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How expelling Nigeria from Egmont Group could effect you

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The Egmont group reportedly plans on expelling Nigeria’s Financial Intelligence Unit (FIU) at its meeting, scheduled for the 2nd-7th of March 2018 at Buenos Aires, Argentina.

The initial suspension placed on Nigeria in July 2017 was billed to last until January 2018. In response, the Senate passed a bill granting autonomy to the Nigerian Financial Intelligence Unit (NFIU).

What is the Egmont Group?

The Egmont Group is a united body of 155 Financial Intelligence Units (FIUs). The group provides a platform for the secure exchange of expertise and financial intelligence to combat money laundering and terrorist financing. Nigeria joined the organization in 2005 but was granted full membership in 2007.

Why Nigeria may be expelled

The Egmont Group is unconvinced that Nigeria’s Financial Intelligence Unit (NFIU) has sufficient independence from the Economic and Financial Crimes Commission (EFCC). The EFCC has been alleged to have used critical information it had obtained to arm-twist individuals that had cases. The body had also requested from a proper legal framework, in addition to a physical relocation.

Reps and Senate bicker

The bill is yet to be harmonized with the House of Representatives which is insisting on the NFIU being domiciled with the EFCC. The difference of opinions between both chambers has led to a delay in the bill being submitted to President Muhammadu Buhari for approval.

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A section of the Reps’ version of the bill places the collation of all reports relating to suspicious financial transactions, analysing and disseminating them to all relevant government agencies on the EFCC. This then means the body will be under the supervision of the EFCC.

The Reps are of the opinion that the laws granting legal autonomy are more important than the physical location of the NFIU.

In theory, the EFCC has granted the body autonomy, but in practice, this has not happened.

Why has this taken so long to settle?

Typically, Nigeria tends to leave critical issues to the last minute. Therefore, it is not surprising that no action has been taken just yet. The Senate has also had a running battle with the EFCC Chairman, who has not yet been confirmed (by the Senate). Had the two arms had a cordial relationship, this may have been resolved in time.

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Implications of an expulsion

On the country

The country’s war against corruption would also be affected as an expulsion would mean it will not have access to financial intelligence from sister agencies outside the country. The political elite in the country often launder huge sums of money to European countries. An absence of such information from financial intelligence units abroad makes it difficult to recover such funds.

The Muhammadu Buhari administration had picked the war against corruption as a key agenda. while his commitment to fighting corruption is largely debatable, an expulsion also gives a negative impression internationally, as regards Nigeria’s seriousness with the war on corruption.

On banks

If the expulsion goes through, Nigerian banks would be unable to issue ATM cards by Mastercard and Visa.The banks’ card income will also take a hit, coming at a time when yields on money market instruments are dropping

Banks may also have to access foreign trade lines and loans at a premium, making such funds slightly more expensive for them. This added cost will be in turn passed to businesses and customers.

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On businesses

E-commerce firms will also be affected since their business models are largely online. They would be forced to rely on cash for transactions, which comes with higher processing costs. The expulsion could also throw a spanner in the Central Bank of Nigeria’s bid to improve financial inclusion.

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Many goods sold on such sites are imported. Hence a restriction on card usage means businesses would have to find alternative ways of purchasing goods. This then makes them more expensive, as most consumers would prefer to buy directly than using a Nigerian e-commerce site.

Manufacturers in the country are will also be affected as a large proportion of their raw materials are imported. At the peak of the foreign exchange crisis in 2016, many were forced to rely on the parallel market, to meet FX needs. An increase in raw materials cost leads to an increase in the price of the goods sold.

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How it affects you

You may be forced to rely on cash for transactions abroad in the absence of cards. This could then push you to the parallel market, as official markets limit the amount of cash one can buy per quarter. Parallel market rates are more expensive than official rates.

Nigerians spend a large proportion of foreign exchange on upkeep for their wards schooling abroad, hospital bills, and personal travel allowance.

Pressure on the parallel market then leads to a depreciation in its rates. Parallel rates will become more expensive. This then makes regular transactions even more expensive for the average Nigerian.

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training.He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE).He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy.You can contact him via [email protected]

Economy & Politics

Uganda Elections: Museveni re-elected for 6th term with 58.6% of the votes

Uganda’s President Museveni has won a 6th term in office as the opposition alleges wide-scale rigging.

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The President of Uganda, Yoweri Museveni, has been re-elected as President, gathering 5.85 million votes compared to 3.48 million votes by main opposition leader, Robert Kyagulanyi, a.k.a Bobi Wine.

According to Reuters, this victory represents 58.6% of the vote cast while Bobi Wine got 34.8%

Bobi Wine announced that the election results show this is the most fraudulent election in the history of Uganda and urged his followers to reject the result.

What you should know

  • Yoweri Museveni, aged 76, has been President of the East African nation since 1986.
  • Bobi Wine claimed via his official Twitter handle that military men jumped over his fence and took control of his home yesterday.

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Coronavirus

Combined Vaccine Manufacturing capacity to hit 6.8 billion doses in 2021

COVID-19 vaccine manufacturing capacity is expected to hit 6.8 billion doses in 2021.

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Covid-19: First world nations oppose waiving intellectual rights for vaccine development

Meristem Group disclosed that the combined effort in manufacturing COVID-19 vaccines for global use is expected to yield about 6.8 billion doses in 2021.

This was revealed in the Annual Outlook 2021 report presented by Meristem Group, titled Bracing for a different future.”

According to the report, the existing manufacturing capacity will only be sufficient enough to immunize about 44% of the global population, which would create obvious vaccination gap and make the pandemic last longer than necessary.

The report states,

  • The cold temperature requirements for vaccine storage pose major logistics concern particularly in Sub-Saharan Africa and other low-income countries. WHO estimates that about 50% of vaccines are wasted every year, largely due to a lack of temperature control.”

According to the report, the estimated 6.8billion doses are expected to be collaboratively manufactured as follows:  CanSino – 0.2billion, AstraZeneca – 3.0 billion, Gamaleya – 0.3billion, Moderna – 0.4billion, Pfizer-BioNtech – 1.3billion, SinoPharm – 1billion, and SinoVac – 0.6billion.

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What you should know

  • The global population as of 2020 is 7.8billion and 70% is required to achieve herd immunity (otherwise called herd protection)
  • Herd Immunity or herd protection is achieved when you have most of the population immunized against an infectious disease.
  • 2 doses of the vaccines are required for each person for immunity.
  • It is expected that between 11 and 15 billion doses would be required to achieve the desired herd immunity, globally.
  • From all indications, herd immunity may not be achieved until mid or late 2022, with the subsisting 100% vaccine production capacity utilization in 2021 – with neither production nor distribution losses.
  • To achieve regulatory approval, a vaccine must undergo a three-stage clinical development process after the exploratory and pre-clinical stages and the U.S Food and Drug Administration (FDA) sets a phase 3 efficacy benchmark of 50%.

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Coronavirus

Covid-19: Global deaths surpass 2 million

Global casualty record for the Covid-19 pandemic surpassed 2 million deaths on Friday.

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Nigeria blows past 40,000 COVID-19 cases

The Global casualty record for the Covid-19 pandemic surpassed 2 million deaths on Friday, with the United States accounting for 1 in every 5 deaths, as it has recorded over 386,000 casualties so far.

This was disclosed in a report by Reuters in its Covid-19 tally reported on Friday evening.

After the United States, Brazil, Mexico, India and the U.K contribute nearly 50% of the combined casualties.

The report also disclosed that an average of 11,900 casualties are recorded per day in year 2021, despite the fact that it took 9 months for the world to record 1 million casualties.

United Nations Secretary-General, Antonio Guterres, said the 2 million death count was “a heart-wrenching milestone.”

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  • “Behind this staggering number are names and faces: the smile now only a memory, the seat forever empty at the dinner table, the room that echoes with the silence of a loved one,” he added.

The WHO warned that 2021 could be tougher due to the nature of new variants which transmit the disease faster.

  • “We are going into a second year of this. It could even be tougher given the transmission dynamics and some of the issues that we are seeing,” WHO Chief, Mike Ryan, said.

Analysts expect the global death toll to surpass 3 million by April 2021.

What you should know 

  • Nairametrics reported that the total number of covid-19 cases in Nigeria had surpassed the 100,000 mark on Sunday 10th January 2021, according to the Nigeria Centre for Disease Control.
  • The African Union stated that it secured 270 million Covid-19 vaccine doses for the continent from drug manufacturers to supplement the COVAX programme, a step towards the commencement of the complex task of vaccinating over 1.2 billion people with limited financial resources.
  • The Nigeria Centre for Disease Control on Friday 15th January 2021, announced that 1,867 new cases of the covid-19 virus were recorded across 24 states in the country. This represents the highest number of cases recorded in a single day.

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