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Naira depreciate portends danger for the economy



Naira depreciate portends danger for the economy

Naira depreciate portends danger for the economy

These are not the best of times for the Nigerian economy. It is buffeted on all sides by a weak local currency, declining industrial production, massive job losses, escalating cost of living, worsening insecurity and difficulties in transportation, among others. Combined, they present a dangerous slide towards economic meltdown. The President, Major General Muhammadu Buhari (retd.), needs to act decisively to arrest the drift.

Dangerously, the national currency has been in a free fall. It tumbled to a new low of N610 to US$1 last week in the parallel market, heightening fears of a further devaluation by the Central Bank of Nigeria. The rate at the Importers and Exporters Window was, however, N415.75 on May 23, widening the exchange rate spread to N194.25. This sustains the prevalence of illegal arbitrage and upturns fiscal planning in the public and private sectors.

As businesses and citizens fretted over the foreign exchange volatility and its attendant negative effects, the CBN, a day after, raised the benchmark interest rate to 13 per cent for the first time in two years from 11.5 per cent to 13 per cent, a 150 basis points jump. This will invariably push inflation further up.

The naira is weakening steadily due to increased speculation, falling external reserves, and low forex inflows. External reserves fell by $313 million in March, says the CBN. The increase in the tempo of political activities is seen also as a key factor in the depreciating exchange rate. Meanwhile, politicians are reportedly mopping up dollars for the 2023 electioneering.

Undoubtedly, Nigeria’s leadership is not managing the headwinds effectively. The country remains import-dependent and continues to rely on crude oil for over 80 per cent of the foreign earnings. Conversely, it is not benefitting from the rising oil prices fuelled by the Russia-Ukraine war. Primarily, this is due to a lack of capacity to increase production because of massive crude theft and receding investment.

Diaspora remittances, which represent a major source of forex inflow into Nigeria, have been on the decline, lately from $12.3 billion in the second half of 2018 to $9.3 billion in the first half of 2021, according to CBN data.

The crashing naira is a problem foretold. The haphazard way the CBN has been managing the economy has been a cause for concern for years. The system is rife with inconsistency, cronyism and corruption. Analysts fear the naira may crash further to N1,000 to $1 soon.

The CBN’s multiple exchange rate regimes fuel massive corruption and arbitrage; connected persons and operators make huge profits, while genuine users of such as manufacturers and small-scale industrialists and other producers can hardly obtain forex. They are forced to source dollars from the parallel market as the official channels hardly meet 10 per cent of their needs.

The CBN Governor, Godwin Emefiele’s recent reckless plunge into the murky waters of politics has eroded the little confidence that Nigerians and international investors have in the CBN’s ability to steer the economy on the path of growth, and manage inflation, forex and interest rates.

The National Bureau of Statistics said inflation jumped to 16.82 per cent in April, the highest in eight months, following a similar uptick recorded in the previous month on the back of higher energy and food prices. Inflation was 15.92 per cent in the previous month.

In another critical segment, Nigeria’s total public debt rose to N39.55 trillion in December 2021, representing N1.55 trillion or a 4.1 per cent increase in three months from N38 trillion in September 2021. The regime’s appetite for borrowing is unprecedented. In April, Buhari requested approval for an increase in the 2022 budget deficit to be financed through domestic borrowing a few days after the Debt Management Office released a schedule of the Federal Government’s N720 billion domestic borrowing plan for the second quarter of 2022.

Factory closures and the attendant job losses, congestion at the ports, as well as rising JET-A1 price that has almost crippled the domestic aviation industry, are clear signs of a collapsing economy.

The Federal Government should apply the brakes on borrowing in another spurious bid to fix the moribund refineries, the Ajaokuta Steel Company and other wasteful expenditure. Buhari has not undertaken the privatisation of a single public enterprise in his seven years in office. Asset sales offer a way to turn the money-gulping enterprises into profit-making ventures that can yield benefits to the economy. Government should privatise the ports and airports through honest concession arrangements.

The low tax collection rate hurts the economy. It should be reversed. Although Value Added Tax collection hit N2.07 trillion in 2021, it is mainly because the rate was raised from 5.0 per cent to 7.5 per cent from February 2020. Tax income in 2020 was N8.8 trillion. Taxes are under-collected as are income from revenue-generating agencies.

Overall, Nigeria’s 6.1 per cent tax-to-GDP ratio (2019) is among the lowest in the world. It is far behind the 16.5 per cent tax-to-GDP for 30 African countries and the 32.9 per cent average in the Organisation for Economic Cooperation and Development countries.

Therefore, public agencies not remitting revenue to the government coffers must be compelled to comply with the extant laws. The government must recover money owed the country by International Oil Companies in line with a Supreme Court judgement it has so far failed to enforce.

It must plug all revenue leakages; reform the Nigeria Customs Service to minimise smuggling, which is badly hurting the economy. Maintaining nine presidential aircraft in a struggling economy goes against rationality. The wasteful distribution of money to people that cannot be identified through the dubious ‘conditional cash transfers’ should stop. Instead, target single-digit credit to micro-businesses and small farmers. The CBN should scrap the catastrophic multiple exchange rate regime.

Power is a major problem for industries. This sector needs urgent, radical reforms. An economy in trouble needs expert input and strong collaboration between the public and the organised private sector. Buhari should mobilise all stakeholders to rescue the fragile economy.

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India, Nigeria to Strengthen Business Partnership



India, Nigeria to Strengthen Business Partnership

By: Michael Mike

Indian Government has revealed its plan to strengthen business partnership with Nigeria, emphasizing that the country remains an important alien.

India’s External Affairs Minister, Dr Subrahmanyam Jaishankar, made the revelation on Monday in Abuja at the India-Nigeria Business Forum organised by the Indian High Commission through collaboration with the Confederation of India Industry (CII) business delegation to Nigeria.

The minister, who made his maiden visit to Nigeria, said there is the need for the Business stakeholders to work closely together to improve India-Nigeria businesses and achieve meaningful growth.

Jaishankar said: “We have to keep finding various ways of improving the business enabling climate, there are some banking charges, there could be payment issues, there could be some travel vistas.

“In many cases we have started something but necessarily working, to which there are regulatory challenges, between that could be mutually helpful approach.

“In a way the CII and all businesses can help to solve problems faced by Nigerian partners in India and they in-turn open more doors to us in Nigeria.

“So, we will continue to ease the operation system, motivate business against whatever obstacles, also facilitate and look for new opportunities because there are lots of changes in each country.

“We could harness those business opportunities, a very good example is in the energy sector, it could be in digital field, green energy, I think there are lots of interest in agriculture.”

He promised to build on the mutual relations between Nigeria and India, and also extend such to other parts of Africa.

Jaishankar, who also unveiled the Mahatma Ghandi’s statue at the Indian High Commission in Abuja, said: “For us it is a matter of great fight, because our identity and our bond with Africa that we are displaying to the world.

“I am thankful to all of you for joining us, more than many other countries the Nigerian-Indian community has played very important role in building our relationship and shaping our image.

“So, this will be my one chance to say thank you all for it. But keep contributing to the relationship, keep building the relationship.”

On his part, the High Commissioner of India to Nigeria, Mr Gangandharan Balasubramanian described the India-Nigeria Business Forum as a platform designed to bring together business community across India and Nigeria
He said: “I wish all of you the best and hope that this can be very productive and useful meeting for all of you.

“Something that will strengthen the good and favourable relationship between our two countries.”

The Director-General of CII, Chandrajit Banerjee, expressed the industry’s appreciation to the Minister for driving economic engagement through his leadership and guidance towards Nigeria-India trade and investment relationship to new levels.

He said the CII business delegation forum is to further strengthen economic cooperation, explore business and economic opportunities between India and Nigeria.

Banerjee said: “We have representatives from Energy, Pharma, ICT, Financial Institutions, Infrastructure and defense, besides others in the delegation who are seeking to find business partners in Nigeria.

“India is Nigeria’s leading investor. It is informally estimated that there is around 19.3 billion USD of investment by Indian companies in the country and is home to a large Indian community numbering around 50,000.

“Over 135 Indian companies are currently operating in Nigeria, with Indian owned/operated companies estimated to be the second largest employer.

“As the secretariat of the B20, CII had an Action Council on Africa which had strong participation including a Co-Chair from Nigeria. The Council came out with very strategic recommendations including inclusion of the African Union in the G20,” he said.

The director-general disclosed that the Industry has scheduled the next “CII India-Africa” conclave to hold from Aug. 20 to 21, adding that: “we look forward to a strong participation from Nigeria.”

The event attracted Otunba Adele Oye, National President, Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), Mr Emeka Obegolu, President, Abuja Chamber of Commerce and Industry (ACCI), prominent individuals in both Indian and Nigerian business communities and government officials from India and Nigeria.

India, Nigeria to Strengthen Business Partnership

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Nigeria, India Sign MOU to Combat Trafficking in Drugs



Nigeria, India Sign MOU to Combat Trafficking in Drugs

By: Michael Mike

Nigeria and India have taken a tough step to combat trafficking in illicit drugs between the two countries, with a historic signing of a Memorandum of Understanding between the National Drug Law Enforcement Agency, NDLEA and the Narcotics Control Bureau of India

Chairman/ Chief Executive Officer of NDLEA, Brig. Gen. Buba Marwa (Retd) who signed the MoU on behalf of Nigeria’s anti-narcotics agency said the move represents a robust partnership in the effort to exterminate incidences of drug abuse and illicit drug trafficking in the two countries.

He said: “This bold step taken by the two agencies is an affirmation of our foresight and commitment to the task of ensuring the safety of our citizens and the global community at large. Today’s development constitutes a fundamental step towards positioning the two countries, India and Nigeria, at the forefront of confronting and dismantling transnational drug trafficking networks with brazen capabilities of outmaneuvering legitimate drug law enforcement.

“With our understanding of the changing dynamics of the illicit drug problems, locally and globally, every major organisation around the world working assiduously to curb the menace knows that working with partners greatly helps in addressing the trafficking and abuse of narcotic and psychotropic substances.

“The governments of both countries remain committed to eradicating the problem posed by illicit substances, notably synthetic opioids and Amphetamine Type Stimulants (ATS) which pose a potent threat to our citizens.”

Marwa, while acknowledging the courage exhibited by the two agencies in the course of past meetings that culminated in the MoU, he stressed that the partnership will impact greatly on efforts to prevent “illicit trafficking in narcotic drugs, psychotropic substances, precursor chemicals, and related matters” between the two countries.

In his remarks, Indian High Commissioner to Nigeria and Head of the Indian delegation, Ambassador Shri Balasubramanian, who signed on behalf of his country, noted the enormous negative impact of drugs on global financial and political systems, adding that proceeds of drug trafficking are often directed towards terrorism financing.

The envoy observed that drug trafficking does not only affect the health of the individual that consumes it but equally the economy of the country as well as national security. He advised that both countries should take advantage of their similar demographic advantage to address substance use problems.

Balasubramanian noted that the liberal trade relations and educational advantages enjoyed by both countries has been negatively applied to further criminal drug trade, urging that all hands must be on deck to ensure that merchants of death do not succeed in their evil trade. He pledged the commitment of the Indian Government to ensure the enforcement of the provisions of the MoU.

Nigeria, India Sign MOU to Combat Trafficking in Drugs

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FG Opens Nigerian Businesses to Rest of World



FG Opens Nigerian Businesses to Rest of World

By: Michael Mike

Nigerian businesses have been given another opening to the rest of the world as the Federal Government on Thursday launched an online platform that would connect foreign businesses that want to do business with Nigerian businesses.

The government also set up a help desk to attend to Nigerians in diaspora who need information on provision for help.

The Nigeria Global Business Match, NGBM is a real-time online one stop-shop where foreign businesses seeking to do business in Nigeria can transparently conduct end to end transactions with Nigerian registered and verified businesses in a secured and trusted online platform.
NGNM provides a database of registered Nigerian businesses to its foreign counterparts.

The essence is to leverage on the ministry of Foreign Affairs global presence to boost Nigeria’s overall international business, trade and economic relations.

In what may perhaps be described as the parting gift of Geoffrey Onyeama, the ministry also launched two other legacy projects- the Nigeria Global Citizens Help Desk, NGCHD for Nigerians in Diaspora who are in need of help.

Also launched was the Unified Online Presence under Diplomatic Service Digitalization initiative, which is aimed at
seeing all the country’s missions and the ministry in one secure Web space. With this, all the missions and Ministry will now have a uniform naming pattern.

Speaking during the event, Buhari said the projects were targeted towards achieving the mandates given to the Ministry of Foreign Affairs and would be extremely beneficial to Nigerians abroad.

Buhari who was represented by his Chief of Staff, Professor Ibrahim Gambari, appreciated partner ministries, departments and agencies for their contributions and support, particularly those that provided data base access for verification purposes.

He said: “I would like to urge the staff of the Ministry, especially those who will interface directly with this system to utilise them diligently and ensure effective delivery of qualitative service to Nigerian citizens.”

The President further reiterated the need to maintain the legacy projects, as well as improve upon them as innovation permits so that they can compete globally.

Speaking earlier, the Minister of Foreign Affairs, Geoffrey Onyeama, said the ministry felt the need to leverage on its physical presence in a hundred countries around the world to promote the portal and direct the attention of the businesses in those hundred countries unto the portal where Nigerian businesses would be able to upload all their information, as well as foreign businesses, in a secure environment as supported by the government, the Ministry of Industry, Trade and Investment, the Ministry of Foreign Affairs and others.

He said: “Secure environment in which businesses can meet each other. And hopefully, we will be able to have a live match.”

Onyeama further said the portal will be a unique matching tool for businesses as it will open up the world for Nigerian businesses seamlessly.

The Minister said the second initiative was part of the Ministry’s citizens’ diplomacy, saying that there were huge numbers of Nigerians around the world.

“That is one of the reasons why I am also delighted that the Executive Governor of Edo State was able to come here because he has been a champion for the Nigerian trafficking victims around the world and he has been extremely engaged in protecting young, vulnerable Nigerians who had been trafficked or who could be trafficked if the necessary measures are not put in place,” Onyeama also said.

Governor Godwin Obaseki of Edo State, who was at the occasion, said the event was quite significant, adding that the platform provided for Nigerians in the Diaspora and other relevant sister agencies with a channel that provides services where Nigerians can reach out for help, advisory services and also to report in cases of emergencies.

Obaseki added that the recent Russian-Ukrainian conflict and the crisis in Sudan, clearly demonstrated the need for a trusted and dependable channel where citizens can report emergencies and seek help, especially from Abuja and Nigeria.

He noted that: “This service would be of tremendous benefit to our citizens in the Diaspora who, as you are aware, are spread out all over the world.”

FG Opens Nigerian Businesses to Rest of World

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