23rd To 29th November 2015

23 November 2015
Consumers kick as NERC finalizes new electricity tariffs

Power consumers have outlined reasons why the Nigerian Electricity Regulatory Commission should not approve any hike in electricity tariffs. But the regulator has finalized its position on the requests by the electricity distribution companies for increase in the different types of tariff classes. Mr. Obong Eko, the Assistant National Secretary, Nigerian Electricity Consumer Advocacy Network, “argued that many small businesses would go bankrupt if NERC should increase the power tariffs, adding that this would push up the unemployment rate in the country. A lot of companies come to us, telling us to interface with NERC and make them see reasons why Nigeria is not ripe for an increase in electricity bill. In fact, many of these companies spend about 30 per cent of their revenue to pay for the electricity being supplied currently. So, if the bill is increased, how much of their revenue will they now pay for electricity alone? The Federal Government must not allow this.”

24 November 2015
CBN saves $300m from BVN-for-forex policy

The Central Bank of Nigeria (CBN) said the implementation of the Bank Verification Number (BVN) in the transactions of foreign exchange (forex) has already saved the country about $300m. According to the CBN Governor, Godwin Emefiele, “we have seen the number of BDC operators who purchase forex from the Central Bank drop from an average of about 2,886 to just below 1,200 BDCs, thereby giving the CBN forex savings of almost $100m per week.” According to him, although some are not happy with the action, CBN has managed to attain stability in the exchange rate at about N197/$ since February 2015, while speculators and rent seekers are gradually being eliminated from the forex market. “Despite the sharp drop in inflows, our forex reserve is still at about $30bilion, which is enough to cover about 6 months of Nigeria’s imports as against the traditional benchmark of 3 months. He said, “This is an opportunity for us to look inwards, diversify our economy away from oil, produce locally and create jobs for our unemployed youths.” Read More

25 November 2015
Poor condition of roads costs economy N296trn annual losses

The Regional Chief Executive Officer of Dangote Cement Plc, Arvin Pathak has disclosed that Nigeria is losing$1.5 billion (about N296 trillion) annually, due to poor condition of roads. He gave a vivid picture of the state of Nigerian bituminous roads constructed few years ago as opposed to concrete roads in the USA and India which have been constructed over 80 years ago and still smooth. He said roads play very important part in nation’s infrastructure development and well-designed concrete roads required little maintenance over 40 year design lives. He further explained “Using concrete roads will result in less fuel consumption and less emissions. Small percentage reduction of life time energy use associated with road will have significantly positive implications on sustainable development. Concrete roads are durable and safe. Less prone to wear and tear and low maintenance requirements is one of the principal advantages of concrete roads.” According to him, government would find out that Concrete road is the way to go because of easy availability of indigenously produced cement, uncertainty about bitumen availability in future. “This is against the fact that bitumen is derived from petroleum crude and the world supply of crude is not inexhaustible. It is in the country’s interest to conserve petroleum products and to adopt more eco-friendly and cost effective technologies.” Read More

Oil and gas operators get 4 weeks to submit project costs

The Department of Petroleum Resources, DPR, has issued a four-week deadline for oil and gas operators to furnish it with the cost components of projects currently under execution in the country. This follows DPR’s establishment of “a mechanism to monitor and benchmark Nigerian oil and gas industry costs of projects and operations across the terrains and business arrangements.” This comes as Nigeria’s daily crude oil production is down to 2.1 million barrels, as DPR initiates a National Production Monitoring System, NPMS, to monitor the country’s actual production volumes. The development may not be unconnected with growing global fears on costs escalation in project execution, with Nigeria cited as having one of the highest project costs in the world, which analysts blamed on improper oversight by regulators to monitor and evaluate costs. Read More

26 November 2015
Buhari establishes E-UNIT to cut cost of governance

President Muhammadu Buhari has taken a critical step towards cutting the cost of governance with the establishment of the Efficiency Unit, E-UNIT, which will vet all major expenditures of Federal Ministries, Departments and Agencies, MDAs. The unit will be domiciled in the Federal Ministry of Finance headed by a project leader drawn from the Debt Management Office, Ms. Patience Oniha. The Minister of Finance, Mrs. Kemi Adeosun, who announced this in Abuja, yesterday, explained that the E-UNIT was in line with the current administration’s resolve to institutionalize reform policies that would ensure effective management of the nation’s economy. She said “The principal objective of the Efficiency Unit is to ensure that every government expenditure is necessary and represents the best possible value for money. The Efficiency Unit will undertake programmed reviews of all government overhead expenditure with a view to reducing wastage, promoting efficiency and ensuring quantifiable savings for the country. Specifically, the Efficiency Unit will work across all MDAs to identify and eliminate wasteful spending, duplication and other inefficiencies; identify best practices in procurement and financial management and share such knowledge to ensure its adoption.” Read More

Banks’ operating expenses hit N3.3tr

WHILE the Nigerian banking industry continues to grapple with the pangs of the Treasury Single Account (TSA), latest industry cost performance report on the sector has shown that publicly quoted banks may have spent N3.3 trillion on operating expenses between 2012 and 2014. According to analysts at Fulfigate Associates, a review of 15 publicly quoted banks reports from 2012 to 2014 showed that the nation’s banking industry remains burdened by increasing operating expenses in the last three years from 2012 to 2014, with expenses rising year-on-year by N102 billion and N130 billion, representing 10 per cent and 12 per cent in 2013 and 2014 respectively”. The cost income ratio which shows how much is spent to generate a given level of revenue shows that only six publicly quoted Nigerian banks are efficient in the last three years, achieving below 70 per cent which is the industry’s benchmark. GTB emerged the most efficient bank in this regard, spending 41kobo to generate N1 of income. On the outlook, analysts at Fulfilgate forecast that with the trend over the last three years (2012-2014) and current indices as at September 2015, total expenditure of banks will grow by 15 per cent to N1.419 trillion by December, over 2014 figure of N1.234 trillion. Read More

27 November 2015
Nigeria Central Bank Cuts Rates For First Time In Six Years

Nigeria’s foremost Banker, Mr. Godwin Emefiele Nigeria’s central bank surprisingly cut the benchmark interest rate to 11 percent from 13 percent on Tuesday, its first reduction in the cost of borrowing in more than six years, in an effort to stimulate growth in Africa’s biggest economy. The bank also reduced the cash reserve ratio for commercial banks to 20 percent from 25 percent, another move to try to inject liquidity into the banking system and encourage lending. The central bank has been injecting cash into the banking system since October in a bid to stave off recession in Africa’s top oil producer, which has been hit hard by the sharp fall in crude prices over the last year. “We must stimulate growth,” Governor Godwin Emefiele said, the step was taken “in consideration of the weakening fundamentals of the economy, particularly the low output growth, rising unemployment and the uncertainty of the global economic environment”. Read More