Economy
Heritage Bank, LCFE Explore Commodities Market to Boost FX Liquidity
By Aduragbemi Omiyale
Recently, the Central Bank of Nigeria (CBN) launched a policy aimed to boost foreign exchange (FX) liquidity in the country with a policy known as the CBN RT200 FX Programme.
The scheme intends to generate about $200 billion in forex repatriation in the next three to five years through non-oil exports.
Nigeria, which is the largest economy in Africa, has mainly relied on the sale of crude oil for FX earnings and because of the global economic meltdown caused by the COVID-19 pandemic, it has not earned much, putting pressure on the Naira at the exchange rate market.
To help the apex bank achieve the forex repatriation goal, Heritage Bank Plc, Lagos Commodities and Futures Exchange (LCFE) and other participating financial institutions came together to explore opportunities on export revenue from the commodities market.
At a breakfast meeting organised by LCFE with bankers tagged The CBN RT200 FX Programme: and Potential of Export Revenue from the Commodities Ecosystem, representatives from Heritage Bank, FSDH, Agvest Limited, Novo Merchant Bank amongst others spoke on the matter.
Speaking on the opportunities for financial institutions in the CBN RT200 FX Programme, the Divisional Head, Agribusiness, Natural Resources & Project Development, Heritage Bank, Mr Olugbenga Awe, stated that the promotion of investment in commodities ecosystem by financial institutions in partnership with LCFE in its various assets traded in Agric commodities, energy and solid minerals would increase liquidity support from local commodity exportation to boost the race for the $200billion in FX repatriation and reduce the pressure on exchange rate.
Meanwhile, he identified challenges that expediently needed to be addressed which may likely hinder financial institution’s efforts on supporting the commodities ecosystem to drive the CBN’s RT200 FX target, such as inadequate export finance resources, lack of dependable source of local product prices, risk of haulage to bad roads amongst others.
Mr Awe explained that to significantly boost local production of exportable commodities and drastically reduce the country’s dependence on oil revenue, financial institutions must play the role of market markers to the Commodity Exchange (COMEX), thereby bringing liquidity to the exchange.
According to him, with COMEX as a risk mitigation platform, there is a need for the Warehouse (WR) finance structure to be registered with LCFE and the collateral management in place, which is within the parameters set by banks.
He further explained that banks must actively participate in crop receipts, liaise with their brokers to develop the value chain around a well market structure warehouse receipts systems (WRS).
This, he said would help stimulate demand amongst players from the aggregators, off-takers for standardized contracts that help deepen the value chain while providing financing that increased volumes traded.
Mr Awe, however, reiterated that promoting investment in commodities ecosystem via structured WR finance would bring about value addition to commodities with the help to moderate the prices, as the expected increase in demand would increase revenue export and make deposit money banks self-sufficient in meeting the FX needs of their customers.
The banker, who enumerated how financial institutions can partner with commodity exchange especially LCFE to deepen their footprints in various asset classes traded by LCFE, also referenced what Heritage Bank is doing in the Wheat Value Chain together with CBN investing N40 billion, which will scale up wheat production during harvest season.
According to him, whatever can be achieved in wheat can be replicated across the various value chains in rice, maize, others and ensuring that there is a link to the commodity exchange.
MD of LCFE, Mr Akin Akeredolu-Ale, who commended Heritage Bank for its sterling efforts in deepening its footprints in agribusiness, called on banks and other organisations to take advantage of the catalytic and transformational approach to support the CBN RT200 FX initiative.
He stressed that to achieve the target, there was a need for the creation and registration of Bank Commodity Desks with LCFE and Central Securities Clearing System (CSCS).
He noted that the stakeholders’ structure in financing the commodities ecosystem include Commodity Exchange, Commercial Banks, Non-Interest Banking, Merchant Bank.
Mr Akeredolu-Ale, who decried that the Nigerian economy was still import driven and depended largely on the export of petroleum to meet FX earnings, revealed that LCFE has lined up products such as commodity instruments, commodity-backed notes, Exchange-traded funds, Commodity Spot Contracts amongst others as a bumper for driving huge export revenue from commodities ecosystem to fast track the actualisation of $200 billion in FX repatriation.
By Modupe Gbadeyanka
Efforts are being made to deepen collaboration to promote transparency and accountability in the collection of oil and gas revenue in Nigeria.
Two key organisations involved in this, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigeria Revenue Service (NRS), recently held a strategic meeting to further work on ways to achieve this goal.
The chief executive of NUPRC, Mrs Oritsemeyiwa Eyesan, was at the headquarters of the tax-collecting agency in Abuja on Wednesday.
In discussions with the chairman of NRS, Mr Zacch Adedeji, she praised him for driving reforms that culminated in the enactment of the NRS Act.
Speaking on the transfer of revenue collection responsibilities, Mrs Eyesan said the process had been seamless, highlighting her organisation’s efforts to create an enabling environment for operators in the oil and gas industry.
She further revealed that Nigeria had the potential to produce 1.9 million barrels per day, having hit a peak production of 1.86 million barrels per day in May.
In his response, the NRS chairman praised NUPRC for its dynamism, professionalism and transparency, promising continued collaboration with the commission, particularly on matters relating to the transfer of revenue collection functions under the new Act.
“I collect revenue. I don’t generate revenue. Wherever revenue is, I work on it and keep an account for you. So, I’m helping you to collect your royalties,” Mr Adedeji said.
He pledged that the NRS would continue to support the commission to achieve its shared objective of increasing government revenues in a fair, transparent and sustainable manner.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange jumped 1.04 per cent on Wednesday, June 17, with the market capitalisation adding N26.99 billion to settle at N2.619 trillion compared with the previous session’s N2.592 trillion, and the Unlisted Security Index (NSI) rising by 45.1 points to close at 4,378.45 points, in contrast to the preceding day’s 4,333.35 points.
The rally was driven by the gains reported by two securities, which outweighed the losses posted by three securities, led by FrieslandCampina Wamco Nigeria Plc, which dipped by N1.95 to N178.19 per unit from N180.14 per unit. Geo-Fluids Plc lost 19 Kobo to close at N2.61 per share compared with Tuesday’s closing price of N2.80 per share, and Food Concepts Plc slid by 1 Kobo to N1.77 per unit from N1.78 per unit.
On the flip side, Central Securities Clearing System (CSCS) Plc recorded a N6.33 appreciation to trade at N86.57 per share versus the previous day’s N80.24 per share, and Light House Financial Services Plc grew by 10 Kobo to N1.13 per unit from the N1.03 per unit it closed a day earlier.
In the midweek session, the value of stocks traded by investors surged by 181.0 per cent to N128.3 million from the preceding session’s N45.6 million, the volume of securities increased by 305.6 per cent to 2.8 million units from Tuesday’s 688,290 units, and the number of deals executed jumped by 6.5 per cent to 33 deals from 31 deals.
At the close of trades, Great Nigeria Insurance (GNI) Plc remained the most active stock on a year-to-date basis, with 3.4 billion units valued at N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units sold for N6.5 billion, and CSCS Plc with 67.3 million units exchanged for N4.6 billion.
GNI Plc also ended as the most traded stock by volume on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by Infracredit Plc with 2.3 billion units sold for N6.5 billion, and Resourcery Plc with 1.1 billion units traded for N415.7 million.
By Dipo Olowookere
As part of moves to boost its internally generated revenue (IGR) and increase its streams of income, Ayobo-Ipaja Local Council Development Area (LCDA) is considering commercial ostrich and crocodile farming.
The council recently held a sensitisation programme, where agribusiness experts engaged stakeholders, including residents and entrepreneurs, on the viability of this.
The programme provided participants with the knowledge on investment requirements, training opportunities, startup funding, and regulatory frameworks guiding ostrich and crocodile farming in Nigeria.
The chairman of Ayobo-Ipaja LCDA, Mr Lukmon Agbaje, commended the initiative, reiterating his administration’s commitment to promoting innovative agricultural practices as a pathway to sustainable development.
He described agriculture as a critical driver of economic transformation, stressing that modern farming has evolved into a profitable business venture with immense potential for youth empowerment and enterprise development.
Mr Agbaje further assured participants of the council’s readiness to partner with investors, agricultural institutions, and other relevant stakeholders to facilitate training, capacity building, and access to opportunities across the agricultural value chain.
On his part, the council’s Head of Department of Agriculture, Mr Wale Atepe, emphasised the growing market demand for products such as leather, meat, feathers, and other valuable by-products, adding that strategic investment in the sector could unlock significant opportunities for employment, wealth creation, and export earnings.
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