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Jonathan govt incurs N5tn domestic debt in five years



In the over five years that President Goodluck Jonathan has been presiding over the affairs of the country, the Federal Government has borrowed N5.04tn from the domestic debt market.

Jonathan became Nigeria’s acting President on February 10, 2010 and   substantive President on May 6,2010 following the death of President Umaru Yar’Adua on May 5,2010. On May 29, 2011, he was sworn in as an elected president.

Records at the Debt Management Office showed that the domestic debt of the Federal Government stood at N3,466,360,000,000 (N3.47tn) as of March 31, 2010.

The latest debt statistics from the DMO as of March 31, 2015 showed that the domestic debt   had risen to N8,507,545,474,000 (N8.51tn).

This means that in the last five years, the Federal Government had borrowed N5.04tn from domestic lenders. It also means that within the period, the domestic debt of the Federal Government grew by 157.48 per cent.

A breakdown of the domestic debt profile of the Federal Government by instruments showed that FG Bonds accounted for N5.37tn or 63.13 per cent of the total domestic debt.

The Nigerian Treasury Bills, on the other hand, accounted for N2.87tn or 33.68 per cent of the Federal Government total domestic debt profile.

Similarly, the Nigerian Treasury Bonds accounts for N271.22m or 3.19 per cent of the Federal Government’s total domestic debt profile.

The DMO statistics also showed that the domestic debts of the states grew by 116.83 per cent within the same period.

As of March 31, 2015, the domestic debts of the states stood at N1.69tn or $10.87bn. However, as of March 31, 2010, the domestic debts of the states which were only given in dollars stood at $5.01bn.

This means that in dollar terms, the domestic debts of the states rose by $5.85bn or 116.83 per cent in the last five years.

Within the same period, the external debts of both the federal and state governments rose from $4,306,180,000 ($4.31bn) to $9,464,110,000 ($9.46bn).

This means that within the five-year period, the external debts of both tiers of government rose by $5,157,930,000 ($5.16bn). In percentage terms, the external debts of both tiers of government rose by 119.78 per cent.

The latest debt figures released by the DMO did not segregate the external debts of the country into the proportions owed by the Federal Government and the various states of the federation.

As of December 31, 2014 when the debt figures were last segregated, the states’ component of the nation’s external debt profile stood at 33.63 per cent while the Federal Government’s component stood at 66.37 per cent.

With $1,169,712,848.66, Lagos State occupied the top position on the list of the most externally indebted states.

It was followed by Kaduna, $234,416,052.15; Cross River State, $131,469,661.94; Edo State, $123,128,295.53; and Ogun State, $109,154,553.08.

The least exposed states in terms of external debts were Taraba, $22,780,063.89; Borno, $23,067,549.16; Delta, $24,233,639.67; Plateau, $30,947,579.75; and Yobe, $31,237,619.25.

The increasing profile of the nation’s domestic debt has been reflecting on the cost of debt servicing.

According to budgetary provisions, the cost of debt servicing went up from N591.76bn in 2013 to N712bn in 2014. This was made up of N663.61bn for servicing domestic debt and N48.39bn for the foreign debt component.

A statement by the DMO last week said the debts of the country, especially that owed by the Federal Government had not grown unusually in the last four years. It also explained that the debts had been rising because of budget deficit financing.

According to the office, the increase in public debt between 2011 and 2014 was the lowest compared to the period 2004–2007 and 2008–2011.

The DMO said, “In 2010, there was a general wage increase (53.7 per cent average increase) for all categories of public servants, including political appointees. The funding of this depended on increased domestic borrowing.

“The global economic and financial crisis (2008-2010) occurred within the same period. All economies engaged in counter-cyclical public spending, using what was popularly referred to as stimulus package.

“In Nigeria, the government was able to effectively play the role by borrowing from a domestic bond market, which to the country’s credit, had been developed as an alternative source of funding after the exit from the Paris and London Clubs debts in 2005 to 2006.

“While the Federal Government’s debt stock has grown, a comparison with the figures before the exit from the Paris Club should not be on absolute figures alone. The size of the GDP and the structure of the debt must be taken into consideration.

“The increase in the domestic debt was due principally to the financing of the deficits as appropriate in the annual budgets. The budgets include both capital and recurrent expenditure; thus, the deficit cannot be attributed to a single item on the budget.

“In the case of external borrowings, which are mostly from the multilateral financial institutions; the utilisation of the proceeds are tied to projects – in power, agriculture, health, education – and other infrastructure and human development projects.”

The Debt Office added that public borrowings were done in accordance with the mandate of the National Assembly.

Finance experts, who spoke to our correspondents, on the issue,   called on the DMO to ensure that it did not go beyond the acceptable limit of debt to Gross Domestic Product Ratio

An Associate Professor of Finance, Nasarawa State University, Keffi,   Uche Uwaleke, said that the increase in the debt could also be looked at from the standpoint that the economy was growing.

He said, “One important point you should realise is if the debt is sustainable. If it is sustainable relative to the size of economy, then it should not call for concern. As long as we are operating within the acceptable threshold of debt to GDP ratio, then it shouldn’t be of much concern.

“But that doesn’t mean we should continue to borrow, the DMO should do all within its powers to manage the debt stock within a sustainable level.

“Again, the worrying aspect of it is the fact that in the past for instance, we borrowed money to finance consumption. We borrowed money to meet the demand for increase in wages and salaries and we have not recovered from that up till now because if you check the 2015 budget, the provision that has been made for debt servicing is as a result of the impact of that borrowing area.”

Also, Bismarck Rewane, who is the   Chief Executive, Financial Derivatives Company, who described the debt as huge, said that Nigeria was spending about 25 per cent of its revenue on debt servicing.

He said, “The debt servicing burden is quite high. The debt has to be restructured because what we are seeing now is that the debt-to-GDP is high. We are spending almost 25 per cent of our revenue to service debt and that is why I say it is quite high, and again we have another large percentage that is spent on subsidy. When you consider all these, you will find out that there will be nothing left to run the economy.”

A former President, Association of National Accountants of Nigeria,   Samuel Nzekwe, said the country’s debt would slow down the development of capital projects across the country.

The Chairman, Institute of Chartered Accountants of Nigeria, Abuja District, Mr. Adewale Gbakinro,   said it was wrong for the Federal Government to borrow as much as N5tn in the last five years when oil sold for more than $100 per barrel for most of the period under review.

Gbakinro said, “Much of the borrowings were spent on recurrent expenses. It does not make sense to me to borrow to pay salaries.

“The amount of money being spent in Nigeria to run government is not right. I know that democracy is costly but a lot could have been done through financial discipline.”

Gbakinro listed the budget for feeding at the Presidential Villa and the maintenance of the presidential fleet as some areas that government could have cut down on the cost of governance.



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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