The Nation Newspaper

Tag: optimism

  • Optimism as INEC gives out certificates of return

    Senate leadership, individual senator-elect’s plans and others dominated discourse yesterday as the Independent National Electoral Commission (INEC) issued lawmakers-elect certificates of return, report Onyedi Ojiabor and Abdulgafar Alabelewe.

    I’ll perform far better than

    araki, says Oloriegbe

     

    Senator-elect for Kwara Central Dr Ibrahim Yahaya Oloriegbe yesterday declared that he would perform better than Senate President Bukola Saraki.

    Saraki, the Senator representing Kwara Central, has represented the Senatorial District since 2011.

    He spoke in Abuja alongside two other Senators-elect from Kwara State after collecting his certificate of return from the Independent National Electoral Commission (INEC).

    He said Saraki did not set any standard of performance for any successor to study.

    Oloriegbe said: “It is God that gives and takes power from whosoever He wishes. I thank the Almighty Allah for granting me the grace of being overwhelmingly elected as Senator for Kwara Central in the coming 9th Senate.

    “I have the pedigree of service to people and humanity as a trained medical doctor who has spent decades working with World Health Organization (WHO) and years on the political field also in rendering selfless service to people and humanity.

    “I was the majority leader of Kwara State House of Assembly from 1999 to 2003 under the late Governor Muhammed Alabi Lawal.

    “My focus in the Senate will squarely be on how to through legislative engineering, quality and responsive representation,  improve the lots of my people in Kwara Central and  collaborate very effectively along with other federal lawmakers from the state with the State Governor-elect, Abdulrahaman Abdulrazaq in giving the state a new direction with regards to wealth creation and genuine development.

    “The responsive representation I will put up for Kwara Central people within the next four years coupled with the required legislative engagements to be made on both the floor and at committee level for good governance in the country , will surpass whatever performance Saraki had rendered in the past.”

    The Kwara South Senator-elect, Lola Ashiru, assured that the new set of elected political office holders in Kwara State would collaborate to give the greatest good to the greatest number of Kwarans.

    Ashiru said: “We are aware of the expectations on the ground and enormous challenges at hand but as people who are out to serve and not lord it over the electorate, Kwara will surely be better off with the change that had taken place in the state.”

    The Senator-elect for Kwara North, Umar Sadiq, said he had the strong conviction that marginalisation that had been the lot of his area in the past would be a thing of the past.

     

    Gaya eyes Ekweremadu’s seat

     

    The Senator representing Kano South, Kabiru Gaye, is interested in becoming Deputy Senate President.

    Gaya, a sitting Senator and Chairman Senate Committee on Works, told reporters about his intention to go for the Senate top job yesterday after collecting his certificate of return as Senator-elect for Kano South.

    The post is occupied by Senator Ike Ekweremadu (Enugu, PDP).

    He told reporters at the International Conference Center, Abuja venue of the issuance of the certificate of return to Senators-elect that his aspiration was driven by mass appeal for him to go for the job by his colleagues.

    He has been returned to the upper chamber for the fourth time unbroken.

    Gaya said: “I thank the Almighty Allah who granted me the grace of being elected into the Senate for the fourth time.

    “As regards the leadership composition of the 9th Senate, majority of my colleagues are mounting pressure on me to run for the position of Deputy Senate President. I want to use this opportunity to announce that I’m running for the position being one of the most ranking Senators in the 9th Senate.”

    He however gave a caveat that his ambition for the exalted position will be subject to the determination and approval of the All Progressives Congress and the presidency.

    The aspiration of Gaya, who hails from the North West geo-political zone, may alter the permutations being made for the Senate leadership positions.

    If Gaya emerges Deputy Senate President, it may be difficult to also retain the Senate Presidency in the North.

    Front runners for the position of Senate Presidency of the ninth Senate include Senators Ahmed Lawan (APC Yobe North), Mohammed Ali Ndume (APC Borno South) and Mohammed Danjuma Goje (APC Gombe Central) and Abdullahi Adamu (Nasarawa West).

    Of the four front liners, Lawan looks good to get the Senate top most position going by his track records and standing in the APC.

    The Senate leadership race is, however, very much open as other Senators are said to be warming up to take a shot at the position.

    Senator-elect Adedayo Adeyeye (APC Ekiti South) noted that to avoid the leadership crisis that overwhelmed the 8th Senate, the APC national leadership should provide the required direction for the majority party in the Senate to follow.

    Another Senator-elect Bamidele Opeyemi (APC Ekiti Central) was sure that the APC leadership would effectively manage the process for effective leadership of the ninth Senate.

    He said: “The calibre and character of personalities elected for the 9th Senate are very solid and promising for the country but leadership is key. This very reason why the leadership of the ruling party must manage well, whatever process, it is going to use for the emergence of leadership at both chambers this time around.

    “Once this is done, the party and in particular, the National Assembly and the presidency will be on the same page on development-driven bills sponsorship, policy formulations and approvals.”

    Senator Aliyu Sabi Abdullahi (APC Niger North) said the necessary lessons had been learnt from the leadership tussle in the 8th Senate.

    Abdullahi was optimistic that the loose ends in the leadership selection process of the ninth Senate would be tightened by the APC leadership.

    He said: “I was a key player in the leadership configuration of the 8th Senate and the attendant crises that followed. As one of the 43 returnees, the lessons learnt will be used to prevent the mistakes of the past from happening.”

     

    We will not fail Kaduna people,

    says senator-elect

     

    The Senator-elect for Kaduna Central senatorial District, Uba Sani, has said the elected representatives of Kaduna State are “bound by their love for the people of the state” to succeed in their responsibilities.

    He assured that the lawmakers will not fail the people of Kaduna in their legislative assignment.

    In a statement after he was issued with certificate of returns by the Independent National Electoral Commission in Abuja, Uba said with the crop of representatives the state has produced, the people of the state are poised to enjoy the dividends of democracy.

    He said: “Today, the great quest to place the good people of Kaduna Central Senatorial zone in pole position to reap bountifully from the next level of massive infrastructural, economic, social and agricultural development of the re-elected and re-energized APC government at the federal level and in Kaduna State, commenced effectively with my issuance of certificate of return by INEC.

    “I truly appreciate the youths, women, elders and other residents of Kaduna Central Senatorial zone who believe so much in me and showed it most audaciously with their huge votes at the polls. I shall remain eternally grateful. Like I have said repeatedly, I shall not fail you.

    “My biggest thanks however goes to my boss, close confidante and governor of our  State, Mallam Nasir El-Rufai.  We are bound by our common love for Kaduna State and our love for our long suffering people.

    “As a Senator in the 9th Senate of our great nation, I shall do all that is within my competences and powers to ensure that our collective dream and aspiration of a peaceful, investment friendly and economically buoyant Kaduna State is speedily achieved.

    “My loyalty to our party and our great leader, His Excellency, President Muhammadu Buhari, GCFR, shall be unalloyed and unflinching. With like-minds and fellow party men, we shall build a bulwark of support for the President and his administration in the Senate,  Insha Allah.

    “I am truly honoured and I shall not take the huge responsibilities reposed in me by the people for granted. I am very conscious of the fact that I cannot afford to fail. God helping me, I will not fail.”

  • Growing optimism as Lagos boosts artisans’ training

    Artisan training has been entrenched as Lagos State priority.This was confirmed as the government completed eight week’s intensive training and re-skilling programme for over 1,500 tradesmen and artisans in twenty-three different trades and vocations across the state.

    Commissioner for Wealth Creation and Employment,  Mrs. Uzamat Akinbile-Yusuf during a monitoring/familiarisation visit to one of the re-skilling centres in Ikeja, commended the beneficiaries of the training for their resilience throughout the training.

    She expressed optimism that the beneficiaries, having been exposed to  modern ways of trading and modern tools in their various vocations and trade, stood better chance above their peers who were not part of the training.

    The commissioner urged the beneficiaries to extend the exposure garnered through the training to their colleagues in other respective vocations, saying that the ultimate aim of the state government is to have competent artisans who can confidently handle various tasks that would be of reputable standard.

    “Having been trained by the state government, it is our expectation that you will use the knowledge and experience acquired to advance the state’s economy, improve its Gross Domestic Product (GDP) and curb the practice of bringing artisans from neighboring countries for works that can be handled by  our indigenous artisans.” she said.

    The Head of Entrepreneurship Department in the Ministry, Mrs. Taiwo Abiose said the training is the eighth   up-skilling programme and it is one of the several ways of positioning artisans to compete globally with their contemporaries, especially in this era of different innovations and Information Communication Technology (ICT).

    She said the re-skilling training programme was designed for practitioners of different trades and vocations who are desirous of exploiting new frontiers and also acquainting themselves with modern technologies in their various fields.

    One of the beneficiaries and a member of Professional Carpenters & Furniture Makers Association, Akinola Akindele, appreciated the s government for the gesture.

    He pleaded with the state government to complement the training initiative with the provision of work tools for the artisans, saying this would make the training impactful, sustainable and profitable to them. The training was put together by the Ministry of Wealth Creation and Employment and Lagos State Technical and Vocational Education Board, LASTVEB to improve the competencies of artisans and tradesmen in the State so that their competencies can earn them more job opportunities. The training covered tie and dye, shoemaking, welding, barbing/ cosmetology, catering, vulcanizing among others.

  • Cautious optimism

    •This is what the good news from Investors’ and Exporters’ FX Window calls for

    If sceptics had doubted the potentially calming effects of the Investors’ and Exporters’ FX Window created in April 2017 by the Central Bank of Nigeria (CBN) to tame the raging bull of forex market instability, the latest numbers coming from the segment would appear as an attestation to the wisdom of the initiative. According to FSDH Research in a report, “The total turnover at the Investors’ and Exporters’ FX Window (I&E Window) between April 2017 and May 2018 stood at $50.73 billion”.

    At a time the country is locked in an export mode, the pointers are certainly hard to ignore. First, it is unmistakably, a sign of renewed confidence by foreign investors in the domestic economy. Secondly, it reaffirms what is now common knowledge about the immense potential locked within the domestic economy and which require the right trigger to unleash. No doubt, the signs are of a steady, albeit slow progression in the journey towards economic diversification.

    Having noted the above, we must also state that the report says nothing that previous ones have not revealed about the potential of the Nigerian economy. Indeed, it needs stating that the initiative – Investors’ and Exporters’ FX Window – does not even pretend to be any magical wand to solve the problem of scarcity; it was more about managing scarcity – a mere window to  avail investors the opportunity to sell dollars to willing buyers at rates of their choice. Only when it is appreciated that the Nigerian forex problem goes beyond managing scarcity to one of fundamentally boosting the nation’s forex stock best guaranteed by an export-led growth can the initiative be seen for what it truly is – a placebo.

    And so for us – far beyond the optimistic numbers routinely churned out by national and international agencies – is the broader question of what indices such as the latest one translates to for the economy; the question of whether the economic fundamentals have changed in any significant sense for our import dependent economy, either in the specific sense of lessening our dependence on oil revenue, or in our ability to produce everyday goods which would otherwise have been imported, and whether the economy is better placed to deliver impressive job numbers in the long run.

    Undoubtedly, some measures of progress are being recorded. One of these is the steady accretion in our foreign reserves (it seems a measure of our import dependence hangover that this continues to be denominated in the amount of imports it can finance over a given period). The other is the massive boost in agricultural output which has led to the cutbacks in food imports as indeed other basic industrial manufactures being aggressively pursued by the Muhammadu Buhari administration. Even at that, the noticeable progress can best be described as modest given its potential and the enormity of the challenge. The reality of course is that our international trade has barely lifted beyond exports of primary products– of raw materials. As if that is not bad enough, the absence of any significant local input in processing not only erodes the basis of reciprocity inherent in trade relations, it undermines our ability to derive meaningful advantage from it.

    And to add to these the infrastructure challenge which continues to present formidable obstacles to our quest for competitiveness; and the problem of porous borders which makes smuggling and dumping fair game; the odds facing our manufacturers, and by extension those facing the nation’s quest for the more lucrative export trade, becomes better appreciated.

    More than mere numbers which have come to mean nothing, our quest should be for self-reliance and industrial competitiveness. And we do know that the twain will never happen without massive upgrade/modernisation of our infrastructure, particularly of transportation and power, without a deliberate programme to retrain and retool our youths for the future. They will not happen without measures to protect our industries from smuggling and dumping of cheap foreign products. And surely, they would not happen without targeted incentives to get indigenous manufacturers not only up and running, but in competitive mode.

     

  • Cautious optimism over proposed ban on palm oil import

    Cautious optimism over proposed ban on palm oil import

    Prompted by the need to boost local production and halt the huge import bill for palm oil, valued  at N116.3 billion in 2017, the National Assembly has renewed the push to ban the importation of palm oil and its allied products. It is envisaged that this will conserve foreign exchange, create jobs and boost the economic diversification push. However, with palm oil refineries operating at 30 per cent installed capacity, there are fears that without first addressing the product’s demand/supply gap, the proposed ban will amount to putting the cart before the horse, Assistant Editor CHIKODI OKEREOCHA reports.

    The Senate, has renewed the call to ban the importation of palm oil and its allied products. It came at an auspicious time, which was, perhaps, why it enjoyed an overwhelming support of members of the Upper Chamber of the National Assembly and, indeed, operators and stakeholders in the palm oil value chain.

    Although the fresh push to ban the importation of the product came at a time the Federal Government’s diversification agenda, anchored on increased agricultural production and export, was gathering momentum, the move has come under scrutiny by some experts and critical stakeholders.

    Some of them, who spoke with The Nation, described the proposed ban as a welcome development. They were, however, quick to point out that at the 30 per cent installed capacity of the crude palm oil refineries, banning the importation of the product without first addressing its demand/supply gap would be tantamount to putting the cart before the horse

    For instance, the General Manager, External Affairs, PZ Cussons Nigeria Plc, Mr. Muhammed Tahir, said he supports the move to ban the importation of palm oil into the country as this would boost local production. He, however, told The Nation that at present, the crude palm oil refineries operate at about 30 per cent installed capacity.

    The implication of this, he said, was that there was the need to ramp up local production by addressing the issues around the supply of crude palm oil to the refineries. According to him, at 30 per cent installed capacity, the refineries cannot meet demand by individual and industrial users. To him, addressing the demand and supply gap for palm oil is important before banning its import.

    The upper chamber of the National Assembly, recently started fresh move to ban the import of palm oil and its allied products. Waxing patriotic, Senator Francis Alimikhena of the All Progressives Congress (APC), Edo State, said the importation of the product was a threat to the government’s campaign on diversification.

    The lawmaker, who sponsored the motion, titled: “Urgent need to halt the importation of palm oil and its allied products to protect palm oil industry in Nigeria” and also led the debate, recalled with nostalgia that Nigeria, before the 1970s, was a global powerhouse in palm oil production and export.

    Alimikhena, however, lamented that the country lost her leadership position in the global palm oil trade, forcing her to import about 450, 000 tons of palm oil to the tune of N116.3 billion in 2017 alone. He, therefore, insisted that the government must reverse this trend.

    The lawmaker was right. Nigeria was the world leading producer of palm oil in the 1950s and mid-1960s. She was reportedly supplying about 645,000 Metric Tons (MT) of palm oil yearly to markets across the world and boasting an enviable global market share of about 43 per cent.

    Palm oil alone accounted for 80 per cent of Nigeria’s export earnings. It also created millions of direct and indirect employment opportunities for Nigerians. Malaysia, one of the Asian emerging markets, was even said to have obtained the oil palm seedling with which she built her thriving oil palm business from Nigeria.

    Although the Asian Tiger has since refuted this claim, it, nonetheless, underscored Nigeria’s towering status and visibility in the global palm oil industry. Curiously, from controlling over 40 per cent market share, Nigeria has since lost her grip on the business. She  accounts for a paltry seven per cent of total output.

    Malaysia and Indonesia have since surpassed Nigeria as world’s leading palm oil producers and exporters, retaining the second and first position, respectively. Sadly, Nigeria, as at 2016, fell to an unenviable fifth position.

    While Indonesia produces 32 million tons of palm oil, Malaysia boasts 17.7 million tons. And they have been exporting palm oil products to Nigeria. The country, which was once the bride of the international palm oil business, is now a net importer of palm oil to meet her growing domestic demand.

    Africa’s largest economy has between 450, 000 and 500, 000 tons annual palm oil supply shortage, made up of about 300, 000 tons of Technical Palm Oil (TPO) for the production of soap and about 200, 000 tons of Special Palm Oil (SPO) used in the food industry.

    The fact that much of these are  being met through imports, with the attendant humongous loss to Nigeria in foreign exchange is something Alimikhena and, indeed, other concerned stakeholders cannot comprehend hence the current wave of campaign to reverse the trend.

     

    Private operators support ban

    This time, the public sector (Senate) is in the vanguard of the renewed push to return Nigeria to its glory in palm oil production and export. However, the imperative of repositioning the sector to contribute to diversification is not lost on the private sector, which includes farmers, refinery operators and companies that utilise palm oil as raw material for production.

    To them, the proposed ban bode well with the private sector’s age-long agitation to embrace the Backward Integration Policy (BIP) to encourage local production and ultimately, create jobs and conserve foreign exchange. This was why, for instance, the Plantation Owners Forum of Nigeria (POFN) has thrown its weight behind the move.

    The Forum through its Executive Secretary, Mr. Fatai Afolabi, said the Senate’s move deserved the commendation and support of all Nigerians. According to him, the importation of palm oil and allied palm products were threats to Federal Government’s campaign on diversification of the economy through increased agricultural production and exports.

    Afolabi was particularly peeved that Nigeria, which once held sway in palm oil production and export, imported about 450,000 tons of the product valued at N116.3 billion last year. He, therefore, urged the Federal Government to halt the importation in order to boost local production.

    As far as POFN and indeed, other private sector operators are concerned, Nigeria has no reason spending scarce resources importing the product when Mother Nature has strategically positioned her to call the shot in global palm oil production and export.

    For one, Nigeria and indeed, most parts of Africa, especially West Africa, lie in the world’s oil palm belt – a region which produces the best results for oil palm plantations. Also, she was, and is still, endowed with enormous human resources and fertile arable land to support large scale cultivation of palm oil.

    According to experts, Nigeria’s all-year-round hot weather, a lot of sunshine, abundant rain, rich, deep, flat and permeable soil, among others, are some of the features that make Nigeria most suitable for cultivation of oil palm plantations.

    While hot temperatures allow the oil palm to grow many leaves and, as a result, produce more fruit, oil palms need a lot of sunshine to grow well. It also needs access to water and mineral salts deep in the soil to do well hence the need for a permeable soil like Nigeria’s.

    But, sadly, the country has evidently failed to translate these huge advantages into maintaining a strong position in palm oil production and export.

     

    Where Nigeria got it wrong

    According to experts, Nigeria put the wrong foot forward and lost its economic bearing when she turned her back on agriculture following the discovery of crude oil in commercial quantity in the 70s. Before independence, agriculture was Nigeria’s economic mainstay, with more than 70 per cent of the population engaged in the sector.

    Alimikhena observed, for instance, that apart from various food crops produced in the country, Nigeria was a major producer of palm oil/kernel, cocoa, groundnut and rubber. But following the discovery of crude oil in commercial quantity, agriculture was neglected, while attention was shifted to oil.

    While acknowledging that Nigeria is endowed with the land and manpower to boost palm oil production, the lawmaker noted that the focus should be directed towards returning to pre-independence status in palm oil production. “We have no business importing palm kernel or any oil palm product from any country,” he pointed out.

    Alimikhena said the focus should be directed towards returning Nigeria to pre-independence status in palm oil production, noting that importation was hurting the local palm industry and depleting the nation’s foreign reserve.

    He also said it was threatening the industry’s viability into which many Nigerians have sunk huge sums of money in support of government’s export promotion drive. He expressed hope that if the palm oil industry is fully developed, it will guarantee mass employment and boost the nation’s foreign exchange earnings.

    Some of his colleagues in the Senate could not agree less, with Senator Theodore Orji (Abia-PDP), saying, for instance, that there was need to establish a special fund to encourage local production of palm oil.

    Orji expressed concern that many oil production plants were moribund. While pointing out that palm oil used to be a major income ear      ner for the country, he said unfortunately many plants are dead.

    For Deputy Senate President Ike Ekweremadu, the importance of reviving the palm oil industry cannot be over-emphasised. He, therefore, said there was need to properly position the sector to play its role as one of the major income earners for the country. He added that reviving the sector will boost employment.

    However, those  critical of the fresh move to ban the importation doubt if the Federal Government has the political will to do so let alone follow up with the introduction of policies targeted at encouraging local production.

  • Cautious optimism

    Cautious optimism

    •Not yet time to celebrate the stock market surge 

    FAR from sounding the alarm bells,  managers of the Nigerian economy will no doubt do well to pay attention to the Nigerian bourse. In every respect, the signals are that the good times are finally back. On January 11, the Nigerian Stock Exchange (NSE) All-Share Index (ASI) crossed the 43,000 mark – the first time since the market hit the nadir in 2008. The same day, market capitalisation also hit a historic record high of N15.317tn – again crossing the psychological milestone of N15 trillion after nearly a decade. In what smacks of an unmistakeably bullish trajectory, the market capitalisation would close at an unprecedented N16.154 trillion on Friday.

    In all, the surge of 12 percent since the beginning of the year puts the local bourse at the top as the best performing stock market in the world.

    The developments call for celebration and caution. Celebration because, apart from signalling a general improvement in the macro-economy, the overall indications are that investor confidence is returning, albeit gradually, to the market as indeed the larger economy.

    Caution because a closer look at the factors underlying the swing in fortune merely highlights the issues at the heart of the economy’s exposure to exogenous forces and hence its continuing fragility.

    First is the Investors’ and Exporters’ foreign exchange window introduced by the Central Bank of Nigeria (CBN) last year, said to have boosted the confidence of foreign investors. Clearly, if we understood the imperative of that initiative in the context of the need to bring some stability to the forex management regime at the time, the development, coming when it did, must be seen as an admission of the immense challenges of managing a problem of forex supply. In other words, while the creation of the window may have helped significantly to assuage the fears of the investors, it comes nowhere close to being the magic bullet to address the forex crisis in any fundamental sense, or even in a demonstrably sustainable manner in an environment where even the most basic raw materials – not to talk of basic consumer goods – are imported.

    The same is no less true for the second factor touted for the performance – the rise of crude oil price at the international market. Oil and its price of course remain the proverbial elephant in the room. Its impact on the bourse is self-evident: increase in oil price means a vastly improved foreign exchange earnings and reserves– a critical determinant in the decision on whether the foreign investor plays or exits the market – whether or not he can cash out on his asset at whatever time of his choosing.

    Already, there are concerns about the high relationship between Nigerian stock market and global oil price which the managers of the economy can ignore at great risks to the country. That Bloomberg, for instance, puts the 120-day correlation between Nigerian stocks and Brent crude price as around the highest in two years should ordinarily be sobering, given the potentially devastating impact of an oil price crash.

    Moreover, if there are any lessons from the 2008/9 stock market crash when the hordes of portfolio investors hit the road at the first signs of trouble, and consequently taking down our bourse from its one-time high of N13.5 trillion in March 2008 to an unprecedented low of N4.6 trillion by the second week of January 2009, nothing in the local bourse is known to offer any real impediments to an investor who, for whatever reasons, wants to exit.

    Rather than embark on celebrations, what we expect of the economic managers is to keep working at deepening the economy. Apart from being a sure way to deepen the market itself, the in-grown capacity therefrom will undoubtedly make the economy not only more attractive to genuine investors but one less susceptible to exogenous shocks.

    It is certainly not too early for the Securities and Exchange Commission (SEC) to step up its regulatory activities to forestall the wide-ranging abuses and infractions by operators such as we saw in 2008/9.

  • Optimism over rising oil price

    Firms in the upstream and downstream sector will bounce back if the price of crude oil continues to rise, stakeholders have said.

    Former Executive Director of the National Integrated Power Projects (NIPPs) Dr Albert Okorogu and  former Country President of the Association of International Energy Economists (AIEE) Prof Adeola Akinnisiju said operators would  raise their investments if the crude price hits $56 per barrel.

    Okorogu said momentum was gradually returning to the industry, adding that the sector would witness new investments soon.

    He said the decline in prices was affecting the sector, adding that operators, such as the international oil companies (IOCs) and their local counterparts, power generation companies (GenCos), gas producers and suppliers, among others, were hard hit.

    “The recovery of oil price is a good omen for operators in the nation’s oil and gas and electricity  industry. Once oil companies return to profitability, they would increase oil and gas exploration and the better for fertiliser and power companies,’’ he said.

    Okorogu said there would be enough gas for domestic consumption when oil companies increase the commodity. He said many power firms relied on Forcados pipeline owned by Shell for gas supply, adding that many power firms were stranded when militants broke the gas pipeline.

    Also, Adeola said operators would benefit when crude price appreciates further. He said activities in the sector had gone down, following the fall in the global price of crude.

    ‘’If the price of crude oil can increase from below $20 per barrel in 2014 to$56 per barrel in 2017, it means that the global oil market can record a price of $100 per barrel in the next few years,” Adeola said.

    He said the price of crude could pick up as the Federal Government  looks for money to finance critical infrastructure in the country, adding that the government relies on revenue from petroleum to finance budgets.

    The global oil crisis began mid- 2014, a development that has resulted in price crash and forced oil operators to prune their operations and workforce.

  • Embracing our common economic future with optimism

    Embracing our common economic future with optimism

    As widely acknowledged, the ‘old normal’ of high oil prices – oil prices at $100.00 per barrel and above – has given way to a ‘new normal’ of prices well below this range. The 2016 crude oil price outlook is very gloomy. The most authoritative optimistic price outlook for the product in 2016 is by the International Monetary Fund, which forecasts $42.00 per barrel average price. Equally, the 2017 oil price outlook is also not much expansive. Quite clearly, therefore, Nigeria, like all other oil exporting-countries, are having to make fiscal and monetary adjustments in response to this reality.

    The administration of President Muhammadu Buhari recognises this immediate need for adjustment. For instance, unlike Russia which budgeted on $50.00 a barrel price for oil in 2016, the Benchmark Price for oil in the Nigerian budget proposal is $38.00. This tends to counter the argument that Nigeria’s 2016 budget is overboard on oil price optimism. But this is by the way.

    Right from inception of the administration last May, when the Brent crude was still selling at a decent price range of $55 to $60.00 a barrel, President Buhari signalled his preparedness to move forward the agenda of structural diversification of the Nigerian economy. Moving in this direction, the 2016 budget proposal seeks to stimulate investments in infrastructure, agriculture and solid minerals. The resolve to also increase tax revenues and build social safety nets are sure signals that the government, indeed, wants to decouple the economy from oil dependency.

    The implementation of this bold plan is critical in moving beyond the rhetoric of structural transformation of the economy to its actualisation. Most oil producing economies of OPEC (Organisation of Petroleum Exporting Countries) were also stuck in the rhetoric of economic diversification.

    High crude prices and the accruing huge revenue paradoxically bred complacency and lacklustre commitment to policy actions.

    Nonetheless, economic diversification requires funding. The cumulative gain from last ten years of high oil prices was the fillip we should have seized to make much more progress with this agenda. But in practice, it didn’t work out like that. Perhaps, one could say it hardly works out like that.

    What we didn’t do when petrol dollars was a deluge, we now must do with historically low oil prices and historically low oil revenue for Nigeria. The Nigerian Export – Import Bank had been talking up the imperative of non-oil sector growth during the last season of high oil prices. For us, oil sector-led growth is a jobless growth. It is also pro-cyclical; the potential to expose the country to the current brutal external shocks was always there.

     

    Making the transition

    The adjustments we need to make as a country now are pointedly two-fold. We have to curb imports by boosting domestic production. And we have to develop local capacity to produce non-oil value-added products for export. We no longer have the benefit of high oil price to delay further actions on either of these. So, here is the rub. We have to start making the adjustments and the transition now albeit in the middle of volatile global market conditions and unpleasant domestic economic situation arising from a sharp decline in government revenue.

    Some analysts believe we can make cosmetic tweaking of market policies to, in effect, keep the old order in place. In this regard, the Central Bank of Nigeria (CBN) has come under great pressure to lift the rein on importation by being more accommodative with its foreign exchange policy. While it is true that the capital controls may have inadvertently impacted some activities negatively – and happily the President and the CBN have promised to continue to fine-tune the foreign exchange regime – import substitution and diversification of export base have no viable substitutes for long-term performance of the Nigerian economy.

    Yes, this adjustment will not be easy. It would mean near drastic lifestyle changes for even people who have the naira to continue indulging in their foreign taste. For others, it would impose the need to reinvent their businesses and commercial sourcing. Yet, for everyone, immediately, it could mean a squeeze and an economic discomfort.

    The inconvenience will not last forever. But it would last in the period that we all have to make the psychological adjustment. Recent monetary and fiscal policy decisions will have to penetrate the system with the desired effects. Financial institutions would have to respond positively to the policy priority of improvement in real sector and SME funding. We also have to bring about significant expansion of non-oil exports. In spite of the current personal discomforts and market turmoil especially in the foreign exchange and equity markets, opinions are converging that, finally, we have reached a critical turning point in economic management in our country. This portends to be for good.

     

    Help on the way

    The CBN upheld its Monetary Policy Committee decisions of last November at its January meeting. The main reason would be to allow the banks to respond to the November decisions, which initiated a process of injecting additional liquidity in the banks. This was by way of reduced Cash Reserve Ratio, from 25% to 20%. This liquidity, estimated above N1 trillion, would filter into the system only through lending to real sector businesses and Small and Medium Scale Enterprises. These are the sectors that will underpin the strength of the Nigerian future economy.

    This targeted credit boost, however, requires the banks to develop additional risk management capacities and new credit products. Some of such products have started to reach the market, like the one that now wants to help SMEs improve their capital assets. Such facilities would improve operational efficiency and outputs of domestic producers and manufacturers.

     

    CBN and NEXIM Bank collaboration

    The Nigerian Export – Import Bank, which has the responsibility for promoting non-oil exports, is scaling capacity to intermediate external sector revenue generation. One of our latest activities include a collaboration with the CBN to create additional funding resources for Nigerian export manufacturers. This has led to the creation of a new N300 billion Export Stimulation Fund that will lend at 9% interest rate.

    This fund targets immediate impacts. Our quick-win strategy is to expand the businesses of companies that are already exporting. We will give them funding to produce and export more. This facility is in line with the fiscal outlook of the Federal Government, which requires helping the private sector to generate additional $2 billion in non-oil exports in 2016.

    Inadequate financing, according to the CBN, had led to the drop in government’s non-oil export revenues from $10.53 billion in 2014 to $4.39 billion in 2015.

    Nigerian export manufacturers, like other critical stakeholders in the economy, need to step forward and embrace government’s efforts. For too long, the profile of Nigeria as a predominant oil exporting-country had stuck, and with no correlating benefits. While aggregate domestic credit to the economy has been on the rise, credit to non-oil exports has been declining at an average of 0.6% of total domestic loans to the private sector in the last five years, according to data from the CBN. We are set to reverse this.

     

    Trumping pessimism

    A pessimistic view of the adjustment taking place in Nigeria now cannot be validated by our past failure with structural transformation of our economy. The truth is that such pessimism is incompatible with our instinct to survive and prosper, given that the cards we have for shared prosperity are what we are playing now. We have to defeat pessimism and embrace our common economic future with optimism in order to bring about the change that we desire.

    At NEXIM Bank, we look forward to working with Nigerian businesses that would help rebalance our economy more in favour of domestic production and non-oil exports, against dependency on oil revenue and unbridled importation of consumer goods. In the medium- to long-term, we will see a significantly transformed Nigerian economy for our benefits.

    • Orya is Managing Director and Chief Executive Officer, Nigerian Export – Import Bank. He is also the Honorary President, Global Network of Exim Banks and Development Finance Institutions (G-NEXID)
  • Embrace 2016 with optimism, faith, Osun Assembly urges Nigerians

    Embrace 2016 with optimism, faith, Osun Assembly urges Nigerians

    The Osun State House of Assembly has charged Nigerians to approach the New Year with a high sense of hope, optimism, positive attitude and unshakeable faith.

    It also called for fervent prayers for peace and spirit of sacrifice from the citizenry in view of the myriads of challenges confronting the nation, as well as mutual trust needed for nation building.

    The calls were made through a statement to mark the New Year celebration issued by the Chairman, House Committee on Information and Strategy, Olatunbosun Oyintiloye.

    Describing the year 2016 as one of great expectations, hope, possibilities and challenges, the Assembly said though the nation is presently facing serious economic challenges and not yet one of our collective dream, it potentially still remain a land of unquantifiable opportunities and great possibilities.

    Stressing that Nigeria has all ingredients to attain greatness, Oyintiloye maintained that with tenacity of purpose, the nation would regain her lost glory within a very short period.

    The Assembly further urged Nigerians of all faith to unite in the New Year by collectively summoning the courage to tackle the present challenges, with a view to making Nigeria the global giant of Africa.

    The statement read, “Nigeria has every ingredient for greatness; with our ardent posture, assertive nature, and tenacity of purpose matched with stupendous natural resources, immense success is attainable.

    “Despite the crippling weaknesses of today’s economy imposed on us by the huge corruption of past government, drop in the price of oil and all such factors that undermine genuine development, it is needful to support  a well focused leader and government led by President Muhammadu Buhari.

    “Nigerians must collectively work with the present democratic government in fighting our challenges, especially as it relates to corruption, economy and insecurity in order to guarantee social equality that will guide us to our envisioned society.”

  • Shettima: From despondency to optimism

    Shettima: From despondency to optimism

    Asked in a press interview during his third-year anniversary in office why (he) Governor Kashim Shettima is reported to have admitted that he was an unhappy governor, Shettima replied: “… How can I be happy when citizens I am under constitutional oath, and with moral and religious duty, to protect are being killed? How can I be happy when, as we speak, over 200 daughters of Borno are being held somewhere? How can I be happy when hundreds of Borno sons and daughters are six feet under the ground out of cruelty? How can I be happy when as a governor, I am forced to close down schools? How can I be happy when hundreds have lost their homes and sources of livelihood? How can I be happy when we have spent over N10 billion that should have been used for developmental needs to resist man’s inhumanity, and yet we are still spending? How can I be happy when people were forced to close their shops, avoid markets, abandon schools, and stay away from the relations?

    “How can I be happy when the economy of Borno is being grounded to a halt by our own people? I just don’t want to go on, please. Only Allah knows exactly how I feel. Not even I can explain the extent of what goes through my mind every day. There was one night, about one and half years ago, I was thinking that I should resign. I was so frustrated that the insurgents were waxing very strong. I was feeling helpless and I didn’t want Borno to collapse and surrender to insurgents under a regime that had me at the helm of affairs. But then, I thought that somebody has to be at the helm of affairs in Borno. If I am not there, someone has to be there. By the way, I asked myself, what was it that was to make me leave? Was it fear of death, fear of challenge or just trauma?

    “I am a fanatic of motivational quotes. There is one by Meg Cabot that inspires me which states that ‘courage is not the absence of fear, but rather the judgment that something is more important than fear. The brave may not live forever but the cautious do not live at all’.

    “That night, I then said to myself, wasn’t it better for a leader to die for a good cause than to abandon his own kinsmen and women to live for nothing at all and forever be remembered for abandoning his people? Since that day, I made up my mind to confront whatever challenge is before Borno State and work towards the recovery and progress of the state. I have conquered the fear of challenge, but I live with the reality of the trauma our citizens face and that gives me immense headache”.

    Added to Shettima’s melancholy or albatross was the emergent sour relations between him and his political godfather and predecessor, Senator Ali Modu Sheriff on account of irreconcilable political differences which resulted in name-calling, character assassination and ultimate conflict between supporters of the two personalities. At first, the alleged attempt by Senator Ali to prevent Governor Shettima from having a second term was successfully resisted by Shettima and his teeming supporters.

    Secondly, when Senator Ali Modu dumped the All Progressives Congress (APC) for the Peoples Democratic Party (PDP), the communication gap between the two leaders widened and became suspect. To compound the already charged situation, the supporters of Governor Shettima and Senator Ali accused one another of masterminding insurgency in the state. It got to a point where Senator Sheriff and the Borno State government accused each other of aiding and abetting insurgency in the state.

    To compound Shettima’s lament, this time, his relationship with the administration of erstwhile president, Goodluck Jonathan was not a cordial one, as it became a cat and mouse affair. The relationship between the two soured the more when Governor Shettima charged the Federal Government to be forthcoming in providing equipment and incentive to Nigerian troops for the insurgency war to be won. The central government, apart from open rebuke of Shettima, did not take kindly to this charge as soldiers were withdrawn from the Government House, Maiduguri and replaced with policemen.

    Thus, apart from the traditional socio-economic problems and blood-stained banner (insurgency) he inherited, Shettima, for most of his first tenure, trod a path fraught with huge boulders and criss-crossing ravines and deep gorges. He constantly encountered natural and artificial road block. For him, it was a mixture of joy and sadness.

    Faced with a daunting mountain of problems, the governor, a man of vision and courage, fought through the catastrophe.  As an unrepentant optimist with indomitable spirit and achiever’s disposition, he proved pessimists who thought that Borno was a failed state waiting for the funeral wrong. He has made Borno more stable, stronger and viable than he met it. He has given hope to the hopeless through massive employment and introduction of various poverty alleviation programmes where over 500, 000 youths are beneficiaries.

    Shettima has made agriculture the greatest employer of labour through diversification of its various sectors, modernisation and incentives to thousands of farmers, especially the youths. He is rebuilding broken homes through rehabilitation, reconstruction, resettlement and compensation to the victims of the insurgency. Educational institutions torched by the insurgents are being rebuilt while teachers’ and workers’ salaries are paid as and when due.

    It is heart-warming to note that in spite of the multi-dimensional problems of the state and financial implications of maintaining thousands of Internal Displaced Persons (IDPs), the Borno State Government didn’t owe workers or compromise competing interests in the name of want. Through skilful diplomacy, Shettima has been able to keep Borno afloat despite the insurgency and complexities of Borno politics.

    Today, five months into his second term tenure, Governor Shettima says: “I see the light, I see the hope and I perceive a greater Borno from grass to grace.”

    In the struggle for redemption of the state from the clutches of Boko Haram, the governor is indeed a dependable ally of federal troops halting the onslaught of insurgency in the nook and cranny of Borno and beyond.

    Shettima’s administration has demonstrated that leadership is about good and prompt response to official responsibility. From the initial despondency, Shettima’s administration has graduated to one of optimism and hope.

    According to President Muhammadu Buhari, “Governor Kashim Shettima has remained with the people of Borno State passing through all phases and doing very well in steering the affairs of the state at a challenging time. He never abandons his people for one day”.

    In the words of the Shehu of Borno, Alhaji Abubakar Umar Garbai El-Kanemi, “Borno is lucky to have the right person that perfectly fits our challenging time. We are happy to have a very good, compassionate, highly committed and selfless son like Governor Kashim Shettima at the helm of affairs. He stands by his people and supports them while at the same time transforming all sectors of Borno State …”

  • Nigerian equities soar by N905b in post-election optimism

    Nigerian equities soar by N905b in post-election optimism

    As President-elect General Muhammadu Buhari (rtd) collected the certificate authenticating his victory as Nigerian president at the March 28 poll, Nigerian equities recorded its strongest rally this year yesterday as investors continued to scramble for Nigerian equities.

    With the flood of buy orders in the market dominated by foreign investors, market capitalization of Nigerian equities gained N904.5 billion to close at N11.620 trillion as against its opening value of N10.717 trillion. The benchmark index for the stock market, the All Share Index (ASI), indicated a day-on-day gain of 8.3 per cent as it surged by three steps to close at 34,380.14 points compared with its opening index of 31,744.82 points.

    The strong momentum raised optimism on the outlook for the Nigerian equities as the average year-to-date return, which has sustained double-digit negative return all through the year, nearly turned positive yesterday. Average year-to-date return closed at -0.8 per cent.

    Investors staked more than N10.9 billion on 881.58 million shares in 4,611 deals.

    Market pundits attributed the strong bullish performance to the success of the national election, the emergence of Muhammadu Buhari as president and the statesmanship displayed by President Goodluck Jonathan in his concession.

    “The Nigerian stock market stretched its winning streak today on the heels of peaceful conduct of presidential elections. The subsequent announcement of Muhammadu Buhari as winner, with the incumbent conceding defeat also gave the market the needed strong impetus,” analysts at Sterling Capital Markets said.

    According to analysts, the current positive momentum may likely continue as market anticipates peaceful transition devoid of violence. The release of impressive score cards and dividend benefits may also act as catalyst to spur positive sentiments.

    “We expect the positive sentiment to continue as investors’ confidence returns to the market, even as the uncertainties in the polity appear doused,” Afrinvest Securities stated.

    Analysts at GTI Securities said the recently concluded presidential election has restored confidence in the Nigerian capital market as investors hurry to take position of cheap stocks.

    Analysts at Exotix, a global investment firm, are placing buy sign on Nigerian stocks, noting that the political transition has enhanced the potential of Nigerian equities among the frontier markets.

    “We have advocated for some time a shift in favour of Nigeria for frontier portfolios, arguing that the litany of concerns are in such plain view that the capacity for negative surprise is low and that these concerns are arguably largely reflected in a trailing price to book multiple towards the low end of its five-year range,” Exotix stated in a review yesterday.

    There were only three losers against 65 gainers yesterday at the Nigerian Stock Exchange. Nestle Nigeria topped the gainers’ list with a gain of N47 to close at N892 per share.