Ways and Means: Tinubu Won’t Exceed Statutory Limit– Edun

President Bola Tinubu will not go above statutory limits in obtaining budget support facilities from the Central Bank of Nigeria (CBN) through the Ways and Means Advances. The Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, said this at the weekend in Marrakech, at the ongoing World Bank/International Monetary Fund (IMF) Annual Meetings. He said that Tinubu was committed to “keeping with the spirit and the letter” of autonomy of the CBN. The stakeholders and financial experts had criticised former President Muhammadu Buhari for worsening the country’s debt burden. By obtaining more than N22.7 trillion in Ways and Means Advances from the apex bank. Edun, however, said that the country was discussing with the World Bank for a 1.5 billion dollars budget support. “The World Bank is the number one development bank that helps developing countries to fund their projects and programmes. “We are happy that the funding will come in soon. World Bank money is the cheapest, ” he said. The minister said that the government was also concerned about financing. “About one trillion dollars is needed to meet the target of climate change globally. These is a climate financing fund which is relatively cheap. “There is also a commitment to help Africa and the third world with climate transition because they are not responsible for climate change in any substantial way. “One of the ways to help them is through climate financing and we will be looking at green bond and more climate financing options,” he said. 

Afreximbank To double Intra-African Trade Financing To $40bn By 2026

African Export Import Bank (Afreximbank) is to double its financing of intra-African trade to 40 billion dollars on a revolving basis by 2026. This bank’s intra-African trade financing stood at billion dollars in 2021. Mrs Kanayo Awani, Afreximbank’s Executive Vice President, made the disclosure at the Intra-African Trade Fair 2023 (IATF) Nigeria High Level Business Roadshow in Lagos. The IATF 2023, scheduled for November 9 to Nov. 15, in Egypt, is organised by Afreximbank, African Union Commission and the Africa Continent Free Trade Area (AfCFTA) Secretariat. The event is a platform for businesses to access an integrated African market of over 1.3 billion people with a gross domestic product of over 3.5 trillion dollars created under the AfCFTA. Awani said that Afreximbank was not only spearheading the IATF to support AfCFTA, but was also at the forefront of supporting African trade and had developed several financing and facilitation instruments to support trade and investments. She said the bank was working with AfCFTA Secretariat to put in place AfCFTA Adjustment Fund to facilitate and provide support through financing, technical assistance, grants and compensation funding to AfCFTA state parties and private enterprises. The official said that this would aid adaptation and effective participation in the AfCFTA. “The Board of Afreximbank has approved and committed one billion dollars to support the funding of the initiative and 10 million dollars grant that will facilitate the establishment and operationalisation of the adjustment fund. “We are also partnering with the AfCFTA Secretariat and AU to ensure a successful implementation of the Pan-African Payments and Settlements System (PAPSS), with the view to facilitating the payment and settlements of trade transactions in local currencies. “This will address the challenge of currency inconvertibility and foreign exchange shortages that hamper intra-African trade,” she said. Awani added that Afreximbank was also leveraging digitalisation through the African Trade Gateway – a digital ecosystem created to facilitate intra-African trade. She said that the ecosystem comprised an integrated and function-specific set of platforms that would help to surmount impediments to cross-border trade. According to Awani, to facilitate the movement of goods, Afreximbank developed the Afreximbank African Collaborative Transit Guarantee Scheme to ensure seamless transportation of goods across multiple borders through issuance of a single technology-enabled transit bond. She said the scheme backed by one billion dollars commitment provided by Afreximbank, would lead to cost saving of more than 300 million dollars yearly. “We have also created an African Trade Facilitation Programme (AFTRAF) through which we are forging strong partnerships with African commercial banks to help them finance intra-African trade. “The Bank is also working with the African Association of Automotive Manufacturers (AAAM), African Union and the AfCFTA Secretariat to develop a viable automotive industry in Africa. “In this context, Afreximbank has developed a one-billion-dollar global automotive financing facility for the automotive industry. “We are also providing support in terms of facilitating the development of regional value chains and the implementation of the Continental Automotive Strategy that was adopted by trade ministers early this year.” She added that the bank was working with the International Trade Centre to train African companies including SMEs on how to export under the AfCFTA. “The training programme provides trade and market information to assist the businesses to identify export opportunities, how to comply with all the export requirements under the AfCFTA as well as how to access finance, payment and settlement, among others,” she said. Awani reiterated the bank’s commitment to working with member-countries to position them to take advantage of the AfCFTA. She said that in an effort to support Nigeria’s industrialisation and export development efforts, Afreximbank had invested over 36 billion dollars in the Nigerian economy since its creation in 1993 through its trade and projects financing. Awani said that the support covered a range of sectors and industries, including energy, transport, financial services, healthcare, manufacturing, and trade infrastructure.

CIBN backs Tinubu on exchange rate unification

The Chartered Institute of Bankers of Nigeria (CIBN) has commended President Bola Tinubu for unifying the Naira exchange rate to save the country from financial crisis. The President/ Chairman of Council of CIBN, Dr Ken Opara, said this at the 2023 Lagos Bankers Night with the theme, “Exchange Rate Unification: Global Implications, Organisation’s and the Country,” on Friday night in Lagos. According to him, the institute has always advocated transparency and a free market that would allow the interplay of supply and demand. He said, “The Chartered Institute of Bankers of Nigeria totally supports the Central Bank of Nigeria’s reform as it relates to the unification of the exchange rate and other measures basically taken to ensure the true value of the Naira. “As a matter of fact, we have been advocating for this and during the week, Dr ‘Biodun Adedipe, leading other scholars, and Mr Laoye Jaiyeola of the Nigeria Economic Summit Group, gathered at the Bankers House to applaud the reform, especially as it relates to the unification of the exchange rate. “We have seen that the effort that the Central Bank of Nigeria has initiated is already yielding dividend. “We can see that the exchange rate between the Naira and the dollar has started coming down which means it is a good initiative that is well thought out.” Opara said that the institute recently organised a half year economic review, where captains of industries also spoke in support of the reform. He urged Nigerians to take advantage of the good opportunities that the reform had presented, saying wherever there are challenges lie in opportunities. The CIBN president pledged the institutes continued commitment to making contributions and suggestions relating to what should be done to support and grow the country. He said, “As it is the concept of the industry; we played this role very well when the industry was facing challenges and we will continue to do that because we believe that the banking industry is very solid, stable and efficient.” He described the payment system in Nigeria as “the best” all over the world, stressing that it is a system that one could consummate transactions on an online real-time basis. Opara said this showed that the banking industry and its regulator had done well in stabilising what an effective payment system. He debunked media reports that its Lagos branch was not in support of the exchange rate unification, describing as “untrue”, but calculated to cause panic. Chief Consultant of B. Adedipe Associates Ltd. (BAA Consult), Dr ‘Biodun Adedipe, said that the exchange rate unification, which was not new in Nigeria, had gone through the route before with different appellations. “Let me trade very quickly what I brand as Nigeria’s journey to exchange rate unification. “Nigeria has gone through this route before but with different appellations like devaluation, correction, alignment, depreciation, all of which are matter of semantics. “The simple interpretation of this is to remove the premium on the official rate and the parallel market or road side market. “Of course, this is a typical Bretton Woods recipe; keep premium within five per cent to decentivise round tripping and then find liquidity to sustain it. “This is the easy way out; but, it never brings enduring solution to the persistent crisis in the external sector of the Nigerian economy.”. According to him, there are 54 evidence-based research documents to establish that free float is not always the most appropriate for all economics. Giving historical illustrations, the expert noted that exchange rate movements had a more significant impact on all other prices more than interest rates adjustment. He said the only period that Nigeria experienced a successful and stable rate convergence in the country was when it had a significant external reserve. Adedipe said it took the country an average of two to six weeks for the parallel market rates to diverge from the official exchange rate during each episode of premium removal. He added that speculative attack on the currency occured each time there was no clear sight to a stable and enduring supply. President Bola Tinubu, had during his inauguration on May 29, said his administration would seek to bring the different exchange rate regimes being operated across the country’s foreign exchange channels under a single regime. However, in June, Tinubu through the Special Adviser on Special Duties, Communications, and Strategy, Dele Alake, announced the implementation of a unified exchange rate to save the country from a financial crisis. He emphasised that his decision to implement a managed float, similar to his approach to fuel subsidy removal, was in the best interest of Nigeria.