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Nigeria Naija News

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Nigeria 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 Naijas 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 limitation policy has started to pay off with some manufacturers of some imported goods signifying interest to begin manufacturing in Nigeria instead of abroad actions because of the high price of imported products occasioned by the policy.

We got many endorsements and the direction in which we seek to take the Nigerian market. Specifically, we held bilateral meetings with particular bilateral agencies, such as the Islamic Development Bank where we've agreed to work together on a micro-finance scheme for women; the Japanese development bureau where we've agreed to work jointly on electricity projects and they've agreed to make considerable investments in the region of power which I believe will be really beneficial for Nigeria and the IFC. Similarly, we had a meeting with them this morning (yesterday), again discussing investment in power and some of our banks to shore up their places and likewise the ADfB on arrangements for investments in agriculture and cooperation in a variety of initiatives that would help us to diversify the economy.

Likewise, we had conversations with the World Bank around our budget support request and we have now been able to have very productive meetings to understand what the next steps are in the process and we're quite favorable of a great result.

In his comments, the CBN Governor, Godwin Emefiele, spoke on the various monetary policy measures of the authorities to boost productivity at all levels of the economy, including that both in the medium and long terms, the various policies, including the currency policy regime, are bound to stimulate the market.

Both crucial government officials made the revelations in Washington DC, United States (U.S.) at a press briefing as part of tasks of this years Spring Assembly.

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

Her words: The gains are various and important for the Nigerian government. At least, we could network with our coworkers, other ministers of finance of the G7 nations and the G24 countries and compared notes and their expertises. I believe this reinforces the validation that the course we've chosen to restructure Naija is the appropriate one.

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

Divided stakeholders say policy may ease company, stifle local firms

For diverse stakeholders in the economy, the Federal Governments recent currency swap deal with China holds both bright prospects and grave consequences 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 transactions between both countries, 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 countries money, in the forex market, through a concomitant emergent bid scheme, with tactical decreased demand for dollar and other major currencies, apart from the yuan.

The currency swap deal is composed of an agreement between two central banks, a minumum of one of which must be an international currency issuer, to swap their currencies. The central banks party to the swap trade can loan the proceeds of the swap, against collaterals they deem adequate, to the commercial banks within their jurisdiction, to provide them with temporary liquidity in a foreign currency.

But pessimists pointed out the swap deal was not consummated between the two states 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 affect the aims of the swap deal in any way, it raises some fundamental sovereign dilemmas, according to an analyst who spoke on condition of anonymity.

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

He said: I think that Nigerias overriding goal for the currency swap would be to address short term foreign currency liquidity challenges which has led to CBNs inability to match foreign currency demands. With the currency swap, based on the value, an important part of Nigerias import invoices from China would now be denominated and settled in yuan, thus reducing the need for dollar by Nigerias importers.

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

I recommend the Government should try to incorporate a strategy much like that of the cement sector policy, which would necessitate some of the imports from China to be made locally after a defined timeline, especially if Nigeria has comparative producing advantage for such products. Examples that can easily come to mind include textiles, plastics, ceramics, among others.

He explained that the gain of inclusion of Chinese Yuan as part of Nigerian reserve currency was done about five years ago by the immediate past CBN governor, primarily to diversify the reserve and reduce the currency risk related to the U.S. dollar.

That action was taken at a time when the U.S. market was particularly vulnerable due to the weakness of their economy after the international financial disasters triggered 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 increasing pressure on the U.S. dollar, which has gone haywire in the foreign exchange market.

Based on Olatujoye , the determination 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 the conclusion could cause the higher importation of Chinese goods into Nigeria, citing the economic competition or money war between China and America.

He, nevertheless, expressed the fear that European nations may not be well disposed to it because it is capable of adversely affecting their trade balance with Nigeria, warning that their stakeholders could frustrate the move.

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

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

Uwaje continued: We dont have to use dollar to pay because its going to be costlier, we pay with yuan. By so doing we avoid every form of round tripping.

Uwaje advocated Buharis economic team to see how the state can truly leverage on the technology art of China for Naija to achieve a sustainable economy.

Based on Gbade Buraimoh, a Lagos-based financial expert, the quest for dollar through banks will undoubtedly reduce, as all trades between www.latest naija news and China will take yuan in place of 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 eliminate challenges arising from transactions with the dollar and boost business flexibility between Nigerian and Chinese, Buraimoh described.

The Director-General of Lagos Chamber of Commerce and Industry, Muda Yusuf concurred that the swap deal would smoothen the payment system in the bilateral trade between the two states but stressed that it might not necessarily reinforce the naira in the foreign exchange market, as the state would have to accentuate its productive base to reach that.

An Abuja-based international affairs and diplomacy expert, Kadiri Abdulrahman, seen the currency swap deal as a positive move towards enriching the value of the naira, thereby improving access 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 deal 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 isn't the first state 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.

Based on the Peoples Bank of China (PBoC), those swap arrangements were intended not only to stabilise the international financial market, but also to facilitate bilateral trade and investment.

Meanwhile, the advantage of the currency swap deal and other agreements reached in Beijing during Buharis trip to the Far East Asia nation has rubbed off on the air travel 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 shown at the Enugu Economic Summit the airline was made Nigerias official flag carrier for the course.

According to him, with the anticipated 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 allow it to be possible for American investors to put money into the Nigerian market again.

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

The government and the flying public created a yearning opening, all the arrangements in this country are tilted to one side, the foreign airlines, but this government of Muhammadu Buhari has started to do things otherwise recognising the local airlines and seeing that in Air Peace there is 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 fully behind President Muhammadu Buhari in the continuing attempts by his administration to rid Nigeria 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've been very active in supporting President Muhammadu Buhari's effort against corruption in Naija and we think it truly is essential to transform the future of the country.

We totally support precedence the President has given to tackling corruption in Naija.

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

The minister urged the Government to give attention to 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 excursions embarked upon by the President, saying such international involvement was needed to reposition the countries market.

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

He described as unwarranted the criticisms against the journeys, remembering that former President Olusegun Obasanjo embarked on similar excursions in the early stage of his administration which led to the successful debt relief for the nation.

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

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

Talking with The Guardian, Yadudu asserted that although the National Assembly has the power to appropriate cash in the budget, it was incumbent on it to take cognizance of the interest of the executive.

He added: "They do have the latest naija news power to change it, but once they do it, they need the comprehension of the President." "It is not just that something was brought by him and they merely change it anyway they want; the President has the right to propose a budget, which shouldn't be tampered with."

"But the most significant thing is that if you will find things they would like to propose in the budget, they have to get the comprehension of the Executive arm.

"The National Assembly does’t have to believe that because they have the power to appropriate, they can appropriate anyhow." 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've been at the receiving end of economic crisis in recent times.

He stated: "It is hard to say so if the issue of padding needs to do with pursuit of selfish program of the National Assembly members."

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

"To be honest with you, I do’t understand what exactly is the issue now, but I understand 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 has to be a combined effort between the two arms of government."

"There is no uncertainty about the fact that the National Assembly has the power to appropriate. And when they appropriate, obviously, they have to take action in collaboration.

"Whatever they appropriate will have to be in the form of the Appropriation Act. So when an Act of the National Assembly, it requires the assent of the President in order for it to become law. "So, it truly is a collaborative effort between the Executive and the Legislative arms."

"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 sign and everything would follow what exactly is contained in the Appropriation Act."

Wali, who made this known while speaking only with The Guardian in Abuja, said that more Nigerians have to embrace the production sector of the market. "Nigeria’s production sector has great potentials to contribute to increased sales for the state, particularly if trade is eased with good transportation system. Nigerians should adopt this sector," he said.

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

Attesting to the dominance of made -in-Nigerian family commodities in neighboring West African nations and in Central African Republic, Wali said vast majority of household and essential commodities sold in those areas are made in Nigeria. According to him, the range of products made in Nigeria but enjoying huge patronage in other African countries contain cement, toiletries, noodles,beauty products,dairy products,textiles,pharmaceuticals,foot wears, plastic chairs, among many others made locally in the country. He said: you are going to be amazed to find out that a good number of manufactured products sold in their own marketplaces are products "If you go to Central Africa, even up to most countries in the West African region." style="max-width:440px;float:left;padding:10px 10px 10px 0px;border:0px;">"I was lately for instance, and what I saw was so surprising. More than 80 per cent of the products on sale there were made in Nigeria. You name it, the indomie noodles, sugar,salt, plastics,even pharmaceuticals products which are made here in Nigeria were on sale everywhere in their markets."


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Guest Martes, 23 Enero 2018