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Senate Rejects Kaduna’s $350m Loan Request

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Nasir-El-Rufai
  • Senate Rejects Kaduna’s $350m Loan Request

The Senate has rejected the request by the Kaduna State Government to obtain a $350m loan from the World Bank.

The rejection was based on the recommendation of the Senate Committee on Local and Foreign Debts and supported by the three senators from the state.

In the report, which was presented by the Chairman of the committee, Senator Shehu Sani (APC, Kaduna-Central), it was recommended that the facility be disapproved as it would worsen the debt profile of the state.

Listing the findings of the committee, the report stated that the Development Policy Operation (budget support) of $350m for Kaduna State was approved by the World Bank in 2016 and captured in the 2016-2018 borrowing plan of the Federal Government as approved by the National Assembly.

It also said the credit facility had an attractive low financing data of 1.25 per cent interest and moratorium of five years and a 25-year tenor.

It added that the facility was already captured in the 2016-2018 Medium-Term Expenditure Framework.

The committee, however, stated, “According to the latest Debt Management Office figures, Kaduna State has a total debt stock of $232.1m, and approving the current loan request of $350m for Kaduna State will bring its total debt stock to $582.1m.

“If this loan request is approved, the new total debt stock of $582.1m for Kaduna State will be unsustainable and necessarily attract huge financial burden to the meagre federal allocation to the state.

“With the new borrowing, the debt service to revenue ratio of Kaduna State will further be increased and thus impact negatively on the ability of the state to meet other basic needs of its people. The new debt stock will likely further erode the economic viability of the state.”

The committee recommended thus, “The Senate do reject the request of $350m for Kaduna State as contained in the 2015-2018 External Borrowing (Rolling) Plan of Mr. President (Muhammadu Buhari).”

In his additional comment, Sani said if the loan facility was approved, the people of the state, who were 50 years old, would be 75 years old by the end of the repayment period.

He added that while the debt profile of Kaduna was $232.1m between when Nigerian gained independence in 1960 and 2018, the state’s debt stock would rise to $582.1m under Governor Nasir el-Rufai’s administration alone.

The Deputy President of the Senate, Ike Ekweremadu, who presided over the plenary, asked for the opinion of the other two lawmakers from Kaduna State, Senator Suleiman Hunkuyi (APC, Kaduna-North) and Danjuma La’ah (PDP, Kaduna-South), and they also expressed their opposition to the request.

Both senators also criticised el-Rufai’s administration.

“I crave the indulgence of my colleagues that the application of that loan, among other things, is indeed a misplaced priority as we have clearly seen. I strongly stand behind the prayer of the chairman of the committee that this chamber do reject that request for the loan,” Hunkuyi stated.

La’ah, on his part, said his constituents did not give him the authority to support the approval of the loan.

He noted, “I met with the representatives of Kaduna State and asked them, ‘What is this loan all about? What projects is this loan meant for? Who are those to execute them? Who are the contractors? Where will the projects be sited?’ Those questions were not answered.

“I realised that the money received by Kaduna State is much but they are busy retiring and sacking people (workers), and they are now requesting for a loan. To do what? If the loan must be given, there must be a specific reason for it. But if you are collecting a loan without giving a reason, then it should not be given.

“I am not in support of it because my people are not in support of it. This loan should not be granted as far as we are concerned in Kaduna State, most especially the Southern Kaduna.”

The Deputy Majority Leader, Senator Bala Ibn Na’Allah, said there was “a very serious lesson” to learn from the aftermath of the report.

Making a veiled reference to the political crisis between el-Rufai and senators from the state, he stated, “In a democratic society, you do not look at the representatives of the people; you look at the people that they are representing.

“Three senators have so far spoken on this matter and they all happen to be senators from Kaduna. And it appears that apart from the recommendation by the committee, the three senators appear to be in agreement that the recommendation of the committee should be upheld by this Senate.

“It appears that the wisdom of the Senate will be to uphold the respect that our senators deserve and to go by their thinking. This is how I think, regrettably so.”

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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Federal Government Set to Seal $3.8bn Brass Methanol Project Deal in May 2024

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Gas-Pipeline

The Federal Government of Nigeria is on the brink of achieving a significant milestone as it prepares to finalize the Gas Supply and Purchase Agreement (GSPA) for the $3.8 billion Brass Methanol Project.

The agreement to be signed in May 2024 marks a pivotal step in the country’s journey toward industrialization and self-sufficiency in methanol production.

The Brass Methanol Project, located in Bayelsa State, is a flagship industrial endeavor aimed at harnessing Nigeria’s abundant natural gas resources to produce methanol, a vital chemical used in various industrial processes.

With Nigeria currently reliant on imported methanol, this project holds immense promise for reducing dependency on foreign supplies and stimulating economic growth.

Upon completion, the Brass Methanol Project is expected to have a daily production capacity of 10,000 tonnes of methanol, positioning Nigeria as a major player in the global methanol market.

Furthermore, the project is projected to create up to 15,000 jobs during its construction phase, providing a significant boost to employment opportunities in the country.

The successful execution of the GSPA is essential to ensuring uninterrupted gas supply to the Brass Methanol Project.

Key stakeholders, including the Nigerian National Petroleum Company Limited and the Nigerian Content Development & Monitoring Board, are working closely to finalize the agreement and pave the way for the project’s advancement.

Speaking on the significance of the project, Minister of State Petroleum Resources (Gas), Ekperikpe Ekpo, emphasized President Bola Tinubu’s keen interest in expediting the Brass Methanol Project.

Ekpo reaffirmed the government’s commitment to facilitating the project’s success and harnessing its potential to attract foreign direct investment and drive economic development.

The Brass Methanol Project represents a major stride toward achieving Nigeria’s industrialization goals and unlocking the full potential of its natural resources.

As the country prepares to seal the deal in May 2024, anticipation grows for the transformative impact that this landmark project will have on Nigeria’s economy and industrial landscape.

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IMF Report: Nigeria’s Inflation to Dip to 26.3% in 2024, Growth Expected at 3.3%

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IMF global - Investors King

Nigeria’s economic outlook for 2024 appears cautiously optimistic with projections indicating a potential decrease in the country’s inflation rate alongside moderate economic growth.

The IMF’s revised Global Economic Outlook for 2024 highlights key forecasts for Nigeria’s economic landscape and gave insights into both inflationary trends and GDP expansion.

According to the IMF report, Nigeria’s inflation rate is projected to decline to 26.3% by the end of 2024.

This projection aligns with expectations of a gradual easing of inflationary pressures within the country, although challenges such as fuel subsidy removal and exchange rate fluctuations continue to pose significant hurdles to price stability.

In tandem with the inflation forecast, the IMF also predicts a modest economic growth rate of 3.3% for Nigeria in 2024.

This growth projection reflects a cautious optimism regarding the country’s economic recovery and resilience in the face of various internal and external challenges.

Despite the ongoing efforts to stabilize the foreign exchange market and address macroeconomic imbalances, the IMF underscores the need for continued policy reforms and prudent fiscal management to sustain growth momentum.

The IMF report provides valuable insights into Nigeria’s economic trajectory, offering policymakers, investors, and stakeholders a comprehensive understanding of the country’s macroeconomic dynamics.

While the projected decline in inflation and modest growth outlook offer reasons for cautious optimism, it remains essential for Nigerian authorities to remain vigilant and proactive in addressing underlying structural vulnerabilities and promoting inclusive economic development.

As the country navigates through a challenging economic landscape, concerted efforts towards policy coordination, investment promotion, and structural reforms will be crucial in unlocking Nigeria’s full growth potential and fostering long-term prosperity.

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South Africa’s March Inflation Hits Two-Month Low Amid Economic Uncertainty

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South Africa's economy - Investors King

South Africa’s inflation rate declined to a two-month low, according to data released by Statistics South Africa.

Consumer prices rose by 5.3% year-on-year, down from 5.6% in February. While this decline may initially suggest a positive trend, analysts caution against premature optimism due to various economic factors at play.

The weakening of the South African rand against the dollar, coupled with drought conditions affecting staple crops like white corn and geopolitical tensions in the Middle East leading to rising oil prices, poses significant challenges.

These factors are expected to keep inflation relatively high and stubborn in the coming months, making policymakers hesitant to adjust borrowing costs.

Lesetja Kganyago, Governor of the South African Reserve Bank, reiterated the bank’s cautious stance on inflation pressures.

Despite the recent easing, inflation has consistently remained above the midpoint of the central bank’s target range of 3-6% since May 2021. Consequently, the bank has maintained the benchmark interest rate at 8.25% for nearly a year, aiming to anchor inflation expectations.

While some traders speculate on potential interest rate hikes, forward-rate agreements indicate a low likelihood of such a move at the upcoming monetary policy committee meeting.

The yield on 10-year bonds also saw a marginal decline following the release of the inflation data.

March’s inflation decline was mainly attributed to lower prices in miscellaneous goods and services, education, health, and housing and utilities.

However, core inflation, which excludes volatile food and energy costs, remained relatively steady at 4.9%.

Overall, South Africa’s inflation trajectory underscores the delicate balance between economic recovery and inflation containment amid ongoing global uncertainties.

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