Economy
Local Savings Can Help Reflate Economy—Finance Minister
By Dipo Olowookere
Nigeria’s Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, has said the country’s economy can be reflated if local savings is encouraged.
The global economy is currently on a life support because of the coronavirus pandemic, which forced many countries to lockdown their economies.
Nigeria was not an exception as it only eased the lockdown early June after almost all economic activities were shut down for nearly three months in order to curb the spread of COVID-19.
Already, the fiscal authorities are looking ahead of post-COVID-19 era. It is believed that the virus will disrupt the ways things have been done in the past.
While speaking at the inauguration of the National Savings Strategy Working Group in Abuja at the weekend, the Minister canvased the need to mobilise local savings, saying it was capable of reflating the economy post COVID-19.
She tasked members of the group to develop easy instruments that are safe to be able to attract ordinary Nigerians to key into the strategy.
The terms of reference of the group include; To study the National Savings Strategy Paper and advise the federal government on the feasibility of the proposals or with recommended changes.
The team is also expected to advise on ways and means of mobilizing and channelling corporate and individual savings to accelerate domestic capital formation to support entrepreneurs and enterprise development in the urgent task of diversifying the economy and the deepening of the capital market;
The group is further expected to draft a National Working Paper that outlines a detailed roadmap on the implementation of the National Savings Scheme to be submitted for approval by the Federal Executive Council.
“Let us not forget the average Nigerian that wants to save and does not have huge sums, we need to develop easy instruments that are safe to be able to attract them. look at creating retail savings scheme to allow these Nigerians to save quickly by being able to enter and exit without unnecessary rigours.
“We need to mobilise local savings to reflate the economy, increase productivity by creating new enterprises and ensure that existing ones also thrive,” she said.
Mrs Ahmed commended the acting Director General of the Securities and Exchange Commission (SEC), Ms Mary Uduk, her team and the members of the Capital Market Master Plan Implementation Council (CAMMIC) for their dedication and commitment to the implementation of the masterplan so far.
She expressed optimism that ongoing efforts to review the masterplan to align the assumptions and projections with current realities, would redefine the road map for stakeholder participation in the Nigerian capital market.
“My expectation when the review is concluded is that we would have a strategic document that provides a clear pathway that would enable the Nigeria’s capital market achieve the goal to be Africa’s deepest, most liquid and largest capital market contributing not only to Nigeria’s socio-economic development but also serve as a global financial hub offering opportunities to other parts of Africa,” she said.
In her remarks, Ms Uduk said the SEC launched a 10-year capital market masterplan in 2015, a market wide strategic blueprint that had the buy-in of all stakeholders, aimed at making the market deeper, vibrant and more effective.
Ms Uduk said the implementation of the initiatives in the 10-year plan will transform the Nigerian market, facilitate the diversification of the economy, encourage savings and create wealth.
“This will no doubt grow investors’ confidence, improve the depth and breadth of the market in terms of product offerings, engender market integrity, and contribute to the country’s economic growth.
“I am glad to report that we have taken up the initiatives outlined in the masterplan document in a systematic manner while engaging with the government, and other critical stakeholders to successfully implement key initiatives while driving the execution of others,” she stated.
Ms Uduk disclosed that the need to establish a National Savings Strategy was outlined in the masterplan as one of the key strategies to enhance capital formation by mobilizing domestic funds for investment to drive rapid economic growth.
She said it envisaged the deliberate provision of risk capital as venture capital and private equity that are naira based and more committed to the long-term prosperity of Nigeria, as well as create a buffer to the instability created by foreign investors.
“On July 16, 2016, CAMMIC set up a 7-man technical committee as a first step towards achieving that goal.
“The technical committee developed a 102-page, 7-chapter position paper which reviewed historical data and information on the Nigerian savings-investment culture, the Nigerian financial system, population and economy and the savings and investment strategies of select countries.
“The purpose of the position paper was to ascertain the need for a national savings strategy in Nigeria and make recommendations on an implementation strategy.
“The position paper forms the basis for the work expected to be carried out by the national working group being inaugurated today,” Ms Uduk added.
She, therefore, assured that SEC will provide the necessary support and every other assistance within its capacity to the national working group to ensure that their job is done in a timely and efficient manner.
Also speaking, Chairman of the team, Mr Fola Adeola, said savings is one of the fundamentals of highly developed economies and pledged the readiness of the group to help drive the Nigeria economy.
“This assignment is coming at a most difficult time as people are worried about the effect of COVID-19 on the economy, but if we get it right now, by the time we ease into good times, we will be better for it,” he added.
Recall that the capital market masterplan proposed the National Savings Strategy (NSS) as one of the key initiatives to drive capital formation and investment necessary to support entrepreneurs and enterprise development in the urgent task of diversifying the economy and deepening of the capital market.
To lift the equity markets, galvanize new start-ups and expand existing projects, there should be deliberate provision of Naira based risk capital.
In essence nurturing, growing and channelling domestic savings to fund the creation of new enterprises will result in rapid economic growth, diversification of the economy, acceleration in the rate of job creation and increasing the productivity and output of the Nigerian economy.
By Adedapo Adesanya
The Naira appreciated against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, July 17, by N1.35 or 0.07 per cent to N1,380.18/$1 from N1,381.53/$1.
It also improved its value against the Pound Sterling in the same market segment during the session by N11.75 to trade at N1,854.42/£1 compared with the previous day’s N1,866.17/£1, and gained N5.69 against the Euro to sell at N1,576.99/€1 versus Thursday’s closing price of N1,582.68/€1.
In the same vein, the Naira chalked up N1 against the United States currency yesterday at the GTBank forex desk to quote at N1,388/$1, in contrast to the preceding day’s N1,389/$1, but closed flat at the black market at N1,405/$1.
The appreciation of the Nigerian currency on Friday came amid fresh signals that Nigeria is building its external reserves for protection against shocks and excessive currency volatility.
The Governor of the Central Bank of Nigeria (CBN), Mr Yemi Cardoso, said the country’s gross reserves had risen above approximately $52 billion by 15 July, while net reserves had increased from about $3 billion when the current CBN leadership took office to more than $40 billion.
Mr Cardoso linked the increase in reserves to reforms that had restored greater confidence in the foreign exchange system. He also pointed to efforts to diversify foreign currency inflows, including policies designed to increase remittances through official channels.
He noted that monthly diaspora remittances had risen above $600 million and the CBN expected them to reach approximately $1 billion by the end of 2026. The target is part of a broader effort to grow reserves through recurring inflows rather than temporary measures.
The improvement, he argued, had strengthened Nigeria’s capacity to respond when unexpected events threatened market stability.
The apex bank has also launched a new digital platform that will track every foreign exchange transaction involving Bureau De Change (BDC) operators, marking a major step in its efforts to improve transparency and strengthen oversight of Nigeria’s retail forex market.
As for the crypto market, prices were up as markets overlooked geopolitical developments and macro forces weighing on the whole market ecosystem rather than anything crypto-specific, with Cardano (ADA) up by 4.6 per cent to $0.1661.
Bitcoin (BTC) jumped by 1.8 per cent to $63,968.32, Ethereum (ETH) improved by 0.9 per cent to $1,843.88, Dogecoin (DOGE) also rose by 0.9 per cent to $0.0723, Solana (SOL) soared by 0.6 per cent to $74.90, Ripple (XRP) also appreciated by 0.6 per cent to $1.08, and Binance Coin (BNB) advanced by 0.1 per cent to $567.32.
However, TRON (TRX) depreciated by 0.2 per cent to close at $0.3218, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
By Adedapo Adesanya
The prices of the crude oil grades rose Friday, as fighting between the US and Iran continued in the Middle East, leading to further attacks in Bahrain, Jordan, Kuwait, Oman, Qatar and Syria.
Brent crude futures advanced by about 4.6 per cent to $88.10 per barrel, while the US West Texas Intermediate (WTI) futures gained about 4.5 per cent to settle at $82.49 per barrel.
US forces stepped up attacks on Iranian sites, reportedly striking key bridges, railways, and an airport, prompting retaliatory action by Iran.
US Central Command said that it had completed its sixth consecutive night of strikes against Iran, hitting dozens of military targets such as military logistics infrastructure and maritime capabilities.
Centcom said more than 50,000 service members were operating across the Middle East, adding that they “remain vigilant, lethal, and ready.”
Iran said it attacked the US targets in Bahrain, Jordan, Kuwait, Oman, Qatar and Syria in retaliation for the latest round of strikes by the Americans.
Kuwait said Iran attacked a power and water desalination plant as fighting escalated in the Persian Gulf, saying that the attack damaged the facility that sparked a fire that affected a large number of its electricity-generating units, according to The Kuwait Times.
Kuwait is heavily dependent on desalination plants for potable water. Analysts have long feared that Iran would strike infrastructure that is critical to supporting civilian life in the Middle East.
A tanker was hit by a projectile off the coast of Oman, causing minor damage, the United Kingdom Maritime Trade Operations Centre said in an incident report Friday. Iran has repeatedly attacked tankers over the past week as it tries to force civilian ships to transit the Strait of Hormuz through its waters.
The escalating fighting comes as the fragile truce reached last month has collapsed, once again disrupting energy flows through the strategically vital Strait of Hormuz, which typically handles around 20% of the world’s oil traffic.
Earlier in the week, President Donald Trump said American forces would target Iran’s infrastructure next week unless the two sides reached a diplomatic breakthrough.
Iran has asked Yemen’s Houthis to close the Red Sea oil route if the US targets Iranian power infrastructure.
Market analysts noted that Iran and the US still have strong economic incentives to avoid a complete breakdown in talks, with the US seeking lower oil prices ahead of the November midterm elections and Iran reluctant to forgo economic incentives.
By Adedapo Adesanya
Despite signs that Nigeria’s headline inflation is easing, rising food prices continue to threaten the country’s inflation outlook, the chief executive of the Centre for the Promotion of Private Enterprise (CPPE), Mr Muda Yusuf, has warned.
He noted that structural inflationary pressures in the real economy remain pronounced despite improving macroeconomic stability.
In a policy brief released following the inflation report, he noted that headline inflation eased marginally, while month-on-month change moderated from 1.75 per cent to 1.66 per cent, indicating that headline inflation has largely plateaued.
According to him, the dominant concern in the latest inflation report is the renewed acceleration in food inflation.
This growth, he said, suggested that food prices have resumed an upward trajectory after a brief period of moderation.
Warning that a renewed increase in food inflation has significant economic and social implications, he stressed that food inflation remained the biggest driver of Nigeria’s cost-of-living crisis, stressing that rising food prices continue to erode household purchasing power, worsen poverty and food insecurity while weakening the inclusiveness of the current reform programme.
He maintained that sustained moderation in food prices is critical to improving citizens’ welfare and strengthening public confidence in the ongoing economic reforms.
Acknowledging the easing of core inflation as encouraging, he drew attention to the persistence of urban inflation.
At 16.08 per cent, urban inflation exceeded the national headline inflation rate of 15.91 per cent, while month-on-month urban inflation increased from 1.99 per cent to 2.13 per cent.
According to Mr Yusuf, the figures indicated that inflationary pressures remained particularly intense across urban centres.
He attributed the rising urban inflation partly to increasing population displacement from rural communities affected by insecurity, expressing worry that as more households migrate to urban areas, demand for housing, transportation, utilities and other essential services would increase, adding to inflationary pressures and creating additional urbanisation challenges.
Addressing insecurity in farming communities, he said, was important not only for protecting lives and property and boosting agricultural output but also for easing cost pressures in urban centres, adding that the June CPI data reinforced the view that Nigeria’s inflation challenge is predominantly structural rather than monetary.
On the monetary policy outlook, he said the data do not justify further monetary tightening, arguing that headline inflation has largely stabilised.
The CPPE chief expected the Monetary Policy Committee (MPC) to retain the current monetary policy rate at its next meeting, adding that the priority is for monetary and fiscal authorities to work together to accelerate structural reforms to expand food supply, improve logistics, reduce energy and production costs, lower debt service costs, as well as strengthen domestic value chains.
