- Nigeria’s Forex Earnings Hit $24 Billion in Third Quarter 2016
The federal government aggregate foreign exchange (forex) inflow as at the third quarter of 2016 moved up remarkably to $24 billion, a member of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), Dr. Doyin Salami, has revealed.
This represents an increase by $8.67 billion when compared with the aggregate forex inflow into the economy of $15.33 billion recorded by the country in the second quarter of 2016, as indicated in the CBN’s economic report.
But Salami, who said this when he spoke on the outlook of the Nigerian economy in 2017, at the Redeemed Christian Church of God, King’s Court Parish, Victoria Island, Lagos, at the weekend, pointed out that the aforementioned amount of forex inflow recorded in the third quarter of last year was paltry, compared with an aggregate of $97 billion earned by the country in 2014.
“In 2014, Nigeria earned $97 billion from export revenue, $90 billion of that was oil. As of third quarter 2016, we were doing $24 billion. Now, even if you pro-rate it and add another $8 billion for the full year, that is just $32 billion and about a third of where we were in 2014.
“When you look at the numbers, foreign portfolio investment which was $16 billion in 2014, was down to less than $2 billion in 2016. So, the inflow of FX has reduced dramatically. On the supply side, inflows are down, but on the demand side, the pressure for forex is still high. That is one of the few challenges that this economy is facing,” Salami, who is a lecturer at the Lagos Business School (LBS), Pan-Atlantic University, explained.
He urged the federal government to restore confidence in the economy.
Salami, who stressed that the comments were his personal views and not that of the MPC added: “Nigeria in my view unwisely allowed herself to be exited from the JP Morgan Index. It was very unwise! Given that I sat in some of the meetings and listened to some of the comments, Nigeria really needs to understand that in the global market, it is whoever offers the best terms and best securities that gets it. My view is that currently, Nigeria’s policy stance is not aligned to attract capital flows. I don’t want to be sentimental.
“In terms of capital flows, if we can encourage confidence in Nigeria, in the policy making of the Nigerian government, then we would be able to attract capital flows. But if we cannot, we would continue this way. 2017 would be driven by the resource allocation mechanism to be adopted by the country. Nigeria has one of the best FX policy that was introduced in June last year, it is just that we haven’t implemented it yet.
“As a nation, how we come out of recession is as important as staying out of recession. If we come out of it in a manner that sends us back to it two years down the line, because what we did to come out of it was unsustainable, that would be too bad. If we come out of it in the right way, it is going to be gradual. So, for me I see growth around one and two per cent for 2017. My expectation for inflation in 2017 is going to be around 13 per cent. My hope is that the central bank would be a bit more consistent because last year, those of us responsible for monetary policy managed to speak from both sides of our mouths.”
Furthermore, he pointed out that because of the structure of the Nigerian economy, events in the global economy would always influence activities in the domestic market.
According to him, the international environment is no “longer set fair for Nigeria,” saying that part of it was our fault and partly because of the fact that things have changed.
“Donald Trump takes over as the U.S. President at the end of next week and in terms of his economics, it doesn’t portend the best of time for Nigeria. And this is in three dimensions. Firstly, taxes would reduce and US government spending is going to rise. How does that concern Nigeria? It does concern Nigeria because that means US deficit is likely to rise and US interest rates are likely to rise.
“So, on top of what we were expecting, we are also expecting further rise in US interest rates. If US interest rates rise and we are borrowing internationally, it would be costly. If US interest rates rises, the pressure of further foreign portfolio investments coming in here reduces, the pressure for outflows for Nigeria and other emerging economies increases. So, any which way you look at it is a bit of a problem. A stronger dollar is also not good for oil prices. That is because a stronger dollar makes it more expensive and demand to drop.
“As far as oil is concerned, we have seen a little rally recently and my expectation is that prices would move in a range between $45 and $60 per barrel. Honestly, $60 per barrel is rather on the high side. But three things are Nigeria’s challenges as far as oil is concerned: If the Niger Delta is not calm, the likelihood that we would get two million barrels per day of oil is not bright.
“So, we need a calm Delta. And my sense is that the government seems to be re-engaging. But there are two other challenges which are beyond our control. The first is the glut in the crude oil market may strengthen and shale. But we cannot continue to depend on the external environment to support Nigeria.”
Egypt Leads Nigeria, South Africa in Foreign Direct Investment
The United Nations Trade Association has Nigeria recorded a total of $2.6 billion in Foreign Direct Investment (FDI) in 2020, below the $3.3 billion posted in the preceeding year.
South Africa, Africa’s most industrialised nation, reported $2.5 billion during the same year, slightly below Africa’s largest economy and 50 percent below the $4.6 billion attracted a year earlier.
The report also noted that Africa recorded a total of $38 billion FDI in the same year, representing a 18 percent decline from the $46 billion posted in the corresponding year of 2019.
However, Egypt led Nigeria and South Africa with $5.5 billion FDI, an increase of 38 percent from the preceeding year.
The report read in part, “FDI flows to Africa declined by 18% to an estimated $38 billion, from $46 billion in 2019. Greenfield project announcements, an indication of future FDI trends, fell 63% to $28 billion, from $77 billion in 2019. The pandemic’s negative impact on FDI was amplified by low prices of and low demand for commodities.”
UNCTAD also noted that global foreign direct investment declined by 42 percent to an estimated $859 billion, down from $1.5 trillion in 2019.
“The decline was concentrated in developed countries, where FDI flows fell by 69 percent to an estimated $229 billion. Flows to Europe dried up completely to -4 billion (including large negative flows in several countries). A sharp decrease was also recorded in the United States (-49%) to $134 billion.”
FG to Partly Fund Six Rail Projects Connecting All Regions
The Federal Government will pay a total sum of N71 billion to partly fund six rail projects connecting all regions of the country.
In the report obtained from the Federal Ministry of Finance, Budget and National Planning, the six rail projects marked for development this year are Lagos-Kano rail line (ongoing), Calabar-Lagos (ongoing), and Ajaokuta-Itakpe-Aladja (Warri).
Others are the Port Harcourt-Maiduguri railway, the new Kano-Katsina-Jibiya-Maradi line in Niger Republic and the Abuja-Itakpe and Aladja-Warri Port and refinery/Warri new harbour.
The Buhari administration will also spend N15.1 billion on the development of safety and security of critical projects, airport certification, runway construction, terminal building, among others in the aviation sector in 2021.
Last week, Rotimi Amaechi, Minister of Transportation, said the Lagos-Kano line would be connected from the Ibadan end of the Lagos-Ibadan railway and would cost $5.3 billion.
“We are waiting for the Chinese government and bank to approve the $5.3bn to construct the Ibadan-Kano. What was approved a year ago was the contract,” the minister said.
He added, “The moment I announced that the Federal Government had awarded a contract of $5.3bn to CCECC (China Civil Engineering and Construction Corporation) to construct Ibadan-Kano, people assumed the money had come in; no.
“We have not got the money, which is a year after we applied for the loan. We have almost finished the one of Lagos-Ibadan. If we don’t get the loan now, we can’t commence.”
FG Launches E-ticketing Platform to Deepen Train Usage and Convenience
In a bid to improve the usage and enhance the convenience of train transport in Nigeria, the Federal Government on Thursday announced the launching of the Electronic Ticketing platform for the Kaduna-Abuja rail services.
The N900 million E-ticketing platform was introduced by the Minister of Transportation, Chibuike R. Amaechi, and the Nigerian Railway Corporation.
Amaechi said the new platform would improve efficiency, promote accountability, reduce leakage and enhance economic growth, as well as save time.
The E-ticketing platform was a Public-Private Partnership project done in conjunction with Secure ID Solutions, who provide and would manage the system for 10 years in an effort to recoup its investment before the Nigerian Railway Corporation take charge.
Kofo Akinkugbe, the Chief Executive Officer, Secure ID Solutions, said as the new E-platform issued 25,000 tickets after a successful pilot test on Thursday.
Potential Travelers can book via three ways:
1. Mobile app
3. POS or Cash at the station
A validator would be used to scan the ticket barcode to ascertain its authenticity before boarding.
Amaechi further announced that self-service ticket vending machines at various train stations would be introduced soon.
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