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FG Urged to Boost Domestic Production of Goods

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  • FG Urged to Boost Domestic Production of Goods

The federal government has been advised to implement policies that would help strengthen domestic production of goods and services.

An economic analyst and Head of Banking and Finance Department at the Nasarawa State University, Dr. Uche Uwaleke, said this while delivering a paper at a seminar organised by the Central Bank of Nigeria for financial journalists in Sokoto tuesday. He pointed out that the import-dependent structure of the Nigerian economy had led to the depletion the nation’s foreign exchange reserves, fuelled inflation, depressed growth and created unemployment.

The present situation of the Nigerian economy, he added, provides an opportunity to look inward in a bid to trigger economic growth and development.

“In order to boost the economy, the current demand management which involves forex access restrictions of items that can be produced locally, should be contained. I am not saying that the policy should be kept forever, but we should sustain it until we get out of recession. If our reserves get to a comfort zone of about $32 billion, then we can begin to think of how to relax the policy,” he added.

He urged the CBN, through its development finance function, to identify certain goods that can be produced locally and provide incentives for SMEs to be able to produce locally.

In addition, Uwaleke charged federal government to ensure that the proceeds of the Eurobond id judiciously utilised as investors are more concerned about the interest they would get on their investments more than what the investments was used for. Uwaleke said the Nigerian Eurobond was oversubscribed despite downgrades by rating agencies because investors saw a better yeild as opposed to what they would get in European markets.

Uwaleke said Nigeria was due to repay the $500 million Eurobond it raised in 2013 next year.

“I looked at the budget implementation report starting from 2013 up till now and the latest budget implementation reports on the website of the budget office is first quarter of 2016, and I cannot place my finger on what was done with the Eurobond that was issued in 2013 which will have to repay next year.

“We can’t trace it. The $500 million we did was just meant to test the world market. But again we need to see what it was used for.”

He also noted that the cost of the latest $1 billion Eurobond issued by the country was high.

“If we didn’t have a reserve, this Eurobond outing wouldn’t have been a success because all those investors are looking at your reserves” he stated, even as he urged the country to focus more on accumulating its reserves before deciding to fully float the currency.

According to him, Nigeria needs a minimum of $32 billion in reserves which will be comfortably enough for seven months of imports before it floats the currency. Querying the school of thought that says the CBN should allow the market determine the value of the naira, he said the supply of forex was yet to be enough to leave the currency to market forces.

He charged the monetary authorities not to succumb to pressure saying Egypt which succumbed to pressure of free-float its currency, has seen its currency depreciate more than envisaged.

“If we don’t have this $32 billion, we shouldn’t be thinking of floating the currency. Nigeria needs a minimum of $32 billion to be regarded as comfortable and that is enough to finance 7 months of funding. So if we don’t have this $32 billion, we shouldn’t be thinking of floating the currency.”

Uwaleke added: “Egypt was advised not to float the currency until they got to $25 billion reserve but because Egypt was pressured and in a hurry to get $12 billion IMF loan they did the currency float much earlier and they have now seen the outcome. So when people say Nigeria should float, why don’t we look at what happened elsewhere.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Guinness Nigeria Postpones Spirits Importation Exit, Extends Deal with Diageo

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Guinness Nigeria Plc has announced a delay in its plan to halt the importation of spirits as it extended its agreement with multinational alcoholic beverage company Diageo until 2025.

The decision, communicated through a corporate notice filed with the Nigerian Exchange Limited on Tuesday, cited a longer-than-expected transition period for separating its business from Diageo’s.

Initially slated for discontinuation in April 2024, the importation of premium spirits like Johnnie Walker, Singleton, Baileys, and others under the 2016 sale and distribution agreement with Diageo will now continue for an additional year.

The extension comes as the process of business separation between Guinness Nigeria, a subsidiary of Diageo, and Diageo itself faces unexpected delays.

In October, Guinness Nigeria had announced plans to cease importing spirits from Diageo, a move aimed at reducing its foreign exchange requirements.

However, the separation process has encountered unforeseen hurdles, necessitating the extension of the importation agreement.

The notice, signed by the company’s Legal Director/Company Secretary, Abidemi Ademola, highlighted the ongoing efforts by Guinness Nigeria and Diageo to implement the separation, originally scheduled for completion by April 2024.

The extension underscores the complexity of disentangling the businesses and ensuring a smooth transition.

Guinness Nigeria reaffirmed its commitment to the long-term growth strategy, aligning with Diageo’s decision to establish a new, wholly-owned spirits-focused business.

Despite the delay, both companies remain dedicated to managing the importation and distribution of international premium spirits in West and Central Africa, with Nigeria as a key hub.

The postponement comes amid challenges faced by Guinness Nigeria, including significant exchange rate losses, which amounted to N49 billion in the 2023 half-year operations.

Despite these setbacks, the company remains optimistic about its future prospects in the Nigerian market.

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Private Sector Warns: Interest Rate Hike to Trigger Job Cuts and Inflation Surge

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As the Central Bank of Nigeria (CBN) announced a hike in the Monetary Policy Rate (MPR) from 22.75% to 24.75%, concerns have been raised by the private sector regarding the potential ramifications on job stability and inflationary pressures.

The move, aimed at curbing inflation and stabilizing the exchange rate, has prompted apprehension among business operators who fear adverse effects on the economy.

Representatives from the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Nigerian Association of Small Scale Industrialists have voiced their worries over the increased difficulty in accessing affordable credit.

They argue that the higher interest rates will impede the private sector’s ability to borrow funds for expansion and operational activities.

This, they fear, could lead to a reduction in business investments and subsequently result in widespread job cuts across various sectors.

The Lagos Chamber of Commerce and Industry (LCCI) acknowledged the necessity of the interest rate hike but emphasized the potential negative consequences it may bring.

While describing it as a “price businesses would have to pay,” the LCCI highlighted the current fragility of the economy, exacerbated by various policy missteps.

They cautioned that the increased cost of borrowing could stifle entrepreneurial activities and discourage expansion plans critical for economic growth and job creation.

Experts have echoed these concerns, warning that the tightening monetary conditions could exacerbate inflationary pressures and hinder economic recovery efforts.

With inflation already soaring at 31.70%, the rate hike could further fuel price hikes, especially in essential goods and services, thus eroding the purchasing power of consumers.

However, CBN Governor Yemi Cardoso defended the decision, citing the imperative to address current inflationary pressures and ensure sustained exchange rate stability.

He emphasized the need to restore the purchasing power of ordinary Nigerians and expressed confidence that the economy would stabilize by the end of the year.

Despite assurances from the CBN, stakeholders remain cautious, calling for a more nuanced approach that balances the need for price stability with the imperative of fostering economic growth and job creation.

As businesses brace for the impact of the interest rate hike, all eyes are on the evolving economic landscape and the measures taken to mitigate its effects on livelihoods and inflation.

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Breaking Barriers: Transcorp Hotels CEO Shares Journey from Crisis to Success

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Dupe Olusola

Dupe Olusola, the Managing Director/CEO of Transcorp Hotels Plc, reflects on her remarkable journey from navigating the depths of a global pandemic to achieving unprecedented success in the hospitality industry.

Appointed in March 2020, amidst the onset of the COVID-19 pandemic, Olusola found herself at the helm of a company grappling with the severe economic fallout and operational challenges inflicted by the crisis.

Faced with a drop in occupancy rates from 70% to a mere 5%, Olusola and her team were confronted with the daunting task of steering Transcorp Hotels through uncharted waters.

Undeterred by the adversity, they embarked on a journey of transformation, leveraging creativity and resilience to navigate the turbulent landscape.

Implementing innovative strategies such as introducing drive-through cinemas, setting up on-site COVID-19 testing facilities, and enhancing take-away services, Transcorp Hotels adapted to meet the evolving needs of its guests and ensure continuity amidst the crisis.

Embracing disruption as a catalyst for growth, Olusola fostered a culture of collaboration and teamwork, rallying her colleagues to overcome obstacles and embrace change.

Through unwavering determination and a commitment to excellence, Transcorp Hotels emerged from the pandemic stronger than ever, breaking profit and revenue records year after year.

“It’s indeed been a great opportunity to learn and relearn, to lead and to grow. When you see success stories, remember it’s a journey with twists, turns, ups and downs but in the end, it will all be okay”, she said.

Olusola’s leadership exemplifies the power of adaptability and perseverance, inspiring her team to transcend limitations and chart a course towards unprecedented success.

As Transcorp Hotels continues to flourish under her stewardship, Olusola remains steadfast in her dedication to driving innovation, fostering growth, and breaking barriers in the hospitality industry.

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