Economy
World Bank Silent on Conditions for Nigeria’s $1.5bn Loan Request
By Modupe Gbadeyanka
The World Bank Group has remained silent on the conditions it plans to attach to the $1.5 billion loan request from Nigeria.
The administration of President Muhammadu Buhari had announced its intention to approach the global lender for the financial assistance.
The reason was because of the drain in revenue caused by the coronavirus pandemic, which crashed the price of crude oil at the international market.
Nigeria, Africa’s largest economy by size, relies heavily on the sale of oil for foreign earnings and since the outbreak became very pronounced in early 2020, funding of the budget has been threatened.
When Mr Buhari signed the 2020 Appropriation Bill into law last December, the benchmark for crude oil was at $57 per barrel with an average daily production of over 2 million barrels per day.
However, the pandemic forced a downward review in March 2020 to $30 per barrel and later to $25 per barrel this month, with an average daily production of 1.7 million barrels per day.
In April 2020, Nigeria, alongside other oil producers in the world, especially from the Organisation for the Petroleum Exporting Countries (OPEC), agreed to cut global supply by 10 percent to 9.7 million barrels per day.
Under its own quota, the Africa’s largest producer of the of the commodity was asked to reduce its supply to 1.4 million barrels per day in May and June 2020.
This agreement has helped price of crude oil to jump to over $30 per barrel since the deal became effective on Friday, May 1, 2020.
When the coronavirus outbreak affected Nigeria’s economy, the federal government ran to the World Bank to seek for a $1.5 billion loan to help carry out its main duties in the country.
The World Bank has said this request would be considered in two months’ time and a decision announced.
In an interview with Reuters on Friday, the Director of the World Bank for Nigeria, Mr Shubham Chaudhuri, stated that, “We were hoping to present to our board by late July or latest early August, because the government will need the finance.”
Mr Chaudhuri said further that, “The immediate challenge is a fiscal one: How does the government marshal the fiscal resources to keep basic government functions going?”
However, he declined to comment on any conditions the bank hopes the country fulfils before granting the loan.
But the lead economist of World Bank on Nigeria, Mr Marco Hernandez, informed Reuters that, “We have been recommending a move towards a unified exchange rate and a more flexible exchange rate for some time,” emphasising that it would help the recovery and boost investor confidence.
Nigeria operates a multiple exchange rate system and this has been very confusing to investors.
While the official exchange rate is N361 to a Dollar, the exchange rate at the black market is over N450 per Dollar, while at the Investors and Exporters (I&E) window is over N380/$1.
Last Thursday, the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, warned that Nigeria’s economy could fall into a recession in 2020 with a 8.9 percent contraction.
The last time the country slipped into an economic crisis was in 2016, a year after Mr Buhari became President. If Nigeria falls into another recession, it would be the second under his administration and the first President to lead the country into recession two times in the same regime.
Business Post reports that last month, the International Monetary Fund (IMF) approved Nigeria’s $3.4 billion loan request. The money was withdrawn from the bank by the country and is expected to be repaid in five years, with two years moratorium.
By Aduragbemi Omiyale
The ban on the export of raw shea nuts from Nigeria has been extended by one year by President Bola Tinubu.
A statement from the Special Adviser to the President on Information and Strategy, Mr Bayo Onanuga, on Wednesday disclosed that the ban is now till February 25, 2027.
It was emphasised that this decision underscores the administration’s commitment to advancing industrial development, strengthening domestic value addition, and supporting the objectives of the Renewed Hope Agenda.
The ban aims to deepen processing capacity within Nigeria, enhance livelihoods in shea-producing communities, and promote the growth of Nigerian exports anchored on value-added products, the statement noted.
To further these objectives, President Tinubu has authorised the two Ministers of the Federal Ministry of Industry, Trade and Investment, and the Presidential Food Security Coordination Unit (PFSCU), to coordinate the implementation of a unified, evidence-based national framework that aligns industrialisation, trade, and investment priorities across the shea nut value chain.
He also approved the adoption of an export framework established by the Nigerian Commodity Exchange (NCX) and the withdrawal of all waivers allowing the direct export of raw shea nuts.
The President directed that any excess supply of raw shea nuts should be exported exclusively through the NCX framework, in accordance with the approved guidelines.
Additionally, he directed the Federal Ministry of Finance to provide access to a dedicated NESS Support Window to enable the Federal Ministry of Industry, Trade and Investment to pilot a Livelihood Finance Mechanism to strengthen production and processing capacity.
Shea nuts, the oil-rich fruits from the shea tree common in the Savanna belt of Nigeria, are the raw material for shea butter, renowned for its moisturising, anti-inflammatory, and antioxidant properties. The extracted butter is a principal ingredient in cosmetics for skin and hair, as well as in edible cooking oil. The Federal Government encourages processing shea nuts into butter locally, as butter fetches between 10 and 20 times the price of the raw nuts.
The federal government said it remains committed to policies that promote inclusive growth, local manufacturing and position Nigeria as a competitive participant in global agricultural value chains.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange expanded for the first session this week by 1.27 per cent on Wednesday, February 25.
This lifted the NASD Unlisted Security Index (NSI) above 4,000 points, with a 50.45-point addition to close at 4,025.25 points compared with the previous day’s 3,974.80 points, as the market capitalisation added N30.19 billion to close at N2.408 trillion versus Tuesday’s N2.378 trillion.
At the trading session, FrieslandCampina Wamco Nigeria Plc grew by N5.00 to trade at N100.00 per share compared with the previous day’s N95.00 per share, Central Securities Clearing System (CSCS) Plc improved by N4.18 to sell at N70.00 per unit versus N65.82 per unit, and First Trust Mortgage Bank Plc increased by 14 Kobo to trade at N1.59 per share compared with the previous day’s N1.45 per share.
However, the share price of Geo-Fluids Plc depreciated by 27 Kobo at midweek to close at N3.27 per unit, in contrast to the N3.30 per unit it was transacted a day earlier.
At the midweek session, the volume of securities went down by 25.3 per cent to 8.7 million units from 11.6 million units, the value of securities decreased by 92.5 per cent to N80.7 million from N1.2 billion, and the number of deals slipped by 33.3 per cent to 32 deals from the preceding session’s 48 deals.
At the close of business, CSCS Plc remained the most traded stock by value on a year-to-date basis with 34.1 million units exchanged for N2.0 billion, trailed by Okitipupa Plc with 6.3 million units traded for N1.1 billion, and Geo-Fluids Plc with 122.0 million units valued at N478.0 million.
Resourcery Plc ended the trading session as the most traded stock by volume on a year-to-date basis with 1.05 billion units valued at N408.7 million, followed by Geo-Fluids Plc with 122.0 million units sold for N478.0 million, and CSCS Plc with 34.1 million units worth N2.0 billion.
By Dipo Olowookere
The bears consolidated their dominance on the Nigerian Exchange (NGX) Limited on Wednesday, inflicting an additional 0.09 per cent cut on the market.
At midweek, the market capitalisation of the domestic stock exchange went down by N73 billion to N124.754 trillion from the preceding day’s N124.827 trillion, and the All-Share Index (ASI) slipped by 114.32 points to 194,370.20 points from 194,484.52 points.
A look at the sectoral performance showed that only the consumer goods index closed in green, gaining 1.19 per cent due to buying pressure.
However, sustained profit-taking weakened the insurance space by 3.79 per cent, the banking index slumped by 2.07 per cent, the energy counter went down by 0.24 per cent, and the industrial goods sector shrank by 0.22 per cent.
Business Post reports that 25 equities ended on the gainers’ chart, and 54 equities finished on the losers’ table, representing a negative market breadth index and weak investor sentiment.
RT Briscoe lost 10.00 per cent to sell for N10.35, ABC Transport crashed by 10.00 per cent to N6.75, SAHCO depreciated by 9.98 per cent to N139.35, Haldane McCall gave up 9.93 per cent to trade at N3.99, and Vitafoam Nigeria decreased by 9.93 per cent to N112.50.
Conversely, Jaiz Bank gained 9.95 per cent to settle at N14.03, Okomu Oil appreciated by 9.93 per cent to N1,765.00, Trans-nationwide Express chalked up 9.77 per cent to close at N2.36, Fortis Global Insurance moved up by 9.72 per cent to 79 Kobo, and Champion Breweries rose by 5.39 per cent to N17.60.
Yesterday, 1.4 billion shares worth N46.2 billion were transacted in 70,222 deals compared with the 1.1 billion shares valued at N53.4 billion traded in 72,218 deals a day earlier, implying a rise in the trading volume by 27.27 per cent, and a decline in the trading value and number of deals by 13.48 per cent and 2.76 per cent, respectively.
Fortis Global Insurance ended the session as the busiest stock after trading 193.7 million units for N152.7 million, Zenith Bank transacted 120.7 million units worth N11.1 billion, Japaul exchanged 114.8 million units valued at N407.0 million, Ellah Lakes sold 98.4 million units worth N999.2 million, and Access Holdings traded 63.1 million units valued at N1.7 billion.
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