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CBN to Devote Available FX to Strategic Importation as Foreign Reserves Declines

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Godwin Emefile
  • CBN to Devote Available FX to Strategic Importation as Foreign Reserves Declines

The Central Bank of Nigeria on Sunday said it would devote available foreign exchange to only strategic importation or service obligations.

Nigeria’s foreign reserves plunged from $38 billion in January 2020 to $34.1 billion in May following the fall in oil prices and global demand for the commodity.

The COVID-19 pandemic and lockdowns by Nigeria’s top oil trading partners like China, US and India stalled crude oil sales and weighed on the nation’s foreign revenue needed to service the largely import-dependent economy.

In March, the apex bank devalued the Nigerian Naira to protect the falling foreign reserves due to the surged in capital outflow and almost zero foreign revenue. Experts attributed the move to dwindling foreign reserves and diminishing CBN’s fx intervention power.

Since then, Naira foreign exchange rate has surged with fx traders at the non-deliverable fx futures already trading the Naira at N570 to a US dollar in a five-year futures contract.

This was because forex traders doubted the apex bank could meet the sudden surge in demand for the US dollar by foreign investors looking to move their funds abroad as the world prepares for post-COVID-19 crisis.

The CBN, however, announced on Sunday that it has put in place policies to ensure orderly exit for those that might be interested in doing so.

In a Twitter post put out by the apex bank, the CBN said: “Investors interested in repatriating their funds from the country are guaranteed to get their money, notwithstanding the drop in the revenue from crude oil.”

“CBN has put in place policies to ensure an orderly exit for those that might be interested in doing so.

“Foreign Exchange available would be devoted to strategic importation or service obligations that are priority.”

The announcement was to ease panic demand for the US dollar by foreign investors that are worried the local currency exchange rate could rise even further.

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.

Finance

Stanbic IBTC Obtains Approvals, License to Establish Life Insurance Subsidiary

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stanbic IBTC Insurance

Stanbic IBTC Holdings Plc on Friday announced that it has obtained all required Regulatory Approvals and a license from the National Insurance Commission to establish a wholly-owned Life Insurance subsidiary, Stanbic IBTC Insurance Limited (SIIL).

In a statement signed by Chidi Okezi, Company Secretary, Stanbic IBTC and released on Friday, the bank said “The establishment of this new subsidiary essentially complements the bouquet of product offerings by Stanbic IBTC as it continues its goal of being the leading end-to-end financial solutions provider in Nigeria. In this regard, SIIL will aim to facilitate long term insurance for already financially included individuals and will seek to become the preferred Insurer in the Life Insurance Business.

“Stanbic IBTC Holdings PLC, a member of Standard Bank Group, is a full-service financial services group with a clear focus on three main business pillars – Corporate and Investment Banking, Personal and Business Banking and Wealth Management. The group’s largest shareholder is the Industrial and Commercial Bank of China (ICBC), the world’s largest bank, with a 20.1% shareholding. In addition, Standard Bank Group and ICBC share a strategic partnership that facilitates trade deals between Africa, China and select emerging markets. Standard Bank Group is the largest African financial institution by assets. It is rooted in Africa with strategic representation in 21 countries on the African continent.

“Standard Bank has been in operation for over 158 years and is focused on building first-class, on-the-ground financial services institutions in chosen countries in Africa; and connecting selected emerging markets to Africa by applying sector expertise, particularly in natural resources, power and infrastructure.”

 

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World Bank to Discuss New $1.5 Billion Loan Request From Nigeria

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Zainab Ahmed

The Finance Minister, Budget and National Planning, Mrs. Zainab Ahmed, on Friday said the Federal Government has met all the conditions for a fresh loan of $1.5 billion from the World Bank.

The minister disclosed this on Bloomberg TV.

She said the multilateral financial institution is in the final stage of approving the loan. The minister explained that the loan will be discussed in the bank’s next meeting and possibly be approved in the same meeting.

In June, the Senate approved the borrowing plans but the World Bank pushed back demanding Nigeria fulfill the conditions attached to the $3.4 billion loan received from the International Monetary Fund (IMF) in May.

Some of the conditions were to increase revenue generation by upping VAT, the introduction of tariff reflective electricity bill, the removal of subsidy and the unification of the nation’s foreign exchange.

Most of which the Federal Government has done despite protests from most Nigerians who called the new policies anti-people given their current situation.

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Nigeria Realises Over N400 Billion from Company Income Tax in the Third Quarter of 2020

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tax relief

The Federal Government realised N416.01 billion from Company Income Tax (CIT) in the third quarter of the year, according to the latest report from the National Bureau of Statistics (NBS).

This was 3.48 percent higher than the N402.03 billion generated in the second quarter of the year and represents a decline of 20.13 percent year-on-year from N520.89 billion realised in the third quarter of 2019.

A breakdown of the report showed the professional services sector including the telecoms generated the highest amount of CIT at N55.52 billion during the quarter, while the manufacturing sector followed with N42.03 billion.

The banking and financial institutions realised N24.05 billion while the mining generated the least and closely followed by Textile and Garment Industry and Local Government Councils with N120.93 million, N167.51 million and N321.72 million generated, respectively.

The report added that out of the total amount realised during the quarter under review, a sum of N244.70 billion was generated as CIT locally. The federal government collected N70.34 billion as foreign CIT payment and the remain N100.97 billion was received as CIT from other payments.

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