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CBN, EFCC to Punish Forex Policy Violators

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  • CBN, EFCC to Punish Forex Policy Violators

SANCTIONS await banks, their customers and businesses that abuse the Central Bank of Nigeria’s (CBN’s) policy restricting foreign exchange (forex) allocation to 41 items.

Culprits are to be investigated and sanctioned, the apex bank said yesterday through its Director, Financial Policy & Regulation Department, Kelvin Amugo.

The investigation will be carried out by the Economic Intelligence Unit of the CBN in collaboration with the Economic and Financial Crimes Commission (EFCC), Amugo said in a letter to all banks.

As part of its developmental objective on employment generation and inclusive growth, the CBN had on July 1, 2015, stopped foreign exchange allocation to the importation of 41 items, which could be produced locally.

The bank said that the policy had been abused by some banks and their customers.

According to the trade information available to the CBN, the policy is being abused as the restricted items are being dumped in the country.

Such sanctions will, among others, include blacklisting the institutions and their directors; closing of their accounts; and restricting them from maintaining accounts in any bank under the can remit. Banks that provide their platforms for such economic abuses are to be sanctioned.

The letter reads: “The CBN views this development with trepidation. The Economic Intelligence Unit of the CBN in collaboration with the Economic and Financial Crimes Commission (EFCC) would commence immediate investigation of the accounts of the corporates and entities engaged in this unwholesome act with a view to visiting severe sanctions on all the culprits.”

According to the apex bank, the implementation of the policy has resulted in massive investment and the establishment of cottage industries that now engage in the production of the restricted items across the country. The growth and development benefits have been phenomenal.

It said: “Unfortunately, the trade information available to the CBN indicates the circumvention of the policy as the restricted items are being dumped in the country. The implications are that the growth and employment benefits arising from the policy may be eroded if not checked.

“Banks are by this notice, advised on strict compliance with the Know Your Customers (KYC) and Know Your Customer Business (KYCB) requirements and be properly guided.”

CBN Governor Godwin Emefiele had at the 53rd annual Bankers dinner in Lagos, said the CBN’s policy restricting forex access to 41 items that can be produced locally has helped to move the economy out of recession adding that there even calls that the list of 41 items be increased to cover more goods that can be produced locally.

Emefiele said: “As I have always emphasised, it is our collective duty to ensure that the potentials and prospects of the Nigerian economy is optimally realised.

“The ongoing economic recovery requires the joint efforts and wise counsel of everyone, if we must make giant strides forward. The CBN is more determined now than ever to remain at the forefront of the effort to ensure that the rebound is not overturned.

“There has been considerable discourse particularly on whether the restriction on access to foreign exchange for 41 items is driving local production, with some nay-sayers stating that it has constrained productivity and growth in the economy.

“Based on our internal research conducted at the Central Bank of Nigeria, there is strong support that the recovery of our economy from the recession may have been much weaker or even negative, without the implementation of the restriction on 41 items.

“Our research supports the conclusion that the combination of the restriction on 41 items along with other measures imposed by the fiscal and monetary authorities has helped to promote the recovery.

“Any attempt to reverse the course of this actions may have untold consequences on the growth trajectory of our economy particularly in our push to diversify and restructure our economy.

“In fact, recommendations are being made to the CBN that the list of 41 items be expanded to include other additional items that can be locally produced.”

In a separate circular by Director, Trade and Exchange Department, Ahmed Umar, the CBN said: “In the continued effort to sustain the achievement recorded from the classification of 41 import items as ‘Not Valid for Foreign Exchange’ in the Nigerian Foreign Exchange market, authorised dealers and the general public are hereby notified of the inclusion of fertilizer on the list effective Friday December 7, 2018.

“However, the CBN will ensure that transactions (Form ‘M’) on fertilizer for which payments are outstanding are settled at the appropriate settlement dates.”

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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Nigerian Brand, JR Farms Acquires 11% Stake in Rwandan Firm

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Nigerian Brand, JR Farms Acquires 11% Stake in Rwandan Firm

JR Firms, an agribusiness firm with headquarters in Nigeria, has announced partnership with Sanit Wing Rwanda through the acquisition of 11 per cent stake in the company.

The CEO of the company, Mr Rotimi Olawale, explained in a statement that the partnership was in furtherance of its goals to ensure food security, create decent jobs and raise the next generation of agrarian leaders in Africa.

The stake was acquired through Green Agribusiness Fund, an initiative of JR Farms designed to invest in youth-led agribusinesses across Africa.

Sanit Wing Rwanda is an agro-processing company that processes avocado oil and cosmetics that are natural, quality, affordable, reliable and viable.

The vision of the company is to become the leading producers of best quality avocado and avocado by-products in Africa by creating value across the avocado value chain.

With focus on bringing together over 20,000 professional Avocado farmers on board and planting of three million avocado trees by 2025 through contract farming, the company currently works with One Acre Fund in supply of avocado to its processing facility.

The products of the company which include avocado oil, skin care (SANTAVO), hair cream and soap are being sold locally and exported to regional market in Kenya.

With the new partnership with JR Farms- the products of the company will enjoy more access to markets focusing on Africa and the European Union by leveraging on partnerships and trade windows available.

Aside funding, the partnership comes with project support in areas of market exposure, capacity building, exposure and other thematic support to grow the business over the next four years.

JR Farms has agribusiness operations in Nigeria, Rwanda, United States and Zambia respectively.

In Nigeria, the company deals in cassava value chain processing cassava to national staple “garri” which is consumed by over 80 million Nigerians on daily basis, while in Rwanda, it works in the coffee value chain with over 4,000 coffee farmers spread across the East Central African country.

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Shut Down Depots Selling Petrol Above Approved Price – Marketers

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Shut Down Depots Selling Petrol Above Approved Price – Marketers

The Federal Government should close down depots that are selling petrol above the approved price, oil marketers said on Thursday.

National President, Independent Petroleum Marketers Association of Nigeria, Sanusi Fari, said the sale of petrol above government approved price by depot owners would soon lead to a hike in the commodity’s pump price.

Fari told journalists in Abuja that the government through its agencies such as the Department of State Services and the Department of Petroleum Resources should curb the development to avoid crisis in the downstream oil sector.

He said some private depot owners were selling at N165 per litre to independent marketers, way above the government stipulated price of N148 per litre.

Fari said, “Our challenge is the inconsistency in the pricing of petrol. Up till a week ago, government was still insisting that the February price for petrol remained unchanged.

“And most of the private depot owners are selling above the government stipulated price. As at today ( February 25, 2021) private depot owners are selling at N165 per litre to independent marketers.”

He added, “In the last six years, only NNPC imports refined products into this country and these tank farms buy their products from NNPC under a controlled price.

“This has affected our businesses seriously because government is insisting that we sell at the rate of N165, which is not going to work.”

The IPMAN president said filling station owners buy the product at N165 per litre from the private depots and incur other expenses such as transportation, rent, etc.

“So government cannot expect us to sell less than what we buy,” he said.

Fari added, “This is why we are calling on government and agencies that are saddled with the responsibility to control petrol pricing to urgently clamp down on depots that are selling above the stipulated price.”

The Nigerian National Petroleum Corporation, the country’s sole importer of patrol, recently stated that it never hiked the cost of petrol to depots.

It also enjoined the depot owners to sell the product at the approved rate and called on the DPR to enforce the stipulated price across the depots.

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Nigeria Will Benefit Less From African Trade Deal – NESG

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Nigeria Will Benefit Less From African Trade Deal – NESG

Nigeria and other resource-based countries will benefit less from the African Continental Free Trade Area than economies that are more diversified, the Nigerian Economic Summit Group has said.

The NESG, a private sector-led think-tank, said in its 2021 Macroeconomic Outlook that Nigeria could reap more gains through export diversification away from crude oil.

It said trade in Africa remained dominated by raw materials and less processed products, adding that on average, minerals and agriculture accounted for 44 per cent and 16 per cent of intra-African trade respectively between 2007 and 2017.

The NESG said, “Evidence has shown that African economies that are more diversified and have improved transport infrastructure, would benefit more from the trade pact than others that are resource-based and agricultural dependent.

“Putting this in context, South Africa currently accounts for 40 per cent of intra-African manufacturing imports. On the other hand, resource-based countries, such as, Algeria, Egypt and Nigeria – which collectively account for approximately 50 per cent of Africa’s GDP – contribute only 11 per cent to intra-African trade.”

“Another bone of contention is the issue of ‘rules of origin’, which constitutes a significant risk factor. This implies that protectionism practices by some countries could constitute a setback for the establishment of the ambitious single market for Africa. But there are several reasons to be optimistic,” it added.

The group said the World Bank estimates revealed that the AfCFTA would promote manufacturing exports over natural resources, agricultural and services exports, and that manufacturing exports would account for one-third of the projected total exports of $2.5tn by 2035.

It said, “Nigeria could reap more gains through export diversification away from crude oil, as manufacturing exports currently account for an average of nine per cent of the country’s total exports.

“This suggests that efforts should be directed at strengthening domestic value chains, particularly the agro-allied industrial base.

“To achieve this, there is a need to attract private capital, most especially, FDI, that would allow for knowledge and technological transfers.”

According to the NESG, for Nigeria to maximally benefit from the trade deal, there is an urgent need to also address transport infrastructure bottlenecks and provide improved logistics.

It said, “Finding a lasting solution to the Apapa gridlock by creating similar ports in other regions of the country, so as to ensure speedy clearance of consignments needs to be prioritised.

“Nigeria also needs to set standards for locally-made goods to enhance their attractiveness in the regional market.

“The Nigerian government as a matter of urgency needs to operate an efficient and corruption-free land border system, so as to guide against the importation of low-cost sub-standard products into the country.

“It is only when these and many more reforms are implemented that Nigeria can begin to reap the benefits of the trade deal.”

The group noted that owing to the outbreak of COVID-19, the implementation of the AfCFTA was postponed from July 1, 2020 to January 1, 2021.

It said, “The key goal of the free trade pact is to expand the volume of intra-African trade, which stood at 16 per cent in 2018 .“Till date, 36 countries, including Nigeria, have ratified the agreement. The trade deal is expected to create a single market with a combined GDP of $2.5tn and total population or market size of 1.2 billion.”

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