Emefiele has been rightly criticized for its multiple exchange rate regime, capital controls, demand-side exchange model, and restrictive management of the dollar.
These concerns have seen the naira on a downward slope and currently at around N580 / $ in the parallel market, with negative impacts on household consumption, inflation (17.4%) and weak indexes from managers. purchase, dealing blows to consumers.
“What is happening in the forex market is a consequence of the CBN’s policy choice of a fixed exchange rate regime and administrative forex allocation,” said economist and private sector consultant Muda Yusuf . ICIR in a recent interview.
“This low investor confidence is expected to persist into 2021 due to the lack of clarity in the country’s foreign exchange management framework,” Lagos-based economic analyst Damilola Adewale said in response to low FDI inflows into the country. .
In all of the reviews, however, very few mentioned that Finance Minister Zainab Ahmed and Industry, Trade and Investment Minister Niyi Adebayo did not support the naira on the fiscal side.
The Nigerian Ministry of Finance manages the finances of the Federal Government of Nigeria, including the control and monitoring of federal revenue and expenditure.
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The Ministry of Finance and the Ministry of Industry, Trade and Investment are both responsible for enforcing government tax policies and attracting investment into the economy.
This has not been the case since 2019, as Nigeria continues to witness a huge drop in investment due to several bad policies.
For example, foreign direct investment inflows into Nigeria fell 21.21 percent in 2020 to $ 2.6 billion, the lowest since 2015, according to data released by the United Nations Conference on Trade and Commerce. development, UNCTAD.
The steady decline in FDI has stifled job creation in Africa’s largest oil producer and worsened the economy’s growth prospects, pushing the unemployment rate to 33.3% in the fourth quarter of 2020.
The biggest challenge is that the two ministers failed to explore several ways to attract investment and did not design clear policies to do so, analysts said.
“In 2014, a Bloomberg trader in Hong Kong or New York could click a button and buy either 6 Nigerian bonds from JP Morgan or 11 from Barclays. This is how foreign portfolio investment poured in and kept the Naira strong. These ended in 2015. Now we are fighting for dollar remittances with Binance, ”said economist and financial expert Kalu Aja in reaction to Nigeria’s poor economy.
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Aja blamed the crushing capital controls that made it difficult for bondholders to buy back dollars if they sold their securities.
Political economist Pat Utomi also said the country lacks a national economic development strategy.
As for the Minister of Industry, several manufacturing companies are closing and he does not seem to have a formula to solve this problem. He also hasn’t commented on them, which means he may not be aware that the companies are shutting down.
Two of those companies that have closed since 2019, when Adebayo became minister, are Glenz Metal in Enugu and Elton Hanniee, a soap and toilet cleaner producer.
ICIR has learned from leading industry sources that Elton Hannie went out of business in 2020 when its raw materials got stuck in ports, resulting in numerous demurrages.
The constant occurrence of the situation led to the closure of the company. Other companies that have gone out of business since 2019 are: International Glass Industries in Aba, Super Glory Nigeria Limited, Iwaya, Ogun State and West African Building Materials, Ota, Ogun State.
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The reporter discovered that West African Building Materials closed in 2019 due to the foreign exchange policy, according to leading industry sources.
Once a country’s manufacturing sector is not strong, imports will eclipse exports, leading to weakness in the local currency, analysts say.
Nigeria’s manufacturing sector contributes less than 10 percent of gross domestic product, compared to 14 percent in South Africa and 16 percent in Egypt.
The national industrial revolution plan, which began in 2013, expired in 2020 without meeting most of its goals, but there is no industrial strategy in Nigeria yet, according to industry players.
Business and finance expert Richard Ayoade said that until Nigeria could manufacture, produce and industrialize, real economic change would be impossible.
In addition, the Minister of Commerce has yet to relaunch the Export Expansion Grant (EEG). In 2013, this policy, which aimed to improve non-oil exports, was suspended. Since Buhari came to power in 2015, approval of the policy has been in the offices of the National Assembly.
While some companies have been approved for EEG, 38 others have not been since 2018/19. Until today, there is no coherent policy to stimulate non-oil exports in the economy.
The result is that non-oil exports have not exceeded $ 4 billion since 2013. In 2018, while Nigeria earned $ 3.3 billion from all non-oil export products, Bangladesh received 33 billion dollars. billion dollars of textile export alone.
Economic analysts have insisted that Nigeria’s inability to leverage non-oil exports to bolster the economy is weighing on the naira, amid the apex bank’s reluctance to float the local currency.
Former Central Bank of Nigeria Deputy Governor Kingsley Muoghalu said Nigeria needs to build a strong manufacturing and exporting economy, which needs to be pulled on the fiscal side.
“The most important determinant of the value of the Naira is whether the Nigerian economy is productive or competitive in international trade. That is, if it has a diversified base of complex, value-added products that it exports and earns foreign exchange through these exports. I’m not talking about diversification into cashews and yam tubers. No. These are commodities, not complex, value-added products that are serious about engineering and innovation.
The finance minister has failed to stop leaks in several government ministries, departments and agencies.
At the refineries of Warri, Port Harcourt and Kaduna, 168.178 billion naira was lost in 2019, and only 1.681 billion naira was made in revenue, according to ICIR calculations of companies’ financial statements.
In 2020, dying refineries squandered 153.084 billion naira, generating only 5.216 billion naira in revenue.
In addition, concerns have been expressed about low income transfers by some government income-generating agencies.
Earlier this month, the Nigerian Senate questioned the apex bank, the Nigeria Customs Service and the Nigerian National Petroleum Corporation for non-payment of their excess revenues to the federation’s public treasury.
Many analysts wonder why the Federal Ministry of Finance is watching these income-generating agencies fail to hand over the money at a time when President Muhammadu Buhari has embarked on a worldwide borrowing frenzy.
According to the National Assembly panel, the umbrella bank has not remitted its operating surpluses to the treasury over the years from its annual budget of about 2.3 trillion naira.
Also, on the side of the Ministry of Industry, Trade and Investment, there was talk of tumbles and political inconsistencies.
Nigeria has lost several potential investors in the automotive sector due to political inconsistencies and the failure of the government to deliver on promises made to investors who had injected billions of naira into the sector.
From 2013, the importation of new cars was subject to a 35 percent tax and 35 percent tariffs. The policy has attracted several local and foreign car assembly plants which have taken Nigeria by storm to take advantage of its demographics and a growing economy.
However, the current government, in 2020, reduced the import of cars to 5%, hurting many companies that have invested billions in the economy.
Niyi Adebayo had hinted at the federal government’s plans to review auto policy, but the delay in the review has left investors bullish in the balance, discouraging future investors from expressing confidence in the Nigerian economy.
“There are several countries that we can learn from in Africa. Kenya and Tanzania have national sector plans in every aspect of the economy without political interference. This is part of the reason why we are taking a step forward and a step back, ”UK Department for International Development associate consultant Celestine Okeke told ICIR.
“You saw our air cargoes go empty the other time because of poor policy coordination. This is where I expect the Minister of Industry, Trade and Investment and the Department of Finance to step in.
He noted that the aforementioned ministries should enable trade and investment, not kill them.
“They have to facilitate trade, not kill trade. Why would exporters suffer from exporting and are we talking about the weakness of the naira? “
Experts say that floating Eurobonds, as the finance minister does, are not enough, but attract direct investment that will create jobs and improve the productive capacity of the economy.
For them, it is partly the job of the Minister of Finance via low tariffs, tax exemptions and economic reforms.
Again, experts say the finance minister, who also oversees budgets, should be more interested in managing annual capital-driven budgets to boost investment in infrastructure that will facilitate a productive economy.