SBM Report counsels FG to borrow in FX against local bond

…As Herdsmen attack cost 3 states $14b in 4 years

A report released weekend by SBM Intelligence report has urged the federal government to extend borrowing in foreign currencies, against borrowing in local currencies through bond, in order to exit its debt binge.

The report which cut across developments across the country last week, also touches the Independent People of Biafra (IPOB) leader impending judgment, Boko Haram onslaught, financial systems challenge and herdsmen attack among others, called for strategic action by government to further strengthen cohesion, stability and economic growth.

The herdsmen attack, the document revealed has drained $14 billion from three states within four years.
The report made available to Daily Times Nigeria, acknowledged that the National Assembly on approved the president’s request for a $500 million Euro-bond, but counselled “It is a smart idea to borrow in foreign currencies and from multinationals as these provide lower interest rates than issuing local bonds”
It noted that asides federal government, many states are also borrowing which has lifted sub-national debt contribution to national debt and where debts are used to fund non-income generating projects, burden of repayment on successive administrations strengthens.

“For example, out of the sub-national debt of $3.57 billion, Lagos had a share of $1.38 billion, meaning that Lagos owed 38.7 percent of the country’s sub-national foreign debt. Kaduna State came second with a foreign debt of $222.88 million; Edo, $183.64 million; and Cross River, $114.99 million. Asides Lagos which derives bulk of its funding from internally generated revenues, these states will rely on their federal allocations to pay down their loans” pointed the SBM Intelligence report.

The report identified prevailing challenges facing Nigerian banks adding that when a bank considering the tough business environment and high interest rates, many banks are no longer confident that they can loan out money and expect it to come back as and when due. “Any fall in interest rates at the back of falling inflation will also affect profit from investment portfolios. It is indeed a tough time to be a bank in Nigeria”

On how Africa’s rent-seeking culture is costing Nigerian (home)-grown businesses, the report quoting recent Bloomberg’s report said “ Dangote Cement’s 2.5 million metric tons per annum plant in Ethiopia is facing protests by youth groups demanding control of a section of the plant” According to the SBM Intelligence report, “ The protest by youth from communities adjoining the company’s plant located in Mugher, about 90 km north of Addis Ababa, is coming months after a similar protest by Oromo communities forced the company to halt production”.

The report pointed at continuous Herdsmen attacks, Boko Haram onslaught and IPOB, as issues projecting the country to the global space with divergent signals.

The resurgence of herdsmen killings in Benue in the alleged recent killing of the final year Geography student of the State University, Makurdi, allegedly by herdsmen it noted re-echoed the dander poised by the marauding herdsmen.

“The Tiv Professional Group claims that this has cost three states – Benue, Nasarawa, and Taraba, $14 billion in the last four years” the SBM Intelligence report said.

On the continued agitation for Biafra by the independent People of Biafra, of which their leader, Nnamdi Kanu, and three others David Nwawuisi, Benjamin Madubugwu and Chidiebere Onwudiwe, are charged with treasonable felony, “IPOB is more strategic than FG” said the report.

According to the document “Outlandish as that claim may sound to some, IPOB has clearly leveraged on the continued detention of its leader and intellectual soul to advance its long term aims – a strategy which has found some currency with some Nigerians who ordinarily may not have given a second thought to re-legislating the Biafra issue”
The Federal High Court in Abuja has fixed April 25 to rule on the bail application by the leader of the Indigenous People of Biafra (IPOB), Nnamdi Kanu, and three others.