Economy
African Economists Want Stronger Monetary Policy Reforms
By Dipo Olowookere
African economists attending the 12th African Economic Conference in Addis Ababa, Ethiopia, have called for more radical monetary policy reforms and an overhaul of the tax policy regime in most countries in order to guarantee the welfare needs of the local population.
The economic researchers from Ethiopia, Kenya and Sudan, who attended a session of the conference to discuss ‘Macroeconomic policies for the inclusive development,’ on December 5, 2017, noted broader reforms were required to secure stability in the foreign currency markets and to curb inflation.
“Consistent monetary policy yields the greatest welfare security to the citizens compared to discretionary monetary policy,” said Mr Peter Wamalwa of the Central Bank of Kenya, presenting a paper on the impact of monetary policy on the prices of assets in an open economy.
Discretionary monetary policy is often based on the knee-jerk reaction of the key policy-makers on matters which have an impact on taxation policy, spending and fiscal activities carried out by the respective Central Banks, often known as the monetary policy decision-making bodies.
Mr Wamalwa said while the monetary policy is often used by the respective Central Banks to correct market imperfections which require urgent intervention, the Central Bank should ensure as a priority that the social needs of the households and the firm are taken care off in order to guarantee economic stability.
“The monetary policy is not effective if the asset prices are not included. The response to the monetary policy is more significant,” said Mr Wamalwa, who insists Central Bank interventions to stabilize the domestic prices should allocate the economy’s resources efficiently and in a socially desired manner.
The African Economic Conference is dedicated to discussions on the kind of economic and political governance reforms that are critical in order to ensure structural transformation takes place in Africa.
Mr Wamalwa said the focus should remain on the effectiveness of the monetary policy in battling key challenges such as inflation and the foreign currency exchange rate policy.
In his paper, Mr Wamalwa did not entirely dismiss the possibility of the Central Banks relying on discretionary monetary policy, saying it has a role to play when policy weaknesses fail to address market distortions which affect prices in an economy in a more negative manner.
“This affords the monetary authority the flexibility to respond to unanticipated price and output changes as well as the dynamic behaviour of agents in an economy. This is more relevant to the financial markets where investors make decisions frequently to optimize their portfolio holding,” Mr Wamalwa said.
Speaking during the same session, Saswan Abdul-Jalil, a teaching assistant at the University of Khartoum, Sudan, called for an overhaul of the tax regime in Sudan and broad measures to unlock restrictions which make it much harder for ordinary businesses and individuals to access bank loans.
Terming difficulties in accessing the domestic financial markets due to the government’s increased domestic borrowing and stringent capital controls the “financial repression,” Abdul-Jalil said the capital controls imposed by the government enabled it to borrow at a lower rate domestically.
According to the paper titled “Financial Repression and Capital Controls in Sudan: An Evaluation of Fiscal Effects,” the financial repression causes a bigger impact on the pace of economic growth in Sudan.
“It leads to high cost of domestic borrowing because the commercial banks prefer to lend to the government and its effect is 0.8 percent on the Gross Domestic Product. The capital controls are part of the government’s efforts to raise revenue locally,” Abdul-Jalil argued.
By Modupe Gbadeyanka
The federal government has been asked by the Nigerian Bar Association (NBA) to suspend the implementation of the controversial tax laws.
In a reaction to the tax reform acts, the president of the group, Mr Afam Osigwe (SAN), the suspension of the laws would allow for a proper investigation into allegations of alterations in the gazetted and harmonised copies.
A member of the House of Representatives, Mr Abdussamad Dasuki, alleged that some parts of the laws passed by the parliament were different from the gazetted copy.
To address the issues raised, the NBA said it is “imperative that a comprehensive, open, and transparent investigation be conducted to clarify the circumstances surrounding the enactment of the laws and to restore public confidence in the legislative process.”
“Until these issues are fully examined and resolved, all plans for the implementation of the Tax Reform Acts should be immediately suspended,” the association declared.
It noted that the controversies “raise grave concerns about the integrity, transparency, and credibility of Nigeria’s legislative process.”
“These developments strike at the very heart of constitutional governance and call into question the procedural sanctity that must attend lawmaking in a democratic society,” it noted.
“Legal and policy uncertainty of this magnitude has far-reaching consequences. It unsettles the business environment, erodes investor confidence, and creates unpredictability for individuals, businesses, and institutions required to comply with the law. Such uncertainty is inimical to economic stability and should have no place in a system governed by the rule of law.
“Nigeria’s constitutional democracy demands that laws, especially those with profound economic and social implications, emerge from processes that are transparent, accountable, and beyond reproach. Anything short of this undermines public trust and weakens the foundation upon which lawful governance rests.
“We therefore call on all relevant authorities to act swiftly and responsibly in addressing this controversy, in the overriding interest of constitutional order, economic stability, and the preservation of the rule of law,” the organisation stated.
By Adedapo Adesanya
Demand for hot stocks, including MRS Oil Plc, buoyed the NASD Over-the-Counter (OTC) Securities Exchange by 0.52 per cent on Tuesday, December 23.
The energy company was one of the three price gainers for the session as it chalked up N19.69 to sell at N216.59 per share versus the previous day’s value of N196.90 per share.
Further, FrieslandCampina Wamco Nigeria Plc gained N2.95 to close at N56.75 per unit versus N53.80 per unit and Golden Capital Plc appreciated by 84 Kobo to N9.29 per share from Monday’s N8.45 per share.
Consequently, the market capitalisation went up by N10.95 billion to N2.125 trillion from N2.125 trillion and the NASD Unlisted Security Index (NSI) rose by 18.31 points to 3,570.37 points from 3,552.06 points.
Yesterday, the NASD bourse recorded a price loser, the Central Securities Clearing System Plc (CSCS), which gave up 17 Kobo to close at N33.70 per unit against the previous trading value of N33.87 per unit.
The volume of securities traded at the session went down by 97.6 per cent to 297,902 units from the previous day’s 12.6 million units, the value of securities decreased by 98.5 per cent to N10.5 million from N713.6 million, and the number of deals remained flat at 32 deals.
By value, Infrastructure Credit Guarantee Company (InfraCredit) Plc ended as the most actively traded stock on a year-to-date basis with 5.8 billion units exchanged for N16.4 billion. This was followed by Okitipupa Plc, which traded 178.9 million units valued at N9.5 billion, and MRS Oil Plc with 36.1 million units worth N4.9 billion.
In terms of volume, also on a year-to-date basis, InfraCredit Plc led the chart with a turnover of 5.8 billion units traded for N16.4 billion. Industrial and General Insurance (IGI) Plc ranked second with 1.2 billion units sold for N420.7 million, while Impresit Bakolori Plc followed with the sale of 536.9 million units valued at N524.9 million.
By Dipo Olowookere
It was another bullish trading session for the Nigerian Exchange (NGX) Limited as it closed higher by 0.59 per cent on Tuesday.
The market further rallied due to continued interest in large and mid-cap stocks on the exchange by investors rebalancing their portfolios for the year-end.
Yesterday, Aluminium Extrusion sustained its upward trajectory after it further appreciated by 9.96 per cent to N14.90, as Austin Laz gained 9.81 per cent to close at N2.91, Custodian Investment improved by 9.69 per cent to N38.50, and First Holdco soared by 9.35 per cent to N50.30.
Conversely, Royal Exchange declined by 7.22 per cent to N1.80, Champion Breweries shrank by 6.57 per cent to N15.65, NASCON lost 5.36 per cent to trade at N105.05, Sovereign Trust Insurance depreciated by 5.28 per cent to N3.77, and Japaul went down by 4.51 per cent to N2.33.
At the close of business, 29 shares ended on the gainers’ table and 27 shares finished on the losers’ log, representing a positive market breadth index and bullish investor sentiment.
This raised the All-Share Index (ASI) by 895.06 points to 153,354.13 points from 152,459.07 points and lifted the market capitalisation by N579 billion to N97.772 trillion from the previous day’s N97.193 trillion.
VFD Group finished the day as the busiest stock after it recorded a turnover of 192.0 million units worth N2.1 billion, GTCO exchanged 63.5 million units valued at N5.6 billion, Access Holdings traded 49.8 million units for N1.0 billion, First Holdco sold 45.8 million units valued at N2.3 billion, and Secure Electronic Technology transacted 38.3 million units worth N28.4 million.
In all, market participants bought and sold 677.4 million units valued at N20.8 billion in 27,589 deals compared with the 451.5 million units worth N13.0 billion traded in 33,327 deals on Monday, showing an improvement in the trading volume and value by 50.03 per cent and 60.00 per cent apiece, and a shortfall in the number of deals by 17.22 per cent.
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