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PDP, LCCI React as Buhari Says 2019 Budget Faces Difficulties

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  • PDP, LCCI React as Buhari Says 2019 Budget Faces Difficulties

President Muhammadu Buhari said on Monday that the 2019 budget would be difficult to implement following the changes introduced to it by the National Assembly.

But the Peoples Democratic Party dismissed the President’s complaint, saying there was no way the National Assembly would return the budget to him the way it was brought to them.

The Lagos Chamber of Commerce and Industry, which noted that there had been complaints over the adjustment of budgets by the legislature over the years, said the judiciary should be allowed to determine whether lawmakers had the power to adjust the budget.

There were indications that Buhari might return the 2019 budget to the ninth National Assembly for a review as the tenure of the current legislature would expire on June 8.

The President signed the N8.92tn budget on Monday but quickly pointed out that the legislature increased his original proposal by N90.33bn from the N8.83tn estimates he laid before it in December 2018.

Speaking at the event, which was witnessed by the Speaker of the House of Representatives, Mr Yakubu Dogara, Buhari said his next line of action was to engage the National Assembly on how best to ensure a smooth implementation of the budget.

He also said his administration and the ninth National Assembly would work more closely to return the country to the January-December budget cycle.

The President said, “You will all recall that in December 2018, I presented our 2019 budget proposal with the theme ‘Budget of continuity.’ Our goal was to use this budget to move the economy further on the path of inclusive, diversified and sustainable growth.

“Back then, I proposed a total expenditure of N8.83tn to the National Assembly for appropriation, targeting strategic and impactful projects and initiatives. However, the 2019 budget I will be signing into law today (Monday) provides for the aggregate expenditure of N8.92tn. This is an increase of N90.33bn over our submission.

“This increase reflects changes introduced by the National Assembly. In some areas, expenses we proposed were reduced while in other areas, they were increased. There were also certain areas where new additions were introduced into the budget. More details of the approved budget will be provided by the Minister of Budget and National Planning.”

Buhari said some of the changes would adversely impact his government’s programmes, making it difficult to achieve the objectives of the Economic Recovery and Growth Plan.

He said, “Although I will be signing this bill, it is my intention to continue to engage the National Assembly to ensure we deliver on our promises. I will, therefore, be engaging with the leadership of the ninth National Assembly, as soon as they emerge, to address some of our concerns with this budget.

“We will also look at how to improve the budget process, so that, amongst other things, we can speed up budget consideration processes and return the country to the January-December fiscal year timetable.”

It should be recalled that Buhari made a similar complaint about the 2018 budget, bordering on “insertions” he said were not in the original executive proposals.

The dispute delayed the implementation of the budget as both the executive and the legislature argued over which of the two arms had the power of appropriation under the 1999 Constitution (as amended).

The disagreement petered out after the President forwarded a series of supplementary proposals to the National Assembly to address the gaps he said the legislature created in the budget.

However, at the signing ceremony for this year’s budget on Monday, Dogara responded to the President’s complaints, insisting that the legislature was not expected to just stamp the executive proposals for presidential assent.

The Speaker argued that merely approving the executive proposals without alterations by the National Assembly would have eroded the relevance of the legislature in a democracy and the principle of checks and balances.

He said, “The issues raised (by the President) relate to certain reductions that were made in the budget and some sub-head increases that were made and that such reductions would make it a bit difficult for some of those projects to be implemented.

“But he said it is an ongoing process and he will have discussions with the leadership of the National Assembly to see what they will be able to do in order to put that behind them and then execute whatever critical projects that suffered some form of hurt in the process of passing the project in the National Assembly.”

Specifically, on the cuts and increases made by the National Assembly, Dogara said, “By the constitution and design, the executive informs us what they intend to do and the representatives of the people in the National Assembly decide what is a priority since they represent the people. It is going to be a knotty area but we will continue to define the relationship between the executive and the legislature.

“Whether it is Britain or the US, wherever it is, there is always a strained relationship on this issue of budget. That is because it deals with high-stake distributional issues as to who gets what, which part of Nigeria gets this and that; so it will continually be an issue.

“We should not be defined by those issues, rather we should define those issues by forming a consensus that is the part to progress and we will continue to do that.”

The Speaker also reacted to Buhari’s desire to return the budget cycle to January-December, as against the current June-May.

He said, “I think that can really be achieved, but it must start with the early and timely submission of the budget to the National Assembly from the executive. A situation where the budget is submitted in December, even if you shut down the entire National Assembly, we will not be able to achieve the January deadline. So going forward, this is a collective exercise between the executive and the legislature.

“In most cases, it is the National Assembly that decides how federally-generated receipts should be expended and the National Assembly took that decision and we are glad that the President has signed it into law.”

The President of the Senate, Bukola Saraki, arrived at the Presidential Villa, just as the signing of the Appropriation Bill ended.

His Special Adviser on Media and Publicity, Mr Yusuf Olaniyonu, told State House correspondents that Saraki was in Port Harcourt, Rivers State, attending another official function when the invitation for the budget event reached his residence on Sunday night in Abuja.

The main opposition party, PDP, said it was not surprised with the claim by the President that it would be difficult for him to implement the budget.

The former ruling party reminded the President that there had been no time from 1999 till date when budgets presented to the National Assembly were returned to the executive the way they were brought to the legislature.

The National Chairman, PDP, Prince Uche Secondus, who spoke with one of our correspondents, said that the way the President had been blaming others for his failure to fix the country, he would soon blame the person in charge of the country between 2015 and 2019 after “he is sworn in on May 29.”

He said, “Go and look at the history of budgets in the country, and even in all the states, legislators always tinker with budgets. It is within their powers to make adjustments where necessary and all that. They were elected to represent constituents, and they have to protect the interests of their people as well.”

The Director-General, LCCI, Mr Muda Yusuf, said it was a good decision by the President to sign the budget since he had spoken about presenting a supplementary budget to the National Assembly.

He said, “It is a good thing that the President has decided to sign the budget so that the implementation can commence because enough time has been lost already.

“Later, this issue needs to be taken to court so that the judiciary can make a pronouncement whether the National Assembly has the power to cut or increase the budget or not. This has been going on every budget year and the court needs to decide what should be done.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Economy

Seme Border Sees 90% Decline in Trade Activity Due to CFA Fluctuations

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The Seme Border, a vital trade link between Nigeria and its neighboring countries, has reported a 90% decline in trade activity due to the volatile fluctuations in the CFA franc against the Nigerian naira.

Licensed customs agents operating at the border have voiced concerns over the adverse impact of currency instability on cross-border trade.

In a conversation with the media in Lagos, Mr. Godon Ogonnanya, the Special Adviser to the President of the National Association of Government Approved Freight Forwarders, Seme Chapter, shed light on the drastic reduction in trade activities at the border post.

Ogonnanya explained the pivotal role of the CFA franc in facilitating trade transactions, saying the border’s bustling activities were closely tied to the relative strength of the CFA against the naira.

According to Ogonnanya, trade activities thrived at the Seme Border when the CFA franc was weaker compared to the naira.

However, the fluctuating nature of the CFA exchange rate has led to uncertainty and instability in trade transactions, causing a significant downturn in business operations at the border.

“The CFA rate is the reason activities are low here. In those days when the CFA was a little bit down, activities were much there but now that the rate has gone up, it is affecting the business,” Ogonnanya explained.

The unpredictability of the CFA exchange rate has added complexity to trade operations, with importers facing challenges in budgeting and planning due to sudden shifts in currency values.

Ogonnanya highlighted the cascading effects of currency fluctuations, wherein importers incur additional costs as the value of the CFA rises against the naira during the clearance process.

Despite the significant drop in trade activity, Ogonnanya expressed optimism that the situation would gradually improve at the border.

He attributed his optimism to the recent policy interventions by the Central Bank of Nigeria, which have led to the stabilization of the naira and restored confidence among traders.

In addition to currency-related challenges, customs agents cited discrepancies in clearance procedures between Cotonou Port and the Seme Border as a contributing factor to the decline in trade.

Importers face additional costs and complexities in clearing goods at both locations, discouraging trade activities and leading to a substantial decrease in business volume.

The decline in trade activity at the Seme Border underscores the urgent need for policy measures to address currency volatility and streamline trade processes.

As stakeholders navigate these challenges, there is a collective call for collaborative efforts between government agencies and industry players to revive cross-border trade and foster economic growth in the region.

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Economy

CBN Worries as Nigeria’s Economic Activities Decline

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Central Bank of Nigeria (CBN)

The Central Bank of Nigeria (CBN) has expressed deep worries over the ongoing decline in economic activities within the nation.

The disclosure came from the CBN’s Deputy Governor of Corporate Services, Bala Moh’d Bello, who highlighted the grim economic landscape in his personal statement following the recent Monetary Policy Committee (MPC) meeting.

According to Bello, the country’s Composite Purchasing Managers’ Index (PMI) plummeted sharply to 39.2 index points in February 2024 from 48.5 index points recorded in the previous month. This substantial drop underscores the challenging economic environment Nigeria currently faces.

The persistent contraction in economic activity, which has endured for eight consecutive months, has been primarily attributed to various factors including exchange rate pressures, soaring inflation, security challenges, and other significant headwinds.

Bello emphasized the urgent need for well-calibrated policy decisions aimed at ensuring price stability to prevent further stifling of economic activities and avoid derailing output performance. Despite sustained increases in the monetary policy rate, inflationary pressures continue to mount, posing a significant challenge.

Inflation rates surged to 31.70 per cent in February 2024 from 29.90 per cent in the previous month, with both food and core inflation witnessing a notable uptick.

Bello attributed this alarming rise in inflation to elevated production costs, lingering security challenges, and ongoing exchange rate pressures.

The situation further escalated in March, with inflation soaring to an alarming 33.22 per cent, prompting urgent calls for coordinated efforts to address the burgeoning crisis.

The adverse effects of high inflation on citizens’ purchasing power, investment decisions, and overall output performance cannot be overstated.

While acknowledging the commendable efforts of the Federal Government in tackling food insecurity through initiatives such as releasing grains from strategic reserves, distributing seeds and fertilizers, and supporting dry season farming, Bello stressed the need for decisive action to curb the soaring inflation rate.

It’s worth noting that the MPC had recently raised the country’s interest rate to 24.75 per cent in March, reflecting the urgency and seriousness with which the CBN is approaching the economic challenges facing Nigeria.

As the nation grapples with a multitude of economic woes, including inflationary pressures, exchange rate volatility, and security concerns, the CBN’s vigilance and proactive measures become increasingly crucial in navigating these turbulent times and steering the economy towards stability and growth.

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Economy

Sub-Saharan Africa to Double Nickel, Triple Cobalt, and Tenfold Lithium by 2050, says IMF

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In a recent report by the International Monetary Fund (IMF), Sub-Saharan Africa emerges as a pivotal player in the global market for critical minerals.

The IMF forecasts a significant uptick in the production of essential minerals like nickel, cobalt, and lithium in the region by the year 2050.

According to the report titled ‘Harnessing Sub-Saharan Africa’s Critical Mineral Wealth,’ Sub-Saharan Africa stands to double its nickel production, triple its cobalt output, and witness a tenfold increase in lithium extraction over the next three decades.

This surge is attributed to the global transition towards clean energy, which is driving the demand for these minerals used in electric vehicles, solar panels, and other renewable energy technologies.

The IMF projects that the revenues generated from the extraction of key minerals, including copper, nickel, cobalt, and lithium, could exceed $16 trillion over the next 25 years.

Sub-Saharan Africa is expected to capture over 10 percent of these revenues, potentially leading to a GDP increase of 12 percent or more by 2050.

The report underscores the transformative potential of this mineral wealth, emphasizing that if managed effectively, it could catalyze economic growth and development across the region.

With Sub-Saharan Africa holding about 30 percent of the world’s proven critical mineral reserves, the IMF highlights the opportunity for the region to become a major player in the global supply chain for these essential resources.

Key countries in Sub-Saharan Africa are already significant contributors to global mineral production. For instance, the Democratic Republic of Congo (DRC) accounts for over 70 percent of global cobalt output and approximately half of the world’s proven reserves.

Other countries like South Africa, Gabon, Ghana, Zimbabwe, and Mali also possess significant reserves of critical minerals.

However, the report also raises concerns about the need for local processing of these minerals to capture more value and create higher-skilled jobs within the region.

While raw mineral exports contribute to revenue, processing these minerals locally could significantly increase their value and contribute to sustainable development.

The IMF calls for policymakers to focus on developing local processing industries to maximize the economic benefits of the region’s mineral wealth.

By diversifying economies and moving up the value chain, countries can reduce their vulnerability to commodity price fluctuations and enhance their resilience to external shocks.

The report concludes by advocating for regional collaboration and integration to create a more attractive market for investment in mineral processing industries.

By working together across borders, Sub-Saharan African countries can unlock the full potential of their critical mineral wealth and pave the way for sustainable economic growth and development.

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