CAPITALDIGEST, DAILY NEWS. 16 MAY 2022.
MONDAY 16/5/2022 – NIGERIA’S OIL PRODUCTION FALLS OVER POOR MAINTENANCE, SAYS WORLD BANK
The World Bank has said that Nigeria’s oil production declined in 2021 due to a lack of maintenance and the loss of infrastructure efficiency. It added that Nigeria was yet to benefit from increasing oil prices as a result of declining oil production and fuel subsidy. The Washington-based bank said this in a new report titled ‘Migration and Development Brief titled ‘A War in a Pandemic: Implications of the Ukraine crisis and COVID-19 on the global governance of migration and remittance flows. The report read in part, “Nigeria has not been able to benefit from higher oil prices to date as: oil production declined in 2021 due to lack of maintenance and loss of infrastructure efficiency; and domestic petrol prices remain fixed—increasing the cost of the ‘Premium Motor Spirit’ subsidy, a large and growing fiscal burden.” In a different World Bank report, titled ‘Global Flaring and Venting Regulations: 28 Case Studies from Around the World’, it was disclosed that within almost a decade, oil production declined by 40 per cent in Nigeria. “Nigeria’s oil production fell by nearly 40 per cent from 2012 to 2021. During this period, the flaring intensity barely changed. The volume of gas flared declined broadly in proportion to oil production, falling 25 per cent, from 9.6 bcm to 6.6 bcm. There were 166 individual flare sites in the last flare count, conducted in 2019,” the report read.
TUESDAY 17/5/2022 – DOLLAR HITS N600 AT PARALLEL MARKET, FOREX SUPPLY SHRINKS
The dollar exchanged at N600 on Monday at the parallel market, heightening fears of a further devaluation of the nation’s currency. The rate at the Importers and Exporters Window was, however, N415.75 on Monday, widening the exchange rate spread to N184.25. At Zone 4 in Abuja, which is the hub of the parallel market in the Federal Capital Territory, two Bureau de Change Operators, Mohammed Isa, and Abu Abdullahi, told The PUNCH that the rate was N599/$ at 10am and 11.14am respectively. However, the rates for both BDCs changed to N600/$ when they were separately contacted at N3.13pm and N5pm respectively on Monday. “If I reduce this by N1, I will not be able to make any profit,” one of the two BDCs, Abu Abdullahi, said. At the Lagos airport on Monday, a BDC operator, Adamu Haruna, told The PUNCH that the rate was “N600/$, no more, no less.” A BDC operator at Amuwo-Odofin in Lagos, Bala Usman, gave an initial rate of N598/$ in the morning but changed to N599 at 2.53pm when contacted.
WEDNESDAY 18/5/2022 – AT 26.61%, BANKS MAXIMUM LENDING RATE DROPS TO 5-YEAR LOW
Amid rising inflation rate that is expected to hike operating cost and plud profitability, banks have reduced maximum lending rate to 26.61 per cent, an over five-year low, the latest data by the Central Bank of Nigeria (CBN) on banks’ deposit and lending interest rates has revealed. The CBN data revealed that In 2016, the maximum lending rate was hovering around 26 per cent and crossed the 31 per cent mark in 2017. The drop involves a decline in lending rates to the real sector of the nation’s economy and increasing deposit rates on bank customers’ deposits. The data on banks’ deposit and lending interest rates showed a 1.4 percentage points drop in the average maximum lending rate from 26.61 per cent in March 2022, as against 27.65 per cent in January 2022. The maximum lending rate was at 30.73 per cent in February 2022 and it has dropped by 2.5 per cent to 27.85 per cent in December 2021 from 28.3 per cent it was in January 2021. The CBN data indicated that interest on savings deposits closed March 2022 at 1.28 per cent from 1.25 per cent, representing an increase of 2.4 per cent Year-till-Date (YtD) performance. Experts attribute the decline in maximum lending rate to excess liquidity in the banking sector. Commenting, the President of the Association of the Capital Market Academics in Nigeria (ACMAN), Professor Uche Uwaleke believe interventions by CBN also forced banks to cut interest rate on loans to customers.
THURSDAY 19/5/2022 – ABCON Calls for Creation of BDCs’ Autonomous FX Trading Window
The President, of the Association of Bureaux De Change Operators of Nigeria (ABCON) Mr. Aminu Gwadabe has urged that Central Bank of Nigeria (CBN) to create a trading window in a bid to enhance dollar liquidity in Nigeria. Also, ABCON announced that they have developed a roadmap campaign plan needed to save the naira from further decline and enhance exchange rate stability. The ABCON National Executive Council yesterday said the move to save the naira was agreed upon by the body at the conclusion of its meeting in Lagos recently where it unveiled strategies for saving the local currency, bridging the exchange rate gaps, and curbing volatility in the forex market. Gwadabe said there was an urgent need to enhance dollar liquidity in the market and ensure stability of prices in the economy. These steps, he said, would save the local currency and economy from the impact of election spending that has kept inflation at double digits for a very long time. He said: “The naira has consistently come under serious pressure due to dollar scarcity making it difficult for forex end users, manufacturers, and key industry players to access dollars needed to meet their needs. ABCON under my leadership will continue to encourage our members to play the vital role of closing the exchange rate gaps in the market and reducing widening premium between the parallel market and the official window.” Gwadabe listed several factors that continue to undermine the naira’s stability and the local currency’s value against other currencies.
FRIDAY 20/5/2022 – RENEWED BARGAIN HUNTING IN 21 STOCKS LIFT INDICES BY N298BN
After three consecutive sessions of losses, renewed bargain hunting in the shares of MTN Nigeria (MTN N), Betaglas and 19 other stocks lifted market capitalisation by N298 billion. Precisely, the All-Share Index inched higher by 554.15 absolute points, representing an increase of 1.05 per cent to close at 53,275.49 points while the overall market capitalisation value gained N298 billion to close at N28.721 trillion. The market gain was driven by price appreciation in large and medium capitalised stocks amongst which are; MTN Nigeria Communications (MTNN), Beta Glass, Stanbic IBTC Holdings, Transcorp Hotel and GlaxoSmithKline Consumer Nigeria. GTI Securities Limited said “The equity market closed trading activities for yesterday bullish, as investors’ increased buying appetite for MTNN and 20 others lifted the market by 1.05 per cent following three days of successive losses. However, we expect profit-taking from recently appreciated stocks to continue during the week.”