Consolidate Debt Relief

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					Summary of business and economic news 11th-15th July, 05

Monday, July 11th

The Guardian

Govt. moves to check reckless borrowing by states – In an apparent move not to be bitten
twice, the Federal Government (FG) may have vowed to consolidate the recent o ffer of
debt relief by the Paris Club of creditors. Henceforth, all reckless borrowing by states
would cease, while the Nigerian Government itself would only go for concessional
sources of funds from international institutions. To this effect, the governme nt has started
tightening regulations concerning borrowing by states. Moreover, the FG has also
concluded plans to consider paying up- front the $6 billion it still owes the Paris Club in
order to gain access to further discounts on the money. According to the Director-General
of the Debt Management Office (DMO), Dr. Mansur Muhtar, who made the disclosure at
the weekend, the possibility of incurring more debts had been a major source of concern
to the President, adding that the FG would also refuse to provide the required guarantees
which states needed to access some loans from foreign institutions. He pointed out that
the overall objective would be to generally deny requests for borrowing but would ensure
that only loans that met certain 'favourable' conditions were considered. He added that the
FG would continue to access concessional sources of funds and resources available at
zero per cent interest with a 10- year grace period and about 20 to 30 years repayment

NESG lauds debt agreement between Nigeria, Paris Club - Nigeria’s leading private
sector think-tank, the Nigeria Economic Summit Group (NESG,) has welcomed the debt
relief package announced by the Paris Club on June 29, 2005 for the country. In
principle, the debt agreement between Nigeria and its bilateral creditors would write off
$18 billion worth of debt, almost two-thirds of total debts; the largest ever debt writen-off
by the Paris Club. In a statement released to the News Agency of Nigeria, the NESG
noted that accompanied by prudent economic policies, the significant debt relief should
ensure long term debt sustainability and offer a fair, sustainable and definitive solution to
Paris Club creditors and Nigeria. It hoped that Nigeria's poverty reduction efforts would
also gain from the debt relief package and noted that the burden of debt service
repayment has been undermining the financing of basic social services for a teeming

Minister woos private investors in fisheries sector - Minister of State for Agriculture and
Rural Development, Mr. Bamidele Dada, has called for the involvement of the private
sector in the exploitation, processing and canning of tuna fish to boost local consumption
and export, noting that such investments by the private sector would boost the nation's
income and accelerate poverty alleviation and wealth creation. The Minister, who was
represented by the Director of Fisheries, Federal Department of Fisheries, Mr. Gugwin
Shinang, noted that research had shown that tuna abound in Nigeria's exclusive economic
zone waters. He explained that other countries like Ghana had been exporting processed
tuna to Europe and America. In addition, he disclosed that other investment opportunities

in the fisheries sub-sector included: fish craft construction, gear design and fabrication
among others. He thus urged the industry to support the plan of the government to host
the NEPAD Fish for All Summit scheduled for August 22 to 25 in Abuja and has assured
that problems facing the sector would be addressed by professionals and policy makers.
at the technical session of the summit.


Obasanjo sends bill on external borrowing to National Assembly – President Olusegun
Obasanjo has urged Nigerians to support the Bill on External Borrowing which is aimed
at checking unguided borrowing by all the tiers of government. The Bill which is
currently before the National Assembly, is a measure to control external borrowing
particularly by state governments. President Obasanjo recently revealed in a televised
programme that a lot of energy and resources were used to secure the debt relief from the
Paris Club and added that the government will no longer tolerate indiscipline in the
borrowing habits of the states and Federal Government agencies. Minister of Finance,
Mrs. Ngozi Okonjo-Iweala also disclosed that the states were largely responsible for the
accumulation of a significant portion of debts as they were repaying 75 per cent of the
debts. She however added that the FG was made liable as it guaranteed the debts of the

Tuesday, July 12th

The Guardian

BPE concessions Apapa port to ENL – The Federal Government and ENL Consortium
have signed a concessioning agreement in respect of Apapa Port Terminal "C ". The
Bureau of Public Enterprises (BPE) revealed that in the agreement which was signed
recently in Abuja, ENL would pay an Entry Fee of US$1 million. The official signing
brings to two, the number of concessioning agreements signed with prospective
concessionaires since the opening of the bids for the Lagos Ports Terminals on March 10.
2005. The ten-year lease agreement requires ENL to pay the Entry Fee of US$I million
on or before July 18, 2005. The BPE on March 10, 2005, opened the financial bids of
prospective concessionaires for the Apapa Port Complex, which includes the Container
Terminal and Terminals 'C', and 'D'. A Transition Committee for Terminals C and D,
which has been set up, would commence work on Friday July 8, 2005 and is expected to
conclude work before the end of August 2005. Upon conclusion of the transitional
period, ENL will pay the Asset Purchase Fees and Annual Lease Fees for the first year of
the concession in respect of the two terminals. Given this development, the ENL
consortium is not only expected to operate and manage the two terminals for the next ten
years, but will also be responsible for its modernisation and maintenance throughout the
gestation period. The ENL Consortium is made up of ENL, (a Nigerian-based public
utility management company); Haastrup Line WA, (which has operated two private
wharfs, handling bulk and break-bulk cargoes near Port Harcourt for over 30 years) and

the GSI, (a stevedoring company with ongoing contracts with the Nigeria Ports
Authority for customs clearance). Dublin Port Company will to serve as the technical


BPE sets up anti-corruption unit - The Bureau of Public Enterprises (BPE) has stated
that it has established an Anti-corruption Unit. In a statement signed by the Head, Public
Communications, Mr. Chigbo Anichebe, the Unit, which is headed by Mrs. Halima L.
Halilu, an experienced lawyer, has been set up with a view to ensure transparency and
due process in the privatisation programme. The BPE disclosed that as the third phase of
the privatisation programme involved divestitures of government’s holdings in more
critical and strategic sectors in the Nigerian economy, namely: refineries, ports and
power, there was the need to ensure transparency, competition and compliance with
established procedures. It explained that the Unit was expected to ensure compliance
with all established policies, rules of procedures and guidelines for the transaction
processes and the running of the Bureau. This, according to the BPE, related to activities
such as procurement, competitive tendering/contract award processes, processes for the
selection/appointment of consultants and advisers, transparency/value for money for all
purchases and supplies, adherence to accounting procedures and standards, as well as all
in-and-out payments for services. Furthermore, the Unit is mandated to receive and
investigate not only allegations of fraud, bribery & corruption, but also leakages of
confidential information. It will also ensure that decisions taken by management are
implemented by the respective departments/units. The Anti-Corruption Unit would
operate independently and will be permitted to relate and report directly to the ICPC,
EFCC and other relevant agencies involved in the Anti-Corruption crusade of the Federal

Nigeria to manufacture anti-AIDS drugs- The Federal Government stated yesterday that
the country would go into local manufacture of anti-retroviral drugs (ARVs) and the
Artemisinin-containing therapies for malaria (ACTs). The government also disclosed that
another local pharmaceutical manufacturing plant for the production of "NICOSAN", a
pytomedicine for the management of sickle cell anaemia would be built in Abuja.
Speaking in Abuja at the opening of the National Institute for Pharmaceutical Research
(NIPDR), the Minister of State for Health, Princess Funke Adedoyin explained that the
country would soon commence the manufacturing of the aforementioned drugs. She
noted that it was hoped that the NIPRD with its cadre of scientific personnel will soon
begin to show interest in the synthesis and formulation studies of ARVs and ACTs. She
added that it was necessary to encourage and build adequate capacity for the local
production of the medicines, as well as ensure that their quality complies with all
established international standards.

Wednesday, July 13th

The Guardian

Nigeria secures US$123.2m aid from EU, Japan for water supply scheme – The European
Union (EU) and the Japanese government have entered into bilateral agreement with the
Federal Government to support its project on rural water supply. At separate occasions on
recently in Abuja, the duo announced a donation of US$123.2 million to strengthen the
presidential initiative on "Water for People; Water for Life", aimed at achieving water for
all by the year 2007. Under the agreement, the Japanese government will extend its grant-
in-aid up to US$3.2 million (about N453.6 million) for rural water supply in Kano State,
while the European Union has pledged a donation of US$120 million. The Japanese
government will carry out capacity-building programme for the appropriate management
and maintenance for the bore holes, which will be conducted in co-operation with
UNICEF and the Kano State Rural Water Supply and Sanitation Agency. The agreement
for the grant was signed by Mr. Yoshimasa Iwata, Chargé d' Affairs on behalf of the
Japanese government, while the Minister of Water Resources, Alhaji Muktari Shagari,
signed for the Federal Government. It was revealed that the scheme would be the second
large-scale water supply project extended by the government of Japan, since it resumed
its development co-operation to Nigeria upon return to democratic government in May
1999. Japan had extended similar aid to Oyo State in October 2002.

Alhaji Shagari explained that the project will consist of procurement of equipment
necessary for ground water development, technical assistance through technical training
and strengthening of operation, as well as the maintenance of equipment and facilities.
He noted that Nigeria would only be responsible for the construction of the facilities.
The Minister listed the benefits to be derived from the project as: the construction of 240
water bore holes; the construction of hand pumps in various villages in the state; the
increased maintenance and operation of hand pumps, (which would also enhance the
management capability of Kano Rural Water and Sanitation Agency) and the access to
cleaner and safer water to more than 86,000 people who would thus be much less
vulnerable to water-borne diseases. In another development, the European Union (EU)
pledged to support the Federal Government rural water supply project with the sum of
100 million Euros.


Agricultural sector accounts for 67% of national poverty; employs 70% of labour force -
According to the World Trade Organisation (WTO), the agricultural sector of the country
accounts for about 67 per cent of the nation poverty, even as some 70 per cent of the
country’s labour force is employed by the sector. It has explained that the agricultural
sector plays a significant role in the Nigerian economy: in 2003, it accounted for about
26.4 per cent of the Gross Domestic Product (GDP) and in spite of the dominance of oil,
the sector is the mainstay for majority of Nigerians, employing some 70 per cent of the
country’s labour force. This means that if agriculture is not given special focus, all
attempts to drive away poverty may just be a scratch on the surface, as the development
of other sectors, particularly oil and gas, may not be able to reduce poverty. Nigeria’s
total land area is estimated at 92.4 million hectares, some 36 per cent of which is arable

and permanent crop land; 31 per cent of which is pasture land; 12 per cent of which is
forest and wood land; 14 per cent of which is water and the remaining 7 per cent of which
is occupied by human activities. According to the Food Agricultural Organisation’s
(FAO) classification, Nigeria’s soils range from low to good productivity, with the
majority lying in the low (60 per cent) and medium (32 per cent) ranges. Nigeria’s
agricultural policy aims to: ensure food security; promote domestic trade; enhance
foreign exchange earnings; promote export diversification; enhance access to agricultural
raw materials; encourage participation in preferential trade arrangements and promote the
use of modern technology and the quality of exports.

Thursday, July 14th

The Guardian

Diamond Bank signs US$30m deal with IFC – Diamond Bank has signed a seven- year
on- lending loan agreement with the International Finance Corporation (IFC); the private
sector arm of the World Bank Group. The loan, in the amount of US$30 million,
represents the second portion to the Nigerian bank from the IFC. This loan raises the
IFC's total on-lending investment commitment in Diamond Bank to US$50 million and
reflects the growing confidence in the Nigerian bank by the multilateral investment
institution. In September 2000, Diamond Bank became the first among several recipients
of the IFC advances to the Nigerian banking sector when it signed the agreement for the
initial portion of US$20 million. The increased lending activity of the IFC in Nigeria is
the direct consequence of the country's return to democracy since 1999. Established in
1991, Diamond Bank has 53 branches around the country. The bank recently signed a
memorandum of understanding (MoU) to acquire Lion Bank of Nigeria Plc. The latter
has 22 branches and has strong business roots in the Middle Belt of Nigeria. The
acquisition deal is expected to raise the bank's shareholders funds to well over N25
billion. Indications are rife that the bank was currently finalising arrangements to raise
additional capital in the capital market via an initial public offer. Head of Corporate
Affairs, Mr. Nkem Ossai, who recently confirmed the news, has added that the bank will
release a definite timeline in the next few weeks. Diamond Bank's result for its financial
year ended April 30, 2005, showed huge leaps in various aspects of its operations. Total
assets, for instance, rose by about 80 per cent from N73 billion to N131 billion, while
shareholders' funds increased to about N21 billion from N6.7 billion. Profit before tax
rose by a colossal 203 per cent, from N1.16 billion to N3.52 billion.

Friday, July 14th


FG to sell Eleme Petrochemical in Nov. - Minister of State for Petroleum Resources, Dr.

Edmund Daukoru, has disclosed that the Eleme Petrochemical Company will be sold in
November this year. He made the declaration yesterday whilst inaugurating the seven-
man interim technical board for the company in Abuja. Dr. Daukoru stressed the need to
ensure that the company was financially viable and competitive. According to the
Minister, the privatization of the company, an NNPC subsidiary, which came into
operation in 1995, will involve divesting 51 per cent of the government’s equity to a core
investor(s). He explained that the Bureau of Public Enterprises (BPE), had commenced
the privatisation process having called for the Expressions of Interest from prospective
investors. He revealed that FBN Merchant Bankers Ltd and the Standard Trust Bank
Consortium have been appointed by the BPE as privatization advisers for the assignment.
Dr. Daukoru has asked the board to oversee the affairs of the company to ensure its
smooth privatization as well as its sustenance.



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