Nigerian interbank rates ease on liquidity boost from matured Treasury bills

 

Nigeria's interbank lending rates eased to 14 percent on Friday from 40 percent last week after injections of liquidity from matured Treasury bills and refunds by the central bank of cash set aside by banks to buy dollars.


The cost of borrowing among banks jumped to as high as 70 percent during the week on tight liquidity after the central bank tightened liquidity to support the naira currency. The central bank last week directed banks to pay for their dollar purchases 48 hours in advance, draining the market of liquidity.

Traders said about 183 billion naira ($920 million) in matured Treasury bills was injected into the money market on Thursday by the central bank causing rates to fall.

Also, more funds from interest payment on bonds and refunds to banks from the central bank for their forex cash provision also raised liquidity, traders said.

"Interbank lending rates swung this week as a result of tight liquidity arising from the provision for forex purchases and we expect the cycle to continue next week," one dealer said.
Traders said banks' cash balances with the central bank stood at about 80 billion naira compared with a 25 billion naira cash surplus last week.

The secured Open Buy Back (OBB) and overnight placement closed at 14 percent from 40 percent apiece for OBB and overnight placement last week.

"We expect rates to trend up early next week on possible cash withdrawal by NNPC (state-owned energy firm) and could trade around the 30 percent level until inflows of budgetary allocations to government agencies come in," another trader said.

Nigeria, Africa's top crude exporter, distributes revenue from oil among its three tiers of government every month, injecting liquidity into the money markets.

NNPC GMD Meets Buhari, Says More Heads Will Roll

 The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Emmanuel Kachikwu, on Thursday said more heads will roll as part of his activities aimed at restructuring the company for better performance and accountability.

He said the restructuring would affect all levels of the corporation with the new Group Executive Directors and Group Managing Directors taking the exercise to the lower layers.

Kachikwu spoke with State House correspondents shortly after meeting President Muhammadu Buhari behind closed-doors at the Presidential Villa.

He said after the personnel aspect would have been completed, he would also order for a proper forensic audit that would cover 2014 and 2015.

That exercise, he added, would show the true state of the company.

Kachikwu noted that when the process is completed within five or six months, a new NNPC would have emerged.

Power supply reaches 4 600mw

Godknows Igali, the Permanent Secretary in the Federal Ministry of Power, says electicity supply nationwide had reached 4,600 megawatts.

Igali told State House correspondents after briefing President Muhammadu Buhari on the current state of power situation in the country.

He said that the volume was a great improvement in the sector.

According to him, electricity supply is one of the most discussed topics in Nigeria and naturally so because it is fundamental to the country’s social and economic development.

"Where we stand is that we are doing over 4 600mw of power on the grid and we can do better but then this is a big improvement from about 3 000mw.

"The other time we attained 4 000mw but because of pipeline disruptions we go down to 2 000mw, we go down to 3 000.

"But consistently in the past two months also we have been over 4 500mw, now we are reaching close to 4,700mw.

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N183bn NDDC funds diverted, says Auditor General

The Auditor General of the Federation, Mr. Samuel Ukura, says N183bn meant for the development of the Niger Delta was diverted.

He, therefore, recommended that the money should be recovered.

Ukura stated this when he submitted three special audit reports to the Clerk to the National Assembly, Alhaji Salisu Maikasuwa.

The Auditor General explained that the amount was discovered in the periodic checks carried out by his office on the activities and programmes of the Niger Delta Development Commission between 2008 and 2012.

He said N70.4bn was paid as mobilisation to various contractors who never reported to site while N90.4bn was the extra-budgetary expenditure “for Head and Sub-heads without approval by the legal authorities.”

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Naira firms on black market as CBN sells dollars

Nigeria's central bank sold $80 million to bureaux de change (BDC) operators on Wednesday at 197 naira helping the local currency strengthen on the parallel market, the president of the association of forex dealers said.

The naira was quoted at 221 on the parallel market, up 1.36 percent on the day, after dollar liquidity rose, traders said.

On the interbank market, the naira ended at the bank's pegged rate of 197 to the dollar.

Aminu Gwadabe, president of Nigeria's bureaux de change association, told Reuters that the central bank has started to sell dollars twice weekly to BDCs since last week.

Nigerian Inflation Stays at 9.2%

The nation's inflation rate was unchanged in July, ending a seven-month period of acceleration that pushed the rate outside the central bank’s target band.
The National Bureau of Statistics in its monthly inflation report in Abuja, noted that consumer prices rose 9.2 percent from a year ago. The inflation rate rose 0.7 percent in the month.

It would be recalled that the Central Bank of Nigeria kept its benchmark interest rate unchanged at 13 percent in July even as inflation breached the target range of 6 percent to 9 percent in the previous month.

Inflation has been fueled by the naira’s 7.8 percent slump against the dollar this year.

NNPC appoints four new executive directors

Nigeria's state oil firm has appointed four new group executive directors and reduced its management staff from 122 to 83, it said on Tuesday.

Last week former Exxon Mobil executive Emmanuel Ibe Kachikwu was appointed as the new head of Nigerian National Petroleum Corporation (NNPC) and he dismissed all of the company's executive directors the next day after a government directive.

President Muhammadu Buhari has made a number of changes at NNPC as part of a crackdown on corruption and mismanagement in Nigeria's main money earner.

The appointments, approved by Buhari, include Maikanti Baru as group executive director for exploration and production and Isiaka Abdulrazaq as group executive director for finance and services.

The other appointments were Dennis Nnamdi Ajulu, as group executive director for refining and technology, and Babatunde Victor Adeniran, who is now group executive director for commercial and investment.

"The new appointments are in line with the federal government's aspiration to transform the corporation into a lean, efficient, business-focused, transparent and accountable national oil company," said the emailed statement.

The statement added that more than 30 members of top management staff had been retired, "reducing the number from 122 to 83".

Buhari has said about 250,000 barrels of oil were being stolen each day and that his government was aiming to recover an estimated $150 billion in stolen funds with U.S. assistance.

In 2013, the then central bank governor Lamido Sanusi said tens of billions of dollars in oil revenue had failed to make it into state coffers, which the company denied.

In June, Nigeria's National Economic Council said NNPC had earned 8.1 trillion naira ($41 billion) from 2012 until the end of May, but only paid 4.3 trillion to the federal government.

Naira eases on black market as dollar demand rises

Nigeria naira eased against the dollar on the parallel market on Tuesday driven by demand mainly from individuals travelling abroad for summer holidays and importers, traders said.

The local currency was quoted at 224 naira to the greenback on the unofficial market, 0.89 percent weaker from 222 the previous day, traders said.

On the official interbank market, the naira ended at 197, a level it has been stuck at following a central bank's peg on the exchange rate in February.

BDCs are allowed to sell up to $4,000 as personal travelling allowance and $5,000 as business travelling allowance.

However, individuals sometimes buy above the stipulated dollar limit from the undocumented parallel market.

The naira firmed to 216 on the parallel market last week after commercial lenders stop accepting hard currency cash deposits on central bank orders, fuelling excess dollar liquidity on the parallel market.

The bank has also directed lenders to pay for dollars purchased at the official market 48 hours in advance, tightening naira liquidity.

Banks directed to reduce withdrawal limits on ATMs

The Central Bank of Nigeria (CBN) has directed banks in Nigeria to limit Naira cash withdrawal at ATMs to N60 000 per day while foreign currency is $300 per day, Punch reports.

Before the directive, the domestic withdrawal limit was N150 000 per day.

This is contained in a statement issued CBN on Sunday to all money deposit banks.

The new arrangement will have banks separate traditional ATM from MasterCard credit card where the former has now been deactivated and can no longer be used for transactions abroad. Hitherto, a single ATM card serves for transactions for both domestic and abroad.

Also read: CBN has decided to limit our freedom to our money

CBN said all legitimate requests for foreign currency for eligible transactions, normally referred to as “invisibles,” such as remittances for school fees, student maintenance allowances, BTA, PTA, medical and other eligible transactions, shall be fully met at the official/interbank exchange rate.

The statement added that already all the legitimate demands for such transactions through recognised channels have so far been fully met by CBN.

CBN’s Limit On Cash Withdrawal Via ATM May Stifle Cash Flow – Experts

Some financial experts and businessmen on Tuesday said the Central Bank of Nigeria (CBN) limit on cash withdrawal via the Automated Teller Machine (ATM) may lead to a disruption of cash flow.

They spoke against the backdrop of the recent CBN policy which pegged the daily cash withdrawal from the ATM at 300 dollars (N60,000 from N150,000).

They told the News Agency of Nigeria (NAN) in Lagos that the policy was a contradiction of the cashless regime earlier espoused by the apex bank.

An economist, Dr Evans Osabuohien, said that the policy was a contradiction of the cashless policy of the CBN.

Osabuohien, who lectures at the Department of Economics and Development, Covenant University, Ota, Ogun, added that the policy would have adverse effects on businessmen.

“The policy will lead to hardship in the economy and it will affect the confidence of businessmen in the banks,’’ Osabuohien said.

The don noted that the policy might force bank users to look for other ways of banking their money without undue restrictions.

“I think that this policy may force people to keep their monies in their houses with the attendant security risks,’’ the don said.

NAN reports that the policy was part of CBN measures to curb illicit financial flows out of the economy.

Another financial expert, Prof. Sheriffadeen Tella, believed that the policy was only going to be a temporary measure.

According to him, the directive is not a major instrument for the strengthening of the naira.

Tella, who lectures at the Department of Economics, Onabisi Onabanjo University, Ago Iwoye, Ogun, said the policy was an attack on the CBN cashless policy.

“We are not running a full cashless economy yet. The CBN would have raised the bar higher for those who want to make huge transactions,’’ Tella said.

The economist noted that the policy would reduce cash flow in the economy, adding that it would ultimately stifle demand and lead to unemployment.

“If there is no cash flow, it stifles demand; productivity will fall, and this will lead to unemployment,’’ the don said.

The professor insisted that the policy remained a temporary measure and it was aimed at preparing the economic system for a major policy statement by the apex bank.

Mr Okechukwu Udensi, a businessman, said that the policy would make financial transactions very difficult and time-consuming.

According to him, the ATM has made cash withdrawals very convenient and has reduced the risk of carrying cash.

“Some of us transact businesses in huge amounts.

“Even the banks charge us for electronic funds transfer within the banking hall. So, where is the cashless policy?’’

He noted that the rigours of going through the banking hall for transactions was cumbersome and a lot of time for meaningful business activities would be lost.

Mr Ikenna Okonkwo, Director, heels.com.ng, an e-commerce platform, said that the policy would pose a challenge for small businesses.

Okonkwo noted that bigger e-commerce businesses whose goods go above the N60,000 benchmark would have some difficulty in sorting out payments above that amount.

“For now, the prices of our goods are within N20,000.

PENGASSAN urges Buhari to stop political meddling in NNPC

Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) says the ongoing effort by President Muhammadu Buhari to restructure the Nigerian National Petroleum Corporation (NNPC) will make greater impact if political interference in the affairs of the corporation is halted by the Presidency.

The NPPC, which handles the sales of crude oil, Nigeria’s major foreign exchange earner, on behalf of the Federal Government, had been described in some quarters as “the cesspit of corruption.”

In the last couple of years, particularly under the immediate past government of President Goodluck Jonathan, the corporation had been accused of failure to remit in full accruals to the federation account with allegation of shady deals in crude oil sales linked to an unnamed minister.

Fortnight ago, President Buhari began what is seen as a major shakeup in the corporation with the appointment of Emmanuel Ibe Kachikwu, as the new group managing director (GMD), followed in quick succession by the sack of all executive directors in what marks the beginning of the structuring of the federally owned corporation.

But workers in the oil and gas industry are insisting that the president should go beyond the restructuring to a total reform in the nation’s political system that will make it impossible for the political class to meddle in the affairs and activities of the NNPC.

Francis Johnson, president, PENGASSAN, who spoke at the triennial delegates’ conference of the workers in Abeokuta, Ogun State, alleged that high level of political interference by the political class had been the bane of the NNPC.

BUSINESS TALK IN SUMMER 2015 - Waves of Change, Oceans of Opportunity

 

 

     

                                                  BUSINESS TALK IN SUMMER 2015

5 SECTORS - 5 TOPICS - 5 SPEAKERS - September 12, 2015 - Chelsea Hotel, Abuja.