Business Sun, 26 Feb 2017 12:13:40 +0000 Joomla! - Open Source Content Management en-gb Nigeria’s economy in the light of DMO’s interventions Nigeria’s economy in the light of DMO’s interventions
By Samir Amir         
IT is an incontrovertible fact that among the recessions that had taken place in Nigeria, none had been too disastrous like the current one.
In its 56-year history, the country has gone through five recessions which had damaging economic consequences.
Of the downturns, four were caused by the drop in global crude oil prices, while the 30-month civil war birthed a period of economic decline.
A Word Bank report said the last time the country experienced a recession was in 1991 during the regime of Gen. Ibrahim Babangida, retd.  
The National Bureau of Statistics (NBS) also stated that there was a prolonged one that started in 1982 and lasted until 1984.
Available World Bank and NBS data also maintained that in 1987, the country experienced an economic meltdown similar to the current one, as the economy recorded consecutive decline of 0.51 percent and 0.82 percent in first and second quarters.
While these had their respective negative impacts on the economy, the current experience has been termed the worst in the country’s history.   
The magnitude of the current crisis was evident in the report by the NBS announcing it which revealed that Nigeria’s economy contracted by 2.06 percent to record its lowest growth rate in three decades.
In the first quarter of 2016, the NBS said the economy shrank by 0.36 percent to hit its lowest point in 25 years.
The NBS said: ‘’In the Second Quarter of 2016, the nation’s Gross Domestic Product (GDP) declined by -2.06% (year-on-year) in real terms. This was lower by 1.70% points from the growth rate of –0.36% recorded in the preceding quarter and also lower by 4.41% points from the growth rate of 2.35% recorded in the corresponding quarter of 2015.
‘’Quarter on quarter, real GDP increased by 0.82% During the quarter, nominal GDP was N23,483,954.78 million (in nominal terms) at basic prices. This was 2.73% higher than the Second Quarter 2015 value of N22,859,153.01 million. This growth was lower than the rate recorded in the Second Quarter of 2015 by 2.44% points.’’
With this report, confirming the fears of most experts, who had in the past argued that Nigeria’s economy was headed for the rocks, the country’s economy has been recording a significant decline in activity across the economy, which has lasted longer than a few months.
The effects of these are visible in industrial production, employment, real income and wholesale-retail trade.
Irrespective of the magnitude of the current crisis, the economy has continued to survive and even show prospects of recovery. Indeed, the depth of the meltdown is such that could bring down even the most resilient global economies but a combination of key economic players and factors produced the synergy that had kept the economy going.
Of such factors, is the profound role, the Debt Management Office, DMO, has been playing to ensure that the country emerges from the recession stronger.
In understanding this, the appreciation of the role debt plays in a troubled economy becomes imperative.
 While some countries would have latched on such ground to go on a borrowing spree, the DMO through constructive handling of the challenges thrown up, has ensured that Nigeria remained on the path of solution without a bloated debt profile.
The DMO had last year, unveiled what a  strategy to manage Nigeria’s debt by capturing the current issues in the economy in line with  President Muhammadu Buhari’s commitment to reviving every sector of the economy.
As an expert, I will say that the new strategy is the best for the Nigerian economy as the government is presently making sustained efforts on diversifying the economy.
Instructively, Nigeria’s Debt Management Strategy (2016-2019) as initiated by the DMO, has  been broad-based thereby making it possible for Nigerians to have confidence in the management of the country’s economy.
One of the major aspects of this strategy is that over the medium, term, Nigeria will strive to remix the public debt portfolio from 84% domestic and 16% external to 60% domestic and 40% external.
At the moment, the country is remixing between external and domestic and also between short and long-term.
Interestingly, the package has developed a debt management strategy that has ensured that in the face of macroeconomic and other financial constraints, the cost and risk profile of the public debt portfolio remains within acceptable limit over time. This is particularly a good news for the nation, as many had feared that the country’s debt profile will rise astronomically as a result of the recession.
Founded in 2000 to coordinate the management of Nigeria’s debt, which was hitherto being done by a myriad of establishments in an uncoordinated fashion, the organization has articulated various initiatives to ensure that Nigeria refinances maturing domestic debt with cheaper external debt instead of with domestic debt.
To ensure that the economy did not succumb to the pressures of the recession, the DMO, in a remarkable move, initiated plans to finance the 2016 budget deficit through external borrowing.
The beauty of this is that it just not a carefree borrowing. The organization has carefully monitored the process to the extent that things are currently looking up.
One of such remarkable achievement of the DMO at a time like this was its facilitation of the approval of the issuance of $1 billion Eurobond and appointment of six transaction parties for the bond by the Federal Government.
The bond is part of the country’s plans to borrow a total of N1.8 trillion ($5.8 billion) from abroad and locally to fund an estimated 2016 budget deficit of N2.2 trillion.
Through this measure, the DMO succeeded in preventing the country from crowding out local investors.
Today, Nigeria has the realized  $1 billion in the Eu¬robond market and as well has inspired confidence in the economy.
The feat was generally hailed as a testimony that the DMO’s strategy was an effective tool at ensuring that Nigeria’s economy survives the recession.
Those familiar with the path the organization had taken would agree that the DMO  defied all known predictions by international financial and capital market analysts to prove that Nigeria’s economy remains resilient and robust in the international capital market during the issuance of the nation’s first 15 years maturity $1 billion Eurobond.
With these, one can boldly say that Nigeria has commenced the walk towards economic recovery. 
Little wonder, the Director General of DMO, Dr. Abraham Nwankwo before now at different for a expressed confidence that things can only get better.
‘’In the next five years or so, Nigeria’s economy will have substantially moved to a position of diversified exports and public revenue, the maximum domestic satisfaction of aggregate demand and, self-sustainability. Under that condition, the appropriate public debt management strategy, with particular reference to the relative weights of the domestic and external components of the public debt portfolio, will be quite different from what it is today,’’ Nwankwo stated.
*Samir, an economist, writes from Banawa, Kaduna
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Dangote set to launch 25,000 hectares of rice outgrower scheme in Sokoto Dangote set to launch 25,000 hectares of rice outgrower scheme in Sokoto

Dangote Rice, a subsidiary of Dangote Group is set to launch in Sokoto, Sokoto state it’s multi-million naira 25, 000 hectares of rice Outgrower scheme with a prospect of hundreds of thousand of employment opportunities for the rural communities inhabitants.


President of the Group, Aliko Dangote disclosed at the weekend that the Company will on Wednesday, flag of with a pilot project of 500 ha by Gonroyo dam, in Goronyo community. Gonroyo dam is the second largest in the country, after Kainji.

The flag off ceremony which will be performed by the governor of the state, Alhaji Aminu Tambuwa will witness seedlings being distributed to the primary local farmers who will in turn plant the seed after which Dangote Rice company will purchase from them for milling and final processing.

Sokoto state is the second after Jigawa out of the 14 states spread across the state where Dangote Rice plans to operate outgrower scheme to empower local farmers and create job opportunities for community dwellers and reduce migration to the cities.

Dangote Rice Projects in the 14 states, when, operational, will generate a significant number of jobs and increase take-home income for smallholder farmers, all while diversifying Nigeria’s economy and reducing the nation’s food import bill.

Statistics from the Federal Ministry of Agriculture and Rural Development (FMARD) estimates that  rice demand in Nigeria reached 6.3 million MT in 2015, with only 2.3 million MT of that demand satisfied by local production.

This local production shortfall leaves a gap of 4.0 million MT that is currently being filled through formal importation of rice or illegal imports over land borders.  

By year-end 2017, Dangote Rice plans to produce 225,000 MT of parboiled, milled white rice. This will allow us to satisfy 4% of the total market demand within 1 year. Our model can then be successfully scaled to produce 1,000,000 MT of milled rice in order to satisfy 16% of the domestic market demand for rice over the next 5 years.

Due to the current economic crisis, domestic prices for agro-commodities have risen dramatically over the last 12 months, making local agriculture an attractive investment. Dangote Rice Limited  seeks to take advantage of this economic trend and the favourable policies laid out in the FMARD’s Agricultural Transformation Agenda.

Dangote Rice has a mandate to locally high-quality milled, parboiled rice for the Nigeria market. This goal will be achieved by sourcing the raw material (paddy) required from the Dangote Rice Outgrower Scheme.

Through the Dangote Rice Outgrower Scheme, DRL will partner with outgrowers (smallholder and contract rice farmers) to cultivate and grow rice paddy. Specifically DRL will provide inputs, technical assistance, extension services and land preparation services and equipment directly to farmers. At harvest, DRL will recoup the costs of inputs and services in-kind and will act as a guaranteed offtaker for paddy that meets certain pre-agreed quality standards. Smallholder farmers will provide land and labour. 

The centralized outgrower model enables a high level of control over product quality and quantity.  The purchasing price given to farmers will reflect each season’s market price and will be set after an extensive market price survey and consultation with all stakeholders. 
In the short-term, Dangote Rice will be responsible for importing all of the inputs needed for cultivation and making them available to the outgrowers.

By end of  in 2017, Dangote Rice will have 25,000 Ha under rice cultivation across 3 sites in Northern Nigeria having identified rice-growing communities in Jigawa State (5,000 Ha), Sokoto State (10,000 Ha) and Zamfara State (10,000 Ha).

The 25,000 Ha will be farmed by nearly 50,000 outgrowers in the selected site areas. These outgrowers are already organized into cooperative associations. We will engage with these organizations to register and sign contracts with each farmer.

In addition to the outgrowers, an additional ~260 jobs will be created by year-end 2017. These individuals will serve as agronomists, credit officers and staff of the mill.

Upon harvest, Dangote Rice will offtake rice paddy and transport the paddy to be processed. One centralized mill will mill the stored paddy rice from all 3 sites.

Dangote Rice plans to produce one million MT of rice from 150,000 Ha in the next 5 years over. They intend to accomplish this by scaling the business model described above to more sites and rice growing communities. These communities have been identified and relationship building and sensitization has already begun. In addition to scaling the above model, DRL will establish and manage a high-quality seed development farm at Numan in Adamawa to reduce the costs of seeds.

Dangote Rice will establish raw material reception, drying, hulling, parboiling units and silos in strategic areas throughout the country near our additional outgrower communities. Each site will store dried, hulled, parboiled bran rice. DRL will then transport this bran rice to a mill, where finished rice will be produced. 

]]> (Super User) Business Mon, 13 Feb 2017 12:19:24 +0000
Nigeria's $USD1B Eurobond Is Oversubscribed By 800% Nigeria's $USD1B Eurobond Is Oversubscribed By 800%
Nigeria comfortably raised $1 billion in its return to the Eurobond market yesterday, in what signifies a global investors’ endorsement of the Federal Government’s economic recovery initiatives and growth. 
The issue was 750% oversubscribed, underscoring still buoyant investor appetite for scarce frontier African paper, despite a recent selloff in emerging market assets. `The Global medium term Note programme of U.S.$1,000,000,000 is due to mature in 2032
It was a day of international acknowledgement and endorsement of the Debt Management Office (DMO) continued effective strategy in a peculiar challenging local and global economic landscape.
The DMO defied all known predictions by international financial and capital market analysts to prove that Nigeria’s economy remains resilient and robust in the international capital market during the issuance of the nation’s first fifteen-years maturity $1B Eurobond.
Africa's top oil producer issued $1Billion 15-year bond at a 7.875 coupon at a most turbulent time of her economy.
These feet show an unambiguous resilience of the Nigerian economy and strength, particularly in terms of effective bullish public debt management record.   
Market players had queried that the Eurobond issuance will meet brick wall due mainly to the country’s Foreign Exchange policy which has seen the Central Bank controlling the exchange regime. Many stakeholders and international financial market analysts had premised at the Eurobond Roadshow in London, Los Angeles and New York that Government’s control of the Forex regime will adversely impact on the fortunes of the Eurobond.
This is the first time Nigeria is issuing a $1B Eurobond in a single tranche. In 2013 the Federal Government issued a $1B Eurobond but in two tranches of $500m each for five and ten years’ maturity each. 2011 was the debut outing of $500m with maturity period of ten years.
The Federal Government will take advantage of this success to reflate an economy in recession and the otherwise turbulent market. 
Egypt, with a higher credit rating issued a ten-year Eurobond at 7.5 percent compared to Nigeria’s fifteen-year at 7.875, shows that Nigeria’s has a stronger performance in view of the longer maturity tenor. 
]]> (Super User) Business Fri, 10 Feb 2017 12:35:18 +0000