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  • IMF: Nigeria’s economic recovery lifts Africa’s outlook

    The International Monetary Fund (IMF) has said that economic growth in Nigeria due to rise in commodity prices will stimulate growth in other Sub-Saharan African economies.

    The IMF World Economic Outlook update released yesterday showed that Sub-Saharan Africa has Nigeria to praise for better economic growth prospects next year. The Fund saids the region’s economy will likely expand 3.8 per cent in 2019 as against  a 3.7 per cent prediction in April.

    The upgraded forecast “reflects improved prospects for Nigeria’s economy” and an increase in commodity prices. Gross domestic product in Nigeria will rise 2.3 per cent, it said, lifting its estimate from 1.9 per cent in April.

    Nigeria’s economy is recovering from the worst contraction in 25 years in 2016, which was caused by lower oil prices and output and shortages of foreign exchange to import raw materials. The IMF held its predictions for South Africa’s economy, saying it will expand 1.5 per cent this year and 1.7 per cent the next.

    “Despite the weaker-than-expected first-quarter out-turn in South Africa, the economy is expected to recover somewhat over the remainder of 2018 and into 2019 as confidence improvements associated with the new leadership are gradually reflected in strengthening private investment,” the fund said.

    South Africa, the continent’s most-industrialized economy, hasn’t grown at more than two per cent a year since 2013. GDP shrank the most in almost a decade in the first quarter as former President Jacob Zuma handed the reins to Cyril Ramaphosa. Zuma spent close to nine years in power, during which time the nation lost its investment-grade credit rating and policy uncertainty and unemployment increased. Nigeria and South Africa’s economies account for about half of the region’s GDP.

    Further analysis of the report showed that amid rising tensions over international trade, the broad global expansion that began roughly two years ago has plateaued and become less balanced.

  • Gains, pains of multiple exchange rates, by IMF

    The exchange rate regime to be adopted by a country is dependent on many factors. They include the economic policy being implemented and the International Monetary Fund (IMF). The regime adopted will come with benefits and consequences, an IMF report has said.

    The report titled: “Exchange Rate Regimes in an Increasingly Integrated World Economy”, obtained from the Fund’s website, said the choice of an appropriate exchange rate regime — floating, managed or fixed arrangements—for individual countries will have social and economic implications.

    It said these changes include the general increase in capital mobility and the abrupt reversals of capital flow to developing and transition economies.

    The report also said there is no single exchange rate regime that is best for all countries in all circumstances. “Member countries continue to have scope to choose the type of exchange rate regime that best suits their needs always with the proviso that the chosen regime must be credibly supported by policies consistent with the choice,” the report said.

    Continuing, the IMF document, which was posted on its website, said which exchange rate regime and associated policies are appropriate for a country depend on its particular circumstances.

    “While increased capital mobility has been leading an increasing number of countries to either end of the spectrum between firmly fixed rates (or monetary unification) and free floating, intermediate regimes are likely to remain viable and appropriate in many cases,” it said.

    However, Renaissance Capital (RenCap), an investment and research firm, has said foreign investors prefer to invest in countries with exchange rate, as against single exchange rate as being practiced in Nigeria.

    The investment and research firm, said many foreign investors are still worried about the multiple exchange rates operating in Nigeria, which remain a big challenge to foreign capital inflows.

    RenCap’s Global Chief Economist, Charles Robertson, who disclosed this during the RenCap ninth Annual Pan-Africa 1:1 Investor Conference in Lagos, said Nigeria will be better off adopting a single exchange rate.

    He said although the foreign investors have increased their interest in the economy, but the level of capital inflows would have been better were the country to adopt a single exchange rate.

    According to Robertson, “the main challenges for investors are on the front of liquidity: how can Ghana and Nigeria increase liquidity in the near future?” He said: ”Nigeria is looking better on most metrics, having accelerated growth, a stable currency and rising forex reserves, but needs to improve on bank lending which remains weak.”

    He added: “The cyclical story is again improving for much of Africa as commodities pick up. The credit rating downgrade cycle is basically finished. We think Nigeria will have one of the strongest growth accelerations in Africa in 2018, while the currency is well supported for 2018.”

    RenCap, an emerging and frontier markets investment bank, said the conference serves as a platform for closed door one–on-one meetings between top global and local investors from across the globe and over 30 corporate representatives to discuss investment opportunities in Nigeria and other fast-growing economies on the continent.

    The keynote speakers and panelists are Adedoyin Salami, a renowned Nigerian economist and Executive Director, African Business Research, and Mrs Patience Oniha, Director-General, Nigeria Debt Management Office, among other prominent business and opinion leaders.

    CEO Nigeria, Renaissance Capital, Temi Popoola, said: “This conference provides an opportunity to broaden and expand the narrative around investing in West Africa, a long term, broad objective of fulfilling our mission to providing client solutions and ensuring that we remain an innovative and ever-evolving partner to them. We hope to bring more visibility to the region and help facilitate increased capital inflows. We continue to believe Africa will be a $29 trillion economy in 2050, larger than the 2012 combined GDP of the US and the eurozone.”

    In her investor address, Oniha, said: “The combination of fiscal and monetary policy strategies adopted by the Federal Government has delivered results on several key parameters – GDP, inflation, external reserves, forex stability, etc. This trajectory is expected to continue. The reinforcement of the ongoing strategy through other policy measures, of which the focus is on generating non-oil revenues, is one of the factors that will boost economic indicators.”

     

  • IMF warns Nigeria, others over rising debt

    Nigeria and other countries in sub-Saharan Africa risk a debt distress because of heavy borrowing and gaping deficits, despite an overall uptick in economic growth, the International Monetary Fund (IMF) warned yesterday.

    Nigeria’s external and domestic debts as at December, 2017 stood at N21.72 trillion ($70.99 billion), data from Debt Management Office (DMO) has shown.

    The IMF assessment came as African countries continue to tap international debt markets and issue record levels of debt in foreign currencies, spurred on by insatiable investor demand for yields.

    “What really we’re concerned about is the pace of increase, rather than the average.

    “What we’re calling for right now is that those countries are going to need to go through fiscal consolidation,” IMF Africa Director Abebe Aemro Selassie told Reuters at the launch of its economic outlook for the region in Accra, Ghana.

    He added that oil producers and other resource-dependent economies were seeking the sharpest growth in their debt loads.

    The Fund projected that the rate of economic expansion would rise to 3.4 per cent this year, up from 2.8 per cent last year, boosted by global growth and higher commodity prices.

    Slower growth in South Africa and Nigeria – the continent’s two largest economies – weighed on the region-wide average, but the IMF expects growth to pick up in around two-thirds of African nations. However, under current policies, that rate is expected to plateau below four per cent over the medium term.

    Meanwhile, around 40 per cent of low-income countries in the region are now in debt distress or at high risk of it, the IMF report said. And refinancing that debt could soon become more costly.

    “The current growth spurt in advanced economies is expected to taper off, and the borrowing terms for the region’s frontier markets will likely become less favorable … which could coincide with higher refinancing needs for many countries across the region,” it said.

    African governments issued a record $7.5 billion in sovereign bonds last year, 10 times more than in 2016. And they have issued or plan to issue over $11 billion in additional debt in the first half of 2018 alone, the report said.

     

    Foreign currency debt increased by 40 percent from 2010-13 to 2017 and now accounts for about 60 percent of the region’s total public debt on average, IMF data showed. Average interest payments, meanwhile, increased from 4 percent of expenditures in 2013 to 12 percent in 2017.

     

    Six countries – Chad, Eritrea, Mozambique, Congo Republic, South Sudan and Zimbabwe – were judged to be in debt distress at the end of last year. And the IMF’s ratings for Zambia and Ethiopia were changed from moderate to “high risk of debt distress.”

    The IMF conceded that Africa’s enormous needs will continue to demand heavy investments to build infrastructure and social development. But to do so while avoiding the risk of a debt trap, the continent, which currently has the lowest revenue-to-GDP ratio in the world, will need to become more self-reliant.

     

    “Borrowing to finance spending is part of the macroeconomic policy tool kits which all countries use. But over the medium to long-term they have to rely more on domestic revenues, tax revenues to address their development spending needs,” Selassie said.

  • IMF to Nigeria: Generate more revenue to service debt

    •Says no formal notification on ECOWAS single currency

    THE International Monetary Fund (IMF) is encouraging Nigeria to embark on fresh measures to boost its revenue base with a view to servicing local and international debts.

    The debts stood at N21.7 trillion last December.

    The Director of Africa Department in IMF, Abebe Selassie, said yesterday in Washington D.C that debt service remains a big issue for Nigeria as revenue generation capability remains too low.

    The problem for Nigeria, according to him, is not debt, but the rising debt service cost.

    “We expect revenue from taxes to step in and bridge the gap,” Abebe said.

    He recommended the use of property tax to expand the tax base, remove tax exemptions, and implement public finance management reforms.

    He added:  “There has been less emphasis on tax collection, so using this avenue to enhance tax collection is important.

    “As to how that is to be done, it is a deeply domestic and political issue. It is for the government to choose what appropriate tax handles to engage.

    “We can provide advice and suggestions but it is up to the government to find how best to optimize tax collection and in what manner.”

    He was of the view that Nigeria has achieved tremendous success in tackling inflation on account of the reforms that have been undertaken in exchange rate regime, as well as capital inflows.

    He said: “Inflation has also been decelerated. These are all welcome trends, but I do think that there remains a need to move towards having a more simplified exchange rate regime moving forward.

    “That would also be important for the conduct of monetary policy, so the idea is to go back to what you have before, so that you have a liquid foreign exchange market.”

    Abebe said fiscal policy should strike a balance between debt sustainability and ensuring adequate space for key infrastructure and priority social spending.

    Oil-exporting countries, he pointed out, should continue to forcefully implement their fiscal consolidation plans and advance economic diversification, taking advantage of the respite provided by the recent pickup in commodity prices.

    He said stepping up revenue collections would allow sub-Saharan African countries to make progress towards their Sustainable Development Goals, while preserving fiscal sustainability.

    He said  most countries in the region have considerable potential to collect higher revenue, and  that despite substantial progress in revenue mobilisation over the past two decades, Sub-Saharan Africa has the lowest revenue to GDP ratio.

    “By our estimates, countries in Sub-Saharan Africa could mobilize between three to five percentage points of GDP in additional tax revenue,” he said.

    “Achieving this ambition would require strengthening Value Added Tax (VAT) systems, streamlining exemptions and broadening the tax base.”

    On the single currency for the ECOWAS region, Abebe said the IMF was yet to get proposal from the region on the project, saying the organization only got to know about the project through news reports.

  • World economic outlook: IMF optimistic of growth expansion

    The world economy is on the verge of growth expansion. This is projection by of the International Monetary Fund in its World Economic Outlook (WEO) report released ahead of Spring Meetings currently ongoing in Washington, D.C.

    The IMF retained its 2018 and 2019 global growth forecasts at 3.9% apiece, 10bps above actual growth of 3.8% in first quarter of 2017.

    According to the IMF, the growth is expected to remain broad-based across regions, extending the synchronised expansion observed since 2017 against the backdrop of favorable market sentiment, accommodative financial conditions and positive knock-on effects of expansionary fiscal policy in the United Sates.

    In the forecast years, Advanced Economies (AEs) are expected to grow faster than potential while excess capacity is expected to narrow in the Euro Area. Similarly, growth in Emerging Markets (EMs) & Developing Markets (DMs) is expected to strengthen further following the rebound in global trade and rising commodity prices.

    Stripping global growth by regions, AEs are projected to grow higher than initial forecast in 2018 (revised to 2.5% in 2018 vs. actual of 2.3% in 2017), driven by stronger activity in the US and Euro Area which would offset the slower growth in the UK, Japan and Canada. Positive US outlook is on the back of expansionary fiscal policy, while the sustained recovery in the euro area is anchored on stronger domestic demand, supportive monetary policy and improved external demand prospects.

    In EMs & DCs, growth is projected to accelerate 10bps to 4.9%, driven by improved external demand outlook in China, strong private consumption in India and Brazil as well as Mexico which will feed off positive growth in the US. The IMF is also optimistic on Sub-Saharan Africa as it estimated growth in the region to improve from 2.8% in 2017 to 3.4% in 2018 (previous estimate: 3.3%), largely on the back of growth prospects in key economies – South Africa, Angola and Nigeria.

    The world body’s projection ties in with Afrinvest Research projection, which shows a more optimistic with projected growth of 2.6% to be driven both oil and non-oil sector in 2018.

    In the global commodities market, oil prices rallied further to US$73.82 (as at 20th April, 2018) – a 3 year high – following indications that oil inventory surplus which was in excess of 337.0m barrels in January 2017 had been cut by approximately 97.0% to 10.0m barrels by January 2018 as a result of oil production cuts agreed upon by member countries of the Organization of Petroleum Exporting Countries (OPEC) and its allies led by Russia since December 2016.

    Across African markets we track, we observed a mixed performance as 2 of 4 indices under our coverage closed in the green. Ghana’s GSE Composite and Egypt’s EGX rose 2.8% and 0.9% W-o-W respectively. During the week, Egypt reported a decline in inflation rate to 13.0% following removal of subsidies and floating of its exchange rate in the previous year while investors in Ghana continue to increase positions in local stocks. On the flipside, Kenya’s NSE 20 sustained negative performance from the prior week  further  declining 2.5% W-o-W while the Nigeria’s All Share Index fell marginally by 0.3% as investors continued to book profits on overvalued stocks.

     

  • Rising debts risky to countries’ financial stability, says IMF

    The International Monetary Fund (IMF) yesterday warned against the profile of rising debts in emerging markets and low income countries, saying the trend constitutes direct risk to the countries’ financial stability.

    The IMF’s Financial Counsellor and Director of the Monetary and Capital Markets Department, Tobias Adrian, gave this charge during the Global Financial Stability report presentation at the ongoing IMF/World Bank Spring Meetings in Washington D.C.

    He however assured that the IMF was ready to provide sound debt management assistance to Nigeria and other emerging market countries, in line with its debt sustainability framework for low income countries and emerging market economies,  pointing out that  short-term risks to financial stability have increased, and medium term risks remain high, while vulnerabilities in global markets may make the roads ahead bumpy, and put growth at risk.

    On the implication of Nigeria’s current debt profile, Adrian said: “We do not go into the details of specific countries in the report. There will be regional press briefing on Friday that is looking more specifically at different regions, in particular at Sub-Saharan Africa; and specific country questions can be raised at that point. In general, what we see in many emerging and low-income countries is that debt levels are rising and that underwriting standard of foreign debts are deteriorating, and that is a risk for financial stability of those countries.”

    He said: “Rising foreign debts remain a big risk to financial stability. The debts that are accumulated quickly are deteriorating and could pose financial stability crisis in the future in emerging markets,” adding that the Fund has continued to track debt issuance programmes in emerging markets which Nigeria belongs. The bank-dollar liquidity mismatches also remain a concern, he stated.

    He said pick-up in inflation might lead to a more rapid withdrawal of monetary accommodation by central banks, leading to sudden tightening in financial conditions and a sharp fall in asset prices, saying that the remedy is for central banks to continue to normalise monetary policy, and communicate their decisions clearly while addressing financial vulnerabilities by strengthening fundamentals and building buffers.

    He advised that proceeds from the debts should be invested in high-yielding assets to bring the high returns for the economy.

    Adrian  said the international US-dollar balance sheets of non-US banks rely on short-term, or wholesale sources for about 70 per cent of their funding, a practice he stated that could leave banks exposed to dollar funding problems in the event of strains in markets. He therefore advised policy makers to ensure that the post-crisis regulatory reform agenda is implemented, and should resist calls for rolling back reforms.

    “Our growth risk analysis which links financial conditions to the distribution of future global growth, indicates that under a severely adverse scenario, growth could be negative three years from now. Stretched valuations across many asset classes, borrowing by emerging markets and low income countries and bank-dollar liquidity mismatches remain vulnerabilities.”

    He said that issuance of riskier bonds has surged, adding that debt sustainability in emerging markets and low income countries, has deteriorated and that a more complex creditor composition poses challenges for any future debt restructurings.

    Also speaking, the  IMF’s Director at the IMF’s Fiscal Affairs Department, Victor Gasper, said public debts were at historic high in emerging markets and have been associated with fiscal crises. He said debt servicing is also rising in countries with high inflation rates, saying there was no room for complacency, and that countries should strengthen their tax capabilities and deploy the resources in funding health, education and public infrastructure.

    Gasper, who spoke at the Fiscal Monitor session, said that counties will be better placed to tackle looming risks if they build strong public finances in good times. He said in emerging market economies, debt at almost 50 per cent of Gross Domestic Product (GDP) on average, is at levels that in the past have been associated with fiscal crises, adding that average debt was only higher during the 1980s.

    He said in the last 10 years, emerging market economies have been responsible for most of the increase in the $164 trillion global debt. “We urge policy makers to avoid pro-cyclical policy actions that provide unnecessary stimulus when economic activity is already pacing up. Instead, most countries should deliver on their fiscal plans and put deficits and debt firmly on a downward path,” he stated.

  • Nigeria’s economy to grow by 2.1 per cent, says IMF

    Nigeria’s economy which grew by 0.8 per cent in 2017 will end this year, with a 2.1 per cent growth, the International Monetary Fund (IMF) has predicted.

    It, however, projected a slow down to 1.9 per cent growth next year, in its latest World Economic Outlook (WEO) Report launched in Washington DC, United States where the annual World Bank/IMF Spring Meetings are ongoing.

    The IMF advised oil-dependent economies, including Nigeria’s to intensify economic diversification as the global body foresees the crash of crude oil prices in the near future.

    “Some low-income countries like Mozambique and Nigeria have experienced financial stress or deteriorating loan quality in recent years as growth has moderated and corporate balance sheets have weakened.

    “Further deterioration in loan quality would impair credit intermediation and ability of the banking sector to support growth, which would raise the risk of cost recapitalisation and severely burden the already strained public finances,’’ the IMF said.

    The IMF Director of Research, Mr Maurice Obstfeld at a news conference yesterday said that global economy would grow by 3.9 per cent in 2018.

    Obstfeld said the forecast was borne out of the continued strong performance in the Euro area, Japan, China and the United States.

    “Despite the good near-term news, longer-term prospects are more sobering. Advanced economies are far facing aging population, falling rates of labour force and low productivity growth.

    “Emerging and developing economies present a diverse picture.  Many of these countries need to diversify their economies to boost future growth and resilience,’’ he said.

    According to Obstfeld, global financial conditions remained loose, despite the approach of higher monetary policy interest rates and enabling a further buildup of asset-market vulnerabilities.

    He said the recent escalating tension over trade (United States vs China) presented a growing risk for global financial stability.

    “The prospect of trade restrictions and counter-restrictions threatens to undermine confidence and derail global growth prematurely.

    “While some governments are pursuing substantial economic reforms, trade disputes risk diverting others from the constructive steps they would need to take now to improve and secure growth prospects,’’ he said.

    The IMF encouraged each national government to advance growth by resolving issues of climate change, infectious diseases, cyber-security, corporate taxation and corruption, among others.

    The global financial body said “each national government can do much on its own to promote stronger, more resilient and more inclusive growth,” saying   global interdependence will only continue to grow; and that “unless countries face it in a spirit of collaboration- not conflict – the world economy cannot prosper.”

  • IMF raises hope on Nigeria’s economy

    IMF raises hope on Nigeria’s economy

    •Seeks confirmation of MPC members 

    At the conclusion of its 2018 Article IV Consultation with Nigeria on Monday, the Executive Board of the International Monetary Fund (IMF) says the economy is on track.  Its directors, however, call for the confirmation of Monetary Policy Committee (MPC) members and Central Bank of Nigeria (CBN) directors. They also seek better implementation of the Economic Recovery and Growth Plan (ERGP) agenda for a more inclusive growth, reports COLLINS NWEZE.

    NEW foreign exchange measures, rising oil prices, attractive yields on government securities and a tighter monetary policy have contributed to better foreign exchange availability, increased reserves to a four-year high and contained inflationary pressures in Nigeria, the International Monetary Fund (IMF) said at the conclusion of its Article IV Consultation with Nigeria on Monday.

    The Fund said economic growth, driven mainly by recovering oil production reached 0.8 per cent last year and that inflation declined to 15.4 percent year-on-year by end-December, from 18.5 per cent at end-2016.

    According to the IMF, reforms under the government’s Economic Recovery and Growth Plan (ERGP) have resulted in significant strides in strengthening the business environment and steps to improve governance.

    It, however, said that all the factors have not boosted non-oil non-agricultural activity, brought inflation close to the target range, contained banking sector vulnerabilities, or reduced unemployment.

    A higher fiscal deficit, driven by weak revenue mobilisation amidst tight domestic financing conditions, has raised bond yields and crowded out private sector credit.

    The Fund insisted that higher oil prices have been  supporting the near-term projections, but medium-term projections indicate that growth would remain relatively flat, with continuing declines in per capita real Gross Domestic Product (GDP) under unchanged policies. Also, the improved outlook for oil prices is expected to provide relief from pressures on external and fiscal accounts. Growth, the fund said, would rise to 2.1 per cent this year, in in view of the full year impact of greater foreign exchange availability and recovering oil production.

    It said renewed import growth would reduce gross reserves despite continued access to international markets. After arrears clearance, the fiscal deficit would narrow and public debt levels would remain relatively low, but the interest payments to the Federal Government revenue ratio would remain high.

    It said: “Risks are balanced. Lower oil prices and tighter external market conditions are the main downside risks. Domestic risks include heightened security tensions, delayed fiscal policy response, and weak implementation of structural reforms.

    “Stress scenarios highlight sensitivity of external and public debt, particularly to oil exports and naira depreciation. Faster than expected implementation of infrastructure projects are an upside risk. A further uptick in international oil prices would provide positive spillovers into the non-oil economy.”

    The Fund’s executive directors agreed with the thrust of the staff appraisal. They welcomed Nigeria’s exit from recession and the strong recovery in foreign exchange reserves, helped by rising oil prices and new foreign exchange measures.

    They commended the progress in implementing the ERGP, including the start of a convergence in foreign exchange windows, tight monetary policy, improvements in tax administration and significant strides in improving the business environment.

    The directors noted, however, that important challenges remain, as growth in the non-oil, non-agricultural sectors, has not picked up; inflation remains high and sticky; unemployment is rising; and poverty is high.

    To address these vulnerabilities, they stressed the urgency in comprehensive and coherent policy actions.

    The directors emphasised the need for a growth-friendly fiscal adjustment, which frontloads non-oil revenue mobilisation and rationalises current expenditure to reduce the ratio of interest payments to revenue to a more sustainable level and create space for priority social and infrastructure spending.

    They said: “In addition to ongoing efforts to improve tax administration, directors underlined the need for more ambitious tax policy measures, including through reforming the value added tax (VAT), increasing excises, and rationalising tax incentives.

    “The implementation of an automatic fuel price-setting mechanism, sound cash and debt management, improved transparency in the oil sector, increased monitoring of the fiscal position of state and local governments, and substantially scaled-up social safety nets should support the adjustment.”

    The directors also commended the central bank’s tightening bias in 2017, which should continue until inflation is within the single digit target range. They recommended continued strengthening of the monetary policy framework and its transparency, with a number of directors urging consideration of a higher monetary policy rate, a symmetric application of reserve requirements, and no direct central bank financing of the economy. A few directors urged confirmation of the appointments of the central bank’s board of directors and members of the monetary policy committee.

    The directors praised the foreign exchange measures and recent efforts to strengthen external buffers to mitigate risks from capital flow reversals.

    They welcomed the authorities’ commitment to unify the exchange rate and urged additional actions to remove the remaining restrictions and multiple exchange rate practices.

    Besides, they urged concerned to contain rising banking sector risks. They welcomed the Central Bank of Nigeria (CBN) commitment to increase capital buffers by stopping dividend payments by weak banks.

    The IFM directors called for an asset quality review to identify any potential capital need. They noted that an enhanced risk-based banking supervision, strict enforcement of prudential requirements, and a revamped resolution framework would help contain risks.

    They emphasized that structural reform implementation should continue to lay the foundation for a diversified private sector-led economy.

    Other essential measures that must be taken, according to them, include: building on recent improvements in the business environment, implementing the power sector recovery plan, investing in infrastructure, accelerating efforts to strengthen anti corruption and transparency initiatives, and updating and implementing the financial inclusion and gender strategies.

    They also welcomed the continued improvement in the quality and availability of economic statistics and encouraged further efforts to address remaining gaps. It is expected that the next Article IV consultation with Nigeria will take place on the standard 12-month cycle.

    Experts react to IMF’s verdict

    Speaking on the report, Managing Director of  Rockview Financial Enterprises, a bureau de change firm, Kingsley Moses, said the IMF is yet to inform Nigerians the basis of their judgment on further naira devaluation.

    He said: “Their judgment is not correct. The IMF and their group have since 1980s been insisting that the naira be-devalued further. But, we have continued to devalue to where it is today. The value of the currency cannot be taken singularly. There are many things that determine how the country runs its exchange.”

    According to Moses, Nigeria has inflationary economy and cannot devalue its currency more because such measure will help a country that has been struggling to encourage local production. “They are not in a position to give us a comprehensive economy plan, but they are not the ones running our economy,” he said.

     

    Economic Recovery

    and Growth Plan

     

    The Federal Government unfolded the Economic Recovery and Growth Plan (ERGP), which outlined how the country will get out of recession and attain stability and growth.

    The economic blueprint, itemised the potentials in the economy and how they can be harnessed for economic growth, development and good of all.

    The ERGP recognised that Nigeria has the potential to become a major player in the global economy by virtue of its human and natural resource endowments. However, this potential, it said, has remained relatively untapped over the years.

    Analysts said the content of the ERGP shows that government is already approaching the solution to the nation’s economic challenges with the same will and commitment it had demonstrated in the fight against corruption and economic development.

    They believed the ERGP brought together all the sectoral plans for agriculture and food security, energy and transport infrastructure, industrialisation and among others means  it can actually be used to revive the economy.

    Besides, after a shift from agriculture to crude oil and gas in the late 1960s, Nigeria’s growth has continued to be driven by consumption and high oil prices.

    “Previous economic policies left the country ill-prepared for the recent collapse of crude oil prices and production. The structure of the economy remains highly import dependent, consumption driven and undiversified,” it said.

    The ERGP, a Medium-term Plan for 2017–2020, builds on the Strategic Implementation Plan (SIP) and has been developed to restore economic growth while leveraging the ingenuity and resilience of the Nigerian people – the nation’s most priceless assets.

    It is also articulated with the understanding that the role of government in the 21st century must evolve from that of being an omnibus provider of citizens’ needs into a force for eliminating the bottlenecks that impede innovation and market-based solutions.

    The plan recognises the need to leverage Science, Technology and Innovation (STI) and build a knowledge-based economy.

    Besides, the ERGP is consistent with the aspirations of the Sustainable Development Goals (SDGs), given that the initiatives address its three dimensions of economic, social and environmental sustainability issues.

    A report by the global research and consultancy firm Oxford Business Group (OBG) sheds a spotlight on ERGP 2017 to 2020, which is leading national efforts to ease the impact of lower oil prices.

    The OBG’s publication also looks in detail at the areas of the economy that have remained resilient in difficult times, such as agriculture, which has become a major employer and is benefiting from an ease in lending constraints.

    The report also analyses the government’s far-reaching plans to modernise the country’s long-neglected public transport system. It considers both the opportunities that the project in the pipeline will attract investors and show the difficulties in bringing private sector operators on board.

    OBG’s Editor-in-Chief, Oliver Cornock, said that while lower oil prices have weighed heavily on the local economy, the government’s ambitious, medium-term strategy for recovery was already beginning to yield results.

    Cornock said: “Nigeria remains an appealing destination for investors and the fact that growth has begun to pick up following a slower period for the economy will provide the country with a welcome boost, as its efforts to develop and diversify the economy gain pace.”

    OBG’s Managing Editor for Africa Robert Tashima agreed that while Nigeria had experienced a challenging couple of years, it appeared to have made some progress, emerging from recession with a floating currency and more bullish expectations for the coming 12 months.

    “There are still a number of hurdles that need to be cleared – ranging from issues such as power shortages and underemployment to limited foreign exchange revenues – but the economy is clearly gathering momentum,” he said.

    The IMF’s Mission Chief for Nigeria, African Department, Amine Mati, said the commercial lenders need recapitalisation to enable them secure fresh funds to boost the government’s chances of achieving the ERGP target.

    He described the ERGP as an important step for the economy and important policies step taken but requiring urgent action to achieve its objectives.

    Also, Stanbic IBTC Holdings Plc said that with diligent execution and policy consistency, the ERGP has the capacity to steer the country towards full economic recovery and sustainable growth and development.

    The key goals of the ERGP, which was unveiled in April last year as a short-to-long term (2017 to 2020) blueprint to lift the country out of recession and return it to the path of inclusive growth and development, include macroeconomic stability, and incremental improvements in national productivity.

    Thy goal include sustainable diversification of production in such areas as agriculture, energy and medium and small enterprises, as well as manufacturing and services.

    Speaking on the sidelines of the 23rd Nigerian Economic Summit in Abuja, the Chief Executive of Stanbic IBTC Holdings Plc, Yinka Sanni, stated that practically, every sector of the economy is endowed with huge potential, which, when adequately harnessed would trigger exponential development of the country.

    By empowering enterprises, big and small, opportunities are unlocked that leads to enhanced productivity levels and subsequent creation of employment for the people, he added.

    Sanni said that though Nigerian enterprises are buffeted by myriad of challenges, with a conducive operating environment, the banks can reverse the trend by providing critical support across the SME value chain, which would enable the sector play its foundational role in economic development.

    SMEs in Nigeria, he added, are constrained in three main areas which he identified as management, finance and business environment.

    “In the area of management are issues such as skills shortage, management expertise, financial management, business support and access to markets, while in the area of finance, they are confronted by cost of capital, lack of collateral, information requirements, regulation impact and culture clash,” Sanni said.

     

  • Nigerians getting poorer despite recovery – IMF

    Nigerians getting poorer despite recovery – IMF

    Nigerians are getting poorer despite the ongoing economic recovery after the recession, the International Monetary Fund (IMF) has said.

    The Fund urged the government to urgently begin economic reforms to turn things around, according to the IMF Annual Article IV review of Nigeria quoted by Reuters.

    The Fund expects the government to “muddle through” in the medium term, and any progress could also be threatened if elections next year consume political energy and resources, the report said.

    The report said economic managers had continued to boast that they had set the economy back on track after emerging from recession in the second quarter of last year.

    It said critics insisted much of the recovery came from a return to oil dependence after a rise in global oil prices and a recovery in crude production, mainly as a result of the militants in the Niger Delta stopping attacks on oil facilities than of economic policy under President Muhammadu Buhari’s administration.

    The IMF said in the report that the outlook for growth had improved but remained challenging. “Comprehensive and coherent” economic policies “remain urgent and must not be delayed by approaching elections and recovering oil prices,” it said in its annual Article IV review of Nigeria’s economy.

    “Higher oil prices would support a recovery in 2018 but a ‘muddle-through’ outlook is projected for the medium term under current policies, with fiscal dominance and structural constraints leading to continuing falls in real GDP per capita,” the IMF said.

    In the report, IMF identified risks to growth, including additional delays to implementing policies and reforms ahead of 2019 elections, security tensions, and oil prices, a fall which could see capital flows reversed. “Further delays in policy action — including pre-election pressures — can only make the inevitable adjustment more difficult and costlier,” the report said.

    The lender repeated its call for Nigeria to simplify its “complex” foreign exchange system, a bugbear for the IMF for more than a year which has left large gaps between official rates and various windows that certain groups can use to get other rates.

    “Moving towards a unified exchange rate should be pursued as soon as possible,” the IMF said. “(IMF) staff does not support the exchange measures that have given rise to the exchange restrictions and multiple currency practices.”

    The Fund singled out the Central Bank, saying it should discontinue direct interventions in the economy. The Central Bank of Nigeria (CBN) frequently injects hundreds of millions of dollars into the foreign exchange market to keep its own rates stable.

    Commercial banks struggling to remain solvent were also called out, but not identified by the IMF, including one that the lender said was already insolvent: “Some of these banks are kept afloat through continuous recourse to the CBN’s lending facilities.”

    The IMF said it does not comment on purported leaks. A spokeswoman for the Fund said a statement would be issued after the lender’s board meets to discuss its assessment on Friday. A Finance ministry spokeswoman did not immediately respond to a phone call and email requesting comment, Reuters said.

  • Buhari’s advisers moving nigeria backward – Pioneer NLC president

    Buhari’s advisers moving nigeria backward – Pioneer NLC president

    The pioneer President of Nigeria Labour Congress ( NLC ), Comrade Hassan A. Summonu has said that most of the Advisers and so called technocrats in the Buhari government does not have the capacity to move the nation forward as they were merely playing politics with the life of Nigerians.

    Summonu who was contributing to the discussion on the future of work at the ongoing 40th anniversary celebration of the Nigeria Labour Congress (NLC) said the President’s advisers were working hard to turn Nigerians to starved slaves.

    He said government’s reactive, rather than proactive measures has contributed largely to drawing the country backward, pointing out that most of the socio economic and security challenges can be attributed to unemployment.

    He said: “Some of the so called technocrats in the present  government and advisers of Buhari are mere Buharist, they cannot move Nigeria forward. So NLC and other civil society organisations across Nigeria must fight those people who want to dull Nigeria and turn its citizens to starved  slaves.

    “Education, health, housing and industries are core to socio-econimic development of any country. And thses are areas that can generate millions of jobs for Nigerians. Most of the socio-economic and security problems facing Nigeria is as a result of unemployment and this becauseof poor or Wactive socio-economic policies of both the present government and the past ones.

    “Are we reacting instead of being proactive. Nigeria, led by its government have to be proactive. What is our government doing in terms of socio-economic development in order to prepare for a better  future of work for Nigerians? We cannot prepare for the future of the world of  work if we don’t massively invest in new technology through research for a viable industry  development. 

    “Look at Ajaokuta Steal. No country can induatrialise without a viable steal industry. We have been told that Ajaokuta Steal has been built up to 90% and then they want to put some money there and sell it to their friends. In the name of privatising our national asset. 

    “NLC, Nigeria Civil Society organisations  and every Nigerian should oppose any attempt by anybody or any government to privatize Ajaokuta Steal and other industries in the country. We should resist it because it is unpatriotic, unpardonable, unreasobale and unforgivable. 

    “Look at the number of tens of thousands of jobs that should be available for Nigerians if that industry is viable. Since they privatize our electricity industry, what have we gotten? Instead of constant light, we are paying more for darkness.

    “In electricity, are we investing in research and technology for solar energy, wind energy which are the future of electricity across the world? Are we preparing and training youths for electric engine motor cars because in another decades, petrol might not  be the source of running cars.” 

    Summonu said further that Nigerians must work to revamp the education sector from kindergarten to primary,  high school and university level, saying “Over 60million Nigerians are said to uneducated. So it means that those 60million Nigerians are not effectively contributing to the economy of Nigeria because of illiteracy. 

    “So if we decide to train teachers for the purpose of eradicating illitracy in Nigeria within the next 2 to 3 years, are we not going to generate massive jobs? On the other hand, if the socio-economic policy of the government is directed to providing decent housing for the majority of Nigerians, would that not create millions of jobs?

    “So far, even with the so much job creation promised they made to Nigerians every now and then, they are only focusing on pocket economic policy agenda. Being what IMF and World Bank direct them to do. What they can actually do to provide jobs for Nigerians  is so obvious. 

    “Though I commend the federal government for now seeing that agriculture is among the ways to provide for our country and so create jobs. However, Nigeria government must invest in research and development.”