Adeosun Unfolds Plan to Reset Economy

• FG may resort to Chinese Panda bonds to fund 2016 budget CBN sells $189m to banks, GTB leads in forex allocation

Chika Amanze-Nwachuku and Obinna Chima in Lagos with agency report
The Minister of Finance, Mrs. Kemi Adeosun, has said the government plans to reset Nigeria's economy with structured borrowing, targeted investment and diversified growth.

Adeosun, who spoke to journalists after a special event hosted by the Lagos Business School at the weekend, also said part of the cash set aside to finance some energy projects would be used to help fund the budget.

"We have inherited a set of conditions that requires us to refine how we collectively work towards ushering in a new era in Nigeria," she said.

Pointing to the impact of falling oil prices on the economy, the minister said: "In the past, we had the means but not the will. Now we have the will but we no longer have the money to invest. The safety blanket of oil has been ripped away, laying the poverty of Nigeria's institutions bare."

She added: "We have spent too many years tinkering at the edges of our institutions, our infrastructure and our economy and the mistakes and misjudgment of the last 40 years have set our clocks back by decades.

"We must collectively adopt a blueprint that equips the future generations to be creative and dynamic, that allows us to articulate a vision of a Nigeria, with a strong educational foundation; rich in depth of knowledge with a breadth of skills, an expansive infrastructure capable of servicing the needs of a nation of 150 million Nigerians."

On the N1.8 trillion borrowings to invest in railway transportation, roads, housing, power and health, the minister said: "We are committed to a countercyclical budget expenditure model. This has been a success in other nations, offsetting the risk of recession and creating an economy which is not based on either fragile consumer spending or over-reliance on oil."

Adeosun also used the forum to set out what she described as the four pillars of the economic plan: stimulate economic growth to achieve a real GDP growth of 4.2 per cent in 2017; reduce the cost of governance and strengthen institutions to combat corruption and extract efficiencies in public service; increase government expenditure on infrastructure; and fund the budget deficit and negative trade balance cost effectively.

She said the targeted outcomes would include a substantial increase in gross capital formation; acceleration of GDP growth; infrastructure development to unlock economic growth; diversification of the economy and growth of the non-oil sector; an improvement in the overall business environment; and improvement in key socio-economic indicators, jobs and wealth creation.
Adeosun also disclosed that the federal government might issue Chinese Panda bonds to help fund the 2016 budget.

She said the federal government was shopping for cheaper money to help fund the 2016 budget aimed at reviving the dwindling Nigerian economy, reported Reuters.
"Initially we were looking simply at the Eurobond market but then we began to explore opportunities in the renminbi market, so there is a possibility of issuing a Panda bond," she said.

She added: "Our objective is to borrow the cheapest possible money and when we realised that the possibility of issuing a panda bond, which is a renminbi-denominated bond between issuing a euro denominated bond, we began to explore that opportunity. Indicatively, that will be cheaper for us than issuing a straight eurobond."

The minister however declined to disclose the size of the possible issue, saying, "We were looking originally at doing about a billion dollars on the Eurobond market, so we may split that between the renminbi and the Eurobond.

"We are going to see what the pricing comes out as. At the moment indicative pricing is a bit cheaper – about 1.5 lower than the Eurobond."
When asked about the timing, Adeosun said: "Our objective was always to be in the market early Q3."

Later, she told a news conference that Nigeria might also sell Japanese Samurai bonds.
Adeosun said the government might use the money set aside for funding joint venture investment projects with private oil firms. Nigeria plans to boost tax income by 33 per cent in 2016 to offset a slump in oil revenues.
"If the revenue doesn't come in, we have got N1 trillion in the budget for cash calls," she explained.

Meanwhile, despite the foreign exchange curbs which have contributed to the economic downturn, the publications by commercial and merchant banks on the utilisation of forex bought from the Central Bank of Nigeria (CBN) last week showed that 16 banks and three merchant banks were allocated a total of $189,489,057, in order to meet the forex demands of their customers.

Guaranty Trust Bank Plc (GTB) with a total of $24,556,150 received the highest allocation of forex from the central bank. GTB displaced Diamond Bank, which was allotted $21,576,682 to hold the second position, while Zenith Bank Plc with an allotment of $19,590,562 came in third.

Zenith Bank's major customers last week in terms of forex sales were Dangote Agro Sacks Limited and Dangote Sugar Refinery which got a total of $5.376 million; KLM Airlines ($1 million); and Tiger Brand Consumer Goods ($1.054 million).

Also, Stanbic IBTC with $17,625,449 held the fourth slot, Ecobank Nigeria with $15,319,240 occupied the fifth position, and FirstBank Nigeria Limited with returns of $14,480,540 followed in sixth place.

United Bank for Africa Plc (UBA) held the seventh position with total returns of $12,751,315 reported last week, while Union Bank of Nigeria occupied the eight position with returns of $10,707,425, just as First City Monument Bank (FCMB) with $10,689,039.54 held the ninth position. Sterling Bank with $8,099,228 came in 10th.

An assessment of its forex sales to customers during the week showed that Diamond Bank had a total of 202 corporate and individual customers. Some of its corporate customers were Dangote Cement, Coscharis, Dana Airlines and Ratcon Construction Company Limited, among others. Its major customers were Dozzy Oil and Gas Limited to which it sold $2,188,793.26; Swift Oil ($2,554,632.16); Rahamaniya Oil and Gas Limited ($1,479,167.94); Bua Sugar Refinery ($1,000,000); and A-Z Petroluem ($6 million). The bank also sold the greenback to customers who required to pay for school fees and personal travel allowances (PTA).

To occupy the third position, Zenith Bank sold forex to a total of 405 customers – individuals and corporates. The corporate customers got forex for the importation of items such as natural gas, industrial raw materials and spare parts, among others. Just like its peers, Zenith Bank also sold large amount of dollars for school fees and PTA.

Stanbic IBTC sold the greenback purchased from the CBN to 90 customers. The exit by foreign portfolio investors continued with the sale of equities by Financial Portfolio Consulting, Enco Opportunity/Stanbic Nominees and Brown Brothers, among others.

Ecobank Nigeria Limited also sold its forex to 161 customers. Its customers utilised the dollars they purchased for loan repayments, purchase of motorcycle parts and other industrial raw materials, school fees and PTA.

The returns on forex utilisation published by FirstBank Nigeria Limited had 580 customers. Of this number, 53 got the greenback for the importation of industrial raw materials and other visible items, while the rest was for the payment of tuition fees abroad and PTA.

UBA with 156 customers on its list, also reported that its customers purchased dollars for the importation of completely knocked down motorcycles, raw materials, gas oil, remittance of ticket sales, and importation of tailoring materials, among other visibles, as well as for school fees and PTA.

Union Bank, which sold dollars to 87 customers, also had the importation of items such as unleaded gasoline, caterpillar spare parts, and pharmaceutical laboratory equipment as well as for payment of school fees abroad and PTA.

Similarly, FCMB sold dollars to 189 customers to import petrol, gas oil, other industrial raw materials and to pay school fees, just as Sterling Bank also sold dollars to 118 customers for both visible and invisible items.

Returns on Forex Utilisation April 4-8
Ranking	Commercial Banks	Amount ($)
01	GTBank	24,556,150
02	Diamond Bank	21,576,682
03	Zenith Bank	19,590,562
04	Stanbic IBTC	17,625,449
05	Ecobank Nigeria	15,319,241
06	FirstBank	14,480,540
07	UBA	12,751,315
08	Union Bank	10,707,425
09	FCMB	10,689,034
10	Sterling Bank	8,099,228
11	Access Bank	8,057,024
12	Fidelity Bank	7,019,530
13	Citibank Nigeria	6,249,201
14	Wema Bank	4,188,005
15	Heritage Bank	2,078,700
16	Unity Bank	1,738,343

Merchant Banks
01	FSDH Merchant Bank	1,826,320
02	RMB Nigeria	1,181,830
03	Coronation Merchant Bank	1,754,478
	Total	189,489,057