09 Jan

Daily Watch – External reserves skirt $25bn mark, Negative 2016 delays Chinese loan deal

  • The nation’s external reserves closed 2016 at $25.84 billion, a decline of $3.22 billion compared with $29.06 billion as at December 31, 2015. The figure from the CBN indicates a 12.7 percent decline year on year (y/y), but increased by 4.2 per cent month-on-month, up from $24.69 billion on November 28 to $25.781 billion, due to a slight recovery in global oil prices. Despite demand pressure, the nation’s external reserves and the volume of money or other assets held by the apex bank recorded an increase of $642 million in one month, after weeks of consistent and gradual gains. These are in spite of a US$2.3 billion decline in average inflows of foreign exchange into the CBN every month over the last 26 months as revealed by Governor Godwin Emefiele. The regulator had disclosed in its data on foreign exchange utilisation for October 2016 that it granted access to about 7,792 requests for foreign exchange, valued at over $867 million through the inter-bank window to enable them to source vital raw materials and spare parts for their respective industries.
  • Multiple negative growth figures recorded in the economy in 2016 has been identified as one of the reasons the Chinese government withheld a $20 billion concession loan earlier promised Nigeria upon due verification, The Guardian reports. A top Presidency source privy to the development told the paper that the FG had been hopeful that the Chinese government would release the loan last year, given the relationship between the two countries, but expressed disappointment that the money was withheld. The action of China may well be an indication of the loss of confidence in Nigeria’s creditworthiness by the global financial community. Analysts have predicted that the current economic downturn would dent the country’s creditworthiness. The situation has increased the concern over the government’s ability to borrow the $30billion for infrastructure development, which the National Assembly has refused to approve.
  • The NNPC says it will reduce petroleum products importation by boosting the capacity utilisation of local refineries to 60 percent by the end of 2017. Group Managing Director, Maikanti Baru, who made this known in a statement said that the NNPC was keen on ending product importation in a few years. “We are putting together various programmes to ensure that we achieve at least 60 percent local refining by the end of this year. It is the procedure or methodology that we are changing a little bit. We are focusing on the process licensors to come and audit our processes and they have already started auditing most of our process units in the various refineries. We hope if we do all these systematically, we should achieve 60 percent capacity utilisation this year or the first quarter of 2018 and get to 80 percent by the end of 2018. With other efforts in terms of other refineries coming in place, we should be able to quit importation in a few years,” Baru said.
  • The FG plans to demolish illegal structures in Mowe, Ibafo and other smaller communities along the Lagos-Ibadan Expressway which is currently undergoing reconstruction. The Punch quotes sources at the Federal Ministry of Works which say that the communities have contributed to the slow pace of work on the Sagamu to Ojota section of the road being handled by Julius Berger Plc. “They have been asked to move and very soon the ministry will move everybody and demolish those shanties and other illegal structures. The Federal Government paid compensation during the construction of the Lagos-Ibadan Expressway and no permanent structure is supposed to be on the right of way, but Nigerians are totally indiscipline,” one of the sources said. The paper quotes another ministry source as saying that the space on both sides of federal highways, up to 45.72 metres, should be clear of obstructions, but that illegal developments such as markets had taken up the right of way, thereby making construction in the areas difficult. “There is supposed to be a 45.72 metres space from the centre of the road but the areas are completely built up, so, when the construction project gets to those points, which is very soon, they will be demolished and there will be no compensation,” the source added.
  • The office of the Auditor General of the Federation was last week thrown into anxiety, following reports that the nominee for the vacant position, Anthony Mkpe Ayine would appear before the Senate Public Accounts Committee on Monday. Some officials of the office expressed concern about the delay in filling the position, which had become vacant seven months after the retirement of Samuel Ukura. The delayed process according to unnamed officials, had taken a toll on efforts to sanitise the nation’s financial system. The concerned officials appealed to the Senate to expedite the screening when it resumes from its recess, saying that the FG’s accounts have been in default since the stagnation, contrary to the provisions of the Constitution.
  • The Nigeria Union of Pensioners has appealed to the Federal Government to pay December 2016 pensions to its members. In a statement signed by the Chairman, NUP (Federal Branch) Lagos, Dele Joseph, the union also urged the government to pay the arrears of 53.4 percent increase in their pensions, which was slashed to 33 per cent. He observed that some banks had released the payment of December pensions while the majority of the banks had not done so. “The NUP (Federal branch) in Lagos wishes to appeal to the Federal Government to please release the December 2016 pensions to pensioners,” he said. Joseph complained that the anomaly had become a monthly occurrence, adding that the haphazard payment of pensions was not justifiable.