Nigeria’s inflationary trend may move higher in the coming months if the nation continues to close its borders to its West African countries. This is according to the outgoing President of LCCI, Babatunde Ruwase.
He projected that the current 11.25% which was announced by the National Bureau of Statistics at the end of September 2019 may move higher in time to come, Punch reports.
Ruwase who said this at the 131 annual general meeting of the body, shortly before he handed over to a new president, Mrs Toki Mabogunje said that he naira had been relatively stable against the US dollar, which was largely sustained by the Central Bank of Nigeria’s intervention in the currency market, however, said that the continued injection of liquidity into the foreign exchange market to ensure the stability of the local currency was not sustainable.
He dwelt on the fear of global oil prices crashing which he said might weaken the CBN’s ability to defend the naira.
“Inflation will most likely trend higher in coming months considering continued shutdown of the land borders, implementation of the new minimum wage, proposed a hike in Value Added Tax rate, festive-related consumer spending and recent flooding incidents which may affect harvesting of food crops.
“Increasing inflation may further worsen the poverty status of many and this calls for concern,” Ruwase said.
More details: Speaking further, Ruwase went on to praise the administration of President Muhammadu Buhari on his pro-investment initiative, Presidential Enabling Business Environment Council, and other Executive Orders which he said had moved Nigeria 15 places up the ladder in the 2020 World Bank’s Ease of Doing Business report to 131st position from 146th last year.
However, he stated that there was still a lot the Federal Government needs to do in terms of fostering an environment where small businesses could do well. He emphasized the fact that sound and result-oriented business regulations were critical to private sector development.
The President added that to achieve this feat, it was imperative that the Federal Government tackles regulatory bottlenecks by some of its agencies which were hurting businesses. Also, areas like insecurity and infrastructure deficit such as power and roads would need to be addressed.
Guinness warehouse in Lagos on fire
The warehouse was said to be used in storing plastic crates.
A warehouse that is reportedly owned by Guinness Nigeria Limited, along the WEMPCO Road, Ogba, has been gutted by fire.
The warehouse was said to be used in storing plastic crates.
READ MORE: Why Guinness is a stock to pick – RenCap
Director-General, Lagos State Emergency Management Agency, Olufemi Oke-Osanyintolu, explained that emergency responders, including the LASEMA response team and official of the state fire service, were on ground to salvage the situation, adding that the immediate cause of the fire could not be ascertained.
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He said, “On arrival at the scene of the incident at 0430am, it was observed that a warehouse storing plastic crates which appears to belong to the Guinness Nigeria Limited and used to store plastic crates, had been burnt.
“The immediate cause of the fire could not be determined. However, the agency’s responders and LASG Fire Service officials are on ground to carry out a dampening exercise to forestall any spread or secondary incident.”
READ ALSO: UPDATE: CAC headquarters in Abuja on fire
More details later…
Fitch forecasts that banks’ earnings will be hit hard by CBN’s CRR policy, others
The CRR debits on Nigerian banks have exceeded the N2 trillion mark in 2020 alone.
Foremost International Rating Firm, Fitch Ratings, has forecast that punitive policies by the Central Bank of Nigeria (CBN), especially the Cash Reserve Ratio (CRR) debits on Nigerian banks, will negatively impact on their earnings.
According to the rating firm, this is coming at a time when most other countries are giving banks extra leeway to fight the economic fallout of the coronavirus.
The Senior Director for Europe, Middle East and Africa at Fitch, Mahin Dissanayake, in an interview, said:
“The Central Bank of Nigeria has been highly interventionist. Where peers like South Africa and Kenya followed the global trend of giving banks more room to lend, Nigeria hasn’t budged. Instead, it stuck with a cash reserve ratio that compels lenders to park 27.5% of their deposits with the central bank.’
“The CRR is unique and hugely punitive. The regulation is aimed at reducing the amount of money in the financial system to keep inflation in check.’’
Dissanayake pointed out that keeping those huge idle cash with the CBN in a non-interest yielding account puts a lot of pressure on the earnings of the banks, as they would have been put to better use through ventures such as lending. The inability of the banks to meet the requirements of the apex bank results in the debiting of the banks’ accounts with the shortfall.
The CBN also debits the accounts of banks who fail to meet the 65% loan to deposit ratio (LDR) regulation, a policy which is aimed at stimulating credit in the economy.
The CRR debits on Nigerian banks have exceeded the N2 trillion mark in 2020 alone, some of which are speculated to be aimed at reducing the capacity of the lenders to participate in the foreign exchange market and as a result reducing the pressure on the naira.
According to an earlier report from Nairametrics, some analysts suggest that the CBN debits the accounts of banks arbitrarily without adhering to the 22.5% CRR, just to manage the liquidity in the system.
Dissanayake disclosed that enforcement of these policies and penalties have caused an effective hit on capital to between 40% and 50%.
He said, “Nigerian banks compared to other markets operate in a volatile environment. The banks have to deal with economic shocks, short credit cycles and persistent problems in the oil sector. They also have to deal with policy actions, policy uncertainty and regulatory risks.”
He, however, said that the positive side of this is that the strong revenue-generating capacity in a large Nigerian economy allows the banks to absorb the higher cost of risk even when income from interest charges on loans deteriorate.
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The financial results for the first half of the year saw Nigerian banks record trading and foreign exchange revaluation gains which had neutralized the lower yields on government bond holdings, slower loan growth and fewer transactions from customers due to the effect of the coronavirus pandemic.
Dissanayake forecasted an estimated 20% decline in revenue, with a decline as well in profitability. The degree of decline in profitability will depend on the extent of loan impairment charges and the size of trading and translation gains.
NBC slams N5 million fine on Nigeria Info over Mailafia’s inciting comments
This was contained in a press statement which was issued by NBC on Thursday.
The Nigerian Broadcasting Commission (NBC) has slammed a fine of N5m on a radio station, Nigeria Info, over the recent claim by a former Deputy Governor of the Central Bank of Nigeria, Dr Obadiah Mailafia.
Mailafia, in an interview in one of the radio station’s programmes, claimed that some of the repentant Boko Haram militants confessed that one of the northern governors is the commander of Boko Haram in Nigeria.
This was contained in a press statement which was issued by NBC on Thursday, August 13, 2020, titled, ‘’The National Broadcasting Commission fines Nigeria Info 99.3 for Unprofessional Broadcast’’.
The NBC expressed its displeasure at the radio station for providing its platform to be used to promote unverifiable and inciting views that can lead to crime and public disorder.
The NBC’s statement reads, ”The National Broadcasting Commission has noted with grave concern, the unprofessional conduct of Nigeria Info 99.3FM, Lagos, in the handling of the Programme, “Morning Cross Fire”, aired on August 10, 2020, between 8.30 am and 9.00 am. The station provided its platform for the guest, Dr Mailafia Obadiah, to promote unverifiable and inciting views that could encourage or incite to crime and lead to public disorder.”
”The Commission, again, wishes to reiterate that Broadcasters hold Licenses in trust for the people. Therefore, no Broadcast Station should be used, to promote personal or sectional interests at the expense of the people.”
NBC noted that Dr Obadiah’s comments on the Southern Kaduna crisis, were devoid of facts and the broadcast of such by Nigeria Info 99.3 violates some sections of the Nigeria Broadcasting Code which include;
- No broadcast shall encourage or incite to crime, lead to public disorder or hate, be repugnant to public feelings or contain an offensive reference to any person or organisation, alive or dead or generally be disrespectful to human dignity;
- Broadcasting shall promote human dignity, therefore, hate speech is prohibited;
- The broadcaster shall ensure that any information given in a programme, in whatever form, is accurate;
- The Broadcaster shall ensure that all sides to any issue of public interest are equitably presented for fairness and balance;
- The broadcaster shall ensure that language or scene likely to encourage or incite to crime, or lead to disorder, is not broadcast;
- No programme contains anything which amounts to subversion of constituted authority or compromises the unity or corporate existence of Nigeria as a sovereign state;
- The Broadcaster shall not transmit divisive materials that may threaten or compromise the indivisibility and indissolubility of Nigeria as a sovereign state.
The NBC further states, ”Consequent on these provisions and in line with the amendment of the 6th edition of the Nigeria Broadcasting Code, Nigeria Info 99.3FM Lagos, has been fined the sum of N5,000,000.00 (Five Million Naira), only. This is expected to serve as a deterrent to all other broadcast stations in Nigeria who are quick to provide a platform for subversive rhetorics and the expositions of spurious and unverifiable claims, to desist from such.”
The NBC also stated that it will not hesitate to suspend the license of broadcast stations that continue to breach to breach the broadcast code.