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Is Nigeria’s appropriation bill a scam?

It’s been seven days ago since the National Assembly passed the rather expensive N8.9 trillion appropriation bill for the 2019 fiscal year.

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Fuel Subsidy

It’s been seven days since the National Assembly passed the rather expensive N8.9 trillion appropriation bill for the 2019 fiscal year. The document is currently awaiting presidential approval, even as Nigerians continue to dissect it for details in the meantime.

One of the latest analysis that caught Nairametrics‘ attention is the one by a young professional identified as Laolu Samuel-Biyi.  The London-based, Chevening Scholar recently shared his analysis on Twitter, basically arguing that the Nigerian budget is a scam.

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Why this outrageous perspective? According to Mr Samuel-Biyi, the budget is a scam because most of the allocations to Ministries, Departments, and Agencies (MDAs) are absolutely unnecessary/questionable; thereby indicating the Government’s misplaced priority.

Basing his analysis on the 2018 appropriation bill, he argued that a simple glance at the document reveals to anyone just how misguided the Government is about governance/administration.

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He gave examples to prove his point: Samuel-Biyi, who was very determined in his “table-shaking” mission, went ahead to name Government establishments he doesn’t believe deserve the allocations earmarked for them in the 2019 appropriation bill. One of such establishments is the Nigerian Stored Product Research Institute which received a budget allocation of N9 billion last year.

Samuel-Biyi was also rather discomfited by the fact that the Ministry of Communication Technology and the Nigerian Communications Satellite Agency received millions-of-naira-worth of allocations just to build computer centres and buy desktops.

Allocation for the Ministry of Budget and Planning is probably the biggest scam! Mr Samuel-Biyi questioned why the Ministry of Budget and Planning needed N2 billion to fund “sporting activities” in 2018. By the way, all of us here at Nairametrics are questioning the same thing too.

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Come to think of it, what is the relationship between Budget and Planning with sporting activities? Is the Ministry now in charge of organising the Africa Cup of Nations? Oh well, there you have it!

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By the way, the National Board of Arabic and Islamic Studies received the same allocation as Yabatech. Enough said…

A laughable capital expenditure: Mr Samuel-Biyi continued to poke holes in Nigeria’s appropriation bill by pointing out the fact that much of the earmarked capital expenditure (which comprised 30% of the total 2018 budget), was spent buying cars, among other things.

This should really concern us all: The Code of Conduct Tribunal received N221 million just to furnish its office, in addition to another N154 million to build a new office. CCT also needed an additional NI billion for “governance reform” and “digitisation of operations”. Mind you, millions of Nigerians are unemployed and hungry.

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Still on the need for us to be concerned, a Kano-based institution that has trained 2,000 people “over the years”, received N1.5 billion. Wondering how many people they trained with that; maybe three people?

Based on these revelations, it is safe to say that the 2019 budget is probably yet a scam after all. It is, however, unfortunate that this is the standard the Nigerian citizenry have been subjected to overtime. There is no gainsaying the fact that we deserve a better standard than this.

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. Adenike Oyalowo

    May 7, 2019 at 4:12 pm

    I am surprised to say the least, that you, or anyone for that matter, is just coming to the conclusion that the Nigerian budget is a scam. And I am not just talking about the 2019 edition. The fact that pots & other kitchen wares and generators and inverters and UPS for Aso Rock feature faithfully in our budget every year without fail long led me to reach that conclusion.

    And what about hundreds of millions for building and maintaining non-functional or at best unimaginative websites for Ministries and MDAs? I once thought this government will be different, alas…

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Economy & Politics

President Buhari directs Ministries of Power, Finance, BPE to seal Siemens deal

Presidency has approved the release of funding for the first part of Phase 1 of the PPI, to kick-off the pre-engineering and concession financing workstreams.

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Nigeria-Siemens power deal get N61 billion allocation 

President Muhammadu Buhari has directed the Ministries of Power, Finance, and the Bureau of Public Enterprise (BPE) to conclude the nation’s engagement with Siemens AG over regular power supply.

The directive, which was issued via the Presidency’s Twitter handle on Wednesday, was to start the pre-engineering & concessionary financing aspects of the Presidential Power Initiative (PPI).

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PPI is a power infrastructure upgrade and modernization Programme agreed to by the Federal Government and Siemens AG of Germany, with the support of the German Government. The ultimate goal of the initiative, according to the government, is to modernize and increase the Nigerian electricity grid capacity from its current capacity of  about 5 GW to 25 GW, over three phases.

How it works: Under the PPI, Nigeria on behalf of the other shareholders in the Electricity Distribution Companies (DisCos), will invest in infrastructure upgrades in the form of improved payment systems, distribution substations, transformers, protection devices, smart meters, and transmission lines among others.

The President explained that all DisCos have, directly and through the BPE, been diligently carried along over the last 15 months to understand in detail the challenges in the electricity systems.

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Funding: The funding for the PPI will be secured under concessionary terms (up to 3-year moratorium and 12-year repayment at concessionary interest rates) through the German Euler Hermes cover, which Nigeria will on-lend as a convertible loan to the other shareholders in the DisCos.

According to the statement, President Buhari has approved the release of funding for the first part of Phase 1 of the PPI, to kick-off the pre-engineering and concession financing workstreams.

“To ensure fairness and transparency of the intervention, the President has also directed that the nation engage the International Finance Corporation (‘IFC’) to assist in developing the commercial structure of the intervention…

“The President has also directed that to ensure value for money and preserve the integrity & transparency of the procurement process under the Govt-to-Govt framework, Siemens AG shall be solely responsible for nominating its EPC partners to perform all onshore works; NO middlemen.

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“Our goal is simply to deliver electricity to Nigerian businesses and homes… Our intention is to ensure that our cooperation is structured under a Govt-to-Govt framework. No middlemen will be involved, so that we can achieve value for money for Nigerians,” President Buhari added.

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The PPI journey started on August 31, 2018, when Chancellor Angela Merkel visited Nigeria and met with President Buhari. Then the Chancellor brought along with her a business delegation that included the Global CEO of Siemens.

Nigeria and Germany agreed to explore cooperation in a number of areas, including Power.

PPI was designed to deliver improved power supply nationwide, with attendant results in job creation, investor confidence, cost and ease of doing business and economic growth. The partnership is also  expected to guarantee training & capacity building for thousands of young Nigerians (non-graduates, students & graduates).

Other goals include the creation of economic opportunities for Nigerian engineering companies that will serve as local vendors for the provision of manpower and equipment. Overall, the partnership will guarantee inflow of additional investment into the power sector.

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Companies

Endeavour honours founders of Kobo360

Fixing Africa’s supply chain is clearly important for commerce on the continent.

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Kobo360

Endeavour, a leading global movement for high-impact entrepreneurship, has honoured the founders of Kobo360, Obi Ozor and Ife Oyedele as Endeavor Entrepreneurs.

Kobo360 is a digital logistics platform that uses big data and agile technology to reduce friction and improve efficiency in the African logistics ecosystem.

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Managing Director, Endeavor in Nigeria, Gihan-Mbelu, explained that the company is excited to welcome Kobo360 into Endeavor’s network which includes some of the world’s most exciting scale-up entrepreneurs and most experienced mentors and investors.

He said, “Fixing Africa’s supply chain is clearly important for commerce on the continent, and Kobo360’s rapid growth over the past 3 years is evidence that the company’s valuable services are in critical demand. Obi and Ife are inspiring founders and their relentless focus on scaling Kobo360 serves as an inspiration to high-impact entrepreneurs everywhere.”

Meanwhile, since launching in 2017, Kobo360 has surpassed several milestones, including a $30 million Series A in August 2019.

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“It’s an honour to be joining this global network of high-impact entrepreneurs and to have Endeavor recognise our efforts to transform Africa’s logistics sector using technology. As entrepreneurs, we wanted to turn African problems into African opportunities.

“Focusing on logistics, Ife and I started Kobo360 to not only fix the inefficiencies that exist, but to build opportunities for the businesses we serve and most importantly, the hundreds of thousands of truck drivers across Africa. This is a fundamental milestone in Kobo360’s journey; our Global Logistics Operating System [GLOS] will revolutionize supply chain across emerging markets, Ozor, Co-founder & CEO of Kobo360.

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Companies

Why these companies remain on NSE’s delisting radar

The Regulation Committee of the National Council of The Exchange (RegCom) has given approval to The Exchange to proceed with the delisting process.

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NSE moves to protect investors’ data , Ekiti, Osun, Delta, Imo, 9 others raise over N500 billion bonds in 10 years, Equities: Foreign investors remain net sellers of Nigerian equities, Top 10 stockbroking firms traded N1.35 trillion on stocks in 2019, Equities: A bullish run to start the year, NSE to sustain growth in 2020, CEO assures, Commodities , NSE PUBLISHES GUIDANCE TO FACILITATE EFFECTIVE VIRTUAL MEETINGS FOR STAKEHOLDERS AMIDST COVID-19

Data obtained from the Nigerian Stock Exchange (NSE) has revealed that about seven companies have been on the delisting radar of the Exchange since December 2019.

They have been either in the process of delisting their issued shares from the bourse or on the delisting watchlist of the Exchange. This was stated in the Exchange’s X-Compliance report.

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The report, which is released by the Exchange every Friday and seen by Nairametrics, stated that the Regulation Committee of the National Council of The Exchange (RegCom) has approved for the Exchange to proceed with the delisting process of Evans Medical Plc, Tourist Company of Nigeria, Anino International Plc, Nigerian German Chemicals Plc, and Roads Nigeria Plc since last December.

On the other hand, Omatek Ventures and Deap Capital Management & Trust have been placed on the NSE’s delisting watch-list over their failure to comply with some post-listing requirements, including failure to file their quarterly and annual reports within a stipulated time.

Why companies delist 

There are two main reasons why companies delist from the NSE or are forced to delist from the market. The first one entails punishment for companies that violate NSE’s listing rules.

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The NSE periodically fines defaulting companies, whilst demanding that such companies address their corporate governance lapses. As Nairametrics reported recently, the latest X-Compliance report showed that the NSE made as much as N154 million by imposing fines on defaulting companies.

But sometimes, fines are not enough. The NSE is often forced to voluntarily delist companies whose infractions have become persistent.

On the other hand, a good number of companies have also voluntarily delisted from the NSE for various reasons, including the desire to become privately owned entities.

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What you should know

In the case of Omatek Ventures, the company’s fate has been dwindling since the departure of its founder, Dr Florence Seriki. Nairametrics reported when it was accused of defaulting on its credit facility agreement with the Bank of Industry (BOI).

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According to the development bank, the company has refused to service the N5.81 billion which it obtained in 2012. The bank disclosed that several measures had been employed to ensure that Omatek kept to the loan agreement, all to no avail. One of such efforts was the appointment of Ade Oyebanji as a receiver, who took inventory of all items located at Omatek’s premises at Plot 11, Kudirat Abiola Way, Oregun,  Ikeja, Lagos, in January 2017.

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Summary of the loan detail

In December 2012, the Bank of Industry loaned Omatek Ventures N5,808,429,033.95 in a term loan and working capital facilities agreement. The loan was disbursed to finance the procurement of assembly components for the production of laptops.

Also, as part of the requirements for obtaining the loan, the development finance bank said that it requested an Irrevocable Standing Payment Order arrangement with the defunct Skye Bank Plc in favour of BoI, all assets debenture, and an Irrevocable Personal Guarantee of the late Seriki.

Evans Medical Plc is a Nigerian pharmaceutical company that was established in 1954 and listed on the Nigerian Stock Exchange in 1979. Over the years, the company has been plagued by many challenges, ranging from increasing competition to corporate governance lapses. The latest NSE X-Compliance report indicated that the company has not submitted any quarterly financial statement from 2016 to 2019. At this rate, the NSE may have no choice but to forcefully delist the company.

Nigeria-German Chemicals Plc has also not been obeying the listing rules of the NSE. The latest NSE X-Compliance report also noted that the company had not filed any financial statement since Q3 2014 till date. It will not come as a surprise if the company is delisted from the Nigerian bourse any moment from now due to regulatory reasons.

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Note that the company is a chemical/healthcare company which was incorporated in 1964. It was initially known as Nigerian Hoechst Plc before it rebranded and changed to its name in 1995. It was listed on the NSE in 1979.

Amino International Plc is also in the process of delisting, primarily because it abused NSE rules by not disclosing its quarterly financial statements from 2015 till date. The company, which engages in manufacturing different kinds of personal and industrial products, was incorporated in 1981 and listed on the NSE in 1990.

Roads Nigeria Plc is a civil engineering firm that is in the business of construction of roads, bridges, dams, airfields, and real estate. The company was incorporated in 1974 and is headquartered in the Northern Nigerian city of Sokoto.

Unfortunately, the company has not released its quarterly financial statements since 2014. This is a major violation of the NSE listing rules, which could result in the company being delisted soon.

The delisting of the Tourist Company of Nigeria Plc from the Nigerian Stock Exchange may be a voluntary move by the company’s owners. The company has recently been plagued by ownership tussles, with some shareholders calling for it to be liquidated. The hospitality company was incorporated in 1964.

DEAP Capital Management Trust Plc was incorporated in 2002 and listed on the NSE in 2007. Though Nairametrics had reported earlier that it was unclear whether its delisting was voluntary or regulatory with the recent X-Compliance report, it appears that the company is struggling financially as it has failed to turn in its quarterly reports to the Exchange.

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