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CBN Steps up Distribution of Lower Denominations

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Naira - Investors King
  • CBN Steps up Distribution of Lower Denominations

The Central Bank of Nigeria (CBN) has stepped up the campaign to rid the country of dirty notes, make lower denominations available and stem the tide of racketeering in new notes, as it approved a disbursement to traders at the Tejuosho Ultra-modern Market, in Lagos.

The lower denominations approved by the management of CBN for the disbursement include N200, N100, N50, N20, N10 and N5 denominations to economic agents.’

This is in continuation of a series of direct disbursements to marketers, merchants, shopping malls, supermarkets, tollgates, among others, with a searchlight on the recipients to ensure compliance to rules.

A top source at the apex bank said that those direct disbursements were matched with unique numbers to a particular recipient and would easily be flagged when used for wrong purposes, like selling the notes at events’ venues.

The Director, Currency Operations Department, Mrs. Priscilla Eleje, at the weekend in Lagos, during the sensitisation programme at the market, said the traders at the market would be entitled to N5000 worth of the lower denominations weekly, which would be done through their bank accounts.

She said that the piecemeal disbursement was to guard against possible abuse or diversion and curtail the scarcity of the lower naira denominations due to hoarding and sale by unscrupulous people.

“In recent time, the bank has observed the inadequate circulation of the lower denomination banknotes and difficulties encountered by economic agents despite huge volume of banknotes injected into circulation on yearly basis.

“Any beneficiary found to violate the procedure would be delisted”, she warned.

She added that CBN ‘recognizes the important role markets play in economic growth, hence the need to ensure accessibility to lower denominations to carry out legitimate economic transactions.

Explaining the framework for the disbursement of these lower denominations, she reiterated that this would be made through commercial banks at no extra cost, while the beneficiaries should ensure that their accounts are funded before any withdrawal would be made.

“Therefore, market associations are not expected to add any cost to their members. In order to guard against possible abuse or diversion of these banknotes, the bank has developed a monitoring framework to ensure the judicious utilisation of the funds disbursed.

“The exercise consists of on the spot-checks to the premises of the beneficiaries after the receipt of disbursement as well as mystery shopper approach to shops, markets and toll gates and any beneficiary found to violate the procedure would be delisted.

The Branch Controller, CBN Lagos, James Iyari, urged the traders not to continue to recycle dirty or mutilated Naira notes, but return such to their banks.
“I want to use this opportunity to urge you to handle the Nigerian banknotes properly.

It is important to let you know that the CBN spends a lot of money to print and process the notes, which is meant to sustain daily economic transactions.

“I I also remind you that it is a criminal offence to abuse the Naira, which is punishable under the CBN Act 2007, by six months imprisonment or a fine of N50,000 or both, when convicted of the sale, spraying or mutilating the banknotes.

It is also a criminal offence to counterfeit the Naira, which attracts five-year imprisonment without an option of fine.”

Speaking on behalf of the traders, the market Leader of Tejoshuo Model Market, Alhaja Titilayo Noyimot, expressed gratitude to the apex bank for making lower denominations available to traders in Lagos markets.

Lamenting that the challenge of getting lower denominations has become real problem for the petty traders in the market, she thanked CBN for making the market the first in Lagos to benefit from the initiative.

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

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Energy

Egypt Increases Fuel Prices by 15% Amid IMF Deal

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Petrol - Investors King

Egypt has raised fuel prices by up to 15% as the country looks to cut state subsidies as part of a new agreement with the International Monetary Fund (IMF).

The oil ministry announced increases across a variety of fuel products, including gasoline, diesel, and kerosene.

However, fuel oil used for electricity and food-related industries will remain unaffected to protect essential services.

This decision comes after a pricing committee’s quarterly review, reflecting Egypt’s commitment to align with its financial obligations under the IMF pact.

Egypt is in the midst of recalibrating its economy following a massive $57 billion bailout, orchestrated with the IMF and the United Arab Emirates.

The IMF, which has expanded its support to $8 billion, emphasizes the need for Egypt to replace untargeted fuel subsidies with more focused social spending.

This is seen as a crucial component of a sustainable fiscal strategy aimed at stabilizing the nation’s finances.

Effective immediately, the cost of diesel will increase to 11.5 Egyptian pounds per liter from 10.

Gasoline prices have also risen, with 95, 92, and 80-octane types now costing 15, 13.75, and 12.25 pounds per liter, respectively.

Despite the hikes, Egypt’s fuel prices remain among the lowest globally, trailing only behind nations like Iran and Libya.

The latest increase follows recent adjustments to the price of subsidized bread, another key staple for Egyptians, underscoring the government’s resolve to navigate its economic crisis through tough reforms.

While the rise in fuel costs is expected to impact millions, analysts suggest the inflationary effects might be moderate.

EFG Hermes noted that the gradual removal of subsidies and a potential hike in power tariffs could have a relatively limited impact on overall consumer prices.

They predict that the deceleration in inflation will persist throughout the year.

Egypt’s efforts to manage inflation have shown progress, with headline inflation slowing for the fourth consecutive month in June.

This trend offers a glimmer of hope for the government as it strives to balance economic stability with social welfare.

The IMF and Egyptian officials are scheduled to meet on July 29 for a third review of the loan program. Approval from the IMF board could unlock an additional $820 million tranche, further supporting Egypt’s economic restructuring.

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Crude Oil

Oil Prices Rise on U.S. Inventory Draws Despite Global Demand Worries

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Oil

Oil prices gained on Wednesday following the reduction in U.S. crude and fuel inventories.

However, the market remains cautious due to ongoing concerns about weak global demand.

Brent crude oil, against which Nigerian crude oil is priced, increased by 66 cents, or 0.81% to $81.67 a barrel. Similarly, U.S. West Texas Intermediate crude climbed 78 cents, or 1.01%, to $77.74 per barrel.

The U.S. Energy Information Administration (EIA) reported a substantial decline in crude inventories by 3.7 million barrels last week, surpassing analysts’ expectations of a 1.6-million-barrel draw.

Gasoline stocks also fell by 5.6 million barrels, while distillate stockpiles decreased by 2.8 million barrels, contradicting predictions of a 250,000-barrel increase.

Phil Flynn, an analyst at Price Futures Group, described the EIA report as “very bullish,” indicating a potential for future crude draws as demand appears to outpace supply.

Despite these positive inventory trends, the market is still wary of global demand weaknesses. Concerns stem from a lackluster summer driving season in the U.S., which is expected to result in lower second-quarter earnings for refiners.

Also, economic challenges in China, the world’s largest crude importer, and declining oil deliveries to India, the third-largest importer, contribute to the apprehension about global demand.

Wildfires in Canada have further complicated the supply landscape, forcing some producers to cut back on production.

Imperial Oil, for instance, has reduced non-essential staff at its Kearl oil sands site as a precautionary measure.

While prices snapped a three-session losing streak due to the inventory draws and supply risks, the market remains under pressure.

Factors such as ceasefire talks between Israel and Hamas, and China’s economic slowdown, continue to weigh heavily on traders’ minds.

In recent sessions, WTI had fallen 7%, with Brent down nearly 5%, reflecting the volatility and uncertainty gripping the market.

As the industry navigates these complex dynamics, analysts and investors alike are closely monitoring developments that could further impact oil prices.

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Commodities

Economic Strain Halts Nigeria’s Cocoa Industry: From 15 Factories to 5

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cocoa-tree

Once a bustling sector, Nigeria’s cocoa processing industry has hit a distressing low with operational factories dwindling from 15 to just five.

The cocoa industry, once a vibrant part of Nigeria’s economy, is now struggling to maintain even a fraction of its previous capacity.

The five remaining factories, operating at a combined utilization of merely 20,000 metric tons annually, now run at only 8% of their installed capacity.

This stark reduction from a robust 250,000 metric tons reflects the sector’s profound troubles.

Felix Oladunjoye, chairman of the Cocoa Processors Association of Nigeria (COPAN), voiced his concerns in a recent briefing, calling for an emergency declaration in the sector.

“The challenges are monumental. We need at least five times the working capital we had last year just to secure essential inputs,” Oladunjoye said.

Rising costs, especially in energy, alongside a cumbersome regulatory environment, have compounded the sector’s woes.

Farmers, who previously sold their cocoa beans to processors, now prefer to sell to merchants who offer higher prices.

This shift has further strained the remaining processors, who struggle to compete and maintain operations under the harsh economic conditions.

Also, multiple layers of taxation and high energy costs have rendered processing increasingly unviable.

Adding to the industry’s plight are new export regulations proposed by the National Agency for Food and Drug Administration and Control (NAFDAC).

Oladunjoye criticized these regulations as duplicative and detrimental, predicting they would lead to higher costs and penalties for exporters.

“These regulations will only worsen our situation, leading to more shutdowns and job losses,” he warned.

The cocoa processing sector is not only suffering from internal economic challenges but also from a tough external environment.

Nigerian processors are finding it difficult to compete with their counterparts in Ghana and Ivory Coast, who benefit from lower production costs and more favorable export conditions.

Despite Nigeria’s potential as a top cocoa producer, with a global ranking of the fourth-largest supplier in the 2021/2022 season, the industry is struggling to capitalize on its opportunities.

The decline in processing capacity and the industry’s current state of distress highlight the urgent need for policy interventions and financial support.

The government’s export drive initiatives, aimed at boosting the sector, seem to be falling short. With the industry facing over N500 billion in tied-up investments and debts, the call for a focused rescue plan has never been more urgent.

The cocoa sector remains a significant part of Nigeria’s economy, but without substantial support and reforms, it risks falling further into disrepair.

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