By Obinna Chima
The naira gained a total of N1.45 against the dollar at the interbank market, last week as it rose to N158.85 to a dollar on Friday, compared with the N160.30 to a dollar it stood last Tuesday.
Dealers attributed the trend to a drop in the demand for the greenback by oil marketers continue to wane. The local currency attained its strongest level at the interbank since two months.
This occurred, just as treasury bills yields offered by the Central Bank of Nigeria (CBN) declined at the auction held last weekend as demand was far higher than the N149.3 billion sold.
In fact, total bid at the treasury bills auction increased by N167.55 billion to N316.85 billion, the highest amount since the November 24 sale.
Bloomberg revealed that the apex bank sold N32.1 billion of 91-day bills at a yield of 14.70 per cent, 9 basis points lower than the 14.79 per cent at the last auction held on January 25. Similarly, the apex bank sold N50billion of 182-day securities at 16.09 per cent, 1 basis point lower than the previous sale as well as N67.2 billion of 364-day notes at 16.89 per cent, 0.3 per cent lower than at the last sale on January 11.
“The consumer inflation rate fell for the first time in four months to 10.3 per cent in December, from 10.5 per cent a month earlier, the National Bureau of Statistics said January 18. With the central bank committed to containing inflation, it appears investors will continue to enjoy attractive returns from purchases of treasury bills,” Chief Economist at FBN Capital Limited, London, said.
The apex bank maintained its benchmark interest rate at a record high on of 12 per cent on January 31 to curb inflation after the government partially removed fuel subsidies, boosting gasoline costs.
However, at the CBN’s regulated Wholesale Dutch Auction System (WDAS) last Wednesday, the naira also climbed by 35 kobo to close at N156.50 to a dollar, stronger that the N156.85 to a dollar it closed last week Wednesday.
The CBN offered a total of $450 million to dealers, compared with the $250 million sold last Wednesday. The apex bank increased its supply at the WDAS to meet the volume of demand because the auction was not held on Monday. The bi-weekly auction did not hold last Monday because of the Muslim public holiday.
CBN Governor, Mallam Sanusi Lamido Sanusi, last week disclosed that while the Nigerian economy grew at the rate of seven per cent for the past five years, unemployment had actually doubled at same period.
Sanusi had also said the current security upheaval and internal insurrection all over the country were as a result of severe poverty and rising unemployment, especially in the north.
The CBN governor had noted that the present development and economic reality in Nigeria, where unemployment was widening at a time of economic growth, was an aberration.
He had said: “According to data from the National Bureau of Statistics (NBS); unemployment rate in 2011 is 29.3 per cent. This means that unemployment has doubled since last five years. Unemployment in Yobe is 60.6 per cent, Kano is 67 per cent and that is why when you go to Kano you will see a sea of people without work. We must make sure we did not begin to see our demography as a curse.”
Sanusi had also said that government needed to rethink and restructure the economic system of the country by creating the enabling environment that encourages industrialisation. He had added that jobs would only be created by establishing industries that rely on little technology but high in productivity similar to the ones adopted by the Chinese and Asian Tigers.
Islamic Development Bank
Minister of State for Finance, Alhaji Yerima Ngama, last week, said that discussions had reached advanced stage between the federal government and the Islamic Development Bank (IDB) to secure a $600 million-loan for infrastructure development in the country.
He had said the loan which would be on a three to four-year borrowing plan without interest had already passed the screening stages and would soon be made available for federal and state government projects.
The minister had also said there were some criteria yet to be satisfied by government before it could get the funding. For instance, he pointed out that some of the projects, which funding was being sought for had not actually commenced.
But Islamic financing principle would prefer mostly projects which are on-going and have been evaluated to ascertain minimal risks. Ngama had stressed that there was need to apply for funds ahead of time.
Executive Director, Islamic Development Bank (IDB), Gambo Shuaibu, had said IDB’s authorised capital had just been increased to about $30 billion with Nigeria investing about 7.8 per cent of the amount over a period of 10 years.
He said the forthcoming forum had become necessary given the country’s level of investment in the multi-lateral development finance institution.
THISDAY last week reported that after months of controversy generated by the introduction of the non-interest banking in the country, also known as Islamic banking, Jaiz Bank Plc quietly opened its doors for business on Friday, January 6, 2011 in Abuja.
According to THISDAY, the bank, which has its head office in Kano House, Central Business District, Abuja, had been offering banking services for about a month, same for its branches in Kaduna and Kano which were also opened simultaneously.
Jaiz’s eventual emergence followed repeated failures in the past to begin operations more than five years after it launched itself into the public consciousness to raise funds from the capital market.
The bank, which has as one of its promoters a former chairman of First Bank of Nigeria Plc, Alhaji Umaru Mutallab, was actually incorporated on April 1, 2003 as a public limited liability company with an authorised share capital of N2.5 billion.
The CBN had announced on June 20, 2011 that it had issued Jaiz Bank an approval-in-principle to operate as an Islamic bank - the first financial institution to be so licensed. It was thereafter, given six months to comply with the apex bank’s capitalisation requirement, among other criteria, in order to receive the final licence.
Financial Reporting Council
The Financial Reporting Council of Nigeria (FRC) said it had sought the co-operation of the CBN in ensuring effective enforcement of financial reporting guidelines in the country.
The FRC had said the move would also address the challenges associated with implementation of International Financial Reporting Standards (IFRS). The Executive Secretary, FRC, Mr Jim Obazee, explained that the collaboration would address issues concerning the implementation of IFRS.
Obazee particularly mentioned embedded insurance contract in banking products, fully provisioned loans reclassified to memorandum account, CBN policy in respect of 55 per cent restriction on revaluation surplus of property, plant and equipment versus International Accounting Standards 16 property, plant and equipment.
In his response, Sanusi had also called for a collaborative effort by financial regulators in the implementation of IFRS. Sanusi agreed that the FRC should be participating in the activities of the Financial Services Regulation Coordinating Committee (FSRCC), even as the statement quoted the CBN Governor to have expressed surprise that the Council was not a regular member of the body. He had also charged the FRC to be prepared for the bureaucratic bottlenecks that may be encountered in registration of professionals.
The Federal Ministry of Agriculture and Rural Development last week said disclosed plans to partner Thai Tapioca Development Institute of Thailand (TTDI) in cassava production and marketing.
Acknowledging the challenges facing the nation’s farmers in getting market for their cassava, Minister for Agriculture and Rural Development, Dr. Akinwumi Adesina, had said the ministry, under the Transformation Agenda, was poised to ensure that necessary steps are taken for Nigerian farmers to have access to improved variety of cassava as well as create market, since an increase demand for cassava would stabilise price for farmers.
Adesina had stressed that Nigeria had zero per cent in the Global Value of cassava, while the country remained number one in its production.
He had argued that Nigeria had a lot to learn from Thailand who is number three in cassava production yet the largest exporter of the crop in the world.
The minister had also explained that the partnership between Nigeria and Thailand would bring about optimum utilisation of cassava that Nigeria has in abundance.
Minister of National Planning, Mr. Shamsuddeen Usman, last week said that the federal government was in talks with the European Investment Bank to secure funding for the Calabar-Kano gas pipeline and the Mambilla power projects under the ministries of Petroleum Resources and Power, respectively.
THISDAY reported that the Africa-EU Union Trust Fund exists to, among other things, fund various projects that support economic growth.
Specifically, the Mambilla power project, which consists of three dams, is estimated to cost US$3.2 billion and had been in the pipeline since 2005 when the feasibility study was reviewed. And the Calabar- Kano gas pipe line project or the Trans-Nigeria Gas Pipeline is the domestic segment of the proposed Trans-stream gas pipeline for gas supply from Nigeria to Europe, meant to diversify export routes for marketing Nigeria’s natural gas and strengthen regional cooperation.
Usman had said the two projects would add value to Nigeria as well as make life easy for Nigerians through the enhancement of economic opportunities for the country.
Nigeria’s external reserves, which have been bullish since this year, due to the upswing in oil prices in the international market had improved significantly by a total of $1.803 billion in the last five weeks.
THISDAY had reported that showed that the growth recorded by the forex reserves, represented an increase by 5.5 per cent, from $32.915 billion as at December 30, 2011, compared with its current position of $34.718 billion as at February 2.
THISDAY findings had further shown that the last time the reserves stood around its current value was on September 15, last year, when it rose to $34.86 billion.
Thereafter, it had hovered around the region of $32 billion and $33 billion. It however closed last year at a low level of $32.9 billion, which was 0.6 per cent less than the $33.1 billion it attained in the corresponding period of 2010.
Experts had attributed the build-up in the forex reserves to the upbeat recorded by oil prices in the international market since this year as well as the moderate demand for forex at the CBN’s official forex market –the WDAS.