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.

                   

 

Nigeria mortgage agency seeks approval to raise capital

 Nigeria Mortgage Refinance Company (NMRC) will seek approval from members by month-end to raise additional equity capital of 28.5 billion naira ($143 million) through a shelf registration programme, the state-backed mortgage agency said on Monday.

NMRC set a price range of 4.50 to 7 naira per share for the first tranche of equity to be raised under the programme worth 6 billion naira.

Nigeria put $300 million of World Bank aid money into a mortgage-backed guarantee last year in a bid to boost lending through the creation of a secondary housing market, which is virtually non-existent in Africa's biggest economy.

Africa's most populous nation suffers a housing shortage, with somewhere between 16 million and 20 million new homes needed just to keep up with current demand, according to official figures.

The NMRC was set up with the aim of lowering mortgage lending rates -- currently around 20 percent for a 10-year loan or up to 30 percent for households with lower credit ratings.

The debut general meeting will be held on Aug. 31, the NMRC said in a notice to approve the capital plans. It added that further equity tranches will be approved by members.

Mortgage lending is a small portion of the overall property market. There are about 20,000 mortgages open in Nigeria, the finance ministry has said, none of which are tradable because of a lack of liquidity. None extend beyond 10 years.

Skye Bank to raise equity, restructure loans

 

Nigeria's Skye Bank is in talks to raise 30 billion naira ($151 million) from existing and new investors before the end of the year to bolster its capital base, its chief executive said on Monday.
 
Timothy Oguntayo told an investors' call the bank had identified some shareholders who were willing to support the cash call, part of which is meant to help the lender prepare as the country adopts stricter international requirements.

"With or without changes in the macro (economic) environment, our existing shareholders have shown some interest in the offering," he said, referring to a weaker currency and lower oil price that have hampered Nigeria's outlook as an investment destination.

The bank had said in April it planned to raise 50 billion naira.

Shares in Skye Bank, down 21 percent so far this year, ended flat at 2.10 naira.

Last week the bank, which acquired nationalized lender Mainstreet Bank in 2014, reported a 47.4 percent rise in first-half pretax profit to 10.71 billion naira.

It said it had so far this year restructured 65 billion naira in loans, about 30 percent of which were to clients in the oil and gas sector.

Loans grew by 14 percent in the half year to 657 billion naira and it set loan growth guidance of 5 percent this year.