Recession: Nigeria can export its way out – Punch

By Michael Onuoha

In recent weeks, Nigeria was enmeshed in a debate as to whether or not she should sell some of her assets to earn foreign exchange that can help the country come out of its current economic recession. The assets touted for sale included the Nigeria Liquefied Natural Gas company, some refineries as well as government’s stakes in joint venture operations and the Africa Finance Corporation, amongst others.

The debate was triggered by the recommendations of the National Economic Council to the Federal Government to carry out sales of the aforementioned assets. Perhaps, Nigerians might have let the issue alone but when a personality like Aliko Dangote threw his weight behind the sale proposal, many people sat up straight, knowing now, as the Igbo say, that “the handshake has passed the elbow”. Dangote is the wealthiest living African and among the richest in the world. His empire was built through astute business deals. So when he spoke in favour of the “sell our assets” proposal, the campaign was no longer to be ignored because any business idea from Dangote is not to be taken lightly and so gave a significant measure of credibility to the proponents of the idea.

Nevertheless, many Nigerians including labour, activists, public policy analysts among others vociferously expressed their opposition to the sale idea. Not only did the opposition perceive the campaign as serving the interests of the sale champions, it also believed the country would, by selling the mentioned assets, be mortgaging its future for the present. They also believed the proceeds of the asset sale would end up in the coffers of the high and mighty pushing for it as allegedly had happened in the past. Yes!! This is Nigeria.

I don’t intend to continue the debate here, however. My thinking and which is the focus of this piece is that the government should not be occupied by here and now measures for tackling the recession. It should get more creative and explore numerous other options to get the country out of the recession.

For instance, export promotion. At a time like this, the government should be most occupied with exploring how the country can produce more for export to earn the much-desired foreign exchange to ease the pressure on the naira. Here, I mean non-oil exports with particular emphasis on export of manufactured goods. I am not talking of export of raw materials and primary products that would return to us as much higher-priced finished products or export of mineral resources.

There is no point in lamenting, as has become the pastime activity in government quarters, the slide in price of crude oil and how it has dealt a big blow to the nation’s economic fortunes. The reality is that we must take our export agenda more seriously. Countries that have gone through recession had relied on export of manufactured goods as one of key measures to weather the storm.

That was the case in the United States of America. In his recent essay in The Economist titled. “The way forward”, President Barack Obama firmly acknowledged the role of export in pulling the US out of its recession. He stated, “Exports helped lead us out of the recession. American firms that export pay their workers up to 18 per cent more on average than companies that do not.” It will be recalled that the American economy was going through one of the country’s worst in economic recessions in history when President Obama came into office. Export of goods and services grew about 39 per cent since Obama took office. This has led to over 10 million jobs being added to the economy since Obama’s time in the Oval Office. To consolidate the gains of export in the US, President Obama is currently pursuing the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership with the EU to further open up the EU to American goods and services.

Over 90 per cent of Nigeria’s exports over the years are accounted for by petroleum and other mineral products. Sometimes and especially in the recent past, overall export appeared to be growing but in real terms they are not. For instance, the Foreign Trade Report Q2, 2016 released by the National Bureau of Statistics showed that value of exports grew by 63.3 per cent over Q1, 2016 figures. But the report was quick to point out that the growth was attributable to foreign exchange gains rather than to volume. Even then, export of manufactured products accounted for a paltry 0.9 per cent.

Nigeria has excess manufacturing capacity in a number of areas such as alcohol and non-alcoholic beverages, tobacco, pharmaceutical products and wood furniture, etc. Many companies producing these products are currently burdened by low capacity utilisation which should not be the case if the export environment is right. Additionally, there is nothing stopping the country from being a net exporter of finished products made from such agricultural produce such as cassava, cocoa, palm kernel and palm oil instead of exporting these products in their raw or primary form.

For a robust export economy focused on manufactured products to take root in the country, the government has to deal with the impediments on the way. Key among this is development of necessary infrastructure that can help to reduce the transactional cost of manufactured goods in the country. A former chairman of Ikeja branch of the Manufacturers Association of Nigeria a few years ago stated that private power generation by manufacturing companies in Nigeria accounted for 30 per cent of cost of production, for instance. There’s therefore no gainsaying that bad roads, poor rail network and unreliable electricity supply have important consequences for Nigeria’s export performance. High cost of manufactured goods in the country makes them uncompetitive outside the shores of this country and even against goods imported into the economy. The development of infrastructure must be accelerated to impact positively on the economic advancement of the country. Government must find ways to address the issue of foreign exchange availability to manufacturers to further reduce their cost of production.

In addition, the government should either revive past export incentives or put in place new ones. Over the years, successive governments in the country had introduced and implemented a number incentives geared towards promotion of exports and diversification of the economy. For instance in 1986, the government promulgated the Export (Incentives and Miscellaneous Provisions) Act, under which it introduced the Export Development Fund, the Export Expansion Grant (EEG) and the Export Adjustment Scheme Fund. The period between 1987 and 2012 marked the high point of Nigeria’s export of goods and services, thus attesting to the effectiveness of the afore-mentioned export incentives. However, all three incentives are at the moment. It is on record that the EEG was suspended and reactivated eight times since it was introduced. The last suspension was in January 2014 and since then has not been reactivated.

Nigeria has the potential to dominate the ECOWAS region with its manufactured products if only it can get its acts together. As the manufacturing engine room in the sub-region, Nigeria can take advantage of ECOWAS regional integration and its trade instruments such as the ECOWAS Trade Liberalisation Scheme to advance its export interests within the sub-region while developing new partnerships across the continent and globally for same objectives.

Onuoha is a public affairs and reputation management specialist based in Lagos

Dollar tanks as U.S. jobs cast doubt on pace of future hikes – Reuters

By Gertrude Chavez-Dreyfuss | NEW YORK

The dollar fell broadly on Friday after posting gains the last three weeks as a solid, but not spectacular, U.S. non-farm payrolls report stirred doubts about the path of rate increases next year.

Analysts, however, said the dollar’s weakness was just a short-term correction, a much-needed one, after a strong rally in the wake of Donald Trump’s victory in the U.S. presidential election on Nov. 8.

The dollar index posted its first weekly fall in four weeks against a currency basket, but was still up 1.7 percent for the year. The U.S. currency also slid against the Japanese yen, hitting session lows after the jobs data, but showed gains for a fourth consecutive week.

Nonfarm payrolls increased 178,000 jobs last month, but data for September and October were revised to show that fewer jobs were created than previously reported. Wage growth for the month was just 2.5 percent, compared with expectations of 2.8 percent, unchanged from October.

“I think the market was a little less excited about wage growth this past release, but in general, my view on the dollar has not changed. This is just some profit-taking, some squaring up of positions,” said Ron Waliczek, managing director of OTC FX and interest rates at INTL FCStone Inc in Chicago.  

“I do think that the dollar has another leg up, about 6-7 percent toward the 107, 108 level in the dollar index.”

In late trading, the dollar index fell 0.3 percent to 100.77. It was down 0.7 percent for the week. Against the yen, the dollar fell 0.4 percent to 113.69 yen.

Marvin Loh, global markets strategist at BNY Mellon in Boston, said the jobs report did not provide much clarity on future U.S. interest rate increases.

“We think there are enough yellow flags to support the slow and shallow path endorsed by the Fed, which expected only 2 hikes this past September,” Loh added.

The euro, on the other hand, was flat against the dollar at $1.0657 , ahead of Sunday’s Italian referendum. The referendum could reject constitutional reforms on which Prime Minister Matteo Renzi has staked his political future.

Renzi’s departure could destabilise Italy’s fragile banking system and be taken as another sign of rising anti-establishment sentiment around the world, potentially eroding investor confidence in the euro.

The euro’s one-week implied volatility, a gauge of the currency’s expected movements in either direction, rose on Friday to the highest level since Britain’s June vote to leave the European Union.

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Chizu Nomiyama and Richard Chang)

Nigeria overnight lending rate eases as naira reach banks – Reuters

LAGOS Dec 2 (Reuters) – Nigeria’s overnight interbank lending rate fell to 10 percent on Friday from 14 percent a week ago as October budget allocations to government agencies reached the banking system.

Nigeria distributed 420 billion naira ($1.33 billion) to its three tiers of government for October last week, with some portion passed through the banking system. 

Africa’s largest economy relies on crude oil sales for two-thirds of its national income. Proceeds from the sale provide substantial liquidity to the money markets.

Traders said the central bank sold treasury bills on Wednesday to soak up some of the liquidity, but the amount sold was not enough to affect lending rates.

They also said the regulator offered to sell more bills on Friday, but most lenders declined to participate, choosing to hold cash because of the frequency of withdrawals from their customer accounts.

Traders expect money market rates to stay flat next week as activity slows towards the end of the year.

($1 = 315.50 naira) (Reporting by Oludare Mayowa; Editing by Chijioke Ohuocha, Larry King)


Nigeria plans over 7 trln naira budget for 2017 – vice president – Reuters

By Camillus Eboh | ABUJA

Dec 2 Nigeria is planning a budget of more than 7 trillion naira ($22.2 billion) next year, Vice President Yemi Osinbajo said, to boost spending and help pull the economy out of its worst crisis in more than two decades.

“Our entire budget for 2016 is … just over 6 trillion naira. We will probably be moving to about 7 trillion naira in the 2017 budget,” Osinbajo said during visits to manufacturers on Thursday.

He said Nigeria’s economy of around 90 trillion naira ($285.3 billion) needed more spending to make an impact. The West African country planned a record 6.06 trillion naira budget for 2016, but it has struggled to fund it.

Nigeria is in its deepest recession in 25 years and needs to find money to make up for a shortfall in its budget this year. Its revenues from oil have plunged along as the price of crude fell and militants attacked its crude-producing heartland, the Niger Delta, cutting its output. 

Ratings agency Moody’s forecast the Nigerian economy would expand 2.5 percent next year if it could produce 2.2 million barrels of oil per day – the level at which the government made its 2016 budget calculations.

On Wednesday, Budget Minister Udoma Udo Udoma said the cabinet had approved next year’s budget without providing details. The vice president told Reuters this week the president will present 2017 budget to parliament by mid-December. ($1 = 315.50 naira) (Writing by Chijioke Ohuocha, editing by Larry King)

Nigeria’s Imports Drop on Renewed Drive to Encourage Local Production – Thisday

• IMF: Additional exchange rate depreciation could further worsen already high NPLs

 • Rising exports slash trade deficit balance to N104bn


By Obinna Chima in Lagos and James Emejo in Abuja


The import substitution policies being driven by the Central Bank of Nigeria (CBN) and the federal government appear to be yielding results, as a country assessment report on Nigeria by the International Monetary Fund (IMF) has indicated that a sharp decline in imports contributed to a modest recovery in Nigeria’s external current account balance in the first half of 2016.

Although the report showed that Nigeria’s exports declined by 14 per cent in the first half of 2016, it revealed that imports fell more than proportionately by 25 per cent in the first half of this year, compared to the same period last year.

Also, the foreign trade report released yesterday by the National Bureau of Statistics (NBS) showed that the country’s total value of merchandise trade rose to N4.72 trillion in the third quarter (Q3) of 2016, representing an increase of 16.3 per cent, or N661.5 billion, compared to N4.06 trillion recorded in the preceding quarter of the year.

According to the NBS, the country’s balance of trade still remained negative despite the improvement, as the rise in exports in the quarter only helped to reduce the existing deficit trade balance from N484.23 billion in the preceding quarter to -N104.14 billion in the third quarter.

The IMF report, which detailed an assessment of Nigeria’s macroeconomic situation, was prepared for the African Development Bank (AfDB) by the Fund, as part of the conditions for the country to access the $1 billion budget support loan from AfDB.

 The document, dated September 30, 2016, was made available to THISDAY by a presidency source yesterday.
The AfDB in November released the first tranche of the loan amounting to $600 million.
It was also gathered that the country is aggressively working towards securing an additional $2.5 billion budget support loan from the World Bank, just as it finalises plans for its $1 billion Eurobond issue for the first quarter of next year.

However, THISDAY gathered that part of the conditions for the World Bank loan is for the CBN to freely float the naira exchange rate, which the Nigerian regulator has strongly resisted.
The CBN ditched its 16-month-old peg on the naira in June this year and introduced a flexible exchange rate regime to allow the currency to trade freely on the interbank market.

But perennial dollar shortages in the economy appear to have frustrated the objective of the central bank, as the gap between the interbank FX market and the parallel market has continued to widen. This has made the central bank to maintain its managed float system.

“There is no central bank in the world that allows a free-float of its currency. That would encourage an attack on the currency by speculators. What you do is try to find the price level and find the rate at which you can live with,” a bank chief executive officer in support of the CBN policy told THISDAY.
The chief executive, who pleaded to remain anonymous, pointed out that freely leaving the naira exchange rate to market forces would have dire consequences on the economy.

This he listed to include a spike in the price of goods and services including energy prices, and worsening unemployment, adding that the naira would also record significant depreciation.

The six-page assessment report from the IMF on Nigeria noted that while liquidity and capital adequacy ratios for the financial industry as a whole remained above prudential levels in the first half of 2016, asset quality had deteriorated, with some banks reporting non-performing loan (NPLs) ratios above 20 per cent (the NPLs for the banking sector was 11.7 per cent as of 2016 Q2).

It stated that a prolonged economic slowdown and additional exchange rate depreciation could further increase the already high NPLs.

“Renewed disruptions to, or inadequate recovery of oil production could further increase fiscal financing needs. With external financing likely to fall short of budget, the domestic financing requirements needed if the budget is to be fully implemented are very large, crowding out private sector credit and investment.

“An additional financing constraint facing the FG is the likely need for further assistance to state governments that are facing deteriorating finances and the re-emergence of domestic payment arrears,” it added.
The report acknowledged that the Nigerian authorities have introduced some key measures, but stressed that much stronger measures were needed to address the severe imbalances.

The Fund said: “In May this year, the regulated fuel prices were raised by 68 per cent, bringing them in line with the cost of importation. While the 2016 budget assumed no subsidies, it was estimated that the continuation of the previous regime would have cost 0.3 per cent of GDP.

“However, the regulated price system has remained in place, which poses a risk that further increases in the landing cost of fuel or additional depreciation of the exchange rate could result in renewed shortages if the price is not adjusted.”

The IMF said there was urgent need to implement an appropriate and coherent set of policies to rebuild confidence in the near term and foster economic recovery over the medium term.
These included articulating a plan to place fiscal policy on a sustainable footing, ensuring the monetary policy stance is kept sufficiently tight, and pressing ahead with structural reforms to improve competitiveness and facilitate economic diversification, it said.

“Specifically, it will be important to: Pursue strong macroeconomic policies to provide the fiscal space to enable priority capital expenditure to be executed. For the remainder of 2016, implement high-impact and priority capital expenditure, subject to available financing. Significant under-execution of the capital budget will limit the anticipated impact on growth,” it stated.

In addition, it urged the federal government to implement measures to support fiscal and debt sustainability.
This, it stated, would include: containing the fiscal deficit across all tiers of government; boosting the ratio of non-oil revenue to non-oil GDP, through a combination of improvements in revenue administration, broadening the tax base (including through curtailing of waivers and exemptions), and adjusting tax rates; rationalising recurrent expenditure, and implementing an independent price-setting mechanism to minimise/eliminate petroleum subsidies; adopting safety nets for the most vulnerable; and fostering transparency and enhanced accountability and an orderly adjustment of sub-national budgets, by encouraging reform of budget preparation and execution and strengthening public financial management.

Other measures recommended in the report included improving the monetary and FX policy frameworks.
“A more forward-looking monetary policy strategy, with the overriding objective of price stability, would help better anchor expectations and policy credibility.

“As emphasised in the 2016 Article IV staff report, staff do not support the policies that have given rise to exchange restrictions and multiple currency practices, as they distort the allocation of FX and inhibit the adjustment of the exchange rate to underlying fundamentals.

“Enhance vigilance of the financial sector. The authorities are taking measures to strengthen financial intermediation, but with declining asset quality in a low growth environment, intensifying monitoring of banks and further enhancing contingency planning and resolution frameworks become even more important.
“Reduce impediments to growth, including by investing in infrastructure and improving the business environment, thereby facilitating higher private investment and national savings. Strong macro policies that underpin macro stability could provide the fiscal space or conditions to allow borrowing for implementing priority capital expenditure.

“Nigeria remains on the standard 12-month Article IV Consultation cycle. Staff continue to actively engage with the authorities, including through the provision of technical assistance,” it said.

Trade Deficit Balance Drops to N104bn

Meanwhile, Nigeria’s total value of merchandise trade rose to N4.72 trillion in the third quarter of the year, representing an increase of 16.3 per cent or N661.5 billion, compared to N4.06 trillion recorded in the previous quarter.
The improvement was aided by increases in exports and imports, which stood at N2.30 trillion, an increase of N520.8 billion or 29.1 per cent and N2.41 trillion, representing an increase of N140.7 billion or 6.2 per cent, respectively.

According to the foreign trade data for Q3 2016, which was released yesterday by the NBS, the country’s balance of trade still remained negative despite the improvement as the rise in exports in the quarter only helped to reduce the existing deficit trade balance from N484.23 billion recorded in the second quarter to -N104.14 billion.
In the period under review, crude oil export value stood at N1.94 trillion, indicating an increase of N458.4 billion or 30.9 per cent, compared to Q2 estimates.

Year-on-year, exports decreased by N24.4 billion or 1.0 per cent against the export value recorded in the corresponding quarter of 2015, while imports value was 6.2 per cent more than the N2.27 trillion recorded in the preceding quarter, and was an increase of N724.8 billion or 42.9 per cent compared to Q3 2015.
According to the bureau, the structure of the country’s export trade was still dominated by crude oil exports, which accounted for N1.94 trillion or 84.2 per cent of the total domestic export trade.

The highest export product for the country in 2016 was mineral products, accounting for N2.24 trillion, or 97.3 per cent, while other products comprising prepared foodstuff, beverages, spirits, vinegar and tobacco contributed N24.3 billion or 1.1 per cent to total exports.

Also, vegetable products contributed N9.4 billion, or 0.4 per cent of total exports.
A further breakdown of export trade in Q3 showed Nigeria mainly exported goods to Europe and Asia, accounting for N767.7 billion, or 33.3 per cent, and N672.8 billion, or 29.1 per cent, respectively.
The country also exported goods valued at N371.2 billion, or 16.1 per cent, to Africa while exports to the ECOWAS region was valued at N190.3 billion.

On the other hand, imports were dominated by mineral fuel, lubricants etc.; machinery and transport equipment; and chemicals and related products, which accounted for 30.3 per cent, 25.1 per cent and 14.4 per cent, respectively, in Q3 2016. The value of mineral imports was put at N746.2 billion in the quarter.
India remained Nigeria’s major trading partner in the quarter under review, accounting for 25.4 per cent of total exports, while the United States and France respectively accounted for 17.9 per cent and 10.7 per cent of total exports.

China was the country’s largest import destination, representing 27.2 per cent of total imports for the period.

Nigeria’s Q3 merchandise trade rises by 16.3% to N4.721bn – Businessday

Increase in Nigeria’s import and export trade in the third quarter (Q3) of 2016 has pushed the total value of the country’s merchandise trade to N4,721.9 billion, an increase of N661.5 billion (16.3%) from the preceding quarter value of N4,060.4 billion.
According to the foreign trade report released by National Bureau of Statistics (NBS), exports stood at N2,308,857.2 billion, resulting to an increase of N520.8 billion or 29.1 percent, while imports rose to N2,413,001.7 billion, which gives an increase of N140.7 billion or 6.2 percent.
The rise in exports this quarter reduced the deficit trade balance from -N484,238.7 billion experienced in the previous quarter to -N104,144.5 billion, the report further revealed.
According to the NBS, the crude oil export value stood at N1,943,987.0 billion, indicating an increase of N458.4 billion or 30.9 percent against the level recorded in Q2 2016. “The structure of Nigeria’s import trade according to the reported was dominated by the imports of mineral fuel, lubricant, machinery, transport equipment as well as Chemicals and related products,” which contributed the most to the value of import trade in 2016.”
Whereas commodities such as ‘crude inedible materials, except for fuel,’ beverages, tobacco, animal and vegetable oils as well as fats and waxes, contributed the least, the report revealed.
Import trade by section was dominated by the imports of mineral products, which accounted for N746.2 billion or 30.9 percent of the total value of import trade in 2016. Other commodities that contributed noticeably to the value of import trade in 2016 were boilers, machinery and appliances; parts thereof” at N475.6 billion (19.7%).
While “products of the chemical and allied industries stood at N220 billion (9.1%), “plastic, rubber articles thereof at N153.9 billion (6.4%) while “prepared foodstuffs; beverages, spirits and vinegar; tobacco” stood at N148.2 billion (6.1%).
The NBS report further revealed that Nigeria’s import trade by direction showed the country imported goods mostly from China, with an import value of N478.7 billion (19.8%) of total imports. This was followed by Belgium at N331.3 billion (13.7%), Netherlands with299.7 billion (12.4%), the United States with N165.5 billion (6.9%) and India with N121.3 billion (5.0%), of total imports. “Imports by economic region revealed that the country consumed goods largely from Europe, with import value of N1,158.4 billion (48.0%), Asia, with import goods valued at N843.27 billion (34.9%). Goods valued at N294.5. While import trade within the continent of Africa totalled N87.9 billion or 3.6 percent, whereas imports from the region of ECOWAS amounted to N8.5 billion.
Meanwhile, the structure of Nigeria’s export trade, which is still dominated by crude oil exports, with an estimated value of N1,944.0 billion, showed that Nigeria mainly exported goods to Europe and Asia. While the report further revealed that the country exported goods valued at N371.2bn to the continent of Africa whereas export to the ECOWAS region totalled N190.3 billion.

Nigeria’s 33 grain silos empty – Businessday

Nigeria has 33 silos meant for storing grains against periods of poor harvest but all the silos are empty, as fear of famine stalks the country.

“For about two years now I do not think the government has been storing grains because we have not been producing enough for our consumption. The country is already experiencing limited supply of maize, as we speak,” said Tunji Ademola, national president, Maize Association of Nigeria (MAAN).“We really do not know the current situation of the silos across the country. Before now, the silos were operating below 10 percent capacity and the government was planning to concession them,” said Ademola.

In reaction to recent concerns that the country is going to run out of grains, Audu Ogbeh, Minister of Agriculture and Rural Development, said on the sidelines of the just concluded COP22 held in Marrakech, Morocco, that Nigeria needed about N30 billion to buy up grains and store at least 25,000 to 30,000 tons in the country’s silos which would dry up before next year January.

But farmers say the 33 silos across the country are largely empty and the country does not currently have a bulwark against famine.
“The silos were not put to maximum use because of the high cost of running them. It cost billions of naira to maintain a silo,” said Rotimi Fashola, senior partner, TT Fash Consults Limited. “The government is currently managing only four of our silos, with 26 put up for concession for proper participation of farmers and three are still under construction. Companies have bid for the silos already and are awaiting government modalities on the grain specification for each of them,” said Fashola.

The Federal Government constructed 33 silos in 2009 to ensure food security and guarantee all-year-round supply of food to Nigerians.
Nigeria has a total of 33 silos with a storage capacity of about 1.3 million metric tonnes. Silos were constructed in Ekiti, Kebbi, Zamfara, Borno, Imo and FCT states with 100,000 metric tonnes capacity.

Other silos had the storage capacity of 25,000 metric tonnes. These included Yobe, Bauchi, Osun, Nasarawa, Taraba, Ogun, Anambra, Kogi, Sokoto, Akwa Ibom, Adamawa, Kano, Ebonyi, Gombe, Edo, Oyo, Benue, Niger, Cross River, Katsina state amongst others. The silos were meant to store rice, beans, maize, soya beans, millet, wheat, and other food items.

Silos in Borno, Yobe and Bayelsa are still under construction due to insecurity and natural disasters, according to a document seen by BusinessDay.
According to stakeholders, most of the silos had not been put to maximum use, as they mostly operate below 10 percent utilisation capacity and wrongly located.

Aminu Dikko, director-general of the Infrastructure Concession Regulatory Commission (ICRC), said at a breakfast meeting organised by the Nigerian-British Chamber of Commerce (NBCC) in Lagos, that many of the silos were not properly located, owing to political and other primordial considerations.

Nigeria’s major grains are rice, wheat, maize and sorghum, with a production of 15.56 million metric tons and demand of 25.5 million metric tons per annum, according to the Federal Ministry of Agriculture. This shows a demand-supply gap of 9.9 million metric tons per annum.
Despite bumper harvests by farmers this year, Nigerian grains such as maize and wheat are becoming scarce in the local market, as food and beverage companies such as Nigerian Breweries, Nestlé, Guinness, International Breweries and flour millers pay for them at the point of harvest or before they are moved to the market.

This is leaving less and less grains to sell to Nigerians who need the same crops as food on their tables, despite bumper harvests of major crops this year.

Abiodun Olorundenro, chief executive officer, Green Vine Farms, said “If we had been storing up grains, the government would not be talking about famine next year. The silos are there but nothing is happening there.” “The output of maize this year is quiet low and this is as a result of the army worm infestation that destroyed a lot of maize farmland in the South-West and North-Central this year. The government ought to have released dry maize from the silos now if they had them stored,” Olorundenro said.

Silos provides platform for the purchase and management of grain stock at guaranteed minimum prices, which is usually made known to the famers before production and stored at the national reserve silos.The stored foods are released only at the approval of the president during period of national disasters and to give assistance to friendly sister countries in their period of needs.

However, contrary to the Federal Government’s fears that pressure on Nigerian grains from West African neighbours could trigger famine in 2017, farmers say Nigerians will not go hungry in 2017 for lack of food to buy. Farmers who spoke with BusinessDay hinged their belief that there will be no famine in 2017 on the fact that more farmers are going into all-year farming as well as the fact that many more Nigerians are going into farming now, as agriculture has become attractive and receives a lot of support from government, private sector and international organisations.

They further observe that some of the external grain purchase pressure will be taken off Nigeria by Mali which has recently recorded a bumper harvest of grains. Mali has produced a record grain crop of 8.96 million tonnes for the 2016/17 season, an increase of 11 percent that will leave it with a surplus over 3.77 million tonnes, provisional agriculture ministry statistics showed a fortnight ago.

Rice, maize and millet account for the bulk of the West African nation’s grain production. “Despite exporters buying up grains in large quantities this year, I do not see the country experiencing famine next year. There was bumper harvest in major crops even grains this year and the figures from third quarter GDP attest to that,” said Emmanuel Ijewere, chief executive officer, Bests Foods Limited and co-ordinator, Nigeria Agribusiness Group (NABG).

Third quarter figures from the National Bureau of Statistics (NBS) show that the contribution of agriculture to the gross domestic product (GDP) jumped from 22.5 percent in the second quarter of 2016 to 28.7 percent. Growth in the agriculture sector was driven by output in crop production, accounting for 95 percent of overall nominal growth of the sector. The Central Bank of Nigeria has initiated the Anchor Borrowers Scheme, which has boosted rice production in Kebbi State, and promises to repeat the feat in 13 other states. More than 65,000 farmers are involved in the Anchor Borrowers Scheme in Kebbi State alone.


Josephine Okojie

Imports surge 43% on naira devaluation – Businessday

The latest trade data released by the National Bureau of Statistics (NBS) shows that imports rose 43 percent
year-on-year to N2.41 trillion from N1.68 trillion recorded in the same period of 2015, while quarterly
comparison shows an increase by 6.2 percent from N1.5 trillion.

“Import value may have risen due to the naira devaluation, but I am sure in terms of volume, there has been a decline,” said Muda

Yusuf, director-general of the Lagos Chamber of Commerce and Industry’s (LCCI). “This is because the naira depreciation has made imports more expensive and it has shaved imports, while the 41 items banned from accessing dollars in the official market, coupled with the FX shortages has contributed to a decline.”

However, Nigeria’s trade deficit narrowed in the third quarter, as the value of exports from Africa’s most populous nation surged after a devaluation of the naira.

The trade deficit narrowed by 78.4 percent to N104.1 billion in the three months through September, compared with N484.2 billion in the previous three-month period, according to a report released Thursday, December 1.

“The rise in exports this quarter reduced the deficit trade balance,” the NBS said.

Exports saw a quarterly rise by 29 percent to N2.30 trillion, from N1.87 trillion in the second quar-



Sterling makes best run vs euro in nine months as hard Brexit fears ease – Reuters

By Jemima Kelly | LONDON

A stronger sterling looked headed for a fifth consecutive week of gains against the euro on Friday, its best run in nine months, as investors’ fears eased that a “hard Brexit” would see Britain lose access to the European Union’s single market.

The pound jumped to a three-month high against the single currency and a two-month high against the dollar on Thursday, after Britain’s Brexit minister said the government would consider paying into the EU budget in order to keep market access.

And investor jitters were soothed further overnight, when a pro-EU Union Liberal Democrat candidate won a parliamentary seat previously held by the ruling Conservative Party on Friday, in a vote considered a protest against a hard Brexit. 

“That (by-election) has its own idiosyncrasies, so it’s important not to overinterpret things,” said UBS Wealth Management currency strategist Geoffrey Yu. “But that plus the comments we’ve had this week probably has helped to shift the narrative somewhat.

“What’s now being priced in is greater resistance to a hard Brexit.”

Sterling was up 0.1 percent at around $1.26 by 1000 GMT, having climbed almost 1 percent over the course of the week. And after recording in November its strongest month against the single currency in eight years, sterling climbed 0.2 percent to 84.45 pence per euro.

Data released on Friday showing growth in Britain’s construction industry unexpectedly touched an eight-month high in November, while its costs rocketed at the fastest pace since 2011, had little impact on the currency.

Asked on Thursday by a lawmaker if the government would consider making “any contribution in any shape or form” for access to the EU’s single market, Brexit minister David Davis said it would. He said the government would seek “the best possible access for goods and services to the European market”.

A spokesman for EuroGroup President and Dutch Finance Minister Jeroen Dijsselbloem said on Thursday the situation for Britain after Brexit should not be better than for countries in the bloc, but that it was possible to “design new agreements to allow (Britain) to enter the internal market and to allow trade to continue”.

“For the first time since Brexit we have had two clear signals of a potential way in which progress might be made between the EU and the UK over reaching a deal on Brexit,” said MUFG’s European head of global markets research, Derek Halpenny, referring to Davis’s and Dijsselbloem’s comments.

“The comments to us suggest a further easing in fears over a ‘hard’ disruptive Brexit that should allow the recent out-performance for the pound to continue,” Halpenny said.

Dollar dips before U.S. jobs data; eyes on Italy’s vote – Reuters

By Patrick Graham | LONDON

The dollar was on course for its first weekly fall in four weeks against the euro and a basket of currencies on Friday, with investors trimming bets against the single currency before U.S. jobs numbers and Italy’s constitutional referendum.

Bets on the euro have largely been taken on options markets this week, driving implied volatility of the currency to its highest since Britain’s vote to leave the European Union in June. EURSWO=

But spot rates for the single currency have held up as the U.S. currency drifted lower, a move that most analysts cast as a short-term correction on the dollar’s surge since Donald Trump’s election on Nov. 8. Most banks forecast a broadly stronger dollar next year.


“We’re in a period of consolidation. We saw this in October, we spent the whole month rising and then we had a week of sideways trading,” said Neil Mellor, a strategist at BNY Mellon in London.

“I don’t think we need to overcomplicate things today. You have the Friday factor, there is always a degree of reserve before payrolls. It does also feel as if liquidity is already falling ahead of the end of the year. Some people may be sitting back and waiting for January.”

In early trade in Europe, the dollar index dipped 0.2 percent to 100.86 .DXY, down 0.6 percent for the week. It was roughly steady against the euro while pulling back from Thursday’s 9 1/2-month highs of 114.83 yen. JPY=

The logic behind the dollar’s gains has been broadly about another rise in U.S. Federal Reserve interest rates later this month raising the premium for holding dollars.

That now looks fully priced-in, however, and some have argued the dollar may struggle for momentum until there is more clarity on Trump’s economic policy proposals and their ability to raise inflation rates and in turn drive rates higher.

“The sense I get is that people who have sold (the dollar) on rallies have taken a hit, while bulls are still doing fine,” said a trader with one Japanese bank, adding that market participants are probably looking to buy the dollar on dips.

Economists polled by Reuters expect that U.S. employers added 175,000 jobs in November, although a poorer batch of weekly jobs figures on Thursday hinted at a weaker number.

The focus for the euro is now on an Italian referendum on Sunday that could reject constitutional reforms, on which Prime Minister Matteo Renzi has staked his political future.

His departure could destabilize Italy’s fragile banking system and be taken as another sign of rising anti-establishment sentiment around the world, potentially eroding investor confidence in the currency union.

“High-frequency accounts and leveraged specs (speculative traders) have been reported on the bid, though there are plenty of offers ready to cap overdone rallies,” analysts from currencies exchange LMAX said in a morning note.

“There is sure to be plenty of volatility in Asia on Monday as the result of the Italian referendum comes in.”

(Additional reporting by Shinichi Saoshiro in Tokyo, editing by Larry King)