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  • $1.2b debt: NCC, CBN secure reprieve for Etisalat

    $1.2b debt: NCC, CBN secure reprieve for Etisalat

    Reprieve came for Mobile Network Operator (MNO), Etisalat yesterday following a meeting convened by the Central Bank of Nigeria (CBN) and telecom sector regulator, Nigerian Communications Commission (NCC) to find a quick resolution to the loan default crisis facing the company.

    The meeting succeeded in halting the attempt by Etisalat’s creditors at bringing it under any form of take over. Receivership was completely taken off the table in a meeting that was very productive and constructive.

    According to a statement endorsed by Director, Public Affairs at the NCC, Tony Ojobo, the meeting, which held at the CBN Lagos Office, had the consortium of banks being owed and Etisalat in attendance. The banks and the MNO agreed to concrete actions that will bring all parties closest to a resolution.

    The CBN and NCC were able to secure for Etisalat the necessary oxygen to enable it continue to meet urgent operational expenses.

    CBN Governor, Mr Godwin Emefiele who chaired the meeting, was firm in declaring what needed to be done by both parties towards a quick resolution. The NCC equally made it clear everything necessary must be done to protect the 23 million Etisalat subscribers and also protect the telecom industry to prevent potential investors from developing cold feet.

    Meanwhile, in a renewed effort to ensure that Etisalat remains in business while the consortium of banks meet their obligations to their customers, a meeting will hold on March 16 to agree on a payment restructuring path going forward.

    The NCC will lead the CBN in a possible crucial meeting with Etisalat’s shareholders anytime soon.

  • $1b loan: CBN, NCC launch rescue mission for Etisalat

    $1b loan: CBN, NCC launch rescue mission for Etisalat

    A rescue mission was launched yesterday for troubled mobile giant Etisalat.

    The Central Bank of Nigeria (CBN) and the Nigerian Communications Commission (NCC) resolved to intervene in the over $1billion  loan repayment issue between the telco and its local creditors.

    According to the NCC, the decision was taken yesterday afternoon after a meeting in Abuja between the NCC  Executive Vice Chairman  Prof. Umar Danbatta and CBN Governor Godwin Emefiele.

    NCC spokesman  Tony Ojobo, in a short statement, said the meeting at the Central Bank Headquarters, Abuja was convened by the financial sector regulator at the instance of the NCC, the telecom regulator, to stave off the attempt by banks to take over Etisalat.

    “At the end of the meeting, the CBN agreed to invite Etisalat management and the banks to a meeting tomorrow (today), towards finding an amicable resolution.

    “The NCC, as a regulator of the telecom industry had moved quickly to intervene earlier in the week by reaching out to the CBN convinced of the negative impact such a bank take over will have on the industry.

    “NCC was worried about the fate of the over 20 million Etisalat subscribers and the wrong signals this may send to potential investors in the telecom industry,” Ojobo said.

    Access Bank yesterday said the telco was owing it N40 billion ($131 million).

    The lender’s Chief Executive, Herbert Wigwe said the loan talks were triggered 10-days ago when the company asked lenders to “stand still” on the loan for it to review its operations.

    He also said Etisalat Nigeria’s parent, Emirates Telecommunications Group (Etisalat) had converted a loan to the Nigerian company into shares to free up cashflows and was being asked to inject more equity capital.

    “Banks are saying we would need an equity injection or commitment to support the business. That is being discussed,” he told an analysts’ call when asked about Access Bank’s loan book.

  • CBN sustains forex supply with $170m disbursements

    CBN sustains forex supply with $170m disbursements

    The Central Bank of Nigeria (CBN) yesterday channeled $170 million as wholesale intervention in the interbank market to meet the requests for Business/Personal Travel Allowances and other pressing dollar demands.

    In a statement, the bank explained that the interventions were exigent as more customers of banks and other business people overcome the earlier difficulties in obtaining forex for their transactions, and in a bid to sustain the tempo of foreign exchange supply to the interbank forex market and ensure liquidity.

    CBN’s Acting Director, Corporate Communications, Isaac Okorafor, said the bank remained resolute in ensuring that it supplies enough forex to genuine customers of Deposit Money Banks and increase liquidity in the market.

    According to him, the uniqueness of the Wholesale Forwards was 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.

    With this development, importers who had hitherto been using bills for collection will now experience relief instead of having to patronize other more expensive sources.

    It will be recalled that the CBN only on Tuesday, injected another sum of $100 million 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 $1.2 billion for both wholesale and retail interventions.

  • CBN, NCC move to intervene in Etisalat loan issue

    CBN, NCC move to intervene in Etisalat loan issue

    The Nigeria Communication Commission (NCC) on Thursday said the Commission and Central Bank of Nigeria (CBN) had moved to intervene in the Etisalat loan issue.

    The Director of Public Affairs of NCC, Mr Tony Ojobo said this in a statement issued in Abuja.

    “After a meeting on Thursday afternoon in Abuja between the Executive Vice Chairman of  NCC, Prof. Umar Danbatta and the CBN Governor,  Mr Godwin Emefiele and his team, a decision was reached to intervene in the loan issue between Etisalat Nigeria and a consortium of commercial banks.

    “The meeting which was held at the CBN in Abuja was convened by the financial regulator at the instance of NCC and the telecom regulator to further deliberate on how best to stop the attempt by the banks to take over Etisalat.

    “At the end of the meeting, the CBN agreed to invite Etisalat management and the banks to a meeting tomorrow, Friday, toward finding an amicable resolution,’’ he said.

    Ojobo said that the NCC as a regulator of the telecom industry had moved quickly to intervene earlier in the week by reaching out to the CBN because it was convinced of the negative impact such takeover move would have on the industry.

    He added that NCC was worried about the fate of the over 20 million Etisalat subscribers and the wrong signals this might send to potential investors in the Telecom industry.

    It was reported that on March 8, Etisalat was had been taken over by three banks because of its N541.8 billion debt.

    However, NAN correspondent spoke with the Head of Public Relations, Etisalat Nigeria, Ms Oluseyi Osuntedo, dispelled the talk that banks had taken over the company.

    Osuntedo NAN in Lagos that discussions were still ongoing between the banks and the company.

    “Discussions are going on; nobody is taking up the company.

    “It is not true that we are being picketed, whoever gave the information is not telling the truth,” she said.

    A consortium of some foreign and Nigerian banks, including Guaranty Trust Bank, Access Bank and Zenith Bank, have been having a running battle with the mobile telephone operator, over a loan facility totalling 1.72 billion dollars (about N541.8 billion) obtained in 2015.

    The banks said their attempt to recover the loan by all means, was fuelled by the pressure from the Asset Management Company of Nigeria (AMCON), demanding immediate cut down on the rate of their non-performing loans.
    .
    NCC appears not to be favourably disposed to the takeover proposal as it believed that Etisalat is not only a viable going concern, but also willing and able to negotiate the servicing of its loans.

    Etisalat is Nigeria’s fourth largest telecoms operator with about 21 million subscribers as at January 2017, according to the NCC.

    It commenced business in Nigeria in 2009. (NAN)

  • CBN clears 3,114 BDCs for IMTOs dollar purchase

    CBN clears 3,114 BDCs for IMTOs dollar purchase

    •Dollar sale to BDCs to rise from $8,000 to $15,000

    The Central Bank of Nigeria (CBN) yesterday cleared 3,114 bureaux de change (BDCs) to buy dollars sourced form International Money Transfer Operators (IMTOs).

    Presdent, Association of Bureaux De Change Operators of Nigeria (ABCON) Aminu Gwadabe who disclosed this, said the IMTOs cash will be purchased this week. He said the naira closed yesterday at N463 to dollar.

    According to Gwadabe, the ongoing   volatility in the market was due to the scarcity of dollar especially at the BDCs segment of the market.

    The ABCON boss also said the CBN will next week, raise the weekly dollar supplies to BDCs from $8,000 to $15,000.

    There are at present, 35 licensed IMTOs approved by the CBN which include Aftab Currency Exchange Limited, AWS Malta Limited, Caperemit UK Limited, Centrexcard Limited, Colony Capital Limited among others.

    Others are Ria, Western Union, MoneyGram, WorldRemit RANS-Fast Remittance, UAE Exchange Center LLC, Wari limited, and Home Send S.C.R.L among others to help Nigerians in Diaspora remit dollar home and boost dollar liquidity.

    Also, the interbank forex market recently traded $540,000 in early deals at N375 per dollar, near a record low exchange rate hit last November, Thomson Reuters data showed. The local currency traded at a record low of 375.50 to the dollar last November on the official interbank market before it reversed losses.

    The interbank market traded a total of $3.77 million at multiple exchange rates, the data showed. It was quoted at 305.25 per dollar.

    In February the CBN  effectively devalued the naira for private individuals, offering to sell them the currency at around half the premium charged at the black market, in a bid to narrow the spread on the unofficial market.

    On Monday, the CBN asked lenders to set up tellers for retail customers to buy and sell dollars in order to ensure access to hard currency. The regulator also asked banks to process demand for retail forex users within 48 hours.

  • CBN’s forex intervention, artificial – Economist

    CBN’s forex intervention, artificial – Economist

    • says ERGP la is specifics

    The Central Bank of Nigeria (CBN) has been cautioned that its current foreign exchange (forex) intervention to stabilise the Naira is artificial and capable of scaring off foreign investors.

    Dr Anthony Aziegbemi, an economic consultant and partner at Value Fronteira Limited stated at his presentation on the “Way out of recession” on Wednesday that “daily roll out of restrictions and pumping out of forex creates uncertainty and will scare away foreign investors because they are not sure of what will happen to the rate and the value of the currency to enable them plan.”

    Dr Aziegbemi, who was a former legislator during the Olusegun Obasanjo-led administration, noted that “pumping forex out because we have it, once that dries up we will be back to square one. The value of the exchange rate should be determined by market forces.”

    “If you don’t follow these laws and you do it artificially, like banning of the 41 items from getting foreign exchange, the economy won’t work as expected.”

    Speaking on the way out of the current recession, Aziegbemi advocated for more money to be voted for the power, housing and works over this year’s figure of N370 billion in order to create jobs and stimulate the economy.

    The former lawmaker also criticised the CBN’s decision to increase interest rate from 11% to 12% arguing that this will not move the economy out of recession but he expects the Monetary Policy Committee (MPC) to cut rates at its next meeting.

    He said that countries that successfully came out of recession had to lower their monetary policy rates to encourage spending. “So raising the lending rate has made less money available in the system and more difficult to drag the economy out of recession,” he said.

    Aziegbemi also urged the federal government to drastically reduce the country’s import bill which stands at over $8 billion annually by at least half of that amount. He noted that “if we don’t curb our taste for foreign goods we will still be in trouble.”

    Also speaking on the recently released Economic Recovery Nas Growth Plan (ERGP) Aziegbemi lamented that the document lacked specifics on some of the plans and targets stressing that there was no information on how government hopes to meet 8% growth rate for the manufacturing sector by 2020 as stipulated in the document.

    The document he added does not have a fiscal stimulus package “which is what is needed to get out of recession.”

    His solution to get the country’s economy out of recession he pointed out include putting money into specific projects to generate employment and stimulate spending by the masses; reducing Company Income Tax (CIT) from 30% to 20%; eliminating leakages in all forms including the CBN released g the names of the companies that benefit from its interventions and those behind the companies for transparency sake; and granting amnesty to treasury looters with a moratorium of six months.

    While commending government for its efforts to recover stolen public funds, Aziegbemi noted that lengthy legal battles and the fact that in the two years that the government has been prosecuting the war, only one high-profile figure has so far been convicted while according to him “between N5 and N10 trillion are reckoned to be buried in soak aways, mud houses and farms across the country.”

    To get some of this money back, the ex-lawmaker advocated for amnesty for these looters to return what they have stolen but after the expiration of the six months moratorium any looter that fails to return the loot should be made to face the law.

    [news_box style=”2″ display=”tag” tag=”Forex” count=”4″ show_more=”on” show_more_type=”link”]

  • Pumping dollars to strengthen Naira, an artificial solution – Expert

    Pumping dollars to strengthen Naira, an artificial solution – Expert

    An economist, Dr Anthony Aziegbemi, described the Central Bank of Nigeria’s (CBN) latest strategy of strengthening the value of Naira by injecting  excess foreign currencies into the market, as an artificial solution.

    Aziegbemi said this on Wednesday in Abuja at a round-table on the “Way out of Recession’’, organised by Value Fronteira Limited.

    The CBN, in the last two weeks, injected over 1.14 billion dollars through the inter-bank market, to meet legitimate demand of foreign currencies for travels, school fees and medicals.

    Through this, the CBN hopes to strengthen the value of Naira and simultaneously crash the demand at the black market segment.

    “Right now CBN is pumping so much Forex because it has the money. But once the money dries up, we are back to square one.

    “Economics is a social science, thus contains laws that govern how economies should be run.

    “If you don’t follow these laws and you do it artificially, like banning of the 41 items from getting foreign exchange, the economy won’t work as expected.

    “You need to attack the foundation of the economy. You need to get the manufacturing industry up and moving. That is the only way we will have sustainable progress,’’ he said.

    Aziegbemi said that the right way to strengthen the Naira was to invest in critical infrastructure and ensure that the manufacturing  and agriculture sector got the necessary support to grow.

    In proffering solution out of recession, Aziegbemi called for the downward review of the current monetary policy rate.

    He recalled that with obvious signs of recession and rising inflation, instead of lowering the monetary rate, the CBN instead, raised it from 11 per cent to 12 per cent and later to 14 per cent.

    He said that countries that successfully came out of recession had lowered their monetary policy rates during such trying times to encourage spending.

    He cited the case of China, Ethiopia, India, Malaysia, Poland, Mexico and Turkey that reduced lending rate, increased spending and used fiscal policy to stimulate demand in the face of collapsing global demand.

    “The Monetary Policy Committee needs to cut down the monetary policy rate to at least 8 per cent.

    “ The cause of inflation is our over dependence on foreign products and not excess liquidity. So raising the lending rate has made less money available in the system and more difficult to drag the economy out of recession.

    “What we need to do is to reduce the lending rate rather than tightening people’s hands,’’ he said

    Aziegbemi advised the government to continue to pay special attention to agriculture and agric-businesses, work on enhancing the sources of Forex and ensure better fiscal and monetary policy coordination.

    He canvassed for amnesty for treasury looters, to allow voluntary return of looted funds and encourage government to commence immediate implementation of projects and programmes that would stimulate the economy.

  • Rate convergence likely over CBN’s dollar supplies

    Rate convergence likely over CBN’s dollar supplies

    • $8.75b spent yearly on currency subsidy

    The ongoing weekly dollar supplies by the Central Bank of Nigeria (CBN) at the interbank market are expected to facilitate exchange rate convergence in the coming months, analysts have said.

    Speaking on the development, the Managing Director, Financial Derivatives Company Limited, Bismark Rewane, said the convergence between the parallel and official rates, has started after the CBN’s sustained dollar interventions in the interbank.

    He said: “Currency misalignment is part of the structural defects of the economy. The exchange rate has been and continues to be a major subsidy of the elite and the working class in Nigeria, even as approximate value of subsidy is $8.75 billion per annum.”

    He said the CBN allocates $1 million weekly to Deposit Money Banks (DMBs) and $4 million to Travelex for sale to customers for personal expenses, basic travel, medical needs and school fees. According to him, banks are also expected to sell at 20 per cent markup (maximum) of the Interbank Foreign Exchange Market rate.

    Rewane said although the market remains segmented with multiple rates attached to each of its segment, consistency in delivering weekly forex supplies could see the parallel market appreciate towards the Bureaux De Change rate of N400 to a dollar.

    Thomson Reuters data had showed that the interbank forex market had on Monday traded at $540,000 in early deals at N375 per dollar, near a record low exchange rate hit last November. The local currency traded at a record low of N375.50 to the dollar last November on the official interbank market before it reversed its losses.

    Rewane said increased  borrowing and rising oil prices have seen reserves building up to $29 billion, even as recent forex initiatives by the apex bank will slow reserve accretion.

    “Plans to build up reserves to $40 billion seem far-fetched with the new forex policy initiative, increased foreign borrowing and higher oil prices will support the CBN with the ammunition needed to ensure the forex market remains liquid,” he said.

  • CBN, NDIC struggle for control of dormant accounts’ fund

    The Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) tried to convince the House of Representatives Committee on Banking and Currency that they would use the proceeds of dormant accounts in commercial banks  judiciously.

    The two organisations spoke during the public hearing on a bill for an Act to Amend the Banks and other Financial Institutions Act, to among other things, establish a Deposit Fund at the CBN, for Standardisation and Management of Dormant Accounts.,

    Kofo Alada, who represented the  CBN said the amendment should give the the apex bank ‘certain latitudes’ to manage the Dormant accounts fund.

    According to him, the accrued funds into the dormant accounts would be used to finance infrastructure and also assist CBN in effectively discharging its duties  as lender of last resort to the deposit banks and other financial institutions.

    The provisions of the bill, he said, should not be restricted  to deposit banks but also extended to specialized banks that accept deposits.

    Some depositors, he said are in prison hence their accounts hence were declared dormant, and that accounts that became dormant because of liquidation were not covered by the bill.

    However, Belema Taribo, Board Secretary /Director (Legal) of the Nigerian Insurance Deposit Corporation (NDIC), said management of the dormant account should be given to the Corporation by the Green Chamber.

    According to him, the fund would be justifiably used as it will be invested in government securities as provided in the NDIC Act.

    Unclaimed funds, he said should be redrafted in the bill to include: “process of local and foreign currency, drafts or any instruments not yet presented for payment by beneficiaries or funds received from may person without sufficient details as to the rightful beneficiary, judgement debt for which judgement creditor has not claimed the amount of judgement award.”

    Taribo said despite the introduction of Treasury Single Account (TSA), there are several dormant accounts belonging to Government’s agencies and parastatals, adding that insider abuse is negatively affecting the banking industry.

    He also called for inclusion of dormant accounts of government agencies in the bill but that accounts under litigation should not be included in the pool of dormant funds.

    He urged the National Assembly  to make laws banning the accessibility to loans by bank owners or directors from their own banks.

    Chairman of the Committee Jones Onyeriere was unhappy at the lack of financial regulation from the apex bank on commercial banks.

    He said: “I’m worried to the extent that if you look at the BOFI Act amendment bill, you will agree with me that most banks create unnecessary infractions. How will you ask a bank to pay N100,000 for an infraction, that is why the bank can afford to give themselves billions of credit facility at the expense of the depositors.

    “With respect to the regulator’s, there’s nothing weighty about the consequences of not doing your job as it were because why would you have the banking supervision department and you know that the law provides that no shareholder or bank director will give credit to himself or anybody whosoever related to him or her in excess of N50,000 but you are giving billions of naira.

    “CBN, you know that no bank has the authority to give any loan whatsoever without the express approval of the CBN and you allow that to happen.

    “So the time has come to take critical look at the BOFI Act and trust me, in the next two to three months,we will come out with the amendment, enough is enough,” he said.

  • Forex: CBN pumps additional $100m into market

    Forex: CBN pumps additional $100m into market

    The Central Bank of Nigeria (CBN) on Tuesday injected another sum of 100 million dollars into the interbank foreign exchange market, its acting Director, Corporate Communications, Isaac Okorafor has said.

    Okorafor said the measure became necessary as part of the initiatives to make Forex easily accessible, thereby crashing demand at the black market.

    The director made this known to newsmen in Abuja on Tuesday.

    He said that the measure was to fund the commercial banks with enough Forex to cater for the request of customers and to meet basic travelling allowance, medicals and tuition fees.

    This fresh injection by the apex bank brings the amount so far pumped into the interbank Forex market within the last two weeks to 1.14 billion dollars for both forwards and invisibles.

    A former Economic Adviser to former President Olusegun Obasanjo, Prof. Ode Ojowu said the measure would further create problems for currency speculators who had not recover from the sudden appreciation of the Naira.

    “It appears this time around, the CBN has decided to become smarter than the market manipulators by putting on its cap of authority to look beneath the market forces,” he said.

    Ojowu also commended the efforts of the CBN in ensuring the continuous appreciation of the Naira.

    He attributed this to good policy and effective communication strategy, which had increased dollar supply to the market. (NAN)