30 — Vanguard, MONDAY, JUNE 24, 2019 (08052201997) The wrong way to defend the naira AREPORT on Page 33 of the June 21, 2019 edition of The Punch Newspaper indicated that “between April 2018 and March 2019, the Central Bank of Nigeria injected over $42.3bn into the foreign exchange market to ensure liquidity in that segment of the economy.” In the same report, Isaac Okorafor, CBN’s Director of Corporate Communications also attributed the relative stability, in the forex market, largely to CBN’s continued intervention; furthermore, according to Okorafor, private international money transfers, estimated at over $20bn annually, plus the Naira swap arrangement with the Chinese Yuan, have all contributed to relative stability in the forex market. Conversely, however, the same edition of the Punch Newspaper, also carried another story titled “DMO records 655% oversubscription at Treasury bills auction;” Page 35, notably, the DMO had rolled over a total of N17.61bn at its Treasury bills auction on Wednesday 19th June 2019, when CBN borrowed at a cost ranging between 9.6% and 12.2% respectively for the bills offered for sale. The implication of the above is that, in place of the N17.61bn Treasury bills actually sold, the 655% oversubscription is indicative of a Naira liquidity excess above N111.35bn in the money market. It is inexplicable that the related Treasury bills rates were as high as between 9-12%, when in reality, there is an undeniable Naira surfeit in the system; surely tomatoes do not cost more when the market has an excess supply of tomatoes! Instructively, nonetheless, with the subsisting 22.5% Cash Reserve Requirement for banks, the N111.35bn liquidity surplus indicated above will translate to an oppressive Naira excess above N400bn, which invariably will propel higher rates of inflation and cost of loans while also jeopardizing consumer demand, economic growth and job opportunities! Worse still, with the suffocating subsisting burden of excess Naira liquidity, the embattled fate of the Naira rate thereafter, becomes sealed, in CBN’s auctions of between $200-$300m weekly to set an exchange rate for the Naira, as the subsisting Naira liquidity surplus expectedly overwhelms the small dollar rations simultaneously offered for sale by the same CBN. Unexpectedly, nonetheless, the more modest value of CBN’s total forex sales, is inexplicably popularly presumed to be the main driver of Naira exchange rate, even when the total autonomous component of forex inflow may be equally significant. Indeed, a cursory examination of CBN’s forex reserves, clearly indicates that Naira exchange rate bears minimal correlation with the size of “CBN’s External Reserves or forex sales;” this means, rising reserves do not translate to stronger Naira rates! For example, in January 2012, Government’s Reserves, was over $34bn, while Naira exchanged for about N155/$1, but unexpectedly, later slumped, to N161=$1, even when forex reserves rose well above $43bn! Similarly, in 2013, External Reserves fluctuated between $45bn in January to $42bn by December, yet the Naira rate remained sticky, between N153-N162/$1. Furthermore, in 2014, the Naira rate also weakened to N170-N199, even when external reserves still trended favourably between $44bn-$45bn! Curiously, however, when External Reserves dipped below $30bn in 2016, the Naira which, was trading around N197=$1 in January, was officially devalued before December to N305-N360=$1, while the economy was, also officially confirmed to be in recession. Conversely, however, the Naira rate in retrospect, was as strong as N84=$1 between 1995-98, even when total It is rather macabre that, the CBN willfully depletes it stock of reserves to defend the Naira, through its regular, weekly auctions of hundreds of millions of dollars reserve was a very modest $4bn. Similarly, between 1972- 1984, official forex reserves was barely $390.71m but one Naira exchanged for almost $2! Instructively, since 2017 External Reserves have since climbed above $40bn, but the Naira rate, still appears inexplicably stuck between N305-N360=$1 even after about 41 items were excluded from forex sales. The obvious question therefore is, if dollar rate rose well above N300=$1, because reserves dropped below $30bn in 2015, why then, has Naira rate remained static between N305-N360, even after reserves have climbed, once again and remained stable between $40bn-$47bn. Although CBN’s Communications Director, Isaac Okorafor, indicated exchange rate stability as priority, rather than size of reserves, invariably however, rapid depletion of reserves would perfunctorily precipitate market panic and induce further reserve erosion, which could, ultimately, compel another huge Naira devaluation below N500=$1. The social and economic impact of such a rate will, inevitably, fast track more Nigerians into poverty, and sustain our Nation’s odious title as the reigning “World Poverty Capital!” It is rather macabre that, the CBN willfully depletes it stock of reserves to defend the Naira, through its regular, weekly auctions of hundreds of millions of dollars, to all and sundry at face value, while conversely, Government simultaneously, seeks dollar loans and pays upto 8% as interest on such debts despite CBN’s heavy cache of idle dollars! For example, the DMO has lately (June 2019) confirmed its intention to borrow $2.7bn from foreign sources in 2019. Nigerians must question why the loan required could not be obtained directly from CBN’s caché of almost $50bn, part of which CBN unilaterally auctions against the Naira and freely distributes sans interest to even Bureau-De-Change, who are probably the major source of foreign exchange for those smuggled goods which continue to threaten Nigeria’s economy. The above title “The Wrong Way to Defend the Naira” was first published in April 2011 in Vanguard Newspaper, to reflect the perspective of the contradiction of higher External reserves while Naira exchange rate, inexplicably, conversely, remain sticky and under siege, even when dollar reserves exceed budget expectations. FINANCIAL VANGUARD 3 African presidents to speak at TEF Entrepreneurship Forum — Elumelu By Cynthia Alo THE Tony Elumelu Foundation (TEF), Africa's leading entrepreneurship platform, has announced the line-up of speakers and activities for the 5th Tony Elumelu Foundation Entrepreneurship Forum, the largest annual gathering of African entrepreneurs. For the Forum's Presidential Dialogue, the President of the Democratic Republic of Congo (DRC), Félix Tshisekedi, will join President of Rwanda, Paul Kagame, and President of Senegal, Macky Sall, in an interactive plenary session that opens Day-2 of the Forum. The Presidential Dialogue will be moderated by TEF Founder, Tony O. Elumelu, and will feature all three the Presidents engaging directly with an audience of 5,000, comprising of entrepreneurs, policymakers, investors and business leaders, with thousands of people interacting live online, throughTEFConnect. The Forum presents the largest single annual opportunity for entrepreneurs and policy makers to interact directly and all sessions at the Forum have private sector and public sector leaders anchor panel discussions, master classes, and a dynamic pitching competition that will engage an audience of start-up entrepreneurs, development institutions and policymakers. The speakers expected for this year's Forum include Prof. Benedict Oramah, President of African Export-Import (AFREXIMBANK); Dr. Akinwumi Adesina, President of African Development Bank (AFDB); Dr. Awele Elumelu, Trustee, Tony Elumelu Foundation and Founder, Avon Medical; Kennedy Uzoka, Group CEO, UBA Group Plc; Mrs. Djene Kaba Conde, First Lady, Guinea; amongst other notable global business leaders. Every year, the Tony Elumelu Foundation hosts the largest gathering of African entrepreneurs, policymakers and business leaders in one location. The fear of economic contraction, increasing joblessness and deepening poverty expressed in that article have all become oppressively apparent. A summary of that article follows hereafter. Please read on. “In practice, the Naira exchange rate is actually more a function of Excess Naira liquidity in a strictly regulated market in which small rations of dollars are auctioned intermittently by the CBN. Regrettably, such a market model will only spell disaster for growth and deepen poverty for our people.” Specifically, the CBN Governor, Lamido Sanusi in his acceptance Speech as Silverbird’s 2010 Man of the Year, referred to IMF’s recommendation for a devalued Naira as one of such ‘bad’ or anti-Nigeria recommendations that pauperise our people. Consequently, he rightly refused to play along with IMF, as he saw no observable benefits in a weaker Naira, which would “trigger higher industrial production costs, fuel inflation, increase fuel prices and subsidies and increase our national debt burden.” “Undoubtedly, Sanusi’s argument with regard to the critical need for a stable naira value appears more plausible; but the real question is, can the CBN Governor keep Naira below N155/$1 within the context of the present framework that explodes Naira supply whenever distributable dollar revenue is substituted with naira, in monthly allocations to government? This column has consistently maintained that naira substitution for dollar revenue is the poison in our economy, as it engenders a system that cripples our economy and oppresses our people whenever we earn increasing dollar revenue; a veritable paradox if there was one!” ECONOMY This year's Forum, themed "Empowering African Entrepreneurs", will take place at the iconic Transcorp Hilton Hotel, in Nigeria's capital city of Abuja. The Forum will also include the UBA Marketplace, where UBA, Africa's global bank, brings together businesses from across the continent. At the 2018 forum, TEFConnect, the largest digital platform for African entrepreneurs was launched to connect entrepreneurs to the opportunities they need for business success. TEFConnectwill take centre stage at this year's Forum as global debates move to technology as a key driver of economic development in Africa.
Vanguard, MONDAY, JUNE 24, 2019—31 Send Opinions & Letters to: email@example.com Western Sahara: When Nigerians hosted an African President STATE visits are state visits. Usually drab affairs with polite speeches, handshakes and some reassurances. It is usually a state affair in which the people are rarely involved. Not so when President Brahim Ghali of the Saharawi Arab Democratic Republic, SADR (Western Sahara) came calling mid-June. The notice of his visit was quite short and his programme, tight. So a race began to get his team accommodate a meeting between him and broad sections of the Nigerian people. It was agreed that he would be hosted under an umbrella organisation, the Nigerian Movement for the Liberation of Western Sahara, NMLWS. The Movement reminds me of similar mass Nigerian organisations that supported the liberation struggles in Mozambique, Angola, Guinea Bissau, Cape Verde, Zimbabwe, Namibia and South Africa. Within hours, one of the Movement’s affiliates, the Nigeria Labour Congress, NLC, offered to provide its secretariat as venue. The NLC which is the largest labour centre in Africa also provides offices, free, for the Movement while its counterpart, the Trade Union Congress, TUC, which like the NLC, has millions of dues-paying members, provides logistical support. 90 The Movement also invited representatives of 17 civil society organisations from women, youth, student and social organisations affiliated to it. The meeting was coordinated by Dr. Dipo Fashina, a past president of the Academic Staff Union of Universities, ASUU, the umbrella organisation of all academics in Nigerian universities. ASUU is also one of the most active organisations in the Movement. Dr. Fashina represented the chairperson of the Nigerian Western Sahara Solidarity Movement, Professor Ibrahim Gambari, the chairperson of the Joint African Union - United Nations Special Representative to Darfur and also, the Special Adviser on the International Compact with Iraq and Other Issues for the UN Secretary- General. President Ghali came to the meeting accompanied by Foreign Affairs Minister, His Excellency, Ould Salek; Special Adviser, Abdati Braika and ambassador in Nigeria, Ambassador Malainine Sadik- Bashir. In welcoming President Ghali, NLC President, Ayuba Wabba, reiterated the “collective demand that Morocco must be isolated in the global space by all countries, not just in Africa but in the entire world until Western Sahara gains sovereignty, free from colonial control.” Represented by the president of the National Union of Road Transport Workers, NURTW, Najeem Yasin, Ayuba reiterated: “As long as Western Sahara is not free, Africa is not free; and all Africans and African countries must be involved in the struggle.” The Nigeria Solidarity Movement asked me to present its speech at the occasion. I started by reminding President Ghali that Professor Gambari was Nigeria’s Foreign Minister in 1984 when Nigeria formally recognised Western Sahara as a sovereign country. In its address, the Movement told President Ghali that “with millions of friends in Nigeria The wide and active support by Nigerians for the liberation of Western Sahara is a warning to Morocco and its collaborators that they can no longer hold Africa down who solidarise with the Sahrawi people, you can see that here, in Nigeria, you are at home amongst friends, comrades, brothers and sisters; so you are welcome to one of your homes in Africa.” It added: “There are some of your fellow African heads of state who we, our members and affiliates, will not touch even with a ten-foot pole. There are some of them who will not dare come to a labour centre like the NLC without a state of emergency being declared. We cannot be friends or receive people who perpetuate colonialism and exploitation; who betray the very essence of African brotherhood and the soul of humanity.” The Movement asked rhetorically: “Is it not surprising that the European Union, EU, which is loud in shouting about human rights, liberty, freedom and equality, is in league with Morocco stealing the natural resources of Western Sahara?” It argued that refugee camps are supposed to be temporary shelter for refugees and people in refugee-like situation, and regretted that millions of Sahrawi have been forced to live in the Tindouf Refugee Camp in Algeria for the past 44 years. It added: “We do not know any people who have suffered such inhumanity. Yet, the international community says it is interested in human rights, and even claims to be fighting for animal rights.” The Movement mentioned the case of Aminatou Haider whom it had hosted in the same NLC premises in 2009. It said when on November 13, 2009 she returned to her ancestral land, the Moroccan monarchy blocked and deported her to the Spanish Canary Islands. It reminded all, that it took a huge international campaign before the monarchists allowed her return on December 17, 2009. It drew an inference from the this case: “In that infamous act, Morocco once again displayed the fact that the Sahrawi are not Moroccan citizens or does a country refuse its citizens entry and deports them?” The Nigerian Movement which described the continued occupation of Western Sahara by Moroccan troops and security as the worst type of apartheid ever perpetuated, gave a scorecard of its activities: “Everywhere Morocco seeks to perpetuate its evil deeds, we are there to challenge it. We sometimes do not succeed, such as stopping Morocco from returning to the Africa Union, but sometimes we do, such as stopping it from being admitted as a member of the Economic Community of West African States, ECOWAS. "We felt that the Ebola-like contagious foreign policy of Morocco must not be allowed to spread to the West African region. Currently, apart from combating Morocco’s corruption-driven attempt to suck in some Nigerian officials to support its colonisation of Western Sahara, we are also engaging the Nigerian Government to stop the Fertiliser Producers and Suppliers of Nigeria, FEPSON, from its indecent liaison with Morocco to sell in Nigeria, Western Sahara phosphate and natural resources plundered by Morocco.” Responding, President Ghali said: “The support of Nigeria has been critical for freedom in Africa. The role of Nigeria is still needed in driving the liberation of Africa and we know it will continue until the total liberation of Western Sahara. Reacting to the solidarity speeches of students and youths, including from the Amilcar Cabral Ideological School, ACIS, President Ghali said: “We are very happy to see the young Nigerian generation joining the old to continue the struggle for Western Sahara liberation and to ensure that the whole of Africa is liberated.” President Ghali left the meeting to hold talks with President Buhari who in a statement by the Presidency: “restated Nigeria’s support for the people of the Sahrawi Arab Democratic Republic, SADR, and their quest for selfdetermination and independence.” President Buhari added that “Nigeria remains committed to supporting the efforts of the AU and the UN towards finding a lasting solution to the Sahrawi problem.” The wide and active support by Nigerians for the liberation of Western Sahara is a warning to Morocco and its collaborators that they can no longer hold Africa down. First term report card: Verdict of the examiner By Funmilola Adigun THE last session of the Federal Executive Council meeting in Abuja provided a very apt occasion for President Muhammadu Buhari to declare his verdict and he did not mince words or lose face. He rose in robust defense of his cabinet ministers by deflecting orchestrated criticism of his decision to retain them till the end of his first term. In the process, President Buhari impressively saluted the courage and conviction of the ministers, noting that in the situation of serious challenges confronting the nation at the inception of the administration, which many commentators described as hopeless, “many would have given up.” But they stayed on, united in determination to fulfill the campaign promise of rescuing Nigeria from its parlous state. The president then captured the pure essence of stability of government as the anchor of nationhood when he specifically stated that he retained his cabinet because “each of you has a unique skill and strength. "We are a reflection of the Nigeria we aspire to achieve, a diverse but tolerant nation where no one is silenced and where every opinion should be heard and considered.” He enumerated some of the major achievements of the administration, such as curbing the Boko Haram insurgency, revamping food security, the diversification agenda, the Economic Recovery and Growth Plan, ERGP, rail infrastructure and the social investment programmes. The president then added: “I want you all to leave this meeting proud to have served your nation to the best of your ability…..your achievements have guaranteed your position in the history books of this country. You have certainly built the foundations for an improved economy and a more purposeful government.” At this point, discerning readers will realise the salient issues from which the president draws both inspiration and determination to soldier on regardless of the shrill criticism of the vocal minority escalated by media manipulation. It is one thing to be recognised for certain ethical and governance principles and to be propelled into presiding over an elected government by an expectant citizenry. It is quite another to be able to weather the ensuing storm of real and contrived challenges without succumbing or getting distracted. But the ultimate success lies in taking charge with focused commitment and making the positive difference that defines progress in halting decline or deterioration and preparing the grounds for a renewed The president specifically stated that he retained his cabinet because each of them had a unique skill and strength initiative for reformed implementation. President Buhari’s political mission was defined by the frustration with the excesses of the Goodluck Jonathan administration, a state of anomie that was rejected by the masses. Not even the former president could have accurately and comprehensively accounted for the full dimensions of the damage done to the economy and the polity, certainly not in re-election season, so there couldn’t have been anything like proactive preparation for righting the wrongs by the incoming President Buhari. As a reform minded non-conformist political leader with a well-informed insight into the evils of bad governance perpetrated by corrupt politicians, the opportunity of getting elected into leadership of the country could only be the first step in a long and laborious march against entrenched enemies of the progress of the country. Indeed, the first steps in the long march, equivalent to the first term, were certain to encounter all manner of rough tackles and even shifting of goal posts to frustrate and sabotage such that, as President Buhari observed earlier, “many would have given up.” Giving up was exactly what the oppositionpowered, elitist minority intended to impose on the incoming anti-corruption Buhari administration as a forced alternative. A return to the bad old days of economydeflating squandermania must remain an abominable option that requires all patriotic Nigerians to thank God for the re-election of President Buhari for a second term. It also calls on them to rally round for the deep entrenchment of the reformist agenda, especially the anti-corruption and economic infrastructure development components, in the last four years of the tenure, appropriately tagged Next Level. • Adigun, a lecturer, wrote from Ibadan C M Y