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2018 Budget Implementation Crucial, Experts Tell Buhari

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  • 2018 Budget Implementation Crucial, Experts Tell Buhari

Economic and financial experts have expressed concerns over the Federal Government’s ability to implement the 2018 proposal, saying the current year’s budget performance has been below average.

They also conveyed divergent views over the budget assumptions and key indices as presented by President Muhammadu Buhari to a joint session of the National Assembly on Tuesday.

While some expressed doubt over its likely efficacy, others said the budget would achieve all it was set to achieve if its implementation would begin on time.

The Chief Executive Officer, Financial Derivatives Company Limited, Bismarck Rewane, described the budget proposal as good but said there were fundamental issues with some of its assumptions.

He said, “It is called the ‘Budget of Consolidation’ but the success is not fully entrenched yet. The growth is still fragile. It is a step in the right direction but it is not bold, aggressive and robust enough.

“If you discount inflation with the expenditure, then you see that it is still small. You need an increase of at least 30 per cent. The exchange rate of N305/$ is not realistic. What volume of transactions is done at that rate?

“Looking at the oil production of 2.3 million barrels per day, I don’t think that is perfect. It is a good budget but it did not go far. You need to grow expenditure by a minimum of 30 per cent. As an economist, I will say there is a lot of work to be done; you need vision, courage and integrity.”

An analyst and Managing Director, Afrinvest Securities Limited, Mr. Ayodeji Ebo, said the N8.6tn expenditure was too ambitious, saying he wondered how the Federal Government would raise such an amount.

“My concern is how the government will fund the expenditure. The government is still far behind in terms of getting revenue to fund the 2017 budget. The exchange rate of N305/dollar is not realistic considering the fact that most transactions are now being done at N363/dollar,” he stated.

Ebo stressed the need to pass the budget on time and begin its implementation by January.

An economist at Capital Economics, John Ashbourne, said the budget was too ambitious.

He told Reuters, “Mostly, I think that they are setting themselves yet more unattainable goals.

“The Federal Government falls short on its revenue and expenditure targets every year, and Buhari always responds by writing an even more ambitious target into the budget for the following year.”

An economist at Lagos-based Vetiva Capital Management, Michael Famoroti, said, “If the government will borrow externally as it has indicated, the budget has to be passed early so that it can meet up with the funding gap

“There is the challenge of getting approval from the legislature and it’s something it can’t overlook.”

In his comments, the Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, said, “The budget is achievable. The oil revenue projection of N2.4tn is achievable. The main condition is to ensure stability in the Niger Delta, as this will enable them to achieve 2.3 million barrels per day output target. If this budget is passed on time, the 3.5 per cent growth and 12.4 per cent inflation rate will be achievable. The year 2018 is the last full year the government has to impress the electorate. What we need is diligent implementation of the budget.

“The 2017 budget has some issues because it was passed late and the economic environment was tougher than now. This is why we must begin the implementation of the 2018 budget in January.”

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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Guinness Nigeria Postpones Spirits Importation Exit, Extends Deal with Diageo

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Guinness Nigeria Plc has announced a delay in its plan to halt the importation of spirits as it extended its agreement with multinational alcoholic beverage company Diageo until 2025.

The decision, communicated through a corporate notice filed with the Nigerian Exchange Limited on Tuesday, cited a longer-than-expected transition period for separating its business from Diageo’s.

Initially slated for discontinuation in April 2024, the importation of premium spirits like Johnnie Walker, Singleton, Baileys, and others under the 2016 sale and distribution agreement with Diageo will now continue for an additional year.

The extension comes as the process of business separation between Guinness Nigeria, a subsidiary of Diageo, and Diageo itself faces unexpected delays.

In October, Guinness Nigeria had announced plans to cease importing spirits from Diageo, a move aimed at reducing its foreign exchange requirements.

However, the separation process has encountered unforeseen hurdles, necessitating the extension of the importation agreement.

The notice, signed by the company’s Legal Director/Company Secretary, Abidemi Ademola, highlighted the ongoing efforts by Guinness Nigeria and Diageo to implement the separation, originally scheduled for completion by April 2024.

The extension underscores the complexity of disentangling the businesses and ensuring a smooth transition.

Guinness Nigeria reaffirmed its commitment to the long-term growth strategy, aligning with Diageo’s decision to establish a new, wholly-owned spirits-focused business.

Despite the delay, both companies remain dedicated to managing the importation and distribution of international premium spirits in West and Central Africa, with Nigeria as a key hub.

The postponement comes amid challenges faced by Guinness Nigeria, including significant exchange rate losses, which amounted to N49 billion in the 2023 half-year operations.

Despite these setbacks, the company remains optimistic about its future prospects in the Nigerian market.

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Private Sector Warns: Interest Rate Hike to Trigger Job Cuts and Inflation Surge

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As the Central Bank of Nigeria (CBN) announced a hike in the Monetary Policy Rate (MPR) from 22.75% to 24.75%, concerns have been raised by the private sector regarding the potential ramifications on job stability and inflationary pressures.

The move, aimed at curbing inflation and stabilizing the exchange rate, has prompted apprehension among business operators who fear adverse effects on the economy.

Representatives from the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Nigerian Association of Small Scale Industrialists have voiced their worries over the increased difficulty in accessing affordable credit.

They argue that the higher interest rates will impede the private sector’s ability to borrow funds for expansion and operational activities.

This, they fear, could lead to a reduction in business investments and subsequently result in widespread job cuts across various sectors.

The Lagos Chamber of Commerce and Industry (LCCI) acknowledged the necessity of the interest rate hike but emphasized the potential negative consequences it may bring.

While describing it as a “price businesses would have to pay,” the LCCI highlighted the current fragility of the economy, exacerbated by various policy missteps.

They cautioned that the increased cost of borrowing could stifle entrepreneurial activities and discourage expansion plans critical for economic growth and job creation.

Experts have echoed these concerns, warning that the tightening monetary conditions could exacerbate inflationary pressures and hinder economic recovery efforts.

With inflation already soaring at 31.70%, the rate hike could further fuel price hikes, especially in essential goods and services, thus eroding the purchasing power of consumers.

However, CBN Governor Yemi Cardoso defended the decision, citing the imperative to address current inflationary pressures and ensure sustained exchange rate stability.

He emphasized the need to restore the purchasing power of ordinary Nigerians and expressed confidence that the economy would stabilize by the end of the year.

Despite assurances from the CBN, stakeholders remain cautious, calling for a more nuanced approach that balances the need for price stability with the imperative of fostering economic growth and job creation.

As businesses brace for the impact of the interest rate hike, all eyes are on the evolving economic landscape and the measures taken to mitigate its effects on livelihoods and inflation.

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Breaking Barriers: Transcorp Hotels CEO Shares Journey from Crisis to Success

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Dupe Olusola

Dupe Olusola, the Managing Director/CEO of Transcorp Hotels Plc, reflects on her remarkable journey from navigating the depths of a global pandemic to achieving unprecedented success in the hospitality industry.

Appointed in March 2020, amidst the onset of the COVID-19 pandemic, Olusola found herself at the helm of a company grappling with the severe economic fallout and operational challenges inflicted by the crisis.

Faced with a drop in occupancy rates from 70% to a mere 5%, Olusola and her team were confronted with the daunting task of steering Transcorp Hotels through uncharted waters.

Undeterred by the adversity, they embarked on a journey of transformation, leveraging creativity and resilience to navigate the turbulent landscape.

Implementing innovative strategies such as introducing drive-through cinemas, setting up on-site COVID-19 testing facilities, and enhancing take-away services, Transcorp Hotels adapted to meet the evolving needs of its guests and ensure continuity amidst the crisis.

Embracing disruption as a catalyst for growth, Olusola fostered a culture of collaboration and teamwork, rallying her colleagues to overcome obstacles and embrace change.

Through unwavering determination and a commitment to excellence, Transcorp Hotels emerged from the pandemic stronger than ever, breaking profit and revenue records year after year.

“It’s indeed been a great opportunity to learn and relearn, to lead and to grow. When you see success stories, remember it’s a journey with twists, turns, ups and downs but in the end, it will all be okay”, she said.

Olusola’s leadership exemplifies the power of adaptability and perseverance, inspiring her team to transcend limitations and chart a course towards unprecedented success.

As Transcorp Hotels continues to flourish under her stewardship, Olusola remains steadfast in her dedication to driving innovation, fostering growth, and breaking barriers in the hospitality industry.

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