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Dollar To Naira: World Bank Tackles CBN On Forex Management

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Dollar To Naira Exchange Rate Today (Monday, November 8, 2021)

Dollar to naira alarming exchange rate has been a major issue causing setbacks for most businesses in Nigeria, and the World Bank has broken its silence about it.

In an interview published on Punch, Shubham Chaudhuri, World Bank’s Country Director for Nigeria, said the Central Bank of Nigeria (CBN) was deploying policies that don’t have the potency of addressing the lingering forex challenge.

According to Chaudhuri, even though the World Bank aligned with the CBN on the need to achieve price stability as one of its core mandates, it differed on the method and choice of policies in achieving this.

His words: “Nigeria, like many other countries, has gone through a very tough time, especially last year, with the price of oil falling, which had an immediate effect in terms of foreign currency inflows into the country because sales of crude oil are one of the biggest sources of foreign currency inflows into Nigeria.

“So, we recognise that in the middle of the economic crisis, Nigeria was under tremendous pressure, alongside the naira. One of the core mandates of CBN is price stabilisation. However, we differ with the CBN on how best this aim can be achieved.”

World Bank advises CBN on how to manage dollar to naira

For World Bank, it is not a smart thing to do for CBN to have multiple exchange rates, amongst other policies that bottle it up with pressures.

The World Bank director explained that it is pertinent for the apex bank to allow the naira to respond to pressures from market realities on its own.

“In the FX market, the way it works is to let the naira respond to very real pressures but in a way that let the steam off rather than bottle it. Because if you bottle it, the pressure does not get released, and at some points, there has to be a massive adjustment.

“Over the last year, the pressures have been building up. Finding ways to release some of the pressures by letting the naira adjust more gradually would help and keep the naira, in a long run, from depreciating by a very large amount,” he stated.

Chaudhuri also advised the central bank to adopt a more predictable, clear mechanism for the forex, as he expressed optimism that it would help in restoring and enhancing the confidence in the market.

“We haven’t had foreign portfolio investors come back to Nigeria since the COVID crisis, not at the levels that we saw earlier. Some of that has to do with what is happening to interest rates locally but some of that also has to do with their confidence – that if they do come into the market, they will be able to get the FX out again, repatriate their profits.

“What’s more concerning is foreign direct investors. FDI has not recovered. That also has to do partly with the level of confidence in terms of the ability to predictably access foreign exchange. While we understand and see what the CBN’s overall objectives are, we do differ on how those objectives might be obtained,” the World Bank boss added.

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Economy

How FG Tend To Fund N2.4trn Palliative

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How FG Tend To Fund N2.4trn Palliative

The Federal Government may deduct at least N2.4 trillion from the Federation Account to fund the N5,000 cash palliative that will be handed over to 40 million poor Nigerians after the fuel subsidy has been removed next year.

This is just as the list of poor Nigerians on the Federal Government’s National Social Register had surpassed 42 million and may hit 43 million by December 2021. This implies that the figure to be spent on the subsidy palliative may hit N2.58tn in one year.

When contacted on the telephone on how funds for the N5,000 palliative would be sourced, Yunusa Abdullahi, the Media Adviser to the Minister of Finance, Budget and National Planning, Zainab Ahmed, referred journalists to a statement by his principal after the Federal Executive Council meeting on Wednesday, November 23.

In the statement, Ahmed noted that the funding would come from FAAC allocations. FAAC which is headed by the Minister of Finance comprises Commissioners of Finance from the 36 states, representatives of revenue-generating agencies such as the Nigerian National Petroleum Company Limited (NNPC), Federal Inland Revenue Service (FIRS), Department of Petroleum Resources (DPP), Central Bank of Nigeria (CBN), Nigeria Customs Service (NCS), among others.

These revenue-generating agencies are expected to remit a specified amount of their revenue to the Federation Account which will be distributed among the three tiers of government.

Ahmed, however, noted that negotiation was still ongoing.

So these are things that we are still in negotiation because it’s still money that would have to come from the Federation Account. So everybody that is a member of FAAC will have to agree on the numbers.

The Group Managing Director of the Nigerian National Petroleum Company Limited, Mele Kyari, had on Tuesday announced at a World Bank event in Abuja that the subsidy on petrol was not sustainable.

He said the Federal Government would in 2022 remove the petrol subsidy paving the way for the sale of the product for between N320 and N340 per litre.

Also at the World Bank event, the Minister of Finance, Budget and National Planning said the subsidy was not benefitting the poor.

According to her, to cushion the effect of fuel subsidy removal, the Federal Government will give a transport grant of N5,000 each to between 30 million and 40 million poor Nigerians.

The N5,000 transport palliative planned to be disbursed to 40 million Nigerians means the Federal Government will be spending a total of N200bn every month on the initiative. Since the government has said the initiative may last for 12 months, it follows then that the scheme will gulp N2.4tn in one year.

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Nigeria Air To Commence Operations With 49% Foreign Ownership

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Nigeria Air To Commence Operations With 49% Foreign Ownership

Nigeria Air, the proposed national carrier will begin flight in April next year, the Minister of Aviation, Hadi Sirika, has stated.

The development came three years after the Federal Government announced plans to establish a new national carrier, following the liquidation of the Nigerian Airways in 2003.

At the end of a virtual Federal Executive Council meeting presided over by the President, Major General Muhammadu Buhari (retd.) at the Presidential Villa, Abuja, on Wednesday, Sirika told State House correspondents that the Federal Government would own not more than five percent equity stake in the national airline.

According to him, Nigerian entrepreneurs will own 46 percent shares while international strategic partners will own 49 percent stake.

The minister said his ministry presented two memoranda which were approved by FEC.

The next one also is the approval of the outline business case for the establishment of the national carrier and this is the sixth time the memorandum appeared before Council. The sixth time, we got lucky to be passed by the Council.

The structure of the proposed airline; the government will be own not more than five percent. So, five percent is the maximum equity that the government will take, then 46 percent will be owned by Nigerian entrepreneurs. So, if you add that, it’s 51 percent.

Sirika noted that 49 percent stake would be held by strategic equity partners that would be sourced during the procurement phase.

He added, “This airline, if started, within the first few years will generate about 70,000 jobs. These 70,000 jobs are higher than the total number of civil servants that we have in the country. Its importance has been well discussed, so; I’ll not go back to it. You had discussed it separately also on various fora as to the need for it.”

Speaking about the second memo, the minister said, “Today in Council, civil aviation presented two memoranda. The first one is approval for the award of contract for the provision of Automated Civil Aviation Regulatory Equipment, including software support and training, which will be located in Nnamdi Azikiwe International Airport.

In summary, this is a software that will allow all of the activities of civil aviation regulation to be done electronically on one platform, including payments, including follow-ups on personnel licensing, the medicals, the economic regulation of airlines, safety regulation of airlines and all other businesses within the envelope of civil aviation will be monitored by this single software.

“It is called ‘the truth machine’ in Europe because all of the truth of the regulation of civilisation will appear on this platform. It’s extremely important software that the world has now come to terms with.”

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Economy

Reps Reveal Plan For Economic Diversification

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Reps Reveal Plan For Economic Diversification

The House of Representatives has resolved to work with the executive arm of the Federal Government towards creating a roadmap for the diversification of Nigeria’s economy from petroleum to other sectors over the next 10 years.

The resolution is based on a motion moved by a member, Dennis Idahosa, at the plenary, which was titled, ‘Need to Create an Economic Revenue Road Map for the Future of Nigeria.’

Moving the motion that was unanimously adopted by the lawmakers, the Idahosa recalled that the 26th meeting of the conference parties to the UN Framework Convention on Climate Change, focusing on addressing the climate crisis in decades ahead, was held in Glasgow from October 31 to 12 November, 2021.

The lawmaker noted that a resolution was passed at the UNCOP26 2021 summit to phase down fossil fuel to limit global warming to 1.5 degrees Celsius compared to pre-industrial levels.

He also noted that parties to the Paris Agreement adopted at COP21 in Paris on December 12, 2015, entering into force on November 4, 2016, are expected to transit from fossil fuel to clean energy and reach a Net Zero ambition for greenhouse gases emission.

Idahosa said, “The House recognises that the oil and gas sector is Nigeria’s biggest revenue-generating sector accounting for over 65 percent of the country’s total revenue, with a production capacity of 2.5 million barrels per day.

The House is also aware that all over the world, and with the advent of rapid technological advancement, the need for fossil fuel and hydrocarbons is declining. Some countries like Sweden, China, Costa Rica, Nicaragua, and many others are taking actions that will lead to complete dependence on renewable energy soon.

The House is concerned that following the recent resolution by all major countries at the UNCOP26 2021 summit, countries like Nigeria, which depend mainly on hydrocarbon and fossil fuels for revenue and survival, will be the worst hit except and unless careful and intentional precautions are taken to secure the future of Nigeria.

The House is worried that Nigeria has come up with futuristic plans in the past like Vision 20:2020 plan and the desired result was not fully achieved. Nigeria has numerous potential sources of revenue and if attention is not placed on them early, it will be of no benefit to citizens and the nation at large.”

Adopting the motion, the House mandated its Committees on Climate Change, Gas Resources, Environment, Petroleum Resources (Upstream), and Solid Minerals to liaise with relevant stakeholders “with the mandate of providing a 10-year framework for the utilisation of current resources towards developing other sectors and report back within 12 weeks for further legislative action.

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