Business News
Why Emefiele is clamouring for more financial support for local businesses
The Governor of the @cenbank Godwin Emefiele has reiterated the need to develop preemptive measures to guide the country’s economy from global shocks that could negatively impact Nigeria’s growth and lead to another recession.
The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele has reiterated the need to develop preemptive measures to guide the country’s economy from global shocks that could impede Nigeria’s growth and lead to another recession.
The preemptive measures, according to Emefiele, would help to create jobs in critical sectors that will, in turn, fuel the economy. He added that low-interest rate regime, stable exchange rate regime, and robust reserve position are some factors needed to ensure a prosperous nation.
Emefiele made this comment while speaking at a consultative roundtable titled “Going for Growth” with some economic stakeholders in Lagos. He advised the stakeholders and policymakers to strengthen their resolve in actualising the goal.
“Although we had hoped to achieve a lower level of interest rate, this became impossible given the normalisation of monetary policy in the United States and the over 60 per cent drop in crude oil prices between 2014 and 2016.
“You will agree with me that the consequence of these unfortunate occurrences was a heightened inflationary pressure on the economy and monetary policy had no option but to embark on a regime of tightening so as to rein inflation.
“We also deployed measures aimed at supporting improved productivity of the Nigerian economy by restricting access to foreign exchange on 43 items that could be produced in the country.
“We have also strengthened our intervention programmes which helped in restarting the flow of credit to critical sectors of the economy.
“As part of our interventions, we introduced the Anchor Borrowers’ Programme; a programme that helped to improve access to credit to Small Holder Farmers through our intervention programmes such as Commercial Agricultural Credit Scheme and the Real Sector Support Fund.
“We have enabled large agro-processors and manufacturers to expand their operations, thereby supporting our efforts at improving the domestic production of goods.”
He, however, stated that Nigeria is far from building a stronger economy, as the Gross Domestic Product growth is said to remain fragile, lagging behind the population growth rate of 2.7 per cent.
Why this matters: Recall that Nigeria slipped into recession in 2016 due to its unpreparedness to cope with the recent global oil crash. When the global oil price dropped, it had serious negative effects on the economy.
Therefore, in order to forestall a repeat of such, other sectors are being encouraged to grow in order to reduce the dependence on oil revenue. Note that other oil exporting countries were able to withstand the global oil crash of 2015/2016 because they have other revenue sources.
What you need to know: For other sectors to develop their contribution to the GDP, there’s a need to support their operation by giving them credit facilities. Unfortunately, much of this financial assistance hasn’t been given to them, according to Emefiele.
Gov. Sanwo-Olu to support drive: Meanwhile, the Lagos State Governor, Mr. Babajide Sanwo-Olu, said the government will support Nigerian businesses in order to make it possible for them to compete fairly in the global market space.
While speaking on the contribution of Lagos State to Nigeria’s GDP, which according to him stands at 30%, the Governor said the state and CBN will partner to ensure continued economic growth.
“We are going to do this so that we can become increasingly competitive and innovative. It is important to unleash the potential of the state so as to attract Foreign Direct Investments to the state.”
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Financial Services
Amid sell-off, FUGAZ investors lose N34.68 billion in a single trading session
Market capitalization of the top five banks dropped to N2.52 trillion as at close of business on the 4th of March 2021.
Investors in the elite banks in Nigeria- FBNH, UBA, GTB, Access and Zenith have lost a total of N34.68 billion in a single trading session, amid sell-offs.
According to data from the Nigerian Stock Exchange (NSE), the market capitalization of the top five banks dropped to N2.52 trillion as at close of business on the 4th of March 2021, shedding about 1.6% in a single trading session.
The loss is due to downward pressure on the share prices of the elite banks, evident by the sell-off witnessed in the market. A snapshot of how much each bank lost and the impact is succinctly captured below;
READ: Investors lose N352bn during NSE’s eight days of losing streak
UBA
The United Bank for Africa investors lost a total of N10.26 billion after its market capitalization dropped from N282.15 billion to N271.9 billion as at close of business yesterday.
The drop is due to a sharp decline in its share price which closed at N7.95, shedding about 3.64% in a day.
Investors cashed in on the decline to trade about 26,782,197 units of the Bank’s shares valued at N211, 571,939.35, placing the bank as the fourth most traded stock at the NSE. The volume of shares traded by the bank rose astronomically by 201.9%, when compared to 8.87 million units traded the previous day.
On the other hand, it is pertinent to note that the United Bank for Africa (UBA) is yet to release its audited FY 2020 result.
Access Bank
Access Bank Nigeria Plc lost a total of N8.89 billion after its market capitalization dropped from N286.14 billion to N277.25 billion. The loss is due to a decline in its share price from N8.05 to N7.80, indicating a dip of 3.11%.
Just like UBA, Access Bank investors traded a total of 21,586,491 units valued at N168, 090,266.60, placing it as the fifth most traded stock at the NSE today. In lieu of this, Access Bank stock volume appreciated by 229.1%, from 6.56 million traded yesterday.
Access Bank is yet to release its audited financial statements for FY 2020.
READ: Oando share price up by 10% off the back of court ruling
Zenith Bank
Zenith Bank investors lost a total of N7.85 billion after market capitalization dropped to N794.3 billion today. The marginal drop is due to a slight dip in the firm’s share price, from N25.5 traded yesterday to N25.30 as at close of business, indicating a decline of 0.98%.
Investors reacted to this drop by trading 38,647,711 units of the bank’s shares valued at N983, 251,467.75, placing the firm as the second most traded stock at the NSE market.
The drop in the market value of Zenith shares is in contrast to what was obtained last week, when investors gained a total of N37.7 billion, the highest recorded by the bank since the famous circuit breaker. The gains were sequel to an impressive financial performance by the firm for FY 2020, after it recorded a PAT of N230.6 billion and declared a final dividend of N2.70 per share.
FBNH
FBNH investors lost N1.8 billion after its market capitalization declined to N253.06 billion as at the close of business. The drop was due to a 0.7% decline in its share price from N7.1 traded earlier to N7.05.
In lieu of this, a total of 31,253,644 units of the bank’s shares valued at N983, 251,467.75 were traded, placing the firm’s stock as the third most traded stock at NSE. The total volume traded surged by 88.9%, from a total of 16.54 million traded a day earlier.
FBNH had earlier declared a Profit After Tax figures of N79.71 billion for FY 2020, indicating an increase of 8.2% YoY.
GTB
GTB investors lost a total of N5.89 billion, following a drop in its market capitalization from N932.97 billion to N927.08 billion. The drop was due to a 0.63% decline in share price which closed at N31.50.
It is pertinent to note that GTB is yet to release its audited financial statement for FY 2020.
What you should know
- The Nigerian Stock Exchange ended on a bearish note on Wednesday, March 4, 2021 after the ASI declined by 0.40% to close at 39,364.67 index points.
- On a general note, investors lost a total of N82.35 billion, with FUGAZ accounting for 42.11% of the loss.
