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Nigeria’s investments in mutual funds hit N174bn

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DG SEC, Ms Aruma Oteh

DG SEC, Ms Aruma Oteh

ABUJA-The total value of mutual funds investment rose by N23.67bn or 15.7 per cent at the end of 2014.

At the end of trading in 2013, the value of investment in mutual funds, also known as Collective Investment Scheme, closed at N153.83bn.

A report obtained from the Securities and Exchange Commission on Friday showed that the value closed at N174.50bn at the end of last year.

SEC, with the Nigerian Stock Exchange and market operators, had in the last few years emphasised the wisdom of diversification through investment in mutual funds.

The CIS, usually managed by a fund manager, involves collecting money from different investors that have a common investment objective and reinvesting such funds.

It is a form of investment that is accessible to all, where each investor has a proportional stake based on how much money they have invested in the pool of funds.

The fund manager invests the money by buying treasury bills, stocks, bonds, or other securities, according to specific investment objectives that have been established for the scheme.

The immediate past Director-General, SEC, Ms. Arunma Oteh, had explained that mutual funds helped to reduce the risks of cautious investors and opened them to a variety of other options for investment.

She said that commission had rolled out guidelines aimed at increasing participation in that market, adding that the CIS was an investment platform with huge growth potential for investors interested in diversifying their risks.

She said, “We cannot overemphasise the importance of investing in the CIS and we have put in efforts aimed at strengthening the framework of the CIS investment. We are glad to note that there has been a lot of interest in the CIS of recent.

“Presently, we have huge investments in the CIS and we are tightening the regulation on this segment, because it is a real area of opportunities for investors who want to manage their risks. We hope to see more interest in that market in the next few months.”

The Managing Director, Highcap Securities Limited, Mr. David Adonri, said there was an increase in the participation of investors in the CIS because the scheme gave investors the opportunity of achieving their varying investment goals.

He said, “A major benefit of investing in the CIS is that they are structured to meet the differentiated investment goals of investors. These funds have trustees who represent the interest of investors while the fund manager is responsible for investing the funds in assets according to the goals of the scheme.

“Also, it is important to note that this investment scheme is ideal for passive and uninformed investors who rely on the professional expertise of the fund managers to meet their investment objectives.”

The Chief Executive, Stanbic IBTC Bank, Mr. Yinka Sanni, said mutual funds could also be beneficial to short-term investors, giving them the leverage to withdraw from the funds at a short notice when there is a pressing need.

“Investing in mutual funds are ideal for conservative investors attempting to optimise cash balances that may be required in a short period of time, as it usually has a capable investment management team with good level of experience and a well established investment process,” he stated.

PUNCH-

Business

Nigeria pays US$4.9 billion on petrol subsidy in 2024- NNPCL

It was however noted by Biztellers.com.ng, that although subsidy is back in effect, the main reason for that is the increasingly weak state of the Naira and the country’s extreme dependence on products importation. Also unlike the previous subsidy era, where several oil marketers were getting free subsidy refunds for unverified product importation, this subsidy era is witnessing only one importer, the NNPCL, which in effect is the sole receiver of government subsidies. 

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Yemie ADEOYE

INSPITE of the official position of the Nigerian government that the controversial petrol subsidy is gone for good as announced by the President on assumption of office, the state owned Nigerian National Petroleum Corporation Limited, NNPCL has disclosed that petrol subsidy is still fully operational in Nigeria, although, under a different identity.

Umar Ajiya, Chief Financial Officer at the NNPCL, disclosed that it cost the company a staggering N7.8 trillion (US$4.9) to cover this price gap in the first seven months of 2024.

Rather than simply referring to these claims as subsidies, he stated that the company is merely managing the price difference in petrol imports on behalf of the federation, stressing that this should not be misconstrued as a return to subsidy payments.

This revelation has reignited discussions on whether the NNPC is indirectly offering subsidies, a concept typically defined as selling a product below its cost price.

Documents reviewed by Biztellers.com.ng showed that the term “subsidy” was used extensively in official correspondence between the NNPCL and the presidency, particularly in reference to the “shortfall.”

Recall that President Bola Tinubu reportedly approved NNPC’s request to utilize the 2023 final dividends due to the federation to offset these costs.

However, during a media briefing on Monday about the company’s 2023 audited financial statements, Ajiya refuted claims that the NNPC is involved in any subsidy scheme.

Ajiya further disclosed that the Nigerian government owes the NNPC N7.8 trillion ($4.9 billion) in subsidy-related debts for the period from January to July 2024.

In furtherance of his clarification to the News Agency of Nigeria (NAN), Ajiya insisted that no subsidy payments have been made to any marketer in the last nine years, citing the NNPC’s role as the sole importer of petrol under supply contracts.

He said, “In the last eight to nine years, NNPC Ltd. has not paid anyone a dime as a subsidy; no kobo has been disbursed by NNPC Ltd. in the name of subsidy. No marketer has received any payment from us for subsidy.”

“What has been happening is that we have been importing PMS, which has been landing at a specific cost price, and the government tells us to sell it at half price. So the difference between the landing price and that half price is a shortfall.

“And the deal is between the Federation and NNPC Ltd., to reconcile, sometimes they give us money, so there is no money exchanging hands with any marketer in the name of subsidy.”

Ajiya remained silent on how much of the $4.9 billion could have been remitted to the federation account if the NNPC had not been covering the “shortfall.”

It was however noted by Biztellers.com.ng, that although subsidy is back in effect, the main reason for that is the increasingly weak state of the Naira and the country’s extreme dependence on products importation. Also unlike the previous subsidy era, where several oil marketers were getting free subsidy refunds for unverified product importation, this subsidy era is witnessing only one importer, the NNPCL, which in effect is the sole receiver of government subsidies.

 

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Banking

CBN Denies Currency Devaluation

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CBN Pegs Interest Rate at 14%

 

The Central Bank of Nigeria (CBN) has refuted claims of devaluing the.

 

Earlier reports suggested that the CBN had devalued the Naira, lowering its exchange rate from N631 to the dollar, compared to the previous day’s rate of N461.60 at the Importers and Exporters (I&E) window.

 

However, the Central Bank of Nigeria (CBN) released a statement on Thursday through its Acting Head of Corporate Communications, Dr. Isa Abdulmumin, categorizing the report as false information.

 

In the statement titled ‘CBN Has Not Devalued The Naira’, he said the attention of the apex bank was drawn to the news report by an Abuja based newspaper edition of June 1, 2023, titled “CB Devalues Naira To 630/51”.

 

However, the CBN stated categorically that the news report was replete with outright FALSEHOODS and destabilizing innuendos, ‘reflecting potentially willful ignorance of the said medium as to the workings of the Nigerian Foreign Exchange Market.’

 

“For the avoidance of doubt, the exchange rate at the Investors’ & Exporters (I&E) window traded this morning (June 1, 2023) at N465/USS1 and has been stable around this rate for a while.

 

“The public is hereby advised to ignore the news report by Daily Trust in its entirety, as it is speculative and calculated at causing panic in the market,” the CBN spokesman added.

 

He, therefore, advised media practitioners to verify their facts from the Central Bank of Nigeria before publishing in order not to misinform the public.

 

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Banking

BREAKING: CBN Increases Interest Rate By 0.5%

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CBN Pegs Interest Rate at 14%

 

The interest rate in Nigeria has been raised to 18.5 percent, up by 0.5 percent, from 18 percent where it was pegged in March 2023.

 

The Central Banks of Nigeria’s (CBN) Monetary Policy Committee (MPC) resolved to this effect at its third meeting of 2023 in Abuja, on Wednesday.

 

Governor, CBN, Godwin Emefiele, made the disclosure in the communiqué of the MPC’s meeting,  thereafter.

 

While engaging the media at the end of the two-day meeting, Emefiele, said the committee voted to keep the asymmetric corridor at +100 and -700 basis points around the MPR.

 

In the view of the MPC, rising inflation rate is traceable to the high energy cost and challenges around the supply chain, among others, which lie outside the corridors of the CBN.

 

Emefiele said, “The current trend in price development would continue to be monitored by the bank with greater collaboration with fiscal authority to address the drivers of inflation.”

 

Biztellers reports that the CBN had effected six consecutive interest rate increases, which has seen the rate move from 11.5 percent in March 2022 to 18.5 percent in May 2023.

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