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Balancing The Books …Nigeria’s Foreign Reserve, Debt Profile, Fate of the Naira
Rivers State Deputy Governor, Engr Tele Ikuru (left) chatting with the Secretary to the State Government, Mr George Feyii, during the Children’s Day celebration at Isaac Boro Park, Port Harcourt, yesterday
The Economic growth of any nation depends on many variables some of which are its balance of trade, sound export base and value of its currency. Tthe health of Nigeria’s national foreign reserve, its capital market, debt profile and the value of the naira are negative indicators bound to have profound effect on the growth of the economy.
These fearful indications point to a less than favourable economic climate. The drop in the foreign reserve, near collapse of the Nigerian capital market and the debt profile present a bleak economic scenario..
According to a recent Central Bank of Nigeria (CBN) report, the reserves which peaked at $62.24 billion by mid-May 2008 dropped to $35.66 billion last week, the lowest in over four years. Such depletion should and indeed have far-reaching adverse effects on the economy especially if not tied to specific projects intended to develop infrastructure.
With unemployment so rife, armed robbery and kidnapping assuming frightening heights by the day and excessive spending by government leading to near exhaustion of the Excess Crude Account (ECA) standing at about $500 million down from $20 billion in 2007 there is need to worry.
The CBN is expected to regulate this spending which is fuelling inflation and make its numerous policies impact positively on the economy.
Clearly, the depletion of the foreign reserves may lead to the depreciation in the value of the local currency which can equally send warning signals to Nigeria’s trading partners. Already, the Naira is very weak against other major international currencies.
As at 17th May 2012, one US dollar exchanged for 158.9 Naira, while, one British Pound exchanged for 253 naira. Yet the CBN has said it does not intend to devalue the Naira even as the currency dropped to its lowest level in 13 months, last week.
CBN governor, Lamido Sanusi at a meeting of the Monetary Policy Committee (MPC) in Abuja earlier in the month said: “The Committee would continue to monitor developments in the market to ensure that measures are taken to eliminate speculative demand and exchange rate volatility.”
Analysts have however blamed the drop in the value of the Naira on the huge demands which were not met by the Central Bank.
In the face of the depleted foreign reserves and weakness of the Naira, the capital market which is expected to drive investment and economic growth is virtually prostrate, felled by all manner of market abuses.
These abuses are currently being unearthed at the on-going House of Representatives Ad-hoc Committee probe into the near collapse of the Nigerian Capital Market.
Already, there have been revelations of infractions in share buyback, misrepresentation in returns to the regulatory body – Securities and Exchange Commission (SEC) among numerous others.
It was also revealed that about 440 wonder banks defrauded the unsuspecting public of nearly 4,106 billion British pounds Sterling. All these have led to investor apathy and negatively affected the Nigerian Stock Market.
However, analysts have identified the granting of margin loans by banks, the failure of SEC and the CBN to carry out their regulatory duties and the non patronage of companies on the stock exchange as reasons for the crisis in the capital market.
To resuscitate the market on the part of sustainable growth and viability, they have called for a bail-out intervention of government as it did for the money market.
They fear that the Naira’s free fall will continue if the Central Bank fails to bridge the shortfall in its bi-weekly dollar supply to the wholesale Dutch Auction system (WDAS).
Rather than boost exports as is the case with China and India, the Naira’s depreciation against major international currencies appears to be having the opposite effect largely because of the nation’s high appetite for foreign goods while having low capacity in the production of industrial goods.
Again, the increasing theft of crude oil means that the international oil companies operating in Nigeria have not had much to sell, of late. And with the recent drastic drop in the price of the commodity, it follows that they too would have been hit by low dollar income which translates to shortage in supply of the currency at the foreign exchange market.
To curtail the nation’s dependence on food imports and with it reduce the demand for foreign currency which in itself exerts so much strain on the Naira, Dr. Ngozi Okonjo-Iweala advises the nation to diversify: “We need to diversify the economy itself into sectors such as agriculture, where we have a strong comparative advantage.
I think Nigeria should not even be importing most of the foods it currently imports. We spend about $10 billion a year on food imports that we could grow, like rice, fish, sugar, and wheat for bread. Actually, we do not grow wheat very well, but we can substitute cassava flour for wheat flour. If we pursue the development of these sectors, then we will create jobs and we will diversify”.
Analysts also called for the listing of multi-national oil and telecommunications companies either through legislation or persuasion in order to make the capital market stronger while encouraging more indigenous companies to be listed in the stock exchange.
These voices also called for proper funding of the SEC so as to carry out its regulatory functions. They argue that a situation where SEC is partly dependent on those it regulates for financial survival has the tendency of compromising its regulatory functions.
It would be recalled that a former Director-General of the Nigerian Stock Exchange (NSE), Prof. Ndi Okereke-Onyurke, had during her presentations before the House of Representatives’ Ad-hoc committee on the crisis in the Nigerian capital market said “the half hearted intervention in the stock exchange by NSE has kept the market comatose.” She said SEC was collecting 0.3 percent from NSE’s operational charges.
However, the management of the nation’s debt profile has remained encouraging and the Debt Management Office (DMO) deserves commendation for good service delivery since it was resuscitated in 2000.
As at the end of March 2012, Nigeria’s total debt stock was N6.8 trillion ($44 billion) out of which N5.96 trillion ($38.3 billion) is domestic debt while N919 trillion ($5.9 billion) is external.
It would be recalled that in 2005 Nigeria paid off most of the $30 billion external debt it owed the Paris and London Club of creditors and in the process reduced its debt to Gross Domestic Product (GDP) ratio from 52 percent to less than 7 percent.
The DMO had in 2003 also set in motion the process to restructure Nigeria’s domestic debt portfolio, with the objective of lengthening the maturity of the instruments and deepening the government bond market.
As commendable as these initiatives are, government may have to watch the crowding out effect of the private sector that occurs when it borrows at an average yield of 15 percent. This makes it impossible for private sector companies to issue corporate bonds at a sustainable interest rate since those bonds are priced off the Federal Government bond benchmark.
The high interest rates that FG bonds attract have also led to the problem of the banks choosing to invest on these bonds rather than perform their primary role of financial intermediation in the economy through the provision of credit to private sector operations, small and medium enterprises and consumers.
Another thing to watch is the escalating cost of servicing domestic debt. The Federal Government’s budget for domestic debt service in 2012 is N559.6 billion, leaving less money for infrastructural and other needs. Government should be transparent by letting Nigerians know what each borrowed fund was and is to be used for.
The management of the nation’s economy can only make sense to the masses of the country when they begin to see improvements in the value of the naira, better debt management and a vibrant capital market anchored on a healthy foreign reserve.
As Nigerians hope, pray and look ahead to a better economy, more responsive fiscal management, job creation under a vibrant democratic culture in the years of the President Goodluck Ebele Jonathan Presidency, the Minister of Finance and co-ordinating Minister for the economy Dr. Ngozi Okonjo-Iweala must domesticate her world-class financial management expertise which made her the toast of the world for the World Bank Presidency and ensure that the Nigerian economy thrives.
Lilian Peters
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DEPLOY YOUR CAPACITY, TECHNICAL KNOWHOW TO REVITALISE SONGHAI FARMS, FUBARA TELLS TASK FORCE
Rivers State Governor, Sir Siminalayi Fubara, has said that diversifying the economy of the State has become inevitable because of the need to solve the problem of food shortages while also providing jobs for the teeming unemployed youths.
These, he said, are the reasons why great care has been taken to critically look at the prospects of revitalising the Songhai Integrated Farms, which is located in Bunu Tai, in Tai Local Government Area of the State.
Governor Fubara insisted that if the problem associated with food shortages is tackled with good intent and purpose, about 40 to 50 percent of current problems of economic hardship plaguing the country and its people would have been solved.
Governor Fubara made the assertion while inaugurating the Chairman, Mr Biedima Oliver, and members of the task force saddled with the responsibility of supervising the revitalization of Songhai Integrated Farms by its partners: Vitalcrop Ventures Limited and Imagine Adama Limited, at Government House in Port Harcourt, yesterday.
Other members of the task force included, the Rivers State Commissioner for Agriculture, Engr Victor Kii; Commissioner for Finance, Barrister Emmanuel Frank-Fubara; Dr Ayebaesin Beredugo; and Mr Maurice Ogolo.
The Governor explained that it took him time to approve the constitution of the task force being inaugurated because of the ugly experience with the previous group that shown such interest.
Governor Fubara stated that a process was initiated and driven halfway into the handing over of Songhai Farms on concession to an interested partner who latter showed a total lack of the needed capacity to undertake such task.
He said, “As a matter of fact, if few of you could remember, we even conceded the place to an investor who came in after he had made his presentation, and we, believing that he has the capacity, we said okay to him, and we had already signed up.
“But something happened. He came back to tell us that he wanted us to give him a N5billion bank guarantee. We then asked him, why? If we have the N5billion, why do we need you to come and even revitalize Songhai Farms? We would have put that N5billion there ourselves. For that reason, we cancelled that arrangement.”
Governor Fubara said now that two separate companies have come together to indicate interest and given the assurance of having the needed capacity to drive the process, he is delighted to see them meeting that expectation.
Governor Fubara pointed to the expectation of the people who want to see the Songhai Farms back on stream on a sustainable basis.
That expectation, he insisted, is also what his administration wants to see actualised within its lifespan.
He noted, “We want to see food sufficiency, because we know when Songhai Farms comes on board, there will be food, which is one of the problems we are having in this country. If we are able to tackle the issue of food, 40 to 50 percent of our problem will be solved.”
Governor Fubara also stated that although he believes in the presentation made by the group and has taken their assurance to heart, but warned that he would not tolerate a repeat of what happened before.
The Governor said, “I hope your story will not be (end) halfway too. I hope you have the capacity and all the technical knowhow to handle it. It is not when we start now, after we had finished inaugurating the task force, you will come back to tell us that you need $2million. If we have $2million, we won’t need you. We will invest it by ourselves.”
Governor Fubara, however, praised the capacity of the Chairman of the task force, Biedima Oliver, saying that incidentally, he was one of the personnel that convinced the then administration to develop the Songhai Farms, and had worked with the Rivers State Sustainable Development Agency (RSSDA) to manage the project.
He said, “He knows and understands the workings of Songhai, and now that we are making you the chairman of the task force, we want to believe that you will make that place come back to life.
“I don’t have any doubt in your capacity. A few things you’ve touched, you turned them to gold. Please, bring it back to what we used to see in Songhai. Bring it back with the help of your committee.”
Governor Fubara assured that his administration will remain committed to providing all the necessary support that they may require to make their assignment a success.
He added, “So, I hereby inaugurate you. Your task is very simple: Do everything within your powers and with our support to make sure that Songhai becomes operational to the benefit, not just the people of Tai, but to the entire Rivers State and Nigeria as a whole”.
In his acceptance speech, the Chairman of the Task Force to Supervise the Revitalization of Songhai Farms with Vitalcrop Ventures Limited and Imagine Adama Limited, Mr. Biedima Oliver, expressed appreciation to Governor Fubara for the opportunity and confidence reposed in them to revive Songhai Farms.
Mr. Oliver assured that they will deliver the expected goal on Songhai Farms, and doing so on time and on target so that the good people of Rivers State can eventually be happy and also benefit from the huge investment.
Rivers State Governor, Sir Siminalayi Fubara, has declared that all the policies and programmes of his administration are tailored towards the protection of interest of Rivers people, especially the youths.
This, he said, is borne out of the importance his administration attaches to youths’ development and empowerment as leaders of tomorrow.
Fubara, according to a statement by his Chief Press Secretary, Nelson Chukwudi, disclosed this when he received the youths of Emohua Local Government Area under the auspices of “Emohua Youths For SIM” on solidarity visit to Government House, Port Harcourt, last Friday.
He said that his administration has put in place modalities that will boost the livelihoods and well-being of Rivers citizens, which youths of Emohua will also benefit when they materialise.
The governor, who spoke through the Rivers State Head of Service, Dr. George Nwaeke, pointed out that the recently awarded Elele-Omudiaga-Egbeda-Ubimini-Ikiri-Omoku Road, the ongoing Emohua-Kalabari Road, reinstatement of illegally sacked workers of Emohua Local Government Area and the approval for electrification of the area, are part of deliberate measures to open up the area to make life conducive and more meaningful for the people.
According to him, “Everything about the governor is putting the interest of Rivers State first. He is looking at and taking action on those things that we need to do to restart the wheels of progress in Rivers State.
“There are many things the governor has planned and is already doing that will boost the life and welfare of every citizen of Rivers State, but most importantly the youths.
“Growing up, I learnt that Egbeda is one of the biggest communities in the whole of Ikwerre, and it’s predominantly an agrarian community. They have food in Egbeda, they have food in Ubimini, they have food in Omudiaga and other natural resources. The whole world is tilting to agriculture, and this is the way to go.
“The Elele-Umudioga-Egbeda-Ubimini-Omoku road, when completed, will open up the area for real development. Your food and everything you produce there will now have value, they will no longer be thrown away. In all these, you the youths are going to be the utmost beneficiaries.”
He added, “Same will be applicable to the Emohua-Kalabari Road which will also, trigger development in the area, and you will be the greatest beneficiaries. When the LGA is also electrified, you will be having 24 or 20 hours of electricity, and those things the youths can do with electricity, you can stay at home and create wealth for yourself and children.
“All the totality of what the governor is doing, when they are completed, or even as some are completed now, the youths are going to be utmost beneficiaries.”
While acknowledging that youths are the true leaders of tomorrow and any government that fails to carry them along in the scheme of things is doomed to fail, the governor assured them of his administration’s commitment to always address issues concerning youths and ensure that they are part of his government.
He commended the youths for toeing the path of truth by identifying with his administration, urging them to sustain the tempo and shun evil, as his government will ensure that the trend whereby politicians turn youths to beggars are over.
He said, “Youths are, indeed, the leaders of tomorrow. The time of youth is a very important time. It a time that your parents or whoever is your leader at that time have to make the greatest investment in you. And any Government that decides to only carry the elderly, chiefs aling and abandon the youths is bound to fail,” he asserted.
“But I am happy that Governor Fubara has concentrated his energy on everything that will benefit the society, especially the youths.
“And based on these, I want to thank you for recognising what is good and calling it good, for shunning what is evil, for saying the Governor is standing for you.
“Let me tell you, you are on the right direction. Let me tell you again, Rivers State is the bride of Nigeria. The whole Nigeria is looking at what will happen here. As they look here and see you standing on the path of truth, this is a very important step that you have taken to right all the wrongs of the past, to make Rivers State stand on the tripod of justice, peace and security. That is what we are going to gain through the governor, taking all the wise actions that he has already initiated.
“The projects the governor is embarking on are meant to prepare nets for the youths to fish and put food on their table, hence you should continue to follow him.
“The SIMplified Movement brought upon by the governor will ensure that Rivers youths stop the habit of going to bow down before politicians, pledging loyalty before they can eat.”
Earlier, spokesman for the Emohua Youths for SIM, Comrade Ovamale O. Ovamale, had said that the visit by youths from the 14 political wards in Emohua Local Government Area was to thank the governor for the award of the Elele-Omudiaga-Egbeda-Ubimini-Ikiri-Omoku road, the approval for electrification of the area and reinstatement of sacked workers of Emohua Local Government Council, of which the youths were mostly affected.
According to him, “Siminalayi Fubara of recent has given Emohua Local Government road that links Elele to Omoku, which comprises over four communities in the local government.”
“Emohua Local Government has also been in darkness for eight years. No community in the local government that has light. But, of recent, because of the passion and love the governor has for the people of Emohua, he has approved the electrification of the local government.
“Also, the illegal sack of Emohua Local Government workers, for which the youths were mostly affected and without the approval of the Local Government Service Commission, the governor, in his compassionate nature, has reinstated them, and that is why we said we must come and thank His Excellency”, he said.
Rivers State Governor, Sir Siminalayi Fubara, has assured that his administration will collaborate and continue to consult widely in delivering a liberated State experiencing enduring peace.
Fubara said, in doing so, he would not operate as a dictator but as a member of a team that has the best interest of the State at heart and determined to leave a lasting legacy that can be celebrated.
The governor spoke during the formal presentation of Certificate of Recognition and Staff of Office to the Amanyanabo of Okochiri Kingdom, King Ateke Michael Tom, as first class tradition ruler, at Government House in Port Harcourt, yesterday.
Fubara stated that, during the Sixth State Executive Council meeting, N80.8billion was approved with 50 percent contract value paid already as the Government awarded the construction of the Elele-Egbeda-Omoku Road.
He said the project will be funded from the savings from Internally Generated Revenue (IGR) to underscore his administration’s prudence without also borrowing to complete the project.
“We are at a crossroad in our State where we all need to stand for what is right. It happens once in a life time. So, for now, be one of those people that will be in the course to liberate and free our dear State.
“And I know strongly that having the support of a peace-loving Amanyanabo of Okochiri Kingdom, having the support of the wonderful Council of Chiefs, having the support of the great people of Rivers State, we will bring peace in our State. We will do those things that are right to develop our State.
“We will continue to consult. We will not act as dictators. We will act as people who know that one day, we will leave, and when we leave, the way we have acted will speak for us. We will not force people to talk good about us. Our legacy will be a signature for how we led”, the governor said.
Fubara explained that he acted within the ambit of the law to upgrade the traditional stool upon which King Ateke Tom sits in recognition of his efforts in promoting peace in Okrika, and indeed, the State, and urged him to continue to do justice to everyone.
In his speech, Commissioner for Chieftaincy and Community Affairs, Hon Charles Amadi, congratulated King Ateke Tom for being formally presented with the Certificate of Recognition and Staff of Office as first class traditional ruler.
Also speaking, former Transport Minister, Chief Abiye Sekibo, thanked the governor for fulfilling his promise of upgrading the traditional stool of Okochiri Kingdom, and pledged the support of Kirike Se people to his administration.
