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Coronanomics: Nigeria Needs Economic Pragmatism and Robust Institutions – Dr. Temitope Oshikoya

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Temitope Oshikoya

Nigeria needs to achieve economic pragmatism with the support robust institutions to achieve economic stability amidst the COVID-19 pandemic that has recorded over 230 cases in the country.

Dr. Temitope Oshikoya an economist and CEO of Nextnomics Advisory disclosed this on the WebTV Coronanomics Watch program.

He described the recent N500bn intervention plan of the Federal Government as a good step; a critical one at a time of a viral pandemic, even as Nigeria has also engaged Multilateral Development Banks (MDBs) like the World Bank, International Monetary Fund and the Islamic Development Bank amongst other.

According to him it was important to strengthen Nigeria’s healthcare infrastructure and delivery systems, because good health leads to economic wealth.

Oshikoya emphasized the need for effective governance measures through institutions and pragmatism from policy makers, to navigate the challenges arising from the coronavirus disease.

According to him sustainable economic development depends on productivity and productivity depends on incentives, robust institutions and innovation.

Speaking further, he said that Nigeria needs ‘Economic Pluralism’ which will adopt a combination of financial market roles and efficiency of government institutions.

On the fiscal support from the Federal Government for states, the economist said, “We need an efficient information system to monitor distribution and disbursement which means we need an efficientdatabase”.

“We need to work with the NBS, ICT digital economy information ministry in order to build our infrastructural data base and reach out to the poor and most vulnerable. We need stabilizers from social security arrangements, the insurance sector, and pension administration which the USA is building upon. The local government apparatus is equally very important”.

Taking on the issues further in the area of state intervention, he stressed that the issue of decentralization from each state was important, and equipping the healthcare sector should start from the local government  level.

He noted that, “the local government apparatus is very important and strengthens the state’s capacity to handle healthcare, insurance  and educational matters competently and efficiently. The focus should be at the local government not federal level”.

He cited Germany as an example of a country that is effectively driving the state decentralization process through strategic interventions at the Federal, State and Local Government levels which is evident in the reduced cases of COVID-19.

The economist acknowledged Nigeria’s high debt and low revenue base with a low tax base characterized by tax revenues constituting only 7% of GDP, compared to Africa’s average of 15%  and a tax to GDP ratio of 25% in OECD countries.

“In the short term, we need to support the government in the fiscal space but over the long term we need to build public institutions to enable the government to widen the base for tax revenue”, he said.

In terms of key areas for the Nigerian government to  focus on Oshikoya highlighted the following areas:

We need to manage our debt very carefully over the medium term

.we need to mobilise more revenue by improving efficiency in the collection of taxes and reduce corruption

.In  terms of public expenditure, we need to focus on more things that government would imply a greater impact of fiscal spending per capita and improved growth of the productive real sector of the economy

(TEMITOPE WAHEED OSHIKOYA is an Assistant Professor of Economics at the University of New Brunswick, Canada, and a former Economics Consultant to the World Bank)

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Economy

Currency Speculators in Trouble as Naira’s Resurgence Continues

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Currency speculators are in trouble as the Naira has continued to gather strength in the market in recent times.

It would be recalled that the US Dollar exchanged for nearly N2,000 in February this year, same with the Pounds, Euro and other foreign currencies.

However, the Naira has continued to gather strength and is currently hovering around N1,480 and N1,520 for a Dollar.

To that end, the Presidency has warned forex speculators to discard their Dollars, saying that the Naira will soon appreciate more and may depreciate their savings.

President Bola Tinubu’s Special Adviser on Information and Strategy, Bayo Onanuga, made this call in a statement via his X handle on Thursday.

The presidential aide urged speculators to quickly dump their dollars to avoid “tears.”

He stated, “With backlog FX settled, Naira is set to appreciate further, faster. Currency speculators should quickly dump their stock of dollars to avoid sorrows and tears.”

Onanuga was reacting to the Central Bank of Nigeria, CBN, disclosure that it had cleared the $7 billion foreign exchange backlog inherited by Governor Yemi Cardoso.

Yemi Cardoso, CBN Governor

In a statement on Wednesday, CBN’s Acting Director of Corporate Communications, Mrs Hakama Sidi Ali, confirmed the settlement of all valid FX backlog claims.

Ali said the apex bank employed Deloitte Consulting, an independent auditing firm, to meticulously assess the transactions, ensuring that only legitimate claims were honoured.

“Any invalid transactions were referred to the relevant authorities for further investigation,” she stated.

The CBN’s commitment to tackling the FX backlog appears to be paying off, with the external reserves seeing a significant rise, reaching $34.11 billion as of March 7, 2024, the highest level in eight months.

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Economy

CBN Uncovers $2.4b Invalid FOREX Claims

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CBN Governor Yemi Cardoso

Central Bank of Nigeria (CBN) Governor Yemi Cardoso said the apex bank has discovered $2.4 billion invalid forex outstanding claims pressuring the naira and causing anxiety in the currency market.

Cardoso disclosed this in an interview with Arise Television on Monday.

According to Cardoso, this was uncovered during an audit by the consultant the CBN hired, which exposed a number of dubious transactions.

The CBN Governor stated that the apex bank commissioned Deloitte to look into the FX allegations to provide a true picture of the situation.

Cardoso said, according to the Deloitte assessment, up to $2.4 billion of the backlog consists of fictitious claims, with claimants in certain cases being unable to provide import documentation.

“We had had reasons to believe we needed to take a harder look at these obligations. So we contracted Deloitte management consultants to do a forensics of all these obligations and to actually tell us what was valid and what was not,” Mr Cardoso said.

“The result that came out of this was startling in a great respect. It was startling. We discovered that of the roughly $7 billion, about $2.4 billion had issues, which we believe had no business being there and the infractions on that ranged from so many things, for example not having valid import documents and in some cases entities that do not exist,” he said.

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Economy

We are Determined to Stabilise Forex and Boost Economic Growth. -FG

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By Christopher Sunday

Minister of Information and National Orientation, Mohammed Idris, has said the Tinubu administration is committed to implementing macroeconomic reforms.
aimed at curbing inflation, easing the cost of living, and stabilising the foreign exchange as part of the broader objective of boosting economic growth.

The Minister stated this on Saturday in Minna, Niger State, at the 2024 Press Week of the Niger State Chapter of the Nigeria Union of Journalists (NUJ).

Represented by the Director General of the Voice of Nigeria, Mallam Jibrin Baba Ndace, the Minister said the year 2024 holds a lot of prospects for Nigerians as some of the promising initiatives of the administration begin to bear fruit.

“Permit me, distinguished invited guests, as chief spokesperson of the Federal
Government of Nigeria, to use this hallowed platform to tell Nigerians, at this early and auspicious time of the year, that 2024 would be a great year for Nigeria as thepolicies of President Bola Ahmed Tinubu under the Renewed Hope Agenda takefirmer roots for the growth of our nation’s economic development, our invaluablehuman assets, and national security.

“The Tinubu administration will continue to implement macroeconomic reforms.
to achieve broad economic objectives of sustained economic growth aimed at
bringing down inflation, easing the cost of living, and stabilising foreign exchange
and job creation, among others,” he said.

Idris said, against the backdrop of the withdrawal of fuel subsidies, liberalising the foreign exchange regime, and the fight against corruption, the Tinubu government is showing fidelity to the rule of law and the independence of institutions, as demonstrated in the recent judgements of the courts.

The Minister explained that the recent Federal Government decision to relocate certain departments of the Central Bank of Nigeria (CBN) and the headquarters of the Federal Airports Authority of Nigeria (FAAN) to Lagos is part of a broader strategy to enhance operational efficiency, streamline processes, ensure a responsive financial system for Nigeria, and cut operations costs. He emphasised that the government’s directive aligns with global best practices and has no political motivation, however wrongly propagated.

The minister assured that no policy of the present administration would put any part of the country in a disadvantageous position. “President Bola Ahmed Tinubu’s commitment to fairness and equitable development, as outlined in his oath of office, ensures that no policy under his administration will disadvantage any region. His dedication to fostering national unity and inclusivity is reflected in policies guided by principles of fairness and equality,” he said.

The Minister, who also used the occasion to enlist the support of the media in the fight against fake news, said the hydra-headed menace of fake news is ravaging the media space. “My dear colleagues, we need to rise against the elements of fake news that are deliberately designed to misinform Nigerians,” he said.

Idris also announced to the gathering that the Federal Government would soon unveil comprehensive details of the National Values Charter, which are aimed at inculcating values in the citizenry.

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