Business News
BPE to convert redundant assets to cash, set to achieve N477 billion fiscal budget
The BPE has said it might put up more redundant public assets for sale in 2020 to meet its N477 billion fiscal budget.
The Bureau of Public Enterprises (BPE) has said it might put up more redundant public assets for sale in 2020 to meet its N477 billion fiscal budget.
According to the Director-General of BPE, Mr Alex Okoh, redundant national monuments are assets that shouldn’t be kept to a point where they are becoming federal liabilities when they can be privatized or concessioned to raise cash to fund other social imperatives of BPE fiscal budget.
“We can’t continue to keep federal redundant assets to an extent they are beginning to turn into liabilities when we can convert them to values.
“For me, that’s throwing good money after bad assets. We should convert those assets to value, privatize those that can be privatized; concession those that can be concessioned and use the proceeds to fund other social imperatives of our fiscal plan,” said Alex Okoh.
[READ MORE: UPDATED: P&ID operations shut down, assets forfeited by court order]
Meanwhile, the BPE, which has a budgetary funding target of N220 billion in the 2019 budget, out of which it has only raised N135 billion with a balance of N85 billion to meet up, said its contribution to the 2020 national budget would be slightly higher.
Mr Okoh also said instead of increasing the country’s debt servicing and incurring cost through subvention, the funds raised from privatization or concession of these redundant assets could be used to finance the national budget.
“We can convert them to values, to cash, and use the proceeds to fund a national budget rather than resort to borrowing to fund expenditure when we have these assets lying over there. And these assets are even making serious demands on government’s purse by way of subvention. It doesn’t make sense.”
Citing an example, Mr Okoh said, “If you look at the National Theatre, for example, that is an asset that is just lying there redundant; degenerating on a daily basis. For those kinds of assets, rather than regard them as monuments, we should be able to convert them to value. If you go abroad and visit New York, for example, you can see what they have done out of the 911 memorial. It’s not just a memorial for people to visit, it generates money for the City of New York. So, this idea of looking at national assets as just monuments rather than assets and liabilities, we need to change our mentality. “Government doesn’t have the money to keep subsidizing and providing for the maintenance of the assets, including the National Stadium.”
[READ ALSO: Pension asset increases to N9.33 trillion – PenCom]
What this means: This could be a source of revenue generation and cost reduction for the Federal Government, if and when it decides to walk the talk.
Economy & Politics
Nigeria only hit 56% of its target revenue in first five of months of 2020
Nigeria’s earnings in the period were N1.48 trillion which is 56% off its main target.
Nigeria’s Minister of Finance, Zainab Ahmed revealed that Nigeria was only able to meet 56% of its target revenue from January to May as the global oil price crash affected government revenue due to the COVID-19 pandemic.
Nigeria’s earnings in the period were N1.48 trillion which is 56% off its main target, crude oil revenues accounted for half of Nigeria’s revenues, while non-oil revenues made up the rest in the first 5 months of the year.
On Friday, President Muhammadu Buhari signed the new 2020 revised budget of N10.8 trillion with the crude oil benchmark reduced from $57 per barrels in the earlier budget to $25 in the new budget.
The Minister said the budget had to be revised because of the effects of the COVID-19 pandemic on Nigeria’s economy. She added that Nigeria’s crude oil production would be an average of 1.86 million barrels per day next year and rise to 2.09 million the following year.
“Although Nigeria’s total production capacity is 2.5 million barrels per day, current crude production is about 1.4 million barrels per day — in compliance with the Organization of the Petroleum Exporting Countries’ production quota – and an additional 300,000 barrels per day of condensates, totaling about 1.7 million barrels per day,” she said.
Coronavirus
African Union begins COVID-19 vaccine trial group
CONCVACT plans to capture more than ten late-stage vaccine trials at the earliest.
The African Union Commission just recently facilitated a program called the new Africa Centres for Disease Control and Prevention (Africa CDC) Consortium for COVID-19 Vaccine Clinical Trial (CONCVACT).
The program is part of the Africa Joint Continental Strategy for stopping the deadly COVID-19 onslaught that has disrupted human activities. The goal is to prevent severe COVID-19 infections and deaths in African countries, reduce the economic damage caused by the pandemic, and help minimize the general disruption to everyday life.
Quick fact about COVID-19: Although for some individuals, the COVID-19 virus causes only mild illness, it can make other individuals seriously ill. The disease can be very fatal, especially among older individuals, and those with compromised immunities (such as diabetes, high blood pressure, or heart problems) appear to be more susceptible.
South Africa’s leader, Cyril Ramaphosa, said, “Success in developing and providing access to a safe vaccine requires an innovative and collaborative approach, with significant local manufacturing in Africa.
“We need to support the contribution of African scientists and healthcare professionals. We need to act with urgency.”
CONCVACT plans to capture more than ten late-stage vaccine trials at the earliest, via collaborations with global vaccine developers, sponsors, and African businesses that enable clinical studies.
The African group also hopes to secure the safety and efficacy data of promising vaccine candidates for the African population in order to validate their launch after approval.
Economy & Politics
2021 Budget: FG projects spending plan of N11.86 trillion and deficit of N5.16 trillion
This tops 2020 budgeted expenditure of N10.8 trillion.
The Federal Government is projecting to spend N11.86 trillion for 2021. This was disclosed by the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed at a virtual presentation of the 2021-2023 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) held on Friday.
According to the finance minister, the government is planning to spend N11.86 trillion against revenue of N6.98 trillion meaning the government will have to grapple with a fiscal deficit of N5.16 trillion.
Zainab Ahmed;
“The 2021-2023 MTEF&FSP is the pre-budget statement that provides the framework for the development of the 2021 budget. It is being framed against the backdrop of challenging global macroeconomic environment as well as domestic factors.
“We aim to keep the deficit within the three percent ceiling over the medium term and are therefore working on identifying new revenue sources and or cost of reduction.”
The minister noted that the 2021-2023 draft had been prepared against the backdrop of heightened global economic uncertainty.
Earlier today President Buhari signed the revised 2020 national budget of N10.8 trillion, which was passed by the National Assembly in June. The National Assembly passed a revised budget of N10.8 trillion on the 11th of June after the Federal Executive Council (FEC) approved a revised budget of N10.523trillion in May. 2020 Budget is based on a revised oil benchmark of $25 per barrel as against $57 while crude production was reduced from 2.18 million to 1.94 million barrels per day Budget deficit for 2020 is estimated at N5.365 trillion.
As of March 2020, the FG was running a 52% shortfall in the first quarter of the year with actual revenue collected of N950 trillion compared to budgeted revenue N1.96 trillion.
What this means: Nigeria is facing an unprecedented revenue crisis exacerbated by the Covid-19 pandemic and the crash in oil prices. At N5.16 trillion, Nigeria’s projected budget deficit will be 43% of spending and about 3.6% of GDP if the budget is passed. A budget deficit means the government will have to borrow heavily next year to fund its expenditure programs.
The government received a $3.4 billion funding from the IMF in April and expects another $3.5 billion from the World Bank in August 2020. The government also revealed it has no plans to access the commercial market for foreign debts as it takes advantage of lower interest rates in the domestic market.
Nigeria only hit 56% of its target revenue in first five of months of 2020
African Union begins COVID-19 vaccine trial group
2021 Budget: FG projects spending plan of N11.86 trillion and deficit of N5.16 trillion
Nigerian Bourse finishes on a bullish note, triggered by MTN, INTBREW, VITAFOAM
Daily Parallel Market exchange rate – ₦465/$1
COVID-19 Update in Nigeria
Top 10 highest earning CEO’s in Nigeria
These foreign tech companies must now pay tax to Nigerian Government
Naira falls to a 3-year low at the black market
Nigeria’s excess crude account falls to $72 million
