MARKET NEWS

*CBN temporarily sells $25,000 weekly to BDCs to ease yuletide FX pressure

BY  Ndubuisi Francis in Abuja and Nume Ekeghe in Lagos 

The Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, yesterday disclosed that an annual investment of $20 billion was needed for Nigeria to achieve a seven percent economic growth rate by 2027. He said this while speaking on ARISE News Channel yesterday. Edun, also pointed out that the Medium Term Expenditure Framework recently passed by the National Assembly envisioned substantial investments between 2025 and 2027, revealing that the federal government had launched a presidential initiative to unlock the healthcare value chain to produce 70 per cent of the country’s pharmaceutical needs locally by 2030. 

This was just as the Central Bank of Nigeria (CBN) announced that it has temporarily allowed Bureau de Change (BDC) operators to access the Nigerian Foreign Exchange Market (NFEM) to buy up to $25,000 weekly from authorised dealers to address seasonal demand for foreign exchange. Edun said: “We need to commit ourselves to raising another $20 billion in investment expenditure that would take us by 2027, to about seven percent economic growth. 

I am sure you will agree that with our Gross Domestic Product (GDP) growing at seven percent, the issue of human development index, multi-dimensional poverty as well as other social and economic indicators would be moving in the right direction. “Looking at the information available to us, the Nigerian economy is stabilising and is indeed set to move on an upward trajectory, trajectory.” On the initiatives being taken to boost the healthcare sector, he said: “Just yesterday (Thursday), we had a meeting with the healthcare sector, and it was a presidential initiative on unlocking the healthcare value chain with a commitment of producing 70 percent of our drugs, our pharmaceutical products and needed supplies in Nigeria by 2023. “Already, there is a $5 billion pipeline of investments awaiting investors in that sector. So things are definitely on the move. 

There is a change for the better.” He added that the tax reform was in progress, with legislation advancing through the National Assembly, saying the reform aims to increase tax revenue as a percentage of GDP, bringing it closer to levels observed in other African nations and globally. Speaking on the 2025 appropriation bill, Edun said: “We are confident that given the work of the economic management team, given the preparation that has gone into the medium-term expenditure framework this budget will be diligently executed. “Above all, it’s so important to emphasise that what is the basis of a budget? It is revenue. Where is Nigeria’s revenue headed? up? Why? “Because the President has stopped the hemorrhaging. He has stopped the loss of five percent of GDP, worth $15 to $20 billion a year.” 

Also, earlier yesterday, while speaking in Abuja, at a Citizens and Stakeholders’ Engagement on the Implementation of Presidential Priorities and Ministerial Deliverables for the Fourth Quarter of 2024, organised by his ministry, Edun explained that the federal government was cautious in implementing the recently announced duty-free policy on food imports in order not to harm local production.

According to Edun who gave an overview of the President Bola Tinubu administration’s eight priority areas, the government had done a lot to reform and bolster the economy in the last 18 months, leading to a modest GDP growth of 3.46 percent in the third quarter of 2024, which he stressed was slightly above population growth. But he admitted that the kind of growth capable of engendering inclusivity and impact on the masses was not yet visible. He stressed that the government has its role to play to stimulate investment and drive infrastructural development. 

He also highlighted the role of the private sector as well as foreign investors in stimulating investment. “”Where does that come from? It comes from federal government’s increased revenue, federal government’s maxmisation, but also from investment by Nigerians and also investment by foreigners in the Nigerian economy, in joint ventures; whether government, whether with other Nigerian partners. “It comes from investment. Investment comes from savings. 

So, that’s really the picture–a N50 trillion budget with N35 trillion in revenue expected to be generated, and then over the next two years or so, $20 billion attracted in investment that will push the economy to grow at a pace that nobody will be able to say that they can’t see the effect; they can’t feel the effect.  “And of course, that additional capital must be properly deployed, particularly on the government side, to invest in the constraints to growth, to generate employment and to reduce poverty.” The minister explained that social protection was a priority to the administration, also stated that with improved security across the country, “in 18 short months, Tinubu has changed Nigeria for the better.”

Lending further credence to the allusion that country had changed for the better, he noted that people no longer circumvent the process by getting forex allocation from the CBN. He added that people no longer depend on the Nigerian National Petroleum Company Limited (NNPCL) through subsidy, adding that GDP per capita was also growing. He noted that with improved oil sector and local value addition, “Nigeria is now on the way to indistrialisation” while local production of petroleum products has created price modulation. Edun who boasted that “inflation is being wrtestled,” stated that it was expected to moderate by 2025. 

Responding to a question on the implementation of multiple budgets at the same time, the minister said there was no such thing as multiple budgets. According to him, the National Assembly only extended the implementation of the capital component of the 2024 budget by six months. Also responding to a question on the progress made in the 150-day duty-free policy on food imports announced by the administration in July, the minister said the government was careful not to hurt local production. He pointed to a deluge of applications that trailed the announced duty-free import. 

Edu stressed that the government was supporting local farmers and millers to produce  enough for local consumption. 

Earlier in her remarks, the Minister of State for Finance, Dr. Doris Uzoka-Anite applauded the ministry’s performance in the last three quarters, especially in the area of revenue generation. She disclosed that the Nigeria Customs Service (NCS) and Federal Inland Revenue Service (FIRS) exceeded their revenue targets.  In the meantime, for BDCs’ accessing the NFEM, the CBN disclosed in a statement signed by its Acting Director of the Trade and Exchange Department, T.G. Allu that the temporary access would be available from December 19, 2024, to January 30, 2025. 

The circular stated: “In order to meet expected seasonal demand for foreign exchange, the CBN is allowing a temporary access for all existing BDCs to the NFEM for the purchase of FX from Authorised Dealers, subject to a weekly cap of $25,000. “This window will be open between December 19, 2024 and January 30, 2025. “BDC operators can purchase FX under this arrangement from only one authorised Dealer of their choice and will be required to fully fund their account before accessing the market at the prevailing NFEM rate. “All transactions with BDCs should be reported to the Trade and Exchange department, and a maximum spread of 1.0 percent is allowed on the pricing offered by BDCs to retail end-users.”

CBN noted that the personal travel allowance, PTA, and business travel allowance, BTA, remain available and could be accessed from their banks to meet travel requirements. “The general public is also reminded of the continued availability of PTA/BTA from their banks to meet their personal and business travel requirements and that all legitimate and eligible foreign exchange transactions are expected to be completed in the NFEM, at the market determined exchange rate. “The CBN remains committed to a fully functional foreign exchange market and will continue to provide liquidity when necessary to manage price volatility.”