Business News
Nigerian Banks reduce dollar spending limits as forex scarcity rises
Many Nigerian banks are reducing how much foreign currency customers can spend abroad as concerns over the impact of the COVID-19 pandemic and drop in crude oil prices worsens Nigeria’s currency situation.
Many Nigerian banks are reducing how much foreign currency customers can spend abroad as concerns over the impact of the COVID-19 pandemic and drop in crude oil prices worsens Nigeria’s currency situation.
Guaranty Trust Bank Plc, the country’s biggest lender by market value, reduced international spending limits on its naira-denominated cards to $1,500 from $3,000 last week, while Zenith Bank Plc. reduced the limit to $1,000 from $3,000. Some media outlets report GTB reduced its limit to $500.
Also, Providus Bank, one of the more recent banking institutions also informed its customers that it will be restricting limits to $1,000 per month.
Just last week, the central bank “adjusted” the exchange rate between the naira and the US dollar from N307/$1 to N360/$1 at the official window while it moved the exchange rate for business travelers looking to buy forex from N360/$1 to N380/$1. This marked the first official devaluation of the naira since 2017.
READ MORE: Another crushing recession ‘is coming’
Why the restrictions: Analysts explain to Nairametrics that the recent devaluation or adjustment of the naira as the CBN will have it, could be the first round of currency depreciation expected in 2020. The exit of foreign portfolio investors from emerging markets like Nigeria is also expected to negatively impact the country’s external reserves.
Thus, banks may have decided to take precautions as the amount of dollars available for them to sell to their customers paying for transactions abroad may be declining.
The CBN is thought to have also restricted forex sales to BDCs following their requests further increasing dollar scarcity.
Nairametrics research also confirms the exchange rate at the parallel market is between N400 and N410 depending on who you are buying from and there is no guarantee that the seller actually has the dollar supply.
Blast from the past: This is not the first time the banks will be restricting dollar purchase for its customers.
READ MORE: Exploring branchless, other digital forms of banking in a crisis
In 2015 and 2016 when the oil price and output crashed, the central bank introduced controls to reduce dollar demand, prompting many lenders to either cut or suspend foreign payments for customers using their naira cards.
However, the measures taken then in 2016 came with damaging effects, as restricted access to dollars left businesses unable to import raw materials and locals unable to meet dollar-denominated expenses, including medical expenses and tuition at foreign schools.
Even while abroad, Nigerians still felt the brunt of the restrictions as banks placed spending limits on debit cards. The currency controls also had an adverse effect on investors as international airlines either pulled out or cut down on routes to Nigeria.
Corporate Press Releases
elev8 launches new Nigeria Academy, to host event series on Nigeria’s digital future
The event will bring together experts in business, digital technology and economic development to amplify Nigeria’s digital dialogue.
Global technology training company elev8 is delighted to announce the launch of its new academy in Lagos with a series of online events focused on digital transformation in Nigeria.
The Knowledge-based Economy – A Pathway to Nigeria’s Digitally Enabled Future is an opportunity for business leaders to participate in Nigeria’s digital dialogue with industry experts, technology trailblazers and government leaders.
C-suite executives and digital leaders across the country are invited to join elev8 for a special series of events exploring the impact of new technologies and digitalization, as well as the potential risks to economic growth, such as Covid-19.
Digital enablement is increasingly becoming a hot topic for global businesses. In the next few years, the digital economy is projected to be responsible for a quarter of global GDP.
Across the world, businesses are accelerating digital adoption to establish a competitive edge, drive growth and ensure efficiency. For Nigeria to compete on the world stage, investment in new technologies and skills is essential in supporting a transition to a knowledge-based economy.
Digital Event: The Knowledge-based Economy – A Pathway to Nigeria’s Digitally Enabled Future
30 November – 3 December
The event will commence with the release of a cutting-edge research report on November 30. Produced in conjunction with BusinessDay Research and Intelligence Unit.
The report examines the impact of digital transformation on Nigeria’s economic growth over the next three years.
On December 1, participants will gain valuable insight on the digital strategies and tactics deployed by leading market players in an exclusive masterclass, Digitize or Die, hosted by award-winning technology and digital innovator, Sabine VanderLinden.
The event will close on Thursday, December 3 with a live digital dialogue, featuring an expert panel of digital specialists, government figures, and business leaders, looking at the ways that digitization will impact Nigeria’s economic development.
To find out more, or register for the event, please visit: www.elev8me.com/nigeria20
Companies
ValuAlliance distributes value fund of N10 per unit for H1, 2020
ValuAlliance Value Fund has declared the distribution to unit holders, the sum of N10.00/unit for the financial year ended June 30, 2020.
ValuAlliance Value Fund (“Value Fund” or the “Fund”), formerly called the SIM Capital Alliance Value Fund, has declared the distribution to unit holders, the sum of N10.00/unit for the financial year ended June 30, 2020.
This is according to a notification by the firm, sent to the Nigerian Stock Exchange market and seen by Nairametrics.
The latest distribution indicates a decline of N1/unit when compared to its distribution in the corresponding period last year.
(READ MORE: SEC reinstates DEAP Capital’s Board)
The key highlights of the recent notification include:
- Annual General Meeting Date: 21st December 2020
- AGM Venue: 33A Alfred Rewane (Kingsway) Road, Ikoyi, Lagos, Nigeria
- Proposed Distribution: ₦10/unit
- Qualification Date: 9th December 2020
- Closure of Register Date: 10th December 2020
- Payment Date: 23rd December 2020
What you should know
- The Value Fund is a closed-end Fund registered and regulated by the Securities and Exchange Commission (SEC), whose units are listed on the main board of the NSE.
- The Value Fund for the year ended June 30, 2020 achieved a growth of 2.83% Year-on-Year, with a cumulative return of 125.32% since inception, which translates to a 9-year Internal Rate of Return (IRR) of 12.06%.
Economy & Politics
Nigeria generates N416.01 billion from Company Income Tax in Q3 2020
Total company income tax generated increased by 3.48% in Q3 2020, compared to N402.03 billion recorded in Q2 2020.
Nigeria generated the sum of N416.01 billion from Company Income Tax (CIT) in the third quarter of 2020. This was revealed in the Company Income Tax by Sectors report, recently released by the National Bureau of Statistics (NBS).
According to the report, the total CIT generated increased by 3.48% in Q3 2020, compared to N402.03 billion recorded in the previous quarter (Q2 2020). It reduced by 20.13% compared to N520.89 billion recorded in the corresponding quarter (Q3) of 2019.
Highlights
- Company income tax generated year-to-date sums up to N1.11 trillion as against N1.26 trillion in the comparable period of 2019.
- Professional Services including Telecoms generated the highest amount of CIT with N55.52 billion generated, closely followed by Other Manufacturing with N42.03 billion.
- Banks & Financial Institutions generated a sum of N24.05 billion.
- Mining generated the least, closely followed by Textile and Garment Industry and Local Government Councils with N120.93 million, N167.51 million, and N321.72 million generated respectively.
Out of the total amount generated in Q3 2020, N244.70 billion was generated as CIT locally, while N70.34 billion was generated as foreign CIT payment. The balance of N100.97 billion was generated as income taxes from other payments.
Automobiles and Assemblies grows CIT by 994%
In terms of sectors with the highest increase in company income tax remittances, the Automobiles and Assemblies sector grew its CIT by 994%, from N81.6 million in Q2 2020 to N892.7 million. It was closely followed by the Gas sector, which grew its CIT by 626% to stand at N4.76 billion from N655.5 million.
On the flip side, transport and haulage services recorded the highest decline in company income tax, as it reduced by 76% to stand at N7.35 billion from N31.1 billion. This is closely followed by Banks and financial institutions, which declined by 51% to stand at N24.1 billion.
Bottom line
The rise in company income tax is an indication of the Nigerian government’s move to improve the generation of revenue from the fiscal side as against oil exportation. However, the halt in economic activities due to the COVID-19 pandemic contributed to the year-on-year decline in company income tax.
Before you transfer RSA: Best Pension Fund managers in Nigeria (1)
elev8 launches new Nigeria Academy, to host event series on Nigeria’s digital future
100,000 tons of cocoa stranded at ports due to CBN documentation – Cocoa exporters
FG launches cash grant for rural women programme in Ondo
ValuAlliance distributes value fund of N10 per unit for H1, 2020
COVID-19 Update in Nigeria
Daily Parallel Market Exchange Rate – ₦480/$1
#EndSARS: CACOVID earmarks over N250 billion to rebuild police stations and create jobs
Slack gains 22% on Salesforce buyout offer
Visa report highlights ecommerce as key to unlocking merchant revenue growth during the festive season
