The Senate has raised alarm that with its approval of $22.7billion foreign loan request by President Muhammadu Buhari penultimate week, the total debt profile of Nigeria now stands at N33 trillion.
Speaking at the one day public lecture organised by the National Institute for Legislative and Democratic Studies ( NILDS), on Public Debt in Nigeria : Trend, Sustainability and Management in Abuja, the Deputy Chairman of Senate Committee on Local and Foreign Debts, Senator Muhammad Enagi Bima Enagi, All Progressives Congress, APC, Niger South, said borrowing had always served as veritable financial platforms for many countries of the world in running their economies.
According to him, judicious utilization of such loans for intended projects and servicing the debts appropriately have also been problems for some countries, particularly the developing ones as Nigeria.
This is even as the Director -General, Debt Management Office, DMO, Mrs Patience Oniha, expressed fears that economic effects of the coronavirus pandemic might incapacitate and frustrate Nigeria from servicing its debts appropriately.
Speaking further, Senator Bima noted that realities on ground in the country, in terms of required infrastructure and debt accumulations between 2006 and now, were not in anyway connected.
He, however, explained that many Nigerians were worried whenever they heard that their government was seeking one loan or the other.
He said: “From a low ratio of debt to gross domestic product (GDP) of about 3.4 percent at independence, Nigeria’s total public debt as at September 30, 2019, according to the Debt Management Office, DMO, stands at about N26.2 trillion (or $85.4 Billion).
“Of this amount, total domestic debts is about N18 trillion (or $58.4 Billion), which is 68.45percent of the total public debts. With the recent approval of the 2016-2018 External Borrowing Plan, the total debt stock would be about N33 trillion and 21% Debt/GDP ratio.
“The big question in the minds of average Nigerians aware of this fact is What did we do with the money? In other words, where did the money go?
“What do we have to show as a people for these huge debts accumulated over the last four decades or so?”
According to him, in stopping the ugly trend, the Senate and by extension, the National Assembly, is more than desirous to monitor the executive on prompt utilization of new loans being sought, to save the country from going back to the pre-2005 and 2006 debt burden era
Senator Bima said further: “The consequence of these borrowings is that the sheer magnitude of the Nations Annual Debt Servicing put at about N2.47 trillion for 2020 makes the provision of basic but essential amenities and infrastructure in the country almost impossible without further borrowings.
“Clearly, Nigeria needs to get its public finance in order to avoid the potential fiscal and financial crisis ahead of the nation.
“The current debt situation in Nigeria needs to be properly managed and every borrowed Naira or Dollar, carefully deployed, especially in the face of the continued dependence of the nation’s economy on exported crude oil, with its usual price volatility.
“Borrowings must be project-tied and not just to support budget deficit. Furthermore, the projects must be such to grow the economy and bequeath laudable infrastructure and not debt for future generations.’’
In her remarks, DMO Director-General, Patience Oniha, who was quick to say that there was no cause for alarm with regard to the total budget profile of the country which she puts at $85.390bn or N26trillion as at September 2019, said the country’s total debt stock as at 2006 when she exited the Paris and London Club of Creditors was $17.349million.
She, however, noted that annual deficit budgeting and poor revenue generation forced the country into taking loans which has accumulated to N26trillion as at September last year.
She said: “Concerns have been expressed about the growth in Nigeria’s debt stock since the exit from the Paris and London Club of Creditors.
‘’It is true that the public debt swtock has grown from US$17,349.69 million in 2006 to USD85,390.82 million as at September 30, 2019.
“However, it must be recognised that the current debt stock is the result of cumulative borrowings by successive governments to finance budget deficits and various infrastructure projects.”
Oniha explained that in order to ensure that the public debt was sustainable, the Debt-to-GDP Ratio was set at 25%, lower than the 56% advised by the World Bank and IMF, adding that the total public debt-to-GDP had remained within the 25% limit, standing at 18.47% in September 2019.
“This is however, only one measure of debt sustainability, the other equally important measure is the debt service-to-revenue ratio and this is where Nigeria needs significant improvement.
‘’Actual Debt Service to Revenue Ratio has been high at over 50% since 2015, although it dropped to 51% in 2018 from 57% in 2017. The relatively high Debt Service to Revenue Ratio is the result of lower revenues and higher debt service figures.
“Whilst Nigeria’s debt is sustainable, recent developments in the global environment induced by COVID -9, already suggest a less than favourable economic outlook with implications for Nigeria,” Oniha said.
NAICOM Licences Seven New Insurance Firms
By Sola Alabadan
The National Insurance Commission (NAICOM) issued operational licences to seven insurance companies in Abuja today, in line with Market Conduct & Business Practice Guidelines.
The new insurance firms are Heirs Insurance Limited (General), Heirs Life Assurance Limited, Stanbic IBTC Insurance Limited (life), Enterprise Life Assurance Company, FBS Reinsurance Limited, Salam Takaful and Cornerstone Takaful Insurance Company Limited.
The Commissioner for Insurance, Sunday Thomas, who gave the operational licences to the five firms at NAICOM Head Office, said the Commission has issued operational licences to the firms to operate insurance business.
According to him: “The National Insurance Commission (NAICOM) received applications from the under listed companies for registration as Insurance and reinsurance Companies to transact insurance and reinsurance business in Nigeria.
“In fulfillment of the statutory provisions of extant laws for the registration/licensing of insurance Companies, the general public is hereby informed that the Commission has commenced the process of registering the companies.
Consequently:” Heir Insurance Limited (General) has picked, Olaniyi Stephen Onifade as its Managing Director, Stanbic IBTC Insurance Limited, picked, Akinjide Orimolade as Managing Director; Heirs Life Assurance Limited picked Abah Okoriko and Enterprise Life Assurance Company Nigeria Limited picked Fumilayo Abimbola Omo.
“FBS Reinsurance Limited is led by the former Commissioner of Insurance, Fola Daniel. FBS is bringing together professionals with proven experience from the brokerage and underwriting units of the industry including Bala Zakariyau, the former managing director of Niger Insurance who currently plays in a support unit of the Nigerian aviation industry, Ahmed Olaniyi Salawu of the Standard Insurance Consultants, and Wole Oshin Bankole of the Custodian Investment Plc that has just taken a plunge into the property sector by taking a large chunk of the United Property Development Company, a subsidiary of the UACN Plc.
“These crops of professionals represent those with firm beliefs that there is a big insurance potential in Nigeria and indeed, the African continent. Others are Ebele Ofunneamaka Okeke, from Nnewi North, Anambra who rose to the position of the Head of Nigerian Civil Service before her retirement, and also, Yusuf Hamisu Abubakar, a lawyer, and an accomplished administrator and businessman with vast experience at the senior executive level in power and communication sectors.
“The reinsurance firm is required to pay the new N20 billion capitalisation stipulated by the commission under the reform exercise for it to start a business in the industry.”
Power: FG Ready To Support DisCos’ Initiatives – Minister
Mr Saleh Mamman, Minister of Power, says the Federal Government is ready to support any initiative by electricity Distribution Companies (DisCos) aimed at addressing the challenges facing the power sector.
The News Agency of Nigeria (NAN) reports that Mamman spoke at the inauguration of Eko Electric Distribution Company’s (EKEDC) Supervisory Control And Data Acquisition (SCADA) System on Thursday in Lagos.
Mamman said : “I felicitate with and commend the EKEDC’s Board of Directors and management for this milestone.
“SCADA is one of the most advanced technologies in the power distribution business globally and I am optimistic that this event will translate to improved service delivery within EKEDC’s network.
“The inauguration of this SCADA system will help EKEDC monitor and respond quicker to faults and reduce the outage durations which would improve quality of service delivery to customers.”
According to him, the SCADA project will help the DisCo meet its set objectives under the recently executed Service Level Agreements with the Transmission Company of Nigeria (TCN).
He said the project would provide access to real time data that enables distribution system operators to make informed decisions that improve reliability and availability, consistent with the targets of the Service Based Tariff (SBT) regime.
Mamman said the FG was working assiduously to address the challenges of the power sector through initiatives such as the National Mass Metering Programme, the Siemens AG Power Project and upgrade of power infrastructure across the country.
Earlier, Mr Adeoye Fadeyibi, Managing Director, EKEDC, thanked the Central Bank of Nigeria (CBN) for its support to the Nigerian Electricity Supply Industry which paved way for the SCADA project.
Fadeyibi said : “SCADA is a centralised computer system which represents the evolution of our network operations from the present physical monitoring, remote coverage and relay of network information.
“By contrast, SCADA innovatively gathers real time information, identifies loopholes or breaches in the network and transfers this data back to a central site where the necessary analysis and control is carried out.
“The result of this analysis is then displayed in a logical and organised fashion. The project involves monitoring, control, fault tracking, data analysis and operations optimisation of our high-tension network.
“As part of Eko DisCo’s effort to improve operational efficiency, revenue generation and reduction of our Aggregate Technical Commercial and Collection Losses, we have implemented the SCADA project to automate our electric power distribution network across our franchise coverage area.”
He said the achievement by the DisCo showed that the FG’s Power Sector privatisation programme was a laudable decision, as it had completely transformed the sector and the Nigerian Electricity Supply Industry.
Emirates Offers Travellers $500,000 Multi-risk Travel Cover
Emirates airlines has announced that it will provide travellers a multi- risk travel cover worth $ 500 , 000 on top of its current COVID-19 cover.
The airline stated that the new multi- risk travel insurance and COVID-19 cover will automatically apply to all Emirates tickets purchased from December 1 , and extend to Emirates codeshare flights operated by partner airlines , as long as the ticket number starts with 176.
Emirates Chairman and Chief Executive , Ahmed bin Al Maktoum was quoted as saying , “ Emirates was the first airline to offer complimentary global COVID -19 cover for travellers back in July , and the response from our customers has been tremendously encouraging.
“ We have not rested on our laurels and instead continued to look at how we can offer our customers an even better proposition. We are very pleased to be able to now provide this new multi- risk travel insurance and COVID – 19 cover , which is another industry first, to all our customers.”
He added, “ We aim to give our customers even more confidence in making their travel plans this winter and moving into 2021 by the launch of this feature .”
Highlights of the coverage include out -of – country emergency medical expenses and evacuation up to $ 500 ,000 , valid for COVID -19 ( contracted during the trip ) and other medical emergencies while travelling abroad.
It also involves trip cancellation up to $ 7 ,500 for non- refundable costs if the traveller or a relative ( as defined in the policy ) is unable to travel because they are diagnosed with COVID- 19 before the scheduled trip departure date , or for other named reasons – similar to other comprehensive travel cover products.