The Nation Newspaper

Tag: dollars

  • ‘Nigeria loses billions of dollars to destination brands’

    Indication has emerged that  Nigeria loses billions of dollars in the tourism and hospitality sector due to failure to refresh the brand equity of tourist destinations, heritage sites and monuments across the 36 states and the Federal Capital Territory (FCT).

    Nanet Hotels Limited Managing Director Ini Akpabio said this at a briefing in Abuja.

    He said Nigeria had over 1,000 tourist destinations, including 33 museums, and 65 national monuments  of which two were declared World Heritage Sites. They are Sukur Cultural Landscape in Adamawa State and Osun-Osogbo Groove in Osun State.

    Akpabio added that the Abuja Carnival and Argungun Fishing Festival attract no fewer than 1,000 international tourists and over 100,000 domestic tourists. When the tourists board flights, book hotels, eat and pay for other leisure associated with the festival, Nigeria stands to rake in billions of naira.

    According to him, Nigeria loses billions of naira in Yankari Game Reserve, Bauchi; Obudu Cattle Ranch, Cross River; Sukur World Heritage Site, Adamawa; Tinapa Resort Centre, Cross River; Chad Basin National Park, Born, among others.

    He said this monumental loss was due to infrastructure decay, absence of facilities, insecurity, poor policies, lack of a national carrier, poor management and insurgency.

    Akpabio said the challenges of lack of capital, poor government support, poor infrastructure, political instability and natural calamities hinder the growth and development of the sector.

    He said there was a need to improve social services, such as providing more sporting and recreational facilities, man-made tourism centres, promoting architectural, religious and educational tourism while re-jigging and improving the health care system for medical tourism. He was happy to note that Lagos State was creating a Healthcare City.

    Akpabio said low level of technology, destruction of wildlife, poor road networks, poor funding and lack of basic amenities had also been a challenge to domestic tourism development.

    He, therefore, urged ministries, departments, agencies and the private sector to work with the tourism and hospitality experts for the nation to access the huge benefits that abound in the sector.

  • Oil hits 2016 high of 43 dollars per barrel

    Oil reached a 2016 high, hitting 43 dollars a barrel on Tuesday, and supported by hopes that upcoming meeting of oil producers will agree on steps to tackle a supply glut.

    The rise was also supported by a weak U.S. dollar and further signs of strong demand in China.

    Many members of Organisation of Petroleum Exporting Countries (OPEC) and outside producers like Russia are meeting in Doha, Qatar, on Sunday to discuss freezing output.

    The dollar fell to its lowest in nearly eight months against a basket of currencies, supporting commodities.

    Brent crude was up 50 cents at 43.33 dollars a barrel and had earlier in the session reached a 2016 high of 43.53 dollars per barrel.

    U.S. crude gained 39 cents to hit 40.75 dollars a barrel.

    “The weak dollar is one important reason,” said Eugen Weinberg of Commerzbank, adding “also, the fact that we are above 40 dollars and at multi-month highs is also contributing to the price increase as it is prompting some speculative buying”.

    Also supporting prices are rising vehicle sales in China, a further sign of strong gasoline demand and a plan by thousands of oil and gas workers in Kuwait to go on strike from Sunday.

    “If it is not clear that the strike will last long and will have any meaningful impact on exports or domestic production (including refineries), it does illustrate further the amount of pain that (Gulf) oil producers are also facing at current price levels,” said Olivier Jakob, analyst at Petromatrix.

    Oil prices have collapsed from above 100 dollars per barrel in mid-2014 due to over-supply.

    The OPEC decision in November, 2014 to abandon its traditional role of cutting output helped deepen the decline.

    Crude gained a boost last week after a surprise decline in U.S. inventories from a record high.

    But this week’s U.S. supply reports are expected to show an increase in stocks of 2.8 million barrels.

    Industry group, the American Petroleum Institute, is scheduled to release its report on Tuesday, while the government’s figures are due out on Wednesday.

     

  • Next level indeed

    Next level indeed

    Nigerians devise new way to launder money: swallow dollars!

    Some years back, gonorrhea was seen as a disease of the famous in the country. At least that was the way those selling what they regarded as its cure in Molue buses used to advertise the product/s. The reason why the disease was so regarded probably has to do with the temptations that come with fame, some of which are irresistible. Attraction to the opposite sex ranks high. Since the idea of asking people to zip up was not yet common then, chances of people contracting gonorrhea and other sexually transmitted diseases (STDs) were very high.  What the gonorrhea cure vendors were saying in essence is that should someone who is not too famous contract the disease, he or she had nothing to be ashamed of. He or she should just walk into any hospital or contact the local drug seller for solution. Today, despite the avalanche of churches and mosques, as well as all manner of campaign asking people to refrain from premarital sex, or have at most one sexual partner if they cannot flee from it, we have many cases of STDs

    Just as these STDs used to be the disease of the famous; so was money laundering, at least in Nigeria. Mere mortals could not have engaged in it because the stakes were usually high. Hence, it was usually heads of state, governors, ministers, etc. that engaged in money laundering. Some of them, including highly placed Nigerians, have had their days in jail abroad for engaging in it. But what we hear these days is that because some of those countries that they used to stash the money (usually ill-gotten wealth) have tightened the noose on them due to fears that such monies could be used for terrorism or drug-related matters, these rich Nigerians have now devised a way to beat the new measures. They are now said to be ‘warehousing’ those monies in buildings that they constructed specifically for that purpose. If this is true, then it is only a matter of time for us to be led into the new tricks of our big thieves.

    But, just as our big men are trying to find a haven for their ill-gotten wealth, some not-too-rich Nigerians came up with their own version of money laundering. According to reports, the National Drug Law Enforcement Agency’s (NDLEA) Joint Task Force (JTF) team has smashed a money laundering syndicate of six at a hotel on Airport Road, Ikeja, Lagos. They allegedly swallowed $156,000 cash in a money laundering bid.

    What we were used to are stories about people swallowing hard drugs with the intention of taking them abroad to sell. Even when that started, it was strange to the rest of us who could never in our wild imagination have thought it possible or practicable for human beings to swallow hard drugs with the intention of excreting it later for monetary gains.  That practice apparently is still very much with us as the law enforcers keep making arrests that are widely reported in the media. But with advancement in science and technology, it was only a matter of time for the appropriate machines to be developed to catch up with such characters. Of recent, security agents have begun to arrest people with suspicious huge foreign currencies at our airports, with the aim of exporting such huge sums contrary to the law. Again, this seems not to be enough. But, like the Abiku (Ogbanje) and his mother who continue to engage one another in a battle of wits, those bent on making money, no matter how, have continued to deploy their God-given talent for even more sinister purposes. Given this new dimension, it would seem killing for ritual purposes too would soon be on the decline because many of those in the act are also being caught. Perhaps these are the reasons that made some other people come up with the idea of swallowing cash.

    Nigerians may not be the only nationals harbouring all manner of criminals, local and international, but we should hardly be surprised when our people are subjected to extraordinary frisking by security agents abroad because, if we have lost our own capability to be shocked, we should not expect others to be like us; and when they don’t, we should not be crying foul as if we do not know the extent some of us can go to get rich quick. It beats my imagination that people could be as ingenious as to even contemplate swallowing money. An equally baffled online commentator appropriately tagged it “Next Level Money Laundering”. I doubt if there could have been a better headline for the report.

    I wrote on this same page that for everything that God or man has made, there is always an adulterated version. When we talk about money laundering, it was not something for the hoi polloi; it was and remains a crime committed by the rich and mighty. But the poor who want to do what the rich do but could not muster the huge amounts the rich launder allegedly came together, with six of them trying to export $156,000. Even at a generous exchange rate of N220 to a dollar, the total amount is N34.3 million. Is this sufficient for six men to take the risk of swallowing cash? Many of those who swallowed drugs died in the process; just as many who are crossing over to Europe from Africa in search of the elusive better life. Yet, none of these is sufficient to deter others from doing same. Swallow cash? This sure, is more than next level in need. It smells more of next level indeed.

    The Nwosus, the police and jurisdiction 

    Even as the full and final report of what actually led to the abduction, on Monday, of Toyin, wife of the Deputy Managing Director of The Sun, Steve Nwosu, is yet to be released, one thing that has come out of it is the question of jurisdiction. According to report, when the marauders got to the Nwosus’ house, the husband placed calls through to the ‘Area E’ Division of the Nigeria Police Force in Amuwo-Odofin, Lagos, but they did not respond on time because, according to them, the street where the Nwosus live is under Okota Police Division, which is outside their jurisdiction. I am not a policeman and therefore do not know how these things work. But I guess the divisions were created for administrative convenience and should therefore facilitate, rather than hinder efficiency. The Fire Brigade is a good example. When there is a fire incident, and you call the appropriate emergency numbers, fire fighters from as many as three fire stations could meet at the scene and collaborate to put out the fire. That, I think, should be the model. The police authorities could look at the issue again if that, strictly speaking, is not what obtains now.

    It is gratifying that Mrs Nwosu was released at about 2.20 a.m. on Thursday. But the family might have been saved the agony if the police division initially contacted had responded swiftly.

  • PDP can’t win by sharing dollars, says APC

    PDP can’t win by sharing dollars, says APC

    …36 party image makers express concern over Army, police role in elections

    All Progressives Party (APC) state publicity secretaries yesterday expressed concern over the proposed troops deployment for elections by the Federal Government, saying that the security agencies may be used to manipulate the elections.

    The image makers, under the umbrella of the APC Conference of State Publicity Secretaries, also berated the Peoples Democratic Party (PDP) for instigating campaigns of calumny against the Chairman of the Independent National Electoral Commission (INEC), Prof. Attahiru Jega, who has insisted on conducting credible elections.

    The PROs, who stormed Lagos for their second summit, complained that the attempt by soldiers to displace the police in the maintenance of law and order during elections is unconstitutional. Lagos State Special Adviser on Information and Strategy Hon. Lateef Raji saluted their loyalty and steadfastness, urging them to sustain the tempo till the elections.

    He said: “This is a critical time for you. But, you now need to inform and educate Nigerians that the dollars being shared by the President and the PDP are the money that should be used to build roads, construct bridges and fix the power sector. You should also resist intimidation by the PDP in your states.”

    The Chairman of the conference, Comrade Joe Igbokwe of Lagos State, noted that anxiety is mounting over the proposed deployment of troops, contrary to Jega’s advice, who has insisted that soldiers should not be on election duty.

    He said the recent revelation about the scandalous rigging of the Ekiti State governorship election have cast doubt over the neutrality and devotion to professionalism by soldiers during elections under the Jonathan regime.

    Igbokwe added: “The army was used in an extensive manner to rig the Ekiti State governorship election, the fact of which is emerging from the scandalous Ekiti rigging tape leak. The Army, DSS and the police were inordinately used in the attempt to rig the Osun governorship election, but that plot failed because of the vigilance and determination of our people.

    “While we insist that the Army and other security forces should not be used to manipulate the election for the PDP, we charge state publicity secretaries to, as a matter of urgency, educate our members and supporters across the country to stand firm and resolute to defeat any attempt to intimidate them during elections. We must refocus energy in using the remaining one week to prepare our people not to give in to intimidation by either the Army or the police or the DSS in their determination to effect change in the elections.”

    Flaying the Presidency and the PDP for campaign of calumny against Jega, Igbokwe said efforts were being made to discredit the umpire because of his refusal to dance to their tunes.

    He described as bizarre and potentially dangerous the use of outlawed organisations and ethnic militias, including the Movement for the Actualisation of the Sovereign State of Biafra (MASSOB) and the Oodua Peoples Congress (OPC) to intimidate and terrorise the populace to support the agitation for Jega’s sack.

    Igbokwe said, while MASSOB staged a show of shame in the Southeast, OPC disrupted socio-economic activities in Lagos, molested law abiding citizens and destroyed APC campaign materials along Stadium/Ikorodu Road.

    The Publicity Secretary added: “Jega is being persecuted by the PDP and its acolytes for insisting that a credible election should be held. There is a devilish machination by a desperate failed party to remain in power. The protests and criticisms of Jega are unfounded tactics the PDP wants to use to frustrate Jega and the PDP and manipulate the election in its favour or scuttle it because it is obvious that they cannot win in a free and fair elections.”

    Stressing that the future of Nigeria depends on the elections, Igbokwe said the credibility of the exercise depends on Jega’s leadership of the INEC.

    The Publicity Secretary also said that the monetisation of the electoral process by the Presidency and the PDP will be counter-productive, adding that the sharing of dollars to compromised stakeholders cannot save him from electoral defeat.

    He added: “The President himself has lost confidence in the naira. He is now talking in dollars, euro and pound sterling. He is ready to buy anybody at whatever price to ensure that he remains in power. How many Nigerians will Dr. Jonathan reach with dollars? The dollar sharing is an admission of failure and this regime must be sent out by all means, unless it can reach the 170 million poverty-ridden Nigerians with these dollars.”

  • Dollars, dollars everywhere, but naira worse off

    Dollars, dollars everywhere, but naira worse off

    Despite recent moves by the House of Representatives and the Central Bank of Nigeria to discourage the use of dollar and other foreign currencies in local transactions, the practice still continues unabated in major cities because it is a craze of the rich and the connected. Assistant Editor ADEKUNLE YUSUF reports

    In the country’s major cities, transacting local businesses in foreign denominations, especially the ubiquitous dollar, is still spreading like harmattan fire.Although it is muted in some places, the rich and the not-so-rich still luxuriate in the use of dollar in effecting payment for local business transactions. Despite a resolution in February this year by the House of Representatives condemning the practice, elite Nigerians and non-Nigerians alike have turned the use of foreign currencies in local transaction as a status symbol thing, which experts say is putting severe pressure on an already fragile naira.

    In Port Harcourt, the Rivers State capital, the high and the mighty regard the use of the dollar and other foreign currencies mostly as a way of confirming that the person is of the elite class. And every opportunity is often used to make bold statements about it. Recently, The Nation’s reporter was with the Rivers State Chairman of one of the major political parties at the state secretariat in Port Harcourt, and met two associates of the party’s helmsman being attended to.The two gentlemen, after some minutes of meeting with the party Chairman, were set to leave so that the reporter who was on a news hound could also be attended to. The Chairman of the big party, perhaps in order to impress his departing visitors, dipped his right hand into the right side pocket of his trousers and brought out some crisp dollar notes, which he handed over to the gentlemen, who were obviously excited, thanking the party chieftain profusely, while smiling as they left.

    But if using foreign currencies in local businesses is an economic crime, it is not only political bigwigs that are culpable. In fact, many highly-placed persons, top executives of companies, and other wealthy people are also involved in the use of foreign currencies to transact businesses in Nigeria. With many expatriates working for multinational oil companies and other firms in Rivers State, the use of foreign currencies is also on the increase, since salaries of most of them are not paid in naira. Expectedly, many business outfits are following suit, as big hotels, eateries, elite schools, upscale residential apartments and shopping malls prefer foreign currencies to naira, ostensibly to prove that they are of very high class, and not for the toiling masses. An estate agent in the new Government Reservation Area (GRA) in Port Harcourt, who preferred to be identified simply as John, disclosed that most of the landlords in the GRA have for long been opting for foreign currencies for their apartments, adding that he and his colleagues have no choice but to comply with their principals’ directives. He noted that most of the newly-built houses in new GRA in the Garden City are yet to be occupied, simply because the owners insisted on elite tenants, who would be able to afford payment in foreign currencies.

    At a highbrow hotel on the Port Harcourt-Aba Expressway, near the Rumuola Flyover, one of the managers, who pleaded not to be named, revealed that their lodgers and other customers have the option of paying either in naira or foreign currencies. One of the attendants of a popular shopping mall in GRA, Port Harcourt, not far from the Salvation Ministries, noted that most highly-placed men, who had been patronising the mall with ladies, prefer to use foreign currencies for the items purchased, mostly to impress their associates. Even at ostentatious owambe parties that often accompany marriage betrothals, house warming, chieftaincy awards, funerals and other wasteful fantasies that have become a subculture in the country, foreign currencies, especially the dollar or pound sterling, are often lavishly sprayed. At the close of such functions, musicians who delight in singing the praises of the rich, including many of today’s upstart politicians and other members of the ruling political elite, smile to the bank for the rain of fortune.

    In Lagos, the country’s economic nerve center, the love for dollar is often in ample display by the high and the mighty. At the Banana Island, by far Nigeria’s most extravagant and expensive neighborhood, which is the exclusive playground of the obscenely wealthy, transaction in dollar is a way of life. Built on a reclaimed land in Ikoyi, Lagos, the island is a place of unrivalled opulence and grandeur that boasts working amenities – totally a different world from other parts of the country. Perhaps this is all the credential the island needs to emerge as one of the most expensive places in Nigeria to own a house, for property on the choice island is dollar-denominated. The average cost of buying a three-bedroom apartment in this elite settlement is estimated to cost about $2 million. And to rent the same apartment, it takes an average of about $150,000 per annum. There is also a clause: the tenancy agreement will not be sealed unless an initial minimum term of 2 years is paid in advance and a ‘service charge’ of $17,000 per annum is coughed out. A typical plot of land on the elite island is said to usually go for between $4 million and $6 million, while the cheapest building on the island costs nothing less than $8 million. However, due to the ridiculously high prices of property on the island, it is gathered that about 60% of the completed buildings are said to be currently unoccupied.

    Also, from Agege, a suburb of Lagos, to other boisterous areas of the state, including Apapa, Allen Avenue, and Murtala Muhammed International Airport, Ikeja, it is business as usual for the ubiquitous foreign exchange black marketers who feed the demand for dollars. Already, some organisations including schools, upscale apartments, hotels and supermarkets in Lagos, especially in elite locations, such as Lekki, are now insisting on payment for their services in dollars. One of the excuses advanced for this is the fact that their customers include Nigerians and foreigners who would not want to go through the rigours of exchanging their foreign currencies into naira.

    As it is in Rivers and Lagos,

    the use of dollar in local

    transactions is also gaining ground in Abuja, the Federal Capital Territory (FCT), though it is muted in some places. At the Regent Schools in Abuja, which is meant for children of the elite, tuition fees are denominated in dollars. Established in 2000 in Wuse and manned by expatriates, this exquisite school comprises both primary and secondary arms, each costing thousands of dollars to enroll a child. One of its attractions, beyond its state of the art facilities and competent hands, is that it runs international curriculum and a mix of local subjects that reflect the Nigerian system. In view of the high fees, it is not a surprise that the students are mostly children of diplomats, expatriate workers, governors, senators, ministers and others who have benefitted from the wealth of the nation. Besides security, medical and administrative charges that are also on the high side, each student is said to pay an average of $3,500 as school fees per term in order to benefit from the rich facilities and services the school offers. Although the school, which also runs excellent boarding facilities, allows payment in naira at the exchange rate to be given by the bursar, it was gathered that the exchange rate often given by the school can sometimes be prohibitive, forcing parents to part with hard currencies.

    This craze for dollar is common in high-stake casino establishments where the dollar is used to play, win and lose at hotels and resorts where expatriates and wealthy Nigerians patronise in Abuja and Lagos. According to an Abuja estate developer, apart from the ease of carrying large sums of dollar around, some individuals who would not want to declare their sources of funds pay cash in dollars to legitimise their funds (money laundering). He hinted that estate developers disguise money laundering by charging dollars for choice apartments in choice locations. By so doing a trail of legitimate dollar funding for their activity is created. Sadly, many of such dollarized properties remain unoccupied and the authorities some of whom patronize dollar transactions look the other way. For example, a property on Imo River Street, Maitama was priced at N850 million but The Nation learnt that the new owner paid the equivalent of that amount in dollars. The estate agent noted that some of the owners of these dollarised properties are government officials as a result the desire to stamp out the trend is muted.

    Transaction in dollars in Nigeria is a combination of compulsion, choice and occasionally for the love of spending the almighty dollar. A good example of the compulsory payment for transactions in dollars is the practice by a high-end primary school in Maitama Abuja where $3, 650 is compulsorily charged for primary schools children per term. Checks have shown that parents whose children attend this school with a regal moniker include regulators of financial institutions, legislators, top civil servants and members of the executive council. Another case of compulsory payment for transactions in dollars is witnessed in the gaming industry. For example, two top casinos in Maitama and Wuse areas of Abuja require and demand from patrons to pay for their chips for the games of Roulette and Black jack (games requiring large sums of money) in dollars. A resort in Colorado Street in Maitama demands for dollars from patrons for services as well openly.

    The case of choice in dollar payment is prevalent in real estate transactions, payment of hotel bills and car dealership transactions. At one of the very celebrated hotels in Abuja, call girls and escorts gladly accept dollars as payment for services while the hotel takes a fraction of the dollar transaction as escort commission. In the case of car dealerships, sellers of second-hand cars are less guilty of this practice but the dealers of imported brand new cars more often than not ask for dollars from clients for the sale of luxury cars.The political class outmanouver one another by “settling” their supporters with dollars. Between 1999 and 2007, the practice in Abuja was for politicians to “settle” their supporters with cash inducements stuffed in the ubiquitous “Ghana Must Go” bags, but from around 2009, the practice has changed to the use of dollars to secure the votes and support of potential interest groups.

    Interestingly, many of the perpetrators of the dollarisation of the Nigerian economy care very little about the economic consequences of their actions, but are very aware of the damage that this does to the economy. In most cases, non-Nigerians are the forces behind these transactions but with the active connivance of influential Nigerians. An Abonnema, Rivers State indigene, Chief Bob Manuel, who was met at a newly-inaugurated eatery in the old GRA, Port Harcourt, admitted that people who use foreign currencies to transact businesses in Nigeria are not unaware that the practice hurts the local economy, adding that they have chosen to continue because there is no deterrence against the practice, indicating that there is no law against it.

    Last February, the House of Representatives, concerned by the rising popularity of dollar in local transactions, passed a resolution urging the Central Bank of Nigeria (CBN) to put an end to the dollarization of the economy. Distressed that the dollar was fast displacing the naira as a means of exchange in Nigeria, Nadu Karibo from Bayelsa State, moved the motion in the House to urge major hotels, elite schools, and supermarkets which now preferred to be paid in dollars to start accepting the naira. He further argued that the trend of using foreign currencies instead of the local currency for the payment of domestic transactions was weakening the naira and should be stopped before the local currency becomes worthless.

    “There’s a growing trend in the use of some foreign currencies, especially the US dollar, for the payment of school fees, hotel bills, real estate, rents and purchase in bars, nightclubs, luxury goods shops in Nigeria. Every country has its currency, which serves as a means of exchange, a symbol of identity, a source of pride and a sign of fiscal independence and economic stability. Without equivocation, the naira is Nigeria’s currency and the only means of exchange for local and domestic transactions known to the law in Nigeria,” he argued.

    At the last International Monetary Fund/World Bank annual meetings in Tokyo, the CBN Governor, Mallam Sanusi Lamido Sanusi, similarly expressed concern over the dollarisation of the economy. He said this was part of the reasons the apex bank proposed a N5, 000 banknote last year, which due out of public pressure, was suspended. Also, the CBN’s deputy governor in charge of its operations, Mr Tunde Lemo, also tried to link the increasing robustness of the dollar to the failure to introduce higher denomination of the naira, citing the botched N5,000 note.

    Speaking at the weekend during the World Bank/IMF meeting in Washington DC, the CBN governor said he would not revisit the N5,000 note.

    He said: “On 5000 Naira note I have said I would not revisit. I made all the arguments at the time I made them. You have had inflation in double digits for a very long time, this has weakened the purchasing power of the national currency and therefore means you are carrying much more currency than you need to carry to carry out your transaction.

    “You go to an ATM, you want N100,000 you have to take 100 notes, those notes have a cost and printing those notes you are paying for the paper, paying for the security features, paying for transportation and paying for security while transporting them. And then the CBN is going to pay for destruction of those notes (when they become old and tattered.

    “People got up and made statements, professional institutions, accountants, saying ‘this is inflationary.” I don’t know when accountants became economists, I don’t know when changing denomination became the same as increasing money supply, but in a country in which the decisions are not taken based on the soundness of an argument but on sentiments, I can’t help it. If Nigerians would rather carry Ghana- must- go bags on their backs, that is fine. If they would rather we continue pending money printing these notes, that is fine.”

    Sanusi believes politicians

    have started stacking dollar

    notes ahead of the 2015 elections. He blamed the “dollarisation of the economy by political elite” for continued weakness of the naira.

    At the weekend, the CBN governor insisted that recipients of transfers from the United States must be paid in naira. Speaking on the need to reduce the dollar notes in circulation, he said: “The interesting thing about our country is that we try to be different from others in the world. If you are in the UK and somebody transfers money to you from the United States, in what currency do you get paid in London? Obviously you get paid in pounds. There is no where in the world where you go to a bank and because you got a transfer, you insist on being paid in that currency.”

    However, while some people welcomed what they termed the high level of patriotism displayed by the lawmakers, others insisted that due to globalisation and the Nigeria’s quest for economic transformation, which has led to significant growth in the flow of international trade, it would be difficult to control the use of foreign currencies for some form of transactions in Nigeria. But political elite also to blame for the rising influence of dollar in local transactions, for some actions and inactions of many government officials, especially ministers, lawmakers and other officials of the executive arm of government at the state and federal levels, often promote the love for dollar. For example, recently, it was alleged that each member of the House of Representatives was bribed with $25,000 to support President Goodluck Jonathan.

    Last year, a bribery scandal

    that rocked the House of

    Representatives Adhoc committee on subsidy regime, which led to the suspension and trial of the then chairman of Education committee, Farouk Lawan, was alleged to have been transacted in US dollars. Such transactions, as illicit they are, have exposed how politicians and the business class have promoted the usage of foreign currencies in carrying out their nefarious transactions at the determent of the naira. In other words, while banning the localisation of foreign currencies in the country may sound like a good option, experts saymthose in government should first embark on self-cleansing exercise by making sure that all official financial transactions are done in naira, not in foreign currencies.

    Unarguably, a strong currency gives the people greater purchasing power, and makes foreign products relatively cheaper. Also, volatile exchange rates create uncertainty about international transactions, adding a risk premium to the costs of goods and assets traded across borders. By the currency, experts say a government can encourage greater trade and investment. But, Managing Director/Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane, described the proposal of the lawmakers as a huge joke.

    “Money is a store of value and you cannot compel people not to use whatever currency they want to use. That is not possible,” Rewane said.

    Also, the President, Finance Houses Association of Nigeria (FHAN), Mr. Samuel Durojaye, pointed out the resolution showed that the lawmakers were concerned about the need to strengthen the naira. He however stressed that the use of dollar or other foreign currencies cannot be legislated on.

    “It is a good move, but it is not something that should be legislated on. Ordinarily, if the economy is doing well and we have a very strong industrial base, the naira will be strong compared to the dollar or other foreign currencies and people will prefer to hold the naira more. But today, people feel safe to hold dollars, pounds, euro as a store of value. People feel that these foreign currencies are better store of value against the naira. Most of the goods in the country are imported because our economy is weak and these transactions are done in foreign currencies.

    “So when these importers collect dollars or other foreign currencies, they know that whenever they want to import goods, it is any of these foreign currencies that will be used. But if they collect naira, whenever they want to import their goods, they will have to convert the local currency to the foreign currency,” Durojaye said, while urging the CBN and Ministry of Finance to initiate policies that would reinvigorate ailing industries and strengthen the country’s production base. Who will save the naira?

    Additional reports from Bisi Olaniyi, Port Harcourt and Nduka Chiejina, Abuja

     

  • Naira remains firm against dollar

    Naira remains firm against dollar

    The Naira on Wednesday remained firm against the dollar at the Central Bank of Nigeria (CBN’s) biweekly Wholesale Dutch Auction System (WDAS).

    The apex bank disclosed this on its Website after the conclusion of the auction.

    It sold 272.52 million dollars worth of foreign exchange to banks at the rate of N155.75 to the dollar at the auction.

    The CBN had sold Naira to a dollar at the rate of N155.75 at the previous auction on Monday.

    Nineteen banks participated at the auction, as against the seven that took part in the bidding at Monday’s auction.

  • CBN to maintain value of Naira

    CBN to maintain value of Naira

    The Central Bank of Nigeria  (CBN) continues to intervene in the currency markets to bolster the Naira, after its recent weakening to a seven-month low of 159.10 to the Dollar.

    Although Nigeria is the largest oil-producing nation in Africa, inflation and the need for imports have weakened the currency of late. This fall in value has prompted investors in Nigerian bonds to sell their positions, thereby putting more pressure on the Naira. The CBN’s stated objective, however, is to maintain the value of the nation’s currency within a tight bank of three percent, either side of 155.00. The Naira had strengthened to this plateau over the past year, maintained it for months, but then gradually began to depreciate over the last three months.

    Inflation was the primary concern in 2012. The central bank on six consecutive occasions raised interest rates to address rising prices. Rate changes stopped in November, resting at a 12 percent level. The NCB has passed on any rate adjustments since that time. Lamido Sanusi, Governor of the Nigeria Central Bank, stated this week that he expects the bank to leave interest rates unchanged at 12 percent over the coming months so as not to jeopardize the bank’s efforts to bring inflation back down to single digits, a program designed to stabilize the Naira’s exchange rate.

    Concurrent with this maintaining a constant interest rate posture, the CBN, however, has intervened in the currency markets by holding two U.S. Dollar auctions of $300 million and $276 million over the past week to cover various import needs of the country. When coupled with anticipated month-end sales by local oil producers, the combined effect is to provide stability for the Naira and keep it below the 159.75 threshold. The Naira today is holding steady at 158.55.

    Sewa Wusu, an analyst at Lagos-based Sterling Capital Ltd., has stated in a phone interview with Bloomberg that the “CBN’s increased intervention through the auction has ensured Naira stays within the targeted band amid increased dollar demand.”

    As for near-term prospects, most currency experts are forecasting a stronger Naira, based on the previous open-market actions and expectations of local oil companies. Investors also seem confident that the central bank will continue to support the Naira, as well. One dealer noted that, “We see the Naira trading around the 158 Naira to the Dollar level this week and early next week with more oil companies selling dollars as part of their month-end sales.”

    In a recent Reuters’ survey, 8 of 9 economists predicted that the CBN would not budge from their 12 percent interest rate benchmark. “The main focus of the debate … will be the inflation outlook … and the recent weakness in the currency,” said Andrea Masia, a Morgan Stanley analyst. He was also quick to add that the 2013 budget will have monetary implications that could impact inflation, as well. Inflation currently sits at 9 percent, but Governor Lamido Sanusi has publicly expressed concerns regarding the pressure posed on prices arising from outside of the country.

    Nigerian President Goodluck Jonathan recently approved a 4.99 trillion Naira budget that had received Parliamentary approval in February. The new budget represents a slight rise in government spending of 1.4 percent, a tentative compromise reached after several months of serious debate over future spending plans.

    The stage is now set for further minimal gains over the following week. Kunle Ezun and Kenneth Asenime, local analysts at Ecobank Transnational Inc. in Lagos, suggested a 158.10 figure in a newsletter to their clients, “with bias for moderate appreciation due to monetary policy support.”

    Bio:

    Article by Tom Cleveland of forextraders.com. Mr. Cleveland has been writing about economics and investments since 1980. Since 2010, Mr. Cleveland has been specifically researching currency fluctuations and many aspects of forex news. To read more on his work, view the news section on Forex Traders.

     

     

  • Naira weakens as CBN cuts dollars sale

    Naira weakens as CBN cuts dollars sale

    The naira depreciated for a fourth day on higher demand for the US currency after the Central Bank of Nigeria (CBN) cut the size of its dollar sales this week, reducing supply.

    The naira weakened by 0.1 per cent to N157.09 per dollar. It gained 3.9 per cent last year, the strongest performance among African currencies tracked by Bloomberg.

    The CBN sold $108.48 million at an auction yesterday, bringing sales this week to $120.30 million, representing a 38 per cent decline, compared with $193.20 million sold last week, according to data on its website.

    The apex bank sells foreign exchange at auctions on Mondays and Wednesdays to stabilise the naira. Fuel imports have been a source of pressure on the naira, the CBN said.

    “Dollar demand exceeded the supply this week as businesses resumed for the year,” Tunde Ladipo, Chief Executive Officer of Lagos-based Valuechain Investment Limited, said by phone yesterday.

    Yields on 10-year naira debt rose 13 basis points to 11.44 per cent, according to yesterday’s prices compiled on the Financial Markets Dealers Association website.

    Borrowing costs on the nation’s $500 million of Eurobonds due January 2021 declined two basis points to 3.736 per cent.