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Economy

Recession Erases N5, N10 Values in Market

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  • Recession Erases N5, N10 Values in Market

Some of the nation’s currencies may soon be out of circulation if economic managers fail in their efforts to tame rising inflation, as increasing price of goods occasioned by higher production costs have taken its toll on the value of some legal tenders.

Already, an investigation across several markets has shown that besides peasant farmers in the rural area who give away their produce at lesser prices, it is difficult to get any item that can be bought at N5, while only few are bought at a few pieces for N20.

The development is now calling to question the rationale for continued printing of the denominations, which is currently assessed as excess in circulation, when there is none or few items available that they can buy, as well as the need for commodity price control and management.

Government’s inability to address these concerns portends danger for consumers as the cost of living continues to rise amidst high inflation, even when salaries remain stagnant with many Nigerians already jobless due to a prolonged recession that has left many operators in the real and services sectors in a limbo.

Like the antecedents— N1 and N2, the low denominations now like N5, N10 and N20 notes are gradually losing their value, as consumers can no longer tender them for an exchange in the market. Indeed, Nigeria has been saddled with a financial crisis in the last one year following the drop in oil prices, monetary policy reforms and uncertainty, which decimated foreign exchange inflows and further plunged the nation into recession.

Executive Director, Union Capital Markets Limited, EgieAkpata, said that from the point of cost, the development portends waste of resources to print denominations that can hardly buy anything in the economy.

“For example, the four polymer notes- N5, N10, N20 and N50 are in the same line of cost in printing. And to discourage counterfeiting, the intrinsic value of a note must be higher than its face value. This means that it costs more to print N5 and N10 than N20 and N50.

“In this situation, the best is to look at other alternatives, if the denominations must be printed. But I see no rationale again, except for legal tender reasons, to print a note that cannot buy item,” he said.

Expressing worry about the trend, the Director-General of the Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf said the relevance of a currency depends on what it can buy.

According to him, if nothing tangible can be bought with the currency, it becomes useless, as the value currencies command depends on the value of goods and services.

Yusuf explained that the real income of the average Nigerian has dropped while many are presently jobless.“Currency drop is a function of inflationary trend in the system.

Inflation has rendered some of the currencies useless. The value a currency commands depends on what it can buy in the system. Some of the currencies may just go the way the coins have gone.

“The only way out is to reduce the cost of goods and services as they have gone up significantly. I don’t know how feasible that is under the current dispensation. Unfortunately, the real income of a lot of people has continued to drop and that is if they even have an income”, he added.

For the Manufacturers Association of Nigeria (MAN), there seems to be no leeway at the moment as inflation is a reflection of the operating environment.

The association President, Dr. Frank Jacobs lamented that many operators in the real sector have had to contend with the rising cost of operations through energy costs, especially the pricing of gas, which is in dollars, as well as dollarisation of raw materials.

The Sub-Saharan Africa Economist at RenCap, Yvonne Mhango, said there is need for policy adjustment to realign the economy, given the foreign exchange crisis, spiraling inflation and subsisting interest rate.

According to her, the economy may grow by less than one per cent in anticipation that the capital expenditure plans will pick up, but warned that higher fuel prices imply a return to subsidy issues, with attendant upside risk to the budget deficit and continued challenge on standard of living.

“Making the interbank foreign exchange market work is key for the Central Bank. Improved liquidity, a smaller premium between the parallel and interbank rate, price discovery, and transparency would signal success.

“Over 50 per cent of foreign exchange transactions take place in the parallel market, by one estimate. This implies that inflation is already reflecting a large part of the 90 per cent depreciation of the naira on the parallel market in 2016.

“Households are adjusting their spending patterns, by buying fewer imported items. We think plans to further adjust forex policy imply rate hikes are likely. However, they will probably be moderate. Fifty-to-sixty percent of Nigeria’s economy is directly impacted by oil. This explains the depth of the downturn in the economy,” she said.

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.

Economy

India, Spain, the Netherlands, USA, Nigeria’s Major Export Markets -NBS

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India, Spain and the Netherland top Nigeria’s export markets in the final quarter of 2020, according to the latest data from the National Bureau of Statistics (NBS).

The Commodity Price Indices and Terms of Trade Q4 2020 report showed that the United States and China trailed the three.

However, the NBS revealed Nigeria exports mainly crude oil and natural gas during the period under review.

It, “The major export and import market of Nigeria in Q4 2020 were India, Spain, the Netherlands, United States and China.

“The major export to these countries were crude petroleum and natural gas. The major imports from the countries were motor spirits, used vehicles, motorcycles and antibiotics.”

The bureau stated that the all-commodity group import index increased by 0.13 per cent between October and December 2020.

This was driven mainly by an increase in the prices of base metals and articles of base metals (one per cent), boilers, machinery and appliances; parts thereof (1.03 per cent), and products of the chemical and allied industries (0.75 per cent),” it stated.

The NBS, however, noted that the index was negatively affected by animal and vegetable fats and oils and other cleavage products.

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Economy

Onyeama: Qatar To Invest $5bn In Nigeria’s Economy

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The oil-rich state of Qatar is to invest a total of $5 billion in Nigeria’s economy, the Foreign Affairs Minister, Godfrey Onyeama, has disclosed.

Onyeama, who spoke Sunday at a send forth dinner in honour of Nigeria’s Ambassador-designate to the State of Qatar, who is also the outgoing Director of Protocol (DOP) at the State House, Ambassador Yakubu Ahmed, also stated that recent career ambassadorial appointments made by the gederal government was based on merit, experience and professionalism.

The minister further said there had been discussions with Qatar on partnership with Nigeria’s Sovereign Wealth Fund (SWF), for significant investments in the region of $5 billion in the Nigerian economy.

According to him, ‘‘Qatar is a weighty and strategic country and very strategic in that part of the world and we are putting our best feet forward to advance the interest of our country economically and in other areas.”

He recalled that President Muhammadu Buhari had visited the State of Qatar in 2016 and the Emir of Qatar, Tamim Bin Hammad Al-Thani, reciprocated with a State visit in 2019.

Onyeama also explained that only trusted hands with a track record of diligence, experience and professionalism in the Foreign Service were recently appointed career ambassadors by the federal government.

The minister said the appointment of Ahmed and other career ambassadors were predicated on posting dedicated and keen Foreign Service practitioners to serve as image makers of the country.

He said: ‘‘Ambassador Yakubu Ahmed is a dedicated professional with a penchant for rigour and detail. He is very capable and one of the best in the Ministry of Foreign Affairs. He is personable, affable, extremely friendly, dispassionate and objective.

‘‘He is going to head a very important mission, a very important country, reckoned to be one of the richest countries in the world, per capita, and there’s a lot we will be doing with the State of Qatar.”

Also speaking, the Deputy Chief of Staff, Adeola Rahman Ipaye, described the honoree as a ‘‘perfect gentleman, very even-natured and always well turned out’’.

Ipaye said he had no doubt that the newly appointed ambassador would serve the country well in Qatar, adding that: ‘‘We are further encouraged that when he completes this assignment, he would return to serve Nigeria in a higher capacity.’’

In his remarks, the Permanent Secretary, State House, Tijjani Umar, while congratulating the outgoing DOP on his appointment, lauded Ahmed for excellent service to the State House and the nation.

‘‘He served this institution and the nation with the deepest sense of responsibility and it is very important that we establish a tradition where the system appreciates those who have served it well and those who will continue to serve it well,’’ he said.

Umar urged the new envoy to keep very fond memories of his time at the Presidential Villa, assuring him of the prayers and goodwill of all the staff.

Responding, Ahmed thanked President Buhari for the great honour and privilege of making him his principal representative in Doha, Qatar.

The Ambassador-designate pledged to deplore his energy and skill to the promotion of the existing cordial relationship between Nigeria and Qatar, particularly in the areas of economic, political, cultural and consular affairs as well as other key areas.

Ahmed, who joined Nigeria’s Foreign Service in 1993, said during his years in public service he had learnt that ‘‘patriotism, selfless service, diligence, determination and perseverance will always result in the achievement of the desired objective’’.

According to him, these virtues would be his ‘‘watchword’’ in the pursuit of Nigeria’s foreign policy objectives and the attainment of national interests.

The Ambassador-designate singled out for appreciation the Chief of Staff to the President, Prof. Ibrahim Gambari, and the state Chief of Protocol, Ambassador Lawal Kazaure, saying he had learnt a lot working under their mentorship.

He expressed gratitude to the Minister of Foreign Affairs and the Permanent Secretary, State House for giving him the opportunity of a memorable work experience in the State House.

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Economy

France, Nigeria to Build New Partnership

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France is currently aiming at building a new partnership with Nigeria, with the dispatching of its Minister in charge of Foreign Trade and Attractiveness, Franck Riester, to Nigeria.

Riester, who was expected at the time of filing this report on Monday, is scheduled to visit Nigeria from 12-14 April, 2021.

A statement from the French Embassy in Nigeria said: “Franck Riester is visiting Nigeria from 12 to 14 April, a visit that follows up on the priorities set by French President Emmanuel Macron during his official visit to Nigeria in July 2018 and his desire to build a new partnership between Africa and France.

“As the largest economy in Africa and the economic engine of West Africa, Nigeria is indeed a major partner for France, the first in sub-Saharan Africa with bilateral trade amounting to a total of 4.5 billion USD in 2019 (2.3 billion USD in 2020, due to the Covid-19 pandemic).”

It disclosed that the minister will have several official meetings in Abuja and Lagos, in order to underline the importance of the bilateral economic relationship and to prepare the summit on the financing of African economies in Paris on 18 May.

It revealed that the objective of the mission is also to further strengthen the links between the French and Nigerian private sectors, and “in this regard, the minister will have in-depth discussions with the main Nigerian economic actors to strengthen bilateral cooperation and investments, both in Nigeria and in France, particularly in the logistics sector”.

It said while in the country, the minister would meet with young Nigerian entrepreneurs in the cultural and creative industries sector, to discuss the major role of their country in African creativity and the development of the African entrepreneurial ecosystem, with the support of France.

It further said: “The minister will also open the ‘Choose Africa’ conference, a €3.5 billion initiative by President Emmanuel Macron dedicated to supporting the development of start-ups and SMEs in Africa to enable the continent to benefit fully from the opportunities of the digital revolution.”

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