Weekly Nuggets

Saturday, 12 September 2020

Nigerian Manufacturers Say Unsold Goods at an All-Time High 

The Manufacturers Association of NIgeria said unsold goods produced by members have reached an “all-time high’’ valued at more than 402 billion naira as consumer demand weakened.

This is one of the economic fallouts of the coronavirus pandemic which has eroded the disposable income of most citizens, according to Mansur Ahmed, president of the association, who briefed reporters in Lagos.

Manufacturers find their circumstances made worse by the demand of multiple levies and taxes from various tiers of government, at a time most members are spending more than 38 percent of their production costs in providing alternative sources of power in the face of poor public supply, Ahmed.

The group called on President Muhammadu Buhari’s government to reopen the country’s borders since neighbouring countries, shut a year ago, which has cut off manufacturers from their export markets across West and Central Africa. 

Buhari Directs CBN Against Giving Forex for Food Imports

Nigerian President Muhammadu Buhari said he directed the Central Bank of Nigeria not to release any foreign exchange for food and fertilizer imports as Africa’s biggest economy and most populous country battles hard currency shortages.

Nigeria has made significant progress in boosting food output  and no longer needs imports. Similarly the country has attained self sufficiency in fertilizer production and has no further need for imports, President Muhammadu Buhari told a meeting on national food security in Abuja on September 9.

“We have a lot to do to support our farmers,” Buhari said.

Nigeria is battling a crippling foreign exchange shortage as the coronavirus pandemic caused a  plunge in the price of oil, the country’s main export.

Nigerians Prefer Saving to Investing, Central Bank Says

Deposits are soaring in Nigeria, with people showing a preference to save rather than invest in productive activities, according to the central bank.

“Over the past several months, we have noticed an increasingly large gap between total deposits in the banking system and total credit to the economy,” Central Bank of Nigeria spokesman Isaac Okorafor said in a statement pushing back against criticism of the regulator’s decision to reduce interest rates on savings deposits.

 “Many rich cooperates have simply been content with saving their cash balances and collecting huge interest payments, rather than expanding their investment, which should lead to hiring more people and producing more goods,” said Okorafor. 

As at January this year, total deposits in the financial system stood at 25 trillion naira compared with loans of 17 trillion naira. Ideally, they should be in equilibrium, the CBN said.

The CBN with effect from September 1 lowered the base of interest rate on savings deposits to 10 percent of the Monetary Policy Rate of 12.5 percent,  effectively slashing the minimum rate to 1.5 percent, at a time inflation is at 12.8 percent.

Central Bank Punishing Savers,Spawning Abuses, Group Says

The Central Bank of Nigeria under Governor Godwin Emefiele is pursuing policies inimical to the interests of local investors and savers while spawning foreign-exchange abuses, according to the Nigerian Economic Summit Group, a leading private sector policy lobby.

The NESG, as the group is known, said in a statement on Tuesday that it was concerned about “distortions in the liquidity and interest rate management of our financial system” that have made losers out of pensioners and domestic investors.

“This will occasion major disincentives to savings and investments and thereby, be a disadvantage to Nigerian pensioners and long term savers,” the NESG said in the statement.

The central bank responded swiftly to the NESG’s statement, dismissing their concerns as “bourgeois” and “a false alarm.” The CBN burnished its record of efforts to protect the economy and the financial system despite a more than 60 percent plunge in revenue occasioned by the coronavirus pandemic..