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Investors Panic as Lack of Quorum May Stall 2018 MPC Meeting

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MPC Meeting

By Dipo Olowookere

There is anxiety in the Nigerian business space as the first Monetary Policy Committee (MPC) meeting for 2018, scheduled for the third week of January, may not hold due to lack of quorum.

The MPC is a body set up to maintain price stability and support the economic policies of the federal government by formulating monetary and credit policies.

The committee has the Central Bank of Nigeria (CBN) Governor as Chairman; the four deputy governors of the apex bank; two members of the board of directors of the CBN; three members appointed by the President; and two members appointed by the Governor.

By the end of this year, eight positions in the 12-member committee would have become vacant, making it impossible for it to form the quorum required for it to meet.

In October 2017, President Muhammadu Buhari nominated Mrs Aisha Ahmad as a Deputy Governor of the CBN to replace Mrs Sarah Alade, who retired from the bank in June.

He also nominated Professor Adeola Festus Adenikinju, Dr Aliyu Rafindadi Sanusi, Dr Robert Chikwendu Asogwa and Dr Asheikh A. Maidugu as members to fill the positions of four others whose tenure would expire at the end of the year.

Meanwhile, Alhaji Suleiman Barau, another deputy governor of the central bank, who is also a member of the committee, retired recently. The President is yet to name a replacement for him.

But the President’s nominees sent to the Senate for confirmation have not been considered at all. The upper parliament has refused to consider the President’s nominees because of its resolution to suspend all executive confirmation requests for positions not listed in the 1999 Constitution as amended until the Acting Chairman of the Economic and Financial Crimes Commission (EFCC), Mr Ibrahim Magu, was removed.

The Senate last week adjourned to January 9 for its Christmas/New Year recess, while plenary session would begin on January 16.

This development has made uncertain the January meeting of the committee, which has operational independence in setting interest rate as well as designing monetary policy for the country.

Speaking in a chat with THISDAY, the Director General of the West African Institute for Financial and Economic Management (WAIFEM), Prof. Akpan Ekpo, expressed concern over the development.

According to Mr Ekpo, it would create uncertainty among investors.

He said: “There might not be an MPC meeting because they would not be able to form a quorum and if the MPC does not meet it would send a wrong signal to the international investors because it means that there is still uncertainty in the system.

“The way it is now, we are in a limbo and if MPC does not meet, it means that there won’t be decisive actions on monetary policy. The MPC is the engine room for monetary policy and so if they cannot meet to deliberate on the economy and relevant issues, you increase uncertainty in the system.

“The central bank’s mandate is price stability and it is very crucial in any economy. We have always argued that such delays would always cause problem for us.

“So, my advice is that they should stop this delay because it has adverse effect on the economy. So, even if they have to come back from recess and confirm the MPC members, they should do so.”

However, in his reaction, the chief executive of the Financial Derivatives Company Limited, Mr Bismarck Rewane, said there was no need for panic.

Mr Rewane expressed optimism that the new MPC members would be confirmed before the next meeting.

He said: “I don’t think that is a problem. There is still time between now and then. The meeting is not until third week in January for the MPC and I believe the Senate would be able to deal with it before then.”

Nevertheless, when reminded that the Senate would resume fully on January 16, Mr Rewane said: “They would postpone the MPC by one or two weeks! I don’t think it is something to panic about.

“In any case, what does the MPC do? Most of the changes in policy instruments have taken place outside the MPC meeting. So, the MPC has become a ritual. So, there is no need to panic.”

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

Equity Market Gains 0.75% as Investors Mop up MTN, Others

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MTN Subscribers

By Dipo Olowookere

Transactions on the floor of the Nigerian Exchange (NGX) Limited rallied on Tuesday by 0.75 per cent after investors intensified their demand for local stocks.

It was a tough battle between the bulls and the bears during the session, but the former overcame by a whisker after the bourse recorded 29 appreciating equities and 28 depreciating equities, indicating a positive market breadth index and strong investor sentiment.

The growth posted by Customs Street yesterday could be attributed to the appetite for MTN Nigeria shares, which chalked up 10.00 per cent to settle at N256.30.

SCOA Nigeria appreciated by 9.93 per cent to N2.99, Omatek grew by 9.88 per cent to 89 Kobo, Universal Insurance rose by 8.70 per cent to 75 Kobo, and CAP gained 8.52 per cent to trade at N47.75.

Conversely, Secure Electronic Technology lost 9.88 per cent to quote at 73 Kobo, Abbey Mortgage Bank declined by 9.09 per cent to N3.30, Sunu Assurances tumbled by 8.21 per cent to N6.15, Deap Capital slumped by 7.08 per cent to N1.05, and C&I Leasing depreciated by 6.82 per cent to N4.10.

A total of 440.3 million equities valued at N12.0 billion exchanged hands in 13,087 deals compared with the 1.3 billion equities worth N17.7 billion transacted in 13,891 deals on Monday, representing a decline in the trading volume, value and number of deals by 66.79 per cent, 32.20 per cent and 5.79 per cent, respectively.

Lasaco Assurance ended the session as the most traded stock after it sold 108.1 million units valued at N338.7 million, Access Holdings traded 44.0 million units for N1.1 billion, UBA exchanged 27.9 million units worth N945.7 million, Zenith Bank transacted 26.7 million units for N1.3 billion, and Universal Insurance traded 22.7 million units valued at N16.7 million.

On Tuesday, the insurance, banking and industrial goods sectors jumped by 1.03 per cent, 0.30 per cent, and 0.03 per cent, respectively, and the consumer goods and energy counters lost 0.38 per cent and 0.36 per cent apiece.

The All-Share Index (ASI) went up yesterday by 767.63 points to 103,137.99 points from 102,370.36 points and the market capitalisation increased by N472 billion to N63.333 trillion from N62.861 trillion.

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Economy

Nigeria Led Africa’s Upstream Oil, Gas Investments in 2024

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OPEC Global Oil Demand

By Adedapo Adesanya

Nigeria ranked as Africa’s leading destination for upstream oil and gas investment in 2024, new research from market intelligence firm, Wood Mackenzie, has shown, accounting for three out of four Final Investment Decisions (FIDs) announced by global oil and gas majors, totaling $13.5 billion.

The FIDs announced within the Nigerian market included Shell’s $122 million investment in the Iseni Gas Project, TotalEnergies’ $566 million commitment to the Ubeta Gas Project and Shell’s approval of the Bonga North Tranche 1 project valued at around $5 billion.

According to the Special Adviser to President Bola Tinubu on Energy, Ms Olu Verheijen, these investments reflected Nigeria’s ongoing efforts to unlock its hydrocarbon potential through investor-friendly policies and strategic global partnerships.

Last year, Nigeria introduced several initiatives to create a conducive environment for oil and gas investors, including new tax incentives aimed at attracting up to $10 billion in natural gas investments.

Nigeria, which is Africa’s largest oil producer, also offered tax relief for gas investors, reducing corporate income tax and extending capital allowance benefits – for deepwater gas projects.

Other policies include the Presidential Directive on Local Content Compliance Requirements 2024 to address the reduction in oil and gas investments caused by high operating costs compared to global markets.

Also, the Presidential Directive on Reduction of Petroleum Sector Contracting Costs and Timelines 2024 reduces the time spent to award contracts for oil and gas projects.

In addition to the directives, Nigeria also launched its 2024 oil and gas licensing round, offering 19 blocks for exploration, demonstrating its commitment to continued collaboration with local, regional and international partners.

Market analysts note that with this momentum, further FIDs are anticipated, including TotalEnergies’ expected $750 million commitment to the Ima Shallow Gas Project in 2025.

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Economy

UBN Property Triggers 0.22% Loss at NASD OTC Exchange

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UBN Property

By Adedapo Adesanya

The NASD Over-the-Counter (OTC) Securities Exchange recorded a 0.22 per cent decline on Monday, January 20, with the market capitalisation shedding N2.35 billion to close at N1.073 trillion compared with the preceding session’s N1.075 trillion and the NASD Unlisted Security Index (NSI) going down by 6.79 points to wrap the session at 3,105.12 points compared with 3,111.91 points recorded in the previous session.

It was observed that the loss recorded on the first trading day of the week was triggered by UBN Property Plc, which crashed by 20 Kobo to trade at N2.00 per share versus last Friday’s N2.20 per share.

However, the share price of Industrial and General Insurance (IGI) Plc went up by 4 Kobo to 40 Kobo per unit from 36 Kobo per unit, it could not stop the bourse from going down at the close of transactions.

The activity chart showed that on Monday, the volume of securities traded by investors increased by 57.9 per cent to 767,610 units from the 486,215 units traded in the preceding session, while the value of shares traded yesterday slumped by 17.7 per cent to N2.3 million from the N2.8 million recorded in the preceding trading day, as the number of deals declined by 14.3 per cent to 12 deals from the 14 deals carried out in the previous trading day.

At the close of transactions, FrieslandCampina Wamco Nigeria Plc remained the most active stock by value on a year-to-date basis with the sale of 4.1 million units worth N162.9 million, followed by Geo-Fluids Plc with a turnover of 9.1 million units valued at N44.0 million, and 11 Plc with the sale of 55,358 for N14.5 million.

Also, Industrial and General Insurance (IGI) Plc closed the day as the most active stock by volume on a year-to-date basis with 25.3 million units sold for N5.9 million, Geo-Fluids Plc came next with 9.1 million units valued at N44.0 million, and FrieslandCampina Wamco Nigeria Plc with 4.1 million units worth N162.9 million.

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