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FG Raises Infrastructure Allocation by 75% in Two Years

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  • FG Raises Infrastructure Allocation by 75% in Two Years

The Federal Government has in the last two years increased the capital allocation to five key ministries by 75 per cent, an analysis of the 2018 budget provisions before the National Assembly has shown.

The combined provision for the execution of capital projects in the ministries of Power, Works and Housing; Transportation; Agriculture and Rural Development; Water Resources; and Industry, Trade and Investment in 2016 stood at N639.67bn.

However, allocations to the five key ministries in the proposed 2018 budget stand at N1.12tn.

This means that within a period of two years, the allocation to the five key ministries increased by N481bn or 75.27 per cent.

The 2016 budget provided the base because it was the first full budget drafted and implemented by the President Muhammadu Buhari administration.

Although the current administration took over power on May 29, 2015, it inherited a budget prepared by the previous administration led by President Goodluck Jonathan.

The Ministry of Power, Works and Housing received N422.97bn in 2016. This increased to N555.88bn in 2018.

The Ministry of Transportation received N188.67bn in 2016 and N263.1bn in 2018. The Ministry of Agriculture and Rural Development received N46.17bn in 2016 and N118.98bn in 2018.

The Ministry of Water Resources received N46.06bn in 2016 and N95bn in 2018. The Ministry of Industry, Trade and Investment, on the other hand, received N5.8bn in 2016 and N82.9bn in 2018.

In nominal terms, the increase reflects the concern of the government for infrastructure deficiency in the country.

Since inflation has also been on the downward trend in recent months, it can also be asserted that in real terms, the increases are a reflection of the government’s plan to build up infrastructure.

However, the expectation that expenditure on infrastructure will increase year-on-year is dashed when the capital provision for the 2017 budget is brought to the fore.

In 2017, the capital budget allocation to the infrastructure-bearing ministries stood at N1.03tn. This shows an increase of only 8.74 per cent.

A former President of the Nigerian Economic Society and currently Executive Director, African Centre for Shared Development Capacity Building, Prof. Olu Ajakaiye, is not disappointed at the minimal increase.

According to him, the 2017 budget was passed too late to be fully implemented; so, the 2018 budget should be a rollover of the current year’s, urging the National Assembly to pass the appropriation bill expeditiously to enable full implementation.

Meanwhile, the Coordinator, Nigeria Agribusiness Group, Mr. Emmanuel Ijewere, has said the 2018 provision for agriculture is below agreed terms.

He stated that the N118.9bn allocated to agriculture in the 2018 Appropriation Bill was far below what Nigeria and other African countries agreed and signed in the Maputo Agreement of 2013.

According to him, the Federal Government has never at any time been able to meet up with what it signed in the agreement with respect to funding agriculture in Nigeria.

Ijewere told one of our correspondents that it was agreed that member countries must allocate 10 per cent of their total budgets to agriculture in order to ensure adequate development of the sector.

This, he said, had not been met by the Federal Government despite the increase in allocation to agriculture in the 2018 Appropriation Bill.

Ijewere said, “It is true that the budget for agriculture was increased from N75bn in 2017 to N118.9bn in 2018, but under the Maputo Agreement, which Nigeria signed, every African country undertook and made a promise that the minimum budgetary allocation to agriculture would be 10 per cent of the entire budget for that specific period. Nigeria has never got there.

“In the 2017 budget, it was only 1.6 per cent. The N118.9bn that we have now in the 2018 budget of over N8tn is still a very far cry from what Nigeria appended its signature to, which is the Maputo Agreement that specifies 10 per cent of the total budget.”

He added, “Nigeria has said repeatedly that agriculture is the way to go and the vast majority of about 50 to 60 per cent of all the work that Nigerians do is in the agricultural industry. But the poorest of our people are in the agricultural industry.

“It is also important to note that despite all the claims by government that it wants to create jobs, it allocated such a little amount to agriculture without considering the Maputo Agreement.”

Ijewere noted that the increase was not impressive as more efforts were needed to diversify the economy, particularly through agriculture.

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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Economy

Nigeria’s Plan to Review Oil Companies’ Gas Flaring Strategies

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Oil

Nigeria is ramping up its efforts to address environmental concerns in the oil and gas sector with a comprehensive plan to review gas flaring strategies of international and indigenous oil companies.

The Minister of State for Environment, Dr. Iziaq Salako, announced this initiative during a national stakeholders engagement meeting on methane mitigation and reduction held in Abuja, Investors King reports.

Gas flaring, a common practice in the oil industry, releases methane—a potent greenhouse gas—into the atmosphere, contributing to climate change and posing health risks to communities near oil facilities.

Nigeria aims to end routine gas flaring by 2030, aligning with global climate goals and commitments.

Dr. Salako explained the importance of reducing methane emissions and highlighted the detrimental effects on public health, food security, and economic development.

He outlined practical steps being taken to tackle methane emissions, including the development of methane guidelines and the engagement of government institutions.

The ministry, through the National Oil Spill Detection and Response Agency, will conduct periodic reviews of oil companies’ plans to ensure compliance with the gas flaring deadline.

Deloitte management consultants will assist in conducting comprehensive forensic audits to scrutinize the legitimacy of forward-contracted transactions.

President Bola Tinubu’s commitment to environmental sustainability underscores the government’s dedication to addressing climate change and fulfilling its multilateral environmental agreements.

The engagement event served as a platform for stakeholders to discuss methane mitigation strategies, existing policies, and implementation challenges.

Collaboration and dialogue among diverse sectors are crucial in charting a unified course towards sustainable methane reduction in Nigeria’s oil and gas industry.

As the country navigates its environmental agenda, ensuring accountability and transparency in gas flaring practices remains paramount for achieving a greener and healthier future.

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Economy

Interest Rate Jumps to 24.75% as CBN Takes Aggressive Stance Against Inflation

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Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has announced a significant increase in the monetary policy rate, known as the interest rate, to 24.75%.

This move disclosed by CBN Governor Olayemi Cardoso during the 294th Meeting of the Monetary Policy Committee press briefing in Abuja, represents a bold step by the apex bank to address the mounting inflationary pressures faced by the country.

With inflation soaring to 31.70% in February, the CBN aims to moderate this upward trend by tightening its monetary policy stance.

This decision follows the previous hike in the interest rate to 22.75% in February, showcasing the CBN’s commitment to combatting inflationary forces.

While the bank opted to maintain the Cash Reserve Ratio at 45%, the significant increase in the interest rate underscores the urgency of the situation and the need for decisive action.

Governor Cardoso emphasized that these measures are essential to stabilize the economy and safeguard the purchasing power of the Nigerian currency.

The 294th MPC marks the second meeting under Governor Cardoso’s leadership, indicating a proactive approach to addressing economic challenges.

The next MPC meeting is scheduled for May 20th and 21st, 2024, highlighting the ongoing commitment of the CBN to navigate Nigeria’s economic landscape amidst inflationary pressures.

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Economy

Nigeria Braces for 10th Consecutive Interest Rate Hike by Central Bank

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Central Bank of Nigeria (CBN)

As Nigeria grapples with persistently high inflation, the Central Bank of Nigeria (CBN) is gearing up to implement its tenth consecutive interest rate hike in a bid to curb the soaring prices and attract investment.

Analysts surveyed by Bloomberg are anticipating a substantial 125 basis-point increase in the key rate to 24%, marking one of the most significant adjustments in the current tightening cycle.

The decision, expected to be announced by Governor Olayemi Cardoso on Tuesday at 2 p.m. in Abuja, comes on the heels of inflation accelerating to 31.7% in February, far surpassing the central bank’s target range of 9%.

This surge has been primarily attributed to the sharp depreciation of the naira, prompting authorities to devalue the currency twice since June to narrow the gap with the unofficial market rate and encourage investor confidence.

While these measures have seen the naira strengthen in recent days and bolstered investment inflows, including a fourfold increase in overseas remittances and significant foreign investor portfolio asset purchases, there remains a palpable need for more decisive action.

Giulia Pellegrini, a senior portfolio manager at Allianz Global Investors, emphasized the necessity for the CBN to intensify its tightening efforts to regain foreign investors’ confidence in the local bond market.

While acknowledging the positive strides made by the central bank, Pellegrini stressed the importance of a more assertive approach to prevent the diversion of investor attention to other frontier markets.

As the Nigerian economy navigates through these challenging times, the impending interest rate hike signals the CBN’s determination to address inflation head-on and foster a more stable economic environment.

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