Author Archives: Mr. Toyin Olaogun

FDI in manufacturing rises by $644m, says NBS

Foreign investments in Nigeria’s manufacturing industry went up by $644m in 2023 to $1.5bn from $948m in the prior year, according to data from the National Bureau of Statistics.

The NBS in its capital importation report stated that manufacturing ranked first as the sector with the most investments.

The banking and finance sectors (treated separately) came a distant second and third as the sectors that made up the top three investment magnates.

Investments in manufacturing in 2023 ($1.5bn) constituted 39 per cent of the total capital importation during the year ($3.8bn)

Foreign investments to Nigeria shrank by $1.5bn to $3.8bn against $5.4bn recorded in 2022.

By type, other investments attracted $ 2.37bn to the total capital importation, followed by portfolio investment at $1.1bn and foreign direct investment bought in $377.3m.

Lagos State was the top destination in 2023 with $2.5bn, followed by Abuja with $1.1bn. Abia and Rivers States recorded $150m and $6m, respectively.

Other states that attracted investments in 2023 were Ogun, Ekiti, Abia, Akwa Ibom, Anambra and Adamawa.

In recent years, foreign investments in Nigeria have been on a consistent decline.

According to NBS, foreign investment inflow into Africa’s largest economy declined by $18.6bn in four years (2019-2022).

During the four years, eight states failed to attract any form of foreign investment.

The affected states were Taraba, Yobe, Zamfara, Bayelsa, Ebonyi, Gombe, Jigawa and Kebbi.

According to the data, Nigeria attracted $23.9bn as foreign investments in 2019.

By 2020, the figure declined to $9.6bn, dipping further to $6.7bn the following year, before decreasing to $5.3bn in 2022. This implies a $18.6bn decline over the four-year.

In total, the most populous Black Country in the world raked in about $46bn in the four years.

Lagos State led with the highest foreign investments ($35.4bn), while Federal Capital Territory followed with $10bn foreign inflow.

CBN sells another N1.58 trillion in Treasury Bills, interest rate at 19% for 364-day bill

The money laundered through cryptocurrency exchanges declined by 29 per cent in 2023, according to a Chainalysis report.

The report, obtained on Thursday, revealed that those illicit funds dropped by approximately $9.3bn, declining from $31.5bn in 2022 to $22.2bn in 2023.

The blockchain research platform noted that the drop could be attributed to an overall decrease in crypto transaction volume, both legitimate and illicit.

Chainalysis noted that centralised exchanges had been the primary destination for funds sent from illicit addresses, at a rate that has remained relatively stable over the last five years.

“Over time, the role of illicit services has shrunk, while the share of illicit funds going to DeFi protocols has grown.

“We attribute this primarily to the overall growth of DeFi generally during the period, but must also note that DeFi’s inherent transparency generally makes it a poor choice for obfuscating the movement of funds,” it said.

The firm indicated that the 2023 trend closely resembled 2022 regarding the breakdown of service types used for money laundering.

However, it added that there was a slight decrease in the share of illicit funds directed to illicit service types, accompanied by an increase in funds moving towards gambling services and bridge protocols.

“If we zoom in to look at how specific types of crypto criminals laundered money, we can see that there was a significant change in some areas. Most notably, we saw a huge increase in the volume of funds sent to cross-chain bridges from addresses associated with stolen funds.

“We also observed a substantial increase in funds sent from ransomware to gambling platforms, and in funds sent to bridges from ransomware wallets,” it added.

Further, Chainalysis said 109 exchange deposit addresses received over $10m worth of illicit cryptocurrency each, and collectively, they received $3.4bn in illicit cryptocurrency in 2023.

“While that still represents significant concentration, in 2022, only 40 addresses received over $10m in illicit crypto, for a collective total of just under $2.0bn.

Equity investors lose N67bn over sell-offs

Equity investors lost N67bn on Thursday, as the Nigerian Exchange returned to the red zone.

Sell-offs in banking, insurance, and consumer goods sectors dragged the All-Share Index to a 0.12 per cent decline, closing at 101,239.10 points, while the market capitalisation, which dipped at the same rate, settled at N55.40tn.

The exchange’s year-to-date returns moderated to 35.39 per cent.

The local bourse managed to return to the green zone on Wednesday with a gain of N165bn, following two days of bearish trading.

Amid the prevailing downturn in the market, trading activities also stayed downbeat, with traded volume decreasing by 16.43 per cent to 252.9 million units.

Total traded value also dropped by 24.54 per cent to N4.94bn, accompanied by a 15.83 per cent dip in the total deals, totalling 7,248 trades.

Market breadth, which is the measure of investors’ sentiment, was negative, as reflected in 22 gainers and 28 losers.

The gainers were led by Sunu Assurances Plc, Omatek and Juli.

Leading the decliners were Daar Communications, which lost 10 per cent to close at N0.72; Wema Bank shed 9.93 per cent to close at N7.80 and PZ Cussons lost 9.89 per cent to close at N24.60 per share.

Across sectors, bearish sentiments were widespread, notably in the banking, insurance and consumer goods sectors, which declined by 0.44 per cent, 0.22 per cent and 0.08 per cent respectively, driven by sell-sentiments in Wema Bank, Stanbic IBTC, Royal Exchange and PZ Cussons.

The industrial goods sector was the only gaining sector with a 0.04 per cent improvement, on the back of buy interests in Lafarge Africa, while the oil & gas index traded flat.

FBN Holdings emerged as the most traded security by volume and value, with 31.86 million units traded worth N917.27m in 381 trades. 

Exchange rate for cargo clearance jumps to N1605.8/$1

The Association of Bureau De’Change Operators of Nigeria has concluded plans to automate its trading operations to eliminate the activities of market speculators and street traders.

This was as the association backed the recent clampdown by the government on persons selling and buying foreign currencies on the streets.

Since the year started, Nigeria’s local currency has depreciated severely, sliding down to N1,900 on Wednesday owing to low liquidity and surging demand for the US dollar.

The ABCON President, Aminu Gwadabe, speaking in an interview with our correspondent on Wednesday, said the association has developed an automation platform, which, if okayed by the Central Bank of Nigeria, would help revolutionise the retail FX market.

He noted that the automation process will be launched in three weeks pending a “no objection” approval from the CBN.

Gwadabe said, “We have now put a lot of recommendations on how we can at least utilise technology, innovation, and automation in our operations.

“In three weeks, we will automate the system. We already have the automation system in place just for the CBN to give us the approval for “No Objection” that is all we asking.

“We can entirely automate the industry of any retail trader, we will automate them in three weeks, we already built the automation platform it is there for them. We have sent it to them, and we are only waiting for ‘no objection’ approval. This innovation will also eliminate street trading.”

Gwadabe further advised that the ongoing raids and arrests of traders should not be misconstrued, revealing that FX street traders ambush customers of licensed operators, thereby causing a lull in their operations.

He added, “What is happening is not targeted at licenced Bureau De’Change but the operators of FX street trading.

“For us, we are against street trading and support any action that will remove FX street traders. Their activities affect me also. I have an office but my clients cannot come to my office because of the menace of street traders.”

On the volatility in the FX market, Gwadabe explained that various factors, including the imbalance between supply and demand and liquidity, were responsible.

He urged members of the association to strictly adhere to all FX regulations and conduct their operations within their offices.

On Wednesday, the naira depreciated further to N1,900 against the dollar in the parallel market.

According to currency operators, the naira exchange declined by 9.83 per cent from the N1,730 recorded at the beginning of the week and N170 or 9.82 per cent from the trading rate on Tuesday.

This is even as Bureau de Change operators battle for liquidity to meet the surging demands for the greenback.

On Wednesday, BDC operators quoted the buying rate at N1,850 and the selling rate at N1,900, leaving a profit margin of N50.

Banks sell $172m as CBN, EFCC battle currency speculators

The naira gained marginally against the United States dollar at the Nigerian Autonomous Foreign Exchange Market on Tuesday, closing at N1,542.58/$ from N1,551/$ recorded on Tuesday.

The rate represents a 2.9 per cent appreciation from the N1,598.54 traded on Monday and a meagre 0.58 per cent against Tuesday’s rate.

According to data from the FMDQ Securities Exchange-a platform that oversees FX trading in Nigeria-the local currency hit an all time intra-day high of N1,755 and an intra-day low of N1,050.

Also, the foreign exchange turnover increased to $172.14m from the $66.43m and $117.32m recorded on Monday and Tuesday, respectively.

Banks sale of approximately $172m on Wednesday represents about 47 per cent increase from the $117m sold on Tuesday. While the sale of forex on the FMDQ is dominated by banks, the Central Bank of Nigeria and multinationals especially oil firms also participate in the sale and purchase of forex on the platform.

However, the Wednesday’s 1,542.58/dollar closing rate of the national currency at NAFEM further widened the gap between the official and paralleled market rates.

On Wednesday, the naira depreciated further to 1,900 against the dollar at the parallel market, bringing the gap between the official and black market rate to over N300 and fuelling concerns over round-tripping.

Analysts and Bureau De Change Operators predicted on Wednesday the local currency might reach all-time low of 2,000/dollar at the parallel market before the end of next week.

A BDC operator in Wuse, Abuja, identified as Abubakar Yahu, said the demand for the greenback was fuelling volatility.

He said, “Today’s rate was at N1,900. We bought at N1,900/dollar and sold  around N1,850 and N1,870. Some people say the rate may hit N2,000 by next week or before then.”

Also, A BDC operator in Allen Avenue, Ikeja, Lagos, Mr Lawan Lawal, said the local currency was bought and sold at N1880/dollar and N1,860, respectively.

Another BDC operator at the Lagos airport, Mustafa Zakari, said the naira-dollar exchange rate had experienced high volatility at the parallel market in the past few weeks due to the activities of currency speculators.

On Wednesday, The PUNCH learnt that operatives of the Economic and Financial Crimes Commission stormed the Wuse Zone 4 market in search of currency speculators.

The development was part of ongoing efforts by the EFCC and the CBN to restore exchange rate stability and boost forex liquidity.

It was learnt the CBN and the EFCC, supported by the Office of the National Security Adviser were determined to deal with currency speculators whose activities had led to widening gap between the official and parallel market rates of the naira against the US dollar.

The Office of the NSA had in a statement on Tuesday said it was working with the central bank to tackle illicit financial activities.

The partnership, according to ONSA, will involve a coordinated effort with key law enforcement agencies, including the Nigeria Police force, EFCC, Nigeria Customs Service and the Nigeria Financial Intelligence Unit.

However, it appears the efforts have yet to yield the expected results, as the naira continues to fluctuate at both forex markets.

Last week, the apex bank released another set of guidelines that stopped banks from paying Personal Travel Allowance to their customers in dollars. it also asked International Oil Companies not to repatriate all their revenue to their parent companies at once. The apex bank, in another circular, reviewed its guidelines to stop under-invoicing of exports and over-invoicing of imports.

Despite the central bank’s efforts to boost forex supply through various policy interventions, challenges have persisted in the forex market.

Meanwhile, analysts and some stakeholders have faulted the intra-day rates at the official NAFEM, raising concerns over the huge gap between the intra-day high and intra-day low rates.

They said the huge gap between the intra-day rates indicated there was a need for more transparency and disclosure at NAFEM.

Chief Executive Officer of Cowry Treasurers Limited, Charles Sanni; and President of the Association of Bureau De Change Operators  of Nigeria, Aminu Gwadabe, spoke on the various challenges facing forex market especially NAFEM.

Gwadabe, while querying the huge gap between both rates, said there was a need to separate the ownership and structure of the FMDQ Exchange.

He said, “The gap between the intra-day high and intra-day low is too huge. There is also lack of adequate disclosure on who bought what and who sold what on the platform. There is a need to publish this on the FMDQ websites.

“However, my worry is that FMDQ is 90 per cent owned by the banks and 10 per cent owned by the CBN. The banks dominate the place. So, there is an issue here. How can we call this the official rate? I feel the government needs to set up a platform that would be fully independent.”

The ABCON president also wondered how a circular issued by the CBN led to the movement of rates on the FMDQ platform from N900/dollar to over 1,400/dollar.

Gwadabe explained, “This is unacceptable. The country needs patriotism. FMDQ needs to be more transparent, committees can be set up. There is exchange rate volatility which is driven by speculation and other activities.”

The Chief Executive Officer of Cowry Treasurers Limited, Charles Sanni, speaking with The PUNCH, however, said the wide gap between the intra-day trading rates of dollars at the official market was an abnormal situation driven by poor forex supply.

He said, “This shows that while the demand is there, the supply is not okay. That is what is responsible for it. It just speaks to the fact that there is a scarcity of foreign exchange. That is why traders would quote only one-way. It usually occurs in an abnormal situation.”

Efforts to get the CBN to comment on the development did not yield any result. Calls made to the Acting Director, Corporate Communications, CBN, Hakama Sidi Ali, by our correspondent, was not responded to as of the time of filing this report.

However, according to top official who spoke on condition of anonymity because he was not authorised to speak on the matter, the CBN does not publish the details of parties who bought and sold on the FMDQ platform.