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Tag: Naira

  • Glorious days of naira will return soon, Adeboye tells Nigerians

    Glorious days of naira will return soon, Adeboye tells Nigerians

    • RCCG fetes 3,000 worshippers, shares clothes

    The General Overseer of the Redeemed Christian Church of God (RCCG), Pastor Enoch Adeboye, has said the country’s weakling naira will soon regain its value against the dollar and other international currencies.

    Adeboye spoke yesterday while ministering during the church’s monthly thanksgiving service with the theme: Uncommon Miracles, at the RCCG headquarters, The Throne of Grace, at Ebute Metta in Lagos.

    The cleric told the gathering about the value of the naira some years back, citing an incident between him and his wife when the church was having its convention and there was a paucity of funds.

    “Let me remind you of a time the convention was on. The crowd had already gathered and we had trusted God and told everybody: ‘Come, God will feed you.’ All of a sudden, all the money dried up and nobody knew that there was no money left in my pocket.

    “And then my wife came in the morning and said ‘Darling, we’ll need N5,000 today’; N5,000 of those days, when the naira was stronger than the dollar,” he said.

    Adeboye asked his congregation not to worry, assuring that “those days will return”.

    He added: “I know you don’t believe me. If the Lord I serve is still on His throne, those glorious days will return. Maybe when that happens you will know that there is a God of miracles.”

    Read Also: LG poll: Outcome of results reaffirms PDP dominance in Edo, says Obaseki

    Also, Pastor Adeboye has urged Nigerians to trust God in the face of economic hardship confronting the nation for uncommon miracles.

    The cleric prayed for fathers, mothers, widows, widowers, among others, for a prosperous month.

    The programme also witnessed the donation of foods, clothings, books and other items to over 3,000 worshippers.

    Addressing the congregation, Adeboye said: “The law of gravity does not hinder God from making things to happen. When God wants to bless, no matter the policy put in place to determine such blessings, God has the capability to skip such policies.”

    “These are the advantages those who trust the Lord enjoy,” he said.

    The Special Assistant to the General Overseer on Administration and Pastor in charge of Region One, Dele Balogun, said RCCG’s Throne of Grace remained committed to its Christian Social Responsibility (CSR) every month.

    He said the church was aware of the hardship in the land.

    The preacher urged other churches to follow suit.

  • Foreign reserves, naira appreciates on stable oil outlook

    Foreign reserves, naira appreciates on stable oil outlook

    Nigeria’s  foreign exchange (forex) position showed a positive outlook at the weekend. The nation recorded first accretion in its foreign reserves in recent time.

    The naira also showed stronger resilience as crude oil production reached its highest point in recent period.

    Foreign reserves rose by $224.39 million to close at $33.95 billion, its first accretion in recent period.

    The naira appreciated by 5.1 per cent to N740.38/$ at the I & E Window as the Nigerian National Petroleum Company Limited (NNPCL) announced that crude oil production had improved by nearly one-third to 1.6 million barrels per day.

    The NNPCL announcement came after The Nation reported that oil sector, which had suffered 13 consecutive quarterly declines, was projected to resume growth in the third quarter.

    A breakdown of the latest Gross Domestic Products (GDP) report released by the National Bureau of Statistics (NBC) had shown that the oil sector recorded a negative growth of -13.43 per cent in second quarter of the year  a further depression on -4.21 per cent recorded in first quarter 2023.

    The oil sector contributed 5.34 per cent to the GDP in third quarter 2023, down from 6.21 per cent reported in first quarter 2023. Oil sector to GDP was 6.33 per cent in second quarter 2022. The oil sector was dragged down by the decline in crude oil production volume, despite oil price rally.

    Analysts at Financial Derivatives Company (FDC) at the weekend said they expected oil prices to remain upbeat this quarter, citing the projection 1.6mbpd increase in global oil demand, according to the International Energy Agency (IEA).

    The steady increase in Nigeria’s oil production, almost at the projected estimate of 1.69 mbpd for the 2023 budget, places Nigeria in position to take advantage of the price rally.

    FDC also noted that there could also be an improvement in the oil GDP performance due to exchange rate revaluation gain from crude oil sales proceeds.

    The external reserves had come under intense pressure in recent period as the country struggled with a multiple exchange rates system and subsequent backlog of unmet dollar demand, even after the liberalisation of the forex market.

    The reserves, which closed in 2022 at about $37.08 billion, had peaked at $37.211 billion on January 16. It has since been largely on the decline, running consecutive declines for several weeks in many instances. The reserves had lost about $2.9 billion in the first half of the year.

    FDC stated that the tussle between oil-producing countries of Russia and Saudi Arabia and consuming countries of United States and Ukraine is expected to keep oil prices hovering between $80 per barrel and $85 per barrel in the meantime.

    Read Also: Fed Govt will rejig N-Power scheme, pay beneficiaries, says Betta Edu

    At the weekend, Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, outlined that the government fiscal authorities would work with the Central Bank of Nigeria (CBN) to attract forex into the country from different locations.

    In his inaugural press briefing, Edun said: “There are substantial sources of foreign exchange open to Nigeria. There is a lot of cash outside the system which if brought into the system increases the money supply of dollars and increases the reserves.”

    The government he said, is giving serious thought to this idea of mopping up forex outside the system. According to him, “thought is being given to that, there are funds in domiciliary accounts which if you give people the incentive, they will utilise those for investment in Nigeria.

    “Nigerians in Nigeria have huge holdings of foreign currency in financial institutions abroad; we need to provide the environment that brings those funds home so that the owners of these foreign currencies will choose to invest in the Nigerian economy rather than foreign economies, which is what they are doing now.

    “We also have a huge source of funds from the diaspora, Nigerians living and working abroad who have families here and who are interested in keeping a presence here, we have to encourage them to save in Nigeria perhaps by improving payment mechanisms, among others” the minister revealed.”

    Other sources of foreign exchange he said: “Include recovery of oil production which will provide additional foreign exchange liquidity and automatically provide additional naira resources to government.”

    Edun noted that “there’s plenty of hope and it is our determination to put in place the kind of structures and incentive framework that brings Nigerian money abroad and even Nigerian money outside the system into the financial and economic system to work to create jobs for Nigerians”.

  • Naira relapses to N900/$ at parallel market

    Naira relapses to N900/$ at parallel market

    The naira yesterday closed at N900/$ at the parallel market N70 weaker than N830/$ during this week’s opening.

    The local currency, which regained steam after the Central Bank of Nigeria (CBN) Governor, Folashodun Shonubi, threatened forex speculators of losing huge amount, relapsed as the speculators sustained their operations.

    At the Investor and Exporter (I&E) window – the official market- the naira closed at N773.42 to dollar, creating around N123 premium between the official and parallel markets.There was $61 million turnover at the I & E Window.

    One of the forex traders based in Abuja, Mustapha Bakori, said he was not surprised to see the naira depreciate, because initial expectation of improved dollar liquidity in the market, was not met with action.

    “Many people expected immediate intervention in the market that will boost dollar liquidity, but that is taking too long to happen. Until that is done, the naira will continue to come under pressure,” he said.

     A Bureaux De Change (BDC) trader based in Marina, central Lagos, Garuba Sarki, said many forex dealers were still not sure, whether the rates would oscillate in the next few weeks, because the Central Bank of Nigeria (CBN) is still keeping the market in suspense.

    Read Also: Kia introduces ‘Monsoon Service’ clinic

    “Many speculative dealers who were taking the back seat have returned to the trenches. We expect the naira to continue to depreciate until the policy environment is well defined,” he said.

    Also, President, Association  of Bureaux De Change Operators of Nigeria (ABCON), Dr. Aminu Gwadabe, advised the Federal Government to enhance financial intelligence by tracking people with proceeds of corruption to sanitise the market.

    He said many of the people with proceeds from corruption were the ones manipulating the forex market.

    “The naira is depreciating not by forces of demand and supply, but by the collective action and impact of the people with illicit funds,” he said.

    The CBN had in June commenced currency reforms that  brought about exchange rate unification and abolishment of multiple exchange rates.

    The exercise led to 40 per cent drop in naira rate at the official market, but dollar supply has continued to be a big challenge making it difficult for official and parallel market rates to converge.

    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.

    “Our crude oil export quota is currently 1.74 million barrels per day. In July, we produced 1.081m bpd. Let us get our production up to the full quota. At current market price of about $87 per barrel, this should see us earning an additional about $1.7 billion per month. Nigerian Diaspora Remittances rather than declining should be growing as the population of our Diasporans are growing. Half year January to June 2023, remittances totaled $952  million compared to $1.21 billion for the same period in 2022,” he said.

    According to Obire, 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,” he advised.

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

    “In the long term, only a strong economy will produce  a stable currency. To achieve this will require addressing the fundamental structural defects in our political-economy hampering an accelerated transition from an outward consumption oriented economy into a mainly balanced  production driven one,” he said.

  • Naira relapses to N900/$ in parallel market

    Naira relapses to N900/$ in parallel market

    The Naira on Wednesday, August 23, closed at N900/$ at the parallel market, N70 weaker than N830/$ this week’s opening.

    The local currency, which regained steam after the acting governor of the Central Bank of Nigeria (CBN), Folashodun Shonubi, threatened forex speculators of losing huge amount, relapsed as the speculators sustained their operations.

    At the Investor and Exporter (I&E) window, the official market, the naira closed at N773.42 to dollar, creating around N123 premium between the official and parallel markets.

    There was $61 million turnover at the I&E window.

    Read Also:Naira records N100 gain, now N840/$ in parallel market 

    One of the forex traders based in Abuja, Mustapha Bakori said he was not surprised to see the naira depreciate, because initial expectation of improved dollar liquidity in the market, was not met with action.

    He said: “Many people expected immediate intervention in the market that will boost dollar liquidity, but that is taking too long to happen. Until that is done, the naira will continue to come under pressure,” he said.

    A Bureaux De Change (BDC) trader based in Marina, central Lagos, Garuba Sarki, said many forex dealers are still not sure, where the rtes will oscillate in the next few weeks, because the Central Bank of Nigeria (CBN) is still keeping the market in suspense.

    He said: “Many speculative dealers were taking the back seat have returned to the trenches. We expect the naira to continue to depreciate until the policy environment is well defined,” he said.

    Also speaking, the president, Association of Bureaux De Change Operators of Nigeria (ABCON), Dr. Aminu Gwadabe, advised the Federal Government to enhance financial intelligence by tracking people with proceeds of corruption to sanitize the market.

    He said many of the people with proceeds from corruption are the ones putting pressure on the forex market through their manipulative actions.

    “The naira is depreciating not by forces of demand and supply, but by the collective action and impact of the people with illicit funds,” he said.

    The CBN had in June commenced currency reforms that brought about exchange rate unification and abolishment of multiple multiple exchange rates.

    The exercise led to 40 per cent drop in naira rate at the official market, but dollar supply has continued to be a big challenge making it difficult for official and parallel market rates to converge.

    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.

    “Our crude oil export quota is currently 1.74 million barrels per day. In July, we produced 1.081m bpd. Let us get our production up to the full quota. At current market price of about $87 per barrel, this should see us earning an additional about $1.7 billion per month. Nigerian Diaspora Remittances rather than declining should be growing as the population of our Diasporans are growing. Half year January to June 2023, remittances totaled $952 million compared to $1.21 billion for the same period in 2022,” he said.

    According to Obire, 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,” he advised.

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

    He noted: “In the long term, only a strong economy will produce a stable currency. To achieve this will require addressing the fundamental structural defects in our political-economy hampering an accelerated transition from an outward consumption oriented economy into a mainly balanced production driven one. “

  • Naira remains stable at parallel market

    The Naira on Thursday remained stable at the parallel market in Lagos, exchanging at N359.3 to the dollar.

    The Pound Sterling and the Euro traded at N472 and N402, respectively.

    At the Bureau De Change (BDC) window, the naira was sold at N360 to the dollar, while the Pound Sterling and the Euro traded at N472 and N402, respectively.

    Trading at the investors window saw the naira closing at N361.09 to the dollar as market turnover stood at 121.15 million dollars.

    Meanwhile, Prof Sheriffdeen Tella, a Senior Economist at the Olabisi Onabanjo University, Ago-Iwoye, Ogun, has attributed the current stability of the naira at the foreign exchange market to slow economic activity.

    Tella noted that import businesses had drastically reduced as the business community awaited the take-off of the 2019 budget.

  • Naira gains against dollar at parallel market

    The Naira on Tuesday gained 40 Kobo to exchange at N359 to the dollar at the parallel market in Lagos, stronger than N359.6 traded on Monday.

    The Pound Sterling and the Euro closed at N470 and N402, respectively.

    Trading at the Bureau De Change (BDC) segment saw the naira closing at N360 to the dollar, while the Pound Sterling and the Euro traded at N470 and N402, respectively.

    Read Also: Naira stable at N360.5 to dollar at parallel market

    At the investors window, the naira exchanged at N360.99 to the dollar as market turnover hit 109.52 million dollars.

    The News Agency of Nigeria (NAN) reports that the naira had remained stable at the parallel market in Lagos due largely to the interventions of the Central Bank of Nigeria.

    Meanwhile the dollar fell slightly against the yen and some other major currencies as trade talks between the United States and China toughens.

    NAN

  • Naira stable at N360.5 to dollar at parallel market

    The Naira on Thursday traded flat at N360.5 to the dollar at the parallel market in Lagos.

    The Pound Sterling and the Euro closed at N469 and N408 respectively.

    At the Bureau De Change (BDC) segment, the naira traded at N360 to the dollar, while the Pound Sterling and the Euro was sold at N469 and N408 respectively.

    Trading at the investors’ window saw the naira closing at N363.03 to a dollar, while market turnover stood at 231.46 million dollars.

    NAN reports that the CBN had continued to inject liquidity to the market in defence of the naira.

    NAN

  • ‘Naira will remain stable despite campaigns’

    The Managing Director/Chief Executive Officer of Heritage Bank Limited, Ifie Sekibo, spoke with financial reporters on major issues shaping the sector, including the planned take-off of the Payment Service Banks, exchange rate stability, foreign portfolio inflows and slow loan growth in the economy. COLLINS NWEZE was there.

    Payment service banks are expected to begin operation soon. How prepared is the sector, including your bank, to face the competition that the new banks will bring?

    There are guidelines that are being issued to guide the Payment Service Banks. They are not lending banks; they are essentially going to assist us in bringing banking services closer to the grassroots.

    For us, it is an enabler for the financial inclusion that we are all talking about. It is not necessarily a competition. Yes, it is a competition to the extent that we would compete with them in the financial inclusion space; our agency banking products will compete with their payment platforms, but we all have very good payment platforms.

    Most of us, our payment platforms have developed much more than they could even be able to compete with. But for us, it is important that we have such other organisations that will help the lower side of our economy where people put money under their beds or leave money in their stores, and when there is fire outbreak, it burns both the store and the money and the investment and they are back to square one.

    We need to eliminate all that. We need to bring as many onto the formal platform, so we can measure them. Today, we don’t have good measurement for how much money is in circulation in Nigeria because we don’t even know. But if we can get these new institutions join us to expand the financial institution space, we believe it is better for everybody and it is better for the economy.

    Why are bank customers not keen on taking loans despite the availability of loanable funds?

    The drop in the volume of loans taken by banks is a function of the overall economy. If a sector is not growing, there is no need going to borrow because if you have a sector that is not growing and you are borrowing into that sector, you are destroying capital. And the last thing you want to do in an economy is to destroy capital. So, when they say customers are not borrowing, customers are being realistic.

    We are already maxed out in the power space, unless we do something, there is no need to borrow further in the power space. And if you borrow further in the power space,  and you are not able to pay because you are not generating enough power ­ and you are not generating enough money to pay what you have borrowed – you are going to destroy that capital. The reason for not much borrowing in the industry is because the income that will sustain borrowing does not exist. And we need to create avenues to make those income begin to come back to life for us to begin to borrow again.

    Analysts have predicted that treasury bills’yields will dip in post-2019 elections. How will the banks cope with this development given that a large part of their profits come from government securities?

    I don’t think that very high treasury bills rates are good for the economy. What that implies is that you will have to borrow at a higher rate. If we are trying to deal with interest rates that are high, one of the things we should advocate for business to grow and become much stronger is for interest rates to come down so that we can expand our business and we can make more money. So, your postulation does not seem to hold because if we project that they should come down, it means that we are hoping that business will expand. Because interest rate will then drop and then people will be able to borrow and there will be sufficient savings for them to be able to do more business, which means the banks will do better, because on one hand we are having a bigger position which will give our customers advantage, so we will do better.

    Are we likely to witness more mergers and acquisitions in the  industry?

    There may be mergers and acquisitions in the economy and I am happy to see them happen. Yes, investors are coming and they are happy with what returns. We are one of the companies that return good on the financial institutions and investors are always very happy with the kind of returns we make and so they will come, and we expect much more investments and I expect that as those investments take place, mergers and acquisitions may actually take place this year, both local and foreign.

    What is your forecast on the financial outlook for the year?

    I try not to be a soothsayer, but we all believe that the outlook will stay stable. We have seen a stable naira almost throughout last year. We had electioneering up until almost the ending and the naira stayed stable without any major fluctuation, and there is in fact no fluctuation. So, we believe that trend will continue.

    Portfolio investments normally take flight at the end of the year, even if there is no election. Investors want to see if they can consolidate themselves and come back in. They stay around the borders and then they run back in because there is not going to be any significant change in the climate.

    They will come back and then you will see the capital market going up again. Yes, there is a little bit of downturn, but we expect it to run back up within the second and third quarters and we still expect good results this year. That is my prediction.

    Read also: Nigeria’s investment prospects in oil, gas high

    What should be the right policy direction that would sustain economic development?

    What we have canvassed is in dealing with the policy options that you would enunciate, is that it should be all-inclusive. It should not be just human capital development or economic growth. It has to be inclusive. We have to take a view. Are we planning to pull out X-percentage of people below the poverty line to above the poverty line? Then, what does it take? Do we need to deal with our infrastructure deficit? What does it take? Do we need to increase our social investment? What does it take? But in all these, there is a thin line that runs through them. If there is no savings, there can be no investment and if there is no investment, there can be no development. So, we need to work through that trend, and until we have a policy that addresses this trend, we will not be able to achieve our inclusive development as we have enunciated.

    How has the journey been? What are the developments with Heritage Bank?

    Heritage Bank has been an interesting journey for us. We came at a time when the market was almost turning into depression in the international space; when the capital market was going down. But somehow, we were able to find a space in the area of small and medium enterprise banking and retail, and we have kept on with that promise to be able to make SMEs bankable.

    Not necessarily by throwing money at them but being able to educate our entrepreneurs on the need for cooperation, the need for partnership was more important than the need for raising loans to be able to run their businesses. Over time, we have seen more and more cooperation among entrepreneurs. They have consolidated their businesses, they have gone into areas they would hitherto not have been able to go into; young lawyers have been able to come together to help these small organisations keep proper records in terms of their incorporation, and records in terms of how they do business.

    Again, small accounting firms have been able to put together these organisations in terms of how they keep their financial records for tax purposes and all that. They have been able to measure their progress over the period.

    So, I think as a bank, we have lived up to our promise, especially with one of our projects, the SMEs clinic of helping SMEs to grow. And, we have also taken that a bit further to grooming new entrepreneurs in the Next Titan, which we are on our fifth season by this year, where we allow young minds come in, develop products, businesses, ideas and pick them from scratch onto a platform where they are able to express themselves even on national television as what they can possibly do for the country in our development space.

    What should customers and other stakeholders expect from your bank?

    I believe going forward; we are going to continue in this space of SMEs because it is the bedrock of the development of any country. On the back of that is the challenging issue that most of our people don’t have financial services and  products that they could latch on to.  So, there is this financial inclusion strategy being spearheaded by the Central Bank of Nigeria and we are all latching on to it. Agency banking is also a veritable vehicle with which we are trying to help the financial inclusion strategy for the country and we believe that we will have to increase that space. And as we increase the financial inclusion space, you put more people into the economy; thereby development could continue to grow.

    Is Heritage Bank still interested in listing on the stock exchange and when will that happen?

    I want to predict, a good prediction for that matter. It would not be this year. But it would definitely be listed on the stock exchange, especially when we are expecting new investors. One of their core expectations is that we would list in the nearest future, and so we will list.

  • Hurdles for Naira as election approaches

    Next month’s general elections will have negative impact on the naira exchange rate. This year will also be defined by the take-off of the Payment Service Bank (PSBs) launched last November by the Central Bank of Nigeria (CBN) to boost financial inclusion.The PSBs are expected to, within the year, help the apex bank achieve its financial inclusion target. The investors’and Exporters’ (I&E) Forex window will be sustained by the CBN to keep the local currency stable amid election fears, writes COLLINS NWEZE.

    The elections planned for next month will have negative impact on the naira, stakeholders have warned.

    The local currency is likely to face a major volatility crisis as the general elections approach, Financial Derivatives Company Limited Managing Director, Bismarck Rewane has said.

    He said the local currency will slide to between N385 and 395/$ as against the current N362 /$.

    He predicted that the bearish market trend would persist with Foreign Portfolio Investment (FPI) expected to push the equities market to the south.

    Rewane predicted that the capital market index would reach a trough in the second quarter of the year but pick up on the back of a violence-free handover.

    “Gradual restoration of investor confidence and increasing market activities, FPI inflows will pick up after the elections. Increased investors confidence, positive market performance, driven by increasing demand,” he predicted.

    He said naira liquidity would increase on the back of minimum wage review, election spending, adding that currency adjustment is likely to occur by 2019-end.

     

    Payment Service Banks

    Financial market analyst, Michael Obi, said the Payment Service Banks (PSBs) inaugurated by the Central Bank of Nigeria (CBN) to drive a sound financial system and enhance access to financial services for low income earners and unbanked segments of the society will also top agenda this year.

    The PSBs are to operate mostly in the rural areas and unbanked locations, targeting financially-excluded persons, with not less than 25 per cent  financial service touch points in such rural areas as defined by the CBN from time to time, the guidelines said.

    According to the CBN, the key objective of setting up PSBs is to enhance financial inclusion by increasing access to deposit products and payment/remittance services to small businesses, low-income households and other financially excluded entities through high-volume low-value transactions in a secured technology-driven environment.

    The new banks are to also enter into direct partnership with card scheme operators, but such cards shall not be eligible for foreign currency transactions.

    They are to deploy ATMs as well as  Point of Sale (PoS) devices to some areas and be at liberty to operate through banking agents (in line with the CBN’s Guidelines for the Regulation of Agent Banking and Agent Banking Relationships in Nigeria).

    The National Financial Inclusion Strategy (NFIS), which supports PSBs, seeks to ensure that over 80 per cent of the bankable adults in Nigeria have access to financial services by 2020.

    The CBN, in collaboration with stakeholders, was launched the NFIS on October 23, 2012 to reduce the exclusion rate to 20 per cent by 2020.

    Despite several initiatives, including the Introduction of Microfinance Banking, Agent Banking, Tiered Know-Your-Customer Requirements and Mobile Money Operation (MMO) in pursuit of this objective, the inclusion rate remains below expectation.

    The CBN, in the circumstance and in collaboration with critical stakeholders in the digital financial ecosystem, such as the Nigerian Communication Commission (NCC), commercial banks, mobile money operators and telecommunication companies, have conducted several study tours of other jurisdictions that have made significant progress in driving financial inclusion.

     

    Mergers and acquisitions

    The Federal Government, which owns Polaris Bank, injected N786 billion into the new bank. The long-time loan was priced at single digit interest rate. New investors are expected to see the value in the new bank and buy it from the Federal Government.

    Polaris Bank Group Managing Director (GMD) Adetokunbo Abiru stated the efforts of the new management team to stabilise the defunct Skye Bank and reassured  stakeholders of the bank that it would have no problem meeting its obligations to corresponding banks, depositors, customers and other financial institutions.

    He also stated that Polaris Bank had been established to assume ownership of the assets and liabilities of Skye Bank, and that the management of the defunct bank had been retained for its good performance.

    While the banking sector was about recovering from the Skye Bank saga, the airwaves were agog with news of Diamond Bank merger with Access Bank. The planned merger has already got the approval of the CBN and is expected to be concluded in the first half of the year.

    The merger followed the signing of the Memorandum of Agreement and announcement of headline terms, which valued Diamond Bank at N72.5 billion ($200 million) and will see Diamond Bank shareholders receive N3.13 per share in cash and shares.

    Access Bank and Diamond Bank are announcing further details, including the rationale and benefits of the deal, the estimated cost synergies, the capital management plan and the timetable.

    The merger will form a leading Tier 1 Nigerian bank and the largest bank in Africa by number of customers, spanning three continents, 12 countries and 29 million clients.

     

    Forex restriction on 42 items

    CBN Governor Godwin Emefiele has outlined the monetary policy thrust for 2019.

    He said the short-term outlook of the economy remains good, adding that tight stance of the bank will continue in the near-term.

    Emefiele stated these while delivering the keynote address entitled: “Strengthening the economic recovery process in Nigeria” at the 53rd Annual Bankers’ Dinner of the Chartered Institute of Bankers of Nigeria (CIBN) held in Lagos late last year.

    He also said the bank, working with the Federal Government, was open to foreign investors who were keen to support efforts at unlocking the immense opportunities in the economy.

    “Your Central Bank is more committed to creating wealth and putting in place strong policies for creating jobs for our growing youth population; your Central Bank today is ever more committed to promoting a more stable and resilient financial system,” he said.

    While advising against hasty criticism of monetary policies, which he said, were taken based on macroeconomic and geo-political contexts, he assured that the CBN would always act in good faith, with the best available information and in cognizance of economic conditions, to pursue price and financial system stability, support job creation on a massive scale and ensure a more inclusive growth in the economy.

    On the restriction of access to foreign exchange from the market for 41 items that can be produced in Nigeria, he reeled out statistics to show that the policy had helped to boost local production of the items. He said that the combination of the restriction on 41 items along with other measures imposed by the fiscal and monetary authorities helped to promote the recovery that got Nigeria out of recession.

     

    Budget implementation

    also a priority

    The implementation of the 2019 budget and part of the 2018 will also be a major development in the financial sector and economy this year.

    The Federal Government’s 2018 and 2019 combined budget figure of N17.93 trillion (N9.1 trillion in 2018 and N8.83 trillion in 2019) needs revenue drive from oil and non-oil sectors to be realised. Funding the budget with the volatility in the oil market will also form major discourse this year.

    From year to year, the implementation of the budget has not only been impacted by delays in the signing of the budget but by limited revenue.  The 2017 budget implementation report released by the Budget Office of the Federation showed an acute revenue shortage.  Gross oil revenue stood at N4.084 trillion representing 23.43 per cent below budget.The shortfall in gross non-oil revenue for 2017 was 34.46 per cent as the country only generated N2.791 trillion.

    According to the Budget Office, the net distributable revenue shared by the three tiers of government in 2017 after cost deductions was N4.944 trillion, representing a shortfall of 41.92 per cent.  With limited revenue, the country is said to be spending over 60 per cent of its revenue on debt servicing.

    Speaking at the 2019 budget proposal presentation in Abuja, Minister of Budget and National Planning, Udoma Udo Udoma, gave a breakdown of the 2018 budget implementation and 2019 budget estimate as against revenue target.

    Udoma said at the end of the third quarter of the year, the Federal Government’s actual aggregate revenue was N2.84 trillion, which is 40 percent higher than 2017 revenue.

    This includes oil revenue of N1.51 trillion (101 per cent higher than 2017); Company Income Tax (CIT) of N500.37 billion (23 per cent higher than 2017); Value-Added Tax (VAT) of N100.37 billion ( five per cent higher than 2017); and Customs collections of N229.62 billion (11 per cent higher than 2017).

    The overall revenue performance is only 53 per cent of the target in the 2018 budget largely because some one-off items, such as the N710 billion from Oil Joint Venture Asset restructuring, are yet to be actualised and have been rolled over to 2019.

    Of the total appropriation of N9.12 trillion in 2018, N4.59 trillion had been spent by September 30, against the pro-rated expenditure target of N6.84 trillion. This represents 67 per cent performance.  Debt service and the implementation of non-debt recurrent expenditure, notably payment of workers’ salaries and pensions are on track but capital releases only commenced after the signing of the budget on June 20.

    “As at 14th December 2018, a total of N820.57 billion had been released for capital projects. Spending on capital has been prioritised in favour of critical ongoing infrastructural projects in the power, roads, rail and agriculture sectors. Implementation of the 2018 Capital Budget will continue into 2019 until the 2019 budget is passed into law,” Udoma said.

  • Naira depreciates further at parallel market

    The Naira on Friday depreciated further against the dollar at the parallel market in Lagos, exchanging at N363 to the dollar, weaker than N362.5 traded on Thursday.

    The pound sterling and the euro were sold at N478 and N418, respectively.

    At the bureau de change window, the naira exchanged at N360 to the dollar while the pound sterling and the euro were sold at N478 and N418, respectively.

    Trading at the investors’ window saw the naira closing at N364.01 while the daily market turnover stood at 108.17 million dollars.

    A reliable  source at the foreign exchange market told the News Agency of Nigeria (NAN) that political activities and importers’ demand for end-of-the-year shipments were responsible for the spike in the exchange rate.

    He added that anxiety and uncertainty in the market also contributed to the depreciation of the naira. (NAN)