Nigeria’s external reserves increased by 11 per cent from the $38.912 billion it was as of January 2, 2018, to $43.195 billion as of December 28, 2018. This represented an increase of $4.3 billion within the period. The reserves had dropped to about $41 billion in November last year.
Save for a total of $5.36 billion Eurobond issued by the federal government last year, which bolstered the country’s reserves position, it would have depreciated significantly considering the combined effects of interest rate normalisation in some advanced economies which have resulted to increased capital outflows as well as the slump in crude oil price.
After successfully raising $2.5 billion from the Eurobond market last February, the federal government in November last year raised $2.86 billion to fund its 2018 budget deficit.
At $54 a barrel, international benchmark Brent crude was down at about 20 per cent in 2018.
The decline was the first annual loss and the biggest yearly drop since 2015 when both contracts fell more than 30 per cent.
Crude oil prices look likely to trade below $70 per barrel in 2019 as surplus production, much of it from the United States, and slowing economic growth to undermine OPEC-led efforts to shore up the market, a Reuters poll had shown.
CBN Governor, Mr. Godwin Emefiele, recently pointed out that due to the ongoing interest rate normalisation in the United States, which has been predicted to extend to some other advanced economies in Europe, the central bank would focus on maintaining a stable exchange rate so that businesses can plan and to avoid a problem in the banking system assets.
“The choice for Nigeria is to maintain a stable exchange rate so that businesses can plan and we don’t create a problem in the banking system assets,” he had explained.
According to him, practically, all emerging markets have suffered, not just by depreciation, but also a loss of reserves since the interest rates normalisation commenced.
CBN says foreign investment is on the rise
Total capital flows to Nigeria between January and May 2019, stood at $14.2 billion, the Central Bank of Nigeria (CBN) revealed last night. Of the aforementioned amount, Foreign Direct Investment (FDI) accounted for $2.87 billion, representing 20.18 percent of the total amount.
The CBN revealed this in a statement that was signed by its Director, Corporate Communications, Mr. Isaac Okorafor while reacting to a Reuters report which stated that FDI in the country dropped last year.
The apex bank said its attention was drawn to the news item on Reuters quoting the World Investment Report, 2019, recently released by UNCTAD on Foreign Direct Investment (FDI) to African countries.
“The attention of the Central Bank of Nigeria (CBN) has been drawn to the news item on Reuters quoting World Investment Report, 2019, recently released by UNCTAD on FDIs to African countries,” the statement said.
The UNCTAD report had alleged a decrease of over 40 percent in FDI inflows to Nigeria in 2018.
The CBN statement added: “While the CBN is not privy to the methodology used in arriving at the figures, we wish to state that available records show a significant increase in FDI in Nigeria during the period 2018, contrary to the Reuters’ report.
“For instance, in 2018, the total capital inflows to the country stood at $19.07 billion out of which FDI accounted for $7.78 billion.
“Furthermore, total capital flows to Nigeria, from January to May 2019 stood at $14.2 billion of which FDI accounted for $2.87 billion, representing 20.18 percent of the total amount.
“The country continues to enjoy steady capital flows due to the prevailing stable macroeconomic environment and sustained investors’ confidence in the economy.
“Against this background, we wish to urge the public to take advantage of several publications by the CBN and the National Bureau of Statistics (NBS), which give adequate and accurate statistics on the subject matter,” the statement added.
Inflation rate rises to 11.40%
The inflation rate rose to 11.40 percent (year-on-year) in May 2019 according to the National Bureau of Statistics (NBS) report.
According to the report, this is 0.03 percent points higher than the rate recorded in April 2019 (11.37 percent). Increases were recorded in all 12 Classification of Individual Consumption by Purpose (COICOP) divisions, that yielded the Headline index. On a month-on-month basis, the Headline index increased by 1.11 percent in May. This is a 0.17 percent rate higher than the rate recorded in April 2019 (0.94 percent).
“The percentage change in the average composite CPI for the 12 months period ending May 2019, over the average of the CPI for the previous 12 months period was 11.30 percent, 0.01 percent points from 11.31 percent recorded in April 2019. The urban inflation rate increased by 11.76 percent (year-on-year) in May 2019 from 11.70 percent recorded in April 2019, while the rural inflation rate increased by 11.07 percent in May from 11.08 percent in April. On a month-on-month basis, the urban index rose by 1.15 percent in May, up by 0.15 points from 1.00 percent recorded in April 2019, while the rural index also rose by 1.07 percent in May 2019, up by 0.17 from the rate recorded in April 2019 (0.90 percent).
“The corresponding 12-month year-on-year average percentage change for the urban index was 11.66 percent in May. This is less than the 11.69 percent reported in April, while the corresponding rural inflation rate in May is 10.99 percent compared to 11.00 percent recorded in April.
431 Nigerian companies indebted to AMCON
Sixty-Two debtors are owing to the Asset Management Corporation of Nigeria (AMCON) N10 billion and above each, the agency has said.
The corporation was established on July 19, 2010, when AMCON Act was signed into law by former President Goodluck Jonathan, with a mandate to acquire bad loans from banks, pay the banks and recover the loans from the debtors.
But eight years into its operation, the corporation is being owed N10 billion and above by each of the 62 high-profile debtors. The debt represents 40 percent of the 12,537 obligors.
AMCON said that 431 debtors, representing 37 percent of the debtors, owe between N1 billion and N10 billion; 1,998 debtors, constituting 16 percent of the total obligors, owe between N100 million and N1 billion while 10,046 debtors, representing seven percent of the total obligors owe between N100 million and below bringing the total number of bad loans under AMCON management to 12,537.
AMCON was created to be a key stabilizing and re-vitalizing tool aimed at reviving the financial system by efficiently resolving the non-performing loan assets of the banks in the economy.
The corporation has in the last eight years of operation, bought Non-Performing Loans (NPLs) worth N5.4 trillion from banks.
There is N3.8 trillion AMCON Bond held sorely by the Central Bank of Nigeria (CBN) and this is expected to mature by 2023.
AMCON’s Managing Director Ahmed Kuru announced that the corporation has so far recovered N1 trillion from the bad debtors, and the agency was doing everything within the ambit of the law to recover the remaining debts.
But recovering the remaining debts from billionaire debtors, who are taking strategic steps to ensure they do not payback will remain an uphill task, and perhaps impossible.
Financial pundits insist that since it took AMCON eight years to recover N1 trillion out of the N5.4 trillion bad debts, it is doubtful if it could recover the substantial amount by 2023, which is its sunset timeline. The N1 trillion recovery represents a meager 18.51 percent of the total debt portfolio.
Speaking on AMCON operations and results achieved so far, a Board Member at Standard Bank Group, South Africa, Atedo Peterside, said that one-third of the money that the Federal Government squandered on AMCON can resolve most of Nigeria’s social and economic problems including fixing the power sector.
Peterside who did not elaborate further on AMCON’s operation, spoke during ‘A Consultative Roundtable with The Central Bank of Nigeria Governor’ tagged: ‘Going for Growth’ held in Lagos.
Nigeria lost N44.6bn as a result of the drop in oil revenue
Nigeria lost N44.6bn as a result of the drop in oil revenue occasioned by the shut-ins and shutdowns of some terminals by the Nigerian National Petroleum Corporation in April 2019, latest data obtained from the Central Bank of Nigeria revealed.
The CBN said the country’s oil earnings fell from the N516.88bn recorded in March to N472.28bn in April, adding that this also affected the gross federally-collected revenue for the month.
Although oil receipts accounted for 59.4 per cent of total revenue which the country made in April this year, data from the bank showed that earnings from oil dropped by 8.6 per cent when compared to the previous month’s receipts.
Also, earnings from the sector were 26.2 per cent lower than the provisional monthly budget estimate, as the apex bank explained that the shutdown and shut-ins of terminals were due to leakages, technical issues and maintenance.
The bank stated, “Oil receipts, at N472.38bn or 59.4 per cent of total revenue, was below both the provisional monthly budget estimate and the preceding month’s receipt of N516.88bn by 26.2 per cent and 8.6 per cent, respectively.
“The fall in oil revenue relative to the provisional monthly budget estimate was attributed to the shut-ins and shut-downs at some NNPC terminals due to technical issues, leakages and maintenance.”
Similarly, the CBN noted that at N322.93bn or 40.6 per cent of total revenue, non-oil revenue was below the provisional monthly budget estimate of N466.91bn by 30.8 per cent, but exceeded the preceding month’s receipt of N251.01bn by 28.7 per cent.
It said the lower collection relative to the provisional monthly budget estimate was due to the shortfalls in corporate tax, value added tax, Federal Government independent revenue and education tax.
On operations of the Federation Account, the bank stated that at N795.31bn, the estimated federally-collected revenue (gross) in April 2019 fell below the provisional monthly budget estimates of N1.11tn by 28.2 per cent.
“However, it exceeded the receipt of N767.90bn in the preceding month by 3.6 per cent. The decrease, relative to the provisional monthly budget estimate, was attributed to a shortfall in both oil and non-oil revenue,” it added.
It further stated that of the total N616.21bn retained revenue in the Federation Account, the sums of N88.49bn, N67.82bn and N24.72bn were transferred to the VAT Pool Account, the Federal Government Independent revenue and ‘others’, respectively, leaving a balance of N435.18bn for distribution to the three tiers of government.
Of this amount, the Federal Government received N208.39bn, while the state and local governments got N105.70bn and N81.49bn, respectively.
The balance of N39.59bn was shared among the oil producing states as 13 per cent Derivation Fund.
Similarly, from the N88.49bn transferred to the VAT Pool Account, the Federal Government received N13.27bn, while the state and local governments received N44.25bn and N30.97bn, respectively.
“Also, the sum of N78.09bn was shared as excess oil revenue,” the CBN stated.
It explained that the federal, state and local governments received N35.79bn, N18.15bn and N13.99bn, respectively, while the 13 per cent Derivation Fund received N10.15bn