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NLC, TUC And Forex Market: Matters Arising

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In spite of Organised Labour’s recognition of the real advantages that a deregulated downstream oil sector would bring to the economy, there is yet no sign that Labour’s opposition to this policy has waned! Labour, of course, recognizes that NNPC (Nigerian National Petroleum Corporation), like all monopolies (especially state run monopolies) create price and market distortions which do not generally favour the masses. Thus, even when it is clear that deregulation will not only release at least N600bn revenue annually for critical infrastructural upliftment, but also reduce the space for corrupt enrichment within the petroleum sub-sector and induce keen competition with improved consumer services, Labour is not convinced that deregulation would translate into cheaper or stable petrol prices, especially when global crude oil prices follow an upward trajectory.

In truth, this column shares Labour’s apprehension and I will even make bold to say that any assurance from any quarter that deregulation as proposed in its present jaundiced form will bring down petrol prices from its current level even when crude oil prices continue to rise must be a calculated attempt to deceive Nigerians, before our income values are taken to the cleaners! Indeed, Deregulation within the context of our current monetary framework will be suicidal! In their eagerness to encourage Labour to embrace deregulation, government and its agents have been quick to point to the gains in the telecom sector with the advent of liberalisation. In truth, prices of mobile handsets and cell rates have tumbled endlessly over the past five years and Nigerians are urged to be patient so that the same favourable scenario would play out in the downstream oil sector; but, sincere and insightful analysts will be quick to caution against such expectation. In the first place, competition may indeed have impacted favourably on consumer prices, but the more important fact is that it is the increasing size of the market (the cost benefit of mass production/service) that has been the main driver of the favourable prices! Secondly, and certainly of equal significance, price reductions are made possible with an expanding market in the telecom sector by the nature of its revenue base; for example, telecom operators receive their incomes in local currency (i.e. naira) from Nigerian based customers, and furthermore, the telecom operators do not have any direct influence on the determination of the naira purchasing power!

Meanwhile, deregulation of the downstream sector may mean more suppliers, but the demand for petrol as in the case of telecom is unlikely to enjoy an astronomical increase, so the relatively static size of local demand for petrol will not increase and thereby instigate the cost savings that will ultimately reduce prices of petrol, especially when the crude oil market is buoyant! Thus, more refineries with increased capacities and an influx of importers will not necessarily increase demand such that prices will come down with the advantages of large scale production. Furthermore, it is clear that the universal driver of petrol prices is actually the international crude oil price movements. This is certainly the most significant factor in the pump price of fuel.

Yes, the distance between refineries and the market, and the index of efficiency in each refinery would also contribute to the price level, but in reality, these two factors may not account for more than 20% in the price structure of petrol; however, the most critical factor that could induce wild swings in petrol prices is certainly the market price of crude oil. The price of crude oil is, however, denominated in dollars and unlike telecom, our export revenue is consequently received in dollars and not in naira. Meanwhile, the naira value derivable from this dollar revenue is in turn determined in a market which is inexplicably dominated and controlled by the worst form of monopoly (i.e. government parastatals).

Thus, the foreign exchange market which determines how much our hard earned dollar income will command in the market, by its monopolistic nature, is plagued by price distortions, corruption, and market dislocations!! In spite of vastly increased export revenue, the monopolistic posturing of the Central Bank in the foreign exchange is in fact at the root of our underdevelopment! The CBN in its role position as the nation’s banker is the prime custodian of our currency; i.e. the naira, and it is appropriate that it controls all naira issues and it is, by its mandate expected to maintain price stability which also includes an appropriate monetary framework which ensures that the naira we all earn does not continue to buy less and less in the market! Thus, while a Central Bank’s monopoly of a nation’s currency issue and management is universally accepted as inevitable, the waters become seriously muddied when the same Central Bank becomes not only a major player but also a monopolist in the supply of foreign exchange to the domestic market; this would lead us into a very poisonous matrix that guarantees that our people become poorer with increasing dollar export revenue.

Currently, the CBN is annually responsible for about 70% of all dollar revenue that enters into the domestic forex market. The balance 30% or less is supplied by oil companies and a few exporters outside the oil sector! While these private dollar suppliers are legally permitted to approach the banks directly for the exchange of their dollars to naira, the owners of public sector dollar revenue in our reserves are not so lucky! Over the last three decades or so, the CBN has played the role of the all-knowing big brother with our dollar earnings. In the present framework, the CBN actually captures the monthly distributable dollar revenue, and proceeds, with no serious attempt at a market-determined naira/dollar rate, to print and supply loads of naira to the three tiers of government at its own unilaterally determined exchange rate! Consequently, with such framework, increasing dollar revenue will mean increasingly worthless naira value, as more and more naira will be pumped into the system with the attendant problems of excess liquidity, high interest rates, heavy government borrowing (not for infrastructural development but for reduction of excess cash in the system) increasing unemployment, lower demand and comatose industrial landscape as a result of CBN’s monopoly of the people’s dollar revenue!

As you may imagine, the above is a veritable paradox, as increasing dollar revenue (whether from crude price rises or additional export revenue) should realistically improve the value of the naira if the increased dollar revenue provides us with longer forex demand cover. For example, our $60bn or more reserves in 2008 gave us over 30 months demand cover according to CBN and our exchange rate hovered between N120 – N150=US$1, but compare this with our $4bn dollar reserves and four month’s demand cover in 1996 and yet our naira exchange in 1996 for just N80/$1.

Some Nigerians have argued that crude oil is our natural endowment and we should therefore enjoy a subsidy akin to agric product subsidies elsewhere in Europe and U.S.A. Thus, even if a subsidy regime cost us N1 OOObn a year (a third of federal budget) or indeed breeds corruption and dislocates the price structure, such Nigerians maintain that subsidy is our birthright! I do not have any quarrel with this argument, but the point is that the concept of incidence of subsidy is misplaced in this instance. It should be a realistic expectation that when crude oil prices increase, our nation’s treasury benefits with increasing dollar reserves, which would in turn improve our dollar demand cover; when dollar demand cover improves as per the above example, we should rationally expect our naira to be stronger against the dollar! A stronger naira, with rising crude oil prices should normally translate into reducing petrol prices locally!!

The cheaper petrol prices will, however, mean higher cost to all cross boarder smugglers of petrol who have contributed to push our daily consumption of petrol over to 30 million litres! What our economic experts do not tell you is that the resultant stronger naira, cheaper petrol prices, the damper on inflation, and a savings ofN600bn erstwhile subsidy are actually the real subsidies that ownership and export of crude oil provides!

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NASRDA Moves To Promote Space Technology In S’East

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In its quest to boost creativeness of space technology and its innovations among Nigerian youths, the National Space Research and Development Agency (NASRDA) through its Southeast Advanced Space Technology Applications Laboratory (SE-ZASTAL) has commenced a turn-round space technology applications promotion among the secondary schools in the region.
The Coordinator, SE-ZASTAL, Federal University, Ndufu-Alike, Mr. Andrew Onwusulu, made this known while declaring open a training outreach held for 442 students at the main hall, Federal Government College, Okposi, Ohaozara Local Government Area of Ebonyi state.
According to him, “the space applications promotion outreach was part of activities designed for the secondary students to sharpen their intellectual capability in science and technology innovations”.
Tagged “Capacity building for young minds: Benefits of Space and Technology Applications”, the outreach, he explained, “will forever remain in the minds of the students who participated in the training based on series of lectures and skills benefited”.
The principal of the School, Mr. Frank O.A. Omale, in his opening address thanked the agency’s new DG, Dr Mathew Adepoju, through the SE-ZASTAL Coordinator, Mr. Onwusulu Andrew, who outlined the significance of the training as a means of expanding the knowledge of Space Science to the people at the grassroots.
Mr. Omale urged the students to be serious with their studies, describing it as a great opportunity for FGC, Okposi, to be selected first, on the list of the schools mapped out for such training in the Southeast States.
In his remark, the Principal of the School, Mr Omale Frank, observed that no nation can survive the present struggles without  adequate involvement in space technology and its innovations.
He, therefore, charged Science students to rededicate their time to deep reading and aligning with current trends in technology, which he said remain very pivotal to national development.
Other instructors which included Engr. Chinedu Akarugwo, focused on the topic, “Basic Space Science and Technology of SE-ZASTAL”, and Miss Precious Ugwu with the “Space Careers”, as well as Engr. Agu John-Paul Okechukwu, who taught on, “Understanding our environment thorough earth observation”, all highlighted the impacts of Space Science researches and innovations in the environment.
During the training session, the students also had opportunities to access the SE-ZASTAL’s facilities to test, and were also exposed to the activities of NASDRA in other States, such as The National Centre for Remote Sensing, Jos, Centre for Basic Space Science, Nsukka, Enugu State; Centre for Atmospheric Research, Anyigba, Kogi State, Ile-Ife, Lagos.
Some of the students who shared their experiences after the lecture, including an SSS2 student, Okorie Ifeanyichukwu Timothy, described the training as “well-organised”, noting that it would stimulate students’ interest in the technical aspects of promotion and its applications.
Another student, Ogbonna Confidence A., urged the government to support teachers and researchers in the agency, expressing her willingness to take her time to visit the Agency’s headquarters and other NASRDA offices during holidays.
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SEC Directs Capital Market Operators To Implement ERM Framework 

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The Securities and Exchange Commission (SEC) has mandated all capital market operators to implement an Enterprise Risk Management (ERM) framework that aligns with internationally recognised standards.
In a statement issued on the Securities and Exchange Commission website, the SEC said these standards include those set by the Committee of Sponsoring Organisations of the Treadway Commission, the International Organisation for Standardisation, and the Financial Action Task Force Recommendations.
It added that this initiative aims to bolster risk management practices within the capital market, minimize systemic impacts, and safeguard stakeholders’ interests.
“All capital market operators are hereby directed to implement an enterprise risk management framework that conforms to international standards, such as the Committee of Sponsoring Organisations of the Treadway Commission, the International Organisation for Standardisation (ISO 31000), Financial Action Task Force Recommendations and any other internationally recognised risk management standards.
“Adoption of comprehensive risk management practices is imperative for minimising systemic impact and safeguarding the interests of all stakeholders”, the statement explained.
According to the commission, the new ERM framework requires CMOs to consider their operational structure, business activities, client demographics, products, services, and delivery mechanisms.
It noted that the framework must include a comprehensive risk governance structure with clear roles and responsibilities, including the establishment of a risk management committee.
To ensure accountability and oversight, the SEC directed CMOs to define their risk appetite, tolerance statements, and consistent reporting to senior management and the Board of Directors.
It added that organisations must implement risk-awareness programmes to cultivate a culture of risk management throughout their operations.
“This directive is aimed at strengthening the implementation of risk-based supervision, including anti-money laundering and counter-terrorism financing measures in the capital market.
“Consequently, all CMOs are required to submit a Board-approved risk management policy (selectable and searchable PDF format) on or before September 30, 2024, via email at rbs@sec.gov.ng to obtain a ‘No Objection'”, it stated.
The commission noted that the directive was part of its broader strategy to enhance risk-based supervision in the capital market, including measures for anti-money laundering, countering the financing of terrorism, and countering proliferation financing.
It also asked CMOs to submit an annual risk profile by January 31 of each year.
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Firm Combats Fraud Through Data Technology 

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A digital technological firm, the Visa,  has concluded plans to protect sensitive data for individuals, saying its technology helped to save about $650 million that could have been lost to fraudsters  in 2023.
A statement from the firm revealed that the technology, known as Visa tokens, generated more than $40 billion in incremental e-commerce revenue for businesses globally.
The statement added that Visa would continue to enhance security across the payment ecosystem through the technology, known as tokenization.
“Visa, a world leader in digital payments, recently announced a significant milestone achieved by its tokenization technology, revealing that Visa tokens have generated more than $40 billion in incremental ecommerce revenue for businesses globally and saved $650 million in fraud in the last year”, the statement explained..
Visa also announced it has issued more than 10 billion tokens since the technology’s launch in 2014.
“Over the last 10 years, Visa has further enhanced security across the payment ecosystem through tokenization, a technology that replaces sensitive personal data with a cryptographic key that conceals sensitive payment data.
“Tokenization can be embedded into any device, making digital payments more secure while being virtually useless to scammers.
“Currently, 29% of all transactions processed by Visa use tokens, reflecting their widespread adoption and the trust consumers place in this secure payment method.
“Tokenization technology has also caused a six-basis point increase in payment approval rates globally. Overall, tokenization can reduce the rate of fraud by up to 60%, providing businesses with more successful transactions and offering much-needed peace of mind to consumers and merchants of all sizes.
“Visa, announced the milestone live onstage at Money20/20 in Amsterdam recently, issued its billionth token in 2020. Due in part to the shift to digital during the pandemic, the adoption of tokens accelerated significantly in the last four years.
“Today, over 8,000 issuers are enabled for tokenization, with over 200 markets empowered with the technology globally. In the last 12 months, over 1.5 million eCommerce merchants transacted with Visa Tokens every day.
“A recent Visa survey revealed that less than one third of consumers globally feel in control of their data, and only slightly more than one third fully understand how their data is used.
“However, Tokenization can unlock a whole new era of personalization and security, one where consumers control their data and approve when and where it can be shared for a more personalized experience.
“In the not-too-distant future, Visa data tokens could help merchants and commerce platforms use your data in a way that is both transparent and gives you control, meaning you decide who gets access to your data (and when they no longer do) as well as how your data will be used.
“Powered by AI, Visa data tokens let consumers view, consent to, and revoke data sharing access, right from their banking app”, the statement posited.
Corlins Walter
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