The African Private Capital Association (AVCA), called for increased investment to attract the $ 2.3 trillion of domestic capital in Africa that needs to be unlocked.
This was stated at the AVCA 20th Annual Conference & VC Summit in Johannesburg, with the ‘embracing change and shaping the next era of Africa’s prosperity’.
Institutional investors, fund managers, policymakers, global and local investors and entrepreneurs opened the major international gathering, convening 700+ private capital leaders from over 60 countries to align on strategies to power the next 20 years of Africa’s growth.
Speaking, chief executive officer, AVCA, Abi Mustapha-Maduakor introduced the flagship forum by noting that, despite a challenging macroeconomic environment in recent years, Africa’s private capital industry has remained resilient and will continue to rise.
Chairman and co-founder, Phembani Group, Phuthuma Nhleko followed with an instructive keynote address rallying private investors to back innovative businesses to drive prosperity at scale.
Calling for a new plan for the transformation ahead, he argued that, “the size of population generates 50 per cent of Gross Domestic Product (GDP). By 2050, we will have 2.5 billion Africans that constitute over a quarter of humanity, with over 40 per cent of youth below the age of 18. By this time, Nigeria’s population is expected to be bigger than the US.”
Co-founder and managing director, Alitheia Capital, Tokunboh Ishmael described the exponential growth witnessed throughout the second decade of private capital expansion in Africa.
Despite clear signs of progress involving the increase in fund managers and assets under management (AUM), industry titans including Wale Adeosun, Founder and Chief Executive Officer, Kuramo Capital Management and Vincent Le Guennou, Chief Executive Officer, Africa50’s Infrastructure Acceleration Fund, aligned that Africa’s private capital industry remains a nascent ecosystem with immense potential. Founder and chief executive officer, Kuramo Capital Management, Wale Adeosun said on the benefits of bringing institutional investors from the U.S into Africa.
Chief executive officer, Africa50’s Infrastructure Acceleration Fund, Vincent Le Guennou proposed that the traditional private equity model replicated in the continent needs to be adapted and advocated for proactive efforts to attract the $2.3 trillion of domestic capital in Africa that needs to be unlocked, saying, this needs to be a key objective for the next 10 years.
Also, the Pension funds in Africa were highlighted as a vital source of capital to diversify funding and bridge the finance gap. The partner and chief operating officer, Joliba Capital, Dieynaba Kamara expressed that most pension funds needed ‘education on investing in private equity as an asset class’, especially in Francophone Africa where pension funds prioritise hard assets such as real estate.
Director and head of Funds Solutions, British International Investment, John Owers said, ‘a functioning private capital ecosystem needs to provide options for exits for Limited Partners (LPs), and that is what the secondary market does.’
The Nigerian equities yesterday sustained the bearish run as the overall capitalization lost N673 billion. The All-Share Index (ASI) lost 1,190.24 points, representing a decline of 1.20 per cent to close at 98,121.30 points. Also, market capitalisation declined by N673 billion to close at N 55.494 trillion.
The downturn was driven by price depreciation in large and medium capitalised stocks amongst which are; MTN Nigeria Communications (MTNN), Transcorp Hotels, FBN Holdings (FBNH), Fidson Healthcare and Transnational Corporation (Transcorp).
However, market breadth closed positive, as 22 stocks gained relative to 19 losers. SUNU Assurance, Neimeth International Pharmaceuticals and The Initiates Plc (TIP) emerged the highest price gainer of 10 per cent each to close at N1.21, N1.98 and N1.98 respectively, per share. CAP followed with a gain of 9.90 per cent to close at N28.85, while UPDC rose by 9.76 per cent to close at N1.35, per share.
On the other side, Transcorp Hotels and MTNN led the losers’ chart with 10 per cent each to close at N87.93 and N201.60 respectively, while Oando followed with a decline of 9.90 per cent to close at N9.10, per share.
FBNH depreciated by 9.82 per cent to close at N19.75, while Fidson Healthcare down by 9.75 per cent to close at N14.35, per share.
The total volume traded declined by 31.10 per cent to 395.751 million units, valued at N9.576 billion, and exchanged in 7,907 deals. Transactions in the shares of Guaranty Trust Holding Company (GTCO) led the activity with 81.407 million shares worth N2.931 billion. Zenith Bank followed with account of 46.156 million shares valued at N1.691 billion, while United Bank for Africa (UBA) traded 41.600 million shares valued at N953.518 million.
FBNH traded 23.44 million shares worth N480.999 million, while Access Holdings traded 22.301 million shares worth N361.895 million.
The Nigerian National Petroleum Company Limited (NNPC Ltd) and its Joint Venture partner in the Awoba Unit Field, Newcross Exploration and Production Ltd, have restarted production from the Awoba field.
The field which last contributed production to the Bonny Terminal in 2021 and was finally shut down in February 2022 due to evacuation issues and crude oil theft, has been averaging 8,000 barrels per day, and production is expected to ramp up to 12,000 barrels per day within the next 30 days.
The NNPCL noted that the field, restarted on April 13, 2024, the Awoba field is also expected to significantly boost gas supply to the power sector and other gas-based industries and optimise production from the nation’s hydrocarbon assets to boost revenues and meet the nation’s OPEC production quota, according to a release signed by its spokesman, Olufemi Soneye.
The Awoba Unit which straddles OMLs 18 and 24 is located in the mangrove swamp south of Port Harcourt, Rivers State. Both OML 18 and OML 24 assets are under the management of the NNPC Upstream Investment Management Services (NUIMS).
NNPC Ltd has been recording a string of production successes from the JV portfolio which have significantly lifted overall national production. Besides the recent start of production at the Madu Field by the NNPC Ltd/First E&P JV, the company has achieved the restart of production at OMLs 29 and OML 18 in late 2023 which have steadily contributed an average of 60,000bpd to the nation’s production output since their restart.
Speaking on the development, the group chief executive officer, Mele Kyari, ascribed the achievement to the President Bola Ahmed Tinubu administration’s success in providing an enabling operating environment for businesses to thrive.
He expressed appreciation to all stakeholders (staff, operators, host communities, government security agencies, and private security contractors) who played a pivotal role in achieving the feat.
Abuja Investments Company Limited has announced a temporary suspension of the rehabilitations at the International Conference Centre (ICC) till July 5th 2024.
According to the company, the directive was authorised by the minister of the FCT, Nyesom Wike.
The company said that the decision was made to accommodate two significant events that are of peculiar nature and of importance to the nation and the international community:
“The Nigeria Air Force Anniversary tagged The NAF @ 60 Anniversary, themed ‘Nigerian Air Force at 60: Leveraging Strategic Partnerships in Aerospace Innovations for Regional Security,’ will feature a series of activities.
The Nigeria Oil and Gas energy week which is scheduled to take place in June 2024. In parallel the 23rd NOG Energy Week Conference & Exhibition, a cornerstone event for the international energy sector. We regret any inconvenience this might have caused. AICL remains committed to providing a world-class venue for conferences, conventions, and cultural events in Abuja.’’
…As CBN again slashes Customs exchange rate By 7.1%
Despite significant drop in foreign exchange at the official, parallel markets as well as exchange rate for calculating import duties by the Nigeria Customs Service (NCS), cargo and vehicles importation are yet to pick up at the nation’s seaports and airports across the country, LEADERSHIP can report.
This is as the Central Bank of Nigeria (CBN), again adjusted the Customs exchange rate for clearance of cargoes at the nation’s seaports and airports from N1238/$1 to N1,150/$1.
ccording to data on Nigeria trade hub, the exchange rate has been adjusted by 7.1 per cent or N88 from its last rate of N1,238/$1 by the CBN. The reduction of the Customs exchange rate is in response to appreciation of naira against the United States dollar in the official and parallel markets. Also, the CBN had earlier stated in response to complaints over the frequent changes in the Customs’ FX rate that the exchange rate on the data of the Form M application will be used in calculating the duties collection.
The Nigeria Customs Service (NCS), in collaboration with the CBN, regularly adjusts the exchange rate to align with the official market rate on the NAFEM window, resulting in frequent changes in the rate. However, clearing agents have called on the CBN to ensure that the exchange rate for cargo clearance is reduced to N600/$1, to boost port activities.
They argued that activities is yet to pick up at the port despite the depreciation of the United States dollar and appreciation of naira in the last few months.
Speaking, a clearing agent operating at Tin-Can Island port, Akinola Oluwaseun, said sustaining the foreign exchange markets will make economic activities boom in the seaport. According to him, there has been a significant drop in Customs duty payable on imported Cargo and vehicles.
He stated that agents, however, target Exchange Rate for Customs Clearance to be between N500 or N600/$1 for activities to fully take off.
“The money payable for Customs’ exchange rate has dropped and that has made the duty payment drop. We hope the exchange rate can drop to N600/$1. Foreign exchange especially dollars has started dropping in the foreign exchange markets as well as in the clearance of cargoes at the seaport. We hope that by next week, FX will come down more and activities will pick up,” Akinola stated.
LEADERSHIP reports that last Wednesday, the naira strengthened to N1,250 to a dollar, gaining 0.8 per cent (N10) over N1,260 closed on Tuesday at the parallel market, popularly called the black market.
This showed appreciation compared to N1,825/$1, it traded at the parallel market on February 20, 2024.
Also, the Customs FX rate for computing duty on imported cargo dropped from N1,515/$1 in March, 2024 to N1,150/$1 on Sunday, April 21, 2024.
However, maritime experts have said that low import despite naira gaining strength was due to planning and to be assured that the policies ensuring forex growth is sustainable.
According to the experts, sustainability of the FX reforms will lead to further investment by importers and other investors.
Speaking to LEADERSHIP, the chief executive officer, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said it will take a few weeks before activities can pick up at the nation’s sea and airports.
According to the former director general, Lagos Chamber of Commerce and Industry, the international trade cycle whether import or export takes 60 days so it takes time to make a decision to import, to source the fund and to mobilise and do all sorts of things.
“There is normally a lag when we have policy change and when we have improvement in some economic indicators and when we begin to see the response from investors. International trade cycle, whether import or export, takes 60 days, so it takes time to make a decision to import, to source for funds, to mobilise and do all sorts of things.
“Secondly, people already have ongoing transactions and some have stock that they have bought so until they exhaust some of those things we can now begin to rush and jump into transactions. Before we can see the impact, we can talk about 2 months or more.
“Also, there are people who will want to see how sustainable the policies that led to the strengthening of naira before they can resume Importation. So, it’s more about sustainability of policies that will lead to confidence for Importation of cargoes.
“However, let’s give some weeks then we will start seeing the improvement and impact interns of Port traffic,” Dr Yusuf stated.
On his part, the National Publicity Secretary, Association of Nigerian Licensed Customs Agents (ANLCA), Emmanuel Onyeme, stated that the government should encourage export in order to balance the nation’s trade deficit.
Onyeme aligned with CPPE Chief, Dr Yusuf, saying importers are waiting for sustainability of the exchange rate before they can start importing cargoes into the country.
He, however, argued that cargo import has risen by 20 percent in the last one month compared to last December when naira started depreciating.
“Actually, importation is improving compared to when the exchange rate was high. Manufacturers have started bringing raw materials but not as what they are doing before. They have improved and those importing used vehicles too have improved as we can see shipment coming in.
“We can say the improvement was by It’s 20 percent increment. I think the government needs to place more emphasis on export to see how incentives can be introduced to see how people can go into export. Because with more exports, the country will get more forex and that will sustain the current gain of the reform in the FX markets,” he stated.
To achieve balance of trade, the import and export must be balanced and the government should sustain the reform that made naira gain against Forex, they should continue doing it. If we stabilise exports, there will be more foreign exchange to stabilise the economy, so sustainability will improve port activities and as such, the economy will improve,” Onyeme argued.
On his part, a clearing agent operating at Tin-Can Island port, Akinola Oluwaseun, said sustaining the foreign exchange market’s gain will make economic activities boom in the seaport.
According to him, there has been a significant drop in Customs duty payable on imported Cargo and vehicles.
He stated that agents, however, target Exchange Rate for Customs Clearance to be between N500 or N600/$1 for activities to fully take off.
“The money payable for Customs’ exchange rate has dropped and that has made the duty payment drop. We hope the exchange rate can drop to N600/$1. Foreign exchange especially dollars has started dropping in the foreign exchange markets as well as in the clearance of cargoes at the seaport. We hope that by next week, FX will come down more and activities will pick up,” Akinola stated.
Alert Microfinance Bank (MFB) Group is planning to support over 100,000 Micro Small and Medium Enterprises (MSMEs) in 2024 with affordable business loans.
The move, according to the company, was aimed at addressing the lack of access to credit for businesses which is still a major challenge hindering the growth and development of MSMEs in the country.
The chief executive Officer (CEO), Alert MFB Group, Dr. Olanrewaju Kazeem, at the grand opening of Alert Group headquarters and product launch in Lagos, at the weekend, said the Group, so far, has supported over 35,000 businesses and would be deploying the use of technology and credible partnerships to achieve the 100,000 target.
To him, “Based on our plans for the year, we are looking at a massive upscale of supporting over 100,000 businesses across our branches. We believe with this, within the next one year, we should be able to bring an additional 100,000 businesses into the Group.”
The company, he stressed, is focused more on supporting MSMEs, explaining that about 98 per cent of its loans are extended to supporting businesses.
He stated that, courtesy of the licence from Central Bank of Nigeria (CBN), the Group’s intention is to expand across Lagos State, while also pointing out plans to open up 10 additional branches to take its number of outlets in the State to 20.
“As it stands today, Alert Microfinance Bank is a State licensed bank by the CBN, so, this means we can operate across the State. Today, we have about 10 branches across Lagos and they have supported over 30,000 clients. We have also disbursed over N30 billion so far,” he stated.
He, however, commended the federal government for establishing the microfinance Bank policy, saying that is a step in the right direction that has benefited many Nigerians.
Earlier, the commissioner of Finance, Lagos State, Mr. Abayomi Oluyomi said, according to the National Bureau of Statistics (NBS), 50 per cent of Nigeria’s Gross Domestic Product (GDP) representing 60 million people are employed by several millions of MSMEs in the State.
He stated that Alert MFB Group has been in the forefront in the past ten years to empower small scale businesses in the State, saying, the Group has so far disbursed N30 billion loans to over 30,000 individuals.
“What we are saying is that the Group is a partner of Lagos State because they are about empowering the people which is one of the core mandates of the Lagos State government,” he said.
“As we gather here, it is imperative to recognize the pivotal role that Alert MFB as a SME enabler is playing in driving economic growth, fostering innovation and creating employment opportunities in Lagos State and Nigeria at large,” he noted.
Opening the week, the local equities market yesterday gained N71 billion, recovering some of the prior week losses.
The All Share Index (ASI) rose by 125.30 points, representing a gain of 0.13 per cent to close at 99,665.05 points. Accordingly, market capitalisation gained by N71 billion to close at N56.367 trillion. The upturn was impacted by gains recorded in medium and large capitalised stocks, amongst which are; Guaranty Trust Holding Company (GTCO), Zenith Bank, Unilever Nigeria, Lafarge Africa and Transnational Corporations (Transcorp).
This week, United Capital Plc said “we expect activities in the fixed income market to continue to stand as a strong demotivator toward equities investments. We expect the status quo to remain same, with bearish sentiments outweighing. From an alternate viewpoint, we expect bargain hunting activities to lurk in the shadows, owing to the tremendous opportunities presented by the recent bearish trend (particularly around the banks).”
As measured by market breadth, market sentiment was negative, as 26 stocks gained relative to 19 losers. Japaul Gold & Ventures recorded the highest price gain of 9.58 per cent to close at N1.83, per share. GTCO followed with a gain of 9.55 per cent to close at N36.70, while FTN Cocoa Processors rose by 8.76 per cent to close at N1.49, per share.
Universal Insurance went up by 8.57 per cent to close at 38 kobo, while RT Briscoe Nigeria appreciated by 8.47 per cent to close at 64 kobo, per share.
On the other hand, The Initiates Plc (TIP) led the losers’ chart by 10 per cent, to close at N1.80, per share. Prestige Assurance followed with a decline of 9.84 per cent to close at 55 kobo, while Omatek Ventures declined by 9.52 per cent to close at 74 kobo, per share.
Vitafoam Nigeria depreciated by 9.26 per cent to close at N17.15 and Learn Africa declined by 9.09 per cent to close at N3.00, per share.
The total volume traded increased by 18.91 per cent to 306.620 million units, valued at N5.301 billion, and exchanged in 8,298 deals. Transactions in the shares of GTCO topped the activity chart with 50.158 million shares valued at N1.774 billion. Access Holdings followed with 48.067 million shares worth N815.925 million, while United Bank for Africa (UBA) traded 41.747 million shares valued at N956.455 million.
Universal Insurance traded 39.714 million shares valued at N14.392 million, while Zenith Bank sold 15.166 million shares worth N560.323 million.
The rapid adoption of Computer Vision Technology (CVT) has revolutionized business operations and transformed e-commerce by improving efficiency in a variety of ways. CVT is the process of using algorithms and artificial intelligence to process visual data from images or videos.
In the retail sector, for instance, CVT enables automated product categorization, visual search, object recognition, and even virtual try-on experiences. It‘s leveraged for tasks like inventory management, customer analytics, automated checkout, and enhancing the overall shopping experience.
According to a study titled: “Exploratory Study on the Application of Computer Vision Technology for E-Commerce Sector Growth In Nigeria,” published by the Nigerian Communications Commission (NCC), the use of computer vision in retail operations can lower operational costs, increase inventory management accuracy, improve consumer interaction, ultimately boost sales and has a significant and intriguing potential to transform the retail environment as technology develops and becomes more affordable.
However, to fully realize the potential of computer vision in Nigerian e-commerce, there is a need to address the challenges associated with infrastructure, talent, and funding, the study averred. The study used a total of 108 participants for the quantitative data collected, which included e-commerce companies like Jumia, Konga.com, OLX, Flutterwave, Payporte, and Jiji.ng, Interswitch, Opay, Palmpay, Moniepoint, Paystack, Shopify, and their customers. This diverse sample was chosen to capture a wide range of perspectives and experiences related to the application of computer vision technology in the e-commerce sector
The study also gathered data from users of e-commerce services across major Nigerian cities such as Lagos, Abuja, Kano, Kaduna, Ibadan, Abeokuta, and Port Harcourt to mention but a few. A total of about 363 respondents completed the survey instruments.
Findings The findings of the study showed that 60 percent of respondents are currently using Computer Vision in their operations and an additional 35 percent indicate that they are very likely to integrate it. On the perception of computer vision‘s impact on the e-commerce sector, about 57.4 percent agreed that CVT can enhance the e-commerce sector in Nigeria.
On the benefits of computer vision in E-commerce, 44.4 percent said CVT will enhance customer experience, even as the study disclosed that the success of Amazon‘s recommendation system, which led to a 30 percent sales increase, is a testament to this potential. However, 40 percent of the businesses surveyed are not familiar with AI and its applications for business growth.
Challenges in adopting computer vision The primary challenge as identified by the study is the lack of technical expertise, even as the study added that for successful adoption, there‘s a need for skilled professionals.
According to the study, “the size of required data sets was highlighted as the biggest limitation in computer vision, receiving 42.3 percent of votes. High costs (at 20.4 percent) were indicated as the second biggest limitation.”
The study highlighted poor data quality as a challenge, as CVT relies on large and diverse datasets of labeled and annotated images to train and test the algorithms. “However, collecting and curating such datasets can be challenging in Nigeria, where there may be a lack of data sources, data standards, and data protection regulations. Furthermore, the datasets may not reflect the local context, culture, and diversity of Nigeria, leading to biased and inaccurate computer vision models.
“In response to the growing prevalence of computer vision applications, ensuring a qualified workforce to translate ideas into reality is crucial. While the number of artificial intelligence professionals globally is in the hundreds of thousands, the burgeoning demand for roles in this field exceeds millions, highlighting a significant skills gap. This gap has been exacerbated by the widespread accessibility of AI and deep learning, motivating both established corporations and startups to venture into the domain,” It stated.
To address this issue, the study advised that enhancing resources for digital, technical, and mathematical education is key, adding that, “Notably, industry leaders like Amazon and Google are investing on a global scale to enlarge their talent pool. Additionally, businesses can concentrate on retraining and upskilling their existing employees to bridge the skills divide effectively.”
Inadequate hardware is also a challenge, as the study explained that CVT requires high-resolution cameras, sensors, and other devices to capture and process images effectively. “However, these hardware components can be costly and difficult to install and maintain in some areas of Nigeria, especially in rural and remote regions. Moreover, the availability and reliability of electricity and internet connectivity can also affect the performance of computer vision systems,” it stated.
On ethical concerns, the study averred that CVT presents ethical concerns encompassing privacy, consent, accountability, and fairness. Instances include the potential infringement on individuals‘ and groups‘ rights and freedoms in Nigeria through systems like surveillance, facial recognition, or biometric identification; Moreover, these technologies can manifest bias or discrimination, disproportionately affecting specific segments of the population, including women, minorities, and people with disabilities, it stated.
It also highlighted the fact that CVT is an emerging field in Nigeria, but it‘s relatively new, leading to limited awareness and comprehension of its advantages and possible uses among the general public and prospective users. “Additionally, there is a scarcity of proficient professionals capable of creating, implementing, and overseeing computer vision systems in the country. Hence, there‘s a pressing requirement for increased education, training, and skill development in computer vision technology across Nigeria,” the study revealed.
Recommendations The adoption of computer vision, with 60 percent of e-commerce businesses already utilizing it and an additional 35 percent indicating that they are very likely to integrate it, underscores the need for a cohesive national direction, the study stated, while recommending that there is a need for government to develop a comprehensive strategy.
“The government can provide a clear roadmap for the sector, emphasizing the potential economic uplift, job opportunities, and global competitiveness. This proactive approach will ensure that the nation remains at the cutting edge of this technological wave, harnessing its full potential for the e-commerce landscape,” it added. Given that 40 percent of the businesses surveyed are not familiar with AI and its applications for business growth, there‘s a clear gap in digital literacy, the study stated, while calling on the government to invest in and promote digital literacy programs, especially focusing on emerging technologies like AI.
The appetite for innovation is evident, with businesses interested in channeling their resources into R&D for computer vision, the study stated, “offering incentives such as tax breaks or grants, the government can further fuel this drive, accelerating advancements in the field. Such a move will not only spur businesses to push technological boundaries but also position the country as a hub for computer vision innovation in e-commerce.”
It also called for a review and update of data privacy regulations, adding that, “As businesses adopt AI, concerns about data privacy and security will inevitably arise. The government should proactively review and update data privacy regulations to ensure that they are in line with the latest technological advancements. This will not only protect consumers but also provide businesses with clear guidelines on how to handle data responsibly.”
The power of collective effort cannot be understated, even as the study averred that “By fostering platforms where e-commerce entities can converge to discuss computer vision projects, share insights, and tackle shared challenges, the government can catalyze the formulation of standardized practices and a unified vision. Such collaborative endeavors can streamline the sector‘s approach to computer vision, maximizing its benefits.”
The bedrock of effective computer vision implementation is robust digital infrastructure, as the study suggested the need to channel investments into bolstering this infrastructure. “The government can ensure businesses have the requisite resources at their disposal, optimizing the impact of computer vision technologies on e-commerce,” it added.
Nigeria’s economic landscape in 2024 presents a complex picture. Excess liquidity in the financial system threatens inflation, while a volatile foreign exchange market adds another layer of uncertainty. To address these challenges, the Federal Government has outlined a strategic plan through collaborative efforts between the Central Bank of Nigeria (CBN) and the Ministry of Finance. Assistant Editor, NDUKA CHIEJINA examines the issues.
The Nigerian financial system currently faces a situation of excess liquidity. This means there’s a surplus of money circulating in the economy. While seemingly positive, this can have detrimental effects. Increased money supply can lead to inflation, a scenario where prices of goods and services rise, eroding purchasing power. This can disproportionately affect low-income households and stifle economic growth.
The CBN, as Nigeria’s central bank, plays a crucial role in managing liquidity. It possesses various tools in its monetary policy arsenal to combat inflationary pressures. Some key measures include raising the benchmark interest rate, currently at 24.75 per cent to discourage borrowing and encourages saving. This reduces the amount of money circulating in the system, dampening inflationary pressures. The CBN gradually increases rates to avoid stifling economic activity.
In addition, the CBN can engage in Open Market Operation (OMO) by selling government securities to banks. This absorbs excess liquidity from the system. Conversely, buying securities can inject liquidity when needed. OMOs allow for targeted liquidity management.
The Cash Reserve Ratio (CRR) is the minimum amount of deposit banks must hold as reserves with the CBN. Increasing the CRR reduces the amount of money available for lending by banks, effectively tightening the money supply. It’s a powerful tool, but requires careful implementation to avoid hindering lending and economic growth.
The Ministry of Finance plays a crucial role in managing government spending and revenue generation. To curb inflation, the ministry is trying to implement several measures such as reducing government budget deficits by cutting non-essential spending or increasing tax collection which can help dampen inflationary pressures. However, striking a balance is crucial to avoid hindering essential public services.
Subsidies on certain goods can contribute to inflation. The government is executing a phased removal of subsidies to certain sectors while ensuring social safety nets are in place to protect vulnerable populations.
Strategic investments in infrastructure development can increase productivity and efficiency in the long run. This can help address supply chain bottlenecks that contribute to inflation.
To effectively tackle foreign exchange (forex) volatility, the Central Bank of Nigeria (CBN) and the Ministry of Finance can collaborate on several strategies.
The CBN and the Ministry of Finance should align on exchange rate policies. This includes deciding on the appropriate exchange rate regime (e.g., fixed, floating, managed float) and communicating a consistent message to the market.
The CBN manages foreign exchange reserves, which are crucial for stabilising the currency. The Ministry of Finance can support by ensuring adequate funding and transparency in reserve management practices.
While the CBN can intervene in the forex market by buying or selling foreign currencies to influence exchange rates the Ministry of Finance can coordinate by providing necessary backing and support for these interventions.
Regular dialogue and coordination between the CBN and the Ministry of Finance are essential. They have agreed to share data, discuss policy options, and jointly formulate strategies to address forex volatility.
Both the Ministry and the CBN are collaborating to enhance regulatory measures that prevent speculative activities in the forex market and ensure transparency and fairness in foreign exchange transactions.
They are working together to develop and promote hedging instruments (such as futures, options and swaps) to help manage currency risk for businesses and investors. Futures, options, and swaps are financial instruments used in the markets to manage risks associated with price fluctuations (including foreign exchange rates) or to speculate on future market movements. Each derivative serves a specific purpose and provides investors and institutions with tools to hedge against uncertainties in the financial markets.
The Ministry of Finance can implement fiscal policies that support exchange rate stability. This includes managing government spending, taxation, and borrowing in a manner that doesn’t exacerbate forex volatility.
Both institutions continuously monitor the forex market and share critical information. This helps in understanding market dynamics and taking timely actions to stabilize the exchange rate.
Addressing underlying structural issues in the economy, such as improving export competitiveness, reducing import dependency, and promoting diversification, can also contribute to forex stability. The Ministry of Finance can lead efforts on these structural reforms.
By working closely together and leveraging their respective mandates and capabilities, the CBN and the Ministry of Finance can enhance Nigeria’s ability to manage foreign exchange volatility effectively, fostering economic stability and growth.
Collaboration is key: The CBN/Ministry of Finance synergy
The success of the government’s economic plan hinges on effective collaboration between the CBN and the Ministry of Finance. Here’s how their synergy can make a difference. Inflation can be likened to a runaway train, where the Central Bank of Nigeria (CBN) attempts to slow it down using interest rate adjustments. However, if the Ministry of Finance keeps adding fuel by increasing government spending, inflationary pressures persist.
When monetary (CBN’s interest rate changes) and fiscal policies (Ministry of Finance’s fiscal consolidation) work in tandem, their impact on inflation is amplified. This combined approach reduces the amount of money circulating in the economy, curbing inflation effectively.
Aligned policies send a strong signal to the market about the government’s commitment to tackling inflation, boosting confidence among businesses and consumers. It also attracts foreign investment and promotes economic stability.
Regular sharing of economic data and forecasts between the CBN and the Ministry of Finance is crucial. It informs policy decisions, enhances market confidence, and helps manage public expectations.
Achieving policy alignment is not without challenges, such as balancing fiscal objectives, political pressures, and timing policy adjustments for optimal impact.
Development Finance: Shifting gears
The recent decision by the CBN to withdraw from directly participating in development finance interventions, such as the fertiliser distribution programme, and hand over these responsibilities to the fiscal authorities, presents a significant shift in economic policy.
While this move might raise initial questions, it has the potential to positively impact the effectiveness of the government’s collaborative efforts to achieve economic stability, particularly when viewed in the context of their joint fight against inflation.
By relinquishing development finance activities, the CBN can dedicate its resources and expertise to its core functions–managing monetary policy, maintaining financial system stability, and issuing legal tender. This sharper focus can lead to more effective monetary policy implementation, potentially aiding in inflation control efforts.
Shifting development finance to the Ministry of Finance places the responsibility for budgetary allocation and programme execution squarely on their shoulders. This increased accountability can incentivise the Ministry to prioritise efficient resource allocation and target programmes for maximum impact.
Budgetary allocations for development finance programmes channeled through the Ministry of Finance become subject to the usual legislative oversight processes. This can enhance transparency and minimize potential misuse of funds.
With both monetary and fiscal policy tools concentrated under the purview of the government (CBN and Ministry of Finance, respectively), the potential for a more unified economic management approach is amplified. This can facilitate smoother collaboration and communication between the two entities.
The Ministry, with its broader fiscal mandate, might be better positioned to take a holistic view of the economy and prioritise development finance interventions that complement its overall economic strategy. This could lead to more targeted and impactful programmes. However, a smooth transition and maximizing the potential benefits require careful consideration of potential challenges.
The CBN’s exit from development finance interventions presents a unique opportunity to strengthen collaboration with the Ministry of Finance. By leveraging each other’s strengths and fostering a more unified approach, this shift can contribute to a more stable and efficient economic environment. The success of this collaboration, however, hinges on effective communication, capacity building within the ministry, and a shared commitment to achieving long-term economic stability.
The CBN and the Ministry of Finance can collaborate in several ways to fight inflation and boost the economy by jointly addressing insecurity.
Here are some possible strategies
The CBN can work closely with the Ministry of Finance to align monetary policy with fiscal policy. This coordination can help manage inflation by ensuring that both entities work in harmony to control money supply, interest rates, and exchange rates.
The Ministry of Finance can collaborate with the CBN to create special funding initiatives aimed at addressing insecurity. This could involve allocating funds to enhance security infrastructure, support law enforcement agencies, and invest in social programs that address the root causes of insecurity.
The CBN, in collaboration with the Ministry of Finance, can design and implement targeted interventions to address the economic impact of insecurity. This may include providing financial support and incentives to businesses affected by insecurity, particularly in vulnerable sectors like agriculture and manufacturing.
The CBN and the Ministry of Finance can work together to strengthen the regulatory framework to combat insecurity. This may involve developing new policies and regulations to monitor and control illicit financial flows, money laundering, and terrorism financing.
Both entities can collaborate to boost investment in sectors that enhance security and provide economic opportunities. By creating an enabling environment for investors, such as providing tax incentives and improving infrastructure, they can attract investments that contribute to both security and economic growth.
Collaboration between the CBN and the Ministry of Finance should involve engaging relevant stakeholders, such as state governments, security agencies, and private sector organiSations. This multi-stakeholder approach can ensure a comprehensive and coordinated effort towards addressing both inflation and insecurity.
Overall, a collaborative approach between the CBN and the Ministry of Finance can contribute significantly to tackling inflation and boosting the economy while addressing the challenges posed by insecurity in Nigeria.
While the government’s plan has merit, it’s important to acknowledge potential challenges. Global economic events, commodity price fluctuations and exchange rate volatility can all impact inflation and complicate the implementation of policy measures.
The impact of monetary and fiscal policy adjustments might take time to be fully realised, requiring patience and sustained commitment to the strategy. Measures such as interest rate hikes, subsidy reductions, and tax increases can have a disproportionate impact on lower-income households. The government needs to consider social safety nets to mitigate these effects.
Edun and Cardoso speak
At the last Monetary Policy Committee (MPC) meeting in Abuja, the CBN Governor Mr Olayemi Cardoso stated that “does donation of over two million bags of fertiliser suggest a return to developmental interventions? The answer is no, it doesn’t. And let me explain why it doesn’t.
“Because we have been consistent in saying that we will withdraw from direct interventions. We have been consistent in sales.
“So, we have also been consistent in saying that we will work with those who we believe have the capacity to successfully intervene in whatever manner they can. And that, by the way, includes even capacity building. It’s not strictly speaking, you know, direct funding or anything like that. It isn’t, it extends to a whole host of different areas.
“So, where we see that that capacity is there, the central bank would be happy to partner and that goes similar to what one had just said about the collaboration that we have had with regulatory authorities and also law enforcement authorities.”
In Washington DC last week, the Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun confirmed the administration’s commitment to tackling the issue of surplus money circulating within the economy, stating that: “We are determined to pin down Ways and Means to alleviate the pressure of excess money in the system.”
This measure, he explained, is aimed at facilitating a collaborative effort between fiscal and monetary authorities to reduce inflationary pressures and stabilise the exchange rate.
“We need to borrow less and focus more on domestic resource mobilization.”
Collective effort towards stability
The Federal Government’s collaborative approach to tackling excess liquidity, inflation, and economic instability presents a promising path forward. The success of this plan will depend on the effective implementation of the outlined measures, continuous monitoring and adjustments based on economic data, and clear communication with the public.
Ultimately, achieving economic stability requires a collective effort from the government, the private sector, and the citizenry. By working together, Nigeria can navigate through these turbulent economic waters and emerge on a stronger foundation.
The managing director/CEO, Transcorp Hotels Plc, Dupe Olusola said the Company will maintain its growth performance through 2024 and beyond.
Olusola stated this at the Transcorp Hotel Investors conference held via virtual. She said the Company is committed to redefining the hospitality experience across the continent, ensuring that every interaction with our brand is memorable and unmatched.
She added that “our flagship brand, Transcorp Hilton Abuja, continues to set the standard for luxury hospitality and culinary excellence. With 670 rooms, 20 meeting rooms, and 7 restaurants, it stands as one of the largest hotels in Sub-Saharan Africa, offering a unique blend of hospitality and lifestyle experiences that resonate with both business and leisure travellers seeking exceptional service and memorable moments.
“Aura by Transcorp Hotels is Africa’s best platform for connecting travellers to unique accommodation, great food, and memorable experiences. With 4,000 rooms across 88 Hotels and 490 apartments, Aura offers a wide range of accommodation and experience options for guests.”
To sustain its performance, Olusola stated that “we will focus on key growth drivers that will ensure we continuously win in this ever-changing industry and economy.
According to her, the company will enhance use of its digital platform Aura, which is revolutionising how we drive bookings, engage with guests, and generate revenue. This technology underscores our commitment to growth and adaptability in the digital age.
“Upgrading our technology to enrich the guest experience, offering contactless services and personalised offerings that cater to the unique preferences of each visitor, ensures that our services are not just cutting- edge but also deeply personal.
“Strategic sourcing and operational efficiency which are key to our cost optimization efforts. We are dedicated to managing expenses without compromising the quality that our guests have come to expect from us. We will be focusing on eco-friendly initiatives, energy-saving measures, and sustainable sourcing; and continuously looking for ways to enhance the value and utility of our assets.”
She added that “we will maintain our performance through 2024 and beyond. We are committed to not only upholding but elevating the exceptional guest experiences that set us apart. Our strategy is to widen our portfolio, innovating and diversifying our services to drive revenue growth further whilst also focusing on operational efficiency to reinforce our position as the leader in Nigeria’s hospitality sector.”
Looking at the Company’s performance in first quarter (Q1) of 2024, Transcorp Hotels reported a record-breaking revenue of N41.5 billion in 2023, compared to N30.4 billion in 2022, marking a substantial 36 per cent growth year-on-year, while operating income also grew by 50 per cent, to close at N13.1 billion as of December 2023, compared to N8.8 billion in December 2022.
Profit for the year grew by 133 per cent from N2.6 billion in December 2022, to N6.1 billion in December 2023. Total Assets increased by five per cent from N120.5 billion in December 2022, to N126.1 billion in December 2023
