The Central Bank of Nigeria (CBN) has disclosed that it injected $7.6 billion into the economy in five months through foreign exchange sales to authorised dealers.
The apex bank said this in its monthly economic reports for May 2022.
According to the report, CBN said it intervened in the FX markets to stabilise the value of the naira with $1.65 billion and $1.39 billion in January and February, respectively.
The apex bank added that it pumped $1.82 billion in March, $1.56 billion in April and $1.18 billion in May 2022.
Despite interventions, the naira depreciated by 0.7 percent to N415 a dollar in the official market within the period.
“Total foreign exchange sales to authorised dealers by the bank were $1.18 billion, a decrease of 24.4 percent below $1.56 billion in April,” the report reads.
“A breakdown shows that foreign exchange sales at the Investors and Exporters and interbank/invisible windows decreased by 37.9 per cent and 0.7 per cent to $0.16 billion percent, below their respective levels in the preceding month.
“Similarly, SMIS and matured swap contracts fell by 7.0 percent and 71.4 percent to $0.64 billion and $0.10 billion, respectively, compared to the amounts in April. However, foreign exchange sales at the Small and Medium Enterprises window rose 8.4 percent to $0.12 billion in the review period.”
Last year, the Central Bank of Nigeria (CBN) stopped the sale of foreign exchange (FX) to Bureau De Change (BDCs) operators in the country and channelled weekly allocations of dollar sales to commercial banks to meet legitimate FX demands.
Godwin Emefiele, governor of the CBN, had said the apex bank would stop the sale of foreign exchange to banks by the end of the year.
“The era is coming to an end when, because your customers need $100 million in foreign exchange or $200 million, you now want to pack all the dollars and pass it to CBN to give you dollars,” he had said.
“It is coming to an end before or by the end of this year. We will tell them don’t come to the Central Bank for foreign exchange again and generate their export proceeds.”
Nigeria has a revenue, not debt problem, Zainab Ahmed replies Akin Adesina
Minister of Finance, Zainab Ahmed, says she does not agree with those who say Nigeria has a debt problem, stating that the country only has a revenue problem.
Speaking at the Nigeria International Economic Partnership Forum in New York, Ahmed said Nigeria has set a debt-to-GDP ceiling at 40 percent, which the country is yet to exceed.
At the same event, Akinwumi Adesina, president of the Africa Development Bank. (AfDB) had said Nigeria needs help to tackle its debt burden, which has now crossed the $100 billion mark.
Ahmed, who spoke after Adesina, said the problem is not debt, but revenue — stating that Nigeria’s revenue generation is low right now.
“Everywhere we go, we hear this issue of the debt of Nigeria is a problem and is not sustainable. The debt and debt financing that we do in Nigeria is following a designed debt management strategy,” she said.
“As of today, and this has been reported by two previous speakers, Nigeria’s public debt stock is $100.1 billion or N14.6 trillion, which represents 24 percent of the nominal GDP. This is below the 40% threshold that we have set up for ourselves.
“Nigeria operates a four year rolling medium term strategy which guides the borrowing strategy of the federal government. And we have specific indices that we closely monitor. The public debt that we set is 40 percent and we are at 24 percent.”
The minister further explained that “the portfolio composition between external and domestic is set at 30:70. So 70 percent of our debt is domestic and 30 percent is external. We also have a mix of long to short term financing and the mix is 75 to 25 and we are very well within this threshold”.
“So the medium term strategu show that the Nigerian debt portfolio is still operating within sustainable limits.”
‘WE HAVE A REVENUE PROBLEM’
She however, added that while debt, in her opinion, is still sustainable, there is a revenue problem.
“We do have a revenue problem and this revenue problem, we’re tackling using the instrument of the strategic revenue initiative, the revenue challenges we have we have been addressing in a systematic manner,” she added.
“We have had a very significant impact in revenue performance based on the issues in the oil sector, and it is being addressed by the security agencies.
“There are some ineffective tax incentives that are currently in process of being review, so some that have reached maturity will not be renewed, there might be some new ones that are being introduced, but we’re trying to make sure that we’re getting value for the investments that we have provided.
She said the Strategic Revenue Growth Initiatives (SRGI) is designed around three thematic areas: achieve sustainability, identify new and enhance existing revenue stream and achieve collision within the revenue ecosystem — alignment between our people and our truths.
Ahmed said the government has taken on some innovative approaches to financing infrastruction, giving an example of road infrastructure for tax rebate.
She called on the investors to come partner with Nigeria and reap the rewards of investing in Africa’s largest economy.
Nigeria needs help with debt burden, Akin Adesina tells international community
The president of the African Development Bank (AfDB), Akinwumi Adesina, says Nigeria needs help from the international community in tackling its debt burden.
Speaking at the Nigeria International Economic Partnership Forum in New York on Thursday, Adesina said financing is critical to solving Nigeria’s development challenges.
“Financing is critical because the debt to GDP ratio of Africa has increased to 70 percent — several countries are the risk of high debt distress due to unstable, unsustainable debt levels,” he said.
“Nigeria’s total debt level is N42.84 trillion or $103 billion. External debt levels stand at N16.61 trillion or $40 billion. Ladies and gentlemen, Nigeria needs help to tackle this debt burden.
“International partnerships on debt are helping Africa, and Nigeria. The issuance of special drawing rights (SDR) by the International Monetary Fund of $650 billion helped provide liquidity support for countries. However, Africa only received $33 billion out of all of that. Pretty small.
“A call made by the African heads of State for developed economies to rechannel $100 billion of additional SDRs to Africa will go a long way to reduce the debt burden in Nigeria.
“Allocating this SDR, some of this, through the African Development Bank will actually allow us to leverage it four times because we are a leveraging machine. We can deliver more financing to Nigeria and Africa.
Nigeria and other African countries, in my view, therefore need debt relief. They cannot run up the hill carrying a backpack full of sand.”
He said African countries, including Nigeria, need international partnership to tackle climate change.
Adesina said to understand this, all you have to do is take a look at Lake Chad in Nigeria, stating that the continent loses $15 billion as a result of climate change.
‘INVESTING IN NIGERIA IS LIKE ROSES WITH THORNS’
The AFDB president said while there are roses in Nigeria, “roses come with thorns” and that Nigeria’s huge economic potential also comes with a few thorns.
“Those thorns should not discourage us, they call on us to strengthen international partnerships around Nigeria. Nigeria’s growth will be conditioned on its ability to fix its massive infrastructure deficit.
He said the National Integrated Infrastructure masterplan shows Nigeria would need a total finacing of $759 billion up until 2043.
Adesina concluded his intervention by saying referring to a classic by Michael Jackson, asking Nigeria leaders to look at the man in the mirror, and change where necessary
“I’m talking about the man in the mirror, I’m asking him also to change his ways. We must change our ways sometimes. To attract greater foreign direct investment to Nigeria, we must fix security, capital does not like to be troubled.
“With the right conditions in place, we can confidently say Nigeria is a great investment destination; believe in us, invest in us, invest with us, and you will not be disappointed,” he concluded.
JUST IN: Delta airline suspends New York to Lagos flights
Delta Air Lines will, effective October 4, 2022, suspend its flights between New York JFK airport and Lagos.
The airline disclosed this via a statement, stating that the route suspension was to fit into “the current demand environment.”
The statement read, “Delta is suspending its nonstop service between New York-JFK and Lagos to fit the current demand environment.
“The airline continues to operate service between Lagos and Atlanta and offers onward connections to New York and other cities across the United States.
“Customers impacted by our suspended New York-JFK to Lagos service will be re-accommodated on Delta operated flights or services operated by our joint venture partners. Delta remains committed to the Nigeria market.”
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