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What Osinbajo Said About Naira Devaluation, What It Could Mean For The Future

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Nigeria is on auto-replay. Events of the past find a clever way of repeating themselves. Very few things that happen in this African giant are new.

Conversations around the naira and dollar are definitely not new, and we are back at a familiar junction: let’s call it the naira devaluation avenue.

On Monday, at the midterm review of President Muhammadu Buhari’s second tenure in office, the conversation about naira devaluation found a good place to grab centre stage.

For about 45 minutes, Vice-President Yemi Osinbajo explained how the country’s Economic Sustainability Plan helped Nigeria get out of recession.

At the end of his presentation, Osinbajo told a hall full of ministers, captains of industries, diplomats, and civil servants, how he expects the Central Bank of Nigeria to devalue the naira to reflect the state of the market.

The professor of law did not mince words when he said the CBN’s demand-management strategy needs a rethink.

“As for the exchange rate, I think we need to move our rates to [be] as reflective of the market as possible. This, in my own respective view, is the only way to improve supply,” Osinbajo said.

“We can’t get new dollars into the system, where the exchange rate is artificially low. And everyone knows by how much our reserves can grow. I’m convinced that the demand management strategy currently being adopted by the CBN needs a rethink, and that is just my view.”

The boldest part of Osinbajo’s call for devaluation was that he did it right before his principal, President Muhammadu Buhari. Buhari is known to be against the devaluation of the naira, even when market forces clearly necessitate the shift.

WHAT HAPPENED WHEN OSINBAJO CALLED FOR DEVALUATION IN 2016

When Buhari and Osinbajo took office in 2015, one of the first demands of the investing community was for the government to devalue the naira and maintain a single exchange rate system. President Buhari strongly opposed this position. He famously said he will not kill the naira.

Osinbajo stood with Buhari. He told diplomats that Nigeria will not be devaluing the naira, suggesting that devaluation was not the solution to the currency crisis.

“I don’t agree on devaluation and it is not that I am doctrinaire about it. In the first place, it is not a solution — we are not exporting significantly. And the way things are, devaluation will not help the local economy,” he told ambassadors from Italy and Canada, who visited him in October 2015.

Some months down the line, the vice-president who chairs major economic committees in the Buhari government, called for a “substantial revaluation for the foreign exchange policy”.

“There has been a sharp decline in foreign exchange earnings. The executive is not responsible for monetary policy but we have made the point clearly that demand management will not take us out of the woods,” he said in May 2016.

Just as Osinbajo said in 2016, he has said again in 2021 that the CBN’s “demand management” strategy needs to be reevaluated.

A month after Osinbajo’s call in 2016, the CBN removed its peg on the naira from 197 per dollar. The local currency went as high as 283 per dollar in a matter of hours.

Osinbajo said this would help boost dollar supply and encourage capital inflows. He was right. Nigeria recorded a 138.7 percent increase in inflows. But the story did not end there.

WHAT 2016 TEACHES US ABOUT 2021

If we follow the 2016 script to the letter, then the authorities would walk back on this call for devaluation starting from today. We would find many reasons why devaluation is bad for the economy. But the devaluation will eventually happen.

Look at it like this; we are back at that time in 2015 when the official rate of the dollar was N197, and the parallel market rate was N260. There was more than a 20 percent gap between the parallel market and the official side. Today we have 411 vs 570, which is also more than a 20 percent gap.

If the CBN goes with Osinbajo’s suggestion to “move our rates”, what immediately happens is that we see a devaluation at the official market, which may drive up prices of goods and services in the short term.

If the CBN employs some of the lessons from the past, it can strengthen the naira at the parallel market. The naira will dramatically recover from N570 per dollar to anywhere between 450 and 500.

There would be a unification of rates at a new midpoint. But the big question is: what happens next?

After the 2016 devaluation and some sort of unification, the parallel market began to shift again. The CBN adjusted for unification. By 2017, the parallel market had taken the naira to 520 per dollar. CBN had to devalue again to 360 to firm up rates.

The naira recovered from 520 to 360 at the parallel market. But this was not sustainable due to the nature of the Nigerian economy.

Since 2017, we have moved from a unified 360 to 570 as of Monday. If we devalue again, the naira will firm up for a bit, and if we don’t do something different with the economy, we would be back again at devaluation avenue in a few years. That is how the Nigerian auto-replay works.

 

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EndSARS: CNN, Amnesty International Must Apologise To FG -Lai Mohammed

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The Federal Government has demanded an apology from Amnesty International, CNN and DJ Switch for misleading the world that there was a massacre at the Lekki Toll Gate on Oct. 20, 2020.

The Minister of Information and Culture, Lai Mohammed made this demand on the occasion of the first year anniversary of the famous #EndSARS protests in Nigeria.

According to the Minister who spoke during a press conference in Abuja on Wednesday, CNN, Amnesty, and DJ Switch are all guilty of spreading fake news.

Mohammed maintained that there was no massacre of Nigerian youths at the Lekki Toll Gate incident during the protest last year and the trio mentioned only gave false and misleading reports.

The Minister insisted a professional analysis of what transpired at the Lekki Toll Gate revealed that the military didn’t massacre anyone while if truly there was any killing as widely reported, the families of the victims and those affected would have appeared with evidence before the Judicial Panel of Inquiry.

Not done, Lai Mohammed further accused the trio of spreading ‘tales by moonlight’ about what he described as the phantom killings at the Lekki Toll Gate during the EndSARS protests last year.

He said: “…During the sitting, CNN was summoned but it never showed up, thus missing a great opportunity to prove its allegation of massacre at the toll gate. Also, Amnesty International had a golden opportunity to convince the world, but it rather opted for issuing meaningless press releases.”

“In its latest attempt to grasp at straws and redeem whatever is left of its battered credibility on this issue, CNN has continued with its baseless report that soldiers shot at protesters. In a report currently running on the network, CNN brazenly and unashamedly held on to its flawed narrative, relying on an unidentified mother whose son was reportedly shot dead at Lekki, but without convincing evidence of who shot him dead. The same CNN that tweeted on Oct. 23rd 2020 that 38 people were shot dead at Lekki is now struggling to convince the world that one boy was killed at Lekki. What a shame!”

“The testimony of ballistic experts before the Judicial Panel of Inquiry in Lagos contradicts the tales by the moonlight by Amnesty International, CNN, a runaway DJ, and their ilk.”

 

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BREAKING: Police Arrest #EndSARSMemorial Protesters At Lekki Tollgate

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Operatives of the Lagos State Police Command have arrested two protesters at the Lekki tollgate where the #EndSARS Memorial Protest is scheduled to hold in the state today.

One of those arrested claimed to be a journalist while the other was seen carrying a placard.

The police had reportedly warned that anyone seen at the tollgate without an ID card will be arrested.

The arrested journalist told newsmen that he works with LegitTV and that his phone, driver’s license and other documents were taken away from him.

Speaking from a Lagos State Task Force van where he was kept by the police, the journalist who identified himself as Abisola stated that he lost his ID card in transit.

About 30 police trucks and armed personnel are currently at the tollgate to enforce a ban on protests issued by the police command.

A car procession in honour of those believed to have lost their lives at the tollgate when soldiers dispersed #EndSARS protesters on October 20, 2020, is scheduled to hold at the tollgate today.

What #EndSARS protests were about

The #EndSARS protests which were held in October 2020 were against the activities of the now-disbanded Special Anti-Robbery Squad, a unit of the Nigeria Police Force which was accused of police brutality.

The epicentre of the protests was the Lekki tollgate in Lagos where many youths gathered day and night to air their grievances against police brutality and bad governance.

They were dispersed from the location by gun-wielding soldiers on October 20, 2020, an action which some quarters believe led to the loss of lives.

This was followed by the destruction of private and public properties by hoodlums in Lagos, an incident that informed the latest warning issued by the police in the state.

PUNCH

 

 

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Police Threaten To Punish Inspector For Voting At APC Congress

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The Zone 1 Command of the Nigeria Police Force, Kano, on Tuesday said its attention had been drawn to a trending picture on the social media, of a police inspector casting his vote at the Kano State congress of the All Progressives Congress alongside his principal, the state party chairman, Alhaji Abdullahi Abbas.

A statement by the Zonal Public Relations Officer, DSP Abubakar Ambursa, added that the inspector had been identified as Bashir Mohammed of the Special Protection Unit, Base 1, Kano.

According to the statement, the Inspector is attached to the Government House, Kano, from where he was deployed to work with Abbas as a security aide.

“In view of this seemingly unprofessional conduct of the inspector, the AIG (Assistant Inspector General of Police) has referred the matter to the Zonal X-Squad for investigation.

“If the inspector is found to have committed the offence, appropriate disciplinary action will be taken against him,” the statement said.

The police assured members of the public that further development on the matter would be communicated.

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