The Nation Newspaper

Tag: Economy

  • Buhari working to reposition economy, says Edo legislator

    A member of the Edo State House of Assembly from Akoko-Edo South Constituency, Hon. Emmanuel Agbaje, has assured Nigerians of the Federal Government’s effort to reposition and stabilise the economy. He said: “I am confident that these efforts would change the situation for the better”.

    Agbaje, who called on Nigerians to be hopeful of a better country, said: “I consider it an obligation as well to let you know the challenges confronting us and our determined efforts. This is important so as to bridge the gap between expectations and realisations”.

    He spoke at the weekend, in Igarra, Headquarters of Akoko-Edo Local Government Area, during a Town Hall Meeting and interactive session with his constituents.

    Agbaje said: “We are all witnesses to the economic woes now bedeviling our dear country. The situation knows no exception. Governance at all levels have been seriously affected and in some cases almost brought to its knees, hence it has become increasingly difficult for governments to make good, its promises and obligations to our people.

    “Irrespective of this untoward situation, we must look forward with hope and this is more so, as the All Progressive Congress (APC)-led Federal Government is working assiduously to reposition and stabilise the economy. I am confident that these efforts would change the situation for the better.

    “Permit me to say that the 2015 constituency projects is being handled by my predecessor, Hon. Dele Oloruntoba. I want to express hope and confidence that the projects are on-going and that they will be well executed.

    The legislator added: “The 2016 budget has been presented already; it is going through the process of possible review. I want to assure you that I and my colleague from the North constituency have been putting heads together to making sure we have our fair inputs which we will pursue vigorously. Subsequently, however, I hope that we will take advantage of this kind of town hall meetings to articulate our needs in order of priority and set them as our common agenda and targets. This will guide us to project our collective interest.

    “Within the period under review as a new legislator, I have moved two Motions on the floor of the House and have also contributed positively to other Motions and Bills which I am convinced are in the interest of my people. I became the first to move a Motion that got to a resolution of the House in this Sixth Assembly of Edo State.

    “With the support of my colleagues, I moved a motion of urgent public importance on the BEDC impunity which resulted in the power outage experienced in Igarra community and environs. We got justice.

  • Past mismanagement destroyed economy, says govt

    Past mismanagement destroyed economy, says govt

    THE poor state of the country’s economy is the direct consequence of its mismanagement and the looting of the national treasury under the immediate past administration, the Federal Government said yesterday.

    Segun Adeyemi, the senior adviser to Minister of Information and Culture Alhaji Lai Mohammed, said this in a statement issued yesterday in Abuja.

    The statement stressed that the nation’s economic challenge, especially the depreciation in the naira exchange rate, should not be blamed on “any so-called mismanagement by the Buhari administration”.

    This followed Deputy Senate President Ike Ekweremadu’s comments over the “downward slide” of the nation’s economy.

    Ekweremadu warned that unless urgent steps were taken by the All Progressives Congress (APC)-led Federal Government to arrest the situation, the country might witness a major revolution.

    But Mohammed said: “If there was still any honour left among thieves, there is no way the leaders of a party under whose watch the nation’s economy suffered a monumental mismanagement and the Central Bank was turned to the ATM or piggy bank of a few people will have the temerity to insult a government that is working hard to turn things around or the citizens who are bearing the brunt of such mismanagement.

    “It is now clear to all Nigerians that if the Peoples Democratic Party (PDP) had won the last general elections, Nigeria’s economy would not have survived one more month, considering the battering it received under the immediate past administration.

    “It is, therefore, unconscionable that those who should show contrition and hunker down to avoid public opprobrium are the same ones pointing an accusing finger at the Buhari Administration.”

    The minister described the comments credited to the Deputy Senate President as the clearest indication yet that the PDP and its leaders were still in denial about the massive looting they allegedly inflicted on the economy.

    “Senator Ekweremadu complained about the depreciation of the Naira without telling Nigerians who ‘dollarised’ the Nigerian economy by bribing many individuals and groups with dollars during the last elections, thus inflicting a knock-out punch on the local currency. He also failed to tell Nigerians which government presided over the frenzied mop-up of dollars, either for ‘armsgate’ or for slush fund purposes, from the CBN to a point where it almost ran out of the hard currency,” he said.

    The minister added that even though the Buhari administration met an economy that was in coma, it had refused to use that as an excuse for inaction.

    Mohammed said the All Progressives Congress (APC) administration has been working hard on measures that would turn the economy around “and offer relief to the citizenry by lifting millions, not thousands, of people out of poverty through a massive social intervention policy”.

    The minister explained that the outcome of the months of hard work would manifest soon in the 2016 national budget, which, he said, would give succour to millions of Nigerians who were reeling from fallout of the errors of the immediate past administration.

    He advised the leaders of the PDP and members of the immediate past administration, who were allegedly involved in the emerging cases of “looting spree” to urgently return the funds they have stolen out of the commonwealth to government’s coffers.

    “They are lucky that Nigerians are not as incautious as they are, otherwise they would not be able to walk around freely, not to talk of having the effrontery to fire darts at the government that inherited their rot or the people who are suffering the consequences.

    “They looted the billions of naira that were allocated for the fight against insurgency, causing many innocent and patriotic soldiers to die needlessly, yet they are not remorseful. They looted the treasury to influence the last elections, doling out money as if it was going out of fashion, yet they continue to grandstand.

    “In the latest revelation, a minister under the immediate past dispensation admitted to sharing N600 million to six chairmen of the Contact and Mobilisation Committee of the PDP for the last general elections, N300 million to an account given by a former PDP chairman, N200 million to a PDP governorship candidate and N100 million to a former PDP governor. This is just one case out of many; yet these revelations are but a tip of the iceberg of what Nigerians will hear in the days ahead,” Mohammed said.

    The minister assured that despite the “mind-boggling revelations” about looting and the mismanagement by “self-styled economic wizards, the economy will bounce back under the watch of Buhari, who is bringing probity and transparency back into governance”.

  • Can Buhari treatment fix the Economy?

    Can Buhari treatment fix the Economy?

    With the credit crunch biting Nigerians very hard, the debate everywhere is whether President Muhammadu Buhari’s formula can turn around the economic fortunes of the country. Ibrahim Apekhade Yusuf examines the issues 

    Six months ago when President Muhhamdu Buhari took the oath of office, a lot of Nigerians looked forward with hope and optimism to a bright future. But that hope is fast receding into frustration as many are seeking answers to a myriad of questions.

    Too little, too late

    To many observers, measures so far taken by the government are largely cosmetic and not solid enough to make much impact.

    So far, some of the policy initiatives of the Buhari government created a lot of bad blood and ill-will, analysts have said.

    Even the recent cut in benchmark interest rate to 11 percent from 13 percent has not helped much to convince analysts that the administration has mapped out a clear cut strategy to turn around the economy for good.

    In the week preceding the Central Bank of Nigeria (CBN) announcement, Nigerian equities bled profusely as a combination of foreign exchange crisis, policy uncertainties and weak corporate earnings sustained pressure on the share prices of most quoted companies. Most transactions at the Nigerian stock market highlighted investors’ concerns and lack of appetites for aggressive risk-taking.

    The skepticisms come from the fact that not much has been done to address other challenges that stifle growth in the nation’s economy.

    The CBN governor, Godwin Emefiele said that the decision to cut both the policy rate and the harmonised cash reserve ratio was to engineer growth by increasing the flow of lending to critical sectors of the economy like agriculture, solid minerals, critical social infrastructure and manufacturing.

    However, analysts remain cynical, wondering how such initiatives, though commendable can drive economic growth in the absence of critical infrastructures and amenities, especially power and recurring fuel scarcity, which businesses still have to provide for themselves, cutting deep into available resources.

    In the view of analysts, the policy pronouncements of the APC-led administration including the CBN policy on import restriction, forex restriction and fixed exchange rate, among others, which were expected to bring succour have resulted in regulatory headwinds.

    During the last MPC meeting, Emefiele claimed he reduced the benchmark interest rate by two percent to 11 percent and lowered the cash reserve ratio to 20 percent to help support an economy struggling to cope with falling oil revenue.

    But with importers blocked from accessing dollars, the liquidity boost may do little to increase output in manufacturing and other industries, while fueling inflation economic watchers have argued.

    “It is difficult to overstate the degree to which this is a highly unorthodox move,” John Ashbourne, an economist at Capital Economics in London, said in a note to clients.

    “Nigeria faces high inflation, pressure on its currency, and it desperately needs to attract foreign capital to fund the current account deficit created by low oil prices. It is, in short, in exactly the sort of situation in which economists would generally expect – and recommend – tighter monetary policy.”

    Nigeria is bucking the trend across Africa as central banks from Ghana to Zambia and South Africa raise interest rates to curb inflation threats stemming from weak currencies.

    But policymakers in Nigeria have moved in the opposite direction, imposing foreign-exchange controls to stabilise the naira, in contrast to other major oil-selling nations, including Russia, Colombia and Kazakhstan that have let their currencies fall.

    The naira has remained virtually fixed at 198 to 199 per dollar since the central bank imposed the foreign-exchange restrictions in February. It lost a fifth of its value from June 2014, after oil prices began sliding, until the currency controls were implemented.

    “It’s hard to see this set of policies succeeding in the long run,” Charles Robertson, chief economist at Renaissance Capital Ltd., said by phone from London. “These are policy choices that have a finite lifespan. Unless Nigeria is saved by a much higher oil price, it is going to carry a lot of costs for the economy.”

    Monetary policy easing signals the central bank has no intention of devaluing the naira yet, according to Razia Khan, Head of Africa Economic Research at Standard Chartered Plc in London.

    “The message that the Central Bank of Nigeria is undoubtedly sending to everyone with its policy easing is that it assumes a fixed-exchange regime remains in place,” she said by phone.

    “If it were thinking about a foreign-exchange market liberalisation, which in all likelihood would lead to more foreign exchange weakness, it would have been more difficult to follow through with these stimulus measures in this format.”

    Lower interest rates may add to pressure on inflation, which slowed for the first time in almost a year in October to 9.3 percent. The central bank’s goal is to keep inflation in a range of 6 percent to 9 percent.

    The prevailing macro-economic indicators point to an economy irretrievably headed for more troubles in days ahead. Last month, inflation rate soared to 9.4 per cent from 9.3 per cent in August. It was the highest inflation rate in two years, a National Bureau of Statistics (NBS) report said.

    A recent World Bank report has classified Nigeria, with about 170 million people, among countries with extreme poverty. The bank says more than 70 per cent of Nigeria’s population lives on $1.25 (abot N250) or even less per day.  Specifically, the report revealed that seven per cent of the 1.2 billion people living below poverty line in the world are Nigerians. An increasing number of Nigerians are said to be daily losing their access to basic social and public infrastructure; potable water, sanitation and healthcare.

    The economic growth rate has been on the decline, a development, which experts identify as a direct consequence of falling oil prices and subsequent depreciation of the naira.  The economy, which recorded a Gross Domestic Product (GDP) growth of 6.54 per cent in the second quarter of last year, has dropped to 2.35 per cent this year, the NBS said. The 2.35 per cent GDP growth recorded in the second quarter of this year marked the second quarter in a row that the economy will record a GDP below its anticipated performance.  According to experts’ interpretation, an average Nigerian is getting poorer when a 2.35 per cent growth is recorded at a time the population growth is close to 2.85 per cent.

    The final projection for the year, according to the Bureau, is expected to be 2.63 per cent, compared to last year’s 6.22 per cent. The projection is less than half of the budgeted growth rate.

    Industry watchers are worried that the third quarter has ended without any visible economic stimulus to raise the GDP growth from the abysmal 2.35 per cent recorded in the second quarter.  They argue the focus of the President Buhari led-administration has been more on the fight against corruption and Boko Haram insurgency.

    “The economy has been in its lowest ebb because President Buhari is focusing on the fight against corruption, which has been with us for a very long time,” the Registrar/Chief Executive Officer of the Institute of Business Development (IBD), Mr. Paul Ikele, observed. According to him, the economy should run alongside the anti-corruption war.

    “There is a trade off,” Lanre Buluro, head of research at Primera Africa Securities Ltd., said by phone from Lagos. “In the short term, the central bank wants to trade off inflation and if the economy picks up it will tighten again.”

    Ololade Ososami, a tax and financial analyst in Lagos, said the bid to stabilise exchange rate using forex restrictions appears to have failed as the real value of the currency is seen at the black market where it continues to fall against the dollar.

    She warned of dire consequences for the economy.

    “The implications of this change in monetary policy is that businesses will end up generating lower taxable profits, which will ultimately lead to the payment of less tax and reduced government revenue,” Ososami asserted.

    The country’s debt profile has been climbing. According to a report by the Debt Management Office (DMO), Nigeria’s domestic debt has hit N11 trillion; external debt ($11 billion). However, DMO’s Director-General, Dr. Abraham Nwankwo, who spoke at a function in Kaduna said the huge debts remain sustainable.

    “I want to assure you that Nigeria’s debt remains sustainable,” he said, noting that the size of the debt was not as important as the resources deployed to stimulate economic growth, development, generate employment and reduce poverty.

    A critique of Buhari’s economic blueprint

    In the view of the former Central Bank of Nigeria (CBN) Governor, Prof. Charles Soludo, the economy is literally prostrate, no thanks to the inability of the current administration to get its economic management formula right.

    The erstwhile boss of the nation’s Bourse, who spoke at a public forum recently, was unsparing of the economic policies of the federal government, saying their implementation won’t take the economy anywhere.

    Specifically, he said the Treasury Single Account (TSA), the CBN’s foreign exchange (forex) policy, and bailout funds for state governments are all in bad taste.

    Besides, he believes the removal of fuel subsidy should be done without further delay just as he argued that the capital controls policy of the apex bank has continued to chase away investors.

    Soludo who spoke on the theme: ‘It’s the Nigerian Economy, Stupid” at the third anniversary lecture of Realnews held in Lagos, said the CBN’s forex policies are not in the best interest of the economy, arguing that fixed exchange rate is a disincentive to investors.

    “The economy has always done worse in fixed exchange rate regime. Capital will fly out. Such policies do more harm than good. Capital flight in a country that is in dire need of capital is bad. Private capital is on the run,” he said.

    Going down memory lane, Soludo said, “In my five years at the CBN, we maintained undervalued real effective exchange rate. Delayed adjustment of the naira value is dangerous because investors don’t wait.”

    He said the forex policy of the CBN has triggered massive lobbying for the greenback. “Lobbying for forex is the new trend now. Why must people get forex to pay for school fees, medical bills and mortgages abroad? Such expenses cost the economy billions of dollars and are creating briefcase millionaires. It is creating instant millionaires,” he said.

    He also condemned capital control policy of the CBN, saying it does nothing good to the reserves. “CBN thinks capital control saves reserves. But that is not true. Capital flow works on reverse psychology. If you make it so difficult for investors to take out their money, it will be difficult for them to invest,” he said.

    He challenged the CBN to explain why it pegged the naira at N197 to a dollar, saying it was wrong to arbitrarily pick numbers. “The policy will continue to make a bad situation worse. The forex policy will complicate issues,” he said.

    Soludo called on the government to quickly remove fuel subsidy before it is too late. “If government does not deal with fuel subsidy removal now, I don’t know when he can do that. It is a waste that should be checked. Government should come up with credible agenda on fuel subsidy. It should have been done yesterday,” he said.

    He also faulted the implementation of the Treasury Single Account (TSA), saying it does not add positive value to an economy that is in urgent need for re-fueling. For him, TSA is not sound economics.

    He advised that government adopt a hub and spoke strategy, where the CBN acts as the hub and banks act as spoke in galvanising the economy.

    However, he admitted that the CBN cannot do much without the collaboration of the Presidency. “The market will react if investors find out that the Presidency controls the CBN. There should be independence of the CBN,” he said.

    Speaking further, he said CBN’s bailout fund to states was a mistake that should not be repeated arguing that the Fiscal Responsibility Act should be implemented fully.

    Soludo said a sitting governor can decide to bankrupt his successor and will be applauded at the moment. It is the next government that feels the pain of the bailout fund.

    “We must watch the balance sheet of the CBN and banks very carefully,” he said.

    The former CBN boss said the proposed N5, 000 welfare package for the unemployed is a good idea, but not for this time. He explained that although promises have been made, the welfare payment cannot be sustained, unless government wants to overtax the private sector.

    “Corporate taxes should go down. This is not a good time to raise taxes,” he said.

    Soludo said the GDP handed over to the APC should be doubled in the next eight years as such would help to reduce poverty.

    He said the last PDP government left only $30 billion in foreign reserves, instead of estimated $100 billion based on the level of revenues that accrued to government’s coffers in the last five years of the administration. He said the current government must succeed and that failure is not an option.

    Christopher Kiwamu, a former banker with the Bank of Industry (BoI), Lagos, shares the same sentiments with Soludo.

    As far as he is concerned, everybody is at a quandary and searching for answers, which are not forthcoming.

    “An economy does not improve based on sloganeering, name-calling or engaging in blame games and searching for scapegoats, but rather painstaking and determined efforts focused on tested solutions. What is on ground right now does not give room to cheer,” he said.

    In the opinion of Mr. Peter Folikwe, Managing Director/Chief Executive, Berger Paints Nigeria Plc, manufacturers are finding it pretty difficult to carry out production because of the regulatory headwinds.

    Most of the manufacturers, he stressed, find it hard to establish Letters of Credit because of the CBN policy on forex restriction.

    How Buhari can rekindle economy

    In the view of the former Minister of Information, Dr Walter Ofonogoro, Nigeria needs to reduce dependence on oil and diversify the economy.

    Speaking in an interview with The Nation, Ofonagoro said the time was right for the government of President Buhari to pursue its vision of providing a multi-sectoral economy, with emphasis on making each sector generate money substantially to grow the economy.

    He said the nation’s oil reserves are shrinking due to the downturn in the global market, thereby making it difficult for the federal government to mobilise enough revenue for growth.

    In the opinion of Dr Akinola Adebosin, an economic consultant with the Nigerian Indigenous Economic Development Alliance (NIEDA), the best way to revamp Nigeria’s dwindling fortunes is to tinker with the current policies.

     

  • Economy must be diversified, says MAN

    Economy must be diversified, says MAN

    The Manufacturers Association of Nigeria (MAN) has said there is no better time to diversify the economy than now. MAN President Dr. Frank Udemba Jacobs said it has become imperative to encourage the development and growth of the manufacturing sector, which is the surest way to diversify the economy.

    Speaking with the Nation,  Jacobs said the manufacturing sector is essential to job creation, sustained growth and development of other key sectors such as agriculture, solid minerals and others. “For the economy to remain the largest economy in Africa, as we claim, and assume the position of one of the leading 20 global economies in the year 2020, its structure must be diversified,” he said.

    He, therefore, called on the government to urgently address the challenges militating against the growth of the manufacturing sector. He identified some of the challenges as acute infrastructure deficiency, general insecurity, smuggling and unbridled importation and dumping of cheap and substandard finished products. Others are high cost of funds, inadequate long term loan windows to support long gestation investments and multiple taxation.

    The MAN president also identified non-availability of functional core industries such as iron and steel and petro-chemical industries as serious threats to the survival and growth of businesses. He also said irregular supply of industrial fuels arising from epileptic operation of local refineries constitutes an impediment to businesses.

    Jacobs urged government to ensure that refineries are privatised and the petroleum sector completely de-regulated. He also complained of policy inconsistency, high level of corruption both in the public and private sectors, as well as tardy implementation of policies. He said these sometimes arose from lack of political will to follow through on good policies.

    The MAN chief criticised what he called the lopsided government fiscal expenditure in favour of recurrent allocation; lack of patronage of made-in-Nigeria products. He noted, for instance, that government expenditure dictates the direction of general demand in the economy.

    He canvassed a policy on buy made-in-Nigeria and asked that it should be strictly enforced at all tires of government including Ministries, Departments and Agencies (MDAs).

  • Running the economy without oil

    Running the economy without oil

    There were two major national problems our military rulers managed poorly. First was the enormous wealth that came our way in the oil boom of the early 70s. One martial ruler said his headache wasn’t money: It was how to spend it whereupon the country under him took upon itself the Father Christmas role. We gave and gave to African countries that were not as oily endowed as we were. When we could no longer locate the needy in Africa we turned to shores outside the continent.

    There was that distant Caribbean island. One of the reports on the matter said we paid the salaries of that country’s civil servants when the government couldn’t oblige their servants. Was it a loan? Was the money paid back with interest? Or we gave it to them not hoping it will be returned?

    After that era, another military leader came into the scene. He also enjoyed economic prosperity, engendered by the then Persian Gulf War that made Nigeria’s crude oil much sought after. His own problem was that despite applying all the political and economic strategies that big money could afford, a socio-politically ailing Nigeria failed to stabilize. And so he threw up his arms in despair and said the country had defied every solution in the books. Many astute observers wondered what became of the wise counsel of the galactic cabinet of his junta.

    Now in our day, in the period that would soon pass as the post-oil age, there is another challenge: what do we do without oil wealth? Can we manage the country and its teeming population with depleting wealth from crude? Is it possible to run this huge economy without the black gold?

    Those who have a keen sense of history, those who know what played out in the days of the old Western Region under Chief Obafemi Awolowo wouldn’t beat about the bush to answer those questions in the positive. They would tell you offhand that if he and the premiers of the other two regions developed their areas without oil in their days, Nigeria today would also thrive without oil, if we had the right leaders with bold and resourceful ideas.

    Oil wealth is receding, incapable of matching fiscal policy while there is a massive pressure on our rulers to sustain the machinery of government and to meet the yearnings of those who enabled their existence in our democratic process. So our leaders and their partners in industry are expected to move with lightning speed and walk away from oil as a base for development. We must think out of the box. Doing so means generating wealth from ideas such as countries without oil are doing and moving their societies into the league of leading nations of the world, far ahead of those with oil weapon which is now proving inadequate.

    Lately, we have seen this movement of idea power put to work in Ogun State. Faced with a bleak future for oil revenue and a rush of social and economic migrants from Lagos and other peripheral states, the administration of Governor Ibukunle Amosun has had to initiate creative strategies to raise good money to fund gigantic projects and meet the needs of the state’s burgeoning population. He is beating a retreat from resting on the rickety base of oil economy.

    Amosun resorted to the bold and imaginative step of what the government has since described as the Homeowners Charter project. It entailed a drastic discount in the process of acquiring the all-important Certificate of Occupancy for landed property in the state. It will cost close to N600, 000 to possess it. But in the arrangement initiated by Amosun, a property holder will pay less than N100, 000.

    Late in November in Abeokuta, the state capital, when he presented C of Os and Building Plan Approval to some 1000 more of the Home Owners Charter beneficiaries, Amosun alluded to a major advantage of the scheme: employment generation.

    Now I add four more: Home Owners Charter reduced crime in Ogun through its direct and indirect employment of the youth; it raised more funds for the mammoth capital development projects going on all over the state; it brought security of property ownership in Ogun; finally it enhanced the owner’s mortgage loan potential.

    Now oil revenue hasn’t played a role in all these. It’s been the result arising from a sheer stroke of an idea. Just as it was when the illustrious leader of the sprawling Western Region of Nigeria Obafemi Awolowo didn’t have oil money but still performed wonders under a cocoa economy. He was creative with what he had to introduce free education for his people. It was the same enterprising mentality that made him build the Western Nigerian television station in Ibadan, which was reputed to be the first in Africa.  In the North, it was Ahmadu Bello working without oil but relying on imaginative programmes who built the groundnut pyramids to develop his region. And in the East, Dr Nnamdi Azikiwe employed a coal industry to raise a solid economic base for the Eastern Region of Nigeria. In all these instances it was the spirit of creativity that performed the magic.

    What Amosun has also achieved with the Home Owners Charter scheme represents a spark from the realm of creativity. It has as we have seen ledto ripples of other life-giving projects to the benefit of society.

    What he and other men and women of ideas in our midst are teaching is that the country can be run on the wheels of ideas and enterprise in this age of dwindling resources from oil as we rely on science and technology rather than on the brawny oil regime.

    Government and stakeholders in education and youth training programmes in the society must draw appropriate lessons from the Ogun state’s Home Owners Charter initiative. Let us beat a retreat from an all-tutorial diet that glues our kids to the classroom all their lives in school. Vocational and entrepreneurial exposure must no longer take the back seat. Theory must go side by side with practice.

    If we pick the fields of agriculture and solid minerals for instance and toss in the bubbling creativity of our inexhaustible human resources, backed by the advanced tools of science and technology along with the right leadership, I can’t imagine Nigeria being clubbed in the log of poor countries or among the so-termed developing nations. Nor can we again be in the Third World.

     

  • The new shared economy

    The new shared economy

    The popular saying used to be that big fish would eat small fish. This has since changed significantly in the light of recent happenings in the global economy; UBER, until recently a relatively unknown company out of Silicon Valley in California employs 160,000 drivers today, and is adding an average of 20,000 drivers every month. This transport services disrupter is now valued at $41b. Another obscure company with similar roots, AirBnB, has over 1.5m accommodation on its platform, and is now valued at $25b. Upwork, a platform that connects businesses with freelancers have gone from zero to $1b revenues in just five years and projects to reach $10b in the next five years.

    The new disrupters are not confined to just North America and Europe. China’s foremost e-commerce business, Alibaba’s recent listing on the New York Stock exchange broke all records with a valuation of $170b. DiDi Kuaidi, a Chinese transport platform is pooling over eight million drivers and serving 10 million commuters every day, in a consumer to consumer model.

    Here in Nigeria, CWG Plc, has seen a record uptake of six million new accounts on the Diamond Y’ellow Account platform, a mobile banking product that it white labels, and recently launched in conjunction with MTN and Diamond Bank, targeted at MTN subscribers.

    The new saying today is that fast fish will eat slow fish. Nimble, highly innovative companies are taking advantage of ubiquitous broadband and smartphone penetration to push business models that ride on providing virtual products over a virtual channel, thus pushing transaction velocity to the limit, and securing a bigger slice of the pie in the process. These companies, primarily in the technology industry are rapidly disrupting long standing businesses in a model that would not have been possible as early as a decade ago, and racking up huge valuations in the process. Welcome the Czars of the new sharing economy, also sometimes referred to as the gig economy, or the on-demand economy. WhatsApp, founded in 2009 already handles 10 billion more messages a day than the SMS global text-messaging system, and was recently acquired by Facebook for $19b.

    This new business model is simply meeting a pent up demand of consumers. Today’s customers demand to have their products and services delivered to them wherever and whenever, and do not necessarily want to cut a cheque or reach for their wallets to pay. They usually bank online and are less likely to have paid a visit to their banks in the past one month. Disrupters such as Apple seem to have heard them very clearly and working round the clock to provide a seamless payment solution. ApplePay currently serve users of IOS devices who have registered their credit or debit cards. It is used to pay for goods at shops that have near field communication (NFC) readers. Apple is now developing a peer to peer option, which puts it directly in competition with more established players such as PayPal. It is not only Apple that is circling around Pay Pal’s lunch. Samsung has a similar product, and Google used to have Google wallet.

    It seems that Cloud Computing has finally come of age, as these disrupters typically deliver their platforms over the cloud. Oracle has started offering cloud services including databases. Microsoft’s only growing business is her cloud services. Amazon’s only profitable business is her cloud services, which now includes online database as a service. CWG launched her new subscription based business model christened CWG2.0 on the Cloud Platform. It enables the business to scale globally seamlessly, without having to make any investments in brick and mortar.

    The global economy seems to be moving from getting supply from companies, to a crowd sourcing model in a peer to peer way. Regulation of this ‘new normal’ is quite a challenge because regulation is backward-looking while innovation is forward looking, so there is always a gap which creates considerable tension. It takes quite some time for regulation to catch up with technology, so there is a period of time where the disrupter seem to be operating in ‘no man’s land’ as far as the law is concerned.

    Another major challenge in the new economy is data security. The bigger problem is about governments getting interested wherever there is large amount of data, and seeking to gain access to it, perhaps for tax purposes, security etc. How do the new businesses, which typically generate tons of customer data handle this dilemma? On more than one occasion, Google has reported governments’ requests for access to her data.

    There is a lot of concern around the disruptive force of digitalisation and the need for inclusive growth and job creation. The impression is that digitalisation kills jobs through automation. The reality is that for every job lost through digitization, 12 more are created, but you may need retraining and retooling to benefit. In reality, digitisation provided a whopping $193b boost to world economic output and created six million jobs globally in 2011, equivalent to a 1.02% drop in the unemployment rate.

    It is very clear that we are at the throes of a new digital economy. Companies who fail to adapt to the new imperatives of the shared economy should prepare to write their obituaries.

    • Okere writes from New York

     

  • NUPENG seeks rejuvenation of economy

    NUPENG seeks rejuvenation of economy

    The Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), has urged President Muhammadi Buhari and the Federal Executive Council (FEC) to hit the ground running to put the economy on track.

    The union, in a statement, said it believes that time had been wasted in constituting the cabinet to implement the programmes of the government.

    NUPENG appealed to FEC to meet regularly to proffer solutions to the needs of the citizens.

    The workers said expectations were high, adding that the ministers should put in place policies to arrest incessant fuel shortages crippling the economy.

    NUPENG said since Mr. President is in charge of the Petroleum Ministry, he and his team must put in place short- and long-term measures to end the sufferings of the masses so they can get petroleum products without wasting man-hours at the filling stations.

    NUPENG also urged the Federal Government to address casualisation and outsourcing of workers to contractors, which is modern-day slavery.

    NUPENG added that as the over-seer of the Petroleum Ministry, Mr. President must address the issues of non-payment of cash-calls on Joint Ventures and also represent the Petroleum Industry Bill (PIB) after a stakeholders’ meeting to iron out the grey areas.

    The group said the new FEC must halt divestments in the oil & gas industry and tackle the Turn-Around-Maintenance (TAM) of the nation’s four refineries in Port Harcourt 1, 2 Kaduna and Warri.

    NUPENG stated that it will not hesitate to resist any further retrenchment and down-sizing in the oil and gas sector and therefore called for an enabling environment that will create a level-playing field for investors to operate.

    The Union also wants the problems of power and bad roads addressed while the diversification of the economy must be on the front burners of the government.

  • Forex restriction takes toll on economy

    Forex restriction takes toll on economy

    •Manufacturers,  importers, publishers, others  groan

    Operators in key sectors of the economy have been gasping for breath, following the introduction of Foreign Exchange (forex) restriction on some items classified as finished products by the Central Bank of Nigeria (CBN). The print media  is part of the casualty of the policy. Most newspaper publishing outfits cannot replenish their stock because newsprint is classified as a finished product, requiring high duty. Besides, banks are not opening letters of credit for them to import materials. The development has heightened fears of possible closure of newspaper houses and job losses.  CHIKODI OKEREOCHA, OKWY IROEGBU-CHIKEZIE, COLLINS NWEZE, AKINOLA AJIBADE and ADEDEJI ADEMIGBUJI report that stakeholders are calling for special intervention to avert the looming catastrophe.

    CBN defends policy

    DESPITE complaints by manufacturers and others operators that the Foreign Exchange (forex) policy introduced by the Central Bank of Nigeria (CBN) was making the business climate inclement for investment, the apex bank has defended its stand.

    The bank has insisteted that it has no plans to roll back the policy soon, saying that the good intention behind the introduction of the policy was incontrovertible.

    It explained that it removed the 41 products from access to its forex window they could easily be sourced and produced locally.

    According to the bank, it makes no economic sense to spend the country’s reserves on importing materials that could be sourced in the country, insisting that the policy was aimed at boosting local production.

    The affected items include: rice, cement, clothes, textiles, toothpick, poultry products, meat and processed meat, margarine, palm kernel/palm oil and vegetable oils, private airplanes/jets, tinned fish, incense and wooden doors.

    Also on the prohibition list are: soaps and cosmetics, tomato/tomato paste, woven fabrics, table ware, kitchen utensils, furniture, plywood boards and panels, wood particle boards and panels and glassware. Cold rolled steel sheets, galvanised steel sheets, wire mesh and steel nails.

    Largely because of the import-dependent nature of the economy, the slide in oil prices in the international market, which started mid-last year, caused an unprecedented fall in the value of the naira. The development necessitated the need for a policy intervention to defend the naira value and protect the nation’s foreign reserves in the midst of dwindling oil revenue.

    The CBN has a responsibility to use foreign reserves to defend the naira, but the reserves have been depleted as a result of the sharp fall in oil revenue. Industry watchers have faulted the CBN policy of defending the naira. They spoke of the need for the apex bank to allow market forces to determine the real value of the naira.

    However, CBN’s decision to devalue the naira in October 2014 through March 2015 unleashed serious and unintended negative consequences on operators in various sectors.

    The wish of real sector operators is a review or outright cancellation of the policy, but CBN Governor, Godwin Emefiele, has said now of the options is on the card.

    At the International Monetary Fund (IMF)/World Bank Group meeting in Lima Peru, Emefiele, sealed manufacturers’ hopes when he said CBN would continue to deny importers access to forex to bring in goods which can be produced locally.

    He explained that contrary to insinuations, the finance sector regulator has not banned any goods from being imported.

    He said: “We have not banned any items. What we just did was to exclude them from accessing foreign exchange; items that can be produced in the country.

    “We think that because of the problems we’ve had, the drop in commodity prices and revenue accruing to the nation and because we know that these items have been produced in large quantities in this country in the past that provision still stands. The CBN is not reconsidering the ban, the exclusion still stands.”

    The CBN chief added that since the policy came into force, he has been prompted from various quarters to even elongate the ‘excluding items’ list, but that the CBN would confine itself to the items presently in the restriction basket.

    However, with the negative impacts of the policy now creeping into several sectors, the consensus of not a few industry operators is that there is urgent need for a review by the regulator.

    Real sector operators, especially manufacturers were among the first to scream blue murder being at receiving end of crippling effects of the Foreign Exchange (forex) policy introduced by the Central Bank of Nigeria (CBN) to encourage consumption of local materials. They have been contending with the trend since mid last year  when oil prices tumbled at the global market, forcing a sharp drop in accruals to the foreign exchange reserves. The devel devaluation of the naira was the apex bank’s bank’s immediate response.

    The continued slide of the naira against the dollar and other major currencies has thrown manufacturers into confusion. Manufacturers, who buy their inputs or raw materials from abroad are hurting. No thanks to the exchange rate. They now pay more naira for each unit of imported raw materials, including machineries, spare parts and other import-dependent procurements.

    Besides, manufacturers, who rely on loans from banks to import raw materials, have been doing so at higher interest rates. The rates hover between 25 and 30 per cent. The Nation learnt that many operators are finding it difficult to fund their import bills. Those who manage to do so, have to contend with shrinking profit margins. Operators in the Small and Medium Enterprises (SMEs) sector are the worst hit. The manufacturers’ grouse is that some of them, who use products on the restricted items’ list as raw materials, are adversely affected since they no longer have access to forex. Impliedly, manufacturers, who require any of the 41 restricted items, either as inputs or raw materials, may soon could close shops as the apex bank is not in a hurry to relax the policy.

    The Director-General, Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf, highlighted some of the crippling impacts of the policy on real sector operators. He said the restriction on the use of export proceeds by exporters has made settlement of bills difficult for importers. It has also caused a decline in bank’s revenue due to loss of transactions as operators approach alternative market, though at higher rate. This, he said, has been eroding the already shrunk profit margins.

    According to him, the fortunes of operators are on the decline since they spend more patronising the alternative market. They could no longer meet their obligations to foreign suppliers.

    In a paper where the LCCI listed the impacts of CBN’s various policies on businesses and the economy, Yusuf said apart from reduction in  trade volume, the forex restriction has caused a negative risk perception for the country by foreign banks because of the restriction on foreign credit lines.

    The LCCI chief added that the restriction has caused loss of customers to the parallel markets since banks have been unable to meet their customers’ forex demands  for tbusiness transactions. He said the lack of forex to import raw materials and the delay in processing form ‘M’ to import and meet demands has led to loss of market share.

    President of Manufacturers’ Association of Nigeria (MAN), Dr. Frank Udemba Jacobs, said the impacts of the policies on his members can be gleaned from National Bureau of Statistics (NBS) figures, which showed that the sector performed abysmally low in the second quarter of the year in terms of output and contribution to the Gross Domestic product (GDP).

    Relying on the NBS figures, Dr. Jacobs said real output in the manufacturing sector grew by 3.82 per cent in the second quarter from 14.01 per cent in the prededing year. This, according to him, showed a 17.83 percentage point decline over the period.

    Also, the manufacturing sector’s contribution to nominal GDP in the second quarter fell to 9.29 per cent as against 9.77 per cent recorded last year, indicating 0.48 percentage point decline. He lamented the crash of all manufacturing indices, noting that capacity utilisation, production value and manufacturing investment, have been on the decline.

     

    Banks hit as customers turn to neighboring countries

     

    Local banks are losing customers, who turn to neighbouring West African countries of Ghana, Benin Republic and Cotonou, where the import procedures and forex policy are friendlier.  The Nation learnt that the local banks could no longer meet their customers’ forex needs, forcing them to go outside the shores of the land to exchange and transfer funds for transactions.

    Yusuf confirmed that many rich Nigerians in the Diaspora have been  operating parallel foreign exchange market by accepting to settle transaction cost for friends and associates, who in turn, pay in naira into their local bank accounts at above the rate in parallel forex market.

    The LCCI chief, who hinged his claim on a research conducted by the Chamber on the impact of the CBN policies on the real sector, said: “Under the transfer arrangement, there is about 10 to 15 per cent increase in the cost of transfer, excluding the security-related issues.”

    He alleged that the policy, especially, the one on domiciliary account, has eroded investors’ confidence in making Nigeria as their destination of choice.

    Investigations by The Nation has also shown that the rejection of dollar deposits by banks has created a business boom for forex speculators.

    Edu Abdulkareem is one of those taking advantage of the policy to fatten his bank account. The policy, which made it impossible for importers to fund their domiciliary accounts directly from Nigeria, has created a billion-dollar business for currency speculators.

    “Dollar deposits and transfers to suppliers’ accounts are only possible if the money came in from a foreign account as inflow. What we do is collect the equivalent in naira while our agents in Benin Republic make dollar equivalent deposits into the importer’s domiciliary account from where he transfers the fund to foreign suppliers,” he explained.

    That way, Abdulkareem explained, the importer will be able to beat the regulator’s caveat that ‘only foreign inflows’ can be transferred to suppliers. He explained that although it is a tedious process, but it has enabled importers to escape regulatory sanctions while allowing him to take commission on every successful transfer.

    Another currency speculator, who pleaded for anonymity, said the rejection of across-the-counter foreign currency cash deposit by banks has been creating problems for importers.

    He said: “The surplus dollars in the street market is unavailable to the local importers as they cannot transact with it through their bankers. The neighbouring countries are having a field day mopping up the excess dollar cash liquidity at a very cheap rate for the use of their imports to the detriment of importers. Importers are diverting the payment for their imports to neighbouring countries.”

    The importers are also diverting their consignments to ports in neighbouring countries. The ports of Tema and Tokoradi in Ghana as well as the Port Autonome de Cotonou, in The Republic of Benin are their preferred choices.

    “The policy change is helping businesses in neighbouring countries at the expense of Nigerian lenders. I believe that operators should expect further market disequilibrium,” he warned.

     

    An economy at the crossroads

     

    Operators in virtually all the sectors have been thrown into confusion following the June 2015 CBN monetary policy that barred importers of 41 items that can be sourced locally from accessing to its official forex window.

    The issuance of the prohibition list by the CBN has banned importers of such items from benefitting from CBN’s forex window, which is the cheapest. Those wishing to import these items can no longer  source forex locally for their shipment. Exporters cannot use their proceeds to ship them into the country neither.

    Under the new regime, export proceeds domiciled in one bank cannot be transferred to another bank. The apex bank also prohibited the deposit or transfer of foreign currencies from domiciliary accounts, with deposit banks.

    Since the CBN forex squeeze came into force, operators in key sectors, such as manufacturing, banking, oil & gas, maritime and telecommunuications, among others, have difficulties in transfering funds freely to meet obligations to their foreign partners.

    Although, importers and manufacturers were the first to scream blue murder over the policy’s debilitating effects on their businesses, the crippling effects of the policy has now spread like a wildfire to other sectors.

    The print media industry appears to be the latest to be hit by the forex regime described as vexatious by many operators. Although, newsprint, which is the most critical raw material for newspaper publishing business, is not among the 41 restricted items, publishers have been finding it difficult to open Letters of Credit (LCs) with their bankers for the importation of the material.

    The Nation learnt that most newspaper outfits have run out of stock of newsprint and that opening LCs with foreign suppliers has become a complicated process. A reliable source close to one of the affected newspaper houses told The Nation, that some of the LCs opened for newsprint import about six months ago, have not been completely processed by their bankers and foreign suppliers.

    The fear, according to the source, who pleaded to remain anonymous, is that with the existing stock being depleted and the delay being experienced in replenishing stock, some media organisations may be forced to shut down. And the implication of doing so, he said, would be too grave.

    For instance, he said some newspaper houses that may not cope with the attendant staff redundancy arising from the delay in stock replenishment, may be forced to lay off workers.

    The thinking of most media owners and practitioners is that it is bad enough that most of the good hands in the industry are leaving the profession in search of greener pastures in politics without replacement. So, it would be a disservice to the nation if more hands are lost to the policy.

    Prior to the policy came into force, banks were using between a week and a month to convert LCs to the equivalent of the forex required by importers and manufacturers to import or carry out transactions.

    But because the volume of foreign currency available for business transactions has seriously reduced on account of the new policy, banks now insist that customers must pay the full value in the local currency of what they are importing within 48 hours before their LCs could be processed.

    Newspaper owners, who have now been boxed into a corner by the forex restriction, ought to turn to local newsprint suppliers/vendors, but local supplies lack the capacity to bridge the supply gap. The few existing newsprint suppliers cannot meet the requirements of the print media.

    The reasons are obvious. The three integrated pulp and paper mills – Nigerian Paper Mill (NPM), Nigeria Newsprint Manufacturing Company (NNMC), and Nigerian National Paper Manufacturing Company (NNPMC), have gone moribund. Therefore, newspaper owners must rely on imports at huge cost.

    As at the last count, Nigeria spends over N50 billion on paper and paper-related products’ importation annually, according to the Director-General, Raw Materials Research and Development Council (RMRDC), Dr. Hussaini Ibrahim.

    Dr. Ibrahim spoke recently at one-day forum for stakeholders in the pulp, paper and paper products, printing and publishing sector, with the theme: “Optimising pulp and paper production in Nigeria” organised by the Council in collaboration with Manufacturers Association of Nigeria (MAN) in Lagos.

    The RMRDC chief, who spoke through a director of Agriculture & Agro-allied Department of the Council, Dr. Abimbola Ogunwusi, stressed that government’s poverty alleviation and employment generation aspirations might not be realised if the mills continued to be comatose. He noted that there is need for new investments in the sector if the country must become self-sufficient in pulp and paper production.

    While Dr. Ibrahim may have spoken the minds of operators and stakeholders in the print media, given the outcry over rising cost of newsprint, MAN’s Director-General, Chief Remi Ogunmefun, was quick to note that the recent dearth of forex remains a stumbling block to self-sufficiency in pulp and paper production.

     

     

     

     

     

    Job loss fear grips media

     

    Operators and stakeholders in the media industry, particularly those in the print segment are losing sleep over likely closure and subsequent loss of jobs. And they have reasons to be so afraid. For one, the crippling effects of the policy are coming at a time the cost of newsprint has skyrocketed, forcing many newspaper publishing outfits to adopt cost-cutting measures, including a reduction in both print run and paginations.

    Traditionally, there are two streams of income for newspaper houses – the number of copies sold or advert patronage. Unfortunately, advert revenues have dropped sharply in recent time, a trend which observers blame on the dwindling economy.

    According to a media specialist, the rising cost of production caused by lack of basic infrastructure, especially electricity remains a common threat to operators. The specialist told The Nation that the print media faces peculiar challenges, which, if not addressed, would lead to closure of many media houses and subsequent staff lay.

    He listed some of the challenges to include poor reading culture, drop in copy sales and declining print run, adding that even if copy sales goes up, most newspaper houses would still be unable break even unless the adverts roll in.

    He also said this might be difficult considering the current situation where many advertising agencies place adverts in newspapers, collect money from their clients and refuse to credit the accounts of the newspapers.

    As if this is not enough heartache for print media owners, the expert said because of rising cost of production, most newspapers are cutting down their number of pages, thus inadvertently making themselves vulnerable to threat of competition from digital media.

    Incidentally, digital media, he noted, have also been affecting advertising revenue to the traditional media. Besides, readers now have options of switching to online or digital media to get the same news the traditional media offer. Worse still, newspaper owners are reducing the number of pages despite retaining the same price.

    The specialist, whose experience spanned several African countries, said the CBN policy has succeeded in adding to the woes of operators in the print industry, whose fortunes have been dwindling lately. He said the country may have to brace for possible closure of more media houses and massive job losses.

    Noting that the bleak future of the media industry, he said the CBN would have to review its policy to avert the impending doom, adding that such a review could be outright cancellation, or the introduction of some soft-landing measures to cushion the effect on the media industry, considering its critical role.

     

    Call for special intervention

     

    Former Abia State Governor and publisher of The Sun newspaper titles, Dr. Orji Uzor Kalu, said the media industry deserved a special intervention fund from government at a reduced interest rate among other palliatives if it must carry on with the business of publishing.

    He called on the President Muhammadu Buhari administration to come to the aid of print media owners to avoid job loss due to increasing production cost.

    Kalu said the print media industry was getting closer to the edge of the precipice as the industry runs at a loss due to rising operational cost. He, therefore, appealed to the President to urgently intervene to prevent job cuts by media owners and for them to stay afloat.

    “The operational cost media houses have to contend with is huge and keeps rising daily. We are dying from the burden. Our businesses are suffering,” he lamented.

    Kalu, who spoke in Lagos, recently, said media owners are reeling under the weight of rising cost of newsprint, ink, blankets and plates and other consumables in the print media.

    Using The Sun Publishing Ltd. As a case study, he said the company uses 2, 800 tons of newsprint every month and when added to the cost of freighting, the dwindling fortunes of the naira and power challenges, it becomes obvious that newspaper publishing business is facing more difficulties by the day.

    His words: “The Federal Government needs to come to our aid. If this bad tide is not stemmed, media owners may resort to downsizing to save cost and that will further worsen the nation’s already bad unemployment figures.”

    Kalu informed that all media houses have producing every copy of the newspapers at a loss.

    “The average cost of printing a copy of a newspaper is N500 and we sell for N150 or N200. That means, media owners are subsidizing every copy our readers get with N300. How long can we go on like that and stay in business? The government has to intervene to ensure journalists keep their jobs and we stay afloat,” he said.

     

    Oil & gas industry also cry

     

    The policy has also raised the blood pressure of operators and workers in the oil & gas industry. Some of them who spoke with The Nation expressed concern over the heavy toll the forex policy is taking on their operations, warning that the situation may compel employers to lay off workers.

    Major Oil Marketers Association of Nigeria (MOMAN) Secretary Olufemi Olawore blamed the rising petrol and diesel prices on the high exchange rate. He said the directive issued by the Federal Government to reduce the level of exposure of oil companies to forex market instability contributed to the current fuel scarcity.

    His words: “This is an unfortunate situation in which we find ourselves. As the price of crude oil and the international price of diesel were dropping, the government devalued the naira. For instance, for Premium Motor Spirit (PMS), the exchange rate for bringing the product before devaluation was N171.36 per dollar. At that rate, the landing cost was N90.67.

    “At another point, the foreign exchange rose to N188 per dollar, while the landing cost rose from N90.67 to N98 36. Now, the exchange rate has increased again to over N200 in the market, and you can imagine what the landing cost of PMS would be now.”

    Former President of the Nigerian chapter of International Association of Energy Economics (IAEE), Prof Adeola Akinnisiju, said the instability being witnessed in the foreign exchange market has been affecting operators in both the local and international petroleum industry.

    According to him, the bulk of equipment used in oil production and exploration activities are imported, and this implies that operators would need to spend more money to source equipment abroad.

    He lamented that the development has resulted in the review of contracts given to local firms by oil majors, with attendant implications on the industry.

     

  • The economy needs direction

    SIR: There is no need to re-iterate the fact that oil prices are on the nose-dive and will not be rising very soon – if ever – considering rising global crises, slowing global GDPs, new discoveries of oil wells and not to forget the fast embrace of renewable clean technologies to replace fossil fuels. By implication, our over 75% dependent oil revenue will soon tend to nothing leaving us with dilapidated infrastructures, more unemployment, illiquidity, huge debt burden especially at state levels, insecurity and credit crunch in the financial system.

    At this time, neither Nigeria nor the naira needs devaluation. What we need as a nation is a sense of economic direction. Too many policy reversals and inconsistencies have been the order of events. We have operated like a man trying to ride a bicycle with just one leg – monetary policies running without fiscal policies. The world is not waiting for Nigeria. Investors are not sure of our economic direction. They cannot trust government commitment to policies and agreements as our economic policies are all too prone to reversals.

    It is true Nigerians need to exercise some patience with the new administration given the rot in the system. However, with the new ministers in office, the government needs to get its acts right, focus and revisit its economic papers. The economic mantra of change ought to be one with a direction, not one driven by political sentiments or propaganda. Besides, in fighting corruption, the people need to be alive to witness the victory. While fighting corruption, we must get the Nigerian economy on a forward motion.

    It is good that the Central Bank of Nigeria (CBN) has banned foreign exchange allocation for products that can be manufactured in Nigeria. But to what extent has it gone to search, locate and make available credits for the expansion of small indigenous businesses that manufacture these commodities? Trickle down economics is no longer working; small business must be located, financed and given opportunities to thrive.

    While the Single Treasury Account (TSA) remains a welcome development, the poor manner in which it was introduced also created bits of financial panic which induced a squeeze in deposits as well as bank credit allocation.

    In the crafting and adoption of new economic policies, the government need not be hasty in reviewing the policies already on ground For instance, the zero-based budget for 2016, though a good one, needs more public explanation on its operation.  How will it infuse into the development of the Medium Term Sector Strategy (MTSS) and the Medium Term Expenditure Strategy (MTEF)?

    We also need to create a platform to ensure that the Freedom of Information Act (FOIA) and the Whistle-blowers Bill (soon to be a law) are made to work. Openness is key both for the growth of the economy and battle against corruption.

    Where are the annual audit reports? Why are they not made public? Where are budget implementation reports for last quarters of 2014 and 2015? What stops us from having a list of contractors who are awarded projects by the government across board and know the amount that were released to them? Why are we yet to have a procurement council?

    On the FOIA, the judicial system needs to develop or buy some integrity and speed to enforce compliance and sanction.

    Yes, we need to be patient and play our part as citizens by obeying set laws and regulation; paying our taxes, reporting and exposing crimes/corruption to relevant authorities, media and the public at large. But the Buhari administration must understand that time waits for no one and Nigerians will not listen to excuses. We are staggering towards decline and we cannot pretend all is well.

    • Donald Ikenna Ofoegbu,

    Centre for Social Justice, Abuja.

     

  • ‘Falling oil revenue, opportunity to diversify economy’

    The falling revenue in the oil sector is an opportunity for Nigeria to develop other sectors of the economy, President/Chief Executive Officer, Pearl Awards, Mr Tayo Orekoya has said.

    Mr Orekoya who spoke with our reporter in Lagos also urged Nigerians to embrace the opportunities in capital market saying it is a market open to all and not one that requires so heavy funds.

    He said there is need to strengthen infrastructure, diversify productive base, encourage other revenue generation initiative, boost exports and generate non oil revenue for the economy to be more stabilised, adding that this will provide more jobs and help the economy to have its boom again.

    Orekoya said for us to have more investors in Nigeria there must be consistency in principles, policies and we should encourage new companies by giving incentives that would make the capital market more attractive.

    He called for compulsion of some companies in some sectors to be listed on the stock exchange, including the telecoms sector and the oil and gas sector.

    “These are sectors where you have companies that can deepen the market to a large extent; the incentives should be there and for companies that are making so much from the economy, they need to give something back and Nigerians should be part owners of these business by listing them on the stock market.

    “Government and the regulatory authorities should provide more incentives for them, there should be investor education so that confidence can be restored in capital market investors,” he said.

    Orekoya who spoke ahead of this year’s 20th anniversary of Pearl Awards billed to hold on the 29th of this month at Eko Hotel and Suites on Victoria Island, Lagos, noted that Pearl awards Nigeria will continue to develop and support the growth of capital market through its awarding of quoted companies to engender healthy competitiveness and outstanding performances to enhance the capital market.

    He said quite a number of foreign investors in the capital market have been withdrawing their investment, saying this is a call to Nigerians to embrace the capital market so that the market would not be totally in the wings of foreign investors.