The Nation Newspaper

Author: The Nation

  • Fed Govt raises N563.4b from new bond auctions

    Fed Govt raises N563.4b from new bond auctions

    The federal government borrowed about N563.4 billion from the domestic capital market at its latest bond auction, continuing the aggressive borrowings that had had characterised the government’s issuances in recent period.

    As against its initial offer target of N360 billion, the government allotted bonds worth N563.36 billion at its March 2023 bond auction on Monday.

    Transaction report by the Debt Management Office (DMO), the agency that oversees government’s debt issuance and management, indicated that subscription to the N360 billion bond offer was N808.612 billion, 124.6 per cent above initial offer size.

    Following the recent trend, the government took advantage of high investors’ appetite for sovereign securities to increase its allotment to N563.359 billion.

    At the bond auction, the DMO had offered N90 billion each across four tenors of bonds. The bonds on offer, which were reopening of previous issuances, included the 10-year, 13.9800 per cent February 2028 bond with a previous stop rate of 13.99 per cent; the 15-year, 12.500 per cent April 2032 bond with a previous stop rate of 14.90 per cent; the 20-year, 16.2499 per cent April 2037 bond with a previous stop rate of 15.90 per cent and the 30-year, 14.8000 per cent, April 2049 with a previous stop rate of 16 per cent.

    Analysts at Arthur Steven Asset Management, which deals in sovereign securities, said the high subscription rate might not be unconnected with increased liquidity due to the collection of corporate benefits as well as the sell-off at the equities market. 

    Analysis of the subscription pattern indicated that the April 2037 instrument was the most desired, which analysts attributed investors’ management of the uncertainty that accompanied Nigeria’s credit downgrade.

    The DMO under-allocated the undersubscribed 2028 and 2032 instruments and over-allocated across the 2037 and 2049 instruments, which is 156.49 per cent of the DMO’s intended offer size.

    The average stop yield closed at 15.31 per cent, which is three basis points higher than the average stop yield reported in the last month’s auction.

    The Federal Government has maintained a trend of raising more than the initial offer size, as investors continued to show preference for sovereign securities.

    At the recent auction of Nigerian Treasury Bills (NTBs), investors had staked N906.21 billion on NTBs, more than quadruple of the government’s offer, providing headroom for the government to increase its initial offer by 44.5 per cent.

    Closing report on the latest primary market auction of the NTBs conducted by the Central Bank of Nigeria (CBN) showed that the government had offered N224.50 billion across three tenors of 91-day, 182-day and 364-day NTBs.

    Total subscriptions by investors however peaked at N906.21 billion, an increase of 303.7 per cent on the initial offer size. With the strong liquidity, the apex bank fully allotted its offers of N1.03 billion and N10.55 billion for the 91-day and 182-day NTBs. It increased allotment for the 364-day NTBs from the initial offer size of N212.92 billion to N312.92 billion.

    The report showed that stop rates for the 182-day and 364-day cleared higher at six per cent and 10.00 per cent. However, the stop rate for the 91-day tenor cleared lower at 1.44 per cent.

    The federal government had raised about N2.13 trillion in new debts from the domestic capital market within the first two months of this year.

    Data obtained by The Nation’s Economic Intelligence had shown that the government has stepped up its borrowings across all instruments as risk-averse investors crowded around sovereign debt issuances.

    The data indicated that the government raised N2.129 trillion between January and February 2023 through regular bond issuance, the retails savings bonds and treasury bills.

    Faced with sovereign downgrades by global rating agencies, with attendant higher risk profile and cost for international debt issuances, there were indications that government might have narrowed down to the domestic capital market to raise N8.8 trillion regular debt component of the 2023’s N10.78 trillion deficit.

    A breakdown showed that government raised N1.189 trillion in February, 26.4 per cent above N940.62 billion raised in January 2023.

    In January 2023, government raised N662.617 billion through its regular bond auction, N277.468 billion through the Nigerian Treasury Bills (NTBs) and N533.03 million through the Federal Government of Nigeria Savings Bonds (FGNSBs), a retail monthly debt issuance introduced in 2017.

    Last month, the government raised N770.56 billion through bond auction, N417.064 billion through NTBs and N1.271 billion through the FGNSBs.  

    Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, at the public presentation of the breakdown and highlights of the 2023 budget proposal, said the budget deficit of N10.78 trillion for the year would be financed from domestic loans.

    She outlined that the budget deficit would be financed mainly by borrowings including domestic sources, N7.04 trillion; foreign sources, N1.76 trillion, multilateral and bi-lateral loan drawdowns, N1.77 billion and expected N206.18 billion proceeds from privatisation of national assets.

    While experts agreed that rising demand for sovereign debts provides government with a comfortable fallback option, many analysts said government’s domestic mop up may crowd out other issuers and raise cost of fund.           

    The February 2023 issuances illustrated the crowded demand for sovereign debts. Transactional report for the February 2023 bond auction indicated that the bond auction received a total bid of N992.11 billion, about 176 per cent above government’s offer size of N360 billion.

    The government had offered to raise N90 billion each across four tenors of bonds but three of the four bonds were overwhelmingly oversubscribed, providing the government headroom to mop up more funds.

    The bid-to-cover ratios for the 10-year FGN FEB 2028, 10-year FGN APR 2032, 20-year FGN APR 2037, and 30-year FGN APR 2049 bonds were 3.29 times, 0.87 times, 3.30 times, and 3.57 times.

    The DMO increased allotments across the three oversubscribed bonds, while reducing allotment for the undersubscribed bond.

    The government allotted N257.41 billion to investors in the 10-year FGN Feb 2028 bond as against total subscription of N296.214 billion, N51.12 billion to the undersubscribed 10-year FGN Apr 2032 bond, which recorded total subscription of N77.998 billion; N220.56 billion for the 20-year FGN Apr 2037 bond as against total subscription of N296.619 billion and N241.47 billion was allotted to the 30-year FGN AprIL 2049 bond, which had the highest subscription of N321.274 billion. The marginal rates for the bonds were 13.99 per cent, 14.90 per cent, 15.90 per cent and 16.00 per cent.

    Analysts at Arthur Steven Asset Management noted that the total subscription of N992.11 billion in February was higher than N805.17 billion total subscription recorded in January 2023, an increase of 23.22 per cent.

    Analysts attributed the increase in subscription to increase in liquidity and strategic portfolio positioning for the year.

    According to analysts, the subscription for the long-tenored 2049 bond showed that more investors still prefer longer maturities despite the downgrade of the country’s credit rating.

  • British International Investment commits Euro 20m to TURF

    British International Investment commits Euro 20m to TURF

    British International Investment (BII), the United Kingdom’s (UK’s) development finance institution (DFI), has announced a EUR 20 million commitment to The Urban Resilience Fund (TURF), launched by Meridiam.

     The investment is the DFI’s first investment in an urban infrastructure fund and supports the design and scale of climate-focussed infrastructure projects across sub-Saharan Africa – increasing the affordability, safety, reliability, and climate-resilience of public infrastructure in African cities.

     Meridiam is an infrastructure specialist with global expertise in developing, financing, and long-term management of sustainable public infrastructure in Africa. Through the fund, they will target infrastructure investments aligned with sustainability goals, such as energy efficiency and carbon capture. The Fund will invest in urban mobility such as bus rapid transit and modern cable cars.

    BII has been an active partner to Meridiam, having also invested in their previous two funds – MIAF I and MIAF II, which  invested across major greenfield and brownfield infrastructure projects.

    This included two solar parks in Senegal that deliver a combined 60MW of reliable electricity to households and industry, increasing firm productivity, facilitating economic growth and job creation.  

     This latest transaction reflects the companies’ vision to invest in low-carbon, climate-smart solutions for municipal environments experiencing the pressures of rapid urbanisation. Africa’s cities are the fastest-growing cities in the world; and while they pose challenges with insufficient infrastructure, pollution and congestion, the lack of existing development presents the opportunity to create exemplars of green public infrastructure.

    The investment from BII helps contribute to the UN’s Sustainable Development Goals on industry, innovation and infrastructure (SDG 9); on sustainable cities and communities (SDG 11), and on climate action (SDG 13).

    Minister of State for Development and Africa, Andrew Mitchell said: The UK is committed to supporting the development and climate-resilience of infrastructure services in African cities. I am pleased to see British International Investment commit to this Fund and we are confident that their involvement will help attract much needed additional funding from the private sector in support of vital, clean and green infrastructure in the region.”

    Head of Infrastructure and Climate, BII, Holger Rothenbusch added: ”We are delighted to be an anchor investor in Meridiam’s latest fund and will be supporting Meridiam in its efforts to reach its first close. The Fund will deliver clear benefits to local communities at a time when there has never been a more urgent need to invest in sustainable infrastructure to increase climate resilience. This Fund is a ‘first-of-its-kind’ in the market and will contribute to creating progressive solutions that ensure that citizens benefit from the rapid urbanisation taking place in African cities.”

    Partner and Deputy CEO, Meridiam, Mathieu Peller commented: ”We are very pleased with the longstanding support from BII across our various African strategies. BII’s investment in TURF is a key milestone in our partnership to deliver sustainable and impactful infrastructure projects which are needed by cities throughout the continent.  TURF will be essential in addressing the multiple resilience challenges faced by cities, such as climate change, sustainable resource management and social inclusion.”

  • FCMB, firms partner on N75m mortgage loan

    FCMB, firms partner on N75m mortgage loan

    First City Monument Bank (FCMB) has partnered Brains & Hammers Limited and Brooks Assets & Resources Limited to provide affordable housing for salary earners and the self-employed  in Lagos State.

    The partnership, which offers mortgage loans of up to N75 million, will empower FCMB customers and other Nigerians to purchase homes or acquire land in areas of their choice within the state.

     In a statement, the bank said the partnership, Divisional Head, Personal Banking, FCMB, Shamsideen Fashola, said: “Our partnership with Brains & Hammers Limited and Brooks Assets & Resources Limited provides a unique opportunity for our customers to fulfill their dreams of home ownership, easing all the constraints and fears associated with this exciting and self-fulfilling life moment that everyone cherishes.”

    Fashola said the loan is easy to obtain and repayment is flexible. He urged Nigerians to take advantage of the offer to fulfill their home ownership dream, assuring them: “FCMB will continue to support the dreams of its customers and Nigerians by giving them the financial support they need to be homeowners when it matters most.”

    The Acting Group Chief Operating Officer of Brains & Hammers Limited, Mrs. Christine Fashakin-Nobre said: ‘’Brains & Hammers has an assortment of products in Abuja, Lagos and Kano that can meet the needs of every type of potential homeowner.”

    Managing Director, Brooks Assets & Resources Limited, Ms. Lanre Sola, said: “Aside giving Nigerians the opportunity to pay over a long period, the funding will help to reduce the cost of houses because, as a developer, you can now access low-interest loans for construction due to visibility of an exit plan. This intervention will also greatly enhance the modality of the mortgage facility and aid home ownership or property purchase for a lifelong time benefit.’’

    The partnerships seek to bridge Nigeria’s home ownership gap, helping customers become landlords, eliminating challenges for first-time buyers, and making them secure, accomplished and fulfilled.

  • ‘54.2% Nigeria’s unbanked poor save at home’

    ‘54.2% Nigeria’s unbanked poor save at home’

    A group, the Inclusion for all Initiative says 54.2 per cent of Nigeria’s unbanked poor prefer saving at home. While the circulation of new notes continues, the old notes will remain in circulation and serve as legal tender until December 31, 2023. Assistant Business Editor COLLINS NWEZE reports on what the ongoing currency reforms of the Central Bank of Nigeria (CBN), including the redesigned naira notes and cash withdrawal limits, mean for the grassroots population.

    FIFTY-TWO point two per cent of Nigeria’s unbanked poor prefer to save their money at home or carry it around than depositing the funds in bank, a report by the ‘Inclusion for all Initiative’ has said.

    The initiative is an advocacy programme that addresses the barriers that prevent the financial and economic inclusion of Nigeria’s poorest and most vulnerable communities.

    The report indicated that more than 50 per cent of this segment of the population could lose their savings if they are unable to exchange old notes for new ones in line with the Central Bank of Nigeria’s (CBN) naira redesign timeline.

    Last October 25, the CBN announced plans to redesign the N200, N500 and N1000, with effect from December 15, last year. While circulation of the new notes continues, the old notes will remain in circulation and serve as legal tender until December 31, 2023 courtesy of the Supreme Court order on the apex bank. 

    The initiative said conditions for the exchange of old naira notes could affecty impact vulnerable populations.

    The group suggests that Nigeria’s most vulnerable groups can be adversely affected by the exchange of old Naira notes for new ones through a bank account.

    The Head, Inclusion for all Initiative, Chinasa Collins-Ogbuo, said: “While we commend the Central Bank of Nigeria for its commitment to the digitilisation of Nigeria’s financial services sector, we have to design a policy to ensure that it is suitable for the most vulnerable parts of society.”

    According to the 2020 EFInA Access to Finance (A2F) Survey, there are more than 38 million Nigerians without a bank account, and our research indicates that more than 50 per cent of these people prefer to save in cash.

    “Unbanked Nigerians face a range of barriers to enter the financial system, from access to identity, a lack of proximity to financial access points and a lack of trust in the system. These barriers must be considered and addressed in the Naira redesign process, if we are to ensure that this process supports financial inclusion, and does not further marginalise the vulnerable communities,” Collins-Ogbuo said.

    According to him, the CBN has acknowledged concerns around vulnerable populations, and prioritised banking agents to help those in rural/underserved areas to deposit cash.

    “However, agents are concentrated in urban areas – far away from vulnerable populations. With a 20 per cent agent coverage target for the northern regions, the Northeast is only at 6.3 per cent, with Northcentral at 15.5 per cent and Northwest at 12 per cent. Challenges cited include insecurity, distance, lack of electricity, and low profits,” he added. 

    Speaking on the Inclusion for podcast on the Naira Redesign, Associate Dean, Lagos Business School, Prof. Yinka David-West, said: “From the supply side, we need to ask, ‘Is this a push or pull initiative?’ I’ll compare the naira redesign to the National Identification Number (NIN) registration, which was a push directive. All that is required is linking the NIN to a SIM and BVN to facilitate bank transactions.

    Many Nigerians treasure their phones more than their bank accounts. How can we incorporate seamless banking to fit the lifestyle of Nigerians? Through the naira redesign, the CBN is promoting a cashless system with secure and seamless transactions as a means to facilitate financial inclusion.’’ 

    The group also provided recommendations for action to ensure that vulnerable populations participate and secure the  benefits of access to digital financial services.

    It said the extension of the period to exchange Naira notes should be seriously considered to enable a rapid and intensified rollout of a sensitisation programme among vulnerable groups, informing them of the process, deadlines and requirements.

  • AFEX seeks N30b funding to support commodities’ processors

    AFEX seeks N30b funding to support commodities’ processors

    AFEX is raising about N30 billion for advance funding to agro-processors in another major move to unlock the potential of Nigeria’s commodities market.

    AFEX, through AFIL SPV Plc- a special purpose vehicle of AFEX Investment Limited (AFIL), is offering Series Asset-Backed Commercial Paper (ABCP) to raise up to N30 billion, in an offering that allows conventional and ethical investors to invest in the issue.

    The N30 billion ABCP is being issued under AFIL SPV PLc’s N100 billion ABCP programme, sponsored by AFIL, a capital investment member of the AFEX Group. AFEX Commodities Exchange, the trading platform member of AFEX, is also a co-Guarantor.

    According to the issuer, the AFIL SPV Plc ABCP is aimed at catalysing finance for agro-processors in the food, beverage, and poultry sectors through the capital market in ways that ensure a fit in both timeliness of funding and structure of the funds.

    The net proceeds of the issuance will be used to provide pre-qualified agro processors with working capital support to enable them purchase commodities required for their production processes at an agreed upon price.

    The ABCP Notes will be backed by commodities deposited by the pre-qualified agro-processors with the collateral manager.

    The issuance allows Islamic ethical investors to invest in the notes through a murabaha window.

    AFIL SPV is offering 179-day commercial papers with effective and implied yields of 14.50 per cent and 13.54 per cent. It is simultaneously 270-day CPs with effective yield of 15.00 per cent and implied yield of 13.50 per cent. Minimum subscription is N5 million.

    The ABCP notes will be listed on AFEX Commodities Exchange after the completion of the offer.  

    AFEX recently signed a major agreement that may herald trading in future contracts for major local commodities such as cocoa, maize, paddy rice and soybean among others.

    The development of exchange-based trading for commodities futures and other derivatives is expected to boost capital formation for the development of the agricultural sector and to deepen the depth of the Nigerian capital market.

    Currently, trading on commodities such as cocoa, maize, paddy rice, and others are limited to the spot and over-the-counter (OTC) markets. The spot and OTC markets expose participants to frequent price movements and counterparty risk.

    With the futures market, participants can lock in prices and positions of various commodities ahead of time without facing the risk of default by a counterparty.

    In furtherance of the commodity futures market, AFEX Commodities Exchange and NG Clearing Limited last November signed an agreement to develop the infrastructure that facilitates trading and central clearing of futures contracts for agricultural commodities.

    AFEX Commodity Exchange will serve as the trading venue while NG Clearing will serve as the central counterparty that guarantees the settlement of trades.

    A central counterparty is a critical financial market infrastructure that facilitates the clearing and settlement of derivatives and other securities as well as the management of counterparty credit risk.

    Chief Executive Officer, AFEX Commodity Exchange, Mr Ayodeji Balogun  said the agreement was part of AFEX’s mission oto be a reference point for commodities in Africa.

    According to him, the collaboration with NG Clearing is a new leap for the financial market as it further opens opportunities for generating shared prosperity through the commodity market.

    He said AFEX shares a drive with market regulators and other players in the capital market to deepen the market and unlock financing options and alternative investment classes for players in the commodities ecosystem.

    “We believe that this would further position the country as a preferred capital destination with a viable path of effectively managing risks in key sectors of the economy,” Balogun said.

    Chief Executive Officer, NG Clearing, Mr. Tapas Das, said the partnership with AFEX would usher in a new phase in the development of the financial and agricultural sectors.

    “As the central counterparty, we bring confidence and trust to the market as we will be guaranteeing the execution of the trades through our resilient collateral management processes,” Das said.

     He said the collaboration would unlock the untapped potential of commodity derivatives in Nigeria.

    The agreement between AFEX and NG Clearing comes at a time when unlocking value in Nigeria’s agricultural sector is at the front burner of government initiatives.

    The AFEX market turnover stands at N123.72 billion while NG Clearing earlier facilitated the introduction of equity index derivatives last April, serving as a central counterparty to the NGX Exchange.

  • Fintech remains future of financial services, says IT expert

    Fintech remains future of financial services, says IT expert

    An IT professional and Managing Partner, Lifted Technologies,  Tayo Sotade, has said Fintech companies are transforming the way Nigerians  use financial services.

    In a report, he said Fintechs have brightened the future of financial services in Nigeria, adding that  our fintech companies have what it takes to continue driving innovation.

    “One of the key advantages of a fintech firm is the ability to provide financial services to those who were previously excluded from the traditional banking system. This is, particularly, important in Nigeria, where a large percentage of the population is unbanked.

    “Fintech companies such as Paystack, Flutterwave, and Interswitch are making it easier for Nigerians to access digital payments, loans, and other financial services,” he said.

    Sotade listed another area of innovation in Fintech as the use of blockchain technology to create secure and transparent financial systems.

    “Blockchain enables secure, tamper-proof record-keeping, and this has the potential to revolutionise the way financial transactions are conducted. Nigerian fintech startups such as SureRemit and BuyCoins are using blockchain technology to create innovative solutions that enable fast and secure payments and transfers,” he said.

    According to him, Fintech remains the future of financial services in Nigeria.

    Sotade added:  “As more Nigerians gain access to digital payments, loans, and other financial services, the economy will become more dynamic and inclusive. With my certifications in project management, network engineering, and cybersecurity, I am excited to be a part of this transformation.

    “As an IT professional, I am keenly aware of the importance of keeping financial data safe and secure. Fintech companies are handling sensitive financial data daily, and this data must be protected from cyber threats such as hacking, phishing, and malware attacks..

    “At Lifted Technologies, we take cybersecurity very seriously. We invest in the latest security technologies and protocols, and we conduct regular security audits and assessments to ensure that our systems are secure. We educate our clients and customers about cybersecurity best practices, such as using strong passwords and keeping software up to date.

    “In addition, our certifications in cybersecurity enable us to stay up to date with the latest trends and best practices in this space. This enables us to build and deploy fintech solutions that are secure and reliable, and that instill confidence in our clients and customers. “

  • ‘Youths need to imbibe savings culture from early years’

    ‘Youths need to imbibe savings culture from early years’

    Stakeholders should work together to inculcate savings and investment culture in youths from their early years.

    This was the conclusion yesterday as the Nigerian Exchange (NGX) led other partners to mark this year’s Global Money Week (GMW).

    Participants agreed that stakeholders  must inculcate a culture of saving and investing in young Nigerians.

    They said it was important to ensure that young people, from early age, are financially aware, and are gradually acquiring the knowledge, skills, attitudes and behaviours necessary to make sound financial decisions and ultimately achieve financial well-being and financial resilience.

    NGX, Securities and Exchange Commission (SEC) and NGX Regulation Limited (NGX RegCo) partnered the Central Bank of Nigeria (CBN) to educate over 100 students on GMW’s  theme, “Plan your money, plant your future”.

    Divisional Head, Capital Markets, Nigerian Exchange (NGX), Mr. Jude Chiemeka, said there was the need to guide children in their formative years so as to be responsible citizens in the future.

    He emphasised that choices they made would have a significant impact on their future.

    “We must also recognise that our individual financial health is closely linked to the health of the planet and of society as a whole. The choices we make about how we earn, spend, save, and invest our money can either contribute to or undermine the sustainability of our world.

    “As such, it’s essential that we  adopt a responsible and informed approach to financial decision-making that considers the impact of our choices on our environment and society,” Chiemeka said.

    He outlined that as part of NGX-led financial literacy initiatives, the Exchange also offer a range of educational resources, including a comic book series named NGX StockTown with the goal of using illustrations to raise the next generation leaders who are financially aware, responsible and skilled economic citizens.

    The event, which culminated in a closing gong ceremony, had the overall winners at the quiz, held at the Exchange, close the market by sounding the gong. They were also gifted shares with the first prize winner receiving N80,000 worth of shares while the first and second runner ups won N70,000 and N50,000 worth of shares.

    Principal Manager, Market Development Department, Securities and Exchange Commission (SEC), Mr John Achile and Principal Manager, Head of Advocacy Office, Consumer Education and Evaluation Division of Consumer Protection, CBN, Mr Abubakar Albasu highlighted the importance of market regulation and investors protection.

    Head, Market Surveillance and Investigation, NGX RegCo, Mr Abimbola Babalola delivered a presentation on the rudiments of money and the technicalities of the capital market.

    Sales Trader, Meristem Stockbrokers, Mr Abdulkareem Kelani and Head, Securities Dealing, APT Securities, Mr Mohammed Jamie also contributed to improving the students’ knowledge capacity about the stock market. Other partners at the event were MinieMoney, AIESEC Lagos and Junior Achievement Nigeria (JAN).

  • Yearly remittances to Nigeria may exceed $34b

    Yearly remittances to Nigeria may exceed $34b

    There are strong indications that migrant remittances to Nigeria estimated by PwC may exceed $34.8billion.

     The consultancy firm estimated that migrant remittances to Nigeria could grow from $25.5 billion in 2019 to $34.8billion this year.

    Diaspora remittances is the highest source of foreign exchange (forex) to Nigeria and contribute more to Nigeria’s gross domestic product (GDP) than oil and more than 11 times than the Foreign Direct Investment (FDI).

    In the last five years, an average of 15,000 Nigerians, troop out of the country daily   to better their earnings, standard of living, as well as for  official and personal commitment.

    The number of emigrants has grown significantly, particularly to countries such as the United Kingdom, Canada, the United States, Germany, and others.

    United Kingdom Immigration’s report indicated that Nigeria had the highest number of migrants to the UK in June last year.

    It noted that Nigerian immigrants to the UK rose by 686 per cent  from 8,384 in 2019 to 65,929 as of June 2022, the highest percentage growth in the top 5 countries through study visa.

    Since 2015, diaspora remittances have outstripped oil revenues in Nigeria.

    According to the World Bank ,Nigeria remains in the lead as the highest recipient of remittance in Sub-Saharan Africa during 2022, followed by Kenya, Ghana and Senegal. According to the  World Bank, remittances in Sub-Saharan Africa grew an estimated 5.2 per cent to $53-billion  last yeqar , compared with 16.4 per cent  in 2021.

    Commonwealth of Dominica , is already advising  Nigerians are relocating to  invest locally , while abroad. The Country currently offers Citizenship by Investment (CBI) Programmes globally. According to it, Nigerian investors have the advantage of using the Dominican banks to manage international transfers and business needs. This notwithstanding, the  Central Bank of Nigeria (CBN) pegged total direct remittances for 2022 at  $2.16 billion, a decline of 11.18 per cent from the previous year.

    The apex bank in its “International payment” data disclosed that the country recorded $2.43billion in total direct remittances in 2021, amounting to 11.18 per cent decline when compared to 2022 remittances.

  • NBS: Diesel price soars by 168.26% in one year

    NBS: Diesel price soars by 168.26% in one year

    • Petrol price increases by 54.76% in 12 months

    The National of Bureau of Statistics (NBS) yesterday said the average price of Automotive Gas Oil (AGO), also known as diesel, rose by 168.26 per cent from N311.98 in February 2022 to N828.82 in February 2023.

    Its document entitled: “Automotive Gas Oil  Price Watch  (February 2023),” said the  “average retail price of Automotive Gas Oil (Diesel) paid by consumers increased by 168.26per cent yearly from a lower cost of N311.98 per litre recorded in the corresponding month of last year to a higher cost of N836.91 per litre in February 2023.”

    NBS noted that on a month-on-month basis, an increase of 0.98per cent was recorded from N828.82 in the preceding month of January to an average of N836.91 in February 2023.

    According to the Bureau, looking at the variations in the State prices, the top three States with the highest average price of the product in February 2023 include Bauchi (N904.33), Abuja (N885.00) and Adamawa (N873.33).

    It further explained that  the top three lowest prices were recorded in the following State namely, Bayelsa (N767.14), Katsina (N778.75) and Edo (N789.43).

    Continuing, NBS revealed that the zonal representation of average price of Automotive Gas Oil (Diesel) shows that North Central has the highest price of N850.65 while South-South zone has the lowest price N814.63 when compared with other zones.

    In a similar document, NBS said  the average price of Premium Motor Spirit (PMS) rose by 54.76per cent from N170.42 in January 2022 to N263.76 in February 2023.

    Its data entitled: “Premium Motor Spirit Price Watch +February 2023),” said : “The average retail price paid by consumers for Premium Motor Spirit (Petrol) for the month of February 2023 was N263.76, indicating a 54.76per cent increase when compared to the value recorded in January 2022 (N170.42).”

    According to the data, likewise, comparing the average price value with the previous month (.i.e. January 2023), the average retail price increased by 2.58per cent from N257.12.

    The NBS explained that on State profile analysis, Jigawa State had the highest average retail price for petrol at N329.17.

    It added that Rivers and Ebonyi States were next, with N323.33 and N317.14, respectively.

    On the other side, said NBS, Niger State, Plateau State and Abuja had the lowest average retail prices for Premium Motor Spirit (Petrol), at N198.50, N198.71 and N200.00, respectively.

    The Bureau also noted that on the zonal profile, the South-East zone had the highest average retail price of N306.86, while the North-Central zone had the lowest price of N215.01.

  • CBN: our banks not affected by US banks’ failure

    CBN: our banks not affected by US banks’ failure

    • MPR raised by five basis point to 18%

    The Central Bank of Nigeria (CBN) has dispelled any rumours, or fears of a possible backlash, or linkage of the banking sector failure, or instability arising from the collapse of some big banks in the United States.

    The CBN Governor, Godwin Emefiele, spoke yesterday at the end of the Monetary Policy Committee (MPC) Meeting in Abuja.

    When asked yesterday to comment on the health of Nigerian banks and their level of exposure to failed American banks, Emefiele gave the nation’s banks a clean bill of health.

    He said when the news broke that Silicone Valley Bank (SVB) had collapsed with possible spill over to foreign banks, Emefiele said, “the reports that came back to us were that there is no direct investment by Nigerian banks in SVB that could result in a loss of investment”.

    To ensure that the nation’s banking system is isolated, the CBN, he said, “reviewed the various prudential guidelines we have put in place,” saying: “Nigeria is one of the few countries in the world where we have cash reserves deposit requirements which means that a certain percentage of deposit is held, or serialised at the CBN to ensure that when there are liquidity crisis, that money is available for that bank to use and solve that liquidity problem so that people who deposit don’t lose their money.” 

    Another safeguard, he pointed, out is the liquidity ratio “which is an indices of specified liquid assets against total deposits of a bank, either held in cash in bank vault or bank balances, or money. And in Nigeria our ratio is a minimum of 30 per cent. Banks keep above that today, liquidity ratio is almost about 43 per cent’’.

    Emefiele said, to a large extent, the CBN “has put in place prudential guidelines, rules and regulations that have isolated the Nigerian banking industry from this kind of risk that we saw last week in the United States.”

    Emefiele noted that the CBN has made sure that even when banks are taken over by the CBN, shareholders may lose their investment, but no depositor, as far as I know since 2008, has lost his deposit in the Nigerian banking industry till date.

    “We will continue to repeat that a banking licence is a privilege; it is not a right, the banking licence is the property of the CBN that can be withdrawn at any time once we find that the shareholders are misbehaving. This is a policy that the CBN has held on to even before I became the governor of CBN”.

    On the fight to bring down inflation by tightening interest rate, the CBN governor said members of the MPC were “confronted at this meeting that the fact that the tightening measures had started to reduce the rate of inflation, we believe that as we continue this process that inflation will eventually begin to trend downwards”.

    “Between now and May or end of this administration, we expect that subsidy will disappear. Subsidy removal has its own implication on inflation. We, at the Monetary Policy Committee, are not optimistic that prices are going to come down because of these measures so we feel that we will continue to tighten and thats what we did at this meeting”.

    At the end of the meeting, members of the MPC raised the Monetary Policy Rate (MPR) by 50 basis points to 18 percent; retained the asymmetric corridor of +100/-700 basis points around the MPR; retained the Cash Reserve Ratio (CRR) at 32.5 per cent; and retained the Liquidity Ratio at 30 percent. 

    In his reaction, the Chief Executive Officer of the Center for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, has warned that the increase in the monetary policy rate (MPR) to 18 percent poses an additional burden on businesses in the country. Yusuf, in a statement made available to The Nation, also noted that the victims of the continuous hike in the monetary policy rate are the investors in the real economy and other entrepreneurs in the economy.

    According to him, “the Increase of the MPR to 18 percent means  an additional burden on business as it will result in a spike in cost of credit. Production costs would increase,  sales will drop,  profit margins will shrink and investors confidence will be negatively impacted.”

    He further observed that the reality is that ways and means financing,  high energy cost,  and foreign exchange challenges are much bigger factors in the inflation equation.

    He, therefore, charged the CBN to pay greater attention to financial system stability at this time as recent developments in the global financial system underscores the imperative of cautious interest rate hikes.

    The CPPE, Yusuf revealed, is concerned about the stifling effect of the high CRR of 32.5 percent on the banking system stability and financial intermediation role of the banking system.

    “It is regrettable that the CBN governor did not acknowledge the pains and sufferings that ordinary citizens have been going through on account of the cash crisis.  The CBN Governor should have shown some empathy and apologise to Nigerians for the trauma inflicted by the cash crisis,” Yusuf submitted.