- FG, NASS Political Deadlock Threatens Economic Rebound
The Central Bank of Nigeria has fallen victim to a battle between President Muhammadu Buhari and the National Assembly.
The Monetary Policy Committee did not meet on Monday and Tuesday, as scheduled, because it lacks a quorum after the Senate refused to approve Buhari’s nominees for the committee.
This means the MPC cannot meet, and the CBN can’t set interest rates.
This setback has added to the economic fallout from a longstanding political standoff.
Already, the NASS has threatened to delay the 2018 budget proposal for a third year amid acrimony over who is to blame for the impasse and haggling over allocations.
At the heart of the dispute is not only a supremacy battle, but an anti-corruption campaign that helped Buhari get elected in 2015 and that some lawmakers call a witch-hunt.
Legislators also want projects in their constituencies funded and implemented before next year’s elections.
The stalemate may jeopardise efforts to help recovery in an economy that contracted by 1.6 per cent in 2016 and has yet to deal with risks that may come with the February 2019 vote, according to a Bloomberg reports.
The standoff is “a key political risk for Nigeria this year as it may get in the way of the effective functioning of the economy,” the Head, Macroeconomic Research at Standard Chartered Bank Plc in London, Razia Khan, said.
“The belief is that in time the new MPC members will be appointed. If we get to the next set of meetings and they still can’t be held, there would be some disquiet among investors and concerns about the workability of Nigeria’s political system,” she added.
Presidential spokesman, Garba Shehu, declined to comment when phoned on Monday and said he hadn’t been briefed on the matter.
The cancelled MPC meeting is likely to reinforce the view that the current economic downturn has been worsened by poor policy management.
The MPC is likely to have held rates at 14 per cent if it had been able to meet, but the prospects of rate cuts at its March and May meeting now look more unlikely as it may take time to reach consensus on a change of policy once the committee has convened.
So far, markets have shrugged off the dispute and are betting the economic recovery will continue, according to Mark Bohlund of Bloomberg Economics
Nigerian stocks have risen 18 per cent this year in dollar terms, the most globally, according to data compiled by Bloomberg.
The Chairman, Senate Committee on Banking Committee, Rafiu Ibrahim, said last week the NASS had an “issue with the executive.”
In the absence of a MPC meeting, the CBN’s key rate remains at 14 per cent, where it’s been since July 2016, the CBN Governor, Godwin Emefiele said in a statement on Monday. That’s despite remarks by Emefiele in November that the committee may consider loosening policy early this year.
This is the first time in at least two years that a scheduled MPC meeting didn’t take place
Even more important, according to Standard Chartered’s Khan, is the approval of the 2018 budget, in which a third of the spending is earmarked for investment in infrastructure to help spur economic growth.
“The budget has a much more immediate impact on the economy than anything the newly formulated MPC could do,” she said.
The impasse over so-called constituency projects may determine when the budget is approved, according to Clement Nwankwo, executive director of the Abuja-based Policy and Legal Advocacy Centre.
The legislature had approved the projects and the executive refused to implement, Nwankwo said. “The view of the National Assembly members is that that aspect of the budget has been singled out for neglect,” he said.
The Senate has twice rejected Buhari’s nomination of Ibrahim Magu as chairman of the Economic and Financial Crimes Commission.
Buhari left Magu to continue running the agency in an acting capacity, angering lawmakers.
At the same time, the EFCC is trying to pursue a case of false declaration of assets against the Senate President Bukola Saraki.
Saraki’s trial and Magu’s confirmation are symptoms “of how the legislature has been fighting for its own independence and it feels that the executive and its agencies are undermining its authority,” the Head of Lagos-based BudgIT, a civic group that lobbies for government transparency, Oluseun Onigbinde, said.
Nigeria, Morocco sign MOUs on Hydrocarbons, Others
The Federal Government and the Kingdom of Morocco have signed five strategic Memoranda of Understanding that will foster Nigerian-Morocco bilateral collaboration and promote the development of hydrocarbons, agriculture, and commerce in both countries.
The Minister of State for Petroleum Resources, Chief Timipre Sylva, led the Nigerian delegation to the agreement signing ceremony on Tuesday at Marrakech, Morocco, while the Chief Executive Officer of OCP Africa, Mr Anouar Jamali, signed for the Kingdom of Morocco, according to a statement by the Nigerian Content Development and Monitoring Board.
Under the agreement between OCP, NSIA and the Nigerian National Petroleum Corporation, Nigeria will import phosphate from the Kingdom of Morocco and use it to produce blended fertiliser for the local market and export.
The statement said Nigeria would also produce ammonia and export to Morocco.
“As part of the project, the Nigerian Government plans to establish an ammonia plant at Akwa Ibom State,” it said.
The Executive Secretary of NCDMB, Mr Simbi Wabote, and the Group Managing Director of NNPC, Mallam Mele Kyari, were part of the delegation and they confirmed that their organisations would take equity in the ammonia plant when the Final Investment Decision would be taken, the statement said.
Sylva said the project would broaden economic opportunities for the two nations and improve the wellbeing of the people.
He added that the project would also positively impact agriculture, stimulate the growth of gas-based industries and lead to massive job creation.
He said the President, Major General Muhammadu Buhari (retd.), had mandated the Ministry of Petroleum Resources and it agencies and other government agencies to give maximum support for the project.
“He mandated me to ensure that at least the first phase of this project is commissioned before the expiration of his second term in office in 2023,” he added.
According to the statement, the MOUs were for the support of the second phase of the Presidential Fertiliser Initiative; Shareholders Agreement for the creation of the joint venture company to develop the multipurpose industrial platform and MOU for equity investment by the NNPC in the joint venture and support of the gas.
Other agreements are term sheet for gas sales and aggregation agreement and MOU for land acquisition and administrative facilitation to the establishment of the multipurpose industrial platform for gas sales and aggregation agreement.
The NCDMB boss described the bilateral agreement as significant to the Nigerian economy as it would accelerate Nigeria’s gas monetisation programme through establishment of the ammonia plant in the country.
The agreement would also improve Nigeria’s per capita fertiliser application through importation of phosphate derivatives from Morocco, he added.
Wabote challenged the relevant parties to focus on accelerating the FID, assuring them that the NCDMB would take equity investment for long-term sustainability of the project.
He canvassed for the setting up of a project management oversight structure to ensure project requirements and timelines are met.
“There is also need to determine manpower needs for construction and operations phase of the project and develop training programmes that will create the workforce pool from Nigeria and Morocco and design collaboration framework between research centres in Nigeria and Morocco to develop technology solutions for maintaining the ISBL and OSBL units of the Ammonia complex,” he said.
Dangote Fertiliser Plant to Commence Shipment of Urea in March 2021
Dangote to Sells Petrol in Naira, Plans to Commence Urea Shipment in March 2021
The Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, has said Dangote Fertiliser Plant will commence shipment of Urea in March 2021.
The CBN governor disclosed this during an inspection tour of the sites of Dangote Refinery, Petrochemicals Complex Fertiliser Plant and Subsea Gas Pipeline at Ibeju Lekki, Lagos on Saturday.
Emefiele further stated that Dangote Refinery would sell refined petroleum products in Naira when it starts production.
This he said would save the country from spending 41 percent of the nation’s foreign exchange on importation of petroleum products yearly.
“Based on agreement and discussions with the Nigerian National Petroleum Corporation and the oil companies, the Dangote Refinery can buy its crude in naira, refine it, and produce it for Nigerians’ use in naira,” Mr Emefiele said.
“That is the element where foreign exchange is saved for the country becomes very clear. We are also very optimistic that by refining this product here in Nigeria, all those costs associated with either demurrage from import, costs associated with freight will be totally eliminated.”
Emefiele explained that this will make the price of Nigeria’s petroleum products affordable and cheaper in naira.
“If we are lucky that what the refinery produces is more than we need locally you will see Nigerian businessmen buying small vessels to take them to our West African neighbours to sell to them in naira.
“This will increase our volume in naira and help to push it into the Economic Community of West African States as a currency,” Mr Emefiele said.
UK Budget 2021: Will Sunak’s Budget Run Into Unintended Consequences?
Rishi Sunak’s Budget will encourage higher earners to consider their “international financial options” and will drive businesses away from the UK, warns the CEO of one of the world’s largest independent financial advisory and fintech organizations.
The warning from Nigel Green, chief executive and founder of deVere Group, comes as the Chancellor delivered his 2021 Budget in the House of Commons, his second since he took on the role.
Mr Green says: “The Chancellor has got an extraordinarily difficult hand to play as he tries to stem the economic damage caused by the pandemic, support jobs and businesses and, crucially, rebuild the public finances.
“Whilst Mr Sunak is being hailed a hero for the continued and unprecedented levels of support, it should also be remembered that he is – in a stealth move – dragging more people firmly into the tax net.
“He is raising taxes under the radar.
“Yes, there is no income tax rise. However, he is freezing personal tax thresholds, meaning as incomes rise and thresholds don’t, he is able to raise money by fiscal drag.”
Earlier this week, the deVere CEO noted: “Those most impacted by this stealth move will be looking at the financial planning options available to them, including international options, in order to grow and protect their wealth.”
Rishi Sunak also confirmed that corporation tax will increase to 25% from 2023, up from the current level of 19%.
Of this tax hike, Mr Green goes on to say: “Lower corporation tax helps job and wealth-creating business to survive and thrive. It also helps attract business to move and invest in the country.
“Instead of increasing taxes, Mr Sunak should have relentlessly focussed on growth and stimulus policies for businesses. This would have been of greater help to firms, the economy, jobs and, ultimately, the Treasury’s coffers.”
He adds: “Again, this corporation tax hike is likely to serve as a prompt for businesses to consider their overseas financial options.”
The deVere CEO concludes: “The Chancellor had to perform a tough juggling act. But stealthily dragging more people into the tax net and raising corporation tax might have negative, unintended consequences for the Treasury’s bottom line.”
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