The Nation Newspaper

Tag: Naira

  • Naira depreciation supporting businesses to adapt, says expert

    Naira depreciation supporting businesses to adapt, says expert

    Naira fluctuations due to reforms , which have weakened the purchasing power of consumers, have prompted businesses to adapt to local content, Chief Strategy Officer of Retail Supermarkets Nigeria Limited, Bunmi Adeleye, has said.

    Retail Supermarkets Nigeria, owners of Shoprite Nigeria, was recently acquired by Persianas Investment Limited and other key institutional investors, making it a fully Nigerian-owned business that contributes to the country’s economy and provides employment opportunities for its citizens.

    In an interview in Lagos, Adeleye explained that “despite the challenges posed by the naira depreciation, Retail Supermarkets Nigeria has maintained its high-quality products and services for its customers and plans to open more stores that showcase a wide variety of Nigerian-made products and international brands”.

    Adeleye explained that like any retail business operating in a continually evolving economic landscape, Retail Supermarkets Nigeria face various challenges, including naira depreciation.

    “While the increased costs of importing goods and supply chain disruptions pose challenges, the depreciation of the naira has also created opportunities for growth and localization. Despite efforts to remain competitive, we have adjusted prices to reflect the increased costs, potentially affecting customer purchasing power,” she explained.

    Adeleye explained that the company has faced various challenges such as increased costs of importing goods, supply chain disruptions, and product availability due to naira depreciation. However, the company has implemented robust procurement strategies, strengthened local supplier relationships, and focused on sourcing products locally to mitigate challenges and support the economy.

    “To overcome the challenges posed by naira depreciation, we have implemented robust procurement strategies, strengthened local supplier relationships, and focused on sourcing products locally to mitigate challenges and support the economy. It also catered for diverse purchasing powers and promoted affordability through promotions and discounts,” she added.

    She disclosed that the company is actively exploring opportunities to expand its business operations to better serve communities and provide convenient access to quality products while fostering economic growth and development. To stay ahead of the competition, the company has adopted various strategies such as a strengthened value proposition, enhanced customer experience, efficient supply chain management, technology integration, local sourcing, and continuous innovation.

     “We are considering innovative solutions tailored to the specific needs of customers. We aim to provide convenient access to quality products while fostering economic growth and development,” she said.

    On competition in the industry, Adeleye emphasized its importance for growth and market development. The company has adopted strategies such as a strengthened value proposition, enhanced customer experience, efficient supply chain management, technology integration, local sourcing, and continuous innovation. Shoprite keeps up with the latest trends to offer relevant and useful products. It trained the staff to provide better customer service and utilised technology to gain insights into customer preferences and optimise operations.

    The company is actively exploring opportunities to expand its business operations to better serve communities and provide convenient access to quality products while fostering economic growth and development. To stay ahead of the competition, the company has adopted various strategies such as a strengthened value proposition, enhanced customer experience, efficient supply chain management, technology integration, local sourcing, and continuous innovation.

    Read Also: Cement price hike: NIQS throws support for importation

    Adeleye believes that competition in the retail industry is essential because it helps the industry grow and improve. To stay ahead of the competition, the company has adopted strategies such as a strengthened value proposition, enhanced customer experience, efficient supply chain management, technology integration, local sourcing, and continuous innovation. The company has partnered with local suppliers and distributors, providing quality products, fresh fruits and vegetables, ensuring everyday low prices, and easily accessible stores while monitoring industry trends and consumer needs to ensure that offerings remain relevant.

    Overall, she noted that the retail industry in Nigeria is thriving and presents good investment opportunities for those interested.

    “Retail Supermarkets’ success in adapting to the local market is a testament to the opportunities available for businesses in Nigeria,” she added.

  • Who will save the Naira?

    Who will save the Naira?

    • By Zayyad I. Muhammad

    Sir: The naira is floating without direction. The floating Naira resembles a small wooden canoe in a mighty ocean—so many forces are against it. Apart from the natural market forces, other artificial forces against the naira are undefeatable, so it seems. In its 51 years of existence, the naira has never reached the all-time lows as currently witnessed on both the official and parallel markets.

    The major factors responsible for the high value of the dollar against the naira are the decline in the supply of dollars and a surge in the demand for dollars. That means the biggest problem in the Nigerian forex market is liquidity! Simple.

    Indeed, financial experts and political commentators argue that effective foreign exchange management necessitates a blend of financial acumen, social awareness, and political astuteness. Therefore, addressing the challenges in the forex market requires a local solution that integrates these three variables harmoniously.

    Given that conventional economic strategies have yet to restore the naira to its desired value against the dollar, it’s time to incorporate both academic economic theories and practical solutions from everyday individuals. The local solution must address the social and human factors contributing to Nigeria’s challenges with the dollar-to-naira exchange rate. Key issues include the preference for foreign education and medical services among the wealthy and middle class, as well as the widespread preference for foreign goods and services over locally-made products. Encouraging domestic consumption, investing in local industries, promoting education and healthcare reforms, and fostering a sense of national pride in locally produced goods and services could be part of the solution.

    Additionally, policies aimed at reducing dependency on imports and promoting local entrepreneurship could help address these underlying social and human issues. According to the Central Bank of Nigeria (CBN), between 2010 and 2020, foreign education expenses gulped $28.65 billion, while a whopping $11 billion was spent on medical treatment abroad within the same period.

    Focusing on exportable agricultural products is indeed a viable long-term strategy to address the volatility in the forex market. Nigeria possesses a rich diversity of agricultural commodities such as cocoa, cotton, gum Arabic, hibiscus, beans, garlic, onion, and many others, which have significant export potential. A strategic approach would involve selecting 5–10 of these agricultural products for intensive cultivation, processing, and standardisation within a year, with the aim of boosting export volumes and earning foreign exchange. This initiative will not only contribute to stabilising the forex market but also stimulate economic growth, create jobs, and enhance the country’s agricultural value chain. This, if done well, will bring good dollar inflows into the country.

    The Central Bank of Nigeria has become the focal point of both high activity and criticism within the Nigerian government, largely due to its management of the floating naira and the subsequent rise in commodity prices, particularly those reliant on imports. The CBN is forced to take some short-term steps, make hard decisions, and even churn out two to three new policies in a day. This is because something was missing before the naira was thrown out to survive on its own.

    Read Also: Lagos Police warn intending protesters against road blocks

    Indeed, floating a currency typically requires a certain level of economic development and the presence of robust institutions to manage the associated risks effectively. This approach necessitates stable fiscal policies, well-regulated financial systems, strong institutions, and the ability to respond to market dynamics swiftly. Without these foundational elements in place, floating the currency can lead to increased volatility and economic instability.

    Strong economies with well-developed institutions can afford to allow their currencies to float freely, benefiting from the flexibility and efficiency it offers. However, emerging economies often need to implement some level of currency control to protect their economies from the volatility of market forces and external pressures. By implementing measures to manage their currency’s value, such as capital controls or intervention in the foreign exchange market, emerging economies like Nigeria can mitigate the negative impacts on their economies and safeguard the purchasing power of their citizens

    •Zayyad I. Muhammad,

     Abuja.

  • Naira abuse: Selective enforcement

    Naira abuse: Selective enforcement

    Two recent cases exposed a double standard in Nigeria’s fight against naira abuse. In one case, actress Oluwadarasimi Omoseyin was sentenced to six months in prison, with a fine option, for spraying and stepping on naira notes at a party in Lagos. Curiously, in the other case, which involved a traditional ruler, the Olu of Owode Egba, Ogun State, Oba Kolawole Sowemimo, the naira abuser has not been prosecuted.

    According to the Economic and Financial Crimes Commission (EFCC), the actress, “on the 28th day of January 2023, at Monarch Event Centre, Lekki, Lagos… whilst dancing during a social occasion tampered with the sum of N100,000 issued by the Central Bank of Nigeria by spraying same,” and thereby committed an offence contrary to and punishable under Section 21(1) of the Central Bank Act, 2007.

    She was arrested by officers of the Independent Corrupt Practices and Other Related Offences Commission (ICPC) on February 1, 2023, in Ikoyi, Lagos, following a viral video that showed her spraying and stepping on naira notes at a party, and handed over to the EFCC the next day for further investigation.

     In her statement, she had stated that she attended a friend’s wedding on January 28, 2023, and that she sprayed N200 and N100 notes on the occasion. She was first arraigned on February 13, 2023, and granted bail two days later.

    Justice Chukwujekwu Aneke of the Federal High Court, Lagos, on February 1, 2024, convicted her, and sentenced her to six months in prison with a N300,000 fine option.

    The Central Bank of Nigeria (CBN) Act 2007 (As amended) stipulates that “spraying of, dancing or marching on the naira or any note issued by the Bank during social occasions or otherwise howsoever shall constitute abuse, and defacing of the naira or such note shall be punishable under the law by fines or imprisonment or both.” Abuse of the currency attracts a penalty of not less than six months imprisonment or a fine of not less than N50,000 or both.

    The CBN is supposed to work with the EFCC, Nigeria Police Force (NPF), Federal Inland Revenue Service (FIRS), and the Nigerian Financial Intelligence Unit (NFIU), among others, to curb the abuse of the naira. It is unclear whether they are operating with a sense of collective mission concerning the issue.

    Considering Omoseyin’s prosecution for naira abuse, and her punishment for violating the law, it is puzzling that Oba Sowemimo has not been arraigned for the same violation.

    In January, the National Orientation Agency (NOA) issued a statement, calling the traditional ruler’s attention to “an online video where a garland of the national currency was used by you to spray on one of the musicians who played at the event.” The agency said, “for us that was an abuse of one of the national symbols of our dear country,” noting that his action was punishable under the law.

    Its Director General, Lanre Issa-Onilu, who signed the statement, implored Oba Sowemimo “to join the NOA in finding a solution to the indiscriminate abuse of the currency by enlightening your community members on the legal consequences of the abuse of the Naira and promoting the integrity of all our national symbols.” It was strange that the agency appealed to an unreformed naira abuser to support the campaign against naira abuse. 

    A month later, the Egba Traditional Council suspended Oba Sowemimo for two months without salaries following the recommendation of its Ethics Committee, which had examined the viral video and reached the conclusion that his action was unethical.  The video showed the traditional ruler, during the celebration of his 13th coronation anniversary, adorning a popular Fuji musician, Wasiu Ayinde, with new N1,000 notes shaped like a garland. The committee observed that his action contravened the law, and encouraged derisive comments about Yoruba traditional rulership.

    “They said the suspension was due to the way I spent money on one musician,” Oba Sowemimo was reported saying. “And when I was asked if I had anything to say, I stood up and apologised for whatever I had done wrong and the suspension which was earlier announced to be for three months without salaries was reduced to two months.” He added that he “totally” accepted the decision of the council.

    According to the council, while under suspension, he must not parade himself as a traditional ruler, must not be invited to any government or public function as a traditional ruler, and must not attend any such event as a traditional ruler.

    Read Also: Lagos Police warn intending protesters against road blocks

    It is unclear if the actions of the NOA and the Egba Traditional Council were meant to make his prosecution unnecessary.  It is said that the law is no respecter of persons. But the different treatments of the naira abusers in these cases suggest that the actress faced trial because of her comparatively low status, and the traditional ruler has not been tried because of his high status.

    Omoseyin was sentenced to six months in prison, with a fine option. Oba Sowemimo was suspended for two months without salaries. It is unclear how much his salaries for two months amount to.  In the first case, there was enforcement of the law. In the second case, the law was not enforced. Enforcing the law through arrest and prosecution sends a serious signal that cannot be achieved through the methods of the NOA and the council of traditional rulers in the case of Oba Sowemimo.

    Selective enforcement of the law is not the way to fight naira abuse. Indeed, the authorities should target the high-ups who break the law by abusing the naira, and are regularly seen in viral videos doing so. Such naira abusers should be prosecuted and punished. That is a more effective way to fight naira abuse.

    Fighting naira abuse and naira abusers demands much more than the conviction of an obscure actress. Naira abusers are all over the place, in high places and low places. These two cases demonstrate that reality. Regular viral videos show the high scale of naira abuse in the country. The violators carry on because those who should stop them allow the violation to continue. More people should be arrested and prosecuted for naira abuse, irrespective of their status.

  • 2023 polls: How we survived naira swap, attacks, others

    2023 polls: How we survived naira swap, attacks, others

    • Says election results reflection of the voters’ will
    • ‘Why upload of presidential poll result was slow’

    The Independent National Electoral Commission (INEC) yesterday told of the challenge posed by the naira swap to the conduct of last year’s general elections in the days leading to the commencement of the polls.

    The election umpire, in a 526-page Report of 2023 General Election just released in Abuja, also opened up on the hiccups over the uploading of the results of the presidential election.

    It attributed the problem to a technical challenge which, according to it, was later fixed by 8.55 pm on the election day.

    The commission said the currency swap and the limit placed on cash withdrawals from banks made it difficult for it to pay for some critical items and services including fuel procurement and transportation of personnel and materials.

    It said the situation “constituted encumbrances on the Commission’s operations for the payment to some unbanked service providers and the ability of particularly transport providers to service and fuel vehicles in boats and motorcycles in readiness for election duty.

    “The prevailing fuel scarcity across the country and inadequate number of vehicles and boats for the transportation of election personnel and materials within the required timeframe posed a great challenge to the logistics plan for the election.

    “This is more so considering the size and diversity of Nigeria, as well the state of national infrastructure.

    “Indeed, election is the largest and most complex logistics undertaking in Nigeria involving the simultaneous movement of personnel and material to 176,846 polling units across 8,809 wards spread across 774 Local Government Areas (LGAs) in 36 states and FCT.”

    But it said the most devastating of the challenges was the spate of attacks on its personnel and facilities by thugs, unknown gunpersons and arsonists nationwide.

    “During the period between the 2019 General Election and 12th December 2022, the Commission suffered over 50 attacks on its buildings and facilities in various LGAs and State Offices across 15 States of the federation in which vehicles, office equipment and election materials were destroyed,” it said.

    However, it submitted that the elections were not only generally free and fair because they reflected the wishes of Nigerians they were also “notable for their peaceful and orderly conduct, marked by the absence of significant instances of violence, with over 25% of registered voters casting their ballots.”

    Going into the specifics, it said the analysis of the polls showed that no party was dominant while the spread of results across party lines was better than in all previous elections in the country.

    The commission said the polls were unique in terms of keeping to the time table, the new 80 clauses in the Electoral Act and the introduction of new technologies which made voting easier.

    The National Commissioner and Chairman Information and Voter Education Committee, Mr. Sam Olumekun, in a statement on the release of the report, said: “On Thursday, 22nd February 2024, the Commission convened for its weekly meeting where the 2023 General Election Report was reviewed and approved for publication.

    “In keeping with our tradition over the last four electoral cycles, and our commitment to transparency, we are pleased to announce the release of the official INEC report on the 2023 General Election.

    “This comprehensive 526-page document, structured into 13 chapters and enhanced with 60 tables, 14 boxes and 10 graphs, offers an in-depth analysis of the election’s key processes, achievements and challenges, alongside valuable lessons learned.

    “The Report showcases the election’s unparalleled diversity in party representation, demonstrating significant democratic progress.

    “This election saw four political parties winning gubernatorial races, seven parties winning senatorial seats, eight in federal constituencies and nine in State legislatures, illustrating a broad shift in political representation across Nigeria.”

    The commission described the elections as “perhaps the best planned and most innovative election in Nigeria.”

    It said: “The election witnessed the highest number of eligible voters and voting locations across the country with the participation of over one million election duty officials and deployment of enormous logistic requirements including over 100,000 vehicles and about 4,000 boats protected by gunboats.

    “Given the meticulous preparations for the election, the transparency of the entire electoral process, from the casting of the vote, the publication of the number of collected Permanent Voters Card for the election down to the polling unit level for the first time ever, the presence of security personnel, party agents, election observers and the media along the entire voting process and result collation chain, as well as the layers of stringent checks and control put in place by the Commission before making a declaration and return for an election, the outcome of the election, based on immutable provisions in the electoral legal framework is a true reflection of the wishes of the electorate.”

    Explaining the uniqueness of the polls, INEC said: “Several other innovations by the Commission in the 2019-2022 period peculiarly made the 2023 General Election unique. It was the first general election to be conducted after the amendment of the Electoral Act 2022.

    ” Furthermore, the Presidential and National Assembly election, for the first time in two Electoral Cycles 2010-2015 and 2015-2019, held on schedule without postponement as a result of logistics or other challenges.

    “Moreover, voter access to polling units was expanded countrywide after 25 years when in June 2021 the Commission converted the 56,872 Voting Points and Voting Point Settlements into full-fledged Polling Units, bringing the number of polling units in Nigeria to 176,846.

    “In addition to expanding voter access to polling units, the Commission also relocated 749 polling units from inappropriate to more appropriate public facilities or open spaces to guarantee unencumbered access for all voters.

    “Sequel to the forgoing, there was voter migration and inadvertently, de-congestion of some over-crowded polling units. This exercise is on-going as some polling units are still congested as a result of voter reluctance to relocate mainly for security consideration.”

    Continuing, INEC said: “Polls opened on time in most polling stations and was generally smooth and orderly. There were some reports of technical glitches with the BVAS, although these were addressed by the roving technical staff assigned to address such issues. The counting, collation, and declaration of results process was largely peaceful, transparent, and credible nationwide.

    “While the former was tailored to serve as the nerve centre for monitoring the conduct of elections across the 774 LGAs nationwide, the latter served as the venue for National Collation of results emanating from States. Throughout the electoral process, Election Monitoring Support Centres (EMSCs) in every state served as a vital source of field information and intervention.

    “The National Situation Room was also set up for the conduct of the Governorship and State Houses of Assembly Elections, held on the 18th March 2023. This time, it was replicated in all 36 states. The Situation rooms both at the national and State level were managed by a team of experts from INEC, the security agencies and other relevant organisations.”

    On the failure to upload Polling Unit results of the presidential election to the INEC Result Viewing (IReV) portal in real-time at the close of polls on Saturday 25th February 2023, the commission said: “To begin with, it is important to note that the IReV portal is one of the most significant innovations introduced by the Commission prior to the 2023 General Election to promote the integrity and transparency of the electoral process. As a public-facing website, the IReV portal shows the images of the original Polling Unit result sheets as recorded in Form EC8A.

    “The operational methodology and the concept behind the upload of results to the IReV for public viewing is quite simple. At the end of polls, Polling Unit results (Form EC8As) are scanned and uploaded to the IReV by the Presiding Officer(s). These results are then available for viewing to the public and all stakeholders.

    “The system, which was first deployed during Nasarawa Central State Constituency bye-election in August 2020 and tested in 105 subsequent elections, including three (3) off-cycle governorship elections, has tremendously improved public confidence in the integrity and transparency of the Commission’s result management process.

    “The challenge of uploading the PU presidential election results on the IReV after the presidential and NASS elections on 25th February 2023 was unique. As voting ended across the country and POs began the process of uploading the images of the PU result sheets of the elections for the various constituencies around 1 4:00pm, the commission began to receive reports that attempts to upload presidential election result sheets was failing.

    “Following these reports, the Commission immediately engaged with its field officials for details in order to understand and trace the origin, source, scale and magnitude of the problems across the result management ecosystem to devise appropriate solutions.

    “In the troubleshooting process, it was established that there was no issue in uploading the PU result sheets of the Senate and House of Representatives elections through the Election Result Modules.

    “However, there was a problem with uploading the presidential election results to the system. Attempts to upload the results were generating internal server errors, which refer to a significant impairment that usually originate from within an application due to problems relating to configuration, permissions, or failure to create or access application resources correctly.

    “Further interrogation of the Election Result Modules indicated that the system was encountering an unexpected configuration problem in mapping the presidential election results uploaded into the system to the participating Polling Units.

    “Due to the complex, sensitive and critical nature of the systems and the real potential for malicious cyber attacks, the Commission immediately put in place several strict security and audit control measures to prevent any unfettered or elevated access to the Result Upload System.

    “In the process of resolving the challenge, it was discovered that the backend system of the IReV was able to query and detect the base States for uploading the PU result sheets based on the mapping of all Senatorial District and Federal Constituency elections to the respective 36 States of the Federation and the FCT as established in the database structure deployed within the system.

    “In configuring and mapping the election results for the presidential and NASS elections, the Commission created Four Hundred and Seventy (470) election types consisting of one presidential constituency covering the entire country, 109 Senatorial Districts and 360 Federal Constituencies.

    “Each Senatorial District and Federal Constituency election on the database was mapped to their respective states. However, the presidential election result is a single, countrywide constituency and therefore, does not belong to any one state.

    “Consequently, while the uploads for the NASS elections succeeded as the application was able to identify the respective state and build the folder hierarchy for the results organisation process for the election, attempts to upload the presidential election results sheets, which does not belong to or mapped to any State on the database, failed. Instead, it returned a HTTP server error response.

    “This failure is attributable to the inability of the application to create and build a folder structure to organise the uploaded images of the result sheets of the presidential election. Having identified and established the source of the problem, the Commission quickly created and deployed ‘Hotfixes’ which are software updates for fixing a bug or any vulnerabilities in a system.

    Read Also: Stop free floating of naira, Olawepo-Hashim tells Fed Govt

     “The deployed hotfixes eventually resolved the HTTP error on the system and the first presidential election result sheet was successfully uploaded at 8.55pm on the 25th of February 2023. After the problem with the upload was resolved, the Commission noticed a high volume of uploads on the queue.

    “All results that scanned but could not be uploaded due to the error were queued waiting to be automatically processed. Due to the large volume and high traffic from the queue, the system was running slower, even though it tried to scale up automatically to handle the unanticipated heavy traffic.

    “The density of the traffic that slowed the uploads was one issue. Another was that the offline queue requires the BVAS devices to be switched on and connected to the internet for the upload. However, some of the POs had at the time left their PUs, and the devices had either been switched-off, or were out of internet coverage.

    “Switched-off devices could not connect and upload the results sheets. The Commission had to reach out to the POs of affected areas to switch on their systems and ensure internet connectivity for the uploads to continue. This accounted for the delay, with some of the results coming in the next day.

    “By and large, the glitch experienced in uploading the scanned images of PU presidential election result sheets on 25th February 2023 was due to the inherent complexity within the System, which was difficult to anticipate and mitigate.

    Thereafter, the Commission has made improvements on the IReV and taken additional steps to build more resilience and undertook additional checks to ensure the stability and optimal operation and performance of the IReV portal. Additional Quality assurance checks are now done to complement the end-to-end testing of the entire result upload ecosystem before the conduct of any election.

    “However, the glitch in the upload of the presidential results sheets to iREV did not affect the credibility of the election. Agents of political parties and security agents were given copies of polling station results after they were announced in public.

    “The results were also displayed at polling units for scrutiny by voters. So, when they were eventually uploaded, it was easy to compare them with the copies displayed at polling centres and given to party agents and party officials.”

  • Stop free floating of naira, Olawepo-Hashim tells Fed Govt

    Stop free floating of naira, Olawepo-Hashim tells Fed Govt

    A politician and businessman, Mr. Gbenga Olawepo-Hashim, has urged the Federal Government to stop the free floating of the naira in exchange for other currencies and revert to “Nigerian traditional managed float and allocate Nigeria’s forex and domestic resource for nation’s economic and national priorities”.

    In a statement by his media office, Olawepo-Hashim said: “It would be delusional to manage Nigeria’s foreign exchange regime with the expectation that the market would correct itself when the Nigerian market is controlled by different criminal gangs.”

    The business mogul suggested that “it is also time for real Central Bankers to assume control of the Central Bank rather than commercial bankers and even elements at the fringes of commercial banking who have hijacked the management of our monetary policies in the past two decades”.

    Not a few Nigerians have been alarmed at the sudden emergence of the banks and their chief executives as foreign exchange speculators, as allegations are rife that most of the banks were warehousing large volumes of foreign currencies in order to trade with them at higher rates.

    Olawepo-Hashim argued that “no serious nation in the world would continue to manage its affairs on the basis of failed recommendations by officials of Bretton Woods institutions who have consistently misadvised Nigeria to continuously devalue its currency for about 38 years”.

    He added: “My generation stoutly resisted these packages in the great Anti-SAP revolts of 1989. The present variant of the market allocation is the most extreme ever experienced, which is seeing the naira exchange at N1,900 to a dollar, compared to N8 to a dollar which we resisted fiercely in 1989.”

    Read Also: Train girls to lead, says Tinubu’s aide, governor’swife

    The business mogul stressed that following the removal of subsidy on petroleum products with its hard consequences, it is bad economic planning to allow the naira to go on a free fall.

    He said naira devaluation would continuously erode any fiscal gain of subsidy removal and that it would lead to another round of subsidy and subsidy removal which the economy, at 32 per cent inflation, cannot absorb.

    Olawepo-Hashim added that the much sought after investors, whether local or foreign, would be hard to find in a season of currency volatility and high inflation eroding the purchasing power of consumers.

    He called for an urgent stability of the economy and taming of the volatility through “common sense economics”.

  • Naira depreciates to N1,700/$ at parallel market

    Naira depreciates to N1,700/$ at parallel market

    The naira yesterday exchanged at N1,700 to dollar at the parallel market. It exchanged at N1,640 to dollar on at the weekend, representing N60 per dollar depreciation.

    At the Nigerian Autonomous Foreign Exchange Market (NAFEM)- the official market, the naira traded at N1,598 to dollar. The rate represents 3.94 per cent depreciation against US Dollar in the NAFEM Window.

    The local currency has continued to depreciate at both official and parallel markets over persistent dollar scarcity.

    The CBN last week directed that all authorized dealers to pay Personal and Business Travel, allowances (PTA/BTA) to their customers through electronic channels only, including debit or credit cards instead of cash.

    “In line with the Bank’s commitment to ensure transparency and stability in the foreign exchange market and avoid foreign exchange malpractices, All Authorized Dealer Banks shall henceforth effect payout of PTA/BTA through electronic channels only, including debit or credit cards. For the avoidance of doubt, payment of PTA/BTA by cash is no longer permitted,” the bank said.

    Importers are finding it increasingly difficult to secure the necessary funds from the official FX market and black market.

    Legitimate needs driving the demand include Form A applications for Business Travel Allowance (BTA), Personal Travel Allowance (PTA), school fees, and medical fees. Small and Medium Enterprises (SMEs) are also grappling with the scarcity, as highlighted by the use of Form Q.

    “The problem is that dollars are scarce in the market. People are not bringing dollars and demand is so high that is why the price is going up,” a street trader told Business Day on Tuesday morning.

    Read Also: Be patient, Tinubu’s policies yielding results, Bagudu begs Nigerians

    Former Executive Director, Keystone Bank Limited, Richard Obire advised that Nigeria’s heavy and skewed outward-oriented consumption of goods and services as seen in decades of long substantial bills for food and energy imports should be reversed to save the naira.

    Also, the massive corruption-driven capital outflows which in turn severely damages Nigeria’s capacity to produce at scale that will enable the country to fully engage its large population to create widespread prosperity works against the naira.

    On ways to strengthen the naira, he advised that in the short-term, there is  need to find non-market damaging  ways to increase the supply of hard currencies and reducing the demand for same.

    He said that insecurity hampering food production needs to be tackled with a sense of urgency and effectiveness.

  • JUST IN: Naira falls to N2,000/1£ at parallel market

    JUST IN: Naira falls to N2,000/1£ at parallel market

    The local currency in Nigeria (Naira) is currently trading at over 2,000 Naira against the British pound in the parallel market

    Malam Ibrahim, a Bureau de Change operator in Wuse Zone 4, verified the rates on Monday, February 19.

    He said: “Yes it is true, we are currently selling above N2,000 for the pounds and it is still about the heavy and consistent demand for these currencies.”

    According to the Punch, the new rate increased from N1,930 recorded on Saturday and is currently the lowest point in the historical performance of the naira.

    Read Also: Evolving solutions to save the naira

    In a similar vein, the naira lost value about the dollar on the parallel FX  market, where it is now unofficially trading at N1,673 from N1,670/$ on Friday.

    Details shortly…  

  • Evolving solutions to save the naira

    Evolving solutions to save the naira

    The depreciation of the Naira underscores the importance of effective monetary and fiscal policy, as well as structural reforms to improve the country’s export competitiveness and reduce its dependence on imports

    The astonishing depreciation of the Naira has significant implications for the country’s economy. The devaluation of the currency means that it now has less value relative to other currencies; this has led to higher import costs for essential goods such as food, fuel and machinery which, in turn, has contributed to inflation, making it more expensive for consumers to purchase imported goods and potentially driving up prices across the board.

    Furthermore, a weaker Naira can also deter foreign investors and lenders, as it erodes the value of their returns in their currencies and raises concerns about exchange rate risk. This can lead to reduced foreign investment and capital inflows, which are critical for economic growth and development.

    The depreciation of the Naira also affects government finances, as it increases the cost of servicing external debt denominated in foreign currencies. This can strain the country’s budget and lead to higher borrowing costs, potentially crowding out other important government expenditures.

    Overall, the depreciation of the Naira underscores the importance of effective monetary and fiscal policy, as well as structural reforms to improve the country’s export competitiveness and reduce its dependence on imports. These measures are crucial for managing exchange rate volatility and supporting sustainable economic growth.

    Read Also; Wike, Akpabio to Nigerians: Tinubu’s policies only way out to address years of economic rot

    The key factors contributing to the Naira’s depreciation are Nigeria’s heavy dependence on oil exports for government revenue and forex earnings. When oil prices fluctuate, the Naira’s value is affected. The global economic slowdown has reduced investor confidence and foreign direct investment in Nigeria, leading to fewer dollars entering the economy and putting pressure on the Naira.

    High inflation reduces the purchasing power of the Naira and increases demand for foreign currencies. While intended to control inflation, high interest rates can discourage borrowing and investment, hindering economic growth and forex earnings. In addition, low reserves limit the CBN’s ability to defend the Naira by selling dollars in the market.

    CBN’s interventions for a stable Naira

    The Central Bank of Nigeria (CBN) has rolled out several measures to mitigate the crash of the Naira. Between December 29, 2023, to date, the CBN has issued nine circulars all targeted at saving the Naira.

    The CBN is adapting to market trends. Bank customers with domiciliary accounts can request to sell foreign currency through their banks, but the bank cannot force the transaction. The bank will notify other customers of the opportunity to buy at the agreed rate. If no buyers are found, the selling customer can adjust the rate.

    International Money Transfer Operators (IMTO) registration fees have increased from N500,000 to N10,000,000 for both foreign and local IMTOs. Guidelines have been revised to promote a fair market for all IMTOs, emphasizing a willing buyer-willing seller system.

    To prevent abuse of PTA and BTA funds on the parallel market, all payments for these allowances must now be done using cards, rather than in cash.

    A new policy requires all exporters to repatriate export proceeds to a designated account in Nigeria. Oil companies with global subsidiaries often pool their proceeds in foreign accounts, affecting Nigeria’s economy. The new policy allows IOCs to initially repatriate 50 per cent of their proceeds, with the remaining 50 per cent kept in Nigeria for 90 days before repatriation, boosting liquidity in the market.

    The apex bank has implemented various policies and interventions to address the depreciation of the Naira.

    About measures to curb black market activities, the collaboration with security agencies to crack down on illegal forex operators and restrict unauthorised transactions aimed at reducing black market activity and strengthening the official rate is commendable but enforcement can be challenging, with the possibility of pushing activities underground, which might create unintended consequences. Overzealous enforcement could also discourage legitimate transactions.

    The CBN’s interventions have yielded mixed results. While they have addressed some concerns, such as transparency in the forex market, sustained stability is yet to be achieved. This is because individual interventions might address specific symptoms, but not the underlying structural issues contributing to the Naira’s weakness.

    Amplifying public concerns

     The rumour that domiciliary accounts worth $30 billion would be forcibly converted into Naira caused a lot of worry among the public. There are several reasons for this amongst which are Nigerians have experienced policies in the past that have made them lose trust in financial institutions and their own savings. They remember times when the value of their money dropped and they couldn’t easily access foreign currency.

    Banks holding excess FX to stabilising the Naira

     The recent news that commercial banks are holding excess foreign currency brings another layer of complexity to the issue of stabilizing the Naira. It may seem contradictory to the long-term goals of the Central Bank of Nigeria (CBN), but it emphasizes the need for a multi-faceted approach.

    In the short term, the CBN has directed banks to release excess dollars to address the scarcity of foreign currency in the market. This could provide some relief by increasing liquidity and reducing pressure on the Naira. However, it’s important to note that this is a one-time measure and doesn’t address the root causes of the Naira’s weakness. It may also create temporary disruptions for  banks and their clients who rely on these reserves.

    To achieve long-term stability, broader strategies are crucial. Diversifying the economy by reducing reliance on oil exports and promoting non-oil sectors can reduce vulnerability to external shocks and create new foreign exchange earnings. Encouraging value-added exports can strengthen the Naira organically. Responsible fiscal and monetary policies are necessary to control inflation, protect the purchasing power of the Naira, and attract foreign investment. A market-driven exchange rate regime, with managed intervention, can reflect economic realities and attract investment, but careful management is needed to avoid excessive volatility. Transparent communication about policies and interventions is also essential for building public trust.

    The recent actions taken by the CBN to limit banks’ exposure to foreign currency have a complex relationship with stabilising the Naira. Although they are not a direct solution, these actions can create conditions that are conducive to a more stable currency in the long term.

    There are several potential positive impacts of these measures. Firstly, by limiting banks’ exposure to foreign currency, the CBN aims to reduce their vulnerability to sudden changes in exchange rates. This could lower the risk of bank failures and financial instability, which in turn fosters confidence and encourages lending, contributing to economic growth.

    Secondly, lower exposure to foreign currency by banks could lead to less speculation and volatility in the foreign exchange market, potentially making it more predictable and efficient. This increased predictability could attract foreign investment and indirectly stabilize the Naira.

    Lastly, the emphasis on robust risk management and accurate reporting could help banks identify and manage risks more effectively, including those related to foreign exchange fluctuations. This could contribute to a more resilient financial system overall.

    However, there are also potential challenges and limitations to consider. Meeting the new limits quickly may be difficult for some banks, impacting their ability to serve clients and participate in the foreign exchange market. This could have unintended consequences for businesses and individuals relying on these services.

    High-level meeting: A glimmer of hope for the Naira?

    The recent meeting between Finance Minister Wale Edun, and the Chairman of the Economic and Financial Crimes Commission (EFCC) Ola Olukoyede, and CBN Governor Olayemi Cardoso brought together important figures involved in Nigeria’s economy. Although specific details of their strategies were not disclosed, their public commitments provided some insights.

    They all emphasised the need to align monetary and fiscal policies for a coordinated approach to address economic challenges. This may involve managing government spending and borrowing in line with monetary policy goals. They also expressed a commitment to upholding the rule of law, suggesting a crackdown on illegal activities in the forex market such as the black market and money laundering.

    Finance Minister Edun reiterated the government’s dedication to economic stability and the rule of law, imply ing potential policy adjustments aligned with the CBN’s objectives. EFCC Chairman Olukoyede pledged support for initiatives enhancing financial regulation integrity, indicating increased efforts to curb illegal forex activities and ensure compliance with financial laws. CBN Governor Cardoso emphasised the importance of coordinated efforts, hinting at potential collaborations between the CBN, Ministry of Finance, and EFCC. 

    Based on public statements and expert analysis, potential strategies could involve enhanced transparency and communication to rebuild trust, collaboration among authorities to enforce regulations and crackdown on illegal forex activities, targeted interventions in specific sectors to boost exports and attract foreign investment, and long-term reforms addressing issues like inflation and dependence on oil exports through fiscal discipline and economic diversification.

    The effectiveness of their strategies will depend on concrete actions, transparency, and sustained collaboration. Open communication about proposed measures and their potential impact is crucial to rebuilding public trust and gaining support for their efforts.

    Multifaceted strategies for a stable Naira

    The fluctuating value of the Naira is a big problem for Nigeria’s economy. It is not enough to have just one solution. We need to take a multifaceted approach:

    The authorities need to diversify the economy away from relying too much on oil. By investing in other industries such as agriculture, manufacturing, and tourism, the country can reduce its vulnerability to volatile oil prices and create new ways to earn foreign exchange. This will require long-term commitment and investment in areas like infrastructure and skills development.

    The government and the people should promote exports and focus on producing higher-value goods instead of just raw materials. This can bring in more dollars and strengthen the Naira. To do this, we can give tax breaks, help businesses access financing, and improve trade logistics. They should also develop the country’s competitive advantage in sectors like processed agricultural products or light manufacturing. But it won’t be easy because they will need to invest in technology, skills development, and quality control.

    The authorities particularly need to address inflation, which reduces the Naira’s purchasing power and discourages foreign investment. This can do by being disciplined in government spending and borrowing, and by adjusting interest rates when necessary. It’s a tricky balance because nobody wants to stifle economic growth, but they also need to control inflation.

    Building up the country’s foreign exchange reserves is important because it gives the country a cushion against external shocks and allows the Central Bank to stabilize the Naira if needed. Strategies to do this include attracting foreign investment, encouraging diaspora remittances, and managing external debt responsibly. Earnings from exports and other foreign income sources can be used to build up reserves. But there is a need for a stable and attractive investment environment, as well as other development priorities to consider.

    There should be a market-driven exchange rate regime that allows the Naira to adjust to market forces. This can make the currency more reflective of economic realities and attract investment. However, the CBN needs to manage it carefully to avoid excessive volatility. A managed float system, where the Central Bank only intervenes to prevent extreme fluctuations or disorderly markets, can strike the right balance.

    In conclusion, stabilising the Naira requires a comprehensive approach that tackles multiple factors. Each solution has its challenges, so we need to carefully analyse the trade-offs and implement these measures in a coordinated way. The CBN should also focus on data-driven decision-making, collaboration with stakeholders, and a long-term perspective to achieve a stable Naira and a strong Nigerian economy.

  • How to strengthen naira, by Lagos Assembly

    How to strengthen naira, by Lagos Assembly

    The Lagos State House of Assembly has urged the Federal Government and Central Bank of Nigeria (CBN) to take bold steps to stem the continuous devaluation of the naira against the dollar.

    As at yesterday, the naira exchanged for $1 between N1,474 and N1,500 and the lawmakers, at plenary, advised the Federal Government and the Central Bank of Nigeria (CBN) on some bold steps to take so as to shore up the value of the naira.

    Part of resolutions by the House was that the Federal Government should reduce foreign trips for seminars and conferences by ministries and agencies. This should also apply to states, they said.

    Stressing the need to strengthen security across the country, the House also called on the CBN “to sensitise Nigerians on steps being taken to reduce pressure on the naira and expected roles of Nigerians at this time’.

    The Assembly urged depositors of dollars in banks can be engaged for an acceptable arrangement where such funds can be utilised by the government to help reduce pressure on the naira.

    Speaker of the House, Mudashiru Obasa, who presided over the sitting, lamented the disparity between the dollar and naira, while also commending the CBN for taking some measures with the hope that such actions would yield positive results.

    He added: “In my opinion, the CBN and government should embark on sensitisation and information dissemination to make people understand what the government is doing.

    “The pressure on the naira is too much, but the CBN should make sure that national interest is supreme.”

    Read Also: Emefiele’s $6.2m trial: Buhari’s signature forged, says ex-SGF

    The speaker also urged the government to regulate religious pilgrimages as they attract undue interest in dollars and further pressures the naira. According to him, this action should be sustained until the naira stabilises.

    “To save the naira, the Federal Government and states can stop foreign conferences and seminars. If possible, we can bring the resource persons to Nigeria to deliver their lectures. We all need to look inward to support the government.

    “Locally, some people in Nigeria doing businesses demand dollars instead of naira. Even at parties now, you see people spray dollars. We need a way out and to do this, we need the support of citizens. That’s the essence of sensitisation,” he added.

    Femi Saheed (Kosofe 2), who spoke on ‘Matter of Urgent Public Importance’, lamented that the current naira-dollar disparity is the direct consequence of the policies of the Godwin Emefiele-led CBN.

    According to him, the naira will gain strength if measures, including fixing the refineries, strengthening the education and health sectors, are taken.

    “I think the current CBN governor should work on moral suasion to get people to pull out the dollars in their domiciliary account,” he said.

  • How to strengthen the naira, by Lagos Assembly

    How to strengthen the naira, by Lagos Assembly

    The Lagos State House of Assembly has urged the federal government and the Central Bank of Nigeria (CBN) to implement decisive measures to curb the ongoing devaluation of the naira against the dollar.

    As part of its resolution, the House recommended that the federal government should minimize foreign trips for seminars and conferences by ministries and agencies, with states following suit.

    Emphasizing the imperative of bolstering security nationwide, the House also called on the CBN to educate Nigerians about efforts being made to alleviate pressure on the naira and the expected contributions of citizens during this period.

    The Assembly proposed that depositors of dollars in banks could be engaged in discussions to devise acceptable arrangements whereby such funds could be utilized by the government to alleviate pressure on the naira.

    During the session presided over by Speaker Mudashiru Obasa, the House expressed concern about the widening gap between the dollar and the naira.

    However, it also commended the CBN for implementing certain measures, expressing hope that these actions would yield favourable outcomes.

    He added: “In my opinion, the CBN and government should embark on sensitisation and information dissemination to make people understand what the government is doing. The pressure on the naira is too much, but the CBN should make sure that national interest is supreme.”

    The speaker also urged the government to regulate religious pilgrimages as they attract undue interest in dollars and further pressure the naira.

    According to him, this action should be sustained until the naira stabilises.

    He said: “To save the naira, the Federal Government and states can stop foreign conferences and seminars. If possible, we can bring the resource persons to Nigeria to deliver their lectures. We all need to look inward to support the government.

    Read Also: Naira exchanges at N1,534 to dollar at official market

    “Locally, some people in Nigeria doing businesses demand dollars instead of naira. Even at parties now, you see people spray dollars. We need a way out and to do this, we need the support of citizens. That’s the essence of sensitization.”

    Femi Saheed (Kosofe 2), who spoke on ‘Matter of Urgent Public Importance’, lamented that the current naira-dollar disparity is the direct consequence of the policies of the Godwin Emefiele-led CBN.

    According to him, the naira will gain strength if measures, including fixing the refineries and strengthening the education and health sectors, are taken.

    He said: “I think the current CBN governor should work on moral suasion to get people to pull out the dollars in their domiciliary account.”