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Business News

Budget Review: Several infrastructure projects stalled

With the crash of crude oil price, everal infrastructural projects earlier scheduled for take-off in the first quarter of 2020 would be stalled.

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Covid-19, Conditional cash transfer: FG gives reason for disengagement of 2 Payment Service Providers, President Buhari asks the Chief Justice to release prisoners due to coronavirus

Following the crash of the crude oil price, several infrastructural projects earlier scheduled for take-off in the first quarter of 2020 would be stalled, as the Federal Government is yet to come up with alternate sources to make up for the deficit.  

Rail transport: More coaches set to arrive from China - Amaechi , Transport Minister sets April 2020 deadline for Lagos-Ibadan railway project , Again, FG shifts deadline to complete Lagos-Ibadan railway project 

Many of the projects with strong economic impact on the Nigerian populace, were listed by President Muhammadu Buhari in his January new year letter to Nigerians as those to be executed starting from the first quarter of 2020. 

However, these projects will now be stalled in view of almost 20% budget deficit, which the government has to grapple with.  

[READ MORE: Buhari seeks amendment of new Finance Act)

The affected projects include the Ajaokuta-Kaduna-Kano project (AKK) gas pipeline project earlier scheduled for take-off in the first quarter of 2020;

  • the OB3 gas pipeline and the expansion of the Escravos – Lagos pipeline;
  • 47 road projects scheduled for completion in 2020/21, including roads leading to ports,
  • major bridges including substantial work on the Second Niger Bridge.  
  • 13 housing estates under the National Housing Project Plan;
  • the Lagos, Kano, Maiduguri and Enugu international airports to be commissioned in 2020;
  • launching of an agricultural rural mechanisation scheme that will cover 700 local governments over a period of three years; 
  • the flag-off of the Livestock Development Project Grazing Model in Gombe State where 200,000 hectares of land has been identified;
  • training of 50,000 workers to complement the country’s 7,000 extension workers;
  • the Lagos – Ibadan and Itakpe – Warri rail lines listed for commissioning in the first quarter, and
  • commencement of the Ibadan – Abuja and Kano – Kaduna rail lines also in the first quarter will also be stalled in this new development.  

With this downturn in the global and Nigerian economy, the further liberalisation of the power sector to allow businesses to generate and sell power does not appear feasible in the first quarter, neither does the construction of the Mambilla Power Project listed to take off in the first half of 2020.  

[READ ALSO: Buhari appoints new NIMASA Executive Director)

FG sets deadline for completion of Ibadan-Kano rail project, gives reason for delay 

Minister of TransportationRotimi Amaechi, whose ministry supervises several infrastructure projects being undertaken by Chinese Consultation firms, has also revealed that ongoing construction works on the Lagos-Ibadan rail project had been stalled due to the inability of employees of the China Civil Engineering Construction Corporation (CCECC), who are handling the project, to return back to Nigeria due to the Coronavirus outbreak in their country. 

Sequel to the crash in the global crude oil prices, President Muhammadu Buhari inaugurated a committee headed by Minister of Finance, Budget and National Planning, Zainab Ahmed and supported by Minister of State Petroleum Resources, Timipre Sylva, with Minister of State, Budget and National Planning, Clement Agba; CBN Governor, Godwin Emefiele and the Group Managing Director of the NNPC, Mele Kyari as members to finding a solution to the resulting budget deficit 

Ruth Okwumbu has a MSc. and BSc. in Mass Communication from the University of Nigeria, Nsukka, and Delta state university respectively. Prior to her role as analyst at Nairametrics, she had a progressive six year writing career.As a Business Analyst with Narametrics, she focuses on profiles of top business executives, founders, startups and the drama surrounding their successes and challenges. You may contact her via [email protected]

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Financial Services

Ratings agency, Moody’s reveals it is reviewing First Bank’s ratings

Moody’s explained why it might downgrade First Bank’s ratings.

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Moody’s Ratings agency said on Thursday that it has put First Bank of Nigeria on review for a downgrade after the central bank sacked the board of directors and replaced them with new directors.

Moody’s made this statement in a report titled ‘Removal of Non-Executive Board Members Highlights Governance Shortcomings.’

In a quote, Moody’s said:

“Moody’s Investors Service, (“Moody’s”) has today placed all long-term ratings and assessments of First Bank of Nigeria Limited (First Bank) on review for downgrade. The review will focus primarily on an assessment of evolving governance considerations at First Bank, specifically corporate governance developments. The rating action follows the dissolution of First Bank’s board by the Central Bank of Nigeria (CBN), the bank’s primary regulator, on 29 April 2021. As a result of this action by the CBN, all the non-executive directors were removed while the executive management remained in place.”

The Governor of the Central Bank of Nigeria, Godwin Emefiele, had last week announced the sack of the entire board of directors of FBN Holdings Plc and its subsidiary, First Bank of Nigeria Ltd following the initial removal of its MD/CEO Dr Sola Adeduntan. Following his sacking of the board, he set up a new board for the bank holding company and its subsidiary and also reinstated Adeduntan as MD/CEO.

Moody’s mentioned that the regulatory actions demanded of First Bank by the CBN introduces a clould of uncertainty over the outlook of the bank. For example, the CBN had asked the bank to divest from its holdings in two listed companies while also recovering its loans from one of them.

“The review for possible downgrade reflects the rating agency’s view that the removal of all non-executive directors of the bank’s board by the regulator demonstrates corporate governance shortcomings and weaknesses in board oversight. The bank also needs to implement regulatory directives concerning the resolutions of loans to, and shareholding in non-banking related parties, which reportedly had not been executed in the recent past.

Moody’s notes that the outcomes of these developments are uncertain at this point, and the final and long-term governance, reputational and financial implications of the events for First Bank are also unclear.”

The central bank directive sacking the board of the bank also retained its executive management perhaps suggesting that the CBN had confidence in the ability of the MD and his team to manage the bank. Moody’s also noted this in its briefing.

“While the bank’s executive management team remained the same, the rating agency believes these developments could distract management’s focus on implementing the bank’s strategic plan and road to recovery. First Bank management’s immediate key target was to reduce nonperforming loans (NPLs) to levels comparable with domestic peers. The rating agency recognises that, in the context of asset risks, the bank took steps to reduce its stock of problem loans, with its reported NPL ratio falling to 7.7% at year-end 2020 from 25.9% in 2018.”

Will Moody’s downgrade First Bank?

The rating agency explained that the decision to downgrade will depend on how strong the bank’s corporate governance structure is and whether the CBN will impose additional sanctions. If any of these crystallizes, it could downgrade its ratings.

“The bank’s long-term deposit ratings can be downgraded if flaws in the bank’s governance systems exist, and if the CBN imposes additional sanctions on the bank, including, but not limited to, conditions to address any vulnerabilities that may be discovered. Financial output that is less than anticipated could also result in a rating downgrade.”

Moody’s, however, poured water on any optimism around a rating upgrade.

Given the review for downgrade and the pessimistic outlook on the government of Nigeria, there is a slim chance that First Bank’s ratings will be upgraded. Stronger solvency progress than currently reflected in the ratings, combined with a stabilization of the sovereign outlook, could result in the outlook being stabilized.

Why is rating important?

Corporate Organizations desire positive ratings because of the effect it has on their ability to raise capital as well as the cost of capital. A high credit rating typically attracts positive investor sentiments helping organizations tap the debt and equity markets, especially from institutional investors.

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Spotlight Stories

Tip Jar, Twitter’s new giveaway feature that lets users send money to you

Twitter has introduced a new feature called Tip Jar that allows you send money to your favourite tweeters.

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US Elections: Twitter, Facebook suspend several news accounts

Twitter has introduced a new feature called Tip Jar that allows you send money to your favourite tweeters.

According to the blog post, “Tip Jar is an easy way to support the incredible voices that make up the conversation on Twitter. This is a first step in our work to create new ways for people to receive and show support on Twitter – with money.”

The new feature utilizes different payment platforms like PayPal, Venmo, Patreon, CashApp, and others.

Users can link their Twitter accounts with Tip Jar to any of these payment providers. Twitter takes no cut.

READ: Facebook is creating an audio chat product similar to Clubhouse

You’ll know an account’s Tip Jar is enabled if you see a Tip Jar icon next to the Follow button on their profile page. Tap the icon, and you’ll see a list of payment services or platforms that the account has enabled. Select whichever payment service or platform you prefer and you’ll be taken off Twitter to the selected app where you can show your support in the amount you choose.

Twitter has released series of features this year as part of its efforts to grow Twitter’s user base to 315 million daily active users by the end of 2023.

The company also launched Twitter crop where images don’t get crop again on Twitter for Android or iOS. Standard aspect ratio images (16:9 and 4:3) will now display in full without any cropping and images will look just like they did when you shot them.

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READ: Does YouTube stand a chance against TikTok?

Lauren Alexander, a Twitter spokesperson said, “Today’s launch is a direct result of the feedback people shared with us last year that the way our algorithm cropped images wasn’t equitable, The new way of presenting images decreases the platform’s reliance on automatic, machine learning-based image cropping.”

Twitter has tested several features and more will be rolled out soon.

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