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Nigeria Lost $10.3bn to Boko Haram, Armed Insurgency in 2020

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The activities of banditry, Boko Haram insurgency, farmers-herdsmen conflict, separatist agitation and organised violent groups, among others, cost the federation a whopping sum of $10.3 billion in 2020, the Presidential Economic Advisory Council (PEAC) has disclosed.

The economic council gave the figure in a document presented during its sixth regular meeting with President Muhammadu Buhari at the State House, Abuja penultimate Friday, detailing the socio-economic cost of insecurity across the federation.

Buhari had constituted the council under the chairmanship of Prof Doyin Salami to replace the Economic Management Team (EMT), which Vice-President Yemi Osinbajo earlier set up to advise the National Economic Council.

The council, at its sixth regular meeting, dissected the country’s economic environment with a strong indication that insecurity resulting from Boko Haram insurgency, political violence, resource-based violence, organised violence and farmers-herdsmen conflicts had crippled economic activities nationwide and contracted the country gross domestic product (GDP) by 2.6 percent in 2020.

The council cited the grievous consequences of ethno-religious conflicts mostly caused by suspicion and distrust among various ethnic groups and among the major religions in the country.
Examples of such conflicts, as the council documented in its 33-slide presentation, are Boko Haram, conflicts in Southern Kaduna as well as farmers-herdsmen clashes in the Middle Belt, especially Benue State.

The council observed that there was a general consensus of a worsening of the security situation in Nigeria, which it said, included competition for power and ultimately resources, usually around the general election.

Resource based violence, according to the council in its presentation, comprised competition for economic opportunities driven by illegal mining in some states, kidnapping for ransom, Niger Delta militants and pirates and recent farmer-herder conflicts.

The council dissected the dynamics of violent farmers-herdsmen conflict, mainly among groups that peacefully co-existed previously, exacerbated by infiltration of foreigners on the one hand and climate change and environmental challenges on the other hand.

Citing incontrovertible statistical evidence, the council claimed that nationwide insecurity had multidimensional implications, especially for economic and human development.

In terms of economic cost, the council disclosed that insecurity had cost Nigeria $10.3 billion or 2.6 percent of the GDP, which dropped $568.5 billion in 2014 to $375.75 billion in 2017 and rose to $448.12 billion in 2020. The presidential council equally cited a study by the United Nations Development Programme (UNDP) estimating that Nigeria lost $141.9 billion of production to security related violence between 2007 and 2019, a period of 16 years.

The council analysed the impact of human capital, which according to its slide presentation escalated the population of out-of-school children to over 13 million and significantly reduced life expectancy nationwide.

While it claimed that extreme poverty in the conflict zones was accentuated by conflict, the council observed that the unemployment rate, currently standing at 33.33 percent, had steadily increased since 2014, in line with worsening insecurity, thus adding to the population of persons that had fallen below the poverty line.

At large, the council said: “Conflicts and heightened insecurity reduce business confidence, manifested in declining foreign and domestic investment, deteriorating financial sector performance, higher fiscal cost and security spending.”

Consistent with PEAC’s report, as shown in complementary data obtained from the NBS, the volume of the FDI inflow dropped from $2.28 billion in 2014 to $1.03 billion in 2020, accounting for 54.83 percent.

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Economy

COVID-19: IMF Rolls Out $50 Billion Trust Fund, Targets Low-income, Vulnerable Countries

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IMF global - Investors King

The COVID-19 pandemic, no doubt, has had significant economic consequences, especially on low-income and less developed countries.

It is in view of this that the International Monetary Fund (IMF) proposed a $50 billion trust fund to help these low-income and vulnerable middle-income countries build resilience and ensure a sustainable recovery through a Resilience and Sustainability Trust (RST), Investors King has learnt.

The RST’s central objective is to provide affordable long-term financing to support countries as they tackle structural challenges.

According to the IMF, broad support from the membership and international partners will further aid in the approval of the RST by the IMF Executive Board before the upcoming Spring Meetings and for it to become fully operational before the end of the year.

Apart from the pandemic, climate change is another long-term challenge that threatens macroeconomic stability and growth in many countries through natural disasters and disruptions to industries, job markets, and trade flows, among others.

Hence, the RST support aims to address macro-critical longer-term structural challenges that entail significant macroeconomic risks to member countries’ resilience and sustainability, including climate change, pandemic preparedness, and digitalization.

The IMF and World Bank staff have worked closely to develop a coordination framework on RST operations on climate risks, building on earlier experience in supporting countries with structural reforms. Similar frameworks with relevant institutions are expected to be developed in the coming months in this and other reform areas.

Meanwhile, to qualify for the RST support, an eligible member would need a package of high-quality policy measures consistent with the RST’s purpose; a concurrent financing or non-financing IMF-supported program with appropriate macroeconomic policies to mitigate risks for borrowers and creditors; and sustainable debt and adequate capacity to repay the Fund.

The RST would be established under the IMF’s power to administer contributor resources, which allows for more flexible terms, notably on maturities, than the terms that apply to the IMF’s general resources.

Consistent with the longer-term nature of balance of payments risks the RST seeks to address, its loans would have much longer maturities than traditional IMF financing.

Specifically, 20-year maturity and a 10-year grace period has been proposed.

 

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FG Suspends Removal of Fuel Subsidy Over Inflation Concerns

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Nigerian petrol station

The Federal Government has suspended plans to remove fuel subsidy by the end of the first half of 2022 over heightened inflation, according to the Minister of Finance, Mrs. Zainab Ahmed.

The Minister made the statement at a meeting with President of the Senate, Sen. Ahmad Lawan, at the National Assembly on Monday.

She said the removal of fuel subsidy at any time this year could escalate inflationary pressure in the country.

“We discovered that practically, there is still heightened inflation and that the removal of subsidy would further worsen the situation and impose more difficulties on the citizenry,” Ahmed said at the meeting.

“Mr. President does not want to do that. What we are now doing is to continue with the ongoing discussions and consultations in terms of putting in place a number of measures.

“One of these include the roll-out of the refining capacities of the existing refineries and the new ones which would reduce the amount of products that would be imported into the country.

“We, therefore, need to return to the National Assembly to now amend the budget and make additional provision for subsidy from July 22 to whatever period that we agreed was suitable for the commencement of the total removal.”

Agusto&Co, a research, credit ratings and credit risk management firm, had projected the same thing in its economic outlook for 2022 sent to clients. The firm had argued that it was impossible for the current administration to remove fuel subsidy given its little political capital.

The firm said no, the FGN can not remove subsidy in full in 2022 because “this is a tough political decision that we believe is best made by a government with a large amount of political capital. Current government has ruled for seven years, has about a year left and has little political capital to expend.”

Augusto further stated that the federal government is not likely to boost infrastructure spending in 2022 “because the ability of government to invest in infrastructure will still be constrained by weak tax revenues and high operating expenses.”

Therefore, it said the government cannot fully fund Nigeria’s 17 trillion budget as its revenue is limited to ₦5 trillion and funding sources are constrained.

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Economy

World-class Lekki Seaport to Start Operations by 2022 Ending

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The total works presently carried out on the Lekki Deep Seaport Project in Lagos have amounted to 80 percent of the completion stage. The proposed world-class seaport has been scheduled to begin port operations by the end of 2022.

 This was revealed during the inspection of the port project construction on Saturday, by the Minister of Transportation, Chibuike Amaechi.

Speaking on the progress of the project, Amaechi stated that in less than five months, a lot of civil work had been done.

He commended the contractors for the work done so far while urging them to speed up the work.

“I want to congratulate you for the very huge progress. By the time we came here, there were no civil works; it was just pure sand. You have tried.

“I am suggesting that if you work day and night you will go far and complete the work before commissioning. If the President sees it, approval will be easier,” Amaechi said.

The minister further stated that prompt completion of the project will enable the government to approve all the necessary processes before the next election, adding that six months into the election, government officials would get busy with politics and would be hardly met in their offices.

He advised that more machines should be deployed to the port to aid output and reduce physical contact.

Also speaking, the Chief Technical Officer of Lekki Port, Steven Heukelom, stated that the ongoing project construction was in place as scheduled.

Heukelom explained that the port dredging and reclamation works had attained 89.93 per cent of completion, Quay Wall 85.65 per cent, Breakwater 79.66 per cent, and the landside infrastructure development 67.82 per cent; all amounting to 80 per cent completion stage approximately.

He mentioned that work had begun on the marine services jetty, which would be used by the Nigerian Ports Authority, NPA for marine services.

He appreciated the Acting Managing Director, Mohammed Bello-Koko for his support and preparations for the seaport operations to kick-start.

Bello-Koko, however, revealed that the NPA has made provision for tug boats and other infrastructure for the smooth operation of the Lekki deep seaport.

Investors King gathered that Tolaram and China Harbour Engineering Company is in charge of the Lekki seaport construction while the Lagos State Government and Nigerian Ports Authority are shareholders in the project company.

The Chief Operating Officer of Lekki Port, Laurence Smith, noted that the company is working tirelessly to deliver the project by the fourth quarter of 2022.

Smith affirmed that after completion, the Lekki seaport would be a world-class port and would be a regional distribution and transhipment hub for the African continent.

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