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|Nigeria seeks budget support|
CBN says forex restriction policy
already paying off
From Washington, the headquarters of the Breton Woods multilateral associations the International Monetary Fund
(IMF) and the World Bank in America came compliments for Nigerias economic recovery programme, according to the Finance Minister, Mrs.
The commendation is even as the Central Bank of Nigeria (CBN) Governor, Mr.
Godwin Emefiele, said yesterday that the countrys foreign exchange limitation policy has begun to pay off with some manufacturers of some imported goods signaling interest to begin production in Nigeria instead of foreign actions because
of the high price of imported products occasioned by the policy.
We got many sanctions and the direction by which we seek to take the Naija market.
Particularly, we held bilateral meetings with particular bilateral agencies, such as the Islamic Development Bank
where we've agreed to work jointly on a micro-finance scheme for women;
the Japanese development agency where we have agreed
to work together on power projects and they've consented
to make considerable investments in the area of power which I believe will be very favorable for Nigeria and the IFC.
Similarly, we had a meeting with them this morning (yesterday),
again discussing investment in power and some of our banks to
shore up their places and likewise the ADfB on arrangements for investments in agriculture and collaborations in a
range of initiatives that would help us to diversify the economy.
Similarly, we'd conversations with the World Bank around our budget support request
and we have already been able to have quite productive meetings to understand what the next steps
are in the process and we're very positive of a great outcome.
In his remarks, the CBN Governor, Godwin Emefiele, spoke
on the various monetary policy measures of the government to
improve productivity at all levels of the market, adding that both in the medium and long terms, the various policies, including the currency
policy regime, are bound to arouse the market.
The two essential government officials made the disclosures in Washington DC, United States
(U.S.) at a press briefing as part of actions of this years Spring
The minister spoke on the gains of this years Spring Meeting and the several bilateral meetings held between Nigeria and her partners.
Her words: The gains are various and important for the Nigerian authorities.
At least, we could network with our co-workers, other ministers of finance of
the G 7 nations and the G-24 countries and compared notes
and their expertises. I think this strengthens the validation the lessons
we have decided to restructure Naija is the right one.
According to him, in furtherance of its statutory mandate,
the apex bank can also be concentrating more
to expand giving to vital sectors such as agriculture, mining and manufacturing, adding
that some of the immediate increases of the fiscal and monetary policies are the raising foreign investments
in the market.
Separated stakeholders say policy may facilitate company, stifle local businesses
For diverse stakeholders in the economy, the Federal Governments recent currency swap deal with China holds both glowing prospects and serious implications for Nigeria even as the naira inched up against the dollar at the weekend at the parallel market.
During his official trip to the worlds second largest economy, President Muhammadu Buhari reached a naira and yuan swap deal,
scripted to ease trade trades between both nations, devoid of present exchange challenges with the United State dollar.
Moreover, the deal, according to Presidency sources, has the potenrial
of shoring up the value of the nations money, in the foreign currency market, through a concomitant emergent bid scheme, with
strategic decreased need for dollar and other major
currencies, aside from the yuan.
The currency swap deal is composed of an arrangement between two central banks, at
least one of which must be an international money issuer, to swap their currencies.
The central banks party to the swap transaction can lend the proceeds of the swap,
against collaterals they deem adequate, to the commercial banks within their jurisdiction, to provide them with temporary liquidity in a foreign currency.
But pessimists pointed out that the swap deal wasn't consummated between both states
apex banks but between Central Bank of Nigeria (CBN) and
Chinas ICBC- the worlds largest lender by total assets and market capitalisation. While this may
not impact the objects of the swap deal at all, it
raises some fundamental sovereign dilemmas, based on an analyst who spoke on condition of anonymity.
The Managing Director/Chief Executive Officer of Cowrie Investment
Limited, Johnson Chukwu described that the currency swap scheme would address ,
on a short term basis, the present liquidity challenge in the states foreign exchange market.
He said: I think that Nigerias overriding objective for the currency swap will be to address
short-term foreign currency liquidity challenges that has
led to CBNs inability to fulfill foreign currency demands.
With the currency swap, determined by the value, a significant portion of Nigerias import bills from China
would now be denominated and settled in yuan, thus reducing the need for dollar by Nigerias importers.
Yet, he pointed out the major draw back to
the currency swap policy is that an unrestricted
use of yuan, at an overvalued naira exchange rate, if the N30/RMB is the agreed
exchange rate, will definitely support importation and stifle local production of goods.
I recommend that the Government should try and incorporate a strategy much like that of the cement
business policy, which would need some of the imports from China to be made locally after a defined
timeline, particularly if Nigeria has comparative producing edge
for such products. Examples that can readily come to mind include fabrics, plastics, ceramics,
He clarified the increase of inclusion of
Chinese Yuan within Nigerian reserve currency was done about
five years ago by the immediate past CBN governor, primarily to diversify the
reserve and reduce the currency risk connected with the
That action was taken at a time when the U.S. economy was
particularly vulnerable due to the weakness of their market after the global financial crises
activated by sub-prime mortgage.
In his reaction, the National President, National Palm Produce Association of Nigeria (NPPAN),
Henry Olatujoye, welcomed the currency swap deal, describing it as
an incredible measure that would significantly reduce the
increasing pressure on the U.S. dollar, which has gone haywire in the foreign exchange marketplace.
According to Olatujoye , the determination has the ability of
bringing double investment to the country from
China on one hand and from the U.S. on the other.
The NPPAN president allayed any concern that the determination could bring about the higher importation of Chinese goods into Nigeria,
citing the economic competition or currency
war between China and America.
He, however, expressed the fear that European nations may not be well disposed to it because it's with the capacity of adversely impacting their
trade balance with Latest Naija News Jan 2017,
warning that their stakeholders could frustrate the move.
The Chairman, Mobile Software Solution, Chris Uwaje, believed that the naira to yuan swap
arrangement should reduce the pressure on the naira if correctly executed.
According to him, the agreement if it becomes a
reality, means the de facto currency, dollar , will not hold
on the import and export deals between Nigeria and China.
Uwaje continued: We dont must use dollar to pay because its going to be more expensive, we pay with yuan. By so doing we prevent every
kind of round tripping.
Uwaje urged Buharis economical team to see how the country can indeed leverage
on the technology prowess of China for Nigeria to achieve a sustainable economy.
According to Gbade Buraimoh, a Lagos-based financial expert, the quest for
dollar through banks will definitely reduce, as all transactions between Naija and China will maintain yuan in place of dollar.
He detected that oil sales from Nigeria to China would be settled in Chinese
money, stressing that access to yuan would also be simpler.
The swap will eliminate challenges originating from transactions with the dollar and boost company flexibility between Nigerian and Chinese, Buraimoh described.
The Director-General of Lagos Chamber of Commerce and Industry, Muda Yusuf agreed that
the swap deal would smoothen the payment system
in the bilateral trade between both countries but stressed
that it might not really reinforce the naira in the forex marketplace,
as the nation would have to accentuate its productive
base to achieve that.
An Abuja-based international affairs and diplomacy specialist, Kadiri Abdulrahman, seen the currency swap deal as a positive move
towards enhancing the value of the naira, therefore improving accessibility to cheaper foreign exchange, in favour of members
of the business community.
The Director- General of the African Affairs Department of Chinas Foreign
Ministry, Lin Songtian told reporters in Beijing after
the deal was signed by the Governors of Nigerias Central bank and the Industrial and Commercial
Bank of China Ltd. (ICBC) that the Renminbi (yuan) is free to flow among different banks in Nigeria and has
been included in the foreign exchange reserves of Nigeria.
Nigeria isn't the first state that China would enter into this arrangement with.
The Asian powerhouse has multiple year currency swap agreements of the Renminbi with
Argentina, Belarus, Brazil, Hong Kong, Iceland, Indonesia, Malaysia,Singapore, South Korea, United Kingdom and Uzbekistan.
In accordance with the Peoples Bank of China (PBoC), those swap agreements were
intended not only to stabilise the international financial market, but
also to ease bilateral trade and investment.
Meanwhile, the advantage of the currency swap deal and other agreements reached in Beijing during Buharis excursion to the
Far East Asia nation has rubbed off on the air travel sector, as a Nigerian carrier, Air Peace declared that it would soon commence scheduled flight to China from Enugu.
Chairman of Air Peace, Allen Onyema shown at the Enugu Economic Summit that the airline has been made Nigerias official flag carrier
for the course.
According to him, with the anticipated ease on the pressure
on the dollar, it would bring down the value of
the dollar in regard to the naira, which he said would now help it become possible for American investors to put money into the Nigerian market again.
In his perspective, the present high rate of the dollar in Nigeria had in recent months discouraged American and Western investors in the
The government and the flying people created a yearning opening, all the arrangements in this state are tilted to one side, the foreign airlines, but this
government of Muhammadu Buhari has began to do things differently recognising the local airlines and seeing that in Air Peace there is a lot of quality, so they really determined to give us when we implemented
it didnt take time before they gave it to us, said Onyema.
The United Kingdom is totally behind President Muhammadu Buhari in the ongoing attempts by his
administration to rid Nigeria of corruption, its Minister for International Development, Nick Hurd, has ensured.
Hurd told the News Agency of Nigeria (NAN) in Abuja yesterday that fighting corruption was crucial to
transforming the countrys future.
We've been very active in supporting President Muhammadu Buhari's effort against corruption in Nigeria and we think it really is
fundamental to transform the future of the country.
We entirely support priorities that the President has given to tackling corruption in Nigeria.
We believe that corruption is absolutely the right priority and we want to support him in that, he
The minister urged the Federal Government to give attention to public sector reforms aimed at making corruption unattractive to workers and
Meanwhile, the son of former premier of previous Western Region and erstwhile chieftain of the
Peoples Democratic Party (PDP), Chief Niyi Adegbenro, has backed the
foreign trips embarked upon by the President, saying
such international involvement was needed to reposition the nations market.
Adegbenro, who has now cease partisan politics, told reporters
at the weekend in Abeokuta, Ogun State that continuing moves by Buhari and the Central Bank of Nigeria (CBN) to revive the
nations economy need wholesale support.
He described as unwarranted the criticisms against the travels, recalling that former President Olusegun Obasanjo embarked on similar trips
in the early stage of his administration which resulted in the successful debt relief for the state.
Adegbenro said the Presidents international involvement was in Naijas best interest, adding
that he was optimistic that it would soon yield favorable outcomes.
Let's give Buhari the opportunity as far as I 'm
concerned. I 'm not saying he's a messiah, but he is a redeemer.
"There is no doubt about the fact that the National Assembly has the power. And when they appropriate, naturally, they have to take action in collaboration with the Executive arm.
"Whatever they suitable will need to maintain the form of the Appropriation Act.
So when an Action of the National Assembly, it requires the assent
of the President for this to become law. "So, it is a collaborative effort between the Legislative arms and the Executive."
He included: "They do have the power to alter it, but once they do it, they desire the comprehension of the President." "It is not they just shift it anyway they wish and just that something was brought by him; the President is entitled to propose a budget, which should not be tampered with."
"But the most significant thing is that if there are matters they would like to propose in the budget, they need to get the comprehension of the Executive arm.
"The National Assembly does’t need to believe that because they
have the power they can appropriate anyway." Yadudu, who was legal adviser to former military Head of State, the late Gen. Sani Abacha, noted that non-passage of the budget could send the wrong signal to Nigerians, who've been at the receiving end of economic crisis in recent times.
He stated: "It's difficult to say so if the issue of padding must do with pursuit of selfish program of the National Assembly members."
"All I know is it is a collaborative effort
between the Legislature and the Executive arms and that they have the power to
proper, but the initiative is that of the Executive.
"So, there must be a combined effort between the two arms of government."
"Non- passage of the budget can send a wrong signal, but this really is not the first time the budget has gone up without passage to the month of April or May. If they pass it early enough, it sends the correct signal and everything would follow what is found in the Appropriation Act."
Managing Director of Nigeria Export
Import Bank (NEXIM Bank), Bashir Wali, has said
that local production of crucial commodities in Nigeria has the potential to reflate the economy.
Wali, who made this known while speaking exclusively
with The Guardian in Abuja, said that more Nigerians need to embrace the manufacturing
sector of the economy. "Nigeria’s production sector has great potentials to contribute to increased revenue for the state, especially if trade is facilitated with good transportation system. Nigerians need to embrace this sector he said.
The bank leader stressed that manufacturing of distribution, sale or goods in the nation and within the sub-region prevents capital flight. He added that it also encourages regional trade and offer employment opportunities to various amounts of skilled and unskilled workers.
Attesting to the dominance of made -in-Nigerian household commodities in nearby West African nations and in Central African Republic, Wali said vast majority of household and essential commodities sold in those areas are made in Nigeria. He said: you are going to be amazed to learn that a good number of manufactured products sold in their own marketplaces are products proudly made in Nigeria "If
you go to Central Africa, even up to most states in the
West African region.
I was lately for instance in Congo, and what
I saw was surprising. More than 80 per cent of the merchandise on sale
there were made in Nigeria. You name it, the noodles that are indomie,
sugar,salt, plastics pharmaceuticals products that are made
here in Nigeria were on sale everywhere in their markets."
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