Nigeria’s external reserves have rallied and hit $45bn mark in May 2019. This is according to data obtained from the Central Bank of Nigeria (CBN) official website.
According to the CBN, on the 2nd of May, external reserves steadily rose to $44.7bn and then increased further to $45bn in less than 3 weeks. Specifically, in May, external reserves increased by $212.2m.
Breakdown: Nigeria’s external reserves started to decrease in September 2018. This was the last time it stood at $45bn. It then depleted ever since, hovering around $41bn and $44bn. Further analysis shows that fluctuations in external reserves have been largely due to the movement in Oil prices.
Oil prices rebounded to $73p/b over the last five months, following the year low that was recorded in January. Recall that oil price was as low as $53.21 as at January 2019, but steadily rose to the $70p/b in mid-April, thanks to the Organisation of the Petroleum Exporting Countries‘s (OPEC) move to cut oil supply in order to boost prices.
Further rise in External Reserves amidst crises: Analysts have earlier predicted that oil price will hit $70 per barrel in 2019. Similarly, Nairametrics recently predicted that Nigeria’s external reserves will hit $45bn mark. As oil prices are expected to continue its bullish run amidst rising tensions in the Middle East, coupled with the new International Maritime Organisation (IMO) rules, Nigeria’s reserves will maintain its accumulation. This will, in turn, give further leverage to Naira.
Oil prices rose to multi-week highs on Monday after OPEC indicated it could maintain production cuts that have helped support prices so far this year. Meanwhile, tension continues to escalate in the Middle East, further bolstering global oil prices.
Reuters reported that the Saudi Energy Minister, Khalid al-Falih, said on Sunday that there was a consensus among the Organization of the Petroleum Exporting Countries (OPEC) and allied oil producers to drive down crude inventories “gently”. He also stated that he would remain responsive to the needs of a “fragile market”.
Last week, Oil prices rallied after the facilities of Saudi Aramco suffered a major setback when explosive-laden drones attacked two pumping stations belonging to the state-owned oil company. Report indicated that following the attack on Saudi Aramco pipeline, oil prices have jumped.
Hence, Nigeria’s reserves which largely depend on oil price revenue is expected to exceed the $45bn mark soon, as oil prices continue to rally.
The input of whistleblowing cashflows: On the other hand, improvement in reserves have also been attributed to the funds recovered by the Presidential Initiatives on Continuous Audit (PICA) activities. Reports show that the sum of N603.78bn has so far been recovered since the inception of PICA in 2016.
According to the Minister of Finance, Mrs. Zianab Usaman, the country has saved N8.03billion from the recovered funds.
Upshots: The rise in external reserves implies that the stability of the naira is expected to continue in the long run. In 2018, the Central Bank of Nigeria (CBN) sold a whopping $36.6 billion in forex. When compared to the $15.8 billion sold in 2017, there is a whopping 130% rise. While explaining the reason for the high volume of transactions, the CBN stated;
“The increased volume of transactions in 2018 was attributable largely to the Bank’s foreign exchange policy and its management, coupled with the improvement in the levels of foreign reserves during the year.”
With the reappointment of the CBN Governor, Mr. Godwin Emefiele, the I&E window is expected to enjoy some level of stability. The Governor recently stated that Nigeria’s reserves can finance nine months import.
“Nigeria’s current stock of external reserves can finance nine months of current import commitments.
“With improved availability of foreign exchange, the exchange rate at the I&E FX window has remained stable over the past 24 months at an average of N360/$, and the parallel market exchange rate has appreciated from N525/$ in February 2017 to N360/$ today.”
Update: FG extends second phase of eased lockdown by another 4 weeks
This is the third time the second phase of the eased lockdown is being extended.
President Muhammadu Buhari has approved the extension of the second phase of eased lockdown by another 4 weeks.
According to a monitored media report, this is the third time the second phase of the eased lockdown which is currently observed across the country is being extended
The disclosure was made by Boss Mustapha, the Secretary to the Government of the Federation (SGF) and Chairman of the Presidential Task Force (PTF) on COVID-19, during the Task Force briefing in Abuja on Thursday.
The Federal Government had on July 27 extended the current lockdown by an additional one week due to the Sallah celebration on July 29.
Mustapha disclosed that the extension followed the briefing and recommendation to President Muhammadu Buhari on Wednesday on the progress made so far by Presidential Task Force in containing the spread of Covid-19 and keeping citizens safe from contracting the virus.
The PTF Chairman noted that they made a couple of recommendations to the president and the extension of the current phase of ease of lockdown was one of the ones approved.
He revealed that in the recommendation that was made to the president about retaining the current phase of the lockdown, the PTF made some minor changes to address the economic, socio-political concerns of Nigerians.
Under the current extended second phase, the current curfew of 10 pm to 4 am is still in force, civil servants on grade level 12 and above are now to resume work fully and close by 4 pm and no longer 2 pm that currently operates. He, however, said that virtual meetings by government officials and parastatals will be maintained.
He also said that while the restrictions on recreational parks have been lifted for non-contact physical activities, the ban on entertainment centres will be sustained.
Mustapha explained that despite the accomplishments and challenges, some challenges continue to pose a considerable concern. Some of them include increased non-compliance with non-pharmaceutical prevention measures, lack of enforcement of necessary guidelines issued to preserve lives, insufficient engagement by some states with the national response, and lingering concern about the gap between identified cases and the actual burden of disease.
He also talked about apathy, fatigue and disbelief combining to challenge public enlightenment, compliance and behaviour change.
The SGF said that to address these challenges, the PTF decided that it was important to ensure that restrictions were not completely relaxed in order to control transmission.
He noted that it was also important that at this Community Transmission Phase of the pandemic, sub-national governments should step up to take more responsibilities by owning the response.
The various state authorities and the Federal Capital Territory were mandated to enforce non=pharmaceutical guidelines, the use of face masks in public appearances and places.
Just In: Access Bank acquires Zambian Cavmont Bank Ltd
The statement from Access Bank says that the deal is a highly complementary transaction.
Access Bank Zambia, a subsidiary of Nigeria’s Access Bank Plc, has reached a ‘definitive agreement’ with Cavmont Capital Holdings Zambia Plc (CCHZ) to acquire Cavmont Bank Ltd.
The tier-1 bank announced this latest development regarding the merger talk which has been ongoing for a while, in a statement that was signed by its Company Secretary (Sunday Ekwochi) and issued to the Nigerian Stock Exchange earlier today.
According to the statement by Access Bank, the deal is a highly complementary transaction that is expected to combine Access Bank Zambia’s wholesale and trade finance capabilities with Cavmont Bank’s retail and commercial banking operations.
The proposed transaction which, in the meantime is still subject to relevant shareholder and regulatory approvals, is also expected to better position Access Bank Zambia as one of the top 10 banks in the Southern African country.
Customers from the enlarged bank will benefit from greater security offered by what will be one of the most capitalized banks in Zambia with a more diversified product and service offering and a broader geographical footprint and infrastructure.
Access Bank on its notification stated, ‘’Subsequent to our announcement on July 8, 2020, the Board of Access Bank Plc announces today that its subsidiary, Access Bank (Zambia) Limited, has entered into a definitive agreement with Cavmont Capital Holdings Zambia Plc (CCHZ) regarding proposed acquisition of Cavmont Bank Limited, a subsidiary of CCHZ and subsequent merger of Cavmont Bank’s operations into Access Bank Zambia. The proposed transaction, which remains subject to relevant shareholder and regulatory approvals, will position the enlarged Access Bank Zambia as one of the top 10 banks in Zambia and create the momentum to advance its strategic objectives.’’
‘’Under the terms of the agreement, Access Bank Zambia will acquire the entire issued ordinary share capital, assets and liabilities of Cavmont Bank while Capricom Group Limited, the ultimate majority shareholder of CCHZ will invest at least ZMW300 million ($16.5 million) of preference shares into Access Bank Zambia. Capricorn will hold preference shares in the enlarged Access Bank Zambia for a period of five years, after which the preference shares will be acquired by Access Bank Plc.’’
The statement also notes that the enlarged bank will be well placed to participate in the long-term economic growth of Zambia and will be predicated on the country’s vast reserves of natural resources and fast growing young population.
The transaction is expected to be completed during the fourth quarter of 2020.
Nnaemeka Ewelukwa assumes office as new MD/CEO of NBET
Dr, Eweluka replaced the sacked Dr. Amobi as NBET Chief before full assumption in August 2020.
Dr Nnaemeka Ewelukwa has assumed office as the new Managing Director/Chief Executive Officer of the Nigerian Bulk Electricity Trading (NBET) Plc. This was announced earlier today by the Federal Government of Nigeria.
— Government of Nigeria (@NigeriaGov) August 6, 2020
The Backstory: In December 2019, the former CEO of NBET, Dr Marilyn Amobi, was suspended by Nigeria’s Minister of Power. This followed a series of complaints made against Dr Amobi who was appointed to the position in 2016. Following her sack, the Minister of Power also noted that he was seeking to bring sanity back to the system. A committee was also set up to investigate the many complaints against the former NBET CEO.
“In view of this, the minister has also directed the Constitution of a 5-man investigative committee to look into the myriads of complaints against the MD/CEO (of NBET) with the view of restoring sanity in the management of the company. Consequently, she is to handover to the most senior director in the organisation,” a statement issued by Aaron Artimas, the spokesman of the Minister of Power had read.
Interestingly, President Muhammadu Buhari reinstated Dr Amobi in January this year, but then finally sacked her later in June. Now, Dr, Eweluka, who was earlier announced as Amobi’s replacement, has now taken over.
Before now, Eweluka was appointed the General Counsel and Company Secretary of NBET in march 2012. He has also served as a Technical Adviser with the Presidential Task Force on Power (PTFP) where he was a member of the Regulatory and Transactions Monitoring Unit.
He graduated with an LLB from the University of Nigeria Nsukka, an LLM in International Business Law from the London School of Economics and a PhD from Queen Mary, University of London.