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Nigeria May Slide Into Another Recession Soon — Finance Minister

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Zainab Ahmed, minister of finance, says unless Nigeria achieves a very strong third quarter 2020 economic performance, the country may slide into recession.

Ahmed disclosed this at the opening of a five-day interactive session on the 2021-2023 Medium Term Expenditure Framework (MTEF), and Fiscal Strategy Paper (FSP), held on Thursday in Abuja.

The interactive session was organized by the house of representatives committee on finance, chaired by James Faleke, the lawmaker representing Ikeja federal constituency.

Ahmed, who was represented by Clement Agba, the minister of state for finance, said the COVID-19 pandemic had put further pressure on Nigeria’s foreign exchange.

He said the COVID-19 pandemic resulting in the crash of global oil prices among other economic factors had adversely affected the nation’s economy, with the Gross Domestic Product growth for Q2 most likely to be negative.

The World Bank had in July warned that the collapse in oil prices resulting from the COVID-19 pandemic was expected to plunge the Nigerian economy into a severe economic recession, the worst since the 1980s.

The global bank had stated this in its latest Nigeria Development Update.

Agba had read out a written presentation by the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, titled ‘Draft 2021-2023 MTEF/FSP: Presentation to the House Finance Committee.’

The minister said the Nigerian economy faced serious challenges in the first half of 2020 with the microeconomic environment significantly disrupted by the pandemic.

The document partly read, “The impact of these developments is about 65 percent decline in projected net 2020 government revenues from the oil and gas sector, with adverse consequences for foreign exchange inflows into the economy.

“Nigeria is exposed to spikes in risk aversion in the global capital markets, which will put further pressure on the foreign exchange market as foreign portfolio investors exit the Nigerian market.

“Nigeria’s Q2 GDP growth is in all likelihood negative, and unless we achieve a very strong Q3 2020 economic performance, the Nigerian economy is likely to lapse into the second recession in four years, with significant adverse consequences.

“In response to the developments affecting the supply of foreign exchange to the economy, the Central Bank of Nigeria adjusted the official exchange rate to N360/USD1, and more recently to N379/USD.

“The disruptions in global trade and logistics would negatively affect Customs duty collections in 2020.

“The COVID-19 containment measures, though necessary, have inhibited domestic economic activities, with a consequential negative impact on taxation and other government revenues.

“Consequently, the projections for Customs duty, stamp duty, Value Added Tax, and Company Income Tax revenues were recently reviewed downwards in the revised 2020 budget.

“Customs revenue has generally performed close to target over the last few years, exceeding the target in 2019.”

While noting that there had been some improvement in Company Income Tax and VAT remittances, the minister said the Federal Government expected significant improvements in VAT collections with the new VAT rate of 7.5 percent.

The minister said, “Over the past five years, actual revenue performance averaged 61.4 percent.

“Some of our reforms are yielding positive results, with significant improvements between 2018 and 2019. We believe we can do more to improve revenues, especially remittances from GOEs, possibly up to N1tn per annum.”

Speaking on the key assumptions of the MTEF/FSP, the minister, among others, said, “Inflation, however, is expected to remain above single-digit over the medium term, given the structural issues impacting on the cost of doing business, including the high cost of distribution.”

On the management of the fiscal crisis, the minister noted that fiscal measures were being instituted to improve government revenue and entrench a regime of prudence, with emphasis on achieving value for money.

“The goal of fiscal interventions will be to keep the economy active through carefully calibrated regulatory/policy measures designed to boost domestic value addition, de-risk the enterprise environment, attract external investment and sources of funding, etc.,” the minister stated.

The minister noted that the draft 2021-2023 MTEF/FSP was prepared against the backdrop of a global recession and heightened global economic uncertainty.

The document further read, “The medium-term outlook for Nigeria suggests that fiscal risks are somewhat elevated, largely due to COVID-19 related disruptions, which have exacerbated structural weaknesses in the economy.

“Nigeria faces significant medium-term fiscal challenges, especially with respect to its revenues, which, if not addressed, could snowball into a debt sustainability crisis.”

Already, Nigerians are becoming agitated by the rising debt profile of the country, with the National Assembly raising concerns over external loan agreements between Nigeria and global bodies, especially the China Export-Import Bank.

BIG STORY

National Assembly Passes Life Imprisonment Bill For Nigerian Drug Traffickers

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In a bid to tackle drug-related crimes, the National Assembly has amended the National Drug Law Enforcement Agency (NDLEA) Act, introducing life imprisonment for drug offenders and traffickers.

This comes after the Senate and House of Representatives adopted the harmonised report on the amendment.

Senator Tahir Monguno, Chairman of the Senate Conference Committee, presented the report, highlighting that the amendment introduces stricter penalties to deter drug-related crimes.

“Any person who unlawfully engages in the storage, custody, movement, carriage or concealment of dangerous drugs or controlled substances and, while doing so, is armed with an offensive weapon or disguised in any manner, commits an offence under this Act and is liable, upon conviction, to life imprisonment,” Monguno said.

The Senate approved the amendment through a voice vote during Thursday’s plenary, which was presided over by Deputy Senate President Barau Jibrin.

In addition, the Senate passed the Revenue Mobilisation, Allocation, and Fiscal Commission Bill, 2024, aimed at replacing the 2004 RMAFC Act. Yahaya Abdullahi, Chairman of the Senate Committee on National Planning and Economic Affairs, stressed the need for the commission’s reform, citing Nigeria’s declining revenue and increasing population.

“The Act, last revised over 20 years ago, no longer reflects Nigeria’s evolving economic realities. This bill proposes additional funding and a restructured operational framework for the commission to improve its efficiency,” Abdullahi explained.

He further emphasised the need for adequate funding from the Federation Account for the RMAFC to effectively carry out its constitutional duties.

The bill, passed after deliberations and a majority vote, now awaits President Bola Tinubu’s assent to become law.

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BIG STORY

UPDATE: We’re Ready To Provide Evidence For Trial Of Simon Ekpa — Enugu Government

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The Enugu State Government has expressed its readiness and willingness to provide evidence to assist in the prosecution of Simon Ekpa, who was arrested in Finland on Thursday over allegations of sponsoring terrorism in Nigeria.

Enugu State Government made this offer in a statement released by the Secretary to the State Government, Prof. Chidiebere Onyia, on Friday.

In the statement, the Enugu State Government also commended the Government of the Republic of Finland for the arrest of Ekpa, whom it described as “the Finland-based leader of the criminal gang, Autopilots.”

The Enugu State Government further referred to Simon Ekpa as “a common criminal, con man, and terrorist, who has no interest of Igbo people at heart.”

It added that Ekpa “is a murderer and fraudster, who delights in killing his people and living large off their misery.”

“Enugu State was ready and willing to provide evidence of Ekpa-sponsored atrocities against Ndigbo to aid his trial and conviction, whether in Finland or Nigeria.”

“The Enugu State Government welcomes the arrest of the Finland-based terrorist, Simon Ekpa.”

“His arrest and trial will no doubt go a long way in strengthening peace, security, and stability in all parts of the South East.”

“This arrest is in line with the demand of Governor Peter Mbah Administration, which has repeatedly made it known that Ekpa is a megalomaniac, common criminal, murderer, and fraudster, who takes joy in feeding fat on the manipulated emotions of Ndigbo and inflicting misery on the South East region.”

“Ekpa has for long, and unfortunately from Finland, made a living by creating a siege climate and mentality in the South East, destroying lives, property, and the Igbo trademark of entrepreneurship and hard work.”

“He thrives on manipulating, exploiting, and extorting the people on the pretext of fighting for their interest and for the restoration of Biafra,” the government said.

Ekpa was arrested and detained alongside four other suspects by the government of Finland on charges of sponsoring terrorism in Nigeria, according to local newspapers in the European country.

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BIG STORY

Much Ado About Meddlesome Minions, And Messengers Of Misinformation — By Tayo Williams

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There is a growing phalanx of pseudo-intellectuals parading the social media space with faux and fictitious knowledge of the indigenous oil and gas industry, and it is scary because of the grave danger they portend and present for the average Nigerian.

From X (formerly known as Twitter) to Facebook and even the photos and videos-sharing site, Instagram, they abound, in their inglorious number, lending their platforms to deliberately distort facts and spread misinformation especially to favour the narratives propounded by popular Nigerian businessman Aliko Dangote, owner of the Dangote Petroleum Refinery.

Since the refinery began operations earlier in the year, it has been one week, one controversy allegedly orchestrated by Dangote in a brazen attempt to arm-twist the Nigerian National Petroleum Corporation Limited, NNPCL, into playing by his rules.

Those conversant with the modus operandi of Dangote and his refinery say the long-drawn warfare with every institution and individual in the oil and gas value chain is nothing but a self-seeking and mindless profit maximisation tactic.

Whilst nobody begrudges Dangote’s drive for profit as a businessman, perhaps he needs to be reminded that the NNPC has a mandate to ensure and provide energy security in a way that is affordable and sustainable for the generality of Nigerians. And, the NNPCL management has declared in very unambiguous terms that it would not pander to the din of the market whether orchestrated by Dangote, his rampaging minions or anyone else.

The truth, however, is that there is an increasing army of vacuous, vicious, and vile individuals strutting the social media space defending and propagating outright and outlandish falsehoods. Of particular concern is one Kelvin Emmanuel who has become the unofficial mouthpiece of the Dangote Refinery. Going from one media house to the other, he pulls figures out of the air and projects obnoxious untruths on hapless Nigerians. With the backing of his paymaster’s billions, it is no surprise that this otherwise irrelevant and fatuous character now commands appearances on major television stations.

But it is on X that he has made lying glibly and gratuitously the Holy Grail. He once premised Dangote’s inability to secure feedstock for his refinery on the government and the NNPCL. While peddling this untruth, he conveniently forgets that the refinery had a seven-year window, during its construction phase, to lock in feedstock supplies that could last a minimum of five years. Dangote did none of that. As it would later unfold, his game plan, which Emmanuel glossed over, was to monopolise equity oil and production quotas to serve his business interests.

Another deliberate misinformation from the Dangote camp was the allegation that International Oil Companies (IOCs) and other industry players were trying to sabotage his interests. Apart from being an investor in the Dangote Refinery, the NNPC still supplies gas to various Dangote companies across Nigeria. How can anyone or any institution jeopardise their investment? What further proof of faith does Dangote and his minions need to know that the NNPC is their cheerleader, and is here to make operating in the industry seamless and a win-win for all?

Echoing Dangote’s baseless stance, Emmanuel also called for the sack of Mr. Farouk Ahmed, Chief Executive Officer of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), regulators of Nigeria’s midstream and downstream value chain. By Emmanuel’s warped reckoning, Ahmed had no locus to speak against Dangote or his enterprise because the latter questioned the quality of the product from Dangote Refinery and other local refineries in comparison with imported ones. Of course, Emmanuel’s was a lone voice in the wilderness because those who understand the invaluable role that the NMDPRA plays in the industry did not as much as dignify his tirade with a glance.

In a robust response to Emmanuel’s groundswell of egregious lies, Ibrahim Y. Kabo, a petroleum engineer based in Abuja, described him as “Someone who has not seen the inside of a refinery before Dangote built one, let alone understood the mechanism of the energy industry, …(yet) assuming the role of an authority in oil and gas matters.”

He went further to lampoon Emmanuel for stating that only Dangote Refinery’s products meet specifications while others are all sub-standard. “The obvious question is: whose specifications? For a refinery that has barely made four of seven pre-inauguration certifications, it sounds somehow laughable to suddenly assume the role of regulator in an industry you’ve barely entered,” Kabo said.

In the article, entitled, “The Hand of Aliko, the Voice of Kelvin: Inside Dangote Refinery’s Media Stunt Lab”, Kabo declared that from all Emmanuel’s interviews and pretensions to be an industry expert, one thing is obvious: “He lacks an understanding of both the mandate and the reach of NNPC as a national oil company.”

Kabo adds that, “Downstream is the least of NNPC’s business interests. The mandate, as per PIA (Petroleum Industry Act), is to facilitate both the extraction and commercialization of Nigeria’s oil and gas resources. 20 billion dollars may be a lot, but NNPC and industry regulators routinely handle projects of that magnitude. At best, Dangote and (Emmanuel’s) ranting are an irritation. I believe that’s why NNPC openly declared it was not interested in being Dangote’s off-taker.”

Like the Yoruba saying goes, derision does not stop the sweetness of the honey. The meddlesome minions and messengers of misinformation can continue dancing naked in the marketplace, but what is most important is that the NNPCL has assured that it will not cease doing everything in its capacity “to harness the possibilities of oil and gas, address energy demand and drive the national economy, and become the number one oil producer and supplier in Africa.”

 

Tayo Williams is a Lagos-based media executive

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