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  • NASS passes Finance Bill, imposes 70% levy on Banks’ windfall forex profits

    NASS passes Finance Bill, imposes 70% levy on Banks’ windfall forex profits

    The National Assembly on Tuesday passed proposed amendment to the Finance Act which seeks to impose 70% levy on Banks’ windfall forex profits in 2023.

    The passage of the Finance Act (amendment) Bill followed the consideration of the report of the Joint National Assembly Committees on Finance by both chambers during plenary.

    The report was presented by the Chairman, Senate Committees on Finance, Senator Sani Musa to the red chamber and his counterpart in the House, Hon. James Faleke.

    The Joint Committee in the report, observed “that the banks enjoyed windfall as a result of exchange rate unification policy of the Federal Government.

    “That the windfall was as a result of FX allocation to selected Commercial Banks. The policy does not permit the use of windfall for dividend payments.”

    They recommended “that the application of the provision of Section 30 of the Principal Act shall take effect from 1st January 2023.

    “The levy shall be 70% (for federal government and 30% for banks) on the realized profits from all exchange transactions of Banks.

    “Any bank that fails to pay the windfall profit levy to the Service, has not executed the deferred payment agreement as at the time of commencement of the regime, shall be liable to pay the windfall levy withheld or not remitted in addition to a fine of 10% of the levy withheld or not remitted per annum and interest at the prevailing Central Bank of Nigeria, minimum discount rate.”

    Minister of Finance and Coordinating Minister of the Economy Wale Edun said the Federal Government of Nigeria had injected funds worth N1trillion as incentives into the manufacturing sector within the last one year.

    Edun spoke at a meeting with the National Assembly Joint Committee on Finance over the proposed 70 per cent tax on banks’ foreign exchange windfall in 2023.

    The Tuesday public hearing of the panel was the continuation of defence on the Finance Act (Amendment) Bill 2024, deliberations which commenced on Monday.

    Also at the meeting was the Chairman of the Federal Inland Revenue Service (FIRS), Mr Zacch Adedeji, who declared that accelerated stabilisation fund focussed among others, series of legacy projects, geared towards putting in place infrastructure to make the sector more viable.

    The Minister in his response to request by members of the Committee that the Manufacturing sector should be considered as beneficiary from the proposed tax on banks’ foreign exchange profits (windfall tax), said the sector had already been taken care of.

    Edun said: “There is expenditure of one trillion naira (N1trn) in terms of incentives to the manufacturing sector to help them with the high cost of production.

    “In addition, under the Accelerated Stabilization and Advancement Plan, which is a six-month plan for emergency economic, fiscal, and corporate sectoral actions in order to help in particular, the manufacturing sector, there is low interest funding coming for the manufacturing sector.”

    In his presentation to the joint committee Chaired by Senator Sani Musa (APC – Niger East), Adedeji said the proposed one time windfall tax is geared towards redistribution of wealth which according to him , would be beneficial to the various sectors.

    He however explained to members of the joint committee that strategic programmes of President Bola Tinubu administration were targeted at reinvigorating the manufacturing sector.

    Read Also: Hold the governors and not Tinubu responsible for high cost of living – Okocha

    “Accelerated stabilization fund focusing on helping the manufacturing sector are already being doled out aside legacy projects strategically targeted at making the sector more vibrant and viable.

    “Some of these strategic projects that would in terms of infrastructure reinvigorate the sector are the Badagry – Sokoto Highway which would make journey from Badagry to Sokoto 11hours.

    “Also, Lagos – Calabar Coaster Highway is another strategic road infrastructural project that will bring about the required connectivity for reinvigoration of the manufacturing sector.

    “The plan of President Bola Tinubu on the economy, manufacturing sector and development generally is very robust,” he said.

    Sharing percentage from the one time windfall tax between the Federal Government and the banks was however not agreed upon before the Minister, the FIRS boss and representative of the Governor of Central Bank of Nigeria (CBN), were excused from the meeting.

    Tinubu in an executive bill forwarded for approval by both chambers of the National Assembly, proposed 50% sharing formula for both parties, which some members of the committees, suggested for upward review.

    The National Assembly however increased the amount of the levy from 50% to 70% in favour of the Federal Government.

  • Govt targets N2tr in banks’ forex gain tax

    Govt targets N2tr in banks’ forex gain tax

    • Finance institutions to pay 50% of windfall
    • Experts caution on timing

    The proposed one-off tax on 2023 foreign exchange (forex) gain by banks may fetch the Federal Government not less than N2trillion, it was learnt at the weekend.

    President Bola Ahmed Tinubu hinted at his administration’s plan to tax the banks’ gain in the proposed amendment to the 2023 Finance Act before the National Assembly.

    Also before the National Assembly is an Executive Bill on the 2024 Supplementary Budget seeking to raise N6.2 trillion to fund infrastructure.

    The tax on banks’ forex windfall in 2023 is meant to raise part of the funding for the supplementary budget.

    The levy on forex revaluation gains, otherwise known as a windfall, will be used to finance “Renewed Hope” infrastructure projects, education and healthcare, among others.

    A review of audited reports and accounts of banks and independent analysts’ reports yesterday estimated forex revaluation gains at about N4 trillion in 2023, half of which the government is seeking to appropriate for national budget funding.

    For instance, three of Nigeria’s five biggest banks – Guaranty Trust Holdings Company (GTCO), Zenith Bank and United Bank for Africa (UBA), made forex revaluation gains of about N700 billion last year 2023, with GTCO accounting for about two-thirds of the total gains by the big three.

    GTCO recorded a forex revaluation gain of about N442 billion in 2023, followed by Zenith Bank and UBA with N229 billion and N27 billion respectively.

    If passed into law, the government will receive about N350 billion in one-off payments from the three banks.

    Five other banks, including the First City Monument Bank (FCMB) Group, Fidelity Bank, Stanbic IBTC, Access Holdings, and Sterling Financial Holdings, recorded estimated forex revaluation gains of about N176 billion during the year.

    The 2023 Finance Act amendment stipulates that “there shall be levied and paid to the benefit of the Federal Government of Nigeria a tax of 50 per cent on the realised profits from all foreign exchange transactions of banks within the 2023 financial year.

    “The Federal Inland Revenue Service – (a) shall assess the realised profits, collect, account and enforce payment of tax payable under section 30 in accordance with the powers of the Service under the Federal Inland Revenue Service (Establishment) Act 2007.”

    The amendment proposes a penalty of an additional 10 per cent for banks that have not remitted the assessed forex gains or gotten approval for instalment payment from the CBN by December 31, 2024.

    Read Also: Shaibu: My legal battles will restore sanity to deputy governor’s office ridiculed since 1999

    Also, principal officers of defaulting banks would face imprisonment of up to three years.

    Most experts have faulted the timing and the nature of the windfall tax, noting that it could indirectly undermine the ongoing banking recapitalisation.

    They said it was unfair to deny shareholders of direct benefits from forex gains on one hand, and for the government to seek to retroactively appropriate such on the other hand.

    The Central Bank of Nigeria (CBN) had directed banks not to utilise their forex revaluation gains to pay dividends or for other operational expenses, but rather to save the funds as a hedge against any future volatility.

    “Banks are required to exercise utmost prudence and set aside the foreign currency revaluation gains as a counter-cyclical buffer to cushion any future adverse movements in the forex rate in this regard.

    “Banks shall not utilise such forex revaluation gains to pay dividends or meet operating expenses,” the apex bank had stated.

    Experts at Afrinvest West Africa said while the government is constitutionally empowered to impose taxes, including on windfall gains, to strengthen fiscal accounts, the timing of the policy’s announcement is problematic.

    Faulting the timing, they argued that it would create a sense of uncertainty and unpredictability among investors and industry practitioners.

    Afrinvest said: “For instance, Italy in August 2023 announced a one-off 40.0 per cent windfall tax on increase in banks’ net interest margin for the fiscal year 2023.

    “Although the plan was eventually modified, the announcement was made during the 2023 operating year – in contrast to the abruptness of the proposed tax on Nigerian banks, which is to be applied outside of the 2023 fiscal year.

    “Unsurprisingly, the banking index shed a total of 3.0 per cent in the final trading sessions of the week, following the announcement.

    “In summary, lingering concerns about uncertainty around the sector could present some headwinds amidst the ongoing recapitalisation process.

    “Furthermore, there is a need for clarification on the wind-fall tax adjustments to be made for banks that already remitted income tax for 2023.

    “Given the five-month window for compliance, the federal government should provide a clearer template that would take into consideration some of the nuances around implementing the tax.

    “There is the issue of fairness from the perspective of capital owners, given that the CBN already barred access to foreign currency earnings via dividend payments.

    “The Federal Government is seeking access to 50.0 per cent of the same profit.

    “In the light of the ongoing recapitalisation, the broad steps by the regulator and the Federal Government to tighten the noose around forex income for banks might disincentivise new capital inflow into the sector, thereby prolonging the current episode of lack-lustre foreign capital inflows into the country.”

    Managing Director, Arthur Steven Asset Management, Mr. Olatunde Amolegbe, said the introduction of the windfall tax in the middle of ongoing banking recapitalisation may send wrong signals to investors and thus negatively impact the ability of banks to raise the much-needed capital.

    Amolegbe said: “We also have to be very mindful of the impact on the liquidity ratio of these banks, many of which are finding things tough due to the tight monetary stance of the CBN. There is a need for caution here.

    “In business, as in life, timing is everything. It will appear we are moving one step forward two steps backward.”

    His counterpart at HighCap Securities, Mr. David Adonri, said the 50 per cent windfall tax amounts to an expropriation of shareholders’ wealth.

    “It defeats the purpose of making banks strong enough to support the envisaged $1 trillion economy, an objective that is compelling banks to recapitalise,” Adonri said.

  • Fed Govt to give special forex access to GenCos

    Fed Govt to give special forex access to GenCos

    Minister of Power, Chief Adebayo Adelabu has said the Federal Government is planning to give electricity generation companies (GenCos) access to foreign exchange (forex) for their maintenance and operations.

    Adelabu made this known on his X handle yesterday while giving account of his visit to Egbin Power Plant in Ikorodu, Lagos State.

    He said GenCos having access to forex is critical to sustaining and improving energy supply nationally.

    “Moreover, we acknowledge the importance of ensuring that power generation companies have access to essential foreign exchange (forex) for their maintenance and operations. This access is crucial for sustaining and improving power output on a national scale,” Adelabu said.

    He added that the government is accelerating efforts to ensure Gencos have access to forex due to the critical role they play in the country’s energy infrastructure.

    Read Also: FG plans access to forex for GenCos

    “We are taking decisive steps to facilitate this access, recognising its critical role in the broader context of our energy infrastructure,” Adelabu said.

    He said the ministry’s ongoing discussions with the Ministry of Petroleum Resources and gas suppliers are centered on addressing gas supply constraints and facilitating debt repayment.

    According to him, through collaborative efforts with all stakeholders, the government is dedicated to finding solutions that will benefit the entire sector and contribute to its long-term sustainability.

    He noted that the shortage of gas has posed a significant obstacle to the operation of gas power plants.

    He pointed out that during his  visit to the Egbin Power Plant, he reiterated that the ministry has conducted a thorough diagnosis of the challenges currently facing power sector in Nigeria.

    He said these challenges range from infrastructure limitations to supply chain constraints.

  • Foreign investors’ transactions rise by 28% on forex liquidity

    Foreign investors’ transactions rise by 28% on forex liquidity

    Foreign portfolio investors appeared to be increasingly active in the Nigerian investment market with more than a quarter increase in transactions in recent period.

    Official trading data at the Nigerian Exchange (NGX) released yesterday showed that total foreign transactions  at the market increased by 28.19 per cent from N94.26 billion or $70.83 million in March 2024 to N120.83 billion or $90.83 million in April 2024.

    The increase in foreign transactions moderated the impact of decline in domestic transactions, although domestic investors continued to dominate transactions at the market.

    Total domestic transactions at the NGX nearly halved, dropping by 49.27 per cent from N444.28 billion in March 2024 to N225.40 billion in April 2024.

    With these, total transactions at the NGX in April 2024 dropped to N346.23 billion or  $260.24 million, a decrease of 35.7 per cent from N538.54 billion or $404.69 million recorded in March 2024.

    However, compared with the comparative month of April 2023 when the market pooled N191.2 billion, the performance in April 2024 represented a significant increase of 81.1 per cent.

    Market analysts attributed the increase in foreign transactions to increased foreign exchange (forex) liquidity as the Central Bank of Nigeria (CBN) continues to implement its forex reforms.

    Read Also: Forex crisis: BDCs to recapitalise, re-apply in CBN reform plan

    FPI transactions, which used to account for between one third and half of transactions at the Nigerian market, had plummeted to its lowest in recent years as the country struggled with a hemorrhagic, subsidised multiple forex rates.

    The new government of President Bola Tinubu, which marks its one-year anniversary tomorrow, abolished the multiple forex rates, alongside removal of equally debilitating petrol subsidy.

    Further analysis of the breakdown of market transactions showed that institutional investors outperformed retail Investors by 10 per cent.

    Retail domestic transactions decreased by 54.89 per cent from N223.37 billion in March 2024 to N100.77 billion in April 2024. Institutional domestic transactions decreased by 43.58 per cent from N220.91 billion in March 2024 to N124.63 billion in April 2024.

  • $1.7b traded in one week on forex window

    $1.7b traded in one week on forex window

    Foreign exchange (forex) transactions at the Nigerian Autonomous Foreign Exchange Market (NAFEM) window rose by 276.1 per cent to $1.7 billion in the last  one week.

    NAFEM is the singular formal market trading segment for investors, exporters and end-users. With the abolition of multiple exchange rates by the Central Bank of Nigeria (CBN), forex trades are made at exchange rates determined by prevailing market circumstances, thus ensuring efficient and effective price discovery in the Nigerian forex market.

    In a report at the weekend, Afrinvest West Africa, reported increased activities at the forex window. However,  naira  exchange rates differed across the formal and parallel markets. 

    According to the report, although the naira  lost 2.4 per cent against the dollar to settle at N1,169.99  at the NAFEM official window, it  appreciated by 7.4 per cent to close at N1,145 to dollar  week-on-week at the parallel market.

    Analysts expected sustained naira appreciation as CBN keeps short-term remedies to strengthen the local currency.

    “In the currency market, activity level in the NAFEM window soared to 276.1 per cent week on week to $1.7 billion while the naira lost 2.4 per cent against the dollar to settle at N1,169.99 to dollar.

    Meanwhile at the parallel market, the naira closed at N1,145 to dollar indicating 7.4 per cent appreciation, week-on-week,” report stated.

    The local currency had of recent commenced rapid recovery, as volatility in the market dropped after the apex bank    commenced dollar sales to bureau de change operators.

    Legitimate needs driving forex demand include Form A applications for Business Travel Allowance (BTA), Personal Travel Allowance (PTA), school fees, and medical fees. Small and Medium Enterprises (SMEs) are also grappling with the scarcity, as highlighted by the use of Form Q.

    Managing Director  Financial Derivatives Company Limited Bismarck Rewane said  that cost pressures were  likely to ease due to  naira’s rebound.

    Rewane said the naira had since February  appreciated significantly across the markets, fueled by sanitisation of the forex market, an increase in forex supply and a fall in the demand for dollars.

    The settlement of the $7 billion verified forex backlog of forward commitments have boosted confidence and improved the credibility of the  CBN .

    Read Also: ‘How agro exports can boost forex inflows’

    “However, the pressing question remains, will the naira tumble again? The answer is No, if Nigeria continues to do the right things. Prospects for forex earnings are promising, with foreign portfolio investments on the rise. Nigeria’s key export commodities have also seen significant price surges, with cocoa trading at a record high of over $10,000 per tonne in the global market and oil prices exceeding $85pb as oil production reached an impressive 1.48mbpd in February 2024,” Rewane stated.

    Naira’s appreciation, he further stated, followed the Monetary Policy Committee (MPC) meeting on February 26 and 27, during which interest rates was increased sharply by 400 basis points (bps) to 22.75 per cent per annum.

    The MPC also met on March 24 and 25, agreeing to hike interest rates by 200bps to 24.75 per cent per annum to keep prices in check.

    “These moves, combined with the CBN house-cleaning exercise to mop up excess demand for dollars, signal that the apex bank intends to stay on the path of orthodoxy to positively anchor inflation and stabilize exchange rates. Consequently, though slowly, the naira is expected to sustain appreciation,” Rewane said.

  • Edun: Fed Govt plans to raise bond in forex

    Edun: Fed Govt plans to raise bond in forex

    The Federal Government plans to begin the issuance of domestic foreign currency-denominated bonds from this quarter, Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, said yesterday.

    A Reuters report quoted the minister as speaking at a parley with business leaders in Lagos.

    The government move is expected to herald domestic issuance of similar bonds by companies and sub-nationals, a plan already given provisional approval by the country’s apex capital regulator.

    The sovereign domestic foreign currency issuance aligns with government’s move to attract more forex inflows to stabilise the naira. Dollar shortages have had significant adverse impact on the naira.

    Edun told his audience that the government would seek to sell forex bonds to Nigerians at home and abroad who, “because of lack of faith in the currency, have decided to try to hold and save in dollars.”

    “All the funds in the diaspora, we are targeting them. There are all these funds that you have brought into your (local foreign currency) accounts, we are targeting them,” said Edun.

    The minister said President Bola Ahmed Tinubu in October 2023 signed executive orders to allow domestic issuance of instruments in foreign currency and also allow all cash outside the banking system to be brought into the banks.

    He said that the government had not issued the bonds earlier because it sought to first build confidence in its fiscal policy and gain the trust of citizens who are sceptical of government policies.

    Nigeria spends around 78 per cent of its revenue on debt servicing and the government has vowed to cut this to around 50 per cent.

    “When they say what keeps you awake at night, I will say paying the debt service (cost),” said Edun.

    Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC) had given a provisional “no-objection” to the proposal to allow companies and governments to undertake dollar-denominated listings on the Nigerian stock market.

    The proposal, being pushed by the Nigerian Exchange (NGX), involves creation of a new listing platform for high-valued issuers to raise capital through dollar-denominated debts and equities issuances.

    The proposal is considered as one of the quick-interventions to bolster the country’s foreign exchange (forex) position by exploring alternative sources and redirecting remittances and informal sources to a formal market.

    Securities and Exchange Commission (SEC) Director-General Lamido Yuguda said the apex regulator has “no problem” with the proposal for dollar-denominated listings by qualified issuers.

    According to him, the basic premise of regulation is full disclosure and demonstrated ability of an issuer to meet the required obligations imposed by the issuance.

    He said SEC would treat such dollar-denominated listings by companies or governments on the same basis of the ability to meet the required obligations as contained in the issuance documents, and in line with extant rules at the capital market.

    Lamido said investors’ protection is deeply ingrained in all regulatory consideration by the Commission as it continues to explore ways to further deepen the capital market.

    The listing of dollar-denominated bonds and shares at the Nigerian stock market is targeted at easing access to forex for select companies, especially high-valued companies that require substantial forex for their operations.

    Read Also: Shettima inaugurates technical committee for iDICE

    Under the proposed two-phased plan, the NGX plans to start with quotation of dollar-denominated debt issues such as bonds and then move to listing of dollar-based ordinary shares and other quasi-equities.

    The provisional approval by SEC is a major boost for the NGX forex proposal.

    NGX Chief Executive Officer (CEO) Temi Popoola said the Exchange would work with the SEC to create the required regulatory framework for the dollar-based listing.

    Changes to listing regulations can be achieved within a “relatively short time”, Popoola said.

    He explained that the Exchange was banking on the market-oriented stance and reforms of the Tinubu administration to push the dollar-listing proposal through.

    Popoola said the Exchange would be targeting companies operating from the special economic free trade zones and those earning foreign currency

    The primary objective, he noted, is to enable these companies to issue bonds denominated in dollars and eventually offer equity in dollars.

    “It could potentially address the challenges posed by fluctuations in foreign currency,” Popoola said in an interview with Bloomberg.

     Bloomberg reported that companies Nigeria consistently cite getting access to the dollars they need for raw materials as their biggest challenge.

    The NGX also plans to work with SEC to initiate a framework that allows companies with home listing to pay dividends in dollars. Few companies with dual listings already pay dividends in dollars.

    The NGX, which did not give a timeline for the launching of the plan, said government’s willingness to consider market reforms increases the prospect of success.

     “Given the proactive stance of the current administration, it is reasonable to anticipate that these objectives can be achieved,” Popoola told Bloomberg.

    He pointed out that both retail and institutional investors have “substantial” amounts of dollars that domestic capital markets can tap to encourage more local listings.

    “If the target companies cannot access dollars within our market, many of them may opt to list abroad,” he said.

  • U.S. Mayor okays CBN’s forex policy, economic plans

    U.S. Mayor okays CBN’s forex policy, economic plans

    A United States (U.S.) Mayor has given thumbs up to the Tinubu Administration for tackling the foreign exchange (forex) crisis and resetting the country’s economy.

    San Antonio (Texas) Mayor, Mike Arnold spoke during  a reception for Nigerian author and activist  Reno Omokri  at the official performance centre of the San Antonio Spurs.

    The performance centre is a new $500 million facility built by U.S. National Basketball Association (NBA) team in San Antonio.

    The Mayor said: “I am particularly pleased that Nigeria is successfully tackling its foreign exchange crisis, and by blocking loopholes through which institutions like Binance were able to profit.

    Read Also: $2.4b invalid forex

    I fully support what Nigeria’s National Security Adviser (NSA) Nuhu Ribadu is doing.”

    The office of the NSA (ONSA) arrested two Binance executives, one of who is already on trial for economic sabotage.

    The Mayor, praising  the initiative of #GrowNairaBuyNaija campaign by Omokri,  said because of you, Americans now know Nigerian corporations like Glo, Dangote and Innoson:

    The mayor urged Nigerians to sign his petition to build IDP infrastructure in Nigeria at www.idpjustice.org.

    Star player, Gorgui Dieng, gave a message of support for the Nigerian people and thanked Omokri for his visit. He encouraged Nigerian youths to utilise sports as a means of personal development.

    Phil Collins, one of the coaches/officials of the club, led the tour of the facility at the centre.

  • 6 Essential Things Beginners Need to Know Before Trading Forex

    6 Essential Things Beginners Need to Know Before Trading Forex

    Forex trading can be an exciting and lucrative venture, but it’s crucial to understand the basics before diving in. As a beginner, it’s essential to choose a reputable forex broker that offers educational resources, competitive spreads, and a user-friendly trading platform. Here are six essential things beginners need to know before trading forex.

    Choosing the Right Forex Broker

    Starting your journey in the forex market begins with finding a forex broker. This broker is your main gateway to the world’s currency markets, offering access to fluctuating global currencies. It’s essential to partner with a broker that is not only reputable but also regulated, to ensure secure and fair trading. Different brokers will provide various features, like unique platforms, diverse spreads, and leverage options, all of which can influence both your trading experience and your potential success or failure. Make the right choice to set the foundation for a successful trading journey.

    Additionally, consider the broker’s trading platform. A user-friendly, stable and feature-rich platform can significantly enhance your trading experience. Look for platforms that offer advanced charting tools, a wide range of indicators and the ability to execute trades quickly and efficiently. Many brokers offer demo accounts, which allow you to test their platform and practice trading strategies without risking real money. Take advantage of these opportunities to find a platform that suits your needs and trading style.

    Familiarize Yourself with Forex Market Hours

    The forex market is unique because it operates 24 hours a day during the week. This around-the-clock trading gives you the flexibility to trade on international markets at any time. However, it’s crucial to learn about the market’s schedule, including when different markets around the world open and close. Trading volumes and volatility can vary significantly during these times, affecting potential trading opportunities. Understanding these patterns can help you choose the best times to trade.

    It’s also important to note that while the forex market is open 24 hours a day, not all hours are equally active. The most active trading hours occur when two or more markets are open simultaneously, such as when the New York and London sessions overlap. During these periods, you can expect higher liquidity and potentially better trading opportunities. On the other hand, during quieter periods like the Asian session, you may experience lower liquidity and more subdued price action. Adjusting your trading strategy to these different market conditions can help optimize your results.

    Understanding Currency Pairs and Quotes

    Trading in forex means dealing with currency pairs. Each trade involves speculating on the value of one currency against another. There are major pairs that involve the US dollar and are the most commonly traded, as well as minor and exotic pairs. Learning how to interpret these pairs, including which is the base and which is the quote currency, is critical. Additionally, understanding pips—the smallest price move in a currency pair—is essential for managing your trades effectively and calculating potential profits or losses.

    Market Analysis

    Successful trading involves predicting market movements. This requires diving into market analysis, which can be categorized into fundamental and technical analysis. Fundamental analysis looks at economic indicators and news to predict currency movements, while technical analysis focuses on charts and historical price action. Both types of analysis are crucial for making informed trading decisions. Mastering these analytical methods takes time but provides invaluable insight into the market’s future direction.

    Creating a Trading Plan

    Navigating the forex market without a plan is risky. It’s important to have a clear strategy, whether you prefer day trading, where trades are closed by the end of the day, or scalping, characterized by making several small trades. Your strategy should align with your financial objectives, risk tolerance and trading style. Understanding leverage’s impact on both profits and losses is also critical. A solid plan, combined with strict risk management practices, can help steer you through market turbulence.

    Read Also: U.S. Mayor okays CBN’s forex policy, economic plans

    The Psychological Aspect of Trading

    The psychological challenges of trading are often overlooked. The ups and downs of trading can lead to impulsive decisions driven by emotion rather than logic. Cultivating discipline and patience is as important as any trading strategy. Learning to manage stress and maintain emotional equilibrium is key to sticking to your trading plan, especially during volatile market conditions. Mastering the psychological aspect of trading is crucial for long-term success.

    Forex trading offers an exciting path to financial growth. However, it demands preparation, continuous learning and a strategic approach. By understanding the importance of a good forex broker, learning about market hours and currency pairs, mastering market analysis, developing a structured trading plan, and preparing for the psychological challenges, beginners can step into the forex market with greater confidence and a clearer vision, laying the groundwork for a potentially successful trading career.

  • Forex denominated gas pricing may hike electricity tariff

    Forex denominated gas pricing may hike electricity tariff

    Electricity consumers may have to gear up for a monthly tariff adjustment as the cost of providing electricity across the value chain is said to be on the rise.

    A major factor that may influence the price change is the cost of gas. With 80 per cent of the country’s electricity generation coming from thermal sources, which requires gas to power it, the pricing of the commodity (gas) is a source of concern to the industry, especially as it relates to pricing, given the forex exchange rate. This is because the gas business is dollar denominated.

    Industry sources said that although gas price sales to the industry has remained constant at $2.18 base price since 2021, the rising value of the dollar against the naira has made the cost of sourcing the product more challenging. This high cost induced by the exchange rate, it is believed, led to the shortage of gas supply to Generating Companies (Gencos), who, for a long time, have been unable to pay their gas suppliers, leading to the near total darkness the country has witnessed recently.

    Still, top sources in the industry who are in the know of the operations within the sector said that the resort to what is to be known as “automatic monthly tariff adjustment” is being implemented to manage the volatilities in the foreign exchange and inflation rates being experienced in the country. 

    Read Also: NACCIMA faults forex access for milk, dairy products’ imports

    Findings further revealed that the monthly tariff increase may have already been instituted by the Distribution Companies (Discos) since last January but not made public. This move, it is believed, has not received the nod of the regulator- the Nigeria Electricity Regulatory Commission (NERC).

     “This planned monthly tariff increase is a proposal by the Discos but it has not received the approval of NERC and so it cannot be made public, but I can tell you that some Discos have started the implementation quietly. If nobody complains to NERC, then this will continue to be carried on silently. Consumers might not notice the increase immediately because it’s done in small figures. For the Discos, the fear of NERC is the beginning of wisdom because that Commission is very strict with compliance to regulations, especially where they have to protect the consumers’ interest,” a source close to one of the Discos, but who pleaded for anonymity said at the weekend.

    Another source close to one of the Discos in the north explained that the tariff regime is complex. He explained that tariffs collected are shared across the value chain- Gencos, TCN and Discos, for services rendered.

  • ‘Companies need to find alternatives to mitigate forex impact’

    ‘Companies need to find alternatives to mitigate forex impact’

    Experts and business leaders have advised companies to seek alternative and divergent ways of mitigating the adverse impact of currency depreciation and fluctuation on their businesses.

    They spoke during a panel session at the Lagos Business School Chief Financial Officer Conference in Lagos.

    Chief Executive Officer, Flour Mills of Nigeria Plc, Boye Olusanya, noted that companies must explore alternative business models such as import substitution to insulate themselves from forex-related shocks.

    He said: “The biggest thing is sitting and looking at ways to manage your business by looking for divergent inflows that are non-FX driven.”

    A representative of the Chief Executive, Stanbic IBTC Bank, Wole Adeniyi, the bank’s Executive Director, Personal and Private Banking Nigeria, Olu Delano, advised firms to find ways to adapt to the currency devaluation and “keep moving forward.”

    In his opening remarks, the Dean of the Lagos Business School, Prof Chris Ogbechie, stated that in the rapidly evolving landscape, the role of a CFO has never been more pivotal , especially because businesses were grappling with inconsistent government policy and a vast array of challenges in the macroeconomic environment.

    Ogbechie also noted that CFOs are stewards of financial health who offer strategic insights and financial acumen that are indispensable in navigating the complex and dynamic business environment.

    “In today’s rapidly evolving business landscape, the role of the Chief Finance Officer has never been more pivotal. CFOs are stewards of financial health and custodians of strategic decision-making.

    “Thus, they are tasked with navigating complexities, driving innovation, and ensuring sustainable growth for their organisations.

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    “By assuming the role of strategic architects, CFOs contribute to shaping the future direction of the organisation, driving growth, managing risks, and maximising shareholder value,” he said.

    The Group CEO of Dangote Industries Limited, Kunle Alake, who was represented by DIL’s Technical Lead, Finance Office of the Vice President, Isah Aruwa, emphasised that the CFO has to be at the forefront of driving sustainable growth and managing risks such as currency risks, security risks, among others.

    He underscored the point that the CFO has to be the middleman between the business and the stakeholders to understand what they want.

    He advised CFOs to pay attention to foreign exchange management, as it could have devastating consequences on their business.

    Group Chief Operating Officer of Waltersmith Group, Alex Osho, said Nigeria’s economic environment has made it difficult for firms to hedge against the continued depreciation of the local currency.

    According to him, even though firms usually have some tools to hedge against currency depreciation, these are often incongruent within the context of the economy.

    Osho said: “Even though the tools are there, there is no liquidity. In all the companies that declared huge (forex) losses, it is not as if the CFOs didn’t know what to do or have a way around it. It is just that they were helpless to a large extent.