Daily Watch – 17 states insolvent, Kaduna port manager accuses ship owners of sabotage

The Manager of the Kaduna Inland Dry Port, Rotimi Raimi, has accused foreign ship owners of refusing to recognise the dry port as port of destination. Raimi said customers have been complaining of the reluctance of shipping companies to deliver goods at the port. He claimed that shipping companies have the responsibility to move the containers from the port of loading to port of destination, and hand over the containers to Customs. Shipping companies have complained about poor infrastructure in terms of bad roads from Lagos-Kaduna, and the unstable price by transportation companies. The cost of moving containers by road from Lagos to Kaduna is not stable, could cost between ₦800,000 and ₦1 million. Since the Kaduna Port commenced operations in January 2018, it moves an average of 200 containers monthly.

Nigeria and Benin have signed an interconnectivity deal to integrate border trade operations. The custom agencies of both countries negotiated a deal that is expected to address many of the border trade challenges between them. The customs organisations of both countries agreeing on modalities to establish a full automation of the border corridor. For Nigeria, a digital window would simplify trading procedures at the borders as Benin affirmed its readiness to respect the terms of agreement on information sharing. With both parties showing commitment to the implementation of the agreement, it is expected that trade on the border corridor would be effectively facilitated as the deal is expected to create a seamless trade window that will fast track cargo movement between both countries.

The CBN is expected to continue its liquidity mop operations this week and further reduce stop rates on treasury bills. Last week, the regulator mopped up ₦630 billion from the banking system by conducting secondary market, Open market Operations, and treasury bills auctions on Monday, Tuesday and Thursday. The auctions were in response to the inflow of ₦664.21 billion from matured TBs during the week. The CBN at the auction on Monday reduced the stop rate for the 364-Days OMO rate by 10 basis points to 12.94 percent. The stop rate on the 199-day bill was also reduced by 7bps to 12.88 percent, while the 108-day bill rate was unchanged at 11.80 percent. The bank also reduced stop rates by seven basis points across all tenors offered at the auction held on Thursday. The CBN, however, took advantage of the oversubscription triggered by the inflow to lower interest rate on TBs. Meanwhile, the liquidity mop-up action of the CBN prompted cost of funds to rise sharply in the interbank money market with average short term interest rate rising by 396 bpts. Data from FMDQ shows that interest rate on collateralised lending rose by 385 bpts to 9.14 percent last week from 5.29 percent the previous week. Similarly, the interest rate on Overnight lending rose by 407 bpts to 10 percent last week from 5.93 percent the previous week. This week, the interbank money market will experience an inflow of ₦140.9 billion from maturing TBs, comprising maturing primary market TBs worth ₦33.8 billion and maturing OMO bills worth ₦107.1 billion. While the CBN will issue ₦33.8 billion worth of primary market TBs to replace the maturing ones, it is also expected to conduct OMO auction to mop up liquidity from the maturing ₦107.1 OMO bills.

17 out of 36 states in Nigeria are insolvent as their Internally Generated Revenues in 2018 were far below 10 percent of their receipts from the Federation Account Allocations in the same year. The Economic Confidential said in its report on the Annual States Viability Index that these states are unable to meet their financial obligations in the year under review. The index computed by the report shows that without the monthly disbursement from FAAC, many of the states remained unviable and cannot survive without the federally distributed handouts largely from the oil sector. The IGR of the 36 states totalled ₦1.1 trillion in 2018 as compared to N931 billion recorded in 2017. This indicates a ₦172 billion increase. The report further shows that the IGR of Lagos State put at ₦382 billion is higher than that of 30 States put together whose IGR are poor compared to their allocations from the Federation Account. The FCT generated N65 billion IGR against ₦29 billion from the Federation Account in the same period. Lagos State maintained the number one position in IGR with a total revenue generation of ₦382 billion compared to FAA of ₦260 billion, which translate to 146 percent in the 12 months of last year followed by Ogun State which generated IGR of ₦84.55 billion compared to FAA of ₦93 billion representing 90 percent; Rivers with ₦112 billion compared to FAA of ₦237 billion representing 47 percent and Kwara State with a low receipt from the Federation Account has maintained its impressive IGR by generating ₦23 billion compared to FAA of ₦81 billion representing 28 percent. The 10 states with impressive IGR generated ₦808 billion in total, while the remaining states merely generated a total of ₦295 billion in 2018.While the report provides shocking discoveries, the states with less than 10 percent IGR have remained 17 as in the previous year 2017.