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I&E FX Window May Stop Nigeria’s Demotion from MSCI Index



  • I&E FX Window May Stop Nigeria’s Demotion from MSCI Index

The newly introduced Investors’ and Exporters’ (I&E) foreign exchange window targeted at foreign portfolio investors could earn Nigeria reprieve from being demoted from the MSCI’s frontier markets index.

Nigeria’s currency peg between 2015 and 2016 led to the country’s delisting from two major indexes for emerging and frontier markets during the period.

U.S. investment bank, JP Morgan & Chase, in September 2015, first removed Nigeria from its Government Bond Index for Emerging Markets (GBI-EM), while Barclays announced its removal of Nigeria’s sovereign debt from its emerging markets local currency government bond benchmark, effective February 1, 2016.

According to a report by Reuters Tuesday, China, Argentina and Nigeria decisions loom for MSCI’s index review.

MSCI was slated to announce the results of its review Tuesday night. It was to hold conference calls with journalists at 2300 GMT and again at 0700 GMT Wednesday.

Nigeria is under review for possible demotion from the MSCI’s frontier markets index to “standalone” status.

This, according to the index provider, stems from “continuous deterioration of the market accessibility” after the introduction of restrictions on foreign currency trading in 2015.

Eleven Lagos-listed stocks on the Nigerian Stock Exchange (NSE) are currently on the MSCI Frontier Markets 100 index with a weighting of around seven per cent. That is the fourth largest after Kuwait, Argentina and Vietnam.

However, Nigeria might just escape a demotion from the MSCI frontier markets index due to the introduction of the I&E forex window by the Central Bank of Nigeria (CBN) last April, leading to a resurgence of investor confidence in the equities market.

“Investors are hoping the recent introduction of a new foreign exchange mechanism, aimed at international portfolio investors, will earn the country a reprieve. Nigeria’s index hit two-year highs last week,” the report added.

The CBN disclosed last week that cumulative transactions on the new I&E window had risen to $2.2 billion, from about $1 billion last month.

Also, CBN interventions in the I&E window have dwindled to below 30 per cent, enabling participants to freely trade currencies at a market determined rate.

Equities listed on the NSE rose to a new two-year high on Monday. The rally was lifted by gains in cement and banking shares.

The NSE-All share index climbed 0.96 per cent to cross 34,000 points on Monday, a level it last reached in May 2015.

Owing to the positive momentum on the Nigerian bourse, MSCI this month increased Nigeria’s weight on its frontier index to 7.9 per cent from 6.5 per cent, meaning that due to funds tracking, it would buy shares to replicate the new weight, analysts said.

MSCI was likely to open its emerging market benchmark to Chinese mainland-listed shares at its review Tuesday, but investors were also expecting news on other markets such as Argentina and Saudi Arabia.

MSCI had rejected China’s mainland-listed stocks – so-called A-shares – from inclusion on its main emerging markets index on three occasions, but they are expected to get the nod this time.

The index provider is also looking to include 169 A-shares in its $1.5 trillion emerging markets index and by default its $37 trillion All-Country World Index.

It trimmed the number of stocks from an original list of 448. The 169 stocks make up 5 per cent of all listed mainland China companies.
If successful, the stocks would officially join in a year’s time with a combined weighting of 0.5 per cent.

MSCI already includes some Chinese shares, but only those listed in Hong Kong or the U.S. They account for roughly 28 per cent of the EM index. The new A-shares would be on top of that.

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

Banking Sector

Wema Bank, MOD Launch Scheme For International Students



Wema Bank Logo

Wema Bank has launched an advisory and loan scheme, the Education Advisory Service, in partnership with MOD Education for young Nigerians wishing to study abroad.

Following foreign exchange control measures introduced by the government, parents and guardians have experienced difficulties paying tuition fees for their children and wards studying abroad. Some who have the money don’t know the requirements for foreign admission and waste lots of time and resources in fruitless searches.

But to help them surmount these challenges, Wema Bank has partnered with MOD Education, a professional student advisory, marketing, recruitment and placement company for the advisory services and school fees advance facility. The partnership, which was launched on Friday, April 9 at Eko Hotels, Victoria Island, will see both organizations providing innovative education advisory services and funds for international students.

Speaking about the partnership, Divisional Head, Retail Business, Wema Bank, Dotun Ifebogun, explained that the initiative would aid hundreds of thousands of Nigerians requiring advisory and financial support to pay for their wards in foreign schools.

He explained that Wema Bank does not want the aspirations of Nigerians desirous of foreign education truncated, hence the support.

“We are interested in everything that concerns our customers, and education is one of them. Some parents and guardians desire a certain quality of education for their wards outside the shores of Nigeria, and we would be able to assist them with this product. Our school fees advance loan results from the requests of parents and guardians who need to get short term financial support to meet the tuition obligation of their wards irrespective of the constant increase in fees.

“There’s nothing as heartbreaking as withdrawing a child already in a foreign university or being unable to raise the requisite forex for a child offered admission in a top-rated foreign institution of higher learning. But our school fees advance loan will take care of this problem and help secure the futures of such students – both undergraduates and postgraduates. The fact that you get counsel from the right sources at any particular time is another benefit of this product.

Also, the Managing Director, MOD Education, Michael Dosunmu, expressed gratitude to Wema Bank for the partnership. “Wema Bank has been supportive to us as a business and it was just a natural marriage. We trust the bank enough to bank with them, and our trust is enough to recommend it to others.”

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NAIC Pays N1.7bn Claims to Farmers




The Nigerian Agricultural Insurance Corporation (NAIC) said it paid a total of N1.7 billion claims to over 5,000 farmers in the past two years.

NAIC, which is the only federal government owned insurance company authorised to offer agric insurance services to farmers at subsidised rate, said a breakdown of the paid claims showed that it paid N856 million to insured farmers in 2019 and N848 million in 2020.

Commenting on the development, NAIC Managing Director, Mrs. Folashade Joseph, said the claims were paid to the farmers to cover losses incurred in the course of doing business.

Joseph, enjoined agricultural investors and lending institutions to continue to partner NAIC by taking agricultural insurance cover that will enable them remain firm in business despite unforeseen circumstances from weather conditions and other risks in order to realise the food security agenda of President Muhammadu Buhari.

She said the above-mentioned amount was shared among five million farmers who suffered various setbacks in their farms as a result of natural course.

According to her, the NAIC Agric Insurance Scheme was launched in 1987 by federal government to restore the confidence and productivity of Nigerian farmers who suffered losses as a result of natural disaster such as flood, drought, pest and diseases.

The NAIC boss explained that the essence of the sensitisation campaign embarked by the corporation was to let the farmers know and understand exactly what NAIC does, the importance of insurance, and make them understand how insurance works, how they can access NAIC products and services, how to process their claims, as well as what insurance stands to do for them.

“Agribusiness is evolving fast and so many risks are being thrown up, many new participants are coming into the business of agriculture, and the risks are on the increase if you look at them across the value chain, there is no so many participants so we need to keep sensitising the farmers and let them know we are serving them, and we need to know from them how to serve them,” she explained.

Speaking further, she said, “our assurance to farmers is that when they are insured and they suffer losses covered by any of the policies they purchased, including natural disasters and whatever, they will get paid for their losses, and that is the purpose of insurance and setting up NAIC.

“Our motor is ‘Plowing the Farmer Back to Business, Plowing the Farmers into Prosperity’, and we settle claims.”

She said NAIC currently deals with thousands of farmers (Small, Medium, and Large scale farmers) across the country, adding that the corporation serves farmers with investment as little as N100, 000, and at the same time serves multinational farmers.

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Banking Sector

UBA Organises Capacity Building Forum



UBA Insider dealings

As part of its commitment to support the growth and sustainability of micro, small and medium-scale enterprises (MSME) in the continent, the United Bank for Africa (UBA) Plc, is set to organise the next edition of its UBA Business Series.

The UBA Business Series which is a monthly event, is an MSME Workshop as well as a capacity building initiative of the bank where business leaders and professionals share well-researched insights on best practices for running successful businesses, especially in the face of the difficult operating environment that dominates the African business landscape.

Through this initiative, UBA has been assisting with essential tips to help businesses re-examine their models and strategies and ensure that they stay afloat and remain thriving, a statement from the bank explained.

The topic for the next edition of the series is, “Managing Performance for Business Growth,” and it will be held today, via Microsoft Teams.

At this session, the Managing Director, Secure ID Limited, Mrs Kofo Akinkugbe, will be sharing useful tips and insights on the key strategies of performance management to boost business growth.

Akinkugbe is the founder of SecureID Nigeria, a MasterCard, VISA and Verve certified Smartcard Personalization Bureau and Digital Technology company. She currently serves as the Managing Director/CEO, Secure Card Manufacturing, – a Smartcard manufacturing plant producing high security identity cards and documents for the Banking, Telecoms and Public sectors across Africa and beyond.

UBA’s Head, SME Banking, Sampson Aneke said of Akinkugbe, “with her vast experience garnered over the years from various sectors, she will help business owners understand how performance management strategies can be effectively implemented to ensure business growth.”

He emphasised UBA’s commitment and deep passion for small businesses, which according to him, remains the engine of any developing economy adding, “We know small businesses are the backbone of the economy in every country. In many climes, businesses with fewer than 100 employees account for 98.2 per cent of all businesses. This no doubt captures the importance of SMEs to a thriving economy which is why UBA is committed to seeing them flourish.”

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