ActionAid Tasks African Leaders On Collaboration To Tackle Debt Crisis 

ActionAid has called on African governments to coordinate collectively for a resolution to debt crises, based on radical renegotiation or debt cancellation, including through advancing this case in climate negotiations; and to pursue alternative economic paths that place quality public services, social and economic justice at the heart of building sustainable and truly sovereign states. The resolution was made by AA Country Directors at the just concluded IMF/ World Bank Annual Meetings in Marrakech, Morocco. They further called on the two Institutions to move away from the failed neoliberal economic model, to stop imposing austerity policies and constraints to public sector wage bills, and instead to support debt cancellation and ambitious and progressive tax reforms nationally and internationally. “The IMF and World Bank have imposed a neo-colonial model of economic development based on exploitation and extraction from the Global South which has given rise to regular debt and economic crises.  “These crises have then been used to justify the imposition of harsh loan conditions and coercive policy advice on African governments, perpetuating dependency and stripping away the capacity of States through cuts to public spending.  “Although some of the rhetoric has changed in recent years, in practice the IMF and World Bank are still attached to this cult of austerity, undermining progress on health, education and other public services and blocking Africa’s ability to respond and adapt to the climate crisis. “ActionAid’s research has shown in particular that IMF enforced cuts and freezes to public sector wage bills have consistently blocked the recruitment of urgently needed teachers, nurses, midwives and other public sector workers.  “We have documented the gendered impact of these cuts, with women being the first to lose access to services, the first to lose opportunities for decent work and the first to absorb the rising tide of unpaid care and domestic work. “Without access to low-cost financing, many African governments now find themselves facing a deeper debt crisis than ever before – with UNCTAD recently finding that the amount spent on interest payments is often higher than spending on either education or health,” they said.  

I Inherited N359bn Debt From Past Administration –Gov Alia

Benue State Governor, Rev. Fr. Hyacinth Alia on Sunday disclosed that his administration inherited the sum of N359 billion as debt from the past administration in the state. Alia disclosed this at an interdenominational church service to commemorate Nigeria’s 63rd independence anniversary. The church service was organised by the Christian Association of Nigeria (CAN), Benue State Chapter, at the Methodist Cathedral, South Bank, Makurdi. The governor, who is a Catholic priest, said that in spite of the debt burden, he was determined to reposition the state by providing an enabling environment for businesses to thrive. “God has accomplished his work, and it is now left for us to make our state and nation to work. I am here to make things work. “What we inherited was nothing to be proud of, but we will do what will make us all proud. I inherited over N359bn debt,” he said. He regretted that the state lost billions of Naira worth of agricultural produce and other property to herders’ attacks on farmers. He said that the farmers must be supported to do their job well. Alia said that the condition of rural dwellers following incessant herders’ attacks and fuel subsidy removal had become worrisome. He said that his administration would find ways to support farmers by providing seedlings, fertilisers and other forms of support to enable them to work effectively in the coming farming season. “My colleagues call me the governor of the richest state in Nigeria and I agree with them because we have numerous mineral deposits, we have the best yams and soyabeans, among others. “We will create billionaires in the state through our farms. We have everything it takes to do it.” Alia ordered the immediate end to illegal mining in the state. “The foreigners illegally mining gold in Kwande, Logo, Konshisha LGAs and other places in the state should desist from it immediately. This is an order,” he said. He said that God blessed the state and the entire Nigeria abundantly and it was left for the leaders to make things to work. He decried the spate of kidnapping and other criminal activities in the state, pledging to tackle them. The governor said that the future of the state lied in the hands of the youth, adding that his administration was training 10,000 youths in information technology for improved digital knowledge. Alia gave the assurance that his administration would not accommodate corruption and nepotism. The governor appealed to Benue sons and daughters to support the state in any way they could.

High operating costs weighing down manufacturing coys’ revenue

The harsh operating environment experienced in the country which worsened with scarcity of foreign exchange, removal of fuel subsidy have impacted negatively on the performance of the manufacturing industry as companies listed under the sector recorded 351 per cent losses in the first half of 2023. Investors in the nation’s Stock market said that shortages in forex supply coupled with inflationary pressure, currency redesigned of the Central Bank of Nigeria and other challenges witnessed from importing raw materials have affected the profit margin of manufacturing companies directly. They said that all these joined together resulted in a decline in purchasing power and sales volume and revenue of the companies in the first six months of their operations. This development according to them is currently impacting negatively on the share price of these listed firms under the manufacturing sector as most of the stocks are currently undervalued following negative sentiments that have enveloped demand for the stocks. Specifically, a financial analyst, Mr Iheanyi Egbue said that the huge import levies, exchange rate volatility, haulage cost of imported materials and heavy dependence on alternative source of power has increased cost of production in the sector by almost 30 per cent. Egbue said that the federal government failure to adopt a strategy that would encourage investment and development in the manufacturing sector mayerode shareholders 2023 full year dividend as the operating environment is currently very harsh and full of uncertainty. Another investor, Mrs Florence Okeke said that with removal of fuel subsidy, introduction of floating of exchange rate, manufacturing firms have experienced an unexpected high operating cost with the attendant reduction in profitability as operating costs are expenses associated with the maintenance and administration of a business on a day to day basis. She said with the high cost of living, the demand for goods and services have reduced drastically and as result most consumer goods companies in Nigeria have continued to find it difficult to weather the storm. For instance, a look at the performance of Cadbury Nigeria Plc listed under manufacturing segment of NGX showed that it declared loss before tax of N14.52 billion in the first half of the financial year ended June 30, 2023 against profit before tax of N3.35 billion reported in the same period of 2022. The company reported a loss after tax of N14.54 billion compared to profit after tax of N2.34 billion in the corresponding period of 2022. Also, Nestlé Nigeria Plc posted a loss after tax of N49.9 billion, a 280 per cent decline over N27.7 billion reported in the same period of 2022. The company recorded revenue of N261.8 billion in the first half of 2023, representing a 17.7 per cent increase compared to its performance in the same period of 2022. Nigerian Breweries Plc in the same vein reported N85.26 billion Net loss on foreign exchange transactions within the period under review from N7.28 billion in preceding year. The company also declared a loss of N47.6 billion in the first half of 2023 representing 348 per cent compared to N18.74 billion achieved in H1 2022.

Cash shortages drops MTN’s fintechs’ revenue by 39.4%

The effects of cash shortages on over-the-counter (OTC) transactions during the first quarter of 2023 impacted negatively on MTN’s Nigeria revenue from fintech customers. The company, which disclosed this in its first half of 2023 financial results, said it reported a 39.4 percent decline in its fintech customers for the half-year 2023, bringing its users down to 7 million at the end of June. According to MTN, out of the 7 million fintech customers, 3.1 million are MoMo wallet users, representing 44 per cent of its total fintech customers. Despite the decline in customers, MTN said it recorded a 7.8 per cent growth in fintech revenue. Its fintech revenue for the first six months of this year stood at N43.6 billion compared with N40.4 billion recorded during the same period last year. The report also said that the naira devaluation impeded the company’s financial growth in the second quarter of 2023, recording a forex loss of N131.5 billion, an increase of N 117.9 billion from the N13.6 billion forex loss reported in the first of 2022. MTN reported that the Central Bank of Nigeria’s recent forex operations changes caused a significant 60 per cent movement in the exchange rate to N756.24/US$ by the end of June 2023. The telecom giant’s second-quarter results show pre-tax profits fell a whopping 64 per cent to N44.6 billion, taking off its half-year profits to N200.3 billion compared to N268.6 billion in the same period in 2022. Explaining the reasons for the company’s fintech business poor performance in the period under review, MTN’s Chief Executive Officer, Mr Karl Toriola, said the firm’s fintech user base was impacted by the effects of the cash shortages on over-the-counter (OTC) transactions during the first quarter of 2023. Toriola noted that the fintech business remains a crucial priority for MTN as it continues to put structures in place to support the execution of its growth strategy and scale the fintech ecosystem in line with our Ambition 2025 strategy. In that regard, he said the company would ramp up its fintech campaigns to create more awareness. Meanwhile, MTN recorded 49.9 per cent growth in its digital revenue for the period under review. According to the company, this was bolstered by revenue from rich media services and content VAS. Toriola said the digital revenue growth was also supported by the adoption of digital products and the development of the active base, up 56.6 per cent to 14 million. “In H1, we bought Amazon Prime Video and Apple Music to our customers, expanding our rich media services portfolio. Ayoba, our instant messaging platform, continued to gain traction with the addition of over two million users, bringing the monthly active users to 7.2 million in H1.