Why aviation workers are on strike

Nigerian aviation workers have commenced their two-day warning strike with a protest on Monday.

The PUNCH gathered that the workers blocked the road leading to the Murtala Muhammed International Airport in Lagos.

The development inevitably left many air passengers stranded.

Here are things to know about the workers’ demands:

The strike follows a meeting called by the Nigeria Civil Aviation Authority which ended in a stalemate on Sunday.

The Director-General, Civil Aviation, Capt. Musa Nuhu, called the meeting aimed at prevailing on the unions to shelve their planned two-day warning strike with representatives of the unions in attendance.

The Permanent Secretary, Ministry of Aviation, Dr Emmanuel Meribole, was also at the meeting.

2. The unions comprising the National Union of Air Transport Employees, Air Transport Services Senior Staff Association of Nigeria; the National Association of Aircraft Pilots and Engineers and the Association of Nigerian Aviation Professionals, are demanding, among other things, that the planned demolition of aviation agencies’ headquarters in Lagos be halted.

3. They are also advocating the implementation of the conditions of service signed with the staff of the aviation agencies.

The Deputy General Secretary of ATSSSAN, Frances Akinjole, in a short interview last night after the meeting said, “As I am talking to you, nothing has changed. If you don’t hear anything from the General Secretary, the strike continues.”

Activities at airport affected?

A source in the airport told The PUNCH that the protest was not affecting operations as the workers “just blocked the airport road.”

However, video footages on Twitter show that traffic is being affected around the airport Monday morning.

@@eonsintelligenc, in a tweet accompanied with pictures, partly stated, “Aviation workers union has commenced a nationwide protest over the non-implementation of the new condition of service.

“Roads leading to the airports have been barricaded.”

Airport advises travellers

However, Operators of Murtala Muhammed Airport Terminal Two, Bi-Courtney Aviation Services Limited, on Twitter, advised travellers on the strike action, identifying possibility of delays and flight disruptions.

“Due to the ongoing aviation union strike action, there may be flight delays and disruptions.

“MMA2 continues to operate on a best effort basis. Kindly check your map for traffic information and check with your airline for your flight status,” it said in tweet on Monday.

Earlier, it said in a statement that MMA2 was monitoring the situation closely and would keep all customers and terminal users informed of flight schedules delays or possible disruption.

Punch

Why new naira notes are scarce – CBN sources

There seems to be no end in sight to the scarcity of the redesigned naira notes as officials of the Central Bank of Nigeria (CBN) blame the general public for the problem.

The apex bank commenced the circulation of the new notes on December 15 last year, but four months after, two of which majority of Nigerians spent in severe suffering occasioned by the scarcity, the new notes are hardly seen by the people who are supposed to spend them.

An investigation conducted by The Nation during the week revealed that about 80 per cent of the naira notes being spent by Nigerians now are the old notes.

And that was even made possible by the Supreme Court which, in a landmark ruling on March 3, extended the validity of the old N200, N500 and N1000 notes till December 31, 2023.

A seven-member panel of the court led by John Okoro ruled that the old notes should circulate alongside the new notes until the end of the year.

It took the CBN about two weeks to act on the judgment.

Bank customers across the country said much of the money they have been receiving at banking halls and from ATMs are the old notes.

Traders and transporters also say customers hardly pay them with the new notes.

Bank officials told our correspondents that they disburse what they receive from the CBN.

They said the new notes hardly come their way.

CBN-Governor-and-Hajiya-Zainab

A Lagos-based entrepreneur, Mary Okon, said all the cash receipts for goods sold came in old naira notes.

“All the cash I received for goods sold were in old notes. Sometimes, I wonder where the new notes are. This has affected our turnover, worsened cash crunch crisis and made payment for goods very cumbersome,” she said.

Another bank customer, Michael Otu, said the low cash position in many families has made it difficult for them to buy things that are needed like food, clothing and provision, among others. 

“We have seen many families cut their expenditure because of low cash positions. We hope that the situation will improve when the CBN releases more new notes into the economy,” he said.

In many of the bank’s branches visited in Victoria Island, Matori, and Ikeja axis of Lagos, there were still queues of customers wanting to make cash withdrawals with the N20,000 weekly limit.

The banks’ Automated Teller Machines (ATMs), which dispensed new notes at the time the new notes were launched, have returned to old notes disbursement across the counter or through other payment channels.

Officials of the CBN who do not wish to be named because they are not authorised to speak to the press on the issue alleged that many Nigerians are hoarding the new naira notes ahead of the December deadline for the phasing out of the old notes.

A source at the CBN said: “About N1 trillion is currently in circulation and more money is being printed and released.”

The source, who is involved in key monetary policy decisions of the apex bank, added: “People, not only politicians but ordinary Nigerians, are hoarding the new notes because of uncertainties.

“You know December will soon come. That is when all the old notes will cease to be legal tender. So people are stocking the new notes to mitigate uncertainties over the old or new naira notes.”

The CBN official advised the “authorities to engage in massive enlightenment and reassurances that the new notes will be available in and after December.”

According to the official, the CBN “releases N70 billion to the banks to distribute to their various branches every day, and they are largely old notes by way of strategy because of the phenomenon I spoke to you about earlier.

“When people see the new notes they just take them out of the system and don’t bring them back.

“That is the reason the CBN is dishing out the old notes so that they become available and citizens can make transactions very easily. That is the current position.

“So, it’s not that the CBN is not releasing money at all.”

When told that Nigerians want the new notes, the CBN official said: “Why are people looking for the new notes if they want to buy goods and services and money is available?

“They should leave that strategy to the CBN. That’s the bank’s problem, because by the end of the year, all the old notes being released now will also be removed from the system.

“For now that is not the problem of the citizens.

“Those complaining are looking for the new notes to hoard. That’s the implication.”

What is happening, the source said, “is that the new notes are not returned to the commercial banks.

“If they can be returning them to the commercial banks, the banks will also give them out to the citizens to use, but it appears that that is not happening,

“I don’t know what the fancy is in the new notes that they are hoarding them again.”

The official also disclosed that the CBN will print more new notes between now and December.

“Definitely it (CBN) will, because the old notes would have to exit the system.

“But for now, the strategy of the CBN is to meet the present exigencies, ameliorate any suffering, make money available, either old or new, so that people can have easy access.

“But the CBN has its own strategy to ease out the old notes before the end of December, so the implication is that there is the likelihood that more new notes will come into circulation.”

The official sought to allay fears that printing more new notes to maintain the N1trillion in circulation will lead to excess liquidity.

His words: “The CBN will map out appropriate strategies. New notes printed will replace old notes that will be eased out.

“There is no likelihood of too much currency in circulation, and secondly, the bank has its own idea of the optimal quantity of cash or notes, both old and new, that should be in the system. That is what the CBN is working towards.”

One of the reasons the initial attempt at currency redesign failed was the unavailability of smaller denominations of N100 and N200 notes for ordinary citizens to spend.

Admitting that that was a lapse in judgment on the part of the CBN, the official said: “I envisaged that one. Some of us have also made that point, because printing of the lower denomination notes will reduce the prospects of hoarding and counterfeiting of large denomination notes.

“That will help to meet the objectives of the CBN to minimise hoarding and counterfeiting of large notes.

“You know it is the large denomination notes that are very vulnerable to counterfeiting because of the huge profit they make from it.

“So the possibility is there that the CBN will print more of the lower denominations in line with its own objective.”

A member of the Presidential Economic Advisory Council, Bismarck Rewane, said the CBN printed approximately N400 billion new naira notes following the currency redesign programme. 

In a report titled: Nigeria Hits A Brick Wall, Rewane said that a shortfall of N2.48 trillion cash exists, leading to near paralysis of commercial activities in the economy. 

He said the shortfall represents 90 per cent of the cash in circulation, meaning that only about 10 per cent of the cash needed was printed.

According to Rewane, an economist and Managing Director, Financial Derivatives Company Limited, three of the eight naira denominations – N200, N500 and N1,000 estimated at N2.88 trillion – make up 90 per cent of the total cash in circulation.

Also speaking on the development, an economist and CEO, Economic Associates, Dr. Ayo Teriba explained what is playing out.

He said a breakdown of the N400 billion new notes printed by MINT Nigeria showed that about 700 million pieces of new notes are in circulation at present.

He said the volume of the new notes, falls drastically below the 9.75 billion pieces naira notes circulating before naira reforms.

He said: “The Naira notes have attracted global attention at the turn of 2023 for the wrong reasons.

“The currency redesign policy was a needless exercise that turned out to be a chaotic wild goose chase until the Supreme Court suspended it on legal grounds.

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“The Supreme Court Ruling has however not completely taken the issue off the table as the N200, N500, and N1,000 currency notes may still cease to be legal tender by 31 December 2023.

“The policy choice Nigeria must make is whether to replace the old notes with new ones of the same face values or with new notes of larger face values.”

He suggested that instead of wasting resources to print and replace 9.75 billion pieces of naira notes, it can be drastically reduced by introducing larger denominations notes.

Teriba said it is very unlikely that the CBN will print over nine billion pieces of new notes to totally replace the old notes by December 31.

He suggested:  “The pieces of Naira notes in circulation had exploded to 9.75 billion pieces by December 2021.

“This piece demonstrates that the introduction of N2,000, N5,000, N10,000, and N20,000 notes that would be equivalent to US$4 to US$50 now is the sensible way to drastically reduce the pieces of Naira notes in circulation to between half a billion and a billion pieces before the end of 2023.”

He said that at less than US$1 per Naira note, Nigeria has inadvertently printed far too many pieces of these small value notes to be easily manageable by CBN.

The reason the CBN could never have printed enough of the N200, N500, and N1,000 new notes was that there were well over five billion pieces of them in circulation, and there was no way the CBN could have printed that much even if they had two years to do so.

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Teriba said the nominal value of currency in circulation is the most basic measure of cash circulating in the economy, a key component of the overall money supply that lubricates economic transactions.

According to him, the total value of cash is only meaningful when related to the economic transactions that it is meant to lubricate. As such, you cannot conclude that it is too much or growing too fast by looking at its size or growth in isolation.

Teriba said Nigeria fell into that trap in the nineties as the total pieces of naira notes in circulation was to rise steadily from 1.5 billion pieces just after the N50 note was introduced in 1991 to 8.5 billion pieces by year 2000.

But an industry source said the new notes are scarce because of currency hoarding. According to the source, the new naira notes released by the CBN are being hoarded by high net-worth customers of banks, who had unlimited access to the cash.

The source said many high net-worth individuals who were able to source the new notes stockpiled them thereby depriving the public from having access to the cash.

President, Bank Customers Association of Nigeria (BCAN), Dr. Uju Ogubunka, said it was very worrisome that the new notes are not available to the ordinary people on the streets.

“You can occasionally see the new notes with politicians and top business executives who maintain huge account balances in banks.

“We have read stories of banks calling their top customers to come and take new notes. If third party intervention is needed for MINT Nigeria to print the notes, let them request for such support,” he suggested.

Ogubunka, a former Register/Chief Executive Officer, Chartered Institute of Bankers of Nigeria (CIBN) said the Domestic Operations at the CBN owes Nigeria explanations on what is keeping the new notes out of reach of the people.

“I know that a lot of security measures are involved in new notes printing. But whatever it is, by now, the old notes should be passing out. But what we have is that the old notes have remained the dominant means of transaction.

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“If care is not taken, we will have another round of crises by December 31 when the old notes will cease to be a legal tender,” he said.

At a press conference in Lagos, CBN Governor Godwin Emefiele had admitted the hiccups in the implementation of the policy. 

Emefiele said the apex bank was addressing “pressure areas” by redeploying cash where there are excesses. The governor described the challenges as transient, promising that the issues would be overcome soon. He urged Nigerians to embrace alternative payment channels.

On the scarcity, he said: “CBN is aware of the difficulty being faced by Nigerians in accessing the new currency at this initial stage of its issue and circulation but wishes to plead with all to please show some understanding  as everything is being done to correct some of the observed lapses in the implementation of this ambitious programme.”

The Nation

Mixed reactions as CBN sledgehammer falls on dormant accounts

The Central Bank of Nigeria has proposed that banks should transfer funds in accounts that have been dormant for up to 10 years into a trust fund account.

This is contained in the recently released exposure draft of guidelines on the Management of Dormant Accounts, Unclaimed Balances and Other Financial Assets in Banks and Other Financial Institutions In Nigeria.

A circular accompanying the exposure draft stated that the guideline was in response to requests from banks and other stakeholders for the CBN to clarify the procedures for the management of dormant and inactive accounts by banks in the country.

The circular, which was signed by the Director of Financial Policy and Regulation Department of the apex bank, Chibuzor Efobi, also called for inputs which should be sent within three weeks.

The draft states that banks and other financial institutions are expected to transfer all unclaimed funds into an Unclaimed Balances Trust Fund pool account, which will be domiciled at the CBN.

CBN stated that dormant and unclaimed accounts are targets of fraudsters, hence the move to warehouse the funds.

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Once dormant accounts exceed a six-year period, they shall be reported to the CBN along with efforts made by the obligor bank to locate the owners or their personal representatives.

The apex bank said the balances would be invested in government securities like Treasury Bills and would be returned to the beneficiaries not later than ten days of notice.

CBN said, “The Central Bank of Nigeria shall open and maintain an account earmarked for the purpose of warehousing unclaimed balances in eligible accounts. The account shall be called ‘Unclaimed Balances Trust Fund Pool Account.”

The eligible accounts and financial assets are current, savings and term deposits in local currency; domiciliary accounts; deposits towards the purchase of shares and mutual investments; prepaid card accounts and wallets; proceeds of uncleared and unpresented financial instruments belonging to customers or non-customers of FIs; unclaimed salaries and wages, commissions, and bonuses.

Others include proceeds of stale local and/or foreign currency drafts not presented for payment by beneficiaries; funds received from a correspondent bank without sufficient details as to the rightful beneficiary and/or a recall of funds made to the remitting bank to which the Nigerian bank’s account has not been debited and a judgment debt for which the judgment creditor has not claimed the amount of judgment award.

The central bank said any bank or financial institution that contravenes any provision of the new guidelines would attract a penalty of not less than N2,000,000.

It added that failure to comply with CBN’s directive in respect of any infraction would attract a further penalty of N200,000 daily until the directive is complied with or as may be determined by CBN.

The CBN said the objectives of the guidelines are to “Identify dormant accounts/unclaimed balances and financial assets with a view to reuniting them with their beneficial owners; hold the funds in trust for the beneficial owners; standardise the management of dormant accounts/unclaimed balances and financial assets; and establish a standard procedure for reclaim of warehoused funds.”

The CBN also said that it would publish an annual list of the owners of the unclaimed balances that had been transferred to the pool account as well as the procedure for reclaim of warehoused funds.

CBN says: “The continuous maintenance of such accounts results in the accumulation of huge unclaimed balances at the disposal of the financial institutions for which the depositors may not be adequately compensated. In addition, dormant and unclaimed balances are increasingly susceptible to fraudulent transactions or abuse.”

CBN said it would establish a management committee to oversee funds from the accounts and disburse them accordingly. It also stated that a bank account should be deemed dormant if it has not done any transactions for one year.

It said: “A bank account shall be classified as dormant if there has been no customer or depositor-initiated transaction in it for one year after the last customer or depositor-initiated transaction.

“The bank shall institute controls consistent with its precautionary policies, including surveillance procedures and 58-level authorisation. To make such account active, the customer is to provide satisfactory evidence of account ownership, means of identification, and present place of residence.

“Unclaimed funds shall be categorised as Proceeds of stale local and foreign currency drafts not yet presented for payment by beneficiaries. Funds received from a correspondent bank without sufficient details as to the rightful beneficiary and/or a recall of funds made to the remitting bank to which the Nigerian bank’s account had not been debited; and a judgment debt for which the judgment creditor has not claimed the amount of judgment award.”

The bank said it is empowered by the provisions of Section 72 (11) of the bank and other financial institutions to carry out the guideline.

How to activate a dormant account

The account owner can request the bank to reactivate a dormant account. First, the bank would ask them to present several documents, including account number, identification, and other proofs. Then, the person usually has to do some transactions to ensure that the account is reactivated.

Overview of accounts in operation

Checks on the website of NIBSS by The Nation showed that as of December 2021, there were 191.4 million bank accounts in Nigeria, out of which 133.5 million were active.

Meaning there are 57.9 million inactive bank accounts both savings and current in Nigeria.

Over N1trillion up for grabs

From available information, the Federal Government is expected to get over a princely sum of N1trillion from the said funds. 

Two years ago when the government first mooted the idea, the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed had revealed at the time that the figure is still being computed but N850bn is within sight.

“There would be as much as N850 billion. We have to get the exact report from the CBN and then Company’s Registrar to ascertain that so it could be realised into this special trust fund for unclaimed dividends and dormant accounts,” she said.

Litigation imminent

It may be recalled that when in 2021, the Federal Government revealed plans to borrow unclaimed dividends and funds in dormant account balances of Deposit Money Banks, under Part XII of the Companies and Allied Matters Act in the Finance Act, the move elicited reactions from stakeholders and a lawsuit from the Socio-Economic Rights and Accountability Project.

National Assembly Complex, Abuja

In the suit, SERAP argued that “The Federal Government should not be allowed to borrow Nigerians’ money. Borrowing unclaimed dividends and funds in dormant accounts owned by ordinary Nigerians would negatively affect their right to an adequate standard of living, and access to clean water, quality healthcare and education.”

SERAP said that despite Nigeria’s dwindling oil revenue, growing level of public debt and widespread poverty, public officers including the President, Vice President, governors and their deputies, and members of the National Assembly have refused to cut their emoluments, allowances and security votes. They said that at the same time, millions of Nigerians continue to bear the brunt of mismanagement and corruption.”

The statement also said that joined in the suit as Defendants are: Mr Abubakar Malami SAN, Attorney General of the Federation and Minister of Justice; the Senate President, Ahmad Lawan; the Speaker of House of Representatives, Femi Gbajabiamila; and the Minister of Finance, Budget and National Planning, Ms Zainab Ahmed.

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SERAP is also argued that “For there to be a borrower, there must be a lender. The intention to enter into such borrower-lender relationship must be known to both parties. Any other arrangement that allows a borrower to access funds from a lender without the knowledge and express consent of the lender will amount to stealing.”

The suit filed on behalf of SERAP by its lawyers Kolawole Oluwadare and Ms Adelanke Aremo, partly reads, “By the combined reading of section 44(1) of the Nigerian Constitution 1999 (as amended) and Article 14 of the African Charter on Human and Peoples’ Rights, the Federal Government has absolutely no right to borrow Nigerians’ money in the form of their unclaimed dividends and funds in dormant accounts without their knowledge and express consent.”

“The move to borrow Nigerians’ money amounts to unlawful expropriation, as it is neither proportionate nor necessary, especially given the unwillingness or inability of the government to stop systemic and widespread corruption in MDAs, cut waste and stop all leakages in public expenditures. The borrowing is also not in the public interest.”

“Borrowing unclaimed dividends and funds in dormant accounts without due process of law and the knowledge and explicit consent of the owners is arbitrary, and as such, legally and morally unjustifiable.”

“To create a valid trust relationship, there must be an explicit agreement between the setlor and the trustee, for the benefits of the trust beneficiary. There must also be sufficient evidence of the setlor’s intention to create a trust. The relationship cannot be arbitrarily created. It can also not be forced or assumed unilaterally, which is exactly what the Federal Government is pushing to do in this case.”

Divergent over policy

Expectedly, some industry watchers say the policy will dampen investors’ confidence and create uncertainty in the sector.

A onetime Security and Exchange Commission commissioner, Charles Udora, raised some underlying issues on the policy.

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“Are the dormant account balances limited to any specific amount or will the borrowing take everything in all dormant accounts in all deposit money banks?

“Remember that some may have dormant accounts resulting from being sent out for a period on official assignments or have travelled for studies, etc. They return to the country to discover that their entire savings have been cleared via ‘FGN borrowing from dormant accounts.’ What will such persons do to continue their lives?” he asked.

He also raised concerns about the one-sided contract the government will be entering with these account holders.

“With whom will the FGN be entering into the borrowing contract in view or the state of the Law of Contract in Nigeria, especially in terms of capacity to enter into a valid contract, consideration, parties to the contract, etc? With whom did the FGN negotiate the ‘borrowing’?

“Who is representing the interest of the investors whose dividends will be borrowed? What are the terms and conditions of the borrowing and who negotiated them? How will the borrower pay back principal and interest? What will be the effect of the 12 years Statute Bar on Unclaimed Dividends borrowed by the FGN if the borrowed funds are not repaid within the 12-year window from the declaration of dividends to repayment by the FGN? Who is going to hold FGN accountable?” Mr Udora asked.

Udora’s concerns are not new, however, as before the bill was passed by the National Assembly, federal lawmakers, at a public hearing, expressed concerns over drawing funds from various dormant accounts and unclaimed dividends.

Their concern was hinged on fund availability if the rightful owners of the monies showed up.

During the hearing two years ago, the Chairman of the Senate Committee on Finance, Senator Solomon Adeola, posed the question to the Minister of Finance, Budget and Planning.

“We have funds sitting in the registrars and funds sitting in the banks which are not helpful to the system,” the minister, Mrs Ahmed, said.

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“The government is just trying to make use of the funds in the interest of Nigerians because there is no point having idle funds in the banks whereas government needs money to carry out many developmental projects.”

The minister also acknowledged the concerns of Nigerians about the government’s plans.

“This is well-intended,” she said. “Some shareholders may not be happy. Certainly, no regulator is happy. The United Kingdom also has a provision that dividends not claimed after four years, revert to the companies that issued them.”

She said that the Debt Management Office issues securities to the registrars in case owners of such unclaimed dividends or deposit in dormant accounts come forward to claim their entitlement.

“It is possible that a different arrangement is in place in other jurisdictions but I want to state that in the amended CAMA, there is a provision that had modified the section that mandates the registrars to return unclaimed dividends after 12 years to the companies that paid the dividends in the first instance. Rather than the companies to take back the money and redistribute, the government wanted to manage the funds,” she said.

She said the fund managers that would be set up would give details of the procedure of how the funds would be managed.

However, representatives of the Independent Shareholders Association of Nigeria, disagreed, saying that unclaimed dividends belong to shareholders, not the government.

Unclaimed dividends, they said, should never be entrusted in the hands of government but reverted to the company that issued them.

Mr Udora, mentioned earlier, on the other hand, said the borrowing strategy, process and procedures have consequences on the larger economy of the country.

“The greatest consequence of this type of ‘borrowing’ is the potential to trigger panic in the investment community and create an atmosphere of flight to safety which is another acronym for a possible run on banks with obvious consequences,” he said.

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He further noted that there is enough tension already caused by the COVID-19 pandemic, coupled with the localized threats to the nation’s economy because of insecurity, recession, unemployment, high inflation and “seemingly uncontrollable foreign exchange rates with very little hope of any significant improvement in our foreign exchange receipts.”

He said one of the immediate consequences of the implementation of the borrowing plan is the “unforeseeable further loss of value of the Nigerian Naira.”

“This will result from the loss of faith and confidence in the currency and a possible rush by investors to change the store of value of their assets (both cash and non-cash).

“This action will put further pressure on the already stressed state of our foreign reserves. It will also panic foreign investors to begin to divest in anticipation of a bearish market upon commencement of the borrowing plan”, he noted.

He also said public limited companies will begin holding back on dividend declaration as a means of retaining their funds.

“This action on its own will discourage investors and inflows into the capital market will drop. All these events will end up affecting trade, business and ultimately the taxes of all types may see a decline,” he said.

The Nation

Fuel subsidy, oil theft gulped N29tn, says FG

The Federal Government, on Thursday, said the amount spent on subsidising Premium Motor Spirit, popularly called petrol, between 2005 and 2021 was N13tn, adding that the country lost N16.3tn to oil theft from 2009 to 2020.

It disclosed this in Abuja through the Nigeria Extractive Industries Transparency Initiative at a policy dialogue on oil swap, co-hosted by NEITI and Policy Alert, an indigenous civil society organisation, with support from the Opening Extractives.

In a presentation by NEITI’s Executive Secretary, Orji Ogbonnaya-Orji, which was made available to our correspondent, he said there was an urgent need to make decision on the agitation for the removal of fuel subsidies.

He stressed that the full deregulation of the petroleum sector would permanently lay to rest the conversation around oil swaps, adding that latest findings by NEITI showed the humongous amount spent on subsidising fuel by the government.

“NEITI’s latest policy brief titled, ‘The cost of fuel subsidy: A case for policy review,’ revealed that Nigeria expended over N13tn ($74bn) on fuel subsidies between 2005 and 2021.

“The figure in relative terms is equivalent to Nigeria’s entire budget for health, education, agriculture, and defence in the last five years, and almost the capital expenditure for 10 years between 2011 2020. It is also important to note other economic opportunity costs of fuel subsidy which include slashing allocations for the health, education, and technology infrastructure sectors.

“Others include the deterioration of the downstream sector with the declining performance of Nigeria’s refineries and recording zero production in 2020; disincentivised private sector investment in the down and mid-stream petroleum sector; low employment generation since the refining process is done outside the shores of Nigeria; worsening national debt; declining balance of payment, forex pressures and depreciation of the naira and of course product losses, inefficient supply arrangements, scarcity and its attendant queues, etc,” Orji stated.

On crude oil theft, he said NEITI policy brief and data pulled from industry reports of the oil and gas sector “showed that between 2009 and 2020 (12-year period), Nigeria lost 619.7 million barrels of crude oil valued at $46.16bn or N16.25tn.”

Orji explained that the volume of crude oil losses represented a loss of more than 140,000 barrels per day, adding that between 2009 and 2018, Nigeria also lost 4.2 billion litres of petroleum products from refineries valued at $1.84bn.

“These findings and recommendations on tackling crude oil theft have been submitted to the President through the Presidential Committee on Crude Oil Theft, in which NEITI also served as a member.

 “The committee has concluded its work and submitted its report to the President. The committee did an excellent job with far reaching recommendations. I will like to commend the Office of the NSA (National Security Adviser) that coordinated that panel’s work,” the NEITI boss stated.

Progress on PIA implementation unknown

The presentation also talked about the status of the implementation of the Petroleum Industry Act, stressing that its progress had not been made public.

Recall that the PIA made copious provisions for the deregulation of the downstream sector of the petroleum industry. A Presidential Steering Committee on the implementation of the PIA was set up in 2021 to coordinate the implementation of the Act.

“Not much is in the public domain on the progress of the committee’s work. Civil society should step up advocacies for the conclusion of the committee’s work and submission of its report to the President before the expiration of this administration with clear recommendations to the next administration on what has been done and outstanding work,” Orji stated.

Flaws around oil swaps

On oil swap, the NEITI helmsman said it dated back to the period when the Nigerian National Petroleum Corporation used to receive a daily crude allocation of 445,000 barrels per day from the Federal Government to refine for domestic consumption.

“The near-total collapse of the country’s four refineries meant that the NNPC could not refine the 445,000 bpd domestic crude allocation. Instead, NNPC exported most of the crude and then depended on the Pipeline Products Marketing Company Limited or private oil marketers to import refined products for local consumption.

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“This led the country into huge debts and did not guarantee sustained imports of refined products to meet domestic demand. The debts got so heavy, and refined products were scarce with long queues at petrol stations nationwide.

“The government had to find innovative and less expensive ways of making refined petroleum products available for the citizens. Thus, in 2010, the NNPC introduced oil-for-product swaps as a solution to this problem,” Orji explained.

He, however, pointed out that oil-for-product swaps were complex barter transactions in which NNPC and private traders swapped crude oil for refined petroleum products, rather than for money.

He said the NNPC had to adopt two kinds of swaps, including the Offshore Processing Agreement, in which a refiner or trading company entered a contract to lift a specified volume of crude (with clear terms on the expected product yields), refine it abroad, and deliver the resulting refined products back to the NNPC.

Under this model, the refining company also can pay cash to NNPC for any product that Nigeria does not need.

Orji said the second was the Crude-oil-for-Refined-Product Exchange Agreement, in which crude was allocated to a trader, who was then responsible for importing refined products to match the value of the crude, less agreed to fees and expenses.

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“However, these swap deals were not sustained as there were major operational changes within the NNPC on the management of domestic crude allocation in 2016.

“The Direct Sale Direct Purchase replaced offshore Processing Arrangement with effect from January 2016 and a functional unit was created within the Crude Oil Marketing Division to manage the DSDP,” he stated.

Orji, in the presentation, therefore stated that the oil swap policy dialogue was designed to provide a platform to share data and analytical insights on Nigeria’s crude swaps, identify gaps and weaknesses in the swap deals, and highlight corruption red flags or risk areas.

He said the dialogue would initiate inter-agency collaboration on the use of beneficial ownership data between anti-corruption agencies and regulators.

“We also want to use this dialogue to extract a commitment from state actors, especially anti-corruption agencies to follow-up investigations on the crude swaps, strengthen partnerships with specific agencies for follow-on action and generate interest around the subject of crude swap deals among key stakeholders.”

Punch

CBN to mop up balances, unclaimed funds in dormant accounts for up to 10 years

The Central Bank of Nigeria has proposed that banks should transfer funds in accounts that have been dormant for up to 10 years into a trust fund account.

This is contained in the recently released exposure draft of guidelines on the Management of Dormant Accounts, Unclaimed Balances and Other Financial Assets in Banks and Other Financial Institutions In Nigeria.

A circular accompanying the exposure draft stated that the guideline was in response to requests from banks and other stakeholders for the CBN to clarify the procedures for the management of dormant and inactive accounts by banks in the country.

The circular, which was signed by the Director of Financial Policy and Regulation Department of the apex bank, Chibuzor Efobi, also called for inputs which should be sent within three weeks.

The draft states that banks and other financial institutions are expected to transfer all unclaimed funds into an Unclaimed Balances Trust Fund pool account, which will be domiciled at the CBN.

The apex bank said the balances would be invested in government securities like Treasury Bills and would be returned to the beneficiaries not later than ten days of notice.

CBN said, “The Central Bank of Nigeria shall open and maintain an account earmarked for the purpose of warehousing unclaimed balances in eligible accounts. The account shall be called ‘Unclaimed Balances Trust Fund Pool Account.”

The eligible accounts and financial assets are current, savings and term deposits in local currency; domiciliary accounts; deposits towards the purchase of shares and mutual investments; prepaid card accounts and wallets; proceeds of uncleared and unpresented financial instruments belonging to customers or non-customers of FIs; unclaimed salaries and wages, commissions, and bonuses.

Others include proceeds of stale local and/or foreign currency drafts not presented for payment by beneficiaries; funds received from a correspondent bank without sufficient details as to the rightful beneficiary and/or a recall of funds made to the remitting bank to which the Nigerian bank’s account has not been debited and a judgment debt for which the judgment creditor has not claimed the amount of judgment award.

The central bank said any bank or financial institution that contravenes any provision of the new guidelines would attract a penalty of not less than N2,000,000.

It added that failure to comply with CBN’s directive in respect of any infraction would attract a further penalty of N200,000 daily until the directive is complied with or as may be determined by CBN.

The CBN said the objectives of the guidelines are to “Identify dormant accounts/unclaimed balances and financial assets with a view to reuniting them with their beneficial owners; hold the funds in trust for the beneficial owners; standardise the management of dormant accounts/unclaimed balances and financial assets; and establish a standard procedure for reclaim of warehoused funds.”

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The CBN also said that it would publish an annual list of the owners of the unclaimed balances that had been transferred to the pool account as well as the procedure for reclaim of warehoused funds.

In the signed Finance Act 2020, the Federal Government revealed plans to borrow unclaimed dividends and funds in dormant account balances of Deposit Money Banks. This was disclosed under Part XII of the Companies and Allied Matters Act in the Finance Act.

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The move elicited reactions from stakeholders and a lawsuit from the Socio-Economic Rights and Accountability Project in 2021.

Punch

Assets recovery: We are being careful to avoid re-looting — FG

The Federal Government has said that it is being careful to ensure that repatriated and returned looted funds are not re-looted or misappropriated.

Special Adviser to President Muhammad Buhari on Assets Recovery, Mrs Juliet Ibekaku dropped this hint in Enugu during a CSO Roundtable Dialogue on the Status of Asset Recovery in Nigeria held at Bon Platinum Hotel, Enugu organised by CLEEN Foundation, an NGO powered by the FG to oversee the Asset Recovery.

CLEEN Foundation

Ibekaku said that there were agreements reached with the countries where the hitherto looted funds were recovered to see that they are judiciously utilized and channeled into projects that would impact the lives of ordinary Nigerians.

According to her, without conscientious adherence to the agreements, foreign countries would not have the confidence to deal with the Nigerian Government.

She explained that returning the looted funds to the states would not be possible owing to the rigorous processes reached in returning the looted funds which included litigations in courts in those countries.

Speaking on the essence of the Dialogue she said that it was important that Nigerians through CSOs would know how the recovered looted funds like the popular Abacha Loot are being utilised.

Hear her: “The importance of today’s meeting was that the CLEEN Foundation was recruited to monitor what is going on with recovered assets, especially the assets recovered before the implementation of PIDF projects, Lagos-Ibadan express road, Abuja-Kano expressway as well as second Niger bridge has the responsibility to bring together other Civil Society Organizations to create awareness about what the federal government is doing. And also to get other people and Nigerians how those assets are being used.

“The most important thing is knowledge gap of what is happening when the money is returned and what it is being used for, for the benefit of Nigerians should be in the public space and we felt from the government side that this information is not fully on board that people really don’t know that most of those funds had gone into part of the implementation of that project.

“And when the National Furan Authority, NFIA, responsible for overseeing these roads, when they come on board to present their aspect of how these funds have helped in making sure these projects are concluded, then we will get to see the other side of what government is doing and what civil society is talking about. The most important is to have the unity of understanding and to have the knowledge, that is why we need publicity to talk about what is going on.

“The programme is important because it gives the general public the understanding of what government is doing and since this is a CSO, it gives you the opportunity to ask them question. As Nigerian citizens you have right to know what is going on. And that’s why when money return to Nigeria, the process of making it public was to enable Nigeria know where the money is being channeled to, whether it is going to Abuja-Kano expressway, Second Niger bridge, Lagos-Ibadan expressway and so on.

“When you look at it, you see that there is a sense of trying to make sure the projects go round the country. So, it is not just the South or West but also the North. You can see there was a thinking behind the projects that are also being funded, so that even if you don’t see the cash, you can feel it when you go through the road and you can say, this is part of the recovered funds. It’s something people need to see. So, that is the whole essence of the meeting to communicate what is going on and I know CLEEN is going to display some of the activities of what is going on.”

The Executive Director, CLEEN Foundation, Mr.Gad Peter, explaining the essence of the Roundtable said that it was important that Nigerians know where the recovered loots are being channeled to, noting that Civil Society Organisations, CSOs are in a better position to educate Nigerians.

Peter said: “It is with deep sense of delight that I welcome all of our distinguished guests and participants to this CSO Roundtable Dialogue on the Status of Asset Recovery in Nigeria. One of the key objectives of this dialogue is to update you my colleagues and other key stakeholders on the progress success, possible areas of engagement and challenges recorded in the process of utilizing recovered looted assets as well as the roles of Civil society in ensuring these recovered funds assets are adequately utilized and accounted for.

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“CLEEN Foundation is keenly aware of the devastating impact of corruption on societies including croding trust and the ability of governments to deliver to their citizens. It distorts the economies and access to key services. It hinders development and pushes citizens towards extremism.

“It is in recognition of the role corruption plays in undermining democracy that the US considers the fight against corruption as a core national security interest.

The CLEEN Foundation on the 10th of February 2021 was appointed by the Federal Government of Nigeria and the USA Government as the civil society organization to provide effective monitoring of the implementation of the tripartite agreement on the sharing, transfer, disposition, repatration, and management of the Forfeited Assets.

“The funds is for the benefit of the Nigerians for infrastructural development namely: Abuja- Kano Road, Second River Niger Bridge and the Lagos-Ibadan Expressway, I would want to quickly use this opportunity to appreciate the FG, the UK and US government and particularly the Federal Ministry of Justice for this partnership and opportunity that enable us to keep a close eyes on the full utilization of the Abacha loot

“One aspect of the agreements reached to prevent the re-looting of repatriated funds was a provison that civil society organizations would be involved in monitoring and reporting on the use of recovered loot. That way, a number of the countries from which the loot was being returned felt confident that the monies would not vanish into the pockets of government officials.

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“Another innovation, which was agreed, was to use recovered loot for specific social programmes, which would directly benefit poor and vulnerable Nigerians who have over the decades bore the brunt of the grand scale corruption, which has characterized governance in Nigeria. I therefore urge you to help spread the gospel across various constituents you represent.

“In conclusion, this dialogue will provide each and every one of us the opportunity to understand in-depth the work that has been done and also reiterate the need for CSOs to fully participate in monitoring the government’s efforts in the application of these funds On behalf of CLEEN Foundation.”

Vanguard

World Bank lists challenges for incoming FG, drops growth rate forecast

At the backdrop of the imminent assumption of office, the World Bank Group, WBG, has given a long list of challenges that need to addressed in the immediate term by the new leadership of the Federal Government.

The WBG President, David Malpass, in a press briefing at the on-going Spring Meetings of the Bretton Woods institutions in Washington D.C., United States of America today, also hinted that economic growth would be subdued during the year with a forecast growth rate of 2.8 percent, a further drop from its earlier forecast of 2.9 percent and also a significant drop from its estimates for 2022 at 3.3 percent. 

Malpass stated: “For Nigeria, the growth was 3.3 per cent in 2022 and 2.8 per cent for 2023 is within our forecast, and our high priority in the World Bank is shared prosperity in a sustainable way. And so, as we think about Nigeria, there are many changes that are needed in order to make that happen.

“Nigeria has a big chunk of its GDP coming from the oil sector and it means that a lot of people in Nigeria are facing poverty due to the global difficulties in the sector as well as Nigeria’s peculiar challenges, and that needs to be a direct focus.

“And they (Nigeria)also face insecurity across the northern regions that are very challenging. And so, the World Bank is working hard within Nigeria but also working to try to have an economic system that can be more productive.

“Nigeria has trade protection that blocks market development; They have a dual exchange rate that is very expensive for the people of Nigeria; They have high inflation and not enough diversification of the economy to really make sufficient progress”.

Speaking to the broader perspective of African economies also affecting Nigeria, Malpass said, “I wanted to give you the context for Nigeria, Egypt, and for other countries where we wish that the true success of the World Bank would be if there can be countries where the people are doing well into the future. And that I think is going to take a substantial change in the world. 

“My hope would be that we can break through on the debt overhang that’s weighing on countries and also break through the structural blockages in so many of the big developing countries where rather than converging and having their growth go up faster than the advanced economies which would be their goal there is a slow down over the decade. 

“Showing up like China, developing countries can grow at a 10 percent rate and catch up with advanced economies in a period of years and decades. India is showing that now with 6 percent growth but with the aspiration of 8 per cent per year growth based on policies that will generate faster growth, more electricity, access to clean water, and more investment in agriculture, the things that are needed by the countries.”

Vanguard

13trn bill in 16years: Why petrol subsidy must be removed — NEITI

-Costs more than health, education, agric, defence budgets in 5yrs

THE Nigeria Extractive Industries Transparency Initiative, NEITI,  has insisted that the Federal Government must end the costly policy of petrol subsidy as the N13 trillion spent on it between 2005 to 2021 was more than the entire budget for health, education,  agriculture and defence in the past five years.

The Executive Secretary of NEITI, Dr Orji Ogbonnaya Orji disclosed this yesterday in Abuja at a dialogue organised by Policy Alert with the theme: Policy dialogue on the utilization of beneficial ownership information on crude oil swap deals in Nigeria.

Dr Orji explained that Nigeria has over the years paid huge costs for the continuing subsidy of petrol, stressing that the country has spent more on the subsidy than capital projects in the past 10 years.

He noted while new developments in the sector have overtaken the challenges posed by the oil swap deal which was introduced in 2010, the government need to urgently tackle emerging issues.

“The first is the urgent need to make a decision on the agitation for the removal of fuel subsidies. The full deregulation of the petroleum sector will permanently lay to rest the conversation around oil swaps. NEITI’s latest policy brief titled “The cost of fuel subsidy: A case for policy review revealed that Nigeria expended over N13 trillion ($74 billion) on fuel subsidies between 2005 and 2021. 

“The figure in relative terms is equivalent to Nigeria’s entire budget for health, education, agriculture, and defence in the last five years, and almost the capital expenditure for 10 years between 2011‑2020. 

“It is also important to note other economic opportunity costs of fuel subsidy which include among others slashing allocations for the health, education, and technology infrastructure sectors; Deterioration of the downstream sector with the declining performance of Nigeria’s refineries and recording zero production in 2020; Disincentivized private sector investment in the down and midstream petroleum sector; Low employment generation since the refining process is done outside the shores of Nigeria; Worsening National Debt; Declining balance of payment, Forex Pressures and depreciation of the Naira and of course product losses, inefficient supply arrangements-scarcity and its attendant queues etc”.

He called on the government to also intensify efforts aimed at ending the menace of theft and pipeline vandalism, adding that between 2009 and 2020 (a 12-year period), Nigeria lost 619.7 million barrels of crude oil valued at $46.16 billion or N16.25 trillion oil thieves. 

“The volume of crude oil losses represents a loss of more than 140 thousand barrels per day”. 

Speaking earlier, Executive Director, of Policy Alert, Mr Tijan Bolton-Akpan explained that “with the Petroleum Industry Act, 2021, entering into force, additional obligations in the areas of contract openness and beneficial ownership transparency have been imposed on the two oil regulators, on the state-owned company (NNPC Limited) and on the many domestic and international companies doing oil and gas business with the Nigerian state”.

CBN forex ban: Nigerians imported N18tn cooking oil, meat, others in seven years – Report

•Importers ordered agric, animal products, others from Asian, EU, African countries

•Firms sourced dollars at parallel market over CBN forex ban on 41 items

Nigerians imported not less than nine items worth N18.12tn from the forex ban list of the Central Bank of Nigeria between 2016 and 2022, findings by The PUNCH have shown.

The CBN had categorised about 41 import items as not valid for forex, which means that the importer will not be able to get forex from the apex bank for such items.

The apex bank said the restriction was part of efforts to sustain the stability of the foreign exchange market, ensure effective utilisation of foreign exchange and the derivation of optimum benefit from goods and services imported into the country.

However, these items were not banned or prohibited by the Nigerian Customs Service, so they can still be imported.

According to an analysis of Nigerian Foreign Trade reports of the National Bureau of Statistics from 2016 to 2022, items such as crude palm oil, vegetable products, animal products, meat, vegetable fats and oil, steel products, rubber, plastic, clothes, and textiles were imported from various countries.

Further breakdown showed that crude palm oil got a total of N283.8bn in seven years, with N39.5bn spent in 2017, N20.2bn in 2018, N19.1bn in 2019, N134.8bn in 2021 and N70.2bn in 2022. The item didn’t record any transactions in 2016 and 2020.

Vegetable products got N4.8tn with N283.2bn spent in 2016, N295.8bn in 2017, N407.6bn in 2018, N443bn in 2019, N1.1tn in 2020, N945.4bn in 2021, and N1.3tn in 2022.

Animal products recorded trade of N3.3trn with N664.3bn imported in 2016, N190.9bn in 2017, N365.3bn in 2018, N221bn in 2019, N793.5bn in 2020, N485.8bn in 2021 and N549.6bn in 2022.

Mackerel meat recorded a total of N491bn with N11.2bn in 2016, N27.5bn in 2017, N239.5bn in 2018, N37.92bn in 2019, N62.73bn in 2020, N95.3bn in 2021, and N17.1bn in 2022.

Other items restricted from accessing FX at the CBN official market include blue whiting’s frozen meat, which recorded a total of N204bn with N10.5bn worth of goods imported in 2017, N15.2bn in 2018, N21.86bn in 2019, N49.6bn in 2020, N65.5bn in 2021 and 41.5bn in 2022. The product, however, didn’t record any purchases in 2016.

Imported vegetable fats and oil goods got a total of N2.1trn with N35.5bn spent in 2016, N954.4bn in 2017, N72.9bn in 2018, N62.1bn in 2019, N482.3bn in 2020, N292.6bn in 2021 and N165.9bn in 2022.

Others, like steel products, other types of fish and clothes, recorded single transactions in 2017, 2020 and 2021 with N31.9bn, N24.6bn and N62.75bn, respectively.

N5.15tn was spent on rubber and plastic, while N1.67tn was spent on textiles.

The data showed that the sum of N336.47bn was spent on importing rubbers and plastic in 2016, while N79.9bn was spent on importing textiles in the same period.

The figures from the NBS also revealed that in 2017, N405.47bn was spent on rubber and plastics imports. Similarly, N102.62bn was spent on importing textiles in the same year.

Plastic products

According to data obtained from NBS, in 2018 alone, N607.4bn was spent on rubber and plastic imports, while N166.24bn was spent on textile imports.

The breakdown of the data revealed that in 2019, the sum of N536.77bn was spent on importing rubber and plastic, while the sum of N174.97bn was spent on importing textiles within this same year.

In 2020, a total of N1.46tn was spent on importing rubber and plastic, which is N25.6bn more than the amount spent in 2021. Meanwhile, N416.71bn was spent on textile imports in the same year.

The NBS also revealed that N367.68bn was spent on importing textiles in 2021, while N1.19tn was spent on rubber and plastic in the same year.

Benzema celebrating his first UCL goal against Chelsea last night.

By 2022, N482.06bn was spent on importing rubber and plastic, while N365.46bn was spent on importing textiles.

A country-by-country breakdown showed that most products were imported from Europe and Asian countries.

However, available data didn’t specify the importing country for animal products, vegetable products, clothes, and other types of fish and vegetable fats and oil.

For crude palm oil, the analysis showed that Malaysia is majorly where the product is sourced with N129.7bn of the product imported during the period.

This is followed by India with N64.5bn, China with N24bn, Ivory Coast with N22.4bn of the product, Singapore with N20.8bn, Indonesia with N17.5bn, Columbia with N1.4bn and Ghana with N114m.

Mackerel products were obtained from the Netherlands at N53.6bn followed by Russia at N72bn, Japan at N43.9bn, Mauritania at N17.1bn, Ireland at N14.75, Chile at N13.9bn, Norway at N12.33bn, Faroe Island at N7.5bn, Morocco at N5.75bn and South Korea at N3.18bn.

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Also, Blue Whiting’s frozen meat worth N73.95bn was imported from the Netherlands.

This is followed by Russia N67.1bn, Ireland N22.5bn, Faroe Island N20.96bn, Poland N4.53bn, Chile N2.24bn and Norway N1.47bn.

For steel and iron, a single import worth N31.6bn was recorded from Germany.

In the third quarter of 2018, rubber and plastic were majorly imported from France, valued at N867m, followed by Spain at N594m, Lithuania at N588m, the Netherlands at N449m, and Germany at N249m.

China imports

The fourth quarter of 2018 saw textiles as the majorly imported item from China, valued at N5.07bn, followed by South Korea at N2.94bn, the US at N1.99bn, Taiwan at N854m, and Kenya at N598m.

Comparing the data to previous years, it shows that in the second quarter of 2019, textiles were the majorly imported item from China, valued at N7.34bn, followed by South Korea at N1.07bn, the United States of America at N321.93m, Taiwan at N321.93m, and Kenya at N253.25m.

In the second quarter of 2018, rubber and plastics were majorly imported from France, valued at N561m, followed by Lithuania at N445m, Spain at N410m, Italy at N368m, and China at N328m.

According to data released by the NBS, in the second quarter of 2021, Nigeria imported rubbers valued at N368m from China, followed by Luxembourg at N339m, Taiwan at N298m, Italy at N277m, and India at N67.81bn.

The Rivers police officers who assaulted motorist last Sunday

In an earlier report by The PUNCH, a renowned political economist, Prof Pat Utomi, explained that the country had a huge appetite for imports because of insufficient domestic production driven by worsening insecurity and stringent government regulations.

He said, “You will notice that Nigeria’s top imports which are food products and motor spirits are things that we should be exporting because we are a food-producing nation and we have oil in abundance. This is scandalous.

“But the reason this is so is simple; firstly, access to farms is problematic. I am in the agriculture value chain business and farmers say to us ‘We can’t supply to you, because we are afraid to go to our farms’. So insecurity contributes significantly to poor farm output. Beyond insecurity, government regulations and policies also hinder production in various sectors.”

Reacting, the National President of the All Farmers Association of Nigeria, Kabir Ibrahim, said that Nigeria had yet to achieve food sufficiency.

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“And that is why I always say we are yet to achieve food security; it is work in progress; it is when the import bill is far less than the export bill; that is when you can say that you are self-sufficient in food at least. But when you import so much like the vegetable oil, there is no food sufficiency.

Also speaking, the Chairman, South West zone of AFAN, Dr Femi Oke, said the development was not encouraging to farmers.

“As farmers, we are not happy, we are pained because it is not encouraging. It is surprising to hear that import of food items rose to that amount despite the fact that these commodities are banned.”

However, Ibrahim believes there is a need to commend the CBN for the forex ban on 41 items.

He said, “The forex ban is commendable as it has made us self-sufficient to some extent, especially rice. Every country in the world does it in order to boost competence in a certain area and prohibit some items to excite internal production. If we can produce it, why should we import it? We are approaching self-sufficiency in rice. There are items we have a competitive advantage and it is not economically wise to import them because they are available here. There are other products we currently don’t have competence in and there is nothing wrong if we import products like milk and wheat.”

Yusuf faults list

Reacting, the Director of Centre for Promotion of Private Enterprise, Muda Yusuf, described the forex ban list by the central bank as an “aberration”, explaining that the banned items were legally acknowledged in the nation’s trade policy document.

Yusuf said, “The list itself is creating confusion in our trade policy because it is only fiscal authorities that should determine what you can import and not import. What the CBN has done is unusual, an aberration because the trade policy of any country is documented in its fiscal policy; a trade policy document which will show the tariffs and items under import and export prohibition. That means you can’t import those products.

“When you have that information document by concerned authorities, the CBN now has its own list of items which you can’t officially source foreign exchange so it creates a lot of confusion in the system. What needs to be done is harmonisation and it is not the duty of the apex bank to decide what items to give forex for. That is a trade policy decision.”

He explained that the ban can be considered to be a major factor in the gap between the official exchange rate and the parallel market.

“It is also creating a lot of pressure on the parallel market and is helping to widen the gap between official and parallel exchange markets since that is where the importers get forex from. And that is creating a whole lot of problems for them.”

A financial analyst and Managing Director of Cowry Asset Management, Johnson Chukwu, on his part, advised the government to prioritise local production of goods to reduce the country’s dependence on imports.

Chukwu said, “In the first place if we have a sufficient supply of those products, it would be inadvisable for anyone to import them

“The reason is that once you have enough supply of these products, the prices would go down below what we can import them.”

Speaking with The PUNCH, the President of the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture, John Udeagbala, attributed the imports of the items  to a shortfall in local production.

He said, “Apart from being the president of NACCIMA, I am in the palm oil trade. I have a vegetable oil refinery. We don’t have enough in the country. My plant cannot event run 24 hours for one week because we don’t have enough raw materials. There is a shortage. If there is no demand, there won’t be any supply.”

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Similarly, the Deputy-President of the Lagos Chamber of Commerce and Industry, Gabriel Idahosa, said that local production of some items had decreased over time. This, coupled with Nigeria’s growing population has necessitated imports of products which Nigeria ought to attain self-sufficiency.

He further stated that due to the fortune spent by importers to bring in these imported items, Nigerians would consequently have to pay more for products which ought to have been purchased at cheaper prices.

Idahosa said, “This is why exchange rate has gone from N300 to the dollar, from 2 or 3 years back to N700. This is the impact. Because CBN has banned the items on the list, these people go to the parallel market.

“If somebody is selling imported fish, by the time the fish arrives Apapa, the importer of then fish has calculated all his costs. He will just set his profit margin and take it to the market. If a crate of ice fish was N5000 before, now we buy it at N22,000. It causes runaway inflation and multidimensional poverty.”

The Punch

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