News

Naira Redesign, Withdrawal Limits: Give CBN Benefit of Doubt

Published

2 years ago

December 13, 2022

Thebig Eye

By Reno Omokri

I have been watching the reactions to the new Automated Teller Machine policy of the Central Bank of Nigeria, which limits ATM withdrawals for individuals to N100,000 per week and N20,000 per day, and quite frankly, it is a bit disappointing as to how people have allowed their own narrow personal interests colour their responses.

My understanding of the tenets of welfare economics is that this policy (like any good one) will have more gainers than losers, which is the objective of every public policy aimed at optimising societal gains. But the few losers are usually the wealthy, affluent and corrupt members of the society, who will make very loud noise to ensure that their unscrupulous gains are restored.

As a nation, we must understand that there are few, preciously few institutions that are non-partisan, non-ethnic, non-religious that project the greatness of Nigeria. The army is one (or should be one). The Central Bank of Nigeria is another. Whether you are PDP, APC, Northerner, Southerner, Christian or Muslim, it is in your personal interest that they survive and thrive!

That is the main reason why the Central Bank of Nigeria, like other reserve banks, is statutorily independent. Because a symbol of a nation’s independence and prominence, such as money, is too important to be left to the whims and caprices of things that are subject to sentiments.

This policy, and others like it, did not come out of nowhere. They did not arise out of a vacuum. Something or somethings happened, and they were responses to what some may even describe as existential financial threats to the nation.

The Naira was taking a big hit. It had to be controlled. Not influenced. Controlled. It took guts to do it. Because whatever you do, those benefitting from the status quo ante bellum will fight you. This new ATM limit is good. It will make cash scarce. And scarcity increases value!

Too many unnecessary things were affecting the Naira’s value. Spraying Naira notes at owambe. Politicians carrying around huge caches of cash for rallies. Kidnappers and bandits flush with cash ransoms. Salary payments in cash. Something just had to give.

With nearly N3 trillion of raw cash flying around outside the banking system, there is surely too much supply of physical cash. How can over 85 percent of currency issued be held physically? It shows too much abundance.

Someone at the Central Bank of Nigeria is a deep thinker. That person, or persons, understands the law of scarcity. The more an item is scarce, the more it rises in value, and the greater the desire to acquire it. This new ATM limit will increase Naira’s value, and make Nigerians work harder to acquire Naira, thereby increasing our GDP.

The policy will ensure that the motive for wanting to hold physical cash is limited to unavoidable necessities.

When you limit a people’s freedom of choice to access anything with innate value, the limited item becomes more sought after. And that is one of the economics of illusion that the United States Federal Reserve Bank uses to shore up the value of the dollar. And now, to my great relief, the Central Bank of Nigeria is proving that it too can play that game.

There are ATM limits abroad. Even beyond that, there are other limits to what you can do with cash. For example, in both the United States and the United Kingdom, you can’t pay cash into an account that does not belong to you. Heavens did not fall when they introduced that policy. Quite the opposite. Their currency rose in value.

Western nations do not exist for the benefit of developing nations. They keep telling you to allow market forces determine the value of your own currency. Do market forces alone determine the value of theirs? Last month, the Pound was collapsing. Did the Bank of England leave it to market forces alone?

Of course not. They panicked and intervened. The chief economist of the Bank of England, Huw Pill, said that the Monetary Policy Committee “cannot be indifferent” to the collapse of the Pound and warned the public of a “significant” monetary policy response to come before the end of the year to shore up the pound.

That response came in the form of increased interest rates (it went up by 0.75% on Thursday, November 3, 2022), and on Thursday, December 8, 2022, it was announced that they are about to increase interest rates again, by another 0.50% by some projections.

When the Bank of England noticed a run on the Pound, they responded rapidly by jacking up interest rates to increase the yield available to foreign direct investors on their British financial assets, which they hoped would lead to a rise in the value of the Pound. And it did.

We have seen a 13% rise in the value of the Pound between September 27, 2022 (when it exchanged for US$1.06 to £1) and December 9, 2022 (exchanging for US$1.23 to £1).

And the British government and people supported the Bank of England, because before their very own eyes, £500 billion was wiped out of their economy. With such colossal losses, you forget the free market and modern money theories, and do whatever is practically necessary for the survival of your currency and economy.

And that is what the Central Bank of Nigerians is now doing. Thankfully, the usually dull and economically clumsy President Buhari has seen it fit to not interfere. That shows that he definitely understands that the Nigerian economy must be strengthened in all ways possible, regardless of unscrupulous noises both from within and outside Nigeria.

The National Assembly is making grunting noises to placate the public. But this may merely be a misplaced bid to placate their constituents and secure another term in office.

But one of the main resistances to this patriotic act of the Central Bank of Nigeria in limiting ATM withdrawal is coming from the public, who do not yet understand that the policy is in their best interest. Specifically, bandits, kidnappers and urgent 2k girls may also scream as their cheap and iniquitous sources of income are terminated. They are pressuring their men, and we feel the pressure on social media and the traditional media!

The Naira is too readily available. It needs to be less available as cash and more available as credit in banks, which is the lifeblood of an economy. Money will not be scarce in banks as digital and electronic cash remains very accessible and available, even in the most remote parts of the country. It is only the physical holding of cash that is restricted. And anybody that says they cannot do business except via cash is deliberately ignorant. They can. They just choose not to for reasons best known to them!

There is hardly any transaction that you need (not want) to do via cash that you cannot do with the new ATM limits. You can pay a bus conductor to get from point A to B, and you can buy groceries from the market. In fact, less cash will drive the cost of food and transport down!

To some thinking people, the N100,000 weekly limit is even too much. How many honest, ordinary, and poor Nigerians require that amount consistently every week for a year? Many market women and men, artisans and MSMEs whose weekly transactions exceed the N100,000 limit already operate bank accounts. All of us have paid our mechanics, welders, carpenters, tailors, etc. via bank transfers. Even in the remotest villages, we have sent money to parents and relatives through their banks.

We must understand that what was happening with the Naira was a very desperate situation, and desperate illnesses sometimes require desperate remedies.

The ASUU strike was beyond the control of the Central Bank of Nigeria, however, the consequences of that strike shook the very foundations of that bank. Almost overnight, Nigerians seeking foreign higher education increased by almost a 1000%.

And then the supply chain crisis caused by the Russia/Ukraine war set in at a time Africa was already trying to grapple with the Ethiopia-Tigray crisis. Oil prices became unpredictable. The profligate Buhari administration was borrowing left, right and centre. And politicians were stockpiling cash for 2023.

Of all the responses that they could have taken, the Emefiele-led Central Bank of Nigeria took what in my opinion is the best decision. They frustrated speculators, politicians, and criminal non-state actors, like bandits and kidnappers, with the Naira redesign.

Of course, politicians who are used to using bullion vans to influence elections will not take kindly to the new CBN ATM limits. Bullion vans were their main election strategy. Now, Emefiele has frustrated such plans. It is only commonsensical to expect them to fight back. We all saw the photo behind the son of a notorious politician which said “Money Inducements”. Those are the enemies of ATM limits.

It goes without saying that where there are ATM limits, “money inducement” will be almost impossible. That is why they are fighting the CBN’s new ATM limits. It has nothing to do with the poor. The poor do not need to have over ₦100,000 cash weekly. Election riggers do!

And now this new ATM limits will ensure that we do not return to the same situation that necessitated the redesign of the Naira. We too as citizens must show some patriotic discipline. Our financial actions have consequences on the Naira. It is not left to the Central Bank of Nigeria alone.

Do not play with money. Devaluation and untamed inflation are dangerous. If you study history, almost all revolutions and epoch-defining social upheavals have always been ignited by devaluation and untamed inflation.

The French Revolution was sparked by the price of bread. The Bolshevik Revolution was set off by the economic policies of Tsar Nicholas II, which led to spiralling inflation, leading to mass starvation. The rise of the National Socialist German Workers’ Party, which inevitably led to the Second World War, was due to the hyperinflation of the German Papiermark.

And whether or not we want to acknowledge it, the stated reason for the EndSARS protest may have been police brutality, but the real reason was food inflation. If you doubt me, ask yourself what police brutality had to do with the storming of palliative warehouses, which was a hallmark of the EndSARS protest.

Today, food inflation in Nigeria is over 23%, do we wait until we match the 99% food inflation in Turkey before we act judiciously?

You and I can afford to be shortsighted. However, those in control of our monetary policies cannot. The Central Bank of Nigeria has continued to impress me recently with their penchant for lateral innovative thinking and unconventional solutions to Nigeria’s unique challenges.

I have met Alan Greenspan, probably one of the best central bankers in history. I sat for lunch at a restaurant with him. And believe me when I say that the actions of a country’s central bank often matter more than the actions of its President.

I urge Nigerians to have faith in the Emefiele-led Central Bank for now. He and his team have continued to act in good faith for the betterment of Nigerians. Believe that they have the best interest of you and your families at heart. Allow them the freedom to find homegrown solutions to our unique economic challenges.

Nigeria is at a critical stage. We must allow those institutions that must work independently go on with their independence if we want to retain and maintain our own national independence from those institutions that have kept Francophone Africa independent only in name.

While the jury is still out, we can nevertheless tell what type of day it is going to be by the morning we see. Things are looking less heady than they were two months ago. There is a lot less Naira instability.

We await the November Consumer Price Index from the National Bureau of Statistics. Although this is the time of the year when festivities affect inflation, I am still optimistic that the Central Bank of Nigeria’s policies will show and year-on-year improvement.

And even if it does not, let us give them the benefit of the doubt until we see the Q1 figures for 2023.

On the issue of the so-called order by the House of Representatives to the Central Bank of Nigeria for it to suspend the new ATM limits, Governor Godwin Emefiele needs to demonstrate courage. First of all, these are politicians. One of the very classes of people targeted by this patriotic policy. They cannot be judges in their own case.

And the ‘order’ itself is not even worth the paper it is written on. Any high court of law should be able to set it aside. And it is unenforceable by the police or any other law enforcement body for the simple reason that the House of Representatives lacks the power to order the Central Bank of Nigeria or its Governor. Section 1 (3) of the Central Bank of Nigeria Act, 2007 provides that “The Bank shall be an INDEPENDENT body”. Thus, I will counsel the CBN Governor, Emefiele, to ignore them!

News

P’Harcout Refinery: CSO knocks NNPCL for berating host community leader

Published

1 hour ago

December 1, 2024

Thebig Eye

***calls on Tinubu to sack Kyari immediately, as refinery stops production

For coming out to disparage a leader from the host community of the Port Harcourt refinery, a group, known as Network of Oil Producing Communities in Nigeria (NOPCN), has come hard on the foremost regulatory agency, Nigeria National Petroleum Corporation Limited (NNPCL).

This was, even as, the group has called on President Bola Tinubu to relieve the Group Chief Executive Officer (GCEO) of NNPCL, Mallam Mele Kyari of his duties, for misleading the President and Nigerians about the operation of the Port Harcourt refinery.

In a statement on Sunday signed by the President, Engr. Igeniwari Edward, and Comrade Omototsho Ogbe, the group corroborated the comments of the Secretary of the Alesa Community Stakeholders, Timothy Mgbere, saying, the petroleum products loaded from the newly rehabilitated Port-Harcourt Refinery were not freshly refined but dead stocks left in the storage tank of the facility since 2016.

“Before shutting down in 2016, the Port Harcourt refinery had some large quantity of dead stock left in the tank, and were only evacuated from the storage to some trucks during the rehabilitation of Old Area 5.

“Some dead stocks like Premium Motor Spirit (petrol) DPK (kerosene), and Automated Gas Oil (diesel) were stored in the tanks in large quantity. What NNPC did was to evacuate them into waiting trucks, making the President and Nigerians to believe they were loading freshly refined products into those trucks.

“It is not only Chief Mgbere that knew about this fact, all of us from Alesa, infact, all the suburbs in Eleme can attest to this.

“It also doesn’t surprise us that the NNPCL shut down the refinery sooner than they claimed it was operating. That’s because they ran out of lies and couldn’t cajole the President any further.

“Kyari should be so sober right now and I believe he is already aware that the much celebrated 60,000 capacity segment of the refinery they claimed to have rehabilitated was shut down 2 days ago and no activity is happening there any longer.

“The President should not wait any further before he sacks Mele Kyari and all his accomplices in this national monumental trick they pulled on Nigerians on Tuesday. He should not only be sacked, Kyari should tell Nigerians what happened to over N17 trillion naira injected into the Port Harcourt, Warri and Kaduna refineries.

“Nigerians should also join our Network to say NO to conversion of any of the refineries to a blending plant. We all know the environmental degredations our people having been facing over oil exploration and bunkering activities. We don’t want any further hazard on our land. Kyari should just deliver exactly what the government paid for and stop fighting our leaders in the host communities”, the statement read.

Chief Mgbere, Secretary to Alesa Community Stakeholders Forum, had appeared on a national television show on Thursday, alleging that the Port Harcourt refinery only loaded six trucks on Tuesday, despite stating that 200 trucks would be picked up from the refinery daily, adding that the many trucks parked within the premises were tucked up with dead stock and off-spec of old products.

Alesa, one of the 10 major communities in Eleme, Rivers State, is the host community of the Port-Harcourt Refinery.

But in response to the allegations, the NNPCL denied claims by an Alesa community leader, in a statement signed Friday by its Spokesperson, Olufemi Soneye, saying the agency did not lie when it said the Port Harcourt refinery was producing crude oil.

The NNPCL accused Mgbere of crass ignorance of how a refinery runs, saying he would not have dignified him with a response if not for a need to set the records straight.

“We call on the general public to disregard the claims of the self-acclaimed ‘community person’ which are obviously borne out of sheer mischief and blatant display of ignorance,” NNPCL had said.

Meanwhile, exclusive report emerging from Sahara Reporters Saturday night corroborated the position of the Network of Oil Producing Communities in Nigeria, that the NNPCL has shut down operation “at the moment” with only its non-petroleum unit running which is the Crude Distillation Unit (CDU).

The CDU produces naphtha, kerosene and diesel but cannot produce the component which is needed for the Premium Motor Spirit (PMS) otherwise known as petrol, top sources at the refinery disclosed to SaharaReporters on Saturday.

“The Crude Distillation Unit (CDU) is still running but the operation of the depot is shut down at the moment. The CDU produces naphtha, diesel and Kerosene but cannot produce theP’Harcout Refinery: CSO knocks NNPCL for berating host community leader

***calls on Tinubu to sack Kyari immediately, as refinery stops production

“It is not only Chief Mgbere that knew about this fact, all of us from Alesa, infact, all the suburbs in Eleme can attest to this.

Alesa, one of the 10 major communities in Eleme, Rivers State, is the host community of the Port-Harcourt Refinery.

The NNPCL accused Mgbere of crass ignorance of how a refinery runs, saying he would not have dignified him with a response if not for a need to set the records straight.

“The Crude Distillation Unit (CDU) is still running but the operation of the depot is shut down at the moment. The CDU produces naphtha, diesel and Kerosene but cannot produce the component for the production of PMS.

“All these products cannot serve the masses as the production of these products are in small P’Harcout Refinery: CSO knocks NNPCL for berating host community leader

***calls on Tinubu to sack Kyari immediately, as refinery stops production

“It is not only Chief Mgbere that knew about this fact, all of us from Alesa, infact, all the suburbs in Eleme can attest to this.

Alesa, one of the 10 major communities in Eleme, Rivers State, is the host community of the Port-Harcourt Refinery.

The NNPCL accused Mgbere of crass ignorance of how a refinery runs, saying he would not have dignified him with a response if not for a need to set the records straight.

“All these products cannot serve the masses as the production of these products are in small quantities even if the plant runs at 100% throughput. The processing plant of 150,000bpd capacity will commence operations in 2026; that is if money is made readily available to meet the timelines because at the moment the project has exceeded $2billion”, a top official of the agency told Sahara Reporters even if the plant runs at 100% throughput. The processing plant of 150,000bpd capacity will commence operations in 2026; that is if money is made readily available to meet the timelines because at the moment the project has exceeded $2billion”, a top official of the agency told Sahara Reporters component for the production of PMS.

News

What Tax Reform Bills Are All About- Senate

Published

2 days ago

November 29, 2024

Thebig Eye

………Set for Public hearing with stakeholders

The Senate Thursday led Nigerians into the general objectives of the Tax Reform Bills

The Bills are a set of four proposed piece of legislation aimed at increasing value-added tax (VAT) distributable to the subnational governments to 55% while reducing the federal government’s share to 10%.

The new legislative regimes also proposed zero VAT on exports and essential consumptions by the masses and grant of input VAT credit on assets and services in addition to goods consumed by businesses to lower the cost of production

The breakdown of the general objectives of the Bill were let out in the lead debate by Senate Leader , Opeyemi Bamidele

Recall that the Tinubu administration had proposed the Tax Reform Bills comprising the Joint Revenue Board of Nigeria (Establishment) Bill, 2024; Nigeria Revenue Service (Establishment) Bill, 2024; Nigeria Revenue Service (Establishment) Bill, 2024 and Nigeria Tax Bill, 2024.

The bills elicited mixed reactions from across board

Key stakeholders such ad the Chairman, Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele and Chairman, Federal Inland Revenue Service, Dr. Zacch Adedeji were invited to give perspectives about the Bills.

Leading debate at the plenary, Bamidele reeled out far-reaching proposals contained in the Tax Reform Bills, which according to him, aims at simplifying the tax landscape, reducing the burden on small business and streamlining how taxes are collected.

In the area of tax exemptions, Bamidele pointed out that those, whose salaries are not more than the minimum wage from Pay As You Earn (PAYE) deductions, would be exempted from the tax regime.

He also said small businesses with annual turnover of N50 million or less “are equally exempted from payment of taxes,” a key pro-business initiative that encourages job creation; deepens ease of doing business and incentivises more investments.

Similarly, the senate leader explained that there was a proposed huge reduction in company income tax from the current 30% to 25% that would last for at least two years.

He said: “As part of deliberate attempt to curtail the incidence of double taxation and multiplicity of taxes and levies, multiple taxes hitherto paid by companies under various tax heads namely 2.5% education tax, 0.25% NASENI tax have been harmonized into a development level of 2% which by 2030 will be applied to fund the newly established student loan scheme which will benefit many Nigerian youths.

“Unlike what is obtainable under the existing tax regime whereby the Federal Government takes a lion share of VAT revenues, it is proposed that the sharing formula should allow the State Government share 55% of VAT revenue from the current 15% to 10% sharing formula.

“However, Local Governments share of VAT revenue remains unaffected. Relatedly, basic items consumed by Nigerian households such as food items, medical services and pharmaceuticals, educational fees, electricity etc. are exempted from VAT.

“Again, as part of efforts to ease the administration of income taxes and levies across the Federation, there is a reasonable effort made to consolidate core tax statutes and related tax legislations,” Bamidele explained.

Contrary to misrepresentations in the public domain regarding the intendment of the Bills under consideration, Bamidele explained that the bills contained innovative and people-oriented proposals as part of the government’s deliberate fiscal and tax reform measures to cushion the effect of ongoing broader economic policies such as the removal of subsidy on petroleum products, renewed efforts to implement cost -reflective electricity tariffs in the power sector etc on Nigerian citizens.

In his contribution, former Chief Whip of the Senate, Senator Ali Ndume (Borno South) claimed that his problem was about timing and the issue of derivation.

He added that the Constitution of the Federal Republic of Nigeria, 1999 (as amended) must be amended before the Tax Reform Bills should take effect, therefore calling for its immediate withdrawal.

Ndume observed: “I am not against the reform, my problem is timing and the issue of derivation make the reform contagious. The 1999 Constitution has to be amended before the bills can be effective.”

However, the Chief Whip of the Senate, Senator Mohammed Munguno (Borno North) expressed strong objection to Ndume’s submissions, asking the Senate to disregard it and pass the bills for second reading.

Munguno urged the Senate to pass the bill into second reading, advocating that all areas of concern would be addressed at the public hearing stage.

After the debate that featured Chairman, Senate Committee on Finance, Senator Sani Musa and Chairman, Senate Committee on Ecology, Senator Seriake Dickson, the Senate unanimously passed the bills into second reading following Munguno’s final position.

In his remarks, the President of the Senate, Senator Godswill Akpabio referred the bill to the Senate Committee on Finance, advising the Committee to invite all the stakeholders to the public hearing to address all areas of concern.

News

Port Harcourt Refinery, Another Grand Deception From NNPCL -Coalition

Published

4 days ago

November 27, 2024

Thebig Eye

***warns Kyari, others not to mislead Tinubu, Nigerians

As reactions continue to thrill the announcement by the Nigerian National Petroleum Corporation Limited (NNPCL), that the Port Harcourt refinery has been activated for operation; a group of Civil Society Organisations has called for great caution.

The groups, under the aegis of Coalition for Accountability and Transparency in Energy Sector (CATES), said what the NNPCL was glorifying was not a full fledged refinery which Nigerians paid for.

In a statement on Wednesday by the Spokesperson of the Coalition, Dr. Linus Ikwur, the groups alluded that, despite the public outcry from stakeholders, organisations and individuals, warning against turning the Port Harcourt refinery to a blending plant, the NNPCL made good its intention and damned whatever would come out of it.

The coalition described the much celebrated Port Harcourt refinery as “what I ordered, vs what I got”, saying, the NNPCL did not mean well for the country and the citizenry, by converting the heritage refinery in Port Harcourt to a mere blending plant, despite receiving huge funds to operationalize it.

“The NNPCL was given money to turn Port Harcourt into a full fledged refinery. But now they want to turn the place into a blending plant, despite the public outcry on the dangers of having a blending plant in the region that is already suffering environmental degredation.

“Nigerians paid for a refinery and not a blending plant. This is a clear case of what I ordered vs what I got.

“There’s a need for great accountability, transparency and probity in ensuring that the refineries operate at 100% capacity and not as a blending plant”, the statement said.

Speaking further, the Coalition expressed great disappointment with the announcement of NNPCL, confirming that the refinery was to serve as a blending plant, which it described as a global practise; warning that the agency should cease the deception forthwith.

Dr. Ikwur said, “to us, it did not come as a surprise, because we saw it coming and we have raised enough alarms, so that it could be averted, but the authority kept calm, until the NNPCL perfected its plan to convert our heritage refinery into a blending plant. But we were highly disappointed, that the NNPCL misled Nigerians, including President Bola Tinubu into believing that the Port Harcourt refinery had come back to live.

“It took the great effort of the the media, Sahara Reporters in particular, to confirm our claims that Nigerians were indeed celebrating a blending plant, and not a refinery. Nigerians are too wise for that grand deception and Mr. President should not fall for that kind of cheap attempt to score political goals by the NNPCL.

“Mele Kyari and his cohorts should stop misleading the President. They should rather come out and explain how the over N17 trillion expended on our local refineries went and why is it that none of the Port Harcourt, Warri and Kaduna refineries is working, after receiving such a humongous funding”.

It would be recalled that, the NNPC posted on its X handle on Tuesday, saying: “NNPC Ltd Delivers Port Harcourt Refinery as plant begins truckout of products today, Tuesday 26th November 2024 at 1.45 pm.

“Watch the commissioning and trucking out event LIVE.”

But Sahara Reporters, in an exclusive report Tuesday night, exposed that, the NNPCL “is not trucking out Premium Motor Spirit (PMS), popularly known as petrol, from the Port Harcourt Refinery as it claimed on Tuesday”, claiming a top source within the system revealed it.

Instead, it said the NNPCL bought “Cracked C5 petroleum resins” and blended it with other products including Naphtha to sell to the Nigerian public as though the refinery processed it.

“The plant is running but it is the old one of 60,000bpd capacity but you can’t get PMS from it except diesel. The part that produces PMS is yet to start.

“If you hear they are trucking out PMS from the depot, know it is a lie. They bought Crack C5 from Indorama company in Port Harcourt and blended it with Naphtha to sell to the public”, the source told Sahara Reporters.

Unexpectedly, the Spokesperson for the NNPCL, Olufemi Soneye swiftly confirmed the claims in a statement Tuesday night, saying, “blending is a standard practice in refineries globally”.

Soneye said, “It is worth noting that the refinery incorporates crack C5, a blending component from our sister company, Indorama Petrochemicals (formerly Eleme Petrochemicals), to produce gasoline that meets required specifications.

“Blending is a standard practice in refineries globally, as no single unit can produce gasoline that fully complies with any country’s standards without such processes. Additionally, we have made substantial progress on the new Port Harcourt Refinery, which will begin operations soon without prior announcements”.