CAPITALDIGEST, DAILY NEWS 27/05/2024

GLOBAL OIL PRODUCTION DECLINING, OPEC BOSS WARNS

The Secretary General of the Organisation of Petroleum Exporting Countries, Haitham Al Ghais, has warned that global oil production capacity was dropping.  Speaking during a recent interview with S&P Global Commodity Insights, he stated the refinery sector was not keeping pace with growing fuel demands, putting the world at risk of future supply crunches.“The industry needs significant investment, but finds itself in an increasingly challenging financial environment, exacerbated by ‘unhelpful criticism and misguided narratives’ about fossil fuels,” he explained. Ghais has been engaged in notable disagreements with the International Energy Agency regarding their criticism of OPEC’s production cuts and communication regarding the future energy mix. He advocated a dialogue that would accurately reflect the significant factors involved in shaping energy’s future. He said, “In terms of the current outlook, on the oil demand side, we see global demand growth in 2023 at around 2.3 million b/d. We also know that there are several economic uncertainties the world is carefully navigating through, including high inflation, higher interest rates, particularly in the Eurozone and the US, the impending US debt ceiling, high debt levels in many countries and regions, and how China’s reopening plays out through the rest of the year. “As always, we will continue analysing and closely monitoring all technical market fundamentals in detail.” All these technical factors will be carefully considered in the discussions and whatever decision is taken by ministers at the June meeting. However, we cannot pre-empt what will be discussed, and what any potential outcome will be. While emphasising the necessity for additional production cuts and considering the potential easing of market conditions soon, Ghais cautioned against jumping to conclusions and advised waiting until ministers convene in early June. Furthermore, he noted that it was crucial to restate that the voluntary production adjustments announced in April 2023 were made independently by individual countries and were not part of the DoC framework. He added that given market developments in the period since those voluntary adjustments had proven to be the right ones.

NDIC TO SELL DEFUNCT BANKS’ ASSETS, REFUND CUSTOMERS

Following the revocation of licences of 179 microfinance banks and four Primary Mortgage Banks by the Central Bank of Nigeria, the Nigeria Deposit Insurance Corporation has assured depositors of the closed banks of speedy payment of their insured sums. The Managing Director/Chief Executive, NDIC, Mr Bello Hassan, gave this assurance in a statement after the revocation of licences of the affected MFBs and PMBs by the Governor of the Central Bank of Nigeria, Mr Godwin Emefiele. In the statement signed by the Director, Communication & Public Affairs Department, NDIC, Bashir Nuhu, the NDIC boss stated that the insured deposit was the first claim that the corporation paid to depositors upon revocation of bank’s licence by the CBN. He added that, maximum specified limits for the MFB and PMB sub-sectors are N200,000 and N500,000 per depositor per bank, respectively. As liquidator, the managing director said, “The corporation has also put machinery in motion to commence sales of assets of the defunct banks as well as recover debts owed to them in order to declare liquidation dividends on pro rata basis to the affected depositors with claims exceeding the maximum insured sums of N200,000 for MFBs and N500,000 for PMBs.” He assured that regulatory authorities were leaving no stone unturned to ensure that the soundness of the banking system was not compromised, and that there was no need for the public to panic over the safety of their bank deposits. Hassan said, as deposit insurer, the NDIC would begin the process of payment of the insured sums immediately with the verification of eligible depositors at the respective premises of the closed banks. He urged such depositors to get the required documents for the exercise such as proof of account ownership, verifiable means of identification and alternate bank account to facilitate their seamless verification and payment of their insured deposits.

 TOTAL DOMESTIC INVESTORS’ TRANSACTIONS ON NGX RISE TO N659.26BN IN FOUR MONTHS

Amid the current macroeconomic challenges, the total domestic transactions performed by investors on the floor of the Nigerian Exchange Limited (NGX) has so far risen to N659.26 billion in the first four months of 2023.This is according to the recently released data on domestic and foreign portfolio participation in Nigeria’s equity trading for the month of April.The prolonged foreign exchange scarcity, inflation among others have been taking their toll on the Nigerian economy and the capital market which is the barometer of the economy has seen mixed sentiments in transactions in the month under review. For instance, domestic transactions decreased by 45.30 per cent from N3.556 trillion in 2007 to N1.945 trillion in 2022 while foreign transactions also decreased by 38.47 per cent from N616 billion to N379 billion over the same period. Furthermore, total domestic transactions accounted for about 84 per cent of the total transactions carried out in 2022, while foreign transactions accounted for about 16 per cent of the total transactions in the same period. However, the transaction data for 2023 shows that total domestic transactions stood at  N659.26 billion, while total foreign transactions currently stands at N62.18 billion. According to the report, total transactions at the nation’s bourse at the end of April, increased by 30.77 per cent from N146.22 billion (about $317.09 million) recorded in March 2023 to N191.21 billion (about $413.25million) recorded in April 2023.  However, the performance of the current month when compared to the performance in April 2022 (N205.88 billion) revealed that total transactions decreased by 7.13 per cent. In contrast, total foreign transactions decreased by 7.83 per cent from N9.19 billion (about $19.94 million) to N8.47 billion (about $18.31 million) between March 2023 and April 2023. The report also revealed that the total value of transactions executed by domestic investors outperformed transactions executed by foreign investors by 92 per cent. Domestic inflows and outflows recorded in the month under review stood at N91.91 billion and N90.83 billion respectively while foreign inflows and outflows stood at N3.67 billion and N4.80 billion. A comparison of domestic transactions in the current and prior month (March 2023) revealed that retail transactions increased by 40.43 per cent from N52.83 billion in March to N74.19 billion in April 2023.

 FGN SAVINGS BOND HITS N5BN IN FIVE MONTHS – NGX

Nigerian Exchange Limited has revealed that the total allotments for FGN Savings Bonds have risen to N5.06bn within the first five months of 2023. The Divisional Head, Capital Markets at NGX, Jude Chiemeka, made this known during the NGX Savings Bond webinar 2023 organised in collaboration with the fintech platform, Optimus by Afrinvest, supported by the Debt Management Office and CSL Stockbrokers on Thursday. Chiemeka said, “FGN Savings Bonds market has remained on the upward trend in the current year (from January to May) with allotments at an average of N1.01 bn (Total allotments from January – May stands at N5.06 billion). However, there remains an opportunity for further participation by the investing public. “As inflation remains unrelentingly on the upward trajectory (Now at 22.22 per cent as of May) the yields on FGN Savings Bond which are in double digits offer an opportunity for investors to taper negative real interest rates.” The Director-General, DMO, Ms Patience Oniha, represented by the Director, Market Development Department, DMO, Monday Usiade, during the webinar, revealed that FG had successfully raised N50.2bn from about 35,000 subscribers. The DG added that the DMO uses the FGN bond benchmark yield curve to price the savings bond to ensure that retail investors earn comparable returns. The NGX set up the webinar to create more awareness of the benefits of FGN Savings Bonds to the investing public, especially the retail segment of the market, thereby encouraging participation in investments and driving financial inclusion in the country.

 CBN DISBURSES N173BN UNDER 100-FOR-100 POLICY

The Central Bank of Nigeria has disbursed N173.31bn to beneficiaries under its 100-for-100 Policy on Production and Productivity since the commencement of the intervention. According to the bank, the CBN Governor, Godwin Emefiele, disclosed this in Abuja after the Monetary Policy Committee meeting.  He said, “Under the 100 for 100 Policy on Production and Productivity, the Bank disbursed the sum of N13.81bn to three projects in the manufacturing sector. “This brings the cumulative disbursement under the facility to N173.31bn, disbursed to 81 projects comprising 45 manufacturing, 23 agriculture, five healthcare, and eight services sector projects with an estimated 23,343 direct jobs created.” According to the guidelines for the implementation of the initiative, the CBN fixed the maximum loan amount that a participant could get at N5bn.The CBN stated in the guideline that the initiative would select 100 private sector companies with projects that have potential to significantly increase domestic production and productivity, reduce imports, increase non-oil exports, and overall improvements in the foreign exchange generating capacity of the Nigerian economy. “The initiative, which shall be bank-led, will be rolled over every 100 days (that is, quarterly) with a new set of companies selected for financing under the initiative,” it stated. The apex bank said the initiative would be implemented in collaboration with relevant stakeholders, with a focus on micro and macroeconomic impacts, in terms of contribution to GDP and exports, sustainable jobs created, local content development, production output, and capacity utilisation and integration into the global value chain.