- Foreign Reserves Adds $825 Million in November
There was an accretion of about $825, 149,623 to Nigeria’s foreign reserves in November, data from the Central Bank of Nigeria (CBN) has revealed.
According to the figures obtained from CBN on the movement in reserves, which is a 30-day moving average, on November 1, the gross foreign reserves stood at $23,946,448,274 and by November 30, the level was raised to $24,771,597,897, representing an increase of $825,149,623 or 3.45 per cent in the review month.
The foreign reserves, according to the International Monetary Fund, consist of “official public sector foreign assets that are readily available to, and controlled by the monetary authorities, for direct financing of payment imbalances, and directly regulating the magnitude of such imbalances, through intervention in the exchange markets to affect the currency exchange rate and/or for other purposes.”
Nigeria’s foreign reserves had been under severe pressure before the introduction of the flexible foreign exchange regime, which allows the exchange rate to be determined by supply and demand. As it were, before the advent of the flexible foreign exchange regime, the unabatedly rising demands for the United States dollar had pushed the value of the naira southward and the CBN, in its wisdom, had intermittently intervened in the market, defending the national currency with the foreign reserves. The intervention had at various times eaten deep into the reserve, used to settle payment of the nation’s import obligations. For instance, the external reserve was reported to have lost $1.5 billion in the second quarter (before the introduction of the flexible regime), which may not be unconnected with the response of the CBN to the falling value of the naira.
But the positive development in November, may be considered a reversal of fortunes or the beginning of a positive turnaround, giving the trend of activities in recent past.
Analysts at FBNQuest, an investment banking and research arm of FBN Holdings, have described the accretion in the month of November as “a rare increase in reserves.”
According to the firm, “CBN data show that gross official reserves picked up by US$820m in November on a 30-day moving average basis to US$24.8bn. The monthly average movement has been an outflow of US$430m over the past 12 months.”
Recalling that, “This first sizeable increase since July 2015, when the FX holdings of public bodies were transferred to the CBN, is apparently due to the disbursement of US$600m by the African Development Bank (AfDB) in the form of budget support,” FBNQuest analysts argued that, “We do not see another inflow on this scale until Q1 2017, when the sovereign Eurobond is due to be launched.”
FBNQuest noted that, “The reserves may appear comfortable according to one traditional measure: on the basis of the balance of payments for the 12 months through to end-June, they provided cover for 6.6 months’ merchandise imports and for 4.6 months when we add services.”
But it pointed out that, the cushion is not wholly owned by CBN as its latest figures showed that it was the owner of only 73 per cent of reserves.
Given the oil price and allowing for the OPEC accord in Vienna last week, and seeing still robust import demand, the CBN is playing cautiously, observed the FBNQuest analysts.
“Since August it has sold just US$1.5m per day (to one bank according to a rota). In addition it has honoured four forward contracts since the devaluation/liberalisation in June, and held a special FX auction for petroleum marketers this week.”
“In June we were told that a floating exchange-rate regime was imminent. We urge patience, however, since we cannot currently identify the large autonomous FX inflows which will prove the short-term, game-changer. We are content with our favoured piecemeal solution in which a series of transactions over time supplies the trigger (Eurobond, balance under the AfDB facility, World Bank support and oil-related transactions),” the analysts concluded.
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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