massive protests across the country. President Goodluck Ebele Jonathan later reached an agreement with the Nigerian Labour Congress and reduced the pump price to 97 naira. In April 2006, Nigeria became the first African country to fully pay off its debt owed to the Paris Club. However, this was structured as a debt writeoff of approximately $18 billion and a cash payment of approximately $12 billion. In the light of highly expansionary public sector fiscal policies in 2001, the government sought ways to head off higher inflation, leading to the implementation of stronger monetary policies by the Central Bank of Nigeria (CBN) and underspending of budgeted amounts. As a result of the CBNs efforts, the official exchange rate for the Naira has stabilized at about 112 Naira to the dollar. The combination of CBNs efforts to prop up the value of the Naira and excess liquidity resulting from government spending led the currency to be discounted by around 20% on the parallel (non-official) market. A key condition of the Stand-by Arrangement has been closure of the gap between the official and parallel market exchange rates. The Inter Bank Foreign Exchange Market (IFEM) is closely tied to the official rate. Under IFEM, banks, oil companies, and the CBN can buy or sell their foreign exchange at government influenced rates. Much of the informal economy, however, can only access foreign exchange through the parallel market. Companies can hold domiciliary accounts in private banks, and account holders have unfettered use of the funds. Expanded government spending also has led to upward pressure on consumer prices. Inflation which had almost disappeared in April 2000 reached 14.5% by the end of the year and 18.7% in August 2001. In 2000, high oil prices resulted in government revenue of over $16 billion, about double the 1999 level. State and local governments demanded access to this windfall revenue, creating a tug-of-war between the federal government, which sought to control spending, and state governments desiring augmented budgets, preventing the government from making provision for periods of lower oil prices. Services Nigeria ranks 63rd worldwide and fifth in Africa in services output. Low power generation has crippled the growth of this sector. Since undergoing severe distress in the mid-1990s, Nigerias banking sector has witnessed significant growth over the last few years as new banks enter the financial market. Harsh monetary policies implemented by the Central Bank of Nigeria to absorb excess Naira liquidity in the economy has made life more difficult for banks, some of whom engage in currency arbitrage (round-tripping) activities that generally fall outside legal banking mechanisms. Private sector-led economic growth remains stymied by the high cost of doing business in Nigeria, including the need to duplicate essential infrastructure, the threat of crime and associated need for security counter measures, the lack of effective due process, and nontransparent economic decisionmaking, especially in government contracting. While corrupt practices are endemic, they are generally less flagrant than during military rule, and there are signs of improvement. Meanwhile, since 1999 the Nigerian Stock Exchange has enjoyed strong performance, although equity as a means to foster corporate growth is being more utilized by Nigerias private sector. Transport Main article: Transport in Nigeria Nigerias publicly owned transportation infrastructure is a major constraint to economic development. Principal ports are at Lagos (Apapa and Tin Can Island), Port Harcourt, and Calabar. Of the 80,500 kilometers (50,000 mi.) of roads, more than 15,000 kilometers (10,000 mi.) are officially paved, but many remain in poor shape. Extensive road repairs and new construction activities are gradually being implemented as state governments, in particular, spend their portions of enhanced government revenue allocations. The government implementation of 100% destination inspection of all goods entering Nigeria has resulted in long delays in clearing goods for importers and created new sources of corruption, since the ports lack adequate facilities to carry out the inspection. Five of Nigerias airports—Lagos, Kano, Port Harcourt, Enugu and Abuja—currently receive international flights. Government-owned Nigeria Airways ceased operations in December 2002. Virgin Nigeria Airways started operations in 2005 as a replacement and serves domestic and international routes. Also, The Nigerian Airforce began a new airline called United Nigeria, with a Boeing 737-500 in 2013. There are several domestic private Nigerian carriers, and air service among Nigerias cities is generally dependable. The maintenance culture of Nigerias domestic airlines is not up to internationally accepted standards. massive protests across the country. President Goodluck Ebele Jonathan later reached an agreement with the Nigerian Labour Congress and reduced the pump price to 97 naira. In April 2006, Nigeria became the first African country to fully pay off its debt owed to the Paris Club. However, this was structured as a debt writeoff of approximately $18 billion and a cash payment of approximately $12 billion. In the light of highly expansionary public sector fiscal policies in 2001, the government sought ways to head off higher inflation, leading to the implementation of stronger monetary policies by the Central Bank of Nigeria (CBN) and underspending of budgeted amounts. As a result of the CBNs efforts, the official exchange rate for the Naira has stabilized at about 112 Naira to the dollar. The combination of CBNs efforts to prop up the value of the Naira and excess liquidity resulting from government spending led the currency to be discounted by around 20% on the parallel (non-official) market. A key condition of the Stand-by Arrangement has been closure of the gap between the official and parallel market exchange rates. The Inter Bank Foreign Exchange Market (IFEM) is closely tied to the official rate. Under IFEM, banks, oil companies, and the CBN can buy or sell their foreign exchange at government influenced rates. Much of the informal economy, however, can only access foreign exchange through the parallel market. Companies can hold domiciliary accounts in private banks, and account holders have unfettered use of the funds. Expanded government spending also has led to upward pressure on consumer prices. Inflation which had almost disappeared in April 2000 reached 14.5% by the end of the year and 18.7% in August 2001. In 2000, high oil prices resulted in government revenue of over $16 billion, about double the 1999 level. State and local governments demanded access to this windfall revenue, creating a tug-of-war between the federal government, which sought to control spending, and state governments desiring augmented budgets, preventing the government from making provision for periods of lower oil prices. Services Nigeria ranks 63rd worldwide and fifth in Africa in services output. Low power generation has crippled the growth of this sector. Since undergoing severe distress in the mid-1990s, Nigerias banking sector has witnessed significant growth over the last few years as new banks enter the financial market. Harsh monetary policies implemented by the Central Bank of Nigeria to absorb excess Naira liquidity in the economy has made life more difficult for banks, some of whom engage in currency arbitrage (round-tripping) activities that generally fall outside legal banking mechanisms. Private sector-led economic growth remains stymied by the high cost of doing business in Nigeria, including the need to duplicate essential infrastructure, the threat of crime and associated need for security counter measures, the lack of effective due process, and nontransparent economic decisionmaking, especially in government contracting. While corrupt practices are endemic, they are generally less flagrant than during military rule, and there are signs of improvement. Meanwhile, since 1999 the Nigerian Stock Exchange has enjoyed strong performance, although equity as a means to foster corporate growth is being more utilized by Nigerias private sector. Transport Main article: Transport in Nigeria Nigerias publicly owned transportation infrastructure is a major constraint to economic development. Principal ports are at Lagos (Apapa and Tin Can Island), Port Harcourt, and Calabar. Of the 80,500 kilometers (50,000 mi.) of roads, more than 15,000 kilometers (10,000 mi.) are officially paved, but many remain in poor shape. Extensive road repairs and new construction activities are gradually being implemented as state governments, in particular, spend their portions of enhanced government revenue allocations. The government implementation of 100% destination inspection of all goods entering Nigeria has resulted in long delays in clearing goods for importers and created new sources of corruption, since the ports lack adequate facilities to carry out the inspection. Five of Nigerias airports—Lagos, Kano, Port Harcourt, Enugu and Abuja—currently receive international flights. Government-owned Nigeria Airways ceased operations in December 2002. Virgin Nigeria Airways started operations in 2005 as a replacement and serves domestic and international routes. Also, The Nigerian Airforce began a new airline called United Nigeria, with a Boeing 737-500 in 2013. There are several domestic private Nigerian carriers, and air service among Nigerias cities is generally dependable. The maintenance culture of Nigerias domestic airlines is not up to internationally accepted standards.
Posted on: Thu, 13 Mar 2014 09:41:20 +0000
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