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Black market dollar to naira exchange rate today 18th January 2024

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What is the Dollar to Naira Exchange rate at the black market also known as the parallel market (Aboki fx)?

How much is the Black market dollar to naira today, 18th January 2024?.

What is the Dollar to Naira Exchange rate at the black market, also known as the parallel market (Aboki fx)?

See the black market Dollar to Naira exchange rate for 17th January below. You can swap your dollar for Naira at these rates.

The exchange rate for a dollar to naira at Lagos Parallel Market (Black Market) players buy a dollar for N1,295 and sell at N1,300 on Wednesday 17th January 2024, according to sources at Bureau De Change (BDC).

How much is the Black market dollar to Naira today, 18th January 2024?

Please note that the Central Bank of Nigeria (CBN) does not recognize the parallel market (black market), as it has directed individuals who want to engage in Forex to approach their respective banks.

Dollar to Naira Black Market Rate Today
Buying Rate N1,310
Selling Rate N1,315

Please note that the rates you buy or sell forex may be different from what is captured in this article because prices vary.

 

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Economy

Ten African countries with the most affordable internet rates

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Ten African countries with the most affordable internet rates

Internet connectivity is one of the most important drivers of economic growth. However, because of their economic status, it is expensive for many Africans.

According to experts, Africa needs to make internet access cheap and affordable for its citizens. According to research by Cable.co.uk, here is a list of African countries with the most inexpensive internet.

Malawi
The internet in Malawi is the cheapest in Sub-Saharan Africa. One gigabyte of data costs $0.38, which is about 400 in the Malawian currency. Interestingly, internet prices in Malawi used to be as expensive as $27.41 per gigabyte, which was a very high percentage of the citizen’s income.

Nigeria
Nigeria’s internet prices are the second cheapest in sub-Saharan Africa. One gigabyte of data costs $0.39, which is about N300, putting the country at 31st globally for the cheapest mobile data. However, these prices may differ according to the mobile provider and data plan.

Ghana
Ghana is third on the list, and a gigabyte of data costs about $0.40, which is about 4.60 Ghana Cedis.

Somalia
Somalia’s internet costs about $0.50, which is also the currency used in the country. However, some plans may fall as low as $0.19. Somalia has a very competitive telecommunication market, with several providers offering various data plans and rates. This competition helps to keep prices low for consumers. Sometimes, the most expensive data plans can get as high as $1.67 per gigabyte.

Democratic Republic of the Congo
Internet in DRC costs about $0.52 per gigabyte, with the cheapest being $0.36. DRC has many options for fixed internet plans, even though mobile data is more prevalent.

Rwanda
Rwanda’s internet costs $0.55 per gigabyte, which is 666.67 in the country’s currency. According to VisitRwanda, major cities in Rwanda have high-speed 4G LTE wireless broadband. WiFi networks are also available in high-end places like hotels. In recent years, the Rwandan government has invested heavily in building its internet infrastructure. This has led to a significant increase in internet penetration in the country.

Kenya
Internet in Kenya costs about $0.59 per gigabyte, equivalent to 86.11 KES. Kenya’s internet penetration is about 32.7 percent. Mobile phone data is more prominent as mobile network operators (MNOs) have extensive coverage nationwide.

Mauritius
Internet in Mauritius costs $0.67. Mauritius boasts of a high internet penetration rate, which data puts at 75.76 percent, with many homes enjoying internet access. Mauritius has invested in building a robust internet infrastructure, including two undersea cables for international internet capacity and plans for two more.

Sierra Leone
One gigabyte of data costs $0.67. However, depending on the plan, prices can range from as low as $0.64 to as high as $1.19 per gigabyte. Sierra Leone’s internet access is still developing, so it is only readily available in the capital city. It is also slower than the global average.

Congo
In Congo Brazzaville, one gigabyte of internet costs $0.68. It may sometimes move to $1 and even $5 at austere times. The internet here is slower than globally acceptable. Also, the lack of developed infrastructure, especially fibre optic cable networks, hinders wider internet access.

Six of the top 50 cheapest internet-cost countries in the world are in sub-Saharan Africa. Africa also has five of the ten most expensive countries in the world, with Zimbabwe being the most expensive on the continent and globally at $43.75. Saint Helena is next at $40.13, South Sudan is next at $23.70, the Central African Republic is next at $10.90, and Zambia is last at $8.01.

According to experts, internet usage has increased on the continent because of the adoption of smartphones, improved network infrastructure (4G and 5G), affordable data plans, the availability of mobile-friendly content, the popularity of social media and apps, and overall economic development in various regions.

 

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Tinubu to Nigerians: I’ll make inflation go down like exchange rate

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President Bola Tinubu has asked Nigerians not to lose faith in his administration over the skyrocketing inflation assailing the nation’s economy, assuring citizens that he and his team are working to “bring it down” like he did when the naira dipped drastically against the dollar.

Tinubu gave the assurance at the State House in Abuja while hosting members of his party, All Progressives Congress (APC), particularly those in the Presidential Campaign Council (PCC) and Independent Campaign Council (ICC) to Iftar Wednesday evening.

The Nigerian leader said it was evident that the economy was already “looking much better” than it was “a year ago” when “borrowing was higher,” implicitly taking a jab at his predecessor, Muhammadu Buhari, whose eight-year rule was characterised by taking heavy loans from other nations.

“The economy is looking much better,” Mr Tinubu said Wednesday evening. “Yes, we have challenges of inflation, but we will bring it down. When the exchange rate was going haywire, it looked like we were asleep, but we worked on it diligently, and it is going down; it is getting better.”

The president stressed that he was committed to restoring the lost dignity of Nigeria among its international counterparts.

“Borrowing was higher a year ago, but today, we are reengineering the financial landscape, and our revenue is expanding. And we are taking up our sovereignty and earning our respect back in the comity of nations,” Mr Tinubu added in the statement released by his media aide, Ajuri Ngelale.

The naira, which in February traded as high as N1825 to one dollar, has appreciated in value, trading at N1250 against the dollar as of Thursday afternoon, according to Aboki Forex, a website that publishes the official and parallel rates of the naira against dollar and other currencies.

But despite the naira’s gain in the international market, prices of goods and services have yet to come down, adversely affecting the purchasing power of citizens.

According to the National Bureau of Statistics, the inflation rate reached a record high of 31 per cent in March, up from 29.9 per cent in February.

At his inauguration in May 2023, Mr Tinubu scrapped the fuel subsidy, a move that caused inflation and distress to the economy, as the price of fuel rose sharply from N145 to N617.

 

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Jobs losses loom as Nigerian banks battle to escape extinction

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Jobs losses loom as Nigerian banks battle to escape extinction

There is panic in the Nigerian financial sector over massive job losses as banks battle to meet the recently announced minimum capital requirements by the Central Bank of Nigeria.

The National President of the Association of Senior Staff of Banks, Insurance and Financial Institutions, Olusoji Oluwole, expressed these concerns during an interview with Channels Television on Monday.

He said the Association had already informed the CBN and the Ministry of Labour about the impact of the recapitalization exercise on workers in the sector.

“We are very aware of what happened in the past during such recapitalization programmes, the last being in 2005. We knew that some banks had to pull it through themselves, some through mergers, others through acquisition.

“It has an impact on the employment of workers; because of that experience, we have proactively acted by informing the Central Bank of Nigeria and the Ministry of Labour of the likelihood of the programme on our members.

“When things like this happen, there are bound to be jobs lost. We expect that there will be a lot of fairness in the actions of the banks and to ensure that our members are well protected and compensated”, he said.

DAILY POST recalls that the CBN raised the minimum capital requirements for commercial banks with international authorization, National Spread Regional, Merchant Banks, National Non-Interest Banks, and Regional Non-interest between 100 and 900 per cent last Thursday.

What the 2024 Recapitalization exercise means

With the move, the CBN proposed to achieve the $1 trillion economy of President Bola Ahmed Tinubu’s government.

Also, the bank said the exercise would engender the emergence of healthier banks with the capacity to underwrite larger levels of credit/loans.

The development came nearly 19 years after the apex bank had last conducted its recapitalization exercise in 2005 under former President Olusegun Obasanjo and Prof Charles Soludo as CBN governor.

According to reports, over 5,000 staff members of affected banks such as Oceanic bank, Fin Bank, Spring Bank, Union Bank, Intercontinental Bank, Stanbic IBTC, and others lost their jobs.

This is why the announcement of the 2024 recapitalization programme sent a shockwave across the country’s banking sector.

Banks’ available options

CBN had given all the banks 24 months, starting from April 1, 2024, to kick the ground running in meeting the new set capital benchmark.

Within the set period, Nigerian banks have been boxed into Injecting fresh equity capital through private placements, rights issue/or offer subscriptions, mergers and acquisitions( M & As) and Upgrades or downgrades of license authorization options.

It is left to banks to explore either option to escape extinction.

Controversy clause

Unlike in the 2005 recapitalization exercise, CBN placed a caveat that 2024 minimum capital requirements shall only comprise paid-up capital and share premiums, ruling out the shareholders’ funds.

The non-inclusion of the Shareholders’ Fund had raised dust among the sector’s players.

In his statement reacting to the development, Johnson Chukwu, CEO of Cowry Assets Management Limited, faulted the exclusion of retained earnings and advised the CBN to align the new capital requirements with industry dynamics to facilitate a seamless transition.

Will Nigerian Banks Survive 2024 Capitalization?

With the development, the top ten Tier 1 and 2, namely Guaranty Trust Bank, Zenith Bank, United Bank of Africa, Access Bank, First Bank of Nigeria, EcoBank, Stanbic IBTC, First City Monument Bank, Fidelity, Sterling and others, will have raised over N3.3 trillion minimum capital base in 24 months.

Meanwhile, Ernst and Young, a global financial services company, had earlier predicted that about 17 banks would survive recapitalization.

“In a worst-case scenario, i.e., given a capital multiplier of 15, about 17 out of 24 banks would not meet the new minimum capital,” it said.

Financial Experts Reactions

Speaking to DAILY POST on Monday, a renowned economist and former President and Chairman of the Council of Chartered Institute of Bankers, Prof Segun Ajibola, said many banks may be unable to meet the current requirements, especially the family-like banks in terms of ownership and operation.

The economist said that a successful banking recapitalization exercise could benefit the Nigerian economy if well implemented.

According to him, with the exercise, Nigeria’s domestic economy will enjoy the patronage of existing and new local and foreign investors to meet the capital requirements. However, he said the country needs to be mindful of how the ownership of Nigerian banks can be ceded to foreign interests.

“The recapitalization of Nigerian banks by their owners is no doubt an exercise that is long awaited due to the current value of Naira, and by extension the size of the bank’s financial position, when viewed globally. The current value has constrained the banks’ capacity to handle large ticket deals even within the domestic economy.

“Many banks may be unable to meet the current requirements, especially the family-like banks in ownership and operation. There may be voluntary and involuntary mergers and acquisitions.

“One only hopes that the situation of 2005, when banks formed ”unholy alliances” and strange bedfellows, those with conflicting orientations, cultures and governance practices, were forced together to save their shareholders from total loss, etc. Some banks may seek downgrades as a way out of pollution and dilution of their shareholders.

“It remains to be seen if the domestic economy can cough out the funds required to meet the required capital.

“However, the flow of foreign funds to the Nigerian economy by the existing and would-be shareholders will be a welcome development if it happens.

“There is a need for the authorities to assure potential investors of stable and consistent investment and exchange control policies for a safe and predictable investment environment, among others.

“The definition of what constitutes capital under the Basel Accord is shifting from Tier I to Tier III. As said earlier, it is hoped that the domestic economy will enjoy the patronage of existing and new local and foreign investors to meet the capital requirements.

“Again, one is mindful of the extent to which the ownership of Nigerian banks can be ceded to foreign interests.

“A successful banking recapitalization exercise can have a beneficial impact on the Nigerian economy. It can help to rejuvenate the overall growth of different sectors of the economy through appropriate, timely funding of economic activities.

“Yes, it has the likely effect of crowding out investments in other suitable areas of the economy. It can lead to some job losses. But the overall benefits outweigh these side effects if successfully executed”, he told DAILY POST.

On his part, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, CPPE, Dr Muda Yusuf, said that the real issue is that Nigeria’s soaring inflation has weakened the value of money over time, which makes recapitalization imperative and inevitable.

He, however, urged that the exercise be done to minimize shocks and disruptions to the banking system and the economy.

Yusuf added that the apex bank should caution all players in the banking sector against predatory and other anti-competitive practices in the industry because of the recapitalization policy.

He told DAILY POST: “The last major review of the minimum capital requirement was done in 2005, some 18 years ago. That was under President Olusegun Obasanjo, with Prof Charles Soludo as CBN governor.

“But since then, the value of the minimum capital has been significantly eroded by inflation. For instance, the official exchange rate in 2005 was about N130 to the dollar.

“This meant that the N25 billion for a national bank, for instance, was equivalent to $192 million. The naira equivalent today is about N250 billion. The International Banking license would be about $384 million, an equivalent of about N500 billion.

“The capitalization requirement has not increased materially in real terms when adjusted for inflation.

“The real issue is that inflation has weakened money’s value over time, making recapitalization imperative and inevitable.

“The essence is to ensure the safety of depositors’ funds, strengthen the financial system’s stability, deepen the banking system’s resilience and reposition the bank to support growth.

“Reports from the Central Bank of Nigeria attest that Nigerian banks have good soundness indicators. The industry Capital Adequacy Ratio as of January was 13.7 per cent, above the prudential threshold of 10 per cent.

“The Non-Performing Loans as a ratio of total loan assets was 4.81 per cent as against the prudential threshold of 5 per cent, which is also positive. The liquidity ratio is 40.14 against the prudential minimum of 30 per cent, which also reflects a healthy position.

“The summary is that based on the financial soundness metrics, Nigerian banks are judged to be generally healthy.

“However, this does not diminish the need for regulatory authority to ensure that this soundness and stability are preserved and improved, especially because of the recent macroeconomic headwinds.

“This, perhaps, is what informed the current policy of the CBN to review the capital base”, he stated.

Similarly, the CEO of SD & D Capital Management, Mr Idakolo Gbolade, said the recapitalization exercise will allow Nigeria to maintain its leading role in the African continent.

“The recapitalization of banks in categories is long overdue”, he told DAILY POST and advocated for the expansion of our economy.

“The time frame is very adequate as well. Some international banks have already envisaged this process and have started making provisions early enough. Banks that cannot meet the new capital requirements have mergers and acquisitions options.

“Nigeria has the highest GDP in Africa, and for us to maintain that position and operate a trillion-dollar economy, the banks must be adequately capitalized.

“A trillion dollar economy must have local capacity to initiate and execute million dollar transactions locally without foreign intervention in key areas of development like oil and gas, steel production, mining, mega construction projects and Public Private Partnerships with the government.

“This can only materialize if we have adequately capitalized banks that can rise to the occasion. Nigerian banks also need to take pride in Africa regarding capitalization because Nigerian banks are not among the most capitalized in Africa.

“Therefore, this new recapitalization policy will adequately position our banks for the emergency economy in Nigeria or Africa and worldwide.

“The exclusion of shareholders’ funds as additional Tier 1 capital shows the CBN wants to distinguish fresh funds from existing funds which could be subject to regulatory infractions because shareholders’ funds is not a statutory capital base”, he told DAILY POST.

The National President of the Association of Senior Staff of Banks, Insurance and Financial Institutions, Olusoji Oluwole, expressed these concerns during an interview with Channels Television on Monday.

He said the Association had already informed the CBN and the Ministry of Labour about the impact of the recapitalization exercise on workers in the sector.

“We are very aware of what happened in the past during such recapitalization programmes, the last being in 2005. We knew that some banks had to pull it through themselves, some through mergers, others through acquisition.

“It has an impact on the employment of workers; because of that experience, we have proactively acted by informing the Central Bank of Nigeria and the Ministry of Labour of the likelihood of the programme on our members.

“When things like this happen, there are bound to be jobs lost. We expect that there will be a lot of fairness in the actions of the banks and to ensure that our members are well protected and compensated”, he said.

DAILY POST recalls that the CBN raised the minimum capital requirements for commercial banks with international authorization, National Spread Regional, Merchant Banks, National Non-Interest Banks, and Regional Non-interest between 100 and 900 per cent last Thursday.

What the 2024 Recapitalization exercise means

With the move, the CBN proposed to achieve the $1 trillion economy of President Bola Ahmed Tinubu’s government.

Also, the bank said the exercise would engender the emergence of healthier banks with the capacity to underwrite larger levels of credit/loans.

The development came nearly 19 years after the apex bank had last conducted its recapitalization exercise in 2005 under former President Olusegun Obasanjo and Prof Charles Soludo as CBN governor.

According to reports, over 5,000 staff members of affected banks such as Oceanic bank, Fin Bank, Spring Bank, Union Bank, Intercontinental Bank, Stanbic IBTC, and others lost their jobs.

This is why the announcement of the 2024 recapitalization programme sent a shockwave across the country’s banking sector.

Banks’ available options

CBN had given all the banks 24 months, starting from April 1, 2024, to kick the ground running in meeting the new set capital benchmark.

Within the set period, Nigerian banks have been boxed into Injecting fresh equity capital through private placements, rights issue/or offer subscriptions, mergers and acquisitions( M & As) and Upgrades or downgrades of license authorization options.

It is left to banks to explore either option to escape extinction.

Controversy clause

Unlike in the 2005 recapitalization exercise, CBN placed a caveat that 2024 minimum capital requirements shall only comprise paid-up capital and share premiums, ruling out the shareholders’ funds.

The non-inclusion of the Shareholders’ Fund had raised dust among the sector’s players.

In his statement reacting to the development, Johnson Chukwu, CEO of Cowry Assets Management Limited, faulted the exclusion of retained earnings and advised the CBN to align the new capital requirements with industry dynamics to facilitate a seamless transition.

Will Nigerian Banks Survive 2024 Capitalization?

With the development, the top ten Tier 1 and 2, namely Guaranty Trust Bank, Zenith Bank, United Bank of Africa, Access Bank, First Bank of Nigeria, EcoBank, Stanbic IBTC, First City Monument Bank, Fidelity, Sterling and others, will have raised over N3.3 trillion minimum capital base in 24 months.

Meanwhile, Ernst and Young, a global financial services company, had earlier predicted that about 17 banks would survive recapitalization.

“In a worst-case scenario, i.e., given a capital multiplier of 15, about 17 out of 24 banks would not meet the new minimum capital,” it said.

Financial Experts Reactions

Speaking to DAILY POST on Monday, a renowned economist and former President and Chairman of the Council of Chartered Institute of Bankers, Prof Segun Ajibola, said many banks may be unable to meet the current requirements, especially the family-like banks in terms of ownership and operation.

The economist said that a successful banking recapitalization exercise could benefit the Nigerian economy if well implemented.

According to him, with the exercise, Nigeria’s domestic economy will enjoy the patronage of existing and new local and foreign investors to meet the capital requirements. However, he said the country needs to be mindful of how the ownership of Nigerian banks can be ceded to foreign interests.

“The recapitalization of Nigerian banks by their owners is no doubt an exercise that is long awaited due to the current value of Naira, and by extension the size of the bank’s financial position, when viewed globally. The current value has constrained the banks’ capacity to handle large ticket deals even within the domestic economy.

“Many banks may be unable to meet the current requirements, especially the family-like banks in ownership and operation. There may be voluntary and involuntary mergers and acquisitions.

“One only hopes that the situation of 2005, when banks formed ”unholy alliances” and strange bedfellows, those with conflicting orientations, cultures and governance practices, were forced together to save their shareholders from total loss, etc. Some banks may seek downgrades as a way out of pollution and dilution of their shareholders.

“It remains to be seen if the domestic economy can cough out the funds required to meet the required capital.

“However, the flow of foreign funds to the Nigerian economy by the existing and would-be shareholders will be a welcome development if it happens.

“There is a need for the authorities to assure potential investors of stable and consistent investment and exchange control policies for a safe and predictable investment environment, among others.

“The definition of what constitutes capital under the Basel Accord is shifting from Tier I to Tier III. As said earlier, it is hoped that the domestic economy will enjoy the patronage of existing and new local and foreign investors to meet the capital requirements.

“Again, one is mindful of the extent to which the ownership of Nigerian banks can be ceded to foreign interests.

“A successful banking recapitalization exercise can have a beneficial impact on the Nigerian economy. It can help to rejuvenate the overall growth of different sectors of the economy through appropriate, timely funding of economic activities.

“Yes, it has the likely effect of crowding out investments in other suitable areas of the economy. It can lead to some job losses. But the overall benefits outweigh these side effects if successfully executed”, he told DAILY POST.

On his part, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, CPPE, Dr Muda Yusuf, said that the real issue is that Nigeria’s soaring inflation has weakened the value of money over time, which makes recapitalization imperative and inevitable.

He, however, urged that the exercise be done to minimize shocks and disruptions to the banking system and the economy.

Yusuf added that the apex bank should caution all players in the banking sector against predatory and other anti-competitive practices in the industry because of the recapitalization policy.

He told DAILY POST: “The last major review of the minimum capital requirement was done in 2005, some 18 years ago. That was under President Olusegun Obasanjo, with Prof Charles Soludo as CBN governor.

“But since then, the value of the minimum capital has been significantly eroded by inflation. For instance, the official exchange rate in 2005 was about N130 to the dollar.

“This meant that the N25 billion for a national bank, for instance, was equivalent to $192 million. The naira equivalent today is about N250 billion. The International Banking license would be about $384 million, an equivalent of about N500 billion.

“The capitalization requirement has not increased materially in real terms when adjusted for inflation.

“The real issue is that inflation has weakened money’s value over time, making recapitalization imperative and inevitable.

“The essence is to ensure the safety of depositors’ funds, strengthen the financial system’s stability, deepen the banking system’s resilience and reposition the bank to support growth.

“Reports from the Central Bank of Nigeria attest that Nigerian banks have good soundness indicators. The industry Capital Adequacy Ratio as of January was 13.7 per cent, above the prudential threshold of 10 per cent.

“The Non-Performing Loans as a ratio of total loan assets was 4.81 per cent as against the prudential threshold of 5 per cent, which is also positive. The liquidity ratio is 40.14 against the prudential minimum of 30 per cent, which also reflects a healthy position.

“The summary is that based on the financial soundness metrics, Nigerian banks are judged to be generally healthy.

“However, this does not diminish the need for regulatory authority to ensure that this soundness and stability are preserved and improved, especially because of the recent macroeconomic headwinds.

“This, perhaps, is what informed the current policy of the CBN to review the capital base”, he stated.

Similarly, the CEO of SD & D Capital Management, Mr Idakolo Gbolade, said the recapitalization exercise will allow Nigeria to maintain its leading role in the African continent.

“The recapitalization of banks in categories is long overdue”, he told DAILY POST and advocated for the expansion of our economy.

“The time frame is very adequate as well. Some international banks have already envisaged this process and have started making provisions early enough. Banks that cannot meet the new capital requirements have mergers and acquisitions options.

“Nigeria has the highest GDP in Africa, and for us to maintain that position and operate a trillion-dollar economy, the banks must be adequately capitalized.

“A trillion dollar economy must have local capacity to initiate and execute million dollar transactions locally without foreign intervention in key areas of development like oil and gas, steel production, mining, mega construction projects and Public Private Partnerships with the government.

“This can only materialize if we have adequately capitalized banks that can rise to the occasion. Nigerian banks also need to take pride in Africa regarding capitalization because Nigerian banks are not among the most capitalized in Africa.

“Therefore, this new recapitalization policy will adequately position our banks for the emergency economy in Nigeria or Africa and worldwide.

“The exclusion of shareholders’ funds as additional Tier 1 capital shows the CBN wants to distinguish fresh funds from existing funds which could be subject to regulatory infractions because shareholders’ funds is not a statutory capital base”, he told DAILY POST.

Source: Daily Post

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Naira closes 1,309/$ as banks sell $2.5bn

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Naira closes 1,309/$ as banks sell $2.5bn

In the last two weeks, the Central Bank of Nigeria and other banking institutions have improved dollar supply to the foreign exchange market by $2.5bn, making the naira strengthen to N1,309 against the United States dollar.

Official figures obtained from the FMDQ Securities Exchange revealed that the naira closed at N1309/$1 on Thursday compared to the N1300/$1 recorded a day earlier. However, it still falls within the eight week low for the Naira as it continues to gain strength against the US dollar.

Trading activities were closed on Friday due to the public holiday.

Similarly, forex transactions between willing sellers and buyers at the Nigerian Autonomous Foreign Exchange Market increased by 106 per cent to $857m at the close of trading activity on Thursday, marking the highest level since the Central Bank implemented its new forex policies.

This latest development is also the largest turnover since 2021, with the closest figure being $760 million on June 2nd, 2022.

The average daily forex turnover recorded in March has been around $220 million, while this year we have seen $177 million in daily average forex turnover.

Penultimate week, the CBN made a total sales of $1bn.

The summary of the FX trading revealed that the intraday high closed at N1392 on Thursday from N1,460 per dollar on Wednesday, The intraday low appreciated to N1,250 on Thursday as against N1,200 closed on Wednesday.

Liquidity in the forex market has been attributed to an array of policies currently implemented by the CBN.

Key reforms include the unification of exchange rate windows, liberalization of the FX market, clearance of FX backlog obligations for banks and airlines, implementation of a Price Verification System, imposition of limits on banks’ Net Open Position, removal of the daily cap of N2 billion on remunerable Standing Deposit Facility, and overhaul of the Bureau De Change segment.

Forex turnover is a critical metric in the financial world as it represents the total value of all foreign exchange transactions completed within a specific timeframe, providing insights into the liquidity and vibrancy of the forex market.

High turnover rates indicate a highly active market with numerous participants engaging in buying and selling currencies, which can signal investor confidence and economic stability.

On the official end of the market, the apex bank started by addressing suspected cases of excessive foreign currency speculation and hoarding from Nigerian banks.

The apex bank also announced the complete clearance of the valid foreign exchange backlog. They stated that they concluded the payment of $1.5 billion to settle obligations to bank customers, effectively settling the residual balance of the FX backlog.

At the parallel market, the naira has continued to appreciate as the US dollar is currently selling at N1,280 on the parallel market.

At the black market, the US dollar sold between N1,280 to N1,305 depending on who is buying and selling, following the recent foreign exchange policy measures of the Central Bank of Nigeria.

Source: Punch News

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Only foreign borrowing can save naira, clear CBN debts – EIU

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Goldman Sachs has described Naira as the best-performing currency this month (April), saying the currency will exchange below

International business research firm, Economist Intelligence Unit, has said that the Central Bank of Nigeria does not have the liquidity to support the naira as of now.

It stated this in its latest Country Report on Nigeria, which was published on Friday.

The CBN unified segments of the country’s foreign exchange market on June 14, 2023, which resulted in a significant depreciation of the local currency.

The naira weakened by 36.56% to 632.77/$ on the day the CBN unified the forex market from 463.38/$ at the official market.

The naira has struggled against the dollar since then and it worsened in February following a second devaluation, which is about 45 per cent according to analysts in an attempt to close the gap with the parallel market rate.

That makes it the second-worst-performing currency in the world, after the Lebanese pound.

In the report, EIU said that the CBN may need to resort to foreign borrowing to support the naira and fulfil its foreign exchange obligations.

It stated, “Our view is that it will take foreign borrowing to rebuild the CBN’s buffers, fully clear a backlog of unmet foreign exchange orders and restore confidence. This is probably only achievable towards the end of 2024. In mid-January Nigeria took out a $3.3bn loan from the African Export-Import Bank, secured on oil revenue in a so-called crude oil prepayment facility. This follows a $1bn loan from the African Development Bank in November, and another $1.5bn is being sought from the World Bank.

“Falling risk premiums on government international bonds make tapping the international capital market another viable (albeit costly) option once US interest rates start to fall from the second half of 2024.

“For most of this year, the naira will be highly volatile, leading to regulatory erraticism that can affect businesses, especially those holding foreign currency.

“The CBN lacks the liquidity to support the naira itself; out of $33bn in foreign reserves, a large share (estimated at nearly $20bn), is committed to various derivative deals. The CBN recently imposed restrictions on oil companies repatriating export earnings abroad, and there is a risk of wider convertibility limits being imposed until the currency stabilises.”

Also, it was revealed that the Federal Government was greatly incentivised to borrow from the CBN following the return of fuel subsidy.

In the report, whose briefing sheet was edited by Benedict Craven, EIU said that with the return of fuel subsidy, which was larger than the previous one, the FG had a strong reason to want to borrow from the apex bank.

In December 2023, the National Assembly approved the securitisation of the outstanding debit balance of N7.3tn of the ways and means advance in the consolidated revenue fund of the Federal Government. Ways and Means is a loan facility through which the CBN finances the Federal Government’s budget shortfalls.

The report said, “Market reforms under Mr (Bola) Tinubu were intended to attract investment but do not constitute a coherent plan. His two flagship policies, the elimination of petrol subsidies and the liberalisation of the exchange rate have an inner contradiction. As Nigeria imports virtually all its fuel, devaluations of the naira, the latest being a 45 per cent drop in February, should be reflected in the pump price.

“However, owing to the threat of industrial action, there has been little movement since June, despite the naira having weakened from N461:$1 in May 2023 to N1,600:$1 in late February 2024. This indicates the return of a (large) subsidy. Denying this publicly, the government has a strong incentive to turn to the Central Bank of Nigeria for financing to cover the fiscal cost.

“Deficit monetisation and high inflation will undermine the currency. A possibility is that monetary policy will be tightened to a point at which foreign investors view the naira more favourably.”

According to the report, although the CBN raised its policy rate in February, President Tinubu has expressed an aversion to high interest rates.

“As inflation has been allowed to rise to a level at which a positive real short-term interest rate would create a significant rise in unemployment—adding another policy¬ induced element to economic hardship—we assume that politics will prevent this from happening. The CBN’s independence has been heavily eroded in recent years; because fiscal firepower is so limited, the government will continue to rely on monetary policy to achieve job-creation and development objectives,” it said.

EIU revised its 2024 economic growth forecast for Nigeria from 2.2 per cent to 2.5 per cent, premised on higher than previously expected crude output and earlier than expected production from the Dangote refinery, which is expected to provide some relief although fuel import is expected to continue its dominance.

“The new, 650,000-barrel/day Dangote mega-refinery is another possible circuit breaker. The facility is gearing up for its first fuel exports, to be followed by cargoes to the domestic market. In theory, the facility can meet all domestic needs but petrol subsidies make it unclear whether doing so will be profitable (let alone profit-maximising). In any case, Nigeria will continue to depend on fuel imports for most of the year as the refinery ramps up output,” the report said.

Describing the implementation of the twin policies of floating the naira and fuel subsidy removal as hasty, the EIU said, “Mr Tinubu has embarked on the biggest economic shake-up in a generation, rapidly rolling out unpopular market reforms and dismantling vehicles for patronage and corruption. Upon coming to power, Mr Tinubu quickly moved to deregulate petrol prices and float the currency. In theory, these reforms are needed to put Nigeria on a higher growth path, but implementation has been hasty and inflation has been allowed to rise to decades-long highs. As the crisis is distinctly policy-induced, there is a serious risk of mass protests and strikes.

“Given the potential threat of industrial action on a scale not seen since 2012, the government has been forced to backtrack in some areas, notably on petrol subsidies. Attempts to stem the decline in the currency have become more desperate, and we expect the policy to become increasingly erratic, particularly in the early part of the forecast period, as the need to stabilise prices takes on an existential dimension for the government.”

The report noted that the Monetary Policy Rate would peak at 23.75 per cent this year, currently standing at 22.75 per cent.

Inflation is projected to also likely to continue climbing for the first half of the year driven by the hefty devaluation of the naira in February.

“We expect a full-year rate of 30.3 per cent, which includes some disinflation in the second half of the year,” EIU said.

Meanwhile, it projected that the Nigerian currency would depreciate below 2,000/$ before the year runs out.

Highlighting top concerns and risks to its forecast, EIU said that if President Bola Tinubu moves too fast on his market reforms, it may lead to mass unrest with a very high impact.

The African Development Bank recently raised similar concerns, following the persistent increase in the prices of food items.

The AfDB sounded the warning in its macroeconomic performance and outlook for 2024.

It cautioned that an increase in fuel and commodity prices occasioned by currency depreciation or subsidy removal in Nigeria, Angola, Kenya and Ethiopia could trigger internal conflicts.

It stated, “Internal conflicts and violence could also result from rising prices for fuel and other commodities due to weaker domestic currencies and reforms.”

According to the AfDB, other risks include social unrest forcing the government to make concessions on its reforms, strikes bringing the economy to a halt and the activities of terrorists spreading from the North-East to Central Nigeria.

Meanwhile, the apex bank boss, Dr Olayemi Cardoso, in February revealed that the central bank would not be extending facilities to the Federal Government until it fulfils its outstanding obligations to it.

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Nigeria must battle food insecurity as priority — IMF

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The International Monetary Fund, IMF, yesterday asked the Federal Government to pay immediate attention to food insecurity in the country.

The IMF’s position came on a day governors said Nigeria must go into production if it must get the people out of the current hardship.

At the 16th Edition of the Leadership Annual Conference and Awards, the IMF made its position known in its End-of-Mission statement issued after the completion of the IMF Staff 2024 Article IV Mission to Nigeria.

This is even as former Anambra State governor and 2023 presidential candidate of Labour Party, LP, Mr Peter Obi, who decried the hardship in the country, said he was not desperate to be president but “desperate to make Nigeria work.”

Also, former Deputy Governor (Financial Stability) of the Central Bank of Nigeria, CBN, Professor Kingsley Moghalu, advocated the sale of government assets to raise funds, totalling $18-20 billion, which could be channelled into bolstering foreign reserves to stabilize forex and overcome economic woes.

However, President Bola Tinubu urged Nigerians to be patient, assuring them that his economic reforms will stabilize the country.

President Tinubu, Obi and Moghalu also spoke at the Leadership annual event, which served as a stage for political figures, statesmen and other dignitaries to highlight the importance of increasing productivity as a means of elevating Nigeria from her current state of hardship and steering her toward economic stability and strength.

Echoing the governors, the IMF said addressing food insecurity should be an immediate priority of the Federal Government.

Stating that the new government inherited a difficult economic situation marked by low growth, low revenue collection, accelerating inflation, and external imbalances built up over the years, IMF said: “Addressing food insecurity is the immediate priority. The recent approval of a well-targeted and effective social protection system is an important step towards addressing food insecurity in Nigeria, and its implementation will be crucial.”

It said the decision by the Monetary Policy Committee, MPC, to further tighten monetary policy would help contain inflation and pressures on the Naira.

The statement said an IMF team, led by Axel Schimmelpfennig, IMF Mission Chief for Nigeria, visited Lagos and Abuja from February 12 to 23, 2024, to hold discussions for the 2024 Article IV Consultations with Nigeria.

It said the team met with the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, and Governor of the CBN, Olayemi Cardoso and some other senior government and CBN officials, mnisters and representatives of sub-nationals, private sector, and civil society organisations, CSOs.

Nigeria’s economic outlook challenging

The statement said that at the end of the visit, Schimmelpfennig issued the following statement:
“Nigeria’s economic outlook is challenging. Economic growth strengthened in the fourth quarter, with Gross Domestic Product, GDP, growth reaching 2.8 per cent in 2023. This falls slightly short of population growth dynamics.

“Improved oil production and an expected better harvest in the second half of the year are positive for 2024 GDP growth, which is projected to reach 3.2 per cent, although high inflation, Naira weakness, and policy tightening will provide headwinds.

“With about eight per cent of Nigerians deemed food insecure, addressing rising food insecurity is the immediate policy priority. In this regard, staff welcomed the authorities’ approval of an effective and well-targeted social protection system.

“The team also welcomed the government’s release of grains, seeds, and fertiliser, as well as Nigeria’s introduction of dry-season farming.”

Schimmelpfennig said recent improvements in revenue collection and oil production are encouraging.
He said Nigeria’s low revenue mobilisation constrains the government’s ability to respond to shocks and to promote long-term development.

“Non-oil revenue collection improved by 0.8 per cent of GDP in 2023, helped by Naira depreciation. Oil production reached 1.65 million barrels per day in January as a result of enhanced security.”

Dangers of capping fuel prices and electricity tariffs

Schimmelpfennig said the capping of fuel pump prices and electricity tariffs below cost recovery could have a fiscal cost of up to three per cent of GDP in 2024.

He said the recently approved targeted social safety net programme that will provide cash transfers to vulnerable households need to be fully implemented.

“This is before the government can address costly implicit fuel and electricity subsidies in a manner that will ensure low-income households are protected.

“The team welcomed the MPC’s decision to further tighten monetary policy. The MPC increased the policy rate by 400 basis points to 22.75 per cent for a total tightening of 1,025 basis points since May 2022.
“This decision should help contain inflation, which reached 29.9 per cent year-on-year in January 2024, and pressures on the naira.”

Speaking on behalf of his peers, Governor Umar Bago of Niger State focused on the nation’s agricultural potential, underscoring the need to harness it for national prosperity.

He lauded Professor Moghalu’s insights, describing them as “100% very, very correct.”

Governor Bago revealed that Niger State, alone, has attracted over $1 billion in agricultural investments, positioning itself as a potential bread-basket of Africa.

He disclosed that the state has deliberately cleared over a million hectares of land, ready for cultivation against the upcoming rainy season.

Bago announced that President Tinubu was scheduled to visit Niger State between today and Saturday to commission state-of-the-art agricultural machinery from the United States, signalling a significant step towards bolstering the nation’s agricultural sector.

The governor also echoed Mr. Obi’s sentiments that there is no reason for Nigeria to remain in poverty.
He emphasized the need for productivity and denounced the idea of a handout or palliative economy, saying, “you cannot be out of poverty unless you start to produce.”

Governor Bago’s remarks struck a chord with his peers such as Governors Hyacinth Alia (Benue), Dikko Radda (Katsina), Seyi Makinde (Oyo), and Umar Namadi (Jigawa).

As recipients of the ‘Governor of the Year’ award, all five dignitaries collectively vowed to maintain honour and diligence in their governance.

Governor Bago called on the award organizers and leadership circles to retract the accolade from any laureate who failed to embody the principles of honour.

The governors emphasized the importance of integrity, recognizing it as a cornerstone for guiding Nigeria on the path to greater prosperity and autonomy.

Governor Bago said: “We are farmers and we are agrarian. Prof. Kingsley Moghalu spoke very well in his paper, and what he said is 100% correct. Niger State alone can feed Africa. We have attracted an investment of over a billion dollars to Niger State in agriculture.”

 

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