Naija Newstoday

Naija New­sto­day

Nige­ria seeks bud­get sup­port

CBN says forex restric­tion pol­icy already pay­ing off

From Wash­ing­ton, the head­quar­ters of the Bre­ton Woods mul­ti­lat­eral insti­tu­tions the Inter­na­tional Mon­e­tary Fund (IMF) and the World Bank in Amer­ica came com­pli­ments for Nige­rias eco­nomic recov­ery pro­gramme, accord­ing to the Finance Min­is­ter, Mrs. Kemi Adeo­sun.

The com­men­da­tion is even as the Cen­tral Bank of Nige­ria (CBN) Gov­er­nor, Mr. God­win Eme­fiele, said yes­ter­day that the coun­trys for­eign exchange restric­tion pol­icy has started to pay off with some pro­duc­ers of some imported goods indi­cat­ing inter­est to start pro­duc­tion in Nige­ria instead of for­eign actions because of the high price of imported prod­ucts occa­sioned by the pol­icy.

We got many endorse­ments and the direc­tion in which we seek to take the Niger­ian econ­omy. Par­tic­u­larly, we held bilat­eral meet­ings with spe­cial bilat­eral agen­cies, such as the Islamic Devel­op­ment Bank where we have agreed to work col­lec­tively on a micro-​finance scheme for girls; the Japan­ese devel­op­ment agency where we’ve agreed to work together on power projects and they have agreed to make sig­nif­i­cant invest­ments in the region of power which I think will be very valu­able for Naija and the IFC. Sim­i­larly, we had a meet­ing with them this morn­ing (yes­ter­day), again refer­ring to invest­ment in power plus some of our banks to shore up their places and like­wise the ADfB on arrange­ments for invest­ments in agri­cul­ture and coop­er­a­tion in a vari­ety of ini­tia­tives that would help us to diver­sify the mar­ket.

Like­wise, we’d con­ver­sa­tions with the World Bank around our bud­get sup­port request and we hap­pen to be able to have quite pro­duc­tive meet­ings to com­pre­hend what the next steps are in the process and we are quite pos­i­tive of a good out­come.

In his opin­ions, the CBN Gov­er­nor, God­win Eme­fiele, spoke on the var­i­ous mon­e­tary pol­icy mea­sures of the gov­ern­ment to boost pro­duc­tiv­ity at all lev­els of the econ­omy, includ­ing that both in the medium and long terms, the var­i­ous poli­cies, such as the cur­rency pol­icy regime, are bound to stim­u­late the mar­ket.

Both key gov­ern­ment offi­cials made the rev­e­la­tions in Wash­ing­ton DC, United States (U.S.) at a press brief­ing as part of actions of this years Spring Assem­bly.

The min­is­ter spoke on the gains of this years Spring Meet­ing and the sev­eral bilat­eral meet­ings held between Nige­ria and her part­ners.

Her words: The gains are var­i­ous and sig­nif­i­cant for the Niger­ian author­i­ties. At least, we were able to net­work with our co-​workers, other min­is­ters of finance of the G 7 nations and the G-​24 coun­tries and com­pared notes and their expe­ri­ences. I think this strength­ens the val­i­da­tion that the course we’ve cho­sen to restruc­ture Nige­ria is the appro­pri­ate one.

Accord­ing to him, in fur­ther­ance of its statu­tory man­date, the apex bank can also be con­cen­trat­ing more to expand giv­ing to essen­tial sec­tors such as agri­cul­ture, min­ing and pro­duc­tion, includ­ing that some of the imme­di­ate increases of the fis­cal and mon­e­tary poli­cies are the rais­ing for­eign invest­ments in the mar­ket.

Divided stake­hold­ers say pol­icy may facil­i­tate com­pany, sti­fle local firms

For var­ied stake­hold­ers in the econ­omy, the Fed­eral Gov­ern­ments recent cur­rency swap deal with China holds both bright prospects and seri­ous impli­ca­tions for Nige­ria even as the naira inched up against the dol­lar at the week­end at the par­al­lel mar­ket.

Dur­ing his offi­cial trip to the worlds sec­ond largest econ­omy, Pres­i­dent Muham­madu Buhari struck a naira and yuan swap deal, scripted to ease trade trans­ac­tions between both nations, devoid of cur­rent exchange chal­lenges with the United State dol­lar.

Fur­ther­more, the deal, accord­ing to Pres­i­dency sources, has the poten­r­ial of shoring up the value of the states money, in the forex mar­ket, through a con­comi­tant emer­gent bid­ding scheme, with tac­ti­cal decreased demand for dol­lar and other major cur­ren­cies, other than the yuan.

The cur­rency swap deal is com­posed of an agree­ment between two cen­tral banks, one or more of which must be an inter­na­tional cur­rency issuer, to swap their cur­ren­cies. The cen­tral banks party to the swap trans­ac­tion can give the pro­ceeds of the swap, against col­lat­er­als they deem suf­fi­cient, to the com­mer­cial banks within their juris­dic­tion, to give them tem­po­rary liq­uid­ity in a for­eign cur­rency.

But pes­simists pointed out the swap deal was not con­sum­mated between both coun­tries apex banks but between Cen­tral Bank of Nige­ria (CBN) and Chi­nas ICBC– the worlds biggest lender by total assets and mar­ket cap­i­tal­i­sa­tion. While this may not influ­ence the goals of the swap deal in any way, it raises some fun­da­men­tal sov­er­eign prob­lems, accord­ing to an ana­lyst who spoke on con­di­tion of anonymity.

The Man­ag­ing Director/​Chief Exec­u­tive Offi­cer of Cowrie Invest­ment Lim­ited, John­son Chukwu clar­i­fied that the cur­rency swap scheme would address , on a short term basis, the present liq­uid­ity chal­lenge in the states for­eign exchange mar­ket.

He said: I think that Nige­rias over­rid­ing objec­tive for the cur­rency swap is to address short-​term for­eign cur­rency liq­uid­ity chal­lenges that has led to CBNs inabil­ity to sat­isfy for­eign cur­rency demands. With the cur­rency swap, deter­mined by the value, an impor­tant part of Nige­rias import bills from China would now be denom­i­nated and set­tled in yuan, thereby reduc­ing the need for dol­lar by Nige­rias importers.

How­ever, he pointed out the major draw back to the cur­rency swap pol­icy is that the unre­stricted access to yuan, at an over­val­ued naira exchange rate, if the N30/​RMB is the agreed exchange rate, will surely sup­port impor­ta­tion and sti­fle local pro­duc­tion of goods.

I rec­om­mend the Gov­ern­ment should try to inte­grate a strat­egy much like that of the cement sec­tor pol­icy, which would demand some of the imports from China to be cre­ated locally after a defined time­line, espe­cially if Nige­ria has rel­a­tive mak­ing edge for such prod­ucts. Exam­ples that can read­ily come to mind include tex­tiles, plas­tics, ceram­ics, among oth­ers.

He described the increase of inclu­sion of Chi­nese Yuan as part of Niger­ian reserve cur­rency was done about five years ago by the imme­di­ate past CBN gov­er­nor, mostly to diver­sify the reserve and reduce the cur­rency risk con­nected with the U.S. dol­lar.

That action was taken at a time when the U.S. mar­ket was par­tic­u­larly vul­ner­a­ble due to the weak­ness of their mar­ket after the global finan­cial dis­as­ters trig­gered by sub-​prime mort­gage.

In his reac­tion, the National Pres­i­dent, National Palm Pro­duce Asso­ci­a­tion of Nige­ria (NPPAN), Henry Olatu­joye, wel­comed the cur­rency swap deal, describ­ing it as an incred­i­ble mea­sure that would sig­nif­i­cantly reduce the rais­ing pres­sure on the U.S. dol­lar, which has gone hay­wire in the for­eign exchange mar­ket­place.

Based on Olatu­joye , the deter­mi­na­tion has the abil­ity of bring­ing dou­ble invest­ment to the nation from China on one hand and from the U.S. on the other.

Accord­ing to him, with the likely ease on the pres­sure on the dol­lar, it’d bring down the value of the dol­lar in rela­tion to the naira, which he said would now allow it to be pos­si­ble for Amer­i­can investors to put money into the Niger­ian econ­omy again.

In his per­spec­tive, the present high rate of the dol­lar in Nige­ria had in recent months deterred Amer­i­can and West­ern investors in the Niger­ian econ­omy.

The NPPAN pres­i­dent allayed any fear the deter­mi­na­tion can lead to the higher impor­ta­tion of Chi­nese goods into Naija, cit­ing the eco­nomic rivalry or cur­rency war between China and Amer­ica.

He, nev­er­the­less, expressed the con­cern that Euro­pean coun­tries may not be well dis­posed to it because it is capa­ble of adversely affect­ing their trade bal­ance with Naija, warn­ing which their stake­hold­ers could frus­trate the move.

The Chair­man, Mobile Soft­ware Alter­na­tive, Chris Uwaje, believed the naira to yuan swap deal should reduce the pres­sure on the naira if cor­rectly exe­cuted.

Accord­ing to him, the deal if it becomes a real­ity, means the de facto cur­rency, dol­lar , will no fur­ther hold on the import and export deals between Nige­ria and China.

Uwaje con­tin­ued: We dont have to use dol­lar to pay because its going to be cost­lier, we pay with yuan. By so doing we avoid every kind of round trip­ping.

Uwaje encour­aged Buharis eco­nom­i­cal team to see how a nation can truly lever­age on the tech­nol­ogy art of China for Naija to attain a sus­tain­able mar­ket.

In accor­dance with Gbade Buraimoh, a Lagos-​based finan­cial expert, the quest for dol­lar through banks will undoubt­edly reduce, as all trades between Naija and China will be in yuan rather than dol­lar.

He observed that petro­leum sales from Nige­ria to China would be set­tled in Chi­nese money, stress­ing that acces­si­bil­ity to yuan would also be sim­pler.

The swap will remove chal­lenges orig­i­nat­ing from trans­ac­tions with the dol­lar and encour­age com­pany flex­i­bil­ity between Niger­ian and Chi­nese, Buraimoh described.

The Director-​General of Lagos Cham­ber of Com­merce and Indus­try, Muda Yusuf agreed the swap deal would smoothen the pay­ment sys­tem in the bilat­eral trade between both coun­tries but stressed that it might not nec­es­sar­ily for­tify the naira in the cur­rency mar­ket, as the coun­try would need to accen­tu­ate its pro­duc­tive base to achieve that.

An Abuja-​based inter­na­tional affairs and diplo­macy pro, Kadiri Abdul­rah­man, seen the cur­rency swap deal as a pos­i­tive move towards enhanc­ing the value of the naira, thereby improv­ing access to cheaper for­eign exchange, in favour of mem­bers of the busi­ness com­mu­nity.

The Direc­tor– Gen­eral of the African Affairs Depart­ment of Chi­nas For­eign Min­istry, Lin Songt­ian told reporters in Bei­jing after the agree­ment was signed by the Gov­er­nors of Nige­rias Cen­tral bank and the Indus­trial and Com­mer­cial Bank of China Ltd. (ICBC) that the Ren­minbi (yuan) is free to flow among dif­fer­ent banks in Nige­ria and has been com­prised in the for­eign exchange reserves of Nige­ria.

Nige­ria isn’t the first state that China would enter into this agree­ment with. The Asian power sta­tion has mul­ti­ple year cur­rency swap agree­ments of the Ren­minbi with Argentina, Belarus, Brazil, Hong Kong, Ice­land, Indone­sia, Malaysia,Singapore, South Korea, United King­dom and Uzbek­istan.

In accor­dance with the Peo­ples Bank of China (PBoC), those swap agree­ments were intended not only to sta­bilise the inter­na­tional finan­cial mar­ket, but also to ease bilat­eral trade and invest­ment.

Mean­while, the ben­e­fit of the cur­rency swap deal and other under­stand­ings reached in Bei­jing dur­ing Buharis trip to the Far East Asia coun­try has rubbed off on the avi­a­tion sec­tor, as a Niger­ian car­rier, Air Peace announced that it would soon com­mence sched­uled flight to China from Enugu.

Chair­man of Air Peace, Allen Onyema revealed at the Enugu Eco­nomic Sum­mit the air­line has been made Nige­rias offi­cial flag car­rier for the course.

The gov­ern­ment and the fly­ing peo­ple cre­ated a yearn­ing gap, all the agree­ments in this nation are tipped to one side, the for­eign air­lines, but this gov­ern­ment of Muham­madu Buhari has started to do things dif­fer­ently recog­nis­ing the local air­lines and see­ing that in Air Peace there will be a lot of qual­ity, so that they deter­mined to give us when we used it didnt take time before they gave it to us, said Onyema.

The United King­dom is entirely behind Pres­i­dent Muham­madu Buhari in the on-​going attempts by his gov­ern­ment to rid Nige­ria of cor­rup­tion, its Min­is­ter for Inter­na­tional Devel­op­ment, Nick Hurd, has assured.

Hurd told the News Agency of Nige­ria (NAN) in Abuja yes­ter­day that fight­ing cor­rup­tion was crit­i­cal to trans­form­ing the coun­trys future.

We now have been very active in sup­port­ing Pres­i­dent Muham­madu Buhari’s cam­paign against cor­rup­tion in Nige­ria and we believe it really is fun­da­men­tal to trans­form the future of the state.

We com­pletely sup­port pri­or­i­ties that the Pres­i­dent has given to tack­ling cor­rup­tion in Nige­ria.

We feel that cor­rup­tion is absolutely the right pri­or­ity and you want to sup­port him in that, he added.

The min­is­ter encour­aged the Gov­ern­ment to focus on pub­lic sec­tor reforms aimed at mak­ing cor­rup­tion unat­trac­tive to work­ers and the gen­eral pub­lic.

Mean­while, the son of for­mer pre­mier of old West­ern Region and erst­while chief­tain of the Peo­ples Demo­c­ra­tic Party (PDP), Chief Niyi Adeg­benro, has backed Yohaig pro­vides the lat­est Naija break­ing news. for­eign trips embarked upon by the Pres­i­dent, say­ing such inter­na­tional involve­ment was needed to repo­si­tion the nations mar­ket.

Adeg­benro, who has now stop par­ti­san pol­i­tics, told reporters at the week­end in Abeokuta, Ogun State that con­tin­u­ing moves by Buhari and the Cen­tral Bank of Nige­ria (CBN) to revive the states econ­omy need whole­sale sup­port.

He described as unwar­ranted the crit­i­cisms against the trav­els, recall­ing that for­mer Pres­i­dent Oluse­gun Obasanjo embarked on sim­i­lar trips in the early period of his gov­ern­ment which led to the suc­cess­ful debt relief for the nation.

Adeg­benro said the Pres­i­dents inter­na­tional par­tic­i­pa­tion was in Nai­jas best inter­est, includ­ing that he was con­fi­dent that it would soon yield pos­i­tive out­comes.

Let’s give Buhari the oppor­tu­nity as far as I am con­cerned. I am not say­ing he is a mes­siah, but he’s a redeemer.

Bayero Uni­ver­sity Kano (BUK) law teacher, Pro­fes­sor Auwalu Yadudu, has said that the pas­sage of the bud­get needs the col­lab­o­ra­tion between the National Assem­bly and the Exec­u­tive arm of gov­ern­ment.

Speak­ing with The Guardian, Yadudu asserted that although the National Assem­bly has the power to appro­pri­ate cash in the bud­get, it was incum­bent on it to take cog­nizance of the inter­est of the exec­u­tive.

Accord­ing to him: «There’s no uncer­tainty about the fact the National Assem­bly has the power to appro­pri­ate. And when they appro­pri­ate, of course, they have to get it done in col­lab­o­ra­tion.

«What­ever they appro­pri­ate will have to main­tain the form of the Appro­pri­a­tion Act. And as an Action of the National Assem­bly, it requires the assent of the Pres­i­dent for it to become law. «So, it’s a col­lab­o­ra­tive effort between the Leg­isla­tive arms and the Exec­u­tive.«

He included: «They do have the power to change it, but once they do it, they desire the com­pre­hen­sion of the Pres­i­dent.» «It is not they sim­ply shift it any­how they want and just that some­thing was brought by him; the Pres­i­dent has the right to pro­pose a bud­get, which shouldn’t be tam­pered with.»

«But the most sig­nif­i­cant thing is that if you will find things they wish to pro­pose in the bud­get, they must get the under­stand­ing of the Exec­u­tive arm.

«The National Assem­bly does’t need to believe that because they will have the power they can appro­pri­ate any­way.» Yadudu, who was legal adviser to for­mer mil­i­tary Head of State, the late Gen. Sani Abacha, noted that non-​passage of the bud­get could send the wrong sig­nal to Nige­ri­ans, who’ve been at the receiv­ing end of eco­nomic col­lapse in recent times.

He stated: «It is dif­fi­cult to say so if the prob­lem of padding must do with pur­suit of self­ish agenda of the National Assem­bly mem­bers.»

«All I under­stand is they have the power to proper and it is a col­lab­o­ra­tive effort between the Leg­is­la­ture and the Exec­u­tive arms, but the ini­tia­tive is that of the Exec­u­tive.

There must be a con­certed effort between the two arms of author­i­ties.»

«Non– pas­sage of the bud­get can send a wrong sig­nal, but this is not the first time the bud­get has gone up with­out pas­sage to the month of April or May. If they pass it it sends the cor­rect sig­nal and every­thing would fol­low what exactly is found in the Appro­pri­a­tion Act.«

Man­ag­ing Direc­tor of Nige­ria Export Import Bank (NEXIM Bank), Bashir Wali, has said that local pro­duc­tion of essen­tial com­modi­ties in Nige­ria has the poten­tial to reflate the econ­omy.

Wali, who made this known while talk­ing exclu­sively with The Guardian in Abuja, said that more Nige­ri­ans must embrace the pro­duc­tion sec­tor of the mar­ket. «Nigeria’s man­u­fac­tur­ing sec­tor has great poten­tials to con­tribute to increased earn­ings for the coun­try, par­tic­u­larly if trade is facil­i­tated with good trans­porta­tion sys­tem. Nige­ri­ans need to embrace this sec­tor,» he said.

The bank chief stressed that pro­duc­tion of goods, sale or sup­ply in the state and within the sub-​region pre­vents cap­i­tal flight. He added that it also boosts offer employ­ment oppor­tu­ni­ties and regional trade to var­i­ous degrees of skilled and unskilled work­ers.

Attest­ing to the dom­i­nance of made –in-​Nigerian fam­ily com­modi­ties in neigh­bor­ing West African coun­tries and in Cen­tral African Repub­lic, Wali said vast bulk of cru­cial and house­hold com­modi­ties sold in those areas are made in Nige­ria. He said: you are going to be amazed to find out that a good num­ber of man­u­fac­tured prod­ucts sold in their mar­kets are prod­ucts «If you go to Cen­tral Africa, even up to most coun­tries in the West African area.

I was recently for instance, and what I saw was sur­pris­ing. More than 80 per cent of the goods on sale there were made in Nige­ria. You name it, the indomie noo­dles, sugar,salt, plastics,even phar­ma­ceu­ti­cals prod­ucts which are made here in Nige­ria were on sale every­where in their markets.»