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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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Aviation

Tension as Dana Air plane crash-lands in Lagos

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An aircraft belonging to Dana Air has crash-landed at the Murtala Muhammed International Airport in Lagos.

The management of Dana Air has confirmed reports that one of its aircraft with registration number 5N BKI skidded off the runway at the Murtala Muhammed International Airport in Lagos on Tuesday morning.

The airline made the confirmation in a statement on Tuesday.

Expressing regret, the airline noted that the aircraft which flew from Abuja to Lagos, skidded off the runway in an attempt to land.

However, it expressed relief that no casualty was recorded, stating that it had informed the Accident Investigation Bureau and the Nigeria Civil Aviation Authority of the incident.

The statement read, “Dana Air regrets to inform the public of a runway incursion involving one of our aircraft, registration number 5N BKI, which was flying from Abuja to Lagos today 23/04/24

“We are relieved to confirm that all 83 passengers and crew onboard the flight disembarked safely without injuries or scare as the crew handled the situation with utmost professionalism.”

“We have also updated the AIB and NCAA on the incident and the aircraft involved has been grounded by our maintenance team for further investigation.”

The management thanked the airport authorities and its crew for ensuring the safety of all passengers onboard the aircraft.

The statement added, “We wish to thank the airport authorities, and our crew for their very swift response in ensuring the safe disembarkation of all passengers following the incident and our sincere apologies and appreciation to the passengers on the affected flight for their patience and understanding.

“We wish to reassure our passengers that their safety will always be our top priority, and we are cooperating fully with the relevant authorities to investigate the circumstances surrounding the incident.”

Recall that in January 2018, a commercial aircraft belonging to Dana Air used its left wing to hit a fence at the Nnamdi Azikiwe International Airport, Abuja.

Dana flight, with registration number 5N-DEV from Port Harcourt, brushed the fence while trying to park after it landed at the NAIA. https://punchng.com/dana-air-plane-hits-fence-at-abuja-airport/

Sources at the airport and passengers onboard the flight reveal that no injury was recorded, but blamed the aircraft’s pilot for the incident.

 

 

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Black market dollar to naira exchange rate today 23rd April 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)?

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 22nd April below.

The exchange rate for a dollar to naira at Lagos Parallel Market (Black Market) players buy a dollar for N1,180 and sell at N1,200 on Monday 22nd April 2024, according to sources at Bureau De Change (BDC).

How much is the Black market dollar to naira today, 23rd April 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 N1,240
Selling Rate N1,260

You can swap your dollar for Naira at these rates.

Please note ThePAPERS.ng does not set or determine forex rates, the rates you buy or sell forex may be different from what is captured in this article because prices vary.

Kindly check for updates at least once every 3 hours.

 

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Business

Illegal N10b transfer: CAC revokes NIPOST subsidiaries’ certificates

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The Corporate Affairs Commission has revoked the certificates of incorporation of NIPOST Properties and Development Company and

The Corporate Affairs Commission has revoked the certificates of incorporation of NIPOST Properties and Development Company and NIPOST Transport and Logistics Services Limited.

This revocation followed the discovery of an illegal transfer of N10 billion in restructuring funds released by the Federal Ministry of Finance to the agency’s subsidiaries.

The CAC, in a statement on Monday, said, “The General Public is hereby informed that the Commission, sequel to its powers contained in Section 41 (7) of the Companies and Allied Matters Act No. 3 of 2020, revoked the Certificates of incorporation of the below-mentioned companies because the same was improperly procured. These companies are:

“1. NIPOST Transport and Logistics Services Company Ltd RC 1673881 and 2. NIPOST Properties & Development Company Ltd RC 1673971.

“By virtue of these revocations, the Companies are deemed to be dissolved and their Assets and Liabilities transferred to the Nigeria Postal Services established under the Nigerian Postal Services Act Cap N127 LFN 2004.”

The November 8, 2023 CAC records confirm that top officials of BPE own significant shares in the subsidiaries.

Responding to these discoveries, the Senate passed a resolution on December 30, 2023, for a probe into the matter.

The resolution declared the NIPOST subsidiaries in question “irregular and illegal” and recommended their immediate winding-up and deregistration.

The Senate resolution goes beyond immediate action; it demanded a thorough investigation into the N10 billion voted by the Ministry of Finance for NIPOST’s restructuring and recapitalisation.

Should evidence of “injudicious utilisation” surface, the Senate said the committee responsible must recover the full amount.

In its resolution of December 30, 2023, the Red Chamber said it uncovered an alleged illegal transfer of Federal Government shares in two NIPOST subsidiaries to private individuals.

The discovered infractions sparked outrage, prompting the lawmakers to call for immediate action.

Some individuals in key positions within the Bureau of Public Enterprises (BPE) and NIPOST were listed as shareholders of the two NIPOST subsidiaries.

 

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Aviation

FAAN calls for stronger collaboration with ICAN

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The Managing Director of the Federal Airports Authority of Nigeria (FAAN), Mrs. Olubunmi Kuku has called for greater collaboration between

.. Says accountants in the agency have performed creditably well

The Managing Director of the Federal Airports Authority of Nigeria (FAA), Mrs. Olubunmi Kuku has called for greater collaboration between FAAN and the institute of Chartered Accountants of Nigeria (ICAN).

This is just as she stated that the over 100 accountants in the agency’s workforce have been doing their jobs transparently and with integrity.

She said this while speaking when the 59th President of ICAN, Dr. Innocent Okwuossa and his team visited FAAN headquarters at the Murtala Muhammed Airport (MMA),Lagos.

She explained that the accountants working with FAAN have proven to be a very important segment of the agency’s work force by carrying out their jobs with commitment, accuracy, transparency and integrity.

According to her, “ It is our desire to continue to partner with your prestigious institute as we leverage on this important visit to call for stronger collaboration between FAAN and ICAN going forward.”

ICAN, Kuku noted, has continued to play a critical role in training and retraining accountants all over the country to provide accounting services with the highest level of professionalism.

She commended the ICAN President and his team for the great work they are doing to keep the professionalism competence going among members .

Speaking further, Kuku said that the present administration in FAAN is committed to ensuring that services at airports across the country meet international standards for safe, secure and efficient carriage of passengers and goods within the country.

We are also mindful of the need to consciously carry out our activities with utmost transparency, accountability and integrity for the benefit of the nation and this is that very important juncture our paths cross as an institution.

Speaking, the President of ICAN, thanked the FAAN boss for giving him and his tram a warm welcome, said that the institute would like to partner with FAAN on capacity building to further equip its members.

He stated that the FAAN Managing Director has not only made history as the first woman managing Director of the agency but that she has also inspired women across the country that they can get to leadership positions.

Okwuossa noted that ICAN recognizes the important role and the impact FAAN makes in the aviation industry infrastructure development, adding that as a result there has not been serious accidents and incidents in the sector for some time now.

The ICAN President pointed out that FAAN has from time to time supported the ICAN members working with the agency for training to further broaden their horizon , calling on the agency to further sponsor their members to the ICAN annual conference coming up in October and other international conferences.

The President appealed to the FAAN managing director to liaise with other agencies to establish the ICAN Chapter.
Present during the visit were directors from FAAN and the ICAN visiting team led by its President, Dr. Innocent Okwuissa

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Oil & Gas

Marketers eye N700/litre diesel after Dangote price cut

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The Independent Petroleum Marketers Association of Nigeria says it is expecting that the Dangote refinery will reduce the price of its diesel

The Independent Petroleum Marketers Association of Nigeria says it is expecting that the Dangote refinery will reduce the price of its diesel further to say about N700 per litre.

The National Vice President of IPMAN, Hammed Fashola, stated this on Wednesday while appreciating the Dangote refinery for reducing the price of diesel from over N1,200 to N1,000.

Fashola, in an interview with our correspondent, maintained that the marketers have high expectations that the price of diesel would still go down.

According to him, the rebound of the naira against the dollar will bring about an appreciable reduction in the diesel price.

“It is a good development, a welcome development. That is what we expected. Even we are still expecting that diesel will still come down more. Because if you look at the dollar rate to the naira now, the currency is doing well against the dollar. The exchange rate now is almost N1,000 on the black market. We still expect that the dollar will come down more,” he stated

The IPMAN boss explained that the price would be reduced because the challenges of shipment, Customs duties and others have been removed since the product is being produced locally.

“When you look at the diesel being produced here, there are lots of factors that have come to play; like the issue of shipment, the issue of tax, Customs and others. All those are not there again. So, we marketers, we are expecting diesel to come to like N700 per litre; that is our prayer and at that level, it will be a blessing to everybody. That is what we are looking at. What we produce here must be quite different from what is imported. That is what we expected,” Fashola submitted.

He spoke further that, “We all supported Dangote, we all prayed for him. We appreciate that the price is coming down, we still expect that the price will come down more and it will be affordable for citizens.

Dangote began the sale of diesel about two weeks ago, crashing the cost of diesel from N1,600/litre to 1,250/litre.

Last Tuesday, the refinery announced another price cut, saying the fuel would now be sold at N1,000/litre.

An economist, Femi Oladele, welcomed the price cut, saying, “This price cut is good news. Production cost should drop significantly and this should also affect the cost of products and services.”

Some businesses that shut down due to exorbitant costs might resurface while new businesses will emerge.”

He also pointed out the potential savings in foreign exchange, which could bolster the nation’s reserves.

The economist expressed optimism about the future, predicting, “If this trajectory continues, we should see a significant increase in economic activities and a drop in inflation.”

Also, an analyst at Sankore Investment Limited, Jonathan Thomas, highlighted the impact of fuel prices on the economy.

“The price of fuel is one of the major determinants of the general price level of goods and services. Petroleum products such as diesel are being used by plants in factories for the production of goods and services. Diesel is also used by heavy vehicles for the transportation of goods and raw materials which are used for production. Therefore, the latest development is expected to impact the total cost of production,” he explained.

 

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Business

Black market dollar (USD) to naira (NGN) exchange rate today 22nd April 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)? See the black market Dollar to

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 21st April, below. You can swap your dollar for Naira at these rates.

How much is a dollar to naira today in the black market?

Dollar to naira exchange rate today black market (Aboki dollar rate):

The exchange rate for a dollar to naira at Lagos Parallel Market (Black Market) players buy a dollar for N1290 and sell at N1297 on Sunday 21st April 2024, according to sources at Bureau De Change (BDC).

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

Dollar to Naira (USD to NGN) Black Market Exchange Rate Today
Buying Rate N1290
Selling Rate N1297

Dollar to Naira CBN Rate Today

Dollar to Naira (USD to NGN) CBN Rate Today
Buying Rate N1160
Selling Rate N1161

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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