By Obinna Chima
The naira gained remarkably against the United States dollar at the interbank market last week as it gained N2.5 to close at N160.20 to a dollar on Friday, compared with the N162.70 to a dollar it stood last Monday.
Dealers attributed the feat achieved by the local currency at the interbank to inflow from multinational oil companies and the Nigerian National Petroleum Corporation (NNPC).
It was gathered that the NNPC sold about $550 million to some banks on Friday, which further strengthened the local currency.
Shell Nigeria and Liquefied Natural Gas (NLNG) Company had sold the greenback to some banks earlier last week. According to dealers, the supply by the oil firms significantly increased dollar liquidity in the market.
Periodically, multinational oil firms and the NNPC sell the greenback to commercial banks to obtain naira for their local operations and to meet their obligations.
However, at the Central Bank of Nigeria (CBN) official window, the regulator supplied a total of $450 million last week to dealers. The naira closed at N156.85 to a dollar at the Wholesale Dutch Auction System (WDAS).
Interbank Rates Movement
The interbank rate closed reduced on Friday as some portion of funds from the Federation Account Allocation Committee (FAAC) hit the system.
The Minister of State for Finance, Alhaji Yerima Ngama, had revealed that a total of N616.201 billion was shared among the three-tiers of government for the month of December 2011 last week.
Ngama had explained that although the current global economic downturn might affect the demand of the nation’s oil, there were guarantee of comfortable foreign inflows into the economy.
The interbank market was closed for business the preceding week due to a nationwide strike by labour and civil society groups over the move by the federal government to completely remove subsidy for fuel. As a result of the action, the interbank market was shut for six days.
Data from the Financial Market Dealers Association (FMDA) showed that whereas the overnight tenor closed at 14.42 per cent on Friday, as against the 14.62 per cent it stood last Thursday, the 7-day tenor also closed at 14.75 per cent on Friday, from 14.87 per cent on Thursday.
Cost of Strike
The National Bureau of Statistics (NBS) last week said Nigeria lost about N207.408 billion to the nationwide strike embarked upon by organised labour and civil society groups to protest the removal of petroleum subsidy by government.
THISDAY had reported that the NBS had said its estimates were based on the Gross Domestic Product (GDP) computation to ascertain the monetary worth of the seven-day strike. The NBS had also said that the Wholesale and Retail sector of the economy, which accounts for about 18 per cent of the GDP, recorded the highest loss of about N86.9 billion or about 42 per cent of the overall loss in output during the crisis.
The sector was followed by the Crude Petroleum and Natural Gas sector - the largest source for government income, accounting for N28.7 billion or 14 per cent of economic losses. The Crop Production segment also recorded a loss of about N15.2 billion or 7 per cent of total economic losses.
The NBS had however, explained that the figures were "early estimates which are derived from projected GDP figures rather than actual surveys" with its inherent setbacks.
The NBS last week said the Composite Consumer Price Index (CPI), which measures inflation, dropped slightly by 1.9 per cent to 10.3 per cent in December 2011 compared to 10.5 per cent in the previous month. Average monthly food prices also rose by 2.2 per cent in December as against 0.3 per cent in the previous month.
The price hike in food items was linked to the festive period.
The bureau had also said that average headline inflation in 2011 was 10.9 per cent compared to 13.8 per cent in 2010. According to the monthly CPI report for December 2011, the increase in prices of food items had resulted in the inflation rate recorded in the food sector to edge slightly higher into double digits (11 per cent) after averaging 9.1 per cent in the previous six months.
But this was however, moderated by low increase in inflation rate of "all items less farm produce" section, which rose to 10.8 per cent year-on-year.
That was slightly lower than the 11.5 per cent year-on-year change in November. However, increases in transport fares, kerosene and hotel and restaurant charges caused the month-on-month "all items less farm produce" index to rise by 0.2 per cent in December.
The Federal Government last week said it would review the 2012 Appropriation Bill to make provision for partial fuel subsidy following the recent unsuccessful bid to scrap the policy and implement full deregulation of the downstream sector of the petroleum industry.
Equally, the Federal Government had also reiterated its resolve to fight corruption, particularly in the petroleum sector, insisting that all forms of leakages and wastages in the sector needed to be blocked to harness these resources for the benefit of the economy.
But THISDAY had reported that a legal luminary and former Chairman, Nigeria Bar Association, Chief Olisa Agbakoba, last week warned that the war against wastages and corruption in the sector could not be won by mere policy pronouncements but government must be prepared to match policies with action.
Agbakoba had said the National Assembly must pass without any further delay, the Petroleum Industry Bill(PIB) to set the tone for complete deregulation of the downstream sector of the oil and gas industry, support the current effort by the Economic and Financial Crimes Commission (EFCC) to investigate the subsidy regime and ensure the implementation of the provisions of the Nigeria Content Act, the Cabotage Act as well as revisit the KPMG Audit Report on the oil industry.
Coordinating Minister of the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala had also stated the position of government when she appeared before the House of Representatives Ad hoc Committee on Monitoring of the Fuel Subsidy Regime.
Petrol Import Fraudsters
THISDAY reported last week that N669.088billion was paid out last year by the Petroleum Products Pricing and Regulatory Agency (PPPRA) to petrol import fraudsters. The 8.7 billion litres or 24 million litres per day was the cumulative quantity of petrol that exceeds the 35 million litres that Nigeria consumes on a daily basis.
This could be attributed to over-invoicing, false import claims and other tactics that the fraudsters employ to benefit from the subsidy regime. In other words, while the country consumed 35 million litres every day that attracted N76.38 subsidy per litre, the fraudsters claimed they brought in 59 million litres daily through sharp practices.
The revelation on the products lost to the fraudsters came last week when the PPPRA gave its testimony before the House of Representatives Ad hoc Committee on Monitoring of the Subsidy Regime.
The agency had further explained that under the subsidy regime, 59 million litres of petrol were imported and discharged at the ports daily as against the country's average local consumption of 35 million litres per day. The practice leaves a huge gap of 24 million litres of subsidised fuel unaccounted for in the country.
Current Account Forecast
Financial market experts at Standard Bank last week predicted that Nigeria would post a current account surplus of 11.2 per cent of her Gross Domestic Product (GDP) this year. Current account is one of the primary components of balance of payments (BoP).
It is one of the two major metrics of the nature of a country's foreign trade. A current account surplus increases a country's net foreign assets. Standard bank had however expressed concern that official trade statistics had remained problematic in the economy, “because of the continued disconnect between the Central Bank of Nigeria (CBN) and the National Bureau of Statistics (NBS) time series and an unexplained surge in imports in 2010.”
It had argued: “This spike pushed down the aggregate trade balance and current account surplus to record low. Unlike the NBS data, CBN figures point to an improvement in the trade balance in 2011. We expect the import discrepancy to be eventually addressed and see Nigeria posting a current account surplus of 11.2 per cent of GDP in 2012.”
Ezekwesili Quits World Bank
THISDAY reported last week that Vice-President for Africa, World Bank, Mrs. Oby Ezekwesili had resigned from the Bretton Woods institution, after five years of meritorious service.
Her resignation takes effect from the first week of May. The World Bank President, Mr. Robert Zoelick had said Ezekwesili would be back to Nigeria after “five years of important and successful service to the bank and Africa”. Zoelick had said he had to delay the exit of Ezekwesili, who was a two-time minister when former President Olusegun Obasanjo held sway, by one year, to enable her implement the new strategy, “Africa’s Future and World Bank support to It,“ that “she did so much to develop”.
Ezekwesili will be succeeded by Makhtar Diop, a Senegalese national, who has been the Country Director for Brazil since 2009. Diop is expected to resume on May 5.
According to him, “Under Oby’s leadership, our Africa team employed innovation, knowledge, partnership and financial services to strengthen results across Africa and to improve the prospects for Africa’s economic performance.
Zoelick added: “Oby has built a strong team across the range of the Bank’s work: infrastructure and human development; agricultural production and productivity; private sector development; economic reforms to overcome poverty; and governance and accountability.
“Reflecting her experience and background, Oby has been a relentless campaigner for transparency and against corruption. She has also led in the use of ICT for Development; in supporting social accountability mechanisms through civil society engagement; and in promoting innovative approaches to regional integration.”
Court on Union Bank
The Court of Appeal in Lagos last week gave the Governor of Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, the go-ahead to sell Union Bank of Nigeria Plc. The court, in a judgment delivered by Justice Helen Ogunwumiju had dismissed the appeal filed by some aggrieved shareholders of the bank praying the court to stop Sanusi from going ahead with his plan to sell the shareholdings.
Justice Ogunwumiju, who by the judgment had affirmed the decision of the lower court, added that the appeal lacked merit and consequently dismissed it.
She further held that the appellants ought to have raised questions for determination in their originating summons.
The shareholders, led by the President of Progressive Shareholders Association (PSA), Boniface Okezie had urged the appellate court to set aside the ruling of Justice Binta Murtala-Nyako of the Federal High Court in Lagos.
Nyako had, while ruling on the preliminary objections filed by the respondents, struck out the suit on the ground that the plaintiffs failed to raise questions for determination in their originating summons.