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On  Forex Restriction Policy

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When on June 23, 2015, the immediate past federal government, through a circular from the Central Bank of Nigeria, CBN, placed a ban on forex in the Nigerian Foreign Exchange Market for 43 items, some Nigerians raised concern on the possible effect of such restriction on the nation’s economy.
They advised that forex restriction on rice, cement, margarine, palm kernel, palm oil products, vegetable oils, meat and processed meat products, vegetables and processed vegetable products; poultry and processed poultry products; tinned fish in sauce (geisha)/sardine; toothpicks and many more could contribute to inflationary pressures as there would be limited availability of foreign exchange for these essential goods, adding that when businesses face higher costs for imports, these costs often get passed on to consumers through increased prices for locally produced goods and services.
It could be recalled that some economists appeared on interview programmes on the media, educating that forex restrictions could create instability in the foreign exchange market, as the demand for forex may exceed its supply. This they said could lead to multiple exchange rates, with a significant gap between the official exchange rate and the parallel market rate, which can deter foreign investors and distort the economy.
Some people in the manufacturing sector warned that forex restrictions could lead to shortages of imported goods, including essential commodities and critical inputs for manufacturing and that businesses might struggle to maintain production, leading to supply disruptions and affecting employment and economic growth.
They warned that the policy would impact negatively on businesses as industries that rely heavily on imported raw materials or machinery could face operational difficulties, reduced production, and increased costs, which could lead to job losses and lower economic growth
Some other citizens were worried that forex restrictions would lead to the growth of black markets, where foreign exchange is traded at unofficial rates and could create opportunities for illegal activities and capital flight; that the policy could discourage foreign investors, as they could find it challenging to repatriate their profits and may be concerned about the business environment’s unpredictability; that over time, forex restrictions can deplete a country’s foreign exchange reserves, making it more vulnerable to external shocks and economic instability.
Incidentally, the government paid a deaf ear to these warnings.  They claimed that restricting the items from accessing FX from investors and exporters (I & E) window was aimed at reducing foreign exchange demand for products that could be locally produced, improve employment generation and conserve foreign reserves as well as protecting and growing the local industries.
Today, eight years later, amidst the constant downward sliding of the nation’s currency, scarcity of forex and a collapsing economy, the forex restriction is lifted by the same apex bank that said the forex restriction policy was the ultimate and would take the nation’s economy to Eldorado.
Sometimes, it is difficult to understand the reasons behind some government’s actions and policies. Could it be for their selfish reasons, religious, political, tribal considerations or what? Is it in the interest of the nation and the citizens as they always claim? What has the general masses benefitted from the constant policy summersault other than economic hardship, increased poverty, hunger and the likes?
It is good that the House of Representatives had resolved to invite the Governor of CBN, Olayemi Cardoso, to give clarifications on the forex lifting policy and its implications on the economy. Let him go and explain to the nation how the latest policy will improve the nation’s economy and better the lots of the people. What will the increased demand for dollars, an inevitable result of the policy, do to our local economy?
What will be his answer to the fears expressed by the law makers and indeed many other Nigerians that the policy will impact negatively on the indigenous industries?  Will it put more pressure on the scare forex, impact negatively on the indigenous industries and have an adverse effect on the already poor economy generally?  Will it make it difficult for Nigeria to be competitive in the African Continental Free Trade Area because the markets will be flooded with imported finished goods as the law makers opined?
However, much as one identifies with the reason for some people’s pessimism over the lifting of the forex ban, it is imperative that we interrogate the gains of the ban while it lasted from 2015 till two weeks ago. How much changed throughout the period of banning of those items?  Did it lead to the growth of the local industries as envisaged? How much attention and financial support was given to these industries to reinvigorate them?
Yes, it could be said that the policy led to the drive to bolster the production of local rice. The commitment of Muhammadu Buhari’s administration towards ensuring self-sufficiency in rice was very visible. The partial closure of the western border with Benin to curb rice smuggling, the anchor – borrowers programme of the CBN were some of the government’s attempt to boost local production even though it did not result in rice pyramid as Buhari and former CBN Governor, Godwin Emefiele claimed.
Apparently, these interventions did not lead to the availability of rice and at affordable price. We recall the former Minister of Agriculture and Rural Development, Audu Ogbeh, boasting in 2019 that the price of 50kg bag of local rice will crash from N18,000 to N13,000. That was never to be. Today, it goes for between N45,000 to 52,000 depending on the brand and your location.
The familiar problems of insecurity, high cost of energy, poor infrastructure, near nonexistent power, inadequate funding, irregular taxes, high exchange rate, unfavourable government policies and many more, made and still make the cost of production of the previously forex banned items very high. You can imagine farmers in some northern states paying bandits up to N1.7million annually as tax and harvest fees before they can have access to their farms and avoid being abducted as reported in the media.
The President of the Manufacturers Association of Nigeria (MAN), Francis Meshioye, recently disclosed that the unrelenting increase in production costs is posing a serious threat to the existence of the manufacturing sector. He said, “Currently, the cost of manufacturing is daily rising, owing to scarce and unavailable manufacturing inputs that continue to shrink profitability and threaten the existence of the critical sector of the economy.
“More worrisome is the fact that the sector that should propel job creation, productivity, and economic growth is enmeshed with a series of challenges that constantly limit its contribution to the Gross Domestic Product.”
Therefore, the law makers should not stop at inviting the CBN governor. They should come up with good legislations that will help in tackling these challenges. They should collaborate with the executive arm of government to save the economy from collapsing.
The legislators should also demonstrate their desire to see the economy bounce back by sacrificing some of their luxuries. They should discourage the executives from obtaining foreign loans to be shared to them and to buy exquisite cars for them or to be shared to the so called 15 million families for feeding for three months.
These monies should be channelled into subsidising power, provision of infrastructure, quality health care to the poor masses and in other avenues that will boost the economy.
Someone recently said that the government does not need advice on how to revive the nation’s economy and that is true. The economy is currently being driven by renowned economic experts. They have launched the 8-point agenda of President Bola Tinubu in addition to other policy reforms and beautiful ideas on how to make the economy vibrant again. What is needed now is for them to walk the talk.

By: Calista Ezeaku

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Opinion

Soludo’s Mandate, Austerity Or Prudence?

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The Governor of Anambra State, Prof. Chukwuma Soludo, recently celebrated the anniversary of his two years in office. Prof. Soludo won the Anambra State 2021 guber elections with a remarkable landslide, in one of Nigeria’s most popular and freest elections. A professor of economics and former governor of the Central Bank of Nigeria, who spearheaded banking sector reforms and reconsolidation that became points of reference, Prof Soludo was heralded as the Messiah of Anambra State, especially as he promised to make the State the “Dubai and Japan of Africa.”
But mid-way into his administration, the euphoria about the Soludo magic has long dissipated. The disappointed well-wishers who gathered at the venue of his anniversary at Awka, may have come to get first-hand account of the happenings, and to reassess their stand. Usually such events are opportunities for office holders to recount their accomplishments. Governor Soludo, while narrating a litany of achievements said he runs an austere government in the State to the point of claiming not taking any salaries since assumption of office, and that even the first lady does not have any car allocation from the State.
What stands out however, is that the governor said he had insisted not to borrow, even though records show that the governor has sought and got approval from the State assembly to borrow N100 billion. So far, Soludo’s decision not to draw the loan is commendable, because records show that as at January 2023, the State’s debt deductions stood at N872,425,828.86 per month, which was 27.8 per cent of net statutory allocation, and 12.4 per cent of total allocation. Today, that burden is more than double due to naira devaluation.
Additional kudos goes to Soludo from Anambra’s 2024 budget summary documents, which show that the approved 2023 budget estimate of N260,394,690,434 yielded a revenue of only N155,647,114,526.22, of which the State spent only N76,905,169,399.35 to realise a whopping surplus of N78,741,945,126.87.
However, how austere is Soludo’s administration? And is austerity a measure of development? As sympathetic as the first family’s acclaimed self-denial may sound, the office of the first lady is not a constitutional creation, and therefore has no entitlements. The governor’s basic salary is N185,306.75, while his hardship and constituency allowances are N92,654.37 and N370,617.50, respectively, all of which sum to N648,578.62, a negligible amount compared to the governor’s monthly security vote of N850 million, amounting to over N10 billion per year, plus other perks of office.
Former Governor Obiano is currently facing charges of diverting N4 billion from security votes. Soludo should have told the public if he has cut down such humongous allowances.
Anambra State’s approved 2024 budget of N410,132,225,272.11 also shows that the governor’s office receives N11,199,200,089.19 comprising personnel bills of N4,668,243,574.08 and capital expenditure sum of N6,530,956,515.11, for the State’s Boundary Commission, Anambra State Public Procurement Agency, Anambra State Investment Promotion & Protection Agency,  Anambra State Action Commission on AIDS (ANSACA), Christian Pilgrims Board, Muslim Pilgrims Board, Anambra State Small Business Agency (ASBA), Greater Onitsha Development Agency and the Greater Nnewi Development Agency, whereas these agencies should belong to requisite ministries, while the office of the governor is saddled with developmental concerns.
On the social sector, Soludo’s administration allocates a paltry annual purse of N175,000 for the upkeep of each secondary school in the state, which translates to less than N60,000 per term, and may be the reason some principals got tempted to request fees from students.
The plight of 656 health centre in the state are more pitiable as most receive N140,000 per year, which is about N11,667 per month, may be to fuel generators and other expenditures. The Orumba General Hospital is allocated N105,000.
The  Anambra State should be more realistic in funds allocation to ensure that meager funds do not stifle essential institutions.
Anambra’s 21 local councils that draw a total monthly federal allocation of over N8 billion, continue to be ruled by illegal Transition Committee Chairmen appointed by the governor, thus denying the State of political tutelage at the council levels that groom vibrant politicians to the national level, while Anambra State Independent Electoral Commisson lies idle with allocation of N197,301,110.40.
As for roads construction, the governor may have done well, with the Ekwulobia on-going project standing most prominent, but what is on ground across the State lags far behind expectations. It took him two  years to deliver his flagship campaign promise at Okpoko in Onitsha, combined with a re-election fever, to deliver the Okpunoeze road at Nnewi, probably out of wariness of the Senator Ifeanyi Ubah factor. Governor Soludo almost turned the road commissioning at Nnewi into a campaign ground.
In a country where politicians envision themselves as construction project management officers, road works, however inappropriate, have become the be-all-of- the-average. But for a professor of economics, who had sat at the vintage position of a Central Bank governor, where the impacts of policies and big industries are clearly understood, there are far bigger development expectations for which Soludo’s coming sounded messianic.
While his tax administration reforms are commendable, the brigandage of the Ocha Brigade and ANJET, who enforce tax drives, are eliciting sorrowful tales from the masses, especially road transport drivers. Insecurity remains a terror in the State. Meanwhile, in less than nine months, Alex Otti of Abia State has initiated rapid ‘positive disruptions’ as Soludo likes to coin it, and capped it with Geometric Power’s 24-hour of electricity in Aba, a project worth $800 million. In Imo State, Seplat Energy and Nigeria Gas Infrastructure Company (NGIC) are rounding-up a $700 million ANOH Gas Processing Plant, while Shell/NNPC is completing a $3.5 billion Obiafu-Obrikom-Oben OB3 gas pipeline network, despite insecurity, to link the Escravos-Lagos pipeline system. The revenue that would accrue to Imo State when it comes onstream far outweighs what Anambra gets harassing struggling transporters. Moreso, Shell has just empowered youths from the host communities of Assa, Ochia, Awarra, Obile, Avu, Obissima, Obuomadike, Ununwaku, Ohoba, Obitti and Umuapu, who graduated from its one-year training. Road construction and contracts in Imo would be usual community development accompaniments.
While the rat-race for revenue drives continues in Anambra, the State sits on 50 billion barrels of crude oil reserve, and 10 trillion cubic feet of gas awaiting development, out of its seven gas acreages, only two are being minimally tapped. Vested interests bind State-owned Orient Petroleum Plc with inept partners, First Modular Gas Systems Ltd, in ways that may have repelled big Oil and Gas players like Seplat Energy whose major shareholder, Dr. ABC Orjiako, is from Anambra State, and Mr. Emeka Offor’s Chrome Group, whose Interstate Electric Company Ltd are stakeholders in Enugu Electricity Distribution Company (EEDC) and the Alaoji Power Plant. It is obvious, the State has the human resources to develop its potentials, but needs prudent leadership.
Anambra, home to the Innoson Car Assembly plant, industries and businesses that are suffocating under poor electricity, needs visionary managers that draw down greater benefits, even if they do not forego salaries.

By: Joseph Nwankwo

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Opinion

Nigeria Must Not Become  A Wasteland

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The political, business and economic classes seem to lose sight of the fact that a land without a people is in another word known as a wasteland. And what is a wasteland?
A wasteland is a society uninhabited by a people, and therefore the exploiters, manipulators and abusers of the commonwealth will have nobody and nowhere to ply their trade, whatever that may be. This is a fact that most of them seem to have so missed in their blind rush to rob the common people of everything, including their sanity.
Religious leaders are part of this ruthless group, but we decided not to mention their insidious role in the exploitation of the commoner because we have spoken about them in an earlier article on the subject of corruption. The word ‘corruption’ is not supposed to be spoken in the same breath with the phrase ‘religious leaders’, but what is abnormal elsewhere is very normal in Nigeria, especially when it comes down to the exploitation of the common people.
It is a known fact that despite its abundant resources and potential for extreme wealth, Nigeria is one of the backward nations in which only an insignificant number of people benefit from the commonwealth to their satisfaction and, above all, wish.
This is the way they want it, because theirs is a group, regardless of members’ religion and race, that does not welcome gate crushers, until it is absolutely necessary to do so. And so is mostly done by way of marriages. It is like a secret society,  the secret of which it does not want outsiders to know and share with others outside the clique. It is a clique that non-members are fiercely not allowed to know what goes on in it. Along the way, a non-member may even lose his life with the members’ fierce protection of their exclusive conclave.
As stated earlier, when marriage calls with a ‘commoner’, members try all they can to disallow it, but when that is not achieved, it is reluctantly agreed upon until the ‘common’ party is fully integrated into the conclave. And so, a new member is then reluctantly born into the otherwise exclusive group. And all of the members of the group belong to one religion or the other, with, maybe, some holding firm to the traditional beliefs. Still, they feast on the commonwealth as if it was their own to do as they please.
It would seem that we believe in a different God. Muslims among us believe that our God is a just God, Who does not condone injustice on one over another, and that everyone must account for their actions in what we generally call ‘the hearafter’ before God (SWT). It is my belief that some members of this group do not believe in accounting for what they did while they were on this earth, even though those who believe in Christianity believe that Prophet Isa (AS), (Jesus Christ) ‘died for their sins’. This much is evident in their blind quest to exploit the common person, and they keep ‘acquiring’ from the commonwealth that which they, their children and grandchildren cannot spend in a sensible manner in their lifetime, try as they may.
Yet, the common person celebrates these people as heroes, which gives them the licence to continue their exploitation (of the Common person) of what by the laws of the land belongs to all. Celebrated on these shores, these people steal the Commonwealth blind and bring out a pittance by way of supposed charity or ‘assistance’ to the poor in the name of help. How is it possible to help a person from the proceeds of what you ingeniously or forcefully stole from him? This only happens in the land of the Mafia or in Nigeria, which is controlled by its own mafia. The earlier the Nigerian mafia is done away with, the better for the common person, now in the pole position to utilise, defend and enjoy the Commonwealth, as the laws of the land meant it to be.

By:  Abdu Malumfashi, Abuja.

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Opinion

Nigeria Must Not Become  A Wasteland

Published

on

The political, business and economic classes seem to lose sight of the fact that a land without a people is in another word known as a wasteland. And what is a wasteland?
A wasteland is a society uninhabited by a people, and therefore the exploiters, manipulators and abusers of the commonwealth will have nobody and nowhere to ply their trade, whatever that may be. This is a fact that most of them seem to have so missed in their blind rush to rob the common people of everything, including their sanity.
Religious leaders are part of this ruthless group, but we decided not to mention their insidious role in the exploitation of the commoner because we have spoken about them in an earlier article on the subject of corruption. The word ‘corruption’ is not supposed to be spoken in the same breath with the phrase ‘religious leaders’, but what is abnormal elsewhere is very normal in Nigeria, especially when it comes down to the exploitation of the common people.

**It is a known fact that despite its abundant resources and potential for extreme wealth, Nigeria is one of the backward nations in which only an insignificant number of people benefit from the commonwealth to their satisfaction and, above all, wish.
This is the way they want it, because theirs is a group, regardless of members’ religion and race, that does not welcome gate crushers, until it is absolutely necessary to do so. And so is mostly done by way of marriages. It is like a secret society,  the secret of which it does not want outsiders to know and share with others outside the clique. It is a clique that non members are fiercely not allowed to know what goes on in it. Along the way, a non member may even lose his life with the members’ fierce protection of their exclusive conclave.

As stated earlier, when marriage calls with a ‘commoner’, members try all they can to disallow it, but when that is not achieved, it is reluctantly agreed upon until the ‘common’ party is fully integrated into the conclave. And so, a new member is the reluctantly born into the otherwise exclusive group. And all of the members of the group belong to one religion or the other, with, maybe, some holding firm to the traditional beliefs. Still, they feast on the commonwealth as if it was their own to do as they please.

It would seem that we believe in a different God. Muslims among us believe that our God is a just God, Who does not condone injustice on one over another, and that everyone must account for their actions in what we generally call ‘the hearafter’ before God (SWT). It is my belief that some members of this group do not believe in accounting for what they did while they were on this earth, even though those who believe in Christianity believe that Prophet Isa (AS), (Jesus Christ) ‘died for their sins’. This much is evident in their blind quest to exploit the common person, and they keep ‘acquiring’ from the commonwealth that which they, their children and grandchildren cannot spend in a sensible manner in their lifetime, try as they may.

Yet, the common person celebrate these people as heroes, which gives them the licence to continue their exploitation (of the Common person) of what by the laws of the land belongs to all. Celebrated on these shores, these people steal the Commonwealth blind and bring out a pittance by way of supposed charity or ‘assistance’ to the poor in the name of help. How is it possible to help a person from the proceeds of what you ingeniously or forcefully stole from him? This only happens in the land of the Mafia or in Nigeria, which is controlled by its own mafia. The earlier the Nigerian mafia is done away with, the better for the common person, now in the pole position to utilise, defend and enjoy the Commonwealth, as the laws of the land meant it to be.

Abdu   Malumfashi

Malam Malumfashi writes in from Abuja.

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