CAPITALDIGEST, DAILY NEWS, 12TH SEPTEMBER, 2022
OIL MARKETERS KICK AS FG DELAYS DEREGULATION
Oil marketers have said that the inability of the Federal Government to fully deregulate the petrol industry is creating a serious challenge for the adoption of gas across the country. Chief Executive Officer, Major Oil Marketers Association of Nigeria, MOMAN, Clement Isong, made this known to The PUNCH in Lagos. According to him, delayed deregulation had caused most people to depend on cheap Premium Motor Spirit, PMS, for their cars and generators, adding that the Federal Government must wean Nigeria off subsidy. “It is something that must be done as there are no more viable options. We are told that this year the subsidy bill to the government may be between N5 trillion and N6 trillion,” Isong said while representing the MOMAN Chairman, Olumide Adeosun. To wean Nigeria off this subsidy, MOMAN said a lot of investment must be done to sensitise Nigerians in convincing them and finding alternatives. “We need to begin to remove the subsidy and mitigate the pains Nigerians will feel when petroleum prices begin to manifest their true value.” Ison explained that the regulator had an important role to play in guiding the future, adding that the market was the best regulator. “The market regulates prices.
FX MONTHLY INFLOW FALLS BY 17% TO $5.42BN
Aggregate foreign exchange inflow into the country fell by 17.3 per cent to $5.42bn in May, according to figures obtained from the Central Bank of Nigeria. The latest figures on foreign exchange flow showed that $5.42bn was recorded in May, down from $6.56bn recorded in April. The report stated, “The economy recorded a net foreign exchange inflow of $2.29bn, relative to $2.61bn in the previous month. “Aggregate foreign exchange inflow into the economy fell by 17.3 per cent to $5.42bn from $6.56bn in April. Similarly, total foreign exchange outflow declined by 20.7 per cent to $3.13bn from $3.95bn in April.” Further analysis showed that foreign exchange inflow through the CBN decreased by 14.2 per cent to $2.12bn from $2.47bn in the preceding month, largely attributed to a 47.2 per cent decline in crude oil export receipts. Autonomous inflow also fell by 19.2 per cent to $3.31bn from $4.09bn, due to decreases in total over-the-counter purchases. Foreign exchange outflow through the apex bank declined by 25.8 per cent to $2.12bn, from $2.86bn in April, attributed largely to decreases in matured swap transactions, drawings on letters of credits, third-party MDAs transfers, and foreign exchange sales at the Investors & Exporters and the Secondary Market Intervention Sales windows. Autonomous outflow declined by 7.5 per cent to $1.01bn from $1.09bn in April, on account of lower invisible imports.
STOCK INVESTORS’ THREE DAYS LOSS HIT N241.27BN
The equities market continued its bearish trend on Wednesday as investors’ three days loss rose to N241.27bn from N30bn loss on Monday. The equities market of the Nigerian Exchange Limited had declined by N30bn at the end of trading on Monday. The All-Share Index of the Nigerian Exchange Limited fell to 49,599.73 basis points on Wednesday from 49,991.41 basis points on Monday, while the market capitalisation fell to N26.753tn from N26.964tn. At the end of trading on Wednesday, 17 firms recorded share price appreciation while the share prices of 16 firms declined. A total of 128.94 million shares valued at N 1.67bn were traded by investors in 3,426 deals at the end of trading on the floor of the NGX on Wednesday. Analysts at Coronation Research said, “Today, activities on the local bourse ended mixed, albeit with a bearish tilt as the benchmark index lost 0.02 per cent to close at 49,635.76 points, the lowest level since 24 August.” It added that analysis of Wednesday’s market activities showed trade turnover settled lower relative to the previous session, with the value of transactions reducing by 38.79 per cent. According to analysts at Cordros Securities, “Trading in the local bourse remained bearish as investors took profits off FCMB (-8.0 per cent) stock. Thus, the All-Share Index shed 2bps to close at 49,635.76 points. Consequently, the month-to-date and year-to-date returns were unchanged at -0.4 per cent and +16.2 per cent, respectively.”
CBN DEFENDS NAIRA WITH $7.6BN IN FIVE MONTHS
The Central Bank of Nigeria injected $7.6bn into the economy to stabilise the value of the naira in five months. This was obtained in the banking regulator’s monthly economic reports on foreign exchange market developments. According to the reports, the CBN intervened in the markets with $1.65bn, $1.39bn and $1.82bn in January, February and March, while the interventions were $1.56bn and $1.18bn in April and May respectively. The report read, “Total foreign exchange sales to authorised dealers by the bank were $1.18bn, a decrease of 24.4 per cent, below $1.56bn in April. “A breakdown shows that foreign exchange sales at the Investors and Exporters and interbank/invisible windows decreased by 37.9 per cent and 0.7 per cent to $0.16bn apiece, below their respective levels in the preceding month. “Similarly, SMIS and matured swap contracts fell by 7.0 per cent and 71.4 per cent to $0.64bn and $0.10bn, respectively, compared to the amounts in April. However, foreign exchange sales at the Small and Medium Enterprises window rose by 8.4 per cent to $0.12bn in the review period.” The CBN maintained the official rate of the naira to the dollar at N427.76 at the I&E forex window on its website; while at the parallel market, the naira was bought and sold for N690 and N700 on Thursday.
INFLATION, FX, WEAK REVENUE HURTING ECONOMY –LCCI
The Lagos Chamber of Commerce and Industry has said that rising inflationary pressure, forex challenges, debt servicing and weak revenue generation have put a serious strain on the Nigerian economy. In a statement titled, “LCCI statement on Nigeria’s economic growth performance,” and signed by its Director-General, Dr Chinyere Almona, the chamber noted that even though the economy recorded an impressive recovery from the recession induced by the COVID-19 pandemic in 2020, it might drift into stagflation if these issues were not addressed. According to LCCI, the 3.4 per cent Gross Domestic Product growth recorded in the second quarter of 2022 paled in comparison to 5.01 per cent growth posted in the corresponding quarter of 2021. The Nigerian economy has recorded an impressive recovery from the recession induced by the COVID-19 pandemic in 2020. The economy has recorded growth rates in recent quarters. The statement read in part, “However, the economy has continued to struggle with many inhibiting burdens like inflation, weak revenue generation, degenerated infrastructure, forex challenges, unsustainable cost profile seen in debt services and subsidy payments, and the daunting threats of worsening insecurity. The Chamber is concerned that if we continue in this trajectory, the economy may bleed away into a stagflation which will impact on production cost, job losses, worsened forex crisis, and dampened growth in the medium term.”