Nigeria lets market set currency exchange rate to stabilize economy, woo investors | Canada News Media
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Nigeria lets market set currency exchange rate to stabilize economy, woo investors

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ABUJA, Nigeria (AP) — Nigeria’s central bank has ended its distorted foreign exchange rate, a move the new government in Africa’s biggest economy hopes will help woo investors and stabilize the local currency.

The announcement Wednesday from the Central Bank of Nigeria led to a record fall in the value of the naira currency to 755 per U.S. dollar. It has since recovered some.

The move reflects the changes that new President Bola Tinubu has pledged to make to strengthen the ailing economy, analysts said. He also has removed the head of the central bank following divisive policies and ended fuel subsidies, which economists have lauded as a long-term benefit even as they cause people short-term pain.
Nigeria has for years operated multiple exchange rates for the naira — with the official exchange rate dictated by the central bank, while a far higher unofficial rate determined the price of imported commodities like wheat, which are priced in dollars.

The exchange rate now will be determined by market forces and no longer the central bank, a move that analysts on Thursday said would boost inflows of money and help stabilize an economy battered by surging inflation and a record unemployment rate.

But it also is expected to make the price of imported goods more expensive, which could affect many in a country heavily reliant on imports.

“The multiple exchange rate regime was a major distortion to the workings of the market, such that there was no level playing field for many actors,” said Taiwo Oyedele, Fiscal Policy Partner and Africa Tax Leader at financial services firm PwC.

The policy led to trading that exploited the price differences between the two markets “at the expense of legitimate economic activities,” Oyedele said.

The multiple exchange rates also meant foreign investors had been forced to sell outside currencies to Nigeria’s central bank at the official rate and had been unable to access foreign money amid the country’s severe dollar shortage.

That has affected many foreign businesses, including international airlines whose revenues that were trapped in Nigeria amounted to $450 million as of June last year.

“This is the major reason why foreign portfolio investments and foreign direct investments have literally dried up over the past couple of years,” Oyedele said. “Addressing this critical issue will unlock investments which will lead to growth, employment generation and revenue for the government to provide social needs.”

Tinubu has vowed that his “economic policies shall be guided by our desire for a stronger, more stable Naira founded upon a vibrant and productive real economy.”

Shortly after he took office, Tinubu suspended Godwin Emefiele, the central bank governor who was under fire for pushing new currency notes that led to a critical lack of cash for people to pay for their everyday needs. He has since been arrested.

Tinubu also halted subsidies for gasoline, forcing people to pay far more for fuel they need to travel and power generators at home. Now, the currency devaluation is expected to push up prices for imports like food amid a significantly higher foreign exchange rate.

Both “will cost considerable short-term pain but will correct the economy,” economic analyst Kalu Aja said.

The Nigerian leader, meanwhile, on Thursday inaugurated a key economic team chaired by Vice President Kashim Shettima and which advises him concerning the country’s economic affairs.

 

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Minimum wage to hire higher-paid temporary foreign workers set to increase

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OTTAWA – The federal government is expected to boost the minimum hourly wage that must be paid to temporary foreign workers in the high-wage stream as a way to encourage employers to hire more Canadian staff.

Under the current program’s high-wage labour market impact assessment (LMIA) stream, an employer must pay at least the median income in their province to qualify for a permit. A government official, who The Canadian Press is not naming because they are not authorized to speak publicly about the change, said Employment Minister Randy Boissonnault will announce Tuesday that the threshold will increase to 20 per cent above the provincial median hourly wage.

The change is scheduled to come into force on Nov. 8.

As with previous changes to the Temporary Foreign Worker program, the government’s goal is to encourage employers to hire more Canadian workers. The Liberal government has faced criticism for increasing the number of temporary residents allowed into Canada, which many have linked to housing shortages and a higher cost of living.

The program has also come under fire for allegations of mistreatment of workers.

A LMIA is required for an employer to hire a temporary foreign worker, and is used to demonstrate there aren’t enough Canadian workers to fill the positions they are filling.

In Ontario, the median hourly wage is $28.39 for the high-wage bracket, so once the change takes effect an employer will need to pay at least $34.07 per hour.

The government official estimates this change will affect up to 34,000 workers under the LMIA high-wage stream. Existing work permits will not be affected, but the official said the planned change will affect their renewals.

According to public data from Immigration, Refugees and Citizenship Canada, 183,820 temporary foreign worker permits became effective in 2023. That was up from 98,025 in 2019 — an 88 per cent increase.

The upcoming change is the latest in a series of moves to tighten eligibility rules in order to limit temporary residents, including international students and foreign workers. Those changes include imposing caps on the percentage of low-wage foreign workers in some sectors and ending permits in metropolitan areas with high unemployment rates.

Temporary foreign workers in the agriculture sector are not affected by past rule changes.

This report by The Canadian Press was first published Oct. 21, 2024.

— With files from Nojoud Al Mallees

The Canadian Press. All rights reserved.

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PBO projects deficit exceeded Liberals’ $40B pledge, economy to rebound in 2025

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OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.

However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.

The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.

Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.

The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.

The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.

This report by The Canadian Press was first published Oct. 17, 2024.

The Canadian Press. All rights reserved.

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Statistics Canada says levels of food insecurity rose in 2022

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OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.

In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.

The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.

Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.

In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.

It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.

This report by The Canadian Press was first published Oct 16, 2024.

The Canadian Press. All rights reserved.

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