Forex turnover rose sharply by 303.6%, as the Naira’s exchange rate at the NAFEX window remained stable against the dollar to close at N393.25/$1 during intra-day trading on Thursday, November 26.

Also, the naira crashed again to a new record low against the dollar, closing at N495/$1 at the parallel market on Thursday, November 26, 2020, as some CBN forex policies restrict access to dollars on official window thereby putting more demand pressure on the black market.

Parallel market: According to information from Abokifx – a prominent FX tracking website, at the black market where forex is traded unofficially, the Naira depreciated against the dollar to close at N495/$1 on Thursday.

This represents an N8 drop when compared to the N487/$1 that it exchanged for on Wednesday, November 25.

• The local currency had strengthened by about 7.8% within one week in September at the black market, as the CBN introduced some measures targeted at exporters and importers.
• This is to boost the supply of dollars in the foreign exchange market and reduce the high demand for forex by traders.
• The CBN has sold about $1 billion to BDCs since they resumed forex sales on Monday, September 7, 2020.
• This was expected to inject more liquidity into the retail end of the foreign exchange market and discourage hoarding and speculation.
• However, the exchange rate against the dollar has remained volatile after the initial gains made, following the CBN’s resumption of sales of dollars to the BDCs.
• The President of the Association of Bureau De Change Operators, Aminu Gwadebe, said he expects the impact of the extra liquidity in the market to be gradual.
• Despite the drop in speculative buying of foreign exchange, the huge demand backlog by manufacturers and foreign investors still puts pressure and creates a volatile situation in the foreign exchange market.

NAFEX: The Naira remained stable against the dollar at the Investors and Exporters (I&E) window on Wednesday, closing at N393.25/$1.

• This was the same rate that it exchanged for on Wednesday, November 25.
• The opening indicative rate was N388.15 to a dollar on Thursday. This represents a N1.86 drop when compared to the N386.29 that was recorded on Wednesday.
• The N394 to a dollar was the highest rate during intra-day trading before, it still closed at N393.25 to a dollar. It also sold for as low as N380/$1 during intra-day trading.
• Forex turnover: Forex turnover at the Investor and Exporters (I&E) window increased by 303.6% on Thursday, November 27, 2020.
• According to the data tracked by Nairametrics from FMDQ, forex turnover rose from $52.09 million on Wednesday, November 25, 2020, to $210.25 million on Thursday, November 26, 2020.
• The CBN is still struggling to clear the backlog of foreign exchange demand, especially by foreign investors wishing to repatriate their funds.
• The sharp increase in dollar supply after the previous trading day’s drop reinforces the volatility of the foreign exchange market. The supply of dollars has been on a decline for months due to low oil prices and the absence of foreign capital inflow into the country.
• The average daily forex sale for last week was about $169.93 million, which represents a huge increase from the $34.5 million that was recorded the previous week.
• Total forex trading at the NAFEX window in the month of September was about $1.98 billion, compared to $843.97 million in August.
• The exchange rate is still being affected by low oil prices, dollar scarcity, a backlog of forex demand, and a shaky economy that has been hit by the coronavirus pandemic.
• A financial expert and Managing Director of Financial Derivatives had stated that he expects the exchange rate at the parallel market to likely depreciate to N470-N475/$1 in November and December due to low oil prices that will further limit foreign exchange supply.
• Some members of MPC of the CBN have expressed serious concerns over the increasing demand pressure in the country’s foreign exchange market. This is an obligation of manufacturers to their foreign suppliers that continues to increase in the face of dollar shortages.

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.

The spread of novel Corona Virus Disease (COVID-19) in Nigeria continues to record significant increases as the latest statistics provided by the Nigeria Centre for Disease Control reveal Nigeria now has 66,974 confirmed cases.

On the 26th of November 2020, 169 new confirmed cases were recorded in Nigeria, having carried out a total daily test of 7,101 samples across the country.

To date, 66,974 cases have been confirmed, 62,585 cases have been discharged and 1,169 deaths have been recorded in 36 states and the Federal Capital Territory. A total of 756,237 tests have been carried out as of November 26th, 2020 compared to 749,136 tests a day earlier.

COVID-19 Case Updates- 26th November 2020,

• Total Number of Cases – 66,974
• Total Number Discharged – 62,585
• Total Deaths – 1,169
• Total Tests Carried out – 756,237

According to the NCDC, the 169 new cases were reported from 12 states- Kaduna (74), FCT (42), Lagos (17), Kano (8), Ogun (6), Oyo (6), Rivers (6), Ekiti (3), Bauchi (3), Katsina (2), Delta (1) and Ondo (1).

Meanwhile, the latest numbers bring Lagos state total confirmed cases to 23,083, followed by Abuja (6,671), Plateau (3,813), Oyo (3,721), Kaduna (3,019), Rivers (2,969), Edo (2,696), Ogun (2,202), Delta (1,824), Kano (1,789), Ondo (1,728), Enugu (1,332),  Kwara (1,096), Ebonyi (1,055), Katsina (1,014), Osun (945), Gombe (938). Abia (926), Bauchi (765), and Borno (745).

Imo State has recorded 662  cases, Benue (496), Nasarawa (488), Bayelsa (445),  Ekiti (357), Akwa Ibom (339), Jigawa (331), Niger (296), Anambra (285), Adamawa (261), Sokoto (165), Taraba (157), Yobe (94), Kebbi (93), Cross River (90), Zamfara (79), while Kogi state has recorded 5 cases only.

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Lock Down and Curfew

In a move to combat the spread of the pandemic disease, President Muhammadu Buhari directed the cessation of all movements in Lagos and the FCT for an initial period of 14 days, which took effect from 11 pm on Monday, 30th March 2020.

The movement restriction, which was extended by another two-weeks period, has been partially put on hold with some businesses commencing operations from May 4. On April 27th, 2020, Nigeria’s President, Muhammadu Buhari declared an overnight curfew from 8 pm to 6 am across the country, as part of new measures to contain the spread of the COVID-19. This comes along with the phased and gradual easing of lockdown measures in FCT, Lagos, and Ogun States, which took effect from Saturday, 2nd May 2020, at 9 am.

On Monday, 29th June 2020 the federal government extended the second phase of the eased lockdown by 4 weeks and approved interstate movement outside curfew hours with effect from July 1, 2020. Also, on Monday 27th July 2020, the federal government extended the second phase of eased lockdown by an additional one week.

On Thursday, 6th August 2020 the federal government through the secretary to the Government of the Federation (SGF) and Chairman of the Presidential Task Force (PTF) on COVID-19 announced the extension of the second phase of eased lockdown by another four (4) weeks.

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