NSE Suspends Trading In 7-UP Shares

The Nigerian Stock Exchange on Friday suspended the shares of Seven-Up Bottling Company Plc following a takeover bid from majority shareholder, Affelka S.A., to the minority holders.

In a public notice, the Exchange confirmed that 7-UP shareholders had passed a resolution to back the takeover bid by Affelka S.A. which would see the company delisted from the NSE.

Shareholders of the company had on Thursday approved the scheme of arrangement by which Affelka S.A. would acquire the outstanding 26.8 per cent shares of the firm.

The shareholders gave their approval at a meeting that was convened at the instance of the Federal High Court in Lagos.

Affelka S.A. will now increase its ownership of the company to 100 per cent by acquiring all the outstanding and issued shares previously held by the minority shareholders.

In consideration for the transfer of the shares, a payment of N125 per scheme share will be made to each shareholder. The payment represents a 22.6 per cent premium on the last traded share price of Seven-Up on January 9, 2018 and a 27.6 per cent premium on the share price as of the close of August 9, 2017, being the last business day prior to the date the initial proposal was received from Affelka.

Chapel Hill Denham Advisory Limited acted as financial advisers to the transaction and Aelex Partners as solicitors to the company.

The Chairman, Seven-Up Bottling Company, Mr. Faysal El-Khalil, had said, “We believe that the scheme will create considerable benefits and opportunities for all stakeholders of Seven-Up Bottling Company Plc, and will serve to protect minority shareholders from a continuous erosion of value.

“Furthermore Seven-Up Bottling Company is again assured of Affelka’s long-term commitment to the company and Nigeria.”

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CBN Disowns Fake Emefiele Twitter Handles

The Central Bank of Nigeria on Tuesday disowned fake Twitter handles linked to the CBN Governor, Mr. Godwin Emefiele.

The central bank pointed out that the Twitter handles bearing the name and photograph of Emefiele were fake and targeted at misleading unsuspecting members of the public.

The Acting Head, Corporate Communications, CBN, Mr. Isaac Okorafor, in a statement, advised members of the public to ignore such Twitter handles.

The statement read, “The attention of the Central Bank of Nigeria has been drawn to the existence of several twitter handles purportedly owned by the Governor,     Mr. Godwin Emefiele.

“We wish to inform members of the public, particularly members of the social media community that Emefiele currently has no twitter handle.

“We wish to state categorically therefore, that the twitter handles bearing the name and photographs of Emefiele are fake and targeted at misleading unsuspecting members of the public.

“Accordingly, we wish to advise all members of the social media community and the general public to be wary of the fake accounts and discountenance whatever message conveyed therein.”

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Oil Price At $66 Good For Nigeria, Say Experts

From around $53 per barrel at the start of 2017, international oil benchmark, Brent crude, closed the year around $66.87, a rise that is expected to continue into 2018.

The 2018 budget proposal submitted by President Muhammadu Buhari in November put the benchmark oil price at $45 per barrel, compared to $44.5 per barrel for the 2017 budget.

The Wall Street Journal, in a survey of 15 investment banks, estimated that Brent crude would average $58 per barrel this year, up from an average of $54 in 2017.

The banks expected West Texas Intermediate, the US benchmark, to average $54 per barrel in 2018, up from $51 in 2017, the report indicated.

The predictions showed an oil market in recovery mode after a price rout that cost hundreds of thousands of jobs, strained the budgets of producers and led to delay or cancellation for dozens of multi-billion-dollar projects.

The Vice President/Head of Energy Research, Ecobank, Mr. Dolapo Oni, said, “It ($66 oil price) is definitely good for Nigeria. The good thing is that over the last few years, we tend to start the year at a price and then end at a higher price.

“We have had to update our forecast and we are seeing a possibility of higher prices of about $75, which will be fantastic for Nigeria. When you have this kind of price in the market, it also gives some support to oil production from some costly fields.”

The Managing Director, Financial Derivatives Company Limited, Mr. Bismarck Rewane, described the rise to $66 in 2017 as extraordinary, saying it might come back to the $60-$65 range.

“Having said that, even at $65 per barrel, the Nigerian revenue equation is quite positive, compared to previous years. So, we are in a good place.”

But what we do with the revenue in terms of investment, inclusive growth and stimulating economic activities is the issue,” he stated.

Oil prices are likely to continue climbing in 2018 on the back of production cuts led by the Organisation of Petroleum Exporting Countries and a growing global economy, industry executives and analysts say, according to the report.

But any gains are expected to be kept in check by booming supplies from the United States. That means oil prices probably will most soar to the $100-per-barrel level seen in 2014, but they also will not plunge below $30 per barrel like early 2016.

Traders expect prices to be volatile but in a tight range, much like 2017, when crude traded between $45 and $67 a barrel.

In 2017, the market prices stabilised and more recently began to climb, due largely to major exporters’ production cuts, synchronised global economic growth, rising geopolitical tensions in the Middle East and worsening prospects for the economy of big producer, Venezuela.

Brent crude prices finished on Friday at $66.87 per barrel, up by 18 per cent for the year and 49 per cent above its 52-week low in June, following a series of supply disruptions. The WTI prices, meanwhile, gained 12 per cent to end at $60.42 in 2017.

Now, oil traders are contemplating the end of a global glut of crude in 2018 — a long-awaited rebalancing of supply and demand.

In the most bullish scenario for 2018, in which demand grows at around 1.6 million barrels per day, the oil market “should be balanced within the year,” said Giovanni Serio, head of research at Vitol Group, the world’s largest independent oil trader.

 

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Oil Marketers Threaten Service Withdrawal In Lagos, Ogun

The Independent Petroleum Markers Association of Nigeria, Lagos State chapter, has accused the Nigerian National Petroleum Corporation of undersupplying its members with Premium Motor Spirit.

It said if the situation persists, its members in Lagos State and parts of Ogun State may be forced to shut their filling stations by December 11.

In a statement on Thursday signed its chairman, Alhaji Alanamu Balogun, vice chairman, Pastor Gbenga Ilupeju, and secretary, Prince Kunle Oyenuga, IPMAN noted that no fewer than 900 filling stations will be shut down in Lagos.

The association particularly complained of a shortage of product supply to Ejigbo satellite depot, which, it said, serves more than 900 filling stations in Lagos.

IPMAN alleged that the NNPC was not only undersupplying its members with PMS, it was also frustrating them by reneging on the bulk purchase agreement it signed with its members to supply the product to them at N133.28k per litre.

It said with undersupply from the NNPC, its members were being forced to approach the Depot and Petroleum Marketers Association, which allegedly buys at N117 per litre from the NNPC and resells to IPMAN members at N141 per litre.

It said at that rate it had become unrealistic for them to continue to sell to the end users at the regulated price of N145 and still expect to break even in business.

The body pleaded for the immediate intervention of President Muhammadu Buhari, the Minister of State for Petroleum Resources, Ibe Kachikwu, the Department of Petroleum Resources, the National Assembly, and the Governor of Lagos State, Mr. Akinwunmi Ambode, to avert an imminent fuel crisis in the nation’s commercial nerve centre.

“We have endured enough and are set for a showdown with the NNPC for irregular supply at Ejigbo satellite depot, Lagos,” the association said.

“We have held many meetings with both the NNPC and DAPMAN, questioning why should the NNPC supplies fuel to DAPMAN at N117 per litre and DAPMAN will turn around to sell the same fuel to IPMAN members at N141 and the NNPC wants marketers to sell to the public at N145 per litre.

“The NNPC made it as a condition that we must renew our agreement with it or we will not get fuel supply. This agreement has been renewed yet, the NNPC has refused to supply us with fuel. The same agreement the NNPC signed with us is what it signed with DAPMAN. While DAPMAN gets supplies, IPMAN members are being denied fuel supply, which means the NNPC officials are into a game.

“The Federal Government should step into this matter between now and December 11 to avoid fuel crisis,” IPMAN said.

 

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FG, States, Lgas Share N4.55tn In Nine Months

The three tiers of government shared a total of N4.55tn between January and September this year as disbursements from the Federation Accounts Allocation Committee.

According to the latest quarterly report of the Nigerian Extractive Industries Transparency Initiative, released in Abuja on Wednesday, out of the N4.55tn that was shared in the review period, N1.76tn was disbursed in the third quarter as against the N1.38tn and N1.41tn shared in the second and first quarters of the year, respectively.

It also showed that between January and September, the Federal Government received the highest allocation of N1.85tn, followed by state governments with N1.51tn and the 774 local governments with N913.8bn.

The sum of N271.78bn went to the Department of Petroleum Resources, Nigeria Customs Service and the Federal Inland Revenue Service as costs of revenue collection.

Further analysis showed that the revenues shared to the federating units were higher in the third quarter, a situation that has been the pattern for some years now.

For instance, while the Federal Government got N549.41bn in the second quarter of 2017, the third quarter figure was N752.79bn, an increase of 37.02 per cent. The trend was the same for the states and local governments, as they received N586.58bn and N363.98bn in the third quarter as against N467.13bn and N280.42bn in the second quarter, respectively.

The report noted that the percentage increases between the two quarters for the two tiers of government were 25.57 per cent and 29.8 per cent.

It attributed the reason for the increases in FAAC disbursements to the three tiers of government in the third quarter to the positive developments in the oil sector occasioned by resurgent crude prices and increased production levels.

The NEITI quarterly review report based its analysis on data obtained from FAAC, the National Bureau of Statistics, Federal Ministry of Finance and the Budget Office of the Federation.

The report stated that the “upward trend in the FAAC disbursements to the three tiers of government are encouraging signs, which if sustained, will improve government expenditures, help to boost economic activities and move the country further away from recession.”

The report also stated that Nigeria’s revenue in the first half of 2017 was about 49 per cent lower than the budgeted figures.

It stated that while the government projected N5.368tn revenue inflow in its 2017 fiscal framework for the first six months of the year, the actual inflow was N2.712tn.

The government’s half-year projections were N2.67tn for oil and N2.7tn for non-oil revenues, but the actual revenue fell short of projections.

“Actual oil revenue was N1.587tn, representing a shortfall of N1.079tn, implying a 40.4 per cent underperformance. Non-oil revenue fared slightly worse, as only 41.6 per cent of the projected revenue was realised. Actual non-oil revenue totalled N1.125tn, indicating a shortfall of N1.575tn,” the report stated.

It pointed out that while the government projected that the non-oil sector would outperform the oil sector, the latter performed better by as much as 41 per cent in revenue generation, raking in N1.587tn as against N1.125tn for the non-oil sector.

Figures for the three tiers of government were no different. The Federal Government had hoped for N2.542tn revenue flow for the first half of the year, but the actual revenue was N1.497tn.

A breakdown of the inflows showed that the oil sector accounted for a larger part of the shortfall, with a 60 per cent drop, while the non-oil sector underperformed by 49 per cent.

“Budgeted half-year inflow from the oil sector was N1.061tn but actual oil inflow to the Federal Government was N414bn. The Federal Government’s budget estimated half-year non-oil revenue inflow at N705bn, but realised only N352bn, indicating a 49 per cent shortfall,” the NEITI report stated.

 

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Nigeria, Libya In Focus As OPEC Meets Today

Nigeria and Libya will expect to face growing pressure from their counterparts in the Organisation of Petroleum Exporting Countries to end their exemption from production cuts and accept an output quota, when ministers meet on Thursday (today) for a closely watched summit.

The production cuts deal, which began on January 1 and called on OPEC countries and 10 non-OPEC producers led by Russia to cut a combined 1.8 million barrels per day in supplies, was in May extended by nine months to March 2018.

Nigeria and Libya, which were exempt from the cuts as they dealt with internal unrest that had targeted their oil infrastructure, have ramped up oil production in recent months as their security situations have improved.

While the production outlooks for both countries remain hazy due to political, security and technical challenges, voices had been growing louder within OPEC that their output has recovered sufficiently to join in their market rebalancing efforts, sources told S&P Global Platts.

“I think both countries will be discussed,” an OPEC source told Platts, but he declined to say whether members would insist on imposing quotas.

One option being discussed is a “loose” quota that would be triggered if production in either country rises to a certain level, while another option would be to place a quota right at or above each country’s production target, to at least symbolise that they were willing to accept a cap, other sources and analysts said.

But it would be entirely possible that both countries’ exemptions would be maintained, as they had been vehemently opposed to any output restrictions while recovering from militancy, the sources said.

Nigeria declared in late September that it had agreed to a production cap of 1.8 million bpd, a level the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, said would not be achieved until early 2018.

Other OPEC ministers and delegates appeared caught off guard by that announcement, as it contradicted Kachikwu’s previous statements that Nigeria would not join the output agreement until its production stabilised at 1.8 million bpd, from which it would cut.

Kachikwu had told reporters then that he wanted to “change the narrative” and that his country was already contributing to the deal by producing below that level, albeit involuntarily.

The nation’s oil production from January to October this year was close to 1.74 million bpd, according to the Platts OPEC survey, a rise of 300,000 bpd from December last year, but still much below the 1.8 million bpd cap.

Output hit a 16-month high of 1.86 million bpd in August, but has fallen since due to operational and loading delays.

It could face further challenges, with the growing threat of attacks in the oil-rich Niger Delta next year, as the country heads into its presidential campaign season, analysts said.

Counting Nigerian oil production has also been a difficult exercise, with divided opinions on what constitutes crude and what should be counted as condensates.

Nigeria has long said its oil production capacity is at around 2.2 million bpd, with condensate production accounting for between 350,000 and 400,000 bpd. The remaining 1.8 million bpd or so, which coincidentally is its self-declared cap for the agreement, consists of crude oil.

Nigeria this year began counting its Agbami grade, output of which is about 250,000 b/d, as part of its condensate production, which market watchers say makes it easier for the country to keep its crude output below 1.8 million bpd.

But some independent secondary sources used by OPEC to monitor crude output under the deal still count Agbami as crude.

Platts, one of the secondary sources, includes Agbami in Nigeria’s crude oil figure as it is marketed as a crude export blend and not a condensate by the Nigerian National Petroleum Corporation and international oil companies.

In its latest monthly oil market report, OPEC said its six secondary sources pegged Nigerian crude production at an average of 1.68 million bpd for the first 10 months of the year.

Nigeria’s directly reported figures to OPEC showed that crude output from January to October averaged 1.58 million bpd

 

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Foreigners Taking Over Nigeria’s Agric Sector, Says FG

Foreigners are currently taking over Nigeria’s agricultural sector as a result of the excessively high interest rates being demanded from indigenous agriculturists by Deposit Money Banks, the Federal Government has said.

It also stated that the production and sale of crude oil could not salvage the country’s fragile economy, adding that revenue generation from oil was too low when compared to what some smaller countries were making from agro exports.

Speaking on the sidelines of a seminar organised in Abuja by the Danish Embassy in Nigeria on value development in the country’s food and agriculture sector, the Minister of State for Agriculture and Rural Development, Senator Heineken Lokpobiri, said the major challenge inhibiting the desired development of the country’s agricultural sector was poor access to finance.

Lokpobiri stated, “The major challenge bedevilling this industry is access to finance. Agricultural financing in Nigeria is too costly; for even at nine per cent you can’t find it. They will ask you for all forms of collateral, the CBN will say bring your father’s house, bring this, bring that.

“But if you have a company that is ready to support agro investors, then people will invest. If you have access to cheap funds, you will be able to invest on a long term basis. Instead of getting a loan from a commercial bank at 25 to 30 per cent, you can have it at two per cent and pay back in about 30 years. Here, you don’t have such funding. That is what we are talking about.

“And that is why if you look at it now, foreigners are taking over the agro sector here; either from India, they get it (loan) at three or four per cent, or from Europe at two or three per cent. But here, it is 30 per cent and they (banks) are not even willing to give. The only way you can compete with others is for you to have cheap funds that will reduce your production costs.”

Lokpobiri explained that the economic system being run in Nigeria over the years had made it possible for the banking sector to hold the country hostage with high interest rates, adding that this was why the government often borrowed less from the domestic market.

He said countries that invested in agriculture earned far better than Nigeria, adding that oil production would not salvage the country’s economy.

The minister added, “Nigerians shouldn’t think that we have oil and that oil is going to salvage this country. Countries that are investing in agriculture are getting much more profits than what we get from oil. Do we even get up to $30bn from oil? That is the point.

“Denmark, with a population of about five million people and less land mass than Nigeria, has a net agro export worth over €80bn. Now, ask yourself this question, how many billion dollars do we get from oil export? This clearly shows that there is more profit in agro investment than even in oil investment.”

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Economy Needs To Grow By At Least 6% — Emefiele

The Governor of Central Bank of Nigeria, Mr. Godwin Emefiele, spoke about the banking system, exchange rate and the prospect of the economy in an interview with journalists in Lagos. OYETUNJI ABIOYE was there. Excerpts

The Nigerian economy exited recession in the second quarter after five consecutive quarters of negative growth. What hopes lies ahead?

We have just managed to exit the economic recession with a fragile growth of 0.5 per cent; we have seen inflation trending downwards; we have seen exchange rate and reserves looking stronger and firmer. But I think we are determined to continue to push further to see to it that Nigeria returns to its historical growth path. The 0.5 per cent or two per cent is not the historical growth path for Nigeria. Nigeria is a country that must grow at a rate that is at least twice the population growth rate (six per cent, seven per cent). And until we achieve that, we are not going to rest on our oars. To see that Nigerians are happy again and that we grow the country, God has bestowed us as leaders; he has given us the opportunity to serve our people.. God has put these in our hands and we do owe them the responsibility to ensure that we put policies in place that will make Nigeria good for everybody. We want to continue to join hands with our friends in the foreign investment community to do that. Nigeria has a lot of potential. The environment is good, the climate is good. That is why we make bold to say Nigeria is good for business. There are very big countries in the world you will visit today and say you want to invest, whose returns are not as high as you have in Nigeria. We are battling with unemployment in Nigeria, and that is the reason again the President called on the Federal Ministry of Agriculture, the CBN, Ministry of Employment, Labour and Productivity, and some important stakeholders including the governors together and said there was a need to start thinking about how to create jobs for our people through agriculture; that agric should not be seen as business that is meant for the poor? that you could make money from agriculture. Countries that have progressed have done so because they took the agric sector very seriously. We are determined to make agric the sector where people make money and we have decided to put in place the Anchor Borrowers Programme. Before we introduced the ABP, farmers would go into rice farming and all the yield they were getting was one to 1.5 metric tonnes per hectare. After we started the ABP, today we are beginning to see farmers getting yield as high as eight metric tonnes per hectare, reducing their costs and making it possible to make good profit in rice cultivation.

We have seen that there is a need for us to think about how to improve the wealth of our rural community. We started that journey and through rice; we have achieved that. The Nigerian government is confident that through agriculture, the wealth of our people can be boosted. And that is the journey we are embarking on. We want to invite all of you, our friends and foreign investor friends; I heard the President of the Corporate Council for Africa say that some foreign investors are interested in agriculture in Nigeria. We welcome them. Come, Nigeria will receive you.

What is your view about the effectiveness of the CBN Investor and Exporters FX window that was created to stabilise the naira?

CBN Governor, Mr. Godwin Emefiele

The Governor of Central Bank of Nigeria, Mr. Godwin Emefiele, spoke about the banking system, exchange rate and the prospect of the economy in an interview with journalists in Lagos. OYETUNJI ABIOYE was there. Excerpts

The Nigerian economy exited recession in the second quarter after five consecutive quarters of negative growth. What hopes lies ahead?

We have just managed to exit the economic recession with a fragile growth of 0.5 per cent; we have seen inflation trending downwards; we have seen exchange rate and reserves looking stronger and firmer. But I think we are determined to continue to push further to see to it that Nigeria returns to its historical growth path. The 0.5 per cent or two per cent is not the historical growth path for Nigeria. Nigeria is a country that must grow at a rate that is at least twice the population growth rate (six per cent, seven per cent). And until we achieve that, we are not going to rest on our oars. To see that Nigerians are happy again and that we grow the country, God has bestowed us as leaders; he has given us the opportunity to serve our people.. God has put these in our hands and we do owe them the responsibility to ensure that we put policies in place that will make Nigeria good for everybody. We want to continue to join hands with our friends in the foreign investment community to do that. Nigeria has a lot of potential. The environment is good, the climate is good. That is why we make bold to say Nigeria is good for business. There are very big countries in the world you will visit today and say you want to invest, whose returns are not as high as you have in Nigeria. We are battling with unemployment in Nigeria, and that is the reason again the President called on the Federal Ministry of Agriculture, the CBN, Ministry of Employment, Labour and Productivity, and some important stakeholders including the governors together and said there was a need to start thinking about how to create jobs for our people through agriculture; that agric should not be seen as business that is meant for the poor? that you could make money from agriculture. Countries that have progressed have done so because they took the agric sector very seriously. We are determined to make agric the sector where people make money and we have decided to put in place the Anchor Borrowers Programme. Before we introduced the ABP, farmers would go into rice farming and all the yield they were getting was one to 1.5 metric tonnes per hectare. After we started the ABP, today we are beginning to see farmers getting yield as high as eight metric tonnes per hectare, reducing their costs and making it possible to make good profit in rice cultivation.

We have seen that there is a need for us to think about how to improve the wealth of our rural community. We started that journey and through rice; we have achieved that. The Nigerian government is confident that through agriculture, the wealth of our people can be boosted. And that is the journey we are embarking on. We want to invite all of you, our friends and foreign investor friends; I heard the President of the Corporate Council for Africa say that some foreign investors are interested in agriculture in Nigeria. We welcome them. Come, Nigeria will receive you.

What is your view about the effectiveness of the CBN Investor and Exporters FX window that was created to stabilise the naira?

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I must say that in six months, we have seen about $10bn inflows to Nigeria as a result of the opening of that window. We are grateful to them for showing confidence in Nigeria again. But I think all this also is because President Muhammadu Buhari has always said that we had unfortunately been hit by this exogenous shocks and it had resulted in inflation and plummeting in reserves. We needed at some point to look at the items Nigeria imports into the country. Nigeria is a big market, no doubt; 180 million people growing at an average population rate of three per cent annually. It is certainly a big market. But then it is important to cast our minds back and begin to ask ourselves some questions. There was a time in Nigeria when we produced everything we were eating. We were producing rice and palm oil, among others.. Nigeria was the highest producer and exporter of palm oil in the world with over 40 per cent market share some times in the 60s and 70s. But unfortunately because we found oil, we decided to take things easy. What we are saying is that: the President said we had tasted this before, we had done it before, it is not about re-inventing it. Our climate is good; let us fold our sleeves and begin to feed ourselves again, and save our reserves for some of those items that we cannot produce as a country. And that has led us to where we are today. We are delighted we put FX restriction on 41 items. We were castigated and I was reading in the Economist magazine that what we did was to just move around the home and pick items including toothpicks. I think it is important to know what we are doing. If you go to China where they are producing the toothpicks, those things can be produced in a place that is less than a quarter of a room. How much is neededto invest in the equipment that is used in producing toothpick? We were importing toothpicks. Bamboo is what is used in producing toothpicks. As a result of our policies, people come out of school today and they are now producing toothpick, creating jobs for our people. That is what is found in the spirit of Nigerians. A couple of weeks ago, I picked up a toothpick that is being produced by a Nigerian. That toothpick is stronger than the one that is being imported from China. But I think as far as we are concerned, it is about creating jobs for our people. Nigeria is the largest producer of cassava. We were importing starch and glucose. Nigerian companies that could produce starch and glucose would go to companies in need of starch and glucose and all the companies were telling them was our stock level was high. They said they would visit them when their stock level went low. Unfortunately, their stock level did not go low until we imposed the FX restriction on these items. Their stock level went low and they started to patronise Nigerian companies that were producing starch and glucose. Today, companies that require starch and glucose for their pharmaceuticals and formulations patronise Nigerians. This has created jobs for us. That is the spirit of Nigerians. This is part of the reasons the President said we needed to patronise made-in-Nigeria and I am happy that we are doing this. But I think it is also important that we thank everybody, particularly Nigerians.

What is your general assessment of the foreign exchange market?

The fundamentals that we see show that there is a lot of stability in the FX market, having come down from the high level to the level that we are now.. It is a good level compared to where we were coming from. But we think it is important to know that as reserves get stronger and the economic fundamentals get stronger, there is no doubt that the naira will get stronger and we will see more appreciation in the currency.

The IMF has said there are threats to the banking system. What is your view?

I do not think that is correct. What was said was that the Central Bank of Nigeria should focus on their banking system to ensure there is no significant distabilisation, because anything that destabilises the banking system will have adverse impact on the economy. We are keeping our eyes on the banking system to ensure there are no significant threats that will alter the strategic health of the banking system, to the point where we have to think about things that will create problems for the economy.

There is a lot of attention on the banking system to the point that we are saying there are certain banks that are too big to fail. What we are doing is to ensure that no bank will fail in Nigeria whether big or small. What we will continue to do is to see to it that we put in place strong policies that will continue to guide them. Is it capital, is it liquidity? All these will be put in place to continue to ensure that the banks remain strategically healthy to be able to perform the roles they are supposed to play in the economy so as to achieve growth and development in the economy.

What is your view about remittances into Nigeria? Some say we are targeting $36bn annually. I have been looking for this $36bn and unfortunately, I have not been able to see it. The point is that what we are trying to do is to encourage our brothers in Diaspora to keep remitting funds to daddy a.d mummy  at home and also to invest in their country. This is because they do not have any other place they can call home but Nigeria. We will put in place policies that will continue to encourage them.

We are working on how we can actually link credit bureau arrangement to the foreign borrowing arrangement so that once there is a link between Nigeria and the foreign credit system, it will be easy for them to even borrow from Nigeria, and get some form of attachment to the credit system that they have abroad, either in the United States or the United Kingdom. It will be easy for them to access credit and begin to build their businesses, so that when they retire, they can come back to Nigeria.

What is your view on the state of our economy currently?

In the light of our policy responses, we are delighted that the economy has turned a corner with our worst days clearly behind us. For example, After five quarters of continuous contraction of the GDP, the economy recorded a positive growth of 0.55 per cent in 2017. During this period, core inflation and imported food inflation, similarly fell from 17.90 per cent and 20.95 per cent, respectively, to 12.12 percent and 14.83 per cent. Food inflation, however, rose from 17.82 per cent to 20.32 per cent.. The inertia exhibited by food prices inflation reflected, among other things, the rising prices of farm inputs and supply shortages, intermittent clashes between farmers and herdsmen, as well as the lingering problems in the

We have also seen a significant appreciation of the naira from over N500/US$1 to about N360/US$1. In addition, we have seen stability in the rate for over six months now. I am glad to note that the exchange rate is not only stable, it is also converging across various windows and segments of the market. Our reserves have recovered significantly from a low of just over $23bn in October 2016 to over $34.3bn as of November 3, 2017. The accretion in reserves does not only reflect increased inflow but also our shrewd FX demand management strategy. When we introduced a policy restricting 41 items from our FX markets, we were called all manners of names. Today ladies and gentlemen, among the benefit of that policy is the considerable decline in our import bills. From an average of about $5.5bn, our monthly import bill has fallen consistently to $2.1bn in 2016 and $1.9bn by half year 2017. This is indeed commendable. The World Bank’s ease of doing business indicator for 2018 showed that Nigeria with a score of 52.03, improved 24 places to rank 145 out of 190, standing above the regional average score of 50.43 recorded for sub-Saharan Africa. I must note that the CBN efforts reinforced the Presidential initiatives to improve ease of doing business in Nigeria. The establishment, nurturing and administration of the Credit Bureau and the National Collateral Registry contributed in no small measure at improvement of access to credit and enhancing the ease of doing business in Nigeria. In addition, the introduction of the transparent I&E FX Window which boosted investor’s confidence and eased market sentiments also buoyed our doing business indicator. Due to the dogged implementation of our FX restriction on certain items, we have recorded spectacular improvements in domestic production of most of these items. Local manufacturers are reporting major boosts to their revenue and profit due to the policy.

In line with an agreement we reached with Unilever, the company will be commissioning a new Blue Band Factory in Agbara, Ogun State early next month. We have also seen a sharp drop in imports of rice from several countries. To give one example, data from the Thailand’s Rice Exporters Association indicate that in 2012, about 1.2 million Metric Tonnes of rice was exported to Nigeria. However, in 2016, which was the first full year of implementation of our policy, rice exports to Nigeria had fallen by 99 percent to only 784 Metric Tonnes. This significant reduction in imports of rice from Thailand represents a saving of over $600 million to Nigeria in 2016 alone. It is heart-warming to note that this fall in imports have been largely filled by a boost in local rice production. For example, employees at Labana Rice Mills in Kebbi State are trying to keep pace with demand, processing 320 tons of a rice a day, a 250 per cent increase from the previous year. From Kano, UMZA rice has expanded its milling capacity substantially to the extent that with the recent bumper paddy harvest, the company today takes delivery of over 100 trucks of paddy rice daily. These are clearly verifiable successes of government’s attempts to create jobs locally, improve the wealth of our rural population, improve industrial capacities and ultimately attain economic growth in Nigeria.

What are your projections for the economy?

I believe inflationary pressure will continue to ease. I believe that it may return to very low double digit or high single-digit levels during the next year. Though the base effect had diminished, I expect that as the socio-economic factors that are driving food inflation are resolved, the inertia therein would dissipate and the pace of headline disinflation will grow. the FX reserves will continue to grow. Over the last 12 months, Nigeria’s FX reserves grew by over $10bn from just over $23bn in October 2016 to over $33bn in October 2017. It is my belief that if we remain resolute with our efforts, policies and actions, we can attain an FX reserve position of about $40bn by the end 2018. Economic recovery will consolidate. As the sentiments improve in the macroeconomy and supported by proactive monetary, trade, industrial and fiscal policies, I expect a continued uptick in the GDP growth with a positive spillover to improved unemployment rate. As policies to strengthen the agricultural and industrial sectors become more emergent, growth in these sectors will rise, further bolstering overall economy. Exchange rate stability will continue. As we entrench and sustain the transparency in the FX market, as the FX reserves accretion continues, and market confidence and improved sentiments remain, I expect that the exchange rate will not only be stable but will begin to appreciate against major currencies. The adverse competitiveness outcome which such appreciation may entail will be adequately mitigated by proactive policies to ensure that our balance of payments position is not undermined. Monetary policy stance could change when the underlying fundamentals become supportive. If the pace of disinflation becomes adequate and we see inflation at predicted levels, I am very optimistic that the MPC may begin to see strong justification for an easing of monetary policy, which may further accelerate the recovery process. I expect a re-doubling of strong policy coordination, collaboration and cooperation which flourished during the very difficult times. To sustain our recovery the need is greater now than ever for a robust policy coordination between the key aspects of economic policymaking space. In Nigeria, this will include fiscal, monetary, exchange, and trade policies, which must be targeted at protecting farmers to boost agricultural outputs, support local companies and enhance manufacturing and industrial capacities, with a view to diversifying the economy away from oil and fossil fuels.

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Naira Appreciates, Jumps To N359 Against Dollar

The naira on Thursday appreciated to N359.56 in the Investor and Exporter (I&E) Foreign Exchange, forex.

The indicative exchange rate for the I & E Forex Window, known as Nigerian Autonomous Foreign Exchange, NAFEX, appreciated to N359.56 per dollar.

It jumped from Wednesday’s market rate which stood at N360.70 per dollar.

This indicates an appreciation of N1.14 kobo in the value of the local currency.

Meanwhile, the volume of dollars traded in the window, yesterday, was $191.07 million from $299.80 million exchanged on Wednesday.

This indicates a 2.9 per cent decrease in the volume of dollars traded in the market.

Meanwhile, the Central Bank of Nigeria, CBN, has continued its sustenance of foreign exchange liquidity by injecting another $195m into the inter-bank foreign exchange market, even as the naira maintains its strength.

Figures released by the bank showed that it offered the sum of $100m to the wholesale segment, while the Small and Medium Enterprises segment received the sum of $50m.

The invisibles segment comprising tuition, medical payments and basic travel allowance received $45m.

The bank’s Acting Director, Corporate Communications, Isaac Okorafor, said the intervention was in line with the CBN’s continual determination to ensure forex liquidity and satisfy legitimate demands.

Okorafor said the bank would continue to intervene in the nation’s forex market in order to sustain the liquidity in the market and guarantee the international value of the naira.

 

 

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Budget: N2tn Debt Service Provision Unsustainable, Says LCCI

The Lagos Chamber of Commerce and Industry has described as unsustainable the debt service provision of N2.014tn in the 2018 budget proposal submitted by President Muhammadu Buhari to the National Assembly on Tuesday.

The LCCI, however, commended the commitment of the government to the restoration of the January-December budget cycle, saying it would be good for planning purposes both in the public and private sectors of the economy.

It, therefore, appealed to the National Assembly to ensure a speedy consideration of the appropriation bill in order to normalise the budgetary cycle.

The Director-General, LCCI, Mr. Muda Yusuf, said this would enhance predictability and confidence of investors in the economic management process.

He noted that the 2018 budget proposal of N8.6tn represented an increase of 16 per cent over that of 2017.

“The debt service provision of N2.014tn is 82.6 per cent of total capital allocation and 30 per cent of total revenue. This is clearly on the high side and not sustainable,” he said.

The group said it appreciated the efforts of the government to rebalance the debt portfolio in the light of increasing burden of debt service on its finances and the crowding-out effect of its borrowing on the private sector.

It described the outlook of the macro-economic fundamentals as positive, with the external reserves at $34bn as of October, declining inflation and stability of the exchange rate.

“We welcome the proposal by the government to consolidate on this positive outlook,” Yusuf said.

Noting that the exchange rate assumption of N305 to the dollar was unrealistic, he added, “For all practical purposes, the exchange rate in the economy is between N350 and N365 to the dollar.

“We appreciate the fact that 30.8 per cent of the budget will be allocated to capital projects. The emphasis on infrastructure spending is also being sustained.”

He highlighted the need to further reduce the cost of governance; scale up remittances of surpluses from the Ministries, Departments and Agencies to the coffers of government; refocus the tax drive from direct to indirect taxes in line with the National Tax Policy; and curb the growing incidence of multiplicity of taxes and levies on businesses at all levels of government.

The LCCI DG added, “We welcome the priority accorded to infrastructure in the budget proposal focusing on roads, railways, power projects, water projects and the second Niger Bridge. We welcome the decision to connect the Lagos-Ibadan standard gauge rail line to the Apapa and the Tin-Can Island ports. But time is of the essence.

“There is an urgent need to save the private sector and investors from the agony of persistent gridlock at the Apapa and Tin-Can ports, which account for over 70 per cent of import and export cargoes in the country.”

While noting the assurance of Buhari on the redemption of the promises made to the oil-producing areas of the Niger Delta, Yusuf said, “We commend the renewed commitment to accelerate the ease of doing business reforms. These and more will facilitate the progress and stability of the economy.”

He noted that it was imperative to put in place policies to mobilise private sector capital into the infrastructure space, adding that this should include the broad spectrum of policies like tax, monetary, trade and investment.

“Policy choices that create rent opportunities and distortions should be avoided. The principles of transparency, equity and level playing field should be observed at all times. This is critical for the sustenance of investor confidence,” he said.

The LCCI stressed the need for clarifications on the status of the budgetary appropriation for petroleum subsidy, both for the current fiscal year and 2018.

“It is also necessary to throw some light on the status of the estimated N800bn debt to oil marketers. Investors in this sector would like to see a sustainable framework for the management of petrol subsidy,” Yusuf added.

According to him, there is also a need for clarification on the status of the Asset Management Corporation of Nigeria’s debt estimated at about N5tn within the debt management framework of the government and framework for payment of contractor arrears, which cut across various MDAs.

“The non-payment of the contractor arrears has taken a huge toll on many contractors. Amount involved has been estimated at over N1tn,” he said.

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