Nigerian Business News – Week in Review

Stock Exchange
The floor of the Nigerian Stock Exchange

The introduction of the new foreign exchange market by the Central Bank of Nigeria has brought a change in the Nigerian financial market. Herein are details and highlights in the business sector for this week.

Naira crashes to 288/dollar at new official market

The naira plunged by 31 percent to 288.85 against the United States dollar on Monday at the close of trading at the newly established interbank market.

The local currency also depreciated at the parallel market where it closed at 346 to the greenback, down from around 330 and 335 on Friday.

The Central Bank of Nigeria had last week introduced new guidelines for the nation’s foreign exchange market with the adoption of a single structure through the interbank/autonomous window.

Forex trading: NSE loses N163bn on first day

The stock market started the week with a loss of N163bn in market capitalistically at the close of trading on the floor of the Nigerian Stock Exchange on Monday.

A total of 33 losers emerged, with Ecobank Transnational Incorporated Plc, Nigerian Breweries Plc, Nigerian Aviation Handling Company Plc, PZ Cussons Nigeria Plc and Dangote Sugar Refinery Plc emerging as the top five losers.

New forex policy will ring short-term pain, says Ecobank

With the commencement of trading under the new foreign exchange guidelines on Monday, the Group Chief Executive Officer, Ecobank Transnational Incorporated, Mr. Ade Ayeyemi, has said there will be short-term pain and a need for adjustments.

Ayeyemi, who I spoke with exclusively, commended the decision by the Central Bank of Nigeria to liberalize the forex market.

The CBN had last week said based on the new guidelines, the value of the naira against other currencies would be market-driven, putting an end to its peg of N197-N199 to the United States dollar.

CBN okays Wema Bank as FXPD

Wema Bank Plc on Monday announced that it had been appointed as one of the primary dealers in the foreign exchange interbank market by the Central Bank of Nigeria.

The bank said in a statement that with this new appointment, it was positioned as one of the banks to deal with the CBN in wholesale foreign exchange transactions (minimum of $10m) on a two-way quote basis, among other obligations as stated in the new forex guidelines.

The Managing Director and Chief Executive Officer of Wema Bank; Segun Oloketuyi, was quoted as saying, “This is a great achievement for the bank, which is presently undergoing a thorough business evolution. The appointment of Wema Bank as a primary dealer definitely implies that we control a relatively higher proportion of forex market volumes, which will be positive for our net interest revenue line.”

Lafarge Africa

Lafarge Africa concludes N60bn bond issuance

Lafarge Africa Plc has concluded its Series I and II N60bn bond issuance, comprising N26,386,000,000 three-year bond at 14.25 percent, which is due in 2019, and a N33,614,000,000 five-year bond 14.75 percent due in 2021.

The firm stated that the proceeds of the bond issuance would be used to partly refinance the debt of its wholly owned subsidiary, United Cement Company of Nigeria Limited.

Floating exchange rate, a positive step-CIS

The Chartered Institute of Stockbrokers has lauded the Central Bank of Nigeria for the re-introduction and re-modeling of the floating single foreign exchange policy, saying it is a positive and bold step.

The move, it noted in a statement on Monday, attested to the dynamism of the apex bank in policy evolution for the greater benefit of the economy.

“The operating dynamics of the new framework as stipulated by the CBN is in accordance with the tenets of democratic capitalism of which the highlights are, market-driven systems, free participation within individual limitations and the ‘invisible hand’,” it explained.

Senate queries CBN on N120bn aviation intervention fund

The Senate took a swipe at the Central Bank of Nigeria and beneficiaries of the N120bn released to the aviation sector out of the N500bn intervention dispersed in 2011.

The Senate Committee on Aviation and Anti-Corruption, at a public hearing, frowned on the way the N120bn was allocated to the aviation sector as a bailout and allegedly was mismanaged and diverted.

But the Minister of Transportation, Rotimi Amaechi, told the committee that his ministry and agencies under it, based on available records, were not aware of the fund.

FG to raise foreign borrowing to 40 percent

The Federal Government unveiled earlier this week, a new debt management plan for 2016 to 2019, aimed at raising the country’s foreign debt portfolio to 40 percent of the total debt mix.

At a news briefing in Abuja, the Director-General of the debt management office, Dr. Abraham Nwankwo, said foreign loans were cheaper than domestic loans.

eTranzact targets reducing unbanked to 10 percent this year

eTranzact says it is on track to explore the network of the Nigerian Postal Services to reduce the unbanked population in the country to 10 percent before the end of 2016.

The e-payment solution provider stated this while responding to an inquiry on why it abandoned its 2008 agreement with Nipost to drive the growth of mobile money services and subsequently reduce Nigeria’s unbanked population.

Results from a total demographic study carried out by the Enhancing Financial Innovation and Access Group showed that from a sample of 93.5 million Nigerian adults, only 33.9 million people are banked – while those unbanked are 59.6 million.

However, eTransact’s Chief Executive Officer, Mr. Valentine Obi, said that the network of postal outlets operated by Nipost constituted the most widespread retail network in the country to boost financial inclusion, “especially in reducing the unbanked population to about 10 percent (about 5.9 million).”

(With information from the Punch Newspaper)