• FirstBank posts highest forex returns as CBN sells $186m to banks
Central Bank of Nigeria (CBN) Governor,
Mr. Godwin Ifeanyi Emefiele has described the current scarcity of
foreign exchange confronting the country as good riddance, saying local
production of various essential goods are now being given top priority.
Emefiele said this during a tour of the
farmlands cultivated under the Anchor Borrowers’ Programme in Kebbi
State over the weekend. He stated that the commitment of stakeholders
and the expected output from Kebbi State alone had proved critics of the
central bank’s policy measures wrong.
In a statement from the CBN, Emefiele,
who was full of praise for the farmers and the Kebbi State Government
for their determination and commitment, said that with the level of
success attained under the pilot project in the state, in addition to
what he saw at the Sunti Golden Sugar Estate in Niger State recently, it
was becoming more of a reality that the country can produce enough food
to feed itself and even export in no distant future.
The CBN governor held the view that with
agriculture being the bedrock of genuine economic growth of any nation,
Nigeria could not be an exception.
“As such, Nigeria with large expanse of
arable land ought not to be spending huge amounts of money importing
food items at the expense of other competing needs,” he added.
Emefiele stated that the success
recorded by the rice farmers in Kebbi State has rekindled hope in the
ability of Nigeria to be self sufficient in rice and wheat production,
adding that with the sum of N210,000 granted to each farmer, they were
able to cultivate a hectare of rice.
He disclosed that 78,581 farmers were
mobilised in the state under the Anchor Borrowers Programme. The farmers
are already looking forward to a total of one million metric tonnes of
rice this year, he added.
Speaking further on what the programme
has been able to achieve, the CBN governor stated that with the
disbursement of N4.9 billion as loans to the farmers, over 570,000
direct jobs had been created with the multiplier effect that, 70,871
rural farmers now own and operate bank accounts and are captured under
the Bank Verification Number (BVN) biometric project, adding that the
timely supply of inputs to 73,001 farmers was achieved.
According to Emefiele, the performance
of the programme also vindicated the stance of the central bank that
with the right incentives and the necessary support, Nigerian farmers
would be able to fill whatever gaps that exist between the demand and
supply of agricultural products like rice, wheat, cotton and palm
produce.
On his assessment of the programme, the
Minister of Agriculture, Chief Audu Ogbeh, said the level of activities
in the rural areas visited by the team showed that with Kebbi State
alone targeting one million tonnes of rice of the projected seven
million tonnes required by the entire country, self sufficiency in rice
production was very much in sight by the time 12 other states identified
as rice producing belts harvest their produce.
He commended the efforts of the CBN for reinventing agriculture into a profitable business venture.
The minister further stated that rural
areas remained the catalyst for viable economic development and as such
deliberate efforts were being directed at opening up the rural areas.
The Kebbi State Governor, Alhaji Atiku
Bagudu, said farmers in the state had been adequately mobilised towards
the attainment of the one million tonnes of paddy rice by providing them
with the necessary inputs as and when due.
He also noted that with the assurance of
availability of markets for the produce, farmers in the state were
already looking forward to the repayment of the loans extended to them
at the beginning of the farming season.
While acknowledging the pivotal roles of
both the CBN and the state government in the provision of loans,
irrigation equipment and fertiliser, the farmers said they were looking
forward to a bumper harvest this season.
They also appealed for an appreciable increase in loans to enable them cultivate more land and maximise output.
The team visited rice farms in Suru, Augie, Bunza and Argungu Local Government Areas of the state.
Meanwhile, the CBN last week allocated a
total of $186,356,794.86 to 15 commercial banks and four merchant banks
as demand for the greenback continued to rise.
The amount sold to the banks last week
was higher by $8,479,981 compared to the preceding week, according to
the banks’ returns on forex utilisation reviewed by THISDAY.
Demand was buoyed by dollar purchases by
Dangote Group which got a total of $14 million from different banks,
the Nigerian Security Printing and Minting (NSPM or the mint) Plc which
purchased $9,740,000 for its foreign loan repayment, and Forte Oil Plc
which also purchased $6 million during the week.
FirstBank of Nigeria, which got
$31,427,590 from the CBN, returned to the first spot. The bank sold
forex to 578 customers – corporates and individuals. NSPM which bought
$9.74 million, was FirstBank’s biggest customer for the week. The mint
was followed by Forte Oil which got $6 million and Dangote Cement which
purchased $5 million from FirstBank.
Also, Stanbic IBTC was allotted
$16,495,298.46 to come in second place. Stanbic IBTC sold forex to 132
customers, of which 76 of them repatriated funds from Nigeria’s equities
and fixed income money markets.
Diamond Bank Plc with $13,671,749.59
held the third slot. The bank sold dollars to 221 customers and its
biggest customers in the week under review were Hyde Energy Limited
($1.521 million), Bua Sugar Refinery Limited ($1 million), Dozzy Oil and
Gas Limited ($2.539 million), Standard Metallurgical Company Limited
($2.735 million), and Dangote Cement ($2 million).
Guaranty Trust Bank Plc (GTBank) with
$13,474,564.26 returns on forex utilisation held the fourth position.
The bank sold the greenback to 209 customers. GTbank’s biggest customers
during the week were Dangote Industries Limited ($2 million), Iris
Smart Technologies Limited ($1.699), and Lufthansa Air.
Zenith Bank Plc with returns of
$12,914,395.81 occupied the fifth position. It sold the greenback to 274
customers, of which the National Salt Company of Nigeria (NASCON) got
$4.962 million.
United Bank for Africa Plc (UBA)
reported returns of $11,912,969.93 to occupy the sixth place. It listed
208 customers to which it sold the greenback including those who bought
to pay school fees abroad, for personal travel allowance (PTA), and for
the importation of industrial raw materials and other equipment.
UBA’s biggest customers during the week
were NFE Industries Limited ($1.764 million), Matrix Energy Limited
($1.877 million), and IATA ($1 million).
First City Monument Bank Limited (FCMB)
with $11,755,450.41 stood in the seventh place. Its biggest customer
during the week was the Dangote Group which bought $ 5 million from the
bank.
A report by Afrinvest West Africa
Limited indicated that the CBN was still unable to adequately meet the
dollar demands of banks on behalf of their customers, “as the central
bank continues to refund deposit money banks for huge volumes of
unfulfilled bids at the weekly forex auctions”.
According to the report, the impact of
forex unavailability was being felt across sectors, especially the
petroleum sector as difficulties with importation of refined products
continues to adversely affect economic output.
In another report, Renaissance Capital
Limited (RenCap) said it foresees Nigeria’s forex policy becoming more
flexible by mid-2016.
The firm, in a report sent out at the
weekend, said it expects the country’s policy-based budget support to
spur a change in the CBN’s forex policy.
According to RenCap, this was the case the last time Nigeria sought financing from development finance institutions in 2009.
President Muhammadu Buhari’s government has described its first budget, which is yet to be signed into law, as reflationary.
It plans to accelerate economic growth
by spending N6 trillion, up from N4.49 trillion that was planned for
2015. Of this, 30 per cent will go towards capital expenditure, up from
20 per cent in recent years.
The government plans to borrow $5 billion externally (which is about N1 trillion at the official exchange rate of NGN199/$1).
The country has approached the World
Bank for $2.5 billion in budget support and has also approached the
African Development Bank (AfDB) for $1 billion.
RenCap pointed out that “the budget
support from the World Bank is policy based, implying that it has to be
underpinned by policy reforms”.
“As the World Bank has in principle
agreed to the loan – the first tranche is expected to be disbursed by
June, and the second by the end of 2016 – we see Nigeria instituting
policy reforms, possibly as soon as mid-2016, that we think may include a
more flexible forex policy.
“We expect a couple of the policy
reforms that will underpin the budget support to involve easing some
supply constraints. In particular, we see forex policy becoming more
flexible.
“As it did in July 2009, when Nigeria
eased temporary exchange restrictions, resulting in a weaker naira, and
fall in the spread between the parallel market and official exchange
rates to seven per cent (from 25%).
“That was the year Nigeria first
approached the World Bank for budget support. Because of Buhari’s
aversion to a weaker naira, for fear it will hurt the poor, we rule out a
transition from a fixed peg of N199/$1 to a floating exchange rate
which would weaken the naira to N260/$1 today, according to our real
effective exchange rate (REER) model that tells us the official rate is
30 per cent overvalued,” the company stated.
Rencap said it expected a policy compromise that would help conserve forex reserves by diverting heavy forex demand.
“Probably to an additional exchange
rate, a managed float that trades in a band in the N200-260/$1 region.
With that, it suggested that the fixed (interbank) rate would apply to
essential imports, as deemed by the government.
“In so doing, it would subsidise sectors
deemed to be important, such as agriculture. Capital account
transactions and luxury goods would be left to the managed float
market,” it added.
But it noted that market participants in
sectors deemed important by the government and benefit from buying
dollars at the stronger rate of N199/$1, may lobby to try and keep the
rates in place. And in so doing, open up doors for corruption.
“The forex and fuel shortages are
overshadowing the gains made on the security and anti-graft front.
Buhari campaigned on an anti-corruption platform. True to his word, he
has followed up with credible anti-graft measures,” the report added.
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