CBN Calls For Stakeholders Input On Corporate Governance Code

The Central Bank of Nigeria (CBN) has advised the Financial Reporting Council of Nigeria (FRCN) to ensure that it considers the input of a wide-range of stakeholders in its preparation of the National Code of Corporate Governance (NCCG), for private, public sectors as well as not-for profit organisations.

The banking sector regulator also disclosed that it found out that most of the inputs by operators under its regulatory purview were not captured in the draft document.

The central bank stated this in a circular posted on its website that was obtained yesterday.
The FRCN, following a public hearing it held on June 30, 2015, released drafts on the NCCG for private, public sectors as well as not-for profit organisations in December 29, 2015.

But the CBN stated: “The Central Bank of Nigeria noted that most of its inputs/observations, submitted during the public hearing, which it considered critical to the smooth operation of the banking industry were not considered in the released drafts. The CBN also observed that other significant contributions from a number of banks and other financial institutions on the private sector code were not also considered.

“We advise on the need to ensure that relevant inputs that would enhance the status of the codes as well as facilitate the efficient and effective operation of the financial system are factored-in by the FRCN before the codes are finalised. Accordingly, we invite you (banks) to forward your inputs and/or concerns on the national corporate governance codes to the Director, Financial Policy and Regulations Department.”

In the proposed NCCG for the private sector, the code is to cover entities that only render operational returns as opposed to financial returns to designated regulators; requires a clear statement of the main purpose of a corporate board to clear any ambiguity; specification of a minimum board size of eight while the maximum board size is left to corporate needs; among others.

On the other hand, the public sector code stipulates a re-statement of the compliance and performance obligations of public sector entities; introduction of public entities (oversight) committee in each ministry, rather than a centralised oversight agency, among others.

Lagos Records N5bn FDI In Three Months

Lagos State government has recorded over N5billion foreign direct investment (FDI) in the first quarter of 2016, Dr. Yakub Olajide Bashorun, Permanent Secretary, Office of Overseas Affairs and Investment has said.

Dr. Bashorun made this disclosure at the weekend during a one-day sensitisation of MDAs on mandate of Office of Overseas Affairs & Investment in Lagos.

Speaking on the investment profile of Lagos, the erstwhile Permanent Secretary in the Ministry of Agriculture and Co-operatives, said: “The investment projection for the state is very high. In the first quarter for instance, we have done about N5billion worth of investment into Lagos, creating hundreds of jobs for Lagosians.

“That is over 50 per cent of what has come in to the country this year alone. So you can imagine what will still be done with this kind of sensitisation workshop with everybody on the same page, whether in agriculture, in power, in transportation, health, medical tourism, ICT, education, entertainment and tourism sectors. So these are areas that are huge.”

Continuing, he said: “We will continue to monitor with aftercare because it is not only enough to ensure that investment comes to Lagos we want to also ensure that investment is thriving. If they are doing very well how can they do even better? Can they open more branches? If they are not doing well is that something went wrong along the way? Is it in terms of implementation of agreement? There has to be somebody who is working out the interest of everybody and that is what we’re doing.”

Office of Overseas Affairs & Investment, otherwise known as Lagos Global is a new parastatal was established in last May at the inception of the Governor Akinwunmi Ambode administration.

While explaining the core mandate of the agency, Prof. Ademola Abass, Special Adviser, Office of Overseas Affairs and Investment, in a presentation titled: ‘Promoting FDI in Lagos: Yesterday, Today and Tomorrow,’ said: “We’re in the investment arm of the Lagos state government. Since the creation of this office, I can tell you they are in hundreds and if the trend continues with what we have seen I will be talking in terms of thousands. But again, make no mistake, not all proposals will come to fruition. And you do not know the one which will come to fruition before you have dealt with it. So we have hundred proposals may it is going to be about five or six that would give you the traction that you need. And you may have just one proposal after over two months that would be a very major proposal. So you cannot really calibrate it but the important thing is that it is huge.”

The former university don, who spoke on plans by the state government to turnaround the fortunes of the state said: “Lagos needs a lot of infrastructural development, especially with our transportation. For a city of 22 million people you cannot rely on a mono transport system. One of the things we’re trying to do in Lagos is to take the ferry service a lot more serious than we have always done. So we’re looking into investment in the transportation area. This has become inevitable because the oil revenue has been nose-diving. We’re trying to look into and develop our agricultural resources. In terms of health we want to make sure we develop our hospital infrastructural to be able to stop our people from going to spend millions on medical tourism. We want to invest on energy. Lagos today is need of about 4, 000 megawatts to function but we have just around 1, 000 mega watts. So we have less than one quarter. So these are the key sectors we’re interested in Lagos state.”

On measures to encourage investment drive, Prof. Abass said: “There are many incentives. We have tax holidays for people. Obviously we’re also trying to cut down the time it takes to set up. We going recognising pioneer status and the government is also looking at using land as equity for those who may require land. Lagos has unique advantages.

“We have a population of almost 22million. We’re not just giving them benefits but we’re asking our investors to look at our unique advantages that Lagos actually offers them. In terms of population, it’s 22million, almost 5million of which is in the middle class. That is a huge purchasing power for whatever investment you have in Lagos state. And you’re talking about a Lagos state that is today the fifth largest economy in Africa, talking about $135billion GDP, which is 42 countries in Africa as a whole. So it’s not just giving investors benefits but we also helping them to take advantage when you come to Lagos state.”

Inflation Rises To Double Figures On Higher Food Prices, Imported Goods

Despite the federal government’s refusal to devalue the naira, the Consumer Price Index (CPI), which measures inflation, rose significantly to 11.4 per cent in February compared to 9.6 per cent the previous month, the National Bureau of Statistics (NBS) said on Tuesday.

It attributed the 1.76 per cent rise in the headline index to the faster pace of increase across almost all major divisions that contribute to the index with the exception of the restaurants and hotels division which also rose, albeit, at a slower pace.

The Central Bank of Nigeria (CBN) has argued at every opportunity that devaluing the currency would result in import-induced inflation. However, the currency curbs it put in place since last year to conserve foreign reserves and prop up the naira, have led to sharp spikes in the prices of goods and services in a slowing Nigerian economy.

According to the NBS, the pace of increase of food prices as recorded by the food sub-index increased at a faster pace in February, with the food index rising by 11.3 per cent, up by 0.71 per cent from what was recorded in January.

The NBS stated that “during the month (February), all major food groups which contribute to the food sub-index increased at a faster pace during the month with the exception of potatoes, yams and other tubers group and sugar, jam, honey, chocolate and confectionery groups”.

The urban index rose by 12.3 per cent (year-on-year) from 9.7 per cent in January, while the rural index also rose to 10.7 per cent in February from 9.5 per cent the month before.

On a month-on-month basis, both the urban and rural indices increased at a faster pace, as the urban index increased by 3.0 per cent in February from 0.9 per cent in January, while the rural index increased by 1.8 per cent from 0.9 per cent in January.

Also, the core sub-index increased at a faster pace in February as imported items as well as other domestic shocks resulted in ripple effects across many divisions that contribute to the core index.

The core sub-index rose to 11.0 per cent in February, roughly 2.2 per cent from the rate recorded in the previous month.

“Imported food items as well as other necessary inputs to producing key local staples such as bread continue to drive the food index higher. The food index increased to 11.3 per cent (year- on-year), 0.7 per cent points higher from rates recorded in January.

“The highest price increases were recorded in the fish, vegetables and bread and cereals groups for the second consecutive month,” NBS said in its monthly inflation report.

However, the average monthly price paid by Nigerian households for a litre of petrol across the country dropped to N99.76/litre in February compared to N109.59/litre, the NBS further stated.

The official pump price of petrol remained unchanged at between N86 and N86.50/litre, but figures provided showed that on the monthly average, Nigerians have continued to purchase petrol above the official rate in the period under review.

According to the NBS report for February, Ogun and Edo States recorded the lowest monthly average price of N86.53 and N86.50 respectively for a litre of petrol.

On the other hand, Yobe and Bayelsa States accounted for the highest monthly average price of petrol at N122.88 and N120.06 respectively.
Abuja and Lagos recorded monthly averages of N92.70 and N87.03 respectively.

In a related development, Egypt has abandoned its long standing struggle to prop up the value of its currency against the dollar, a shift that may prompt other countries like Nigeria to also undertake foreign exchange devaluations.

According to the London-based Financial Times newspaper, the Central Bank of Egypt said on Monday it would adopt a flexible exchange rate after devaluing the pound by 13 per cent against the dollar.

The currency market expects other central banks to follow Egypt and seek greater policy flexibility, with Nigeria among those seen undertaking a devaluation to alleviate economic pressures.

Nicolás Maduro, Venezuela’s president, last month devalued his country’s bolívar by 37 per cent in an attempt to boost its ailing economy.

Luis Costa, a currencies analyst at Citigroup in London, said Egypt’s “bold” devaluation could prove to be a model for other countries such as Nigeria.

“These countries can’t put off an adjustment in their currency any more. I know it can be painful, and we know there will be pressure on inflation, but a liberalised FX policy is the right way to go,” Mr Costa said.

Nigeria heads a list of countries with currency pegs or strict currency regimes that may loosen their exchange rate policies.

Pressure on commodity prices last year forced Kazakhstan and Azerbaijan to abandon their currency pegs, as the strain on their reserves to maintain a stable exchange rate became too great.

The Gulf states of Saudi Arabia, Bahrain and Oman are seen as vulnerable to devaluation, although the commodity rally of recent weeks may relieve that pressure in the short term.

“It’s helped some of those central banks still trying to maintain those pegs,” said Piotr Matys, emerging market foreign exchange strategist at Rabobank. “But it still feels like a short-term squeeze rather than a sustainable rebound in the oil price.”

Fundamentals would determine whether countries could maintain their pegs, according to Win Thin at Brown Brothers Harriman.

Whereas the Hong Kong dollar peg looks fairly secure, “countries with weak fundamentals will have a much harder time keeping pegs in place,” he said. He pointed to the Kazakh tenge, the Nigerian naira, Venezuela’s bolivar and the Argentine peso.

One currency showing early signs of stability following adoption of a weaker currency regime is the Russian rouble. But Mr. Matys said other countries might not be able to manage the adverse public reaction to the rise in inflation that followed devaluation.

“There are lots of central banks under political pressure to maintain these pegs,” he said.

“No one dares to challenge (Russia’s) President Putin, and he got away with (devaluation) fairly unscathed, but I don’t think other politicians would escape protests.”

Government To Train 500,000 Unemployed As Teachers, To Stimulate Economy Via Infrastructure Development – Lai Mohammed

Lai Mohammed, minister of information and culture, says the federal government has “a clear plan to fix the economy”, which includes “training 500,000 unemployed graduates as teachers”.

Speaking when he appeared as a guest on Sunrise Daily, a breakfast programme on Channels Television, Mohammed expressed optimism that the current administration would take Nigeria out of its present economic challenges.

“We have made provision for massive social intervention,” he said.

“We have put aside N500 billion for artisan, market women, traders and other people to become self-reliant. We have made provision for 500,000 unemployed graduates to be trained as teachers.”

He added that gone were the days when government relied solely on oil, and lamented the effect of the sharp decline in the prices of oil.

“The federal government has a clear plan to fix the economy. There is hope and this government is determined to take the country out of its current economic difficulties,” he said.

“The government has a very clear policy on the economy despite the challenging outlook. Although the price of crude oil is recovering slowly, we have learnt our lessons and we are not going to depend solely on crude again as the mainstay of the economy.

“Our fiscal policy is very clear. We are going to have a budget stimulus which will put money back in the economy.

“Our economic plan is to ensure that more money is put into infrastructure and at the same time that we provide infrastructure that will stimulate diversification into other areas – agriculture, solid minerals and manufacturing.

“Anybody who studies our budget will see clearly where the government is going. This government is going to steer the country out of its economic depression and that is why our budget concentrated more on capital projects which can reflate the economy.”

Analysts Explain Slowing Down Of GDP In Q4 2015

Following the dip in gross domestic products, GDP, for fourth quarter Q4, 2015 reported last week by the National Bureau of Statistics, NBS, analysts have delved into how and why the economy got to the declining year end.

In its analysis last week, researchers at ARM Investments noted that in contrast to Q3 2015, when on-streaming fields helped swing production to 2.17 million barrel per day, mbpd, NBS reports that oil production declined to 2.16mbpd in Q4 2015 which, relative to 2.19mbpd in the corresponding period in 2014, largely accounts for the contraction recorded in the sector.

It stated “we link the negative growth to impact of several disruptions along the Trans Niger, Nembe Creek and Forcados pipelines in Q4 2015. “Furthermore, we note that sustained decline in crude oil prices which has induced industry-wide cutbacks on oil exploratory activity continued to weigh on domestic production”.

“Continued moderation in construction activity, as the impact of dwindling oil prices curtailed the ability of the federal government and state governments to embark on capital projects, was evident in further compression in Building and Construction sector which officially entered into recession since Q3 2015 at -0.11 per cent YoY, and Q4 2015 at -0.4 per cent YoY.

“In a similar vein, Services GDP maintained the downward trajectory over 2015 (Q1: 7.3 per cent YoY, Q2: 4.5 per cent YoY, Q3: 3.8 per cent YoY, Q4: 3.2 per cent YoY) as slowdown heightened across its two key segments, namely, Telecommunications and Real Estate.

“Deceleration in the former (telecommunications) is in line with our views about impact of recent regulatory activism on MTN, which resulted in the disconnection of 5.1 million lines, impacting subscriber growth.

“On the latter (real estate), weakness reflects continued restraint on demand for luxury real estate following the anti-corruption thrust of the Buhari government and bulging oversupply in the office space which pressured rental yields in 2015.

“The foregoing speaks to continued struggles for the oil sector over 2016. On balance of all the factors considered, delayed progress on fiscal plans to stem the slide in GDP growth and fresh headwinds to oil production results in a downward revision to our 2016 mean growth forecasts.

“Incorporating the aforementioned points into our forecasts and adjusting for the loss of one quarter of the planned increase in fiscal spending, with delayed budget passage, leads to a 60 basis points moderation in our 2016 growth estimate to 2.9 per cent YoY”.

I Never Said Economic Crisis Was Beyond Government’s Control – Lai Mohammed

The Minister of Information and Culture Alhaji Lai Mohammed has said that he never said that Nigeria’s economy was beyond the control of the president.

Lai in a statement by Segun Adeyemi his Speacial Assistant said his views while speaking on a radio show on Saturday was misrepresented and twisted and that he never said that the Nigerian economy had gone out of the control of the current administration led by President Muhammadu Buhari.

The Minister further enjoined Nigerians to disregard such distortion and continue to support President Buhari as his administration is on the move to take Nigeria out of the woods.

The statement read thus

On Saturday morning, I appeared on a Radio show here in Abuja at which I spoke extensively on the issues affecting our country, especially the economy

To my surprise, my views were twisted and I was reported to have said that the economy of our country is beyond the control of the President.

This is a gross misrepresentation of what I said. I could not have said our economy is out of the control of our President or the administration he heads. As a matter of fact, this Administration has decided to turn the economic disaster‎ that we inherited to a blessing by diversifying our economy.

I don’t know the reason behind the gross distortion of my comments on the radio today, but whatever the motive is, Nigerians should disregard such distortion and continue to support our President and his Administration to take our country out of the woods.

“Honourable Minister’s comments on the economy during the programme goes thus: ”Again, we have not been very fortunate with our economy in the sense that we came in at a time when there is global collapse in the prices of commodities ranging from oil.

”Unfortunately for us, we have inherited an economy where the mainstay of the economy, crude oil, crashed from an all high of $100 to about $30 and that of course means that automatically the source of our foreign exchange was affected. 80 percent of our foreign exchange used to come from crude.

Today we have lost 70 percent of that amount so that is the major reason.” “While indeed this Administration inherited a disastrous economy, it has decided to turn the disaster into blessing by diversifying the economy away from oil, thus widening its base and weaning the country of its addiction to oil.

Nigeria’s Foreign Reserves In Steady Increase

It is good news again from the Central Bank of Nigeria (CBN) with the rise of foreign reserves for four days consecutively – the first of such since President Muhammadu Buhari took office.

The reserves, which rose by $13 million on Tuesday February 22, have continued to blossom its way out of the 11-year low positions. The consecutive rise started on Thursday February 24, from $27.804 billion to $27.823 billion as at February 29, surging gradually through the days in-between.

The rise has been attributed to a gradual recovery in oil prices and strict restrictions of capital flow. The consecutive rise makes for the sixth daily rise in foreign exchange reserves in the last six months.

After rising by $350 million in August 2015, the foreign reserves have not experienced any of such huge leaps in 6 months, with a meagre rise of $32 million in February 2016.

Major restrictions have been put in place to curb excessive outflow of Nigeria’s foreign exchange, following fears that the reserves may be down to zero in 10 months.

The measures taken to avert the foretold crisis include; ban on CBN forex sales for the 41 items and halting sales of forex to bureau de change operators. The position of the CBN and the federal government on forex has been fiercely criticized by many, who consider capital control as counter-productive.

The Cable