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What Can Make Nigeria Abandon Naira for ECOWAS Currency 

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By Adedapo Adesanya

Nigeria could swap the Naira for the single currency being proposed by the Economic Community of West African States (ECOWAS) if good monetary and fiscal policies are put in place, Business Post analysis shows.

Originally intended to be launched in 2000, the ECO, which is the currency being considered, has been postponed multiple times; and the newest target date set is 2020.

With this, it means six member countries, including Nigeria, Liberia, Sierra-Leone, and Ghana; could swap their currencies for the ECO. ECOWAS countries like Benin Republic, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal, and Togo currently jointly use the CFA franc.

The 15-member group had announced at the end of an ECOWAS summit in Abuja in July 2019 that part of its plans was to redress the region’s economic problems. It was stated at the gathering that the adoption of ECO could set things in motion.

Mahamadou Issoufou, the president of Niger Republic, who also doubles as the ECOWAS chairman, explained that there was a real firm political will to increase efforts ahead of the January 2020 deadline.

“We are of the view that countries that are ready will launch the single currency and countries; that are not ready will join the programme as they comply with all six convergence criteria,” Issoufou said at the past ECOWAS meeting.

However, the African Development Bank Group (AfDB) in a report said; “The 2020 deadline for the single currency will most like be postponed again unless West African countries can align with their monetary and fiscal policies.”

But ECOWAS has since pushed ahead as it stated that it will be working with the West African Monetary Agency (WAMA), the West Africa Monetary Institute (WAMI), and central banks of West African nations to speed up the implementation of a new road map for the proposed single trade currency.

On Nigeria’s part, the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, recently noted that the proposed date for the commencement of a single-currency regime for West Africa may not be realised as many countries within the region have yet to meet the criteria for the monetary union.

She said only Togo had met criteria to adopt the ECO, and with only the country achieving this, it would be difficult to operate the single currency regime by next year, which is just few days away.

To be able to adopt the single currency, key demands for entry are for countries to have a deficit of less than 3 percent of gross domestic product (GDP), inflation of 10 percent or under and debts worth less than 70 percent of GDP, but Nigeria’s GDP stands at less than 2.3 percent (Q3 ’19) while its inflation as at November 2019 was 11.85 percent.

However, despite the increase in the Nigeria’s debt profile, the country’s debt-to-Gross Domestic Product (GDP) ratio is still well below the average for sub-Saharan Africa and Africa as a whole as the International Monetary Fund (IMF) noted last month.

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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Economy

Nigeria’s Pension Funds Reach N14.27bn as Contributors Near 10 million

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By Adedapo Adesanya

The National Pension Commission (PenCom) says the total number of registered contributors and the value of pension fund assets stand at 9,795,957 million and N14.27 trillion respectively, as at June 2022.

The Director-General of PenCom, Mrs Aisha Dahir-Umar, gave the figures at a recent workshop themed Increasing Informal Sector Participation In The Contributory Pension Scheme (CPS): The Case for Micro Pension Plan (MPP).

Mrs Dahir-Umar, represented by the Head, Corporate Communications, Mr Abdulqadir Dahiru, said the increasing number of pension funds and contributors was responsible for the recapitalisation of the Pension Fund Administrators (PFA’s) by PenCom.

“The reason for the recapitalisation exercise was to ramp up the capacity of the PFA’s to manage the increasing number of registered contributors and the value of pension fund assets which stood at 9,795,957 million and N14.27 trillion respectively, as at June 30, 2022.

“PenCom increased the Minimum Regulatory Capital (Shareholders’ Fund) requirements of PFAs from N1 billion to N5 billion in 2021.

“All PFAs have complied with the commission’s directive to increase their minimum capital during the exercise which had a 12-month transition between April 27, 2021, and April 27, 2022,” she said.

According to her, the theme of the workshop aligned with the commission’s objective of expanding coverage of the CPS as it relates to the micro pension plan.

The director-general explained that the objective was to bring into the CPS, Nigerians working in the informal sector and those who were self-employed through the MPP.

Mrs Dahir-Umar noted that strategic efforts to drive the MPP remained one of the significant areas of focus of the commission.

She said the MPP was conceptualised to expand pension coverage to the informal sector, including small-scale businesses, entertainers, professionals, petty traders, artisans and entrepreneurs.

“The MPP was implemented to curb old-age poverty by assisting the workers, as mentioned above, to contribute while working and build long-term savings to fall back on when they become old, ” Mrs Dahir-Umar said.

The director-general stated that to create awareness of the MPP, the commission, in collaboration with the Pension Fund Operators Association of Nigeria, was currently championing an industry media campaign in major cities in the country’s six geopolitical zones.

She said it was expected that the exercise would bring about increased effectiveness and efficiency as well as improved service delivery in the industry.

“Let me re-affirm the commission’s commitment to creating awareness and holding social dialogue on the workings of the CPS with relevant stakeholders towards the smooth implementation of the scheme in Nigeria,” she said.

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Economy

Outrage Over Payment of N18.39bn Daily for Fuel Subsidy

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By Adedapo Adesanya

Some Nigerians have started to express anger over the disclosure by the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, that the sum of N18.39 billion is used by the federal government daily to pay for fuel subsidy.

Speaking during an investigative hearing of the House of Representatives ad hoc committee looking into the petroleum subsidy regime between 2017 and 2021, the Minister revealed that, “The total amount of subsidy per day is N18.397 billion per day.”

“So, if you are projecting for the full year, it would be N6.715 trillion. If you are projecting for half year, it would be 50 per cent of that,” she informed the lawmakers.

According to the Finance Minister, this was calculated using the information provided by the Nigerian National Petroleum Company (NNPC) Limited and the regulator, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).

She said the information showed that 64.96 million litres of fuel are the projected average daily truck out, adding that N1.774 trillion was paid to independent oil marketers as subsidy in four years.

Aside from the increasing cost of petrol importation, economic and energy experts have continued to decry the rising cost of fuel subsidy by the federal government.

In January, the federal government said it will retain fuel subsidy indefinitely and amended the 2022 budget to provide funds for that purpose, a move that saw the provision jump over 800 per cent to N4 trillion.

Mrs Ahmed, at that time, said the government realised that the timing of the planned removal of the petrol subsidy was problematic and would worsen the suffering of Nigerians.

According to her, all payments on fuel subsidies were supposed to cease from July 2022 but, “subsequent to the passage of the [Finance] Act, we went back to amend the Fiscal Framework that was submitted to the National Assembly to incorporate this demand, but after the budget was passed we have had consultations with a number of stakeholders.

“It became clear that the timing is problematic, that practically there is still heightened inflation, and also removal of subsidy will further worsen the situation, thereby, imposing more difficulties on the citizens, and Mr President clearly does not want to do that.”

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Economy

Naira Exchanges at N694/$1 in Peer-to-Peer FX Segment

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Nigerian Naira

By Adedapo Adesanya

The Naira depreciated against the United States Dollar at the Peer-to-Peer (P2P) window of the foreign exchange market on Thursday by 0.32 per cent or N2 to sell for N694/$1 in contrast to the preceding day’s rate of N692/$1.

However, it closed flat against the greenback in the Investors and Exporters (I&E) segment of the FX market at N429.38/$1 amid a slump in the value of transactions at the ecosystem.

According to data from the FMDQ Securities Exchange, forex transactions worth $63.30 million were carried out during the session compared with the $120.46 million reported a day earlier, indicating a decline by $57.16 million or 47.5 per cent.

But at the interbank segment, the local currency moved in the same direction on Thursday, appreciating against the British Pound Sterling and against the Euro.

It was observed that the domestic currency appreciated against the Pound Sterling by N1.72 to trade at N508.24/£1 compared to the previously traded rate of N509.96/£1 and against the Euro, the Naira gained N11.06 to settle at N420.83/€1 compared with the previous day’s N431.89/€1.

Also, in the black market, the domestic currency improved its value by N2 to trade at N678/$1 in contrast to the N680/$1 it was sold on Wednesday.

Meanwhile, in the cryptocurrency market, investors counted more losses as the appetite for the digital coins waned, with Shiba Inu (SHIB) dropping 9.9 per cent to sell for $0.00001343 and Dogecoin (DOGE) losing 8.4 per cent to close at $0.07429.

Cardano (ADA) depreciated by 8.1 per cent to settle at $0.4951, Solana (SOL) slumped by 6.2 per cent to sell at $38.30, Binance Coin (BNB) slid by 5.0 per cent to close at $291.64, Ripple (XRP) depreciated by 3.7 per cent to finish at $0.3616, Litecoin (LTC) went down by 3.0 per cent to quote at $58.99, Bitcoin (BTC) recorded a 2.5 per cent drop to end at $22,818.66, while Ethereum (ETH) retreated by 1.5 per cent to trade at $1,817.11, with the US Dollar Tether (USDT) retaining its previous day’s value of $1.00 due to the strong performance of the US Dollar against other currencies.

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