CAPITALDIGEST DAILY NEWS, 28/11/2022

NNPC MEETS MARKETERS AS PETROL SCARCITY BITES HARDER The scarcity of the premium motor spirit, popularly called petrol, has continued to spread across many states, resurfacing in Abuja on Wednesday after disappearing briefly. It grew worse in Lagos, Ogun, Ekiti, among others. Oil marketers blamed this on the 163 per cent hike in the cost of renting daughter vessels to move products from mother vessels, stressing that this had reduced the purchasing power of many dealers. They also attributed the scarcity to a drop in PMS supply by the Nigerian National Petroleum Company Limited, the inability to access foreign exchange at the official rate, and the continued subsidy on PMS, among others. The PUNCH reported on Wednesday that long queues surfaced in Lagos on Tuesday as motorists spent hours at filling stations in their bid to purchase PMS. Commenting on this, the National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria, Chief Ukadike Chinedu, said the situation was due to various factors. He said, “Talking about Lagos, that is where most of the (PMS) vessels come. When the mother vessel comes into Lagos, its products will be distributed by daughter vessels to ports in Lagos, Warri, Port Harcourt, etc. “These daughter vessels are hired by independent private tank farm owners or private depot owners, who pay vessel charges in dollars. Some of them source dollars in the open market. So, the dollar also determines the price of products. “Now, you cannot expect them to sell PMS at N145/litre when the price of hiring a vessel has risen from $38,000 to around $108,000 to $111,000, depending on the level of the vessel. These charges are paid in dollars.” NEW NAIRA: CBN, EFCC TO TRACK LARGE WITHDRAWALS The Governor of the Central Bank of Nigeria, Godwin Emefiele has said that it would work with law enforcement agencies like the Economic and Financial Crimes Commission and the Independent Corrupt Practices and Other Related Offences Commission, to complicate and track large withdrawals. He said this while briefing the press after the launch the new Naira banknotes in Abuja on Wednesday. At the briefing, Emefiele said that the amount of money that can be withdrawn from the counter would be reduced drastically, adding that bulk withdrawals would require several procedures and security checks to track use. He said this would ensure a steady transition into a cashless economy“There is no economy imbued with the thinking that it has to be a cash economy; the world has moved from predominantly cash to a cashless economy. And I think Nigeria and the Central Bank of Nigeria are prepared to move towards a cashless economy. And that is why following the redesign and issuance of this note, we will insist that cashless will be nationwide. “We will restrict the volume of cash that people can withdraw over the counter. If you need to draw large volumes of cash, you will fill out uncountable forms; we will take your data, whether it’s your BVN or NIN so that our law enforcement agencies like EFCC and ICPC can follow you and be sure that you are taking that money for a good purpose.” He also noted that this move alongside the redesigned notes would ensure that the apex bank has ample control over the amount of money in circulation. 16.5% INTEREST RATE: PRIVATE SECTOR PREDICTS FACTORIES SHUTDOWN, HIGHER BAD LOANS The Monetary Policy Committee of the Central Bank of Nigeria has raised the benchmark interest rate from 15.5 to 16.5 per cent in order to rein in inflation and maintain economic stability. Speaking at the end of a two-day Monetary Policy Committee meeting on Tuesday in Abuja, the CBN Governor, Godwin Emefiele, said the committee voted to raise the rate to 16.5 per cent while retaining the asymmetric corridor of +100/-700 basis points around the benchmark interest rate, also known as the monetary policy rate. He said the MPC also voted to retain the cash reserve ratio at 32.5 per cent and the liquidity ratio at 30 per cent. “The Committee’s choices were on whether to further hike rates or pause for the impact of the last three rate hikes to continue to feed through the economy. At this MPC, therefore, the options considered were primarily to hold or further tighten the policy rate. The option to loosen was not considered as this would gravely undermine the gains of the last three rate hikes,” Emefiele said. This was the fourth time the committee would be raising the benchmark interest rate since May when the rate was moved upwards from 11.5  to 13 per cent. The rate has since increased to 14 per cent in July, 15.5 per cent in September, and to 16.5 per cent in November. “At this meeting, the MPC was concerned that the global inflationary pressures have continued to trend higher and financial markets were also facing challenges. It observed that this was indeed the trend in Nigeria, with inflation attaining 21.09 per cent in October, 2022,” he said. Inflation has risen from 15.92 pr cent in March to 21.09 per cent in October, due to cost of production, demand and external factors. CREDIT TO ECONOMY RISES 33% TO N63.5TRN Banks’ credit to the economy rose year-on-year (YoY) by 33 percent to N63.47 trillion in October 2022 from N47.5 trillion same period last year. According to data in the CBN Money and Credit Statistics for October 2022, the government recorded the highest YoY growth (75 percent)  in its share of credit which stood at N22.6 trillion in October 2022 compared to N12.9 trillion in the corresponding period of 2021. This was followed by credit to the private sector which grew by 16 percent to N40.2 trillion as at October 2022 from N34.6 trillion in October 2021. Meanwhile, the CBN data also showed that currency-in-circulation, CIC, grew YoY  by 11 percent to N3.9 trillion in October 2022 from N2.9 trillion in 2021. Currency outside banks rose YoY 13.2 percent to N2.83 trillion in October 2022 against N2.5 trillion in 2021. While defending its decision to redesign the Naira note, the CBN had said some individuals were stockpiling huge amount of cash outside the banking system with statistics showing that over 80 per cent of the CIC outside the vaults of the commercial banks. According to the CBN Governor, Godwin Emefiele, a situation where a total of N3.2 trillion was in circulation, out of which N2.73 trillion was outside the vaults of the banks, was unacceptable. Meanwhile, the CBN has launched a countdown clock to the January 31, 2023 deadline for phasing out the N200, N500, and N1,000 notes currently in circulation. FG’S DOMESTIC BORROWING CROWDS OUT PRIVATE SECTOR IN 2022 Indication has emerged that the Federal Government, FG, borrowings in the domestic market through bonds issuance skyrocketed in the third quarter of the year, Q3’22, while also squeezing the private sector borrowing in the same market. Bond market is one of the cheapest sources of borrowing for both governments and corporate organizations in Nigeria, but investment analysts are saying that the bullish position of the government has now altered the valuations with the bonds going up to as much as 16.2499%.Financial Vanguard findings show that the value of FG’s new bond listing on the Nigerian Exchange Limited, NGX, recorded a sharp rise to N7.547 trillion, representing a 94.7 percent increase against the N3.877 trillion recorded in the corresponding period of 2021, Q3’21. This figure accounted for 96.2 percent of the total N7.842 trillion worth of bonds raised in the market so far in 2022. At the level of the second tier of government, though only two States, Lagos and Kogi, accessed the market, borrowing a combined figure of N105 billion during the period, their stake in the market represents a remarkable development against a zero presence last year. However, the come-back amounted to just 1.36 percent of the total value of bonds issued so far this year. Out of the N105 billion state bonds in 2022, Lagos took the lion share of N100billion while Kogi took just N5.0billion. Consequently, the combined funding raised by the governments from bonds so far in 2022 rose 97.4 percent to N7.652 trillion as against N3.877 trillion in 2021. However, though the private sector funding from the bond market rose significantly by 182.1 percent to N189.6 billion so far in 2022, against  N67.2 billion in 2021, its share of the total bond market funding is considered very negligible at 2.4 percent of the total N7.842 trillion pulled from the market so far this year.