Registered Charity No. 1120876 Europoint House 5 Lavington Street London SE1 0NZ Telephone : +44 (0)20 7261 9650 E-mail : education@britain-.org Website: www.britain-nigeria.org CONFIDENTIAL Special Edition NIGERIA DIGEST – October 2016

 BNET Exclusive – The Chibok Schoolgirls Members will be aware of the recent news that 21 of the schoolgirls who were kidnapped from the village of Chibok in April 2014 were released, meaning that 219 of the schoolgirls are still in captivity. This happened after intense negotiations between the Nigerian Government and , which were brokered by the International Red Cross and the Swiss Government. What was not made public at the time was that the appalling news that of the 21 schoolgirls, 18 had had babies. Negotiations for the release of the remaining schoolgirls are still ongoing at the time of this report.

Whilst the parents of the schoolgirls who remain in captivity wait in hope for the return of their children, news has emerged the President Buhari recently rejected the opportunity to pay €5 billion ransom (N1.711 trillion) for the release of the schoolgirls who remain in captivity, following negotiations between the Nigerian Government and Boko Haram, which have carried on in secret for a number of months.

This startling revelation is reported to be contained within the book : the Challenges of Leadership in Nigeria written by Professor John Paden, to be published on December 1 st 2016. In the book it is claimed that on several occasions captured Boko Haram terrorists were taken to Maiduguri to be exchanged for the Chibok schoolgirls, but negotiations collapsed when, in addition, Boko Haram demanded a ransom of €5 billion for the release of the girls. The Nigerian Government was clearly not going to acceded to Boko Haram's extraordinary demand for this massive sum of money, which would have been used no doubt, to fund future attacks in Nigeria and elsewhere in pursuit of their militant Islamist activities.

It is understood that negotiations continue, brokered by the International Red Cross, the Swiss Government and other western countries for the release of the remaining Chibok schoolgirls and it seems highly likely that President Buhari will have more success in achieving this outcome than did his predecessor.

The latest information from Nigeria is that the negotiations have now concentrated on the release of a further 100 schoolgirls although very sadly it is understood that there are 100 of these schoolgirls who have been so far radicalised and traumatised by their experience that they have no wish to leave the Boko Haram enclaves. No information is available at the time of going to press as to whether this will involve the payment of a ransom, or the release from detention of further Boko Haram terrorists in Nigeria.

 Boko Haram Despite being driven back to their enclaves in the Sambisa Forest, it has not prevented Boko Haram terrorists from making sporadic attacks on villages and towns in Nigeria. The Nigerian Air Force continues to bomb the Sambisa Forest as the Joint Task Force (JTF) continues its operations to clear the forest entirely of terrorists. In a recent video which was in the traditional form, it showed Abubakar Shekau (who had been presumed dead) taunting Nigeria and its leaders and threatening to kill the President himself.

In the latest battle, 83 Boko Haram terrorists were killed in action by the JTF and it is only now that the humanitarian crisis that has occurred as a result of Boko Haram activities can be revealed to the world. There are nearly half a million people -- mostly children – around Lake Chad facing severe and acute malnutrition, according to UNICEF, due to the seven year campaign of Boko Haram, compounded by the severe drought, 49,000 of which are living in Nigeria’s .

In Borno State nearly two thirds of the hospitals and clinics have been partially or completely destroyed, and three quarters of the water and sanitary facilities need to be rehabilitated. As a result of the terrorist activities there are over 2.2 million people trapped in areas which remain under the control of Boko Haram or who are staying in camps in Nigeria, too terrified to return to their own homes. Boko Haram's main tactic continues to be the deployment of child suicide bombers of which there have been over 40 cases this year, compared to 4 in 2014 and just over 40 last year.

 Education President Buhari and his administration were elected primarily on an anti-corruption platform with which there have been tremendous achievements (which will be detailed later on in this special edition of the Digest). In his 2016-17 budgets, the new President (who, members will be aware, was briefly a military Head of State in the mid 1980's) has for the first time in Nigerian history introduced an all-encompassing, compassionate form of Government that reaches out to assist every Nigerian in the country.

Apart from the well-publicised pursuit of stolen funds and the conviction of former corrupt Ministers, State Governors, politicians, businessmen and Nigerian elders, one of the key platforms is education. On October 11 th , Vice President Yemi Osinbajo announced that the Federal Government was to deploy 200,000 unemployed graduates to become teachers, spread throughout the 36 States of the Federation. A further 300,000 unemployed graduates will also be offered employment under the Government's Social Investment programme being deployed in the agriculture sector in various States as well as new jobs in the catering industry to supply food to schools.

Under a micro-credit scheme, one million potential entrepreneurs, traders and market women will be offered loans ranging from N60,000-100,000 which will be made available through the Bank of Industry. More specifically 1.5 million women will be empowered by the Government through a separate funding facility.

The new graduate teachers are considered vital to the future of Nigeria, due to the neglect of the sector by previous administrations, notably at State Government level, as has been revealed in the corruption trials of former politicians and State Governors who diverted the funds for their own personal benefit.

In 2016 the Federal Government and the 36 State Governments are spending N1.03 trillion on education, which is primarily allocated for recurrent as opposed to capital expenditure. This amounts to 8.5% of their total budget, as compared to the proposed UNESCO 26% benchmark ratio for education in developing countries. A breakdown shows that the Federal Government is spending N367.73 billion on education, compared to 33 out of 36 States in the Federation, which will spend N653.53 billion. Of this, it is the 219 States in Northern Nigeria that will spend N361.123 billion, thus demonstrating the commitment of the new Government to prioritise the education sector in the poorest parts of Nigeria.

According to the UNESCO report of 2015 (Financing Education in Nigeria-Opportunities for Action) there are some 8.7 million primary schoolchildren that have no education at the present time. The Report states that Nigeria has the highest population of 'out of school' children in the world. According to the Report, the estimated primary-school-age population is 30 million, including 14.5 million girls (34% of whom do not attend school) and 15.1 million boys (29% of whom do not attend school).

However, adding in capital expenditure, the Federal Government's commitment to the education sector for 2016 amounts to over N500 billion, which is the highest allocation ever made by a Nigerian Government. According to the President, education is a critical priority for his administration.

 Other News Much has changed as a result of the President's anti corruption drive, and policies. In celebration of the first anniversary of his administration it was announced that out of US$17 billion estimated to have been stolen from Nigeria between 2004 and 2013, his Government has already recovered in excess of US$2 billion. As a result over 60 officials have been indicted in criminal proceedings including 15 former State Governors, 4 former Federal Government Ministers, 12 senior “public servants” who were appointed to various Federal and State Government parastatals. In the first 6 months of 20016 alone, the EFCC secured over 140 convictions against as what can only be described as high profile Nigerian criminals.

At the same time, as well as recovering billions of dollars worth of money, they have also blocked numerous avenues of money laundering. These figures do not include the US$2 billion which the former National Security Advisor to former President Jonathan, Sambo Dasuki, is accused of stealing, funds which had been allocated for the purchase of arms from South Africa for the fight against Boko Haram and which is currently the subject of criminal proceedings.

It is notable that a significant amount of stolen money has been returned to Nigeria, voluntarily, without court proceedings having been instigated. A detailed breakdown of the assets recovered as at June 1 st 2016 is detailed below. *

2 *The following, the statement said, is the breakdown of the recovered cash and assets:

3 The Nigerian economy has been severely affected by the sharp fall in oil prices, which has been exacerbated by the re- emergence of militant activity in the Niger Delta area. As a result Nigeria's foreign exchange reserves have fallen by over 50% in a matter of years. The Government has had to seek a US$2.5 million loan from the World Bank and a parallel US$1 billion loan from the African Development Bank. Even these were insufficient to finance the budget deficit, which was originally estimated to be 2% of GDP but rose to over 3% as a result of the turmoil in the world oil markets. This in turn led the Nigerian Government to access a US$6 billion loan from the Chinese Government to fund critical infrastructure capital expenditure.

In fact during the year the Chinese and Nigerian Governments have strengthened significantly their bilateral relationships, which included a further US$15 million agricultural credit for the establishment of 50 agricultural demonstration farms throughout the country as well as an increase in its Nigerian scholarship awards to students from 100 to 700 per annum as well as agreeing to train 1000 other Nigerians in vocational and technical training in China on an annual basis. Other agreements signed with China include ones on aviation co-operation and on scientific and technical co-operation.

At the end of September the President submitted his Medium Term Framework and Fiscal Strategy Paper covering 2017-19 to the National Assembly as required under the Nigerian Constitution, which stipulates that before the President can present his New Year’s budget the Medium Term Framework and Fiscal Strategy Paper must first be approved by the National Assembly. For the 4 th year in succession your Editor has obtained a copy of both documents, which can be made available to members on request.

The MTEF and FSP are a 3-year planning document that clearly defines the President's economic, social and development objectives and priorities whilst at the same time detailing explicitly the appropriate strategies in order to achieve the required objectives for the benefit of all 175 million Nigerians. President Buhari's ultimate aim is to ensure that the majority of Nigerians become more productive by pursuing a job creation policy that will support new and current businesses. At the same time, he intends to identify new investment opportunities almost exclusively in the non-oil sector where there are millions of new opportunities for unemployed Nigerians who will be assisted through a series of measures which will revolutionise the Nigerian economy thus reducing poverty over the next 3 years.

There is no doubt the President has benefited in no small degree from some of the policies introduced by his predecessor, notably in the agricultural sector, with the domestic production of rice being a notable example. Some five years ago the then President Jonathan, (who at the present time is himself under something of a cloud of suspicion although there is nothing known that could compromise his integrity in any way) introduced a new Agricultural Policy, the origins of which date back to 1999 when Olusegun Obasanjo was elected Nigeria's President. During their tenures of office, both men concentrated their efforts on domestic food production, notably rice, wheat, sorghum, sugar and other essential commodities. As a result, in less than two years rice production in Nigeria, which is concentrated in twelve States, has risen from 3.5 tonnes per annum to 7.5 tonnes in the current year. During the last 18 months there have been two periods when the importation of rice through land borders with neighbouring countries has been totally prohibited, which has had 3 significant benefits for Nigeria and Nigerians.

4 Firstly, the elimination of smuggling and related corruption; secondly, substantial changes in foreign exchange payments for the importation of rice which cost Nigeria over US$2.1 billion in the preceding 3 years; and thirdly, through the Government initiatives foreign direct investment in conjunction with Nigerian entrepreneurs and some of the State Governments have invested heavily in the new domestic rice production which at the same time created hundreds of thousands of new jobs for unemployed Nigerians.

There was a time when Nigerians were not prepared to eat domestically produced rice, as foreign rice imported legally or illegally, sold at only a slight premium to domestically produced rice and was regarded as superior. With the floating of the Naira in June this year, the cost of imported rice rose so high as to be simply unaffordable to ordinary Nigerians, who now happily eat the domestically produced product, which is of international standard. As a result the Government is expected to announce shortly that the importation of rice through land borders, sea or airfreight will be totally prohibited from January 1 st 2017. This is just one small example of the successes of Nigeria’s “made in Nigeria” import substitution policy which in truth, successive Nigerian Governments either military or democratically elected have been pursuing for over 50 years. Until now, primarily due to corruption, there have been few successful achievements to reflect this. The President, who in a recent poll had a popularity rating of over 54%, can be considered to be (with very few exceptions) almost certainly one of the most incorruptible President/Head of State that Nigeria has ever had in the last 50 years.

In the short term, whilst his economic policies may indeed be painful for Nigerians, the Editor is quite certain that in the longer term he will be seen and revered as one of Nigeria's finest Presidents in history.

 Oil and Gas Whilst Nigeria's oil production in 2015 averaged 1.9 million barrels per day (mbpd), as a result of NNPC and the successes of the Joint Task Force operations in the Niger Delta area, by the middle of 2016 it had fallen to 1.4 mbpd, the lowest level for nearly 30 years.

The decline can be almost solely attributed to the activities of the Niger Delta Avengers (NDA), a militant organisation which has been responsible for numerous attacks on oil and gas infrastructure throughout the Niger Delta Area and oil and gas pipelines and installations. This is due to the President's decision to reduce the level of amnesty payments to former Niger Delta militants, some of whom have become millionaires for claiming contracts from the former administration for their own companies to patrol and police key oil and gas pipelines. Whilst there was a certain level of success, the level of corruption was so appalling that the new administration had no option but to curtail those contracts.

Although the situation has improved slightly, in August production averaged only 1.45 mbpd which is attributed to the oil companies having to repair damaged pipelines throughout the Niger Delta region following the attacks just mentioned. In September it rose to over 1.65 mbpd at a time when the world crude oil price has risen to US$50.89 per barrel. At last there is some hope on the horizon for Nigeria.

As mentioned in earlier reports, in June of this year the President, through the Governor of the Central Bank Godwin Emeiefele, took the brave decision to float the Naira against world currencies at a time when under heavy pressure the Naira was trading against the dollar at a rate of N197.31 =US$1.00. Since then the Naira has depreciated substantially to the current level of N305.25=US$1.00. This has been compounded by rampant inflation, which is in excess of 17% per annum. Nigeria has moved into recession.

However, following a favourable IMF article IV report, Nigeria is showing clear signs that it is moving in the right direction economically, which is reflected by the fact that in the past four months new foreign investment into the Nigerian economy has been in excess of US$1 billion, which is a clear reflection of world opinion of the successes of President Buhari's administration and policies. As a result, at the last Central Bank of Nigeria Monetary Policy Committee meeting, it decided to hold all existing rates indicating that Government policies are being effective.

A brighter picture can also be seen from the increase in the monthly disbursements made by the Federation Allocation Accounts Commission. In June 2016 it was only able to distribute N311 billion to the Government, the 36 State and local government councils. This figure more than doubled in July when N698.1billion was distributed. This included N79 billion from monetary exchange rate gains alone, and a further N6 billion repayment from NNPC.

As a result, the Federal Government received an allocation of N255 billion and the 36 States and the local governments received N153 billion and N116 billion, a distribution which was warmly welcomed by the State Governments in particular who were then able to reduce payments for salary arrears. That sharp increase was due solely to a significant surge in the world oil price, but also reflects the fact that Nigeria's oil production had hit a 2016 high of 1.9mbpd in April this year. 5 In August, as a result of militant activity in the Niger Delta and to show how effective it had been, total distributed revenue fell to a mere N287.81 billion, but the distribution at the end of September (reflecting revenue received in August) increased to N510.27 billion.

 A review of the 2016 Budget In the first 6 months of 2016, the Federal Government's retained revenue was some N951.52 billion less than the approved budget projections. This is mainly attributable to the under-performance of non-oil revenue sources, such as Customs Revenue and Corporation Tax, although it must be said that oil revenues were in fact 13% higher than the approved budget as N406.03 billion was received from this source compared to the budget projection of N358.78 billion. This will come as a considerable shock to international analysts who believed that Nigeria has only one source of revenue.

The 53% shortfall in the first 6 months of companies' income tax revenue does not appear to be the shock it seems at first glance. As this figure is predicated on companies' performances in 2015, with year ending 31 st December that year, this means that income tax will only be paid in the current year.

On the side of Government expenditure, the budget had approved N2.29 billion, to be allocated for both recurrent and capital expenditure, whereas N2.420 billion was actually spent. The shortfall was financed by borrowing and from other sources. It must be borne in mind that as the 2016 budget was only signed into law on May 6 th this year, it was only after that date that releases for capital expenditure could begin. By the end of July, only N350 billion had been released for expenditure on critical infrastructure projects specifically relating to those in combination with other Government policy measures which in due course of new employment (unemployment is officially stated to be 12.1% as at the end of September) are expected to be the catalyst for revving Nigeria's economic activities.

Given this overall scenario, there are significant reasons to believe that the Nigerian economy is at last being set on the right path, and this can clearly be seen in the detail of the President's second and critical 2017 Federal Government Budget.

 The 2017 Federal Government Budget In a letter dated 30 th September, personally signed by the President and addressed to both the Senate President and the Speaker of the House of Representatives, the President submitted his proposals for the Government's 2017 budget.

This envisages total expenditure of N6.866 trillion, of which N1.765 trillion is allocated for capital expenditure, N2.563 billion for recurrent expenditure, N1.639 trillion for debt services and, crucially, N350 billion for recurrent expenditure on the Government's Social Intervention Programme. These proposals are for expenditure of some N805 billion greater than the approved 2016 budget and is predicted on the basis of oil production of 2.2mbpd, with an oil bench mark price of US$42.5 per barrel (which is in accordance with both international analysts forecasts and crucially OPEC and western Governments forecasts) with an average exchange rate of N290=US$1.00.

The Social Intervention Fund, which was introduced in the 2016 budget, was the first attempt in Nigeria's history to try and implement a social welfare policy, targeted at the millions of unemployed Nigerians. However, by the end of August only 1.2 million Nigerians had actually registered to benefit from this scheme. It is basically a two-month vocation creative job learning scheme in order to provide them with sufficient skills to become young entrepreneurs. The most talented of the first batch graduate to higher skills training during a follow-up programme, which would be located at one of the six zonal training centres in Calabar, Anambra, Bauchi, Katsina, Kogi and Ondo States. However, the scheme ran into difficulties when it was realised that millions of Nigerians were missing out due to the Government's requirement that they register online.

This was basically created “to enable the accessibility of qualitative, basic and civic education for all Nigerians. The intention is to support farmers with the knowledge that ensures that they produce what Nigerians eat, as well as improving preventative public health care, training an army of inventors who will be empowered to use the following, amongst other things, digital media and technology. In addition, the programme envisages developing a highly skilled force of millions of unemployed Nigerians who will be taught the building techniques in the construction, domestic hospitality and infrastructure industries in order to benefit the livelihood of the critical mass of young unemployed Nigerians estimated to be in excess of 30 million people.”

Although the Government did not succeed in the initial aim to attract the numbers it expected, it has notably allocated N35 billion for its recurrent Social Intervention Programme in 2017, as the belief is that the initial scheme has been successful.

6 The Government envisages that in order to finance the 2017 budget, it needs to prioritise on improving revenue from non-oil sectors through a series of new laws, enhanced company income tax collection and related policies which should improve transparency and accountability and considerably enhance tax and customs revenue collections, whilst continuing to diversify the economy. At the same time, the Government accepts the need to increase output through productivity and new development measures and, very interestingly, suggests a possible refinancing of its debt and debt management programme. On that subject it is notable that the allocation for capital expenditure is only N126 billion greater than allocated revenue for debt service which supports the view that this surmise may well be correct as the allocation is some N217.42 billion higher than last year.

The Government's primary sources of revenue in 2017 are expected to be from oil realising N1.3 trillion, mineral and mining N1.07 trillion, non-oil revenues of N1.51 trillion (of which N902.8 billion will come from company income tax) as well as N1.207 trillion from independent revenue, N6.55 billion from the Government share of balances in special accounts and N9.08 billion from Government balances in special levies accounts.

On the subject of debt, the Debt Management Office issued a circular earlier this year beginning the process of appointing two international banks and a local bank as financial advisers and joint lead managers for the issue of US$21 billion Eurobond out of a total of US$4.5 billion Federal Government medium term note programme for 2016. Nigeria wishes to remix its public debt portfolio from the existing balance of 84% coming from domestic sources and only 16% external, to 60% domestic and 40% external whilst at the same time remixing the current status of Nigeria's debt from 31% being short term to a maximum of 25% short term and a minimum of 75% being long term. With a very low debt to GDP ratio, Nigeria can borrow substantially more overseas to fund its budget and capital expenditure programme as well as other infrastructure and essential projects that will stimulate the economy and critically here again create new jobs for unemployed Nigerians. This programme, which was announced 3 months ago by the Director General of the Debt Management Office, Dr Abraham Nwankwo, has the blessing of both the World Bank and the IMF. This is something that the previous administration had hoped to achieve but due to a number of factors that are only now emerging, it was not possible.

At the end of June this year Nigeria's external debt stock had increased from US$10.718 billion to US$11.26 billion, almost exclusively due to World Bank Group funding, increasing its support for Nigeria from US$6.29 billion to US$6.85 billion. Since then there have been the loans from the Chinese Government as mentioned earlier in this report.

 IN BRIEF  Archbishop Justin Welby welcomes Nigerian dignitaries to London On May 16 th, Archbishop Justin said it was “a great honour” to welcome President Buhari to Lambeth Palace, “the leader of the largest country in Africa”. It was the first time President Buhari had visited Lambeth Palace since his election as President last year.

The Archbishop of Canterbury, Justin Welby, also welcomed the former Nigerian Head of State General Yakubu Gowon to Lambeth Palace on September 16th during his visit to London. Archbishop Justin and General Gowan spoke about peace and reconciliation in Nigeria.

 President Muhammadu Buhari's wife has warned him that she may not back him at the next election unless he shakes up his government. In a BBC interview on October 14th, Mrs Aisha Buhari suggested his Government had been hijacked by only a "few people", who were behind Presidential appointments. She campaigned vigorously for her husband in last year's election in Nigeria, organising town hall meetings with women's groups and youth organisations across the country.

However, she kept a low profile at the start of the administration and was barely seen or heard. She was restricted to her work on the empowerment of women, and helping victims of the Boko Haram conflict in the North-east of the country where she comes from. This is one of the reasons why this damning interview has caught the attention of many Nigerians.

Standing alongside German Chancellor Angela Merkel at a news conference, the President laughed off his wife's accusations. Mr Buhari said that having run for President three times and having succeeded the fourth, he could "claim superior knowledge over her".

7  STOP PRESS

 Former President Former President Goodluck Jonathan speaking earlier yesterday at The Oxford Union after his lecture titled "Youth Entrepreneurship" said: - They said the National Security Adviser stole $2.2 billion. I don't believe somebody can just steal $2.2 billion. We bought warships, we bought aircraft, we brought lots of weapons for the army and so on and so forth and you are still saying $2.2 billion, so where did we get the money to buy all these things. Yes there were some issues. Yes, there are still corruption issues but some of it were overblown I'd say exaggerated and they give a very bad impression about our nation. You cannot say the National Security Adviser stole $2.2 billion. It is not just possible

One thing about the issue of corruption is that all these matters are in court, let's allow some of these processes to end. I don't want to be seen as a former President challenging what the sitting government is doing so I have decided to keep quiet for the court to look into them. I am not saying there is no corruption in Nigeria, there is corruption. If you look at corruption there is almost no country that is free, the degree varies, the perception varies.

Transparency International talks about the way corruption is being perceived in different economies, why do we talk about the way corruption is being perceived, it depends on the issue raised in the media every day " Source Vanguard Newspaper 25th October 6.05pm

 Supplementary Budget. President Buhari asked The National Assembly in letters addressed to The Senate President and The Speaker of The House of Representatives yesterday morning 25th October, 2016 has sought approval from The National Assembly to approve new external loans amounting to US$29.960 billion and to amend the 2016 budget requirement in the sum of N180.8 billion, the latter being achieved by moving approved budgeted funding from " Special Intervention Programme Budgets covering both Capital and Recurrent Expenditure to fund shortfalls in the provision of personnel costs, inadequate provision ab initio for amnesty programmes, continuing requirements to sustain the war against the insurgency and the depreciation of the Naira"

The President gave as one of several examples of the need for this request the fact that "The provision for meal subsidy for The Unity Colleges is inadequate for the number of students in the schools as well stating that "Due to the depreciation of the Naira, the budgetary provisions for the foreign missions are no longer sufficient to cover all their costs".

Whilst this requirement was entirely expected the size of the new foreign borrowing has stunned the world, but again demonstrates quite emphatically just how serious President Buhari and his government are to finally awake the giant that Nigeria really is and now will be able to assume her true position in Africa and indeed the world. This move at a stroke will bring the economy out of recession and revolutionise its economy.

The new borrowing is made of Eurobonds totalling $4.5 billion, new foreign loans amounting to $11.274billiion, Special Infrastructure Loans amounting to $10.686 billion and will be supported by Federal Government Funding amounting to $4.5 billion. The loans will be used to finance a massive infrastructure capital expenditure programme as well as providing key financing for projects in the agriculture, health, water supply growth and employment generation, poverty reduction and critically the education sectors of the economy.

This news which was only revealed late in the evening yesterday is such a massive undertaking that it will undoubtedly leave the world breathless when it reads it in the press today.

The Editor would like to apologise profusely to all members for his absence for a long period during this year. This has been caused by various health issues mainly related to Parkinson's Disease and which eventually resulted in a prolonged hospital stay. He very much regrets this situation, but thanks to fantastic support from his wife and family he has now recovered as far as can be hoped. Thankfully he now feels able to resume producing a regular Digest.

Circulated October 27, 2016

The content of this publication has been prepared by a Nigeria Correspondent for The Britain-Nigeria Educational Trust and whilst every effort has been made to ensure accuracy of the information, the Trust cannot accept responsibility for any errors or omission. It is recommended Members seek further advice before basing decisions upon the detail given in this Digest.

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