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NAIRA TO FALL FURTHER -SANUSI

By NBF News
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BY Peter Egwuatu & Michael Eboh, with Agency ReportS

LAGOS-The Governor of Central Bank of Nigeria (CBN), Mallam Lamido Sanusi, yesterday, said the apex bank was considering allowing the naira to depreciate further by setting new band of between N155 and N156 per dollar within which the currency can float.

At the moment the CBN has a band of 3 % above or below N150 per dollar. Speaking yesterday in Abuja Sanusi  said: 'We think at this point we might move the naira to between N155 and N 156 to a dollar as a midpoint. The CBN will make its stance on the currency clear next week or two.'

This was even as the naira weakened further against the dollar in the foreign exchange market, yesterday, closing at N159.52 to the dollar.

The naira declined against the U.S dollar on both the interbank and CBN window yesterday as demand for the dollar outstripped supply at both markets.

The naira closed at 159.52 to the dollar on the interbank, weaker than the 156.40 a dollar on Friday.

The CBN Governor stated that the apex bank was determined to keep the naira stable at between N155 and N156 per dollar, saying 'People will know that in the next 12 months, we will keep the naira within that band. As long as we are not running out of reserves at an outrageous rate we'll try to keep that stability.'

According to him, 'The CBN has been struggling to keep the naira within a band of three per cent above or below N150 per as oil prices declined and demand for imports surged. The Central Bank pegs the currency to help keep price pressure under control.'

The CBN said it will review its target band for the naira in the next few days, and depending on where the exchange rate settles may move its midpoint to 155/156 to the dollar, compared to its current 150.

According to him, the CBN will give the naira few more days and see where it settles finally and then it will come out with a new transparent band.

He said, 'Both the midpoint and the band could change. Whatever it is, we will let the market know very soon. It is more likely to be around 155/156.'

In apparent reaction to recent global trends especially the death of former Libyan strongman, Col. Moamar Ghadaffi, and the resumption of oil production in Libya the federal government has revised the benchmark for the price of crude oil in the 2012 budget at $70 per barrel from the initial price of $75 per barrel. Minister of state for Finance, Dr Yerima Lawan Ngama who appeared before the House Committee on Appropriations said the exchange rate of the currency has also been fixed at $1 to N153.

Capital Market @ 50- From left: CBN Gov, Sanusi Lamido Sanusi; Chief Executive, Capital Markets Authority Kenya, Mrs Stella Kilonzo; Gov. Babangida Aliyu of Niger State; Head, Capital Markets Department of the Financial Services Board of South Africa, Mr Norman Muller and Director-General, Security and Exchange Commission, Arunma Oteh, at the Commemoration of 50 Years of Capital Market Regulation in Abuja, yesterday. Photo: NAN

According to the Minister, government's decision was based on the fall of the Ghaddafi government in Libya as well as the imminent entry of Ghana into the comity of Petroleum producing countries which is bound to affect production quota and the budget. He explained that the exchange rate was arrived at by various relevant fiscal authorities adding that the Central Bank of Nigeria (CBN), as the apex of government financial structure allied with the projection after the projection of exports, imports and global financial trends.

'External forces that can influence the exchange rate are beyond the control of the CBN, it is better to allow fiscal authorities to make their assumption because of the information at their disposal.' Giving an insight into the outlook of the 2012 budget, the Minister of state for Finance revealed that N794bilion in the budget  had been set aside to service domestic debts, which stood at 1.1trillion,adding that like the 2011 budget, the 2012 would be deficit financed.

'Servicing domestic debt is competing with capital vote, and this is the truth, we want the National Assembly to assist us in this regards because the reality is that future budgets will not be different from what we are battling with now.' He further revealed that in 2013, the sum of N474billion had also been earmarked for domestic debt while   in 2014, it will gulp N436billion and in 2015, N412billion. At the end of the on-going fiscal year, Ngama said that the ministry was expecting over N200billion to be returned as unspent fund into the federal government coffers.

Dr Ngama's appearance yesterday appeared to have put paid to the threat by members of the House of Representatives that unless the Minister of Finance, Dr Ngozi Okonjo-Iweala appears before the committee yesterday, the House might consider boycotting the budget presentation by president Goodluck Jonathan.

It will be recalled that the Minister of Finance, Dr Okonjo-Iweala was given an ultimatum of 12noon of yesterday to show up at the committee room, or risk the rejection of the 2012 Appropriation bill by the House. Despite the plea by the Minister of state last Friday to allow him and other senior officials of the ministry defend the MTFF, members insisted that they will only listen to the senior minister.

Total deregulation will open up economy
- FG, Economists
Meanwhile, the Federal Government, yesterday, said it was set to deregulate the power and petroleum sector and allow the private sector to drive the economy while creating enabling environment. The panel comprising of Bismark Rewane,CEO, Financial Derivative Limited; David Cowan, Chief  Economist for African Group; Dr. Ousmane Dore, Country Representative, African Development Bank, and Chief Economist Renaissance Capital, Mr. Charles Robertson also supported the move by the Federal Government to remove oil subsidy, saying this was the best time to deregulate the oil sector and diversify the economy.

Director General of the Securities and Exchange Commission (SEC), Ms. Arunma Oteh in her opening remark at the investors' forum to commemorate 50 years of capital market regulation said, The Nigerian capital market is helping to diversify the Nigerian economy by assisting in the structured financing of the country's huge infrastructural and industrial development. And we are building a more robust investor protection regime. We are building a market that is fair, efficient and transparent. The SEC has recently updated its rules for the market and strengthened the code of corporate governance. We are working on migrating to the IFRS reporting standard for banks and quoted companies, by January 2012. I can proudly say that we have built a market that is equipped to support the investment destination that Nigeria is.'

Speaking at the investors forum, President Good luck Jonathan, said, 'The Federal Government's economic transformation programme is to attract investments by creating incentives and providing an enabling environment for capital formation.

' Nigeria is open for business. Now is the time to invest here. Our capital market has come of age. In the course of the past fifty years, the Nigerian capital market has grown beyond the imagination of its founders. In the past fifty years, we have deployed our best and most committed citizens to keep watch over our investments and those of our friends from other shores. As testament to the formidability of our regulatory system, the Nigerian capital market survived the worst financial crisis since 1930.'

He further declared that the federal government wasdetermined to foster an environment rich in opportunities for investment with the highest returns, while bringing inclusive growth to ordinary Nigerians.  In his words, 'We are set to deregulate the power sector. Government, at various levels, is increasingly looking to the capital market to finance infrastructure projects. We have also rolled out a master plan to convert the millions of acres of arable land in Nigeria to achieve sustainable food production for consumption and export. The agriculture potentials of this country are simply beyond measure. This government has also undertaken to provide affordable housing for the majority of Nigerians.'

Meanwhile,  Rewane, noted that total deregulation is  a panacea to move the country forward. According to him, 'Total deregulation will open the economy for more direct investment. The regime of regulatory policy is a barrier that needs to be eliminated and the time to do it is now. We aught to have deregulated before now, so policy error by the government will be disastrous for the country. The country is operating sub optimally.'

The Minister of Commerce, Dr Olusegun Aganga at the event said his Ministry is trying to reactivate the export and free trade zones.

According to him, 'We are developing a healthy, strong and medium enterprise sector  and we are working on modalities on how to reduce cost of production. We are also working on backward integration programmes. The cement business in Nigeria is a good example of a success story in Nigeria and we should leverage on that to improve other sub-sectors.'

He declared that the government is determined to create a conducive atmosphere for investment in the country by ensuring that our laws and policies are investor-friendly.

He further disclosed  that his ministry will pay close attention to the sources of capital for investment both within and outside the country.

According to him , ' The Sovereign Wealth Fund, which establishment we made a reality, is a potent pool of investible capital. We also have well over N2.2 trillion in pension funds. With a safe investment atmosphere assured, the potential of the pension fund is boundless. We have to proactively make sure that we unlock capital, go out and make sure that we get investments into our country. And to ensure this, Nigeria has embarked on reforms that will make this possible.'