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Nigeria’s central bank concerned over ‘free fall of Naira’

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Amidst the dwindling nature of the Nigerian economy, its apex bank said it concerned about the value of the naira and is making deliberate efforts to avert a further downward slide in the currency.

Nigerian lawmakers on Wednesday the Central Bank of Nigeria’s policy had “contributed to the excessive scarcity of forex in Nigeria” and summoned Central Bank of Nigeria (CBN) Governor Godwin Emefiele over the “free fall of the Naira”.

This week, Naira weakened to a 34 per cent in 10 months, closing at N710 to a dollar on Wednesday in the parallel market, with a margin of N280 from the official rate.

Punch reports that Nigeria has failed to leverage oil windfall to drive huge dollar inflows into the economy due to an opaque petrol subsidy regime, oil theft and lack of gas infrastructure. Its non-oil exports last year was merely $10bn, four times less than Vietnam’s $38bn earnings from garments in 2021 and nearly five times less than what the country received for exporting phones ($57.54 bn).

“The CBN remained committed to resolving the foreign exchange issues confronting the nation and as such has been working to manage both the demand and supply side challenges,” the central bank said.

Nigeria’s GDP growth is projected at 3.4 percent (y/y) in 2022 while inflation is expected to remain elevated. The fiscal deficit of the Consolidated Government is expected to remain high at 6.1 percent of GDP due in great measure to costly petrol subsidies and limited tax revenue collections.

 

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Nigeria: President Buhari makes U-turn on approval of Exxon unit acquisition by Seplat

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Nigeria’s President Muhammadu Buhari has made a U-turn in his earlier position that grant approval of Exxon Mobil’s  sale of local offshore shallow water assets to Seplat.

President Buhari had on Monday approved the $1.28 billion transaction, only for the Nigerian Upstream Petroleum Regulatory Commission to say it opposed the deal, although it did not give a reason.

Presidential spokesman Garba Shehu, told newsmen that “the president has decided to allow the regulator to do their work. He is withholding his earlier given approval, for now, to allow the process to be completed, that is basically it.”

In February, Seplat Energy Plc, unveiled plans to acquire the entire share capital of Mobil Producing Nigeria Unlimited (MPNU) from Exxon Mobil Corporation Delaware (USA Incorporated). That includes all of Exxon’s entire shallow water assets in the Niger Delta.

Seplat on its side said it is yet to received no official notification of President Buhari’s U-turn and is seeking clarification from authorities.

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Nigeria climbs to fourth position on World Bank’s list of most indebted nations

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Nigeria has moved into the fourth position of World Bank’s list of countries with the highest debts, according to the Bank’s financisl report released on Monday.

Going by the World Bank Fiscal Year 2022 audited financial statements for International Development Association (IDA), Nigeria now owes a debt stock of $13bn as at June 30, 2022.

The country also moved up one spot from the fifth position it was rated as of June 30, 2021, with an IDA debt stock of $11.7bn.

The global bank also revealed in its audited financial statements that Nigeria has accumulated about $1.3bn IDA debt within a fiscal year, adding that the debt is different from the outstanding loan of $486m from the World Bank’s International Bank for Reconstruction and Development.

What this means is that Nigeria now has the highest IDA debt in Africa, and is only bettered by the likes India with $19.7bn debt, Bangladesh, $18bn
and Pakistan, $15.8bn, all from the Asian bloc.

The Washington-based international Financial Institution also disclosed that Nigeria’s debt which may be considered sustainable for now, is fast growing into a state of vulnerability and could become costly.

“Nigeria’s debt remains sustainable, albeit vulnerable and costly, especially due to large and growing financing from the Central Bank of Nigeria,” it said.

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