Kelvin. Profile picture
Mar 17 5 tweets 2 min read
I keep thinking:

Only 38% of 12.6m customers currently have prepaid meters.

The government says in the 2nd half of 2022, the DISCOs had a revenue impairment of 49% to NBET as they remitted only #265bn of #519bn for load delivered from GENCOs through TCN
This means their efficiency rate is 51% because of the loss from estimated billing. And the govt has to cover for the shortfall of #254bn for only 2 quarters.

I get the argument of adopting cost reflective tariff, but this issue of raising electricity tariff because collection
is so poor is like the argument for raising VAT because the revenue to GDP ratio is low.

Of all the problems bedevilling the power sector (from infrastructure for distributing gas to GENCOs, to the FX issues they face for parts & maintenance, to lack of CAPEX to expand capacity
to need to build bigger dams especially in the North that doesn't have as many gas turbines because of a lack of gas distribution, to the ailing transmission infrastructure of TCN and the need to privatize a part of it to increase efficiency),

One of the most critical pieces of
reform required to improve power is to increase the adoption of prepaid meters;

& a viable way to achieve this is to ensure that there's a measure of backward integration for the production of meters to reduce backlog and insulate consumers from the FX fluctuations.

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More from @realkelvin07

Mar 17
“Nigeria is one of the few countries in the world where banks have to keep a specified percentage of monies raised with the CBN. Banks also have to keep a certain level of liquidity and maintain a capital adequacy ratio. In our laws, after tax, 23% of your profits must be kept in
a statutory reserve fund to boost your capital adequacy ratio.

After the 2008 financial crises, banks in Nigeria came together to form AMCON to which banks in Nigeria contribute as Insurance against crises”- Godwin Emefiele at Africa Central Bankers' Conference in Jo'burg.
Interesting that the response of the CBN Governor to a framework for managing a bank run and insolvency is to mention AMCON that has loan impairment of #5trn on their balance sheet.

Important to note that the Deposit Insurance Fund (DIF) and the Orderly Liquidation Authority
Read 5 tweets
Mar 16
The Airline Intervention Fund (AIF) will never be a solution to the ever growing pile of funds intl airlines have stuck in Nigeria, because of a lack of FX to repatriate,

The UAE govt reviewed Visa policy for Nigeria becos of Emirates Airline. Pile is back up to $743m
Airlines cannot price their tickets in USD; because of sections 20(1) of the CBN Act, so they raise their prices by 2.5 times & Nigerians bear the unfair cost of them hedging FX risk, as compared to ticket prices for similar destinations from departure points in nearby countries.
It is time to review FX intermediation and collapse the windows at the CBN

• to let investors price risk,
• counterparty market makers find a forward curve for the forwards market,
• incentivize the inflow of net export proceeds,
• stimulate speculative FPIs &
Read 4 tweets
Mar 8
Nigeria consumes 1.6m metric tonnes of sugar yearly at $1.4bn,

Currently there's import restriction that gives only 3 companies waiver to import sugar:

• Dangote Sugar Refinery
• BUA Sugar
• Golden Sugar Company

The task for the next minister of Industry, Trade &
Investment, as well as Finance are:

1. Remove the import restriction that gives only 3 companies waiver
2. Follow the National Sugar Master Plan (NSMP) 4 phase approach to achieve 70% backward integration for import substitution

That very importantly includes the need
for companies that are enjoying waiver, ensuring they raise primary production that matches the amount of waiver requested with an increase in importation quota.

Sugar is an essential component for manufacturing and food processing, and the import restriction, as well as
Read 6 tweets
Mar 6
There is a nexus between treasury operations in a bank and total risk weighted assets that determines the capital adequacy ratio of a Nigerian Bank,

The more I look at the books of Nigerian banks, the more I'm convinced that you need a CBN Governor that will raise the tier 1 & 2
CAR requirements of banks, reverse the HoldCo structures of banks and enforce stricter control on trading & lending (asset & liability mgmt) in banks that is critical to especially systemically important banks scaling periodic stress test in comparison to their peers in Africa.
A CBN Governor picked from the banking industry will become a deal maker with his peers,

You need a Governor who will make the banks focus on their core banking business,

Call for recapitalisation, especially considering an increase in deposits tilts the balance of scale for
Read 4 tweets
Oct 14, 2022
The Special Adviser to the Hon Min of Finance on Comms said I should provide facts. So I'm going to take a minute to educate her on what I'm sure she already knows; A thread.

Sections 38, sub sec 2 of the CBN Act as amended in 2007 expressly states:

"The total amount of such
advances outstanding shall not at any time exceed five per cent of previous year's actual revenue of the federal govt"

Sub-section 3 of sections 38 states:

"All advances made pursuant to this section shall be repaid:
a) as soon as possible and shall in any event be repayable
by the end of the federal government financial year in which they are granted and if such advances remain unpaid at the end of the year, the power of the bank to grant such further advances in any subsequent year shall not be exercisable, unless the outstanding advances have
Read 8 tweets
Jul 27, 2022
All the things we feared from removing the daily peg and adopting a free float without daily intervention for swings outside +-3 naira, has happened.

Question is, what are you still scared of?

Remove the peg and do an internal audit on diversion of pms.

30% of pms subsidised
Is diverted to neighboring West African Countries.

Also call an emergency meeting with the Nigeria Governors Forum as members of the National Economic Council.

Ask for approval to abolish the ECA; that removes the need to set benchmark price for oil, share the revenues into
Consolidated Revenue Fund (CRF) and the Sovereign Wealth Fund (NSIA).

Set up a phased removal of pms subsidy in 25% tranches per 6months, and move speedily into the gas partnership with the EU through project financing.

Then adopt a bifurcation of your foreign reserves as a
Read 4 tweets

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