Major Economy, Industry and Corporate News In Nigeria Right Now (UPDATED)!

Here are some of the major events in the business world in Nigeria right now:

Nigeria's Forex Reserves Increse To Over $29billion, Highest Since December 2015

Data from the CBN’s website shows Nigeria’s foreign exchange reserves is now $29 billion,  the highest it has been since December 2015.

The CBN has been building reserves since late last year even as the exchange rate has plummeted to an all time high of N515/$1 in the black market. 

The CBN Governor was queried by the National Economic Council on Thursday on the widening disparity between the interbank and parallel exchange rate, requesting that a new policy direction be crafted. The CBN Governor requested for more patience. 

Analysts from Renaissance Capital believe the build up of reserves is ahead of a potential change in the CBN’s forex policy that may warrant a ditch of the 41 banned items for increase in tariffs.

CAC Workers Embark on 3-Days Warning Strike

Workers at the Corporate Affairs Commission (CAC) earlier in the week on Wednesday began a three day warning strike. Reasons for the strike border on salary arrears, and lack of training. These common place labour mattershas led to the complete paralysis of activities in the agency, with its resultant wider implications on Nigeria’s image as a business destination very dire.

For a country that claims to be doing all it can to improve ease of doing business in it, the inability to carry a task as simple as registering a company name does not represent sincere efforts to back the promise. The negative implications could also have an indirect effect on the attempt to bring the country’s economy back to the path of survival as foreign investors are likely to be deterred from doing business due to minor snags such as this.

It is hoped that whatever reasons the workers have for carrying out this industrial action, the appropriate bodies will quickly step in to resolve the issues and allow business to resume in the Corporation.

More Details on the Proposed 3,500 Workers To Be Sacked by the Nigerian Government

The Federal Government (FG) through the Federal Character Commission has shortlisted over 3,500 workers under the employ of the FG who will lose their jobs despite the current recession and pleas from government officials for private sector companies to stop mass retrenchment. Information about the sacking exercise as reported by Daily Times shows the following 6 facts.

1. The South bears the highest burden with more than 60% of those to be sacked coming form the South
2. The South-East, followed by the South-West were the worst hit regions with the North Central being the Northern region with the highest casualties.
3. Almost all ministries were affected by the sacking exercise.
4. The Ministry of Communication has the least number of staff to be sacked (66) while the Ministries of Education (809) has the highest number to be sacked.
5. Reasons given for the sack were “irregular appointments are appointments that are not backed by approved declared vacancies, in which case, government does not have the financial provision for them.”, fake appointment letters or that “the offers were not accepted within the stipulated two months.”
6. The exercise is ongoing and more workers could lose their jobs as time goes on.

CBN Releases New Forex Guidelines

As a result of claims that made the rounds a few weeks ago, the Central Bank of Nigeria (CBN) has released a new guideline to prevent a repeat occurrence of what the bank termed to be ‘a misunderstanding’.

 The CBN’s new directive now requires that banks file their returns on the sale of foreign currency in dollars to avoid ambiguities, which the apex bank claims is partly responsible for the misunderstanding that led to erroneous media reports. According to the Acting Director of Communications in CBN, Isaac Okorafor, the allegations of inconsistencies in the foreign exchange rates given to foreign exchange buyers by the CBN was rather a reflection of transactions in third currencies such as the Japanese Yen and South African Rand.

“Following observations of different exchange rates after the last publication on our website, we called for explanations from the banks concerned. In response to our queries to them, apart from some observed formatting errors, the concerned banks reported that the returns were sent on the basis which the transactions were conducted. The transactions concerned were consummated in third currencies such as Japanese Yen and South African Rand (YEN/ZAR), Euros to Dollars and Dollars to South African Rand (USD/ZAR).”

“As a result, there is no way any DMB or the CBN will deal in forex transaction at the rate of 61 kobo to the dollar, N18 or N3 to the dollar as was erroneously reported. The aforementioned are third currency transactions and when properly translated, will be in line with the prevailing forex rate range in the interbank market,” Okorafor said.

It is as a result of this the CBN is now requiring banks to report the purchases and sales of foreign exchange between the commercial banks and their customers in dollars to prevent this misunderstanding from repeating itself.

CBN Pegs Dollar Rate For School Fees, PTA At N375/$ 

In line with its determination to boost dollar supply in the economy as well as to bridge the wide gap between the interbank foreign exchange (FX) market and the parallel market, the Central Bank of Nigeria (CBN) yesterday pegged the Naira exchange rate for payment of school fees (strictly universities) abroad and Personal Travel Allowance (PTA) at N375 to the dollar.

The central bank disclosed this in a closed-door meeting it held with all chief executive officers of commercial banks as well as other authorised FX dealers in attendance. The meeting took place in Lagos.

A source who was at the meeting said the new rate for school fees and PTA would become effective from Monday.

According to the source, the CBN Governor, Mr. Godwin Emefiele who chaired the meeting, assured that the central bank would provide enough dollars to meet all FX demands for these invisible items.

“For tuition fees, the CBN said it would only cater for those in the universities and the persons involved can only get $15,000 per term and the FX would be wired directly to the school abroad. We (the banks) were all told to ensure compliance and that heavy sanction awaits any authorised FX dealer that flouts this rule,” the source added.

THISDAY also gathered that applicants for FX for tuition fees must have tax clearance certificates and Bank Verification Number.

The move, according to another source is to drastically reduce FX round-tripping which appears to be one of the factors responsible to the wide gap between the interbank FX market and the parallel market.

On the other hand, for PTA, the source said: “People are entitled to PTA only if their flight(s) is not less than five hours and they are only entitled to $4,000 per quarter.

“The CBN has also undertaken to provide enough dollar liquidity to see these through.”

Emefiele had while making a presentation to members of the National Executive Council (NEC) on Thursday appealed for patience, saying that the CBN was working on halting the widening gap between the interbank FX market and the parallel market.

The NEC members had generally expressed concern over the current situation of the exchange rate and called for an urgent review of the current forex policy, especially the gap between interbank and the parallel market rates.

But Emefiele sued for patience and understanding, assuring that the situation was being closely managed.

Meanwhile, the Naira maintained its value of N516 to the dollar on the parallel market yesterday.

Bankers Committee and CBN Agree On New $20million Weekly Allocation For Invisibles 

Each of Nigeria’s twenty banks will receive an allocation of one million dollars weekly from Monday for sale to their customers to cover medicals, school fees, personal and business travel, BusinessDay has authoritatively learnt. The relief was agreed at Friday’s bankers committee meeting.

Pharma-Deko Plc Wants Guinness Nigeria Plc Wound Up Over N175m Debt

Pharma-Deko Plc has asked a Federal High Court in Lagos to wind-up Guinness Nigeria Plc over a debt of  N175,699, 317.99 it claims it is being owed.

Why the request to liquidate Guinness?

It appears Pharmadeko entered into a canning agreement with Guinness Nigeria Plc which the latter eventually breached. They did not provide reasons why the contract was breached. Upon breaching the contractual agreement, the matter went into arbitration and it was resolved that Guinness pays a sum of N175.6 million to Phamadeko.

Pharmadeko is apparently now requesting that Guinness be liquidated because they are yet to receive the money. Interestingly, Guinness did not disclose this matter in its interim report for the period ended December 2016.

Overnight Lending Rates Double on CBN Cash Withdrawals

The banking system’s overnight lending rate more than doubled to 25 per cent on Friday from 10.17 per cent on Thursday after the Central Bank of Nigeria sold open market bills and debited commercial banks for bond purchases, Reuters reported.
The CBN sold N178.44bn ($586.01m) in 321-day treasury bills at 18.6 per cent and N19.14bn of 174-day paper at 18 per cent, draining cash from the money market and pushing up the cost of borrowing among commercial lenders, traders said.

It also debited commercial banks’ accounts for the purchases of N160bn worth of long tenor bonds and N202.4bn in treasury bills sold at auctions on Wednesday, leaving the market with little cash for transactions. The Debt Management Office and the CBN had raised N160bn in local currency bonds at its second debt auction this year and N202.4bn treasury bills at another auction, respectively same Wednesday.

On Thursday, the money market had a cash surplus of about N83.89bn compared with N55.07bn a week ago. However, about N120bn in treasury bills is expected to mature and repaid next week.

Meanwhile, the nations’ foreign exchange reserves climbed to $29bn as of February 15, their highest level in 19 months, the CBN data showed on Friday.

NSE indices up by 0.44%, turnover 232.43%

Activities on the Nigerian Stock Exchange (NSE) closed for the week on Friday on a positive note, with the turnover volume appreciating by 232.43 per cent, while market indices grew by 0.44 per cent.

The News Agency of Nigeria (NAN) reports that a total of 480 million shares valued at N1.98 billion were exchanged by investors in 2,713 deals.

This was in contrast with a turnover of 144.39 million shares worth N1.54 billion transacted by investors in 2,303 deals on Thursday. NAN reports that Staco Insurance drove the activity chart with an exchange of 252.12 million shares worth N126.06 million.

United Capital followed having accounted for 61.96 million shares valued at N24.88 million and Zenith International Bank traded 59.53 million shares worth N893.06 million.

FCMB Group sold 21.29 million shares valued at N27.53 million and FBN Holdings traded 15.19 million shares worth N50.33 million.

In the same vein, the market indicators closed higher with a growth of 0.44 per cent due to price appreciation recorded by some highly capitalised stocks.

An analysis of the price movement table indicated that Total Nigeria led the gainers’ table gaining N2.90 to close at N273.01 per share.

Nigerian Breweries came second with a gain of N1.98 to close at N115 and Julius Berger added N1.82 to close at N38.39 per share.

PZ Industry gained N1.23 to close at N13.39 and Presco Plc increased by N1.01kobo to close at N47.01 per share.

Conversely, Forte oil recorded the highest loss for the day, shedding N3.11 to close at N59.21 per share.

UAC Property trailed with loss of 10k to close at N1.94, while Custodian and Allied Insurance lost 8k to close at N3.34 per share.

Guinness Nigeria shed 5k to close at N60.95 and Livestock dipped 4k to close at 76k per share.