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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.

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.

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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PHOTO: Gov Makinde Host Nigeria Police Games

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1: Oyo State Governor, Seyi Makinde (left) and Inspector General of Police, Olukayode Egbetokun, during the opening ceremony of the 14th Biennial Nigeria Police Games, host by Oyo State Government, held at Adamasigba Stadium, Ibadan. PHOTO: Oyo Gov’s Media Unit.

2: From left, Deputy Governor of Oyo State, Barr Bayo Lawal; Governor Seyi Makinde; Inspector General of Police, Olukayode Egbetokun and his wife Elizabeth, during the opening ceremony of the 14th Biennial Nigeria Police Games, host by Oyo State Government, held at Adamasigba Stadium, Ibadan. PHOTO: Oyo Gov’s Media Unit.

3: Oyo State Governor, Seyi Makinde (left) take a salute from the Police Mascots, during the opening ceremony of the 14th Biennial Nigeria Police Games, host by Oyo State Government, held at Adamasigba Stadium, Ibadan. PHOTO: Oyo Gov’s Media Unit.

CREDIT: Oyo Gov Media 

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Economic crisis: Find more ways to improve your IGR – President Tinubu to universities

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The Nigerian government has called upon universities in the country to broaden their sources of funding amidst economic challenges. President Bola Ahmad Tinubu made this assertion during the 6th & 7th combined convocation ceremony of Federal University, Dutse, which took place on Saturday.

Speaking through Professor Kabir Bala, the Vice-Chancellor of Ahmadu Bello University, Zaria, who represented him at the event, President Tinubu stressed the government’s dedication to facilitating a conducive environment for universities despite resource limitations.

He urged universities to actively explore alternative funding channels, underlining the significance of self-reliance in the prevailing economic circumstances. The President also encouraged universities to seek international funding opportunities for research, advocating for collaborations and the attraction of funds from global sources.

President Tinubu emphasized that government alone cannot shoulder the financial burden of universities, particularly amid economic challenges and competing demands from various sectors. Nonetheless, he reiterated the administration’s commitment to providing the necessary support within the available resources to ensure universities function as pillars of educational advancement and national development.

He further urged universities to pursue innovative strategies for generating revenue and to tap into international research funding opportunities. He assured that his administration remains dedicated to supporting universities in achieving their objectives as outlined in the Renewed Hope Agenda.

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Contempt threat against NLC, TUC leaders over public protest uncalled for – Femi Falana replies FG

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Human rights advocate and constitutional lawyer, Femi Falana, has clarified that the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) have every right to organize the nationwide public protest scheduled for February 27 and 28, asserting that it does not constitute contempt of court.

As a Senior Advocate of Nigeria (SAN), Falana emphasized that Nigerian workers are entitled to freedom of assembly and expression as enshrined in the country’s Constitution. He urged the federal government, in a strongly worded letter to the Attorney General of the Federation (AGF) and Minister of Justice, to ensure maximum security for the workers and to participate in the protest.

In response to the AGF’s threat of contempt charges against the NLC and TUC leaders, Falana’s letter dated February 24 countered the threat, arguing that it lacked legal basis.

Falana pointed out the history of negotiations between the government and the labor unions following the removal of fuel subsidy in 2023, which resulted in court orders restraining the unions from striking. Despite compliance with these orders, the unions challenged them, and the contempt proceedings initiated by the government were subsequently withdrawn.

He highlighted subsequent legal actions initiated by the government against the unions, noting that these actions were contested by the unions on grounds of abuse of court process and lack of jurisdiction. Falana emphasized that since the contempt proceedings were withdrawn, there is no basis for the government’s threat of contempt charges regarding the planned protest.

He cited legal precedents affirming citizens’ rights to protest on matters of public interest without the need for police permits, emphasizing the democratic importance of freedom of speech and assembly.

Falana urged the government to respect these fundamental rights and directed the Inspector-General of Police to provide adequate security for the protesters in accordance with the Police Establishment Act.

In conclusion, he called on the government to reconsider its stance and assured that the protests would be conducted peacefully.

The federal government had previously warned of invoking relevant laws to charge the NLC leadership with contempt if the protest proceeds, citing it as a breach of agreement and a challenge to the court’s authority. The AGF, Prince Lateef Fagbemi, conveyed this warning in a letter to Falana, urging the NLC to abandon the protest to avoid violating the court’s order.

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