World Bank and Nigerian president discuss the country’s economic crisis

By Felix Onuah

ABUJA, April 27 (Reuters) – The World Bank held talks with the Nigerian president on Wednesday on how it could help Nigeria overcome an economic crisis caused mainly by a sharp fall in crude prices eating into its oil revenues.

On her second day of meetings with Nigerian officials, World Bank Managing Director and Chief Operating Officer Sri Mulyani Indrawati met President Muhammadu Buhari, who plans to stimulate the flagging economy with a record 6 trillion naira ($31 billion) budget.

Nigeria will have to borrow 1.8 trillion naira from abroad and at home to help fund the budget, which has been delayed by several months and wrangling with parliament, if it goes ahead.

Although Nigeria has held talks with the World Bank over a possible loan or credit facility in recent months, Indrawati did not address this when speaking to reporters after the meeting.

“We would like to know how we can help Nigeria to make the very important decisions, whether on micro economic policy and other sectoral policy, that will make this economy move forward to become a strong middle income country,” she said.

Indrawati, who met Finance Minister Kemi Adeosun on Tuesday, said she and Buhari discussed the government’s “commendable goals to improve tax collection and crackdown on corruption.

Nigeria’s economy, the largest in Africa, grew by 2.8 percent last year, its slowest pace since 1999.

Source: Reuters

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2016 Budget: NASS has resolved differences with Presidency – Saraki

President of the Senate, Dr Bukola Saraki, says all the grey areas in the 2016 Budget have been resolved.

Saraki said this on Tuesday night while speaking with State House correspondents after a closed-door meeting with President Muhammadu Buhari in Abuja.

Buhari met with the leadership and principal officers of the National Assembly, as part of efforts to resolve the 2016 budget impasse.

Saraki said that the lawmakers came to inform the President and his team of the solutions they had found to the budget impasse.

He said that both sides agreed on the way forward and assured Nigerians that the process would be completed in a matter of days.

“We just finished a meeting with the President and the Vice-President.

“We came to let them know some of the solutions that we found in moving the budget process forward and we are happy to say that we have agreed on the way forward.

“We believe that this process will be completed in matter of days rather than weeks.

“So, it is good to Nigerians and all of us, we have found a way forward and in a matter of days, the budget will be ready for the President’s assent,” he said.

Saraki also said that committees had been set up on both sides to hasten actions on the process.

He said that the committees would meet over the next few days to “tidy up a few loose ends and here and there and the outcome will be satisfactory to everybody.”

Also commenting on the outcome of the meeting, the Minister of Budget and National Planning, Mr Udoma Udo Udoma, confirmed that the Executive had agreed with the Legislature to resolve all grey areas in the budget and the modalities of doing so in the next few days.

“We have agreed to work together to resolve all issues in the next few days and we have also agreed on the modalities of or doing so.

 “It was a very good meeting and it was very positive; within the next few days, all issues will be resolved.

 “We are working together, both the Executive and the Legislature, to sort those things out. Within the next days, all matters will be resolved,” he added

Those who attended the meeting included Vice-President Yemi Osinbajo; President of the Senate Bukola Saraki; Speaker of the House of Representatives Yakubu Dogara; Deputy President of the Senate Ike Ekweremadu and Deputy Speaker of the House of Representatives Yusuf Lasun.

Others were Senate Minority Leader Godswill Akpabio; House Leader Femi Gbajabiamila, among other leaders of the National Assembly; Chief of Staff to the President Abba Kyari and Minister of Budget and National Planning Udoma Udo Udoma.

The Senior Special Assistant on National Assembly Matters (Senate), Ita Enang; and the Senior Special Assistant on National Assembly Matters (House of Representatives), Samaila Kawu, also attended the meeting.

Source: PM News

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Party politics aside, Nigeria must industrialize Now

By Ugo Nwagwu

The best time for Nigeria to industrialize was 35 years ago. The second best time; NOW!

Pre Independence Malaysia was rich in natural resources such as porcelain, spices (which were then traded as currency) and large deposits of Tin. As part of the British Empire, the British took over administration of the economy and also introduced Rubber and Palm Oil trees for commercial purposes and then brought in Chinese and Indian expats to work the fields and mines instead of locals. Pre 1970s Malaysia had an economy completely dependent on natural resources exported while basically everything it consumed was imported. Sound familiar?

Today, Malaysia though still state oriented, has a newly and open industrialized market economy. This is because in the 60s and 70s, the Malaysian government took painful and costly steps to industrialize their economy. The Malaysian government committed itself to a transition from being solely reliant on mining and agriculture as an economy to a multi-sector economy. Mining and agriculture dominated the economy up until the 80s and since then, it’s been the industrial sector driving growth. It took 25 years for the turn around.

If you read the papers and follow the news concerning all things about Nigeria’s economy, three things continue to drive the headlines: Oil prices, Nigeria’s insatiable appetite for FOREX (Dollar, Pounds, Euros and now potentially, Yuan) & diversifying to Agriculture.

One thing we still aren’t talking about is how to push past the politics of now, and blame shifting to chasing after real solutions that will benefit our children and their children. We are a nation of traders. We have always been a nation of traders and even if we exploit more of the agricultural sector, chances are that we will take the traders approach.

As we diversify into agriculture, the tendency will be to treat its produce as we’ve done with oil. Right now, Nigeria remains one of the largest crude production and exporting country but what plagues the average Nigeria today is the availability of refined crude. We continue to import refined crude at an amazing rate negating whatever balance of trade that could have been helped by crude export. Even if the state’s 3 refineries were working to capacity, it won’t produce enough to support a population of 180 million and growing.

Now we want to take the same mentality into agriculture by “mining” produce and then exporting the raw produce without any thought to a “National Vertical Integration” whereby we keep all our “raw produce” and process them here to first serve the immediate need of the population (limiting imports of those processed goods) and then exporting them. Simply put, if we grow tomatoes, we should be able to process every part of the tomato into everything Nigerians need from a tomato i.e. canned tomatoes, ketchup, tomato sauce, tomato paste, tomato puree all in Nigeria. This goes for every single agricultural produce we grow or plan to grow.

That’s one example but it can be applied to every sector in which raw materials are found. Palm oil is used in over 50% of everything found in a supermarket and you know which country has one of the world’s largest palm oil production potential? Nigeria! As a nation we need to invest not just in mining gold, lead, zinc or whatever metals are beneath the soil to smelting them and turning them into actual products that we can then export to other parts of Africa and the world thereby controlling all parts of its margins.

This level of industrialization would pump millions of jobs into the economy and lead to economic growth unrivaled in any part of Africa in its history.

How do we start? First we must resist the urge to turn the Naira-Yuan swap into another level of shopping binge for cheap Chinese goods but instead import heavy machines and power plants to build factories and manufacturing plants. We must continue to attract foreign investments that solely act to serve Nigeria in an industrialization master plan.

The Federal Government can pursue public private partnerships with matching investments and use the capital markets as part of their exit strategy thereby also providing a return of investments to shareholders. This is certainly more productive than subsidizing fuel consumption.

We don’t need more retail outlets and companies selling us high priced alcoholic beverages. We have enough cheap clothing and shoes coming in droves from all parts of the world.

If we do this and leave the politics and tribalism that only serves to separate us and shift our attention from the selfish ambition of today’s politician from the Local Government level to the Federal Government and all ministerial staff, then maybe in 25 years, we too would serve as an example for other countries to follow. If we get this done and done right, no one would be as concerned about the price of $1.

To borrow a phrase from one of Nigeria’s senators from Bayelsa, Senator Ben Muray Bruce, my name is Ugo Nwagwu and I just want to make common sense.

South African’s Pick n Pay to expand into Nigeria, Partner with Local Chain

JOHANNESBURG, April 26 (Reuters) – South African supermarket operator Pick n Pay plans to expand into Nigeria next year through a partnership with a local conglomerate, as it seeks to reduce its reliance on its home market, it said on Tuesday.

Pick n Pay already operates in Botswana, Zimbabwe and Namibia and plans to open new stores in Ghana next year. Like many other South African companies it wants to expand further across the continent amid sluggish economic growth at home.

The retailer, which reported a 26 percent jump in annual earnings on Tuesday, said it would take a 51 percent stake in a Nigerian joint venture with conglomerate A.G. Leventis , which runs a food business. It did not disclose the size of the investment.

“We are not suddenly going to explode onto the scene in Nigeria next year but we are going to start the process of looking at all those things,” Pick n Pay’s CEO Richard Brasher told a results briefing, adding that he was aware of tough trading conditions in Nigeria and would not expand hastily.

Nigeria is Africa’s biggest economy but some South African companies that expanded into the west African country, including Dairy products maker Clover Industries and fashion retailer Truworths, have either pulled out or scaled down due to a scarcity of hard currency to import spare parts and raw materials.

Brasher said Pick n Pay was taking a long-term view of Africa’s most populous nation.

“If you’re in the retail business and you are an African business its hard to ignore Nigeria,” he told Reuters.

Gryphon Asset Management analyst Reuben Beelders said he backed Pick n Pay’s conservative approach to Nigeria.

“People have realised that Africa is not just going to be a pot of gold at the end of the road, it’s a lot of graft and it’s going to need long-term investment rather than something that happens quickly,” Cape Town-based Beelders said.

Pick n Pay has lost ground in South Africa to rivals such as market leader Shoprite, after failing to invest in new stores. But Brasher, a former UK head of Tesco who took over in January 2013, is implementing a plan to win back market share.

Pick n Pay said headline earnings per share (EPS) rose 26.4 percent from a year earlier to 224.04 cents in the year to the end of February, helped by cost-cutting measures. Headline EPS, a measure that excludes certain one-off items, is the profit figure most widely used in South Africa.

The company declared a final dividend of 125.20 cents per share, bringing the year’s total payout to 149.40 cents, 26.5 percent higher than the previous year.

Shares in Pick n Pay, which are up nearly 30 percent over the last year, inched up 0.58 percent to 69.89 rand by 1215 GMT.

Source: Reuters

Nigeria to meet repayment to bondholders for cash-strapped states – Reuters

ABUJA, April 25 (Reuters) – The Nigerian government will allow cash-strapped states to defer deductions for loans in March so that they will have sufficient funds to pay salaries, the finance ministry said on Monday.

The government will instead make loan repayments to bondholders on the states’ behalf, the ministry said. Deductions of 10.9 billion naira ($54.8 mln) were defered in March.

Several Nigerian states borrowed in the domestic bond market and from banks to fund infrastructure projects at the peak of oil prices. But as crude prices plunged, many states have been unable to pay bills or salaries.

“With about 27 states currently experiencing challenges meeting their salary payments…obligatory repayments due to the federal government from the states in respect of their restructured loan obligations are being deferred for the current month,” the finance ministry said in a statement. 

Nigeria, Africa’s biggest economy and top oil producer, relies on crude sales for about 70 percent of government revenues and has been hit hard by the sharp fall in crude prices, leaving many states unable to pay workers.

Government revenues fell to their lowest in five years to 299 billion naira in March, down from 345.095 billion naira in February, due to low oil prices, prompting the deferral.

Governors of Nigeria’s 36 states last year requested federal government support to offset a funding crisis amid debts including unpaid salaries totalling around 658 billion naira ($3.3 bln).

The central bank then offered interventions of between 250 billion and 300 billion naira to help clear backlogs while the debt management office restructured commercial loans of more than 660 billion naira.

The finance ministry said government will make repayments to bondholders and offset the debt against liabilities from States.

“All states will receive the relief in this instance, however further deferrals will be subject to the agreement of a fiscal restructuring plan to be prepared by each state with clear measurable objectives,” it said.

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Nigeria to tap strategic wheat reserves to rein in food prices – Reuters

ABUJA, April 25 (Reuters) – Nigeria will tap its strategic grain reserves to rein in food prices, President Muhammadu Buhari said, as Africa’s biggest economy faces its worst economic crisis in decades fueled by a collapse in crude oil prices.

Annual inflation in the continent’s top oil exporter rose to a near four-year high of 12.8 percent in March from 11.4 percent in February, driven by a rise in food prices.

“President Buhari has ordered the release of 10,000 tons of grain from the National Strategic Grains Reserve to check food price increases,” his office said in a tweet on Sunday.

He ordered the agriculture ministry to assist “all able-bodied men and women” living in camps for people displaced by the jihadist Boko Haram group to return “immediately” to farming, it said.

The army has in recent months regained territory lost to the group, which has been waging a seven-year insurgency in the northeast, but most displaced people have been reluctant to return home given the volatile security situation.

A slump in oil revenue, which makes up 70 percent of Nigeria’s state income, has dried up hard currency supplies needed to fund food and other vital imports.

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Nigerian revenues down, Excess Crude Account up in March – Minister of Finance

Abuja, April 21, 2016 (FxMallam) – The Federal Government of Nigeria saw its revenues fall in March to N299 Billion from N345 billion in February due in large part to low oil prices.

The Minister of Finance, Kemi Adeosun told reporters that, “The federation accounts receipts are among the lowest in recent memories. We are looking at 299 billion this month and that is because of the very low oil pricing.” She also said that the Excess Crude Account rose from $2.26 billion to $2.3 billion.

While the Federal Government has indicated plans to raise additional revenue through new taxes and better tax collection enforcement, 70% of its current revenues are derived from Crude oil sales.

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Nigeria collects $13.6b in TSA – Accountant General

The Accountant-Generalof the Federation (AGF), Mr Ahmed Idris has reveal that the Federal Government of Nigeria and collated over N2.7 Trillion in its Treasury Single Account (TSA).

This comes after President Muhammadu Buhari in a bid to increase accountability and reduce corruption, ordered the merger of all state accounts into one account at the Central Bank.

A statement released by the deputy director of the OAGF, Kene. N. Offie, on Thursday, April 21, also quoted the Accountant-General of the Federation, Ahmed Idris, saying “there is a standing instruction from Mr. President for workers to be paid on or before 24 or 25 of every month.”

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Buhari needs more time to sign 2016 budget – Minister

Nigeria’s President Muhammadu Buhari needs more time to check the 2016 budget bill before signing it, a government minister said on Wednesday, signaling further delays before the legislation takes effect.

The budget for Africa’s top oil producer has been held up for months as Buhari had to withdraw his original bill, which set spending at a record $30 billion, in January, due to an unrealistic oil price assumption and flaws in the draft.

Lawmakers approved an amended bill last month but said last week they would hold new talks with the government to discuss “areas of concern” after local media reported disputes over details.

“On the 2016 budget we are still talking,” Udoma Udo Udoma, minister for budget and national planning told reporters. He declined further comment.

Buhari hopes the bill will revive the economy hit by a slump in oil prices but officials have left open how it would be funded. The government has said it might sell Chinese Panda bonds or get a loan deal from China and the World Bank.

Source: Reuters

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Oil rebounds to close at a 2016 high

LONDON, April 20 (Reuters) – * Oil prices rebounded to a 2016 high Wednesday as U.S. stocks of crude posted a smaller-than-expected build and there was a drawdown in gasoline and distillate stocks.

* Russia said on Wednesday it was prepared to push oil production to new historic highs, just days after a global deal to freeze output levels collapsed and Saudi Arabia threatened to flood markets with more crude.

* Iran also said it was determined to recover its share of the world oil market following the lifting of sanctions, and can withstand low prices.

NIGERIA

* Nigeria’s June loading programmes were still emerging, with a slight increase in Qua Iboe exports to 317,000 barrels per day (bpd) but one less cargo for each of the Agbami, Escravos and Usan export plans.

* Senegal’s SAR bought a cargo of Qua Iboe in its tender, but the grade remained easily accessible.

* The arbitrage to the United States had mostly closed as dated Brent was trading at a larger premium relative to U.S. WTI.

* As a result, the bulk of the some 15 cargoes left for May loading were expected to seek an outlet in Europe.

* Despite an ongoing force majeure on Forcados, and the still-missing Erha export plan for May, Nigerian crude was in ample supply.

* Qua Iboe differentials were under pressure, as several May cargoes are left for sale and there is a slightly longer bpd programme in June.

Source: Reuters Africa