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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

Fuel Crisis: We Don’t Know About NNPCL’s Logistics Challenges — Oil Marketers

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Oil marketers have stated that they are unaware of the specific logistical issues that the Nigerian National Petroleum Company Limited (NNPCL) indicated were to blame for the country’s present low product supply.

Last Wednesday saw the return of a fresh petrol shortage, which has since gotten worse, leaving Nigerians to deal with the fallout.

Due to the scarcity, prices have since increased in Lagos to ₦1,200 per litre on the black market and as much as ₦800 per litre in some filling stations owned by the Independent Petroleum Marketers Association of Nigeria (IPMAN).

Prior to the shortage, fuel was sold at stations run by the Major Energy Marketers Association of Nigeria (MEMAN) for around 610 per litre.

Some filling stations sell petrol for as high as N850 to ₦900 per litre in locations such as Maryland, Ikeja, Agege, Iyana Ipaja, and other outskirts of Lagos. In some states, the product sells for more than ₦1,000 per litre at filling stations. Even at that rate, most filling stations have since shut their doors due to a lack of products.

The NNPCL blamed the development on logistics challenges. The spokesperson for the company Olufemi Soneye said last week that the challenges have been resolved.

But almost a week later, oil marketers have said they are in the dark about the nature of those challenges. They also dismissed claims that they were hoarding the products.

“Do you blame oil marketers for the current situation? If NNPCL gives us products, we will sell them because we are businessmen. We are in this business to make money, so we won’t keep products in our tanks if we have,” the Chairman of IPMAN Satellite Depot, Lagos, Akin Akinrinade told Channels Television.

“They said they have a logistics problem and have 240 million litres in store to distribute. But that was what they told us since last weekend. They said the logistics challenges have been resolved but they didn’t tell us the type of logistics problem they have.

“For now, NNPCL stations are mostly the ones selling with just a few others getting supply. But you know our members have the largest number of stations nationwide. If they give IPMAN stations products, you will see that the queues will disappear immediately.”

Currently, IPMAN has over 30, 000 filling stations nationwide.

According to Channels Television, a top source among the oil marketers said  that there is not much product in circulation.

“We don’t have much products as we speak. According to them, they don’t have smaller vessels to take the fuel from the larger vessels. Others are saying it’s because of bridging claims. As I speak, I don’t have fuel in my depot. I am going around begging for fuel,” he said.

“If you tell NNPCL you need say like 80, 000 tons of product now, they will give you 10, 000 tons. So, you will sell small, and then everything goes dry again.

“If they claim they have fuel, and no products in our tanks, then, it still translates to a no-fuel situation. Again, NNPCL is selling to us at around N600 per litre, and as of today, the landing cost of gasoline at the international market is ₦847 per litre.

“So, if I buy at ₦847/litre and add other costs, the pump price will be about ₦1400 per litre. So, if I sell at that price in my station, who will buy it? Even we marketers can’t buy much at that price. So, we continue to manage the situation.

“And if we make noise too much, they will tell us to go and import too. How will we import with the high exchange rate? If we import on our own, who will buy from us at that high price?

“Those currently selling at low prices know how they go about it because, during scarcity, everybody will be doing whatever they like.”

Chinedu Ukadike, the Public Relations Officer of IPMAN, had on Sunday, said that the prevailing scarcity of petrol could persist for an additional two weeks.

Ukadike told journalists that the product was not available in the country, because most refineries in Europe were undergoing turnaround maintenance.

“I also have it on good authority that most of the refineries in Europe are undergoing turnaround maintenance, so sourcing petroleum products has become a bit difficult.

“NNPC Group CEO has assured us that there will be improvement in the supply chain because their vessels are arriving.

“Once that is done, normalcy will return. This is because once the 30-day supply sufficiency is disrupted, it takes two to three months to restore it”, he said.

Unconfirmed speculations doing the rounds have also woven the current scarcity around an imminent increase in the price of PMS, which according to them, led to excessive hoarding, and panic buying, among other things.

While the public was still hoping for an improvement as promised by the NNPCL, IPMAN had threatened to withdraw services over non-payment of ₦200bn bridging claims.

The association’s unit chairman and spokesperson, Aba Depot, Mazi Oliver Okolo who made the threat, said it was with the backing of the IPMAN’s national leadership.

He claimed that the debt is being owed by the Nigerian Midstream and Downstream Petroleum Regulatory Commission (NMDPRA).

In a communique released after a press conference on Tuesday, Okolo said NMDPRA failed to pay the ₦200bn debt despite a directive for payment from the Petroleum Minister (Oil) Heineken Lokpobiri.

The IPMAN deport chairman claimed that since the directive by the minister in February 2024, only ₦13bn had been paid to their members, saying that the unpaid claim had crippled their businesses.

“We are extremely distressed and depressed by the laidback attitude of the leadership of the Nigerian Midstream Downstream Petroleum Regulatory Authority (NMDPRA), towards the survival of our member’s businesses, arising from NMDPRA’s deliberate delay and refusal to offset the debt of over ₦200 Billion owed our members, which has consequently led to the deaths of many of our members and the unfortunate collapse of their businesses.”

He blamed the Nigerian National Petroleum Company Limited (NNPCL), the sole importer of petroleum products, for the current nationwide petrol scarcity, adding that some of its members have “completely” shut down their businesses, and retrenched their employees.

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Governors Can Pay N615,000 Minimum Wage If They Get Priorities Right — NLC

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The President of the Nigeria Labour Congress (NLC), Joe Ajaero, says state governors can afford to pay the proposed N615,000 minimum wage if their priorities are right.

Ajaero made this known on Thursday during an interview with Channels Television.

Organised labour recently declared that N615,000 should be the new minimum wage.

The idea was made in the midst of continuous discussions about the minimum wage between organised labour and the federal, state, and local governments.

The national minimum wage was set at N30,000 by the former president Muhammadu Buhari’s administration in 2019. Some states took an extremely long time to enact the increase in the minimum wage when it was announced at the time.

When asked during the interview if the N615,000 offered by organised labour is reasonable, Ajaero responded that, considering the nation’s rapidly rising inflation, it is the “most realistic” sum.

The NLC president said organised labour considered factors like transportation, housing, and feeding before arriving at the sum.

“If you are talking about being realistic, the N615,000 demand is the most realistic. Being realistic is not about slave wage,” Ajaero said.

“However, N30,000 is big money if inflation is brought down, and at a single digit.

“Look at the indices that create inflation. If you check them, you can talk about being realistic. All other factors in the country are going high and wages remain constant.”

Asked if states can afford the N615,000 proposal, the NLC president averred that it is not about ability to pay but the priorities of states.

“I think we need to understand the issues of ability to pay and not getting the priority right,” he added.

“Most of the states that have shown willingness to pay the current minimum wage are not among those getting the highest revenue.

“During the time of Muhammadu Buhari, some states were declared not having enough money to pay and he released funds for them to pay.

“Those states still refused to pay. It is not the question of either the quantum of money that they have or not, it is what they decide to do with such money.

“If they get their priorities right, then a lot can happen.”

Organised labour has also threatened to embark on a strike if a new minimum wage is not announced before May 31, 2024.

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We’ve Apprehend Mastermind Of 2022 Abuja-Kaduna Train Attack — Police

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Ibrahim Abdullahi, the alleged mastermind of the 2022 train attack in Abuja and Kaduna, has reportedly been taken into custody by the Nigeria Police Force (NPF).

Updates on force operations were given by police public relations officer (PPRO) Olumuyiwa Adejobi on Thursday while she was in Kaduna.

According to Adejobi, on January 12, the Kaduna State Criminal Investigation Department (SCID) anti-kidnapping squad arrested Abdullahi, also known as Mande. According to a military spokesman, Abdullahi acknowledged leading a kidnapping ring that terrorised the Kaduna-Abuja route.

On March 28, 2022, gunmen ambushed a train travelling from Kaduna to Abuja, killing numerous people on board.

Several others were injured while 61 persons were also abducted during the attack.

All the abducted passengers were released at various intervals, with the latest batch freed after seven months.

Adejobi said Mande was also involved in the abduction of students of Greenfield University in Kaduna state.

On April 20, 2021, armed bandits attacked the institution and abducted 20 students and three officials.

Five of the students and a male warden were killed while in captivity.

The students and staff were also released in batches with the last batch freed on May 29, 2021.

“On January 12, 2024, police operatives attached to the anti-kidnapping unit of the Kaduna State Criminal Investigation Department (SCID), based on credible information, swooped on and arrested one Ibrahim Abdullahi, also known as Mande, at the Abuja-Kaduna road flyover by Rido junction,” Adejobi said.

“The suspect confessed to being the leader of a kidnap syndicate terrorising the Kaduna-Abuja highway, ranked among other criminals like Dogo Gide and Bello Turji.

“He had participated in various kidnapping incidents, including the abduction at Green Field University, and he was involved in almost all the kidnappings along the Abuja-Kaduna highway. He was also involved in the popular Kaduna-Abuja train attack but had run away. We promised Nigerians that he would be arrested.”

The police spokesperson said the strategy of the force has paid off.

He added that a helicopter has been deployed to serve as an escort for trains using the route to provide aerial support for the ground troops, including police, and other security agencies deployed along the corridor.

“This proactive measure aims to prevent attacks and act as a first responder in the event of any untoward incidents,” he said.

Adejobi said the police also arrested 81 suspects for armed robbery; 40 for kidnapping; 73  for murder/homicide; 36 for rape; 22 involved in cult-related crimes, and 28 for engaging in other criminal activities.

He said 16 firearms of various calibre with 226 ammunition of diverse types were recovered.

The police spokesperson added that 28 stolen vehicles, over 200 harmful weapons, and 600 bags of fertilisers have been retrieved, while 158 kidnapped victims have been rescued.

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