We are sad but not surprised over reports of death of inmates in the Internally Displaced Persons (IDP) camps in Borno State as a result of malnutrition.Read More
Early this week, just the second week in the life of the flexible foreign exchange regime, the policy has slid into revisionism, rejigs and reforms.Read More
The appointment of an Acting Inspector General of Police,IGP,from the rank of Assistant Inspector General, AIG,has created another season of instability in the commanding heights of the Nigerian Police force.Read More
We are shocked and saddened by the sorry stories making the rounds that some unscrupulous government officials are now going after the food items which are meant to feed the victims and escapees of Boko Haram attacks who have been sheltered inside and outside the Internally Displaced Persons (IDP) camps in the North East, especially Borno State.Read More
The Chairman of the Presidential Advisory Committee on Anti-Corruption, Professor Itse Sagay, put it aptly recently when he observed that our National Assembly members no longer fear Nigerians in the light of their recent moves to secure life pension for the principal officers of the House of Representatives and the Senate.Read More
ON June 2, 2016, the Federal Government announced the cancellation of post-Unified Tertiary Matriculation Examinations (UTME) tests instituted by tertiary institutions, mainly universities, in 2007.Read More
LAST week,Osun state was in the news again for a wrong reason. A High Court judgment which allows female Muslim Students to wear face coveringsor hijab on their uniform pitched Christians against Muslims.Read More
On Monday 13th June 2016, the Central Bank of Nigeria (CBN) formally flagged off its new foreign exchange market regime which, in a nutshell, runs on free market principles, thus jettisoning its former foreign exchange supply and exchange rate controls.
We have examined the short, medium and long-term implications of the policy change on the banking industry and the entire economy and we can safely say that with effective implementation it has more chances of yielding positive results than what we experienced in the previous policy of the last one year.
However, some challenges need to be addressed by the banks, the CBN, as well as the fiscal authorities so as to mitigate some of its unintended adverse consequences.
First, with the new exchange rate framework, banks will have to adopt a higher exchange rate for reporting, which means that risk-weighted assets will increase following the conversion of foreign currency loans to local currency equivalents. This will reduce the capital adequacy ratio of some banks. Consequently, the affected banks need to quickly address this weakness by shoring up their capital.
For the stock market, we foresee an initial sell-off by foreign portfolio investors (FPI’s) so as to repatriate funds. However, if the new policy runs optimally in the next few weeks, most FPIs who have been on the sidelines awaiting some form of clarity on the situation may gradually return to the market.
This dovetails into the need to cultivate policy and market discipline to engender Nigeria’s return to foreign bond indexes. Any hope of major foreign investment flow into the bond market is contingent upon the re-inclusion of Nigeria in foreign bond indices such as the JP Morgan and Barclays which kicked out Nigerian bonds last year due to the exchange control policy.
Irrespective of the immediate depreciation of the Naira in the inter-bank market, we expect a reversal to stability and even a strong appreciation of the Naira in a few weeks if the backlog of dollar demand is cleared. We also expect a Naira appreciation at the black market, and the narrowing of the gap between the new inter-bank rate and the black market.
With the liberalisation of the foreign exchange market, we now expect many manufacturing companies to find it relatively easier to source dollars to import essential raw materials, and consequently, a gradual pickup in overall industrial capacity utilisation and an improved gross domestic product (GDP).
Concerning inflation worries, we believe the effective exchange rate for most businesses prior to this policy was closer to the parallel market rate. Therefore in the medium term, if the CBN diligently executes inter-bank spot and futures exchange rate markets, we do not see inflation rising steeply.
As the federal government grapples with the harsh realities of declining economic fortune, it has become imperative for Nigeria to diversify the economic base once and for all to reduce its continued dependence on crude oil prices.Read More
Recently, there have been reports of plan by the Federal Government to evacuate about 1, 934, 765 Internally Displaced Persons, IDPs, who are living in formal camps, host communities and satellite camps in the country. The intention is to return them to their respective liberated communities in the North Eastern states of Borno,Read More
The statement credited to the Minister of Labour and Employment, Dr Chris Ngige that banks which defy his directive to stop sacking their employees will have their licences revoked is highly tendentious. It is even more perturbing that he issued this directive at the 105th session of the International Labour Congress (ILC) in Geneva, Switzerland, with the whole world listening in.Read More
The decision of the Abia State Government to revive the dreaded vigilante group, the Bakasi Boys, attracted some critical comments in some quarters, but Governor Okezie Ikpeazu responded that the local security outfit was not a militia group.Read More
Nigeria and indeed the football world are yet to come to terms with the sudden demise of Stephen Okechukwu Keshi, a football legend of our time who passed on to glory on Wednesday, 8th June 2016, at the age of 54.Read More
We are delighted to throw our full weight behind the campaign for our federal, state and local governments to adopt concrete/cement for the construction of roads throughout Nigeria as opposed to the current emphasis on asphalt/bitumen.Read More
Today, boxing legend, Muhammad Ali, will go home in a blaze of glory. The eyes of the world will be on him one more time – one last time – before he is committed to eternity at the Cave Hill Cemetery, Louisville, Kentucky.Read More