Fall of Naira: Emefiele’s economic policy deadly, scorching – Youth Council
The recent freefall of the Naira has been attributed by the National Youth Council of Nigeria (NYCN) to the inadequate economic management strategies of Mr. Godwin Emefiele, Governor of the Central Bank of Nigeria (CBN).
The Naira reached an all-time low of N730 to a US dollar at the parallel market last week, according to ENTSTUFF.
President of the NYCN, Comrade Solomon Adodo, responded by pointing out that statements attributed to the CBN Governor claimed that the NNPC Ltd.’s failure to remit dollars to the foreign reserve was the cause of the Naira’s current freefall against other major currencies, without highlighting the actual causes, which included both oil-related and non-oil related factors, such as a decline in Nigeria’s crude oil production, an increase in the price of gasoline, and an unsustainable dual
The group charged Emefiele with entirely failing to focus on his primary responsibility as governor of the top bank, which is to maintain price stability.
It was noted that the CBN Governor should be held accountable for worsening poverty in the nation as he continues to work against President Muhammadu Buhari’s goal of decreasing poverty and expanding the economy with inflation at roughly 19 percent and the exchange rate close to N800 to a dollar.
“We are all witnesses to the reality that the official exchange rate has changed from N381 to N415/$, reflecting merely a nine percent gain, from August 2020 to July 2022,” the statement adds. The official exchange rate, on the other hand, has created a significant incentive for round-tripping, price gouging, sharp market practices, and inflation. The parallel market, however, has increased from N470 to N710 within the same time frame, representing a 51 percent increase and a record 71 percent arbitrage. The comment of the Governor linking the free-fall of the parallel market rates to NNPC, despite the fact that it is entirely a monetary policy issue and beyond the NNPC’s purview, as a result, stunned the NYCN.
As a youth organization, we have observed that the CBN’s slow release of Joint Venture (JV) cash call funding from the Treasury Single Account (TSA) despite the Nigeria National Petroleum Company’s (NNPC) Ltd.’s adequate cash cover has caused the JV Partners to lose confidence in their ability to resume production and benefit from today’s higher oil prices. We are aware that the CBN, under Mr. Emefiele, has been unable to pay out over $400 million in fully processed dollar-denominated cash call payments for more than three months.
“Significant crude oil output losses of over 600,000 barrels per day have culminated as a result of CBN’s unwillingness to immediately release JV cash call to resume production, the rising losses owing to crude oil theft, and production deferments.” We find it odd that the top governor appears uninformed of the severe oil theft and overall instability in the Niger Delta that continue to pose a threat to the nation’s oil production and the oil and gas industries as a whole. The country’s three largest onshore production and export facilities, Bonny, Brass, and Forcados, are currently experiencing significant losses and have declared a state of force majeure.
Nigeria is recording opportunity losses amounting to over $64 million every day and a colossal impact of approximately $2 billion per month at the current year-to-date average crude oil price of $107 per barrel. We are shocked that Mr. Governor is denying that the nation’s rising fuel subsidy costs and the rising cost of servicing its external debt are all commitments that have an impact on the economy. These have an impact on payments made by the NNPC to the Federation Account. The cost of the PMS subsidy from January to June 2022 was N2.2 trillion, and it is predicted that the full-year subsidy bill might be between N5 trillion and N6 trillion in 2023.
In addition to the government’s choice to postpone PMS deregulation, CBN foreign exchange management has a big impact on the subsidy profile. The NNPC has, however, made notable progress in production ramp-up, achieving “first oil” production from the Anyala-Madu Fields and, most recently, the Ikike Fields, which together increase national oil production by about 80,000 barrels per day. Additionally, NNPC has continued to work toward achieving a combined increased output of over 100,000 barrels from fields like Obodo, Utapate, etc. despite the global setback brought on by the COVID-19 pandemic’s effects.
“History demonstrates that Mr. Emefiele is unable to address issues related to monetary policy. Recall that the CBN governor attributed Aboki FX’s role to Naira’s depreciation in 2021. He would eventually lay the blame for the suspension of dollar sales to the group on the Association Bureau De Change’s members. On another occasion, he attributed the devaluation of the Naira to political figures as well as money-laundering and terrorism financing activities. Nigerians are also suffering as a result of the CBN Governor’s inaction because the UAE’s national airline, Emirates Airlines, has scaled back its flights to Nigeria because the CBN is unable to repatriate around $85 million in income.
The group claimed that Emefiele is obviously a poor worker who places the responsibility for his failure on everyone else while calling for the dismissal of the CBN Governor.
“According to all indications, a partisan Emefiele has been doing everything to disparage the accomplishments of President Muhammadu Buhari ever since his failed presidential run and his rejection by the All Progressives Congress, and this should no longer be tolerated.
“Before Mr. President heeds our clarion call to remove Mr. Eemefiele from the CBN, we advise that the CBN consider the World Bank’s recommendation of adopting a single market-responsive sustainable exchange rate, improving access to foreign exchange through well-defined periodic forex auctions, and signaling a renewed commitment to price stability as a primary goal of the apex bank,” it said.
Additionally, NYCN expressed confidence that the NNPC’s conversion to a limited liability entity, in accordance with the Petroleum Industry Act’s (PIA) provisions, and its regulation now in accordance with the Companies and Allied Matters Act’s (CAMA) provisions, would help end delays in cash call payments because the company is now exempt from TSA, among other regulations.