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Refund of $2.1B Budget Support Loan Will Hurt State Economy – Governors

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Governors have reached out to Central Bank of Nigeria (CBN) Governor Godwin Emefiele, asking him to halt the plan to start deducting the $2.1 billion budget support loan from allocations due to the states.

“States will collapse if this step is taken. The larger picture is that states won’t be able to pay salaries. Workers will go on strike and everything will be paralysed”, a governor, speaking on behalf of his colleagues, told the media last night.

Emefiele last week said state governments must begin to pay back the Budget Support Loans offered to them by the Federal Government.

He spoke in reaction to the claim by Edo State Governor Godwin Obaseki that the Federal Government printed about N60billion to augment the March revenue before it was shared by the Federation Account Allocation Committee (FAAC) to the Federal, States and Local Governments.

But, from the fact-sheet released by the Progressive Governors Forum, the total distributable revenue for March was N596.94billion.

The forum said due to the shortfall in gross statutory revenues compared to the previous month “an augmentation was made in the sum of N8.65 billion from the Forex Equalization Fund Account.

It said the augmentation brought the total distributable revenue to N605.59 billion.

An investigation by the Nations showed that most governors were shocked by the decision of the CBN to start deducting the $2.1billion loan.

It was learned that apart from personal calls to Emefiele, members of the PGF waded in the controversy generated by Obaseki’s claim.

The PGF statement carpeting Obaseki was said to be part of the rapprochement to the CBN so that the apex bank will stay action on the refund.

PDP governors yesterday gave their backing to Obaseki and chided Emefiele, describing his reaction as “vengeful” and “vindictive”.

A governor, who spoke in confidence with our correspondent, added: “We have already reached out to the CBN governor to stay action on the refund of the $2.1billion. It was apparent that the position of the CBN was a retaliatory action, following Obaseki’s claim.

“Emefiele was obviously angry because Obaseki is in a vantage position to know the truth. At the Nigeria Governors Forum (NGF) level, Obaseki and Governor Nasir El-Rufai of Kaduna are in charge of the committee liaising with the Nigerian National Petroleum Corporation (NNPC) and others. They have the vital indices and they have a full grasp of what is at stake. Their contributions have also been helpful to the government and the NGF members. The anger is based on the fact that Obaseki as an insider should not be Mr. Clean.

“It is not in the interest of all the 36 states and the Federal Capital Territory (FCT) to allow the controversy to linger.

“We are hopeful that Emefiele will look at all the economic indices and defer the refund of the $2.1billion to a timeline when the nation’s economy would have fully recovered from the recession. So far, the economy is fragile and states cannot afford to refund the $2.1billion. The capacity is not just there for us.

“Our total budget is equivalent of about $26billion. The annual budget for the agricultural sector in Brazil alone is about $56billion out of that country’s budget of about $264billion. What the governors are saying is that the Federal Government and the states should collaborate to put the economy back on a sound footing before we start talking of a $2.1billion refund. We all have a lot to do to reset our economy.”

The governor said the CBN is aware that about N120billion (belonging to the Federal Government, the states and the Federal Capital Territory) is being deducted monthly from the cash in the Federation Account for petrol subsidy.

The governor explained that the shortfall from FAAC may linger unless both the Federal Government and the states come together to resolve the issue of fuel subsidy.

The source added: “Despite the increase in oil price, the distributable revenue in the purse of FAAC is not enough for the states because N120billion (belonging to the Federal Government, the states and the Federal Capital Territory) is deducted monthly for fuel (Premium Motor Spirit) subsidy.

“We are already paying about N1.3trillion per annum as fuel subsidy. This means the money we should have used for capital projects is being wasted on subsidies.

“Yet, we hardly consume 60 percent of the refined products. Others are sold in neighboring countries. It is either we remove fuel subsidy or continue to live with the subsidy and shortfall in distributable revenue.”

Banking Sector

Ecobank Partners NiDCOM to Mobilise Nigerians Abroad for National Development

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In a bid to fulfill it’s objectives and mandate, the Pan African Bank has promised to support Nigerians living and working abroad through it’s partnership with NiDCOM.

The Managing Director, Ecobank Nigeria, Patrick Akinwuntan has stated that the bank is privileged to work closely with the Nigerians in Diaspora Commission, (NiDCOM) and will continue to pursue one of its key mandates of helping to enhance the economic development and integration of Africa through its support to Nigerians living and working abroad.

Speaking at the maiden edition of the Diaspora Quarterly Lecture Series with Ecobank as the sole banking partner which took place on Saturday, 8th May 2021, he noted that Ecobank remains a critical bridge for Nigerians abroad, as it has made huge investments in the necessary platforms to enable them connect with home seamlessly. The event held online and had over 2000 participants from across all the continents in attendance.

“Nigerians in the diaspora play a major role in nation building, their contribution goes a long way to catalyse economic development. For us at Ecobank, we are a pan-African institution positioned to foster the economic growth and integration of our continent, so we are particularly pleased to work closely with the Nigerians in Diaspora Commission (NiDCOM), ably led by the Chairman/CEO, Hon Abike Dabiri-Erewa”.

“We are committed to ensuring that every Nigerian living abroad is able to remit home seamlessly and affordably, access viable investment opportunities and as the financial institution of choice for Nigerians abroad, we have deployed the necessary resources to actualise this.” He stated.

The Minister of Interior, Ogbeni Rauf Aregbesola, who was also present, reiterated the readiness of the government to collaborate with Nigerians in the diaspora, highlighting the new processes put in place to facilitate passport issuance, noting that all backlog of passport applications would be cleared by the end of May 2021.

Also speaking, the Hon. Minister of State, Foreign Affairs Amb. Zubairu Dada said harnessing the human capital and material resources of Nigerians in the diaspora towards the socio-economic, cultural, and political development of Nigeria can no longer be ignored. He pointed out that the Nigerian diaspora community is well educated, resourceful, skilled, and exposed to global best practices.

The NiDCOM Chairman/CEO, Hon. Abike Dabiri- Erewa explained that the Diaspora Quarterly Lecture Series is projected to be a major aspect of national discourse, where Nigerians abroad can be kept abreast of the government’s policies, programmes and projects.

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Finance

Increase in Price Boosts Revenue of Dangote Sugar by 41.5 Percent in Q1 2021

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Revenue of Dangote Sugar Refinery Plc rose by 41.5 percent to N67.394 billion in the first quarter (Q1) of 2021 from N47.643 billion recorded in the same quarter of 2020.

According to the leading sugar manufacturer, the increase in revenue was a result of the increase in the price of sugar in the first quarter. The company claimed price adjustment was necessary to mitigate the negative effect of inflation and depreciation on the company.

Volumes only rose by 5.7 percent during the quarter despite a 41.5 percent increase in revenue, meaning the increase in price was the main sales catalyst.

In the company’s unaudited financial statements, gross profit grew from N12.721 billion in Q1 2020 to N18.044 billion in Q1 2021.

Similarly, operating profit stood at N15.884 billion, up from N10.747 billion posted in Q1 2020.

Finance cost more than double from N1.353 billion in Q1 2020 to N3.412 billion in Q1 2021.

Dangote Sugar’s profit before tax rose from N9.509 billion recorded in the corresponding quarter to N11.949 billion in the quarter under review.

The company paid N3.646 billion in income tax, slightly higher than N3.137 paid in the same quarter of 2020.

Profit for the period grew from N6.372 billion in Q1 2020 to N8.302 billion in Q1 2021.

Commenting on the company’s performance, Dangote Sugar said “EBITDA increased by 34.7% to N17.02 billion (2020: N12.64 billion) on account of increased earnings. Group profit after taxation for the period increased by 30.3% to N8.30 billion (2020: N6.37 billion) reflecting management’s unrelenting drive to deliver consistent shareholder value.”

On price increase, the company hinged it on series of devaluation carried out in 2020 by the Central Bank of Nigeria (CBN), escalating inflation, port congestion and rising in price of global sugar. Dangote Sugar said its imported raw sugar from Brazil under Federal Government’s backward integration plan.

We have continued to witness high cost of raw materials, energy costs and other input costs due to rising inflation and FX rate fluctuation. Further cost escalation is anticipated in the year as inflationary pressure mounts,” the company said.

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FBN Holdings Suffers 39 Percent Drop in Profit to N15.6 Billion in Q1 2021

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FBN Holdings Plc profit after tax declined by 39 percent from N23.140 billion recorded in the first quarter (Q1) of 2020 to N15.6 billion in the first quarter of 2021.

In the leading financial institution’s unaudited financial statements released through the Nigerian Exchange Limited, gross earnings declined by 14.5 percent to N137 billion in the period under review, down from N160 billion filed in the previous quarter.

Similarly, net interest income declined from N60.253 billion achieved in Q1 2020 to N52.793 billion.

Net interest income after impairment charge for losses also dipped from N50.547 billion in Q1 2020 to N39.619 billion in Q1 20201. While net fee and commission income rose from N20.773 billion in Q1 2020 to N28.427 billion in Q1 2021.

Profit before tax declined by 34 percent to N18.906 billion in the quarter under review, down from N28.680 billion posted in the corresponding quarter of 2020.

FBN Holdings paid N3.285 billion in income tax in the first quarter of 2020.

Therefore, profit for the period stood at N15.621 billion. While Net Assets contracted from N765.2 billion to N764.8 billion.

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