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Nigeria’s External Reserves Drop By $1bn In 13 Days |The Republican News

                                                           Naira and dollars

’Femi Asu

The nation’s foreign exchange reserves have dropped to a seven-month low, losing $1.02bn in the 13 days to Monday, latest data from the Central Bank of Nigeria showed on Wednesday.

The external reserves, which stood at $44.30bn on September 28, fell from $44.02bn on October 2 to $43bn on October 15.

The reserves, which rose to a high of $47.865bn on May 10, have dropped by $4.86bn in five months.

As of March 5, the reserves stood at $43.12bn, up from $42.75bn on March 2, according to the CBN data.

Last week, the International Monetary Fund said Nigeria needed to be cautious about the use of its foreign exchange reserves, saying oil prices could decline at any time.

The IMF, in its latest Regional Economic Outlook said tighter global financial conditions resulting from faster-than-envisaged monetary policy normalisation in advanced economies, or a sudden shift in investors’ sentiment could constrain financing and growth for many sub-Saharan African countries.

“Higher US interest rates and a stronger dollar also heighten risks, as observed historically in emerging and developing economies. In particular, the probability of a large reversal in foreign flows in sub-Saharan Africa is significantly higher the US interest rates go up,” the fund added.

The Director, Corporate Communications, CBN, Mr Isaac Okorafor, explained early this month that the external reserves had been going down recently because of higher yields in the United States.

Okorafor, however, gave an assurance that at the current level of $44bn, the reserves were sufficient to take care of the nation’s import bill for 17 to 20 months, much more than the three-month standard recommendation.

According to him, some foreign investors who have gone to emerging markets to take advantage of the high yields have had to go back to the US because of better opportunities there at the moment.

“The drop in our forex reserves is basically as a result of the capital flow reversals arising from rising interest rates in the United States. You will recall that the Federal Reserve has been raising rates and has even given guidance that this would continue in the near term,” he added.   (Punch)

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South Africa Goes Into Recession, Against Predictions Of Growth |The Republican News

           South African president Cyril Ramaphosa

South Africa’s economy tipped into recession as it shrunk 0.7 percent in the second quarter, official data showed Tuesday, dealing a blow to President Cyril Ramaphosa who came to office in February.

The downturn, which was the second consecutive quarter of negative growth, was driven by contractions in agriculture, transport, trade and manufacturing industries.

StatsSA said agriculture was hit by a fall in field crops, drought in the Western Cape and severe hailstorms in Mpumalanga province that damaged production.

After a revised 2.6 percent contraction in the first quarter, the latest data piled pressure on Ramaphosa who has promised a “new dawn” after his predecessor Jacob Zuma’s scandal-tainted nine-year reign.

Micheal Power, an asset manager at Investec, said domestic and international events had combined to stall economic growth.

“We are getting no help from the outside with the strengthening dollar, the escalating trade war and issues that are now facing emerging markets,” he told AFP.

“In some respects, this can be seen as a good thing if it means that we are now not drinking to avoid the hangover.”

The recession is the first in South Africa since the 2008–2009 global financial crisis, when South Africa experienced three consecutive quarters of economic decline.

Before Tuesday’s data, Bloomberg said only one of 12 economists surveyed had predicted a contraction.

Independent analyst Daniel Silke said on Twitter that the figures reflected an “inability to create confidence-building measures to enhance work opportunities and uplift investor sentiment.”

Ramaphosa, who faces elections in 2019, has been on an investment drive to attract foreign investment and tackle unemployment of about 28 percent.

(AFP)

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Our Economic Diversification Programme Is Working – Buhari |RN

By Anule Emmanuel

 

Muhammadu-Buhari5

President Muhammadu Buhari

 

President Muhammadu Buhari has declared that his administration’s economic programme tailored towards boosting the agricultural sector was fast yielding positive results.

The President stated this yesterday while speaking at an event in Auyo, Jigawa State. The President, who is in Jigawa State for a two-day working visit, expressed delight that the Federal Government’s economic diversification and inclusive growth programmes were yielding positive results, particularly in key food-producing states. He explained that Nigeria’s agricultural revolution was real and on the course.

The President had participated at an event to mark the commencement of the rehabilitation and expansion of the 6,000-hectare Hadejia Valley irrigation project. Buhari assured Nigerians that his administration would sustain the positive momentum in the sector by implementing the right policies and providing the needed financial resources for people-oriented projects.

He also applauded the World Bank’s assistance to the project, which when completed, would increase water availability for all-season farming in the state and beyond. Senior Special Assistant on Media and Publicity to the President, Garba Shehu, in a statement, said that the Minister of Water Resources, Alhaji Suleiman Adamu, explained that works on the Phase One of the projects, which started in the early eighties during the administration of President Shehu Shagari and received some funding under the Petroleum Special Trust Fund had suffered frequent abandonment due to lack of funds. Adamu said with N9.6 billion allocated under the 495 million World Bank-assisted Transforming Irrigation Management in Nigeria (TRIMING) project in five different irrigation locations in Nigeria, the project would be completed by 2021.

‘‘By the time the project is finished in three years, there would be about 6,000 hectares of farmland and the Jigawa State Government also plans to key into the project that will benefit over 25,000 farmers,’’ the Minister said.

In Jigawa, the President commissioned the 42-kilometre Tasheguwa-Guri Road and the 32-kilometre Abunabo-Kadira-Guri road constructed by the state government to facilitate easier movement and evacuation of farm produce. Buhari also commissioned the 250,000 solar-powered water supply scheme. The project is one out of nine of such projects, which will add nine million litres to daily water supply in Dutse and environs. (New Telegraph)

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Buhari Came To Power At Difficult Time, Says Orji Kalu |The Republican News

Orji-Uzor-Kalu1

Former Governor of Abia state, CEO SLOK Group, Chief Orji Uzor Kalu

•Says Nigeria will exit recession in 2019

Sunday Ani

Former governor of Abia State, Dr. Orji Uzor Kalu has said that President Muhammadu Buhari came to power at a time there was recession all over the world, adding that the situation was made worse by the fact that the president equally met an empty treasury.
Kalu, who spoke on AIT monitored programme said the President was putting every necessary stimulus into the economy to ensure that the country exits recession by 2019. He disagreed with those who said that the country was already out of recession, saying, “When I see people who said they are economists saying we are out of recession, I say they don’t understand what they are talking about because we are not out of recession. Government already has a roadmap to be out of recession and I can assure you that this government is determined to see it happen. But, you can’t just tell people that we are out of recession; you can’t do that because the indices are there. What the president and the government are doing is to continue to pump in stimulus, which is what the economy needs to come out of recession. And I can see us moving out of recession in 2019.”
The former governor also said that the president is under pressure from the international intelligence communities not to say more of what he had seen about looting in Nigeria. “The president is restraining himself because if he opens his mouth to say what happened in NNPC or central bank, Nigerians will not feel good about governance,” he said.
Kalu equally said that the problem in Libya, which led to upsurge of emigrants into Nigeria and the president’s health challenges, caused a lot of havoc on his plan for the country. He said: “And secondly, with the world recession, you also had problem of people migrating into the country from Libya because of the problem there, and some of them came in with a lot of arms. You also see that the president became sick and the medical attention also caused a lot of havoc on his plan. I am not speaking for him because I am not his spokesman but as a party man, I believe he has done well in some areas.”
He noted that the president has not done very well in terms of economy, but added that “he is grappling with it. There is a lot of stimulus going into the economy.”
On why he ventured into politics, having achieved so much before the age of 29, he said he went into politics to help communities and serve the people. “That is why when people talk, I laugh at them because by the time I was going into politics, I have worked anywhere I liked. I was a member of First Bank, Hallmark BanK and Oando boards. I was also chairman of two banks and I was solidly a cocoa trader, a rice trader and a successful industrialist. I have one of the largest furniture factory in Maiduguri and the Happy Home furniture in Kirikiri, Lagos,” he said.
As the governor of Abia State, he said his major achievement was giving education to the people of Abia and its environs. “I was able to give education to our people; they had no education and I am very proud to say that. The kids get excited when they see me on the road today,” he said.
He also narrated an incident where a young lady openly accepted that what she got in Abia State under his administration was real free education. He also stated that Abia State under his administration had started with free education up to the secondary school level even before former President Olusegun Obasanjo introduced the Universal Basic Education (UBE) programme.
“People were paying N7000 in Abia State university because I was paying N93,000 for 35 students. We wrote cheques every month to give back to the university. They pay N7000 and we made it up to N100,000 by paying N93,000. Even before Obasanjo came up with the UBE programme in primary and secondary schools, we had full free education for secondary schools in Abia State. People from other states enjoyed it. The greatest investment we made was in education. We also built a lot of roads but those roads have collapsed today,” he stated.
When asked the rationale behind his eating akara on the road side with common people, Kalu said: “It is not about common people; it is to practice what I started with. It is only fools who think that they have arrived and that they cannot go back.”
He said that during the last Christmas festivities, he visited many houses to dine and wine with them in his Igbere community. “In a day we visited almost 50 houses. That is how I started and I can’t stop. Even if you make me president tomorrow, I will still do the same thing because that is the right thing to do.”
He argued that when the rich interact with the poor and give back to society, there would be peace. He also said that there is zero percent robbery and violent crimes in Igbere because as a community, the rich have decided to associate and socialize with the poor and give back to the community.
“In Igbere, there are good people who are sociable and religious. We are trying to portray our community for what it is. There are so many people who do community service; they give back to community. We agreed as a community that we must be giving back to the people. Our last cultural festival was superb. We don’t do medicine in my community. In Igbere, there is no native doctor because we don’t believe in it. We believe in God,” he submitted.   (The Sun)

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Senators Slam President Buhari, Say Nigeria Is On The Brink Of Collapse |RN

senate

The Nigerian Senate

Say Nigeria on the brink

…Insist Nigerians can’t access basic amenities

From: FRED ITUA, Abuja

Some senators, on Tuesday, descended on the Muhammadu Buhari-led Federal Government and claimed that the country was on the brinks of collapse. They also claimed that Nigerians could no longer access basic amenities.

The federal lawmakers said the delivery of public values had ceased to be the essence of governance. They said the challenges have shaken the very foundation of Nigerians’ faith in leadership.

Addressing newsmen, on Wednesday, ahead of the 8th National Prayer Breakfast, Senators Emmanuel Bwacha, Joshua Lidani, Oluremi Tinubu, Binta Garba, Sonnie Ogbuoji and Barnabas Gemade, said hate speech, divisive and secessionist quests frequently raise their ugly heads.

President of Christian Legislators’ Fellowship, Sen. Gemade, who read a prepared speech on behalf of other senators, said: “We are still at present, a reflection of a country at the brinks. Hate speech, divisive and secessionist quests raise their ugly heads, but we fortunately overcame. The delivery of public values has seized to be the essence of governance as our fellow countrymen can barely access basic social necessities. These challenges have shaken the very foundation of the Nigerian people’s faith in leadership.” (The Sun)

Details later…

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N19trn Debt: NESG, Utomi, Rewane Others Call For Caution

Kemi-Adeosun-Ogun

                              Minister of Finance, Kemi Adeosun

Everest Amaefule and ’Femi Asu

Economic and financial experts have raised the alarm over the nation’s rising debt burden, calling on the Federal Government to spend more on capital expenditure and exercise care in its quest for more borrowing.

The experts, who spoke in separate interviews with our correspondents on Tuesday, reacted to the N7.1tn increase in the nation’s total debt in two years to N19.16tn as of March 2017.

A professor of Political Economy and management expert, Pat Utomi, said, “A country is not different from a household, more or less generally, in terms of how it manages its finances. So, if your personal debt profile is going up at that rate, will you be comfortable?

“However, there are times that you need to spend your way, literally speaking, out of a challenge of output; recession being one of those. But I think that even at that, you need a certain level of care to make sure that you don’t get into an unsustainable debt scenario.”

Utomi expressed hope that the government would be more careful even if the recession required spending.

“My big worry is that the impact of the borrowing may not be reflected on output, in the sense that if we get into a double whammy where our debt balloons, but we don’t have the necessary stimulation of production, especially when our consumption is very external in its orientation, we need be very careful to watch all of those,” he added.

The Chief Executive Officer, Financial Derivatives Company Limited, Bismarck Rewane, said it was wrong for the government to be mainly borrowing to support recurrent expenditure.

He said, “We need to move away from debts for recurrent expenditure to debts for capital expenditure, which is projects-specific. The debt level itself is not dangerous, but the debt service level – the debt burden – is very high.

“We are using 66 percent of our independent revenue to pay interest. So, interest rates must come down substantially, or else, we are in trouble.”

The Board Chairman, Nigerian Economic Summit Group, a private sector think tank and policy advocacy group, Mr Kyari Bukar, said the amount of debt should not be a cause for concern considering the low debt to Gross Domestic Product ratio of the country.

“What one needs to pay attention to is the debt service amount versus the capital expenditure of the budget. The debt servicing and the ability to service the debts are the key areas of concerns that we should pay attention to,” he said.

The 2017 Appropriation Bill, which was passed into law by the National Assembly recently, provided N1.84tn for debt servicing compared to the N2.17tn provided for capital expenditure for all sectors of the economy.

“The kind of debt I will like to see happen is the debt where the money that is borrowed goes into productive sectors such as investment in railways, health care, education and other critical infrastructure. However, if we borrow to pay salaries, it starts to become a problem,” Bukar added.

A professor of Economics at the Olabisi Onabanjo University, Ago Iwoye, Sheriffdeen Tella, said, “It is not healthy to continue to increase our debts. In fact, the growth in the last two years has been quite alarming, and so there is a need for us to slow down on it. It is not the debt itself that is important, but the interest rates that you pay on such debt and the usage of the debt.

“If the government is going to spend more, as people have advised, the normal thing is that when you have a problem of depression, you go into expansionary fiscal and monetary policies. The expansionary fiscal policy, which is government spending more, must be based on the budget.

“When we say the government should spend more, the budget must be approved early enough; and so, when the government is spending on time, even if it is not much, the economy will expand on the basis of that.”

Some other stakeholders called for the appropriate utilisation of the N7.1tn borrowed by the Federal Government and the 36 states of the federation in the last two years.

The Managing Director, SHI-Logistics Limited, Dr Mike Omotosho, said the increasing debt meant that the burden of servicing it would increase.

Doubting the correct use of borrowed funds, Omotosho said it was wrong for the government to use debt to finance routine government expenses.

He stated, “First if we compare the percentage of our debt to our Gross Domestic Product, it is foolhardy to think we will not feel the negative effects in the long run.

“Borrowing in itself is not the main problem but what we spent the money on. In the last two years, I doubt if we have spent up to N2.5tn on infrastructure and other key policies that can help the economy and the people.”

He added, “This means that over 60 percent of the debt has gone into recurrent expenditure. There is no way the nation will not pay for this pretty soon. We had the N6tn budget in 2016 and about N2.4tn, representing about 40 percent, went into debt servicing. Now, that the debt profile has jumped up, imagine what will go into debt servicing.

“Our policymakers hardly consider the negative impact of debt when they go on a borrowing spree. I would have preferred we take the right way out of our quagmire rather than a decoy easy way that is filled with traps.”

An associate professor of Finance at the Nasarawa State University, Keffi, Uche Uwaleke, said there was no problem if the government utilised the loans to finance projects that would pay back the monies borrowed.

However, he added, if the funds were utilised to fund consumption, then the government had succeeded in mortgaging the future of the nation.

Uwaleke said, “A country like Nigeria with huge infrastructure deficit will have to borrow if it must develop at a fast pace.”              (Punchng.com)

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Buhari 2 Years On: Economy Struggles To Exit Recession |The Republican News

e1775-buhari2b3

President Muhammadu Buhari

As the nation marks two years of the President Muhammadu Buhari-administration, the economy is struggling to recover from its worst recession in 25 years, which has hit many Nigerians hard, ’FEMI ASU writes

Still smarting from the far-reaching impact of the recession that the economy slid into shortly after the start of the second year of the President Muhammadu Buhari-administration, many Nigerians are eager to see recovery.

But the Gross Domestic Product report released last week by the National Bureau of Statistics showed that the recession failed to end in the first three months of this year contrary to expectations.

The nation’s GDP contracted by 0.52 per cent (year-on-year) in real terms in the first quarter of 2017, representing the fifth consecutive quarter of contraction since the first quarter of 2016.

The economy had shrunk by 1.5 per cent in 2016, the first full-year contraction in 25 years.

After several months of slowdown in growth on the back of the steep fall in crude oil prices, the economy contracted by 0.4 per cent in the first quarter of 2016, 2.1 per cent in the second quarter, 2.2 per cent in the third and 1.3 per cent in the fourth.

Amid the sustained low oil prices, the resurgence of militant attacks on oil and gas facilities in the Niger Delta last year disrupted the nation’s oil production and worsened government’s revenue woes.

But analysts have said that the way the government handled the economy, particularly the delays by monetary authorities in implementing a flexible foreign exchange policy, exacerbated the impact of weaker oil earnings on the economy.

While the nation has seen a slowdown in the negative growth rates in the last two quarters, the Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane, said the journey to recovery would take time.

“Two years, we have gone down into the pit and we are coming back out. But the recovery journey is slow, painful and it is going to take time. Even if we get 0.1 per cent positive growth, we are out of recession. But that is not enough to make people comfortable,” he told our correspondent on Sunday.

The Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, said the Buhari’s government performed below par in its first two years, given the current state of the economy compared to what it was in 2015.

He said, “When the government took over in 2015, the unemployment rate was 7.5 per cent; as of the end of the third quarter of 2016, when the last report was made available, the unemployment rate had gone up to 13.9 per cent. In 2015, the inflation rate was below nine per cent; in April 2017, it was 17.24 per cent.

“In 2014, the GDP grew by 6.22 per cent; in 2015 when the government took over, it grew by 2.78 per cent. In 2016, it contracted by 1.5 per cent. Those are the highlights of parameters you use to measure an economic performance.”

Chukwu said the government should take responsibility for the deterioration of the economy, adding that the government would need to move at a fast pace in driving its economic recovery and growth plan.

The nation’s inflation rate, which climbed to 18.72 per cent in January, fell for the first time in 15 months to 17.78 per cent in February, 17.26 per cent in March, and 17.24 per cent in April.

The stock market has rebounded significantly in recent times as the market capitalisation of listed equities hit the $10tn mark on Friday from N8.716tn on April 21, when the Central Bank of Nigeria established a forex window for investors and exporters to boost liquidity in the forex market.

The foreign reserves, which rose to $30.988bn on May 4 from $25.84bn on December 30, 2016, have declined to $30.494bn as the CBN continued effort to prop up the naira by supplying the forex market.

The naira, which slumped to an all-time low of 520 to the dollar on the parallel market in February, stood at 382 to the dollar on Friday.

Electricity generation in the country has yet to reach the peak generation of 5,074.70 megawatts achieved on February 2, 2016. It stood at 4,206.10MW on Sunday, according to data from the System Operator.

The Global Chief Economist, Renaissance Capital, Charles Robertson, in an emailed report, noted that Nigeria’s per-capita GDP had fallen to around $1,740, from over $3,000 in 2014.

“We think most metrics in Nigeria will be demonstrating improvement in 2017, provided that oil prices and production do not plunge. We are cautiously positive on equities and bonds at an exchange rate of around N400/$,” he said.

Analysts at SBM Intelligence, in a new report on the Buhari’s administration, said perhaps the biggest economic item that dominated the conversation over the last year had been the government’s management of the foreign exchange market and its far-reaching impact on economic performance.

They said, “In this regard, the central bank and the Ministry of Finance have shown less than convincing mastery in handling this hot button issue.

“The announcement in June 2016 of a currency float, which was initially met with delight from investors and the market, turned to be the start of a multi-exchange rate system that bred a mix of frustration and confusion, while doing little to achieve the CBN’s intent of reining in the distortionary effect that short sellers and black marketers were having on the national currency.”

Rewane said the country would not get back to its five-year average growth rate until 2019/2020.

“The government needs to invest and spend. If you are going to be spending only N7tn in a year, which is four per cent of your GDP, that is not going to cut it. You need to do almost three times that for the impact to be felt. As far as I am concerned, everything directionally is okay but in nominal terms, we are still way below what we should be doing,” he added.  (Punchng.com)

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