By Omoh Gabriel
LAGOS — Managing Director/CEO Global Fleet Energy and Chairman NICON Group, Barrister Jimoh Ibrahim yesterday urged President Umaru Yar’Adua to print and circulate more naira to get the country out of its present financial predicament.
In Abuja, Director-General of the Nigerian Stock Exchange, Professor Ndi Okereke-Onyiuke yesterday dispelled notions that the capital market has crashed, saying there is no better time to invest in the capital market than now.
The NSE boss spoke before the House of Representatives Committee on Capital market, headed by Hon. Aliyu Wadada, which had invited her.
“It is wrong to for anyone to say that that the Nigerians Stock Market has crashed. That is not true. Unlike in the US where companies have folded and closed shop, in fact, in Nigeria we producing less than what the demand is. That is why Dangote Cement and the rest cannot meet domestic demand. Government has no choice than to import.”
Speaking with journalists in his new offices at 156 Broad Street, Lagos, Barrister Jimoh Ibrahim said “I strongly advice the Federal Government at this time to look at the possibility of printing Naira notes as an urgent solution to the recession. If the naira is printed, its cost of printing will be reasonable as to the cost of depleting the foreign reserve or supporting domestic spending through foreign reserve withdrawal.
“If you print our naira now, we would be able to fund government spending, fund infrastructure and fund the seven-point agenda. Definitely, printing naira notes will cost inflation; this can be controlled by Treasury bills to mop excess liquidity.
“Printing naira notes will reduce interest rates, will increase liquidity, while banks will be well funded so as to fund companies. Properly funded companies will not cut jobs, they will reduce unemployment, they will fund capacity utilisation and by extension, spending habits will be promoted and this will lead to good activities at the stock exchange. I know there will be inflation as a challenge but it can be controlled by treasury bills.
“In my view, it will be better to control inflation than to keep spending government reserves. Government is the largest spender in our economy and the moment government stops spending, the economy stops performing. Cutting domestic spending as per federation account by 34% will lead to more pains and aggravate recession. We cannot afford to stop projects and development programmes; particularly the seven point agenda, good roads and infrastructure including power.
“Printing of naira at this time is a confrontational approach to recession. When every sector of the economy (private and public) is active and spending is persistent, recession disappears. At this time, oil is expected to be giving us the highest returns. But if it fall short of that, it is better to project realistic solutions than manage our insufficient reserves.
“I do not think that the United States has not started printing Dollars; I have my doubts if they are not doing so already with interest rates of 0.5% as compared with Nigeria’s 22% and that of 1% in England. I do not think the Central Bank of Nigeria has ever thought of any realistic solution at this time. To run away from obvious fact is more dangerous. If you cannot manage recession you will go into depression.”
When Vanguard called officials of the Central Bank of Nigeria for comment, a senior officer of the apex bank who did not want to be named in print dismissed the suggestion as laughable and said, “you can see the kind of economist you have around the nation proferring solution to the crisis”.
Time to buy shares is now, says Okereke-Onyiuke
The NSE boss further told the House of Representatives Committee on Capital Market yesterday:
“Believe me, a lot of foreigners have started coming back with their money to buy more shares. But we are reluctant to sell to them. If we do that, they would mop-up our market at give-away prices. Then Nigerians will come up tomorrow and say that the market is controlled by foreigners.
“Our manufacturing sector is firm and has value. I will advise people like you to buy shares now. If you can just invest about N2 million in some of these companies, you may end being a director very soon.
“The market would surely bounce back and I want Nigerians to start having confidence and invest again,” she said.
She added that the Nigerian capital market problem was not caused by any local factor.
“Nobody brought the market meltdown in Nigeria — it was America. In Davos three years ago, I said America will put the whole world in problem because anything that happens in the American economy will affect the rest of the world, because Americans were spending too much money on what they don’t need; they buy because of credit cards. What they don’t need, they buy because they are not paying cash. There is a difference when you pay cash as we do in Nigeria. So this is the result of that habit,” she said.
She also said that the capital market does not need direct government financial intervention, a position that did not seem to please some members of the committee.
“How can you say that more people should invest in the market at this time?”, queried Hon Gbenga Onigbogi,
“I want to tell you that between 70 and 80% of those that would have invested in that market have already done so and have lost. So I don’t see any sensible person taking his money there at this time.
“I don’t agree with you that you don’t need government intervention”, he argued.
“We are in an unusual situation that demands drastic steps and unconventional ways of doing things. People who are capable of buying are people who have lost up to 80 percent of their investments at the capital market. The solution is for government to do something as in Hong Kong where government acquired some percentage of their stock and made four times profit.
“The bail out is now. Government is the largest lender of money; the government is the owner of Central Bank of Nigeria (CBN) while the CBN regulates other commercial banks, so you need to shout out for a bail out and it is important that the National Assembly intervenes promptly in the matter before the market crashes.”
