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Repeal 2019 Minimum Wage Bill, Start Again – Dele Sobowale

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Repeal 2019 Minimum Wage Bill, Start Again – Dele Sobowale

“Those who deal in ideas, if they are wise, will welcome attack. Only a peaceful passage should dismay them; for it proves that the ideas do not affect anyone very much.”

– Professor J K Galbraith, 1908-2006, Nobel Prize Winner.

The attacks will come. They are welcome. Most of it will be from Labour leaders, never-say-die “Socialists”, media fellow travellers and others emotionally wedded to the idea that Nigeria is still a rich country – where “money is not our problem, but how to spend it”. The fallacious notion of great wealth, because we are an oil-producing nation, was planted early after we joined the oil cartel. Few people are aware that the oil bonanza was over years ago. Henceforth, exporting crude oil will not save us. It will certainly not make it possible to maintain our over-bloated public service sector anymore. The new global economic reality calls for far less reliance on oil than most of us realise

 

TODAY IS THE BEGINNING OF A NEW ECONOMIC ORDER

“Ekiti State suspends minimum wage; slashes political office holders’ salaries.”

News Report, June 5, 2021.

“Umahi sacks over 1000 board members, aides.” News Report, May 30, 2021.

Two Governors have taken tentative steps to adjust to the new normal. Governor Fayemi of Ekiti slashed the take home pay of Special Assistants; he has also reduced the number of those appointed. Nobody needs to tell the poor fellows affected, whether sacked or retained at reduced pay, to adjust their life styles to the new reality. For many, it will constitute the biggest shock of their lives.

Governor Umahi of Ebonyi State went even further. Not one to dwell on half measures, he sent his entire board members and several aides packing.  It is not surprising that Ekiti and Ebonyi were among the first states to take drastic action. They rank 33 and 32 in the league of Nigerian States. Only three other states are poorer than those two. Rest assured several states will soon follow.

Nothing sobers a person up as quickly as a sack letter. Governor El-Rufai acted first, unwisely if you ask me, and is already fighting his own battle. For the hundreds of thousands likely to go under nationwide the trauma is the same.

The entire world you have built around yourself crumbles in one minute. Self-esteem evaporates; the future looks totally bleak. Evil thoughts creep in – suicide is always a strong possibility. The bigger they are, the harder they fall. The media publishes the news on the same or the next day. There is no hiding place. You can’t go to church, mosque or club without several people asking “What happened?” Only those who had experienced it can understand how the people involved really feel. Thank God, I never did.

READ ALSO: Labour Demands For N30,000 Minimum Wage For Workers In Kwara

DON’T BELIEVE THE GOVERNOR; EXPECT RETRENCHMENT.

“States bank on PPP projects as cash crunch bites harder.” News Report, May.

Virtually all the states, and the Federal Government, are now looking longingly in the direction of the private sector to bail them out of, frequently, self-imposed financial hardships. Private-Public-Partnership, PPP, which most of them avoided like COVID-19 before is now being explored as a way out of impending disasters everywhere. To be quite candid, it is already too late for those with only two years left in office.

Despite the obvious inevitability of down-sizing, some Governors are still deceiving their people that there will be no retrenchment. Anybody who believes that rubbish has not heard that “You cannot adopt politics as a profession and remain honest.”(L. M. Howe, 1871-1936). They won’t tell the workers they are going – until the sack letter arrives. Preparing for it is the beginning of wisdom.

WHY THE MINIMUM WAGE BILL IS DEAD

“You can’t bully reality.”

One of the reasons why Nigerian governments have failed us, and might continue to fail us, is the lack of understanding of the basic principles of economics by the leaders and the led. We operate a country in which the blind lead the blind. That is why the most popular campaign promises are massive job-creation and free services – starting with education. The listeners clap; the party members go round and ram those vague promises down our throats. We vote and wait in vain for the promises to be delivered.  The Minimum Wage Bill is a classic example of how the Nigerian people conspire with the politicians to deceive themselves and develop high expectations – which invariably are not, and cannot be, met. And, that is irrespective of which political party or which candidate wins the election. As usual, readers should follow me down memory lane. As far back as December 2015, Nigerians – governments and governed alike – were warned that we would end up here today. Read on.

READ ALSO: The High Cost Of Federal Procurement

MINIMUM WAGE AND THE INEVITABLE BANKRUPTCY OF STATE GOVERNMENTS.

“Who ever reads history with application will perceive that the same events are often repeated and that we need only change the names of the actors. Frederick the Great, 1712-1786, (VANGUARD BOOK OF QUOTATIONS, VBQ, p 92.)

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.

The first sounds of the 2016 war involving the governments and Labor have already been heard from most of the state governors – minus three dissenters, namely Governors Wike, Fayose and Oshiomhole. Wike, as everybody knows, faces another election and cannot be seen to be anti-labor. Self-interest is the motive here. Fayose, we know, loves to fish in troubled waters; while Oshiomhole is caught in the trap of his past as a Labour leader. The former Labour leader cannot be seen to be forsaking the people who brought him into prominence. At any rate he has only seven months to go; he can leave his successor with the problem when he goes. That is the worst form of political cynicism. Irrespective of how the three governors arrived at their current positions, they can be regarded as traitors to the cause of the other governments. They may eventually regret their dissent from the majority.

Let me declare, up front, that I strongly believe that the two sides are engaged in a war that would end up in mutual destruction — they will also destroy the states, economically, as we know them now. Most states are already tottering on the brink of bankruptcy with the current MW pegged at N18,000 per month.”

Need I say more?

 

Economy

Naira Dips Further At Parallel Market After CBN’s Clampdown On BDCs

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Naira Dips Further At Parallel Market After CBN's Clampdown On BDCs

The naira slumped further to 523/$ at the parallel market on Wednesday, July 28, 2021, a day after the Central Bank of Nigeria (CBN) stopped the allocation of foreign exchange to Bureau de Change (BDC) operators in the country.

The naira, which exchanged to the dollar at 503 on Monday, fell to 505 on Tuesday, few hours after the CBN announced it would no longer sell forex to the BDCs and stopped approval of new licences to the operators.

According to naijabdcs.com, the official website of the BDCs, the dollar was bought at N515 and sold at N523 on Wednesday.

At the Investors & Exporters forex window, the naira hit a high of 413/$1 but closed at 411.60/$1.

The CBN, however, maintained the official rate of N410.16/$1 on its website.

Before the new regulation, the CBN had been supplying each BDC $10,000 twice a week at the rate of N393.

After the Monetary Policy Committee meeting on Tuesday, the Governor, CBN, Godwin Emefiele, had accused the BDCs of abusing the privilege given to them and sabotaging efforts to ensure naira stability in the country.

Expressing the displeasure of the MPC, he said, “The facts abound that BDCs have turned themselves into agents that facilitate graft and corrupt activities of people who seek illicit fund flow and money laundering in Nigeria and we will go after all of them.

“Throughout this meeting of the MPC, we extensively debated this matter, and independently with each member of the committee exhibited accurate and deep understanding of issue at stake.

“After these exhaustive and extensive deliberations, the management of the Central Bank with the support of the committee reached the following decisions which will take the following effect. Hence, the CBN will henceforth discontinue the  sale of foreign exchange to BDC operators.”

Emefiele added that the CBN would henceforth channel significant portion of its weekly allocation currently meant for BDCs to commercial banks, to meet legitimate forex demand for ordinary Nigerians and businesses, whether for small-scale imports, medical bills, educational expenditure, personal and business travels or any other legitimate needs as prescribed by the CBN’s foreign exchange manual.

He said by this, all commercial banks in the country would with immediate effect create a designated teller point in designated branches, for sale and disbursement of foreign exchange to customers who deserve forex for legitimate purposes.

He said, “For emphasis, the public should note that once a customer provides the basic documentation to provide forex, all banks must immediately pay that on demand or within a stipulated time frame sell foreign exchange to the customer.

“Any customer who does not receive foreign exchange must report this to their bank and where they are unsatisfied with the resolution, they are required to contact the CBN on our toll free line 07002255226 or email cpd@cbn.gov.ng to lodge the complaint with details of the bank’s transactions.”

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Economy

ABCON Keeps Mum On CBN’s Sanction

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ABCON Keeps Mum On CBN's Sanction

Alhaji Aminu Gwadabe, the President of the Association of Bureaux de Change Operators of Nigeria (ABCON), has refused to comment on the action of the Central Bank of Nigeria (CBN) against his members.

As reported on Newsrand, CBN blew hot, stopping the licensing of BDC operators in the country.

According to CBN governor Godwin Emefiele, who made the disclosure of this development, while the apex bank will no longer license new BDC operators, all current processes of new licenses have equally been halted.

Defending the CBN action, Emefiele explained that BDC operators were fond of carrying out illegal forex trading.

However, when contacted for comment, Gwadabe didn’t answer his phone but replied with an SMS that there was no comment on the clampdown at the moment.

“In a meeting with BDCs operators. For now, no comment,” he replied.

Meanwhile, Dr. Muda Yusuf, Economist, and former Director-General, Lagos Chamber of Commerce and Industry (LCC), has reacted to the development, warning that there will be consequences.

According to Yusuf, the CBN action would only worsen the situation raised rather than addressing why the action had to be taken.

His words: “It is a policy regime that has created a huge enterprise around foreign exchange – round-tripping, speculation, over-invoicing, capital flight, etc.

“The action of the apex bank amounts to tackling the symptoms rather than dealing with the causative factors, which is not a sustainable solution.

“It is regrettable that the CBN does not believe in the market mechanism. Yet market systems are time tested as instruments of efficient resource allocation in leading economies around the world.”

“Moving retail forex transactions from BDCs to the banks was like kicking the can down the road. The same issues would manifest even with the banks.

“The CBN needs to give the market a chance. Its current approach would continue to deepen distortions in the economy, perpetuate round-tripping, fuel speculation, suppress forex supply, and boost the underground economy.”

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Economy

PenCom Develops App To Automate Pre-Retirement Enrollment

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PenCom Develops App To Automate Pre-Retirement Enrollment

The National Pension Commission (PenCom) on Tuesday announced that it had developed an online application to automate pre-retirement verification and enrollment.

A statement signed by the commission’s Head, Corporate Communications, Mr. Peter Aghahowa, in Lagos, said the application had the capability to register, verify and enroll prospective retirees of treasury-funded Federal Government Ministries, Departments, and Agencies (MDAs).

Aghahowa said PenCom would test-run the online enrolment application between Aug. 2 to 20 with selected MDAs.

READ ALSO: FG Inaugurates 16 Board Members Of PENCOM

He stated that the MDAs would be selected across the six geopolitical zones in the country, including the Federal Capital Territory (FCT).

“Accordingly, the online enrolment application would be hosted on the PenCom website.

“As a prelude to the formal deployment of the online enrolment application, PenCom would commence a pilot run of the exercise from between Aug. 2 to 20.

“This will be done with selected MDAs in the six Geo-Political Zones and the Federal Capital Territory (FCT) in order to test-run the application with real-time data,” he said.

He said the application would go live after a test run on a date to be announced by the commission in due course.

The PenCom spokesperson explained that the affected retirees or prospective retirees were expected to undergo the data recapturing with their respective Pension Fund Administrators (PFAs), as a pre-requisite for the online enrolment.

Aghahowa said the data recapturing entailed updating personal details and providing National Identification Number (NIN).

“However, retirees or prospective retirees who have already undergone the data recapture exercise with their PFAs are not required to repeat the exercise,” he said. 

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