Houston, Texas — The bilateral trade between Nigeria and the United States of America (U.S.), from January to February this year, has been put at $799.9 million, according to the United States’ Census Bureau.
Besides, Nigeria’s oil and gas business relationship with Houston Texas in 2015 stands at $15 billion.
The Mayor of Houston, Sylvester Turner, who made this disclosure at the 2016 Nigeria Content Investment Forum in Houston Texas, organised by Sweetcrude Reports, in collaboration with Nigeria Content Development and Monitoring Board (NCDMB) and The Guardian Newspapers, described oil and gas trade between Nigeria and Houston as a success story.
According to him, Nigeria as one of the U.S. largest trade partners, stressing that the country will continue to strengthen ties with Africa’s economic giant.
In a special message to Nigeria’s Small Medium Enterprises (SMEs) and Houston’s manufacturers, he explained that the existing close ties between Nigeria and Houston has made many oil companies to have office branches or associates in the country.
“330 Houston companies have businesses and trade connection with Nigeria,” Turner said, noting that Houston ranks as Nigeria largest U.S. gateway for international trade and for greater partnership.
To further strengthen Houston/Nigeria oil and gas trade, the Houston Mayor said in 2011, United Airlines opened a direct flight to Nigeria from Houston to Lagos, linking two major energy cities.
“This flight has already promoted robust connections. Houstonians and Nigerian alike have benefited greatly from this connection,” he said.
The Mayor commended the organisers for the vision of the forum, which seeks to continue to promote credible partnership, fostering industry support and participation, cultivating new and innovative ideas and initiatives that will be mutually beneficial for Nigeria and Houston alike.
Speaking also at the event, the Acting Executive Secretary of NCDMB, Daziba Patrick Obah said despite falling crude oil prices, local content policy will be implemented.
He said specific areas of focus for local content development include infrastructure development, fiscal incentives, funding, addressing long contracting cycle and in-country processing of hydrocarbon resources.
Trading on the equity sector of the Nigerian Stock Exchange closed on a downward note yesterday, occasioned by price losses suffered by major blue chip companies, causing the All-share index to depreciated by 0.6 per cent.
Yesterday, market capitalisation dropped by N50 billion or 0.6 per cent from N8,897 recorded on Tuesday to N8,845 trillion while the All-share index slides by 150.08 points from 25,865.50 to 25,715.42.0
Nestle topped the gainers chart with 1.68 kobo to close at N680.00 per share. West African Portland Company followed with 1.62 kobo to close at N73.00 per share. Unilever gained 1.53 kobo to close at N32.24 per share.
Tigerbrands added 0.33 kobo to close at N3.63 per share. Nigerian Breweries also appreciated 0.32 kobo to close at N122.00 per share.
However, FO emerged the day’s highest price loser with 3.46 kobo to close at N190.00 per share while Dangote Cement followed with 2.57 kobo to close at N169.00 per share. PZ Cussons shed 1.12 kobo to close at N21.3 per share. Eco bank TransNational Incorporated shed 0.8 kobo to close at N14.7 per share. Flourmills also dropped 0.7 kobo to close at N20.3 per share.
FBN Holdings dominated in volume terms with 117 million shares worth N413.3 million while United Bank for Africa followed with 33 million units valued at N115.8 million. Fidelity Bank sold 32 million shares worth N34 million.
Diamond Bank exchanged 24 million shares worth N33 million. Zenith Bank accounted for 22 million units valued at N292 million.
Investors exchanged 330.5 million shares worth N2.3 billion, against 230.12 million units, valued at N1.50 billion transacted in 3,474 deals.
FCMB Group Plc, the holding company of First City Monument Bank (FCMB) Limited, FCMB Capital Markets Limited, CSL Stockbrokers Limited and CSL Trustees Limited, is on a stronger pedestal and committed to the provision of superior performance that would add significant value to stakeholders in a sustainable manner in spite of the challenging macroeconomic and regulatory environments.
To achieve these, the financial institution said it was laying emphasis on strong capital, cost efficiencies, capital optimisation and accelerated growth in retail business. The Group added that its subsidiaries were well positioned to deliver cutting edge solutions that would provide the best customer experience in their respective target markets.
The assurance was given at the 3rd Annual General Meeting (AGM) of FCMB Group Plc held in Lagos on Friday, April 29, 2016. At the meeting, shareholders of the Group unanimously approved the payment of a cash dividend of N1.98billion, translating to 10 kobo per ordinary share, for the year ended December 31, 2015.
Speaking at the AGM, the Chairman of FCMB Group, Dr. Jonathan Long, said, ‘’although 2015 posed many challenges for the Group, it was again possible for us to continue the development of our core banking franchise and to do so profitably’’. With the depth and range of professional excellence among our staff, and benefitting from our strong Board and Committee structure, the Group will deal successfully with the challenges of 2016 and continue to lay a path for future growth and prosperity in a sustainable manner’’.
The Managing Director of FCMB Group Plc, Mr. Peter Obaseki, noted that the Group is focused on sustaining the momentum of its leading retail presence He added that, “the outlook for 2016 in terms of portfolio strategy is positive’’. As we seek to build more businesses in the retail space, we hope to fully launch a micro-finance business as a full subsidiary of the Group and seek opportunities to improve controlling participation in the pension fund industry; we expect our non-pension asset management and private trusteeship business to grow more steadily. A combination of these initiatives will reduce the pressure on the bank’s balance sheet and steer activities to less capital intensive businesses’’.
Also speaking, the Group Managing Director/Chief Executive of First City Monument Bank Limited, the flagship firm of the Group establishment, Mr. Ladi Balogun pointed out that the Bank has moved swiftly and decisively to address the challenges that affected its financial results last year. ‘’In the fourth quarter of 2015, we began to see early promising signs from the actions we have taken so far to reset the business and restore our growth’’, he said.
According to him, the lender’s performance this year is expected to be driven by improvements in operating efficiency and its retail banking drive, particularly in alternate channels (ATMs, POS and agent banking).
Mr. Balogun also informed the shareholders that the bank currently has 689 Automated Teller Machines (ATMs), 12,000 Point of Sale (PoS) terminals and 71 agent banking outlets (with a plan to grow to 800 agents), across the country. ‘’We are now acquiring 55,000 new customers monthly and disbursing 20,000 new loans, with over 2,000 monthly to women-owned micro-enterprises’’, FCMB has a great foundation to continue to build from and we are confident that our strategy is building the necessary resilience. We believe that our future is intertwined with the collective future of our customers and we do not believe that we can succeed if the customers do not. Hence, we will reinforce our position of being an inclusive lender. We will support sectors that will drive the prosperity of the markets in which we operate. We will bring greater accessibility to a broad range of financial services. By doing so, we will build a very resilient financial services franchise’’.
The audited accounts of FCMB Group Plc for the year ended December 31, 2015 showed a profit before tax (PBT) of N7.8billion, while profit after tax stood at N4.8billion. Revenue was up by 3 percent to N152.5 billion in 2015, as against N148.6 billion in 2014. However, net interest income decreased by 12 percent Year-on-Year (YoY) to N63.9 billion, compared to N72.6 billion in the previous year.
Commenting on the financial statements of the Group, the Co-ordinator of Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu, commended FCMB for its resilience. “We appreciate FCMB Group, its subsidiaries, their respective Boards, Management, the Founder and indeed all staff for their resilience and ability to face the present socio-economic and regulatory challenges. The fact that the institution paid a dividend of 10 kobo shows that it has all it takes to overcome the situation. Things may be tough now, but it will not last forever. Given the advise we have given the Board and Management, we are optimistic that FCMB will perform better going forward” he added.
On his part, a shareholder in Sokoto state, Alhaji Kabiru Tambari, expressed appreciation to FCMB for the dividend payment and other strategies put in place to enhance performance. According to him, “we believe that the institution will continue to improve and add more value to shareholders”.
The Morgan Stanley Capital International (MSCI) has said that it will keep Nigeria in its benchmark frontier-market index after saying earlier this month that it might exclude the country because of the government’s capital controls.
MSCI won’t “implement changes” for Nigerian securities in its benchmarks, including the MSCI Frontier Markets 100 Index, in its semi-annual review next month, the New York-based index provider said in a statement weekend.
The country, however, will be placed under a “special treatment,” and some individual stocks that no longer meet MSCI’s criteria may be deleted from indexes.
The MSCI is a market-capitalisation-weighted index designed to provide a broad measure of stock performance throughout the world, with the exception of US-based companies.
MSCI told Bloomberg last month it might remove Nigeria from its benchmarks because inadequate liquidity in the foreign-exchange market is making it difficult for foreign investors to buy and sell securities.
JPMorgan Chase & Co. and Barclays Plc have already dropped Nigeria’s bonds from their local-currency emerging market indexes.
According to a report by Lagos-based CSL Stockbrokers Limited, Nigeria currently makes up 11.8 per cent of the MSCI index, which had market capitalisation of $85 billion at the end of March. This puts the theoretical value of Nigeria’s share at around $10 billion. The CSL report noted that any adjustment that required investors to sell Nigerian equities would have been difficult for index followers to carry out given forex and equity market liquidity issues.
“In other words, MSCI appears to be trying to shield investors from market accessibility issues by not implementing changes,” CSL added.
It pointed out that an exclusion from the index would have forced index-following investors to face accessibility issues head on as they would have to sell Nigerian stocks.
“In reality however, we believe that investors are massively underweight Nigeria and estimates of index-tracking money in the NSE have been put at around U$500 million. Daily equity market turnover in recent weeks has averaged around $7 million.
Once investors are out of the stock market, they would then have to face the even bigger challenge of converting the naira proceeds of these sales to forex. $500 million over 14 weeks would result in investors attempting to remit $35 million per week. Recently, the Central Bank of Nigeria has made around $180 million available to commercial banks on a weekly basis to meet total dollar demand from their clients.
“Based on the $35 million assumption above and assuming the CBN forex sales stay at current levels, foreign investors would theoretically apply for 20 per cent of total forex sales to commercial banks in the event of an exclusion from the MSCI index. We see it is as extremely unlikely that the CBN would be willing to grant foreign investors such a large proportion of overall forex available,” it added.
With all these, it noted that an exclusion from the index would have made life very difficult for index-tracking foreign investors, adding that it was possible that the MSCI wanted to avoid causing these difficulties with its latest decision.
Sterling Bank Plc has posted a profit before tax of N2.8 billion for the first quarter ended March 31, 2016.
The News Agency of Nigeria (NAN) reports that this is contained in the bank’s unaudited result released to the Nigerian Stock Exchange (NSE) on Thursday.
The profit before tax was in contrast with N4.0 billion achieved in the corresponding period in 2015.
The bank’s profit after tax dropped to N2.5 billion compared with N3.9 billion posted in the comparative period of 2015, a decrease of 35 per cent.
The report indicated that net interest margin, which measures the profitability of a bank’s lending operations, rose to eight per cent during the period against 7.4 per cent recorded in the corresponding period in 2015.
Its cost of funds stood at 5.3 per cent compared with 5.9 per cent achieved in the preceding period of 2015 due to cost efficiency strategy introduced.
Also, the bank’s net interest income appreciated by 24.7 per cent to N11.4 billion in 2016 in contrast with N9.2 billion in the same period in 2015.
The bank reported that it was driven by a 14.4 per cent decrease in interest expense resulting in a 940 basis points improvement in net interest margin to 56.9 per cent.
Speaking on the bank’s outlook, Mr Yemi Adeola, the bank’s Managing Director, said that the bank adopted a cautious, but progressive approach to business due to the challenging macro-economic conditions.
Adeola said that subdued crude oil prices, persistent fuel and power supply disruptions and significant foreign exchange shortages increased the cost of doing business and heightening the pressure on household income.
According to him, the resultant monetary tightening measures could further challenge the operating environment.
He also said that the management of the bank prioritised balance sheet efficiency, cost efficiency and prudent credit risk management to ensure that non-performing loan remained flat below the regulatory threshold of five per cent.
“We are confident that our goals for 2016 will be met despite the subdued outlook for the Nigerian economy.
“Our optimism comes from the various investments focused on operating efficiency that the bank had made over the past year, which are now starting to pay off.
“Our plan for the year is to prioritise operating efficiency, ensure moderate loan growth, while continuing to diversify funding sources as our retail banking strategy matures,” Adeola said. (NAN)
Despite the challenging operating environment in 2015, there has been a prediction that African capital markets are expected to see a gradual pickup in growth in 2016, with the markets expected to raise Initial Public Offers, IPOs of $3.1 billion.
The President of African Securities Exchanges Association, ASEA and Chief Executive Officer, Nigerian Stock Exchange, NSE, who disclosed this yesterday in Lagos at a seminar themed “Building African Financial Markets (BAFM) Capacity Building” said “many countries in sub-Saharan Africa are expected to see a gradual pickup in growth in 2016.
According to research by Thomson Reuters, African initial public offers (IPOs) are set to raise over $3.1billion in 2016 doubling the amount raised in 2015, and the highest value raised in any year since 2010.”
He stated that Technology, Consumer Essentials and Industrial sectors are set to be the busiest among the 15 IPOs in the African pipeline.
“Now, what does this mean for us? It means that we must position African capital markets as a viable funding source for the anticipated growth, and liquidity is the key success factor to this goal” he added.
Onyema emphasized that sub-regional integration efforts such as WACMI in West Africa, CoSSE in Southern Africa, and EAC in East Africa are important initiatives that have the potential to unlock demand among issuers and boost liquidity. He stressed that the African Exchanges Linkage Project (AELP) which is a jointly owned mandate between ASEA and the Africa Development Bank (AfDB), is also aimed at addressing the lack of liquidity in African capital markets.
“Thus, these initiatives are encouraged to fast-track the integration of their regional markets like integration. Technology has become a facilitator of liquidity. Historically, the technology focus for exchanges was on execution, however today, the focus has shifted to information services, pre trade, and post trade dimensions. Accordingly, information services, pre-trade and post-trade are where the next waves of innovation for exchanges are expected to emerge. Emerging technology such as block chain and Fintech are gaining traction. Business models such as Uber and Airbnb who have no taxis or rooms but yet create liquidity in them,demonstrate that technology does not create liquidity on its own but instead it brings together market participants, and that leads to liquidity” he noted.
According to him “In the capital markets, technology can be powerful, as it can bring very diverse market participants together as you will see in some of the sessions scheduled later in this programme. Building the African financial market is our collective responsibility.”
The Nigeria Labour Congress (NLC) and the Trade Union Congress of Nigeria (TUC) have jointly proposed and presented N56, 000 as the new minimum wage to the Federal Government.
The current national minimum wage is N18, 000.
The NLC president, Ayuba Wabba, said this at a news conference on Wednesday in Abuja.
Mr. Wabba said both the NLC and the TUC made the formal demand on the proposed national minimum wage to the Federal Government on Tuesday.
“I can say now authoritatively that as of yesterday (Tuesday) we made a formal proposal to the Federal Government of N56, 000 to be the new minimum wage.
“The demand has been submitted officially to government and we hope that the tripartite system to look at the review will actually be put set up to look at it.
“Our argument is that, yes, it is true that the economy is not doing well, but the law stated that wages for workers must be reviewed after every five years.
“So, the issue must be looked into by the Federal Government and workers should not be seen as sleeping on their rights, ”he said.
Mr. Wabba recalled that the last review of the national minimum wage was done in 2011 and that the setting up of a tripartite committee to review the newly proposed national minimum wage was long overdue.
He said it was imperative that the government should set up the tripartite committee for the review of the new minimum wage.
Mr. Wabba said this was the only way the representatives of unions and government would fashion out the negotiation process at a roundtable.
According to him, the logic behind the new minimum wage is to ensure that no worker earns below what can sustain him or her for a period of 30 days.
“You also know that when we negotiated the N18, 000 minimum wage, the value in terms of exchange rate at that time was almost at N110 to the dollar.
“But as at today, the value of the naira to the dollar has been reduced; and there are the issues of inflation and purchasing power, among others to contend with.
“So, it also about the law of the review of the wage, the law envisaged that within a circle of five years, there must be a review,” Mr. Wabba said.
Mr. Wabba called on the government to ensure that the issue of the national minimum wage was urgently taken on board as way of fighting corruption in the country.
He said if employers failed to cater for their workers’ welfare adequately, it would be difficult for such an employer to fight corruption.
The NLC president said workers needed to be empowered financially to have the purchasing power to buy what they would need to survive.
“If manufacturers are producing and nobody is buying, the economy will be at a standstill because people lack the purchasing power to buy.
“So, these are some of the issues we will be pushing forward at the negotiation table and there must be a tripartite committee to look at the challenges, ”he said.
As the name implies, currency swap is an arrangement between two friendly countries to trade in their own local currencies, paying for import and export trade at pre-determined rates of exchange without the use of a third currency like the United States dollar. Since the financial crisis of 2008, central banks around the world have entered into bilateral currency swap agreements with one another. These agreements allow a central bank in one country to exchange currency, usually its domestic currency, for a certain amount of foreign currency. The recipient central bank can then lend this foreign currency to its domestic banks.
China, for instance, has signed swap deals with nearly 30 countries since 2008 with the biggest being the 400 billion yuan currency swap with Hong Kong in November 2014. According to a publication by the People’s Bank of China, these swap agreements were intended not only to “stabilise the international financial market,” but also to “facilitate bilateral trade and investment.” Noticeably, the swap agreements are denominated in renminbi (also known as the yuan) and the local currencies of the counterpart countries without involving the US dollar. The swaps typically last for three years after which they are renewed.
For example, South Korea, one of China’s largest trading partners, signed a swap agreement with China in December 2008 and has renewed and expanded the swap amount many times. In June 2015, the People’s Bank of China and Bank Negara Malaysia signed an agreement to renew their currency swap arrangement for a further term of three years with the size maintained at 180 billion yuan/90 billion ringgit. The original arrangement was established in 2009 and first renewed in 2012. Africa has now joined the bandwagon. In April 2015, the South African Reserve Bank announced it had signed a three-year bilateral swap agreement with the People’s Bank of China for the exchange of local currencies of up to R57 billion.
Regarding the reported currency swap deal established between the Industrial and Commercial Bank of China Limited and the Central Bank of Nigeria, on the sidelines of President Muhammadu Buhari’s recent visit to China, one can only undertake a cursory analysis since the deal was short on details. Critical aspects of a swap line such as size, duration, effective date and cost were not made public. The CBN is, therefore, urged to communicate the details of the deal especially given the fact that the agreement was signed with the ICBC and not the Chinese PBoC. These details should be uploaded on the CBN’s website as soon as the deal is consummated to enable a thorough analysis of its costs and benefits to Nigeria.
With Chinese exports accounting for about 80 per cent of the total bilateral trade volumes, it has been argued in some quarters that Nigeria does not stand to reap any commensurate benefit from the deal given the large trade imbalance in favour of China. The “flooding” of Nigerian markets with cheap Chinese goods has adversely affected domestic industries, especially in textiles. The currency deal, the argument further goes, would only reinforce Nigeria’s position as a dumping ground for goods from China and rubbish the import-substitution efforts of the Federal Government. The antagonists of the deal also contend that it is rather hasty to accumulate a substantial proportion of the country’s foreign reserves in Chinese currency in view of the volatility associated with the yuan and the fact that it is not yet an international reserve currency.
Nonetheless, it is pertinent to observe that asymmetric trade in favour of China can be tackled within the framework of the agreement. This much was not lost on President Buhari when he urged the business community in China not to “see Nigeria as a consumer market alone, but as an investment destination where goods can be manufactured and consumed locally.” Worthy of note also is the fact that the yuan is on its way to becoming an international reserve currency.
In November 2015, the Managing Director of the International Monetary Fund, Christine Lagarde, had announced that China’s renminbi would become a world reserve currency alongside the dollar, euro, pound and yen with effect from September 2016. This would pave the way for broader use of the renminbi in trade and finance, securing China’s standing as a global economic power. The Chinese currency is already one of the top-10 most traded international currencies, according to a recent report by the Bank for International Settlements.
It is safe to conclude that the swap arrangement is being established in the context of the rapidly growing bilateral trade between China and Nigeria. According to a recent CBN report, “business and trade relations between Nigeria and China have grown astronomically in the last decade with bilateral trade volumes rising from $2.8 billion in 2005 to $14.9 billion in 2015. Nigeria accounted for 8.3 per cent of the total trade volume between China and Africa and 42 per cent of the total trade volume between China and the Economic Community of West African States countries in 2015.”
The Minister of Finance, Kemi Adeosun, had disclosed the plan by Nigeria to issue panda bonds (denominated in yuan) as part of strategies to finance the 2016 budget deficit. Other factors being equal, the currency swap deal is also expected to strengthen the naira since Nigerian traders, who import mainly from China, can now conclude their transactions in the yuan instead of the dollar. And from China’s point of view, the currency swap will increase the demand for the yuan as it marches towards establishing its currency as a reserve currency in the future.
Without doubt, a currency swap deal with China, as the experiences of other countries have proved, is a win-win. It is not for nothing that many developed and developing countries are queuing up to sign currency swap agreements with China – the second biggest economy in the world. The fact that countries that utilised the three-year swap line offered by China opted for renewal is eloquent testimony of its palliative effect on ailing economies. It is, therefore, in the interest of Nigeria to join this growing club of countries seeking to “de-dollarise” and diversify risk in foreign exchange management