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FG, CBN, DMO reject Moody’s downgrade of sovereign rating

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. Nigeria, one of top 10 most improved economies- World Bank

.CBN expands Anchor Borrowers’ Programme

.Targets extra 2m tonnes from 300,000 rice farmers

The Federal Ministry of Finance (FMF), the Central Bank of Nigeria (CBN) and the Debt Management Office (DMO), have vehemently rejected the downgrade of Nigeria’s rating by Moody from a B1 stable to a B2, insisting that there is no basis for the rating.

The rating agency, on Wednesday, had cut Nigeria’s long-term foreign-currency bond to B1 from Ba3 and kept its outlook stable, saying Nigerian efforts to broaden non-oil revenue had been unsuccessful. The local-currency rating was unchanged at Ba1.

But Nigeria’s fiscal and the monetary authorities came together and said that this is equivalent to the nation’s existing B/Stable Outlook rating from S&P and slightly lower than Nigeria’s B+/Negative Outlook rating from Fitch.

In a mail response to this development, the Federal Government said: “While we respect the right of Moody’s to make this decision, we strongly disagree with the premise and must address some of the conclusions upon which the decision rests.

“Since Nigeria was last rated by Moody’s (as B1 stable) in December 2016, Nigeria has successfully emerged from a protracted recession and recorded important improvements across a broad range of indices, including: A return to economic growth of 0.55% in Q2 2017, and returning business confidence, as evidenced by a PMI index of 55.0”.

The Federal Government further explained that there is a stable foreign exchange window for importers and exporters, with improving liquidity and convergence of the parallel and official rates.

The statement noted that there is a significant improvement in the nation’s foreign exchange reserves, currently totalling $34 billion, increased oil production, combined with stable and now improving oil prices, a slowly improving revenue profile, with non-oil revenue (principally taxes) up 10 percent.

“For instance, the month on month improvements in inflation levels since January 2017, with inflation continuing to trend downwards, while the strong year on year improvement on the World Bank Ease of Doing Business Rankings from 169th to 145th place, a 24 place move in one year.

“Similarly, in 2016, the highest capital expenditure deployment since 2013, making investments in critical infrastructure to support further growth.

“At the heart of Moody’s rationale is the need for Nigeria to improve non-oil revenue aggressively. This is absolutely and directly aligned to the government’s priorities. This is critical to our economic development and is the basis for the establishment of a stable and inclusive economy, which can withstand global shocks and has the resources to increase investments in our infrastructure.

“We have put in place a number of measures to improve our collection and FIRS has made good progress in increasing revenues, particularly when considering that the economy is still recovering from the oil price shock. Examples include: Introduction of a Tax Amnesty (the on-going Voluntary Assets and Income Declaration Scheme (VAIDS)), which is showing positive results.

“Plugging leakages and deployment of technology driven revenue management strategies. An example is Health Pay, a pilot cashless revenue project in the health sector, which has recorded material increases in revenue.

“We have seen improvements in revenue in 2017. Fiscal revenues are linked directly to both the performance of the economy and the number of tax payers contributing. As a result of the foundation that has been established in 2017, we expect, similar positive trends in 2018”, the Federal Government added.

The authorities, also said: “Our revenue initiatives are changing the mix of revenue sources available to government from the traditional oil or debt to a combination of oil, debt and domestic revenue. For example, the 2018 budget includes N710billion proceeds from the restructuring of the Government’s equity in the JV oil assets.

“The reform is aimed at increasing private sector equity participation to improve efficiencies in the sector and also provides revenue to the Government which will be deployed solely and exclusively for creating new assets in Nigeria.

“Moody’s highlights that while our debt levels remain low, interest is consuming a larger portion of revenue. It should be noted we are implementing a very prudent fiscal and debt management strategy to reduce the cost of our debt.

“Given the relatively higher domestic interest rates, we are focusing on longer term external borrowing with an aim to re-balance our domestic and international debt portfolio to a 60:40 split over the coming years.

“Our existing proposal to refinance US$3 billion of treasury bills through external borrowing is expected to reduce Nigeria’s debt servicing costs, further improving our fiscal position.

“We also expect this strategy to help to reduce the “crowding out” effect of Government borrowing in the domestic markets. The challenges that are highlighted in the Moody’s rating are clear, and are being addressed by the government, with the environment having improved significantly since the last period of assessment”, Nigeria’s authorities clarified.

But while dismissing the rating as lacking any substance, the World Bank, in a recent report, said that Nigeria has begun doing well.

The global financial institution has said that Nigeria has moved up 24 places to 145th in the World Bank’s ‘Doing Business,’ adding that for the first time, the country is recognised as one of the top 10 most improved economies in the world.

Just on Wednesday, the World Bank team formally presented 2017 Doing Business Ranking to the Federal Government, as evidence of progress made by Nigeria as a result of recent reforms embarked upon by the government.

The report, highlighted five reforms including Starting a Business, Dealing with Construction Permits; Registering Property; Getting Credit, and Paying Taxes, which is making it easier to do business in Kano and Lagos, the two cities covered by the report in Nigeria over the course of last year.

The Presidential Enabling Business Environment Council (PEBEC), which is meeting for the first time since the release of the latest rankings by the World Bank, will look at the significance of Nigeria’s ranking, especially as the country features as one of the 10 economies showing the most notable improvement in Doing Business 2017.

The World Bank, in its latest ranking on Doing Business, confirmed Nigeria’s progress across several indicators comprising, starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency.

Other indices that will feature in the council’s discussions on Doing Business index include the distance to frontier metric which rose from 48.18 in 2017 to 52.03 in the 2018 outlook, and per capita income, among other issues.

According to the Senior Special Assistant to the President on Media & Publicity, Office of the Vice President, Laolu Akande, the PEBEC will also at the meeting appraise the ongoing implementation of the second National Action Plan (NAP 2.0.) as well as get an update on PEBEC special projects.

Akande, in a statement obtained by one of our correspondents, explained that in its bid to consolidate the progress made so far, the council at the meeting, will launch an App (Report NG) that enables the council to obtain feedback from citizens on the reforms being implemented by it.

The PEBEC App (Report NG) enables interested persons to register their complaints by logging into the App and providing details of their complaints and the agencies of government involved.

The App also enables the council’s secretariat to track resolution of the complaints via a dedicated page with a view to ensuring consumer satisfaction.

The Daily Times recalls that the PEBEC, was established by President Muhammadu Buhari in July 2016, with a mandate to sustainably and progressively make Nigeria an easier place to do business.

The PEBEC is chaired by the Vice President Yemi Osinbajo, with the Minister of Industry, Trade & Investment, as vice chair.

Meanwhile, following its ongoing economic recovery and growth plan, the Federal Government through the Central Bank of Nigeria (CBN) has formed strategic partnerships with agricultural commodity associations in the country in its effort to expand the implementation of the Anchor Borrowers’ Programme (ABP).

Acting Director, Corporate Communications Department (CCD) of the Central Bank of Nigeria, Isaac Okorafor, who disclosed this on Wednesday, said the decision to enter into strategic partnerships was to consolidate on the gains of the ABP and reach more deserving small holder farmers nationwide.

He said: “The CBN is forming these partnerships to further ramp up domestic production of identified commodities by leveraging the existing organised structures of the agricultural associations nationwide, thereby providing huge economics of scale in the implementation of the programme.”

Okorafor said that the strategic partnership had begun to yield results with the commencement of the Rice Farmers Association of Nigeria (RIFAN) Anchor Borrowers’ Programme with the Bank of Agriculture where about 300,000 rice farmers across 20 states would be supported under the ABP during the upcoming dry season cultivation.

He said that an additional two million metric tonnes of paddy rice was expected to be produced under the dedicated RIFAN Anchor Borrowers’ Programme, adding that the strategic partnership with RIFAN was in tandem with the Federal Government’s agenda for Nigeria to be self-sufficient in rice production in the future.

The CBN spokesman further said that all registered agricultural commodity associations could key into this strategic partnership by simply approaching any of the Participating Financial Institutions (PFI) collaborating with the CBN in the implementation of the programme.

The Daily Times recalls that the CBN’s Anchor Borrowers’ Programme was inaugurated by Buhari on November 17, 2015 in Birnin Kebbi, Kebbi State.

The ABP has so far achieved success in terms of outreach and coverage, making it one of the most successful CBN development finance interventions to date.

About N45.5billion has been released through 13 Participating Financial Institutions in respect of over 218,000 farmers cultivating nine commodities across 30 states.

Motolani Oseni, Lagos, Mathew Dadiya, Abuja

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Ihesiulo Grace

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