Debt forgiveness will help boost development in Africa – Gbajabiamila
Gbajabiamila has said that foreign debt cancellation will allow African countries to have more funds for the development of the continent.
The Speaker of the House of Reps, Femi Gbajabiamila has stated that debt forgiveness will help boost development in Africa as African nations will spend less time towards debt serving but on governance.
The Speaker disclosed this in a social media statement after meeting international development partners on the Debt Cancellation Campaign Initiative (DCCI) under the umbrella of the Conference of Speakers and Heads of African Parliaments (CoSAP).
Speaker Femi Gbajabiamila engages development partners on debt cancellation
In light of the grinding economic impacts of Covid-19, Nigeria's Speaker, Rep. @femigbaja, has engaged some international development partners on the Debt Cancellation Campaign Initiative (DCCI)…
— Speaker of the House of Representatives (@SpeakerGbaja) December 10, 2020
The international partners expressed readiness to support the CoSAP debt cancellation drive for African countries.
Also present was Country Director in Nigeria, Shubham Chaudhuri, including delegations representing the EU Commission, ECOWAS, Nigeria, United Nations Development Programmes, GIZ, Japan International Cooperation Agency, Canadian International Development Agency and others.
The Speaker added that foreign debt cancellation for African countries was topmost on the group’s agenda and solicited their support to make it a reality.
Considering the impact of the coronavirus pandemic on African economies, he disclosed that debt servicing was “strangling” African economies as African nations are spending funds needed for development on debt servicing.
“We can all sit here/talk about revamping the economy, develop the infrastructure in terms of health, education and all of those things, which are great/wonderful.
“But, we may be doing it, and it would be, hopefully not be an exercise in futility because these things require money and if all your money is going toward servicing debt, then how are we serious about this (Legislative) agenda?
“So, one of the main issues we are dealing with is debt forgiveness in the form of debt cancellation,” he said.
He added that if this is done, African nations will have more funds for the development of the continent.
“We consider this debt forgiveness if we do get it, as money in hand and we have to channel these towards the development of the continent,” he said.
World Bank Country Director, Chaudhuri said the issue of debt relief was being pushed by the World Bank President, David Malpass, before the Group of Twenty (G20).
“What has happened over the last 20 years is that the debt levels have built up. For Nigeria, as you may have known over the issue of financing, does not have a debt problem but for other sub-Saharan African countries.
“The problem is, there is a very different set of creditors that we are talking about and it will take a lot more work. That’s one thing that has changed,”Chaudhuri said.
What you should know
- It was reported in October that the World Bank President, David Malpass, advocated that debt cancellation is needed by the poorest countries as the COVID-19 pandemic could trigger a debt crisis in some nations.
- In November, the G-20, in a bid to combat the economic fallouts of the pandemic, endorsed a plan which will enable the freezing of debt obligations to developing nations till mid-2021.
Reps say implementation of capital projects must be result-oriented
The House of Reps has called on the FG to ensure the implementation of capital projects contained in the 2020 budget.
The House of Representatives has called on the Federal Government to ensure that the extension for implementation of capital projects in the 2020 budget is matched by visible and identifiable results.
This was disclosed by the Speaker of the House of Representatives, Femi Gbajabiamila, during the visit of the Finance Minister, Zainab Ahmed, to the National Assembly on Monday.
The Speaker described the level of implementation of the 2020 budget as the highest recorded since Nigeria’s return to democracy in 1999.
He said, “The extension for implemntation of capital projects in the 2020 budget must be matched by visible and identifiable results needed to achieve quantifiable development and growth.
“Let me commend the minister and her team for the level of implementation throughout last year. It was really high, probably the highest we have seen in a long time; if not in history, in recent times, but we wanted to achieve a hundred per cent and we are on the same page.”
According to him, “We are basically trying to make sure social development and growth for the country are achieved optimally.
“It’s not a usual thing to extend the life of your budget – a budget is supposed to be for a year. So, if we do that which is not the norm, we expect there’ll be a result, and it will not just be an extension for the sake of it. There’ll be visible, identifiable results,” the Speaker added.
Briefing the lawmakers on the performance of the 2020 budget, the Finance Minister said that the Federal Government retained revenue was N3.94 trillion which represents 73% of the target for the year.
What you should know
- The Federal Government’s share of the oil revenue was N1.5 trillion which represents 157% performance over and above the prorated target for 2020.
- This is because the crude oil price performed better than the 28 dollars per barrel that it had projected.
- The collection was 1.28million barrels per day representing 79 per cent performance of the revised target.
- Company income tax performed at 82 per cent and 68 per cent respectively of the target for the year.
Customs revenue performance was 79 per cent. Other revenue, which includes Independent Revenue, was budgeted at N993.73 billion. The performance was N519.36 billion.
“Considering the challenges of the year, this is a reasonably good performance, in fact, this performance is higher than several previous years backwards.
“At the close of the year, we had released 89 per cent of the capital budget, and what we rolled over was only the un-utilized portion of the budget and it is that un-utilized portion that we are now tracking the performance and that by the end of January, performance of in-utilized portion is about 30%,” Ahmed stated.
2020 budget performance: FG achieves 89% capital release in December 2020
The Minister of Finance has revealed that the FG achieved 89% release of the capital component of the 2020 budget to MDAs as of December 2020.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, has revealed that the Federal Government achieved 89% release of the capital component of the 2020 budget to Ministries, Departments and Agencies (MDAs) as of December 2020.
She said that the 89% capital funding for MDAs was achieved with the release of N1.74 trillion.
According to a report by the News Agency of Nigeria (NAN), this disclosure was made by Ahmed at an interactive session with the leadership of the National Assembly on Monday, February 22, 2021.
She also revealed that the government had disbursed N118.37 billion for Covid-19 capital expenditure from the fund.
What the Minister for Finance is saying
Ahmed said the Nigerian economy faced serious challenges in 2020, with the macroeconomic environment significantly disrupted by the Covid-19 pandemic.
She said this led to a 65% drop in projected net 2020 government revenues from the oil and gas sector, which adversely affected foreign exchange inflows into the economy.
On the delayed release of funds to implement the 2020 capital budget until March 31, the Minister said the complaint had decreased.
She said, “I think the complaint was earlier in the year when we were trying to transfer the balances. As far as I know, in the past three weeks, I haven’t heard any such complaints and we have been able to address them.
“But when we started the transfers, we couldn’t transfer to some agencies because of some limitations in the system, but we have since been able to transfer the capital component that is being utilised by the agencies budget to the system.”
While pointing out that the implementation of the MDAs projects was tied to procurement processes and capacity of the MDA, Ahmed also said the extension of the 2020 capital budget implementation to March 31 had recorded 30% performance as at January.
However, Ahmed said that she expected that the extension would record 100% performance in March.
Speaking during the interaction, the Senate’s Chief Whip, Senator Orji-Uzor Kalu, commended the Minister on the capital performance of the 2020 budget.
He said, “I want to commend the minister and her team because this is the first time in the history of Nigeria that by December 31, we are having 89% performance expenditure of the budget. It has never happened before; Last year was the very first.
“The budget had been going 49%, 27%; this means from what the Senate President was asking, it means by March, we should be looking at implementing the budget 100%.’’
Earlier, President of the Senate, Ahmad Lawan said the meeting was to get an update on the capital implementation of the 2020 budget given its extension for implementation by the national assembly to March 31.
What this means
- The 89% capital release for the 2020 budget as of December 2020 is quite encouraging as it occurred despite the economic challenges and disruption caused by the outbreak of the coronavirus pandemic.
- There seems to be an improved effort by the Federal Government at the budgeting process with the early passage of the 2021 budget and the implementation of the capital component of the 2020 budget.
Nigeria’s economy to grow by 1.1% in 2021 – World Bank
The World Bank expects growth in Nigeria to resume at 1.1% in 2021 but fears the rebound could be affected by lower oil production due to quotas.
The World Bank has forecasted that the global economy is set to rebound by 4% in 2021, while Nigeria’s economy is expected to resume at 1.1%.
The World Bank released this on Monday in its January 2021 Global Economic Prospects. The World Bank said:
- “The global economy is expected to expand 4% in 2021, assuming an initial COVID-19 vaccine rollout becomes widespread throughout the year. A recovery, however, will likely be subdued, unless policy makers move decisively to tame the pandemic and implement investment-enhancing reforms.”
The World Bank urged that administrators needed to focus on improving business environments, and increase labour and product market as the pandemic had severely affected the global economy.
World Bank Group President, David Malpass, said:
- “While the global economy appears to have entered a subdued recovery, policymakers face formidable challenges — in public health, debt management, budget policies, central banking and structural reforms — as they try to ensure that this still fragile global recovery gains traction and sets a foundation for robust growth.
- “To overcome the impacts of the pandemic and counter the investment headwind, there needs to be a major push to improve business environments, increase labour and product market flexibility, and strengthen transparency and governance.”
The World Bank added that the 2020 economic fallout was slightly less severe than previously projected, citing shallower contractions in advanced economies and a more robust recovery in China. However, disruptions to activity in emerging economies were “more acute than expected.”
The World Bank added that Nigeria’s economy was estimated to have contracted 4.1% in 2020, as the effects of the pandemic impacted economic activities in all sectors, even across the region.
- “In South Africa, where economic activity was on weak footing before COVID-19, output is estimated to have fallen 7.8% last year. The country suffered the most severe outbreak of the pandemic in the region and underwent strict lockdowns that brought the economy to a standstill.”
The World Bank said oil exporters in the region grappled with sharply lower prices, however, contractions in agricultural commodity exporters were less steep.
- “Growth in the region is forecast to rebound moderately to 2.7% in 2021.”
The World Bank said it expected growth in Nigeria to resume at 1.1% in 2021, citing that Nigeria’s economic rebound would be affected by lower oil production due to quotas.
- “Growth in Nigeria is expected to resume at 1.1% in 2021. Activity is nevertheless anticipated to be dampened by low oil prices, OPEC quotas, falling public investment due to weak government revenues, constrained private investment due to firm failures, and subdued foreign investor confidence.
- “In South Africa, growth is expected to rebound to 3.3% in 2021. An expectation of weak growth momentum reflects the lingering effects of the pandemic and the likelihood that some mitigation measures will need to remain in place.”
What you should know
- Nigeria’s Gross Domestic Product (GDP) in real terms declined by -3.62% (year-on-year) in Q3 2020, thereby marking a full-blown recession and second consecutive contraction from -6.10% recorded in the previous quarter, Q2 2020.
- The Federal Government of Nigeria stated that the latest recession in the country would be short-lived, as it expected Nigeria to return to positive growth soon unlike during the 2016 recession.