The practice whereby Nigerian businessmen obtain dollars at official rate and resell at a higher rate at the parallel market is still continuing, emir of Kano, Muhammadu Sanusi ll, has said.
“We have created our own billionaires since 2015 from foreign exchange subsidy,” the emir said in a speech at 15th Joint National Council on Development Planning meeting held in Kano yesterday.
They got the dollar at N197 and price their goods at N300, he said in his speech tilled “Nigeria: The search for new growth model.”
“For instance, when the CBN was selling dollar at N197 and people were buying at N300, if I sit down in my garden and pick up my phone I would have enough people to call in the industry to get 10 million dollars at officials rate and sell at N300 and make a profit of over N1bn and if I do that four times in a year, for doing nothing I would have earned N4bn.
“And people were telling us that this policy was to help the poor. We should not devalue because if we do the poor people would suffer.
“…People that were profiting from this were the ones telling the government that if you devalue people would suffer; meanwhile they all got the dollar at N197 and price their goods at N300.
“The poor paid the price of the devalued currency and the rich schemed up the profits and it went on for one year and we talked and talked and talked. “If the present administration continues to behave the way the immediate past government behaved, we will end up where Jonathan ended. You may not like it but that is the truth.”
He added that one needs not be an economist to know that any system that allows someone to make N1bn profit through a phone call without investing a kobo is a wrong system and unsustainable.
He pointed out that the economics aspect of the whole thing was that for every one billion dollars that was taken from the federation account and sold by the CBN at N197, the states were losing N100bn that can go into salaries, into agriculture and into healthcare.
At the same time, he said, the states were going back to borrow from the same government on the bailout when the government was selling its dollars to a group of people.
“What kind of economy are we running? Who is advising the government? I want know who is advising the government so that I can talk to the adviser.
“We didn’t have money, oil price has collapsed, avengers were blowing oil wells and the scarce dollars we had we are selling cheaply to some few individuals.”
The emir said manufacturers have abandoned production and embarked on foreign exchange business at the expense of unemployment and local production.
He lamented that it was unfortunate that while other countries are developing Nigeria has no ambitions as a nation, saying “Do we really love our country? Do we feel any shame when we see Malaysia that collected palm oil seed from us is now exporting palm oil?”
He recalled that the Nigerian public sector wage bills went up from N443bn in 2005 to N1.7trn in 2012, adding that in 2010 when the government increased minimum wage to N18, 000, he had personally protested because government would basically rely on borrowing to pay salaries and that would not be sustainable.
However, he said Nigeria is not all about oil since oil contributes only 15 per cent to the GDP, adding that if the entire Nigeria’s oil reserves were sold today, the proceeds would only add 1164 dollars per head compared to GDP per capital of 3,000 in 2016.
“So those that are making noise about oil should stop and those that are afraid about oil should stop. Oil is just a working capital … that when we sell it we get the dollars that we can use to import. If we can have another source of working capital we can do without it.”
The emir commended the FG for making some changes in the economic system including removal of wasteful subsidies, noting that the country should rather subsidise in production not consumption.
He pointed out that Nigeria is spending 6-7 billion dollars per annum on fake subsidies and all the money goes to private jets, expensive jewelleries, and properties abroad and so on and so forth, noting that nothing goes to the economy.
The emir added that Nigeria earned 16 billion dollars from the oil sector in 2011 but not a single dollar went to education, roads and or power sector. “Every dollar we earned in the oil sector went back to petroleum subsidy in 2011.”
He advised the FG to also focus on power generation and land reform as well in its effort to diversify the nation’s economy.
The emir said he is a friend of the present administration “but if they decide to run Nigeria aground, I will become the opposition. You are not good friends with government officials and don’t tell them the truth. I will continue to say the truth.”
The Emir attributed the current economic recession in the country to inability of the past administrations to diversify the economy.
He said there was urgent need for the country to return to the drawing board and expand the economy through wise investment for the economic growth and development of the country.
“If we do not expand the economy through wise investment, we can end up in classical Malthusian situation.
He lamented that in spite of the past experiences we had on our socio-economic challenges, the country was still making the same mistakes as we cannot process tomato paste.“Tomato paste is being imported from China. It is sad, “he said.
SEC To Ban Unregistered CMOs From Operating By Month End
The Securities and Exchange Commission (SEC) says it will stop operations of Capital Market Operators (CMOs) that are yet to renew their registration on May 31, 2021.
This was contained in a circular signed by the management of SEC in Abuja on Monday.
On March 23, SEC had informed the general public and CMOs on the reintroduction of the periodic renewal of registration by operators.
The commission noted that the reintroduction of the registration renewal was due to the need to have a reliable data bank of all the CMOs registered and active in the country’s capital market.
“To provide updated information on operators in the Nigerian Capital Market for reference and other official purposes by local and foreign investors, other regulatory agencies and the general public, to increasingly reduce incidences of unethical practices by CMOs such as may affect investors’ confidence and impact negatively on the Nigerian Capital Market and to strengthen supervision and monitoring of CMOs by the Commission,” SEC explained.
According to the circular, the commission said CMOs yet to renew their registration at the expiration of late filing on May 31, would not be eligible to operate in the capital market.
It explained that CMOs were required to have completed the renewal process on or before April 30, however, the commission said late filing for renewal of registration would only be entertained from May 1 to May 31.
SEC also said that asides from barring the CMOs who failed to comply accordingly, their names would be published on its website and national dailies.
It added that names of eligible CMOs would be communicated to the relevant securities exchanges and trade associations.
A Threat to Revenue As Nigeria’s Largest Importer of Crude, India slash Imports By $39.5B
Nigeria’s revenue earning capacity has come under threat following the reduction of importation of crude oil by India.
India, Nigeria’s largest crude oil importer, reduced crude oil imports by $39.5bn in April, compared to the same time the previous year, data from India’s Petroleum Planning & Analysis Cell showed.
According to the Indian High Commission in Nigeria, India’s crude oil imports from Nigeria in 2020 amounted to $10.03bn.
This represented 17 percent of Nigeria’s total crude exports for the year according to the Nigerian National Petroleum Corporation, as quoted by OilPrice.com.
As Nigeria’s largest importer of crude oil, lockdowns in India’s major cities from the COVID-19 surge in April had ripple effects on Nigeria’s oil sales.
The NNPC was prompted to drop the official standard price of its main export streams, Bonny Light, Brass River, Erha, and Qua Iboe, by 61-62 cents per barrel below its April 2021 prices. They traded at $0.9, $0.8, $0.65, $0.97 per barrel respectively, below dated Brent, the international benchmark, as Oilprice.com showed.
India had been buying the not-too-light and not-too-heavy Nigerian crudes that suited its refiners.
Reuters reported that the Indian Oil Corporation’s owned refineries were operating at 95 percent capacity in April, down from 100 percent at the same time the previous month.
An official at the IOC was quoted as saying, “If cases continue to rise and curbs are intensified, we may see cuts in refinery runs and lower demand after a month.” Hundreds of seafarers risked being stuck at sea beyond the expiry of their contracts, a large independent crude ship owner reportedly told Bloomberg.
India reportedly bought more American and Canadian oil at the expense of Africa and the Middle East, reducing purchases from members of the Organisation of the Petroleum Exporting Countries to around 2.86 million barrels per day.
This squeezed the group’s share of imports to 72 percent from around 80 percent previously, as India’s refiners were diversifying purchases to boost margins, according to Reuters.
India also plans to increase local crude oil production and reduce import expenses as its population swells, according to Bloomberg.
A deregulation plan by the Narendra Modi-led government to boost national production to 40 million tonnes of crude oil by 2023/2024, an increase of almost eight million tonnes, had already been initiated.
According to Business Today, an Indian paper, the country currently imports 82 percent of its oil needs, which amounted to $87bn in 2019.
Invest Africa and DLA Piper Partner to Support ESG Best Practice in African Renewable Energy Projects
The global law firm, DLA Piper, has partnered with Invest Africa, the leading trade and investment platform for African markets, to support the development of ESG best practice in African renewable energy projects.
Clear Environmental, Social and Governance (ESG) targets and measurements have become an increasingly important part of fundraising as investors seek to align their portfolios with sustainable growth. For a continent boasting ample natural resources, this presents a significant opportunity for Africa’s green energy sector. However, renewable does not always equal sustainable and developing and articulating ESG metrics can pose a significant challenge to projects as they prepare investment rounds.
The project will assemble experts from the worlds of impact investment, development finance and law. Across a series of online meetings, participants will discuss strategies to improve ESG practices in African renewable projects from both a fundraising and operational perspective.
Amongst those speaking in the inaugural session on Thursday 13th May are Cathy Oxby, Chief Commercial Officer, Africa Greenco, Dr. Valeria Biurrun-Zaumm, Senior Investment Manager, DEG, Orli Arav, Managing Director – Facility For Energy Inclusion (FEI) – Lion’s Head Global Partners, Beatrice Nyabira, Partner, DLA Piper Africa, Kenya (IKM Advocates) and Natasha Luther-Jones, Partner, Global Co-Chair of Energy and Natural Resources, International Co-Head, Sustainability and ESG, DLA Piper.
Veronica Bolton-Smith, COO of Invest Africa said, “Africa is particularly vulnerable to the impact of climate change despite contributing very little to global emissions. As the price of renewables fall, they will form an ever more important part of Africa’s electrification. In this context, it is essential that projects be given the tools to apply best practice in ESG not only from an environmental perspective but also in terms of good governance, fair working conditions and contribution to social inclusion. I look forward to working closely with DLA Piper on this important topic.”
Natasha Luther-Jones, Global Co-Chair Energy and Natural Resources and International Co-Head Sustainability and ESG at DLA Piper also commented, “Climate change is one of the biggest challenges companies, and people, face today and when we look at its reduction – whether that be in how we power our devices, what we eat or how we dress, where we live or how we work – all roads come back to the need to increase the amount of accessible, and affordable, clean energy. However, renewable energy companies are not automatically sustainable as sustainability is a focus on all ESG factors, not just environmental. We know the need for renewable energy is only going to continue to rise, and therefore so will the number and size of renewable energy companies. The additional challenge is to make sure they are truly sustainable organisations and that’s what we’re excited about discussing during the webinar.”
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