Connect with us

Business

NLC, TUC And Forex Market: Matters Arising

Published

on

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!

Continue Reading

Business

Boat Mishap Kills Pastor, Wife And Church Members  In Brass Water

Published

on

A boat accident in Bayelsa state has killed a serving Pastor, Wife and other church members along Brass waterways
The sad incident happened at Odioama in Brass local government area of Bayelsa State when the Pastor, wife and  members of his church were in a programme.
?
?Tide confirmed that the lifeless body of the Pastor’s wife has been found and deposited in a mortuary while the remains of her husband ,the Pastor is yet  to be recovered
as search party are still ongoing.
Although the real cause of the boat Mishap is not yet known as at the time of this report,  our Correspondent gathered  that the identities of the Pastor, wife and church members were not disclosed to the public.
The mishap, Tide gathered occurred on Friday morning when the church members were on a boat transit
The Bayelsa State government and the state police command are yet to issue official statement’s  on the sad accident
By: CHINEDU WOSU
Continue Reading

Business

Rivers Workers Seek Scrapping Of Contributory Pension Scheme

Published

on

The Rivers State Council of  Nigeria Civil Service Union has called on the State Government to urgently scrap the contributory pension scheme, describing it as unfavourable to long-serving civil servants in the state.
Chairman of the union, Chukwuka Osuma, said this in an interview with newsmen in Port Harcourt,  recently.
Osuma said the current pension structure has continued to worsen post-retirement hardship for workers.
He noted that  the contributory pension scheme had failed to provide adequate retirement security for workers who had spent many years in service, especially those approaching retirement age.
According to him, civil servants who had served for more than 20 years were among the worst affected under the scheme, insisting that many retirees could no longer cope with prevailing economic realities.
He also  informed that the Union has made moves to showcase their concerns, pleading with Governor Siminalayi Fubara to abolish the pension policy and introduce a more favourable arrangement for affected workers.
“The union was not opposed to pension reforms, the contributory scheme should only apply to newly employed workers or those with fewer years in service”, he said.
Osuma explained that workers who had already spent decades in the civil service ought to remain under a more secure pension structure capable of guaranteeing stability after retirement.
The labour leader further noted that inflation and the rising cost of living had continued to erode the value of retirement savings, thereby increasing the suffering of pensioners across the country.
He also appealed to the state government to consider extending the years of service in the civil service from 35 to 40 years and the retirement age from 60 to 65 years.
Osuma argued that such adjustment had become necessary in view of present-day economic realities and changing conditions in the workplace.
The unionist also reviewed that similar policies had already been adopted in some sectors and jurisdictions, expressing optimism that the State could also implement the reforms for the benefit of workers.
He however, commended Governor Fubara for approving an N85,000 minimum wage for workers in the state, noting that the amount was above the national benchmark of N70,000.
Osuma also acknowledged the government’s efforts in the area of workers’ promotions and bonuses, but insisted that pension reforms and extension of years of service remained critical to the long-term welfare and stability of civil servants in Rivers State.
By: King Onunwor
Continue Reading

Business

FG Begins South-West Tour To Promote New Cooperative Bank

Published

on

The Federal Government has launched the South-West zonal engagement and ministerial advocacy tour on the Cooperative Bank of Nigeria share capital mobilisation, sensitisation and cooperative sector digitalisation.
 Reports say the initiative was launched through the Federal Ministry of Agriculture and Food Security.
According to reports, the advocacy tour, organised by the ministry’s Federal Department of Cooperatives, began on Monday in Lagos.
Speaking at the event, the Minister of State for Agriculture and Food Security and Supervising Minister of Cooperative Affairs, Dr Aliyu Abdullahi, said the initiative was part of President Bola Ahmed Tinubu’s Renewed Hope Agenda.
Abdullahi described the exercise as a strategic effort to reposition the cooperative sector as a key driver of inclusive economic growth, financial inclusion, enterprise development, food security and national prosperity.
“Today represents a defining moment in our collective determination to reposition the cooperative sector as a major driver of inclusive economic growth, financial inclusion, enterprise development, food security and national prosperity,” he said.
The minister noted  the modern cooperative movement in Nigeria originated in the South-West following the 1934 Strickland Report, which led to the enactment of the Cooperative Societies Ordinance of 1935.
According to him, the decision to commence the sensitisation and share capital mobilisation tour in the region is symbolic, as it marks a return to the roots of cooperative development in the country.
Abdullahi said the advocacy tour was a direct outcome of resolutions reached at the 8th Regular Meeting of the National Council on Cooperative Affairs held in Abuja in March 2026.
He said the council approved the Renewed Hope Cooperative Reform and Revamp Programme, a comprehensive framework designed to strengthen the cooperative sector and align it with the administration’s goal of building a one-trillion-dollar economy.
“The reform programme focuses on seven strategic pillars, including governance reforms, cooperative financing and the establishment of the Cooperative Bank of Nigeria, digitalisation, capacity building, value chain development, inclusion of youths, women and persons with disabilities, and strategic partnerships,” he said.
He said the establishment of the Cooperative Bank of Nigeria and the digitalisation of the cooperative sector were the two major transformational initiatives under the programme.
“The Cooperative Bank of Nigeria is aimed at rebuilding a strong cooperative financial system capable of supporting cooperators, farmers, artisans, traders, SMEs, youths, women and persons with disabilities with accessible and affordable financial services,” he said.
Abdullahi emphasised that the proposed bank would be government-enabled but not government-funded.
“Government is not establishing the bank as an owner, nor will it rely on Treasury Single Account funds.
“The role of government through the FMAFS is to provide policy support, stakeholder coordination, regulatory facilitation and an enabling environment under the Renewed Hope Cooperative Reform and Revamp Programme,” he said.
Also speaking, the Lagos State Commissioner for Commerce, Cooperatives, Trade and Investment, Mrs Folashade Ambrose-Medebem, reaffirmed the state government’s commitment to cooperative sector transformation.
She described cooperatives as critical tools for promoting inclusive growth, grassroots productivity, food security, financial inclusion and community wealth creation.
Ambrose-Medebem said Lagos State would continue to support reforms and collaborate with stakeholders to ensure the successful implementation of the Renewed Hope Cooperative Reform and Revamp Programme (2025–2030).
“Together, let us build a cooperative ecosystem that is modern, transparent, digitally enabled, financially inclusive and globally competitive.
“Let us build cooperatives that not only mobilise savings, but also mobilise prosperity,” she said.
Continue Reading

Trending