Tomato paste manufacturers tackle CBN over FX policy – Vanguard

By Nkiruka Nnorom

THE Union of Tomato Paste Manufacturers in Nigeria has raised alarm over the danger of the foreign exchange policy on the industry.

They said that the once vibrant industry might cease to exist next year if the Central Bank of Nigeria (CBN) did not amend its policy on forex to exclude triple concentrate tomato paste from the scope of the 41 items under the restricted list.

The union raised the alarm through its spokesperson, Mr. Nnamdi Nnodebe. Nnodebe, who is also the Managing Director, Sonia Foods Industries Limited, said: “While trying to heal the economy, the pillars that hold the economy together are being removed. Pillars such as the tomato industry are invaluable to growing a vibrant economy. The total investment in the packing manufacturing sector of tomato paste is about N19 billion. The economy cannot afford to lose such a huge industry that provides millions of direct and indirect jobs for Nigerians.

The fact is this industry that grew to be the 13th largest in the world and second largest in Africa might die before the second quarter of next year if the ban on forex is not lifted.” “The unavailability of tomato paste triple concentrate for the industry will grind production to a halt; meaning millions of people who depend on the industry for their livelihood will lose their jobs or have reduced incomes. The impact of this on the economy will be massive and negative as consumer behaviour will also be influenced leading to low purchase of goods in all sectors, not just tomato.

These workers also patronise electronics shops, banks, petrol stations, they pay taxes etc. but they will no longer be able to fulfill all these.” The value of imported tomato paste in Nigeria used to be about 170 million USD (before the CBN ban on 41 items). The imported triple concentrate tomato paste used as raw material by the packers used to be around $50 million out of the $170 million (2014).

The imported concentrated raw material is then further processed in order to make it available for the consumers into products such as consumer packs of tomato paste, ketchup, sauces etc. “It makes better economics to import the raw materials that will enable production, grow the economy and keep jobs rather than importing the finished products or frustrating efforts to get the raw materials, thereby rendering millions jobless which might further kill the economy. The local packing industry can also form the hub for exports to the hinterland countries as there are adequate local capacities to more than cater to the domestic requirement,” Nnodebe said.

Hope rises for recovery from economic recession in 2017 – Guardian

By Kingsley Jeremiah

But companies operating in the country are worried that struggling economy, corruption, volatility and political risks as well as violence may jeopardise business development.

BMI’s latest report revealed that negative investor sentiment and delays on government-supported infrastructure would keep real Gross Domestic Product (GDP) growth far from pre-2014 levels.

However, experts at the 6th Annual Allianz Risk Barometer in Lagos, on Wednesday, noted that growing concerns, including digital dilemmas arising from new technologies and cyber risks as well as government policies may not enable businesses to thrive.

While macroeconomic situation is expected to improve should the country exit the economic slump, projected risks could create loss in GDP, as organisations need to invest more resources into better monitoring politics and policymaking.

“We see little prospect of the NGN6.7trillion budget shown to parliament by President Muhammadu Buhari in October, being realised in 2017, despite the deficit likely to remain quite wide, at 2.7 per cent of GDP,” BMI said.
It however noted that Nigeria’s current account deficit will be equivalent to 4.2 per cent of GDP in 2017, marking an improvement on the 6.2 per cent projected in 2016.

“This will be driven by a pick-up in the oil sector, both in terms of global prices and production. Nevertheless, this is still far from the surpluses recorded over the decade to 2013, which averaged 9.3 per cent of GDP.

“We expect that pressure on the naira will be much reduced in 2017 following a projected devaluation to N350 per dollar, but the weak inward flows of foreign capital will continue to exert downward pressure on the currency, albeit to a far lesser degree than seen in 201,” the report said.

The President, Risk Managers Society of Nigeria (RIMSON), Jacob Adeosun, who described the Barometer as a worthy compass, telescope and guide, urged managers, investors, professionals, governments, policymakers and corporate entities not to ignore it in their strategic decisions in 2017.

Speaking, the Chief Executive Officer, Allianz Global Corporate & Specialty (AGCS), Africa, Delphine Maïdou, noted that: “Nigeria faces macroeconomic challenges including low commodity prices, the Chinese slowdown and the tightening of U.S. monetary policy. It also suffers its own internal pressures such as inflation, weak domestic demand and socio-political tensions. The country’s growth is held back by weaker macroeconomic environment, the struggling financial sector, underdeveloped infrastructure, insufficient health and education.”

Emefiele: CBN’s Policies in Best Interest of Nigerians At This Time – Thisday

The Governor of Central Bank of Nigeria, Mr Godwin Emefiele, yesterday offered insights into the prevailing economic crisis in the country, explaining that it was caused by the nation’s failure to diversify the base of its economy.

The CBN chief, who spoke in Abuja at the Annual Media Trust Dialogue, with the theme, “Beyond Recession: Towards a Resilient Economy,” also defended the monetary policies of the apex bank, saying they were made in the best interest of majority of Nigerians.
Panelists at the dialogue had come down heavily on the central bank’s monetary policies, arguing that they weighed heavily in favour of the few rich in the country.
They were particularly critical of its forex policy which allocates 60 percent of the nation’s forex to the manufacturing sector that they said accounts for only 10 per cent of the Gross Domestic Product (GDP).

At the parley were other prominent Nigerians, including the Speaker of House of Representatives, Hon. Yakubu Dogara; Minister of Finance, Mrs. Kemi Adeosun; a former minister of Petroleum Resources, Chief Philip Asiodu; and the Chairman, Standard/IBTC, Mr. Atedo Peterside, who all proffered solutions to the nation’s biting economic hardship.

But Emefiele said the panelists’ perception of the CBN policies was wrong, submitting that the “policies were put in place to help Nigeria pull through the hard time.”
He said the forex policy was meant to stimulate the economy at a time of acute scarcity.

He explained that the country found itself in the present situation due to lack of appropriate commitment to economic diversification, especially when the earnings from oil were as high as $140 per barrel, just as he noted that earnings of the government had risen to as high as $3.2 billion and fell to about $500m per month recently.
According to the governor, there was also a time when the crude oil price stabilised at $105 per barrel over a period of five years.

“What did we do with the huge accretion to the reserves then?” he queried yesterday.
Emefiele therefore, counselled critics of the CBN and government policies that “priority will be given to Nigerian masses by managing the limited resources to provide for industrial raw materials, plants and equipment and agricultural inputs in order to create employment and generate wealth.”

One of the panelists, Mr. Atedo Peterside, had raised concern that the foreign exchange policy of the CBN was hurting business interests to which the CBN Governor responded that policy makers don’t make policies in isolation or are designed to hurt the citizenry but with the objectives to improve the life of all concerned and not just for a few powerful and rich individuals.

Many of the speakers at the dialogue, however, suggested radical and bi-partisan measures to build a vibrant economy.

They recommended that for the nation to overcome the recession and begin a trajectory of sound economic growth, it must, among others, go back to the era of rolling plans, embark on massive infrastructure development, and align fiscal and monetary policies efficiently.

In his opening remarks, Asiodu who was the chairman of the occasion, embarked on a historical journey, tracing the nation’s present economic stagnation to the abandonment of development planning.

He recalled that in the early ’70s, the Yakubu Gowon administration had a comprehensive development plan, which was jettisoned when former President Olusegun Obasanjo emerged as military head of state in 1976.

He recalled that successive administrations also abandoned development plans until the late Gen. Sani Abacha enunciated a broad economic plan, encapsulated under Vision 2010.

According to him, by 1998, all the institutions to galvanise efforts towards implementing the 2010 blueprint were already put in place by the Abacha administration.

That blueprint, he regretted, was also jettisoned by the civilian administration under former President Obasanjo in 1999.

Asiodu noted that the President Goodluck Jonathan government was to come up with Vision 2020 and the Transformation Agenda, which were not implemented to the letter.

He lamented that the lack of political will and commitment to pursue and implement development plans by past administrations set the stage for the deterioration of infrastructure, and brought the nation to the current economic quagmire.

Asiodu observed that in the first republic, Nigeria was at par with the Asian Tigers growth-wise because there were workable development plans.
He said it was wrong to look at the economic recession from the standpoint of oil and the precipitous fall in the price of the commodity.

Asiodu, who was also a former Chief Economic Adviser to former President Obasanjo, said the fall in the price of oil was not the cause of the nation’s problem, arguing that many African countries without oil were doing well.
He called for a national income policy, and underscored the desirability of such a policy with a flash back to when he was in government.

In her presentation, the Finance Minister, Mrs. Kemi Adeosun, noted that lack of infrastructure had held the country down for too long, regretting that an abysmally low investment on infrastructure had been a trend over the years.

Adeosun lamented that the previous administrations missed the opportunity of investing massively on infrastructure, which she described as the bedrock of economic growth and development, when oil prices were very high.

She also debunked views that Nigeria is an oil economy, describing the notion as erroneous.
According to her, with a daily oil production of 2.2 million barrels of oil per day (mbpd) for a population of about 180 million people, compared to Saudi Arabia’s 10 mbpd for a 30 million population, Nigeria cannot be described as an oil economy.

The minister stated that poor investment on infrastructure, corruption and inability to foresee the future when oil prices were high led to the current economic recession.

She noted that the present administration was desirous of navigating the country out of past mistakes and launch it into a sustainable economic growth, anchored on massive infrastructure.
Investment in infrastructure, she noted, was the key to the nation’s industrialisation.

In his presentation, the Chairman of Stanbic IBTC Bank, Mr. Atedo Peterside observed that while the present administration was doing some things right, it was equally taking many wrong steps, noting that there was a reluctance on the part of the government to break away from the past.

According to him, the Buhari administration has just this year to make an impact on the economic landscape and the general well-being of the nation as politicking would dominate the scene from 2018.

He listed some of the challenges of the administration as the inability to take bold, holistic and audacious approach to harmonise fiscal and monetary policies to attain sound economic outcomes.

Peterside said the government’s monetary and economic policies were at best unclear, citing the existence of multiple forex regimes and half-hearted policy on deregulation, among others.

On what he listed as 11 items he considered as the grey areas that government did not do well, he said not resolving the Niger Delta agitation expeditiously was a major undoing, which had dire economic consequences for the country.

That, he said, led to a $6 billion monthly revenue loss, even as he picked hole in the lack of will for the full deregulation of the downstream sector.
He also pooh-poohed the CBN forex policy, particularly its directive to the banks to allocate 60 per cent of their FX resources to the manufacturing sector.

Peterside said it was wrong to allocate 60 per cent FX to a sector that accounts for about 10 per cent of GDP and leave a mere 40 per cent to all the other sectors, adding that it engendered a huge distortionary trend, created panic in the system and led to the disappearance of forex inflows.

He also stated that shying away from the political restructuring of the nation was a serious mistake on the part of the government adding that irrespective of how unpalatable the concept might sound to some people, it was a necessity.

While calling for an open mind on the issue, Peterside, who punctuated every point with “because I love my country,” noted that less than 25 per cent of the nation’s 36 states were economically viable.

In his keynote address, the Speaker of the House of Representatives, Hon. Yakubu Dogara, said he was optimistic the economy would come out of the recession soon, adding that the National Assembly was collaborating with the executive to turn the economy around.

He regretted that lack of development plans was the nation’s bane, adding that wasting resources to plan and not implementing such plans was wrong.

Dogara noted that while the federal government was tackling terrorism, it was disturbing that other security challenges, including armed robbery, kidnapping and other vices were on the prowl.
He regretted that attracting Foreign Direct Investment (FDI) would be difficult in such an atmosphere.