Nigeria may miss G-20 talks
From Azimazi Momoh-Jimoh (Abuja) and Laolu Akande (New York)
THE Federal Government yesterday unveiled a package of measures to check the impact of the global economic crisis on the nation.
It not only decided to inject N70 billion into the wobbly textile industry through guarantee, various regulatory authorities also assured that the country's economy was stable despite the global meltdown.
Yesterday too, there were indications that Nigeria may not be represented at the G-20 leaders' summit in London meant for talks in the world financial crisis.
Disclosing the N70 billion bailout for the textile industry at an interactive session with the Senate Committees on Banking, Finance and Capital Market, Minister of State for Finance, Mr. Remi Babalola ruled out bailout for banks because according to him, they have no liquidity problems.
And the Director-General of the Nigeria Stock Exchange (NSE), Mrs. Okereke-Onyuike said that between 2007 and 2008, a total of N812 billion went out of the country as a result of the global financial crisis in the host countries of foreign investors.
Babalola said that government was doing a lot to attract confidence into the financial sector, adding that all the challenges would soon be overcome.
"We have challenges, no doubt about it, but those challenges are also presenting unusual opportunities for us and those challenges are being addressed at the very, very senior level to make sure that Nigeria will not only weather the storm but that Nigeria will come out of it with a better structured economy," he said.
On bail out for the banks, he said: "We have said it so many times. If we find out that there is a problem with the financial system we will work out modalities by which we certainly ensure that the financial system that is the pivot of the entire economy will not be affected; that it will still remain resilient and stable and we will do whatever we can to assist the financial system. The issue now is how to restore confidence, how to protect our financial institutions. The issue of bailing out banks by giving them money does not arise because they don't have liquidity problems."
Talking about steps taken to assist the textile industry, he stated: "I love it when they talk about the textile sector. That is the kind of bailout, intervention we are looking at. In the last two weeks we have had a lot of meetings with the ministry of commerce, we have set up a technical committee; they have met three times. It is not that we are giving them money, it is just a guarantee. So what is stopping us?
"There are some fundamental challenges about the way it was structured, it is difficult for it to work the way it was structured, and it may even be more than N70 billion. What we are working on now is how to immediately allow the money to be released to that sector and it is the entire sector. We want to look at some sectors. That is a sector that can employ more than 500,000 persons at a time and we cannot allow that sector to collapse and disappear, it is just strategic for a country that has a population of 147 million.
"That is why we are intervening. When government guarantees, even though you are not giving out the money it is as good as if you are giving out the cash. Five ministers are involved and we are meeting on a weekly basis, it involves commerce, it involves agric, it involves ministry of finance and SGF office. A lot of work has gone on in the last two weeks about this."
The minister also said that the fall in the crude oil price would not affect the funding of the 2009 budget. His words: "The truth is that the way the budget is structured we have said so many times even if the crude price comes down to $30 ordinarily the way we have worked it out it should not affect budget implementation, it should not affect releases for budget.
When at first, they asked me the question why have we been saving money? We have been saving money for the rainy day and these are rainy days.
"When we budget at $45 benchmark... the whole essence is that in any month where the average is below either the production or the price, what we do is that we take from the excess crude that we have, we take some money from it, to augment and supplement it so the money that is going to come to the Federal Government and to the states and Local Governments, every month they know what they will get, from January to December and even if the price comes to $30, they know they will get it. Are we going to have enough money to put in the budget? We will have enough money to fund the budget."
And speaking about the efforts made to restore confidence in the capital market, Okereke Onyuike said:
"Somebody also asked a question about statistics of how much capital flight has gone. This is a constant question. We even have that one offhand. In 2007, we had N256 billion, equivalent of dollars. That was what was captured. Remember that a lot of Nigerians send in money through Western Union to relations, we do not capture those statistic, because we only take money wired through the banks, because Nigeria wants to avoid money laundry. We advise Nigerians and our investors to send money through wired transfer. We only have that captured by Nigerian banks, those are the statistics we have.
"But in 2008, we now have N556 billion that went out. As the governor of the Central Bank said, when some of the investors had problems in their home country, when the global phenomenon started, as they were losing money, they had to now come and sell such shares in our country and go back and shore up their economies at home. Immediately they left, Nigerians panicked, when they saw those investors dumping shares, that is public information. Our market is transparent; all the investors published their transactions every day. The fundamentals are right, the companies that made up the stock exchange are still making profit, they are not declaring losses. The companies are still there, the management are still there. What happened was that it was the panick that came through the foreign investors and affected Nigerians who are watching CNN all the time."
Also speaking on the occasion, the Central Bank of Nigeria Governor (CBN) Prof. Chukwuma Soludo said that the banks' recapitalisation carried in 2005 had already saved banks from the adverse effects of the global financial crisis.
He said that no bank recorded any loss in 2008, adding that from findings in January, 2009, there was no indication that any bank would record any loss throughout the year.
Also yesterday the Senate ad-hoc committee on Food Crisis said that the poor state of Nigeria 's River Basin Development of Authorities had put the country's food security at great risk.
At a one day interactive meeting between the Committee and Chief executives of River Basin Development Authorities, the Managing Director of the Sokoto Rima Basin Development Authority, Alhaji Danlami Bala Zango, said less than eight thousand out of the 23 cultivatable irrigation farm lands in Bakori, were in use.
Meanwhile, just as the United States (US) President Barack obama is yet to speak to Nigeria's president on phone as he has done to about 16 world leaders including the United Nations Secretary-General and two African presidents, there are now indications that Nigeria may again be snubbed by the G-20 leaders regarding the forthcoming London summit in April to continue talks on the global financial crisis.
With only two months away from the holding of the second G-20 meeting of world leaders on the global financial crisis, the participation of Nigeria, Africa's largest populated country is still largely unlikely.
While Nigeria did not participate last November at the first G-20 meeting in Washington, DC hosted by immediate past US President George W. Bush, diplomatic sources hinted then of a possible participation of Nigeria at the follow-up meeting next April in London.
But international sources now say that four African countries have been confirmed to attend the summit, and Nigeria is not included.
They are South Africa, which sources say will be attending as one of the original G-20 countries, and then Libya, Tanzania and Uganda as representatives of the African Union. Nigeria's exclusion for a second time is being perceived as a reflection of a disturbing trend where Nigeria's leadership role in the continent is being eroded.
At the G-20 meeting in Washington, DC late last year the African Union was actually left out completely by former President Bush. But after criticism, the United Kingdom which is now hosting the follow-up summit in London has decided to invite the African Union, but mum has been the word regarding Nigeria's participation.
Formal response regarding Nigeria's exclusion from the G-20 secretariat of the host nation, UK, was still being awaited as at press time. But it was learnt that the G-20 host nation did not decide who the representatives of the AU would be since that was decided last week at the AU summit in Addis Ababa, where Nigeria's president was absent.
