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Tag: markets

  • Markets and the burden of regulation

    Markets and the burden of regulation

    That Nigerians are not amused by the across the board tariff increases at a time of shrinking disposable incomes is merely stating the obvious. With the vicious, battering forces of the market as unfriendly as can be, and with services providers across the board barely managing to keep a steady course, the irony isn’t just that the Nigerian consumer, who ordinarily should be the king in normal circumstances are left with the short end of the stick, but also that the service provider whose primary duty is to make that happen, being themselves increasingly enfeebled, have more often than not, gone on a ruthless binge of extortionate pricing, to survive.

    Admittedly, no sector of the economy, has been untouched by the headwinds. Thanks to the Tinubu administration’s valiant efforts to reset the economy, to unchain it from the wasteful subsidies and the discretionary, but transparently corrupt foreign exchange regime that have held it down, it has been a slow but painful adjustment across the board.

    From basic household items to food, transportation services to raw materials for industries, no sector has escaped the gale. Currently, the inflation rate, aside ranking among the highest in Africa has seen food prices in particular, balloon; so also are transportation costs and the cost of housing; until lately, they have all been on a steep increases. Again, raw material prices as indeed the cost of industrial spares, thanks to the new forex pricing regime and the attenuating devaluation of the naira, have shot up. Overall, the ease of doing business or the mere prospect of it has remained daunting whether for entities small, medium of even large scale.

    Between the fabled Scylla and Charybdis, the Nigeria economic actor – whether as a consumer or a producer of goods or services – has suddenly found himself caught up in the maelstrom of the forces over which he little or no control.  

    Just like the Good Book is wont to say, it may well be the case that the parents were the ones that ate the sour grapes, it is the children’s teeth that are set on the edge! Nigerians, long impervious to such concepts as ‘cost recovery’, ‘appropriate tariff’ and the long maligned ‘market forces’, are not only now waking up to the dawn of a new reality, but are finally, it seems, learning the lessons the hard way too.

    Read Also: CNA advocates development of legislative drafting manual for National Assembly

    And so the current pressure by service providers for across the board tariff reviews. From the telecommunications companies that claim to require it so bad that any contemplation of an alternative or even a delay in granting their request can only be at the cost of their survival as an industry. Imagine; last year alone, the MTN Group reportedly posted a staggering $414.7 million loss; the same with the electricity sector which continues to guzzle billions of naira of taxpayers’ money post-privatisation (the Nigerian Electricity Regulatory Commission puts the subsidy largess in the first 11 months of 2024 at N1.91tn), hence the buzzword today being that tariff reviews have become somewhat inevitable. 

    Now, the latest in the tariff quest is the entertainment company, MultiChoice, the operator of DStv and GOtv, which Monday February 24 served notice of its intention to hike subscription prices, effective March 1. Again, as with the other corporates, the reason as given by the company’s Chief Executive Officer, John Ugbe is, ‘higher operational costs’. 

    Part of the statement from the company read: “Due to prevalent economic factors leading to increased operational costs, we have unavoidably had to adjust the prices of our DStv and Gotv subscription packages”.

    As Dataphyte, the media, research and data analytics company would note: “Over the past nine years, Nigerians have dealt with a series of price increments on DStv subscriptions. The increments have become more frequent in recent times and the reasons for increment has (sic) always been due to the rising operational costs in the country.

    Expectedly, the Federal Competition and Consumer Protection Commission (FCCPC), has since taken up the challenge with the latter not only raising concerns about what it described as ‘recurring unilateral price increases’, including serious questions about ‘fairness, market abuse, and potential anti-competitive practices’ but requesting a meeting to discuss the matter.

    As it is, it is hard to see any part of the FCCPC invite as anything but legitimate public duty. MultiChoice is, after all, not just another fringe player in the entertainment sector of the economy, its dominance is unequalled, or if you like, unchallenged. 

    Surely, this will not be the first time MultiChoice will duel with the regulators or even the parliament. Yet, as with every duels past and present, the issue(s) have remained basically the same issues of inflation and rising costs and how this impinges on the service delivery and prices, and then the question of how it responds to it, not just in the market place, but in the context of its status as a lead player in a sector in which it has remained, inexplicably, a dominant player.

    However, while the issue has remained somewhat intractable and so doesn’t lend to easy answers, it is not necessarily because the roots of the problem are unknown but because they are out of control!

    Surely, I understand the case that the FCCPC is eager to make: it doesn’t accept that the tariff review by DSTV makes any sense any than the extremely short notice of barely five days served on the subscriber fair; needless to add that it considers both to be, not just injurious, but antithetical to consumer interests and to that extent demands some regulatory action. Not only is this reasonable, it may well be the right call to make in the current circumstances. This, as indeed, the alleged monstrosity of a dominant player in a country of over 200 million population being legitimate questions that Nigerians have had to raise in times past, but for which concrete answers are yet to be found, precisely because the solutions, although in plain sight, are not easy to deliver, are live issues!

    To put things simply:  Nigeria’s case is akin to that of the proverbial bird perched, delicately on rope; neither the bird nor the rope could claim to be at ease!

    Therein lies the burden of the nation’s competition and consumer protection body. The body has certainly done a yeoman’s job of pounding the streets in the bid to bridge the perceptible animus between the different set of actors in the economy, producers and consumers alike. Sometimes the body has found itself, reading the riot act, to those for whom the issue of fair, just and equitable market prices would remain an alien concept. In all, it has done well to raise the stakes for the consumer and the service provider alike. But then, as far as the matter of tariffs go, the case of the service providers may well be an instance of those creating value being forced to carry more than they can capably bear.

  • Akure monarch orders closure of markets, shops

    Akure monarch orders closure of markets, shops

    Deji of Akure, Oba Oba Aladelusi Aladetoyinbo, has ordered closure of markets and shops today for the observation of Aherehbe festival.

    A statement by his spokesman, Michael Adeyeye, said the closure was an integral part of the requirement in observing the age long tradition.

    The statement said: “Sequel to this, there shall be no opening of markets, trading or opening of shops under any guise during the festival.

    Read Also: Tinubu: GDP surge points to an economy on right path

    “Residents, market women and shop owners are enjoined to comply with this directive.

    “However, in view of the importance attached to the health sector, only pharmacy shops are exempted from closure during the festival

    “Notwithstanding, the festival will not in any way restrict human and vehicular movement.”

  • Ogun govt to shut dirty markets

    Ogun govt to shut dirty markets

    The Ogun State government has threatened to shut any market found guilty of improper waste disposal and dirty, to avoid the spread of cholera.

    Special Adviser to the Governor, Abayomi Semako Hunye gave the warning during a meeting with the executives and members of the Ogun State Association of Market Men and Women in Abeokuta, the state capital.

    According to him, the country is battling cholera and it calls for proper waste disposal and cleanliness in markets.

    Hunye, also Managing Director, Ogun State Waste Management Authority (OGWAMA), added that improper waste disposal in markets breeds rodents, vectors and flies which infest commodities sold to the public.

    He said: “In Ogun State, the government has provided big waste collection bins in most of the markets with some serviced by Waste PSP operators, so the traders in various markets have no reason not to  properly dispose their waste

    Read Also: FG orders 37 contractors to deliver 260 emergency road projects in three months

    “Unfortunately some traders with their market leaders look away while their members dump their waste in their immediate surroundings, especially on drainage channels in front of their shops or stalls. This environmental infraction has the capacity to block and likewise  lead to unnecessary erosion when it rains and  create offensive odour in the market space.

    “To make matters worse, some markets create illegal dump-sites within their space, especially at the back which have become haven for rodents, vectors and flies which feed and  perch on their commodities that they sell to the public.

    “These illegal dumpsites aside from aiding the spread of diseases also lead to fire outbreaks in markets, notably that of Lafenwa Market in Abeokuta months back.”

  • Delta govt to clamp down on illegal motor parks, markets

    Delta govt to clamp down on illegal motor parks, markets

    Delta State Government has warned that it would shut down unauthorised motor parks and markets in Warri and Uvwie in Delta South Senatorial District next year.

    Warri, Uvwie and Environs Special Area Development Agency Director General, Godwin Ejinyere, said the January 2024 deadline is to enable the agency restore the beauty of the oil city.

    Ejinyere, who spoke in Effurun on Christmas Day after a drive round both cities, said the areas included Jakpa, Airport and Enerhen junctions, Udu Road to express junction in Ovwian, Effurun roundabout, tankers park and express junction by refinery bridge, and Ugbuwangue junction along NPA expressway.

    Others are PTI junction, DSC roundabout, Ugbomro, Otokutu and Mofor junctions along the DSC expressway, Okumagba Estate, Okere Market, Warri Main Market and Igbudu Market by Hausa quarters, DDPA, Ugborikoko and Edjeba junctions along Airport Road and Ekpan roundabout in Ekpan.

    Read Also: Nigeria is in good hands, Tinubu assures citizens

    According to him, these areas have been illegally used as motor parks for indiscriminate parking and loading of vehicles, especially tricycles, along the roads and at road junctions.

    He said broken down vehicles abandoned on the roads would be impounded by government agencies working in synergy with his agency, to bring sanity to both cities.

    He said owners of such vehicles would be sanctioned by a mobile court.

     Ejinyere said unauthorised markets in any part of the oil city would be shut, adding that such markets had compounded the chaotic vehicular traffic situation.

  • Agency serves closure notices on Ladipo, Ijora 7-Up, Tejuosho, other markets

    Agency serves closure notices on Ladipo, Ijora 7-Up, Tejuosho, other markets

    The Lagos Waste Management Authority (LAWMA), has sealed off Oyingbo and Alayabiagba markets on Lagos Mainland.

    The development followed series of warnings to markets to shun filth and embrace equipment hygiene.

    LAWMA Managing Director, Dr. Muyiwa Gbadegesin, said in a statement that other markets that risk imminent shut-down for improper waste disposal and sundry environmental infractions include: Tejuosho Model Market Phase 1, Ladipo Market in Mushin, Anjorin Market, Irewolede Plank Market, Idi-Araba Obele Market, Oni Baba Market, Oba Morufu International Market, formerly known as Ejigbo Market, Ijora 7UP Market, Okeafa Plank Market, Ifelodun Fruit Market, Amukoko, among others.

    He said the authority’s decision to shut down the markets was arrived at, after several warnings about their noncompliance with the state’s Environmental Protection Laws, which emphasised zero tolerance for environmental offences, such as indiscriminate dumping of refuse, willful defacing of the environment and refusal to pay for waste services.

    He said: “LAWMA has continued to work relentlessly to improve the environment across the state, particularly commercial facilities, by putting in place several measures aimed at maintaining the cleanliness of the city. However, some individuals and markets are busy undermining our efforts by refusing to abide by the laws and regulations. As the need arises, such individuals, dealers and markets will be dealt with, in accordance with the law”.

    Dr. Gbadegesin cautioned that other markets engaging in irresponsible waste disposal and other environmental violations would face similar harsh consequences, if they refused to turn a new leaf, saying that the executive members of such markets would also be held accountable.

    Read Also: Ogoni monarch lauds Tinubu’s clean-up plan, resumption of oil production

    “It is imperative that we hold businesses accountable for their environmental responsibilities. This enforcement action by LAWMA aims to promote a culture of compliance and create a more livable city for all residents. “

    I also want to emphasise that once a market is closed, it would meet all requirements before being reopened for business”, he said.

    In a related development, the LAWMA boss also spoke on plans to dislodge illegal market structures sprouting across the metropolis.  He listed them as Fiki Marina fruit market; Victoria Island market by Abraham Adesanya roundabout Ajah; Jakande market by Jakande bus stop; Traders Opposite Oniru Market, Oniru and New Road Market by New Road Bus-stop, which according to him were posing safety hazards and impeding the free flow of traffic, as well as urban planning efforts.

    Gbadegesin restated that, “Removing illegal market structures is pivotal for urban planning and development. It allows for proper zoning and allocation of spaces, ensuring a more organised and aesthetically pleasing cityscape.”

     He further disclosed that the Authority was seeking collaboration with market associations, local authorities, and relevant stakeholders, to ensure the success of these initiatives, adding that the agency would provide guidance and support to markets, towards establishing efficient waste management systems that comply with established regulations.

    He urged markets in the state to support the Authority’s efforts, by following stipulated waste management guidelines, adding that with the agency’s concerted efforts and cooperation of residents, the state would witness significant improvement in waste management, resulting in a cleaner and healthier environment for all.

  • Foreign investors show more confidence in Nigeria

    Foreign portfolio investors appear to be discounting Nigeria’s political risks and focusing on the fundamentals of the markets.

    Trading data on foreign portfolio investments (FPIs) polled by the Nigerian Stock Exchange (NSE) from major custodians and capital market operators showed a positive trajectory in both level of activities and the direction of transactions.

    The report, the latest on FPI, showed that inflows into the Nigerian investment market by foreign investors rose by about 85 per cent, on the same curve with an increase of 96.21 per cent on the total transactions by foreign portfolio investors. For the second consecutive month, Nigeria recorded positive net FPI position.

    The report for the trading month ended August 30, 2018 showed that total value of FPI transactions increased by 96.21 per cent from N36.17 billion in July 2018 to N70.97 billion in August 2018. Foreign portfolio inflow increased from N19.83 billion to N36.66 billion while foreign portfolio outflow increased from N16.34 billion to N34.31 billion, sustaining a two-month positive net FPI position.

    A year-to-date analysis showed improved performance in the FPI compared with the corresponding period of 2017. Total FPI transactions for the eight-month period ended August 2018 stood at N906.86 billion compared with N699.07 billion recorded in comparable period of 2017. Foreign inflow and outflow stood at N437.14 billion and N469.71 billion respectively in 2018 compared with N419.88 billion and N279.19 billion, narrowing the deficit considerably.

    The FPI report used two key indicators-inflow and outflow, to gauge foreign investors’ mood and participation in the stock market as a barometer for the economy. Foreign portfolio investment outflow includes sales transactions or liquidation of equity portfolio investments through the stock market while inflow includes purchase transactions on the NSE. The NSE report is generally regarded as a credible gauge of foreign portfolio investments in Nigeria as it coordinates data from nearly all active investment bankers and stockbrokers.

    Many analysts said the political risks, which had compounded macroeconomic risks as the 2019 elections approach, might be giving way to renewed optimism.

    Managing Director, NASD OTC Securities Exchange Plc, Mr Bola Ajomale, said Nigeria had pulled away from similar political skepticism and could repeat another round of peaceful elections.

    “A lot of people have been saying the elections are going to be difficult, things are going to slowdown and it will probably lead to a run on the market and so on. I’m beginning to take a bit of a contrarian view. Few years back, we had elections, very successful one that I think surprised people more than their expectations. I don’t think people expected that it would work out that smoothly. The same kind of pessimism is being expressed now that things are going to be difficult, it’s going to be a hard time, it’s going to be chaotic and so on and so forth. Who says that we cannot do it again? We have done it once before. I don’t anticipate nor do I expect there would be a particularly disruptive political process. And I think the more people start thinking in that manner, the better prepared to at least support the system running well,” Ajomale said.

    He noted that a smooth electoral process would enable Nigeria to achieve greater economic performance and strengthen investors’ confidence in the Nigerian economy.

    “In the best case scenario of a less disruptive and smooth election, I will expect that we will hit about three to four per cent growth rate next year; if we have a smooth transition in an election that is free and fair with no hassles whatsoever and we get the right ministers and the right calibre of people in the right places and we get work starting immediately,” Ajomale said.

    Analysts at Afrinvest Securities identified lingering political uncertainties and weakened appetite for emerging market assets as two major factors mitigating performance at the Nigerian stock market.

    Total transactions at the Nigerian stock market meanwhile dropped by 8.37 per cent from N146.07 billion recorded in July 2018 to N133.84 billion in August 2018. Cumulative transactions from January to August however increased by 22.99 per cent from N1.526 trillion recorded in 2017 to N1.877 trillion in 2018.

    Foreign investors outperformed domestic investors by 6.06 per cent in August 2018. There was a significant decrease of 42.79 per cent in total domestic transactions from N109.9 billion in July 2018 to N62.87 billion in August 2018.

    Total transactions at the NSE had reduced from N187.78 billion recorded in June 2018 to N146.07 billion in July 2018. Domestic investors accounted for 50.48 per cent of total turnover in July 2018 as total domestic transactions increased by 28.72 per cent from N85.38 billion in June 2018 to N109.9 billion in July 2018. Domestic transactions were largely driven by the 55.48 per cent increase in the retail domestic participation which increased from N29.12 billion in June 2018 to N65.42 billion in July 2018.

    Total transactions for the seven-month period ended July 2018 increased by 54.38 per cent from N1.129 trillion recorded in 2017 to N1.743 trillion in 2018.

    Foreign portfolio investors were the dominant group in the Nigerian equities market in first half of this year with about N800 billion. Foreign investors’ transactions accounted for N799.7 billion within the six-month period ended June 30, 2018, representing an increase of 85.9 per cent on N430.23 billion FPI trading recorded in the comparable period of 2017.

    Foreign investors had marginally outpaced Nigerian investors with 50.07 per cent of total value of transactions in first half of 2018 compared with the first half of 2017 when Nigerian investors accounted for 54 per cent of total value of transactions.

    Domestic investors traded N797.47 billion worth of equities during the first half of 2018, 57.9 per cent increase on N505.03 billion traded in comparable period of 2017. Altogether, total transactions at the equities market rose from N935.26 billion in first half 2017 to N1.597 trillion in first half 2018.

    The report however showed a negative trend in FPI trading with more outflows than inflows. Net FPI deficit stood at -N38.41 billion in first half 2018 compared with net positive position of N1.71 billion recorded in first half 2017. Foreign inflows and outflows stood at N380.65 billion and N419.06 billion respectively in first half 2018 compared with inflows and outflows of N215.97 billion and N214.26 billion respectively in first half 2017.

    Month-on-month analysis showed that FPI transactions totalled N102.41 billion in June, consisting of inflows of N47.96 billion and outflows of N54.45 billion. Total transactions at the equities market had dropped from N318.27 billion in May 2018 to N187.78 billion in June 2018.

    The report indicated that foreign investors’ outflows from the equities market increased by 124.7 per cent to about N131 billion in May as against N58.25 billion in April. However, there was a 3.45 per cent decrease in foreign inflows to N62.06 billion in May as against N64.28 billion recorded in April.

  • Ecobank promises customers access to finance, markets

    Ecobank Nigeria Limited yesterday promised to provide improved access to credit and markets to its customers, especially  Small and Medium Enterprises (SMEs).

    Its outgoing Managing Director/CEO, Charles Kie, said SMEs are seen as the backbone of national economy and Ecobank has great role to play to support them.

    “As a leadership institution, we have responsibility to provide solutions to SMEs and local corporates. We have capacity to give SMEs and local corporates a helping hand as they grow to become big corporates. We want to be very close and dear to their businesses. We will be there to support them anytime they need us,” Kie said.

    He said the bank wants to bond with its customers, giving them access to markets, finance and development partners such as the Bank of Industry (BoI), adding that the launch of Emerald Business Club will help the lender achieve the objectives.

    According to Kie, the bank wants to position SMEs to compete globally adding that there is a huge market in the global space.

    “We have over 19 million customers. The Emerald Business Club allows us to mentor the customers. Every restaurant operator, barbing saloon, among others are welcome to join the club.

    “It is with great pleasure that I wish to welcome you to the official launch of Ecobank Nigeria Emerald Business Club. This is an exclusive product for our Key Local Corporate and SME Clients. This is founded on our long term commitment to support Indigenous Businesses within the country and in line with Ecobank‘s Vision –   “to contribute to the economic development and financial integration of Africa”.

    He  said the bank recognises the need for Nigeria and Africa as a whole to grow organically hence its drive to contribute is quota as a bank in developing the economy through the provision of sustainable banking products and services that are needed to help business to grow.

    He said: “For this reason, we have resolved to expand our scope in our Commercial Banking Businesses and have designed a wide range of products specifically tailored to meet the needs of target customers (largely local corporate, SMEs and Key Public Sector participants. We have also developed a number of initiatives to support trade business and lending to our target customers. We are willing to work with the peculiarities of each customer’s business so as to grow the economy. In the same vein, The Emerald Business Club is being proposed as an implementation platform for this Ecobank focus approach.

    “Our pan African Footprint has consistently provided a strong platform for us to support trade and business growth across Africa. No other bank is better placed to serve you better than Ecobank. The bank is once again offering an amazing opportunity via the ‘Ecobank Emerald Business Club; our commercial bank customers who have been loyal now have an exciting time ahead of them.”

  • Firm’s Naira-based platform brings global markets to Nigeria

    • 5000 trading accounts attracted in two years

    or Nigerians seeking to build alternative stream of incomes and experienced investors seeking diversification of assets, one of Africa’s most innovative financial technology companies, Eagle Global Markets (EGM) has opened up a seamless, hassle-free opportunity to trade on more than 1,000 global markets financial products, using the Naira.

    EGM, which added the innovative ‘Naira Cloudtrade’platform to its existing United States Dollar MT4 platform, said the Naira-based platform is a game changer that brings the global markets to the palms of Nigerians.

    Co-Founder, Eagle Global Markets (EGM), Gbite Oduneye, said the Naira-based platform provides Nigerian traders access to more than 1,000 global markets financial products, using the local currency.

    “We have two platforms: the ‘Naira Cloudtrade’ and then the US Dollar MT4, which is the only one other players in the industry offer to their clients. EGM makes the investing world a much smaller place by breaking down barriers, making it possible for Nigerians to trade more than 1000 financial products with Naira,” Oduneye said.

    While taking some investment journalists through the rudiments of trading global markets, Oduneye said with the EGM platforms, investors and traders can trade on a wide range of instruments ranging from international equities, commodities such as crude oil, gold and silver; indices, currency pairs and derivatives of global companies such as Facebook, Google and Snapchat, among others.

    He pointed out that EGM provides Nigerians opportunities to make incomes from global developments, citing the recent fluctuations in the global markets when Dow Jones recorded one of largest drops in its history as well as fluctuations in oil prices as tradable information for traders.

    “In times gone by, this would have constituted only engaging conversation, but now one can generate an income from taking advantage of these moves from the comfort of one’s mobile phone with Naira,” Oduneye said.

    According to him, EGM has come to solve many challenges associated with global trading for individual investors and traders. While global financial market place has a significant impact on people’s day to day lives, it is very difficult to participate and benefit from global trends as an individual. Capital requirements, data costs and transparency are just a few of the many reasons why trading non-domestic products appears prohibitive.

    To complicate matters further, converting in and out of the local base currency is inefficient and sometimes the gains made from the investment are significantly impacted by the simple process of exchanging currency.

    He noted that EGM sets out to ensure that online trading becomes Nigerian run for the Nigerian people by educating and nurturing its clients into confident self-directed traders, who want the freedom the company’s multi asset, multi device trading platform delivers.

    “We have experienced account managers, who guide our clients. We are one of the most innovative financial technology (Fintech) companies in Africa. We offer tight spreads, Mobile apps: Android and Apple; and Fast Trade Execution. Our clients are at the heart of our business and we provide the best client management in the industry.

    “In less than two years we have grown our clientele base considerably from a mere 500 to 5000 and still counting. This is driven by our commitment to professionally advise and educate our clients. Education is at the heart of our business, we offer free seminars in our Ikoyi office as well as our EGM Academy in Ikeja. We are looking to open in Ibadan in the next quarter of this year.

    “We enable clients diversify their portfolios by taking advantage of opportunities that exist in global markets. We enable Nigerians to earn extra income and provide jobs for our introductory brokers. We offer the highest level of compliance with our Financial Conduct Authority (FCA)-regulated technology partners. We hold all clients funds in segregated accounts,” Oduneye said.

    Director of Operations, Eagle Global Markets, Temitayo Sanusi, said the company was always working towards the highest level of compliance possible by ensuring due diligence is always carried out and Know Your Customers (KYCs) requirements are adhered to.

    Sales Manager, Eagle Global Markets, Barbara Aleshe also said the company usually provides supports for its clients by providing the highest level of customer care and back-office support, adding that EGM goes the extra length of training clients to understand market psychology.

    “Education is very important in trading global markets. The emotions, sensations or psychology of trading are very important and go a long way in determining success. In trading global markets, trading psychology and training are what most brokers do not impact on their clients,” Aleshe said.

    “We have one of the best education facilities in the country. We offer free courses at our office in Ikoyi and training academy in Ikeja to all levels of traders. From clients that have never traded before to expert traders, we equipped them so they can earn from global markets even while they are asleep,” Yetunde Shogo, another sales manager at EGM, said.

  • Take campaigns to schools, markets, others, cleric urges FRSC

    Take campaigns to schools, markets, others, cleric urges FRSC

    The Assembly Pastor of The Apostolic Church, Yaba, Lagos, Pastor Emmanuel Adebiyi, has called on the Federal Road Safety Corps (FRSC) to take road safety campaigns to churches, homes, schools and market places.

    The clergyman spoke during a service held in the church to mark the end of the 30th anniversary celebration of the FRSC.

    The Lagos State Command of the corps led by its Sector Commander, Hyginus Omeje, attended the activity with the theme: “The great Commision.”

    Pastor Adebiyi said the corps’ failure to continue enlightening the public on the use of roads would have negative effects on both social and economic lives of the people of this country.

    He urged the officers to work in accordance with the rules of the corps and  keep away from all forms of indiscipline that would hinder the FRSC from achieving its goals.

    The Sector Commander Omeje said the significance of the thanksgiving was to appreciate God for what he had done for the corps.

    Omeje said the FRSC would not relent in carrying out researches on the modern technology that would improve its operations until “it records more success of in the reduction of crashes on Nigerian roads”.

    He appealed to all road users to support the FRSC campaigns on obeying traffic rules, adding that the corps would from henceforth have zero tolerance for any indiscipline on the part of road users.

  • Financial markets: No dull moments in 2017

    Financial markets: No dull moments in 2017

    The outgoing year has been a busy one for the financial markets and the economy. From the naira’s huge recovery against global currencies, massive borrowing by the Federal Government from the International Capital Markets, the Bank Verification Number (BVN) policy and the Anchor Borrowers’ Programme to the implementation of the Financial System Strategy (FSS2020), there were no dull moments within the year. COLLINS NWEZE captures some of the major events that shaped the financial markets in 2017. 

    It was difficult to name one event that created the biggest anxiety for banks and managers of the economy within the last one year.

    However, the   Federal High Court, Abuja ruling on an ex parte application filed by the Federal Government through the Office of the Attorney-General of the Federation on October 21, which granted the temporary forfeiture of funds in accounts not linked to Bank Verification Number (BVN) stood out.

    The biggest casualties in terms of deposit loss should the Federal Government go-ahead to implement the court order  will be the first generation banks. They seem to have the largest number of customers who have stayed with them for close to or over 100 years.

    The banks with the largest impact are likely to lose deposits running into billions of naira, may have to recall loans, and suffer liquidity problems. The Federal Government has secured an interim forfeiture order from Federal High Court which would now allow it to freeze the accounts of bank customers in Nigeria who have no BVN.

    The order gave the Federal Government the nod to instruct the banks to disclose any investments made with these funds and to freeze any outward movement from these accounts.

    The court order mandates the Central Bank of Nigeria (CBN) to appoint an examiner to look into the books of any commercial bank that fails to comply. The banks are expected to provide the names of accounts without BVN, account numbers, outstanding balances, domiciliary accounts without BVN, branch/locations where these accounts are domiciled.

    Although the Federal Government seems to have soft-pedaled on the policy implementation, the anxiety it created within the financial markets, especially among Tier-1 banks, is yet to go away.

     

    Naira stability achieved

     The naira started the year exchanging at N490 to dollar in the parallel market. By February 6, the exchange rate worsened to N497 to dollar and by ending of February, it was exchanging at N520 to dollar.

    The local currency was however, stable in the official market where it exchanged for N305.5 to dollar. Interestingly, the naira stabilized at N363 to dollar at the weekend, and has remained within that band in the last four months.

    The state of the naira then, prompted the CBN Governor, Godwin Emefiele to call for a change of lifestyles among Nigerians. He said in a campaign that: “The size of Nigeria’s reserves and the value of the naira critically depend on our lifestyles and on the value and types of imports we allow into the country.”

    Emefiele’s message implied that a change in consumption pattern from foreign to indigenous goods would impact positively on the value of the local currency.

    However, some stakeholders attributed the naira’s woes to CBN’s inability to fully liberarise the foreign exchange market and allow the naira to float.

    But sub-Saharan Africa Economist at Renaissance Capital (RenCap), Yvonne Mhango in a report titled: Nigeria: Winds of change- More flexible Forex Policy, predicted that the naira would not be allowed to float on the interbank market. “This view is informed by the partial deregulation of petrol prices on May 11, and Nigeria’s history of managing the forex rate. The ideal scenario would be for the CBN to let the market set the new interbank forex rate without restriction, and in so doing, allow for an appropriate level to be found,” she said.

    Mhango predicted that consumption expenditure would continue to underperform (and weight on aggregate Gross Domestic Product (GDP)  in the near term due to declining real wage and thrifty consumers who are wary of uncertain economic outlook and also taking advantage of high interest rate environment to save.

    “We believe policy measures to ease supply side shortages in the economy, particularly for forex, and subsequent easing of monetary policy will go a long way in stimulating investment and consumption spending to support aggregate economic performance and naira’s recovery,” she said.

     

    Measures to strengthen naira

    Some of the measures put in place by the CBN to end the crisis include the first Naira-Settled Over-the-Counter (OTC) Forex Futures Market (FFM) launched in June 27 with FMDQ OTC Securities Exchange and the planned resumption of dollar sales to the BDCs.

    The FMDQ OTC Securities Exchange (FMDQ) is an organisation with the strategic intent of bringing about revolutionary changes and fostering the development of the Nigerian financial markets.

    The naira-Settled OTC Forex Futures are non-deliverable forwards, or a contract where parties agree to an exchange rate for a pre-determined date in the future, without the obligation to deliver the underlying dollar on the maturity/settlement date.

    On the maturity date, it will be assumed that both parties would have transacted at the spot forex market rate. The party that would have suffered a loss with the spot forex rate will be paid a settlement amount in naira to ensure that both parties enjoy the rate that had been guaranteed to each other through the OTC Forex Futures.

    FMDQ’s Managing Director/Chief Executive Officer Bola Onadele Koko said: “The naira-settled OTC Forex Futures product is a major milestone development in the evolution of the Nigerian financial markets. The Futures market is an opportunity to transform risk into certainty – a major paradigm shift in the financial markets landscape.

    “This innovation offers opportunities for government, businesses, pension fund administrators, investors and individuals among others to hedge (not speculate) to cope with exchange rate risk.

    “It also affords the CBN a greater opportunity to manage exchange rate volatility, thus achieving greater market confidence, liquidity, improvement in business planning, job security, employment, better allocation of resources, global competitiveness of the Nigerian financial markets, and all in all, a thriving economy.”

     

    Foreign exchange interventions continue

     While the BVN policy was on the table, the CBN consistently funded the foreign exchange (forex)  market to protect the naira and make forex available to importers.

    Dollar injections into the economy are estimated at $9 billion since February and have helped the CBN achieve long-term naira stability and curb volatility in the forex market.

    The CBN had, in the last 10 months, sustained its weekly dollar interventions in the forex market; a large part of it goes into the interbank market, bureau de change (BDCs), Retail Secondary Market Intervention Sales (SMIS) and wholesale spot.

    The dollar injections were made to enable stakeholders secure enough forex for their operations, and in the process boost naira’s stability.

    The gap between official and black market rates started to shrink since February 20, when the CBN resumed dollar interventions in key segments of the economy. Industry sources said the CBN has injected over $9 billion in the last nine months into the market.

    The CBN’s Deputy Governor, Financial System Stability, Joseph Nnanna, said the introduction of the Investors’ & Exporters’ (I&E) Forex Window was targeted at increasing forex supply; and allowing the timely settlement of transactions helped to achieve the current exchange rate. He said over $10 billion has been attracted to the economy through the I&E Forex window, adding that the window’s success rate exceeded stakeholders’ expectations.

     

    The Financial System Strategy 2020

     The implementation of the Financial System Strategy 2020 (FSS 2020) blueprint launched 10 years ago and meant to transform Nigeria’s financial sector into a growth catalyst also featured prominently in the outgoing year.

    The FSS2020 was also meant to engineer the country’s evolution into an international financial centre to strengthen domestic markets and enhance their integration with external financial markets.

    The need to get Nigeria onto the same wavelength as the rest of the world prompted the CBN’s inauguration of the FSS 2020 which clocked 10 years this year.

    The vision was to enhance Nigeria’s chances of playing big in the global financial space and sustaining its leadership position in Africa. It was also to allow Nigeria achieve Goldman Sach’s prediction of being among the Next 11 countries poised for rapid economic growth by 2020. But, achieving this requires Nigeria to have a robust and vibrant financial system and reformed payment system to power the new economy.

    To make the vision a success, the CBN, in collaboration with key stakeholders in the payments community, developed the National Payments Systems Vision 2020 (NPSV 2020). The NPSV 2020 is a sub-set of the Financial Systems Strategy 2020 (FSS 2020).

    Former CBN Deputy Governor, Corporate Services and Coordinator, FSS 2020, Suleiman Barau, said that in measuring the milestone of FSS 2020, there was a need to examine them from the existing sector perspectives. For mortgage sector, a robust secondary mortgage has been created with the CBN and mortgage operators streamlined, which has led to the establishment of the Nigeria Mortgage Refinancing Company (NMRC).

    Again, the uniform underwriting standard which was nonexistent has now been codified and introduced in the mortgage industry to regulate their practice. “In addition, the framework for the mortgage asset registry has been developed to capture mortgage transactions on a common IT platform.  The CBN has also introduced the categorisation of primary mortgage banks into national, state and local. The pension asset has grown from about N3 trillion in 2013 to N6.02 trillion in 2017,” he said.

    Also within the year, the Nigerian Sovereign Investment Authority (NSIA) was appointed advisers to manage the deployment of pension funds into long term infrastructure deployment. He said through sensitisation and mass advocacy, PenCom has stepped up prompt settlement of pension claims for retirees and is embarking on massive technical trainings, using the Information Technology platform, to ensure prompt service delivery and implementation of the micro pension scheme.

     

    Anchor Borrowers’ Programme

     The CBN committed N44.1 billion to the Anchor Borrowers’ Programme (ABP) through the 13 participating financial institutions.

    Its spokesman, Isaac Okorafor, said the CBN is moving into commodity associations where over 300,000 farmers will be mobilised and about two million jobs will be created.

    Okorafor listed the CBN’s intervention schemes that have impacted positively to the economy as, Agricultural Credit Guarantee Scheme Fund (ACGSF), which has created a total of 5,045,900 jobs; N200 billion Commercial Agricultural Credit  Scheme (CACS) – 1,134,772 jobs; N200 billion Small and Medium Enterprises (SME) Restructuring and Refinancing Facility (SMERRF) – 89,860 jobs; N300 billion Power and Airline Intervention Fund (PAIF) – 7,899 direct jobs and 14,304 indirect jobs; the N220 billion Micro, Small and Medium Enterprises Development Fund (MSMEDF) – 139,156 jobs.

    Others are Textile Sector Intervention Facility (TSIF) – 1,668 jobs; Nigeria Electricity Market Stabilisation Fund (NEMSF) – 1,180MW Capacity Recovery by Generating Companies (GENCOS) and over 414,000 units of meters procured; and Anchor Borrowers’ Programme (ABP) created 653,250 direct jobs.

    He said a total sum of N44.18 billion has been released through 13 Participating Financial Institutions (PFIs) in respect of 200,000 small holder farmers across 29 States in the country cultivating over 234,581 hectares of farmland in the ABP.

    The CBN targets 500,000 participants by end of 2017 on the ABP. He said the CBN is expanding the ABP through the direct engagement of commodity associations. “Currently we are working with the Rice Farmers Association of Nigeria (RIFAN) to mobilise 300,000 rice farmers who would add two million tons of rice to the national output in one year.

    He said the CBN is also working with the Federal Ministry Agriculture and rural development which aims at the pilot stage to create at least 10,000 jobs in each state of the federation.

    In order to provide access to finance for MSMEs, the acting director noted that the CBN has facilitated the establishment of the National Collateral Registry (NCR) to ensure that MSMEs and the millions of budding entrepreneurs across the country can use their movable assets to raise finance.

     

    FGN Savings Bond

    The Federal Government also within the year, generated over N6.69 billion through the monthly issuance of the Federal Government of Nigeria Savings Bond (FGNSB) since in March this year. The bond issuance, was in pursuit of its objective of financial inclusion by attracting retail investors into the bond market.

    The amount raised since inception grew to N6.69 billion following the conclusion of the FGNSB Offer for October 2017. Out of the N6.69 billion raised since inception of the FGNSB, N3.71 billion was for the 2-Year Bond while N2.98 billion was for the 3-Year Bond.

    The Debt Management Office (DMO) which issues the FGNSB on behalf of the Federal Government said the high level of subscription by investors since the debut offer in March, shows that the product appeals widely to investors. According to the DMO, 9,103 subscriptions have been received so far from investors across the county.

    Analysts praised the DMO for introducing the Savings Bond into the securities market for retail investors and taking the instrument to the grassroots. The DMO plans to sustain investor interest in the product through sensitization of the public about the gains of investing in the Bond which has a competitive fixed interest rate with its income exempted from taxes.

    Besides, the Federal Government within the year, raised N100 billion through the Sovereign Sukuk, also called Islamic Bonds.

    According to DMO Director-General, Patience Oniha, the fund will be used for the construction and rehabilitation of sections of key economic roads across the six geopolitical zones in the country.

    The Federal Ministry of Power, Works and Housing also listed 25 road projects the fund will be used for. For the CBN and DMO, Islamic finance is needed to take financial services to the grassroots, and open new investment frontiers in government-issued securities.

     

    Eurobond borrowings

    The Moody’s Investors’ Service downgrade of Nigeria’s long-term issuer and senior unsecured debt rating to B2 from B1 (with a stable outlook) within the year means higher cost of international borrowing, top financial analyst Bismarck Rewane has said.

    In an email report, the Financial Derivatives Company Limited boss, said Moody’s action means that the Federal Government’s plan to raise $5.5 billion through Eurobonds sales within this fourth quarter will attract higher pricing.

    This will bring the total funds raised through the Eurobond–International Capital Market (ICM) by the Federal Government to $7 billion in less than one year. A total of $1.5 billion was previously raised in two tranches of $1 billion and $500 million.

    In a report, Vice President – Senior Analyst Moody’s Investors Service, Lucie Villa, said Nigerian authorities’ efforts to address the key structural weakness exposed by the oil price shock by broadening the non-oil revenue base have so far proven largely unsuccessful.

    But in a swift reaction, the Federal Ministry of Finance (FMF), Central Bank of Nigeria (CBN) and the Debt Management Office (DMO) said the challenges that are highlighted in Moody’s rating are clear, and are being addressed by the government with the environment having improved significantly since the last period of assessment.

    Mhango said the plan to borrow $5.5 billion through Eurobonds will raise the country’s debt service to revenue cost beyond 62 per cent.

    She said capital releases for the 2016 budget continued into the first quarter of this year while public debt has increased by seven percentage points of Gross Domestic Product (GDP) since 2014.

    On the debt service/revenue, she said: “Nigeria’s debt service/revenue has risen sharply in recent years to 62 per cent as at June 2017 against 29 per cent in 2014. This largely reflects the Federal Government’s low revenue/GDP target of four per cent this year. The Federal Government plans a $5.5 billion Eurobond issuance before year-end 2017, as part of its efforts to lower local interest rates, by reducing domestic debt/total public debt to 60 per cent, against over 70 per cent today.”

    Mhango said budget performance in the first seven months of this year and debt developments showed there were no capital releases for the 2017 budget, because it was passed late. She said the Federal Government’s 2017 budget of N7.4 trillion was 6.2 per cent of GDP, and was signed by the executive, after being passed by the Senate in May.