Connect with us

Economy

Fuel Subsidy, Debt Servicing Pushing Nigeria into Bankruptcy — Sanusi

Published

on

  • Fuel Subsidy, Debt Servicing Pushing Nigeria into Bankruptcy — Sanusi

The Emir of Kano, Mallam Muhammad Sanusi II, has warned that Nigeria is on the verge of bankruptcy as fuel and electricity subsidies, as well as debt servicing, continue to eat into government revenue.

Sanusi, who is a former governor of the Central Bank of Nigeria, said this while delivering his address at the ongoing third National Treasury Workshop, organised by the office of the Accountant-General of the Federation in Kano.

He advised President Muhammadu Buhari’s administration to scrap fuel and electricity tariff subsidies in order to stabilise the economy.

He said, “In 2011, when I was CBN governor, Nigeria made $16bn from petroleum sales, and we spent $8bn importing petroleum and spent another $8.2bn subsidising the product…and I asked, ‘Is this sustainable?

“The country is bankrupt and we are heading to bankruptcy. What happens is that the Federal Government do pay petroleum subsidy, pays electricity tariff subsidy, and if there is a rise in interest rates, the Federal Government pays. What is more life-threatening than the subsidy that we have to sacrifice education, health sector and infrastructure for us to have cheap petroleum?”

Sansui said, “If truly President Buhari is fighting poverty, he should remove the risk on the national financial sector and stop the subsidy regime, which is fraudulent.”

He said the President must tell Nigerians the facts about the economic situation and act promptly to address it.

Sanusi told the participants at the workshop, “We need to ask these questions: why are there high mortality rates, malnutrition, high rate of out-of-school children, among others, while the national treasury goes to petroleum sector?

“In 2016, we were told that we are consuming 28 million litres of petrol per day and just a few weeks ago, we were told that it has jerked up to 60 million litres daily; what went wrong? Since I have decided to come here, you have to accept what I have said here. And please, if you do not want to hear the truth, never invite me.”

The Emir expressed worry about the state of public finance in the country, saying there were a number of very difficult decisions that must be made.

He said, “We should face reality. His Excellency, the President, said in his inaugural speech that his government would like to lift 100 million people out of poverty. It was a speech that was well received, not only in this country but worldwide.

“The number of people living in abject poverty in Nigeria is frightening. By 2050, 85 per cent of those living in extreme poverty in the world will be from the African continent, and Nigeria and the Democratic Republic of Congo will top the list.

“Two days ago, I read that the percentage of government revenue going to debt servicing had risen to 70 per cent. These numbers are not lying. They are public numbers. I read them in the newspapers. When you are spending 70 per cent of your revenue on debt services, then you are managing 30 per cent.

“And then, you continue subsidising petroleum products and spending N1.5tn per annum on petroleum subsidy! And then we are subsidising electricity tariff. And maybe, you have to borrow from the capital market or the Central Bank of Nigeria to service the shortfall in the electricity tariff. Where is the money to pay salaries? Where is the money for education and other government projects?”

In his address at the workshop, the Chairman, Economic and Financial Crimes Commission, Mr Ibrahim Magu, stressed the need to tackle corruption in the country and warned public and private office holders to desist from corrupt practices.

Economic and financial experts, who spoke with our correspondents in separate interviews, expressed divergent views on the Emir’s statement that the country was heading towards bankruptcy.

The President, Lagos Chamber of Commerce and Industry, Mr Babatunde Ruwase, said the chamber had always stood against petrol subsidy, adding that it was not economically healthy to keep subsidising consumption.

He said instead of subsidising consumption, the money should be channelled into capacity building in the educational sector, health and other ventures.

“Productive ventures like farming should benefit from subsidy and not consumption. If we continue the way we are going, it is only a miracle like a sudden and astronomical rise in the global price of crude oil that will save us; otherwise, the nation will definitely go bankrupt,” he added.

According to Ruwase, the current subsidy regime is not sustainable and is open to abuse and fraud.

On electricity tariff, he said, “If the government wants investors to come into the electricity sector, it has to relax its control and allow the economic cost to determine the tariff. The current tariff we have was set three years back and it is lower than the cost of investing in the sector.”

The Registrar, Chartered Institute of Finance and Control of Nigeria, Mr Godwin Eohoi, described the nation’s debt service cost as high but said it could not make the country go bankrupt.

According to him, there are many areas that the country can explore to generate much-needed revenue.

He, however, said the over-reliance on oil had made it difficult to focus on the revenue-earning potential of the non-oil sector.

He said, “The debt profile of Nigeria is very high and there is no doubt about it. But we have revenue that can sustain it and there is the capacity to do more. I don’t see Nigeria going into bankruptcy. There is no doubt that we have high debt profile but the revenue we are generating is gradually increasing and there is an aggressive drive by all the agencies of government to boost revenue generation.

“While I agree with the Emir that the amount spent on debt service is high, I disagree with him that it will lead us to bankruptcy. The government has given an indication that revenue would be increased; so, if that is achieved, then we can avoid bankruptcy.”

When asked if he was in support of the removal of subsidy, he said, “Subsidy is an issue that has lingered for long and it will take the political will for it to be removed. There is no political will to remove it now.”

A former President, Association of National Accountants of Nigeria, Dr Sam Nzekwe, described the Emir’s statement as a wake-up call to the government to make things work better in the economy.

He said, “It is subjective that Nigeria is heading to bankruptcy, but I think what he is trying to say is that because of our dependency on oil when there is internal and external volatility or attack on oil pipes, we will not be able to produce as much.

“If there is volatility in prices, then there will be a problem. We have not been able to get the economy working as we are supposed to. A country whose economy is not producing and the population is growing faster than the economy is a problem. The government is still the driver of the economy, but we need to get the private sector to drive the economy. We need to create an enabling environment for things to work, provide critical infrastructure for the private sector to join.”

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)

Published

on

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.

Continue Reading

Economy

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

Published

on

Institute of Chartered Shipbrokers

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.

Continue Reading

Economy

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

Published

on

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.

Continue Reading

Trending