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Sobowale On Business

Soludo vs Emefiele: Pot calling kettle black

Mr Godwin Emefiele answering questions  during his screening by the Senate for  Central Bank Governorship in Abuja on Wednesday

Professor Chukwumah Soludo, former Governor of the Central Bank, CBN, was in his elements a few weeks ago, when he declared that the current CBN Governor, Godwin Emefiele, turned the bank into an ATM machine for the Jonathan administration. The imports of that statement are numerous; but, two would have struck most readers who are no knowledgeable about the role of the central bank in any nation.

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Emefiele CBN Governor

Finally, FG addresses fiscal policy

Godwin Emefiele, the Governor of Central Bank of Nigeria, CBN, is one official who has my total sympathy. He is the victim of economic circumstances absolutely beyond his control, yet, he is looked upon to provide solutions to problems well outside the mandate of the CBN. Unjustifiably, he had become the target of attack from all sides – manufacturers, importers, exporters, BDCs, domiciliary account holders, banks, oil companies,

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deltaplane

Taraba enters age of aviation, tourism with Overland Airways

It is like a marriage made in Heaven which invariably produces great results. When Governor of Taraba State told me in November last year that his state capital, Jalingo, will in about three weeks, enjoy direct flight from Lagos, through Abuja, it sounded like one of those political promises “made to be broken” (apologies to Jonathan Swift, 1667-1745). Given the short period he had been in office, in one of the poorest states in the nation, and being distracted by his political adversaries, it would appear that sealing a deal with an airline to start operating a flight to Jalingo would be almost impossible.

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supermarket

Expected lower aggregate consumption in 2016

When Morita wrote the article from which that statement was lifted in 1992, I was a Senior Lecturer/Consultant at the Nigerian Institute of Management, NIM, and an avid reader of the Harvard Business Review. That explains why the VBQ is filled with insights from the HBR. But, in 1992, Japan was the second largest economy in the world and the second biggest manufacturer; the USA was first in both. China was nowhere in sight and the VBQ was still fifteen years away from being published. But, I had started on it.

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Buhari presents N6.08trn 2016 budget to NASS

Consequences of states reducing budgets for 2016

The most obstinate illusions are ultimately broken by facts.” Trevor Roper, in THE LAST DAYS OF HITLER. (VAGUARD BOOK OF QUOTATIONS, VBQ, p100). Roper, in one of the best books on the last days of the German leader wrote about how Hitler, deceived by his field commanders set about deploying imaginary troops in order to halt the advance of the Allied Forces into his country. It was comical and historical. It demonstrates how political leaders can turn to clowns when faced with realities which are too harsh to admit.

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Emefiele CBN Governor

Banking blues in 2016

When oil companies fail to pay, bankers are in a fix. But, not just bankers; we are all in a fix. Shareholders of Nigerian banks, already waving off a bad 2015, will again have to endure two economic woes – low or no dividends and plummeting share prices. Currently, only two banks shares are above N15 per share: ECOBANK and GTB. None of the others is above N6 per share.

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BAIL-OUT

Why most states are on the verge of bankruptcy

In July 2014, the Federal Government allocated N630.32bn to all the three tiers of government – Federal, States and Local Governments. In August 2014, N601.65bn was allocated to the states. For September 2015 the figures just released indicate that a total of N389.936 was shared by all the tiers of government; representing drops of 35% and 38% from the August and July 2014 allocations. Yet, N601bn in August represented a sharp decline from the previous months in 2014. At the moment governments are sharing less than half of what was available in January 2014.

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Minimum wage

Minimum wage and the inevitable bankruptcy of state governments

Another economic war is about to start in Nigeria. The war will be about Minimum Wage, MW. The states want to renegotiate it, meaning reduce it. Labor also wants to renegotiate it, meaning increase it. Renegotiation seems to be the only point of agreement; it is also the battle ground. On the face of it, one would assume that this is only “a matter of cash”. But, it is more than that. The very existence of states and local governments is threatened by this conflict.

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BAIL-OUT

Can Nigeria states go bankrupt? (2)

Governor Aregbesola, went on to disclose to the people of the state, and Nigeria, that “Osun State received only N55m from the Federation Account for the month of September 2015.” For a state which had declared a monthly wage bill totaling N2.4 billion, this is not only frightening, it naturally leads to the question: from where will the state raise the funds to fulfill its obligations to its workers and others?

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Cartoon

Can Nigerian states go bankrupt? (1)

It is unthinkable that wisdom should ever be popular”, Johann Goethe, 1749- 1832, (VANGUARD BOOK OF QUOTATIONS, VBQ, p 275.) “The Chairman Fiscal Responsibility Commission, Chief Victor Murako, has warned of a possible shutdown by some states of the federation in the next six months unless they find creative ways of handling their dwindling allocations from the federation account.” PUNCH, November 24, 2015. You bet they can; and at least two are technically bankrupt now.

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Buhari-promise

What exactly did APC promise Nigerians? (2)

NOTE: The first part of this series might create the impression that this is political commentary. Even the Editor was alarmed enough to call me about it. Readers need to understand the reason for the historical summary. Every promise involves two elements, the promise and the entity making the promise. Nigerian political history has demonstrated that political alliances don’t last; and the promises made are never fulfilled. APC is another coalition whose sustainability will determine the fate of the promises made to us. Please read on.

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BAIL-OUT

Why monthly allocations to states will never be enough -1

If there is one thing uniting the thirty-six state governors, irrespective of political affiliation, it is the fact that the two bail-out arrangements fashioned out by the Federal Government have not solved the problem. Doctors in the medical field know the phenomenon too well. It is called treating the symptom instead of the cause(s) of a disease. And, like cancer, which starts as a small lump and becomes bigger on life-threatening, economic tumour starts slowly; get bigger; and eventually might lead to economic calamity.

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ricepix-new

Reversal of rice import prohibition and its consequences

The report in the NATION, October 13, 2015, page 7, titled “Fed Govt suspends quota issuance to rice millers”, brought tears to my eyes. It would be the third time in my life that the Federal Government of Nigeria would drive me to tears of frustration over the national policy on rice importation. Althogu, I no longer have any investment or involvement with the sector, it is the only sector in which personal monetary investments as well as sacrifice of well-paid job was made because of government policy announcement.

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The 55th Independent cake of the Federal Republic of Nigeria

Who is baking the Nigerian cake ?

In a report written by Oyetunji Abioye, readers were told that “the bank stated that a more challenging economic environment would make growth in the region to come down to 3.7 per cent from 4.6 per cent in 2014”. Readers, familiar with this page, surely know that we have not needed to wait for the World Bank to tell us the bad news about the Nigerian economy in 2016. So far in 2015, the economy had managed to grow only about 2.4 per cent; and is heading lower!! Every economic indicator known to forecasters points to a dreadful 2016.

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CBN Governor, Mr Godwin Emefiele

Toss out TSA, please (2)

Incidentally, if you ask any of its supporters what it is designed to achieve, the answer will be, “to curb corruption”. But will it? If historical experience in Nigeria is to be our guide, the correct answer will have to be “very doubtful”. Let me quickly explain the reasons. While conducting the research which resulted in the book PDP: CORRUPTION INCORPORATED, what was most striking to me was how much corruption was accounted for by transactions and activities which are not reflected in the balances in the bank accounts of Ministries, Departments and Agencies, MDAs.

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