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CBN Spends $107bn on Imports in Five Years

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Institute of Chartered Shipbrokers
  • CBN Spends $107bn on Imports in Five Years

Over dependent on import products continued to hurt Nigeria’s foreign reserves despite efforts by the Federal Government to deepen local production.

The recent data from the Central Bank of Nigeria has revealed that importation gulped $107.11 billion between 2014 and 2018.

A break down of the data showed $34.202 billion was spent on importation in 2014; $24.718 billion in 2015; $17.154 billion in 2016; $15.161 billion in 2017 and $15.87 billion in 2018. Translating to over 200 percent of the current foreign reserves of $44 billion.

Further analysis revealed that food importation accounted for 13.12 percent of the total $107.11 billion spent on importation in the five years under review. Highlighting the reason why the Federal Government mandated the Central Bank of Nigeria to restrict importers of food items from accessing foreign exchange from the apex bank and banking industry.

In 2015, the central bank restricted importers of 41 items from forex, and earlier this year added importers of palm oil and textile to the list.

President Muhammadu Buhari, in a rather tough stance, insisted that the central bank should not provide forex for importers of food items that could be produced locally.

This stance was supported by Godwin Emefiele, the Governor, CBN, who attributed the high unemployment rate in the country to low local production.

He said: “Today, we are complaining that there is a high rate of unemployment, leading to some extent insecurity in the country. Why should we allow people to import food that can be produced in the country?

“We need to improve wealth in our rural communities and I am saying we will not change our course; we will even be more aggressive with this programme.”

“I will like to stress that we will ensure that more of these items will get on the list of items that are going to be restricted from accessing foreign exchange in Nigerian banking industry, not just from the CBN source.

“Because I have heard some comments that maybe it’s about the CBN’s source. It is not the CBN’s source; we are saying you will not be able to access foreign exchange from the Nigerian banking industry because it is important for us to produce these items in Nigeria and we will follow through on them.”

Meanwhile, the manufacturing sector expanded at 57.9 in August and contributed the most to the Value Added Tax generated in the second quarter of 2019, despite the small size of the sector when compared to the size of the economy. Suggesting that health manufacturing sector could boost Federal Government revenue and deepen growth with the right policies.

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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Economy

Nigeria’s Plan to Review Oil Companies’ Gas Flaring Strategies

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Oil

Nigeria is ramping up its efforts to address environmental concerns in the oil and gas sector with a comprehensive plan to review gas flaring strategies of international and indigenous oil companies.

The Minister of State for Environment, Dr. Iziaq Salako, announced this initiative during a national stakeholders engagement meeting on methane mitigation and reduction held in Abuja, Investors King reports.

Gas flaring, a common practice in the oil industry, releases methane—a potent greenhouse gas—into the atmosphere, contributing to climate change and posing health risks to communities near oil facilities.

Nigeria aims to end routine gas flaring by 2030, aligning with global climate goals and commitments.

Dr. Salako explained the importance of reducing methane emissions and highlighted the detrimental effects on public health, food security, and economic development.

He outlined practical steps being taken to tackle methane emissions, including the development of methane guidelines and the engagement of government institutions.

The ministry, through the National Oil Spill Detection and Response Agency, will conduct periodic reviews of oil companies’ plans to ensure compliance with the gas flaring deadline.

Deloitte management consultants will assist in conducting comprehensive forensic audits to scrutinize the legitimacy of forward-contracted transactions.

President Bola Tinubu’s commitment to environmental sustainability underscores the government’s dedication to addressing climate change and fulfilling its multilateral environmental agreements.

The engagement event served as a platform for stakeholders to discuss methane mitigation strategies, existing policies, and implementation challenges.

Collaboration and dialogue among diverse sectors are crucial in charting a unified course towards sustainable methane reduction in Nigeria’s oil and gas industry.

As the country navigates its environmental agenda, ensuring accountability and transparency in gas flaring practices remains paramount for achieving a greener and healthier future.

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Economy

Interest Rate Jumps to 24.75% as CBN Takes Aggressive Stance Against Inflation

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Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has announced a significant increase in the monetary policy rate, known as the interest rate, to 24.75%.

This move disclosed by CBN Governor Olayemi Cardoso during the 294th Meeting of the Monetary Policy Committee press briefing in Abuja, represents a bold step by the apex bank to address the mounting inflationary pressures faced by the country.

With inflation soaring to 31.70% in February, the CBN aims to moderate this upward trend by tightening its monetary policy stance.

This decision follows the previous hike in the interest rate to 22.75% in February, showcasing the CBN’s commitment to combatting inflationary forces.

While the bank opted to maintain the Cash Reserve Ratio at 45%, the significant increase in the interest rate underscores the urgency of the situation and the need for decisive action.

Governor Cardoso emphasized that these measures are essential to stabilize the economy and safeguard the purchasing power of the Nigerian currency.

The 294th MPC marks the second meeting under Governor Cardoso’s leadership, indicating a proactive approach to addressing economic challenges.

The next MPC meeting is scheduled for May 20th and 21st, 2024, highlighting the ongoing commitment of the CBN to navigate Nigeria’s economic landscape amidst inflationary pressures.

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Economy

Nigeria Braces for 10th Consecutive Interest Rate Hike by Central Bank

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Central Bank of Nigeria (CBN)

As Nigeria grapples with persistently high inflation, the Central Bank of Nigeria (CBN) is gearing up to implement its tenth consecutive interest rate hike in a bid to curb the soaring prices and attract investment.

Analysts surveyed by Bloomberg are anticipating a substantial 125 basis-point increase in the key rate to 24%, marking one of the most significant adjustments in the current tightening cycle.

The decision, expected to be announced by Governor Olayemi Cardoso on Tuesday at 2 p.m. in Abuja, comes on the heels of inflation accelerating to 31.7% in February, far surpassing the central bank’s target range of 9%.

This surge has been primarily attributed to the sharp depreciation of the naira, prompting authorities to devalue the currency twice since June to narrow the gap with the unofficial market rate and encourage investor confidence.

While these measures have seen the naira strengthen in recent days and bolstered investment inflows, including a fourfold increase in overseas remittances and significant foreign investor portfolio asset purchases, there remains a palpable need for more decisive action.

Giulia Pellegrini, a senior portfolio manager at Allianz Global Investors, emphasized the necessity for the CBN to intensify its tightening efforts to regain foreign investors’ confidence in the local bond market.

While acknowledging the positive strides made by the central bank, Pellegrini stressed the importance of a more assertive approach to prevent the diversion of investor attention to other frontier markets.

As the Nigerian economy navigates through these challenging times, the impending interest rate hike signals the CBN’s determination to address inflation head-on and foster a more stable economic environment.

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