CBN Commends Osun’s Policies On Small Businesses

THE Central Bank of Nigeria (CBN) governor, Godwin Emefiele, has commended the Osun State government for formulating people-friendly policies that are particularly geared towards the empowerment of women in the state.
The apex bank’s governor made this remarks in the state capital, Osogbo at the official ceremony for the disbursement of N2 billion CBN Micro, Small and Medium Scale Enterprises Development Fund and the distribution of second batch of 22 mini-buses some transport operators in the state.

Nigeria climbing another debt cliff By OMOH GABRIEL

Nigeria climbing another debt cliff

on August 25, 2014   /   in Broken Links 12:43 am   /   Comments

By OMOH GABRIEL
Nigeria is again on the path towards a debt trap set as usual by its quest and taste for nice things. The country is accumulating debt without any visible alternative of paying back the loans apart from oil.
In other parts of the world, countries borrow to improve their capital infrastructure that aid further production. This helps in no small way to pay off such debt. In those other countries, citizens and corporate bodies pay their taxes regularly to aid development. Nigeria’s tax to GDP ratio is one of the lowest in the world.
With oil prices swinging and with more oil being found around the world, Nigeria has been growing its debt profile.
Nigeria’s total debt stock has risen to a very high level of N10.4 trillion as at June 2014. The rising debt profile of the country is made up of external debt stock of N1.46 trillion ($9.377billion) and Federal Government domestic debt of N7.421 trillion ($47.653billion). States in the federation have a domestic debt stock of N1.551trillion or $9.963 billion.
The Federal Government share of the rising external debt stock stands at $6.363billion. As at December 2013, however, the total stock of external debt was $8.821 billion, indicating a rise of $556 million in the first half of 2014. But as at 31st December 2012, Federal Government’s external debt was $4.14 billion as against a total debt stock of both federal and state governments of $6.5 billion.
A break down of the rising debt profile showed that Federal Government’s external and domestic debts amounted to N8.8 trillion or $57.030 billion as at the end of June 2014. Federal Government borrowing from multilateral institutions amounted to $3.826 billion while loans from bilateral sources mainly China Exim Bank and Eurobond amounted to $2.537 billion.
In the case of states, a total of $2.904 billion was sourced from multilateral institutions, $108.9 million was obtained as loans from bilateral sources, thus making states’ total outstanding external debt as at June 2013, $3.013 billion.
The growing debt should be of concern to all Nigerians considering the nation’s recent experience with the Paris Club of creditors.
Nigerians will remember that in 1985, Nigeria owed $8 billion to the Paris Club of creditors out of $19 billion of its foreign debt. By the end of 2004, about 11 years after, Nigeria owed the Paris Club $31 billion out of $36 billion of its foreign debt. The rise in the debt stock was as a result of interest rates, interest arrears and interest charged on the arrears.
These are huge arrears, penalties and interests accumulated over the years. In December 2000, rescheduling agreements made by the Federal Government showed the principal balance of the nation’s debt was $1.48 billion. But the principal arrears were $10.31 billion; interest arrears $4.45 billion and late interest $5.18 billion.
As a result, over $6 billion increase was recorded on Nigeria’s debt profile between 2002-2004. This added up to $31.42 billion that Nigeria was said to be owing the Paris Club as at 2002. To exit the Paris Club, Nigeria made the total payment of $12.4 billion to Paris Club and Britain, the largest creditor received $3 billion.
Years after, Dr. Ngozi Okonjo-Iweala who assisted Nigeria to exit the club of creditors is again presiding over the accumulation of another round of debt that could snowball into a debt trap. In an attempt to comfort Nigerians that all is well, the Director-General, Debt Management Office, Dr. Abraham Nwankwo assured that the debt remained sustainable at a ratio of 12.51 to the Gross Domestic Product, GDP. But he contradicted himself immediately by saying that the managers of the nation’s debt would apply more caution in further borrowing in order not to run into the crisis of debt overhang, which the nation once suffered.
Nwankwo is just being a clever civil servant. All is not well. The debt is mounting and the nation’s revenue profile is dwindling. Oil production is dropping, traditional buyers of Nigeria’s oil are finding alternatives. If the prices of crude crash as it did in the 80s that led to the nation’s inability to pay its debt as at when due, the country will once again be in a strait. For several years, Nigeria has been preaching economic diversification without any appreciable progress. The nation has continued to import goods it has no business importing.
Nothing has changed, just the faces of the economic managers whose major concern is gathering in Abuja at the end of every month to share oil money.
DMO-DG said: “The sovereign debt is doing well. Currently, our total sovereign domestic debt for federal, states and the FCT is about N8.9 trillion and external debt is about $9.38 billion. The question to ask Dr. Nwankwo is: how well is the debt doing? A debt is a debt. These men should stop deceiving Nigerians. You are accumulating debt for the next generation of Nigerians. The last debt overhang is what has caused the level of unemployment in the country today.
The present insecurity ravaging the unity of the country was as a result of the indiscretion of those who led the nation to wanton borrowing in the 70s. Today, while those men and their children are living in luxury, the younger generation is wallowing in abject poverty.
The government would want Nigerians to swallow the bait that the nation’s current debt/G.P. ratio is about 12.51 per cent which is much lower than the 56 per cent total public to G.P for countries in Nigeria’s group saying that this is not an indication that Nigeria can afford to borrow without caution.
In spite of the rebasing which means we have more capacity to borrow, we are not going to borrow without caution. In fact, we are going to be more cautious, especially because our tax-G.P ratio is low. Many economic agents do not pay their taxes.” This is where this government has failed. If many economic agents are not paying their taxes and oil revenue is dwindling, what has it done to fill the gap? This is dangerous for the future.
The frightening thing is that the Federal Government raised additional $1 billion from the international capital market in 2013 following which several Nigerian firms, especially banks have also gone to the international capital market to raise funds for their operations. Six companies issued nine bonds within the last one year, from which about $3.4 billion was raised. This development does not look promising considering Nigeria’s previous experience with borrowing from the international capital market.

- See more at: http://www.vanguardngr.com/2014/08/nigeria-climbing-another-debt-cliff/#sthash.8hMBSB8U.dpuf

Nigeria is again on the path towards a debt trap set as usual by its quest and taste for nice things. The country is accumulating debt without any visible alternative of paying back the loans apart from oil.

In other parts of the world, countries borrow to improve their capital infrastructure that aid further production. This helps in no small way to pay off such debt. In those other countries, citizens and corporate bodies pay their taxes regularly to aid development. Nigeria’s tax to GDP ratio is one of the lowest in the world.

MICROFINANCE: POVERTY ABOLITION or FABRICATOR by Don Abiodun Odedeyi

BACKGROUND

The Nigeria microfinance should be a source of financial services for entrepreneurs and small businesses lacking access to banking and related services, changing their stories from insufficient finance to abundant financial capacity.

But like the 1980s and early 1990s, a new canker-worm is creeping into the financial sector in Nigeria. Unlike then when it tried to swallow the whole banking industry, now, it is the microfinance sector.

In the last 9 months, microfinance banks are witnessing rising non-performing credit portfolios which are gradually spreading distress into the sector. From investigation, these grief are due, mainly, to predatory debtors in the banking system whose motives involved the abandonment of their debt obligations in some banks only to contract new debts in other banks. Their tactics varies but include using several individuals to contract (front) new loans from several banks only for these ‘fronters’ to disappear after handing over the loans.

Life in Dubai...

Hundreds of thousands of young Africans are throwing everything into the unknown, traveling to foreign countries in the hope of a better life. This story is important for those aspiring to venture on such journey... It is the reality faced by those who chose to go to Dubai in search of greener pasture...


Every evening, the hundreds of thousands of young men who build Dubai are bussed from their sites to a vast concrete wasteland an hour out of town, where they are quarantined away. Until a few years ago they were shuttled back and forth on cattle trucks, but the expats complained this was unsightly, so now they are shunted on small metal buses that function like greenhouses in the desert heat. They sweat like sponges being slowly wrung out.


There are three different Dubais, all swirling around each other.
* There are the expats, about 9% of the population, who are primarily attracted by the employment and investment opportunities of the United Arab Emirates,  * there are the Emiratis, or are citizens, headed by Sheikh Mohammed; and then * there is the foreign underclass who built the city, and are trapped here. 
They are hidden in plain view. You see them everywhere, in dirt-caked blue uniforms, being shouted at by their superiors, like a chain gang – but you are trained not to look

Sonapur is a rubble-strewn patchwork of miles and miles of identical concrete buildings. Some 300,000 men live piled up here, in a place whose name in Hindi means "City of Gold". 
In the first camp I stop at – riven with the smell of sewage and sweat – the men huddle around, eager to tell someone, anyone, what is happening to them.

PART 3. WHEN MICROFINANCE BANK IS A BAD CHOICE BY DON ABIODUN ODEDEYI

Yesterday (November 5, 2014), while putting an article together, I got a report that a microfinance bank customer was stopped from taking her own life. She is a customer to three different microfinance banks and, in total, owned them about 1 million naira, her business has taking a nosedive and banks are pressing for their money.

She had gone to a river near her house around Orimerunmu (between Ibafo and Mowe, Ogun state, Nigeria). Fortunately, she was spotted by fishermen before she could accomplish her task.

Who is at fault?

How did she get to this state?

Would she have been better off if she is never involved with microfinance and had opted for commercial banks?

Part 2: MYTH OR REALITY: MICROFINANCE BANKS RUN AWAY WITH CLIENTS’ MONEY by Don Abiodun Odedeyi

This is the second part of my Microfinance Bankable or Not series. I hope you read the first part else, click here. Today, the theme is CONFIDENCE in the sector. Is it real or myth? What you need to know and how you can best be on the advantage side.

Misinformation is the second biggest problem facing the microfinance sector. 

Many cry 'foul' when a mfb is suggested for business...

May I ask you this? "What are you going to the mfb for?"

Many, today, know mfbs for credit lending MEANING you go there to get loan then repay over a period of time (usually 6 months to 12 months). To this end, who should be wary of the other?

ARE MICROFINANCE BANKS RELIABLE? CAN YOU BANK WITH MICROFINANCE BANKS? Part 1 By Don Abiodun

I never planned this to have parts, my intention was to put together a problem solving article for my audience but along the line, it was too glaring that if I am to help those who will find this article helpful, I need to take time in explaining my points hence, I will make this a daily affair until this issue is trashed.

December 2013, Mrs Daniella Arul*** paid the last installment for her 500,000naira loan to a microfinance bank. It was her third cycle. To access another, she needed to shore-up her cash collateral by 20% of the loan she will like to access.

Every week, she contributed 15,000, proceeds from her cloth sales. She eye early March for her date of accessing another 800,000naira loan.

February 21, 2014, Central Bank of Nigeria (CBN) revoked license of 83 Microfinance banks. Mrs Daniella's Microfinance bank was one of them.

******************

Robust economic growth, the goal of any country cannot be achieved without putting in place well focused programmes that increase access of poor and low income earners to factors of production. This was the main challenge defeated with the introduction of Microfinance Banks. Evidently, Micro-financing is here to stay yet the trend of closure of these institutions raised great concern and erode public's confidence?

Thus, I have come across many people who wish to do business with the sector but the same question seems to come from them all...  

ARE MICROFINANCE BANKS SAFE AND RELIABLE?

Yes, The Trains Are Back By Bayo Adeyinka

I also took some time to talk to the elderly woman right behind me on the queue. She told me she was on her way to Ilorin and she rides the train regularly. 'It's so convenient for me', she said in Yoruba. Without any further prodding, she told me about how she was able to carry more load with less hassles as a trader unlike if she went by road. I wondered how many of such women not captured by the statistics of our formal sector who are actually the true beneficiaries of a re-engineered railway.

I bought my ticket and we moved towards the platforms. It was at that point that I asked if what I paid for was the express train. Initially, I was disappointed when I was told that the express train would leave by 12 noon and it was the regular train that departs by 9am. The fare was still the same. 

Ebola, ECOWAS, and flight bans by Olusegun Ogundeji

Still on the Ebola Virus Disease, a friend in Freetown got his ‪visa‬ mid August to undertake short media training in the ‪US‬. He was shocked when the airline asked him to pay how much? $4,400 for a return trip ticket between Freetown and Miami. That was in addition to the information that there was no seat throughout ‪September‬.

He hoped for a better option with time because only two airlines were operational in Sierra Leone since late July when regional flight operators from Nigeria, Cote d’Ivoire, Togo and Senegal bowed out for Sierra Leone, Liberia and Guinea to settle their differences with Ebola – alone.

Unfortunately, it’s been three months now. Nothing has changed except more deaths, and spiraling figures from WHO. I want to maintain that most ‪West African‬ states reacted to the ‪Ebola‬ Crisis, especially the treatment meted at countries worst hit, in an appalling manner.

Lagos from a visitor's view by Don Abiodun Odedeyi

A close friend #Divine Patr***, from #Kaduna, came to Lagos recently. Her 5-day visit gave me a different view of #Lagos... While I won't define Lagos from another man's view, it is good to see, once in a while, from others'.

Sadly, I got carried away with laughter so much I forgot to turn on my audio recorder but never mind, I have a perfect photographic recall of the whole affair.

On her way home, #Divine Patr*** was opportune to see a train plying Ikeja-Yaba axis. It was around 6pm, rush hour; when many workers are struggling to get home. The sight of human bodies on every available space around/on the train stunned her.

Her exact words were, "How can men pack themselves on train like Sardine"?

For many of us, we've seen this sight many times and it doesn't count for anything again . Now, we are somewhat blind to this gory sight...

Yesterday, I read Lee Abbamonte's piece about Lagos in his 'Worst Places to Live', though grossly exaggerated, scene like this will give foreigners nothing but nightmares about Nigeria.