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Africa Finance Ministers Seek IMF’s Special Drawing Rights System Reforms

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African Ministers of Finance, Planning and Economic Development have called for reforms of the IMF’s Special Drawing Rights (SDR) system.

The ministers made the call at the on-going 2023 African Development Bank (AfDB) Group’s Annual meetings in Sharm El Sheikh, Egypt.

According to them, the reforms will help to strengthen the global financial safety net and make more liquidity available to developing countries.

The call was made during a meeting of the Africa High-level Working Group on the Global Financial Architecture on the margins of the annual meetings.

Coordinated by the Economic Commission for Africa (ECA), the High-level Working Group comprised African Ministers of Finance, Planning and Economic Development, the African Union(AU), AfDB, Afreximbank, and the World Bank.

The Group serves as a forum to develop reform proposals for the global financial architecture and strengthen the African voice on the global stage.

Ms Hanan Morsy, ECA’s Deputy Executive Secretary and Chief Economist, said the SDR system came into existence in 1968 with the aim of supplementing official reserves and facilitating global liquidity. Morsy said the IMF’s Articles of Agreement stipulated that SDR allocations were meant to be considered every five years, referred to as “basic period”.

She said the Articles also allowed for SDR allocations in response to unexpected major developments.

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“Throughout the 12 `basic periods’ since the inception of the SDR system, there have been merely four general allocations and one special allocation with two notable ones in 2009 and 2021.

“ This is in spite the fact that global macroeconomic conditions will have warranted more frequent allocations during this time,’’ she said.

According to Morsy, when SDRs are allocated, they tend to disproportionately benefit countries that are less in need of them.

She said this was because SDRs are distributed in proportion to existing IMF quotas, which are primarily a function of an economy’s size and relative position in the world economy.

“For instance, during the 2021 general SDR allocation of 650 billion dollars, high-income countries, which are least likely to require or utilize SDRs, received approximately 450 billion dollars.

“This constitutes almost 70 per cent of the total allocation. Africa, with a population exceeding 1.4 billion, received fewer SDRs than Germany, a country with a population of only 83 million.

“Making SDR allocation decisions more rule-based and analytical,’’ Morsy said.

She underscored the importance of ensuring that SDRs are directed to countries that required them the most.

She advocated for the rechanneling of SDRs to Multilateral Development Banks, such as the AfDB, as a means to achieve this goal.

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“The proposal for SDR rechanneling put forward by the AfDB and the Inter-American Development Bank provides a viable technical solution  to leverage SDRs to provide much needed liquidity to African countries.

“SDR donor countries should participate in the proposal and thereby enable its implementation.

“Moreso, there should be reforming of the SDR rechanneling mechanism to promote greater utilization,’’ she said.(NAN)

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Economy

Oil Spillage: NOSDRA, Stakeholders Move to Tackle Menace 

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The National Oil Spill Detection and Response Agency, (NOSDRA), has called on stakeholders in the petroleum industry, to take measures that would prevent oil spill in Nigeria.

The Chairman, Governing Board of NOSDRA, and Emir of Keffi, Dr Shehu Yamusa (III), made the call on Thursday in Abuja, at a stakeholders meeting with oil companies operating in Nigeria.

Yamusa said that operators in the petroleum sector shared a common goal of ensuring the effective response to oil spill and sustainable management of the Nigerian environment for national development.

He said oil spillage could be prevented through compliance with extant laws, regulations and guidelines, on environmental management in the petroleum industry.

The Royal Father was represented by Mr Idris Musa, the Director-General, National Oil Spill Detection and Response Agency (NOSDRA).

He said that stakeholders would discuss action plans on the management of oil spills in 2023, with emphasis on reviewing regulatory procedures with regards to reportage.

Others he said, included, the conduct of Joint Investigation Visits (JIV), Clean-Up and remediation of oil spill impacted sites. as well as the conduct of Post Spill Impact Assessment (PSIA), among others.

“The transparent conduct of these processes is very important, not just for the integrity and credibility of the regulatory agency (NOSDRA), but also for sustainable environment management, fair, just and amicable resolution of disputes that may arise therefrom.

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“The vision statement of the National Oil Spill Detection and Response Agency is to create, nurture and sustain a zero tolerance for oil spill incidents.

“This can only be achieved if players in the industry take measures to ensure prevention of oil spill occurrence through compliance with extant laws, regulations and guidelines on environmental management in the petroleum industry,” Yamusa said.

In his remarks, Musa said that oil spill management was of paramount importance to the agency and other stakeholders in the oil sector.

“We are actually aware of the devastating impacts that oil spills have on ecosystems, wildlife, local economies, the well- being and livelihoods of host communities.

“It is a collective responsibility that we must shoulder together as stakeholders representing various sectors, to tackle this pressing issue head-on, and work towards effective and efficient solutions,” the D-G said.

Also addressing journalists on the sidelines of the event, Musa said the agency had made impact in cleaning oil spills in the oil producing areas through the Clean-Up and remediation of oil spill impacted sites.

“As of today, I can tell you that NOSDRA as an agency, has certified about 40 cleaned-up impacted sites in Ogoni land and there are almost about the same number in the process at different levels of operations.

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“None is less than 50 per cent, in another few months, we will be recording about 70 to 80 per cent clean-up sites in Ogoni land,” the D-G said. (NAN)

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Tinubu Directs NEC to Work on Subsidy Removal Palliatives

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By Mathew Dadiya, Abuja

President Bola Tinubu, yesterday directed the National Economic Council (NEC) led by Vice President Kashim Shettima to device an approach and begin the process of working on interventions to mitigate the impact of subsidy removal on the Nigerians.

Governor of Ogun State, Dapo Abiodun, stated this after leading some major oil marketers on a courtesy visit to the President at the State House in Abuja.

Addressing correspondents after the meeting, Abiodun, who was a former chairman of the oil marketers association, stated that the marketers expressed solidarity with the President for removing the N4trn subsidy burden, a move that can enhance the Federation Account Allocation Committee (FAAC) allocation to states.

The group of marketers subsequently announced their intention to donate to 50 to 100, fifty-seater mass transit buses that would run on CNG, costing N100m each and N10bn cumulatively, to cushion the effect of the removal within the next 30 days.

They are hoping other corporate bodies can emulate their action.

The President’s meeting with the oil marketers comes amid the controversy and protests trailing the removal of subsidy on Premium Motor Spirit known as petrol.

President Tinubu, during his inaugural speech on May 29 at the Eagle Square in Abuja had announced the removal of subsidy payment on petrol. The President said that the immediate past administration of Muhammadu Buhari did not make provisions for subsidy in the 2023 budget beyond June.

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Many Nigerians had expected that the new price regime would come into effect by July 1 but almost immediately after the presidential pronouncement, queues resurfaced at filling stations across the country even as retail outlets hoard the product and increase prices.

Already, a litre of petrol is being sold at over N500 across the country following NNPC price adjustment and the presidential pronouncement on subsidy removal.

Fuel queues have since surged for the vital commodity, compounding the traffic situation in parts of the country, even as transportation cost skyrocket to more than 100% increment.

The Organised Labour had resolved to embark on a nationwide strike beginning Wednesday but was restrained by a court order of Monday, June 5, 2023. The Organised Labour subsequently shelved its planned strike after a meeting with the Federal Government late Monday.

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BUSINESS

ICAN Tasks New Accountant General on Nigeria’s Financial Stability

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By Tony Obiechina, Abuja 

The Institute of Chartered Accountants of Nigeria (ICAN) has called on the new Accountant-General of the Federation, Dr. Oluwatoyin Madein, FCA to ensure financial stability, transparency and accountability in Nigeria’s financial sector.

The President of ICAN, Dr. Innocent Okwuosa, gave the charge when he paid a visit to the AGF in her office in Abuja.

In a statement from ICAN, Okwuosa noted that the position of the Accountant-General of Nigeria carries immense responsibilities, especially now that Nigeria stands at a pivotal juncture, facing a rapidly evolving economic landscape, changing regulatory frameworks coupled with endemic corruption.

He said, “As the Accountant-General, you have the responsibility for maintaining the financial stability, transparency and accountability of the nation as a whole.”

He however, assured her of ICAN’s continued support to her office to ensure effective management of government finances, implementing, monitoring, and evaluating the country’s budget and other fiscal management obligations.

‘’We understand the enormity of your responsibilities and we will continue to encourage you and all our members in the public service and private sectors to adhere to the profession’s ethics to succeed” he added.

Okwuosa also used the opportunity to inform the AGF of the ICAN Accountability Index (ICAN-AI), one of the Institute’s innovations to contribute to the promotion of accountability and transparency in the Federation.

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It is a novel and first-of-its-kind Index developed to assist the adoption of best practices in Public Financial Management (PFM) in all tiers of government.

He added that the ICAN-AI has been ratified by several national and international organizations (such as, the World Bank, the Public Expenditure and Financial Accountability (PEFA), the International Federation of Accountants (IFAC), among others) as an equitable and professional way of monitoring Public Financial Management practices.

The Accountant- General in her response expressed her appreciation to the ICAN team for the honor.

She said, “I acknowledge the enormity of the task and I am aware that the expectation is very high especially in relation to accountability and transparency which I believe the Institute has a lot of resources in stock to give all its members and non members to follow, the ethics of the profession is there, beckoning on us on how to handle our activities, so as not to be caught in the web. 

“Thank you for bringing this to the fore, we cherish them and it will continue to be our watchword in the office of the Accountant- General”.

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