• Nigeria And The Emerging Economies

    10/Apr/2016 // 332 Viewers

    By Femi Fabiyi

    The buzz “Globalization” has redefined socio economic affairs in many developing and underdeveloped countries. Many countries are relishing robust trade deals in lieu of more liberal international economic laws, promoting less barriers and reduced tariffs in an effort to create real and valuable assets-based-opportunities, tailored towards growing economic and social wealth, particularly in the emerging markets. Many emerging market economies, including Nigeria have struggled to simulate the dynamics of the global concept, resulting in some cases - repressive and damaging socio economic policies. Below expectation economic performances from the BRIC countries, per their last 5years economic metrics, have provided deep insight into two different economic models that may have been employed by many other emerging markets – Nigeria, a case study. 

    On one part is the economy system driven solely on natural resources. And the other is the economy structure that is aligned with human capital.

    On a consistent note, Nigeria has been measured by experts as a country with enormous potentials, similar to some of the BRICs. But Nigeria economic growth deterrence lies in her inability to align its powerful human capital with its massive natural resources.

    The crash in the oil market becomes a wrench in many oil producing nation’s policies and economic strategies, making a long term fiscal and economic projections a notoriously delicate endeavor. The unprecedented situation complicates economic trajectory for emerging economies that rely heavily on petrodollar, creating a sense of urgency for oil nation managers to exert their leadership skills in resource management. 

    At the height of commodities boom, the emerging market economies ushered in various power brokers or political juggernauts, and they were, and still very close to the helms of their respective government affairs. They have steadily upended their influence in channeling state resources to meeting unguarded goals and objectives. In Nigeria, mafia-like groups took over key institutions, and run the systems with little or zero ethics. The Oligarchies are the gun powders of day to day business activities in Russia’s most lucrative markets, and the Odebrecht and Petrobras decides what goes into Brazil fiscal policies. Just as the promising emerging markets got clobbered with market uncertainties, the power brokers in Indian and China pulled together their think-tanks and unconventionally began to develop a workforce that is turning Asia market a force to reckon with. The Chinese stake holders spread their risks across all economic sectors – strong manufacturing sector, promotes financial prudency, introduce competitive educational systems, reinvigorate its service industry, and spend years constructing roads, bridges and residential houses for their middle class. Strategically, it also encourages disruptive technology in the area of Intellectual Property, and has maintained an era of trade surplus, helping its economy to continue to build a middle class workforce. Over the years, the smartest of the Indians have come together to reinvent India’s education system, building a competitive high-tech workforce and a branded medical service. India professionals in IT have reshaped global service industries, attracting more than 500 US off shore corporations. The West corporate inversions to China and India have helped both nations’ major stock indexes in positive territory. And both countries have performed far better than Brazil and Russia, whose economic growth model relied heavily on natural resources just like Nigeria.

    Assessing the efforts of Nigeria think-tanks or the smartest guys that found themselves at the corridor of affairs, it is appalling what seems to be on Nigerians score sheet. My research found that, unlike the Oligarchies, the Odebrecht and Petrobras who to some extent invested in other sectors of their respective local economies, Nigerian smartest politicians are predominantly found in off shore business activities, siphoning the little earned petrodollar premium back to the Western economy.

    Many of Nigeria mafias have invested their stolen monies in personal homes abroad (USA, Britain, Dubai, South Africa and a host of other countries). Why should a Nigerian based politician maintain a residential home in the USA? I honestly cannot find a reasonable answer to this question. For my readers who do not understand USA real estate market, here is a hypothetical case – A Nigerian based politician who owns a $1,000,000 house in America is expected to pay at least 2% of $1,000,000 in property taxes and between 1.5% and 2% of $1,000,000 for maintenance on a yearly bases. So, what sense does it make for a Nigeria politician to pull an average of $35,000 from the local economy every year and send it to America to help develop America cities and counties?

    Unlike the Chinese and Indian stake holders, Nigeria mafias are notorious of importing high end luxury cars and even private jets for recreational purposes. A personal friend calls his luxurious car “my toy”. Again, the question is, does this toy fit an environment where roads are very bad and unsafe? Remember, they will need hard earned community dollars to fix the slightest hiccup in the engineering of the car or private jet.
     
    I personally expected Nigerian high rollers to be loyal to their economy where returns on equity could be higher. But Nigeria mafias favors stocking their monies in the Western economies where equity returns has been very low. Investment in Bonds and Treasury instruments performed even worse in the West.
     
    Understandably, celebration of life and occasions are part of Nigerian culture, but the culture may be at stretch when our smart leaders are seen throwing scarce $$ bills in the air at parties. Interestingly, the new trend is even more worrisome - the urge for privately brewed imported drinks at ceremonies. This indicates another way of redefining the class structure in Nigeria society. It is imperative to note that this is happening in a country where unemployment has ballooned through the roof and middle class is pretty much on its knees.

    In consideration of Nigeria numerous challenges and the enormous opportunities within reach, I was hoping the smart politicians will show some sense of creativity by recycling the stolen money in Nigeria emerging economy such that, it at least add values to the system they have looted. May be a good way to begin to seek forgiveness for their deeds! 

    It cost China 4years and a sum of $1.5b to build a 26 mile bridge that is warranted for 100 years by Chinese workers. How about Nigeria politicians emulating such a fit by using the stolen monies to construct a toll-based highway from Lagos to Port Harcourt or from Port Harcourt to Kano? Not only will the concept provide them and their families a stream of perpetual income, it will also give an average motorist on these roads some sense of traffic relief.

    Recently, a group of international investors submitted a proposal for a massive solar energy power base in the desert of North Africa - an area that covers the borders of Algeria and Egypt. The financial outlay has not been officially finalized but I don’t think the project is beyond what our smart looters can join hands and execute in the interest of Nigeria economy. Nigerians will skip meals to pay for electricity – it will result in a win win endeavor. 

    Nigerian mafias will rather travel to India or the West for medical issues than to find solutions to our hospital problems in Nigeria. They prefer to rush their children to universities abroad than to upgrade our educational systems. They will rather look for ways to weaken naira than to give the Nigeria economy a boost. In spite of these anomalies, we still treat them like semi-god.

    Recent shortages in petroleum products and nation-wide electricity blackout have proven to the investment world that Nigeria is not ready to be a formidable player in the emerging economies. This is particularly sad because the economy situation in the country now is dire, and there is urgent need for a turn around. The government seems to show some calmness at time of desperation, where life of an average Nigerian is getting eroded by the day. Business is stagnant; manufacturers are either relocating outside the country or closing shops. The naira is losing value, inflation is off chat and the government is yet to demonstrate a path to resurrection. Nigerians home and abroad have banked a little hope on the news of recovered looted money, but what is been done with the money can only be imagined.  According to JP Morgan, more than $1billion has been moved from Nigeria equity market in 12 months to other emerging economies including Mexico, Indonesia and Turkey.

    The world has become so small and every country is looking for a piece of the pie. The challenges are real and its time for our big guys to measure up. A focused based emerging economy should be directing its resources to creating opportunities for its people, especially where the demographic is favorable and the people are determined. 

    The last time I sighted a cross-over carrier politician in his egoistic opulence, and his wife well decorated with a leash-like necklace, I questioned his smartness and why the political class have no respect for Nigerian lives, his answers were resentful – Nigerians don’t complain. He may be right; otherwise we will not have some of the governors out there running shows for their states. 

    It is important to note that, the West cares and love Nigeria. They will never desert us, knowing a failed Nigeria is their headache. They will however continue to allow our corrupt politicians to launder petrol money into their systems. They will target, and attract our young and the brightest if we choose to ignore them. They will equip them and embrace their knowledge. They will listen to their plights and suave them into changing allegiance. They will stay afar and watch as we continue to write and rewrite our depressing history. They will remain peace keepers through their numerous charity organizations and ensure no dissidents are allowed to disrupt the fragile tact between all the different ethnic groups. They pray one day, we learn from our mistakes and begin to explore our potentials. As the hope and aspiration lingers in the land of milk and honey, so is suffering and smiling. 

    *Femi Fabiyi is based in Connecticut, USA

    Email: femif826@gmail.com

     

     


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  • Why the Federal Government should listen to the World Bank on the removal of subsidy

    10/Dec/2015 // 240 Viewers

     

     

    The World Bank has advised President Muhammadu Buhari to remove the fuel subsidy amidst the current fuel scarcity plaguing the country.
     
    According to the World Bank Economic Report released on Tuesday, Nigeria has spent about N6.9 billion in the last five years to subsidise petroleum products making the removal of the subsidy imperative, when the price of oil is still under pressure thanks to the current storage squeeze.
     
    Buhari has stated that the government is yet to remove the subsidy because its impact on food and transportation which would affect both the employed and unemployed citizens in the country. However, a World Bank Lead Economist, John Litwack, said the removal of the fuel subsidy is best carried out at a time when oil price is at its lowest in order to maintain the retail pump price of N100 per litre.
     
    Between 2010 and 2014, Nigeria spent $35 billion on the fuel subsidy which denied the federal government the opportunity to accumulate revenue in the excess crude account which, in turn, could have reduced effect of the dwindling oil prices for the country. If the federal government fails to remove subsidy now, there is a high tendency for its cost to increase over time as rising domestic demand for petrol out paces growth in oil output or revenues.
     
    It is seemingly outrageous that the government spends about one-fourth of its budget on a fuel subsidy that is significantly greater than the entire executed federal capital budget as well as the combined spending on education and public health. “Nigeria currently needs fiscal consolidation since it is not earning because oil prices are down, it is pertinent, therefore, to cut down all expense lines… Fuel subsidy must go” said, the Emir of Kano and former Central Bank of Nigeria (CBN) Governor, Mallam Muhammad Sanusi.
     
    This subsidy was sustainable when the global price for oil was well above $100. But with the current price hovering around $37.89 – $38.09 per barrel and a debt service cost that is likely to increase to 35 percent of the country’s revenue in the next four years, the fuel subsidy can no longer be accommodated.
     
    While it appears that the president has tactically scrapped the kerosene subsidy in the Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), which he presented to the National Assembly this week, the fuel subsidy is yet to be removed. More needs to be done in order to setup a well-designed framework which will allow for development in the gas sector.
     
    By Damilare Opeyemi


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  • Israel 'exported gold to North Korea'

    10/Dec/2015 // 171 Viewers

     

     

     
    © AFP/File | The Israeli Knesset's economics committee said it would tighten restrictions on trade with North Korea after learning that $400,000 of gold was exported after a 2006 UN ban
     
    JERUSALEM (AFP) - Hundreds of thousands of dollars worth of gold has been exported from Israel to North Korea despite a UN ban, an Israeli parliamentary committee said Thursday.
     
    The Knesset's economics committee said it would tighten restrictions on trade with the authoritarian state after learning that $400,000 of gold was exported after a 2006 UN ban.
     
    David Houri, an Israeli tax official, told a committee hearing Wednesday the gold was traded in the years after the ban was introduced, Israeli media reported.
     
    Specific details were not released, but other banned goods have also been exported in recent years, he was quoted as saying.
     
    Spokesman Lior Rotem confirmed to AFP that the committee had taken new "steps to implement" the 2006 ruling.
     
    The new restrictions prohibit the export of many luxury goods to North Korea while the economy ministry will also more carefully scrutinise export licenses.
     
    Trade with North Korea of precious metals, among many other goods, was banned by a Security Council Resolution imposed due to the state's attempts to obtain nuclear weapons.
     
     
     
     
     
     
     
     
     
     
     
    By AFP


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  • South Africa’s volume of trade with Nigeria nosedives, witnesses steady decrease from May 2015 - Lulu Aaron-Mnguni, S'Africa Ambassador to Nigeria

    10/Feb/2017 // 711 Viewers

    *Under Jonathan, the volume of trade recorded a steady growth from N488 billion (20.6 billion Rand) in 2010 to N1.5 trillion (62 billion Rand) in 2015

     

    South African Ambassador to Nigeria, Lulu Aaron-Mnguni, says trade volume between the two countries has dropped to about N1.3 trillion (55 billion Rand) in 2016.

    The trade volume decreased by 11.29 per cent from N1.5 trillion (62 billion Rand) in 2015.

    Aaron-Mnguni told News Agency of Nigeria in Abuja on Thursday that bilateral relations between the two countries were excellent but could be improved upon.

    The trade between the two countries increased steadily from N488 billion (20.6 billion Rand) in 2010 to N1.5 trillion (62 billion Rand) in 2015.
    He said that the gradual movement was attributed to Nigeria’s demand for automotive parts, South Africa’s export cars, vehicles, structures and parts of structure, uncoated paper and paperboard.

    Aaron-Mnguni said: “The volume of trade is 55 billion Rands; that is what I can say now. It is growing, of course there are challenges at this moment but it is growing and we want it to grow more.

    “That is why we are working together in the field of diversification of the economy; we currently have South Africans that are working in some parts of Nigeria like in Jos and Kaduna.

    “We are trying to make sure that we help in the field of mines and steel, of course we work together in the field of energy.

    “We are learning from Nigeria in the field of oil and gas, we want to learn because in the future we will want to be experts in that area.”
    The envoy said that the relationship between the two countries was encouraging, adding that there was nothing negative about Nigeria in South Africa.

    Aaron-Mnguni said that the two countries needed to work together to leverage on their advantages in the continent.

    According to him, there is need to address the issue of poverty in both countries so that desperation among the people which ends up in mistrust and suspicion can be removed.

    He said: “Nigerians are very good in business and this is the area we need to work together and that is what can help us, so that South Africa can learn more about doing business.

    “It is through this working together that people can learn that they are one people. There are lots that we can do together for the sake of our people.”

    He, therefore, called on Nigeria to lend a helping hand in developing SMEs Sector of the South Africa.  - (NAN)


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  • Saddled with massive debt burden under BUHARI, Nigeria’s debt rose to N14.5tr in 2016

    10/Mar/2017 // 444 Viewers

     

    Nigeria’s total debt rose to $14.5 trillion as at end of last year, the Debt Management office has said yesterday

    The debt office in their end of the year report said foreign bonds and loans stood at $11.40 billion as of 31st December, an increase of $700m when compared with $10.71billion in the previous year.

    The domestic debts which comprised bonds, Treasury Bill, and Treasury Bonds stood at N11.06 trillion, an increase of N2.23 trillion above the N8.83 trillion in 2015.

    The country which battled recession within the reported year serviced its domestic debts with about N1.22 trillion compared to N1.02 trillion in 2015.

    The total amount committed to debt servicing in 2016 is equivalent to the 20 per cent of the N6.2 trillion budget of the year.

    Part of the foreign debt  were the $1.72billion from African Development Bank Group, $6.4billion  from World Bank Group and the $1.65 billion bilateral  loans from China, France, Japan, India and Germany.

    The Federal government recently issued $1billion euro bond and is about to place additional $500m to fund the infrastructure projects in the 2016 budget which roll-over till May this year.


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  • Thousands rally in Berlin against EU-US free trade deal

    10/Oct/2015 // 150 Viewers

    AFP / DPA / Kay Nietfeld | Protesters rally against the proposed US-EU free trade pact, the anti-Transatlantic Trade and Investment Partnership (TTIP) in Berlin on October 10, 2015

    Hundreds of thousands of people rallied Saturday in the German capital against the massive free-trade accord being negotiated by the European Union and the United States.

    Responding to a call by a group of political parties, trade unions and environmental and anti-globalisation groups, the demonstrators gathered at Berlin's main train station for a march through the city.

    Organisers said 250,000 people showed up to the protest, much more than the 50,000 to 100,000 expected to take part.

    Police said around 100,000 participated in the protest against the Transatlantic Trade and Investment Partnership (TTIP) under negotiation between Washington and Brussels, as well as a similar deal with Canada.

    "Never before have we seen so many people take to the streets for this issue," the German trade union confederation DGB, which helped organise the protest, said on Saturday.

    Several trains and more than 600 buses had been chartered to transport protesters to the capital, who marched carrying sigs that read "Stop TTIP" and "TTIP signals climatic shipwreck".

    Opponents say the deal would lead to widespread deregulation and reduce the scope of government.

    "We are here because we do not want to leave the future to markets, but on the contrary to save democracy," said Michael Mueller, president of the ecological organisation German Friends of Nature.

    Talks on the pact between the US and 28-nation EU -- which would be the world's biggest trade deal if completed -- began in 2013 and the two sides aim to conclude them by 2016.

    Campaigners are particularly angered over Washington's insistence that as part of the pact, private companies be allowed to sue governments before special tribunals.

    (AFP


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  • Naira appreciates on Monday against the US dollar (See exchange rate)

    11/Apr/2017 // 2304 Viewers

     

    PARIS, APRIL 11, 2017: (DGW)  THE  Nigerian  naira on Monday  appreciated on  in the parallel market following indication that the CBN will sell $20,000 to each BDCs this week, up from the $10,000 usually sold to each BDC.

     
    Though the naira closed N403 per dollar on Monday and N397 on Friday previous week in the parallel market, it however depreciated to N405 per dollar on Saturday.
     
    Gwadabe blamed the depreciation on inflow of illicit money which he said is driving up demand for dollars.
    He warned BDC operators to avoid being used in the laundering such illicit money, saying that ABCON will impose heavy sanction on any operator involves in such illegality.
    Commenting on the N450 million cash discovered in an abandoned BDC premises in Lagos  shop on April 7 Gwadabe said that   ABCON has commenced  investigation into the matter    was ongoing and still under the security purview.
    He assured that as soon as investigation was concluded, the press would be briefed accordingly. “We have identified the characters involved and we are going to write them to invite them.
    “The reason we call this meeting is to say that we condemn it in entirety. He urged members to desist from such act since it was an abuse of Know-Your -Customer (KYC).
    Even if you are a member and you are found with N500 mill that is total abuse of KYC, total abuse of the cash transfer report, it is total abuse of the suspicious transaction report and that is the message we have told our members that they must respect those compliances.”


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  • Again, Naira weakens against the dollar, other major currencies (See exchange rate)

    11/Apr/2017 // 1870 Viewers

     

    PARIS, APRIL 11, 2017: (DGW) The Nigerian Naira on Tuesday again fell before the US dollar on the parallel market in spite of Nigeria's apex bank intervention at both the interbank market and Bureau De Change (BDC) window.

    The News Agency of Nigeria (NAN) reports that the naira on Tuesday afternoon exchange between N405 (buying rate) and N410 selling rate on the parallel market.

    NAN reports that it was weaker than N405 traded on Monday.

    Also, the Pound Sterling and the Euro closed at N490 and N430 respectively.

    At the BDC window, the Naira was sold at N362 to a dollar, while the Pound Sterling and the Euro traded at N500 and N428 respectively.


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  • Pathetic! How Nigeria Crashed Out as Africa’s Biggest Economy Under Buhari

    11/Aug/2016 // 570 Viewers

     

    After the much celebrated declaration of the Nigerian economy as the largest in Africa and 26th in the world, South Africa has pushed the country back, climbing to the top position on the African continent.

    The International Monetary Fund, IMF, using the Gross Domestic Product, GDP, at the end of its 2015 report, rated South Africa as the biggest economy in Africa, taking back the first position it lost to Nigeria with a GDP of $301 billion, while Nigeria’s GDP stood at $296 billion.

    According to a report by Bloomberg, the South African currency, rand, has gained more than 16% against the US currency since the start of 2016, while the naira has lost more than a third of its value.

    South Africa’s economy has regained the position of Africa’s largest in dollar terms, more than two years after losing it to Nigeria, as the value of the nations’ currencies moved in opposite directions.

    Based on GDP at the end of 2015 report published by IMF, the size of South Africa’s economy is $301 billion at the rand’s current exchange rate, while Nigeria’s GDP is $296 billion.

    That’s after the rand gained more than 16 percent against the dollar, since the start of 2016, and Nigeria’s naira lost more than a third of its value after the central bank removed a currency peg in June.

    Both nations face the risk of a recession after contracting in the first quarter of the year. The Nigerian economy shrank by 0.4 percent in the three months through March, from a year earlier amid low oil prices and shortage of foreign currency. That curbed imports, including fuel.

    In South Africa, GDP contracted by 0.2 percent from a year earlier, as farming and mining output declined.

    “More than the growth outlook, in the short term the ranking of these economies is likely to be determined by exchange rate movements,” Alan Cameron, an economist at Exotix Partners LLP, said.

    Although, Nigeria is unlikely to be unseated as Africa’s largest economy in the long run, “the momentum that took it there in the first place is now long gone”.

    The South African rand rallied as investors turned to emerging markets with liquid capital markets to seek returns after Britain voted to leave the European Union on June 23, even as the central bank forecast the economy won’t expand this year and the nation risks losing its investment-grade credit rating.

    In Nigeria, investors did not flock to buy naira-based assets after authorities removed the peg of 197-199 naira per dollar. The Central Bank of Nigeria, CBN, raised its benchmark interest rate to a record in July, to lure foreign money, even as the IMF forecast the economy will contract 1.8 percent this year.

    Nigeria was assessed as the continent’s largest economy in April 2014, when authorities overhauled its GDP data for the first time in two decades.

    The recalculation saw the Nigerian economy in 2013 expand by three-quarters to an estimated N80 trillion. The rand gained 1 percent to 13.2805 per dollar at 4:03 p.m. in Johannesburg on Wednesday. The naira weakened 2.7 percent to N320 per dollar. - POST NIGERIA


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  • End of the Road As Buhari Hands Over Nigeria’s Economy To Foreigners

    11/Sep/2016 // 3361 Viewers

     

    POST.NG: In a bid to help Nigeria come out of her economic recession as quick as possible, the United Nation Secretary-General, Ban Ki-moon, has pledged to send a special envoy to the Nigerian Young Professionals Forum, NYPF, Summit, scheduled to take place in New York on September 24.

    U.N. Secretary-General, Ban Ki-moon, made this gesture during a press conference at the United Nations headquarters in Geneva, Switzerland.

    “The world should act with great urgency and compassion to ease economic distress”, Ban Ki Moon said.

    A statement issued on Saturday in Abuja, by Miss Owomilere Obe, Director of Communications of the forum, said that the summit was aimed at providing solutions to the recession facing the country.

    The UN Secretary-General, former Central Bank of Nigeria, CBN, Governor, Charles Soludo and Minister of Finance, Kemi Adeosun, are expected to attend the summit, according to the statement.

    “The summit is part of efforts to resolve the present economic crisis in Nigeria, and assist with credible projects that could potentially elevate Nigeria from its current status, as a third world country.

    “The theme of the summit is X-raying the Current Nigeria’s Economic Challenges and Our Foreign Policy, Prospect and Solution.

    “We can no longer pretend that Nigeria is not in a recession. This is evident by the dip in government revenues, drop in consumer spending, decline in economic activities, job losses, and most importantly inflation rate.

    “This is why we have come together as young professionals to address these issues, on the way forward for Nigeria,” Obe said.

    She added, that the summit would hold concurrently with the United Nations General Assembly, and it would feature discussions that border on inclusive growth, food security, economy diversification, and foreign direct investment.

    Obe, said that representatives of the International Monetary Fund, IMF, World Bank Group, African Development Bank, Bill Gates Foundation, EU, and Rockefeller Foundation, would feature in panel discussions.

    NYPF, founded by Moses Siasia, is a non-governmental organisation with more than three million young Nigerian professionals from diverse professions and perspectives.

    It recently inaugurated a special seed fund, ‘Young Entrepreneurs and Student Grant Scheme’, for young Nigerians, as part of efforts to grow more indigenous entrepreneurs, and encourage self-reliance.


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