Connect with us

Economy

IMF, World Bank Behind Nigeria’s High Cost of Living, Says Experts

Published

on

Lagos Nigeria - Investors King

Economic experts have blamed the recent increase in prices from petrol, Value Added Tax (VAT) to electricity tariff on the International Monetary Fund (IMF) and the World Bank.

The experts said the two global financial institutions are known for dictating economic direction whenever a nation approaches them for financial assistance during a tough economic period.

Prof. Akpan Ekpo, an economist and Chairman of the Foundation for Economic Research and Training, said, “Once a country does not run its economy well and it wants to borrow from the IMF, it will be given conditions. If the economy is well-run, the country may be given soft conditions.

“But if the economy is not well-run, the country will be given tough conditions. At times, the reforms the World Bank or IMF wants the country to implement may not augur well with the common man. Some reforms are in our interest.”

In recent years, the IMF and the World Bank had expressed concerns about Nigeria’s weak revenue generation when compared to other nations, including African nations.

The IMF, in April, said Nigeria must up revenue collection efficiency to simultaneously finance its high rising debt profile and embark on capital projects necessary to further and sustain economic productivity.

This was before the Federal Government approached the Fund for $3.4 billion emergence assistance to address severe economic damage caused by the COVID-19 pandemic.

The Federal Government secured the loan after agreeing to remove fuel subsidy, introduce a single forex rate and up VAT and other taxes.

In a letter dated April 21, 2020, the Federal Government agreed to the demand and responded that “the recent introduction and implementation of an automatic fuel price formula will ensure fuel subsidies, which we have eliminated, do not reemerge.”

It immediately adjusted the nation’s foreign exchange rate in line with the Fund’s demand to N379/US dollar.

Dr. Bongo Adi, an economist and Senior Lecturer, Lagos Business School, said, “We know what the Bretton Woods institutions stand for. They are pro-market, liberal economic institutions. Before you access their loans, you have to be ready to meet certain conditions.

“Surely, you can see that there is a linkage between the loans we are trying to get and the conditionalities they have always traditionally required of any country seeking loans.”

However, apart from the IMF and the World Bank, some Nigerians including Investors King Ltd had been advocating for fuel subsidy removal and the deregulation of the downstream oil sector.

Deregulation will boost investment in the sector and finally put to an end fuel scarcity that over the years have crippled economic activities and overall growth of the nation. It also means that over N1 trillion budgeted for subsidy in 2019 and preceding years can now be channeled into capital projects.

The Managing Director/Chief Executive Officer, Cowry Asset Management Limited, Mr Johnson Chukwu, explained it better.

He said, “With or without external pressures, there was an absolute need for Nigeria to remove subsidies on consumption and channel the resources to more critical sectors of the economy that will stimulate the economy.

“What the IMF and the World Bank were emphasising was that Nigeria had some inefficiencies in resource allocation and that if the country wanted them to give it support, the inefficiencies should be eliminated.

“They were urging the government to plug the wastages in the system.”

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.

Continue Reading
Comments

Economy

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

Published

on

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.

Continue Reading

Economy

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

Published

on

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.

Continue Reading

Economy

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

Published

on

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.

Continue Reading
Advertisement




Advertisement
Advertisement
Advertisement

Trending