Connect with us

Finance

Nigeria Has Current Account Surpluses to Support Imports

Published

on

ICAEW

The Institute of Chartered Accountants in England and Wales (ICAEW) has stated that Nigeria and a few African countries have current account surpluses, indicating that their economies have lesser risk of suffering when imports become more expensive in the face of a stronger dollar.

ICAEW made this known in its latest Economic Insight: Africa Q4 2015, which examined the impact of key economic events of 2015 on the future outlook of African development.

ICAEW in the report determined the risk levels of various economies within the continent in relation to the rise in United States Federal Reserve rate.

“In order to do so, a ‘vulnerability index’ was constructed which focuses on three measures, namely; a country’s current account balance, its growth in private sector credit, as well as its ratio of foreign debt to reserves. These indicators are scaled, harmonised and added together to provide an overall vulnerability score for each economy. The higher the score, the more vulnerable an economy to the rise in the US Federal Reserve rate, ”it stated.

According to the report, Ghana emerges as the weakest economy with a score of 273 out of 300, explaining that is due to a very high current account deficit as well as a history of rapid credit growth.

“Seychelles came in at a close second place followed by Guinea, Tanzania and Democratic Republic of Congo (DRC). Kenya ranked 6th in terms of vulnerability scoring just under 250 points out of 300.

“This can be attributed to the nation’s current account deficit which stands at 10.4 per cent,” ICAEW added.

Countries according to the report were assessed on three variables: the current account/GDP ratio, the growth of private sector credit and the foreign debt/reserves ratio.

Nigeria’s weak point among the variables is credit growth, which expanded by 24.8 per cent year/year in June 2015 according the CBN data.
The series covers the lending by deposit money banks, and includes loans to state and local governments, which represent a little over five per cent of the total.

Growth in private sector credit, it added, also presents a risk, as it indicates a dependence on debt to drive growth.

“Within the major African economies, Ghana tops the list, with a private sector credit growth rate of 18.4 per cent followed closely by Kenya with a rate of 17.8 per cent since 2013. Botswana and Mauritius have seen a growth of under 10 per cent while other economies such as Zimbabwe have seen credit decline by 24 per cent over the same period. While the index provides insights into the vulnerability of emerging markets in relation to a US Federal Reserve rate hike, it is not exhaustive.”

Regional Director, ICAEW Middle East, Africa and South Asia, Michael Armstrong, said: “Of course, there are many factors to consider, like financial openness and the level of integration into the world economy, which all affect the level of vulnerability to global economic shocks. Clearly, if policy conclusions are going to be drawn, they should be done following a country-by-country analysis. However, this index does show a snapshot of how resilient the various African economies are on some important metrics. All countries would be well placed to anticipate the possible effects of US monetary policy when planning for economic growth.”

ThisDay

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Continue Reading
Comments

Banking Sector

Buhari Expresses Confidence in Banking Institutions to Tackle Economic Challenges

Published

on

President Muhammadu Buhari

President Muhammadu Buhari has expressed his confidence in the West African Banking Association (WABA) to tackle economic challenges in the West African region.

The president expressed his trust while receiving a team from WABA, led by its President, Thierno Seydou Nourou Sy, at the State House in Abuja.

The president stated that the sub-region needs to come to an agreement on low access to financial services and recovery from the COVID-19 pandemic.

According to him, the association, founded in 1981, brings together over 250 commercial banks and 15 institutions from across West Africa, and for many centuries, African countries have traded with one another without a formalized and structured system. He, however, noted that over time, global trade had become more complex and organized.

The president expressed optimism that the launch of the African Continental Free Trade Area will mark a watershed moment in the way African countries do business.

“More importantly, we will turn the page in ensuring that we deepen and expand our industrial capabilities by making sure we export less of what we have been endowed with in the primary or raw form, and convert larger portions of these resources into finished materials.

“That will allow us to benefit from the revenue earned from the added value of exporting a finished product,” he said.

“Our ability to overcome the current phase of our development lies in our resolve to work jointly via our regional and sub-regional organizations where we can all reach a common understanding to fight against a common enemy.

“This is one of the reasons I am delighted with the strides ECOWAS has been making towards unanimity and forging alliances with a goal to resolve issues that confront the sub-region.

“I believe that this is also the approach that is being followed in the West African Bankers’ Association and the West African Monetary Union,’’ he added.

While commenting on WABA’s ongoing attempts to synchronize monetary and fiscal policy, the president pushed the organization to find common ground despite the particular macroeconomic challenges that each member-state faces.

He pledged that Nigeria would always be ready to support efforts that are geared towards improving the lives of all its citizens “as long as they do not place us at a disadvantage.”

The WABA President praised Nigeria’s leadership role in the African economy, while also praising President Buhari’s leadership.

“That’s why we are here for counsel and guidance for the financial sector in West Africa,” he said. He further urged the president to be an advocate for the greater inclusion of WABA in the ECOWAS structure.

Continue Reading

Finance

NGX Sheds 0.13% on Monday to Extend its Decline

Published

on

Stock - Investors King

The Nigerian Exchange Limited (NGX) extended its decline on Monday as investors exchanged 263,338,835 shares worth N3.549 billion in 4,549 billion.

The market value of all listed equities decreased by N37 billion from N28.562 trillion it closed on Friday to N25.525 trillion while NGX shed 0.13% to close at 52,911.51 index points on Monday.

Jaiz Bank led the most traded stocks with 114007816 shares worth N101,752,697.03. Followed by GTCO’s 12,872,851 shares valued N302,842,620.75. See other details below.

Top Gainers 

Symbols Last Close Current Change %Change
CONOIL N 31.15 N 34.25 3.10 9.95 %
MRS N 13.60 N 14.95 1.35 9.93 %
MCNICHOLS N 2.13 N 2.34 0.21 9.86 %
ACADEMY N 1.23 N 1.35 0.12 9.76 %
NPFMCRFBK N 1.87 N 2.02 0.15 8.02 %

Top Losers 

Symbols Last Close Current Change %Change
PRESCO N 200.00 N 180.00 -20.00 -10.00 %
GSPECPLC N 3.41 N 3.07 -0.34 -9.97 %
NEIMETH N 1.76 N 1.59 -0.17 -9.66 %
UACN N 14.40 N 13.20 -1.20 -8.33 %
NEM N 4.39 N 4.05 -0.34 -7.74 %

Top Trades

Symbols Volume Value
JAIZBANK 114007816.00 101752697.03
GTCO 12872851.00 302842620.75
TRANSCORP 12806324.00 16725610.46
ACCESSCORP 11657629.00 115657901.70
ZENITHBANK 8579430.00 207021363.25

Continue Reading

Finance

Nigeria Raises Interest Rate by 150 Basis Points to 13%

Published

on

Godwin Emefiele - Investors King

The Central Bank of Nigeria (CBN) led Monetary Policy Committee on Tuesday unanimously agreed to raise interest rates by 150 basis points from 11.5% to 13% to rein in escalating consumer prices.

The apex Governor, Godwin Emefiele disclosed this while speaking to the media on Tuesday, May 24th, 2022.

In 2020, the committee cut interest by 50 basis points to 11.5% in September 2020 to encourage borrowing and deepen new investment to stir growth and halt the plunge in economic productivity during the peak of COVID-19.

The nine-member committee voted unanimously to keep Monetary Policy Rate (MPR) at 13% and others as follow:

  • The asymmetric corridor of +100/-700 basis points around the MPR was retained
  • CRR was retained at 27.5%
  • While Liquidity Ratio was also kept at 30%

The increase may not be unconnected to Nigeria’s high inflation rate of 16.82% in April. The committee is now projecting an aggressive increase in the inflation rate due to the forthcoming general election.

Emefiele said the MPC is suspicious “there might be an aggressive accretion of inflation”. Therefore, to prevent the looming inflation, he said the committee had to raise the interest rate by 150 basis points.

Continue Reading




Advertisement
Advertisement
Advertisement

Trending