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Economy (48)
NIGERIANS ECONOMY RECEIVE HOPE FROM THE WORLD BANK
Written by Kayode Olorundare
In a gloomy assessment of Nigeria's economy released, the World Bank predicted that a significant transformation of the country would take ten to fifteen years.
The disclosure highlights the significant obstacles that lay ahead and demands swift and decisive measures to guide the economy back toward resilience and recovery. Speaking at the 30th Nigerian Economic Summit Group (NESG #30), Senior Vice President of the World Bank Group Indermit Gill stressed that the government must exert all of its efforts to shield the most vulnerable citizens from hardship because both their lives and the lives of Nigeria's 110 million children depend on it.
"To transform its economy, Nigeria will need to stay the course for at least another 10 to 15 years," he stated. That being said, I'm not sure if you agree or disagree with me. If it does so, its economy will change and it will start to grow faster than other countries in sub-Saharan Africa, contributing to the transformation of the continent. While completing these tasks is extremely challenging, the benefits are enormous. This is the lesson learned during the past forty years, as well as from the experiences of nations like Norway, Korea, Poland, India, and others. So once more, I could say something controversial. However, Nigeria's 2003–2007 reforms were exactly what the country needed.
However, they did not last. Everyone is harmed by the current exchange rate, and monetary, and fiscal reforms, but poor Nigerians are particularly badly hit because of the country's exorbitant food and transportation costs. "The lives of Nigeria's 110 million children and its most vulnerable residents depend on the government doing everything within its power to shield them from misery. The long-term survival of Nigeria and the future of these 110 million children depend on it continuing with the reforms. Now that the year is almost over, there are three things that Nigerian policymakers need to accomplish.
The first is to prioritize non-oil growth. This requires a competitive exchange rate, which Nigeria now has. Nigeria’s real exchange rate is at its most competitive in at least 20 years,” he said. “This is a great opportunity for the private sector. To protect the poor and maintain competitiveness, the central bank must stay focused on inflation. It should resist the lure of short-term capital inflows that might push up the Naira’s value too quickly and curb non-oil growth
Rather, it should replenish its foreign exchange reserves to act as a buffer against fluctuations in oil prices. Once more, I believe that Governor Cardoso of the Central Bank of Nigeria is doing many of these things, and we should support him. He continued, saying that the government is implementing a large-scale targeted temporary cash distribution program that has already reached between 4 and 5 million people. "The second thing is to help every vulnerable household cope with high inflation," he stated. This should be swiftly expanded to 10 million families, and if needed, possibly even more.
The World Bank added that the government needs to use the money saved by eliminating fuel subsidies to safeguard its most vulnerable populations. According to Gill, the government ought to implement an economic safety net for the most susceptible residents in the coming years, funding it with the proceeds from the withdrawal of fuel subsidies and changes in exchange rates.
The economy must become more ready for business. Furthermore, I believe that the NESG Chairman has outlined a very clear agenda for what needs to be done in this area. Over 12 million young Nigerians, including men and women, will join the workforce in the next ten years. Their ability to find work will be largely dependent on the private sector and significant private investment, both domestically and internationally, in the non-oil economy. To attract investment of this kind, the national power system must be strengthened, transportation must be improved, security must be increased, and laws controlling private enterprise must be strengthened. Failing in these areas would destroy the future of yet another generation and impede reform initiatives throughout the continent.
The elites of Nigeria—all of us in this room are elites—must band together to back these reforms. They will be granting possibly the most significant wish for their children and grandchildren—a broadly prosperous and stable Nigeria. The World Bank team in Nigeria right now is among the greatest. Here we have a first-rate country director. Your team of economists, energy experts, and operations personnel is excellent. They possess the necessary knowledge. Above all, though, particularly during trying times, they possess the experience that the situation calls for. Numerous professionals in our Abuja office have experience with comparable adjustments that have taken place in Indonesia and numerous other locations.
You ought to utilize that to its fullest. But as I got ready for this visit, the most significant thing I discovered about our team is that they have a deep love and respect for regular Nigerians. That's the one thing that stood out to me about them. The people and government of Nigeria can always rely on their backing, and this team will receive all the help they require from the World Bank Group, he said.
TINUBU ECONOMY POLICIES ARE STRIVING: ENIOLA BADMUS.
Written by Kayode Olorundare
The Nigerian economy under President Bola Ahmed Tinubu has received plaudits from Nollywood actress Eniola Badmus.
She pointed out that the nation's exports are rising and imports are falling, suggesting a growing economy. The actress underlined that trade has advanced in Nigeria under Tinubu's leadership, emphasizing a change in focus from consumption to production.
"Our exports are increasing, and our imports are decreasing," she wrote. That indicates that the economy is growing. As of today, 2024, our exports have reached N38.59 trillion, while our imports totaled N24.44 trillion. We now have a record eight-month trade surplus of over N14 trillion as a result. It has never happened in Nigeria. Never. The change from consumption to production is welcome.
Her evaluation is conducted against the backdrop of the nation's tremendous hardship and inflation. Millions of people participated in a movement known as "End Hunger Protests" last month to express their opposition to the nation's deteriorating conditions.
CBN EXPECTS INFLATION TO SUBSIDE WITHIN THE NEXT SIX MONTHS
Written by Kayode Olorundare
Over the next six months, fluctuations in energy prices, exchange rates, and transportation expenses are expected to be the main drivers of inflation, according to the Central Bank of Nigeria (CBN). In its "Inflation Expectations Survey for August," released on Thursday, the CBN provided the inflation outlook. The study is conducted in the wake of Nigeria's inflation rate dropping to 33.40 percent in July from 34.19 percent in June. According to CBN, the survey's foundation was built by the responses of businesses and households that were questioned about how they saw the inflation rate.
Businesses and families anticipate that fluctuations in energy prices, exchange rates, and transportation expenses will be the main drivers of inflation during the next six months, according to the financial regulator. The respondents anticipate a modest decrease in the inflation rate over the next six months, according to the apex bank, "as their indices showed considerable improvement over the review periods." In contrast to families, the study indicates that corporations are expecting a lower rate of inflation.
According to CBN, respondents anticipate higher spending over the next three and next month, with positive indices of 29.2 and 30.3 points, respectively. "Nevertheless, a negative index of -7.8 points indicates that they anticipate a significant decline in their spending over the next six months," according to CBN. "Businesses indicated a consistent decline in their expenditure appetite over the reviewed periods, while households expect to maintain their expenditure basket until October 2024 but significantly decrease it in February 2025." According to the CBN, 84.9 percent of respondents thought the rate of inflation in August was too high overall, "culminating in an index of -63.2 points."
According to CBN, energy prices, transportation costs, and exchange rates were the main determinants of how households and companies perceived inflation.
NNPC SUPPLIES DANGOTE’S REFINERY WITH 30 MILLION BARRELS OF CRUDE OIL
Written by Kayode Olorundare
The Dangote oil refinery has received 30 million barrels of crude oil from the Nigerian National Petroleum Company Limited, with intentions to supply an additional 17 million barrels shortly. Adedapo Segun, the Executive Vice President of NNPCL Downstream, revealed this information on Thursday during a speech on Arise Television. Segun states that the business will deliver 11.3 million barrels in October in addition to 6.3 million barrels in September. "We will supply 11.3 million barrels in October, bringing our total supply to about 30 million barrels—6.3 million this month."
He continued by saying that this plays a role in the federal government's choice to sell crude to nearby refineries. The 6.3 million barrels will be delivered in seven cargoes, according to Segun. He voiced worry that the pump price as it is does not accurately represent the state of the market.
The current pump price does not accurately represent the market. It is unusual because NNPCL is the only importer of Premium Motor Spirit (PMS) in the nation. He emphasized that market forces, not any one organization, should control fuel prices. "We should be moving towards a situation where the free market determines prices," he added. He made it clear that NNPC's position as the only importer of gasoline was a result of the state of the market, not a conscious choice. "Allow me to place it in the right context. Not that NNPC is a regulator. We did not decide to act as the exclusive importer. Who enters the market is not decided by us. When others stopped participating, we took over. It has nothing to do with our desire to have monopolies.
He went on to say that perfect market circumstances, such as a more liquid foreign exchange market, would be necessary to achieve a stable fuel supply and pricing. "Optimal market conditions and foreign exchange liquidity are imperatives," he continued, implying that more extensive economic changes might be required to tackle the problem of fuel prices. Working closely with commercial refineries like Dangote, NNPC has made sure that there is a consistent supply of crude oil available for processing.
The CORAN representative contended that unless the government addressed the exorbitant cost of fuel, particularly by collaborating with the regional refiners, it would be impossible to combat the rising inflation rate. If the price of petroleum products is not addressed at the pump, inflation cannot be controlled. You cannot claim to have a plan to reduce inflation while excluding important industries like refineries; you must include us and let's collaborate.
Furthermore, CORAN claims that we can entirely cease importing petroleum goods in 18 months if the Nigerian government cooperates with our plans and initiatives. Refineries exist in varying states of completion. We can create what Nigeria will need in eighteen months, he said.
Idoko stated that there is enough crude oil in Nigeria to support Dangote and other refineries, but the main issue facing the upstream oil industry has been crude theft. The crude oil we have is sufficient to run these refineries, and fresh fields are getting licenses every day. Thus, crude will be available to supply the refineries. The everyday theft of crude is the reason for our declining production rate.
Crude theft will decrease if there are refineries nearby. Since most refineries are situated close to some of these fields, people steal crude through the pipelines. Because of this, producers of crude oil won't have to worry about pumping their product through pipelines to the export terminal. "The local refineries will simply transport their products to these locations by truck, short pipeline, or barge from their fields. Because dishonest people are stealing petroleum from the lengthy pipes, we are losing a lot of money, Idoko said.
According to the CORAN official, local refineries are expected to purchase crude oil from foreign oil corporations at a price that is less than the international price. He requested that the Federal Government make sure that the price of crude oil is expressed in naira rather than dollars, citing the possibility of lower fuel production costs and less pressure on the local currency. He asked the IOCs to start selling fuel directly to local refiners rather than sending them to their trading representatives in Europe, mentioning that stopping fuel imports would boost the naira against the dollar.
The NMDPRA boss had earlier warned that Nigeria could not rely heavily on the Dangote refinery for its fuel supply. According to him, the refinery had requested the regulator to stop giving import licenses to other marketers to be the only fuel supplier in Nigeria.
"We cannot rely solely on one refinery to feed the country. Dangote is asking that all petroleum product imports, particularly AGO, be suspended or stopped and that all marketers be directed to the refinery. This is not good for the country's energy security. And because of monopolies, that is bad for the market," Ahmed emphasized. Aliko Dangote, the president of the Dangote Group, refuted the accusation, questioning how he could have a monopoly when the Nigerian National Petroleum Company Limited is spending $4 billion to renovate government-owned facilities. The Federal Government of Nigeria has been urged by many citizens to assist regional refineries and halt fuel imports.
They said they hoped this would drive down the price of gasoline and diesel at the pump. Dangote, who has been bemoaning the purported inability of foreign oil corporations to provide crude to his refineries, declared lately that he will start supplying gasoline between August 10 and August 12. However, if the current crude crisis continues, a Dangote Group official stated in confidence that the refinery may export its gasoline.
In a statement signed by their National Coordinator, Mrs. Bisi Bakare, the group—which operates under the auspices of the Pragmatic Shareholders Association of Nigeria—expressed shock at the regulator's accusations about the caliber of Dangote's fuel production. Bakare praised Dangote for making the audacious decision to build one of the biggest refineries in the world. She emphasized Dangote's resolve and patriotism by highlighting his significant investments, such as the refinery, and his dedication to the country's progress.
The majority of Dangote's business investments are made in the local area, she continued, and he has made sure to pay taxes, create a large number of jobs, and provide shareholders with steady profits. The organization denounced what it called regulatory agencies' "unwarranted attempts to demarket the refinery." It issued a warning, stating that such measures might discourage foreign and local investment and jeopardize government efforts to guarantee fuel availability and maintain price stability. "We need to unite behind the Dangote refinery to offer vital support, like the distribution of crude oil, participation from foreign oil companies, and coordination with regulatory agencies," she stated.
According to Bakare, Nigeria may save approximately 30% of its foreign exchange expenditures on offshore refining if the refinery is built, which would greatly help the nation's foreign exchange problems. "As shareholders, we are unwavering in our commitment to supporting Alhaji Aliko Dangote's vision to strengthen the country's economy and expand opportunities for our citizens," the shareholder stated. IOCs criticized The Dangote Group Management maintained last week that the IOCs were still impeding the refinery's ability to provide crude oil to its 650,000-capacity facility. In a statement, the group alleged that the IOCs insisted on selling crude oil to its refinery through their foreign agents, saying the local price of crude will continue to increase because the trading arms offer cargoes at $2 to $4 per barrel, above NUPRC.
NIGERIA DEBT HITS 121.67 TRILLION (91.46 BILLION USD)
Written by Kayode Olorundare
Nigeria's overall public debt stock reached ₦121.67 trillion (91.46 billion USD) in March, according to the Debt Management Office (DMO).
Patience Oniha, the DMO's director general, announced this in a statement on Friday in Abuja. According to Oniha, the Federal Government, the 36 state governments, and the Federal Capital Territory's (FCT) total debt, both domestic and foreign, made up the debt stock.
She stated that as of March, the total amount of debt was ₦65.65 trillion (46.29 dollars) for domestic debt and ₦56.02 trillion (42.12 billion dollars) for overseas debt. Comparatively speaking, she stated that as of December 2023, the total debt stock was ₦97.34 trillion, or 108.23 billion dollars. According to her, the expansion in the domestic debt component needed to close the 2024 budget deficit and the volatility of the foreign exchange market in the first quarter were the main reasons for the increase in the total debt stock.
Only the domestic debt component of the overall debt stock increased from ₦59.12 trillion on December 31, 2023, to ₦65.75 trillion on March 31, 2024, excluding changes in the value of the Naira during the first quarter of 2024. "The increase came from securitization of a portion of the ₦7.3 trillion Ways and Means advances at the Central Bank of Nigeria (CBN) and new borrowing to partially finance the 2024 budget deficit," the spokesperson stated. She stated that while borrowing will continue as planned in the 2024 budget, increases in government revenue would go a long way toward guaranteeing debt sustainability.
The current administration's reform strategy has been recognized by the German government as the "bold steps" President Bola Tinubu has taken since taking office on May 29, 2023, to elevate the nation. In an interview with NAN in Abuja, German Ambassador to Nigeria Annett Gunther presented the recognition. He cited the administration's initiatives over the previous year to support the oil industry, address insecurity, and fight corruption. Gunther emphasized that the Federal Government must continue concentrating on the ongoing economic changes, stating that they were long needed.
The economic reforms in the country were long needed, and Tinubu showed guts to carry them out even though he knew they would have immediate consequences like inflation, the speaker stated. According to the German envoy, Tinubu's reform initiatives will eventually contribute to the stabilization and strengthening of Nigeria's economy, and the president's activities are essential to delivering essential social services to the populace. Although the president is on the right route, Gunther added, "I would not say he has done everything. We are eager to support and work together to make meaningful progress and achieve this goal."
She discussed the necessity for the Tinubu-led administration to bolster its security apparatus to stop kidnappings, murders, and other associated offenses. She claims that Germany is prepared to assist Nigeria in combating insecurity since doing so will promote nation-building, governmental transparency, and the enthronement of democracy's benefits. "The Inspector General of Police and the National Security Advisor have been collaborating closely with us.
In Nigeria, we have been actively involved in police reforms. We have former German police officers with expertise who have trained over a thousand Nigerian trainers, who in turn have trained numerous additional police officers. We are pleased to be the biggest donor in this field, and we have also renovated and outfitted the police training college. We are collaborating with the administration to advance security and governance," she continued.
To preserve stability in the foreign exchange (FX) market, the Central Bank of Nigeria (CBN) declared that it will continue to sell dollars to operators of Bureaux De Change (BDCs). The CBN has made these interventions for the third month in a row.
The facts of the most recent intervention were provided by the CBN in a letter to the president of the Association of Bureau De Change Operators of Nigeria (ABCON).
The Central bank will offer $10,000 at a set rate of N1101 per US dollar to each of the 1,588 participating BDCs. BDCs have the permission to sell these dollars to qualified end users at a maximum margin of 1.5 percent above the CBN purchase price, or around N1,116.15 per dollar. This places a cap on the possible profit that BDCs can earn from each deal.
Additionally, the CBN directed all qualified BDCs to start paying the Naira equivalent of their dollar allocation right now. The letter included specific CBN Naira Deposit Account Numbers for BDCs to use to make these payments. To obtain their dollar allocation, BDCs must deliver payment confirmation and all relevant paperwork to the specified CBN branch after making a payment.
BDCs must abide by all previously established norms and regulations, as stated in earlier CBN messages, the CBN has emphasized.
This demonstrates the CBN's dedication to maintaining accountability and openness in the foreign exchange market. "The ongoing dollar sales to BDCs aim to address potential FX shortages at the retail level, particularly for low-value transactions," a CBN official acknowledged to The Nation. This intervention method will assist in maintaining exchange rate stability and enhancing small enterprises' and people's access to foreign exchange.
For BDCs, the CBN's fixed exchange rate and constrained spread provide some consistency. "To achieve the objectives of price stability and improved FX accessibility, the CBN will closely monitor the impact of these interventions and adjust its strategy as needed," the official said. The effective use of funds allotted to this intervention is essential to reaching lawful end users and putting a stop to illicit behavior.
The limiting profit margin, however, may result in lower total revenue for BDCs. "The CBN's ongoing dollar sales could deplete its foreign exchange reserves," he continued. In difficult economic circumstances, these reserves are essential for preserving import capacity and protecting the Naira. Balogun issued a warning, saying that "it might discourage responsible behavior if BDCs and end-users come to expect consistent dollar injections from the CBN." Companies that import a lot of goods might not put as much emphasis on increasing their efficiency or looking into domestic alternatives.
As a substitute, he suggests that the CBN "allows for a more flexible exchange rate determined by market forces that could discourage speculation and encourage efficiency." Long-term more sustainable solutions can involve addressing the root causes of FX demand, such as excessive domestic inflation and reliance on imported commodities. There are no simple answers to the complicated problem of the CBN's approach to the FX market. In assessing these policies' efficacy and long-term effects on the Nigerian economy, the upcoming months would be critical.
FRESH INFLOW OF FOREX INCREASE CONFIDENCE IN CENTRAL BANK REFORM
Written by Kayode Olorundare
Following the Monetary Policy Committee (MPC) meeting, the Central Bank of Nigeria (CBN) announced that $1.5 billion in foreign exchange had entered the Nigerian economy. The CBN is hopeful about the state of Nigeria's foreign currency market in light of this development.
The CBN claims that this encouraging improvement is a direct outcome of its continuous monetary policy initiatives.
Acting Director of Corporate Communications for the CBN, Mrs. Hakama Sidi Ali, said data indicates the inflows resulted from the CBN's efforts to stabilize the foreign currency market.
The Autonomous Foreign Exchange (AFEX) market has witnessed an appreciation of the Naira, which indicates its stability. The Naira was trading at N1,309/$1 as of Thursday, March 28, 2024, a considerable gain above N1,611/$1 during the second week of March.
Mrs. Ali noted the encouraging trend but underlined the CBN's steadfast commitment to preserving exchange rate stability and making sure the Naira accurately represents its value to other major international currencies.
She said, "This development is consistent with the recent statements made by Governor Olayemi Cardoso after the Monetary Policy Committee (MPC) meeting on March 26, 2024."
Nigerians Should Consider Earning N200,000 Salary Instead of £2000 in the UK, Says Air Peace Boss Onyema Nigerians Should Consider Earning N200,000 Salary Instead of £2000 in the UK, Says Air Peace Boss Onyema Onyema went on to suggest that the government needs to make it more practical for airlines to have unfettered access to dollars. A chief executive officer (CEO) of Air Peace Allen Onyema asserted that a Nigerian earning N200,000 a month is better than a person earning £2000 in London, UK. Onyema spoke in an interview with TVC News on Wednesday about the importance of Nigerians having faith in their national currency.
"I agree with what Mr. Cardoso (Central Bank Governor Yemi Cardoso) said," he said. I agree with Mr. Cardoso when he says that the naira has more worth than has been portrayed and that the entire situation is fake. "Come to London, if your monthly income is £2000, you are impoverished because in London, what £2000 can buy you is only N2000. This is because a Nigerian will sit down and convert N2000 to a pound, believing he can have N4 million."In Nigeria, the one making N200,000 is better. You have the option of hiring a driver or a maid. I'm trying to convey that we should stop dehumanizing our nation, that we should love it, that we should fight for it.
Onyema went on to suggest that the government needs to make it more practical for airlines to have unfettered access to dollars. "We need government support for Nigerian airlines," he went on. In flying, money is everything. You cannot proceed if you do not have access to money. Recall that these airlines were in competition with foreign airlines and that their local banks only provided 3% loans. I'm receiving a thirty percent loan in Nigeria. In terms of insurance, the Nigerian airline is also completely out of date. My nation is stigmatized because insurance is handled outside.
Thus, the same method that we use to guarantee one airplane will be used by those larger airlines worldwide to guarantee around eight planes. Eliminating our nation's practice of city hopping is another approach to help the airlines. The naira is being strained by us. President Tinubu is aware of the difficulties he faces as a result of foreign airlines visiting his nation frequently. The president needs to demand that these bilateral aviation services agreements (BASA) be reviewed right away.
It is not intended to even be included in BASA. Nations don't engage in it. "In my nation, people travel from city to city, and these foreign airlines end up making a lot of money, which puts pressure on the dollar and the naira, and they start extorting the nation."
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To expedite import procedures and advance transparency, the Nigerian Customs Service has decreased the exchange rate for cargo clearance and import charges to match the official rate of the CBN. Effects of lower NCS exchange rates on importers from Nigeria Effects of lower NCS exchange rates on importers from Nigeria The exchange rate for cargo clearance and import duty collection has been significantly adjusted by the Nigerian Customs Service (NCS), going from N1,572.5/$ to N1,448.38 to the USD. This significant drop from the prior rate of N124.12 indicates a calculated reaction to changing economic conditions. The new exchange rate indicates a harmonization of exchange processes amongst government agencies since it is in line with the current rate on the Central Bank of Nigeria's (CBN) official window.
This action aims to improve transparency in the customs clearing system and expedite import procedures. The strengthening of the naira in the foreign currency market is reflected in the steady decrease in the exchange rate for paying import fees on the customs portal during the last two weeks. The rate steadily dropped to the current value from its peak of N1,624.7/$1 on March 12, 2024, indicating a positive trend in currency valuation. To comply with the direction to match the official rate of the CBN, the Nigeria Customs Service decided to modify the exchange rate for cargo clearance. This calculated action highlights the cooperative efforts of government agencies to preserve stability and promote commerce inside the nation.
This exchange rate decline would help importers and other import-export industry participants by reducing customs clearance costs and import tariffs. This action is anticipated to boost commerce and increase Nigerian companies' competitiveness in the international market. A proactive approach to economic management may be seen in the Nigerian Customs Service's decision to lower the FX rate for cargo clearance and import duty collection. The customs authority seeks to enhance economic growth and development by promoting efficiency and transparency in trade operations through market dynamics and alignment with the CBN's official rate.
AFTER REPEATED WARNINGS TO DOLLAR SPECULATORS BY THE PRESIDENT, CENTRAL BANK BOOSTS NAIRA WITH STRATEGIC DOLLAR SALE
Written by Kayode Olorundare
To stabilize the Naira, the Central Bank of Nigeria has started selling dollars to BDCs again. The goal of this calculated move is to reduce the difference between official and black market pricing. The Nigerian Central Bank Strengthens Naira via Strategic Dollar Sales to BDCs The Nigerian Central Bank Strengthens Naira via Strategic Dollar Sales to BDCs In a daring attempt to stabilize the Nigerian Naira, the Central Bank of Nigeria (CBN) has formally restarted dollar sales to Bureau De Change operators (BDCs), assigning $10,000 to each BDC at a rate of N1,251/$1.
The goal of this tactical intervention, which was made public on Monday, is to improve foreign currency market liquidity, reduce the difference between official and parallel market prices, and eventually aid in the Naira's strengthening relative to the dollar. The CBN laid out the terms of the currency sale in a circular sent to BDC operators. It stressed that BDCs could not sell the dollars to qualified clients at a rate higher than 1.5% over the purchase price, so restricting the sale price to N1,269/$1. This instruction represents a substantial change in the central bank's approach to foreign exchange management and a renewed commitment to stabilizing the currency market. It comes after the CBN revoked the licenses of over 4,173 BDC operators in February.
The Nigeria Autonomous Foreign Exchange Market (NAFEM) closed on Monday with the Naira strengthening to N1,408.04 to the dollar, indicating that the currency is beginning to show signs of recovery. This progress is mostly attributable to the CBN's recent policy actions, which have encouraged foreign investors to reinvest in the nation and restored trust among them. These actions include the clearing of dollar backlogs and vigorous monetary policy tightening. Finance experts have applauded these moves, pointing out that they have improved the performance of the Naira and advising the CBN to increase dollar liquidity even more to maintain this trend. The CBN's involvement has had an immediate impact on the Naira's value, but there are still concerns over these measures' long-term viability.
Experts emphasize that to preserve the stability of the exchange rate, more foreign currency must be supplied and policies must be implemented consistently. Additionally, maintaining the Naira's stable performance versus the dollar would depend heavily on controlling inflationary pressures and enhancing forex availability. It has also been acknowledged that the CBN's moves against significant cryptocurrency sites like Binance have aided in stabilization efforts, highlighting the need for a multipronged strategy to handle Nigeria's economic problems.
The CBN will be closely monitoring the results of its existing measures as it continues to negotiate the difficulties of foreign currency management. The latest actions are a big step forward. towards restoring stability and confidence in the Nigerian currency market, but achieving lasting economic stability will require sustained effort and strategic policymaking.
WHY DOLLAR CANNOT GO DOWN N400 PER DOLLAR FOR NOW?
Written by Kayode Olorundare
Those who believe that the Naira should be worth N400 to the dollar are dreaming, says Moghalu According to Kingsley Moghalu, a former deputy governor of the Central Bank of Nigeria, people who desire the Naira to exchange for N400 against the US dollar are living in a fantasy land. He felt that the exchange rate ought to accurately represent the currency's market worth. According to Moghalu, the Central Bank maintained artificiality throughout the Godwin Emefiele era in an effort to appease politically powerful but economically uneducated individuals at the time.
This artificiality allowed speculators to engage in enormous arbitrage, which weakened the economy. Nigeria's export economy is not yet very successful. That is the crux of the issue.We also don't have foreign reserves of $100 billion. What will make the Naira exchange rate go back to a fantastical level in the near future? Regaining or reaching full investor confidence, like we did when we were there (and the rate was N150-165 to the $), would also take time.
The earlier we concentrate on building a manufacturing export economy with value addition that generates genuine and substantial foreign exchange earnings apart from oil, the better. The problem of power generation—which has been at less than 4,000 megawatts for a population of 200 million people for decades—is crucial to this.
You can see the potential of the Nigerian entrepreneurial mentality if you increase power to even 20K megawatts (let alone 50K given South Africa's 60 million people or Brazil's 181K megawatts with a population marginally larger than Nigeria).
Nigeria could not be the last major African economy to devalue its currency. Perhaps Egypt is another, following that same route.
Egypt devalued the Egyptian pound, which had been set at slightly under 31 pounds to the dollar for the preceding 12 months, to almost 50 to the dollar on March 6. Since then, the value of the pound has steadily increased; on Wednesday, it was trading at 48.40. Remittances have increased in the week following the devaluation, four lenders told Reuters. According to bankers and analysts, Egyptians living overseas have been hoarding their money or transferring it home through the illicit market, where the value of the pound last month dropped as low as 70 to the dollar.
Without providing specific numbers, Prime Minister Mostafa Madbouly stated that remittances have been rising. Egypt and the International Monetary Fund last week agreed to a $8 billion financial support package that included the devaluation.
Remittances decreased from $6.44 billion to $4.52 billion in the third quarter of 2023, according to the central bank's most current figures. In the third quarter of 2021, they reached a peak of $8.15 billion, months before Egypt's economic crisis was exacerbated by the conflict in Ukraine. After the devaluation, a top banker claimed not to have seen any statistics on the overall amount of remittances. "But the flow generally is excellent," he stated. Moreover, a persistent shortage of foreign cash has led to an accumulation of commodities in Egyptian ports. According to Madbouly, over the past several days, ports have released products valued at $3 billion.