The naira continued to strengthen on the parallel market on Monday to close at N435 to the dollar, stronger than N450 to the dollar at which it closed last Friday, as the Central Bank of Nigeria (CBN) continued to relentlessly pump the greenbank into the interbank foreign exchange market to meet the demand of bank customers.
But the buy rate of the greenback rose slightly to N430 to the dollar Monday, against N440 last Friday. Several parallel market operators who had been stockpiling dollars for months, were seen lamenting that the CBN’s intervention was forcing them to offload their dollars at a loss.
But as they bemoaned their losses, market analysts cautioned that they were likely to incur more losses, as the CBN, in keeping with its determination to increase liquidity in the FX market Monday pumped a fresh $180 million into the interbank market.
A breakdown of this amount showed that the CBN sold $100 million through its special wholesale intervention forwards and pumped an additional $80 million to the banks, specifically for school fees, medicals, and Business and Personal Travel Allowanced, among other invisible transactions.
CBN also said it would with “immediate effect give Travelex $4 million weekly to satisfy demand for travel allowances at the Lagos and Abuja airports”.
In a statement released Monday, the CBN’s acting Director, Corporate Communications, Mr. Isaac Okorafor, said the central bank’s commitment to providing enough FX for legitimate business remains unshaken, reiterating that it would do “everything possible” to maintain the steady supply of forex to the market.
In all, the new FX measures introduced by the CBN aimed at improving liquidity in market has led to the appreciation of the naira by N85 in just one week.
Analysts are projecting that the naira might appreciate to about N400 to the dollar on the parallel market this week, effectively meeting the CBN’s objective of closing the gap between interbank and parallel market rates. The CBN had maintained that much of the dollar demand was a bubble created by speculators and hoarders of the greenback.
Also, speaking on a programme monitored on Raypower FM in Lagos Monday, Okorafor urged currency dealers and others hoarding dollars to make hay and sell their holdings in order to avoid heavy losses.
He added: “I want to assure that we would provide enough liquidity in the market and we will sustain liquidity in the market. The country is opening up and foreign reserves are improving. Many people outside are beginning to realise the huge opportunities in this country.
“You can see the subscription of the Eurobond. It clearly shows the potential in this economy. This economy is bottomless when it comes to investment opportunities.
“So, ultimately, the exchange rate would improve and anybody hoarding dollars would suffer for it.” Responding to a question on the impact of the continuing ban of 41 items from accessing the official FX market, the CBN spokesman said: “The savings we have made from the elimination of the 41 items from the FX market have been very huge.
“Nigerians are beginning to adapt to made-in-Nigeria products and indeed we have supported some local manufacturers.
“Apart from rice, we are funding the production of palm oil and other produce. “We have two firms now producing toothpicks in Nigeria. So, you can see that even though people criticized the removal of the 41 items, which is one thing that we held on to, to change the entire economic landscape of this country.
“No country is known to have succeeded or became great by depending on outsiders for its food, fashion, drinks, and others. We cannot continue like that. “We must change our appetite for foreign goods and services. We are determined to fund the FX market.” Meanwhile, Nigeria’s external reserves increased further to $29.414 billion, according to latest figures made available by the CBN.
THISDAY’s findings showed that this represented an increase of 14 per cent over $25.843 billion at the end of last year.
The Central Bank of Nigeria (CBN) yesterday released additional $180 million to the forex market to further ease business transactions in the country.
The intervention was done in two phases – an $80 million offer for Personal Travel Allowance (PTA), school fees and medicals at the inter-bank market and $100 million Wholesale Forwards Market sell, which by the new policy, is reduced to maximum of 60-day tenor.
The CBN Acting Director of Corporate Communications Department, Isaac Okorafor, said that the latest moves were part of the bank’s pledge and determination to increase liquidity in the foreign exchange market.
“In keeping with its determination to increase liquidity in the foreign exchange market, the Central Bank of Nigeria (CBN) has released another $100 million into the wholesale forwards segment of the market and pumped an additional $80 million into the banks specifically for the settlement of dollar demand for school fees, medicals and Personal Travel Allowance (PTA), among others. “The commitment to providing enough forex for legitimate business remains unshaken and we will do everything possible to ensure the steady supply of forex to the market,” he said.
Only last week, the apex bank had pumped $500 million into the market, which impacted positively on the value of the naira against major currencies of the world, particularly the United States dollar, which fell against the naira from N520 to N466 to $1.
The efforts by the CBN in making available large amount of forex to the market has led to the appreciation of the naira by over N85 in less than one week. There are fears in the market that the local currency may well be on a permanent journey to its natural value put by some analysts at less than N300 to the dollar.
The CBN had maintained that much of the dollar demand had been a bubble created by speculators and hoarders of the greenback. On a radio programme yesterday, the apex bank had warned market players and keepers of dollars to make hay and sell their holdings to avoid heavy losses.
Meanwhile, analysts, although raising fears of sustainability of the market intervention, have admitted that the new policy direction is gradually bringing sanity into the forex market, as well as strengthening naira’s value.
Transcorp Hotels Plc, the hospitality subsidiary of Transcorp Plc has posted a profit after tax of N4.095 billion for the year ended December 31, 2016, showing an increase of 17 per cent above the N3.497 billion recorded in 2015. Also, the directors recommended a dividend of 40 kobo per share.
The audited results showed revenue of N15.312 billion, compared with 13.979 billion in 2015. This was driven by certain key events including visits by very high profile guests, many foreign heads of governments and representatives of various consulates. The hotel hosted number of annual general meetings (AGMs) several bluechip companies and also recorded visits by the CEOs of world football governing body (FIFA) and many Fortune 500 CEOs and their equivalents. The company’s revenue also improved due to aggressive business development through market segmentation and competitive rates for rooms, food and beverage and corporate events.
Cost of sales stood at N3.889 billion, compared with N3.362 billion, while gross profit before increased from N10.617 billion to N11.421 billion. Administrative expenses, impacted by the high inflationary trend that characterised the year, rose jumped from N5.943 billion to N7.323 billion. Net finance cost moderated from N594 million to N575 million. Consequently, profit after tax improved from N3.497 billion to N4.095 billion. Hence, the directors recommended a dividend of 40 kobo.
Transcorp Hotels recorded also some achievement in 2016. For instance, for the fourth year in a row, the hotel emerged as the proud recipient of five prestigious awards at the 23rd World Travel Awards: Africa’s leading business hotel, Nigeria’s leading business hotel, Nigeria’s leading hotel; Nigeria’s leading hotel suite (the presidential suite) and Nigeria’s leading MICE hotel.
The World Travel Awards brand is recognised globally as the ultimate hallmark of quality, with winners setting the benchmark to which all others aspire. Transcorp Hilton Abuja also clinched the 2016 TripAdvisor Travelers’ Choic awards for hotels (the highest honour to be given by TripAdvisor), ranking first out of 64 hotels in Abuja based on the reviews and opinions of the global travel community.
The company said it has concluded plans to record even better performance in the coming year as Transcorp Hilton Abuja plans to conclude the upgrade and refurbishment of the hotel, which is in full swing with completed floors (floors 8 to 10) to be included in inventory by the end of first quarter 2017.
The International Markets Unit – Head of Middle East, Africa and South Asia, London Stock Exchange, (LSE), Ibukun Adebayo, has described the success of Nigeria’s bond listing as a strong indication of international investors’ interest in building exposure to the nation’s economy.
Adebayo said this during the listing of the Nigeria’s $1 billion 15-year government bonds on LSE platform.
According to him, the listing, which secured high quality investor support from across the United States and Europe, would support Nigeria in financing its long-term infrastructure projects.
Adebayo explained that the listing of the bond on LSE builds on the recent pipeline of several high profile sovereign, supranational, municipal and private company bond issuances on the LSE.
He noted that the offer, nearly eight times oversubscribed, reaching approximately $7.7billion, highlights strong international investor demand and demonstrates confidence in Nigeria’s economy. Furthermore, Adebayo added that the listing reinforces LSE status as a strong partner to Nigeria, as well as the City’s readiness to provide a deep additional channel of finance for the development of Nigerian infrastructure and the growth of the economy.
“In January 2017, Israel listed its largest ever Eurobond offering of €2.25 billion in London. Nigeria’s choice of London Stock Exchange for its first international bond offering since 2013 underlines LSE position as a leading global venue for debt fund raising and London’s enduring status as a market open to the world.”
Also, the Economic Secretary to the Treasury, Simon Kirby, said: “I am delighted that the Nigerian government has chosen London as the location to list its $1 billion sovereign bond. This issuance underlines Britain’s position as the world’s leading global financial centre and strengthens our economic and financial relationship with Nigeria.”
With a coupon of 7.875 per cent, the 15 year government bond, is the longest ever maturity for an international Nigerian bond, the first international issuance for the country since 2013. The offer was nearly eight times oversubscribed, with the order book closing at approximately $7.7 billion.
LSE Group has a long history of supporting the development of African capital markets and investment in African companies.
The Central Bank of Nigeria on Tuesday carried out a wholesale intervention in the interbank foreign exchange market with the release of $370.8m to 23 Deposit Money Banks.
The amount, which was confirmed in a statement by the Acting Director, Corporate Communications, CBN, Isaac Okoroafor, was to meet the requests of customers.
Okoroafor said the move was sequel to the apex bank’s promise to ease the difficulties encountered by Nigerians in obtaining funds for foreign exchange transactions.
He stated that while seven banks received full allotments of their respective bids ranging from $315 to $360 valued at $37.5m each, other received allotments ranging from $46,512.50 to $15,578,081.51.
Okorafor said the CBN’s intermediation in the forex market was the first wholesale intervention aimed at easing the pressure of access to forex on Nigerians who intend to meet obligations that fall under visible and invisible needs categories.
He further explained that the CBN offered $500m for sale to the banks, but not all of them provided enough naira backing to pay fully for their respective bid amounts.
While expressing optimism that the wholesale intervention would substantially ease the foreign exchange pressure on visible and invisible needs of customers, Okorafor gave an assurance that the CBN would continue to make interventions based on qualified bids from the banks on the requests of their customers.
He reiterated that the CBN was more than ever ready to support the inter-bank market by ensuring liquidity and transparency to guarantee efficiency in the forex market.
Okorafor urged all market participants to contribute their patriotic quota and assist in ensuring that the new measures put in place by the CBN guaranteed the stability of the financial market as well as the growth and development of the economy to the benefit of all Nigerians.
The CBN had on Monday modified its foreign exchange policy with the reduction of the tenor of its forward sales from the current maximum cycle of 180 days to 60 days from the date of transaction.
It said the decision was part of efforts to further increase the availability of foreign exchange to all end-users.
In a bid to ease the burden of travellers and ensure that transactions are settled at much more competitive exchange rates, the CBN directed all the banks to open forex retail outlets at major airports as soon as logistics would permit.
The value of pension assets invested in the Nigerian equities market rose to N481.8 billion at the end of November, up from N445.88 billion in January 2016.
The assets under management of the Nigerian pension industry stood at N6.02 trillion as at the end of November, according to the National Pension Commission (PenCom). And an analysis of the figures showed that N481.8 billion are in equities, indicating 8.02 per cent of the total value.
Although the growth is marginal, market analysts said it is an encouraging development considering the fact the growth was recorded in a year that the market suffered its third consecutive decline. Besides, pension fund administrators (PFAs) have been avoiding the equities market for fear of losing their investments due to what they suffered during the market crash of 2008 and 2009.
While PFAs are allowed by law to invest about 25 per cent of their pension assets in equities, the level is about eight per cent. Most of their investments are in federal government bonds.
PFAs prefer government securities, investing about 71 per cent of the assets in bonds and treasury bills at the end of November 2016. The federal government bonds attract the highest investment of N3.536 trillion or 58.7 per cent, while treasury bills attracted N749 billion.
However, some market analysts said despite the bearish market, PFAs could still successfully navigate the market and make good returns on their investments, saying what they need is the expertise to analyse and make the right investment decisions.
“We all agree that the market has been down for the past three years. But amidst this volatility, people are still making money from the market. Last year for instance, while the Nigerian Stock Exchange (NSE) All-Share Index declined by 6.17 per cent, some stocks delivered returns as high as 50 per cent. What really matters is the ability of PFAs to identify value stocks using their expertise instead focusing only on government bonds,” a broker said.
In a bid to increase the pension assets, PenCom said it was targeting the informal sector in the first quarter of 2017, considering successes recorded by the new pension reform, which led to significant increase in pensions assets to N6 trillion.
The Director General of the Commission, Mrs. ChineloAnohu-Amazu, who stated this in Lagos, noted that the decision was based on the number of people in the informal sector.
The DG, represented by Head, Research and Corporate Strategy Department of the Commission, Dr. Farouk Aminu, said the macro-pension scheme was being introduced to the grassroots to enable an effective system.
“The macro-pension scheme is going down to the grass roots and make sure that people understand, not only understand pension but also participate.”
The PenCom boss added that pension transitional arrangement directory has been introduced to cater for those that are exempted from the contributory pension scheme.
The commission, she said has further introduced certain safeguards as a corporate governance mechanism to ensure safety of the contributory pension scheme, listing some of these measures to include investing 71 per cent of the N6 trillion equity in federal government securities, N50 billion mortgage refinancing, strong legal and institutional framework, separation of custody from administrative of pension assets, meticulous investment limits and risks rating requirement, as well as segregation of Pension funds from assets of operators and daily monitoring of investment of pension funds.
The shares of Nigerian Breweries Plc rose further tuesday as investors increased demand in a bid to benefit from the final dividend of N2.58 per share recommended for the year ended December 31, 2016. Nigerian Breweries Plc thus closed as the second highest price gainer in percentage terms and the highest gain in absolute terms. The stock gained N5.19 or 4.3 per cent to close at N125.00 per share.
Market operators said some investors are impressed with the final dividend recommended by the company despite a decline in profit for the year.The directors have recommended a final dividend of N20.457 billion, which translate to N2.58 per share, bringing total dividend to N28.386 billion or N3.58 per share.
Besides, the directors of the company have also made a recommendation to the shareholders to receive new ordinary shares of in the company instead of the final dividend.
Tthe company recorded a revenue of N313.743 billion in 2016, up from N293.9 billion in 2015. Cost of sale rose from N149.73 billion to N178.218 billion. Marketing and distribution expenses also rose from N58.45 billion to N61.312 billion. While the company brought down administrative expenses, finance cost increased by 66 per cent from N8.217 billion to N13.645 billion. However, this increase was majorly driven by net foreign exchange loss of about N7.552 billion, compared to N752 million in 2015.
Following the huge forex loss, Nigerian Breweries Plc ended the year with profit before tax of N39.675 billion, down from N54.514 billion in 2015 and PAT of N28.416 billion as against N38.05 billion in 2015.
The Company Secretary/Legal Adviser of Nigerian Breweries Plc Mr. Uaboi Agbebaku, yesterday explained in a statement that the 100 per cent dividend payout is coming at a time the results of the company were impacted by high inflation and scarcity of foreign exchange in the macro-economic environment.
According to Agbebaku, the company was able to end the year with a positive result due to its twin agenda of cost leadership and market leadership supported by innovation.
“Although the operating environment in 2017 is expected to be similar to 2016, the company remains confident that it is well positioned to adapt to the operating environment as required, and stay committed to delivering a good return on investment to shareholders,” Agbebaku said.
The naira tumbled to 520 against the United States dollar at the parallel market on Monday as scarcity of the greenback continued to keep the exchange rate in a free fall mode.
The naira had closed at 516/dollar on Friday, after hitting 510/dollar and 507/dollar last Thursday and Tuesday, respectively.
Experts said demand for dollar for school fees payment overseas as well as Personal Travel Allowance by intending travellers was taking a toll on the exchange rate at the parallel market.
This came just as retail currency traders tried to digest the Central Bank of Nigeria’s new decision to sell dollars to retail users through commercial banks, Reuters reported.
The CBN is planning to sell $1m weekly to each of the country’s 21 commercial banks at a rate of N375 to clear a backlog of demand for retail users and try to narrow the premium between the official and black market rates.
Retail currency users buy dollars from licensed Bureaux de Change operators. However, due to the CBN’s inability to meet dollar demand, the BDCs have tended to source dollars from private sources and resell at a much higher margin, fuelling the black market.
Forex traders told Reuters that some banks had compiled a list of bids from customers awaiting dollars.
The CBN has been selling dollars at N305 to clear a backlog of demand from manufacturing, agriculture and airline companies, hoping also to help drag the country out of its worst recession in 25 years.
Experts are divided over the outlook for the naira this year. Some experts have said the naira may hit between 520/dollar and 1000/dollar at the parallel market this year unless the CBN reviews its forex policy.
An economic expert and Chief Executive Officer of CocoSheen Nigeria Limited, Mr. Henry Boyo, said the naira would hit 1000/dollar unless the central bank reviewed its monetary policy framework.
He said the framework was skewed against the naira.
The Director General, National Pension Commission (PenCom), Mrs. Chinelo Anohu-Amazu, has sought the appropriation of over N113 billion for the 2017 retirees of the Federal Government, against the initial N50.2 billin submitted in the 2017 Appropriation Bill, thereby resulting in a shortfall of almost N63 billion. The PenCom boss disclosed this in a memorandum submitted to the National Assembly Joint Committee on Appropriations at the budget defence session on the 2017 budget estimate, a copy of which was made available to our correspondent.
The Commission noted that the entire fund should be approved in pursuant to Section 39(3) of the Pension Reform Act (PRA) 2014. The pension regulator maintained that the most critical challenge of the implementation of the Contributory Pension Scheme (CPS) in Nigeria today, is the non-payment of retirement benefits of Federal Government employees, who retired in 2016. This is due to insufficient appropriation and late release of appropriated funds for the payment of accrued pension rights.
Accordingly, Anohu-Amazu said: “We would like to make a case, first, on the need for adequate appropriation of funds for the payment of the Federal Government’s pension liability under the CPS. Secondly, our submission also seeks appropriation for overhead and capital subvention to facilitate the Commission’s operations in 2017.”She said based on the number of verified and enrolled Federal Government employees that retired from January to December in 2016 under the Scheme as well as deceased employees within 2016, PenCom requested for the provision of the sum of almost N92 billion in the 2016 budget proposals.
However, the National Assembly approved only about N50.2 billion in the 2016 Appropriation Act, thereby resulting in a shortfall of about N41. 72 billion.
She added that of the about N50.2 billion appropriated for the Retirement Benefits Bond Redemption Fund (RBBRF) Account in the 2016 budget, only N18.82 billion had so far been released, leaving an outstanding balance of N31.4 billion which are yet to be released.
“Accordingly, the Joint Committee on Appropriations is requested to consider and ensure the appropriation and release of the sum of N73.1 billion to pay January to December 2016 retirees of the Federal Government.”
PZ Cussons Plc traded higher at the end of last week’s transactions on the Nigerian Stock Exchange. It led nine other with 21.29 per cent to close at N13.39 per share.
Following PZ Cussons, last week, was Julius Berger Plc, adding 10.22 per cent to close at N38.39 per share. Other gainers in last week’s transactions include; Betaglas, Forte Oil, United Capital adding 10.22, 9.91 and 7.61 per cent to close at N36.45, N59.41 and N3.82 per share. Jaiz Bank gained 6.11 per cent to close at N1.39 per share. Sterling Bank added 5.71 per cent to close at N0.74 per share.
Dangote Flourmills garnered 5.67 per cent to close at N4.10 per share. Livestock added 5.56 per cent to close at N0.76 per share. FBN Holdings also gained 5.43 per cent to close at N3.30 per share.
Consequently, a turnover of 1.073 billion shares worth N8.608 billion in was recorded in 14,486 deals by investors on the floor of the Exchange, in contrast to a total of 1.052 billion shares valued at N8.031 billion that changed hands in 13,586 deals during the week ended February 10, 2017. Last week, the financial services industry (measured by volume) led the activity chart with 930.380 million shares valued at N5.701 billion traded in 8,759 deals; thus contributing 86.70 per cent and 66.24 per cent to the total equity turnover volume and value respectively.
The consumer goods industry followed with 52.480 million shares worth N1.992 billion in 2,513 deals. The conglomerates industry ranked third with a turnover of 22.125 million shares worth N39.217 million in 499 deals.
Trading in the top three equities namely – Staco Insurance Plc, Zenith International Bank Plc and Guaranty Trust Bank Plc (measured by volume) accounted for 473.880 million shares worth N4.269 billion in 2,254 deals, contributing 44.16 per cent and 49.60 per cent to the total equity turnover volume and value respectively.
Also traded during the week were a total of 15.400 million units of Exchange Traded Products (ETPs) valued at N198.477 million executed in nine deals, compared with a total of 200 units valued at N338,007.70 transacted last week in eight deals.
A total of 10,673 units of Federal Government Bonds valued at N10.479 million were traded this week in 10 deals, compared with a total of 1,135 units valued at N1.175 million transacted last week in five deal. The NSE All-share index and market capitalisation depreciated by 0.69 per cent to close the week at 25,164.91 and N8.709 trillion.