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Economists, Manufacturers Criticise Dual Forex Rates

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  • Economists, Manufacturers Criticise Dual Forex Rates

Economists and manufacturers have joined the call for the abolition of the dual exchange rate policy currently being operated in Nigeria.

They say the present arrangement is a breeding ground for corruption and suggest floating of the naira so that everybody can buy the dollar at the same rate.

A professor of Economics at the University of Uyo, Leo Ukpong, advised against the practice of maintaining a dual forex exchange rate.

He said, “Dual exchange rate regime creates room for illegal profit-making by those who have access to buy at the lower (the CBN official rate) and turn around to sell at the high (parallel market) rate.

“This practice ends up increasing the cost of the FX to legitimate businesses that play by the rule; increases the cost of consumer goods to the larger population; causes the FX shortages due to hoarding; and distorts the true value of exchange rate.

“The CBN cannot design or implement any efficient or meaningful foreign exchange policy until we get rid of dual (or multiple) exchange rate regime.”

A Lagos-based leading manufacturer told our correspondent that the dual exchange rate was a very corrupt system that made millionaires out of a few Nigerians and impoverished many.

The manufacturer, who spoke on condition of anonymity, said the dual exchange rate regime was fraught with corruption.

“Since most people want to access forex at the official rate, there is usually a long queue that lasts for months, but you can avoid this by parting with a percentage of the money you want to access,” he said.

An economic strategist with the Manufacturers Association of Nigeria, Mr. Ambrose Oruche, supported the floating of the naira.

He said, “Allow naira to find its level. It will allow for more supply because there will be free entry and exit. More people will come into the market to trade. In the short run, there will be inflation but it will eventually ease off.

“All the efforts geared at protecting the naira can only have a short-term effect, it is not sustainable. The naira will still lose value in the long run while the cost of living for the ordinary man continues to go up.”

A former CBN governor and the Emir of Kano, Alhaji Muhammadu Sanusi, argued that no economy could thrive with dual/multiple forex rates.

A key operator in the manufacturing sector, Chief Eric Umeofia, accused the CBN of exploiting the dual forex regime to allocate forex to those he called cronies of the apex bank’s chiefs and importers of frozen fish while local manufacturers were forced to buy dollars at exorbitant black market rates.

He supported the claim with documents showing forex utilisation from one of the commercial banks.

A recent report by Bloomberg attributed the nation’s current woes to the dual forex regime, noting that it had refused to allow its currency to trade at its market value.

The report titled ‘A tale of two currencies: Egypt sets itself apart from Nigeria’, drew a comparison between Nigeria and Egypt, two countries that were in the same situation in early November, in search of dollars to revive their sinking economies as well as trying to curb rampant currency-trading on the black market.

According to the report, Egypt’s strategy was to ditch a currency peg, leaving its pound open to market forces.

It read in part, “Egypt is still short of dollars, but the situation is changing, and investors are gradually returning.

“Nigeria, in contrast, isn’t letting the naira trade at its market value, insisting that is the only way to protect the poor from a further surge in inflation, which is already at the highest level since 2005. Traders argue that this has left the currency overvalued and say they’ll avoid Nigerian local markets until it weakens.”

It added that Egypt’s strategy had caused the Egyptian pound to gain 16 per cent against the dollar even as the naira fell 40 per cent in value against the greenback.

The National Bureau of Statistics in its January report stated that the inflation rate had gone up to 18.72.

Currently, the prices of consumer goods, according to the Chairman, Ikeja Shop Owners’ Association, Mr. John Okonkwo, increase on a daily basis.

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.

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C & I Leasing Appoints Ugoji Lenin Ugoji as Group Managing Director/CEO

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Ugoji Lenin Ugoji

C & I Leasing Plc has appointed Mr. Ugoji Lenin Ugoji as the Group Managing Director and Chief Executive Officer following the retirement of Mr. Andrew Otike-Odibi on 31 of December 2021.

The company disclosed in a statement signed by Mbanugo Udenze & Co Company Secretary and seen by Investors King. Ugoji, the company’s chief operating officer, is now the Managing Director/CEO, effective 1 January 2022.

Ugoji Lenin Ugoji Profile

Ugoji holds a Bachelors’ Degree in Estate Management from the University of Lagos, and an MBA in Banking & Finance from the ESUT Business School, Enugu. He is also a Chartered Pension professional, and an associate of the Certified Pension Institute of Nigeria.

Ugoji joins C & I Leasing with over 20 years experience in Commercial/Investment Banking, Leasing and Asset Management.

His last assignment was with The Mellanby Trust Company, a Commodity focused Asset Management Company registered with the Securities & Exchange Commission (SEC), where he was a founding Director and the Chief Investment Officer responsible for directing the company’s Investment Portfolio structure for purposes of its corporate and individual clients.

Ugoji’s extensive experience in the Leasing Industry commenced in 2005 as a Pioneer member of the Aquila Capital Group where he served as the pioneer Group Head Treasury & Wealth Management. He was responsible for creating the Group’s, Equipment Leasing focused Funding and Investment structure, which was targeted at attracting Capital from Private Equity, Foreign Development Financial Institutions and Local sources.

From 2010 to 2015, he served as the pioneer Managing Director for ‘Aquila Asset Management Ltd’, a Management Buy-Out firm from the Aquila Group. Prior to his time at the Aquila Group, Ugoji worked at Continental Trust Bank (now UBA) and NAL Bank Plc (now Sterling Bank) in the Treasury, International Operations and Domestic operations groups respectively.

Ugoji is happily married with children. He is passionate about ideas creation, investment and deal structuring, and enjoys volunteering for laudable causes. When not at work or volunteering, he enjoys spending time with his family, reading, music and photography.

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C&I Leasing Appoints Cordros Registrars as its Registrar

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C&I Leasing - Investors King

C&I Leasing Plc, a Nigerian leading maritime company, has appointed Cordros Registrars Limited as its registrar for share registration and data management service provider.

The company disclosed this in a statement filed with the Nigerian Exchange Limited and obtained by Investors King.

Cordros Registrars Limited has now replaced Centurion Registrars Limited and takes over the Register of Members of C & I Leasing Plc effective 1st January, 2022.

The statement reads “C&I Leasing Plc hereby notifies Nigerian Exchange Limited (NGX), its shareholders and the investing public of the appointment of Cordros Registrars Limited as its REGISTRARS – SHARE REGISTRATION AND DATA MANAGEMENT SERVICE PROVIDER.

“Cordros Registrars Limited replaces Centurion Registrars Limited and takes over the Register of Members of C & I Leasing Plc effective 1st January, 2022.”

Speaking at a virtual press conference at the weekend, the Chief Executive Officer, C & I Leasing Plc, Ugoji Ugoji, revealed the company’s plans to explore opportunities in the digital space to improve its revenue despite the negative effects of the pandemic.

Explaining how the company planned to achieve this, he said by increasing and enhancing its collaboration and the creation of new business models to navigate the impact of the COVID-19 crisis, the company will remain more profitable and competitive in the industry.

He also stated that the company would continue to look at the existing businesses to identify areas of improvement.

“We must be able to adapt and manage the resources of the company to improve on our processes to reduce the cost of transactions and grow our topline revenue,” he said.

 

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Netflix Increases US, Canada Subscription Fees…Nigerian Subscribers To Suffer Same Fate

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With the increase in inflation rates and the unstable foreign exchange, Netflix is likely to hike its subscription fee in Nigeria.

This is following the latest increase in its subscription fee in the United States and Canada, effective immediately for new subscribers.

Usually, when the inflation rate rises, prices of goods and services also increases, and consequently, banks raise their interest rates as well to cope and maintain their profit margin.

In the U.S., subscribers to Netflix’s basic plan, which allows for one stream on one screen at a time and does not have HD streaming, will now be charged $9.99 a month, up from $8.99.

The standard plans, which allow for users to stream on two screens at the same time now costs $15.49 per month, an increase from $13.99, while premium plans have also increased to $19.99 a month.

Investors King gathered that this is the third time Netflix will raise its prices in three years and the first since October 2020 for streamers residing in the U.S. and Canada.

Presently in Nigeria, Netflix’s subscription rate ranges from about  3,300 to about 5,800 per month.

Investors King recalls that Netflix, in 2020, officially launched its presence in Nigeria and since its launch, the streaming company has dominated Nigeria’s relatively new video-on-demand market with some hit movies and web series like King of Boys, Òlòtūré, Citation, Lionheart, Namaste Wahala, among others.

Today, Netflix has over 151 million paying subscribers in more than 190 countries.

Meanwhile, the Federal Government of Nigeria is making plans to force international social network services and digital platforms to register and open offices in Nigeria.

This means that media services, social media platforms and digital streaming platforms like Netflix and the others must register and pay tax in Nigeria and register with the National Broadcasting Corporation (NBC).

This move, according to the government, is to ensure that all these platforms register with the NBC, apply for a broadcasting license and pay tax.

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