Central bank resists calls to ease currency restrictions

Teachers unpaid, projects stalled on plummeting oil revenue

When Nigerian President Muhammadu Buhari came to power in May vowing to mend the economy, fight terrorism and end corruption, Kola Karim was upbeat. Oil prices had sunk, but Buhari’s arrival made him believe his company still had a chance to prosper in Africa’s biggest crude producer.

Shoreline Group, the third-biggest Nigerian oil and gas producer, decided to forge ahead with a $500 million Eurobondto expand drilling operations. Then prices fell below $50 per barrel last year. The bond sale was suspended. 

One hope was to rely on income from Shoreline’s construction and power-generation businesses. Except that the central bank’s refusal to devalue the currency meant Nigeria was starved of foreign exchange, crimping business operations. Now, with prices hovering around $30 a barrel, Shoreline plans to cut 35 percent of its nearly 2,000 staff.

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“It’s a double whammy,” Karim, 47, said in his Lagos office, where two enormous bronze reliefs by artist Bruce Onobrakpeya leaned against the wall. “Getting dollars to bring in raw materials is very tough. If Nigeria was earning enough from its oil revenue, we wouldn’t have that.”

Karim’s struggle mirrors that of the wider Nigerian economy, Africa’s largest. And his difficulties show the challenges faced by Buhari, a 73-year-old former general who ruled Nigeria as a military strongman from 1983 to 1985. His task when he came to office was to push Nigeria to reform. Now he must help it survive.

Unpaid Teachers

The government, which in 2014 relied on oil for two-thirds of revenue, can’t pay many teachers or finance infrastructure projects. With the economy growing at barely half 2014’s 6.3 percent, a recession can’t be ruled out this year, according to Morgan Stanley. Nigerian stocks have fallen 16 percent since the end of December, the mostin sub-Saharan Africa.

Buhari and central bank Governor Godwin Emefiele have imposed currency controls that encouraged capital flight and suffocated businesses dependent on imported supplies. Emefiele, with Buhari’s backing, has pegged the naira for almost a year at 197-199 per dollar, even as major producers from Russia to Mexico and Canada have let their currencies slide. Dangote Group, Nigeria’s largest company, has called the foreign-exchange situation “extremely tight.”

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This week, the black-market rate fell to a record 350 per dollar, 76 percent weaker than the official rate. Former central-bank governor Muhammadu Sanusi II in October told business leaders that Buhari and Emefiele were “in denial” over the currency. 

No Gain

The president says critics will have to“work much harder” to convince him ordinary Nigerians will gain anything from a devaluation that foreign investors from Ashmore Group Plc to Investec Asset Management Ltd. think is inevitable. The central bank says a weaker currency would only accelerate inflation already at athree-year high of 9.6 percent.

“People were expecting the Buhari dividend and that never really materialized because of the policy inertia,” said Ronak Gopaldas, a Johannesburg-based analyst at Rand Merchant Bank. “There’s still the perception that currency has to be devalued. But you’re getting this stubborn resistance at the top.”

Buhari spokesman Femi Adesina said Buhari and his government have already responded publicly to questions about economic management. 

Independent Bank

“There is no perfect policy," Kayode Fayemi, minister of solid minerals development and former policy director of the ruling All Progressives Congress, said in a Feb. 8 interview. "We have an independent central bank and the central bank should do its job to convince the stakeholders” if a change in policy is needed.

Nigerian authorities say they realize they need to diversify the economy.

“For us, this is an opportunity,” Emmanuel Kachikwu, a petroleum minister and head of the state oil company, said last month in an interview at the World Economic Forum in Davos, Switzerland.

Officials want to broaden the tax base by 5 million individuals and 500,000 companies this year, mostly by tightening enforcement. Nigeria’s government-revenue-to-GDP ratio is about 8 percent, the second-lowest level in sub-Saharan Africa after war-torn Central African Republic, according to the International Monetary Fund. South Africa collects 29 percent; Kenya 20 percent.

The government says the tax measure, along with $9 billion of new borrowing from local and international investors and multilateral lenders such as the World Bank, will ensure the government can plug a fiscal deficit set to be a record $15 billion this year. Debt-service payments will be more than three times what is spent on education, and six times the expenditure on health.

Buhari can claim progress for his anti-corruption drive, said Cobus Claassens, managing director of security company Pilgrims Africa Ltd. The president has sacked executives at the national oil company and ordered the new management to clean it up, while starting probes into whether the last governmentsiphoned off billions of dollars meant for the military fighting Islamist militant group Boko Haram in the northeast.

Drum-Beating

“Buhari is beating a drum that’s scaring the living daylights out of every corrupt guy,” Claassens said. “That doesn’t stop them from being corrupt, but they’re not so in-your-face. The offensive side of corruption -- extortion -- is dying out.”

Some investors are also benefiting from gains made against Boko Haram, which has been dislodged from swathes of territory it held early last year.

Buhari “has opened the north up a bit more,” Alex Kanellis, chief executive officer of PZ Cussons Plc, a U.K. soap maker that gets more than a third of its sales in Africa, said on an earnings call last month. “It’s helping improve our distribution.”

Still, the president’s economic policies are worsening the pain caused by falling oil prices, says RMB’s Gopaldas.

“The anti-corruption and security drives are positive, but they need to be matched with clear, unambiguous economic policies,” he said. “At $30 a barrel, there’s no getting away from the fact it’s going to be really tough.”

http://www.bloomberg.com/news/articles/2016-02-17/nigeria-faces-double-whammy-as-buhari-fails-to-manage-oil-rout

Bloomberg couldn't have put it any better. However on the aspect of devaluation of the Naira, the pros and cons have to be weighed intelligently else Nigeria would find itself in a much larger mess.

The Topic of the topic should be : Oil broke Nigeria can't afford to pay teachers.

This is just the beginning, when APC is done with Nigeria there will be nothing else to govern.

dats what u get when u fail to plan and plan to fail.

With B. Tech in Animal husbandry, I am not qualified to teach Animal husbandry in secondary schools. The last time I tried my luck with a teaching service commission, one NCE holder was preferred to me. I was sad, not knowing that it was a blessing in disguise. Educationists would say I am not a qualified teacher. Mind you, I will teach that subject without the help of a written text for any hours you want, and I vow that I won't make a mistake.

Its generalizing, Some Nigeria states can't afford to pay teachers salary.. Not All

Every bad news that came with buhari, catch Fire

Hmmm this year seems tough for Nigerians,everything is cost now..... I wonder wat the Govt is doing abt it

THAT'S WHAT YOU GET WHEN YOU VOTE APC.

Blame it on the Daura President(D2)

Teachers unpaid, projects stalled on plummeting oil revenue

Isn't this expected??

Even almighty Saudi Arabia has drastically cut back on subsidies for the same reason. But I bet PDP supporters would still blame Baba.

Hell, they could blame him for the crash in oil price.

kernel504:
THAT'S WHAT YOU GET WHEN YOU VOTE APC.

SMARTKOSSY:
Blame it on the Daura President(D2)

I said it. According to these two, Buhari is responsible for the plunging oil price.

Buhari daalu rie nne! #Proudly5%

Iroh88:
I said it. According to these two, Buhari is responsible for the plunging oil price.

It's possible, since he also promised to make $1=#1.

Iroh88:
I said it. According to these two, Buhari is responsible for the plunging oil price.

boi.... Abeg...neva in ur life quote me.... I don't av any business with u.....dey ur Lane...... When he said I will stabilise world oil price, where were you?......

SMARTKOSSY:
boi.... Abeg...neva in ur life quote me.... I don't av any business with u.....dey ur Lane...... When he said I will stabilise world oil price, where were you?......

I've quoted you again. How about you did what you plan on doing??

See pikin. You are simply too excited I quoted you and find it hard to believe I did. Admit it.

Oil-rich? Who oil wey no get value don help now?

Iroh88:
I've quoted you again. How about you did what you plan on doing??

See pikin. You are simply too excited I quoted you and find it hard to believe I did. Admit it.

I pity u.... Can u get lost now?

The topic captured "teachers" as if they are the only people affected by the crashed oil price.

Buhari was not responsible for the fall in oul prices, but then his sin was that he didn't start well, he started with a form of aloofness to the economy. An Italian proverb would say "to be well begun, is half done". Buhari came on board with an indifferent attitude to the economy, got his priorities wrong from the beginning, and also with actions that belie his purported stand on issues as evidenr in the budget fiasco, his incessant foreign trips which are already a huge drain on the economy, come to think of it, Dasuki and Jonathan might have been accused of removing 47million usd in suitcases from cbn (a one instance case out of the years in office), at the rate Buhari travels he must have expended that amount on his foreign trips.
Everyone complains the economy is going down the winding staircase, but the president is yet to have an economic blueprint, yet to convene the stakeholders meeting Oyegun cited in his "act of God" interview. The overall effect of all these is that the head of this country is confused or helpless at the moment and doesnt leave much to be hoped for, by the citizenry.

The ages old addage says "A stitch in time saves 9", obviously Buhari seems hell bent on proving that to be false.

Question: Who takes pride in being called "baba go slow" in this 21st century where people react proactively to issues?
Answer
Only the cattle rustler from Daura.

These are the kind of news, they love reporting about Nigeria. Fu*kstards!

menabae:
Hmmm this year seems tough for Nigerians,everything is cost now..... I wonder wat the Govt is doing abt it

Can u imagine common egg is now 50 naira?

To be candid, there is no point waiting for the govt to perform miracle. All of them are the same and corrupt.

Individually we have to rise to the occasion to make things work for ourselves.


Gmrng to u. I can't stop laughing at one of your comment on my article yesterday.

wristbangle:


Can u imagine common egg is now 50 naira?

To be candid, there is no point waiting for the govt to perform miracle. All of them are the same and corrupt.

Individually we have to rise to the occasion to make things work for ourselves.


Gmrng to u. I can't stop laughing at one of your comment on my article yesterday.

wow egg 50 naira? ,where@ ?......... Yea u are on point,I was amazed seeing people here fighting over some corrupt leaders,the truth is Nigerian leaders are badlucks frm time immemorial,they can never change exept by God's divine intervations, instead of them to come together as one to criticize the Govt they are here making meaningless noise hmm lolz.... . Gmorning to u too,hw was the night?

menabae:
wow egg 50 naira? ,where@ ?......... Yea u are on point,I was amazed seeing people here fighting over some corrupt leaders,the truth is Nigerian leaders are badlucks frm time immemorial,they can never change exept by God's divine intervations, instead of them to come together as one to criticize the Govt they are here making meaningless noise hmm lolz.... . Gmorning to u too,hw was the night?

Tribalism and ethnic difference has becloud the judgement of some gullible Nigerians that they believe the past and present administration are different hence the reason why they maintain selfish interest for their indigenes in power.

I mean which of their wailing support has helped the country? By 2019, I will vote for KOWA party.

My night was something else. No light, heat coupled with vampire teeth mosquitoes .

4 a cute lady like u, I know that urs will be splendid becos u slept in a AC room.

nigeria has bcom a pariah state under buari dullard.

wristbangle:


Tribalism and ethnic difference has becloud the judgement of some gullible Nigerians that they believe the past and present administration are different hence the reason why they maintain selfish interest for their indigene in power.

I mean which of their wailing support has helped the country? By 2019, I will vote for KOWA party.

My night was something else. No light, heat coupled with vampire teeth mosquitoes .

4 a cute lady like u, I know that urs will be splendid becos u slept in a AC room.

hahahahahaha,I laugh in chinese,and u think the so called KOWA party is exceptional?then u must be day dreaming,anywayz with prayers things will get in the right places....... Lolz@ vampire teeth mosquitoes,do u live besides water?and for the heat is just something else even the A.C is crying for help lolz....

Thunder fire BUHARI and Osinbanjo!

menabae:
hahahahahaha,I laugh in chinese,and u think the so called KOWA party is exceptional?then u must be day dreaming,anywayz with prayers things will get in the right places....... Lolz@ vampire teeth mosquitoes,do u live besides water?and for the heat is just something else even the A.C is crying for help lolz....

Eh nau. Na KOWA go do am. And If dem fvck up, I will contend for president.

Lolss. Well I live at a rugged area. My prayer is God should lift me high before d 1st quarter of this year.

Shebi u still enjoy AC small. My fan spoil last wk. Money to do am, na God go provide. Mosquitoes don frustrate my life finish. I don tire 4 everything sef

wristbangle:


Eh nau. Na KOWA go do am. And If dem fvck up, I will contend for president.

Lolss. Well I live at a rugged area. My prayer is God should lift me high before d 1st quarter of this year.

Shebi u still enjoy AC small. My fan spoil last wk. Money to do am, na God go provide. Mosquitoes don frustrate my life finish. I don tire 4 everything sef

Eh hen?are u serious?incase u wanna contest for presidency,we gonna campaign for u,by fire by force u must win,we really need young fresh and intelligent lad inside Asorock,Nigerians are tired of same incompetent and clueless recycled old men, u berra tight ur booth very well oo...... And I said amen to ur prayer!dnt worry God has already lifted u,thou I'm not the prayer warrior church type oo,bt I still believes in faith and miracle,as for the mosquito try and flit ur room with insecticide before going to bed....

Iroh88:
I said it. According to these two, Buhari is responsible for the plunging oil price.

. Omenka is this ur new account? I was busy searching for ya on d other thread.

ARIZONA123:
. Omenka is this ur new account? I was busy searching for ya on d other thread.

after1.....subway101...food don land....

menabae:
Eh hen?are u serious?incase u wanna contest for presidency,we gonna campaign for u,by fire by force u must win,we really need young fresh and intelligent lad inside Asorock,Nigerians are tired of same incompetent and clueless recycled old men, u berra tight ur booth very well oo...... And I said amen to ur prayer!dnt worry God has already lifted u,thou I'm not the prayer warrior church type oo,bt I still believes in faith and miracle,as for the mosquito try and flit ur room with insecticide before going to bed....

Thanks dear. I Appreciate your motivated words. Your comments are filled with hope. If u don't mind join me as I eat gala and pure water