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Inflation: Where Are We Going From Here? [OPINION]

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Richard Asoge

Nothing depresses a man of the house like waking up early in the morning in preparation for the task of the day but not without doing all mathematical economics considering the size of his lean pocket. His take home can no longer take him to the bus-stop not to talk of providing for his households. Same applies to CEO of various small and medium scale enterprises. On daily basis, if not on hourly business transactions, he does calculations on overheads, cost of replacement of raw materials or ordering to arrive at fair price of each of the items available for sale so that the firm will not go under. The worst hit are the salary earners whose salary hardly changed. All these mathematical economics on daily basis would not have been necessary if the prices of goods and services were relatively stabled and not dangling like water lettuce on the sea.

We are in dire situation where you keep racking your brain on calculations over the price for the meal of the day, the transport fare or cost of putting your car on the road and other basic things that define the existence of humanity. You keep adjusting your spending downward until a point where it is no longer possible. The calculations you used in the last 24hours for buying some items of goods are no longer reliable just because the prices have move up almost immediately. Where are we going from here?

For any economy to have not just growth but sustainable development, inflation must be well monitored and guided. As a matter of fact, it should not go beyond the threshold of single digit. Going by the report of NBS for November 2023, inflation rate was 28.2 percent. Breaking it down further, inflation in food sector is leading the component to the historical level of 32.8 percent. This should be a concern to every right thinking individual and institution, be it local or foreign.

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Statutorily, the primary responsibility of the CBN as an institution is price stability. Every other function comes after price stability. This is a serious challenge to the monetary regulatory authority. Continuous failing in the purchasing power of naira can make one interact with the history of dark days of trade by barter.

Unsatisfying taste for foreign goods and services contributed in no small scale to the persistence fall in the value of naira. It will always be in that trend until we roll up the sleeves of our shirts for production and create value on our local products in such a way that those living outside the shore of Nigeria can not take their eyes off them. This will in turn bring in the foreign currency needed for settling international transactions. The proceeds of crude oil, being the major item for exportation that generates foreign exchange, is no longer enough to keep us in a good liquidity position as a country. How better the country would have been if leaders of various groups and opinion molders can demonstrate high level of patriotism by not just believing in Nigeria products but buy and use them. The effect will trickle down to the common man on the street.

In 2017, during one of the medical vacations of the President Mohammed Buhari, his Vice, Yemi Osinbajo signed three executive orders. One was on ease of doing business. Within 30 days, there was respite. There was fresh breath across the length and breadth of the country. Infact, exchange rate came down. This well thought out approached endeared many people to him till date. Is it not time for President Tinubu to sign appropriate executive order(s) and activate necessary machineries to alleviate the suffering of the citizens and rescue the small and medium scale enterprises that are currently gasping for breath? Whatever happens to the small and medium scale enterprises has its implication on the economy. Nigeria can not afford to add to the current high level of unemployment. No government anywhere in the world can provide jobs for all its citizens but putting necessary framework in place gingers small and medium scale enterprises not only to prosper but engage all that are willing to work.

FROM THE AUTHOR: Subsidy Removal: A Measure To Re-Jig The Economy [OPINION]

The Recent killing of two kings and kidnapping of staff and students of a private secondary school in Emure Ekiti, Ekiti Sttate, is a strong justification for supporting local vigilante called Amotekun to bear light weapons against these marauder killers and evil doers. In the time past, nobody dare looked into the eye of a traditional king not to talk of pointing gun at him. Such a fellow will not live to tell the story.

Fountain of knowledge state is known for intellectual prowess and farming. Each family had farm until recently when farms are no longer safe. This is why hunger is on the faces on the people not only in the state but across the country. We can not continue to use the same approach on a knotty issue and expect different result. It is time to have special court to try kidnapping cases with a timeline to conclude the case. Whoever is found culpable must be sentenced to death without option. This will naturally bring down the incidence if not total eradication.

Negotiation and Implementation of new minimum wage by the federal government and others are long overdue. No matter the amount agreed upon by the parties concern may just be like a medicine to the symptoms and not the root cause. In a matter of months, the money would have lost its value and then back to where we were coming from.

I look forward to seeing our president, President Bola Tinubu working round the clock for the poor to breath and as well secure the country before it fails.

Richard Asoge
Clappahouse Analytics
chards001@gmail.com
08081492614.

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JUST IN: CBN May Increase Bureau De Change’s Share Capital To N2bn

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The Central Bank of Nigeria is considering plans to increase the share capital of Bureau De Change operators to N2bn and N500m for Tier 1 and Tier 2 licenses.

The currency operators were previously charged N35m for a general license.

This was contained in the draft paper of a “Revised Regulatory And Supervisory Guidelines For Bureau De Change Operations In Nigeria” published by the apex bank on Friday.

The new guidelines contain several new changes to the guidelines for BDC operations in the country and if endorsed will be effective at a date decided by the CBN.

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Recently, operations of the currency operators have suffered heavy backlash following the free fall of the naira against the dollar.

Government officials have severely blamed the black market operators for this fall though liquidity remains a huge challenge.

This week, operatives of the Economic and Financial Crimes Commision arrested over 250 BDC operators in Abuja and many more in other states of the federation.

Under the minimum capital requirements, the central bank is introducing a two-tier license for BDC operators in the country.

A Tier 1 BDC is authorised to operate on a national basis can open branches and may appoint franchisees, subject to the approval of the CBN.

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A Tier 1 BDC (which is the franchisor) shall exercise supervisory oversight over its franchisees. All franchisees shall adopt their franchisor’s name, branding, technology platform, and rendition requirements.

Also, a Tier 2 BDC is authorised to operate only in one state or the FCT. It may have up to three locations – a head office and two branches, subject to approval of the CBN. It is not permitted to appoint franchisees.”

Under Tier 1 operators are expected to have N2bn as minimum share capital while also depositing a Mandatory Caution Deposit of N200m.

The application and license fee is also N1 million and N5 million respectively.

“Under Tier 2 operators are expected to have N500 million as minimum share capital while depositing a Mandatory Caution Deposit of N50 million. The application and license fee are also N250,000 and N2 million respectively.”

The apex bank also stated that the prescribed minimum capital of BDCs and any subsequent capital injection shall be subject to verification by the CBN.

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MPC Nominees Promise To End Forex, Food Crises

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The Senate on Wednesday grilled nominees for membership of the Central Bank of Nigeria’s Monetary Policy Committee over the forex crisis and unending food crisis.

President Bola Tinubu had, last week, forwarded to the Senate for confirmation, the names of nominees for the committee of the CBN.

In giving the request expeditious consideration ahead of the MPC meeting slated for next Monday, February 26, the Senate, through its Committee on Banking, Insurance, and Other Financial Institutions, grilled six out of the nominees with questions on required urgent solutions to forex volatility and food crisis.

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The first to be grilled was the Director-General of the Securities and Exchange Commission, Lamido Yuguda, who informed the committee that his nomination into MPC would give the SEC the needed voice in monetary policy.

Yuguda lamented that the value of the Naira as it is today, is not real, having lost its intrinsic value but that the MPC, when inaugurated on Monday, would join other stakeholders to stabilise the national currency.

He said, “The value of any currency is measured by the goods and services that it can buy. The Naira, as it is today, does not possess that value sufficiently which is being critically looked into.”

READ ALSO: Nigerians Knock Seyi Tinubu For Preaching Endurance Over Economic Hardship

In his submission, the nominee from Lagos State, Dr. Mustapha Akinkunmi, said the way out now is to target the exchange rate and not inflation as currently being tackled which hasn’t yielded so much result.

He saod, “A more proactive way of addressing the Naira volatility problem at hand is for the CBN to target the exchange rate itself and not inflation.

“The inflation the country is facing now is largely that of food inflation, which is beyond CBN but for the entire country.

“Production and distribution of food commodities across the country would help to reduce the food inflation, while the aggressive target of the exchange rate, would help to stabilise the Naira with the required increase in productivity.”

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In a similar submission, the nominee from Imo State, Mrs Aku Odinkemelu, said productivity is the key to arresting the volatility of the Naira and food inflation.

Other nominees grilled at the session by the committee were Prof. Murtala Sagagi, Kano State; Bamidele Amoo, Kwara State; and Aloysius Ordu, who worked with the World Bank and the African Development Bank for 30 years at different times.

In his closing remarks, the committee’s chairman, Senator Tokunbo Abiru (APC, Lagos East), told the nominees that their screening was done ahead of the MPC meeting slated for next Monday by the CBN.

Abiru said what Nigerians expect to come after the meeting are solutions to the rising inflation rate, worsening Naira volatility in the forex market and the general rejuvenation of the economy.

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MTN, Dangote Cement, Others Drag Equity Market To N1.8tn Loss

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The equity market opened in the reds on Monday as investors lost about N1.82tn.

Substantial depreciations were observed in bellwether stocks, fuelled by strong sell interest in the market. Specifically, securities such as Dangote Cement, MTN Nigeria, NGX Group, NEM Insurance, and Tantalizer dipped by 10 percent, 10 percent, -9.76 percent, -9.74 percent, and -9.52 percent, respectively.

Both the All-Share Index and the market capitalisation of the local bourse depreciated by 3.15 percent to close at 102,393.23 points and N56.03tn due to waning market sentiment. Hence, the year-to-date return of the index dipped to 36.94 percent from 41.39 percent in the previous trading session.

Trading activities remained subdued into the new week with notable decreases in the total traded volume and value by 17.60 percent and 5.59 percent to 273.85 million units and N7.44bn, respectively. However, the total deals for the day bucked the trend, advancing by 17.60 percent to 9,688 trades.

In eight months of Tinubu administration, Nigeria’s stock market leads the world
Despite the market sentiments, buy pressure was observed in Juli Plc, Daar Communications, Sunu Assurances, ABC Transport, and NAHCO, as their share prices rose by 9.52 percent, 8.64 percent, 6.74 percent, 6.67 percent, and 5.86 percent.

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On the sectoral front, tracked sub-sector indices closed in red territory. The Industrial Goods sector topped the chart for the most losers with a massive 6.02 percent decline, primarily driven by sell-pressure in Dangote Cement. This was followed by the Insurance sector with a loss of 2.49 percent, attributable majorly, to share price declines in NEM Insurance, Linkage Assurance, and VeritasKap.

Sectors such as Banking, Consumer Goods, and Oil/Gas declined by 0.24 percent, 0.77 percent, and 0.28 percent, respectively.

Guaranty Trust Holding Company Plc was the most traded security by volume with 28.85 million units, while Geregu led in value at N1.74bn.

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