The Nation Newspaper

Tag: Private sector

  • ‘Private sector investments in sugar hit N500b’

    ‘Private sector investments in sugar hit N500b’

    •Ban on imported packaged sugar stays

    Nigeria has attracted over N500billion private sector investments in the sugar sector under the Nigeria Sugar Master Plan (NSMP), the Minister of Industry, Trade and Investment, Olusegun Aganga, has said.

    The minsiter who spoke at the 2014 Sugar Forum in Lokoja, Kogi State yesterday, said the investments cut across 11 states of the federation. He listed the states to include Oyo, Ondo, Ogun, Adamawa, Kogi, Taraba, Jigawa, Kwara, Niger, Kebbi and Sokoto.

    He said within two years of the implementation of the NSMP, sugar prices have nosedived to an all-time-low, while  sugar refining capacity utilisation has moved up from 60 per cent to 75 per cent.

    He listed the interventions in the sugar sector under President Goodluck Jonathan’s adminsitration  to include trade instruments, “which give domestic products access to the local markets; and the N2billion Agricultural and Infrastructure Support Fund set aside at the Bank of Agriculture for investors in Government’s Backward Integration Programme.”

    Aganga said the Federal Government has created a N10billion funding pool, managed by the Bank of Industry (BoI), with a N5billion matching fund by the National Sugar Development Council (NSDC), among other intervention measures.

    While reiterating the ban on imported packaged sugar, he said: “So far, significant progress has been made in the sugar sector as a result of government’s policies. We are proud of what we have achieved so far, but more excited about what we can achieve as we go ahead.

    “The momentum we have achieved in the sugar sector is irreversible. We have started a journey that is difficult to reverse.

    “The NSMP was developed as a core component of the Nigeria Industrial Revolution Plan to fundamentally transform the sugar sector to create jobs, generate wealth and enhance economic growth. We’re gradually realising the targets under the plan.

    “The case to develop the sugar sector in Nigeria is clear, and the sugar master plan is our roadmap. By implementing a full scale sugar programme, Nigeria can produce over five million metric tonnes of sugarcane, which far exceeds the current domestic production of about 1.3 million metric tonnes per year.

    “This means that not only can we produce enough sugar for consumption, we can in fact become a net exporter into the sub-region and the wider international markets.

    “Under our current programme, we are on track to producing 1.7 million tonnes by year 2020, and to exceed this afterwards This is the first president that has had the vision and courage to embark on this journey of diversification.”

    Executive Secretary, NSDC, Dr. Latif Busari, urged importers of banned packaged sugar to come and produce in Nigeria under the NSMP, noting that this would create jobs for Nigerians and grow the economy.

    He said: “The implementation of the Nigeria Sugar Master Plan has been very successful so far; we will therefore not allow anything to derail the process. Imported packaged sugar remains banned.”

    Kogi State Governor, Captain Idris Wada, said NSMP is a success story, saying the state had already provided 250,000 hectares of land for sugar production.

    He said: “Nigeria has a great potential to produse enough sugar to meet local demand and for export. The journey so far indicates that the implementation of the sugar master plan has been a success story. “My administration is ready to support any investor by facilitating the provision of land for industrialisation and sugar production.”

  • Private sector key to fixing economy, says FIIRO chief

    TO breathe life into the ailing economy, entrepreneurs must devise new strategies to discover and creatively harness the nation’s abundant endowments, experts have said.

    Director-General/Chief Executive Officer, Federal Institute of Industrial Research Oshodi (FIIRO), Dr Gloria Elemo, who spoke at the induction of new members of the Institute of Entrepreneurs in Lagos, also advised government to take up issues relating to the development of Small and Medium Scale Enterprises (SMEs) more seriously.

    Mrs Elemo, who urged the Federal Government to invest in capacity building of entrepreneurs in the country, said there was urgent the need for stakeholders to embrace knowledge-based economy.

    She said: “Considering the wonders that SMEs have performed in most Asian countries which have made them the most competitive economies in the world, serious and adequate attention must be given to SMEs’ development issues.

    “Today, we are fond of bemoaning the nation’s bad economy, but the truth is that our problem is over-abundance worsened by mental indolence. We have to be mentally alert and look inwards for solutions to our economic maladies. Our problem lies in our pitiable inability to identify opportunities around us instead of expecting solutions from foreign countries.”

    Executive Secretary, Institute of Entrepreneurs, Dr Rotimi Oladele, said SMEs are crucial to growing the national economy, urging the Federal Government to take decisive steps to encourage their survival in the country.

    He said: “The spirit of entrepreneurship in us must be discovered and empowered lest we continue in our futile search for white-collar jobs that are not there. Our government must make sincere and conscious efforts to boost entrepreneurship, while the entrepreneurs amidst us must embrace proactiveness, innovativeness, risk taking, goal getting and rely less on theories.”

    He advised the new inductees to be committed to adding values in their various endeavours to contribute their quota to efforts aimed at revamping the nation’s ailing economy.

  • ‘Weak private sector responsible for unemployment’

    ‘Weak private sector responsible for unemployment’

    The failure of successive governments to provide infrastructure   has led to a weak private sector that is unable to provide needed jobs for the youths..

    This dearth of infrastructural facilities has scared away would-be investors in the country leading to  unemployment in the country, Kwara State Governor Abdulfatah Ahmed has said.

    Ahmed threatened to nullify any employment into the state’s civil service which did not draw applicants from the pool of youths currently taking part in the state’s employment bridging project, KWABES.

    Ahmed, who made the promise during a Town Hall meeting with youths participating in the scheme, was responding to allegations by some of the participants to the effect that contrary to the promise by his government during the launch of the scheme, some fresh intake into the state’s civil service had been made ‘through the back door’.

    The governor, who acknowledged getting the report, gave the youths his personal email address to furnish him with details as he expressed disappointment that some people could be working against the vision of the project.

    “I have been getting report and you have confirmed here that the scheme I put in place has not been followed to the letter,” he told the youths assembled from across the 16 local government areas of the state.

    Said he: “I am going to say openly that if anyone is found smuggling anybody into the civil service without going through KWABES, that employment will be nullified and the person who perpetrated it will be sanctioned because we cannot create a programme and somebody will be sabotaging it.

    “I have given my instruction very clearly that the people on the bridge are the first consideration for employment anywhere they are and it will remain so.”

    He told the youths, who also pledged to support him if he would contest the 2015 election in the state, that all stakeholders must work to ensure that KWABES succeeds as the private sector in  is not yet strong enough to absorb everyone seeking employment even though the sector is supposed to be the creator of jobs.

    The governor also gave details of his administration’s struggles with dwindling monthly revenue from the Federation Account saying last year, the state only got a total of N38 billion compared with a state such as Akwa Ibom that got N460 billion over the same period of time.

    “But despite our position, we are one of the few states that have been paying salaries as wt when due, we have also not defaulted on pensions as well as the promotion of our civil servants,” the governor said.

  • NACCIMA urges Fed Govt to engage private sector in policy formulation

    NACCIMA urges Fed Govt to engage private sector in policy formulation

    The Vice President, Nigeria Association of  Chambers of Commerce Industry, Mines and Agriculture (NACCIMA), Prince Billy Gillis-Harry, has urged the government to engage the private sector in policy formulation.

    He also emphasised the place of collaboration between public and private sectors in the provision of sustainable infrastructure needed for economic growth.

    Speaking with The Nation, he said the business environment is low, adding that the policies that should kick-start the growth of the economy are not not in place.

    He said: “Our government  is the biggest spender; to guarantee consistent growth and source of employment to deplete the rate of unemployment, but the government in Nigeria is still the biggest spender. All the major projects like construction of roads, airport, repairs, are all handled by the government.

    “Banks, of course, are still very slow in supporting businesses; banks only know how to keep money and charging high transaction costs. This is discouraging because shareholders invest in business to make profit, and the profit must be proactive, protected to protect new entrants, new ideas or innovation.”

    On the Petroleum Industry Bill (PIB) gathering dust on the floor of the National Assembly, he said it is a bill aimed at tackling the excesses in the industry, adding that local content is also vital to grow indigenous capacity in the oil and gas sector.

    “Local content, as a new law, which the Federal Government has enacted, is to boost indigenous participation in the nation’s oil and gas industry. I think it is the right way to go. If Nigeria must be industrialised and must be stable, not just in the oil and gas, but in all aspects of our national economy, local content should be a focus where a greater percentage of what is the component of anything we consume here is home-grown. They should be manufactured here with the intent of raising the nation’s Gross Domestic Product (GDP).

    ‘’I think local content should be the way to go. The Nigerian Content Development and Monitoring Board (NCDMB) is doing well. I think, so far, they are doing as much as they can in the oil and gas industry, which is what the law says. However, I think they should be expanded to manufacturing and food production so that agriculture can come back as the mainstream of the economy.’’

  • Private sector and education development

    Many people grossly underestimated the level and extent of the socio-political and economic decay of the country when the ongoing political dispensation came into being in 1999. One of the worst-hit areas was the education sector which, in spite of the fact that the 1999 Constitution of the Federal Republic of Nigeria expressly gives citizens the right to education, suffered from many more years of deliberate neglect.  This state of affairs was further compounded by inadequate or outright derelict attention to policy frameworks within the sector by those who are responsible for their execution.

    A conservative estimate rates the national literacy level at below 60 percent while over 50 percent of the teaching force is either unqualified or professionally- deficient in some of the areas of learning they are detailed to teach or supervise.  The provision and installation of basic infrastructure, equipment, teaching aids etc is either inadequate or palpably non-existent at all the levels of education within the country.

    To make matters worse, access to basic education is grossly hindered by gender issues and diverse socio-cultural beliefs, mores and practices among other issues. With an educational system that places premium on theoretical knowledge at the expense of technical, vocational and entrepreneurial education, there is an urgent need for a radical review of the intent and purpose of the present system of things to make the various school curricula relevant and practice –oriented. The education sector has the responsibility for producing and supplying the manpower required to propel, pursue, attain and sustain the critical goals of employment, wealth creation, poverty reduction and value reorientation.

    Conventional wisdom indicates that government (at whatever level) cannot, adequately, shoulder all the responsibilities and foot the bills alone in the provision of the education needs of the people without the active participation of the private sector and its citizens who can afford to do so. Globally, governments have begun to withdraw from its dominant role in the economy by privatising, liberalising and deregulating certain services – the education sector inclusive. Innovative schemes like Build-Operate-Transfer (BOT), Build-Own-Operate-Transfer (BOOT), Rehabilitate-Operate-Transfer (ROT) and other platforms of private sector engagement are being encouraged in the key areas of pre-school, kindergarten, nursery, primary, secondary and even tertiary education.

    In recent years, there have been a gradual paradigm shift from the old orientation of stifling bureaucratic control and checkmating; risk avoidance; personalising of governance through suffocating tax regimes and unproductive patronage, to a new era where some of the governments are now providing the enabling environment for private sector investment in education to thrive. Now, the private sector has become a pacesetter in providing qualitative education for the youths of this country. The establishment of good quality and adequately-staffed privately-owned educational institutions at all levels, have come to fill the yawning gaps in the provision of sustainable education in Nigeria, while achieving linkages between government-owned institutions and the private sector.

    Hitherto, there was this laid-back and laissez-faire attitude to investments in the development of education in Nigeria due to many factors.  Some of the factors included prohibitive legislations and bureaucracy; restrictive and cumbersome registration requirements and the belief that there was slow pace of returns on investment in the sector, as opposed to some others which yield profits without the strains, regulations and oversight associated with the education sector.

    Quite recently, Aduvie International School, an integrated educational institution in the Federal Capital Territory organised a launching and fund raising dinner during which speaker after speaker made references to the need for the private sector to help in the development of educational facilities in the country as a way of bridging the gap between educational institutions in Nigeria and their counterparts in other parts of the world.

    One major constraint militating against quality education in the country has been the high cost of doing business in Nigeria which include policy uncertainty; inadequate basic infrastructure; poor access to and high interest rates on take-off and working capital; stifling procedures and regulations and lack of relevant information on investment opportunities in the education sector. It is in this wise that many governments have liberalised the processes of setting up private educational institutions at all levels through the provision of vital enabling environment such as waivers; tax holidays; easy acquisition of land and Certificates of Occupancy; unencumbered access to finance at affordable interest rates; critical basic infrastructure like motorable roads; constant electricity supply; potable water supply; sector-friendly legislation etc.

    Over the last decade, governments have established effective and efficient monitoring systems of both public and private education institutions to enhance and ensure strict adherence to and compliance with global best practices and standards.  In addition to this, there have been attempts at the review of curricula needs of both public and privately-funded schools at all levels of education to enhance relevance while making them competency-based in line with global challenges and the needs of the job market.

    Another major role of private sector involvement in the development of education in Nigeria is that it is principally complementary to that of the various levels of government whose engagements in other critical areas of providing succour to its citizens place a lot of pressure on available resources. The intervention of the private sector in education development of Nigeria reduces, to a manageable level, the yoke or burden placed on financial out lay of the various governments who have hitherto been solely responsible for funding education, at all levels.

    As profit-oriented concerns, many private sector-led educational institutions tend to cut corners in the provision of advertised in-house edges which they claim to have over the competition. Reacting to this despicable practice that is very rampart within the sector, Professor Steve Azaiki, Chairman, Governing Board of Aduvie International School, opined that parents and guardians should be more diligent and discerning enough to do background checks on those privately-owned schools with claims to dubious and highfalutin “excellence” that are rather mirages and not verifiable.  In his words: “It is criminal for school proprietors or administrators to make dubious claims or trumpet achievements that are far from reality”.  He added that: “The relevant government organ and other sectoral agency with oversight functions over these institutions laying claims to non-verifiable achievements and facilities should sanction them and restore sanity and honour to this sector”.

    Professor Azaiki further explained that another reason for the involvement of the private sector in education development, at any level in Nigeria, is “to deploy scarce funds to provide those basic infrastructure; learning aids, tools and equipments; qualified and well-informed cadre of teachers and instructors in the privately-owned institutions at the service of the community in the areas of functional instruction methods and purpose-driven total education of the Nigerian child”.

     

    • Umar is an Abuja based Public Affairs Analyst.
  • Chukwumerije seeks private sector support

    Chukwumerije seeks private sector support

    Beijing Olympics bronze medalist Chika Chukwumerije has called on the private sector to financially support taekwondo in discovering, engaging, encouraging and exposing upcoming athletes.

    Speaking against the backdrop of the three bronze medals won by the five-man Nigeria team at the Africa Senior Taekwondo Championships held in Tunis, Tunisia a fortnight ago, Chukwumerije lauded the support the team got from Abuja-based Zuma Energy Nigeria Limited. The company took the initiative to throw its weight behind the team to the tournament.

    The team included current All African Games gold medallists, Uche Perez Chukwumerije and Jamilu Mohammed, three-time Olympian, Chika Chukwumerije, African medallists Sunday Onofe and Joy Ekhator.

    “The trip would not have been possible without the timely support of Zuma Energy and our other sponsors who would like to remain anonymous, so, I am thankful to the Executive Chairman, Innocent Ezuma, who responded to the reach-out by my Foundation to the private sector for support.”

    Undefeated nationally for the past six years, two-time All African Games medallist, Miss Joy Ekhator, who won a bronze medal at the tournament, commended CCSF for pushing the initiative to source funds for the trip, and thanked Zuma Energy Nigeria Ltd for being one of the co-sponsors of the trip.

    “Without the efforts made, I would not have been able to come here and gain ranking points. I train very hard every day, but it is still difficult to go and compete against opponents that compete week in week out.”

    Current defending All African Games champion, Jamilu Muhammad, who crashed out in the Quarterfinals, was more direct. “No money, no medals,” he began. “I have not competed internationally since the last All African Games, even though I am constantly training, thus I was a bit match-rusty.

    The Kano-State-born taekwondo enthusiast further reflected: “I am number 46 in the world, and I sometimes wonder what my ranking would be if I could compete more. I am grateful that I competed at this event. It has enabled me see the opposition for next year’s All African Games, and I would use the experience gained to teach upcoming Taekwondo athletes when I get back to Kano.”

    Noting the good example set by the company, CCSF boss Chika Chukwumerije urged the private sector to take a cue from Zuma Energy Ltd in providing the kind of sustained support that would “give life to the real dreams of millions of Nigerian sportsmen and women across the country, especially when they have clear operational plans and genuine medal-winning possibilities in the foreseeable future.”

    He said: “Athletes are very visible and can serve, not only as a source of inspiration to our future generation, but also as a deep spring of pride for the nation. They deserve to be supported by the business community.

    “The recent performances of (Blessing) Okagbare, the victories of the Super Eagles at the last Nation’s Cup, the last U-17 World Cup winners, and the exploits of our weightlifter Usman at the last Commonwealth Games are some examples of sporting feats that provide hope to young people, and bring smiles to millions of Nigerians.”

    Chukwumerije urged the private sector to invest in communities in which they operate all over Nigeria, as “investing now would give Nigeria an edge in the Commonwealth Games this year, All African Games next year and at the RIO 2016 Olympics.”

    He continued: “Everybody loves a winner, and companies can leverage on potential Olympic Gold Medals to be won by Nigeria’s talented athletes by investing in their training and exposure now.”

  • Ogun to launch private-sector owned 10ha cassava farm

    Ogun to launch private-sector owned 10ha cassava farm

    The Governor of Ogun State, Senator Ibikunle Amosun is to launch a 10 hectare cassava pilot farm promoted by Caterina de’ Medici Africa Projects Ltd (CDMA) at Ikenne, Ikenne Local Government of the state on April 9.

    The pilot farm, which is private-sector driven, will serve as a prelude to a bigger 4,000 hectare cassava farm to be supported by Thai Farms International Ltd and other investors. It is supported by the USAID- Nigeria Expanded Trade and Transport Program (NEXTT) and several local banks.

    Foluke Michael, Principal Partner of CDMA said the project will adopt modern farming methods, conduct training for local farmers, supply the farmers with agro-chemicals to improve farm yield, and provide other extension services to all its partners.

    “The partnership with the state will also help to build public infrastructure changes in agricultural policy,” she said.

    The Ogun State government is supporting the programme with a total of 4,000 hectares of land, which it has allocated to CDMA, in the belief that the large population of smallholder farmers and entrepreneurs in the state will benefit directly from the programme.

    Senator Amosun is currently encouraging wide participation of farmers to ensure continuous engagement of youths in the host communities.

    Ms Michael said the programme, tagged “CDMA-NEXTT INITIATIVE (CNI),” will contribute to food security and poverty reduction in Nigeria. The project seeks to generate massive employment – especially of youth in the immediate community; creates wealth though investment facilitation and opportunity for export of farm produce.

    The Initiative will also support regional trade and transportation objectives, by facilitating trade flows and compliments agricultural productivity improvement efforts under the United States’ Government’s food security initiative Feed-the-Future.

    The US Initiative has three program activities, which NEXTT is implementing on behalf of the USAID. These include improvement along the Lagos – Kano -Jibiya (LAKAJI) agro-investment corridor; and reform of government policy to aid investment and trade.

    “The CNI is an example of development we would like to encourage along the Lakaji corridor,” Alf Monaghan, Chief of Party for NEXTT, said.

    CDMA was incorporated to promote Agribusiness and Investments in Nigeria by partnering with government bodies and local communities to develop agricultural productivity; helping youth to see agriculture as a profitable business; develop solid relationship with end-buyers through established markets; and sourcing funds locally and internationally to support Agriculture.

  • Private sector’s credit rises to N16.5tr

    Private sector’s credit rises to N16.5tr

    Banks’ credit to the private sector rose by 1.4 per cent to N16.5 trillion at the end of the fourth quarter of last year, the Central Bank of Nigeria (CBN) has said.

    According to the CBN Economic report for the quarter released at the weekend, the figure represents an improvement compared with the 3.7 and 2.7 per cent increase in the preceding quarter and the corresponding period of 2012.

    It said the development, relative to the preceding quarter, reflected the 0.9 per cent increase in claims on the core private sector. Also, at N8.5 trillion, banks’ foreign assets (net) of the banking system fell by 4.6 per cent, compared with the decline of 2.6 per cent at the end of the preceding quarter.

    The CBN said banks’ credit to the domestic economy rose by 8.6 per cent to N12.2 trillion, when compared with date from the preceding quarter. The development, it said, was attributed largely to the 346.9 per cent increase in claims on the Federal Government.

    However, CBN’s credit to the banks fell by 1.6 per cent to N229.8 billion, reflecting the decline in overdrafts to banks, while total specified liquid assets of the deposit money banks (DMBs) stood at N6.6 trillion, representing 39.5 per cent of their total current liabilities.

    Also, the liquidity ratio rose by 1.8 percentage points above the level in the preceding quarter, and was 9.5 percentage points above the stipulated minimum ratio of 30 per cent. The loans-to-deposit ratio stood at 36.3 per cent, and was 2.9 percentage points above the level at the end of the preceding quarter, but was 43.7 percentage points below the prescribed maximum ratio of 80 per cent.

    The quarterly report also said Gross Domestic Product (GDP) was estimated to have grown by 7.7 per cent, compared with 6.8 per cent in the preceding quarter. The development, it said, was driven largely by the growth in the non-oil sector.

    Broad money supply (M2) grew by 9.1 per cent, in contrast to the 7.9 per cent decline recorded at the end of the preceding quarter.

    The CBN said the development reflected largely, the 14.9 per cent increase in domestic credit (net) of banking. Similarly, narrow money supply (M1) rose by 11.4 per cent, in contrast to the 9.3 per cent decline at the end of the preceding quarter.

    At the end of December 2012, broad money supply (M2) grew by 1.2 per cent, owing largely to the 18.5 per cent increase in net domestic credit, which more than offset the 26.0 and 5.9 per cent decline in other assets (net) and foreign assets (net) of the banking system. Reserve money (RM) rose at the end of the fourth quarter of last year.

    Broad money supply, (M2), grew by 9.1 per cent, in contrast to the 7.9 per cent decline recorded at the end of the preceding quarter.

    The CBN said the development reflected, largely, the 14.9 per cent increase in domestic credit (net) of the banking system. Similarly, narrow money supply, (M1), rose by 11.4 per cent, in contrast to the 9.3 per cent decline at the end of the preceding quarter.

    Over the level at end-December 2012, broad money supply (M2) grew by 1.2 per cent, owing largely to the 18.5 per cent increase in net domestic credit, which more than offset the 26.0 and 5.9 per cent decline in other assets (net) and foreign assets (net) of the banking system, respectively. Reserve money (RM) rose at the end of the fourth quarter of 2013.

    Available data indicated that banks’ deposit and lending rates generally trended upward, while the weighted average inter-bank call rate fell by 3.23 percentage points to 11.02 per cent, reflecting the liquidity condition in the inter-bank funds market.

    Provisional data indicated that the value of money market assets outstanding increased by 4.1 per cent to N6.8 trillion, compared with the increase of 5.7 per cent at the end of the preceding quarter.

     

  • Govt, private sector urged to develop cooperatives

    THE government and the private sector have been urged to recognise cooperatives as relevant to socio-economic development.

    The National Coordinator, Southwest Cooperative Sector Assessment Summit/Exhibition, Mr. Ademola Akintola, spoke yesterday at the summit/exhibition organised by the Oyo State Ministry of Trade, Investment and Cooperative and the National Association of Cooperative Consultants (NACC) at the State Secretariat in Ibadan.

    Akintola said: “Cooperatives essentially empower people, create jobs, promote the standard of living and reduce poverty. There is need for the government and the private sector to stop paying lip service to this sector and fund cooperative societies, if they want to achieve sustainable economic growth.”

    He said the dormant cooperative sector was responsible for our economic problems, adding: “At critical socio-economic challenging periods, cooperatives provide a fall back and bail out.”

  • Credit to private sector drops to N15.2t on rising bond yields

    Credit to private sector drops to N15.2t on rising bond yields

    Credit to the private sector dropped by 8.1 per cent to N15.2 trillion last month, from nine per cent decline in February, the Managing Director and Chief Executive Officer, Financial Derivatives Company Limited, Bismack Rewane, has said.

    The drop has been linked to the 10.5 per cent rise in bond yields in March as against 9.42 per cent the previous month.

    Rewane, in a report by the company last week, said indicators that determine the direction of the benchmark rate, including rates cut from 12 per cent, appear positive except for the continuous weakening of the naira.

    He said the national inflation rate slowed to 8.6 per cent year-on-year in March from 9.5 per cent in February. The 0.9 per cent decline in the inflation rate makes the Consumer Price Index the lowest since April 2008 when it was 8.2 per cent.

    “Credit to the private sector growth slowed to 8.1 per cent equivalent of N15.26 trillion year-on-year in March from nine per cent year-on-year in February, due to the rise in debt yields to 10.5 per cent in March from the previous month’s 9.42 per cent,” he said.

    He argued that since the inflation is below the nine per cent benchmark, the interest rate debate will become more acrimonious and controversial, adding that it will also lead to short position taking by fixed income traders and portfolio managers until May 21, the date of the next Monetary Policy Committee (MPC) meeting.

    Rewane said the depreciating value of the naira could be linked to falling oil revenue, resulting from the state of the oil sector, where oil output is plummeting and global oil prices are falling below estimates. Nigeria’s oil production has been declining steadily due to widespread oil theft and pipeline vandalism.

    In March, Nigeria’s production declined to 1.97mbpd according to the Organisation of Petroleum Exporting Countries (OPEC). Recently, the Shell Petroleum Development Company of Nigeria (SPDC) declared a force majeure on its production of Bonny Light crude, effectively shutting down 150,000bpd worth of crude.

    He said weak global market sentiment and soft demand for oil have played a key role in the downward trajectory of oil prices, adding that the decline in oil prices and production are pointers to the risks posed to Nigeria’s revenue framework, forex inflows and external reserves. Consequenty, he said, the Federal Government might be forced to make necessary adjustments that could be fiscal, monetary and/or structural.

    He said interest rate moderation was mainly attributed to base year comparison, adding that there seems to be some fundamental downward drift in prices. He said inflation could rise in April due to the wearing off of the impact of the fuel subsidy strike on the base year.

    “Anticipated inflation is more important in determining the direction of monetary policy, especially under an ‘inflation targeting’ policy framework. However, several other factors, such as the growth rate, exchange rate, and external reserves are also considered in monetary policy decisions,” he said.

    But Razia Khan of Standard Bank Research, Africa, said the drop in inflation was due to a substantial base effect. She said the figure, which reflects in part, the stability in the forex rate seen in recent months, will lead to new calls for interest rate cut. “Should the improvement in inflation be sustained, then the risk of any easing is certainly higher. However, the recent decline in the oil price remains a key risk factor,” she said.

    For her, a second risk factor relates to the price outlook once the substantial base effect has run its course, saying the case for sustained easing may not yet be that clear-cut.

    Analysts at Renaissance Capital (RenCap), an investment and research firm, said downward adjustment of the Cash Reserve Requirement would be more effective at relaxing the interest rate, than a rate cut.

    The CBN had at its last meeting retained the interest rate at 12 per cent with a corridor of plus or minus two per cent, Standing Deposit Facility at 10 per cent and Standing Lending Facility at 14 per cent. It also maintained the Liquidity Ratio (LR) at 30 per cent and Cash Reserve Ratio (CRR) at 12 per cent.

    The firm explained that the decision means that other forms of monetary policy, such as Open Market Operations (OMO), will continue to be the preferred method for managing liquidity.