My Biggest Shock In My First Year In Office - Buhari Reveals Top Secret

Daily Trust - The biggest shock he had during the past year as President was the realisation that Nigeria had over the years squandered all its precious foreign exchange on the importation of food items and other frivolous items including toothpicks, President Muhammadu Buhari said in Abuja yesterday. 

He spoke to editors and newspaper executives in a brief interview to mark the administration’s first year in office.

President Buhari said last year, when oil prices fell to $40 per barrel, he summoned Governor of the Central Bank of Nigeria [CBN] Godwin Emefiele and asked to see what it was that  Nigerians were buying with foreign exchange.

He said to his greatest shock, he found that most of the imports were food items. Nigeria, he said, discovered too late that it was over dependent on a mono-economy. 

He said, “Up to 2013 we were earning on average over $100 per barrel from oil but by fabulous coincidence, it went down to about $30 per barrel when we came in. There was no money to import food. For me it was the biggest shock.” 

He said in the course of its history Nigeria became an oil economy and “we left agriculture and solid minerals and everyone went to the city to look for oil money.” 

Buhari also spoke at length about his opposition to naira devaluation. He said when he was military Head of State in 1984-85, World Bank and International Monetary Fund [IMF] experts advised him to devalue the naira and remove subsidy on petrol and flour. He said even though they pressed him hard, he did neither of the two. 

He said this was because countries that benefitted from currency devaluation were developed countries that produced more products after devaluation and were able to export more because their goods became more competitive. 

He was told, Buhari said, that Nigeria’s petrol was being smuggled out to neighbouring countries because it was very cheap but he countered that what our neighbours consume is only about one large Nigerian city’s supply. 

President Buhari also said, “When I was removed [as military Head of State] in 1985 the dollar was one naira fifty kobo. Now naira is 350 to the dollar. Tell me the benefits we derived from that. How many factories were built in those years? Economists are not able to explain this to me. I am still waiting for economists to tell me why we should continue to devalue the naira. However, I don’t rule the country alone, so we must accommodate the economists.” 

Buhari also said contrary to what observers think, he believes in privatisation of state owned firms. “It is much more efficient,” he said. He however said NNPC’s four oil refineries must be revitalised before they can be sold because he will not agree to sell them as scrap. He recalled that as Federal Commissioner for Petroleum Resources in General Obasanjo’s military regime in the 1970s, he signed contracts to build Warri and Kaduna refineries and to expand Port Harcourt refinery as well as build the depots and pipelines. 

He said, “Should we sell them as scrap?  We cannot spend so much of our national resources to develop infrastructure and then sell them a scrap. We must first take into consideration our state of development. We must repair them first so we can negotiate with the buyers from a position of strength.” 

More Deadly hardship Looms As Buhari Bows At Last To Foreign Pressure, To Devalue Naira To 290

Sahara Reporters - After months of insisting that he had no plans to devalue the naira, President Muhammadu Buhari has caved to pressure to change course; SaharaReporters has learned from an exclusive briefing by a few top aides of the president.

A day after the Buhari administration increased the price of the pump price of fuel by 67%, from N86.5 to N145 a liter, our sources disclosed that Mr. Buhari has also agreed to demands by the International Monetary Fund (IMF) that he significantly devalues the Nigerian currency. Our sources indicated that the naira would be pegged at N290 to one dollar. The current official rate is about N200 to a dollar.

Our sources said Mr. Buhari and his economic team took the decision to accept the IMF’s terms for funds that the Nigerian government wants to access to bridge a critical shortfall in revenue occasioned by a drastic decline in oil revenues. An administration insider told SaharaReporters that Nigeria could receive as much as $3 billion in credit facilities from the IMF.

“The truth is that Nigeria cannot operate without sourcing credit from the IMF,” said one of our sources, an economic adviser to Mr. Buhari, who spoke on condition of anonymity. “And the IMF was adamant that we must devalue before they can discuss extending credit to us,” he added.

Curiously, administration officials took the decision to devalue the naira without the input of the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, another source revealed. An official of the CBN confirmed to Saharareporters that bank executives were kept in the dark about the discussions that led to the Buhari administration’s decision to devalue the naira. “Some of us here [the CBN] are not opposed to devaluation, given our country’s present circumstances,” the source said, adding that it was the CBN’s function to pilot Nigeria’s monetary policies.

One of our sources pointed to the fact that the naira has been weakened in the parallel market, where it now sells at N360 per dollar. “The government cannot continue to operate under the illusion that the naira is stronger than it is. The only problem is that we did not start early enough to admit to Nigerians how bad the financial outlook was,” the source added.

The Nigerian economy has been pummeled by falling oil earnings that have led to a near collapse of the economy. The IMF had long indicated its readiness to support Nigeria’s economy with credit liquidity but insisted on Nigeria devaluing its currency. President Buhari had insisted on numerous occasions, before and after his election, that he would never devalue the naira.

It is unclear how Mr. Buhari and members of his economic team plan to justify the about-turn on devaluation and other policy somersaults. After initially vowing to reduce the price of fuel, the government yesterday announced a significant hike in fuel price. The administration also set to announce a 10% increase in value-added tax (VAT), another indication that the Buhari government was embracing the kind of liberalization pushed by the IMF.

To compound dwindling oil prices, militants in the oil-rich Niger Delta region have crippled oil exports substantially after bombing oil pipelines and issuing threats to oil companies to leave the region.

Last week, several oil companies evacuated essential staff from the region’s offshore platform leading to a reduction in daily oil outputs from 2.2 million barrels a day to 1.3 million barrels a day.

Poor Economy: Keep Your Loan, We Don't Need It - FG Shuns IMF's

Finance Minister,  Kemi Adeosun, at the ongoing Spring Meetings of the IMF/World Bank, on Friday, explained why the Federal Government is not excited about calls to apply for loan facility from the International Monetary Fund (IMF) to tackle  the economic challenges Nigeria is facing due to the slump in global oil prices 

Other speakers at the event included IMF Deputy Managing Director Mitsuhiro Furusawa and Rwanda Finance Minister Claver Gatete. 

The Minister, who was a speaker at a panel discussion on Africa titled: “Sub-Saharan Africa: Just a Rough Patch,” said Nigeria is adapting to its new realities and it is implementing fiscal policies to steer the country back on track for stable growth with a diversified economy.    

The policies and investment, according to her, should enable Nigeria to show positive growth in 2017. 

Adeosun emphasised that what the country is passing through is surmountable , adding that government is already applying a cocktail of measures to address the problem. 

“Nigeria is not sick and even if we are, we have our own local remedy,” the Minister said, in an apparent response to a question on why the government has refused to apply for IMF loans. 

Noting that the real vulnerability in the Nigerian economy is over-dependence on a single source of revenue, oil, she said, “We have resolved to build resilience into the country’s economy to hedge against future oil shocks. This is because dependence on oil brings about vulnerability and laziness. So we are doing a combination of things to diversify our economy, with revenue mobilisation    to enable sufficient investment in developing the non-oil sectors.”

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JONATHAN Not BUHARI Responsible For Nigeria's Current Economic Woes - Dr. Okonjo-Iweala

TheCable - Ngozi Okonjo-Iweala, former minister of finance, on Thursday said the zero political will to save under former President Goodluck Jonathan is responsible for the challenges the country is facing.

Speaking on “inequality, growth and resilience,” at George Washington University, the two-time finance minister said the World Bank and the International Monetary Fund (IMF) must seek means to embed savings in national constitutions devoid of political manipulations.

Okonjo-Iweala added that Nigeria was able to save $22 billion under former President Olusegun Obasanjo, which saved the country in 2008, when there was global economic meltdown.

Speaking on the Chilean saving example, Okonjo-Iweala said: “We tried it in Nigeria, we put in an oil price based fiscal rule in 2004 and it worked very well.

“We saved $22 billion because the political will to do it was there. And when the 2008 /2009 crisis came, we were able to draw on those savings precisely to issue about a 5 percent of GDP fiscal stimulus to the economy and we never had to come to the bank or the fund.

“This time around and this is the key now, you need not only need to have the instrument but you also need the political will. In my second time as a finance minister, from 2011 to 2015, we had the instrument, we had the means, we had done it before, but zero political will.

“So we were not able to save when we should have. That is why you find that Nigeria is now in the situation it is in. Along with so many other countries.”

On solving the problem of political will and political manipulations, she said: “That is the question that I ask, what do we need to do to these countries to save over a period of long accelerated growth.

“We need to devise mechanisms not just that are good technically but find a way to either embed them in the constitution or find a way to separate them from the political manipulation so that these countries can survive over time.

“To build resilience, African countries need tools, mechanisms and it is doable and we need to interrogate ourselves why we have not done it.”

She added that manufacturing was also critical to growth in Nigeria and the rest of Africa, quoting manufacturing as just 11 percent of GDP in Africa, and nine percent in Nigeria.

“I do not believe that we can be resilient, except if we can encourage manufacturing even on the goods we consume, services, entertainment industry, agriculture.

“I think these are the kinds of questions that policy makers struggle with on a daily basis and that is what we are going to answer to get resilience.

“If we don’t get these mechanisms, we politicise them, find ways to transform the base of the economy and create jobs including in manufacturing, I believe we are going to go into this looming deceleration that is being talked about.”

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U.S Market Panics Over Potential Dollar Crash As Buhari Signs Currency Deal With China

In a bid to bridge the widening gap between the Naira and the Dollar in the Exchange rate market, President Muhammadu Buhari, on Tuesday, April, 12, shocked foreign investors mainly from the United States who have been accused of stockpiling their money in dollars.

The President had consistently insisted that he would not devalue the naira against the dollar despite pressure from the International Monetary Fund, IMF and the United States.

With the West insisting that the nation’s currency must be devalued, which has always been part of their conditions for assistance, the East (China) has offered to rejuvenate the nation’s economy by investing in capital projects across the country.

During talks, China and Nigeria agreed to strengthen military and civil service exchanges as part of a larger capacity building engagement.

In line with this, China offered to raise it’s scholarship awards to Nigerian students from about 100 to 700 annually, while 1,000 other Nigerians would be given vocational and technical training by China annually.

According to the Senior Special Assistant to the President on Media and Publicity, Garba Shehu, the Chinese President, Xi Jinping also offered $15 million agricultural assistance to Nigeria for the establishment of 50 demonstration farms across the country.

The offer was in response to Buhari’s vow to make Nigeria self-sufficient in food production.

During Buhari’s visit to Beijing, the Industrial and Commercial Bank of China Limited, the world’s biggest lender, and the Central Bank of Nigeria signed a Currency swap deal on yuan transactions.

The implication according to the Director-General, African Affairs Department, China’s Foreign Ministry, Lin Songtian, is that “Renminbi (yuan) is free to flow among different banks in Nigeria, and the renminbi has been included in the foreign exchange reserves of Nigeria,”

The Minister of Finance, Mrs. Kemi Adeosun, had said last week that Nigeria was looking at panda bonds or yuan-denominated bonds sold by overseas entities on the mainland, which she noted would be cheaper than the dollar and the Eurobonds.

An economic expert and Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, noted that the currency swap agreement will allow Nigerian banks to issue Letters of Credit in renminbi (yuan) in place of the dollar or euro.

“It will facilitate trade deals between Nigeria and China. The ongoing foreign exchange scarcity has been affecting the amount of Nigeria’s import from China.

“The new deal may ease pressure on the dollar, since demand for yuan/renminbi will start rising,” Chukwu said.

So far, most financial analysts have applauded Buhari for the trade agreement with China; on the other hand, China has also expressed interest in setting up major projects in Nigeria such as refineries, power plants, mining companies, textile manufacturing, and food processing industries as soon as the enabling environment is provided by the Federal Government.

Economic pundits have likened this agreement to his 1984 military regime policy when he directed the Apex Bank to cause a change in the colours of the Nigerian currency.

The exercise was designed to render the money alleged to have been stolen by Nigerian political leaders useless in their hands.

In a bid not to devalue, Buhari according to experts is seeking for a way to weaken the dollar dominated currency by approving Yaun to be one of the nation’s major foreign exchange currencies.

DON'T MISS: The Breakdown Of Buhari's $6b Investments Sealed Deals From China Trip