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    Rational Perspectives

    “Of exchange rate mechanism, exchange rate and devaluation”

    Indeed, Naira devaluation is probably the most potent weapon against the prosperity of Nigerians. Nigeria’s migration from a potential industrial power house with bustling social affluence, to a subdued and stumbling economy clearly began with the adoption of IMF’s Structural Adjustment Programme during Babangida’s regime: the chorus from International Agencies, at that time, was also that falling oil prices with an unserviced debt burden and the consequent restriction of trade credit to Nigeria, were the products of an allegedly overvalued Naira exchange rate.

    Industry, Commerce, as well as employment opportunities, unexpectedly, flourished for the greater part of Abacha’s four year reign, despite Nigeria’s pariah status and the stupendous treasury rape by the dictator. The question, therefore, is how Abacha’s Economic team sustained the erstwhile elusive enabling environment, despite the dysfunctional economy that was inherited. Fortunately, Chief Anthony Ani, an insider in that team, answered this question, in his keynote address, at ICAN’s injuction ceremony on May, 112016.

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    FUEL-Price-change

    The mother and father of fuel prices

    In the wake of deregulation of petrol prices under Obasanjo in 2004, and the unfolding anxiety of Labour and the Nigerian public on the adverse impact of rising fuel prices, this column published two articles titled “The Mother and Father of Fuel Prices”(22.11.2004) and “Only a Stronger Naira Will Stop Rising Fuel Prices”(22.08.2005) The solution proposed in both articles remain solidly valid today as it was over 12 years ago; for this reason, a summary of both articles is again presented in the hope that the authorities will one day heed our counsel and resolve our dilemma.

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    Buhari

    A misguided editorial on Buhari’s refusal to devalue Naira

    It is common practice in the print media for a Newspaper to identify and evaluate an issue of public significance and then make sensible recommendations that would be socially beneficial. Ultimately, after presumed exhaustive debate of the subject by a seasoned team of journalists and external consultants, a statement is distilled and published as the Newspaper’s Editorial opinion.

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    NLC protest electricity tariff hike in Abuja

    N56,000 minimum wage or a stronger Naira?

    The leadership of organised Labour Unions, last week presented a new demand for N56,000 monthly minimum wage, to the federal government. The President of Nigeria Labour Congress (NLC) Comrade Ayuba Wabba told a news conference in Abuja, that even though it is true that the economy is not doing well, but the law has stated that wages for workers must be reviewed after every five years”.

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    President Buhari receiving a presentation from Mr Jin Zhuanglong Board Chairman, Commercial Aircraft Corporation of China shortly after his visit to Commercial Aircraft Cooperation of China Ltd in Shanghai China.

    President’s trade mission to China

    The template for public expectation from President Muhammed Buhari’s recent visit to China was formally defined by Femi Adesina, in the President’s Media Adviser’s press release, which was published a day before Nigeria’s star-studded delegation departed Abuja in April. However, the Finance Minister, Kemi Adeosun had told Reuters and London’s Financial Times, just before the China trip that Nigeria was actually in negotiation for a $2.5bn World Bank loan to partly fund the 2016 budget, because of the more favourable terms.

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    fuel-pump

    ECONOMY: Why increasing crude prices will cause more problems

    Crude oil prices wobbled alarmingly, well below Nigeria’s modest budget benchmark of $38/barrel, for several weeks, but, unexpectedly flexed above $40 in early April to rekindle hopes that the fortuitous price spiral will be sustained to partly fund the 2016 projected deficit and partially also satisfy the clearly bloated excess market demand for foreign exchange.

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    FILE: FROM LEFT: PERMANENT SECRETARY, STATE HOUSE, MR NEBOLISA EMORDI; 
CBN GOVERNOR, MR GODWIN EMEFIELE; VICE-PRESIDENT YEMI OSINBAJO AND  PRESIDENT MUHAMMADU BUHARI, DURING THE INAUGURATION OF NATIONAL ECONOMIC  COUNCIL AT THE PRESIDENTIAL VILLA IN ABUJA ON MONDAY (29/6/15).

    Economy: Buhari and CBN pulling apart

    The National Assembly approved the 2016 Appropriation Bill, just a day before recess, on the Wednesday 23rd of March; the approval was a fulfillment of the Appropriation Committees’ promise to do the needful before the Easter break. However, the Senate Appropriation Committee’s Chairman, Danjuma Goje, acknowledged that the three months delay before implementation could have been avoided if the Budget was presented to the Legislature in good time.

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    File: Buhari during the 2016 budget presentation to the National Assembly.

    Is N6trn “ghost budget” still defensible?

    It is regrettable, that the absence of a more salutary impact from partial implementation of earlier budgets, has seriously eroded public expectation to make Nigerians, nonchalant about this annual constitutional requirement. Unfortunately, the unfolding drama surrounding the 2016 version of this critical annual event, may not also inspire public confidence that this year’s plan will positively touch our lives.

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    Indeed, Naira devaluation is probably the most potent weapon against the prosperity of Nigerians. Nigeria’s migration from a potential industrial power house with bustling social affluence, to a subdued and stumbling economy clearly began with the adoption of IMF’s Structural Adjustment Programme during Babangida’s regime: the chorus from International Agencies, at that time, was also that falling oil prices with an unserviced debt burden and the consequent restriction of trade credit to Nigeria, were the products of an allegedly overvalued Naira exchange rate.

    $20bn idle deposits: Burden or opportunity?

    As I’m talking to you, $20bn is in various domiciliary accounts of individuals. Naira is our currency, why are they keeping the foreign currency? From my experience in international finance, I have never seen a country where its nationals speculate on its currency”. The preceeding is an excerpt from the presentation of Dr. Joseph Nnana, CBN Deputy Governor (Financial Systems Surveillance) at a recent meeting with the Joint Appropriation Committee of the National Assembly.

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    Long queue of jerry cans at a petrol station as fuel scarcity bites harder, yesterday.

    Will agonising fuel queues ever end?

    It is, inexplicable, that despite Nigeria’s ranking as a major oil producer, our economy is still literally in shambles with a tattered currency and a crushing unemployment rate above 25%; we still unfortunately presently expend almost 50% of our total export revenue on fuel imported from some of those refineries which buy our crude oil. Regrettably, despite the regular recurrence of fuel scarcity, with its severe public discomfort, and ravaging economic dislocation, there is still no assurance that this tortuous cycle will ever end. However, if the inefficient, and wasteful sporadic operation of existing government refineries is anything to go by, any serious proposal for government to build and operate more refineries may just be a death wish.

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    Counterfeit naira

    Latent wealth with debt seeking mindset

    The 2016 Appropriation Bill, has probably generated wider public interest and debate than any other annual budget in recent memory. The projected spending of over N6Tn is by far the highest ever, but will also require an exceptionally heavy loan of almost N2Tn to fund this budget, in which capital expenditure is allocated an unusually high, though still modest provision, of 30% of government’s total spending this year.

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