Imports: Turbulence as Economy Crumbles
PANAMA CONTAINER VESSEL
By Francis Ugwoke
For every businessman or woman, the past few months have been turbulent. The worst hit are importers as they are having nightmare sourcing foreign exchange to finance their imports. As at the time of filing this report, a dollar exchanges for over N700 in the black market. The official rate is over N600/per $. This is for those who are lucky to find the foreign currency. The commercial banks through which dollars could be sourced officially by virtue of the directive from the Central Bank have continued to tell importers of unavailability of the foreign exchange. But that is for those who qualify for this, presumably manufacturers. Those on the list of 41 items are on their own. They are the worst hit. It is not only the importers, as those who have to travel or pay school fees overseas do not easily get the foreign exchange from these banks. This has made life and trade difficult. The implication is that for importers who source foreign exchange at high rate to break even, they have to also increase prices of goods to remain in business. This explains why prices of many goods in the markets remain very high. Cost of services has also gone up and the low income earners are having hard time.
CBN Response
As the crisis continues, the apex regulatory agency, CBN, assured it is determined to resolve the foreign exchange issue. This assurance came as the National Assembly in July summoned the CBN governor, Godwin Emeifele over the situation. As at the beginning of July the exchange rate was N720/$ in the black market before it came to N750/$. It has continued to fluctuate. CBN Governor, Emefiele had in July said “The CBN remained committed to resolving the foreign exchange issues confronting the nation and as such has been working to manage both the demand and supply side challenges.”. He attributed the fall in Naira to demand pressure from many manufacturers, individuals who need the foreign exchange to pay for bills overseas. After the statement, the Naira fall continued. Many have had to criticize the CBN over the situation. But other sources said the issue has been due to drastic fall in oil revenue that leads to as much foreign exchange as possible. Others believe the CBN leadership has not been good enough at addressing the continued fall in the value of Naira.
To the National Youth Council of Nigeria, the CBN Governor, Emefiele should be held responsible over Naira’s misfortune.
The President of NYCN, Comrade Solomon Adodo in a statement said it was not true that lack of remittance of dollars to foreign accounts by the NNPC was responsible for the continued fall in Naira.
Adodo said, “without highlighting the reality of the causative oil and non-oil related factors including a drop in Nigeria’s crude oil production, growing petrol subsidy, an unsustainable dual exchange rate system, reduction in foreign direct investments and growing dependence on importation across many sectors of the economy as disingenuous and unpatriotic” could be the problem.
Export trade to the rescue
At a meeting of stakeholders in the maritime industry, emphasis was placed on export trade as the only way to address the dwindling fortunes of the Nigerian economy. Maritime stakeholders had called for more concerted efforts to improve on export trade in the country to boost the national economy.
The stakeholders who attended a one-day sensitization programme organised by the Ministry of Transportation and the Nigerian Shippers Council (NSC) in Lagos said increasing Nigeria’s export trade will help in bailing the economy out of crisis.
The Executive Secretary of the NSC, Emmanuel Jime said that about 70 percent of export cargoes were primary commodities while most imports were made up of consumer goods.
Jime said there was the need to develop Nigeria’s industrial base to balance trade and boost her economy.
According to him, the port has critical infrastructure that needs to be competitive to check monopoly.
A maritime lawyer, Dr. Emeka Akabogu said Nigeria needs to be more concerned about her export trade.
According to him, Nigeria needs to grow export considering that her economy was currently on her knees.
Chairperson of the Ship Owners Association, Mrs Magreth Orakwusi in her contribution said without increase in Nigeria’s export, the nation’s fragile currency, Naira, will disappear.
Orakwusi advised those involved in export business to be concerned on preserving perishable goods, adding that there was the need to ensure efficiency in handling export goods.
She stressed the need to address the issue of corruption in the system and encourage competition to attract investment and grow businesses so that the country will not go down economically.
At a recent virtual pre-summit, with the theme ‘Critical Tax Reforms for Shared Prosperity’, organised by the Nigerian Economic Summit Group, the world bank said Nigeria’s economic is facing a major existential threat.
World Bank’s Senior Public Sector Specialist, Domestic Resource Mobilisation, Mr Rajul Awasthi, said the only way out was for Nigeria to end the policy of fuel subsidy. The world bank call may not be unconnected with a statement credited to the Finance Minister, Mrs Zainab Ahmed, who said the government would need as much as close to half of the year’s budget, N6.72tn, to pay for fuel subsidy in 2023.
After the Federal Government earmarked about N4tn for subsidy payment in 2022, the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, said that government might spend a whopping N6.72tn as fuel subsidy in 2023 or pay N3.36tn up to mid-2023 if the subsidy regime would end in May 2023. With the status of being on the world bank’s debtors list with $11.7bn, the International Monetary Fund said Nigeria spends 93 percent of its revenue on debt servicing so far in 2022. Worse still is the report by the Debt Management Office (DMO) that Nigeria’s total debt has hit N42.84 trillion and still running. This scenario indeed is startling as it paints a gloomy picture of hopelessness of improvement as soon as possible for any change in fiscal policy that will benefit international traders.
Ends.
For every businessman or woman, the past few months have been turbulent. The worst hit are importers as they are having nightmare sourcing foreign exchange to finance their imports. As at the time of filing this report, a dollar exchanges for over N700 in the black market. The official rate is over N600/per $. This is for those who are lucky to find the foreign currency. The commercial banks through which dollars could be sourced officially by virtue of the directive from the Central Bank have continued to tell importers of unavailability of the foreign exchange. But that is for those who qualify for this, presumably manufacturers. Those on the list of 41 items are on their own. They are the worst hit. It is not only the importers, as those who have to travel or pay school fees overseas do not easily get the foreign exchange from these banks. This has made life and trade difficult. The implication is that for importers who source foreign exchange at high rate to break even, they have to also increase prices of goods to remain in business. This explains why prices of many goods in the markets remain very high. Cost of services has also gone up and the low income earners are having hard time.
CBN Response
As the crisis continues, the apex regulatory agency, CBN, assured it is determined to resolve the foreign exchange issue. This assurance came as the National Assembly in July summoned the CBN governor, Godwin Emeifele over the situation. As at the beginning of July the exchange rate was N720/$ in the black market before it came to N750/$. It has continued to fluctuate. CBN Governor, Emefiele had in July said “The CBN remained committed to resolving the foreign exchange issues confronting the nation and as such has been working to manage both the demand and supply side challenges.”. He attributed the fall in Naira to demand pressure from many manufacturers, individuals who need the foreign exchange to pay for bills overseas. After the statement, the Naira fall continued. Many have had to criticize the CBN over the situation. But other sources said the issue has been due to drastic fall in oil revenue that leads to as much foreign exchange as possible. Others believe the CBN leadership has not been good enough at addressing the continued fall in the value of Naira.
To the National Youth Council of Nigeria, the CBN Governor, Emefiele should be held responsible over Naira’s misfortune.
The President of NYCN, Comrade Solomon Adodo in a statement said it was not true that lack of remittance of dollars to foreign accounts by the NNPC was responsible for the continued fall in Naira.
Adodo said, “without highlighting the reality of the causative oil and non-oil related factors including a drop in Nigeria’s crude oil production, growing petrol subsidy, an unsustainable dual exchange rate system, reduction in foreign direct investments and growing dependence on importation across many sectors of the economy as disingenuous and unpatriotic” could be the problem.
Export trade to the rescue
At a meeting of stakeholders in the maritime industry, emphasis was placed on export trade as the only way to address the dwindling fortunes of the Nigerian economy. Maritime stakeholders had called for more concerted efforts to improve on export trade in the country to boost the national economy.
The stakeholders who attended a one-day sensitization programme organised by the Ministry of Transportation and the Nigerian Shippers Council (NSC) in Lagos said increasing Nigeria’s export trade will help in bailing the economy out of crisis.
The Executive Secretary of the NSC, Emmanuel Jime said that about 70 percent of export cargoes were primary commodities while most imports were made up of consumer goods.
Jime said there was the need to develop Nigeria’s industrial base to balance trade and boost her economy.
According to him, the port has critical infrastructure that needs to be competitive to check monopoly.
A maritime lawyer, Dr. Emeka Akabogu said Nigeria needs to be more concerned about her export trade.
According to him, Nigeria needs to grow export considering that her economy was currently on her knees.
Chairperson of the Ship Owners Association, Mrs Magreth Orakwusi in her contribution said without increase in Nigeria’s export, the nation’s fragile currency, Naira, will disappear.
Orakwusi advised those involved in export business to be concerned on preserving perishable goods, adding that there was the need to ensure efficiency in handling export goods.
She stressed the need to address the issue of corruption in the system and encourage competition to attract investment and grow businesses so that the country will not go down economically.
At a recent virtual pre-summit, with the theme ‘Critical Tax Reforms for Shared Prosperity’, organised by the Nigerian Economic Summit Group, the world bank said Nigeria’s economic is facing a major existential threat.
World Bank’s Senior Public Sector Specialist, Domestic Resource Mobilisation, Mr Rajul Awasthi, said the only way out was for Nigeria to end the policy of fuel subsidy. The world bank call may not be unconnected with a statement credited to the Finance Minister, Mrs Zainab Ahmed, who said the government would need as much as close to half of the year’s budget, N6.72tn, to pay for fuel subsidy in 2023.
After the Federal Government earmarked about N4tn for subsidy payment in 2022, the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, said that government might spend a whopping N6.72tn as fuel subsidy in 2023 or pay N3.36tn up to mid-2023 if the subsidy regime would end in May 2023. With the status of being on the world bank’s debtors list with $11.7bn, the International Monetary Fund said Nigeria spends 93 percent of its revenue on debt servicing so far in 2022. Worse still is the report by the Debt Management Office (DMO) that Nigeria’s total debt has hit N42.84 trillion and still running. This scenario indeed is startling as it paints a gloomy picture of hopelessness of improvement as soon as possible for any change in fiscal policy that will benefit international traders.
Ends.
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