Nigeria approves plan to borrow more from abroad as recession hits – Reuters

ABUJA Aug 31 (Reuters) – Nigeria’s government has approved a three-year plan to borrow more from abroad, Finance Minister Kemi Adeosun said on Wednesday after the economy slipped into recession for the first time in more than 20 years.

The government has so far disbursed more than 400 billion naira in capital expenditure this year, part of a record 6.06 trillion naira ($30 billion) budget for 2016, Adeosun said last week

But with lower oil prices and attacks on oil facilities, it has struggled to fund its budget, aimed at averting the recession.

Data on Wednesday showed Nigeria had slipped into recession and the naira was quoted at a new record low of 420 per dollar on the black market as chronic hard currency shortages continued to hurt businesses. The news sent its dollar bonds down to more than two-week lows.

Adeosun said the drop in oil prices had accelerated the recession and that Nigeria had to tackle structural problems that had stoked inflation. She said interest rate hikes were not the answer.

“If we rely on oil and the price of oil remains low and the quantity of oil remains low, we can’t grow. We have to grow our non-oil economy,” she said told reporters in Abuja after a cabinet meeting.

Adeosun said the government would look for soft loans in addition to tapping the commercial Eurobond market and that the West African country was negotiating with institutions including the World Bank, China Eximbank, the Development Bank of Japan and the African Development Bank.

Nigeria has said it wants to switch its debt mix so that 40 percent of loans would come from abroad, compared with 16 percent now, and extend its debt maturity profile.

It plans to borrow as much as $10 billion from debt markets, with about half of that coming from foreign sources and is seeking advisers to manage a $1-billion Eurobond it intends to offer this year.

Adeosun said monies from the Eurobond would be spent on power transmission projects, solid mineral development and agriculture.

She said the World Bank was providing $150 million for polio immunization.

The medium-term borrowing plan, which covers 2016-2019, will now be sent to parliament for approval.

 

Nigeria central bank ends banks’ suspension from FX market – Reuters

ABUJA Aug 31 (Reuters) – Nigeria’s central bank ended the suspension of eight lenders banned from the interbank currency market for failing to remit money owed to the government, it said on Wednesday.

The central bank tightened restrictions on the flow of dollars to domestic lenders in March. That forced the banks to delay hard-currency loan and trade repayments and increased their risk of default.

Nine banks last week failed to remit at least $2.1 billion in deposits from two state-owned energy companies into a government account, leading to their suspensions.

The central bank lifted the suspension on one of the nine, United Bank for Africa, last Thursday.

Tokunbo Martins, the central bank’s director of banking supervision, said the other eight had all submitted a “credible repayment plan” to remit the outstanding money.

“As a result of that, all those banks have been reinstated in to the foreign exchange market,” she said.

President Muhammadu Buhari last year ordered all state accounts to be merged into a single one at the central bank to reduce corruption.

 

Nigeria in recession as low oil prices shrink economy – Reuters

“The Nigerian economy contracted more deeply than we had expected in the second quarter,” said Razia Khan, chief economist, Africa at Standard Chartered bank.

“With a wider current account deficit it remains important for Nigeria to maintain a credible policy response, in order to attract much-needed stabilising inflows,” she added.

The NBS figures showed Nigeria attracted just $647.1 million of capital in the second quarter, a 76 percent fall year-on-year and 9 percent down from the first quarter.

Nigeria’s economy was last in recession, for less than a year, in 1991, NBS data shows. It also experienced a prolonged recession from 1982 until 1984.

President Muhammadu Buhari was in power for some of that period as a military ruler after seizing power in a December 1983 coup and remained head of state until the military pushed him out in August 1985.

The office of the vice president, who oversees economic policy, said in a statement it expected a “better economic outlook” for the second half of 2016 “because many of the challenges faced in the first half either no longer exist or have eased”.

Niger Delta Avengers, the group claiming responsibility for most of the attacks in the oil-producing region in the last few months, said on Monday it had ceased hostilities.

Adeyemi Dipeolu, a presidential economic advisor, attributed the recession largely to a “sharp contraction in the oil sector” caused by the militant attacks.

“The rest of the second quarter data is beginning to tell a different story. There was growth in the agricultural and solid minerals sectors,” he added.

The naira remained at the record low of 418 per dollar hit on Tuesday on the black market, as dollar shortages curb activity on the official interbank market where the currency was offered as rates as weak as 365.25 this month before gaining ground after central bank interventions.

Nigeria’s naira hits new record low of 420 per dollar on black market – Reuters

LAGOS Aug 31 (Reuters) – Nigeria’s central bank sold dollar to some commercial lenders on Wednesday to support the local currency, which hit a fresh all-time low of 420 to the dollar on the unofficial market, the same day Africa’s biggest economy officially slid into recession.

The currency traded at 418 to the dollar on Tuesday and has been under pressure on the black market for months.

The naira closed at 306 to the dollar on the official window after the central bank dollar sales, reversing losses in early traded which saw it quoted at 317.09 to the dollar, but fell compared with the 305.50 naira closed the previous day.

But bureaux de change operators raised hope of a gradual appreciation of the local currency in the near term as the central bank licensed 11 new international money transfer operators to address the dollar supply side.

“Depending on the effective implementation of the central bank’s policy, the appointment of new international money transfer operators will ensure that banks will have more dollar to sell to bureaux de change and provide the needed liquidity in the market,” Aminu Gwadabe president of bureaux de change association said.

Gwadabe said the central bank’s directive that commercial lenders should sell dollar inflow through money transfer operators to bureaux de change has boosted daily dollar supply to the currencies agencies to around $10-$20 million and this could further boost supply and help support the naira.

The Nigerian Bureau of Statistics (NBS) said on Wednesday that gross domestic product (GDP) contracted by 2.06 percent after shrinking 0.36 in the first quarter.

 

Nigeria July Inflation Accelerates to Highest in Almost 11 Years – Bloomberg

Nigerian inflation accelerated for the ninth consecutive month in July, adding to pressure on the central bank to continue raising interest rates even as the economy deteriorates.

The inflation rate in West Africa’s largest economy increased to 17.1 percent from 16.5 percent in June, the Abuja-based National Bureau of Statistics said in an e-mailed statement on Wednesday. That’s the highest rate since October 2005, according to data on the Central Bank of Nigeria’s website. The median of 16 economist estimates compiled by Bloomberg was 17.3 percent. Prices rose 1.3 percent in the month.

The central bank maintained restrictions that block importers of selected items from steel products to rice from accessing the foreign currency inter-bank market even after removing a naira peg on June 20. Fuel shortages also pushed up consumer prices, adding to inflation pressure caused by the more than one-third loss in the value of the naira since it was allowed to float.

“Inflation will continue to accelerate, reaching about 20 percent later this year,” John Ashbourne, a London-based economist at Capital Economic Ltd., said before the data was released. “One of the big factors right now is the devaluation of the naira.”

Food inflation accelerated to 15.8 percent from 15.3 percent. The cost of gasoline declined to 148 naira from 149 naira in June, the statistics agency said in a separate statement.

The central bank raised its benchmark interest rate by 200 basis points to 14 percent last month to fight inflation and prop up the currency by luring foreign investors. Governor Godwin Emefiele will announce the bank’s next policy move on Sept. 20. The economy will probably contract 1.8 percent this year, according to the International Monetary Fund.

With inflation accelerating “we expect at least another 100 basis points hike this year,” Raza Agha, an economist in London at VTB Capital, said by e-mail before the data was released.

FG receives N18.99 billion NNPC’s refund – Today

The Federal Government received N18.99 billion from the Nigerian National Petroleum Corporation (NNPC) during the second quarter of 2016, being installmental refund of the corporation’s indebtedness to the government.

The Central Bank of Nigeria (CBN), which made this disclosure in its second quarter report, added that the sum of N7.86 billion was equally distributed as exchange gain among the three tiers of government as 13 per cent Derivation Fund.

A breakdown of the allocation showed that Federal Government received N3.68 billion; State Governments, N1.87 billion; Local Governments, N1.44 billion; and 13 per cent Derivation Fund (N0.88 billion).

CBN disclosed that Nigeria’s crude oil production, including condensates and natural gas liquids, was estimated at an average of 1.54 million barrels per day (mbd) or 141.68 million barrels (mb) for the second quarter of 2016.

This, it said, represented a decline of 0.37 mbd or 15.4 per cent, relative to 1.82 mbd or 165.62 million barrels produced in the first quarter of 2016.

It stated that crude oil export stood at 1.09 mbd or 100.28 mb representing a decline of 20.4 per cent, compared with 1.37 mbd or 124.67 mb, recorded in the preceding quarter.

It stated: “Supply disruptions owing to continued attacks on oil installations by vandals accounted for the decline in crude oil production. Deliveries to the refineries for domestic consumption remained at 0.45 mbd or 41.40 million barrels during the review quarter.

Read more at https://www.today.ng/business/175111/receives-n18-99-billion-nnpcs-refund

$595m flows into Nigeria’s foreign reserves in 72 hours – The Cable

The Central Bank of Nigeria (CBN) has recorded an inflow of $595 million into the country’s foreign exchange reserves in just 72 hours.

According to CBN data, a total amount of $594,862,612 flowed into the foreign reserves between August 24 to August 29 – three trading days.

The reserves moved from an 11-year low of $25,600,746,725 on Wednesday to a monthly-high of $26,195,609,337 on Monday.

Nigeria has been battling low oil prices, which had seen its foreign exchange receipt fall from about $4 billion a month to less than $500 million per month.

The CBN had employed various method to rev-up the reserves, including a 16-month peg on the naira exchange rate, with a majority of it amounting to a further depletion of the reserves in defence of the naira.

The gross external reserves at the end of the second quarter of 2016 stood at $26.51 billion, showing a decline of 3percent and 6.5 percent, compared with the levels in the preceding quarter and the corresponding period of 2015, respectively.

However, the lastest combination of policies by the CBN seem to be yielding some results, with the inflow of forex and the registration of 11 new International Money Transfer Operators (IMTOs).

The CBN says it remains committed to implementing an holistic suite of policies, capable of maintaining financial stability in the Nigerian economic system.

Iraq joins Nigeria, Saudi Arabia, others to freeze crude production – Today

Succour may be closer to Nigeria front step in its quest to reap good fortunes from the oil industry, as Iraq, yesterday agreed to join Nigeria, Saudi Arabia and others to freeze crude production, which inturn would likely increase crude price at the International market.

This is coming after the Minister of States, Petroleum, Ibe Kachikwu, had expressed doubt over possible agreement from Iraq to cut production in the expected Organisation of Petroleum Exporting Countries, OPEC’s meeting slated for next month.

It will be recalled that dead end met plans to freeze output at its last OPEC meeting with Russia, as Saudi Arabia refused to concede freeze without Iran coming on board.

For Nigeria, this may impact positively on its fortunes amidst the downturn of its economy, following incessant attacks on facilities which has dropped production drastically to a lower level.

The result of this impact also affected the sponsoring of the country’s budget and other pending projects currently suffering setback due to lack of funds.

However, militant groups said they have ended attacks on the nation’s oil and gas industry that have reduced the OPEC member’s output by 700,000 barrels a day to 1.56 million bpd.

It was, however, gathered that the Prime Minister of Iraq, Haider al-Abadi, said that it will support OPEC’s decision tofreeze oil production in order to prop up the downturn of crude price at the international.

According to him, “We would freeze production at the OPEC meeting, provided Iraq will support the group’s agreement.”

Read more at https://www.today.ng/business/174975/iraq-joins-nigeria-saudi-arabia-freeze-crude-production

Nigeria slides into recession as economy contracts by 2.06 pct in Q2 – Reuters

Nigeria’s gross domestic product (GDP) contracted by 2.06 percent in the second quarter, the statistics office said on Wednesday, sending Africa’s biggest economy into a recession after a decline in the first quarter.

The Nigerian Bureau of Statistics (NBS) said the non-oil sector declined due to a weaker currency while lower oil prices dragged the oil sector down. Output shrank by 0.36 in the first quarter.

Nigeria is in the midst of an economic crisis triggered by a slump in crude prices, its mainstay, which has hammered public finances and the naira and caused chronic dollar shortages. Crude sales accounts for around 70 percent of government revenues.

The West African nation was last in a recession, for less than a year, in 1991, and experienced a prolonged one that started in 1982 and last until 1984, NBS data showed.

On Wednesday, the statistics office also said annual inflation rose to 17.1 percent in July from 16.5 percent in June, and food inflation rose to 15.8 percent from 15.3.

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Dollar to Naira Rate Black Market August 31 2016

Dollar to Naira Rate Black Market August 31 2016. Today’s Naira Black Market Exchange Rates. Dollar to Naira. Pounds to Naira. Euros to Naira.

These are the prevalent rates for Lagos. Actual rates may vary slightly based on vendor. Rates are updated during the day as they change.

NAIRA (N)

USD ($)

EURO (€)

GBP (£)

BUY/SELL

BUY/SELL

BUY/SELL

31/8/2016

410/420

450/465

520/535

30/8/2016

410/417

450/460

515/530

29/8/2016

405/413

450/460

515/530

26/8/2016

402/412

440/455

515/530

25/8/2016

401/406

440/450

510/525

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Check out trending news stories that could affect today’s black market rates at fxmallam.com/news/.