The Nation Newspaper

Tag: Foreign

  • ‘Why foreign investors are dumping Nigerian equities’

    Foreign investors are nervous about Nigeria’s macroeconomic and monetary outlook and increasing political risks as the nation struggles with steep decline in global crude oil price, insecurity and political tension.

    Against the background of a recent exclusive report by The Nation that Nigeria recorded net foreign portfolio investment deficit of N101 billion over the past 10 months, financial and investment experts said the sell pressure from the foreign investors was due to anxieties over the nation’s economy and political situation.

    Chief Executive Officer, Stanbic IBTC Asset Management Limited, Mr. Olumide Oyetan, said the foreign investors were concerned about the adverse effect of the decline in global crude oil price on Nigeria’s macro economy, especially the stability of the nation’s monetary and exchange system.

    According to him, foreign investors were anxious Nigeria may be forced to devalue its currency directly or indirectly, thus exposing them to foreign exchange risks and potential loss of value.

    He however noted that the downtrend at the stock market occasioned by the foreign investors-induced sell pressure presents opportunities for investors to build up their portfolios at good prices.

    Head, research and investment advisory, Sterling Capital Markets, Mr. Sewa Wusu, also said investors were anxious about Nigeria’s macroeconomic and monetary outlook in the light of the declining global oil prices and rising economic risks.

    According to him, foreign investors are pulling out from their Nigerian assets including stocks because of exchange rate risks and concerned over Nigeria’s macroeconomic and monetary stability.

    He said foreign investors were concerned and were pulling out to play safe because of apprehension over implicit and explicit devaluation of Naira, especially in the light of the declining oil prices and its impact on Nigeria as oil-dependent mono-product economy.

    “It’s flight to safety, they are pulling out from Naira-denominated assets including stocks, we also saw that affecting the bond market too,” Wusu said.

    Head, financial advisory, GTI Capital Limited, Mr. Kehinde Hassan, said the political risk was also a contributing factor as investors are worried about the tension in the political terrain as the 2015 elections draw near.

    According to him, the foreign portfolio inflow-outflow scenario may remain unchanged till the end of this year.

    Head, equity research, FBN Capital Limited, Mr. Olubunmi Asaolu, underscored the need for Nigeria to further diversify its economy to stave off negative impact of decline in crude oil price.

    According to him, intense naira pressure due to the recent fall in oil prices has killed off any hopes of a late-year recovery in Nigeria’s equity market. This has further highlighted the consequences of the nation’s huge dependence on the oil sector.

    Asaolu said the falling oil revenues do not bode well for reserves and increase the risk of currency devaluation, which simultaneously lead to the offshore investor community finding ways to exit. This then compounds foreign exchange pressure.

    In its latest Foreign Portfolio Investment (FPI) report, the Nigerian Stock Exchange (NSE) indicated that Nigeria has so far recorded a net foreign portfolio deficit of some N101.41 billion over the past 10 months as divestments significantly outpaced investments by foreign investors.

    The NSE report is generally regarded as a credible gauge of foreign portfolio investments in Nigeria as it coordinates data from nearly all active investment bankers and stockbrokers. Nigeria presently operates a mono stock exchange, which makes the NSE the sole gateway to the nation’s stock market and the NSE’s benchmark indices, the country indices for Nigeria.

    The NSE report used two key indicators – inflow and outflow – to gauge foreign investors’ mood and participation in the stock market as a barometer for the economy. Foreign portfolio investment outflow includes sales transactions or liquidation of equity portfolio investments through the stock market while inflow includes purchase transactions on the NSE.

    The latest report, which aggregates data for the 10-month period ended October 31, 2014, showed that foreign portfolio outflow was N676.67 billion as against inflow of N575.26 billion during the period, representing a net deficit of N101.41 billion.

    Foreign investors remained the dominant bloc at the Nigerian stock market. Total foreign transactions during the period stood at N1.25 trillion compared with domestic transactions of N964.74 billion, representing foreign-domestic ratio of 56.5 per cent to 43.4 per cent. Aggregate foreign and domestic transactions stood at N2.22 trillion over the 10-month period.

    Nigerian equities market particularly has witnessed increased foreign divestment in recent period. In October, when foreign transactions accounted for 87.5 per cent of total market transactions, foreign outflows totaled N101.22 billion as against inflow of N52.06 billion. Total transactions stood at N175.10 billion in October, with Nigerian individual and institutional investors only contributing N21.82 billion.

    The foreign portfolio outflow had impacted negatively on the overall market situation at the Nigerian stock market. In October, the stock market lost an average of 8.88 per cent, equivalent to about N1.17 trillion.

    Aggregate market value of all quoted equities closed October at N12.437 trillion compared with the opening value of N13.607 trillion for the month, representing a loss of N1.17 billion. The All Share Index (ASI), the composite value-based index that tracks prices of all quoted equities on the NSE, closed October at 37,550.24 points as against 41,210.10 points recorded as opening index for the month.

    The decline in October pushed the average year-to-date for the past 10 months to -9.14 per cent. This simply amounted to a loss of N789 billion, although the average decline in market capitalisation was moderated by new listings.

    The ASI indicated a 10-month average decline of 9.14 per cent. The ASI, as the pricing barometre for the stock market, serves as the country index and measures the pricing direction of the country’s stocks within a particular period.

    Aggregate market value of all quoted equities had opened this year at N13.226 trillion, indicating a loss of N789 billion. The ASI had opened the year at 41,329.19 points, representing average 10-month return of 9.14 per cent.

  •  Tales from NDDC’s foreign scholars

     Tales from NDDC’s foreign scholars

    The Niger Delta Development Commission’s decision to build qualitative capacity through its yearly overseas post-graduate scholarship programme for indigenes of the region is one of the best things to happen to the oil-bearing areas. This is even more so because, after all, the human resource is more important than physical infrastructure.” That was the opinion of Mr. Lenin Francis, one of the 210 beneficiaries of the 2014 Post-Graduate Foreign Scholarship programme sponsored by the NDDC.

    Francis, who is from Bayelsa State and has enrolled for a Masters’ degree in petroleum engineering in the University of Salford, England, sees the programme as a capacity builder that will equip the youths to join in developing the Niger Delta. “I pray that the NDDC will continue with this laudable programme which has helped many youths in the region. The commission should also extend the scholarship to other students at the undergraduate level as well, in order to increase the number of beneficiaries.”

    He said the foreign scholarship was a boost not just for the beneficiaries but for the entire Niger Delta, because it would give the youths the opportunity to develop themselves and acquire technical expertise for the benefit of the people of the region.

    Mr. Stevyn Akosubo, another beneficiary who is heading to Coventry University in the United Kingdom, said the NDDC had given them an opportunity to widen their horizon and open their eyes to international best practices. “It is going to enhance the knowledge I have acquired here in Nigeria. It is a great opportunity for me to meet and interact with other students from different parts of the world. We owe our country and the Niger Delta, in particular, a duty to succeed,” he said.

    He further said that the scholarship scheme, which was given to 210 graduates in this batch from the nine Niger Delta states, needs to be increased.  ”It is clearly insufficient for the teeming youths of the region. Currently, the scholarship scheme is enjoyed by less than 15 per cent of qualified applicants, with some states getting only 10 slots. Surely, the NDDC can improve on this number,” he said.

    Giving her own perspective, Miss Amaka Uchendu, who is heading to the University of Essex in the UK, said that the youths often find it difficult to start their lives after their first degrees. “With this scholarship programme, it will be easier for us to go for the opportunities which we may not otherwise have been able to pursue on account of not having money. So, the NDDC has helped us to kick start our lives and we say a big thank you to the commission for giving us the opportunity to move forward and make our lives better.”

    The young graduates who are all set to jet out of the country for their post-graduate studies were all gathered at the Landmark Hotel, Port Harcourt to collect their scholarship award letters. The successful graduates from the 9 states in the Niger Delta were also given pre-departure briefings and put through a formal orientation.

    In his address to the NDDC scholars, the Managing Director of the commission, Sir Bassey Dan-Abia, charged them to be good ambassadors of Nigeria in the foreign universities by applying themselves studiously to their academic programmes, so as to excel in their chosen fields of study.

    The NDDC Managing Director, who was represented by Barr. Sunday Obiofiong, his Special Adviser on Administration and Human Resources, assured the scholars that funds for their school fees and accommodation would not be delayed for any reason. He told them that previous beneficiaries of the scholarship programme set enviable standards for them to emulate. “Those before you did not disappoint us and we trust that you too will make us proud by your conduct and academic achievements,” he said.

    He said that the commission would continue to sponsor Niger Delta students to universities across the globe, and in return expect worthy response and commitment as an appreciation of the fact that the monies expended on them belonged to the people.

    The NDDC Director for Education, Health and Social Services, Dr. Solomon Ita, explained that the Foreign Post- Graduate Scholarship Scheme, which was started 4 years ago, was meant to equip Niger Delta youths with relevant training and skills for effective participation in the local content programme of the Federal Government.

    He said that since the inception of the scheme, the NDDC had trained 811 graduates at post-graduate level, noting that the commission had consistently sponsored 200 students yearly to foreign universities to acquire Master’s and Doctorate degrees in science disciplines. This year, he said, the number was increased to 210. He explained that emphasis was placed on science disciplines because of a noticeable deficiency in this area in the oil industry, which made it difficult to employ young graduates from the region in that critical sector. “You know we have a lot of gaps in our oil and gas sector, and that is what we desire in the Niger Delta region and Nigeria at large”.

    According to him, there was need to position young graduates from the region to compete globally in various professional fields, noting that before now, the oil and gas industry had discriminated against the fresh graduates whom they dismissed as not possessing requisite qualifications. ”We also need to encourage our youths to show interest in engineering for the sake of our projects. We need qualified engineers that can manage our projects just as in agriculture, environmental science and other science related courses,” the director said.

    Dr. Ita stressed that the foreign scholarship scheme was designed to expose the graduates to other developed environment outside the country. “It is our belief that the skills they acquire will add value to the development of the Niger Delta. So far, we have been proved right as those that benefited from the programme in the previous years have justified the need for the advanced training programme,” he said.

    He recalled the outstanding performance of one of the beneficiaries who studied in the United Kingdom in 2012. The star NDDC scholar of that year, Miss Francisca Chiedu, was elected as President of the United Kingdom University Student Union. That feat, he said, demonstrated that Nigerian youths could lead innovative changes within and outside the country. “Her success was indeed a victory for the NDDC. It is a testimony of the capability of the new generation of Nigerian to effect the change they seek and champion worthy causes they desire.”

    The NDDC director said he was optimistic that the process adopted in selecting beneficiaries of the foreign scholarship scheme would continue to produce first class performers. “it will guarantee the Niger Delta region and Nigeria at large, the likes of Francisca Chiedu, the Information Engineering and Network Management student in the Robert Gordon University, Aberdeen, who brought glory to NDDC, the region and nation.”

    Miss Chiedu, a University of Benin Computer Science graduate, showed appreciation for what the NDDC did for her. She wrote back to the commission to say that “truly life presents us with different opportunities. For me, every moment in our life offered a door, all I had to do was choose, I chose to dream, I chose to think, I choose to move, I chose to act and I chose to win.”

    Other potential winners have been lining up to be raised by the NDDC. It was not surprising, therefore, that 4, 000 graduates applied for this year’s post-graduate foreign scholarship programme. The successful ones were selected through a transparent electronic examination conducted at the Rivers State University of Science and Technology, Port Harcourt. Mr. Asawo Ibituro, a consultant for the electronic test, said that e- exams promote transparency. “There is no room for anybody to change your grade since your picture and details are in the system, after writing the examination your score is reflected immediately”.

    The interview process for this year’s foreign postgraduate scholarship was concluded in April and the students were supposed to have reported at their universities in September. However, there were some delays which were attributed to the budgetary process of the Federal Government.

    One of the candidates who participated in the final interview, Mr. Peter Keshi, said: “Following the transparent and swift manner in which the tests and interview process was conducted, we expected quite a lot. This year’s qualifying exams for the scholarship programme were rounded up on the 5th of April, we were invited for interviews shortly in that same month and the interview process was equally done on the 24th of April. One would have expected that all successful candidates would by this time be in their various universities across the world.”

    Keshi didn’t have to wait for too long as the NDDC had finalised all arrangements to facilitate the movement of the graduates to their various universities for their post-graduate studies. The beneficiaries who attended the orientation/pre-departure briefing were visibly anxious to get moving. As they were being briefed by Mr. Umanaette Udoh, an NDDC consultant, the UK-bound graduates were impatient, listening to how to get around London. One of them asked: “Who wants to learn how to use the sub-way? Some of us have been living in London for many years now.”

  • Foreign investors dump Nigerian equities

    •NSE loses N1.44tr

    Foreign investors are scaling down their Nigerian portfolios as global concerns about Nigeria’s macroeconomic, political and security outlook pressured the stock market to a whooping loss of N1.44 trillion last week.

    Aggregate market value of all quoted equities on the Nigerian Stock Exchange (NSE) dropped to N11.001 trillion at the weekend as against its opening value of N12.437 trillion for the week, representing a loss of N1.44 trillion.

    The All Share Index (ASI), the main composite index that tracks all quoted equities, dropped by 11.54 per cent to 33,216.31 points compared with 37,550.24 points recorded as index-on-board for the week. The spiral decline exacerbated the bearishness that had gripped the market in October.

    Nigerian investors lost an average of 8.88 per cent in October, equivalent to about N1.17 trillion, as the stock market set on a grueling fourth quarter that looks to exacerbate the recession at the equities’ market.

    Aggregate market value of all quoted equities closed October at N12.437 trillion compared with the opening value of N13.607 trillion for the month, representing a loss of N1.17 billion. The ASI closed October at 37,550.24 points as against 41,210.10 points recorded as opening index for the month.

    The decline in October pushed the average year-to-date for the past 10 months to -9.14 per cent. This simply amounted to a loss of N789 billion, although the average decline in market capitalisation was moderated by new listings.

    The average-year-to-date return last week rose to 19.63 per cent.

    Stockbrokers attributed the steep decline to the open market orders by foreign investors exiting their positions in Nigerian equities.

    Analysts at Cowry Asset Management Limited, a top investment banking firm, said the continued onslaught on Nigerian equities was “due to outflows of foreign portfolio investments”.

    A six-month report for the first half ended June 30, 2014 showed that foreign investors accounted for 60.84 per cent of total turnover value in the Nigerian stock market as against 39.16 per cent recorded by Nigerian investors.

    Total foreign transactions stood at N705.15 billion as against N453.91 billion by Nigerian investors. Total transactions during the period thus stood at N1.159 trillion. However, there were more outflows than inflows with net foreign deficit of more than N100 billion. Total foreign outflows stood at N402.63 billion as against foreign inflows of N302.52 billion.

    Earlier reports had indicated general decline in foreign investments as the overall trend continued to show net deficit with outflows more than inflows. While foreign participation declined from 75.25 per cent in April to 45.56 per cent in May, domestic participation more than doubled from 24.75 per cent to 54.44 per cent.

    The five-month report for the period ended May 31, 2014 detailed month-on-month as well as periodic transactions by both foreign investors and Nigerian investors.

    According to the report, the quantity of total foreign transactions dropped by about N47 billion in May to N91.9 billion, its lowest position in four months. Besides, the inflow- the buy side of the foreign transactions, declined by about N24 billion from this year’s high of N65.1 billion in April to N41.3 billion in May, its lowest position in three months.

    Total transactions trended to its high of N201.61 billion in May, driven largely by significant increase in transactions by Nigerian investors, which rose from N45.64 billion in April to N109.75 billion in May.

    Five-month cumulative analysis however still underlined the dominance of foreign investors, who accounted for about 63 per cent of the turnover on the NSE during the period. Aggregate turnover during the period stood at N933.55 billion, consisting of N587.15 billion from foreign investors and N353.41 billion from Nigerian investors.

    Buy-sell analysis of the foreign transactions showed that foreign investors had taken out more than they invested during the period. Foreign outflows stood at N353.41 billion within the period as against inflows of N233.74 billion.

    In April, foreign investors traded N138.79 billion worth of shares including sales transactions of N73.73 billion and buy transactions of N65.06 billion. Total domestic transactions stood at N45.64 billion. Total transactions during the month stood at N184.43 billion.

    The foreign sale-buy trend in April followed the same trend in recent months, although the momentum of buy transactions appeared to be picking up. In the first quarter, nearly two-thirds of foreign portfolio transactions were on the sell side.

    According to the NSE, total foreign outflows stood at N229.03 billion in the first quarter, representing some 64.2 per cent of total foreign transactions during the period. Total foreign inflows stood at N127.41 billion. Altogether, foreign investors’ deals accounted for N356.50 billion during the three-month period, more than 65.11 per cent of total transactions of N547.51 billion. This indicated that Nigerian investors accounted for N191.01 billion, 34.89 per cent of total transactions, during the period.

    Month-on-month analysis showed that there was increase in the momentum of foreign transactions in March 2014, with increases in both sell and buy orders. However, the downtrend continued to dominate transactions. Total foreign outflow in March 2014 stood at N75.42 billion as against inflow of N55.13 billion, totaling N130.55 billion. Foreign investors accounted for 78.25 per cent of total transactions-foreign and domestic, of N166.84 billion in March 2014.

    The flow of investments in March 2014 contrasted sharply with the situation in March 2013 when there were more inflows than outflows. Total foreign inflows totaled 53 per cent of total foreign transactions in March 2013. Total foreign transactions stood at N80.14 billion in March 2013, consisting of inflow of N43.13 billion and outflow of N37.01 billion.

    Month-on-month, the outflows in February are about 107 per cent higher compared to January 2014 and about 183 per cent compared to February 2013. While total transactions at the NSE increased from N181.97 billion in January 2014 to N198.70 billion in February 2014, foreign outflows accounted for the increased tempo of activities and the higher proportion of foreign participation to local participation.

  • Expert frowns against usage of foreign contractors by govt

    Expert frowns against usage of foreign contractors by govt

    The immediate past Chairman, Nigeria Society of Engineers (NSE) Ibadan, Oyo State  chapter, Mr Olugbenga Ilori has condemned what he called the excessive usage of foreign contractors by government, which he claimed has caused degeneration to engineering profession.

    Ilori spoke while delivering a lecture entitled:” Engineering Development: The necessary tool in nation building” at the 20th Arokodare Memorial lecture in Ibadan, the Oyo State capital.

    According to him, this step amounts to waste of government resources and retrogression of engineering development in the country.

    Ilori said:” Nigeria has no re?ason to look outward for consultants if we are to develop technologically. What magic will the Chinese perform on railway modernisation that Nigerian consultants cannot. Do?. It took the Chinese 40 years to study and develop three Gorges Dam which is now the largest dam in the world, supplying 10 per cent China’s electricity consumption. They did not call on German or Italians for help. The Nigerian, will rush to foreigners.

  • Fears over foreign exchange reserves

    Analysts at FBN Capital have said the Central Bank of Nigeria (CBN’s) expectations of foreign exchange reserves increase to about $45 billion by year-end may not be realised.

    The reserves have come under pressure in recent months over declining oil prices and need to support the naira. The reserves stood at $39 billion on October 23, and were at $39.56 billion on September 26, down 0.15 per cent from the previous month, data from the CBN showed.

    Reserves stood at $39.62 billion in August and were $45.66 billion in September last year.

    Further analysis showed that reserves which were at $39.65 billion on August 25 and was at $38.4 billion on July 17. The rate of accretions to the reserves has been marginal but consistent since the CBN reviewed the bureau de change (BDC) policy guidelines.

    FBN Capital said the apex bank uses administrative measures to support its exchange-rate agenda. It said the mandatory recapitalisation of bureaux de change to stem leakages is one of such measures.

    According to the firm, the fall in the international price of Nigeria’s benchmark Bonny Light crude to about $95/barrel has fuelled fears that the CBN will be unable to hold the line on the naira exchange rate.

    “There remains a cushion of close to $20/barrel above the assumed export price in the 2014 budget although in reality pressures in the market develop far more quickly, which we can detect from the reluctance of offshore portfolio investors to participate in the most recent auctions of Federal Government of Nigeria bonds and Nigeria Treasury Bills,” it said.

    According to the firm, official statements give the impression that some of the oil production losses have been recovered, a claim, it said, it was unable to confirm in the absence of a unified source of metering.

    “As for the price, we do not think that global demand warrants significant further weakness. We also point to the many geopolitical risks and OPEC’s (Organisation of Petroleum Exporting Countries) interest in arresting the decline. The level of official reserves has settled on a plateau of $39.6 billion this month but still provides nine months’ merchandise import cover,” it said.

    Another measure to boost the naira, it said, is dollarisation of the banking system. “The CBN data though to March 2014 shows a limited build-up to 25.7 per cent of commercial banks’ total deposits,” it said.

  • Foreign reserves fall to $39.56b

    Foreign reserves fall to $39.56b

    The nation’s foreign reserves fell to $39.56 billion by September 26, down 0.15 per cent from the previous month, data from the Central Bank of Nigeria (CBN), have shown.

    The reserves stood at $39.62 billion in August and were $45.66 billion in September last year. Currency traders attributed the fall to draw downs by the CBN to support the naira.

    Data from the CBN, showed that the reserves stood at $39.65 billion on August 25 and  $38.4 billion on July 17. The rate of accretions to the reserves has been marginal but consistent since the CBN reviewed the Bureau De Change (BDC) policy guidelines.

    The reserves were at $37.23 billion on June 25; $37.26 billion on June 26; $37.31 billion on June 27. The reserves also rose to $37.54 billion on July 1 and continued the upbeat till the current position.

    Further analysis showed that before the upbeat, the reserves had maintained a steady decline after closing last year at $42.85 billion.

    The year-end figure represented a decrease of $0.98 billion or 2.23 per cent, as against the $43.83 billion recorded at end- December 2012. The reserves dropped to $38.79 billion as at March 12. Analysts said the reserves declined as imports of fuel and foods soared.

    But the CBN said the decrease was driven largely by the increased funding of the foreign exchange market in the face of intense pressure on the naira and the need to maintain stability, adding that the pressure on the external reserves was deemed to be consistent with the seasonal annual payment of dividends to foreign investors

    The CBN had on June 24, rolled out new guidelines for BDCs operation. The regulator raised the capital base for operators from N10 million to N35 million, plus additional caution deposit of N35 million to be kept with the CBN at zero interest rate.

  • Analysts doubt CBN’s expectations on foreign reserves

    Analysts at FBN Capital have said the Central Bank of Nigeria’s (CBN) expectations of foreign exchange reserves increase to about $45 billion by year-end may prove overly ambitious.

    The investment and research firm, said the apex bank uses administrative measures to support its exchange-rate agenda. It said the mandatory recapitalisation of bureaux de change to stem leakages is one of such measures.

    According to the firm, the fall in the international price of Nigeria’s benchmark Bonny Light crude to about $95/barrel, has fuelled fears that the CBN will be unable to hold the line on the naira exchange rate.

    “There remains a cushion of close to $20/barrel above the assumed export price in the 2014 budget, although in reality pressures in the market develop far more quickly, which we can detect from the reluctance of offshore portfolio investors to participate in the most recent auctions of Federal Government of Nigeria bonds and Nigeria Treasury Bills,” it said.

    According to the firm, official statements give the impression that some of the oil production losses have been recovered, a claim, it said, it was unable to confirm in the absence of a unified source of metering.

    “As for the price, we do not think that global demand warrants significant further weakness. We also point to the many geo-political risks and OPEC’s interest in arresting the decline. The level of official reserves has settled on a plateau of $39.6 billion this month, but still provides nine months’ merchandise import cover,” it said.

    Another measure to boost the naira, it said, is dollarisation of the banking system. “The CBN data through to March 2014 showed a limited build-up to 25.7 per cent of commercial banks’ total deposits,” it said.

     

  • Dip in foreign investments

    Dip in foreign investments

    •To reverse the trend, govt must tackle insecurity and check political violence

    Nigeria’s economy may have remained among the top three investment destinations in Africa despite its numerous socio-political challenges. There are, however, increasing signs of political uncertainties and the spate of insecurity not only taking their toll but also impacting on the general economic outlook. Indeed, if the latest figures from the Nigeria Stock Exchange (NSE) are anything to go by, foreign investors may have begun to leave our shores even before the countdown to the 2015 elections.

    From the figures obtained from the NSE, between June and July, the portfolio of foreign investments actually declined by 52 percent. To be more specific, whereas the value of foreign investments as at the end of June stood at N118 billion, it dipped to N56.42 billion as at the end of July – a whopping N61.58 billion difference.

    By way of contrast, the volume pumped in by domestic investors actually jumped appreciably from N107.51 billion in June to N167.77 billion in the month of July.

    No doubt, countless explanations have been rendered, all of them, admittedly, making eminent sense. Topmost of them is the nsecurity in the country, particularly the inability of the Federal Government to rein in the activities of the murderous terrorist group – the Boko Haram. Not least in this regard are the heightened political risks as the 2015 general elections draw near. Taken together with other factors beyond the nation’s borders, there certainly would be some good reasons to see the development as inevitable.

    It is sad that  elections remain a source of apprehension in the country despite the years of democratic experiments we have had. In many other places,  people perform this civic responsibility without any disruptions to their daily activities. If the conduct of elections is costing the nation this dearly in direct economic terms alone, it follows that the government must do something about our electoral process. We should be able to conduct credible and transparent elections without huge costs to our economy.

    The immediate lesson in all of these must be that insecurity, uncertainties and investments do not mix – the reason serious countries work at creating stable environment for businesses of all shades. The reality is that the nation still has a long way to go in terms of making its business environment truly competitive.

    Today, the question of how much worse things would get before they get better appears to have been answered by the World Bank in its latest placement of Nigeria on 147th position out of 189 nations in its 2014 edition of Doing Business Report.

    There is however a greater lesson which the nation ought to learn. This lesson stems from the bitter tales of 2008 when the so-called foreign investors exited at the onset of the global credit crisis, leaving their local counterparts to rue their losses. What this tells us is that entry is no guarantee of permanent stay; and that when all is said and done, only truly indigenous businesses would stay when uncertainties come.

    Moreover, given their legendary staying power, it goes without saying that the local business investor would do far better, given a fraction of the incentives available to his foreign counterpart. Rather than the current obsession with foreign investment, the Federal Government would do well to concentrate on improving the business environment, bearing in mind that the nation’s economic salvation does not lie in the hands of any foreigner, but in the hands of the local investor.

  • ‘Why foreign carriers don’t sign agreements with local airlines’

    The Regional Manager, Africa and Middle East, South African Airways, Mr Aaron Munetsi, has identified poor understanding of how to run network operations as part of the factors militating against interline agreements between local and foreign carriers.

    Interline are agreements that allow domestic carriers distribute passengers flown into the country by foreign carriers.

    According to Muntetsi, many foreign carriers are constrained to enter into such agreements because many Nigerian carriers see airline business as moving passengers from point to point as against the global practice, where a single ticket booked on a global alliance could take passengers to points beyond routes flown by their choice carriers.

    He said until indigenous carriers see airline business as global networking, they would not be able to enter into global alliances.

    He also said until airlines share similar operational philosophies, it would be difficult for them to foster any partnership.

     

  • Foreign reserves to hit $41b

    Foreign exchange reserve,which stood at $39.57 billion on September 10, is expected to hit $41 billion by the end of this month, Managing Director, Financial Derivatives Company (FDC) Limited, Bismarck Rewane, has said.

    At the FDC Breakfast Meeting at the Lagos Business School, he said the slow replenishment of the reserves would continue until they reach $41 billion by month-end.

    Analyses of the reserves based on data from the Central Bank of Nigeria showed that the reserves have risen by over $2.4 billion in the last 10 weeks. The reserves which were at $37.2 billion on June 24 rose to $3.84 billion on July 17.

    Rewane said average oil prices of Nigerian crude remained above $104 per barrel while the positive impact on oil revenue will be felt in October. The United States own to less than two per cent, of exports, compared to seven per cent in 2011.

    Dwindling Nigerian shipments to the U.S. imply that disruptions to Nigeria’s oil supplies are unlikely to trigger oil price rallies. Nigeria imports about 50 per cent of its refined products from the US.

    He said oil revenues forecast in second quarter is $12 billion as against first quarter revenue of approximately $11 billion adding that accruals from oil form major part of the reserves. The reserves will cover 8.2 months of import cover

    Analysing financial sector credit, he said the average opening credit position of the banking system was N358.75 billion in July, about 0.66 per cent lower than June figure. Inflation crept up by 0.2 per cent to 8.2 per cent, the fourth consecutive monthly increase.

    He said the Monetary Policy Committee (MPC) left the monetary policy instruments and stance unchanged in July even as the naira appreciated at the interbank market to N161.85/ dollar but depreciated at the parallel market to N168/ dollar.

    Also, banking earnings were flat and lower than first quarter because of the cumulative impact of the Cash Reserve Ratio (CRR) hike. Also, average corporate earnings for lenders declined by 1.53 per cent in second quarter and stock prices decreased by 3.16 per cent.