The Central Bank of Nigeria (CBN) has said it cannot meet the country’s monthly demand for $4.8 billion foreign exchange.
In september, only 13.75 per cent of the demand for foreign exchange was met.
The apex bank said its inability to meet the demands was based on the dwindling foreign reserves attributable to low production and drop in crude oil prices.
According to the apex bank, its forex policy was geared towards controlling access to the limited supply of dollars and to encourage local production of commodities that were hitherto being imported. It would be recalled that the CBN was only able to meet its forex obligation of $660.17 million to 1342 manufacturers and allied firms in September for the importation of raw materials, plants and machinery.
Besides, the CBN noted that it would be abjectly failing on one of its cardinal objectives if it cuts interest rates when the inflation rate is high, saying “ours at 18.3 percent, one must question the judgment of cutting interest rates at this time. I think it is important to underscore that interest rates reflects not just the cost of capital but also the cost of doing business, and so we need to also look at interest rates from the perspective of the lender. Given that most banks have to individually provide security, power, and other infrastructure, it is not surprising that some of these costs are passed on to customers in the form of high interest rates.”
Similarly, the CBN Governor, Godwin Emefiele explained actions taken on Bureau De Change operators saying that about $6 billion per year was being sold to the operators for frivolous reasons.
According to him, we set up BDCs and started giving out FX cash to them.
“At some point, we even had Class A BDCs that could collect as much as $1 million per week. On average, we sold about US$6 billion per year for frivolous reasons. Over the 11 years that we were practicing this, we sold more than $66 billion. None of these monies were used to build factories or to create jobs in Nigeria. None of these were used to build hospitals or schools in Nigeria. Imagine what this money would have meant to us if we had that amount in our FX Reserves today”, he said.
Emefiele added that the demand for forex has reached an all-time high of over $1.2 billion weekly or $4.8 billion monthly, noting that when he assumed office in June 2014, the nation’s forex reserves had fallen from an high of $62 billion in 2008 to only $37 billion. “Rather than build on the one-time burgeoning base of agricultural production and manufacturing we had, we invested less in power, infrastructure, education, and health. As our schools began to dilapidate and teachers went on incessant strikes, we sent our children overseas even for primary school education. As doctors preferred to practice in the US and UK and hospitals lacked even hand gloves, we embarked on a medical exodus abroad even for basic diagnosis.
“As our manufacturing companies started closing especially for lack of power, we gladly substituted them with seemingly cheap imports while inadvertently exporting jobs and importing poverty to our country”, he added.
Director-General of the Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf explained that while the CBN may be right in its justifications for some of its actions, there is a need for a holistic and integrated approach to addressing the concerns in the economy, thus necessitating a fusion of fiscal and monetary policies.
President, Manufacturers Association of Nigeria (MAN), Dr. Frank Jacobs explained that the demands of the real sector are yet to be met and that may spell doom for the nation’s economy if unresolved by the end of the year.
FMDQ OTC Securities Exchange listed the pioneer memorandum money market fund, The Greenwich PlusMoney Market Fund. The fund is managed by Greenwich Asset Management Limited.
Commenting on the listing, Managing Director/CEO of FMDQ, Mr. Bola Onadele.Koko commended the fund manager on its choice of securities exchange for the memorandum listing and reiterated the exchange’s commitment to facilitate growth and development in the Nigerian debt capital market (DCM).
“In presenting an attractive and efficient platform for issuers/fund managers to list their money market and fixed income mutual funds, FMDQ, as a front-line regulator and an information repository, provides governance and ensures continuous disclosure/dissemination of key information on all funds listed on its platform, thus, improving information transparency whilst promoting credibility of the funds towards a more globally competitive DCM,” Onadele said.
In his comments, Managing Director of Greenwich Asset Management Limited, Mr. Dayo Obisan, said: “Our choice to list the Greenwich Plus on FMDQ as the first collective investment scheme on its platform is a deliberate strategy to promote the transparency and visibility of the fund, and be the pioneer mutual fund that would encourage others to be listed. The Greenwich Plus recorded the highest level of subscription at its Initial Public Offering (IPO) after subscribers demonstrated confidence in the Greenwich brand by over-subscribing to the IPO by 44.85 per cent. The Fund remains open and its core objectives are to achieve a competitive rate of return and generate a steady stream of income for unit holders.”
Also speaking the Group Managing Director of Greenwich Trust Group, Mr. Kayode Falowo said the IPO and subsequent listing of the fund is a great feat in view of recent economic and financial market conditions.
“Being the first mutual to be listed on this great platform, FMDQ, is remarkable for us all in the Greenwich Trust Group. We believe that the 48 per cent oversubscription attests to the confidence investors have in the capability of the fund manager, Greenwich Asset Management. As such, we encourage all investors, retail, institutional and pension funds administrators to invest in the Greenwich Plus Money Market Fund, as a means of portfolio diversification, and enjoy competitive returns on your investment.”
Shell Companies in Nigeria, supported by the Nigerian National Petroleum Corporation (NNPC), has signed Memoranda of Understanding (MoU) with eight Nigerian banks under the revised Shell Contractor Support Fund, the latest milestone in an effort to improve access to finance for Nigerian vendors and suppliers in the oil and gas industry.
Under the MoUs signed in Lagos, Access Bank Plc, Skye Bank Plc, Zenith Bank Plc, Stanbic IBTC Bank, First Bank of Nigeria Limited, Standard Chartered Bank, First City Monument Bank (FCMB), and Guaranty Trust Bank Plc have set aside $2.2 billion for contract execution by Nigerian firms.
According to a statement by Shell, the scheme provides support for contractors to enable them finance projects executed for Shell Companies in Nigeria in line with the aspirations of the Nigerian Content Act.
To access these funds, the contractors must have a valid purchase order and meet the banks’ risk assessment criteria. This revised version is in response to market realities and will offer loans faster and at cheaper rates.
The Managing Director of The Shell Petroleum Development Company of Nigeria Ltd (SPDC) and Country Chair, Shell Companies in Nigeria, Mr. Osagie Okunbor, said at the signing ceremony in Lagos that supporting SMEs under this scheme was for the mutual benefit of all the parties.
“While the scheme reduces the pressure from requests for advance payments from contractors on us, it also ensures optimum delivery by our contractors, leaving the banks with a de-risked clientele base, in addition to the comfort of domiciliation of payments,” Okunbor said.
Also speaking, Shell’s Finance Manager, Nigeria and Gabon, Guy Janssens, added that funding is key to enable contractors deliver and grow. Janssens also urged the banks to make the scheme work.
Commenting on the MoUs, the Managing Director of Shell Nigeria Exploration and Production Company (SNEPCo), Mr. Bayo Ojulari, advised the contractors to perform in order to build trust and grow.
The Group General Manager, National Petroleum Investment and Management Services (NAPIMS), Mr. Dafe Sejebo, who was represented by Bunmi Lawson, implored the banks to make the loan facilities available to the vendors when they come for them.
In the same vein, the Chairman of the Petroleum Technology Association of Nigeria (PETAN), Mr. Bank-Anthony Okoroafor, enjoined the banks to be realistic in their demands in order to engender easier access to the funds.
Responding, one of the contractors, Moritz Abazie of Strides Energy and Maritime Limited, urged the banks to ensure that the rates charged are comparable to credit sourced from overseas so that Nigerian firms could compete with foreign firms in bidding for jobs.
The Contractor Funding Scheme started in 2011 with the Shell Kobo Fund, which gave rise to the Shell Contractor Support Fund in 2012. The scheme has been redesigned to address the current economic exigencies and to align it with stakeholder needs by merging the two initial initiatives.
To date, the six participating banks have disbursed $1billion to over 220 vendors. In 2015, 93 per cent of all contracts awarded by Shell Companies in Nigeria were undertaken by Nigerian companies amounting to $900 million.
The Central Bank of Nigeria is to provide about N750bn for the recapitalisation of the Bank of Agriculture before the end of next year, the Federal Government has said.
According to the government, the restructuring and recapitalisation of the BoA will enable the bank to attract up to N1tn to effectively provide loans at affordable interest rates to farmers.
The Minister of State for Agriculture and Rural Development, Senator Heineken Lokpobiri, disclosed this at the Farmers’ Field Day organised by Dizengoff Nigeria Limited in collaboration with Phinada Integrated Farms in Abuja.
He said, “The Central Bank of Nigeria is collaborating with the Ministry of Agriculture. This is because one of the biggest challenge of agriculture in Nigeria today is access to affordable loans. But in many other parts of the world, agriculture is the most attractive sector for banks to lend money to. So what do we do?
“As a ministry and the Federal Government, we are planning to recapitalise the Bank of Agriculture. So, we are to restructure the BoA and the CBN is committed to providing about N750bn. The BoA as an institution itself is going to attract hundreds of billions of naira. And we thinking that before the end of next year, we should be able to attract at least N1tn available credit to be lent to anybody who wants to do farming business.”
The minister added, “Right now, the Federal Government is subsidising farmers, but the subsidy is not what the farmers want. We have seen this under the Anchor Borrowers Scheme of the CBN in Kebbi. In that scheme there was no subsidy.
“What the CBN, through the BoA, did was to give each farmer between N110,000 and N130,000 to cultivate one hectare of rice farm, and some of them got 10 tonnes per hectare. And if rice per tonne is between N60,000 and N80,000, then whoever adequately cultivates two hectares is already a millionaire.”
Lokpobiri further stated that the Federal Government decided to make tractors import duty-free in a bid to move Nigeria towards mechanised and commercial agriculture.
Access Bank Plc has announced that it is targeting a 22 per cent Return on Equity (ROE), at the end of 2017.
The figure is however, higher than 14.8 per cent in 2013 and 18.8 per cent achieved as at September 30, 2016.
ROE is the amount of net income returned as a percentage of shareholders equity. It also measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested.
The Managing Director of the bank, Herbert Wigwe, said this reviewing its performance and making future projections at the bank’s 2016 investors’ forum held in Lagos at the weekend. He explained that the bank, over the last four years has driven its strategy through increased focus on the transformation of its operating model to enable it become one of the top three across key financial indices by 2017.
He added that the bank during the period had consistently grown its profit margin from 17 per cent in 2013 to 21 per cent in 2016. Furthermore, he explained that the bank, as part of strategy to derisk its business, avoided risky exposures to the power and downstream oil and gas sectors and controlled loan growth within set guidance.
He added that the bank ensured disciplined capital plan in alignment with its five-year rolling strategic plan, optimised capital structure to provide support the growth of the business Wigwe disclosed that the bank would focus on strengthening its financial stability with continued efforts on long-term growth and shareholders value creation in the next financial year.
According to him, the bank is poised to maintaining stable asset quality on the back of disciplined risk management and solid liquidity position to enable it take advantage of future growth opportunities.
“We have delivered strong and consistent results, which reflect our resolve to effectively execute our strategy and consistently deliver on our promise.
The Securities and Exchange Commission on Sunday said it had signed a Memorandum of Understanding with the Nigerian Educational Research and Development Council for the introduction of capital market studies in school curriculum.
The Director-General, SEC, Mounir Gwarzo, said that the commission had stressed the need for financial literacy, adding that this would enable people to make informed investment decisions.
In a statement issued on Sunday, the commission quoted Gwarzo as expressing enthusiasm about the collaboration, adding that the MoU was part of a 10-year capital market master plan.
He also said the agreement would strengthen the relationship between the two parties and ensure an effective implementation of the initiative.
The SEC DG said there was a need to inculcate the culture of financial literacy and introduce capital market studies into the school curriculum at all levels of education.
The African Securities Exchanges Association (ASEA) and the Chartered Institute for Securities & Investment (CISI) have signed a Memorandum of Understanding (MoU) to develop effective framework for a common certification programme across the 26 ASEA member exchanges.
The aim of the partnership, according to the Nigeria Stock Exchange was to promote professionalism and develop channels for capacity building and knowledge sharing for the growth of the capital markets industry in Africa.
Among the 26 ASEA member exchanges include: Botswana: Botswana Stock Exchange, Cameroon: Douala Stock Exchange, Cape Verde: Bolsa de Valores de Cabo Verde, Egypt: Egyptian Exchange, Ghana: Ghana Stock Exchange. Also included are Ivory Coast (Benin, Burkina Faso, Mali, Niger, Senegal, Togo, Guinee-Bissau) BRVMM, Kenya: Nairobi Securities Exchange, Libya: Libyan Stock Market, Malawi: Malawi Stock Exchange.
Others are: Mauritius: Stock Exchange of Mauritius, Morocco: Casablanca Stock Exchange, Mozambique: Mozambique Stock Exchange, Namibia: Namibian Stock Exchange, Nigeria: FMDQ OTC Securities Exchange, and Nigerian Stock Exchange (NSE) Republic of Sierra Leone: Sierra Leone Stock Exchange. There are also Rwanda: Rwanda Stock Exchange, Seychelles: Seychelles Securities Exchange, South Africa: Johannesburg Stock Exchange, Sudan: Khartoum Stock Exchange, Swaziland: Swaziland Stock Exchange, Tanzania: Dar es Salaam Stock Exchange, Tunisia: Bourse de Tunis, Uganda: Uganda Securities Exchange, Zambia: Lusaka Stock Exchange and Zimbabwe: Zimbabwe Stock Exchange. NSE explained that ASEA and CISI would work together to provide a common certification framework for ASEA members enabling practitioners to achieve internationally recognised qualifications that are relevant to their job.
The ASEA President and Chief Executive Officer, Oscar Onyema, at the Nigerian Stock Exchange said; “We are pleased to welcome the Chartered Institute for Securities & Investment as an Associate member of ASEA. One of the focus areas of my presidency of ASEA is human resources development across member exchanges. “I believe that trained practitioners and trusted individuals are key to boosting professionalism, and in turn enhancing the attractiveness of Africa as an investment destination. We look forward to working with the CISI and benefitting from their international footprint and globally portable qualifications.”
The Chartered MCSI, Global Business Director at the CISI, Kevin Moore said; “We are delighted to have become part of the ASEA membership and to be able to offer our experience to introduce internationally recognised qualifications and certification.
Moore noted that the CISI has been working internationally for 10 years and has spent three years in Africa. “ASEA is the premier Association of 26 securities exchanges in Africa with the aim of developing member exchanges enhance the global competitiveness of member exchanges and provide a platform for networking and exchange of information.”
The National Bureau of Statistics (NBS) has valued the cost of imported petroleum products between May and September 2016 at about N1.23 trillion.
This comprised 7.85 billion litres of petrol valued at about N958.28 billion; 2.11 billion litres of kerosene valued at about N254.54 billion as well as 208.53 million litres of diesel which was worth about N25.46 billion within the months in review.
Separately, the statistical agency also put the total number of federal government employees with a retirement savings account (RSA) at 1.85 million as at the third quarter of the year (Q3 2016). This represented a marked improvement from the 1.82 million workers who were registered in the corresponding quarter of 2015.
It said there were 1.49 million state government employees with RSA in Q3 while the private sector accounted for 3.88 million RSA accounts. Altogether, there are 7.24 million RSA holders within the period in review compared to 6.74 million in Q3 2015.
Meanwhile, the Minister of Industry, Trade and Investment, Dr. Okechukwu Enelamah, has said the country is currently “extremely hungry” for both local and foreign investments, adding that the federal government was doing everything possible to attract investors, particularly, foreign direct investments (FDIs).
He yesterday in Abuja at an interactive session stated that the government is in the process of negotiating a 21st century Nigerian free-trade agreements, with the goal of expanding market opportunities for Nigerian companies as well as looking into the ECOWAS Common External Tariff which had remained quite controversial.
He said already, FDIs worth billions of dollar had been attracted into the country particularly the investments by China and General Electric (GE) in the railway system.
The minister said more investments were required to properly diversify the economy. He said government is also working to better the ecosystem, adding that small business registration would soon be simplified and made cheaper to encourage local start-ups. Under the proposed government initiative, it could cost as low as N2,000 to register an SME, the minister added.
Speaking at the interactive session with journalists in Abuja to give a status report on the implementation of the ministry’s growth master plan and objectives, Enelamah said the Export Expansion Grant (EEG), which was suspended in 2014 following allegations of widespread abuse and the accumulation of significant liability on the Negotiable Duty Credit Certificate (NDCCs), is also expected to resume in 2017.
He said the planned resumption signified government’s determination to expand the volume and value of Nigeria’s exports, diversify export products and improving global competiveness of Nigerian exporters.
The scheme would be included in the budget in order to manage the impact on government revenue and promote transparency, he said.
The minister said efforts were further being made to encourage Nigerians “to consume more of what we produce,” adding that government’s intention was to offer people diverse choice in production of variety of items locally so as to reduce importation.
The minister said his ministry is currently working in partnership with the Bank of Industry (BoI) and other relevant government departments to support MSMEs through funding.
Specific MITI initiatives currently underway include the GEM (Growth and Employment) initiative in collaboration with the World Bank. More specifically, the GEM initiative has identified 23 IDAs (Industrial Cluster Areas) to support MSME’s with capacity development and launch the ‘BIG platform’ funding initiative to provide funding and training for MSMEs.
He nevertheless assured Nigerians that though the ongoing adjustment processes might be painful in the short term, it will lead to a better economy in the long run. Enelamah said the ministry was updating Nigeria’s trade policy priorities by working to correct imbalances in the country’s trade relationships and reversing negotiating failures.
The Board of Directors of Ashaka Cement Plc has opted for a voluntarily delisting of the company from the Nigerian Stock Exchange (NSE). In an explanatory to the NSE, made available wednesday, directors of Ashaka Cement said the voluntary delisting follows the company’s violation of the exchange’s Free Float Deficiency provision of 20 per cent.
According to the directors, Lafarge Africa Plc currently holds 84.97 per cent of Ashaka Cement, bringing the free float that is tradable on the NSE to 15.03 per cent as against 20 per cent stipulated by the exchange.
The directors explained that is not improbable that given this free float deficiency, the NSE could take enforcement action and initiate a regulatory delisting, given that the free float deficiency is not likely to be remedied, hence the decision to delist and operate as an unlisted company.
Besides, the free float deficiency, the directors said over the last five years there is little or no trading activity with only 0.20 per cent of the shares held by the minority shareholders being traded.
“Neither the company nor any shareholders are benefiting from the continued listing as shareholders are not getting any exit opportunity and their investments have been locked up and they find it difficult to dispose of their shareholding. Moreover, the company is bearing unnecessary cost in complying with its listing obligations,” the directors said.
They disclosed that through the voluntary delisting of AshakaCem, they are exercising a regulatory provision that will shield the company from any enforcement action that the NSE may effect and are also providing an exit consideration to minority shareholders who do not wish to remain in an unlisted company.
The directors said minority shareholders of AshakaCem may exit prior to the delisting by trading their shares on NSE or receive 57 shares of Lafarge Africa Plc in exchange for 202 AshakaCem shares held as at the date of the special resolution approving the voluntary delisting. In addition, a cash consideration of N2 per share will be paid to every shareholder exchanging their AshakaCem shares for Lafarge Africa shares.
The directors noted that where a shareholder desires to remain a shareholder of AshakaCem, such shareholder shall be free to do so and there is no obligation to trade their shares or receive the exit consideration.
Considering the liquidity challenges and prevalent disequilibrium currently facing the Nigerian Foreign Exchange (FX) market, the FMDQ OTC Securities Exchange wednesday announced the suspension of the FMDQ Spot FX Closing Rate with immediate effect.
The move according to the Exchange was also to ensure transparency as well as to protect the integrity of the FMDQ Spot FX Closing Rate Methodology.
A statement yesterday explained that the Market Review Committee (MRC) of FMDQ charged with the responsibility of governing all FMDQ Markets, Standards and Benchmarks took the decision. “Consequently, the daily Spot FX closing rate that FMDQ shall publish, will be the rate of the last available executed trade on the Thomson Reuters NGN=D1 module at 2:00 PM. This will be referenced the “CBN Closing Rate”.
” In line with FMDQ’s mandate to ensure that all FMDQ benchmarks (including closing prices/rates, fixings, indices etc.) are in line with international best practices, the calculation and publication of FMDQ’s Spot FX Closing Rate shall remain suspended until the general market structure promotes a more transparent and credible price formation,” it explained.
The FMDQ said it appreciates the importance of a market’s closing rate and will therefore continue to ensure the methodology remains as credible as possible.
“Consequently, the need for all market participants to play their parts in ensuring an FX Market aligned with global best practice is paramount. In line with FMDQ’s mandate to promote price discovery, there is the need to ensure FX trading activities in the market are fully captured to reflect the required transparency to all stakeholders.
“FMDQ had been concerned with the significance of confirmed trades on the designated FX Trading System which informed the Market Notice (MN-03) issued yesterday. However, it has received reasonable assurance that Dealing Member (Banks) [DMBs]/Authorised Dealers will promptly update their inter-Member trades and trades with clients on the designated FX Trading Systems accordingly.
“DMBs are also therefore encouraged to advise their clients to expedite action on the CBN FX onboarding directive for corporates to further enhance the transparency of the market. Based on the foregoing, DMBs are encouraged to confirm all trades and voice report trades done via other mediums (including telephones) during business hours (i.e. by 2:00 PM daily) on the designated FX Trading System,” it added.
