13 Jan

Daily Watch – CBN pledges to manage naira, FG loses ₦43b in global air remittances

  • The CBN has told Bureau de Change operators it does not intend to devalue the naira and will support it at current levels, especially with a recent rise in oil prices. Aminu Gwadabe, president of Bureau de Change operators, said central bank governor Godwin Emefiele told the group in a meeting it was looking at ways to boost dollar liquidity on the official market to eliminate the spread to the parallel market. The government has been pressing retail operators to narrow what it says is a damaging gulf between the naira’s official rate – currently ₦305 to the dollar – and the parallel rate, which has been as weak as ₦490 in recent days. On Tuesday the operators set their first ever reference exchange rate for the naira at ₦399 per dollar ahead of the central bank meeting.
  • The NSE has expressed optimism that the country’s economy will recover from its current recession this year with a modest GDP growth forecast of 0.6 percent. The recovery, according to the bourse, will be driven by the vigour of fiscal policy implementation, with a keen focus on articulation of desired goals; lower rates of disruptions to oil infrastructure as a result of the resolution of the Niger Delta conflict; crude oil prices remaining above the Federal Government’s benchmark of $42.5 per barrel; and the positive impact of the war against corruption manifested in the improvement in the ease of doing business in the country. Oscar Onyema, NSE CEO, who said this at a business conference on Thursday, also said the economy would be driven by policies aimed at boosting productivity, citing improved budgetary allocation to capital expenditure, and exit from joint venture cash call arrangements with the International Oil Companies by the government, which is expected to save the country $2 billion annually. Onyema stressed that one critical move the government must make was to sell the ailing refineries as they were old and operating below optimal levels.
  • The Chinese Foreign Affairs Minister, Wang Yi, has announced plans by the Chinese government to invest up to $40 billion in Nigeria as part of efforts aimed at deepening relations between the two countries. The figure is in addition to other contributions China has made to Nigeria to support her developmental activities. Yi said his country had invested about $45 billion in various projects in Nigeria and is on the verge of releasing another $40 billion. “China has already invested or financed a total number of $22 billion projects here in Nigeria, another $23 billion in projects are on-going. In addition, we are also following up another over $40 billion of investments, which are in the pipeline,” Yi said.
  • The FG says it has budgeted ₦5.8 billion for the repair of the runway at the Nnamdi Azikiwe International Airport, Abuja. The transportation minister, Rotimi Amaechi; and the Minister of State for Aviation, Hadi Sirika, appeared before the Senate on Thursday to give an explanation on the planned closure of the Abuja airport and the diversion of flights to the Kaduna airport. The Senate had on Tuesday kicked against the planned closure of the Abuja airport for the repairs, scheduled to last for six weeks. The lawmakers had summoned Amaechi, Sirika, the works, housing and power minister, Babatunde Fashola; the Federal Capital Territory minister, Mohammed Bello; the Chief of Air Staff, Air Marshal Sadiq Abubakar and the heads of aviation agencies. Fashola and Bello were, however, absent at Thursday’s hearing. Sirika, who was grilled by the lawmakers for about three hours, was asked questions bearing on the cost of the runway repair, relocation of personnel and logistics to Kaduna, and security measures for travellers who would ply the Abuja-Kaduna Expressway, among others. The Senate was also concerned about the extra-budgetary cost agencies such as the Nigeria Immigration Service, Nigeria Customs Service and the National Drug Law Enforcement Agency would incur by moving to Kaduna.
  • Nigeria may have lost over ₦43.48 billion ($144 million) remittances paid by international airlines as reciprocity charges in the Bilateral Air Service Agreement from 2014 to the end of 2016 due to the decision of the Ministry of Transport to stop collecting the charges without providing alternative payment platform for the airlines. These are royalty payments for the frequencies operated by the foreign airlines from Nigeria to destinations where there is no corresponding reciprocity from Nigerian airlines. The payments are calculated per passenger and over the years millions of dollars have accrued to Nigeria, which was used for airport and other aviation development. These funds used to be in the custody of the defunct Nigeria Airways before it was liquidated. However, the FG has just been allowing these foreign airlines to operate freely to Nigeria and at the same time government allots multi designations to the foreign carriers thus stifling the market for the local airlines. Industry stakeholders said such accruals could have been used to upgrade and rebuild the nation’s navigational aids, provide airfield lighting at the country’s many airports or used to support aviation agencies and reduce the huge charges domestic carriers pay to the parastatals.