03 Nov

Daily Watch – New FX bill scales second reading, Lagos most competitive state

  • President Buhari will present the 2018 budget to the National Assembly on 7 November, he said in a letter on Thursday, seeking to avoid the delays that have plagued previous budgets, not passed until well into the years they targeted. The letter was read in the House of Representatives by Speaker Yakubu Dogara. Each of Buhari’s budgets has set a record high level of spending, but economists say implementation, particularly on capital expenditure that is meant to jump-start infrastructure building, has been lacking. At the same time, previous budgets have been beset by wrangling with lawmakers over line items. Although Buhari did not disclose details of the budget, the government last month published a document that said the budget would be a record ₦8.6 trillion ($27.3 billion) in 2018, up 15.5 percent from this year.
  • A draft law to ease a dollar shortage by restricting movement of hard currency in and out of Nigeria passed its second legislative reading on Wednesday. A dearth of dollars since crude prices slumped in 2014, slashing government revenues, prompted a recession in 2016 that Africa’s largest economy exited in Q2. The bill, read in the House of Representatives, is designed to replace a law passed in 2004. It would ban individuals and companies from exporting more than $50,000 in cash without the written approval of the CBN, with contraventions punishable by up to two years in prison. Anyone importing more than $10,000 would have to disclose the source of and use for the funds, according to a copy of the bill, The bill, which would have to be passed by the upper house to become law, also seeks to extend the time for issuance of capital importation certificates to 72 hours from 48 hours.
  • Lagos has been ranked the most competitive Nigerian state in terms of human capital, infrastructure, economy and institutions with Borno and Gombe states in the north coming last in the rankings. The rankings, released by the National Competitiveness Council of Nigeria on 1 November, is the first-ever National Competitiveness Report and Sub-National Index, ranking all states and the FCT across four key areas: Human Capital, Infrastructure, Economy and Institutions. Lagos was followed by Delta and River states, while Borno and Gombe ranked 36th and 37th respectively in the index. The country’s financial capital fared best in Infrastructure and Economy while Borno and Zamfara lost significantly in Human Capital – being plagued by healthcare and education issues. According to the report, all of the states performed strongly in at least one of the four broad themes and 23 sub-indicators.
  • The FG expects the naira to strengthen and does not see a significant risk of devaluation in the medium term, Finance Minister Kemi Adeosun said on Thursday. Adeosun also defended the government’s plan to borrow more in dollars to refinance a portfolio of treasury bills and help plug holes in its 2017 budget. “The government … does not see a significant devaluation risk as the implementation of … reforms, over the medium term, is such that the naira is expected to strengthen,” Adeosun said in a statement. Adeosun said the treasury bill refinancing would save ₦91.65 billion per annum in debt servicing costs while the Eurobond issue would save ₦76.37 billion annually when compared to the cost of borrowing at home.
  • MTN is focused on laying the groundwork for an initial public offering of its Nigerian business and should complete the process in the next six months, its CEO, Rob Shuter, said on Wednesday. “We have a lot of advisers running around and getting everything ready,” he said in an interview with Bloomberg TV. “It’s a complicated process and there’s a lot of regulation that needs to be arranged. We are moving forward well with the project and anticipate concluding that in the next six months or so,” Shuter explained. MTN agreed to the IPO as part of the settlement of a $1 billion fine imposed by the NCC on it in 2015 after missing a deadline to disconnect unregistered subscribers amid a security crackdown in the country.