17 Jan

Daily Watch – Cameroon crisis fuel Nigeria cocoa smuggling, Inflation slows for 11th consecutive month

  • Annual inflation in Nigeria slowed for the 11th month in a row in December, to 15.37 percent from 15.90 percent a month before. According to the statistics agency, food inflation dropped 0.89 points to 19.42 percent from 20.31 percent in November. This represents the first major decline in food inflation since it started rising in November 2014. In November, food inflation recorded its lowest month-on-month mark since September 2016. Overall inflation also dropped from 15.90 percent in November to 15.37 percent in December. The last time food inflation figure was in this region was between January and February 2009 when it stood at 18.4 percent and 20 percent respectively. In October, Central Bank Governor Godwin Emefiele said he expected inflation rates to fall at a faster pace and reach the high single-digits by the middle of 2018.
  • Unrest in Cameroon’s English-speaking regions, the country’s cocoa-growing heartland, is fuelling bean smuggling into Nigeria, Reuters quotes farmers and buyers in the region as saying. Cameroon has been gripped by spiralling violence since November 2016, when government forces crushed a peaceful movement of Anglophone teachers and lawyers protesting against their perceived marginalisation by the French-speaking majority. Violent clashes between separatists and security forces have cut many Cameroonian buyers off from parts of the Southwest region, the source of roughly half of Cameroon’s total production which reached around 240,000 tonnes last season. Smugglers, they said, are now paying higher prices for beans and venturing deeper into Cameroon, the world’s fifth-biggest producer, to scoop up more of farmers’ output. One farmer in the south-western village of Eyang Ntui said Nigerians paid between 850 and 1,000 CFA francs ($1.52-$1.79) per kilogram of beans. Cameroonian buyers were, meanwhile, paying around 600 CFA francs/kg, he said. Cocoa smuggling has long been an issue along the border.
  • The CBN said on Monday that it had injected $210 million into the interbank foreign exchange market as part of its attempt to boost liquidity and alleviate dollar shortages. The bank said in a statement it had released $100 million earmarked for the wholesale market, $55 million for small businesses, and $55 million for certain dollar expenses such as school fees and medical bills. The bank, in an emailed statement, said it would continue to intervene in the foreign exchange market to sustain liquidity.
  • Meristem Securities was responsible for 13.3 percent of the value of stocks traded on the NSE in 2017 by Top 10 firms, making it the second leading brokerage of the year. The company handled about ₦338.6 billion worth of shares during the review period. A couple of major deals in 2017 were said to have driven the company’s sharp rise in stockbroking value. Noteworthy was a 1,295 percent surge on December 18 following a huge ₦124 billion rush by investors of about 551 million Dangote Cement shares facilitated by Meristem. Stanbic IBTC Stockbrokers Limited was the top brokerage of 2017 with share deals worth ₦403.49 billion or 15.85 percent of total NSE trade value. After Meristem, CSL Stockbrokers, Rencap Securities and Cordros Securities Limited made up the rest of the top five.
  • The National Insurance Commission has reduced the minimum capital base for microinsurance companies from ₦150 million to ₦40 million. This was contained in the new microinsurance guidelines released by the commission on Monday. Under the old guidelines, NAICOM pegged the minimum capital to commence life microinsurance and non-life microinsurance at ₦150 million and ₦200 million, respectively, while firms willing to operate both were expected to have at least ₦350 million in capitalisation. The commission added that the guidelines became effective on January 1. The new guidelines added that registered insurance companies shall be granted national microinsurer licences upon application and uniform premium rates will apply for all compulsory classes of insurance products. In recent years, NAICOM had stopped the issuance of new operating licences to general and life insurance companies.
  • Nigerian firm, AIC has been awarded $10 million as damages against the South African retail giant, Shoprite Checkers and its business partner, Retail Supermarkets Nigeria Limited for breach of a 1998 contract. Justice Lateef Lawal-Akapo of a Lagos High Court added that the defendants are to pay ₦1 million as well as an interest rate of 10 percent per annum effective from the judgment date until final liquidation of the judgement sum. AIC had sought $2.23 million and another ₦13.6 million as special damages from the defendants and a declaration that by virtue of its agreement with Shoprite Checkers Limited, it had entered into a joint venture to exclusively operate and manage the Shoprite brand in Nigeria and the rest of West Africa except Ghana. The claimant claimed that the agreement was breached when the first defendant sidelined it and incorporated the second defendant to handle its affairs. Shoprite eventually entered the Nigerian market in 2005.