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Naira Devaluation Reduces Nigeria’s Trade Deficit by 44%

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Shipowners

The devaluation of the naira slashed Nigeria’s trade deficit by 44 per cent to N196.5bn in June, from N351.3bn in March, the National Bureau of Statistics said on Tuesday.

The bureau said the value of exports increased by 63 per cent to N1.9tn in the quarter.

“The improvement in export value is largely due to the depreciation in the value of the naira,” the NBS said in a statement.

  The nation’s total value of trade increased to N3.94tn in the second quarter, up from N2.7tn, it said

The NBS, in the merchandise trade statistics for the second quarter of this year, said the country recorded a 49 per cent increase in trade from N2.65tn in the first quarter to N3.94tn.

The bureau in the report stated that the increase in trade was as a result of a rise of N725.6bn in the value of exports against what was recorded in the preceding quarter.

It said as a result of the improvement in the second quarter trade, the country’s negative trade balance had now reduced by N154.8bn to N196.5bn.

The report stated, “The total value of Nigeria’s merchandise trade in Q2, 2016 was N3.94tn. This was 49 per cent more than the value of N2.64tn recorded in the preceding quarter.

“This development arose from a rise of N725.6bn or 63.3 per cent in the value of exports (largely due to the exchange rate gains), combined with a rise of N570.8bn or 38.1 per cent in the value of imports against the levels recorded in the preceding quarter.

“The current trade position brought the country’s negative trade balance to  N196.5bn during the period under review. This shows a N154.8bn reduction in the country’s trade deficit over the previous quarter.”

In terms of the structure of Nigeria’s trade, the report stated that the country’s import stood at N2.06tn at the end of the second quarter, representing an increase of 38.1 per cent from the value N1.9tn recorded in the preceding quarter.

As with exports, it said the increase in import value could be traced to a decline in the value of the naira.

It said capital goods and parts, with N663.6bn or 32.1 per cent, accounted for the highest chunk of the country’s imports.

This was followed by industrial supplies with N421.2bn or 20.4 per cent, and transport equipment and parts with N356.1bn or 17.2 per cent.

It said the import trade by direction showed that the country imported goods mostly from China, the Netherlands, the United States, India and the United Kingdom.

Trade with these countries accounted for N493.5bn or 23.9 per cent; N285.7bn or 13.8 per cent; N199bn or 9.6 per cent; N124.9bn or six per cent; and N119.3bn or 5.8 per cent, respectively, of the total value of goods imported during the quarter.

For export, the report put the value of the trade at N1.87tn in the second quarter, indicating an increase of N725.6bn or 63.3 per cent over the value recorded in the preceding quarter.

“The improvement in export value is largely due to the depreciation in the value of the naira,” it added.

The structure of the export trade, the report added, was still dominated by crude oil exports, which contributed N1.49tn or 79.7 per cent to the value of total domestic export trade in 2016.

“Whenever there is a devaluation of the currency it encourages exporters because they get more naira for the goods sold at the international market or priced in dollar,” an analyst at Lagos-based Financial Derivatives Company, Opeyemi Oguntade, told Reuters.

“For the country and the exporter, the thing to consider is if the benefit of the devaluation is high enough to outweigh the cost of rising inflation,” he added.

Nigeria’s leading export markets include India, the US, Spain and the Netherlands.

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

COVID-19: CBN Injects N3.5 Trillion into the Economy

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CBN

CBN Stimulates the Economy With N3.5 Trillion as COVID-19 Impact Thickens

The Central Bank of Nigeria on Tuesday said it has so far injected N3.5 trillion into the Nigerian economy following the outbreak of COVID-19 in Africa’s largest economy.

Godwin Emefiele, the Governor of the Central Bank of Nigeria, disclosed this on Tuesday after the nation’s monetary policy committee meeting.

So far, he said N216.87 billion was injected through the real sector funds; COVID-19 Targeted Credit Facility N73.69 billion; AGSMEIS N54.66 billion; pharmaceutical and healthcare support fund N44.47 billion; and creative industry financing initiative N2.93 billion.

Breaking down expenditure, under the real sector funds, he said 87 projects that comprises of 53 manufacturing, 21 agriculture and 13 services projects were funded.

While in the healthcare sector, 41 projects which include 16 pharmaceuticals and 25 hospitals and health care services were funded.

Under the Targeted Credit Facility, he explained that 120,074 applicants had received financial support for investment capital.

The Agri-Business/Small and Medium Enterprise Investment Scheme (AGSMEIS) intervention has been extended to a total of 14,638 applicants, while 250 SME businesses, predominantly the youths, have benefited from the creative industry financing initiative,” he said.

In addition to these initiatives, he said, the CBN was set to contribute over N1.8 trillion of the total sum of N2.3 trillion needed for the Federal Government’s one-year Economic Sustainability Plan, through its various financing interventions using the channels of Participating Financial Institutions.

Meanwhile, the monetary policy committee lowered interest rate by 100 basis points to stimulate growth and broaden economic productivity. The benchmarkt intrest rate was lowered from 12.5 percent to 11.5 percent.

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Economy

Labour to Begin Strike as FG Refuses to Back Down on Petrol Price, Electricity Tariffs

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Ayuba Wabba

Labour to Embark on Industrial Action to Force FG  to Reverse Increase in Petrol Price, Electricity Tariffs

The sudden increase in prices of fuel and electricity tariffs despite the negative impacts of COVID-19 on the Nigerian people has forced the Nigerian labour union once again to announce an industrial action to compel the Federal Government to emulate other economies easing COVID-19 impacts through various palliatives and measures.

Labour union on Tuesday set Monday for what it described as “unprecedented mass action” and “total strike” to get the government to reverse the hike in petrol pump price and the increased electricity tariffs.

At a meeting with members of the National Administrative Council, Presidents and General Secretaries, the Nigeria Labour Congress National Executive Council (NEC) agreed to embark on a total strike against what they described as anti-people policy.

While the ultimatum given to the federal government by Trade Union Congress (TUC) expired on Monday, TUC has extended it till Monday in line with NLC announced industrial action.

NLC President Ayuba Wabba, who read the communique of the meeting, said: “NEC resolved to reject in its entirety the issue of hike in electricity tariffs by almost 100 per cent as well as the fuel price increase in the name of full deregulation.

“This decision is premised on the fact that these twin decisions alongside other decisions of government including the increase of VAT by 7.5 per cent, numerous charges by commercial banks on depositors without any explanations will further impoverish Nigerian workers and citizens.

“Therefore, this increase, coming in the midst of the COVID-19 pandemic, is not only ill-timed but counter-productive.

“NEC also observed that the privatisation of the electricity sub-sector seven years down the line has not yielded any positive result. Whereas, the entire privatisation process, the entire sector was sold at about N400 billion, we are surprised that government within the last four years injected N1.5 trillion over and above the amount that accrued from this important asset.

“Therefore, NEC came to the conclusion that the entire privatisation process has failed and the electricity hike is actually a process of continuous exploitation of Nigerians.

“On the issue of the refineries and also the increase in the pump price of PMS, this particular issue had been on the table for more than three decades and the argument has not changed.

“Whether it is the name of full deregulation or subsidy removal, what is obvious is that it is fuel price hike and this has further eroded the gains of the N30,000 minimum wage because it has spiral effects which include the high cost of food and services and the reduction in the purchasing power of ordinary Nigerians.

“While demanding that our three refineries should be made to work optimally, NEC also concluded that government has business in doing business because the primary purpose of governance is about the security and welfare of the people and if in other countries, governments are maintaining refineries, and they are working optimally for the benefit of the people, Nigeria cannot be an exception.

“In the light of these, NEC decided to endorse the two-week ultimatum given to the Federal Government to reverse those obnoxious decisions and also pronounce that the action proposed by the Central Working Committee is hereby endorsed by the NEC that 28th of September should be the date that those decisions should be challenged by the Nigerian workers, our civil society allies and other labour centres.”

“We’ll meet. We don’t want anything that will cause more financial pain to workers.”

Speaking on the matter and the reason for industrial action, TUC’s  President Quadri Olaleye and Secretary-General Comrade Musa-Lawal Ozigi, urged to Nigerians to get ready for the “unprecedented mass action”.

TUC said it resolved to work with the NLC and civil society allies because of the magnitude of the situation. Hence, it suspended the previously planned strike to join force with NLC and others.

Consequent upon this, the ultimatum which should expire by midnight of today (yesterday) has been shifted to 28th September 2020 for effective and maximum effect.

“We want to use this opportunity to call on Nigerians, especially those in the informal sector, to bear with us while the industrial action lasts.

“There is no need for the pains we bear. It is a needless one. They ask us to tighten our belts while they loosen theirs. Services are not rendered yet we are compelled to pay estimated bills.

“You will recall that this government during its electioneering campaigns in 2014 told the world there is nothing like subsidy. We were told that they will build refineries. All that is history now.

“We run a mono-economy and any hike in fuel automatically will have an adverse effect on us, yet successive governments tow that path because they are not creative.

“As at today, about eight states are yet to commence the payment of new minimum wage and its consequential adjustment even though the President signed it into law on April 18, 2019. We have written letters to the governors and also engaged them in dialogue but all to no avail. Sometimes we wonder if these people have a conscience at all.

“The Congress hereby appeals to all Nigerians to get ready for the unprecedented mass action against corruption, obnoxious policies, rape and other violent offences, breach of the collective agreement, unemployment, etc.

“We also call on the USA, UK, Germany, Spain, etc to support our struggle by placing indefinite visa ban on our political leaders whose stock in trade is to loot and impoverish the masses and the country. We can no longer take it. Enough is enough!”

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Economy

AfCFTA Must Be Backed by Legal Framework to Yield Desired Results -Lawan

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For AfCFTA to Achieve Expected Results, it must be Backed With Legal Framework

Senate President, Ahmad Lawan, has said for the African Continental Free Trade Agreement (AfCFTA) to yield desired results, it must be backed by necessary legal frameworks, right policies and robust implementation.

The Senate President made the statement when the delegation from the African Continental Free Trade Area Secretariat led by Wamkele Keabetswe Mene visited him in Abuja.

Ahmad Lawan, who was represented by Prof Ajayi Boroffice, said Nigeria’s signed the AfCFTA agreement to benefit Africans and reduce the huge unemployment and underemployment facing the continent from South to West and East to North.

This high unemployment rate and underemployment rate, according to him, had led to the migration of some of Africa’s top brains and experts. He said the economies of African nations had been characterised by weak economic productivity, low efficiency and limited resources.

He described AfCFTA as “a step in the right direction for the growth of African economies, through limited restrictions, leading to the stimulation of trade, commerce, and industry”.

“In signing the AfCFTA, and depositing the instrument with the African Union Commission, our countries made a statement on the determination of our collective economic fate.

He, therefore, said the fate is now in our hands to deepen growth and development on the continent through requisite legal frameworks, right policies, and robust implementation.

The initial momentum from the signing of the agreement needs to be continued, for a greater continental impact, to benefit Africans, both on the continent and outside it,” he said.

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