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External Reserves Shed $1bn in Five Weeks

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CBN-headquarters-Investors King

The country’s external reserves have been depleted by $1bn in the last five weeks, latest statistics from the Central Bank of Nigeria have showed.

This follows the CBN’s almost daily intervention at the interbank/official foreign exchange market in recent weeks, as chronic dollar shortage continues to weigh on the economy.

In its efforts to defend the naira and prevent it from falling further at the official interbank market, the central bank has been selling dollars at the interbank market more frequently.

The naira had fallen to an all-time low of 365.25 to the dollar at the interbank market on August 18 before making a gradual recovery. On Friday, the local currency closed at 310.64 against the greenback.

At the parallel market, the naira, which has been under persistent pressure, closed at 424 to the dollar on Friday.

The external reserves fell by 2.86 per cent to $25.45bn on August 29, 2016, up from the $26.2bn it recorded at the end of July.

Year-on-year, the reserves have fallen by 18.9 per cent.

The reserves had fallen by 0.4 per cent at the end of July, down from the $26.34bn recorded on June 29.

The foreign exchange reserves stood at $26.42bn on May 28, down by 9.2 per cent year-on-year.

The CBN had on June 20 lifted its 16-month-old currency controls and auctioned about $4bn on the spot and futures market to clear a backlog of dollar demand, to help boost interbank market trading.

The global plunge in oil prices has caused the reserves to be depleting very fast. The development had forced the CBN to introduce foreign exchange controls, which were abandoned in June.

The CBN’s Monetary Policy Committee announced plans to adopt a flexible exchange rate policy after the external reserves fell to $26.56bn on May 23.

The external reserves have so far lost over $2bn this year.

The nation recorded a balance of payments deficit of 1.4 per cent in its Gross Domestic Product at the end of 2015 owing largely to its first current account deficit (three per cent of the GDP) in over a decade.

The nation’s external reserves reduced by $6.7bn within a period of 21 months, the Minister of Budget and National Planning, Senator Udo Udoma, said on March 23.

However, the foreign exchange reserves increased by $595m to hit a one-month high of $26.196bn, the CBN data showed on Monday.

It had stood at $25.6bn as of August 24, down from $26.21bn on July 28, the CBN data showed.

The reserves declined from $26bn on August 4, 2016 to $25.97bn on August 5 as the CBN stepped up dollar sales to boost liquidity at the interbank market and support the ailing naira.

The central bank has been selling dollars regularly at the interbank market to prop up the naira since it floated it on June 20.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Finance

NNPC Secures $5 Billion Loan From African Export-Import Bank To Fund Upstream Sector

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NNPC - Investors King

The Nigerian National Petroleum Corporation (NNPC) has secured a $5 billion financial commitment with the African Export-Import Bank (Afreximbank) to kickstart investment in Nigeria’s oil and gas sector.

This follows the commencement of the implementation of the Nigerian Petroleum Industry Act.

Investors King recalls that the new Petroleum Industry Act 2021 was assented and signed into law by the President of the Federal Republic of Nigeria on August 16th, 2021 to repeal the extant Petroleum Act 2004.

The Petroleum Industry Act was enacted to provide for the legal, governance, regulatory, and fiscal framework for the Nigerian Petroleum Industry, the establishment, and development of host communities and other related matters in the upstream, midstream and downstream sectors of the petroleum industry.

The Act is categorised into 5 Chapters, 319 Sections, and 8 Schedules. The first chapter of the Act provides for the governance and institution of the petroleum industry. It lays emphasis on the fact that the ownership and control of petroleum within Nigeria and its territorial waters are vested in the Government of the Federation of Nigeria.

The Minister of Petroleum Resources who heads the Petroleum Industry has the powers as vested on him by Section 3(1) to formulate, monitor, and administer government policy in the petroleum industry, amongst other functions.

With the NNPC looking to expand its upstream portfolio, the funding will be critical for the Corporation as it steps up investments in new and strategic prospects.

The repayment of the fund is being projected to be made within a four to eight-year period with an objective to ensure major fiscal obligations and operating expenses are discharged appropriately.

Asides this, the NNPC and the Afreximbank agreed to also deepen the business collaboration between the two institutions.

The Afreximbank has a mandate to provide liquidity for trade and project related finance and related activities across the continent, in order to facilitate the quantitative and qualitative growth of trade on the continent.

The bank recently concluded a landmark 10-year, dual tranche facility of €200 million and US$166 million for the Government of Uganda.

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Finance

Financial Inclusion: Nigerians To Get Free Debit Cards As NIPOST Launches Banking Platform

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NIPOST - Investors King

As part of efforts in boosting financial inclusion, the Nigerian Postal Service (NIPOST) has launched its own e-debit card, agency banking platform and 27 new logistics vehicles for courier services.

The E-debit card is expected to be given free to every Nigerian at every NIPOST outlet.

Minister of Communications and Digital Economy, Prof. Isa Ali Ibrahim who spoke during the launch, note that the e-debit card is a multipurpose card for financial transaction, conditional cash transfer, payment of bills and more.

This development, according to him, is a commendable one and is in alignment with the government’s digital economy for achieving a digital Nigeria.

“Our target in this country by 2030 is to be completely digitalized”, he stressed.

He noted that the NIPOST banking platform will allow NIPOST to conduct financial transactions with most Universal Postal Union (UPU) member countries, adding that this is also in alignment with the proposal to come up with NIPOST Microfinance Bank.

Investors King gathered that the banking agency will function like the Point of Sales (POS) while the card will function without the internet and can be replaced easily if stolen or lost.

So far, there have been remarkable efforts by financial organizations and government agencies in achieving financial inclusion in Nigeria.

Financial Inclusion is a state where financial services are delivered by a range of providers, mostly the private sector, to reach everyone who could use them. Specifically, it means a financial system that serves as many people as possible in a country.

Financial institutions in Nigeria are increasingly using electronic channels to onboard clients and address customer queries and bring financial product offerings to prospective users.

However, this initiative does not come with its own hitches, especially in a developing country like Nigeria. In its report on ‘Financial Inclusion In Nigeria: Issues And Challenges’, the Central Bank of Nigeria (CBN) noted that critical challenges of low financial literacy, inadequate infrastructural facilities, as well as inadequate and inefficient technology-based facilities by financial institutions, has limited the achievement of significant expansion in financial inclusion level in Nigeria.

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Ecobank Grows Profit After Tax by 324 Percent in 2021

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Ecobank - Investors King

Ecobank Transnational Incorporated, a pan African bank, continues to grow as key metrics hit record highs in the year ended December 31, 2021. Ecobank’s gross earnings rose by 13 percent to N952.951 billion from N841.143 billion recorded in 2020.

This was revealed in the bank’s unaudited financial statements seen by Investors King.

Revenue surged by 11 percent from N641.753 billion achieved in the same period of 2020 to N712.933 billion in 2021.

Similarly, operating profit before impairment losses stood at N294.302 billion, representing an increase of 23 percent when compared to N239.059 billion filed in 2020.

Profit before tax rose by 52 percent to N195.720 billion in the period under review, up from N129.088 billion recorded in the corresponding period of 2020.

The bank’s profit before tax rose by an astonishing 194 percent to N195.720 billion. After income tax, profit for the year jumped by 324 percent from N33.742 billion in 2020 to N143.109 billion in the 2021 financial year.

Ecobank Group Financial Highlights for 2021

– Gross earnings up 6% to $2,327.3 million (up 13% to NGN 953.00 billion)
– Revenue up 4% to $1,741.1 million (up 11% to NGN 712.9 billion)
– Profit before tax and goodwill impairment up 41% to $478.0 million (up 52% to NGN 195.7 billion)
– Profit before tax up 174% to $478.0 million (up 194% to NGN 195.7 billion)
– Profit after tax up 296% to $349.5 million (up 324% to NGN 143.1 billion)
– Total assets up 5% to $27.3 billion (up 11% to NGN 11,560.3 billion)
– Loans and advances to customers up 4% to $9.6 billion (up 10% to NGN 4,066.4 billion)
– Deposits from customers up 7% to $19.5 billion (up 13% to NGN 8,283.2 billion)
– Total equity up 5% to $2.1 billion (up 11% at NGN 902.9 billion)

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