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Mixed Reactions as Buhari Nominates Emefiele as CBN Gov

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Godwin Emefiele CBN - Investors King
  • Mixed Reactions as Buhari Nominates Emefiele as CBN Gov

Mixed reactions have greeted the reappointment of the Governor of the Central Bank of Nigeria, Mr Godwin Emefiele.

While some experts said the development was good for the banking sector, monetary policy and economic stability, others thought otherwise.

President Muhammadu Buhari on Thursday wrote to the Senate to approve Emefiele’s reappointment as the CBN governor.

The President, in his letter to the Senate, sought legislative approval of a second tenure for Emefiele, whose current tenure expires on June 2, 2019.

The President of the Senate, Bukola Saraki, read Buhari’s letter to members at the plenary on Thursday.

The Managing Director and Chief Executive Officer, Polaris Bank, Tokunbo Abiru, said, “The re-appointment of the CBN governor for another term of five years is a positive development for our economy.

“The economic outlook remains positive as this adds fillip to the continuity of current macro-economic policies initiated by Emefiele. The positive interventions in the agriculture, real sector and foreign exchange stability give confidence that the economy will continue to grow.”

The Chairman, Chartered Institute of Bankers of Nigeria, Abuja Chapter, Prof.Uche Uwaleke, described Emefiele’s appointment as a positive development for the Nigerian economy, saying stakeholders in the economy would have confidence in the consistency of the monetary policy.

He said, “Emefiele’s appointment is a good omen for the capital market. It is one development that speaks to policy consistency and will further consolidate macroeconomic stability, especially with respect to exchange rate and inflation.

“Investors, both domestic and foreign, can have some degree of confidence in the direction of monetary policy, which is positive for the capital market.

“One thing is now certain: That the interventions by the CBN in critical sectors of the economy, especially agriculture and non-agric based SMEs will continue.

“These will rub off positively on economic recovery efforts, especially now that the CBN under Emefiele has signalled an accommodative monetary policy stance. It is equally positive for financial systems stability. So, I expect a positive reaction.”

The Registrar, Institute of Finance and Control of Nigeria, Mr Godwin Eohoi, said as one of the major actors who worked towards taking Nigeria out of recession, the apex bank boss understood what would be needed to consolidate the growth trajectory.

He also said there was a need for the apex bank boss to ensure the reduction of interest rate is to make the cost of funds cheaper for businesses.

He said, “There is a need for the intensification and effective monitoring of the interventions, in particular, the Anchor Borrower Programme.

“Emefiele should also focus on ensuring increased access to credit by SMEs and generally fostering a low-interest rate environment with the support of fiscal authorities,

“He should focus more on intervention programmes in the agricultural sector, textile and other economic stimulating and job creation sectors.”

A former President, Association of National Accountants of Nigeria, Dr Sam Nzekwe, said, “It is a good development because, given the way he has worked for five years, I think he is a competent man. He has made sure that he has so far stabilised the exchange rate; he has managed the monetary authority very well given the kind of very difficult economy we have.

“I think he has done very well. He performed above average. I think it is a good thing to give him a second chance.”

The Chairman, TAF, Debo Ajayi, who is also an economist, said he had not really considered the governor to have performed well.

He also described some of the actions of the CBN as confusing because he got involved in fiscal policies instead of focusing on monetary policies, which was his key role.

Ajayi said, “Maybe things could have been worse than it actually is but also, I really do not see the CBN managing the economy very well, and yet, the exchange rate seems to have stabilised, but it is still not where it ought to be in terms of the valuation of the naira.

“So, I have not seen any major initiative from the CBN, but evidently, his boss may be looking at it from an angle we are not looking at it from that is making him to recommend him. However, from this side, I don’t see the governor to have done an exceptional job for which he is being recommended for another five years.

“But I do commend them from time to time for some of the initiatives. For instance, the recent one on access to credit in the creative industry is a fantastic one, better late than never. We see some initiatives sometimes like in the area of agriculture, but we have not seen these translate to tangible impact on the masses.”

A professor of Economics at the Olabisi Onabanjo University, Ago Iwoye, Sheriffdeen Tella, said President Muhammadu Buhari re-appointed Emefiele because he felt that he had been able to maintain stable exchange rate and ensured that the inflation rate did not go haywire.

The don, who, however, expressed reservations about the CBN’s direct intervention in the agricultural and the real sectors, added that Emefiele must have earned his re-appointment having been able to help the Buhari’s administration to stabilise the nation’s monetary policy, as it had envisaged it to be.

He said, “I think the President re-appointed him because he is happy with what he has done in the monetary sector. He has stabilised the foreign exchange rate and managed the inflation rate. These must have fallen in line with the President’s policy, but I don’t believe the CBN should be directly involved in giving loans to farmers and those in the real sector of the economy.”

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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South Africa’s Inflation Rate Holds Steady in May

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South Africa’s inflation rate remained unchanged in May, increasing the likelihood that the central bank will maintain current borrowing costs.

According to a statement released by Statistics South Africa on Wednesday, consumer prices rose by 5.2% year-on-year, the same rate as in April.

The consistent inflation rate is expected to influence the decision of the six-member monetary policy committee (MPC), which is set to meet in mid-July. The current benchmark rate stands at 8.25%, a 15-year high, and has been held steady for six consecutive meetings.

Central Bank Governor Lesetja Kganyago has repeatedly emphasized the need for inflation to fall firmly within the 3% to 6% target range before considering any reduction in borrowing costs.

“We will continue to deliver on our mandate, irrespective of how our post-election politics plays out,” Kganyago stated earlier this month in Soweto. “The only impact is what kind of policies any coalition will propose. If the policies are not sustainable, we might not have investment.”

While money markets are assigning a slim chance of a 25-basis point rate cut in July, they are fully pricing in a reduction by November.

Bloomberg Africa economist Yvonne Mhango anticipates the rate-cutting cycle to begin in the fourth quarter, supported by a sharp drop in gasoline prices in June and a rally in the rand.

The rand has appreciated more than 3% since Friday, following the ANC’s agreement to a power-sharing deal with business-friendly opposition parties and the re-election of President Cyril Ramaphosa.

In May, the annual inflation rates for four of the twelve product groups remained stable, including food and non-alcoholic beverages.

However, transport, alcoholic beverages and tobacco, and recreation and culture saw higher rates. Food prices increased by 4.3% in May, slightly down from 4.4% in April, while transport costs rose by 6.3%, up from 5.7% and marking the highest rate for this category since October 2023.

The central bank’s cautious stance on monetary policy reflects its ongoing concerns about inflation.

Governor Kganyago has consistently voiced worries that the inflation rate is not decreasing as quickly as desired. The MPC’s upcoming decision will hinge on sustained inflationary pressures and the need to balance economic stability with fostering growth.

As South Africa navigates its economic challenges, the steady inflation rate in May provides a measure of predictability for policymakers and investors alike.

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Ghana Reports Strong 4.7% GDP Growth in First Quarter of 2024

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Ghana’s economy showed impressive growth in the first quarter of 2024 with the Gross Domestic Product (GDP) expanding by 4.7% compared to the same period last year, according to Government Statistician Samuel Kobina Annim.

This represents an increase from the 3.8% growth recorded in the previous quarter and should provide a much-needed boost to the ruling New Patriotic Party (NPP) as the nation approaches the presidential elections scheduled for December 7.

The positive economic data comes amidst a challenging backdrop of fiscal consolidation efforts under a $3 billion International Monetary Fund (IMF) rescue program.

The government has been working to control debt through reduced spending and restructuring nearly all of its $44 billion debt.

This includes ongoing negotiations with private creditors to reorganize $13 billion worth of bonds.

The latest GDP figures are seen as a vindication of the NPP’s economic policies, which have been under fire from the main opposition party, the National Democratic Congress (NDC).

The opposition has criticized the government’s handling of the economy, particularly its fiscal policies and the terms of the IMF program, arguing that they have imposed undue hardship on ordinary Ghanaians.

However, the 4.7% growth rate suggests that the measures taken to stabilize the economy are beginning to yield positive results.

Analysts believe that the stronger-than-expected economic performance will bolster the NPP’s position as the country gears up for the presidential elections.

“The growth we are seeing is a testament to the resilience of the Ghanaian economy and the effectiveness of the government’s policies,” Annim stated at a press briefing in Accra. “Despite the constraints imposed by the debt restructuring and IMF program, we are seeing significant progress.”

The IMF program, which is designed to restore macroeconomic stability, has necessitated tough fiscal adjustments.

These include cutting government expenditure and implementing structural reforms aimed at boosting economic efficiency and growth.

The government’s commitment to these reforms has been crucial in securing the confidence of international lenders and investors.

In addition to the IMF support, the government has also been focused on diversifying the economy, reducing its reliance on commodities, and fostering sectors such as manufacturing, services, and technology.

These efforts have contributed to the robust growth figures reported for the first quarter.

Economic growth in Ghana has been uneven in recent years, with periods of rapid expansion often followed by slowdowns.

The current administration has emphasized sustainable and inclusive growth, seeking to ensure that the benefits of economic progress are widely shared across all segments of the population.

The next few months will be critical as the government continues its efforts to stabilize the economy while preparing for the upcoming elections.

The positive GDP growth figures provide a strong foundation, but challenges remain, including managing inflation, creating jobs, and ensuring the stability of the financial sector.

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World Bank Commits Over $15 Billion to Support Nigeria’s Economic Reforms

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The World Bank has pledged over $15 billion in technical advisory and financial support to help the country achieve sustainable economic prosperity.

This commitment, announced in a feature article titled “Turning The Corner: Nigeria’s Ongoing Path of Economic Reforms,” underscores the international lender’s confidence in Nigeria’s recent bold reforms aimed at stabilizing and growing its economy.

The World Bank’s support will be channeled into key sectors such as reliable power and clean energy, girls’ education and women’s economic empowerment, climate adaptation and resilience, water and sanitation, and governance reforms.

The bank lauded Nigeria’s government for its courageous steps in implementing much-needed reforms, highlighting the unification of multiple official exchange rates, which has led to a market-determined official rate, and the phasing out of the costly gasoline subsidy.

“These reforms are crucial for Nigeria’s long-term economic health,” the World Bank stated. “The supply of foreign exchange has improved, benefiting businesses and consumers, while the gap between official and parallel market exchange rates has narrowed, enhancing transparency and curbing corrupt practices.”

The removal of the gasoline subsidy, which had cost the country over 8.6 trillion naira (US$22.2 billion) from 2019 to 2022, was particularly noted for its potential to redirect fiscal resources toward more impactful public investments.

The World Bank pointed out that the subsidy primarily benefited wealthier consumers and fostered black market activities, rather than aiding the poor.

The bank’s article emphasized that Nigeria is at a turning point, with macro-fiscal reforms expected to channel more resources into sectors critical for improving citizens’ lives.

The World Bank’s support is designed to sustain these reforms and expand social protection for the poor and vulnerable, aiming to put the economy back on a sustainable growth path.

In addition to this substantial support, the World Bank recently approved a $2.25 billion loan to Nigeria at a one percent interest rate to finance further fiscal reforms.

This includes $1.5 billion for the Nigeria Reforms for Economic Stabilization to Enable Transformation (RESET) Development Policy Financing, and $750 million for the NG Accelerating Resource Mobilization Reforms Programme-for-Results (ARMOR).

“The future can be bright, and Nigeria can rise and serve as an example for the region on how macro-fiscal and governance reforms, along with continued investments in public goods, can accelerate growth and improve the lives of its citizens,” the World Bank concluded.

With this robust backing from the World Bank, Nigeria is well-positioned to tackle its economic challenges and embark on a path to sustained prosperity and development.

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