Nigeria to pay out oil savings in Naira

Soludo

THE Federal Government has said that payment of $4 billion oil savings to federal and state governments between now and June will be made in local currency, the naira.

According to President Umaru Yar’Adua’s spokesman, Olusegun Adeniyi, “After much argument, the consensus was that the position of the law is against dollar payment and it was so ruled by the president,”

The Central Bank of Nigeria (CBN) and the finance ministry had been saying for weeks it was important that the release would be in dollars rather than naira as this would help manage liquidity and limit the inflationary impact of the disbursement.

Analysts said the change of plan meant the CBN would have to raise interest rates at its April meeting, unless the disbursement was spread out over a much longer period than the three installments in five months initially planned.

“They will have to hike rates in April if they stick to the original timetable. If they can stagger it over 12 to 24 months that would help control the liquidity implications,” said Michael Kafe, an economist at Morgan Stanley in South Africa .

The windfall oil savings were one of the pillars of a home-grown, IMF-backed economic reform programme launched by the previous administration in 2003.

Under the policy, Nigeria sets a benchmark oil price in its budget and uses that to calculate projected revenue. Oil income in excess of the budget price is saved in a special account.

Adeniyi said the decision to disburse part of the savings in naira, not dollars, was taken some days ago at a long meeting attended by the CBN governor and finance minister.

“The change in the reading of the law leaves the authorities with an inflation headache,” said Stephen Bailey-Smith, an economist at Standard Bank in London .

He said the CBN’s options could include renegotiation of the disbursement schedule, an interest rate hike or more dollar sales to sterilize liquidity and help the naira appreciate against the dollar.

Adeniyi said Yar’Adua was fully aware of the inflationary implications of the huge disbursement and a new mechanism would have to be found to moderate the impact.

“There is a commitment to make the payment, but the central bank will have to study how they are going to do it in terms of controlling inflation,” he said. He had no further details.

The finance ministry confirmed the development but had no further comment, while central bank spokesmen were not immediately available.

The plan to disburse $4 billion from the oil savings account is the result of a political deal between the federal and state governments to resolve a long-running dispute.

The states had argued that under the constitution, Nigeria ‘s oil revenues belong to all three tiers of government — federal, state and local government and therefore the central authorities had no right to retain the states’ share of the money.

Yar’Adua, who came into power last May, wanted to find a consensus to resolve the matter. After weeks of talks, the decision was to retain 1 trillion naira ($8.5 billion) as a “base deposit” and share out the rest, about $4 billion.

Nigerian women bankers prepared for vision 2020

Akin Adewakun, Lagos

In a rare move to identify with the aspiration of President Umar Musa Yar’Adua’s administration and the dream of the Central Bank of Nigeria ’s Governor, Prof. Chukwuma Soludo, the Association of Professional Women Bankers (APWB) is organising a conference that is targeted at assembling the best brains in the country among Nigerian women to build capacity towards vision 2020.

The chairperson of APWB, Mrs. Abioye Kusamotu, at a pre- conference media briefing in Lagos , disclosed that the conference was informed by the urgent need for the Nigerian women to effectively help move the nation into the league of 20 largest economies in the world.

According to Kusamotu, “It is pertinent to note that before the nation can join this league of developed nations, there is the need for a better life and an acceptable standard of living among all Nigerians. An average Nigerian should have three square meals per day, shelter over his head and very simple clean clothing on and improved life expectancy.”

She stated that the experience now was very much not desirable, ‘Poverty is on the rise while corruption is becoming legalized and all forms of negative vices that go with poverty. For example, armed robbery attacks in broad daylight, hardly will a day pass without a bank being robbed with people being maimed or killed.”

She emphasized that Nigerian women as custodians of value system that produce credible and reputable family units are divinely and socially positioned to correct some of these ills. In view of this, the association would use the opportunity of the Conference tagged: Women Bankers in Nation Building, to set agenda for not just the professional women bankers but the entire womenfolk in every profession in the country on how they can indisputably contribute to building a peaceful Nation where things work.

She clarified that the conference, which would be not be gender-biased, would acknowledge the importance of carrying the men along, adding ‘It is a re-defining of social and economic reconstruction which can only work with men and women working together as co-partners in progress’

Professionalism, Kusamotu stressed, cannot be under-rated in economic development of a nation, particularly, in the banking and finance profession, since the banking profession is the catalyst of change in any economy. For instance, she stated, “Post-banking-consolidation Nigeria has witnessed rapid economic development than it has witnessed in the last 5 years of pre-consolidation.”

Kusamotu revealed that the expectation was that the conference would equally cover areas such as Strategic leadership and corporate governance, ethics, professionalism and work life balance and banking reform agenda, strategic positioning of women bankers for vision 2020.

Papers and deliberations are focused on issues that would produce a lot of useful ideas to move this nation forward. In her contribution, the association’s First Vice Chairman, Mrs. Taiwo Ige, stated that the Conference would also addresse the critical issue of infrastructure development, adding that there was no way any businesses small or large can survive with incessant power failure’.