The Nation Newspaper

Tag: forex

  • CBN sells $1b to clear forex backlog in aviation, manufacturing

    CBN sells $1b to clear forex backlog in aviation, manufacturing

    The Central Bank of Nigeria (CBN) has sold about $1 billion on the forward market to clear a foreign exchange (forex) backlog in selected sectors, especially aviation and manufacturing, traders said yesterday.

    The dollar sale is the apex bank’s largest special auction since a currency peg was removed in June. Outstanding dollar demand was about $4 billion before June, when the 16-month-old peg was removed. Efforts to cut dollar demand have been largely unsuccessful due to low oil prices.

    Traders said the CBN told banks to prioritise airlines, manufacturing firms, petroleum products imports and the agriculture sectors, the sectors worst hit by the dollar shortage, in the auction.

    “The CBN sold $1 billion at last week’s special forex auction and directed banks to issue fresh letters of credit to reflect the amount sold in favour of the affected sectors,” a senior currency trader told Reuters.

    Traders said the Central Bank sold 30-day and 60-day forwards at the auction. On December 19, the apex bank instructed commercial lenders to submit their backlog of dollar demand from fuel importers, airlines, raw materials and machinery for manufacturing firms and agricultural chemicals for the special forex intervention.

    Nigeria is in its first recession for 25 years, caused by the oil price drop which has cut the supply of dollars needed to fund imports. Attacks by militants on pipelines in the Niger Delta since January have cut crude output, further reducing dollar inflows.

    The dollar shortage Nigeria, whose crude sales make up two thirds of government’s revenue, has caused many companies to halt operations and lay off workers, compounding the economic crisis.

    Some foreign airlines have closed down or reduced their operations over an inability to repatriate the proceeds of their earnings due to the dollar shortage. An acute shortage of jet oil in the last few months – caused by the inability of importers to secure the dollars needed to buy the fuel – has led to many operators refuelling in neighbouring countries.

  • Forex, govt dwindling revenue affect auto industry, says Toyota chief

    Forex, govt dwindling revenue affect auto industry, says Toyota chief

    The Managing Director of Toyota Nigeria Limited (TNL), Mr Kunle Ade-Ojo, has said that government dwindling revenue and forex have greatly affected the auto industry.
    Sales, Ade-Ojo said, has dropped by 60 per cent because government and corporate organisations, who are main buyers of brand new vehicles in the country are affected by tight revenue and foreign exchange.
    “So when government is cash strapped and businesses are closing down and not generating cash to run their businesses, then naturally, that also affect our business,” he said.
    He spoke during a media briefing at TNL head office, Lekki, Lagos.
    The TNL chief predicted a tougher year ahead if the present situation persists.
    “Foreign exchange has been a major challenge to everybody. And as a result, when we compare import this year with that of last year as far as brand new vehicle is concerned, there has been a drop of almost 60 per cent.
    “Last year, the entire market imported about 15,000 new vehicles. This year, it has reduced to about 6,000, which is a major decline as far as importation is concerned,” he said.
    Even at that, he said the company did not retrench workers, rather look inward and cut some expenses.
    “However, despite the difficult challenges encountered during the current year, we have decided not to retrench. We have a strong foundation, which we keep on strengthening to weather the storm.”
    On the market share, he said Toyota has continued its leading role.
    “Out of total sales of 32,000 vehicles recorded by the entire auto market in 2015, Toyota sold about 7000 vehicles. For this year, however, the industry forecast only a maximum of 16,000 vehicles. And for us in TNL, our sales forecast was 4000, which is a significant drop,” he said.
    He noted that foreign exchange and price of vehicles will continue to be major issues come next year, saying: “Between January and now, the price of vehicles has more or less doubled from what it used to be. And that has been, because of the foreign exchange issues. At some instances, some of us had had to go into the black market, which also has major impact as far as price of goods are concerned.”

  • Forex: Manufacturers hail CBN’s $660m grant

    Forex: Manufacturers hail CBN’s $660m grant

    Manufacturers have praised the Central Bank of Nigeria (CBN) for giving them $660 million to buy raw materials.  They said the fund would bring relief to some of them affected by the restrictions on the sourcing of foreign exchange (forex).

    Apapa branch Chairman of Manufacturers Association of Nigeria (MAN), Mr. Babatunde Odunayo said the cash was a welcome development.

    At the branch’s 45th Annual General Meeting (AGM) in Lagos, Odunayo said: “Manufacturers are glad to receive the news of the release by the CBN of $660m to manufacturers for the purchase of raw materials.”

    The theme was: “Economic recession and the future of manufacturing in Nigeria.”

    MAN President, Dr. Frank Udemba

    Jacobs, described the theme of the AGM as “topical”, noting that it captured the current economic realities. He said the fall in oil prices and its attendant constrictions   of national income as well as the reccession, which the country  slipped into calls for greater attention to the manufacturing sector.

    According to him, the sector has been instrumental to the survival of many economies that slipped into recession in the past, but unfortunately, the sector in Nigeria    is passing through several  challenges.

    The Minster of Industry, Trade and Investment, Dr. Okechukwu Enelamah, restated government’s committment to the growth of  manufacturing.

    “The sector is the most viable option towards our economic renaissance as a nation,” he said, adding that goverments  focus was to build an industrialised economy that is strongly based on locally available resources.

    Enelamah said the recent decision to allocate over 60 per cent of avaialble forex to manufacturers was a demonstration of government’s commitment to the growth of manufacturing. He expressed the belief that the situation in the sector will soon improve.

    In a bid to ease business activities and reduce the pressure on the parallel market, the CBN had on November 7, 2016, granted manufacturers in Nigeria access to over $660m forex through  the inter-bank forex market to source raw materials and spare partsfor their operations.The gesture was good news to manufacturers.

    However, in another development, manufacturers have lamented that that the N100 billion Cotton, Textile and Garment (CTG) Revival Fund set up by the Federal Government through the Bank of Industry (Bol) to bail out textile companies and promote the manufacturing has failed.

    Speaking with The Nation,   said that the intervention has failed to make any appreciable impact on the sector.

    He stated that the large-scale funding programme initiated by the government in 2010 has failed to revive the comatose sector because of unbridled importation of substandard textile materials from Asian countries, particularly China.

    Udemba said although there have been reports of Customs raiding textile markets in Kano where smuggled goods worth N315 billion were seized, the volume of smuggled textiles in Balogun Market in Lagos or Onitsha Market, for instance, remained high.

    The MAN boss, however, said the government could save indigenous textile manufacturers by allocating 10 per cent of the Textiles Development Levy to companies at single digit interest rate for Research & Development (R&D) and technology improvement. This, he said, will be in line with the government’s policy on textile development earlier agreed by stakeholders.

    Jacobs also called for the introduction of Cotton Marketing Board to ensure that manufacturers have preference over export, in addition to granting them unfettered access to forex to import raw materials and spare parts.

    He further urged the Federal Government to reduce the price of gas  and review the Central Bank of Nigeria (CBN) list of 41 items restricted access to forex. This, he said, is to remove raw materials component from the list and grant tax holidays to the textile companies.

  • CBN denies knowledge of Forex Act Amendment

    The Central Bank of Nigeria (CBN) says it has no plans to amend the Foreign-Exchange Act to provide for the imprisonment of anyone who holds foreign currencies, particularly the United States dollars, for more than 30 days.

    A statement from the CBN on Monday  in Abuja said the apex bank “has nothing to do with such.”

    The Acting Director, Corporate Communications of the CBN, Isaac Okorafor, stressed that “the CBN, in line with its mandate, was committed to safeguarding the international value of the country’s legal tender currency.”

    He then denied knowledge of the proposed clause recommending a jail term for as long as two years or a fine of 20 per cent of the amount for any holder of foreign exchange in cash.

    According to him, “to the best of my knowledge, the Central Bank of Nigeria (CBN) has not proposed any bill seeking to arrest and jail persons holding foreign exchange for more than 30 days.”

    He also denied that the CBN was planning to confiscate funds in domiciliary accounts of individuals, saying any such claim was false.

    There have been speculations  suggesting that the Federal Government and the Central Bank of Nigeria were considering imprisoning anyone who holds foreign currencies, particularly the United States dollars, for more than 30 days as a way of stemming the volatility in the exchange rate and strengthen the international value of the Naira.

  • CBN lifts manufacturing, power with $660m forex disbursements

    CBN lifts manufacturing, power with $660m forex disbursements

     The Central Bank of Nigeria (CBN) has disbursed $660.17 million to 1,342 manufacturers, power and other real sector operators for the procurement of raw materials, plants and machinery, foreign exchange (forex) utilisation report by apex bank has shown.

    The funds, sourced from the CBN and sold to the beneficiary customers at the official rate of about N30.5 to dollar, were handled by commercial, merchants and non-interest banks using the interbank market.

    The funds were specifically used for the procurement of raw materials, plants and machinery as specified in the Letters of Credit (LCs) under which they were sourced, and in-line with the CBN-stipulated import approval list.

    The forex utilisation report was  meant to promote transparency and accountability on the side of the lenders which act as a link between the regulator and the forex users.

    The report, which was for September, showed that large part of the funds went to 20 companies, with Dana Motors ($12,877,278.81), Nigeria Breweries ($6,240,000), A-Z Petroleum Products Limited ($12,962,425.04), Rahamaniya Oil & Gas ($19,220,000), Dag Motorcycles Industries Nigeria ($27,964,123) and Seven-Up Bottling Company Limited ($5,882,293.67) benefiting.

    Others are Biswal Limited ($6,779,858.11), HIS Nigeria Limited ($10,006,405.57), IPI Power Tech ($7,405,595.55), Promasidor Nigeria Limited ($5, 122, 472.80), Saba Steel Industries Limited ($11,147,478.58), and Crown Flour ($10,254,558). Also in the list are African Foundries Limited ($4,020,679.36), Parco Enterprises Limited ($6,558,320), Prime Plastochem Nigeria Limited ($5,668,012.75), TempoGate Oil & Gas ($7,145,279.25), Saro Agro Sciences Limited ($10,106,833.54), Midland Rolling Mills Ltd ($9,895,653.60), Flour Mills of Nigeria Plc ($11,968,016.74) and Matrix Energy Limited ($14,872,223.91).

    The report also showed the raw materials that the beneficiaries used the funds to import. Dana Motors Limited used its funds for import of Kia brand of vehicles in semi-knocked; Nigeria Breweries Plc for malt row winter specifications while for Dag Motorcycles Industries Nigeria Limited, they were used for  Bajaj vehicles spare parts import.

    The African Foundries Limited used its funds for the importation of industrial raw materials; Parco Enterprises Limited for the importation of hard wheat and  Seven-Up Bottling Company Limited, for the importation of 273 units of Pesi-Cola, the report showed.

    A-Z Petroleum Products Limited, Rahamaniya Oil & Gas Ltd, TempoGate Oil & Gas for gasoline import while for Biswal Limited, the funds were  used for Yaanmar engines import.

    HIS Nigeria Limited used its funds for telecom plant and equipment import while for IPI Power Tech it was for automatic board panel import. Promasidor Nigeria Limited procured Cowbell powder with its funds while for Matrix Energy Limited it was for unleaded gasoline import among others.

    The CBN said providing forex to the manufacturers and other key players in the economy was meant to enable it keep its promise to strengthen the real sector of the economy by ensuring that 60 per cent of available forex are used to procure industrial inputs, such as raw materials, machine spare-parts, telecom equipment, plastic raw materials, agricultural machines and pre-payment meters, amongst others.

    The CBN has also expressed its commitment to ensuring that manufacturers of goods for which Nigeria does not enjoy comparative advantage, are able to get LCs to import the required materials for their businesses.

    The exercise, the CBN insists, would provide a new lease of life in the manufacturing sub-sector, and also boost industrial output and employment. The regulator said it will continue to support and facilitate hitch-free procurement of necessary industrial inputs to sustain productive activities in the manufacturing sector.

    The gesture, it said, buttresses its commitment to rejuvenate and sustain industrial activities and retention of jobs.

  • Banks not co-operating with CBN on forex, says MAN

    Banks not co-operating with CBN on forex, says MAN

    Banks are not co-operating with the Central Bank of Nigeria (CBN) on forex policy, Manufacturing Association of Nigeria (MAN) President Dr. Frank Udemba Jacobs has said.

    Dr Jacobs said the CBN was sensitive to the plight of the manufacturing sector, but it was unfortunate the apex bank’s good intention were being frustrated by those who didn’t share the same passion for manufacturers, in particular, or the nation.

    He cited the CBN’s directive to banks to allocate 60 per cent of available forex to manufacturers for the importation of raw materials and spare parts, which the banks had not implemented.

    He told The Nation that the CBN also released about $414 million  recently, with provisions for another $500 million for allocation to manufacturing and other critical sectors, but regretted that banks were not co-operating, thereby frustrating a critical policy.

    Jacobs debunked the allegation that the CBN ‘settled the manufacturing sector with $330 million, saying the CBN announced the release of $314 million but he did not know who benefitted from it.

    Acknowledging that manufacturing was the worst hit by forex scarcity, Jacobs said the case of those included in the list of items excluded from the inter-bank forex was more worrisome.

    But manufacturers and the Organised Private Sector (OPS) had argued that the CBN should not have excluded  the 41 items as some  things in the list were actually raw materials and input for industries.

    On the embedded power supply proposed  by manufacturers  to save their businesses, he said the project was ongoing as planned.

    “We have made remarkable progress in this direction by receiving bids from power companies, and have carried out tariff evaluation following the opening of the bids from which we have shortlisted three companies that we’ve adjudged to be competent. We have also selected four clusters for the pilot project. They are Henry Carr Street, Isolo, Amuwo Odofin and Ilupeju. As I said, these are tentative arrangements which have not been finalised. It must be said that we have not started actual operations yet.”

    On the implication of the planned relocation of a major tomato paste manufacturer, Erisco Foods Nig. Limited to China and some other African countries, the MAN boss said the issue of closure and planned relocation was for the company alone to decide.

    He said the decision of the company to shut its operations in Nigeria would have serious implication for the economy in terms of further job losses at a time that the unemployment rate was soaring.

    He said the planned closure would send wrong signals to potential investors, adding that the action would lead to loss of revenue.

  • Security agents raid forex ‘black market’

    The Department of State Services (DSS) yesterday raided the foreign exchange (forex) parallel market in Lagos and Abuja, arresting dealers selling the dollar above N400.

    A dealer said some of his colleagues were among those arrested.

    “The DSS visited the market and arrested some of my colleagues, but I was saved because I didn’t have dollar to sell at the time.

    “They want us to buy at N390, and sell at N400. That cannot work for now; there is no dollar in the market.”

    Another dealer, Ibrahim Baba, said DSS and police visited the markets, but made no arrest.

    Baba said: “They came yesterday and today, and said we should sell at N400. Anyone who sells above that will be arrested and detained.

    “For now, the market is just dull, people are buying and selling cautiously.”

    Other traders in Alade market, Ikeja, Lagos, confirmed the visit of the security agents, adding that “everyone is still buying and selling at will”.

    “If you want to sell dollars, I am buying at N440, but I don’t think I want to sell for now,” he said.

  • Security agents raid black market forex dealers

    Security agents raid black market forex dealers

    Security agents raided the offices of black market currency dealers yesterday, detaining some dealers and ordering others to sell dollars at a lower rate in a bid to break the fall of the currency, dealers said.
    The Central Bank of Nigeria (CBN) has been unable to stop the naira’s slide on the black market, where importers go to buy dollars due to severe hard currency shortages. Nigeria has been hammered by a slump in prices for oil, a key source of revenue – in the form of dollars.
    The CBN has kept the official naira rate to the dollar artificially high, effectively driving hard currency dealing away from commercial lenders and towards the black market, the real benchmark.
    “The police and state security service officials are raiding black marketers in Lagos and Abuja to compel an appreciation of the naira,” Mallam Adamu, a bureau de change operator, told Reuters.
    Another trader said security agents visiting bureau de change operators told dealers not to sell dollars for more than N395. The Lagos police had no immediate comment.
    A source at the central bank declined to comment on the raids, saying only that the bank was concerned about the spread between the official and parallel market rate.
    The currency is changing hands at 460 naira per dollar on the black market, in contrast to the official rate of 305.5. The naira had regained some ground this week after dropping earlier from 470, but dealers said hard currency supplies were limited.
    “We’ve stopped buying dollars from just anybody that walks into our shop due to the harassment from security agents and a directive from our association,” said a dealer, asking not to be named.
    In June the central bank said it would float the naira but in reality it has reinstated a dollar peg at 305.5 via its daily interventions on the official market. The West African nation is in the middle of a recession as low oil prices have eroded public finances and hard currency reserves.

  • Forex scarcity forces Marketers to cut imports

    F10uel marketers are cutting   imports because of their inability to get foreign exchange (forex), which now sells for N480 per dollar in the parallel market, The Nation has learnt.

    The situation is worsened by other factors, such as increase in the landing cost of fuel, poor profit and margins.

    It was gathered that the scarcity of forex had increased landing cost  from N133.28 per litre to N135, which made marketers to reduce importats and rely on the Nigerian National Petroleum Corporation (NNPC) for supply.

    It was further learnt that NIPCO and some oil marketing companies still import while many of the firms had either stopped or reduced their imports.

    An official of an oil marketing firm, who did not want to be named, said the issue was affecting members of the Major Marketers Association of Nigeria (MOMAN) and the Independent Petroleum Marketers Association of Nigeria (IPMAN).

    The source said NNPC was importing a larger percentage of fuel, because it had enough forex.

    The source said: “Problems, such as scarcity of forex, dwindling profit as evidenced by the poor margins being recorded by marketers, among others, have stalled efforts of marketers to bring in fuel. This informed the decision of the marketers to buy from NNPC.

    “Marketers buy fuel at N135 per litre as against N133.28. By the time the transport cost of N3 per litre and the bridging cost of N6.20 per litre are factored in, they (marketers) are left with very little profit, which in most cases is between N1 per litre and N1.50 per litre.’’

    MOMAN Executive Secretary Mr. Obafemi Olawore said the margins on litres of fuel were not enough. “The margins gained on imported petroleum products by marketers have never been adequate. By now marketers should be talking about impressive margins.”

    Olawore said he was yet to find out whether marketers were importing fuel or not. “I’m not abreast of the developments in the sector because I have been on leave,” he said.

    However, IPMAN factional leader Chinedu Okoronkwo refuted the claim.

    He said marketers were getting enough forex to import fuel, adding that operators were not complaining.

  • Naira appreciates against dollar

    Naira appreciates against dollar

    The Naira on Tuesday appreciated against the dollar in all the segments of the forex market, the News Agency of Nigeria (NAN) reports.

    The currency gained N44.95 to exchange at N305.27 to the dollar at the interbank market after its Monday’s record of N350. 22.

    At the parallel market, the naira gained N5 to exchange at N465 from N470 it traded on Monday, while it went for N565 and N510 against the Pound Sterling and the Euro, respectively.

    Trading at the Bureau De Change (BDC) Segment saw the currency exchange at N385, the control rated of the Central Bank of Nigeria (CBN) and at N564 against the Pound Sterling and N510 for Euro.

    Assessing the market, Alhaji Aminu Gwadabe, President, Association of Bureau De Change Operators of Nigeria (ABCON), said that the naira had prospects of further appreciation in the days ahead.

    He told NAN that the CBN was working with Nigerians in Diaspora to woo more remittances back home.

    According to Gwadabe, the CBN had a robust meeting with stakeholders and Nigerians in Diaspora at the weekend in London on way to boost liquidity in the foreign exchange market.

    He said that more International Money Transfer Operators (IMTOs) had indicated interest in facilitating the repatriation of remittances from abroad.