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Nigeria Must Scale up Exports to Solve Forex Crisis—Sanwo-Olu

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By Aduragbemi Omiyale

Governor Babajide Sanwo-Olu of Lagos State has advised the federal government to intensify its efforts to scale up Nigeria’s exports in order to address the scarcity of foreign exchange (forex) in the country.

Speaking on Thursday at the RT 200 Non-Oil Export Summit organised by the Central Bank of Nigeria (CBN) in Lagos, Mr Sanwo-Olu said the country has enough resources to take to other nations for FX earnings.

According to him, Nigeria should shift its attention from oil and gas and focus on agricultural produce, solid minerals, chemical products, furniture and clothing as well as tourism among others, noting that a situation in which the energy sector consistently accounts for the bulk of government revenues and forex earnings was not ideal.

At the event themed Setting the Roadmap toward achieving RT200 and non-oil export for development, the Governor emphasised that, “We can do a lot to strengthen the Naira and our external reserves by focusing on our non-oil exports. This diversification also gives us immunity from the severe shock of depending on a limited pool of exports.”

He commended the apex bank for coming up with the $200 billion FX Scheme (RT200), an initiative aimed to generate about $200 billion in FX earnings, specifically from non-oil sources, over the next few years.

“I am aware that, so far, the central bank has approved the payment of billions of Naira to more than 100 exporters who have taken advantage of the scheme and have scaled up their non-oil exports of finished and

semi-finished goods in line with it.

“I have no doubt that this scheme will go from strength to strength, and deliver to an extent beyond the expectations of the Central Bank and the Nigerian economy. I urge exporters to readily take advantage of it. I also urge the central bank to continue to finetune and strengthen this process, while also thinking of new and innovative initiatives that will achieve similar outcomes,” Governor Sanwo-Olu said.

He used the occasion to inform the guests that his administration is making efforts to improve the “state of transportation infrastructure, to enable imports and exports, and generally bring down the cost of doing business.”

“When goods for export get stuck on the roads and can’t make it to the ports, we have a big problem on our hands. There is a big price that the economy pays for these dysfunctions, at all levels – from the small and

large businesses whose goods are being exported to the people in the business of exports, to the users of our roads who have to waste valuable time in traffic because of worsening gridlock.

“It is, therefore, our responsibility, as governments, to ensure that we make the business of exporting (and also importing) as seamless as possible. Nigeria has so much potential to scale up its exports, shifting from over-dependence on oil and gas to agricultural produce, solid minerals, chemical products, furniture, clothing, and so on,” he submitted, stressing that “a country in need of foreign exchange has no business downplaying the importance of exports.”

Economy

FrieslandCampina Boosts NASD OTC Bourse by 0.08% at Midweek

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NASD OTC Bourse

By Adedapo Adesanya

The NASD Over-the-Counter (OTC) Securities Exchange closed in the positive zone by 0.08 per cent on Wednesday, June 29 driven by a bullish price movement from FrieslandCampina WAMCO Nigeria Plc.

The milk-producing company appreciated during the midweek session by 99 Kobo or 1.03 per cent to settle at N96.79 per share compared with the previous closing price of N95.80 per share.

The NASD OTC bourse recorded a price loser and it was Niger Delta Exploration and Production (NDEP) Plc, which depreciated by N6.21 or 3.14 per cent to N191.79 per unit from N198.00 per unit.

But the gains printed by FrieslandCampina offset the losses reported by NDEP as the market capitalisation expanded by N810 million to N1.005 trillion from N1.004 trillion, while the NASD Unlisted Securities Index (NSI) increased by 0.62 points to wrap the session at 763.24 points compared with the 762.62 points recorded in the previous session.

Securities worth N10.1 million were bought and sold by traders at the market on Wednesday compared with the N1.8 million securities transacted a day earlier, indicating an increase of 462.5 per cent.

However, the volume of the securities went down by 18.9 per cent as investors traded only 72,550 units, 18.9 per cent lower than the 89,440 units transacted in the preceding session.

The transactions were carried out in 20 deals as against the 11 deals executed on the bourse on Tuesday, implying a decline of 81.8 per cent rise.

AG Mortgage Plc remained the most traded stock by volume (year-to-date) with 2.3 billion units valued at N1.2 billion, Central Securities Clearing System (CSCS) Plc stood in second place with 674.4 million units worth N14.1 billion, while Food Concepts Plc was in third place with 146.5 million units valued at N127.2 million.

On the flip side, CSCS Plc was the most active stock by value (year-to-date) with 674.4 million units exchanged for N14.1 billion, VFD Group Plc was in second place with 10.9 million units worth N3.2 billion, while FrieslandCampina Plc was in third place with 9.7 million units valued at N1.3 billion.

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Economy

Crude Oil Drops as Economic Worries Offset Tighter Supply Signals

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By Adedapo Adesanya

Prices of crude oil were in red on Wednesday as worries about a weaker global economy offset data showing a weekly drawdown in crude stockpiles, indicating supplies remained tight.

Investors are also worried a slowing economy could dent energy demand as central banks hike interest rates to battle inflation, causing the price of the Brent crude to fall yesterday by 1.75 per cent or $2.06 to $115.90 per barrel, with the United States West Texas Intermediate (WTI) dropping 1.98 per cent or $2.21 to $109.50 a barrel.

US crude inventories fell last week even as production hit its highest level since April 2020 during the first wave of the coronavirus pandemic.

Even comments from the US central bank chief did nothing to quell the fear as prices went down.

The US Federal Reserve Chair, Mr Jerome Powell, announced that the economy would not be allowed to slip into a “higher inflation regime” even if it means raising interest rates to levels that put growth at risk.

The oil market had been propelled in the previous session as concerns over tight supplies due to Western sanctions on Russia outweighed fears that demand may slow in a potential future recession.

Analysts are concerned that Saudi Arabia and the United Arab Emirates (UAE) may not have enough spare capacity to make up for the lost Russian supply.

French President, Mr Emmanuel Macron, said this week he was told these producers will struggle to increase output further.

However, the UAE energy minister said the country, which is producing about 3 million barrels per day, has some spare capacity above its OPEC quota of 3.17 million barrels per day.

The Organisation of the Petroleum Exporting Countries (OPEC) and its allies such as Russia, which form the OPEC+ group, began a series of two-day meetings on Wednesday and will hold its official meeting on Thursday.

There are no indications that there will be changes to the current level of output as was agreed earlier this month.

At its last meeting in early June, OPEC+ sped up production cuts and agreed to raise output each month by 648,000 barrels per day in July and August, up from earlier increases of 432,000 barrels per day.

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Economy

Naira Plunges to New Low at Spot Market, Trades N610/$1 at Parallel Market

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Spot Market

By Adedapo Adesanya

The Naira on Wednesday, June 29 depreciated to its lowest level in the Investors and Exporters (I&E) segment of the foreign exchange (FX) market.

Amid a biting forex crunch, the local currency fell by N3.88 or 0.80 per cent against the US Dollar to close at N424.88/$1 versus the N421.00/$1 it was sold on Tuesday despite a decline in the value of transactions at the spot market.

According to data from the FMDQ Securities Exchange, the turnover for the midweek session was $112.83 million, 45.4 per cent or $93.82 million lower than the turnover of $206.65 million published the day before.

Also, in the parallel market, the domestic currency reported a dismal performance against the greenback as it lost N1 to quote at N610/$1 compared with the previous day’s value of N609/$1.

However, the value of the Naira to the Dollar remained unchanged at the Peer-to-Peer market window at N619/$1.

In the interbank segment of the market, the Naira appreciated against the British currency – the Pound Sterling and the Euro.

Against the Pound Sterling, it was strengthened by N3.91 to N505.91/£1 from N509.82/£1 and against the Euro, it gained N1.90 to settle at N437.59/€1 versus N439.49/€1 on Tuesday.

Meanwhile, four of the 10 tokens monitored by Business Post closed in the green territory, with the TerraClassicUSD (USTC) recovering more grounds as it traded higher by 59.9 per cent to $0.0691. Dogecoin (DOGE) rose by 5.4 per cent to trade at $0.0707, Litecoin (LTC) went up by 1.9 per cent to settle at $54.15, while Bitcoin (BTC) added 0.3 per cent to its value to close at $20,315.78.

However, Binance Coin (BNB) recorded a 4.7 per cent fall to sell at $221.44, Ethereum (ETH) depreciated by 3.7 per cent to $1,116.72, Solana (SOL) decreased by 3.6 per cent to $34.68, Ripple (XRP) recorded a 1.9 per cent slide to sell for $0.3329, Cardano (ADA) dropped 0.2 per cent to trade at $0.4722, while the US Dollar Tether (USDT) moved downwards by 0.02 per cent to $0.9989.

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