Connect with us

Economy

Naira Devaluation Unlikely as MPC Meets Today

Published

on

DOLLAR CURRENCY

Although experts have clamoured for the devaluation of the naira in the light of the nation’s depleting foreign exchange reserves, the Central Bank of Nigeria’s Monetary Policy Committee may not do so during its first bi-monthly meeting for this year, it has been learnt.

Sources close to the CBN and members of the committee said the two-day meeting, which commences today (Monday), would only review policy measures taken so far in the past year, adding that key policy issues, especially as regards the need to devalue the naira, might be delayed till the March or May meeting.

It was further learnt that President Muhammadu Buhari’s stance of not devaluing the naira would influence the voting pattern of the 11-member MPC when issues that border on the exchange rate policy are considered.

The CBN has in the last one year adopted a number of administrative forex control measures to safeguard the naira in place of devaluation.

Although the naira has been pegged at between 197 and 199 at the interbank official market against the United States dollar, the local currency has fallen as low as 295 to the greenback at the parallel market.

The immediate past Governor of the CBN, Mallam Lamido Sanusi; Managing Director, Financial Derivatives Limited, Mr. Bismarck Rewane; and other local and foreign economists have called for the devaluation of the naira, insisting that the current forex control measures were counterproductive.

The forex control measures, which have to do with rationing the dollars, have hurt the economy amid slow growth.

But economists said although the way forward was for the MPC to adjust the exchange rate, they said this was unlikely considering the mood of the Federal Government.

“The mood of the Federal Government is that the rates will be kept unchanged. The Cash Reserve Ratio and the Monetary Policy Rate will be left unchanged, while the exchange rate will also be left unchanged,” the Managing Director, Cowry Asset Management Limited, Mr. Johnson CHukwu, said.

The Head, Research and Investment Advisory, Afrinvest West Africa Limited, Mr. Ayodeji Ebo, also predicted that the exchange rate, CRR and MPR would likely be left unchanged.

He, however, said the MPC might choose to adjust some of the forex control measures, saying, “The list of banned items may be reviewed considering the fact that the naira volatility became serious when those 41 items were banned from the official CBN window.”

Currency strategist at Ecobank Nigeria, Mr. Kunle Ezun, said it was unlikely that the MPC would take any major policy decision, adding that the committee might delay major decisions till future meetings within the year.

Analysts at FBN Quest Research in their economic note said, “The next meeting of the MPC takes place in Abuja on Monday and Tuesday. Judging by the intensity of the media commentary, we could be forgiven for thinking that its only decision is whether to adjust its exchange rate policy.

“The depletion of official reserves, the slide in the oil price and the intermittent global market turmoil emanating from China and elsewhere could make a good case for devaluation. We are not so sure. The preference of the CBN and the MPC is to deploy administrative measures.

“We would not be surprised by some new measures. In any event, the committee may well want to assess the impact of its recent steps before announcing a devaluation, or even introducing some new ones.”

Meanwhile, the Lagos Chamber of Commerce and Industry has asked the CBN to urgently articulate a comprehensive framework for the autonomous foreign exchange market.

According to the LCCI, the autonomous market is currently the major forex market and its scope needs to be clearly defined.

In a statement signed by the Director-General of the LCCI, Mr. Muda Yusuf, on Sunday, the chamber noted that the move would ensure a deeper forex market.

It added that sources of foreign exchange such as Diaspora remittances, export proceeds, forex sales by foreign investors and multinational companies as well as forex sales by donor agencies and other non-governmental organisations should be allowed to be freely traded in the autonomous market.

Punch

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Continue Reading
Comments

Economy

Nigeria On Path To Food Sufficiency As Buhari Unveils Mega Rice Pyramids

Published

on

Rice

With the unveiling of 13 rice pyramids (one million bags of rice) President Mohammadu Buhari today, the country is no doubt on a path is to self-sufficiency in food production.

Investors King gathered that the president, today, unveiled the FCT Mega Rice Pyramids in Abuja.

The rice pyramid, considered to be the biggest of its type in Africa, is located on the grounds of the Abuja Chamber of Commerce and Industries (ACCI) on Airport Road.

The one million rice paddy which was stacked in 15 separate pyramids at the ACCI is in collaboration of the Central Bank of Nigeria (CBN) with the Rice Farmers Association of Nigeria (RIFAN), planted and harvested from states across the country under the Anchor Borrowers’ Programme (ABP). Farmers were asked to return the bags of rice paddy that made up the pyramids in exchange for cash in order to repay the loans they received under the ABP.

Investors King recalls that the CBN’s ABP which started in November 2015 had the goal of providing aid to farmers and influencing the value chain of various commodities in Nigeria. The CBN, in 2019, revealed that it disbursed the sum of N791 billion to more than 3 million farmers across the 36 states of the Federation, under the ABP as part of its efforts towards diversifying the economy and assisting farmers with the provision of farm inputs and cash to smallholder farmers.

The president, who commissioned the pyramid, disclosed that the ABP is expected to catalyse the agricultural productive base of the nation, which is a major part of the government’s economic plan to uplift the economy, create jobs, reduce reliance on imported food and industrial raw materials, and conserve foreign exchange.

According to the CBN governor, Godwin Emefiele, the CBN, in collaboration with the rice farmers have significantly improved the productivity per hectare of the smallholder farmer from about 2.4 metric tonnes per hectares in 2015 to between about 5 metric tonnes per hectares in 2021.

The RIFAN has over 12.2 million members across the 36 states of the country who are involved in rice farming, milling, storage and management, trading and marketing, export, research and training and allied businesses.

Continue Reading

Economy

Nigeria’s Inflation Rate Rose in December After 8-month Decline– NBS

Published

on

Nigerian economy

The National Bureau of Statistics, on Monday announced that Nigeria’s annual inflation rate has risen to 15.63 percent in December 2021. This was higher than the 15.40 percent recorded in November 2021 when the headline inflation moderated for eight consecutive months. The increase is likely due to the usual surge in the prices of goods and services around Christmas time.

The report stated, “This is showing a slowing down in the rate when compared to the corresponding period of 2020.

“Comparing the rate to the year-on-year performance in the previous months shows that the rate has increased.

“Also, comparing the rate of price change between December and November (month-on-month) shows that the headline index rose by 1.82 per cent in December 2021. The November figure was 1.08 per cent. The rise was in part driven by a continued surge in food inflation.”

According to NBS, the composite food index increased by 17.37 per cent in December 2021 down by 2.19 per cent points compared to the 19.56 per cent obtained in December 2020.

“The average annual rate of change of the Food sub-index for the twelve months ending December 2021 over the previous twelve-month average was 20.40 per cent, 0.22 per cent points lower from the average annual rate of change recorded in November 2021 (20.62) per cent,” it said.

It further mentioned that the rise in the food index was as a result of increases in prices of bread and cereals, food products, meat, fish, potatoes, yam and other tubers, soft drinks and fruits.

The statistics showed that on a month-on-month basis, the food sub-index increased by 2.19 per cent in December 2021, up by 1.12 per cent points from 1.07 per cent obtained in November 2021.

Continue Reading

Economy

Manufacturing Activities, Macroeconomy Witness Gradual Growth in Q4 2021: MAN

Published

on

The Manufacturers Association of Nigeria (MAN) has said that Nigeria’s macroeconomy and manufacturing operating environment were buttressed by the marginal recovery of some key manufacturing indicators allowed a gradual improvement in the fourth quarter (Q4) of 2021.

In its Manufacturers CEOs Confidence Index (MCCI) Q4 report, the President of the association, Mr. Mansur Ahmed clarified that although changes in almost all manufacturing indicators as measured in the report are still not as desired, the fourth quarter performance is better than what was obtained in the 2021 Q3.

The MCCI is an index set up by MAN to measure changes in the quarterly pulsation of manufacturing activities in relation to movement in the macroeconomy and government policies. The Index is considered as MAN’s barometer used to aggregate the views of CEOs of manufacturing companies on changes in the economy.

In the report, Ahmed stated that manufacturers’ resilience, seasonal transactions, and passive policy support sustained manufacturing in the quarter despite the prevalence of familiar and emerging excessive tax-related challenges faced by manufacturers.

The manufacturing sector in Q4 of the year under review, overall recorded a mixed grilled performance occasioned by meagre improvement in the operating environment indices and macroeconomic ambiance evidenced by the high points. This he said, cumulatively triggered the increase in the aggregate MCCI score for the quarter to 55.4 points from 54.0 points recording the preceding quarter.

“Manufacturing performance is still below the mark,” Ahmed explained, saying, “notwithstanding the marginal improvement in the operating environment during the quarter under review, as the sector is still plagued by numerous familiar constraints. Some of these challenges enumerated by manufacturers are clearly presented in this report.”

The president further advised the government to implement mechanisms such as providing incentives to encourage investments in raw materials, pharmaceutical and petrochemical materials, iron and steel, etc. He also beckoned on the government to specifically provide security to lives and investments in industrial areas.

“In order to improve the performance of the sector, the government needs to intentionally put in place a mechanism that will address these challenges permanently by considering and implementing the following recommendation:

“Further incentivize investment in the development of raw materials locally through the Backward Integration and Resource-based industrialization initiates. Government should call for more investors to key into these initiatives with appropriate and definite incentives.

“For instance, there is need for urgent investment and production of Active Pharmaceutical Ingredients (API) in the country; investment and production of machines; iron and steel; petrochemical materials, etc to support manufacturing activities.

“Give specific attention to the security of life and investment in industrial areas; properly delineate and upscale security infrastructure in the various industrial areas in the country, particularly in the northern part of the country for priority attention. Government should also quickly invest in modern security such as drones, cameras, etc. for robust monitoring of the areas,” Ahmed stated.

The MAN president in the MCCI report stressed the need to ensure effective allocation of available foreign exchange to productive sectors, especially to the manufacturing sector for the importation of raw materials and vital machines and equipment that are not available locally.

He also buttressed the need for the government to expressly direct the Central Bank of Nigeria (CBN) to consult with the Ministries of Industry Trade & Investment and effectively engage MAN on measures to improve forex supply to manufacturing concerns.

He said that the Ministry of Science Technology and Innovation should be directed to inaugurate the Secretariat that will implement the strategies for the Executive Order and the Standard Organisation of Nigeria (SON). The Secretariat will designate local manufacturers of LPG (Liquefied Petroleum Gas) Gas Cylinders as priority provider of the 10 million Cooking Gas Cylinders to be procured by the government for 12 States in the federation.

Ahmed added, “Return milk and other dairy products to the National list in the fiscal policy guidelines to maintain consistency with the Backward Integration Programme, which has spurred heavy investments in the dairy production.

“Unify academic curriculum with industrial skill needs and requirements to guarantee the sustainable development of skilled manpower for the industries. Government should as a matter of urgency synchronize the curricular of tertiary institutions, particularly the Polytechnics with the skills requirements of industries. The various government vocational and training centers should also be re-engineered to offer those skills that are needed by the industries.

“Revisit the resuscitation of the existing national refineries to produce fuels locally, embark on the rehabilitation of major highway corridors, improve trade facilitation infrastructure and deepen the ongoing development of rails system to change the narrative on the operating environment from being a high cost to low production cost environment.”

On electricity, Ahmed said there is a need to sustain the eligible customer initiative to ensure that more power is supplied to the manufacturing sector.

The Manufacturing Association of Nigeria in its Index Report, further adviced the government to, “Strengthen the Bank of Industry (BOI) and Bank of Agriculture (BOA) to adequately provide liberal finance for the manufacturing sector;

“Monitor the implementation of Executive Order 003 to ensure compliance by MDAs so as to boost activities in the manufacturing sector, Publish the list of approved harmonized taxes and levies for the manufacturing sector by the Joint Tax Board (JTB) to address the issues of multiples taxes and levies.

“Rationalize Government Ministries, Departments, Agencies, parastatal and Commissions to resolve the issues of over-regulation and duplication; Improve the time taken to clear machines and raw-materials at the national ports while making the link road accessible.”

Continue Reading
Advertisement




Advertisement
Advertisement
Advertisement

Trending