The federal government will next week release the sum of N350bn for capital projects captured in the 2016 budget for capital expenditure in its efforts to tackle the economic recession currently facing the nation.
The Minister of Finance, Mrs. Kemi Adeosun, who announced this yesterday also said that the administration was working hard to raise $1billion Eurobond before the end of the year.
According to her, with the N350 billion to be released, the federal government would have raised the sum to N750 billion for capital projects this year, having released N400 billion earlier.
The minister also noted that the much-awaited social investment would commence this month and that N60 billion has been set aside for that purpose.
She said with the economy in recession, the level of consumer demand would be reduced drastically, hence the need for government to step in by injecting liquidity.
Her words: “What government wants to do is to step in and begin to spend and pushing more money into the economy and then get things moving again. Since the budget was passed in May, we have released N420billion.
“One of the sectors we spent the money on, of course the largest has been power, works and housing. Quite a lot has gone to defence because we need to rebuild the credibility of our Army”.
Adeosun also recalled that activities have resumed in the abandoned four international airport projects since the funds were released.
Reeling out some of the quick wins to reposition and reflate the economy that was officially confirmed to be in recession last month, the minister disclosed that the federal government has commenced monthly disbursement of N50bn as budget support funds (loan facility) to states that are still finding it difficult to pay their workers’ salaries.
She said, “As you know, many of them have not been paying salaries for several months. We have been able to support them with additional money every month in the FAAC account. And many of them have resumed paying salaries.”
“We are doing everything possible to ensure that we come out of this in a way that is sustainable so that we never get back here again. When you address infrastructure, you address the cost of living and that is what this government is determined to resolve.
“We are raising money; as you know the Euro bond capital raise is on. We are about to appoint advisers. We are raising additional $1bn. Two weeks ago, we approved the external borrowing plan. If you remember when we said we will borrow, we said we will borrow the cheapest money first.
‘‘We have approvals in that plan from World Bank (AfDB), with interest rate as low as 1.5 per cent and tenures as long as 40years to intervene in specific areas which include Agriculture, Education, Health, rebuilding of the North-East and of course the Rail way projects that are very key to what we are doing.’’
Corroborating the Minister’s position, Accountant General of the Federation, Ahmed Idris said the sum of N50 billion has been set out monthly for the interested states.
Although Idris failed to name the states that have benefited from the scheme so far, he said, “This is the third month the states are being given the support. And it is on equal basis – there is no disparity. So far, it has run for three months”.
Also speaking at the briefing, Director General, Debt Management Office, Abraham Nwankwo said his team will raise the money before the end of this year. According to Nwankwo, the bonds will be used for capital projects only.
Govs Support PMB’s Economic Measures
Meanwhile, governors of the 36 states of the federation said yesterday that they were solidly behind the economic measures being put in place by President Muhammadu Buhari’s administration to end the recession facing the country at the moment.
The governors’ resolve was contained in a communique released after an extraordinary meeting of the Nigeria Governors Forum (NGF) held at the conference centre of the State House, Abuja.
“Also the governors resolved with a commitment to encourage the Federal government to continue along the line to bring the country out of recession”, Chairman of the NGF and Zamfara State governor, Abdulaziz Yari told journalists at the end of the meeting.
Yari who also hinted that the NGF also agreed to activate the states task force on polio or the primary health care, which is to be led by the deputy governors, said it was also agreed that the Boko Haram insurgency must be treated as a matter of national emergency.
He said the governors also expressed their commitment to paying their counterpart funding towards polio eradication, even as they are going to engage the Minister of Health in order to give urgent attention to eradication of Lassa fever in the country.
NCX Targets N12.2bn From Commodity Market
Meanwhile, as the federal government continues to search for ways to stimulate the economy in order to move it out of recession, recent findings have shown that the nation could earn N12.2 billion in five years from commissions on transactions on commodities worth N3.2 trillion through the Nigeria Commodity Exchange (NCX).
The projected earnings are on commodities which include, Paddy Rice, Maize, Sorghum, Cashewnut, Cocoa, Sesame and Soyabeans.
The NCX which was set up to provide an organised trading platform for the buying and selling of agricultural commodities and solid minerals earn commission on whatever is being sold on the exchange, which is now being paid to the Treasury Single Account of the federal government.
According to a document obtained by LEADERSHIP, which detailed a five-year projected revenue plan on the production volume and price increase of transactions of commodities through the NCX at a commission of 0.375%, the exchange is expected to earn N2,017,429,048 on 6,268,931 volume of transactions on the commodities at a value of N537,981,079,516 in the first year.
In the second year, the NCX is expected to earn N2,217,207,958 on 6,582,378 volume of commodities value at N 591,255,455,586 at the rate the same rate of commission, while in the third year, the exchange is expected to earn N2,436,893,090 on 6,911,496 volume of transactions on commodities valued at N649,838,157,411.
In the fourth year, it is projected that the NCX will earn N2, 678,478,285 on fees on 7,257,071 volume of transactions at N714, 260,876,109. It was also projected that the exchange would earn N2, 944,157,961 on 7,619,925 transactions worth N785, 108,789,539.
Analysts have commended the progressive five-year projection describing it as achievable provided there is an enabling environment for the exchange.
In an exclusive interview with LEADERSHIP yesterday, Zaheera Baba-Ari, managing director, NCX said there are lots of opportunities for the country to earn through the exchange.
‘‘Last year alone, about 300, 000 tons of sesame seeds were produced. One ton cost about N100, 000 plus and at times it goes as high as N 200, 000. Even if it’s a percentage of that that is earned, you can imagine how much that will bring to the government, because we have a lot of export commodities like cocoa, cashew and so on”, she said.
She however added that the NCX has not delved into trading on solid minerals yet, so it can concentrate on agricultural commodities.
She also emphasised on the regulations guiding the operations of the Exchange, saying said, ‘‘we are guided by rules and regulations.
“So, whosoever wants to buy or sale on the Exchange has to become a broker and has to be part of the rules and regulations of the exchange. NCX does not buy for itself or sale by itself. The commodity exchange does not engage in outdoor schemes or in anchor programmes. It does not advance money to anybody.
‘‘What it does is to give a transparent trading platform that ensures the quality of whatever is sold and sanctity of contracts. Once you decide to trade on the exchange, you are bound by the rules and regulations of the exchange, so you cannot renege,’’ Baba-Ari added.
Comparing the Ethiopia model of commodity exchange with that of Nigeria, she disclosed that when the government of Ethiopia decided to set up a commodity exchange, it set up all the laws that were needed: the law setting up the exchange, the law for warehouse financing, the law for regulators within three to six months before it opened its doors for business.
She said, ‘‘The Ethiopian topology is just like ours here and their farmers are peasant farmers. They taught them through stakeholder sensitization. The government did all that and opened its doors in 2008. When they started trading in 2008, in spite of all the things put in place, their was no liquidity- they were not making any trades.
“They now realized that there was something wrong. Their main export commodity is coffee and there was a thriving coffee auction floor handled by traditional traders. The government said that the coffee is to them what oil is to Nigeria, they guard it jealously.
“To uplift the lives of their farmers, government generates revenue, farmers benefit and for society to move forward, they now mandated the trading of coffee on the exchange. In Ethiopia till today, you cannot trade coffee in any other place except the exchange. If trade outside the ECX, you go to jail for 5 years.’’
She said the NCX does not expect the government to mandate 100 per cent of export commodities on the exchange, but to just mandate a percentage. According to her, that alone would enhance farmers’ lives, generate employment as graduates will go into farming since they know that they will get paid appropriately and most importantly, government will generate revenue.
According to her, the federal government will now articulate the volumes it has generated through agriculture because it is a win-win situation as government is helping itself and helping the farmers and employment generation and wealth creation.
She said, ‘‘we have had opportunity to meet with people at the top and they have listened to us and there things in the offing. Government has given us the necessary attention and things will improve very soon you. The reason why we were not active prior to this time was that all the necessary things were not there because there was oil, the previous governments didn’t pay us any attention.
“We were not been funded and not just funding but some of the things government could do like passage of the necessary bills, development of grades and standards, and even simple government pronouncements to say a certain percentage of cocoa or sesame seed should be traded on the exchange.
Consumer Price Index Grows To 17.6% In August – NBS
Meanwhile, the National Bureau of Statistics (NBS) has said that the CPI has recorded an increase by 0.5 per cent in August, bringing it to a stand of 17.6 per cent against the record of 17.1 per cent in July.
According to the report which was released yesterday by the NBS, there were increases recorded in all Classification of Individual Consumption by Purpose (COICOP) divisions.
The major divisions responsible for accelerating the pace of the increase were housing, water, electricity, gas and other fuel, education and transportation services.
Food index rose by 16.4 per cent in August, up by 0.6 percent from 15.8 per cent recorded in July. It revealed that imported food items, as well as other necessary inputs to produce key local staples, such as bread continues to drive the food index higher.
The highest prices are recorded in meat, fish, bread and cereals, while the pace of increase was, however, slowed by fruits, potatoes, yams and other tubers as well as oils and fats.
The report also showed that core-sub index increased by 17.2 per cent in August, up by 0.3 per cent from 16.9 per cent recorded in July. Highest increases were seen in solid fuels, vehicle parts, books and stationery and clothing.
Meanwhile, the bureau in partnership with UNICEF is set to conduct its fifth Multiple Indicator Cluster Survey (MICS).
In a statement signed by the Statistician General, the objective of the survey is to provide up to date information on the situation of children and women in the areas of health, education, child protection and HIV/AIDS worldwide.
The survey is said to commence on the 21st of September, 2016 in all the states and FCT and last for 92 days for intensive interviews conducted in nine hundred and sixty selected households in all locations.