Business
Naira Surges In March, Marks Biggest Gain In 5 Years
In March 2024, the Nigerian naira showed remarkable strength against the US dollar, appreciating by over N350 on the back of major foreign exchange policy.
Official data revealed that the month concluded with the naira valued at N1,309/$1, a significant improvement from N1,595.11/$1 recorded at the end of February 2024.
This 21.8% surge was attributed to various forex policies and interventions implemented by the Central Bank of Nigeria (CBN) to stabilize and fortify the national currency.
Additionally, in the parallel market, the naira exhibited an even more robust rebound, climbing from N1,600/$1 in February to N1,250/$1 in March, marking a 28% increase within the month and underscoring the efficacy of measures aimed at narrowing the gap between the official and unofficial currency markets.
The recent gains in both the official and parallel markets represent the most significant improvements witnessed in over five years.
Previously, the exchange rate had been fixed at approximately N450/$1 for nearly two years and hovered around N380/$1 between 2020 and early 2021.
Commenting on the recent positive trend, the Association of Bureau de Change Operators of Nigeria (ABCON) attributed the stability in the exchange rate to the reintegration of its members into the forex market.
The President of ABCON, Aminu Gwadabe addressed the significant developments in Nigeria’s FX market in a statement released on Sunday.
He highlighted that besides resolving the $7 billion FX backlog and implementing monetary policy tightening, which encouraged more investment in government instruments, the recall of BDC operators by the CBN played a crucial role in enhancing dollar liquidity at the retail end of the market.
Gwadabe expressed gratitude to the CBN and other relevant agencies for recognizing BDCs as essential players in the FX market and efficient mechanisms for transmitting exchange rates in FX management.
The statement partly reads, “The reconsideration of the BDCs into the mainstream foreign exchange market has not only cleared illegal economic behaviours of hoarding, rent-seeking, round tripping and FX holding position, but led to the emergence of exchange rate convergence.
“The stability in the exchange rate has already started to have a positive impact on the prices of goods and services.
“For instance, the price for international school fees has dropped by 15 per cent; cost of medical tourism has reduced by 20 per cent and airfares for local and international trips dipped by 25 per cent.
“On a more serious note, the positive impacts include heightened confidence of the public in the local currency as it eliminates currency substitution behaviour which hitherto being (sic) adding pressure on our local currency.”
Gwadabe also noted that the success story continued, with the naira trading at N1,255/$ on Saturday, which was below the advised selling rate of N1,269.765 for BDCs.
He said “It is our view that the collaboration between the BDCs, CBN, National Security Adviser (NSA), Economic and Financial Crimes Commission (EFCC), as well as support from the presidency, helped in creating the opportunity for building the foundation of this achievement.”
“Overall, the combination of these actions have induced an atmosphere of public calmness, confidence, hope and liquidity in the markets.
“We call, therefore, on the CBN to continue to calibrate the existing relationship between the BDCs and the apex bank to sustain the success story.”
Characterizing the current market evolution as revolutionary, Gwadabe underscored the importance of a stable naira in attracting increased foreign portfolio inflows to the economy.
He elaborated on the promising outlook for FX earnings, noting a surge in Foreign Portfolio Investments (FPI) with inflows exceeding $1.5 billion shortly after the Monetary Policy Committee (MPC) raised interest rates by 200 basis points.
Gwadabe also highlighted the role of FX inflows facilitated by the CBN’s monetary tools in bolstering foreign reserve accumulation, thereby empowering the central bank to safeguard the local currency.
He reaffirmed ABCON’s dedication to fostering collaboration with the central bank to ensure mutual benefits for all members, thereby preventing exclusion and the dominance of the sector by larger entities.
Justice Emeka Nwite of the Federal High Court Abuja, on Wednesday 24, April, 2024 granted the Economic and Financial Crimes Commission, EFCC, an interim order to freeze One Thousand, One Hundred and Forty Six (1,146) bank accounts belonging to individuals and companies being investigated for alleged offences bordering on unauthorized dealing in forex exchange, money laundering and terrorism financing.
The judge ordered that the accounts be frozen “pending conclusion of investigation.”
While ruling on a motion moved by the EFCC counsel, Ekele Iheanacho, the judge stated “that an order of this honorable court is hereby made freezing the bank accounts stated in the schedule below which accounts are owned by various individuals who are currently being investigated in a case involving the offences of unauthorized dealing in foreign exchange, money laundering and terrorism financing to the extent that the investigation will be for a period of 90 (ninety) days.”
The judge added “that preliminary investigation conducted thus far reveals that the bank accounts are linked to persons who take advantage of the virtual cryptocurrency exchange platforms to illegally manipulate the value of naira and laundering proceeds of unlawful activities.”
The judge further stated that there was need to preserve the funds in the identified bank accounts pending conclusion of investigation and possible prosecution.
Justice Nwite adjourned the matter to July 23, 2024, for mention.
Companies affected by the freezing order range from entities involved in agri-businesses, logistics and haulage, microfinance banks, engineering, among others.
In a significant development, the Central Bank of Nigeria (CBN) has directed four prominent fintech firms, namely Opay, Palmpay, Kuda Bank, and Moniepoint, to suspend the onboarding of new customers until further notice.
This move follows the CBN’s recent mandate for all financial institutions to collect ID cards before opening financial accounts, contradicting a 2013 rule aimed at promoting financial inclusion, which allowed Nigerians to open accounts without identity cards.
Additionally, the Nigeria Inter-Bank Settlement System (NIBSS) has urged banks and mobile money operators to remove unlicensed fintechs from directly accepting consumer deposits.
A fintech company affected by this directive confirmed the instruction from the CBN, as indicated on its website.
The notice reads, “We’ve temporarily paused new signups on our platform. This means that you’ll be unable to open a new account at the moment. We apologise for any inconvenience this may cause.”
Amidst reports connecting the Central Bank of Nigeria’s (CBN) recent directive to suspicions of illegal forex activities, an anonymous source emphasized the importance for fintech companies to enhance their relationship with regulatory authorities.
The source said “Most of the fraud cases are carried out in the traditional banks. Why is CBN always after Fintech company? I think Fintech companies would need to sit down to educate the regulators on how they operate.”
The management of Dangote Cement Plc says that the company dispatched seven ships of clinker – from Nigeria to Ghana and Cameroon, which saw the export, for the first quarter of 2024 increased by 87.2 percent at 264kt.
It also revealed that the company commissioned 10 of the 17 Alternative Fuel Projects across the Group, while the local demand for cement, in the period under review in Nigeria increased significantly by 26.1 percent to 4.6Mt, which saw the overall group volume rise by 12.3 percent to 7.0Mt, for the first quarter of 2024.
On the first quarter results, Chief Executive Officer, Dangote Cement, Arvind Pathak, said, “During the quarter, we intensified our emphasis on exports, dispatching seven ships from Nigeria to Ghana and Cameroon.
“As a result, our Nigerian exports surged by 87.2%, reflecting our commitment to expanding our presence in regional markets and capitalising on our export-to-import strategy.
“We continue to prioritise innovation, cleaner energy transition, and cost leadership towards achieving our vision of transforming Africa and building a sustainable future”.
The company recorded a Group revenue of N817.4 billion, even as profit after tax inched up by 2.9 percent to N112.7 billion. Earnings per share closed the quarter at N6.68 representing an increase of 3.7 percent.
Pathak noted that the performance drivers included an uptick in economic activities, which saw a strong rebound in the Nigerian operations, despite elevated cost pressures.
“Driven by an uptick in economic activities, our Nigerian operations witnessed a strong rebound, with volumes up 26.1 percent to 4.6Mt in the quarter.
Similarly, our Pan-Africa operations continued an upward trajectory, with volumes up 3.1 percent to 2.7Mt, buoyed by increased sales in Zambia and Congo.
“Despite elevated cost pressures, increased borrowing costs, and a further currency weakening, our first-quarter results reflect our commitment to navigating challenges effectively,” he said.
He added, “Group revenue more than doubled to ₦817.4 billion, while Group EBITDA rose 66.6 percent to ₦309.5 billion. Profit After Tax was up 2.9 percent at ₦112.7 billion. These results underscore our ability to adapt and thrive in a dynamic business environment while delivering value to our stakeholders.
“We continue to prioritise innovation, cleaner energy transition, and cost leadership towards achieving our vision of transforming Africa and building a sustainable future”.
Dangote Cement is Africa’s leading cement producer with 52.0Mta capacity across Africa. A fully integrated quarry-to-customer producer, Dangote Cement has a production capacity of 35.25Mta in Nigeria. Obajana plant in Kogi State, Nigeria, is the largest in Africa with 16.25Mta of capacity across five lines; Ibese plant in Ogun State has four cement lines with a combined installed capacity of 12Mta; Gboko plant in Benue State has 4Mta; and Okpella plant in Edo State has 3Mta.
Through recent investments, Dangote Cement has eliminated Nigeria’s dependence on imported cement and has transformed the nation into an exporter of cement serving neighbouring countries.
In addition, the company has operations in Cameroon (1.5Mta clinker grinding), Congo (1.5Mta), Ghana (2.0Mta clinker grinding and import), Ethiopia (2.5Mta), Senegal (1.5Mta), Sierra Leone (0.5Mta import), South Africa (2.8Mta), Tanzania (3.0Mta), Zambia (1.5Mta).
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