Business
Financial Markets Remain Shallow- IMF
Nigeria’s money and capital markets still lack the depth of lifting the economy out of the doldrums, the International Monetary Fund (IMF) has said.
Also in the league of markets with shallow profit, according to IMF are most of the other sub-Saharan African countries, despite reports of reforms in the respective economies.
IMF, in a recently released report, noted that the domestic money and capital markets in Nigeria and most sub-Saharan African countries remain underdeveloped and shallow offering mostly short term instruments.
According, stock market capitalisation remains low, while private securities markets are largely underdeveloped.
The IMF stated that the shallowness and lack of versality of hedging instruments in African financial markets likely accentuated short-term exchange rate movements.
Therefore, foreign exchange markets offers a limited array of forward hedging instruments, reflecting a part the concentration of foreign exchange receipts in the hands of the public sector, through aid or commodity exports.
Nabil Ben Ltaifa, Stella Kaendera and Shiv Dixit of the African Development IMF, in their submission, “Impact of the Global Financial Crisis on Exchange Rates and Policies in Sub-Saharan Africa” observed that the currencies of many sub-Saharan African countries, like those of many emerging and developing economies, offered large depreciation with onset of the global financial crisis.
Nigeria’s currency, as one of the countries under study, was said to depreciate by at least 20 per cent between June and March 2009.
After April 1, 2009, while some currencies reversed their depreciating trend with respect to the United States dollar, the Nigerian Naira continued almost unchanged.
Although, while in most countries above-trend inflation mitigated the real effect of nominal depreciation, Nigeria registered a significant (over five per cent) real depreciation in its currency over the whole period.
The trio observed that exchange rate volatility increased significantly compared to the pre-crisis period.
Volatility was generally higher with respect to the United States dollar but broadly less vis-à-vis the euro. The naira experienced significant increases in the volatility with respect to the three major currencies.
In contrast, the Rwandan and Tanzanian currencies displayed similar or lesser volatility before the crisis with respect to the U.S. dollar.
Talking about the factors that affected the value of exchange rates, the experts noted that the first factors were external, reflecting the transmission of the global crisis through the trade and financial channels as well as the volatility of the U.S, the main international reserve currency.
“The impact was commensurate with the extent and nature of each country’s exposure to trade and global financial markets. At the same time, domestic policies played a role in shaping the nature and magnitude of the impact,” they said.
Concerning the external environment, the IMF officials observed that trade had, as expected, an adverse impact on the region’s currencies, but that the magnitude of this impact seems to have varied significantly across countries.
According to them terms-of-trade movements were likely the main factor underlying movements in the exchange rates of Nigeria and Zambia, the two large commodity exporters in the sample.
Conversely, the rebound in copper and oil prices in the later part of the period supported the recovery of the Zambian Kwacha and a stabilisation of the naira.
The IMF officials also attributed policy choices of countries to the depreciation of their currencies.
Nigeria operated a managed floating system, which tended to depreciate more, the economy consequently, registered large depreciation, reflecting the limit of currency management in the face of large charges in the external environment.
It was observed that the domestic policy mix adopted in response to the external crisis also played a role in explaining exchange rate dynamics.
According to them, most countries in the sample intervened in their foreign exchange markets in an effort to stem the shock to their currencies.
\however, they said, managed floating regime like Nigeria intervened in a more regular and extensive manner to halt the depreciation.
“As a result, nominal exchange rates in these countries have tended to be more stable. But intervention by the Nigeria’s Central Bank was however, unsuccessful in preventing a large step depreciation of the currency by the end of 2008, in the large turnaround in trade and capital flows.
Business
Food Vendors, Others Relocate To New Site At PH Airport
The raging controversy between the Port Harcourt International Airport Management and restaurants/canteen operators and theirallies over relocation has been brought under control, as the operators have commenced relocation to their structures at the new site.
Recall that there had been serious feud over a directive by the Manager of the airport, Mr. Michael Area, for food vendors and their allies to relocate to the new site.
They insisted that the new site was too distant and hence, would negatively affect patronage from customers, with possible loss.
They further also insisted that it wouldcost them much money to put up another structure, given the economic situation in the country, since the airport management did not build any structure for them, apart from providing the empty land they have to also pay for.
The situation had led to flexing of muscles, which made the Airport Manager to order for sealing of all shops, resulting in scarcity of food, as airport users could not find a place to eat, apart from the only Genesis fast food spot available.
As at last Friday, The Tide observed that most of the food vendors had transferred their structures to the new place, and had started doing business there already.
Meanwhile, customers have started settling down at the new location as they were seen patronising shops for foods and drinks, in spite of the distance.
Few of the remaining structures at the old site, The Tide further gathered, will also be removed as quickly as possible, and the owners are making efforts to get funds for the job to be done.
One of them, Mrs Aka Love explained that she was going to relocate to the new place before the end of March.
Currently, business activities at the old site have come to null, as the place which was usually a beehive of food, drinks and relaxation, has completely winded down.
By: Corlins Walter
Business
MOWCA Strengthens Maritime Crime Prevention
Secretary General of the Maritime Organisation of West and Central Africa (MOWCA), Dr. Paul Adalikwu, has stepped up interaction with the United States Government to lift restrictions placed on some member countries allegedly implicated in illicit shipping activities.
Adalikwu, who led a delegation from the MOWCA Secretariat to the US Embassy in Abidjan for a first leg of the strategic consultation aimed at promoting seamless participation of MOWCA countries in international trade within the global maritime space, reiterated the organisation’s commitment to the best ethical and lawful maritime practices.
Addressing the U.S Ambassador to Côte d’Ivoire, H.E Mrs Jessica Davis Ba, the MOWCA SG stated the organisation’s interest in promoting the International Ship and Port facility Security (ISPS) code which aims at enhancing security of vessels and their ports of call.
He expressed the commitment of MOWCA in promoting environmentally friendly, safe and cost effective shipping without any encumbrance that may limit the economic potential of member countries.
Dr Adalikwu recalled that at the instance of the U.S. Department of State invitation, MOWCA participated in the 2023 Registry Information Sharing Compact (RISC) Conference in Larnaca, Cyprus, on February 28–March 1, 2023, and a virtual meeting held on June 6 2023, with Mrs Jennifer Chalmers, Officer in change of Counterproliferation Initiative.
He recalled The U.S. DOS willingness to support MOWCA’s effort for preventive maritime security through the establishment of the Center for Information and Communication (CINFOCOM) with the aim to ensure a maritime situational awareness domain within MOWCA’s member states’ waters.
He added that MOWCA under his watch is committed to training and retraining of maritime practitioners and experts to enhance the human capital capabilities of member states.
The CINFOCOM will help prevent transnational crimes committed at sea like sanctions evasion by North Korea and other state actors, who exploit poor enforcement due diligence by ship open registries to circumvent United Nations and U.S. trade restrictions.
By: Nkpemenyie Mcdominic, Lagos
Business
Nigeria’s Public Debt Hits N97.3trn – DMO
The Debt Management Office (DMO) has hinted that Nigeria’s public debt increased by 10.7 per cent from N87.87 trillion in the third quarter of last year, to N97.34 trillion as at December 31, 2023.
DMO, in an update data released last Friday, said the increase in the debt stock was largely due to new domestic borrowing by the Federal Government to part finance the deficit in the 2024 Appropriation Act and disbursements by multilateral and bilateral lenders.
The office noted that the N97.3 trillion public debt comprises of domestic debt of N59.12 trillion and external debt of N38.22 trillion. The sum of $3.5 billion was used to service external debt during the review period.
“Nigeria’s Public Debt Stock as at December 31, 2023 was N97.34trillion or $108.229 billion. This amount comprises the domestic and external debt stocks of the Federal Government of Nigeria (FGN), the 36 States Governments, and the Federal Capital Territory (FCT).
“There was an increase of N9.43 trillion over the comparative figure for September, 2023, which was largely due to new domestic borrowing by the FGN to part finance the deficit in the 2024 Appropriation Act and disbursements by multilateral and bilateral lenders.
“At N59.12 trillion, total domestic debt accounted for 61 percent of the total public debt stock, while external debt at N38.22 trillion accounted for the balance of 39 percent.
“Consistent with the debt management strategy, Nigeria’s external debt stock was skewed in favour of loans from multilateral (49.77 percent) and bilateral lenders (14.02 percent) or total of 63.79 percent which are mostly concessional and semi-concessional.
“Whilst the DMO continues to employ best practice in public debt management, the recent and on-going efforts of the fiscal authorities to shore up revenue will support debt sustainability”, DMO stated.
By: Corlins Walter
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