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Nigeria must do away with fuel subsidy –Comrade Akinlaja



Nigeria must do away with fuel subsidy  –Comrade Akinlaja

Former chairman, House Committee on Petroleum Resources (Downstream) Hon. Joseph Akinlaja is a veteran labour leader who rose to the top echelon of the National Union of Petroleum and Nature Gas Workers (NUPENG ) and highly knowledgeable on issues in the oil and gas sector. In this interview with ONWUKA NZESHI, the parliamentarian shares his thoughts on the resurging subsidy controversy and the fuel tanker armada on the Apapa/Oshodi Expressway, Lagos


The controversy over the payment of subsidy on petroleum products has bounced back again following the alarm raised by the former Central Bank of Nigeria, governor Sanusi Lamido that the Federal Government spent N1.5 trillion on subsidy scheme which he described as fraudulent. What’s your view on subsidy regime in Nigeria and what do we do about it?

Well, I will like to confirm that subsidy exists in Nigeria. I’m saying this because there have been so many theories on it over the years. Some people say there is no subsidy while others say that our fuel should not sell more the N45 per litre. A lot of theories have been propounded both by people who know and people who don’t know but just assume.

Officially, subsidy existed in budgetary terms up to year 2016 but later the Federal Government said there would be no more subsidies. So the government was no longer bringing budget items specifically for subsidy to be appropriated by the National Assembly.
It went on to increase the pump price of petrol to N145 per litre on the premise that there would be no subsidy any more. But they forgot that we are not in control of two critical factors which determine the price of petroleum products, namely: the price of crude oil at the International market and the exchange rate of the Naira to the Dollar.

So by the time government increased the pump price to N145, it was saving money because the crude oil price vis- a- vis the foreign exchange did not add up to N145 per litre. They never believed that those factors would ever work together above N145 per litre. But one and a half years after the pump price was raised to N145 per litre, landing cost of the imported Premium Motor Spirit (PMS) rose beyond their expectation.

We’re talking about petrol because as you know, diesel is deregulated. As for Kerosine, we don’t know whether it is deregulated or not because there has been no clear-cut policy on it. It is market forces that have been controlling the price of Kerosine.

So we’re talking about PMS which is widely and heavily consumed by Nigerians. Your ‘I Better Pass My Neighbour’ generator and your small and medium scale industries use petrol engines much more than other engines to power their activities.

At the peak of it in late 2017 and early 2018, there was heavy fuel scarcity and my committee, as the Chairman, House Committee on Petroleum Resources (Downstream) and my counterpart in the Senate went round to find out the reason for the fuel shortage.

We invited stakeholders including the Nigerian National Petroleum Corporation (NNPC) to a public hearing. The NNPC and the Minister for Petroleum Resources, Ibe Kachikwu told us that landing cost at that time was N171.20 per litre and the pump price was still N145 per litre then asked: ‘Who is bearing the cost of N26.20 per litre of petrol consumed in Nigeria? They said it was under-recovery but somebody was and is still picking that bill. Definitely, it is not the consumer. It is any of the agencies representing the government that is picking the bill till today.


So the Emir of Kano (Sanusi) being a former Governor of Central Bank of Nigeria (CBN) and an economist knows or should know the situation. That is why occasionally, he comes out with such things that some people consider controversial.



This subsidy controversy has lingered for so many years. What do you think is the best way to resolve it?

As someone who has been at the top echelon of the National Union of Petroleum and Natural Gas Workers (NUPENG), I have dealt with this matter over the years. I was the Deputy General Secretary of NUPENG under Chief Frank Kokori and when he retired, I took over as General Secretary.

As Deputy President of Nigeria Labour Congress (NLC) under Adams Oshiomhole, we fought against the removal of subsidy. We were acting on behalf of Nigerians because we asked ourselves: ‘What benefit would Nigerians derive from this God-given resource if they should be made to pay exorbitant price for Petrol?’

We fought that the refineries should work and we formed the Petroleum Products Pricing Regulatory Agency (PPPRA) as part of the fight. Unfortunately the PPPRA failed to regulate anything because it is also overwhelmed by the inter-play of market forces.
However, with benefit of hindsight, I have now realised that in Nigeria, we do not have the discipline to operate any subsidy.


Why do you think so when subsidy operates in other countries?

The developed countries also subsidise products. America subsidises agriculture. When the farmers have produced, government through commodity boards buys it, processes and preserves it until when they would either export it or release it to the market for local consumption.
The essence of buying it off is to relieve the farmer burden of preserving these produce and enable him to have money to go back and farm the following year.

But in our own case, the tomato will get rotten in the farm because the farmer does not have the wherewithal to preserve the produce. He has to look for a buyer; he has to look for a transporter to convey his produce to the markets and he doesn’t have the money to do all these things before the good perish in the farm.

In this country, during the Murtala/Obasanjo regime, which dove-tailed into President Shehu Shagari’s regime, there was what we called essential commodities. It was basically a subsidy of basic food items such as salt, milk, tea, sardine and others. These commodities were sold at subsidized rates. What happened to it? Middlemen took over the distribution chain and by the time these commodities get to the real consumers, the ordinary people, it had passed through many hands and the price had gone beyond the reach of the poor. So those targeted by the essential commodity did not benefit from it and the scheme collapsed.


What exactly makes fuel subsidy a challenge in Nigeria?

The Oligarchy and the Cabal, these are some of the names coined to show what is happening in the place. Up till now, we have not been able to resolve the controversy surrounding how much subsidy Nigeria pays on fuel daily. The government has its own figure and marketers have their own figure. There has to be reconciliation every day.

Today, no oil marketing company can import petrol except the Nigeria National Petroleum Corporation (NNPC). Why? NNPC gets an allocation of 445,000 barrels of crude oil per day for local refineries that never work up to maximum installed capacity. Therefore whatever remains, NNPC has to swap it with refineries outside Nigeria to be able to import petrol. This is where the subsidy lies now. Otherwise, there would have been fuel scarcity all over the country.



Why are the major and independent marketers no longer importing fuel?

They cannot bring it at the landing cost above N145 per litre and still sell at N145 per litre. It does not make good business sense to continue investing money on a business you can only incur losses. With the benefit of hindsight, with the fact that we do not have the discipline to honestly operate a subsidy regime, subsidy should be removed. But, who will bell the cat?

Nigerians have been so much pauparized that even if a policy is working against their interest, they will resist its removal.


Was the Jonathan administration right when it attempted to remove subsidy on petrol in 2012?

Yes, we ought to have allowed him to remove subsidy at that time because the decision he took was right. I was one of the few legislators that said that we should remove subsidy at that time. If you go to the Hansards – records of parliamentary proceedings, you will see it there.
For many years, people have been importing petroleum products and making huge profits from the business.

It was these fuel importers that killed the local refineries. There is no incentive to make the existing local refineries work or to build new ones.

While we were stuck on fuel importation, Ghana bit the bullet, they deregulated and their Tema Lube is working. The Tema Lube, their refinery was built in 1965 by the Anglo Dutch multinational – Shell BP, same year the same company built our own refinery in Port Harcourt. The irony is that while the refinery in Ghana is still working, ours has gone comatose.

Their own refinery refines petrol and also produces lubricants and started functioning even before oil was discovered in Ghana.


What is the implication of Nigeria not encouraging local refining of crude oil?

We are exporting jobs offshore because our crude oil is being refined offshore. We are creating jobs for those countries where we go to refine our crude oil.



Why didn’t your colleagues in the parliament, the opposition, labour unions and the civil society heed your counsel in 2012?

It is because at that time, subsidy had become a political issue. It had become political so much so that the opinions of genuine people, like we were in the trade unions, did not matter any longer. Some beneficiaries of the ill-gotten money from subsidy payments were fuelling the fight against deregulation. Those who are still fighting against removal of subsidy are an admixture of genuine patriots who believe they are fighting for the poor masses and the pseudo -patriots who are beneficiaries of subsidy.



Many Nigerians including your colleagues   in the Labour movement have always demanded that before subsidy can be removed, our local refineries must be fixed and working. How do you see this argument?

Yes. It’s a good argument but who will make the refineries work? It is the people that have the wherewithal but they are either the importers or agents of importers.


Are you satisfied with the way NNPC has turned itself into a monopoly in the business of fuel importation?

I won’t blame the NNPC because it is a responsibility that has been entrusted on it. They did not create it. If the NNPC had not taken up that responsibility on itself, fuel would sell at N250 or N300 per litre on the street. You know what happens during fuel scarcity, sometimes it sells as much as N400 per litre. They will carry fuel in jerry cans and stand along the road to sell both genuine and adulterated fuel. At that time, your driver will be sucking fuel with his mouth forgetting that this fuel contains lead which kills instalmentally.

It is a government policy that made them sole importers of fuel and they are the only one who can do it. Why? It is not their money; it is Nigeria’s money and they are playing this role to prevent fuel scarcity.


Why did the NNPC that has four refineries leave them to rot away instead of fixing them?

Up to 1987, our refineries were working at almost installed capacity. Why? Those who built the refineries and the government had a programme that they must train Nigerian engineers on how to maintain and service it. The agreement was for the refineries to undergo a Turn Around Maintenance (TAM), once in two years and Nigerian engineers were doing it. All they needed to do was to import the parts and fix it.

But then, another government policy came to be awarding it as a contract. They awarded the TAM contract for Kaduna Refinery to Total. We now had a French company coming with French technology to come and maintain a facility built by Chiyoda, a Japanese company.
They abandoned Chiyoda that built it. So government policy is one of the problems.

The second reason is what I’ve told you earlier. When people make commission from importation, it will be difficult to stop them. If you ask NNPC till tomorrow whether they are making money out of the fuel importation, they will deny and there is no way you can catch them. You can only catch them by the elbow and they will simply stretch their hands and walk away. If you make the refineries work, where would the importers make their money from? I am told that those who sell gun- powder will not allow war to end. If war ends, their business will be adversely affected.

So the matter of some people profiteering from fuel importation remains in the realm of speculations. The one that is real is that the Turn Around Maintenance (TAM) that is supposed to be done once in two years is not done some times for ten years and by the time they come to do it, a lot of parts had been damaged and it becomes story! Story!! Story!!!


We will ever get out of this quagmire?

We will, if we are willing to get out of it. I thought that with the personality and character of President Muhammadu Buhari that he would be able to do it in his first term of office, but then that did not happen. Perhaps it is because he is no more a military head of state and he is operating under a civilian atmosphere and he must work with people.

Some of these people ensured his victory, so when he is fighting, he will be fighting from all fronts. You know he can’t fight alone.

If the government is ready for us to leave this situation and everybody cooperates with the government, we will get out of it.


Has the National Assembly done enough to get Nigeria out of this problem?

Yes, I will say we tried during the period I was there. What’s the evidence? The evidence is that the 8th National Assembly initiated bills on the various reforms required in the petroleum industry. It is a private member bill, initiated from the National Assembly to try and cure a malady that has trailed the Petroleum Industry Bill (PIB), an executive bill that has been in the parliament for more than a decade.

From my own observation, various conflicting interests still bugged the private member bills down. One of them, the Petroleum Industry Governance Bill (PIGB) which we concluded, passed and transmitted to the President was returned to us with some observations. We addressed the observations for the thing to be on its way back to Mr. President for assent and then we left.

It took us three and a half years to pass the Petroleum Industry Bill (PIB) which we had to split into four parts namely, Governance, Host Community, Fiscal and that’s why I said that if we are willing we can get it done.

We needed to capture the interests of the various stakeholders including the federal government, host communities and International Oil Companies (IOCs), because nobody will give you their technology unless you also take care of their interests.

This drilling of oil is not a thing you use a hoe and digger; it is technology and somebody owns it. So his interest is important before you become self sufficient to be able to take it over. You who want to take it over must make some concessions because technology transfer is theory. You either acquire it or you steal it. Countries that believed they can have done it and I think we too can do it, if we are willing.


Some Nigerians have argued that conflicting regional interests is a major factor why the PIB has remained a proposal for several years. Do you share this view?

No! The one that I can say may have affected the PIB is the host community interests and that is why we had a separate bill to address those community interests. If you are talking about the North vs. South, the issues of ownership of oil; that has been addressed by the concession for increased oil exploration in the North. What is affecting the bill is conflicting interests between the government and the host communities, who are demanding for more than what they have been getting before. The IOCs also believe that they have the technology and if they have the opportunity to cheat us, they will not hesitate to do so. There are all sorts of interests but unless the government which is the overall driver is focused and ready to step on toes and the toes they step on are ready to nurse the wound and allow things to move forward, we won’t go anywhere with the bill. This is why we are where we are today.


What is the implication of our inability to get this bill passed and signed into law?

Let me tell you the danger in it. I am sorry for myself as a parliamentarian and Nigeria as a whole because while we were in this motion without movement, the consultants that were working along with us have taken the issue beyond our shores. What they prepared for us has found its way into the hands of other countries such as Ghana and Angola. They just looked at it, dusted it, adopted it and signed the bill into law while we are still arguing here. Don’t forget that capital is a coward, it goes to places of least resistance. The investors have moved to Ghana, Angola and other places.

At the peak of the oil industry while I was there, we had thirty two drilling rigs operating onshore, swamp, offshore and deep waters. Today, we have only seventeen rigs. So why we were still hesitating, others are moving.

Don’t also forget that many years before now; we did not have more than four oil producing countries in Africa. Today, they are more than eighteen and the IOCs have choices.

You could see how they are divesting from Nigeria. ExxonMobil recently said it was going to divest; Shell has already divested; Total Upstream has divested part of its investments in Nigeria. These are the consequences of not having a clear policy direction and legal framework.


The gridlock in Apapa, is a fallout of the policy on fuel importation and the presence of the fuel depots in the vicinity of the Lagos ports. What is the solution to the gridlock?

Well, our problem is an integrated problem and it is still a policy somersault problem. At the beginning of downstream sector of the oil industry in Nigeria, there were only seven systems. The Esso, Total, Shell and others. They were seven and they all had their depots at Apapa. They had parking spaces for their vehicles.

When the industry developed, there were increased activities and the government started building a network of pipelines to convey fuel to different parts of the country. When the pipelines came on stream, oil activities shifted away from Lagos to the twenty two PPMC Depots across the country.

Trucks could now load fuel from Calabar, Benin, Enugu, Jos, Makurdi and all the other strategic depots and Apapa became empty.

Immediately, pipeline vandalisation started and the integrity of the pipelines became compromised. At the same time, the refineries had stopped working at maximum capacity and importation started in full swing.

The policy of Nigeria being in the commanding heights of the downstream sector led to the building of more strategic depots.

During the building of strategic depots, starting with WAWABECO , Tincan Island and later ASCON and Zenon.

As NUPENG, we put up a battle with the Lagos State Government during which we advised them not to allow any one build depots with parking space for tankers. There was nothing that I did not do because I was directly in charge of tanker drivers. I even made an analogy that it is only in Nigeria that I see people building supermarkets without parking space, hence while you are shopping inside the supermarket, LASTMA is toying away your vehicle parked on the road.

In civilized climes, parking space is often bigger than the supermarket itself and that’s why they make the supermarkets skyscrapers.

We picketed several depots and took over the Ibru Depot by force for tankers to go and pack there. They sold every inch of the land; the Ministry of Physical Planning approved and every inch of the place was depot. So where will the tankers pack?

Now the integrity of the pipeline did not allow fuel to go through the pipelines, therefore almost all tankers must come to Lagos. Where do they have the facility to import? It is only Atlas Cove because it has the capacity to receive vessels conveying 30,000 tons of fuel. The other depots are in shallow waters. So from Atlas Cove, they pump fuel to Ejigbo and to the private depots. Everybody will leave Kano, Kaduna, Gombe , Maidiguri and other places to come to Lagos to lift fuel.

When this was happening, Gen. Abdulkareem Adisa was the Minister of Works and Housing and he ordered that all vehicles packing under the bridge to leave . We told the tanker drivers, run for your dear lives. It was during the military regime. We told them to go to Ogere and stay there until it is your turn to load fuel.

Then there was fuel scarcity and Adisa called me to find out what was responsible. So I told him how his order to tankers caused the scarcity. He then asked for a way out.

I told him there can be only two solutions: Relocate the depots to Ikorodu, Ekpe or Ijebu -Ode and the tankers will go there.

He said we cannot remove those depots. I said then, what do we do? I gave him the second solution which is looking for a large expanse of land to build a park for these tankers because if you don’t want them to pack under the bridges then you must provide an alternative place.

We now got an expanse of land in Orile but the place is in a swamp. It is only the government that can get a construction firm like Julius Berger to sand fill the place and construct a park as a social service. That place can contain 2,500 tankers and if you move 2,500 tankers out of Apapa leaving only those that are ready to load, you would have solved the problem.



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125-year-old US dime sells for N.5bn




125-year-old US dime sells for N.5bn

A dime doesn’t buy much these days, but this rare dime that recently sold at auction cost a pretty penny.

The 1894-S Barber dime is considered among the rarest and most coveted coins in the country — only nine are known to exist — according to auction house Stack’s Bowers Galleries, which specializes in antique coins and currency.

Dell Loy Hansen, a Utah businessman and owner of the Real Salt Lake soccer club, paid $1.32 million (N 471,240,000) for the 125-year-old coin last Thursday at the Stack’s-Bowers Rarities Night Auction in Chicago.

“This was an opportunity to buy yet another famous rarity for the growing collection,” Hansen said in a statement.

The 1894-S dime was designed by engraver Charles E. Barber and struck in San Francisco on June 9, 1894, according to the Professional Coin Grading Service.

The dime, which was once owned by former Los Angeles Lakers owner Jerry Buss, is ranked No.6 in the respected “100 Greatest U.S. Coins” listing, behind the likes of 1804 silver doll and the 1913 Liberty Head nickel, reports

Hansen has been collecting coins for years, and is amassing the first privately-held coin collection of items from 1792 to the present day, according to David Lawrence Rare Coins, which is helping Hanse in the pursuit.

John Brush, president of David Lawrence Rare Coins, called Hansen’s purchase “one of the most exciting acquisitions that we have made.”

“This opportunity to acquire such a legendary rarity is something that you can only dream about as a child,” Brush said in a statement.

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Food imports: Divergent views trail Buhari’s directive to CBN



Food imports: Divergent views trail Buhari’s directive to CBN

Financial experts and stakeholders continue to hold varied views on the implications of President Muhammadu Buhari’s statement, last week, that he had directed the Central Bank of Nigeria (CBN) not to allocate foreign exchange to importers of food items to help the nation attain full food security. Tony Chukwunyem reports



eactions to the President Muhammadu Buhari’s widely reported speech last Tuesday that he had directed the Apex Bank to stop allocating foreign exchange to importers of food items, as part of efforts to conserve the country’s foreign reserves, continue to come thick and fast from financial experts and stakeholders.Indeed, it does appear that confusion still lingers in some quarters over exactly what the implications of the President’s statement are especially with regard to CBN autonomy and his claim that the move will help the nation attain full food security.



Presidency denies FT’s report



For instance, just last Sunday, the Presidency reacted to a Financial Times (FT) of London report on the issue, describing it as incorrect.



In a letter addressed to the Editor of the publication made available to journalists, Senior Special Assistant to the President on Media and Publicity, Mr. Garba Shehu, stressed that the Federal Government had not banned or placed restrictions on the importation of agricultural products into the country, as the report, according to him, seemed to have insinuated.



Mr. Shehu’s statement reads in part: “To be absolutely clear, there is no ban or restriction on the importation of food items whatsoever. President Buhari has consistently worked towards strengthening Nigeria’s own industrial and agricultural base. A recent decision sees the Central Bank maintain its reserves to put to use helping growth of domestic industry in 41 product sectors rather than provide forex for the import of those products from overseas.



“Should importers of these items wish to source their forex from non-government financial institutions (and pay customs duty on those imports – increasing tax-take, something the FT has berated Nigeria for not achieving on many occasions) they are freely able to do so,” he stated.



However,  as  the FT pointed out in its report, many analysts believe that instead of boosting  Nigerian agriculture, the forex ban on food imports would create food shortages,  increase smuggling activities, and send prices higher.



The publication reported Africa Director for the Eurasia Group, Amaka Anku, as saying that the problem was not whether  Buhari’s directive would be implemented or not, but that it sent a troubling message for an economy suffering from high unemployment, low foreign direct investment and sluggish growth.



Specifically, she was quoted as saying: “Most actors, especially the central bank, should know that a total ban of food imports is not practical and I doubt that will be the policy. But his comments will continue to drive home the sense that Buhari has no idea how to manage an economy and will raise uncertainty about what other (foreign exchange) restrictions are coming, and contribute to already low business confidence.”



Similarly, the publication reported Chief Economist at NKC African Economics, Mr. Cobus de Hart, as saying that President Buhari’s call for a currency ban raised more “serious concerns,” adding that it also cast doubt on Nigeria’s commitment to the Africa Continental Free Trade Area agreement, which the country signed last month after more than a year of delay.



According to him, the move:  “Stands in stark contrast to the strategy outlined in the Africa Continental Free Trade Area agreement, and this policy will certainly not set Nigeria’s agricultural sector up to take full advantage of a liberalisation of trade barriers across the continent.”



NECA, others fret over directive




Even before international financial analysts faulted President Buhari on the directive, their counterparts in Nigeria, as well as stakeholders in the country, had also picked holes in the President’s call.



For instance, reacting to the directive, the Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane,  was reported by Reuters as saying that directive could have consequences  for Nigeria    given  that the country signed  the African Continental Free Trade Agreement,  which seeks  to create a continent-wide free trade zone where tariffs on most goods would be eliminated.



He was quoted as saying : “At this point in time, these rules will be manipulated in the interest of smugglers and their accomplices.”



Also, former Deputy Governor of the CBN, Professor Kingsley Moghalu, said the   issue was not whether or not CBN should allow access to Forex for food imports, but whether such an economic policy should be imposed by a political authority.



He said: “Our economy will not be saved by Ad Hoc political decisions like this, handed down by the very institutions that should be shielded from the whim and caprice of politicians. Nigeria’s entire economy appears to have been sub-contracted to our Central Bank, including industrial and trade policy. In the process, the economy has fared poorly, and the Central Bank has lost its independence. This is sad!”



Similarly,  the Centre for Social Justice and the Nigeria Employers’ Consultative Association (NECA), said in separate statements that the move was coming at a wrong time.



In the statement issued by the Centre for Social Justice’s (CSJ), signed by its Lead Director, Mr. Eze Onyekpere, the organisation also pointed out that  the directive was not in line with S.1 (3) of the CBN Act 2007, which, according to him, states : “The CBN shall be an independent body in the discharge of its functions.



“There are no provisions in the CBN Act or any other existing law empowering the President to run or give directives on foreign exchange management or any other component of Monetary Policy. This directive erodes the independence and autonomy of the apex bank,” Mr Onyekpere said.



Besides, he argued that Nigeria was far from attaining food security and had not even started the race for food sovereignty.



“Stopping the allocation of foreign exchange for the importation of needed food items will only increase their prices since there will still be demand for the goods,” he said. “Unless there is a ban on the importation of these food items, importers will still be free to source for foreign exchange from alternative sources to import them.



“Increase in the price of food at a time of grave economic crisis, increasing poverty and misery can only deepen the already fragile and precarious living conditions of the average Nigerian. Even an outright ban will be a misnomer in the circumstances”.



Equally, in a statement signed by its Director-General, Mr. Timothy Olawale, NECA said that while the intention behind the directive was laudable, the country could not afford such policy at the moment, as it had not yet attained self-sufficiency in food production.



He warned that an immediate withdrawal of forex for food importation without giving a buffer period for businesses to adjust might negatively impact the economy.



The NECA D-G said: “Though the recent thrust towards withdrawal of forex for imported foods is laudable and welcome, the timing, however, calls for concern.”



Only a few days ago, the Manufacturers Association of Nigeria (MAN) also issued a statement in which it said that  it was yet to fully understand the implication of the President’s  directive.  According to the association, a close examination of the directive reveals that it is broad and would have to be both specific and targeted and there should also be strategic implementation to achieve the purpose intended by government.



For instance, the association said it wanted to know what type of food import was affected by the directive, whether  it is  finished and ready to eat items or as input for further processing.



Director General of MAN, Mr. Segun Ajayi-Kadir, who spoke for the association, said that while MAN lauded the move, it needed more clarity on it, especially given, “trade agreements that require the country to be more open to imports and the well-known antics of our neighboring countries.”



  He further stated: “We are not necessarily worried about the directive and we prefer to see it as an expression of Mr. President’s mindset.  We are sure Mr. President is aware of the independence of the CBN and that such policies may be counterproductive if implemented by fiat, without ensuring necessary alignment with the fiscal policy and other economic policy initiatives of this administration.”






However, the directive seems to have received a blanket endorsement from Economist and analyst, Mr. Tope Fasua. He commended President for giving the directive, which he described as the right step in the right direction.



In fact, he urged the President to ensure full implementation of the directive to enable Nigerians consume what is produced in the country.



He said: “I believe it is in the right direction but we need more than pronouncements. The boost in food production needed to bridge the gap cannot be left to the mere pursuit of profits. It should be strategically pursued using several instruments including mass mobilisation.





“Otherwise, this may end up counterproductive if only a few moneybags with stolen cash or unfettered access to bank loans are able to produce while the majority is at their mercy.”



Last line



However, as a top banking industry source pointed out at the weekend, contrary to popular belief, President Buhari’s directive to the Apex Bank last week was not new; the President was only reiterating something the CBN has been implementing in the last few years.

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Naira stability: CBN sells N299bn T-bills in one week



Naira stability: CBN sells N299bn T-bills in one week


ith the recent downward movement in oil prices resulting in a decline in the nation’s external reserves and triggering concerns over naira stability, the Central Bank of Nigeria (CBN) auctioned a total of N299billion worth of Treasury Bills between August 7 and 15, to lure foreign inflows, findings by New Telegraph show.



According to traders, the recent drop in oil prices, coupled with falling yields, led foreign investors to booking profits on local bonds, thereby putting pressure on the naira at the Investors and Exporters’ (I&E) foreign exchange window.



The CBN responded to the development by holding an unscheduled Treasury bill auction on August 7, during which it sold a total of N114.6billion worth of T-bills.



The auction was the apex bank’s first T-Bills sale since mid-July and  it saw the CBN offering  to sell N100billion of bills in maturities of three, six and 12 months, but  getting bids of N454.9billion, with the one-year paper winning around 80 per cent of the demand.



Specifically, the CBN sold the most-liquid one-year bill at 12 per cent, lower than the 12.25 per cent it paid at its last auction in July and compared with as high as 18 per cent it fetched a year ago.



The CBN followed up this auction with another after the Sallah break on August 14, during which  it sold  N34.4 billion worth of bills.



On the 91-day bill, N4.38billion was offered at 9.70 per cent. A total subscription of N15.06billion was recorded while N4.38billion worth of bills was sold.



Also, the N10billion 182-day tenor bill, which was offered at 11.35 per cent, recorded a total subscription of N8.59billion while N3billion was sold.



A total of N27billion was recorded from the sale of the N20billion 364-day bill, which was offered at 12 per cent up from 11.2 per cent it paid at its last sale and recording a total subscription of 122.88billion.



In addition, the CBN auctioned another N150billion open market bills last Thursday,  a sale that clearly showed that the regulator  was trying to lure foreign inflows as traders said it had told them  to increase their rates from last auction rates.



Interestingly, the T-Bills auctions in the last week  took place amid ongoing moves by the regulator to limit commercial banks’ investment in treasury bills and Federal Government bonds and get the lenders to increase lending to the real sector of the economy.



Last month, for instance, the apex bank first announced that all deposit money banks would be required to maintain a minimum Loan to Deposit Ratio (LDR) of 60 per cent by September 30, 2019, sub ject to quarterly review.



It stated that this was meant to encourage lending to Small and Medium Enterprises (SMEs), retail and mortgage customers which shall be assigned a weight of 150 per cent in computing the stipulated LDR.



The regulator emphasised that any DMB’s failure to meet the new minimum LDR by the specified date would result in a levy of additional Cash Reserve Ratio (CRR) equal to 50 per cent of the lending shortfall of the target LDR.



A few days later, the CBN tweaked the guidelines on DMBs’ access to Standing Deposit Facility (SDF), capping the remunerable daily placements by lenders at the SDF window at N2 billion (down from N7.5 billion).



It stated that while the N2 billion would be remunerated at the interest rate prescribed by the Monetary Policy Committee (MPC) from time to time, any deposit by a bank in excess of the N2 billion will not be remunerated.



Clearly, however, with falling oil prices and foreign investors taking profits, the CBN’s unending battle to ensure naira stability is again on the front burner.



Although the naira continues to remain stable at the parallel market, exchanging at N360 to the dollar, the same rate it had largely traded at over the last 12 months, the local currency  is currently under pressure at the I&E foreign exchange window.



Last Friday, at the window, the naira eased to 364 per dollar, from a quote of 363.50 amid thin liquidity.



In a recent note, analysts at Financial Derivatives Company (FDC) Limited predicted that the decline in oil prices would eventually lead to a depreciation of the naira.



It would be recalled that the CBN in its third quarter 2019 Nigerian Treasury bills issue calendar, stated that it hoped to raise the total sum of N809.37billion through new issues of Treasury bills from June 13 to August 29, 2019.



The data showed that the CBN would sell N90.62billion worth of three-month bills, N188.04billion of six-month bills and N530.71billion of one-year bills.



As part of its mandate to raise funds for the Federal Government, the CBN sells treasury bills twice a month. The regulator also regularly issues T-bills as part of monetary control measures to mop up excess liquidity and control the money supply.



Findings by New Telegraph indicate that the CBN had planned to raise a total of N1.006trillion and N823.43 billion from treasury bills sales in the second and first quarters of 2019 respectively.

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Port haulage charges drop



Port haulage charges drop

A well structured haulage rate and services for road transport is to be introduced by government following the 40 per cent drop in container haulage charges, BAYO AKOMOLAFE reports



Haulage charges which has gone up from N120,000 to N700,000 within the last two years in Lagos due perennial gridlock and extortion at port access roads are gradually coming down due to slight improvement on the roads.



Prior to the latest development, importers had been paying exorbitant charges and high rent on goods to terminal operators and truckers because of  delay caused by traffic gridlock and port inefficiency.






Last year, the National President, National Council of Managing Directors of Licensed Customs Agents (NCMDLCA), Mr. Lucky Amiwero, complained that the cost of transporting a 20 feet container from Tin Can/Apapa ports to Alaba International Market in Lagos jumped from N200,000 to N400,000, while 40 feet container cost  between N700,000 and N900,000.


Also, he noted that the cost of transporting a 20 feet container from Tin Can/Apapa to Kaduna was N900,000, while it cost N1 million to transport a 40 feet container from N600,000 previously.






Other charges include the cost of evacuating and transporting containers, illegal charges by shipping lines, extortion by security operatives and loss of container deposits due to late return of empty containers.



Another factor is that extortion by security operatives has been reduced as the Presidential Task Force in charge of traffic at the Apapa port has reduced the gridlock.



The task force was set up as a result of a presidential directive, which ordered the removal of trucks on bridges and roads in Apapa as well as the restoration of law and order on the port roads.



The   Vice President of National Association of Roads Transport Owners (NARTO) Dry Cargo section, Mr Abdullahi Mohammed, told New Telegraph that truckers had stopped paying between N60, 000 and N70, 000 to security operatives.



He said that extortion at the port road had assumed in a new dimension, stressing that some security operatives not assigned to the port roads were using hoodlums to extort money from truck drivers.



He said: “We have stopped paying money for parking space. You know before now, truck drivers pay as much as N60,000 to N70,000 to the officials of the Nigerian Navy and other military formations just to gain entrance into the port.”



In order to bring sanity to the road, the truck transit park being constructed by the Federal Ministry of Power, Works and Housing at Tincan Island was forcefully opened three weeks ago by the Presidential Task Force in order to forcefully to decongest the road.



Also,  Abdullahi stressed that the Lilypond container terminal at Ijora had  been temporarily converted to holding bay for trucks and empty containers.



Also, as part of efforts to tackle the challenges of doing business within the port environment, the Managing Director of the Nigerian Ports Authority, Hadiza Bala-Usman, also noted that the management of the authority had introduced the automation of Call Up System (CUS) for trucks and other incentives given for the transfer of cargo through barges from Ikorodu, Epe and Ijegun among others.






The outcome, according to Nigerian Shippers Council (NSC), had made haulage fares charged by truck owners to drop by 40 per cent.



It was learnt that importers now paid N240,000 instead of N400,000 for 20 feet container and  N420,000 instead of N700,000 for 40 feet container within Lagos.



As part of efforts to further reduce the cost of container haulage, NSC noted that it had presented new rates to stakeholders at a conference in Lagos.



The  Executive Secretary of NSC, Barrister Hassan Bello, noted that plans were ongoing to establish a well-structured haulage rates and services for the road transport sector for port stakeholders.



He said: “The haulage rates are determined by supply and demand, but there should be benchmarking so that foreigners and investors would know that they have an idea of how much it costs.”






According to  Bello, the council embarked on consultation with the  Federal Ministry of Transportation, Federal Road Safety Corps, National Association of Road Transport Owners (NARTO), National Union of Petroleum and National Gas Union (NUPENG), Road Transport Employers Association of Nigeria (RTEAN), Association of Maritime Truck Owners (AMARTO), National Union of Road Transport Workers (NURTW) and other unions on how to bring the haulage changes down in the port industry.



Bello attributed the fall in haulage rate to efforts of the Presidential Task Force monitoring the traffic.



He said that the haulage rate was artificial because it was occasioned by the traffic and extortion.



Bello said: “Now that the traffic is leaving and there is order and sanity, the traffic rate has dropped. We are also helping by bringing sanity into the terminals, sometimes; it is what happens in the terminal that causes the traffic, so we try to achieve efficiency in the terminals so that there would not be congestion.”



Bello also assured that the new haulage rate coming up would guide transporters and port users.



Last line



There is need for government to establish a well-structured haulage rates and services to encourage importers to use the nation’s seaports. This will reduce diversion of cargoes to neighbouring countries’ ports.

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UBA partners LCCI on 2019 Lagos I’tl Trade Fair



UBA partners LCCI on 2019 Lagos I’tl Trade Fair


nited Bank for Africa (UBA) Plc, and the Lagos Chamber of Commerce and Industry(LCCI), have partnered to organize the 2019 edition of the Lagos International Trade Fair.


The fair, which holds between November 1st and 10th, 2019, is the 33rd edition and is expected to provide an avenue for networking and other business opportunities that will assist to catapult business activities in Africa’s largest and busiest city, Lagos and in Nigeria.


UBA, which is the headline partner will be working together with LCCI, to provide a veritable platform that is intended to grow both domestic and international trade. It further presents participants and visitors with opportunities to seal medium and top business deals.



In line with UBA’s unflinching support to the growth of small and medium enterprises (SMEs), the bank is giving a 20% discount to its Small and Medium business customers who register to attend the fair.



UBA’s Group Head, Marketing, Mrs Dupe Olusola, who expressed excitement at the partnership, noted that the bank, with its extensive spread across Africa and other major economies of the world, is always on the lookout for partnership opportunities that will benefit the business environment and the economies where it operates.



Olusola noted that the Bank is delighted as this year’s Lagos International Trade Fair is coming after a very successful organisation of UBAmarketplace by the Bank in Abuja, where over 120 SMEs from 20 African countries exhibited their products, attracting over 50,000 footfalls.



She said: “UBA, the Pan African financial institution, has branches in 20 African countries, including the United Kingdom, the United States of America and France and has always been involved in activities that aim to strengthen business connections and networks across key economies.



“Thus, we have decided to partner with LCCI to promote this year’s fair which is in its 33rd edition because the Lagos International Trade Fair has become a genuine avenue for both domestic and international trade through business to business meetings, product launches, enlightenment opportunities for government agencies’ programmes, and international trade partnership deals across borders. “



She added that the partnership would also offer the bank the opportunities to showcase its array of products to its teeming and new customers, adding that the bank will set up stands at various points to serve its customers and attend to various concerns.



The Director General of the Lagos Chamber of Commerce and Industry, Mr. Muda Yusuf, who praised the collaboration between both institutions, noted that it is a partnership that is expected to yield great benefits, owing to the fact that the LITF hosts an average of 2,000 exhibitors annually, with over 200 foreign exhibitors from 16 countries.



He also added that arrangements have been put in place to make this year’s fair even bigger and better than the previous editions, adding that already, existing and potential exhibitors have been responding positively to register and participate at the fair.



“We at LCCI believe that this is part of the bold initiatives of the bank with a corporate culture founded upon strong organizational values and performance-driven operating standards,” Yusuf said.



Yusuf stressed that the chamber would maintain the brand promise of the fair, with the theme ‘connecting businesses, creating value’, adding that this will be sustained this year in all its marketing campaigns.

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NSE: Sell pressure dominates activities



NSE: Sell pressure dominates activities


ctivities on the Nigerian Stock Exchange (NSE) yesterday returnedo to downward trajectory following sell-off that pervaded the equities market resulting in the equities market dropping by 0.21 per cent.


The decline was impacted by negative sentiments of investors on blue chip stocks.



Consequently, the All-Share Index shed 57.27 basis points or 0.21 per cent to close at 27,058.62 index points as against 27.115.89 recorded the previous day while market capitalisation of equities depreciated by N28 billion to close lower at N13.186 trillion from N13.214 trillion as market sentiments returned to the red territory.



Meanwhile, a turnover of 209.6 million shares in 3,743 deals was recorded in the day’s trading.



The banking sub-sector was the most active (measured by turnover volume); with 77.4 million shares exchanged by investors in 654 deals. The sub-sector was enhanced by the activities in the shares of GTBank Plc and ETI Plc.



The premium sub-sector boosted by the activities in the shares of Zenith Bank Plc  and FBNH Plc  followed with a turnover of 54.5 million shares in 1,364 deals.



The number of gainers at the close of trading session was 27 while decliners also closed at 10.



Further analysis of the day’s trading showed that Oando Oil Plc and Transcorp Plc topped the gainers’ table with 10 per cent each to close at N3.85 and 99 kobo per share respectively while Chams Plc followed with 9.52 per cent to close at 23 kobo per share. Berger Paints Plc trailed with a gain of 9.49 per cent to close at N7.50 per share.



On the flip side, Cutix Plc led the losers’ chart with a drop of 9.62 per cent to close at N1.41 per share. PZ Cussons Plc and Union Dicon Plc followed with a loss of 8.33 per cent each to close at N5.50 and 22 kobo per share respectively. May and Baker Plc trailed with 6.83 per cent to close at N1.91 per share.

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U.S. stocks decline after 3-day winning streak



U.S. stocks decline after 3-day winning streak



.S. stocks were little changed on Tuesday after three sessions of gains, as lower Treasury yields weighed on financial shares, offsetting a boost from Home Depot’s better-than-expected earnings.



After a stormy start to the month on worsening trade tensions, the three main indexes have rebounded sharply, erasing most of their losses from a steep selloff last week on rising hopes of global monetary stimulus.

According to Reuters, the benchmark S&P 500 .SPX is now about 3.6% below its all-time high hit in July. It had fallen as much as seven per cent from its record last week.



“The markets have been extremely strong over the past few days, so there is a little bit of profit taking,” said Gary Bradshaw, portfolio manager with Hodges Funds in Dallas.



Losses on the blue-chip Dow and the S&P 500 indexes were tempered by a 4.3 per cent rise in Home Depot Inc (HD.N). Its shares drove a 0.47 per cent gain in the consumer discretionary index .SPLRCD.



“Home Depot’s earnings show that people are continuing to invest in their homes, a positive for Wall Street and the U.S. consumer,” Bradshaw said.

The S&P 500 banks index .SPXBK slipped 0.81% and the broader financial sector .SPSY fell 0.50 per cent as U.S. Treasury yields slipped on rising prospects of interest rate cuts as well as political tensions in Italy and Britain’s tumultuous exit from the European Union.



All eyes this week will be on Wednesday’s release of minutes from the Federal Reserve’s July policy meeting and Chair Jerome Powell’s speech on Friday at the Jackson Hole central bankers’ conference.



Powell’s remarks will be closely monitored for hints if more policy easing is in store, against the backdrop of an ongoing trade war and growing fears of recession, signaled by the inversion of the U.S. yield curve last week.



At 11:20 a.m. ET, the Dow Jones Industrial Average .DJI was up 4.96 points, or 0.02%, at 26,140.75, the S&P 500 .SPX was down 1.82 points, or 0.06%, at 2,921.83. The Nasdaq Composite .IXIC was up 2.26 points, or 0.03%, at 8,005.07.



Shares of Netflix Inc (NFLX.O) were the biggest drag on the S&P 500, losing 3 per cent after Walt Disney Co (DIS.N) announced its streaming service would launch in Canada and the Netherlands on November.

Eight of the major S&P sectors were trading lower. The energy sector .SPNY lost 0.60 per cent, weighed by lower oil prices.



Medtronic Plc (MDT.N) gained 4.5 per cent, and was among the biggest gainers on the S&P 500, after the medical device maker raised its full year adjusted profit forecast.



Declining issues outnumbered advancers for a 1.11-to-1 ratio on the NYSE and for a 1.25-to-1 ratio on the Nasdaq.

The S&P index recorded 29 new 52-week highs and five new lows, while the Nasdaq recorded 35 new highs and 54 new lows.



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Domestic institutional market decreases by 53% to N45bn



Domestic institutional market decreases by 53% to N45bn


Domestic transactions decreased by 66.68 per cent from N3.556 trillion in 2007 to N1.185 trillion in 2018


he institutional composition of the domestic market reduced significantly by 53.04 per cent from N96.64 billion in May 2019 to N45.38 billion in June 2019, according to a report obtained from the Nigerian Stock Exchange.



Further checks showed that the value of domestic transactions executed by retail investors significantly outperformed institutional investors by 54.00 per cent.



A comparison of domestic transactions in the current and prior month (May 2019) revealed that retail transactions increased by 228.43 per cent from N47.23 billion in May 2019 to N155.12 billion in June2019.



As at 30 June 2019, total transactions at the nation’s bourse increased by 34.42 per cent from N221.13 billion (about $713.7 million) in May 20195 to N297.25 billion (about $970.1million) in June 2019.



According to the report, the performance of the current month compared to the performance in the same period (June 2018) of the prior year revealed that total transactions also increased by 58.29 per cent.



In June 2019, the total value of transactions executed by domestic investors significantly outperformed transactions executed by foreign investors by 34.00 per cent.



A further analysis of the total transactions executed between the current and prior month (May2019) revealed that total domestic transactions increased by 39.36 per cent from N143.87 billion in May to N200.51billion in June 2019.



In contrast, total foreign transactions also increased by 25.22 per cent from N77.25 billion (about $252.1 million) to N96.74billion (about $315.7 million) between May and June 2019.



Highlights of the performance of the market over the last decade revealed that over a 12-year period, domestic transactions decreased by 66.68 per cent from N3.556 trillion in 2007 to N1.185 trillion in 2018 whilst foreign transactions increased by 97.88 per cent from N616 million to N1.219 trillion over the same period.



Total foreign transactions accounted for about 51 per cent of the total transactions carried out in 2018, while domestic transactions accounted for about 49 per cent of the total transactions in the same period.



The actual performance referenced 2019A (2019 actual) shows that total foreign transactions carried out year till date (YTD) is about N472.78 billion whilst total domestic transactions YTD is about N614.67 billion.



Acting Director General of the Securities and Exchange Commission, SEC, Ms. Mary Uduk, said recently that the outflow had led to sell pressure accumulating into depressed prices.



This, she said, was one of the reasons the commission is mapping out strategies to build confidence in the market and encourage more retail investors.



The Nigerian Stock Exchange (NSE) also said that currently there were about three million retail investors in the Nigerian capital market, representing only three per cent of the total adult population in the country.



The Divisional Head, Trading Business, Mr. Jude Chiemeka, disclosed this recently at the maiden edition of Retail Investor Workshop tagged ‘Investment Masterclass; Making your money work’ organised by the NSE.



According to Chiemeka, “Nigeria has a population of over 190 million people and is the second largest economy in Africa. However, the current Financial Inclusion indices of 48 per cent leave much to be desired.



“Financial Iiclusion is a priority of stakeholders in the capital market, and the Nigerian Stock Exchange makes it a primary concern to contribute towards the achievement of Nigeria’s National Financial Inclusion Strategy of reducing the proportion of adult Nigerians that are financially excluded to 20 per cent in the year 202.0”



Chiemeka noted that the exchange recognised the need to improve investor participation, and is leveraging recent capital market initiatives such as the Tiered KYC requirements for capital market investments, as well as promoting the introduction of globally competitive investment products with low entry thresholds, to achieve financial inclusion goals.

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Disbursement of lower naira denominations guidelines out



Disbursement of lower naira denominations guidelines out


he Central Bank of Nigeria (CBN) has released guidelines for the disbursement of lower denominations of the naira through micro-finance banks (MFBs) across the country.



According to the guidelines posted on the apex bank’s website yesterday, all microfinance banks must have a Composite Risk Rating (CRR) of above average in the most recent Risk Based Supervision (RBS) target examination before they were considered for the scheme.



The guidelines stated, among others,  that: “The MFBs shall accept a mixture of new and Counted Audited Clean (CAC) banknotes under the intervention scheme; the MFBs shall give 20% of any withdrawal in lower denomination banknotes subject to a maximum of N50,000.00.



“Where beneficiaries withdraw more than once a day, the disbursement under the initiative will apply to only one transaction per day.”



It further stated: ”The MFBs shall exchange banknotes subject to a maximum of N50,000.00 for customers with accounts and N10,000.00 for customers without accounts.

“The MFBs shall not exchange for same beneficiary more than once a week.”



The guidelines also warned MFBs against hawking, hoarding or using of funds obtained under the intervention for any other purpose.

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SME Clinic: Unity Bank partners Signal Alliance, Businessday



SME Clinic: Unity Bank partners Signal Alliance, Businessday

Unity Bank has hosted the maiden edition of Small and Medium Enterprises  (SME) clinic in conjunction with Signal Alliance and Businessday newspaper as a capacity building workshop to bridge knowledge gap.



The SME clinic was designed to boost SMEs operators in leveraging effective branding and marketing strategy expected to play a key role in creating added value for products and making start up become a big brand enterprise.



Coming on the verge of the 5th industrial revolution and the need to put SMEs ahead of the fast paced developments, the clinic provided platform to expose participants drawn amongst fintech operators, retailers, social services, schools, contractors, professional service firms, wholesalers, manufacturers, hospitality, NGOs, clubs and associations, supplies and agric value chain to the opportunities available as convergence of technology and human begin to take center stage.



Commenting on the clinic, the Head of SME, Unity Bank Plc, Opeyemi Ojesina, said that as a key market focus contributing about 48 per cent of the national GDP in the last five year, 50 per cent of industrial jobs and nearly 90 per cent of the manufacturing sector in terms of number of enterprises, hosting a capacity building initiative of this nature enables the bank to have more insight for enhancing financial inclusion plan for SMEs.



He further stated that as a leading bank in the advocacy for SME, Unity Bank has developed innovative products for SMEs aimed at enhancing greater access to financial services, financial advisory and cluster marketing initiatives.



Participants were of the view that the SME clinic gave practical insights into techniques for creating distinctive brand concept centered on consumers and appreciated the three entities that organized the workshop.

The Chief Technology Officer, Signal Alliance, Mr Uchechi Nwaukwa, used the platform to launch CloudGo, an IT product built on Microsoft cloud platform.



As a “solution that enhances communication, collaboration and scales innovation for business becomes a necessity” he further stated that “the product is a results of huge investment in IT infrastructure which helps to overcome upgrade challenges, enhance data protection and disaster recovery challenges faced by small businesses.

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