17 Jun

The week ahead – A light has appeared at the tunnel’s end

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.

This came a day after a report by the National Bureau of Statistics showed that inflation rate has jumped to 15.6 percent in May over high electricity rates and energy prices. The Consumer Price Index released suggested that inflation increased by 1.9 percentage points higher from the 13.7 percent recorded in April. A separate report also released by the NBS on average price of petrol ‎sold in the country revealed that Nigerians bought the product at ₦150.28 per litre in May. The price was ₦5.28 higher than the official price of ₦145 approved by the federal government for a litre of petrol. The price of petrol together with high transport fares had a negative impact on prices of goods and services within the period.

Calls for the restructuring of the federation have become fervent, as elder statesmen including Second Republic Vice-President, Dr. Alex Ekwueme, Yoruba leader, Ayo Adebanjo, former Minister of Information, Jerry Gana and former Governors of Anambra State, Chukwuemeka Ezeife and Peter Obi, in Enugu asked President Muhammadu Buhari to commence the immediate implementation of the report of the 2014 National Conference. They insisted that doing that would go a long way in addressing the myriads of problems confronting the country, adding that the current protests and demands for separation by various groups in the country, as well as other socio-economic crises could be reduced by half if the national conference report was considered and implemented.

In a move to confront some banks which recently retrenched about 3,000 workers, the Nigerian Labour Congress (NLC) Wednesday issued a 14-day ultimatum to six banks to reinstate sacked workers or face shut down of their headquarters and branches across the country. The letter of ultimatum was issued to Fidelity Bank, Diamond Bank, First City Monument Bank, First Bank, Eco Bank and Skye Bank. At the last count, the six banks had sacked nearly 3,000 workers citing economic recession and dwindling returns as the reason for mass sacking of their staff.

The Senate has begun moves to amend the 1999 Constitution with 13 bills seeking the review of various section of the constitution. At the plenary session, all the bills were referred to the Constitution Review Committee chaired by the Deputy Senate President, Ike Ekweremadu. Eleven of the bills are on second reading while the remaining two are on first reading.

In Rivers State, some religious leaders on Wednesday claimed that they have uncovered plot by armed Fulani herdsmen to launch an attack in the state as herdsmen were already intimidating land owners in some rural communities of the state and acquiring land for grazing.

Suggestions

  • The new foreign exchange policy is a step that must be commended. We counsel that the CBN must resist the urge to intervene in the market in the weeks to come in order to rebuild depleted investor confidence that it will indeed allow the markets determine the foreign exchange price. We also counsel that the price controls on the pump price of fuel be done away with as it is no longer tenable in a regime where foreign exchange price is market driven.
  • We urge President Buhari to at the very least, take a look at the the 2014 confab report, and begin serious discussions about the restructuring of this country. The various regional and ethnic agitations across the country stems from the false arrangement Nigeria currently operates as federalism, and we are of the opinion that the current system does not do Nigeria any good.
  • The NLC is a very discredited organisation these days. Banks, like other such organisations in manufacturing and agriculture, have been compelled to cut jobs to manage costs in an economy in dire straits. The alternative is to go under due to huge costs, a situation which will have dire consequences for the economy. Rather than demand a recall of sacked staff, the NLC should channel its energies to determining if the workers were disengaged in lawful manner, with full benefits paid. They should also engage banks on the practice of casualisation of workers.
  • We are not very optimistic that the National Assembly will do a good job of constitutional reforms and amendments. We also counsel that the executive needs to do the job of agenda setting and citizen buy-in to the constitutional amendment process. It is important that the amendments to the constitution do not eschew the important issues.
  • The security agencies need to take the reports from Rivers State seriously and act quickly to forestall a situation akin to the massacre in Enugu. It will be recalled that there were reports that elders in the Enugu community made formal complaints which were ignored before the massacre took place.