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NLC, Experts Lambast FG Over High Rail Projects’ Cost

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  • 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.

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.

Banking Sector

Unity Bank Posts N2.09 Billion Profit Despite N4 Billion Revaluation Loss in 2020

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Unity Bank Plc, one of Nigeria’s leading financial institutions, grew profit after tax to N2.09 billion in the financial year ended December 31, 2020.

The lender profit before tax stood at N2.22 billion in the year under review while assets rose by astonishing 67.90 percent from N293.05 billion in 2019 to N492.02 billion in 2020.

In the audited financial statements released on Monday, Unity Bank grew its gross loan portfolio by 92.9 percent from N106.9 billion recorded in December 2019 to N206.2 billion in December 2020.

The almost 100 percent jumped in credit provision highlighted the bank’s strategy at deepening support for farmers, improving food security and enhancing new job creation for thousands of youths and entrepreneurs.

During the bank’s earnings call on Monday, Mr. Kolawole Ebenezer, the Executive Director and Chief Financial Officer, Unity Bank Plc, explained that the bank has been able to cut down on its Non-performing loan to near-zero percent by adopting a strategy that allows the lender to focus on farmers and at the same time implement strategy that mitigates security challenges.

Unity Bank grew its net operating income by 9.71 percent to N25.46 billion in 2020, up from N23.21 billion in the corresponding period of 2019. Similarly, net interest income rose by 7.60 percent to N17.75 billion in 2020 from N16.49 billion in 2019 while earnings per share stood at 17.85 kobo.

In spite of COVID-19 disruption, Unity Bank grew customers’ deposit portfolio by 38.4 percent to N356.62 billion, up from N257.69 billion filed in 2019. This indicates market acceptance of the bank’s product offerings and series of technological integration launched during the year under review to ease banking challenges, especially as the world struggles with the COVID-19 pandemic.

Bismarck J. Rewane, the Managing Director and Chief Executive Officer of Financial Derivatives Company Limited, who spoke during the earnings call on Monday, said Unity Bank is operating like a tier I bank despite its obvious limitations and highlighted the broad-based growth the bank has recorded in recent years.

The economic think tank further explained that if the bank’s N4 billion revaluation loss is added to profit after tax declared, the bank would have declared N6 billion. This does not include the adjustments made by the Central Bank of Nigeria to the interest rate charged on agric loans that eroded interest income on loans by over 30 percent.

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Finance

Nasdaq Set To Launch Options Trading For Coinbase Global

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Less than a week after the largest crypto exchange in the U.S. Coinbase was listed, Nasdaq is set to start trading options for Coinbase Global.

According to Reuters, a representative for Coinbase stated that the COIN.O options will start trading on Nasdaq on Tuesday, April 20.

The launch of equity options will offer a new way for investors to bet on the fortunes of Coinbase. Equity options represent the right, but not the obligation, to buy or sell a stock at a certain price, known as the strike price, on or before an expiration date.

The news follows Coinbase’s direct listing, which saw the firm’s stock fluctuate between a valuation of $429.54 and $310 on its first day of trading.

It was reported that the Chief Executive Officer of Coinbase, Brian Armstrong sold less than 2% of his holdings which worth about $292 million in shares on COIN’s first day of trading. According to filings made with the U.S. Securities and Exchange Commission, Armstrong sold 749,999 shares in three batches at prices ranging from $381 to $410.40 per share for total proceeds of $291.8 million.

It was also reported that insiders dumped nearly $5 billion in COIN stock shortly after it was listed. Filings on the Coinbase Investor Relations website showed a total of 12,965,079 shares were sold by insiders, worth over $4.6 billion at COIN’s $344 share price at close on Friday.

Yahoo Finance reported the stock has slumped 22.5% from a high of $429.54 on April 14 to a current after-hours trading price of $332.75 where it appears to have settled after Monday’s trading session.

On April 20, Coinbase Pro announced that will add support for new trading pairs for Basic Attention Token (BAT), Cardano (ADA), Decentraland (MANA), and USDC from April 20. The four assets will be paired with three fiat currencies (USD, EUR, GBP), BTC, and ETH, with limited trading functionality to be made available while market liquidity is assessed at launch.

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Banking Sector

Unity Bank Grows Asset by 67.90% to N492.02 Billion, As Gross Earnings Hit N42.71 Billion in FY 2020

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Unity Bank Plc grew its assets base to N492.02billion representing a significant increase of 67.90% from the N293.05 billion of total assets value recorded in 2019. This is even as the agric-focused lender declared gross earnings of N42.71 billion within the period under review.

A review of the Bank’s audited results for full-year ended 31 December 2020, released to the Nigerian Stock Exchange, showed that the Bank improved its bottom line marginally as Profit After Tax, PAT stood at N2.09 billion. Profit Before Tax, PBT closed at N2.22 billion, in a year that was defined by the unmitigated impact of global pandemic characterized by disruptions in business activities and the general downturn that resulted in revenue/returns dip in major leading sectors globally.

The lender substantially grew its customers’ deposit portfolio to N356.62 billion, up from N257.69 billion in the corresponding period of 2019, representing a 38.4% growth. This affirms positive market uptake of the Bank’s product offerings, as well as the lender’s growing customer base to its recent aggressive push with agile customer-centric products, which has played a role in deepening financial services penetration, especially to a wider world, an underserved spectrum of the retail market.

Other major highlight of the audited financial statement relates to growth in its net operating income which rose to N25.46 billion from N23.21 billion in the corresponding period of 2019, representing a 9.71% increase. This is even as the net interest income recorded a significant jump, as it rose by 7.60% to N17.75 billion from N16.49 billion in the corresponding period of 2019. Earnings per Share closed at 17.85 Kobo.

The Bank’s gross loans portfolio increased by 92.9% to N206.2 billion in December 2020 from N106.9 billion in December 2019. The Bank’s lending strategy was specially tailored to support the nation’s food agenda. This had the added advantage of improving food security across the country, providing employment to thousands of youths and entrepreneurs, contributing to the conservation of FX stocks and mitigating security challenges by ensuring adequate empowerment of citizens and deepening skills acquisition across the value chain.

Commenting on the result, Unity Bank’s Managing Director/Chief Executive Officer, Mrs. Tomi Somefun stated that the results showed the resilience of the Bank during unprecedented times of uncertainties and our ability to innovate and focus on key balance sheet items that will enable us to maintain the growth trajectory.

She further opined that: “Consequently, for the year under review, the opportunities to significantly create more quality assets for the business, thought to have a sustainable impact, informed part of choices made and we have seen some encouraging market uptake in this regard, apart from the benefits to the enterprise bottom-line that have also started trickling in. Other key performance indicators especially on the liability side of the business were equally not left out. The Bank deployed new product features and augmentation supported by omni-channel, USSD promotions and other channels to enhance services delivery efficiency, drive income generation capacities and enhance steady balance sheet growth for the year”.

Looking ahead, Somefun stated: “we will latch on targeted strategies to deploy significant investment in technology in order to ride the waves of the COVID-19 pandemic. On the back of this, the Bank focuses on achieving major efficiency gains, deepening its retail footprints and penetrating identified cluster market segments, as bulwarks to tapping into various youth markets platforms, in addition to the mass market would get a further boost”.

While laying an outlook for the future, the Unity Bank’s Chief further stated: “The Bank is also looking to consolidate on the gains from its core business areas and niche in the agribusiness sector. The Bank has solidly financed over one million farmers over the past three years. These farmers cut across several primary crop production such as rice, maize, cotton, wheat, sorghum, etc coupled with their rich value chains, and we hope to continue to expand on this as we play our part in driving the country’s quest for self-sufficiency in food production.”

Analysts are of the view that has made an appreciable impact in the agribusiness and its value chains consistently, the market is excited that the current year performance and different initiatives of the Bank show that the agribusiness is bankable not only as a differential positioning but also for sustainable business performance and profitability.

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