Business
European Ministers Consider Boosting Bailout Fund
Euro-zone finance ministers face one big question when they meet in Brussels today and tomorrow: Are they willing to fundamentally change their strategy for solving the debt crisis that has rocked the currency bloc over the past year?
Over the past week, calls to boost the euro zone’s euro750 billion ($1 trillion) bailout fund by expanding its size and — perhaps more importantly — by giving it broader powers have grown louder.
French Finance Minister Christine Lagarde told journalists Friday that she and her counterparts were discussing giving the fund the power to buy government bonds on the open market — a move that would take pressure off countries that have seen bond prices fall and funding costs rise. Belgium’s Finance Minister Didier Reynders, meanwhile, said the size of the fund should be doubled, to euro1.5 trillion ($2 trillion).
Jean Claude Trichet, the head of the European Central bank, and two top officials of the European Union’s executive commission have also thrown their weight behind a new role for the bailout fund, which has so far been limited to providing rescue loans to cash-strapped countries.
The European Commission last week circulated a document among EU member states with some suggestions on how to broaden the scope of the fund beyond bailouts. But an EU official familiar with the document said talks were still at an early stage and that he didn’t expect finance ministers to take big any big decisions next week.
“The meeting will not achieve such a degree of detail,” said the official, who was speaking on condition of anonymity because of the early stage of the discussions.
Most analysts say the euro zone’s current strategy to deal with the crisis has failed. That strategy sees countries bail out their struggling banks to then provide them with expensive rescue loans, conditioned on steep budget cuts, when they run out of money.
A euro67.5 billion bailout of Ireland — necessary after massive capital injections for big banks pushed the country’s budget deficit to almost one-third of economic output — didn’t succeed in containing the crisis. Greece, which received a euro110 billion rescue loan, was last Friday downgraded by another rating agency, reflecting concern about the country’s ability to pay off its debt amid a shrinking economy and falling government revenue.
Most economists expect Portugal to also ask for help soon, while markets are worried about the financial health of much larger Spain. Spain’s economy makes up about 10 percent of the euro zone’s gross domestic product and bailing it out could easily overwhelm the existing facility.
“Maybe now they should see one needs a new approach,” Daniel Gros, director of the Brussels-based Centre for European Policy Studies and a former economist for the International Monetary Fund, said of European policymakers’ scramble to stop the crisis from spreading. “It’s not so much the size of the fund, but what it’s used for.”
Giving the bailout fund broader powers, such as directly intervening in financial markets in times of turmoil, or even providing short-term cash injections to re-capitalise wavering banks could attack the crisis at its roots, analysts say.
One big part of this new approach would be to let banks’ debtors take losses if a firm is actually insolvent, and then quickly spend large sums of money buying up government and bank bonds to stop panic on financial markets, Gros said.
Germany so far has opposed significantly increasing the firing power of the existing bailout fund. But German Finance Minister Wolfgang Schaeuble has raised the option of boosting the lending capacity of the euro zone’s contribution to the fund so it actually reaches the advertised euro440 billion ($580 billion).
Euro-zone governments make their contribution to the euro750 billion fund by guaranteeing loans issued by the so-called European Financial Stability Facility. The remaining euro310 billion of the total fund comes from the EU’s executive Commission and the IMF.
However, because of the way the EFSF provides money to cash-strapped countries, it can actually lend out much less than euro440 billion. Rather than giving direct loans, the facility sells bonds to investors, with the proceeds going to the government in trouble.
To get a triple-A credit rating for those bonds — and make them attractive to wealthy investors — governments committed to guarantee 120 percent of their value, taking the amount it can actually lend out down to about euro367 billion. On top of that, bailed out countries have to deposit a certain portion of the loans they receive “as a cash buffer” with the fund.
Schaeuble said boosting the fund so it can actually lend out euro440 billion would not represent an actual increase and Berlin has ruled out doing anything beyond that.
But analysts warn that the way the crisis had developed, governments might soon be force to go further.
“We do these things only after we have denied even thinking about them,” said Gros.
The Nigerian Communications Satellite Limited (NIGCOMSAT), the country’s satellite operator, has called for immediate promolgation of policy action that will enable the country to harness the potentials of Artificial Intelligence (AI).
NIGCOMSAT, also warned that Nigeria risks missing out on Africa’s projected $1.2trillion share of the global AI economy by 2030.
Managing Director of NIGCOMSAT, Nkechi Egerton-Idehen, disclosed this in a statement issued at the weekend following her participation in the Meeting of the National Council for Communications, Innovation, and Digital Economy.
“Artificial intelligence is reshaping industries, economies, and societies worldwide, with projections that it will contribute up to $15.7trillion to the global economy by 2030. Africa stands to gain $1.2trillion of this if the right policies and innovations are in place”, Idehen said, citing a PricewaterhouseCoopers report.
The NIGCOMSAT MD underscored the transformative potential of AI in agriculture, highlighting its applicability in Benue State, widely regarded as Nigeria’s “food basket.”
According to her, machine learning tools could revolutionize agricultural practices by improving pest detection and optimizing planting schedules using satellite imagery.
“AI offers us the chance to not only flourish economically but also to achieve food security. However, we must ask ourselves if we are prepared to manage this technology responsibly”, she added.
Idehen also noted that internet access remains a significant barrier to AI adoption in Nigeria.
“For AI tools to be effective, basic digital infrastructure is essential. Addressing this gap must be a priority.
“AI is happening. We have the opportunity to manage this technology revolution responsibly, both in Africa and globally, through innovation and governance”, she said.
In August 2024, the Federal Ministry of Communications, Innovation, and Digital Economy released a draft National Artificial Intelligence Strategy, aiming to position Nigeria as a global leader in AI.
Corlins Walter
The Chairman of Emohua Local Government Council, Chief David Omereji, has said the council has so far spent over N1 billion for the electrification of communities in the area.
Omereji said this while addressing staff of the council at the council headquarters recently.
He said the move was part of his administration’s resolve to ensure peace and development of the LGA.
According to him, the Council spent about N29 million on monthly basis for the maintenance of the Emohua Local Vigilante group known as OSPAC, with each member being paid a stipend of N100, 000 monthly.
He diaclosed that 11 out of the 14 wards are currently enjoying electricity, while efforts are on to light-up the remaining ones.
“I also want to use this opportunity to inform the political class for purposes of records and for the understanding of the people that the Council under my watch have done more than enough”, he said .
The Emolga boss explained that all that have been achieved were through the personal effort of the Council, without support from anybody as rumoured in some quarters.
Omereji further reaveled that a number of other projects, including roads, fencing of schools, hospitals, courts premises, and reconstruction of some abandoned buildings at the Council Headquarters are being undertaken by his administration.
He enjoined the people of the area to support his administration’s drive to bring purposeful development to the LGA.
The Emohua Council boss, who reiterated his hatred for noise making, stated that his works would speak for him, and solicited the support of staff of the council and the entire people of the area.
He noted the fact that some people may not be happy with his achievements, saying that he would remain focused, while advising critics of his government to do so constructively with facts and figures.
King Onunwor
The Movement for the Survival of the Ogoni People (MOSOP) has raised some ethical questions over a Financial and Technical Services Agreement (FTSA) between Sahara Energy and West African Gas Limited (WAGL), an affiliate of the Nigerian National Petroleum Company (NNPC).
MOSOP said the agreement was not done in good faith, not in the interest of the Nigerian people, and did not follow due process.
Foremost Ogoni born activist and MOSOP leader, Fegalo Nsuke, who made this known in Abuja, weekend, described the Sahara-WAGL deal as fraudulent, deceptive and an insult on the intelligence and integrity of the Nigerian nation.
Nsuke called on President Bola Ahmed Tinubu to cancel that FTSA between Sahara Energy and WAGL, noting that the agreement is fraught with irregularities and deceptive.
“What Sahara and the NNPC did in the FTSA between Sahara and WAGL is shameful and depicts high level corruption in public service of our country.
“WAGL is an affiliate of Sahara and the NNPC. How then can Sahara go into an agreement with its own affiliate? It’s as good as going into an agreement with itself. This is deceptive and fraudulent”, Nsuke said.
He continued that “Sahara Energy is certainly not a company the Ogoni people want on their soil and we are calling on Mr. President, Bola Ahmed Tinubu, to terminate any deal between the NNPC and Sahara Energy over OML 11, and to allow for an inclusive arrangement that considers a fair treatment of the Ogoni people in the distribution of revenues from natural resource extraction on Ogoni soil.
“The last Ogoni Congress has been unequivocal on the Ogoni demand for justice and has given a clear path to resolve the three decade old conflict between all critical parties.
“It will be good to explore this path to peace and development for Ogoni and for our country”.
Nsuke accused Sahara Energy and the NNPC of frustrating the progress made by MOSOP to achieve a permanent solution to the Ogoni problem.
He urged a presidential intervention with deep consideration for a fair treatment of the Ogoni people in order to permanently address the problem.
He noted that Sahara Energy should give up on the Ogoni area to allow for an engagement in the interest of the country and the people.
Recall that MOSOP and Sagara Energy have recently been engaged in a row in what MOSOP describes as an unholy relationship between Sahara Energy and the NNPC over OML 11.
MOSOP expressly rejected Sahara Energy and called for a fair treatment of the Ogoni people in natural resource extraction in Ogoni.
It noted that Ogoni people, led by MOSOP, paid the sacrifice to take the oil from Shell, hence “the position of MOSOP must be taken into consideration in decisions relating to resumption of oil production in Ogoni”.