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Border closure: Losses by Nigerian businesses soar above N600bn

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images 81 1 Border closure: Losses by Nigerian businesses soar above N600bn

After a year of closing Nigeria’s borders over alleged security breaches and abuse of international trade facilitation procedure, the economy of border communities appear to have taken a turn for the worst with legitimate businesses either grounded or relocated.

Today, Nigerian businesses that operate between Lagos and some West African states like Togo, Benin Republic, Ghana, Cote d’Ivoire, Cameroun among others have reported losing over N600 billion.

The Muhammadu Buhari administration had introduced a joint military operation codenamed “Ex-Swift Response” on August 20, 2019 across the nation’s borders to curb the rising incidence of smuggling of rice, firearms and other prohibited goods into the country from Benin Republic and other neighbouring countries. Since then, the hardship the exercise brought upon both exporters, importers, clearing agents and people living around the borders are enormous. Economists at several fora even indicated that the pains of the closure are more than the gains. However, all efforts of the Economic Community of West African States (ECOWAS) persuade Nigerian government to revisit and review its decision over the closure of the border posts proved abortive.

This seems to anger the neighbouring states as they are now inflicting hardship on Nigerians doing businesses in these states. Sometimes ago, there was an escalating tit-for-tat trade war as the Ghana Union of Traders Association (GUTA) shut down almost 70 Nigerian-owned businesses because of Nigeria’s closure of its border to imports and exports.

At a recent sensitisation programme held at Nigerian Shippers’ Council in Lagos, a member of Manufacturers Association of Nigeria (MAN) revealed that Republic of Benin arrested some truck owners and jailed them for 12 years for bringing in some pharmaceutical products from Nigeria into Benin.

Investigation by our reporter shows that in order to keep Nigerians out of business, Benin has increased transit fee from 6000 cefas to 2 million cefas. The increase was a result of the closure of the nation’s land borders.

Manufacturers Association of Nigeria (MAN) has called on the Federal Government to review the border closure and put measures in place to guard against ill practices at the country’s land borders.

Its acting Director General, Paul Oruche, said with the border closure, and the wave of the COVID -19 pandemic, the pains of exporters have aggravated. He added that the closure has posed a major risk to economic growth.

Chairman of Save Nigeria Freight Forwarders Importers and Exporters Coalition (SNFFIEC), Patrick Osita, said there is need for Federal Government to reopen the land borders, adding that there are some measures that can be put in place to check smuggling. He said continued closure of the land borders will not help the nation especially now that the economy is struggling to survive due to COVID-19 pandemic, saying that the closure of the land borders have cost the nation’s economy over N600 billion.

Also, speaking with Daily Sun, Chairman of the Association of Nigeria Licensed Customs Agents (ANCLA), Seme border chapter, Bisiriyu Fanu, said that the government is no longer having direction on what to do any more.

According to him, the latest thing around the border is that everybody has taken their destiny in their hands since the land border is yet to be opened.

“We are waiting on government to open the border. Somebody heard in the news yesterday or day before yesterday that Buhari is not ready to open the border or he’s not in hurry to open the border. Somebody was telling me this afternoon and I said well, they are not God.

“The government is not helping situation because what is happening down south here is not happening in the north there. If what is happening in the south here is also happening in the north down there, majority of us would have been happy about it. We are leaving everything to God to judge,” he added.

He said now people around the border are involving in other businesses especially the export of petroleum product, which they know how they do. “Going to the border now, there are more police checkpoints than coming back. The economy is crumbling. Has the border closure improve any agricultural product? We still have over 160 trucks left around the border because government said they should go back. Majority went back, some went through water and some through the bush. That is why I said the government has not achieved anything,” he said.

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CBN bans customer-to-customer forex transfer

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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

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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%

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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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