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Stockbrokers decry effect of Nigeria’s forex policy on foreign companies

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The Chartered Institute of Stockbrokers (CIS) has expressed concerns about the impact of recent foreign exchange reforms on companies with significant foreign exchange components, noting that many of these companies are posting losses or substantially reduced profits.

This statement was made by the CIS President and Chairman of the Council, Mr. Oluropo Dada, at the 2024 Vanguard Economic Discourse, themed ‘Reforms in an Era of Global Uncertainties: Whither Nigeria.’

Dada, represented by Council Member Mr. Adeyemi Aina, highlighted the challenges faced by businesses such as Nestle and MTN, which have been adversely affected by the forex reforms.

He emphasised that the government should take these concerns seriously as they reflect broader economic vulnerabilities.

“While these reforms are aimed at accelerating economic growth, they come with initial challenges due to the existing deterioration in the economic structures,” he said.

Dada reiterated the CIS’s support for the overall policy direction of the government but suggested that the implementation could be improved.

He pointed out that no country operates a completely free-floating currency system; instead, advanced economies use a managed float system to protect their national currencies from market volatility.

“No country operates with a completely free-floating currency. Democratic nations typically employ a managed currency management system to prevent economic instability.

“The reality is that it is suicidal for any country to expose its natural currency entirely to the forces of demand and supply,” he stated.

He expressed concern over the impact of foreign exchange losses on the profitability of quoted companies and urged for proactive measures to mitigate these effects.

He noted that the financial results of companies like Nestle and MTN are indicative of the broader impact.

He noted that the institute has set expectations for major corporations, such as Dangote Group, the Nigerian National Petroleum Corporation (NNPC), and electricity distribution companies, to be listed on the exchange by the end of 2024. This move is anticipated to boost market activity and investor confidence.

The President highlighted the importance of significantly increasing the aggregate volume and rate of production in the economy as a sustainable method to strengthen the national currency, the naira.

“A sustainable way to strengthen our national currency is to produce what we consume domestically and reduce importation,” he said.

He called on the government and all economic stakeholders to work towards achieving a significant increase in local production.

He also advocated for multinational companies like Toyota and General Motors to establish production lines in Nigeria, which would facilitate the local manufacturing of car tires, batteries, engine oil, and other automotive parts.

However, he cautioned the federal government to reconsider the increase in Band A electricity tariffs, as this would likely raise production costs and make locally produced goods less competitive compared to imports.

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Crypto: SEC launches new initiative to speed up VASP registration

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The Nigerian Securities and Exchange Commission (SEC) has launched a new program aimed at speeding up the registration process of Virtual Assets Service Providers (VASP).

According to the regulatory body, the new program will serve as an amendment to existing rules and is targeted at improving the current regulatory framework to fit the existing complexities of the crypto industry in the country.

In March, the Nigerian SEC announced steep changes to its Rules on Digital Assets Issuance, Offering Platforms, Exchange, and Custody.

The most significant aspect of the change was the increase in registration fees of VASPs from 30 million naira ($20,161) to 150 million ($100,806) which raised much criticism and speculation because of the potential to reduce business participation.

The latest adjustment was announced in a memo on June 21 unveiling a specific amendment to these VASP registration rules which introduces the Accelerated Regulatory Incubation Program (ARIP).

The new program which is expected to last for 30 days creates a window of opportunity for all “operating and prospective” VASPs in Nigeria to speedily complete all requirements thus ensuring full compliance across board.

The commission mandated all active and existing VASPs in the country to head to the SEC ePortal to commence the Accelerated Regulatory Incubation Program.

All defaulting VASPs are liable to prosecution by the nation’s regulatory body.

The new initiative is another brainchild of SEC Chief Emomotimi Agama who rode into office with a crypto-friendly reputation but his actions and initiatives since entering office have resonated wrongly on the stakeholders in the Nigerian crypto space.

One of his loudest Anti-crypto policies occurred in May when the SEC chief led an onslaught on the listing of the Naira on various crypto exchanges. The SEC chief argued that Peer-to-peer trading of the naira on crypto exchanges is responsible for the devaluation of Nigeria’s local currency.

The onslaught led to several crypto exchanges like Binance and Kucoin delisting Naira from their platform.

The SEC’s body language so far reflects a stringent approach to regulating cryptocurrency and its entities in Nigeria.

In December 2023, the Central Bank of Nigeria lifted its two-year prohibition on banks operating accounts for VASPs in a bid to embrace a more friendly regulatory approach towards cryptocurrencies rather than banning them outright.

Despite this positive move, Microfinance banks remained banned from facilitating crypto transactions. This development coupled with the hike in registration fees and the latest ARIP program suggests that the SEC is bent on upholding very strict regulatory measures for the crypto industry in Nigeria.

Nigeria is among the countries with very high and fast crypto adoption. Over 22 million people (10.3 percent) of the population are active crypto owners.

The crackdown on peer-to-peer naira trading by the Nigerian SEC resulted in Binance and Kucoin delisting the naira from its platform.

The Nigerian authorities and Binance limited, the largest crypto exchange in the world are currently amid a spat that led to the detention of a Binance executive in a Nigerian prison. The spat between both groups has made the headlines in most top news outlets.

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GTCO rated Nigeria’s ‘Strongest Brand and Best Banking Brand’ in Nigeria

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By Seun Ibiyemi

Africa’s leading financial services institution, Guaranty Trust Holding Company Plc (GTCO), has added to its impressive haul of accolades as it was recently named Nigeria’s strongest brand and Best Banking Brand in Nigeria by Brand Finance and Global Brands Magazine, respectively.

These awards not only reaffirm GTCO’s position as a leading financial services group but also spotlights the Group’s enduring reputation as a customer-focused brand.

Over the years, GTCO has demonstrated remarkable commitment to shaping the future of financial services in Africa and is renowned for its innovative approach to customer service and stakeholder engagement.

The Group’s brand strength is underpinned by a strong commitment to delivering cutting-edge financial solutions, fostering meaningful customer relationships, and Promoting Enterprise using its proprietary free business platforms.

Commenting on the two awards, the Group Chief Executive Officer of Guaranty Trust Holding Company Plc, Segun Agbaje, said, “These achievements are a reflection of our unwavering commitment to excellence, innovation, and customer satisfaction, as well as to building a truly international brand from our proudly African roots.

“We are delighted to receive these recognitions and inspired to continue delivering our promise of enriching lives with every opportunity.”

GTCO is a leading financial services group with banking operations in Nigeria, West Africa, East Africa, and the United Kingdom alongside non-banking verticals in HabariPay, Guaranty Trust Fund Managers, and Guaranty Trust Pension Managers.

Its leadership in the banking industry and efforts at empowering people and communities has earned it many prestigious awards over the years.

The Group’s flagship banking franchise, Guaranty Trust Bank, was named Nigeria’s Best Bank and Best Bank in CSR at the 2023 Euromoney Awards for Excellence, Best Banking Group in Nigeria by World Finance, and Best Bank in Nigeria by Global Finance.

Guaranty Trust Bank is featured in the Top 1000 Banks in the World and Top 100 Banks in Africa rankings by The Banker.

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SEC introduces guidelines for banks to raise capital efficiently

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By Opeyemi Abdulsalam

The Securities and Exchange Commission (SEC) has introduced a comprehensive framework to support the Central Bank of Nigeria’s (CBN) bank recapitalisation program.

This framework aims to ensure a seamless, transparent, and efficient process for banks and holding companies to raise capital.

The framework serves as a guide for banks and market participants, outlining the necessary procedures and guidelines for raising capital through various methods, including rights offerings and private placements, between 2024 and 2026.

The SEC recognises the importance of strengthening banks’ asset base and supporting economic growth, as highlighted by the CBN’s directive.

The framework acknowledges the crucial role of the capital market in facilitating this program, enabling banks to access necessary funds and explore business combinations.

According to the SEC, this framework will ensure an efficient, transparent, and stakeholder-friendly capital raising process.

The SEC has established a streamlined application process, requiring electronic submission of applications and supporting documents via a dedicated email address.

The commission will review applications, communicate any deficiencies to applicants, and expect prompt resolution to avoid delays. Incomplete applications will incur penalties, including a N1,000,000 fine and N100,000 re-filing fee, encouraging banks to submit complete and accurate information.

The SEC encourages inquiries and clarifications via a dedicated email address, ensuring open communication and efficient navigation of the process.

Building on existing regulations, this framework should be read in conjunction with relevant provisions of the Investment and Securities Act, 2007, and the Commission’s Rules and Regulations.

In response to the CBN’s directive, the SEC framework provides a clear guide for banks and market participants, aiming to strengthen Nigeria’s banking sector and support economic growth.

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