The oil sector was the highest user of foreign exchange (Forex) in the first half of the year, despite the fact that the Federal Government reduced subsidy claims on petroleum imports.
According to a report released last week by FBN Capital, the oil sector used $5 billion, which fell sharply from $6.4 billion recorded in the first half of 2011. This, it said, was due to fuel subsidy cut in January and the ensuing audits.
The substantial imports of food products, most of which could be grown locally, accounted for 13.5 per cent of the total. Nigeria’s insatiable appetite for imports, which is a function of the limited productive capacity of its economy has assisted in raising the ceiling for forex use.
The report showed that $22.2 billion forex inflows were recorded from the Central Bank of Nigeria (CBN) while autonomous sources consistently provided the greater forex supply worth $33.5 billion, adding that imports of goods and services hit $28 billion and $10.9 billion respectively.
Nigeria’s Eurobond yields fell for the seventh day to a record after CBN Governor, Sanusi Lamido Sanusi, said the nation’s financial system was not under threat from the withdrawal of speculative investments.
Borrowing costs on the $500 million debt due January 2021 slid four basis points, or 0.04 percentage point, to 4.162 per cent in Lagos, the lowest since it was issued in January 2011. The yields have dropped 213 basis points from a high of 6.29 per cent on December 21, 2011.
Inter-bank
The inter-bank rate fell 104 basis points to 11.1 per cent on December 6, due to liquidity injection through matured treasury bills. Although, the CBN auctioned N177.61 billion on December 5, the net withdrawal on December 6 was N49.6 billion.
Olukunle Ezun, a Fixed Income and Currencies Analyst at Ecobank Nigeria Plc, said CBN’s liquidity management remains active and supported by the circular issued on August 1, tightening currency and the Monetary Policy Committee’s decision to leave the Monetary Policy Rate unchanged at 12 per cent.
The naira weakened 0.2 per cent against the dollar in the Inter-bank on 6 December, despite CBN’s liquidity management efforts. It closed the week at N157.35 to a dollar.
According to Ezun, although the CBN has supplied sufficient dollar at the twice-weekly Wholesale Dutch Auction System (WDAS) auctions, the auction process is devoid of the required competition needed to generate significant secondary market activity.
Oil export/ corruption
Oil exporting countries are more corrupt than they ‘should be’ than non-exporters, Renaissance Capital (RenCap), an investment and finance firm, said.
A report from the firm said oil exporters constitute 18 of the 25 countries that are measurably more corrupt in the Transparency International (TI) survey than per capita Gross Domestic Product (GDP) measures suggest they should be.
The worst performers, it said, include Equatorial Guinea and Kuwait, with scores at least 30 points lower on the 100-point scale than their peers.The next worst include Turkmenistan and Venezuela, while Greece, Italy and Afghanistan, were each 20 to 29 points lower than their peers.
The remaining countries include Iraq, Kazakhstan, Russia, Kazakhstan and Ukraine. “These are countries in which debt investors may feel more comfortable, as they can bypass corruption problems by dealing in international courts when things go wrong. But there has been improvements. Russia, which was on the verge of being in Italy and Venezuela’s group, but in the past year, has clearly moved into the middle of the “slightly more corrupt” group,” the report said.
IMF
The International Monetary Fund (IMF) has developed a balanced view on the management of global capital flows to help give countries clear and consistent policy advice.
In a statement, IMF said global capital flows have increased dramatically in the last decade, from an average of less than five per cent of global Gross Domestic Product (GDP) during 1980 to 1999 to a peak of about 20 per cent by 2007. In the past, countries’ capital accounts have ranged from almost completely closed to completely open and, while most countries have moved in the direction of greater openness, wide differences remain.
It said the financial account in a country’s balance of payments covers a variety of financial flows, mainly foreign direct investment (FDI), portfolio flows including investment in bonds and equities, and bank borrowing which have in common the acquisition of assets in one country by residents of another.
Financial inclusion
The number of adults excluded from the financial system would drop to 20 per cent by 2020, Chief Executive Officer, Enhancing Financial Innovation & Access (EFInA), Ms. Modupe Ladipo, said. At the moment, no fewer than 34.9million Nigerians, representing 39.7 per cent are excluded from financial services.
Unveiling the results of the EFInA Access to Financial Services in Nigeria’s survey, she said between 2008 and 2012, the number of adults that are financially excluded decreased by 10.5 million. She explained that the report was meant to measure trends in access and use of financial services in the country and establish credible benchmarks and indicators of financial penetration in the country.
Recurrent expenditure for states
The recurrent expenditure of the 36 states was 58 per cent of last year’s budget, FBN Capital, an investment and research firm, said.
In a report obtained by The Nation, the firm said on the surface, states have a better mix of expenditure but recurrent items accounted for 58 per cent of their aggregate spending in 2011, capital items 38.9 per cent and extra-budgetary costs 3.1 per cent.
It said personnel consumed 19.2 per cent of the total and overheads, a further 13.7 per cent, even as Federal Government’s minimum wage legislation pushed up the cost of salaries this year.
At the Federal Government level, the firm said the rise in recurrent expenditure was affecting real sector funding and growth. It said personnel costs amounted to 36.5 per cent of total spending in 2011, and related overheads, an additional 14.3 per cent. Statutory payments to bodies, such as the National Judicial Council and the National Assembly, have accounted for 5.9 per cent of government expenditure year to date.
Offshore Banking
Banks with foreign subsidiaries have been advised to use resources in their host-countries to boost their operations rather than ship funds from home.
In a statement, the Central Bank of Nigeria (CBN) urged them to raise funds from the offshore capital market through private placements or public offerings.
CBN’s advice followed its earlier directive stopping banks from using local resources to fund their offshore subsidiaries. It also stopped quarantee of deposits for foreign subsidiaries.
CBN Director, Banking Supervisions, Agnes Martins, advised that the banks could also pursue a merger or acquisition; or if external capital raisings fail, submit a strategy for exiting the relevant foreign jurisdictions to the regulator.
The directive also barred Nigerian banks from guaranteeing the deposits of their foreign subsidiaries and mandates banks with foreign subsidiaries to submit plans showing that their subsidiaries are fully capitalised in line with Basel II and III accords.
Cheque transactions
The value of cheque transaction declined by 13.5 per cent to N10 trillion during the first half of the year over increasing use of electronic payment. In a Central Bank of Nigeria (CBN) report on the first half of the year released last week, it said the value of electronic card (e-card) transactions rose by 32.8 per cent to N1 trilion from N764.14 billion in the first half of 2011.
Data on various e-payment channels for the period under review indicated that Automated Teller Machine (ATM) remained the most patronised, accounting for 96.4 per cent, followed by mobile payments with 1.3 per cent and Point of Sale (PoS) terminals, 1.2 per cent. The web (internet) was the least patronised, accounting for only 1.1 per cent of total e-payment transactions.
Financial Inclusion
The number of adults excluded from the financially system would drop to 20 per cent by 2020, Chief Executive Officer, Enhancing Financial Innovation & Access (EFInA), Ms. Modupe Ladipo, has said.
At the moment, no fewer than 34.9million Nigerians, representing 39.7 per cent are excluded from financial services.
Unveiling the results from the EFInA Access to Financial Services in Nigeria’s survey, he said between 2008 and 2012, the number of adults that are financially excluded decreased by 10.5 million.
NDIC
Microfinance banks (MfBs) that fail to live up to the legal requirement will be closed next year, the Managing Director, Nigeria Deposit Insurance Corporation (NDIC), Umaru Ibrahim, has said.
Speaking at a briefing in Lagos, he said that some MfBs have not lived up to expectations and have refused to pay their premiums to the corporation.
He said as at September 30, 2012, 698 MfBs and Primary Mortgage Institutions (PMIs) paid N980.79 million as premium to the corporation as against N1,06 million collected from 765 MfBs in the same period in 2011, representing a decline of 8.02 per cent.
As at September 30, 2012, 130 MfBs and 20 PMIs could not be assessed for premium collection as they failed to submit their certified deposit statements as well as call reports since December 31, 2011.
He said the corporation is still prevailing on the banks to ensure that it obtains their certified deposit liabilities statements or call reports. Ibrahim also said the Central Bank of Nigeria (CBN) is also considering issuing new licences to MfBs that want to enter the market.
Bank to bank report
Ecobank Capital, the investment banking division of the leading pan-African bank, Ecobank, has announced that it has successfully raised a $202 million syndicated credit facility on behalf of IHS Holding Limited, Africa’s largest independent mobile infrastructure provider.
In a statement, the firm said the proceeds will be used as part of IHS’s acquisition of MTN Group Limited’s 1,757 mobile network towers in Cameroon and Côte d’Ivoire with the continuation of IHS’s solar energy and build-to-suit programmes for other wireless operators.
IHS Holding’s Chief Executive Officer, Issam Darwish, said he is happy with Ecobank, the co-arrangers and participating banks. “The facility was oversubscribed and securing this credit facility reaffirms our excellent reputation on the local and international credit markets. We are delighted the consortium shares our long-term vision of creating an indigenous force in mobile network infrastructure and collectively has the financial capacity to support our pan-African expansion,” he said.
The Fidelity Helping Hand Programme (FHHP) instituted by staff of Fidelity Bank Plc to assist to support communities has donated some educational materials to Ikoyi Primary School. The group has also renovated the nursery section of the school to enable the pupils to have a more conducive environment for learning.
The bank’s Assistant General Manager, Public Sector Richard Madiebo said the THE Programme is the staff’s way of supporting the society.
He said the initiative has helped many people, schools and community to live better lives and achieve success in their different endeavours.
