In what can be only described as bad news, the International Monetary Fund (IMF) has come out to say that the unemployment rates in Africa’s two largest economies are going to hit new highs never experienced. The grave implication of this piece of news sinks further in when one considers the unemployment rate currently in place. In Nigeria, sub-Saharan Africa’s largest economy, the unemployment rate is already at alarming 14% while South Africa, the second largest economy, it is over 27%.
According to the IMF, these rates will further explode to all-time records highs due to certain factors working in synergy to make finding employment unavailable, especially for youths. First, the working age bracket in the region is exploding more than ever before. “By 2035, sub-Saharan Africa will have more working-age people than the rest of the world’s regions combined,” the IMF wrote in a blog post.
A second factor working against working age population in the region is the inability of the governments in those countries to stimulate the development of their economies so as to produce more jobs. The informal economy, consisting of trades like street vendors, household workers and off-the-radar cash jobbers was hitherto responsible for sucking up most of the unemployed people, with the IMF estimating that they were responsible for as much as 38% of gross domestic product in 2010-14.
While this may sound like hope, in reality, it is cause for concern as it represents a decline from nearly 45% in 1991-99 period. Furthermore, the “lack of protection in the event of non-payment of wages, compulsory overtime or extra shifts, lay-offs without notice or compensation, unsafe working conditions and the absence of social benefits” associated with the informal sector mean that less and less people are being engaged in it.
Thus, with an upward spiral in working age population and a downward spiral in the availability of adequate employment opportunities, the IMF sees no other choice than peak unemployment rates, which in turn would lead to economic, security and migration problems. Unless of course, the governments rise up to the challenge.
Just In: Nigeria received $5.85 billion capital inflows in Q1 2020 –NBS
Nigeria received $5.85 billion capital importation (inflows) in the first quarter (Q1) of 2020, compared to $8.51 billion in Q1 2019.
Nigeria received $5.85 billion capital importation (inflows) in the first quarter (Q1) of 2020, as against $8.51 billion in Q1 2019. This is according to the latest capital importation report released by the National Bureau of Statistics (NBS).
According to the NBS, the $5.85 billion worth of capital importation in Q1 2020 represents an increase of 53.97% when compared to how much was received in Q4 2019.
However, when compared to the corresponding first quarter period of 2019, the figure indicates a 31.19% decline.
Capital Inflow by type
Portfolio investment ($4.31 billion) accounted for 73.61% of the total capital importation, followed by other investments ($1.33 billion), which accounted for 22.73%, and Foreign Direct Investment ($214.3 million), which accounted for 3.66% of total capital importation.
More details shortly…
Naira set for recovery as ABCON issues guideline to members on forex sales resumption
It is obvious that the CBN has come to realize that BDC operators can be the difference between naira recovery and depreciation during volatile times.
The Central Bank of Nigeria (CBN) and the Association of Bureau De Change Operators of Nigeria (ABCON) have finalized arrangements for the resumption of forex sales to Bureau De Change operators (BDCs).
Following this finalisation, the more than 5,000 BDCs spread across the country are now expected to help curb the downward spiral of the naira, thereby checking the activities of foreign currency speculators.
Recall that the naira has recently been facing major challenges, no thanks to the COVID-19 pandemic. Unfortunately, currency speculators took advantage of the situation by making spurious demand for dollars with the hopes of making good returns from the rising gaps between official and parallel market rates.
Meanwhile, Governor Godwin Emefiele of the CBN and ABCON President, Aminu Gwadabe, have repeatedly spoken against the illicit business of currency speculators and the dangers they pose to the economy and naira’s stability. They have also warned the speculators about the looming danger for their trade if they refuse to retrace their steps; they Could incur losses estimated at over N10 billion in the next few months, especially now that the CBN is enabling BDCs’ full return to the forex market after nearly six weeks of inactivity.
(READ MORE: Devaluation’s drum beats louder)
Governor Emefiele had also appealed to industrialists who patronize the parallel market to stop such practices in the interest of the economy and for the sustainability of their businesses. Failure to do this might result in them incurring the same huge losses as currency speculators.
Both Emefiele and Gwadabe have extensive experience in the market, enough to predict what follows after every major crisis. During the 2016 currency crisis, the market got a major relief after the BDCs began getting dollar allocations from the CBN. That same scenario will soon play out as the BDCs countdown to resumption.
In the meantime, it is obvious that the CBN has come to realize that BDC operators can be the difference between naira recovery and depreciation during volatile times. This is especially true now that the local currency has come under intense pressure, driven mainly by speculative demand for the dollar.
Note that the BDCs are essentially operators who help to get dollars across to the end-users, no matter where they are. The BDC operators have, for decades, proven their relevance in stabilizing the naira. While commenting on the recent moves by the apex bank to resume dollar sales to the BDCs, Gwadabe said:
“The CBN’s planned lifting of moratorium on dollar sales to BDCs, reopening of the airports for air travels as well as global ease on restriction of movement are positive indications that dollar flows to the economy will soon improve.
“The naira has been exchanging at N461 to a dollar at the parallel market but will be upbeat once dollar sales to BDCs commence. The return of over 5,000 BDCs to the forex market will add great strength to the Naira and lead to major capital losses for forex speculators. It happened in 2016 and it will happen again in 2020. The return of the BDCs will immediately boost naira’s recovery and put the enemies of the economy to shame. We are committed to the CBN’s exchange rate stability and will take all necessary steps within set rules and regulations to keep the naira stable.”
Moving on, the CBN said it has taken steps to address the risks facing the naira. Asides other positive developments in the global economy (including oil price recovery thanks to OPEC+ output cuts and IMF’s $3.4 billion emergency funding to Nigeria), the CBN believes its measures will enable a rapid recovery for the local currency. Emefiele explained:
“CBN has also officially reviewed the naira exchange rate to N380 to a dollar. Aside devaluing the naira, the apex bank also adopted a unified exchange rate, and pushed the official rate of the naira to N376 to dollar for International Money Transfer Operators rate to banks; N377 to dollar for banks’ dollar sale to CBN and pegged CBN’s dollar sales to banks at N378, all aimed at attracting Foreign Portfolio Investment and strengthening the local currency. The BDC operators are expected to buy dollar from the CBN at N378 per dollar.”
For Gwadabe, the naira rate review and the CBN’s assurance to foreign investors on the easy repatriation of their funds from Nigeria, are positive indicators for naira’s continued recovery.
(READ MORE: Why the naira is falling)
He also noted that ABCON is reopening guidelines to all its members nationwide included on-boarding of the queuing crowd ticketing management application, known as ABCON 360°QSM portal, by all members. So far, over 80 percent of members registered nationwide.
He also disclosed that they updated all regulatory obligations during the lockdown, such as fumigation of members’ offices/markets, and distribution of second phase of face mask nationwide to our members. They also made provision for wash hand basins and sanitizers at distributions centres, even as members will explore school fees, mortgage, and subscription payments as part of their allowable scope post-COVID-19.
Africa day 2020: Buhari urges economic groups, CSOs and private sectors to drive peace for economic development
President Muhammadu Buhari has urged economic groups, CSOs and private sectors in Africa to strengthen collaborative efforts of the AU.
As Nigeria continues to battle the rising insecurity fuelled by the COVID-19 pandemic, President Muhammadu Buhari has urged regional economic groups, civil society organisations and the private sector in Africa to strengthen collaborative efforts among member-countries of the African Union.
He added that stakeholders must take full ownership of the theme of this year’s celebration to ‘silence the guns’, and allow for economic development in the continent.
”Peace, security, unity, and harmony are prerequisites for development in Africa,” Buhari said, stressing the need for all economic groups to work together to achieve the peace required for economic growth.
This was part of the President’s message to African leaders to mark the celebration of the ”Africa Day 2020,” by the African Union Commission and the World Health Organization (WHO).
President Buhari said Africa has given the world a new hope by choosing the theme ''Silencing the Guns in the context of the COVID-19'' for this year’s Africa Day.
— Garba Shehu (@GarShehu) May 25, 2020
He noted that the selected theme for the year 2020, ”Silencing the Guns in the context of the COVID-19” provides a ray of hope in the seemingly bleak situation caused by the pandemic across the globe.
He stressed the need for African leaders to ensure that every effort is made to ensure the success of silencing the guns in the continent, emphasizing the need to sensitize Africans about the inseparable connection between peace and development.
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About the Africa Day
Africa Day is observed annually on 25 May, in commemoration of the founding of the Organization of African Unity (OAU), which was founded on 25 May 1963 in Addis Ababa, Ethiopia and is now known as the African Union.