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news you can trust I ** tuesDAY 05 may 2020 I vol. 19, no 556
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NGUS mar 31 2021 393.92
S
outh Africa’s sudden resolve to sell its cashburning state-owned firms provides key learning for Nigeria as it desperately seeks to ease pressure on government finances in the wake of the COVID-19 pandemic and the fiscal crisis it is inflicting.
South African Finance Minister Tito Mboweni sees gross domestic product (GDP) slumping by nearly 6 percent in 2020, while tax receipts are expected to tumble by up to a third, and he told lawmakers on Thursday the government was willing to sell cash-guzzling public enterprises in the wake of the coronavirus pandemic and sharply falling state revenues.
Nigeria, a country of 200 million people, is in an even worse position. “At well below 10 percent of GDP since 2015, the total revenue available to the three tiers of government in Nigeria has fallen so low that it does not cover even recurrent spending threshold of fiscal liquidity, as salaries and debt service each amounted to about 70 percent
6M
of Federal Government revenue in 2017, and deficits had to be incurred to meet both in full, with additional borrowings to meet shrinking overheads and a small and contracting capital spending,” said Ayo Teriba, a Cambridge-trained economist. “With less access to debt markets, many states were known Continues on page 30
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NGUS mar 29 2023 403.03
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Pressure mounts on Nigeria to sell cash-guzzling state-owned enterprises SEGUN ADAMS
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Lagos, FCT residents spurn facemasks, social distancing as lockdown eases …crowds at bank branches show weak adoption of cashless policy, say analysts … FG alarmed by gross violation of guidelines, to prosecute offenders JOSHUA BASSEY, HOPE MOSES-ASHIKE (Lagos), TONY AILEMEN, JAMES KWEN, SOLOMON AYADO, INNOCENT ODOH, CYNTHIA EGBOBOH & GODSGIFT ONYEDINEFU (Abuja)
D
ay-one of the gradual relaxation of the fiveweek-long lockdown in Lagos, Abuja and Ogun State showed poor level of compliance with the guidelines reeled out by the Federal Government and the various state administrations as residents trooped out with little or no regard to social distance, compulsory use of facemasks and other safety protocols. The three states had been on lockdown since March 30 as part of government measures to curContinues on page 30
Inside
Wapic Insurance offers health workers 15% premium rebates on new policy uptake P. 6
A truckload of interstate travellers arrested by the police at Berger in Lagos, yesterday. According to the truck driver, the truck departed with some travellers from Zamfara State and picked others in other states of the North en route to Lagos. Pic by Olawale Amoo
Sokoto, Taraba, Jigawa record highest poverty rates as Nigeria’s poor P. 6 now 82.9m
Why Buhari’s call for debt forgiveness would be a tough sell LOLADE AKINMURELE
P
resident Muhammadu Buhari’s plea to international financial institutions for an outright cancellation of Nigeria’s debt obligation to them to help better withstand the coronavirus pandemic would be a tough sell, according to senior people with knowledge of the matter. The request which was made
in a meeting with other heads of state from the Non-Aligned Movement seemed to be directed at multilateral lenders, including the World Bank and Africa Development Bank, as well as bilateral lenders led by the Export-Import Bank of China and include the French Development Agency (AFD), the Japan International Corporation Agency (JICA), the Exim Bank of India and Germany’s KFW.
These groups of lenders, especially led by the World Bank and China EXIM Bank, make up 60 percent of the country’s $27 billion external debt, according to official data, while commercial lenders, led by Eurobond holders, account for 40 percent. Getting a debt cancellation from these groups of lenders would be a tough sell for multiple reasons. For the multilaterals like the
World Bank and AfDB, they operate as commercial entities with shareholders and would most likely balk at a deal to take a hit to lose part of their capital in a debt forgiveness spree. “The World Bank already held internal discussions on ways to ease the pain of debtors at these trying times and decided a debt relief for a couple of months was appropriate,” a senior banker with multilateral lending experi-
ence said. “If they thought a debt cancellation was feasible, they would have done that, but it’s not. What would they have left if they decided to cancel the debt of every debtor country? They’ll go bankrupt,” the person added. The commercial lenders are also unlikely to accept a debt cancellation of Nigeria’s debt as it would mean giving away Continues on page 30