In an economy as vibrant and fragile as Nigeria, financial team is pivotal to how the nation strike a balance between global and national economics, and use that as the basis for formulating both monetary and fiscal policies. This is something Nigeria’s financial team has failed to do since the global oil glut started.
When global oil prices plunged and erased over 70 percent of Nigeria’s foreign revenue. Instead of the central bank to allay national fear by formulating monetary policy to stimulate the economy from within and assure the nation of its readiness to do whatever it takes to ensure things does not deteriorate further like the Bank of England governor Mark Carney did immediately the Britons voted to leave the European Union on June 23, the institution spent the first two months of this administration denying the impact of the shortfall on the economy, only to banned manufacturers of 40-items from accessing forex at official rate on June 23, 2015 as a measure to rescue itself from lack of forex, but end up weakening the manufacturing sector as most manufacturers had to lay off when they couldn’t source for raw materials, leading to high unemployment rate and even higher foreign exchange rates.
Subsequently, this created unnecessary fear and alerted foreign investors to the level of their technical know-how, hence the capital flights that follows and the persistent pressure from both the International Monetary Fund and analysts to devalue the Naira so as to accommodate the difference created by a drop in global oil prices. Again, the federal government, central bank, ministry of finance and monetary policy committee (financial team) refuted all plead to devalue the Nigerian Naira and instead increased interest rates by 100 basis points to 12 percent to boost capital importation, ease the liquidity issue unfolding at the interbank market as at the time and reduce capital flight simultaneously. Not only does this monetary policy fail, but it further exposed their lack of experience in managing financial crisis.
However, one would think the Nigerian Monetary Policy Committee that had voted severally on rates since then would thought it necessary to lower interest rates and allow real investors access to cheaper loans to create jobs needed to attack high unemployment rate, increase consumer spending and fight economic gridlock, while the CBN concentrate on how to increase forex into the country by going after institutions like PayPal Inc., that bar Nigerians from withdrawing funds yet declared Nigeria as the third highest mobile shopper in the world. But no, the Monetary Policy Committee led by the Governor of the Central Bank of Nigeria Godwin Emefiele left rates unchanged.
Again, on June 20 when the institution exhausted its external reserves and was forced to introduce forex flexibility policy, the institution failed to take into consideration global economics “the U.K. and the European Union referendum of June 23”. Even though, Nigeria is a petrol-dollar economy and grossly depend on the outcome of the referendum like every crude oil dependent economies, the CBN neglected the obvious and roll out forex policy three days to the referendum to attract global investors that were perturbed by the high global uncertainty created by the referendum, and in fact forced the “BIG” US Federal Reserve to rescind on its rate decision pending the outcome of the vote.
As expected that too failed, with nothing left in its arsenal to attack the situation, the CBN resolved to a more radical move by increasing interest rates by 200 basis points to 14 percent in an economy with pervasive layoff, low consumer spending and weak manufacturing sector — all in an effort to lure same global investors that have refused to invest in Naira’s risky assets, especially when global risks and uncertainty heightened by Brexit jumped to the level last seen in 2009. This was even made worse in Nigeria with the recurrent militant attacks that has reduced oil production by more than 600,000 barrels per day, high unemployment rate (13.3%), high inflation rate (17.1) and negative economic growth rate (-2.06).
The question is why chasing foreign investors? Why not stimulate the economy domestically by lowering interest rates and ensure commercial banks pass the difference to customers, then go after corporations like PayPal Inc., to complement the 11 newly licensed international money transfer operators? Here is the logic, if the lack of liquidity in the forex market is as a result of low business confidence and high uncertainty associated with Naira assets, why not restore business confidence by addressing the nation and the world on the situation of things and the steps the central bank planned to take to resolve these issues going forward? This does not merely work for the U.K after Brexit but it has restored the economy to almost normalcy barely two months after the referendum. Both global and local investors need a clear cut policy to make informed investment decisions. The CBN will not lure investors without a blueprint. If this is done, it will not only boost business confidence but also help lower high foreign exchange rates and revamp the manufacturing sector.
Envoy Considers Establishment Of Chinese Banks In Nigeria To Boost Economy
Mr Cui Jianchun, the Chinese Ambassador to Nigeria, says he is in talks with Chinese owned Banks to establish operations in Nigeria.
This, the envoy said, is to boost Nigeria’s economy and expand trade relations between the two nations.
Cui made this known on Tuesday in Abuja while addressing Journalists during the commemoration of the 2021 Chinese Moon Festival and China-Nigeria Cultural week.
According to Cui, the establishment of Chinese Banks in Nigeria will also be one of the key areas of discussion during the China-Nigeria Binational Committee meeting, which he is also pushing for the establishment.
He said that an efficient financial institution was a key driver to achieving a strong economy, one Nigeria can learn from China’s experience.
“Before my departure from Beijing to Abuja, I talked to several banks in China. When you list the World’s 10 big banks, six are in China.
“The Banking sector is very important, because, without money, we cannot build our industries.
“What I am thinking here is best to talk to the governor of Central Bank and how we can allow the Chinese Banks to run office here and now, they are doing the feasibility studies on that.
“I am working hard that in the Bi-national meeting, I hope we can make a big decision and give a big push to let the banking industry and insurance industry because financial integration and institutions are key.
“If you go to China, you will find our banking industry is very powerful, not only for business but the change in the way of life.
“Because of the COVID-19, the Banking Industry is a little hesitant, but I told them Nigeria has a lot of human resources and as long as we work together, we can do big things.
“And that is why it is important to invest in the banking industry, to solve this problem,” Cui said.
Extolling the extant China-Nigeria trade relations, Cui noted that the volume of trade between China and Nigeria is nearly 20 billion US Dollars, with an increase from 2020’s 19.2 billion dollars.
Cui said the Chinese economy is restoring to the normal post-COVID-19 pandemic and both governments are working hard on how to expand imports and exports.
Speaking on the event, Cui said the China’s moon festival is a very important and significant one for China as it symbolises family reunion, national peace and social harmony.
The envoy said the 2021 celebration is also a special one as it coincides with the 50th Anniversary of China-Nigeria’s bilateral relations.
He said that both countries also share Oct. 1 as their National Days.
He said it is also on that note that the Chinese Embassy is honouring 50 Nigerian employees of Chinese Companies in Nigeria for their outstanding performance and contribution to strengthening diplomatic ties.
Dr Ifeoma Anyanwutaku, the Permanent Secretary, Federal Ministry of Information and Culture, also lauded the Nigeria-China relations.
She said the relations had recorded great successes over the past five decades.
“The five decades of co-operation had since witnessed several cultural activities and exchanges in the spheres of arts, music, dance, exhibition, cultural administration, training and capacity building of cultural officers.
“And recently, the development of Cultural Industries centres in Nigeria, among others.
“I must add that China, through the youth-oriented programmes such as the photos competition and similar activities in the past is surely a dependable ally.
“In redirecting the energy and mind of our youth to creative ventures, thereby furthering the Nigerian government’s policy of lifting a hundred million Nigerians out of poverty in the next 10 years”, Anyanwukatu said. (NAN)
Lagos Prohibits Open Cattle Grazing, Sanwo-Olu Signs Bill Into Law
Lagos State Governor Babajide Sanwo-Olu, on Monday, assented to the bill prohibiting Open Cattle Grazing and Trespass of Cattle on Land, signing the legislation into law 11 days after it was unanimously passed by the State House of Assembly and transmitted to the Executive arm for authorisation.
By implication, it is now criminal in Lagos for cattle rearers to occupy unapproved public areas and private land with their livestock for grazing. The law also prohibits the act of moving cattle round public places by herders.
The signing of the anti-open grazing law by the Governor followed the decision of Southern Governors’ Forum last August, setting the September deadline to pass the law across member States.
There have been crises witnessed in some States, resulting from alleged open grazing.
Although farmer-herder crisis is not pronounced in Lagos, the anti-open grazing law is expected to prevent the spillover of the menace into the State.
Sanwo-Olu, who assented to the bill during the State’s Executive Council meeting in Alausa, directed the security agencies to swing immediately into action and enforce provisions of the law.
He said: “By the powers vested in me as the Governor of Lagos State, I am signing the bill on Open Cattle Grazing and Trespass of Cattle on Land into law to prohibit issues associated with open grazing of livestock.”
The Governor also signed legislation transforming the Lagos State Domestic and Sexual Violence Response Team (DSVRT) into a full-blown agency.
The development coincided with the commemorative month dedicated to raising awareness on gender-based violence in the State. The Governor and members of the State’s cabinet wore attire with purple shades to support the campaign against sexual violence.
The DSVRT legislation provides for the establishment of Sexual Offenders’ Register that would help the State efficiently tackle violations in the communities.
After signing the law, Sanwo-Olu said: “Raising awareness about domestic and sexual violence is an important piece of working to end the cycle of violence. It is important to reiterate the State Government’s zero tolerance to all forms of sexual and gender-based violence. We will not rest on our oars until the menace is reduced to the barest minimum in Lagos.”
The Governor appointed Mrs. Titilola Vivour-Adeniyi as the Executive Secretary of the new agency.
Vivour-Adeniyi was the coordinator of the response team before the legislation was signed into law.
ECOWAS Imposes Sanctions on Guinea Junta Over Coups
West African leaders have decided to impose travel bans and freeze the financial assets of members of Guinea’s ruling junta and their families after a coup more than a week ago.
The decisions were announced Thursday after an Extraordinary Summit on Guinea in Ghana’s capital, Accra. Mediators with the regional group had traveled to Guinea to meet with junta leaders and check on the condition of deposed President Alpha Conde.
ECOWAS president Jean Claude Brou said the West African leaders have also insisted that there should be no “need for very long transition for the country to return to democratic order.”
The targeted sanctions come after Guinea’s coup leaders set a number of conditions for releasing Conde, according to the foreign minister of Ghana.
ECOWAS had already warned it will impose penalties on the junta in Guinea unless it immediately releases Conde, who has been held at an undisclosed location since being detained during the Sept. 5 coup in Conakry.
“We are coming to address a burning issue in the region,” said Ghana’s President Nana Addo Dankwa Akufo-Addo, the current chair of the regional bloc, ahead of the summit. He was joined by presidents or high-ranking officials from eight of the other 15 ECOWAS countries.
Members of the ECOWAS delegation that visited Conakry after the coup presented their reports at Thursday’s meeting, said Ghanaian Foreign Minister Shirley Ayorkor Botchway. The junta has set a number of conditions for complying with the demands of regional mediators, she said but declined to disclose what they are.
The delegation has spoken with Conde’s doctor “who ascertained that indeed physically, he’s very well,” she said. However, she said, the ex-president is still coming to terms with the fact that his government has been toppled after more than a decade in power.
“For anybody who has gone through such a traumatic experience like he did, mentally, it’s not the best, not to say that mentally we found anything wrong, but he was quite shocked; he’s still in a state of shock,” she added.
Meanwhile, in Conakry, junta leaders were also set to meet with mining company representatives on the third day of a special summit to chart Guinea’s political future. Junta leader Col. Mamady Doumbouya has sought to reassure the country’s most vital economic sector that the political changes will not impact existing mining projects in the country, which has the world’s largest reserves of bauxite.
Guinea’s coup leaders have yet to make public their proposed timeframe for handing over power to a civilian transitional government, nor have they outlined how quickly new elections can be organized.
Conde had sparked violent street demonstrations last year after he pushed for a constitutional referendum that he used to justify running for a third term, saying term limits no longer applied to him. He ultimately won another five years in office last October, only to be toppled by the coup 10 months later.
At the time he came to power in 2010, he was Guinea’s first democratically elected leader since independence from France in 1958.
The regional bloc also planned to tackle concerns over whether a second member state, Mali, is making enough progress toward a return to democracy more than a year after a military takeover there.
In Mali, the ruling junta led by Col. Assimi Goita has committed to holding new elections by February 2022, though mediators who recently visited have expressed concern about whether that deadline now can be met.
Goita overthrew Mali’s president in August 2020 and then agreed to a civilian transitional government and an 18-month timeframe for holding a vote. However, only nine months after the first coup he effectively staged a second one, firing the civilian interim leaders and ultimately naming himself as president of the transition.
ECOWAS has not reinstated Mali’s membership in the bloc, marking the first time since 2012 that two of the 15 member states are suspended concurrently.
ECOWAS President Brou said there was the need to revisit the organization’s 2001 protocol on good governance “because a lot of things have changed or improved.”
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