Economy
Heritage Bank, LCFE Explore Commodities Market to Boost FX Liquidity
By Aduragbemi Omiyale
Recently, the Central Bank of Nigeria (CBN) launched a policy aimed to boost foreign exchange (FX) liquidity in the country with a policy known as the CBN RT200 FX Programme.
The scheme intends to generate about $200 billion in forex repatriation in the next three to five years through non-oil exports.
Nigeria, which is the largest economy in Africa, has mainly relied on the sale of crude oil for FX earnings and because of the global economic meltdown caused by the COVID-19 pandemic, it has not earned much, putting pressure on the Naira at the exchange rate market.
To help the apex bank achieve the forex repatriation goal, Heritage Bank Plc, Lagos Commodities and Futures Exchange (LCFE) and other participating financial institutions came together to explore opportunities on export revenue from the commodities market.
At a breakfast meeting organised by LCFE with bankers tagged The CBN RT200 FX Programme: and Potential of Export Revenue from the Commodities Ecosystem, representatives from Heritage Bank, FSDH, Agvest Limited, Novo Merchant Bank amongst others spoke on the matter.
Speaking on the opportunities for financial institutions in the CBN RT200 FX Programme, the Divisional Head, Agribusiness, Natural Resources & Project Development, Heritage Bank, Mr Olugbenga Awe, stated that the promotion of investment in commodities ecosystem by financial institutions in partnership with LCFE in its various assets traded in Agric commodities, energy and solid minerals would increase liquidity support from local commodity exportation to boost the race for the $200billion in FX repatriation and reduce the pressure on exchange rate.
Meanwhile, he identified challenges that expediently needed to be addressed which may likely hinder financial institution’s efforts on supporting the commodities ecosystem to drive the CBN’s RT200 FX target, such as inadequate export finance resources, lack of dependable source of local product prices, risk of haulage to bad roads amongst others.
Mr Awe explained that to significantly boost local production of exportable commodities and drastically reduce the country’s dependence on oil revenue, financial institutions must play the role of market markers to the Commodity Exchange (COMEX), thereby bringing liquidity to the exchange.
According to him, with COMEX as a risk mitigation platform, there is a need for the Warehouse (WR) finance structure to be registered with LCFE and the collateral management in place, which is within the parameters set by banks.
He further explained that banks must actively participate in crop receipts, liaise with their brokers to develop the value chain around a well market structure warehouse receipts systems (WRS).
This, he said would help stimulate demand amongst players from the aggregators, off-takers for standardized contracts that help deepen the value chain while providing financing that increased volumes traded.
Mr Awe, however, reiterated that promoting investment in commodities ecosystem via structured WR finance would bring about value addition to commodities with the help to moderate the prices, as the expected increase in demand would increase revenue export and make deposit money banks self-sufficient in meeting the FX needs of their customers.
The banker, who enumerated how financial institutions can partner with commodity exchange especially LCFE to deepen their footprints in various asset classes traded by LCFE, also referenced what Heritage Bank is doing in the Wheat Value Chain together with CBN investing N40 billion, which will scale up wheat production during harvest season.
According to him, whatever can be achieved in wheat can be replicated across the various value chains in rice, maize, others and ensuring that there is a link to the commodity exchange.
MD of LCFE, Mr Akin Akeredolu-Ale, who commended Heritage Bank for its sterling efforts in deepening its footprints in agribusiness, called on banks and other organisations to take advantage of the catalytic and transformational approach to support the CBN RT200 FX initiative.
He stressed that to achieve the target, there was a need for the creation and registration of Bank Commodity Desks with LCFE and Central Securities Clearing System (CSCS).
He noted that the stakeholders’ structure in financing the commodities ecosystem include Commodity Exchange, Commercial Banks, Non-Interest Banking, Merchant Bank.
Mr Akeredolu-Ale, who decried that the Nigerian economy was still import driven and depended largely on the export of petroleum to meet FX earnings, revealed that LCFE has lined up products such as commodity instruments, commodity-backed notes, Exchange-traded funds, Commodity Spot Contracts amongst others as a bumper for driving huge export revenue from commodities ecosystem to fast track the actualisation of $200 billion in FX repatriation.
By Adedapo Adesanya
Food Concepts Plc neutralized the gains recorded by three securities, returning the NASD Over-the-Counter (OTC) Securities Exchange into the negative territory with a 0.27 per cent loss on Thursday, December 4.
Yesterday, the share price of the parent company of Chicken Republic and PieXpress declined by 34 Kobo to sell at N3.15 per unit compared with the previous day’s N3.49 per unit.
This shrank the market capitalisation of the OTC bourse by N5.72 billion to N2.136 billion from N2.142 trillion and weakened the NASD Unlisted Security Index (NSI) by 9.57 points to 3,571.53 points from 3,581.10 points.
Business Post reports that Central Securities Clearing System (CSCS) Plc went down by 50 Kobo to N38.50 per share from N38.00 per share, FrieslandCampina Wamco Nigeria Plc gained 29 Kobo to sell at N55.79 per unit versus N55.50 per unit, and Geo-Fluids Plc added 5 Kobo to close at N4.60 per share compared with Wednesday’s closing price of N4.55 per share.
Trading data indicated that the volume of securities recorded at the session surged by 6,885.3 per cent to 4.3 million units from the 61,570 units posted a day earlier, the value of securities increased by 10,301.7 per cent to N947.2 million from N3.3 million, and the number of deals went up by 146.7 per cent to 37 deals from the 15 deals achieved in the previous trading session.
At the close of business, Infrastructure Credit Guarantee Company (InfraCredit) Plc was the most traded stock by value on a year-to-date basis with the sale of 5.8 billion units for N16.4 billion, trailed by Okitipupa Plc with 170.4 million units worth N8.0 billion, and Air Liquide Plc with 507.5 million units valued at N4.2 billion.
InfraCredit Plc also finished the session as the most traded stock by volume on a year-to-date basis with 5.8 billion units transacted for N16.4 billion, followed by Industrial and General Insurance (IGI) Plc with 1.2 billion units sold for N420.2 million, and Impresit Bakolori Plc with 536.9 million units traded for N524.9 million.
By Dipo Olowookere
The upward trend witnessed at the Nigerian Exchange (NGX) Limited in recent sessions continued on Thursday as it further improved by 0.10 per cent.
This was despite investor sentiment turning bearish after the local equity market ended with 23 price gainers and 28 price gainers, indicating a negative market breadth index.
UAC Nigeria gained 10.00 per cent to finish at N88.00, Morison Industries appreciated by 9.94 per cent to N3.54, Ecobank rose by 8.53 per cent to N36.90, and Coronation Insurance grew by 8.47 per cent to N2.56.
On the flip side, Ellah Lakes depreciated by 10.00 per cent to N13.14, Eunisell Nigeria also shed 10.00 per cent to finish at N72.90, Transcorp Hotels slipped by 9.95 per cent to N157.50, Omatek shrank by 9.23 per cent to N1.18, and Guinea Insurance dipped by 8.46 per cent to N1.19.
Yesterday, the All-Share Index (ASI) went up by 152.28 points to 145,476.15 points from 145,323.87 points and the market capitalisation chalked up N97 billion to finish at N92.726 trillion compared with the previous day’s N92.629 trillion.
Customs Street was bubbling with activities on Thursday, though the trading volume and value slightly went down, according to data.
A total of 1.9 billion stocks worth N19.2 billion exchanged hands in 23,369 deals during the session versus the N2.3 billion valued at N21.0 billion traded in 21,513 deals a day earlier.
This showed that the number of deals increased by 8.63 per cent, the volume of transactions depleted by 17.39 per cent, and the value of trades decreased by 8.57 per cent.
For another trading day, eTranzact led the activity chart with 1.6 billion units sold for N6.4 billion, Fidelity Bank traded 31.0 million units worth N589.3 million, GTCO exchanged 28.3 million units valued at N2.5 billion, Zenith Bank transacted 27.1 million units for N1.6 billion, and Ecobank traded 21.9 million units worth N744.3 million.
By Adedapo Adesanya
The Naira marginally depreciated against the United States Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Thursday, December 4 amid renewed forex pressure associated with December.
At the official market yesterday, the Nigerian currency lost 0.01 per cent or 18 Kobo against the Dollar to close at N1,447.83/$1 compared with the previous day’s N1,447.65/$1.
It was not a different scenario with the local currency in the same market segment against the Pound Sterling as it further shed N15.43 to sell for N1,930.97/£1 versus Wednesday’s closing price of N1,925.08/£1 and declined against the Euro by 20 Kobo to finish at N1,688.74/€1 compared with the preceding session’s N1,688.54/€1.
Similarly, the Nigerian Naira lost N5 against the greenback in the black market to quote at N1,465/$1 compared with the previous day’s value of N1,460/$1 but closed flat against the Dollar at the GTBank FX counter at N1,453/$1.
Fluctuations in trading range is expected to continue during the festive season as traders expect the Nigerian currency to be stable, supported by intervention s by to the Central Bank of Nigeria (CBN)in the face of steady dollar demand.
Support is also expected in coming weeks as seasonal activities, particularly the stylised “Detty December” festivities, will see inflows that will give the Naira a boost after it depreciated mildly last month, according to a new report.
“As the festive Detty December season intensifies, inbound travel, tourism spending, and diaspora inflows are expected to provide moderate support for FX liquidity,” analysts at the research unit of FMDA said in its latest monthly report for November.
Traders cited by Reuters expect that the Naira will trade within a band of N1,443-N1,450 next week, buoyed by improved FX interventions by the apex bank.
Meanwhile, the crypto market was down as the US Federal Reserve’s preferred inflation gauge, core PCE, likely rose in September—moving in the wrong direction. However, volatility indices show no signs of major turbulence.
If the actual figure matches estimates, it would mark 55 straight months of inflation above the US central bank’s 2 per cent target. The sticky inflation would strengthen the hawkish policymakers, who are in favour of slower rate cuts.
Ripple (XRP) depreciated by 4.5 per cent to $2.08, Solana (SOL) went down by 3.8 per cent to $138.11, Litecoin (LTC) shrank by 3.1 per cent to $83.23, Dogecoin (DOGE) slid by 2.5 per cent to $0.1463, Cardano (ADA) declined by 2.1 per cent to $0.4368, Bitcoin (BTC) fell by 0.9 per cent to $91,975.45, Binance Coin (BNB) crumbled by 0.9 per cent to $899.41, and Ethereum (ETH) dropped by 0.7 per cent to $3,156.44, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closed flat at $1.00 apiece.
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