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Naija Newstoday

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latest naija news update seeks budget support

CBN says forex restriction policy already paying off

From Washington, the headquarters of the Breton Woods multilateral institutions the International Monetary Fund (IMF) and the World Bank in America came compliments for Nigerias economic recovery programme, according to the Finance Minister, Mrs. Kemi Adeosun.

The commendation is even as the Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, said yesterday that the countrys foreign exchange restriction policy has begun to pay off with some producers of some imported goods indicating interest to start manufacturing in Nigeria instead of overseas tasks due to the high cost of imported products occasioned by the policy.

The two key government officials made the revelations in Washington DC, United States (U.S.) at a press briefing as part of actions of this years Spring Assembly.

The minister spoke on the gains of this years Spring Assembly and the several bilateral meetings held between Nigeria and her partners.

Her words: The gains are various and significant for the Nigerian government. At least, we were able to network with our colleagues, other ministers of finance of the G-7 nations and the G24 states and compared notes and their experiences. I believe this strengthens the validation the course we have chosen to restructure Nigeria is the correct one.

We got many endorsements and the direction in which we seek to take the Naija economy. Particularly, we held bilateral meetings with special bilateral agencies, such as the Islamic Development Bank where we have agreed to work together on a micro-finance scheme for girls; the Japanese development agency where we've agreed to work jointly on power projects and they've agreed to make substantial investments in the area of power which I think will be very beneficial for Naija and the IFC. Likewise, we had a meeting with them this morning (yesterday), again referring to investment in power and some of our banks to shore up their locations and similarly the ADfB on agreements for investments in agriculture and collaborations in a variety of initiatives that would help us to diversify the economy.

Similarly, we'd talks with the World Bank around our budget support request and we happen to be able to have quite productive meetings to comprehend what the next steps are in the process and we're quite favorable of a great result.

In his remarks, the CBN Governor, Godwin Emefiele, spoke on the various monetary policy measures of the authorities to improve productivity at all levels of best naija news the economy, adding that both in the medium and long terms, the various policies, including the currency policy regime, are bound to arouse the economy.

According to him, in furtherance of its statutory mandate, the apex bank can also be focusing more to expand giving to vital sectors such as agriculture, mining and production, including that some of the immediate gains of the fiscal and monetary policies are the increasing foreign investments in the market.

Divided stakeholders say policy may ease business, stifle local businesses

For varied stakeholders in the economy, the Federal Governments recent currency swap deal with China holds both bright prospects and grave implications for Nigeria even as the naira inched up against the dollar at the weekend at the parallel market.

During his official trip to the worlds second biggest economy, President Muhammadu Buhari reached a naira and yuan swap deal, scripted to ease trade trades between both states, devoid of present exchange challenges with the United State dollar.

Besides, the deal, according to Presidency sources, has the potenrial of shoring up the worth of the nations money, in the forex market, through a concomitant emergent bidding scheme, with strategic reduced interest in dollar and other major currencies, apart from the yuan.

The currency swap deal consists of an agreement between two central banks, at least one of which must be an international currency issuer, to swap their monies. The central banks party to the swap transaction can give the proceeds of the swap, against collaterals they deem adequate, to the commercial banks within their authority, to provide them with temporary liquidity in a foreign currency.

But pessimists pointed out the swap deal was not consummated between both nations apex banks but between Central Bank of Nigeria (CBN) and Chinas ICBC- the worlds biggest lender by total assets and market capitalisation. While this may not change the aims of the swap deal at all, it raises some fundamental sovereign issues, based on an analyst who spoke on condition of anonymity.

The Managing Director/Chief Executive Officer of Cowrie Investment Limited, Johnson Chukwu described the currency swap scheme would address , on a short-term basis, the current liquidity challenge in the states foreign exchange market.

He said: I believe that Nigerias overriding objective for the currency swap is to address short term foreign currency liquidity challenges that has led to CBNs inability to meet foreign currency demands. With the currency swap, based on the worth, a significant portion of Nigerias import bills from China would now be denominated and settled in yuan, therefore reducing the demand for dollar by Nigerias importers.

Nonetheless, he pointed out that the major draw back to the currency swap policy is an unrestricted access to yuan, at an overvalued naira exchange rate, if the N30/RMB is the predetermined exchange rate, will certainly support importation and stifle local production of goods.

It is suggested that the Government should try and incorporate a strategy much like that of the cement business policy, which would necessitate some of the imports from China to be created locally after a defined timeline, especially if Nigeria has comparative making advantage for such products. Examples that can easily come to mind include fabrics, plastics, ceramics, among others.

He clarified the gain of inclusion of Chinese Yuan within Nigerian reserve currency was done about five years ago by the immediate past CBN governor, mainly to diversify the reservation and reduce the currency risk associated with the U.S. dollar.

That action was taken at a time when the U.S. economy was especially vulnerable due to the weakness of their economy after the global financial crises activated by sub-prime mortgage.

In his reaction, the National President, National Palm Produce Association of Nigeria (NPPAN), Henry Olatujoye, welcomed the currency swap deal, describing it as an incredible measure that would significantly reduce the raising pressure on the U.S. dollar, which has gone haywire in the foreign exchange market.

According to Olatujoye , the conclusion has the ability of bringing double investment to the nation from China on one hand and from the U.S. on the other.

The NPPAN president allayed any fear that the conclusion could result in the higher importation of Chinese goods into naija entertainment news, citing the economic competition or money war between China and America.

He, however, expressed the concern that European nations may not be well disposed to it because it's with the capacity of adversely affecting their trade balance with Nigeria, warning which their stakeholders could frustrate the move.

The Chairman, Mobile Software Solution, Chris Uwaje, believed the naira to yuan swap agreement should reduce the pressure on the naira if properly executed.

According to him, the agreement if it becomes a reality, means the de facto currency, dollar , will no longer hold on the import and export deals between Nigeria and China.

Uwaje continued: We dont must use dollar to pay because its going to be more expensive, we pay with yuan. By so doing we prevent every type of round tripping.

Uwaje urged Buharis economical team to see the way the country can really leverage on the technology prowess of China for Nigeria to achieve a sustainable market.

Based on Gbade Buraimoh, a Lagos-based financial expert, the quest for dollar through banks will undoubtedly reduce, as all trades between Naija and China will maintain yuan rather than dollar.

He observed that oil sales from Nigeria to China would be settled in Chinese currency, stressing that accessibility to yuan would also be easier.

The swap will remove challenges originating from transactions with the dollar and boost company flexibility between Nigerian and Chinese, Buraimoh clarified.

The Director-General of Lagos Chamber of Commerce and Industry, Muda Yusuf concurred the swap deal would smoothen the payment system in the bilateral trade between both states but stressed that it might not really reinforce the naira in the currency marketplace, as the state would have to enhance its productive base to attain that.

An Abuja-based international affairs and diplomacy expert, Kadiri Abdulrahman, seen the currency swap deal as a confident move towards enriching the value of the naira, therefore improving accessibility to cheaper foreign exchange, in favour of members of the business community.

The Director- General of the African Affairs Department of Chinas Foreign Ministry, Lin Songtian told reporters in Beijing after the agreement was signed by the Governors of Nigerias Central bank and the Industrial and Commercial Bank of China Ltd. (ICBC) that the Renminbi (yuan) is free to flow among different banks in Nigeria and has been comprised in the foreign exchange reserves of Nigeria.

Nigeria is not the first nation that China would enter into such an arrangement with. The Asian powerhouse has multiple year currency swap agreements of the Renminbi with Argentina, Belarus, Brazil, Hong Kong, Iceland, Indonesia, Malaysia,Singapore, South Korea, United Kingdom and Uzbekistan.

According to the Peoples Bank of China (PBoC), those swap agreements were intended not only to stabilise the international financial market, but also to ease bilateral trade and investment.

Meanwhile, the benefit of the currency swap deal and other understandings reached in Beijing during Buharis excursion to the Far East Asia country has rubbed off on the aviation sector, as a Nigerian carrier, Air Peace declared that it would shortly commence scheduled flight to China from Enugu.

Chairman of Air Peace, Allen Onyema revealed at the Enugu Economical Summit the airline was made Nigerias official flag carrier for the route.

According to him, with the likely ease on the pressure on the dollar, it'd bring down the value of the dollar in relation to the naira, which he said would now make it possible for American investors to put money into the Nigerian market again.

In his perspective, the current high rate of the dollar in Nigeria had in recent months deterred American and Western investors in the Nigerian economy.

The authorities and the flying people created a yearning opening, all the deals in this country are tipped to one side, the foreign airlines, but this government of Muhammadu Buhari has started to do things differently recognising the local airlines and seeing that in Air Peace there will be a lot of quality, in order that they decided to give us when we implemented it didnt take time before they gave it to us, said Onyema.

The United Kingdom is entirely behind President Muhammadu Buhari in the continuing attempts by his administration to rid Naija of corruption, its Minister for International Development, Nick Hurd, has assured.

Hurd told the News Agency of Nigeria (NAN) in Abuja yesterday that fighting corruption was crucial to transforming the countrys future.

We have been quite active in supporting President Muhammadu Buhari's campaign against corruption in Nigeria and we believe it is essential to transform the future of the country.

We fully support priorities that the President has given to tackling corruption in Nigeria.

We feel that corruption is definitely the right priority and we want to support him in that, he added.

The minister encouraged the Government to focus on public sector reforms aimed at making corruption unattractive to workers and people.

Meanwhile, the son of former premier of previous Western Region and erstwhile chieftain of the Peoples Democratic Party (PDP), Chief Niyi Adegbenro, has backed the foreign trips embarked upon by the President, saying such international engagement was needed to reposition the countries economy.

Adegbenro, who has now cease partisan politics, told reporters at the weekend in Abeokuta, Ogun State that ongoing moves by Buhari and the Central Bank of Nigeria (CBN) to revive the nations economy need wholesale support.

He described as unwarranted the criticisms against the journeys, remembering that former President Olusegun Obasanjo embarked on similar trips in the early period of his government which led to the successful debt relief for the country.

Adegbenro said the Presidents international involvement was in Nigerias best interest, adding that he was confident that it would shortly give positive outcomes.

Let's give Buhari the opportunity as far as I am concerned. I 'm not saying he's a messiah, but he's a redeemer.

He added: "They do have the power to modify it, but once they do it, they desire the understanding of the President." It is not they merely shift it anyway they wish and just that something was brought by him; the President is entitled to propose a budget, which should not be tampered with."

"But the most important thing is that if there are things they would like to propose in the budget, they have to get the comprehension of the Executive arm.

"The National Assembly does’t need to feel that because they will have the power to appropriate, they can appropriate anyway." Yadudu, who was legal adviser to former military Head of State, the late Gen. Sani Abacha, noted that non-passage of the budget could send the wrong signal to Nigerians, who have been at the receiving end of economic crisis in recent times.

He stated: "It is not easy to say thus if the problem of padding needs to do with pursuance of self-centered agenda of the National Assembly members."

"All I know is it is a collaborative effort between the Legislature and the Executive arms and that they have the power to proper, but the initiative is that of the Executive.

"To be honest with you, I do’t know what exactly is the problem now, but I know that the National Assembly has the power to appropriate and when they submit the budget for the assent of the President, he is entitled to veto it or to approve it. There must be a combined effort between the two arms of government."

According to him: "There's no doubt about the fact the National Assembly has the power. And when they appropriate, obviously, they must get it done in collaboration.

"Whatever they proper will need to maintain the form of the Appropriation Act. And as an Act of the National Assembly, it needs the assent of the President in order for it to become law. "So, it truly is a collaborative effort between the Legislative arms and the Executive."

"Non- passage of the budget can send a wrong signal, but that is not initially the budget has gone up without passage to the month of April or May. If it is passed by them it sends the right signal and everything would follow what exactly is found in the Appropriation Act."

Wali, who made this known while talking alone with The Guardian in Abuja, said that more Nigerians must adopt the production sector of the market. "Nigeria’s production sector has great potentials to lead to increased earnings for the country, particularly when trade is eased with good transportation system. Nigerians should embrace this sector he said.

Attesting to the dominance of made -in-Nigerian home commodities in neighboring West African countries and in Central African Republic, Wali said vast bulk of household and vital commodities sold in those regions are made in Nigeria. According to him, the variety of products made in Nigeria but loving large patronage in other African countries include cement, toiletries, noodles,beauty products,dairy products,textiles,pharmaceuticals,foot wears, plastic seats, among many others made locally in the state. He said: you may be amazed to find out that a good quantity of manufactured products sold in their own markets are products proudly made in Nigeria "If you go to Central Africa, even up to most nations in the West African area.

The bank leader stressed that manufacturing of goods, sale or distribution in the country and within the sub region prevents capital flight. He added that it also encourages regional trade and offer employment opportunities to various degrees of unskilled and skilled workers.

I was recently for instance in Congo, and what I saw was so astonishing. You name it, the indomie noodles, sugar,salt, plastics pharmaceuticals products that are made here in Nigeria were on sale everywhere in their markets."


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Guest Viernes, 23 Febrero 2018