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 Dipo Olowookere
The Nigerian Exchange (NGX) Limited further grew by 1.00 per cent on Friday as investors look forward to the rates meeting of the Central Bank of Nigeria (CBN) next week.
The Monetary Policy Committee (MPC) meeting of the CBN begins next Monday and analysts anticipate a rate cut due to the reduction in the country’s inflation rate to 22.22 per cent in June 2025.
At its last meeting in May, the committee retained the Monetary Policy Rate (MPR) at 27.50 per cent to study the markets further.
At the stock market yesterday, investors mopped up financial equities, especially the banking space, with FCMB trading 1.3 billion shares valued at N12.6 billion.
Further, Fidelity Bank transacted 1.2 billion equities worth N23.0 billion, Access Holdings exchanged 113.8 million stocks for N3.1 billion, Chams sold 92.6 million shares valued at N293.9 million, and Zenith Bank traded 50.7 million equities worth N3.7 billion.
At the close of business, the market participants bought and sold 3.4 billion stocks for N62.4 billion in 28,593 deals compared with the 1.2 billion stocks worth N42.8 billion exchanged in 37,418 deals on Thursday, a decline in the number of deals by 23.59 per cent, and a rise in the trading volume and value by 183.33 per cent and 45.79 per cent, respectively.
The trio of NCR Nigeria, Learn Africa, and UPDC chalked up 10.00 per cent each to sell for N6.60, N6.27, and N4.84 apiece, as BUA Cement gained 9.98 per cent to close at N123.40, and Ellah Lakes also appreciated by 9.98 per cent to N10.80.
Conversely, Red Star Express depleted by 9.97 per cent to N12.92, Union Dicon lost 9.62 per cent to finish at N10.80, Academy Press shed 6.67 per cent to quote at N7.00, Sterling Holdings decreased by 4.34 per cent to N6.17, and First HoldCo slumped by 4.10 per cent to N33.95.
The market breadth index was positive during the trading session after the bourse ended with 46 price gainers and 25 price losers, implying a strong investor sentiment.
Business Post reports that the All-Share Index (ASI) increased by 1,301.80 points to 131,585.66 points from 130,283.86 points and the market capitalisation expanded by N823 billion to N83.241 trillion from N82.418 trillion.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange closed the last trading session of the week higher by 0.03 per cent on Friday, July 18.
This was buoyed by the gains recorded by the duo of Central Securities Clearing System (CSCS) Plc and Lagos Building Investment Company (LBIC) Plc.
According to data from the alternative stock exchange, CSCS Plc rose by N4.50 to close at N38.00 per share compared with the preceding day’s N36.80 per share, and LBIC Plc appreciated by 4 Kobo to N3.12 per unit from N3.04 per unit.
However, the price of FrieslandCampina Wamco Nigeria Plc went down by N3.94 to end at N61.00 per share versus Thursday’s value of N64.94 per share, and Acorn Petroleum Plc weakened by 13 Kobo to finish at N1.20 per unit compared with the preceding day’s N1.33 per unit.
At the close of transactions, the market capitalisation of the trading platform surged by N630 million to N2.043 trillion from N2.042 trillion and the NASD Unlisted Security Index (NSI) soared by 1.07 points to 3,488.74 points from the 3,487.67 points it ended a day earlier.
Yesterday, there was a 49,784.9 per cent increase in the volume of securities to 125.9 million units from 252,312 units, just as there was 1,783.6 per cent rise in the value of securities to N125.9 million from N21.4 million, while the number of deals declined by 4 per cent to 24 deals from 25 deals.
Impresit Bakolori Plc was the most active stock by volume on a year-to-date basis with 536.9 million units worth N524.8 million, trailed by Air Liquide Plc with 507.2 million units sold for N4.2 billion, and Geo-Fluids Plc with 277.2 million units traded for N516.3 million.
Okitipupa Plc also remained the most traded stock by value on a year-to-date basis with 153.9 million units transacted for N4.9 billion, followed by Air Liquide Plc with 507.2 million units worth N4.2 billion, and FrieslandCampina Wamco Nigeria Plc with 42.3 million units valued at N1.8 billion.
By Adedapo Adesanya
A marginal loss of 10 Kobo or 0.01 per cent was suffered by the Naira against the United States Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Friday, July 18.
According to data obtained from the Central Bank of Nigeria (CBN), the exchange rate closed at N1,533.32/$1 compared with the N1,533.22/$1 it ended on Thursday.
Similarly, the Nigerian currency depreciated further against the Pound Sterling in the official market during the trading session by N3.56 to trade at N2,060.08/£1 compared with the previous day’s N2,056.52/£1 and lost N8.60 against the Euro to finish at N1,785.02/€1 versus the N1,776.42/€1 it was exchanged a day earlier.
The further decline in the local currency came amid concerns about the sustainability of the currency defense strategy of the central bank as well as the weak state of oil earnings, subdued foreign portfolio investment inflows, and uncertainties around external financing.
Meanwhile, there are positives that the Naira may latch onto including improved crude output as well as enhanced foreign portfolio investment (FPI) inflows amid slowdown in import trade-related outflows.
In the black market, the Nigerian Naira closed flat against the Dollar yesterday at N1,535/$1.
The cryptocurrency market succumbed to profit-taking after President Donald Trump fulfilled part of his vow to establish US crypto regulations on Friday, signing legislation into law that formally established rules for stablecoin issuers.
The milestone marked a first step that the digital assets industry hopes will end with the more important regulatory regime governing the wider crypto markets.
The GENIUS Act will now be forwarded to the federal financial and banking agencies that must implement its various provisions. That will include formalizing the definitions for what kind of firms make acceptable issuers of stablecoins.
Litecoin (LTC) dropped 5.9 per cent to sell at $102.48, Cardano (ADA) lost 5.9 per cent to trade at $0.8244, Solana (SOL) declined by 3.8 per cent to close at $176.55, Ripple (XRP) fell by 3.5 per cent to $3.44, Ethereum (ETH) tumbled by 2.2 per cent to $3,575.00, Binance Coin (BNB) depreciated by 1.9 per cent to $732.95, and Bitcoin (BTC) slumped by 1.8 per cent to $118,218.96.
However, Dogecoin (DOGE) jumped by 1.8 per cent to $0.2511, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
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