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Stakeholders laud CBN on forex as inflation drops — Daily Times Nigeria

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*Apex bank’s interventions reflect positive growth of economy-Expert

Motolani Oseni, Lagos And Philip Clement, Abuja

Following the latest World Bank report on the impacts of the Central Bank of Nigeria’s (CBN’s) management of the foreign exchange regime, industry stakeholders have insisted that the country’s apex financial institution is on the right track as its different interventions on the economy are yielding positive results.

The World Bank in its bi-annual Nigerian Development Update, a report published twice yearly, had called on the federal government to ensure transparency in its economic recovery policy.

According to the World Bank, the central bank’s management of the exchange rate reduced supply in the market thus affecting investor confidence.

In the report which is titled, “Resilience through Reforms”, the World Bank said despite signs that the country’s economy has started to grow again, prices have continued to increase rapidly, severely impacting Nigerian households.

The report which was released in Abuja on Tuesday noted that as of April 2021, the inflation rate of 18.12 per cent was the second-highest in four years after attaining 18.17 per cent the previous month.

Food prices accounted for over 60 per cent of the total increase in inflation, with rising prices pushing an estimated 7 million Nigerians below the poverty line in 2020 alone.

The report acknowledged notable government policy reforms aimed at mitigating the impact of the crisis and supporting the recovery, including steps taken towards reducing the subsidy levels for petroleum products imports and supply and adjustments in electricity tariffs towards more cost-reflective levels.

The report also highlighted both the Federal and State government’s efforts to cut down on non-essential spending and redirect saved resources towards the COVID-19 response.

However, there were indications of positive growth for the Nigerian economy as the National Bureau of Statistics (NBS) had earlier in the day said that the nation’s inflation rate has further dropped to 17.93 per cent.

This shows a positive growth from the 18.12 per cent recorded in April.

From the first quarter of 2021, inflation has spiked from 16.47 per cent in January to 17.33 per cent in February, 18.17 per cent and 18.12 per cent in March and April.

The Consumer Price Index report released by the NBS on Tuesday shows food inflation plunged to 22.28 per cent in May compared to the 22.72 per cent recorded in April.

“This rise in the food index was caused by increases in prices of Bread, Cereals, Milk, Cheese, Eggs, Fish, Soft drinks, Coffee, Tea and Cocoa, Fruits, Meat, Oils and fats and Vegetables,” said NBS.

The Core inflation, which excludes the prices of volatile agricultural produce stood at 13.15 per cent in May 2021, which is a rise of 0.41 per cent when compared with 12.74 per cent witnessed in April 2021.

However, the the different interventions of the CBN on the economy are yielding positive results on the economy.

Speaking to The Daily Times on this development, a finance expert, Prof. Uche Uwaleke, said that it’s possible that the interventions by the CBN in the agric value chain are beginning to bear fruits, as food inflation is easing.

He, however, cautioned that with rising insecurity, and a likely hike in the pump price of fuel and electricity tariffs, it is doubtful whether the downward trend in headline inflation rate will be sustained.

The Director-General of Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, on Tuesday said: “We welcome the deceleration of headline inflation from 18.12 per cent in April to 17.93 per cent in May 2021, year on year. This represents a marginal decline of 0.19 per cent.

We note the marginal drop in the Food Inflation sub-index from 22.72 per cent in April to 22.28 per cent in May 2021. However, the core inflation sub-index accelerated to 13.15 per cent in May from 12.74 per cent in April 2021.”

He, however, noted that the drivers of inflation had remained largely the same and are mainly supply-side issues.

These include the security situation, cost of transportation and logistics, energy costs, exchange rate depreciation, illiquidity in the forex market, climate change, among other variables.

But the president, Association of Bureaux De Change Operators of Nigeria (ABCON), Alhaji Dr Aminu Gwadabe had identified Forex speculators as the problem, even as he said that the CBN has continually funding the BDCs.

He, therefore, said that foreign exchange speculators will lose a huge amount of their fortune (over N100 billion monthly), because the apex bank has sustained massive funding for Bureaux De Change (BDC) operators.

According to him, the CBN is committed to improving funding for over 5,000 BDCs nationwide in a new move to deepen market liquidity and protect the naira against speculators.

He called for the return of normalcy to the market as the ongoing speculative behaviour hampering the market operations and stability will come at huge loss to speculators.

The ABCON boss linked the continued fall of the naira at the parallel market and Investors’ and Exporters’ (I&E) Forex window to currency speculators hoarding dollars to profit from the currency crisis.

He said the perpetrators are creating an artificial scarcity of the greenback within the market to cause more woes for the local currency.

Gwadabe said the ABCON Management and the CBN-licensed BDCs will fight alongside the regulator to ensure that speculators lose their capital should they persist in the illegal activity.

Although, the World Bank report noted an improvement in public-sector transparency, particularly around the operations of the oil and gas sector, with the Nigerian National Petroleum Corporation (NNPC) continuing its policy of publication of accounts of activities and earnings.

The report underlined the critical importance of a clear policy on exchange-rate management by the monetary policy authorities, trade and fiscal policy, as well as social protection of the poor and the vulnerable.

Specifically, the report recommended increased transparency and predictability of exchange rate management policies to reduce distortions in allocations in the private and public sector; and to ensure agents can access foreign exchange in a timely and orderly manner, at an approved rate.

Meanwhile, CBN Governor Godwin Emefiele in his seven years in office, apart from aggressive development finance function by intervening in different sectors of the economy, has been promoting price and monetary stability, exchange rate stability, financial system stability as well as spur growth through interventions.

In his second year in office inaugural speech, he said: “You will recall that during my maiden address on June 5, 2014, I stated that my vision would be to ensure that the CBN is more people-focused, as its policies and programs would be geared towards supporting job creation, reducing the high level of Treasury-Bill rates, improving access to credit for MSMEs, deepening our intervention program in the Agricultural Sector, building a robust payment system infrastructure that will help drive inclusion, in addition to key macroeconomic concerns such as exchange rate stability, financial system stability and maintaining a strong external reserve.”

He has in the last seven years tightened the monetary policy rate to rein in inflation, created an Investors and Exporters Window which allowed exporters and investors to inflow and sell their foreign exchange at the prevailing market rate.

To reduce reliance on the importation of items which could be produced in Nigeria, the CBN in the last seven years has maintained pressure in the restriction of access to foreign exchange on items that can be produced locally, while deploying intervention funds to support growth and productivity in the agricultural and manufacturing sectors.

“These measures helped to support the attainment of our monetary policy objectives such as a reduction in the inflation rate, stability in our exchange rate and improved accretion to our external reserves,” he had said.

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KQ resumes Mumbai flights after 4 months

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KQ resumes Mumbai flights after 4 months


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A Kenya Airways aircraft at JKIA. FILE PHOTO | NMG

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Summary

  • Kenya Airways will on Thursday resume flights to Mumbai, ending a four-month hiatus that was occasioned by increased cases of Covid-19 in the Asian state.
  • The airline in a notice to its customers yesterday said it will resume its operations on the route on September 16, 2021 with the first flight departing Jomo Kenyatta International Airport at 7am to arrive in Mumbai at 3:45 pm.

Kenya Airways #ticker:KQ will on Thursday resume flights to Mumbai, ending a four-month hiatus that was occasioned by increased cases of Covid-19 in the Asian state.

The airline in a notice to its customers Monday said it will resume its operations on the route on September 16, 2021 with the first flight departing Jomo Kenyatta International Airport at 7am to arrive in Mumbai at 3:45 pm.

The airline will then resume full operations on the route on September 20, flying three times per week on the Indian route, which is one of the most lucrative destinations on its network.

Passengers on the route will part with Sh46,000 ($419) for one-way air ticket on economy class seats from Nairobi to Mumbai- prices that are relatively the same compared to what it was charging before the Covid-19 pandemic.

“Welcome back onboard! Fly from Nairobi to Mumbai starting Thursday 16th September with normal schedules resuming from Monday 20th September 2021,” said the airline in a notice to its customers yesterday.

KQ Suspended passenger flights to and from Mumbai on April 30 until further notice, following a government directive on travel between India and Kenya due to a Covid-19 crisis in that country.

The airline said on Friday that passengers who had booked tickets after May 1, the date of the last flight from Mumbai to Nairobi, will have to change their plans.

Affected passengers, KQ said, could also take vouchers for the value of their fare for future travel within 12 months.

India has seen soaring infection rates in the recent days, since the discovery of a new virus variant. Last month, India put on lockdown one of the states following a spike in cases of Covid-19.

Other countries that have banned flights to India include France, the UK Bangladesh, Oman and Hong Kong that have banned travel to and from India or asked their nationals coming from the Asian country to isolate themselves in government-approved hotels.

India has so far detected 33,264,175 corona virus cases with the number of deaths hitting 442,874 as at September 13.

A large number of patients from Kenya also travel to India every year for specialised medical treatment, especially cancer care, helping to drive medical tourism in the densely populated country that boasts affordable and easily accessible healthcare.

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Lower import volumes push mitumba prices to new highs

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Lower import volumes push mitumba prices to new highs


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Man pulls a cart loaded with second-hand clothes at Gikomba Market in Nairobi. FILE PHOTO | NMG

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Summary

  • Traders paid Sh100,527 on average per tonne of the used clothes, popularly called mitumba, compared to Sh96,286 the previous year.
  • Kenya Bureau of Standards (Kebs) banned importation of the clothes from late March through mid-August in a bid to contain the spread of the life-threatening coronavirus infections.
  • Findings of the Economic Survey 2021 suggests dealers shipped in 121,778 tonnes of mitumba in 2020, a 34.02 percent fall compared with 2019 and the lowest volumes since 2015.

The average price of a tonne of second-hand clothing items imported into the country crossed the Sh100,000 mark for the first time last year on reduced volumes in the wake of safety protocols and guidelines to curb spread of coronavirus.

Traders paid Sh100,527 on average per tonne of the used clothes, popularly called mitumba, compared to Sh96,286 the previous year.

Kenya Bureau of Standards (Kebs) banned importation of the clothes from late March through mid-August in a bid to contain the spread of the life-threatening coronavirus infections.

Findings of the Economic Survey 2021 suggests dealers shipped in 121,778 tonnes of mitumba in 2020, a 34.02 percent fall compared with 2019 and the lowest volumes since 2015.

Last year’s drop was the first dip since 2011 when 76,533 tonnes were shipped in compared with 80,423 tonnes the previous year, the official data collated by the Kenya National Bureau of Statistics (KNBS) shows.

The import bill for the merchandise amounted to Sh12.24 billion, a drop of 31.11 percent, or Sh5.53 billion, year-on-year.

TIn imposing the temporary ban on used clothes, Kebs had applied a standard which prohibits buying second-hand clothes from countries experiencing epidemics to ensure disease-causing microorganisms are not imported into Kenya.

Higher quality and relatively lower prices for mitumba has continued to drive demand for used clothes at expense of locally-made products amid higher margins enjoyed by traders largely operating in informal markets.

The lucrative second-hand clothing market has seen traders from China —a key source market for the merchandise —open shops in Gikomba, Kenya’s largest informal market for mitumba, in recent years to cash in rising demand.

Earnings from exports of articles of apparel and clothing accessories fell 5.32 percent to Sh32.92 billion last year compared with 2019, data indicates.

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Court backs Atwoli union in horticulture membership feud

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Court backs Atwoli union in horticulture membership feud


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Cotu boss Francis Atwoli. FILE PHOTO | NMG

Summary

  • A trade union that is led by the long-serving Central Organisation of Trade Unions (Cotu) boss Francis Atwoli has survived an attempt to stop it from representing over 60,000 workers in the horticulture industry.
  • Newly registered Kenya Export, Floriculture, Horticulture, and Allied Workers Union (Kefhau) had filed as a case in the Employment and Labour seeking to bar the Atwoli-led Kenya Plantation and Agricultural Workers Union (KPAWU) from representing workers in the industry.

A trade union that is led by the long-serving Central Organisation of Trade Unions (Cotu) boss Francis Atwoli has survived an attempt to stop it from representing over 60,000 workers in the horticulture industry.

Newly registered Kenya Export, Floriculture, Horticulture, and Allied Workers Union (Kefhau) had filed as a case in the Employment and Labour seeking to bar the Atwoli-led Kenya Plantation and Agricultural Workers Union (KPAWU) from representing workers in the industry.

Mr Atwoli is the secretary-general of KPAWU. The rival union claimed KPAWU had encroached on its area of workers’ representation.

Justice James Rika, however, dismissed the claim and ruled that the dispute should have been taken through conciliation, and was therefore presented in court prematurely.

He also stated that Kefhau must go beyond its registration and recruit sufficient members from the employers, to be granted recognition and organisational rights.

“Registration on its own, does not afford the claimant (Kefhau) recognition. Until there is proof that Kefhau has satisfied Section 54 of the Labour Relations Act, the status quo must be maintained,” said the judge.

“Kefhau must recruit at least 50 percent plus one, of the unionisable employees in the floriculture and horticulture industry, members of the Agricultural Employers Association to be considered for recognition,” he stated.

He noted that there is a Recognition Agreement and CBA, binding Mr Atwoli’s union and Agricultural Employers Association, affecting 73 Flower Growers Group of employers, and over 60,000 employees.

“It is objectionable for Kefhau to be allowed organisational rights, and the legitimacy to receive trade union dues and agency fees, from over 60,000 employees, just on the strength of registration as a trade union,” said the judge.

Kefhau wanted the court to declare that it is the sole trade union, which is allowed by its constitution to carry out activities in the export floriculture and vegetable industry, and an order restraining Mr Atwoli’s from representing workers in that area.

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