07 Oct 2016




MAN canvasses policies to stimulate economy (The Nation, pg.14)
The Manufacturers Association of Nigeria (MAN) has canvassed a strong focus on price stability and economic growth, with integration of the monetary and fiscal policies to stimulate the economy.
Speaking to The Nation, its President, Dr. Frank Udemba Jacobs, said there was a need for the Federal Government to show strong commitment to resolving the challenges facing the nation by reducing the interest rate on refinancing operations if the manufacturing sector had to stimulate the economy.
He said: “The government must work towards the reduction of Company Income Tax (CIT) to 15 per cent for manufacturers as a way of attracting further investments aimed at pulling the economy out of recession as has been done in other countries with success. It must support the banking sector to maintain the flow of credit, and low interest rate of not more than five per cent”.
The MAN chief canvassed the exploitation of the over 35 solid minerals across the country.
He said some of the minerals, such as metals, chemicals, iron and steel could be exploited for motor vehicle and miscellaneous assembling.
He made a case for adequate incentives to attract investors into the sector.
The MAN chief said investment in the petroleum sector was critical, as the nation currently boasts one functional petro-chemical plant, which sadly does not produce all types of petro-chemical raw materials needed in the manufacturing sector.
Pointing out that economic diversification would be difficult without a vibrant manufacturing sector, Jacobs said economic diversification attained by highly industrialised economies such as the United States (U.S), Japan, China and Malaysia was successful principally as a result of deliberate policies by the governments.
He, therefore, urged the government to borrow a leaf from these countries, pointing out that Nigeria could pull out of recession if enough stimuli was given to the manufacturing sector.
Jacobs further advised that all efforts to increase non-oil revenue should be pursued vigorously by removing all obstacles restraining the growth and competitiveness of the sector such as the indiscriminate changes in the Monetary Policy Rate (MPR).
He observed, for instance, that the MPR changed as many as four times between 2014 and July 2016, with distorting effects on the economy.
Others, he said, are the exclusion of 41 items, some of which are essential raw materials from the official Foreign Exchange (forex) market as well as failure to synchronize monetary and fiscal policy actions.
The MAN chief0 also said there was the need to encourage the exportation of manufactured and other non-oil products as a way of boosting foreign exchange earnings, and also conclude the review of the Export Expansion Grant (EEG), which has been going on since 2014.
According to him, this would make the incentive available to exporters as a way of encouraging export and allowing the payment of import duties and Company Income Tax (CIT) with the existing Negotiable Duty Credit Certificate (NDCC).
“There should be development of support infrastructure so as to facilitate the country’s industrialisation efforts. It is not advisable to use borrowed funds only to finance infrastructure development. The private sector should be actively involved in infrastructure development.
“Government should, therefore, resuscitate the Public Private Partnership (PPP) programme through the establishment of concession agreements under the Build-Operate-Transfer (BOT) basis in road and rail construction and maintenance,” Jacobs added.
He also advised on the need to adjust downward taxes such as corporate income tax, Value Added Tax (VAT), and Personal Income Tax. According to him, it is not advisable to increase CIT, VAT and PAYE as the productive sector is already hit with dwindling investments.
He argued that any further tax increase will crowd out more investments in the sector. Instead, he suggested that current Tax-Gross Domestic Product (GDP) Ratio of 12 per cent, which is below the World Bank benchmark of 18 per cent may be raised by widening the tax net and ensuring that all taxable individuals and entities are covered.
Source: The Nation;

PZ Nigeria’s assets hit N74.4b (The Nation, pg.11)
The Chairman, PZ Cussons Nigeria Plc, Chief Kola  Jamodu yesterday said the company’s balance sheet remained strong with total assets of N74.4 billion compared to N67.4billion it was last year.
The chairman who spoke during the firm’s ‘Annual Report and Accounts 2016’ in Abuja, stated that overall, the company did well to hold its share of the market.
He said: “Our balance sheet remains strong with total assets of N74.4 billion compared to N67.4billion in the previous year. The N1.7billion of export rebates that are receivable from the Nigerian government in the previous year’s report are included in our total assets.
“Despite the deteriorating operating environment, the company remained focused and managed to deliver a steady performance for the year to grow shareholders’ value.
“Consolidated revenue decreased by 4.9 per cent from N73.1billion to N69.5billion due to the adverse economic conditions referred to above. We continued with our strategic initiatives aimed at increasing shareholder value and sustaining long term growth.
“The family care business experienced a margical decrease of two per cent in revenue compared to the prior year. Improved planning and execution in supply chain and targeted investments in key brands helped to limit the negative impact of the scarcity of foreign currency and other adverse factors.”
He added that the revenue of the white goods business decreased by nine per cent as consumers shifted demand from durable consumer goods to foods and other basic necessities. Consequently and largely due to an exchange loss of N2.9billion, group profit before tax dropped by 52 per cent from N6.56billion to N3.15billion.
Source: The Nation;

‘SMEs, crucial to economic recovery’ (Guardian, pg.22)
As the country struggles to escape recession, Small and Medium Enterprises (SMEs) have been identified as a survival tool to reshape the economy, Chairperson, African Incubator Network and Centre Manager, Technology Incubation Centre, Lagos; Zonal Coordinator, South-West, Technology Incubation Centres in Nigeria, Dr. Julie Momah, has said.
To use the SMEs as the springboard for lifting the economy out of the woods, Momah advised governments and big enterprises in the country to prioritise support for the sector.
Speaking at a forum organised by Computer Warehouse Group (CWG) Plc to promote SMEs with ICT tools in Lagos, she said the success of SMEs is the success of any developing nation. If promoted, they would eventually create jobs, wealth, active commerce and develop the environment, which will help in the resuscitation of the economy.
Noting that SMEs in the country are currently contending with serious challenges, she however contended that the difficult times create good opportunities for Nigerians to think inward, and be creative. She noted that Government has put in place agencies to help the SMEs, but they are not enough as there is need to do more.
Business Development Manager, Small and Medium Enterprise Resource Planning (SMERP) Chidi Asiegbu, said for the country to move out of recession, SMEs are the primary focus to move ahead as a country saying that empowering them is one of the basic tools to strengthening the economy.
“In Nigeria today, we have a thriving pool of SMEs struggling for recognition and survival. They are yet to make any significant impact on the growth and development of the economy due to a number of challenges.
“It is on this premise that CWG Plc in line with its vision has provided an SME solution based platform to mitigate these challenges, riding on its new strategy of driving technology as a service.
The solution, ‘SMERP’ is offered as a service within the cloud solutions, which eliminates the incessantly high setup cost associated with technology acquisition.
He said SMERP enables the Small and Medium businesses have their own brands. They are able to use it to create individual online stores without going through the long phase of creating a website. They are also able to use the solution to manage the inventory of what they produce which includes the general accounting of what they sell.
Speaking on the flexibility and affordability of the solution, he said the solution is very flexible. “It is in the cloud, anybody who has an email and internet can access it. In terms of affordability, we have decided that all the SMEs coming through strategic government SMEs organisation, we would allow them use the solution free for one year, which is part of our empowerment strategy,” he said.
Source: Guardian;


Naira’s ‘true value’ in dilemma as margins widens (Businessday, pg.1&4&38)
What is the naira’s real value and why is the gap between the official and parallel market rates increasing on a daily basis? And why are we having different markets, such as official, black market, fuel importation, and BDC rates among others,” These were few posers from Friday Ameh, an energy analyst and investor to… 
Source: Businessday;

National Assembly seeks Buhari’s briefing on economy (Guardian, pg.6)
• Reps query use of IDPs’ N250m to clear weeds
• SGF to explain utilisation of N12 billion
The Senate yesterday agreed with the House of Representatives that President Muhammadu Buhari should brief a joint session of the National Assembly on the state of the nation’s economy.
The House had on September 22, 2016 urged the president to hold an emergency joint session with the National Assembly with a view to formally presenting to the legislature and by extension all Nigerians, information on the true state of the economy and measures being taken to remedy what it called the country’s worst economic predicament since independence.
It is the belief of the lawmakers that the president’s appearance before the National Assembly will provide Nigerians, including all government functionaries an opportunity to have equal knowledge and perception about the state of the economy and how to resolve the crisis.
The House of Representatives Speaker, Yakubu Dogara, had read an address which the lawmakers adopted as their resolution but required the concurrence of the Senate to make it effective.
Dogara said: “The recent retreat by Mr. President with his cabinet and sundry statutory appointees is most commendable. It is in this regard, that I urge Mr. President to consider holding a joint emergency session of the National Assembly to brief both the legislature and indeed Nigerians of his plans to pull Nigeria out of recession.”
The decision to concur with the House of Representatives’ resolution in the Senate yesterday followed a motion by the Deputy Senate Leader, Ibn Na’Allah, which drew the attention of the upper legislative chamber to the resolution of the House on September 22.
After moving the motion, the Senate President, Bukola Saraki, put it to a voice vote and was accordingly passed without any dissenting voice.
But it is left for the president to decide on whether to honour the invitation or not.
The House of Representatives also yesterday queried the Presidential Initiative on the North East (PINE) for expending N258.1 million on the clearing of weeds in Yobe State.
PINE had awarded the contract for the removal of 250 kilometers of invasive plant species along the river channels and simplified village irrigation scheme (Phase11) in Komadugu basin in Yobe State in favour of Messrs Josman Technolgy Limited for N258.132.735.00.
PINE’s Executive Secretary, Mr. Umar Farouk, who told the lawmakers that the N5 billion budgeted to his outfit had already been released to him, explained that he approved the use of N258 million to clear the weeds to pave the way for a free flow of water required by farmers in Jacusco, Bade and its environs for productive activities.
But the execution of the weed removal contract within a month did not go down well with members of the Mohammed Sani Zorro-led House Committee on the Internally Displaced Persons (IDPs) and PINE who had an interactive session with Farouk at the National Assembly complex.
A member of the committee, Igariwey Idumu Enwo (PDP: Afikpo: Ebonyi) questioned the rationale for the issuance of the weed removal contract since it had no direct relationship with the rehabilitation of the IDPs. Enwo also faulted several other jobs contracted out by PINE, arguing that the outfit fell short of compliance with the provision of the Public Procurement Act.
Gyang Istifanus Dung (PDP: BarkinLadi:Riyom: Plateau) who recalled the committee’s visit to Damboa and Bama expressed disbelief that PINE had in its kitty N5 billion to cater for the needs of the IDPs in the north east. “At the time we visited the IDPs centres in Damboa and Bama, it was unbelievable that this is happening in Nigeria. I found it difficult to understand how you went out of your way to prioritise the removal of grass over attending to the dire situation our IDPS found themselves. It beats my imagination, “ he said.
Ismail Gadaka (APC: Fika: Yobe) who described the expenditure as a clear waste of resources disclosed that there had been budgetary provision running into hundreds of millions of naira for the clearing of such weeds in the past 15 years.
Zorro decried the absence of the Secretary to the Government of the Federation (SGF), Mr. Babachir Lawal, who should have explained how he expended N12 billion allocated to his office to cater for the IDPs. He upbraided PINE for expending such money to clear weeds.
Meanwhile, the House has expressed readiness to assist in the repatriation of $458 million from the United States.
The House position was sequel to the adoption of a motion sponsored by Johnson Agbonayinma at the plenary session presided over by Dogara.
The lawmakers resolved to interface with the Minister of Justice and Attorney General, Mr. Abubakar Malami to meet with the U.S. Congressmen and women who initiated the resolution for the $458 million to be returned to the Nigerian government.
Agbonayinma while moving the motion explained that the money was part of the $550 million traced by the U.S. authorities as part of its kleptocracy asset recovery initiative in 2013.
Source: Guardian;

Recession: IMF offers Nigeria, others zero-interest loans (Punch, pg.23)
The International Monetary Fund is prepared to lend money to Nigeria and other countries facing economic crisis at zero interest rate in order to stimulate their recovery.
The Managing Director, IMF, Christine Largade, said this on Thursday in Washington DC, United States, at the ongoing annual meetings of the World Bank/IMF.
“If we want to improve the inequality issue, we must have a strong international safety net. In this context, I am pleased to reveal that our board recently approved the extension of the zero interest rate on all concessional facilities from 2016 to 2018, and thereafter, if there is a need for an extension,” she said.
Our correspondent, however, gathered from top Nigerian officials attending the meetings that the country was not favourably disposed to taking the IMF offer.
An official, who spoke to our correspondent on condition of anonymity, said, “The IMF people have been talking to us for some time, asking us to come and take loans, but their facilities come with too many unfavourable conditions.
“For instance, they told us to remove fuel subsidy and devalue the naira, which we did. If we take their fresh offer, they may ask us to raise the price of fuel and further devalue the currency, but these will create unrest in the country because the people are already suffering and we are aware of this.
“We will rather take a facility from the World Bank. The IMF facility comes with too many conditions; though we need a lot of funds to come into our economy now, we have to be wary of some of the tough conditions attached to them.”
Giving further details about the facility, the IMF boss said, “That is really important for low-income countries to be able to actually absorb the shocks without necessarily going to the international markets or relying on bilateral lending capacity of close to $1tn by extending access to bilateral borrowing agreements. The new agreements that are being signed this week will run at least through the end of 2019, and will continue to serve as a third line of defence.
“As you know, the first line of defence is quota; the second line is a new arrangement to borrow; and the third line of defence will be those bilateral loans.
“We have so far received pledges of $344bn from 26 members. We look forward to others joining the effort. We will provide more details shortly; and there will be some signing sessions organised in the course of the next two days.”
Lagarde also said that the outlook for advanced economies remained subdued, while that for the developing economies provided some guarded optimism with great diversities within the various economies.
She added, “Prospects for low income economies may be more challenging with varied outlook. We see growth as too low, too long and benefitting few. By exploiting synergies in policies, we can overcome these challenges. We also believe that each country has something to offer. My hope is that at the end of these meetings, each finance minister, each governor of central bank will go back home thinking of what to fuel growth.
Source: Punch;

Nigeria Needs Infrastructure, Not iPhones, Adeosun Tells Donors, Foreign Investors (Thisday, pg.9)
• IMF dangles zero interest rate before low-income countries, FG may shun offer
• Senate invites president to brief N’Assembly on the economy
• At $52 oil hits four months high
Chika Amanze-Nwachuku, Obinna Chima in Washington D.C, Omololu Ogunmade in Abuja and Ejiofor Alike in Lagos with agency report
The Minister of Finance, Mrs. Kemi Adeosun, has informed multilateral donor institutions and investors that Nigeria is hungry for infrastructure that can trigger growth, not iPhones and pricey suits that will drive consumption.
Wednesday night at a session during the International Monetary Fund (IMF)/World Bank annual meetings in Washington D.C., saying investors must start to realise that western economies are matured and offer lower returns, while Africa with its infrastructure gap offers greater returns.
The minister made the remarks on the heels of the announcement by the IMF that it would offer zero interest rate on its concessional lending facility from 2016 to 2018 to Nigeria and other low-income economies that are in dire need of financial support to boost their economies and overcome challenges as a result of low commodity prices.
Adeosun said: “It seems very simple, in terms of what needs to be done. We are quite excited about negative interest rates. We like that you’re not earning any money.
“We are happy to take your money and give you very small positive interest rate. We think that the time has come, everyone is thinking out of the West, but there is nothing left in the West, everybody has to now come to Africa.
“But we don’t want investors to come to Africa to sell us iPhones and many expensive suits.
“We want to become productive, so we want this investment to come into infrastructure that will enable us to compete and really enable Africans to stay in Africa.”
She informed her audience that Nigeria has started a journey, which would take its economy from being dependent on oil as a primary commodity, to a more productive economy.
Adeosun said the economy had moved from spending 90 per cent of its budget on recurrent items and only 10 per cent on capital expenditure, to 70 per cent on recurrent expenditure and 30 per cent on capital expenditure.
“From the numbers that we have done, the infrastructure gap that we face, even if we devote our budget for the next three years, it is not enough, so we’ve got to look for creative ways to mobilise additional capital.
“We started of course with spending our own money (pension funds) because we think, of course, that the first thing we have to do is to re-establish some benchmarks, some ability to deliver on roads, on rails, on basic infrastructure,” she said.
According to her, Nigeria’s long-term plan is to mobilise private capital. “We think the narrative around who pays for infrastructure is a very important one in Africa. I say that because at the moment, if you don’t have infrastructure, you are going to pay anyway. If you spend six hours on a journey that should take you an hour, you’ve paid.
“So how do we convert that payment, which is currently informal and very painful, into a formal payment and therefore turn to a revenue stream that could attract investors, That is the challenge that we are working on now.
“As I have said, we are leading with our own money. We are looking at a regulatory framework that would enable investors to come in. We know it’s a new market and we are going to de-risk it.
“So what we are starting with are just infrastructure bonds that we guarantee, and then hopefully, when investors get an appetite for what the Nigerian infrastructure framework can provide them in terms of returns, we believe, we’d be able to remove some of the safeguards needed at the moment.
“We are hungry for infrastructure. We’ve got 170 million people who don’t have power in sufficient quantities, we don’t have a rail system, we don’t have a road structure, we believe that if we solve these infrastructure challenges, the entire productivity chain — agriculture, solid minerals, manufacturing, our unemployment problems — could all be solved.
“Our population is young; we have to provide a standard of living that keeps young vibrant Africans in Africa, because we think that is very important for eliminating poverty,” the minister stated.
IMF Offers Zero Interest Rate
The finance minister’s remarks came after the IMF said it was offering zero interest rate on its lending facilities between 2016 and 2018 to Nigeria and other low-income countries that are in dire need of financial support to boost their economies.
Addressing the media at the ongoing World Bank/IMF annual meetings, the Managing Director of the IMF, Ms. Christine Lagarde, said the policy was expected to help countries that are members of the donor institution absorb future shocks and continue their efforts to achieve deeper and more sustainable economic growth in line with sustainable development goals.
Despite the concession being dangled by the fund, THISDAY reliably gathered from a top official at the Ministry of Finance, that Nigeria might not be interested in borrowing from the IMF because of the conditionalities that are usually associated with loans from the fund.
Africa’s top oil exporter has been hit by low oil prices and depleted foreign reserves that have plunged the country into recession.
The National Bureau of Statistics (NBS) recently revealed that the country’s GDP contracted by 2.06 per cent in the second quarter of 2016, compared to the negative growth of 0.36 per cent recorded in the first quarter.
The country recently got a lifeline from the African Development Bank (AfDB), with the bank stating that it would support the country with the sum of $1 billion to help it address the N2.2 trillion deficit in the 2016 budget.
It is also in talks with the World Bank to plug its budget deficit, just as it is getting set to issue a Eurobond.
Continuing, Lagarde said the IMF board took the decision on the zero interest rate, which is in alignment with most developed economies, in view of the challenges facing some low income countries, including Nigeria.
“If we must improve the inequality issue, we must have a strong international safety net. In this context, I am pleased to reveal that our board recently approved the extension of zero interest rate on all concessional facilities from 2016 to 2018, and thereafter, if there is need for extension.
“That is really important for low-income countries to be able to actually absorb the shocks without necessarily going to the international markets or relying on bilateral lending capacity of close to a trillion dollars by extending access to bilateral borrowing agreements.
“The new agreements that are being signed this week will run at least through the end of 2019, and will continue to serve as a third line of defence.
“As you know, the first line of defence is the quota, second line are new arrangements to borrow, and the third line of defence will be those bilateral loans.
“We have so far received pledges of $344 billion from 26 members. We look forward to others joining this effort. We will provide more details shortly, and there will be some signing sessions organised in the course of the next two days,” she explained.
According to Lagarde, the outlook for advanced economies remained subdued, while the outlook for developing economies provide some guarded optimism with great diversities within the various economies.
“We also believe that each country has something to offer. My hope is that at the end of these meetings, each finance minister, each governor of central banks will go back home thinking of what to fuel growth.
“For example, when the monetary policy has been over-stretched, fiscal policy can step up. This will also put in place the structural reforms that are much needed, which have been sorted out in some countries, but which are still lacking in other places,” she added.
Also speaking at a separate media briefing yesterday, the President of the World Bank Group, Jim Yong Kim, noted that a lot of developing countries continue to struggle amidst a sluggish global economy.
He stressed that a lot of countries had been hit by falling commodity prices and stagnating global trade.
He pointed out that “we now have the highest number of developing countries in recession since 2009”, adding that the World Bank had been working to meet rising demand for assistance to help countries manage the global challenges.
Furthermore, Kim said the World Bank was playing a strong counter-cyclical role in the global economy.
“But multiple risks threaten hard-fought gains in many countries and can hamper progress on our goals of ending extreme poverty by 2030 and boosting shared prosperity.
“Our research shows that inequality is still far too high, both globally and within countries, constraining growth and breeding instability.
“We need to focus on growth and continue to reduce inequality – and we have to make growth more equitable, and more sustainable. Because of the multiple, overlapping global shocks – including climate change, forced displacement, and pandemics – we have to scale up our efforts dramatically,” he said.
Senate Invites Buhari
However, as finance ministers, central bank governors, economists and financial experts converged on Washington for the annual meetings of the Bretton Woods institutions, the Senate yesterday joined the House of Representatives to invite President Muhammadu Buhari to appear before a joint session of the National Assembly to brief it on the state of the economy.
A fortnight ago, the House had passed a resolution inviting the president to address the legislature on the economy, as the nation navigates through its worst recession in 29 years.
The decision to concur with the House’s resolution in the Senate yesterday followed a motion by the Deputy Senate Leader, Ibn Na’Allah, drawing the attention of the Senate to the resolution of the House on September 22.
Na’Allah asked the Senate to concur with the House’s resolution passed on September 22 to invite the president to address a joint session of the National Assembly to intimate it with plans to get the country out of the recession to enable the National Assembly take further legislative action.
After moving the motion, the Senate President Bukola Saraki put the motion to a voice vote, which was passed without any dissenting voice.
Oil Hits $52/bl
Meanwhile, the prices of crude oil rose to a four-month high yesterday, following expectations that the Organisation of Petroleum Exporting Countries (OPEC) would cut global output as agreed, coupled with a large drop in the U.S. inventory levels on Wednesday.
The price of the global benchmark, Brent crude had hit $115 per barrel in June 2014, before it slumped to over a decade low of $27 per barrel in January 2016.
The price later recovered to a 2016 high of $52 in June and slumped again to hover at $43 per barrel.
However, Brent crude futures yesterday settled at $52.41 a barrel, after hitting a session peak of $52.65, the highest in four months.
U.S. crude, West Texas Intermediate (WTI), also settled at $50.29 a barrel, having broken above $50 for the first time since June this year.
Citing OPEC sources, Reuters reported that a number of OPEC oil ministers, plus Russia’s energy minister are set to attend an energy conference in Istanbul, and are expected to meet together informally although they are unlikely to make any new decisions. 
OPEC agreed last week to implement modest oil output cuts in the first such deal since 2008, with the group’s leader Saudi Arabia softening its stance on arch-rival, Iran, amid mounting pressure from low oil prices.
Under the deal, OPEC would reduce output to a range of 32.5 million barrels per day (mbpd) and 33mbpd from the current estimates of 33.24mbpd.
But investors are concerned that the cartel’s members may not stand by an agreement on output cuts.
Concerns have also been raised over how much sway the cartel now has over a market still brimming with crude from around the world, even as the scope of the proposed reduction has been considered inadequate to arrest the supply growth and bring balance back to the supply-demand dynamics.
However, both contracts hit their highest in nearly four months, after U.S. data showed crude oil stockpiles fell 3 million barrels last week to 499.74 million barrels, confounding expectations for an increase.
Source: Thisday;

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