The National Youth Council of Nigeria (NYCN) has blamed the recent Naira depreciation on the Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele’s poor economic management policies.
According to the Charmingpro, the Naira depreciated to an all-time low of N730 to the US dollar in the parallel market this week.
Comrade Solomon Adodo, President of the NYCN, responded by stating that statements attributed to the CBN Governor alleging that the current free-fall of the Naira against other major currencies was caused by the NNPC Ltd’s failure to remit dollars to the foreign reserve, without highlighting the reality of the causative oil and non-oil related factors, such as a drop in Nigeria’s crude oil production, rising petrol subsidies, and an unsustainable dual exchange rate.
The group accused Emefiele of failing to focus on his primary mandate as governor of the apex bank, price stability.
It stated that with inflation at around 19 percent and the exchange rate approaching N800 to a dollar, the CBN Governor should be held accountable for the country’s deepening poverty as he continues to work against President Muhammadu Buhari’s goal of reducing poverty and growing the economy.
“We are all witnesses to the fact that from August 2020 to July 2022, the official exchange rate moved from N381 to N415/$, representing only a 9% increase,” the statement says. The parallel market, on the other hand, has risen from N470 to N710 in the same time frame, representing a 51% increase and a record 71 percent arbitrage with the official exchange rate, creating a huge incentive for round-tripping, price gouging, sharp market practices, and inflation.
“The NYCN is thus shocked by the Governor’s comment associating the free-fall of parallel market rates with the NNPC, despite the fact that it is purely a monetary policy issue and outside the NNPC’s purview.”
“As a youth group, we have observed the CBN’s inability to promptly release Joint Venture (JV) cash call funding from the Treasury Single Account (TSA) even when the Nigeria National Petroleum Company (NNPC) Ltd had adequate cash cover, resulting in JV Partners’ loss of confidence in restoring production and reaping the benefits of today’s improved oil prices.”
“We are aware that, for more than three months, dollar-denominated cash call payments totaling more than $400 million have yet to be paid by the CBN under Mr. Emefiele.”
“The combined impact of CBN’s inability to release JV cash call to restore production, rising losses due to crude oil theft, and production deferments has resulted in significant crude oil output losses of over 600,000 barrels per day.”
“We find it curious that the apex governor appears to be unaware of the insecurity and massive oil theft in the Niger Delta, which have continued to challenge the country’s oil production, as well as the oil and gas industries in general.” At the moment, the country’s major onshore production export facilities of Bonny, Brass, and Forcados are suffering massive losses and have declared force majeure.
“At the current year-to-date average crude oil price of $107 per barrel, Nigeria is counting opportunity losses totaling more than $64 million per day, with a monthly impact of approximately $2 billion.”
“We are surprised that Mr. Governor is pretending to be unaware that the country’s rising petrol subsidy costs, as well as rising external debt servicing costs, are all obligations affecting the economy.” These have an impact on the NNPC’s payments to the Federation Account.
“From January to June 2022, the cost of PMS subsidy reached N2.2 trillion, and the full-year subsidy bill is expected to be between N5 trillion and N6 trillion in 2023.”
“Aside from the government’s decision to postpone the implementation of PMS deregulation, the CBN’s foreign exchange management has a significant impact on the subsidy profile.”
“It is worth noting, however, that the NNPC has made significant progress in terms of production ramp-up, including achieving ‘first oil’ production from the Anyala – Madu Fields and, most recently, the Ikike fields, which increase national oil production by nearly 80,000 barrels per day.”
“Furthermore, despite the global setback recorded as a result of the effects of the COVID-19 pandemic, NNPC’s efforts to achieve additional combined production of over 100,000 barrels from fields such as Obodo, Utapate, and others have never abated.”
“History demonstrates that Mr. Emefiele is at sea when it comes to addressing monetary policy issues.” We recall that in 2021, the CBN governor blamed Aboki FX for the Naira’s depreciation. He would later blame members of the Association Bureau De Change for the halt in dollar sales to the organization. At another point, he blamed the Naira’s depreciation on money laundering, terrorism financing, and politicians.
“Furthermore, Nigerians are bearing the brunt of the CBN Governor’s inaction, as Emirates Airlines, the flag carrier of the United Arab Emirates (UAE), has reduced its flight operations to Nigeria due to the CBN’s inability to repatriate approximately $85 million in revenue.”