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Experts praise FG’s transfer of over 40% shareholding to MOFI

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The Federal Government has received praise from power experts for transferring its 40 percent shareholding in electricity distribution companies. The experts expressed their commendations in separate interviews with journalists in Lagos on Monday.

The transfer, which took place on January 12, saw the government move its shareholding from the Bureau of Public Enterprises (BPE) to the Ministry of Finance Incorporated (MOFI). Dr. Ayodele Oni, a Partner at Bloomfield Law Practice, described the move as a significant step towards promoting more robust boardroom discussions.

Oni expressed that the shift demonstrated the government’s commitment to enhancing the competitiveness of government-owned companies and assets.

He stressed that the redirection of shares was not a miraculous solution, but rather a practical move based on a strategic vision.

With the Ministry of Finance’s board duly constituted and operating as a business entity, Oni signified that they would be witnessing more direct investments in the Discos in 2024 and beyond.

“MOFI was set up pursuant to Sections 2 and 3 of the MOFI Act 1959, as an assets holding company vested with the responsibility of being the sole manager of all federal government investments, interests, estates, easement and rights.

“The BPE was, however, set up for the purpose of privatising public enterprises, carrying out sector reforms and liberalisation of key economic sectors.

“It was, thus, an anomaly to have BPE continue to hold, on behalf of the federal government of Nigeria, those shares of the electricity distribution companies as MOFI was set up, to do just that.

“The step, now being taken by the government, in my view, is indicative of the government’s seriousness to improve the quality of the government’s investments in the Discos.

“This is so, because, whilst the BPE does not have the powers to make investments, as its primary purpose is the privatisation of entities, MOFI on the other hand has far-reaching powers to make investments.

“Not only does the MOFI have such powers, it does have a decent asset base from which to deploy resources to possibly support and or rescue the Discos from their financial doldrum,” he said.

Oni said with the current business targets of MOFI, deliberate steps would be taken to generate revenue for the government, improve foreign direct investments and ensure the financial protection of all investments in its custody.

On his part, Chairman of the Customer Consultative Forum of Festac/Satellite Town, Lagos State, Dr Akinrolabu Olukayode acknowledged that opinions on the transfer of shareholding might vary.

Olukayode said some might perceive it as a positive step towards increasing transparency and accountability, as the Ministry of Finance gains more oversight and control over the electricity distribution companies.

He said that others might be concerned about potential politicisation of the sector, as the ministry was a political entity.

The expert said, “The impact on the economy, Nigerians, and investment will depend on how the Ministry of Finance manages its new role.

“If it leads to improved governance, efficiency, and investment in the electricity distribution sector, it could have positive effects on the economy and Nigerians by ensuring reliable power supply.

“On the other hand, if mismanagement or political interference occurs, it can hinder investment and negatively impact the economy and Nigerians who rely on electricity services,” he said.

The EKEDC customers forum chairman said that the transfer of shareholding might not directly enhance the regulatory authority of the Nigerian Electricity Regulatory Commission (NERC) or government appointments into the boards of Discos.

He, however, ssid that it could potentially lead to changes in the regulatory framework or decision-making processes if the Ministry of Finance decided to exercise its new authority in this area.

Also, Mr Chinedu Amah, another power expert, said the government just moved the portfolio between two govt offices.

Amah said If the government wishes to trade its shares, it should do so already, adding that he doesn’t see how this would improve supply significantly.

He said, “If the challenges of the sector include funding then trading the equity with a view to attract investment would be key.

“Unfortunately, trading the government equity will not have any direct funds injection into the disco. So, I do not see any direct correlation connecting this action to any form of progress.

“The present DisCos holders should have a right of first refusal. Government should open up the market by enabling cost reflective tariff and also enforce value added franchising to increase supply capacity

“The same Finance Ministry that is not clearing Ministries, Departments and Agencies (MDAs) debts.”

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LCCI advocates discipline, export to sustain Naira appreciation

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LCCI advocates discipline, export to sustain Naira appreciationThe Lagos Chamber of Commerce and Industry (LCCI) has emphasised the importance of maintaining discipline in the foreign exchange market to sustain the steady appreciation of the Naira.

The President and Chairman of the Council of LCCI, Mr Gabriel Idahosa, made the call in an interview with newsmen on Wednesday in Lagos.

Idahosa praised the efforts of the Central Bank of Nigeria in imposing discipline, attributing the recent Naira appreciation to curbing speculative activities.

“On the monetary side, the CBN is doing it. The primary efforts should continue to impose discipline in the foreign currency market.

“The abuses in the foreign currency market were prevalent and most of the fall in the value of the Naira in the last six months is not because there was any sudden calamity in the Nigerian economy.

“It was primarily because of very reckless speculations, that people were just speculating in the dollar, they had nothing to export, nothing to import, they were just buying the dollar for speculative reasons.

“And once the Central Bank started to impose discipline in the foreign currency market, we saw the value of the Naira rising very quickly by stopping speculation,” he said.

According to him, the strategies of the Central Bank, now, are designed to achieve a sustained discipline in the foreign currency market.

Idahosa highlighted the need to continue reducing the number of Bureau de Change operators, stressing that many operated without contributing to international trade.

He applauded the Central Bank’s move to enforce documentation and identification of buyers and sellers at BDCs, aiming to deter reckless speculation and curb illicit financial flows.

On the fiscal side, Idahosa urged President Bola Tinubu to prioritise a nationwide export drive, citing it as the key to bolstering the Naira and providing essential foreign exchange.

He emphasised the importance of fostering a culture of export among Nigerians across all scales of enterprise to reduce reliance on imports and strengthen the country’s economic resilience.

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Foreign reserves decline to $32.29bn

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The foreign reserve has depleted to $32.29 billion, which is a six-year low in the Central Bank’s course to save the naira.

This is the lowest level the reserves have been since September 25, 2017, when it was $32.28 billion.

The country’s foreign reserves declined by 6.2 percent, losing $2.6 billion since March 18, when the naira started its rebound from record-low levels against the dollar to $32.29 billion as of Monday, based on the latest available data from the CBN.

At the beginning of the month, the reserve was at $33.57 billion, then further dipped to $32.6 billion by April 12.

This comes as the CBN has attempted to save the naira through various interventions such as raising interest rates to 24.75 percent and managing foreign exchange trades.

It stepped up its intervention in the FX market with sales at both the official market and to BDC operators who sell dollars on the streets.

The apex bank, which sells $10,000 to each BDC every week, mandated them to only sell at a spread of 1.5 percent, which comes to N1,117 per US dollar.

The rate sold by the BDCs has set a defacto floor for the naira in the black market since the apex bank resumed sales to them in February.

Also, last month the CBN said it had cleared a backlog of $7 billion since the beginning of the year. That was built over the years as the central bank pegged its currency against the dollar, leading to a scarcity of foreign currency that deterred foreign portfolio investment. However, it’s unclear how much dollar debt the CBN retains on its books.

Akpan Ekpo, a professor of economics and public policy, said the CBN’s managed float system in which it is trying to ensure supply and curtail demand is not sustainable in the long term.

He said the CBN needs to be careful with how it depletes the foreign reserves as its main source is oil revenue.

“We need to manufacture non-oil goods and services, export them, and get foreign exchange and not depend on oil income,” he said.

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CBN expresses commitment to harnessing digital technologies

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The Central Bank of Nigeria says it is committed to harnessing the power of digital technologies to enhance financial inclusion.

CBN Governor, Mr Yemi Cardoso said this on Tuesday in Abuja, during a strategic institutions tour by participants of Senior Executive Course 46 of the National Institute of Policy and Strategic Studies (NIPSS).

Cardoso, who was represented by Dr Bala Bello, Deputy Governor, Corporate Services, said that digital technologies would also boost productivity and create an enabling environment for innovation and entrepreneurship to thrive.

According to him, the apex bank has already deployed robust digital technologies in driving most of its processes towards achieving optimal performance.

He said that NIPSS, as a foremost national policy think-tank, had made invaluable contributions to the socio-political and macroeconomic development of Nigeria.

“We are, therefore, not surprised at the apt and relevant choice of your research theme.

“The CBN and NIPSS have had a long-standing and robust working relationship since the establishment of the institute. This has culminated into positive mutual benefits for the two institutions.

“The CBN, on the one hand, has provided infrastructural support to the institute through construction of an auditorium and a hostel, in addition to the provision of technical support.

“On the other hand, NIPSS has supported the technical capacity of the CBN through the training of some personnel both at senior executive course level and intermediate course cadre,” he said.

The Director-General of NIPSS, Prof. Ayo Omotayo, said that the study visiting would be representing the institute in getting information from operators of the apex bank on the relevance of digital technology to developing jobs for Nigerian youths.

According to Omotayo, a lot of progress has been made globally in using digital systems to run the economy.

“The more of our activities that we can put in digital format, the more we get the opportunity of providing employment access to a whole lot of the 120 million active Nigerians.

“We at NIPSS always knock at the frontiers of knowledge, checking what is going to happen in the immediate future.

“We are working towards a system where we believe that almost every service can be delivered digitally,” he said.

The Acting Director, Monetary Policy Department of the CBN, Dr Lafi Bala Keffi, commended the NIPSS study group for its interest in the apex bank.

She urged the participants to explore the time-tested culture of NIPSS, which is to diagnose national, profer practical solutions and recommend ways of making such solutions realisable.

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