The Central Bank of Nigeria’s (CBN) recent policy introduced to remove third parties from accessing its SMIS forex window through FORM M forex purchases is allegedly expected to translate to disruption of the supply chain of the business community.
This was disclosed by the Director-General of Lagos Chambers for Commerce and Industry, Dr Muda Yussuf, during an interview on TVC recently. According to him, the implementation of the policy would translate to the disruption and dislocation of over 80% supply chain of the business community.
He explained that the development would create more problems than it would solve, as activities of small business owners trading in the domestic economy would be severely affected.
He said; “Small businesses don’t have the capacity to connect with the original producers of these things, because these intermediaries play the role of aggregating the demand of these small businesses, and then they go on to buy in bulk from original supplies and producers as the CBN called them and then sell in smaller portions to the SMEs.”
Back story: Nairametrics had reported when the CBN issued a circular removing buying agents/companies or any third parties from accessing its SMIS forex window through FORM M forex purchases.
In a circular dated August 24, 2020, the apex banks instructed that “Authorized Dealers are herby directed to desist from the opening of Form M whose payment is routed through a buying company/agent or any other third parties” effectively eliminating third parties or middlemen from transacting in forex deals in its official SMIS window.
The central bank explained that its decision was based on the need to “ensure prudent use of our foreign exchange resources and eliminate incidences of over-invoicing, transfer pricing, double handling charges, and avoidable costs that are ultimately passed to the average Nigerian consumers”.
Sentiments regarding the policy
On the flip-side, the expert sees the policy compounding the supply chain disruptions, as it is impractical to expect all importers of raw materials, equipment, and other inputs to buy directly from the ultimate producer or supplier, especially in an economy driven by SMEs.
Victims of the policy
According to a National Survey of MSMEs in Nigeria in 2017, SMEs and other Micro enterprises were the prime drivers of the economy, as they jointly offered a total employment contribution of 59,647,954 persons, including owners, (76.5% of national workforce) in 2017, they contributed 49.78% of the GDP and 7.64% of exports.
Yusuf explained that with SMEs and other small businesses incapacitated to have a direct transaction with producers of machines and equipment manufacturers abroad, the only option they have is to buy from intermediaries.
He emphasized the need for intermediation in the business space for the survival of these businesses, as the lack of intermediation would lead to supply chains disruption, and this would aggravate the impact of the pandemic on businesses and the economy as a whole, as many of these businesses would be completely cut-off.
Though, the LCCI boss lauded the CBN for the steps it has taken to mitigate and curb abuses in the foreign exchange market, he emphasized that “this policy negates the current laudable efforts of the CBN to ensure business continuity, sustainability, and recovery.”
He then called for caution in the bid to cushion policy inconsistency that may aggravate further distortions. As the new policy conflicts with the letters and spirit of the Economic Sustainability Plan of the Federal Government.
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The DG of LCCI concluded that the policy was not sustainable, as it created distortions, transparency problems, corruption, and drives forex and international trade transactions underground, and into the informal space.
He hopes that the new policy on payment will be urgently reviewed to avoid further disruptions to businesses and the economy.
President Buhari approves local production of helicopters by NASENI
President Buhari has directed NASENI, to collaborate with Dynali Company for the local production of helicopters.
President Muhammadu Buhari has directed the National Agency for Science and Engineering Infrastructure (NASENI), to collaborate with Dynali Company, a Belgian Helicopter Manufacturing Company, for the local production of helicopters.
According to a report from the News Agency of Nigeria (NAN), this directive was given by the President at the maiden edition of the meeting of the Governing Board of NASENI at the State House, Abuja, on Tuesday, January 26, 2021.
While presiding over the meeting, President Buhari, who is also the Chairman of NASENI, directed the agency to work towards bridging the gaps in research and technology that keeps Nigeria waiting on other countries for supplies and solutions, especially in tackling challenges like the Covid-19 pandemic.
What President Buhari is saying
Buhari said the agency should play a more pivotal role in equipping the country during emergencies, while encouraging research, upgrading local skills, fabrication and international collaborations that would provoke growth in science and technology.
The President said, “The uniqueness of the mandate of NASENI as enshrined in its enabling law towards the actualisation and realisation of our development programmes such as the creation of Ten Million jobs; Economic Recovery and Growth Programme (ERGP) and Post COVID-19 sustainability Plan.
“It is only deliberate deployment of Engineering, Science, Technology and Innovation (ESTI) using technology domestication and reverse engineering of capital goods.
“Making them available in Nigeria that can fast-track the realisation of our collective will to build capacity and reduce poverty among our teeming populace. The countries that are at the forefront of economic recovery have only one thing in common: investment and sustained research and development work in knowledge economy.
“Covid-19 pandemic has exposed the Technology and innovation gap between us and the developed World, which NASENI is strategically positioned to fill.’’
Going further, the President said in order to achieve its full potential, NASENI must be empowered through the provision of adequate financial, human and material resources and be given the autonomy and independence to engage in international partnerships to acquire the relevant technologies for socio-economic and industrial advancement of the country.
He said, ‘’In this regard, I have directed the Honourable Minister of Finance, Budget and National Planning and Federal Inland Revenue Service to commence remittance of funds approved by Law of the Agency.’’
‘’It is important to for members of the NASENI Governing Board to note that Agencies of Governments with a similar mandate as NASENI in many countries are directly under the supervision of their respective Heads of State and Government.’’
While making his own remark, the Executive Vice Chairman of NASENI, Prof. Mohammed Haruna, revealed that the agency had constructed electronic voting systems and was already working on locally produced jet engines and assemblage of passenger and military helicopters.
What you should know
- It can be recalled that President Buhari had earlier approved the reconstitution and inauguration of the Governing Board of NASENI on March 8, 2018, with a clear mandate to develop local capacity in machine building and fabrication, which would be critical to Nigeria’s industrial development.
- NASENI was established in 1992 by the Federal Government following the recommendations of the White Paper Committee on the 1991 Report of a 150-member National Committee on Engineering Infrastructure comprising scientists, engineers, administrators, federal and state civil servants, economists, lawyers, bankers and industrialists.
MTN Nigeria, Airtel Africa, WAPCO up, investors gain N259 billion
Nigerian Stocks Month-to-Date and Year-to-Date returns increased to 3.24% as market capitalization stands at N21.494 trillion.
The Nigerian Stock Exchange continued today on a positive note, as the All-Share Index improved by 1.21% to close at 41,584.94 index points.
Consequently, Month-to-Date and Year-to-Date return increased to 3.24% as market capitalization stands at N21.494 trillion, having added N259 billion.
A total volume of 467 million units of shares, valued at N5.56 billion exchanged hands in 5,990 deals.
- Transnational Corporations (+0.93%) continued to dominate market activity in terms of volume and value at 45.9 million units and N50.5 million respectively.
- Similarly, the market breadth index was positive with 32 gainers against 19 losers.
- RTBRISCOE (+10.00%) led the gainer’s chart today, while JOHNHOLT (-10.00%) was the top loser.
- Sectoral indices closed mostly positive. The NSE Consumer Goods Index led the gainers with 0.54%. The Insurance and Industrial Indexes trailed by 0.40% and 0.25% respectively.
- On the flip side, the NSE Oli & Gas & Banking Indexes dipped by -5.31% and -0.14%t respectively.
- AIRTELAFRI up 7.60% to close at N920
- FIDSON up 8.60% to close at N5.05
- FLOURMILL up 6.25% to close at N34
- WAPCO up 3.77% to close at N27.5
- MTNN up 0.53% to close at N170.9
- SEPLAT down 9.26% to close at N490
- CUTIX down 7.08% to close at N2.1
- AFRIPRUD down 1.82% to close at N7
- CADBURY down 1.54% to close at N9.6
- ZENITHBANK down 0.94% to close at N26.25
Nigerian stocks ended Tuesday’s trading session on an impressive note.
- The upside route followed investors’ interests in WAPCO, Flourmill, and Airtel Africa as their stocks advanced by 3.77 %, 6.25%, and 7.60% respectively.
- Nairametrics however, envisages cautious buying, amid improved market conditions in Nigeria’s financial market.
South African President appeals to wealthy countries not to hoard COVID-19 vaccines
South African President, Cyril Ramaphosa has called on the world’s wealthiest countries to stop “hoarding” vaccines.
The South African President, Cyril Ramaphosa has urged the world’s wealthiest countries to stop “hoarding” vaccines and called for an end to “vaccine nationalism.”
He made this call at the World Economic Forum’s virtual Davos Agenda event, where he clearly cautioned that some countries had ordered more supplies of vaccines than they needed, and that this was counterproductive to the global recovery effort.
According to him,
- “Ending the pandemic worldwide will require greater collaboration on the rollout of vaccines, ensuring that no country is left behind in this effort”
- “The rich countries of the world went out and acquired large doses of vaccines from the developers and manufacturers of these vaccines, and some countries have even gone beyond and acquired up to four times what their populations need”
- “That was aimed at hoarding these vaccines and now this is being done to the exclusion of other countries in the world that most need this”
What they are saying
According to Africa CDC Director, John Nkengasong, the African continent is quite facing a “very aggressive second wave” of the pandemic, with mortality increasing on average 18% across the 55 African member states last week.
“We as a continent must recognize that vaccines will not be here when we want them, but as such we need to really focus on the public health measures that we know work”
He however praised the progress of the African Vaccine Acquisition Task (AVAT) Team, which he said was created when AU nations realized “how the world’s richest countries are behaving.”
What you should know
- South Africa is the country, worst hit by Covid-19 on the continent.
- As at date, the country had recorded more than 1.4 million cases with 41,117 deaths.
- The African Vaccine Acquisition Task (AVAT) Team has secured a provisional 270 million doses for AU member states directly, in addition to the 600 million expected from the World Health Organization’s COVAX initiative.