The nation’s overnight interbank rate rose to an average of four per cent on Friday, up from three per cent the previous week, as the Central Bank of Nigeria’s attempt to mop up excess liquidity from the banking system faltered.
Traders said the CBN failed to sell Treasury bills at its Open Market Operation window twice last week because commercial banks were asking for higher returns than the bank was willing to offer.
The CBN, however, sold 206-day bills worth N93.18bn ($468.24m) on Monday, and retired N129.61bn of matured OMO bills, leaving the system with more cash, Reuters reported.
Total banking system liquidity stood at N401.72bn on Thursday, slightly lower than N408.25bn the previous week, dealers said.
“We expect rates to trade lower next (this) week if the promise of the government to release capital project funding next (this) week is anything to go by,” one dealer said.
Meanwhile, the naira is expected to drop further against the United States dollar at the parallel market this week as the CBN moves to release details of its new flexible exchange rate policy.
The local currency was quoted at 368 to the dollar on the black market on Friday, compared with 350 last week.
The naira closed at 197.50 a dollar on the official interbank market, around the peg rate of 197.
The Group Managing Director, United Bank for Africa, Philips Oduoza, had said on Thursday that details of the proposed flexible currency model would be ready in a “short while”, after a Bankers Committee’s meeting in Abuja.
The announcement halted the free fall of the naira, while many traders expected that the announcement of the detail would spur the alignment of the parallel market rate and the official window, according to Reuters.
Major African currencies are also expected to come under pressure this week due to low foreign exchange supplies and lingering concerns about global economic growth.
The Minister of Labour and Employment, Dr. Chris Ngige, has disclosed that the federal government has invited the banks for dialogue in order to chart the way forward.
In a statement by the Deputy Director, Press in the Federal Ministry of Labour and Employment, Samuel Olowookere, the minister said he was optimistic that the dialogue would be fruitful,
“We have invited the banks to a dialogue and we hope the dialogue will be fruitful,” Ngige stressed.
Ngige took a swipe at the Director General of the Nigeria Employers Consultative Assembly (NECA) Mr. Segun Oshinowo, over NECA’s opposition to the directive of the federal government to banks and other financial institutions to suspend the ongoing retrenchment of workers in the sector pending the outcome of a conciliatory meeting and stakeholders’ summit billed for the first week of July as not only irresponsible and thoughtless but also a bland knee jerk reaction borne out of self-service.
The minister’s position came amid several criticisms over his directive to banks, with many calling such act as arbitrary action beyond permissible boundaries.
He said: “Any reaction that tends to hamstrung the intervention by government in any sector of the economy in the overall interest of all Nigerians, by invoking a sudden rigid stricture to free market rules, is an overarching absurdity
“If government has been intervening and shall continue to intervene to save banks and allied institutions, even the aviation industry, in times of distress without allowing the free market rules to solely reign, therefore forcing some of them to go under, the same government can equally make minimum demands from this private sector in the overall interests of the nation. Our authority in this instance is not only statutory but also moral.
“Therefore, we wish to state clearly once more, that the intention of government rather than being punitive on these financial institutions is to safeguard national interest by staving off unnecessary job losses and hence avert its real and potential threat to the already fragile security situation and stability of the nation.
“Government intention is guided by the fact that there are clear alternatives to the abrasive lay off of thousands of workers especially in the background of non-compliance with laid down rules on redundancy as clearly enunciated in our labour laws.
“The labour unions in the financial sector have brought forward, very strong evidence that thousands of workers laid off last year in a similar exercise are yet to receive their negotiated benefits.
“May we also add that our directives to the banks are premised on set rules of engagement. That section 20 of the labour act is abundantly clear on redundancy and steps expected of institutions to safeguard not just their interests and that of their employees but also that of government who is the chief guarantor of industrial harmony.”
According to Ngige, “financial institutions though ‘privately owned’ are not mere private businesses in the manner of an average shop on the street, rather they are institutions whose stake in the stability of the national economy is denominated by their pivotal roles as well as consequent regulations and oversight by government.
“It is hence unpatriotic and a predetermined sabotage of common good to expect that government will have its hands tied by a mischievous and self serving credo about free market.”
“The intention of government is that if the private sector is helmed from expansion and new job creation as a result of downturn in the economy, it can at least hold onto what exists by these institutions making little adjustments in the administrative and other expenditure profile. We have made similar patriotic demands from the petroleum sector (International Oil Corporations) and got positive results.”
He argued that “there is nothing therefore inappropriate or untoward about this demand on the financial institutions except as viewed from the prism of those who are still slumbering in the thoughts and imagination, hamstrung by narrowness of thought.”
UAC of Nigeria PLC (UAC) has concluded plans to restructure the operations of three of its subsidiaries.
The companies are UACN Property Development Company Plc, Livestock Feeds and Portland Paints and Products Nigeria Plc.
Besides, the company paid a total dividend of N1.92 billion, culminating to 100 kobo per share due to every shareholder of the firm for the 2015 financial year. Addressing shareholders during the 2015 yearly general meeting held in Lagos yesterday, the Chairman of the company, Dan Agbor explained that the fund would be used to boost the company’s operational expenses, purchase of new machines, improve production facilities and enhance working capital.
“Against the backdrop of an extremely challenging economic and business environment in 2015 and the need to conserve funds so that we can participate in the Rights Issues to be undertaken by three of our subsidiaries.
“The objective of the capital raising proposals that were presented to the shareholders at the yearly general that took place on the 23rd of September 2015 was to attract a strategic investor or investors and obtain equity control that would be used to drive growth in certain subsidiaries. Following your approval of a one for 12 rights issue of 160,072,032 ordinary shares, your Board and Management made all necessary arrangements to launch the Issue.
“Unfortunately, however the weak performance of the Nigerian capital market has made it impossible to raise the requested capital on optimal terms and at the end of March 2016, a decision was taken by the Board to discontinue the Rights Issue. Your Board and Management will now undertake the needed investment and financial restructuring of those subsidiaries using internally generated funds”, the Chairman said.
Reviewing its performance, Agbor noted that the company posted group revenue of N73.I billion which was down by 14.6 per cent when compared to N85.6 billion achieved in the previous year while group profit after tax stood at N5.2 billion, lower than N10.9 billion posted in the previous year.
The shareholders commended the board for payment of dividend, amid harsh operating environment, urging them to reduce their expenses and the number of unclaimed dividend in the list.
Specifically, the Secretary General, Independent Shareholders Association of Nigeria, Adeleke Adebayo stressed the need for the company to reduce the number of its unclaimed dividend list by making it public.
He also urged the management to do everything within its powers to increase the dividend payout in the current financial year.
The market capitalisation of the Nigerian Stock Exchange appreciated by N64bn at the close of trading on the Exchange’s floor on Thursday with Unity Bank Plc, Nestle Nigeria Plc and Total Nigeria Plc emerging as the top gainers.
The market recorded 18 gainers and 17 laggards at the close of trading.
The NSE market capitalisation appreciated to N9.370tn from N9.306tn recorded on Wednesday, while the All-Share Index also rose to 27,284.83 basis points from 27,098.18 basis points.
A total of 182.676 million worth N1.58bn exchanged hands in 3,631 deals.
The shares of Unity Bank Plc appreciated by N0.10 (9.09 per cent) to close at N1.20 from N1.10, while those of Nestle rose by N68 (8.98 per cent) to close at N825 from N757.
Total’s share price also gained N8.26 (4.99 per cent) to close at N173.63 from N165.37, while that of NEM Insurance Company Nigeria Plc closed at N0.92 from N0.88, gaining N0.04 (4.55 per cent).
Other gainers were DN Meyer Plc, Vitafoam Nigeria Plc, Continental Reinsurance Plc, United Bank for Africa Plc, Access bank Plc, Berger Paints and Products Nigeria Plc, United Capital Plc, Diamond Bank Plc, Custodian and Allied Plc, among others.
On the other hand, Redstar Express Plc, Cadbury Nigeria Plc, Honeywell Flour Mill Plc and AG Leventis Nigeria Plc emerged as the top losers.
Redstar Express share price depreciated by N0.21 (4.99 per cent) to close at N4.00 from N4.21, while that of Cadbury fell to N18.51 from N19.48, losing N0.97 (4.98 per cent).
Honeywell shares also slid by N0.05 (2.94 per cent) to close at N1.65 from N1.70, while those of AG Leventis depreciated by N0.02 (2.17 per cent) to close at N0.90 from N0.92.
Other losers were Cement Company of Northern Nigeria Plc, Livestock Feeds Plc, FCMB Group Plc, Oando Plc, Nascon Allied Industries Plc, among others.
NSE, on Wednesday, also organised the Nigerian Capital Market Sustainability Reporting Seminar. It was a joint initiative of the NSE, Global Reporting Initiative and Ernst and Young.
Speaking at the forum, the Chief executive Officer, NSE, Mr. Oscar Onyema, said traditionally, stock exchanges have become the nexus for the interaction between investors, companies, policymakers and regulators, adding that Exchanges had played a crucial role in building transparent, regulated markets and promoting best practice in financial and corporate governance disclosure among listed companies.
He said, “Today, Exchanges are also well suited to help with the 21st century sustainable development challenge as they are uniquely placed to facilitate action as regards sustainable business, with a variety of measures at their disposal. These include listing requirements related to sustainability reporting, voluntary initiatives, guidance documents and training for both companies and investors, and sustainable investment products such as indexes that focus on Environment, Social and Governance issues.
“There is a recognised need for enhanced levels of corporate transparency on ESG issues, and as an Exchange we are well positioned to encourage and even require listed companies to produce better sustainability reports that are issued consistently and with comparable information.”
He said currently, a range of capital market stakeholders were increasingly recognising the need for more widespread and consistent ESG disclosure, and were looking to policymakers and regulators for potential solutions. With more than a decade of voluntary initiatives and thousands of large companies producing ESG reports, he noted that there is an increased focus on efforts to ensure that improved sustainability performance spreads down from leading companies to the majority who are yet to adopt ESG disclosure practices.
“At the NSE, we have a number of motivational factors for the promotion of sustainability reporting initiatives. Firstly, we understand that transparency builds trust which is a critical ingredient to a well-functioning market and economy. Secondly, It has been proven that strong ESG performance attracts the growing number of investors interested in the long-term sustainability of their investments,” he said.
Companies integrating ESG performance into their business strategy and operations, he explained, showed that the benefits ranged from improved resource efficiency, improved stakeholder relations and social licence to operate, enhanced access to markets and investor confidence, as well as product and service innovation – all leading to enhanced competitiveness.
The Director-General of Securities and Exchange Commission (SEC), Mr. Munir Gwazo, has called on the National Assembly to quickly remove some identified impediments on the way of implementing capital market master-plan through legislation to fast-track the implementation of the plan.
Speaking at the just-concluded stakeholders’ forum on realising the potentials of the Nigerian economy through proactive capital market legislation co-hosted by the capital market committees of both the Senate and House of Representatives, Gwazo said the action had become imperative because of the critical role the legislation would play in tackling identified legal impediments to the master-plan.
Gwarzo identified some of the impediments to include jurisdictional conflict between the Investments and Securities Tribunal and the Federal High Courts.
To address these impediments to the actualisation of the master-plan, Gwarzo appealed to the National Assembly to include the IST under Section 6 (5) of the Constitution and draft “legislation to prescribe the adoption of “reasonableness test” in conducting judicial review in contrast to the “correctness test” as well as make the IST a special division of the Federal High Court. Besides, the National Assembly was urged to amend the relevant sections of the Land Use Act to resolve property/land title allocation and transfer issues to facilitate securitisation because “various sections of the Land Use Act inhibit, the development of the capital market. Particularly, Sections 21 and 22 negatively impact transfer of possession and foreclosures, which by implication inhibit the take-off of mortgage-backed securities.”
The SEC is also demanding for an amendment of Section 22 of Companies and Allied Matters Act (CAMA) to innovatively allow crowd funding of private companies.
According to the SEC director-general: “Section 22 of CAMA on crowd funding limits members of a private company to 50 while also restricting its transfer of shares.
Gwarzo stated that “a robust legal and regulatory frame-work is a necessary condition for the actualisation of our master-plan aspirations.”
In his speech, Chairman, Senate Committee on Capital Market and Institutions, Isiaka Adeleke, said the National Assembly is keenly aware of the dwindling fortunes of the capital market and by extension, the economy but that as a parliament, they “strongly believe that the downward slide in Nigeria’s economy provides the best opportunity for major stakeholders to begin to return the economy to vibrancy.”
The two chambers of the National Assembly, he said, have come to the jolting realisation that the Nigerian economy cannot fully develop without making the capital market the hub or pivot of its developmental strides.
According to him: “This market has long been neglected and denied its rightful and strategic role in our march towards economic recovery. The capital market is a veritable institution for mobilisation, allocation and utilisation of long-term funds, not just by the federal but also for states and local councils.”
The value of the domestic crude oil purchased by the Nigerian National Petroleum Corporation (NNPC) between April 2015 and April 2016 was $1.8 billion (N1.2 trillion).
Besides, the combined value of output by the three refineries (at import parity price) for the month of April 2016 amounted to ₦28.57 billion while the associated crude plus freight cost was ₦21.57 billion, giving a positive margin of ₦1.30 billion after considering overhead of ₦5.70 billion.
NNPC, who made this disclosure in its monthly report released on Monday, said that NNPC lifted 14,185,585.00 barrels of crude oil for domestic utilization translating to an average volume of 457,599.52 barrels of oil per day in terms of performance.
The report disclosed that in order to meet domestic product supply requirement for the month of March, 2016 about 9,493,824 barrels of crude oil was processed through Offshore Processing Agreements (OPA), while 1,897,063 barrels was processed as Direct Sales Direct Purchase (DSDP) whereas 904,221 barrels was sold in the export market and the balance of 1,890,477 was processed in the domestic refineries. It said that in April 2016, 958.35 million litres of white products was supplied into the country through the OPA arrangements which comprised of 909.04 million litres and 49.31 million litres of PMS and DPK respectively while 955.29 million litres was supplied in the month of March 2016; PMS and DPK receipt in March 2016 were 873.82 million litres and 81.48 million litres.
NNPC put the total crude processed by the three Refineries, for the month of April 2016 was 351,698MT (2,578,650 bbls) which translate to a combined yield efficiency of 89.70 per cent compared to crude processed in March 2016 of 329,396MT (2,415,131 bbls) with combined yield efficiency of 94.98 per cent.
It stated: “For the month of April 2016, the three Refineries produced 318,104MT of finished Petroleum Products out of 351,698MT of crude processed at a combined capacity utilization of 19.32 per cent compared to 17.51 per cent combined capacity utilization achieved in the month of March 2016.
“The improved performance was due to success achieved by the domestic refineries, for the first time in several months the three refineries operated concurrently.
“The petroleum products (PMS & DPK Only) production by the domestic refineries in April 2016 amounted to 233.54 million litres compared to 110.51 million litres in March 2016”.
Barring any last-minute change in plans, the Governor of Central Bank of Nigeria, Mr. Godwin Emefiele, will today (Thursday) meet with Managing Directors and Chief Executive Officers of all the Deposit Money Banks in the country.
The meeting, which is scheduled to hold at the headquarters of the apex bank in Abuja, according to findings, may consider the massive sacking of workers in the banking sector.
A total of about 1,400 workers had so far been sacked between last week and Wednesday by Deposit Money Banks in a move to prune down the number of workforce in the sector.
The PUNCH had last week reported that Ecobank Nigeria sacked over 1,040 of its employees, while Diamond Bank Plc and Skye Bank also disengaged 200 and 175 members of their workforce respectively.
FBN Holdings, the parent company of First Bank of Nigeria Limited, had recently said it would prune the number of its employees by 1,000.
Following the gale of job losses in the banking sector, the Minister of Labour and Productivity, Dr. Chris Ngige, had on Friday directed the banks to stop further sacking of workers.
The minister said that all the sacking done in the past four months should be put on hold pending the outcome of a proposed stakeholders’ summit for employers and employees of the banking, insurance and other financial institutions scheduled for the first week of July.
“Following the high spate of petitions and complaints from stakeholders in the banking, insurance and financial institutions, I hereby direct the suspension of the ongoing retrenchment in the sector pending the outcome of the conciliatory meetings in the industry,” Ngige had said.
But sources told our correspondent that the issue of mass sacking might feature prominently at Thursday’s meeting because of the fact that it had attracted the attention of the Federal Government.
A top official of one of the banks confided in our correspondent that while the decision to sack workers was a tough one, there was no way the DMBs could sustain the huge cost of operations following the drop in government patronage.
The source said, “You will recall that the banking sector has been in the spotlight due to the huge loss of jobs by bankers. The reason for this action is obvious when you consider the fact that the banks are no longer making huge profits the way they used to.
“A lot of stakeholders in the sector are concerned about this development and I am sure that this issue will be discussed at the Bankers’ Committee meeting scheduled to hold on Thursday at the CBN headquarters.”
Apart from the issue of mass sacking, it was gathered that the new foreign exchange policy would also be discussed at the meeting.
The apex bank is on the verge of releasing a new guideline on the management of foreign exchange in the country.
Emefiele had said the policy, when unveiled, would enable the CBN to retain a small window for critical transactions.
He gave some of such transactions as importation of vital machinery for production as well as essential basic raw materials critical for manufacturing, which by their nature could not be sourced locally.
A flexible exchange rate system is a monetary system that allows the exchange rate to be determined by supply and demand.
The implication of this is that with a high demand for the dollar in Nigeria, there is every likelihood that the naira will experience further decline.
The continuing pressure on the naira rose sharply on Wednesday with the local currency tumbling to a new low of 371 against the United States dollar at the parallel market. It had closed at 361 per dollar on Tuesday.
The delay by the Central Bank of Nigeria in explaining how the proposed flexible exchange policy will work has increased speculation on the currency.
Foreign exchange dealers and investors said the delay had caused uncertainty in the foreign exchange market and fuelled hoarding of hard currencies.
According to foreign exchange dealers at black markets in Lagos, Abuja and major airports across the country, the dollar was sold for between 367 and 373 on Wednesday.
Findings from various operators revealed that the local currency went for 371 against the greenback in most of the parallel market locations.
Abokifx.com, an online portal that monitors the movement of exchange rates at the parallel market, reported that the naira closed at 367 against the dollar.
However, the currency traded at 199.40 to the dollar on the official interbank market, within the CBN’s pegged rate band.
“Demand for the greenback has increased amidst growing scarcity as uncertainties created by the new policy have caused individuals to start to stock dollars,” the National President, Association of Bureau De Change Operators, Alhaji Aminu Gwadabe, told Reuters on Wednesday.
Economic analysts said heightened political risks, evolving economic crisis and the CBN’s delay in unveiling its blueprint on the proposed forex policy were responsible for the fast depreciating rate of the naira at the parallel market.
An economic analyst and Chief Executive Officer of Cowry Asset Management Limited, Mr. Johnson Chukwu, said, “Foreign investors are fast losing confidence in the economy, seeing that they cannot bank on what the central bank says. It is almost two weeks now since the announcement of a new policy and yet, the blueprint has not been unveiled.
“Secondly, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, just said that oil production had fallen significantly as a result of the disruption in the Niger Delta; this means a major drop in our forex earnings. So, this is an evolving economic crisis.”
Other analysts said the value of the local currency was dipping because customers were trying to hedge against a possible depreciation when the CBN clarifies its new forex policy.
The naira had closed at 357 against the greenback on Monday, before crashing to 361 on Tuesday.
The CBN had recently said it would abandon its naira peg to the dollar and introduce a flexible currency exchange regime.
It has not said how this will work, a situation that has unsettled investors who are worried about getting caught in the middle of a devaluation.
The CBN’s Monetary Policy Committee had two weeks ago announced the plan to adopt a flexible exchange rate. The Governor, CBN, Mr. Godwin Emefiele, said the blueprint for the proposed policy would be released soon.
The delay has, however, caused the stock market to record huge losses after recording landmark gains following the announcement of the plan to adopt the policy.
The central bank banned dollar sales to retail Bureaux De Change in January and reduced supply at its official interbank forex market in an effort to conserve reserves, now at their lowest level.
Dangote Sugar Refinery Plc, CAP Plc, Airline Services and Logistics Plc, Portland Paints and Products Nigeria Plc and Nigerian Breweries emerged the top five losers at the close of trading on the floor of the Nigerian Stock Exchange on Wednesday after the market lost N130bn.
A total of 28 stocks declined in value while only 16 appreciated.
The NSE market capitalisation slid to N9.306tn from N9.436tn, while the All-Share Index also fell to 27,098.18 basis points from 27,475.48 basis points.
A total of 261.008 million shares worth N1.215bn were traded in 3,591 deals.
Dangote Sugar shares closed at N6.33 from N6.80, losing N0.47 (6.91 per cent), while those of CAP depreciated by N1.88 (4.95 per cent) to close at N36.12 from N38.
Airline Services and Logistics also saw a N0.09 (4.92 per cent) drop in its share price to close at N1.74 from N1.83, while the shares of Portland Paints depreciated by N0.10 (4.88 per cent) to close at N1.95 from N2.05.
Nigerian Breweries shares closed at N130.01 from N136.53, losing N6.52 (4.78 per cent).
Other losers were Union Homes Savings And Loans Plc, Eterna Plc, Fidson Healthcare Plc, Skye Bank Plc, AxaMansard Insurance Plc, Continental Reinsurance Plc, Union Bank of Nigeria Plc, Fidelity bank Plc, Dangote Cement Plc, Diamond Bank Plc, Nascon Allied Industries Plc, Law Union and Rocks Insurance Plc and FCMB Group Plc, among others.
On the other hand, Unity Bank Plc, Oando Plc, Forte Oil Plc, Flour Mills Nigeria Plc and NEM Insurance Company Nigeria Limited emerged to top five gainers.
The Nigerian National Petroleum Corporation lost N19.43bn in the month of April, as the country’s crude oil production dropped from 59.27 million barrels recorded in February to 57.43 million barrels in March.
In its latest financial and operations report released on Wednesday, the NNPC also revealed that over 1,500 megawatts of electricity were lost as a result of the destruction of oil and gas facilities, adding that the capacity utilisation of the Warri Refining and Petrochemical Company plummeted from 25.65 per cent in March to 6.36 per cent in April.
The report stated, “The NNPC’s monthly financial and operations report indicate an operational loss of 19.43bn in April 2016 as against 18.89bn in the month of March 2016. The deficit increased by 2.83 per cent in the month of April 2016 due to slight decline in revenue generation, which is attributed to the decrease in petroleum product sales by 7.11 per cent.
“The NPDC’s crude sale for the month is still hampered by Forcados pipeline vandalism, which continued to deny the NPDC of monthly crude oil revenue of about 20.0bn.”
The oil firm stated that global crude oil spot prices increased by $3.41 per barrel in April to a monthly average of $40.75 per barrel, up from $37.34 in March and down from $57.54 in April 2015.
This, it said, represented an increase of 9.13 per cent from March 2016 and -29.18 per cent from April 2015, adding that the increase in the crude oil spot prices by $3.41 per barrel in April this year to a monthly average of $40.75 per barrel was the highest monthly average so far this year.
It stated, “Nigerian crude oil production for the month of March 2016 stood at 57.43 million barrels, which is 3.1 per cent lower than February 2016 production, and so far, the lowest recorded in the 12-month review period. Recent upsurge in vandalism has negatively impacted on the Nigerian crude oil production output, losing its African top crude oil producer to Angola.
“About 380,000barrels per day remained shut-in due to vandalism of the 48-inch subsea export line on 15th of February, 2016. Hence, all March cargoes were deferred until the repair is completed. Also, the nation has lost over 1,500MW of power supply to the damage as gas supply from Forcados, which is Nigeria’s major artery, accounts for 40 to 50 per cent of gas production. Incessant pipeline vandalism poses the greatest threat to the industry.”
The NNPC, however, noted that its leadership was already diligently addressing the corporation’s key business and operational challenges.
“For the first time, the NNPC was able to get the buy-in of the upstream companies operating in Nigeria to enhance domestic supply of refined petroleum products by indicating readiness to make available additional funding to support import of products,” it said.
