Daily Watch – Emefiele sows doubt about forex policy shift, Ethiopia confirms Eritrean involvement in Tigray conflict

Nigeria has not changed its foreign exchange policies from a managed float to a flexible regime, Central Bank Governor Godwin Emefiele said Tuesday. A report concluding that the country has adopted a flexible foreign-exchange rate based on comments by Finance Minister Zainab Ahmed is wrong, according to the governor. Africa’s largest crude producer now uses the more flexible Nafex rate for all official transactions, abandoning the ₦379 to the dollar fixed rate the central bank still has on its website, Ahmed said Tuesday. The country’s 2021 budget was prepared based on the central bank’s fixed rate. “The country is deemed not to be practising a multiple currency regime as long as its rates vary or range around a band that is not more than 2% below the nominal market rate,” Emefiele said. “In our case, the nominal market rate is Nafex. If the minister says that the rate for monetisation is anchored or benchmarked on Nafex, the minister has not talked about a flexible exchange rate.” The Abuja-based regulator said it ceased interventions in the investors and exporters window since January, though it continues to monitor the market to determine whether or not to intervene. It is also working with the government and the finance ministry to achieve a stable foreign-exchange regime, Emefiele said.

The Monetary Policy Committee of the Central Bank of Nigeria has retained the Monetary Policy Rate at 11.5 percent. CBN Governor Godwin Emefiele disclosed this after the committee’s two-day meeting in Abuja on Tuesday. It also retained the Cash Reserve Ratio and Liquidity Ratio at 27.5 per cent and 30 per cent respectively. The CBN governor explained that members of the MPC were of the view that given the precarious exit of the country from recession, any decision to tighten may reverse the fragile recovery and return the country back to recession. In the light of this, he said, the concession among the MPC members was that given that the inflation was substantially a supply-side factor, there was the need to continue to focus on consolidation of the recovery process by taking those actions that would continue to stimulate output growth, create employment. He added that at the same time, it must have an eye on efforts to moderate inflationary pressure using the current administrative measures being adopted by the bank in controlling monetary aggregates in the banking system.

The Senate has commenced moves to unbundle the Nigerian Postal Service with the consideration of a bill to repeal and re-enact the Nigerian Postal Service Act 2004. The bill, which scaled the second reading on Tuesday, was sponsored by Senator Oluremi Tinubu (APC, Lagos Central), according to a statement. Leading the debate on the general principles of the bill, Tinubu said the piece of legislation seeks to reform the Postal Industry and to make comprehensive provisions for the development and regulation of postal services in Nigeria. She recalled that as of Nigeria’s independence on 1 October 1960, there existed 176 post offices, 10 sub-Post offices, and 1,000 postal agencies. Tinubu, however, noted that the agency presently has over 955 post offices and more than 3,000 postal agencies in 35 states and Federal Capital Territory. The lawmaker observed that in view of existing realities, it had become imperative for the NIPOST Act to be reviewed to guarantee improved efficiency and service delivery.

Ethiopian Prime Minister Abiy Ahmed confirmed for the first time on Tuesday that troops from neighbouring Eritrea entered the northern Tigray region during the five-month-old conflict, the first such acknowledgement after months of denials. In a parliamentary address, he also acknowledged for the first time that atrocities like rape had been committed during the fighting, and promised perpetrators would be punished. Fighting erupted in Tigray after forces loyal to the then-governing party there – the Tigray People’s Liberation Front (TPLF) – attacked army bases across the region overnight and in the early hours of 4 November 2020. The attacks initially overwhelmed the federal military, which later mounted a counter-offensive alongside Eritrean soldiers and forces from the neighbouring region of Amhara. The TPLF, which dominated Ethiopia’s government for nearly three decades until Abiy came to power in 2018, has long been an archenemy of Eritrea. Abiy said Eritrean troops had crossed the border because they were concerned they would be attacked by TPLF forces, but the Eritreans had promised to leave when Ethiopia’s military was able to control the border. The TPLF repeatedly fired rockets at Eritrea after the conflict began. The governments of both Eritrea and Ethiopia repeatedly denied Eritrea’s involvement in the war, despite reports from rights groups like Human Rights Watch and Amnesty International, which documented the killings of hundreds of civilians by Eritrean soldiers in the holy city of Axum.