The Nation Newspaper

Tag: rates

  • Rates to remain unchanged as MPC meets today

    Despite the rising calls by economic experts for lowering of benchmark interest rate, the Central Bank of Nigeria (CBN)-led Monetary Policy Committee (MPC) is expected to retain all rates as they are since July 26.

    The MPC’s second meeting of the year holding today and tomorrow in Abuja, from all indication, won’t adjust the rates with the Monetary Policy Rate (MPR)- benchmark interest rat 14 per cent; Cash Reserve Ratio (CRR) at 22.5 per cent and Liquidity Ratio (LR) at 30 per cent and the Asymmetric corridor at +200 and -500 basis points around the MPR.

    “We expect emphasis to be placed on the need to withstand a possible pass through inflation from rising global inflation as well as protect the economy and financial markets against rising downside risk of capital flow reversals,” analysts at Afrinvest West Africa said.

    According to the investment and research firm, developments in the global economy and financial markets are likely to be viewed with mixed feelings by the MPC.

    It said that much to the delight of policymakers in commodity exporting countries, oil prices hit $80.0/barrel mark last week – its highest since June 2014 – against the backdrop of the US exit from Iran’s nuclear deal as well as falling inventory levels and subsisting impact of OPEC’s production cut deal.

    “Higher commodity prices is a boon to Nigeria’s external sector stability and fiscal balance, but it also comes with attendant risk of ballooning state’s petrol subsidy. On a balance of risks, we believe that external sector developments remain broadly favorable for Nigeria, supportive for economic growth and current monetary policy stance. Yet, the MPC will likely maintain its cautious view due to emerging downside risk of capital flow reversals,” they said.

    Besides, economic data releases since the last MPC meeting have mirrored current positive outlook for the economy. The Purchasing Managers Index (PMI) released for April indicated an expansion in the economy (Manufacturing PMI stands at 56.9 while Non-Manufacturing PMI at 57.9) while dis-inflation trend extended to the 15th consecutive month in April.

    Foreign exchange rate has already remained stable in all segments while External Reserves have stabilized around the $47.5 billion mark. “On the same day the MPC is starting, the Nigerian Bureau of Statistics -NBS is due to release first quarter 2018 Gross Domestic Product (GDP) numbers, which we expect to show continued expansion driven by low-base effect of Oil sector GDP as well as rebound in Trade and ICT,” they said.

    Afrinvest said the positive development in consumer prices within the last 14 months has presented the CBN with an opportunity to begin to converge Monetary Policy Rate (MPR) with market interest rates which have since priced-in inflation expectation.

    However, the decision will be delayed due to the ongoing capital flow reversal and asset prices volatility in emerging and frontier markets which is a downside risk to what has come to be the CBN’s prime policy anchor – Exchange Rate stability. “The current capital flow reversal has been the strongest test for liquidity in the Investors’ and Exporters’ Window (I&E Window) so far; a test it is yet to pass with flying colors. The CBN has responded to the volatility in the Fixed Income market and increased demand for foreign exchange by tightening liquidity in the money market in the past two week,” Afrinvest said.

     

  • Fed Govt to rice millers: we’ll reduce interest rates

    The Federal Government has assured rice millers of plans to ensure reduction in interest rates paid on loans.

    Kebbi State Governor Abubakar Atiku Bagudu, who is the chairman of the Presidential Task Force on Rice, gave the assurance at the weekend in Lagos at a stakeholders’ meeting with Rice Distributors Association of Nigeria and Rice Millers.

    He said the President Muhammadu Buhari administration would ensure rice availability and affordability.

    Bagudu said: “On the reduction of interest rates on loans requested by the millers, I think it is right. It will be done.”

    He said based on the contributions of stakeholders, it was apparent that what Nigerians wanted was not making subsidy available on rice production, but making it affordable and accessible such that they could produce rice that would compete with imported ones.

    “The mandate given to this task force, which is under the leadership of President Buhari and Vice President Yemi Osinbajo is to ensure the country has self-sufficiency in rice and wheat production.

    “But so far, stakeholders within the value chain, either as farmers, distributors or millers are not talking about subsidy. What they are saying is that help us tell President Buhari that we will like to have rice at a competitive price with the so-called imported rice. This has to do with affordability. I can tell you that the President is committed to this,” the governor said.

    He said the National Agency for Food and Drugs Administration and Control (NAFDAC) and Standard Organisation of Nigeria (SON) had responsibilities to discharge, adding that the government would intensify efforts in that regard.

    National President of Rice Distributors Association of Nigeria Deaconess Olufunmulayo Akinsanya implored the Federal Government to assist millers in producing at a cost that could be afforded by the less-privileged.

    Iyaloja-General Chief Folashade Tinubu Ojo said there is hunger in the land, urging governments to ensure efforts are intensified to make Nigerians feed well.

  • Brokers seek different commission rates

    Brokers seek different commission rates

    There must be a difference in commission rates and other benefits that accrue to brokers from other intermediaries in insurance transactions, Nigerian Council Of Registered Insurance Brokers President, Shola Tinubu, has said.

    He said this would justify the remarkable differentiation in their competencies and experience compared to other intermediaries.

    Insurance intermediaries facilitate the placement and purchase of insurance, and provide services to insurance companies and consumers that complement the insurance placement process.  Traditionally, insurance intermediaries have been categorised as either insurance agents brokers. The distinction between the two relates to the manner in which they function in the marketplace.

    Tinubu, who spoke at the December Edition of the Members’ Evening of the Council, hosted by AIICO Insurance Plc in Lagos, said the differential must be made if at all, underwriters would transact business with other intermediaries in the industry.

    He said the Council’s relationship with the National Insurance Commission (NAICOM) is progressive to create a more harmonious professional and business environment for their members.

    He said: “The issue of timely response to mails, both by NAICOM and Brokers to ensure that issues were resolved timeously, were highlighted. Furthermore, collaboration by the two bodies in training of Brokers, particularly in regulatory compliance to mitigate fees and penalties often slammed on them, was extensively discussed.

    “It is my desire that we continue to parley NAICOM for our members and continually put in place  strategies to promote self-regulation by the Council. We greatly covet the support of all members in this regards. Our slogan is: self regulation for self respect

    Our team will assiduously work on effective collaboration with the relevant publics and stakeholders, especially those whose activities have significant impact on the operations and image of the Broker.

    He said agitation of members in this regard is not wrongly placed, considering the challenges they face on all ends, adding that this has necessitated  immediate collective solution from the Council.

    “In addressing this, our team would be quite strategic in first identifying, in clear terms the immediate and future challenges threatening brokers.

  • New interest rates for manufacturers coming

    New interest rates for manufacturers coming

    Vice-President Yemi Osinbajo yesterday said the Federal Government would roll out new interest rates for manufacturers to boost their productivity.

    He said the modalities for providing the loan were being worked out by the government, adding that soon, manufacturers would access the cheaper funds.

    Osinbajo announced this at the inauguration  of the multi-billion dollar 300-million litre tank farm in Ibefun, Ogun State.

    He said the decision was part of government’s efforts to boost investors’ peformance.

    The tank farm was built by Petrolex  Group, an indigenous oil and gas firm.

    He said the decision to give incentives to the private investors, was in line with the agenda of the President Muhammad Buhari administration to encourage economic growth.

    Osinbajo said: ”Government is committed to  providing adequate incentives to private investment operators in government To achieve this, the government will provide a new interest rate specifically to enable operators in the manufacturing sector access cheaper credit for production.”

    He said the decision was informed by the critical roles, which manufacturing sector plays in the history of any nation.

    According to him, the government will provide incentives to  other sectors of the economy, with a view to encourage private investors.

    He commended the firm for the initiative to develop an integrated energy mega city capable of transforming the oil and gas landscape of the country.

    He said the  size and scope of the  investment will help the country to meet its petroleum products need in 2018, and further reduce by 20 per cent fuel domestic need by the  first quarter of 2019.

    He said the inauguration was a testament of the company’s vision and shows also that Nigeria is ready for business.

    Also, former President Olusegun Obasanjo, canvassed a robust public, private sector collaboration.

    In his remark at the event, He observed that no private business can thrive without support from the public sector.

    He urged government at all level to support indigenous companies in Nigeria to strike in other to develop the socio-economy environment.

    Similarly, the Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Dr Maikanti Baru, said the investment is a testimony of ingenuity of indigenous companies and demonstration of capacity to support government reform drive.

    He  promised to support the company to realise its  objectives as the investment would further to achieve its target of ensuring uninterrupted products distribution.

    In addition, Petrolex’s Chairman, Mr Segun Adebutu said the facility will host petroleum products worth of 250,000 barrels of crude oil, adding that it signposted  a good development for the sector.

  • CBN seeks rates convergence as MPC meets

    CBN seeks rates convergence as MPC meets

    Today’s Central Bank of Nigeria (CBN)-led Monetary Policy Committee (MPC) meeting will push for exchange rates convergence and the shoring up of the naira’s value, it was learnt yesterday.

    MPC members are targeting how to ensure that the gap between official and parallel markets shrink further and engender confidence of international investors in the economy.

    The naira continued its strong show against the dollar at the weekend, underscoring the resolve of the apex bank to achieve convergence of rates between the interbank and Bureau de Change segments.

    The dollar along with other convertible currencies at the end of last week crashed against the naira, which gained at the parallel market, exchanging at between N376 and N380 to $1 as against the N390 and N385 at which it exchanged a week earlier.

    However, in other segments of the market – Deposit Money Banks (DMBs) and Travelex, the naira was trading at or below N362 to the dollar. The official market rate stood at N306 to the dollar.

    The CBN said at the weekend that it remained committed to ensuring a convergence of forex rates and that the recent gains would be sustained.  The apex bank will continue its interventions to ensure the stability of the naira.

    It noted that the windows established for Small and Medium Enterprises (SMEs) and for investors and exporters continued to yield the desired results by providing access to forex and easing pressure on the market.

    CBN spokesman Isaac Okorafor reiterated the CBN’s commitment to ensuring that there is enough supply of forex to genuine customers to achieve forex rates convergence.

    The Manufacturers Association of Nigeria (MAN) urged the CBN to drop the lending rate from 14 per cent so as to accelerate productivity and economic growth.

    MAN President Frank Jacobs told the News Agency of Nigeria (NAN) that the MPC needed to review the lending rate downward because the high interest rate regime had stifled growth, productivity and competitiveness of manufacturers.

    He noted that with the appreciation of the naira and further drop in inflation rate, friendlier policies that would stimulate economic growth and boost production should be embraced.

    Jacobs also urged the CBN to create five per cent concessionary interest rate for manufacturers to drive the nation’s diversification agenda and increase contribution to the Gross Domestic Product.

    “If manufacturers have access to low interest rate as done in other climes, we will be able to employ more people and create wealth for the nation through tax,” he said.

    Jacobs said with concessionary interest rate, manufacturers would be able to expand their businesses, create wealth, boost productivity and catalyse economic transformation.

     

  • On tenement rates in FCT

    SIR: On behalf of millions of residents of the Abuja Municipal Council (AMAC), I wish to draw the attention of the Honourable Speaker, House of Representatives Yakubu Dogara through the House Committee on FCT on this matter of public importance.

    The Daily Trust of November 25, 2016, page 31 reported the House as advising residents of the Federal Capital Territory (FCT) to immediately cease payment of tenement rates and taxes as they portend an affront on the FCT Internal Revenue Service Act and is aimed at defrauding members of the public.

    We wish to bring to the notice of honourable House that AMAC is at it again with demand notices to residents retroactive to 2014 and threats of prosecution and sealing up of premises, houses and flats of defaulters after 21days of demand, not even minding that some of the occupants just rented the apartments/houses in 2016/2017 as the case maybe.

    It is not as if residents of the AMA are averse to paying reasonable rates to the right quarters as at when due. There is a lot the FCT Internal Revenue Service which was approved only last week can learn/copy from the Federal Inland Revenue Service which realised N27bn from penalty waivers which shield tax payers from the burden of carrying forward old tax liabilities arising from retroactive penalty and interest. FIRS chairman Babatunde Fowler was quoted as saying that it is part of their efforts to promote voluntary compliance by taking advantage of the special window to avoid payment of penalties and interest of tax between 2013 and 2015.

    This humane approach is said to have added 814,000 new tax payers into the national data base and it can also capture millions of voluntary tenement rate payers for FCT Internal Revenue Service from this year without costly litigations and the huge consultancy charges as presently obtained.

    While we empathise with AMAC, it is necessary that the change government should not be perceived by residents of the council as anything but a listening and humane administration that gets its job done without alienating the masses of the FCT many who are civil servants. This is particularly in view of the realities of our current economic situation and the fight against corruption.

    We await, urgently your further directives and clear pronouncement on tenement rates in the FCT because as far as we are aware, your resolution of November 2016 still subsist  and is binding on all of us including the chairman of AMAC, Hon. Abdullahi Candido whom we voted massively into office not too long ago.

     

    • Mohammed Ahmed,

    Abuja.  

  • Disparity in CBN’s rates may stifle exchange convergence – BDCs

    Disparity in CBN’s rates may stifle exchange convergence – BDCs

    The Association of Bureau de Change Operators of Nigeria (ABCON) has said that disparity in foreign exchange rates sold by Central Bank of Nigeria (CBN)  might stifle efforts at rates convergence and might lead to job losses.

    ABCON President, Alhaji Aminu Gwadabe, said this in an interview with the News Agency of Nigeria (NAN) on Thursday in Lagos.

    Gwadabe said that the CBN had continuously sold foreign exchange to BDCs, Travelex, and commercial banks at different rates and this could be used by speculators to distabilise the market.

    “The CBN sells dollars to BDCs at N381 and are expected to sell at N399, while the CBN sells dollar to Travelex, also a BDC and banks at N315 and are expected to sell at N375.

    “While Travelex and banks are expected by a CBN circular to settle such transactions at a rate not exceeding 20 per cent above the interbank market rate, BDCs only sell at five per cent margin.

    “Twenty per cent profit margin from FOREX is the highest in the world, ’’Gwadabe said.

    According to him, recent development at the foreign exchange market has shown that if the CBN does not eliminate the disparity in rates prevalent at the market, BDCs will be technically hedged out of the market.

    Gwadabe  said that hedging out about 3, 200 CBN registered BDCs from the foreign exchange market would lead to over 30, 000 job losses in an economy that was gradually recovering from recession.

    He said that his members were already losing customers due to the challenge of rate disparity as naira continued to appreciate against the dollar at the parallel market.

    Gwadabe appealed to the CBN to urgently see that the rates were harmonised to save a critical section of the nation’s  foreign exchange market.

    The ABCON chief said that as far as street hawkers were still plying their trade, rate convergence would be a mirage.

    The financial expert said that the CBN could achieve rate convergence if there was sustained liquidity in the market, adding that a fair level playing ground for all operators would also lead to rate convergence.

    NAN reports that the CBN rose from its last Monetary Policy Committee (MPC) meeting with a vow to see rates convergence at the nation’s FOREX market. (NAN)

  • CBN queries five banks for manipulating forex rates

    CBN queries five banks for manipulating forex rates

    Five commercial banks have been queried for manipulating foreign exchange (forex) transaction rates, The Nation learnt at the weekend.

    The Central Bank of Nigeria (CBN) detected the rate manipulations following the mandatory rendition of forex returns and compliance with anti-money laundering regulations. The identities of the banks were not clear as at press time.

    But a CBN statement yesterday admitted that some of the queried lenders manipulated forex rates. Others attributed the rate discrepancies to ‘formatting errors’.

    Although the statement was silent on the number of the affected banks, industry sources said five lenders were involved and may face sanctions.

    Round-tripping a serious financial crime, has become more rampant after the CBN introduced the flexible forex policy which devalued the naira by over 40 per cent against the dollar. The policy shift created a huge gap between the official and parallel market rates.

    About 20 to 25 per cent of the volume of forex traded in the country is from autonomous sources, usually diverted into the parallel market through round-tripping. The naira was on Friday trading at N306 to dollar in the official market and N498 to the dollar in the parallel market, raising the temptation of rate manipulation among banks desperately looking for free funds to boost their profits.

    The CBN statement said: “The commercial banks involved in providing inaccurate data has since been issued queries accordingly. Some have returned a response indicating that some of the figures were related to formatting errors which do not affect the true rates of the affected transactions.”

    The CBN said it neither allocates foreign exchange nor does it deal directly with bank customers adding that it also does not fix forex rates for transactions by individuals or companies.

    “In line with our principle of transparency, we directed Deposit Money Banks (DMBs) to forward to us evidence of forex sale to end users and to advertise same in national dailies. Since the introduction of the new forex policy in 2016, we have published, monthly, the evidence of sale from DMBs, as received from the banks and without any alteration by us in the spirit of transparency. We have recently observed, however, that some DMBs forwarded inaccurate data, which were erroneously published and gave a wrong impression of disparate rates,” the statement said.

    “As the constitutionally authorised industry regulator mandated to manage the forex market, maintain external reserves and to safeguard the international value of the legal tender currency, we wish to state unequivocally that the CBN has a duty to perform and would not indulge in acts capable of discrediting the forex market,” it added.

    The CBN said the forex sale under the new policy was most transparent and not intended to benefit any individual or corporate body in anyway. “While we appreciate the concerns of stakeholders, we urge all concerned to verify information on matters relating to the bank and use our available channels to lodge their complaints,” it said.

    There have been several allegations against the CBN on irregularities in the rates at which forex were obtained by some individuals and companies from banks under the new 60:40 foreign exchange policy, which prioritises forex sales to manufacturers, agriculture, plant and machinery and critical raw materials, among others.

    The CBN’s report on forex utilisation showed last week that it disbursed $1.07 billion to 4,328 manufacturers, power and other real sector operators for the procurement of raw materials, plants and machinery.

    Playing prominently in the funding are FirstBank, Zenith Bank, Access Bank, Unity Bank, Union Bank, Wema Bank, and Sterling Bank.

    Others are Diamond Bank, GTBank, Fidelity Bank, Jaiz Bank and FBN Merchant Bank.

    The report, which was for November, listed some of the beneficiaries as Dana Motors, Dangote Industries, Eat N Go Limited, Flour Mills Nigeria, GX Foods Limited and PZ Cussons.

    Others are Indorama Eleme Petrochemicals Limited, Fidson Healthcare Limited, Okomu Oil Palm, MTN Nigeria Communications, Nestle Nigeria Plc, Nigerian Breweries Plc and Nigerian Bottling Company Limited among others.

    The forex utilisation report was meant to promote transparency and accountability on the side of the lenders which act as a link between the regulator and the forex users.

    The CBN said providing forex to the manufacturers and other key players in the economy was meant to enable it keep its promise to strengthen the real sector of the economy by ensuring that 60 per cent of available forex is used to procure industrial inputs, such as raw materials, machine spare-parts, telecom equipment, plastic raw materials, agricultural machines and pre-payment meters, amongst others.

    The CBN has also expressed its commitment to ensuring that manufacturers of goods for which Nigeria does not enjoy comparative advantage are able to get LCs to import materials for their businesses.

    The exercise, the CBN insists, will provide a new lease of life in the manufacturing sub-sector, and also boost industrial output and employment.

    The regulator said it will continue to support and facilitate hitch-free procurement of industrial inputs to sustain production in the manufacturing sector. The gesture, the CBN said, buttresses its commitment to rejuvenate and sustain industrial activities and keeping jobs.

  • MPC to hold rates

    MPC to hold rates

    •Talks on inflation, forex

    The Central Bank of Nigeria (CBN) moderated Monetary Policy Committee (MPC) will today and tomorrow be holding its sixth and last meeting for this year.

    It is to review major developments in the global and domestic space and make vital policy decisions.

    The MPC will be deciding on the domestic macroeconomic challenges – negative growth, constraining fiscal space, high inflation and foreign exchange (forex) scarcity  – that remain the major downside risk to Nigeria’s medium term economic performance.

    Analysts believe that the committee will likely hold all rates constant whilst reinstating the need for the CBN’s hierarchy to properly implement the currency market reforms to build market confidence.

    They insist that these key macroeconomic indicators have continued to show the sub-optimal performance of the economy and financial markets as seen in the persistent rise in prices which ensured inflation continued to gallop, rising by 48 basis points from 17.9 per cent in September to 18.3 per cent in October.

    Managing Director, Afrinvest West Africa Plc, Ike Chioke said the committee will maintain status quo as monetary policy has already reached its limit in stimulating investor confidence whilst focus has shifted to administrative measures preventing a fully functional forex market.

    “A higher rate environment would neither spur private capital inflow nor would a lower rate policy incentivize banks to increase their risk appetite in the credit market. The investment dilemma to foreign investors remains the current attractive yields in the market and the overhanging currency risks which might serve as a bottleneck in the repatriation of funds,” he said.

    “We believe that the forex market needs to be ‘truly liberalised’ not only in its operations but also in the demand and supply dynamics by rolling back capital control polices and reinstating transparent two-way quoting system for forex”.

    Ecobank Nigeria currencies analyst Olakunle Ezun said inflationary pressure had been subsiding in recent months due to seasonal effect of farm produce harvest, relatively stable forex rate at the CBN/Interbank market and stable energy and fuel costs.

    However, inflation expectation is to stay high in the short term as further adjustments to fuel prices and forex rate remain inevitable.

    Ezun said increases were recorded across almost all major divisions which contribute to the inflation figure. “Communication and restaurants and hotels recorded the slowest pace of growth in October, growing at 5.7 per cent and 9.4 per cent (year-on-year) respectively. The Food Index rose by 17.1 per cent (year-on-year) in October, up by 0.47 per cent points from 16.6 per cent recorded in September. During the month, all major food groups which contribute to the food sub-index increased with fruits recording the slowest pace of increase at 11.5 per cent,” he said.

    Chioke explained that since the last MPC meeting in September, the global risk landscape and policy outlook had changed dramatically, underlined by the emergence of Donald Trump as the President-elect of the United States and the resultant shockwave in the global bonds market, risk-on appetite in the US and underperformance of emerging markets assets.

    “Global fund managers have interpreted Trump’s victory to imply a domestic pro-growth and expansionary fiscal policy agenda in the US and high probability of lower trade relations with emerging markets,” he said.

  • Airtel offers 90% cut on roaming rates

    Airtel offers 90% cut on roaming rates

    Airtel Nigeria is offering customers up to 90 per cent off roaming rates and other amazing discounts on its newly repackaged Roam & Home Bundle plan.

    The Roam & Home Bundle plan is designed to make travelling more enjoyable and  empower telecoms consumers to be connected with business associates, family and friends while overseas.

    According to Airtel, the new offering allows customers to roam at a hugely discounted rate on 33 selected networks in 27 countries, also offering bundle balance that can be used locally or when a customer returns home.

    With the Airtel Roam & Home, customers can receive calls and SMS without charge and account balance can be requested by dialling *123*3#.

    Customers can subscribe to the Roam & Home Bundle by dialing *789#. The service can be activated either at home or abroad by dialing the shortcode.

    The minimum bundle of N5, 000 comes with seven days validity while subscription with validity of 30 days begins from N10, 000. Customers get daily notifications on usage after subscription.

    Customers can make calls back home to Nigeria while abroad (roaming) across the 27 countries for as low as N60/20secs. In addition to this, customers also receive calls and SMS free (T&C apply). And when back in Nigeria, customers can also use the balance in their Roam and Home bundle to make calls at local rate.

    On the package, the company’s Chief Commercial Officer, Ahmad Mokhles, noted that Airtel is committed to partnering Nigerians on every international trip, ensuring that they get real value and also enjoy seamless telephony experience at the best tariff.

    With Roam & Home Bundle, customers remain seamlessly connected to their families, friends and business associates and at the same time benefit amazing discounts on the Airtel network, Mokhles added.