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PEOPLES DAILY, WEDNESDAY DECEMBER 21, 2022 BU$IN€SS

Naira depreciates further, exchanges for N750/$ at parallel market

The naira, on Tuesday, declined further against the dollar at the parallel section of the foreign exchange (FX) market, popularly called the black market.

A parallel market (black market) is an unofficial market for currencies which operates alongside the official market.

According to TheCable, Bureaux De Change operators (BDCs) at Alade Market in Ikeja, Lagos, quoted the naira at N750 to the dollar at the black market.

The figure represents a depreciation of N5 or 0.7 percent from the N745 it traded last week.

The black market traders put the buying price of the dollar at N735 and the selling price at N750, leaving a profit margin of N15.

“I can just say that demand has been moderate this week,” a trader identified as Abdullahi.

Since the suspension of trading information by abokiFX, Nigerians have resorted to street traders for current parallel market rates of the local currency.

Although the parallel segment is more accessible to traders and businesses who need FX, the Central Bank of Nigeria (CBN) has consistently maintained that it represents less than one percent of forex transactions and should never be used to determine the exchange rate.

On the official market side, the local currency closed flat against the dollar at N451.50 on Monday, according to information obtained from the FMDQ OTC Securities Exchange – a platform that oversees official foreign exchange trading in Nigeria.

Last week, Godwin Emefiele, CBN governor, spoke about the persistent shortage of foreign exchange to meet citizens’ needs.

He asked banks to come up with an action plan for boosting FX inflow from non-oil exports.

“We are in the business of servicing customers, and servicing customers also entails that they have import needs and they need foreign exchange to conduct their import activities,” Emefiele had said.

“To do so means that you need foreign exchange to service them. There is a clear shortage of foreign exchange today. But yet as bankers, we must meet the needs of our customers.

“The market is tight, and I know we don’t have a choice. We will have to do something to ensure that this problem is solved.”

Petrol scarcity: Local refining would eliminate delays at depots, reduce prices, say oil suppliers

The Nigerian natural oil and gas suppliers association (NOGASA) says the resumption of crude oil refining at the Port Harcourt Refinery Company (PHRC) will lower pump prices of petroleum products.

Benneth Korie, national president of the association, said this while speaking to journalists on Monday in Abuja.

Korie said once production resumes at the Warri and Kaduna refineries, prices of petroleum products will “go down on its own”.

He explained that prices will reduce because the gap between loading at refineries and importation would be closed.

This sentiment is premised on the assurances of Timipre Sylva, minister of state for

L-R: The President, Abuja Original Inhabitants Youth Empowerment Organisation (AOIYEO), Amb. Issac David, the Representative of CHRICED, Comrade Armsfree Ajanaku, The Project Manager AOIYEO, Comrade Bitrus Lawrence and a member of AOIYEO,. Sanha Hajaratu, during the Public Presentation of FCTOIs Charter of Demands, yesterday in Abuja. Photo: Justin Imo-owo

petroleum resources, that the Port Harcourt Refining Company (PHRC) would soon begin crude oil refining as it is being upgraded.

Korie said this would bring the total crude oil processing capacity of the PHRC to 210,000 barrels per day (bpsd).

“We have assurances from the minister of petroleum resources that the PHRC refinery will start working this December, definitely between now and end of January 2023,” he said.

“After Port Harcourt, other refineries including Warri and Kaduna will come up because work has been seriously going on there.

“Then you will see that prices of petroleum products will go down on its own because there is a difference between importation of products and loading from our refineries.”

Korie said the refinery, when operational, would blend automotive gas oil (AGO), premium motor spirit (PMS), jet A1, and other products.

He decried the cost of product distribution and delays experienced due to loading from depots, noting that once the refinery starts running, oil imports would stop and petroleum products would be loaded onto trucks directly from there.

“Formerly; trucks used to load from refineries but now paid vessels spend between 10 and 14 days to load product from depots as against one day. Marketers and transporters are suffering and sacrifice a lot in the bid to distribute products,” he said.

In March 2021, the federal executive council (FEC) approved $1.5 billion for the rehabilitation of the Port Harcourt refinery. The project, contracted to Tecnimont SPA, an Italian company, was to be executed in three phases of 18, 24 and 44 months.

In May 2021, the Nigerian National Petroleum Company (NNPC) Limited commenced the rehabilitation of the refinery.

Short transition period of naira redesign may affect economic activity, World Bank warns

By Abubakar Yunus, Abuja

The World Bank has warned that the timing and short transition period of the naira redesign policy may have negative impacts on economic activity.

The international financial organisation issued the warning in its latest Nigeria development update (NDU) report titled ‘Nigeria’s choice‘.

On Thursday, commercial banks began dispensing the redesigned N200, N500 and N1,000 notes to customers across the country.

Peoples Daily reported that the new naira notes were dispensed over-the-counter alongside the old ones in most banks.

But the old notes will cease to be legal tender from January 31, 2023, according to Central Bank of Nigeria (CBN).

Commenting on the monetary policy, the World Bank, in its report, said the phasing out of existing naira notes over a short time period may add to the challenges of poor households and small-scale businesses.

“The CBN announced on October 26, 2022, that it planned to redesign, produce, and circulate new series of Nigerian naira (N) 200, 500 and 1,000 notes (equivalent to roughly US$0.5, US$1, and US$2 at the official rate). The three notes are the highest denominations out of the eight legal tender notes in Nigeria,” the report reads.

“Following the launch of the new designs on November 23, 2022, the new currency notes are to be circulated from December 15, 2022, with both the new and existing notes considered legal tender until January 31, 2023. Thereafter, only the new notes will be legal tender.

“Bank charges on cash deposits have been suspended to facilitate the transition.

“While periodic currency redesigns are normal internationally and the naira does appear to be due for it, since naira notes have not been redesigned for two decades, the timing of and short transition period for this demonetisation may have negative impacts on economic activity, in particular for the poorest households.

“International experience suggests that rapid demonetisations can generate significant short-term costs, with small-scale businesses, and poor and vulnerable households, potentially being particularly affected due to being liquidityconstrained and heavily reliant on day-to-day cash transactions.

“At present, households and firms already face elevated financial pressures from prolonged, high inflation, recently compounded by external food and fuel price shocks, and the severe floods, and phasing out existing naira notes over a short time period may add to their challenges.”

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Nigeria needs $150bn annually to close infrastructural gap, says minister

Clement Agba, minister of state for finance, budget and national planning, says, based on the reviewed national integrated infrastructure master plan, $2.3 trillion is needed to close infrastructural gap in the country.

Speaking during the media parley in Abuja, Agba disclosed that the new master plan provided the roadmap for building a worldclass infrastructure that would guarantee sustainable growth and development in Nigeria.

According to Agba, the country has a $2.3 trillion infrastructural gap and plans to ensure that 70 percent of the infrastructure stock from the current 30 to 35 percent is closed by 2043.

The minister added that the plan also prescribes an expenditure of $150 billion annually to achieve this target.

He said his ministry, through the infrastructure department, had ensured an annual production of national infrastructure report to track the level of implementation and development on infrastructure across all sectors while also coordinating the review of the national road safety strategy (NRSS:2021-2030) to assist in the reduction of road accident fatalities on Nigerian roads.

Agba also said Nigeria’s budgetary processes were much more transparent and participatory now, as all stakeholders, especially the citizens, were carried along and enabled to make input into the processes.

The minister further said the country has been accepted into the membership of the Beneficial Ownership Leadership Group, a transnational body established to drive a “set of best practice disclosure principles”.

“Nigeria recorded its best performance in the open budget survey (OBS), scoring 45 percent in the latest 2021 survey for transparency, indicating an improvement by 24 points — a significant leap from the 21 percent achieved in the 2019 exercise,” Agba said.

“Our aspiration in joining the leadership group is to strengthen our international alliances towards a more seamless coordination for tracking illicit flows from Nigeria to anywhere around the world.”

Agba further said states across the country had begun to increase efforts to improve transparency and accountability in their governance processes.

He said 24 states out of 36 states and the Federal Capital Territory (FCT) in Nigeria had so far accepted the open government partnership, (OGP), and were making concrete commitments to develop a culture of transparency and accountability in the governance processes while empowering citizens to participate effectively in governance processes.

“Also, the Abuja Municipal Area Council has keyed into the open government partnership, making it the first local government to do so,” he added.

Speaking the progress made so far with the state employment and expenditure for results (SEEFOR) project (2014-2020), the minister said four states have been supported in Nigeria.

“This actually began before the inception of our administration but ended two years after I was appointed minister of state for budget and national planning. SEEFOR was a World Bankfunded project in partnership with the European Union, designed for four Niger Delta states of Bayelsa, Delta, Edo and Rivers,” he explained.

“The project involved a concessionary interest-free loan of $200 million from the World Bank with a grant element of about $78.4 million from the European Union.

“It was aimed at enhancing opportunities for employment and access to socio- economic services, while improving public expenditure management systems in the participating states.”

Agba noted that, in collaboration with the World Bank, his ministry designed the above-named programme to provide support to the 36 states and the FCT on some major result areas, including social issues and FADAMA agriculture.

He said the project outlined a proposed programme-forresults operation of $750 million to support the 36 states and the FCT in their efforts to mitigate the impact of the COVID-19 pandemic on the livelihoods of the poor and vulnerable households as well as micro-enterprises in the country.

Agba added that the federal government had, for the first time, launched a multidimensional poverty report, situation analysis for children, and monitoring child poverty in Nigeria.

“The reports of these three studies will help in shaping policies and actions of government and all stakeholders towards addressing the socio-economic, nutrition and health challenges of the child,” he said.

Court stops DSS from arresting Emefiele

Abubakar Yunus Abuja

Afederal high court sitting in Abuja has declined an application by the Department of State Services (DSS) to arrest and detain Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), TheCable understands.

In declining the motion ex parte — filed by an applicant in the absence of the respondent — Justice JT Tsoho, the chief judge, said the secret police did not provide any concrete evidence to substantiate its claims that Emefiele was involved in terrorism financing and economic crimes.

Sources at the high court told TheCable that the judge said he should have been taken into confidence if there was any evidence to back the allegations in the application, marked FHC/ ABJ/CS/2255/2022.

“The honourable judge also wondered why the name of the respondent was given simply as ‘Godwin Emefiele’ without a material disclosure that he is the same person as the CBN governor, a highly ranking public official who occupies an extremely sensitive position,” the source told TheCable.

The court said such an application should have been accompanied with the presidential approval because of the grave implications for the Nigerian economy if the CBN governor is arrested and detained.

There are suggestions that the bid to arrest Emefiele might be political given the impact the redesign of the naira and limit on cash withdrawals might have on vote-buying in the 2023 elections.

A number of politicians have complained that the naira redesign is targeted at them but President Muhammadu Buhari has given his full backing to Emefiele over the policy.

On Monday, a group of civil society organisations raised the alarm that there was a plot to frame Emefiele for terrorism and remove him from office.

Meanwhile, DSS has warned Nigerians against being used to “undermine” its investigations.

In a statement issued on Monday, Peter Afunanya, DSS spokesperson, said the service will not be distracted by those seeking to use “propaganda” to undermine its lawful investigations.

Afunanya said one of the duties of the DSS is the “investigation of matters of national security dimension. It has always discharged this responsibility in the overall interest of Nigerian citizens”.

“As such, the Service will continue to disseminate actionable intelligence to the relevant authorities devoid of any sentiment,” the statement reads.

“While professionally discharging its mandate, the DSS pledges to remain focused and unbiased. It will not, by any means, succumb to propaganda, intimidation and the desperation of hirelings to undermine it.

“It will also not give room to the use of falsehood and deceit to misdirect public understanding and perceptions of issues of national importance.

“Given not to join issues, the Service warns those on a wild goose chase to be mindful of their actions. Similarly, it urges members of the public to disregard the vituperations and rantings of misguided elements and not allow themselves to be used as instruments of destabilisation.

“Notably, these elements should remember the famous axiom that ‘you will only deceive some people, some of the time, but not all people, all the time’.

“To put it succinctly, the Service will not be distracted by persons and/or groups from carrying out its duties to the Nation, citizens, and, President and Commander-in-Chief.”

Afunanya asked Nigerians to “avoid being used to thwart or undermine the Service and its lawful investigations as those who wish to act in the breach will be dealt with in accordance with the law”.