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CBN reinstates 9 suspended banks into forex market

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  • As AfDB chief warns Nigeria, others on foreign debt

The Central Bank of Nigeria (CBN ) has reinstated the nine banks that were recently suspended from the foreign exchange market.

The CBN Director of Banking Supervision, Mrs. Tokunbo Martins, who announced the reinstatement in Abuja , Wednesday, explained that the apex bank took the decision after the banks presented repayments plans.

The CBN had on Tuesday banned nine Deposit Money Banks (DMBs) from the nation’s foreign exchange market for failing to remit the sum of 2.3 billion dollars belonging to NNPC to the Treasury Single Account (TSA).

The CBN then on Thursday re-admitted the United Bank for Africa (UBA) Plc, saying it had remitted all outstanding NNPC/NLNG deposits in its possession to NNPC’s TSA at the CBN.

In the meantime, the President, African Development Bank, Mr. Akinwumi Adesina, says huge capital is available in Africa.
Adesina, therefore, urged the continent’s governments to boost tax revenue and steer clear of international borrowing as the region grappled with its worst economic slump in more than a decade.

Adesina told the Financial Times that he expected the downturn in Africa, which was triggered by the slump in commodity prices and the slowdown in China, to last for up to another three years.
Africa was facing a debt “challenge” rather than crisis, he said, but warned that “there has to be a lot more fiscal consolidation”.

During the commodities boom, Africa was home to many of the world’s fastest-expanding economies. But growth in resource-dependent nations has stalled with Nigeria, Africa’s most populous country, sliding into its first recession in more than two decades.
The International Monetary Fund forecasts that sub-Saharan Africa’s gross domestic product will grow at 1.6 per cent this year, a sharp decline from 3.5 per cent in 2015, and well below the average of 5-7 per cent over the past decade.

Many nations are struggling with dwindling revenues, rising debt and wide budget deficits in the low growth environment after taking on foreign debt during the boom years.

Zambia, Ghana and Mozambique were among a raft of African states that took advantage of low global interest rates and high commodity prices to issue billions of dollars of debt as international investors hunted for yield.
African governments sold $12bn of eurobonds last year, compared with about $26.5bn between 2006 and 2014, according to the AfDB. The weakness of many African currencies has meant debt service costs have soared in local currency terms, while several commodity producers are battling foreign currency shortages.

Adesina, who took over as the bank’s president in September last year, said that expanding the tax base and improving the efficiency of tax administration would be the easiest ways to boost public finances.
He said the tax-to-GDP ratio in sub-Saharan Africa was about 14.5 per cent, compared with more than 30 per cent for most developed nations.

He said, “So, a lot more needs to be done to expand the tax base in Africa. Today it’s about $500bn a year [for the region], which is much better than it used to be, but we need to expand that.”

The AfDB chief said not only was it risky for governments to borrow overseas because many African currencies were weakening and the US Federal Reserve appeared set to raise interest rates again this year, but also unnecessary.
“Instead of African countries running off to raise a lot of eurobonds, I think there’s huge amounts of capital available more locally that we must tap for Africa’s development,” Adesina said.

He added that borrowing should only be undertaken to finance projects that enhance economic growth.
Adesina said African pension funds had a pool of $334bn, sovereign wealth funds $164bn and there was some $56bn of foreign direct investment looking for bankable projects.
However, he acknowledged that “there’s a lot of work that needs to be done to unlock that capital,” particularly in improving legal and regulatory environments.

The AfDB — which has taken an increasingly prominent role in providing budget support to governments and financing infrastructure projects — intends to invest $12bn over the next five years in energy projects.
Cement price jumps to N2,300
The price of cement has risen to between N1,200 and N1,300 in Lagos and other parts of the country.
Before the hike, a bag of cement costs about N1, 600 marking over 35 per cent rise in the cost of the raw material used in the building and construction industry.

Reacting to the development, 2nd Vice President Vice President, Nigeria Institute of Building (NIOB), Mr. Kunle Awobodu said the increase may have been as a result of cost of production and the devaluation of the naira.
He lamented that with the hike, the cost of construction will increase while the need for cost variation in all ongoing contracts and abandonment of projects may become inevitable, adding that it may also discourage people from embarking on new projects.

He said: “Clients, contractors and quantity surveyors may have disagreements due to price variations. New price on old contracts in a competitive bidding may eventually lead to sub-standardisation in construction.”
A cement distributor in Arepo, Ogun State said the new price came as a surprise, adding that it many have been occasioned by the current economic down-turn. Another distributor at Ajah area of Lagos, Mr. Kunle Salami said he has stopped his requests for more supplies as he is not sure of his customers reactions.

He decried the increase and urged the government to intervene either in terms of policy for the manufacturing sector or the provision of constant electricity in order for them to thrive.
The Citizen with additional report from Upshot

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WAIVER CESSATION: Igbokwe urges NIMASA to evolve stronger collaboration with Ships owners

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…Stresses the need for timely disbursement of N44.6billion CVFF***

Highly revered Nigerian Maritime Lawyer, and Senior Advocate of Nigeria (SAN), Mike Igbokwe has urged the Nigeria Maritime Administration and safety Agency (NIMASA) to partner with ship owners and relevant association in the industry to evolving a more vibrant merchant shipping and cabotage trade regime.

Igbokwe gave the counsel during his paper presentation at the just concluded two-day stakeholders’ meeting on Cabotage waiver restrictions, organized by NIMASA.

“NIMASA and shipowners should develop merchant shipping including cabotage trade. A good start is to partner with the relevant associations in this field, such as the Nigeria Indigenous Shipowners Association (NISA), Shipowners Association of Nigeria (SOAN), Oil Trade Group & Maritime Trade Group of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA).

“A cursory look at their vision, mission and objectives, show that they are willing to improve the maritime sector, not just for their members but for stakeholders in the maritime economy and the country”.

Adding that it is of utmost importance for NIMASA to have a through briefing and regular consultation with ships owners, in other to have insight on the challenges facing the ship owners.

“It is of utmost importance for NIMASA to have a thorough briefing and regular consultations with shipowners, to receive insight on the challenges they face, and how the Agency can assist in solving them and encouraging them to invest and participate in the maritime sector, for its development. 

“NIMASA should see them as partners in progress because, if they do not invest in buying ships and registering them in Nigeria, there would be no Nigerian-owned ships in its Register and NIMASA would be unable to discharge its main objective.

The Maritime lawyer also urged NIMASA  to disburse the Cabotage Vessel Financing Fund (CVFF)that currently stands at about N44.6 billion.

“Lest it be forgotten, what is on the lips of almost every shipowner, is the need to disburse the Cabotage Vessel Financing Fund (the CVFF’), which was established by the Coastal and Inland Shipping Act, 2003. It was established to promote the development of indigenous ship acquisition capacity, by providing financial assistance to Nigerian citizens and shipping companies wholly owned by Nigerian operating in the domestic coastal shipping, to purchase and maintain vessels and build shipping capacity. 

“Research shows that this fund has grown to about N44.6billion; and that due to its non-disbursement, financial institutions have repossessed some vessels, resulting in a 43% reduction of the number of operational indigenous shipping companies in Nigeria, in the past few years. 

“Without beating around the bush, to promote indigenous maritime development, prompt action must be taken by NIMASA to commence the disbursement of this Fund to qualified shipowners pursuant to the extant Cabotage Vessel Financing Fund (“CVFF”) Regulations.

Mike Igbokwe (SAN)

“Indeed, as part of its statutory functions, NIMASA is to enforce and administer the provisions of the Cabotage Act 2003 and develop and implement policies and programmes which will facilitate the growth of local capacity in ownership, manning and construction of ships and other maritime infrastructure. Disbursing the CVFF is one of the ways NIMASA can fulfill this mandate.

“To assist in this task, there must be collaboration between NIMASA, financial institutions, the Minister of Transportation, as contained in the CVFF Regulations that are yet to be implemented”, the legal guru highlighted further. 

He urged the agency to create the right environment for its stakeholders to build on and engender the needed capacities to fill the gaps; and ensure that steps are being taken to solve the challenges being faced by stakeholders.

“Lastly, which is the main reason why we are all here, cessation of ministerial waivers on some cabotage requirements, which I believe is worth applause in favour of NIMASA. 

“This is because it appears that the readiness to obtain/grant waivers had made some of the vessels and their owners engaged in cabotage trade, to become complacent and indifferent in quickly ensuring that they updated their capacities, so as not to require the waivers. 

“The cessation of waivers is a way of forcing the relevant stakeholders of the maritime sector, to find workable solutions within, for maritime development and fill the gaps in the local capacities in 100% Nigerian crewing, ship ownership, and ship building, that had necessitated the existence of the waivers since about 15 years ago, when the Cabotage Act came into being. 

“However, NIMASA must ensure that the right environment is provided for its stakeholders to build and possess the needed capacities to fill the gaps; and ensure that steps are being taken to solve the challenges being faced by stakeholders. Or better still, that they are solved within the next 5 years of its intention to stop granting waivers”, he further explained. 

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Breaking News: The Funeral Rites of Matriarch C. Ogbeifun is Live

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The Burial Ceremony of Engr. Greg Ogbeifun’s mother is live. Watch on the website: www.maritimefirstnewspaper.com and on Youtube: Maritimefirst Newspaper.

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Wind Farm Vessel Collision Leaves 15 Injured

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…As Valles Steamship Orders 112,000 dwt Tanker from South Korea***

A wind farm supply vessel and a cargo ship collided in the Baltic Sea on Tuesday leaving 15 injured.

The Cyprus-flagged 80-meter general cargo ship Raba collided with Denmark-flagged 31-meter wind farm supply vessel World Bora near Rügen Island, about three nautical miles off the coast of Hamburg. 

Many of those injured were service engineers on the wind farm vessel, and 10 were seriously hurt. 

They were headed to Iberdrola’s 350MW Wikinger wind farm. Nine of the people on board the World Bora were employees of Siemens Gamesa, two were employees of Iberdrola and four were crew.

The cause of the incident is not yet known, and no pollution has been reported.

After the collision, the two ships were able to proceed to Rügen under their own power, and the injured were then taken to hospital. 

Lifeboat crews from the German Maritime Search and Rescue Service tended to them prior to their transport to hospital via ambulance and helicopter.

“Iberdrola wishes to thank the rescue services for their diligence and professionalism,” the company said in a statement.

In the meantime, the Hong Kong-based shipowner Valles Steamship has ordered a new 112,000 dwt crude oil tanker from South Korea’s Sumitomo Heavy Industries Marine & Engineering.

Sumitomo is to deliver the Aframax to Valles Steamship by the end of 2020, according to data provided by Asiasis.

The newbuild Aframax will join seven other Aframaxes in Valles Steamship’s fleet. Other ships operated by the company include Panamax bulkers and medium and long range product tankers.

The company’s most-recently delivered unit is the 114,426 dwt Aframax tanker Seagalaxy. The naming and delivery of the tanker took place in February 2019, at Namura Shipbuilding’s yard in Japan.

Maritime Executive with additional report from World Maritime News

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