Nigeria likely to pass 2017 budget before May – lawmaker – Reuters

By Camillus Eboh

ABUJA, March 27 (Reuters) – Nigeria is likely to pass the 2017 budget into law before May, a lawmaker who chairs a committee on the spending plans in the upper chamber of parliament said on Monday.

The budget lays out plans to pull Africa’s largest economy out of its first recession for 25 years, largely prompted by low global prices for the oil it produces and the impact of attacks on energy facilities in its Niger Delta oil hub in 2016.

President Muhammadu Buhari, who has faced rising disenchantment over his handling of Nigeria’s economy, presented his record 7.298 trillion naira ($23.2 billion) budget to lawmakers in December. It must be agreed by lawmakers before the president can sign it into law.

Senator Danjuma Goje, who chairs the budget appropriation committee in the Senate, said last year’s budget – signed into law in May last year after months of wrangling between the presidency and lawmakers – covered a period of 12 months and was technically valid until midnight on May 5.

It was unlikely to have to be extended beyond May of this year, he said.

“I believe before that date, the 2017 budget will be passed,” said Goje.

Nigerian lawmakers had previously said they wanted to pass the budget before the end of March. (Reporting by Camillus Eboh; Writing by Alexis Akwagyiram; Editing by Catherine Evans and Mark Trevelyan)

http://af.reuters.com/article/nigeriaNews/idAFL5N1H45WQ

Dollar, stocks fall on Trump woes – Reuters

dollar to naira

U.S. stocks and the dollar fell on Monday while Asian markets struggled as President Donald Trump’s failure on healthcare reform raised questions about his ability to push through tax cuts and fiscal spending to boost the economy.

Reuters reported that Trump’s inability to get enough support from his own Republican party to “repeal and replace” the Obamacare health insurance reforms, a major campaign promise, also spurred a rush to safety assets such as gold and the Japanese yen.

U.S. stock index futures fell 0.7 percent to a six-week low in heavy volume, suggesting a weaker start on Wall Street later in the day.

So-called “Trumpflation trades” — betting on an extended recovery in the U.S. and global economies and related assets such as commodities — came under heavy selling pressure.

“Markets have had a good run recently and this is a good opportunity for profit taking across counters,” said Alex Wong, a fund manager at Ample Capital Ltd. in Hong Kong, with about $130 million under management.

But Wong said the selloff is likely to be limited as cashed-up investors waited on the sidelines.

MSCI’s broadest index of Asia-Pacific shares outside Japan was broadly flat after posting its first weekly decline last week in three weeks.

Japan’s Nikkei fell 1.5 percent as the yen rebounded in the face of renewed U.S. dollar weakness.

Rising U.S. policy uncertainty also raised concerns that a recent pick-up in global business and consumer sentiment, particularly in Asia, would start to fade.

In terms of relative valuations, U.S. stocks are trading well above their historical averages while Asia stocks are still broadly in line despite a recent bounce.

“Any big pull back in markets would be an opportunity for long term investment in a region where potential is still intact,” said Nicholas Yeo, head of China/Hong Kong equities at Aberdeen Asset Management in Hong Kong, part of a team that manages $374 billion in assets as of end-December 2016.

The dollar fell to a near two-month low against a basket of currencies.

The dollar index was down 0.3 percent at 99.287  its lowest since Feb. 2.

It had risen to a 14-year high near 104.00 early in January when expectations for significant stimulus under the Trump presidency were at their peak.

“There isn’t much going for the dollar right now and the market will be bracing for its further decline.” said Shin Kadota, senior strategist at Barclays in Tokyo.

Fresh off the defeat on U.S. healthcare legislation on Friday, the White House warned rebellious conservative lawmakers on Sunday that they should get behind Trump’s agenda or he may bypass them on future legislative fights, including tax reform.

The Republican head of the tax-writing committee in the House of Representatives said he hoped to move a tax bill through his panel this spring.

The euro was 0.45 percent higher at $1.0847 EUR= following a rise to $1.0849, its strongest early December.

U.S. Treasury yields were trading near one-month lows with ten-year bonds trading near 2.36 percent, its lowest levels since Feb. 28.

Shanghai Futures Exchange copper slid by 0.7 percent to 46,680 yuan ($6,785) a tonne while Australia’s benchmark metals and mining index declined as much as 1.7 pct, its lowest since March 14.

Oil prices were broadly flat as investor concerns lingered that OPEC-led supply cuts were not yet reducing record U.S. crude inventories.

U.S. crude was trading slightly higher at $48.15 per barrel.

Safe-haven gold perked up, rising to $1,253 an ounce.

Pressure grows on Nigeria’s central bank governor – Reuters

By Ulf Laessing, Karin Strohecker and Sujata Rao

LAGOS/LONDON, March 27 (Reuters) – Earlier this year, an open letter in the Nigerian media from a group of businessmen attacked the “shameful” record of central bank governor Godwin Emefiele and demanded that he should go.

With Africa’s largest economy in recession for the first time in 25 years, the letter reflects growing anger directed at Emefiele, whose insistence on keeping the naira artificially high is believed to have worsened Nigeria’s oil-price induced slump.

Three years into his tenure, the flak is flying around the 55-year-old career banker once admiringly described by colleagues as a discreet man who gives little away.

The advertisement, which appeared in several newspapers and online news portals, is the most prominent expression so far of widespread discontent with the government’s naira policy among senior figures from the worlds of business and investment.

“Whatever hard-won reforms we had, (the benefit) has been undone in the past two years by (Emefiele),” one of the signatories, accountant Feyi Fawehinmi, told Reuters. Another ad is being planned, he said.

Emefiele imposed currency restrictions in 2015, defying bankers’ advice to float the naira and raise interest rates as some other oil exporters had done. Investors fled as the once promising emerging market was ejected from key bond indexes.

Economists and investors say they have given up seeking any clues from Emefiele, who once read out a 32-page statement on interest rates without referring to the issue uppermost on his audience’s mind – the frozen naira.

They are scathing about Emefiele, citing policies that have choked off the flow of dollars to official channels, fuelled a naira black market and ravaged domestic industry.

“Emefiele is responsible for the currency mismanagement. If someone achieves to beat down a currency like that, then a foreign investor like me can’t support that,” Lutz Roehmeyer, director at Landesbank Berlin Investment, told Reuters.

“Absolutely no one trusts or believes that this central bank is still able to fix this,” he said, describing the forex policy sarcastically as a “masterstroke” that destroyed the economy.

STRONG CURRENCY

That policy accords with President Muhammadu Buhari’s desire for a strong currency.

A 74-year-old former military ruler, Buhari has reminisced publicly about the 1980s when the naira traded at 1.3 per dollar, apparently viewing currency strength as a matter of national pride.

But Kingsley Moghalu, a former central bank deputy governor, says that does not absolve Emefiele of blame.

“Of course, there are many concerns that the bank is not being run in an independent manner in terms of policy … But we all know that one of the burdens central bankers always have to carry is to do the right thing even if it is not popular,” said Moghalu, who teaches now at Tufts University.

“So I don’t care what excuse you give, what explanation you give – the result is what we are looking at.”

Emefiele recently eased his grip on naira rates by offering dollars to different users and there are now at least five exchange rates. Moghalu called the multiple rates “a perfect recipe for corruption”.

The central bank says a “managed float” is needed to offset low oil prices. It did not respond to requests for comment for this article and Emefiele declined interview requests.

Ordinary Nigerians are suffering widespread shortages of consumer goods, while factory closures, due to lack of raw materials and machinery, have caused job losses.

Nigeria’s economy is heavily import dependent. By not making dollars available on a transparent basis, the central bank drives importers to the black market. As a result, inflation has rocketed but there are also shortages of imported goods.

The only winners from this policy are the few who obtain dollars they can sell on the black market, while everyone else is a loser. Prices for rice, Nigeria’s staple food, have doubled in the two years since the policy came in.

“What are the measures take by the central bank to rescue our currency (sic). Please, Nigerians are crying,” read a comment posted on the central bank’s Facebook page on Feb. 13 as the naira black market rate fell below 500 per dollar.

To console such citizens, Emefiele has suggested his import curbs are rejuvenating domestic industry. In a March 11 speech, he rejected devaluation.

It was “an opportunity to change the economy’s structure, resuscitate local manufacturing and expand job creation,” the speech, posted on the central bank website, said.

But while Emefiele has cited domestic tomato processing as a beneficiary of the import curbs, one new plant has shut, unable to import machinery or tomatoes.

At a meeting of Nigeria’s top economic advisory body to discuss the currency – Emefiele said everything was “under control” and called for “patience”, according to a deputy state governor who attended the session.

He has also told reporters the naira will move in a 304-305 range, describing it as “a sort of floating market”.

SURVIVAL

Emefiele, who ran one of Nigeria’s biggest banks, Zenith, between 2010 and 2014, was appointed by then President Goodluck Jonathan. He replaced Lamido Sanusi who irked authorities by exposing a $20 billion scam at state oil firm NNPC.

After Buhari won the 2015 election, many expected Emefiele to join the list of Jonathan appointees who were fired. But the view now is that Emefiele suits Buhari, playing to the president’s desire for a strong currency.

One Nigeria-based banker said Emefiele remains in his job because he carries out Buhari’s wishes. A former government economic policymaker said the central bank chief’s relations with his deputy governors were poor but he felt he could ignore them because he had Buhari’s backing.

Neither Emefiele nor the central bank press office replied to request for comment on these allegations.

But he has some defenders, and while Buhari is in office, political analysts believe Emefiele will also remain in post. Buhari, however, has been scaling down his schedule since he returned from extended sick leave and is expected to have more medical treatment in London next month.

By crushing imports, Emefiele has balanced Nigeria’s current account and boosted hard currency reserves. Inflation may be starting to slow.

This month, Vanguard, one of Nigeria’s biggest dailies, named Emefiele “Personality of the Year”. The paper praised his “long-term strategy for strengthening the Nigerian economy” and efforts to build non-oil industry.

WHERE IS EMEFIELE ?

Emefiele has reduced public engagements and has not given interviews to foreign media in over a year. He did not attend a Nigerian investment roadshow this year, sending a deputy instead.

Perhaps that was down to his experience at last summer’s roadshow in London.

One investor at that meeting recalled Emefiele telling fund managers and analysts the naira was solid and there was no issue with the foreign exchange market. For that he was angrily berated by some investors present.

Most investors will want to see more than a floating naira before they return to Nigeria, said John Bates, a strategist at PineBridge Investments. A key question may be whether Emefiele completes his tenure, which runs until 2019.

“They need to find credible speakers. There is an element of mistrust in the market, and I am referring to the central bank and the presidency,” Bates said. (Editing by Giles Elgood)