The Nation Newspaper

Category: Money

  • Forex inflows drop to $11.17b

    Forex inflows drop to $11.17b

    There was a drop in foreign exchange (forex) inflow in the fourth quarter of last year, the Central Bank of Nigeria (CBN) has said.

    The forex inflow was $11.17 billion, representing a decline of 16.9 per cent from that of the last quarter of 2011, the CBN provisional data on forex showed.

    Outflow was $7.82 billion, showing a decline of 3.3 per cent in the preceding quarter. This resulted in a net inflow of $3.35 billion, compared with a net inflow of $5.36 billion in the preceding quarter.

    The report predicated the decline in inflow relative to the preceding quarter, largely to the 9.6 per cent fall in crude oil sales; the fall in outflow was attributed to the 35.2 per cent decline in the Wholesale Dutch Auction System (WDAS) utilisation.

    The invisible sector accounted for the bulk (32.9 per cent) of total forex disbursed during the period, followed by mineral and oil sector (18.7 per cent).

    Others include industrial sector (18.2 per cent), food products (15.5 per cent), manufactured products (10.1 per cent), transport sector and agricultural products (0.2 per cent).

    Estimated forex demand by authorised dealers stood at $4.28 billion, indicating a decline of 35.2 per cent in the preceding quarter. The CBN sold $4.27 billion during the period, indicating a decrease of 36 per cent in the preceding quarter.

    Under the WDAS, the average exchange rate of the naira through the dollar appreciated by 0.04 per cent to N157.32, from N157.39 per dollar in the preceding quarter, but depreciated by 0.1 per cent relative to the rate of N155.74 recorded in the corresponding period of 2011.

    In the bureau de-change segment of the market, the naira traded at an average of N159.19 per dollar, indicating an appreciation of 1.6 per cent and 1.5 per cent below the levels in the preceding quarter.

    In the interbank segment, the naira exchanged for an average of N157.38 to the dollar as against N159.36 in previous quarter. The premium between the WDAS and the bureau-de-change rates narrowed from 2.8 per cent in the preceding quarter to 1.2 per cent in the fourth quarter.

    The data showed an upward trend in banks’ deposit and lending rates. The spread between the weighted average term deposit and maximum lending rates, widened to 17.38 percentage points from 16.65 in the preceding quarter.

    The margin between the average savings deposit and maximum lending rates also widened from 22.17 percentage points in the preceding quarter to 23.28 at the end of the review period. The weighted average interbank call rate, which stood at 15.50 per cent in the preceding quarter, fell to 11.72 per cent, reflecting the liquidity condition in the interbank funds market.

  • ‘11% GDP‘s projection unrealistic’

    The Federal Government has come under fire over its decision to project a baseline Gross Domestic Product (GDP) growth rate of 11.7 per cent per year between 2011 and 2015.

    A former Director of Research, at the Central Bank of Nigeria (CBN), Mr Titus Okunronmu, told The Nation that there is no way the government can meet 11 per cent, giving the slow pace of the economy.

    He said virtually all the sectors are dead, arguing that it is pretty difficult to improve GDP in the face of economy that is not responsive to growth.

    Okunronmu said: “If you look at the macroeconomic framework and economic direction, through which the government is projecting a baseline of eleven per cent GDP, you would observe that they are making an empty statement. In that framework, the government said the 11 per cent target will translates to real and nominal GDP of about N428.6 billion and N73.2 billion at the end of the period. How realistic is the goal, considering the fact that there are no good businesses to spur economic growth?

    He said there was infrastructural decay as evident by bad roads, epileptic power supply, among others.

    He said: “The unemployment rate is high, the health sector is dying, education sector is in comatose, Transportation system is dead, poor weak governance structures are in place in most companies, businesses are closing down, pockets of crisis in the Niger Delta, violent Islamic sects known as Boko Haram among other crises dominated the landscape. What are the yardsticks which the government will use to measure Gross Domestic Product within the five year period? Can there be increase in GDP when the economy is not productive? he asked rhetorically.

    “The government is not committee to the issue of attaining eleven per cent growth in Gross Domestic Product, adding that there is no concrete plans in place to achieve this goal.

    “For this year, the government has executed recurrent aspect of the budget by paying salaries of its workers. But the recurrent expenditure has not been implemented as we step into the first quarter of 2013. Nigerian is still waiting for capital budget. Once there is a misplaced priority, economic growth cannot be driven and the issue of eleven per cent GDP cannot be attained,” he added.

    The Chief Executive Officer, Financial Reporting Council, Mr Jim Obazee, said the government allocated funds to various sectors to drive the economy. He said the allocations were meant to drive the sectors of the economy, make them more productive, and further contribute to the growth of the GDP.

    He said the government can meet the 11 per cent GDP target between 2011 and 2015 if the objectives of all the sectors are vigorously pursued.

  • Experts fault FIRS on self-assessment form

    The Federal Inland Revenue Services (FIRS) has drawn the flaks over its decision to collect taxes before payers fill self-assessment forms.

    Experts advise tax payers to treat the FIRS’ notice with caution.

    Eben Akinyemi, Partner, at the transactions and tax advisory firm, Stransact Partners, said FIRS did not consider the 2011 Tax Administration (Self-Assessment) Regulations in its request.

    Akinyemi, who is also an Associate of the Institute of Chartered Accountants of Nigeria (ICAN), said the regulator cited Section 55 of the Companies Income Tax Act (CITA) 2004 (as amended) and demanded payment of taxes beginning from January 2013 and final payment to be made on or before June 30, 2013 for companies whose financial year end is after July 31, last year.

    “The FIRS relied on Section 61 of the FIRS Establishment Act (FIRS Act), to issue the 2011 Tax Administration (Self-Assessment) Regulations in December 2011. The Regulations made specific pronouncements on the Companies Income Tax Act (CITA), the Personal Income Tax Act (PITA), the Petroleum Profits Tax Act (PPTA), and the Value Added Tax Act (VATA), among others.

    Section 77(5) states: “A company filing self-assessment shall pay the tax due within two months from the date of filing the assessment in one lump sum, or such number of monthly installments (not being more than six) as may be approved by the Board,” he said.

    Managing Consultant at WTS Nakyea & Adebiyi, Ali-Nakyea Abdallah, said: “The FIRS Board with the approval of the Minister can make regulations giving full effect to provisions in the Act and not to pass laws, which is the exclusive preserve of the Legislature. It is important to mention that tax is a creature of statute; thus tax imposition, collection, debt enforcement and management should all be backed by statute, otherwise they crumble as being arbitrary and biased.”

    Abdallah, who is also a lecturers at Ghana School of Law, said: “If the FIRS finds the six months too long a waiting period, the only remedy is to get the section amended. In Ghana, we had a similar six months waiting period till an amendment was effected to reduce it to four months after the end of the taxpayer’s accounting date.

    “However, the provision for an application for extension was maintained and the Ghana Revenue Authority (GRA) can grant the extension for a period not exceeding two months. The FIRS can take a cue from the GRA’s approach by seeking an amendment by the legislature.”

  • Concerns over naira as election year approaches

    Concerns over naira as election year approaches

    How will the naira fare in 2014, a year before the 2015 general elections?

    It is expected to come under pressure before the election, says an economist, David Cowan.

    Cowan, Director, Africa Economist, Citi, was speaking on Global Economic Update: Europe Casts a long shadow at the EuroFinance conference in Lagos.

    The naira, he explained, had last week, weakened 0.2 per cent against the dollar in the Inter-bank. It also recorded (-one per cent) decline partly due to increased dollar outflows to cover import bills and other forex obligations.

    Recent strengthening of the naira was largely due to dollar supplies from the Nigeria National Petroleum Corporation (NNPC) and robust capital inflow into government securities.This followed the Central Bank of Nigeria’s (CBN’s) decision to hold the interest rate unchanged at 12 per cent on January 21.

    Although the naira has a weakening outlook, the steady rise in reserves to $47.3 billion, which is about 10 months equivalent of imports provides a large cushion to support the naira in the weeks ahead.

    Oil price, he said, would also weaken next year, thereby a putting pressure on the naira.

    He said increased fiscal spending pressure would grow in 2014, adding that there is need to strike a balance between the urban inflation and rural inflation rates in the country.

    On the international scene, he said there were signs that the Indian economy is going to grow aggressively. In emerging market, it is expected that the Asian foreign exchange rally will continue throughout 2014.

    He said the South African Rand is undergoing pressure as the country is running a deficit, Ghana is one of the countries in West Africa that is running the highest fiscal deficit.

    Cowan said there was need for African economies to ensure they are not cut off from global opportunities.

    Senior Partner, Kenna Partners, Fabian Ajogwu, who spoke on Rethinking Corporate Governance, said proper governance of enterprises in Nigeria has become more critical to economic growth than ever.

    “Recent developments in the Nigeria and the current financial and economic crisis put the issue of sustainable development of enterprises at the centre of any economic plan and development strategy,” he said.

    He explained that when companies fail, a lot of attention focuses on how boards discharge their statutory, contractual, and trust-based duties to all stakeholders. He said where the market does not regulate itself properly, the challenge of corporate governance becomes more apparent.

    Director, EuroFinance, Peter Green, explained that the conference enables treasurers and chief finance officers to exchange innovative strategies, best practice and expert opinions. It also focuses on conducting in-debt research with thousands of corporate treasurers worldwide every year, thereby providing insight into the trends and developments in cash management, treasury and objective global viewpoint.

    “We are happy to be having the fourth annual EuroFinance in Lagos. It is important to ensure that all parts of the world are up-to-date on the most current and efficient practices for treasury and cash management, so as best to maximise growth and in turn develop key sectors of local and global economies,” he said.

  • CBN advocates reforms to stabilise economy

    CBN advocates reforms to stabilise economy

    There is need to carry out radical reforms in the financial system of the country to achieve stability in the economy, Central bank of Nigeria’s (CBN’s) Deputy Governor, Corporate Services, Suleiman Barau, has said.

    Speaking at this year’s EuroFinance Conference in Lagos at the weekend, Barau, who was represented by the Deputy Director of Banking Supervision, Steve Nwadiuko, said such the restructuring was the only way to avoid massive corporate failure witnessed during the financial crisis of 2007 to 2009, which exposed the weaknesses in many banks.

    He said reforms were needed to strengthen the stability and resilience of the global financial system and prevent the reoccurrence of systematic crisis.

    He said chief finance officers of banks across the globe need to design strategies that would adequately address possible hitches in the financial system.

    He said in Nigeria, the CBN has carried out reforms that are aimed at achieving financial system stability and instituting sound corporate governance. These, he said, has ensured that the financial system thrives to add needed support to the real sector and the economy.

    He said the reforms are anchored on enhancing the quality of banks, establishment of financial stability and ensuring that the financial sector contributes to the economy.

  • World Bank, AfDB, others advocate coordination on global devt

    World Bank, AfDB, others advocate coordination on global devt

    Leaders of the African Development Bank (AfDB), European Bank for Reconstruction and Development, Inter-American Development Bank, International Monetary Fund (IMF), and the World Bank Group have pledged close collaboration to support development and growth.

    In a statement, the institutions said there is need for coordinated efforts to achieve the Millennium Development Goals by 2015, which aim to end poverty and hunger, increase access to education and health care, improve gender equality, and ensure environmental sustaina-bility.

    “Nothing could be more important than ensuring young people get the right start in life. We aim to make 2015 the year in which children no longer negotiate access to basic education, mothers to the most basic health care, households to water and sanitation, or girls to the most fundamental opportunities for schooling, work, or voice in their communities. And we aim to ensure these gains are permanently sustained in the post-2015 era” Donald Kaberuka, President of the African Development Bank said.

    Also, the leaders pledged strong support for and collaboration with the UN-led process of defining the Post-2015 Development Framework. They voiced support for an approach that integrates concepts of economic, social and environmental sustainability. Noting that even recent gains in social indicators are at risk in the absence of a long term financing plan, leaders pledged to work together to develop options for long term investment to strengthen the foundations of growth.

     

     

     

  • Nigeria achieves 7.1% growth in Q4

    Nigeria’s economy grew by 7.1 per cent in the fourth quarter, the Central Bank of Nigeria (CBN) has said.

    Growth was 6.9 per cent in the previous three months and 7.7 per cent in the same period the previous year, the bank said in a report on its website, citing figures from the National Bureau of Statistics.

    The pick up was largely driven by industrial growth, with the non-oil sector expanding 8.2 per cent and accounting for 87 per cent of all output, the bank said. Agricultural “areas adversely affected by the floods during the second half of 2012 were yet to recover fully from the impact.”

    The fiscal deficit of the country rose to N420.8 billion or 3.9 per cent of economic output, in the fourth quarter. That compares with a targeted deficit of N284.1 billion for the period and a gap of N489.5 billion in the previous three months, the bank said.

     

     

     

  • Shareholders endorse Union Trustee’s results

    Shareholders, yesterday approved the results of Union Trustees Mixed Fund. They also commended CDL Assets Management Limited for successfully managing the fund amid harsh economic environment.

    They said the fund’s net asset values of N1.8billiion and four kobo dividend are good enough, given the inherent problems in the nation’s macroeconomic environment.

    Speaking during the 4th Annual General Meeting (AGM) of the fund in Lagos, the National President, Independent Shareholders Association of Nigeria (ISAN), Mr Sunny Nwosu said there has been an improvement in the financial year ending April 30, 2012.

    Nwosu said investors are oblivious of the problems in the economy, and therefore believe that the Fund is being managed well.

    He said activities in the financial market are looking good, advising CDL to improve its returns on investment. He urged the firm to address the issue of unclaimed dividend by contacting the affected investors.

    Also, the Chief Executive officer, CDL Assets Management Limited, Mr Bade Adesina said plans are underway to grow the fund to an enviable height, add values to investors. Adehsina said the Fund is one of the few active mutual funds in the country, adding that it is growing despite volatilities in the financial markets.

    He said: “As at April 30, 2012, the gross income of the Fund has increased by 94.3 per cent to N248.7 million from N128million recorded in the previous year. The Fund also posted a net income after tax of N75.3million in the period under review. The retained earnings were N429.6million, while the net asset value of the Fund stood at N1.8billion. Based on these, we have been able to declare dividends in the past four years.”

    He said the offer and bid prices currently stand at N1.55 and N1.52, implying that the fund is growing well.

    According to him, efforts are being made to aggregate potentials in the market by investing in high yielding portfolios.

  • Cashless policy moves to Rivers, Ogun states

    The Central Bank of Nigeria (CBN) has concluded plans to extend the cashless policy to Rivers and Ogun States from July 1.

    The decision to extend the cashless project to these states was made at the last Bankers’ Committee Meeting held in Abuja.

    The CBN had earlier announced that the policy will take off from July 1 in four additional states after the Lagos pilot scheme. The states are Kano, Anambra and Abia States as well as the Federal Capital Territory (FCT) .

    CBN’s Head, Shared Services, Chidi Umeano said the aforementioned states and the FCT were chosen because of the large volume of cash transactions in some of their major cities such as Aba, Kano, Port Harcourt and Onitsha among others.

    The cashless policy implementation began in Lagos in January, last year. It is aimed at reducing the dominance of cash in the system. The policy specifies penal charges for individuals and corporate organisations that want to withdraw or lodge cash above prescribed limits. Under the policy, the CBN pegged the daily cumulative cash withdrawal or deposit limit for individual accounts at N500, 000 per day and N3 million per day for corporate accounts.

    Umeano explained that the policy earlier planned to be implemented in other states in January 2013 was deferred due to some infrastructural challenges. He said the CBN is also being careful to ensure that it makes use of resources in a smart way.

    This was corroborated by the CBN Deputy Governor Operations, Mr. Tunde Lemo. who explained: “When we talk about nationwide roll-out, we are also being careful to ensure that we make use of resources in a smart way. Cash doesn’t flow in the same volume in every state of the federation. What we would do in July is to look at those other market clusters where large volumes are transacted and add them to Lagos”.

    The Deputy Governor added: “It is cheaper that way because resources needed to cover the entire 923 square kilometres in Nigeria are huge. But you can achieve almost the same thing by looking at the pattern of cash distribution and you can cover about 90 per cent of that by adding about more locations to Lagos.

    “That is basically what we want to do. We would get those clusters and add them to Lagos. When we add those locations to Lagos, then we would have covered about 90 per cent of the cash volume. We would see how far that goes and once we perfect that, we then begin to look at contiguous.”

    Banks have continued to roll out more innovative electronic payment platforms to meet customers’ expectations. The cashless policy has been very successful in Lagos considering when it started and how far it has gone in terms of Point of Service (PoS) deployment. At the initial stage of Cash-less Lagos, there were less than 10,000 PoS in Lagos, but currently there are over 150,000 PoS machines in the state alone.

  • Don advocates budget reform

    There is need to reform the budget to enable the country achieve enhanced economic growth, Professor of Social and Political Environment of Business, Lagos Business School (LBS) Olawale Ajai has said.

    He said there was need to reform the budgetary process and for more effective participation in its preparation.

    Ajai will tomorrow, deliver a lecture, entitled: The 2013 Budget: Implication for Businesses and the Socio-political Environment, at the LBS Alumni Session.

    In a statement, LBS said Ajai will address the basis for predicting the performance of the budget, the direction and flows of costs-benefits, winners and losers among the stakeholders in the polity. He will also talk about opportunities for businesses and players in the socio-political environment.