Nigeria - Institutional weaknesses stunt economic growth, says Utomi
Image Profile
by FricNews
Nov 01, 2019 - 10:11
Founder, Centre for Values in Leadership (CVL), Prof. Pat Utomi, has said that fundamental institutional weaknesses were responsible for the lack of economic growth on the continent.In his keynote address on ‘Ensuring Value for Women in the new African Continental Free Trade Area (AfCFTA)’ at the African Women Innovation and Entrepreneurship forum (AWIEF) in Cape Town, South Africa, the don stressed the need for improvement on the continent’s entrepreneurship base.

He said, “We always ignore the fact that the earliest business people of this continent were significantly women, but the structure of evolving African economies has not allowed us to give the women that place.

“The women have remained small-scale players because the system has not enabled them.”

Utomi urged women to be more active and put pressure on the men.

“The political processes on the continent are not decent; they are often a gang-up of criminals; the criminalisation of finding people to represent people, hence women are far less inclined to play with criminals,” he added.

According to him, every business in Nigeria has become more about managing state and regulatory capital.

At the event, stakeholders canvassed support for economic empowerment of women, as well as the many ideas created by women, which do not always receive the needed support to succeed.

They took turns at the AWIEF event to seek support for women entrepreneurs who were always on the back seats, urging the momen to build confidence to play at higher levels and compete with the men.

Cape Town Executive Mayor, Dan Plato, acknowledged that the forum would help to increase the visibility and inclusion of women in businesses, particularly in Africa.

“Women must have the same rights as men to be able to compete on the same level in business. We need to change our perception of entrepreneurship, as it takes bravery to put a business idea out into the world, and this should earn our respect.

“Support your neighbour or local artisan, tradesman and business person to succeed,” he added.

Earlier, the founder of AWIEF, Irene Ochem, lamented the challenges faced by women to include cultural traditions and taboos, education, finance and investment, access to networks, socio-cultural and structural inequalities among others.

She said, “The African Continental Free Trade Agreement (AfCFTA) is a monumental milestone on this developmental road that we must exploit to the full. The African Development Bank’s ‘African Economic Outlook’ expanded four-fold.

“AfCFTA is expected to boost this trade by as much as 53 per cent by mid-2020s, which would unleash almost unlimited opportunities, new economies of scale, and income and employment generation through the greater market and economic integration.”

The United Nations Undersecretary-General and Executive Secretary, UN Economic Commission for Africa (ECA), Vera Songwe, noted that over 543,000 Africans were without identities, with over 200,000 being women.

“Identity comes with dignity. If we can bring the 45 per cent of women without identity on the continent into the economy, then we will begin to talk about how to empower them. This forum would help women to connect and join forces to scale up their businesses on the continent; hence dignity, connectivity and protecting women business ideas are very important,” she added.
Professor of Entrepreneurship and Political Economy, Pat Okedinachi Utomi. Photo: FACEBOOK/UTOMI
Nigeria - Way out of economic crisis, by Dangote, Sanusi, others
Image Profile
by FricNews
Oct 08, 2019 - 9:10
PROMINENT Nigerians — economists, bankers, top industrialists and others yesterday listed the way out of the  economic crisis.

President Muhammadu Buhari urged them to proffer home-grown solutions.

They spoke at the 25th edition of the Nigeria Economic Summit (NES25) in Abuja organised by the Nigeria Economic Summit Group (NESG).

Africa’s richest man Aliko Dangote, former Central Bank of Nigeria (CBN) Governor and Emir of Kano Muhammadu Sanusi II, First Bank Plc Chairman Mrs Ibukun Awosika, chairman of the Economic Advisory Council (EAC) Dr. Doyin Salami, and top banker Atedo Peterside, gave tips on how to improve the economy and lift millions of people out of poverty.

Dangote flayed the paltry contributions of the manufacturing sector to the country’s GDP and advocated urgent steps to reverse the trend for the economy to make appreciable industrial growth.

According to him, the manufacturing sector currently contributes nine per cent, unlike in the Asian countries where it contributes 30 per cent. “To achieve a significant level of industrialisation and general economic growth, this trend must be reversed,” he said.

Dangote said the government must, among other things: decongest the ports, expand rail network, tackle smuggling, implement gas masterplan and entrench responsive bureaucracy.

Represented by the company’s Group Executive Director, Government and Stakeholder Relations, Ahmed Mansur, Dangote identified the private sector is key to the much-touted industrial revolution.

“Dangote is in the business of producing and distributing cement, foods etc. However, we have found ourselves engaged in power generation, road construction e.t.c as these are critical foundations for our businesses,” he added, urging the government to encourage more investments from local entrepreneurs.

Founder of Stanbic IBTC Bank Plc, Atedo Peterside said there is need to quantify the annual petrol subsidy, apportion it and pay each Nigerian adult that falls below a minimum income threshold of his or her share.

He said: “This can be executed transparently by the same office for National Social Investment Programmes that currently pays monthly handouts to a lucky few out of the 90 million extremely poor Nigerians. If the Federal Government is in the habit of being seen to grant subsidies then we should focus less on getting stubborn people to shed a bad habit. It is far better to get them to replace a bad habit of wasted subsidies with a much better habit of direct payments to the poor via an instrument that the rich cannot corner or access.”

Peterside also called for the trimming of personnel overheads on account of a bloated headcount in the public sector.

“Will 98 per cent of the population continue to suffer so that less than two per cent who make up the bloated public sector can maintain their lifestyles? The same Federal Government endorsed a largely unaffordable minimum wage and presses on with “populist” subsidies which are largely cornered by the rich. Government revenues as a percentage of GDP are exceedingly low at six per cent approximately and yet, all that the private sector does is resist any attempts to increase indirect taxes or price products such as petrol and electricity on the basis of full cost recovery,” he said.

Peterside added: “The responsibility that we must share is to encourage Federal Government to get its finances in order and attain both fiscal viability and macroeconomic stability. We must also encourage Federal Government to level the playing field for investors and quit dangling rent-seeking and/or arbitrage opportunities such as multiple exchange rates, which remain open to abuse,” he stated.

He added that it was  not too late for President Buhari’s Government and the National Assembly to borrow a cue from Mozambique and learn how to enact laws that provide clarity and reduce uncertainty for investors in the oil and gas sector and other sectors too.

The Emir of Kano, Muhammadu Sanusi (II) raised the alarm that Nigeria’s huge population had become a liability.

The Emir linked the spate of kidnapping, armed robbery, insurgency, farmers-herders crisis to the level of population growth.

According to him, “people say that our population is an asset but we are yet to get there. Nigeria’s population is currently a liability because most of the root cause of problems such as kidnapping, armed robbery, Boko Haram, drug addiction are all tied to the population that we have and the question is how do you turn that into a productive one.”

Emir Sanusi aded that “population problem is perhaps the most important developmental challenge we have to face. If we don’t have a demographic transition, we will never have economic transition.”

Bishop Hassan Kukah noted that “everything that becomes an opportunity in other countries becomes a liability in Nigeria. How is it that a country that is so resource endowed with all the opportunities that are available to us, things still turn liabilities to us in Nigeria.”

The bishop suggested that the government needed to do more to make the country a better place for all.

Mrs. Awosika said government ought to declare a state of emergency in the education sector in order to harness the potentials of its human resources.

According to her, “we need to articulate our position and strategy to achieve our objectives. Every young person wants an opportunity to be educated and have a job. We must have a political system that serves the interest of the nation rather than individuals. We need to declare an emergency in the education sector and redefine the universities to close the gap from what is being taught and what the industry needs.”

Dr. Salami canvassed a unified approach between federal and sub- national governments for accelerated economic growth. Dr Salami noted that “for private sector to thrive, the government must create enabling environment by ensuring that the resources of private investors were saved.

He enjoined the country to clearly define which areas, the country wants to go into to compete with big countries.
Nigeria - Why Nigeria’s economic growth is slow – Report
Image Profile
by FricNews
Oct 02, 2019 - 9:10
The decline in government revenues and the slow and uneven growth in key sectors of the economy are key factors in the stagnation of the nation’s economic development, an economic analysis conducted by the Centre for Democracy and Development (CDD) shows.

The Assessment of the Effectiveness of Government Policies and Programmes on Economic Growth and Development, 2016 -2019, which undertakes to review the main economic goals of the current government, examines the implementation of policies and programmes and broadly assesses their effectiveness. It observed that growth rates while turning positive, have been lower than stated targets.

The report which was made available to PREMIUM TIMES on Tuesday, noted that generally the GDP growth rates, oil and non-oil revenues, federal government revenue and expenditure and particularly capital expenditure have been significantly lower than anticipated through the periods of 2016 to 2018.

Such anticipations were captured in the Economic Recovery and Growth Plan(ERGP) and in subsequent annual budgets.

“It is clear that the estimates, projections and expectations for GDP growth have been significantly different from the actual outcome, although the performance in Q4 2018 and Q1 2019 are more encouraging,” stated the report.

“For the last one year, the impetus for growth has mainly come from the non-oil sector.”

It identified that oil GDP growth rates were negative in the last three quarters of 2018 and so could not be relied upon to power sustainable growth and recovery.

The analysis further posited that although non-oil GDP growth had been positive, it still remained relatively low.

“Much stronger growth is needed from this sector to achieve the envisaged diversification and rapid economic recovery.”

The report also submitted that revenue shortfalls appeared to pose the biggest challenge inhibiting the delivery of a strong enough stimulus and capital investment to engender rapid growth.

It suggested that renewed efforts were needed to expand the tax base, partly through more vigorous enforcement and partly through the incorporation of MSMEs and the informal sector into the tax net.

The report also recommended that new areas of generating revenue, such as commercialisation, part-divestment, securitisation, joint ventures, combined with efforts to attract diaspora investments into these areas, should be explored.

“It must be noted that previous attempts at privatisation in Nigeria have, in most cases not yielded the right results. The necessary steps must, therefore, be followed to avoid the known pitfalls,” the report said.

Failure of privatisation

The report stated that the proposal to raise substantial revenue through wholesale privatisation of government assets appeared not to have been thought through.

“Privatisation by itself will not provide an appropriate solution. Firstly, this will provide revenue on a one-off basis and does not provide a sustainable way of raising budgetary resources,” it stated.

“Secondly, the history of privatisation in Nigeria has been a challenging one. Some concerns have been expressed on the risk of selling enterprises to privileged groups at below market prices, undermining the subsequent services and exacerbating income inequalities (Eke, 2017; Sahara Reporters, 2011).

“In some cases, the new owners are alleged to have stripped off and sold the assets, with the companies failing or being rendered comatose soon thereafter.

“More intelligent ways of leveraging public assets are needed, which will generate revenue streams and provide options for future government ownership.”

Taxes and other possible revenue sources

The report noted that greater efforts were made by the current administration in 2018 to raise taxes through the implementation of the Integrated Tax administration system and stronger enforcement and better monitoring of ministries, departments and agencies (MDAs).

It, however, observed that revenues anticipated to be earned from taxes on solid mineral production activities in 2017 and the first half of 2018 came to nothing.

“Budget under-performance has been 100%. This is a puzzle since there appears to be many mining activities going on in the country, with many of the licenses issued by the Federal Ministry of Solid Minerals,” it stated.

“The other anticipated source of revenue has been the recovery of stolen funds. Clearly, the government, through the Economic and Financial Crimes Commission (EFCC), has made substantial progress in this area.

“Between November 2015 and November 2018, The EFCC has indicated that it recovered N794 billion, US$261m and £1.1m from “looters”(Vanguard Newspapers, 12 Nov 2018). In the first quarter of 2019, an additional amount of N117 billion was said to have been recovered (Channels TV, 5 April 2019).

“However, not all the amounts have been finally forfeited to the government, and have therefore not been sufficient so far, to cover the revenue gaps.”

The report concluded that for the moment, the solutions being proffered to raise revenues had not been able to make a major contribution to the achievement of the substantial increase in non-oil revenue/GDP ratios that had been anticipated in the ERGP and annual budgets.

“Since revenue projections have been under-achieved, expenditure has also fallen substantially below the budget,” the report said.

“It was barely more than half of the budgetary projections in the first part of 2018.

“Whenever there are shortfalls in revenue, the recurrent expenditures, particularly salaries and other emoluments take precedence. Consequently, capital expenditure, which is critical for promoting growth and generating jobs floundered and is well below the 24% achieved in 2015.”

Sectoral Analysis

With respect to power, the report noted that the challenge goes beyond the shortfalls in capital expenditure.

“There is also some evidence that the privatisation of the sector may not have been done in the right way,” it further observed.

“It appears that some of the entities may have been sold to persons based on their political connections rather than their capacity to make the significant long- term capital investments that are necessary to make the business viable (Conversations with U. G Mohammed; MD, Transmission Company of Nigeria, 2018).

“This is particularly true with respect to the distribution companies, most of whom have not been able to make the necessary capital investments to develop the capacity to buy enough power, adequately distribute and collect the revenue.

“They argue that this is due to the failure of the government to implement the tariff structure agreed upon.

“Clearly, the current model is not viable. While a review of the whole structure is needed in the long term, it may be necessary for the government, as an interim measure, to pursue a policy of consolidation of the DISCOs (similar to what was done for banks) so that they can combine their financial resources to achieve economies of scale and make the necessary investments in the energy distribution sector.

“This is the minimum that is needed to substantially improve power supply, which is so critical for supporting stronger growth.”


In agriculture, the report noted that although the sector experienced sharp growth in 2017, there was a decline in 2018, and is a concern given the concentration of credit and intervention activities in the sector.

“However the performance of the sector did improve to 3.17% growth in Q1 2019, but experienced a substantially reduced growth rate of 1.79% in Q2 2019,” it submitted.

In the manufacturing sector, the report noted that while recovering from negative growth in 2017, it is still not growing as fast as needed, and appears to have experienced a substantial slow down to 0.81% growth in Q1 2019 and a decline of 0.13% in Q2 2019.

“The performance of the finance and insurance sector, while positive, remains steady and low,” it recorded.

“Only the information and communication and the transportation sectors experienced a significant surge in 2018.”

Explaining the dip in the contributions of the oil sector to the GDP, the report noted that the sector’s contributions had nothing to do with oil prices for 2017, 2018, and 2019, where the average prices had been higher than budgeted prices.

“It is largely because output, which is within the control of the government, has been consistently lower than the budgeted amount, to the extent that the positive price differences have not been able to compensate for the low production figures,” it said.

“Consequently, oil revenues have fallen, by an increasing rate over the 2016-18 period, below the budgeted amount.”

In its recommendations, the report noted that the power sector needs both increased capital investment and reforms in order to deliver the energy needed to promote rapid growth, adding that at a minimum, DISCOs must be “incentivised to both consolidate and re-capitalise.”

For the oil sector, it noted that Nigeria could do little about international prices, but It must focus on increased production and local processing since the sector by itself and through its inter-linkages with many other sectors of the economy can contribute to both growth and diversification.

“On diversification, there have been promising trends of increased production and exportation of agricultural products to the US, EU and Asia, as well as manufactured goods to the ECOWAS region,” it recommended.

“These should be nurtured through continuous progress in the areas of exchange rate stability, export incentives and in continued improvements to the ease of doing business.”
Nigerian economy improved slightly in 2016, but remains in recession -- NBS [Photo Credit:]
Nigeria - Despite $81bn Debt Burden, Nigeria Seeks $2.5bn W’Bank Loan
Image Profile
by FricNews
Sep 20, 2019 - 10:09
Nigeria and the World Bank have begun talks for a loan of $2.5 billion in a new tranche of concessionary lending by the multilateral financial institution.

In the past year, Nigeria received $2.4 billion from the World Bank, World Bank’s Vice President for Africa Region, Mr. Hafez Ghanem, told Bloomberg Thursday in an interview.

If the World Bank grants Nigeria the loan, it would shoot up the nation’s debt burden to over $83 billion mark.

“We’re talking about a new set of programmes of about the same amount, it should be around $2.5 billion,” he said.

Ghanem, in another interview with THISDAY, also supported the ongoing bid by the federal government to jack up Value Added Tax (VAT) from the extant 5 per cent to 7.2 per cent.

Faced with revenue shortfalls as the output and price of oil, Nigeria’s main export, fell in the past five years, President Muhammadu Buhari’s administration has increased borrowing to finance government spending.

The country’s total public debt, comprising the federal government, states and the Federal Capital Territory (FCT) debt stocks, stood at N24.947 trillion or $ 81.274 billion as at March 31, 2019, according to data from the Debt Management Office (DMO). The figures indicated that the external debt also increased by N101.646 billion in three months.

To ease the mounting debt burden, Nigeria has sought more credit with low interest and long repayment periods from institutions, including the World Bank and the African Development Bank.

Nigeria, which vies with South Africa for Africa’s biggest economy, has made a sluggish recovery since a 2016 contraction, with Gross Domestic Product (GDP) expanding only 1.9 per cent in the three months through June, slowing for the third consecutive quarter.

The World Bank in April lowered its 2019 growth forecast for Nigeria to 2.1 per cent, from 2.2 per cent.

“The current economic performance of Nigeria is not enough to reduce poverty,” said Ghanem. “We need to accelerate growth.”

The World Bank’s focus in Nigeria is to lift about 100 million Nigerians, half of the population, out of poverty, with special emphasis on women’s education, expanding digital opportunities and solving a power crisis that hobbles economic activities.

“It’s important to resolve the problems of the power sector in Nigeria to bring in more investments because you need to bring down the cost of power to make the economy more competitive for the development of industries,” Ghanem stated.

World Bank Backs VAT Hike Bid

Also, as part of the federal government’s efforts to generate more revenues, it has unfolded plans to raise VAT by 2.2 per cent, a move the World Bank described as laudable.

It said for the government to be able to fulfill its obligations to the people, it would need to raise taxes as well as broaden the tax base to strengthen its fiscal position.

The World Bank said the current rate of economic growth was incapable of poverty reduction.

It said the country should also embrace the digital economy to fast-track its developmental aspirations.

Ghanem told THISDAY that it had become inevitable for the federal government to raise VAT as well as explore other strategies for domestic resource mobilisation to boost revenue needed for investments in infrastructure, including power, education, health, agriculture, as well as the digital economy.

According to him, Nigeria’s growth, which has averaged two per cent in the last two years, is “not enough to reduce poverty.”

He said to make the desired impact however, the economy needed to grow by an average of between five per cent and seven per cent annually- much faster than the population growth rate of 2.62 per cent.

Ghanem also said the country’s VAT remained one of the lowest when compared with neighbouring countries and around the world, adding that total government revenue which stood at about eight per cent of GDP and tax revenue of only about four per cent of GDP were inadequate if growth must be impactful and inclusive.

“If we look at a country like the United States for example, their tax-to-GDP ratio is more than 20 per cent; in Europe, it is close to 40 per cent. And in countries which are much less-developed than Nigeria, we see that the minimum should be around 15 per cent tax to GDP,” he added.

However, he warned that though domestic resource mobilisation remained an important factor to drive growth, “that does not mean that you should go and over tax a few groups and kill your industry.”

On economic diversification, particularly into agriculture, he said government should increase productivity by investing in new technologies and improving information to farmers.

He stated that it was important for government to link farmers to markets and also provide opportunities for agro-processing to enhance value addition and profitability.

“To develop agriculture, you need to invest in agriculture and you need to make agriculture more profitable.
“In order to fight poverty you need several things. First, you need to get the economy to grow faster. The Nigerian economy has been growing within the past two years at two per cent and that is not enough to reduce poverty.

“You need to be growing at a much faster rate than the population growth rate so you need to be growing at between five per cent to seven per cent and you need to make sure this growth is inclusive; so, it is well distributed among the population,” Ghanem added.

According to him, the federal government is already working towards improving the narrative while the World Bank is also doing its best to support the Nigerian government’s efforts.

He stressed the importance of human capital development, especially the need to empower women.

He said the federal government needed to drive “economic transformation and also diversify the Nigerian economy, develop industries, agriculture and in that regard. I would stress in today’s economy that you need to invest in the digital economy.

“Digitalisation and the links to the rest of the world, access to technology and information are becoming increasingly important for the growth of industry, agriculture, services.

“I will say that Nigeria has a comparative advantage because you have a young, creative entrepreneurial Nigerians who if given access to the digital economy, will create a lot of economic development and growth.

“If you want economic transformation, you need to also ensure adequate infrastructure, including power and improved transportation.”
Africa - South Sudan turns to tourism in bid to draw line under past unrest
Image Profile
by FricNews
Sep 06, 2019 - 10:09
Travel firms adopt wait-and-see approach as government seeks to entice visitors with safaris, Nile rafting and climbing trips.

When Carsten Lillelund Pedersen visited South Sudan in November he was almost turned back at the airport.

The immigration official had never seen a tourist visa before.

“They told me the country doesn’t have tourists,” said the Dane, 49, who travelled on a whim after visiting a friend in Uganda.

While South Sudan has six national parks, 13 game reserves and is rich in biodiversity and resources, safaris are not uppermost in the mind when thinking about the wartorn nation. Five years of fighting killed almost 400,000 people, displaced millions and plunged pockets of the country into famine. Government and opposition forces alike have been accused of committing human rights atrocities, including the use of rape as a weapon of war.

As the country slowly emerges from conflict, with a fragile peace deal signed last September, it is looking to diversify revenues instead of relying almost entirely on oil.

In February, for the first time since gaining independence in 2011, the ministry of wildlife and tourism hosted a three-day marketing workshop with the East African Community, a regional body comprised of six countries. South Sudan is working with Uganda, Kenya and Tanzania, all of which have established tourism industries to make it easier for people to travel across borders.

The government is banking on the country’s geographical and cultural diversity – it has 64 tribes – as well as Nile rafting tours, mountain climbing and conservation tourism to entice visitors, said Joseph Oroto, director general for tourism. A total of 16 travel agencies operate within the country, and there are more than 180 hotels in the capital, Juba.

Not since the 1970s, when there was a lull between civil wars in Sudan, have tourists poured in. Less than 6% of the national budget is put towards the wildlife ministry, and last year no money was allocated towards tourism development. Visitors like Pedersen are rare.

Humanitarians working in the country are reluctant to invite guests to a place that’s strictly censored by the National Security Service and notorious for being more dangerous for carrying a camera than a gun.

The government knows that, without investors, the industry will take decades to develop. Companies reluctant to do business in South Sudan are waiting to see what happens in November, when opposition leader Riek Machar is expected to return and once again serve as President Salva Kiir’s deputy. When the two leaders last attempted to work together, it ended in failure as fighting broke out in Juba in July 2016. Machar fled the country on foot.

But some communities are eagerly getting started. Situated on the edge of the Bire Kpatous game reserve, along the Congolese border in Western Equatoria state, villagers from Ndoromo are trying to shed a brutal past. Terrorised by the Lord’s Resistance Army and crippled by own civil war, locals have been increasing efforts to preserve the park and stave off poachers. The aim: enticing holidaymakers.

“It would be the best thing for tourism to come here,” said Masimino Pasquale, a community volunteer who patrols the reserve.

Becoming a tourism hub will take some time – Ndoromo lacks basic infrastructure such as easy access to water, paved roads and buildings that could accommodate visitors.

Conservation experts warn against viewing tourism in Africa, especially in volatile countries like South Sudan, as a “silver bullet solution”, said Alison Mollon, director of the Africa programme for Fauna & Flora International, a wildlife organisation. It can work, she says, but it needs to make sense for the context and be resilient to shocks such as war.
Villagers from the village of Ndoromo are seen walking on the edge of the Bire Kpatous game reserve, where efforts are afoot to encourage tourism. Photograph: Sam Mednick
Nigeria - NLC Rejects Hike in Electricity Tariffs
Image Profile
by FricNews
Aug 26, 2019 - 10:08
Nigeria Labour Congress (NLC) has rejected the upward review of electricity tariffs being charged by distribution companies (Discos) operating in Nigeria.

NLC General Secretary, Mr. Emmanuel Ugboaja, said the new tariff is not acceptable to Nigerian workers.

“We completely disagree with any fresh hike in electricity tariff. We oppose it and the NLC has clearly expressed this position in its communiqué issued at the end of its National Executive Committee meeting held in Kano,” he said,

Ugboaja, who spoke to THISDAY on telephone yesterday, said NLC has also rejected the federal government’s plan to divest from the Discos and the generation companies (Gencos).

“NLC is also opposed to attempts to divest 40 per cent federal government’s holdings in the Discos and Gencos,” he said.

The Nigerian Electricity Regulatory Commission (NERC) had last week approved new electricity tariffs for the distribution companies operating in Nigeria.

The commission said the new tariff which was distinct to each Disco, became effective from July 1, 2019.

Under the new tariffs, residential customers in the networks of Abuja Disco would have to pay between N24.30 and N47.09 per kilowatt hour (kwh) of electricity in 2019, and between N33.34kwh and N63.42kwh in 2021.

Commercial customers under the same network would pay between N37.39kwh and N47.09kwh in 2019 as well as N50.28kwh and N63.42kwh in 2021.

For industrial customers in Abuja, their tariffs in 2019 range from N36.07kwh to N47.09kwh, while that of 2021 would be between N48.49kwh and N63.42kwh.

Under Eko Disco, residential customers would in 2019 be charged between N24 and N29kwh. In 2021, they would be charged N32.42khw and N42.83kwh.

Commercial customers will in 2019 pay between N24 and N36kwh while in 2021, they would be charged between N33.61kwh and N47.70kwh.

For industrial customers in Eko, they will be charged between N24 and N36kwh in 2019, but in 2021, they would have to pay between N36.23 and N48.52kwh.

He said, “Be very, very careful what you believe even when you read such materials in social media or sometimes in newspapers because in this country, we have a most fertile multiplier effect.

 “When somebody hears something, he puts it on the Internet, it spreads and an industry begins as people start commenting on things which never existed.

“Sometimes on social media, you’ll even see trending quotes supposedly from me, with my name, my photograph, with statements which represents what those people want to say but lacked the courage to say it.”
Nigeria - DPR Dismisses Fuel Scarcity Scare in Lagos
Image Profile
by FricNews
Aug 26, 2019 - 10:08
The Department of Petroleum Resources (DPR) has dismissed the risk of possible fuel scarcity in Lagos State over petroleum marketers’ failure to load at depots for days into the weekend.

Operations Controller of DPR, Lagos, Wole Akinyosoye, told journalists in the state that the federal government is on top of the situation after meeting with the Independent Petroleum Marketers Association of Nigeria (IPMAN).

“That the petroleum marketers failed to load on Wednesday, Thursday and Friday is no cause for impending fuel scarcity in the country,” he said.

He further explained that, ” As I am talking with you we have a storage of more than two weeks supply, and as I am talking, vessels are berthing and they are discharging to their depots.

“So, the issue of scarcity is really not in the horizon. We reiterated this last December to let people know that scarcity is not in the offing and we are still repeating that every avenue where scarcity could happen has been blocked.

 “We really want to appreciate all stakeholders in the industry in ensuring uninterrupted supply of petroleum resources since the beginning of the year.”

According to the Chairman of IPMAN, Akin Akinrinade, the marketers’ inability to load for  complete three days was due to  internal issues.

He expressed hope for quick intervention for the benefit of the country.

He said, “In the last three days we had issue with our pipeline and also with our generating sets but as a speak we have had Interpol that a new generating set is on the way from Abuja, and it has nothing to do with scarcity and we are confident that as from next week we will have a smooth operation.”

He explained further that, “we at IPMAN now have new executive members and we have come to familiarise with DPR management and part of the issues we seize this meeting to address is also include, the issue of multiple taxation from government agencies which we know that they are just after our money.

“And we have assured government on quick compliance the safety default in our operation outlets in total compliance with the safety regulations as set by DPR for the industry.”
Nigeria - Oil pipeline vandalism up by 77%, says NNPC
Image Profile
by FricNews
Aug 26, 2019 - 9:08
• Corporation posts N17 billion loss for refineries

The Nigerian National Petroleum Corporation (NNPC) yesterday said oil and gas pipeline vandalism rose by 77 per cent in June this year.The newly released June edition of the corporation’s Monthly Financial and Operations Report (MFOR) showed that 106 pipeline points were breached as against the 60 points vandalised the preceding month.NNPC’s Group General Manager, Group Public Affairs Division, Ndu Ughamdu, explained that the Aba-Enugu axis in the system 2E pipeline corridor accounted for 25 per cent of the total pulverised points, while the Lagos Atlas Cove-Mosimi axis of the system 2B had 23 per cent of the compromised points.

The Ibadan-Ilorin leg of the System 2B pipeline recorded 18 per cent of affected lines, followed by the PHC-Aba section of the system 2E which was responsible for 13 per cent, as the other areas were responsible for the rest 21 per cent of the breaks.

The document indicated that 1.76 billion litres of Premium Motor Spirit (popularly known) as petrol were supplied during the period under review.A breakdown revealed that 58.65 million litres/day of the product were supplied and distributed. It said to sustain supply and distribution in the downstream sector, the corporation ensured daily monitoring of the stock nationwide.

In the gas sub-sector, the report stated that 223.98 billion cubic feet (bcf) of natural gas were produced during the month, translating to an average daily production of 7,466.09 million standard cubic feet per day (mmscfd). The figure was a slight increase of 0.11 per cent over the previous month’s tally. Besides, deficit from the nation’s four refineries hit N17.4 billion during the period, as operations from the facilities remained at a sub-optimal level.

The installations have been operating at just 5.55 per cent of their combined capacity of around 445,000 barrels daily.The unsavoury situation underscores the fact that the oil-rich nation still relies heavily on imports for its energy needs.

However, to achieve the 2023 target of local refining, the Federal Government, last week, said it had begun the overhaul of the facilities, commencing with the Port Harcourt refinery.Giving itself a three-year deadline, the NNPC hopes to review operations of the refineries, support condensate plants and open the midstream sector.

It noted that the Port Harcourt, Kaduna and Warri facilities have continued to record deficit, with losses for the period rising to N17.42 billion. Specifically, the Kaduna installation recorded a shortfall of N9.55 billion; Port Harcourt, N3.79 billion; and Warri, N4.07 billion in March as against combined revenue of N2.01 billion during the month.
Nigeria - CBN policy frees N750b for loans
Image Profile
by Realities, Nigeria
Jul 12, 2019 - 8:07
The Central Bank of Nigeria (CBN) directive for banks not to deposit funds above N2 billion at its Standing Deposit Facility (SDF) window will free over N750 billion for loans, it was learnt on Thursday.

Commercial banks are expected to deposit excess funds at the CBN daily and earn interests on such funds, The Nation learnt.

The guideline, issued on Wednesday, took effect yesterday. It reduced the remunerable daily placement of SDF from N7.5 billion to N2 billion.

SDF is the excess reserve funds that banks deposit at the SDF window of the CBN at the end of each business day. The Standing Lending Facility (SLF) is fund borrowed by banks from the apex bank to square up their positions in the market.

The SDR attracts interest rate of Monetary Policy Rate (MPR) minus 500 basis points, which is 8.5 per cent per annum up to the limit of N2 billion. Any deposit over and above the maximum will attract zero interest rate.

CBN Director Financial Markets Department Angela Sere-Ejembi said renumerable daily placements by banks to the SDF shall not exceed N2 billion.

She said: “With reference to the circular to all banks and discount houses on guidelines for accessing the CBN Standing Deposit Facility.

“The SDF deposit of N2 billion shall be enumerated at the interest rate prescribed by the Monetary Policy Committee from time to time. Any deposit by a bank in excess of N2 billion shall not be enumerated. The provisions of the circular take effect from today.”

The Head, Currencies Market at Ecobank Nigeria, Olakunle Ezun, said the CBN had earlier announced regulatory guidelines to stimulate lending to Small and Medium Enterprises (SME), retail, mortgage and consumer lending with mandate to banks to maintain a minimum loan to deposit ratio of 60 per cent (compared to current industry average Loan to Deposit Ratio (LDR) of 58.5 per cent as at May 2019 and regulatory maximum of 80 per cent), subject to quarterly review.

By this regulation, the CBN aims to improve market liquidity and, subsequently, encourage deposit money banks to increase lending to the productive sector of the economy. This comes with additional incentive of a weight of 150 per cent to the preferred sectors in the computation of LDR.

Ezun said the impact of the new guideline on SDF would force the banks to carry out their core responsibility of intermediation (the circular capped the preference of banks to keep idle balances at the CBN in the SDF window).

“In the immediate, the money market liquidity is expected to rise by N750 billion, thereby lowering inter-bank market rates by 150 basis point.

“The CBN’s recent move could be positive, as we expect improved lending to the productive sector and reveals the risk appetite for the productive sectors of the economy,” Ezun said.

However, depending on market reaction and behaviour, the inter-bank money market rates could further drop and was average two per cent to five per cent in the days ahead.

It is currently trading at a weekly average of 4.85 per cent for overnight rate and 12.25 per cent on 90-day tenored funds.

According to Ezun, the secondary market (discount) rate on treasury bill was expected to trade between eight per cent to 10 per cent for 91-day maturity and below and 11.5 per cent for tenor above 91-day maturity.

He said the secondary market yield on bond is expected to moderate downward to sub 13.5 per cent for tenor above five-year in short term.

Ezun said that while the CBN’s reason for the circular is to encourage bank to lend to the productive sector, it is not clear how the apex bank intends to achieve this objective.

He said: “Given internal risk framework of most bank and their disposition to increase lending to riskier borrowers, potentially with looser underwriting or under-pricing outlook, the risk acceptance framework will have to come to play.

“While the liquidity in the market will rise, the liquidity could be locked up in a large portfolio of government securities in contrast to the overall objective of lending to the real sector.”

He explained that in the longer term, more stringent regulations can be positive for the economy but negative for the lending institution while stringent regulations can force bank to increase their risk appetite, which could lead to higher non-performing loan and further deteriorate the industry’s asset quality.
Nigeria - CBN identifies two major issues affecting Nigeria’s economy
Image Profile
by Realities, Nigeria
Jun 09, 2019 - 15:06
Governor of the Central Bank of Nigeria, CBN, Godwin Emefiele, has said the bank, with some stakeholders, have identified smuggling and dumping as major challenges sabotaging the Nigerian economic policies.

The governor said this on the sideline of a consultative roundtable titled, “Going for Growth” with some economic stakeholders in Lagos.

The News Agency of Nigeria (NAN) reports that the essence of the rountable was to encourage participants to highlight important building blocks that will lead to greater economic growth in the country.

It also involves the CBN Governor listening to their ideas and views on how productivity and investments by companies operating in Nigeria can be improved.

Others include how to reduce the nation’s dependence on imported goods and increase exports of non-oil goods and services.

Emefiele said, “We have identified smugglers and people dumping goods as those who sabotage those policies and we decided that we will deal with them.

“The strategy that we came up with is that we will not bother ourselves with them.

“There is an agency of government that is responsible for border control and if these people pass through the border control we would use the instrumentality of being the regulator of the banking system to make sure that we get the banks to provide all details about them.

“We investigate their accounts and if they are found in economic sabotage, boarding, smuggling and dumping in Nigeria, we would not only block their accounts, we would close their accounts in all the Nigerian banks simultaneously.

He also said the CBN asked commercial banks to close those companies’ accounts and those of the top members of such entities.

The bank chief said CBN in due course would come up with the names of those that had been identified.

“We want to be sure that we come up with something that is credible and cannot be denied.

“At this stage we have already blocked the accounts of some in the textile and rice and palm oil company.

“We are investigating those accounts and as information becomes clearer, we can clearly say that they committed the offence.

“We would then go to the next level which is to forbid any Nigerian bank from maintaining accounts for these people,” he said.
Nigeria - How Buhari’s slow decision process may upset economy
Image Profile
by FricNews
Jun 03, 2019 - 8:06
Analysts urge speedy formation of cabinet

President Muhammadu Buhari’s slow decision-making process could once again impede his second term in office and endanger the economy.

One week after signing the N8.92 trillion 2019 budget and five days after the new administration was inaugurated, Buhari’s “body language,” according to a source close to the presidency, seems out of tune with the urgent need to set up a cabinet, reset the ailing economy and properly deploy the budget’s borrowed funds.

“Baba’s way is taking things gradually. But I don’t think it would take long like before. There is a need to prove a point this time around, coupled with the criticisms against him and the condition of the economy. For now, it’s not clear whether he will speak on it this week,” the source said.

What has thrown into sharp relief the slowness of Buhari is that South Africa’s president, Cyril Ramaphosa, named his cabinet 96 hours after he was sworn in, becoming also the third president on the continent to have a gender-balanced cabinet, after Rwanda and Ethiopia.

Affirming the connection between cabinet inauguration and the financial market, the South African rand reacted positively, appreciating by 0.5 per cent.In 2015, investors and financial market players, both foreign and domestic, waited six months before Buhari picked his cabinet. The development signalled a lack of direction and fuelled speculations. It also led to uncertainty, near-inactivity, cautious investments and huge withdrawal of investments, besides institutional sanctions.

According to the chief executive officer of Cowry Asset Management Limited, Johnson Chukwu, “It was more of a dark moment, as there was no fiscal policy direction to boost activities. The development caused investment reversals, while potential inflows were kept on the sidelines against perceived uncertainties. The hiatus, in an already high-speed growing economy, was a key reason behind the high-level economic headwinds that culminated in recession. We cannot afford it this time.”

Currently, the economy is hostage to external shocks, even as the latest report on Gross Domestic Product (GDP) shows a reverse from major gains in the fourth quarter (Q4) of 2018. It went down from 2.39 per cent to 2.01 per cent in the first quarter (Q1) of 2019, representing a decline by 0.38 per cent.

But a financial analyst, Egie Akpata, was skeptical on what the president’s package could unfold. He told The Guardian that the economy might not witness any great change, as Buhari might return many of his “underperforming” ministers. He nevertheless expressed hope that the 2015 delay would not repeat itself, even as he called for urgent attention to bring the economy out of its “bad shape.”

FXTM research analyst, Lukman Otunuga, noted that the key question on the minds of many investors is what his re-election means for the economy in 2019 and beyond, with emphasis on shifting the economy from reliance on oil, rather than mere proclamations.

“The market is still afraid his victory suggests continuity of policies. On the other hand, it offers the government an opportunity to build on what has already been achieved over the last four years. If infrastructural developments are worked upon and there is real diversification, especially in agriculture, coupled with strategies to mitigate external risks, Nigeria could still surprise the world this year,” Otunuga said.

On his part, economist, Bismarck Rewane, said: “We need investments to move on. Of course, there are signs. But what we need more, now, not the signs, but tangibles. In the near term, everything will continue this way, unless something different happens.”

Financial analyst, Ayodele Akinwunmi, said the president has learned from the past. He was therefore optimistic that he would constitute his cabinet on time with a team to drive his economic growth agenda.He warned: “Any delay like what we had in 2015 may put the economy on reverse gear from its current momentum. I am sure the president will not like such. I believe Nigeria will have a cabinet before the end of June. Expectations for the second term are high and there is a lot of work to be done.”

Also, economist, Dr. Olalekan Obademi, said he would not expect the president to repeat the late appointment of cabinet ministers. According to him, “The effect is that the uncertainty could lead to capital flight and create other distortions in the economy.”
Muhammadu Buhari.
Nigeria - Treasury Bills, Bonds: CBN to Limit Banks’ Investment
Image Profile
by FricNews
May 22, 2019 - 7:05
The Central Bank of Nigeria (CBN) is to limit Deposit Money Banks (DMBs) access to government securities to redirect their lending focus to the private sector.

CBN Governor, Mr. Godwin Emefiele, said yesterday in Abuja that the intention was to stimulate growth in the economy.

The CBN unfolded its new policy direction on banks’ access to investing in treasury bills and bonds just as the apex bank further resolved to hold all parameters of monetary policy constant by retaining the Monetary Policy Rate (MPR), otherwise known as interest rate, at 13.5 per cent.

The MPR is the rate at which the CBN lends to commercial banks and often determines the cost of borrowing in the economy.

It also retained the asymmetric corridor of +200/-500 basis points around the MPR; left both the Cash Reserve Ratio (CRR) at 22.5 per cent and Liquidity Ratio at 30 per cent.

Emefiele, who read the committee’s communiqué at the end of the two-day Monetary Policy Committee (MPC) meeting in Abuja, said in arriving at the decision to hold all rates at current levels, nine members out of 11, voted to hold all parameters of monetary policy constant. Two members voted, however, to reduce the MPR by 25 basis points.

He said: “As in the past, the committee considered the options of whether to be more accommodative, tighten or hold its position. The committee felt that although the slight inflation uptick should result in tightening, it felt that doing this will limit the ability of DMBs to increase credit at this time, given the need to support or redirect the focus of DMBs to new credit in support of consumer, mortgage and other priority sectors of the economy, including, SMEs, agriculture and manufacturing.

“It also felt that given the fragile state of the economy, increasing the cost of credit would further diminish investment flow and impact negatively on output growth.

“As regards loosening, some members felt that it was desirable to aggressively stimulate growth, restart the capital market activities and increase lending at lower rates; which would ultimately stimulate domestic aggregate demand.

“Those against loosening felt that given that there was a marginal increase in headline inflation for April 2019, there is need to restrain from loosening in order not to exacerbate inflationary pressures.

“They also felt the economy would experience liquidity surfeit and without corresponding increase in real sector output, inflationary pressures could be elevated; resulting in likely exchange rate pressures.

“As for members who favoured a hold position, maintaining monetary policy rate at its present level was essential for better understanding of the momentum of growth before determining any possible modifications.

“They also felt that retaining the current policy stance provides an avenue for evaluating the impact of the Bank’s intervention policies to support lending to the priority sectors of the economy.”

The CBN urged government to ensure increase in tax revenue to enable it to fund its budget adequately.

Emefiele said the MPC particularly expressed concern at the development whereby banks abandoned their key roles of stimulating growth by investing in government instruments at the detriment of the economy.

He also highlighted some measures to address the situation.

He said: “The truth is that yes, according to our own regulations, there is a particular minimum percentage of treasury bills or government securities that the banks must invest in, in order to remain liquid. But again, we have observed and unfortunately and increasingly so, that the banks, rather than even focusing on granting credit to the private sector, they tend to direct their focus mainly on buying government securities.

“The MPC has frowned on that and has directed the management of the CBN to put in place policies or regulations that would restrict the banks from unlimited access to government securities.

“It is important and expedient that the committee gives this directive to management because this country badly needs growth. For us to achieve growth, those whose primary responsibility that it is to provide credit, who act as intermediaries in providing credit and are called catalysts to credit and growth in the economy must be seen to perform that responsibility.”

According to him, it is unfortunate that rather than perform their responsibility to the private sector that is the engine of growth in the economy, banks are directing liquidity to other sectors of the economy.

The CBN governor said the apex bank would implement the directive of the MPC.

On the issues that have discouraged banks from lending to the real sector as well as the Non-Performing Loans (NPLs) in the industry, Emefiele said measures would be taken to mitigate losses.

Providing update on the level of bad debts in the industry, the CBN boss said: “If you recall, the prudential is that banks should have maximum of five percent in NPLs. I must say at this time it is about 19 per cent on the average which is a significant improvement from where it was a year or two ago.

“About a year or two ago, it was close to 15 to 17 per cent and moderating to 10 per cent I would say is a substantial and significant and encouraging improvement in the level of NPLs.

“And I do think that with the steps that would be taken by the CBN to support the bank through administrative, legal and regulatory framework, that certainly we would see to it that NPLs are brought down so that deposit money banks can be encouraged to go back and begin to lend more aggressively to those sectors that they consider to be risky.”

Commenting on the MPC decision, an analyst at Ecobank Nigeria Limited, Mr. Kunle Ezun, backed the decision of the MPC.

He, however, called for a reduction of the MPR at the next meeting to support real sector growth.

Speaking in a telephone interview, Ezun said: “For me, I think what the MPC did was the best thing by keeping the rate for 13.5 per cent points for the policy rate and keeping the asymmetric corridor at +200/-500 basis points.

“If you cut the rates in an environment where you have exchange rate as a monster, it becomes a big issue because the idea is that the rate becomes so low that people could get naira at a cheap rate to purchase forex. So keeping the rate at 13.5 per cent is the best in the interim.”

On his part, the CEO of Stanbic IBTC Nominees Limited, Mr. Akeem Oyewale, said: “From the information the MPC provided, it means that right now there is still need to observe the impact of the transmission mechanism of the recent cut in MPR earlier this year.

“They still want to observe the market. There are usually lags in cutting rates and the intended impacts in the economy. You could recall that the MPC just cut the MPR this year.

“The MPC is privileged to have access to a lot of information and in reaching the decision that it took, I believe that it must have been the optimal decision in the views of the MPC.

“The market likes stability, so if there is stability in the MPR, then investors can at least plan as against having massive swings in rates.”
Nigeria - Nigeria loses $29.3b yearly to erratic power supply
Image Profile
by FricNews
Apr 29, 2019 - 6:04
The Electricity Generation Companies (GenCos) at the weekend said the country loses $29.3billion yearly to low   supply resulting from load shedding and inadequate facilities.

The Executive Secretary, Association of Power Generation Companies (APGC), Joy Ogaji, in an emailed response to questions,  urged the Transmission Company of Nigeria (TCN) to upgrade its network to absorb the 8,000megawatts (Mw) capacity of the GenCos.

She said: “In urban areas where electricity access has been provided, the availability of electricity supply is drastically low, due either to load shedding or inadequate power supply facilities.  It is estimated that the Nigerian economy is losing $29.3 billion annually, due to the lack of adequate power.”

Ogaji, a lawyer, also sought a strict regulation of the transmission and distribution chains of the Nigeria Electricity Supply Industry (NESI) to compel the distribution companies (DisCos) to remit the revenue they collect from their customers to the market operator.

She said: “If power output must improve, the transmission and distribution arms of the power chain must be strictly regulated. The transmission grid must be upgraded to ensure 8000Mw available capacity from GenCos is put on the grid.

“The DisCos must be strictly monitored to ensure revenue collected for electricity supplied is remitted. This is the link to infrastructure development and future investment along the power chain.”

Justifying Federal Government’s continued funding of the GenCos despite the privatisation, she said the government intervention is “because investment on generation is at the instance of the off-taker (NBET- FGN). Also because they have kept to the terms of their contract with government’’.

“GenCos, despite the stern challenges they are faced with from inception till date, have in association with the Federal Government’s objective to enhance the efficiency of the nation’s power industry as well as make energy affordable and available to consumers, kept to the terms of the industry agreements they entered into with the Bureau of Public Enterprises (BPE), which defines the relationship between the privatised companies and the government (represented by BPE and Ministry of Finance incorporated (MOFI) with a five-year period to recover lost capacities. Records from BPE shows that as at the takeover date in November 2013, available generation capacity was 4,500Mw.

“Also installed generation capacity stands at 13,496Mw as against 12,500Mw at take over. GenCos engaged on a massive capacity recovery plan with their acquired asset and achieved in no time lost capacities increasing available capacity to 7,913Mw.”

She said NESI has huge potential, but yet to demonstrate sustainable returns to investors across the electricity supply value chain.

Ogaji said cash flow within the industry is the fundamental problem preventing Nigerians from enjoying continued and sustainable improvement in electricity supply and the gains of the power sector reforms or privatisation.

She said: “The reason for this liquidity squeeze we feel in the sector is that the sector is working against the established principles of electricity supply value chain.

“The first principle being that while energy flows from the left to the right (via the fuel (gas or water) supplier to the fuel transporter (NGPTC), to the power generator (GenCos), to the power transmitter (TCN), to the power distributor (DisCos) and then to our homes or industry/commercial enterprises. The payment/money for the energy is expected to move from right to the left.

“That is, from consumers to the DisCos – statutorily empowered to collect and account for customer payments, on behalf of the value chain.

“This, unfortunately, is not happening as the GenCos are having a current market invoice shortfall of over 75 per cent. The question is: ‘which business can survive on a 25 per cent monthly invoice payment. Are Nigerians not willing or able to pay for the power generated?’ ”

Ogaji said GenCos increased available generation capability was not translated to corresponding increase in power supply to consumers, so consumers believe that the system has failed.

According to her, the  privatisation of the sector had exposed the  its structural weakness.

She said: “As investors, GenCos are worst hit in this electricity market logjam. They generate power and the power is consumed and not paid for. The Transition Electricity Market (TEM) regulation betrayed GenCos. Ineffective contracts as against the TEM promise; imposed quasi-PPA; constrained down and out – unrecognised demand capacity; wrongly defined available capacity.

“The above facts culminate to the understanding that whatever is on paper as an outstanding to any GenCo is less than the actual. GenCos are all casualties – a collateral damage to the economy.

“Natural justice, apart from PPA (power purchase agreement) clauses, requires that the GenCo be paid full for the declared available capacity and energy in the absence of the SO’s instruction to ramp down. Obvious commercial justification is that the GenCo has mobilised and paid for every input variable – fuel, labour and all other overhead costs – needed to produce energy as declared.

“More than four years after the establishment of NBET, what is evident to both international and local investors in the power sector is that NBET is deficient in the required capitalisation to meet its obligations.

“It also lacks the ability to provide adequate and sustainable payment securities backed by the Federal Government under PPAs. In the light of these glaring deficiencies, international organisations like the World Bank and the African Development Bank have had to create credit enhancement/payment support instruments in the form of partial risk guarantees to protect the companies.”
World - Lagarde: Global Economy Has Lost Momentum Since January
Image Profile
by FricNews
Apr 03, 2019 - 10:04
Global growth has lost momentum since the start of the year, leaving the world economy in a “precarious” position, the Managing Director of the International Monetary Fund (IMF), Christine Lagarde said yesterday.

The global economy has weakened since the IMF last updated its forecast in late January, though a recession isn’t likely in the near term, Bloomberg quoted Lagarde to have said in remarks prepared for a speech at the US Chamber of Commerce in Washington.

Lagarde, characterised the slowdown as a “synchronised deceleration” during a panel discussion after her speech.

In January, the fund lowered its projection for world economic growth, forecasting expansion of 3.5 per cent this year and 3.6 percent in 2020. It was the IMF’s second cut in the outlook in three months.

The fund would release its new World Economic Outlook with an updated growth forecast on April 9.

“The global economy is at a ‘delicate moment,’” Lagarde said in her speech.

Her warning comes as global finance ministers and central bankers prepare to convene in Washington next week for the semi-annual meetings of the IMF and World Bank.

While confidence has been boosted by the Federal Reserve’s switch to a more patient stance and signs of a trade deal between the US and China, investors remain concerned the global expansion may be running out of steam a decade after the financial crisis.

Lagarde said the global economy was set to benefit from the patience of major central banks, as well as increased stimulus by the Chinese government.

The IMF predicts global growth would pick up “some” in the second half of 2019 and into 2020, she said.

Still, that rebound remains vulnerable to a host of risks, including Britain’s exit from the European Union, high debt in some sectors and countries, trade tensions and “a sense of unease in financial markets,” Lagarde said.

Given the state of the global economy, it’s important for policy makers to avoid missteps, she said. Monetary policy should remain accommodative where inflation is below target, while exchange-rate flexibility should be used as needed, according to Lagarde. Regulatory reforms aimed at strengthening the financial sector should continue, she added.

High public debt and low interest rates have left “limited room to act when the next downturn comes, which inevitably it will,” she said.

“I am not saying that we currently have a ‘monopoly problem.’ But I am saying that we should take appropriate measures — so that it does not become a problem,” she said.

Lagarde reiterated her warning for countries to avoid imposing new tariffs on each other. An increase in tariff by 25 per centage points on all goods traded between the US and China would reduce annual output in the U.S. by up to 0.6 per cent, and up to 1.5 per cent in China, she said.

“These are potentially self-inflicted wounds that should be avoided,” Lagarde said.
World - Debt crisis warning as poorest countries' repayment bills soar
Image Profile
by FricNews
Apr 03, 2019 - 9:04
Campaigners say repayments have doubled since 2010, leading to public spending cuts.

Debt repayments by the world’s poorest countries have doubled since 2010 to reach their highest level since just before the internationally organised write-off in 2005, campaigners have warned.

The Jubilee Debt Campaign (JDC) said a borrowing spree when global interest rates were low had left many developing nations facing repayments bills that were forcing them into public spending cuts.

Plunging commodity prices, a stronger dollar and rising US interest rates had combined to increase debt repayments by 85% between 2010 and 2018, the JDC said.

The bid to reduce the unaffordable debts of the world’s poorest countries was prompted by grassroots activism in the late 1990s and early 2000s, first with the Jubilee 2000 campaign and then with Make Poverty History.

But the financial position of many developing nations has again deteriorated in recent years.

Repayments account for more than 12% of government revenue on average, the highest level since 2004, the year before the G8 summit held at Gleneagles agreed a comprehensive package of financial assistance involving aid and debt relief.

The International Monetary Fund has become increasingly concerned at the financial vulnerability of poor countries and will discuss the issue at its spring meeting in Washington DC next week. Two-fifths of low-income countries are assessed by the IMF to be at “elevated risk of debt distress”, a doubling since 2013.

Tim Jones, the JDC’s head of policy, said: “The growing debt crisis needs urgent international attention. A vital first step is to require that all loans to governments are publicly disclosed, allowing parliaments, media and civil society to hold governments to account for new borrowing.

“In addition, when crises arise, the IMF should stop bailing out reckless lenders, and require debts to be reduced instead, so that the costs of crises are shared between borrower and lender. All too often, the lenders who helped to cause the crisis are bailed out, while all the costs of irresponsible lending are borne by people in the borrowing country.

“There is now evidence of falling public spending in countries hit by high debt payments, further undermining progress towards the sustainable development goals.”

External loans to developing country governments more than doubled from $191bn (£14.5bn) in 2008 to $424bn in 2017, the latest year for which figures are available.

Calculations by the JDC found that in the 15 countries with the highest debt payments, public spending per person fell in 10 of them between 2016 and 2018.

In oil-rich Angola, which was hit by the collapse in the cost of crude in the mid-2000s, debt payments were 57% of government revenue in 2018, while public spending was cut by 19% between 2016 and 2018. Cameroon has cut spending by 20% and Egypt by 23% after their repayments rose to 30% and 20% of government revenue respectively. All three countries are on IMF programmes.

Across the 15 countries with the highest repayments, public spending fell by an average of 4%.

In contrast, of the 15 countries with the lowest debt payments, public spending per person fell in just two between 2016 and 2018. On average across these 15, public spending increased by 11%.
 In Angola debt payments made up 57% of government revenue in 2018, with public spending cut by 19% between 2016 and 2018. Photograph: Sean Smith/The Guardian
Nigeria - Promoting exports for favourable trade balance
Image Profile
by FricNews
Mar 27, 2019 - 8:03
FOR once, the Nigerian economy has received a boon. From a deficit in the third quarter of 2018, its balance of payment recorded a surplus in Q4 2018, the Central Bank of Nigeria stated in its just-released Q4 report. In real numbers, Nigeria’s BOP was in a huge black hole at $4.54 billion in Q3 2018. Undeniably, it wiped off its losses in Q4, inching up moderately to a surplus of $2.8 million, which the Godwin Emefiele-led bank considers “a significant improvement.” This is promising, but the challenge is how a mono-product economy like this will sustain the gains.

Typically, balance of trade, which is defined as the monetary transactions between a country and the rest of the world, could indicate economic success when it is in surplus. Although the Q4 result is a marginal achievement, it tells only half of the story. Intrinsically, it was driven by crude oil and gas exports. In 2017, for instance, the country recorded a trade surplus of N4.03 trillion. That year, the National Bureau of Statistics noted that this was because oil exports, at over 93 per cent, outweighed imports. “Nigeria’s manufacturing capacity is limited,” the NBS said, “so it imports most of what it consumes.”

Obviously, without oil and gas, Nigeria’s BOP would be in the red. In 2016, when oil sold for an average of $40.68 per barrel, Nigeria logged a BOP deficit of N290 billion. With oil selling higher in 2017 at an average of $52.51pb and $69.52pb in 2018, the country witnessed better trade balances. This is the crux of the matter: the economy would likely collapse in record time if oil and gas (income) were to be taken out. Consequently, with oil selling for about $27pb early in 2016, the economy slipped into what would become a 15-month recession that August.

Repeatedly, government has stated that it would end the dependence on oil, but such avowal has not significantly changed anything. In 2017, the data showed that cocoa beans exports to the Netherlands, Malaysia and Indonesia, contributed fractionally with 0.37 per cent of exports. This crop was a major foreign exchange earner in the three decades to the 1970s, but because of the ruinous fixation on oil, Ivory Coast and Indonesia have taken over the prime spots off Nigeria. Consequently, Ivory Coast netted $3.79 billion from cocoa beans exports in 2017, $1.04 billion from cocoa paste and $634 million from cocoa butter, according to the US-based Observatory of Economic Complexity.

It is a similar debacle in palm oil, rice, wheat, machinery, raw materials for the real sector and information technology. A March 2019 report by the CBN stated that Nigeria – once the global leader in palm oil exports – spent about $500 million to import the product in 2017. Although domestic rice production has climbed up because of the Anchor Borrowers Programme, Nigeria still imports rice to augment the shortfall. There is a hefty bill on this, but the haemorrhage goes on. In cassava, its share of 20 per cent is the highest globally, but it is a net importer of ethanol.

Nigeria’s agriculture and agribusinesses are underperforming. According to the World Bank, many developing countries such as Brazil, Indonesia, and Thailand now export more food products than all of sub-Saharan Africa combined. Also, because domestic production has collapsed, Nigeria spends $4 billion on textile imports annually. It is a net importer of refined petroleum products, though it is Africa’s largest producer of crude oil. The NBS said petrol imports alone cost Nigeria N2.3 trillion in 2018. With its four moribund domestic refineries, this is senseless.

Worse, the prices of locally produced goods are not competitive in the international market because the country lacks good roads, railways and electricity.

For years, the Apapa ports, which host 70 per cent of Nigeria’s maritime trade, have been locked down because of decrepit roads, crude technology and administrative incompetence, evident in a slew of vetting agencies. With lending rates between 15 and 40 per cent, locally manufactured goods are at a massive disadvantage against imported cheaper products.

For Nigeria, therefore, there are overwhelming impediments. Unravelling them demands a strong political will to retune development programmes and a genuine understanding of economics: the only way to attain qualitative BOP is to export more than it imports. Essentially, exports success should not be driven by oil but by other products.

This is why, for decades, China concentrated and built up its export market. Today, it is the largest exporter in the world, making $2.3 trillion in 2017, the World Bank noted. To go with it, it had a BOP of $421 billion in the same year, the global BOP leader. Likewise, Germany, which had the second highest BOP in the world in 2017 at $281 billion, was the third highest exporter-nation, as it recorded $1.05 trillion in exports. Russia and South Korea – the four leading economies per BOP – can flex their economic muscles globally.

To improve on the modest surplus, Nigeria has to return to the basics and ensure that reforms are implemented in a disciplined manner. Our focus should be on export of products that are in high demand worldwide.  A coherent and integrated approach that addresses challenges related to productive education, rural infrastructure, land access and tenure, access to financial services and access to markets should be adopted in putting agriculture at the centre-stage of our export drive. The most difficult ingredient in all of this is how to accumulate collective productive knowledge to develop our productive capacity in agriculture. President Muhammadu Buhari should assemble a crack economic management team for his second term.

First, the power sector privatisation has to be reviewed to deliver efficient electricity to the real sector. Without that, both agricultural and manufacturing exports will be imperilled by the high cost of goods. Government should plug leakages in public finance, including the loss-making refineries, and redirect funds to road and railway infrastructure. In this, the seaports have a major role: the associated infrastructure should be reconstructed immediately, the public agencies there streamlined to aid a quick turnaround and technology upgraded to reduce the choking delays.
Ghana - Cedi depreciation causes fuel price hike for second time in March
Image Profile
by FricNews
Mar 25, 2019 - 8:03
Some major Oil Marketing Companies (OMCs) have slightly adjusted upward prices of petrol and diesel.

Checks at various fuel stations showed that Shell and Total have increased the prices of petrol and diesel by six pesewas.

The two companies are selling a litre of petrol and diesel for GHS5.24 representing a 1.16 percent increase from the previous price of GHS5.18.

This is the second increase in the prices of fuel in the month of March.

The Institute of Energy Security (IES) which predicted the increase has attributed the hikes to the recent depreciation of the cedi.

“Even though we have seen the currency pick up some strength against the dollar this came a little too late and way into the pricing window after BDCs and oil marketing companies have transacted their bills in the movement of products,” Mikdad Mohammed a Research Analyst at the IES told Citi Business News in an interview.

The first increment, which occurred after the first pricing window in the first week of March was also attributed to the depreciation of the cedi and the increase in the cost of Brent Crude on the  World market.

“We have been monitoring the market since the first pricing window in March which we projected that prices were picking up based on the cedi fundamentals of the market as we know them to be. We looked at Brent crude price, finished product price, the cedi depreciation against the dollar and we looked at the stock level,” said Mikdad.

However a major state oil company, GOIL is yet to adjust its price.

OMCs like Allied and Glory Oil are also yet to increase their prices.
Nigeria - NNPC lauds progress rate of oil, gas exploration in north
Image Profile
by FricNews
Mar 20, 2019 - 8:03
The Nigerian National Petroleum Corporation (NNPC) yesterday lauded the progress rate of oil and gas exploration activities in the north.

The Group Managing Director, Dr. Maikanti Baru, said the Kolmani River-II Well, whose spud-in was inaugurated in January by President Muhammadu Buhari, was “progressing satisfactorily with drilling so far at 6,700 feet.”He spoke when the Petroleum Technology Association of Nigeria (PETAN) recognised him for his achievements in office in Abuja.

Baru said prospecting for oil and gas in the well was one of the recent steps into inland exploration in parts of the federation.He hinted that the target was 14,200 feet, though the depth could be longer depending on findings.He told his victors that the president should be commended for the success story.The GMD hinted that the corporation was considering extending the ongoing Ajaokuta-Kaduna -Kano (AKK) gas pipeline system across the Sahara to Algeria in North Africa.
Liberia - ECOWAS Bank Approves US$50M for Liberia
Image Profile
by FricNews
Mar 11, 2019 - 7:03
-For Sasstown-Klowein Road

The 61st meeting of the Board of Directors of the ECOWAS Bank for Investment and Development (EBID), held on Tuesday, 5th March 2019 at its headquarters, in Lomé, Togo, approved partial financing in the amount of US$50 million for the Sasstown-Klowein Road construction project, in southeastern Liberia. According to the EBID, the public sector road construction project, among other crucial components, comprises civil works for fifty kilometers (50km) approximately.

Fielding questions from journalists after the meeting, the President of EBID, Mr. Bashir Mamman Ifo, said that in addition to the approval for the financing of the project, the 61st Board Directors meeting, which was the first in 2019, approved the 2018 Activity report and 2018 Accounts which were both recommended for the approval of the Board of Governors.

With regard to resource mobilization, Mr. Ifo pointed out that it was a continuous process through which the Bank raises funds from financial markets within the region; from Europe and from Asia, to finance projects.  He further said that with regard to the region, the Bank intended to raise twenty-five billion francs (FCFA 25 billion) from the UEMOA capital market this quarter.  He further said that the Bank was authorized to issue a Eurobond in the international capital market.  Finally, he reminded journalists that EBID also raises funds on a bilateral basis from Asia especially from EXIM Bank India while discussions are ongoing with China Development Bank.

About EBID

The ECOWAS Bank for Investment and Development (EBID) is the financial arm of the Economic Community of West African States (ECOWAS), comprising fifteen (15) Member States namely, Benin, Burkina Faso, Cape Verde, Côte d’Ivoire, The Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Senegal, Sierra Leone and Togo.

The mission of EBID is to assist in creating favorable conditions for the emergence of an economically strong, industrialized and prosperous West Africa that is fully integrated into the global economic system with a view to taking advantage of the opportunities and prospects offered by globalization.

The Bank operates primarily in the following areas: infrastructure, transport, energy telecommunications; agriculture and rural development, social sector; industry, services (financial services, financial engineering, hotels/tourism, etc.). EBID intervenes through long, medium and short-term loans, equity participation, granting of lines credit and putting in place framework agreements for refinancing, financial engineering operations and services.

To date, EBID has approved funding for 278 projects corresponding to 1.080 billion Units of Account (UA), equivalent to about US$2.5 billion.  The authorized capital of the Bank is UA1 billion, equivalent to US$1.039 billion.
Zambia - Economy fairly stable, promising but precarious and hurting main street – Analysis
Image Profile
by FricNews
Mar 04, 2019 - 8:03
Story Highlights

Economic performance in 2018 remained generally resilient, supported by relative macroeconomic stability as well as less volatile commodity prices particularly for copper. This notwithstanding, several downside risks included: continued global trade tension; and, rise in global oil price, negative market sentiment related to fiscal challenges; upward adjusted debt; sluggish credit growth; depreciation of the Kwacha impacted on the overall performance of the economy ( Minister of Finance, Margret Mwanakatwe, December,2018)
 Companies in Zambia experienced a further deterioration in business conditions in December, ending a challenging second half of 2018. Output fell at a sharp and accelerated pace in December, with slow business and a lack of money in the economy highlighted again by panelists ( Stanbic Bank Purchasing Managers Index Survey, 2019)
Credit to the private sector remained constrained and contracted in the fourth quarter of 2018, underpinned by elevated lending rates and persistently higher than programmed fiscal deficits. To support sustainable macroeconomic stability and achieve higher growth, prompt and effective implementation of fiscal adjustment measures remains critical ( Bank of Zambia Governor Dr. Kalyalya, Feb 2019)
The current fiscal position of the nation does not allow for a massive experiment in the risky aviation industry at the expense of taxpayers. Zambia is grappling with rapidly increasing debt, now about US$16 billion, and is currently implementing austerity measures (Centre for Trade Policy and Development (CTPD )researcher Bright Chizonde, January 2019)
Corruption really has serious negative implications on the economy of the country, especially in Zambia where most of the major projects are being done by donors like the USA, in terms of the rehabilitation of our sewer system, water reticulation system, also the help that we are receiving in the health sector. It sends a very bad picture as to what is happening in the country. People cannot stop talking about corruption. But because there are accusations of corruption, people are talking about corruption and other problems in the economy. That is sending a negative picture to the capital market and our bonds are performing very badly because of this. ( Dr. Lubinda Habazooka, Economics Association of Zambia President)


There have been a lot of comments about the performance of the Zambian economy in 2018 leading into 2019 by various commentators and experts but no full unbiased picture has yet been given. The majority of comments and analysis have been couched in technical language as usual, whereby ordinary Zambians, cannot exactly figure out what is happening apart from feeling the effects. This article presents facts supported by numbers from the government, World bank/IMF, Africa Development bank and Bank of Zambia. The analysis and interpretation of the same is done in a relatively layman’s language.

This writer tries as much as possible to give an objective, independent but critical picture of the Zambian economy while wearing patriotic lens. It is in this respect that it is not true to say the Zambian economy is in a crisis like it was in 2015 as postulated by certain quarters. On the other hand, it is also incorrect to say the economy is doing very well and government should be contented.

The analysis looks at the following main ten economic indicators: interest rates, inflation, exchange rates, unemployment, Debt/ GDP %, and fiscal deficit % of GDP, international reserves, external debt%, domestic debt% and GDP. The article goes on to explain the effects of these technical indicators are having on ordinary people. The objective is to educate the public, politicians and also help government to act and accelerate the implementation of reforms.

The bright spots in the Zambian economy

The major bright spots in the Zambian economy lie in the monetary policy environment where both the monetary policy rate and the Statutory Reserve Ratio has been maintained at 9.75% and 5% respectively for a period of 12 months. In a normal economy, these metrics were supposed to bring down interest rates to between 12% -15% but because the government is borrowing from the market at 21.5% and continuing, it is a pipe dream to expect commercial bank rates to come down any time soon.

Although the inflation rate has been trending upwards for quiet sometime, one needs to consider that it was about 22% a few years ago. At the latest rate of 7.8% at the end of February, 2019, it is both below the double digit inflation threshold and the Central bank target of the 8%. The recent reduction in pump price of petrol is also a positive for the economy.

The expected maize output for 2018/19 season is 2.6 million tonnes compared to 2.4 million the previous year. This means that Zambians will not have to import the staple food. On the other hand, the price of copper has been relatively stable, hovering around $6,000 per tonne, and had it not been for the USA and China trade war, it may have even reached beyond $7,000 per tonne. The latest copper price as at 28 February, 2019 was $6,500 per tonne.

There is no doubt that the Government’s announcement of revision of mining taxes, which have been very popular among Zambians, is a step in the right direction. Zambia needs to benefit more from its natural resources. The firm stand of government, and the public outcry about the Mining houses’ corporate greed, forced mining houses to backtrack on the threat of job losses. The stand by government and Zambians is commendable.

The other bright spot in the economy is the stable electricity supply. Zambia’s power generation capacity has increased above the 1901 MW which is about what the nation needs at its peak. The Finance Minister reported a 12.6 % in the 12 months period ended 2018 in power generation. This augurs well for the productive sector of the economy. There is virtually no load shedding in Zambia apart from a few inexplicable disruptions for domestic users from time to time. The dark days of load shedding are long gone. This is certainly a positive given the trauma that load shedding caused in 2015 and 2016.

The Zambian economy has been growing, albeit in a subdued manner. The economy is expected to grow at about 4% in 2018. According to the African Development Bank, the medium-term outlook remains positive, with growth projected at 4.2% in 2019 and 4.3% in 2020. Although the fact that the economy is growing and not in recession is a positive; it is way too low to have any positive impact on the lives of ordinary Zambians. It is also way below the growth rates of countries like Ghana, Ethiopia and Rwanda which are growing between 7% to 10%.

The last positive aspect about the Zambian economy is the issue of the competence of the two key managers of the economy- the Central Bank Governor and the Minister of Finance. The writer is an admirer of Governor Dr. Denny Kalyalya’s management of the Central since he took over.

The current evidence also suggests that Mrs Margret Mwanakatwe, despite being a Chartered Accountant like the writer, and not an economist, has so far proved to be a promising finance minister. This is especially regarding her attitude of being transparent by regularly communicating to the market, information about the economy. She has helped in building some level of confidence among market players. However, the jury is still out on her. In the event that she manages to seal the elusive deal with the IMF, it will certainly bode very well for her competence. The two economic managers have demonstrated that when the right Zambians are appointed with the three crucial ingredients to success in such jobs – Education, Experience and Exposure – and with minimum political interference, they can deliver.

The dark spots of the Zambian economy

The poisoned well of the Zambian economy, from which we are all drinking, is the massive public debt. According to the African Development Bank, in 2018, Zambia’s domestic debt was estimated at 20% of GDP while the external debt, including government guarantees, fell to an estimated 39.2% of GDP which makes the total ratio to be 59.2%. The high public and publicly guaranteed debt led to Zambia being classified as being at high risk of debt distress in 2017 by a joint IMF-World Bank’s Debt Sustainability Analysis (DSA) study and led to the subsequent suspension of the IMF talks on the bailout programme.

The total debt servicing costs are estimated at about 35% as of total revenue. The external debt alone is estimated at US$ 9.51 billion from US$ 8.7 billion at end December 2017 an increase of 9%.Domestic debt which is mainly government securities as at 30 September,2018 was $4.62billion (K54.6 billion). Domestic arrears (amounts owed to suppliers of government) were $1.25 billion (K14.7 billion) whereas Government guarantees were $1.2 Billion.

It follows from the above numbers that the total government debt without guarantees is $15.38 billion if domestic debt and arrears are converted at K11.8. When Government guarantee is added, the total government borrowing amounts to $16.38 billion. This is way too high and is causing havoc in the economy.

Government’s high domestic borrowing at high interest rates continues to crowd-out private sector lending and encourage banks to charge high lending rates to households and the private sector. Government is borrowing at 21.5% for treasury bills and 19.9% for government bonds. It is no surprise that commercial bank lending continued to be very high at 23.6 per cent in December 2018. The banks’ lending to the private sector has continued to decline meaning that economic activities ( growth) will continue to be subdued and employment creation will continue to be a pipe dream.

The government’s fiscal deficit for 2018 is estimated at 7.45% of GDP which is above the 6.1 % budgeted in 2018. The target was missed mainly due to high capital expenditure, rising debt, growing government suppliers debts and a large wage bill. According to the African development bank, “Another downside risk to the economic outlook arises from the slow pace of fiscal consolidation”.

In regard to foreign exchange, foreign reserves have dropped to $1.57 Billion from $1.8 billion, which is 1.8 months import cover. On the other hand, the Kwacha depreciated by 25.2% in 2018 from an average of K 9.49 per dollar in 2017 to an average of K 11.8.

One of the most important economic metrics that is ignored or not talked about much is the unemployment rate especially among the Youth. The survey carried out by Ministry of Labour and social services indicated that Zambia’s employment rate is 41.2%. This could be even being higher. The issue of jobs in Zambia, it appears, is not a taken seriously by the Government and Opposition parties

The net impact of all the above negative effects is reflected in the low economic activity in Zambia. The very low economic activity in Zambia in 2018 was confirmed by Stanbic Bank Purchasing Managers’ Index (PMI).

“Output fell at a sharp and accelerated pace in December, with slow business and a lack of money in the economy highlighted again by panelists. The acceleration in the rate of decline in activity was recorded in spite of a slower reduction in new business. Operating conditions have now decreased in five successive months,” the Survey reported.

The World Bank review of the economy of Zambia in 2018 also supports the above view of the subdued economic activity. “Economic activity has faced a drag from a deteriorated fiscal and debt situation. Large domestic public expenditure arrears increased non-performing loans to 13.4 per cent of outstanding loans in May 2018, from 9.7 per cent in 2016, leading to lower private sector lending,” World Bank’s 11th Edition of the Zambia Economic Brief said.

How ordinary Zambians are currently affected by economy

The question lay people may ask is what is the implication of all the above technical language and numbers? First and foremost, when looks at the positive and negative economic indicators in the Zambian economy, the net effect is that the negatives far outweigh the positives and thus the reason why the majority of Zambians are of the view that the economy is not working for them. The main street, who is made up of farmers, villagers, venders, workers, youth, women, small businesses cannot say there are better off than they were ten years ago.

It is crystal clear that the causes of Zambia’s economic stagnation and problems are the interrelated issues of excessive public debt both domestic and foreign, Kwacha’s depreciation, high commercial bank interest rates, low liquidity (shortage of cash in the economy), excessive and reckless government expenditure, low domestic revenue mobilization and the endemic corruption.

The combination of the above negative economic indicators have resulted in the lack of employment opportunities for Zambians especially the Youth, high cost of living, shortages of medicines and supplies in clinics and hospitals as grants are irregular, cancellation of meal allowances for University students, less money in Zambian pockets, less business for vendors, delay in payment of farmers, delay in paying of government contractors and suppliers, delay in payment of civil servants in some months, and above all escalating poverty levels especially in rural areas.

The bottom line is that with excessive debt servicing at about 35% and a wage bill of about 50% of revenue, the huge expenditure on some superfluous capital projects with no discernible economic value, less funds will be available for the promotion of social programmes in education, health, social welfare. This writer and other experts warned about the negative effects of excessive debt four to five years ago, but we were called all sorts of names including being called lunatics by one former finance minister who is very comfortable in retirement and not feeling our pain for the debt mountain mess he helped create when he presided on a borrowing binge, despite the fact that he had the experience of the devastating effects of excessive borrowing during the UNIP/ KK years.


In summary, although a number of economic problems have been enumerated, there are three main issues that are preventing Zambia’s economy from growing by as much as 10% and which if addressed can reboot the economy and restore market confidence. These are huge public debt, excessive government expenditure and endemic corruption. These are the issues that need to be prioritised, laser focused on, and the rest is likely to follow without doubt.

If Zambia was a company, as former corporate consultant, i would have recommended a restructuring and turnaround strategy. Zambian economy needs a serious restructuring because given that approximately 35% of revenue goes to debt servicing and about 50% goes to the wage bill, foreign reserves are at $1.57 billion or 1.8 months import cover, unemployment is at 41%, commercial bank rates at 23%, this is clearly a sign of an economy that is very precarious and at great risk. It is vulnerable to any foreign and domestic shock.

Government needs to accelerate the implementation of the austerity measures in place and even add new ones like reduction in the number of the vehicles given to officials, curtail allowances and per diems and generally implement the reduction in big government like the creation of new districts.
« 1 2 3 »