News

Macron’s call for elections in France adds to fears of financial woes

Published

7 months ago

June 12, 2024

Investors made clear on Tuesday the depth of their concerns over President Emmanuel Macron’s gamble to call for new elections in France, driving up the nation’s borrowing costs, pushing down stock prices and prompting the Moody’s ratings agency to warn it may downgrade French sovereign debt as risks of political instability rise.

Mr. Macron’s dissolution of the lower house of Parliament on Sunday after his party was battered by Marine Le Pen’s far-right party in European Parliament elections has ignited concerns that the government could grind to a stalemate. The turmoil has focused attention on France’s fragile finances, and the prospect of legislative gridlock that could undermine the government’s ability to address it.

“This decision will not ease the economic challenges facing the country,” Philippe Ledent, senior economist at ING Bank, wrote in a note to clients. Public finances and the performance of the French economy will be “at the heart of the electoral campaign,” he added.

As the head of France’s conservative party on Tuesday called for an alliance with the far right to beat back Mr. Macron ahead of two rounds of national voting that will start on June 30, investors punished French stocks, sending the Paris Bourse down 1.33 percent, after a sharp fall on Monday.

The yield on France’s 10-year government bonds rose sharply for a second day amid investor unease over France’s ability to manage its finances. Bond yields are indicative of the government’s borrowing costs, and elevated levels would make it harder to stimulate the economy and manage the country’s debt.

France is suddenly facing uncharted territory. The prospect that Ms. Le Pen’s party, the National Rally, could triumph in the hastily called legislative elections — which could weaken Mr. Macron’s grip on power and possibly force him to govern with a prime minister from his political opposition — risks piling economic havoc atop the political toll.

“Fiscal and domestic economic policies are set by the government, which needs a majority for its legislation in Parliament,” said Holger Schmieding, chief economist at Berenberg Bank in London. “For a fiscally challenged France, new parliamentary elections add a level of uncertainty.”

The turmoil comes with the French economy in a rough patch, as the wars in Ukraine and Gaza, economic slowdowns in Germany and China and record-high interest rates take a bigger-than-expected toll on growth. Mr. Macron’s government recently warned that growth would be weaker than expected this year, and his finance minister, Bruno Le Maire, was charged with finding more than 20 billion euros in savings quickly as the nation’s finances deteriorate.

After the government spent lavishly during the pandemic to support the economy and shield consumers from high energy prices, French debt has climbed to 3 trillion euros, or 110.6 percent of gross domestic product. The government deficit for 2023 stands at €154 billion, accounting for 5.5 percent of gross domestic product, one of the worst performances in the eurozone.

France is now at risk of breaching European Union budget rules that restrict government borrowing and is likely to be sanctioned next week by the European Commission, the E.U. executive branch. On Tuesday, Mr. Le Maire warned that France could be thrown into a “debt crisis” if Ms. Le Pen’s party gained power.

Paris had been increasingly concerned about French debt being downgraded by international rating agencies, which increases borrowing costs. On May 31, Standard & Poor’s downgraded France’s debt rating, rattling the government, whose economic credibility has been one of its main political assets.

Then on Tuesday, Moody’s warned that Mr. Macron’s maneuver could deepen France’s financial woes by creating “a polarized political environment.” By dissolving the National Assembly, Mr. Macron had increased the risks that France will not be able to bring its budget back in line, raising the prospect of a further downgrade.

“There is a high risk of greater political instability in the future,” the agency said, adding that Parliament could be thrown into political gridlock for at least a year because the winner of the upcoming elections was unlikely to have an absolute majority. That could mean that almost any legislation Mr. Macron puts forward would be blocked, including measures to cut government spending needed to avoid breaching the European Union’s fiscal rules.

The danger is that France’s high debt balloons even further, which could lead to a faster-than-expected rise in interest payments, Moody’s added.

Ms. Le Pen and her firebrand protégé, Jordan Bardella, have backed higher public spending to address issues that have driven waves of voters to the National Rally party, especially a loss of purchasing power brought by high inflation and energy costs, and demand for job creation in areas that have been devastated by industrial losses to globalization.

Mr. Macron has sought to play the role of a European leader during Russia’s invasion of Ukraine, but the National Rally has assiduously been courting voters, especially in rural areas.

Ms. Le Pen’s party won by large margins this weekend in places that have lost jobs to deindustrialization. The National Rally has grabbed bigger audiences for its pledges to bolster purchasing power, create employment through “intelligent” protectionism and shield France from European policies that expanded globalization.

Mr. Macron has been trying to counter the rise of National Rally, which has seized on the economic slowdown, immigration issues and regulatory requirements imposed by the European Union to attract disenchanted voters.

Now in the middle of his second term, Mr. Macron has sought to show that he was moving France back to business, burnishing its image especially with foreign investors. He has overhauled France’s rigid labor code to make it easier for companies to hire and fire and is streamlining France’s generous unemployment system.

He is also overseeing an enormous subsidized industrialization program that has attracted hundreds of billions of euros in commitments from multinational companies. These include the creation of four big battery plants for electric cars in northern France and a beefed-up pharmaceutical industry with new investments from Pfizer and Novo Nordisk, which will expand production of its popular Ozempic and Wegovy weight-loss drugs.

Last month, Mr. Macron hosted hundreds of global chief executives at the Palace of Versailles for an annual business conference that drew large new pledges, including a €4 billion investment by Microsoft for a new data center in eastern France.

Even so, France’s economic slowdown has been noticeable, particularly to voters who have swung to Ms. Le Pen’s party. Many feel inequality has widened, rather than narrowed, as Mr. Macron pledged, in the seven years since he took office.

News

Inflation, Rising Costs Behind 50% Telecom Tariff Increase – Minister

Published

1 hour ago

January 22, 2025

Gloria Ikibah

…FG to invest ₦6bn in fibre optic expansion

By Gloria Ikibah

The Minister of Communication, Innovation, and Digital Economy, Dr. Bosun Tijani, has attributed the recent 50 percent increase in telecommunication tariffs to inflation and rising operational costs.

The Minister disclosed this during the 2025 budget defense session held by the joint House of Representatives and Senate Committees on Communication, on Tuesday in Abuja.

Explaining the rationale behind the tariff hike, Dr. Tijani stated that the move aligns with broader economic trends where increased tariffs lead to higher consumer prices due to added costs on imported goods.

The Minister also revealed plans by the Federal Government to invest ₦6 billion in the deployment of 90,000 kilometers of fiber optic cables, increasing Nigeria’s current coverage from 35,000 kilometers to 125,000 kilometers, and he described this initiative as a critical step towards boosting communication infrastructure and fostering growth in key sectors of the economy.

“Tariffs act as a sales tax, causing a one-off price increase rather than sustained inflation.

“Outside of South Africa and maybe Egypt or Tunisia, many African countries face a significant deficit in fiber optic cable coverage.

“This is going to become a big business. We want Nigerian companies not only to lay cables within Nigeria but also to provide these services for neighboring countries. And we want our people to be the workforce driving this transformation,” he said.

Dr. Tijani who emphasised the importance of communication infrastructure in ensuring security and economic development, highlighted the historical reliance on private investment for telecommunications infrastructure, which has often prioritized profitable urban areas over rural communities.

“Private companies only invest where they see potential returns.

“They use tools like night-time satellite data to identify economic activity, represented by lights, and focus their investments in those areas. This has left many underserved regions without proper infrastructure. Addressing this disparity is a priority for us,” he explained.

The Minister, however, lamented the inadequate funding of the Ministry, which he said hampers its ability to fulfill its mandate effectively.

“The Ministry is underfunded compared to agencies like the NCC. We lack the necessary resources and software to track revenue-generating activities efficiently. With better funding, the Ministry could generate significantly more revenue and enhance its impact,” he said.

In his remarks, Senator Shuaib Salisu, Co-Chairman of the Senate Committee on Communication, acknowledged the critical contributions of the communication sector to Nigeria’s economic growth. He called for a review of the Ministry’s 2025 proposed budget to ensure it is adequately equipped to deliver on its mandate.

Following discussions, the Committee adopted a motion urging the Committees on Appropriation to consider an upward revision of the Ministry’s budget for 2025.

News

Kalu Calls On UK Govt to Support Nigeria’s War Against Corruption

Published

2 hours ago

January 22, 2025

Gloria Ikibah

…praised diplomatic ties between the two countries

By Gloria Ikibah

The Deputy Speaker of the House of Representatives, Rep. Benjamin Kalu, has called on the government of United Kingdom (UK) to support Nigeria’s fight against corruption.

The Deputy Speaker made the call during his speech in an event tagged “UK-Nigeria Collaboration: A Parliamentary Strategic Dialogue” which attracted the presence of the Deputy Leader of the British House of Lords, Rt. Hon. Lord Collins among other members of parliament from Nigeria and UK in London on Wednesday.

Kalu emphasized the importance of collaboration between the two countries in tackling corruption amongst other challenges.

He commended the diplomatic ties between Nigeria and the United Kingdom, highlighting the potential for deepened economic relationships.

Referencing the partnership between Nigeria and the UK as a testament to shared values and mutual interests, Kalu added that by deepening collaboration across these sectors, both countries will unlock the opportunities for sustainable growth and development.

He said: “The UK-Nigeria Strategic Partnership establishes a comprehensive framework for deepening bilateral relations and achieving shared objectives. This collaboration spans six pillars: Growth and Jobs: Through the Enhanced Trade and Investment Partnership (ETIP), both nations will drive mutual economic growth by addressing market barriers, boosting two-way trade, and fostering sustainable investments in manufacturing, agriculture, and energy.

“Both nations commit to facilitating safe migration, tackling visa abuse, and operationalizing prisoner transfer agreements while advancing reforms in global financial systems.

“I wish to call on the UK Government to intensify its efforts towards supporting Nigeria’s war against corruption in all its facets. One of the ways the UK can support this fight is to ease the process of repatriation of monies seized from Nigerian officials that are trapped in the UK financial system. Incidentally, I am here with the Chairman of the Nigerian Parliament Committee on Financial Crimes and he will be happy to continue the conversation with relevant officials.

“Nigeria seeks the UK’s continued support in recovering illicit funds. Enhanced collaboration should focus on: Setting up mechanisms to curb illicit financial flows. Strengthening institutions to combat corruption. Facilitating asset recovery processes through bilateral agreements”.

Kalu who is the Chairman, Nigeria’s House Committee on Constitution Review and an advocate for political inclusion also called on the UK’s Foreign, Commonwealth & Development Office (FCDO) to support the work of the panel.

“As Chair of the House Committee on Constitution Review, I acknowledge the monumental task of refining Nigeria’s constitutional framework to reflect the evolving needs of its people. Key issues under deliberation—such as the creation of special status seats for women in legislative assemblies, the enactment of more gendersensitive legislation, and the potential introduction of sub-national policing—are pivotal to fostering inclusive governance and addressing the nation’s security challenges.

“Thus, I implore the UK’s Foreign, Commonwealth & Development Office (FCDO) to extend tailored support to the Committee’s critical work. By providing technical assistance, research expertise, and capacity-building programs, the FCDO can help ensure that these constitutional reforms are comprehensive, evidence-based, and aligned with international best practices.

“Such support would not only strengthen Nigeria’s democratic institutions but also reinforce shared values of equity, justice, and security, which underpin the UK-Nigeria Strategic Partnership. This collaboration would demonstrate a profound commitment to empowering marginalized groups, ensuring safer communities, and fortifying Nigeria’s legislative framework for future generations”, he said.

News

FG Launches Plastic Waste Vending Machines to Tackle Pollution, Promote Circular Economy

Published

2 hours ago

January 22, 2025

Gloria Ikibah

By Gloria Ikibah

The Federal Government has unveiled Plastic Waste Reverse Vending Machines to address environmental pollution and promote sustainable waste management in Nigeria.

The launch, which took place on Wednesday at the National Assembly complex in Abuja, is part of the United Nations Industrial Development Organization (UNIDO) project titled “Promoting Sustainable Plastic Value Chains Through Circular Economy Practices.”

Speaking at the event, Minister of Environment, Mallam Balarabe Lawal, described the initiative as a significant milestone in the fight against plastic pollution and the promotion of sustainable practices in waste management.

He stressed that the vending machines will reward Nigerians for depositing plastic bottles and other recyclable materials, thereby fostering a culture of recycling.

“Today, we take an important step forward in our collective fight against plastic pollution.

“As we stand together, this reverse vending machine represents not just a tool, but a symbol of our unwavering commitment to a cleaner, greener, and more sustainable future for Nigeria”, Mallam Lawal said.

The Minister also highlighted the broader benefits of the initiative, as he explained that the technology encourages proper waste disposal and reduces environmental pollution while advancing the concept of a circular economy.

“Reverse vending machines are a cutting-edge solution in waste management. They allow individuals to deposit bottles and other recyclable materials, receiving a reward in return.

“This simple yet powerful technology encourages proper waste disposal and creates a culture of recycling, where each citizen can actively participate in protecting our environment,” he added.

Mallam Lawal further noted the economic and environmental gains associated with the initiative, including cleaner communities, job creation, and increased public awareness of sustainability. He stressed that the project embraces local innovation and craftsmanship while reinforcing the government’s dedication to environmental protection.

“With its unveiling, we embrace local innovation and craftsmanship, and a renewed dedication to protecting our environment,” the Minister said.

Chairman of the House of Representatives’ Committee on Environment, Rep. Julius Pondi, commended the initiative and described it as a game-changer in waste management.

He called on UNIDO to collaborate with the National Assembly to replicate the project nationwide.

The initiative is expected to significantly reduce plastic pollution across the country, empower communities, and encourage the active participation of citizens in sustainable environmental practices.