Business News
Update: FG to withdraw $150 million from sovereign wealth fund, to borrow $6.9 billion
President Muhammadu Buhari has given approval that the sum of $150 million should be withdrawn from the stabilization fund of the Nigerian Sovereign Wealth Fund
President Muhammadu Buhari has approved that the sum of $150 million should be withdrawn from the stabilization fund of the Nigerian Sovereign Investment Authority (NSIA). The fund is to help address emerging fiscals risks which the coronavirus pandemic has caused and to support the June 2020 Federation Accounts and Allocation Committee (FAAC) disbursement.
This is one of the various fiscal stimulus measures to be introduced by the Federal Government to cushion the effect of the coronavirus pandemic and the crash in crude oil prices on the Nigerian economy.
This was disclosed by the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, in Abuja on Monday, April 6, 2020, when she was making a presentation on the topic, ‘Fiscal Stimulus Measures in response to Covis-19 Pandemic and oil prices fall’.
The Minister noted that the stabilization fund was created for emergencies like this, while the government explores other options to augment the FAAC disbursement
According to her, the president has also asked that the Liquefied Natural Gas (LNG), should fast track the disbursement of dividend that is due to the federation account to augment for the revenue shortfall into the FAAC account.
READ ALSO: Covid-19: FG to set up N500 billion intervention fund to upgrade healthcare sector
The Minister also said that interest and capital repayment by states on CBN loans will be suspended once inflows into Federation Account drops below a particular threshold.
According to the Minister in her statement, ”The president has approved that the Federal Ministry of Finance, Budget and National Planning should engage with the CBN to agree on the debt and interest moratorium for states on Federal Government and CBN funded loans in order to create fiscal space for the states, given the projected shortfalls in FAAC allocations”.
”Accordingly, once monthly average FAAC receipts fall below a specific threshold, interest and capital payments by states shall be suspended till monthly average FAAC receipts exceed the threshold”
She added that President Buhari has approved a temporary restructuring of the treasury single account in order to better mobilize funds from individuals, corporate organizations and donor agencies.
While answering questions from the media, Ahmed said that government plans to raise as much as $6.9 billion from multilateral institutions to help cushion the impact of the Covid-19 pandemic on the Nigerian economy which is characterized by low oil prices, low revenue generation, health crises, capital flight, shut down of businesses and so on.
Going further she said, the Federal Government is expecting $3.4 billion of that amount from the International Monetary Fund, $2.5 billion from the World Bank and another $1 billion from the African Development Bank.
However she said that Nigeria has no plans to enter into an IMF progamme, she said.
The government has started talks with multilateral lenders to suspend debt repayments for this year and next, Ahmed said.
Details shortly…
Economy & Politics
Output cut: Nigeria leads in OPEC non-compliance with 50 unsold cargoes of crude
Nigeria and Iraq were reported not to have kept to their commitment to the huge production cut deal that had promised to reduce output by 9.7 million barrels of crude oil per day.
As opinions continue to differ on whether OPEC will extend its current oil output cut beyond June, available information has shown that not all members of the oil cartel complied fully with their agreed quotas for the month of May. This is despite the fact that the oil output by OPEC member countries reached its lowest in almost 20 years.
Available data from oilprice.com showed that OPEC members cut their output by 5.91 million barrels per day from the April level, producing 24.77 million barrels per day. This figure also showed a 4.48 million barrel per day of the agreed output cut, thereby representing a 74% compliance level.
Nigeria and Iraq were reported not to have kept to their commitment to the huge production cut deal that had promised to reduce output by 9.7 million barrels of crude oil per day.
Iraq was able to achieve just 38% compliance of its agreed output cut for the month of May, while Nigeria, which achieved a much lower compliance of the agreed output cut, recorded 19% compliance of what was agreed. Saudi Arabia showed the highest compliance, recording 96% of the agreed output cut.
Some have attributed the noncompliance of some members of OPEC to the agreed output cut, to the contractual obligations and commitment to buyers, given the short timeframe between when the agreement for the output cut was made and its implementation.
Meanwhile oil exports from Angola and Congo remained steady at high prices on Friday, while Nigerian oil fared lower amid huge inventory of unsold cargoes.
Nigeria continues to face some difficulty in the oil market, primarily due to sluggish demand from Europe; it has around 50 unsold cargoes of crude oil yet to be sold for the months of June and July.
Meanwhile, India has become one of the few buyers for the Nigerian oil. Indian oil firms bought about 5-6 million barrels of Nigerian crude oil last week and has bought about 2 million barrels as at Thursday this week.
Business News
President Muhammadu Buhari reshuffles NNPC’s board of directors
Note that the former board included the late Chief of Staff to the President, Abba Kyari as a member. Stakeholders have since expected the President to reconstitute a new board to take over.
President Muhammadu Buhari has approved the reconstitution of the board of the Nigerian National Petroleum Corporation (NNPC) after the expiration of the tenure of the current board.
The newly constituted board members are expected to serve for a tenure of three years, effective immediately. They will take over from the last board, whose 3-year tenure officially ended in 2019. Information about this development is contained in a State House press release that was published on the official twitter handle of the Nigerian Presidency on Saturday morning.
READ MORE: Construction of ICT Parks nudges Nigeria into digital transformation
STATE HOUSE PRESS RELEASE
PRESIDENT BUHARI RECONSTITUTES NNPC BOARD
President @MBuhari has approved the reconstitution of the Board of the Nigerian National Petroleum Corporation (@NNPCgroup), after the expiration of the term of the board members appointed in 2016.
— Presidency Nigeria (@NGRPresident) May 30, 2020
READ ALSO: CBN and NIPOST open pilot microfinance branches
The newly constituted NNPC board is made up of six members from each of the geo-political zones in the country. The members include the following individuals:
- Mallam Mohammed Lawal, representing the North West
- Dr Tajudeen Umar from North East
- Adamu Mahmood Attah from North Central
- Senator Magnus Abe from the South-South
- Dr Stephen Dike from the South East, and
- Chief Pius Akinyelure from the South West geo-political
READ MORE: Boko Haram: A protracted battle yet to be won?
Of the six members, three are returning members on the board – Chief Pius Akinyelure, Mallam Mohammed Lawal, and Dr Tajudeen Umar from North East.
Note that the constitution of the new board is considered a welcome development, as it balances the representation of the six geo-political zones on the board. The previous constitution of the board was faulted for not being “balanced”.
READ ALSO: Full text of President Muhammadu Buhari’s 58th Independence day broadcast
Note that the former board included the late Chief of Staff to the President, Abba Kyari as a member. Stakeholders have since expected the President to reconstitute a new board to take over.
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Around the World
Zoom’s market valuation hits $50 billion mark, thanks to COVID-19
Zoom’s share price now trades at an eye-watering 55 times estimated revenue compared with an average of 7 times for information technology stocks in the S&P 500, according to information obtained from Bloomberg.
Zoom Video Communications’ shares surged to record highs on Friday, as bullish runs in the last hours of trading helped the company to close with a market capitalization of more than $50 billion. The stock gained about 9.7% to jump to $179.48, thereby giving it a market value of $50.6 billion.
Note that this is the first time Zoom’s valuation is reaching this high level since it became a quoted company. The tech giant, which owns popular video conferencing software “Zoom”, has gained more than 160% this year. This is because investors are betting that the surge in Zoom users amid the COVID-19 pandemic, would eventually translate to long-lasting revenue growth.
READ ALSO: How VCs are encouraging terrible business practices by founders
Zoom’s share price now trades at an eye-watering 55 times estimated revenue compared with an average of 7 times for information technology stocks in the S&P 500, according to information obtained from Bloomberg.
Following the significant jump in the company’s valuation, the net worth of its founder and Chief Executive Officer, Eric Yuan, also rose significantly by more than $800 million on Friday. He now has a net worth of $9.3 billion, according to the Bloomberg Billionaires Index.
Meanwhile, in reaction to Zoom’s overnight success, Gennie Gebhart, a researcher with the Electronic Frontier Foundation, said she hoped Zoom would change course and offer protected video more widely. It should be recalled that some users of the app had raised security concerns back in April, as Nairametrics reported.
READ ALSO: Did Satoshi Nakamoto cause the panic sell-off in Bitcoin market
Meanwhile, Zoom has recruited Alex Stamos, a former chief security officer at Facebook, and other top security experts to help deal with the security issues which led to some top companies banning its use. While discussing efforts being made to deal with the security challenges, Stamos told Reuters:
“At the same time that Zoom is trying to improve security, they are also significantly upgrading their trust and safety. The CEO is looking at different arguments. The current plan is paid customers plus enterprise accounts where the company knows who they are.”
