The Nation Newspaper

Tag: cbn

  • CBN policies take toll on ports’ operation

    CBN policies take toll on ports’ operation

    The Managing Director, Micura Stevedoring Services, Michael Ubogu has complained about the Central Bank of Nigeria (CBN), regulations denying importers of some select items, access to foreign exchange in order to shore up the value of the naira.

    Ubogu said the forex restriction on about 41 commodities has adversely affected the maritime industry, especially stevedoring companies. According to him, “41 commodities restricted from the forex is definitely affecting our business especially rice importation.”

    He also said the industry has been experiencing downturn due to the forex restrictions and lack of policy direction by the government. “Obviously, from January till now, if there is any sector that is worst hit, I will tell you it is the maritime sector.

    “According to a survey report of members of Lagos Chamber of Commerce and Industry (LCCI) and other operators in the private sector, there is growing inability of businesses to pay foreign creditors on account of items imported prior to the CBN policy.”

    The operators claimed that Form M opened for items on the list prior to the CBN policy are not processed for payment leading to credit defaults with foreign suppliers.

    They equally said vegetables and processed vegetable products used by quick service restaurants are included in the list and this has affected  the availability of forex to import these materials.

    The revenue of the largest revenue collecting command of the Nigeria Customs Service (NCS) – the Apapa Area Command – plummeted for the third consecutive month due to CBN’s restricting the sale of forex to the importers of 41 select items.

    Its  out-going Area Controller, Comptroller Charles Edike, said the command collected N23.8 billion in September this year as against the N30.4 billion it collected in the corresponding period of last year, representing about 22 per cent revenue loss.

    He said: “Since the CBN policy was rolled out, for the first three months, the remnant that came in were the ones we have been clearing but the remnant is now dwindling, finishing and so that explains the situation we are,” he said.

    The President, Association of Nigerian Licensed Customs Agents (ANLCA) Prince Olayiwola Shittu also complained about so many containers that are trapped in the port.

    Investigation also reveled that importation is very low based on the forex restriction.

  • All banks sound, stable, says CBN

    All banks sound, stable, says CBN

    •Naira strengthens

    The Central Bank of Nigeria (CBN) has defended the stability of the banking system, saying no Nigerian bank is “experiencing stress.”

    CBN’s Director of Communications, Ibrahim Mu’azu, assured the banking public that the Nigerian banking system is sound and that all banks are in compliance with both the regulatory and prudential requirements.

    Meanwhile, the naira yesterday strengthened by 2.1 per cent to N235 per dollar on the unofficial market. The local currency became upbeat after the Central Bank of Nigeria (CBN) moved to enforce documentation requirements on bureau de change (BDC) operators prior to dollar sales.

    The CBN had asked BDC operators to submit accounts showing their dollar usage at the start of each week before they can access future sales, a move traders say was aimed at curbing speculation.

    The naira had fallen sharply on Wednesday, a day after the apex bank unexpectedly cut interest rates to stimulate lending. The currency was quoted at the pegged rate of N197 on the official interbank market on Thursday. “It has been observed that a good number of bureaux de change purchased foreign exchange from the central bank without rendering returns on their utilisation,” the CBN said.

    The CBN has introduced currency controls to stop the naira weakening, defying calls to further devalue the currency hard hit by the plunge in global crude prices.

  • Reps to CBN: reduce interest rates on lending

    Reps to CBN: reduce interest rates on lending

    The House of Representatives yesterday urged the Central Bank of Nigeria (CBN) to reduce interest rates on lending to small and Medium enterprises within the nation.

    The Green Chamber also mandated its Hon. Jones Onyereri-headed Committee on Banking and Currency, to liaise with the CBN, so as to arrive “at measures that will reduce lending interest rate to a single digit and report back to the House within four weeks.”

    The resolution was sequel to the passage of a motion sponsored by Hon. Bode Ayorinde and titled: ‘Call for regulatory lending rate charged by commercial banks.”

    Ayorinde, in his argument noted that the 21 licensed banks in Nigeria to serve as financial intermediaries between those who have surplus funds and those who require borrowings for various purposes.

    He said the banks charge astronomical high interest rates ranging from 23 per cent and 28 per cent on lending, against 2 per cent to 3 per cent interest on savings.

    Ayorinde expressed displeasure over the five per cent to 10 per cent monthly interest rate charged by microfinance banks, which he said  translates to 60 per cent and 100 per cent per annum on loans and overdrafts.

    His words: “Commercial banks use the benchmark interest rate otherwise known as the Minimum Rediscount  Rate, as the basis for fixing the lending rates to their customers, while the CBN is accountable to Nigerians for the 13 per cent benchmark interest rate, the licensed banks achieve their super profits by whatever percentage they add to the 13 per cent.”

    He said businesses that are largely dependent on credit, such as SMEs, are adversely affected due to rising production costs which significantly constrain output and growth, adding that consumers have had to pay to higher prices as businesses have lost the capacity to generate employment opportunities and facilitate economic growth.

    Ayorinde noted that the benchmark interest rate in some countries of the world as at July 2015 according to the Trading Economic website is as follows :

    Italy 1.56 per cent, Candidate 0.05 per cent, Japan 0.00 per cent, South Korea 1.50 per cent, Switzerland 0.75 per cent, UK 0.50 per cent, USA 2.5 per cent, Australia 2 per cent, China 4.85 per cent,  Turkey 7.5 per cent, Indonesia 7.5 per cent, India 7.25 per cent and South Africa 6 per cent and wondered why Nigeria’s case should be different..

    The motion was supported by members when the Speaker, Hon. Yakubu Dogara called for a voice vote, and subsequently refered to the House Committee in Banking and Currency for further legislative imput.

  • Enforce COT regulations, expert urges CBN

    Enforce COT regulations, expert urges CBN

    Central Bank of Nigeria (CBN) Governor Godwin Emefiele has been advised to enforce the directive to banks to reduce Commission on Turnover (COT), as it is threatening Small and Medium Scale Enterprises (SMEs).

    Making the call in Lagos, lastweek, Chairman of Builders’ Mart, a provider of building equipment and homes solutions, Mr. Ayobami Biobaku, said the CBN had not been able to enforce the COT rule it set in 2013. He said CBN’s inaction gave the impression that it had decided to look the other way while the banks engaged in all forms of unapproved practices as well as collect spurious charges.

    He therefore, urged the CBN to check the banks on COT charged so as not to cripple the SMEs. According to him, COT was “like cancer that is slowly and silently killing SMEs.”

    The controversial COT is a charge levied on customer withdrawals by banks, and it is calculated at the end of every month, applying the percentage on a customer’s aggregate withdrawals from the first day of the month to the last day of the month.

    Worried by the harmful effect of COT on SMEs particularly, the CBN in 2013 met with the Bankers’ Committee to find lasting solution to the issue and the result was the production of a special guide on bank charges that both parties endorsed. However, up till date that agreement has not been enforced by the CBN.

    Biobaku said no  bank had heeded the CBN’s instruction to refund money collected from depositors since 2013 and that they were still being charged by banks in violation of CBN’s directive. He urged the CBN Governor to come to their rescue because they are losing a lot of money that should improve their business to the banks.

  • Naira strengthens against dollar at parallel market

    Naira strengthens against dollar at parallel market

    The Naira on Wednesday strengthened against the dollar as it traded for N240 at the parallel market.

    It gained N1 on Wednesday afternoon to exchange for N240 to the dollar, as against N241, its previous rate.

    Meanwhile, its rate at the interbank window remained at N197 to the dollar.

    Traders at the market were optimistic that the sale of forex by the apex bank would boost activities at the market.

    The News Agency of Nigeria (NAN) reports that the Central Bank of Nigeria on Tuesday frowned at the continued patronage of forex traders at the parallel market.

    Mr Godwin Emefiele, the CBN Governor, stated this while answering questions from newsmen at the end of the Monetary Policy Committee Meeting in Abuja.

    He urged genuine forex buyers to use the Bureaux de Change (BDCs) and other authorised sources for forex, adding that their rates were far better than what was obtained at the parallel market.

     

  • Experts commend CBN for reducing MPR, CRR

    Experts commend CBN for reducing MPR, CRR

    Some financial experts on Wednesday commended the Central Bank of Nigeria (CBN) for its decision to adjust downwards its monetary policy rates.

    The experts, who spoke in separate interviews with the News Agency of Nigeria (NAN) in Ota, Ogun, said that banks would now be more comfortable to lend to the real sector.

    Dr. Wale Adegbite, the President, Ogun Chapter of Manufacturers Association of Nigeria (MAN), commended the downward adjustment of the Monetary Policy Rate (MPR) and Cash Reserve Ratio (CRR).

    Adegbite said the reduction in MPR was commendable because it would enable banks to lend at lower rates to the real sector.

    The CBN announced the adjustment of the rates after a two-day meeting of its Monetary Policy Committee (MPC) in Abuja on Tuesday.

    The Monetary Policy Rate (MPR) was adjusted from 13 per cent to 11 per cent, while the Cash Reserve Ratio (CRR) was adjusted from 25 per cent to 20 per cent.

    The CBN said that the measures were to check inflation in the country.

    MAN president said that the adjustment of the monetary policy rates would make more funds available to manufacturers to do business.

    He, however, expressed regret that Nigerian banks preferred to invest in treasury bills rather than lend to manufacturers.

    Adegbite said this preference by bankers was due to the high risk of doing business in the country.

    “Commercial banks in Nigeria believe that the real sector finds it difficult to make profit due to infrastructure challenges like poor power supply and inadequate transportation system,’’ he said.

    The MAN chief said that the Federal Government needed to address the nation’s infrastructural problems to enable banks to lend effectively to the real sector.

    Dr. Titus Okunronmu, a former CBN Director, said lowering the interest rates was a welcome development, saying that there had been lots of complaints about the high interest rates in the financial sector.

    He said the reduction in MPR and CRR would encourage banks to grant credit facilities to the real sector at lower rates.

    “If banks can play their roles by targeting the real sector and people that need the loans, it will help the economy to grow and bring down inflation rate in the country,’’ he said.
    Dr. Samuel Nzekwe, a former President, Association of National Accountants of Nigeria (ANAN), agreed with the other experts that the decisions of the CBN would increase productivity in the real sector.

    Nzekwe said that since public funds had been withdrawn from the financial sector, banks were left with private sector funds.

    He urged the CBN to bring down interest rates further, saying this would be good for the financial sector.

    “The ability of the productive sector to borrow at lower interest rates from the financial institutions will lead to employment generation for youths and reduce poverty in the country,’’ Nzekwe said.

     

  • CBN cuts CRR to 25% in bid for more jobs

    CBN cuts CRR to 25% in bid for more jobs

    Banks got yesterday the impetus to fund job creation ventures.

    The Central Bank of Nigeria (CBN) slashed the Cash Reserve Ratio (CRR) to 20 per cent from 25 per cent  – with a proviso that banks should lend these monies to only employment generating activities.

    Speaking  at the end of the bi-monthly Monetary Policy Committee (MPC) meeting in Abuja yesterday, Central Bank of Nigeria (CBN) Governor Godwin Emefiele said the Committee “evaluated various options for ensuring increased credit delivery to the key growth sectors of the economy, capable of generating employment opportunities and improving productivity and growth.”

    Emefiele said “the liquidity arising from the reduction in the CRR to 20 per cent, will only be released to the banks that are willing to channel it to employment generating activities in the economy, such as agriculture, infrastructure and solid minerals”.

    The MPC, he said, was particularly concerned that the previous liquidity injections embarked upon through lowering of the Cash Reserve Ratio (CRR), in the last MPC, has not transmitted significantly to improved credit delivery to key growth and employment in sensitive sectors of the economy. Rather, sectors with low employment elasticity got more credit.

    The Committee, the CBN Governor said, underscored the need for banks to ensure that measures taken by the Bank to inject liquidity and stimulate the economy adequately translate into increased lending to the sectors with sufficient employment capabilities and the potential to generate growth.

    Said Emefiele: “What we’ve decided to do is as we continue to ease, we are going to ensure that funds that are going to be injected into the system the banks are going to be expected to ensure that those funds are going to be directed at loans to real sector, infrastructure sector. Here, we mean to the agricultural sector as well as to support solid minerals, which we think we have a lot of potential which we have not exploited and can also generate revenue.”

    The apex bank will release the guidelines of the new measure in a circular to banks about the modalities of its operation. “We are going to identify which companies or which sector falls into what we categorise as real sector. We will identify businesses which will stimulate agriculture; is it farming of rice, tomatoes, all the products will be identified and we will see to the fact that the banks comply to this,” the CBN governor said.

    Emefiele went on to announce that “the banks will then analyse and appraise their credit proposals just like they do currently for all other intervention programmes we have at the Central Bank of Nigeria and if we are satisfied that those proposals meet our minimum requirement, we will release the naira amount for that sector to the banks to disburse directly to these projects. That is one way we can see to the fact that because we are reducing liquidity, the liquidity will go a long way to support the areas that we think we need support at this time.”

    Emefiele disclosed how banks frustrated the planned disbursements to the real sector when he said: “What we’ve found is, when banks are in need of liquidity and they come to the Central Bank, we say that you will borrow from Central Bank at 200 basis point above the Monetary Policy Rate (MPR) but if you have excess liquidity and you don’t have any area to channel the liquidity, you give the liquidity to the Central Bank and the CBN pays you MPR minus two per cent, which is 11 per cent. But, unfortunately, what we’ve found out is that what the banks do is to dump their money on CBN and earn 11 per cent for doing nothing. So what we’ve decided is that, now that the MPR is reduced, it means that you can access money by CBN as your last resort and lend to the real sector at 11 plus 2 which is 13 per cent, but if you want to bring your money to CBN, you will only earn MPR minus 7 per cent, which is 4 per cent. Hopefully, that will be a disincentive for banks to dump their monies on CBN rather than loan this money to the real sector and the relevant sector of the economy.”

    At the end of the MPC meeting, it was decided that CRR be reduced from 25.0 per cent to 20.0 per cent; MPR reduced from 13.0 per cent to 11.0 per cent; and the symmetric corridor of 200 basis points around the MPR to an asymmetric corridor of +200 basis points and -700 basis points, around the MPR.

    The CBN governor also explained why the N230 billion SME fund being accessed by governors is not performing as planned, saying: “We don’t know anything about political tool; we don’t get involved in politics. We are professional bankers who do our work. The truth is that there were a few speculations that some of these funds were held in banks and were not disbursed and what the bank did was to reverse those monies from the account of the banks. Once we find out that the monies are not used for the purposes which they were meant, we would reverse those monies from the bank.”

    On the Biometric Verification Number (BVN), Emefiele said: “The BVN going forward will be a tool for financial transaction and I will advise all to comply. Other than improving the know-your-customer for the bank, the BVN with time will grow our consumer credit like other developed economies to transact businesses, where if you want to buy a car, you can go to your car dealer and with your BVN, you can have some little deposit and pay what is called car loans. That is how to boost consumer credit in an economy and that is ultimately the direction and that is our destination and we are optimistic that we will get there.”

    Emefiele also debunked the rumour that three banks were having capital inadequacy. According to him, “there is no bank with capital inadequacy problem today and all the news around is all false. The CBN has its own internal mechanism with which it conducts what is called the daily stress testing of the operations and activities of banks. We stress test their balance sheet and their profit and loss on a regular basis using different scenarios to determine that. If we tighten liquidity by this or loosen liquidity by this, what will be the result on the banks’ capital adequacy ratio or its MPR or its liquidity ratio as the case may be. We hold informal discussions with the banks about the level of capital adequacy issues.”

  • CBN: Three banks fail capital adequacy test

    CBN: Three banks fail capital adequacy test

    The Central Bank of Nigeria (CBN) has given three commercial banks until June 2016 to recapitalise after they failed to meet the minimum Capital Adequacy Ratio (CAR) of 10 per cent.

    The CBN explained at the weekend, that 14 banks have licenses to operate as regional and national lenders with respective capital bases of N10 billion ($50 million) and N25 billion, three of which were asked to raise fresh funds.

    The Liquidity Stress Test was conducted by the CBN, which indicated that the capital position of ‘three small banks’ has fallen below regulatory capital requirement.

    The test, contained on the CBN’s Financial Stability Report showed the Capital Adequacy Ratios (CARs) of the affected banks were below five per cent regulatory threshold. The three banks are not among the domestic systemically important banks (D-SIBs), it said.

    The report, which measured the lenders’ positions as at June this year, showed that the number of banks with CAR less than five per cent, also increased from zero to three from December 31, 2014 to June 30, 2015. The CAR is a ratio of a bank’s assets to its risks

    According to CBN’s Director, Financial Policy and Regulation Department, Kelvin Amugo, the liquidity stress test was conducted, using the Implied Cash Flow Analysis (ICFA) and the Maturity Mismatch/Rollover Risk approaches to assess the resilience of the banking industry to liquidity and funding shocks.

    He said the ICFA approach assessed the ability of the banking system to withstand unanticipated substantial withdrawal of deposits, as well as short-term wholesale and long-term funding over a five-day and cumulative 30-day periods, with specific assumptions on the fire sale of assets.

    The report said liquidity ratio (LR) of the Nigerian banking industry decreased by 6.5 percentage points to 39.3 per cent from the 45.8 per cent December, 2014 position.

    The decline in the LR position was driven mainly by the large and medium banks with 6.5 and 7.4 percentage points decrease respectively from their December 2014 LR position to 36.9 per cent and 45.5 per cent respectively. This decline may be traced to the sustained tight monetary policy stance of the CBN.

    The test results revealed that the industry liquidity ratio declined to 9.30 and 6.10 per cent, from 39.3 per cent baseline position after the five-day and cumulative 30-day shocks, respectively. The result of the stress tests indicated potential vulnerability to liquidity risk in the event that these scenarios crystallized.

    “Overall, there was an improvement in the baseline CAR of the Nigerian banking industry at end-June 2014 compared to the December 2014 position. The baseline CAR rose by 0.23 percentage point over the December 2014 position to 17.38 per cent at end-June 2015. This was driven mainly by improvements in the baseline CAR of the large banks which rose by 1.03 percentage points over their December 2014 position to 18.56 per cent at end-June 2015,” the report said.

    “Equally, the number of banks with CAR greater than the 15 per cent prudential hurdle rate for international banks increased from 13 at end-December 2014 to 16 at end-June 2015. However, the number of banks with CAR less than five per cent also increased from zero to three over the period,” he said.

     

     

  • FG advised to reverse National Automotive Policy

    The Spokesman of Seaport Terminal Operators Association of Nigeria (STOAN), Mr Bolaji Akinola on Thursday advised the Federal Government to reverse the National Automotive Policy.

    Akinola gave the advice in an interview with the News Agency of Nigeria (NAN) in Lagos.

    According to him, the Federal Government, through the Federal Ministry Trade and Investment, should revisit the nation’s automotive policy and ensure a quick reversal.

    He explained that the automotive policy had increased import duty on vehicles from 20 to 70 per cent and was driving cargoes (vehicles) away from Nigerian ports.

    Also, president of the Shippers Association Lagos State, Mr Jonathan Nicol, had said the automotive policy specifying 35 per cent duty, 35 per cent levy and 5 per cent Value Added Tax (VAT) should be reversed.

    Akinola said the Central Bank of Nigeria (CBN) policy restricting access to the official foreign exchange market by importers of 41 selected items had also compounded port operations.

    “Because of the foreign exchange restriction on importers of the 41 items, our ports have suffered significantly.

    “Very importantly, there would be the need for the Federal Ministry of Transport to look into the gridlock around both Lagos and Onne ports,” he said.

    He told NAN that the gridlock was caused by a combination of bad port access roads, lack of trailer parks and the proliferation of tank farms.

    Akinola explained that all of these should be looked into to make Nigerian ports user-friendly and to attract more cargoes that were being lost to ports in neighbouring countries.

    He also said the railways should be linked to all ports in the country to deliver more cargoes to their final destinations.

    Akinola said more workers at the terminals might be laid off as imports and exports at the ports had declined by more than 30 per cent.

    He said under the platform of STOAN, there were some workers who had been rendered redundant already, adding that more workers would suffer same fate.

    “Now that we have found ourselves in this kind of situation, the option left is to cut costs to stay afloat and remain in business, ‘’ he told NAN.

    The STOAN spokesman, however, said it would be difficult for now to be specific on the number of workers that would be affected.

  • On CBN’s forex policy

    On its website, the Central Bank of Nigeria (CBN) states that its purpose is the delivery of price and financial stability and the promotion of sustainable economic development. Surely realising this in a country as complex as Nigeria will be no easy task, more so at this time. The price of crude oil has fallen by about 60per cent from its peak in June of last year exposing Nigeria to a term of trade shock and causing an exodus of capital from the country which has put pressure on the Naira. The Central Bank devalued the currency in November and in February, closed the official window but the pressure on the Naira has persisted. The Central Bank has issued several circulars aimed at controlling demand at the forex market, an unconventional move it calls demand management. The most notable has been the restriction of forex flow to importers of 41 items, the ban on cash deposits into domiciliary accounts and the imposition of daily spending limits on foreign purchases by card users.

    Demand management has helped stabilise rates at the interbank market. However the CBNs policy has put the businesses of some of those affected in great peril and the consequent effect on the price and availability of affected goods is beginning to manifest in the real economy. The ban on some importers created a larger black market with the black market premium reaching levels unprecedented that the central bank had to double forex sales to bureau de change operators to discourage practices aimed at profiting from the wide spread but this has in turn made cross border currency smuggling a thriving business, with the players benefiting far more from the CBN policy than the industries the CBN claims its policies would assist.

    Investors have lost faith in the ability of the CBN to hold rates preferring to stay out of Nigerian assets for as long as the exchange rate uncertainty persists, a major reason the Nigerian stock market has one of the worst year-to-date performances in the world. In a recent development, JP Morgan announced it will remove Nigeria from its Emerging Market Government Bond Index citing reduced liquidity at the interbank market and reduced transparency from the CBNs policy that have made it difficult for investors to exit the market.

    The demand management policy has been widely criticised, with most of the critics calling for an outright devaluation of the naira and some even asserting that the country will gain from the boost to exports. However it is important to note that Nigeria has unique attributes that makes it different from the typical economy with responses to policy actions that have in certain times diverged from the typical economy. This sometimes calls for situations where the central bank’s effort to manage economic shocks should include the use of unconventional measures. Nigeria’s non-oil export, which would benefit from devaluation, is virtually non- existent. Historical data shows that the Naira’s downtrend over several decades has occurred with a simultaneous contraction in non-oil exports as against an expected increase suggesting the role of other factors hindering the growth of non-oil exports in Nigeria. While these factors persist, devaluation will not yield the expected boost to exports. In addition, Nigeria happens to be a low income country with over two-thirds of its population living below the poverty threshold. The country also doubles as highly import dependent, relying on imports for much of its consumer products. Devaluation in such an economy is sure to cause hardship for a majority of the population, throwing many Nigerians into poverty.

    The CBN is not the first to use unconventional measures to try to maintain economic stability. Indeed manyregulatory banks across the world, after running out of conventional ammunition, resorted to atypical measures to restore economic stability during and after the 2008 financial crises. Thus the CBN in trying to achieve its mandate should be innovative in its approach to steer the economy out of crises especially when it has run out of orthodox options. However it is important for policy makers to know that our world of irrational decision makers is far more complex than the most sophisticated economic models used to guide them in decision making. In this situation, there will always be policy risks that are either hidden from sight or grossly underestimated by these models. This makes it necessary for a policy maker about to enter uncharted territory to ensure that the expected benefits of such a move far outweigh the visible risk if he is to be reasonably confident of emerging successful. However in my opinion, the CBN policy of demand management doesnot meet that criterion.

    An alternative to demand management with much less potential to do damage is for the CBN to create a separate forex market for investors where the Naira will be sold at a discount to the price at the interbank market. The price spread between both markets should be wide enough to eliminate the perceived risk by investors. To give its move some credibility, the CBN would have to admit that the Naira is overvalued but at the same time try to hit home its message that the peculiarity of Nigeria’s economy would make a further devaluation contrary to its mandate of maintaining economic stability.

    The bank might further highlight the object of its move which is to address the exchange rate uncertainty that has deterred investors from Nigerian assets. The use of forward guidance will be instrumental in gaining investors’ confidence, portraying the Central Bank as proactive and strategic in its use of unconventional monetary policy. Forward guidance has been used by major central banks to calm financial markets through periods of unconventional monetary policy, proving to be most useful during transition periods. If implemented, this move will boost foreign investments in Nigeria which will in turn improve the forex receipt of the CBN giving it a leeway to reverse at least the most unhelpful of its demand management measures which have been largely reactive and have exposed Nigerians to both hidden and unhidden risk.

    A well-structured market for investors as a sole policy move will be helpful in the short to medium term. Beyond that, it will be less effective in maintaining economic stability especially if the price of crude oil doesnot improve. Thus it should be seen as a way to buy time for the CBN to implement a well-planned import substitution policy with distinct medium and long term objectives. The CBN should work on a strategy with a medium term objective of boosting both our export volumes and the competitiveness of local substitutes to our major imports.

    For the long term objective, the CBN should collaborate with government in identifying and promoting industries where Nigeria has a strong comparative advantage. Such a strategy should not focus on using trade restrictions but rather on carrying out targeted actions that will significantly improve business conditions for local industries. Decades of restricting international trade in Nigeria, save a few cases, have failed to bring about the desired effect of stimulating local production primarily due to Nigeria’s peculiarity as a safe haven for corrupt practices. The beneficiaries of trade restriction have been smugglers and privileged holders of import waivers with the worsening of living conditions for the rest of the population.

     

    • Uyi, 500-Level Medicine and Surgery, UNIBEN