Emefiele Rules Out Foreign Investors’ Exclusion from OMO

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•Says FPIs remain important stakeholders in forex market

By Obinna Chima

Foreign portfolio investors (FPIs) will not be barred from participating in the Open Market Operations (OMO) auctions, Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, has said.

Besides, the CBN has facilitated the release of 50,000 metric tonnes of maize into the market, forcing down the price from N200,000 per metric ton to N180,000.

Emefiele, in a telephone interview with THISDAY yesterday, highlighted the importance of portfolio inflows to the economy, saying that forex liquidity plays an important role in supporting economic growth.

He spoke against the backdrop of a report by Bloomberg on Tuesday, which quoted CBN’s Director of Monetary Policy, Mr. Hassan Mahmud, as saying in an interview aired during an online conference in Abuja that the bank was preparing to end an era of debt sales that handed foreign investors one of the best returns in Africa.

Bloomberg had quoted Mahmud as saying that offerings to non-residents of OMO bills are to be phased out, “once current obligations have been redeemed.”

But Emefiele said there was no truth in the Bloomberg report just as he ruled out excluding FPIs from the OMO auctions.

According to him, the CBN considers FPIs as one of its important stakeholders and partners in the running of the forex market and the financial market.

“So, there is no contemplation and there would never be any contemplation of the exclusion of FPIs in the Nigerian financial market and the forex market,” he added.

In October 2019, the central bank had restricted OMO sales to banks and offshore investors, barring the participation of domestic institutional investors and non-banking firms.

He explained to THISDAY: “What the CBN did in 2019 was to ensure the exclusion of PFAs and corporates and individuals that are in the OMO market because the CBN felt that the cost and size of OMO were unbearably high.

This has been achieved considerably. We see the FPIs as part of the sources through which foreign flows come into Nigeria.

“So, for anybody to say the CBN is trying to reduce the size of OMO and is planning to exclude FPIs is totally inaccurate. This is a financial market matter and the only person who can give responses on this issue would be the Financial Market Department of the CBN who are like the treasurers.

“Yes, the truth is that the CBN is a little bit concerned about the cost of OMO and that the reason the CBN took the decision it took in 2019, which substantially helped in bringing down the size of OMO bills as well as the cost of OMO. So, there is no intention to exclude FPIs from the market.”
He had at the last Monetary Policy Committee (MPC) meeting explained that the OMO and various other instruments were part of the CBN’s monetary policy instruments to control money supply.

“We have our numbers that tell us the optimal level of liquidity that is needed at every point in time for the economy to be stable and for us to be able to do our work.

“We would insist on that optimal level of liquidity. If we find any amount above that liquidity, we would suck it up because that is our job and we do not have any apology for doing our work,” he had said.

Nigeria’s Gross Domestic Product (GDP) recorded a positive growth rate of 0.11 per cent (year-on-year) in real terms in the fourth quarter of 2020 (Q4 2020), which successfully lifted the economy out of recession.

The positive growth recorded in Q4 was a reflection of the gradual return of economic activities following the easing of restriction of movements and limited local and international commercial activities in the preceding quarters, the National Bureau of Statistics had reported.

CBN Facilitates Release of 50,000Mt of Maize

Meanwhile, the Central Bank of Nigeria (CBN) has released 50,000 metric tonnes of maize into the Nigerian market.

A statement from the central bank yesterday said the development was in fulfilment of its pledge to reduce the price of the commodity.

It added that the initiative was done through its Anchor Borrowers’ Programme (ABP) to major poultry feed producers and poultry producers.

“The CBN facilitated the release of the 50,000 metric tonnes of maize in the second week of February has made an impact as the maize market has recorded a reduction in price from N200, 000 per metric tonnes to about N180,000 per metric tonnes. It is still anticipated that the current will further reduce,” it stated.

It listed major beneficiaries of the February release to include: Premier Flour Mills, Crown – Olam, Grand Cereals, Animal Care, Amobyn and Hybrid Feeds.

Others are: Zartech, Wacot, Sayeed Farms, Pandagri Novum and Premium Farms as well as the South-west, South-south, North-west and North Central chapters of the Poultry Association of Nigeria (PAN).

“The benefiting companies represent the major players in the poultry value chain in the country.

“The release of the 50,000 metric tonnes of maize forestall the pressure and reduce the activities of intermediaries (middlemen) in the Nigerian Maize market,” it added.

The CBN had in January, announced a plan to release 300,000 metric tonnes of maize into the market.

This was to bridge the shortfall in production and augment local production of the commodity.

The current shortfall in the quantity of maize available in the market that CBN is working on mitigating was attributed to banditry, drought in some parts of the country last year, hoarding and insecurity around the major maize producing belt of Niger, Kaduna, Katsina, Zamfara and part of Kano states.

As part of the bank’s financing framework, the CBN facilitates the funding of maize farmers and processors through the Anchor Borrowers’ Programme (ABP) Commodity Association, Private/Prime Anchors, State Governments, Maize Aggregation Scheme (MAS), and the Commercial Agricultural Credit Scheme (CACS).

Also speaking on AriseExchange, a programme monitored on Arise News Channel yesterday, CBN’s Director of Monetary Policy, Dr. Hassan Mahmud, clarified that there was no plan to ban foreign investors from the OMO auction market.

According to him, a CBN circular that was released in 2018 on the matter still subsists, saying foreign investors are still allowed in the market.
He pointed out that forex from foreign investors remains a supplement for capital inflows for the CBN.

“The explanation I gave was as a result of the assurance given by the CBN Governor that any investor that wants to take out his fund on maturity, there is the assurance that they can get their fund. That was the assurance that I re-emphasised.

“The CBN Governor has said it severally that investors can get their funds whenever they want to exit. I, however, mentioned that in a period of crisis, this would have to be done in a systematic manner.

“It would not be done in a day. I also mentioned even the backlogs were being cleared and subsequent build-ups would also be cleared over the period. That was my explanation. There was no referral that the Bank would bar foreign investors,” he clarified.