The Director General, Lagos Chamber of Commerce and Industry, Muda Yusuf says the Central Bank of Nigeria (CBN) cannot sustain the new Foreign Exchange Policy to improve the economy.
He noted that the CBN does not have the capacity.
According to him, “we need to create a window for capital competition to come in to improve the foreign exchange”.
Mr. Yusuf made this known on Channels Television’s breakfast programme, Sunrise Daily.
He however, said “the fundamental issue with the foreign exchange situation in the country is a supply side issue, we have a supply crisis.
“This situation has come about because the CBN is virtually the only supplier in the market meanwhile, the CBN doesn’t have the capacity to support the market, they have always had supplies from autonomous sources.
“So, when you are dealing with this kind of method, you deal with it both on the supply side and on the demand side.
“What we have seen over the years is the concentration on managing demands, there is nothing on the table as we speak.
“To encourage supply, we need supply either from foreign direct investors, foreign portfolio investors or from our exporters”.
He added that the policy is only aggravating the demand.
Fidelity Bank Plc has announced the appointment of Ernest Ebi as the Non-Executive Director and Chairman, designate of the board of Fidelity Bank Plc.
This is following the retirement of Fidelity Bank Plc Chairman, Chief (Dr.) Christopher Ezeh, who, after over 11 years of meritorious service, had attained the retirement age for Non-Executive Directors, in line with the bank’s policy.
Mr Ebi on the other hand was the former CBN Deputy Governor, (Policy and Corporate Services), between 1999-2009.
He was also the Managing Director and Chief Operating Officer at Diamond Bank (1998) and served as Chief Executive Officer of the defunct New Nigeria Bank Plc.
With his wealth of corporate experience, Mr Ebi joins the Board of Fidelity Bank as the eighth Chairman since the company began its operations in 1988.
The Board also approved the appointment of Mr Charles Chidebe Umolu and Mr Kings Akuma as Non-Executive Directors of the bank.
The appointments are however subject to the approval of the Central Bank of Nigeria (CBN).
The Central Bank of Nigeria (CBN) on Wednesday said reducing interest rates “will do virtually nothing” in taking Nigeria’s economy out of a recession.
The apex bank also maintained that there is no quick fix out of the recession Nigeria is currently in.
The Minister of Finance, Mrs Kemi Adeosun, had expressed hope that the Monetary Policy Committee (MPC) would lower key interest rates.
“We would love to see the MPC reduce interest rates because we think in terms of business activity that would deliver greater results to Nigeria”, she told Channels Television in an exclusive interview.
However, speaking on Sunrise Daily, the Director, Monetary Policy Department of CBN, Mr Moses Tule said the MPC had to look at the fundamentals before taking the decision to maintain the rates at 14 per cent.
Mr Tule said a country like Japan has been in recession for more than ten years despite having an interest rate of less than 2 per cent, adding that the Bank of England has also reduced its interest rate from 0.5 per cent to 0.25 per cent and “still nothing is happening, so the solution does not lie in the reduction of interest rates”, he said.
He also noted that despite the interest rate reduction in the past, the CBN has not seen “that response, in terms of growth in credit”.
He further noted that “we are not just in recession but we are in a stagflation, where growth has reduced precipitously to the negative and you have prices rising, so it is insufficient for the Monetary Policy Committee to just meet and say we are reducing interest rates to address a complex economic situation like stagflation”.
To get out of the economic quagmire Nigeria is in, Mr Tule said the “monetary policy, fiscal policy, trade policy, budget policy need to sit together in a retreat to fashion out comprehensively what the policy response is going to be.
“All the key policy parameters must be brought to the table to fashion out what the way forward is for the country”, he said, insisting that “you can’t clap with one hand”.
Mr Tule added that with the inflation rate at 18 per cent, a reduction in interest rate will lead to an increase in money supply which in turn means higher inflation, wondering “if the government has the resources to increase salaries when there is higher inflation.
“The current inflationary trend are not strictly monetary policy induced factors. Some are legacy factors that rose as a result of reforms, like in electricity tariff, petroleum pricing model and foreign exchange market”, he maintained.
Key Constraints To The Economy
Mr Tule, who maintained that the CBN is not averse to lower interest rates, however stressed the need for the government to correct the structural deficiencies inherent in Nigeria.
He added that an economy does not deliver low interest rates if it has key structural deficiencies like infrastructure, insisting that “these are key constraints to the economy.
“You cannot compare the infrastructural level to the structural deficiency in this economy with what you have in the UK, Japan or in the United States. If the UK went through a recession, which they are still going through and not completely out, Japan over the last ten years is being struggling with a recession, the European Union since 2007/2008 global financial crisis still going through a financial crisis and are not yet through despite putting all the policy arsenals, then for an economy like Nigeria, where there are key structural deficiencies, there is an urgent need to harmonize the policy reaction that would address this stagflation”, he maintained.
Mr Tule maintained that the issues are “deeper and comprehensive than the current solution kit that is on the table”, hinting that we are “misdiagnosing what the issues – stagnation or recession – are”.
The CBN had at the last MPC meeting in July raised the benchmark Monetary Policy Rate from 12 percent to 14 percent, while the Cash Reserve Ratio and Liquidity Ratio were both retained at 22.50 per cent and 30 per cent each.
The Cross River State government is looking to establish a Proper Professional Food Bank as a steady market for farmers.
Governor Ben Ayade is optimistic that agriculture can go a long way to strengthening Nigeria’s Economy which at the moment is in recession.
The Governor, who announced the plan on Saturday, said the Proper Professional Food Bank would be responsive for granting a steady market for farmers to sell their produce as they are cultivating.
He spoke at the CBN-CRSG Anchor Borrowers’ Programme for Rice Value Chain held at Odukpani Local Government Area of the State.
The Central Bank of Nigeria (CBN) Anchor Borrowers’ Program is a Scheme set up by the President to lift thousands of small farmers out of poverty and in turn generate millions of jobs for unemployed Nigerians.
Mr Ayade at the occasion commended President Muhammadu Buhari for providing an agricultural mechanised centre to provide industrialised support for farming.
According to him, this initiative he believes, will guarantee a steady income, agricultural exchange centre for the Council, State and Nigeria in extension, just as his administration intends to set up a food bank across the 18 local government areas of the State.
Governor Ayade assured the beneficiaries and farmers across the state of government’s support from the point of equipment, factory support, machineries and all the factorisation they require.
A representative of the CBN Governor, Graham Kalio, urged the beneficiaries to keep faith with the roadmap, plan and vision of the scheme in order to achieve a Nigeria where the importation of rice and other foodstuffs would be a thing of the past.
Meanwhile the State’s Commissioner for Agriculture, Anthony Eneji, said that the government had identified a rice yield that would guarantee 24 tons per hectare.
Nigeria’s currency market registered $327 million worth of trades on Monday, about six times more than its usual volume, the market regulator told Reuters.
That included a single $270 million transaction at 345 naira per dollar, by foreign investors buying local currency bonds, Bola Onadele, the Managing Director of FMDQ OTC Securities Exchange, said in an interview.
Other transactions were carried out from 314.50 to 317.34 per dollar.
Average trading is around $50 million a day on normal days. It might reach $100 million on days the Central Bank of Nigeria (CBN) intervenes in the currency market.
Traders also said the CBN sold an undisclosed amount of dollars, close to the end of market session, to help prop up the naira. The currency closed at 305.50 on Monday, around the level where it’s closed for the past week.
Monday’s surge in trading came after the CBN said on Friday that it would offer 212.85 billion naira ($675 mln) in treasury bills maturing between 91 days and one year on Wednesday.
The debt will be sold on Wednesday.
The CBN has been selling short-dated open market bills at yields as high as 18 percent in an effort to attract offshore funds, most of whom fled Nigeria’s bond and equity markets during a financial crisis that began when oil prices plunged.
The crisis ultimately led the CBN to let the naira’s value float, in June.
From its controlled rate of 197 naira to the dollar, the Nigerian currency plunged to as much as 309 to the dollar on the interbank market and 412 to the dollar on the black market .
The Emir of Kano, Muhammadu Sanusi, on Wednesday advised the present administration led by President Muhammadu Buhari to learn from the mistakes of his predecessor, Dr. Goodluck Jonathan, if past wrongs are to be corrected.
The Emir while delivering a paper at the 5th meeting of the Joint Planning Board and National Council on Development Planning, titled “Nigeria In Search Of New Growth model”, warned the present administration against continuing to blame previous administrations for the nation’s woes.
He said what is important is for the administration to concentrate on putting the nation back on the path of progress.
“And just so we are not always blaming the previous administration. We have also made mistakes in this administration. We have started retracing our steps or we have to retrace those steps.
“And if we fall into the same holes that we fell into the last time where the government is always right… If a policy is wrong, it is wrong. Nothing will make it right and it has to be changed.
“If this government continues to behave the way the last government behaved, we will end up where Jonathan ended. You may not like it but that is the truth. You have to listen.
“You don’t have to be an economist to know that any system that allows you to sit in your garden, and with a telephone call, make one billion Naira without investing a kobo, that system is wrong. It is unsustainable,” he maintained.
He goes on to blame past federal administrations for failing to diversify the nation’s economy during the oil boom, saying President Buhari should not make the same mistakes.
According to the Emir, there are many “voodoo economists” parading around the administration and advising the government, adding that “many of them are not economists but demagogues”.
The Central Bank of Nigeria (CBN) Governor, Mr Godwin Emefiele, on Tuesday said there has been an agreement with the Pilgrim’s Commission to sell the dollar at 197 Naira long before the latest adjustments.
Mr Emefiele added that the pilgrims had made advanced payments for the exercise.
The CBN had on Thursday directed banks and authorised forex dealers to sell the Pilgrims Travelling Allowance, PTA, to intending pilgrims at a concessionary exchange rate of 197 Naira to a dollar.
“Each pilgrim is entitled to purchase a minimum of $750 and maximum of $1,000 as PTA.
“The Federal Government has approved that intending pilgrims are to be sold the PTA at a concessionary exchange rate of 197 Naira to the US dollar.
“No commission shall be charged by the banks for the sale of the PTA to the intending pilgrims,” the statement read.
The Senate agreed that the declining Gross Domestic Product and high inflation rate clearly showed that the country’s economic policies required an urgent review to avoid a further plunge in the economy.
The Senate has ordered Minister of Finance, Mrs Kemi Adeosun, to appear before it before it goes on recess on Thursday.
This directive is coming after the Minister of Finance failed to appear before the upper legislative chamber to brief them on the 2016 budget and on other economic issues that affects the nation.
It would be recalled that the Senate had on May 26 summoned the Minister and the CBN Governor to brief them on the issues surrounding the economy and its impact on Nigerians.
The Senate before inviting the duo in the month of May noted that unemployment rate rose to 12.1 per cent in the first quarter of 2016 from 10.4 per cent in the last quarter of 2015.
“This Senate is further deeply worried that the continued complacency of the current economy, if allowed unchecked, would set the tune for a full blown economic recession by the end of June,” said Sen. Bassey Akpan.
Senator Akpan said the declining Gross Domestic Product and high inflation rate clearly showed that the country’s economic policies required an urgent review to avoid a further plunge in the economy.
Senator Akpan then told the Senate that it was their responsibility to invite the Minister of Finance and the CBN Governor to brief the Senate.
He pointed out that the briefing would enable them agree on the modalities that would be deployed to salvage the economy of the oil rich nation.
After the lawmaker’s statements, the Senate decided to invite the duo to brief them.
The Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, on Tuesday, honoured the invitation and briefed lawmakers on the monetary policies he has adopted to strengthen the naira and revamp the economy.
Nigeria’s oil production showed further signs of strain on Thursday as intruders blocked access to Exxon Mobil’s terminal exporting in Qua Iboe, the country’s largest crude stream.
Exxon Mobil said that the terminal continued to operate even as the intruders blocked staff from gaining access from early morning hours.
The incident is the latest in a string of attacks and other problems at the oil infrastructure in Africa’s largest crude producer.
Militant activity in the oil-rich Niger Delta has taken out some 500,000 barrels per day of crude oil production from other companies in Nigeria, pushing oil output in Africa’s largest-producing nation to more than 22-year lows.
Human rights lawyer, Mr. Femi Falana (SAN), has asked the Federal High Court sitting in Abuja to restrain the Central Bank of Nigeria (CBN) from allowing market forces to determine the exchange rate of the naira.
The Senior Advocate of Nigeria also asked the court to direct the CBN to stop the use of the United States dollar as a legal tender in Nigeria.
The suit was filed on Wednesday, 24 February 2016 and is yet to be assigned to a judge for hearing.
In the suit, Mr Falana, alleged that the CBN’s monetary policy had led to a situation where too much naira was made to chase a few dollars with an attendant weaker naira and adverse multiplier effects such as rising inflation, closure of factories and high level of unemployment.
He also alleged that the CBN had so “dollarised the economy” that the foreign currency had now become legal tender with school fees and rents now being charged and paid in dollars to the detriment of the economy.
The Senior Advocate wants the court to make a declaration that by virtue of Section 16 of the CBN Act 2007, the CBN shall fix and determine the exchange rate of the naira by a suitable mechanism devised for that purpose.