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Buhari Okays $1bn Equipment for Military

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nigeria-army
  • Buhari Okays $1bn Equipment for Military

President Muhammadu Buhari has approved the purchase of equipment worth $1bn for the military.

The Minister of Defence, Mansur Dan-Ali, stated this in an interview with State House correspondents at the end of the meeting that Buhari had with security chiefs at the Presidential Villa, Abuja, on Wednesday.

“What I can add after all that I have said is to inform you that of recent, our leader, President Muhammadu Buhari, gave approval for the purchase of more equipment for the military, worth $1bn,” the minister said.

Although Dan-Ali did not disclose the source of the money, the National Economic Council, chaired by Vice-President Yemi Osinbajo, had in December 2017 approved the withdrawal of $1bn from the Excess Crude Account to fight insecurity.

The minister described the meeting with the President as a “normal meeting of security agencies in the country.”

He said issues concerning security situation in some states, including Taraba and Zamfara, were discussed.

On what to expect after the deployment of troops in Zamfara, Dan-Ali said, “We have operationalised a division in Sokoto. There will be a Brigade in Katsina and another Brigade in Zamfara that will take care of security situation in the areas.

“Of course, the strength of security personnel has increased, including the air force additional quick response group; they have added enough manpower in that area.”

He said efforts were being intensified to secure the release of Leah Sharibu, the Dapchi schoolgirl still being held by Boko Haram because she allegedly refused to renounce Christianity.

However, the weekly meeting of the Federal Executive Council did not hold on Wednesday.

As of the time of filing this report, no official reason was given for the cancellation of the meeting which usually holds every Wednesday at the Presidential Villa, Abuja.

Buhari presides over the FEC that has Vice-President Yemi Osinbajo; all ministers and some presidential aides as members.

BBOG, CD, CDHR, others knock Buhari

The #BringBackOurGirls movement on Wednesday deplored the approval of $1bn by the President, noting that the nation had not got any value for the huge amount spent so far on fighting insurgency in the North-East.

The BBOG spokesman, Sesugh Akume, described the fight against insurgency as “a money-making scheme,” wondering why the government needed to spend additional $1bn to fight the insurgents it claimed to have defeated.

He said, “The whole thing is a money-making scheme; our movement did an analysis of the money spent on fighting insurgency since 2011 and it has been within that range and we have not had value for the money we have spent.

“The government claimed to have defeated Boko Haram, so what are we spending $1bn on?”

Also, two civil society organisations, the Campaign for Democracy and the Committee for the Defence of Human Rights, said the approval of $1bn could extend the insurgency, calling on Nigerians to demand the monitoring of the fund.

The CD President, Usman Abdul, said, “This money from the Excess Crude Account is accrued for special purposes. This is one of the reasons why the Boko Haram insurgents cannot be defeated yet; because there are funds to cater to them. This is why the abduction of schoolgirls in Dapchi area of Yobe State took place in February.

“With this huge money, we are creating an avenue for the insurgents to wax stronger. We have to monitor how that money is spent. What we are witnessing is the negligence of the security agencies, more money is not needed.”

Also, the CDHR President, Malachy Ugwummadu, said, “While we agree that it is the responsibility of the Federal Government to use every means available to end the Boko Haram insurgency, allocation of funds must be constitutionally followed.

“The government must also ensure that the funds are judiciously used. One of the pitfalls of the former government of President Goodluck Jonathan was that allocation for weapons ended up in private hands. This must not go the same way.”

A security expert, Lt. Olusola Oremade (retd.) also criticised the approval, describing it as unreasonable.

“The approval of the $1bn to fight terrorism is unreasonable; it is a waste of money. No reasonable government would want to expend such money. We have those who knew the insurgents personally, why can’t they liaise with them to track down the insurgents?”

But a security analyst, Ben Okezie, believed that no amount was too much to spend on security.

“Security costs money and knowing that the value of our currency has plummeted, we don’t know whether the money would be enough.

“We have been fighting insurgency for over 10 years. Did you know many aircraft have gone down and how many armoured cars that have been destroyed and other artillery that need to be replaced? The welfare of the troops is also there, so it is justified to spend the money. Security costs money.”

Fayose says fund meant for re-election

The Ekiti State Governor, Ayodele Fayose, has queried the approval of $1bn for the procurement of security equipment.

The governor described the action as a “pooling of public funds for the ac of funding President Buhari’s re-election, as well as the coming governorship elections in Ekiti and Osun states.”

Fayose, who demanded to know if the $1bn was from the Excess Crude Account, said, “It will be illegal and against the principle of federalism that operates in Nigeria for the President, who is the head of just one of the federating units, to approve spending of fund belonging to the three tiers of government without the consent of heads of other federating units.”

Fayose spoke on Wednesday in a statement by his Special Assistant on Public Communications and New Media, Lere Olayinka.

He said, “When did the National Assembly approve the spending of the $1bn? Or can the President spend $1bn belonging to Nigerians without the approval of the National Assembly?”

Fayose queried the use of the money after the Federal Government said it had defeated Boko Haram.

He said, “The question the Federal Government must answer is; which insurgency are they buying arms worth N370bn to fight? Is it the same Boko Haram that they told Nigerians that they have completely defeated?

“Since they said they have defeated Boko Haram, and later told Nigerians that they have a ceasefire agreement with the insurgents, what else do they need $1bn (over N370bn) for, if not to fund the 2019 elections?

“Also, up till now, the government has yet to give satisfactory explanations as to the abduction and return of Dapchi schoolgirls.

“With the hurried approval of $1bn, is it not being reinforced that the Boko Haram insurgency has become a source of looting public fund by this government?

“It is on record that Transparency International once said in its report that some top military officials in the country were feeding fat from the war against Boko Haram by creating fake contracts and laundering the proceeds in the United States, United Kingdom and 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.

Economy

Goldman Sachs Urges Bold Rate Hike as Naira Weakens and Inflation Soars

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Central Bank of Nigeria (CBN)

As Nigeria grapples with soaring inflation and a faltering naira, Goldman Sachs is calling for a substantial increase in interest rates to stabilize the economy and restore investor confidence.

The global investment bank’s recommendation comes ahead of the Central Bank of Nigeria’s (CBN) key monetary policy decision, set to be announced on Tuesday.

Goldman Sachs economists, including Andrew Matheny, argue that incremental rate adjustments will not be sufficient to address the country’s deepening economic challenges.

“Another 50 or 100 basis points is certainly not going to move the needle in the eyes of an investor,” Matheny stated. “Nigeria needs a bold, decisive move to curb inflation and regain investor trust.”

The CBN, under the leadership of Governor Olayemi Cardoso, is anticipated to raise interest rates by 75 basis points to 27% in its upcoming meeting.

This would mark a continuation of the aggressive tightening campaign that began in May 2022, which has seen rates increase by 14.75 percentage points.

Despite this, inflation has remained stubbornly high, highlighting the need for more substantial measures.

The current economic landscape is marked by severe challenges. The naira’s depreciation has led to higher import costs, fueling inflation and eroding consumer purchasing power.

The CBN has attempted to ease the currency’s scarcity by selling dollars to local foreign exchange bureaus, but these efforts have yet to stabilize the naira significantly.

“Developments since the last meeting have definitely been hawkish,” noted Matheny. “The naira has weakened further, exacerbating inflationary pressures. The CBN’s policy needs to reflect this reality more aggressively.”

In response to the persistent inflation and naira weakness, analysts are urging the central bank to implement a more coherent strategy to manage the currency and inflation.

James Marshall of Promeritum Investment Management LLP suggested that the CBN should actively participate in the foreign exchange market to mitigate the naira’s volatility and restore market confidence.

“The central bank needs to be a more consistent and active participant in the forex market,” Marshall said. “A clear strategy to address the naira’s weakness is crucial for stabilizing the economy.”

The CBN’s decision will come as the country faces a critical period. With inflation expected to slow due to favorable comparisons with the previous year and new measures to reduce food costs, including a temporary import duty waiver on wheat and corn, there is hope that the economic situation may improve.

However, analysts anticipate that the CBN will need to implement one final rate hike to solidify inflation’s slowdown and restore positive real rates.

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Economy

Currency Drop Spurs Discount Dilemma in Cairo’s Markets

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Egyptian pound

Under Cairo’s scorching sun, the bustling streets reveal an unexpected twist in dramatic price drops on big-ticket items like cars and appliances.

Following March’s significant currency devaluation, prices for these goods have plunged, leaving consumers hesitant to make purchases amid hopes for even better deals.

Mohamed Yassin, a furniture store vendor, said “People just inquire about prices. They’re afraid to buy in case prices drop further.” This cautious consumer behavior is posing challenges for Egypt’s consumer-driven economy.

In March, Egyptian authorities devalued the pound by nearly 40% to stabilize an economy teetering on the edge. While such moves often lead to inflation spikes, Egypt’s case has been unusual.

Unlike other nations like Nigeria or Argentina, where costs soared post-devaluation, Egypt is witnessing falling prices for high-value items.

Previously inflated prices were driven by a black market in foreign currency, where importers secured dollars at exorbitant rates, passing costs onto consumers.

Now, with the pound stabilizing and foreign currency more accessible, retailers are struggling to sell inventory at pre-devaluation prices.

Despite price reductions, the overall consumer market remains sluggish. The automotive sector has seen a near 75% drop in sales compared to pre-crisis levels.

Major brands like Hyundai and Volkswagen have slashed prices by about a quarter, yet buyers remain cautious.

The economic strain is not limited to luxury items. Everyday expenses continue to rise, albeit more slowly, with anticipated hikes in electricity and fuel prices adding to the pressure.

Experts highlight a period of adjustment as both consumers and traders navigate the volatile exchange-rate environment. Mohamed Abu Basha, head of research at EFG Hermes, explains, “The market is taking time to absorb recent fluctuations.”

Meanwhile, businesses face declining sales, impacting their ability to manage operating costs. Yassin’s store has offered discounts of up to 50% yet remains quiet. “We’ve tried everything, but everyone is waiting,” he laments.

The devaluation has spurred a shift in economic dynamics. Inflation has eased, but the pace varies across sectors. Clothing and transportation costs are up, while food prices fluctuate.

With the phasing out of fuel subsidies and potential electricity price increases, Egyptians are bracing for further financial strain. The recent 300% rise in subsidized bread prices adds another layer of concern.

The situation underscores the balancing act between maintaining consumer confidence and attracting foreign investment.

Economists suggest potential stimulus measures, such as lowering interest rates or increasing public spending, to boost demand.

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Economy

MPC Meeting on July 22-23 to Tackle Inflation as Rates Set to Rise Again

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Interbank rate

The Monetary Policy Committee (MPC) is set to convene on July 22-23, 2024, amid soaring inflation and economic challenges in Nigeria.

Led by Olayemi Cardoso, the committee has already increased interest rates three times this year, raising them by 750 basis points to 26.25 percent.

Nigeria’s annual inflation rate climbed to 34.19 percent in June, driven by rising food prices. Despite these pressures, the Central Bank of Nigeria (CBN) projects that inflation will moderate to around 21.40 percent by year-end.

Market analysts expect a further rate hike as the committee seeks to rein in inflation. Nabila Mohammed from Chapel Hill Denham anticipates a 50–75 basis point increase.

Similarly, Coronation Research forecasts a potential rise of 50 to 100 basis points, given the recent uptick in inflation.

The food inflation rate reached 40.87 percent in June, exacerbated by security issues in key agricultural regions.

Essential commodities such as millet, garri, and yams have seen significant price hikes, impacting household budgets and savings.

As the MPC meets, the National Bureau of Statistics is set to release data on selected food prices for June, providing further insights into the inflationary trends affecting Nigerians.

The upcoming MPC meeting will be crucial in determining the trajectory of Nigeria’s monetary policy as the government grapples with economic instability.

The focus remains on balancing inflation control with economic growth to ensure stability in Africa’s largest economy.

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