Economy
World Bank Silent on Conditions for Nigeria’s $1.5bn Loan Request
By Modupe Gbadeyanka
The World Bank Group has remained silent on the conditions it plans to attach to the $1.5 billion loan request from Nigeria.
The administration of President Muhammadu Buhari had announced its intention to approach the global lender for the financial assistance.
The reason was because of the drain in revenue caused by the coronavirus pandemic, which crashed the price of crude oil at the international market.
Nigeria, Africa’s largest economy by size, relies heavily on the sale of oil for foreign earnings and since the outbreak became very pronounced in early 2020, funding of the budget has been threatened.
When Mr Buhari signed the 2020 Appropriation Bill into law last December, the benchmark for crude oil was at $57 per barrel with an average daily production of over 2 million barrels per day.
However, the pandemic forced a downward review in March 2020 to $30 per barrel and later to $25 per barrel this month, with an average daily production of 1.7 million barrels per day.
In April 2020, Nigeria, alongside other oil producers in the world, especially from the Organisation for the Petroleum Exporting Countries (OPEC), agreed to cut global supply by 10 percent to 9.7 million barrels per day.
Under its own quota, the Africa’s largest producer of the of the commodity was asked to reduce its supply to 1.4 million barrels per day in May and June 2020.
This agreement has helped price of crude oil to jump to over $30 per barrel since the deal became effective on Friday, May 1, 2020.
When the coronavirus outbreak affected Nigeria’s economy, the federal government ran to the World Bank to seek for a $1.5 billion loan to help carry out its main duties in the country.
The World Bank has said this request would be considered in two months’ time and a decision announced.
In an interview with Reuters on Friday, the Director of the World Bank for Nigeria, Mr Shubham Chaudhuri, stated that, “We were hoping to present to our board by late July or latest early August, because the government will need the finance.”
Mr Chaudhuri said further that, “The immediate challenge is a fiscal one: How does the government marshal the fiscal resources to keep basic government functions going?”
However, he declined to comment on any conditions the bank hopes the country fulfils before granting the loan.
But the lead economist of World Bank on Nigeria, Mr Marco Hernandez, informed Reuters that, “We have been recommending a move towards a unified exchange rate and a more flexible exchange rate for some time,” emphasising that it would help the recovery and boost investor confidence.
Nigeria operates a multiple exchange rate system and this has been very confusing to investors.
While the official exchange rate is N361 to a Dollar, the exchange rate at the black market is over N450 per Dollar, while at the Investors and Exporters (I&E) window is over N380/$1.
Last Thursday, the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, warned that Nigeria’s economy could fall into a recession in 2020 with a 8.9 percent contraction.
The last time the country slipped into an economic crisis was in 2016, a year after Mr Buhari became President. If Nigeria falls into another recession, it would be the second under his administration and the first President to lead the country into recession two times in the same regime.
Business Post reports that last month, the International Monetary Fund (IMF) approved Nigeria’s $3.4 billion loan request. The money was withdrawn from the bank by the country and is expected to be repaid in five years, with two years moratorium.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange extended its stay in the south territory with a decline of 0.56 per cent on Wednesday, April 2.
This brought down the market capitalisation by N13 billion to N2.417 trillion from N2.430 trillion, and downed the NASD Unlisted Security Index (NSI) by 22.57 points to 4,062.87 points from the previous session’s 4,062.87 points.
It was observed that the NASD exchange ended with three price gainers and three price losers during the trading day.
MRS Oil Plc depreciated by N19.00 to close at N171.00 per unit compared with the previous price of N190.00 per unit, NASD Plc lost N4.14 to trade at N37.36 per share compared with Wednesday’s N41.50 per share, and Central Securities Clearing System (CSCS) Plc gave up N2.00 to sell at N78.00 per unit versus N80.00 per unit.
On the flip side, FrieslandCampina Wamco Nigeria Plc appreciated by 19 Kobo to N93.00 per share from N92.81 per share, Food Concepts Plc expanded by 15 Kobo to N2.87 per unit from N2.72 per unit, and Great Nigeria Insurance (GNI) Plc improved by 2 Kobo to 52 Kobo per share from 50 Kobo per share.
Yesterday, the volume of securities dipped by 91.8 per cent to 260.2 million units from 3.2 billion units, the value of securities went down by 98.1 per cent to N154.2 million from N8.3 billion, while the number of deals soared by 53.3 per cent to 46 deals from 30 deals.
GNI Plc was the most active stock by value on a year-to-date basis with 3.4 billion units worth N8.4 billion, followed by CSCS Plc with 56.9 million units valued at N3.9 billion, and Okitipupa Plc with 27.5 million units traded for N1.8 billion.
The most traded stock by volume on a year-to-date basis was also GNI Plc with 3.4 billion units sold for N8.2 billion, trailed by Resourcery Plc with 1.1 billion units exchanged for N415.7 million, and Infrastructure Guarantee Credit Plc with 400 million units transacted for N1.2 billion.
By Adedapo Adesanya
The Naira dropped N2.09 or 0.15 per cent against the United States Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Thursday, April 2, to trade at N1,380.79/$1 compared with Wednesday’s rate of N1,378.70/$1.
However, it appreciated against the Pound Sterling in the official market by N2.77 to quote at N1,824.86/£1 versus the N1,836.57/£1 it was traded at midweek, and improved its value against the Euro by N10.54 to N1,591.92/€1 from N1,602.46/€1.
Yesterday was the last trading session of the week for the local currency in the spot market, as the market will be closed on Friday and Monday for the Easter Holiday.
At the black market, the Nigerian Naira maintained stability against the greenback yesterday at N1,405/$1, but gained N8 at the GTBank FX counter to settle at N1,388/$1, in contrast to the previous session’s N1,396/$1.
Pressure eased on the domestic currency as strong policy indicators have helped calm the majority of worries within the financial systems. Particularly in the remittance segment, the apex bank has directed all International Money Transfer Operators (IMTOs) to route remittance transactions through designated Naira settlement accounts in banks, a move aimed at boosting transparency and channelling more foreign exchange into the formal market.
This helps take off pressure from the foreign reserves, which have fallen below the $50 billion mark as they are gradually decreasing rather than falling sharply.
Meanwhile, the cryptocurrency market was bullish on Thursday, as macro sentiment shifted against recent optimism after reports that Iran is drafting a protocol with Oman to manage traffic through the Strait of Hormuz, easing concerns about disruptions to a key global oil route.
The remarks came after U.S. President Trump on Wednesday night vowed to hit Iran “extremely hard” in the coming weeks and that the Strait of Hormuz would “open naturally” once the war ends.
Cardano (ADA) chalked up 1.9 per cent to trade at $0.2435, Dogecoin (DOGE) grew by 1.2 per cent to $0.0912, Ethereum (ETH) appreciated by 0.8 per cent to $2,066.37, Bitcoin (BTC) added 0.5 per cent to sell at $67,080.53, Solana (SOL) increased by 0.5 per cent to $79.91, and Ripple (XRP) jumped 0.2 per cent to $1.31.
Conversely, Binance Coin (BNB) dipped 0.7 per cent to $586.90, and TRON (TRX) depreciated by 0.3 per cent to $0.3147, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closed flat at $1.00 each.
By Dipo Olowookere
The local stock market was relatively flat on Friday, as the bears and the bulls shared the spoils of war, though investor sentiment turned bullish compared with the preceding session’s bearish posture.
Data from the Nigerian Exchange (NGX) Limited showed that the All-Share Index (ASI) was marginally down by 4.66 points as it ended at 201,698.89 points versus Wednesday’s 201,703.55 points, and the market capitalisation slightly contracted by N3 billion to N129.806 trillion from N129.809 trillion.
Customs Street was shut on Friday because of the public holidays declared by the federal government today and next Monday.
Business Post reports that John Holt declined by 9.91 per cent to N15.45, Abbey Mortgage Bank shed 9.60 per cent to trade at N8.95, International Energy Insurance slipped by 6.48 per cent to N3.32, Chams shrank by 5.30 per cent to N3.75, and Tantalizers depreciated by 5.18 per cent to N4.03.
On the flip side, Unilever Nigeria improved by 10.00 per cent to N103.40, Fortis Global Insurance gained 9.82 per cent to trade at N1.23, Multiverse appreciated 9.81 per cent to N20.15, Legend Internet advanced by 9.38 per cent to N6.30, and Zichis grew by 9.02 per cent to N14.14.
The market breadth index was positive during the trading session, as there were 35 appreciating stocks and 24 depreciating stocks.
Yesterday, investors traded 560.0 million equities valued at N19.3 billion in 49,676 deals, in contrast to the 815.5 million equities worth N33.3 billion transacted in 52,641 deals in the preceding day, representing a drop in the trading volume, value, and number of deals by 31.33 per cent, 42.04 per cent, and 5.63 per cent, respectively.
Secure Electronic Technology dominated the activity log with 59.7 million shares valued at N61.1 million, Wema Bank exchanged 52.0 million equities worth N1.4 billion, VFD Group transacted 36.0 million stocks for N410.5 million, Access Holdings sold 35.3 million shares valued at N914.8 million, and Chams traded 31.0 million equities worth N115.0 million.
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