Economy & Politics
Ecobank Transnational CEO warns that debt cancellation will hurt African countries
African Finance ministers had asked for debt relief from multilateral Institutions amid the coronavirus crisis.
The Group Managing Director and Chief Executive Officer of the Pan African Banking Group, Ecobank Transnational Incorporated, Ade Ayeyemi, has warned against the idea of African countries seeking debt cancellation from multilateral institutions, bilateral lenders, and international financial organizations.
Ade Ayeyemi stated this during an interview at the Bloomberg Invest Global virtual conference on Monday, July 22, 2020.
The Ecobank CEO stated that canceling the debt of heavily indebted African countries would only come back to haunt them.
According to Ayeyemi, “Forgiveness is not helpful because your debt is somebody else’s savings. When you go to the market to borrow money, the market is looking at your current and past behavior.”
READ ALSO: Nigerian Treasury Bills stay flat at 4.02% per annum
This view was also corroborated by the Chief Executive Officer of Kenya’s largest bank, Equity Group Holdings, James Mwangi, when he said that forgiveness was a form of default, which distorted markets. He pointed out that the call for debt forgiveness was one area where the continent should be conscious of the unintended consequences.
It can be recalled that in April, African Finance ministers asked for debt relief from multilateral Institutions like the International Monetary Fund, World Bank and the European Union amid the coronavirus crisis.
The African countries who asked for immediate relief from debt service obligations from these multilateral institutions including the G20, canvassed for a portion of their debt to be forgiven or converted into long term, low interest loans. This is to help free up funds for the more than 50 poor African countries to deal with the coronavirus pandemic.
Nairametrics had reported last week, the plans by China, to exempt some African countries from repaying their interest-free loans that are due at the end of 2020. It also expressed its willingness to provide further support, including loan maturing extensions, to free up funds needed to deal with the pandemic.
Economy & Politics
N40 billion Probe: Drama as Reps order arrest of Ag MD NDDC after walking out on them
Pondei walked out of the hearing after accusing Hon. Tunji-Ojo of corruption.
The corruption allegation drama going on between the National Assembly and the Niger Delta Development Commission (NDDC) took a new twist as acting Managing Director of the commission, Prof. Kemebradikumo Pondei and his team on Thursday, walked out on legislators investigating the alleged N40 billion irregular expenditure in the commission.
In a reaction to the development, the House of Representative Committee on NDDC, has issued a warrant of arrest on the acting Managing Director.
Pondei walked out of the investigative hearing on Thursday in Abuja, after accusing the Chairman of the House of Representative committee on NDDC, Olubumi Tunji-Ojo (APC-Ondo) of corruption.
READ MORE: Senate confirms appointment of board members for NDIC, law reform commission
According to the acting Managing Director, “We in the NDDC are not comfortable with the Chairman of this committee, presiding over the matter. He is an interested party and we do not believe that the NDDC can have justice because he cannot seat on his own case.”
“We have no issue of appearing, we appeared before the Senate ad hoc committee and as long as he remains, we will not make any presentation,” he said
However, the issuing of warrant of arrest by the lawmakers, follows the unanimous adoption of the motion by Rep. Benjamin Kalu at the investigative hearing On Thursday in Abuja.
READ ALSO: NSITF board to investigate suspended MD and others over financial misconduct
Kalu, who is the spokesman of the house, commended the committee members for the maturity that they have displayed despite the provocations of the NDDC boss.
Kalu in his statement said, ”I want to refer this committee as well as the invited guests to section 60 which says that, the Senate or the House of Representatives shall have powers to regulate its own procedure.
“It is within the parameters of the law that the house regulates its activities, this is a committee affair and not a personalised affair.
“I want to move that this committee invokes the provisions of section 89 of the Constitution and invoke our powers on warrant of arrest to compel the agency to come and answer how they have administered the money appropriated to them,” he said.
Download the Nairametrics News App
The committee, later passed a vote of confidence on the Chairman, while describing him as a man of integrity and a leader of high reputation.
Earlier in his speech, Tunji-Ojo said that documents from the Central Bank of Nigeria and the Office of the Accountant General of the Federation when there officials appeared before the investigative panel showed that NDDC had spent N81.5 billion between January and May 2020.
Economy & Politics
Just in: Suspended EFCC boss, Ibrahim Magu, finally released from detention
Magu’s lawyer confirmed his release from the custody of the DSS.
The suspended acting Chairman of the Economic and Financial Crime Commission (EFCC) has been released from police custody after about 10 days in detention.
According to a monitored report, this was confirmed by his lawyer, Tosin Ojaomo, who said that the EFCC boss is no longer under custody.
The suspended EFCC boss was invited by the presidential probe panel headed by Ayo Salami, a retired President of the Appeal Court to the Presidential Villa in Abuja on July 6 over allegations bordering on corruption and financial misconduct.
He was later moved to Area 10 Force Criminal Investigation Department (FCID) of the police in Abuja where he has since been detained.
Just earlier today, the Inspector-General of Police, Mohammed Adamu, asked Magu, to direct his bail application to the presidential probe panel.
This was in response to a request by Mr Oluwatosin Ojaomo, Magu’s legal representative, who asked the IGP to grant bail to his client on self-recognisance after the suspended EFCC chief had spent four days in custody.
But in a letter dated July 14, 2020, and addressed to Mr Ojaomo, the IGP said the police force is not investigating and detaining Magu, so, it cannot grant the bail request.
It also advised the lawyer to redirect his request to the chairman of the presidential probe panel for appropriate action.
Economy & Politics
OPEC+ to reduce production cuts in August to 7.7 million barrels a day
OPEC+ is preparing to increase production in a period demand picks
The Organization of the Petroleum Exporting Countries (OPEC) and its allies have agreed to increase crude oil supply starting from next month, as demand continues to rise to pre-pandemic levels.
OPEC+ agreed to reduce the daily production cut from 9.6 million barrels a day to 7.7 million barrels a day from August. The reduction in cuts was backed by both Saudi Arabia and Russia, including other participating oil ministers in the virtual conference.
This comes nearly 3 months of production cuts after oil fell to peak lows in April, last month OPEC production reached its lowest level in nearly 30 years since the gulf war. The decision to taper the previous reduction was expected earlier today as the body also talked on extended production cuts for countries like Nigeria, Iraq, and others for not meeting their production cuts for the months of May to June.
However, the risk remains on the strength of a demand recovery as the virus seems to be rebounding in the United States. Saudi Oil Minister, Prince Abdulaziz bin Salman revealed that the extra supply due to the already planned ease of production cuts will be consumed as demand rises. He added that economies globally are beginning to reopen, however, “this is a cautious and gradual process. The recovery signs are unmistakable.”
READ MORE: OPEC launches Annual Statistical Bulletin (ASB)
Nigeria’s position: OPEC expects the increase in supply to be offset by countries like Nigeria that did not meet full compliance on production cuts. Nigeria will join Iraq and Angola by engaging in a further 842,000 barrels a day of cuts through September. It is still unclear if Nigeria and the other defaulting members would be able to meet production cuts compliance as Nigeria has historically failed to meet production cuts numbers before.
Prince Abdulaziz, who has made it his mission to end the quota cheating that has dogged OPEC+ since its inception in 2016, said these compensation cuts are a crucial principle and the group must resist the temptation to relax.
OPEC+ is preparing to increase production in a period demand picks as Prince Abdulaziz has ensured that no country heats on its production cuts, adding that its essential the group cuts and increases production with one voice. The organization cut production to almost just 10% of global supply which enabled prices to rebound to over $40 after April’s lows.
Russia says the tapering goes in hand with the current rising demands and expects output hikes to be consumed in markets of OPEC members as it local demands recovers. Saudi Arabia expects flat exports next month as demand rises locally.
Okonjo-Iweala shares her vision with WTO members, as she pitches for DG post
N40 billion Probe: Drama as Reps order arrest of Ag MD NDDC after walking out on them
Why Artificial Intelligence will separate winning banks from losers amid COVID-19
NITDA launches technology and entrepreneurship scheme
OPEC+ asks Committee to monitor Nigeria, others over extended oil production cuts
COVID-19 Update in Nigeria
Daily Parallel Market exchange rate – ₦470/$1
MTN launches e-sim, a virtual sim card for more security and quality service
BTC scammers breach Twitter accounts of Bill Gates, Obama, Google, Apple, Uber
Crypto; Tron’s founder offers $1 million bounty in finding BTC Twitter hackers
Wise African
June 24, 2020 at 3:04 am
The CEO is an idiot who doesn’t understand that most of the poor countries were given bad loans at exorbitant rates of 9 – 10% while the rich countries will be given the same loan at 1.7 – 2%
Rik
June 26, 2020 at 5:27 pm
“doesn’t understand that most of the poor countries were given bad loans at exorbitant rates of 9 – 10%”
Why do you think it is 10%? It is precisely because of what the CEO is saying. When you take a loan and can’t pay it back, your next loan would be at higher interest rate. So the CEO’s advice is very correct.
The countries that got their loans at 2% are countries that paid their loans back in the past. That is how the credit rating system works.
Peter Erameh
June 24, 2020 at 7:51 am
Yes,I do agree that ‘your debt is somebody’s else’s saving’ but it should be noted that in a situation where the debt is made up of over bloated and suffocating interest rate, then the statement cannot be completely true!
Therefore, debt forgiveness should be considered from the angle of debt quality based on age analysis and the inability of the debtor to perform in terms of the loan repayment – why continue to carry such toxic assets in your books and continue to earn interest on such toxic assets and take away cash dividends because some financial institutions do not make adequate provisions for such toxic assets in Nigeria. In fact, those with offices outside the shores of this country are more guilty of this as they transfer such toxic assets to their outside offices in order to hide them from the regulatory bodies.
Sometimes,over time the lender would have even earned over 200% of the due interest amount plus the principal amount borrowed and yet when the source of repayment becomes impaired, they will continue to compound excessive interest amount on the account with penal interest rate under the guise of expired facility – and yet most of the accounts have not been adequately provided for in line with the various prudential guidelines.
My humble and personal view is that once you have earned adequately on the lending which would have covered perhaps 100% of your savings or investment plus a reasonable interest amount (even though interest amount is recognized before principal amount) and you are convinced that the source of repayment has become impaired, you can proceed with debt forgiveness because he that is alive is the one that can repay debt.