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Mixed Reactions as Buhari Nominates Emefiele as CBN Gov

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  • 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.”

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 market.

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UK Slides Into Deepest Recession Following 20.4% Economic Contraction in Q2

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UK Finally Slides Into Recession, Expert Expects Investors to Look Elsewhere

United Kingdom experienced its deepest economic recession on record in the second quarter of 2020, according to the Office for National Statistics (ONS).

This was coming shortly after the world’s fifth-largest economy exit the European Union in January.

The economy had contracted by 2.2 percent in the first quarter of the year when the negative impacts of COVID-19 were partially captured by the ONS.

In the second quarter, the report captured the complete impacts of COVID-19 on the economy in the second quarter and the entire first half of the year.

The report showed the United Kingdom’s economy contracted by another 20.4 percent in the second quarter, the deepest in the history of the nation.

A break down of the report revealed that the country’s most dominant sector, the services sector contracted by 19.9 percent in the second quarter. While the construction plunged by 35 percent.

This was followed by another 16.9 percent decline in the production industries that comprises of manufacturing, mining and energy provision.

Similarly, spending in the economy dropped with the lockdown that forced many people to stay at home during the quarter. Spending dipped by a quarter on weak retail sales and mostly idle factories and production sites.

While the economy contracted by 20.4 percent in the second quarter, the data reported a unique improvement in the last month of the quarter. The British economy expanded by 8.7 percent in the month of June, suggesting that the economy picked with the gradual reopening of business operations and activities across key sectors.

However, experts doubt the noticeable recovery would be enough to sustain the economy given the lack of COVID-19 vaccine.

Whilst the economy grew 8.7% in June, which beat economic estimates, and confirms a recovery is now underway, the real test will be after the summer when there are no more national lockdown-easing measures to lift the economic spirits, more local restrictions are likely to be imposed and as significant programmes such as the furlough scheme which has protected jobs come to a halt,” stated Nigel Green, the Founder and Chief Executive Officer (CEO) of deVere stated on Tuesday in an email to Investors King.

All of this creates ever more uncertainty in the UK economy.

The CEO added that global investors are likely to initiate precautionary measures to protect their assets against potential fall in UK-based financial assets going forward.

Mr. Green said “UK and global investors will be becoming increasingly nervous of this worrying situation and can be expected to take precautionary measures to insulate themselves against a potential fall in the value of UK-based financial assets.

“A growing number inevitably and quite sensibly are likely to be looking to grow and safeguard their wealth by moving assets overseas through various established international financial solutions.

“The pace of this trend, I believe, will increase over the next few months as the issues intensify.”

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Jagged Reopening of Nations Worldwide Paves Uncertain Path to Economic Recovery

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As economies reopen globally, there is a constant battle to achieve a balance between surging COVID-19 cases and addressing economic slowdown.

Due to the prevailing uncertainty following COVID-19, Global Data’s 2020 forecast for global economic growth has been revised downward from -0.9% (estimated 6 April) to -3.95% (estimated 3 August).

The signs of a faltering rebound is evident in countries such as the US, which may act as a drag on the European economy. GlobalData expects the global economy to witness a contraction of real GDP by 3.95% in 2020 accompanied with a growth of 5.27% in 2021, which is subject to change in the event of a second wave of COVID-19 spread amid resurgence of cases in major economies.

Shruti Upadhyay, Economic Research Analyst at GlobalData, states: “As businesses have been allowed to reopen and retail sales improved, an uptick was observed in the manufacturing and service sectors in the last three months (May–July) globally. GlobalData noted that manufacturing PMI showed an overall improvement in June for countries such as the US (49.8), Brazil (51.6), India (47.2), Russia (49.4), the UK (50.1), France (52.3) and China (50.9). Historically, when the index surpasses 50, it gestures an end to a manufacturing recession. However, with regional lockdowns gaining traction due to resurgence of cases, business conditions now continue to witness patchy recovery.

Retail sales in the Eurozone plunged to record lows when confinement measures were put in place, but sales rebounded as economies started reopening in a phased manner. Asymmetric demand led to rise in retail sector activities and a fall in demand for contact-intensive sectors. Countries that are cripplingly reliant on contact-intensive industries are expected to be deeply impacted in short-term. A slow recovery is being noticed in the active jobs and stock market, both in advanced and emerging economies with varying severity of fresh outbreaks and different pace of openings in the economy.

Upadhyay concludes: “The Eurozone’s reopening provides a beacon of light to countries such as the US, India and Brazil which are battling with rising number of cases in the country. However, with draconian lockdown measures lifted to reignite the damaged economies, the number of virus cases crept higher in Spain, France and Germany as these nations grapple between saving the economy and averting fresh outbreaks.

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UK Recession Will Prompt Investors to Consider Overseas Options

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UK Investors Likely to Look Elsewhere as Economy Shrinks by 20.4%

A growing number of UK and global investors are likely to move their assets overseas as Britain enters its worst recession in history, affirms the boss of one of the world’s largest independent financial advisory and fintech organisations.

The observation from Nigel Green, founder and chief executive of deVere Group, which has $12bn under advisement, comes as it is revealed that the UK economy suffered its biggest drop on record between April and June as coronavirus lockdown measures pushed the country officially into recession.

The economy contracted by 20.4% compared with the first three months of the year.

Mr Green notes: “As was expected, Britain is now officially in recession. It’s the deepest recession in UK history and the deepest of any G7 country.

“Whilst the economy grew 8.7% in June, which beat economic estimates, and confirms a recovery is now underway, the real test will be after the summer when there are no more national lockdown-easing measures to lift the economic spirits, more local restrictions are likely to be imposed and as significant programmes such as the furlough scheme which has protected jobs come to a halt.

“All of this creates ever more uncertainty in the UK economy.”

He continues: “UK and global investors will be becoming increasingly nervous of this worrying situation and can be expected to take precautionary measures to insulate themselves against a potential fall in the value of UK-based financial assets.

“A growing number inevitably and quite sensibly are likely to be looking to grow and safeguard their wealth by moving assets overseas through various established international financial solutions.

“The pace of this trend, I believe, will increase over the next few months as the issues intensify.”

The deVere CEO goes on to add that the confirmation of a recession “may be a good excuse to start that much-needed rebalancing in favour of global stocks, bonds, currencies and perhaps property.”

The weak economy also further boosts the chances of tax hikes and relief cuts in the UK November Budget.

“It is highly likely taxes will rise and reliefs be cut. Possible targets for hikes could include income tax for higher earners, capital gains tax, inheritance tax, and VAT.

“In addition, new wealth taxes may be brought in, which was something the Prime Minister was considering before the pandemic hit,” notes Mr Green.

These potential changes in the Budget can be expected to prompt those overseas with financial ties to the country, to look into the international options available to them.

He concludes: “Now could be a good time to revise your financial planning strategies to ensure you’re best-positioned to be able to grow and protect your wealth.”

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