Business
Why Naira Is On A Free Fall Against US$
The local currency, the Naira fell to 1005/$ over the weekend in the black market, across major cities in Nigeria, including Lagos, Calabar, Port Harcourt, Kaduna, Kano and Abuja.
And this is in spite of several efforts by the Nigerian Government to control the Foreign Exchange (Forex) Market.
Recall the that Central Bank of Nigeria (CBN), not long ago moved through a memorandum to control the forex market by directing Bureau De Change (BDC) to align rates with what obtained in the Investor & Exporter forex window.
According to the circular number TED/FEM/PUB/FBC/001/007 dated August 17, 2023, titled, ‘Operational mechanism for Bureau De Change operations in Nigeria’, all BDCs and the general public should align buying and selling to the I&E Window.
It read, “The spread on buying and selling by BDC operators shall be within an allowable limit of -2.5 per cent to +2.5 per cent of the Nigerian exchange market window weighted average rate of the previous day.
“Mandatory rendition by BDC operators of the statutory periodic reports (daily, weekly, monthly, quarterly and yearly), on the financial institution forex rendition system which has been upgraded to meet operators’ requirements.”
Biztellers gathered that the CBN has not made good its promise to settle the huge debts to Deposit Money Banks (DMB), which has contributed in putting pressure on demand, by increasing scarcity of forex.
Probably the current leadership changes at the apex bank might have been impacting the situation, as the former acting Governor, Folashodun Shonubi, had on September 6, 2023, assured that the apex bank had concluded negotiation on dollar debts with commercial banks, which offered hopes that all forex backlogs would be cleared “within one to two weeks”.
Despite Shonubi’s position that DMBs had been of much assistance to the apex bank in clearing the major part of its overdue forex forward contracts at maturity, the promise of redemption has not been made good.
This is despite public knowledge that that both parties (regulator and operators) had reached an agreement for reimburse to the DMBs.
Shonubi had volunteered thus, at a public gathering in Lagos, “In response to questions about the backlogs, the banks have been working with the CBN on various structures to clear them. So, what happens is that at maturity, they make the foreign exchange available to those that need it.
“We are discussing with them so we can structure their own. So, we are working towards clearing them in the next one or two weeks. It is something we have been discussing for a while.”
This has continued to mount pressure on the forex situation across the country with DMBs and BDCs yielding to the forces of demand and supply.
The DMBs it was gathered are responding by ‘ducking’ forex demands or at best laying them in abeyance, but the BDCs are focused on buying and selling, which has seen the exchange rates skyrocket.
Feelers from the Abuja based BDC operators, indicate that during the weekend, high demand pushed the Naira to 1,000/$.
A BDD Operator who spoke to Biztellers from Abuja, Izama Otedo, blamed it on scarcity of the US$.
He said, “We are only selling as we buy. We always put little gain. And no one can sell what he doesn’t have.”
He revealed that over the weekend the rate of exchange oscillated between 980/$ to 1005/$ in the Abuja metropolis.
In the same vein, a BDC Operator at the Ikeja Airport, Lagos, Kazeem Oredugba, pointed out that it had become more difficult for forex dealers to source ‘the commodity’, which is affecting the sell-on price.
He told Biztellers, “We are finding it difficult to source the US$ and other foreign currencies. If we don’t see it to buy, we cannot sell. And if you see it we can only buy at any rate knowing what we are going to sell-on at a mark-up.”
Reminded about the directive from the CBN, Oredugba quipped, “If the CBN is issuing a directive, let them back it up with supply of the forex. Nigerians are looking for ways to keep lives and businesses going, and we are meeting their needs by serving as the link between those buying and those selling. No authority can decree that,” he pointed out.
What this portends is that the forex market remains volatile and inflation would likely continue unabated while government struggles to come up with solutions.
The Nigeria Deposit Insurance Corporation (NDIC) has announced revisions to the Maximum Deposit Insurance Coverage for banks operating within the country.
NDIC’s Managing Director, Bello Hassan, disclosed the updated coverage benchmarks during a media briefing in Abuja on Thursday.
The coverage for Deposit Money Banks has been increased from N500,000 to N5 million, for Microfinance Banks from N200,000 to N2 million, for Primary Mortgage Banks from N500,000 to N2 million, and for Mobile Money Operators subscribers’ pass-through from N500,000 to N5 million per subscriber.
Hassan underscored that the objective of the update is to enhance depositor safety, foster public trust, promote the inclusivity of financial services, and ensure the overall stability of the financial sector.
More to follow.. . .. .
The 63rd Annual General Meeting (AGM) of the Nigerian Exchange Group Plc (NGX Group), held at the Nigerian Exchange Group House on Monday, April 29, 2024.
During the gathering, the Group concluded on ordinary and special business matters, while also unveiling plans to embark on a comprehensive digital transformation strategy to expand its business operations in line with its overarching strategy.
The meeting’s agenda, approved by the Board of Directors, included the declaration of a final dividend, ratifying the appointment of Temi Popoola as the Group Managing Director/Chief Executive Officer of NGX Group, presenting financial statements to shareholders, re-electing non-executive directors retiring by rotation, authorizing, and disclosing remuneration, among other undertakings.
Notably, the NGX Group, subject to regulatory approval, discussed its authorization on a rights issue to raise capital of up to N10 billion with a subjoined resolution to increase its share capital to sufficiently accommodate the rights issue.
All resolutions were approved by shareholders just as appointment and reelections of directors were ratified.
Following substantial authorization across its agenda, the NGX Group introduced plans to propel the markets with a digital transformation journey that includes an online platform for public offers and deep investments in its technology stack amongst others.
The platform will provide a smarter and efficient way for Issuers to raise capital and enhances the subscription process and operational workflow of POs in the capital market including initial public offerings (IPOs), rights issues and other public offers.
On the development, the Group Chairman, NGX Group, Umaru Kwairanga said, “I am particularly grateful to our shareholders for their assent to the critical business we conducted today. As the Board oversees the strategic direction and gives management the necessary support and guidance, we believe that the coming year will be a better one in terms of value created for our shareholders.
“NGX Group is positioned to capitalize on opportunities amid the positive and forward-looking reforms by the government and our stakeholders should rest assured we will deliver excellently.”
On his part, Group Managing Director/Chief Executive Officer, NGX Group, Temi Popoola, said, “As we complete our 63rd AGM, I extend my sincere gratitude to our shareholders, customers, employees, regulators, and directors for their steadfast support. In a year that underscored NGX Group’s strategic agility and operational excellence, we witnessed growth stemming from our dynamic revenue streams. We are optimistic and well-positioned to forge a future marked by success, resilience, and prosperity.
Addressing the digital transformation agenda, Popoola stated, “The future of our business and the capital markets hinges on technology. That is why we are driving this digital transformation journey across our subsidiaries through the Group. NGX Group’s digital transformation will democratize access to public issuances for every Nigerian with a mobile phone, supporting capital-raising efforts for companies. Additionally, we aim to commercialize our technology solutions and expand our footprint across Africa”.
Key insights and proceedings from the NGX’s AGM can be accessed via the live recording available on NGX Group’s website at www.ngxgroup.com.
. . . Firm Declares N4.5bn Dividend For 2023
The Nigerian Content Development and Monitoring Board (NCDMB) has announced that it had received an interim dividend payment of N450 million out the N1.5bn declared by the Waltersmith Refinery and Petrochemical Company Limited.
The NCDMB made the disclosure on Monday, adding that the payment represented NCDMB’s 30% share in the company for the year ended 2023.
Recall that the NCDMB had in July 2018 invested $10m to acquire 30% stake in the 5000 barrels-per-day (bpd) modular refinery project located at Ibigwe, Imo State, to support the Federal Government’s policy on modular refinery, stimulate investment and create employment opportunities.
Rising from a Board Meeting of Waltersmith Refinery and Petrochemical Company Limited, the Executive Secretary, NCDMB, Engr. Felix Omotsola Ogbe confirmed that a total dividend of N4.5bn had been approved for the year 2023, pending final approval at the Annual General Meeting (AGM).
The company reported a total profit of N23.6bn as profit after tax for the same year.
The Executive Secretary hinted that NCDMB expects to receive additional 30 percent of the outstanding N3bn dividend after the AGM is convened later this year.
He added that the receipt of this interim dividend payment was a testament to the strong performance and profitability of Waltersmith Refinery and Petrochemical Company Limited.
He said, “The NCDMB is proud to be a part of this success and looks forward to continued collaboration with the company in the future.”
He affirmed that the company was upscaling the refinery capacity from 5000 bpd to 10,000bpd and the expansion project was already 44 percent completed and on time to be commissioned by early 2025.
The NCDMB’s investment in the Waltersmith project was also geared to catalyse the industrialisation of the Nigerian oil and gas industry and its linkage sectors and deepen Nigerian Content in the oil and gas industry. It was the first third-party investment embarked by the Board, and it provided proof of concept and paved the way for other successful investments by the Board.
Two weeks ago, NCDMB received a cheque of $1 million from Nedogas Development Company Limited (NDCL), being part of the return on investment (ROI) on one of the Board’s strategic investments.
The cheque was presented by the Chairman of the company, Engr. Emeka Ene when he visited the Nigerian Content Tower in Yenagoa Bayelsa State, where he was received by the Executive Secretary, Engr. Felix Omatsola Ogbe and other members of the Board’s management.
Nedogas Development Company Limited (NDCL) is a joint venture company between Xenergi Limited and NCDMB Capacity Development Intervention Company and it culminated in the construction and commissioning of a 300 MMscfd Capacity Kwale Gas Gathering (KGG) and injection facility located in the Umusam Community, near Kwale in Delta State, Niger Delta, Nigeria.
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