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NLC, Experts Lambast FG Over High Rail Projects’ Cost

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rail project- Investorsking
  • NLC, Experts Lambast FG Over High Rail Projects’ Cost

The Nigeria Labour Congress, the Centre for Social Justice and other economic analysts have lambasted the Federal Government over the high cost of rail projects under construction in parts of Nigeria.

According to them, the costs of such projects in other African countries are far lower than what obtains in Nigeria, as they described the development as worrisome and unfortunate.

Their reactions were prompted by the recent announcement that Ghana signed a Memorandum of Understating with China Railway Construction Corporation to build a 560km railway line for a contract price of $2bn, while Nigeria is spending the same $2bn on 156km Lagos-Ibadan rail project, which is being constructed by the China Civil Engineering Construction Corporation.

Commenting on the development, the Secretary-General, NLC, Peter Ozo-Esan, told our correspondent, “There has been a general worry about cost competitiveness in infrastructural development in Nigeria. Historically, we have always noticed that the construction of roads and the development of other infrastructure in Nigeria cost multiple times more than the cost in other countries and this is worrisome.

“There is no doubt at all that rail development is very welcomed and there is a need to invest more. However, this needs to be done in a cost-effective manner so that we get value for our money.”

He added, “I have also heard of comparison between what is done in Ethiopia and Nigeria in rail development by the Chinese as well and in every case, the cost is always highest in Nigeria and that is extremely worrisome. The Lagos-Ibadan axis is not a coastal area for you to say it is affected by terrain.

“So I think the whole issue of how transparent our budgetary process is and our tendering process and what we pay for infrastructural development need to be visited very squarely if we are to benefit and develop from investments in these areas.”

Ozo-Esan noted that those who brought the facts from the international arena for comparison were doing the country a lot of good, adding that the NLC “will stand to support any call for the government to defend the type of figures that they give and the type of cost that they place on this infrastructure.”

The Lead Director, CSJ, Eze Onyekpere, described the situation in Nigeria as unfortunate, stressing that the Lagos-Ibadan area was not a coastal area and should not warrant such huge fund, judging by what Ghana would spend on its over 500km railway project.

He said, “My first reaction is that there are international benchmark prices for doing kilometres of either roads or rail lines across similar terrains. Once the environment and ecological conditions are the same, it is expected that the cost should be the same.

“But if they differ, it may cost more to do it on maybe wetlands and the kind of environment we have in the Niger Delta, compared to if you are doing it on drylands like Abuja. But beyond that, it does appear that what we have in Lagos-Ibadan is not particularly challenging terrain.”

Onyekpere added, “It is quite a dry zone and what we understand is happening in Ghana is also the same dry land. So on the surface of it, you will understand that some mischief has happened. The contract must have been over-invoiced or there is corruption and some people may have made so much from it.

“So, it is a very crooked situation because we have a closed-door procurement system where due process and value for money are only on paper and have nothing to do with the actual value for money. It is an unfortunate scenario.”

A former President, Association of National Accountants of Nigeria, Dr Sam Nzekwe, said the Federal Government failed to thoroughly go through the terms of agreement with China before entering into railway construction agreements.

He said, “In many of the agreements between Nigeria and China, our country was not able to thoroughly look at the terms. This is because, in the agreements for the rail sector, you will observe that the machinery, rail tracks and almost every other thing about the rail were given to China.

“We’ve noticed that the tracks, bolts, nuts, machines and some good amount of labour are all coming from China. So the Asian country factored everything into the agreements, which our people here in Nigeria did not look at critically.”

Nzekwe added, “So technically, Nigeria has paid that loan but she still owes the money. China is coming with everything, as well as raw materials for the projects and there is no local content in the agreements. Our ministers and government got it wrong when it comes to factoring local content in the agreements.

“Are you saying we cannot manufacture a good number of things being used for the construction of those rail lines? Why is local content so low in the construction of the rail lines? The ministers and government officials who signed those contracts are all jokers.”

Another analyst stated that it was annoying to know that ministers and government officials in Nigeria failed to scrutinise the details of the agreement with China for the various railway construction projects.

“I’ve seen that story about Ghana and what it signed with the Chinese construction company and it is sad that we are spending such amount for a similar project that is far less than what is to be constructed in Ghana,” the analyst, who preferred not to be named due to his level of involvement with the government, stated.

“Our politicians are really failing us and this is so annoying. We hope there will be some form of probe of this issue,” the analyst added.

It was recently reported that Ghana’s moribund railways’ infrastructure received a reconstruction funding of $2bn following the MoU signed by Ghana’s Minister of Railways Development and CRCC, a Chinese construction conglomerate.

However, Ghana’s Minister of Railway Development, Joe Ghartey, said the MoU with the China Railway Construction Corporation Corporation (International) Nigeria Limited (CRCC-Nigeria) has been cancelled “for breach of confidentiality.”

Ghana had signed an MoU with CRCC- Nigeria for the construction and rehabilitation of a 560-kilometre standard gauge railway line.

However, after a report in an online newspaper, TheCable, comparing railway contract costs in Ghana with Nigeria’s, the minister came under pressure to do “damage control.”

In a statement sent to TheCable on Monday, Ghartey was said to have acknowledged that the ministry signed an MoU with CRCC-Nigeria.

TheCable had reported that CRCC offered to rehabilitate and construct a 560-kilometre standard gauge railway line for Ghana at $2bn, with terminals at Aflao and Elubo.

“Messrs CRCC-Nigeria expressed interest in supporting the ministry to develop and modernise Ghana’s railway network, particularly the Trans-ECOWAS line, which runs along the coast between Aflao, on the border with Togo, and Elubo, on the border with Cote d’Ivoire,” the statement read.

“The purpose of the MoU is for CRCC-Nigeria to undertake feasibility studies through the use of independent consultants.

“CRCC-Nigeria is responsible for verifying the project cost as estimated by the feasibility studies and also raise capital to finance the project.”

However, the minister said his ministry had yet to respond to a proposal by CRCC-Nigeria to establish assembly plants for building locomotive coaches and wagons.

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

Finance

President Tinubu Orders Release of Minors Prosecuted for #BadGovernance Protests

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Following a recent viral video on the X app regarding the prosecution of minors who protested during the #BadGovernance movement, President Bola Ahmed Tinubu has ordered the immediate release of all prosecuted minors.

This was announced by the Minister of Information and National Orientation, Mohammed Idris, in a statement to the State House Correspondents in Abuja.

In a show of concern over the detention of minors, President Tinubu directed the Ministry of Humanitarian Affairs and Poverty Reduction to investigate and ensure that the law is fully applied to law enforcement agents involved in the unlawful act.

It was noted that the arrests violated human rights and the Child Rights Act, as the 32 detainees are under 18 years old.

Activist organizations, including the Arewa Consultative Forum (ACF), National Human Rights Commission (NHRC), Civil Society Legislative Advocacy Centre (CISLAC), Resource Centre for Human Rights and Civic Education (CHRICED), and Concerned Parents and Educators (CPE), condemned the actions and denounced the treason charges filed against the detained minors.

In a call to action, the Socio-Economic Rights and Accountability Project (SERAP) urged the president to instruct the Attorney General of the Federation and Minister of Justice, Lateef Fagbemi, SAN, to immediately and unconditionally release all protesters arrested during the #EndBadGovernance movement.

SERAP stated, “The immediate and unconditional release of all #EndBadGovernance protesters, including 32 hungry and malnourished children, is necessary.”

According to SERAP, for the peaceful exercise of fundamental human rights, including freedom of expression, assembly, and association without fear of persecution or undue restriction, all detained protesters should be released.

In response to the president’s directive, the Attorney General of the Federation (AGF), Lateef Fagbemi, commented that his office “will need to review the matter to enable me to make an informed decision.”

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Banking Sector

FBN Holdings To Invest N103.1bn In Corporate, Retail Businesses

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FBN Holdings

As part of means of actualizing its expectation of raising N150 billion from its existing shareholders by way of rights issue, the management of FBN Holdings said it has budgeted an estimated N103.1 billion for its corporate business and retail business lending segments of the market.

The Holdings recently held the signing ceremony to begin the rights issue offering of 5,982,548,799 ordinary shares of 50 kobo each at N25.00 per share to its existing shareholder on the basis of one new ordinary share for every six ordinary shares held as of October 18, 2024.

Extracts from the offer raising prospectus of the financial institution revealed that lending to the corporate business segment gets N77.34 billion, while lending to the retail business segment gets a budget of N25.78 billion.

This covers 68.95 per cent of the N150 billion proposed rights issue the management seeks to raise from existing shareholders.

Out of the N150 billion, a total of N29.46 billion was budgeted to support international business expansion and N14.73 billion for investment in automation and digital banking.

According to the financial institution, seamless and convenient banking experience for its customers would be guaranteed through its significant investment in automation and digital banking.

Through its mobile banking app, FirstMobile, and its internet banking platform, FirstOnline, the management of FBN Holdings said it has effectively acquired a broad cross-section of the target demography, with a clear proposition of owning bank accounts and utilising various financial services from the comfort of their locations.

It added that the bank plans to upgrade the FirstMobile and FirstOnline apps with additional features while driving customer adoption of the platforms, noting that the development is in line with First Bank’s commitment to providing customers with the best-in-class electronic banking experience.

The offer, however, is part of the company’s plan to recapitalise its commercial banking subsidiary, First Bank of Nigeria Limited,  with a view to increasing the bank’s capacity for business development and growth.

Chairman, FBN Holdings, Olufemi Otedola in a statement from the document urged shareholders to support the Rights issue by accepting their rights, stating that the company will be well positioned to achieve its strategic objectives and to deliver improved returns to all stakeholders.

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Finance

Currency Outside Banks Increases By 66.2% As Nigerians Shun Formal Banking Channels

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New Naira notes

A recent data has revealed that currency outside banks increased by 66.2 percent in September 2024.

To this end, money outside traditional banking channels rose to N4.02 trillion compared to N2.42 trillion reported in September 2023.

This represents an increase of N1.60 trillion in just one year.

This was revealed in the Money and Credit Statistics data of the Central Bank of Nigeria.

According to the data, on a month-on-month basis, currency outside banks grew by 3.8 percent in September 2024 from August’s figure of N3.87 trillion, translating to an increase of N147.9 billion.

The trend suggests a growing inclination among the public to retain cash outside formal banking channels, a shift that could impact banks’ liquidity and shape monetary policy dynamics.

The CBN data further shows that a considerable proportion of Nigeria’s currency is held outside the banking system.

In September 2024, approximately 93.1 percent of currency in circulation was outside banks, a rise from 87.5 percent recorded in September 2023.

This shift may reflect limited trust in banking services, inflationary pressures, or a structural dependence on cash in Nigeria’s largely informal economy.

Such a high percentage of currency outside banks poses potential challenges for channelling funds into productive investments, potentially hindering economic growth.

The CBN report also highlights a parallel rise in overall currency in circulation, which encompasses both bank-held and outside cash.

In September 2024, currency in circulation rose beyond 56.1 percent year-on-year to reach N4.31trn, up from N2.76trn in September 2023, reflecting an increase of N1.55trn.

This indicates that the volume of currency retained outside the banking sector outpaced the total released for circulation within the past year.

Compared to August 2024, currency in circulation rose by 4.0 percent month-on-month, adding N166.2bn from the previous figure of N4.14trn.

Earlier in September, the CBN announced plans to sanction banks that fail to dispense cash through their automated teller machines, as part of efforts to improve cash availability in circulation.

The CBN also revealed plans to release an additional N1.4 trillion into circulation over the next three months to ease cash flow within the banking system.

This strategy aims to ensure that ATMs and bank branches have sufficient cash, addressing ongoing challenges faced by customers over cash shortages.

In related developments, it was observed that Nigeria’s money supply grew significantly by 62.8 percent year-on-year in September 2024, despite the Monetary Policy Committee’s tightening stance intended to manage excess liquidity to control inflation.

According to CBN data, M3 reached N108.95 trillion in September 2024, up from N66.94 trillion in the same period last year.

On a month-on-month basis, money supply rose by 1.6 percent, increasing from N107.19trn in August 2024.

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