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The impending recession and how governments can assist businesses

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The impending recession and how governments can assist businesses

Naija News NG brings an article that ex-rays how the Federal Government can help businesses .

While Nigerians were still battling with the effect of the lockdown of business activities imposed by the federal and state governments in their efforts aimed at containing the community spread of the coronavirus disease (COVID-19) the federal government relayed the scary piece of information from the World Bank that the country’s economy would go into recession as a result of the coronavirus pandemic.

 

Mrs Zainab Ahmed, the Minister of Finance, Budget and National Planning, at the briefing of State House correspondents after a recent NEC meeting, said the fall in crude oil price in the international market, as a result of the COVID-19 pandemic, has worsened the economic situation of the country, leading to World Bank’s prediction of recession for Nigeria. According to her, “The World Bank maintains that the impact of the COVID-19 on Nigeria will lead to severe amplified human and economic cost, which will move the country into a recession.”

 

This is not cheering news at all, considering the facts that businesses in the country are yet to fully recover from the recession of 2016/2017, that economic recessions have lasting consequences on the people and businesses, and that the looming economic crisis would inflict more misery on the country through an increase in the poverty rate. Moreover, the fact that is making this prediction even scarier is that, while the country is yet to officially fall into recession, businesses in the country are already feeling the brunt of the COVID-19 economic lockdown.

 

Recently, one of the biggest banks in the country retrenched quite a huge number of its staff and placed those staff who were not retrenched on salary cuts of up to 40 per cent, citing the effects of the COVID-19 economic lockdown. Other banks and financial institutions were planning theirs and would have announced their own measures if the Central Bank of Nigeria (CBN) and the National Pension Commission (PenCom) did not intervene and order the banks and pension funds administrators under their respective purviews, not to layoff or place salary cuts on any of its staff as a result of the effects of the COVID-19 pandemic without the regulator’s express permission.

 

Also, the Federal Airports Authority of Nigeria (FAAN) recently announced a salary cut for its workers. In a circular to staff dated May 19, 2020, the Management of FAAN said the reduction in salaries is due to airport closures occasioned by the coronavirus pandemic. The memo, which was signed by Musa Mohammed, the agency’s General Manager of Administration, read thus: “This is to notify all staff that due to the dwindling revenue generation amidst COVID-19 pandemic, management may not be able to pay full salary to staff as from May 2020.” It took the uproar by Nigerians for the government agency to rescind on this decision.

 

These employees could be said to be especially lucky, as many of their contemporaries in other sectors of the economy are not so lucky. Many micro, medium and small scale enterprises (MSMEs), and even the large corporations, cutting across most sectors of the economy have either formally terminated or placed between 30 to 70 per cent of their staff on no-pay forced to leave as a result of the loss of business on account of the effects of the pandemic. Those most affected are the workers in the private sectors of aviation, interstate transportation, marketing and events management, food vending, hospitality and entertainment, hospitals businesses, etc.

 

The harsh consequences of a recession are a major reason the government must work to ensure that the country does not get into a recession, and in the event, this COVID-19-induced recession happens, to ensure that it gets out of it as quickly as possible. One of the surest ways of making this happen is for the government to support and empower the businesses, especially those promising ones in the MSMEs sector, and major start-ups etc. For example, Jumia Nigeria and many other businesses, especially in the e-commerce and logistics sectors have shown tremendous promise in the face of the pandemic thus pointing to the possible areas that government could extend support to in its efforts towards curbing the adverse economic effects of the pandemic in the country.

 

The theory of the interrelatedness of the macro and microeconomics of every country shows how effective this approach could be in our current situation. In Nigeria, according to the Nigerian Bureau of Statistics (NBS), the MSMEs sector has over 37 million businesses and start-ups like Jumia Nigeria, who employ over 54 million skilled and unskilled labour and contribute about 54 per cent to GDP of the country. This means that if this sector is empowered to run optimally, it will obviously boost the country’s GDP, thus helping in keeping recession at bay.

 

One of the major effects of the COVID-19 lockdown and the recession that may follow on businesses, especially the MSMEs is the solvency issues, resulting from low patronage, operational losses and reduced access to financing. Small businesses and start-ups are, in many ways, the hardest hit by a recession. Without the financial or negotiating power of larger corporations, and frequently with severely restricted credit flows, many MSMEs will be struggling to prevent layoffs or cutbacks.

 

Prior to this period, there still existed a huge gap between the financing needs in this sector and its present realities, which Godwin Emefiele, the Governor CBN, recently put at N48 trillion. The government can address the solvency issues by boosting the MSMEs’ access to finance, through special funding arrangements like funds provision, low-interest rates, credit guarantees and an extended moratorium on loan and credit facilities.

 

Almost all countries across the world that are being faced by similar predictions, including Nigeria, have created special bailout measures to ameliorate the economic effects of the pandemic. In Nigeria, however, the N50 billion intervention fund created by the CBN as a stimulus package for families and MSMEs is relatively too meagre to make the needed impact in the economy. The government should up this ante to reflect, at least, the current financial needs of the MSMEs sector.

 

Also, governments can also institute some tax measures like tax and duty waivers on some categories of business, tax holidays and reduction in/extended filing time off, tax obligations for businesses in the country. Some analysts have advocated for tax relief for businesses in the frontline of the covid19 like Jumia and other eCommerce companies because they have been playing the role of driver and aggregator for a lot of MSMEs/SMEs. According to them, a well incentivised private sector will not only kick-start the post-COVID-19 economy but will also boost the revenue of the government to ensure that recession, and its ugly consequences are averted.

 

The catch is this, a good proportion of the government revenues comes from defined percentages of the company profits paid as taxes, and the more the profits these companies make, the more the taxes they pay to the government. So, when the government assists these businesses reduce their cost of operations by adopting any of these recommendations, the businesses will make more profits and the government, in turn, will increase its revenues.

By Olusegun Koiki

I am Paschal Ogechi Obi Chikero . I have written and published three books , I wrote Festus Keyamo's biography- Lion In Isolation .I have been a Reality TV show Producer/Creator, an Actor and Film Script Writer.

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Alleged N23bn fraud rocks MTN’s MoMo PSB, one month after launch

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Alleged N23bn fraud rocks MTN’s MoMo PSB, one month after launch

Momo Payment Service Bank Limited (MPSBL), the banking subsidiary of MTN Nigeria Communications Plc, is currently enmeshed in an alleged N23 billion fraud scandal, one month after the launch of the platform.

The mobile money banking firm has urged the Federal High Court to compel 18 commercial banks to refund the said fund which was transferred to their customers.

The money, MPSBL said, was erroneously and fraudulently transferred in 700,000 transactions into about 8,000 accounts belonging to the customers

The subsidiary also urged the court to order the banks to provide information about the customers into whose accounts the funds were mistakenly paid.

The requests form part of the reliefs in a suit filed by MPSBL through its lawyer, Lotana Okoli (SAN).

READ : MTN Nigeria’s Chief Risk Officer, Cyril Ilok resigns after s*xual abuse allegations

MPSBL averred that under the Central Bank of Nigeria (CBN) Regulation on Instant (Inter-Bank) Electronic Funds Transfer Services, made pursuant to sections 2(D), 33(1)6) and 47(2) of the CBN Act 2007,it is incumbent on the banks to make refunds and provide the required information.

MPSBL’s Chief Executive Officer (CEO) Anthony Usoro Anthony said in a supporting affidavit that his bank suffered “a system exploitation” on May 24, 2022, during which 700,000 transactions were processed with credits being made into about 8,000 accounts in the 18 banks being requested to make the refunds.

Anthony averred that upon becoming aware of the incident, MPSBL’s management shut down the service to limit the impact and triggered engagements with the defendants (the 18 banks) through the Nigeria Inter-Bank Settlement System (NIBSS) for the commencement of recovery activities from the accounts of the various beneficiaries in the various banks.

He added: “We were able, through system checks, to confirm the banks and accounts into which the various sums of money were transferred into.

“We were also able to confirm how much was paid into each bank account in total. The said list of accounts which received the funds was made available to the respective banks as a preliminary step to mitigate the applicant’s losses.

“The transfers were due to the fact that the plaintiff suffered a system exploitation which led to the said debits.

“There is no transaction between the plaintiff and the recipient account holders that warranted the transfer of the funds to those account,” he said.

Anthony added that his organisation’s resort to the court was informed by the banks’ insistence that they needed to be ordered by the court before they could act.

The MPSBL CEO stated that the organisation was “carrying out investigations internally and externally to ascertain the actual cause of the debits”.

He added: “The defendant banks have requested an order of court mandating the defendant banks to reverse the credits made into their customers’ accounts before the defendants can do so. “

“The plaintiff is entitled to a return of its money and has demanded the return of the money into its settlement account in the name MOMO PSB settlement account number: 2041379385 held in First Bank Plc, Samuel Asabia House, 35 Marina, Lagos.

“It is the understanding of the plaintiff that prior to the defendant banks being informed of the fact that the credits into their customer accounts were unauthorised that some withdrawal transactions had already been carried out by some of the customers.

“This has necessitated the application for information regarding these customers and the banks and accounts to which they transferred the said funds in order to enable the plaintiff to trace the funds to those banks.

“By virtue of the provisions of the CBN Regulation on Instant (Inter-Bank) Electronic Funds Transfer Services, made pursuant to sections 2(D), 33(1)6) And 47(2) of the CBN Act 2007 the plaintiff is entitled to a return of its money and the provision of the information which it requires from the defendants.

“The plaintiff is also entitled to the support of the defendants in the recovery of any sums which have been removed from the customer accounts in the defendant banks the reliefs it is aiming in this action.”

The plaintiff is praying the court for the following reliefs:

* A declaration that the deposits of an aggregate sum of N22,300,000,000.00 erroneously transferred by the plaintiff to the accounts of the customers of the defendant banks, having been done in error, belong to the plaintiff and not the customers of the defendant banks.

* An order directing the defendant banks to each, individually, account for the sums available in their customers’ accounts and the sums which have been removed by the customers and are no longer available.

* An order directing the defendants banks to immediately return the aggregate sum of N22,300,000,000.00, less those funds that are no longer available, to the plaintiffs settlement account in the name MOMO PSB settlement account number: 2041379385 at First Bank Plc Samuel Asabia House 35 Marina, Lagos, from where the funds originated.

* An order directing the defendant banks to release all information, including account name information in respect of the accounts from which the plaintiff’s funds have been transferred to third parties, including the destination accounts and the banks in which they are held to assist in the tracing and recovery of those funds.

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Safe driving: FRSC commissions Dangote truck driving school…Dangote also trains block makers in Kano, Katsina to prevent building collapse

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Safe driving: FRSC commissions Dangote truck driving school…Dangote also trains block makers in Kano, Katsina to prevent building collapse

Leading Cement manufacturer, Dangote Cement Plc, on Wednesday launched the Dangote Articulated Truck Driving School in a move aimed at inculcating safe driving culture in its drivers so as to stem the tide of road crashes.

The opening of the school in partnership with the Federal Road Safety Corps (FRSC), the Company management reasoned, would also make the drivers become better road users.

The Academy, which was officially commissioned by Corps Marshal of the Federal Road Safety Corps (FRSC), Dr. Boboye Olayemi Oyeyemi, was characterized as historic and unique.

The new Academy for truck drivers, according to the Corps Marshal, is a significant step forward that will benefit not only the Dangote Group but Nigeria as a whole.

The country’s top road safety official hailed Alhaji Aliko Dangote, President and Chief Executive of the Dangote Group, for taking “a big step” towards reducing truck accidents.

He said: “This is what we’ve been waiting for. You made it. I have observed that Dangote has done a lot to address truck crashes and I must commend them for this.”

He extolled the conglomerate for leading other companies on this path, saying the new school will play a key part in the country’s efforts to make roads safer.

He said he had suggested such a school long ago, adding that he is happy that the school has come to fruition.

In his remarks, the National Director, Logistics of the Dangote Cement (Transport section) Mr. Juan Carlos Rincon, said the new school is an expression of the determination of the company to bring to halt the incidences of auto crash in the country.

Speaking also Executive Secretary National Board for Technical Education (NBTE) Professor Idris Bugaje who was represented by Engr S.M. Yusuf, said the NBTE will partner with the Dangote Cement Plc for a successful accreditation and takeoff of the new school.

In his remarks, the Bajana of Obajana HRH Oba Idowu Isenibi said he was optimistic that the school will help address auto crashes in the country, even as he described the President of the Dangote Group Aliko Dangote as a “rescuer and God sent to their communities that should be emulated by other investors in the country.

Speaking in the same vein, the Olu of Akpata Oba Frederick Balogun urged other investors to emulate the company.

Both the Dangote Cement Transport and the FRSC signed a Memorandum of Understand (MoU) on how to cooperate to ensure that the school is a success.

In the same vein, Dangote Cement organized thorough block molding training for block makers in both Kano and Katstina states respectively. This, according to the company is to ensure that the blocks moulded for building constructions are strong, reliable, and durable, noting that some block makers do not really know how to make strong and reliable blocks.

The Coordinator of the programme, Mr. Johnson Olaniyi, said the workshop would give the block molders and allied product manufacturers the opportunity to once again build capacity and adhere to global best practices.

Mr. Olaniyi said the Dangote Cement Plc is desirous of reversing the trend of collapse building through the capacity building of block manufacturers.

Meanwhile, government representatives, quality regulators, cement dealers, block makers, and end-users have come to an accord that Africa’s cement giant produces the best quality of cement on the continent.

The stakeholders who attended the meeting also said the ongoing nationwide workshop and sensitization of block manufacturers will help check the menace of collapsed buildings in the country.

Speaking at the workshop in Kano, representatives of the Kano State Government Alhaji Muhammad Garba Kwall said that Dangote Cement Plc is not only the biggest company but produces the best quality in Africa.

He described the company as socially responsible and that’s why it is giving back to society through the sensitization workshop and creating various platforms for educating end users to mitigate the incessant incidences of collapse building in the country.

Speaking, Regional Director, Kano Directorate, Standard Organization of Nigeria(SON), Mr. Albert Wilberforce urged block molders to patronize the quality cement produced by the Dangote Cement Plc, adding that the SON was partnering with the company and ensuring that only quality cement are produced by the company.

In the same vein, The Kano State Coordinator (II) of SON Engr Hauwa M. Husseini urged the block moulders to comply with standard practice in order to prevent the menace of collapse buildings in the country.

Speaking also, Regional Sales Director for Northwest  Aliyu Dan Aliyu urged participants to be ambassadors by telling their customers about the quality of the cement.

He said: A customer who wants to build a house, doesn’t know the quality or type of cement to use. It is the responsibility of the builder to advise him on the desired cement to use for quality building.

Safe driving: FRSC commissions Dangote truck driving school…Dangote also trains block makers in Kano, Katsina to prevent building collapse

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Dangote Sugar Refinery Restates Commitment to FG’s Backward Integration policy …Rewards Shareholders with N12.147bn Dividend

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Dangote Sugar Refinery Restates Commitment to FG’s Backward Integration policy ...Rewards Shareholders with N12.147bn Dividend

Dangote Sugar Refinery Plc has restated its commitment to the achievement of Sugar Backward integration projects, describing it as the best thing that happened to the sector.

Speaking to shareholders at the 16th Annual General Meeting (AGM) of Dangote Sugar Plc, in Lagos the Chairman of the Company, Aliko Dangote, said that despite the harsh operating environment, the board and management were not deterred in the pursuit of sustainable growth for the company and demonstrated resilience by continued implementation of its strategic objectives during the year, 2021.

The dividend pay-out of N12.147 billion for the year was unanimously approved by the shareholders.  The dividend represents N1.00 per share.

The Company under review posted a Group turnover of N276 billion, being 29 percent increase over N214 billion in the comparative year. Profit before tax of N34.021 billion, profit after tax of N22.052 billion. Group EBITDA decreased to N46.5 billion with an EBITDA margin of 18 percent.

According to Dangote, the Company’s performance during the year under review is commendable amidst the challenges and the negative impact of COVID-19 pandemic on economic activities. “We furthered the implementation of process optimisation, cost savings, and product promotion strategies with the launch of our new brand identity and the pursuit of the Dangote Sugar Backward integration master plan”

He further stated that the Board and Management will continue to implement strategic actions to sustain and surpass this performance while engaging with all stakeholders in the sector and its communities to ensure the realisation of the objectives of the Company.

On the company’s backward integration project, Dangote chairman emphasised that the goal of Dangote Sugar Backward Integration Projects Master plan remains the achievement of 1.5 million MT annually from locally grown sugar cane in support of the quest for sugar sufficiency in the country by the federal government.

He added that this will be achieved in addition to the extended value chain benefits that will be derived from the projects including thousands of jobs that will be generated in the sector from these projects.

He pointed out that despite the challenges faced in the year 2021, Dangote Sugar Numan Operations rehabilitation and expansion efforts of the factory and field are advancing, saying “The community tissues that came up were effectively managed, and we have continued to advance so far without any major disruptions.”

He also noted that “In 2021, our commitment to building a sustainable business remained on track with the principles of good corporate governance. We imbibed best practices, environmental and impact management in the day-today running of our business.”

He assured of the company’s commitment to the achievement of Sugar Backward integration projects, which is the future of the industry in Nigeria, saying this will keep us on our sustained growth path and we will continue to deliver and improve our quality service while delivering value to all stakeholders.

Also, the Group Managing Director/Chief Executive officer of Dangote Sugar, Mr. Ravindra Singhvi said that “We remained ahead of the pack in implementation of the National Sugar backward Integration Development Master Plan.”

He however said that the situation at the Lau/Tau project is still the same, “we continue to remain hopeful that the Taraba State government will resolve the lingering issues with the communities, while we focus on the development of other brown and green field project sites…Steady progress is now being made as we continue the rehabilitation and expansion project at Dangote Sugar, Numan, and development activities at the Nasarawa Sugar Company Limited, Tunga.”

Singhvi stated that the Company remains resolute and committed to ensuring a sustainable future for its business while assuring the shareholders of better days ahead.

The shareholders commended the Company’s performance for the year under review. A shareholder, Mrs. Bisi Bakare, commended the company for the food fortification award received for the year under review and the bountiful dividend paid.

Another shareholder, Mr Patrick Ajudua, also expressed satisfaction with dividends declared particularly at a time like this with the various environmental operating challenges.

He charged the management to improve upon the capacity utilisation of the plant to be better positioned to meet local and export needs.

 

 

PHOTO CAPTION:

dangote

L-R: Chairman, Dangote Sugar Refinery Plc, Aliko Dangote; Group Managing Director/CEO, Dangote Sugar Refinery Plc, Ravindra Singhvi; and Non-Executive Director, Dangote Sugar Refinery Plc, Olakunle Alake at the 16th Annual General Meeting of Dangote Sugar Refinery Plc held in Lagos on June 15, 2022

 

L-R: Company Secretary/Legal Adviser, Dangote Sugar Refinery Plc, Temitope Hassan; Chairman, Dangote Sugar Refinery Plc, Aliko Dangote; Group Managing Director/CEO, Dangote Sugar Refinery Plc, Ravindra Singhvi; and Non-Executive Director, Dangote Sugar Refinery Plc, Olakunle Alake at the 16th Annual General Meeting of Dangote Sugar Refinery Plc held in Lagos on June 15, 2022

 

L-R: Non-Executive Director, Dangote Sugar Refinery Plc, Abdu Dantata; Company Secretary/Legal Adviser, Dangote Sugar Refinery Plc, Temitope Hassan; Chairman, Dangote Sugar Refinery Plc, Aliko Dangote; Group Managing Director/CEO, Dangote Sugar Refinery Plc, Ravindra Singhvi; Non-Executive Director, Dangote Sugar Refinery Plc, Olakunle Alake, at the 16th Annual General Meeting of Dangote Sugar Refinery Plc held in Lagos on June 15, 2022

 

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