Economy
Currency Swap Deal: CBN Lacks Transparency—Vitafoam Boss
By Dipo Olowookere
Managing Director of Vitafoam Nigeria Plc, Mr Taiwo Adeniyi, has accused the Central Bank of Nigeria (CBN) of not being transparent in its dealings with stakeholders in the industry.
Mr Adeniyi was quoted by Daily Sun as saying that the apex bank sometimes shows partiality when carrying out its policies.
He was reacting to the announcement made by the CBN Governor, Mr Godwin Emefiele, of the bank’s readiness to buy Commercial Paper (CP) from large companies in order to lend to them at single digit interest rate.
According to Daily Sun, some companies were still waiting for the policy document from the CBN on this.
When asked for his opinion of the issue, the Vitafoam chief said, “When they (CBN) are taking such decisions, they have certain companies they are working with. So, they know what they are doing. When they are taking such decisions they know which organizations can issue commercial paper.
“They know the people they want to use it to help. Even the Yuan they are talking about; has it started? Is it operational?
“The news has gone all over the world that we are doing currency swap. Who and who are benefiting from it? They should tell us.
“Even the commercial banks that know how to operate it, you will hear them say they are still waiting for CBN.
“And yet, it is in the news that they have started the currency swap. So, when they are taking decisions, they know the companies they are targeting to help. So they just push it under the guise of every one of us,” Mr Adeniyi was quoted as saying.
But reacting to the allegation of being biased and not transparent, spokesman of the central bank, Mr Isaac Okorafor, when he contacted by Business Post, said the apex bank has always been plain in its operations.
“Which aspect of the deal (currency swap) does he feel we are not transparent? Is it in the amount of the deal or the rate or the trading?
“On the former, anyone doubting us can crosscheck with the PBoC. On the latter, trading is open and transparent and dealers are allowed to quote whatever they like.
“However as in the rules of the market, anyone who makes an unreasonable quote will be punished by the extent of his or her deviation from the rate that we feel should clear the market.
“It is done to ensure that speculation is put at bare. We have just started this process and with time, we will perfect it,” Mr Okorafor told Business Post in a text message.
Also commenting on the intention of the CBN to buy CP from firm, Managing Director of Afrinvest Securities Limited, Mr Ayodeji Ebo, said the development was a form of quantitative easing and advised the apex bank to come up with structures that will make SMEs participate in it.
“This is a form of quantitative easing. The only reservation is that this will be mainly enjoyed by the blue chip companies due to the SMES inability to issue Commercial Paper. The CBN may need to come up with structures that will enable the SMEs take part in the quantitative easing as this segment is more critical to the growth of the economy,” he said.
The CBN Governor had said at the end of the last Monetary Policy Committee (MPC) meeting in Abuja that the apex bank would buy commercial paper from large companies to lend to them at single digit interest rate.
“The MPC deliberated extensively on what can be done to encourage banks to lend to the private sector because of the numbers we looked at during the main meeting. The MPC was concerned that credit to the real sector was sliding and there was need to incentivise the banks to lend to the private sector.
“At this meeting, we saw improvement which was gratifying, but we feel we must still do what we want to do. In order to achieve lowering interest rate especially to agriculture and manufacturing sectors, we will encourage large corporates to issue CP into the market. In order to complement the banks, we expect that the CP will come in single-digit of 9 percent or below 10 percent, and for a long tenor, as high as five years or seven years, with a two-year moratorium, and for specific purposes.
“If the CBN sees those kinds of notes in the market, we will complement the efforts of the banks through any mechanism to support that by lending to that corporate at that single-digit rate. It is not meant to be in competition with the banks, it is meant to complement their efforts. We want to see that our objective to see to it that we achieve lower interest rate of a single digit can come through this means.
“If a bank lends such money for new projects or plant expansion and it is verifiable, not for refinancing, a project for seven years inclusive of two years moratorium at 9 percent. That bank providing those evidence and verified by the CBN, we will go into bank’s Cash Reserve Ratio and we will release cash of the equivalent sum to that bank at zero cost. In which case, that bank will earn its spread of 9 per cent of that money.
“We feel this is novel. It is something that we should give a chance. In the past, we had reduced CRR and released liquidity into the market, but the liquidity was not channelled into the high-impact, employment-generating sectors and productivity sectors of the economy.
“That is why we feel we should approach it through this means. We believe this will work. We will, from time to time, monitor the level of liquidity in the market and we feel that rather than the banks using their monies to buy Treasury Bills, they can put money into these sectors. And we will provide the liquidity to fund these transactions, as long as they meet these specified terms and conditions.”
A commercial paper (CP) is an unconditional promise by a person to pay to the order of another person a certain sum at a future date.
By Aduragbemi Omiyale
The much-awaited Annual General Meeting (AGM) of Oando Plc will take place on Tuesday, December 17, 2024, at 10 am in Lagos, a statement from the energy company has revealed.
The day would be used to present the audited financial statements of the organisation for the year ended December 31, 2023, to shareholders.
Oando will also seek the approval of investors to appoint Mr Ken Igbokwe and Mr Bashir Bello to the boards of the company with effect from Monday, November 25, 2024.
Mr Igbokwe is a highly experienced management and consulting professional with over 35 years of expertise in various sectors, including oil and gas, financial services and the public sector.
During his distinguished career at PwC Nigeria, he held key leadership roles in Assurance, Tax and Consulting.
His experience spans a wide range of areas such as statutory, financial and process audits and assurance, business valuations, dispute resolution, financial and information systems risk management, corporate strategy development, corporate performance management, and tax planning.
In his role as Country Leader of PwC Nigeria, Mr Igbokwe was responsible for driving strategic thinking and the visioning that underpinned the growth of the firm.
He was in this leadership position for 10 years during which PwC Nigeria’s business recorded tremendous growth with PwC becoming the leading “Big 4” brand. He led the PwC West Africa business into the Africa-wide PwC merger in 2012.
The new appointee contributes to public discourse and debates on public sector transformation in Nigeria and on matters which focus on corporate governance and the strengthening of the investment climate.
Mr Igbokwe holds a B.Sc. (Eng) degree in Mechanical Engineering from Imperial College, London University, which he attended as a Shell Scholar and graduated from, in 1978.
He is a current member of the Institutes of Chartered Accountants in England and Wales and Nigeria. He is also a current member of the Chartered Institute of Taxation of Nigeria.
On his part, Mr Bello is an oil and gas professional with over 32 years of experience in Technical and Executive Management positions across the industry. His expertise spans all sectors, from Downstream (Refining) to Midstream (LNG) and Upstream (Exploration and Production), with a strong focus on Operations, Engineering, Project Management, and Corporate Governance.
He has served as a Board Member for Shell Petroleum Development Company of Nigeria Limited, Bonny Gas Transport Company, NLNG Ship Manning Company Limited, and various Board Committees of Nigeria LNG.
With a proven ability in Interface and Stakeholder Management, he is skilled at delivering business value in Joint Ventures with diverse shareholder agendas, managing projects with complex interfaces and stakeholder expectations, and overseeing operations with diverse functional requirements and limited resources.
Mr Bello holds a Bachelor of Engineering (B.Eng.) in Mechanical Engineering from Bayero University Kano, Nigeria. He is a Fellow of the Nigeria Society of Engineers (NSE), and a Registered Engineer with the Council for the Regulation of Engineering in Nigeria (COREN).
By Adedapo Adesanya
The Central Bank of Nigeria (CBN) has raised the monetary policy rate by 25 basis points to 27.50 per cent to further tackle rising inflation in Nigeria.
This was disclosed by the Governor of the apex bank, Mr Yemi Cardoso, at the end of the 298th Monetary Policy Committee (MPC) meeting in Abuja.
This is the sixth time that the country has hiked interest rate this year after it announced a 50-basis-point that brought the previous rate to 27.25 per cent in September 2024.
The rationale for increasing interest rates is that higher interest rates increase the cost of borrowing for individuals and businesses. This creates a ripple effect that reduces loans spent on items like homes, cars, and investments and curbs overall spending in the economy.
Normally, low interest rates can lead to excessive borrowing and investments in assets that will then inflate their prices.
Also, increased interest rates make saving more attractive as depositors earn more on their savings. It is widely accepted that saving reduces the demand for goods and services and thus helps to stabilise prices.
Mr Cardoso also used the opportunity to reiterate that the CBN will continue to employ necessary means to bring down inflation.
He projected that Nigeria’s high inflation should moderate by the end of the first quarter of 2025.
The inflation rate continued its upward trend in October 2024, impacted by rises in the price of food, electricity, and fuels, as it came in at 33.88 per cent, relative to the September 2024 headline inflation rate of 32.70 per cent.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange dropped by 0.37 per cent to open the week on a negative foot on Monday, November 25.
The NASD OTC market capitalisation lost N3.95 billion during the trading day to settle at N1.050 trillion compared with the previous trading day’s N1.054 trillion and the Unlisted Security Index (NSI) decreased by 11.26 points to wrap the session at 2,997.68 points compared with 3,008.94 points recorded in the previous session.
This happened as there was no gainer or loser on record during the session, according to daily trading data.
However, there was a rise in the volume of securities traded during the opening session of the week as investors exchanged 1.7 million units compared with last Friday’s 157,791 units, indicating an increase of 948 per cent.
Also, the value of shares traded yesterday grew by 4.8 per cent to N6.5 million from the N6.2 million recorded in the preceding trading day.
The number of deals carried out in the trading session remained unchanged at 20 deals.
Geo-Fluids Plc remained as the most active stock by volume (year-to-date) with 1.7 billion units sold for N3.9 billion, Okitipupa Plc came next with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc followed with 297.3 million units worth N5.3 billion.
Aradel Holdings Plc remained the most active stock by value (year-to-date) with 108.7 million units worth N89.2 billion, Okitipupa Plc came next with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc was in third with 297.3 million units sold for N5.3 billion.
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