The UN Conference on Trade and Development (UNCTAD) said on Thursday that around one trillion dollars of debt owed by developing countries would be cancelled under a proposed global deal.
The UN agency said that the plan was to help them overcome the impact of the coronavirus pandemic.
The world’s developing economies, which were already struggling with a rapidly growing debt burden, must now confront a record global downturn, plummeting prices for their oil and commodities exports and weakening local currencies.
At the same time, they need to spend more money on healthcare and to protect their economies. Some 64 low-income countries currently spend more on debt service than their health systems, according to UNCTAD.
“This is a world where defaults by developing nations on their debt is inevitable,” Richard Kozul-Wright, director of UNCTAD’s Division on Globalisation and Development Strategies, said during a video conference with newsmen.
In a report calling for a plan to relieve developing countries’ debt burden, UNCTAD estimated their liquidity and financing requirements due to the pandemic amount to at least 2.5 trillion dollars.
High-income developing countries have debt service obligations of between two dollars to 2.3 trillion dollars in 2020 and 2021 alone, while middle and low-income countries have debt service obligations of 700 billion dollars to 1.1 trillion dollars.
Having poured some eight trillion dollars into stimulus for their own economies, the Group of 20 wealthy nations (G20) last week agreed to suspend the bilateral debt service payments by the world’s poorest countries until the end of the year.
“It’s kicking the can down the road. You extend the problem and you pretend it’s going to go away in two or three years’ time if growth picks up in the world economy.
“We don’t think this is credible,” Kozul-Wright said.
UNCTAD calculated the G20’s debt moratorium would cover 20 billion dollars of public debt to official bilateral creditors.
An additional eight billion dollars would be included if all private creditors joined the initiative, and a further 12 billion dollars, if all multilateral creditors did as well.
That has little impact on the developing world’s overall debt burden, the agency said, and the money would need to be paid back with interest at the end of the suspension.
Instead, it called for a “Global Debt Deal” that would grant initial one-year debt standstills on request, which could be extended after a review and would include a stay on all creditor enforcement actions.
Debt relief and restructuring programmes would follow to ensure long-term debt sustainability, a process that would require significant debt cancellation.
Using as a benchmark the case of post-war Germany, which saw about half its debt cancelled, UNCTAD calculated the figure for developing economies would be around one trillion dollars.
An independent debt authority would oversee the process rather than the International Monetary Fund and World Bank, which are among poor countries’ leading creditors and therefore not impartial, according to UNCTAD.
Kozul-Wright said it was in the interest of wealthy nations to support a plan allowing developing countries to concentrate their resources on fighting the new coronavirus rather than their external debt.
“This is not a charity exercise. The health pandemic will eventually hit much of the south.
“If that happens there will be a blowback in terms of health to countries that thought they had somehow conquered this virus. That’s almost inevitable,” he said.
FCCPC: Electricity Topped Consumers’ Complaints In 2020
The Federal Competition and Consumer Protection Commission (FCCPC) says it received the highest consumer related complaints from the electricity sector in 2020.
Speaking in Abuja on Sunday, Babatunde Irukera (pictured), chief executive officer of FCCPC, said the banking and telecommunication sectors ranked second and third respectively on the complaints chart.
He added that the aviation sector was ranked fourth.
“Our complaints resolution team is still a very small team of people and they are dealing with thousands of complaints,” Irukera said.
“We are looking at expanding capacity to have more hands handling the complaints but the real game changer in handling complaints better and faster is for companies to start doing it.
“The person who has the least open complaint in our resolution team has about 800 complaints across sectors and that is one person. If you multiply it by 12 to 15 persons, you will imagine the number of complaints.
“Being able to expand to a point where we are able to operate more efficiently, we will keep training, leveraging technology, the more we leverage technology, the more efficiently we can do our work.”
The commission was established by the 2018 Federal Competition and Consumer Protection Act (FCCPA) to promote fair, efficient and competitive markets in the Nigerian economy, facilitate access by all citizens to safe products, and protect the rights of all consumers in Nigeria.
FEC Approves CBN’s Request To Renovate National Theatre For N21b
Lai Mohammed, minister of information and culture, said on Wednesday that the Federal Executive Council (FEC) has approved a memorandum of understanding (MoU) between the Central Bank of Nigeria (CBN), and the ministry of information and culture for the renovation of the National Theatre in Iganmu, Lagos.
He spoke at the end the weekly FEC meeting in Abuja.
The federal government, on July 12, 2020, handed over the national theatre to CBN and the bankers’ committee to signify the kick-start of the renovation process.
“This is a landmark approval because, it has paved the way for investment in the creative industry as part of the resolve of this government to create at least one million jobs in the next three years in the creative industry,” Mohammed said.
“The CBN and banker’s committee are willing to invest N21.894 billion to renovate, refurbish and commercialization (run it profitably) of the national theatre complex. The MoU has a life span of 21 years after which it will revert back to government.”
The minister assured that no job will be lost after the national theatre is renovated, adding that the “brand new national theatre, an event centre” will instead create more jobs.
Asides from this, FEC approved about N9.43 billion to complete the digital switch over (DSO) in broadcasting; N8.98 billion for a new national ICT park in the federal capital territory (FCT) to coordinate public and private ICT hubs in Nigeria.
The council also approved a new national policy on aging which would take care of the needs of the aged people across Nigeria; approved the ministry of water resources memo to construct Damaturu water supply project in Yobe state worth N8.43 billion.
Adesina identifies Debt Service As Greatest Risk To Nigeria
The President of African Development Bank (AfDB), Dr. Akinwunmi Adesina, has warned that debt service is Nigeria’s greatest risk, even as he urged the federal government to take steps to increase tax revenue in the face of dwindling oil income.
The Director of Communications and Liaison of the Federal Inland Revenue Service (FIRS), Mr. Abdullahi Ahmad, stated that he spoke virtually at the recently held First Annual National Tax Dialogue .
Dr. Adesina was quoted as saying that due to the impact of the COVID-19 pandemic, Nigeria’s economy shrank “by 3% in 2020 on account of falling oil prices and the effects of the lockdowns on economic activities,” adding, “with shrinkage in oil revenues, debt service payments pose the greatest risk to Nigeria.”
He stressed further that for Nigeria to overcome the pandemic, “taxes must form a significant percentage of government revenue. Digitalization of tax collection and tax administration is critical to ensure greater transparency of the tax system, widening of the tax base, while mitigating compliance risks and encouraging voluntary tax compliance.”
Tax experts and stakeholders at the event called for the automation of tax collection by the FIRS through data and intelligence in order to ease tax collection, as well as, improve revenue.
Executive Secretary, African Tax Administration Forum (ATAF), Mr. Logan Wort, harped on the place of technology in generating revenue for the country in a post-Covid economy.
Mr. Wort, who joined the dialogue virtually from South Africa, stated, “Domestic Resource Mobilisation (DRM) is expected to contribute at least 75% to 90% on average per country” in the post-Covid era, adding that Nigeria and other African countries should note, “improved tax revenue will have to take prime position” in the scheme of things.
He urged Nigeria to pay serious attention to e-commerce and the digital economy sector where big, trans-national digital conglomerates like Google, Netflix and Uber operate and make huge, tax-free profits as a possible way of increasing tax revenue generation.
He said Nigeria should borrow a leaf from Ghana in e-commerce taxation, projected to fetch Ghana $450 million in annual tax revenue.
Ekiti State Governor, Dr. Kayode Fayemi, who was chairman of the Dialogue, was quoted as lauding the FIRS “for its performance in the 2020 fiscal year, despite operating in the most challenging period. The Service not only collected N4.9 trillion in taxes, achieving 98% of its target; only 30.6% of this was attributed to Petroleum Profits Tax, from what used to be over 50%”.
He urged participants to, “interrogate how Nigeria can further deepen the use of technology to improve tax compliance nationally and across sub-nationals.”