APC Mortgaging Nigeria •Economy Still Stagnant •FG Paying Lip Service

By on May 25, 2917


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FEC Meeting
FEC Meeting

This week, three major events signalled the onward trend of the general outlook of the Nigeria’s economy.

The acting President Yemi Osinbajo wrote to the leadership of the House of Representatives requesting consideration and approval of the House to accommodate fundings for both the Development Bank of Nigeria (DBN) and the second tranche of the Fund for Agricultural Finance in Nigeria (FAFIN-II)  in the 2016-2018 external borrowing plan.

The National Bureau of Statistics (NBS) on Tuesday released the first quarter of the year (Q1 2017) GDP report, showing that Nigeria’s GDP contracted by 0.52 per cent (year-on-year) in real terms, indicating five consecutive quarters of contractions since the Q1 2016.

At the end of the Monetary Policy Committee (MPC), the governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele said the committee voted unanimously to retain the Monetary Policy Rate (MPR) at 14 per cent alongside all other policy parameters.

Accordingly, the MPC retained the cash reserve ratio (CRR) at 22.5 per cent, liquidity ratio at 30 per cent, and the asymmetric corridor at +200 and -500 basis points around the MPR.

In the correspondence, read at plenary by the Speaker of the House, Hon. Yakubu Dogara, Osinbajo noted that the DBN is a multi-donor supported bank approved under the previous administration with financing agreements executed on February 25, 2015.

He, however, explained that the sum of $1.28 billion earmarked for the development finance institution was inadvertently omitted in the 2014 to 2016 external borrowing plan which was approved by the National Assembly.

He said the DBN is currently being supported by the World Bank Group, African Development Bank,  KfW Development of Germany and French Development Agency in the sums of $500 million, $450 million, $200 million and $130 million respectively.

Similarly, he said FAFIN-II is being supported by KfW Development of Germany, in the sum of €9 million.

FAFIN is an investment facility in agricultural financing with a commitment of €10.5 million earmarked in its first phase.

It is pertinent to note that the ruling All Progressives Party (APC) is yet to bring to the table any fresh idea as to how to salvage the country’s ailing economy.

At least, aside its belated, four-year Economic Recovery Growth Plan (ERGP), which mat not fly anyway.

The first copy of the President Muhammadu Buhari’s administration Annual Budget was a direct copy of the last one presented by the administration of former President Goodluck Jonathan, if there was any difference, it was in the inflated figures.

Nigerians for long have missed the simple fact that the executive arm of government has never deemed it proper to tell the country how much income it generates annually, at least from the visible sources such as oil and gas exports, non-oil exports, internally generated revenues and foreign aids.

Successive administrations have for long pegged the mentality of Nigerians to  the dollar per barrel source of income. This anomaly aids each administration to present spurious budgets that shows inadequate fund to execute such budgets, thus tabulating a deficit that would be financed through many shades of external borrowings, which never go into quoted projects.

The Jonathan administration did this very well and the APC is toeing the same line.

The Governor of the Central Bank, Emefiele, and Special Adviser to the President, Economic Matters, Dr. Adeyemi Dipeolu, were very optimistic during the week, assuring Nigerians that the country would exit the biting economic recession sooner rather than later, stating that decelerating inflation and negative gross domestic product (GDP) growth, as well as increased capacity utilisation and agriculture output were all signs that the economy was on the path to recovery.

But two points raised by the CBN governor in the course of his address shew that he would really need to roll up his shirt sleeves to defend his fragile position. 

These have to do with the stability of the naira and funding of the real sector.

On how far the CBN would go in sustaining its market interventions, he said: “I have said it and I will repeat myself that the interventions will be more vigorous than before to underscore the fact that we are determined to ensure that the Nigerian economy recovers, by making sure that foreign exchange is being made available to operators of the economy to conduct their businesses.”

Which means the apex bank would continue to prop up the local currency, this is the best approach though but one waits to see how ‘vigorous’ his ‘vigorous’ will be.

On manufacturers’ call for reduced interest rates, he pointed out that it was not only manufacturers that had called for lower rates.

“Even I want a low interest rate but the economic aggregates that we see today, unfortunately, do not give room for us to begin to look at the direction of signalling a downward interest rate.

“Both the IMF and World Bank are advocating a tightened monetary policy. But rather than tightening, we have decided to hold and watch, given that we had embarked on a consistent policy tightening before we decided to adopt the hold policy.

One should never sit back and swallow the IMF and World Bank’s monetary policy because at its best their proffered solutions are never palatable.

One thing is, however. clear from Emefiele’s response, the country’s manufactures will continue to survive the hard way.

Same goes for the average man on the street who is the person bearing the real pangs of the recession.

Far away from the NBS statistics, a market survey shew that the prices of  cooking gas has risen by 100 per cent in one year. The 5kg rose from N1, 000 in April, 2016 to over N2, 000 in April, 2017; the prices of 10 kg and 12.5 kg which stood at N2, 000 and N2, 500 in April 2016 have risen to N4, 000 and N5, 000 respectively. 

Also, the 25 kg and 50 kg which prices stood at N5, 000 and N10, 000 in April 2016 have hit the roof at N10, 000 and N20, 000 respectively.

This is just one out of the citizens’ many daily needs which prices have skyrocketed. And with the way the economy is being handled, may never go down.

The country’s  Federal Executive Council chaired by Acting President Yemi Osinbajo approved a 29-member National Minimum Wage Committee to negotiate with labour unions and work out  a new minimum wage.

Labour Minister, Dr. Chris Ngige announced this at the end of the meeting in Abuja, and said members will be drawn from the Nigerian Governors’ Forum, Manufacturers Association of Nigeria and the Organised Private Sector and the Nigerian Labour Congress and Trade Union Congress.

Labour has tabled a minimum wage of N50,000, almost three times more than the present N18,000, being paid with difficulties by many states.

“This National Minimum Wage Review Committee,” Ngige explained, “will then fix a new minimum wage for the country.

“It has become imperative for a new minimum wage, because the last minimum wage has a life span of five years – it was signed into law by President Goodluck Jonathan- and it elapsed by Aug. 2016.”

The minister stressed that since the issue of minimum wage was a constitutional issue, all stakeholders would be involved in the final discussions.

“So it is a law that it would have a national application for both those in the private sector and those in the public sector.

“So the implementation of the national minimum wage is not only for the Federal Government alone.”

Ngige said the private sector, employers of labour, government and governors, among others would be involved in the discussion.

“We must all sit together and come out with an acceptable agreement.”

This is a step in the right direction because the federal government needs to pump money into the system through all available channels, at least to bring succor to the masses.

Former Governor of the Central Bank of Nigeria (CBN), Professor Charles Soludo, recently, noted that the lack of proper leadership ideas contributed to the nation’s economic crash in 2016.

The academic made the comments in a lecture at the Nnamdi Azikiwe University in Anambra, southeast Nigeria.

“At a time of oil pricing over 100, we were actually borrowing for recurrent expenditure for consumption. The total recurrent expenditure exceeded the total revenue meaning that from 2010 to 2014, that was the foundation and since 2015 we have carried on the same way. We borrow for consumption.

“Every penny spent on capital has been borrowed,” he stressed.

Professor Soludo, however, suggested the adoption of nominal price adjustment during a fall in commodity prices.

Source cattnews

Posted 25/05/2017 12:18:19 AM




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