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BUsiNEss 115
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Moneywatch P23
Compulife P25
Nigerian banks and the travails in risk management
Grappling with rising level of piracy in Nigeria
Fitch gives Access Bank BBB- ratings UTCH Ratings~ a global rating Cagencydedicated to providing value beyond rating through objective ,and balanced credit opin ions, has assigned Access Bank Pic a 'BBB{nga)' National Long-teon rating and '8 (nga)' National Short-teon rating on RatingWatch Positive (RWP). The rating actio n follows the bank's 28th March, 2011 announcement of its execution of a memorandum of understanding (MOU) to enter into busi ness combination with Intercontinental Bank Pic, as well as discussions between Fitch and Access Bank Pic regarding the potential impact of the business combination. Ptior to the conclusion of the transaction, Fitch understands that the Asset Management Corporation of Nigeria (AMCON) will acquire all of the non-performing loans within Intercontinental Bankand will recapitalise the bank toa netassetvalue of zero. Intercontinental Bank has a large • deposit fiancllise, supported by a branch infrastructure of about . 360 branches at the end of December 2010. Fitch is of the opinion that the business combination with Interconti nental Bank will supportAccessBank'sdeveiopingfranchise and enhance
~ortance.
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its systemic Country Director, World Ban k, Onno Rhull (left); former Minister of Finance, Mansur Muktar; Director-General, Debt Management Office, Abraham Nwankwo; and and Director-Genera. u get ice, ng I Okogu, during the International Monetary Fund's regional economic outlook for sub-Saharan Africa, in Lagos, yeste PHOTO: SUNDAY AKINlOlU , ~ rday.
Govt moves to reduce 2011 budget deficit to 3.6 per cent of GDP Jonathan plans supplementary budget By 8ukky otaj'rde. lagos and JohnAbba Ogbodo, Abuja
'THE Federal Government Imay have. commenced talks with the National Assembly in a move to reduce fiscal deficit of over N700 nlil-
lion of the N4.6 trillion budget this year. The moves to reduce the imbalance in the budget carne anlidst predictions yesterday by the International Monetary Fund (lMF) that countries in
sub-Saha ra ns Africa would have a narrowed fiscal deficit this year, The prediction was contained in the Regio nal Economic Outlook for the sub-region by the lMF in Lagos yesterday.
We have both recognised in all our preliminary discussions that there is a need to come back to a more realistic budget deficit level.
It said some low-income countries ~ with h igh tax revenues projections would become buoyant to allow fiscal deficits to be brought down gradually while "still accommodating the recent first rate of'expansion in real government expenditure. The fund said in its economic outlook for Sub-Saharan ,'T1-iE .: S,.out11-~~t " Ptpj~ct ,to pay ~W r~CJU:i, re,d ;tQUn, .tel-~ <if!! inOVingf~t,er tha_Ii',th~ O,th1 Africa that there should ,be ! 1 Coordmatorof Fadama,Ill, part fund for t)ie Imp,lemen- ,ep;"Salawusaul. " '~. J planned reduction in fiscal Mr Ra~ak Salawli has 'a¢'jb- t:itiod o[(h~project.;. : .. _' ~. /'!e ~appealed to the affectea' deficit, as the crack in most ,uted the slow Implementa-' .7Th' ', tfie prbfectis~ on . States and local go\lemme~~ econonlies has diminished, :tioh of t he project iii the ' cQurse , ,'.now, each state t o ,assis(ifi:t lie: impleI!lentaj It also urged oil-exporti ng r egion to i tl)eiha,blliIY,: bf differs i . eprocess qfimPJe. ~ ti?I!,of~eptoject bypayj!lgui! . countries in the region to save some 'states tlj ' pay the ', m en tatton ~ b ecause ~ of -the th~req!lire<l.cquntewartfuiJd l wind fall ' revenue, "with Iequireqciiurtterpart fund, .de1~y in i>ayITien~ dffl\~ c!JutV' , S~.aWl! ,als,Uariient:ed ~t!J~ spending constrained by : Salawu told the,NeWsM;ency rerpart, fuildby st~tes and , If\ilillity , jof " ~adama absorptive capacity within a of Nigeria, i!t Ij~bu-Oife orr !oca\:gbvervrnehts: . "C' ,- ' Community: Uset ' ~roup t~ medium- teon fiscal frameMo~tfay, that without tile , :;rh~,Worl~Bank,,in,::JtiViiig rf1e~tuJl"(jt'!ithe p?~paymen~ work". ireq uired ' coUnterpart fund, out.tfieproJect., sl'llteff,tfiat O(th~prole,~cosc , ",' , , 'I Head of Nigeria's budget ~he ,projectWod,ld not 'qe ~am, ~tafe~astbllay !1:~ehaJn : Hi' sajd th.e: l'arlama l?rpjec~ office, Mr. Bright Okogu, said "Implemented as ' fa st as it , arnount as ' a counterpart was afways ready to Iffipl~i yesterday that government :should. ' . . ' .. i, : ~, furid 'filrthe ,iivpjelli.ciil:<!tiD~· rhentany projeg: astequ~steq was already In talks Wltll the ~- "Ohecif the pro~lerns faciiig cifth.eproje'~" " ' ,!" ~~~~, ,bYfue regist~,nid,user group iq legislators over the country's ",he~ ~" implementatIon "So me states and !otal 'goy- tile cotnmullity. ~, ' ~,; - , , ~,), 2011 budget proposal, with a 'of Fadama fJ~ prdject is from ~em~~nts ··Hi · the :,: S~JUtli-.~. Acco~gtp hi,!" fci~ anyproh view to reducing the country's the government Irs~lf. W~st,h~~eve~ have : rl0rb!i: ~~c\ ; toBe ~ .e,,~cuted ,onth.e, fiscal policy in the next few " Some states and local gOY- alile to meet thatexp~ctation;- ~~quest oL a user gr0!lP;~ Jt, weeks. ernments have riQt been able and that is~ why:solli.e \~~~es . i CONTiNUED O~:PAGEIb ~ President Goodluck Jonathan
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initially proposed a N4.226 trillion (S2732 billion) budget in December, but the National Assembly inflated the spending projection by passing a N4.972 trillion three months after. He vowed in March to take the issue up with the National Assembly. "We are very. very deep in the n egotiations, we have gone very far," Director-General of the Budget Office, told reporte rs whil e the International Monetary Fund (IMF) was launching its outlook for sub-Saharan Africa, in Lagos, yesterday. "We have both recognised in all our preliminary discussions that there is a need to come back to a more realistic budget deficit level," he said. The original budget plan prE'sented by Jonathan implied a deficit of aro und 3.6 per cent, but Okogu said the final ve rsion would push the deficit "back in that direction". Presidentia l, National Assembly and state governor-
ship elections last month dis· rupted the pace of negotiations, but Okogu said he was optimistic that agreement would be reached Defore the end of the current administration on May 29. "Both sides recognise that this has to be sorted out before the new parliament comes into being, so we have a very tight target that we are both working towards," he said. Okogu said the tightening wo uld come from both recurrent and capital expenditure, although care would be taI,en not to impact any highlyneeded infrastructure Of other capital projects. "Some of it will be overheads for example that were increased a little, and some of it will be capital," he said. "We are going to be very careful. All projects that do not have proper designs and not properly costed, we would want to work w ith the National Assembly to see if they can be given atten tion at a future date," he said. Mo re than half of the planned spending in the ver-
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