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ABCON asks CBN to adjust applicable exchange rate downward



The Association of Bureaux De Change Operators of Nigeria (ABCON), the umbrella body of all Central Bank of Nigeria (CBN)-Licensed Bureaux De Change (BDCs) in Nigeria has appealed to the Apex Bank to adjust and lower its applicable Exchange Rate downward below the N1,251/$ its pegged for the BDCs.

The request is coming in the midst of the epoch history making achieved by the apex bank for the first time in the last 15 years for the unofficial market rates at N1,235/$ to be lower than the official BDCs applicable buying exchange rate of  N1,251/$ (plus 1.5 percent margin) set for the BDCs by the CBN in its latest tranche of intervention.

The group insisted that naira’s speedy recovery, which was faster than expected had made CBN’s selling rate to BDCs very expensive and difficult to offload to retail end buyers that are trooping to the undocumented forex operators for cheaper rates and avoiding the BDCs services

In a letter to CBN Director, Trade & Exchange Department, ABCON, signed  by its National President, Alhaji (Dr.) Aminu Gwadabe, ABCON further expressed concerns that many BDCs who funded their accounts for dollar allocations are yet to receive their allocation of dollars to meet up the legitimate  critical demand of their clients due to scrutinisation of the BDCs documents for collections at the various designated Centers  which  invariably made the BDCs vulnerable to exchange rate risk and significant loses.

The group insisted that with naira appreciating across markets, many BDCs who bought dollar at N1,251/$ will lose significant income and capital if they sell at the current open  market rate of N1,235/$ and therefore the  need for the call for a further review downward of the applicable exchange rate for the period and subsequently to continue to enhance naira sovereignty.

“We discovered a worrisome development where many of our members who paid for dollar allocations at N1,251/$ with a margin of 1.5 percent are yet to receive their disbursement. This is happening in the face of prevailing open market rate of N1,235/$ which is lower than the authorised applicable exchange rate by the CBN to the BDCs,” the statement said.

Despite this development, ABCON lauded the CBN leadership for the recall of BDCs into the official FX window and steps taken by the apex bank to strengthen the naira against the dollar and other global currencies.

ABCON said the positive fallout of the CBN’s efforts to restore naira’s glory came faster than expected, reiterating its commitment to working with the apex bank to realise the objectives of the government towards exchange rate stability and economic growth.

ABCON stated that their forecasts in the ongoing market development indicates a willingness of the market to correct itself with a realistic price discovery as naira is forecast to continue to appreciate further across market with the increasing sources of foreign exchange inflows aided by the CBN policies

“It is in view of the above market developments that we write to appeal to your good selves for a readjustment and review downwards of our funding rate of the last tranche (2nd bidding) from N1,251/$  further down to reflect current market rate discovery. This became imperative as it is only the consideration of the readjustment downward that will enable our members to upload their holding positions,” the statement said.

ABCON also requested that the process of payments at the various disbursements centres be reviewed in the immediate time to a medium time automation to achieve enhanced timely payments while also observing the spot nature of our transactions.

The group further requested that based on the offer and acceptance rule, the approval of refunds to those that are yet to collect disbursement having funded their accounts as it is the market that determines the rate presently be considered going forward.

ABCON also requested that the apex bank introduce cut-off time for payments and collection of bids, adding that the current open ended system for payments and collection of bids does not make for effective administration and control of the process.

“Consequently, many of our members are jittery to bid/collect their bid for fear of losing money as the current market reality has the potential to force us to sell below cost price and antithetical to recent market price discovery,” the group said.

ABCON insisted that the disturbing exchange rate disparity can be addressed by a quick and decisive response of the apex bank, which will go a long way in bolstering BDC operators’ confidence in the ongoing intervention by the Central Bank of Nigeria as well as enhance their participation in the bidding process.

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Money market

Sterling Bank, SMEDAN partner on data platform, Databanc



Sterling Bank and the Small and Medium Enterprises Development Agency of Nigeria have launched a platform called Databanc that provides data on businesses in Nigeria and N5bn worth of single-digit loan programmes.

A statement from the bank said that Databank provides insights which will be utilised by SMEDAN to deliver its mandate on policy formulation and a unique identification for small businesses and their promoters.

Speaking at the launch of the platform, the Executive Director of Commercial and Institutional Banking at Sterling Bank, Tunde Adeola, described the platform and fund as evidence of Sterling Bank’s commitment towards growing the real sector of the nation’s economy.

Adeola said, “We are delighted to bolster the backbone of our economy with SMEDAN. This initial fund of N5bn marks just the beginning of what has been and will continue to be a mainstay of our approach to funding businesses to grow at scale, and become the preferred financial partner for businesses, no matter their scale.”

He added that over 20,000 SMEs had enrolled on the Databanc platform, with over 80 beneficiaries of the single-digit loan programme and further disbursements ongoing.

He encouraged all MSMEs in the country to enrol on the platform.

SMEDAN’s Director-General, Mr Charles Odii, represented by the Director of Agribusiness Development and Access to Finance, Levi Anyikwa, highlighted the programme’s alignment with SMEDAN’s mission to democratise credit access for nano and micro-enterprises.

Anyikwa affirmed that access to finance remained a significant hurdle for SMEs, and restated SMEDAN’s commitment to removing that barrier.

The Head of SME Digital Products at Sterling Bank, Bolanle Tyson, emphasised Sterling Bank’s strategic focus on critical sectors encapsulated in the HEART of Sterling forward strategy: Health, Education, Agriculture, Renewable Energy, and Transportation.

She said, “We are leveraging data to empower SMEs like never before. Our commitment to SMEs is steadfast. We recognise their pivotal role in driving Nigeria’s GDP and employment. This partnership with SMEDAN underscores our shared dedication to their success.”

The latest study from Visa, the SME Megatrends report showed that SMEs in Nigeria remained heavily underserved and underbanked with a considerable amount of SMEs relying on personal loans and informal credit, as they face obstacles and requirements that make it difficult to secure loans from banks and other formal lending institutions.

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Money market

Public debt hits N101trn, as FG eyes new $4.4bn fresh loans



The Federal Government has borrowed a total of $4.95bn in loans from the World Bank in the past 12  months, pushing the total public debt to N101tn/ amidst worries about the increasing costs of servicing external debt.

The nation’s public debt was put at approximately N97tn as of December 2023, according to the Debt Management Office data.

This came as the government still expects fresh loan approval worth $4.4bn from the international lender and the Africa Development Bank over the next one year.

An analysis by our correspondent showed that the bank approved funding for six projects including $750m for power sector financing, $500m for women empowerment, $700m for girl child education, $750m for renewable energy solutions, $750m on resource mobilisation reforms and $1.5bn for economic stabilisation reforms.

Findings showed that on June 9, 2023,/ the World Bank board approved a loan of $750m to boost Nigeria’s power sector. The bank said the loan would serve as additional financing for the power sector recovery performance-based operation.

It also announced the approval of a loan of $500m on June 27, 2023 to help Nigeria drive women’s empowerment. This was the second loan approved by the bank under the current administration. It provided a scale-up financing for the Nigeria for Women Programme.

In September 2023, the World Bank approved a loan of $700m to bolster educational opportunities and empowerment for adolescent girls in Nigeria. The loan was to support the ongoing ‘Adolescent Girls Initiative for Learning and Empowerment project. It aimed to encourage secondary education accessibility for girls residing in specific target states within Nigeria.

While $750m was authorised on December 14, 2023, for the Distributed Access through/ Renewable Energy Scale-up project in Nigeria, the project aims to provide over 17.5 million Nigerians with better access to electricity via distributed renewable energy solutions and tackle the electricity access deficit.

The latest was a sum of $2.25bn comprising $1.5bn for reforms on Economic Stabilisation to Enable Transformation Development Policy Financing Programme. It is meant to increase fiscal oil revenues to 2.7 per cent by 2025, boost non-oil fiscal revenues, expand social safety nets to assist 67 million vulnerable Nigerians and raise the import value of previously banned products. $750m was also apportioned to enhance non-oil revenues and protect oil and gas revenue.

Meanwhile, the government is expecting about $4.4bn in new loans from the World Bank and the AfDB. The government is pursuing a $500m loan to address the need for better connectivity in rural road infrastructure and agricultural marketing, a $750m loan if it reintroduces previously suspended telecom tax and other fiscal measures, and a $500m to address the challenges faced by Internally Displaced Persons nationwide. The government is also expecting about $2.7bn economic and budget support loan from the African Development Bank.

The AfDB President, Akinwumi Adesina, in an interview with journalists in March said its Board of Directors approved $134m for Nigeria to implement an emergency food production plan, while talks are also ongoing for a $1.7bn economic and budget support loan as well as the launch of a $1bn agro-industrial processes in 28 states.

The World Bank, a prominent international financial institution dedicated to reducing global poverty, provides loans and grants to developing countries for a wide range of projects, including infrastructure development, education, healthcare, and environmental sustainability.

However, for many Nigerians, long years of infrastructure decay and increased unemployment have triggered an increased feeling of bitterness whenever they hear the government’s intention to borrow with past borrowings is not justifiable.

Nigeria has been a top recipient of fresh loans from multilateral lenders, borrowing $2.7bn in 2023 from about $2.9bn released to the country in 2022.

Last week, the Bretton Woods Institution said its technical advisory and financing to support economic growth in Nigeria currently stands at over US$15bn affirming data from the external debt stock report of the Debt Management Office shows that Nigeria owes the World Bank a total of $15.45bn as of December 31, 2023.

President Bola Tinubu had expressed his resolute commitment to breaking the vicious cycle of overreliance on borrowing for public spending, and the resulting burden of debt servicing it places on the management of Nigeria’s limited government revenue. However, the president may not have matched his words with actions as they have sought to obtain credit facilities from both domestic and external lenders.

The soaring costs of servicing foreign debt have significant implications for Nigeria’s economy. The increased debt burden could potentially divert resources away from critical sectors such as healthcare, education, and infrastructure, exacerbating socio-economic challenges.

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Money market

NPA clears air over $27.29bn Escravos Deep Seaport project 



By Seun Ibiyemi

The Nigerian Ports Authority (NPA) has shed more light on why the $27.29billion Escravos Deep seaport project, which is being promoted by a Nigerian firm, Mercury Maritime Concession Company in collaboration with EDIB International of Hong Kong, has stalled.

Responding to enquiries on the delay of the project via his X (formerly Twitter) handle, the Managing Director, NPA, Mr Mohammed Bello-Koko revealed that the proposal submitted by the promoters of the Escravos Deep Seaport project has not provided the Authority with the necessary information to advise further.

According to Bello-Koko, “First, Mercury Maritime Concession Company Ltd (MMCC) submitted a proposal and wants the Nigerian Ports Authority (NPA) to approve its request as the ONLY deep seaport-free zone in the eastern zone of the country for decades to come.

”Meanwhile, the Authority has received many proposals for developing deep seaports, including Ibom, Burutu, Bakassi, Bonny, and Port of Benin, which are currently at different stages of review. Nonetheless, we carefully outlined the requirements for this project.

“The initial phase involves acquiring land. The availability and suitability of the site are essential for the successful development of the port. This process is yet to be accomplished. Although the classic position is for the Authority to acquire the land and grant a concession on it to the private party, recent concessions granted by the government allowed private parties to acquire the land, hold it for an agreed term, and, after recovering the cost, transfer it to the Authority. Examples are the Lekki & Badagry deep seaports.

“To undertake this project, the site for the port must be identified, and environmental impact assessments and scientific studies must be conducted to confirm suitability.

“Additionally, we must adhere to the PPP process as per the applicable law, which entails submitting the OBC and FBC, obtaining a Certificate of Compliance from the Infrastructure Concession Regulatory Commission (ICRC), and seeking final approval from the FEC.

“Therefore, we highlighted the need to submit a business and investment proposal with a financial model that demonstrates the project’s recovery period and forms the basis for adopting the PPP framework.

“Again, it is crucial to emphasize that the port is just one aspect of the overall development of the Industrial Park. This development encompasses petrochemicals and various manufacturing facilities.

“The required approvals for these aspects are not within NPA’s jurisdiction. They would follow the process under the ICRC Act

“In a nutshell, the proposal hasn’t provided the Authority with the necessary information to advise further.

“The Federal Ministry of Marine and Blue Economy has expressed significant interest in this project and has equally requested additional details. The Minister, Gboyega Oyetola and the Authority are especially keen on working with proponents to develop one deep seaport in the eastern region, at the barest minimum.”

Recall that an approval was granted for a deep sea port in Escravos (Gbaramatu Island/Omadino) Warri South via a Joint venture partnership/PPP in 2019. The project which is expected to be located on a 31,000hectares of land in Delta state, will encompass a Deep sea port, Crude oil refinery, Gas Complex, Independent Power Plant, Airport and a Nature Park.

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