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FG Borrows N473Bn in 4 Months to Finance Budget

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Federal government has borrowed the sum of N473 billion in the past four months to finance this year’s budget and not released any funds for capital expenditure, as lower oil prices eat into its revenues.

Dr. Ngozi Okonjo-Iweala, minister of Finance, who stated this during a media briefing on the budget, which was passed by the National Assembly last week said that despite the fact that the budget had not been signed into law by President Goodluck Jonathan, the constitution allowed the Executive to incur expenditure within the first six months into the fiscal year.

Later in an emailed statement to Reuters, the minister said that “We have serious challenges,”

“Things have been tough since the beginning of the year and they are likely to remain so till the end of the year.”

The borrowed money has been spent to cover overhead, including salaries, the minister said.

Lawmakers in Africa’s biggest economy and oil producer last week passed a 4.49 trillion naira ($23 billion) budget for 2015, 3.2 percent lower than last year’s spending plans. It was forced to cut spending after global oil prices slumped.

The budget took longer than usual getting through parliament, worsening the cash squeeze, because of the closely fought general elections in March, which saw incumbent President Goodluck Jonathan defeated.

“As a result of the 50 percent decline in oil revenues, the country has faced a difficult cash crunch … Out of the 882 billon naira budgetary provision for borrowing, the government has borrowed 473 billion naira to meet up with recurrent expenditure,” the finance ministry said.

Okonjo-Iweala had projected annual domestic borrowing last year would fall to below 500 billion naira from 577 billion naira in 2013.

The borrowing requirement this year could crowd out lending to the real economy, raising domestic interest rates and yields on government bonds, which could hurt growth. Forecasts for growth have already been lowered twice this year.

The ministry said that inflation is still in single digits and that the Nigerian economy is projected to grow by 4.8 percent this year.

Government revenues have shrunk sharply since oil sales account for up to 80 percent of them and its currency, the naira, has weakened drastically, despite the central bank’s spending billions of U.S. dollars to prop it up.

The lack of funds for capital expenditure means badly needed infrastructure development will be put on hold. Funding for large projects such as bridges and roads had already begun to dry up in 2014, forcing construction firms companies with government contracts to cut back and fire thousands of workers.


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E-Financial

Lagos State Appoints MoneyMaster as Payment Partner for “Ounje Eko” Programme

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“Ounje Eko”, the food price discount initiative of the Lagos State Government, has appointed leading payment service bank, MoneyMaster Payment Service Bank Limited (MMPSB), as its collaborator in the bid to ensure ease of payments at the market.

MoneyMaster is one of the Central Bank of Nigeria-licensed Payment Service Banks (PSBs) to promote financial inclusion across Nigeria.

Under the partnership, MMPSB will apply its cutting-edge payment solution to engender easy payment and reconciliation in order to make   the experiences of Lagosians who will be getting their food supplies from the markets pleasurable. Its payment solution is also all-encompassing and ensures real time value to payment destinations.

The mobile bank was appointed as the collection and payment partner for “Ounje Eko” Food Markets programme which is a government initiative serving the five divisions of Lagos State. Consequent on this, MoneyMaster Payment Service Bank will collect payments in 57 LCDAs in the state.

The partnership gives credence to the quality of payment solutions that MoneyMaster is reputed for in its services to its growing business clientele in private and public sectors.

 


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E-Financial

CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

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Central Bank of Nigeria (CBN), is investigating irregular foreign exchange transactions and forward contracts valued at approximately $2.4 billion.

CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

The  inquiry follows an extensive audit by Deloitte, which scrutinized $7 billion in dollar debts accumulated under the bank’s previous leadership.

In the aftermath of the 294th Monetary Policy Committee meeting in Abuja, Yemi Cardoso, governor of CBN,  disclosed to journalists that the investigation, supported by the Economic and Financial Crimes Commission, among other security bodies, aims to clarify the legitimacy of these FX allocations identified as problematic by the audit.

“It was determined that a number of these transactions did not qualify…they were outright illegal. The law enforcement agencies are now looking into those transactions that as far as we are concerned, are not valid to be paid,” Cardoso detailed, emphasizing the unlawful nature of these forex deals.

The crux of the investigation lies in the audit findings that a significant portion of the scrutinized transactions lacked proper documentation and, in many instances, were deemed outright illegal.

However, the unfolding investigation has raised concerns within the organized private sector, with some entities contemplating legal action against commercial banks for unresolved forex bids.

Despite these tensions, Governor Cardoso reassures that the foreign exchange market remains open and transparent, inviting stakeholders to address their forex needs through the official channels.

Furthermore, Cardoso clarified the distribution of fertilizers to farmers as a one-off measure and not indicative of a shift back to direct interventions by the CBN, underscoring a commitment to strategic, regulatory governance rather than direct market involvement.

 

 

 

 

 

 

 

 


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CBN Urges Banks to Expedite Action on Recapitalisation

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Central Bank of Nigeria (CBN) has directed deposit money banks in the country to expedite action to increase their capital base from the current ₦25bn.

CBN Urges Banks to Expedite Action on Recapitalisation

Olayemi Cardoso, governor of CBN

Olayemi Cardoso, governor of CBN, stated this during the apex bank’s 294th meeting of the Monetary Policy Committee (MPC) on Tuesday in Abuja, when the MPC hiked the interest rate by 22.75% to 24.75%.

The apex bank chief said the MPC examined developments in the banking sector and expressed satisfaction that the industry remained stable. The committee, however, said to guard against risk, commercial banks in the country should accelerate their recapitalisation efforts.

Cardoso said, “The MPC also reviewed developments in the banking system and noted that the industry remains safe, sound, and stable. The committee thus called on the bank to sustain its surveillance and ensure compliance of banks with existing regulatory and macro-potential guidelines.

“The MPC also enjoined the banks to expedite actions on the recapitalisation of banks to strengthen the system against potential risks in an increasingly globalised world.”

 

 

 

 


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