Business News
CBN insists on no devaluation, threatens to sanction those responsible for false speculations
The Central Bank of Nigeria (CBN) has debunked speculations making the rounds and suggesting that the naira is finally about to be devalued.
The Central Bank of Nigeria (CBN) has debunked speculations making the rounds and suggesting that the naira is finally about to be devalued.
According to a statement, which was released late Thursday evening and seen by Nairametrics, the apex bank blamed “unscrupulous players in the foreign exchange market” for spreading the rumour.
The statement, which was signed by Isaac Okafor, the CBN Director in charge of Corporate Communications, also noted that the false speculations have created panic in the foreign exchange market.
Punishment awaits speculators: To address this, the CBN is taking a very calculated step towards unravelling those responsible. In other words, the apex bank is working together with the Nigerian Financial Intelligence Unit (NFIU) and other relevant agencies to investigate and uncover those who are responsible for creating panic. Anybody found responsible for this will be made to face the law.
[READ MORE: Coronavirus: CBN advises Nigerians to go cashless ahead deadline)
There is no devaluation of the naira: The statement went further to categorically state that the Central Bank of Nigeria has not devalued the naira. It will not do so in the meantime because market fundamentals do not support such a move. The statement said:
“In light of current circumstances and macroeconomic fundamentals, the CBN has not devalued the naira. Consequently, the CBN will invoke the full weight of applicable sanctions on any persons and authorised dealers found to be invoked in such disruptive and speculative market behaviour.”
The Coronavirus effect: The CBN did not feign ignorance of the negative effects of COVID-19, as it acknowledged the effects of the killer disease on the Nigerian economy.
But just as much as the pandemic has adversely affected oil prices, thereby limiting dollar inflow into the country, it has also resulted in a drastic reduction in importation as well as all kinds of foreign travels, which “hitherto constituted a large chunk of the pressure on the foreign exchange market.”
[READ ALSO: CBN Governor, Godwin Emefiele, reacts to devaluation of naira call)
The CBN further argued that Nigeria’s foreign exchange reserves is still “robust and comfortable” in view of the current FX realities. In the same vein, the apex bank claimed that it is capable of meeting all “genuine” foreign exchange demands.
The CBN also noted that it was working with fiscal authorities to understand the current and anticipated impacts that the Coronavirus pandemic might have in the Nigerian economy. Doing this helps to better curtail the negative impacts that Nigeria might be faced within the nearest future.
Coronavirus
CBN announces new policy measures, reduces interest rates for financial institutions
CBN will be reducing interest rates on its facilities through participating financial institutions from 9% to 5% per annum for a year.
As part of its monetary and financial policy measures to further mitigate the impact of the coronavirus pandemic on households, and businesses, the Central Bank of Nigeria (CBN), has approved regulatory forbearance for the restructuring of credit facilities in the Other Financial Institution (OFI) sub-sector.
This was disclosed in a circular signed by the CBN’s Director for Financial Policy and Regulatory Department, Kevin Amugo, on Wednesday, May 27, 2020.
In the circular, stated that Amugo the apex bank will be reducing interest rates on its facilities through participating financial institutions from 9% to 5% per annum for a year with effect from March 1, 2020.
According to the circular, CBN has approved regulatory forbearance for the restructuring of credit facilities in the OFI sub-sector as follows:
‘’CBN Intervention facilities availed through participating OFIs are granted a further one-year moratorium on all principal repayments, effective March 1, 2020.
‘’Interest rates on the CBN intervention facilities through participating OFIs hereby reduced from 9% to 5% per annum for 1-year effective March 1, 2020.
‘’OFIs are granted leave to consider temporary and time-limited restructuring of the tenor and loan terms for households and businesses affected by COVID-19, subject to the recently issued guidelines for restructuring affected credit facilities in the OFIs sub-sector.”
This new policy measure by the apex bank is in continuation of its intervention in the nation’s economy so as to help manage the crisis caused by the coronavirus pandemic and reduce its effects on household and businesses.
This is coming a day before the Monetary Policy Committee (MPC) meeting for the month of May which has been slated for tomorrow Thursday, May 27, 2020.
Meanwhile, the CBN said that it shall continue to monitor developments and implement appropriate measures to safeguard financial stability and support stakeholders impacted by the COVID-19 pandemic.
Economy & Politics
President Buhari directs Ministries of Power, Finance, BPE to seal Siemens deal
Presidency has approved the release of funding for the first part of Phase 1 of the PPI, to kick-off the pre-engineering and concession financing workstreams.
President Muhammadu Buhari has directed the Ministries of Power, Finance, and the Bureau of Public Enterprise (BPE) to conclude the nation’s engagement with Siemens AG over regular power supply.
The directive, which was issued via the Presidency’s Twitter handle on Wednesday, was to start the pre-engineering & concessionary financing aspects of the Presidential Power Initiative (PPI).
PPI is a power infrastructure upgrade and modernization Programme agreed to by the Federal Government and Siemens AG of Germany, with the support of the German Government. The ultimate goal of the initiative, according to the government, is to modernize and increase the Nigerian electricity grid capacity from its current capacity of about 5 GW to 25 GW, over three phases.
How it works: Under the PPI, Nigeria on behalf of the other shareholders in the Electricity Distribution Companies (DisCos), will invest in infrastructure upgrades in the form of improved payment systems, distribution substations, transformers, protection devices, smart meters, and transmission lines among others.
The President explained that all DisCos have, directly and through the BPE, been diligently carried along over the last 15 months to understand in detail the challenges in the electricity systems.
Funding: The funding for the PPI will be secured under concessionary terms (up to 3-year moratorium and 12-year repayment at concessionary interest rates) through the German Euler Hermes cover, which Nigeria will on-lend as a convertible loan to the other shareholders in the DisCos.
According to the statement, President Buhari has approved the release of funding for the first part of Phase 1 of the PPI, to kick-off the pre-engineering and concession financing workstreams.
The ultimate goal of the #NigeriaPPI is to modernize and increase the Nigerian electricity grid capacity from about 5 GW currently to 25 GW, over three phases.
— Presidency Nigeria (@NGRPresident) May 27, 2020
“To ensure fairness and transparency of the intervention, the President has also directed that the nation engage the International Finance Corporation (‘IFC’) to assist in developing the commercial structure of the intervention…
“The President has also directed that to ensure value for money and preserve the integrity & transparency of the procurement process under the Govt-to-Govt framework, Siemens AG shall be solely responsible for nominating its EPC partners to perform all onshore works; NO middlemen.
“Our goal is simply to deliver electricity to Nigerian businesses and homes… Our intention is to ensure that our cooperation is structured under a Govt-to-Govt framework. No middlemen will be involved, so that we can achieve value for money for Nigerians,” President Buhari added.
The PPI journey started on August 31, 2018, when Chancellor Angela Merkel visited Nigeria and met with President Buhari. Then the Chancellor brought along with her a business delegation that included the Global CEO of Siemens.
Nigeria and Germany agreed to explore cooperation in a number of areas, including Power.
“Our goal is simply to deliver electricity to Nigerian businesses and homes… Our intention is to ensure that our cooperation is structured under a Govt-to-Govt framework. No middlemen will be involved, so that we can achieve value for money for Nigerians.” — President @MBuhari
— Presidency Nigeria (@NGRPresident) May 27, 2020
PPI was designed to deliver improved power supply nationwide, with attendant results in job creation, investor confidence, cost and ease of doing business and economic growth. The partnership is also expected to guarantee training & capacity building for thousands of young Nigerians (non-graduates, students & graduates).
Other goals include the creation of economic opportunities for Nigerian engineering companies that will serve as local vendors for the provision of manpower and equipment. Overall, the partnership will guarantee inflow of additional investment into the power sector.
Companies
Endeavour honours founders of Kobo360
Fixing Africa’s supply chain is clearly important for commerce on the continent.
Endeavour, a leading global movement for high-impact entrepreneurship, has honoured the founders of Kobo360, Obi Ozor and Ife Oyedele as Endeavor Entrepreneurs.
Kobo360 is a digital logistics platform that uses big data and agile technology to reduce friction and improve efficiency in the African logistics ecosystem.
Managing Director, Endeavor in Nigeria, Gihan-Mbelu, explained that the company is excited to welcome Kobo360 into Endeavor’s network which includes some of the world’s most exciting scale-up entrepreneurs and most experienced mentors and investors.
He said, “Fixing Africa’s supply chain is clearly important for commerce on the continent, and Kobo360’s rapid growth over the past 3 years is evidence that the company’s valuable services are in critical demand. Obi and Ife are inspiring founders and their relentless focus on scaling Kobo360 serves as an inspiration to high-impact entrepreneurs everywhere.”
Meanwhile, since launching in 2017, Kobo360 has surpassed several milestones, including a $30 million Series A in August 2019.
“It’s an honour to be joining this global network of high-impact entrepreneurs and to have Endeavor recognise our efforts to transform Africa’s logistics sector using technology. As entrepreneurs, we wanted to turn African problems into African opportunities.
“Focusing on logistics, Ife and I started Kobo360 to not only fix the inefficiencies that exist, but to build opportunities for the businesses we serve and most importantly, the hundreds of thousands of truck drivers across Africa. This is a fundamental milestone in Kobo360’s journey; our Global Logistics Operating System [GLOS] will revolutionize supply chain across emerging markets, Ozor, Co-founder & CEO of Kobo360.
