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Nigeria could likely borrow more despite IMF’s warning

Nigeria’s Budget Minister, Mr Udoma U. Udoma, has claimed that the country has a sustainable debt portfolio and could borrow more money if it so wishes. 

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Udoma

Nigeria’s Budget Minister, Mr Udoma U. Udoma, recently claimed that the country has a sustainable debt profile and could borrow more money if it so wishes.

The Minister, who made this assertion while giving a speech in Indonesia at the recently held annual meeting of the IMF and the World Bank Group, also disputed the wide-spread concern over Nigeria’s debt figures.

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In his defence, he described Nigeria as having one of the lowest debt levels on the African continent. He stated:

“Nigeria has a sustainable debt profile with ample room to borrow more whenever we may require doing so. Nigeria runs no debt risk and the Debt Management Office carries out an annual Debt Sustainability Analysis to ensure that we stay that way.” -Udoma

The IMF has a different perspective

The Minister’s claim comes barely a week after the International Monetary Fund (IMF) issued a serious warning to the country over its looming debt crisis. The organisation also advised the major oil producer to not be deceived by the increase in global prices but to make haste and lower its growing debt levels as well as urgently diversify its economy.

Note that Nigeria’s debt profile stood at N22.3 trillion as at the end of Q2 2018. The country currently spends about two-thirds of its revenues serving loans.

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Meanwhile, the IMF is not the only one concerned

As we reported, former World Bank Vice President and Nigeria’s presidential hopeful, Mrs Oby Ezekwesili, recently criticised the President Muhammadu Buhari Administration over what she perceived as reckless Government loan deals; particularly Nigeria’s recent borrowings from China.

Even the Debt Management Office has acknowledged a rise in debt

Recall that Nigeria’s Debt Management Office (DMO), recently disclosed that the country’s debt increased by N9.61 trillion between mid-2015 and the end of 2017.

Note that this is the official figure as prepared by the government agency. The DMO also stated Nigeria’s debt is within the sustainable threshold of 56% recommended for developing countries, and that borrowed money is used for developmental purposes.

The cost of serving the loans keeps rising

In all these, one thing remains puzzling, and that is the fact that Nigeria continues to record abysmal economic development despite the millions of dollars that are borrowed annually. In other words, the loans do not impact ordinary Nigerians.

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Patricia

Emmanuel holds an MSc. in International Relations and a B.A in Philosophy & Logic, both from the University of Ibadan. He is a communications professional. As a Lead Business Analyst at Nairametrics, he focuses mostly on quoted companies, their products/services, and the economy in which they operate. Emmanuel is also experienced in the areas of corporate communication, brand communication, corporate storytelling, public relations, business research, management/strategy, etc. You may contact him via his email- emmanuel.abara@nairametrics.com.

1 Comment

1 Comment

  1. Anodebenze

    October 17, 2018 at 11:55 am

    m..they can avoid more borrowing by pushing the economy (1)if the cbn continues it’s OMO by making it deep and deeper (2) allows the local govt area to borrow by any means,when they do it, the lga will have more insight to broading and deepen it’s taxes collection,meaning with this democracy it’s taxes will be efficient.
    The major problem in the national govt borrowing from left and right,there is too much leakage in the economy,it is becoming a bottomless pit.funds or finance are not meeting ideas or activities,and this is the major problem in the rises of inflation in Nigeria economy.(3)they could deregulate the economy further,but the problem of increases in corruption as the police forces is not well funded (4)the federal govt intervenes massively in social lending or giving free money to increases economic activities.kemi have the knowledge and education and experience to make Nigeria proud but she did not do it,which is very regretable
    if the cbn deepen it’s OMO,it will leads to competitive economy if there is any increases in inflation,they should ignore it, with lga if well-funded,it will matches funding to economic activities.it will blockes some of the leakages in the economythey will have no choice in future and them many Nigerians are not surprised Mr Buhari did not fired kemi a long ago,we are in a suitiation” ABBB” any body but mr buhari.
    I have read this IMF report of slow down in economic activities for this year and next,if it happen it will not be universal

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Economy & Politics

Buhari meets with AfDB President, Akinwumi Adesina, promises support

Nigeria stands solidly behind Akinwumi Adesina in his re-election bid as the President of the African Development Bank (AfDB).

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President Muhammadu Buhari on Tuesday, June 2, 2020, met with the President of the African Development Bank (AfDB), Akinwumi Adesina, at the presidential villa.

The meeting will not be unconnected with the current travails of Adesina, who was accused by a group of whistleblowers for official misconduct and the pressure by the United States Government for an independent probe of all allegations.

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This was disclosed in a tweet posted on the president’s official Twitter handle.

The meeting which lasted for about 45 minutes was also attended by the Minister of Finance, Budget and National Planning, Zainab Ahmed; Minister of Foreign Affairs, Geoffrey Onyeama, and the Chief of Staff to the President Ibrahim Gambari.

The President in his statement said, ‘’Nigeria stands solidly behind Akinwumi Adesina in his re-election bid as the President of the African Development Bank (AfDB). We will work with all leaders and stakeholders in AfDB to ensure that he re-elected on the strength of his achievements during this term.

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‘’In 2015, when you were to be elected for the first term, I wrote to all African leaders, recommending you for the position, I didn’t say because you were a PDP Minister, and I belonged to the APC, so I would withhold my support.’’

Adesina has continued to deny the allegations and maintain his innocence.

I maintain my innocence with regard to trumped-up allegations that unjustly seek to impugn my honour and integrity, as well as the reputation of the African Development Bank,” Adesina said recently while responding to the accusations.

The Federal Government has, however, continued to rally support for Adesina as the Minister of Finance, Budget and National Planning, Zainab Ahmed in a letter urged the board of the AfDB to ignore calls for an independent investigation of Mr Adesina.

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Nigeria’s Former President Olusegun Obasanjo had earlier in his statement, and as a show of support, called on the board of AfDB to ignore calls for an independent investigation of Adesina by the US treasury secretary.

Patricia

 

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Economy & Politics

Lagos commends religious leaders in the state, churches and mosques to remain closed

The Lagos State Government has commended religious leaders in the state for their cooperation and active participation in the ongoing fight against the COVID-19 pandemic

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Prince Anofiu Elegushi

The Lagos State Government has commended religious leaders in the state for their cooperation and active participation in the ongoing fight against the COVID-19 pandemic, saying that the cooperation received from the leaders of the two major religious groups, especially in the area of zero-congregational gathering, assisted in lowering the curve of the pandemic.

The commendation was given on Tuesday, June 2, 2020, by the state’s Commissioner for Home Affairs, Prince Anofiu Elegushi, during a Ministerial Press briefing commemorating the first year in office of Mr Babajide Sanwo-Olu at Alausa, Ikeja.

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On plans to reopen the economy of the State including worship centres, Elegushi pleaded for continued collaboration with the State government and adherence to the government’s directives that would still be presented to the various churches and mosques when they are eventually allowed to gather for their services.

According to Elegushi, “When we got a hint on the current Coronavirus disease across the globe, we immediately went into action by organising a sensitisation and briefing workshop on Tuesday, March 3rd, 2020 at the Chapel of Christ the Light Hall, Alausa. This was followed by another meeting where a joint decision was reached by all religious bodies to reduce the attendance of worshippers to 50 worshipers at a time”.

In addition to this, our Religious Leaders came together again on 18th March 2020 after reviewing the situation to agree on a total lockdown of Religious Worship Centres across the State before President Muhammad Buhari came up with an announcement locking down Lagos, Ogun and Abuja“, he said.

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Elegushi said that the shutdown of all religious gatherings, activities and programmes by churches and mosques was quite timely and helped in the containment of the virus from escalating beyond control, considering the huge numbers that do gather periodically for religious purposes in the State.

He also acknowledged the discomfort which the pandemic brought on both the Muslims and Christians in Lagos, specifically during the Lenten season and the Ramadan period.

He said: “For a very long time in human history, Christians celebrated the Lenten period and Easter celebrations at home, while our Muslim brothers and sisters were also restricted to observe Sallah at home throughout the Ramadan period, including the Eid-El Fitri celebrations”.

Elegushi attributed the mutual understanding that exists between the State government and the religious groups to a long-term religious harmony and peaceful coexistence, saying that creating rapport is one of the critical functions of the Ministry.

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Meanwhile, information from a monitored report suggests that the churches and mosques in the state might not be opening anytime soon for worshippers. This was disclosed by Elegushi on the sideline of the Ministerial briefing commemorating the first year in office of Governor Babjide Sanwo-Olu.

Patricia

He said that the reopening was not possible as Lagos State is the epicentre of the coronavirus pandemic in the country and that after several meetings with religious leaders in the state, the possibility of reopening religious houses was ruled out.

Elegushi said that they claim that they cannot take responsibility for ensuring that only 20 or 50 people are in attendance.

He said that the governor will come out with further directives.

It can be recalled that the Federal Government, on Monday, June 1, 2020, announced the relaxation of the ban on religious gatherings. They, however, said that each state government can devise measures that suit them, thereby looking at the possibility of doing so in their respective states.

 

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Economy & Politics

The economics of climate change

The Western economies were built by burning “dirty” fuel i.e. coal and later crude oil to generate power for industrial complexes and cars.

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The economics of climate change

When I read “climate change” …I do not see polar ice caps melting and deserts growing. I see the economics of it.

To really do climate change, is to reduce or cap carbon emissions and boost the use of renewables such as solar and wind. These are good objectives, so why has a comprehensive climate change plan not been reached?

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Simple, it is the economics

Let us look at reducing or capping emissions, what emits carbon? Factories and cars do, so to cap or reduce emissions is to cap or reduce growth in factories and to stop families driving cars. You are capping jobs and asking families not to drive. The reality is this, the Western economies were built by burning “dirty” fuel, i.e. coal and later, crude oil to generate power for industrial complexes and cars. Then the West moved to nuclear and cleaner sources of power, but this was after the Western economies had achieved a high and inclusive economic standard of living for their citizens. Owning a car in America was a rite of passage, still is.

The world’s two largest economies outside the Western World are China and India. In all measures, the citizens in these nations are not as rich as the middle class in Pennsylvania. How do you make poor people rich? You create opportunities. How do you create opportunities? You build economies that create jobs. Where do you find jobs? In factories and offices. What do those factories burn? Diesel, petrol, and of course, coal.

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In other words, for India to move her citizens from poverty to prosperity, she must generate enough power supply to factories and businesses in India who hire Indian workers and pay them a middle-class wage. It is really that simple. So, climate change summits always fail because the West wants a cap on carbon emission and the developing nations do not, at least until they are “developed”.

It is important we understand this cold hard reality. Climate change is good. I want a great climate for my kids, but my kids must eat first. Nigeria must not in the name of “climate change” sign away our rights to build coal-fired power plants in Kogi and Enugu…. No. (Japan is restarting coal plants)

(READ MORE:Why households that engage in subsistence agriculture are poor – Yemi Kale)

So, what should Nigeria do? Do we keep polluting and flaring gas?

The economics of climate change

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Nigeria must have a strategy, and I propose a simple strategy called, “Let Them Pay” LTP. If Nigeria has coal deposits, then let the West pay Nigeria not to build a coal Power Plant using that coal. They can pay Nigeria by investing in developmental credits to fund the building of a solar power plan, or even writing off Nigeria’s debts.

Patricia

There is a precedence to this, the West pays the Armed Forces in Africa to fight terrorists, and they pay Police in North Africa to stop people smugglers crossing the Mediterranean.  Nigeria pays Niger Republic by supplying them power so that they do not build their dam on the River Niger to reduce water supply to Kainji Dam. China led Africa strategy on this with the Chinese President flying to Southern Africa from the COP 21 in Paris to discuss the developing world’s response with African leaders.

Nigeria should push that gas flaring be reduced by a massive investment by the Western nations via FDI to build LNG plants in the Niger Delta.

(READ MORE: UPDATED: Minister of Power sacks TCN MD, confirms appointment of Directors)

Nigeria should also tie the Climate Change narrative to terrorism by making the strong case that Boko Haram is feeding off the lack of jobs and opportunities caused in part by the drying of Lake Chad. This has reduced agric and trade and pushed many young boys to Boko Haram. Lake Chad has shrunk by 95% between 1963 to 1998, the UN Food and Agricultural Organization has called it an “Ecological Catastrophe”. Lake Chad provides water to almost 20million people, including frames, fishermen, and herders.

The economics of climate change

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The solution to a drying Lake Chad is already there, a pipeline to take water from the Congo to Lake Chad, it’s bloody expensive – about $14.5b but allowing Boko Haram to exploit the lack of commerce from lake chad also is expensive.

Nigeria must tie this climate thing to economics

 

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