Relentless CBN Pumps $462m into Forex Market

  • Nigeria not ready for industrialization, says Renaissance Capital 
  • Senate C’tee hails apex bank on moves to check Fx leakages in Customs

By Obinna Chima and Damilola Oyedele

In line with its aggressive foray into the foreign exchange (forex) market as well as to further enhance forex flow in the economy, the Central Bank of Nigeria (CBN) yesterday intervened in the market with the total sum of $462,336,426.74.
This is coming on the heels of a report by the Chief Economist at Renaissance Capital, Mr. Charles Robertson which expressed concern that policy makers in Nigeria were not ready for the industrialisation of the country.

A breakdown of the forex intervention figures obtained from the bank indicated that the Retail Secondary Market Intervention Sales (SMIS) received the largest allocation of $267,336,426.74.
The CBN also offered $100,000,000 as wholesale interventions, while $50,000,000 was allocated to the small and medium enterprises (SMEs) forex window.
Those requiring foreign exchange for Business/Personal Travel Allowances, tuition and medical fees, among others, got a total allocation of $45,000,000.
With yesterday’s forex supply, the total intervention made by the CBN for the week came to $657,336,426.74.
Confirming the figures, the Acting Director of the Corporate Communications Department, Mr. Isaac Okorafor, said the leadership of the CBN was impressed by the positive impact its current forex management was having on the manufacturing sector and economic activities in general across the country.
While reiterating that the CBN management was also encouraged by growth in the non-oil sector, particularly agriculture, he noted that the apex bank would not relent in its efforts at sustaining stability in the inter-bank forex market as well as ensuring the convergence between the exchange rates at the Nigeria Autonomous Foreign Exchange (NAFEX) and the Bureau de Change segments of the market.

According to him, the CBN will continue to ensure proper surveillance of the forex market to guard against any sharp practices by participants and uphold transparency of the process.
Nigeria not ready for industrialization, says Renaissance Capital
Meanwhile, a report by the Chief Economist at Renaissance Capital, Mr. Charles Robertson, has expressed concern that policy makers in Nigeria are not ready for the industrialisation of the country. In fact, the report pointed out that Nigeria’s literacy rate of 60% was too low.
Robertson also urged portfolio investors in Nigeria and other frontier markets to always take literacy rates seriously.
In a report titled: “Thoughts from a Renaissance man:  Literacy, development and industrialisation,” obtained yesterday, Robertson stressed that countries need 40 per cent literacy to grow sustainably and 70-80 per cent to industrialise.
He said: “The situation is most bleak in West Africa. Ghana (77%) is the significant exception, with a cheap currency and a reform minded government. Elsewhere, we have five countries (Benin, Burkina Faso, Guinea, Mali and Niger) with literacy levels so low that they cannot even rely on sustainable growth, and three countries with secondary school enrolment ratios so low that we think they cannot escape poverty before the 2030s (Mauritania, as well as Burkina Faso and Niger again).”
Continuing, the report noted that another six countries in the sub-region have literacy rates of 40-60%, including Ivory Coast which has Africa’s benchmark eurobond.
“Indeed, these problem countries extend across the continent, roughly along the 10-20 degrees of latitude range. From Mauritania on the Atlantic Ocean to Sudan on the Red Sea, including Mali, Burkina Faso, Nigeria, Chad, north east Nigeria and South Sudan – the combination of illiteracy and poor secondary school enrolment – have combined to produce a bleak outlook.
“Within West Africa, the most important conclusion is that Nigeria is not ready for industrialisation. The literacy rate of 60% is too low. Also the lack of reasonably priced electricity prevents industrialisation except for those able to access their own sources (e.g Dangote). This may be the main reason why Nigeria lags both Bangladesh and Pakistan in terms of developing industry, even though all three have similar literacy rates.
“However, we are not convinced Nigeria’s oil production condemns it to having a small manufacturing sector. Angola produces far more oil per capita than Nigeria, and this is one reason its manufacturing sector is just 3-4% of value-added (a lot of oil tends to cause Dutch disease). Angola shares more similarities to Venezuela in terms of oil production, while Nigeria is more similar to Mexico.
“There might also be regionally different stories within Nigeria. Using National Bureau of

Statistics data from 2010, we show how literacy rates vary around the country. The 16 million living in Abia, Imo and Rivers states, and the 12 million living in Lagos have adult literacy rates above 80%. There are another 12 states (with a total population of 54 million) stretching from Ogun to Cross Rivers, and Oyo to Benue, with a literacy rate of 70-80% or higher,” the report added.
It estimated that in the north, Kano, Kaduna, Jigawa and Sokoto have a combined 35 million population, and also record adult literacy rates of 70-80% (these literacy rates are often in local languages).
“It may be no coincidence then that the Ministry of Industry, Trade and Investment has chosen Abia (one of the highest literacy rates in the country) and nearby Akwa Ibom (literacy rate of 70-80%) as the first two model zones for its special industrial parks. Other brownfield zones include highly literate Lagos (over 80%), as well as Cross River and Kano (literacy rates of 70-80%).
“It would be a pointless exercise to develop such zones in the west or north-east, where Nigeria’s weaknesses are most acute. Taken together, there are seven states with a population of 32 million and literacy rates of 40-60% and another eight states (across the country) with a population of  27 million and a literacy rate of 60-70%. Pushing these ratios far higher is essential'” the report stated further.
In addition, it argued that West Africa was farthest from industrialisation, with literacy rates either below 40%, or in a 40-60% range (including Ivory Coast), with just two exceptions: Ghana (77%) and (tiny) Cape Verde (85%).

According to the report, the only good news for the worst performers was that school enrolment rates have soared to above 70% according to the latest data.
Senate C’tee hails CBN over Move to Check FOREX Leakages in Customs, Others
Also yesterday, the Senate Committee on Customs, Excise and Tariff lauded the Central Bank of Nigeria for its recent acquisition of Hi-Definition scanners and Enterprise Screening platform, to check foreign exchange leakages in the import-export value chain.
The platform is designed to assist the apex bank to stabilise the Naira by providing accurate cross referenced data on all trade facilitation documents. It will also help in tracking repatriation of foreign exchange proceeds record and online real time remote screening of inbound and outbound cargo or passengers.

The Committee Chairman, Senator Hope Uzodinma, according to a statement, said the acquisition of the technology would assist in exposing leakages in revenue collection other sharp practices in the Nigerian Customs Service and other agencies in the import-export chain, through documents such as Form M, Bill of Lading, Letters of Credit and Clean Certificate of Inspection.
Other challenges in the process, he said, were incorrect declaration, incorrect origin, error in calculation, temporary importation, exemptions and waivers and foreign exchange manipulations.

The new technology, Uzodinma said, would replace the manual process of examination of cargoes and other processes that had led to so much corruption in the system and added that the platform would further ensure judicious utilisation of scarce foreign exchange to ensure that genuine foreign exchange users gained unfettered and transparent access.
Uzondinma also urged the NCS to deploy the platform to check leakages associated with revenue collection and other sharp practices in the service.

It should be recalled that the committee, at a recent hearing alleged that revenue worth over N30 trillion has been lost to activities of a cabal at the ports, who connive with officials to carry out the infractions in daily transactions at the ports, commercial banks, shipping companies, terminal owners and operators.