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.
CBN Gov Approves Charter On Ease Of Doing Business
Governor of Central Bank of Nigeria (CBN), Mr Olayemi Cardoso, has approved the CBN’s reviewed Service Charter.
A statement from the CBN, midweek, said the service charter is a requirement of the Business Facilitation Act 2022 for driving the ease of doing business in Nigeria.
“It also enables the Bank to fully comply with the directives of SERVICOM Nigeria (The Presidency) on improvement of customer service delivery.
“The charter outlines how the bank promises to work with its external customers in meeting their expectations of service along with what the Bank expects from them”, according to the statement.
It stated that the Governor reiterated the Bank’s commitment to providing more responsive and citizen-friendly governance through quality service delivery that is efficient, accountable and transparent.
According to the CBN, “The document clearly outlines the Bank’s mandates, vision, mission, and core values. It contains the list of services offered by the Bank through its various departments and the service standards for each service.
“The service charter also includes a standardised Customer Complaints Form for reporting service failure as well as a mechanism for addressing service failure in any of the Bank’s services”.
Bayelsa, NCDMB Task Youths On Skills Acquisition, Opportunities
The Bayelsa State Government has charged youths across the Niger Delta states to leverage on skills acquired to eke out a meaningful living.
The State Governor, Senator Douye Diri, gave the charge Tuesday in Yenagoa, the state capital, at the Youth session of the 2023 edition of the Nigerian Content Development and Monitoring Board (NCDMB) annual Practical Nigerian Content (PNC) programme.
Diri, represented by the State Commissioner for Youths and Sports, Dr Bralate Daniel Igali, noted that though conventional education is needed in most cases to enable job seekers get better placements in organisations, skill acquisition is inevitable in the contemporary world.
He tasked the youths not to relent in self development, noting that as participants in the fora organized for their development, youths must not just be listeners and participants, but should seize those opportunities to make judicious use of their potentials.
“Over the years, youths have participated in several empowerment and vocational training programmes, but it seems many aren’t taking such opportunities seriously.
“As youths, you must endeavour to make maximum use of knowledge and skills acquired to develop yourself and become a responsibly, productive citizen.
“I charge you not only to be listeners and participants in the lectures and training the NCDMB and others would be giving you today as part of their 2023 PNC programme, but to strive to derive the greatest benefit from it”, Governor Diri said.
Earlier in his opening remarks, the Executive Secretary, NCDMB, Engr. Simbi Kesiye Wabote, called on youths to take advantage of the various empowerment and employment opportunities made available by the board.
Represented by the General Manager, Corporate Communication and Zonal Coordination of the NCDMB, Mrs Angela Okoro, Wabote stated that the rationale behind the forum was to inform youths about activities of the board, noting that the annual programme enables participants benefit from various opportunities provided in the oil and gas sector.
He called on participants to register on the NCDMB’s NOGIC JQS portal to be qualified for training, contracts and other available opportunities.
In her presentation on the prospects of the ongoing NLNG Train-7 project, the Coordination Lead of the Project, Dr. Rachael Tamunoso Ibibam, said there were numerous opportunities in the project.
She said the Train-7 Project comes with new development opportunities that will generate about 12,000 jobs and increase Nigeria’s revenue earnings, as well as provide sufficient LPGs for the local Nigerian market, noting also that the project is 54% completed.
“I want to commend the NCDMB for promoting and encouraging Nigerian businesses. I would like to call on you, participating youths in this forum, to register with the NCDMB as vendors to be qualified to execute contracts in the Train-7 project”, she said.
Delivering a paper on conflict management skills at the programme, a Resource Person, Dr. Patterson Ogon, called for collaborative efforts between and amongst individuals to resolve conflict at home and in the workplaces.
By: Ariwera Ibibo-Howells, Yenagoa
Five Multinationals Exit Nigeria In 10 Months
An analysis of separate notices filed by five multinational firms has shown that the five multinationals have winded down operations in Nigeria in the last 10 months.
On Wednesday, Consumer goods giant, Procter & Gambles, disclosed that it would dissolve on-ground operations in the country.
Chief Financial Officer of the group, Andre Schulten, stated this during his presentation at the Morgan Stanley Global Consumer and Retail Conference.
The company said it was difficult to do business in Nigeria as a dollar-denominated organisation and the macro-economic reality in Nigeria is responsible for its latest strategic decision.
Schulten said, “The other reality that arises in some of these markets is that it gets increasingly difficult to operate and create U.S dollar value.
“So, when you think about places like Nigeria and Argentina, it is difficult for us to operate because of the macro-economic environment.
“So, with that in mind, we are announcing a restructuring programme with the intent to adjust the operating model and adjust the portfolio to ensure that we maintain the portfolio discipline that has brought us to this point.
“The restructuring programme will largely focus on Nigeria and Argentina. We’ve announced that we will turn Nigeria into an import-only market, effectively dissolving our footprint on the ground in Nigeria and reverting to an import-only model”.
The company joins a growing list of multinationals set to exit Nigeria in 2023, following the footsteps of Unilever, which is the first Multinational to announce that it would fold up operations in Nigeria in 2023.
In March, the company had said changes in its business meant it had to exit its home care and skin cleansing categories from Nigeria.
The announcement meant that famous brands such as Omo, Sunlight and Lux, which many Nigerians had become accustomed to, would no longer be on retail shelves.
The company’s decision to end production in Nigeria is connected to increased financial difficulties occasioned by the continued devaluation of the naira, among others.
President of the Manufacturers Association of Nigeria (MAN), Francis Meshioye, told The Tide’s source that some international manufacturing firms had already exited Nigeria as a result of the power crisis, coupled with the unpredictability of the country’s foreign exchange rate before it was recently unified.
He said the N144bn spent on alternative energy sources by manufacturers in 2022 impacted adversely on the operations of his members.
In July, barely a month after Meshioye’s warning, GlaxoSmithKline Consumer Nigeria Plc, the country’s second-biggest drug producer, announced it was halting manufacturing operations in Nigeria.
According to a statement published on the Nigeria Exchange, GSK Plc (Headquartered in the UK), which owns a majority stake in the Nigerian unit, said it will appoint third-party distributors to sell its prescription medicines and vaccines in the country.
GSK’s consumer-health arm, Haleon Plc, also informed GSK Nigeria of its “intent to terminate its distribution agreement in the coming months” and appoint a third-party distributor.
GSK also said it planned “an accelerated cash distribution and return of capital” to minority shareholders.
No reason was given for the company’s exit, though the company had in the past raised concerns about the scarcity of forex which made it difficult to maintain supplies of its pharmaceutical and vaccine products in Nigeria.
Last month, Sanofi, a French pharmaceutical multinational, announced its exit from Nigeria.
The company said it had appointed a third-party distributor to handle its commercial portfolio of medicines from February 2024.
While the company’s Country Manager, Folake Odediran, had described the decision as a strategic move driven by the company’s commitment to continually improve access to medicines, the company’s financials indicated that operating in Nigeria had been a tall order.
Shortly after Sanofi’s announcement, Bolt Food announced that it had made the difficult decision to discontinue its food delivery operations in Nigeria due to business reasons.
According to a statement by the company, the decision was borne out of the need to “streamline its resources and maximise overall efficiency”.
Politics3 days ago
Kogi Gov’ship Election Petitions Stolen By Gunmen – Police
Featured3 days ago
Return To Bodo-Bonny Road Project Site, FG Orders Julius Berger …Sets April 2024 New Deadline For Project’s Delivery
Editorial3 days ago
Stop Privatisation Of TCN, Others
News3 days ago
Bizman Hails Kalabaris Over Monarch’s Burial
Nation3 days ago
EFCC Boss Vows To Fight Corruption
News3 days ago
S’Court: 11 Justices Scale NJC Hurdle, Await Tinubu’s Nod
Social/Kiddies3 days ago
Eze Ndi Igbo Savours Honour
Featured3 days ago
No Level Of Sabotage Can Make Me Surrender Our Mandate -Fubara …Promises To Prioritise Development In Education, Entrepreneurship, Agriculture …Asks For Sustainable Peace Across The State