- CBN Gov, Atedo Peterside Clash Over Forex Policy
The Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele; and the Chairman, Stanbic IBTC Bank Plc, Mr. Atedo Peterside, on Thursday disagreed over whether the flexible foreign exchange policy of the apex bank had been able to address the foreign exchange challenges in the country or not.
They both spoke in Abuja at the 14th Daily Trust Dialogue, which had as its theme: ‘Beyond recession: Towards a resilient economy’.
While Peterside claimed that the forex and interest rate policies of the apex bank had not achieved the needed impact owing to the fact that they were not market-determined, Emefiele said that the policies were not made in isolation.
The Stanbic IBTC chairman said that currently, there were 11 major steps that the government needed to take so as to address the current economic woes.
They steps, according to him, include correcting the imbalance in the foreign exchange policy, making peace with the Niger Delta militants, sale of some national assets, deregulation of the entire downstream petroleum sector, reduction of the bloated civil service, and making states economically viable.
Others are addressing deficit in infrastructure, improving the nation’s legal system, respect for rule of law by the government, restoring business confidence and appointment of directors to the boards of every regulatory agency of government.
He said, “I know that there are those who will criticise me for saying that the Federal Government’s economic policy direction remains unclear. My response to them is that the most significant economic reforms embraced so far by government came about rather reluctantly.
“The Central Bank of Nigeria should accept that its foreign exchange and demand management policies have failed. The more restrictions they have placed on forex repatriation, the less likely it has become that badly needed forex inflows from portfolio investors, foreign direct investors and Nigerians will pick up.”
He added, “The CBN has inadvertently created a siege mentality, thereby making privileged access to its forex allocations, which are reserved largely for the politically well-connected, the best investment game in town.
“Furthermore, the directive to banks to allocate 60 per cent of forex to manufacturers that account for only 10 per cent of the Gross Domestic Product has exacerbated an already bad supply situation.
“Forty per cent is too small to accommodate the rest of the economy and so all other sectors have been crippled, including the service sector, which accounts for over 50 per cent of the GDP.
“This has unleashed panic, thereby sending the parallel market to the high heavens. Forex inflows disappeared partly because of the uncertainty surrounding the ability to repatriate interest/dividends through an overly restrictive 40 per cent window.
“There is nothing magical about 60 per cent or 40 per cent. It has no scientific basis. Meanwhile, it has huge adverse distortionary implications on the supply side. The end result has been our mind-boggling and widely divergent multiple exchange rates, which have spooked investors who have taken fright and also taken flight.
“Sadly, we have effectively ‘shot ourselves in the foot’ by taking unsustainable actions that crippled both forex inflows and the service sector, whilst favouring even those manufacturers who own ‘zombie’ industries that are horribly import-dependent.”
Peterside restated his earlier position on the sale of some national assets, adding that they could generate between $15bn and $20bn in the next two years if their sale was planned carefully.
He said those advising the government to rely on debt alone to take the country out of the present low foreign exchange trap did not mean well for the nation, adding that such a move was a high risk strategy that should be rejected.
Peterside said, “Our economy is underperforming because, among other things, it is caught up in a low foreign exchange trap. Borrowing alone is not and can never be a panacea.
“Indeed, borrowing without instituting necessary and badly needed economic and structural reforms is akin to suicide. Those who are canvassing for more foreign debt simply because our debt to GDP ratio is low are overlooking the fact that our debt service ratios are already high.
“Our debt service ratios are high because our tax to GDP ratio at six per cent is exceedingly poor. Relying on debt alone to get us out of the present low foreign exchange trap is, therefore, a high risk strategy. I consider it to be ill-advised.”
Responding to the issues raised by Peterside, the CBN governor said the priority of the apex bank now was on Nigerians who wanted to import raw materials for the purpose of manufacturing.
Emefiele said, “Our priority today will be Nigerian masses, Nigerians and no other person. Within the limited resources at our disposal, we will continue to give emphasis to those who want to import raw materials.
“We will give emphasis to those who want to employ plants and equipment that will help this country. We will direct support and emphasis to those who are going into agriculture, who are importing agricultural raw materials and implements because we love our country.
“Mr. Atedo Peterside has raised 11 points, which I will say some are contestable and we disagree with some of them. But we will look at them, especially those that affect the central bank.”
The apex bank boss added, “But it is very important that when you stand and talk, it is always good for you to come from a standpoint where you ask those who have made the policies why they have made the policies.
“Policies are not made in isolation. They are made because certain things have happened and they are made because there is an objective in mind, and they are made to ensure that those objectives are achieved.”
Despite COVID-19, FG Realised N1.53 Trillion from Value Added Tax in 2020
The Federal Government of Nigeria has started seeing the positive effect of series of policy adjustments made to up the nation’s revenue and gradually move away from unstable oil revenue.
Nigeria generated N1.53 trillion from Value Added Tax (VAT) in 2020, an increase of 29.3 percent when compared to the N1.18 trillion posted in 2019, the National Bureau of Statistics (NBS) stated in its latest report.
According to NBS, VAT rose by 38.2 percent when compared to N1.11 trillion filed in 2018.
Breaking down the report, professional services contributed N162.32 billion during the period under review, This was followed by the manufacturing sectors with N154.15 billion.
Accordingly, non-import VAT realised expanded by 30.5 percent to N763.01 billion in 2020, against N584.6 billion in 2019.
Non-import foreign VAT grew by 17 percent from N359.5 billion in 2019 to N420.4 billion in 2020.
As expected, import VAT jumped by 44,6 percent from N240.5 billion filed in 2019 to N347.7 billion in 2020.
Despite lockdown and weak economic activities, the Federal Government through a 50 percent increment in VAT from 5 percent to 7.5 percent was able to up VAT revenue by 29.3 percent.
Julius Berger Plc Pre-tax Profit Decline by 30.7 Percent in Q4, 2020
Julius Berger Plc posted a 30.65 percent decline in pre-tax profit to N5.12 billion for the final quarter of 2020.
In the financial statements released on Tuesday, the leading construction company, reported N74.04 billion in revenue in the fourth quarter, an increase of 2.43 percent when compared to N72.29 billion posted in the same period of 2019.
Julius Berger Key Financial Highlights Q4, 2020
- Nigeria’s revenue expanded by 4.21 percent year-on-year to N72.30 billion.
- While Europe & Asia revenue dipped by 40.07 percent year-on-year to N1.74 billion.
- Similarly, revenue from building works depreciated by 56.37 percent to N10.72 billion.
- However, revenue from civil works rose by 35.38 percent from the corresponding period to N55.8 billion.
- Services added N7.54 billion revenue, representing an increase of 15.84 percent year-on-year.
- Cost of sales grew by 13.19 percent year on year to N60.1 billion.
- Julius Berger recorded other gains/losses of N83.89 million.
- The construction company grew investment income to N142.79 million.
- Finance costs jumped by a whopping 388.99 percent year-on-year to N1.79 billion.
- Earnings Per Share rose by 19.76 percent year on year to N3.94.
Board of UBA Approves Financial Statements, Dividend Payment for 2020
The Board of United Bank for Africa Plc has approved the Group Audited Consolidated and Separate Financial Statements and final dividend for the year ended December 31, 2020.
The bank stated in a statement signed by Bili A. Odum, Group Company Secretary.
It said “Please refer to the announcement dated January 12, 2021 which notified the Nigerian Stock Exchange and the investing public of the Board Meeting of United Bank for Africa Plc.
“Please be informed that the Board of United Bank for Africa Plc at its meeting which held on Tuesday, January 26, 2021 considered and approved the Group Audited Consolidated & Separate Financial Statements for the year ended December 31, 2020 and payment of a final dividend, subject to the approval of the Central Bank of Nigeria.
“Further to the above, kindly be advised that the Nigerian Stock Exchange and the investing public would be immediately notified upon approval of the Group Audited Consolidated & Separate Financial Statements for the year ended December 31, 2020 by the Central Bank of Nigeria.”
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