Yesterday, as part of the Federal Government’s efforts to diversify the economy away from volatile oil revenue, it inaugurated the Ajaokuta Presidential Project Implementation Team.
The Chairman of the team is the Secretary to the Government of the Federation (SGF), Boss Mustapha while the Minister of Mines & Steel Development is the alternate chairman.
According to the SGF, Buhari’s regime is focused on making the Ajaokuta Steel Company (ASC) West Africa’s largest fully integrated producer and most importantly to accelerate industrialization in steel-related industries.
The revamp of the steel plant will be supported with funds from AFREXIM bank as well as Russia Export Centre and about US$1.46bn is expected to be committed to the project.
The ASC was a major industrial project conceived after the discovery of iron ore and coal deposits in commercial quantities in Nigeria in 1970. Consequently, the Federal government signed a contract with Tzazh Prom Export (TPE) from Russia to carry out further feasibility studies and initiate the project. By 1979, Ajaokuta Steel Company Limited and Delta Steel Company Limited were established under the National Steel Council Decree.
Construction began and by 1983, the project had reached 95% completion rate. President Shehu Shagari at the time commissioned the plant and the agreed plan was to fund the remaining 5% of the project using profits generated by the company.
However, after almost four decades of several concessions and legal disputes with foreign private companies, Ajaokuta steel company remains derelict.
The failure of the project has been blamed on several factors with poor management being the leading factor. International politics also played a part in installing the project.
The USSR who at that time was Nigeria’s main partner was in a cold war with the USA. Thus, Nigeria found it difficult to raise funds from multilateral bodies like the World Bank and the IMF. Concessions to foreign private managers also proved unsuccessful due to the remaining 5% of the project representing critical infrastructure yet to be developed.
Nigeria has the second-largest iron ore deposit in Africa with over two billion tonnes in reserves.
Nevertheless, the Nigerian steel industry today remains almost totally dependent on imports of rolled steel for local production. Poor investments in iron ore extraction and many other structural bottlenecks have hindered the growth of an industry with enormous potential and the industry is still experiencing negative growth (2019; -1.33%, 2018; -0.75%) based on data obtained from the NBS.
In 2016, the Buhari administration settled the pending court case around the project. This has enabled the FG to take control of the project and drive its resuscitation.
This has led resumption of re-negotiations with the Russian government since they started the project with Nigeria in 1968. It is reported that Nigeria would need $2.0billion to complete a project that has gulped $10 billion.
While the strides made by the Buhari’s administration are impressive, it remains to be seen if it can successfully revive one of the prominent pride of Nigeria’s industrialization.
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BREAKING: Former minister and senator, Aisha Al-Hassan is dead
Ex-Women Affairs minister, Aisha Jummai Al-Hassan, popularly known as Mama Taraba is dead
A former Minister for Women Affairs and ex-Governorship Candidate in Taraba State, Aisha Jummai Al-Hassan, popularly known as Mama Taraba is dead.
According to media reports she died in a hospital on Friday in Cairo, Egypt at the age of 61.
Al-Hassan, who was a former senator of the Federal Republic of Nigeria from Taraba North Senatorial District, was the All Progressive Congress (APC) Governorship Candidate for Taraba in the 2015 general elections.
She later contested for the same seat on the platform of the United Democratic Party in the 2019 general elections after resigning from APC and as a minister in the administration of President Muhammadu Buhari on July 27, 2018.
The former senator was born on the 16th of September, 1959 in Jalingo, Taraba State, to Alhaji Abubakar Ibrahim, Sarkin Ayukan Muri.
Aisha Jummai Al-Hassan attended Muhammed Nya Primary School, Jalingo and LEA Primary School, Tudun Wada, Kaduna before proceeding to Saint Faith College (now GGSS) Kawo Kaduna where she studied between January 1973 and June 1977.
Ratings agency, Moody’s reveals it is reviewing First Bank’s ratings
Moody’s explained why it might downgrade First Bank’s ratings.
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.
Nairametrics | Company Earnings
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