IMF – The Commerce Africa https://thecommerceafrica.com African Reneissance Wed, 21 Feb 2024 20:02:29 +0000 en-US hourly 1 https://wordpress.org/?v=5.9 IMF Warns Naira May Experience Further 35% Depreciation in 2024 Due to Nigeria’s Production Challenges https://thecommerceafrica.com/imf-warns-naira-may-experience-further-35-depreciation-in-2024-due-to-nigerias-production-challenges/ https://thecommerceafrica.com/imf-warns-naira-may-experience-further-35-depreciation-in-2024-due-to-nigerias-production-challenges/#respond Wed, 21 Feb 2024 20:01:07 +0000 https://thecommerceafrica.com/?p=16234 The International Monetary Fund (IMF) has warned that the country’s exchange rate may depreciate further by about 35 percent this year and contribute to a sharp rise in inflation, peaking at 44 per cent before the monetary policy could eventually arrest the situation through tightening.

The fund disclosed this in its February 2024 Post–Financing Assessment and Staff Report.

It noted that monetary policy is currently insufficiently tightened to bring inflation below 20 per cent while pressures on the Naira persist.

The report noted that amid the absence of local production and the recent liberalisation of commodity imports, the exchange rate would likely depreciate further.

IMF said Nigeria had been hit by another adverse climate shock in early 2024 – following severe flooding in late 2022- that exacerbated the current weakness in agriculture and led to a decline in output and a surge in food prices.

According to the Bretton Woods institution, the country would benefit from developing a comprehensive macroeconomic and growth strategy, in collaboration and with support from development partners.

This, it said, would include aggressive monetary tightening, fiscal adjustment to restore macroeconomic stability, and putting in place climate adaptation measures.

It stressed that domestic demand had weakened due to the steep fall in real incomes – as investments in the oil sector would likely stall due to rising costs, and production declines.

The fund further predicted that the country’s growth could fall to zero in 2024 and only slowly recover to two per cent in 2028.

It said the uncertainty over Nigeria’s net international reserves level poses additional risks, as would exogenous further shocks that impact external stability, poverty, and food insecurity.

The publication further stated that the fiscal deficit could increase above six per cent of GDP in 2024 and 2025, driven in part by increased transfers to quell social unrest (one per cent of GDP) and a rise in the implicit fuel subsidy.

IMF Predicted that, “With limited external financing options and higher expenditures, there is increasing use of CBN and domestic financing. The authorities implement expenditure measures in 2026, for example, phasing out the implicit fuel subsidy but the debt to GDP ratio still rises by six percentage points above the baseline by 2028.

“The spike in inflation and rise in uncertainty trigger portfolio outflows, and Nigeria is unable to access Eurobond financing. Reserves decline to $17 billion in 2025. Obligations due under the RFI peak at over eight per cent of officially reported reserves.

“Nigeria would be able to repay the fund, even in the downside scenario. This assumes that the authorities continue to prioritise external debt service. However, debt service would compete directly with urgent humanitarian needs to tackle rising poverty and food insecurity that would need to be prioritised.

“Therefore, even assuming the authorities reserve the remaining SDR allocation for RFI repayments, trade-offs could be severe.

“The uncertainty over Nigeria’s net international reserves level poses additional risks, as would exogenous further shocks that impact external stability, poverty, and food insecurity.”

James Emejo reports for Arisenews.

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IMF Welcomes CBN’s Removal of FX Restrictions on 43 Items https://thecommerceafrica.com/imf-welcomes-cbns-removal-of-fx-restrictions-on-43-items/ https://thecommerceafrica.com/imf-welcomes-cbns-removal-of-fx-restrictions-on-43-items/#respond Sat, 14 Oct 2023 15:16:02 +0000 https://thecommerceafrica.com/?p=15414 The International Monetary Fund (IMF) has commended the Central Bank of Nigeria’s decision to remove restrictions on 43 items previously restricted from accessing foreign exchange at the official window.


The IMF also acknowledged that the newly appointed officials under President Bola Tinubu have initiated a series of reforms aimed at delivering favourable outcomes for Nigerians. It however, noted that the reforms may require time to achieve the desired results.

The International Monetary Fund (IMF) has commended the Central Bank of Nigeria’s decision to remove restrictions on 43 items previously restricted from accessing foreign exchange at the official window.


The IMF also acknowledged that the newly appointed officials under President Bola Tinubu have initiated a series of reforms aimed at delivering favourable outcomes for Nigerians. It however, noted that the reforms may require time to achieve the desired results.


Also, in a speech he presented at the ongoing World Bank and the IMF meetings, the World Bank President, Ajay Banga, praised the ingenuity of Nigerian entrepreneurs, saying that he feels their yearnings to contribute to the growth of society.

The Director of the African Department, IMF, Abebe Aemro Selassie, on Friday unveiled IMF’s approval of Nigeria’s decision to remove forex restrictions on the 43 items, during a media briefing on the Regional Economic Outlook for Sub-Saharan Africa in Marrakech, Morocco, at the ongoing IMF/World Bank Annual meetings.


Selassie, also harped on the need to enhance tax reforms so as to improve revenue generation, create more fiscal space and reduce its burden of servicing and acquiring debts.
On the trade restrictions, he said, “The view of the IMF is that Nigeria and many other economies are so sophisticated and complex, that I don’t think that these kinds of restrictions work.


“The best way to manage a modern economy is to have fiscal policy lever and monetary policy lever to use to affect the kind of policy outcome you want, rather than saying I don’t like these goods and so I don’t want it to come in, etc, that tends to create an unhelpful distortion.
“Of course, there are tax policies you can also use if you really want to be against certain types of imports. In general, I think the direction the CBN has moved is a helpful one.”


Furthermore, responding to a THISDAY question, Selassie said Nigeria’s debt was sustainable, just as he said the country was not in talks with the IMF on debt restructuring.


Selassie said: “I am not aware of any debt discussions that are going on, debt profiling or debt restructuring in Nigeria. In Nigeria, the most important cause of the pressures is the fact that the government does not generate enough tax revenue for all the services it needs to provide.
“Interest payment as a share of revenue is very high and does not leave much room to spend on other issues, that is the key issue that needs to be worked on.


“While there is not enough tax revenue, I think in the past reliance on oil when prices were high and secondly the subsidy regime which also implies and entails lots of government resources being directed where they should not be.


“These are all interlinked issues including causing some of the inflation that you have and the difficulty to tap into the international capital market. That is why the government has had to rely more on domestic financing which of course has crowded out the private sector and put constraints on monetary injections which has weakened the exchange rate.”


He noted that Nigeria has “incredible potential and we have seen reforms moving in the right direction in recent months.
He said: “What is needed, we feel, is making the reforms holistic and help reinforce each other (monetary and fiscal policy).
“Just as things were not reinforcing each other in the past, there is scope to make the reforms reinforce each other. So, the exchange rate reforms that the government did were very welcome in trying to unify the rates.

“Similarly, the fuel subsidy will not help or stick unless they tighten monetary policy and also you are doing something to mobilise more tax revenue.


“So, a holistic package of reforms is what is needed and we have to give a bit of time to the new administration also.
“The CBN governor has just been appointed, and the minister of finance has only been appointed a few weeks. So, we are hopeful that they will move in the right direction and we stand to provide every policy advice that the government needs.”
On Nigeria’s debt level, he added that it was manageable.


He said: “So the assessment of debts should not be based on the nominal value of a debt stock but on how it relates to many other economic variables.”
Regarding monetary policy coordination, he added that it was important to emphasise that addressing the exchange rate gap required more than just necessary adjustments and corrections.


He stressed that it must be complemented by the implementation of stricter monetary policy conditions.
The CBN had on Thursday, declared that importers of 43 items previously restricted from accessing foreign exchange (FX) at the official window were now allowed to purchase FX in the Nigerian foreign exchange market going forward.


The apex bank in June 2015, had initially included 41 items to the list of commodities which were not-valid to purchase FX from the market, citing the need to conserve the scarce forex and encourage domestic production for self-sufficiency and exports. The list was thereafter expanded to 43 items.


Some of the items listed then as not-fit-for forex included rice, cement, margarine, palm kernel products and vegetable oil, meat and processed meat products, vegetables and processed vegetable products, poultry chicken, private airplanes, tinned fish in sauce, roofing sheets wheelbarrows, head pans, among others.

Ajay Banga to Nigerian Entrepreneurs: I Feel Your Yearnings

The World Bank President, Ajay Banga, yesterday, in a speech he presented at the ongoing meetings of the bank and the IMF in Morocco praised the ingenuity of Nigerian entrepreneurs, saying that he feels their yearnings to contribute to the growth of society.


He also spoke about challenges the world was facing and the contribution of developed countries, emerging markets and low-income nations.
He explained: “Looking across the world it is easy to be consumed by a sense of despair. Yet – in all corners of the globe, people are eager to go to work, and to create with their own hands. They want a better life for their children and grandchildren.


“I have felt that yearning among entrepreneurs in Nigeria, seen it in the proud eyes of artists in Indonesia, and touched it on the worn hands of farmers in Jamaica.”


He noted that the bank “has an obligation – a duty – to match their energy with a fierce determination”, adding, “we must be the hand on the back – moving people forward. We must be an institution that exports optimism and impact.
“But we must change to make good on that promise and deliver on what is being demanded. The World Bank is turning to face the wind.
“That evolution began months ago, and today there is a new vision and mission for the World Bank. To create a world free of poverty – on a liveable planet.”


Banga also pointed out that Nigerians were among millions of people doing their best to be part of the solution.
 He said the multilateral institutions were faced with “declining progress in our fight against poverty, an existential climate crisis, food insecurity, fragility, a fledgling pandemic recovery, and are feeling the effects of conflicts beyond the front.”
He added: “Economic growth in much of the developing world is retreating. Falling from six percent to five percent in two decades, and on track for just four percent over the next seven years.


“With each lost percent, 100 million people are pulled into poverty and another 50 million people are pushed into extreme poverty.
“Dig deeper and you’ll find people struggling to provide for themselves and their families as incomes have stagnated. In Sub-Saharan Africa per capita income is the same as it was 14 years ago.
“Meanwhile, debt has increased throughout emerging markets – doubling in Africa – shackling countries to the ground just as they’re trying to rise.


“We are living in a world with alarming challenges but at a time of intensifying polarisation and extremes.
“Beneath the surface, a growing mistrust is pulling the Global North and South apart, complicating the prospect of progress.
“The Global South’s frustration is understandable. In many ways they are paying the price for the prosperity of others.
“When they should be ascendant, they’re concerned that promised resources will never manifest, they feel energy rules aren’t applied universally, and they’re worried a burgeoning generation will be locked into a prison of poverty.”
According to the World Bank chief, “we must find a way to finance a different world where our climate is protected, pandemics are manageable – if not preventable – food is abundant, and fragility and poverty are defeated.”

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IMF Downgrades Nigeria’s Economic Growth Forecast For Year 2023 To 2.9% https://thecommerceafrica.com/imf-downgrades-nigerias-economic-growth-forecast-for-year-2023-to-2-9/ https://thecommerceafrica.com/imf-downgrades-nigerias-economic-growth-forecast-for-year-2023-to-2-9/#respond Wed, 11 Oct 2023 13:57:54 +0000 https://thecommerceafrica.com/?p=15398 The International Monetary Fund (IMF) has downgraded Nigeria’s economic growth forecast for the year 2023 to 2.9%.

This is against its forecast for 2022 which stood at  3.3 %.

The latest forecasts were contained in the IMF’s World Economic Outlook report, October 2023 released on the sidelines of the ongoing World Bank/IMF Annual Meetings in Marrakesh, Morocco.

“For Nigeria, in particular, we have a growth forecast that goes from 3.3 per cent this year [2022] to 2.9 per cent next year [2023], before going up to 3.1 per cent in 2024. There is a downward revision for this year.”

According to the IMF, “Partly, this is because of the demonetization, the high inflation, and the shocks to agriculture and hydrocarbon output. That is coming on top of those external headwinds,”

IMF bemoaned the negative effects of high inflation on consumption of goods and services across the continent of Africa

“Inflation is peaking but is still in double digits for more than 40 per cent of the economies. We see African growth at 3.3, 4 per cent. That’s above the global average, but it’s below the potential that Africa has and that it needs to catch up more quickly toward higher income levels.”

“The shocks hitting growth are diverse, but there are several external ones coming from the higher food and fertilizer prices still from the war in Ukraine; the funding squeeze‑‑harder to get capital; and the still very high spreads, therefore, for several economies; and exchange rate pressures,” the statement also detailed

Despite the downgrade, Head, World Economic Studies Division of the financial body, Daniel Leigh, expressed optimism in the proactive measures President Bola Ahmed Tinubu had taken to cushion the effects of the inflation crisis

“I would also add that President Tinubu has moved quickly with important reforms, including ending the fuel subsidies and unifying the official exchange rate. We welcome these initial bold reforms because we see them as paving the way toward stronger and inclusive growth.

Likewise, the IMF special report, titled, “In Pursuit of Stronger Growth and Resilience called for a cooperative approach to maintain economic stability

“Against this background, Africa’s policymakers should prioritize efforts to boost resilience by ensuring macroeconomic stability and accelerating structural reforms to foster stronger, more inclusive growth.”

“The international community should maintain and enhance a cooperative approach to the provision of global public goods. In the case of Africa,
it is essential to support the region’s most vulnerable climate- and conflict-affected states,” it read.

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Allow Multilateral Development Banks(MDBs) use Special Drawing Rights-Adesina urges IMF https://thecommerceafrica.com/allow-multilateral-development-banksmdbs-use-special-drawing-rights-adesina-urges-imf/ https://thecommerceafrica.com/allow-multilateral-development-banksmdbs-use-special-drawing-rights-adesina-urges-imf/#respond Sat, 24 Jun 2023 16:15:37 +0000 https://thecommerceafrica.com/?p=14329

The President of African Development Bank (AfDB),Dr Akinwumi Adesina has called on the International Monetary Fund((IMF) to grant permission to Multilateral Development Banks(MDBs) to use its Special Drawing Rights to meet the financing deficit of vulnerable jurisdictions.

Speaking on a panel at the Summit for a New Global Financing Pact, African Development Bank President Akinwumi Adesina reiterated the case for multilateral development banks (MDBs) to be allowed to use the International Monetary Fund’s #SpecialDrawingRights.

Adesina said MDBs could leverage an allocation of $200 billion and turn this into a trillion dollars. “The MDBs are leveraging machines. They can leverage the SDRs by three to four times. So that leverage is very important to have,” he remarked.

IMF Managing Director Kristalina Georgieva, who also participated in the panel, announced that her institution had reached its target of making $100 billion in special drawing rights available for vulnerable countries.

Opening the summit on Thursday, United Nations chief António Guterres said many African nations were spending more on debt repayments than on much-needed #health care. He called for greater access to liquidity for developing countries through the IMF’s Special Drawing Rights.

Special Drawing Rights (SDR) is an international reserve created by the IMF to supplement the official reserves of its member countries. The SDR is not a currency.It is a potential claim on the freely usable currencies of IMF members.As such, SDRs c an provide a country with liquidity.

Source:AfDB

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Ghana expects first $600 mln tranche from IMF after Wednesday meeting – minister https://thecommerceafrica.com/ghana-expects-first-600-mln-tranche-from-imf-after-wednesday-meeting-minister/ https://thecommerceafrica.com/ghana-expects-first-600-mln-tranche-from-imf-after-wednesday-meeting-minister/#respond Sun, 14 May 2023 20:01:34 +0000 https://thecommerceafrica.com/?p=13577 Ghana expects the International Monetary Fund to approve a first loan tranche of $600 million as soon as Wednesday, paving the way for disbursement within a week, Minister of State in the Finance Ministry Mohammed Amin Adam told Reuters on Sunday.

Ghana is seeking $3 billion from the Fund to shore up its battered economy. On Friday, IMF Managing Director Kristalina Georgieva said Ghana’s official creditors had provided the necessary financing assurances for the IMF Executive Board to look at signing off on the loan.

“We expect a deal on Wednesday. With the disbursement, there is going to be $600 million as a first tranche just immediately after the approval,” Adam said by phone, adding that Ghana hoped to receive the funds within a week of the board’s decision.

He said a second tranche of $600 million is expected to be approved after a successful first review of the programme, sometime in November or December, with the rest disbursed in equal tranches of $360 million after semi-annual reviews.

The funds will boost Ghana’s coffers and help it work towards the target of foreign reserves amounting to the equivalent of three months of imports by 2026, he said.

Like some other smaller, riskier emerging markets including Sri Lanka and Zambia, Ghana faces a debt overhaul after its already strained finances buckled under the economic fallout from COVID-19 and Russia’s invasion of Ukraine.

Some $5.4 billion of debt to official creditors has been earmarked for restructuring, according to government data, as well as $14.6 billion of debt to private overseas creditors.

Adam said he expected negotiations with both sets of creditors to go well once the IMF signs off on the loan.

“Confidence is going to be restored and we expect that stakeholders will cooperate and will be encouraged to negotiate favourable terms with us,” he said, adding that the date for talks had not yet been set for either group.

Ghana has also turned to the World Bank as it fights to restore macroeconomic stability and end its worst economic crisis in a generation that has fuelled protests over the soaring cost of living.

Adam said the government was far along in talks with the World Bank to provide additional support of $900 million to be disbursed in three equal instalments of $300 million over three years.

“We are far advanced, almost concluding negotiations,” he said.

The World Bank has also agreed to support a financial sector stability fund with $250 million to help Ghana address the insolvency and liquidity challenges following a domestic debt exchange programme, which has affected some domestic banks.

Adam said the government was also in talks with the African Development Bank for over $100 million for the stability fund.

Source: Reuters

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4 things Africa must do to make AfCFTA work – IMF Chief https://thecommerceafrica.com/4-things-africa-must-do-to-make-afcfta-work-imf-chief/ https://thecommerceafrica.com/4-things-africa-must-do-to-make-afcfta-work-imf-chief/#respond Sat, 13 May 2023 14:15:00 +0000 https://thecommerceafrica.com/?p=13557 If the AfCFTA is implemented, trade barriers removed, long trade barriers removed and logistics transportation improved, intra continental can grow by 53%

Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, stated that Africa must focus on reducing Trade Barriers, regional supply chains, economic diversification and focus on youth-led job creation to make the African Continental Free Trade Area (AfCFTA).

She disclosed this on Friday as the IMF discussed its paper that talks about the potential for the AfCFTA.

The 4 Points

Georgieva stated that the paper will focus on the minds of policymakers to unleash development, adding that the 3 points that African policymakers need to focus on are:

  1. Reduction of trade barriers, if Africa decides to follow the ASEAN example, and bring trade barriers from 6% down to 1% that would be a major step in the direction; she said Africa needs to remove tariff barriers and non-tariff trade barriers.
  2. Use trade as an engine for integration in global supply chains and make regional supply chains vibrant.
  3. Diversify the economy, when countries trade more, they deepen specialization that boosts productivity.
  4. A vibrant youthful population for jobs, as trade is a massive generator for jobs, if we are to get 800 million jobs necessary over the next decade; we need trade to be the engine of job development.

AfCFTA’s progress

She also noted that since 2018, countries of the continent have embraced AFCFTA, adding that 54 out of 55 have signed, and 44 have ratified already.

  • “But of course, legislating is only the beginning, what matters is what policies are put in place so the continent can capture the advantage of trade which are enormous for Africa.
  • “What has been a disadvantage, more barriers to trade, limited intra continental trade can be turned around and be an opportunity, if the AfCFTA is implemented, trade barriers removed, long trade barriers removed and logistics transportation improved, intra continental can grow by 53%

She added that trade outside of the continent can grow by 15%, and that translates into tremendous benefits in terms of an increase in income, which is a 10% increase in income as a result.

“Just imagine what can be done with that kind of increase, it is also remarkable, the identification by what needs to be” she added.

Backstory

Nairametrics reported last week that the International Monetary Fund (IMF) said that the African Continental Free Trade Area (AfCFTA) initiative can help African countries reduce climate change risks. The IMF stated this in its departmental paper on the continent, titled: “Trade Integration in Africa: Unleashing the Continent’s Potential in a Changing World”. The departmental paper was released on May 5.

Reviewing climate change effects

According to the IMF, rising average temperatures are expected to lower gross domestic product (GDP) growth and exacerbate food insecurity in Africa. Also, the rising frequency of natural disasters associated with climate change would also be expected to disrupt economic activity at an increasing frequency on the continent.

Solutions abound within Africa

The IMF paper, however, stated that despite these challenges, regional trade integration in Africa can be an important element of a climate adaptation strategy in any of the following ways:

  • Regional trade integration could boost countries’ resilience by reducing their overreliance on sectors that are at increased risk of being adversely affected by climate change-related natural disasters.
  • By facilitating the flow of goods across borders, regional trade integration would help countries diversify sources of climate-vulnerable products.
  • Regional trade integration could open opportunities for increased regional trade related to climate-related infrastructure, services, and finance.
  • Increased global competition for commodities and critical minerals may allow some African economies to deepen their pre-existing integration into global value chains as upstream suppliers of raw materials.
  • The AfCFTA presents African countries with an opportunity to diversify their export destinations, import sources and patterns of cross-border value chain integration by boosting regional trade.
  • Under the AfCFTA, most African economies would see a decline in the concentration of their export destinations, with generally larger declines for countries that currently have a relatively high export concentration. A greater diversity of export destinations would in turn increase economic resilience.

Source: Nairametrics

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Join BRICS, break the yoke of Dollar Dominance-Falana urges FG https://thecommerceafrica.com/join-brics-break-the-yoke-of-dollar-dominance-falana-urges-fg/ https://thecommerceafrica.com/join-brics-break-the-yoke-of-dollar-dominance-falana-urges-fg/#respond Mon, 08 May 2023 19:28:24 +0000 https://thecommerceafrica.com/?p=13475 Human rights activist, Femi Falana has urged the Federal Government to renew its currency swap with China to revitalise Nigeria’s comatose economy.

Falana also accused the International Monetary Fund (IMF) and the World Bank of conniving with the Central Bank of Nigeria to exasperate currency swap with China by promoting the US dollar.

He, then, advised that the country should follow in the steps of other countries and join the BRICS bloc (Brazil, Russia, India, China and South Africa) of emerging economies to launch another international currency.

Falana made this known in a statement titled, ‘Why Nigeria must join BRICS’, released on Monday.

He blamed the global financial institutions for promoting the dollar in Nigerian “While other nations are making arrangements to promote their local currencies.”

The legal giant said, “About five years ago, the Federal Government of Nigeria and China entered into a currency exchange agreement. 

“The transaction, which was valued at Renminbi (RMB) 16 billion or N720 billion was aimed at providing adequate local currency liquidity to Nigerian and Chinese industrialists and other businesses, thereby, reducing difficulties encountered in the search for the United States Dollar.

The swap was also designed to improve the speed, convenience and volume of transactions between the two countries.”

“But the International Monetary Fund and the World Bank which superintend the Central Bank of Nigeria have colluded with the Central Bank of Nigeria to frustrate the currency swap

“The purpose of the economic sabotage is to promote the dominance of the United States Dollar in Nigeria. 

“Even though Nigeria has since become an important source of oil and petroleum for China’s rapidly growing economy, the Federal Government has continued to demand for payment in Dollar instead of Naira,” he added.

He continued, “While other nations are making arrangements to promote their local currencies, the Federal Government has continued to dollarise the Nigerian economy.”

While reviewing the countries that have shown interest in aligning with BRICS, he said they “have concluded plans to launch a new international currency to be used for cross-border trade by the member nations.”

“Ahead of the August summit of the BRICS scheduled to hold in South Africa, a total of 24 nations are now looking to build a strategic alliance that will challenge the US dollar’s decades-long role as the world’s reserve currency.

The 24 nations include Saudi Arabia, Iran, Argentina, the United Arab Emirates, Algeria, Egypt, Bahrain, Indonesia and a couple of African countries.

“This trend to reject neo-liberal orthodoxy policy formulation is captured by the South Korean development economist of the University of London, Ha-Joon Chang, in his recent book, “Edible Economics” as follows: “The rejection of the neo-liberal Washington Consensus policies has been less visible in other parts of the developing world, such as Asia and Africa.

“In Asia, it was mainly because the countries in the region had not followed the Washington Consensus policies in the first place as rigidly as did the Latin American countries. Their generally good economic performance has meant that relatively few Asian countries have had to borrow heavily from the Washington institutions, making it less necessary for them to adopt neo-liberal policies.”

“Moreover,many Asian countries have had a less ideological approach to economic policies, so, even when they adopted neo-liberal policies, those policies were usually not implemented in their extreme forms, as they were in Latin America.

“The African countries, even though they have suffered even more than did the Latin American countries from the Washington Consensus policies, have found it more difficult to openly reject them, given their greater dependence on the Washington institutions for financing.

Even so, in the last decade or so, there has been an increasing recognition across the African continent of the need for a much more active role for the state than what is recommended by the Washington Consensus.”

Falana pointed out, “The point at issue is that the Nigerian state henceforth should be more active in giving a pro-people direction in the political economy. Nigeria should also take a lead in the execution of the African Union (AU)’s project of the African Continental Free Trade Area (AfCFTA) which took effect two years ago. The country should strive for the benefits of promoting trade at such a regional level as an alternative to the increasing dollarisation of a vulnerable economy.”

Imploring the FG, he said, “So, instead of the failed redesign of the Naira the federal government should take urgent steps to save the Naira by renewing the currency swap between Nigeria and China. Furthermore, similar agreements should be undertaken with other friendly nations so that Nigeria can pay for imports in Naira. In particular, buyers of Nigeria’s crude oil and natural gas should henceforth be made to pay in Naira. 

“At the same, the federal government should join forces with the BRICS to promote a new international currency. This is in line with section 19(e) of the Constitution, which has imposed a duty on the Government of Nigeria to promote “a just world economic order

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Nigeria: IMF cautions as eNaira transactions hit N1.4m https://thecommerceafrica.com/nigeria-imf-cautions-as-enaira-transactions-hit-n1-4m/ https://thecommerceafrica.com/nigeria-imf-cautions-as-enaira-transactions-hit-n1-4m/#respond Thu, 04 May 2023 15:37:19 +0000 https://thecommerceafrica.com/?p=13410 The Managing Director of the International Monetary Fund, Kristalina Georgieva, has cautioned about the unforeseeable “consequences” that could be brought about by the retail central bank digital currencies.

Georgieva expressed her concern about retail CBDCs in a May 1 interview at the Milken Institute’s 2023 Global Conference.

According to the IMF boss, the IMF considers retail CBDCs to have far more room for error than wholesale CBDCs

She said, “We think that wholesale CBDCs can be put in place with fairly little space for undesirable surprises, whereas retail CBDCs completely transform the financial system in a way that we don’t quite know what consequences it could bring.”

According to a report by Cointelegraph, retail CBDCs are state-backed virtual currencies issued by central banks for use by consumers and businesses while wholesale CBDCs are similarly central bank-issued but are designed to allow financial institutions to carry reserve deposits with a central bank.

The IMF MD noted that the organization was collaborating with about 50 countries to ensure best practices are adopted, which she expects to have a huge influence on banks and economies in the future.

Earlier, the IMF had announced that it would publish a CBDC handbook to help central banks with CBDC design and implementation, a decision resulting from the unprecedented levels of interest from nations around the world.

The eNaira introduction on October 25, 2021, made Nigeria one of the first countries in the world to develop a central bank digital currency, that is available to the public.

Africa’s most populous nation joined the Bahamas and the Central Bank of the Eastern Caribbean on the coveted list.

During the launch, the Governor, Central Bank of Nigeria, Godwin Emefiele, stated that the eNaira was presented after four years of research by the apex bank. The CBN defines the eNaira as a digital currency denominated in naira that serves as a medium of exchange and a store of value.

The CBN governor claimed that 33 banks were successfully integrated into the eNaira network, with the apex bank minting N500m for the currency’s inauguration.

The regulator said N200m had been issued to financial institutions and over 2,000 customers had also been on-boarded as of the time of the launch.

The CBDC speed wallet app and merchant wallet were made available for download once eNaira became operational.

As of December 2021, the eNaira consumer wallet had over 583,000 downloads, while the merchant wallet had 83,000 downloads from over 160 countries.

On Tuesday, the CBN governor disclosed that e-Naira transactions hit about N1.4m as of March 31, 2023.

Emefiele, who was represented by the Director, of Policy, of the CBN, Dr Hassan Mahmoud, said that his team took advantage of COVID-19 and other developments in-country to drive the electronic payment channels.

He said, “The advent of the Corona Virus pandemic no doubt triggered rapid advancements in financial technology leading to speedy digitisation of money and finance.

“The CBN took advantage of the opportunity by launching the eNaira in October 2021. The eNaira was developed to broaden the payment possibilities of Nigerians, foster digital financial inclusion, with potential for fast-tracking intergovernmental and social transfers.

“Since its launch, the CBN has continued to modify its features to make it more accessible to a wide range of users.

Today, one does not need a smartphone to use the eNaira as it has become compatible with all generations of mobile devices (old and new). Till date, over N1.4m transactions have passed through the eNaira platform.”

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World Bank advises Nigeria to unify the nation’s multiple exchange rate https://thecommerceafrica.com/world-bank-advises-nigeria-to-unify-the-nations-multiple-exchange-rate/ https://thecommerceafrica.com/world-bank-advises-nigeria-to-unify-the-nations-multiple-exchange-rate/#respond Sun, 23 Apr 2023 15:47:17 +0000 https://thecommerceafrica.com/?p=13143 The World Bank has advised the Nigerian Government to unify the nation’s multiple exchange rate windows and carry out a number of other reforms to strengthen the economy and restore macroeconomic stability.

In its latest Macro Poverty Outlook for Nigeria: April 2023, the bank said implementing economic reforms in the non-oil revenue space would reduce fiscal and debt pressures alongside the planned removal of fuel subsidies by the Federal Government.

The bank had said worsening economic environment in the country had pushed millions of Nigerians into poverty through chronically high inflation that has been on the rise since 2019, especially for food items, eroding the purchasing power of poor and vulnerable Nigerians and increasing poverty.

The inflation reached an annual average of 18.8 per cent in 2022, a 21-year high, with food inflation in 2022 estimated to have pushed five million Nigerians into poverty.

However, outlining additional solutions to the proposed subsidy removal which is expected to drastically increase inflation, the World Bank advised the government to restore macroeconomic stability to help cushion its effects.

It read, “Macroeconomic stability has weakened amidst declining oil production, costly fuel subsidies, exchange rate distortions, and monetization of the fiscal deficit.

“The authorities can strengthen the economy by restoring macroeconomic stability through reforms to increase oil and non-oil revenues, tighten monetary policies to reduce inflation and unify the multiple FX windows and adopt a single, market-responsive exchange rate.”

It added that increased insecurity as well as adverse climate change effects could further dampen the economic outlook for Nigeria.

It asserted that”Oil price booms have previously supported the Nigerian economy, but this has not been the case since 2021. Instead, macroeconomic stability has weakened amidst declining oil production, costly fuel subsidies, exchange rate distortions, and monetization of the fiscal deficit. The deteriorating economic environment is leaving millions of Nigerians in poverty. Risks are tilted to the downside given the lack of macro-fiscal reforms, the naira”.

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IMF, World Bank propose solution to debt restructuring hurdles https://thecommerceafrica.com/imf-world-bank-propose-solution-to-debt-restructuring-hurdles/ https://thecommerceafrica.com/imf-world-bank-propose-solution-to-debt-restructuring-hurdles/#respond Tue, 11 Apr 2023 11:53:18 +0000 https://thecommerceafrica.com/?p=12902 The World Bank will push to resolve the mounting debt problems of poor countries.

Along with the International Monetary Fund (IMF), the World Bank will present concrete proposals to address some of the biggest restructuring roadblocks at the ongoing Spring Meetings, President David Malpass said in a blog post on Sunday.

It will introduce the ideas at the Global Sovereign Debt Roundtable, a meeting led by the Bretton Woods institutions and Group of 20 chair India in Washington. 

There are two areas where Malpass sees the possibility for a breakthrough, he said on a call with reporters on Monday.

One is suspending debt-service payments at the start of the process, which would give incentives for reaching a deal and protect debt repayment ability.

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