Business

Nigeria’s forex market needs restructuring – Tinubu’s aide

Published

2 months ago

September 27, 2023

Nigeria’s forex market needs restructuring - Tinubu’s aide The Special Adviser to the President on Economic Affairs, Dr Tope Fasua, has called for a structural reform of Nigeria’s foreign exchange market. Fasua made the call at a roundtable organised by the National Policy Advocacy Centre (NPAC) of the Abuja Chamber of Commerce and Industry (ACCI) on Tuesday in Abuja. The theme of the event was “Unification of Foreign Exchange and the Effect of Fuel Subsidy Removal on the Business Community’’. “I believe we should reform the Bureau De Change (BDC) sector and make it stronger. You cannot manage over 5,000 BDCs selling money on the streets. “If we can do the structural reforms in the BDCs sector and the banks and supervise them well, the CBN with our reserves can incentivize that sector, allowing people to get money much quicker. “And you have to define the illegal market and by then we will be able to find stability,” he said. Fasua said that Nigeria spends over $45 billion annually importing refined petroleum products, milk, chemicals and fish, among others. “I hear things like scarcity of forex. What is scarcity of forex, as if the world owes us any forex. “The world does not owe us any forex. The forex you get is depending on the trade that you do. “If you look at Nigeria’s import and export profile, over 20 items that we import in Nigeria are in the billions of dollar range. “Our biggest import, fuel and diesel take about $25 billion to $30 billion every year. “We have things like cars, which is about four billion every year; sugar, fish, milk one billion each; wheat four billion; chemicals, three billion dollars; pharmaceuticals two billion dollars.” Fasua listed crude oil and fertiliser as two things that Nigeria exports in the billion dollar range. “The first is petroleum and gas, you will see a figure like $57 billion, but out of that only 30% is ours, according to Nigeria Extractive Industries Transparency Initiative (NEITI). “The international oil companies that have the technology that do production own most of that money,’’ he added. The Director, Policy Advocacy Centre, ACCI, Chidiebere Onwumere, said that foreign exchange unification held promises of increased transparency, improved access to forex and reduced market distortions. He, however, said that it raises questions about exchange rate stability, inflationary pressures and the cost of imports. “We must carefully consider how these factors will affect the competitiveness of our industries and the purchasing power of our citizens. “Fuel subsidy removal, on the other hand, is expected to free up fiscal resources, reduce government spending, and potentially lead to increased investment in critical sectors. “Yet, it also raises concerns about the immediate impact on transportation costs, inflation, and the welfare of our citizens, especially those in vulnerable communities,’’ he noted. Oscar Onyema, Managing Director, Nigerian Exchange Group (NEG) PLC, said collaborative dialogue was essential in formulating policies that balance short-term challenges with long-term benefits. Highlighting the effects of both policies on the economy, Onyema said that immediate transition could disrupt businesses and the economy in several ways. Represented by Cordelia Ihedioha, Onyema said that businesses that were heavily reliant on imports may face short-term disruptions due to the sudden shift in exchange rates. According to him, this could result in increased costs for imported raw materials, leading to potential price adjustments for end consumers. “To mitigate these disruptions, businesses may need to explore alternative sourcing strategies and adjust their pricing models,” Onyema said. Dele Alimi, Director General, Institute of Directors of Nigeria appealed to the Federal Government to take total control of the mineral sector. He stated: “The mineral sector over the years has been poorly handled by previous governments as host communities have been left impoverished by illegal mining activities.” Alimi described the subsidy removal and unification of the foreign exchange as bold steps by the Federal Government, saying that it was a necessity for economic revival. He urged more emphasis should be placed on efficiency of governance than cost of governance.

The Special Adviser to the President on Economic Affairs, Dr Tope Fasua, has called for a structural reform of Nigeria’s foreign exchange market.

Fasua made the call at a roundtable organised by the National Policy Advocacy Centre (NPAC) of the Abuja Chamber of Commerce and Industry (ACCI) on Tuesday in Abuja. The theme of the event was “Unification of Foreign Exchange and the Effect of Fuel Subsidy Removal on the Business Community’’.

“I believe we should reform the Bureau De Change (BDC) sector and make it stronger. You cannot manage over 5,000 BDCs selling money on the streets.

“If we can do the structural reforms in the BDCs sector and the banks and supervise them well, the CBN with our reserves can incentivize that sector, allowing people to get money much quicker.

“And you have to define the illegal market and by then we will be able to find stability,” he said.

Fasua said that Nigeria spends over $45 billion annually importing refined petroleum products, milk, chemicals and fish, among others. “I hear things like scarcity of forex. What is scarcity of forex, as if the world owes us any forex.

“The world does not owe us any forex. The forex you get is depending on the trade that you do.

“If you look at Nigeria’s import and export profile, over 20 items that we import in Nigeria are in the billions of dollar range.

“Our biggest import, fuel and diesel take about $25 billion to $30 billion every year.

“We have things like cars, which is about four billion every year; sugar, fish, milk one billion each; wheat four billion; chemicals, three billion dollars; pharmaceuticals two billion dollars.”

Fasua listed crude oil and fertiliser as two things that Nigeria exports in the billion dollar range.

“The first is petroleum and gas, you will see a figure like $57 billion, but out of that only 30% is ours, according to Nigeria Extractive Industries Transparency Initiative (NEITI).

“The international oil companies that have the technology that do production own most of that money,’’ he added.

The Director, Policy Advocacy Centre, ACCI, Chidiebere Onwumere, said that foreign exchange unification held promises of increased transparency, improved access to forex and reduced market distortions. He, however, said that it raises questions about exchange rate stability, inflationary pressures and the cost of imports.

“We must carefully consider how these factors will affect the competitiveness of our industries and the purchasing power of our citizens.

“Fuel subsidy removal, on the other hand, is expected to free up fiscal resources, reduce government spending, and potentially lead to increased investment in critical sectors.

“Yet, it also raises concerns about the immediate impact on transportation costs, inflation, and the welfare of our citizens, especially those in vulnerable communities,’’ he noted.

Oscar Onyema, Managing Director, Nigerian Exchange Group (NEG) PLC, said collaborative dialogue was essential in formulating policies that balance short-term challenges with long-term benefits.

Highlighting the effects of both policies on the economy, Onyema said that immediate transition could disrupt businesses and the economy in several ways. Represented by Cordelia Ihedioha, Onyema said that businesses that were heavily reliant on imports may face short-term disruptions due to the sudden shift in exchange rates.

According to him, this could result in increased costs for imported raw materials, leading to potential price adjustments for end consumers.

“To mitigate these disruptions, businesses may need to explore alternative sourcing strategies and adjust their pricing models,” Onyema said.

Dele Alimi, Director General, Institute of Directors of Nigeria appealed to the Federal Government to take total control of the mineral sector. He stated: “The mineral sector over the years has been poorly handled by previous governments as host communities have been left impoverished by illegal mining activities.”

Alimi described the subsidy removal and unification of the foreign exchange as bold steps by the Federal Government, saying that it was a necessity for economic revival. He urged more emphasis should be placed on efficiency of governance than cost of governance.

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Naira surges strong against Dollar, hits N750.15 in Forex rally

Published

2 weeks ago

November 21, 2023

Ayodeji Oke

In a robust display, Nigeria’s currency, the Naira, surged ahead against the US Dollar at the foreign exchange market on Monday, maintaining its upward trajectory.

Official data from FMDQ revealed a noteworthy appreciation as the Naira strengthened to N750.15 against the Dollar at the close of Monday’s trading, marking an impressive gain of N40.75 compared to Friday’s exchange rate of N791.25/$1.

Simultaneously, the parallel market experienced a surge, with rates climbing to N1,130/$1 on Monday from the previous N1,140 on Friday.

Dayyabu Mistila, a Bureau De Change operator in Wuse Zone 4 Abuja, verified the uptick, confirming sales at N1,130 and purchases at N1,140 on Friday.

This surge follows a remarkable N31.23 gain recorded on Wednesday, defying October’s inflation hike in Nigeria, as reported by DAILY POST.

As the Naira continues its winning streak, all eyes turn to the upcoming economic roadmap presentation by the Central Bank of Nigeria (CBN) Governor, Dr. Olayemi Cardoso, at the annual Bankers’ Dinner of the Chartered Institute of Bankers of Nigeria on Friday, 25th November, 2023.

Business

Rice prices soar by 37% as Nigeria grapples with growing supply gap

Published

2 weeks ago

November 21, 2023

Ayodeji Oke

Rice prices soar by 37% as Nigeria grapples with growing supply gap

A substantial 37% surge in the market cost of rice has left the staple food in short supply, intensifying concerns over the widening annual supply gap. The AFEX Wet Season Crop Production Report for 2023 reveals that the availability drop has resulted in a staggering two million metric tonnes increase in the supply deficit each year.

The report states, “Rice consumption in Nigeria has been steadily increasing, nearly matching the annual population growth projection of 2.6 per cent at two per cent. This has led to a supply gap of about 2 million metric tonnes annually.”

Nigeria, once Africa’s top rice producer in 2021, with an output of 8.3 million metric tons, now faces challenges due to surging consumption rates. Despite potential net rice export capabilities, the country has spent over $15 billion in the past decade to meet its escalating rice consumption.

The Rice Outlook report by the U.S. Department of Agriculture predicts Nigeria’s importation of 2.1 million metric tons of rice in 2024, potentially making the nation the world’s leading rice buyer. This follows the recent decision by the Federal Government to lift the ban on rice importation.

While the ban was in place, imports plummeted by 98.4% between January and July 2022. The increase in rice prices is attributed to production setbacks caused by flooding and the repercussions of global market dynamics.

Factors contributing to the global rice price surge include India’s ban on rice exports, the world’s second-largest rice exporter, and potential production impact from El Nino in key regions. Rain-induced disruptions and quality variations during Vietnam’s summer-autumn harvest have further fueled the price hike. The report anticipates a 4% increase in rice production with an additional 32% rise in the price of paddy rice.

Business

Public schools empty, banks closed in Osun as NLC, TUC members protest

Published

3 weeks ago

November 14, 2023

Ayodeji Oke

Public schools empty, banks closed in Osun as NLC, TUC members protest

The nationwide strike declared by the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) has taken its toll in Osogbo, Osun State, with public school students sent home and banks opting to remain closed.

Observations by the News Agency of Nigeria (NAN) revealed a significant impact on public schools, where students were seen leaving various primary and secondary schools and heading home. At CAC Grammar School, Gbodofon, Osogbo, the school gate stood wide open, allowing students to exit, while teachers gathered under a tree for discussions.

In tandem with the strike’s influence, several banks in Osogbo chose not to open their doors to customers, with some displaying hesitation and a few engaging in business transactions. The state secretariat in Abere witnessed a notable decline in activity, as most offices appeared deserted, and only a limited number of workers were observed within the premises.

A confidential source from the secretariat acknowledged that the strike had yet to fully materialize, highlighting the absence of the usual barricades by members of the NLC and other unions. Security personnel were strategically stationed at the entrance of the secretariat and other key locations in Osogbo.

Modupeola Oyedele, the Osun State NLC Caretaker Chairperson, confirmed to NAN that the strike adheres to directives from the NLC and TUC headquarters. She emphasized that the primary instruction was for workers to abstain from work without engaging in street protests.

“We are not doing street protest with the strike. The instruction is for workers to abstain from work and we are complying.

Public schools have sent back their students in compliance with the strike.

Many send their students back this morning because the strike directive came late last night, so that is why students were turned back after getting to school.

We are ensuring that there is compliance as our officials are at the state secretariat to ensure workers do not resume in their offices,” Oyedele explained.

The strike directive, issued on Monday evening by the labour unions, was met with resistance from the government, which deemed it illegal.