16 Jun

Daily Watch – The naira is finally free, States get tough conditions for bailout

  • The CBN has finally let go of pegs on the naira, allowing the market forces to determine the true value of the local currency against other currencies across the world. Godwin Emefiele, governor of the CBN, said that the bank will operate a single trading window, which will take off on June 20, 2016, adding that the CBN will only step in from time to time regulate the market. Emefiele said the CBN will appoint less than a dozen primary dealers who would now be in charge of foreign exchange trading, driving flexibility in the system. Emefiele added that the 41 banned items remain banned, and cannot access forex from the new window. CBN had initially applied a peg on the naira, keeping it at 197 to the American dollar on the parallel market, while the parallel market rate spiralled gradually away from the official price to trade at ₦368 per American dollar on Tuesday.
  • The FG has given out 22 conditions that Nigeria’s 36 states must fulfill to be eligible to draw from the ₦90 billion set aside to bail out states facing severe financial difficulties. Most Nigerian states have remained in financial hardship despite a July 2015 special intervention fund that gave between ₦250 to ₦300 billion in the form of soft loans to enable the states pay backlog of salaries. The states also enjoyed a debt relief programme designed by the DMO which helped them to restructure their commercial loans of over ₦660 billion, extending the life span of the loans while reducing the states’ debt-servicing expenditures. Those however failed to pull the states out of distress and the federal government is now considering a fresh ₦90 billion loan package for them. But to access the funds, according to Babafemi Ojudu, the special adviser to the president on political matters, states must fulfill 22 conditions which include the publishing of  audited annual financial statements within 9 months of financial year end; the introduction and compliance with the International Public Sector Accounting Standards, and the publishing of state budgets online annually.
  • The Nimbo community in Uzo Uwani Local Government Area of Enugu State has asked the FG to pay ₦17 billion to the community as compensation for the invasion of the community and the killing of residents by Fulani herdsmen. The traditional ruler of the community, John Akor, made the demand when he testified at the panel of inquiry into the attack. He said that the money would be a recompense for the ills suffered by members of the community. According to Akor, the community also needs a trauma hospital to rehabilitate victims of the prolonged herdsmen incursions. Akor said that 11 people lost their lives during the April 25 invasion while several others were injured, adding that the corpses were still at the morgues.