Economy
CBN Extends Naira for Dollar Promo Deadline
By Dipo Olowookere
The deadline for the promo introduced by the Central Bank of Nigeria (CBN) to boost diaspora remittances in the country has been extended.
The initiative tagged Naira 4 Dollar allows beneficiaries of foreign fund transfers through any of the accredited International Money Transfer Operators (IMTOs) to earn N5 for every $1, which could be cashed out over-the-counter or transferred into the beneficiary’s bank account.
The promo started on March 8, 2021, and was supposed to end on May 8, 2021, but the apex bank has now extended the deadline indefinitely.
In a circular issued by A.S. Jibrin for the Director of Trade and Exchange Department of the CBN, it was stated that the promo will continue till further notice.
“Further to the CBN circular referenced TED/FEM/PUB/FPC/01/003 dated March 5, 2021, on the above subject matter, we hereby announce the continuation of the scheme until further notice.
“All aspects of the operationalization of the programme remain the same.
“Please take note and ensure compliance,” the circular stated.
Business Post reports that the CBN introduced the Naira for Dollar promo to increase the flow of Dollars into the country, especially at a time the country was experiencing a shortage in FX earnings from crude oil sales.
The apex bank had said the promo would help Nigeria “to make the process of sending remittance through formal bank channels cheaper and more convenient for Nigerians in the diaspora.”
It had also said the scheme would “ensure that remittance flows and diaspora investments become a significant source of external financing” for the nation.
The Governor of the CBN, Mr Godwin Emefiele, had explained that the models had been applied in Pakistan and Bangladesh. He said both South Asian countries had introduced reimbursement schemes to support inflows.
In the CBN chief’s words, “In Pakistan, the scheme, which is known as free send, has enabled record amount of inflows of over $2 billion a month even during the COVID-19 pandemic.
“Bangladesh introduced its own scheme in June 2019, which is a two per cent rebate on remittance inflows. Following this action, they have also seen a 20 per cent boost in remittance inflows.”
A respected Economist, Mr Bismarck Rewane, while speaking on the likely implications of the currency promo during a chat with Business Morning on Channels TV in March, said it was designed to increase the country’s awareness and the inflows of Nigeria’s diaspora into the country’s financial system.
However, he noted that it was rare for the government to use such promotional schemes to promote inflows into the country.
“What is challenging here is that it is very unusual for policies to be tied around promos or gimmicks. Usually, promos and gimmicks are used by manufacturers to launch or push products, or airlines when they have low sales.
“So, they tie this kind of promo to buy one get one free or to revamp stagnant sales. So, it’s very unusual and peculiar for governments to engage in gimmicks or promos,” he noted.
But he warned that there are a lot of risks associated with the policy because some people will round trip the policy using arbitrage. Arbitrage is the simultaneous purchase and sale of the same asset in different markets in order to profit from tiny differences in the asset’s listed price.
“So, people will try to use arbitrage on the system. But the fact is that Nigeria is number six in the world in terms of diaspora and workers remittances. It is estimated at about $20 to $25 billion [annually].
“The current pandemic and unemployment rates in the US, Canada, the European Union and the United Kingdom are also going to affect the ability of Nigeria to remit money in.
“These two trends have actually dropped sharply because of vaccination certificates and all sorts of the pandemic effect. So, basically, in the end, I think it’s a gimmick. It is a promo, the central bank will fully understand in the end that there’s no other way of managing an exchange rate than converging them, having one rate so that people don’t stop exploiting it.
“In any case, you collect cash, and you take it to the parallel market or autonomous sources to sell the Naira, and then come back and you get the N5. What could happen is that you could turn $1,000 back again to your brother, who will bring it back.
“So, what could happen is that there could be what I call playing with neurons, the same money turning around the velocity of separation increasing, whilst the quantity supplied into the market will not increase.
By Adedapo Adesanya
The duo of Geo-Fluids Plc and Afriland Properties Plc propelled the NASD Over-the-Counter (OTC) Securities Exchange up 0.13 per cent on Friday, January 10.
Investors gained N1.4 billion during the trading session after the market capitalisation of the bourse ended at N1.053 trillion compared with the previous day’s N1.052 trillion, and the NASD Unlisted Security Index (NSI) increased at the close of business by 4.07 points to wrap the session at 3,073.93 points compared with 3,069.86 points recorded at the previous session.
Geo-Fluids added 25 Kobo to its value to close at N4.85 per unit compared with the previous session’s N4.60 per unit, and Afriland Properties Plc gained 24 Kobo to close at N16.25 per share versus Thursday’s closing price of N16.01 per share.
There was a 35.4 per cent fall in the volume of securities traded in the session as investors exchanged 4.3 million units compared to 6.6 million units traded in the preceding session, the value of shares traded yesterday went down by 37.4 per cent to N17.2 million from the N27.5 million recorded a day earlier, and the number of deals decreased by 47.2 per cent to 19 deals from the 36 deals recorded in the preceding day.
FrieslandCampina Wamco Nigeria Plc remained the most active stock by value (year-to-date) with 1.9 million units worth N74.2 million, followed by 11 Plc with 12,963 units valued at N3.2 million, and Industrial and General Insurance (IGI )Plc with 10.7 million units sold for N2.1 million.
IGI Plc closed the day as the most active stock by volume (year-to-date) with 10.6 million units sold for N2.1 million, trailed by FrieslandCampina Wamco Nigeria Plc with 1.9 million units valued at N74.2 million, and Acorn Petroleum Plc with 1.2 million units worth N1.9 million.
By Adedapo Adesanya
The Naira witnessed a depreciation on the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Friday, January 10.
According to data from the FMDQ Exchange, the local currency weakened against the greenback yesterday by 0.12 per cent or N1.80 to sell for N1,543.03/$1 compared with the preceding day’s N1,541.23/$1.
The pressure on the domestic currency came as the access granted to the Bureaux de Change (BDC) operators by the Central Bank of Nigeria (CBN) to purchase FX from the official market through the Electronic Foreign Exchange Matching System (EFEMS) platform prepares to end next week, precisely on January 19.
The CBN had given a 42-day window to the operators to access the platform to help stabilise the Naira in December, and this expires next week.
On Friday, the Nigerian currency tumbled against the Pound Sterling in the official market by N30.78 to sell for N1,889.29/£1 compared with the previous day’s N1,858.51/£1, but gained N5.48 against the Euro to finish at N1,583.81/€1, in contrast to Thursday’s rate of N1,589.29/€1.
As for the parallel market, the Nigerian Naira remained stable against the US Dollar during the trading session at N1,650/$1, according to data obtained by Business Post.
In the cryptocurrency market, it was bearish as the US economy added 256,000 jobs last month, the Bureau of Labor Statistics reported on Friday, topping forecasts for 160,000 and up from 212,000 in November (revised from an originally reported 227,000).
However, the readings came after a number of recent economic reports triggered a broad-market pullback across asset classes such as crypto as investors quickly scaled back the idea of a continued series of Federal Reserve rate cuts in 2025.
Cardano (ADA) fell by 3.6 per cent to trade at $0.921, Solana (SOL) slumped by 2.8 per cent to $185.93, Ethereum (ETH) depreciated by 1.4 per cent to $3,233.27, Litecoin (LTC) lost 1.3 per cent to finish at $103.62, Dogecoin (DOGE) shed 0.5 per cent to sell at $0.3315, Bitcoin (BTC), waned by 0.2 per cent to $94,154.43, and Binance Coin (BNB) went south by 0.1 per cent to $693.30.
On the flip side, Ripple (XRP) jumped by 1.5 per cent to settle at $2.34, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) sold flat at $1.00 each.
By Dipo Olowookere
Profit-takers took control of Customs Street on Friday, plunging it by 0.08 per cent at the close of trading activities.
The sell-offs were across all the key sectors of the Nigerian Exchange (NGX) Limited on last trading session of the week.
The insurance space went down by 1.53 per cent, the banking index depreciated by 0.41 per cent, the consumer goods sector weakened by 0.16 per cent, and the energy counter slumped by 0.08 per cent, while the industrial goods sector closed flat.
At the close of business, the All-Share Index (ASI) tumbled by 79.68 points to 105,451.06 points from 105,530.74 points and the market capitalisation retreated by N48 billion to N64.303 trillion from N64.351 trillion.
Yesterday, investors traded 1.5 billion shares worth N19.4 billion in 12,877 deals compared with the 489.5 million shares worth N13.1 billion transacted in 13,010 deals in the preceding day, indicating a decline in the number of deals by 1.02 deals and a rise in the trading volume and value by 203.14 per cent and 48.09 per cent, respectively.
Wema Bank was the busiest stock with 976.2 million units valued at N9.8 billion, Tantalizers traded 53.0 million units worth 129.6 million, Universal Insurance sold 34.8 million units for N26.8 million, Access Holdings exchanged 33.9 million units valued at N843.8 million, and Nigerian Breweries traded 27.3 million units worth N873.3 million.
The heaviest loss was suffered by Sunu Assurances with a decline of 9.99 per cent to trade at N7.30, Eunisell shed 9.96 per cent to N17.35, SAHCO crumbled by 9.87 per cent to N30.15, DAAR Communications plunged by 9.28 per cent to 88 Kobo, and Sovereign Trust Insurance went down by 7.04 per cent to N1.32.
On the flip side, C&I Leasing gained 10.00 per cent to close at N4.51, Honeywell Flour appreciated by 9.99 per cent to N10.02, Trans Nationwide Express jumped by 9.89 per cent to N2.00, RT Briscoe rose by 9.83 per cent to N2.57, and Secure Electronic Technology grew by 9.46 per cent to 81 Kobo.
Business Post reports that the bourse ended with 33 price gainers and 25 price losers, indicating a positive market breadth index and strong investor sentiment.
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