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Why Nigeria wants to borrow another $1bn from China

The Federal Government, rising from its Federal Executive Council meeting on Wednesday, concluded plans to take a fresh $1 billion foreign loan facility aimed at bankrolling the Gurara II Hydropower project.

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The Federal Government of Nigeria wants to borrow another loan from China to the tune of $1 billion. The loan facility is aimed at bankrolling the Gurara II Hydropower project. The decision was reached, yesterday, during the Federal Executive Council meeting, FEC.

According to President Muhammadu Buhari who led the session, the credit facility is to be provided by the China-Exim Bank. This will further increase Nigeria’s escalating debt profile by N360 billion.

As Nairametrics recently reported, the Debt Management Office disclosed in April that Nigeria’s total exposure as of December 2018 was N24.387 trillion. The figure was N21.7 trillion in the corresponding period in 2017.

More on the proposed investment: While communicating the Federal Government’s position, the Minister of Water Resources, Suleiman Adamu, stated that the investment would generate 360 megawatts of power upon completion. According to him;

“council also approved N5.7 billion revised total estimated cost for the completion of Nkari Dam in Akwa Ibom. Council also approved the appointment of a consultant to resuscitate the Gari Irrigation Project in Kano/Jigawa states. Council had in 2017 approved for the resumption of the project, which was earlier abandoned for 17 years.”

“The consultant is the same appointed in 1998. The contractors are already on the site. Council also approved the revised estimated total cost of N10.4 billion for the completion of Ile-Ife Dam in Osun State. The project was started in 2014 and abandoned. The completion period is 24 months.”

Energy Ministry to benefit: Meanwhile, Babatunde Fashola, the Minister of Housing, Power, and Transportation, also mentioned that the sum of N11.208 billion was approved for the execution of projects under his ministry. One of these projects is the procurement of 200,217 metres by the Yola Electricity Distribution Company under the Meter Asset Providers Scheme.

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“As you might know, Yola Electricity Distribution Company is the Disco that was surrendered by the original holder. So, it is under the Federal Government’s management. So, they are buying 200,217 metres for consumers under their franchise, which covers Adamawa, Borno, Taraba and Yobe states.

“The cost of those metres is N11.208bn. It is to be funded from the judgment sum that I previously briefed you about two years ago, that council approved a compromise from an old metre supply dispute since 2003.

“So, that money is in a bank; that is where these metres will be funded from and as consumers pay back the metres as they are supplied, the money goes back into that account.” -Fashola

Furthermore, the Minister of Agriculture and Natural Resources, Chief Audu Ogbeh, while fielding questions from journalists, spoke about the approvals for the purchase of grains for storage.

“Everywhere in the world, silos are owned by the government into which they purchase grains at the end of harvest. The average is usually between two and three percent of all grains grown. In this case, we have got approval to buy 61,000 tons of maize, millet and sorghum and the purchasing will begin shortly.

“We also informed the council of the problem we have with Nigerian grains, especially maize, sesame seeds and groundnuts. An infestation called aflatoxin, which the Minister of Health confirmed, is a very big threat to the liver and the kidney of most consumers.

“Luckily, the International Institute of Tropical Agriculture has found a product which they produce in large quantities and send to Africa for treating the farms, the Silos and the sacks in which we put the grains to eliminate aflatoxin”, the minister told reporters.”

Mr. Ogbeh stated that the government still maintained its stance on domestically cultivated food for the populace, stressing that it has helped the government save about $21 billion on imports since 2015.

Ronald Adamolekun is a creative writer with proficiency in journalism, financial reporting, financial analysis and imaginative writing. However, his core competency lies in fiction and short story writing as well as feature writing. He is a graduate of English and Literature from Covenant University, Ota, Nigeria.

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Business

AfCFTA: Nigeria securing approval to ratify agreement – Trade Minister

The Minister revealed that Nigeria has set up a National Action Committee on AfCFTA.

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AfCFTA: Nigeria securing approval to ratify agreement- Trade Minister, FG meets group to access AfCFTA's $650 billion market, UNIDO’s $60m investment programme to boost Nigeria’s industrialisation - FG, FG to strengthen economic ties with Turkey, FG moves to facilitate tax incentives for SMEs, Made-in-Nigeria vehicles gulp N364 billion from FG

Minister of Trade, Niyi Adebayo said Nigeria is currently in the process of securing approval to ratify the African Continental Free Trade Area (AfCFTA) agreement soon.

The Minister disclosed this during a meeting with the Secretary-General of the African Continental Free Trade Area(AfCFTA), Mene Wamkele on Monday.

Recall that Nairametrics reported last week Mr. Adebayo said that Nigeria is actively working to attract more foreign direct investments into key industries to meet the demands of the African Continental Free Trade Area (AfCFTA).

“As we gear up to meet the demands of the enlarged continental market which will be fostered by AfCFTA, we are actively working to attract more foreign direct investments into key industries,” the Minister said.

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In today’s meeting, The Minister told the delegation that Nigeria has set up a National Action Committee on AfCFTA, which would implement Nigeria’s roll-out strategy in a bid to take advantage of the agreement. He added, “Nigeria is currently in the process of securing approval to ratify the agreement within the shortest possible time”.

The African Union announced in August that the first commercial deal of AfCFTA will be taking off on January 1, 2021.

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Business

FG inaugurates Committee on the Commercialization of the Nigeria Film Corporation

The Minister said that the FG is repositioning the NFC for effective service delivery.

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FG increases hate speech fine from N500,000 to N5 million, moves against monopoly and antitrust, Coronavirus, covid-19, Minister of information briefing

The Federal Government inaugurated a Steering Committee on the Commercialization of the Nigeria Film Corporation (NFC), with the aim of making Nigeria’s film industry a continental entertainment power.

This inauguration was performed by the Minister of Information and Culture, Alhaji Lai Mohammed in Abuja on Monday. The Minister added that the FG is repositioning the NFC for effective service delivery.

“What we are doing today is to simply reposition the NFC in a manner that will enable it to play the role statutorily assigned to it,” he said.

The Minister added that Nigeria’s film industry is a major boost for Nigerian soft power and entertainment, citing the need for repositioning by the FG as a means to enable effective service delivery for the film industry to grow.

The Minister added that Nigeria lags behind her film making counterparts in the film production value chain, citing Nigeria’s 142 movie theaters compared to 782 in South Africa and 11,209 in India and many others. He urged state governments to invest a part of their infrastructure budgets for the entertainment industry as a means to generate jobs and grow the GDP.

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“It is important to appeal, especially to our state governments, to invest in infrastructure in the industry. I don’t think it will be too much for the state governments to ensure they build at least one cinema house in each local government area of their state. That will give us additional 774 cinema houses, ” he said.

The Minister added that the role of the NFC is to regulate Nigeria’s film industry and organise professional practice in the sector and also addressed challenges facing the NFC like the inability to produce its own films for commercial purposes due to the law establishing the Corporation limits on its operational functions.

Lai Mohammed said the NFC will be repositioned as the FG has engaged the services of a Business Development Consultant to conduct due diligence on the corporation and the sector and recommend a strategy that is suitable for its reform and commercialization.

“Dear members of the SC, your appointment into this committee comes with huge trust and belief in your ability and capacity to make this reform happen. I therefore urge you to consider this a critical national assignment that requires unflinching commitment and zeal,” he stated.

The members of the Steering Committee are: Honourable Minister, Federal Ministry of Information and Culture, Alhaji Mohammed as Chairman; Permanent Secretary, Federal Ministry of Information and Culture, Deaconess Grace Isu-Gekpe; Director-General, BPE, Mr. Alex Okoh; Managing Director, NFC, Dr. Chidia Maduekwe, and Director, Industries and Communications, BPE, Abdullahi Dikko, as Secretary.

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Company Results

Briscoe Motors: Pioneer dealer of Toyota automobile in Nigeria suffers N1.27bn loss

The Auto dealer has a working capital deficit of N14.76bn, driven by a bank overdraft of N15.76bn 

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Pioneer dealer of Toyota automobile in Nigeria suffers a N1.27bn loss

The Nigerian Stock Exchange has released the audited financial results of Briscoe Motors. The results revealed that the auto dealer suffered a loss of N1.27 bn in 2019. 

According to the report released by the exchange today, the company’s performance is an improvement, when compared with thN2.18bn loss, the company reported in 2018. 

Highlights 

  • Revenue increased by 33.9% 
  • Cost of sales increased 41.8% 
  • Operating profit increased by 94.5% 
  • Finance costs decreased by 37.3% 
  • Loss for the year decreased by 41.7% 

cursory view of R.T. Briscoe’s performance, revealed that revenue increased from N5.18bn in 2018 to N6.94bn in 2019. This increase was driven by the improvement in the dealer’s core business segment, as the proceeds from the sale of Motor vehicle and accessories in 2019, rose by 59.7%. 

This improvement in revenue is a consequence of the board’s decision in 2017, to return the company back to profitability, with avid steps taken to restructure the business for greater efficiency and economic rewards, via a strategic positioning of the company’s business segment to customers. This has helped the core business segment of Briscoe in recent years. 

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Despite this improvement, it is noteworthy that the 61% increase in the cost, coming from the company’s activities in the Motor vehicle and accessories segment, continue to pressure the growth prospect of the dealer. 

(READ MORE: OPay and WorldRemit partner to offer International Mobile Money Transfer Service)

In like manners, the rising cost of sales from this segment was compounded by a N1.45 billion finance cost, which the company incurred during the year, as the company is aggressively geared with bank overdraft of N15.76bn, representing 86% of the total liabilities of the company. 

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With recoverability of the trade and other receivables of the company long overdue, the Toyota Automobile dealer is exposed to credit risk, as trade and other receivables accounted for 31% of the total assets value of N8.914bn. 

Key issues facing the company  

It is noteworthy that the auto dealer has a massive working capital deficit of N14.76bn, driven by a current debt of N15.76bn.  

With bank overdraft and other debt unpaid, the company faces penalty charges by banks and court litigations. All these issues have led to winding-up cases of the company, from the banks and other creditors. 

As a result of both current and previous losses incurred over the years, the shareholders’ fund has been completely eroded, to the tune of N9.5bn and N9.9bn deficit for the group and company respectively, as at December 2019. The widespread vulnerability in the company’s book has cast doubts on the goingconcern of the company. 

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