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Red flag on domestic borrowings as Tinubu considers N30tr fresh loans

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Many African governments are currently grappling with the challenge of refinancing their domestic debts at increasingly high costs, all while straining the funding capacity of their central banks to bridge significant gaps in their finances. This situation has left many nations in dire financial straits, according to a report from S&P.

This crisis is exacerbated by the global tightening of monetary policies, making it difficult or unaffordable for many developing countries to access the global debt market. The Federal Reserve, for instance, has raised interest rates to multi-decade highs of 5.25-5.5 percent, with market analysts predicting more rate hikes in the near future.

The S&P report coincides with the Federal Reserve’s rate-fixing arm’s second-to-last meeting, which concluded with no change in interest rates. The report analyzes the domestic financial predicaments of leading African economies, including Nigeria, Egypt, Ghana, among others. This report is particularly relevant as Nigeria’s newly inaugurated administration struggles to manage governance amid formidable fiscal challenges.

The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, previously assured Nigerians that the administration would avoid accumulating debt to fund its activities. However, less than three months after this assurance, it appears that they may have sought additional loans, as foreign financiers are growing increasingly skeptical about the country’s ability to meet its financial obligations.

In preparation for the 2024 budget presentation, the Federal Government may seek at least N8.7 trillion to partially cover the estimated N9 trillion deficit. The government hopes to generate N206 billion from privatization proceeds, a strategy that has historically yielded little success.

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The Medium-term Expenditure Framework (MTEF) for 2024 to 2026, submitted to the National Assembly, forecasts a total federal government deficit of N30.7 trillion. With expectations of less than N700 billion from privatization of public assets, the government is looking to raise the majority of the needed funds from both domestic and foreign debt markets.

As a common trend among fiscally strained African countries, the domestic market is expected to contribute 71 percent, or 21.4 percent of the debt funding. S&P describes this as a major crisis affecting many African leaders.

While Nigeria is not among the hardest-hit countries, such as Egypt, Zambia, Mozambique, and Ghana, in terms of domestic debt refinancing crises, it faces a significant debt challenge, with its debt-to-revenue ratio exceeding 100 percent. The fiscal deficit for this year’s budget performance is already estimated at N11.6 trillion, or over 50 percent of the total budget, according to government documents.

The Central Bank of Nigeria, which has previously accommodated the Federal Government’s fiscal excesses with unrestricted overdrafts, now promises to adhere to the regulations in managing its affairs. This shift may pose a challenge to the government’s plans for continued fiscal spending.

Economists have raised concerns about the exhaustion of the domestic debt market’s capacity, which stands at about N30 trillion. Nigeria has faced delays in fulfilling forward contracts, potentially leading to financial blockages and credit downgrades, affecting its ability to source funds from the financial market.

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The country’s reliance on Central Bank overdrafts and local funding sources has increased, negatively impacting the private sector’s access to capital for expansion and job creation. The situation has led to difficulties for domestic financiers.

Real interest rates on domestic debt remain negative in several African countries, including Egypt, Ethiopia, and Nigeria. Egypt, in particular, has experienced a decrease in foreign investor interest since the onset of the COVID pandemic. The report also highlights risks associated with Egypt’s debt structure.

Zambia recently reached an agreement with bilateral creditors for debt relief under the G-20 Common Framework. However, Zambia’s weak fiscal measures pose significant risks to its domestic debt capacity.

Mozambique’s government has made late payments on domestic commercial debt, constituting a selective default on its local currency rating. The report notes that Mozambique has one of the highest domestic roll-over ratios in Africa.

In summary, many African governments are struggling to refinance their domestic debts amid rising global interest rates and limited access to the global debt market. This situation has serious implications for their fiscal stability and access to financial resources.

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‘Some people have turned into monitoring spirits because of Tinubu’ – Joe Igbokwe

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Joe Igbokwe, a prominent member of the All Progressives Congress (APC) in Lagos State, raised concerns on Saturday about the constant monitoring of President Bola Tinubu. Igbokwe claimed that some individuals have resorted to witchcraft and “monitoring spirits” to keep an eye on Tinubu.

He explained that these individuals are observing Tinubu closely to catch any mistakes or mishaps, wherever he goes. Posting on his Facebook page, Igbokwe predicted that this scrutiny will persist for the next eight years.

He wrote: “Some people have turned to monitoring spirits. They follow PBAT anywhere he goes to see if he will make mistakes, if he will fall down, or if he will be received very well in any country he goes to. This is witchcraft and they will do this for 8 years. Mark this.”

Tinubu had a slip during the Democracy Day celebration at Eagles Square on June 12. Addressing the incident later at a Democracy Day dinner at the Presidential Villa, the President commented: “Early this morning, I had a swagger and it’s on social media. They’re confused about whether I was doing bugger or babariga.

“But it is a day to celebrate democracy. Why doing dobale on the day? I’m a traditional Yoruba boy. I did my dobale.”

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‘We’re still owed salaries in Abia State University’ – ASUU

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The Abia State University chapter of the Academic Staff Union of Universities (ASUU) has claimed that many of its members did not receive their April and May salaries, and those who were paid had deductions from their salaries. ASUU Chairperson Chidi Mbah and Secretary Victor Obisike stated that despite announcements from the Abia government and social media reports indicating that salaries had been settled, only a few staff members with accounts at commercial banks received their April salaries, and even fewer received their May salaries.

The ASUU leaders highlighted that this inconsistency in salary payments and deductions has caused financial difficulties, anxiety, and uncertainty among the affected staff. They noted that staff members who did receive their April or May salaries experienced unexplained deductions ranging from N8,000 to N53,000.

This irregular payment system has made it difficult for the unions within the university to determine the status of their check-off dues, which are usually deducted at the source. Additionally, ASUU emphasized that 11 months of outstanding salary arrears remain unpaid, despite repeated assurances from the government.

ASUU expressed its support for Governor Alex Otti’s efforts to improve Abia State University but urged government officials to avoid politicizing the salary payment issue. They appealed to the state government to promptly address the concerns raised and ensure that all outstanding salaries, including the arrears, are paid in full to alleviate the financial hardships faced by the university staff.

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Sanusi: Ado Bayero was never Emir of Kano – Gov Yusuf’s spokesman

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Sanusi Bature, the Chief Press Secretary to Governor Abba Yusuf of Kano State, has asserted that Aminu Ado Bayero was never the Emir of Kano. According to Bature, former Governor Abdullahi Ganduje appointed Bayero as the Emir of the eight metropolitan local governments of Kano city.

During an appearance on Arise Television, Bature explained that Ganduje’s appointment of Bayero as emir was part of a political maneuver that compromised the integrity of the historic Kano Emirate, which predates Nigeria and its constitution by over a thousand years.

Bature stated: “The governor’s action was intended to protect the emirate’s integrity as an institution. The Emirate of Kano has a history that predates Nigeria, with people living under a single Emir for over a thousand years. Ganduje’s administration politicized this history, which Yusuf promised to rectify during his campaign to restore the emirate’s lost glory.”

He further remarked, “This is not the first time an Emir has been deposed; Ganduje did it, and Sanusi left Kano for peace to prevail. Now Sanusi has returned to Kano after the law was repealed.”

Clarifying Bayero’s status, Bature said, “Aminu Ado Bayero was never the Emir of Kano. He was appointed as the Emir of the eight metropolitan local governments of Kano city. With the revision of the law under a unified Kano, the emirate Bayero served no longer exists. He was the Emir of the Kano city emirate, not the entire 44 local governments of Kano, a status created by Ganduje’s 2019 Emirate law.”

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Governor Yusuf deposed Ado Bayero and reinstated Muhammed Sanusi as the Emir of Kano. Despite this, Ado Bayero has refused to leave his Nassarawa palace and has challenged the state government’s action in court.

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