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
Nigeria ranked as Africa’s leading destination for upstream oil and gas investment in 2024, new research from market intelligence firm, Wood Mackenzie, has shown, accounting for three out of four Final Investment Decisions (FIDs) announced by global oil and gas majors, totaling $13.5 billion.
The FIDs announced within the Nigerian market included Shell’s $122 million investment in the Iseni Gas Project, TotalEnergies’ $566 million commitment to the Ubeta Gas Project and Shell’s approval of the Bonga North Tranche 1 project valued at around $5 billion.
According to the Special Adviser to President Bola Tinubu on Energy, Ms Olu Verheijen, these investments reflected Nigeria’s ongoing efforts to unlock its hydrocarbon potential through investor-friendly policies and strategic global partnerships.
Last year, Nigeria introduced several initiatives to create a conducive environment for oil and gas investors, including new tax incentives aimed at attracting up to $10 billion in natural gas investments.
Nigeria, which is Africa’s largest oil producer, also offered tax relief for gas investors, reducing corporate income tax and extending capital allowance benefits – for deepwater gas projects.
Other policies include the Presidential Directive on Local Content Compliance Requirements 2024 to address the reduction in oil and gas investments caused by high operating costs compared to global markets.
Also, the Presidential Directive on Reduction of Petroleum Sector Contracting Costs and Timelines 2024 reduces the time spent to award contracts for oil and gas projects.
In addition to the directives, Nigeria also launched its 2024 oil and gas licensing round, offering 19 blocks for exploration, demonstrating its commitment to continued collaboration with local, regional and international partners.
Market analysts note that with this momentum, further FIDs are anticipated, including TotalEnergies’ expected $750 million commitment to the Ima Shallow Gas Project in 2025.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a 0.22 per cent decline on Monday, January 20, with the market capitalisation shedding N2.35 billion to close at N1.073 trillion compared with the preceding session’s N1.075 trillion and the NASD Unlisted Security Index (NSI) going down by 6.79 points to wrap the session at 3,105.12 points compared with 3,111.91 points recorded in the previous session.
It was observed that the loss recorded on the first trading day of the week was triggered by UBN Property Plc, which crashed by 20 Kobo to trade at N2.00 per share versus last Friday’s N2.20 per share.
However, the share price of Industrial and General Insurance (IGI) Plc went up by 4 Kobo to 40 Kobo per unit from 36 Kobo per unit, it could not stop the bourse from going down at the close of transactions.
The activity chart showed that on Monday, the volume of securities traded by investors increased by 57.9 per cent to 767,610 units from the 486,215 units traded in the preceding session, while the value of shares traded yesterday slumped by 17.7 per cent to N2.3 million from the N2.8 million recorded in the preceding trading day, as the number of deals declined by 14.3 per cent to 12 deals from the 14 deals carried out in the previous trading day.
At the close of transactions, FrieslandCampina Wamco Nigeria Plc remained the most active stock by value on a year-to-date basis with the sale of 4.1 million units worth N162.9 million, followed by Geo-Fluids Plc with a turnover of 9.1 million units valued at N44.0 million, and 11 Plc with the sale of 55,358 for N14.5 million.
Also, Industrial and General Insurance (IGI) Plc closed the day as the most active stock by volume on a year-to-date basis with 25.3 million units sold for N5.9 million, Geo-Fluids Plc came next with 9.1 million units valued at N44.0 million, and FrieslandCampina Wamco Nigeria Plc with 4.1 million units worth N162.9 million.
By Adedapo Adesanya
The value of the Naira weakened against the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Monday, January 20 amid FX pressures associated with this period.
Most people who came into the country for Christmas and New Year holidays are already going back and are in need of forex, putting pressure on the local currency.
Also, the poor performance of the domestic currency could be attributed to end to the 42-day access granted by the Central Bank of Nigeria (CBN) to Bureaux de Change (BDC) operators to buy forex at official price.
According to data from the FMDQ Securities Exchange, the Nigerian Naira lost 0.16 per cent or N2.47 on the greeback yesterday to sell at N1,550.05/$1, in contrast to last Friday’s rate of N1,547.58/$1.
Similarly, the Naira slumped against the Pound Sterling in the spot market on Monday by N23.39 to trade at N1,906.98/£1 versus N1,883.59/£1 and depreciated against the Euro by N23.14 to sell for N1,613.48/€1 compared with last Friday’s N1,590.34/€1.
However, in the parallel market, the Nigerian currency improved its value against the Dollar during the session by N5 to quote at N1,665/$1 compared with the previous session’s N1,670/$1.
As for the cryptocurrency market, it turned red yesterday as the US President, Mr Donald Trump, didn’t bring up the much-expected subject of crypto in his inauguration speech on Monday afternoon.
Mr Trump had promised a far more friendly crypto policy stance than the previous administration but in the long speech that announced his plans in the coming days, he didn’t make mention of Bitcoin or crypto.
Just over the weekend, the President ignited a speculative frenzy with the Friday evening launch of the Trump meme coin, which was shortly followed by a meme coin associated with his wife, Melania.
Dogecoin (DOGE) crumbled yesterday by 6.3 per cent to $0.3419, Solana (SOL) slumped by 4.7 per cent to $235.32, Cardano (ADA) fell by 3.6 per cent to $0.9777, and Litecoin (LTC) moderated by 1.9 per cent to $114.98.
Further, Ethereum (ETH) went down by 1.7 per cent to $3,241.36, Binance Coin (BNB) retreated by 1.4 per cent to $693.30, Ripple (XRP) depreciated by 1.2 per cent to $3.06, and Bitcoin (BTC) tumbled by 0.8 per cent to $101,746.99, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
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