FEATURES
Floating the Naira Before it Sinks
By Uddin Ifeanyi
One of the more telling pieces of conversation that I have been privy to around the economy’s foreign exchange woes is from a friend regaling me with dialogue he had late last year with the “Mallam” from whom he buys dollars on the parallel market.
Having lost much hope in the naira as a place to salt away his wealth, he begun actively buying the greenback a few years back. Sometime in November 2021, he asked his agent to source US$2,000 for him.The agent’s reply, “But, Oga, the thing too cost” was as instructive, then, as was my friend’s response: “Buy am, jo. You been tink say this people sabi wetin dem dey do?” My friend was so sure that the naira will exchange at US$1:N600 by year end 2022.
It was US$1:N470 when this transaction was consummated.In the debate between those who are calling for the naira’s free float and those who defend the current managed float arrangement, it is this aspect of the exchange dynamics that is to the front and centre. So long as the naira has more than one price, it will continue to support arbitrage activity ― putting up costs without delivering corresponding gains to domestic economic actors.
Besides, in combination with rampant domestic inflation, the gap between the naira’s official and parallel market prices will continue to make it difficult to store value in the local currency. Then, there is the pressure on the balance on the gross external reserve, as the central bank struggles to keep the rate in the official market policy-bound.
But by far the biggest test posed by pegging the naira’s exchange rate is that it messes up with the relationship between domestic prices as a tool for allocating resources.
Ordinarily a change in relative prices signals changes in consumers’ preferences for goods and services, all other variables remaining the same. In the same extent, these price indicators drive the direction of investment, with pricier goods and services (implying juicier returns on investment) getting first dibs on new money.
A managed float, such as we currently run, distorts this process ― reflecting the policymaker’s understanding of the balance between relative prices, rather than where the market would have it. It is small wonder, therefore, that capital importation into the country has continued to fall every year since 2019, with the foreign direct investment component the worst hit.
This does not mean, though, that defenders of our current managed exchange rate arrangement are just crying “Wolf” when they say that a float might see the naira’s exchange rate all over the floor ― with severe implications for the economy’s cost profile. In part, that is one consequence of the long term absence of “macroeconomic reasonability” in our husbandry of the domestic economy.
Much of the success of macroeconomic policy making is about the forward guidance provided by policymakers and the expectations that these then anchor in the markets. In the Nigerian incidence, it is not just that both these ingredients are absent. It is that the resulting stew is full of perverse incentives. The zero-bound interest rate policy for instance is an invitation to dollarise domestic savings that has not, in spite of its best intentions, meaningfully boosted output growth.
These connectedness between different parts of the economy mean that if the naira’s exchange rate will become market-determined at some point, it can only be part of a clearly thought through and coordinated set of reforms to the economy. Of course, these reforms will, at the monetary policy space, include understanding the level at which interest rates help keep inflation down while supporting full employment. It will then require that this be marked up by the rate of core inflation.
Beyond this, however, root-and-branch changes will have to be made to the public expenditure management process. Improvements in governments’ revenue generation (without further crimping businesses ― widening the tax base and walking back on easy to collect but regressive taxes like VAT) will top the list, here. Followed by improvements in the efficacy of governments spending. It will help that leakages and graft are plugged and reduced, if not eliminated. But it will matter more that the return on government spending rises.
These should see deficits drop to levels both more manageable and consistent with the economy’s needs. The portmanteau of reforms that will support a floating naira would also require that the policymakers’ bulimia for borrowing is aligned with the economy’s capacity to absorb such inflows.
Much of the changes required, therefore, to enable the naira float freely are the same ones required to fix the economy. They are changes that have to be initiated from the fiscal side, particularly reforms to the economy’s structure: how it is resourced; the nature and efficiency of its conversion processes; what it produces; and the markets it sells into. It matters, then, that the current government’s borrowing, especially when you include the large ways and means component from the central bank has been implicated in unstable and rapidly rising prices.
We must agree a process to rein this in, including putting in place a process for determining the federal government’s medium-term capital expenditure need, and capping the annual public expenditure borrowing requirement at a proportion of this. On its own, an increase in government spending is not necessarily all negative. Combined, though, with a central bank that is subordinate to the finance ministry and a large budget deficit it begins to present adverse effects on domestic prices.
What does this mean for the ethos around central banking independence? The pandemic may have invited central banks across the world to cross red lines in the financing of their domestic economies, but it is a fair bet that the restraints in the CBN Act on the monetary authority’s ability to monetise the fiscal deficit still make sense as we seek to transition to a private sector-led, market-based economy.
Uddin Ifeanyi, journalist manqué and retired civil servant, can be reached @IfeanyiUddin.
For decades, the narrative around Gender-Based Violence (GBV) has been dominated by the plight of women, with men often portrayed as the perpetrators.
However, the story of John Adegoke, a 35-year-old father of two, tells a different side of this issue.
On one fateful night, Adegoke’s wife became enraged, and the situation regrettably turned violent, leaving him with a broken arm and a shattered sense of self-worth.
“I felt so ashamed and embarrassed.
I didn’t know where to turn or who to talk to. I felt like I was all alone,” he recalls.Adegoke is not the only man with such an experience.
Similarly, Michael Osunbor, a 28-year-old entrepreneur, found himself a victim of abuse.
Osunbor’s partner was emotionally and verbally abusive, constantly belittling him, calling him names, and threatening to leave.
“I felt like I was walking on eggshells around her. I never knew what would trigger her anger. I felt like I was losing myself in the relationship,” Osunbor recounts.
Both Adegoke’s and Osunbor’s stories are not isolated incidents.
In fact, according to the World Health Organisation (WHO), one in six men will experience some form of GBV in their lifetime.
Furthermore, a study by the National Demographic and Health Survey (NDHS) in Nigeria revealed that 16 per cent of men reported experiencing physical violence, while 12 per cent reported emotional violence.
In spite these alarming statistics, male victims of GBV often face significant barriers when seeking help.
Societal norms surrounding masculinity make it difficult for men to admit they are victims.
Consequently, many feel ashamed or embarrassed and may fear being perceived as weak.
Mr Sulaiman Abaya, a renowned legal practitioner, says that men also suffer domestic violence, which can take psychological, economic, or physical forms.
However, he laments the lack of recognition and support for male victims of GBV.
“Even international conventions, protocols, and charters, which are domesticated locally, focus primarily on women as victims, with little emphasis on men. This is the root of the skewed narrative,” Abaya observes.
He further explains that men are socialised to appear strong and stoic, which often discourages them from seeking help.
This stigma, in turn, leads to a lack of support services tailored to male victims.
The consequences of this silence, according to human rights advocates, can be devastating.
Male victims of GBV are more likely to suffer mental health challenges such as depression and anxiety.
Moreover, they may turn to risky behaviours, such as substance abuse, as a coping mechanism.
Dr Rosemary Smith, a human rights activist, expresses these sentiments.
She notes that societal perceptions of masculinity often force male victims to suffer in silence.
“Men who experience GBV are often left without access to the support services they need.
“This can have serious consequences for their physical and mental health, and it perpetuates a cycle of violence and silence,” she says.
Smith emphasises the need to break down the stigma surrounding male victims and dismantle stereotypes about GBV.
To achieve this, she calls for inclusive support services that address the unique needs of both men and women.
“We need to create a safe and supportive environment where men feel comfortable coming forward and seeking help.
“This requires a fundamental shift in the way we think about GBV and recognition that men can be victims too,” she explains.
Abaya suggests that collecting data on GBV against men is critical.
In addition, he advocates for robust campaigns to raise awareness and encourage men to report cases of abuse.
“Human rights agencies should begin to recognise men’s rights. There could even be dedicated platforms, such as Facebook pages, for reporting GBV against men.
“Similarly, support systems should be put in place to help male victims,” he recommends.
In addition to providing support, Mr Samuel Chukwu, a Benin-based family adviser and counsellor, underscores the importance of addressing the root causes of GBV.
He highlights the need to challenge societal norms around masculinity and power.
“We need to challenge the societal norms that perpetuate GBV and promote a culture of equality and respect.
“This requires collective efforts from the government, civil society, and individuals,” Chukwu says.
He also identifies counselling, advocacy, and other tailored forms of support as essential measures to address the issue and help victims heal.
Similarly, Mrs Christy Ipinlaye of the Olive Foundation stresses the importance of awareness.
According to her, public campaigns, community outreach, and education are key to breaking the stigma and encouraging men to report cases of abuse.
As the world concludes the 2024 16 Days of Activism Against GBV, it is vital to remember the often-overlooked victims of this societal menace.
By breaking down the stigma and providing tailored support services, society can move closer to a world where everyone lives free from violence and fear. (NANFeatures)
Years after it went comatose, the Port-Harcourt Refinery rose up from ‘death’, courtesy of the seriousness attached to the all-important plant by its owners, the Nigerian National Petroleum Corporation Ltd. (NNPCL).
Little did stakeholders anticipate such a milestone could be swiftly achieved, boosting Nigeria’s domestic refining capacity.
After years of delays, maintenance challenges and rising dependency on imported refined petroleum products, the inauguration of the plant promises to be a potential shift in the country’s fuel supply dynamics.
While the government and industry stakeholders have lauded the achievement, the re-establishment of the operation did not go without hydra-headed challenges.
The Port-Harcourt refinery comprises two units, with the old facility capacity of 60,000 barrels per day (bpd) and the new plant, 150,000 bpd, both summing up to 210,000 bpd.
The refinery was shut down in March 2019 for the first phase of repair works after the government secured the services of Italy’s Maire Tecnimont, to handle the review of the facility with the oil major Eni as technical adviser.
In 2021, NNPCL announced the commencement of works at the PHRC after the Federal Executive Council (FEC) approved $1.5 billion for the project.
In December 2023, the government announced the completion of the mechanical and the flare start-off, one of Nigeria’s oldest and most critical facilities, inaugurated to reduce dependency on foreign refineries.
With the capacity to process over 210,000 barrels of crude oil per day, the refinery is expected to significantly boost local production of petroleum products, including petrol, diesel and kerosene.
In a landmark move, NNPC Ltd. officially began production at the facility, signaling a return to active refining operations after years of dormancy and extensive rehabilitation work.
The christening on Nov. 26, was attended by major stakeholders: government officials and industry experts, all of who expressed optimism about the refinery’s potential to enhance domestic fuel supply and job creation.
While the inauguration is a monumental achievement, the journey to full operational capacity has not been without its noticeable hiccups.
Reports indicate that there are still several operational and logistical challenges facing the refinery, including issues with the supply of crude, infrastructure inadequacies and technical glitches.
Also, there are concerns about the refinery’s ability to operate at full capacity consistently, as its systems have suffered from years of underinvestment.
The prolonged downtime and intermittent operations have raised doubts about whether the refinery can contribute meaningfully to meeting Nigeria’s domestic fuel needs without delay.
Though the refinery’s management has acknowledged some of the identified setbacks, yet, it remains committed to resolving the issues in the short-term to avoid further disruptions.
In spite of the challenges, stakeholders within Nigeria’s oil and gas sector including Dr Ayodele Oni, a Partner at Bloomfield Law Practice, notes the reopening is a positive step towards addressing the nation’s fuel supply crisis.
Oni says the Port-Harcourt’s production is expected to significantly reduce the nation’s dependence on imported fuel, which has long been a source of concern due to the foreign exchange burden and the fluctuations in international oil prices.
According to him, for Nigeria’s local refineries, the Port-Harcourt refinery holds the promise of reducing astronomical price of fuel imports, by ultimately saving the country’s billions of dollars annually.
It is also anticipated to create thousands of jobs, both directly and indirectly through the supply chain, from transportation to distribution.
Mr Mike Osatuyi, a former National Operations Controller of the Independent Petroleum marketers Association of Nigeria (lPMAN), says by the inauguration, the refinery is expected to contribute to Nigeria’s energy security by bolstering its refining capacity.
Osatuyi says this shift can pave the way for more refineries to return to full capacity and help Nigeria meet its increasing energy demand.
According to him, the refinery’s operational success could drive the government’s push for improved infrastructure in the downstream oil and gas sector, thereby creating a more self-sufficient and sustainable energy ecosystem.
“Local businesses and citizens stand to benefit from a more stable and reliable supply of fuel, which is crucial for everyday activities and economic growth.
Also, industry observers, according to him, will be quick to predict that an efficient, fully operational Port-Harcourt refinery can lead to reduction in the country’s fuel scarcity which has led to long- queues at filling stations and rising fuel prices.
An energy expert, Mr Salisu Danjuma, explains the corporation’s assignment should not end with the Port Harcourt Refinery alone.
Danjuma notes the corporation has laid out plans to increase its capacity with the completion of the Warri and Kaduna refineries, as well as enhancing the operations of the Port Harcourt plant.
He believes the goal is to make Nigeria a net exporter of refined petroleum products, reducing the country’s dependency on imported fuels while creating a robust energy sector that can support both domestic and international demand.
According to him, while the current phase of the Port Harcourt refinery’s operations is a positive indicator of progress, NNPC Ltd. still faces the task of addressing its operational challenges and ensuring long-term sustainability.
“The government has committed to investing in more capacity expansion and technology upgrades to modernise the country’s refineries.
“The commissioning of the Port Harcourt Refinery is undoubtedly a significant step for Nigeria’s oil and gas sector, with the potential to reduce the country’s fuel import bill and improve domestic fuel supply.
“While the refinery’s operations face some initial setbacks, the initiative is hailed by stakeholders as a critical move toward enhancing the nation’s energy security, boosting economic growth, and creating employment opportunities.
“Moving forward, the full success of the Port Harcourt Refinery will depend on the NNPC Ltd.’s ability to tackle its current operational challenges, ramp up production and create a stable and efficient refining ecosystem.
“If these obstacles are overcome, Nigeria could see a transformative shift in its energy landscape, reducing its reliance on imports and promoting self-sufficiency,” he added.
Reacting, the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), acknowledged the support of President Bola Tinubu, as well as the collaborative efforts of the NNPCL Board and contractors for the successful hauling of the facility.
Its President, Mr William Akporehe, and General Secretary, Mr Afolabi Olawale, described the commencement of the crude oil processing and the dispatch of petroleum products from the refinery as a landmark achievement that resonates with the aspirations of Nigerian citizens.
The union declared that the achievement demonstrated by NNPCL’s commitment to the country’s sustainable economic growth cannot be over-emphasised.
It commended the Group Managing Director of the corporation, Mele Kyari, for steering PHRC’s rehabilitation to completion, despite numerous challenges.
Nigeria owns four refineries: two in Port Harcourt and one each in Warri and Kaduna; but they have been moribund for years despite the Turn-Around-Maintenance (TAM) efforts.
The moribund state of the local refineries pushed Nigeria to depend solely on the importation of petroleum products for domestic use for several years, constituting a major drain on the nation’s foreign reserves.
For decades, successive administrations moves at reviving the nation’s refineries to reduce dependency on petrol importation failed.
In 2015, former President Muhammadu Buhari pledged to optimise those performing below capacity and boost foreign reserves by halting importation of refined fuel.
In November 2018, that administration scheduled December 2019 as the terminal date for three of the refineries to attain full production capacity to end petroleum importation and later shifted same to 2020.
Though, while the 2020 deadline was not realised, the government had spent N10.23 billion as at June 2020 on three of the refineries which processed zero crude.
By May 2023, the Federal House of Representatives Ad-hoc Committee on the state of refineries in the country made a disclosure that the federal government had spent over N11 trillion on the rehabilitation of the refineries between 2010 to 2023.
Just August 2023, President Bola Tinubu assurance that the PHRC would become functional by December after numerous failed attempts is now a reality.(NAN)
Nigeria’s solid mineral sector, which was once crucial to the nation’s economy, lost that recognition immediately the nation found oil.
But, with the decreasing oil revenue, the President Bola Tinubu-led administration is revitalising the solid mineral sector and developing its infrastructure to attract foreign investments.
According to the Minister of Solid Minerals Development, Dr Dele Alake, the sector is being repositioned as a major driver of the nation’s economic growth.
As the minister strives toward achieving this goal, critical stakeholders in the industry have emphasised the need to sustain the efforts to meet the goal of diversifying the economy.
One such stakeholder, Mr Mikali Mumuni, believes that the sector has the potential to significantly create wealth and numerous employment opportunities.
Mumini, the Managing Director of Miners Communication Limited, publishers of Miner Magazine, says that the sector is “too good to be ignored”.
“Today, it is dawning upon us that we can no longer depend solely on oil because of the vagaries of international oil market.
“It has become obvious that Nigeria is now earning less and less income from oil.
“Apparently, this is the reason why successive governments have been talking of diversifying the nation’s economic base.
“One of the easiest and surest way to do this is to refocus attention on the solid minerals sector.
“The sector has the highest capacity to create multiple employment opportunities for our teeming population, particularly the youth.
“Basically, the solid mineral sector has been long neglected because of the discovery of oil which made some public policy analysts argued that oil made the nation lazy.
“The reality is dawning on the nation that the holiday is over. It is time to face the reality,” he told newsmen recently.
Mr Abidoye Abiosun, Marketing Director of Miners Communication, while corroborating Mumini, identified lithium as one solid mineral that had gained global focus.
“From what I observed, the Nigerian government is prioritising the expansion and development of its lithium resources in the country.
“The idea is to generate power without polluting the environment.
“To the best of my knowledge, lithium is the major focus in the whole world and that is why, I think, the Nigerian government is really focusing attention on its expansion and development.
“When you are looking at the area of power generation without polluting the air, creating nuisance and ecological hazard, lithium is the safest,” he said.
Abiosun speaks further on the solid mineral.
“Lithium is also the mineral resource crucial to the production of battery used in the generation of solar energy and other similar products.
“With records showing that Nigeria has a very large deposit of lithium, it should be annexed, properly looked into, and tapped so that it would be a ready-made replacement and alternative to oil.
“Lithium is a versatile element with various applications. Lithium-ion batteries power electric vehicles, mobile devices and renewable energy systems.
“This is due to their high energy density and long lifespan.
“Lithium carbonate is used as a medication to treat bipolar disorder, depression and anxiety disorders.
“Lithium is also used in nuclear reactors as a neutron absorber and in nuclear fusion research.
“Lithium oxide is used to produce specialised glass and ceramics with unique properties. Lithium-based lubricants are used in industrial applications due to their high performance and resistance to extreme temperatures.
“It has long been established that lithium-ion batteries have a high energy-to-weight ratio, making them ideal for portable electronics and electric vehicles.
“This is just as lithium-ion batteries can be charged and discharged many times without losing capacity.
“Lithium carbonate also helps stabilise mood and reduce symptoms of mental health conditions.
“Lithium’s ability to absorb neutrons makes it useful in nuclear applications.
“Lithium-based materials have high thermal resistance, making them suitable for extreme temperature applications,” he explained.
Expectedly, stakeholders have lauded government’s efforts in taking steps to reactivate mining licences and address security concerns so as to make the sector more attractive to investors.
They note that Alake has launched the mineral resources database through which anybody that is interested in investing in solid minerals could access information on which part of the country he or she could get a particular mineral or the other.
The minister said recently that investors could express interest where such lies.
The government has also created the Mining Marshall to make the different mining sites safer for investors as well as miners.
Just recently, President Bola Tinubu gave a matching order to the armed forces to redouble their efforts at curbing illegal mining.
“This, to me, is a great assurance to investors in the mining sector,” Mumuni said.
For Abiosun, the renewed interest on the mineral resources sector by Alake and the Federal Government is commendable and must be supported.
“I think it is a very good step in the right direction,” Abiosun says.
Analysts have, however, said that there is the need to review mining licences as many had been issued but not activated.
“If the government is looking at generating employment through solid mineral and mineral resources in the country, all the mining licence that have been given out, need to be activated.
“Serious investors need to invest in the sector, start action and, at the end of the day, the unemployment rate in the country would have decreased.
“We look at majority of our youths that are at home unemployed; they will have areas in which they can be useful at the mining sites and other activities that are associated with mining in the country.
“I think the Federal Government is taking the right step in the right direction,” Abiosun says.
Stakeholders have also emphasised the need for specialised media coverage to promote and support the growth of the sector.
Mumini emphasises this.
“As journalists, it is our duty to ensure that we do not lower the bar of reportage of the sector.
“This is what forced some of us to come up with the idea of the Miners Communication outfit under which we currently have a monthly news magazine solely devoted to reporting the solid mineral sector.
“It is the only magazine that is doing that in the country. We have taken the lead and we are determined to consistently do this by highlighting the diverse and vast opportunities that abound in the sector,” Mumuni says.
Abiosun notes further: “This is an aspect of journalism that has not been looked into.
“The area is a growing sector and it is a genre that we need to encourage just the way the Nigerian government is trying to encourage the mineral resources industry.” (NANFeatures)
NDA Commandant Decorates Ombugadu, Others as Fellows of Solar Energy Society of Nigeria
ShareFrom Abel Zwànke, Lafia The 2023 gubernatorial candidate of the People’s Democratic Party (PDP) in Nasarawa State, His Excellency Rt....
Yuletide: Bode George Urges Tinubu to Reduce Petrol Price
ShareChief Bode George, a former Deputy National Chairman of the Peoples Democratic Party (PDP), has urged President Bola Tinubu to...
Tinubu Set for Groundbreaking of Renewed Hope City in Lagos
Share President Bola Tinubu, is set to perform the groundbreaking of 2,000 housing units of the Renewed Hope City in...
Gov. Alia Presents N550.1bn as 2025 Budget Estimate to Benue Assembly
ShareGov. Hyacinth Alia on Wednesday presented the sum of N550.1bn as the 2025 appropriation bill to the Benue State House...
Tax Bills: NASS will not Betray the Trust of Nigerians, says Akpabio
Share The President of the Senate, Sen. Godswill Akpabio, says the National Assembly will prioritise the interest of all Nigerians...
Alia Has Demonstrated Capacity, Courage to Entrench Good Governance—Speaker
Share The Speaker, Benue Assembly, Mr Hyacinth Dajo, has said that Gov. Hyacinth Alia has so far demonstrated capacity, courage,...
Investors Gain N183bn on NGX
Share The Nigerian Exchange Ltd. (NGX) continued its bullish trend on Wednesday, gaining N183 billion. Accordingly, the market capitalisation, which...
Energy, Solid Minerals Top Priority, Tinubu Tells German Businessmen
Share President Bola Tinubu, on Wednesday, assured the German government and businessmen of Nigeria’s preparedness to expand frontiers for investors...
Nigerian Who Wrote WASSCE 17 Times Bags Distinction from London School
Share Dr Emmanuel Ahmadu, a Nigerian who wrote the West Africa School Senior Certificate Education 17 times, has earned a...
INEC Staff Welfare Association Warns Members Against Manipulating Election Results
Share The Abia Chapter of the INEC Staff Welfare Association (ISWA) has warned its members to uphold the integrity of...