The House of Representatives yesterday rejected the Federal Government’s exchange rate of N305/dollar in this year’s budget, saying it would engender huge corruption, with the almost N500/dollar at the parallel market.
Members of the Green Chamber also queried the Executive on the domestic borrowing plan of the President Muhammadu Buhari administration, saying it will stifle funds that could have been made available to the real sector and small businesses to grow the economy and move the country out of recession.
Of the N2.321 trillion borrowing plan projected in the budget, N1.253 trillion is to be sourced from the domestic market.
The lawmakers, who spoke during an interactive session with members of the Executive with the committees on Finance, Appropriation, Aid Loans & Debt Management, Legislative Budget and Research and National Planning & Economic Development on the Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) also said the government was not doing much to reign in inflation which presently stands at 18.55 percent.
Members in the various committees at the meeting also accused the Federal Government of insufficient consultation with stakeholders, especially the National Assembly while developing the MTEF, adding that the parameters in the budget are different from that in the MTEF initially submitted to the National Assembly.
But the Minster of Budget & National Planning , Senator Udo Udoma, said the government has a multi-facetted plan to move the country out of recession.
On inflation, he said: “ It is our objective to move towards a very low inflation environment because we need to move to a low inflation environment so as to have sustained and sustainable growth.
“We believe that, as the Central Bank had said, many of the things that were feeding into the inflation in 2016 is that once we can stabilise the exchange rate and other aspects of the economy, we will reduce the rate of inflation.
“But we need to do a lot more than that. We need to reduce the cost of doing business and we have a number of plans to achieve that. We need to get Nigerians back to work. We need to get single interest loans, particularly in the key areas, such as agriculture and all that, to get people back to work. Already the Central Bank is working on that.”
Udoma said the government was doing a lot, which it believes will restructure the economy. According to him, the difficult and challenging phase the country is passing through is seen on the part of the executive as an opportunity “to change things in a fundamental way”.
Finance Minister Kemi Adeosun said the government had put a lot of measures in place to stimulate the economy. She said people should be careful about putting their faith in the black market as it drives inflation.
“There is a number of structural initiative to close the gap. We have to look at why are people buying dollars at such high amounts. It’s driven by irrational and emotional factors.”
Adeosun said the Fundamentals show that the naira should be strengthening presently. “The black market will collapse because it’s not being driven by any fundamentals,” she said.
On Treasury Single Account (TSA), the minister said it was counter productive to put the government’s money in commercial banks only for them to loan it back to the government at higher rates.
Mrs. Adeosun said the government was spending more on infrastructure. “We’re targeted on spending on what will bring us out of the recession,” she said.
At the session were the Ministry of Finance, Budget and National Planning, Mines and Solid Minerals Development, Office of the Accountant General of the Federation, the Nigerian National Petroleum Corporation (NNPC), Nigerian Customs Service.
Others were Federal Inland Revenue Service (FIRS) and the Debt Management Office, Central Bank of Nigeria (CBN), and the Department of Petroleum Resources (DPR).
Few days after the World Bank Group said the country would grow by one per cent in 2017, the International Monetary Fund (IMF) has reduced the growth rate to 0.8 per cent.
The differing numbers shows the continuous changes in economic activities, which are used in measuring growth, as well as an affirmation that each forecast is not the end.
Nigeria’s growth rebound would be better than that of South Africa, projected at 0.8 per cent in 2017 and 1.6 per cent in 2018, while the sub-Saharan African economy, led by Nigeria, would record 2.8 per cent and 3.7 per cent for 2017 and 2018 respectively.
The gradual gains in the foreign exchange reserves may have improved Nigeria’s outlook, as the steady price of crude oil add up the number to $26.96 billion yesterday.
The new record represents eight-month record high, as it added no less than $600 million in the last seven trading days.
In the last three months, the nation’s foreign exchange reserves have been on the ascendancy, raising the hopes for calm forex market activities in 2017, and currently influencing growth projections.
Specifically, in the last three weeks, the reserves have added about $1.2 billion, defying mounting pressure from demand and series of interventions through special auctions by the regulator in the last three months.
Three weeks ago, it gained $320 million, followed by a $420 million gain in the second week and now a gain of $440 million.
An economist with Ecobank Nigeria, Kunle Ezun, said the take away from both forecasts is that the country’s recession would be over this year, as it is currently in the positive area.
The projections, he said, are also raising a new hopes that it is not over for Nigeria, because getting out of recession is a progress, adding the variations show that economic forecast is not a straight jacket thing, but influenced by activities and expectations.
“We can either increase or drop in the next forecast, but we must know that the solution to our economic challenges will not be fully realized this year, but a movement towards it.
The Central Bank of Nigeria (CBN) has disbursed $660.17 million to 1,342 manufacturers, power and other real sector operators for the procurement of raw materials, plants and machinery, foreign exchange (forex) utilisation report by apex bank has shown.
The funds, sourced from the CBN and sold to the beneficiary customers at the official rate of about N30.5 to dollar, were handled by commercial, merchants and non-interest banks using the interbank market.
The funds were specifically used for the procurement of raw materials, plants and machinery as specified in the Letters of Credit (LCs) under which they were sourced, and in-line with the CBN-stipulated import approval list.
The forex utilisation report was meant to promote transparency and accountability on the side of the lenders which act as a link between the regulator and the forex users.
The report, which was for September, showed that large part of the funds went to 20 companies, with Dana Motors ($12,877,278.81), Nigeria Breweries ($6,240,000), A-Z Petroleum Products Limited ($12,962,425.04), Rahamaniya Oil & Gas ($19,220,000), Dag Motorcycles Industries Nigeria ($27,964,123) and Seven-Up Bottling Company Limited ($5,882,293.67) benefiting.
Others are Biswal Limited ($6,779,858.11), HIS Nigeria Limited ($10,006,405.57), IPI Power Tech ($7,405,595.55), Promasidor Nigeria Limited ($5, 122, 472.80), Saba Steel Industries Limited ($11,147,478.58), and Crown Flour ($10,254,558). Also in the list are African Foundries Limited ($4,020,679.36), Parco Enterprises Limited ($6,558,320), Prime Plastochem Nigeria Limited ($5,668,012.75), TempoGate Oil & Gas ($7,145,279.25), Saro Agro Sciences Limited ($10,106,833.54), Midland Rolling Mills Ltd ($9,895,653.60), Flour Mills of Nigeria Plc ($11,968,016.74) and Matrix Energy Limited ($14,872,223.91).
The report also showed the raw materials that the beneficiaries used the funds to import. Dana Motors Limited used its funds for import of Kia brand of vehicles in semi-knocked; Nigeria Breweries Plc for malt row winter specifications while for Dag Motorcycles Industries Nigeria Limited, they were used for Bajaj vehicles spare parts import.
The African Foundries Limited used its funds for the importation of industrial raw materials; Parco Enterprises Limited for the importation of hard wheat and Seven-Up Bottling Company Limited, for the importation of 273 units of Pesi-Cola, the report showed.
A-Z Petroleum Products Limited, Rahamaniya Oil & Gas Ltd, TempoGate Oil & Gas for gasoline import while for Biswal Limited, the funds were used for Yaanmar engines import.
HIS Nigeria Limited used its funds for telecom plant and equipment import while for IPI Power Tech it was for automatic board panel import. Promasidor Nigeria Limited procured Cowbell powder with its funds while for Matrix Energy Limited it was for unleaded gasoline import among others.
The CBN said providing forex to the manufacturers and other key players in the economy was meant to enable it keep its promise to strengthen the real sector of the economy by ensuring that 60 per cent of available forex are used to procure industrial inputs, such as raw materials, machine spare-parts, telecom equipment, plastic raw materials, agricultural machines and pre-payment meters, amongst others.
The CBN has also expressed its commitment to ensuring that manufacturers of goods for which Nigeria does not enjoy comparative advantage, are able to get LCs to import the required materials for their businesses.
The exercise, the CBN insists, would provide a new lease of life in the manufacturing sub-sector, and also boost industrial output and employment. The regulator said it will continue to support and facilitate hitch-free procurement of necessary industrial inputs to sustain productive activities in the manufacturing sector.
The gesture, it said, buttresses its commitment to rejuvenate and sustain industrial activities and retention of jobs.
Deposit Money Banks have begun suspending their Automated Teller Machine cards (debit and credit) from working overseas as dollar scarcity continues to hit the economy badly.
Stanbic IBTC Bank, Standard Chartered Bank Nigeria and Guaranty Trust Bank on Friday announced the suspension of their overseas ATM card services.
Also suspended by the banks are online transactions priced in foreign currencies. This means that customers of the banks will no longer be able to use their debit or credit cards to make online transactions that are denominated in dollars, euros, pounds sterling and other foreign currencies.
In a note to its customers on Friday entitled: ‘Suspension of international transactions on naira debit cards’, Standard Chartered Bank Nigeria said, “Please be informed that effective immediately, your naira denominated debit cards will no longer be functional for international transactions.
“This is due to the current volatility in the foreign exchange market. Your naira-denominated debit cards can only be used for local transactions at Point of Sale terminals, Automated Teller Machines and online for Nigerian retailers.”
In a text message to its customers on Friday, Stanbic IBTC Bank similarly said, “Dear customer, kindly note that effective October 18, 2016, your ability to carry out transactions priced in foreign currency using our naira debit and credit cards will be suspended. We apologise for any inconvenience in this regard.”
Both Stanbic IBTC Bank and Standard Chartered Bank Nigeria advised customers seeking to carry out transactions denominated in foreign exchange to apply for dollar or pounds sterling debit credit cards. According to them, the dollar or pounds sterling debit or credit cards will be linked to the customers’ domiciliary accounts.
GTBank also announced the suspension of the ATM cash withdrawal service abroad. The lender also slashed its monthly ATM forex transactions to $100.
In a notice to customers on Friday entitled: ‘Review of the international spending limit on your naira Master Card’, the bank stated, “We write to inform you of the monthly spending limits currently applicable when using your GTBank naira Master Card for international payments via PoS and online. Previous monthly limit via PoS and online was $250; the new monthly limit via PoS and online is now $100. Kindly note that ATM cash withdrawal on your naira MasterCard is now only available in Nigeria.”
The development will make students studying in the United Kingdom, United States, Canada, Ukraine and other parts of the world to face more challenges getting their monthly stipends from their parents.
Most of the students had relied on the ATM card withdrawal to get their monthly stipends from their parents before now.
This means customers seeking to do foreign transactions will have to open domiciliary accounts and fund same with dollars, pounds or euros purchased from the parallel market at the prevailing exchange rates.
Although other banks have yet to announce the suspension of ATM card services abroad, findings by our correspondent showed that many lenders had reduced drastically the amount that customers could withdraw via ATMs abroad.
This is despite the fact that the banks have in the past few months reduced the monthly total amount of forex-denominated transactions that customers can do, using their naira debit or credit cards via ATMs and PoS terminals abroad as well as online payments or transactions.
As of last week, findings showed that some banks had slashed their daily ATM withdrawal limit abroad from the $300 advised by the Central Bank of Nigeria’s Bankers Committee to $100 due to their inability to source for dollars to fund the transactions.
Unconfirmed sources said some banks had reduced their monthly ATM withdrawal limit abroad to $100.
Top banking officials close to the development told our correspondent under the condition of anonymity that banks were increasingly finding it difficult to fund their foreign-currency denominated services, especially online forex transactions and overseas ATM withdrawals, as well as PoS usage overseas by customers.
A top official of Deposit Money Bank, who spoke on the condition of anonymity, told our correspondent on Sunday, “We have to stop the services. Formerly, we were sourcing forex at high prices and we were selling same to customers at similarly high prices. But the situation is now tense; the dollar scarcity has assumed a new dimension.
“This is coupled with the fact that some bank customers are using the platforms to do round-tripping. It is high time we stopped it.”
The decision by some banks to suspend overseas ATM card services and online forex transactions came barely one week after the CBN, through the Bankers’ Committee, raised concerns about what it called the indiscriminate and suspicious manner in which some bank customers were spending dollars and other foreign currencies abroad through their naira debit cards.
Consequently, the regulator said it had concluded that bank customers who spent above the $50,000 annual forex limit it imposed would be barred from the nation’s forex market.
The Director, Banking Supervision, CBN, Mrs. Tokunbo Martins, stated this after the 329th Bankers’ Committee meeting held at the apex bank’s office in Lagos on Wednesday.
She said, “In the CBN’s move to manage the demand for forex, there was a rule that was put in place that people were not allowed to withdraw more than $50,000 annually on their naira debit cards.
“For a while, the policy has been abused by bank customers, and the CBN has not taken any step to that effect. We have decided to take the step now to enforce the rule. So, we want members of the public to remember that that rule is in place.
“All your accounts are linked to a particular Bank Verification Number. Now, that the BVN only allows you to withdraw only $50,000 per annum, if people continue to breach that rule, they will lose access to forex market.”
Dollar scarcity has been ravaging the economy after the price of crude oil, Nigeria’s main forex earner.
It crashed from $110 per barrel to around $44 per barrel from June 2014.
The nation’s foreign exchange reserves have been depleting since then.
On Wednesday, the country’s external reserves hit an 11-year low of $24.21bn, the latest data posted on the CBN website showed.
This means a limited amount of dollars will be available at the official interbank spot market, fuelling concerns over another round of depreciation of the naira.
The foreign exchange reserves fell by $600m in two weeks before shedding $1bn in four weeks, the CBN statistics showed.
An expert at Ernst and Young, Mr. Bisi Sanda, lamented on the dollar pressure on the economy.
He said the Federal Government needed political will to address the issues fuelling dollar scarcity on the economy.
He said, “The issue of dollar is very important to the economy. It is predicated on the fact that we are a dollar-denominated economy. It appears the government is still begging issues as far as the import-dependent state of our economy is concerned.
“We need to fix issues, we need to go back to the drawing board. The CBN said between 2010 and 2016, a total of $11bn was sold to the Bureaux De Change annually. We need to plug leakages in this area.”
PARIS, AUGUST 18, 2016: President Muhammadu Buhari has for the first time admitted his own failures regrding his inability to proffer solutions to the myriad of problems confronting the country.
He made the stunning disclosure in a symposium while speaking at the Association of African Central Bank titled Unwinding Conventional Monetary Policies'
The President said he is very worried about the rising inflation, restrictions in capital flows and depleting forex reserves.
“The region is confronted with several global and domestic economic challenges. Most worrisome is the slowdown in growth, weakening global demand, rising inflation, restrictions in capital flows, rising debt levels, increased exchange rate volatility and depleting external reserves,” Buhari said.
“Those of us who rely on only natural resources such as Nigeria, Angola, South Africa, and Mozambique have been hit the hardest. We have also had to contend with the effect of the Ebola Virus Disease, which struck some countries in the West-African Sub-region.
“Furthermore, China, a major trade and business partner to a number of African countries is currently slowing down as it remodels its economy, sparking fears of further weakening.”
He said “African Central Banks have been at their best in keeping African economies afloat through proactive and effective combination of conventional and innovative monetary policies”.
“I urge you to continue to look for original homegrown solutions, not to rely on ‘fit for all purposes’ prescriptions handed down from abroad. The world is a dynamic place and with innovation, we can survive.
“In Nigeria, the Central Bank of Nigeria has for many years spearheaded economic stimulus measures through specific intervention programmes. I think these measures should be sustained through good times and through difficult times.
“Distinguished Ladies and Gentlemen, we fully understand that monetary policy alone is not sufficient to bring about desired economic growth. We must carefully balance monetary and fiscal policy measures.”
“For us in Nigeria, while recognizing the challenges we are confronted with and the need to surmount them, we are determined to diversify the economy away from excessive reliance on oil and other primary products,” Buhari added.
“Consequently, we are taking measures and implementing policies that would ensure we are self-sufficient, generate massive employment for millions of our youth, and explore our untapped human and natural resources.
“We shall also embark on export and production diversification steps including investment in infrastructure; promotion of manufacturing through agro-based industries and expansion of Regional Trade.
“All these would involve integrating the informal economy into the mainstream and providing funds to Small and Medium Enterprises. We shall also continue, with greater determination and focus to pursue our goal of ensuring improved security for our country and its citizens, and without letting up on our fight against corruption and terrorism.
“Side by side, with economic stimulus measures, we must intensify our surveillance and give guidance to the operations of our financial institutions to reverse the trend of illicit flows of funds out of Africa.
“We should all be serious in putting place measures aimed at ensuring that the proceeds of these illicit flows are repatriated to their countries of origin with minimal bureaucratic hitches.”
The symposium was attended by Godwin Emefiele, CBN governor, and many other central bank governors across Africa.
The National Economic Council has urged state governments in Nigeria to adopt stringent conservative measures in handling their finances for the next three years.
Minister for Budget and National Planning, Udoma Udo Udoma disclosed this while briefing State House Correspondents at the end of the monthly meeting.
He said the Council reached the decision in order to address the dwindling resources available to government at all levels.
The National Economic Council meeting, which reviews the position of the economy and looks at options available to government for improvement was presided over by the Vice President, Yemi Osinbajo.
Addressing newsmen after the meeting, Budget and National Planning Minister Udoma Udo Udoma said the Council emphasized the need for the federal and state governments to work closely on economic matters.
“We briefed the council about government’s revenue and expenditure projection for the next three years, our view in terms of the global outlook and macro economic framework and we also urged states of the country to look towards improving their internally generated revenue and blocking financial leakages in the system. We emphasized the need in planning for the economy, for the federal government and the states to work very closely together,” he said.
Taraba state Governor, Darius Ishaku said the country’s excess crude account gained an interest of over 599 thousand dollars, and the current balance of the account stood at 2.2 billion Dollars.
Sokoto State Governor, Aminu Tambuwal also briefed State House Correspondents at the meeting.
He said the Central Bank Governor gave an update on current challenges being faced as a result of the fall in the price crude oil, which he said had affected Nigeria’s foreign reserve.
“The Governor of the Central Bank gave an update on monetary policy measures and foreign exchange management strategy. He reported to the Council about many challenges being faced as a result of the global economy recession. He also reported that a drop in oil prices has caused serious pressure on Nigeria’s reserve, which currently stands at 29 billon Dollars,” Tambuwal explained.
He said as a monetary policy, the Central Bank Governor announced the adoption of the use of pre-loaded debit cards by travelers instead of cash exchange demand, to reduce the buying of dollar cash for illicit businesses.
No fewer than 25 vessels are expected to arrive at the Lagos pilotage district with various cargoes, including petroleum products, wheat, salt, and fish and a host of others.
No fewer than 25 vessels are expected to arrive at the Lagos pilotage district with various cargoes, including petroleum products, wheat, salt, and fish and a host of others.
This is coming on the heels of another two motor vessels carrying fertiliser and fish; and another one motor vessels with Premium Motor Spirit (PMS) otherwise known as petrol and F/fish are waiting to berth at the Lagos ports.
With inflation at 11 year high of 18.55 percent, the cargoes are essential commodities, which arrivals will their boost availability in the market and hold prices steady.
The Nigerian Ports Authority (NPA), which revealed these in its shipping position on Monday, said the three motor vessels were currently at ENL port, while the petroleum-laden ship is at PWA port with 15000 metric tonnes of PMS.
The fuel, which is expected to boost supply in the downstream market is yet to be cleared for discharge, as the cargo is labeled Customs release not applicable (CRNAPP).
Meanwhile, the 25 other ships that are expected in the Lagos pilotage district were scheduled to start arriving from January 13 to 28th, 2017.
The vessels expected include; Green Guatamela; Pretty Lady; Orwell; Zante; Arcadia; Jin Sha Ling; Oceaneagle; Desert Victory; Mol Dedication; Jonathan Swift; Safmarine Chambal; HS Debusy; SafmarineChachai; Rossini; Quadriga; Autumn E; Solstice N and Maersk Cairo and a host of others.
Petroleum products, such as PMS, Automated Gas Oil (AGO), Jet A1 and base oil are leading the expected cargoes, while other products such as F/Fish, B/Salt, B/Gypsum and wheat, and many others are being imported.
PARIS, JANUARY 17, 2016: (DGW) THE naira, Nigeria's domestic currency remained static on the parallel market as of Tuesday 17, 2016 with the currency exchanging for N497 to $1 US dollar.
The Naira, however, crashed against the British Pound Sterling trading at N597 and also weakened against the Euro trading at N521 on the black market.
On Monday, the Nigerian currency on the parallel or black market segment of the Nigerian foreign exchange market traded at N497 to one U.S dollar.
PARIS, JANUARY 18, 2016: (DGW) Nigeria has again been refused $5 billion loan request after she was previously refused by China by Africa Development Bank (ADB)
Reason cited was unclear economic reform, National Daily has reported.
According to the report, the country's delay in submitting the required economic reform plans have stalled the country’s effort in securing about $5bn from international lenders.
Nigeria had explained that she intends to use the loan to tackle the lingering recession facing the country.
Investigation showed that for about a year now, Nigeria has been in talk with the World Bank, promising to present its proposed reform plans before the end of last December, 2016 but failed to do so.