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CBN Maize Import Ban May Cripple Poultry Sector—Don

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Ikechukwu Kelikume maize imports

By Dipo Olowookere

When a few days ago, the Central Bank of Nigeria (CBN) directed authorised foreign exchange (forex) dealers in the country to stop selling Dollars to importers of maize, many farmers jumped for joy.

They were happy because like in the rice sector, where the ban on importation has been largely effective, this policy will most likely make them richer because of the possible rise in demand.

But the Director of the Lagos Business School Agribusiness Programme, Dr Ikechukwu Kelikume, has warned that the policy may cripple the poultry industry, where relies on the commodity to feed their birds.

The don described the forex ban on maize imports as ill-timed, with potentially negative consequences for the struggling sector.

He said maize, which constitutes over 50 per cent of poultry feed content, is currently very scare and where available, is very expensive, even as the price keeps rising.

Although he admitted that the CBN’s earlier policies of Agric, Small and Medium enterprise scheme and the Anchor Borrowers Programme have been largely successful, he opined that the current decision to discontinue the processing of Form M for the importation of Maize could reverse the gains of those interventions.

Business Post reports that on July 13, 2020, the apex bank announced restricting access for the importation of maize, explaining that the decision was taken “to increase local production, stimulate a rapid economic recovery, safeguard rural livelihoods and increase jobs which were lost as a result of the ongoing COVID-19 pandemic.”

But for Mr Kelikume, “The situation spells doom for poultry farmers across the country who are beginning to cut down on production because of the high cost of feed and imported medication for the birds.”

He stressed that, “A negative spillover effect of the high cost of feed is the scarcity of eggs and a consequent rise in its price across the country.”

The don noted that, “The implications of the current challenges in the maize value chain are that the gains of employing more people in the agricultural sector will be rolled back in the coming months.”

“As it stands, there is no alternative for the poultry farmers, as the poultry sector will face a catastrophic shortage of feeds, a critical input in their business.

“This situation will render tens of thousands of them unemployed and undo all the gains made by this sector in the past five years.

“Thousands of poultry businesses will shut down in the face of high operating costs, leaving business owners and their employees without a means of livelihood,” he added.

The university teacher stated that the apex bank’s decision to ban maize importation was too abrupt, urging the CBN to reverse the decision.

“As a matter of necessity, the CBN’s decision to discontinue the processing of Form M for the importation of Maize/Corn must be revisited.

“It is expedient at this time for the Central Bank to allow importers of maize to import it through the CBN Foreign exchange window, to close the gap in maize shortage while preparing for phased discontinuation of maize importation in the country,” he submitted.

Mr Kelikume estimates the current shortfall in the maize value chain to be around 100,000 metric tons, which translates to an import bill of less than $20 million, describing that as a negligible import burden, even in the current tight foreign exchange situation, and a small price to pay to salvage the poultry sector.

“The time to act is now. The government must put its mechanism in place to import Maize into the country as a temporary measure to plug the pending scarcity that is imminent in the last quarter of the year 2020. Nigeria has a high production potential for maize.

“Notwithstanding, the current challenge is that the production and supply bottlenecks in the sector have first to be checkmated for any meaningful import restriction measure to be effective,” the LBS Agribusiness Programme Director further counselled.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via [email protected]

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Economy

Naira Trades N1,533/$1 at Official Market, N1,650/$1 at Parallel Market

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Naira at P2P Market

By Adedapo Adesanya

The Naira appreciated further against the United States Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) by N1.50 or 0.09 per cent to close at N1,533.00/$1  on Friday, December 13 versus the N1,534.50/$1 it was transacted on Thursday.

The local currency has continued to benefit from the Electronic Foreign Exchange Matching System (EFEMS) introduced by the Central Bank of Nigeria (CBN) this month.

The implementation of the forex system comes with diverse implications for all segments of the financial markets that deal with FX, including the rebound in the value of the Naira across markets.

The system instantly reflects data on all FX transactions conducted in the interbank market and approved by the CBN.

Market analysts say the publication of real-time prices and buy-sell orders data from this system has lent support to the Naira in the official market and tackled speculation.

In the official market yesterday, the domestic currency improved its value against the Pound Sterling by N12.58 to wrap the session at N1,942.19/£1 compared with the previous day’s N1,954.77/£1 and against the Euro, it gained N2.44 to close at N1,612.85/€1 versus Thursday’s closing price of N1,610.41/€1.

At the black market, the Nigerian Naira appreciated against the greenback on Friday by N30 to sell for N1,650/$1 compared with the preceding session’s value of N1,680/$1.

Meanwhile, the cryptocurrency market was largely positive as investors banked on recent signals, including fresh support from US President-elect, Mr Donald Trump, as well as interest rate cuts by the European Central Bank (ECB).

Ripple (XRP) added 7.3 per cent to sell at $2.49, Binance Coin (BNB) rose by 3.5 per cent to $728.28, Cardano (ADA) expanded by 2.4 per cent to trade at $1.11, Litecoin (LTC) increased by 2.3 per cent to $122.56, Bitcoin (BTC) gained 1.9 per cent to settle at $101,766.17, Dogecoin (DOGE) jumped by 1.2 per cent to $0.4064, Solana (SOL) soared by 0.7 per cent to $226.15 and Ethereum (ETH) advanced by 0.6 per cent to $3,925.35, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.

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Economy

Index Gains 0.63% as Value of Nigerian Exchange Crosses N60trn

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Nigerian Exchange Limited

By Dipo Olowookere

For the fourth consecutive trading session, the Nigerian Exchange (NGX) Limited closed higher on Friday by 0.63 per cent on sustained renewed buying pressure.

Apart from the energy and industrial goods sectors which closed flat, every other sector ended in the green territory, according to data obtained from the bourse.

Business Post reports that the insurance index appreciated by 1.52 per cent, the banking space improved by 0.63 per cent, and the consumer goods counter expanded by 0.46 per cent.

As a result, the All-Share Index (ASI) gained 617.47 points to settle at 99,378.06 points compared with the preceding day’s 98,760.59 points and the market capitalisation went up by 375 billion to close at N60.242 trillion, in contrast to Thursday’s closing value of N59.867 trillion.

The volume of transactions on Customs Street yesterday grew by 11.13 per cent to 544.2 million shares from the 489.7 million shares transacted a day earlier.

The value of transactions increased during the session by 49.30 per cent to N10.6 billion from N7.1 billion and the number of deals went up by 1.93 per cent to 8,464 deals from the 8,304 deals posted in the previous trading session.

The busiest equity for the trading day was Japaul with the sale of 71.7 million units valued at N158.0 million, eTranzact exchanged 70.7 million units worth N477.5 million, Tantalizers sold 57.3 million units for N101.2 million, FCMB traded 33.0 million units worth N297.3 million, and Universal Insurance transacted 27.1 million units valued at N9.6 million.

A total of 36 stocks ended on the gainers’ chart, while 15 stocks finished on the losers’ table, indicating a positive market breadth index and strong investor sentiment.

The trio of Aradel Holdings, Ikeja Hotel and Caverton gained 10.00 per cent each to trade at N550.00, N8.80, and N1.98, respectively, as Africa Prudential rose by 9.87 per cent to N17.25 and Golden Guinea Breweries soared by 9.64 per cent to N8.64.

On the flip side, Austin Laz lost 10.00 per cent to close at N1.62, ABC Transport crashed by 8.00 per cent to N1.15, Royal Exchange slumped by 7.69 per cent to 60 Kobo, Secure Electronic Technology plunged by 5.26 per cent to 54 Kobo, and The Initiates crumbled by 4.26 per cent to N2.25.

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Economy

Oil Jumps on Fresh Sanctions Amid Ease in Interest Rates, Demand Boost

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crude oil supply disruption

By Adedapo Adesanya

Oil climbed by about 2 per cent on Friday on expectations that additional sanctions on Russia and Iran could tighten supplies and that lower interest rates in Europe and the US could boost fuel demand.

Brent futures went up by $1.08 or 1.5 per cent to settle at $74.49 a barrel and the US West Texas Intermediate (WTI) futures expanded by $1.27 or 1.8 per cent to close at $71.29 per barrel.

European Union ambassadors agreed to impose a 15th package of sanctions on Russia this week over its war against Ukraine, targeting its shadow tanker fleet.

The sanctions would target vessels from third countries supporting Russia’s war in Ukraine and add more individuals and entities to the sanctions list.

The sanctions package is likely to be formally adopted at a meeting of EU foreign ministers on Monday and will target close to 30 entities, over 50 individuals and 45 tankers.

Also, the US is considering similar moves that might target some Russian oil exports, before Donald Trump returns to the White House.

Britain, France and Germany told the United Nations Security Council they were ready if necessary to trigger a so-called “snap back” of all international sanctions on Iran to prevent the country from acquiring nuclear weapons.

The move comes as Iran has suffered a series of strategic setbacks, including Israel’s assault on Tehran’s proxy militias Hamas in Gaza and Hezbollah in Lebanon and the ouster of Iranian ally Bashar al-Assad in Syria.

Meanwhile, data from China this week showed that crude imports in the world’s top importer grew annually in November for the first time in seven months.

There are expectations that China’s crude imports will remain elevated into early 2025 as refiners opt to lift more supply from top exporter Saudi Arabia, drawn by lower prices, while independent refiners rush to use their quota.

The International Energy Agency (IEA) increased its forecast for 2025 global oil demand growth to 1.1 million barrels per day from 990,000 barrels per day last month, citing China’s stimulus measures.

The Paris-based energy watchdog forecast an oil surplus for next year, when nations not in the Organisation of the Petroleum Exporting Countries (OPEC) and allies, OPEC+ group, are set to boost supply by about 1.5 million barrels per day, driven by Argentina, Brazil, Canada, Guyana and the US.

The United Arab Emirates (UAE), an OPEC member, plans to reduce oil shipments early next year as OPEC+ seeks tighter discipline.

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