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Nigeria is Facing Serious Revenue Problem – Budget Office

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  • Nigeria is Facing Serious Revenue Problem – Budget Office

The weak revenue to GDP ratio has been highlighted as a major issue to the Nigerian economy and growth.

According to the Director-General, Budget Office of the Federation, Mr Ben Akabueze, there is an urgent need to up revenue generation.

Akabueze, who attended the Strategic Dialogue on the Morocco-Nigeria Relations in Abuja, said: “For us in Nigeria, lately, there has been a lot of talk about the government’s borrowings and those who talk about it are justified to express the concern. But the truth is that I think we are generally having the wrong discussion. I personally don’t think we have a debt problem, but we have a serious revenue problem, which, if we do not address, will snowball into a debt problem.”

The Director-General pointed out that Nigeria’s debt to GDP ratio stood at about 20 percent, while Morocco is 63 percent with over 3.4 percent deficit to the GDP. Nigeria deficit to GDP is capped at 3 percent. Meaning, Nigeria has one of the lowest debt to GDP ratio in the world.

However, debt service to revenue ratio rose above 60 percent in 2017 when national debt climbed to $73 billion.

Mrs Catherine Pattillo, Assistant Director, Fiscal Affairs Department, IMF, said Nigeria’s debt to revenue, which she put at 63 percent is “extremely high”.

According to her: “The ratio of federal government interest payment on debt to revenue is extremely high, 63 percent. So there is a need to build revenue so that you have more space to spend for infrastructure, social safety nets etc otherwise interest is eating up most of your revenue.”

Speaking on oil revenue, Akabueze said despite the surge in oil price to about $80 a barrel, Nigeria’s revenue remained weak. Partly, because of the high cost of importation of refined petroleum product.

“On oil price, for us, it is a double-edged sword, unfortunately. This ought to be a season where we should be clicking glasses with regards to the oil price. But right now, practically every drop of refined petroleum product that we consume in the country is imported.”

“And the one single factor that determines the price of the refined product is the price of crude. In essence, while we export the crude at about $80 (per barrel), we effectively import back the same crude at about $100 importation price for refined products. And that explains why despite the strong oil prices, we are not seeing a corresponding growth in government revenue.”

Therefore, unless the nation up its revenue generation, the Federal Government will struggle to finance capital projects due to high recurrent expenditure.

Meanwhile, the Federal Government has reduced its agency revenue by N223.36 billion for 2019, citing slowing economic activities and growing economic uncertainty.

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 long experience in the global financial market.

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Finance

Access Bank in Talks to Acquire Cavmont Bank

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Access Bank to Acquire Cavmont Bank in Zambia

Access Bank Plc on Wednesday announced that its wholly-owned subsidiary in Zambia, Access Bank Zambia Limited (Access Bank Zambia) is in talks to acquire Cavmont Bank Limited, a subsidiary of Cavmont Capital.

According to the statement signed by Mr. Sunday Ekwochi, Company Secretary, Access Bank and released on the Nigerian Stock Exchange website on Wednesday, the ongoing discussions is to acquire 100 percent of Cavmont Capital’s interest in Cavmont Bank.

However, the lender said “there can be no certainty that a transaction will be agreed, nor as to the terms of any such agreement.

“The completion of a transaction would be subject to formal regulatory approvals. Access Bank will be updating the market as appropriate and in accordance with its disclosure obligations.”

The lender, therefore, advised shareholders to exercise caution when dealing in Access Bank’s securities.

Investors King Ltd note: This announcement further threw more lights on the recent purchases of Access Bank’s shares by Herbert Wigwe, the Chief Executive Officer and Managing Director, Access Bank.

The CEO/MD purchased 7.532 million of Access Bank‘s shares in the last one month.

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Mohammed Umar is the New Acting Chairman of EFCC

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Buhari Appoints Mohammed Umar as EFCC Acting Chairman

President Muhammadu Buhari has appointed, Mohammed Umar, the director of operations at the Economic and Financial Crimes Commission (EFCC), as the new Acting Chairman of the agency, according to the NAN.

A top official of the commission confirmed to NAN that Umar has taken charge of the agency following the suspension of Ibrahim Magu, the former acting Chairman.

Ibrahim Magu was suspended by the President on Tuesday following series of allegations bordering on frauds, financial misappropriations and abuse of power.

 

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CBN Spends $11.5bn in Q1 2020 to Support the Economy and Dwindling Naira

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CBN Injects $11.5bn Into the Economy in the First Quarter

The Central Bank of Nigeria (CBN) injected a combined $11.5 billion into the nation’s foreign exchange market to stabilise the economy and support the Naira value in the first quarter of the year.

According to the latest report from the apex bank, the central bank injected $2.96 billion into the nation’s forex market in the month of January. Another $3.39 billion was used to support the economy in February while $4.7 billion was supplied in the month of March, the very month the economy was locked and all operations grounded to curb the spread of COVID-19.

A further breakdown of the report revealed that the Investors and Exporters’ foreign exchange window, Small and Medium enterprises and Invisible segments received a total of $7.23 billion of the $11.5 billion, the Bureau De Change segment received $3.6 billion while the Interbank and WDAS/RDAS got the rest in the first quarter.

The report noted that the apex bank injected a total sum of $14.72 billion and $28.55 billion into the economy in 2018 and 2019, respectively.

Meanwhile, the central bank is yet to commence the sales of forex to the bureau de change following the March suspension.

But has commenced partial sales to all commercial banks for onward sales to parents and small businesses across the country.

Mr Isaac Okorafor, the Director, Corporate Communications, CBN, had said, “The CBN has also made complete arrangements to resume foreign exchange sales to the BDC segment of the market for business travels, personal travels and other designated retail uses, as soon as international flights resume.”

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