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Nigeria Has Enough Capacity to Repay N21.7tn Debt – Adeosun

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  • Nigeria Has Enough Capacity to Repay N21.7tn Debt – Adeosun

The Minister of Finance, Mrs. Kemi Adeosun, has said that the country has enough capacity to repay its debt obligations, which currently stand at about N21.7tn.

Adeosun stated this in an interview with some journalists in Abuja on Monday.

She said that the government was not worried about the country’s rising debt as the debt to Gross Domestic Product ratio was still low compared to other countries.

The minister stated that unlike previous government that borrowed to pay salaries, the focus of the administration of President Muhammadu Buhari was to invest massively in infrastructure.

She said as of the time that Buhari took over the mantle of leadership in 2015, oil prices were very low and as such, the government was constrained in allocating funds for capital projects without having to borrow.

According to her, with over N2.5tn pumped into infrastructure in the last three years, the country will start seeing the benefits of the borrowed funds.

Adeosun said, “I am not worried at all (about rising debt). Our borrowing is sustainable and well managed. Firstly, we took a decision to reflate the economy. Our borrowing is a true reflection of our economy.

“When your income has gone down, the only place you can go is to borrow. It was a strategic decision. We borrowed and invested heavily in infrastructure and then increased our revenue so that we could pay back the debt.

“It was a deliberate decision. We looked at our budget in terms of size and increased it from N4tn to N7tn so that we could focus on developing our infrastructure.”

She explained that the government’s borrowing was a deliberate policy to stimulate economic activities and take the country away from recession.

She added, “It was a very deliberate policy. It was deliberate because if we do not invest in our capital projects, we cannot grow. If all that the government does is to pay salaries, we will be running at a loss every year. So, it was a strategic decision to tie that money to capital projects.

“One of the differences between our style of borrowing and the previous era when oil prices were at the highest is that in May 2011, the debt was N2.5tn and oil price at that time was $111 to a barrel. By May 2015 when we came in, our debt had risen to N12tn; meaning that in that period when oil prices were highest, the debt doubled but capital releases were very low.

“So, if we should be worried about debt accumulation, it should have been that time. And we should be asking, why were capital releases so low and debt doubled when oil price was so high at over $100 per barrel?

“Yes, there has been acceleration in debt, but there has also been acceleration in capital releases and capital spending.”

Adeosun said if the government continued to get the major projects in power, transport and agriculture off the ground, the economy would continue to experience growth.

She added, “We will have no problem managing our debts because they are sustainable. As the economy grows, we will get everyone to pay their tax so that we will be able to service the debts. If you compare us with any of our neighbouring countries, you will see that we are better than any of our neighbours. We will like to keep it that way.

“There is no sense having no debt, no road, no power and no growth prospect. With the kind of young people that we have and the kind of jobs we want to create, we need to build infrastructure and we cannot use oil money alone to fund our debt.”

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

Economy

Nigeria Mulls Selling Electricity to Republic of Chad

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Nigeria Considers Selling Electricity to the Republic of Chad

The Federal Government is presently considering selling electricity to the Republic of Chad after a request was made by the neigbouring nation.

The federal government-owned Transmission Company of Nigeria disclosed this on Sunday, adding that a meeting was held last week to discuss the possibilities of plugging the Republic of Chad to the nation’s grid.

Nigeria presently exports electricity to three neighbouring nations, Benin, Togo and the Republic of Niger despite struggling with power supply at home and failed to up its power generation more than the current level of 3,000 -4,500 megawatts in recent years.

On Sunday, the total power generated declined to 3,474.5MW as of 6am, down from 3,776.5MW on Saturday, according to the latest data from the Nigerian Electricity System Operator.

The total number of idle plants rose from 8 on Saturday to 11 on Sunday. These idle plants were Geregu II, Sapele II, Alaoji, Olorunsogo II, Omotosho II, Ihovbor, Gbarain, Ibom Power, AES, ASCO and Trans-Amadi.

A total of twenty-seven plants were presently connected to the national grid, which is being managed by the TCN.

Meeting between Ministry of Power, TCN, and the Chadian Minister of Energy, Mrs Ramatou Mahamat Houtouin, to discuss the possibilities of connecting the Republic of Chad to the Nigerian national grid [was held] on Wednesday, October 21, 2020,” the TCN said on its Twitter handle on Sunday, alongside pictures of the meeting.

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Economy

Nigerians Turned to Chinese Products as Cost of US Goods Surged Amid Two Currency Devaluations this Year Alone

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Nigeria Imports More of Chinese Products in Second Quarter

The rising cost of American imports has forced importers and many households in Nigeria to embrace Chinese products as they struggle to adjust to two currency devaluations in one single year.

A recent report from the National Bureau of Statitics (NBS) shows that 31.41 percent of goods imported into the country in the second quarter were from China.

In the report titled ‘Foreign trade in goods statistics’ for second quarter of 2020, Spain led Nigeria’s exported nations for goods.

The report read in part, “Nigeria’s imports, by country of origin, shows goods were imported mainly from China (N1.26tn or 31.41 per cent), United States (N428.9bn or 10.66 per cent), India (N322.3bn or 8.01 per cent), and the Netherlands (N202.9bn or 5.04 per cent) respectively.

“The value of exports in Q2, 2020 stood at N2.22tn, a decrease of 45.64 per cent compared to Q1, 2020 and 51.73 per cent compared to Q2, 2019.

“The year to date export amounted to N6.3tn, representing a 31 per cent decline compared to 2019.

“Exports by section revealed that mineral products accounted for the largest portion of exports, amounting to N1.87tn or 84.35 per cent, mainly due to the crude oil component.”

The increase in Chinese import is likely due to the plunge in Naira against the US dollar and the general dollar scarcity that prevent importers from accessing the greenback. This, coupled with two devaluations of the local currency forced many businesses and mini-importers to embrace Yuan goods against the usual US dollar.

Further breakdown of the report showed that Nigeria export mostly to Europe with goods valued at N976.5 billion or 44 per cent exported in the second quarter. Asia followed with goods worth N734.1 billion or 33.08 per cent.

While African nations accounted for N401.4 billion or 18.1 per cent, America received N105.8 billion or 4.8 per cent export goods and Oceania imported N1.7 billion or 0.08 per cent from Nigeria during the period under review.

Within Africa, Nigeria exports goods valued at N149.3 billion to ECOWAS member nations.

While all regions recorded declines in the value of exported goods during the quarter, China and Japan recorded increased in export activity.

The NBS stated, “Exports by country of destination showed that Nigeria exported goods to Spain valued at (N310.8bn or 14 per cent), Netherlands (N243.7bn or 10.98 per cent), China (N220.4bn or 9.9 per cent), India (N195.6bn or 8.8 per cent) and South Africa (N172.2 or 7.7 per cent).

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Economy

FG Launches New N25bn Youth Fund to Address Some of the Concerns Raised by #EndSARS Protesters

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Zainab Ahmed

FG Introduces N25 Billion Youth Fund

The Federal Government has introduced a new N25 billion youth fund to address some of the issues raised by the Nigerian youths who took to the street to demand good governance, among others.

The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, disclosed this at a stakeholder meeting held with the Deputy Governor of Kaduna State, Dr. Hadiza Balarabe, in Kaduna.

Ahmed said the fund would be increased from N25 billion to N75 billion within three years to ensure new job creation for the youths.

The meeting was constituted as part of the directive of President Muhammadu Buhari to ministers and governors to dialogue with stakeholders on some of the concerns raised by #EndSARS protesters.

The finance minister said the aim was to support the Nigerian youths to actualise their innovative and entrepreneurial minds in business and general development of the nation.

On her part, Balarabe said the essence of the meeting was to brainstorm on how to tackle security challenges faced during the #EndSARS protests.

Dr Mohammad Abubakar, the Minister of Environment, who was also at the meeting, reiterated Federal Government’s commitment to people-friendly policies and reforms.

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