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Surging inflation and “One- state -One- product” government programme



images 71 1 Surging inflation and “One- state -One- product” government programme

SINCE the launch of One- state -one- product (OSOP) in 2016, by the federal government through the Nigerian Export Promotion Council (NEPC) as part of its efforts to boost export and diversify the economy, industry watchers have been worried about the success or otherwise of the program as over 80 million Nigerians still wallow in abject poverty -unfortunately.

The mandate of the program is that, every state in the federation must get at least one product ready for export; such product must have satisfied local need and have the potential to generate income, create employment and boost wealth for the state

Four years down the line, a look at every state in the country revealed that not a few states are still struggling to come up with product; while state like Benue is on the move to export Yam tubers to other continents. At this critical period when unemployment rate is above 27.1 per cent, inflation rate is above 12. 5 percent, while the gravity of poverty remains excruciating, it becomes exigent for every state to rise and rescue the country from looming economic collapse.

In a recent workshop organized by Nigeria Export Promotion Council (NEPC), the Council reminded Nigeria that the era of oil dependency is over. As it unveiled its zero oil plan for non-oil commodities export, the plan was laid bare following the economic recession Nigeria experienced in 2016 and the crash of oil at the international market- to prepare Nigeria for a world where oil is becoming less relevant. The NEPC plan incorporated in the Economic and Recovery Growth Plan (ERGP) of the FG was geared to generate up to $30bn foreign exchange yearly through cocoa, cashew, petrochemicals, cotton, cowpea and other non- oil products.

While non-oil export rose from $1.17bnon 2016 to $3.16bnin 2018 according to (international Trade Centre), more is expected from the non -oil sector since the projected earnings under the OSOP initiative was $36bn over the next 10 years, every state has been alerted to speed up its proposed and alternative product(s). Akwa Ibom, Rivers, Cross Rivers, Delta, Edo and Bayelsa has proposed; sea foods, Palm oil, Cocoa, Palm oil, Cassava and Sea foods products for export respectively.

In line with its slogan, “Export business…Tomorrow’s business”, NEPC said it is optimistic that the vision of OSOP would not die provided the government and every other stakeholders both in the private and public domain do their bids. Such harmony and unity of purpose according to him is critical to see this vision through. The country needs more food now than ever to live while other necessities follow suit.

In a telephone interview, the South West coordinator for NEPC, Mr Samuel Oyeyipo, said, so many government agencies are required to play their roles to see this vision fruitful. “The Nigeria Customs Service, National Agency for Food and Drugs Administration and Control (NAFDAC), National and states Chambers of Commerce, Ministry of Agriculture, Standards Organization of Nigeria (SON), Association of Small Scale industrialists, National Quarantine Services and others are instrumental to this vision and must work hand in glove with the National committee on export Promotion (NCEP), domicile in the ministry of commerce in every state.

“Some states have done something while others are yet organizing themselves. For instance, Benue state is doing significantly in yam export, I believe other states have come up with a product, what is required now is action plan to drive the processes. NEPC supports each state where necessary, when production is going, get aggregator, release them to the export market to enable them access the world market for their products, so we are part of the process, both in certification, Logistics; it is the readiness of the state that matters. As the international flights resume fully and boarder opens, we hope export will take off,” he maintained.

Nigerians must not remain in abject poverty in the mist of abundant natural resources. NEPC has reassured the country of not leaving any stone unturned to make sure the citizens get enough to eat and export, but all hands must be on deck to extricate Nigeria from the shackles of resource curse.

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CBN bans customer-to-customer forex transfer



images 94 2 CBN bans customer-to-customer forex transfer

The Central Bank of Nigeria (CBN) has banned transfer of foreign exchange (forex) from one customer to another.

According to the apex bank, forex cash lodgements into domiciliary accounts can only be done by the account owners henceforth.

An internal memo available in the media space explains that the new guidelines are necessary to review the utilisation of inflows into customers domiciliary accounts.

The circular states: “Forex inflows cannot be credited to customers until the legitimacy of funds is established.

“They can have unfettered access by telegraphic transfers up to a limit of $40,000 monthly for payment of medical bills, school fees, subscription to professional bodies subject to existing CBN guidelines.

“Transfers from one customer to another is prohibited. Transfer within related companies is allowed subject to a limit of $50,000 per month.”

It recommended that proceeds from non-oil exports should be sold to banks, used for repayment of dollar term loans, and self-utilisation for trade transactions for LC, bills and Form A. Also oil export proceeds from E&P companies are to be used to pay contractors and service providers employed by the oil companies in addition to the recommended uses for non-oil FX proceeds.

Offshore forex inflows from other Nigerian banks and internal account to forex transfers sourced from offshore inflows are to be used for trade transactions subject to eligibility for E-Form M.

“Upon confirmation of the legitimacy of the inflows, customers can have unfettered access, subject to a maximum of $50,000,” the document read.

“Utilisation for trade transactions subject to processing of eligible trade transactions using E-Form M. Payment for services must be backed with demand note from offshore beneficiary and other regulatory documents. “Related party transfers are allowed to the maximum of the inflow received. The transfer request should be backed by a signed instruction from the account holder.” Payment of government fees and levies are also allowed to the maritime, oil and gas, aviation. government parastatals and export processing zones.

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Nigeria, other maritime nations lose $9tr to COVID-19 pandemic



images 93 2 Nigeria, other maritime nations lose $9tr to COVID-19 pandemic

•FG deploys revenue directors to NPA, Customs, others to boost remittances

Nigeria and other maritime nations around the world have lost about $9 trillion in Gross Domestic Product (GDP) to COVID-19 pandemic that grounded almost all sectors of the global economy.

At the peak of the pandemic between March and May, so many shipping lines, manufacturers, factories and other businesses were shutdown in order to curb the spread of the infestious disease around the world.

At a recent sensitisation workshop for stakeholders on COVID-19 in Lagos, whose theme is Maritime Industry and Emerging Trends In Global Trade, the Director General of African Centre for Supply Chain, Dr. Obiora Madu, said logistics chains are going through unusual and massive losses from the disruption caused by the pandemic.

His words: “The shutdown of factories and scarcity of manpower to de-stuff cargo, as well as drivers to operate trucks for cargo evacuation, has derailed the trade and smooth functioning of the logistics industry. The estimate is a cumulative loss of $9 trillion to the global GDP and the world trade has already witnessed a decline by about 32 per cent”.

Madu who is also the CEO of Multimix Academy, disclosed that the turnaround time at ports has been extended longer that what it was in pre-COVID-19 scenario, adding that many small companies engaged in the maritime and shipping industry have gone bankrupt due to less demand and the inability to handle the finances of the company during the period of less demand of cargoes and shipping.

“This has majorly impacted the small running businesses and resulted in the shutting down of various companies engaged in this industry. With international transport at the forefront of trade and depend on travel and human interaction, the shipping industry has been impacted materially both directly and indirectly from the outbreak of COVID-19,” he said.

Meanwhile, challenged by dwindling revenue and crippling debt amid the pandemic, the Office of the Accountant-General of the Federation (OAGF) on Tuesday began a training programme for treasury officers who will be deployed to strategic Federal Government Owned Enterprises (FGOEs) as revenue directors to help swell government’s purse.

The move also tackles the perennial challenge of low remittance which the revenue-generating agencies were accused of.

In the pilot phase, 10 federal agencies have been penciled down where revenue directors from OAGF will be posted to.

The agencies are; Nigerian Communications Commission (NCC), Federal Airports Authority of Nigeria (FAAN), Federal Inland Revenue Service (FIRS), Nigerian National Petroleum Corporation (NNPC), Nigerian Ports Authority (NPA), Nigeria Customs Service (NCS), Directorate of Petroleum Resources (DPR), Nigeria Shippers’ Council (NSC), Nigeria Maritime Administration and Safety Agency (NIMASA) and Corporate Affairs Commission (CAC).

Speaking at the commencement of a three-day training programme, the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, said the government has been compelled to improve revenue generation, especially in the non-oil sector, to fund the nation’s huge expenditure.

Ahmed charged the Directors of Revenue to remain above board as they would be involved in the revenue operations of the FGOEs.

She urged them to learn fast and have an understanding of the business processes and operations of the FGOEs to realise improved transparency and accountability in revenue reporting by the FGOEs.

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CBN prepares for recession, reduces benchmark lending rate to 11.5%



images 59 2 CBN prepares for recession, reduces benchmark lending rate to 11.5%

The Central Bank of Nigeria on Tuesday reduced the Monetary Policy Rate by 100 basis points from 12. 5 per cent to 11 . 5 per cent after its two- day Monetary Policy Committee meeting in Abuja.
The 10 members of the committee who were in attendance voted to retain the Cash Reserve Ratio and Liquidity Ratio at 27 .5 per cent and 30 per cent respectively .
The MPC adjusted the asymmetric corridor from +200 /- 500 basis points to +100 /- 700 basis points around the MPR .
The Central Bank Governor , Godwin Emefiele , disclosed these while presenting the communiqué after the meeting.
He said , “ At present , fiscal policy is constrained and so cannot , on its own, lift the economy out of contraction or recession given the paucity of funds arising from weak revenue base , current low crude oil prices , lack of fiscal buffers and high burden of debt services . ”
He said the committee expressed deep concern on the continued uptick in inflation for the twelfth consecutive month as headline inflation ( year – on – year ) rose to 13 . 22 per cent in August from 12 .82 per cent in July 2020.
“ The increase in headline inflation was largely driven by the persistent increase in the food component, which rose to 16 per cent in August 2020 from 15 .48 per cent in July 2020, ” he said .
Emefiele said the committee stressed the urgent need for a combination of broad – based monetary and fiscal policy measures to curb the rise in inflation and contraction in output growth .
Explaining further , he said , “ In the light of this , reducing MPR will signal to the Deposit Money Banks to lend more to stimulate growth , increase aggregate supply , which should dampen prices in the immediate term .”
Emefiele said , “ The MPC was, at this meeting , confronted by policy dilemma .
“ Whereas MPC believes in the primacy of its price and monetary stability mandate, it nevertheless was confronted with what policy direction to focus on, given the contraction in output growth during the second quarter of 2020, which may lead to a recession, if the third quarter of 2020 output growth numbers further show a contraction .
“ It is , therefore , of the view that , if a recession occurs in Q3 , the committee would be confronted with proposing policy options in a period of stagflation . ”
“ The committee also noted the rising public debt profile and urged the fiscal authority to strengthen its debt management strategy , explore other sources of revenue , as well as enhance efficiency in public expenditure ,” he added.
Financial experts, however, differ on the reduction in the MPR .
The Director – General , Lagos Chamber of Commerce and Industry , Dr Muda Yusuf , said , “ The adjustment of the MPR by 100 basis points from 12 .5 per cent to 11. 5 per cent by the MPC was a surprise .
“ My expectation was that the status quo would be maintained.
“ Rates were already generally low in the money market . In fact , concerns were being expressed about the fact the real savings and deposits rate were negative.
“ But , I do not believe it would have any material impact on lending rates .”
A former President , Association of National Accountants of Nigeria , Dr Sam Nzekwe , praised the CBN for the reduction in the lending rate.
He said , “ That is a good development and it shows they are beginning to listen to what we are saying because some of us have always said the interest rates should come down. ”
Professor of capital market , Nasarawa State University , Prof . Uche Uwaleke , said , “ I expected the MPC to maintain the status quo , to hold the rates because of the spike in inflation that we witnessed last month .”
He added that the inflationary pressure and the pump price of fuel which was recently increased would exert more pressure on inflation .

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