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Only foreign borrowing can save Naira, clear CBN debts – EIU

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The Naira
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International business research firm, Economist Intelligence Unit, has said that the Central Bank of Nigeria does not have the liquidity to support the naira as of now.

It stated this in its latest Country Report on Nigeria, which was published on Friday.

The CBN unified segments of the country’s foreign exchange market on June 14, 2023, which resulted in a significant depreciation of the local currency.

The naira weakened by 36.56% to 632.77/$ on the day the CBN unified the forex market from 463.38/$ at the official market.

The naira has struggled against the dollar since then and it worsened in February following a second devaluation, which is about 45 per cent according to analysts in an attempt to close the gap with the parallel market rate.

That makes it the second-worst-performing currency in the world, after the Lebanese pound.

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In the report, EIU said that the CBN may need to resort to foreign borrowing to support the naira and fulfil its foreign exchange obligations.

It stated, “Our view is that it will take foreign borrowing to rebuild the CBN’s buffers, fully clear a backlog of unmet foreign exchange orders and restore confidence. This is probably only achievable towards the end of 2024. In mid-January Nigeria took out a $3.3bn loan from the African Export-Import Bank, secured on oil revenue in a so-called crude oil prepayment facility. This follows a $1bn loan from the African Development Bank in November, and another $1.5bn is being sought from the World Bank.

“Falling risk premiums on government international bonds make tapping the international capital market another viable (albeit costly) option once US interest rates start to fall from the second half of 2024.

“For most of this year, the naira will be highly volatile, leading to regulatory erraticism that can affect businesses, especially those holding foreign currency.

“The CBN lacks the liquidity to support the naira itself; out of $33bn in foreign reserves, a large share (estimated at nearly $20bn), is committed to various derivative deals. The CBN recently imposed restrictions on oil companies repatriating export earnings abroad, and there is a risk of wider convertibility limits being imposed until the currency stabilises.”

Also, it was revealed that the Federal Government was greatly incentivised to borrow from the CBN following the return of fuel subsidy.

In the report, whose briefing sheet was edited by Benedict Craven, EIU said that with the return of fuel subsidy, which was larger than the previous one, the FG had a strong reason to want to borrow from the apex bank.

In December 2023, the National Assembly approved the securitisation of the outstanding debit balance of N7.3tn of the ways and means advance in the consolidated revenue fund of the Federal Government. Ways and Means is a loan facility through which the CBN finances the Federal Government’s budget shortfalls.

The report said, “Market reforms under Mr (Bola) Tinubu were intended to attract investment but do not constitute a coherent plan. His two flagship policies, the elimination of petrol subsidies and the liberalisation of the exchange rate have an inner contradiction. As Nigeria imports virtually all its fuel, devaluations of the naira, the latest being a 45 per cent drop in February, should be reflected in the pump price.

“However, owing to the threat of industrial action, there has been little movement since June, despite the naira having weakened from N461:$1 in May 2023 to N1,600:$1 in late February 2024. This indicates the return of a (large) subsidy. Denying this publicly, the government has a strong incentive to turn to the Central Bank of Nigeria for financing to cover the fiscal cost.

“Deficit monetisation and high inflation will undermine the currency. A possibility is that monetary policy will be tightened to a point at which foreign investors view the naira more favourably.”

According to the report, although the CBN raised its policy rate in February, President Tinubu has expressed an aversion to high interest rates.

“As inflation has been allowed to rise to a level at which a positive real short-term interest rate would create a significant rise in unemployment—adding another policy¬ induced element to economic hardship—we assume that politics will prevent this from happening. The CBN’s independence has been heavily eroded in recent years; because fiscal firepower is so limited, the government will continue to rely on monetary policy to achieve job-creation and development objectives,” it said.

EIU revised its 2024 economic growth forecast for Nigeria from 2.2 per cent to 2.5 per cent, premised on higher than previously expected crude output and earlier than expected production from the Dangote refinery, which is expected to provide some relief although fuel import is expected to continue its dominance.

“The new, 650,000-barrel/day Dangote mega-refinery is another possible circuit breaker. The facility is gearing up for its first fuel exports, to be followed by cargoes to the domestic market. In theory, the facility can meet all domestic needs but petrol subsidies make it unclear whether doing so will be profitable (let alone profit-maximising). In any case, Nigeria will continue to depend on fuel imports for most of the year as the refinery ramps up output,” the report said.

Describing the implementation of the twin policies of floating the naira and fuel subsidy removal as hasty, the EIU said, “Mr Tinubu has embarked on the biggest economic shake-up in a generation, rapidly rolling out unpopular market reforms and dismantling vehicles for patronage and corruption. Upon coming to power, Mr Tinubu quickly moved to deregulate petrol prices and float the currency. In theory, these reforms are needed to put Nigeria on a higher growth path, but implementation has been hasty and inflation has been allowed to rise to decades-long highs. As the crisis is distinctly policy-induced, there is a serious risk of mass protests and strikes.

“Given the potential threat of industrial action on a scale not seen since 2012, the government has been forced to backtrack in some areas, notably on petrol subsidies. Attempts to stem the decline in the currency have become more desperate, and we expect the policy to become increasingly erratic, particularly in the early part of the forecast period, as the need to stabilise prices takes on an existential dimension for the government.”

The report noted that the Monetary Policy Rate would peak at 23.75 per cent this year, currently standing at 22.75 per cent.

Inflation is projected to also likely to continue climbing for the first half of the year driven by the hefty devaluation of the naira in February.

“We expect a full-year rate of 30.3 per cent, which includes some disinflation in the second half of the year,” EIU said.

Meanwhile, it projected that the Nigerian currency would depreciate below 2,000/$ before the year runs out.

Highlighting top concerns and risks to its forecast, EIU said that if President Bola Tinubu moves too fast on his market reforms, it may lead to mass unrest with a very high impact.

The African Development Bank recently raised similar concerns, following the persistent increase in the prices of food items.

The AfDB sounded the warning in its macroeconomic performance and outlook for 2024.

It cautioned that an increase in fuel and commodity prices occasioned by currency depreciation or subsidy removal in Nigeria, Angola, Kenya and Ethiopia could trigger internal conflicts.

It stated, “Internal conflicts and violence could also result from rising prices for fuel and other commodities due to weaker domestic currencies and reforms.”

According to the AfDB, other risks include social unrest forcing the government to make concessions on its reforms, strikes bringing the economy to a halt and the activities of terrorists spreading from the North-East to Central Nigeria.

Meanwhile, the apex bank boss, Dr Olayemi Cardoso, in February revealed that the central bank would not be extending facilities to the Federal Government until it fulfils its outstanding obligations to it.

“I’m pleased to note the fiscal authorities’ efforts in discontinuing ways and means advances. This is also in compliance with section (38) of the CBN Act (2007).

“The bank is no longer at liberty to grant further ways and means advances to the Federal Government until the outstanding balance as of December 31, 2023, is fully settled. The bank must strictly adhere to the law limiting advances under ways and means to five per cent of the previous year’s revenue,” he noted.

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Enugu State Forest Guard Issues Standing Operational Order

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…Harps on discipline, professionalism

The Enugu State Forest Guard has issued a new Order introducing comprehensive standards governing the dress code, operational turnout, accoutrements, corporate identity, discipline, and professional appearance of all officers and operatives of the Corps.

The new policy issued entitled Headquarters Standing Operational Order No. 178/2026 was announced by the the Commander of the Enugu State Forest Guard, Dr. Akinbayo Olasoji, in Enugu.

He said the reforms are fully aligned with the vision of the Governor of Enugu State, Dr. Peter Ndubuisi Mbah, to build a disciplined, intelligence-driven, technologically enabled, and highly professional security architecture capable of safeguarding lives, property, forests, and other critical assets across the State.

In statement issued by the Geraldine Chiagozie, an Assistant Superintendent of Forest Guard, Olasoji said the Order forms part of the ongoing institutional reforms aimed at strengthening discipline, reinforcing command and control, enhancing operational professionalism, and projecting a distinctive corporate identity for the Corps.

“As the operational activities of the Forest Guard continue to receive increasing public visibility through field operations, community engagements, television, radio, newspapers, and digital media platforms, it has become imperative to institutionalize uniform standards that reflect the discipline, professionalism, and values expected of a modern government security organization.

“The Standing Operational Order prescribes approved uniforms and their designated days of wear, operational dress for bush-combing and other field deployments, standards for approved accoutrements, lanyards, rank insignia, footwear, and personal grooming. It also establishes special dress codes for Administrative Officers and the Provost Unit to promote uniformity, professionalism, and easy identification throughout the Corps.

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“The Order further prohibits the wearing of unauthorized uniforms, civilian attire (mufti) without authorization while on official duty, unauthorized footwear, and the use or public display of improvised wooden weapons during official assignments.

‘It emphasizes that only Headquarters-approved uniforms, equipment, and accoutrements shall be worn by personnel in the discharge of official duties.

“To ensure strict compliance, Directors, Senatorial Commanders, Zonal Commanders, Heads of Departments, Unit Commanders, and Sector Officers have been directed to conduct regular inspections before office duties, patrols, bush-combing operations, ceremonial activities, media engagements, and other official assignments. The Provost Unit has also been mandated to monitor compliance and enforce the provisions of the Standing Operational Order across all Commands and Units of the Corps,” the statement explained.

Meanwhile, the Commander of the Forest Guard, has also provided more insights into the significance of the initiative.

“Discipline begins with appearance. A professional security organization must be instantly recognized by its smart turnout, uniformity, discipline, and operational readiness. This Standing Operational Order is therefore not merely about uniforms; it is about strengthening our institutional culture, promoting accountability, reinforcing public confidence, and ensuring that every officer and operative represents the Government of Enugu State with dignity, honour, and professionalism,” the statement quoted Dr. Olasoji as saying.

The Commander reaffirmed the unwavering commitment of the Enugu State Forest Guard to continuous institutional improvement, operational excellence, intelligence-led security operations, respect for the rule of law, and effective collaboration with communities and other security agencies in promoting peace, public safety, and sustainable development throughout Enugu State.

Meanwhile, the Headquarters Standing Operational Order takes immediate effect, and all Commands and Units have been directed to ensure immediate and full compliance with its provisions.

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State Police: Mbah presses for financial autonomy, investment in technology

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Enugu Governor, Dr Peter Mbah
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…Allays fears of abuse, says no one would be governor forever

Governor Peter Mbah of Enugu State has called for financial autonomy and investment in modern security infrastructure for state police services when created, stressing the need for any legal framework for state police to take into account the need for national standards, national support, local capability and local decision-making.

Mbah made his position known during the town hall themed, “Building a National Consensus for State Police and National Security,” organised by Arise News in Abuja on Thursday.

The governor emphasised that prioritising security through adequate funding for state police services and investment in technology would enable those responsible for security at the subnational level to deliver the expected outcomes.

“The importance of funding the state police system effectively cannot be overemphasised. And having a State Police Service Commission that has a first-line charge on the Consolidated Revenue Fund is in order.

“Many other institutions in the states – the judiciary and the legislature – have the first-line charge. The key thing is providing enough funding to be able to sustain the state policing system,” he said.

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Sharing the Enugu State experience on the importance of prioritising security, he recalled that at the inception of his administration in 2023, the state was under siege, with nightlife gone, some areas even in the state capital barricaded, Mondays gone, while many students lost an entire academic year, as they could not sit important final-year examinations due to the illegal sit-at-home orders.

“If the Enugu experience is anything to go by, we came into office recognising that we had made commitments to eradicate poverty, to grow the economy exponentially, to make Enugu State the preferred destination for business, living, and investment.

“We immediately recognised that if we didn’t address the security challenges, we could not achieve those objectives. Therefore, we had to invest hugely in technology, in building a Safe City Surveillance System with CCTV cameras that are AI-enabled, as well as having both static and mobile cameras. All these come with huge costs.

“But the human element is also important, which is essentially why we had to set up the Distress Response Squad (DRS). As a governor, you want immediate action because matters of security are measured in minutes. You must be in a position where you are able to act swiftly.

“So, you must build the capability to first nip crime in the bud. But where there has been a breach, you must have the capacity to act swiftly. And if the Enugu experience is anything to go by, that essentially is what we did that enabled us to drive down violent crime by over 90 per cent.

“Therefore, when you talk about funding, you can see that the states are already carrying quite a huge burden in terms of funding, because you are investing in technology.

“We also ensured that there is a unified communication system between the agencies. Our Command and Control Centre houses all the security agencies in the state – the police, the army, and the Department of State Services. They all have a channel of communication,” he stated.

Governor Mbah also called for a constitutional provision that guarantees state police while preserving the details for an Act of the National Assembly to allow for amendments in the future without going through the rigours of constitutional amendment.

“So, in amending the Constitution, we must, by all means, make sure that it is not verbose. There should be a provision that allows us to reform the system in future, if needed, when we have tried it,” he said.

Mbah also stressed the need to focus on operational authority for state police rather than on watering down the powers of governors, who would be in office for a maximum of eight years only.

“By the way, there is this idea that governors are likely to abuse state police and that we should, therefore, do as much as we can to water down their powers.

“Nobody is a governor forever. We are also going to one day leave that office and become regular citizens. We just want to be sure that there is enough operational authority given to the governors so that you do not give someone a performance target without providing him or her with the control needed to achieve the required outcome,” he concluded.

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FG raises Soldiers’ Minimum Salary from N49,000 to N100,000 per month — Defence Minister Musa

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Minister of Defence, Christopher Musa
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The Minister of Defence, Christopher Musa, has disclosed that the Federal Government increased the minimum monthly salary of Nigerian soldiers from N49,000 to N100,000 as part of ongoing efforts to improve the welfare of military personnel.

Musa made the disclosure during an interview with News Central on Wednesday ahead of the station’s NC Exclusive programme scheduled for Friday.

He described the development as one of the welfare improvements introduced by the current administration for military personnel.

“When they started, a soldier was collecting N49,000 monthly. We tried so hard, now he’s collecting N100,000,” the minister said.

For decades, concerns over poor salaries, inadequate accommodation, delayed benefits and rising living costs have dominated discussions on military welfare.

Musa also dismissed allegations that soldiers were being poorly fed, describing claims circulating on social media as misleading.

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Referring to a viral video involving a military officer identified as Justice Crack, he alleged that the footage was deliberately manipulated to create a false impression about the quality of meals served to troops.

“The soldier’s food was okay. There was meat; there was all this. But he told them to pull out those things and make it look as if those things were not there,” he said.

The minister’s remarks come as the Federal Government continues to pursue a mix of welfare reforms, increased security spending and renewed military operations aimed at improving the effectiveness of troops battling insecurity across the country.

But calls persist for greater investment in equipment, intelligence gathering and personnel welfare.

Musa maintained that Nigeria’s defence allocation remains inadequate to meet the enormous demands placed on the Armed Forces.

Responding to a question on whether the current defence budget was sufficient, he replied, “It’s not enough.”

He noted, however, that the government would continue investing in the welfare and operational capacity of the military to enable personnel to respond more effectively to the country’s security challenges.

The minister also advocated tougher punishment for kidnappers, calling for the introduction of the death penalty to discourage the growing wave of abductions across the country.

According to him, existing sanctions have failed to deter perpetrators.

“I think we should do that. There must be deterrence. The laws are soft, and that’s why people take advantage.If they know once you commit an offence, there must be punishment,” he said.

Speaking on the recent abduction of schoolchildren in Oyo State, Musa alleged that the kidnappers were attempting to pressure the military into releasing some of their commanders currently in custody.

Describing the incident as unfortunate, he said the abductors had resorted to using innocent children as bargaining tools.

“It’s a very sad event. Unfortunately, bad things do happen. For whatever reason, they are looking for leverage because we have some of their commanders with us, and they feel taking these kids and holding them to ransom will make us release their commander,” he said.

He further claimed that the kidnappers had threatened to kill the victims should security forces move closer to their hideout.

“They are now threatening that if we come any closer, they’re going to kill all the kids,” the minister added.

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