The naira weakened for the second consecutive session on Tuesday after the Central Bank of Nigeria sold the United States dollar at its highest level ever on the official interbank market.
Traders said the CBN sold $1.5m at N305.75 per dollar. Commercial lenders then resold dollars at a 0.50 naira margin, leaving the naira at 306.25 at the close of the session, according to data from FMDQ OTC Securities Exchange.
The Federal Government unveiled a sweeping economic recovery plan last week that included the relaxing of foreign exchange restrictions with a view to achieving a market-determined regime. The central bank later said it would not allow the naira to float freely.
The naira was quoted at 453 per dollar on the black market on Tuesday, firmer than 455 per dollar its previous close, according to Reuters.
The CBN said on Tuesday it would sell $150m in currency forwards on the interbank market through commercial lenders.
The central bank, which has been intervening on the official currency market over the past two weeks, told lenders that Tuesday’s sale would be settled within 60 days.
The naira fell to 306 per dollar on Monday from the 305.50 level it had traded since last year after the central bank’s intervention on the spot market.
The currency fell to a record 520 per dollar in unofficial trading last month before strengthening to 460 this week, 32 per cent weaker than the official rate.
The Minister of Agriculture, Chief Audu Ogbeh yesterday expressed the federal government’s desire to address the foreign exchange (forex) challenges faced by exporters, disclosing that the ministry is in talks with the Central Bank of Nigeria (CBN) concerning the issue.
Audu who spoke at the FirstBank of Nigeria Expo in Lagos tagged: ‘Re-inventing Agriculture for Sustainable National Development,’ noted that it does not augur well for exporters if they cannot export at the official rate.
He expressed confidence that once the issue is addressed, exporters would be able to repatriate their earnings and not lose money. “We are planning a meeting between the CBN, the Ministry, Nigeria Customs Service (NCS) Nigeria Export Promotion Council (NEPC) and the Ministry of Finance in order to deal with some of these challenges we face especially as it affects smuggled goods that come into the country and how they damage our local efforts.
There is need for us to work to attain self-sufficiency in food production,” the minister explained. Furthermore, the minister revealed that the federal would soon embark on large-scale production of crops such as cocoa and Shea butter, especially in states that have comparative advantage.
He added: “We are also looking at the expansion of coconut. The water from coconut has a natural source of sweetening. Coconut oil is expensive one litre today is N7, 000. A coconut shell is a very expensive export item which can be used to produce activated carbon heavily used in industries just like palm products are very valuable and they are strong export items. Last year, we shipped $6,000 worth of raw cashew to Vietnam.
“We have decided that in two years, we shall not export raw cashew nuts we shall begin to roast it and export because from 3tonnes of raw cashew we produce one tonne of roast cashew which sells in Vietnam for $10,000. We need financial support. We are the only country in the world that the interest rate for agriculture sector is still high.”
He said policy summersault by successive government was one of the factors that hindered the attainment of self-sufficiency in food production by the country, lamenting that Nigeria had become highly dependent on food imports. Earlier, the Managing Director of FBN, Adesola Adeduntan, said the bank was positioned to build alliances with agro-producers, processors and storage companies to ensure improvement in the agricultural sector.
Investors in the moribund multi-billion naira Delta Steel Company, Ovwian-Aladja, now Premium Steel and Mines Limited (PSML), have said the resuscitation of the complex would gulp about N600 billion.
Some investors from the United States and Morocco, have reportedly visited the company on Sunday, where they carried out assessment of the facilities, and expressed hope that Premium Steel and Mines Limited (PSML) has done well within the period they took over the company, adding that prospect of a robust industrial revolution in the area was high.
The Chief Executive Officer of PSML, Prasanta Misha, who confirmed the visit of the investors in a telephone interview with The Guardian, said the N600 million would be used for broken down equipment as well as renovating the buildings and a host of many others.
He added that the investors were conducted round the various units and departments of the Steel Complex with the assurance of imminent resuscitation to boost the local economy. But investigation revealed that unpaid workers of the company had allegedly vowed to resist the resuscitation project unless their outstanding salaries were paid. One of the workers who preferred anonymity, said: “we will disrupt workings on the project unless the investors pay our outstanding salaries.”
In a swift reaction, Misha flayed the plan by workers to disrupt the resuscitation project, assuring that their outstanding would be settled. The international investors were said to have been taken to the DSC harbor, Direct Reduction (DR) plant and the pellet plant, Lime Plant, Rolling Mill, Electric Arc Furnace, and the Continuous Caster. They also went to the other auxiliary units of the plant such as the foundry, electrical and mechanical maintenance workshops and water supply system.
The investors equally inspected the fire and safety, heavy equipment workshops, the rolling mill section, the SMS section, the Nigeria Gas Company, NGC, the major supplier of gas to the plant, the DSC schools and hospitals among other assets in the complex. The team of American investors led by Sekar Rejendran, in a chat expressed confidence with the management and ingenuity of PSML since they took over the company.
They assured that in no distant time DSC would come alive again, as they were fully prepared to mobilise fund to revamp the company and bring it back to production level again.
Mishra had earlier expressed delight with the coming of the investors, assuring that Udu, Delta State and Nigeria at large would soon experience a boom in the steel sector with the resuscitation of the Aladja Steel Plant.
He called on the host communities to continue to cooperate with the management, as thousands of unemployed youths from the area would soon have reason to smile as the company is poised to employ qualified persons soon.
The teams of investors from the two countries include M. Ahmed Mssali, DEBBRAH Mohammed Amine, SekarRejendran (from America), Rajesh Devarajahn, Tilak Raj Chaudhry and Subrahmanyam Paparaju.
The Federal Government of Nigeria Savings Bond, which opened for subscription exclusively on the Nigeria Stock Exchange on Monday, will boost financial inclusion, the Executive Director, Capital Market Division of NSE, Haruna Jalo-Waziri, has said.
He said this while commenting on the planned launch of the sovereign savings bond, which commenced on March 13 and targeted at retail investors. To ensure the offer reaches the last mile subscribers, the Debt Management Office has accredited 87 stockbroking firms of the NSE to market and distribute the savings bond.
The retail bond, issued by the DMO, would be offered monthly in tenors of two and three years, with quarterly payment of interest to investors. The minimum subscription amount is N5, 000 with addition in multiples of N1,000, subject to a maximum of N50, 000,000.
Backed by the full faith and credit of the Federal Government, the bond, among several objectives, was aimed to deepen the national savings culture, provide opportunity to all citizens irrespective of income level to contribute to national development, enable all citizens to participate in and benefit from the favorable returns available in the capital market and more importantly diversify funding sources for the government.
The Minister of Finance, Mrs. Kemi Adeosun, has solicited the cooperation of the Central Bank of Nigeria (CBN) in extending the Bank Verification Number (BVN) regime to account holders in microfinance banks (MFBs).
Adeosun said this would facilitate the detection of accounts, which might have been opened and operated in such banks for ghost workers by fraudulent syndicates.
The minister, who sought the cooperation of the CBN in that regard via a correspondence addressed to the Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, said that the introduction of the BVN by the CBN had contributed immensely in improving the integrity of the federal government payroll on which more than 50, 000 ghost workers were detected and removed.
A statement issued by the Director (Information), Mr. Salisu Na’inna Dambatta said Adeosun revealed that operating bank accounts in microfinance banks without requirement for BVN has left a huge loophole which individuals, intent on financial crimes, could use to hide and launder proceeds of crime and successfully escape detection by law enforcement agencies.
“Our on-going efforts to verify the integrity of federal government personnel costs and purge the system of fraud and error has made extensive use of the Bank Verification Number as a means of identifying recipients of multiple salaries, and salaries paid into accounts with names that differ to those held on our payroll records. “The success of this effort has to date yielded the removal of over 50,000 payroll entries,” the minister emphasised.
She referred the CBN Governor to the discovery that, prior to the deadline for obtaining the BVN, the movement of a large number of salary accounts of federal employees from commercial banks to microfinance banks, was observed. “This is a suspicious activity and we have already commenced a review of such cases to identify and investigate any cases of fraud,” the minister explained.
According to her, extending the requirement for BVN to microfinance banks may put a huge financial strain on the smaller microfinance banks, the minister pointed out that “some MFBs, such as National Police Force Microfinance (NPF), have over 27,000 salary accounts.” “Our inability to perform checks on such a large number of salary earners is a key risk.
” I am therefore seeking your co-operation to enforce compliance with BVN on any MFB with over 200 active salary accounts or those above a certain size. This will support the federal government’s efforts at reducing leakages to create headroom for the capital projects that will support the growth of the economy,” the minister said in the correspondence.
Determined to expose the investment opportunities in Nigeria, 500 Startups, in partnership with Ingressive and African Technology Foundation, is to host the inaugural Africa’s edition of ‘Geeks on a Plane’ programme in Lagos, the Nigerian economic capital, from the 20th-23rd of this month. In a statement made available to The Guardian yesterday, the Founding Partner at 500 Startups, Mr. Dave McClure, said the programme would engage local thought leaders and ecosystem drivers in a series of events and activities meant to celebrate Nigeria’s entrepreneurial talents, highlight disruptive technologies as well as showcase available investment opportunities in the country. His words: “The African region is definitely of interest to 500 as we continue to look for and source deals from traditionally under-represented ecosystems. While we invest 70 per cent in the United Sates, 30 per cent of our deals are spread across 60 different countries currently.
“Through Geeks on a Plane, we are looking to build stronger relationships with investors on the ground, maybe even find a few startups to invest in, and have a lot of fun with local nerds.
“The key tour activities in Lagos will include taste of Nigeria which would feature a techno-cultural journey across major ecosystems and culinary touch points; Seedstars World which comprises a pitch event showcasing diverse and game-changing Nigerian startups; Geeks Meet Nollywood which is a star-studded red carpet event that explores the intersection between African media and technology solutions; Space Apps Nigeria that will also feature a showcase of the next generation of Africa’s youthful innovators and VC Unlocked which will showcase where Dave and team will unlock the secrets of Silicon Valley Investing.” The Regional Partner, African Technology Foundation, Mr. Oluseye Soyode-Johnson, further stated that the tour would expose the Geeks to the depth of innovation activities in Lagos, and showcase the diversity of entrepreneurial activities.
He went on: “Much has been said about Nigeria’s potential to consistently create Africa’s leading technology ventures that have the potential to scale globally.
“Following the visit to Lagos, the Geeks will travel to Accra, Ghana where they will be further immersed in innovation activities across West Africa. They will meet with business leaders, attend conferences, visit co-working spaces and share venture-creation ideas with key ecosystem leaders and investors. The tour will move on to South Africa where they will learn how innovation actors in Johannesburg and Cape Town have blazed the trail and led entrepreneurial activities in Southern Africa.”
The steady rise of Nigeria’s foreign exchange earnings and build-up of external reserves, which started about five months ago, is already under threat from exogenous shock arising from the recent fall in oil prices. Nigeria depends on oil sales for 90 per cent of its foreign exchange earnings and 70 per cent of total revenue.
However, rising shale oil production in the United States in recent months has dampened production cuts carried out by members of the Organisation of Petroleum Exporting Countries (OPEC) and Russia to shore up prices. According to Reuters, oil prices slid 2 per cent on Thursday, extending the previous session’s dive that brought prices to the lowest levels this year, as record U.S. crude inventories fed doubts about whether OPEC-led supply cuts would reduce a global glut. U.S. crude prices fell through the $50 a barrel support level, with market participants unwinding a massive number of bullish wagers they had amassed after a deal by top global oil producers to limit output.
On Wednesday, crude also tumbled more than 5 per cent, its steepest dive in a year, after data showed crude oil stocks in the U.S., the world’s top oil consumer, swelled by 8.2 million barrels last week to a record 528.4 million barrels, well above forecasts of a 2 million barrel build. Although the impact of sliding oil prices are yet to be felt in Nigeria, market analysts have cautioned that the external shocks would eventually hit the country’s foreign earnings and reserves. Last Thursday, Nigeria’s external reserves rose to $30.039 billion, according to the latest data from the Central Bank of Nigeria (CBN). The central bank’s data showed that the reserves, derived primarily from oil sales, recorded a steady increase of between 2.3 and 2.75 per cent since January 2017. Other than oil prices, a drop in militancy in the Niger Delta has also led to an improvement in the country’s foreign exchange earnings.
However, following the recent changes in the CBN’s foreign exchange (FX) policy and its renewed bid to reduce the gap between the interbank and parallel market rates, there have been increased interventions in the FX market by the central bank. So far, the CBN has pumped $1.370 billion into the FX market since the measures were announced. Owing to this, Nigeria’s external reserves, which give the CBN its firepower, have come under close scrutiny. The naira closed at N463 to the dollar at some parallel market points on Friday. At $30.039 billion, the country’s reserves have increased by $4.196 billion or 16 per cent, compared with the $25.843 billion at the end of 2016. But concerns continue to heighten over the central bank’s ability to sustain its intervention in the market with the oil prices recording their biggest fall this year last week.
Speaking in a chat with THISDAY on Sunday, the Director General of the West African Institute of Financial and Economic Management (WAIFEM), Prof. Akpan Ekpo, pointed out that if oil prices continue to slide, it would definitely have a negative effect on the country’s external reserves. “Let’s just hope that it rises again. That is why we have always said that the price of oil is very volatile. That is why you cannot depend on it for long-term development. “Certainly, if this continues, it would affect the amount of dollars the CBN can put in the market. “That is why some people have been asking if what the CBN has been doing in the past three weeks is sustainable. “Effectively, in the long term, the structure of the Nigerian economy has to change towards earning FX from other sources instead of crude oil. We must also understand that the U.S. has stopped buying our oil because of the shale oil produced in the country,” Ekpo added.
The Financial Derivatives Company Limited stated in a recent note that the ability of the CBN to sustain its fight against currency speculation as well as preserve the value of the naira would depend largely on the country’s crude oil earnings. Despite mounting concerns, there were indications at the weekend that the CBN would inject more FX into the market early this week. Information about the central bank’s action became rife over the weekend, sending jitters among currency speculators.
When contacted, the acting Director, Corporate Communications of the CBN, Mr. Isaac Okorafor, confirmed that the central bank was determined to sustain liquidity in the FX market this week in order to enhance accessibility for genuine end-users. Okorafor also cautioned dealers in FX not to engage in any unwholesome practices detrimental to the smooth operations in the market, warning that the CBN would impose heavy sanctions on any organisation or official involved in such acts.
ABUJA—Determined to maintain the momentum of strengthening the Naira at the foreign exchange market, there are strong indications that the Central Bank of Nigeria, CBN, will inject more foreign currencies into the market early this week.
Currency speculators are said to be jittery as they could witness further losses in the new week when the CBN Dollars hit the market. Confirming the proposed additional foreign exchange injection into the system to newsmen in Lagos over the weekend, the Acting Director, Corporate Communications of the CBN, Mr. Isaac Okorafor, said the bank was determined to sustain the provision of liquidity in the foreign exchange market in order to enhance accessibility and affordability for genuine end users. dollars Okorafor also cautioned dealers in foreign exchange not to engage in any unwholesome practice that was detrimental to smooth operations in the market, warning that the CBN would impose heavy sanctions on any organization or official involved in such act.
As at last week, the CBN had intervened in the interbank FOREX market by offering over $1.2 billion for both wholesale and retail end users. Foreign exchange needs for school fees, Basic Travel Allowance and Medicals which constitute some of the major factors driving demand at the parallel market are now being met by the CBN through the banks.
Global oil benchmark, Brent crude, extended its declines on Thursday, hitting its lowest level since December, as the United States’ crude inventories surged to a new record high.
The rise in the US output has continued to feed concerns that the supply glut in the global markets could persist even with output cuts by the Organisation of Petroleum Exporting Countries.
The US West Texas Intermediate benchmark on Thursday dipped below $49 per barrel for the first time since late November.
Brent, against which half of the world’s oil is priced, was down by 2.3 per cent to $51.89 per barrel, its lowest level since early December.
The WTI crude, the US marker, lost as much as three per cent to $48.79 per barrel, having fallen to a low of $50.05 on Wednesday, a decline of almost six per cent, although it closed above those lows.
In later trading on Thursday, the WTI was at $49.04, down 2.5 per cent on the session, according to Financial Times.
Stockpiles of the US crude climbed by 8.2 million barrels in the week ended March 3, and have risen every week this year, according to the latest data from the US Energy Information Administration.
The data came after Saudi Arabia’s Energy Minister, Khalid al-Falih, said a deal among global producers to cut supply and lower stockpiles was not making as quick an impact as initially anticipated.
He added that the agreement was only helping to revitalise the US shale industry.
Oil prices have been supported by a supply cut that started on January 1, 2017 by OPEC plus Russia and other non-members. Data has suggested high compliance with the deal.
The Central Bank of Nigeria on Thursday offered the sum of $100m as wholesale interventions and sold about $70m to meet requests for business and personal travel allowances.
The CBN said the move was in a bid to sustain the tempo of foreign exchange supply to the interbank market and ensure liquidity to enable more bank customers and other business people to overcome the difficulty of obtaining forex for their transactions.
The CBN Acting Director, Corporate Communications, Isaac Okorafor, said in a statement that the bank remained resolute in ensuring that it supplied enough forex to genuine customers of Deposit Money Banks and increase liquidity in the market.
According to him, the uniqueness of the wholesale forwards is that banks are allowed to use their winnings from auctions to fund matured obligations to meet Letters of Credit remittances, extinguish bills for collection and other forex demands.
He said with the development, importers who had hitherto been using bills for collection would now experience relief instead of having to patronise other more expensive sources.
The CBN had on Tuesday injected another sum of $100m into the interbank foreign exchange market in its resolve to ease the challenge of access to foreign exchange by genuine customers.
Thursday’s injection by the CBN takes the amount so far offered in the interbank forex market within the past few weeks to over $1.2bn for both wholesale and retail interventions.
