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FG Sets Aside N177bn to Retire Maturing Bonds

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  • FG Sets Aside N177bn to Retire Maturing Bonds

The Federal Government has set aside a total of N177.46bn in the 2017 budget as a sinking fund to retire maturing bond obligations.

A sinking fund is a part of a bond agreement that requires the issuer to regularly set money aside in a separate custodian account for the exclusive purpose of redeeming the bonds.

The N177.46bn allocated in the 2017 budget is N6.02bn higher than N113.44bn allocated for the same purpose in the 2016 fiscal period.

The proposed spending is contained in the 2017 budget, which was submitted to a joint session of the National Assembly by President Muhammadu Buhari on December 14, 2016.

The N7.3tn budget has a total capital vote of N2.24tn, representing 30.7 per cent, while the recurrent component stood at N2.98tn, with the rest allocated for debt servicing.

Findings revealed that the sinking fund of N177.4bn would be used by the government to settle maturing obligations arising from its domestic indebtedness.

The government usually approaches the domestic bond market to raise funds to meet its short-term obligations such as payment of salaries.

The domestic debt of the government as of the end of June last year stood at about N10.6tn, made up of N7.47tn Federal Government of Nigeria bond; Nigerian Treasury Bills, N2.9tn; and Treasury Bonds, N230.9bn.

The Debt Management Office had in a document entitled: ‘Nigeria’s Debt Management Strategy 2016-2019’, stated that at least 30 per cent of the nation’s domestic debt would fall due within the next one year.

Given the country’s diminishing revenue profile as a result of dwindling oil and gas revenue, refinancing the debt has become a challenge to the government.

According to the DMO, refinancing the 30 per cent component of the domestic debt poses high risk to the economy because of high interest rates.

It stated, “The interest rate risk is high, since maturing debt will have to be refinanced at market rates, which could be higher than interest rates on existing debt.

“The foreign exchange risk is relatively low given the predominance of domestic debt in the portfolio.”

The Registrar, Chartered Institute of Finance and Control of Nigeria, Mr. Godwin Eohoi, said that with the drop in revenue, it would be difficult to refinance the domestic debt, adding that this might lead the country into another debt trap.

He said, “We have about N1.6tn as debt repayment out of the N7.3tn budget and this is very high. Why should we be using about 25 per cent of the budget to repay debt that we have spent? The interest rate is too high.

“There is nothing bad in borrowing but we should borrow heavily for infrastructure purpose and with the level of revenue challenges we are having in the country, it will not be easy servicing some of these debts.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Insurance

Heirs Insurance Group Unveils Revolutionary Website for Seamless Insurance Experience

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Heirs Life Assurance- Investors King

Heirs Insurance Group has launched a website designed to revolutionize the insurance experience for its customers.

With a focus on simplicity, accessibility, and personalized service, the new website aims to streamline the process of obtaining insurance coverage and empower customers to make informed decisions about their insurance needs.

The website boasts a range of innovative features that make navigating insurance options easier than ever before.

From simple and intuitive navigation menus to personalized insurance recommendations, the website is designed to guide customers through every step of the insurance process quickly and efficiently.

According to Ifesinachi Okpagu, the Chief Marketing Officer of Heirs Insurance Group, the new website embodies the company’s commitment to delivering exceptional customer service.

“Today’s customers want simplicity, and this new website delivers on that request,” Okpagu said. “We are empowering customers to take control of their lives, their businesses, assets, and their most cherished people.”

One of the key features of the website is its personalized insurance experience, which takes customers through a short journey to help them identify the best insurance plan for their needs.

Whether customers are looking for coverage for their home, car, business, or loved ones, the website provides tailored recommendations to ensure they find the right insurance solution quickly and easily.

With its user-friendly interface and innovative features, the new website from Heirs Insurance Group sets a new standard for the insurance industry, making it easier than ever for customers to protect what matters most to them.

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Banking Sector

Safaricom, Access Holdings Forge Partnership to Revolutionize Remittance Corridor in Africa

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Access bank

Safaricom, the leading telecommunications company in Kenya, has entered into a strategic partnership with Access Holdings, spearheaded by Aigboje Aig-Imoukhuede.

The collaboration aims to revolutionize the remittance corridor between East and West Africa, marking a significant step towards enhancing financial inclusion and empowering millions of individuals across the continent.

The partnership comes on the heels of Access Holdings’ recent acquisition of the National Bank of Kenya Limited, signaling the company’s ambitious expansion into the East African market.

Leveraging Safaricom’s extensive network and expertise in mobile money through M-Pesa, which currently dominates the mobile money market in Kenya, the alliance seeks to create seamless and efficient channels for remittance transactions.

Aigboje Aig-Imoukhuede, the driving force behind Access Holdings, expressed enthusiasm about the collaboration, highlighting its potential to transcend traditional boundaries and foster greater economic connectivity between East and West Africa.

He highlighted the fusion of collective expertise and resources between the two entities, underlining their shared commitment to driving financial inclusion and empowerment across the continent.

The partnership holds promise for addressing the challenges faced by millions of Africans in accessing affordable and reliable remittance services.

By connecting more than 60 million customers and 5 million businesses across eight countries, the collaboration aims to facilitate over $1 billion in daily transaction value, significantly boosting the flow of remittances within and outside Africa.

With the first phase of the collaboration focusing on key markets such as Nigeria, Kenya, Ghana, and Tanzania, stakeholders anticipate a transformative impact on the remittance landscape, paving the way for greater intracontinental trade and economic integration in line with the objectives of initiatives like the African Continental Free Trade Area (AfCFTA).

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Banking Sector

EFCC Urged to Repatriate Recoveries to NDIC for Depositors’ Relief

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The Nigeria Deposit Insurance Corporation (NDIC) has made a fervent plea to the Economic and Financial Crimes Commission (EFCC) to expedite the repatriation of recovered funds to its coffers to facilitate the timely reimbursement of depositors affected by bank failures.

During a recent meeting between the Managing Director of NDIC, Bello Hassan, and the Executive Chairman of the EFCC, Ola Olukoyede, at the NDIC headquarters in Abuja, Hassan stressed the importance of enhanced collaboration between the two agencies in recovering depositors’ funds lost due to bank failures.

Hassan emphasized that the return of recoveries made by the EFCC on behalf of the NDIC would significantly contribute to the prompt reimbursement of affected depositors.

He commended the EFCC for its unwavering efforts in combating corruption and financial crimes, highlighting its crucial role as a key member of the Taskforce on Implementation of the Failed Banks Act chaired by the NDIC.

The NDIC boss also highlighted the existing partnership between the two organizations, which led to the establishment of the NDIC Help Desk at the EFCC in 2022.

He disclosed that several high-profile cases referred to the EFCC were currently under investigation.

In response, Olukoyede reiterated the EFCC’s commitment to collaborating closely with the NDIC to combat financial crimes and safeguard the integrity of the Nigerian banking sector.

He pledged to intensify efforts to repatriate recovered funds promptly, acknowledging the interconnectedness between criminal activities and bank failures.

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