Nigerian least paid worker needs N41,327 to maintain 2011’s purchasing power

For Nigerian lowest paid worker to purchase, in March 2019, the same amount of goods and services bought in August 2011, the employee would need to earn at least N41,327.88 monthly,  calculations have shown.

Nigerians heaved a sigh of relief when President Muhammadu Buhari signed the new National Minimum Wage Bill of N30,000 into law. However, although the N30,000 new minimum wage represents an increase of 67 percent from the previous N18,000, its real value remains lower compared to the N18,000 when the amount was approved in 2011.

As a result, Nigerian workers would not be able to purchase more goods and services today compared to the last time the national wage was hiked, no thanks to inflation that is fast diminishing the value of the workers’ pay and their purchasing power.

In August 2011, the President Goodluck Jonathan-led Federal Government agreed to pay a new minimum wage of N18,000 in nominal terms. At that time, the Consumer Price Index (CPI), which measures the composite changes in the prices of consumer goods and services purchased by households over a period, was 122.3.

If the effect of inflation was taken into consideration by dividing the nominal minimum wage by the CPI for the period and multiplying all by 100, the real income of Nigerian lowest paid worker, as at August 2011, would be N14,717.91.

The amount continued to fall as the nation’s CPI, a measure of inflation rate, sustained its upward trend over the years on a monthly basis.

Eight years after, figures obtained from the National Bureau of Statistics (NBS) show the CPI rose more than double to 280.8 as at March 2019, plunging the worth of Nigeria’s N18,000 minimum wage to N6,410.26 in real terms. But with the recent national wage hike, the inflation-adjusted value of the nation’s new minimum wage was bolstered to N10,683.76.

This shows that to maintain the August 2011 purchasing power despite the impact of high inflation, Nigerian lowest paid employee is expected to earn N41,327.88.

The amount, which indicates the real value of August 2011’s N18,000 in March 2019, was obtained by dividing the previous nominal wage by the corresponding CPI and multiplying all by the current month’s CPI figure.

Similarly, the new N30,000 minimum wage is lower in value when compared to the previous N18,000 in dollar terms as at August 2011.

Official exchange rate data obtained from the Central Bank of Nigeria (CBN) revealed that the average exchange rate of naira to the United States dollar in August 2011 was N150.2/USD, implying N18,000 was equivalent to $119.84.

Nigeria’s currency, however, fell in value against the US dollar in March 2019 as the average exchange rate of naira to the dollar for the month depreciated to N305.92/USD. Going by this, the new minimum wage represents only $98, more than 18 percent lower than employees’ salaries in 2011.

Source: By Oluwasegun Olakoyenikan

Top Politicians Begin Intense Lobbying to Make Buhari’s New Cabinet

As President Muhammadu Buhari is set to be inaugurated for a second term in office, political calculations have begun with respect to who will make the new cabinet list.

A former Military Administrator, three outgoing governors and 15 ministers are jostling for cabinet seats.

Sources reveal that there is pressure on the President to revert to a 42-man cabinet structure in order to take in more appointees.

The new structure will include the constitutionally recommended 36 ministers from each state of the federation and six others representing each of the nation’s geopolitical zones — if Buhari embraces the idea.

According to sources, the President is yet to give a nod to the 42-man cabinet.

Lobbyists, including governors and ministers, have been mounting pressure on influential citizens to put in a word for them.

Women are said to be demanding more ministerial jobs, including “strategic ministries”.

The pressure is what many said has accounted for the recommendation of a 42-man cabinet.

A source, who spoke in confidence, said: “Some of those seeking to be ministers include a former Military Administrator, three of the outgoing governors and no fewer than 15 of the over 30 ministers who will complete their tenure on May 22.

“As for the three outgoing governors, two may represent their geopolitical zones, depending on the outcome of consultations between the President and leaders from their zones.”

“No fewer than 15 ministers are said to be seeking a second chance because “some of them who faltered in office are claiming that they have learnt their lessons”.

“All these ministerial aspirants have been  mounting pressure on the members of the Kitchen Cabinet of the President in order to be picked.”

Concerning the ex-MILAD, another source said: “Some forces within the first family are lobbying that the ex-Military Administrator should be made the Chief of Staff but the President seems to have confidence in the present holder, Mallam Abba Kyari. When the lobbying was stuck, they made a case for the Secretary to the Government of the Federation for the former MILAD. Now, the game has changed to a desire for a ministerial appointment.

“The only thing which can make the Office of the Chief of Staff to be vacant is if Kyari is given a choice ministerial appointment.

“Although the ex-MILAD will add value to the government, the only hurdle facing him is how he allegedly abandoned Buhari in the defunct Congress for Progressives Change ( CPC) in 2011 for the Peoples Democratic Party( PDP) without deferring to him. Some Buhari supporters do not want him to appoint the ex-MILAD as a minister.”

There were indications that the Office of the Secretary to the Government of the Federation (SGF) might be zoned to the  North-Central in favour of a Christian candidate.

But some party leaders have been making a strong case for the Southeast to produce the SGF despite the zone’s rejection of Buhari at the poll.

A government source said: “Definitely, the SGF post will shift from the Northeast to another zone because the Northeast has enjoyed the slot in the last four years, with Engr. Babachir Lawal and Boss Mustapha occupying the office.

“The Northcentral looks more favoured with a Christian candidate for the slot.”

Some All Progressives Congress ( APC) leaders prefer that the Southeast should produce the SGF, despite the zone’s hostility to Buhari during the just-concluded general elections, the source added.

Pushing for a return to the 42-man cabinet structure, it was learnt, are some of the President’s “strategists” and some governors.

In 2015, Buhari opted for the constitutionally recommended cabinet weight to save cost.

A source in the Presidency said: “The need for inclusiveness in governance has led to the suggestion that we should have 42 ministers.”

Section 147(1-3) directs the President to appoint at least 36 ministers.

The section reads:  “There shall be such offices of Ministers of the Government of the Federation as may be established by the President.

“Any appointment to the office of Minister of the Government of the Federation shall, if the nomination of any person to such office is confirmed by the Senate, be made by the President.

“Any appointment under subsection (2) of this section by the President shall be in conformity with the provisions of Section 14(3) of this Constitution:

“Provided that in giving effect to the Provisions aforesaid the President shall appoint at least one Minister from each state, who shall be an indigene of such state.”

View from India: Technology for housing, highways and road networks

Prime Minister Narendra Modi has declared April 2019-March 2020 as the ‘Construction-Technology’ year.

Close on the heels of this announcement, a high-rise building has been in the news recently. Kolkata, once the seat of the British Raj, is now home to ‘The 42,’ a 268-metre tall ultra-premium residential project.

As the demand for rapid urbanisation is increasing, Modi has stressed the need for eco-friendly, disaster-resilient and energy-efficient construction.

To boost the housing sector, the Government of India (GoI) has implemented national programmes such as Pradhan Mantri Awas Yojana; Deen Dayal Antyodaya Yojana; National Urban Livelihoods Mission; HRIDAY; AMRUT and Smart Cities. These programmes can be implemented only if there’s a skill-ready workforce to take it forward. Clearly, this means that the local talent needs to be nurtured. This explains why the government is working on systematic reforms to fine-tune the engineering and technology curriculum in colleges.

The thrust is on innovative technology and high-tech engineering in order to meet the growing requirement. Low-cost mass housing projects are being planned as per the government policy which envisions ‘House for all by 2020.’

From a technology standpoint, prefab technology is a good option for low-cost housing. Besides being earthquake resistant, it doesn’t require foundations. The houses, which take a few hours to build, can be built on locations. Alternatively, they can be built in factories or workshops and transported to the location. Of course, this can become a reality only when incentive schemes are rolled out to prefab makers to lower operational costs.

Besides dwelling homes, highways and road networks are other dimensions of the Construction-Technology vision.

As indicated in the 2019 Interim Budget, India is the world’s fastest highway developer with 27km of highways built each day. In December 2018, the Ministry of Road Transport and Highways (MoRTH) worked on 31.87km of national highway construction. This is an average record per day.

Moving on, one wishes that technological innovation will bring about a sea change in highway and road journeys. Highways, it is hoped, will package automated computerised traffic systems. These intelligent highways should leverage advanced communication systems to manage traffic in real time. Besides transport management, highways need to be lined with detection points to determine the speed of vehicles. Sensors will help provide weather alerts.

The setting up of electronic tolls will serve a dual purpose. Vehicles need not queue up at toll centres, so the air pollution from idling engines can be avoided. Simply put, highways need to be smart and green.

In 2018, the Eastern Peripheral Expressway (EPE) became the country’s first smart and green highway. The 135km six-lane highway that passes through the states of Haryana and Uttar Pradesh is lit by solar power and has provision for rainwater harvesting. Around 2.5 lakh trees line the periphery of the highway. Intelligent highway traffic management system (HTMS) and video incident detection system (VIDS) are other highlights.

All this aligns with the 2015 National Green Highways Policy. The initiative is towards the fulfillment of India’s commitment of voluntary carbon emissions reduction of up to 35 per cent by 2030. This is as per the United Nations Conference of Parties on Climate Change 21 (CoP 21 Summit). Though national highways are the lifeline of road infrastructure, it’s important to keep them green. National Green Highway projects are being encouraged to synergise road development and environment protection.

It would be nice if there will be eco-friendly roads made with recycled materials. While we do require roads for connectivity, it’s also important to keep the ecology intact. As the usage of plastic has been banned at the national level, this is the time when plastic waste needs to be put to good use. Rather than have them contaminating our oceans, it’s practical to recycle plastic waste and use it with asphalt for road construction.

A move has been made in this direction. JUSCO (Jamshedpur Utility and Services Company Limited), a 100 per cent subsidiary company of Tata Steel has combined plastic waste with bitumen technology to make 12-15km of road in the steel city of Jamshedpur, located in the state of Jharkhand. Let’s hope there are more green roads in the country. Large-scale commercialisation of green roads will generate employment and open out newer engineering innovations in road construction.

We continue on the eco-friendly trail, with a departure from road construction. One upcoming trend is that of self-sustaining Industrial Parks whose energy management extends to rainwater harvesting and solar panels. Many of them are poised to be manufacturing hubs and hence attract foreign direct investments.

Logistics parks are beginning to spring up in various states led by government-aid, private-public partnerships and national consortiums. What is important is that these parks are positioned as sustainable and green units that improve the transportation and warehousing industry activities. These parks are expected to handle various manufacturing aspects like the final assembly and labeling, along with packaging, distribution and disposal. Electric and emission-free vehicles, solar and renewable sources of energy are among the norms that will be followed by these upcoming logistics parks.

Source: By  Kavitha Srinivasa

Kogi Senator Berates Buhari Over Ajaokuta Steel Company Bill

The senator representing Kogi central senatorial district, Ahmed Ogembe, on Monday on expressed disappointment over the refusal of president Muhammadu Buhari to assent to the Ajaokuta Iron and steel bill.

The bill had recommended that $1b should be sourced from excess crude account to revitalize the moribund steel complex.

According to him, the reasons given by the president for rejecting the bill was not sufficient considering the importance of the Ajaokuta Iron and steel complex to the industrialization, economic growth and development of the country.

Ogembe said, “Few days ago, the minister of Transportation said the federal government need about $40b do interconnect Nigeria rail system and my position is that, we will not be needing anything close to that if we had invested in Ajaokuta Steel Company to produce steel needed for the rail tracks and coaches.


“The advantages of Ajaokuta steel complex cannot be overemphasized as it is capable of generating 3 million job opportunities for our army of unemployed youths including over 12 thousand engineers and generate foreign exchange for the country in excess of $4b thereby reducing pressure on Naira value.

“Some of the reasons the president gave in rejecting the bill which includes the need for him to consult with the national economic council since the excess crude account belongs to the federating units was not done but the president hastily rejected the bill. Again, I must say that the inability of the president to convoke a national economic council meeting where the Ajaokuta bill will be discussed cannot be said to be a legislative error and hence there was no need to reject the bill outrightly.

“The president also said $1b for Ajaokuta is not feasible and not the right strategy now considering the budget constraints and competing demands on the federal government. I beg to respectfully disagree with the president, on the 6th November 2017, the Guardian newspaper reported how the federal government spent $3b in search for oil in the north without result. $1b of the amount wasted on prospecting for oil in the north would fix Ajaokuta Steel Company especially now that the world is moving away from fossil energy and we are also talking about the diversification of our economic base”.

The senator, however, urged the president to reconsider his decision in line with national interest and the strategic economic importance of the steel complex to Nigeria.
It would be recalled that the issue of Ajaokuta steel has led to tango between the executive and the legislative arms of government with the executive rejecting most of the suggestions brought forward to resuscitate the company.

Source: By Yinka Oladoyinbo

Unending Fuel Crisis Justifies Call for Subsidy Removal

The dreaded queues for Premium Motor Spirit (PMS) temporarily returned in Abuja, Nigeria’s federal capital, and some major cities in the country last week fuelled by some semblance of mass hysteria that the Federal Government plans to remove subsidy on the petroleum product.

This was against the backdrop of the advice of the International Monetary Fund (IMF), which suggested that Nigeria, Africa’s biggest oil producer, should remove fuel subsidy.
Christine Lagarde, managing director of the Washington-based Fund, had on April 12 called on Nigeria to remove fuel subsidy due to low revenue mobilisation in terms of tax to gross domestic product.

Rumours that petrol pump price hike was in the offing fed on President Muhammadu Buhari’s comments after his victory at the February 23, 2019 presidential election. Buhari said his next four years would be tough and Nigerians may have started feeling the heat.

Zainab Ahmed, minister of finance, had earlier given the impression that the government could consider the IMF advice but later said the templates to have a complete removal of subsidy have not been created, fuelling rumours that the government may after all heed the IMF call.


Africa’s most populous nation spent N730.9 billion on subsidising the retail price of petrol in 2018, an amount which was higher than funds allocated to education, health, infrastructure and other key ministries and parastatals that would have increased the economic growth or standard of living of its over 180 million people.

Wumi Iledare, a professor of Petroleum Economics and Policy Research at the Centre for Petroleum Energy Economics and Law, University of Ibadan, said payments of subsidy is a gorilla that will swallow Nigeria’s economy and lead to the collapse of education institutions, road infrastructures and health facilities because the country spends more than one quarter of the budget subsidising petrol which benefits the elites more than the populace.
“Ghana, our next door neighbour, doesn’t control the price of petrol, so why do we?” Iledare asked.

Over the years, the Nigerian government has subsidised electricity and petrol, paying the difference between the cost of production and the cost charged to customers in order to make them more affordable.

Buhari’s government has spent N7.9 trillion in the past four years importing petrol to augment supply from the country’s rickety refineries according to data from the National Bureau of Statistics (NBS). This is more than Nigeria’s entire 2017 budget of N7.2 trillion and 5 percent of the country’s current gross domestic product.

“It is a big shame that we are one of the world’s biggest producers of crude oil and still the world’s biggest importer of petrol. This has to change,” said Adeola Adenikinju, director, Centre for Petroleum and Energy Economics and Law and member of the Central Bank Monetary Policy Committee (MPC).

Our analysis of the latest financial records of Nigerian National Petroleum Corporation (NNPC) showed that in 2018 alone, the government spent N730.9 billion on subsidy, popularly called “Under Recovery”, which was higher than total budget of individual ministries such as Education (N651 billion), Health (N356 billion), Transportation (N267 billion), and Agriculture and Rural Development (N203 billion).

This could persist for the next four years unless the government finds a way around the fuel subsidy quagmire.

We had in an earlier report quoted analysts at RenCap as saying that “there seems to be some unwillingness on the part of the government to completely remove the de facto subsidies at this time”. Rather, “the intention will be to progressively deal with the subsidies by ensuring a better subsidy regime in a bid to ultimately reduce them over time”.

But despite these realities, the reaction from Nigerians has been immediate and sharp against any planned removal of subsidy which will lead to increase in fuel price. Many said this would affect the already impoverished masses and throw the country into deeper crisis.
The Nigeria Labour Congress (NLC) immediately rose to denounce any planned removal of subsidy on fuel, saying “it would result in astronomical increase in the pump price of petroleum and cost of other goods and services”.

Ayuba Wabba, NLC president, said in a statement that the IMF advice was harmful because among the agenda usually set for any president that emerges in the country are “the devaluation of currency, removal of subsidy, and opening of the country’s borders to free trade”. He added that the solution to the problem of subsidy was local refining of products, which will drive down cost of products and end the corruption associated with the present subsidy regime.

The need to make NNPC curtail losses, improve transparency, attract investors, stimulate growth and increase government revenues has led to agitations for reforms in the oil and gas sector as stipulated in the Petroleum Industry Bill (PIB).

Source: By Innocent Odoh & Stephen Onyekwelu

Lagos Tops Ogun in Manufacturing Investments for 2nd year in a Roll

Lagos has once again overtaken Ogun State, once touted as Nigeria’s industrial hub, in manufacturing investments. This is coming on the back of a new wave of poor doing business practices that have dogged Ogun in the last two years.

Lagos got 52 percent of total manufacturing investments in 2018 as against Ogun State’s 34 percent, data from the Manufacturers Association of Nigeria (MAN), a group with over 2,500 investors, show.

While Lagos, which includes Apapa and Ikeja industrial zones, got total investments valued at N287.16 billion out of the total N552.64 billion, Ogun got N186.47 billion.

In 2017, Ogun mustered only 28.59 percent of the total N329.94 billion invested that year, whereas Lagos got 50.11 percent.

But this was not so between 2014 and 2016, when 50 to 70 percent of investments in agro processing, heavy and light manufacturing went to Ogun, while Lagos attracted less than 20 percent of the total.

The elephants in the room are multiple taxes charged by Ogun State and poor state of roads left unattended to by the state government, which seems more interested in revenue collection than attracting more investors, manufacturers say.

“I will like to put on record that the only motorable road within the OPIC Estate was constructed by members of MAN within the estate,” Paul Gbededo, group managing director, Flour Mills of Nigeria plc, told Dapo Abiodun, governor-elect of Ogun State, on April 11.

Gbededo’s reference was to the dismal state of roads at Agbara, one of the major industrial clusters in Ogun, which also hosts Unilever, Pharma Deko, Beloxxi Industries and Nestlé Nigeria, among many others.

We gathered that the government in 2018 asked manufacturers operating within the zone to contribute 30 percent while the state contributes 70 percent for the rehabilitation of the roads.

Gbededo said reconstruction of Agbara/Atan road was critical, adding that though manufacturers were willing to collaborate with the government on the project, government needed to take the lead in ensuring its proper and timely completion.

At the meeting, Seleem Adegunwa, chairman of MAN, Ogun State chapter, explained to Governor-elect Abiodun that the activities of government agencies, particularly the Ministry of Environment, were sometimes inimical to investments.

Ogun State is currently Nigeria’s leading industrial hub, with virtually all the large enterprises in Lagos having a factory in the state. But the state is hard hit by insecurity, poor infrastructure and money-chasing regulatory agencies hampering investments. Recently, Procter&Gamble, located in Agbara, which was until July 2018 United States’ biggest non-oil investment in the country, packed up.

In 2018, manufacturers told us that they pay a large number of taxes in Ogun each month, including those demanded by the Federal Government.

They added that things were becoming more predictable in Lagos and less so in Ogun as many government agencies demanded the same fees and levies in Ogun.

“Ogun is gradually becoming less organised,” said Olusegun Osidipe, director of research and statistics at MAN.

“Many things are still handled manually in Ogun, but you can easily check who owns a piece of land on the system in Lagos. You know how much to pay on Land Use Charge in Lagos, but not so in Ogun,” Osidipe said in 2018.

In the first half (H1) and second half (H2) of 2018, Ogun got N95.31 billion (out of total N305.56 billion) and N91.16 billion (out of total N247.08 billion), respectively, while Ikeja got N54.8 billion in H1 of 2018 and N85.76 billion in H2 of 2018. Similarly, Apapa got N93.31 billion in H1 and N53.29 billion in H2 of 2018.

Compare these with previous data. In 2014, for instance, manufacturers invested N691.77 billion, out of which N514.87 billion went to Ogun State, representing 74.42 percent of the total.


Apapa and Ikeja in Lagos contributed N15 billion and N85 billion to the investments, respectively, representing a combined 15 percent of the total.

Also, out of the N180.12 billion invested in the manufacturing and agro-allied industries in Nigeria in the first six months of 2015, N128.3 billion went to Ogun, representing 71.23 percent. Ikeja and Apapa industrial zones got N15.74 billion and N6.98 billion, representing 8.7 percent and 3.9 percent share of the total, respectively.

Similarly, manufacturing investments worth N309.33 billion were made in H2 2015, out of which N302.26 billion went to Ogun, representing 97.7 percent of the total. Apapa and Ikeja shared the remaining less than 3 percent with other industrial zones across the country.

In the first half of 2016, total investments estimated at N54.55 billion were made by manufacturers in the country, out of which N37.51 billion moved to Ogun within the period. This means that 69 percent of all investments within H1 of 2016 were channelled to Ogun State. Apapa and Ikeja shared the remaining 31 percent with other industrial zones such as Edo/Delta, Imo/Abia, Oyo/Ondo/Osun/Ekiti, Kano/Sharada/Challawa, Kano Bompai,

Anambra/Enugu, Bauchi/Benue/Plateau, Rivers, Kwara, and Abia.
In the second half of 2016, MAN survey shows that N313.62 billion worth of investments were directed to Ogun out of the total N448.94 billion. This represents 70 percent of the total.

Source: By Odinaka Audu

Nigeria Has Now Borrowed Up-to $8.67bn from World Bank

World Bank loan portfolio in Nigeria now stands at $8.67bn, an investigation has shown.

Loans from the International Development Association, one of the three arms of the World Bank, make up $8.55bn of the portfolio.

Loans from the International Bank for Reconstruction and Development, another arm of the Breton Woods institution, make up $124.18m of the portfolio.

IDA is the concessional arm of the bank through which it grants low interest loans to developing countries while the IBRD is the commercial arm that lends at commercial interest rates.

Statistics obtained from the Debt Management Office showed that the bank’s portfolio in Nigeria rose from $6.67bn as of December 31, 2016,  to $8.67bn as of December 31, 2018.

This means that the World Bank portfolio in the country rose by $2bn within a period of two years. This shows an increase of 29.98 per cent within the two-year period under review.

Nigeria’s external debt as of December 31, 2018,  stood at $25.27bn. With a portfolio of $8.67bn, the World Bank is the country’s single largest creditor as the bank holds 34.32 per cent of the nation’s external debt commitment.

Although some experts may see the 29.98 per cent growth in bank’s portfolio in Nigeria within a period of two years as high, there was actually more growth in the country’s commitment to Eurobonds within the same period.

In 2016, the nation’s Eurobonds loans stood at $1.5bn. However, by December 2018, the Eurobonds portfolio had reached $10.87bn. This shows that within the period, the country’s Eurobonds debt rose by $9.37bn or 624.67 per cent.

Drying concessional sources of external borrowing had driven the nation to commercial loans which included Eurobonds and Diaspora Bonds issued to Nigerians abroad.

The country also had to take commercial loans from abroad in a bid to retire some domestic debts that were considered to come with very high interest rates.

Speaking at a recent press briefing, the Director-General of DMO, Patience Oniha, said the government had borrowed to fund projects, to finance the budget deficit and to refinance maturing obligations.

Particularly, she said, some foreign debts were used to refinance treasury bills because of the short tenor of the bills, adding that borrowing from abroad had also helped to stabilise the local currency in the last two years.

Oniha said that borrowing for 2019 would be 50-50 split between domestic and external in striving to be consistent with the Debt Management Strategy 2013-2019 aimed at achieving a 60:40 ratio between domestic debt and external debt.

She said, “Relatively low interest rates mean the government can issue longer-dated bonds to continue to fund infrastructure projects.

“Revenue generating initiatives are expected to improve revenues and reduce the debt service to revenue ratio.

Source: By Everest Amaefule

Economy on Reverse Gear over N9trn Abandoned Projects

Although the Federal Government Committee Commissioned to assess the quantum of abandoned projects across the countries is yet to complete its assignment, independent assessors of this national  malaise have estimated that between 12,000to 20,000 high economy impacting projects are currently rotting away in various states of the federation.

While for instance the founder of the Africa Diaspora Research in South Africa, Professor Kole Omotoso, believes the figure could be up to 12,000, a former Minister of Finance and Coordinating Minister of the Economy, Dr Ngozi Okonjo-Iweala puts it at 20,000.

This conflict of numbers prompted the former Speaker, House of Representatives, Aminu Tambuwal to moot a bill to compel Ministries Departments and Agencies (MDAs) to implement national budgets in a manner that could halt disturbing trend of failed and abandoned projects. Tambuwal recalled that the project assessment committee had estimated that over 11,886 projects valued at N7.7 trillion were abandoned after government had spent N2.2 trillion on them while N9 Trillion was required to complete them.

 

So far no one has been prosecuted for these failed projects even a sofnowasnewele- phant projects have continue to spring up.

On assumption of power in 2015, President- dent Muhammadu Buhari promised to audit all projects abandoned by the previous governments and the present one.

Consequently, on Tuesday March 5, 2019, the president appointed Professor Yemi Osinbajo to take stock of both ongoing and abandoned projects by his administration and previous governments.

Ten days later, Osinbajo inaugurated an Audit Committee on Federal Government’s Policies, Programmes and Projects.

At that inauguration event Osinbajo charged the committee to take stock of the administration’s efforts so far and make concrete preparations for its second term

in office which would begin on May 29. Members are the Chief of Staff to the President, Head of Civil Service of the Federation, Minister of Budget and National Planning, Minister of Finance, Minister of Power, Works and Housing, the Attorney General and Minister of Justice with the vice president himself as chairman.

Other members are the Minister of Industry, Trade and Investment, Minister of Transportation, Minister of Agriculture and Rural Development, Minister of Water Resources, Governor, Central Bank of Nigeria (CBN) National Security Adviser, Permanent Secretary, Cabinet Affairs Office and the Deputy Chief of Staff to the President.

The terms of reference of the committee were: “To audit and determine the status of implementation of policies, programmes and projects either inherited or commenced by the outgoing administration

“To identify and highlight a residue of works and challenges that may militate against their successful implementation.

“To prepare and produce a detailed working document that would guide the incoming cabinet members on the direction of government regarding policies, programmes and projects.

“Co-opt any organization (s) person(s) relevant towards the successful execution of the exercise; and make any other recommendation (s) as may be considered necessary.’’

The vice president also charged them to, in the next few weeks, determine the current status and performance of Federal Government’s projects and programmes relying on submissions made by the various Ministries, Department and Agencies (MDAs).

He said aside such submissions, the committee would also do an objective assessment of experts who were already engaged on similar assessments and would be co-opted to assist in the mission.

Osinbajo said the team would be required to produce a detailed implementation plan based on the Economic Recovery and Growth Plan (ERGP) and several documents including the Next Level document.

He said the committee would also ensure that there was an objective report; very critical analysis and realistic projections.

According to him, the report would constitute clear guideline for each cabinet minister on ensuring that the incoming government had a clear presentation, ministry by ministry on what government needed to do; the challenges to be envisaged and the implementation plan.

However,of all the projects monitored by the committee, the ones in the South East even Nigeria were not only behind schedule, their level of implementation remained poor.

According to the secretary of the south east monitoring committee, Mr Idache Anthony, work at the 3.0 megawatts solar hybrid power plant located at the Nnamdi Azikiwe University, Awka, Anambra State, is below 40 percent completion even though it was awarded in 2017 with a completion period of nine months.

“By the specification of the contract, having assessed the project, I can say that the project is behind schedule because it has nine months duration and if you count nine months from the period of award till now, the project is behind schedule.

“In trying to find out the cause of the delay, the project engineer,Charles Edeh, could not provide information about the project. From what we saw, we cannot lift the project physically from here to Mr President to see.

The information we provide about the project will inform part of our findings that Mr President will virtually ascertain the level of implementation. Now that the site engineer cannot provide information for us we are handicapped so to speak about our report and what we are going back with are:

1.The project has not been implemented thoroughly.

2. The level of implementation is not impressive

3.Level of implementation compared to the time of award is not impressive. If he had given us information we would have known the percentage.

4.But if you ask me, looking at it physically, I can say that this project is not above 40 per cent completion.

“I did ask if funding was the problem he said that he was not privy to the information about the financial issues of signing
the project” he said, adding that there was a total lack of coordination among the workers.

At the Alex Ekwueme Federal University, Ndufu Alike Ikwo, in Ebonyi State, the chairman of the presidential monitoring committee, Showkubi Olarenwaju also expressed displeasure at the progress of work, several years after it was commissioned. He told Daily Sun on phone that the project was not up to 70 per cent completed. The project, he said, was awarded in 2017 with a completion period of nine months.

Considering the implication of abandoned projects in Nigeria, experts opined that the high rate of abandoned projects is an indication of an unhealthy economy. According to them, Nigeria is a mono-economy that depends totally on oil revenue.

So, the moment oil price plunges, it has a direct impact on infrastructure financing.

In his own submission, a development economist and a consultant to many countries on economies matters, Mr Odilim Enwegbara, suggested that to solve the oil price fluctuation, the government should allow the private sector to take over investment in critical infrastructure.

“If and when government allows the private sector to take over investment in critical infrastructure with a focus on high return on investment (ROI) as the single driving force, many projects wouldn’t end up abandoned.

“If you prioritise projects based on their importance to the country’s economic growth and social inclusiveness, then, it will be difficult for such projects to end up abandoned.

“And the very fact that government’s revenue is mostly dependent on oil, once oil revenue suddenly plunges, then, all the major projects lined up to be funded with oil revenue have to be automatically suspended, and should the revenue crisis continues, those projects over time become abandoned. “Unfortunately, each government comes up with its

own white elephant projects without serious cost benefits going into them and without clearly confirmed funding sources. That is why once the government that initiated the projects leave government office the next government replacing it, without any legally binding obligations toward the inherited projects easily severs funding for those projects, especially in cases where the initiating government has collected its 10 per cent share upfront.

The high rate of abandoned projects is an indication of an unhealthy economy because if the economy is healthy enough, revenue stream will be growing and projects will easily find funding.

“What needs to be done is to make sure that both national and state-based projects are prioritised based on their importance to growing the economy as well as on the availability funding sources. Second, let the private sector take over these abandoned projects”
he said.

In his own remarks, an erudite professor of capital market and lecturer at Nasarawa State University, Uche Uwaleke, proposed a law to mandate governments to first complete inherited projects before embarking on new ones.

“Abandoned projects leave scars on the economy and represent black holes in our country’s quest for sustainable growth. Whenever a project is abandoned, a lot of funds go down the drain and jobs are lost.

The potential economic benefits which the nation would have derived on completion are lost. From another perspective, the opportunity cost is high arising from the forgone benefit from alternative use of the funds which have now become sunk costs. The situation is made worse if the abandoned project is dollar-denominated since the foreign currency component must have negatively impacted the exchange rate and by extension contributed to exerting inflationary pressure.

“Abandoned projects are products of poor planning and implementation. When a project is initiated based on expected revenue especially from oil sales or even foreign loans that fail to materialise, the result is abandoned projects.

They have also resulted from corruption and misappropriation of funds. Another reason
is political when a new government is unwilling to continue a long term project started by the preceding government. The solution in this wise is to make a law that mandates governments to first complete inherited projects before embarking on new ones. With such a law, efforts of the Buhari administration in completing inherited projects such as the new Abuja Airport terminal and railways deserve commendation” Uwaleke opined.

Isaac Anumihe

Economy: Developers Begin Mentorship for Investment Clubs

Faced with the stark realities of the economy and down turns in the real estate business, some property developers and players in the sector are maximizing the high rate of unemployment in Nigeria to expand their business frontiers.
Real estate businesses have been facing serious challenges due to the low purchasing power of Nigerians and the inability of developers to secure long-term finance to construct new homes. In some highbrow areas, the vacancy rate remains high.

The major players are not deterred by the scenario, but adopting new strategies to remain afloat such as engaging in mentoring the army of unemployed or underemployed on the vast potentials in the sector, thereby increasing their liquidity and popularity.

Although, mentorship is not new in Nigeria, the competitive nature of the real estate industry meant that operators must think out of the box, hence the upsurge on the practice.Apart from this aspect, some developers are also exploring opportunities in investment clubs, where the mentees also known as partners or ambassadors are encouraged to invest and make money in return.

While the mentor make money through fees and sales from mentees, who market their products like lands and houses, the mentee also collect commissions from sales as well as other investments in the firm.This is coming in various ways depending on the ideas of the mentor and real estate operators.

Some of these trends come in form of enterprise development and empowerment programmes. The essence is to provide the army of unemployed, underemployed with opportunities to explore the real estate potentials and make money in the process.

For instance, Pertinence Limited, owners of ABC and VIP Gardens, in Lagos, offer enterprise development and people empowerment programmes schemes, where people are registered and mentored on the prospects in the sector.The company also offer asset development programme, which is aimed at motivating, guiding and assisting people to invest wisely. According to the company, “everyone who becomes a member has the opportunity to become a millionaire in five years by investing ₦10,000 monthly.

“You join the club with your initial deposit for investment and decide the amount you want to invest every month, but the minimum is N5,000 which can be paid weekly, quarterly or yearly.”The Guardian learnt that the firm invest the money on their behalf into real estate and others while they get a fixed and guaranteed 10 per cent , 15 per cent, or 20 per cent return on their investment per annum depending on the tenure.

Similarly, on the Asset Business Club, managed by Pertinence Limited, “membership of the club opens you up to a world of wealth creation opportunities.

The goal is to play significant role in solving the poverty and unemployment problem and also be part of the solution to the housing deficit challenge in Nigeria, by ensuring that everyone, regardless of your socio-economic status can be a land/house owner.The strategy is to help you convert the mentee’s Network into Net-worth.” Other companies offering mentorship programmes include, Realty Point Limited, where the Managing Director, Debo Adejana launched a mentorship programme (DAMP). The programme is divided into two categories. The first is the free and the second is the paying category.

The paying category is a closed forum with a cap on the number of people that can be part of it for quality interaction, effective benefit and participation.Membership renewal is annual and although annual payments will be required, non -performing members of the paying forum are disqualified from renewing their membership and new members are admitted in their stead.

Although, the programme is now being repackaged for greater output, Adejana said, it was designed to encourage people to invest in the real estate sector.

Adejana said a mentor serves as guide who can help the mentee to find the right direction and who can help them to develop solutions to career issues. Mentors rely upon having had similar experiences to gain an empathy with the mentee and an understanding of their issues. Mentoring provides the mentee with an opportunity to think about career options and progress.

Also, the Managing Director, Tobykemsworth Investment, a property development firm, Mr. Adekunle Raphael-Monehin, said the mentoring strategy helps to expose, give a wider representation, corporate representation and grow more sales for the firm.

He stressed that mentees, who are charged affordable fees are trained to be ambassadors, who at the end of the day, go about representing the firm or products and services , thereby driving credibility for the firm.
Raphael-Monehin said the mentees are encouraged to grow through networking to know how they can market the firm’s products.For him, the real estate is competitive and there are so many competitions in the market.

Bertram Nwannekanma

Credit to Economy Has Risen to N30.5trn – CBN

CREDIT to the economy rose to an all time high above the N30 trillion mark in February 2019, driven by strong growth in credit to the private sector during the month.

The Central Bank of Nigeria, CBN, disclosed this in its Depository Corporation survey report for February released last week. The report showed that credit to the economy grew by N1.9 trillion or 6.35 percent to N30.5 trillion in February from N28.64 trillion in January. The growth was driven by credit to the private sector which grew by N1.23 trillion or 2.2 percent to N24.16 trillion in February.

The 2.2 percent growth represents a slight improvement when compared to the 1.96 percent growth recorded in 2018. The report also revealed that credit to the government grew by N660 billion or 11.42 percent in February to N6.35 trillion in February from N5.69 trillion in January. The report, however, showed that banks recorded 2.2 percent or N210 billion decline in current (demand) deposit which fell to N9.19 trillion in February from N9.4 trillion in January.

According to the report, “Broad Money supply recorded 3.22 percent month-on-month (m-o-m) increase to N34.79 trillion in February 2019, from N33.72 trillion in January 2019. “This resulted from a 11.80 percent m-o-m rise in Net Domestic Assets (NDA) to N17.77 trillion accompanied by a decrease of 4.44 percent m-o-m in Net Foreign Assets (NFA) to N17.02 trillion.

“On domestic asset creation, the increase in NDA resulted from a m-o-m rise of 6.57 percent in Net Domestic Credit (NDC) to N30.52 trillion, but was offset by a 0.04 percent m-o-m rise in Other Liabilities (net) to N12.74 trillion. “
Further breakdown of the NDC showed a 11.42 percent m-o-m increase in Credit to the Government to N6.35 trillion and an increase of 5.37 percent in Credit to the Private sector to N24.16 trillion.

“On the liabilities side, 3.22 percent m-o-m rise in Broad Money Supply was chiefly driven by 18.83 percent m-o-m increase in treasury bills held by money holding sector to N8.23 trillion but was offset by 0.98 percent m-o-m decrease in Narrow Money to N11.03 trillion (as Demand Deposits which fell by 2.22 percent to N9.19 trillion offset the effect of currency outside banks which rose by 5.70 percent to N1.84 trillion) and a 0.74 percent m-o-m moderation in Quasi Money (near maturing short term financial instruments) to N15.50 trillion.
“Reserve Money (Base Money) decreased m-o-m by 4.30 percent to N7.17 trillion as Bank reserves declined m-o-m by 8.47 percent to N4.58 trillion despite a 4.75 percent m-o-m rise in currency in circulation to N4.46 trillion.

” DMO to offer N100bn FGN bond Meanwhile the Debt Management Office (DMO) will issue FGN bonds worth N100 billion with analysts projecting oversubscription and further reduction in the stop rate. The bond offer comprises N40 billion worth of 12.75% FGN APR 2023 (5-Yr Re-opening), N40 billion worth of FGN APR 2029 (10-Yr New Issue) and N20 billion worth of FGN APR 2049 (30-Yr Re-opening).

Projecting, analysts at Lagos based investment firm, Cowry Asset Management Limited said, “We expect the bonds to be issued at lower stop rates amid demand pressure.” Recall the FGN bond auction held by DMO in March recorded 67 percent oversubscription. While the DMO offered N100 billion worth of bonds, investors’ demand or total subscription stood at N240.6 billion.

In response to the huge demand, the DMO reduced the stop rates by 125 basis points (bps) from its previous auction levels down to 13.50 percent across all tenors offered. Consequently, the five-year, seven-year and 10-year bonds were auctioned at lower stop rates of 13.50 percent, down from 14.52 percent, 13.50 percent down from 14.80 percent, and 13.50 percent down from14.94 percent respectively.

Cost of funds to rise The FGN bond offer is, however, expected to trigger rise in cost funds in the interbank money market this week. Last week cost of funds dropped sharply following inflow of N165.91 billion from matured treasury bills (TBs), which cancelled out the impact of outflow of N58.49 billion through primary market TBs sold by the Central Bank of Nigeria (CBN).

As a result average short term cost of funds dropped by 10.5 bpts,with interest rate on Collateralised (Open Buy Back, OBB) lending falling by 10.43 bpts to 9.86 percent last week from 20.29 percent the previous week. Similarly, interest rate on Overnight lending dropped by 10.57 bpts to 10.57 percent last week from 21.57 percent the previous week. Analysts at Cowry Assets, however, project that this trend will be reversed this week.

“In the new week, T-bills worth N46.25 billion will mature via the secondary market. However, with the DMO expected to issue N100 billion worth of debts, we expect Nigeria Interbank Offered Rate (NIBOR) to trend upwards”, they said.

Source: By Babajide Komolafe

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