RECESSION: FG To Inject N350 Billion Into Economy Next Week
•To commence N60 billion social investment next month
•To raise $1 billion Eurobond before end of year
•Senate okays development, demands more actions
•FG, states owing us over N2 trillion—Contractors
•Labour, Capital Market operators differ
DISMAYED by the steady decline of Nigeria’s economy and its disturbing impact on Nigerians, the Federal Government yesterday said that plans have been concluded to inject N350 billion into the economy next week in order to stimulate economic activities. It also noted that the process of obtaining $1 billion Eurobond had commenced, noting that it would be concluded before this year ends. The government further stated that its pledged feeding programme, recruitment of 500.000 teachers and payment of N5000 to vulnerable citizens would commence this month.
These came as the Senate, Comrade Joe Ajero-led Nigeria Labour Congress,NLC, and Nigerian Insurers Association hailed the development but demanded more measures in order to ameliorate the hardship across the land. However, capital market operators said that FG’s decision would not have any noticeable impact on the economy, while contractors under the auspices of Federation of Construction Industry, FOCI, lame-nted that they were being owed over N2 trillion by the federal government. Nonetheless, the Minister of Finance, Mrs. Kemi Adeosun, who revealed the government’s plan yesterday in Abuja while briefing newsmen, said the funds would be paid to Ministries, Departments and Agencies, MDAs.
In addition, she said when the N350 billion would be released, it would mean that the federal government had disbursed N750 billion for capital projects this year having released N400 billion earlier. While stating that N60 billion had been set aside for social investment, Adeosun said the funds so far released went into on-going projects especially defence, transportation, interior, power and agricultural projects. The minister revealed that Integrated Personnel Payrolls Information System ,IPPIS, had eliminated about 40, 000 ghost workers, thereby saving N10 billion for the country monthly.
In that light, she noted that government’s wage bill had been reduced from N165 billion to about N155 billion monthly. Continuing, she added that a fresh forensic audit of the payrolls would be carried out, stating that about 30, 000 workers currently on the payroll are not on the nominal rolls of MDAs. Shedding light on the plan to raise $I billion Eurobond, Director-General of Debt Management Office ,DMO, Dr. Abraham Nwankwo , said: “On the Eurobond, we intend to raise the money before the year ends.
In terms of the progress made so far, more than five weeks ago we put an advert for Request For Proposals,RFPs, in local and international media, following due process to allow our transaction partners who are interested to compete . “The closing date for the RFPs is September 19, 2016. Immediately after that, we will fast track the process of vetting and selection. “We have a directive to make sure we use a minimum time to conclude all these activities. So we assure you that we are going to cut the time because of the emergency situation to be able to realise the money.
Before the middle of December, we will have the money. “However, based on the directive of the minister, by the time we reach a stage, it might be possible to conduct certain arrangement once we are sure of when we are going to raise the money. Certain arrangements could be made to find a way of getting the money, more or less, arranging it in advance. We are very focused on the fact that these monies are needed urgently to solve the problem and turn around the economy and we are working on that.”
We need more actions—Senate
However, the Chairman, Senate Committee on Media and Public Affairs, Senator Aliyu Sabi Abdullahi, told Vanguard thus” It is a pleasant information to hear in spite of the difficulties.
It is coming at the right time and it shows the government’s total commitment to addressing the difficulties Nigerians are going through. “Now that the federal government has taken this bold step, we expect all MDAs to hasten the due process, diligence as well as guarantee that all projects awarded will turn the economy and Nigeria around.
The action of the government will bring succour to the unemployed in the country. We want to see more actions for things to turn around. We have never doubted the President, we hope that this will turn things around.” A member of Senate Committee on Appropriations, Senator Matthew Urhoghide, said: ‘’The money is too small, we expect that it should be more than this.
We are in the ninth month and the federal government is telling us that it has saved N3 trillion from the TSA and if that is true, we need over N10 trillion to be pumped into the economy because the N350 billion is too small unless the government is saying that what they are telling us about the TSA are stories that could be categorized as fiction.” FG, states owing us over N2 trillion—Contractors On his part, National Chairman of the Nigerian Contractors As sociation ,NCA, Mr. Onuche Okoh, said: ‘’By our sta tistics, the federal govern ment alone is owing contrac tors about N1.97 trillion and if put together with the 36 states, the FCT, and the 774 local gov ernment areas, the total debt is N2.42 trillion. Most of us took loans to execute the jobs and failure to pay the banks at the right time, would make them go after us and the interest rate keeps accumulating.’’ Similarly, President of FOCI, Solomon Ogunmola said they were being owed about N600 billion.
It’s not enough—NLC
On his part, Comrade Joe Ajero said,’’I think injecting N350 billion into the economy for capital projects as announced by the federal government is a very nice development at least for a start even though it is not enough.” Similarly, General Secretary of NLC, Comrade Peter Ozo-Eson, said: ‘’It is important however that the release is tied to actual mobilisation to site so as to ensure the desired positive impact.’’ A Capital Market Operator, Mr. Mustapha Suberu, who is a Research analyt at Eczellon Capital Limited, a Lagos- based investment banking firm, said,”Part of the funds to be released will be used in paying contractors, so the money will invariably end up in banks. We know that the CBN has been quite aggressive in mopping up excess liquidity from the system. So, the possibility is that the central bank will entice banks through Treasury Bills with attractive rates in order mop the fund from the banking system.
Therefore, I don’t see it having much impact on the capital market.” Also, Managing Director of Highcap Securities, Mr. David Adonri, said that any time funds are released for capital projects, it impacts positively on the capital market because it will increase liquidity in the financial system. He, however, opined that there is the likelihood of the action increasing inflation. “It might not increase inflation because it is funds released for recurrent expenditure that increases inflation,” he added. Director of NIA, Mr. Sunday Thomas said: ‘’If the proposed fund is released, it will create expansion in the economy and assets will be acquired and such assets will be insured.’’ Managing Director of RiskGuard Africa, Mr. Yemi Soladoye said, “If part of the fund is deployed into Small and Medium Enterprises, SMEs, then it will have a huge impact on the insurance sector. ‘’