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  • ‘Resolving forex crisis key to economic rejuvenation’

    ‘Resolving forex crisis key to economic rejuvenation’

    Alhaji Abdulmunaf Yunusa is Group Chairman, Azman Group, a diversified indigenous conglomerate with investments across the sectors. He is also the Chairman, Airlines Operators of Nigeria (AON). In this interview with Deputy Group Business Editor, Taofik Salako, the Kano-born billionaire speaks on macroeconomic issues, entrepreneurship and governance, among others

    As an entrepreneur across many sectors, what do you think are the main challenges in the business environment?

    I’m a businessman with diverse portfolios, from oil and gas; downstream oil sector, to aviation to manufacturing and now, to education.  In most of the sectors, the main issue is about foreign exchange (forex), access to forex. In aviation, that’s the main challenge we are facing because 95 per cent of aviation business is based on dollar transactions, most of the things you are going to do, you do it in dollar, only five per cent in Nigerian currency. So, as we are not getting dollars at the ‘official’ price, the operation becomes hard, we are waiting on dollars. Even if we say aviation fuel is too expensive, the importers of aviation fuel are importing with dollars, they too are complaining that they buy dollars from the black market, so we cannot expect to see the price of aviation fuel coming down, which we are also aware since we are in the business too. For instance, we took our aircraft for maintenance outside the country, we don’t have the dollar funding to bring them back; that is why some of the aircrafts are operating below their capacity. I’m the Chairman of the Airlines Operators of Nigeria (AON), so I know what is going on in the industry.

    It’s the same in the petrol and gas business. Yes, we may also talk about the steep decline in sales since the removal of petrol subsidy. Sales of petrol in our filing stations have dropped by about 40 per cent because of the price increase that came with removal of petrol subsidy. Before, you were 50 litres at about N3, 500, now 50 litres has gone up to like N30, 000. If you are on salary, with the minimum wage at N30, 000, and you have a car, which you use to run office and personal errands, you will think about fuel cost alongside the cost of feeding your family and other expenses, then, you have to prioritise and may have to reduce fuel consumption to barest minimum.

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    But the key issue in the oil and gas business is also forex. Deregulation is a good idea. I’m an advocate and supporter of deregulation. But the issue is that the expected level-playing ground is not there, because of access to forex. Even if you want to form a consortium to import petrol in the sense of a deregulated market, where is the dollar to import? Now, nobody is importing the product, it is only Nigeria National Petroleum Company Limited (NNPCL), which has the unique opportunity of taking crude oil abroad and then buying the refined one. The formal market price is about N755 per dollar, but can we get enough to import petrol, just same like other businesses?

    The dollar issue is the key thing affecting the economy; in the oil sector, in aviation, manufacturing and others; because whatever you are going to bring into the country to run or support your business is through the dollar. Let me give you example of how forex affects the business dynamics. Because NNPCL is the sole importer of petrol, we are tied down to whatever price it’s selling. But if we have many importers, the selling price will differ based on the other considerations and operating efficiency of each seller, thus you will have a competitive pricing, which will also influence retail pump price. There’s no way anybody will take parallel market forex to import fuel in this situation, you are going to end up with significantly higher landing cost and at a loss, giving the market situation now.

    Access and stability of forex are important to businesses. At the time I bought my aircraft, dollar was not that expensive, I bought at around N120 per dollar.You can compare then and now. President Tinubu has started very well, especially with the deregulation, the government should move quickly to resolve the forex issue and support the growth of local businesses.

    Let’s talk about Azman Airlines, there have been issues around suspension of operations, what’s the situation of things now?

    My messages to our stakeholders is that they should be patient. We took the decisions as a responsible organisation with safety as number one priority. Our aircraft were scheduled for maintenance, so we took the decision to take them for maintenance as scheduled, but the forex situation affected the plan. When we took the aircraft for maintenance, if your money did not cover the full maintenance costs, they would just allow you to take the aircraft, when you have the money, you pay. But now, due to the forex situation, they are not allowing that again, you have to pay in full. And as I said, where you even have the naira coverage, where is the dollar? So, that’s the challenge. But we are expecting them back this month, so that we can continue our operations. As I told you, we had to suspend operations because we took our aircraft for maintenance and we couldn’t find dollars to bring them back. But now, we have settled some of them and the aircraft are coming back. We are resuming operations immediately.

    Does that mean you do not have any other regulatory issue?

    No, we do not have any other regulatory issues. Our aircraft are coming back and we are resuming operations. It’s just the aircraft coming back and we start operations. We suspended operations purely on the basis of our scheduled maintenance. We reasoned that if the aircraft were due for maintenance, it’s better to suspend our operations, we suspended our operations because we insisted the aircrafts must get that maintenance, we cannot continue taking passengers money when the aircraft are due for maintenance. But, we are putting plans in place to ensure that we do not run into this crisis in future whereas we have to suspend full operation.

    What will you say about the new rules saying that aircraft operators must have at least six aircraft to start business?

    That is not a good idea, because no country is saying that you cannot start airline business unless you have such six minimum aircraft. Getting six aircraft at the time you are going to start operating isn’t easy, it’s very difficult, alongside other expenses. So, we are challenging that one. Our suggestion is that, let it be as it is, when you have two or three aircraft, you can start operations and as you are generating revenue, you add as required.

    From the look of things, capitalisation appears to be one of the key issues with airlines business. We hear often operators calling for intervention funding from the government. Don’t you think that operators can also go into alliance to form a major airline that can compete well?

    The idea of partnership or a consortium is also a very good idea. I think it can work if we have cooperation. But that has to be something that should come naturally, it should be based on mutual agreement, not forced. There are peculiarities in partnerships and mergers, people need to willingly submit to the idea and you need the right partner. But it’s a good idea to consider by operators.

    Do you at any point think that you may need to take Azman Group to the stock market like we have seen some of your friends done in other businesses?

    As far as I know, people are skeptical of airlines business. If you go to the stock market, not too many people would buy shares of an airline, because of the peculiar nature and challenges of the business. As a group, we will rather focus on strategic partnership and investment for now. If I can get a partner or somebody who will have the same interest or passion like me, then we will consider that. The passion must be there, because what took me into the airline industry was passion. My primary business is oil and gas business. But I have passion for my airline business. I started my airline business in May 2014 and have been operating non-stop since then. If you calculate from that time till now, it’s almost 10 years. I know the business inside out and with my broad experience across the sectors, I can tell you that airline business requires as much passion as funding to thrive. It is not such a very profitable business, but it helps a lot of people, helps the country to solve a lot of challenges, even our security challenges. So, it’s right to expect the government to intervene and help airline owners to jointly solve the challenges that we are facing. The government should look into which roles they can help, the airline owners are strategic to Nigerian national interest, and they deserve to be supported by the government. The majority of the airlines are operating below capacity because of the high cost of dollar, we need a resolution around this, among other issues.

    So, what do you think is best way to move the airline industry forward?

    My advice is for the government to initiate a dialogue with the operators, call a meeting and let’s explore ways to assist the development of the industry. If the government wanted to assist indigenous businesses, he should know how to assist. For example, if you are going to invite someone abroad to come and do business in your country, they come with terms favourable to them. We should also extend such value to our domestic investors. For instance, when the government was talking with the Ethiopian Airlines to come and partner on the national carrier, they brought a requirement that they have to be given tax incentives, and they are given the privilege to enjoy tax holiday for some 15 years. No airline in this country was given one-year tax holiday. We put up our resources and pay every taxes in the sector. Whatever I’m telling you, people in the government know what they are supposed to do, but it’s just for them to understand the importance of stepping in to fill in the gap for the operators. The local airlines industry is strategic to the national economy and security, it deserves preferential treatment equal to its strategic nature.

    What philosophy drives your philanthropy?

    My philanthropy is formed on my passion for helping the less privileged and the society. I want to bring my contributions to helping the people, the society, and the country. I’m doing what I’m doing as someone passionate about the well-being of the people, of our society. I’m not a government contractor or politician, I’m just a businessman and investor. I have built and helped to renovate several public institutions-  schools, water supply, mosques, Islamic schools and other public endowments. We have a large education scholarship for the less privileged, and that public interest is what is also driving our latest endeavour in Azman University, which is resuming fully in Kano by next month. Typically, when people bring their requests for me to assist them, ether due to lack of water, lack of school and other needs, I look into these and help them.

    Looking at the way you started, what will be your advice to the upcoming generation?

    Looking at my present age, 68 years. I started business when I was 22 years old. But the young people are in haste. They can’t lay down to do what we have done but they are eager to get money, good cars and buy expensive clothes. They are also envious of those they have seen living such lifestyles, so they want to, by every means, live like that. That is the problem of this young or new generation. At the time we started, when you have little money, you help your parents with some and save some, little by little. We worked hard and we were patient. We were also supportive of our parents, and generally responsible to the society. The trust was high. But now, the youngsters don’t want to toil hard, they want large quick money without the hard work. We have a case where we provide jobs, where a daily worker can save as much as 80 per cent of daily pay and earn far higher than even the public minimum wage worker at the end of the month, but the experience has been that people don’t want to work for their pay, they just want you to give them money.

    Why are you investing in rice milling and agriculture particularly?

    I have two factories for rice milling, one in Kano and another in Jigawa State. My understanding of the rice milling business is that it’s to, a large extent, a domestically sustainable business. We are getting the raw materials locally; it is better than the one we have to import, especially with the hardship of getting the dollar. You can produce and sell in naira. We are buying paddy and storing up, so we can test run and fully launch our operations. By the grace of God, you should have Azman Rice in the market by 2024.

    But do you think of sustainability against the background of reports that some rice-milling companies are closing down because they can’t get enough paddy?

    I’m also investing in the entire value chain. I have a large farm, like about 40 kilometres, that we are starting in Nassarawa State. We have the documentations done and we are clearing already. We are open to investors and partners to see how we can optimise this. Our plan is to run an integrated farm settlement for rice, wheat and sesame. So, if you have local or foreign investors seeking partners, bring them to me (laugh).

    Which other business would you love to go into as an investor, if there is an opportunity?

    If there is any business, you can recommend to me (laugh). We are open to opportunities, always willing to look into business ideas and support as necessary. I’m, in a way, like a venture capitalist too. I support people with viable ideas with funding, I have several examples of that.

    As your group expands, what are you putting in place in terms of governance structure, to ensure your business has the viability to continue whether you are around or not?

    We have well-structured governance system and team. I have no fewer than 15 of my children who are also intricately involved with the business, in addition to other senior and mid-level management members. Many ideas come as a teamwork. If they have an idea that I don’t have or haven’t thought of, we look at it and work towards it. So, we are working to ensure that we continue, from generation to generation, from time to time.

    Can you elaborate more on the vision and concept of Azman University?

    The highest drive for us, in this education pursuit, is the service to humanity. I have been a long-term philanthropist, community-centric individual, compassionate and devoted to education. For more than 10 years, I have been sponsoring some 100 students at the Bayero University, Kano and same in the state university. I have also invested so much in the development of the basic education from primary to secondary, in public schools of course. Through our foundation, we’ve had extensive philanthropic supports in education. We sat down and thought about expanding this vision to tertiary education. We are not just building a university but a university with a difference, one that will be tall among its peers, a world-class university. We brought together the right people to form the planning committee and five years down the line, we are ready to resume.

    The university is situated on 150 acres of land in Kano State. The university has necessary take-off facilities. We have the administrative section. We have the faculties of social and management sciences, allied sciences and human sciences. The university is centered around innovation, so the motto driving the university is innovation.

    The National Universities Commission (NUC) had given us a licence to operate in May, this year. From there, we commenced the process of  recruiting the management staff, appointing and, subsequently, inaugurating the Board of Trustees and Governing and Management councils of the university.

    The university is billed to commence operation by November, this year. We are waiting for NUC to send us the final formal letter granting us approval to commence admission into various programmes. We have proposed 20 programmes across three faculties and 14 departments.

  • Glimmers of hope amid forex crisis

    Glimmers of hope amid forex crisis

    • Foreign reserves hit new low
    • Naira appreciates, still undervalued

    Nigeria’s foreign exchange (forex) reserves remained under pressure as the country struggles with leftovers of previous forex management stance and anxieties over recent changes in forex policies.

    Forex reserves dropped to $33.23 billion this weekend, its lowest in more than two years, since July 2021.

    Naira, however, continued to show resilience, rising by 1.8 per cent to close weekend at N741.85 per dollar at the formal I & E Window.

    The latest forex report came on the heels of the second quarter of 2023 report by the National Bureau of Statistics (NBS) showing that Nigeria’s total capital imports fell by nine per cent to $1 billion in second quarter 2023, compared with first quarter 2023.

    Capital importation tracks offshore financial inflows, including credit and deposits as well as physical capital, by tracing banking transactions and Customs data.

    Economists believe that foreign capital, workers’ remittances, and domestic savings are key sources of capital to drive long-term economic growth. Thus, capital importation serves as a barometer for gauging offshore investors’ perception of an economy.

    The NBS report indicated foreign portfolio investments (FPIs) dropped by 83.5 per cent from first quarter 2023 to $106.9 million in second quarter 2023. This represented a paltry 2.5 per cent of the $4.3 billion recorded in pre-COVID-19 period of second quarter 2019.

    But most analysts expected ongoing reforms to mitigate the forex situation and re-energise the country’s currency management.

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    In its latest report, Managing Director, Financial Derivatives Company (FDC), Mr Bismarck Rewane, says while there might be no tangible appreciation of the naira until next year, there’s a strong level of optimism that the new leadership of the Central Bank of Nigeria (CBN) and the pro-market administration of President Bola Tinubu would gradually turn things around. 

    According to him, the economy is grappling with excruciating debt service, spiralling inflation, and tepid growth.

    He noted that Nigeria’s gross external reserves remain a subject of controversy, while published data showed a gross external reserves position of $33.23 billion on a 30-day moving average basis, the backlog of unsettled forward contracts is estimated at $6.8 billion and airline-trapped funds are approximately $800 million.

    “Therefore, it is baffling to see that our purchasing power parity (PPP) value of the naira is N735.53 per dollar, approximately 27 per cent above the parallel market rate. It shows that the naira is 1.3 per cent undervalued rather than overvalued.

    “Some economists have questioned the logic and sanity of our analysis, but that is what the PPP analysis discloses as of September 30. We believe that the naira will appreciate to N900 per dollar before December if and only if, Nigeria comes clean with what its true external reserves minus its encumbrances are to the market.

    “However, we do not expect any tangible appreciation of the naira until 2024. We are encouraged by the pedigree of the new CBN leadership that they will stop doing the dumb things and start doing some smart things. But those are necessary and not sufficient to salvage the decadence.

    “We are confident that Nigeria will approach the markets to reschedule its inefficiently structured external debt and talk to the International Monetary Fund (IMF) about policy support after the World Bank meetings in Morocco. Some may ask, why borrow more money when you are up to your ears in debt?

    “The answer is simply that mismanaged debts and liabilities with no tangible assets to show need to be followed by project-specific borrowing and proper governance going forward,” Rewane stated, in a weekend review.

    Minister of Finance and Coordinating Minister for the Economy, Mr. Wale Edun, has confirmed that the country was engaging the World Bank to find the most concessional ways to support the forex crisis resolution.

    Analysts at Afrinvest said they expected efforts by the Federal Government to strengthen bi-lateral and multi-lateral business relationships and attempts to effect some market reforms to inspire confidence should external factors align favourably before reform fatigue sets in.

    Analysts noted it would be helpful to support short-term measure such as the $3 billion Afreximbank-NNPCL deal with steady improvements in market yields and inflation-arresting policies to present a compelling narrative for the naira.

    “In our opinion, longer-term strategies should be focused on moving the economy from being hot-money reliant to foreign direct investment (FDI)-based,” Afrinvest stated.

     Afrinvest, however, downgraded its capital importation estimates  for the year from $6.2 billion to $4.8 billion, citing forex illiquidity, unrelenting inflation, need for firmer CBN guidance and yields expansion in Advanced markets.

    Analysts also noted the need for improvements in the attractiveness of the sub-nationals to improve foreign inflows, pointing out that only five of the 36 states and the Federal capital Territory (FCT) attracted foreign investment flows in second quarter 2023, compared to nine states in first quarter.

    Cordros Capital said the narratives in the forex market have remained the same in recent weeks due to perceived slowdown in forex reform momentum.

    Analysts said lingering low crude oil production and a sustained dip in foreign investors’ net flows could continue to weigh on forex supply in the short term.

    “Consequently, we expect forex liquidity constraints to linger in the near term, ensuring the local currency pressures remain intact,” Cordros Capital stated.

  • Forex crisis: Fed Govt opens talks with World Bank

    Forex crisis: Fed Govt opens talks with World Bank

    • Economic challenges over soon, says Edun

    Solution is in sight for the economic challenges, Minister of Finance Olawale Edun yesterday said yesterday.

    He added that the Tinubu Administration will tackle foreign exchange (forex) problem with the cheapest available funds.

    He said he met with World Bank officials yesterday (Wednesday) on how to address tight forex liquidity.

    Edun unveiled plans to address the nation’s economic problems at a Business Lunch in his honour and three other ministers by the Newspaper Proprietors’ Association of Nigeria (NPAN) in Abuja.

    Those also honoured are Minister of Information and National Orientation, Alh. Mohammed Idris; the Minister of Solid Minerals Development, Mr. Dele Alake and the Minister of Art, Culture and Creative Economy Hanatu Musawa.

    All the ministers, who  have been active members of NPAN, were celebrated for being appointed into the cabinet of President Tinubu.

    Edun, a former chairman of Vintage Press Limited, was treasurer of NPAN, while Idris, who was publisher of BluePrint, was general secretary.

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    Speaking on what he described as his humbling experience in power, Edun assured Nigerians that Tinubu was working round the clock to find solutions to the nation’s economic problems.

    “I have just risen from a meeting of the Economic Coordination Committee as stipulated by His Excellency, President Bola Ahmed Tinubu to make sure that there are collaboration, coordination and cooperation. And, as you can imagine, full communication in terms of the economic management of our dear country.

    “And so we went through things like the economic management framework, which would include a lot of consultations, step-by-step with other stakeholders, including the private sector that will serve as one of the key ad hoc committees that we put together and the updated and expanded national development plan.

    “Even earlier, we were meeting with the World Bank. As we know, this is a time of very tight foreign exchange liquidity. So, it must be sought and found wherever.

    “And one of those cheap and viable ways is foreign exchange funding, which virtually comes free. A lot of it has zero interest from the World Bank, a multilateral development institution set up to help developing countries such as ours.

     “And of course, you have to be able to tell them, this is the economic plan. You all know the measures that Mr. President has taken. We have briefly dealt with the issue of subsidy that was draining government revenues. He has briefly dealt with the foreign exchange situation and multiple windows, which was deterring investors

    “But as we know, there is much to be done. So, this morning session (Thursday’s) was a way of explaining our plan in order to attract the cheapest or most available of those funds.

    “So that’s just to spend the time I have with you, explaining myself, communicating and there’s much more of that to be done,” Edun said.

    He pleaded for the cooperation of the media, said the government was working hard to find solutions to the nation’s economic.

    He said Tinubu is ultimately encouraging investments that will increase productivity that will grow the economy, create jobs and reduce poverty.

    “All these will certainly be put on the right trajectory which will yield results in the not too distant future,” Edun said.

    Idris said the media industry may also benefits from the tax incentives the government was working on.

    He affirmed that the government will not censor the media under any guise.

    He promised the nation of his aspiration to change the face of public communication in the country.

    “I want to change the face of public communication in this country. I think it is possible to do public communication and still retain your integrity.

    “I will say it the way it is. I will make it a duty to talk to colleagues. It is in my interest that the media should breath

    “There are tax incentives that the government is working on. I can tell you that the press will be part of it.

    “National orientation is going to be in the forefront. Things are going to happen and we are going to change the face of national orientation. The president told me of his commitment to this. I think a lot is going to happen,” Idris said.

    Alake, pleaded with NPAN members to ensure that journalists in the country are “analytical.”

    He said the traditional media should promote factual and in-depth reporting to set the pace for others.

    Alake expressed concerns that younger Nigerians are no longer interested in journalism.

    Chairman of the occasion, Mr. Sam Amuka, Publisher of Vanguard, pleaded with the government to allow newspapers to breath.

     “We appeal to you, let the newspapers breath. There is hardly any hard copy newspaper that is not losing money today.

    “The hard copy will always survive in Africa because we always celebrate birthdays and funeral. Not all the titles will die but we want as many as possible to survive,” Amuka said.

    He said NPAN will soon seek audience with President Tinubu on the problems in the  Nigerian media.

    A life patron of NPAN and former President, Chief Olusegun Osoba, expressed confidence that the four ministers will perform well in office.

    President of NPAN, Mallam Kabiru Yusuf, who also heads Nigerian Press Organization(NPO) said the media is crucial to the growth and development of democracy in the country.

    “We are contributing our bit to the growth and development of democracy. The Fourth Estate of the Realm is crucial to democracy.

    “We have lost our colleagues  but the nation has gained so much. When they finish what they are doing, they will still come back to us,” Yusuf said.

    NPAN members. Including Chairman of Punch Nigeria Limited, Mrs. Angela Emuwa, President of Nigerian Guild of Editors (NGE), Mr. Eze Anaba and Chairman of Nigeria Union of Journalists (NUJ), Chief Chris Iziguzo  later set agenda for the four ministers.

    While Emuwa sought for more business, including advertisements from the government, Anaba asked the government to avoid media censorship.

    The event was attended by media chiefs including Managing Director and Editor-In-Chief  of the Guardian Press Limited, Mr. Martins Oloja; Editor-In-Chief of Leadership Newspapers, Mr. Azu Ishikwene; Managing Director of  Thisday Newspapers Limited, Mr. Eniola Bello; Provost of the Nigerian Institute of Journalism, Mr. Gbenga Adefaye; Deputy  Managing Director of  Thisday Newspapers, Mr. Kayode Komolafe, Managing Director of The Sun Newspapers, Mr. Onuoha Ukeh and the Group Managing Director of DAAR Communications, Mr. Tony Akiotu.

    Others at the session were Publisher, Businessday Newspapers, Mr. Frank Aigbogun, Publisher of Daily Times, Mr. Fidelis Anosike; NPAN Executive Secretary, Mr. Feyi Smith; Chairman of Thisday Editorial Board, Mr. Olusegun Adeniyi; former Senior Technical Assistant to the President, Mr. Louis Odion; Managing Director of Independent Newspapers Limited, Steve Omanufeme, Publisher of Abuja Enquirer, Mr. Dan Akpovwa and Publisher of the Nigerian Pilot, Dennis Sammy.

  • Manufacturers, consumers adopt local substitutes to beat forex scarcity

    Manufacturers, consumers adopt local substitutes to beat forex scarcity

    Manufacturers and consumers are reviewing import and purchasing options as cost of imported goods and services rise over persistent forex scarcity.

    Many manufacturers are resorting to homegrown substitutes for imported raw materials to keep product cost within the reach of consumers.

    With inflation at 25.8 per cent in August, additional cost from forex scarcity are becoming to much burden for consumers to bear.

    The Central Bank of Nigeria (CBN) economic data showed that Nigeria spends average of $4 billion monthly on importation of raw materials and machineries, manufactured products, minerals, food products, oil, transport, among others,  majority of which can be produced locally.

    At the Ladipo Market, in Lagos, motorists now buy locally fabricated vehicle shock absorbers, brake pads, and even engine oil as prices of imported versions go out of reach.

    Managing Director, Bendock Limited, Steven Kalu, said demand for foreign goods have dropped as prices soared with many Nigerians looking inwards for the closest substitutes of products and services.

    He said: “The naira exchange rate at the parallel market is now N1007/$1. With that, goods and  services linked to the dollar are becoming unaffordable for anyone with a legitimate cause.  Importers have run out of options even as consumers now prefer local substitutes at lower cost”.

    Analysts at Afrinvest West Africa, said naira will continue trading within a similar range across market segments, as the foreign exchange imbalance persists due to weakened forex reserves and sustained high demand in the parallel market.

    Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf said dollar scarcity has created stronger incentives for manufacturers and importers to look inwards now than ever before.

    He said it was   becoming increasingly very, very difficult to import things whether  products or services.

    “So,  if we are talking about a silver lining  in this current foreign exchange crisis, that is the silver lining. This is a challenge to our entrepreneurs, to work more in the direction of import substitution. We need to be a lot more creative and embrace import substitution  across all sectors. Wherever we can we can substitute import, we should do that,” he said.

    Yusuf called on research institutes to rise up to the occasion and government  roll out policies, to support those initiatives.

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    He said: “Both medical tourism and schooling abroad, is changing. People are now looking inwards, and looking at schools and medical institutions with capacity, domestically, and a good number of them are coming up now. We need to localize these services.”

    Continuing, Yusuf said: “It is a good incentive to look inwards, and government should support companies that are looking inwards to support import substitution. Our research institutes should also look into the situation and develop local substitutes for imported goods and services. That is better than looking at ongoing exchange rate crisis, while we try to solve bigger macroeconomic issues”.

    Yusuf said that developing the non-oil export sector is absolutely an imperative, given that this holds vast potential for generating a significant amount of foreign exchange earnings.

    An economist and Managing Director, Financial Derivatives CompanyLimited, Bismark Rewane, explained why the naira’s fortune has continued to decline and dollar inflows on decline. 

    “As oil prices dipped, dollar inflows have also dropped. The CBN has prioritised stability of exchange rate in the official market. It has drawn an exclusion list of avoidable imports from being funded in the official market. With the forex demand for the items transferred to the parallel market, rates in that market have soared,” he said.

    Nigeria operates a managed float exchange rate  regime, and should support the development of homegrown solutions to fix its exchange rate challenges.

    While the CBN is working on achieving price rate stability, something should be done to address the rising dollar demand and ensure that those things can be produced locally, are not imported.

    This will reduce  demand for foreign exchange, and that will ensure that prices do not rise beyond expectations of Nigerians.

  • Telcos’ capital expenditures fall by 36% on forex scarcity

    Telcos’ capital expenditures fall by 36% on forex scarcity

    • N2.6tr spent in three years

    Capital expenditures (CAPEX) by mobile network operators (MNOs) in Nigeria have dropped by more than one-third, heightening the risks of poor network quality.

    Capex are funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology or equipment.

    According to reports by the Nigerian Communications Commission (NCC), local investments by the MNOs  in 2020 stood at N831.976 billion while the operators reported a total capex of N718.351 billion in 2022 as against the N1.124 trillion invested in 2021, indicating a decline of 36.1 per cent within the period. With these, total capex over the last three years stood at N2.6 trillion.

    Stakeholders blame the decline on foreign exchange (forex) scarcity and falling value of the local currency (Naira) amid surging inflation.

    The reports entitled: 2021 Subscriber/Network Data Annual Report and 2022 Subscriber/Network Data Annual Report, prepared by the Policy Competition and Economic Analysis Department of the NCC, also gave figures of the total number of staff reported by the MNOs, including MTN, Glo, Airtel, and EMTS trading as 9mobile, Smile and Ntel.

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     “The total number of staff reported by the mobile operators (MTN, GLO, Airtel, EMTS, Smile and Ntel) as at December 2021 was a total of 7,226 composed of (7,042 Nigerians and 184 expatriates). Further breakdown of this category reveals that 4,541 of the Nigerian Staff are Male while 2,501 are female. Similarly, 181 are male expatriates and three are female expatriates,” the report noted.

    It added that as at last December, they were 7,451 composed of 7,270 Nigerians and 181 expatriates. A further breakdown revealed that 4,735 of the indigenous staff are males while 2,535 are females.

    Similarly, 177 are male expatriates and four are female expatriates.

    Last year’s report showed an increase in revenue of 18.7 per cent to N3.8 trillion which was about N600 billion increase over the N3.2 trillion recorded in the previous year.

    According to the report, the total revenue of telecom companies for the year stood at N3.8 trillion.

    It asserted the dominance of MNOs including MTN, Globacom, Airtel and 9mobile in the industry as they accounted for 86 per cent of the industry’s revenue.

    The revenue of the four mobile operators for the year stood at N3.3 trillion while other players including Internet Service Providers (ISPs), Value Added Service (VAS) providers, and fixed wired operators, recorded about N500 billion total revenue.

    On the other hand, the operating cost for the companies increased by 17.6 per cent in the year.

    According to the report, the operators spent N2 trillion on their operations in 2022 compared with N1.7 trillion they spent in 2021.

    NCC further disclosed that the number of active subscriptions across the telecom networks increased from 195.4 million in 2021 to 222.5 million as of December 2022.

    This showed that the operators added 27.1 million subscriptions in the year, representing a 13.86 percent increase in active subscriptions year on year.

     “The increase in the operators’ subscriber base was attributed to a number of reasons which includes subscriber loyalty, promos, seasonal effects, aggressive consumer acquisition drive, and competitive product offerings across all the networks.

     “The increase in active subscription impacted positively on other derived telecom indicators such as Teledensity, internet penetration as well as broadband penetration,” NCC stated in the report.

    The report further revealed that telecoms subscribers consumed a total of 518,381.89 terabytes of data last year showing an increase of 47 per cent when compared with the 353,118.89 terabytes consumed the previous year. 

    According to the report, the number of internet subscriptions across the networks also increased from 141.9 million as of December 2021 to 154.8 million as of December 2022 representing an increase of 9.06 per cent.

    Aside from the increase in subscriptions, which pushed up data consumption, the launch of 5G during the year by MTN also contributed to the jump.

    With the expansion of 4G network, which delivers faster speed compared with 3G, Nigerians have been spending more on data as they are able to stream high-quality videos online.

    The consumption is expected to increase further as the operators gradually roll out 5G, which delivers 100 times the speed of 4G.

  • Can You Make $300 a Day from Forex Trading?

    Can You Make $300 a Day from Forex Trading?

    Forex trading can offer substantial profits, yet it is essential to set realistic expectations when starting out in this field. Many aspiring traders question whether it’s possible to make $300 daily through Forex trading; here we discuss some factors which could impede or facilitate your earnings potential.

    1. Market Volatility

    Market volatility plays a vital role in determining how profitable Forex trading can be. With higher volatility comes greater price movements and more trading opportunities; however, higher risks should not be underestimated; even though you could potentially make $300 daily trading in highly volatile markets if you employ proper risk management techniques and implement a well-structured trading plan and risk mitigation techniques.

    2. Leverage Trading Capital and Leverage

    Capital and leverage both have a direct effect on your earning potential. A larger trading capital may make it easier to generate higher profits; with leverage you can control larger positions with smaller sums of capital. But be wary when using leverage as it can increase both gains and losses exponentially; carefully consider your risk tolerance before employing leverage responsibly.

    3. Trading Strategies and Skill Level

    Your trading strategy and skill level as a trader can have a dramatic effect on your earnings. Implementing an effective risk management plan combined with a sound trading strategy is the cornerstone of profitable trading; continuous learning, practice, and development of trading skills contribute to overall success as a trader.

    4. Market Conditions

    Market conditions such as economic indicators, geopolitical events and central bank decisions can significantly impact currency exchange rates and market movements on the Forex market. Being aware of their possible effects can help traders make informed trading decisions; keeping up-to-date with market news while conducting in-depth analyses and adapting your strategy as necessary can increase earning potential significantly.

    5. Trading Costs and Fees

    It’s essential to take trading costs and fees into account when calculating potential earnings. Forex brokers charge spreads – which are the differences between buying and selling prices of currency pairs – as well as commissions or account maintenance or withdrawal fees that could impact overall profitability. Choosing a broker with competitive pricing could make all the difference to your success!

    Conclusion

    While Forex trading offers the potential of making $300 daily, it must be approached with realistic expectations and an open mind. Forex trading entails risks that can lead to losses; to become successful at it takes discipline, dedication, and constant learning.

    For optimal returns, create an effective trading strategy, acquire knowledge, practice with demo trading accounts, and continuously advance your skills. Furthermore, implement risk management techniques to protect capital while mitigating losses.

    Read Also: Flutterwave partners Wema Bank, Kadavra BDC on digital forex

    Keep in mind that consistent profitability in Forex trading cannot be assured; it may take some time before reaching your financial goals. Therefore, it is advisable to seek advice from financial professionals, assess your risk tolerance, and only invest what you can afford to lose.

    Finally, remember that forex trading is an ongoing journey which requires patience and persistence. Be committed, remain disciplined in your approach, and be adaptable as market conditions shift in order to increase your odds of success.

  • Exporters lead forex supply

    Exporters lead forex supply

    Exporters have overtaken the Central Bank of Nigeria (CBN) as the dominant supplier of foreign exchange (forex) to the official market (the Investors and Exporters (I&E) window).

    The apex bank lost its position after its monthly forex intervention dropped from $1.2 billion to $100 million,  following the naira reforms that collapsed all exchange rates into the I&E window.

    The expected capital inflows target from the naira reforms has not been met, Head of Treasury Sales at FirstBank, Mrs. Adeola Abioye said at the weekend in Lagos the bank’s Corporate Customer Engagement Forum.

    She explained that forex proceeds from exports account for about 15 per cent of the total forex inflows to the I&E window.

    She told the bank’s customers that exporters have shot into the lead as forex suppliers to the official market, and that the apex bank was not keen on regaining the dominant forex supplier status.

    According to Mrs. Abioye, tight forex liquidity will persist as deadline for school fees payment for Nigerian students studying abroad draws closer.

    She said: “CBN Forex supply has gone down from average of $1.2 billion to less than $100 million per month, at present. Unfortunately, the major contributors to the Importers and Exporters (I&E) window has been the exporters. Forex proceeds from exports account for about 15 per cent of the total forex inflows.

    “And if the whole market is now relying on export proceeds, then you can understand why the market liquidity has been so tight for so long. It is not looking like there is going to be any major shift in that for now.”

    Mrs. Abioye explained that there are hanging forex demands, made up of the covered obligations with forex allocations that have not been delivered.

    She said: “We have about $7 billion of that. We also have uncovered obligations, for which there is no allocation whatsoever. And as long as those obligations remain unsettled, it will continue to distort the market. It will not allow for a proper discovery of exchange rate.”

    “The news is that as we speak, between the monetary authority and bankers committee, and other stakeholders, a lot of discussion and dialogue are going on, on how to resolve the backlogs.

    “This is because without taking out the backlogs, from the equation, it is going to be difficult to allow for a more efficient exchange rate discovery. That backlog is distorting the market, and need to be taken out.”

    On the way forward, the FirsBank official said: “Businesses should look into non-oil export. We have seen a surge in the non-oil export, but the concentration has been on the agriculture. I think that businesses should be more deliberate and intentional about focusing more on non-oil export.

    “The body language is that we are not going to be seeing as much supplies from monetary authority as we were seeing in the past. The generation of forex supply will then lie in the market because we are not likely to be seeing the CBN playing the major role that they played in the past in providing forex.

    Read Also: Australian mining investors to visit Nigeria

    “Businesses now have to get their own source of forex, and one way to do that is to be more intentional and deliberate, focusing on export business. Not just for companies that are traditionally within the export business, but even for companies that are import dependent to look at export as a way of diversifying our businesses.”

    According to Mrs. Abioye, available facts showed that the expectations for unifying the exchange rate market has not been met.

    She said: “Of course, that is not to say that things will continue this way, because I am aware that a lot of dialogue is ongoing. There are lots of consultations with the CBN, and the markets.

    “All layers of market participants, all options are being thrown open, to the CBN and everything is being reviewed. So, we expect that some further policy shift will have to occur for us to be able to unlock the liquidity within the forex market space.

    “This outlook is based on the fact that if things continue this way, assuming there is no change in the current fundamentals that we are seeing now – in the structure of the market, then expect that the forex liquidity tightening will continue in near term, like end of this year before some of the other policies begin to shape.”

    She said that within the monetary space, there is nothing to be done, except within the fiscal space that the economic managers have opportunity to effect major change in the direction of the market. However, such fiscal options are not likely to be realized between now and end of the year.

    “Most likely forex liquidity will continue to be tight, exchange rate divergence will continue to widen, and could even widen further from where it is now.

    “The reason I said it could widen further is because by the time we get to the deadline for school fees payment, and panic buying sets in, and there is no further supply on the other side of the market, there will be so much panic and the rates are likely to go up.”

    Continuing, she said that as at the weekend, the rate at the parallel market was at N955/$ for cash.

    “For transfer, it is higher than that. It is about N960,” Mrs. Abioye said.

    Urging the authorities to  focus more on non-agric side of exports, she said: “There are a lot going on in the solid minerals sector.

    “There is also need for import substitution for things that we can produce locally. We should be more deliberate about that.”

    “In the interim, we also encourage businesses to buy available forex. There is not much out there, but whatever is left, let us try as much as possible to buy them up to close up on our obligations.”

    Founder/Chief Consultant of B. Adedipe Associates Limited, Dr. ‘Biodun Adedipe, said an organisation should have the ability to access quickly new funds, either to take advantage of an emerging opportunity in its market or to survive/stabilise during a crisis or major shock in its operating environment.

    Adedipe, who spoke on “Policy shifts and disruptions- what, why and implications” advised business owners to be nimble, agile and responsive to the changing business environment, including the challenge of naira depreciation, petrol subsidy removal, taxation, among others.

  • Forex scarcity: Is merger good for bureau de change operators?

    Forex scarcity: Is merger good for bureau de change operators?

    Stakeholders under the aegis of the Association of Bureaux De Change Operators of Nigeria (ABCON), are hard pressed with the rather lackluster performance of the foreign exchange market and are therefore determined to turn the tide for good, reports Ibrahim Apekhade Yusuf

    •Wads of forex (inset) Gwadabe

    Worried by volatility of the foreign exchange market, which has led to a lull in its operations, bureau de change operators have hinted of plans to adopt merger in order to withstand the volatility and scarcity.

    The stakeholders, under the aegis of the Association of Bureaux De Change Operators of Nigeria (ABCON), The Nation gathered, are more than determined to address this lacuna.

    ABCON said the merger will improve the members’ financial standing and increase their capacity to buy foreign exchange after the naira devaluation sent the dollar rate upwards from N755.7/$1 to N925/$1 between June 13 to September 12.

    It would be recalled that since the devaluation on June 14, the exchange rate between the dollar and the naira has also increased from N471.67/$1 to N742.10/$1, forcing persons or organisations in need of the United States currency to cough up more naira.

    The new move, our correspondent was reliably informed, has already been proposed to the Central Bank of Nigeria (CBN).

    The forex market is a market for trading and exchanging any currency pair. The value of one currency in terms of another currency is known as the “Exchange Rate”.

    Confirming this development, ABCON said in a statement on Thursday by its President, Alhaji Aminu Gwadabe, that the recommendation was to effectively help its corporate governance and rules of engagements with the apex bank.

    The merger option was adopted for class ‘A’ BDCs in 2007/2008, which entitled them to $1m weekly allocation with N500m capital base.

    The group called for similar business model through mergers and consolidation, rather than outright review of capital base of each operator.

    Merger refers to a strategic process whereby two or more companies mutually form a new single legal venture. A merger occurs when two firms join together to form one. The new firm will have an increased market share, which helps the firm gain economies of scale and become more profitable. The merger will also reduce competition and could lead to higher prices for consumers.

    Each of the CBN-licensed BDCs was capitalised to the tune of N35m and should be allowed to willingly consolidate among themselves, the association said.

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    He said merger of multiple BDCs into a stronger entity would prepare them for higher role in the financial system, including handling of diaspora remittances, or other offshore funds attracted to the economy to deepen forex access at the retail end of the market.

    Gwadabe said the merger of multiple commercial banks in 2004 consolidation exercise by the apex bank is an example the apex bank could adopt for the BDCs to streamline their numbers and present an easily manageable operators for maximum impact in the foreign exchange market.

    He said, “ABCON rejects reports calling for BDCs recapitalisation by a section of the media. The media quoted us out of context and we are working to put proper narratives.”

    According to him, the BDCs were seeking multiple mergers within the industry to present a reduced number of operators for more effective regulation.

    Gwadabe stated that the group never asked for upward review of N35m mandatory regulatory approved capital base for each BDC, but a merger of at least, 10 BDCs to form new capital of N350m.

    The move, he said, would enhance the scope of operation and diversification of sources through various windows and reduce regulatory pressures.

    There has been some uncertainty regarding the fate of the local currency over the last 18 months, especially within the three months into the unification of all segments of the forex exchange (FX) market by the Central Bank of Nigeria (CBN), local money changers have a challenge with their operations despite the reforms.

    “Of course, if a merger is construed by the market to produce synergies that will benefit the acquirer and the target, both companies’ shares may rise. If the market feels the deal is a blunder, both share prices may even fall,” informed Alao Waheed, a forex dealer in Lagos.

    Pressed further, Waheed stressed that mergers in the forex exchange market is the best thing that thing that will happen to the sector, as the benefits are immense.

  • Edun to Indian investors: Nigeria removing barriers to forex rate

    Edun to Indian investors: Nigeria removing barriers to forex rate

    The Federal Government is in the process of removing major macroeconomic impediments to the stability of the foreign exchange (forex) rate, inflation, interest rates, liquidity and access to adequate finance.

    In a new acceleration of the President Bola Tinubu’s monetary and fiscal reforms, the government is also finalizing key initiatives aimed at freeing the macroeconomic environment from legacy constraints, with a view to enhancing Nigeria’s attractiveness as a global destination for investments.

    Tinubu had launched major fiscal and monetary reforms, including the abolition of multiple forex rates, removal of forex restrictions and streamlining investment approval process.

    Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, said the process for the removal of  identified obstacles to a stable and liquid macroeconomic environment was almost being completed.

    “The major macroeconomic impediments to the stability of the exchange rate, of inflation, of interest rates and indeed of obstacles to liquidity, to enough financing, are now in the process of being removed,” Edun said.

    The pronouncement came as the naira recorded its largest gain at the forex market, closing at  N722 per dollar, the strongest rate since June 2023 when the Central Bank of Nigeria (CBN) unified multiple exchange rates.

    Read Also; Nigeria needs N21tn to bridge housing gap, says Shettima

    Speaking on the sidelines of the Group 20 (G20) Summit in India yesterday, the minister expressed Nigeria’s perspective and commitment to building a stronger, sustainable, and resilient economy.

    He pointed out that while government had taken steps to improve the business environment through the removal of forex restrictions and streamlining of the investment approval process, it would soon deepen the reforms with another round of comprehensive initiatives to stabilise the macroeconomic outlook.

    “Our focus is on attracting global capital, promoting foreign direct investments and this underscores our commitment to job creation, economic diversification, and revenue expansion,” Edun added.

    He urged investors to take advantage of the opportunities that Nigeria has  offered, stressing that Nigeria is an attractive destination for business, brimming with opportunities across the various sectors.

    Edun said government’s reforms will also drive inclusivity by including women and young people in what is going on in the economy and having them play their role.

    “For those interested in investing, the playing field has been levelled, it has been cleared of debris and the opportunity is now there for you to seize,” Edun told Indian and other global investors.

    The naira recovery has been attributed to announcement by the CBN Acting Governor, Folashodun Shonubi that forex backlogs will be cleared in two weeks.

    The uptick in crude oil prices have also helped naira recovery at the official market.

    Oil prices hit a 10-month high owing to supply cuts by Russia and Saudi Arabia which Brent crude price rising  to $91pb for the first time since November 2022.

    Managing Director, Financial Derivatives Company Limited, Bismarck Rewane, said Saudi Arabia would further extend supply cuts to December adding that Brent prices are expected to rise to $95pb by year-end.

    Rewane added that global crude oil supplies expected to improve on refinery maintenance.

    On forex backlog clearance, Shonubi had last Monday said that the apex bank was working with commercial banks to clear the forex backlog through different structures within the forex market.

    Shonubi said the banks, which controls 75 per cent of the forex transactions would play significant role in seeing that the backlogs go.

    The backlogs, estimated at $8 billion to $10 billion,  constitute of dollar requests from manufacturers who want to purchase raw material inputs from abroad, parents paying their children’s tuition fees abroad,  Nigerians paying medical bills abroad, travelers sourcing Business Travel Allowances (BTAs), and Personal Travel Allowances (PTA), among others.

    Analysis of data on the FMDQ website showed a $160 million transaction volume on Friday, a major leap from around $60 to $80 million average daily turnover recorded previously.

    However, at the informal parallel market, naira closed weekend around N920 per dollar amid concerns the supply gap may linger.

    Former Executive Director, Keystone Bank Limited, Richard Obire said the weakness of the naira over time has been caused by two broad issues linked to the quality of leadership and governance.

    He said Nigeria’s heavy and skewed outward-oriented consumption of goods and services as seen in decades of long substantial bills for food and energy imports remains a hindrance to naira stability.

    Also, the massive corruption-driven capital outflows which in turn severely damages Nigeria’s capacity to produce at scale that will enable the country to fully engage its large population to create widespread prosperity works against the naira.

    On ways to strengthen the naira, he advised that in the short-term, there is need to find non-market damaging ways to increase the supply of hard currencies and reducing the demand for same.

    According to him, right pricing for remittances and frictionless processes for their use by  recipients  should see the volumes growing again.

     He said that insecurity hampering food production needs to be tackled with a sense of urgency and effectiveness.

    “Priority should be given through deploying pragmatic incentive programs to drive  up the volume of food products for domestic consumption and industrial use to reduce our food import bill. All government consumption expenditures requiring the use of hard currencies should be suspended indefinitely, starting now,” Obire said.

     Obire said the Turn Around Maintenance  (TAM) status of refineries in Port Harcourt and Warri should be appraised immediately. 

    He added:” Efforts should be focused on the one which can begin producing quicker. The other one should be made to be up and running, not long after. This should reduce required forex for fuel imports.”

  • NYSC, SAED, trader okay forex tradingeducation for graduates

    NYSC, SAED, trader okay forex trading
    education for graduates

    The National Youth Service Corps (NYSC) ,  Skills Acquisition & Entrepreneurship Development (SAED) Programme of the Federal Government and Forex trader Temitope Ijibadejo have partnered to provide opportunities for young graduates to tap into forex trading, unlocking a new era of financial independence and entrepreneurship.

    The SAED Programme, a pivotal initiative by the Federal Government, is dedicated to equipping young graduates with the essential skills and knowledge required to tread the path of entrepreneurship.

    Read Also: 13 years after, NYSC reopens Orientation Camp in Borno

    Recognising the potential of forex trading as a vehicle for financial growth and independence, Ijibadejo has committed his expertise, time, and resources to train and mentor an impressive cohort of 5,000 young graduates, over the past four years through the SAED programme, which was launched by the Federal Government in 2012 to mitigate the challenge of joblessness faced by graduates after school.

    “Imparting knowledge is the only way the teacher can keep abreast of developments in his field.  Forex trading education is important for young graduates who are willing to be entrepreneurs. Hence, I enjoy the opportunity to mentor young people who are enthusiastic about forex trading and business development,” he said.

    Ijibadejo noted that the greatest challenge facing Nigeria isn’t so much the type that can be solved by the government, but individuals.

     “The greatest fallacy young people believe is that the government will create jobs; all the jobs the nation needs. That is just not possible. Our country has enormous potential in human material resources. Our market is about the largest in Africa. What more do we need? Nothing but ability to spot opportunities and develop those opportunities,” he added.

    The forex trader noted that the partnership is not merely about education; it is about nurturing a new generation of traders who are equipped with the skills to navigate the intricate forex market and forge their own paths as entrepreneurs.

    His words:”The partnership is all about nurturing a generation that is not only equipped to tackle economic challenges but also poised to steer Nigeria toward a future of sustained growth and prosperity.”

    He noted that forex trading is a  dynamic and evolving domain within the financial world, requiring  a unique blend of knowledge, strategy, and resilience, adding that it is needed to foster economic growth and social progress.