Business

Instead of phasing out, a new denomination of N5,000 should be issued out — NACCIMA

Published

1 year ago

February 7, 2023

By Omolola Dede Adeyanju

The Director General, Nigerian Association of Chambers of Commerce, Industry, Mine and Agriculture (NACCIMA), Sola Obadimu has enumerated the chamber’s view of the country’s current situation.

In his words, “The issues of naira scarcity is for CBN Governor to rectify, he can’t be getting the reward of office and not do the responsibilities of the office. The three go together; when you get the recognition and rewards of office you should take charge of the responsibilities. You can’t be enjoying the rewards of office and not take up your responsibilities. The Governor is highly rewarded but he can’t do a simple job he is expected to do.

“Honestly, this money-changing exercise has been largely disruptive to the economy, needlessly. The management of the currency exchange exercise could certainly be better. The past few weeks have been quite traumatic for a lot of Nigerian citizens and small businesses particularly – coupled with the fuel issue. This week, for instance, a lot of ATM Machines in both Lagos and Abuja had no cash – including at the Airports. This is not decent enough. And, given this development, whatever is happening in the rural areas is better imagined

“Though we appreciate and commend CBN for the 10 days extension but, in going forward, CBN should try to be more proactive than reactive. Secondly, they are advised to consult more widely with stakeholders before taking crucial decisions that are likely to affect people’s lives and businesses, particularly the private sector.

“Personally, I wish the CBN Governor would pay more attention to basic CBN management issues and monetary policy guidelines. The INEC Chairman should worry more about electoral matters. There are more important CBN/monetary policy related issues begging for urgent attention – widening gap in interest rates (between lending and savings) unhealthy gap in forex rates (between official & parallel), soaring inflation rates, etc. When we are responsible for discharging the elements of our assignment as a public official, we should be careful of losing focus.

“I don’t think we should shut down the economy because of pending elections. Imagine a visitor coming into Nigeria for the first time and, on arrival at the Airport, couldn’t withdraw any money from any ATM Machine in either Lagos or Abuja, what kind of investment-friendly rating would he give us? I understand some rating agencies have recently downgraded us, including Moody given recent developments. We should be concerned about investment related ratings.

“Again, we must be careful lest we lose focus in discharging our various duties as public officials. The common man on the streets and busineses must be put into consideration at all times. Businesses keep people in employment and also pay taxes. We mustn’t forget that! Rather than punish everyone because you want to discourage vote-trading, why can’t we seek to deal with issues that have kept the masses perpetually impoverished over the years? If people are adequately economically empowered, why would monies distributed on election days be attractive to them.

“Unfortunately, bad government economic policies over the years have impoverished people and disabled them economically thereby turning the masses into beggars. Let’s deal with the basic issues include massive concentration in improvement of infrastructure, particularly power supply. If people are constructively engaged, they wouldn’t be waiting for 4 years to collect N5,000 only (or even less) from politicians at election times!

“The facts are that the Nigerian economy remains significantly cash transactions-based and most small businesses depend almost entirely on cash-based transactions. It is therefore necessary to advise that enough notes are issued to effectively go around to adquately and sufficiently replace the old notes by the new deadline date of 10th February 2023. In other words, by now, we would have expected all Banking halls and ATMs to effectively issue out only the notes exclusively, while mopping up the old notes

“Also, while creating and maintaning a cashless economy is highly desirable and progressive – particularly with the advantageous ability to track transactions (with particular reference to criminal and money laundering activities, etc), all over the world, cash-based transactions remain an option – but never the only option. This applies even in advanced countries where the infrastructure is more robust and reliable.

“The CBN should not be rationing cash. In fact, it behoves on the CBN to ensure that there is enough cash in circulation for people’s needs. Cash in circulation is not equal to available money and it remains, at most, just about 6 per cent of available money in circulation as most monies are stored up in banks and other electronic systems.

“We have seen that rationing cash can neither control inflation nor make the currency stronger. The US dollar currency notes are available globally. That has never weakened the dollar, neither has it contributed to inflation in the United States. Same goes for other convertible currencies (including the GB Pounds Sterling, Euro, etc) that are available all over the world.

“Our infrastructure remains weak and electronic transaction systems are still largely unreliable. Whenever the system malfunctions (daily, people’s accounts get debited despite recording declined or failed transactions), it takes the banking system between 2 to 3 weeks at times to reverse and refund these accounts. Most ordinary people on the streets cannot bear this sort of delay.

“Therefore, there is a need to ensure that the infrastructure is strengthened and the electronic banking system is more reliable. Currently, we have an environmental of mistrust and delayed transactions which is hugely frustrating, unreliable and unacceptable.

“Besides, due to the inadequacies of cash service of the banking system, a lot of PoS transaction points/outlets have sprung up, creating jobs directly or indirectly for millions of people. Whatever policies that are issued should not have any negative effects on these people’s source of livelihood.

“As a matter of fact, as I have always maintained, I believe, rather than issuing new N1,000, N500 and N200 notes, just a new denomination of N5,000 should have been issued out. This would have helped to achieve the same set of objectives that CBN craves for as: those who have stored up old N1,000, N500 and N200 notes would definitely have brought them out to change for the new N5,000 notes as, being a higher denomination, it would be less burdensome and more convenient to carry.

“It is not nice for our sovereignty and our economy that our highest currency denomination is just $2 or less in equivalent value. This is unacceptable and greatly inconvenient as credible store of value.

“Less number of currency notes would have been required to be printed, again, being a higher denomination and store of value. Thereby, less funds would have been required to be spent.

“Therefore, there’s no doubt at all that this is to be considered sometime in the bear future.”

The DG added, “Going forward, it is necessary to urge the CBN, government and all policy makers to always engage in adequate consultations with the private sectors as well as ordinary Nigerians before announcing and/or implementing any policy that are likely to significantly impact on businesses as well as the lives of the general public. This will help government and all policy makers feel the pulse of the nation first and make policies that will further enhance improved welfare of the citizenry.”

Business

Oyetola in Lagos, defies downpour, embarks on inspection tour

Published

2 days ago

May 17, 2024

NewsDirect

By Seun Ibiyemi

The rain in Lagos began very early on Thursday morning. But the torrential rainfall did not stop Minister of Marine and Blue Economy, Adegboyega Oyetola, CON, from embarking on the tour of two key institutions that were recently brought under his ministry — the Nigerian Institute for Oceanography and Marine Research (NIOMR) and the Liaison office of the Department of Fishery and Aquaculture, which houses College of Fishery, Lagos.

His first port of call was NIOMR, where the Chief Executive of the institute, Prof. Abiodun Sule, took the Minister through some of its strategic breakthroughs, including unveiling some of the different species of fish in our waters.

The Minister charged the Institute to take up the challenge of mapping out the country’s various marine resources, saying the country needs to know what it has and in what quantity.

He charged the staff to redouble their efforts and ensure they find a solution to the rising cost of fish feeds in Nigeria. The Minister reiterated his desire to increase local production of fish, while reducing dependence on importation.

From the Institute, Oyetola and his entourage, which included the Permanent Secretary, Oloruntola Olufemi; Director, Maritime Safety and Security, Babatunde Bombata, and the Executive Director, Engineering and Technical Services, Engr. Ibrahim Umar, who represented the the MD of NPA, headed for the Department of Fishery and Aquaculture, where the delegation inspected the Laboratory and charged the staff not to lower the standard of monitoring and inspection so as to ensure the country’s exporters are not blacklisted by the International community and also ensuring that those being imported meet required standard.

He assured the staff of both institutions of his commitment to their welfare, while urging them to also increase their capacity and productivity, as he wants to see the fishing contribute to job creation and increase in revenue of the FG.

The elated members of staff promised the Minister not to let him down and pledged their commitment to the vision and mission of the Minister with respect to the maritime sector.

Business

CPPE urges CBN to halt interest rate tightening, as businesses are yet to recover from previous hikes

Published

2 days ago

May 17, 2024

NewsDirect

The Centre for the Promotion of Public Enterprise (CPPE) has called on the Central Bank of Nigeria (CBN) to slow down on monetary policy tightening ahead of its Monetary Policy Committee (MPC) meeting this month, stating that businesses are yet to recover from the hawkish monetary policy stance in the last two months.

The Centre stated this in its reaction to the latest inflation figures published by the NBS where headline inflation rose to 33.69 percent in the month of April from 33.20 percent in March.

According to the statement signed by the Director-General of the CPPE, Dr Muda Yusuf, monetary policy tools should be paused for the fiscal side of the economy to work towards addressing the supply issues affecting the inflation dynamics in the country.

He stated, “Meanwhile we urge the monetary policy Committee to soften its monetary tightening stance for the time being. Businesses are yet to recover from the shocks of the recent bullish rate hikes. The monetary instruments should be put on pause while fiscal policy tools address supply-side factors in the inflation dynamics.”

Furthermore, the Centre appreciated the slowdown in inflation for the month, especially headline and food inflation, but noted that the main drivers of price hikes (food, transport, insecurity in farming communities and other structural problems) are yet to cool down.

He explained that the drivers of inflation are supply-based and being addressed by the fiscal authorities. Also, Dr. Yusuf doubled down on his call to the Nigerian Customs Service (NCS) to set a quarterly exchange rate between N800 and N1000 for import duties assessment, noting that the continuous fluctuation has a pass-through effect on inflation.

In his words, “Meanwhile the exchange rate benchmark for the computation of import duty continues to be a major concern to businesses as it has become a major inflation driver. We again urge the CBN to peg the rate at between N800 -N1000/dollar to be reviewed quarterly. This is necessary to reduce the pass-through effect of heightening trade costs on inflation.”

Meanwhile, the CPPE also lauded the commencement of refining by the Dangote refinery, stating that it would help slow down inflation in the short term.

Recall that Nigeria’s inflation rate rose to 33.69 percent in April on the back of an increase in food and transport prices. The rate is one of the highest in about 28 years.

The CBN, in an effort to rein in inflation, has increased

Business

April 2024: FG, States, LGs share N1,208.081trn

Published

2 days ago

May 17, 2024

NewsDirect

The Federation Account Allocation Committee (FAAC), at its May 2024 meeting chaired by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, shared a total sum of N1,208.081 Trillion to the three tiers of government as Federation Allocation for the month of April, 2024 from a gross total of N2,192.007 Trillion.

From the stated amount inclusive of Gross Statutory Revenue, Value Added Tax (VAT), Electronic Money Transfer Levy (EMTL), and Exchange Difference (ED), the Federal Government received N390.412 Billion, the States received N403.403 Billion, the Local Government Councils got N293.816 Billion, while the Oil Producing States received N120.450 Billion as Derivation, (13 percent of Mineral Revenue).

The sum of N80.517 Billion was given for the cost of collection, while N903.479 Billion was allocated for Transfers Intervention and Refunds.

The Communique issued by the Federation Account Allocation Committee (FAAC) at the end of the meeting indicated that the Gross Revenue available from the Value Added Tax (VAT) for the month of April 2024, was N500.920 Billion as against N549.698 Billion distributed in the preceding month, resulting in a decrease of N48.778 Billion.

From that amount, the sum of N20.037 Billion was allocated for the cost of collection and the sum of N14.426 Billion given for Transfers, Intervention and Refunds. The remaining sum of N466.457 Billion was distributed to the three tiers of government, of which the Federal Government got N69.969 Billion, the States received N233.229 Billion, Local Government Councils got N163.260 Billion.

Accordingly, the Gross Statutory Revenue of N1,233.498 Trillion received for the month was higher than the sum of N1,017.216 Trillion received in the previous month of March 2024 by N216.282 Billion. From the stated amount, the sum of N59.729 Billion was allocated for the cost of collection and a total sum of N889.053 Billion for Transfers, Intervention and Refunds.

The remaining balance of N284.716 Billion was distributed as follows to the three tiers of government: Federal Government got the sum of N112.148 Billion, States received N56.883 Billion, the sum of N43.855 Billion was allocated to LGCs and N71.830 Billion was given to Derivation Revenue (13 percent Mineral producing States).

Also, the sum of N18.775 Billion from Electronic Money Transfer Levy (EMTL) was distributed to the three (3) tiers of government as follows: the Federal Government received N2.704 Billion, States got N9.012 Billion, Local Government Councils received N6.308 Billion, while N0.751 Billion was allocated for Cost of Collection.

The Communique also disclosed the sum of N438.884 Billion from Exchange Difference, which was shared as follows: Federal Government received N205.591 Billion, States got N104.279 Billion, the sum of N80.394 Billion was allocated to Local Government Councils, while N48.620 Billion was given for Derivation (13 percent of Mineral Revenue).

Oil and Gas Royalties, Companies Income Tax (CIT), Excise Duty, Petroleum Profit Tax (PPT), Customs External Tariff levies (CET) and Electronic Money Transfer Levy (EMTL) increased significantly, while Import Duty and Value Added Tax (VAT) recorded considerably decreases.

According to the Communique, the total revenue distributable for the current month of April 2024, was drawn from Statutory Revenue of N284.716 Billion, Value Added Tax (VAT) of N466.457 Billion, N18.024 Billion from Electronic Money Transfer Levy (EMTL), and N438.884 Billion from Exchange Difference, bringing the total distributable amount for the month to N1,208.081 Trillion.

The balance in the Excess Crude Account (ECA) as at May 2024 stands at $473,754.57.