• Friday, March 29, 2024
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BusinessDay

Five things to start your day

Five things to start your day

Here’s what’s wrong with the government’s plan to raid pension funds

At the end of the National Economic Council (NEC) meeting Thursday, the council disclosed that the Federal Government had resolved to borrow N2 trillion from the current N10 trillion pension funds to finance the development of infrastructure.
All of these is despite the fact that the federal government already holds 70 percent of the pension funds in the form of bonds and treasury bills.
Sources say the government has approached the pension fund managers to discuss plans of borrowing some money at between 6-9 percent interest, which is well below inflation rate and portends a negative real return for the Nigerian workers who the funds belong to.
Apart from the risk of negative real return on funds set aside by Nigerian workers for an uncertain future- one which the same government has perpetuated with its lack of vision and planning, there are quite a handful of reasons why the plan to raid pension funds is wrong.
One reason is the fact that the government hasn’t exactly earned the reputation of being judicious with public resources. Despite tripling its debt stock by almost N10 trillion, the country has nothing to show for it by way of infrastructure whether its electricity, roads or rail.
Another reason is that the same government that wants to raid pension funds is yet to pay up its own share for its workers. Only a handful of states are consistent contributors to the pension scheme.
The move also threatens to scuttle confidence in the country’s pension system which had challenges when it was being managed by the government. It was because the government controlled pension system proved unsustainable that the new system which allows private sector fund managers manage the fund was introduced in 2004. It has lasted since then and has won the confidence of the private sector with some 9 million contributors.
Any irresponsible move by the government to dip hands into the pension money at a rate below inflation and then squander the money could damage confidence in the scheme.

US$9.6bn judgment: P&ID claims victory at Friday ruling

Process and Industrial Development (P&ID), the beneficiary of an award of US$9.6bn handed down against Nigeria by a London arbitration tribunal in January 2017, has laid claim to another victory at the ongoing enforcement proceedings before the English Commercial Court in London.
The company disclosed that the English Court set a deadline in the next summer for the Federal Government to justify its years of delay in challenging the award.
The firm had on August 16, 2019, obtained a judgment of the English court permitting it to commence the enforcement of the $9.6bn arbitral award.
Alleging fraud in the signing of the contract leading to the decision of the arbitration tribunal, the Federal Government has initiated a series of legal proceedings in the English court to challenge its judgment validating the $9.6bn award.

What next after Nigeria raises bank’s cash ratio for first time in four years

The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, at its maiden session of 2020, raised the Cash Reserve Ratio (CRR) for banks by 500bps to 27.5% (22.5% previously).
Although effective CRR has long being above 22.5 percent, the move to further raise it contradicts the apex bank’s push for lending to the real sector.
A higher CRR means the banks have less cash with which to lend and that may slow down the pace of their fast growing pay day loan spree.
This is the first time in four years that the apex bank is raising the CRR. The committee noted that the decision was aimed at curbing excess liquidity in the banking system which it attributed as a contributory factor to Nigeria’s rising inflation. Nigeria’s inflation rate stood at 11.98% in December 2019, the highest level since April 2018. The MPC, however, held other policy tools constant.

Coronavirus outbreak intensifies and spreads to France

As of this morning, the outbreak of a mysterious coronavirus has killed at least 80 people in China, sickened thousands and spread to at least 10 countries. That includes three confirmed cases in France, the first European country on that growing international roster.
Almost all of the worldwide infections involve people who travelled from China. A top health official in Beijing warned on Sunday that the spread of the disease was accelerating, partly because it was being carried and transmitted by seemingly healthy people.

Italy’s League party loses a key election

The party of the nationalist leader Matteo Salvini lost a regional election on Sunday that he had hoped would set the stage for his return to power — a prospect that once thrilled Europe’s populists and menaced its establishment.
Salvini had campaigned feverishly before the vote, in the northern region of Emilia-Romagna, in the hope that a victory would provide ammunition in his calls for early national elections. But voters there, who have typically supported communist and leftist parties, rejected his anti-migrant League party’s candidate by a margin of around five percentage points.
Five Star, an anti-establishment party in Italy’s governing coalition, was humiliated in the election, raising more questions about its viability in the wake of its leader’s resignation last week.