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AFRICA NEWSBanking, Finance & InvestmentNigeria

Foreign investment may decline over FTSE downgrade

by Editor
written by Editor

Some capital market stakeholders have stated that Foreign Portfolio Investments in Nigeria’s equity market will further reduce following the downgrade of the country by rating agency, FTSE.

FTSE in its latest advisory on the country downgraded Nigeria from Frontier market status to unclassified market status over the inability of investors to repatriate capital.

Nigeria had been added to the Watch List for possible reclassification from Frontier to Unclassified market status in September 2022.

In its latest update on Nigeria’s ranking, FTSE said it has “received feedback from market participants that although Nigeria has adopted a floating foreign exchange rate for the Nigerian Naira in the Investors’ & Exporters’ FX Window, which is now operating on a ‘Willing Buyer, Willing Seller’ basis, the lack of liquidity in the I&E FX Window continues to adversely impact the ability of international institutional to replicate benchmark changes.

“Consequently, as index changes for Nigeria within FTSE Russell equity indices have been suspended since September 2022 and with no improvement in the ability of international institutional investors to repatriate capital at a foreign exchange rate that would be used in FTSE Russell equity indices, following ratification by the FTSE Russell Index Governance Board, FTSE Russell announces that the FTSE Equity Country Classification status of Nigeria will be downgraded from Frontier to Unclassified market status.”

Based on data from the National Bureau of Statistics, Foreign Direct Investment inflow into Nigeria fell by 33 per cent in 2022 to $468.91 million, the lowest in nine years and on the Nigerian Exchange Limited, foreign inflow dwindled to N 9.45bn in July 2023, a sharp decline from N22.72bn recorded in June.

However, the total foreign transactions decreased marginally by 11.37 per cent from N45.74bn (about $60.49m) to N40.54bn (about $52.58m) between June and July 2023.

Reacting to the downgrade, an equity research analyst, Olaide Baanu, lamented that it will have a significant impact on the equity market as foreign investors maintain their wait-and-see approach or even sell off more of their stakes.

He said, “The recent downgrade will have a significant impact on the Nigerian equity market, as many foreign portfolio investors will further tend to sell down their investments.”Related News

Baanu added that the “illiquidity in the foreign exchange market is a serious issue that affects not only the equity market but also the entire financial market. As a result of difficulties in FX repatriation, many Nigerian stocks remain undervalued, and foreign investors have abstained from the market.”

For the Chief Executive Officer of Calyx Securities, Gbolahan Bello, the downgrade provides mixed blessings even as it will impact the equity market.

Bello said, “We should expect major retracement in equity market indices following this announcement by FTSE.”

However, “the temporary price reversal will present bargain hunting opportunities for savvy domestic investors as most of our listed stocks remain fundamentally sound, he concluded.

For economic and capital market analyst, Rotimi Fakayejo, the downgrade may just be ignored by the relevant authorities.  “It will rather be ignored,” he stated.

The Nigerian Exchange Limited market capitalisation shed N757bn after Monday and Tuesday’s trading sessions following the FTSE downgrade.

Meanwhile, the Central Bank of Nigeria has directed banks to stop using their foreign exchange revaluation gains for dividends and other operational expenditures.

In a circular issued on Monday, the apex bank said the move was to battle the forex crunch that has persisted in the country, worsened by the harmonisation of the segments of the forex market in June.

 “Treatment of FX Revaluation Gains: Banks are required to exercise utmost prudence and set aside the FCY revaluation gains as a counter-cyclical buffer to cushion any future adverse movements in the FX rate. In this regard, banks shall not utilize such FX revaluation gains to pay dividends or meet operating expenses,” the CBN stated.

SOURCE; PUNCHNG.COM

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AfricaAFRICA NEWSBanking, Finance & InvestmentEconomyNewsNigeriaWestern Africa

CBN to debit banks on Thursday after CRR Raise To 32.5%

by Radarr Africa
written by Radarr Africa

The Central Bank of Nigeria (CBN) says it will debit all banks in the country on Thursday, Sept. 29, for the Cash Reserve Ratio (CRR) to allow for the mopping-up of liquidity.

The development is coming after the monetary policy committee (MPC) raised the cash reserve ratio (CRR) from 27.5 percent to 32.5 percent to tame inflationary pressure.

Godwin Emefiele, governor of the apex bank, said this on Tuesday while fielding questions from journalists after the committee’s meeting at the CBN headquarters in Abuja.

CRR is the share of a bank’s total customer deposit that must be kept with the central bank.

CRR is one of the ways CBN regulates the country’s money supply, inflation level and liquidity in the country. The higher the rate, the lower the liquidity with the banks.

Emefiele said the directive would allow the apex bank to achieve its desired results.

“We have increased the CRR, and we expect that this decision at this meeting must be seen to be potent and must achieve the effect that the MPC thinks it should achieve,” he said.

“We expect that all the banks in Nigeria must fund their accounts by Thursday, 48 hours because we will debit them for CRR.

“We will take their CRR to a minimum of 32.5 which means we are going to take liquidity out of their vaults by Thursday.”

He added that if any bank fails to meet up, the apex bank may need to “preclude those banks from foreign exchange market until they meet this 32.5”.

ALSO READ: National assembly to pass data protection bill within 30 days

“This message is meant to underscore the fact that this very aggressive decision to rein in inflation must yield results. We do not want to face Nigerians in the next few months, and we begin to take the blame for not being able to rein in inflation and in spite of all of the rates that we raised,” the CBN governor said. 

“So we have decided to adopt a two-pronged approach by increasing CRR – we want to see interest rate go up and CRR going up because we must mop liquidity effectively out of the vaults of the bank.” 

The committee also raised the monetary policy rate (MPR), which measures interest rate, from 14 percent to 15.5 percent.

Source: The Cable

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AfricaAFRICA NEWSBusinessFinance & ServicesNewsNigeriaTechnologyWestern Africa

eNaira services temporarily unavailable, CBN confirms

by Radarr Africa
written by Radarr Africa

The Central Bank of Nigeria’s digital currency, eNaira is currently not available due to an ongoing maintenance process, the financial regulator confirmed, Thursday.

Recall that the CBN has been at the forefront of pushing the eNaira to gather momentum and acceptability by Nigerians through different initiatives.

In a statement issued by CBN, the apex bank apologized to eNaira users as the platform is currently unavailable.

The statement reads: “We apologize for the current unavailability of eNaira services, which is due to an ongoing improvement maintenance activity.

While we regret any inconvenience customers may experience in the interim, we do appreciate your kind feedback and patience as we all strive to improve the user experience with the eNaira.

ALSO READ: Flutterwave enables eNaira collections for one million merchants

According to the CBN, it’s technical team is working hard to complete the enhancement process in the next few hours.

“We assure you that the eNaira platform will be back online soonest to serve you better. Please bear with us.”

Source: Techeconomy

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NigeriaTransportation & LogisiticsWestern Africa

Emirate Airlines Announces flight reinstatement to Nigeria

by Radarr Africa
written by Radarr Africa

Emirate Airlines says it will reinstate flights to and from Nigeria from September 11 because the Central Bank of Nigeria has released a portion of its blocked fund in the country.

In a statement issued by the Airlines Public Relations Manager, Rula Tadros, on Thursday, Emirates said it welcomes the CBN move to release a portion of “our blocked funds.”

“In light of these developments, Emirates Airlines will reinstate flights to/from Lagos from 11 September, which is the earliest date for us to co-ordinate the smooth and safe resumption of operations. It will also provide travellers sufficient time to plan and book their journeys,” the statement partly read.

The airline said they will continue to engage with the Nigerian authorities to ensure the repatriation of “our outstanding” and future funds may continue without hindrance.

Emirates said, “We constantly review our network operations and will adjust our flying schedules to respond to market demand and other operational factors.”

“We remain keen to serve Nigeria, by providing international connectivity for travelers and businesses to access trade and tourism opportunities in Dubai, and across our broader network of over 130 destinations,” the Airline said.

Existing scourge

The Airlines decision is coming after the CBN announced that it released $265 million to airlines operating in the country to settle outstanding-trapped funds from ticket sales last week Friday.

The move by the apex bank came after Emirates Airlines threatened to halt its operations to and from Nigeria by September 1, due to its inability to repatriate $85 million trapped in Nigeria.

Nigeria’s lingering forex crisis has impacted the aviation sector negatively within the past weeks and months, at a time domestic and international airlines are also grappling with a sharp increase in aviation fuel.

ALSO READ: Airlines cut flights as aviation fuel price skyrockets.

The International Air Transport Association (IATA), the top global trade association of airlines, had also criticised Nigeria’s failure to allow international airlines to repatriate their profits, warning it may cause the country more damage.

According to IATA, the amount airlines have been unable to repatriate from the country rose to $464 million (N199.2 billion) in July.

Meanwhile, the Nigerian government has also threatened to shut down domestic airlines over multi-billion naira debt authorities said the airlines owe.

The Nigerian Civil Aviation Authority (NCAA), the agency that regulates airline operations in the country, said airlines owed the government N19 billion and $7.6 million, and have refused to pay despite receiving the money from customers.

The regulator says airlines must enter an MoU on how they will pay their debts in the next 30 days from August 30 or their licences will be suspended.

Source: Premium Times

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Banking, Finance & InvestmentBusinessNigeriaTechnologyWestern Africa

Flutterwave secures grant by CBN for Switching and Processing license

by Radarr Africa
written by Radarr Africa

Africa’s leading payments technology company, Flutterwave has recently been granted a Switching and Processing License by the Central Bank of Nigeria (CBN).

The license, which is widely regarded as CBN’s most valuable payments processing license allows Flutterwave to offer transaction switching and card processing services to customers.

Others include non-bank acquiring, agency banking and payment gateway services.

The Switching and Processing license would allow Flutter wave to enable transactions between banks, fintech’s and other financial institutions.

The Company is also able to process card transactions, participate in agency banking and offer various payment services without any intermediary.

Prior to this license, Flutterwave operated with its Payment Solution Service Provider (PSSP) and International Money Transfer Operator (IMTO) licenses.

CEO and Founder, Olugbenga GB Agboola Commented on the development saying, “This is big news for our customers, partners, investors, and other stakeholders. It is an important milestone in our growth story. Building a thriving payments ecosystem in Nigeria, Africa’s largest economy, is in line with our goal of developing a world-class and secure payment infrastructure for global merchants and payment service providers across the continent.”

ALSO READ: Flutterwave prepares for initial public offering on Nasdaq Stock Exchange

The application and review process by the CBN was a tough and rigorous process that examined every aspect of Flutterwave’s business, including the company’s financial position.

“We’re thrilled to have been issued this license after fulfilling all of the regulatory requirements. The application process was very rigorous and included a detailed review of our operations as a business. As a switch, we have more responsibilities and will continue to work with Regulators to ensure we meet and exceed their expectations.” Oluwabankole Falade, Flutterwave’s Chief Regulatory and Government Affairs Officer said.

“The license will allow us to offer more services and explore more payment use cases for our ecosystem. With this license, we can offer more value to our customers while taking more control of our value chain to enable an improved payments experience for our enterprise, medium scale, and retail customers.” Reacting to the news, Onyedikachim Nwankwo, Head of Product Marketing said.

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AfricaAFRICA NEWSBanking, Finance & InvestmentBusinessEconomyNewsNigeriaWestern Africa

CBN records N2.4B diaspora remittances under its Naira 4 dollar scheme

by Radarr Africa
written by Radarr Africa

Central Bank of Nigeria (CBN), says Nigeria has recorded $2.4 billion in diaspora remittances under the “Naira 4 Dollar Scheme” in 2022.

Director of Trade and Exchange Department CBN, Ozoemena Nnaji revealed this at the 33rd conference for financial correspondents and business editors over the weekend in Lagos.

She noted that while remittances registered through the program totaled $2.9 billion in 2021, Nigeria had only received $2.4 billion as of the first eight months of 2022.

“We have seen an increase in the Naira 4 Dollar in terms of remittances. For example, in 2021, we were able to record $2.9 billion of cash inflows, so far this year, we have recorded $2.4 billion. So, in half of the year, we have gotten almost what we got in the year 2021,” Nnaji said.

“We have a component of remittances which include workers’ compensation, anyone that worked in Nigeria, even if you are a Nigerian but are paid in dollars because you work for an embassy or an international organization, it is counted as a remittance.

“So, there are so many components of remittances. But the component of inflows that came into this country so far, we are at $2.4 billion.”

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AfricaAFRICA NEWSBanking, Finance & InvestmentBusinessNewsNigeriaTechnologyWestern Africa

CBN set to introduce USSD code for eNaira as transactions hit N4bn

by Radarr Africa
written by Radarr Africa

The Central Bank of Nigeria (CBN) says it will roll out the unstructured supplementary service data (USSD) code for eNaira next week.

Godwin Emefiele, CBN governor, revealed this on Thursday at the eNaira hackathon organised by the Africa Fintech Foundry (AFF) and the apex bank in Abuja.

The CBN governor also announced that between October 2021 when it was launched and now, the eNaira has reached 840,000 downloads, with about 270,000 active wallets comprising over 252,000 consumer wallets and 17,000 merchant wallets. The volume and value of transactions on the platform have been remarkable, reaching above 200,000 and N4 billion, respectively.

Emefiele said CBN had concluded the first phase of the eNaira focusing on banks to users and progressed to the second phase of financial inclusion.

For the second phase, the CBN governor disclosed that the eNaira wallet would be made available to the general public by next week simply by dialing USSD code *997#.

“To achieve this set of objectives of the eNaira, the project adopted a phased approach with the first phase focusing on banks to users, while the policy objective of the second phase borders around financial inclusion,” he said.

“The second phase of the project has started, and it is intended to drive financial inclusion by onboarding the unbanked and on the soft users leveraging offline channels. 

ALSO READ: Cashless Economy: Cheque transactions in Nigeria fall 12% to N240bn

“Phase two is expected to deliver more gains with a target of about 8 million active users based on estimations using the diffusion of innovation model. Accordingly, we promised to increase the level of financial inclusion in the country because, just like the naira, the eNaira is expected to be accessible to all Nigerians, and I would provide more possibilities to bring the unbanked into the digital economy. 

“I am pleased and delighted to inform you all today that by next week, Nigerians, both banked and unbanked, will be able to open an eNaira wallet and conduct transactions by simply dialling *997# from their mobile phones.”

“Shortly after this, both merchants and consumers with bank accounts can use the NIBSS instant payment (NIP) to transfer and receive eNaira to any bank account of their choice. This will further deepen the integration of the naira with the assist in national payments infrastructure.”

In June, CBN said the introduction of the USSD code will improve the adoption of the eNaira.

Source: Leadership

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AfricaAFRICA NEWSBanking, Finance & InvestmentEconomyNewsNigeriaWestern Africa

Central Bank of Nigeria Raises interest rate on banks deposits to 4.2%

by Radarr Africa
written by Radarr Africa

The Central Bank of Nigeria (CBN) has raised the interest rate on bank customers’ deposits. According to the Apex Bank, bank customers will be getting at least 4.2 per cent on their savings compared to the previous 0.15- 1.4 per cent.

This is coming after the country’s inflation rate surged to a 17-year high of 19.64% in July 2022.

At its last meeting in July, the Monetary Policy Committee(MPC) of the CBN had raised MPR to 14 per cent due to the persistent rise in inflation rate in the country.

The upward review of interest on savings was stated in a circular signed by the CBN director, Banking Supervision, Haruna Mustafa, and issued to all banks dated August 15, 2022.

With the new circular, banks are expected to increase interest rate on savings from 10 per cent of MPR to 30 per cent of MPR with effect from August 1, 2022. Consequently, bank customers can now earn up to 4.2 per cent which is 30 per cent of the 14 per cent MPR as against 1.4 per cent which was 10 per cent of the MPR.

The circular reads: “It will be recalled that as part of the efforts to ameliorate the impact of the COVID-19 pandemic, the Central Bank of Nigeria reduced the minimum interest rates payable on local currency savings deposits from 30 per cent to 10 per cent of the Monetary Policy Rate (MPR). This was aimed at stimulating growth in the larger economy following the economic slowdown occasioned by the pandemic.

ALSO READ: Nigeria’s Inflation surges to 19.64%, the highest since 2005

“However, following the return to full normalcy and considering the prevailing macroeconomic conditions, it has become necessary to effect an upward adjustment of the interest rate payable on local currency savings deposits.

“Accordingly, effective August 1, 2022, the negotiable minimum interest rate on local currency savings deposits shall be 30 per cent of MPR. This supersedes our letter dated September 1, 2020, referenced BSD/DIR/GEN/LAB/13/052 on the subject.”

Source: Leadership

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AfricaBanking, Finance & InvestmentBusinessNewsNigeriaWestern Africa

TAJbank secures nationwide banking Licence

by Radarr Africa
written by Radarr Africa

TAJBank Limited, Nigeria’s leading non-interest bank, has secured the approval for nationwide banking operations from the Central Bank of Nigeria (CBN).

The bank’s Managing Director, , Mr Hamid Joda, made this known in a statement on Wednesday.

Joda said that the licence was coming on the heels of several awards bagged by the bank in its past two years of operations in recognition of its outstanding banking services.

According to Joda, it is another feat achieved by the bank to leverage on our cutting-edge and impressive products and service delivery scorecards.

“We want to thank the regulatory authorities for issuing a national license as well as the growing number of our customers who are yearning to see us give them the best in non-interest banking services.

“I want to assure them that with the latest approval by the authorities, we will deploy all human and technological resources to their doorsteps and give real meaning to the National Financial Inclusion Strategy (NFIS).

“We will be bringing world class non-interest banking products and services to their doorsteps for growth and prosperity,” he said.

Joda attributed TAJBank’s impressive performances over the past two years to innovativeness in key areas of customer-centric service delivery powered by world-class technologies and solutions.

He said the national license would help in growing the bank’s agency network to 25,000 by 2025, thereby reducing the financial exclusion rate.

ALSO READ: Lekki Deep Seaport gets approval to begin commercial Operation

The bank’s Executive Director, Mr Sherif Idi, expressed excitement at the license for national operation.

Idi said, “we are very excited to achieve this feat, especially when the potential benefits to our customers and the nation’s economy cannot be quantified in socio-economic terms.

” For us, it is a call for more services to millions of Nigerians, who are desirous of having access to credit without pains. Let me say it loud, we shall not disappoint them on this expectation.”

It would be recalled that TAJBank’s management had last month unveiled plans to launch Nigeria’s first private sector Sukuk offering under a N100 billion programme under a Mudarabah structure, thereby marking a historic shift from government-dominated Sukuk offerings to a fully private sector-oriented offering in the Nigerian debt markets.

Source: NAN

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Banking, Finance & InvestmentBuilding

Central Bank of Nigeria clears $1.7billion worth of FX backlogs by October.

by Radarr Africa
written by Radarr Africa

The World Bank has stated that Nigeria’s external reserves are expected to decline as the Central Bank of Nigeria (CBN) is expected to clear $1.7 billion worth of FX backlog and FX forward contracts to foreigners by the end-October 2022.

This was disclosed by the World bank in a document titled ‘Nigeria Development Update (June 2022): The Continuing Urgency of Business Unusual.

Nigeria’s external had been on a downward trend due to the continuous intervention by the Central Bank in the FX market in order to ensure the stability of the local currency.

What the World Bank is saying

The World Bank said, “Boosted by higher oil exports, International Monetary Fund’s Special Drawing Rights allocation in August 2021, and a Eurobond issuance in September 2021, gross official reserves rose to US$41.3 billion (7.4 months of imports) at the end of 2021; offering an opportunity for exchange rate adjustment.”

“Nigeria issued additional Eurobonds for US$1.25 billion in March 2022. However, gross FX reserves are projected to decline during 2022, as the CBN is expected to clear the FX backlog to foreigners (estimated at US$1.7 billion as of end-October) and FX forward contracts,” the Bank added.

The World Bank also projects that Nigeria would experience net portfolio outflows in 2022 due to the hawkish monetary policy seen in developed countries. The bank said “FPI inflows grew significantly in 2021, exceeding US$6 billion (1.4% of GDP). This followed a significant decline in 2020 in the wake of the COVID-19 pandemic when net outflows reached US$3.6 billion (0.8% of GDP).

The World Bank stated that “with the continued hiking of interest rates in the US and other advanced economies due to rising inflation, net portfolio inflows to Nigeria are expected to drop under 1% of GDP in 2022. The pre-election environment is also likely to add to the hesitance of portfolio investors, keeping net inflows low.”

What you should know

  • Foreign reserves are assets held on reserve by the central bank of a country used to back liabilities and influence monetary policy. They include foreign banknotes, deposits, bonds, treasury bills and other foreign government securities.
  • These assets serve many purposes but are most significantly held to ensure that a government or its agency has backup funds if their national currency rapidly devalues. Foreign exchange reserves are also called international or external reserves
  • Nairametrics reported earlier in the year that Nigeria’s external reserve received a boost of $5.15 billion in 2021, bolstered by the $4 billion Eurobond secured by the federal government in September 2021 and the $3.35 billion IMF facility under the Special Drawing Rights. However, at the time of writing, Nigeria’s external reserves stand at $38.69 billion far away from the $41 billion seen last year.
  • Capital imported to Nigeria declined by 47.6% year-on-year in 9-month 2021 to $4.52 billion compared to $8.61 billion recorded in the previous year, with foreign direct investment (FDI) only accounting for 7.55% of the total, based on NBS data.

Source: Nairametrics

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