02 Jun

Daily Watch – Investors panic over exchange rate uncertainty, Banks shed more jobs

  • Nigerian banking stocks headed for the biggest drop in forty-two months as investors showed their displeasure at the lack of clarity from policymakers since they announced a change in foreign-exchange policy more than a week ago. The Stock Exchange Banking 10 Index fell 13 percent, the biggest retreat since November 2012 on a closing basis, extending a 6.6 percent slump Tuesday. Guaranty Trust Bank, the country’s biggest lender by market value, declined 9.6 percent, while Zenith Bank dropped 8.9 percent. UBA retreated 9.5 percent. CBN Governor, Godwin Emefiele, said May 24 the bank would introduce a flexible exchange-rate regime to boost investments after a scarcity of dollars contributed to inflation reaching an almost six-year high of 13.7 percent. President Muhammadu Buhari, who has opposed weakening the currency since coming to power last year, said in a speech five days later he would keep a close watch on how recent measures affected the naira and the economy, while also saying devaluation in the past had harmed the country. The NSE All Share Index fell 2.75 percent to 26,678.01 after it rose the highest last week for the first time in five months reached on May 27 after the CBN announced plans for a more flexible currency regime.
  • An inter-agency effort between the Eastern Marine Command of the Nigeria Customs Service and the Eastern Naval Command of the Nigeria Navy has resulted in the seizure of two boats full of smuggled rice. The seizure was made on the Calabar high sea, Cross Rivers State, by the navy between the Cameroon and Nigerian border. According to Customs, the smuggled rice was concealed in two boats conveying 30 passengers among whom were eight Cameroonians and 13 Nigerians. In a similar development, the Seme Area Command of the NCS has impounded 12 trucks containing 2,131 bags of 50kg rice with a value of ₦23.9 million. The rice was being smuggled through Ere-Creeks, bordering Lagos and Ogun states.
  • The volume of trade between Nigeria and South Africa rose to ₦1.3 trillion about (R.62 billion) in 2015. This, according to Louis Mnguni, South Africa’s High Commissioner to Nigeria. Mnguni said that there were currently about 120 South African companies doing business in Nigeria, and observed that it was important for both countries to close ranks toward the implementation of the 2063 African Union Agenda, in pursuance of Africa’s, South-South Cooperation. Trade between the two countries has increased steadily. It increased from ₦43.6 billion in 2010 to ₦1.3 trillion last year. The gradual movement since 2010 could be attributed to Nigeria’s demand for automotive parts. South Africa exports cars, vehicles, structures and parts of structure, uncoated paper and paperboard. Nigerian SMEs are dominant in the small business sector in South Africa.
  • Following last week’s job cuts by Diamond Bank, Ecobank has fired over 1,000 employees. First Bank is set to follow as it has announced that it would reduce its workforce by “about 1,000.” On its part, Ecobank said in a statement that as part of its restructuring, it had converted over 200 outsourced personnel to permanent employees as part of its drive to attract and reward talent, while also repositioning for improved efficiency. Ecobank Nigeria is a member of the Ecobank Group, which is present in 36 African countries. The Group employs nearly 19,000 people from 40 different countries in over 1,200 branches and offices. The lender had posted an over ₦40 billion decline in its profit for the 2015 financial year owing to high impairment charges.