The Nation Newspaper

Category: Money

  • $1b Eurobonds good for economy, says DMO chief

    The $1 billion Eurobonds raised by Nigeria from the International Capital Market (ICM) has added value to the economy, the Director-General, Debt Management Office (DMO) Dr. Abraham Nwankwo said.

    The DMO chief, who spoke after Nigeria was awarded 2013 Best Sovereign Bond in Africa Award, said the agency’s decision to issue the bonds despite the risk the pronouncements of United States (US) Federal Reserve tapering of the Quantitative Easing (QE) may have on the pricing of the bonds at that particular time was commendable.

    In a statement, he said the award was given to Nigeria by the Emerging Market, Europe, Middle East and Africa (EMEA) Finance, adding that the bonds were over-subscribed vindicating the right judgment of the DMO.

    He explained that QE is a bond-buying programme of the Federal Reserve, which was designed to depress long-term bond yields in order to stimulate the US economy. He explained that so far, the QE has kept yield below levels where they would trade if there had not been the QE policy in place.

    Continuing, he said to understand the risk taken last year by DMO, when it offered two Eurobond in tenors of five and 10 years, each for $500 million, is to know that the Fed was buying $85 million fixed-income securities on the open market monthly during that period through the QE policy.

    “Yet our bonds were oversubscribed. One factor that accounts for the success of the offer was the confidence investors have in Nigeria’s economy. And as we all know confidence is always earned,” he said.

    Nwankwo said the issuance of the Eurobond was part of the DMO public debt management strategy which decided to look up to the ICM to diversify Nigeria’s source of funding its developmental programmes to introduce the country into the highly disciplined international funds markets.

    “In January 2011, Nigeria made its debut in the ICM through issuance of $500 million 10-year Eurobond. Since then, the confidence of the investors in Nigeria’s bond has been on the increase. Most of the funds generated will go into financing the upgrading our power infrastructure, which the country badly needs for its economic growth and development,” he said.

    While handing the award to Finance Minister Dr. Ngozi Okonjo-Iweala, Chief Executive Officer,  Citigroup for Europe, Middle East and Africa, Jim Cowles, said DMO was bold in taking the Eurobond decision.

    “If you look at the timing , this (Nigeria’s issued Eurobond) was the first sovereign bond that was issued at the beginning of last year and there was quite a bit of turmoil in the market place because of the discussion on tapering the quantitative easing.”

    He praised the professionalism with which the DMO is managing Nigeria’s debt profile. The DMO has been advising government on terms and conditions of loans, restructuring and refinancing; maintaining a complete and accurate database of all government borrowings among other roles.

  • China’s forex reserves may stoke inflation, a ‘big burden’, says Premier

    China’s war chest of foreign currency reserves has become a headache as its continued rise could stoke inflation in the long term, Premier Li Keqiang has said, pledging to cut1 the country’s trade surplus.

    China’s foreign exchange reserves, the world’s largest, grew by $130 billion (77.14 billion pounds) in the first quarter, to a record $3.95 trillion.

    The central bank has pledged to keep foreign exchange reserves at reasonable levels, partly by reducing its intervention in the currency market.

    “Frankly speaking, foreign exchange reserves have become a big burden for us, because such reserves translate into the base money, which could affect inflation,” Phoenix New Media Ltd quoted Li as saying during a visit to Kenya.

    “From China’s perspective, macroeconomic controls could face tremendous pressures if the overall trade is imbalanced.”

    China will take steps to reduce its trade surpluses with the rest of the world, including Kenya, Li was quoted as saying.

    Large foreign currency purchases by China’s central bank, which regularly intervenes to cap yuan rises, amount to creation of base money and can fuel inflation unless the central bank soaks up the excess yuan injected into the system.

    In recent weeks, the central bank has been suspected of engineering a fall in the yuan in a bid to punish speculators betting on yuan rises.

    Vice central bank governor, Yi Gang, said in November that the cost of holding the reserves would surpass earnings from them when reserves exceed a certain level.

    China’s inflation has been benign in recent months as its economy slows, but analysts point to long-term pressures as the government loosens its grip on utility and resources prices.

  • $40b infrastructure deficit threatens Africa’s devt

    Former Chairman, Goldman Sachs Asset Management, Jim O’Neill, has urged African governments to bridge the $40 billion investment deficit on the continent.

    Spaeking during the African Finance Corporation’s (AFC’s) conference on infrastructure in Lagos, O’Neill said infrastructure has been estimated  to add an average of two per cent to  economic growth over the next decade as its deficit is reduced.

    He said Africa’s future depends on the continent’s policy makers to do the right thing by working to create better governance, reducing crime, fight corruption and delivering improved infrastructure. Infrastructure development is both a defining challenge and a standout investment opportunity for Africa and investors around the world, he said.

    He said Nigeria is growing at seven per cent despite poor access to power,, noting that adequate power supply could boost economic growth to  about 12 per cent, adding that there is no reason why the country should not become one of the G20 members.

    The conference attracted more than 500 experts.

    AFC’s Chief Executive Officer, Andrew Alli said there are  potentials in Africa which investors can key into.

    “Our vision at the AFC is to bridge the infrastructure divide and seek a strong return for our shareholders at the same time. We believe our core role comes at the earliest stage of project conception and development. While international capital will be fundamental in bridging the investment divide, that capital will have nowhere to go if Africa does not focus on the development of bankable, sustainable projects,” he said.

  • Anambra partners traders on revenue collection

    To stimulate trade and commerce in Anambra State, the state Commissioner for Trade and Commerce,  Mr Ifeatu C Onejeme, has held a meeting with  leaders of the various market associations in the state to seek their support in the drive to “extend the frontiers of excellence” in the state.

    Onejeme met with executives of  AMATAS, including its President,  Chief Okwudili Ezenwankwo; Vice President,  Chief Dozie Akudolu as well as the chairmen and secretaries-general of the major market associations in the state to get their support on how to achieve the four-point agenda of the administration.

    Presenting his economic agenda to the citizens shortly after his swearing in on March 17, this year, Governor   Wiillie Obiano, listed the four pillars of his administration to include, agriculture, trade  and commerce, industrialisation and oil and gas.

    Chairman/Chief Executive of the state Board of Internal Revenue, Sir Okey Mokah, cleared all grey areas  agitating the minds of the traders and market associations.

    The executives of the market associations pledged their support and readiness to work with the government to achieve its objectives.

    They agreed that outstanding market stallage fees, levies and traders tax for 2012, 2013 and this year would be paid considering that the Obiano administration would no longer tolerate delays in the payment of  revenues due to the government and would close any market that fails to collect and remit  revenues, levies and taxes promptly.

    The traders agreed to set up a joint Revenue Collection Task Force with the Ministry of Trade and Commerce to collect arrears of stallage fees, levies and traders taxes for 2012, 2013 and this year.

    On sanitation and environmental cleanliness, it was agreed that the leaders must ensure that their members maintain cleanliness in all markets in the state as the present administration  will not hesitate to shut any market that fails to meet acceptable  sanitation standards.

    The commissioner assured that the Obiano administration would fast-track the modernisation of the markets and construct  new ones to demonstrate its commitment to encourage the traders.

    He said: “Government has resolved to improve and modernise existing markets, especially the state-owned markets through the provision of boreholes, conveniences, fire-fighting facilities and other specific facilities required by the markets.”

    In addition, the traders said the government  planned to partner with the private sector to build ultra -modern hyper-markets and malls to further drive the government’s initiatives to expand state’s capacity for trade and commerce activities.

    The traders were also informed that the government’s determination to stop street trading and eliminate  street markets. The government added that Williams Street, Bright Street, Sokoto Street and New Market Road Street markets in Onitsha would be relocatedwhile Williams Street traders should move to their markets.

    Chief Ezenwankwo pledged his association’s commitment to work with the government, assuring that AMATAS would facilitate the movement of street traders to the shops built for them.

    The meeting also discussed modalities for working with commercial banks, the office of the Attorney- General, the Lands Registry and the government-owned market associations to develop a government-managed shop title documents’ registry that would record and manage all transactions involving transfer of title, mortgages and pledges over shops in the market.

  • Sterling Bank trains SMEs’ operators

    Sterling Bank trains SMEs’ operators

    Sterling Bank have organised   seminar for Small and Medium Enterprises’ (SMEs) owners.

    The bank’s Executive Director, Abubakar Suleiman said the programme was aimed at enhancing the managerial and entrepreneurial qualities of SMEs’operators. He said SMEs play critical roles in the development of the economy.

    “It is our view that for us to be able to support SMEs, the standard for reporting and the day-to-day management of the organisation needs to improve. We are hoping that this seminar would achieve this objective. We are focused on people who have done business with us for a while and we want to assist them to take their businesses to another level. The process for transforming SMEs to become bigger players and part of national growth does not start and end with finance. A huge part of it starts with education,” he said.

    Suleiman assured that the bank will continue to invest in capacity building in the sector as the national economic development prospects of any country is hinged on SMEs.

    He, however, noted that the expected growth of the sub-sector would not be achieved unless there is an improvement in the quality of infrastructure.

    Chief Executive Officer, Africa Star Limited, Mr. Bawor Benjamin, commended the bank for coming up with the training, adding that it would go a long way in encouraging owners of small and medium scale businesses and give them an idea of how to grow their businesses, establish proper structures, so that they can access funds for business growth.

  • Skye Bank launches Ria money transfer

    Skye Bank launches Ria money transfer

    Skye Bank Plc has launched a new money transfer service – Ria Money transfer service. The new service complements the bank’s other international money transfer services.

    Speaking at the event in Lagos, the bank’s Group Managing Director/Chief Executive Officer (CEO) designate, Timothy Oguntayo, said the product is in tandem with the bank’s concept of value creation and addition.

    Noting that if banks must function as a one-stop financial supermarket where customers’ needs can be addressed, such lenders must provide needs-satisfying products timely and effectively.

    He said the new money transfer service would be available at the bank’s 250 branches nationwide as well as through some specially designated branches, assuring that quality service would be the watch word.

    On the new product, the bank’s Executive Director, Southsouth/Retail Banking, Mrs. Ibiye Ekong, assured the public that the bank would make funds remittance and collection easy, safe and convenient for senders and recipients. She said the bank would strive to make Ria Money the reference in money transfer business in the country.

    Business Development Director, Africa, Middle East and America, Ria Money, Manuel Villena, described the  market as the largest in Africa.

  • ‘FMBN needs N250b to operate effectively’

    ‘FMBN needs N250b to operate effectively’

    The housing challenge being faced by millions of Nigerians will continue for a while unless the Federal Mortgage Bank of Nigeria is effectively funded to the tune of N250bn, to enable the mortgage institution discharge its responsibilities.

    According to the Managing Director of the mortgage institution, Alhaji Gimba Yau Kumo, the FMBN has collected the sum of N134bn since the inception of the National Housing Fund in 1992. He disclosed this at an interactive session with newsmen in the nation’s capital, Abuja, yesterday.

    Noting that paucity of funds has gravely affected the drive by the bank to provide affordable housing for Nigerians, Kumo said the bank’s management  is liaising with some mortgage institutions both in and outside the country with a bid to meeting the housing challenges while not compromising quality.

    He said: “We are not only involved in driving foreign investments in the nation’s housing sector but also taking the advantage of the private-sector driven affordable mass housing strategy of the Nigerian government in line with the transformation agenda.

    “We have to do this because the sector is grossly underfunded. As things stand today, if the FMBN is to effectively discharge its responsibilities, it requires a capital base of N250bn and it has nothing close to that. But we are glad that reputable companies in the sector like the Industrial and Commercial Bank of China; the China Export and Credit Insurance Corporation; Shelter Afrique; and Globus Financial Services in the United States of America are prepared to partner with us.”

    Speaking on the bank’s cash flow, Kumo said the monthly collection of the bank stands between N2.2 and N2. 5 billion, while efforts are being made to improve on it by convincing more state governments to contribute to the NHS.

    He said though the Federal Government approved N5bn as the capital base in 2003-2004, the current capital base stands at N2.5 billion which was contributed by the Federal Government while the Central Bank of Nigeria is yet to contribute its 30 per cent share.

    He, however, noted that the management has succeeded in convincing many states to buy into the NHS’ scheme, noting that before December, 2010, between 22 and 24 states were contributing to the NHF while the bank had been able to increase the number of contributing states to 31, including FCT.

    Kumo urged the Federal Government to provide infrastructure, insisting that the bank, in most cases, would provide infrastructure to estate developers apart from giving loans to them.

    He said the total refund of NHF before 2010 was less than N1 billion and that it has been presently raised to N2. 7bn.

    He assured the public that the contributions to NHF remain safe, noting that the bank would pay contributors as at when due.

    “Your contributions are not lost; all will be paid in full with two per cent interest as at when due; so have the confidence that your contributions are safe,’’ he said.

    Kumo also said the bank had been consistent in providing affordable houses across the country, especially for the low income earners.

  • Bank lending to agric expected to hit 10% soon, says govt

    Bank lending to agric expected to hit 10% soon, says govt

    Bank lending to the Nigerian agriculture will grow to between seven and ten per cent very soon.

    Akinwumi Adesina, Minister of agriculture gave this hint yesterday at the ongoing World Economic Forum (WEF) in Abuja, under the ”Doing Agric in 2014: What Catalytic Public Investments Can Do for Agric”: Lessons for 2014, The African Union Year of Agriculture.”

    Adesina said Nigeria’s success story in agriculture today is because it is now being treated not like a developmental activity but as a business, and also by unlocking the huge potentials in the sector.

    The agriculture minister noted that Nigerian bankers are excited about agriculture now more than when the sector attracted only about 0.7 percent of bank lending.

    He advocated that there is need to leverage the private sector, suggesting that public sector funds should be used to leverage private sector investments into the sector.

    Adesina reiterated that due to government’s commitment to agriculture, government has been able to “end 40 years of corruption in input and seed sector and that number of seed companies in the country grew from five to 80 seed companies.”

    He said government has registered 1.5 million farmers with biometric information, linking them into National identity Management System, adding that, ”we produced 15 million metric tones of food in two years and these examples show the importance of political commitment by government, commitment by private sector, including farmers with the ’We can do’ attitude.”

    Nigeria he said should be able to “make stupendous wealth from agriculture giving the country’s comparative advantage.”

    President of the Africa Development Bank (AfDB) Donald Kaberuka observed that no country in history – from Europe to Asia has gone through development and transformation without passing through agriculture, stressing that ”it is not possible to drive inclusive growth without going through agriculture.”

    To tap Africa’s huge agricultural potential and make small holder farmers more competitive, Kaberuka suggested that the continent’s leaders must do four things which include, building infrastructure to make markets functional, consider commodity exchange to allow price discovery by allowing farmers get value for their production, use technology to manage such vital inputs like water and farmers need subsidies.

    Also making his contribution, popular musician D Banj urged youths to embrace agriculture, as that “is where the future is.”

  • Telecoms firms are unfairly taxed, says Airtel chair

    Telecoms firms are unfairly taxed, says Airtel chair

    Telecommunicationscompanies are unfairly taxed in Nigeria because the industry supports other areas of the economy, chairman, India’s largest mobile phone service provider, Bharti Airtel, Sunil Mittal has said.

    “The taxes are very high. That needs to come down. If telecoms are seen as a rightful infrastructure for the growth of many other sectors in the economy and the multiplier force, then I think it doesn’t deserve to be taxed so high,.” Mittal said in an interview yesterday in Abuja, venue of the World Economic Forum.

    Telcos in the country have been crying out loud over multiple taxation by all the three tiers of government and other agencies.

    Bharti, which competes with Johannesburg-based MTN Group Ltd. (MTN) and Abu-Dhabi-based Emirates Telecommunications Corp. to woo users in Africa’s most populous country, is seeing a recovery in Nigeria after a sales decline last year because of changes to interconnect charges, Mittal said. The New Delhi-based company was also among carriers that were banned from selling new SIM cards in March after missing service quality goals.

  • Foreign exchange reserves fall by $200m to $37.9b

    Foreign exchange reserves fall by $200m to $37.9b

    The foreign exchange reserves, which stood at $42.85 billion last December dropped to $37.9 billion on May 5, data from the Central Bank of Nigeria (CBN) has shown.

    The decline has been gradual but steady except for occasional gains.

    The reserves stood at $42.77 billion on February 3, and dropped to $39.72 billion on March 3. It further dropped to $37.8 billion in March 28. Analysts said the reserves declined as imports of fuel and foods soared.

    The CBN noted that the decrease in the reserves resulted largely from a slowdown in portfolio and foreign direct investment (FDI) flows in fourth quarter of last year, resulting in increased funding of the foreign exchange market by the CBN to stabilise the naira. CBN also said the pressure on external reserves was deemed to be consistent with the seasonal annual payment of dividends to foreign investors.

    The regulator expressed concern over the continued depletion of the Excess Crude Account (ECA) which balance stood at less than $2.5 billion, compared with about $11.5 billion in December 2012.

    “This absence of fiscal buffers increased our reliance on portfolio flows thus, constituting the principal risk to exchange rate stability, especially with uncertainties around capital flows and oil price,” the CBN said.

    Oil prices remained relatively high while production was improving, and there were signs of accretion to external reserves. The CBN also expressed concern over the sudden surge in domiciliary account balances which may offset the gains from imposing 75 per cent CRR on public sector funds.

    Managing Director, Financial Derivatives Company Limited, Bismarck Rewane, said of the $37.87 billion reserves as at April 3, $10 billion was in hot money.

    Hot money is the flow of funds (or capital) from one country to another in order to earn a short-term profit on interest rate differences and/or anticipated exchange rate shifts.

    He said reversal of capital flows will intensify, further depleting external reserves.

    These speculative capital flows are called “hot money” because they can move very quickly in and out of markets, potentially leading to market instability.

    Rewane said there would be further external sector imbalances in the run-up to 2015 elections even as equity market imbalance is likely to increase with stock market correction continuing.