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CBN is no longer independent – Moghalu

Former Deputy Governor of CBN, Kingsley Moghalu, in reaction to President Buhari’s order to the apex bank to ban FOREX on food importation, has said that the bank has lost its independence

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Kingsley Moghalu, Food importation ban

A former Deputy Governor of the Central Bank of Nigeria (CBN), Kingsley Moghalu has reacted to President Muhammadu Buhari’s order, directing the apex bank to ban FOREX on food importation. In his reaction, Kingsley Moghalu said the Central Bank has lost its independence.

In a series of tweets posted after the President gave the directive, Moghalu said the issue isn’t whether or not CBN should allow access to Forex for food imports. According to him, it is about whether such an economic policy should be imposed by a political authority.

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[READ ALSO: CBN sets N650,000 as accreditation fee for personalised cheques]

Moghalu made known that an economic policy like the new directive is a major reason for the country’s poverty and instability. He also emphasised that a weak economy begets weak institutions.

The former United Nations Officer further stressed that Nigeria’s marketplace should be regulated and guided in a rational manner that creates a level playing field.

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Moghalu’s tweets read, “Our economy will not be saved by Ad Hoc political decisions like this, handed down by the very institutions that should be shielded from the whim and caprice of politicians.

“Nigeria’s entire economy appears to have been sub-contracted to our Central Bank, including industrial and trade policy. In the process, the economy has fared poorly, and the Central Bank has lost its independence. This is sad!

“@NGRPresident should leave @cenbank alone to discharge its mandate independently within the ambit of the CBN Act and stop ‘directing’ it. @cbnbank should on its part assert its independence (assuming it actually believes it should be independent, but the Act says so, clearly!).”

[READ ALSO: CBN reacts to exchange rate policy change, says Naira not “floated”]

Nairametrics had reported that President Buhari, in a statement, directed the Central Bank to stop providing FOREX for the importation of food into the country.

What you should know: One of Nigeria’s Foreign Exchange Windows is the Investors’ and Exporters’ windows (I&E FX Window), where investors transact foreign currencies for investing purposes. In this market, foreign currencies are usually pegged as the CBN is equally a participant.

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By restricting FOREX for food, it means food importers will have to source for FOREX through the parallel market or other means.

Buying from the parallel market or other sources come at a high cost, and this may trigger the general price level and prices of food items will jack up.

Restricting FOREX for food importation is indeed a welcome development, however, the Presidency needs to cautiously approach this, as the policy may nosedive the economy into stagflation (a condition of slow economic growth and relatively high unemployment, accompanied by rising prices).

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[READ ALSO: $1 billion military spending shrinks Excess Crude Account to $480 million]

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Patricia

Famuyiwa Damilare is a trained journalist. He holds a Higher National Diploma (HND) in Mass Communication at the prestigious Nigerian Institute of Journalism (NIJ). Damilare is an innovative and transformational leader with broad-based expertise in journalism and media practice at large. He has explored his proven ability in the areas of reporting, curating and generating contents, creatively establishing social media engagements, and mobile editing of videos. It is safe to say he’s a multimedia journalist.

1 Comment

1 Comment

  1. Dan M

    August 14, 2019 at 6:51 pm

    I totally agree with Dr Moghalu. Despite the President’s best intentions, this isn’t the proper way to run a country. There are so many considerations that go into framing up economic policies or tinkering with levers. And in some cases, decisions that seem rational might not yield the anticipated results. We as a matter of urgency need to get professionals into the right offices and allow them do their jobs. There isn’t any other way to make progress. No shortcuts! No winging it!!

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Business News

Shoprite lays off 115 workers, shuts down second branch in 5 months

The company has been reviewing its long-term options in Africa after currency devaluations.

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Shoprite’s sales drop by 8.1% in Nigeria in H2 2019 over Xenophobic attacks

Barely three days after announcing a planned divestment from of its Nigerian operation, Shoprite Holdings has informed workers’ union in Kenya that it will be laying off 115 staff effective August 31, 2020.

The job cuts follow the closure of City Mall branch in Nyali, Mombasa, the second branch to be closed in Kenya within a period of five months. Shoprite has cited reduced patronage for its decision to close down the outlets.

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According to a report, Shoprite sent a notice to the Kenya Union of Commercial Food and Allied Workers (KUCFW). Part of the notice said:

“Endeavour to continue trading at the Nyali branch is no longer viable. Financial and other data will be provided and discussed at a proposed meeting. It is contemplated that the intended date of termination on account of redundancy will be August 31, 2020. There are currently 115 persons employed at the branch of which 92 are members of KUCFW.”

More details: Earlier in April, Shoprite had also closed Karen Branch, Nairobi, laying off no less than 104 workers in the process. These closures will most likely constrain Shoprite’s expansion efforts across the East African country.

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Nairametrics understands that Shoprite opened operations in Kenya back in 2018, with hopes of taking advantage of the country’s disorganised retail sector. Unfortunately for Shoprite, it has recently had to combat increased competition from cash-rich retailers such as Naivas and Carrefour.

Note that other smaller competitors in the country have also had to close branches due to lack of profitability.

Meanwhile, Shoprite recently had to deal with a lawsuit from the billionaire Muguku family, which owns Waterfront Mall. The Muguku family was seeking Sh520 million in lost rent after the retail chain cut short its tenancy at the mall.

The Backstory: The retail giant announced on Monday that it will divest from its business operations in countries outside South Africa, due to low profitability. An internal memo sent to its staff in Nigeria on July 31, 2020, disclosed that the new owners of the Nigerian subsidiary will work with the management to drive the expansion plans in Nigeria.

The company has been reviewing its long-term options in Africa after currency devaluations, supply issues, and low consumer spending in Angola, Nigeria, and Zambia began to weigh on earnings.

There are speculations and fears that this new move in Nigeria could result in job cuts, especially if the new owners decide to make adjustments to the business model.

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Hospitality & Travel

COVID-19: Virgin Atlantic files for bankruptcy

The airline is seeking protection under chapter 15 of the US bankruptcy code.

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Covid-19 crisis: Virgin Atlantic files for bankruptcy

The  British airline, Virgin Atlantic, has filed for bankruptcy as the global aviation industry continues to grapple with the devastating effects of the Coronavirus pandemic.

According to a report by Daily Mirror, this recent action is coming after Virgin Australia filed for voluntary administration, a type of bankruptcy, in April.

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An earlier appeal by the airline for a bailout from the British Government was turned down by ministers, leaving the airline in a race against time to secure new investment.

The airline’s boss, Sir Richard Branson, even offered to pledge his Caribbean holiday island Necker in exchange for investment.

In the meantime, the airline said it will most likely run out of cash by September.

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David Allison QC, for Virgin Atlantic Airways Limited, previously said: “The group’s financial position has been severely affected by the ongoing Covid-19 pandemic, which has caused unprecedented disruption to the global aviation industry.’’

‘’Passenger demand has plummeted to a level that would, until recently, have been unthinkable. As a result of the COVID-19 pandemic, the group is now undergoing a liquidity crisis.’’

(READ MORE: Bristow Helicopters sacks about 100 pilots due to Coronavirus pandemic)

A spokesperson for Virgin Atlantic disclosed that the airline attended a court session on Tuesday as part of a solvent recapitalization process under 26(A) of the UK Companies Act 2006. That process would be going ahead with the support of the company’s majority creditors.

The airline’s official said, “Following the UK hearing held earlier today, ancillary proceedings in support of the solvent recapitalization were also filed in the US under their Chapter 15 process. These ancillary US proceedings have been commenced under provisions that allow US courts to recognize foreign restructuring processes.’’

‘’In the case of Virgin Atlantic, the process we have asked to be recognized is a solvent restructuring of an English company under Part 26A of the English Companies Act 2006.

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The UK based airline is seeking for protection under chapter 15 of the US bankruptcy code, which allows a foreign debtor to shield assets in the country.

This move is coming less than a month after the airline disclosed that it had agreed a rescue deal worth $1.6 billion to secure its future beyond the Coronavirus crisis. Under the arrangement, Virgin’s boss, Richard Branson, would inject $200 million, with additional funds provided by investors and creditors.

This proposal needed to secure approval from creditors under a court-sanction process.

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Mr Allison told Justice Trower that the Virgin Atlantic Group has sound business model during a high court hearing on Tuesday.

It can be recalled that Virgin Atlantic, who have been heavily impacted by the coronavirus pandemic had put in some measures to ensure the future of the airline is safeguarded. Some of these measures include the reduction of its schedule to prioritize core routes based on demand, cut over 3,000 jobs and so on.

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Tech News

Sim cards are now virtual and here’s why we like it

Telcos have moved from macro Sims to micro and nano Sims, now we have the eSims.

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MTN announced on July 15, 2020, that its virtual sim cards are now available in Nigeria. This eSim (embedded sim) is built into the smart device and provides the same function as the physical Sim cards; the difference is they cannot be damaged or lost like the physical ones. In cases where there is a damaged phone, the user will need to visit an MTN store to have it deactivated. Also, the MTN eSim can have more than the limited 200 contacts the physical cards normally carry.

However, not everyone can use the eSim just yet as it is compatible with a limited number of phone brands, some of which include: Google, Apple and Samsung, and even then, there are only a few models of these named brands the eSim can be integrated into.

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How does it work?

The eSim has to be activated onto a user’s device. This activation will be done in an MTN store by a customer service agent, this process according to MTN comes at no cost to the user. As soon as the device is confirmed to be compatible, a profile of the subscriber is created and the agent completes the integration process.

Reportedly, MTN will be testing the virtual sim cards over the next 1 year and will only be available to 5000 people during this test run. Also, current phone numbers cannot be linked to the eSim cards at the moment.

Nonetheless, this is yet another first for MTN, Nigeria’s’ biggest telecom company. The telco is no stranger to firsts in these parts; since 2001, the company has been credited with many firsts when it came to mobile communication and internet penetration. With the launch of the eSim, MTN has become the pioneer in West Africa.

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Why are we liking the Idea of eSims in Nigeria?

It is rather early to say whether or not the eSim will in time completely phase out the physical cards Nigerians are used to but the many upsides that come with it, give room for us to want the eSim to thrive.

Sims have had one of the most exciting evolutions- Telcos have moved from macro Sims to micro and nano Sims, now we have the eSims, very soon, we’ll probably go simless all together.

The Upsides?

  1. Using eSims means no more need for a sim card slot in newer model devices- so in case of a damaged slot, you can still use your device. Most devices that are compatible still have the sim card slot but just like the head phone jacks, the slots will probably disappear too.
  2. It is much easier to have multiple telephone numbers on one phone- no need to spend so much on a phone that supports two sim cards and no need to swap out sim cards any longer.
  3. It’ll be much easier to buy one off data plans and phone services when travelling abroad.
  4. Phones with the eSim feature have much more internal space, so they can fit in more components like bigger batteries, not just phones.
  5. eSims can be used in smart watches without having to link it to your phone.
  6. With the eSim comes locks to prevent anyone other than the user from using the embedded device, making it almost useless for anyone who intends to steal.

The Downsides?

  1. The process when a user wants to switch phones can be a bit of a hassle- they would have to log on to your carriers system to inform on the number change for the new phone/device.
  2. User can be tracked easily seeing as you cannot fully disconnect from the network.
  3. Can only work on expensive devices- this relatively new technology can only work on new and expensive phone and devices, hence, the chance it will go mainstream in Nigeria where there is still a large market for the older model phones that are not even internet compatible is rather unlikely.
  4. Could cause a slow in business for telecom companies as the eSim allows consumers to purchase data connectivity from whoever they choose online.

From all the offerings of the eSim, it seems the most beneficial to a user who travels a lot rather than the next door mobile phone user. Regardless, the eSim has a lot of potential and eventually it could take the place of physical cards, but for now they will have to exist alongside the physical cards.

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