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Mr. Vincent Ogboi, Senior fellow, economic and financial analyst on African affairs at Afripol organization was optimistic on the benefits of democracy emphasizing that democracy belongs to the people not a chosen few. Ogboi said, "Democracy in Nigeria @ ten although not a complete failure is still not out of the ICU-Intensive Care Unit. All the major and critical indicators of political transitions to a true democracy are still missing in the political landscape of Nigeria. Nigeria is like a sick child that has the attention and care of a specialist doctor but continuously and stubbornly refuses to take the prescribed medications that will see her out of the intensive care unit.

It is disheartening that Nigeria with so much capital and human resources knows the right things to do but for some personal and selfish reasons of a few elites (bigmen) have refused to implement any positive recommendations that will move her into the league of democratic nations. This elitist few for some selfish reasons and personal gains continue to refuse to carry the masses with them. That is the reason that majority of Nigerians if asked today will judge this democracy after ten years as a failed experiment because there has been virtually no positive impact in the lives of most Nigerians as only the few Elites continue to live in opulence due to corrupt practices while leaving many in abject poverty in the land of so much wealth." http://afripol.org/vincent-ogboi.html      

Mr. Sunny Oputa, Senior fellow and political analyst at Afripol, the publisher/CEO of Energy & Corporate Africa reacted positively on the state of democracy in Nigeria. Mr. Oputa said," Democracy is for the living and as a vital organic part of a social system; it should only be quantified through growth as it relates to the involvement of the people of a nation in making policy decisions or in electing their representatives in a free and fair electoral system. Democracy as a government of the masses could be a mere usage of word to fulfill political righteousness by the ruling class or a practical application of socio-political philosophy that promotes fairness in a civil society.

Therefore, democracy can only be alive when it is practiced with the involvement of the masses, respect of the power of the people, and with due recognition of their desire. Democracy is silenced and killed when the people’s wishes are forsaken or their consent never sought in the governing of their nation. However, a people on a start to grasp and put democracy in motion could be said to be on a match. Nigeria’s democracy is still at a juvenile stage as this most populous African nation, and OPEC 6th top producer of oil thrives in her 10th year as a democratic nation. At the age of ten, a child is undergoing growth and developmental processes. The child is not mature enough to be judged strictly on the strength and content of his decisions. Likewise, Nigeria’s democracy at this stage is on a developmental phase and a work in progress." http://afripol.org/sunny-oputa.html  

Mr. Emeka Chiakwelu, Principal policy strategist at Afripol said,"A democratic process is a marathon race that takes a long time to be evaluated. It will be premature to postulate the failure of democracy in Nigeria for ten years is such a limited time to quantify the well being of democratic life in the country. In this journey there are pitfalls on the way but I am an eternal optimist and greatly bullish on democracy. The democratic system of government have served so many countries well and there will be no reason while Nigeria will be an exception. One thing must be made perfectly clear; democracy is about the people not only about the political leaders, the people must be allowed to fully participate in process for a gainful and meaning result.

Nigeria is lacking the civil infrastructure and architecture for the implementation of the process. But lately our civil society and the courts are rising to the occasion. There is hope and there is a light at the end of the tunnel. It might appears hopeless because the leaders and political parties are obsessed about winning elections. But democracy is not only about election although it is an integral part of the process; election is a means to an end and not the end itself." http://afripol.org/emeka-chiakwelu.html

 

THE EMERGING DEMOCRATIC GOVERNORS

His Excellency Dr. Peter Obi: The Executive Governor of AnambraState

His Excellency Comrade Oshiomhole: The Executive Governor of EdoState

These Gentlemen are democrats who respect the rule of law. When they were shut out from the office of governorship after clearly winning the elections, they took the high road. Instead of taking the laws into their hands, they pubscribed to democratic pathway and took their cases and grievances to the court. They were vindicated and their mandates were restored. These men needed to be acknowledged for their exemplary actions and courage. Democracy and rule of the law which are the building blocks of peaceful society were enhanced which commenced to rearrange the rough terrine of Nigerian politics.

THE ENVIRONMENTAL GOVERNORS

 

His Excellency Mr.Babatunde Raji Fashola: The Executive Governor of LagosState

His Excellency Mallam Dr. Ibrahim Shekarau: The Executive Governor of KanoState

It was beginning to take a shape in the minds of Nigeria that environmental integrity of the nation is without consequence to a sustainable well being of a nation. Governor Fashola introduced a detailed program of solid waste management in LagosState. The trash and debris littered in the streets are collected and disposed properly and efficiently.

As for Governor of Kano he has the vision and common sense to embark on the integrated and comprehensive waste management project and this will immensely reduce littering on the ecosystem of KanoState. A neat ambience will reduce and depopulate mosquito and guinea worm and diseases in the state.

THE AGRICULTURAL GOVERNOR

 

His Excellency Dr. Bukola Saraki: The Executive Governor of KwaraState

On agriculture and industrial farming, the governor of Kwara has done a lot of good things to launch a modern farming mechanism. First and foremost he created the conducive environment that attracted indigenous and international investors and talents to agriculture. Agriculture becomes the means to provide jobs to the youths and jobless in his state. Kwara state has become a bread basket for Nigeria and West Africa. The most important that Nigeria must do is to find a means to feed her bulging population and Dr. Saraki is in the vanguard of fighting and defeating hunger in Africa in general and Nigeria in particular.

 

The government of Anambra State, Nigeria and Access Bank a local financial institution have recently lunched 2.5 Billion Naira microfinance project. This is good news coming from Anambra State that is bedeviled with high unemployment and capital flight.  “Access Bank Plc, a Nigerian commercial bank, has agreed to work with the Anambra state government to launch the state’s first microfinance scheme, by providing an equivalent of USD 16.5 million to selected microfinance institutions (MFIs) within the month. State Governor Peter Obi plans to set up workshops at the local government level throughout the state, in order to monitor progress and train operatives on “effective operation of the scheme.”  The petty traders and small scale merchants can get small loans based on their worthiness of character without the conventional collateral and security.

Access Bank and Anambra State must be applauded for this important project. The issues of credit and liquidity availability are the major problems confronting small business in Anambra State and Nigeria. It is not news that the people of Anambra State are business orientated with industrious and enterprising spirit. But issue of finance can become a hindrance in starting and sustaining a business venture. Therefore with the presence of micro financing the lines of credit will become avaliable to the serious merchants and traders in the state.

Governor Peter Obi “has also organized a committee, consisting of himself, representatives of the Access Bank, the Central Bank of Nigeria, microfinance bank operators, and others, who will oversee the program. The criteria for taking out a loan are not based on assets or collateral, but on “proven good character of the borrower.” The MFIs receiving funds are restricting the maximum amount that can be loaned to an individual to be equivalent to USD 3,294.”

The problems of unemployment do contribute to kidnapping and armed robbery phenomenon in the state. The youths and young men must be encouraged to start small businesses and they can be persuaded to attend trade schools. Guarantees must be given to the youths that loans and credits must be extended to them at the completion of the trade schools. This can help to curtail delinquency and idleness among some of our youths who are likely to engage in criminal behaviors. The micro financing scheme can become a possibility in fighting crimes and unemployment in the state. But we must be careful not to over stretch the project for government does not necessarily create jobs but formulate policies with enabling environment that makes job creation possible by the private sector. The prime reason for the micro financing is to provide the needed credits to small and petty traders who do not have the collateral and expertise to get loans from commercial banks.

The chairman of the State Committee on Microfinance, Mr. Eze Echesi is capable of doing a good job for the people of Anambra State. Echesi have to assemble a committee of experts and technical advisers from all walks of life especially traders and merchants to aid him in implementing and running a successful micro financing entity. The Governor of the State Peter Obi who is a successful businessman can be of a great help and adviser to the chairman of the project.

The great thing about micro financing is the ability to directly work with the people at the grassroots; the regular day-to-day traders on the street corners and at village market place. The women in Eke market of Umuoji or Nkwo market of Nnewi and similar towns are the reasons that brought about micro financing in the first place and they are the ones that need credit to run their tiny and mini-business outlets. The danger with the project is that it can become a patronage to favor political ally and well connected in the state. This can be a major problem associated with government involvement. The government joint partner with a commercial bank can become deterrence to such a self-defeating purpose.

A major barrier that might delay the dispensing of a loan is the evaluation and quantification of credit worthiness of the borrower. Most of the petty traders are semi-literates and are not keen to record keepings and documentation of daily transactions.  The issues of logistic and location must comes into play therefore the managers of the project must go to the customers, for some of these traders do not have reliable transportation and fares to go to the offices of the loan management. Mass media enlightenment becomes imperative to educate the traders on awareness of the program.

Anambra State government must set benchmarks with deadlines on the project. The government must set a goal and purpose especially what they intend to accomplish with the scheme in next 5- 10 years with regards to business creation and reduction of unemployment in the state. The micro financing cannot be cosmetic and superficial but realistic and pragmatic venture with promising affirmative results to ameliorate the wellbeing of citizens of Anambra State.

 

 

Thursday, 24 June 2010 20:49

Prince Charles and Rainforest Fund

Protecting African ecosystem by swapping debt

Prince Charles of Wales a longtime advocate of rainforest protection has taken pragmatic steps by setting up an emergence rainforest fund with thirty five countries. The targeted goal is to put in $22 billion to up to $36 billion in the fund to save rainforest and reduce the raging deforestation rate especially in the poor countries.

This is a noble project and deserves the attention it received. The task of protecting rainforest cannot be left to poor countries in the southern hemisphere that lack the means and resources to stop the cutting down of tress. In the tropical rainforest the forest have become source of energy for domestic consumption. Tresses are cut down to be used as fire woods for cooking, medicine and nutrition. While governments cut down tresses for export in order to generate foreign currency.

This fund can play a vital role to save the Africa’s ecosystem but Prince Charles and the fund managers have to be creative in disbursing the money. African debt cancellation can become the tool to save the forest in the region. The Rainforest Fund can promise and implement debt reduction scheme: Outright debt cancellation when African countries are willing to implement the requisite criteria to save the forest. Simply swapping debt for forest protection can help to curtail rate of deforestation in Africa.

“In Africa today, tropical forests and rangelands are under threat from population pressures and systems of land use. Generally apparent effects of these threats include loss of biodiversity, rapid deterioration in land cover, and depletion of water availability through destruction of catchments and aquifers. Changes in climate will interact with these underlying changes in the environment, adding further stresses to a deteriorating situation. A sustained increase in mean ambient temperatures beyond 1EC would cause significant changes in forest and rangeland cover; species distribution, composition, and migration patterns; and biome distribution.”

In this trouble time of global warming and climate change, forest can aid in the reduction of carbon dioxide, the culpable greenhouse emission gas that contributes to global warming. During photosynthesis which is the process for plant to manufacture food, the carbon dioxide is taken in and oxygen is given out. Therefore the excessive carbon dioxide in the atmosphere can be reduced and global warming can be controlled. It is important to save the forest and have enough of it to make an impact on the reduction of carbon dioxide and global warming.

The 25% goal of reducing the destruction of tropical rainforest by 2015 is plausible when African forest is protected because “deforestation is responsible for almost 20% of global carbon emission.”

Task of contributing such a large amount of money for the Rainforest Fund can be difficult with the global economic recession but it is imperative that destructive effects of global warming must be slowed down before it becomes irreversible and irrecoverable.

 

Vox populi, vox Dei – The voice of the people is the voice of God. Governor Peter Obi has been reelected and the victory goes to the people of Anambra State of Nigeria, whom inspite of the obstacles turned out to elect the candidate they believed in. In a free society, power comes from people and the people have spoken.  Democracy is about the market of ideas and the person that is able to convince the electorate wins the election.

This is a fresh and new mandate for Peter Obi; obviously he was distracted in his term with interrupted impeachment and trials. But with this victory the people have spoken and empower him to lead them for the next four years. This is not time for revenge or resting in his laurels but an opportunity to complete what he has started. A time for hard work; A time to talk less but definitely a time for action and to deliver the promises he made to the voters. The people put their destiny and trust in the hands of Governor Obi and he must reciprocate by doing the people’s business.

The possibility that Anambra State might live up its motto: The light of the Nation – is emerging. The politics of Anambra State might spearhead the revitalization of Nigeria’s polity. Let’s get this right, nobody is saying that the election was a utopia without hitches. But far from the truth, this is the best so far and this is a good beginning. There was absence of violence and intimidation at the polling stations. Although there were some hiccups especially with the absence of names of the voters together with the lateness of some of the polling stations. But we can make a fair assessment by generally saying that election was credible. Yet there remains a room for improvement, as this can become a foundation to build on. The INEC can learn from this as a case study as they get ready for the 2011 general election.

Governor Peter has to be humble at his victory and he is a thoughtful person. He should extend his hands of amity to his competitors and invite them to aid in building a great state. The campaigns and election are over and time to start planting crops has come! There are many challenges, problems and opportunities in our state. Governor Obi has to take the bulls by its horns and live up to the expectation and mandate from the people.

There are numerous problems in the Anambra State which begs for leadership and pragmatism. First and foremost, he must tackle issue of kidnapping and armed robbery enterprise. The most important function of a government is the protection of life and property. The governance must be creative in arresting unemployment that is culprit to the criminal behaviors. Public sector does not necessarily create jobs but formulate policy and liberalize environment that enable private sector to create jobs.

The pressing issues of erosion gullies must be confronted before it reclaim a sizeable landmass of the Anambra State. This is a serious matter and must treat as such without politicization and polarization from the federal government. The proliferation of water boreholes is not the panacea to paucity of safe drinking water. The new government must embark on provision of tap water in the rural and urban centers. The digging of the soil for water wells might increase the vulnerability of the soil to erosion. The underground water might be exposed to the toxic and hazardous nature-occurring materials which is carcinogenic.

Let us not forget Onitsha the commercial nerve center of Anambra state and indeed Nigeria. During the campaign Obi promise to transform Onitsha to a functional city; Yes! We must hold him to his promise. The management of solid waste collection and disposal in the city must be upgraded. The littering must be controlled with reliable best management practice. The new government must institute a modern sewage treatment plant and operations not just in Onitsha but in the rest of the state. The state may not have the adequate resources for all the projects but the most intrinsic social capital is the political will.

Due to inefficiency of the electric power authority, neighborhoods at nights were engulfed with coagulated darkness: Therefore the street lights of Anambra State especially Awka and Onitsha should be powered with inexpensive solar panels.

The people of Anambra State have suffered long enough in the hands of poor leadership and mismanagement. This is the time for liberation. With the support and loyalty of the people, Governor Peter Obi is capable of delivering and this is the beginning of a new day.     May God Bless Anambra State, Nigeria!

 

 


Nigeria is making a bold but calculative move to establish a sovereign wealth fund (SWF). The Acting President of Nigeria Goodluck Jonathan has asked his economic team led by the newly appointed Minister of Finance Olusegun Aganga to make the requisite arrangements to establish a sovereign wealth fund (SWF) as soon as possible. This is a good thing coming from the presidency, although Nigeria has wasted substantial time in coming to this at a later period. But it’s better late than never.

 This development is giving us a widow to the mind-functioning of our leader Goodluck Jonathan. This shows that he think seriously about the finance and wealth of the nation. He understood that excessive revenue generated from oil export must not be left dormant in the foreign reserve but can be prudently invested and be appreciated. SWF is designed for countries like Nigeria that do have little or no foreign debt with budget surplus, although Nigeria in her recent budget will borrow some money to finance her surge in spending. But all things being equal, Nigeria is among the extreme low debt nations-to- GDP ratios; therefore SWF is still good for the country to prudently manage her foreign reserve.

Even with global recession at this point in time establishing sovereign wealth fund (SWF) looks attractive and promising. Gradually the global recession is waning, with emerging lower inflation, Nigeria can invest and gain an appreciating returns. A while ago Nigeria was accumulating a formidable foreign reserve which became a war chest to stabilize the weaken naira. Nigeria foreign reserve was hovering around $50-$55 billion few years back but as result of continuous withdrawal and monetary hiccup it nosedived to $40 billion but with the recent increase of the price of oil the foreign reserve will be increasingly replenish.

On the Prudent management of Nigeria’s foreign reserve, Emeka Chiakwelu, principal policy strategist  at Afripol offered strategic steps to be taken by Nigeria to realize her vision of making club of the world’s 20 biggest economies by the year 2020 by  establishing an investment fund. Chiakwelu said years ago on the paper he delivered on United Nations Day in United Stated: “Nigeria’s foreign reserve is hovering between (50-54) billion dollars and such fund must not be allowed to lay dormant in the foreign holding. A reasonable portion of the reserve can be invested in a foreign market, to yield an appreciating return. Nigeria can learn from Dubai and other Persian Gulf oil countries that have invested in the western economies especially in the American Real estate and fiduciary bonds. Government should assemble a committee of experts to manage the reserve and invest some of the money in stable market overseas.”

Transparency SWF

Transparency is an important foundation on having and managing a corrupt free sovereign wealth fund. It is essential that transparency and probity will be the guiding light to our country as we invest our money with the returns to create more wealth. First and foremost, capable men and women of integrity will run and manage the SWF. Some people are so bearish and cynical on Nigeria that they think that Nigerians are devoid of honesty, uprightness and integrity. But the truth is that Nigeria has good men and women who are patriots and will do a good job for our beloved Nigeria. Transparency must be self evident in the sense that it will be open to the public and anybody can be able to access information on the investments and returns.

Nigeria therefore should join the association of the International Working Group of Sovereign Wealth Funds (IWG). This body IWG is abiding to the rules and regulations of the treaty they made with International Monetary Fund (IMF) named Santiago Principles that detailed the openness, transparency and probity in the management of sovereign wealth fund. It was documented in Wikipedia clearly that the IMF‘s “Santiago Principles are a set of 24 voluntary guidelines that assign "best practices" for the operations of Sovereign Wealth Funds (SWFs). The principles were proposed in 2008 through a joint effort between the International Monetary Fund (IMF) and the International Working Group of Sovereign Wealth Funds (IWG). So far 23 nations have signed onto the principles.

According to the IWG, the creation of the Santiago Principles was driven by the goal for SWFs

* To help maintain a stable global financial system and free flow of capital and investment;

* To comply with all applicable regulatory and disclosure requirements in the countries in which they invest;

* To invest on the basis of economic and financial risk and return-related considerations; and

* To have in place a transparent and sound governance structure that provides for adequate operational controls, risk management, and accountability.

The Santiago Principles contribute to the IWG’s objective for SWFs by monitoring three important areas – legal framework, institutional framework and governance framework, and investment policies and risk management.”

Managing sovereign wealth fund (SWF)

The presidency should set up a committee of experts to manage the wealth fund. The Minister of Finance or the Governor of Central Bank of Nigeria may head the committee. The presidency may decide to step outside the confines of the government and appoint non governmental bureaucrat to head a commission. But whatever the case might be, by the nature of their roles – minister of finance and governor of the central bank will play active roles in the management of the SWF.  It is essential that the committee must comprise of Nigerians from all walks of life including the average Nigerian trader and market women to university professor and government bureaucrats. This is important in order to involve the Nigerian society as partakers and watchdogs. SWF can work for Nigeria when properly managed with transparency and probity.

 

Oil and gas industry is large capital intensive that requires enormous resources for its finance, management and operation. The inability of local banks inNigeria and south of Sahara to finance massive oil and gas projects are not news anymore. The capitalization of banks in Africa is quite low to engage in large capital financing of oil and gas. But gradually things are changing and local banks are beginning to engage in participation of underwriting and financing   of oil and gas projects through the leverage of consortium loans.

It was widely  reported that, “la consortium of eight Nigerian banks led by UBA, as the lead bank, are in a $265million supplementary refinancing deal for ExxonMobil and the Nigerian National Petroleum Corporation (NNPC). The banks are United Bank for Africa Plc, Oceanic Bank, Standard Chartered Bank, Skye Bank, Zenith Bank, Bank PHB, Access Bank and Union Bank Plc. The deal, which was closed in London last week, marked a further sign of the increasing leadership role of Nigerian banks in oil and gas financing, where until recently they had largely played a more limited role.”

Some hydrocarbon companies with publicly traded stocks are issuing more stocks in order to raise capital in the local capital market. The growing oil and gas industries are raising money at the stock market. The West African energy giant, Oando Plc of Nigeria is set to raise the sum of 21 billion naira ($140 million) by selling shares in the capital market. The capital raised will be used to finance ventures in energy sector and "refinancing the acquisition of upstream assets, providing operational capital to fund the operation of the upstream business, and short and medium term investment in its gas and power business segment." Oando Plc headquartered in Lagos, Nigeria is the biggest indigenous energy firm in Nigeria that market oil products and involve in oil exploration at its acquired upstream assets, the segment that will receive the largest chunk of the proposed capital infusion. Oando Plc will raise the capital "through a Right Issue of 301,694,878 ordinary shares of 50 kobo each at N70.00 per share on the basis of one 1 new ordinary share for every 3 ordinary shares of 50 kobo each held as at the close of business on Friday, 18 December 2009." Two powerful and resourceful companies in the capital market: Vetiva Capital Management Ltd. and Stanbic IBTC Bank Plc will participate in the selling of the shares to raise the proposed capital.

Most of financing for the oil and gas projects are from international financial institutions particularly World Bank and International financial corporation (IFC). The Chad’s oil and gas industry was partially financed by the World Bank. But also the continental African Development Bank (ADB) is playing important role in the financing scheme of African based industries. Hasdrubal Oil and Gas Field Development Project in Tunisia was an example of ADB participation as a major player in financing the industry at the tune of $150 million. It was a beginning of local institution flexing its financial muscle in the African based projects.

“IFC has approved an equity investment of up to US$27.3 million in the Lion oil field and Panthere gas field offshore Cote d'Ivoire. The fields are located in Block CI-11, the most significant recent oil and gas discovery in Cote d'Ivoire, and their development is considered one of the country's highest economic priorities. Production of crude oil from the Lion oil field will help Cote d'Ivoire become self-sufficient in its domestic energy needs. Gas production will be used for power generation in the associated power project, in which IFC is also an investor.”

Another African based financial institution, The Africa Finance Corporation (AFC) is another major player in financing of oil and gas industry in Africa. “AFC is an African-led international financial institution whose mission is to improve regional economies by proactively assisting in the development and financing of infrastructure, industrial and other assets across the African continent.”

AFC is focused on financing and assisting industries in Africa including oil and gas industry. In the 1990s:“The Africa Finance Corporation (AFC) has made an equity investment of $20 million in Seven Energy, an indigenous oil and gas exploration and production firm focused on the monetisation of Nigeria's discovered but undeveloped gas reserves. The funds are part of a $200 million equity and debt raise by Seven Energy, and will be used for the development of reserves in the rich oil and gas-producing region of Nigeria. This unique transaction is geared towards the domestic use of gas, including power generation and supply to captive industrial clusters.”

“AFC is a lead investor in the US$240 million African-led Main-One submarine fibre optic cable project, which will provide much needed telecommunications capacity in West Africa. It is also the main African participant in a seven-year US$750 million syndicated reserves based lending facility to develop the landmark Ghanaian Jubilee Oil Field—one of West Africa’s largest deepwater offshore developments in over decade .The Africa Finance Corporation (AFC) has made an equity investment of $20 million in Seven Energy, an indigenous oil and gas exploration and production firm focused on the monetisation of Nigeria's discovered but undeveloped gas reserves. The funds are part of a $200 million equity and debt raise by Seven Energy, and will be used for the development of reserves in the rich oil and gas-producing region of Nigeria. This unique transaction is geared towards the domestic use of gas, including power generation and supply to captive industrial clusters.”

The lack of large capital financing is a major obstacle for oil and gas industry in Africa. For the industry to continue to be viable and buoyant, ways must be devised for readily availability of the capital in local market. African capital markets are improving and continue to be relevant in the oil and gas industry. Banks in the south of Sahara are now selling bonds to international investors and with that come a tremendous growth on the balance sheet. As the indigenous banks grow they can be able to acquire resources and liquidity for capitalization and financing of oil and gas industry

 

The government and people of Federal Republic of Nigeria have lost a great leader, a man of peace and a champion of peace, the late President Umaru Yar’adua. During his brief but committed presidency he set an agenda of reform and renewal for Nigeria. But illness could not allow him to implement and actively participate in carrying out his planned policy.

President Umaru Yar'adua tackled the issue of Niger Delta head on by granting amnesty to the dissidents, simultaneously he set up the Ministry of Niger Delta to ease tension and to bring a new beginning to the troubled region. At the dawn of his presidency he also came up with the popular Seven-Point agenda for economic revitalization of Nigeria and provision of a durable infrastructure. The seven-point agenda could become the catalyst for the realization of the 2020 vision plan. He put a great emphasis on the prudent management of his country’s increasing foreign reserve. All these policies and ideas were at the infant stage before he fell to illness.

Mr. Vincent Ogboi, Senior Fellow, economic and financial analyst on African affairs at Afripol organization, emphasized the late president’s legacy: “Nigeria's loss of President Umaru Yar'adua, although sad, has left a lasting legacy of conflict resolution by finally putting a handle on the Niger Delta militant unrest after many years of unsuccessful attempts by leaders before him. This sad loss has ushered in Dr. Jonathan Goodluck a fresh mind with ideas that may end Nigeria's checkered political history of uncertainty, corruption, poor governance and a never ending cycle of strife and poverty in the land of enormous oil wealth and rich human resources. Dr Goodluck first attempt to tackle head-on the electoral reform Act which has made Nigerian’s young democracy the laughing stock of other democracies because of the massive rigging at all levels of elective positions is a breadth of fresh air. Elections are widely rigged, votes are hardly ever counted. Politicians are known to be selected by god fatherism instead of being elected by the electorate, thus leaving Nigeria and her people with less than credible electoral results.”

Mr. Emeka Chiakwelu, Principal Policy Strategist at Afripol during the monthly round table conference extended condolence to the family of the late president and Nigeria: “Nigeria has lost a great man, a gentleman and a genuine man of peace. The late President Umaru Yar'adua was a patriot who understood the problems facing his country and never shrinks to tackling of the country’s mounting problems. The problems ranging from poverty, inadequate infrastructure and Niger Delta beg for a leadership in Nigeria.  The late president has set an example and a legacy worth emulating and implementing. The new President Goodluck Jonathan will continue to build on the legacy and may God Almighty guide him as he does well for his country.”

With the mantle of leadership and presidency transferred to His Excellency Goodluck Jonathan the continuation of the pragmatic policies of the administration will have new life with productive outcome. Poverty, Social Security, Niger Delta and paucity of social infrastructures especially reliable supply of electricity will continue to be the priorities of the new administration. President Goodluck Jonathan is efficiently capable of stirring the giant of Africa to affirmative direction with great achievements. Therefore Nigeria is possibly in good hands with the new president; and our great country will be a beckon of peace, hope and justice.

Afripol is committed to democracy, freedom and liberty in Nigeria and Africa.

 

Federal Republic of Nigeria and People’s Republic of China signed memorandum of understanding - for China to finance and build $23 billion oil refineries in Nigeria. The deal was signed between the state-owned Nigerian National Petroleum Corporation (NNPC) and its Chinese counterpart China State Construction Engineering Corporation Limited for the construction of oil refineries in three strategic centers in Nigeria including Lagos and in troubled Niger Delta. At optimum production the refining capacity is expected to be 750,000 barrels daily.

His Excellency Emmanuel Egbogah, The special adviser to the president of Nigeria on petroleum matters and a powerful member of the negotiation team confirmed the signing of the deal to Financial Times of London. It was reported by Financial Times that Dr. Egbogah said that signing of the memorandum of understanding “is a starting point but it's a serious proposal."

China is a big player in Africa and Nigeria in particular especially in oil and gas industry. China has a history of trying to consolidate the deal to refurbish Nigerian refineries. “But previous Chinese offers to build or renovate Nigerian refineries as part of haggling over oil blocks between 2005 and 2007 have run aground. Beijing's emissaries have had far less success navigating Nigeria's perilous political terrain than they have in Angola or Sudan, both of which have emerged as crude suppliers to China. The new accord might represent a breakthrough, however.”

China with its big appetite for energy and together with its enormous foreign reserve of $2 trillion has found Africa as its resistible landscape for investments. Africa is rich in natural resources especially in oil and gas. Therefore China the most populous nation and the fastest rapidly growing economy in the world is willing to put her money where her interest can be solidified. The bulk of the financing for $23 billion refineries is from China Export & Credit Insurance Corp. and rest from a consortium of Chinese banks.

This investment can be fruitful and beneficial for both sides and it can become a boost for Nigeria to solve her refined petroleum problem. China can benefit enormously because it will make her foot on Nigeria much stronger and enable her to acquire more oilfields without much ado. Nigeria has major refineries in Warri, Kaduna and Port Harcourt but they are not functioning at an optimum capacity. The problems of corruption, poor management and lethargy have weakened Nigeria’s resolve to run efficient oil refineries.

A successful completion of the deal will enable President Goodluck Jonathan’s administration to bring to an end the scarcity of petroleum products especially petrol in Nigeria. On the money issue, Nigeria has wasted bundle of billions of dollars in the importation of refined fuel for local consumption. It has been estimated that Nigeria shoveled away $10 billion annually in the importation of the refined fuel. The demand for refined fuel in Nigeria is in increased brought by demand from electric energy supply industries and electric generators, factories and the increasing automobiles presence in Nigeria.

This is sunshine deal for the investment is in the core needed-area in Nigeria. A win-win deal for everybody, China will get what she wants - the rights for oil exploration while Nigeria will ameliorate her energy problems.

China has been cultivating interest in Africa for sometime and in 2006 she organized the first major summit between Africa and China. The Chinese President Hu Jintao opened the summit in Beijing attended by nearly 50 African heads of state and ministers. China has pledged to double its aid to Africa and provided $5bn in loans and credits over the next three years. China emphasized that it has no political agenda but doing business with Africa on mutual benefit. China has been accused by the West of downplaying human rights and corruption in Africa.

The President of China, Mr. Hu later embarked on official African tour in 2006 that took him to Nigeria, Kenya, Morocco and others. In Nigeria, President Hu addressed the joint National Assembly and called on greater ties between Africa and China and he made business deals in Nigeria including:

*Seven co-operation agreements were signed by Nigeria and China during President Hu 's visit. 
*China will buy a controlling stake in Nigeria's 110,000 barrel-a-day Kaduna oil refinery 
*Build a railway system and power stations in Nigeria
*China National Petroleum acquired right for oil exploration blocks - comprise two areas in the oil-producing Niger Delta - one onshore and one in shallow water - and two areas in the higher-risk inland Chad basin, where no oil is produced at present. 
*Chinese state oil firm CNOOC completed a $2.3bn deal to buy a stake in a Nigerian oil field. 
*Chinese companies constructed factories in Nigeria and more are planned for a free trade zone in the south-east of the country

Therefore the oil refineries constructions deal with Nigeria goes along with China strategic and calculative business ventures in Africa and Nigeria in particular. For this significant business deal in Nigeria, China in spite of her ambition in Africa deserves praise. Nigerian economy needs the boost from functioning oil refineries.

 

Naira must be protected from further weakening

It is arduous, if not a herculean task to safeguard and revamp a currency in the era of globalism and international currency trading. The recent and precipitous declining value of Nigeria’s naira to major currencies including dollar, euro, yen and others is something of great concern. The slumping naira can be revamp, although it is easier to say than done because the means to the end and options available are limited. With a blink of an eye the computerized trading of currency can alter and devalue a currency, therefore the mission to refurbish naira becomes more complex. Ultimately, the value of nation’s currency is a reflection of the well being of a nation.

There are myriads causative under linings and implications associated with the weaken naira. The rudimentary of a strong currency is determined by the GDP of a nation particularly the vibrancy, volume and richness of the export. An export based economy can readily build and possibly protect a currency from speculators because they can accumulate a large foreign exchange which becomes the war chest to deter any hostile takeover. Even with such a sound economy, capitalism is subject to creative destruction which implies that a larger economy and more active speculators can still overwhelms and weakens a currency by fiercely and voraciously going after the targeted currency. Currencies cannot be fully fortified for in the international trade, they are exposed to the forces of demand and supply.

Nigeria’s naira can be rebuild and possibly fortified from foreign invaders, although it is a tall order. The task of having a sound currency is intertwine with a healthy economy. Nigeria has some advantages, her economy is relatively sound although it is bedeviled with poverty, gigantic unemployment and troubling banks. Nigeria is among the lowest debtor nation in the world, it is an advantage because she does not have to used a lot of generated exchange to service her debt. Nigeria to her merit do not have a large and run away trade deficit, Nigeria even enjoy a healthy trade balance with some industrialized nations. Another good thing going in favor of Nigeria is her large foreign reserve, it can act as a war chest and can become a psychological tool to discourage predatory speculators. Lately the foreign reserve has commenced to dwindle. But with the price of oil rising, the Central Bank of Nigeria (CBN) pledged to continue to build up the foreign reserve.

The declining foreign reserve was as a result of increasing withdrawal from the reserve. It is imperative that the withdrawal be utilized as prop up for naira or be used as investment to the economy, which at the long run can become the best stimulus for naira. The danger of continuous decreasing of the foreign reserve can culminated to steady devalue of naira. For instance the Standard and Poor’s rating for Nigeria was slashed from BB- minus to B- plus. The reason given for the lowering of the rating was the printing of over N 400 billion by Central Bank of Nigeria to rescue the five melting and battered banks in Nigeria. With a rational CBN the printed money can be release efficiently into the system to avoid inflation and overheating the economy. Inflation poses the greatest danger to the value of a currency. Naira can be fortified from inflation with a sound monetary policy coming from the CBN together with sensible fiscal policy from the executive branch of the government especially the avoidance of over taxation.

In totality Nigeria economy is not very active for it is a commodity based economy. The economy lacks diversification and becomes relatively weak when compares to industrialized economies of the West and East. The point here is that the source of generating foreign exchange to Nigeria is quite limited. For the major source of foreign exchange for Nigeria comes from oil. Therefore Nigeria lacks the adequate vim and resources to constantly fends off speculators and buy back the naira in the hands of foreign currency traders. Nigeria needs a export driven economy that will enable her to accumulate a large and intimating foreign reserve.

Import based economy of Nigeria hampers the full blooming of naira because the importers are busy sending the precious foreign exchange to oversea and foreign land. The infant industries are left unprotected. Let us be careful, no one is calling for economic nationalism at the expense of free trade in order to protect naira. That will be self defeating and a waste of energy and resource.

In the short run Nigeria option is limited. Nigeria can dip her hands into her foreign reserve and ease the scarcity of dollars by liquefying her capital market. But once Nigeria does that she increase the internal demand of dollars and other major currencies. But it will temporary cool off the hyper demand of the foreign currencies and buy more time for Nigeria to come up with a long time strategy.

The path way to stronger currency are paved with discipline, hard work and commitment. First and foremost Nigeria must accept that she cannot continue to build an economy with one major export which is oil. The key and the operating word is diversification. It is becoming redundant and superfluous to say the word diversifications in Nigeria. An emerging economy cannot have a strong economy with a mono-exporting commodity. Naira can be as strong as the economy. And by the way when the economy is diversified a too strong currency can depressed trade because the products will be expensive compare to nations with relatively lesser strong currencies. The challenge to Nigeria is to start to lay foundation for a healthy currency and economy by doing the right thing especially providing the adequate infrastructure that will enable industrialization and export driven economy to germinate and grow.

The wrong application of monetary and fiscal policies can weaken a currency. To this, CBN will encourage and enforce low to moderately interest rates while the executive branch of government (federal and state)will lower taxes that will attract resources and investors. Another devourer of currency is inflation which must be vigorous monitored and controlled with logical monetary policy. The readily convertibility of naira can aid to peg naira to some fixed values but it not the panacea to the sorry state of naira. It is tactical move but at the long run a strong naira will eventually be allow to float.

Restoring, rebuilding and even protecting the falling naira must be undertaken with a comprehensive strategy. The economic paradigm must be constructively redrawn to include economy’s diversification. Intrinsically, infuse of investments particularly rebuilding of the infrastructure, including a bold but closely controlled monetary policy can put naira back to a highly valued currency.

 

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