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Economy

CBN Sells $10.3bn to Keep Naira at N379 at FX Market

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Godwin Emefiele CBN Governor

By Adedapo Adesanya

A whopping $10.3 billion was used by the Central Bank of Nigeria (CBN) to defend the Naira at the foreign exchange (FX) market in the first half of 2020.

This information was contained in the H1 2020 Activity Report released on Wednesday.

According to the apex bank, this amount was sold to forex dealers at the various regulated segments of the market to keep the local currency stable against the Dollar in the period under review.

“Consequently, a total of $10,308.01 million was sold at the foreign exchange market. This comprised $5,056.55 million at the Investors & Exporters (I&E) window, $1,198.48 million at the inter-bank spot, $570.00 million for SMEs, $312 million for invisibles, while forwards sales were $3,170.97 million,” the report said.

Business Post reports that in the period, the local currency was relatively stable at N379/$1 at the interbank segment and N395/$1 at the investors and Bureaux De Change (BDC) segments of the market.

Within the period, the bank purchased a total of $2.2 billion, putting the net sale value at $8.1 billion.

“The sum of $5,425.3 million matured at the forward segment while $2,504.62 million was outstanding at end-June 2020,” it noted.

“In the corresponding period, a total of $8.5 billion was sold at the FX market. This comprised $2.2 billion sold at the inter-bank spot, $810 million at the SMEs, $550.7 million for invisible financing, $294.6 million sold at the investors’ & exporters’ window. Forwards sales took $4.7 million.

“In the first half of 2019, the bank purchased $$9.6 billion, putting the net balance at $1.08 million.

“In the futures market, the sum of $14,332.53 million was traded while $10,832.64 million matured and $13,167.65 million remained outstanding at end-June 2020,” the report also disclosed.

According to the report, the turnover of transactions at the I&E window amounted to $24.69 billion in the first six months of the year compared to $33.21 billion in the corresponding period of 2019.

“The decrease in turnover is a result of reduced inflows to the country. Since its introduction in April 2017, the turnover of transactions amounted to $173.41 billion at end-June 2020,” it noted.

The report further explained that in the first half of 2020, the foreign exchange market witnessed reduced foreign exchange inflows and increased demand pressures.

Providing an explanation, the apex bank said this was largely attributed to the drastic decline in crude oil price amid the coronavirus pandemic.

“In the first quarter of 2020, money market interest rates trended within the lower band of the MPR. This signified liquidity stability in the market, resulting mainly from the fiscal operations of the Federal Government, effects of the Loan to Deposit Ratio (LDR) policy, the Standing Deposit Facility (SDF) policy on placement limits on remunerable deposits, settlement for foreign exchange interventions, Open Market Operations (OMO) maturities and reduced frequency of auctions,” the apex bank noted.

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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Economy

Investors Trade 782.2m Shares of Wema Bank, Zenith Bank, First Bank in One Week

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wema bank shareholders

By Aduragbemi Omiyale

Last week, there were huge interests in the shares of Wema Bank, Zenith Bank and FBN Holdings on the floor of the Nigerian Stock Exchange (NSE).

For Zenith Bank, it was as a result of the N2.70 dividend its board recommended for the 2020 financial year and investors wanted a share of the goodie.

At the close of the week, the three companies traded 782.2 million units worth N8.9 billion executed in 4,624 deals, contributing 40.52 per cent and 43.15 per cent to the total equity turnover volume and value respectively.

According to data from the exchange, a total of 1.9 billion stocks worth N20.7 billion exchanged hands in 24,687 deals last week compared with the 1.5 billion shares worth N18.2 billion transacted the preceding week in 22,752 deals.

It was discovered that financial equities accounted for 1.5 billion units valued at N15.1 billion traded in 14,236 deals, contributing 75.11 per cent and 72.96 per cent to the trading volume and value respectively.

Shares in the conglomerates sector accounted for 154.9 million units worth N179.7 million in 798 deals, while equities in the consumer goods industry contributed 111.8 million units valued at N2.3 billion carried out in 3,865 deals.

A total of 19 stocks appreciated in price during the week, lower than 39 stocks of the earlier week, while 44 shares depreciated in price, higher than 33 shares of the preceding week, with 99 equities closing flat, higher than 90 equities recorded in the previous week.

The best-performing stock for the week was Academy Press as its equity price moved up by 17.14 per cent to 41 kobo per share.

Oando gained 12.38 per cent to sell for N3.45 per share, UPDC appreciated by 9.35 per cent to N5.85 per share, Chams rose by 9.09 per cent to 24 kobo per share, while Royal Exchange gained 8.00 per cent to close at 27 kobo per share.

The worst-performing stock last week was Lasaco Assurance as it depreciated by 26.79 per cent to settle at N1.23 per share.

Africa Prudential lost 21.23 per cent to sell for N5.75 per share, Sunu Assurances fell by 18.52 per cent to 66 kobo per share, Champion Breweries declined by 15.15 per cent to N2.52 per share, while Niger Insurance lost 13.04 per cent to trade at 20 kobo per share.

Business Post reports that in the week, the All-Share Index and market capitalisation depreciated by 0.96 per cent to 39,799.89 points and N20.823 trillion respectively.

Similarly, all other indices finished lower with the exception of the banking, NSE AFR Bank Value, NSE MERI Growth and oil/gas indices, which rose by 0.69 per cent, 1.34 per cent, 0.66 per cent and 0.97 per cent while the NSE ASeM and NSE Growth indices closed flat.

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Economy

NASD Investors Lose N7.37bn to Profit-Taking

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NASD Afriland Investors Call

By Adedapo Adesanya

The market environment at the NASD Over-the-Counter (OTC) Securities Exchange was further weakened last week as a result of the 0.49 per cent decline recorded at the eighth trading week of 2021.

In the week, NASD investors lost N7.37 billion to reduce the market capitalisation of the exchange to N512.24 billion from N514.76 billion it finished in the seventh trading week.

In the same vein, the NASD Security Index (NSI) decreased by 3.52 points to settle at 713.91 points as against 717.43 points it ended a week earlier.

Business Post reports that the dominance of the bears at the unlisted securities market was caused by the negative movement in the prices of stocks on the bourse.

Niger Delta Exploration and Production (NDEP) Plc suffered a 2.98 per cent loss to close at N292.82 per unit in contrast to N301.84 per unit it traded the preceding week.

Also, FrieslandCampina WAMCO Nigeria Plc went down by 2.82 per cent to trade at N119.43 per share versus the previous N122.90 per share.

However, there was a price gainer during the week, though it was not enough to sway the market to the bulls. Central Securities Clearing System (CSCS) Plc appreciated by 3.1 per cent to quote at N16.50 per unit compared with the previous rate of N16 per unit.

During the week, there was a 62.4 per cent decrease in the total value of shares traded by investors; N31.6 million compared to N84.2 million of the previous week.

There was equally a decline in the total volume of securities traded by investors by 85.4 per cent as 370,270 units exchange hangs as against 2,535,707 units in the previous week.

Also, the total number of deals decreased by 39.5 per cent as the bourse published 26 deals compared to 43 deals on record at the preceding week.

According to data from the NASD, CSCS Plc ranked top among the five most traded securities by volume with 158,000 units. Nipco Plc traded 83,332 units, FrieeslandCampina transacted 82,585 units, NDEP Plc exchanged 46,348 units, while Mixta Real Estate Plc traded 5 units.

In terms of the top traded securities by value, NDEP Plc led the chart with N13.6 million. FrieslandCampina traded N9.9 million, Nipco Plc transacted N5.7 million, CSCS Plc exchanged N2.5 million, while Mixta Real Estate Plc sold N9.90.

A look at the activity chart on a year-to-date basis showed that investors have traded 24,201,001 stocks worth N602.1 million in 240 deals. Also, the unlisted securities market has lost 3.7 per cent in the year.

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Economy

SEC Tasks CBN, Others on Understanding Crypto Space for Proper Guidance

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Nigerian Crypto Traders

By Aduragbemi Omiyale

The need for regulators in the financial industry in the country, including the Central Bank of Nigeria (CBN), to understand the crypto asset space for proper regulations has been stressed by the Securities and Exchange Commission (SEC).

According to the Director-General of the SEC, Mr Lamido Yuguda, if the regulators can do this, they would be better positioned to address identified risks.

Recently, the CBN ordered banks in the country to close down all accounts of individuals and companies trading cryptocurrencies.

This sparked reactions from many quarters, including the National Assembly. The Senate had to summon the Governor of the apex bank, Mr Godwin Emefiele, to explain the reason for his action.

While appearing before the joint session of the Senate Committee on Banking, Insurance and other Financial Institutions, Capital Market and ICT and Cyber Crime in Abuja last Tuesday, Mr Emefiele noted that the action was taken to protect Nigerians as trading in crypto was risky.

But the DG of SEC crypto-assets can be regulated for the benefits of the citizens, noting that his agency was committed to enhancing financial inclusion in the country through technology.

According to him, SEC recognises the disruption of fintech in the financial industry and aims to create an enabling regulatory environment that would ensure a balance between investor protection and technological advancement.

“We believe that fintech would not only bring about efficiency to the capital market but would also serve as a veritable tool for advancing Nigeria’s financial inclusion agenda.

“However, there is a need to develop an appropriate regulatory framework to ensure the safety of innovation to investors and preserve market integrity,” he submitted.

He said the SEC will advance efforts towards developing a comprehensive regulatory framework that ensures that operators in the crypto asset space conduct their activities in a manner that protects investors and maintains financial system stability.

“The SEC will continue to monitor developments in the digital asset space and further engage/collaborate with all critical stakeholders, including the CBN, to create a regulatory structure that enhances economic development while promoting a safe, innovative and transparent capital market,” he added.

According to Mr Yuguda, the SEC’s approach is consistent with the approaches of several securities regulators around the world as in the United States of America, the US SEC requires platforms that offer trading in digital asset securities and operate as exchanges to register or seek to be exempted from registration.

“In the United Kingdom, the Financial Conduct Authority (FCA) requires firms that carry on specified activities, by way of business, involving a crypto asset, to be authorised. Crypto assets are viewed as financial products in South Africa and the Financial Sector Conduct Authority (FSCA) requires persons carrying out associated activities to be regulated.

“In Malaysia, operators of digital asset platforms are required to be approved by the Securities Commission (SC) as recognized market operators. Several other securities regulators have taken similar positions,” he informed the lawmakers.

Speaking earlier, the Chairman of the Joint Committee, Mr Uba Sani, said the team was on a fact-finding mission in the interest of Nigerians and the nation’s economy.

“We shall look at the position of the CBN who have said cryptocurrencies are very volatile and support insurgency. The Senate will always support innovation and the effective use of ICT for economic empowerment.

“We are aware of the damage it has done and we are poised to protecting our economy and ensure that our people benefit where necessary,” he said.

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Economy

Shell to Assist Nigeria Boost Gas Usage to 5bcf/d

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Gas Flaring

By Adedapo Adesanya

Shell Petroleum Development Company of Nigeria Limited (SPDC) has restated its commitment to help grow gas usage in Nigeria to 5 billion cubic feet of gas per day (bcf/d) from its current 1.7 bcf/d by 2022.

This was disclosed by Mr Osagie Okunbor, the Managing SPDC Director and Country Chair of Shell Companies in Nigeria, while speaking at the Nigerian Gas Association’s 12th International Conference and Awards, held virtually under the theme Powering Forward: Enabling Nigeria’s Industrialization via Gas.

Mr Okunbor pledged support to the federal government’s goal of using the country’s proven gas reserves to trigger economic activities for gas-based industrialisation.

He said the multinational’s support is shown in the company’s multi-billion dollars investment in four of Nigerian National Petroleum Corporation (NNPC) aptly named Seven Critical Gas Development Projects.

According to him, Shell has invested in the Assa North gas project; four unitised gas fields; Brass Fertilizer Company; and the cluster development of Okpokunou/Tuomo West (OML 35/62) to support the government’s drive for national development.

He said, “I am very happy that NNPC and the Nigerian Content Development and Monitoring Board (NCDMB) have taken key roles in these projects. These are positive steps.”

He commended the government’s recent progress in gas development and stated support for NNPC’s aspiration to grow domestic gas usage in Nigeria to 5 billion cubic feet of gas per day from its current 1.7 billion cubic feet of gas per day by 2022.

Mr Okunbor said, “Nigeria has launched out on a few audacious and, frankly, great projects to essentially drive our ambition as a country in this regard. Let’s find a way to make sure that we stay the course and begin to put our efforts in a consistent manner towards downstream where our country can get an ultimate benefit for gas.”

He counselled for robust engagement in discussions for an agreeable price framework in order to attract investments in the country’s rich gas sector.

“A robust pricing framework would be very helpful to unlock Nigeria’s proven gas reserves, especially for Power, Agriculture and Industrial sectors,” he added.

Mr Okunbor said the current pricing regime does not quite fit the wider framework of what the gas industry does.

“We want to incentivise methanol and fertilizer production, which is extremely important, to gear up our agricultural sector but the price regime now in that sector is lower than the kind of prices that you have for supply to the power sector and industrial establishments.

“To make domestic gas work, we do need the right price regime. It might just mean that some sectors are supported more than others that can naturally carry themselves, the Petroleum Industry Bill (PIB) provides that framework.” Mr Okunbor further said.

He urged policymakers to strike a careful balance between trying to raise funds – in terms of the kind of taxes and royalties that are put on gas – and understanding that this is actually much more of a resource that drives national development.

“Gas is by far more important as a catalyst for development,” he added.

Nigeria has over 200 trillion cubic feet of gas proven and is the world’s 9th largest proven gas reserves.

Mr Okunbor added that the country can satisfy both domestic and export markets of gas if the right policies and processes are put in place and the country continues to drive those policies, processes and gas infrastructure.

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Economy

NNPC Rules Out Hike in Petrol Pump Price in March

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petrol pump price

By Modupe Gbadeyanka

Nigerians have been assured that the pump price of Premium Motor Spirit (PMS), commonly called petrol, will not be increased this month.

This assurance was given by the Nigerian National Petroleum Corporation (NNPC) via a statement signed by its Group General Manager in charge of the Group Public Affairs Division, Mr Kennie Obateru.

In the statement issued on Sunday, Mr Obateru appealed to motorists and consumers of the commodity not to panic buy or hoard the product.

There had been reports that oil marketers will increase the price of the fuel at their retail stations on the back of the recent rise in the price of crude oil in the global market.

When the downstream petroleum sector was to be partially deregulated by the federal government last year, citizens were told that prices of petrol would be determined by the international price of black gold.

As of then, the Brent crude, which Nigeria’s oil is priced, was sold around $40 per barrel, but last week, it traded at $67 per barrel, fuelling speculations that the retail price of petrol may likely go for N180.

Last week, most NNPC retail stations in Lagos, according to findings by Business Post, were selling the product at N162 per litre. A few filling stations reportedly sold for N180 per litre at the weekend in Lagos.

But NNPC, in the statement, has ruled out any increment in the ex-depot price of petrol in March 2021 because it does not want to “jeopardize ongoing engagements with organised labour and other stakeholders on an acceptable framework that will not expose the ordinary Nigerian to any hardship.”

As a result, the state-owned oil agency has warned “petroleum products marketers not to engage in an arbitrary price increase or hoarding of petrol in order not to create artificial scarcity and unnecessary hardship for Nigerians.”

According to the NNPC, it has “enough stock of petrol to keep the nation well supplied for over 40 days and urged motorists to avoid panic buying.”

The corporation also called on relevant regulatory authorities to “step up monitoring of the activities of marketers with a view to sanctioning those involved in products hoarding or arbitrary increase of pump price.”

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Economy

MTN Nigeria Makes N205bn Profit, to Pay Investors N5.90 Dividend

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MTN Nigeria AGM

By Dipo Olowookere

Africa’s leading telecommunication company, MTN Nigeria Plc, had a good year in 2020 despite the disruption caused to businesses across the globe.

In the year, according to the financial statements of the firm released to the Nigerian Stock Exchange (NSE) and analysed by Business Post, the sum of N1.4 trillion was generated in the year, higher than the N1.2 trillion achieved in 2019.

A significant part of the revenue was contributed by voice revenue, N766.4 billion versus N725.5 billion, while data revenue contributed N332.4 billion in contrast to N219.4 billion in 2019.

However, the direct network operating costs increased to N310.3 billion from N246.6 billion as a result of a rise in BTS leases to N225.6 billion from N170.1 billion, a jump in the regulatory fees to N34.8 billion from N30.3 billion and a rise in the network maintenance to N48.6 billion from N45.2 billion.

In the period under review, the telco reduced its roaming costs to N3.0 billion from N4.0 billion. It also cut is advertisements, sponsorships and sales promotions to N15.1 billion from N19.9 billion, while the other operating expenses moved higher to N66.6 billion from N51.0 billion due to the N2.0 billion expended on COVID-19, including the N1 billion donation to the Coalition Against COVID-19 (CACOVID) in April 2020 and costs of Personal Protective Equipment (PPE).

As of December 31, 2020, MTN Nigeria was left with an operating profit of N426.7 billion, higher than N393.2 billion a year earlier.

With a finance income of N15.9 billion versus N20.1 billion and N143.7 billion finance costs in contrast to N122.1 billion a year earlier, the GSM network provider was left with a profit before tax of N298.9 billion compared with N291.3 billion in 2019, while the profit after tax stood at N205.2 billion, slightly higher than N203.3 billion as at December 31, 2019, with the earnings per share closing at N10.08 as against N9.99 in 2019.

Meanwhile, the board of directors of MTN Nigeria has recommended the payment of a final dividend of N5.90 per ordinary share of 2 kobo each subject to shareholders’ approval at the forthcoming Annual General Meeting (AGM).

If the proposed final dividend is approved, the total dividend for the financial year ended December 31, 2020, will be N9.40 per share of 2 kobo each.

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