The Naira is losing its resistance against the dollar a few days after it gained some margin at the parallel market.

At the weekend, the naira retreated to about N498/$ at the black market from 490/$ it sold on Thursday.

The momentary gain for the local currency came after the Central Bank of Nigeria (CBN) mandated the money deposit banks (MDBs) to sell to end-users for personal travel allowance (PTA).

Following the directive, banks have intensified campaigns on forex businesses while resurging dollar retreated momentarily. Dollar had exceeded N500/$ as speculators took over the market before the CBN’s intervention.

A former deputy director of the apex bank, Stan Ukeje, warned that the racketeers might have hijacked the CBN’s gesture and that it was not sustainable. He observed that those applying for FX for PTA might be doing so for the arbitrage.

Ukeje noted: “With little regard to the precarious inflow of foreign exchange, money deposit bank (MDBs) advertise availability of foreign currency for would-be travellers and bureau de change (BDCs) get enhanced supply of foreign currency at below Nigerian Autonomous Foreign Exchange (NAFEX) rate. The hope is to lower the expectation of naira depreciation but it does not work out that way.”

He noted that the (CBN) would run out of firepower, after which the slide of the local currency would continue.

“Those who otherwise will not travel do and those who have full information enter the market for the purpose of arbitrage because they know that the policy will not last. The supply splurge is from the CBN. When it exhausts its fire power, the slide in the exchange rate will resume,” he said.

Ukeje had earlier noted that the current NAFEX was “incomplete” as major FX earners, including the Nigerian National Petroleum Corporation (NNPC), do not play in the market.

Experts had advised that the best option for stabilising the currency crisis was setting market-clearing exchange rate as NAFEX does not establish the market equilibrium required to achieve stability.

Last week, both the World Bank and the International Monetary Fund (IMF) sought full harmonisation of the different exchange, saying it was a necessary action point to achieve stability. Though they commended the adoption of NAFEX for official transactions, they noted that a broader reform would be required to a market that supports growth.

The Central Bank had, last month, discarded the previous official rate for NAFEX, otherwise known as investors’ and exporters’ (I&E) window, on which the monetary authority had promised to pursue rate harmonisation.

With NAFEX currently trading at N411/$ last week, the differential between the two markets stands at about N85/$. Financial experts are concerned that the wide differential would continue to incentivise round tripping and other historic market manipulations.

Economic Community of West African States ECOWAS had planned to launch a common currency but postponed the plan due to challenges posed by the Pandemic in 2020.

ECOWAS in an extraordinary meeting in Ghana, adopts a new plan to launch ‘ECO’ single currency in 2027.

The new road map was agreed by heads of state of the Economic Community of West African States (ECOWAS), Jean-Claude Kassi Brou, president of the ECOWAS Commission, told a news conference after a summit of the leaders in Ghana on Saturday.

The countries hope a single currency will help to boost trade and economic growth

“Due to the shock of the pandemic, the heads of state had decided to suspend the implementation of the convergence pact in 2020-2021.

We have a new road map and a new convergence pact that will cover the period between 2022-2026, and 2027 being the launch of the Eco,” he said, referring to the name of the new currency.

Following the First or initial plan to launch the Eco there has been a lot of bottle necks In the Implementation Of the Single Currency In the Region but Analyst say If the criteria Involved In getting the Plan Rolling Is Surmounted then the How will be the next hurdle; That takes us to questions on Implication of a Single Currency in West Africa.

Kelechi Deca an Economy Analyst says the many criteria of the Single currency implementation has been a major challenge since introduction, the implication for each member country is that for example Nigeria will have to let go the Naira, Ghana will also have to leg go the Cedi for the single currency to take effect.

Nigeria, the largest economy in West Africa, currently operates a managed float for its currency, while eight others including top cocoa producer Ivory Coast, use the France-backed CFA, pegged to the Euro.

Ivorian President Alassane Ouattara has said West African nations who meet the criteria to join the single currency should do so by 2020.

Outtara said this after meeting French President Emmanuel Macron in Paris in 2020.

“Countries that are ready, such as countries in the West African Monetary Union (WAMU) zone that are ready and have made significant efforts in terms of good management, good governance, deficit control and debt control, will probably be ready in 2020.

Nigeria realised $34.22 billion from the oil and gas sector in 2019, the Nigeria Extractive Industries Transparency Initiative (NEITI) has disclosed in its latest audit report.

The report showed the revenue was 4.88 per cent higher than the $32.63 billion realised in 2018.

The 2019 report covered 98 entities, including 88 oil and gas companies, nine government agencies and the Nigerian Liquefied Natural Gas (NLNG).

A breakdown of the earnings showed that payments by the companies accounted for $18.90 billion, while flows from the government’s sales of crude oil and gas accounted for $15.32 billion.

Details of the report showed that 10 years (2010-2019) aggregate financial flows from the oil and gas sector to the government amounted to $418.544 billion, with the highest revenue flow of $68.442 recorded in 2011, while the lowest revenue flow of $17.055 was recorded in 2016.

According to NEITI, the total crude oil production in 2019 was 735.244 mmbbls (million barrels of oil or natural gas liquids), representing an increase of 4.87 per cent over the 701.101mmbbls recorded in 2018.

South Africa’s economy is on track to grow 4.1% in 2021, above recent median forecasts for Sub-Saharan Africa as a whole but not enough to make up for last year’s huge contraction.

The rebound comes after a 7.0% contraction last year and the latest median forecast of economists polled in the past week was 0.2 percentage points better than in last month’s survey. Next year’s growth was expected to slow to 2.4%.

Eskom, which supplies most of the electricity to Africa’s most industrialised nation, has been implementing regular power cuts, or load-shedding, due to ageing coal-fired power stations. A slow pace of COVID-19 vaccinations is another drag on growth.

“Until now, concerns about load-shedding, a third wave of COVID-19 infections, and the pedestrian local vaccine rollouts have been the crucial factors explaining the hesitancy to notably boost the real GDP growth forecast for 2021,” said Hugo Pienaar at the Bureau for Economic Research.

The country’s gross domestic product expanded by 1.1% quarter-on-quarter in the first three months of 2021 on a seasonally adjusted basis, after an expansion of 1.5% in the fourth quarter of 2020.

Pienaar added risks were now materialising but better-than-expected Q1 GDP data, as well as indications that at least some of the momentum was sustained this quarter, imply GDP growth of potentially well above 4% in 2021 was becoming a reality.

On a seasonally adjusted and annualised basis, the economy grew 4.6% quarter-on-quarter, following growth of 5.8% in the previous quarter. “Importantly, like the second wave, this assumes a continued light(er) touch from government on lockdown restrictions through the third wave,” said Pienaar.