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DMO: Fed Govt to borrow N1.84tr to fund 2016 budget



  • As Finance Minister explains How FG will fix ailing economy

The Federal Government is set to borrow N1.84 trillion from external and domestic markets to finance the 2016 budget, the Director-General, Debt Management Office, DMO, Dr. Abraham Nwankwo has said.

According to him, the government will borrow N900billion and N984 billion from the external and domestic markets to fund the budget.

Speaking during a workshop on Debt sustainability and the challenge of financing economic recovery by the DMO for the Nigeria Union of Journalists (NUJ) in Abuja, at the weekend, Nwankwo said the challenge of infrastructural development and economic recovery are enormous; therefore, the imperative of the government to seek for alternative funding of which debt sourcing was an integral part.

He urged the media to key into the government’s debt management policy.

The DMO chief observed that the media has a critical role in informing Nigerians of the importance of debt financing in economic development especially with declining oil and gas revenue being faced by the country and around the globe.

He said Nigeria’s debt-to-Gross Domestic Product (GDP) ratio as at December last year was at 13.02 per cent, which he said was far below the peer group ratio of 56 per cent.

Explaining further, Nwankwo said the logic of the mix— external and domestic borrowings, is “to rebalance total public stock in favour of less costly external funds,” while stressing that “the utilisation of the borrowing proceeds are entirely on capital projects to support the growth of productive capacity.”

He said to address the huge infrastructural deficit in the country effectively, the funding implications for Nigeria is about $25 billion per annum over the next five to seven years.

The worry in the funding of such huge infrastructural challenge, the DMO said, lies in private sector equity and debt, which he explained is uncertain as well as public sector revenue and debt which has been adversely affected by declining oil revenue.

To address the imbalance, he said: “The imperative is to depend on well structured, substantial, affordable, long-term external debt financing to fund the desired long-term economic change.”

Nwankwo urged the leadership of the NUJ to engage its members to explain the desirability of public debt financing to Nigerians.

NUJ President, Mr. Waheed Odusile, commended the DMO for the workshop, which he described as timely and educating, urging the office to expand its enlightenment to other critical stakeholders.

Odusile promised that the union would continue to engage with the DMO in order to help pass on the appropriate information on the activities of the office and the importance of debt financing for the country’s development needs.

In the meantime, the Finance Minister, Mrs. Kemi Adeosun has set out government’s plan to reset Nigeria’s economy with structured borrowing, targeted investment and diversified growth. Speaking at a special event hosted by the Lagos Business School, she said: “We have inherited a set of conditions that requires us to refine how we collectively work towards ushering in a new era in Nigeria.”

Pointing to the impact of falling global oil prices on the economy, Adeosun said: “In the past, we had the means but not the will. Now we have the will but we no longer have the money to invest. The safety blanket of oil has been ripped away, laying the poverty of Nigeria’s institutions bare.” According to her, government has spent too many years tinkering at the edges of her institutions, infrastructure and our economy and that the mistakes and misjudgments of the last 40 years have set the clocks back by decades.

Setting out the government’s blueprint for growth, Adeosun said: “We must collectively adopt a blueprint that equips the future generations to be creative and dynamic, that allows us to articulate a vision of a Nigeria, with a strong educational foundation; rich in depth of knowledge with a breadth of skills, an expansive infrastructure capable of servicing the needs of Nigerians”. She described it as an “expansionary budget for investment and growth. We must find the money, and create a system that enables targeted expenditure, based on the nation’s priorities.

This expenditure will be efficient and impactful, focused on creating wealth for the majority.” Outlining N1.8trillion in borrowing to invest in the priorities of Transport, Roads, Housing, Power and Health, the Minister said: “We are committed to a countercyclical budget expenditure model. This has been a success in other nations, offsetting the risk of recession and creating an economy which is not based on either fragile consumer spending or over-reliance on oil.”

The Minister used her presentation to set out the four pillars of the economic plan which include to stimulate economic growth to achieve a real Gross Domestic Product growth of 4.2 per cent in 2017; reduce the cost of governance and strengthen institutions to combat corruption extract efficiencies in public service; increase government expenditure on infrastructure and fund the budget deficit and negative trade balance cost effectively. She said the targeted outcomes included substantial increase in gross capital formation; acceleration of GDP growth and infrastructure development to unlock economic growth.

However, the Minister warned those thinking the borrowing would open the door to renewed fiscal indiscipline that she planned to continue her “aggressive programme of fiscal housekeeping”. She said: “We must safeguard this borrowing, ensuring that the wastage within the existing systems are firmly addressed. We cannot mortgage our future based on a system that has failed us for generations. We must be careful in our borrowing and prudent in utilisation.”

She added that the Minister spoke to the hard working men and women who run Nigeria’s vital small and medium sized companies. She said: “We are a nation of entrepreneurs, and our entrepreneurs need reliable infrastructure, skilled employees and transparent systems and regulation that support them as they grow. We are introducing sound policies and robust systems that will benefit the micro, small and medium enterprises.”

She said: “With courage, discipline and open minds we begin our journey to build an economy whose resilience is not controlled by oil prices, but by our determination to reset the economy and finally give our people the chance they deserve.”

The Nation


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



…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



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

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Wind Farm Vessel Collision Leaves 15 Injured



…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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