Economy
Forex Inflow Solution to Nigeria’s Liquidity Problem—Economist
By Modupe Gbadeyanka
To solve Nigeria’s liquidity problem, she needs foreign exchange inflow, a leading economist and the Chief Executive Officer of Economic Associates, Dr Ayo Teriba, has suggested.
Dr Teriba, who further advised the country to open its economy, contending privatization stimulates foreign direct in-flow, disclosed that Nigeria’s annual export revenue has been halved.
“Nigeria’s problem is that other problems are symptoms of the (liquidity) problem. Recession is reflecting liquidity shortage,” the economist stressed.
He added that, “Privatisation is the tool which most countries use to check their liquidity issue and beef up the economy and Nigeria can also do the same by privatizing some of her key sectors,” pointing out that a macro-economic approach to privatisation was ideal.
Speaking as a Guest Lecturer at a two-day retreat with the theme Rediscovery and Repositioning organised by the Bureau of Public Enterprises (BPE) in Abuja on August 18-19, 2017, Mr Teriba explained that illiquidity remains the country’s main challenge.
He pointed out that privatisation is now the trend the world over; and cited Saudi Arabia and India which plan to privatise some of their critical sectors to raise funds to develop their countries.
Mr Teriba explained that Saudi Arabia avoided recession because of its huge foreign reserves. Saudi Arabia plans to raise about $200 billion through the privatization of 16 sectors ranging from healthcare, airports to education.
The renowned economist noted that Nigeria relies almost exclusively on volatile export revenue and neglecting opportunities to attract massive and much more stable diaspora and foreign direct investment inflows whereas, “non-resident Indians and Chinese invest massively at home to fund economic recovery and growth efforts of their respective countries” and queried why it did not occur to Nigeria to do the same before now.
He recalled that Nigeria used to attract more Foreign Direct Investment (FDI) than India, South Korea, South Africa and UAE but noted that these countries have overtaken Nigeria and called for the opening up of the vents for investment to flow by breaking all government monopolies as has been done in telecoms and power sectors.
“China’s inwards FDI stocks rose from $20bn in 1990 to $1.08trillion in 2015 and Nigeria held nearly half of what China held in 1990 but held only nine percent of what China held in 2015. Where did we get wrong?” he asked.
The renowned economist revealed that though Nigeria has about N100 trillion in her economy, it was not evenly distributed and suggested that instead of the present agitation for political restructuring, those in its vanguard should agitate for sectoral, resource and revenue restructuring.
Declaring the retreat open, the Director-General of the Bureau of Public Enterprises, Mr Alex Okoh, said the aim is to help the Bureau in applying a different kind of thinking by involving every member of the BPE family in a strategic episode where “we can together build a bridge between the dream of a new BPE and the actions that we must collectively take to make that dream a reality”.
He said it was hinged on the two pillars of the new vision of the Bureau—Rediscovery and Repositioning.
For the rediscovery pillar, he said it would lead the Bureau to retrace and redefine its core values and reclaim its culture of professionalism, knowledge, competence, integrity and transparency.
On the other hand, the repositioning pillar aims to set the Bureau on a path that would help it engage with the future effectively and with confidence, to guarantee that the objectives of the Bureau are achieved.
By Adedapo Adesanya
Foreign Exchange (FX) demand pressure eased on the Naira on Wednesday, April 8, in the Nigerian Autonomous Foreign Exchange Market (NAFEX) after gaining N14.84 or 1.07 per cent against the greenback to quote at N1,371.82/$1 compared with the previous day’s N1,386.66/$1.
Also, the local currency appreciated against the Euro in the same market window at midweek by N1.54 to close at N1,604.07/€1 versus Tuesday’s closing rate of N1,605.61/€1, but lost N6.26 against the Pound Sterling to trade at N1,844.83/£1 versus N1,838.57/£1.
In the parallel market, the exchange rate of the Naira to the US Dollar remained unchanged yesterday at N1,410/$1, according to data sourced by Business Post.
There were indicators that the official FX market experienced a liquidity surge, which eased worries around the dominant US Dollar on Wednesday, as the Central Bank of Nigeria (CBN) revealed interbank deals rose to 220 from 71 reported the previous day.
The domestic currency has been in strong demand from foreign portfolio investors seeking to purchase OMO bills and other fixed-income instruments.
Forecasts also show that the local currency will remain relatively stable during the second quarter of the year, trading within the N1,340 to N1,430 per Dollar band on improved FX liquidity, stronger oil earnings, and rising external reserves, which have climbed above 50 billion dollars.
As for the cryptocurrency market, it fell after an initial ceasefire-fueled rally, with markets retracing Wednesday’s “ceasefire euphoria” as cracks emerge in the US-Iran truce while the Strait of Hormuz remains effectively closed.
Global risk assets face renewed pressure as geopolitical uncertainty combines with what analysts call “uncoordinated tightening” by major central banks, reinforcing higher-for-longer interest-rate expectations.
The price of Cardano (ADA) fell by 4.7 per cent to $0.2500, Ripple (XRP) slumped 3.7 per cent to $1.33, Dogecoin (DOGE) shrank by 3.5 per cent to $0.0915, Binance Coin (BNB) slipped 2.6 per cent to $600.02, Ethereum (ETH) went down by 2.5 per cent to $2,183.82, Solana (SOL) dipped 2.5 per cent to $82.24, and Bitcoin (BTC) depreciated by 1.1 per cent to $70,995.20.
However, TRON (TRX) appreciated by 0.4 per cent to $0.3173, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 apiece.
By Dipo Olowookere
The Nigerian Exchange (NGX) Limited rallied by 0.28 per cent on Wednesday despite weak investor sentiment, as the bourse ended with 18 price gainers and 38 price losers, implying a negative market breadth index.
The growth recorded yesterday by Customs Street was influenced by the 2.11 per cent rise posted by the energy index, and the 1.79 per cent jump achieved by the banking sector.
The other sectors experienced profit-taking, with the consumer goods losing 1.07 per cent, the insurance counter down by 0.36 per cent, and the industrial goods space down by 0.19 per cent.
Universal Insurance chalked up 10.00 per cent to sell for N1.21, Omatek improved by 9.78 per cent to N2.47, VFD Group expanded by 9.71 per cent to N11.30, CWG appreciated by 9.64 per cent to N21.05, and Livestock Feeds gained 9.56 per cent to close at N7.45.
On the flip side, UPDC REIT lost 10.00 per cent to settle at N6.75, Fortis Global Insurance shed 9.92 per cent to quote at N1.18, Deap Capital depreciated by 9.85 per cent to N5.40, Chams went down by 9.47 per cent to N3.06, and Japaul declined by 8.82 per cent to N3.10.
Yesterday, the All-Share Index (ASI) went up by 562.43 points to 202,585.53 points from 202,023.10 points, and the market capitalisation advanced by N389 billion to N130.404 trillion from N130.015 trillion.
During the session, 1.0 billion stocks worth N40.6 billion exchanged hands in 52,723 deals compared with the 1.1 billion stocks valued at N40.3 billion executed in 78,006 deals a day earlier, indicating an uptick in the trading value by 0.74 per cent, and a shortfall in the trading volume and number of deals by 9.09 per cent and 32.41 per cent apiece.
The activity chart was led by Access Holdings, which sold 233.0 million units valued at N6.1 billion, Fidelity Bank exchanged 113.1 million units worth N2.2 billion, Wema Bank recorded a turnover of 103.3 million units valued at N2.7 billion, Zenith Bank transacted 60.6 million units for N6.5 billion, and Chams traded 47.5 million units worth N154.6 million.
By Adedapo Adesanya
Crude oil plummeted on Wednesday on hopes of the reopening of the Strait of Hormuz after US President Donald Trump agreed to a two-week ceasefire with Iran.
Brent crude futures moderated to $94.75 a barrel, while the US West Texas Intermediate (WTI) crude eased to $94.41 a barrel.
President Trump said on Wednesday that the US will work closely with Iran and will be talking about tariff and sanctions relief with Iran.
However, analysts cautioned that the ceasefire is a temporary two-week reprieve rather than a permanent resolution, and the global energy system remains fragile due to structural damage to regional infrastructure.
Reuters reported that Iran could open the strait in a limited and controlled way on Thursday or Friday ahead of a meeting between U.S. and Iranian officials in Pakistan.
Agence France-Presse (AFP) reported that two ships appeared to have transited the Strait of Hormuz since the US-Iran ceasefire deal. A Greek-owned bulk carrier and a Liberia-flagged vessel both transited the waterway early on Wednesday.
Meanwhile, Israel carried out its heaviest strikes on Lebanon since the conflict with Hezbollah broke out last month, even as the Iran-aligned group paused attacks on northern Israel and Israeli troops in Lebanon under the ceasefire.
Also, Saudi Arabia’s East-West Pipeline, a critical artery bypassing the Strait of Hormuz, was reportedly hit in an Iranian drone attack. Prior to the attack, the pipeline was pumping at its emergency capacity of 7 million barrels per day to bypass the shuttered strait.
The strikes occurred just hours after a US-Iran ceasefire announcement, which has so far failed to halt regional hostilities. Other facilities in the kingdom were also targeted in the wave of strikes, which the Islamic Revolutionary Guard Corps (IRGC) claimed included oil facilities owned by American companies in Yanbu.
US crude stocks rose by 3.1 million barrels to 464.7 million barrels during the week ended April 3, the Energy Information Administration (EIA) said.
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