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Weekend Ginger: CVFF: ‘Esusu’ whose value can only be known by Amaechi and Dakuku

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Maritime Bank will uplift African economy — Amaechi
…While Nigerians await Col. Ali’s Asset Declaration!***
For now, it would remain an exclusive preserve of a seriously selected few: The actual worth of the Cabotage Vessels Financing Fund (CVFF), shielded, sheltered and coded!

For now, the Minister of Transportation, Rotimi Amaechi has been magnanimous enough to tell us that Dakuku told him that the value is $200m.

One can imagine how Barack Obama treated the coded nuclear – portfolio. And when he handed it over to Trump, how he must conscientiously cautioned him: “Better don’t abuse it. Don’t tell Melanie the Code. The future of mankind is tied to it!”

But the CVFF is just a contribution, an ‘Esusu’, collected by Nigerian Maritime Administration and Safety Agency (NIMASA), from shipowners. The shipowners don’t know how much it is, the stakeholders don’t know, no one knows.

Also read: Dakuku celebrates accomplishment in Cabotage vision, Ports State Control

“The DG of NIMASA announced $200 million”, was all the Minister was ready to unveil, when journalists sought to know the actual value. It would have been better to have pretended not to hear the question!

A portion of the Bible says: “The kingdom of God suffers violence (Matthew 11:12)…..” The next time I am chanced to read it, perhaps, I should try and see if I can amend it to read: The administration of CVFF suffers violence…!

Several people have blamed Dakuku Peterside’s predecessor, Patrick Akpobolokemi, for bringing secrecy to the administration of the fund. Alas! Dakuku is doing just exactly…if not even worse.

Can the Minister of Transportation in the simplest of language, tell us how much Akpobolokemi left behind? how much Dakuku Peterside administration has collected since he assumed office? We can use the simplest of Chinese calculators on our phones to add the two!

In the meantime, let us reiterate our love for the Comptroller General of Customs, Col. Hameed Ali (rtd). He is an Officer and a gentleman, he loves one thing: the army uniform, he hates one thing: corruption. If he has his way, he would very much wish that Customs Officers declare their assets on monthly basis. For now, he would probably want them to do it annually. I was singing his praise recently, when a fellow journalist asked: “Ask the CGC to also declare  his own assets, or is what is good for the goose not good for the gander?”

Comptroller General of Customs, Col. Hameed Ali (rtd)

 

Honestly, I trust the retired Col. irrespective of recent assumptions that the Nigeria Customs Service under his watch would be contracting (or is it: has contracted), a Consultant to engage 3,200 applicants into the Service with a mind blowing N1.6bn.

I love the CGC, irrespective of the baseless allegations that he had run the Service as a Sole Administrator, in the past three years.

And I will still love the CGC Ali this year more, knowing full well, that the Customs Budget this year, being a 7% of revenue grossed in last year (excluding other government support), which was, more than N1.2trn would definitely be more than 2020 Budgets of some State Governments put together!

Having established a love so pure and un-hidden, shouldn’t that also amount to a sufficient locus standi, to demand that the CGC should do exactly what he demands of his officers?!

The CGC Sir! Seyi Makinde has declared and published his asset declaration. We know you are purer than him, Nigerians are waiting for yours, let us publish it. Then, you can morally, as a public figure, continue this your intimidating crusade, that’s your locus standi, or we keep quiet; and stop demanding, like hypocrites, what we ourselves can’t truly give!

In the meantime, let us continue to pray for Dakuku Peterside.

If there’s any Chief Executive Officer who has worked his ass out with sincere diligence, it is Dakuku! Yet, he lacks the Original Icing Sugar Cap!

DAKUKU PETERSIDE, NIMASA DG

He has met every demand of the International Maritime Organisation, so much so, that IMO sees Nigeria as Continental No. 1 in several respects. Alas! Nigeria lost the bid for IMO Council ‘C’, Category Seat!

Also read:  IMO COUNCIL SEAT: Cacophony of voices, as Nigeria again miss bid

At home, he has done everything, from creating Final Sailing Bill, re-energized understanding with Nigerian Navy over security etc; yet Piracy is soaring unabated!

Where’s Dakuku going to seek his glory…?

Perhaps, there lies the reason behind the ‘mind blowing’ One billion Naira, NIMASA Night of Awards!

Amaechi must tell Nigerians the true value of the CVFF, the nation has gone beyond “The DG said….!”; even as Nigeria begins to wait for Col. Ali, to publish his declaration of Asset!

We congratulate President Muhammadu Buhari, for allowing AMOTEKUN. It would have been too difficult to expect our unalloyed loyalty, if he denies us the ordinary layer of security we so craved for!

What kind of neighbour frowns that some villagers are improving their security by engaging Common Maiguards?

If we engage common hunters to improve security and you frown face, then, you must tell me your locus Standi…!

 

Keep Praying for Nigeria!

May the President live forever!!

 

 

 

 

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Analysis: Dangote Refinery And Nigeria’s Forex

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Analysis: Dangote Refinery And Nigeria’s Forex

The 20-billion-dollar Dangote refinery investment with 650,000 barrel capacity per day will undoubtedly boost Nigeria’s foreign exchange.

Equally, the project is expected to reduce the pressure on foreign exchange drastically if the sales of crude oil to Dangote are dominated by local currency.

Industry observers are of the notion that the project will meet 100 per cent of Nigeria’s demand for refined petroleum products with a surplus for export.

In addition, the refinery will also create employment, boost fuel supply across Africa, and generate foreign exchange earnings for Nigeria through the export of 40 per cent of its products.

Viewed as a game-changer for the revitalisation of Nigeria’s economy and the downstream petroleum products market in the entire African continent, the multi-dollar project is billed to elevate the status of the Naira that has been struggling for survival against the dollar.

With its first-rated management, and support from the government and other stakeholders, the project, regarded as a huge achievement for the Nigerian government, will without mincing words, reduce the nation’s dependence on fuel imports and save foreign exchange.

The News Agency of Nigeria (NAN) recalls that the world’s largest single-train refinery was inaugurated by former President Muhammadu Buhari on May 22, 2023, in Lagos, a few days before the change of baton with President Bola Tinubu, his successor.

However, some oil and gas experts in an exclusive interview with NAN, on Sunday, expressed optimism about the world-class project sited in Lekki, a Lagos State riverine community.

Speaking at the Federal Executive Council meeting recently, Mr Zacch Adedeji, the Executive Chairman of the Federal Internal Revenue Service (FIRS), highlighted some of the benefits of the project to Nigeria.

Adedeji said that the pressure on foreign exchange would drastically reduce if sales of crude oil to Dangote were dominated by local currency.

According to the FIRS boss, Nigeria spends about 30 per cent to 40 per cent of its foreign exchange on the importation of petrol, thereby putting much demand on the country’s foreign reserve.

Adedeji said that the proposed transaction would be a game-changer for the foreign exchange market by saving what he termed hard-earned greenback instead of spending it on importation.

“What does this mean to our economy? The pressure on foreign exchange rates, today, will be reduced.

“We spend roughly 30 per cent to 40 per cent of our foreign exchange on the importation of PMS that we consume. That will be drastically reduced,” he said.

The FIRS boss noted that Nigeria would save $7.32 billion annually if all transactions of crude to local refineries were done in local currency as approved by the FEC.

He explained that Nigeria currently spends 600 million dollars on importation of petrol per month, amounting to about $9.72 billion annually.

According to him, selling crude oil and buying refined products from Dangote Refinery at local currency will save the country a total sum of $7.32 billion annually, a 94 per cent decline from actual spending.

“With the new approval, this will reduce to a maximum of 50 million dollars per month. When annualised, that is only 600 million dollars which is a total reduction of 94 per cent. In monetary terms, that is savings of about $7.32 billion,” Adedeji added.

Supporting Adedeji, an oil and gas consultant, Mr Demola Adigun, described the project as a national treasure that must be supported to perform efficiently.

To derive expected value, Adigun listed advantages of the project to include job creation and value addition in the downstream as well as energy security.

He said that the Dangote refinery would significantly create other developments in the manufacturing economy.

The expert said that the government could support the refinery to create a healthy environment for Dangote refinery and other domestic refiners.

“Government can find ways to ensure that his products are purchased when available; government can support the refinery through improved and adequate regulations,” he said.

The expert advised that Dangote must also focus on supporting the extended development of the host community through providing ancillary services and infrastructure.

He added that the government can promote more independence of the regulator and only intervene when necessary, following the laws.

Mr Rabiu Bello, a Senior Independent Non-Executive Director, Board of Seplat Energy Plc., described the successful startup of Dangote refinery as a game-changer in the development of Nigeria’s Midstream and Downstream Petroleum sectors that require transparent collaboration and stakeholder engagements for the realisation of the potential benefits.

To him, it is a great opportunity for Nigeria to be a refining hub and net exporter of petroleum and petrochemical products this decade.

Describing the Dangote refinery as a typical manufacturing plant that relies on a sustainable supply of raw materials to deliver value to its shareholders, Bello revealed that the survival instinct required by the refinery to survive is crude oil and natural gas, which is government-owned.

“Thus, the government can support the refinery-guaranteed crude oil and gas supplies to ensure sustainable operations of the refinery and petrochemical facilities.

“This should be implemented through strategic commercial cooperation and partnership that can create value for both the Dangote refinery and the government but more importantly, for the domestic Nigerian economy.

“A 20-billion-dollar investment in a refinery that is over 10 years is a huge value proposition that must be protected. But, a year supply of 650,000 barrels daily to the refinery at 90 dollars per barrel is worth more than 21 billion dollars.

“This is a significant percentage of federation revenue that must be protected sustainably through efficient operation of the refinery.

“Dangote Refinery is sufficient to pay for the crude and deliver adequate returns to refinery shareholders and the government,’ he explained.

Bello said that all domestic refineries including the NNPCL refineries should be treated equally and be supported with guaranteed crude supplies depending on their efficiency and operational capacity.

He added that the Midstream and Downstream regulator has sufficient legal authority to do the needful in ensuring that products satisfy quality.

He advised that the regulator should also develop proper regulatory frameworks to create a level-playing field for all players such that Nigerian consumers were not short-changed at any point in the supply chain.

He said that with complex refineries like Dangote and the new NNPCL refinery in Port Harcourt operating efficiently, Nigeria would start exporting lots of excess products such as Diesel and Kerosene by the time they start processing 500,000 per day.

The expert noted that the full benefits of Nigeria’s oil and gas sector could only be realised when the country develops the midstream and downstream segments of the value chain, which essentially means the development of oil and gas processing facilities.

He said that these critical infrastructures were required to convert crude oil and natural gas into petroleum products and petrochemicals such as petrol, diesel, kerosene for household and aviation, cooking gas, methanol, fertilizers, clean natural gas for power generation and other products used by industries.

“Without processing our oil and gas domestically, all these products must be imported from those countries who can buy our crude oil and gas and process it for their own use and export excess to those in need, like Nigeria.

“In summary, some of the benefits of having a critical midstream facility like Dangote Refinery in Nigeria include the guaranteed supply of products at a lower cost than import.

“Others include employment generation, import substitution, export earnings from sales of excess products to an international market and enhanced economic growth. 

– By.Yunus Yusuf, News Agency of Nigeria (NAN)

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Microfinance Institutions: A Double-Edged Sword for Poverty Reduction and Economic Growth in Nigeria

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Microfinance Institutions: A Double-Edged Sword for Poverty Reduction and Economic Growth in Nigeria

Microfinance institutions (MFIs) have emerged as a cornerstone of financial inclusion in Nigeria, aiming to alleviate poverty and stimulate economic growth. Their goal is to uplift low-income earners, small businesses, and the underserved by providing them with access to credit and savings. 

However, the efficacy of these institutions in alleviating poverty and stimulating economic growth remains a subject of intense debate. This article delves into the impact of MFIs on poverty reduction and economic development in Nigeria, examining their successes and challenges.

Empowering the Poor or Creating a Debt Trap?

Proponents of microfinance argue that these institutions have been instrumental in empowering underbanked Nigerians, particularly women.

 By providing access to credit, MFIs have enabled countless individuals to start or expand businesses, generating income and lifting families out of poverty. 

Moreover, microfinance has fostered entrepreneurship, creating jobs and stimulating economic activity at the grassroots level. 

However, critics contend that microfinance has not been as effective as hoped. Some argue that limited financial literacy, high interest rates and stringent repayment terms can trap borrowers in a cycle of debt, exacerbating poverty rather than alleviating it. 

Over-indebtedness has led to distress and, in some cases, forced asset sales. 

Additionally, concerns have been raised about the sustainability of many MFIs, with some facing financial difficulties and inadequate infrastructure. 

To maximize their potential, MFIs should focus on expanding their reach to rural areas, offering a wider range of financial products, and strengthening partnerships with government and other stakeholders. 

By addressing these challenges and building on their successes, MFIs can continue to be a powerful force for poverty reduction and economic development in Nigeria.

Economic Growth or Marginal Impact? The impact of microfinance on overall economic growth in Nigeria is also a subject of contention. 

While some studies suggest that MFIs can contribute to job creation and increased economic activity, others argue that their impact is limited and overshadowed by broader economic challenges. 

Furthermore, the effectiveness of MFIs may vary depending on factors such as the target population, loan size, repayment terms, and the overall economic climate. It is essential to conduct rigorous evaluations to assess the true impact of microfinance on different segments of the population. 

Recommendations for Improvement:

To maximize the potential of microfinance banking in Nigeria, several recommendations can be considered:

Financial Literacy and Public Awareness: Extensive financial literacy campaigns should be conducted, so that the public can be educated about the benefits of microfinance and how to use it effectively. MFIs should also integrate financial education into their services to empower borrowers.

Interest Rate Regulation:

 The Central Bank of Nigeria (CBN) should review the existing interest rates of MFIs, in ways that can accommodate the current economic situation and inflation. 

This will protect businesses and individuals from excessive debt burdens.

*Strengthening MFIs: 

The Federal and State governments should provide more support for the development of sustainable and well-regulated MFIs.

*Enhance Supervision: 

CBN should implement robust supervision and monitoring of microfinance institutions (MFIs) to ensure compliance with regulations and protect depositors.

*Risk Management: 

Risk management practices should be strengthened within MFIs to mitigate credit and operational risks.

*Product Innovation: 

MFIs should develop innovative financial products tailored to the specific needs of micro-entrepreneurs.

*Human Capital Development: 

MFIs should invest in training and capacity building for their staff to enhance their skills and knowledge.

*Knowledge Sharing: 

CBN should facilitate knowledge sharing among MFIs to promote best practices.

*Business Development Services: 

MFIs should provide comprehensive business development services to micro-entrepreneurs, including training, mentoring, and market linkages.

Conclusion

Microfinance has the potential to be a powerful tool for poverty reduction and economic development in Nigeria. 

However, its effectiveness depends on various factors and requires careful consideration and implementation of appropriate policies and regulations. 

To maximize benefits and minimize risks, a multifaceted approach is required, encompassing financial literacy programs, access to affordable credit, and supportive government policies. 

By addressing the challenges and building on the successes, Nigeria can harness the full potential of microfinance to create a more inclusive and prosperous society.

About the Author

Ayooluwa Animashaun is a distinguished finance professional currently pursuing a PhD in Business Administration (Finance) at Morgan State University in Maryland, USA. 

He holds a degree in Banking and Finance and an MBA in Finance. His strong academic background has equipped him with expertise in financial analysis, strategic planning, and leadership.

He is also an experienced banker, with a total of eight years of working experience.

Beyond his professional pursuits, Ayooluwa is a sports enthusiast with a passion for athletics track and field. 

With his unique blend of financial acumen and athletic zeal, Ayooluwa is a well-rounded individual poised for success in all aspects of life.

By Ayooluwa Animashaun 

(USA)

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Food Security: Between duty-free importation and Anchor Borrowers initiative

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Food Security: Between duty-free importation and Anchor Borrowers initiative

The Federal Government recently announced plans to allow a five-month duty-free window for staple food items like rice, wheat, and maize.

The government also expressed plans to partner with state governors and the military to cultivate arable lands and support smallholder farmers

These plans are designed to bring down the skyrocketing prices of food items, and moderate heightening food inflation, which, at 40 per cent, is the worst component of the 34.19 per cent headline inflation.

The government, therefore, intends to suspend duties, tariffs, and taxes for the importation of those food commodities through land and sea borders.

The move is also expected to drastically reduce demand for foreign exchange by food importers, from the 2.13billion dollars Nigerians spent to import food items from foreign countries in 2023.

Speaking at a recent forum on food security, the Minister of Agriculture and Food Security, Abubakar Kyari, said that 150 days of duty-free imports would be valid for commodities including maize, husked brown rice, wheat, and cowpeas.

Kyari said the initiative which is part of the Presidential Accelerated Stabilisation and Advancement Plan (PASAP), would also enable the Federal Government to import 250,000 metric tonnes of wheat and 250,000 metric tonnes of maize.

He said that the imported food commodities in their semi-processed state would target supplies to the small-scale processors and millers across the country.

“To ameliorate food inflation in the country caused by affordability and exacerbated by availability, the government has taken a raft of measures to be implemented over the next 180 days.

“This includes a 150-day duty-free import window for food commodities, suspension of duties, tariffs, and taxes for the importation of certain food commodities through and sea borders.

“These commodities include maize, husked brown rice, wheat, and cowpeas.

“Under this arrangement, imported food commodities will be subjected to a recommended retail price,” he said.

He assured that the foods to be imported would be subjected to thorough quality control measures to ensure safety.

“I am aware that some good citizens might be concerned about the quality of the would-be imported food commodities as it relates to the trending worries around the genetic composition of food.

“I am glad to reiterate that the government’s position exemplifies standards that would not compromise the safety of the various food items for consumption.

“These semi-processed commodities will be supplied to small-scale processors and millers across the country,” he said.

For a country like Nigeria, which has a large agricultural sector, the already high food import bill is a concern for stakeholders.

Experts say the directive is a clear demonstration that the Nigerian government is yet to put the nation on the right path of eradicating hunger by 2030 as stipulated by the United Nations Sustainable Development Goals.

Mr Akinwunmi Adesina, the president of the African Development Bank, said that the decision to allow large-scale food importation risks destroying the country’s agriculture sector.

Adesina, who is also Nigeria’s former minister of agriculture, said the announcement of the policy just to tackle short-term food price hikes, was depressing.

He warned that the policy could undermine private investments in Nigeria’s agriculture sector.

“Nigeria cannot rely on the importation of food to stabilise prices.

“Nigeria should be producing more food to stabilise food prices while creating jobs and reducing foreign exchange spending that will further help stabilise the Naira,” he said.

The All Farmers Association of Nigeria (AFAN) said the policy was not a sustainable approach to tackle food insecurity in the country.

The National President of AFAN, Kabir Ibrahim, said only guarantee to a sustainable solution was to ensure that farmers were given subsidies on all imports so that they would boost productivity in the country.

“We will patiently wait for the suspension of import duty to happen, but it is not sustainable.

“The sustainable solution is to ensure that farmers are given subsidies on all imports so that they will escalate productivity and have a sustainable food system.

“Importing anything will not give you sustainable food security,” he said.

According to Dr Muda Yusuf, CEO, Centre for the Promotion of Private Enterprise (CPPE), adopting this policy stance without addressing gaps in the domestic agriculture value-chain might not yield the needed output as envisaged by the Federal Government.

“Insecurity across the agrarian belt remains a significant catalyst to the prevailing food crisis.

“Over the years, states such as Benue, Nasarawa, and other regions in Northeastern and Northwestern Nigeria, traditionally key agricultural areas, have become increasingly unsafe due to the presence of bandits and terrorists.

“Farmers in these regions face extortion, with bandits demanding taxes before farming and at harvest time,” he said.

The food importation policy appears to negate past government initiatives to support local food production.

Stakeholders agree that intervention in the agriculture sector, as done in the recent past, would be more rewarding than encouraging importation of food.

They cited the Anchor Borrowers’ Programme (ABP), which was launched in 2015 to provide farm inputs in cash and kind to Small Holder Farmers (SHFs).

The programme was intended to create a linkage between Anchor Companies involved in food processing and SHFs of the required key agricultural commodities through the commodity associations.

The ABP was designed to help the nation achieve self-sufficiency in food by, at least, “growing what we eat,” and then, putting a stop to the reckless importation of food items.

This was supposed to help save scarce foreign exchange, which can then be used for other more pressing needs.

The ABP was funded and managed by the Central Bank of Nigeria, (CBN), through its development finance initiative.

It commenced with a take-off grant of N220 billion Micro, Small and Medium Enterprises Development Fund, MSMEDF, through which farmers got loans at nine per cent interest. They were expected to repay based on the gestation period of their commodities.

Two initial beneficiaries of the agriculture revolution of the federal government, and the ABP were Kebbi and Lagos states.

The two states went into a collaboration that birthed the LAKE Rice initiative. That initiative has now resulted to the construction of a multi-billion Naira 32 metric tons per hour capacity rice mill by the Lagos state government.

By 2022, the Central Bank of Nigeria (CBN), which was the major driver of the ABP revealed that at least 4.8 million farmers had benefitted from the programme.

But the programme was marred by loan default, even as food prices rose significantly within the years it took effect.

According to the International Monetary Fund (IMF), 76 per cent of the loans collected by beneficiaries were yet to be repaid.

The IMF in a report said that agricultural credit in the country had not succeeded in increasing production due to the difficulty in reaching the targeted farmers.

It said that although the CBN allowed farmers to pay in cash or give the central bank produce of the same value under the ABP, repayments had been very low.

“For the ABP, repayment is also low at 24 per cent, especially since repayment can be made in kind, thereby limiting the tenor of the loans to one year.

“Part of the problem is that the incentive structure for repayment is weak, the recipient loans are not always well targeted and occasionally the funding is used for other purchases,” it said.

Various farmers associations also said that the loans were not disbursed adequately, hence the difficulty in ensuring repayment.

The various challenges of running the ABP saw the new leadership of CBN led by its Mr Yemi Cardoso discarding it and other such interventions.

However, Nigerians express preference for an initiative that would encourage massive local food production as against importation.

– By Kadiri Abdulrahman

 NANFeatures

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