Sad as Naira ‘stuck’ at 320/$1 despite permutations

The Nigerian currency, naira, has remain uninspiring at 320 to the dollar, neither rising nor falling significantly, through the week.

The naira, which was trading between 301 and 310 at about the same time last week, depreciated at the open of business on Monday to trade at 318 to 320.

Over the past month, the naira had numerous dramatic turns, falling to 390 against the dollar, with Capital Oil chairman, Ifeanyi Ubah, saying he could recover the naira to 200 against the greenback.

The naira inspiringly rose from 390 to 310, with some trading erratically at 280 against the dollar at the parallel market.

The interbank rate however stood close to its interbank peg, trading at 197.5 to the international dollar standard.

The Central Bank of Nigeria (CBN) has said that the naira would recover as soon as the 2016 budget is passed and implementation begins.

Joseph Nnana, the deputy governor, financial system surveillance of the CBN, at a meeting of the joint appropriation committees of the national assembly, assured Nigerians that speculators would get their hands burnt.

“Distinguished chairman sir, we have $20bn lying idle in various domiciliary accounts of many customers at the various banks across the country,” he had said.
“This is part of the reasons why the naira has continued to slide against the US dollar. The CBN will embark on aggressive liquidity mop-up to enable the naira regain confidence.

“The CBN will not sit down and watch the consistent fall of the naira. After the passage of the 2016 budget, the naira will begin to bounce back. Those who speculate on dollars will have their fingers burnt.”

Reserves rising again as Nigerian crude hits $39

Nigeria’s foreign reserves are on the rise again, as the Central bank of Nigeria (CBN) confirmed on Thursday that the Nigerian crude, bonny light, is trading at $39.07 per barrel.

The current selling price, which is above the 2016 budget benchmark of $38 per barrel of crude by $1, is also the highest point for Bonny Light in 2016.

According to the latest figures from the central bank, the reserves rose to $27.88 billion following a nine-day rising streak from $27.82 billion at the beginning of the month.

The reserves had a four-day rise in February, the very first of such, since President Muhammadu Buhari took office in May 2015.

On the other hand, Brent crude – the global benchmark for crude oil prices – is trading at $40.07 per barrel on the international market.

According to OPEC secretariat, the daily basket price, which is the average of 13 crude oil variant, stood at one of its 2016 record high of $35.05 a barrel on Wednesday.

President Buhari and Udo Udoma, minister for budget and national planning, have come under fierce criticism for pegging the national budget for 2016 at an oil benchmark of $38 in December, when oil sold less than $35.

The crude oil prices were said to be rallying, following plans by the Organisation of Petroleum Exporting Countries (OPEC) and some Latin America oil producers to stabilise prices.
The new turn of events, regarding increase in crude oil prices would mean some sort of surpluses for the Nigerian budget, if they persist.

Explosion rocks CBN Calabar

The office of the Central Bank of Nigeria (CBN) in Calabar, capital of Cross River state, has been hit by by an explosion.

A witness described what he heard as “a deafening explosion”, saying it occurred “around 1pm”.

“I was part of a group of people that was about to make cash withdrawal at CBN building in Calabar this afternoon,” said the source, a banker who did not want to be named.

“Suddenly, there was an explosion within the CBN premises that caused heavy casualties. Ambulances were used to convey people to various hospitals.

“I was lucky to have escaped, and even luckier to discover that everyone in my group was safe and in good conditions of health. CBN immediately began to evacuate staff, just as corporate organisation in the area did.”

More to follow…

TSA: Skye Bank confirms EFCC’s invitation, denies wrongdoing

Skye Bank has confirmed receiving an invitation from the Economic and Financial Crimes Commission over allegations of non-compliance with the Federal Government’s directives on the Treasury Single Account.

Specifically, the Bank was said to have failed to remit funds belonging to the Presidential Implementation Committee to the Central Bank of Nigeria in compliance with the TSA directives.

The invitation, it is believed, was extended to its Group Managing Director and Chief Compliance Officer.

The Bank, however, denied any wrongdoing.

It said in a statement by Nduneche Ezurike, its Head of Strategic Brand Management, that the Bank did not receive the invitation from the EFCC before stories went awash in the media that its Group Managing Director and Chief Compliance Officer had been invited for interrogation.

The Bank said it had complied with the directives on the TSA by October 2, 2015.
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The statement by Azurite reads in full: “Our attention has been drawn to a report in Sahara Reporters and other publications stating that the GMD and the Chief Compliance Officer of Skye Bank have been invited by the EFCC over an alleged non remittance of funds belonging to the Presidential Implementation Committee (PIC) to the CBN in compliance with the TSA directives.

“As at the time of the said Sahara reports, neither the GMD nor the Chief Compliance Officer of the Bank had seen any such invitation.

“More importantly however, the balances in the said PIC account had since been moved to the CBN in compliance with the TSA on 2nd of October 2015 and the account closed.

Skye Bank thus does not maintain any account nor hold any funds belonging to the PIC as at today.

“We have however received the invitation. These facts and clarifications will therefore be provided to the EFCC or any investigating agency on the subject.”

Senate Reveals MTN’s N300bn Proposal as Settlement for Fine

MTN’S PROPOSED N300BN PAYMENT PLAN
• N50bn already paid in “good faith”
• N100bn via electronic transfer between Dec 31, 2016 and Dec 31, 2020
• N80bn investment in Nigerian sovereign debt instruments in 2016-2017
• N70bn through the provision of broadband access to the FG (subject to excess capacity on MTN’s fibre network) for its e-initiatives

The Senate Committee on Communications yesterday revealed that MTN Communications Nigeria Limited has proposed to pay N300 billion ($1.5 billion) in the ongoing negotiations between the company and Attorney General of the Federation and Minister of Justice, Abubakar Malami (SAN), on the N780 billion fine imposed on the network operator by the Nigerian Communications Commission (NCC).

The industry regulator imposed a N1.04 trillion fine on MTN last October for failing to disconnect 5.2 million unregistered subscribers on its network, but later reduced it to N780 billion and gave the network provider till December 31, 2015 to pay up after it had appealed for leniency.

But before the deadline, MTN sued the federal government challenging the power of the federal government and NCC to impose the fine.

Last month, it withdrew the case and paid N50 billion as a gesture of good faith towards the settlement of the fine.

The penitence exhibited by MTN paved the way for negotiations with the federal government led by Malami and the South African-owned firm led by former US Attorney General, Mr. Eric Holder.

At an investigative hearing held yesterday by the Senate committee in the National Assembly, vice chairman of the committee, Senator Adeola Olamilekan (Lagos West) brandished a proposal acknowledged by the Solicitor General of the Federation, Taiwo Abiodun, from MTN wherein the network provider insisted that it could only pay N300 billion.

A breakdown of the proposal which was forwarded to the Ministers of Communications and Finance by the solicitor general as well as NCC executive vice chairman, Prof. Umar Dambatta include the N50 billion already paid by MTN into a recovery account of the Central Bank of Nigeria (CBN) and another N100 billion to be paid via electronic transfer between December 31, 2016 and December 31, 2020.

The proposal also includes another N80 billion proposed payment by MTN as a demonstration of its commitment to and confidence in the Nigerian economy and will be subject to necessary regulatory approvals,

This would come by way of MTN Nigeria committing to purchase N80 billion of Nigerian sovereign debt issued on the international market in 2016-2017.

The last tranche of N70 billion which the network provider proposed will be through the provision of broadband access to the Federal Government of Nigeria (subject to excess capacity on the company’s fibre network) for the purpose of the government’s e-initiatives (e.g. visa processing, public service, connecting schools, registration, etc.).

If accepted, the broadband access valued at N70 billion will commence from the date of the execution of the agreement between the federal government and MTN to December 31, 2020.

Olamilekan, having brandished the document, accused the AGF of deceiving Nigerians that negotiations were still ongoing with MTN, whereas he had already executed an agreement with MTN that will allow the company pay the proposed N300 billion in four years.

However, an official from the AGF’s office dismissed the charge, describing the document as a proposal which he said was not an end in itself but a means to an end.
But Olamilekan disagreed, insisting that the government was only playing on Nigeria’s intelligence and questioned the rationale behind the acceptance of N50 billion from MTN, which was the first tranche of the payment as contained in the proposal, and yet claiming that negotiations were still ongoing.

The session was attended by Minister of Communications, Mr. Adebayo Shittu, Dambatta, another representative of the AGF, Mr. Dayo Apata, MTN’s Chief Executive Officer, Mr. Ferdinand Moolman, acting Director of Banking and Payment System Department of the CBN, and the Accountant General of the Federation, Mr. Ahmed Idris.

The meeting revealed how the AGF and presidency kept NCC and Shittu in the dark in the negotiations with MTN on the fine.

While Shittu said he was not part of the entire negotiation process, Dambatta said NCC was not responsible for the reduction of the fine from N1.04 trillion to N780 billion, saying it was only invited to a meeting of an inter-agency committee set up by President Muhammadu Buhari.

He said the committee reduced the fine by 25 per cent following the president’s approval after MTN wrote a letter of apology to the government.
Both Shittu and Dambatta said they were not aware of negotiations between Malami and MTN that led to the payment of N50 billion by the latter into the CBN recovery account on February 24.

Shittu maintained that the matter was between Malami and MTN. According to him, since the matter went to court, his ministry and the NCC had virtually been kept at arms length on the matter, adding that when MTN indicated its decision to settle the matter out-of-court, the AGF gave it two conditions for the out-of-court-settlement.

He listed the conditions to include making a down payment of six per cent of the total fine, amounting to N50 billion first, and withdrawal of the suit, both conditions which he said MTN fulfilled.

In his submission, Dambatta disclosed that the fine of N1.04 trillion imposed on MTN by NCC was predicated on a charge of N200 per line that was not registered by the company, in line with its directive at the time.

However, he said the negotiations on the N1.04 trillion fine down to N780 billion was handled by an inter-agency committee set up by the president to look into the fine, to which he said NCC was invited.

According to him, based on a letter of apology written by MTN and its remission, Buhari gave approval to the committee to reduce the fine by N25 per cent, thus bringing it down to N780 billion.

He further disclosed that NCC was not informed about the move to settle the case out of court neither, nor was it a party to the payment of N50 billion to CBN.
On its part, MTN explained that the process leading to the payment of N50 billion began when it made its intention to settle out-of-court known to the AGF.

According to MTN’s chief executive, who echoed the communications minister’s submission, the AGF had informed them that the federal government’s interest in the matter would be dependent on MTN’s preparedness to fulfill the two conditions enumerated by AGF, which he said MTN fulfilled.

But the representative of the AGF who said Malami was unavoidably absent due to a trip out of the country, said on January 22 while in court, MTN had indicated its interest in settling the matter out of court and after being told to do so in “good faith”, by meeting the two conditions, it requested for a long adjournment, which he said was granted by the court.

He said it was these actions that led to the adjournment of the case to March 18 by the court.

When asked why MTN was asked to pay the money into a CBN account and not the NCC account, Apata said he did not know.

However, the accountant general said though his office was not involved in the negotiations, he only got involved in the matter when the AGF asked him to facilitate the opening of an asset recovery account with the CBN. He said the account was credited with N50 billion on February 24.

When the committee questioned the AGF’s representative on the legality of the account, he said he was not in a position to say whether it was legal or not.

Through out the questioning the Senate committee did not conceal its displeasure with the entire process, with Olamilekan demanding to know the right of the AGF to enter into negotiations with MTN while sidetracking other major stakeholders – Ministry of Communications and NCC – in the matter.

He accused the AGF and accountant general of having ulterior motives in the matter by taking over the jobs of NCC and Ministry of Communications.

Also speaking, Senator Abiodun Olujinmi (Ekiti South), said impunity usually begins with the abuse of a process, saying having served on the board of NCC, imposition of fines on telecommunications company by NCC was a regular norm.

According to her, such fines are usually paid into the NCC account, for subsequent transfer by NCC into the Federation Account.

According to her, Malami and Idris had shaved the heads of Shittu and NCC in their presence by totally taking over their jobs.

She described the entire negotiation process as “voodoo” and faulted the opening of a recovery account for money that was not stolen, describing it as a clandestine move to circumvent due process.

She also queried the rationale behind the determination of 6 per cent of the fine, amounting to N50 billion paid by MTN.

“You asked them to pay 6 per cent of N780 billion. And you said it was in good faith. Who determined that? You asked them to withdraw the case from court and you said the case is still in court,” she said.

CBN to borrow N1.07tn via treasury bills in Q2

The Central Bank of Nigeria is planning to borrow N1.07tn via treasury bills issuance in the second quarter of 2016.

The CBN said it would auction N303.77bn worth of 91-day bills, N169.98bn worth of 182-day paper and N599.63bn of one-year paper between March 17 and June 2.

The Federal Government, through the CBN, had raised N1.22tn from treasury bills in the first quarter.

The Debt Management Office had on Wednesday said it would raise N100bn ($503.02m) in local currency denominated bonds with maturities ranging between five and 20 years on March 16.

The debt office said it would raise N40bn at par in the local bond maturing in 2036; N40bn of the paper maturing in 2026 and N20bn of the debt maturing in 2020.

The 2026 and 2020 maturing notes are re-openings of previously issued paper, while the 2036 maturing note is a fresh issue.

The Director-General, DMO, Dr. Abraham Nwankwo, had said the slump in crude oil prices in the international market had made a deficit budget inevitable this year, adding that the DMO was prepared to borrow on behalf of the government to fund the deficit.

Nwankwo dismissed the fears in some quarters that the government might not be able to borrow from the bond market to finance any shortfall in the budget because of the recent delisting of Nigeria from the JPMorgan Bond Index.

SEC-TAKES E-DIVIDEND REGISTRATION ENLIGHTENMENT CAMPAIGN TO KANO

The Securities and Exchange Commission (SEC) Tuesday took the Investor Education Enlightenment Campaign on e-Dividend Registration to the ancient city of Kano with a view to mobilize the investing and the general public towards the value of e-Dividend Registration which is currently on-going in the country.

The Enlightenment exercise reached thousands of Kano people as they massively came out from their houses, shops and business places to digest the information being disseminated via fliers, stickers and interfacing with the audience in various languages which include Hausa and Igbo.  

e-Dividend is a service which allows an issuer to electronically pay cash dividend entitlements directly into the shareholders bank account.

Director General, Mounir Gwarzo had recently said that the Commission aims to attract more retail investors into the Nigerian capital market in its determination to deepen and develop the market.

Gwarzo said that this is one of the reasons why the Commission has embarked on various initiatives line e-Dividend, Direct Cash Settlement, National Investors Protection Fund (NIPF) among others to attract retail investors to the Market. 

He said “We have pursued a lot of initiatives in the last year and we are pursuing more this year. We are taking it from a perspective that this market has never witnessed and the perspective is to address some of the lingering complaints of the investor. We believe that the retail investors are the owners of this market so our strategy should focus on them. 

“As a country we have only less than 2% participation of retail investors in our market. Malaysia has 9%, South Africa  19%, USA 43%, and UK 13%. So our market is highly less being participated by the retail investors. Due to the dominance of the foreign investors, anytime they move out of the market the market goes down. Our effort is to see that in the next 5-10 years we raise the level of involvement of the retail investor to at least 5%”. 

Gwarzo said the Commission has identified some of the challenges hindering the retail investor from accessing the market and believes tackling these challenges through the recent initiatives by the Commission would be very productive.

During the Kano campaign, the public were mobilized and informed that they could collect registration form the bank within the next 90 days after which a fee of N100 will be charged by banks for registration.

The campaign started from Airport Road through Murtala Muhammed Way, Bello Road, Ibrahim Taiwo, IBB Way k/Mazugal as well France Road.