To safeguard Nigerian economy we won’t devalue the naira – CBN

                                                 
The Central Bank of Nigeria, CBN, yesterday, disclosed that its decision not to undertake a further devaluation of the naira was borne out of the need to safeguard the Nigerian economy from the shocks and negative impact the depreciation will have on the economy.
Reacting to an article in the Economist Magazine, the CBN in a statement signed by its Director, Corporate Communications, Mr. Ibrahim Mu’azu, maintained that the CBN does not panic and will not take desperate measures to satisfy few misguided interests in the market.
According to Mu’azu, the article seems to ignore the fact that the exchange rate is simply a price that is essentially determined by the forces of supply and demand, adding that the CBN believes that the 48 per cent decline in oil prices may not be transitory and made bold policy changes including closure of the subsidized Official Foreign Exchange (Forex) Window, which resulted in a 22 per cent depreciation in the currency, the Naira.
He said, “Because the Nigerian economy is heavily dependent on imports and the exchange rate pass-through to inflation is high, we believe that this adjustment is optimal at this time.
“Contrary to the article’s argument, adjustments to a sharp decline in supply of US Dollars cannot all be borne by an indeterminate depreciation, without considering the full impact on the Nigerian economy.
“The demand side also has to be considered, not just in response to the pressure on the Naira but as an opportunity to change the economy’s structure, resuscitate local manufacturing, and expand job creation for our citizens.
“Take rice imports, for example: why should we keep allocating scarce forex to rice importers when vast amounts of paddy rice of comparable quality produced by poor hardworking local farmers across the rice belts of Nigeria are wasted, and farmers are falling deeper into poverty while we export their jobs and income to rice producing countries?
“Few decades ago, Nigeria was one of the world’s largest producers of palm oil but today we import nearly 600,000 Metric Tonnes while Indonesia and Malaysia combine to export over 90 percent of global demand.”
Muazu, however, noted that under the present circumstances, the CBN will do the little it can, through the introduction of huge subsidies, to protect the jobs and incomes of local farmers, using some of the same principles western economies used to justify the protection of their farmers.
He maintained that Nigeria cannot attain its full potentials by importing anything and everything, adding that for a long while now,   the quest for importation has significantly weakened the operating capacities of industries in the country.
He further stated that like other oil-exporting countries, Nigeria is grappling with its share of the aftermath of the oil price decline, noting that despite the challenges, Nigeria’s economic fundamentals remain strong.


According to him, inflation is still within the CBN’s single-digit band, the exchange rate has stabilized around N197 per US Dollar for the last five months, GDP expanded by four per cent in the first quarter of 2015, and 469,070 new jobs were created in the same quarter.
He said, “But now is a good opportunity to begin a reversal. Although the article hastily derides this idea as lacking in economic foundations, it is the same principles upon which many other countries do not allow importation of certain products.
“More also, if the article believes the CBN should adjust to reflect the current parallel market rate, why was this suggestion not made in the week following the inauguration of President Buhari when the same rate fell sharply to under N190 per Dollar?
“Furthermore, it appears condescending to suggest that the list of items seemed “to have been drawn up by someone wandering around a house and a building site”. On the contrary, items were only included after thorough and exhaustive discussions at the highest policymaking body of the Bank, with the strategic national interest of Nigeria.
“With ingenuity and productiveness, we believe that Nigerians will seize this opportunity and use it for the greater good of the country. As we transition into a new administration in Nigeria, we must continue to ensure policy stability at all times.”

It’s insanity to create more states, Col. Umar warns

FORMER Military Governor of  Kaduna State, Colonel Abubakar Dangiwa Umar, rtd has tongue-lashed State governors who could not  pay salaries of workers in their respective states, accusing them of  living a lavish lifestyle that contributed to the economic crunch.

In a statement titled, “ Insolvent State” and made available to journalists yesterday, Umar also blamed his immediate constituency , the Military for causing this financial mess by creating some states which were not economically viable and which depended only on federal government allocations.

He said, “In sum, it is evident that most of the states and local governments are not viable and should not have been created in the first place. One disservice to the nation by some military regimes was the creation of these  revenue guzzling administrative  structures. They have continued slow  national development. But for its impracticability one would recommend a constitutional abrogation of some of them. It simply goes to show that any plot to create more states and local governments is plain insanity.”
Umar who is also the Chairman, Movement for Unity and Progress, urged President Muhammadu Buhari to ensure that he was not hoodwinked by the governors by accepting to any bail-out, just as he asked the President to  discourage frequent rush to the Presidential villa by the governors who visit to demand for help.
According to him, if the President must even attend to the governors,  he must ask them how they got to this level.
The statement read in full, “The current desperate financial situation of most State government or at least those of them that have declared insolvency, is a nightmare long foretold. And not only by the cassandras of this world. We had cause to warn about the reckless extravagance of those states which led them to a borrowing spree from commercial banks at very high rates of interest. In reaction to our alert, the state governors tried to defend their actions, claiming they were all deliberate plan to finance development projects needed to raise internally generated revenue; a way to cut dependence on oil money.
“No one was fooled, and as we expected, the chickens have finally come home to roost. Most of the states have become insolvent having lost the capacity to meet their most basic fiscal responsibility of paying their workers salaries. They are also unable to pay their contractual obligations including the servicing of their jumbo bank loans.
“Faced with this dire financial situation they are running from pillar to post in search of rescue. They have so far approached the FGN with an ill thought out bail out plan, requiring president Buhari to give them cash or his government to guarantee for them more loans from commercial banks having exhausted the Excess crude account and no bank is willing to advance anymore loans to them. They also want the FGN to instruct their creditors, the commercial banks, to allow them a moratorium period of twenty years without indicating a viable repayment plan within the period. Luckily the banks are privately owned and not subject to any governments dictates.
“It is not at all clear if state Governors ever give thought to the political and even ethical implications of their demands on the Federal Government. Doesn’t it ever occur to them that by always coming to the federal government cap in hand, they expose their own sordid impotence and give additional ammunition to those that question the wisdom of running our peculiar federation through so many states and local governments – all of which depend on the centre to survive? Are they aware that the public has gained the impression that states are run without fiscal discipline especially where the egos and whims of the Governors are quite large?
“But president Buhari would definitely want to ask some questions before he extends a helping hand to any cash-strapped Governors including how they got into the problem in the first place and if such Governors commit to be treated of the following diseases: extravagance, lavish lifestyle, prodigality, profligacy, squandamania as well as corruption.
“One of the reasons given by state governments for their current financial mess is the failure of the FGN to reimburse them for projects executed in their states on its behalf. If such claims are valid, it will be quite strange indeed. Do states with such claims have written contractual agreements they signed with the FGN? The FGN has the structure and capacity to execute its projects and should not ask any state to perform its functions. I am sure President Buhari will not allow himself to be hoodwinked. He must maintain the separation of powers between the tiers of government and enforce budgetary discipline. In fact, he should discourage governors from making frivolous demands from the FGN. This will serve to discourage their frequent visits to Aso Rock.
“In sum, it is evident that most of the states and local governments are unviable and should not have been created in the first place. One of the greatest disservice to the nation by some military regimes was the creation of these unviable, revenue guzzling administrative (maladministrative) structures. They have continued to serve as a drag to our national development. But for its impracticability one would recommend a constitutional abrogation of some of them. Goes to show that any plot to create more states and local governments is plain insanity.”
- See more at: http://www.vanguardngr.com/2015/07/its-insanity-to-create-more-states-col-umar-warns/#sthash.neqCwwzj.dpuf

                                           

He said, “In sum, it is evident that most of the states and local governments are not viable and should not have been created in the first place. One disservice to the nation by some military regimes was the creation of these  revenue guzzling administrative  structures. They have continued slow  national development. But for its impracticability one would recommend a constitutional abrogation of some of them. It simply goes to show that any plot to create more states and local governments is plain insanity.”

Umar who is also the Chairman, Movement for Unity and Progress, urged President Muhammadu Buhari to ensure that he was not hoodwinked by the governors by accepting to any bail-out, just as he asked the President to  discourage frequent rush to the Presidential villa by the governors who visit to demand for help.

According to him, if the President must even attend to the governors,  he must ask them how they got to this level.

The statement read in full, “The current desperate financial situation of most State government or at least those of them that have declared insolvency, is a nightmare long foretold. And not only by the cassandras of this world. We had cause to warn about the reckless extravagance of those states which led them to a borrowing spree from commercial banks at very high rates of interest. In reaction to our alert, the state governors tried to defend their actions, claiming they were all deliberate plan to finance development projects needed to raise internally generated revenue; a way to cut dependence on oil money.

“No one was fooled, and as we expected, the chickens have finally come home to roost. Most of the states have become insolvent having lost the capacity to meet their most basic fiscal responsibility of paying their workers salaries. They are also unable to pay their contractual obligations including the servicing of their jumbo bank loans.

“Faced with this dire financial situation they are running from pillar to post in search of rescue. They have so far approached the FGN with an ill thought out bail out plan, requiring president Buhari to give them cash or his government to guarantee for them more loans from commercial banks having exhausted the Excess crude account and no bank is willing to advance anymore loans to them. They also want the FGN to instruct their creditors, the commercial banks, to allow them a moratorium period of twenty years without indicating a viable repayment plan within the period. Luckily the banks are privately owned and not subject to any governments dictates.

“It is not at all clear if state Governors ever give thought to the political and even ethical implications of their demands on the Federal Government. Doesn’t it ever occur to them that by always coming to the federal government cap in hand, they expose their own sordid impotence and give additional ammunition to those that question the wisdom of running our peculiar federation through so many states and local governments – all of which depend on the centre to survive? Are they aware that the public has gained the impression that states are run without fiscal discipline especially where the egos and whims of the Governors are quite large?

“But president Buhari would definitely want to ask some questions before he extends a helping hand to any cash-strapped Governors including how they got into the problem in the first place

and if such Governors commit to be treated of the following diseases: extravagance, lavish lifestyle, prodigality, profligacy, squandamania as well as corruption.

“One of the reasons given by state governments for their current financial mess is the failure of the FGN to reimburse them for projects executed in their states on its behalf. If such claims are valid, it will be quite strange indeed. Do states with such claims have written contractual agreements they signed with the FGN? The FGN has the structure and capacity to execute its projects and should not ask any state to perform its functions. I am sure President Buhari will not allow himself to be hoodwinked. He must maintain the separation of powers between the tiers of government and enforce budgetary discipline. In fact, he should discourage governors from making frivolous demands from the FGN. This will serve to discourage their frequent visits to Aso Rock.

“In sum, it is evident that most of the states and local governments are unviable and should not have been created in the first place. One of the greatest disservice to the nation by some military regimes was the creation of these unviable, revenue guzzling administrative (maladministrative) structures. They have continued to serve as a drag to our national development. But for its impracticability one would recommend a constitutional abrogation of some of them. Goes to show that any plot to create more states and local governments is plain insanity.”

He said, “In sum, it is evident that most of the states and local governments are not viable and should not have been created in the first place. One disservice to the nation by some military regimes was the creation of these  revenue guzzling administrative  structures. They have continued slow  national development. But for its impracticability one would recommend a constitutional abrogation of some of them. It simply goes to show that any plot to create more states and local governments is plain insanity.”
Umar who is also the Chairman, Movement for Unity and Progress, urged President Muhammadu Buhari to ensure that he was not hoodwinked by the governors by accepting to any bail-out, just as he asked the President to  discourage frequent rush to the Presidential villa by the governors who visit to demand for help.
According to him, if the President must even attend to the governors,  he must ask them how they got to this level.
The statement read in full, “The current desperate financial situation of most State government or at least those of them that have declared insolvency, is a nightmare long foretold. And not only by the cassandras of this world. We had cause to warn about the reckless extravagance of those states which led them to a borrowing spree from commercial banks at very high rates of interest. In reaction to our alert, the state governors tried to defend their actions, claiming they were all deliberate plan to finance development projects needed to raise internally generated revenue; a way to cut dependence on oil money.
“No one was fooled, and as we expected, the chickens have finally come home to roost. Most of the states have become insolvent having lost the capacity to meet their most basic fiscal responsibility of paying their workers salaries. They are also unable to pay their contractual obligations including the servicing of their jumbo bank loans.
“Faced with this dire financial situation they are running from pillar to post in search of rescue. They have so far approached the FGN with an ill thought out bail out plan, requiring president Buhari to give them cash or his government to guarantee for them more loans from commercial banks having exhausted the Excess crude account and no bank is willing to advance anymore loans to them. They also want the FGN to instruct their creditors, the commercial banks, to allow them a moratorium period of twenty years without indicating a viable repayment plan within the period. Luckily the banks are privately owned and not subject to any governments dictates.
“It is not at all clear if state Governors ever give thought to the political and even ethical implications of their demands on the Federal Government. Doesn’t it ever occur to them that by always coming to the federal government cap in hand, they expose their own sordid impotence and give additional ammunition to those that question the wisdom of running our peculiar federation through so many states and local governments – all of which depend on the centre to survive? Are they aware that the public has gained the impression that states are run without fiscal discipline especially where the egos and whims of the Governors are quite large?
“But president Buhari would definitely want to ask some questions before he extends a helping hand to any cash-strapped Governors including how they got into the problem in the first place and if such Governors commit to be treated of the following diseases: extravagance, lavish lifestyle, prodigality, profligacy, squandamania as well as corruption.
“One of the reasons given by state governments for their current financial mess is the failure of the FGN to reimburse them for projects executed in their states on its behalf. If such claims are valid, it will be quite strange indeed. Do states with such claims have written contractual agreements they signed with the FGN? The FGN has the structure and capacity to execute its projects and should not ask any state to perform its functions. I am sure President Buhari will not allow himself to be hoodwinked. He must maintain the separation of powers between the tiers of government and enforce budgetary discipline. In fact, he should discourage governors from making frivolous demands from the FGN. This will serve to discourage their frequent visits to Aso Rock.
“In sum, it is evident that most of the states and local governments are unviable and should not have been created in the first place. One of the greatest disservice to the nation by some military regimes was the creation of these unviable, revenue guzzling administrative (maladministrative) structures. They have continued to serve as a drag to our national development. But for its impracticability one would recommend a constitutional abrogation of some of them. Goes to show that any plot to create more states and local governments is plain insanity.”
- See more at: http://www.vanguardngr.com/2015/07/its-insanity-to-create-more-states-col-umar-warns/#sthash.neqCwwzj.dpuf