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Recession: We Need Adjustment To 2021 Proposed Budget — Atiku

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Recession: We Need Adjustment To 2021 Proposed Budget — Atiku
Atiku Abubakar

Former Vice President Atiku Abubakar on Sunday said that Nigeria must act now, by taking necessary, and painful actions including adjustment to the proposed 2021 budget, to exit another recession the country has entered.

Abubakar in a statement he issued in Abuja, said that although the COVID-19 pandemic had exacerbated an already bad situation, Nigeria could have avoided the second recession, within five years, by disciplined and prudent management of the economy.

“Be that as it may, it serves no one’s purposes to quarrel after the fact.

Read Also: Nigeria Lapse Into Recession For 3rd Time Under Buhari

“We must focus on solutions. Nigeria needs critical leadership to guide her back to the path of economic sustainability.

“We cannot afford hand wringing and navel-gazing. We must act now, by taking necessary, and perhaps painful actions.”

Abubakar said that for a start, the proposed 2021 budget presented to the National Assembly on Oct. 8, was no longer tenable, saying Nigeria neither had the resources nor the need to implement such a luxury budget.

Read Also: Nigeria Lapse Into Recession For 3rd Time Under Buhari

“The nation is broke, but not broken. However, if we continue to spend lavishly, even when we do not earn commensurately, we would go from being a broke nation to being a broken nation.

“As a matter of importance and urgency, every non-essential line item in the proposed 2021 budget must be expunged.

“For the avoidance of doubt, this ought to include estacodes, non-emergency travel, feeding, welfare packages, overseas training, new vehicle purchases, office upgrades, non-salary allowances, etc.

Read Also: Nigeria Lapse Into Recession For 3rd Time Under Buhari

“Until our economic prospects improve, Nigeria ought to exclusively focus on making budgetary proposals for essential items, which include reasonable wages and salaries, infrastructural projects, and social services (citizenry’s health, and other human development investments).”

Abubakar also stressed the need to stimulate the economy, by investing in human development and increasing the purchasing power of the most vulnerable of the population.

He said that only a well-developed populace could generate enough economic activity for the nation to exit the recession.

“We must invest in those most likely to be impacted by the effects of the recession, the poorest of the poor.

“As well as stimulating the economy, this also ensures that they do not slip further into extreme poverty.

“For example, a stimulus package, in the form of monthly cash transfers of ₦5,000 to be made to every bank account holder, verified by a Bank Verification Number, whose combined total deposit in the year 2019 was lower than the annual minimum wage.”

He proposed that it could be achieved through a luxury tax on goods and services that were exclusively accessible only to the super-wealthy.

“A tax on the ultra-wealthy to protect the extremely poor.

“A practical approach to this is to place a 15 percent tax, on all business and first-class tickets sold to and from Nigeria, on all luxury car imports and sales, on all private jets imports and service charges.

Read Also: Nigeria Lapse Into Recession For 3rd Time Under Buhari

“Fifteen percent tax on all jewelry imports and sales, on all designer products imported, produced or sold in Nigeria, and on all other luxury goods either manufactured or imported into Nigeria, with the exception of goods made for export.”

He said that the proceeds of the tax should be exclusively dedicated to a Poverty Eradication Fund, which must be managed in the same manner as the Tertiary Education Trust Fund, or the Ecological Fund.

“I further propose that a one percent poverty alleviation tax should be legislated by the National Assembly on the profits of every international oil company operating in Nigeria, and international airlines doing business in Nigeria, which should also go towards the proposed Poverty Eradication Fund.

“It is inhumane for us as a nation to increase the cost of goods and services that affect the poor, while keeping the cost of luxuries fairly stable.

“We must flip this, and flip it immediately.”

Abubakar also advised that Nigeria must stop borrowing for anything other than essential needs, saying borrowing to pay salaries or to engage in white elephants was not an essential need.

Read Also: Nigeria Lapse Into Recession For 3rd Time Under Buhari

He said that the action was particularly important as Nigeria needed cash at hand because the world and the country’s economic and development partners were also focused on helping their home economies overcome the effects of COVID-19.

“We must be our own saviors.

“The more we borrow, the more we will need cash to make interest and principal payments, and the less cash we will have to make necessary investments in our economy and our people.

“If we keep borrowing, we stand the risk of defaulting, and that will make the recession a child’s play because we will lose some of our sovereignty.”

He urged the Federal Government to open its mind to ideas, “without caring who the messenger is”.

Economy

Repeal 2019 Minimum Wage Bill, Start Again – Dele Sobowale

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Repeal 2019 Minimum Wage Bill, Start Again – Dele Sobowale

“Those who deal in ideas, if they are wise, will welcome attack. Only a peaceful passage should dismay them; for it proves that the ideas do not affect anyone very much.”

– Professor J K Galbraith, 1908-2006, Nobel Prize Winner.

The attacks will come. They are welcome. Most of it will be from Labour leaders, never-say-die “Socialists”, media fellow travellers and others emotionally wedded to the idea that Nigeria is still a rich country – where “money is not our problem, but how to spend it”. The fallacious notion of great wealth, because we are an oil-producing nation, was planted early after we joined the oil cartel. Few people are aware that the oil bonanza was over years ago. Henceforth, exporting crude oil will not save us. It will certainly not make it possible to maintain our over-bloated public service sector anymore. The new global economic reality calls for far less reliance on oil than most of us realise

 

TODAY IS THE BEGINNING OF A NEW ECONOMIC ORDER

“Ekiti State suspends minimum wage; slashes political office holders’ salaries.”

News Report, June 5, 2021.

“Umahi sacks over 1000 board members, aides.” News Report, May 30, 2021.

Two Governors have taken tentative steps to adjust to the new normal. Governor Fayemi of Ekiti slashed the take home pay of Special Assistants; he has also reduced the number of those appointed. Nobody needs to tell the poor fellows affected, whether sacked or retained at reduced pay, to adjust their life styles to the new reality. For many, it will constitute the biggest shock of their lives.

Governor Umahi of Ebonyi State went even further. Not one to dwell on half measures, he sent his entire board members and several aides packing.  It is not surprising that Ekiti and Ebonyi were among the first states to take drastic action. They rank 33 and 32 in the league of Nigerian States. Only three other states are poorer than those two. Rest assured several states will soon follow.

Nothing sobers a person up as quickly as a sack letter. Governor El-Rufai acted first, unwisely if you ask me, and is already fighting his own battle. For the hundreds of thousands likely to go under nationwide the trauma is the same.

The entire world you have built around yourself crumbles in one minute. Self-esteem evaporates; the future looks totally bleak. Evil thoughts creep in – suicide is always a strong possibility. The bigger they are, the harder they fall. The media publishes the news on the same or the next day. There is no hiding place. You can’t go to church, mosque or club without several people asking “What happened?” Only those who had experienced it can understand how the people involved really feel. Thank God, I never did.

READ ALSO: Labour Demands For N30,000 Minimum Wage For Workers In Kwara

DON’T BELIEVE THE GOVERNOR; EXPECT RETRENCHMENT.

“States bank on PPP projects as cash crunch bites harder.” News Report, May.

Virtually all the states, and the Federal Government, are now looking longingly in the direction of the private sector to bail them out of, frequently, self-imposed financial hardships. Private-Public-Partnership, PPP, which most of them avoided like COVID-19 before is now being explored as a way out of impending disasters everywhere. To be quite candid, it is already too late for those with only two years left in office.

Despite the obvious inevitability of down-sizing, some Governors are still deceiving their people that there will be no retrenchment. Anybody who believes that rubbish has not heard that “You cannot adopt politics as a profession and remain honest.”(L. M. Howe, 1871-1936). They won’t tell the workers they are going – until the sack letter arrives. Preparing for it is the beginning of wisdom.

WHY THE MINIMUM WAGE BILL IS DEAD

“You can’t bully reality.”

One of the reasons why Nigerian governments have failed us, and might continue to fail us, is the lack of understanding of the basic principles of economics by the leaders and the led. We operate a country in which the blind lead the blind. That is why the most popular campaign promises are massive job-creation and free services – starting with education. The listeners clap; the party members go round and ram those vague promises down our throats. We vote and wait in vain for the promises to be delivered.  The Minimum Wage Bill is a classic example of how the Nigerian people conspire with the politicians to deceive themselves and develop high expectations – which invariably are not, and cannot be, met. And, that is irrespective of which political party or which candidate wins the election. As usual, readers should follow me down memory lane. As far back as December 2015, Nigerians – governments and governed alike – were warned that we would end up here today. Read on.

READ ALSO: The High Cost Of Federal Procurement

MINIMUM WAGE AND THE INEVITABLE BANKRUPTCY OF STATE GOVERNMENTS.

“Who ever reads history with application will perceive that the same events are often repeated and that we need only change the names of the actors. Frederick the Great, 1712-1786, (VANGUARD BOOK OF QUOTATIONS, VBQ, p 92.)

Another economic war is about to start in Nigeria. The war will be about Minimum Wage, MW. The states want to renegotiate it, meaning reduce it. Labor also wants to renegotiate it, meaning increase it. Renegotiation seems to be the only point of agreement; it is also the battle ground. On the face of it, one would assume that this is only “a matter of cash”. But, it is more than that. The very existence of states and local governments is threatened by this conflict.

The first sounds of the 2016 war involving the governments and Labor have already been heard from most of the state governors – minus three dissenters, namely Governors Wike, Fayose and Oshiomhole. Wike, as everybody knows, faces another election and cannot be seen to be anti-labor. Self-interest is the motive here. Fayose, we know, loves to fish in troubled waters; while Oshiomhole is caught in the trap of his past as a Labour leader. The former Labour leader cannot be seen to be forsaking the people who brought him into prominence. At any rate he has only seven months to go; he can leave his successor with the problem when he goes. That is the worst form of political cynicism. Irrespective of how the three governors arrived at their current positions, they can be regarded as traitors to the cause of the other governments. They may eventually regret their dissent from the majority.

Let me declare, up front, that I strongly believe that the two sides are engaged in a war that would end up in mutual destruction — they will also destroy the states, economically, as we know them now. Most states are already tottering on the brink of bankruptcy with the current MW pegged at N18,000 per month.”

Need I say more?

 

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Economy

Nigeria Attain Public Debt Of N33.107 Trn – DMO

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Nigeria Attain Public Debt Of N33.107 Trn – DMO

The Debt Management Office (DMO) says Nigeria’s Public Debt Stock is N33.107 trillion (about 87.239 billion dollars), as of March 31, 2021.

A statement obtained from DMO’s website says that the total public Debt Stock comprised of the debt stock of the Federal Government of Nigeria (FGN), 36 State Governments, and the Federal Capital Territory (FCT), respectively.

The debt stock also includes Promissory Notes in the sum of N940.220 billion issued to settle the inherited arrears of the FGN to state governments, oil marketing companies, exporters, and local contractors.

READ ALSO: Why Nigeria’s Debt Profile Is Increasing -DMO

The report said that compared to the Total Public Debt Stock of N32.916 trillion as of December 31, 2020, a marginal increase of 0.58 percent was recorded in the Debt Stock.

Further analysis shows that the increase was in the Domestic Debt Stock which grew by 2.11 percent from N20.21 trillion in December 2020 to N20.637 trillion as of March 31, 2021.

According to the DMO, the FGN’s share of the domestic debt includes FGN bonds, Sukuk and Green Bonds used to finance infrastructure and other capital projects as well as the N940.220 billion Promissory Notes.

“External Debt Stock declined from USD33.348 billion as of December 31, 2020, to USD32.86 billion due to the redemption by Nigeria of the 500 million dollars Eurobond in January 2021.”

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Business

NLNG To Supply 1.1m Tonnes Of Gas Annually

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NLNG To Supply 1.1m Tonnes Of Gas Annually

The Nigeria Liquefied Natural Gas Limited (NLNG) says it has concluded the Execution of Sales and purchase agreements (SPAs) to supply 1.1 million tonnes per annum to boost domestic gas supply in the country.

The Managing Director of the company, Mr. Tony Attah, made this known at the announcement of the agreement on the sideline of the ongoing 4th Nigeria International Petroleum Summit ( NIPS) in Abuja on Tuesday.

“It is my pleasure, to welcome you and announce that our commitment, as a corporate entity, to unlocking gas utilization is now backed by the execution of Sales and Purchase Agreements (SPAs) to supply 1.1 million Tonnes Per Annum (MTPA) of LNG on DES basis to Asiko Power Limited, Bridport Energy Limited, and Gas-Plus Synergy Limited.

READ ALSO: Proposed NNPC partnership with Dangote Oil Refinery as masterstroke By Chidiebere

“The SPAs will facilitate the project execution and development of infrastructure led by off-takers to aid LNG delivery into the domestic market.

“The execution of these SPAs follows a Domestic LNG (DLNG) Workshop which was held in November 2019 to stress test the delivery model with industry stakeholders and a series of engagements to identify suitable actors to co-create the initiative and stimulate market interest for potential off-takers,” he said.

He commended the effort of the NLNG board in its demonstration of faith in the Decade of Gas vision and commitment to the actualization of that vision.

He congratulated the Department of Petroleum Resources (DPR), which would play a critical role in the implementation of the agreement.

With Nigeria’s enormous gas reserves, I am not in doubt that with the right drive from the government and the support of corporate organizations, we as a nation can stand with our head held high to be counted among major players.

“The government has demonstrated its readiness to take the gas sector to the next level by declaring this decade our nation’s Decade of Gas.

“We believe this will be the decade for us to leverage on our gas reserves to accelerate our power generation solutions through Gas-to-Power projects.

” It will be the decade when as a nation we stop reporting deaths from pollution through the use of wood and solid fuels as domestic energy sources. And it will be the decade for empowering local SMEs to take advantage of the various investment opportunities that the Decade of Gas will attract,” he said.

Attah noted that in addition to the Domestic LNG Scheme, the ongoing Train 7 project with the capacity to attract about 10billion dollars in foreign direct investment.

He noted that the company would expand the LPG value chain by increasing supply to the domestic market, guaranteeing LPG supply and enhancing its access, and enabling the development of a value network for a sustainable ecosystem.

in his remarks, the Chief Operating Officer, Gas in the Nigerian National Petroleum Corporation, said the decade of gas had come to stay and all should support it.

”Decade of gas will bring development, increase food, fertilizer, and will enhance the transportation,” he said.

He urged the off-takers to ensure the supply to the domestic market and not to export it.

In his remarks, the Managing Director of Asiko Energy, one of the off-takers, Mr. Felix Ekundayo, said that the company was proud to be part of the agreement.

He assured that it would do its best to ensure adequate supply of gas to domestic utilization, saying “we are the domestic solution for the LNG supply in the country”.

Mr. Ken Etete and Mr. Jamal Akinde, Managing Directors of Gas Plus and Bridport other off-takers, also pledged total commitment to the supply of the product.

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