43 quarantined in Plateau test negative for coronavirus

• China records decline in new cases, offers support to Africa
• Nigeria’s economic woes worsen as naira crashes to N406/1$
• CBN denies plan to devalue naira, vows sanctions over FX panic

It was a great relief yesterday for 43 people quarantined for being suspected to have contracted the coronavirus as they were declared free of the disease after testing negative for the virus.

The suspects, including four Chinese who are working as miners in Wase Local Government Area of Plateau State, were isolated 14 days ago for close medical surveillance.

The Commissioner for Health, Dr. Nimkong Ndam Lar, who disclosed yesterday that the suspects tested negative for the virus while updating journalists on the matter, said that out of the 43 people quarantined, 25 were Nigerians while 18 were foreigners, including the four Chinese.

The Chinese had travelled all the way through Ethiopia to Abuja, and finally to Jos, their destination. The commissioner further explained that the suspects were kept away from members of the public for 14 days after which they tested negative for the virus.

Lar encouraged residents of the state to focus on preventive measures such as maintaining good personal hygiene, hand washing and ensuring that alcohol – based sanitizers are made available at entrances to all public areas.

According to him, the Ministry of Health has activated preventive emergency measures in case of any eventuality, some of which include isolation wards, medical commodities and equipment.

“Besides, the ministry is working closely with the Federal Ministry of Health and other relevant government agencies to remain vigilant and maintain synergy in handling health emergencies,” he said.

Lar disclosed that a delegation of stakeholders, especially a team of experts from the ministry and the World Health Organisation (WHO) went to Wase and carried out the final medical assessment of the 43 isolated people.

Also yesterday, China announced a decline in the number of reported cases since the outbreak of the virus in the country. In a daily update newsletter on the virus released by the Embassy of China in Nigeria, the country declared it had secured an upper hand in its all-out confrontation with the novel coronavirus and that the country had started making efforts to stabilise its economy.

The government said the virus had basically been curbed as there were only eight new cases recorded on the 11th of this month. This means that the number of cases has greatly dropped from four digits to a single digit due to the all-out fight against the pandemic.

“In stark contrast to the rapid spread in the world, the virus has been basically contained in China with new risks largely coming from imported cases,” the letter reads.

The government of China expressed readiness to support African countries while enhancing its country’s response to the virus, noting that China’s efforts at containing the virus are yielding result and 70 per cent of those affected had been treated and discharged from hospital.

“As China fights the epidemic, the countries and people of Africa have been standing firmly with China and expressing solidarity in various ways. China will do its best to support and help African countries to jointly contribute to regional and global public health safety,” the letter notes.

Meanwhile, Nigeria may relapse into the 2016 economic recession having failed to do anything different in terms of diversification and building buffers, as the naira yesterday depreciated past N400 to a dollar at the forward market after oil prices dipped further to $32.74 per barrel, a result of the coronavirus pandemic.

The naira was priced much weaker at N406 to the dollar yesterday, the lowest this year, compared with the N360 it traded at the beginning of the week, as Nigerians panic to hedge their investments over fears of devaluation.

After a brief respite following reports of central bank economic stimuli in the United States and the UK, crude oil slumped once again on Wednesday after President Donald Trump instituted a 30-day travel ban on most European countries because of the coronavirus pandemic.

According to analysts, a low oil price environment means a faster rate of decline in the foreign exchange reserves. They said Nigeria could suffer this fate if the Central Bank of Nigeria (CBN) continued its interventionist policy in the market to keep rates stable, or a weaker currency if the apex bank stops.

Similarly, the case for devaluation rests on a thin line between economics and politics. Although it takes six months of persistent negative (two consecutive quarters) records in Gross Domestic Product (GDP) for an economy to be declared recessed, the buffers to mitigate a recession remain weak.

Recession is a period of significant decline in activities across the economy- low industrial production and manufacturing, high inflation, rising unemployment, falling purchasing power, low fiscal spending, as well as poor consumer spending, among others.

The economy is currently characterised by the indices described above, as well as depleted excess crude account and dwindling foreign exchange reserves.

Specifically, Nigeria’s latest Excess Crude Account balance, according to a statement from the Office of Accountant General of the Federation, is $71.81m, while movement in reserves showed that the country’s reserves stood at $36.12 billion, down by $2.41 billion from $38.53 billion in which it opened the year.

Similarly, unemployment remains at an all-time high while the latest inflation rate hovers at 12.13 per cent. With the implementation of new VAT rate of 7.5% last month, as well as the proposed increase in electricity tariff in April, average disposable income is expected to further weaken, therefore, affecting purchasing power.

The Nigerian economy ended 2019 in what appears to be another major setback, as trade balance posted N579 billion deficit in the fourth quarter of last year, which, according to the latest foreign trade report released by the National Bureau of Statistics (NBS), is the first time the country recorded deficit trade balance in a quarter since 2016 when it witnessed recession.

Furthermore, the country’s ability to attract sustainable foreign direct investments remained weak, as the total value of capital importation into Nigeria stood at $3.8 billion in the fourth quarter of 2019, representing a decline of 32.42 per cent when compared to the third quarter of 2019, and a 77.67 per cent increase when compared to the fourth quarter of 2018.

In Q3 2019, Nigeria recorded a capital importation volume of $5.62 billion.If the free fall in oil prices continues and demand for foreign exchange rises, the country may be heading back to a recession.

A forward market is an over-the-counter marketplace that sets the price of a financial instrument or asset for future delivery. Forward markets are used for trading a range of instruments, especially at the foreign exchange market.

Analysts had tipped the naira to depreciate by 10 to 20 percent in the parallel market by 2021 as the impact of falling crude oil prices and foreign exchange reserves persist.

Local and foreign analysts predicted that a decline by 10 percent would take the naira to about N400 to dollar, while a 20 per cent drop would see it at around N450 to dollar.

According to Bloomberg survey of investors, the local currency may be marked down by up to 20 percent in 2021. According to the survey, the drop in foreign reserves and lower oil prices will probably force the CBN to devalue the naira. The hitherto continued stability of the naira against the dollar has continued to spark speculations, with many analysts predicting that the local currency will sooner or later be devalued.

In his reaction, the Director-General of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Muda Yusuf, attributed the fall in the naira to many speculative forces in the market, noting that the trend would continue, except the CBN intervenes.

“There are fears of anticipated depreciation. There is a need for reassurance as even the reserves continue to depreciate. Technically, recession happens when there are contractions within two quarters. The windows to manage the crisis are few. The Nigerian National Petroleum Corporation (NNPC) confirmed that there are no buyers for the oil cargoes and these are creating issues for the economy”, he added.

The Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, also raised the alarm of a looming tough time and urged Nigerians to prepare for it in a few months time, following the crash in the prices of crude oil due to the outbreak of coronavirus.

He explained that about 12 Liquefied Petroleum Gas (LPG) cargoes got stranded globally because they had no hub due to abrupt collapse in demand associated specifically with coronavirus.

“It has also hit other sectors from the production stage which is the liquid crude. As at today with the Nigerian crude, we have 50 cargoes that have not found landing; it means the traders have purchased them but they don’t know how to take them”, he added.

But the CBN said yesterday that there was no plan to devalue the naira. In a statement titled “Market fundamentals do not support naira devaluation at this time”, the apex bank said: “The Central Bank of Nigeria (CBN) wishes to note with displeasure, the rumours and speculative activities of unscrupulous players in the foreign exchange market, borne out of the impression that the CBN is on the verge of devaluing the aira, and triggering panic in the FX Market. These rumours are false, unwarranted and calculated to serve their dubious and selfish ends.”

It said that it had begun a robust and coordinated investigation in collaboration with the Nigerian Financial Intelligence Unit (NFIU) and related agencies to uncover the unscrupulous persons and FX dealers “who are creating this panic, and the full weight of our rules and regulations will be meted out to them, including, but not limited to, being charged for economic sabotage.”

It added: “ For nearly four years, the CBN has successfully maintained relative stability in all segments of the foreign exchange market, which has enabled investors, households and other economic agents to plan and to conduct their genuine foreign exchange transactions with relative ease. “The introduction of several foreign exchange management measures side-by-side with complementary interventions in food production and manufacturing has drastically reduced food importation, which hitherto constituted a large chunk of the pressure on the foreign exchange market.

“Although the outbreak of the Coronavirus led to global economic slowdown, fall in the price of crude oil, and less inflow of dollars into Nigeria, the associated public health concerns have also led to factory closures in China, substantial drop in imports, widespread travel restrictions around the world, and cancellation of many conferences, sporting events, business travels, and FX orders;

“The size of Nigeria’s foreign exchange reserves remains robust and comfortable, given the current realities of Nigeria’s genuine and legitimate FX demand. As such, the CBN remains able and willing to meet all genuine demand for foreign exchange for legitimate transactions.

“For the avoidance of doubt, the CBN is also working with the fiscal authorities to properly and accurately dimension the immediate and expected impacts of the Coronavirus in order to respond comprehensively and at the same time, ensure a sound and stable financial system conducive for job creation and inclusive growth.

“In light of current circumstances and macroeconomic fundamentals, the CBN has not devalued the naira. Consequently, the CBN will invoke the full weight of applicable sanctions on any persons and authorized dealers found to be involved in such disruptive and speculative market behavior.”