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LCCI to CBN: supporting external reserves with foreign portfolio investment is unsustainable

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6 years ago

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By Omoh Gabriel

Lagos Chamber of Commerce and Industry has said that the approach of central Bank of Nigeria supporting external reserves with foreign portfolio investment is unsustainable peradventure portfolio investors develop apathy for Nigerian assets. The President of the Chamber Mrs Toki Mobogunje said this in Lagos at a press conference. She said  “We observed that the naira-dollar rate was pressured towards the end of 2019 on the back of increased foreign portfolio outflows due to the depletion in external reserve. Overall, exchange rate has demonstrated relative stability, supported by the sustained intervention of the Central Bank of Nigeria (CBN).  External reserves still hover around the $38 billion threshold, according to official data from the Central Bank of Nigeria. The approach of supporting the reserves with foreign portfolio investment is unsustainable peradventure portfolio investors develop apathy for Nigerian assets”. She said that the mono-product nature of the economy would continue to expose the nation to volatility in the global oil market with its attendant consequences on the economy. Mabogunje called on the Federal Government to intensify diversification efforts and embrace structural reforms to attract private investment and stimulate economic growth.

According to her, businesses still struggle to survive owing to multiplicity of levies, infrastructure challenges, sluggish growth, excessive regulation, high cost of credit and unfavourable government policies. She said the challenges confronting growth of businesses had remained in spite of the country’s upward movement by 15 places in the ease of doing business ranking. The LCCI president advised government to vigorously implement friendly policies to support expansion of businesses. Speaking on inflation, Mabogunje advised the government to stem rising consumer prices through increased investment in infrastructure, especially power and transportation.

This, she said, would help bridge the supply gaps and reduce transportation costs. “The rate at 11.98 per cent in December makes that the fourth consecutive month of rising inflation. Rising inflation has a profound welfare effect on citizens as it weakens purchasing power, as heightened food inflation naturally escalates poverty conditions. Policy makers need to worry about the increasingly intense inflationary conditions, especially the food component of inflation,” she said.

On the 2020 budget, Mabogunje urged government and its agencies to release performance reports to stakeholders and general public on periodic basis. Speaking on the adoption of Eco as a common currency within the ECOWAS sub region , she noted that the change had no significant implication on the Nigerian economy. She, however, explained that the manner of adoption of the currency by the francophone countries raised concern around the mutual confidence levels between the anglophone and francophone countries in the region. “Currency issues are not the biggest issues in the integration process in ECOWAS, as the bigger issues are around non tariff barriers to trade.

The challenges of weak compliance with the ECOWAS protocols, especially around the ECOWAS Trade liberalisation scheme and connectivity between countries in the sub region are major problems.

“It is important to get priorities right as far as economic integration issues are concerned,” she said.

Mabogunje lauded the 65 per cent loan to deposit ratio, saying it was a timely policy intervention to normalise credit markets, spur economic growth and broaden the interface between entrepreneurs and the banking system. She implored the Central Bank of Nigeria and fiscal authorities to strengthen collateral registry to enhance the profiling of borrowers. The LCCI president said this would help to address the downside risk with respect to loan asset quality arising from the new lending policy in the banking system.  Private investment inflows to Nigeria stood at $19.7 billion from the first to third quarter in 2019. The domination of portfolio investment in total capital importation combined with a sustained decline in foreign direct investment highlights the fact that the economy is considered risky by foreign investors. Government needs to do a lot more to ensure policy reforms that could attract private investment into the economy. We believe that it would be almost impossible for government to accelerate growth, create job opportunities and alleviate poverty without adequate private investment in the real economy. Promoting foreign direct investment (FDI) and domestic investment require impactful investment in infrastructure, policy consistency and stable macroeconomic environment. We should prioritise foreign direct investment (FDI) over foreign portfolio investment (FPI).

She said “we note that the finance act is aimed at generating more revenue for government and making the business environment more enabling by reducing the tax burden on micro, small and medium enterprises. We note that the act will help support the funding and implementation of the 2020 budget. However, the increase in VAT rate from 5 percent to 7.5 percent gives us concern. The new tax regime does not bode well for manufacturers and other stakeholders in the real economy. The new tax regime will affect cost of production and profit margin, with consumers at the receiving end. The VAT hike has implications for inflationary pressure and consumer demand. We advise government to utilise the additional income that will be generated from the increase in VAT to develop quality infrastructure, not only on payment of worker’s salaries”.

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Economy

Nigeria champions African-Arab trade to boost agribusiness, industrial growth

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3 days ago

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December 5, 2025

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The Arab Africa Trade Bridges (AATB) Program and the Federal Republic of Nigeria formalized a partnership with the signing of the AATB Membership Agreement, officially welcoming Nigeria as the Program’s newest member country. The signing ceremony took place in Abuja on the sidelines of the 5th AATB Board of Governors Meeting, hosted by the Federal Government of Nigeria.

The Membership Agreement was signed by Eng. Adeeb Y. Al Aama, the CEO of the International Islamic Trade Finance Corporation (ITFC) and AATB Program Secretary General, and H.E. Mr. Wale Edun, Minister of Finance and Coordinating Minister of the Economy, Federal Republic of Nigeria. The Agreement will provide a strategic and operational framework to support Nigeria’s efforts in trade competitiveness, promote export diversification, strengthen priority value chains, and advance capacity-building efforts in line with national development priorities. Areas of collaboration will include trade promotion, agribusiness modernization, SME development, businessmen missions, trade facilitation, logistics efficiency, and digital trade readiness.

The Honourable Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, called for deeper trade collaboration between African and Arab nations, stressing the importance of value-added Agribusiness and industrial partnerships for regional growth. Speaking in Abuja at the Agribusiness Matchmaking Forum ahead of the AATB Board of Governors Meeting, the Minister said the shifting global economy makes it essential for African and Arab nations to rely more on regional cooperation, investment and shared markets.

He highlighted projections showing Arab-Africa trade could grow by more than US$37 billion in the next three years and urged partners to prioritize value addition rather than raw commodity exports. He noted that Nigeria’s growing industrial base and upcoming National Single Window reforms will support efficiency, investment and private-sector expansion.

“This is a moment to turn opportunity into action”, he said. “By working together, we can build stronger value chains, create jobs and support prosperity across our regions”, Edun emphasized. “As African and Arab nations embark on this journey of deeper trade collaboration, the potential for growth and development is vast. With a shared vision and commitment to value-added partnerships, we can unlock new opportunities, drive economic growth, and create a brighter future for our people.”

Speaking during the event, Eng. Adeeb Y. Al Aama, Chief Executive Officer of ITFC and Secretary General of the AATB Program, stated: “We are pleased to welcome Nigeria to be part of the AATB Program. Nigeria stands as one of Africa’s most dynamic and resilient economies in Africa, with a rapidly expanding private sector and strong potential across agribusiness, energy, manufacturing, and digital industries. Through this Membership Agreement, we look forward to collaborating closely with Nigerian institutions to strengthen value chains, expand regional market access, enhance trade finance and investment opportunities, and support the country’s development priorities.”

The signing of this Agreement underscores AATB’s continued engagement with African countries and its evolving portfolio of programs supporting trade and investment. In recent years, AATB has worked on initiatives across agribusiness, textiles, logistics, digital trade, export readiness under the AfCFTA framework, and other regional initiatives such as the Common African Agro-Parks (CAAPs) Programme.

With Nigeria’s accession, the AATB Program extends it’s presence in the region and adds a key partner working toward advancing trade-led development and fostering inclusive economic growth.

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Economy

FEC approves 2026–2028 MTEF, projects N34.33trn revenue 

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4 days ago

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December 4, 2025

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Federal Executive Council (FEC) has approved the 2026–2028 Medium-Term Expenditure Framework (MTEF), a key fiscal document that outlines Nigeria’s revenue expectations, macroeconomic assumptions, and spending priorities for the next three years. The approval followed Wednesday’s FEC meeting presided over by President Bola Tinubu at the State House, Abuja. The Minister of Budget and Economic Planning, Senator Atiku Bagudu made this known after the meeting.

The Minister said the Federal Government is projecting a total revenue inflow of N34.33 trillion in 2026, including N4.98 trillion expected from government-owned enterprises. Bagudu said that the projected revenue is N6.55 trillion lower than earlier estimates, adding that federal allocations are expected to drop by about N9.4 trillion, representing a 16% decline compared to the 2025 budget.

He said that statutory transfers are expected to amount to about N3 trillion within the same fiscal year. On macroeconomic assumptions, FEC adopted an oil production benchmark of 2.6 million barrels per day (mbpd) for 2026, although a more conservative 1.8 mbpd will be used for budgeting purposes. An oil price benchmark of $64 per barrel and an exchange rate of N1,512 per dollar were also approved.

Bagudu said the exchange rate assumption reflects projections tied to economic and political developments ahead of the 2027 general elections. He said the exchange rate assumption took into account the fiscal outlook ahead of the 2027 general elections.

The minister said that all the parameters were based on macroeconomic analysis by the Budget Office and other relevant agencies. Bagudu said FEC also reviewed comments from cabinet members before approving the Medium-Term Fiscal Expenditure Ceiling (MFTEC), which sets expenditure limits. Earlier, the Senate approved the external borrowing plan of $21.5 billion presented by President Tinubu for consideration The loans, according to the Senate, were part of the MTEF and Fiscal Strategy Paper (FSP) for the 2025 budget.

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Economy

CBN hikes interest on treasury Bills above inflation rate

Published

4 days ago

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December 4, 2025

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The spot rate on Nigerian Treasury bills has been increased by 146 basis points by the Central Bank of Nigeria (CBN) following tight subscription levels at the main auction on Wednesday. The spot rate on Treasury bills with one-year maturity has now surpassed Nigeria’s 16.05% inflation by 145 basis points following a recent decision to keep the policy rate at 27%. 

The Apex Bank came to the primary market with N700 billion Treasury bills offer size across standard tenors, including 91-day, 182-day and 364 day maturities. Details from the auction results showed that demand settled slightly above the total offers as investors began to seek higher returns on naira assets despite disinflation.

Total subscription came in at about N775 billion versus N700 billion offers floated at the main auction. The results showed rising appetite for duration as investors parked about 90% of their bids on Nigerian Treasury bills with 364 days maturity. The CBN opened N100 billion worth of 91 days bills for subscription, but the offer received underwhelming bids totalling N44.17 billion.

The CBN allotted N42.80 billion for the short-term instrument at the spot rate of 15.30%, the same as the previous auction. Total demand for 182 days Nigerian Treasury bills settled at N33.38 billion as against N150 billion that the authority pushed out for subscription. The CBN raised N30.36 billion from 182 days bills allotted to investors at the spot rate of 15.50%, the same as the previous auction.

Investors staked N697.29 billion on N450 billion in 364-day Treasury bills that was offered for subscription. The CBN raised N636.46 billion from the longest tenor at the spot rate of 17.50%, up from 16.04% at the previous auction.

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