From all indications, the Nations economy is on autopilot with no clearly defined policies other than scrambling for loans for servicing the burgeoning debts and financing of budget deficit.
In fact the currency of Africa’s top oil producer fell by between the average of three to four percent at the black market to over N400/$, last week as some Nigerians and corporate organizations are devicing strategies at piling up dollars to hedge against a possible further devaluation of the Naira.
This is even as the lack of reassurance from the Federal Government over the growing economic and political uncertainty has continued to create feelings of fear with the attendant continued impoverishment of Nigerians.
Naira has been under pressure against other major currencies, particularly the dollar, since the fall in oil prices and the outbreak of the COVID-19 pandemic. This has triggered a wave of currency speculators who believe the devaluation which occurred in March should have been more.
The CBN devalued the official exchange rate in March from N307/$1 in response to the fall in crude oil prices.
But while the current effort by CBN to unify the multiple exchange rates would rake in more naira to execute some projects, but most Nigerians, particularly, importers are at crossroads over the high exchange rate.
Consequently, speculators are betting that the government may devalue further if they are to fund the budget.
Indeed, African oil producers are being compelled to comply with their various OPEC quota so as to keep prices at current levels of $40pb or above. To countries like Nigeria whose oil revenues are more production than price sensitive, this could be a problem in the near term.
Indeed, African oil producers are being compelled to comply with their various OPEC quota so as to keep prices at current levels of $40pb or above. To countries like Nigeria whose oil revenues are more production than price sensitive, this could be a problem in the near term.
Meanwhile, the cost of living has continued to rise steadily. Annual inflation rose for the ninth straight month in May, to a two-year high of 12.4 percent. The situation is worsened with logistics induced rise in prices of staple food items due to the lockdown and interstate ban ocassioned by the Pandemic.
Nigeria’s oil benchmark has just been approved by the National Assembly at $28pb. Its fiscal programs and the value of the naira in the forex market will be determined to a large extent by the fortunes of the oil markets.
According to Bismarck Rewane’s Financial Deivatives Company current Economic Bulletin unemployment in Nigeria is expected to rise to 33.6%, which means that three in every ten Nigerians (of the workforce) will be unemployed by the end of 2020 according to Nigeria’s Economic Sustainability Plan.
According to Bismarck Rewane’s Financial Deivatives Company current Economic Bulletin unemployment in Nigeria is expected to rise to 33.6%, which means that three in every ten Nigerians (of the workforce) will be unemployed by the end of 2020 according to Nigeria’s Economic Sustainability Plan.
Globally, companies are also becoming more cost-efficient in their quest to remain solvent. For example, in the UK, furlough or support from the government will cease in August. This means that companies will need to pay lower salaries or slash their payroll. In the US, over 41 million Americans have filed for jobless claims and unemployment is at a record 13.3%.
According to the publication, all these indicators are a stark reminder to those in employment to hold tightly to their jobs and maximise whatever retail loans are being offered by banks
Diaspora remittances or transfers from friends and relatives abroad who still have jobs are another safety net. Unfortunately, diaspora inflows into Sub-Saharan African (SSA) countries including Nigeria are estimated to drop sharply by 23.1% to $37bn in 2020
According to the publication, all these indicators are a stark reminder to those in employment to hold tightly to their jobs and maximise whatever retail loans are being offered by banks
Diaspora remittances or transfers from friends and relatives abroad who still have jobs are another safety net. Unfortunately, diaspora inflows into Sub-Saharan African (SSA) countries including Nigeria are estimated to drop sharply by 23.1% to $37bn in 2020
Also, the nation’s external reserves fell by $261 million in 15 days as the central bank marginally increased sale of forex in the I&E window.
Data from the website of the apex bank reveals Nigeria’s external reserve is now $36.3 billion as at June 18th 2020.
However, dollar shortages, which is impacting on the external reserve, continues to be on the burner and widening the exchange rate at the I&E window and the black market.
While some high networth Nigerians are now stockpiling their wealth in foreign currencies, particularly, the dollar, others are investing heavily in shares of their companies taking advantage of the present disproportionate economic hardship.
For instance, Nairametrics,an online platform reported last week that Herbert Wigwe, chief executive of Access Bank had purchased more Access Bank shares, making him the highest stake in the bank, directly owning 201.23 million shares.
For instance, Nairametrics,an online platform reported last week that Herbert Wigwe, chief executive of Access Bank had purchased more Access Bank shares, making him the highest stake in the bank, directly owning 201.23 million shares.
He was said to have purchased 3.1 million shares worth N21.4 million. In a disclosure filed at the Nigerian Stock Exchange, the transaction, was said to be carried out via indirect holding through Tengen Holdings (Mauritius) Ltd.
The notification of insider dealing, on the NSE website, revealed the following details: Purchase of shares by directors of a listed company is legal and occurs regularly. However, regulatory provisions require that such trades are disclosed
The notification of insider dealing, on the NSE website, revealed the following details: Purchase of shares by directors of a listed company is legal and occurs regularly. However, regulatory provisions require that such trades are disclosed
Some other banks are looking outside the shores to hedge against the challenges International Finance Corporation (IFC), a member of the World Bank Group, last week announced an investment of up to $100 million in Nigeria’s Zenith Bank Plc to help it increase support to clients and companies whose cash flows have been disrupted by challenges caused by the COVID-19 pandemic.
IFC’s loan to Zenith Bank is its first investment in Africa through its COVID-19 fast-track financing support package. The funding will help the bank, an existing IFC client and Africa’s sixth-largest bank, to overcome challenges resulting from ongoing limited access to foreign currency, working capital, and trade funding.
But the environment is becoming very hostile even as it is being compounded by some banks.
But the environment is becoming very hostile even as it is being compounded by some banks.
In a message, via sms last week, Access Bank wrote :
“Dear customer,
You may recall that the Central Bank of Nigeria (CBN) mandated a charge of N50 as stamp duty charge on all credit received into current and savings accounts. This is in respect of deposits and electronic transfers into all naira denominated accounts for transaction values of N10, 000 and above.
We recently discovered that the charges on applicable transactions carried out between February 1, 2020 and April 30, 2020 were inadvertently not passed on your account.
We sincerely apologize for this.
However, in compliance with the CBN mandate, we will be required to process the accumulated charges for the said period on your account for remittance to the Central Bank of Nigeria.
We request that you kindly fund your account to accommodate this charge.
Once upon, we express our sincere apologies for the inconvenience.“
We recently discovered that the charges on applicable transactions carried out between February 1, 2020 and April 30, 2020 were inadvertently not passed on your account.
We sincerely apologize for this.
However, in compliance with the CBN mandate, we will be required to process the accumulated charges for the said period on your account for remittance to the Central Bank of Nigeria.
We request that you kindly fund your account to accommodate this charge.
Once upon, we express our sincere apologies for the inconvenience.“