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African finance ministers commits to reforms, transparency

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Tanko Mohammed

African Ministers of Finance, Planning and Economic Development have expressed commitment to implementing the necessary reforms needed to promote transparency and accountability to mobilise domestic and external resources. 

The ministers said this in a communique at the end of the UN Economic Commission for Africa’s (UNECA) 53rd Conference of Ministers of Finance and Economic Planning and Development in Addis Ababa.

It was titled “Communique of African Ministers of Finance, Planning and Economic Development on special drawing rights for low-income and middle-income countries”.

The ministers stated that African countries had demonstrated the benefits of deploying technology to increase revenues, adding that many countries on the continent had introduced e-taxation to increase resource mobilisation.

They noted that countries were deploying digital platforms to engage local communities in the oversight of public spending and transparency, including through information-gathering on public service delivery and the tracking of expenditure commitments. 

They added that African governments were strengthening their tax administration systems to identify, track and stem illicit financial flows (IFFs).

They stressed that global support was, however, needed to continue the battle against IFFs.

They noted that this was needed particularly in the areas of big data analytics, machine learning and neural network programming, which provided a variety of tools and methods to predict illicit behaviour and measure IFFs more accurately. 

The ministers also expressed optimism that more African countries were improving the enabling environment for business. 

“The comprehensive reforms being undertaken by African countries must be complemented by the availability of more resources for all countries.”

They also expressed the assurance of recovering from the effects of the COVID-19 pandemic with adequate and rapid financing and appropriate comprehensive macro-fiscal and structural policy reforms.

The ministers further urged partners to heed the G7’s call for a new issuance of Special Drawing Rights (SDRs) and to move to implement the G20 Common Framework.

They also urged partners to extend the Debt Service Suspension Initiative (DSSI) till the end of 2021.

Furthermore, the ministers called for support on-lending of SDRs to the International Monetary Fund’s Poverty Reduction and Growth Trust (PRGT).

They also urged partners to support vaccine production in Africa and accelerate access to vaccines through the COVAX facility and the Africa Vaccines Acquisition Task Team.

“This is a crisis of the collective, which requires a collective and coordinated response,” the ministers said. 

The hybrid conference has as its theme “Africa’s Sustainable Industrialisation and Diversification in the Digital Era in the Context of COVID-19”.

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African finance ministers call for $500bn to cushion effects of Covid-19

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Anthony Areh

 African finance ministers have called for 500 billion U.S. dollars in Special Drawing Right (SDR) and an extension in the Debt Service Suspension Initiative (DSSI) to respond to the COVID-19 pandemic.

The call was made during a virtual meeting convened by the Economic Commission for Africa (ECA) and International Monetary Fund (IMF) on Feb. 6, according to a statement from ECA on Tuesday.

According to an IMF Factsheet, the SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves.

So far, SDR 204.2 billion, equivalent to about 281 billion dollars, have been allocated to members.

The value of the SDR is based on a basket of five currencies—the U.S. dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound sterling.

Also, according to the World Bank, the DSSI is an initiative by the bank and the IMF urging the Group of 20 (G20) to help countries concentrate their resources on fighting the pandemic and safeguarding the lives and livelihoods of people.

The members of the G20 are: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States, and the European Union.

The initiative took effect on May 1, 2020 and has delivered about 5 billion dollars in relief to more than 40 eligible countries.

In all, 73 countries are eligible for a temporary suspension of debt-service payments owed to their official bilateral creditors.

The implementation of the initiative is being supported by the World Bank and the IMF, by monitoring spending, enhancing public debt transparency, and ensuring prudent borrowing.

However, an extension of the initiative was initially announced in Oct. 2020 until June 30.

According to reports, payments covered are not forgiven but delayed, with a repayment period of five years and a one-year grace period.

The African finance ministers, however, called for additional liquidity, better market access and more concessional resources, given the prolonged nature of the pandemic.

Ghana’s Minister of Finance and Economic Planning, Mr Ken Ofori-Atta said: “We all know that the COVID-19 pandemic will persist for the next two to three years.

“Why are we extending the DSSI for six months and not 24 months?”.

Ofori-Atta said the cascading effects of COVID-19 were “a frightening thing for a finance minister to witness when they don’t have the means to respond.”

On access to the markets, Egypt’s Minister of Finance, Mohamed Maait, said: “there’s a strong case for vulnerable countries to access the markets at affordable rates to afford essentials such as PPEs and food for their populations.”

Equitable access to COVID-19 vaccines was highlighted as an imperative for building forward better.

Managing Director of the IMF, Ms. Kristalina Georgieva, said the world stands to lose “an estimated $9 trillion if only the rich get COVID-19 vaccines”.

“Forty per cent of this loss will be in advanced economies,” she said.

Georgieva noted that in order to build forward better, there was a need for “bold and immediate action for response, recovery, and reset of African economies”.

She added that “liquidity and financing response is the bridge to vaccines and recovery”.

“Now is the moment to demonstrate that SDR allocation can be part of a comprehensive support framework, together with debt reduction, debt relief and policy support actions in the countries.”

She also urged the ministers to prepare for a focused and practical discussion during the 2021 Spring Meetings, following the call to triple concessional financing.

Georgieva stressed that it was “critical in the spring meetings’ conversations last year”.

The meeting agreed on the need for a concerted effort to accelerate reforms to increase revenues, improve expenditure and manage debt to attract more private sector investments into Africa.

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Finance Bill 2020 won’t introduce new taxes- FG

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By Tanko Mohammed

The Federal Government has said that Nigeria’s Finance Bill 2020 would not introduce new taxes or grant new tax waivers due to challenges posed by COVID-19.

The Executive Secretary, Federal Inland Revenue Service (FIRS), Mr Muhammad Nami, said this at a virtual meeting on the Finance Bill 2020 Public Consultation in Abuja on Friday.

The meeting was chaired by Mrs Zainab Ahmed, Minister of Finance, Budget and National Planning.

According to Nami, the policy objective of the bill has no intension to introduce new taxes or grant waivers in view of the peculiarities of what is facing the economy.

“The economy is not doing very great because of the impact of COVID-19 and all other challenges so ordinarily government should be spending more money.

“However, government is no able to raise the taxes; in the same way we still balance the budget to reduce the deficit as much as possible. Therefore, there will be no new waivers.”

Speaking on the African Continental Free Trade Area (AfCFTA) agreement, Nami said the impact would not be significant, in terms of revenue to government but increase the volume of trade with other countries.

“However, in anticipation of the AFCFTA, it is expected that the volume of trade will surge.

“And, as such, even though it will not significantly affect revenue being collected currently by government, it will have a way of making the economy increase significantly.”

Speaking, Ahmed said the public consultation was an opportunity to engage the public and get contributions to the draft of the Finance Bill 2020 aimed to support the 2021 Budget and also businesses.

The minister recalled that during the preparation of the Finance Bill 2019, provision for tax relief was made to small businesses.

“The essence was to ensure that local industries grow because once the African Continental Free Trade Area (AfCFTA) takes effect our borders will be opened and we will have goods from other countries competing with goods in Nigeria.”

She said that one of the basis for reducing taxes was to help the small businesses grow and to protect local industries.

“This is being reinforced in the 2021 proposal by removing completely for the small businesses the obligation to pay education tax.”

She said that the draft Bill would go to the Federal Executive Council (FEC) for approval, after which the President would submit it to the National Assembly for consideration.

Ahmed noted that the present administration had created a new tradition of accompanying every Appropriation Bill with a Finance Bill.

Also, Mr Adeyemi Dipeolu, Chairman, Fiscal Policy Reforms Committee, said a national impact assessment committee, set up by the president, had looked at the potential impact of joining the AfCFTA.

Dipeolu said the assessment was done “before Nigeria even signed the treaty”.

“The impact assessment has already been taken into account and there is an impact preparedness committee also chaired by the Minister of Industry, Trade and Investment.”

Mr Bode Oyetunde, Secretary of the committee, also highlighted five broad thematic areas for the Finance Bill 2020 including enacting counter-cyclical measures and crisis intervention initiatives.

Other areas are fiscal relief for mass transit, Ease of Doing Business Reforms, Procurement Reforms, and tax and fiscal responsibility.

Oyetunde said the overall idea of the AfCFTA was to look at trade laws and see how to make implemental changes that would make Nigeria “more competitive in the pan African point of view”.

“This is to ensure that businesses do feel they can site their enterprises locally and export, not just to West Africa, but the entire continent and also trying to ensure that we have fair trade with instances of trans-shipment and other sharp practices in continental and global trade.

“We also deal with the emerging post COVID realities where business will have to change and we have to do business better and differently.”

He, however, proposed that many of the issues poised to promote the Nigerian economy “have to be dealt with more holistically”.

The ministry also noted that feedback and proposals on the draft of Finance Bill 2020 was welcome until the close of business on Nov. 16.

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World Bank approves $114.28m for Nigeria

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By Anthony Areh 

The World Bank has approved $114.28 million financing to help Nigeria prevent, detect and respond to the threat posed by COVID-19 with specific focus on state level responses.  

According to a statement from the bank on Friday, the amount includes $100 million credit from the International Development Association (IDA) and $14.28 million grant from the Pandemic Emergency Financing Facility. 

It stated that the Federal Government would provide grants to thirty-six states and the Federal Capital Territory (FCT) through the COVID-19 Preparedness and Response Project (CoPREP). 

It added that the project would serve as immediate support to break the chain of COVID-19 local transmission and limit the spread of coronavirus through containment and mitigation strategies. 

Mr Shubham Chaudhuri, World Bank Country Director for Nigeria said: “Nigeria has ramped up its efforts to contain the COVID -19 outbreak, but more needs to be done at the state level, which are at the frontline of the response. 

“The project will provide the states with much needed direct technical and fiscal support to strengthen their position in combating  the pandemic.” 

Chaudhuri added that the project would finance federal procurements of medical equipment, laboratory tests and medicines to be distributed to the states based on their needs.  

He also said that the project complemented the Second Regional Disease Surveillance Systems Enhancement Project (REDISSE II) which was already providing short-term emergency support to implement national and state Incident Action Plans.  

Furthermore, he said that all 36 states had incident action plans cleared by the Nigeria Center for Disease Control (NCDC) and funds had been disbursed to 23 states. 

According to the World Bank, CoPREP would finance further support to all states and the FCT through the NCDC to implement their COVID-19 Incident Action Plans.  

“Specifically, this includes: the operationalisation of 37 Emergency Operations Centers; training of 30,000 healthcare workers in infection prevention and control; support for emergency prioritised water sanitation and hygiene activities; and strengthening of risk assessment and community and event-based surveillance.” 

Others are: “provision of on-time data to inform the response and mitigation activities; additional support to laboratories for early detection and confirmation; equipping and renovating isolation and treatment centers including community support centers; and improving in patient transfer systems through financing of ambulances and training as needed.”  

It further stated that grants to states would be conditional on states adopting COVID-19 response strategies in line with the Federal Government guidelines and strategies.  

“CoPREP will enhance the institutional and operational capacity for disease detection through provision of technical expertise, coordination support, detection, diagnosis and case management efforts in all states and the FCT as per the WHO guidelines in the Strategic Response Plan.  

“It will also help the government mobilise surge response capacity through trained and well-equipped frontline healthcare workers and strengthen the public health care network for future health emergencies.”  

dangote-cement

N100bn Dangote Cement’s bond oversubscribed

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By Chris Ndibe

Dangote Cement has reported the successful issuance of its N100 billion Series 1 fixed rate senior unsecured bonds due April 2025.

Mr Michel Puchercos, its Chief Executive Officer of the company, said in Lagos that the N100 billion bonds under its N300 billion bond programme, were 1.5 times oversubscribed.

Puchercos said book building with respect to the issuance commenced on April 3, following the approval of the Securities and Exchange Commission, and closed on April 15 at a coupon rate of 12.50 per cent.

He stated that the total order book amounted to N155 billion, noting that the landmark transaction was the largest ever bond issuance by a corporate organisation in Nigeria.

“Despite current market headwinds due to the COVID-19 pandemic, the transaction was extremely well received and attracted significant demand from a wide range of high-quality investors including domestic pension funds, asset managers, insurance companies, banks and international fund managers.

“The transaction represents the largest corporate bond issuance in Nigeria’s debt capital markets, reflecting Dangote Cement’s strong credit quality as well as the resilience of the Nigerian debt capital market despite current global challenges,” Puchercos said in a statement.

According to him, the transaction would enable the company to lower its average cost of debt and extend the average maturity of its debt.

He stated that the net proceeds of the offer would be used to refinance existing short-term debt previously applied towards cement expansion projects, working capital and general corporate purposes.

“It allows us to further broaden our sources of funding by accessing long-term debt at competitive costs from the capital market and builds further on the success of our domestic commercial paper programme.

“The success of this transaction, in the current challenging environment, illustrates investors’ continuous confidence in Dangote Cement’s strategy, strong cash generation and solid credit profile,” he added.

Puchercos said the bonds would be listed on the Nigerian Stock Exchange and the FMDQ Securities Exchange.

He explained that for the first time in the history of the Nigerian debt capital markets, investors would have the option of lodging securities with either the Central Securities Clearing System or the FMDQ Depository.

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