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Rational Perspectives

Is the 2017 budget also another sandcastle?

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

A fiscal plan is usually a clear and precise statement of what government hopes to realistically earn as income and how much it would spend within a given time frame. Thus in a year, if projected incomes exceed expenditures, a surplus will be available as savings or to apply responsibly to revamping vital social infrastructure. Conversely, where projected expenditure exceeds actual income, the shortfall will invariably be funded with loans or savings.

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President Muhammadu Buhari

High cost of borrowing: Who is fooling who?

There is a limit to which you can grow a business with personal savings; invariably, sustained growth and expansion require additional capital, which may be subscribed or borrowed. It is less risky, for example, to borrow, if loanable funds come with cheaper rates below 5%, especially where gestation is necessarily extended; besides, easier access to cheap funds generally stimulates businesses to create more job opportunities. Furthermore, material inputs, similarly financed with low interest loans, will also reduce production cost, and sustain consumer demand with affordable prices.

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The recent DSS raid on BDC operators

Ans: It is not appropriate in the first place for CBN to either define the exchange rate or to determine what rates are applicable in the market. The wide disparity between official and parallel market rates is the result of CBN’s reluctance to relinquish its oppressive monopoly on the foreign exchange market. Invariably, monopolists will distort market prices in any sector.

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“MUGU” smiles back into debt trap!

In an article published on 29/12/05, titled ‘Compassionate Debt Relief or Paris Club 419?’, this writer observed as follows: “Despite the effusive enthusiasm of this Administration, some Nigerians refuse to celebrate the conditions for the recent ‘debt relief’ in which Nigeria will see $18bn of its total debt of over $30bn cancelled on condition that it pays the remaining $12.4bn between now and March 2006.”

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To concession is more responsible than to borrow $29.9bn

President Mohammed Buhari’s request dated 25th October 2016, for Legislative approval, to disburse the sum of $29.9bn, between 2016-2019, from an anticipated external loan package, was the first notice of government’s intent to commit to, arguably, the largest borrowing in Nigeria’s fiscal history. Media reports suggest that the funds will be deployed to improve agriculture and redress severe infrastructural deficit in selected parts of the country; so far, the criteria for project choice and location are not yet known and there are already suggestions that the project spread appears lopsided.

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Is petrol still subsidized?

THE Minister of State for Petroleum, Dr. Ibe Kachikwu, informed newsmen in Abuja, on 17 December, 2015, that the Federal Government would focus on price modulation of petroleum products to ensure efficiency and regular supply of products; price modulation, according to the Minister, has nothing to do with the removal or existence of subsidy.

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CBN Headquarters

Where is the $7bn CBN placed with 14 banks?

“The report of 14 Nigerian banks which were appointed by CBN as “Asset Managers” of Nigeria’s reserves was carried on back page of The Guardian Newspaper of the October 5th, 2006. Festus Odoko, the CBN’s Head of Corporate Affairs, confirmed in the report that “already deposits worth $7bn representing part of the Central Bank of Nigeria’s “share of foreign reserves” presently estimated at about $38bn had been released to the banking consortium”.

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President Buhari

Collegiate presidency and national harmony

This article was first published in June 2006, but its content has become increasingly relevant as we mark the 56th anniversary of our independence; it is represented once more as a wakeup call to abort the inevitable dire consequences which will jeopardize our relationship as a nation so that we will forestall an inevitable frustration of the hope of our people for a better life. Please read on.

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Emefiele CBN Governor

The untapped solution to our economic crisis

The above is the title of a 2-part article by Franklin Nnaemeka Ngwu, who holds a Doctorate degree in Law & Economics, Banking and Financial Services Regulation and is also an Assistant Professor of Finance in a UK University. The following summary and excerpts from his article hopefully capture the essentials in the recommendation for an urgent payment reform to resolve our current economic predicament. Please read on:

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Inflation: The quiet plague

Nigerians know too well, that sinking feeling when all items on the household shopping list cannot be covered by the regular budget. The options are either to cut down or do without some basic items, or alternatively make do with less preferred but cheaper substitutes. The depressive impact of a continuous price spiral on the average family’s welfare is therefore a very familiar theme.

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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.

This devaluation ‘be like’ 419!

“The IMF and other respectable International financial agencies and local economic experts, have commended the recent devaluation via a floating Naira exchange rate, as an ‘investment’ that would ultimately yield great dividends. We are encouraged to believe that the new forex regime will recharge our economy, sustain inclusive growth with increasing job opportunities, and also reduce our almost total dependence on crude oil, by facilitating the actualization of a diversified economy. It is also suggested that devaluation would create a level playing ground and attract investors to build more refineries and similarly encourage marketers to import fuel.

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Can banks readily cough up NNPC’s $2.12bn?

The latest directive, dated 23/08/2016, however seems to be a reversal of an earlier approval dated 14/09/2015, from the office of the Account General of the Federation, for CBN to exempt some Agencies from compliance with a Central Treasury Single Account with the CBN. The AGOF’s circular confirmed that the thirteen exempted agencies are “profit oriented government business entities that pay dividends to the federal government of Nigeria”; according to the Accountant General, in another circular, such companies included NNPC, PHCN, Nigeria Railway Corporation and others.

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