The acute scarcity of foreign exchange, especially the dollar, continued on Wednesday with the naira closing at 372 against the United States currency at the parallel forex market.
According to Punch, forex dealers linked the persistent fall of the naira to panic buying of the dollar and other major international currencies by importers, individuals and businessmen.
With the naira exchanging at 372 to the dollar, the local currency has lost 20 per cent of its value at the parallel market in the last 10 days.
The Central Bank of Nigeria has, however, left its official rate unchanged at N197 to the dollar at the interbank window.
On Friday, the local currency fell to 338 against the US currency, a day after the Bankers’ Committee expressed concern over the mounting foreign exchange bills for school fees and medical bill payment.
The naira, which has been on a free fall in the past few weeks, fell steadily at the parallel market from 310 last Monday to 335 last Thursday.
Equities stocks fell almost by two per cent on Wednesday, hit by a major decline in cement companies’ shares, including Dangote Cement, which accounts for the third of local bourse capitalisation, Reuters reported.
The local bourse index dropped by 1.81 per cent to 24,070 points as investors took profits from previous gains on the stocks.
“Due to the rapid decline of the naira’s value, some offshore investors are booking profit and selling down their holdings,” one stockbroker said.
Shares in Dangote Cement fell by 4.11 per cent; Ashaka Cement was down by four per cent, while Cement Company of Northern Nigeria dropped by 8.89 per cent to drag the index down.
The currency and stock markets have been hit hard by the persistent fall in crude oil prices, Nigeria’s main export, causing a decline in government revenues and the exit of foreign investors from the local bourse.
A forex dealer at the international wing of the Murtala Muhammed Airport, Lagos, Mr. Saliu Mohammed, said the increasing demand for the greenback was overwhelming the market.
This, he said, was responsible for the naira’s free fall.
“Most individuals who sell (dollars) to us are no longer willing; but demand is piling up,” another dealer in Ikeja, who identified himself as Ibrahim Tukur, said.
Last month, the CBN banned dollar sales to the BDC operators, sending the naira to a record low at the black market, and later stopped the daily sale to the interbank market, in an effort to conserve the external reserves, now at their lowest in more than 11 years.
The nation realises around 90 per cent of its foreign exchange earnings from crude oil exports. The foreign reserves have fallen to $27.83bn as of February 12, data from the CBN website showed.
Commenting on the development, the Managing Director, Cowry Assets Management Limited, Mr. Johnson Chukwu, said, “The CBN does not have the forex to manage the exchange rate today. Unless we adjust the exchange rate, things may continue to get worse. As it is today, the naira can no longer be a store of value, going by the rate at which it is losing its value at the parallel market.
“Most people are buying dollar to store their wealth. We cannot ignore the parallel market because that is where most people are holding their transactions. A timely intervention by the Ministry of Finance and the CBN to give a clear guidance on how they intend to manage the exchange rate will save the day.”
Ecobank Partners NiDCOM to Mobilise Nigerians Abroad for National Development
In a bid to fulfill it’s objectives and mandate, the Pan African Bank has promised to support Nigerians living and working abroad through it’s partnership with NiDCOM.
The Managing Director, Ecobank Nigeria, Patrick Akinwuntan has stated that the bank is privileged to work closely with the Nigerians in Diaspora Commission, (NiDCOM) and will continue to pursue one of its key mandates of helping to enhance the economic development and integration of Africa through its support to Nigerians living and working abroad.
Speaking at the maiden edition of the Diaspora Quarterly Lecture Series with Ecobank as the sole banking partner which took place on Saturday, 8th May 2021, he noted that Ecobank remains a critical bridge for Nigerians abroad, as it has made huge investments in the necessary platforms to enable them connect with home seamlessly. The event held online and had over 2000 participants from across all the continents in attendance.
“Nigerians in the diaspora play a major role in nation building, their contribution goes a long way to catalyse economic development. For us at Ecobank, we are a pan-African institution positioned to foster the economic growth and integration of our continent, so we are particularly pleased to work closely with the Nigerians in Diaspora Commission (NiDCOM), ably led by the Chairman/CEO, Hon Abike Dabiri-Erewa”.
“We are committed to ensuring that every Nigerian living abroad is able to remit home seamlessly and affordably, access viable investment opportunities and as the financial institution of choice for Nigerians abroad, we have deployed the necessary resources to actualise this.” He stated.
The Minister of Interior, Ogbeni Rauf Aregbesola, who was also present, reiterated the readiness of the government to collaborate with Nigerians in the diaspora, highlighting the new processes put in place to facilitate passport issuance, noting that all backlog of passport applications would be cleared by the end of May 2021.
Also speaking, the Hon. Minister of State, Foreign Affairs Amb. Zubairu Dada said harnessing the human capital and material resources of Nigerians in the diaspora towards the socio-economic, cultural, and political development of Nigeria can no longer be ignored. He pointed out that the Nigerian diaspora community is well educated, resourceful, skilled, and exposed to global best practices.
The NiDCOM Chairman/CEO, Hon. Abike Dabiri- Erewa explained that the Diaspora Quarterly Lecture Series is projected to be a major aspect of national discourse, where Nigerians abroad can be kept abreast of the government’s policies, programmes and projects.
Increase in Price Boosts Revenue of Dangote Sugar by 41.5 Percent in Q1 2021
Revenue of Dangote Sugar Refinery Plc rose by 41.5 percent to N67.394 billion in the first quarter (Q1) of 2021 from N47.643 billion recorded in the same quarter of 2020.
According to the leading sugar manufacturer, the increase in revenue was a result of the increase in the price of sugar in the first quarter. The company claimed price adjustment was necessary to mitigate the negative effect of inflation and depreciation on the company.
Volumes only rose by 5.7 percent during the quarter despite a 41.5 percent increase in revenue, meaning the increase in price was the main sales catalyst.
In the company’s unaudited financial statements, gross profit grew from N12.721 billion in Q1 2020 to N18.044 billion in Q1 2021.
Similarly, operating profit stood at N15.884 billion, up from N10.747 billion posted in Q1 2020.
Finance cost more than double from N1.353 billion in Q1 2020 to N3.412 billion in Q1 2021.
Dangote Sugar’s profit before tax rose from N9.509 billion recorded in the corresponding quarter to N11.949 billion in the quarter under review.
The company paid N3.646 billion in income tax, slightly higher than N3.137 paid in the same quarter of 2020.
Profit for the period grew from N6.372 billion in Q1 2020 to N8.302 billion in Q1 2021.
Commenting on the company’s performance, Dangote Sugar said “EBITDA increased by 34.7% to N17.02 billion (2020: N12.64 billion) on account of increased earnings. Group profit after taxation for the period increased by 30.3% to N8.30 billion (2020: N6.37 billion) reflecting management’s unrelenting drive to deliver consistent shareholder value.”
On price increase, the company hinged it on series of devaluation carried out in 2020 by the Central Bank of Nigeria (CBN), escalating inflation, port congestion and rising in price of global sugar. Dangote Sugar said its imported raw sugar from Brazil under Federal Government’s backward integration plan.
“We have continued to witness high cost of raw materials, energy costs and other input costs due to rising inflation and FX rate fluctuation. Further cost escalation is anticipated in the year as inflationary pressure mounts,” the company said.
FBN Holdings Suffers 39 Percent Drop in Profit to N15.6 Billion in Q1 2021
FBN Holdings Plc profit after tax declined by 39 percent from N23.140 billion recorded in the first quarter (Q1) of 2020 to N15.6 billion in the first quarter of 2021.
In the leading financial institution’s unaudited financial statements released through the Nigerian Exchange Limited, gross earnings declined by 14.5 percent to N137 billion in the period under review, down from N160 billion filed in the previous quarter.
Similarly, net interest income declined from N60.253 billion achieved in Q1 2020 to N52.793 billion.
Net interest income after impairment charge for losses also dipped from N50.547 billion in Q1 2020 to N39.619 billion in Q1 20201. While net fee and commission income rose from N20.773 billion in Q1 2020 to N28.427 billion in Q1 2021.
Profit before tax declined by 34 percent to N18.906 billion in the quarter under review, down from N28.680 billion posted in the corresponding quarter of 2020.
FBN Holdings paid N3.285 billion in income tax in the first quarter of 2020.
Therefore, profit for the period stood at N15.621 billion. While Net Assets contracted from N765.2 billion to N764.8 billion.
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