15 Dec

Daily Watch – CBN tightens currency controls, Brent crude hits 7-year low

  • The CBN has asked bureaux de change to close all branches within 90 days. According to new guidelines, all bureaux de change are now licensed as unit institutions. As a result no Bureau De Change will have a branch office outside its registered office. The CBN also banned BDCs from business relationships with street traders in foreign currencies, saying that such relationships will be grounds for the revocation of a BDC’s licence.
  • Meanwhile, the naira depreciated further by N7 against the US dollar at the parallel market, due to supply shortage. Some traders blamed this on the fact that  the CBN denied over 1,600 BDC operators, 60% of all operators, access to foreign exchange due to late or non-rendition of returns. Consequently, the naira closed at N265/$ compared to N258/$ at the end of last week.
  • Brent Crude hit a 7 year low on Monday trading at a price of $36.50 per barrel as OPEC and other oil-producing countries continue to pump the world with oil in a race for market share. The Brent crude price has now fallen below Nigeria’s target 2016 benchmark price of $38 per barrel for the second day running. The price fell to as low as $36.30 before settling at $37.20.
  • Former NSA, Sambo Dasuki, a Director of Finance at ONSA, Shuaibu Salisu, and Aminu Baba Kusa have all pleaded not guilty to 19 counts of stealing, criminal breach of trust, misappropriation, conspiracy and diversion of public funds to the tune of over N32 billion. The trial will continue today after the Dasuki’s and Salisu’s lawyers asked for an adjournment so they would have time to prepare bail applications for their clients.
  • Tiger Brands, South Africa’s largest food producer, has agreed to sell its stake in an unprofitable Nigerian business to Dangote Industries, just three years after buying it, according to Bloomberg. Dangote will provide Tiger Branded Consumer Goods of Nigeria with an immediate cash injection of N10 billion, with Tiger transferring its 65.7 percent stake for a nominal $1. Tiger will assume and settle debt that it’s guaranteed for the West African business, amounting to N5.6 billion, and will write off 700 million rand (N9.2 billion) of loans that it granted the operation. Tiger last month wrote down the full value of Tiger Branded Consumer Goods, formerly known as Dangote Flour Mills, and Deli Foods, a separate business in the West African country, by 1.9 billion rand. This added to previous impairments of 954 million rand after Tiger bought the business for about 1.5 billion rand in 2012.