Economy
MTN Raises Fears Over FX Liquidity Crisis in Nigeria
By Dipo Olowookere
For the most part of 2020, Nigeria has been battling with a serious liquidity crisis in the foreign exchange (FX) market.
This was mainly caused by the decline in the prices of crude oil at the international market. Nigeria, which is the largest market in Africa, relies heavily on the black gold for its foreign earnings.
As a result, when the price of crude oil is exposed to cold, Nigeria, which is the biggest producer of the commodity on the continent, shivers and when things get better, the country flourishes.
In the year, the Brent crude oil, under which Nigeria’s grade is priced, has traded as low as $20 and this made the federal government to adjust the crude oil benchmark for the year in the budget to $28 per barrel. At the moment, the oil is sold at above $40 per barrel.
This year, in order to manage the liquidity crisis, the Central Bank of Nigeria (CBN) has had to devalue the Naira two times, though it called it a readjustment of the local currency. Before the two actions, the apex bank had said it was not going to devalue the Nigerian currency. The first devaluation was from N306/$1 to N360/$1 and the second was from N360/$1 to N379/$1.
MTN Nigeria, which is one of the companies in the country which needs forex for its business operations, has expressed worry about the situation.
A few days ago, the company released its financial statements for the period ended September 30, 2020, and its chief executive, Mr Ferdi Moolman, said the issue will continue to pose a threat to the business.
“Despite the relaxation of the lockdown restrictions, the operating environment remains challenging. We will continue to build on our operational and financial resilience and execute on our strategy to position the business for sustained growth over the medium and long term.
“The availability of foreign exchange remains a constraint even as we strive to minimise its impact on the business,” Mr Moolman said while commenting on the company’s Q3 performance.
MTN Nigeria, which trades its shares on the Nigerian Stock Exchange (NSE), is the biggest telco in the country. In the first nine months of the year, it grew its revenue by 13.9 per cent to N975.8 billion from N856.6 billion, with voice revenue accounting for N645.5 billion versus N628.3 billion in the same period of last year.
However, its profit after tax went down by 3.3 per cent to N144.2 billion from N149.2 billion in Q3 of 2019 largely due to the 19.5 per cent rise in expenses to N478.0 billion from N400.1 billion, 9.1 per cent year-on-year jump in EBITDA to N497.9 billion from N456.4 billion and a 32.9 per cent increase in the net finance costs to N95.4 billion from N71.8 billion.
Business Post reports that shares of MTN Nigeria rose on the local exchange on Friday by N4 or 2.86 per cent to N144 per unit.
By Adedapo Adesanya
The National Pension Commission (PenCom) has defended its decision to allow Pension Fund Administrators (PFAs) to invest in the parent companies of their custodians, insisting that adequate safeguards are in place to protect contributors’ funds.
The director-general of the pension regulator, Ms Omolola Oloworaran, speaking on Tuesday during the Meet the Press Briefing at the Presidential Villa, Abuja, said the commission’s decision to relax the investment restriction followed a comprehensive risk assessment that found minimal conflict of interest.
She explained that under PenCom’s investment regulations, PFAs are only permitted to invest pension assets in carefully selected instruments that meet stringent criteria, including profitability, strong credit ratings and proven track records.
According to her, the commission regularly reviews its investment regulations, conducts routine examinations and spot checks on PFAs to ensure strict compliance with established risk management guidelines.
“PFAs cannot just go into the stock market and buy any kind of stock. There are strict guidelines. Companies must demonstrate profitability, have a proven track record and satisfy other criteria before pension funds can invest,” she said.
Ms Oloworaran noted that each PFA also operates under the oversight of a board, an investment committee and a risk management committee, providing additional layers of governance to safeguard contributors’ funds.
She said PenCom recently issued a circular allowing PFAs to invest in the parent companies of their custodians after determining that the potential conflict of interest was negligible.
The PenCom boss explained that the parent companies involved are largely Tier-1 banks, including First Bank, United Bank for Africa (UBA) and Zenith Bank, which she described as A-rated institutions with strong financial foundations.
She said the policy was intended to widen investment opportunities for pension funds without compromising safety.
Using Stanbic IBTC as an example, Ms Oloworaran explained that if its custodian is Zenith Bank, the previous restriction prevented the pension administrator from investing in Zenith Bank shares despite the bank’s strong performance.
“We reviewed the risks and any potential conflict of interest and found the risks to be very low. That is why we opened that investment window,” she said.
By Aduragbemi Omiyale
Analysts at Meristem Research have predicted that the inflation rate for June 2026 in Nigeria should marginally rise to 15.95 per cent on a year-on-year basis from the 15.93 per cent reported in May 2026.
The National Bureau of Statistics (NBS) is expected to release inflation numbers for last month later today, Wednesday, July 15, 2026.
In its report sighted by Business Post, Meristem Research said it expects inflationary pressures to re-emerge across key economies in the near term, as the re-escalation of the US-Iran conflict has reignited upward pressure on global oil prices.
It disclosed that this marks a sharp reversal from most of June, when the ceasefire between the two countries helped drive oil prices lower, raising expectations of some relief on the inflation front.
With conflicts now flaring up again, oil prices are likely to increase again, and the anticipated easing in energy-driven inflation may not materialise as broadly as earlier envisaged.
“Nonetheless, some relief is likely from the food segment, where robust supply conditions across major producing regions and softening demand should continue to ease food price pressures,” it stated.
The team also explained that it projected a 15.95 per cent inflation rate because of the lingering effects of persistent food price pressures.
“However, we expect core inflation to moderate as the sharp reversal in energy prices begins to filter through to transportation, distribution, and other energy-related costs, easing underlying price pressures.
“On a month-on-month basis, the combined effect of lower petrol prices, a relatively stable Naira, and the gradual pass-through of reduced energy costs across the supply chain should exert further downward pressure on inflation.
“Based on our assessment, food inflation is expected to remain the key swing factor, as seasonal pre-harvest supply constraints are likely to offset some of the gains from lower logistics costs,” it said.
By Adedapo Adesanya
The duo of Central Securities Clearing System (CSCS) Plc and Afriland Properties Plc weakened the NASD Over-the-Counter (OTC) Securities Exchange by 1.61 per cent on Tuesday, July 14.
CSCS Plc saw its stock value drop N9.08 to close at N82.40 per share compared with the preceding session’s N91.48 per share, and Afriland Properties Plc slid by 17 Kobo to sell at N15.00 per unit versus N15.70 per unit.
The losses recorded by the two securities pulled back the market capitalisation by N41.64 billion to N2.546 trillion from N2.587 trillion, and cracked the NASD Security Index (NSI) by 69.36 points to 4,242.31 points from 4,311.67 points.
It was observed that the exchange witnessed two price advancers during the session, led by FrieslandCampina Wamco Nigeria Plc, which gained N1.37 to end at N151.37 per share compared with the previous day’s N150.00 per share, and Food Concepts Plc chalked up 5 Kobo to settle at N2.50 per unit versus N2.45 per unit.
The volume of securities traded by market participants surged by 50.7 per cent to 13.7 million units from the previous 9.1 million units, while the value of securities went down by 79.7 per cent to N65.2 million from N320.4 million, and the number of deals crashed by 3.6 per cent to 27 deals from the previous session’s 28 deals.
At the close of transactions, Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis, with the sale of 3.4 billion units for N8.4 billion, trailed by Infrastructure Credit Guarantee (Infracredit) Plc, which exchanged 2.3 billion units valued at N6.5 billion, and CSCS Plc with 73.9 million units transacted for N5.2 billion.
GNI Plc also closed the trading day 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 traded for N6.5 billion, and Resourcery Plc with 1.1 billion units valued at N415.7 million.
