The Nation Newspaper

Tag: forex

  • Banks channel forex to investors exiting equities, bond markets

    Banks channel forex to investors exiting equities, bond markets

    Foreign investors repatriating profits and others exiting the Nigeria equities and bond markets last week triggered a rise in foreign exchange (forex) disbursement by leading banks.

    Many of the investors, after liquidating their investments, secured forex to repatriate their funds through Stanbic IBTC Bank. The lender disbursed $19,305,571.50 to 68 customers,   according to published disbursement data for last week.

    JPM London secured $3,331,564.24 from Stanbic IBTC for its divestment of equities and Federal Government of Nigeria (FGN) Bonds. There was also $2,010,690.01 disbursed to State Street/Stanbic Nominees-E by the lender for the same purpose.

    BP2S/BNP Pribas obtained $130,167.61; Standard Bank of South Africa, $541,671.31; Merrill Lynch International $63, 767.89; HSBC Funds Services London, $394,210.30; and The Bank of New York Mellon 2, $206,317.82.

    The foreign investors have been pressurising the Central Bank of Nigeria (CBN) to devalue the naira, which it has vehemently resisted. Last week’s repatriation of investments is expected to continue in the months ahead as the margin between the official exchange rates has continued to widen.

    The naira/dollar exchange rate remained unchanged at N197 to dollar at the CBN and N199.50/US$1 at the interbank market. At the Bureau-De-Change, the naira appreciated against the dollar marginally on all trading days of last week, with the Naira/Dollar rate trending lower from N322.00/$1 on Tuesday (appreciating N1 from Thursday) to close at N320/$1.00 on Friday. The parallel market was also stable as Naira/Dollar traded for N323/$1 on all trading days save for Wednesday when it rose marginally to N324.00/$1.

    Stanbic IBTC also disbursed $6 million in three tranches to Rain Oil for the importation of petroleum products and $1,082,440.37 to GZ Industries Limited for aluminum coils import and $100,000 in Personal Travel Allowances (PTAs) to 25 customers.

    Diamond Bank led other lenders with $20,084,368 disbursed to 222 customers, mainly for school fees payment, PTAs and importation of petroleum products.

    Zenith Bank Plc disbursed $13, 107,525.71 to 362 customers. The lender disbursed $3,646,399.15 to Tiger Branded Consumer for Canadian Milling Wheat. Virgin Atlantic got $1 million for air ticket sales remittance.

    Oando Marketing secured $360,000 in two tranches for importation of petroleum products. The bank also made disbursements to Seven-Up Bottling Company Plc; Sonia Foods Industries Limited; Emerging Markets Telecom Services; Boulous Enterprises Limited; Honeywell Flour Mills Plc. There were several Personal Travel Allowances (PTAs), among others.

    United Bank for Africa (UBA) Plc also disbursed forex to 242 customers. Some of the big beneficiaries are: Total and Eterna Oil which accessed $1,201,649.61 and $1, 449,358.03 restively. The lender also funded $1 million remittance tickets for IATA and several other transactions for school fees payment.

    FirstBank disbursed $6 million in two tranches to Gulf Treasures Limited for the importation of petroleum products. There was also $1.943,612.48 disbursed to Elephant Group Limited for NPK -15-15-15 bulk importation. The bank also disbursed to customers for the payment of school fees and PTAs.

    Other lenders that got forex are Diamond Bank, GTBank, First City Monument Bank, Wema Bank.

    The funds were sourced from the Central Bank of Nigeria (CBN) and sold to the beneficiary customers at the official rate of N197.50 to dollar. The beneficiaries used the funds for the importation of goods, services and other items that fall within the CBN-stipulated import approval list.

    CBN Governor Godwin Emefiele has consistently assured stakeholders that the country will continue to meet financial obligations to foreign investors and her international trading partners.

    The weekly publications on forex utilisation are meant to promote transparency and accountability on the side of the lenders, which act as a link between the regulator and the forex users.

  • Oil firms to provide forex for petrol importation, says NNPC

    Oil firms to provide forex for petrol importation, says NNPC

    The Nigerian National Petroleum Corporation (NNPC) yesterday said that companies  in the upstream oil and gas sector are to provide foreign exchange for the importation of petrol into the country.

    The Group Executive Director/Chief Operations Officer, Downstream, Mr. Henry Ikem-Obih broke the news after inspecting the sale of fuel at some Abuja petrol stations.

    This is coming as the NNPC announced that Nigeria’s three refineries will begin production this month.

    On measures to tackle the scarcity of foreign exchange for marketers in order to enable them import products considering the recent second quarter allocation given to the oil dealers, Ikem-Obih said: “As you know, forex was one of the prime reasons why we didn’t do well in the first quarter. Most marketers who had allocations could not import because they couldn’t access forex.

    “The minister has worked very closely through his own initiatives with the upstream oil companies. So, we have a number of them onboard with us and they will support the local entities and downstream companies.

    “They will help provide forex for the downstream companies to import and meet their PPPRA allocation. So, through the Central Bank of Nigeria, NNPC will support importation of fuel in the second quarter and the oil companies too will work with us. With this combined efforts, we hope we will be able to meet the import allocation for Q2.”

    Ikem-Obih also noted that Nigeria’s three refineries would begin production this month, adding that they would produce locally refined petrol.

    He said:  “Most of the work being done at the refineries are on site, that is, just getting them ready to start cracking crude so that they too can start contributing to the pool of the amount of fuel we have to distribute across Nigeria. We have to ensure that within the month that we have some local refining contributing to the amount of fuel we have to distribute across the country.

    “The work will be across the three locations and they are all at various stages of start-up. And in terms of moving them to their optimal yield, there is a lot of work going on and we are hoping that within this month of April we will also have locally produced fuel as part of what people are buying at the pumps.”

  • Zenith, Diamond banks drive forex disbursement with $41.2m

    Zenith Bank Plc and Diamond Bank Plc disbursed the highest volume of foreign exchange (forex) worth $41.2 million to 802 customers cut across different segments of the economy, published forex utilisation data for last week showed.

    The funds were sourced from the Central Bank of Nigeria (CBN) and sold to the beneficiary customers at the official rate of N197.50 to dollar. The beneficiaries used the funds to the importation of goods, services and other items that fall within the CBN-stipulated import approval list.

    Zenith Bank Plc took the lead with $24,547, 235.36 allocations disbursed to key players in the economy ranging from manufacturing, oil and gas, school fees payment as well as Personal Travel Allowances (PTAs) and Business Travel Allowances (BTAs).

    The bank gave the lion share of $4.4 million to Dangote Gropu of Companies (Dangote Cement, Dangote Flour Mills Plc, Dangote Sugar Refinery) among others. The funds were disbursed to the company in 13 tranches for Letters of Credit (LCs) approved for the importation of different production raw materials ranging from spares parts for textile machines, cement plant machinery, roll crusher plants among others.

    Another $2 million allocation went to Oando Marketing Plc for Premium Motor Spirit (PMS) import. The funds were disbursed in two tranches of $1 million each.

    Zenith Bank financed a total of 472 items within the CBN import approved list. Of this, payment for school fees abroad got the highest allocation in terms of volume, but it also sold dollars to some of its corporate customers for visible items such as the importation of raw materials, pharmaceutical and agricultural products, among others.

    Diamond Bank Plc funded imports worth $16,872,037.50 for 330 customers. Swift Oil Limited; Dozzy Oil & Gas Limited; Rahamaniya Oil & Gas  Limited and Obat Oil & Petroleum Limited and got $2.2 million; $1.5 million; $1.41 million and $1.25 million respectively for the importation petroleum and gas products. The bank also made several allocations to individuals and companies needing the funds for school fees, BTAs, PTA among others.

    The next was Access Bank Plc which got and disbursed about $12.5 million to 184 customers that cut across oil and gas, education, manufacturing among others. The lion share of $6 million went to MRS for gasoline import followed by Blakeney Management which received$1.5 million for school fees payment among others.

  • CBN may intervene in forex allocation to endangered sectors

    CBN may intervene in forex allocation to endangered sectors

    The Central Bank of Nigeria (CBN) is reaching out to members of the Organised to draw up a list of firms in critical forex need, The Nation has learnt.

    Reliable sources close to the apex bank revealed that the CBN is taking steps to open up a forex window to meet the forex requirement of firms identified by OPS members as being in dire straight.

    The CBN measure to make funds available, The Nation learnt, was in response to outcries by leaders of the OPS who pleaded that urgent steps be taken to prevent a total collapse of the real sector.

    Sources in CBN said the bank has reached out to key stakeholders in the real sector to unveil the critical firms that will need the forex relief package.

    Although the list is still in the works, the thinking is that if policy makers do not move fast some company’s may close shop by the end of the first quarter, triggering more job losses.

    It was also learnt that already as much as 100 operators in the general goods sector had indicated that they would shut down in April when their remaining stock of raw materials would have been used up.

    The Chairman, Pharmaceutical Manufacturers Group of Manufacturers Association of Nigeria (MAN), Dr. Okey Akpa, reportedly said about 120 operators were down to two months’ supply of raw materials after which they would close shop.

    The President, Association of Food, Beverage and Tobacco Employees, Mr. Paul Gbadebo, lamented that apart from about three firms, which were able to attain 50 per cent local sourcing of raw materials, the others depended on importation and would find it difficult to keep operating beyond the second quarter.

    On the purported influx of Foreign Direct Investment (FDI) into the country in the face of harsh economic conditions, an investment promotion expert, Mr. Ogbonna Ukuku, said the much-talked about FDI in government quarters is just some smart investors coming in to invest in the profitable companies, such as Indoroma, Procter and Gamble and an indigenous conglomerate, Dangote Industries Limited.

    He called for the scrapping or amendment of over 54 laws that have been inhibiting free trade and investment in the country.

  • AGF blames forex crisis on saboteurs

    The Attorney-General of the Federation (AGF) and Minister of Justice, Abubakar Malami (SAN),  yesterday said the Federal Government  discovered that some individuals and institutions were behind the persistent distortions in the foreign exchange (forex) market.

    Malami, who did not disclose the identities of the “individuals and institutions,” said the government would soon expose them and prosecute those found culpable.

    Addressing a press conference in Abuja, Malami identified the activities of those involved to include “round-tripping of foreign exchange sourced from the interbank market, rendition of false foreign exchange utilisation data, non-repatriation of export proceeds, use of foreign exchange for non-eligible purposes, consumption of foreign exchange transactions with inadequate, expired and or forged documents and failure to report exchange end users, who default in the submission of required documents.

    “Government is aware of the insidious activities of certain elements within some of our strategic national institutions, who rather than exert their regulatory powers, have chosen to use their strong accomplices within the system to manipulate the foreign exchange market for personal corrupt gains and to the detriment of the national economy.

    “Let me restate in the strongest terms that theses nefarious malpractices by unscrupulous individuals and institutions will no longer be tolerated. In this regard, measures are already in place to deal with the infractions decisively and relevant security agencies are on the red alert to investigate these infractions and appropriate sanctions shall follow accordingly.

    “I have therefore directed the economic and Financial Crimes Commission (EFCC) and other relevant security agencies to further investigate and confirm the information already available,” the AGF said.

    He said the government’s action was informed by its realisation that the crisis in the forex market was artificial as against the claim that it was from the interaction of market forces. He said those behind it resorted to this because they have failed in their effort to make the government devalue the nations’ currency

    “There is an urgent need to review our foreign exchange market from the perspective of the degree of compliance with extant laws and regulations due to certain disturbing developments which  increasingly are  confirming the initial suspicions of government that the current state of the naira is not the result of neutral economic factors or directly related to demand and supply forces alone,” he said.

  • Manufacturers lobby CBN for forex

    Manufacturers lobby CBN for forex

    The pressure from foreign exchange scarcity on the real sector, has prompted the leadership of the Manufacturers Association of Nigeria (MAN) to approach the Central Bank to consider  direct sale of dollars to its members.

    If approved, the measure would require  the apex bank by-passing the commercial lenders by selling foreign-currency directly to the end users as a last ditch effort to keep the manufacturing firms afloat and safeguard  jobs in the system .

    The Nation learnt that MAN, which has about 2,700 members, proposed weekly auctions of dollars to manufacturing businesses at a meeting with CBN Governor, Godwin Emefiele in Abuja, the capital, during the week of February 22, according to Ali Madugu, a Vice President at the lobby group.

    “We’re calling for the central bank to start giving to us directly, hand-to-hand, rather than through the banks,” Madugu, who is also managing director of Kano-based Dala Foods Ltd., a food processor, said in an interview in the northern Nigerian city on March 3. “Some of our member companies will run out of raw materials next month. Without restocking, what will happen? Thousands of jobs are on the line.”

    Nigeria, which derives about two-thirds of government revenue from oil, has rationed dollars and brought interbank foreign-exchange trading to a halt since February last year in a bid to prevent the naira falling. The measures have all but pegged the currency at 197-199 per dollar. As dollars have become more scarce, the black-market exchange rate has plummeted to 310, while forwards prices suggest the naira will fall to 291 in a year.

    The International Monetary Fund estimates the economy grew 3 percent in 2015, the slowest pace since 1999. Manufacturing is in recession, having declined during the first three quarters of the year. President Muhammadu Buhari and Emefiele have said that boosting employment in the manufacturing sector is crucial to reviving Nigeria’s growth.

    Under the current system, the central bank sells foreign exchange to commercial lenders who then distribute it to their customers. That’s left manufacturers short since the banks often prioritize other businesses and individuals, Madugu said. The MAN hopes to receive a response from the central bank this week, he said.

    “The banks have everybody as their customers,” Madugu said. “They even have people buying dollars for medical bills and school fees. If the central bank believes the economy must be diversified and manufacturing boosted, they should allocate directly to us.

  • Nigeria records 21.6% foreign portfolio deficit amidst forex strain

    Nigeria records 21.6% foreign portfolio deficit amidst forex strain

    Foreign portfolio investments (FPI) in Nigeria have continued to dwindle as latest investment report indicates that Nigeria recorded about 21.6 per cent foreign portfolio investment deficit in January 2016.

    FPI report for January 2016 released yesterday by the Nigerian Stock Exchange (NSE) showed a deficit of 21.56 per cent between foreign inflow and outflow in January 2016, sustaining the same trend that had marked the 2015 business year.

    Besides, the quantum of foreign investors’ transactions slowed down alongside a marked slowdown in the overall activities at the Nigerian equities market.

    The FPI report showed that foreign inflow stood at N17.01 billion as against outflow of N26.36 billion, representing a deficit of N9.35 billion or 21.56 per cent during the period. Total foreign transactions thus stood at N43.37 billion. With the foreign sales on the high, foreign investors still accounted for the larger share of 51.57 per cent of transactions at the Nigerian stock market during the period.

    Nigerian investors accounted for N40.73 billion or 48.43 per cent of the total turnover of N84.10 billion recorded during the period.

    “Monthly foreign outflows outpaced inflows which was consistent with the same period in 2015,” the report stated. In December 2015, foreign inflow was N17.04 billion against outflow of N34.31 billion, representing a deficit of N17.27 billion.

    In the comparable period of January 2015, foreign investors appeared less edgy and there were more appetite for Nigerian equities, although the tinge of deficit was also evident then. Foreign inflow was N48.03 billion in January 2015 as against outflow of N51.08 billion. Total foreign transactions thus stood then at N99.11 billion or 52.24 per cent of total turnover of N189.72 billion during the period. Domestic investors had accounted for N90.61 billion or 47.76 per cent of total transactions.

    The FPI report, coordinated by the Nigerian Stock Exchange (NSE), uses two key indicators-inflows and outflow, to gauge foreign investors’ mood and participation in the stock market as a barometer for the economy.

    The NSE report is generally regarded as a credible gauge of foreign portfolio investments in Nigeria as it coordinates data from nearly all active and major investment bankers, stockbrokers, custodians and other capital market operators.

    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 12-month foreign portfolio investment report for 2014 had shown that foreign portfolio outflow was N846.53 billion as against inflow of N692.39 billion in 2014, representing a net deficit of N154.14 billion. In 2013, total foreign inflow stood at N531.26 trillion compared with outflow of N510.78 trillion, leaving a positive balance of N20.48 billion.

     

  • Forex demand for medical tourism

    SIR: The CBN recently decried the spate of forex demand by Nigerians seeking medical attention overseas.

    Putting the demand at a whopping 15% of the Deposit Money Bank’s total, the forex allocation cannot but exert an invidious pressure on the economy.

    The taste for foreign medical attention goes beyond mere Epicureanism or a primitive display of wealth, although this narrow pretext may suffice as exception to the rule. The decrepit state of our medical facilities and lack of upgraded training of our medical personnel have combined to push medical tourism beyond the threshold.

    A situation where practically all our government functionaries refuse to patronise local hospitals   and would rather jet out to treat minor ailments is unhelpful to the economy. Rather than subject the economy to the vagaries of unwholesome medical quests, it would be logical to prioritize the type of ailment that should attract forex grant.

    The federal government should also begin to monitor the health sector budget with intensive surveillance. The padding and introduction of discrepancies to the budget of the ministry of health is an unmistakable sign that appropriated funds to the health sector for so many years might have been diverted leaving our medical facilities in a state of disrepair.

    There is urgent need to set up a Budget Implementation Task Force to monitor project implementation across the nation with a mandate to expose graft.

    This is imperative due largely to the abuse and negligence of the National Assembly in the discharge its oversight functions as shown in the Halliburton scandal and the re-looting of the Abacha loot.

    Forex and hard earned resources would continue to go down the drain as long as the national budget cannot be used to achieve economic renaissance due to avoidable sabotage.

    • Bukola Ajisola,

    Victoria Island, Lagos.

  • Forex crisis won’t derail financial obligations, says CBN

    Forex crisis won’t derail financial obligations, says CBN

    The Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, has assured that Nigeria will continue to meet matured financial obligations to foreign investors and her international trading partners.

    Speaking to visiting members of the German business delegation in Abuja, Emefiee said that Nigeria has been going through economic crisis due mainly to shocks arising from falling global oil prices, pointing out that the effect has been a severe shortfall in foreign exchange revenues.

    He told the visitors that given the development, the country is left with no option than to diversify the nation’s economic production base and curtail frivolous importation.

    The apex bank’s sued for their  understanding on the regulator’s policies, which he said are meant to conserve foreign exchange, assuring them of the CBN’s effort to meet demands within the available forex resources.

    Earlier, the leader of the visiting team, Vice Minister and Member of Parliament, Uwe Beckmeyer of the German Federal Ministry for Economic Affairs and Energy, said the essence of the visit was to familiarise themselves with developments in Nigeria’s financial sector and to devise means of articulating business relationships between the German business firms and their Nigerian counterparts.

    He said that members of his team, with interests in such areas as power generation, light machines for Small and Medium Enterprises, were having some challenges in sourcing inputs for their production as well as the issue of double taxation.

    He pleaded that German companies doing business in Nigeria would appreciate being assured of the certainty in areas of currency control as it affects profit remittances.

  • Prioritise forex allocation to auto firms, council urges CBN

    Prioritise forex allocation to auto firms, council urges CBN

    The National Automotive Design and Development Council (NADDC) has urged the Central Bank of Nigeria (CBN) to prioritise foreign exchange (forex) allocation to the automobile industry.

    NADDC’s Director of Policy and Planning, Mr. Luqman Mamudu, who made the appeal in Lagos, said it would enable the local manufacturers to acquire critical components for production and to safeguard their investments.

    He said it was essential that forex allocation to the sector was prioritised since the essence of the automotive policy was to boost local capability and restrict importation of used vehicles. He said scarcity of forex is undermining the development of the industry.

    “At present, the local assemblies can produce 210, 000 vehicles per annum. We believe that with encouragement from government, it can improve. But most assemblies are facing challenges of sourcing for foreign exchange for critical input, which has led some to lay off staff. To sustain the auto industry, local assemblies need encouragement from the government to access foreign exchange for production,’’ he said.

    Mamudu stressed that the automotive industry was a critical sector capable of creating jobs and impacting on other sectors of the economy. He said the automotive industry was capable of driving the agricultural sector because farm tractors were produced by the automotive industry.

    “It also drives consumer goods like washing machines, motorcycles, boats used in the marine industry. The automotive technology is really versatile, that is why developed countries do not joke with the industry. We cannot keep importing vehicles. We must develop our capacity locally, so that we do not continue to rely on other countries,” Mamudu said.