This development came amid the recession Nigeria just plunged into.

With the economic downturn, stakeholders in the manufacturing sector, including those under the auspices of Manufacturers’ Association of Nigeria’s Export Group, Abuja Chamber of Commerce and Industry (ACCI), have in separate in interviews blamed the President Muhammadu Buhari-led government.

They unanimously agued that should land border not be closed as it has been, the economy would be functioning well.

According to the stakeholders, the closure of land borders was not a smart move, as it will definitely have a negatively impact on the economy, especially when the country suffering from the recession.

Ede Dafionone, The President of MAN’s Export Group, said that the uncertainties shrouding the prolonged border closure influenced investment decisions of manufacturers.

He said: “It is actually difficult to have an exact measurement of its impact because there are some companies that have reported that it has helped their businesses because  fake and cheap imports were stopped and there are some exporters who have complained that the border closure has affected their businesses drastically.

“What is very clear is that the sudden prolonged and unanticipated closure of the border is bad for business because of the business community cannot make projections at all for production for export. That uncertainty is clearly bad for long term investments. In that sense, it is definitely bad for the economy.”

He however advised the governmenton the need to earn goodwill by re-opening the borders.

ACCI Director, Adetokunbo Kayode maintained that the decision made by the government to close the borders without talking with the private sector players was very bad.

He said: “The border closure had multiplier base. One is that the decision was taken without consultation, which we think is wrong decision. Government was actually about to review it before the pandemic came and it had to lock up.

“You see, there is no perfect decision or policy or government. So when you are wrong just accept, because it is like being in a hole, in such a situation you don’t have to continue digging but to find a way to get out.”

similarly, Muda Yusuf, LCCI Director, said that both losers and beneficiaries arose from the closure of the border.

He said: “Poultry and rice farmers have reported an improvement in sales arising from the border closure, while investors engaged in cross-border trade in the sub-region lamented on the closure. Traders, manufacturers, freight forwarders and transporters, who operate across the land borders, were negatively affected.”

Without mincing words, Bongi Adi, a senior lecturer at the Lagos Business School, said he was yet to see the economic reason behind the closure of the border.

Adi said: “What we have seen is that the government opened that borders for some firms in Nigeria which means it is not based on economic gains. It was opened to serve some sort of political, self-serving, and parochial interests. This is simply because the government wanted to give access to their people or create some kind of preferential treatment.”

Meanwhile, the Minister of Finance, Budget and National Planning, Zainab Ahmed, asserted that the committee on border closure set up by the President, Major would submit its report soon.

It can be recalled that on August 20, 2019, the government closed land borders to put an end to smuggling in the country and boost local production.

The closure also required that neighbouring countries check smuggling from their own end.

To this effect,The President set up a ministerial committee consisting of Zainab Ahmed, Rauf Aregbesola, Geoffrey J Onyeama, as well as heads of immigration and customs to assess the decision.

It came as a surprise that after more than a year, the committee was yet to submit its report to the President.

Now that their attention has been drawn, ahmed maintained that  the presidential committee set up on the matter had completed its job and would soon submit its report.

She said, “Mr President has set up a committee that I chair, alongside the minister of foreign affairs and other ministers including interior and agencies such  customs, immigration and other security services to review and advise him on the issue of border closure.

“The committee has just completed its work and we will be submitting our report.

“I have signed my copy; I gave everybody to sign between today (Wednesday) and tomorrow (Thursday) so that we submit the report to Mr President.”

However, the minister did not disclose when the report would be submitted and how soon the land borders will be reopened.

Ahmed also  disclosed that the Federal Government  had no plan to withdraw the 2021 Appropriation Bill from the National Assembly because of recession, as proposed by some groups and individuals. Rather, the government would be using the Economic Sustainability Plan(ESP) to revive the economy.

While addressing the current recession situation in the country, the minister explained that the ESP was designed  for that course.

Her words: “You will recall that the ESP was designed to be a 12 months plan, to act as a bridge between the ERGP and its successor plan. But also, it was designed specifically to help us quickly exit recession, which we had projected was going to happen.

“So, the ESP implementation is really on course; it’s focused and also the implementation of the 2020 budget is really on course and is very focused.

“We have been able to release a large volume of capital funding into ministries, departments and agencies, enabling a lot of public work going on simultaneously all over the country.”

The post Stakeholders Fault FG Over Poor Economic Performance appeared first on Business News in Nigeria.

The minister recounted that the total public debt stock of the country, which comprises foreign and local debts stood at N31.01 trillion as of June 30, 2020, as she expressed confidence that the FG will borrow more funds to run the economy next year.

“The total public debt stock comprising the external and home debts of the federal and state governments and the Federal Capital Territory stood at N31.01 trillion ($85.90 billion) as of June 30, 2020.

“It is projected, based on existing approval, to rise to N32.51tn by December 31, 2020, and N38.68 trillion by December 31, 2021,” Ahmed stated.

Among some of the bodies that have fumed at the incumbent administration of the country’s consistency with securing loans is –Lagos Chamber of Commerce and Industry (LCCI).

Raising alarm over the increasing debt profile, Toki Mabogunje, the President of LCCI, stated that the country’s debt is fast becoming unsustainable.

Making reference to the Debt Management Office (DMO), Mabogunje explained that the increase in Nigeria’s public debt was because of the fresh domestic and external borrowing, which she noted were meant to connect the wide fiscal deficit in the revised 2020 budget given the economic impact of COVID-19 and recent exchange rate devaluation.

Nigeria’s alarming portfolio

Recall that some months ago, DMO released the country’s debt report.

In the report, Unmask NG learnt that Nigeria’s total debt stock, which comprises foreign and local arrears, as at June 2020 stood at N31.01 trillion, which represents 8.31% increase when compared to her N28.63 trillion debt profile as at March 2020 (three months prior).

Out of the N31.01 trillion debt profile, external debt stood at N11.36 trillion, representing 36.65% of the total debt stock. On the other hand, domestic debt at N19.65 trillion, representing 63.35% of the total debt.

The DMO report also disclosed that N1.21 trillion was spent to service the loans during the period under review. While domestic debt servicing gulped N921.9 billion, the government spent N288.6 billion to service its foreign debts.

Here’s what you should know

In spite of concerns from economic experts, industry players and stakeholders, and international bodies, President Muhammadu Buhari-led government has channeled its focus on borrowings and adding to Nigeria’s alarming debt stock.

From recent comments by officers in Buhari’s cabinet, it is pretty much obvious that loans seem to be the only way the incumbent administration can secure funds to keep the economy running.

But the reality is, should the government continue on this trend, the increasing debt would not stop to disrupt large investments on infrastructures, which are meant to stimulate productivity and improve the standard of living of the people.

The post Despite N31trn Debt, FG Eyes Fresh N6trn Loan appeared first on Business News in Nigeria.

Recall that between Tuesday, October 20, 2020, and Friday, October 23, some stores (both private and public), were looted, while properties were also destroyed by miscreants who hijacked the nationwide peaceful protest against police brutality dubbed #EndSARS, to unleash mayhem in the state.

With many business owners losing their investments and survival means to the civil unrest in Lagos, economic experts, including Muda Yusuf of the Lagos Chamber of Commerce and Industry (LCCI), Teslim Shitta-Bey of Proshare, Seye Adetunmbi of Capital Market Roundtable (CMR), amongst others have in separate interviews expressed confidence that the looting and arson of properties and stores will negatively impact Nigeria’s economy.

According to the experts, many investors are now skeptical as to if Nigeria is a good investment destination.

Yusuf, LCCI Director, said: “Definitely it will negatively impact on the perception of Nigeria as an investment destination. The scale of the looting and destruction is unprecedented in our recent history. I expected better responses from security agencies to prevent these wanton destructions and lootings. The mayhem and destruction of public and private properties in the last few days were most unfortunate. The loss of lives is regrettable and we empathize with families affected. The escalation was avoidable;

“It was a case of complete breakdown of law and order. The costs of these to the economy, the government and private entities are huge;

“No efforts should be spared to ensure the restoration of normalcy. It is sad that this is happening at a time when the economy is yet to recover from the devastation of COVID 19;

 “Many businesses were still grappling with the consequences of the pandemic and lockdowns. We should have an urgent discussion around a permanent resolution of the crisis.”

Speaking on the development, the managing editor of proshare, Teslim Shitta Bey  pointed out that looting raises risk profile of doing business in nigeria and raises the cost of business funding.

 “The looting raises the risk profile of doing business in Nigeria and raises the cost of business funding;

 “This, in turn, discourages capital importation (which has already been adversely affected by COVID-19) and would likely equally constrain potential job creation. In other words, looters suffer the consequences of their own actions in what economists might call the fulfillment of ‘Murphy’s law’ or a situation in which what can go wrong can really get worse.”

Proshare’s Shitta-Bey stressed that the principal economic growth impact of the mayhem may include lost work place man-hours nationwide; lost business output and workplace disruptions leading to lost income, buildings and movable assets torched during the riots.

“The buildings would be marked-to-market value rather than book value. The movable assets would be adjusted for depreciation; lost lives, the protesters, police and other casualties;

“This would involve the lost cash flow from the future stream of their earnings adjusted for the country’s average life expectancy; intangible costs exist including the cost of the pain and anguish of a nation traumatized by a war on itself; “It would be a surprise if ShopRite goods were not insured; “If the shopping outlet was insured for riots or vandalism then part of the cost of business recovery would be borne by the superstore’s insurers;

“The cost would likely run into hundreds of millions which would worsen the insurance company’s operating loss ratio and cut 2020 profitability.”

Similarly, CMR’s Adetunmbi said the attack, destruction and looting of shopping malls is bad news for the nation and as such, it will be classified as an unstable state, politically, due to bad governance and poor leadership.

Adetunmbi, who is also Chief Responsibility Officer, Value Investing Limited, explained that it is also a red flag for investors that Nigeria is not a safe place for investment destination, especially in the economic sectors and cities prone to vandalism in the event of an uprising.

“The resultant effect is loss of job, which will have a negative multiplier effect on the economy in the short and long run. Coming when we are yet to get over the effect of the pandemic Covid19 and dwindled oil revenue on the economy;

“It is a tripartite economic misfortune for Nigeria – Collapsed oil revenue, Covid19 pandemic and EndSARS fallouts. It is triple jeopardy for the Nigerian economy.

“We are in for a long haul of economic challenges. Most companies are going to report poor performance in the 2020 financial year;

“Dividend yield earned on some investments will reduce in 2021. “Solution includes being prepared for a rough ride until things pick up again and make necessary adjustments appropriately. “Government should seize the opportunity to block leakages in the system and reduce excessive cost of governance; cut drastically recurrent expenditure on the redundant workforce; and review the overheads on the executive and legislative arms of government.

“There has to be a way to help businesses that were adversely affected by the vandalism during the riots.

“The Federal Government needs to make positive pronouncements and take decisive policy directions that will reassure investors (locally and internationally) that Nigeria is a safe investment destination.”

However, US-based economist, risk & data analyst, Waheed Alabede, revealed that the total long term loss to Nigeria’s economy will top N1.5 trillion in direct and indirect losses now and in the next couple of years even if normalcy returns.

Alabede’s words: “Conservative estimate of direct losses of Wednesday alone is currently over N60 billion when replacement cost, loss of use, and other costs are factored in.

“On the economic front, and coupled with downturn caused by COVID-19, it will take over eight years for Nigeria, and especially Lagos, to recover from the loss of confidence among investors occasioned by the attacks on private and public properties;

“One of the effects of destructive protest or riot is that it heightens the level of risk assessment of nations which in turn means local, and international investors and lenders will increase interest rates to compensate for the high-risk business environment brought on by the disruption of business activities, and the destruction of private and public properties.

“The cumulative effect of the shock to the economy is an increase in the unemployment rate, especially among the youth;

 “Additionally, government will have to divert funding from essential services like education to repair or replace the damaged properties;

 “Government must do all it can to bring the youth to the table and the youth must understand that it is time to select a leader within their rank and file;

 “Nigeria survived worse events in the past and we will survive this too but we must work together to turn this to a win for all;

“As it often happens during any economic crisis, there are losers and winners;

 “While the majority of Nigerians including large corporations and SMEs will be losers, the winners, in this case, are the construction and maintenance companies, suppliers of damaged goods, CSOs and NGOs;

 “Due to the recent event, CSOs will be flooded with donations from within and mostly outside of the country. CSOs and NGOs are in one of the few industries that often expect strong financial performance after a major crisis.”

The post Economic Experts Lament Losses After Looting And Arson Of Properties In Lagos appeared first on Business News in Nigeria.

While discussing the implications of the protest against police brutality, Toki Mabogunje, the President of Lagos Chamber for Commerce and Industry (LCCI), said the nationwide demonstration has negatively impacted the Nigerian economy.

The LCCI boss noted that the industry appreciates the participation of citizen in the protest and the demands for accountability, but the negative impact it’s having on the economy is alarming.

Her words: “These are in consonance with the democratic norms. They also form vital ingredients for good governance;

“LCCI is however concerned about the negative impact that the protracted nature of the ENDSARS protest has on business activities across the country;

“Over the past 12 days, economic activities have been crippled in most part of the country and have been particularly profound in the urban areas;

“The Nigeria economy has suffered an estimated 700billlion loss in the past 12 days.”

She further suggested that in order to protect the livelihood of Nigerians, including the business community, the #EndSARS protesters need to progress to the next stage of civic engagement, which is dialogue.

“This is necessary to reduce the massive disruptions, blockades and barricades around our major cities and interstate highways. These actions have been at great cost to the economy and the welfare of Nigeria citizen. It should be noted that our economy is still reeling from the shock of the COVID-19 pandemic and struggling to recover from its devastating effects.”

Toki also urged President Muhammadu Buhari to urgently grant audience to the #EndSARS agitators.

“That the government should commit to rapid improvement in governance quality and accountability by effecting necessary institutional policy and regulatory reforms not only for the police but the entire public sector economic system;

“The leadership of the protest should occupy the seats provided to participate in the reforms to be implemented by the government in response to their demands,” she added.

It is almost three weeks since the protest against police brutality across the country began. However, in order to make their agitation effect, the #EndSARS protesters have since taken over major money-making spots like the Lekki tollgate. Not only that, workers have also not been allowed to commute to their various workplaces.

The post LCCI: FG Has Lost N700bn Due To #EndSARS Protest appeared first on Business News in Nigeria.

Speaking during LCCI’s Annual General Meeting (AGM), Toki Mabogunje, the professional body’s president, stated that the country’s debt is fast becoming unsustainable.

According to her, in the light of the dwindling oil prices and production, Nigeria’s debt profile is likely to hit N34 trillion by the end of this year (2020).

Making reference to the Debt Management Office (DMO), Mabogunje explained that increase in Nigeria’s public debt was because of the fresh domestic and external borrowing, which she noted were meant to connect the wide fiscal deficit in the revised 2020 budget given the economic impact of COVID-19 and recent exchange rate devaluation.

She said: “The public debt stock grew by 8 percent to a whooping N31tn at the end of the second quarter which is equivalent to 21 percent of the GDP.

 “At the peak of the pandemic in the second quarter, the Federal Government received financial support worth $3.4bn and $288.5m from the International Monetary Fund and the African Development Bank respectively, while negotiations are also on-going for a cumulative $1.8bn credit support from the World Bank, AFDB and Islamic Development Bank.”

The LCCI president further made mention of underperforming sectors, which she said has contributed to the country’s unstable economy due to their weak performances.

Mabogunje revealed that 19 sectors have contracted, 14 are in a recession, 11 sectors expanded, and two sectors had moderation in growth.

“While we commend policymakers for the interventions in reflating the economy and supporting business. We urge that special attention be given to sectors severely impacted by the pandemic. The federal government need to expeditiously redirect attention to these sectors including aviation, hospitality, entertainment and manufacturing. This has become necessary to protect jobs, preserve investments and provide the much needed liquidity required to revive the sector,” she added.

Nigeria’s debt portfolio

Recall that some weeks ago, DMO released the country’s debt report.

In the report, Unmask NG learnt that Nigeria’s total debt stock, which comprises foreign and local arrears, as at June 2020 stood at N31.01 trillion, which represents 8.31% increase when compared to her N28.63 trillion debt profile as at March 2020 (three months prior).

Out of the N31.01 trillion debt profile, external debt stood at N11.36 trillion, representing 36.65% of the total debt stock. On the other hand, domestic debt at N19.65 trillion, representing 63.35% of the total debt.

The DMO report also disclosed that N1.21 trillion was spent to service the loans during the period under review. While domestic debt servicing gulped N921.9 billion, the government spent N288.6 billion to service its foreign debts.

Here’s what we know

In spite of concerns from economy experts, industry players and stakeholders, and international bodies, the President Muhammadu Buhari-led government has channeled its focus on borrowings and adding to Nigeria’s alarming debt stock.

From recent comments by officers in Buhari’s cabinet, it is pretty much obvious that loans seem to be the only way the incumbent administration can secure funds to keep the economy running.

But the reality is, should the government continue on this trend, the increasing debt would not stop to disrupt large investments on infrastructures, which are meant to stimulate productivity and improve the standard of living of the people.

The post LCCI Raises Concern Over Nigeria’s Increasing Debt Profile appeared first on Business News in Nigeria.