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How FG Spent $4.8bn Foreign Loans in Two Years

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  • How FG Spent $4.8bn Foreign Loans in Two Years

The Federal Government obtained about $4.8bn from various foreign sources in the last two years. The loans were expended on various programmes.

The Economic Governance, Diversification and Competitiveness Support Programme was the highest single financing item on which the government expended $600m of the borrowed funds from external sources in the last two years.

Responding to an enquiry under the Freedom of Information Act, the Federal Government, through the Debt Management Office, said it received $600m from the African Development Bank for the EGDCSP.

The AfDB said on its website that the programme would help the government to create the fiscal space to facilitate a smooth implementation of the government’s budget, support fiscal and structural reforms, and improve the targeting of social sector spending to protect the most vulnerable segments of the population.

While the first tranche of the programme costing $600m was approved in 2016, the second tranche costing $400m is expected to be approved this year to take the total value of the loan to $1bn.

Another major loan of $500m came from the International Bank for Reconstruction and Development for Nigeria’s development finance institutions. The item also attracted $400m from the AfDB in addition to another $400m secured from the African Development Fund.

The Federal Government secured $500m from the International Development Association, an arm of the World Bank, for the Saving One Million Lives, which is a scheme to expand access to essential primary health care services for women and children.

Three states, Rivers, Ogun and Lagos, benefitted from the foreign debts secured in the last two years. The Federal Government secured UA3.3m ($5.06m) and $200m for the Urban Water Sector Reform and Port Harcourt Water Supply and Sanitation projects, and $33.17m for the Ogun State Urban Water Supply Project.

It also obtained $100m from the AFD for the Lagos Integrated Urban Development Project.

From the International Development Association, the Federal Government secured $200m, $70m, $140m and $70m for the Polio Eradication Support Project, Higher Education Centres of Excellence Project, Community and Social Development Project, and African Higher Education Centre of Excellence Project, respectively.

Another $140m was obtained from the World Bank for the Community and Social Development Project. The Polio Eradication Support Project received another $200m from the IDA, while the Nigerian Partnership for Education Project also received $100m from the same organisation.

From the Export-Import Bank of China, the Federal Government obtained $325m for 40 plants under the Parboiled Rice Processing Plant Project; and $280m from the AfDB for the Enable Youth Nigeria Programme.

Also from the AfDB, the Federal Government obtained $250m for the Inclusive Basic Service Delivery and Livelihood Empowerment Integrated Programme.

From the IDA, the government also obtained $200m for the Multi-Sectorial Crisis Recovery Project for North Eastern Nigeria and $90m for the Regional Surveillance Systems Enhancement.

The government’s response to enquiry, which was directed to the Minister of Finance, Mrs. Kemi Adeosun, did not indicate how far it had gone in implementing the projects for which it obtained the foreign loans in the last two years of the current administration.

Experts have at various times expressed fears that governments across the country borrow funds that are not tied to projects but to finance routine expenditure such as salaries and overheads.

While this may be true of local debts, foreign agencies hardly lend without knowing what the funds will be utilised for.

The response of the Federal Government to enquiry showed that local debts were not tied to any specific projects but warehoused in the Central Bank of Nigeria for financing budget deficits.

Some stakeholders say the government should only borrow to finance capital projects and infrastructure that have the capacity to generate funds for both debt servicing and repayment of the principal.

This is hardly the case as most of the debts are spent on programmes and routine expenses.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Banking Sector

Wema Bank, MOD Launch Scheme For International Students

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Wema Bank has launched an advisory and loan scheme, the Education Advisory Service, in partnership with MOD Education for young Nigerians wishing to study abroad.

Following foreign exchange control measures introduced by the government, parents and guardians have experienced difficulties paying tuition fees for their children and wards studying abroad. Some who have the money don’t know the requirements for foreign admission and waste lots of time and resources in fruitless searches.

But to help them surmount these challenges, Wema Bank has partnered with MOD Education, a professional student advisory, marketing, recruitment and placement company for the advisory services and school fees advance facility. The partnership, which was launched on Friday, April 9 at Eko Hotels, Victoria Island, will see both organizations providing innovative education advisory services and funds for international students.

Speaking about the partnership, Divisional Head, Retail Business, Wema Bank, Dotun Ifebogun, explained that the initiative would aid hundreds of thousands of Nigerians requiring advisory and financial support to pay for their wards in foreign schools.

He explained that Wema Bank does not want the aspirations of Nigerians desirous of foreign education truncated, hence the support.

“We are interested in everything that concerns our customers, and education is one of them. Some parents and guardians desire a certain quality of education for their wards outside the shores of Nigeria, and we would be able to assist them with this product. Our school fees advance loan results from the requests of parents and guardians who need to get short term financial support to meet the tuition obligation of their wards irrespective of the constant increase in fees.

“There’s nothing as heartbreaking as withdrawing a child already in a foreign university or being unable to raise the requisite forex for a child offered admission in a top-rated foreign institution of higher learning. But our school fees advance loan will take care of this problem and help secure the futures of such students – both undergraduates and postgraduates. The fact that you get counsel from the right sources at any particular time is another benefit of this product.

Also, the Managing Director, MOD Education, Michael Dosunmu, expressed gratitude to Wema Bank for the partnership. “Wema Bank has been supportive to us as a business and it was just a natural marriage. We trust the bank enough to bank with them, and our trust is enough to recommend it to others.”

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Finance

NAIC Pays N1.7bn Claims to Farmers

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The Nigerian Agricultural Insurance Corporation (NAIC) said it paid a total of N1.7 billion claims to over 5,000 farmers in the past two years.

NAIC, which is the only federal government owned insurance company authorised to offer agric insurance services to farmers at subsidised rate, said a breakdown of the paid claims showed that it paid N856 million to insured farmers in 2019 and N848 million in 2020.

Commenting on the development, NAIC Managing Director, Mrs. Folashade Joseph, said the claims were paid to the farmers to cover losses incurred in the course of doing business.

Joseph, enjoined agricultural investors and lending institutions to continue to partner NAIC by taking agricultural insurance cover that will enable them remain firm in business despite unforeseen circumstances from weather conditions and other risks in order to realise the food security agenda of President Muhammadu Buhari.

She said the above-mentioned amount was shared among five million farmers who suffered various setbacks in their farms as a result of natural course.

According to her, the NAIC Agric Insurance Scheme was launched in 1987 by federal government to restore the confidence and productivity of Nigerian farmers who suffered losses as a result of natural disaster such as flood, drought, pest and diseases.

The NAIC boss explained that the essence of the sensitisation campaign embarked by the corporation was to let the farmers know and understand exactly what NAIC does, the importance of insurance, and make them understand how insurance works, how they can access NAIC products and services, how to process their claims, as well as what insurance stands to do for them.

“Agribusiness is evolving fast and so many risks are being thrown up, many new participants are coming into the business of agriculture, and the risks are on the increase if you look at them across the value chain, there is no so many participants so we need to keep sensitising the farmers and let them know we are serving them, and we need to know from them how to serve them,” she explained.

Speaking further, she said, “our assurance to farmers is that when they are insured and they suffer losses covered by any of the policies they purchased, including natural disasters and whatever, they will get paid for their losses, and that is the purpose of insurance and setting up NAIC.

“Our motor is ‘Plowing the Farmer Back to Business, Plowing the Farmers into Prosperity’, and we settle claims.”

She said NAIC currently deals with thousands of farmers (Small, Medium, and Large scale farmers) across the country, adding that the corporation serves farmers with investment as little as N100, 000, and at the same time serves multinational farmers.

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Banking Sector

UBA Organises Capacity Building Forum

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UBA Insider dealings

As part of its commitment to support the growth and sustainability of micro, small and medium-scale enterprises (MSME) in the continent, the United Bank for Africa (UBA) Plc, is set to organise the next edition of its UBA Business Series.

The UBA Business Series which is a monthly event, is an MSME Workshop as well as a capacity building initiative of the bank where business leaders and professionals share well-researched insights on best practices for running successful businesses, especially in the face of the difficult operating environment that dominates the African business landscape.

Through this initiative, UBA has been assisting with essential tips to help businesses re-examine their models and strategies and ensure that they stay afloat and remain thriving, a statement from the bank explained.

The topic for the next edition of the series is, “Managing Performance for Business Growth,” and it will be held today, via Microsoft Teams.

At this session, the Managing Director, Secure ID Limited, Mrs Kofo Akinkugbe, will be sharing useful tips and insights on the key strategies of performance management to boost business growth.

Akinkugbe is the founder of SecureID Nigeria, a MasterCard, VISA and Verve certified Smartcard Personalization Bureau and Digital Technology company. She currently serves as the Managing Director/CEO, Secure Card Manufacturing, – a Smartcard manufacturing plant producing high security identity cards and documents for the Banking, Telecoms and Public sectors across Africa and beyond.

UBA’s Head, SME Banking, Sampson Aneke said of Akinkugbe, “with her vast experience garnered over the years from various sectors, she will help business owners understand how performance management strategies can be effectively implemented to ensure business growth.”

He emphasised UBA’s commitment and deep passion for small businesses, which according to him, remains the engine of any developing economy adding, “We know small businesses are the backbone of the economy in every country. In many climes, businesses with fewer than 100 employees account for 98.2 per cent of all businesses. This no doubt captures the importance of SMEs to a thriving economy which is why UBA is committed to seeing them flourish.”

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