The continuous increase in Nigeria’s external reserves appears to have been sustained as it recorded a third consecutive week of growth at the end of last week. Available data from the Central Bank of Nigeria (CBN) show that the country’s external reserve had risen to about $35.77 billion as of May 21, 2020.
Despite the volatility of the foreign exchange market due to decline in crude oil export earnings, the external reserves increased sharply by almost $1 billion in just 9 days, rising from the $34.78 billion that it recorded on May 12, 2020, to about $35.77 billion that it ended with on May 21, 2020.
Nigeria’s external reserves have been on a steady increase since April 29, 2020, when it stood at $33.42 billion. This represents an increase of about $2.35 billion or 7% in 21 days.
It should be noted that Nigeria’s external reserves went on a downward slide last year, after hitting a peak of $45.17 billion on June 11, 2019, thereby losing $11.75 billion within a space of 10 months.
The recent gradual increase of the external reserves and improved liquidity in the foreign exchange market, thanks to the CBN, have helped to strengthen the naira at the Investors and Exporters (I&E) window. This was especially the case last week when the naira exchanged at N385.94 to a dollar from N386 to a dollar.
Note that the improved liquidity in the foreign exchange market and the continuous increase in the country’s external reserves were also made possible by the recent disbursement of $3.4 billion emergency facility by the International Monetary Fund (IMF) to the CBN on May 6, 2020. The money was intended to help Nigeria mitigate the impact of the coronavirus pandemic.
Recall that the naira has been under pressure against other major currencies, particularly the dollar, even as currency speculators have been making a lot of demands for dollars so as to make profits on future sales.
Just last week, the CBN Governor, Godwin Emefiele, had to warn speculators and businesses to stop patronizing the parallel market operators. According to him, the rates they are buying dollar now are unrealistic and possibilities abound that they will lose their money if they continue to do so. It has been estimated that speculators could incur over N10 billion losses.
In the meantime, Governor Emefiele had promised more liquidity in the forex market, assuring that all genuine dollar demands by businesses and individuals will be met. This is coming against the backdrop of the planned resumption of dollar sales to the Bureau De Change Operators (BDC) by the CBN after almost 6 weeks that was suspended due to the lockdown occasioned by the coronavirus pandemic. The President of Association of Bureau De Change Operators (ABCON), Aminu Gwadebe, had pointed out that the return of the BDCs to the forex market will help chase away speculators, curb rising inflation, boost productivity and employment, enhance price discovery, enhance market transparency and competitiveness.
China’s economy bounces back from COVID-19 slump, with a growth of 4.9% in Q3 2020
The Chinese economy has seen a growth of 4.9% between July and September, rising from the slump of the COVID-19 pandemic.
The Chinese economy has continued to show stronger recovery from the COVID-19 pandemic, as its economy saw growth of 4.9% between July and September – Q3 2020, compared to the same quarter last year. However, the figure is lower than the 5.2% projected by most international economists.
China is now leading the charge for a global recovery based on its latest Gross Domestic Product (GDP) data. The near 5% growth is a far cry from the slump the Chinese economy suffered at the start of 2020 when the pandemic first emerged.
China’s trade figures for September also pointed to a stronger recovery, with exports growing by 9.9% and imports growing by 13.2% compared to September last year.
It appears to be a broadening recovery with the important services sector rebounding. Domestic tourists and travelers have probably helped the recovery continue by spending their money at home because global restrictions mean they can’t yet go abroad. With international travel severely restricted, millions of Chinese have been traveling and spending domestically.
What you should know
- While the COVID-19 pandemic has hampered the year’s growth targets, China remains in a trade war with the US and it has relatively hurt its economy.
- For the first three months of the year, China’s economy shrank by 6.8% when it saw nationwide shutdowns of factories and manufacturing plants. It was the first time China’s economy contracted since it started recording quarterly figures in 1992.
- Over the previous two decades, China had seen an average economic growth rate of about 9%; although, the pace has gradually been slowing.
- There were 637m trips in China over the eight-day holiday which generated revenue of 466.6bn RMB ($69.6bn, £53.8bn), according to data from its Ministry of Culture and Tourism.
- Duty-free sales in the tropical island province of Hainan more than doubled from last year, soaring by nearly 150% according to the local customs data.
What they are saying
According to Iris Pang, Chief China Economist for ING in Hong Kong, “I don’t think the headline number is bad. Job creation in China is quite stable which creates more consumption.”
According to Robin Brant, BBC China correspondent, “China’s economy continues to grow at rates unimaginable in other Covid-hit countries. Draconian lockdown measures to control the virus combined with some government stimulus appeared to have worked well. While the growth of 4.9% is slightly below some forecasts, industrial output – a good barometer of state-controlled activity, came in above expectations”
According to Yoshikiyo Shimamine, Chief Economist at the Dai-Ichi Life Research Institute in Tokyo, “China’s economy remains on the recovery path, driven by a rebound in exports, but we cannot say it has completely shaken off the drag caused by the coronavirus.”
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WTO DG: Okonjo-Iweala gets the backing of 79 countries so far
Okonjo-Iweala has disclosed that she has gotten the endorsement of 79 out of the 164 countries that comprise the WTO.
Nigeria’s candidate for the vacant World Trade Organization (WTO) Director-General post, Ngozi Okonjo-Iweala, has expressed confidence in her quest to lead the crisis-ridden global trade organization after all of Africa backed her candidacy, vowing she would champion reform.
This disclosure was made by Nigeria’s former Finance Minister at a virtual press briefing on Friday, October 17, 2020, after 55-member African Union officially supported her over the sole remaining opponent, Yoo Myung-hee of South Korea.
Okonjo-Iweala during the virtual press briefing said, “I feel the wind behind my back,”
She said she was thrilled to learn that all African countries are supporting her. According to her, this is in addition to a group of Caribbean and Pacific countries, who had promised to back her, bringing the number of countries officially endorsing her candidacy to 79 out of the 164 countries that comprise the WTO.
She was also optimistic of support from Latin American and felt she has gotten very good traction and good support in Asia so far.
She said the European Union was meanwhile due to announce its preference soon and feels quite confident that across the regions, they will be able to attract support.
The global trade body is set to be led by a woman for the first time whichever of the two candidates is successful in their bid to succeed Roberto Azevedo, who stepped down as WTO director-general in August a year ahead of schedule.
Okonjo-Iweala, 66, who served as Nigeria’s first female finance and foreign minister and has a 25-year career behind her as a development economist at the World Bank, said it would be good if WTO could also boast its first African leader.
She said, “If that person is African and a woman, I think that is great. Because… neither an African nor a woman has led the organization.’’
“The WTO at this time with the challenges it confronts needs a very competent Director General who is able to have the political reach and stature to be able to do reforms and deal at very high levels. It is not only having those skills, but having them all meet in one person at this juncture when the WTO needs that.”
The WTO was already grappling with stalled trade talks and struggling to manage tensions including trade disputes between the United States and China, even before the outbreak of coronavirus pandemic.
The global trade body has also faced relentless attacks from the United States, which has crippled the WTO dispute settlement appeal system and threatened to leave the organization altogether.
Okonjo-Iweala said she had broad experience in championing reform and was the right person to help put the WTO back on track.
She said, “I am a reform candidate and I think the WTO needs the reform credentials and skills now.”
It can be recalled that the initial pool of 8 candidates for the WTO’s top post, which has been reduced after 2 rounds of elimination processes, had included 3 Africans, and the AU had until now refrained from offering an official endorsement.
The third and final round of consultations seeking to establish consensus around one candidate is due to begin next week and end on October 27, with the announcement due in early November.
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Update: Buhari seeks power to freeze accounts, clamp down on money launderers
President Buhari is seeking approval of the Reps to grant the EFCC powers to freeze accounts allegedly holding proceeds of crime.
President Muhammadu Buhari has sent a bill to the House of Representatives, seeking their approval to grant the Economic and Financial Crimes Commission (EFCC) the powers to freeze accounts allegedly holding proceeds of crime and go hard on money launderers.
This is contained in a letter written by the President and read by the Speaker of the House of Representatives, Femi Gbajabiamila, during plenary on Wednesday, October 14, 2020, at the National Assembly complex in Abuja.
It can be recalled that assent to the same Bill was withheld by President Buhari in 2019, following the worsening working relationship between the National Assembly and the Executive.
According to the letter read by Gbajabiamila, part of the bill sought the creation of a Proceeds of Crime (Recovery and Management) Agency. This is coming after the bill was approved by the Federal Executive Council on September 16, 2020, for onward transmission to the National Assembly.
The letter from the president, partly reads, “Please recall that this bill was passed by the National Assembly in 2019 but was not granted assent due to some issues that were identified during the review.
“The Proceeds of Crime Bill is essential and critical in building an enduring and sustainable foundation for the fight against corruption, money laundering and illicit movement of stolen funds through the banking system and across the Nigerian borders.
“The bill will also improve the ability of law enforcement agencies to seize, freeze and confiscate stolen assets in Nigeria while observing all related constitutional and human rights laws.
“This bill will also address the problem of lack of transparency, accountability and lack of credible records associated with the current procedure in the management of recovered funds by anti-corruption agencies and other institutions in Nigeria.”
The President, in the letter, said that some of the objectives of the proposed agency include the enforcement and administration of the provisions of the bill, the coordination of the recovery and management of the proceeds and instrumentalities of unlawful activity in Nigeria, in collaboration with anti-corruption and other law enforcement agencies.
He disclosed that once recovery is made from the proceeds of crime, the agency will ensure that Nigerians derive maximum benefit from it. The properties and assets will be secured and the final forfeitures granted through a court order can be paid into the Confiscated and Forfeited Account to be domiciled in the Central Bank of Nigeria.