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  • God, save us from our friends

    I want to assume that all we have heard, read and seen on television about the Abuja aberration is a one-off incident that must never be allowed to happen again in our country.

    The siege on the National Assembly in the nation’s capital remains a blight on the image of the Buhari Administration and it gives room for concern as to whether or not the present central government is not gradually drifting towards authoritarianism and intolerance of opposition.

    One or two newspapers had written editorial opinions to condemn the siege and I’m almost swayed to think in the same direction.

    When it became known that the director-general of the department of state security service, Lawal Dauda ordered the sting operation, I almost had my heart in my mouth, wondering why the Buhari civilian administration would contemplate drawing the ire of the democratic world to itself at this time.

    Yes, at this time, when the main opposition People’s Democratic Party (PDP) is decidedly desperate to return to power and continue to do what it knows how to do best – please don’t ask me what that is, as if you didn’t know! It was an unwise gamble to take, to attempt to muzzle the legislature in what could be described as an attempted coup against democracy. Which was what it really was, if the Federal Government of Buhari could be pinned down to it.

    But the prompt intervention of the Vice President who is for now the acting President, Professor Yemi Osinbajo and the decisive action to call off the siege mitigated the damage done to the country’s image and our democratic credentials. The condemnation even by the ruling party, the APC, helped in a way to douse the tension created and that, with the acting president’s quick-silver thinking and action, went some way to erase the impression before it had time to form in people’s minds that Buhari, currently holidaying on the UK, knew about the siege and authorised it.

    The immediate sack of the security chief by the acting president and his ordered detention, point conclusively to the fact that some enemies within as well as collaborators’ without, were at work to make this federal government look ugly in the eyes of the enlightened world community.

    If, as it is being strongly suggested that the siege had the imprint of the Senate President because of his close ties with the DSS chief, then there can be no greater vindication of the First Lady’s rooftop alarm of a cabal within her husband’s presidency that was holding him ‘hostage’.

    Bless the Yorubas fertility of mind when they philosophise about the enemies within. “God save me from my friend, the enemy I can take care of” is another interpretation of the Yorubas saying that “ehinkule l’ota wa; inu ile laseni ngbe”.

    If the insinuation is correct, I think it is the height of betrayal for an insider and a supposed friend to betray and embarrass his principal this way. And if indeed Saraki is complicit in this, it gives him out as a deadly political operator indeed.

    Nothing short of a high-powered probe into the siege will do, to really establish the motive for this scandal of no mean dimension. It is in Buhari’s interest and integrity that the truth of this issue, be unravelled, for our democracy to survive.

  • ‘Nigeria can save $14m yearly from road-marking paints’

    ‘Nigeria can save $14m yearly from road-marking paints’

    Nigeria can save about $14 million yearly from the local production of thermoplastic road-marking paints,  Managing Director, 7T Microns Powder Limited, Mr Manny Igbenoba, has said.

    He spoke during the launch of his brand of paints in Lagos. He said the country imports about 96 containers of the product from China and India quarterly. Each costs  $15,000.

    He said with the production of the product locally, the country could save about $3.5 million quarterly, and $14 million yearly.

    He said the company conducted a research into the project of thermoplastic material with emphasis on road-marking paints in 2014 and eventually concluded same last February.

    “The first product of the thermoplastic material were produced and distributed in March 2017 and since in circulation, the products have been gaining popularity due ti its superiority over the imported ones. Statistical data confirmed that Manny Oil and Chemical Limited/7T Micron powder Limited are the first company in Nigeria /Sub-Sahara Africa to produce Thermoplastic Road Marking Paints,” he said.

    Igbenoba said Nigeria will save a lot of foreign exchange through this.

    He said the new product is very rigid on the roads due to the careful selection of its chemical ingredients which have been confirmed through the laboratory analysis at 75 per cent PCI (America Institute of RMPT). He said the result had been confirmed to be superior to other contemporary road-marking paints.

    “The products are formulated and produced with considerations to Nigeria/Africa roads condition and the temperate climate of the region.

    “These are the reasons the products are preferred  to the other products from the continents. It does not wear off easily, lasting longer than other brands in its category compared to all other imported products, “he said.

    According to him, the company investigated and confirmed that majority of the road marking paints have shorter life spans on the roads, pointing out that this can be attributed to lower rigidity of the said products and sandy conditions of the roads in Nigerian and other African countries.

    He said the products are made up of non-metallic solid materials and some chemicals viable characteristics to become plasticised liquid on heating and hardened on cooling.

    Also, the former Director-General, Manufacturers Association of Nigeria (MAN), Mr Jide Mike, urged the Federal Government to encourage local manufacturers through a more friendly policy tax rebate, and a conducive environment.

    Mike called on the Federal Government to encourage value addition to local products meant for export.

    He said such step would help our local products to access international market, address the foreign exchange deficit and by implication shore up the value of the naira.

    He urged the government to ensure that the various agencies saddled with enforcing standards lived up to their mandate so that local products could be packaged to meet international standard.

  • How to save NHIS, by HMOs

    How to save NHIS, by HMOs

    Why did the National Health Insurance Scheme (NHIS) run into troubled water?

    It is because it transformed from being a regulator to a fund manager, Health Maintainance Organisations (HMOs), under the aegis of Health and Managed Care Association of Nigeria (HMCAN), have said.

    HMCAN Chairman Dr Tunde Ladele and Publicity Secretary Lekan Ewenla spoke at a media roundtable in Lagos that the scheme’s problems had affected its performance and stalled enrolling. Ladele said: “The  mismanagement started when NHIS was told to warehouse the health insurance fund. Since then, NHIS’ objective has changed from regulating the scheme to marketing and managing the fund. But this is not right according to the role of NHIS as stipulated by NHIS Act 35 of 1999.

    ‘’The Act says HMOs are drivers of the scheme. They are the risk bearers while the NHIS is the regulator. It is because of this that the NHIS has lost its focus and a lot of things went wrong. No regulator should market what it is meant to control.

    “According to the rules, the capitation fee is meant to be prepaid, but now it is postpaid. This is another distortion. Money meant to be paid at the beginning of the month now comes as a postpayment which is why the quality of care given to enrollees is affected.

    “We are suggesting that all premiums paid by enrollees should be warehoused with a National Health Fund possibly with the Central Bank to avoid undue interference and abuse by insurance administrators,” he said.

    Another hole picked by Ladele in the scheme is the lack of equity in the distribution of enrollees from secondary and tertiary health care to the primary health care. ‘’The scheme as a social health scheme can only work if the volume of enrollees is much and it is the role of the NHIS to ensure that this is achieved,” he said.

    He said the appointment of executive secretary of NHIS should not be  political because it needs a technocrat to head same, “for the success of the scheme for all stakeholders. This is because health insurance requires a professional. Somebody who understands the nitty-gritty of healthcare delivery. A person that knows his onions when it comes to health financing.”

    Another problem Ladele identified is the non-existence of a Governing Council, which made it easy for anyone occupying of the position of Executive Secretary (ES) to be a boss not answerable to anyone.

    “We are faced with a situation that was not created by law in which an ES has becomes the sole authority to determine who is an HMO or care provider and even disburses more than what the law stipulates.

    “The situation has become an aberration in which even the excesses of some HMOs could not be punished because there is no collaboration between the regulator and the HMO managers. We call on the public to  forward to us  any HMO that defaults and we will ensure discipline is enforced and the affected get redress. We recommend that the Federal Ministry of Health should constitute a Council for the NHIS to restore the confidence of enrollees in the beleaguered scheme.

    HMCAN also supported the suspension of the ES and probe of the NHIS. ‘’It is time Nigerians knew how well their funds are managed by the regulators. Nigerians should not to lose hope in the scheme. It is the only means to get universal health coverage to every citizen. It is barbaric and archaic for the country to regress into the former situation where Nigerians were paying hospital providers mostly for services not rendered under the health retainership method,” it said.

    It suggested a six-point agenda that could pull the scheme back on track, Ewenla said: “These proposals have been in the burner since 2005. It includes a short, medium and long term. It is long overdue that the National Assembly should consider upgrading the scheme to a full-fledged National Health Insurance Commission that will give room for better regulations, as well as make the scheme mandatory for all Nigerians to buy into and operate, rather than the voluntary exercise. It is only when every Nigerian regardless of status, creed or zone can be covered in the Universal Health Insurance that its maximum benefits can be felt by the large population of the country.

    “If the law makes it compulsory for every employer whether in public or private to enrol their employees, and government also obeys the National Health Act of contributing the one per cent consolidated fund for those who are not covered by the formal or informal sectors, health insurance coverage would have gone a long way to reach several millions of Nigerians.

    “There is need for retirees to benefit from the scheme, as well as more coverage of diseases, especially the non-communicable, which is increasing daily.

    ‘’The long-abandoned ICT platform should be activated. It will ensure proper documentation and enable the NHIS, as well as the HMOs, follow and monitor the fund activities by the HMO. It will guarantee transparency. All the running around for paper works and the feeling of embezzling will be taken care of. This is because all stakeholders and interested parties will be able to monitor via the internet how money is being pooled, disbursed and returned.”

    “Technology has made it simple to regulate a system and monitor same by removing encumbrances, hence, it is only ideal to embrace online administration of the nation’s health insurance scheme as soon as possible,” Ewenla added.

  • Save the kids

    Save the kids

    •Nigeria must act to prevent 500,000 young deaths annually

    For a nation that likes to call itself the Giant of Africa, Nigeria tragically appears to have forgotten that true greatness lies in its capacity to bring succour to the most vulnerable of its citizens. This is why the alarm raised by the United Nations Children’s Fund (UNICEF) that 500,000 children aged five years and below could die from severe acute malnutrition (SAM) by the end of 2017 needs to be given the fullest attention that it deserves.

    UNICEF’s statistics on the issue are tragic in their enormity. About 2.5 million children currently suffer from SAM in Nigeria. In 2016, the country’s north-west region had 1,594,462 cases, out of which there were 308,000 deaths. The north-east region had 695,998 cases and 134,000 fatalities. In the north-central region, there were 43,635 cases and 8,400 deaths. The figures for southern Nigeria include the south-south (86,304 cases and 16,700 deaths), south-east (34,889 cases, 6,700 deaths) and south west (84,417 cases, 16,300 deaths).

    Malnutrition is not exclusively confined to poor citizens; 18 per cent of malnourished children are from relatively wealthy homes. Thirty-seven per cent or six million of the country’s children are stunted, of which half are severely stunted. Twenty-nine per cent are underweight, and 18 per cent are wasting.

    This is not the first time the fund has issued such dire warnings. In 2016, it warned Nigeria that 300,000 children could die of acute malnutrition before the end of that year. Nor is UNICEF the only organisation to raise the alarm: in November 2016, the medical charity, Medicines Sans Frontieres (MSF), claimed that thousands of children were dying of hunger in the north-east on a daily basis, and declared it a “large-scale humanitarian disaster.”

    It is clear that Nigeria is confronting what is perhaps its worst humanitarian crisis since the end of the civil war in 1970. The response of successive governments at the federal, state and local government levels has been shamefully inadequate, especially given the financial resources at their disposal over time. Rather than tackle the scourge of child malnutrition at its roots, the country has either ignored the problem or dissipated energy in needless quarrels with humanitarian agencies and charities whose only crime has been to voice their concerns about what they have seen.

    UNICEF’s solution to the country’s malnutrition crisis involves pumping extra money into relevant areas in the immediate short-term: U.S. $144 million for the treatment of at least two million underfed children; bridging the shortfall of $85 million aimed at treating malnourished children; ensuring that all states make financial contributions to major anti-malnutrition initiatives like the Community-based Management of Acute Malnutrition (CMAM) and the purchase of Ready-To-Use Therapeutic Food (RUTF).

    Focused financial intervention, apart from saving thousands of young lives, will also result in substantial savings on future medical treatment. UNICEF estimates that $5 is required to prevent malnutrition in one child, whereas $71 is needed to treat it; so, every $1 spent to prevent malnutrition now would save about $16 spent on malnutrition-related diseases in future.

    Child malnutrition must be treated like the existential crisis that it is. Nigeria must reach into the substantial stores of courage, initiative and self-sacrifice that it displayed during the Ebola emergency in 2014. Information and awareness campaigns must be ramped up to enable all citizens understand the nature of the threat confronting the country and to reassert the crucial importance of exclusive breastfeeding in the first six months of a child’s life. Increased attention should be paid to the Internally-Displaced Persons (IDPs) camps which are at the front-line of the battle against SAM with the main aim of ensuring that food and medicines are supplied to them in adequate quantities.

    No nation can lose half a million children on an annual basis and still deem itself worthy of its own sovereignty.

  • Defeating Boko Haram: We must act now to save lives and build peace

    We are delighted to be visiting Nigeria this week, especially during the UK’s Presidency of the United Nations Security Council (UNSC).

    We agree with new UN Secretary General Antonio Guterres that the UNSC must prioritise preventing conflict and sustaining peace. That is why we are focusing our Presidency on conflict prevention in Africa, starting with a UNSC visit to the Lake Chad Basin. Nigeria itself has long played a major role in international efforts to tackle conflict and build peace. Many Nigerians will be familiar with images of the famous blue helmets and berets worn by UN peacekeepers. But they may not know that more than 2,100 Nigeria military and civilian personnel are currently deployed on UN peacekeeping missions in countries including Liberia, Cote d’Ivoire, Sudan, South Sudan, Mali and the Democratic Republic of the Congo.

    We applaud Nigeria’s contributions to UN, ECOWAS and AU efforts in support of peace. The world saw the value of Nigerian leadership in this respect again in January, when President Buhari played a leading role in brokering a peaceful resolution to the political crisis in The Gambia.

    Of course, Nigeria also faces its own threats to national and regional peace and stability. The UK strongly supports Nigeria’s campaign to tackle the scourge of Boko Haram’s violent extremism and terrorism, and its cooperation in this fight with neighbouring Lake Chad Basin countries.  We are very proud that the UK is training Nigerian troops fighting Boko Haram. The UK is also providing life-saving assistance for those affected by the conflict. In 2016, £70 million in UK aid for North-East Nigeria provided food to more than 1 million people, treatment for 34,000 children at risk of dying from malnutrition, and access to clean water and sanitation for more than 135,000 people.

    Nigeria and its neighbours must maintain their military efforts to defeat Boko Haram, and do all they can to ensure that aid reaches those in need. But lasting security and stability will require a broader approach. As the UN Secretary General said in his first address to the UNSC this year, we cannot take peace for granted – it requires difficult decisions, hard work and compromise.

    Communities and governments will need to find ways of working better together to address a range of underlying causes of conflict: countering extremism; addressing the effects of climate change; protecting and promoting human rights; tackling corruption, and creating economic and educational opportunities. Nigeria’s recent pledge at the Nigeria and Lake Chad region conference in Oslo to spend US$1 billion dollars supporting Internally Displaced Persons (IDPs) and reconstruction in the Northeast of Nigeria is welcome. Such leadership is required from Nigeria to help address the urgent and longer term needs the North-East faces.

    Building peace also requires wide participation, starting at the grassroots and engaging civil society, faith leaders, youth and minorities. The involvement and empowerment of woman and girls at every level will be indispensable.

    All too often, women and girls suffer most in conflict, and are not represented in the pursuit of peace. But we know that when they are involved in negotiations, the chances of peace increase by 20% to 35%.

    The UK will continue supporting Nigerian-led efforts to counter violent extremism and terrorism and build peace, just as we support Nigerian initiatives to tackle corruption and achieve sustainable and inclusive economic growth.  The UK is committed to standing by Nigeria’s side as a friend and partner in difficult times, because a more secure, stable and prosperous Nigeria is good for Nigeria’s citizens, good for the UK and good for the world.

  • Fresh battle to save Naira begins

    Fresh battle to save Naira begins

    Despite the various steps taken by the Central Bank of Nigeria and licensed Bureaux  De Change (BDCs) to restore the naira’s glory, the local currency has been on the ropes for nearly two years. Last week, the Association of Bureaux De Change Operators of Nigeria (ABCON) inaugurated the Uniform Weekly Exchange Rate for Licensed Bureaux De Change Portal to implement and monitor unified rate across board. The ABCON portal, which comes  alive today, is expected to ensure fair pricing and stability for  the naira, herald exchange rate convergence and diminish the influence of currency speculators hurting the economy, reports COLLINS NWEZE.

    •BDC operators eradicate multiple exchange rates

    BUREAU de Change (BDC) operators have been looking up to this week with high hopes.  They will be receiving the first batch of dollar sales for the year from the Central Bank of Nigeria (CBN), with the cash expected to boost dollar liquidity and strengthen the naira against the greenback.

    Besides, the BDC operators, under the aegis of Association of Bureaux De Change Operators of Nigeria (ABCON), will today begin the implementation of the newly launched Uniform Weekly Exchange Rate for Licensed Bureaux De Change Portal.

    The portal is being launched to promote exchange rate convergence and achieve uniform exchange rate for the naira against the greenback across all licensed BDCs. It was created with the understanding that the Foreign Exchange (forex) market is driven by information flow. The positive information flow, it is believed, will translate to better pricing for the naira and improved investment sentiments among others.

    Having recognised these facts, the ABCON, the umbrella body for all CBN-licensed BDCs, last Tuesday, lunched the Uniform Weekly Exchange Rate for Licensed Bureaux De Change Portal.

    ABCON President Aminu Gwadabe, who launched the portal at a media forum in Lagos, said the technology will bring exchange rate convergence, eradicate currency speculation and ensure the naira’s speedy recovery against the dollar.

    According to him, such feats are in line with CBN Governor Godwin Emefiele’s plan to stabilise the naira and boost investors’ confidence in the local economy. The CBN chief told BDCs at a meeting that he was looking at ways to boost dollar liquidity and eliminate the spread at the parallel market.

    The apex bank’s chief also promised not to devalue the naira again.

    The decline in the prices of oil since mid-2014, cut government revenue and triggered currency controls that crippled industries and contributed to contraction of the nation’s economy.

    Last June, the authorities removed a 15-month currency peg to attract inflow. Although the naira has plummeted almost 40 per cent since the unit was floated, traders said it is still being managed by the government. The rebound in oil prices has helped the country in boosting its forex reserves to $26.7 billion as of January 10.

    According to Gwadabe, the BDCs Weekly Rate was launched to make it a reference point for realistic rates in the market that will boost foreign investment inflows, displacing the damaging effect of foreign media platform like Abokifx.com to the economy.

    Gwadabe was confident that with the gradual recovery in crude oil prices, enhanced commitment of the CBN to economy diversification which has led to rising production of local rice and drop in import bills, as well as President Muhammadu Buhari’s political will to implement key economic reforms, the task of achieving a single determined exchange rate will be achieved.

    He urged the media and general public to adopt a single rate in their reporting and forex dealings, and also always quote rate on the ABCON website- www.abcong.ng for consistency and uniformity of reporting.

    The ABCON chief reiterated the need for the public to deal with CBN-licensed BDCs only and urged the public to report errant operators for necessary sanction.

    “ABCON wishes to reiterate its willingness to embark on a comprehensive media campaign on the roles, activities and location of members nation-wide so as to provide a guide to the public in dealing with only CBN-licensed BDCs and for the public to report any errant operator for necessary sanction”, he said.

    Gwadabe informed that the CBN will impose between N500, 000 to N2 million fines on any BDC operator that violate regulatory policies and while such operators may also face license suspension.

    He called for public support for ABCON’s determination to highlight positive rates development in the market through the BDCs Weekly Rate for media coverage which was launched at the event.

    “We also seek your support and partnership to assist the CBN and government to eliminate or reduce to the barest minimum, activities of parallel market operators. We also want to, through our partnership with you, give visibility to registered BDCs in the market and create more awareness on the role of operators in selling forex to the retail end of the market,” he stated.

    The ABCON chief spoke of the need for the CBN and Federal Government to harmonise the multiple official exchange rates in the country and adopt a unified rate for transactions.

    Calling for the adoption of a single forex market rate system, Gwadabe said that licensed BDCs will post an exchange rate every Monday on its website from January 16 to “highlight positive rate development in the market” and counter domains such as Abokifx.com, which publishes ‘high’ unofficial prices daily.

    Trading in the parallel market became more regular since 2014 after the CBN strengthened capital controls as crude oil prices tumbled at the global market. Dollar trades for about N490, compared with the official rate of about N315.

    Gwadabe, who said that the BDCs will initially quote a rate of N399/$, added that the parallel market rates will be disregarded as they were not recognised by law, raising the hope that exchange rate will continue to improve in the course of the year, despite the challenges being faced in the forex market.

    Stakeholders seek transparent price discovery

    Associate Research, Eczellon Capital Limited, Mustapha Suberu, said there was need to allow a transparent price discovery in the market, which he believed would stimulate dollar inflows into the economy and subsequently, lead to local currency stability.

    He called for more transparent forex market that would allow foreign investors to invest in the economy and bring about positive market-determined rate.

    Managing Director, Afrinvest West Africa, Ike Chioke, said the incorporation of a long-term diversified strategy in fiscal policy is required to cushion shocks in various segments of the economy and revive the naira.

    To him, the persistent pressure on the naira could have been minimised if a counter fiscal policy had been developed, as the CBN cannot continue to defend the naira with foreign reserves.

    Chioke said: “To reduce this pressure, an inward looking policy (tax incentives, infrastructure development and production subsidy) should be emphasised to reduce the dependence on imported goods.”

    Apart from oil receipts, the development of the agricultural sector will in the short-term reduce the forex burden of food imports and on the long run, enhance foreign receipts if its comparative advantage in the sector is efficiently deployed.

    A BDC Operator and Managing Director, E.M Consolidated Investment Limited, Emeka Moses, said the BDCs always make returns to the CBN which monitors and sanctions defaulters.

    He said the introduction of Bank Verification Number (BVN) has made it easier for the CBN to detect and monitor BDCs for compliance.  “I want the CBN to continue to carry out spot checks on BDCs and ensure that those that violate regulatory guidelines are sanctioned”, he said.

    Moses said the portal will enables the public to know the prevailing rate at each day and demand adherence to such rate during transactions.

    “If the public knows the rate, it will be easier to detect and spot BDCs that sell above such rate, and get them reported to regulators,” he said.

    A former Executive Director with Keystone Bank, Richard Obire, said that the implementation unified rate across all CBN- registered BDCs by ABCON will bring sanity to the forex market. Obire said: “I do not know how the group wants to achieve this but if well implemented, it will bring orderliness to the market. It is easier to achieve such feats Personal Travel Allowance and Business Travel Allowance transactions.  It is really a good initiative that will reduce the level of uncertainty in the market.”

    Revenue leakages on Diaspora funds lingers

    The Federal Government has been losing billions of dollars as Nigerians in Diaspora avoid official transactions when remitting dollars home.

    Going by the figures released by Senior Special Assistant to the President on Foreign Affairs and Diaspora Matters, Mrs. Abike Dabiri-Erewa, Nigerians in the Diaspora sent home $21 billion in 2015, which boosted the local forex market last year.

    Mrs. Dabiri-Erewa said: “In 2016, they remitted $35 billion which is higher than what was remitted in 2015. This remittance by Nigerians living abroad is the highest in Africa and the third largest in the world.”

    But Gwadabe disclosed that less than five per cent of the $35 billion remitted in 2016 was officially captured by the CBN because of exchange rate divergence, which discourage Nigerians in Diaspora from sending their funds home through official channels.

    He said that harmonisation of the multiple exchange rates in the country, will make the rate for Diaspora remittances more attractive to Nigerians in Diaspora.

    His words:  “The single forex rate has succeeded in Egypt. Nigeria should block all forex leakages to make it work in the country. Forex market is an information-driven market. The type of information you release helps to swing rates and would also help the CBN’s plan to achieve single exchange rate,” he said.

    Gwadabe said the ABCON has been working very hard to build public confidence in registered BDCs because the forex market is driven by perception adding that the ideal rate for the naira is N400/$ even as speculation is hurting the local currency.

    He urged the CBN to stop banks from selling Personal Travel Allowances (PTAs) and Business Travel Allowances (BTAs) to travellers and assign the role to BDCs.

    Will economic buffers save the naira?

    Gwadabe urged the Federal Government to build strong buffers for the naira to withstand headwinds that come during economic crisis like in other climes.

    The United Arab Emirates (UAE) for instance, has more than $400 billion in their reserves. The buffer is big enough for UAE to protect its local currency at any given time.

    “But the Federal Government and the CBN have stood their ground for a very long time by not allowing naira to float freely. The advantage of the flexible forex regime is that the volatility you see, whereby naira everyday is getting weaker, once it goes up, another thing will bring it down,” he said.

    Continuing, he said: “The fact is that when you talk of BDCs, there are parallel market operators and black market operators. The parallel market is the opposite of official market.

    “So, the BDCs are not parallel market operators. There are over one million parallel market operators in this country and they have been here even before the coming of the CBN. They have been here even before the CBN licensing the BDCs in Nigeria”.

    Noting the big difference between a parallel market operator and his BDCs counterpart, he said:  “And if you look at it, last year, we were branded the black sheep in the industry. In India, the BDCs generate over $30 billion from the Diaspora remittances.

    “In United Arab Emirates, the entire banking needs of banks are met by the BDCs. The working of the Lebanon economy is highly dependent on the activities of BDCs in that country. I want stakeholders to support Nigeria BDCs in building the economy.”

    BDCs embrace automation of processes

    On the ongoing automation of BDCs’ operations that will help online real-time operations and enhancement of compliance among operators, Gwadabe said the facility would boost operational transparency, ease of public accessibility of BDCs’ procedures, returns rendition and regulatory supervision.

    Gwadabe said: “We want to introduce certification for registered BDCs. The ABCON is also coming up with schools that will train and retrain members and encourage record keeping. We believe that once we are able to introduce measures that make the operations of parallel market irrelevant, they will be eradicated.”

    He said that ABCON members have been pushing to become sole handlers of PTA and BTA and also raising their operational modalities to ensure they become agents of International Money Transfer Operators (IMTOs).

    Gwadabe said that despite the challenges facing the economy, the CBN and BDCs will continue to work together and find sustainable solutions that can help the country wriggle out of the ongoing forex crisis and achieve full economic recovery.

    He said: “We have continuously assured the CBN and taken appropriate measures to ensure that purchased funds are disbursed to end users and for eligible transactions only. We also render weekly returns on purchases from the banks to Trade and Exchange Department of the apex bank. We also ensure strict compliance to the provisions of the anti-money laundering laws observance of appropriate Know-Your-Customer principles in the handling of forex transactions.”

    The CBN, last week, confirmed the operating licenses of 3,147 BDCs that met its N35 million mandatory capital base. The reviewed list was the first since May 29, last year, when the apex bank approved 2,998 operators to meet customers’ forex needs at the retail-end of the market.

    The CBN said the new approvals in BDCs were in line with its plan to deepen the forex market by getting more operators involved in the retail-end of the market.

    Gwadabe said that the licensing of new BDCs was a positive development that is expected to deepen dollar liquidity in the system.

    Disclosing that the apex bank has a mandate to review the list of operators on quarterly basis, Gwadabe added that the list grew to 2,998 from 1,400.

    “There are more approvals expected. It is a welcome development,” he said.

  • ‘Save us from land grabber’

    Residents of Kajola in Owode-Egba, Ogun State, have appealed to Governor Ibikunle Amosun to rescue them from a land grabber.

    The people, who spoke to The Nation at the weekend, alleged that the land grabber, a man (name withheld), came to their community with armed hoodlums and disrupted construction.

    They alleged that the land grabber and his gang also dispossessed them of their buildings, adding that the man acted under the directive of a woman (name withheld).

    The residents sent an SOS to Police Commissioner Ahmed Illiyasu to to protect their lives and property.

    “We appeal to Governor Amosun and the police to protect us.

    “We have our land documents and see no reason why this land grabber and his boys should torment and oppress us.

    “Enough of this ill treatment. The government should take urgent step to maintain law and order and prevent bloodshed,” they said.

  • APC chief urges Buhari to save party now

    APC chief urges Buhari to save party now

    A former Chairman of the All Progressives Congress (APC) in Kaduna State, Dr Hakeem Baba-Ahmed, said President Muhammadu Buhari must intervene to fix the crisis in the party and save it from disintegration.

    Baba-Ahmed made the appeal in an interview with the News Agency of Nigeria (NAN) in Kaduna on Sunday.

    According to him, the problems affecting the party have been left to linger for too long and must be settled in the next few months, if the party hopes to retain power in 2019.

    “Even if you can forgive some of the crisis and blame it on in experience, you cannot forgive the fact that we have tolerated this crisis for too long.

    “They have persisted, and that is not something we should excuse, we should not also excuse the existence of massive problems in states and at the national level.

    “Those who have the responsibility of fixing the APC as a political platform are not fixing it.

    “It is what we are seeing now; a large number of powerful people within APC are walking away from it, thinking that it is beyond redemption.

    “That is unfortunate and I think it is a major setback for the party.

    “The APC must reinvent itself and rediscover its mission to lead this country, not through a one term presidency or governance, but to actually build a different Nigeria that will meet the yearnings of our children and beyond.”

    Baba-Ahmed stressed that the internal crisis had also affected governance, thereby, making it imperative for the President to quickly intervene and resolve all contending issues within the party.

    “Of course when a party is in a problem like this, a number of things happen; governance suffers because you are constantly having your attention diverted by the party’s problems.

    “Secondly, in political terms, four years of an administration is only like two years or two and half years.

    “In a year’s time, we will not be talking about governing this country, we will be talking about campaign for 2019.

    “And if this party doesn’t fix itself at the national level, doesn’t fix all the problems it has in the states, it is unlikely to come back to Nigerians with the confidence it came to us in 2014 /2015, to say give us another mandate.

    “If we are not careful the only thing of value and credibility that we can say to Nigerians that is still relatively intact in the APC will be President Buhari.

    “And President Buhari more than anybody else, knows that his personality and character alone cannot win him an election.

    “He needs a political platform that can mobilize people to support him, and right now, that political platform is disintegrating.

    “He needs to do something about it, he needs to allow the party to work together, he needs to ask a lot of people to fix the problems of the party.”

    Baba-Ahmed expressed the belief that the problems of the APC were surmountable if the leadership work hard to fix all the underlying issues.

    “I am not one of the people who thinks the future is outside APC, I believe that APC can be salvaged.

    “We will need to apologise to people for mistakes made and reassure them that the first four years of the Buhari administration may not have met all the expectations of the people, but if they give our party another chance for the next four years, we will be able to fix this country.”

  • We can save Nigeria

    Nigeria’s prospects look bleak today. The economy is in serious trouble.  The federal revenue has fallen by as much as 60% in the past year. Oil sales, the pillar of the Nigerian economy, have declined from about two million barrels per day to about 1.2 million barrels. The Niger Delta Avengers, currently the most powerful militant group in the revolt against the Nigerian Federal Government in the Delta, are pushing the most extreme claims – namely, a separate Delta country – as they continue to blow up the oil platforms and pipes upon which the Nigerian oil exports depend, thereby forcing the oil exports to decline further and further. Meanwhile, world oil prices continue to fall, and even Saudi Arabia has had to cut the price of its oil. Oil’s long-term prospect does not look promising, as worldwide investments in non-oil energy sources are rising.

    The Federal Government has been forced to announce that some high priority projects in the 2016 Budget are now impossible to implement. Even federal Ministries, Departments and Agencies are experiencing underfunding, and federal investment in the economy is not happening as it should. Monthly allocations to the states have dwindled drastically. One state governor is reported as saying that he needs now to combine three months of his state’s allocations to be able to pay his state’s workers’ salaries for one month. In spite of emergency bail-outs by the Federal Government, most states cannot pay workers’ salaries. The Governor of the Central Bank was once reported as saying that if the situation continues as of now, even the Federal Government may not be able to pay federal workers’ salaries by October.

    The naira continues to fall in value vis-a-vis main foreign currencies, causing serious declines in imports. Declines in the importation of industrial raw materials are reducing industrial production. Unemployment, already disastrously high, is escalating. Inflation has surged to about 19%. Food prices are rising drastically in the market, putting more hardship on most Nigerians.

    In spite of this frightening down-turn, the Nigerian Federal Government is still having to increase expenditure on the military, in order to respond to various areas of terrorism, revolt, and troubling crime in parts of the country. The military are still fighting Boko Haram in the North-east. They are also standing ready for war in the Delta – in case, according to the high command, the Delta militants continue to frustrate the president’s attempts to resolve the Delta revolt peacefully. In the Delta also, where the president had earlier announced an end to the amnesty payments to the militants, he now appears under pressure to offer a resumption of the amnesty payments – in an effort to buy peace. Radical pro-Biafra activities have made some military build-up necessary in the Igbo South-east, while serious crime imported from the Delta to the traditionally peaceful Yoruba South-west has made some military build-up necessary in the Yoruba South-west.  If actual war should ensue in some of these places, in addition to the old war against Boko Haram in the North-east, it remains to be seen how the Federal Government will be able to find the funds to fight such wars.

    In such a dire situation as this, a widely popular government might still be able to inspire some hope and confidence among its countrymen. Unfortunately, President Buhari, who started his presidency in considerable popularity just over a year ago because of his promise of change and his immediate start of an anti-corruption war, has lost much of that popularity. Citizens in most parts of the country criticize him today for appearing to be engaged in a bid to revive the futile and disruptive attempts by his Arewa North to dominate Nigeria, and for outright nepotism in his appointments of officials into the Federal Government. He has also caused much outrage by not speaking up openly to the country about his kinsmen, the Fulani herdsmen, who have been killing farmers and destroying farms and villages in rural areas in most parts of the country. Above all, he is attracting much unpopularity for seeming incompetence in the management of the economy.

    In these circumstances then, Nigeria, whose stability has always been shaky since its independence in 1960, appears now to be headed into probably a terminal crash. Most of the country’s instability springs from its terrible inability to manage its ethnic and religious diversity appropriately. Those who have ruled Nigeria since independence have been strangely incapable to recognize that Nigeria is a country of many different nationalities, each of which lives in its on ancestral homeland, cherishes its own cultural heritage and its own pride, and desires to be reasonably free to manage its own unique concerns in the context of Nigeria.

    One of the nationalities, installed by the British colonialists in control of federal power at independence, aggressively strives to hold federal power indefinitely, to subdue the other nationalities to federal control, and to use federal power to impose its own kind of Islamic religion on all others. The end result of their striving is now a constitution which concentrates all power and resource control in a so-called federal government that is really a unitary government. In the process, Nigeria has experienced inter-ethnic and religious conflicts, rigged elections and violent protests, a major civil war and smaller civil wars, mind-boggling public corruption, steady escalation of poverty and steady decline in Nigerians’ quality of life, terrorism, pogroms and acts of genocide. For over a decade now, informed observers in many parts of the world have increasingly predicted that Nigeria could soon break up. Today, those predictions seem near fulfilment.

    But even in this gloom, we Nigerians can still find ways to hold our country together, and to make it progressive and prosperous. One sure way is to establish a proper federation for our country. Most Nigerians who want their country saved are increasingly demanding this – and they call it ‘restructuring’. The basic fundamental principle behind restructuring and a rational federation is that we Nigerians must respect our indigenous nations and their cultures and their self-pride, and build upon that, in our country’s constitution, the pattern of interrelationships among our nationalities in our one country.

    Restructuring consists of two basic steps. The first is to create states based on respect for our nationalities. We have about 300 nationalities, and we cannot have that many states. So we need to let some large nationalities (like the Yoruba, Igbo, Hausa-Fulani) be states, and help groups of the smaller nationalities to join to form states. We must not let any nationality be split between states. In this whole way, India, with about 2000 nationalities and a total population of over one billion gave itself 28 states. We might end with about 20 states; if we choose to have fewer states, we could have a Yoruba state, an Igbo state, and a Hausa-Fulani state, and three other states each combining contiguous small nationalities – a total of six states (that is, our six zones become states). Each state organizes itself in its own way and writes its own constitution accordingly.

    The second step is to give each state much power to manage its economic life, promote its own development, maintain its own security, and make its own kind of contribution to our country’s progress. This means that many of the things now done by the Federal Government shall be done by the states. It also means that the states will control the development of their God-given resources as part of their economic development. The Federal Government shall still control the high points of our country’s economy (currency, foreign exchange, central bank, inter-state economic regulations, taxation over all resources, etc.), as well as our country’s foreign relations, military service, etc. On the whole, the Federal Government shall be much smaller than at present and our politicians will no longer fight to death to control the Federal Government.

    That is it. India had our present trouble of instability and near collapse before, and they overcame it by the kind of restructuring described here. We too can do it and save our country.

  • How to save the naira

    How to save the naira

    The naira has lost 30 per cent of its value against the dollar this year despite the adoption of the flexible forex policy by the Central Bank of Nigeria (CBN). The  woes are coming from dollar-demand pressure from home and abroad at a time dollar-export earnings are on the decline due to oil price free fall. But the CBN is making efforts to rescue the troubled currency. The kick-off of the naira-settled Over-the-Counter (OTC) Forex Futures Market and moves to resume dollar sales to Bureaux de Change operators are some of the apex bank’s intervention, writes COLLINS NWEZE.

    hat the naira is troubled is no longer news. What continues to resonate is the impact of the local currency on the lives and businesses of the citizenry.

    Henry Ekwueme, an employee of a multinational oil company, had a bite of the exchange rate crisis while holidaying in the United States (U.S.). It all started mid last month when he wanted to check into a hotel in Vegas, Nevada, by paying a $1,600 bill with his debit card. The transaction was declined.

    He quickly called his bank in Nigeria to enquire what had gone wrong, since the account was well funded.

    “You can only access $300 daily limit because of the ongoing foreign exchange crisis in Nigeria. It is better you pay with cash or use multiple cards to cover the bill,” Ada-Obi Michael, his account officer, advised him.

    Ekwueme quickly opened his wallet and brought out five more Automated Teller Machine (ATM) cards and settled the bill. How he survived his 10-day stay in the city was a surprise.

    Nigeria has been grappling with currency crisis since crude oil prices dropped by about 43 per cent from an average of $100.35 throughout 2014 to an average of $57.20 for the first six months of last year. It closed at  $48.09 per barrel at the weekend.

    Specifically, the drastic fall in the price of crude oil, which constitutes the largest component of Nigeria’s forex reserves has cut dollar earnings from about $3.2 billion monthly to about a billion dollar for the same period. This has negatively impacted on the value of the naira.

    The impact is reverberating at home and abroad. Parents whose wards school abroad are feeling the pang of the dollar scarcity, which makes it difficult for them to settle tuitions.

    The Central Bank of Nigeria (CBN) Director in charge of Monetary Policy Department, Mr. Moses Tule, explained that the restriction might continue until there is an improvement in forex earnings. According to him, if banks had not restricted the use of ATM cards abroad, some of them would have been experiencing challenges meeting the demand of their overseas’ customers.

    Such occurrence, he said, would have caused huge liabilities in the balance sheet of the banks, balance sheet thus affecting their operations.

    Mr. Tule said that much as the CBN sympathised with depositors for the inconveniences they go through in their transactions abroad, there was little the bank could do to reverse itself.

    Tule said: “The limitation on the use of debit or credit cards outside the country was not a limitation that was placed by the CBN.

    “They were restrictions that  Money Deposit Banks (MDBs) placed because their customers have to settle whatever transactions make with your debit cards with corresponding banks in foreign currency.

    “And if the banks do not have the foreign currency to do that, then such customers create a liability problem for them.”

    The priority of the CBN, he said, would be to use the forex to settle matured Letters of Credit for the importation of petroleum products and other raw materials.

    The local currency has been devalued by 35 per cent in the last 13 years.  In 2001, the CBN cut its value by 27 per cent, followed by the latest per cent slash of eight per cent.

    In a country stricken by 15.6 per cent inflation in May, one of the world’s worst; and declining foreign exchange reserves (now at $26 billion from about $42 billion a year ago), the state of the local currency cannot but be worrisome.

    As of the last count, more than 10,000 employees of Bureaux de Change have been sent to the job market following the stoppage of weekly dollar sales to operators by the apex bank.

    President, Association of Bureau de Change Operators of Nigeria (ABCON), Aminu Gwadabe, who confirmed the development, said many operators have closed shop since the CBN suspended dollar sales to them in January. He warned that the entire industry may collapse if nothing is done to reverse the trend.

    Some of the measures put in place by the CBN to end the crisis include the first Naira-Settled Over-the-Counter (OTC) Forex Futures Market (FFM) launched on June 27 with FMDQ OTC Securities Exchange and the planned resumption of dollar sales to the BDCs.

    The FMDQ OTC Securities Exchange (FMDQ) is an organisation with the strategic intent of bringing about revolutionary changes and fostering the development of the Nigerian financial markets

    The CBN had imposed some currency control measures to save the naira. In June last year, it curbed access to the interbank currency market for importers bringing in a variety of goods.

    In an effort to conserve its dollar reserves, the bank said importers could no longer get hard currency to buy 41 items, ranging from toothpicks and rice to steel products and private jets as well as what the bank classified as finished products.

    The Naira-Settled OTC Forex Futures are non-deliverable forwards, or a contract where parties agree to an exchange rate for a pre-determined date in the future, without the obligation to deliver the underlying dollar on the maturity/settlement date.

    On the maturity date, it will be assumed that both parties would have transacted at the spot forex market rate. The party that would have suffered a loss with the spot forex rate will be paid a settlement amount in naira to ensure that both parties enjoy the rate that had been guaranteed to each other through the OTC Forex Futures.

    FMDQ’s Managing Director/Chief Executive Officer Bola Onadele Koko said: “The naira-settled OTC Forex Futures product is a major milestone development in the evolution of the Nigerian financial markets. The Futures market is an opportunity to transform risk into certainty – a major paradigm shift in the financial markets landscape.

    “This innovation offers opportunities for government, businesses, pension fund administrators, investors and individuals among others to hedge (not speculate) to cope with exchange rate risk.

    “It also affords the CBN a greater opportunity to manage exchange rate volatility, thus achieving greater market confidence, liquidity, improvement in business planning, job security, employment, better allocation of resources, global competitiveness of the Nigerian financial markets, and all in all, a thriving economy.”

    Koko explained that the OTC Forex Futures contract is an effective exchange rate management tool supported by a transparent price driven by two-way quote market. The contracts will assist the CBN in managing the volatility in the spot forex market, thereby promoting stability and entrenching confidence in the forex market.

    The spot rate is the price quoted for immediate settlement on a commodity, a security or a currency. The spot rate, also called “spot price,” is based on the value of an asset at the moment of the quote.

    FMDQ Chairman and CBN Deputy Governor in charge of Economic Policy, Dr. Sarah Alade, also said that the innovative product will bring liquidity, transparency, price formation and diversification into the forex market, making the market globally competitive.

    She said the introduction of the OTC Forex Futures market will encourage end-users to spread out their demand for spot forex deals as they are now able to lock down the exchange rates for future forex requirements.

    Mrs. Alade said: “This has the potential to eradicate the constant front-loading of forex requirements and minimize the disequilibrium in the spot forex market.

    “End-users will make better judgment as to the timing of accessing the spot forex market. The availability of the OTC forex futures will improve the business planning practice of end-users and forex sellers, as the future exchange rate is guaranteed through the OTC forex futures.

    On how it works, Koko said: “If a bank buys OTC Forex Futures contract rate at N260 to dollar but on the due date, the spot forex market has climbed to N270 to dollar which is higher than the OTC Forex Futures contract rate of N260 to dollar.

    “The Clearing House, Nigeria Interbank Settlement System (NIBSS), will pay the bank N10 for every dollar, thereby bringing the bank’s effective rate to N260 to dollar which is the OTC Forex Futures rate.

    “Both parties end up with an effective rate of $/N260.00 as this was the guaranteed rate for both parties. If Nigerian Inter-Bank Foreign Exchange Fixing (NIFEX) had been N250 to dollar on maturity date, the purchasing bank would pay CBN N10 per dollar.”

    Already, the CBN and Citibank have implemented the first naira-settled futures trade against the dollar, market regulator FMDQ OTC Securities Exchange said. But the rate at which the futures deal was done and the size of the trade was not disclosed.

    CBN Governor Godwin Emefiele said the Flexible Exchange Rate Inter-bank Market policy is still on trial and would soon make room for more stakeholders including (BDC) operators to participate.

    Speaking at the interactive session between the BDCs and CBN  on the new policy and state of the forex market, the apex bank chief said all hopes to include operators in the policy guidelines is not lost, while also acknowledging the impact of the policy on BDC businesses.

    The broad framework and guidelines of the Flexible Exchange Rate Inter-bank Market was released by the apex bank on June 15 when it restored the automatic adjustment mechanism of the exchange rate with the re-introduction of a flexible inter-bank exchange rate market.

    The CBN said the workings of this market will be consistent with its objectives of enhancing efficiency and facilitating a liquid and transparent forex market.

    Emefiele said: “The CBN wants to accommodate and carry all stakeholders along. All that management is requiring for the BDCs is to be more patient. The new policy is being tested. Efforts will be made to see how the BDCs, which are critical to economic development, will be carried along.”

    He said the CBN will review the BDC operational guidelines to ensure thay are in line with regulatory requirement and prepare the operators for the task ahead.

    Emefiele said the exchange rate would be purely market-driven, using the Thomson-Reuters Order Matching System as well as the Conversational Dealing Book.

    He insisted that the workings of the inter-bank trading are consistent with the CBN’s objectives of ensuring efficiency and facilitating a liquid and transparent forex market.

    According to Gwadabe, the CBN had injected $4.2 billion into the market to kick-off the new policy regime, a step he noted, helped to address unmet payment obligations promoting market volatility.

    He identified the first concern over the policy as the complete exclusion of BDCs from the new forex regime, stoppage of dollar sales to operators, new guidelines that restricted the business of operators as well as various circulars designed to hurt BDC operations.

    Gwadabe said: “The present situation in the forex market is skewed against BDCs and the result is the huge gap between the interbank and parallel market forex rates, which provides opportunity for sharp practices.”

    No respite yet for naira

     

    The naira tumbled to a record low of N295.25 to the dollar in the interbank market at the weekend, from between N282 and N285  it had been exchanging since the flexible forex policy started.

    The local currency, which was quoted at N365 to dollar on the black market, weakened against the greenback despite huge dollar sales by the CBN to boost liquidity on the interbank market.

    The woes of the naira will worsen in the coming months, with the local currency expected to exchange for N390 to the dollar at the close of the, report by Renaissance Capital (RenCap), an international investment and research firm has said.

    RenCap’s Sub-Saharan Africa (SSA) Economist Yvonne Mhango said the liberalisation of forex markets by the CBN led to positive sentiment in the equities market, with banks up by nine per cent since the plan was announced on 15 June.

    However, she said sentiment risks being dampened by concerns around Brexit and the implications for the naira, as capital inflows from foreign investors may not materialise as rapidly as the CBN may have expected.

    Sewa Wusu, Head of Research at SCM Capital Ltd. said: “We have used a N285/$ exchange rate in updating our models but the risk is to the downside, and we see N390/$ by end of this year,” she said in a report titled: ‘Nigerian banks: Life after ‘40’.

    “The CBN sold dollars to the interbank forex market for a third day to try to ease dollar shortages after it floated the currency. The regulator has intervened in the market by selling foreign exchange since it ended the currency’s 16-month fix of 197 to 199 per dollar on June 15.

    “It sold $4 billion in the spot and forwards markets that day to clear a backlog of demand for hard currency, and followed that with about $100 million of sales on the spot market the following day.

    “The market expects the CBN to continue to intervene on a daily basis for now as it is easily the only source of dollar supplies.

    “Foreign direct investment and portfolio flows are yet to start flowing in as investors wait on the sidelines to watch for liquidity, price discovery and stability.”

    CBN Deputy Governor in charge of Corporate Services, Adebayo Adelabu, said the regulator remains a participant in the interbank market, at least in the short term, to ensure that sufficient liquidity is available to facilitate two-way trade.

    He said at news conference in Lagos that the CBN’s decision to adopt flexible forex rate which allows only one single market structure where rates are determined by market forces has been long-awaited by local and international investors.

    “The policy is expected to boost investors’ confidence and get more dollar into the system”, Adelabu said.

    Managing Director/CEO, Tempo Paper & Packaging Limited, Seun Obasanjo, said the flexible forex policy implementation will an immediate rise in energy prices and Customs duties.

    In a chat with The Nation, Obasanjo said consumers of local goods should prepare to absorb a minimum of 15 per cent rise in cost of products, as higher cost of energy and Value Added Taxes (VAT) are into the prices of goods.

    He said that with the new policy, people’s purchasing power has been eroded adding that the country is not out of the woods. He said the Customs calculate duties on imported raw materials using the official rate which moved from N197 to dollar to N281 to dollar on Monday after the flexible forex policy started.

    Obasanjo, who manufactures corrugated cartons and flexible packaging for different items such as confectionary, bread, noodles, spaghetti among others, said pricing for gas, is also done using the official rate, and will now be adjusted to the new rate.

    The manufacturer said the Customs will have no choice than to adjust its template of duties, which means more revenues for government.

    “I see the Customs revenues jumping in the months ahead but manufacturers are going to pass the higher duties’ to consumers. It is painful but we have no other choice,” he said.

    Continuing, he said that although the policy was meant to attract Foreign Direct Investment (FDI), but it may not come.

    Obasabjo said: “FDI may not come. Even if there is foreign direct investment inflow, it will not save the economy. Diversification of the economy is the answer and people should start patronising made-in Nigeria goods.”

    He believes that to get the local industry into the league of players where it can begin to act with full capacity in the production of goods and services, government needs to step in by providing the needed infrastructure.

    He said: “It is not a one direction approach. All hands must be on deck to get Nigeria to its desired destination of being an industrilised nation.

    “By fixing power alone, the cost of production of goods and services will drop significantly, helping the operators to compete in the global market.

    “The same thing applies to low interest rate which is needed to make the manufacturers also compete favourably by reducing the cost of their operations.

    “If I am producing everything in Nigeria, it means Nigerians will be employed starting from drivers, cooks, secretaries, cleaners, gardeners and even security personnel.

    “If the farmers are producing locally, it will improve their capacity overtime and also create jobs. It will help Nigeria to leapfrog from consumption-based economy to production-based economy. We can even become a net exporter of several items.”

    On other benefits to local production, he said: “Instead of scrambling to buy dollars, the manufacturers can earn dollars and strengthen the local currency.

    “It has to be a coordinated effort and the policy needs to be encouraged. The support should come from all stakeholders. Although some people are going to lose out in the short-term because they are importing these items, but if we boost the local production capacity, on the long-run, we will all be better off.”

    Managing Director, Financial Derivatives Company Limited, Bismark Rewane, said the exchange rate has been a hot topic of debate in recent months, adding that this is not the first time Nigeria has suffered from an overly con-trolled currency.

    Rewane said in an on-line report: “From 1981 to 1985, during a similar period of control and oil shocks, relative prices did not adjust to restore internal and external balances. This led to low production, economic distortions, massive retrenchment, poverty and higher unemployment.

    “In contrast, from 1986 to 1991, when the structural adjustment program was introduced, the exchange rate was flexible. Economic data showed that there was increased output, better employment figures and less poverty. Both periods had negative oil price shocks.

    “Nigeria’s current managed floating exchange rate regime combines features of both the fixed and flexible exchange rate. A lightly managed floating exchange rate regime is advocated given that the exchange rate becomes determined essentially by demand and supply forces, while allowing the CBN to intervene occasionally to moderate excessive fluctuations, which are prone in developing countries such as Nigeria.”

    Besides, other factors like terms of trade, inflation differential, public debt, current-account deficits, interest rates, political stability and the overall economic health determine the exchange rate of a currency.

    Managing Director, Afrinvest West Africa Plc., Ike Chioke said a strong positive correlation exists between the exchange rate and crude oil price in the country.

    In a report titled: Naira trending towards 2015, Chioke said: “Nigeria’s crude oil – bonny light, which traded at $110.2 per barrel in January 2014, reaching $114.6 per barrel by June last year, is now trading below $60 per barrel.

    “With the discovery of the shale oil, crude oil prices are projected to moderate in coming years. In addition, the threat by the United States (U.S.) to reduce oil imports constitutes a downside risk on crude receipts of OPEC members. Consequently, the CBN must   establish a ‘real’ and ‘sustainable’ value for the naira as the opportunity cost of ‘substantial’ support for the naira increases.”