On the teeming streets of Lagos, the Nigerian mega-city of 15 million people, the once omnipresent money-changers are going underground.
They’ve become the latest target of authorities desperate to bolster the naira and crush a black market for foreign currency that’s boomed since the crash in oil prices strangled the inflow of dollars and battered the economy.
This month, the Central Bank of Nigeria capped prices that Bureau De Change (BDC) can charge their customers for foreign exchange, effectively pegging the black-market rate, with intelligence agents threatening to jail anyone who doesn’t comply.
The activities of the security agents is creating a parallel market within the black market, according to analysts at Lagos-based Afrinvest West Africa Limited stated.
One trader in the Lagos suburb of Surulere, who asked not to be identified as he feared arrest, told Bloomberg that he would continue using the old rate with trusted customers and refuse to sell dollars to others. Anyone he doesn’t know may be a government spy, he said.
“The black market will go further underground,” an analyst at Afrinvest, Omotola Abimbola said. “The fact they went as low as getting security forces on the streets shows a new level of desperation.”
Nigeria’s interbank market sets the naira’s official value and is meant to serve businesses. But the scarcity of foreign-currency has forced many to go to licensed bureaux de change and the unofficial, or black, market of informal street traders, both of which sell dollars at a higher rate.
The central bank has made several attempts to defend the naira after it plunged in late 2014 along with crude prices. Stock and bond investors are staying away from Nigeria, pointing to the wide gap between the official exchange rate and the black-market one of about N470 to a dollar. Forward prices suggest the naira will depreciate further on the official market, with 12-month contracts trading at 441 against the greenback.
The Department of State Services recently raided bureaux de change and black-market traders and instructed them to cap their rates at N400 per dollar. As a result, people with hard currency are hoarding it rather than selling at an artificially low rate, according to Haruna Usman, a money-changer in Lagos.
“It’s a struggle even to get someone to sell us $200, whereas before they’d often sell us $1,000 or $5,000,” the kaftan-clad Usman said from the mosque compound where he trades. “Now, they’re only exchanging when they’re desperate.”
The central bank is in no mood to back down. CBN Governor, Mr. Godwin Emefiele said this week that “the security agencies should sustain their checks on the activities of illegal foreign-exchange operators in order to bring sanity to that segment of the market.” It’s another signal to foreign investors that Nigeria’s currency policy is broken, according to JPMorgan Chase & Co.
“The Central Bank of Nigeria is clearly not ready to embrace a truly free-floating exchange rate and arguably has further undermined the confidence in the exchange-rate regime,” analysts at the New York-based lender,Yvette Babb and Sonja Keller, said in a note to clients.
“These events are likely to deter inflows.” Nigeria isn’t the first country to clamp down on black-market trading. Egypt also arrested street dealers while pegging its currency’s official rate, until a dollar-squeeze forced it to devalue on November 3.
Forte Oil, MRS Oil, British Petroleum Oil International, Glencore Energy Services Limited and 220 other foreign and local oil companies on Thursday in Abuja submitted bids for the sale and purchase of Nigeria’s crude oil grades.
This is coming as the Nigerian National Petroleum Corporation stated that the country’s crude oil grades had continued to earn premiums as most of them were being refined in India and Europe, contrary to claims that the nation was finding it tough to sell its crude.
Some of Nigeria’s crude grades are Bonny Light, Qua Iboe, Brass River and Forcados.
Speaking on the sidelines of the bid opening ceremony for the sale and purchase of the crude oil grades, the Group Managing Director, NNPC, Dr. Maikanti Baru, stated that the 224 companies had indicated interest to trade about 700,000 barrels per day of various grades of Nigeria’s crude for the 2016/2017 fiscal year.
He noted that the number of bidders dropped from 278 companies in 2015/2016 to 224 currently, adding that this was due to the strengthening of the criteria for the prospecting companies, as the tender process would be concluded by February next year.
Baru said, “There have been those speculations that we are struggling for market. That is not true. Nigeria’s crude grades have continued to earn premiums and they are hot cakes all over for refiners. Because of the light nature of the crude, it induces very high yields on the valuable products that you produce from our crude oil. Nigeria’s crude grades continue to maintain market.
“In fact, contrary to a lot of speculation that a lot of Nigeria’s crude goes to China, they do not. Most of them are consumed and refined in India and Europe, particularly, last year and this year, most of Nigeria’s crude end up in European refineries.”
On the volume to be traded by the bidders, the NNPC boss stated that about 600,000 barrels were expected from Joint Venture operations, while about 100,000 barrels would come from Production Sharing Contracts in terms of royalty and various tax oils.
According to him, refiners and big crude oil lifters will be given priority in the process, which he noted would be concluded in February 2017.
He said the significance of the bid opening was that it marked the beginning of the 2016/2017 term contract tender for the country’s crude oil grades under the NNPC on behalf of the Federal Government and people of Nigeria.
Baru said, “When we sell this crude, the money goes straight to the Central Bank of Nigeria’s accounts on behalf of the federation. The NNPC does not operate any of those accounts. The best input that comes to the NNPC is confirmation that the money has been paid. We have no signature rights on these accounts.
“This is contrary to the perception of several people that the NNPC is withholding some money for and on behalf of the Nigerian people. All the crude that we sell goes to the Nigerian people.”
The Group General Manager, Crude Oil Marketing Division, NNPC, Mr. Mele Kyari, stated that the bidding process would ensure that corporation’s crude oil was sold to capable buyers, guarantee hitch-free transactions, optimise sales and prices, and also increase government’s revenue.
He noted that most of Nigeria’s crude oil production ended up in Europe and Far East Asia, adding, “India, Indonesia and Thailand are our major buyers and, of course, there are changes in the market that are bringing the US back to us.”
FCMB Group Plc has reported a profit before tax of N14.2bn for the nine-months, ending September 30, 2016.
This, the bank said on Thursday, represented an increase by 453 per cent from N2.563bn recorded in the comparative period of 2015.
FCMB Group Plc, the holding firm with subsidiaries including First City Monument Bank Limited, FCMB Capital Markets Limited, CSL Stockbrokers Limited and CSL Trustees Limited, attributed the current development partially to its soundness of ratios, steady buffers against the subsisting adverse operating environment, in addition to the bank’s sustained revenue momentum combined with its cost optimisation programme.
Its unaudited results filed with the Nigerian Stock Exchange showed the FCMB Group Plc’s gross revenue was N140.7bn for the nine-months, which was a 29 per cent increase over N109.3bn recorded for the same period last year.
The group also recorded a non-interest income of N44.8bn, which was an increase of 128 per cent year-on-year, from N19.6bn for the same period last year.
This increase has been predicated on a 612 per cent year-on-year increase in foreign exchange income, from N5bn for the nine-months ended September 2015, to N35.3bn for the nine-months ended September 2016.
Commenting on the result, the Managing Director of FCMB Group Plc, Mr. Peter Obaseki, was quoted to have said, “The audited nine months results for the period ended September 2016, reflects our focus on key soundness ratios and the need to maintain buffers against a sustained adverse operating environment.
“Accordingly, capital adequacy and liquidity ratios have held up at 17.6 per cent and 36.8 per cent, respectively.”
The Group Managing Director of FCMB Limited, Mr. Ladi Balogun, said, “The audited results of the bank revealed that the extraordinary performance of Q2 2016 offset the loss recorded in Q3 of N2.4bn, thereby resulting in strong year-on-year profit growth of 913 per cent.
The bear run at the stock market was halted thursday on bargain hunting by investors, lifting the Nigerian Stock Exchange (NSE) All-Share Index (ASI) by 0.22 per cent to close at 25,517.00. Similarly, market capitalisation added N19.2 billion to close at N8.8 trillion. The market has been bearish in recent times, sending the NSE ASI to a seven-month low on Tuesday. However, the market rebounded yesterday on bargain hunting as investors capitalised on some of the highly discounted stocks to increase their portfolio. At the close trading, 19 stocks gained compared to 11 that depreciated.
Sterling Bank Plc led the price gainers with 5.7 per cent, followed by Oando Plc with 5.0 per cent. Flour Mills of Nigeria Plc and PZ Cussons Nigeria Plc advanced 4.9 per cent each, while Fidson Healthcare Plc and Diamond Bank Plc garnered 4.6 per cent and 4.4 per cent respectively. AIICO Insurance Plc and Glaxosmithkline Consumer Nigeria Plc appreciated by 3.5 per cent and 3.4 per cent in that order.
Conversely, Forte Oil Plc led price losers with 6.2 per cent to close at N70.00 per share. Julius Berger Nigeria plc trailed with 5.0 per cent, just as African Prudential Registrars Plc and Total Nigeria Plc rose by 4.3 per cent. Value of stocks traded rose by 5.01 per cent to N1.19 billion invested in 165.72 million shares. The most actively traded sectors were financial services (141.23 million shares); Conglomerates (12.91 million shares) and Consumer Goods (6.19 million shares), while the three most active stocks were: Diamond Bank Plc(34.42 million shares); Access Bank Plc (32.65 million shares) and FBN Holdings Plc (21.91 million shares).
In terms of sectoral performance, all the sectors closed in the green except the NSE Oil and Gas Index that shed weight. The NSE Banking Index led sector gainers after appreciating 0.75 per cent following investors’ swoop on GTBank Plc(+1.2 per cent) and United Bank for Africa Plc (+1.2 per cent). The uptrend in Nestle Nigeria Plc (+1.3 per cent), PZ Cussons Nigeria Plc (+4.9 per cent) and Nigerian Breweries Plc(+0.2 per cent) bolstered the NSE Consumer Goods Index by 0.50 per cent. Also the NSE Insurance Index appreciated 0.2 per cent on account of AIICO Insurance Plc (+3.5 per cent), while the NSE Industrial Goods Index rose 0.1 per cent.
The House of Representatives has approved the sum of ₦N70,672,492,000 as 2016 budget for the Nigerian Communications Commission (NCC).
The decision followed the adoption of the report of the Saheed Akinade Fijabi-led Committee on Telecommunications at plenary presided over by Speaker Yakubu Dogara.
Of the amount, ₦N22,211,186,000 is for recurrent expenditure, while ₦N15,651,475,000 goes for capital expenditure.
Besides, special projects get N6,557,708,000 while ₦N8,584,000,000 and ₦N17,668,123,000 are to be transferred to the Universal Service Provision Fund (USPF) and the Federal Government.
The Federal Government on Tuesday said it has been able to reduce the monthly wage bill of civil servants in Ministries, Departments and agencies from N165bn to N145bn monthly.
The Permanent Secretary, Ministry of Finance, Mr Mahmoud Dutse gave the figures while speaking with journalists at the sideline of a workshop on cost management.
The event was done to sensitise stakeholders on the need for transparency, accountability, prudence and efficiency in the management of government resources.
He said the N20bn reduction in monthly wage bill was achieved after an audit conducted by the Presidential Initiative on Continuous Audit.
Dutse said in addition to the monthly savings of N20bn, the sum of N15bn had been saved from reduction in overheads and excessive foreign travels and other allowances paid to civil servants
This N15bn savings according to him was achieved through the activities of the Efficiency Unit that was set up by the Minister of Finance, Mrs Kemi Adeosun.
Dutse said the federal government is not only interested in cutting cost of governance. but to also get value for the funds allocated for implementation of government programs.
He said, “This workshop is a cost management workshop organised for the Directors of MDAs. Basically, it centered on how we should manage government’s funds better.
“As you all know, due to sharp decline in government revenue , we must manage our purse more efficiently . Though the revenue has gone down, expenditure has not gone and this is creating fiscal pressure.
The Nigerian equities market closed on a negative note on Tuesday as Forte Oil Plc, Livestock Feeds Plc, Total Nigeria Plc, Neimeith International Pharmaceutical Plc and Nascon Allied Industries Plc emerged the top five losers at the close of trading on the floor of the Nigerian Stock Exchange.
The market extended Monday’s loss position, as the NSE All-Share Index shed 0.15 per cent, dragging the year-to-date return to -11.11 per cent.
The NSE market capitalisation dropped to N8.764tn from N8.777tn, while the NSE ASI closed at 25,461.34 basis points from 25,499 basis points.
A total of 120.931 million shares worth N1.186bn exchanged hands in 2,397 deals.
However, volume traded and value of transactions, advanced by 14.29 per cent and 42.82 per cent, accordingly. There were 11 gainers as against 17 decliners.
The share price of Forte Oil closed at N74.62 from N82.64, losing N8.05 (9.74 per cent), while Livestock Feeds shares also plunged by N0.04 (five per cent) to close at N0.76 from N0.80.
Total’s share price dropped by N13.45 (five per cent) to close at N255.58 from N269.03, while Neimeth shares closed at N0.78 from N0.82, losing N0.04 (4.88 per cent).
The share price of Nascon also dropped by N0.36 (4.77 per cent) to close at N7.19 from N7.55.
Champion Breweries Plc led the gainer’s chart in the day, appreciating by 8.41 per cent to close at N2.45. This was followed by Flour Mills Nigeria Plc, Africa Prudential Registrars Plc, Unity Bank Plc and Mobil Oil Nigeria Plc.
Commenting on the state of the market, analysts at Meristem Securities Limited, said, “We attribute Tuesday’s market performance to sell offs in the oil and gas space, driven by the persistent negative market sentiments. We expect the market to close negative for the week.”
The Nigerian equities market yesterday extended losses for the eight consecutive trading, driving the Nigerian Stock Exchange (NSE) All-Share Index to a 7-month low. The NSE ASI fell by 0.15 per cent to close at 25,461.34, increasing the month-to-date and year-to-date decline to 6.46 per cent and 11.47 per cent respectively.
Yesterday’s decline resulted from heavy sell offs across oil and gas sector. Specifically, Forte Oil Plc fell by 9.7 per cent, while Total Nigeria Plc went down by 5.0 per cent. In all, 17 stocks declined compared with 11 stocks that appreciated. Forte Oil Plc led, declining by 9.7 per cent to close at N74.62.
The sell-off in Forte Oil Plc came after the company successfully raised N9 billion bond under its N50 billion bond issuance programme. The company said the funds would be used to refinance existing short term commercial bank loan obligations and to finance the retail outlet expansion of the company.
The Group Chief Executive Officer, Forte Oil, Mr. Akin Akinfemiwa had said: “With the raising of this initial capital which has been fully underwritten shows the confidence the investing public has in Forte Oil Plc as an investment of choice. This bond programme being the first in the downstream sector, is testament to Forte’s position within the downstream sector and allows the company to actualise the vision of the Board to continue to provide value to its shareholders regardless of the economic climate.”
Apart from Forte Oil that led the price losers’ table, Livestock Feeds Plc trailed with 5.0 per cent, while Neimeth International Pharmaceuticals Plc shed 4.8 per cent. NASCON Allied Industries Plc depreciated by 4.7 per cent.
In terms of sectoral performance, the NSE Oil & Gas Index led with 2.5 per cent due to the losses by Forte Oil Plc and Total Nigeria. Also, the NSE Consumer Goods Index marginally lost 0.02 per cent on account of weak appetite in PZ Cussons Nigeria (-3.3 per cent) and Dangote Cement Plc (-1.6 per cent). On the positive side, the NSE Banking Index rebounded, gaining 0.05 per cent on the back of bargain hunting in Access Bank Plc (+0.5 per cent), Zenith Bank (+0.4 per cent) and GTBank (+0.3 per cent).
Nigeria’s economy contracted in the third quarter as businesses struggled to access foreign exchange and militanta continued to bomb oil pipelines in the restive Niger Delta, official data showed Monday. “The nation’s gross domestic product (GDP) contracted by -2.24% year-on-year,” the country’s National Bureau of Statistics said in a report.
The Nigerian economy is reeling and bruised following the crash in global oil prices from over $100 a barrel in 2014 to around half that today.
A contraction appeared inevitable when militants renewed attacks on the country’s oil infrastructure, strangling production that accounts for around 70 per cent of government revenue and the bulk of Nigeria’s export earnings. The relentless sabotage has put the Nigerian government under pressure as economists increasingly question whether President Muhammadu Buhari can pull the country out of recession.
“During the period under review, oil production averaged at 1.63 million barrels per day (bpd),” the statistics agency said.
That is a 22-percent drop from the same period last year, when Nigeria was producing 2.17 million bpd.
Manufacturing also took a big hit, shrinking by 2.9 percent in the wake of a devalued naira and currency controls that have curbed trade.
“This is partly due to the continued fall in the exchange rate, which makes imported inputs more expensive, thereby increasing business costs,” the statistics agency said.
“This is greatly a result of the continued fall in (the) naira to dollar rate which translates to much higher cost of business operations.”
In early 2016, Buhari had vowed not to “kill the naira” by letting it fall in value, in opposition to depreciations by fellow major oil exporters Angola and Russia.
His government tried to prop up the naira for months, but that drained foreign currency reserves and it eventually abandoned the currency peg in June.
A dollar shortage persists, with black market rates hovering around 440 naira to the dollar this month compared to the official bank rate of approximately 320 naira to the dollar.
The economic troubles look to last, with peace talks between the Nigerian government and oil rebels falling apart this month — the Niger Delta Avengers claimed they bombed three pipelines last week — and foreign investors steering clear until they see a more coherent currency policy.
The International Monetary Fund has forecast the West African nation’s gross domestic product will shrink by 1.7 percent this year, the first full-year contraction in more than two decades, according to Bloomberg News.
The federal government has stated that of the N6.06 trillion that was budgeted for the 2016 fiscal year, it has spent about N3.577 trillion as at September, 2016.
This, it said translated to a 79 per cent performance recorded by the budget.
In a keynote speech at the KPMG CFO’s Forum in Lagos yesterday, the Minister of Budget and National Planning, Senator Udoma Udo Udoma, also revealed that the 2017 Appropriation Bill was almost ready.
However, the minister who was expected to speak about the 2017 budget proposal declined making comment on that, saying it was because the document had not been submitted to the National Assembly.
“The good news is that it is almost ready,” he said. “We are almost through with our consultations with the National Assembly on the Medium Term Expenditure Framework, and the outlines of the 2017 Budget, and will soon be submitting it to the National Assembly for their consideration.
“Without giving anything away, I can assure you that the Budget will be targeted at stimulating private sector investment. The government believes that it is only by partnering with the private sector that we can propel the economy out of recession and onto the path of sustainable growth,” he added.
Commenting further on the 2016 budget, Udoma said in addition to the total of N2.44 trillion so far released for capital expenditure, non-debt recurrent and service-wide vote expenditure, a total of N1.138 trillion had also been paid out in domestic and foreign debt service expenditures, saying this included the N44 billion transferred to the Sinking Fund to retire maturing obligations.
Udoma, disclosed that to date, budget personnel cost and debt service obligations had been fully met, noting that, additionally, government has done reasonably well in the challenging circumstances with respect to capital expenditure.
“It is noteworthy that the total amount of N753.6bn already released for capital expenditure in 2016 is the highest in the nation’s recent history, even in the era of high oil prices.
“Indeed, the capital releases to date exceed the aggregate capital expenditure budget for 2015 of about N700billion, inclusive of capital expenditure in statutory transfers.
“Despite fiscal challenges, government is committed to meeting its debt obligations while funding critical sectors to enable government to function smoothly, as we continue to work out lasting solutions to the issues of revenue shortfalls”.
The minister also highlighted the Nigeria’s Economic Recovery and Growth Plan (NERGP) 2017 -2020, saying “all these reforms and initiatives, and many more, most of which will be reflected in the 2017 Budget, are being brought together in a single document to be called Nigeria’s Economic Recovery and Growth Plan (NERGP).”
He added that the document would present a coherent summary of Nigeria’s short and medium term economic plans for the period 2017-2020, saying by putting government strategies,directions, policy priorities and intended initiatives in one place, other stakeholders were better able to take their own strategic economic decision.
He further disclosed that the NERGP would focus on five broad areas, namely: macroeconomic policy, economic diversification and growth drivers, competitiveness, social inclusion and jobs, and governance and other enablers, assuring that there would be a major emphasis on implementation and monitoring of the NERGP.
