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Economy

272 Firms Shut Down in One Year – MAN

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Manufacturers and other private sector operators on Tuesday painted a gloomy picture of how the foreign exchange restriction placed on 41 items by the Central Bank of Nigeria had affected operations in the business sector.

They said that since the restriction order was placed last year, about 272 firms had been forced out of business, 50 of which were manufacturing companies.

While some of the affected manufacturers have relocated to neighbouring countries, according to Manufacturers Association of Nigeria, at least 222 small-scale businesses have closed shops, leading to 180,000 job losses.

As a result of the negative impact of the policy on the operations of manufacturers, stakeholders in the economy including MAN, the National Association of Small and Medium Enterprises and the Lagos Chamber of Commerce and Industry insisted that the policy must be reviewed.

They spoke at the launch of a report on the manufacturing sector by NOI Polls Limited, in collaboration with the Centre for the Studies of Economies of Africa.

The Director, Economics and Statistics, MAN, Mr. Ambrose Oruche, lamented the unavailability of productive inputs, stating that this was the major challenge confronting manufacturers.

He attributed the problem largely to the ban by the CBN on certain items from acessing the official window of the forex market, adding that the current operating environment was too harsh for many manufacturers to continue to operate.

He wondered why the CBN and the Federal Government kept coming out with what he described as conflicting polices, noting that this was affecting the growth of the manufacturing sector.

He said, “Presently, about 50 manufacturers have closed shop, while some have downsized. Some manufacturers are still producing due to their love for this country. Government’s policy on cement should have been adopted in this case.

“In the case of cement, Nigeria used to be a net importer of cement, but the government set up a policy over a five-year period, which made it possible that today, we are a net exporter of the commodity.”

Oruche said the fact that the economy was technically in recession should have made the CBN to redirect its policies towards stimulating the economy rather than tightening money supply.

He also listed high interest rates, poor power supply, policy inconsistency, poor patronage of locally manufactured products, poor supporting infrastructure, among others, as the challenges confronting manufacturers.

In his remarks, the Director, Research and Advocacy, LCCI, Mr. Vincent Nwani, said the CBN announced the ban on the 41 items without consulting other stakeholders in the sector.

He said, “We did press releases; we did stakeholders engagement; we engaged with the CBN at all levels, at least three times; we met the directors twice up to the CBN governor on this same matter of the 41 items- giving them examples of product-by-product.

“There must be an urgent review of the CBN’s policy on the restriction of access to foreign exchange placed on 41 items, as about 16 of the total items on the list serve as critical raw materials for intermediate goods produced in Nigeria, especially as the country lacks the capacity for optimal production of the items.”

For instance, he said that the ban on oil palm alone had led to a loss of about 100,000 jobs over the last couple of months, while the ban on glass and glassware resulted in 80,000 job losses mainly in the pharmaceutical industry.

Nwani said many companies in the pharmaceutical sector now found it difficult to package their products.

He said, “Local production of oil palm is put at about 600 metric tonnes annually, but the total demand in the country is put at about 1.8 million metric tonnes.

“Today, Presco Oil has orders of up to December 2017 to fill, it is presently hard pressed with demands. Listing oil palms among the restricted items meant that we have a shortfall of about 1.2 million metric tonnes.

“Some of the items placed on the restriction list by the CBN should be reinstated until the country develops the capacity to produce them locally. Some of the items need a period of between three and seven years for the country to develop self-sufficiency in their production.”

Nwani said, currently, about $10bn of manufacturers’ funds were stuck in foreign countries because the owners had no confidence in the economy.

He said, “We have about $10bn stuck in one country or the other earned by our members. Some of them are not manufacturers; some are agriculturists or merchants of different products.”

Meanwhile, the President of MAN, Dr. Frank Jacobs, has lauded the recent directive of the Central Bank of Nigeria that 60 per cent of foreign exchange allocation should go to the manufacturing sector. The association is also confident that with such powers, manufacturers may determine exchange rate in the country.

Jacobs said at a media briefing in Lagos on Tuesday that the directive would revive the sector and reflate the economy.

He said, “MAN commends the Federal Government and the CBN on this directive. It is a welcome development and will give fillip to efforts of government aimed at reflating the economy.

“This is an opportunity for the manufacturing sector to determine the exchange rate of the dollar. I will encourage our members not to bid too high, to also understand the power they have today to determine the exchange rate. With 60 per cent allocation, the banks will be willing to sell to manufacturers at a comfortable rate because they cannot keep their dollars.”

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.

Economy

NNPC to Focus on Domestic Gas Growth, Says Kyari

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Gas Exports Drop as Shell Declares Force Majeure

FG, NNPC to Focus on Growing Domestic Gas Utilisation

Mr. Mele Kyari, the Group Managing Director, Nigerian National Petroleum Corporation (NNPC), has said the corporation is presenting focusing on growing domestic gas utilisation.

The Managing Director disclosed this on Tuesday during a virtual BusinessDay Energy Series Summit with the theme, “Nigeria at 60: Harnessing Nigeria’s Energy for the Future.”

The NNPC boss also said the corporation is committed to delivering key gas infrastructures such as Escravos-Lagos Pipeline System II, Obiafu-Obrikom-Oben Gas Pipeline, Ajaokuta-Kaduna-Kano Gas Pipeline, and Central Gas Processing Facilities.

He stated that NNPC was working on developing five gigawatts of power generation by 2022.

He said, “At the NNPC we are aggressively pursuing other gas development initiatives with the aim of improving Nigeria’s economy using the appropriate fuels.

“In terms of gas and power, we are developing and integrating gas and power infrastructure networks (increase interconnectivity) as well as stimulating gas demand (power generation, feedstock and transport, etc).”

Kennie Obateru, the NNPC spokesperson, quoted the NNPC boss in a statement issued in Abuja. He said the corporation was working on domestic gas utilisation to five billion standard cubic feet of gas per day.

He added that the Nigerian Liquefied Natural Gas Train 7 would be completed and delivered by 2024.

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Economy

Senator Rejects Aisha Umar From North-East as PenCom DG Replacement for South-East

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Law Markers Rejects President Buhari’s PenCOM Director-General Nominee

The Senate has rejected President Buhari nominated Director-General of the National Pension Commission, Aisha Umar.

Some of the Senators, who vehemently protested the nomination immediately the Senate President, Ahmad Lawan, read Buhari’s letter said Aisha Umar from the North-East should not be replacing the former DG, Mrs Chinelo Anohu-Amazu, who is from the South-East.

The aggrieved senators said the action of the president is flagrant breach of the Act that established the PenCom.

According to Section 20(1) and section 21(1) and (2) of the National Pension Commission Act 2014, states, “In the event of a vacancy, the President shall appoint replacement from the geopolitical zone of the immediate past member that vacated office to complete the remaining tenure.”

Meaning President Buhari had acted against the Act establishing the PenCom.

Speaking on behalf of the aggrieved Senators, Enyinnaya Abaribe, the Senate Minority Leader, said “I recall that the tenure of the incumbent was truncated. Therefore, the new letter from the president that has now moved the chairman of the commission to another zone may not be correct.

“It is against the law setting up the National Pension Commission and the Federal Character Commission.

“Before you (Lawan) send it to the appropriate committee tomorrow, (Wednesday), I wish to draw the attention of the committee to it.”

The Senate President, however, rejected the minority leader’s point of order and observation, saying “That is for me to interpret because I interpret the laws here. If there is any petition to that effect it should be sent to the committee.”

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Economy

Electricity Regulatory Commission Suspends Tariff Increase for 14 Days

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Nigerian Electricity Regulatory Commission Suspends Tariff Increase for 14 Days

The Nigerian Electricity Regulatory Commission (NERC) has suspended the increase in electricity tariff in accordance with the resolution reached between the Federal Government and the Nigerian Labour Congress and Civil Rights groups.

The commission suspended the new tariff implemented on September 1, 2020 for 14 days.

The NERC, in its Order No. NERC/209/2020 issued around 10.30 pm on Tuesday, describing the regulatory instrument as “NERC Order on suspension of the Multi Year Tariff Order 2020 for the electricity distribution licensees.”

The commission said, “This order shall take effect from 28th September 2020 and shall cease to have effect on the 11th October 2020.”

This is coming a day after the labour union agreed to halt a nationwide industrial action to allow the government fashioned out a way to address the recent increase in prices from pump price to electricity bill.

Labour had described Federal Government action as anti-people policy, especially given current economic realities.

The government on the other hand had said the hikes were touch necessary decision to advance the nation’s economy and further improve power supply and revenue generation necessary to deepen economic growth.

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