The Pacesetter Frontier Magazine

Tag: Naira

  • FG Warns Fuel Subsidy Return Could Trigger Capital Flight

    FG Warns Fuel Subsidy Return Could Trigger Capital Flight

    Precious Nwonu, Enugu

    The Federal Government has warned that restoring petrol subsidies could trigger capital flight, weaken the naira and reverse gains made through its economic reforms.

    The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, gave the warning during a briefing in Bangkok, Thailand, following the 2026 IMF-World Bank Annual Meetings.

    Oyedele said investors had repeatedly sought assurances that the government would not reverse the removal of fuel subsidies or the unification of exchange rates, particularly as Nigeria approaches another election cycle.

    He warned that any indication of a return to subsidies could undermine investor confidence, prompt capital withdrawals and increase pressure on the foreign exchange market.

    The briefing was also attended by the Central Bank of Nigeria Governor, Olayemi Cardoso, and the Minister of Budget and Economic Planning, Atiku Bagudu.

    The delegation clarified that the Federal Government’s 30-day petrol price reduction did not amount to a reinstatement of fuel subsidies.

    Bagudu stressed the need for closer coordination between fiscal and monetary authorities to sustain the gains of ongoing reforms. The government also announced a seven per cent economic growth target.

    At the meetings, Nigeria called for reforms of the International Monetary Fund and World Bank to strengthen the representation of developing economies in global financial decisions and improve their access to funding.

    Presenting the Group of 24 communiqué, Oyedele said geopolitical conflicts, trade uncertainties, volatile commodity prices and climate-related shocks were threatening global growth, with emerging and developing economies bearing a disproportionate share of the impact.

  • Why We Need To Bring Cash Back

    Why We Need To Bring Cash Back

    By Dr. Samson Abanni

    Some needs when delayed disappear. in the light of the economic challenges, it may be more advisable to return to cash as much as possible. Cash is not easily taxed. Let me put it in a better way. The financial system is one of the best systems used to collect rent because it’s easy to setup digital check points to collect fees. A single transfer of N50,000 can bounce around the country 100 times or more in 24 hours and each time, it will be taxed. And of course, we are seeing it in bank profits.

    Also, it’s easier to spend money when it’s not cash. You don’t feel the pain of the loss of hard earned money, so you spend more and the psychology is well known which is why there’s a massive push for adoption of digital payment systems-it’s easily policed and it is easier to collect rent. Account maintenance fees are rents you pay to economic elites who own these systems of rent collection and the federal government.

    Unlike platforms like piggyvest which pays you for holding your money and encourage you not to spend, banks are more or less paid for keeping your money. When we spend more via cash, we delay gratification more, and when needs are delayed in many cases, they disappear.

    You pay bank to keep the money. They use it to make more money. Then you pay POS, federal government for VAT and electronic transfer levy, and bank to withdraw the money. You also pay for sms to be told of the transaction.

    There are so many checkpoints where your electronic money is being made to pay “fees” before moving on, and because it’s digital, we don’t feel it. Every important stakeholder has his interests covered except the ordinary people.

    Let’s take a look at the journey of a certain N50,000. Immediately a man received his salary of N100,000, he sends N50,000 to his landlord to complete his rent. The landlord sends it to his child in school, who uses it to pay for two shoes. The vendor sends to his girlfriend who buys a wig from someone who borrows it to his sister via transfer and its journey continues, within 24 hours, that N50,000 can crisscross the country a thousand times, crossing different bank borders in 20 states. Each time, that money is taxed differently by different digital checkpoints.

    So, the same N50,000, before it’s done with its rounds, can generate a good part of N50,000 as profit for the financial stakeholders.

    Abanni is a Medical Doctor and Member of the Board of Editors of Pacesetter Frontier Magazine.

  • Nigeria gains massively on the ‘Naira for Dollar’ policy

    The ‘Naira for Dollar’ policy of the Central Bank of Nigeria (CBN) has led to positive accretion to the foreign reserves exactly one month after takeoff.

     

    The foreign reserves, on April 1, stood at $34.85 billion, representing $404 million increase compared to $34.41 billion on March 11.

     

    The uptick in reserves has been attributed to CBN’s ‘Naira for Dollar’ policy which has seen dollar inflows pass through commercial banks, instead of unofficial channels.

     

     

     

    Also helping reserves accretion is the continued rise in benchmark Brent crude oil price, which stood at $63.29 per barrel as at April 8, representing about $23.29 above the $40 per barrel benchmark for 2021 budget.

     

    According to the CBN Governor, Godwin Emefiele, the ‘Naira for Dollar’ policy, gives N5 rebate for every $1 sent by Nigerians in diaspora to the country, which is paid directly to the account of the beneficiaries, following receipt of the remittance inflows.

     

    The CBN had promised that the new policy would provide Nigerians in the Diaspora with cheaper and more convenient ways of sending remittances to Nigeria.

     

    Defending the dollar policy, Emefiele said the move was also to increase the transparency of remittance inflows and reducing rent-seeking activities. He expressed optimism that the new policy measure will encourage banks and financial institutions to develop products and investments vehicles, geared towards attracting investments from Nigerians in the diaspora.

     

    Reiterating the provision a new circular on remittances, the CBN boss said the bank introduced the rebate of N5 for every $1 of fund remitted to Nigeria, through International Money Transfer Operators (IMTOs) licensed by the Central Bank in order to incentivise the process of remittance.

     

    He emphasised that the new measure would help to make the process of sending remittance through formal bank channels cheaper and more convenient for Nigerians in the diaspora.

     

    Also, Forex Trading Associate, AZA, a global forex dealer, Oghenefejiro Eduviere, said naira would remain stable on the parallel market, hovering around the N480 to N490 level, as the Central Bank of Nigeria’s ‘N5 for $1’ incentive scheme encourages forex flows to go through banks.

     

     

     

    “We see trading on the Investors and Exporters (I&E) Forex window extending depreciation towards N435 in the short term,” he said in emailed notes to investors.

     

    “The naira strengthened on the parallel market, trading in the 478/485 to the dollar range vs. 482/486 at the end of last week, while depreciating on the official I&E window, from N408.67 to N411 to dollar amid accumulated demand for dollars carried over from the long Easter break,” he added.

     

    On the foreign reserves, Fitch Ratings, a global rating agency predicted that Nigeria’s external reserves would rise to $42 billion by year-end.

     

    In a report titled, “Depreciatory Pressures on Key Sub-Saharan African Currencies to Lessen,” Fitch Ratings had hinged the forecast on its expectation that Brent crude would average $53 per barrel, compared to the $43.1 per barrel recorded in 2020. Moreover, the agency anticipated that the CBN would allow the official naira exchange rate to depreciate further over the course of 2021, notwithstanding improved terms of trade and foreign exchange reserves.

     

    “Given rising oil prices in 2021, we expect forex reserves to rise to an average of around $42 billion in 2021 (around eight months of import cover), compared to $36 billion in 2020.

     

    “However, this will not negate the impact of persistent depreciatory pressures on the naira, notably as a result of rising dollar demand driven by the domes tic economic recovery,” it stated.

     

     

     

     

     

     

    Source: www.thenationonlineng.net

  • Emefiele Announces the depreciation of Naira at the official market to 410 against the dollar

     

    The Governor of the Central Bank of Nigeria, Mr Godwin Emefiele, has said the naira has depreciated at the official market to 410 against the dollar.

     

    Emefiele, who spoke at a summit on the economy by Bank CEOs on Friday, said the drop in crude oil earnings and the associated reduction in foreign portfolio inflows significantly affected the supply of foreign exchange into Nigeria.

     

    “In order to adjust for the decrease in supply of foreign exchange, the naira depreciated at the official window from N305/$ to N360/$ and now hovers around N410/$,” he said.

     

    The naira exchanged for 478/$ at the parallel market on Friday.

     

    The Vice President, Prof. Yemi Osibanjo, said the Federal Government would address the shortage of foreign exchange.

     

    “We have accepted that we need to take more dramatic step to boost exports in order to earn foreign exchange,” he said.

     

    Osinbajo said the government would combine limited resources to expand the supply base.

     

    ‌

    The Federal Government, he added, would ensure the expansion and promotion of export trading houses, ensure that companies in the special economic zones exported most of their productions, as well as expand the export grant scheme.

     

     

     

    Source: www.punchng.com