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Halt crude oil export to reduce borrowing- Ex-CBN director urges FG

By Balogun Alabi,

The Central Bank of Nigeria (CBN), Budgetary Department, former Director, Titus Okunronmu, has urged Federal Government to halt export of crude oil to other countries, in order to reduce borrowing and pressure on the country’s currency.

However, Okunrounmu explained that part of measures to halt export of crude oil, was to repair all the four refineries in the country, so that the country could refine oil itself.

The Former director noted that refineries would increase domestic supply and end current scarcity of petroleum products, which had been persisting for several years.

Speaking to news men on Monday in Ota area of Ogun State, Okunrounmu noted that if the refineries worked perfectly, government would also earn foreign exchange to aid the economy.

He added that the foreign exchange would be earned from the importation of refined products if the refineries worked at optimal level.

The former director assured government that there were lot of benefits if the country refined its own oil, which included good eceonmy.

“By earning foreign exchange from importation of its refined products, the Federal Government would be able to diversify the economy effectively and create jobs for unemployed youths,’’ he said.

Nigeria’s rice importation drops by 95% – Ogbeh

By Abolaji Adebayo

Nigerian agricultural sector has experienced boom especially in the aspect of rice production as country was said to have substituted 95 per cent of locally produced for the imported one in the last two years, leaving the country with option of sourcing just 5 per cent foreign rice.

The Minister of Agriculture and Rural Development, Chief Audu Ogbeh, who disclosed the drastic decline in the rate of rice importation said that the country had made a lot of progress in efforts to stop rice importation, adding that the feats were a plus to the national economy.

Analyzing the trend at the first Annual NACCIMA-NIRSAL Agribusiness and Policy Linkage Conference in Abuja recently, Ogbeh disclosed that by September 2015, the country was importing 644,131 tonnes of rice which was dropped to 20, 000 tonnes in September 2017, exactly two years later.

The minister said that the achievement was aided by the federal government’s policy to stop rice importation.

“The drop is about 95 per cent. However, smugglers have been very busy, trying to sabotage and compromise the country’s efforts to stop rice importation. There are 12.2 million people growing rice in the country, producing paddy for the rice mills.

“In Kano State alone, we have 1,421 rice mills. We have large paddy fields in Anambra, Ebonyi, Nasarawa, Jigawa, Kebbi state and more are coming up,’’ he said.

He explained that agriculture was strictly private sector-driven, adding that the government did not have any intention to engage in farming but to initiate policies that would be favourable for private sector investments.

“Government has no farm and cannot attempt to farm. If we try, it will be disastrous. Farming business belongs to the private sector.

“That is why in our new policy called the Green Alternative agriculture production programme, we spelt it out clear that agriculture is private sector-driven.

“All that government can do is to lay out policy and try to ensure that the private sector succeeds when it gets involved in agriculture. We cannot solve all the problems in a year or two but we will certainly make some progress,’’ he said.

He stated that the government would also try to reduce interest rate on agricultural loans to single digit, adding that agriculture could not thrive under loans with high interest rates.

On the challenges and recommendations identified at the conference, Ogbeh pledged that the ministry would follow them up and present them to the National Council on Agriculture and Rural Development for further action.

The Managing Director of NIRSAL, Aliyu Abdulhameed, said that the conference was in line with the federal government’s policy on private-public collaboration to make agriculture a business.

“What you see today is exactly what the federal government is looking at. How can the private sector lead and how can policy support the leadership of the private sector? What you observed today is the mandate of NIRSAL, as handed to us by the Central Bank of Nigeria (CBN). How do you get actors from the value chain, from primary production, all the way through processes, retailing and domestic markets, to export?

“How do you get the actors financed in a systematic way? NACCIMA represents the private sector here. There are two value chains here too: the finance value chain and agricultural value chain.

“We will all come together, that is NIRSAL and NACCIMA, to operate in the policy space into the public-private partnership (PPP) agenda of the Federal Government to spur progress.

Also speaking, the President of NACCIMA, Alaba Lawson, said that all hands must be on deck to make headway in terms of treating agriculture as a business in the country.

The conference, with the theme: “Implementing the Agriculture Component of the Economic Recovery Growth Plan (ERGP)’’, was organised by the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), in collaboration with the Nigeria Incentive-Based Risk Sharing system for Agricultural Lending (NIRSAL).

CBN canvasses graduates inclusiveness in bank’s entrepreneurial schemes

By Abolaji Adebayo

The Central Bank of Nigeria (CBN) has charged graduating students of University of Nigeria, Nsukka (UNN) to explore and take advantage of the various entrepreneurial schemes of the bank to create jobs rather than waiting on the government for white collar jobs.

According to the bank, there were various initiatives such as Youth Entrepreneurship Development Programme (YEDP) on which the graduates could leverage to become entrepreneurs, adding that other windows were also created for the youths through which they could source loans to start their businesses.

The Governor, Central Bank of Nigeria (CBN), Godwin Emefiele, believed that the present economic challenge should be an opportunity for the graduates to contribute to the development of the country by creating more jobs on their own.

While delivering the 47th Convocation Lecture of the University of Nigeria, Nsukka, Enugu State, entitled: “A mindset for Succeeding in Today’s Nigeria”, on Thursday, Emefiele noted that rising unemployment remained one of the greatest challenges facing the country, warning that failure to galvanize the youths could boomerang against the Nigerian society.

While stressing the need for young Nigerian graduates to change their mind-set on the labour market, the Bank boss insisted that, in spite of the many complaints about the country, Nigeria remained a land of limitless opportunities.

He therefore admonished the graduating students to strive to be job creators and entrepreneurs rather than being mere job-seekers.

Emefiele, who is also an alumnus of the University, said the CBN, as part of its effort to address the challenge of unemployment on the one hand and the promotion of entrepreneurship among the youth, had designed and formulated policies and programmes aimed at direct real sector intervention.

He encouraged the graduating students and other Nigerian youths with not more than five years post-service experience to take advantage of the CBN Youth Entrepreneurship Development Programme (YEDP), which the bank runs in collaboration with banks and the National Youth Service Corps (NYSC).

Citing examples of successful entrepreneurs and businesses in Nigeria and abroad, Emefiele further challenged the graduating students to take cognizance of the opportunities in their respective environments, motivate themselves, create innovative ideas and turn their ideas into profitable ventures.

Speaking on current economic developments and policies of the bank, the CBN governor recalled that several global shocks that affected the Nigerian economy were amplified due to the country’s over-reliance on the oil sector for its foreign exchange revenue and for government finances.

He however disclosed that the bank embarked on some proactive policy measures such as policy tightening, restriction of forex for imports of 41 non-essential commodities, exchange rate management and development financing in key sectors in order to keep the economy sound.

Citing indicators such as the decline in inflation, improvement in forex supply, accretion to the foreign reserves, and improvement in the World Bank’s “doing business indicators,” and the significant boost in local production, Emefiele said that the Nigerian economy had turned the corner and the worst days were behind.

Earlier, in is his welcome address, the Vice Chancellor, University of Nigeria, Nsukka, Prof. Benjamin Ozumba, said that the convocation lecture was one of the prestigious of the public lectures hosted by the University, hence the privilege of delivering the convocation lecture was usually reserved for men and women whose achievements would motivate and inspire graduating students and the entire university community to greater achievements.

The UNN Vice Chancellor listed some of the projects being embarked on by the University and solicited funding support to accomplish what the University had earmarked for itself. He said the initiatives would not only increase entrepreneurship and innovation, but would also help curb youth restiveness in the country.

Highpoint of the convocation lecture, which was graced by the Governor of Enugu State, Ifeanyi Ugwuanyi, was the presentation of plaques and the Lion laptops manufactured by the University to the CBN Governor, Mr. Godwin Emefiele as well as a former Governor of the CBN, Prof. Chukwuma Soludo, who was the Chairman of the event.

Bankers, economists warn about Bitcoin’s risks

Newsroom with agency reports

Several international bankers have sounded a warning about the mega risks involved in embracing bitcoin, which this week soared to a new record high of more than $8,000. Six years ago, it traded for just one dollar.

The head of Swiss banking giant Credit Suisse, Tidjane Thiam, warned recently in comments that immediately sparked an uproar on social media among bitcoin’s supporters.

The head of the French central bank or Banque de France, Francois Villeroy de Galhau, warned in the summer: “People are using the bitcoin today are clearly doing it at their own risk and at their own peril.”

Nobel laureate, Jean Tirole, also insisted that the current bitcoin boom was a “bubble.” “It’s something that has no intrinsic value,” he said on the sidelines of a conference in Paris this week, adding that it could collapse from one day to the next.

Bitcoin is not regulated, but is traded on specialist platforms. It has no legal exchange rate and no central bank backing it. Launched in 2009 as a bit of encrypted software written by someone using the Japanese-sounding name Satoshi Nakamoto, bitcoin is controlled and regulated by its community of users.

Economists generally are of the view that Bitcoin is the monetary equivalent of Uber, since it bypasses central bank regulation and can be used for illicit purposes and are highly speculative by nature.

“Bitcoin? It’s about ‘Uber-ising’ currency, about not having a central bank that decides the price,” said the Chief Economist at credit insurer Euler Hermes, Ludovic Subran, referring to Uber, the ride-hailing app that has set the cat among the pigeons in the taxi sector in recent years.

Bitcoin supporters are of the view that cynics are raising issues irrelevant to the merits of the cryptocurrency.

“Yes, it’s exactly that: it bypasses a central regulatory authority. That’s the genius of this invention,” agreed Yves Choueifaty, founder of the Paris-based asset management firm Tobam, which this week launched the first European fund investing in bitcoin.

Investors are already referring to it as “digital gold”, as the bitcoin soared to a new record high of more than $8,000 this week, a staggering rise in value from just under $1,000 at the beginning of the year.

“We have no need for central banks,” said Yves Choueifaty, suggesting that institutional investors may be behind the recent sharp gains, even if insisted that there was “no bitcoin bubble.”

The growing interest in bitcoin is catching mainstream attention as the CME Group of Chicago, one of the world’s biggest exchanges, has decided to launch a bitcoin futures marketplace. And prestigious US universities are offering courses in blockchain technology, on which cryptocurrencies are based.

Virtual currencies could also prove attractive to economic players in countries such as Zimbabwe or Venezuela, whose fiat currencies have been ravaged hyper-inflation. Caracas, for example, has had to issue a new 100,000-bolivar bill, when just a year ago, the biggest-denomination banknote was 100 bolivars.

“Think of countries with weak institutions and unstable national currencies. Instead of adopting the currency of another country — such as the US dollar — some of these economies might see a growing use of virtual currencies. Call it dollarization 2.0,” said the head of the International Monetary Fund, Christine Lagarde, recently.

Economists also suggest the bitcoin could be of interest to developing countries where individuals often find it easier to access the internet than traditional bank accounts.

Euler Hermes economist Subran called on the financial authorities to make potential investors more aware of the risks.

“There’s a lot of money to be made. And a lot of money to be lost,” he said.

“We are seeing more and more people wanting to venture there, but they are not fully aware of the risk.”

Adamawa, CBN to create 500,000 youth agripreneurs

By Abolaji Adebayo

As part of strategy to support the nation’s efforts to boost food production and alleviate poverty among the youths, Adamawa State Government in collaboration with the Central Bank of Nigeria (CBN), has designed an Accelerated Agricultural Development Programme (AADP) scheme through which about 500,000 youths would be engaged in agriculture and agro-based businesses in the state.

Under the scheme, which is expected to be partly funded by the CBN, more than 500,000 unemployed youths across the state were to be registered by the state government.

Announcing the commencement of the registration on Friday, the Permanent Secretary of the state Ministry of Agriculture, Felicia Nzomisaki, said the youths were being registered to be engaged in dry season and livestock farming.

The permanent secretary, who hinted that the programme was undertaken in collaboration with the CBN, stressed that unemployed youths with ages between 18 years and 35 years would be registered for the scheme.

“The project, under the Accelerated Agricultural Development Programme, is designed and supported by the Central Bank of Nigeria (CBN),’’ she declared.

Nzomisaki reiterated that the scheme was designed to support the nation’s efforts to boost food production and alleviate poverty among the youth.

She disclosed that the representatives of the state government and the CBN would meet next week to discuss issues relating to the funding of the project.

Manufacturers commend CBN’s foreign exchange window for enhancing productivity

By Abolaji Adebayo

Manufacturers have described the introduction of Investor and Export (I&E) foreign exchange (FX) by Central Bank of Nigeria (CBN) as a means to ensure efficiency in production because since its launch, the policy has been enhancing productivity of the companies importing production inputs

The policy has been said to be efficient having reduced interest on loans of foreign currency taken by the manufacturers through the window.

They confirmed recording bottom-lines improvement in their nine months results after their level of finance costs reduced significantly.

The reduction in finance cost was due to improved FX exchange that resulted from the introduction of I&E window by the CBN.

According to the manufacturers, Nestle’s cost of finance fell by 56 per cent from N19 billion for the nine months in 2016 to N8.606 billion in 2017. This development contributed to the company recording a jump of 4,638 per cent in profit after tax from N5.504 billion to N34.479 billion in 2017.

Also, it was gathered that Nigerian Breweries finance cost fell from N10.2 billion to N7.9 billion, making the company to end the period with a 24 per cent increase in profit to N34.42 billion, from N27.79 billion in 2016.

It would be recalled that CBN recently said the I&E window has performed beyond expectations since introduction in the country.

The Deputy Governor, Financial System Stability, CBN, Dr. Joseph Nnanna, disclosed that the performance of the window had been a great success, transcending the expectation of the bank.

He noted that within four months the I&E window was introduced, the bank has recorded a volume of over $10 billion, even as he explained that the different exchange rates were slowly converging and that the CBN has no plans to force this convergence in order to speed up the appreciation of naira in the parallel market.

“The IMF consistently talks about the need for a single exchange rate. This single exchange rate can be achieved organically or inorganically. The CBN believes that the organic convergence is the way forward. The inorganic convergence involves engaging all possible measures to force the various exchange rates to align. This will definitely lead to arbitrage. That is exactly what we do not want.”

he noted that the “We can say we have achieved stability in the FX market and we expect it to remain stable even as we conclude the last quarter of the year. The sustainability of the naira is already evident.”

He further explained that despite the prominent gap between the inter-bank rate and the indicative exchange rate for I&E window, known as Nigerian Autonomous Foreign Exchange (NAFEX), the CBN would not in any way force a convergence, adding that the convergence, which might appear to be happening slowly, would occur naturally in due time.

SEC faults 2017 budget appropriation, analyses negative impact on capital market

By Jide Ajia

Despite delay that characterized passage of 2017 budget, the Security and Exchange Commission (SEC) has picked holes in appropriation of the yearly spending plan that, it has harmful effects in operation of the Capital Market.

SEC, the apex regulator of Nigerian Stock Exchange (NSE), disclosed the economic undesirable effects while briefing finance and investment journalists after at its quarterly Capital Market Committee Meeting (CMC) held on Wednesday in Lagos.

The Director General, SEC, Munir Gwarzo, said indirect effects of budgets on the capital market could be negative when the federal government put upward pressures on inflation and interest rates, or cause uncertainties in the foreign exchange market.

He hinted further that inflation spiral could be a cause and consequence of exchange rate bubbles and the net effect of such pressures could be negative on the stock market, if urgent attention was not paid to correct it.

Gwarzo stressed the commission has looked at the theoretical links between the capital market and budget with the aid of historical microeconomic data for Nigeria, adding that expenditure has correlated with the nation’s Gross Domestic Product (GDP) growth.

He, however, recommended the federal government to keep a tab on deficit financing, adding that high budget deficits tends to increase cost of borrowing for any given country.

The SEC boss also canvassed that investor education efforts particularly on the role of capital market in economic development should be strengthened and widened to include targeting the policy makers, practitioners and academics.

In addition, Gwarzo averred that the National Pension Commission and Pension Funds Administrators (PFAs), should take active steps to encourage creation of pension investments portfolios that were more diversified by exposing younger workers to take a greater percentage of equities since they have a longer time horizon to invest.

The Head, Vertical Market Group, Nigerian Inter-Bank Settlement System (NIBSS), Samuel Goriola Oluyemi, on e-dividend mandate, stated that registrants stood at 2.1 million, while investors captured through NIBSS account currently stands at 838.68 million and total unique investors identified through Bank Verification Number (BVN) moved to 433.16 million.

While given further analyses of active investors in Nigerian capital market through e-dividend mandate, Oluyemi explained the ratio of male to female investors in the country was approximated at 2 to 1, while male investors constituted 65 per cent, the female counterpart contributed 35 per cent.

Oluyemi also disclosed to the financial press that investment statistics based on states of residence showed that investors in Lagos contributed 38 per cent, followed with Abuja based investors with eight percent and Rivers (6 per cent), Ogun and Oyo State (5 per cent) respectively.

Other investment statistics based on state of origin included investors who hailed from Anambra (10 percent), Imo (9 per cent); Ogun (9 percent); Delta (7 per cent) and Edo State contributed six per cent to the investment window.

Based on nationality, the NIBSS expert stated that investors in Nigeria, based on figures, were put at 421.37 million; Indian (146m); British (142m); Ghanaians (109); Lebanese (46m) and American investors in Nigeria capital market were 32 million.

Nigeria foreign reserves reach $31.22 billion, first time in 2 years

 By Jide Ajia

Then nation’s external reserve has risen to a two year high of $31.2 billion even as the naira appreciated to N367.5 kobo at the Investors and Exporters (I&E) window.

Data from the Financial Market Dealers Quote (FMDQ) showed that the indicative exchange rate for the window, also known as, Nigeria Autonomous Foreign Exchange (NAFEX) dropped from N368.17 per dollar on Tuesday to N367.5 per dollar on Wednesday, translating to 67 kobo appreciation for the naira.

The development was in contrast to the N1.73 depreciation suffered by the naira in the market in the first two days of the week.

However, the naira remained stable at N366 per dollar in the parallel market exchange rate.

Meanwhile data from the Central Bank of Nigeria (CBN) revealed that the reserve rose to $31.2 billion on Monday August 8th from $30.88 billion on August 1st.

It should be noted that since July 2015, when it rose to $31.46 billion, the external reserve declined steadily till October 2016; from $23.89 billion on October 19th 2016, the reserve rose steadily to a new high of $30.98 billion on May 4th 2017.

Since then, the reserve fluctuated due to combination of increased dollar sales by CBN and decline in crude oil price as the trend changed on July 7th 2017, with the reserve recording steady rise, buoyed by improved foreign exchange inflow occasioned by increase in crude oil price, dollar inflow from foreign portfolio investors facilitated by the Investors and Exporters (I&E) window introduced in April, as well as reduction in dollar sale through CBN’s forex intervention.

According to the CBN, the reserve has risen by $890 million between July 7th and August 8th 2017.

Minister of Finance, Kemi Adeosun

FG to refinance $3bn worth Treasury bills through dollar debt

By Jide Ajia

The Federal Government has disclosed plans to refinance $3 billion worth of treasury bills denominated in the local currency market with dollar borrowing to lower costs and improve the country’s debt position.

The Minister of Finance, Kemi Adeosun, said as Africa’s top economy was recovering from a recession, there was need to map out strategies by government to refinance $3 billion worth of maturing naira-denominated short-term treasury bills with dollar borrowing of up to three years’ maturity.

Adeosun announced the move while briefing newsmen shortly after a cabinet meeting in which the spending plan for 2018-2020 was approved in Abuja on Thursday.

Furthermore, Adeosun hinted that it was part of an attempt to restructure the debt portfolio into longer term maturities by borrowing more offshore and less at home, which the minister said would also support private sector access to credit to boost economy.

“As the economy recovers and grows we would be in a much better position to repay instead of just rolling over the debt,” Adeosun said.

She stressed that federal government would issue dollar debt as $3 billion worth of naira treasury bills gradually mature; although the minister did not provide a time frame for the target.

The finance minister further explained that the debt profile change would have positive impact on the value of naira because it means that $3 billion would be coming into the country’s foreign reserve.

According to her, we are not increasing our borrowings, we are simply restructuring instead of owing naira, we would be owing dollars.

On his part, the Minister for Budget and National Planning, Udoma Udo Udoma, while briefing the press at the same news conference stated that the government’s economic growth projection for next year had been revised down to 3.5 percent from 4.8 percent.

Udoma stated that the government had approved a slightly different growth trajectory of 3.5 percent for next year, down from 4.8 percent it announced last week in its strategy paper without further explanation for why the growth forecast had been revised down.

The budget minister forecasted that growth would top 4.5 percent by 2019 and 7 percent by 2020, adding that the government was projecting crude production of 2.3 million barrels per day for next year at a price of $45 a barrel.

However, dollars have been in short supply in Nigeria since the price of crude oil, the main source of hard currency, plunged in mid-2014, triggering a currency crisis, an exodus of foreign investors and its first recession in 25 years.

Currently, Nigeria expects a shortfall of $7.5 billion in its 2017 budget, the major reason for government planning to raise around half of that in foreign loans, including from the World Bank and from international debt markets.

As a member of Organisation of Petroleum Exporting Countries (OPEC), Nigeria relies on crude sales for two-thirds of government revenue; has at least six exchange rates which it has used to mask pressure on the naira during the currency crisis caused by low oil prices.

Senator Udoma Udo Udoma

Naira sustains gain at parallel market

By Jide Ajia

The naira has recorded gains against the dollar at parallel market, exchanging at N363 to the dollar from the N364 posted on Tuesday.

Similarly, the pound sterling, on Wednesday, and the Euro closed at N477 and N428 to the naira, respectively.

At the Bureau De Change (BDC) window, the naira was traded at N363 to the dollar, while the pound sterling and the Euro closed at N477 and N428, apiece, while trading at the investors’ window saw the naira closing at N367.50 to the dollar.

However, traders expressed optimism that the interventions by the Central Bank of Nigeria (CBN) at the market were capable of closing the gap further between the rates at the parallel market and other segments.

It should be noted that not all the BDCs in the South West bought foreign exchange from the weekly auction on Tuesday, but a credible BDC source, on condition of anonymity, confided in The Guild that since the near convergence of rates many BDCs were trading at a loss.

Earlier, the Central Bank of Nigeria (CBN) has unveiled plan to auction N62.43 billion or $171 million of treasury bills at an auction sales next Wednesday.

It also announced plans to offer N32.43 billion in three-month paper and N30 billion on a six-month bill with results of the auction to be announced the same day, while allotment letters would be issued for successful bids on Thursday.

The apex bank, in a statement, said all money market dealers should submit bids through the CBN S4 web interface between 9:00 a.m and 11:00 a.m next Wednesday.

The CBN says each bid must be in multiple of N1, 000 subject to a minimum of N50, 001,000 and authorized money market dealers are to submit multiple bids.

Treasury bills are short term debt instruments used to provide short-term funding for the government and control money supply in the economy.