Long Walk to Freedom

In the week under review, the regulatory resolve to change the fortunes of the country remained crystal clear. The government is undoubtedly making efforts to address the foreign exchange problem by attracting foreign investments and obtaining external financing through a range of creative structures recently explored. Although there was some uproar about outstanding airline FX obligations earlier in the week, foreign airlines operating in Nigeria revealed that approximately 90% of their $783 million trapped funds remain inaccessible.

It is therefore best to adduce that the process of repair takes time and the preliminary steps in the right direction have been taken. It may be more pragmatic to assess the situation in the coming weeks or months, surely before the end of the quarter before judging efficacy. Some analysts expressed concerns about the exchange rate climbing once again after the revaluation in the previous week. Again, we deem it fit and proper to give the current process time to finish that which it has started so well.

Many schools of thought argue that the Federal Government’s recent adjustments to the Nigerian Customs Service (NCS) exchange rate calculations, shifting from ₦770.88/$ to ₦783.174/$ may have adverse repercussions, including a 70% drop in importation. We choose to believe that it will truly discourage the importation of luxuries and perhaps drive inward patronage and production, which if sustained, will lead to a growth in exports.

The ₦1.45 trillion saved between June and September 2023 as a consequence of the removal of the subsidy on Premium Motor Spirit (PMS) is music to many ears as it showcases the Government’s commitment to financial prudence amid evolving economic conditions.

The oversubscription of the FGN Treasury Bills by 182.4% carried significant implications for Nigeria’s financial landscape. FGN Treasury bills reached a staggering ₦875.8 billion in contrast to the little above ₦310m that was offered, with a stop rate of 7%, 11% and 16.75% for the 91-day, 182-day and 364-day tenor, respectively. The entire market awaits conclusive regulatory direction at the bond auction and MPC meeting ahead.