17 Jan

Daily Watch – First 2017 MPC meet for January ending, Heritage bleeds more staff

  • The 254th Meeting of the CBN’s Monetary Policy Committee will hold from January 23-24, 2017. On the regulator’s agenda will be rising inflation. The CBN had on July 26, 2016, increased the MPR by 200 basis points from 12 per cent to 14 per cent to check inflation. The CBN retained all key indicators at its September and November MPC meetings to keep MPR at 14 per cent, CRR at 22.50 per cent and the Liquidity Ratio at 30 per cent, all aimed at controlling inflation. According to Olusegun Omisakin, the Head of Research, Nigerian Economic Summit Group, rising inflation had defied the CBN’s monetary policy measures, adding that policy tools adopted by the apex bank were only effective in taming inflation arising from demand-supply imbalances. “In this case, inflation is cost-push. Production cost is high because producers who want to import intermediate goods for production do not have access to foreign exchange. Most of them go to the black market and definitely the product from this would be expensive, thereby increasing inflation. The CBN cannot address cost-push inflation because it cannot provide energy, roads, transport. There are fiscal issues,” Omisakin said.
  • The country’s external reserves have hit $26.968 billion, nearing the $27 billion mark, the latest data on the CBN’s website shows. The reserves rose to $26.968 billion on January 13 from $26.765 billion on January 11, having hit $26.658 billion and $26.552 billion on January and 10 and January 11, respectively. Between December 30, 2016 and January 12, 2017, the foreign exchange reserves rose from $25.8 billion to $26.8 billion, an increase of $1 billion in two weeks. The foreign exchange reserves have been rising significantly in recent weeks following the gradual increase in global price of crude and rising production output. Experts said the slowdown in foreign exchange allocation to forex markets by the CBN might have contributed to the reserves accretion.
  • The FCT Administration has announced December 2017 as the new date for the completion of the Abuja Light Rail project. In the bid to fast-track the completion of the project, the administration unveiled plans to concession three lots: 4, 5 and 6 which are currently under procurement under a Design, Build and Operate basis. The final design and construction of Lot 1 and 3 of the rail project was firstly awarded on the 25th May 2007 to China Civil Engineering Construction Corporation Nigeria Limited, at the cost of $841,645,898 covering 60.67km with a completion period of 48 months (2011). According to a report obtained by BusinessDay, the scope of the project was however reviewed in August 2012 “due to deficiencies noticed in the estimations.” Speaking on the development, Abdulhamid Suleiman, acting Secretary, FCT Transport Secretariat, disclosed that “the scope of the contract was varied to $823,540,545.87 for the final design and construction of Lot 1 and 3 with a completion date of 36 months. This segment now covers a distance of 45.245km double track of rail line. The project has attained about 84.33 percent completion as at December 2016,” he said.
  • Heritage Bank laid off 400 staff in December, according to the News Agency of Nigeria, with more workers set to receive the sack. The bank, in October 2014, acquired Enterprise Bank for about ₦56 billion. A top anonymous source at the bank told NAN that the sack cut across the top, middle and low cadres. He said that the mass sack was creating apprehension and fears among the bank’s workforce. The source said that the remaining workers, especially workers from the former Enterprise Bank, feared they could be disengaged anytime. He said that workers from the former Enterprise Bank were the most affected in the ongoing restructuring exercise embarked on to improve the bank’s profitability. Fela Ibidapo, bank’s spokesman said the figures were incorrect and the mass sack was not limited to the bank as it cut across all operators in the industry. There were media reports of the bank’s financial instability in 2016, which the bank denied.
  • FXTM has launched a Naira denominated trading accounts solely for citizens and residents of Nigeria, indicating FXTM’s commitment in providing tailored products and services for investors within the country. FXTM, is a forex broker specialising in forex trading, Contract For Differences, and other trading services. This trading account will allow Nigerian traders open cent accounts with ₦1,000, and Standard Accounts with ₦20,000, while also continuing to benefit from the excellent trading terms available across all FXTM’s Standard and Electronic Communication Network accounts. According to an FXTM research analyst, Lukman Otunuga, “Nigerian traders using the Naira denominated accounts can enjoy the excellent trading terms available across all our Standard and ECN accounts, which include instant execution and competitive spreads.