More money to flow to states – Rivers government
Reactions have come from both the public and private sectors of the economy of Rivers State and the South South.
More money sure to flow to states, the Rivers State government said, saying “the new policy, though one year late in coming, is sure to put more money in the coffers of state governments.”
Isaac Okemini, special adviser to Governor Nyesom Wike on investments, said the foreign exchange earnings of the government of Nigeria would now be calculated on market-driven rates, not on N197 to one dollar anymore. By this, he told BusinessDay that states were bound to collect more money from the allocation account henceforth.
Okemini, however, cautioned that the fundamentals of the fiscal policy had not changed, as “inflow of foreign exchange is still very low due to crash of oil prices, oil sold is still very low due to bombing in the oil region, inflation is still high at almost 16 percent from 8 percent, etc.”
He however, admitted that foreign exchange inflow would definitely improve from other sources due to the liberalisation of the system and that more investors hitherto waiting in the wings would come in with funds.
Good but revisit TSA, ban on 41 imports – REIF
Rivers Entrepreneurs and Investors Forum (REIF) has reacted to the FX policy review and hailed the policy as a positive for the economy and the oil region. The president, Ibifiri Bobmanuel, said “the bottom line is the fact that the Federal Government has responded to the cries and appeals of the business sector for one year.”
Bobmanuel however appealed to the Federal Government to revisit the issue of the Treasury Single Account (TSA), a policy he said had squeezed the financial sector, especially the banks. He called to review of the 41 list on banned imports, saying some of them were critical to manufacturing.
The REIF president asked the Federal Government to find out the cost of the delay in the FX policy where the naira was N180 to the dollar, but now is N360; inflation at 16 percent instead of 8 percent. “Recession is here with us before this action is coming. Must we all have to suffer so much for lack of depth in governance?”
He however said if the new policy of not manipulating the naira is practised to the fullest, and other bouquet of decisions are taken along, the economy would begin to respond. “The naira will appreciate but not to the level it was before”.
He agreed that an improvement in the economy would lead to more jobs created and business boom but urged the federal government to go back to the suggestions made months ago by the business sector and get it right. “We sounded like we were against this government. No, we do not have anything against them but the facts have proved us right. Investors’ confidence in the Nigerian economy is at its lowest and they would have to watch for some time be sure we serious before they begin to make a move”.
He said Nigeria has the population and the market depth to turn this situation around but the right policies must be sustained for some time especially the review of the TSA and banned imports.
We are still studying the situation – MAN
The Manufacturers Association of Nigeria (MAN) in Rivers and Bayelsa States said the policy shift on foreign exchange needed closer study to know how it would affect its members.
The chairman of the publicity committee of the MAN in the region, Josy Nkwocha, said its strategic committee would immediately meet to deliberate on the development and come up with a position on the new policy.
Nash Chuwang, investment manager/head of research and planning, Plateau Investment Company, said the new policy had some pros and cons.
Since it is now a single market and more flexible, “it is going to be disastrous for companies at the beginning,” as it will not be easy for companies to access the dollar, Chuwang said.
Chuwang, however, said since it would be difficult for many companies to easily have access to the dollar, “they will be forced to start thinking inward and source for raw materials here.”
According to Chuwang, the flexibility is an indirect devaluation of the naira and the naira will fall to the dollar.
The devaluation he said can be a positive implication in the future and in encouraging foreign investors as a ” few dollar will mean more Naira and movement of funds by foreign investors in equities and bonds will be stopped because they will have more gains.”
Speaking on the implication on the stock market, Chuwang said the shares and bonds would likely experience a boom and people would be encouraged to invest.
If the flexible exchange rate is “properly functional and stable, FGN bonds may likely be admitted back to JP Morgan’s rating and Barclays indices,” he said.
Also, Ezekiel Daju, Plateau State commissioner for commerce and industry, however, told BusinessDay that the CBN would not have introduced the flexibility if it would not be beneficial to the economy.
“Government will not do anything that will be detrimental to the critical economy at the moment but would have made proper consultation to strengthen commercial activities in the country,” he said.
