Business News
Top ten Economic, Business and Political news for the week
IGP appeals for a yearly 31,000 police personnel recruitment for 5 years
Ibrahim Idris, Inspector General of Police (IGP), represented by the assistant IGP in charge of Zone 4, Mr. Akali Usman, during his speech at the Passing Out Parade of 313 General Duty Recruit Constables at the Police Training School Wannune, Tarka Local Government Area of Benue state, appealed to President Muhammadu Buhari to approve an early recruitment of 31,000 police personnel in the next five years.
The call for recruitment of more hands in the police force as he said was not just to help the force effectively police the county given the increasing rate of crime but to also help the police force to meet the United Nations approved policing ratio of 1:4 being that the Nigerian police ratio is currently at 1:6 which is far below the UN’s approved ratio.
Nigeria exempted from oil production cut
At a meeting of the Organisation of Petroleum Exporting Countries (OPEC)’s Joint Ministerial Monitoring Committee on Friday in Vienna, an endorsement was given to approve Nigeria’s exemption from oil production cuts.
At the November 2016 Ministerial Conference, Nigeria had been granted production cuts but it was extended at another Ministerial Conference held in May 2017 until the country stabilizes its crude oil production. Dr Ibe Kachikwu, Minister of State for Petroleum Resources expressed his gratitude and assurance saying “Nigeria as one of the oldest members of OPEC will continue to work for the good of the organization and its member countries, respecting whatever agreements and resolutions are collectively made.”
11-man task force inaugurated on airport matters
Senator Hadi Sirika, Minister of State for Aviation on Thursday, inaugurated an 11-man taskforce to look into regulatory issues at the nation’s airports. The purpose of this taskforce according to Sirika is to look into the payment of multiple charges by the operators, state of infrastructure at the airports as well as negotiation of Bilateral Air Services Agreements (BASA)
The following were inaugurated into the taskforce;
The Minister of State for Aviation
Special Adviser to the president on Economic matters
Director General, Nigerian Civil Aviation Authority (NCAA)
Managing Director, Federal Airports Authority of Nigeria (FAAN)
Managing Director, Nigerian Airspace Management Agency (NAMA)
Nominee of Association of Airline Operators, Capt. Bogie Maggison
Nominee of Association of Airline Operators, Mr. Allen Onyema
Nominee of Association of Airline Operators, Alhaji Kashim Shettima
Nominee of Association of Airline Operators, Capt. Mohamed Joji
Department of Air Transport Management, FMOT
International Air Transport Association (IATA) Representative
NCTL emergency shut down for oil leak
On Friday, Lagos – Aiteo Eastern Exploration and Production Company, had shut the Nembe Creek Trunk Line (NCTL) down for emergency repairs. This was a hasty security measure due to a suspected oil leakage in the area.
According to the company’s Senior Manager, Corporate Communications, Mr. Ndiana-Abasi Matthew, the emergency pipeline and response teams are already on site. He assured that Aiteo is working towards concluding the process speedily and said that further developments will be communicated.
N534billion revenue lost to power sector
Dr Austin Avuru, Managing Director, Seplat petroleum Development Company, yesterday, identified a huge deficit of about N365bn incurred from debts owed banks by the Generating Companies (GENCOs), in the third quarter of 2016. He said Nigeria continues to lag behind in its electricity consumption despite its huge proven gas reserves estimated at 192 Trillion Cubic Feet, TCF. He insists that more turbulence may continue to linger in the country’s economy as it losses over N534bn revenue a year to the in efficiency of the power sector.
Dr. Avuru attributed the current downturn in the country’s petroleum sector to weak regulation. In his words “Strong regulation is imperative to recover losses incurred over the past and then puts the industry in a better light that would attract investors as well as best practices.”
‘Ember promo’ on motor insurance; Cornerstone Insurance
The Ember promo is here again. Every year, Cornerstone Insurance offers a free one month cover on motor insurance policy to its customers for their loyalty and patronage. This year is no different as the Insurance company flags off the 2017 Ember promo.
The Ember promo is a sort of reward for the company’s loyal patrons where customers pay premium for 11 months and get 12 months’ insurance cover. The promo this year is set to run from September 2017 to January 2018.
Heritage bank, Senator Ita Giwa and Cross river to join forces on Climate Change
Heritage bank, Senator Florence Ita Giwa’s Seagull Band and Cross river have all joined forces to educate the people on Climate change; a time for Change. Managing Director of Heritage bank, Mr. Ifie Sekibo, while speaking at the programmed said that the reason the bank had collaborated with the state Government is because the bank believed so much in making the lives of mankind better by preserving it today so that it could transfer it to future generations. The bank’s first attraction though, was that the cause conforms to the Central bank of Nigeria’s regulation on Sustainability banking.
Naira on the decline yet again at N360.33 per dollar
Yesterday, naira continued the decline at N360.33 per dollar in the Investors and Exports (I&E) Foreign Exchange, Forex window. Data from NAFEX shows a decline to N360.33 per dollar yesterday from N360.25 per dollar on Wednesday creating a deficit margin of 8 kobo per dollar.
In the parallel market yesterday, the naira maintained N367 per dollar as it exchanged on Wednesday. The highest Naira has traded this month was at N362 per dollar and the lowest was at N350 per dollar in the I&E Forex Window.
Foreign Investors raise treasury bills subscription by N418bn
The Central Bank of Nigeria (CBN) at an auction of the Nigerian Treasury Bills yesterday raised N215.9 billion which was N75 billion more than the N140.9 billion that was initially intended. The total subscription amounted to N559 billion about N418.1 billion in excess.
The upsurge in the subscription has been attributed by the Financial Instruments’ traders to the interest shown by foreign investors, with the one-year paper accounting for most of the debt.
Nigeria demands IMF and World Bank reforms
Geoffrey Onyeama, the Minister of Foreign Affairs, at the 41st Ministerial Meeting of the Group of 77 plus China (G77+China) on the sidelines of the UN General Assembly, stated Nigeria’s demand on reform of the Bretton Wood institutions (World Bank and the International Monetary Fund) to make them responsive to the needs of developing countries and also reflect the realities of the 21st century.
Onyeama urged the G77 group not to relent. He said “The G77 should not relent in its demand for a more equitable international trading system as trade is an essential tool for economic development.”
G77 is a coalition of developing nations at the UN that promotes its member’s collective economic interests and create an enhanced joint negotiating capacity in the UN.
Business News
Lagos State Government orders building owners to conduct structural stability tests
There will also be stricter enforcement of regulations and safety precautions to ensure that building owners and developers across Lagos metropolis comply with it, she reiterated.
In response to the partial collapse of a 3-storey building at Alagomegi-Yaba on Monday, the Lagos State Government has ordered owners of buildings in the state to immediately carry out structural stability tests on their properties. This is expedient, given the onset of the rainy seasons, and the presence of statistics to show that many buildings collapse during the season.
In a series of tweets that were posted last night on the Lagos State Government’s official Twitter handle, the state’s Building Control Agency (LASBCA), disclosed that the affected building at 6, Olonode Street, Alagomeji-Yaba, Lagos, collapsed in the early hours of Monday due to the heavy rainfall in the area over the night.
Kosegbe emphasised that with the raining season upon us, owners of old buildings in the State should ascertain the level of structural stability of their property to avert collapse, stressing that statistics have shown high incidence of building collapse during this period#LASG
— The Lagos State Govt (@followlasg) May 25, 2020
The General Manager of the agency, Engr. Biola Kosegbe, noted that the collapsed building had earlier been marked for demolition. In other words, all occupants of the building were evacuated by the Agency before the incident, thereby averting a disaster.
(READ MORE:Lagos increases health workers’ allowances, commissions local production of face masks)
Kosegbe went on to explain that statistics from previous years show that there is a higher incidence of building collapse during the rainy season, hence the need for building owners to ascertain the level of structural stability of their properties to avert collapse. She added that the Lagos State Government would not hesitate to remove illegal or distressed buildings, or any other structure that is not in conformity with the State’s building laws and standards.
There will also be stricter enforcement of regulations and safety precautions to ensure that building owners and developers across Lagos metropolis comply with it, she reiterated.
She maintained that the present administration will leave no stone unturned in sanitising the building construction industry removing all illegal or distressed buildings, that are not in conformity with the State building laws, regulations and standards#LASG #ForAGreaterLagos
— The Lagos State Govt (@followlasg) May 25, 2020
Why it matters
This type of pro-active government regulation will help prevent future catastrophes that could occur in the events of building collapse. Incidents of building collapses are not alien to Lagos, a city-state with more than 20 million estimated population, a significant number of whom live in squalid conditions due to extreme poverty and housing deficits.
Business News
UPDATED: Nigeria received $5.85 billion capital inflows in Q1 2020 –NBS
Nigeria received $5.85 billion capital importation (inflows) in the first quarter (Q1) of 2020, compared to $8.51 billion in Q1 2019.
Nigeria received $5.85 billion capital importation (inflows) in the first quarter (Q1) of 2020, as against $8.51 billion in Q1 2019. This is according to the latest capital importation report released by the National Bureau of Statistics (NBS).
According to the NBS, the $5.85 billion worth of capital importation in Q1 2020 represents an increase of 53.97% when compared to how much was received in Q4 2019.
However, when compared to the corresponding first quarter period of 2019, the figure indicates a 31.19% decline.
Capital Inflow by type
In the first quarter of 2020, the largest amount of capital importation was received through portfolio investment, which accounted for 73.61% ($4.31 billion) of the total capital importation.
Under the portfolio category, investment in money market instruments remains the largest recipient of capital inflows with a total of $3.44 billion, followed by $639.72 million in equity, while investment in bonds stood at $231.22 million.
Foreign Direct Investment (FDI): FDI constituted only 3.66% ($214.25 million) to the total capital inflows. A decline of 16.72% compared to $257.25 million received in Q4 2019 and 13.39% reduction compared to the corresponding quarter of 2019.
FDI is an investment in the form of a controlling ownership in a business in one country by an entity based in another country.
Other Investments: other investments, which was broken down into four categories contributed 22.73% ($1.33 billion) to the total capital importation in the first quarter of 2020. The inflows through other investments reduced by 19.92% when compared to $1.66 billion received in Q4 2019.
Investment through trade credits in the first quarter of 2020 was $50,000, Loans ($559.79 million), Currency deposits ($820,000) while other claims scooped the highest share of $769.99 million.
Capital inflows by Sectors
A further look into the report shows that the banking sector received the largest portion of capital importation as it constituted 51.08% ($2.99 billion) to the total capital inflows, followed by Financing, which received $1.33 billion (22.77%) in Q1 2020.
Shares followed with $817.38 billion (13.96%), Production $273.97 billion (4.68%) while Telecoms received $157.48 billion (2.69%).
Capital inflows by origin
The United Kingdom remains the biggest source of capital investment in Nigeria. In Q1 2020, investment from the U.K amounted to $2.91 billion, up from $1.19 billion received in Q4 2019 and decline compared to $4.48 billion in Q1 2019.
The top five countries that accounted for the biggest capital inflows in Nigeria within the quarter include U.K ($2.91 billion), South Africa ($692.63 million), UAE ($532.89 million), Netherlands (441.79 million), and U.S ($389.1 million).
Business News
Naira set for recovery as ABCON issues guideline to members on forex sales resumption
It is obvious that the CBN has come to realize that BDC operators can be the difference between naira recovery and depreciation during volatile times.
The Central Bank of Nigeria (CBN) and the Association of Bureau De Change Operators of Nigeria (ABCON) have finalized arrangements for the resumption of forex sales to Bureau De Change operators (BDCs).
Following this finalisation, the more than 5,000 BDCs spread across the country are now expected to help curb the downward spiral of the naira, thereby checking the activities of foreign currency speculators.
Recall that the naira has recently been facing major challenges, no thanks to the COVID-19 pandemic. Unfortunately, currency speculators took advantage of the situation by making spurious demand for dollars with the hopes of making good returns from the rising gaps between official and parallel market rates.
Meanwhile, Governor Godwin Emefiele of the CBN and ABCON President, Aminu Gwadabe, have repeatedly spoken against the illicit business of currency speculators and the dangers they pose to the economy and naira’s stability. They have also warned the speculators about the looming danger for their trade if they refuse to retrace their steps; they Could incur losses estimated at over N10 billion in the next few months, especially now that the CBN is enabling BDCs’ full return to the forex market after nearly six weeks of inactivity.
(READ MORE: Devaluation’s drum beats louder)
Governor Emefiele had also appealed to industrialists who patronize the parallel market to stop such practices in the interest of the economy and for the sustainability of their businesses. Failure to do this might result in them incurring the same huge losses as currency speculators.
Both Emefiele and Gwadabe have extensive experience in the market, enough to predict what follows after every major crisis. During the 2016 currency crisis, the market got a major relief after the BDCs began getting dollar allocations from the CBN. That same scenario will soon play out as the BDCs countdown to resumption.
In the meantime, it is obvious that the CBN has come to realize that BDC operators can be the difference between naira recovery and depreciation during volatile times. This is especially true now that the local currency has come under intense pressure, driven mainly by speculative demand for the dollar.
READ ALSO: CBN ends forex for fertilizer importation, raises concern over banks sharp practice
Note that the BDCs are essentially operators who help to get dollars across to the end-users, no matter where they are. The BDC operators have, for decades, proven their relevance in stabilizing the naira. While commenting on the recent moves by the apex bank to resume dollar sales to the BDCs, Gwadabe said:
“The CBN’s planned lifting of moratorium on dollar sales to BDCs, reopening of the airports for air travels as well as global ease on restriction of movement are positive indications that dollar flows to the economy will soon improve.
“The naira has been exchanging at N461 to a dollar at the parallel market but will be upbeat once dollar sales to BDCs commence. The return of over 5,000 BDCs to the forex market will add great strength to the Naira and lead to major capital losses for forex speculators. It happened in 2016 and it will happen again in 2020. The return of the BDCs will immediately boost naira’s recovery and put the enemies of the economy to shame. We are committed to the CBN’s exchange rate stability and will take all necessary steps within set rules and regulations to keep the naira stable.”
(READ MORE: Naira depreciates at I&E window, forex turnover up by over 117%)
Moving on, the CBN said it has taken steps to address the risks facing the naira. Asides other positive developments in the global economy (including oil price recovery thanks to OPEC+ output cuts and IMF’s $3.4 billion emergency funding to Nigeria), the CBN believes its measures will enable a rapid recovery for the local currency. Emefiele explained:
“CBN has also officially reviewed the naira exchange rate to N380 to a dollar. Aside devaluing the naira, the apex bank also adopted a unified exchange rate, and pushed the official rate of the naira to N376 to dollar for International Money Transfer Operators rate to banks; N377 to dollar for banks’ dollar sale to CBN and pegged CBN’s dollar sales to banks at N378, all aimed at attracting Foreign Portfolio Investment and strengthening the local currency. The BDC operators are expected to buy dollar from the CBN at N378 per dollar.”
For Gwadabe, the naira rate review and the CBN’s assurance to foreign investors on the easy repatriation of their funds from Nigeria, are positive indicators for naira’s continued recovery.
(READ MORE: Why the naira is falling)
He also noted that ABCON is reopening guidelines to all its members nationwide included on-boarding of the queuing crowd ticketing management application, known as ABCON 360°QSM portal, by all members. So far, over 80 percent of members registered nationwide.
He also disclosed that they updated all regulatory obligations during the lockdown, such as fumigation of members’ offices/markets, and distribution of second phase of face mask nationwide to our members. They also made provision for wash hand basins and sanitizers at distributions centres, even as members will explore school fees, mortgage, and subscription payments as part of their allowable scope post-COVID-19.
