THE Director General of the Nigerian Stock Exchange (NSE), Professor Ndi-Okereke Onyiuke revealed on Monday that Nigeria lost N812 billion to capital flight in the last two years.
Professor Onyiuke made the revelation even as the Minister of Finance, Mansur Muktar and the Governor of Central Bank of Nigeria (CBN), Professor Chukwuma Soludo assured Nigerians that even if the international crude oil price crashed to $30 per barrel, Nigeria’s 2009 budget would not be affected.
But while the Minister of Finance disclosed that the N70 billion bailout for the textile industry would be released in the next one month, they both ruled out any bailout for banks in the face of the global economic crisis, saying that Nigerian banks were very healthy and therefore did not need to be rescued.
They spoke at a meeting with the Joint Senate Committees on Banking, Insurance and other Financial Institutions and Capital Market and Finance.
The committees had invited the Ministers of Finance, and of National Planning, the CBN governor, Chief Economic Adviser to the President, Director General Securities and Exchange Commission, Director General, Nigerian Stock Exchange and the President, Chartered Institute of Bankers of Nigeria, to an interactive session on the effect of the global economic crisis on the country and pragmatic solutions.
Professor Onyiuke said: “In 2007, we had N256 billion, equivalent of dollars. That was what was captured. Remember that a lot of Nigerians send in money through Western Union to relations, we do not capture that statistics, because we only take money wired through the banks, because Nigeria wants to avoid money laundering.
“We advise Nigerians and our investors to send money through wired transfer. We only have that captured by Nigerian banks, those are the statistics we have. We did not capture that sent through relations’ addresses. There was N256 billion that went out.
But in 2008, we now have N556 billion that went out as the governor of the Central Bank said. “When some of the investors had problems in their home countries, when the global phenomenon started, as they were losing money, they had to now come and sell such shares in our country and go back and shore up their economies at home. Our market is transparent; all the investors published their transactions every day. What happened was that it was the panicking that came through the foreign investors and affected Nigerians who are watching CNN all the time.”
The benchmark for the 2009 Budget is predicated on $45 per barrel but even with the current crash in the price of crude oil to below $40, both the finance minister and the CBN governor still assured Nigerians that if the crude price fell to $30, it would not hamper the operation and performance of the 2009 budget.
The Senators, led by the chairman of the committees, Senator Nkechi Nwogu, had asked from the economic experts how the government intended to restore confidence in the economy in the face of the global economic crunch and how to protect the financial institutions.
Acording to the finance minister, who was represented by the Minister of State for Finance, Mr. Remi Babalola: “There is no doubt that we are going to have a significant global slowdown in the economy all over the world. When the budget was was being put together, the lowest crude price was $85 and people thought we were ultra-conservative by using $45 but by January when the price came down to $40 everybody said that we should have used $30.
“All the countries that we actually looked at, like Russia, Indonessia, actually used far higher rates than Nigeria used for its budget in 2009. The most conservative estimate for crude price for 2009 is $59.
“The truth is that with the way the budget is structured, we have said so many times that even if the crude price comes down to $30 per barrel, ordinarily, the way we have worked it out, it should not affect budget implementation, it should not affect releases for budget.
“As far as we know, at this point in terms of exchange rate, in terms of interest rate, in terms of inflation rate, in terms of crude price, there are significant challenges, there are downside risks to the economy, but honestly speaking, for an economy that is still growing, it is not the way that it is being put to the market as if everything is down.”
On the efforts being made, he said a lot of things were being done, adding, “We have said it so many times. If we find out that there is a problem with the financial system we will work out modalities by which we certainly ensure that the financial system, that is the pivot of the entire economy, will not be affected, will still remain resilient and stable and we will do whatever we can to assist the financial system.
“I love it when they talk about the textile sector, that is the kind of bailout, intervention we are looking at. In the last two weeks we have had a lot of meetings with the ministry of commerce, we have set up a technical committee, they have met three times.
“The reason: it is not that we are giving them money, it is just a guarantee, so what is stopping us. There are some fundamental challenges about the way it was structured, it is difficult for it to work the way it was structured, and it may even be more than N70 billion. What we are working on now is how to immediately allow the money to be released to that sector and it is the entire sector.
“We want to look at some sectors. That is a sector that can employ more than 500,000 persons at a time and we cannot allow that sector to collapse and disappear, it is just strategic for a country that has a population of 147 million.
“That is why we are intervening. When government guarantees, even though you are not giving out the money it is as good as if you are giving out the cash, within the next one month. Five ministers are involved and we are meeting on a weekly basis. It involves, commerce, it involves agric, it involves ministry of finance and SGF office. A lot of work has gone on in the last two weeks about this.”
Meanwhile, in a desperate bid to halt the depreciation of the Naira, the Central Bank of Nigeria (CBN) has tightened rules on the foreign exchange market.
Governor of the apex bank, Professor Chukwuma Soludo, announced the new measures Monday in Abuja at a press briefing on the outcome of the Monetary Policy Committee (MPC) meeting.
The reduced inflow to the economy, according to the committee, had constrained supply to the market thus leaving the CBN as the main source of foreign exchange.
To save the Naira and reduce pressure on the external reserves, Professor Soludo stated that the MPC had decided to directly control the exchange rate within a band of plus or minus three per cent until further notice.
In the new foreign exchange management rule that will revolved around the CBN, Prof Soludo said henceforth, the difference between the CBN buying and selling rate would not be more than one per cent, while that of the banks and Bureaux de Change would not be more than one per cent and two per cent respectively.
To ensure that banks and Bureaux de Change operators complied with the new rules on Foreign Exchange, Prof Soludo said the apex bank monitoring team would be sent out, adding that any erring operators would be appropriately sanctioned.
Reviewing key macroeconomic developments, the CBN governor said the year- on year headlines inflation rate at end December 2008 stood at 15.1 per cent compared with 6.6 per cent at end December 2007.
Similarly, the core inflation went to 10.4 per cent in December 2008 from 3.6 per cent at end 2007. On the monetary aggregates, he said broad money grew sharply by 58.02 per cent in 2008, stressing that the growth was induced largely by the rise in credit to the private sector.
Commenting on the macroeconomic indices, Prof Soludo said the economy was currently facing paradoxes as excess liquidity was co existing with rising interest rates, which in real terms and in relation to the deposit rates seemed to be high.
Another paradox, the apex bank noted, was that the observed excess liquidity had not translated into commensurate credit creation.
In the circumstance, the MPC said it was concerned about achieving the multiple objectives of a sound financial system, price and exchange rate stability as well as ensuring that credit continued to flow to the rest of the economy.
Consequently, the committee stated that it would mop up excess liquidity in the system by actively using Open Market Operation policy while the Monetary Policy Rate, currently at 9.75 per cent remains unchanged.
On the persistently high lending rates and the wide margin between deposit and lending rates , the CBN said it would be meeting with banks’ chief executives to agree on modalities to check excesses, especially, in the light of the global economic and financial crisis.
What are the signals being sent by these occurrences when instruments of war of two powerful nations that are not at war with one another clash in the waters and surveillance instruments of another two powerful nations clash in space for the first time in the history of the struggle to dominate the outer space. We should ask ourselves the question; if these incidents are just mere accident or are they premeditated? The HMS Vanguard and French submarine Le Triumphant despite the fact that they are both equipped with sonar to detect other vessels did not detect each other in the Atlantic waters where they clashed. If this is carelessness please check it. Also the clash of Russian satellite and that of the United States of America in space need be examined. The space is wide enough to accommodate as many satellite as could be launched into it, more control and specifications are only needed. The earth has enough risks threatening it's continuous peaceful existence. Let everyone of us beware. Nuclear war is never won neither would we benefit from constant loss of effective control over our technical devices. Read the News report below. 
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