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Experts Divergent Opinions on FG’s N2.2tn Borrowing Plan



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Economists and finance experts have expressed divergent opinions on the proposal by the Federal Government to borrow N2.2tn to finance the deficit envisaged in the 2016 Appropriation Bill tabled before the National Assembly by President Muhammadu Buhari last week.

For the total budget proposal of N6.08tn, the Federal Government expects N3.86tn as revenue, while the balance of N2.22tn will come from borrowing. Out of the N2.22tn to be borrowed, N1.84tn is expected to be spent on capital projects, while the rest will go into recurrent expenditure.

In a statement made available to our correspondent in Abuja by its Head of Abuja Operations, Vivian Bellonwu-Okafor, the Social Integrated Development Centre (Social Action) asked the National Assembly to do Nigerians a favour by stopping the accumulation of such a huge debt.

However, a former President of the Nigerian Economic Society and Executive Director, African Centre for Shared Development Capacity Building, Prof. Olu Ajakaiye, said it was good enough that the Federal Government proposed to spend much of the debt to finance infrastructure.

Bellonwu-Okafor described loans as Greek gifts and a deathtrap for economies, especially weak and developing ones such as Nigeria’s, adding that the terms were usually steep and their conditions mostly stifling, while compromising the growth and well-being of the nation’s economy.

She called for a probe of what previous loans that had been obtained by Nigeria had been used for.

She said, “To continue in the tradition of approving loans for governments in Nigeria without first seeking and establishing an account of the huge loans acquired in the past years on behalf of the country and which have all been frittered away under very shady circumstances would be a great disservice to Nigerians by the National Assembly.

“We reiterate for the umpteenth time that if corruption and capital flight are eliminated, the innumerable leakages existing in the system blocked, tax administration made effective, the economy diversified away from burdensome dependence on oil and strict fiscal discipline established, enough resources will be garnered to fund the nation’s budget.

“The proposition by the Federal Government to borrow a staggering sum of N2.2tn to finance the nation’s 2016 fiscal budget is a glaring demonstration of insensitivity to the travails of Nigeria’s economy and citizens. Already, this is sequel to its plan to devote a colossal sum of N1.36tn to debt servicing alone in the budget.”

Bellonwu-Okafor added, “Fiscal projections as expounded in the proposed budget has revealed that the administration has no genuine intention of running a truly cost-effective government as it committed to doing in its pre-election pledges and which it superficially appeared to do with the merging of ministries, an action that has clearly translated into no concrete change in the fiscal parameters of governance in the country.

“If allowed to pass as it is, this will shoot Nigeria’s debt profile to over N15tn, with debt servicing amounting to 72 per cent of the 2016 capital budget. This sinks Nigeria further into the debt trap, while compromising the nation’s human and capital development.”

Ajakaiye, however, said there was nothing that the Federal Government could do about the N1.36tn for servicing debt that had fallen due.

He said, “It is already an obligation. Government cannot default, otherwise there will be a crisis. The fact that N1.84tn is for capital projects is good. The only thing we need to look at is the type of capital projects to be funded.”

He opined that if the right projects were funded, they would be able to generate funds that could be used to service the debt

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.


Leaked Documents Reveal Money Laundering Scam Worth $2tn




Several leaked documents have revealed how the world’s biggest banks enable criminals to launder money around the world.

The documents showing about $2tn of transactions are popularly called FinCEN files.

The BBC reports that the FinCEN files are more than 2,500 documents, most of which were files that banks sent to the US authorities between 2000 and 2017. They raise concerns about what their clients might be doing.

The documents are utilised by the banks to report suspicious behaviour. However, they may not be proof of wrongdoing or crime, the report said.

The Financial Crimes Enforcement Network, a bureau of the United States Department of the Treasury is saddled with the task of analysing information about financial transactions to combat domestic and international money laundering, terrorist financing, and other financial crimes.

The FinCEN files revealed how top tier banks such as HSBC, JP Morgan, Barclays Bank, Deutsche Bank, Standard Chartered amongst others helped highly connected individuals move money round several accounts in the world.

JP Morgan allowed a company to move more than $1bn through a London account without knowing who owned it.

One of Russian President Vladimir Putin’s closest associates used Barclays Bank in London to avoid sanctions which were meant to stop him using financial services in the West.

Some of the cash was invested in works of art, the report added.

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UK Banks to Ditch Clients Across Europe



UK banks are “outrageously failing” many tens of thousands of expat clients across Europe as they plot to shut their accounts and cancel credit cards within weeks due to post-Brexit rules.

This is the damning assessment of Nigel Green, the CEO and founder of deVere Group, one of the world’s largest financial advisory and fintech organisations, as most of Britain’s biggest banks send letters to customers in the EU warning them that all services are to be scrapped unless they have a UK address.

Mr Green says: “Most of the UK’s high street banks are plotting to unceremoniously abandon their customers across Europe within weeks.

“Accounts will be shut and debit and credit cards voided – regardless of how much or how little you have in those accounts or how long you have been a client – as it becomes illegal for UK banks to service British customers living in the EU without applying for new banking licences.”

He continues: “Once again, traditional banks are outrageously failing their clients who now need to take urgent steps to continue to be able to access, use, and manage their money.

“The move by these banks will be a major inconvenience to many tens of thousands of Brits living in the EU.”

Before post-Brexit rules come into effect, those affected are being urged to find alternatives to avoid potentially serious financial disruption.

“I would urge expats to now seek a financial services provider that already operates under pan-European rules,” says the deVere Group CEO.

In 2017 the firm launched deVere Vault. deVere Vault provides borderless global services with a ground-breaking e-money app and a single card, multi currency service designed with those with an international lifestyle in mind.

“You’re able to open a deVere Vault account in around five minutes, withdraw money from any cash machine worldwide, get real-time notifications with all your transactions, spend money on the card wherever Mastercard is accepted, and send and receive money in most major currencies,” notes Mr Green.

He concludes: “deVere Vault meets a growing need in an increasingly globalised world for our clients to have borderless access to and use of their money.

“Agile, tech-driven challenger banks and fintech firms are ready to fill the void left by traditional banks who are now having to routinely ditch their customers.”


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NNPC Says Private Investors Will Finance Rehabilitation of Downstream Assets



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Private Investors to Finance NNPC Rehabilitation of Downstream Assets

The Nigerian National Petroleum Corporation (NNPC) during the weekend said a group of private investors would finance the proposed rehabilitation and replacement of its aging downstream assets, especially petroleum pipelines, across the nation.

In a statement released in Abuja, the Group Managing Director, Mallam Mele Kyari, said some of the assets to be replaced were as old as 40 years and long overdue for replacement.

The managing director explained that the investors to be engaged would be doing the financing under the Finance, Build, Operate and Transfer, BOT, Model, adding that the model became imperative given the state of the nation’s downstream infrastructure.

He said: “Some of these assets are as old as 40 years and they are due for replacement; and when you want to do a replacement of this scale, you do need a lot of resources.

“And we know that we require these assets so we decided that we bring in private partners who will fund these pipelines, they will construct it, they will operate it with us and then ultimately they will fully recover their investment from the tariff which we will pay for using these pipelines. And as soon as they recover their cost and their margin, they will hand over these assets back to us.”

According to the NNPC boss, no fewer than 78 firms have already submitted virtual bids indicating their willingness to undertake the rehabilitation of the downstream pipelines, associated depots and terminal infrastructure of the NNPC through the financing model.

He added that the final partners would be selected by the end of the first quarter of 2021.

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