FG refunds N535bn spent on federal roads to 21 states

The Federal Government has concluded plans to reimburse a total sum of N535.5 billion expended by 21 states of the federation in repairing federal roads across the country.

This was disclosed by Senator Ibikunle Amosun, Ogun state governor, who briefed State House Correspondents after a meeting of the National Economic Council (NEC) chaired by the Vice President, Professor Yemi Osinbajo.

Amosun said “Another issue discussed is on refund of expenses incurred on repair of federal roads by states. As listed here, we have 13 states that have fully complied with the re-inibursement requirements, we have 8 states that have partially complied, and the total sum of claims to be re-inbursed is exactly N535, 596, 386.00. In other words, N535.5 billion. Then we have N13 billion that has been disbursed to the states already as at 2013. The challenges they face had to do with inadequate funding in the ministry.”

He also disclosed that the Ad-hoc committee constituted by NEC and headed by Governor Adams Oshiomhole charged with the responsibility of probing the management if the Excess Crude Account (ECA) and related federation issues reported perceived lack of transparency and accountability in the operation of the federation accounts.

The panel, according to Amosun, also told the Council that “there were no checks and balances in the running of the ECA in the recent past.”

Those five governors on the Ad-Hoc Committee are the Edo State Governor, Comrade Adams Oshiomhole; Gombe State Governor, Alhaji Ibrahim Dankwambo; Kaduna State Governor, Mallam El Rufai; (who presented the report to Council today) Akwa Ibom State Governor, Mr. Emmanuel Udom and Lagos State Governor, Mr. Akinwunmi Ambode.

Amosun added that some states have started benefiting from the Special Intervention Fund aspect of the presidential relief package earlier approved by President Muhammadu Buhari.

He said “While briefing the Council, the Central Bank Governor, Mr. Godwin Emefiele, said 18 states had been able to draw from the Fund, as at today, while a number of other states are currently being processed for the soft loan facility. This is part of President Buhari’s relief package designed to help states pay backlog of salaries and also ease their financial challenges caused by the drop in federal allocation.

In a similar vein, the Director-General of the Debt Management Office, DMO, Mr. Abraham Nwankwo also informed the NEC that the second phase of the debt restructuring offered to the states is now in effect with 13 new states now being considered, with 12 banks involved.

This is in addition to 11 states whose debts were restructured last month. According to Nwankwo who also told the Council 23 states are now involved in the restructuring. While a total of over N322 billion of states loans were restructured last month, about N252 Billion have been restructured this month.”

It would be recalled that the presidential relief package has three core elements. These include the sharing of about $2.1B in fresh allocation between the states and the federal government. The money was sourced from recent LNG proceeds to the federation account, and its release okayed by the president leading to the sharing of federal allocation twice for month of June.
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The second is a Central Bank-packaged special intervention fund that will offer financing to the states, to the range of about ranging around from N300B. This is a soft loan available to states to access for the purposes of paying backlog of salaries.

The last being a debt relief program designed by the Debt Management Office, DMO, which is now helping the states restructure their commercial loans put at over N660B, and extend the life span of such loans while reducing their debt-servicing expenditures.

The Ogun state governor added that the council also discussed the issues of the current and future agricultural policy direction. “And the PS made a very lucid presentation and it was extensively discussed and he gave us information on data base of farmers in proceeds production capacity of food storage and grains increased fertilizer and he told us specifically that fertilizer used by farmers increased by over 271 percent which was commendable, but the conclusion was that there was the need for more interaction with the states and local governments and their approach in agriculture should be bottom-top approach.

The Council was also briefed about the planned agricultural training programme that the ministry of agriculture intends to pursue and that 12 states and FCT have been selected for the first phase. The second phase would include non educated youths and spread Aldo across states by geopolitical zones,” he said.

Meanwhile, states of the federation have started benefiting from the Special Intervention Fund aspect of the presidential relief package earlier approved by President Muhammadu Buhari.

This was disclosed today at the National Economic Council, NEC, meeting held at the State House presided over by Vice President Prof Yemi Osinbajo, SAN.

While briefing the Council the Central Bank Governor, Mr. Godwin Emefiele said 18 states had been able to draw from the Fund, as at today, while a number of other states are currently being processed for the soft loan facility. This is part of President Buhari’s relief package designed to help states pay backlog of salaries and also ease their financial challenges caused by the drop in federal allocation.

In a similar vein, the Director-General of the Debt Management Office, DMO, Mr. Abraham Nwankwo also informed the NEC that the second phase of the debt restructuring offered to the states is now in effect with 13 new states now being considered, with 12 banks involved.

This is in addition to 11 states whose debts were restructured last month, according to Nwankwo who also told the Council 23 states are now involved in the restructuring. While a total of over N322 Billion of states loans were restructured last month, about N252 Billion have been restructured this month.

Yesterday, the NEC also received an ongoing report from its Ad-Hoc Committee of five governors on the management of the Excess Crude Account and related Federation Account issues. The Committee briefed the Council that it has observed a lack of transparency and accountability in the operation of the Federation Account, adding that there were no checks and balances in the running of the ECA in the recent past.

The five governors on the Ad-Hoc Committee are the Edo State Governor, Comrade Adams Oshiomhole; Gombe State Governor, Alhaji Ibrahim Dankwambo; Kaduna State Governor, Mallam El Rufai; (who presented the report to Council today) Akwa Ibom State Governor, Mr. Emmanuel Udom and Lagos State Governor, Mr. Akinwunmi Ambode.
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S&P reaffirms Nigeria’s rating at B+ with stable outlook

 

The rating agency Standard & Poors today delivered a resounding endorsement of the government of President Muhammad Buhari and its economic policies by affirming Nigeria’s rating at B+ with a stable outlook.

It had been feared that given the foreign exchange controls introduced by the Central bank and backed by the president that the rating agency will place Nigeria on a credit rating watch at best but in its report just published, S&P said its reaffirmation of Nigeria’s credit rating is because the country’s non-oil sectors will continue to support GDP expansion in Africa’s largest economy.

The agency said Nigeria’s rating is further supported by “relatively general government and external debt burdens, ample oil reserves and fairly robust growth in recent years.

The agency acknowledged that Buhari has ordered all government revenues be transferred to a single account held at the Central Bank in a bid to curtail corruption and enhance government revenues.

Naira firms against the dollar, others

The Naira on Friday appreciated by one point against the U.S Dollar at the parallel market .

The development, according to Mr Abubakar Audu, a trader at the parallel market, follows the Central Bank of Nigeria (CBN)’s sale of dollar to Bureau De Change (BDC) operators.

The Nigerian currency traded for N225, N345 and N248 on Friday afternoon against the Dollar, Pounds and Euro respectively.

This is as against Thursday when Naira traded for N226, N345 and N248 against the Dollar, Pounds and Euro respectively.

Meanwhile, the official interbank rate remained at N197 to a Dollar.

Nigeria to sell LNG tender cargo to Brazil's Petrobras

 

Nigeria's liquefied natural gas (LNG) export plant at Bonny Island is to sell a cargo loading later this month to Brazil's Petrobras, trade sources said. 



The cargo, due to load from the plant on Sept. 22-24, was sold at a price estimated by some traders to be around $6.60 per million British thermal units.

Other traders said the price may have been lower.

TSA: Labour warns Banks against retrenchment

Organized Labour in the nation’s banking industry, yesterday in Lagos, said that it would not accept a situation where workers were used as a sacrificial lamb over the Federal Government new Treasury Single Account, TSA, policy.

Operating on the platform of the National Union of Banks, Insurance and Financial Institutions Employees, NUBIFIE, labour lamented that there is the fear of massive loss of jobs in the media and among banks workers as one of the consequences of the TSA by Federal Government

A release by NUBIFIE’s President and Deputy General Secretary, Danjuma Musa and Etim Okon, respectively, advised the banks to among others, strategise and devise urgent means of overcoming this federal government challenge to their existence in business.

NUBIFIE warned operators in the finance industry that any attempt to sack members without due process would be resisted, saying; “As a union, we sympathise with the banking community due to the effect of the federal government decision in its daily operations.”

Nigerian bond index has sufficient liquidity – DMO

The Debt Management Office (DMO) says the Nigerian Bond index has sufficient liquidity and remains a safe haven and appealed to foreign investors who have already withdrawn their portfolio investments from the Nigerian Bond Market to come back.
The Director General of the DMO, Dr. Abraham Nwankwo, dismissed JP Morgan’s proposed phasing out of FGN Bonds in its Government Bond Index – Emerging Markets (GBI –EM) and assured investors that “the bonds remain the very safe and liquid securities they have always been”.

Nwankwo told journalists in Abuja that another set of long tenor bond auction to raise more funds from the debt market would be issued on Friday.

He urged foreign investors to continue with their longstanding interest in the market being fully aware that the Bonds remain the very safe and liquid securities they have always been.

He disclosed that it was JP Morgan that applied to list FGN Bond on its index in 2012, nine years after the Nigerian government had developed its FGN Bond market all by itself with a crop wholly indigenous technocrats.

Nwankwo noted that the planned phasing out of the FGN Bond from the JP Morgan Index does not have any impact on the quality of the FGN Bonds.

According to him, FGN Bonds remain risk-free securities that are backed by the full faith and credit of the Federal Government of Nigeria and are charged upon the general assets of Nigeria.

He explained that JP Morgan’s action does not imply that the Bonds are no longer liquid because FGN Bonds are supported by an active Secondary Market which allows investors to buy or sell them on any business day through any of the 13 Primary Dealer Market Makers licensed by the DMO or on the Nigerian Stock Exchange where the Bonds are listed and for which purpose there is a Government Stockbroker (Stabic IBTC).

JP Morgan had last week informed Nigeria that it would be delisted from its index by year end, following what it described as liquidity challenges in the foreign exchange market which can enable foreign investors quickly repatriate their investment in crisis situation.

CBN Ready to inject liquidity into the Interbank market

 

The Central Bank of Nigeria has ruled out a possible naira devaluation, urging people not to panic about the government shifting its bank accounts to the central bank.

In an interview with Reuters, CBN Governor Godwin Emefiele said he was ready to inject liquidity if needed into the interbank market,

which dried up this week following a directive to government departments to move their accounts into a "Treasury Single Account" at the apex bank.

Amid confusion over implementation of the policy, overnight interbank lending rates spiked to 200 percent this week, but Emefiele denied the policy had provoked a liquidity crisis.

Emefiele said less than one trillion naira would be moved into the single account, while emphasizing maintaining the naira currency - which has dived in the past year due to a collapse in oil revenues - at its current level of 197 to the dollar.

President Buhari Rules Out Further Devaluation of Naira

Nigerian President Muhammadu Buhari says he opposed a further devaluation of the West African nation’s currency and endorsed the central bank’s policies that have restricted foreign-exchange trading.

"I don’t think it is healthy for us to get the naira devalued further," Buhari said in an interview in Paris with France 24 broadcast on Wednesday. The central bank is making foreign exchange available to “essential services, industries.”

Buhari said markets aren’t being harmed by the delay in ministerial appointments, which will happen by the end of the month. Civil servants are running the government of Africa’s top oil producer competently, he said.

“Work is being done by technocrats, they are there and they provide the continuity,” he said.

Amid a halving in oil prices in the past year, Central Bank Governor Godwin Emefiele reacted to the naira’s drop to a record low in February by introducing trading curbs and bans on purchases of dollars to stem the rout.

Last week, JPMorgan Chase & Co. decided to exclude Nigeria from its local-currency emerging-market bond indexes, tracked by more than $200 billion of funds, after the restrictions prompted investor concerns about a shortage of liquidity.

Nigeria's interbank trading halted again as rule for forex funding change

Nigeria's interbank money market was halted for a second day yesterday after the central bank of Nigeria told commercial lenders to provide cash backing for foreign exchange purchases at its proposed intervention on Friday.

Trading on the interbank market was also halted on Tuesday as banks complied with a directive to transfer government revenues into a single account with the central bank.

President Muhammadu Buhari had ordered that all revenues be paid into the Treasury Single Account (TSA) from Tuesday, as part of a drive to fight corruption and aid transparency.

"The market is not trading yet," one dealer said. "What we have is an indicative rate from some banks because of the instruction from the central bank to provide funding for forex intervention."

"We only have people quoting about 50 percent as indicative rate for overnight placement," another dealer said.

Nigeria's central bank in August directed commercial banks to pay for their dollar purchases 48 hours in advance, in a bid to curb speculations at the forex market and drain liquidity from the banking system.

Dealers said there was minimal trading in the interbank money market at 20 percent for overnight lending on Tuesday, after the central bank released a market figure showing 486 billion naira in cash balances for commercial lenders.

Nigeria's forex reserves down 3 pct in month to Sept 14 - CBN Data

Nigeria's foreign exchange reserves fell 2.97 percent to $30.69 billion by Sept. 14, from $31.63 billion a month earlier, according to data from the Central Bank of Nigeria.

The reserves of Africa's top crude exporter were down 22.42 percent from a year earlier.

The CBN has used the reserves to support the local currency, selling dollars to bureau de change operators twice weekly in a bid to narrow the gap between the official and unofficial exchange rate.

Reserves picked up shortly after President Mohammadu Buhari took office in May, which was attributed to efforts to plug leakage and demand management by the central bank. The central bank restricted access to foreign exchange and introduced tight control of the currency market to curb speculation and conserve reserves.

FG to raise N100.8bn in T-bills

 

The federal government will raise N100.88 billion in treasury bills with maturities between three months and one year at an auction on Sept. 23, the Central Bank of Nigeria (CBN) said on Wednesday.

The bank said that it will issue new 91-day paper worth 31.19 billion naira, 10.61 billion naira in 182-day bills, and 59.08 billion naira in 1-year debt, using the Dutch Auction System.

Results of the auction are expected to be released the following day.

Nigeria issue treasury bills twice-monthly to fund the government budget deficit and manage liquidity in the banking system.

Reactions trail Nigeria's index delisting

 If Nigeria had accepted the recommendations of the US investment bank J.P. Morgan which recently removed the country from its index, higher inflation would have driven up the prices of food, transportation and other necessities and many Nigerians would have lost their jobs.

In addition, the official exchange rate of the naira to the dollar would have witnessed a sharp increase from the current rate of N197 to N260 and over N300 in the Black Market. 

These are some of the findings of a recent Central Bank analysis which is supported by some financial experts. 

One of the analysts and Chief Executive Officer of PROSHARE Nigeria, Mr. Femi Awoyemi stated that given the highly import dependent structure of the economy, prices of food items and basic consumables, would have shot up by over fifty percent causing a spike in inflation rate from the current 9.3% to between 13.5% and 15%, were the recommendations adopted.

Furthermore, full adoption of the J.P. Morgan advice would have led to a 50% fall in the value of the Naira, higher school fees for Nigerians studying abroad, and a sharp increase in production costs leading to job losses and more poverty.

The Central Bank Governor, Mr. Emefiele has consistently maintained that the introduction of capital controls is meant to protect the economy from currency manipulators and stimulate growth in critical sectors.

The findings indicate that if the naira had been devalued, foreign currency speculators, would have been the main beneficiaries at the expense of Nigerians.