14 Feb

Daily Watch – Bank vaults swelled in January, Plateau birds catch the flu

  • Bank deposits rose marginally by ₦5.33 billion in January reversing the negative trend recorded in December 2016. However, the naira depreciated to its lowest level in the parallel market last week with the exchange rate rising to ₦506 per dollar in the market. Banks are mandated to keep 22.5 percent of their total deposit as a Cash Reserve Ratio with the CBN. Consequently, the regulator debits banks 22.5 percent of any increase in bank deposit for the month. If banks record a decline in deposits, the CBN credits the industry 22.5 percent of that decline in deposits. According to the Vanguard, the CBN debited banks ₦1.2 billion last week as CRR for January, implying that banks’ deposits rose by ₦5.3 billion.
  • Prices of Nigeria’s Eurobond last week rose for the first time following renewed investors interest which triggered an upsurge in demand. According to DMO data, the price of the 5-year, 5.13% July 12, 2018 Eurobond rose by $2.68 (the yield fell to 5.4 percent), while the 10-year, 6.38 percent July 12, 2023 bond gained $2.68 (yield fell to 6.21 percent). But the 10-year, 6.75 percent January 28, 2021 bond lost $0.03. The renewed investor’s interest might have been prompted by the roadshow that preceded the $1 billion Eurobond issued by the FG last week. Prior to issuing the 15 year bond, federal government’s officials including finance minister, Kemi Adeosun; Senator Udoma Udo Udoma, Budget and National Planning minister; CBN Governor Godwin Emefiele; Abraham Nwankwo, the Director-General of the DMO and Ben Akabueze, the Director-General of the Budget Office met with foreign investors twice in the United Kingdom and the United States.
  • A gas scarcity across the country has been attributed to last year’s attacks on the Forcados gas trunk line, the Nigerian Petroleum Development Company, a subsidiary of the NNPC, said on Sunday. “The pulverisation of the Forcados trunk line by militants in 2016 gravely impacted gas production by NPDC and its JV partners”, a statement by NNPC spokesperson, Ndu Ughumadu, quoted the Managing Director of NPDC, Yusuf Matashi, as saying. “This primarily led to a loss of about 70 percent of NPDC’s crude oil production capability which had an effect on gas production. The NNPC also said it had increased the February supply of PMS into the country by six cargoes, totalling 222,000 tonnes. The corporation said it had also raised the number of trucks of kerosene and diesel to retail outlets across the country to 250 truckloads daily. Acting NNPC Group Managing Director, Saidu Mohammed, disclosed this when he chaired an emergency meeting on the Corporation’s downstream operations. Specifically, he said: “These measures include: increasing the February supply of petrol, by six additional cargoes to the existing national petrol sufficiency of over 32 days; immediate importation of three additional diesel cargoes before the end of February; and an order for massive 250 trucks per day loading of AGO and DPK, from across the three NNPC refineries in Port Harcourt, Kaduna and Warri.”
  • NASD OTC Securities Exchange said bonds worth ₦9.6 billion were traded on its platform during the year ended December 31, 2016, even as plans are underway for the Exchange to raise ₦165.5 million via rights issues. According to its Managing Director/CEO, Bola Ajomale, the rights issue would be in the ratio of one new share for every three previously held by shareholders at ₦1.49 per share, while 111.05 million units would be offered to its shareholders. He said state bonds were the most actively traded during the year, adding that it commenced bonds transactions in Q2, 2016. The NASD announced an initiative with the Nigerian Association of Small and Medium Enterprise and other SME incubator groups to identify SMEs that are eligible for public financing and introduce them for trading in the market.
  • The Poultry Association of Nigeria in Plateau said on Monday that avian influenza or bird flu has resurfaced in the state, claiming at least 11,000 birds in a week. The association’s state chairman, John Dasar, who made this disclosure in Jos, said six farms had so far been depopulated. Bird flu is an infectious type of influenza that spreads among birds. Dasar attributed the fast spread of the disease to the non-payment of compensation to farmers affected by the disease in 2015 and 2016. He said some farmers would prefer to sell their affected birds to desperate marketers instead of reporting the incident to the appropriate authorities. More than 130 poultry farmers were affected by a flu outbreak in 2015 and 2016 but they had yet to be compensated.
  • Dangote Rice, a subsidiary of the Dangote Group is set to launch a multi-million naira rice outgrower scheme in Sokoto with the prospect of hiring hundreds of thousands of people from its rural communities. Group President, Aliko Dangote disclosed at the weekend that the company will on Wednesday, flag off with a pilot project of 500 hectares by Gonroyo dam in Goronyo community. Gonroyo dam is the second largest in the country after Kainji. The flag off ceremony which will be performed by the state governor, Aminu Tambuwal, will witness seedlings being distributed to the primary local farmers who will in turn plant the seed after which Dangote Rice company will purchase from them for milling and final processing. Sokoto is the second after Jigawa out of the 14 Nigerian states where Dangote Rice plans to operate its outgrower scheme to empower local farmers and create job opportunities for community dwellers. Dangote Rice projects in the 14 states, when, operational, will generate a significant number of jobs and increase take-home income for smallholder farmers, all while helping to diversify Nigeria’s economy and reducing the nation’s food import bill. Statistics from the Federal Ministry of Agriculture and Rural Development estimate that rice demand in Nigeria reached 6.3 million MT in 2015, with only 2.3 million MT of that demand satisfied by local production. This local production shortfall leaves a gap of 4.0 million MT that is currently being filled through formal importation of rice or illegal imports over land borders.