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Power Sector Needs Over $35B In Investment To Boost Power Supply – FG

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Power - Investors King

The federal government has said that there’s still a lot of financing gap in the country’s power sector, requiring an immediate funding of $30 to $40 billion in the generation, transmission and distribution value chain.

The government stated that from all sources, it expects to spend between $3 billion to $5 billion to boost power supply in the sector in the next 24 months and eventually free itself from the payment of subsidies.

Speaking during a television programme on the challenges and prospects of the power sector, Special Adviser to President Muhammadu Buhari on Infrastructure, Mr. Ahmad Zakari, noted that the sector is currently bedeviled by three major classes of challenges.

He grouped the systemic challenges as regulatory, fiscal and infrastructural, explaining that for years, Nigeria had a situation where distribution companies were buying power at high prices but were only allowed to sell at low prices by the government.

But he noted that the current administration has gone a long way to correct the inefficiency by introducing the service-based tariff despite the regulatory gap which created an investment quagmire wherein any investor who put in money wasn’t able to recover it.

Zakari further stressed that the administration has worked out how it will push more infrastructure into the network, starting from the National Mass Metering Programme (NMMP), through the emergency intervention from the central bank, commercial banks and donor partners.

This, he said, was in addition to the incremental support from Siemens and other programmes, amounting to about $3 billion actively being spent and would be spent over the next 24 months.

On the issue of grid collapses, he stated that in 2015, there were 28 total or partial collapses, while as of last year there were four , noting that in 2021, Nigeria has had one partial and one total collapse.

“There’s a plan to invest in SCADA, which is the system that digitally manages the grid. It allows you to monitor all of the figures and voltage and whenever there are challenges it can isolate the problematic segment,” he stressed.

On tariff, Zakari noted the law allows adjustment every six months, but regretted that the situation has not been fully communicated with the public even though any time it is done, it is viewed as tariff increase by the masses.

In some instances, the presidential aide noted that tariff may come down, go up or stay flat, saying that what the current administration has continued to do is subsidise electricity for the most vulnerable Nigerians.

He said the federal government has continued to encourage local meter manufacturers, who have already delivered in excess of 500,000 to 600,000 meters in phase zero of the scheme, out of which 400,000 have been installed.

He argued that the national mass metering programme has delivered more meters to Nigerians in four months than what was done in 18 months under the entire Meter Asset Provider (MAP) programme and expressed confidence that the six million metering target will be met.

Through the service-based tariff regime, Zakari noted that new grounds were being broken as the Discos collected N65 billion in December 2020, leading to a 15 per cent increase in delivery of power even before the commencement of capital expenditure.

“So, we are seeing increased liquidity in the system that is likely to continue. The Siemens programme is part of the suite of investments that make up the $3-$5 billion that we are targeting over the next 24 months,” he said.

He noted that despite the improvements, there’s still a lot of gap to be filled and massive investments to be made in the entire value chain of the power sector.

“But we have a gap in this sector in distribution and that’s over $10 billion. If you add everything together, it could be up to $30-$40 billion in terms of the other value chain sectors.

“So, what we are doing is to find all available financing, for instance the emergency funding from the central bank on metering, in-network CAPEX as well as transmission and distribution interfaces. Those are being spent now,” he said.

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Economy

Digital Economy: China Seeks More Partnerships With Nigeria

The Consulate General of the People’s Republic of China in Lagos, Mr. Chu Maoming had advocated for more robust China-Nigeria partnerships in the Digital Economy.

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digital economy - Investors King

The Consulate General of the People’s Republic of China in Lagos, Mr. Chu Maoming had advocated for more robust China-Nigeria partnerships in the Digital Economy.

Investors King learnt that the Chinese Consular General has called for enhanced strategic cooperation between Nigeria and China. The diplomat noted that such a corporation on the digital economy will help to address the challenges confronting Nigeria. 

Speaking in Lagos during the 2022 Africa-China Economic Partnership Agenda Conference, (ACEPAC), Mr Chu Maoming noted that China and Nigeria are the largest economies respectively in Asia and Africa, and both countries are actively developing their digital economies with notable success.

Maoming further stated that Nigeria is one of the most important economies in Africa and Lagos is the economic, financial and technological centre of Nigeria. He, therefore, seeks more collaborations in key digital economic areas of 5G Construction, Mobile Payments Systems and E-Commerce Platform. 

Mr Maoming also noted that digital economy potential lies in the number of mobile internet users in Nigeria which has exceeded 150 million as of June 2022, with an internet penetration rate of nearly 70 percent.

On the other hand, the Director General of the Nigerian Institute of International Affairs, (NIIA) Prof Eghosa Osaghae stated that Nigeria will be open to the new possibilities which the digital economy has to offer. 

Furthermore, the Executive Director of Afri-China Media, Ikenna Emewu described the conference as an important event that will further drive Nigeria towards the digital economy. 

The Executive Director said that Nigeria and Africa cannot afford to lag in adopting digital possibilities to improve their economies.

Meanwhile, Nigerian Minister of Communications and Digital Economy Professor Isa Pantami says the Ministry has completed over 2000 projects within three years to enhance the digital economy across the country. The minister disclosed this during an inspection tour of the National Shared Service Centre in Abuja.

Pantami noted that Nigeria is making progress in the digital economy while the numerous projects which are spread across the country will help to improve the productivity of many Nigerians. 

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MSMEs Critical to Nigeria’s Economic Development- President Buhari

President Muhammadu Buhari has said Small and Medium Enterprises (MSMEs) are critical to Nigeria’s economic growth as they contribute about 48 percent to the nation’s Gross Domestic Product.

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President Muhammadu Buhari has said Small and Medium Enterprises (MSMEs) are critical to Nigeria’s economic growth as they contribute about 48 percent to the nation’s Gross Domestic Product.

President Buhari, who was represented by the Minister of Industry, Trade and Investment, Otunba Richard Adebayo, at the 17th International Trade Fair organised by the Abuja Chamber of Commerce and Industry (ACCI), stated that trade is key to ending poverty and also plays a significant role in the economic growth of any nation.

In his words, “It helps to build wealth and improve foreign reserves. Trade is key to ending poverty across countries, raising standards of living and improving productivity. No economy can thrive without robust trade

“The MSME segment is critical to the stimulation of economic development. Nigeria is estimated to be home to over 40 million MSMEs who, together, contribute about 48 per cent of our GDP. Many of us just see MSMEs as the mamas that fries Akara or the friendly Malam that owns the kiosk on our street.

“That is not the case; some of the fastest growing Fintech start-ups in Africa are in fact MSMEs. This trade fair provides an opportunity to change the narrative of what MSMEs are and demonstrates how innovative they can be.”

“I see enterprises that employ large cross-sections of our youth population. I see enterprises with the capacity to export. I do not see small businesses here, I see future mighty business.”

“The Federal Government is keen to help MSMEs achieve their full potential and has developed strategic policy interventions, enshrined laws and established institutions to create a supportive business environment for entrepreneurs and MSMEs.

“In line with this, the Federal Ministry of Trade and Investment (FMITI) has developed a programme that will enhance access to credit for over 10 million MSMEs at single digit rate.

“Aside from the provision of finance, this project will address key ecosystem issues such as the development of MSME clusters to lower operating costs as well as capacity-building initiatives.

“The Ministry has also commenced the process of adopting a centralised automated platform for the registration of Trademarks, Patents and Designs. The overall objective is to fully digitise existing records and automate the registration process to enable ownership and commercialisation of innovation,” he stated.

It would be recalled that Investors King on October 2, 2022 reported that the federal government has directed the Development Bank of Nigeria (DBN) to step up its efforts to increase its funding for MSMEs.

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Economy

High Interest Rate Will Hurt New Job Creation, Exacerbate Unemployment – Manufacturers Tells FG

The Manufacturers Association of Nigeria (MAN) has said the recently increased interest rate would drag on new job creation and subsequently lead to job loss amid Nigeria’s already worrisome unemployment rate.

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The Manufacturers Association of Nigeria (MAN) has said the recently increased interest rate would drag on new job creation and subsequently lead to job loss amid Nigeria’s already worrisome unemployment rate.

In a statement signed by the Director-General of MAN Segun Ajayi-Kadir, manufacturers disclosed that the increase in the Monetary Policy Rate and the Cash Reserve Ratio portended worrisome negative consequences for the manufacturing sector.

MAN noted that the increase in MPR from 14 percent to 15.5 percent would rub off negatively on other rates and dash the hope for a single-digit lending rate for the productive sector of the economy.

It further said that the recent development would lead to an increase in the cost of borrowing by manufacturers, further beyond the double-digit rate, which would disincentivize new investments in the sector.

The statement read in part, “The observed continuous contractionary monetary policy posture without complementary fiscal support may not effectively reduce the prevailing inflationary pressure on the economy.

“This is not unconnected with the fact that the current increase in consumer price index as reported by NBS is not largely driven by the monetary phenomenon, as self-inflicted weak foreign exchange rate management can be linked to the pressure.”

MAN disclosed that the rate hike would cause increased factor costs which will inflate the price of  products, stating that it was hopeful that the CBN would creatively go beyond the conventional monetary management system because global economic dynamics were changing and conventional measures might no longer be effective.

The statement further read, “It is important that the monetary authority strategically set in motion mechanism for holistic balancing of the real interest rate, which is critical to investment and not just following leading economies to adjust Interest rate without considering domestic peculiarities.”

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