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Nigeria Mismanaging Excess Crude Account

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IMF
  • Nigeria Mismanaging Excess Crude Account – IMF

The International Monetary Fund has criticised the government of Nigeria for mismanaging the Excess Crude Account and not saving enough for the rainy day.

The Director, African Department at the IMF, Abebe Selassie , in an interview with Nigerian journalists after presenting the regional economic outlook on the sub-Saharan Africa at the ongoing joint annual spring meetings with the World Bank in Washington DC, explained that though the country had done well with the Sovereign Wealth Funds managed by the Nigeria Sovereign Investment Authority, it decried the poor handling of the Excess Crude Account.

Selassie said, “There have been two Sovereign Wealth Funds in Nigeria. There has been the Excess Crude Account and the Nigeria Sovereign Investment Authority. The NSIA has been run transparently and based on standard best practice and it has been doing a good job.

“The concern that we have is about the ECA, because if you recall that the ECA economically was set up to save resources when oil prices are high, and to be drawn on when oil prices are low. We do not think that the ECA has been doing effectively enough job that way.

“Because you see, when oil prices fell, the economy was very hard in the last couple of years, we feel like much better job could have been done, saving enough more in the ECA when oil prices were at $100 and $120 per barrel.”

Former President Olusegun Obasanjo established the ECA in 2004 to promote savings and every dollar above the annual oil benchmark was deposited in the account. The Obasanjo government built up the ECA to $20bn at the end of its tenure in 2007.

However, successive governments since after Obasanjo have grossly abused the ECA and treated it like a slush fund that could be spent by the President and the governors whenever they wanted.

For instance, the withdrawal of about $Ibn and another $496m from the ECA by President Muhammadu Buhari without the constitutionally required legislative appropriation sparked outrage from some states and opposition political parties recently. The funds were said to have been used to intensify the fight against Boko Haram and acquire military aircraft from the United States.

Using the management of the ECA as a basis, the IMF had ranked Nigeria second-worst performer on the Sovereign Wealth Funds user index only ahead of Qatar in the Fiscal Monitor report also released on Wednesday.

Though the IMF said the index was compiled using the corporate governance and transparency scores of the sovereign wealth funds and the size of assets as a percentage of 2016 GDP of the countries considered, Selassie clarified on Friday that IMF considered the ECA and not the fund managed by the NSIA (which was put at $2.15bn as of May 2018) to arrive at Nigeria’s Sovereign Wealth Fund ranking.

The IMF also urged Nigeria to sign the Africa Continental Free Trade Area Agreement noting that when completed, the trade deal would establish a market of 1.2 billion people with a combined GDP of $2.5tn.

Recall that President Muhammadu Buhari has yet to sign the AfCTA, saying the country could not afford to go back to the days of signing agreements without understanding and planning for the consequences of such actions.

Selassie said, “From our perspective, we think that the AfCTA will help the region integrate; it’s been the dream of our leaders dating back to independence days and we think that it’s a very important initiative and beyond politics, it will have a positive impact economically.

“Like all trade agreements, like all integration measures, there can be adverse effects but these can be identified and policies are introduced to address those. We have to look at the big picture. Coming to Nigeria specifically, we think that Nigeria will also benefit as the largest economy from joining the AfCTA and being a full participant of that. In my view, looking at how dynamic Nigeria is and looking at the business people Nigeria has, the wealth of talent and entrepreneurs that it has, I don’t think you have to fear anybody else in terms of competition.”

The Managing Director of IMF, Christine Lagarde, had on Thursday called on the Federal Government to remove fuel subsidy, saying it was the right thing to do.

According to the IMF 2019 Article IV Consultation on Nigeria, phasing out implicit fuel subsidies while strengthening social safety nets to mitigate the impact on the most vulnerable will help reduce the poverty gap and free up additional fiscal space in Nigeria.

Selassie, who reiterated the same position, noted that removing subsidy was important because the lion share of the benefit of the subsidy went to the rich people.

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.

Economy

The Kenya Private Sector Alliance (KEPSA) and The Canada-Africa Chamber of Business Announce Major Memorandum of Understanding (MoU)

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The Kenya Private Sector Alliance and The Canada-Africa Chamber of Business are proud to announce collaboration to promote, support and facilitate bilateral trade and investment opportunities from Canada into Kenya.

The first engagement will be a virtual trade mission to Kenya from Canada in May.

The 3-year agreement MoU was signed today during the Second Session of the Binational Commission meeting between the Governments of Kenya and Canada – and is subject to ongoing renewal.

“This MoU will solidify the existing trade relations between Kenya and Canada and establish strong bonds between the two countries that will go a long way to boost private sector trade and investment. The MOU will also enable us to exchange business information with CACB which is critical especially to our members who wish to expand their coverage to international market,” explained Ms. Carole Kariuki Karuga, KEPSA CEO.

The Kenya Private Sector Alliance is the apex body of private sector in Kenya.

The Canada-Africa Chamber of Business is a 27-years old organization committed to accelerating trade, business and investment between Canada and Africa.

‘Nairobi is a vital gateway not just to Kenya and the region, but the continent’s economies of the future in Africa,’ noted Garreth Bloor, President of The Canada-Africa Chamber of Business.

‘KEPSA is world leader in the private sector, showcasing excellence on the global stage. This MoU is a great honour for The Canada-Africa Chamber of Business, our leadership, and all our members across Canada,’ says Deepak Dave, the organization’s long-standing representative in Nairobi and Chief Risk Officer at the African Trade Insurance Agency.

‘The joint intended results of the co-operation agreement between CACB and KEPSA seeks to increase two-way trade and investment between Canada and Kenya in all sectors – while laying the foundations to explore trade missions to Kenya by The Canada-Africa Chamber of Business and to Canada by KEPSA,’ said Sebastian Spio-Garbrah, Chair of The Canada-Africa Chamber of Business.

Guided by this MOU, CACB and KEPSA will work together towards on a case-by-case basis exploring events together, exchange of business information and reciprocity members of the Kenya Private Sector Alliance to enjoy the privileges of membership afforded to CACB members, and to ensure KEPSA members are well-positioned in the Canadian market for investment and trade in all sectors and that CACB members are well-positioned in the Kenyan market for investment and trade in all sectors.

“As KEPSA, we remain committed to establishing progressive business and trade partnerships with Canada and other similar minded parties for a mutual benefit of our members as well as those of our CACB counterparts,” said Ms. Carole Kariuki Karuga, KEPSA CEO.

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Economy

India, Spain, the Netherlands, USA, Nigeria’s Major Export Markets -NBS

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India, Spain and the Netherland top Nigeria’s export markets in the final quarter of 2020, according to the latest data from the National Bureau of Statistics (NBS).

The Commodity Price Indices and Terms of Trade Q4 2020 report showed that the United States and China trailed the three.

However, the NBS revealed Nigeria exports mainly crude oil and natural gas during the period under review.

It, “The major export and import market of Nigeria in Q4 2020 were India, Spain, the Netherlands, United States and China.

“The major export to these countries were crude petroleum and natural gas. The major imports from the countries were motor spirits, used vehicles, motorcycles and antibiotics.”

The bureau stated that the all-commodity group import index increased by 0.13 per cent between October and December 2020.

This was driven mainly by an increase in the prices of base metals and articles of base metals (one per cent), boilers, machinery and appliances; parts thereof (1.03 per cent), and products of the chemical and allied industries (0.75 per cent),” it stated.

The NBS, however, noted that the index was negatively affected by animal and vegetable fats and oils and other cleavage products.

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Economy

Onyeama: Qatar To Invest $5bn In Nigeria’s Economy

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The oil-rich state of Qatar is to invest a total of $5 billion in Nigeria’s economy, the Foreign Affairs Minister, Godfrey Onyeama, has disclosed.

Onyeama, who spoke Sunday at a send forth dinner in honour of Nigeria’s Ambassador-designate to the State of Qatar, who is also the outgoing Director of Protocol (DOP) at the State House, Ambassador Yakubu Ahmed, also stated that recent career ambassadorial appointments made by the gederal government was based on merit, experience and professionalism.

The minister further said there had been discussions with Qatar on partnership with Nigeria’s Sovereign Wealth Fund (SWF), for significant investments in the region of $5 billion in the Nigerian economy.

According to him, ‘‘Qatar is a weighty and strategic country and very strategic in that part of the world and we are putting our best feet forward to advance the interest of our country economically and in other areas.”

He recalled that President Muhammadu Buhari had visited the State of Qatar in 2016 and the Emir of Qatar, Tamim Bin Hammad Al-Thani, reciprocated with a State visit in 2019.

Onyeama also explained that only trusted hands with a track record of diligence, experience and professionalism in the Foreign Service were recently appointed career ambassadors by the federal government.

The minister said the appointment of Ahmed and other career ambassadors were predicated on posting dedicated and keen Foreign Service practitioners to serve as image makers of the country.

He said: ‘‘Ambassador Yakubu Ahmed is a dedicated professional with a penchant for rigour and detail. He is very capable and one of the best in the Ministry of Foreign Affairs. He is personable, affable, extremely friendly, dispassionate and objective.

‘‘He is going to head a very important mission, a very important country, reckoned to be one of the richest countries in the world, per capita, and there’s a lot we will be doing with the State of Qatar.”

Also speaking, the Deputy Chief of Staff, Adeola Rahman Ipaye, described the honoree as a ‘‘perfect gentleman, very even-natured and always well turned out’’.

Ipaye said he had no doubt that the newly appointed ambassador would serve the country well in Qatar, adding that: ‘‘We are further encouraged that when he completes this assignment, he would return to serve Nigeria in a higher capacity.’’

In his remarks, the Permanent Secretary, State House, Tijjani Umar, while congratulating the outgoing DOP on his appointment, lauded Ahmed for excellent service to the State House and the nation.

‘‘He served this institution and the nation with the deepest sense of responsibility and it is very important that we establish a tradition where the system appreciates those who have served it well and those who will continue to serve it well,’’ he said.

Umar urged the new envoy to keep very fond memories of his time at the Presidential Villa, assuring him of the prayers and goodwill of all the staff.

Responding, Ahmed thanked President Buhari for the great honour and privilege of making him his principal representative in Doha, Qatar.

The Ambassador-designate pledged to deplore his energy and skill to the promotion of the existing cordial relationship between Nigeria and Qatar, particularly in the areas of economic, political, cultural and consular affairs as well as other key areas.

Ahmed, who joined Nigeria’s Foreign Service in 1993, said during his years in public service he had learnt that ‘‘patriotism, selfless service, diligence, determination and perseverance will always result in the achievement of the desired objective’’.

According to him, these virtues would be his ‘‘watchword’’ in the pursuit of Nigeria’s foreign policy objectives and the attainment of national interests.

The Ambassador-designate singled out for appreciation the Chief of Staff to the President, Prof. Ibrahim Gambari, and the state Chief of Protocol, Ambassador Lawal Kazaure, saying he had learnt a lot working under their mentorship.

He expressed gratitude to the Minister of Foreign Affairs and the Permanent Secretary, State House for giving him the opportunity of a memorable work experience in the State House.

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