NEW CUSHIONING MEASURES NEEDED – NLC PRESS RELEASE
As part of the process of managing the economy, the Central Bank of Nigeria recently announced a cocktail of measures or guidelines including the following:
§ Free and unfettered access to export process via inter-bank rates by non-oil exporters;
§ Possibility of the emergence of a single market as the primary and secondary markets move closer;
§ Retention of the 41 banned items on the ban-list;
§ Primary dealers to operate the interbank market;
§ Long-dated forwards (6-12 months) to be issued by CBN for enhancement of liquidity;
§ CBN will no longer determine the cost of forex. This will be determined by the market, etc.
In plain language, the CBN has devalued the Naira once again, proof of which is that within 24hours of this policy announcement, the Naira in the primary market exchanged to the Dollar at N245 (from N197)) while in secondary market, the Naira exchanged to the Dollar at N 285 (from N364).
While this movement raised a ray of hope of convergence of the markets, the incontrovertible truth remains that, for now Nigerians will have to pay higher for goods and services and commodities without a commensurate rise in salaries, pensions or other earnings.
An unexpected liquidity pressure came upon the money market as the interbank rate surged to 60 per cent from 18 per cent. This pressure will be passed on to borrowers who will equally pass it on to consumers. This is another source of burden to Nigerians
The intervention of the CBN by way of $150 million was not sufficient to keep the Naira from depreciating.
In view of the above, we call on the government to devise palliative measures to cushion the harsh effects brought on the average Nigerian by this new turbulence.
These measures should operate at various tiers of government or sectors of the economy and could be short term or long term.
For instance, it has been reported that in the course of exiting from the clutches of the Paris Club in the recent past, accounts of state government were over debited by the federal government.
Similarly, the federal government is indebted to many state governments over the maintenance of federal roads in their territories.
In line with the spirit of palliative intervention, we call on the government to make refunds (on verified claims) to state governments as this intervention will help in no small way in ensuring salaries and pensions are regularly paid and contractors also paid. This in our view, will stimulate the economy, one way or the other.
Government’s palliatives, however should not be limited to this.
Comrade Ayuba Wabba, mni