The Minister of Budget and National Planning, Sen. Udoma Udo Udoma, says Nigeria’s foreign reserves have reduced from $26.51 billion in the second quarter of 2016, to $24.74 billion in September. Udoma said this at the 57th annual conference of Nigerian Economic Society with the theme “The developmental state and diversification of the Nigerian economy”. He said Nigeria had revenue and foreign currency concentration problems, adding that a diversification of the economy was the only solution. Udoma said due to four strategic pipeline terminals being blown up, Nigeria had been unable to achieve its 2016 Budget production target of 2.2 million barrels a day. In January, the CBN estimated that Nigeria’s foreign exchange earnings declined from around $3.2 billion monthly to about a billion dollars monthly.
Mr. Udoma’s portfolio includes National Planning, which presumes that there should be an element of foresight involved. Hence, basing the budget on a 2.2 million barrels per day production target was already a faulty premise. The recently approved MTEF has repeated this error. It also, in the face of intelligence that says otherwise, assumed an oil benchmark that rises in 2017 and 2018. The rhetoric that government is determined to diversify its revenue base is not reflected in the most important documentation of its medium term plan. We believe that the eternal fixation on our foreign reserves is not as important as ensuring sound policy congruence between fiscal and monetary policy to facilitate availability of foreign exchange as and when due in the market. The reserves are an effect and not an input.
The Minister of Information and Culture, Lai Mohammed, says the final decision to sell national assets will be taken by the Federal Executive Council, which essentially comprises the President, the Vice-President and the 36 ministers. Speaking after the Federal Executive Council meeting, Mr. Mohammed said calls by the National Economic Council for the assets to be sold were of no consequence. He also said the government has yet to come out with its position on how to bail out the economy, and it will take that position in due course.
As things stand, the economy may continue on its current downward spiral due to the fact that the FG has not approached the crisis the way it ought to. More worrisome is the fact a FEC was held, and Mr. Mohammed only came to deny speculations rather explain tangible or practicable steps that were discussed at the meeting to lift Nigeria from crisis. The more the government waits to take action, the worse the crisis gets. Yesterday, reports emerged that the presidency had indeed sent a bill to the senate for consideration. This approach where government puts out speculations, denies those speculations, and then acts on said speculations, is worrisome and does not portray the government as one whose word should be taken seriously. We believe that government should think proposals through, deliberate on them thoroughly and ensure communications are actual explanations of these thought through positions as opposed to denials.
The African Development Bank is set to lend Nigeria a total of $4.1 billion over 2016 and 2017, and $10 billion by 2019, to help the economy plug its budget gap and develop its infrastructure. AfDB president, Akinwumi Adesina, said he would go to the pan-African lender’s board next month to seek approval for a first, $1 billion loan to cover this year’s deficit as Nigeria grapples with its first recession in more than 20 years. The FG also plans to raise $1 billion in Eurobonds this year, its first since 2013. The performance of its dollar debt and OPEC’s agreement to cut oil production as the West African country prepares to tap the Eurobond market signals investors are comfortable the government has sufficient reserves to cover its foreign obligations. The high demand for Ghana’s Eurobond earlier this month may bode well for Finance Minister Kemi Adeosun’s plan to issue $1 billion this year, according to analysts including NN Investment Partners, Aberdeen Asset Management, Exotix Capital and Vetiva Capital.
This is a step in the right direction. The government urgently needs to raise money to finance the budget and spend its way out of the recession. Financing from bodies like the AfDB and the IMF are a good fit for the kind of funding the government needs and it is a good thing that the deal with the AfDB makes provisions for up to 2019 especially as it struggles to resolve the issues in the Niger Delta and tax revenue being significantly short of their set expectations. The key thing is utilization. The stated intent is to fund infrastructure and not consumption. This is crux of the matter, and the government must show discipline in this regards.
Pension fund operators in the country are alarmed at the moves being made by the Federal Government to use part of the ₦5.8tn Contributory Pension Scheme assets to fund infrastructure development and move the economy out of recession. Operators, have complained that it is wrong for government officials and senators to accuse the administrators of the CPS of holding on to the funds when the economy is going through a difficult time.
While Pension Fund assets present an opportunity to fund much-needed capital infrastructure, we are not convinced that this is anything beyond an opportunistic grab at what looks to the government’s agents as idle funds. The people who crafted the laws guiding pension administration were careful to limit assets that the funds can be invested in to those which successive governments almost have no choice but to honour their commitments to. Infrastructure, sadly, is not one of these areas in the Nigerian system. There is no dearth of financing from private equity for infrastructure projects from other sources. It is the rigour of convincing these funders that the government is serious about utilization, and can guarantee the continuity of honouring agreements in successive government, the kind of discipline that will guarantee returns, that the government seeks to eschew by looking to the pension funds. We suggest that government should look away from these funds in order to forestall a crisis when contributors to the funds need to get paid. The principle should be to prove first with other funding sources before accessing such special funding as the pension funds.
Shell Nigeria has maintained its silence over the latest sabotage of its pipeline, by the terrorist group, Niger Delta Avengers after the group claimed on Friday that it had broken its self-declared ceasefire by bombing the Bonny oil export pipeline. The Niger Delta Avengers, the leading militant group operating in the oil-rich region of southern Nigeria on Friday, September 23, end the proposed truce with the federal government after they blew up a major pipeline, the Bonny 48 inches crude oil export line in Rivers State. Leader of the Pan-Niger Delta Coastal States Stakeholders’ Consultative Forum and former Federal Commissioner for Information, Chief Edwin Clark has condemned in very strong terms, the bombing of the Bonny Export( 48) inch pipeline on Friday by members of the Niger Delta Avengers, saying that the 60-day cessation of hostilities has not elapsed, there is no justification for further bombing. As the Niger Delta Avengers called off their ceasefire, and blew up an oil pipeline in Bonny, Rivers State, some youth leaders in the region have appealed to the group and other militants to stop further attacks. Yesterday, another pipeline was blown up, this time, the Unenurhie-Evwreni Delivery Line in Ughelli, Delta State, by another group, the Niger Delta Greenland Justice Mandate. Their second in as many weeks.
The insecurity of lives, property and economic installations in the Delta will continue to represent the most significant challenge facing the current administration. The lack of a bold strategy to addressing the perennial problems of the region means that attacks like this will continue to occur. This is not a good omen for a government seeking to ramp up oil production to pre-2016 levels and whose Medium Term Expenditure Framework is premised on production being at such level and sees ramping up spending as the route to fight off a recession. The government needs to urgently engage the Niger Delta militants through people whom the militants find credible in order to find a political solution to the problem as it is a political problem that a purely military approach will not resolve. Unfortunately, we are coming to the conclusion that President Buhari may not have the required political mien to resolve the Niger Delta crisis. The situation touches on constitutional reform and devolution of powers, and we keep questioning whether the current government has the capacity to resolve these issues. When we look at the bills currently under consideration at the National Assembly, it appears that the import of a constitutional review is lost on both the executive which is not driving the agenda, and the legislature which is responsible for enacting the necessary changes.
Two soldiers were killed in an ambush on Saturday in Efut Esighi Waterfront in Bakassi Local Government Area of Cross River State. The attack led by wanted criminal, Benjamin Simplee, leader of the Bakassi Strike Force, occurred when the militants arrived the Efut Esighi Waterfront in speedboats.
A combination of intelligence failure and irresponsibility on the part of the security and political leadership are responsible for the Bakassi strife. Since the signing of the Green Tree agreement that ceded Bakassi Peninsula to Cameroon, there has been a massive displacement of people from communities especially youth who have taken up arms to eke a living in the oil rich area, and have also gotten involved in all manners of criminality. It appears that the fate of the people was not factored into the planning of the aftermath of the ceding and they have resorted to self-help in a poorly secured region that straddles two countries. We urge the state government and the FG to work closely before the militant situation degenerates to an all out conflict.
A new report, released by a Civil Society Organisation, Right to Know, says ministries, departments and agencies are not complying with the provisions of the Freedom of Information Act 2011. The report, released to mark the first celebration of the Universal Access to Information Day, said that the National Assembly which passed the bill that eventually became the FOI Act five years ago had also never complied with the provisions of the act. The Act requires public institutions to pro-actively disclose certain information, including how many staff they have, their salaries, grade levels and many more. However, the report found that this provision of the Act was not being complied with. The Bureau of Public Sector Reform was rated the most ready to respond to Freedom of Information requests, while more than 100 other institutions were cited for flouting FOI requirements, including the State House, Press Council, Human Rights Commission, the Central Bank of Nigeria, Nigeria Communications Commission, and Bureau of Public Procurement and the Office of the Head of Service.
The list of defaulting public institutions is virtually a complete run down of the federal bureaucracy. The worst culprits in the ranking includes the National Hospital, the health, communication and environment ministries, the Bank of Industry and the Nigerian Television Authority which have never disclosed any information or respond to any FOI requests. The report assessed compliance by public institutions in Nigeria with two key provisions of the Freedom of Information Act: Section 2 (3 & 4) relating to the provision on Proactive Disclosure—and Section 29 (1, 2 &3) obligating an FOI Annual Submission to the Office of the Attorney-General of the Federation. This new report essentially corroborates a finding of SBM Intelligence which gave this government a NOT DONE score on enforcing the FOI Act, a campaign promise and an overall 0% score on ‘Accountability in Public Service’ in our May Scorecard of the first year of its life. With all the economic challenges the nation is currently facing, the time for action remains now.