President Muhammadu Buhari has asked the parliament for approval to borrow $4 billion and €710 million to fund the deficit in the 2021 budget. That has been expected when the government could not make progress to extract “abandoned balances in bank accounts” and “unclaimed dividends”. With no productivity to bring tax Naira, going to the capital market was expected.

I understand that PDP, the opposition party, is not happy with the development. Sure, PDP left  the national debts at about N12 trillion when it left power in 2015. In six years, that figure has hit N33.1 trillion as of March 2021.

Yet, this is not the end: I expect this loan to hit N100 trillion by 2027. Even the Debt Management Office, a government bureaucracy, is worried. Nothing will change this trajectory until there is a sense of ownership and responsibility in Nigeria. Our current structure makes this possible: with no intra-state competition, everyone sleeps because Abuja will feed us.

What do I mean? Adamawa’s FDI for a whole year was $20,000, and that effort added it to the list of Nigerian states with FDI in 2020: “By destination, Lagos emerged as the top destination of capital investment in Nigeria with $8.3 billion, followed by Abuja, which received $1.3 billion. The others on the list are Abia State with relatively lower $56 million, Niger with $16.4 million, and Ogun with $13.4 million. Anambra State recorded $10.2 million, Kaduna State recorded $4.03 million, Sokoto got $2.5 million and Kano got $2.4 million. Akwa Ibom received $1.05 million ahead of Adamawa, which received just $20,000.” Yes, Simply, no incentive to leverage on comparative advantages across the nation. Twenty-six Nigerian states recorded zero foreign investment in the whole of 2020, figures released by the National Bureau of Statistics show.

My biggest concern is that the Nigerian government has not opened our borrowing business so that fintechs can participate! Yes, that is a huge market which is growing in double digits. I expect it to continue to grow irrespective of the party that takes power in 2023 until fundamental changes take place in the economy – and that is intra-state competition or what some call fiscal federalism!

This app – Jeka (!) – can raise $1billion via API to all bank accounts for x% monthly interest for Abuja! No need for JP Morgan Chase, Goldman Sachs, etc. Go Figure.

People, more loans!

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Comment: Well articulated, however focus on debt should be in 2 parts… Debt to GDP ratio and what the burrowed funds is used for. Today America is burrowing $2trillion to finance deficit caused by Corona and jump start the economy. Last I check Nigeria’s debt to GDP was about 35% while IMF stipulates 25% as a comfort band. America’s debt to GDP is 107%, China 246% while India 21%, Ghana is 78%, UK 106%.

My Response: If a villager borrows from his village, it is market. But if he goes to another village, it opens up for enslavement. Nigeria’s borrowing cannot be compared with what happens in US because US borrows from its village (America) while Nigeria goes to another village – and this the slavery.

In Igbo novels, from Uwadiegwu to Omenuko, kinship-sourced debt is seen as a better alternative than a “foreign” one because if you lose your home, your kinsman (the lender) is obliged to host your wife and children because the child is Nwaoha (a child belongs to the village, not just to the parents) including to the lender.

Our good wishes to our fellow citizens at Trademore Estate in Lugbe, Abuja, for the lives and properties lost as a result of the heavy downpour late Sunday. These things are happening more often these days across the nation. Walk around the Bar Beach area in Victoria Island, Lagos,  and look at those abandoned buildings in the supposedly  most expensive zip code in West Africa. You will pity the owners: they have washed hands and prepared the nuts for the fowls!

Nigerian civil engineers: it is time to work with the government to enforce the law. Adding an additional building to block drainage risks everyone! Government: permits must not be issued without looking at the drainage system.

People, things need to work in Nigeria. Not everything must be the fault of Aso Rock or state capitals. I saw an estate in Owerri built with largely no drainage. The hope remains that bad things will not happen. Unfortunately, the cases are ramping up.

Stay strong Trademore Estate; may it be the last.

No fewer than 74 houses were heavily affected by the flood that ravaged Trademore Estate, one of the largest privately-owned estates in Abuja.

The flood, caused by a heavy downpour which started late Sunday, was confirmed to PREMIUM TIMES by residents as the worst disaster that has ever happened in the estate in over nine years.

Already, three persons have been confirmed dead while search for more bodies is ongoing..

Aside from the destroyed buildings and cars worth millions of naira, a number of shops and businesses along the Phase 3 areas of the estate recorded huge losses that are beyond redemption..

This is one mistake many Nigerian merchants make: convert US dollar-based pricing and ask customers to pay the Naira equivalent. The thinking is like this: if your product goes for N50,000 or $140 when the US dollar is exchanged at N400/$, if the exchange moves to N500/$, you have to go and increase that N50,000. That is wrong.

That confusion is why I get this type of inmails: “On your advert on Tekedia  Diploma programmes, you said $100 or N36,000.00. I thought the exchange rate is now above 400 naira per dollar?”

In Tekedia Mini-MBA, we have three different pricing courses from leading experts; pricing efficiency is very important in any business.  That Naira is falling must not mean that my Nigerian customers must be asked to pay more if that fall of USD does not affect my marginal cost and broad cost of production.

More so, that Naira is losing value to USD does not mean that those earning local currency (Naira) suddenly have more Naira. So, if you have a product at say $100 or N36k when the exchange rate was N360/$, and Naira has dropped to N500/$, you cannot recklessly jack up prices unless there are clear production factors which would be affected.

So, when you see our pricing, it is not a typo. Microsoft does that all the time.  It costs me $99 per year on my personal Microsoft 365; some vendors can sell you for less than N7,000 ($15) in some African countries because it is easier to make $99 than make N7,000 ($15) say in Nigeria. If Microsoft translates that without considering purchasing power parity, it will miss its customer base.

Sure – that does not mean you cannot increase the price as currency erodes value. But it has to be done not just because some speculators are at work!

The VAT controversy between the Federal Inland Revenue Service (FIRS) and Rivers State, which is increasingly escalating to involve other states, keeps introducing new episodes as Governors make decisions on which side of the matter they stand.

Ebonyi State Governor David Umahi has charted a path away from the perceived desire of Southern governors to support Rivers State Governor, Nyesom Wike’s struggle to stop the FIRS from collecting VAT from businesses under states’ jurisdiction. Umahi has said he is not in support of the legal tussle which has been backed by Lagos State, and Ogun State, reportedly working on a bill to give VAT collection by the state government, a legal backing.

“Ebonyi state is not in support of any state collecting VAT. We are in support that FIRS should continue to collect tax and share,” Mr Umahi was quoted as saying at a dinner in honour of a former Chief of Army Staff Tukur Buratai.

Following a Federal High Court ruling last month, which declared the collection of Value Added Tax in states by the federal government illegal, some states in southern Nigeria have been trying to use the opportunity to break away from the tax marriage with Abuja, which has been described as ‘unjust.’

The Rivers and Lagos state governments were swift to enact a law that will empower their states to take charge of VAT collection, and other states, including Akwa Ibom are following their steps.

However, breaking ranks with his southern counterparts, Umahi, who has been a vocal supporter of the federal government’s initiatives, said he doesn’t support the idea.

The outlet reported the governor strongly opposing the move in his address during an event held at the Governor’s Lodge, Centenary City, Abakaliki. He was quoted as saying that “evil will continue to thrive if good people keep quiet.”

“We must make Ebonyi state very exceptional by rising to the challenges. When we shout true federalism, I say, I agree. But it should be administrative restructuring,” he said.

“People are taking special interest in Ebonyi state and her governor, positively and negatively. But it is very important to be in the news than for you to say there are 36 states. You will name 35 and say, ‘what is the other state?’ We have aborted it. We are now a state to reckon with, and we have no apologies.”

Umahi’s decision to stick with the federal government is believed to emanate from Ebonyi State’s total dependence on federal allocation. The southeastern state’s 2020 internal generated revenue (IGR) of about N13 billion is among the poorest in Nigeria, and it’s the only southern state ranked among top-10 poorest states in the country.

While the Federal High Court’s VAT judgment has been hailed as a bold step to fiscal federalism, many states will not survive if it’s nationally implemented. Against this backdrop, many states, especially in the north, are rallying around the FIRS, while others in the south, who have enough IGR numbers to survive without federal allocation, are standing firm in their opposition to the tax agency.

For instance, Lagos and Rivers states have both ignored the ruling of the Appeal Court, which ordered all parties in the VAT case to maintain the status quo. While the Lagos State Government proceeds with all moves to collect VAT, the Rivers State Government has taken the FIRS to the Supreme Court, challenging the appellate court order.

Rivers State wants the Supreme Court to order that the substantive appeal by FIRS be heard and determined by a fresh panel of the Court of Appeal.

Rivers is also requesting the apex court to set aside the ruling made by the appellate court, which ordered the state to stop VAT collection pending the determination of an appeal filed by the FIRS.