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Money Market Records N413 Billion Withdrawal

24 Dec 2012

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By Obinna Chima

The Open Market Operations (OMO) and Repurchase (REPOs) transactions held last week recorded a total withdrawal of about N413.56 billion from the system.
FSDH Securities Limited which disclosed this in a report at the weekend also disclosed that the market recorded a net outflow of N155.78 billion from that segment of the market just as it stated that there was a total inflow of about N257.78 billion.

According to the report, the market also recorded improved liquidity due to the injection of about N255 billion from the funds disbursed the preceding week by Federation Account Allocation Committee (FAAC).

Consequently, inter-bank rates dropped last week.
At the inter-bank market, the 7-day NIBOR closed the week lower at 11 per cent, 383 basis points decrease from the preceding week’s figure of 14.83 per cent, while the 90-day NIBOR also closed lower at 12.92 per cent, 262 basis points decrease from the preceding week’s figure of 15.54 per cent.

At the 91-day Treasury Bill (TB) auction, a total of N33.27billion worth of securities was offered and sold to competitive bidders. A total of N26.66billion was sold to non-competitive bidders, bringing total offer and sale to N59.93billion. The bill was 120.30 per cent subscribed as N40.02billion worth of bid was received from competitive bidders. The bill was issued at a discount rate of 11.67 per cent. A total of N37.49billion worth of matured bills was repaid into the system, leading to a net outflow of N22.44billion from this segment of the market.

“At the 182-day Treasury Bill (TB) auction, a total of N35.03 billion worth of securities was offered and sold to competitive bidders. A total of N25.11 billon was sold to non-competitive bidders, bringing total offer and sale to N60.14 billion. The bill was 123.35 per cent subscribed as N78.24 billion worth of bid was received from competitive bidders,” the report explained.

Forex Transaction
The naira maintained its value against the dollar at the official and the parallel market segment of the forex market last week, while it depreciated at the interbank market. At the official market otherwise known as the Wholesale Dutch Auction System (WDAS), the value of the naira was unchanged at N155.77/$1, same as in the preceding week.

Also, at the parallel market, the local currency closed at N159.20/$1 same as the preceding week.
However, at the interbank market, the naira dropped 35 kobo to close at N157.30/$1 from N157.65/$1 the preceding week.

2013 Budget
The National Assembly last week passed a N4.987 trillion budget for the 2013 fiscal year. The approved budget was N63 billion more than the N4.924 trillion proposed by the executive arm of government when President Goodluck Jonathan presented the budget proposal last October.

The difference arose out of the change in the oil benchmark from $75 to $79. However, there were no major changes in terms of sectoral allocations between what the president had proposed and what has been approved by the parliament. At a glance, another notable difference was the reduction of the recurrent budget by about N100 billion and the addition of same to the capital expenditure component. The Senate and the House of Representatives passed a harmonised version of the budget in their separate chambers.

Of the total budget, N387,976,000,000 was allocated for statutory transfers; N591,764,000,000 for debt service; N2,386,024,770,349 for recurrent (non-debt) expenditure; while the balance of Nl,621,477,655,252 was allocated for capital expenditure for the  year ending 31st December, 2013.

Grant to Exporters
Minister of State for Finance, Alhaji Yerima Ngama, last week said that a total sum of N254.96 billion had been extended as grant to export manufacturers between 2005 till date. This, he said, was aimed at encouraging manufacturers and producers of export crops to increase their exports under the Federal Government's Export Expansion Grant (EEG) scheme which is targeted at economic diversification.
He added that the value of total non-oil export had risen to about $3.2 billion from only about $100 million in 2005 as a result of the grants. Speaking on the implementation of the EEG scheme, Ngama said the scheme had been of immense assistance to manufacturers.

MFBs and PMBs
The CBN last week advised Microfinance Banks (MFBs) to adhere to the 31st December, 2012 deadline set aside for the compliance with the Revised Microfinance Policy Framework, saying that appeal for waiver, or reduction of penalty will not be entertained. This came just as the banking sector regulator also urged operators of Primary Mortgage Banks (PMBs) to conclude the process for their recapitalisation on or before 30th April, 2013.

The CBN in the circular to MFB operators said: “This is a reminder to all directors and shareholders of all MFBs on the deadline of 31st December, 2012 for compliance with the Revised Microfinance Policy Framework, particularly in respect of the capital requirements for each category of MFB and existing branches/cash centres, etc.”

Bond Sales
Nigeria, Angola and Ghana are preparing to sell as much as $3.75 billion in international bonds in 2013, the most from the continent ever, after yields sank below Italy and Spain and investors set aside concerns sparked by the Cote D’Ivoire’s default almost two years ago.

According to Bloomberg, Nigeria planned to borrow $1 billion on overseas markets, twice as much as it sold in 2011, while Angola is seeking $2 billion of debt. Also, Ghana, which issued the first Eurobonds in sub- Saharan Africa outside of South Africa in 2007, may sell a further $750 million, the country’s Deputy Finance Minister, Seth Terkper.

SWF
Following the approval of its strategy document and the progress made with its investment policy guidelines, the ministry of finance last week announced that the Sovereign Wealth Fund (SWF) is expected to commence investment in a variety of instruments by March 2013. The Coordinating Minister for the Economy ((CME) and Minister of Finance, Dr. Ngozi Okonjo-Iweala, said that the strategy document was ratified by the board of the Nigeria Sovereign Investment Authority (NSIA) chaired by Alhaji Mahey Rasheed. According to the minister, in order “to ensure that the blueprint is ready on time, the board was said to have met twice since its inauguration on October 9 to review and reshape the draft submitted by the management team led by the Managing Director of NSIA, Mr. Uche Orji.”


Inflation
Nigeria’s composite Consumer Price Index (CPI) rose to 12.3 per cent year-on-year in November from 11.7 per cent in the previous month; further defying the Central Bank of Nigeria’s (CBN’s) monetary tightening measures aimed at reducing inflation to single digit. The National Bureau of Statistics (NBS), in its latest CPI figures released last week, however, blamed the 4.8 per cent rise in inflation on higher prices in both the food and core indices. It also noted that the hike in food prices was occasioned by the impact of recent flood which ravaged parts of the country, thereby limiting production capacity. The Core index also increased by 0.4 per cent in November though unchanged from October. The average 12 month annual rate of rise of the index was recorded at 13.6 per cent, year-on-year for the twelve-month period ending November 2012.

Fraud Prevention System
Deposit Money Banks (DMBs) and operators in the electronic banking sub-sector have concluded plans to purchase a system that would proactively address electronic banking fraud in the industry by next year. Governor of the Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, explained last week that the Nigeria Inter-Bank Settlement System (NIBSS) would also support the initiative, adding that the proposed software would also be effective in detecting fraud.
He said: “We are working with the NIBSS and other operators to ensure that by next year, we would have software that would proactively address the issue of fraud. It is not only in detection of fraud, but also for prevention, for the whole industry.”

Agric Bonds
The Minister of Agriculture and Rural Development, Dr. Akinwunmi Adesina, last week advised the Asset Management Corporation of Nigeria (AMCON) and the National Pension Commission (PenCom) to invest part of their funds in agricultural bonds in order to boost financing of the agric sector.
Adesina explained: “I believe the time has come for Nigeria to consider raising long-term bonds to finance the agricultural sector. Today, if you look at the amount of money we have - AMCON alone, has over N3 trillion in funds, pension funds have trillion of naira looking for sound investment.

“I believe that as we are modernising agriculture, as we are opening up opportunities in the value chains, as we are lowering transaction cost and reducing risks, AMCON and pension funds need to invest in agricultural bonds to diversify their portfolios.”

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