Nigerian bonds to take cue from new government

Nigeria's debt market is expected to take cue from policy changes under the new administration of president-elect Muhammadu Buhari, who is due to be inaugurated on Friday.
Traders said most offshore investors remain on the sidelines waiting for the new government to state its economic agenda and a possible removal of tight controls on the forex market.
Nigerian financial markets will be closed for business on Friday as Buhari takes the oath of office.
"Investors will be watching out for clues on the policy direction of the incoming government as the president unveils his cabinet and major policy direction in the coming weeks before taking major leaps," one dealer said.
Traders said the market was mixed this week with some sell-off seen after a spell of bearish trade earlier in the week, while yields trended up on some tenors.
"We anticipate initial sell-off by some investors booking profits, but largely the market will wait for a clear direction from the new government," one dealer said.
Yields on the benchmark debt maturing in 2024 rose to 13.83 percent on Thursday from 13.60 percent last week.
The 2022 paper traded at 13.86 percent, up from 13.58 percent last week, while the 2016 note fell to 13.78 percent compared with 13.82 percent.

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Nigeria's FX reserves rise to $29.6 bln by May 27

Nigeria's foreign exchange reserves rose to $29.61 billion by May 27, up by 0.3 percent from a month ago, data from the central bank showed on Thursday.
However, reserves of Africa's biggest economy and top crude exporter fell 20.3 percent year-on-year from $37.14 billion.

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Nigerian interbank rates fall on rising liquidity

Nigeria's interbank lending rate eased slightly to an average of 8.25 percent on Thursday from 8.5 percent last week on the back of increased liquidity after the government paid public workers wages and joint venture partners.
The state paid out a total of about 105 billion naira ($528 million) in wages and contributions to partners involved in joint oil production ventures with the government, boosting liquidity levels and forcing down lending rates, dealers said.
Traders said though the central bank withdrew around 45.7 billion naira to meet the new Cash Reserves Requirement (CRR) on Thursday, the market had comfortable liquidity levels.
The central bank last week harmonised the CRR on public and private sector deposits to 31 percent. Previously the CRR on private sector deposits was 20 percent and 75 percent for public sector deposits.
Traders said liquidity would also be adequate next week.
"We are going to have a very liquid market next week because of anticipated injection of additional cash from maturing treasury bills, and a possible stable lending rates in the market," one dealer said.
Banks had a cash balance of about 300 billion naira at the central bank by Wednesday compared with 220 billion naira last week's Thursday.
The secured Open Buy Back was unchanged at 8 percent, compared with the central bank's 13 percent benchmark rate.
The overnight placement also fell to 8.5 percent against 9 percent last week.

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Kenya's anti-graft body says two ministers should be charged

Kenya's anti-corruption watchdog has recommended two government ministers be charged with abuse of office, the chief prosecutor said on Monday, two months after President Uhuru Kenyatta ordered a crackdown on graft.
The Ethics and Anti-Corruption Commission (EACC) said transport and infrastructure minister Michael Kamau should be charged in relation to the involvement of ministry staff in the embezzlement of funds through a road construction project, said Keriako Tobiko.
It also wanted labour minister Kazungu Kambi to face similar charges for irregular appointments to the board of the state pension fund, the director of public prosecutions added.
Diplomats and analysts say corruption is endemic in East Africa's largest economy.
Tobiko is now expected to review the files and decide whether to take further action.
President Kenyatta suspended five ministers from office in March to pave way for investigations into allegations by the EACC.
The commission has already closed investigations into lands minister Charity Ngilu, a key political ally of Kenyatta, and another minister, without recommending charges.

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Malawi forests shrink as power deficit fuels charcoal business

Impoverished villagers are hacking down Malawi's forests to make charcoal, undeterred by government efforts to confiscate the dirty fuel as a power deficit stokes demand.
Only 9 percent of the southern African country's population have access to electricity, ensuring a good market for the charcoal produced by communities living near forests.
The fuel is sold mainly in urban and semi-urban areas where even those who do have a power connection cannot afford electricity for cooking.
Alex Thom, standing by his bags of charcoal on the roadside at Bale in Rumphi in northern Malawi, said he and others make charcoal by smouldering wood because it provides steady earnings.
“This is our major source of income. The cash crops we grow are seasonal, which means there are parts of the year when we have nothing to sell. But we can store the charcoal and sell it later,” he said.
Charcoal producers, including those around the vast Dzalanyama forest stretching between Dedza and the Malawian capital Lilongwe, say they are driven to the environmentally destructive trade by poverty.
“There is a need to economically empower the poor, especially those in areas bordering natural forests,” said Charles Kajoloweka, a consultant on forest issues.
Policies should encourage local people to co-manage the forests so they see the mutual benefits of protecting them, he added.
Kajoloweka described Malawi’s deforestation rate as “alarming”, and said the real situation was not reflected in out-of-date official figures.
The Department of Forestry told the Thomson Reuters Foundation researchers put the deforestation rate at between 1.6 percent and 2.8 percent of forest cover per year. It plans to commission a new estimate.
'DESPERATE' CONFISCATION
Without stepped-up action, the country will continue to experience rising temperatures as its forests are cut down, releasing the carbon they store into the atmosphere, Kajoloweka warned.
To prevent this, laws governing protection of forests must be adhered to and stricter sanctions introduced, he said.
“The enforcement of these laws is so weak,” he added.
The law stipulates that those found felling trees should have their equipment confiscated, and where charcoal has already been produced, it should be removed.
“There is a need for stiffer punishment. Snatching the charcoal counts for nothing,” Kajoloweka said. “Charcoal means trees have already been felled.”
The large amount of charcoal confiscated at police roadblocks far from where it is produced means existing measures to tame deforestation are ineffective, he added.
Director of Forestry Clement Chilima said forest guards are confiscating charcoal at roadblocks “out of desperation to kill the market or reduce demand”.
“That way we believe those making the charcoal will be forced to seek other means of generating income. But that is not working perfectly,” he explained in a telephone interview.
The government now plans to try and address the problem at its source, he added, without going into details of how this would be done.
Local water boards are already taking action to protect forest reserves in water catchments by deploying Malawi Defence Force soldiers to guard areas supplying water to the cities of Mzuzu and Lilongwe.
The government is considering licensing individuals who produce charcoal in a sustainable way, compared with the majority who are not.
“We will look at those who are growing trees and making charcoal,” Chilima said.
ALTERNATIVE INCOMES
The government has recently launched projects that could help, under the U.N.-backed Reducing Emissions from Deforestation and Forest Degradation (REDD+) scheme, together with donors such as USAID and local groups like Total Land Care.
“Individuals who are in the charcoal business because they have no other means of survival will be engaged in alternative sources of income,” Chilima said.
Total Land Care, for example, promotes apiculture and tree-planting initiatives as ways of curbing deforestation due to charcoal-making. Instead, those involved sell honey, tree seedlings and lumber.
The Department of Forestry and the Department of Energy will also target charcoal users, Chilima said, although they expect resistance from some who prefer charcoal as a cooking fuel.
Joseph Kalowekamo, a spokesman for the Department of Energy, said the government is working to increase access to electricity to 30 percent of the population by 2030.
The Malawi Rural Electrification Programme is connecting people in rural and peri-urban areas, while the government has plans to increase hydro-electric generation capacity, he said by email.
Little has been done yet on other renewable energy sources, but the government has installed community solar and wind hybrid systems in northern, central and southern parts of the country.
These are benefiting around 900 households through a mini-grid network, Kalowekamo said.
The government, with technical and financial support from the Scottish government and the World Bank, is conducting an assessment of solar, wind and geothermal energy resources.
It will develop a renewable energy strategy based on what the assessment judges to be economically viable, Kalowekamo added.

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Nigeria's banks huge exposure to oil sector threatens operations

First Bank of Nigeria's modest head office is stationed at the marina in Lagos. Beyond the mid-morning traffic on the road in front of the building, past the shores of the marina, are two rather imposing oil rigs.
When they first turned up, their presence confused locals. Oil rigs are usually stationed in oil producing regions in Nigeria, close to the Niger Delta, so why were they at the marina? Curious onlookers initially assumed that the rigs, which were owned by indigenous oil company SeaWolf Oilfield Services, were undergoing repairs and need not be in an oil producing region. But a closer look revealed that there was little, if any, maintenance work going on.
The truth is, Nigerian banks are hugely exposed to the oil and gas sector," says Dolapo Oni, oil and gas analyst at Ecobank. "Despite central bank regulations limiting exposure by banks to 20 percent of their total loan book, some have already exceeded this, Dolapo Oni, Ecobank
It was only once local media dug a little deeper that they found out why the oil rigs were there. They discovered that First Bank - Nigeria's largest lender - had seized the oil rigs after SeaWolf failed to make a payment on a N25 billion ($125.6 million) loan. Following the debacle, Nigeria's Asset Management Corporation (Amcon) took over SeaWolf and the rigs in question. The full story behind the repossession is yet to emerge.
"It's become something of a joke in the market," says an analyst based in London. "I mean, what exactly is First Bank going to do with two oil rigs parked out the front of their head office? I don't think they could use it as extra work space, do you?"
But at the heart of the problem appears to be something more profound. The repossession of SeaWolf's rigs is not simply the result of failure to pay back some loans. It is also related to the plummeting oil price globally, and the pressures oil companies in Nigeria more generally are beginning to feel as revenues inevitably come down.
Afren is another Nigerian oil and gas company that has fallen on hard times. Once hailed as one of Nigeria's success stories, Afren carved a path for itself as a leader in the oil and gas sector, culminating in its listing on the London Stock Exchange in 2009. It was an indigenous company setting an international example for others in Nigeria to follow.
But as the oil price tumbled in 2014, Afren began to find it difficult to honour its loan repayments. This year, it has failed to pay interest on any of its loans: Access Bank and Zenith are direct lenders to Afren, while First Hydrocarbon Nigeria, an Afren subsidiary, banks with First City Monument Bank and Guaranty Trust Bank. Over the past year, shares in Afren have fallen by
97 percent.
Bankers argue that cases such as Afren's and SeaWolf's are isolated, due mostly to management problems rather than the fall in the oil price. In fact, they say, banks are well placed to deal with the volatility in commodity prices as they have in place various strategies to avoid a meltdown. "We've done some of our own stress tests," says one international banker based in Lagos. "We believe most banks will be fine, with a few exceptions. But even these exceptions will be able to pull themselves out of trouble, given time."
While stress tests may provide some comfort, it is too early to rule out a severe shock to the banking system. "The truth is, Nigerian banks are hugely exposed to the oil and gas sector," says Dolapo Oni, oil and gas analyst at Ecobank. "Despite central bank regulations limiting exposure by banks to 20 percent of their total loan book, some have already exceeded this." According to data compiled by Renaissance Capital, 40 percent of First Bank's loan book is exposed to the oil and gas sector; for Skye Bank the figure is 33 percent; Guaranty Trust Bank 28 percent; Diamond Bank 27 percent; Access Bank 25 percent; and for Fidelity Bank it's 24 percent. To gauge the scale of the issue: First Bank has a loan book of $11.4 billion.
Being above the 20 percent threshold could mean that these banks will incur central bank fines, although none have been levied as yet. At the very least, they will be forced to increase provisions. By September 2014, First Bank, which has an NPL ratio of 2.9 percent, recorded that around one-seventh of those NPLs were from loans to the downstream oil and gas sector. For Access Bank, which has an NPL ratio of 2.5 percent, downstream oil and gas represented more than a third of distressed lending. That was before the sharpest decline in the oil price. Analysts are waiting nervously to see updated figures. Pressure is building. Is a potential fallout on the way?
Nigeria's oil and gas landscape began to change around five years ago when international oil companies (IOCs) in Nigeria were forced to divest assets to local oil companies (LOCs) under new regulations outlined by local content laws
laws with incentives for local procurement and local employment. In a scramble to get these new assets on their balance sheets, local banks doled out loans, about N2.2 trillion to indigenous companies to acquire oil-related property. Consequentially, banks' allocation to the oil and gas sector changed dramatically. In September 2009, before divestment and local content laws, 13 percent of banking credit in Nigeria was allocated to the oil and gas sector. Three years later, this rose to 22 percent and has stayed flat since.
"There was a sort of 'bandwagoning' effect going on," says Muyiwa Oni, west African bank analyst at Stanbic IBTC. "As all of these assets became available to local companies, banks rushed to finance them, with some taking a blanket view of the assets and corporates that they were backing."
This rush was limited to the local banking sector. International banks were, and still are, exposed to the oil and gas sector, but have largely done so through syndications. Moreover, local banks had much more of an appetite, given the new circumstances. "In any case, if the international banks were to run into serious trouble, they would be able to leverage off of the balance sheet of their parent bank - not something that local banks generally have the privilege of doing," says Oghogho Akpata, partner at Nigerian law firm Templars.
This was the first time that local banks were financing upstream and midstream activities in Nigeria. And it became the first time that many of these banks were exposed to the related risks. Exploration and production are closely related to volatility in commodity prices. "The composition of banks' lending to the oil and gas sector has completely changed, with mixed exposure to downstream, midstream and upstream sectors. This was good for banks' diversification, but it depended to what extent they were exposed to each area," says Adedayo Adesanmi, oil and gas client coverage at Stanbic IBTC.
"And there were some concerns," Oni from Stanbic IBTC says. "This type of lending and the related structures were new to local banks, and some of these banks are still developing the skills needed to do this successfully." With the acquisition of some of these assets, there was the acquisition of related skills but this was not the case for all. As one local banker admits: "Up until around three years ago, we were a solid downstream financing bank with little exposure in the upstream sectors. Now this has all changed. It's been a steep learning curve." Despite these concerns - concerns that have become much clearer with hindsight - bank loans and other debt products were easily extended to local corporates. And this was at a time when oil prices were at all-time highs: at around $110 a barrel, the banks thought they were in for a good deal.
Now, with oil around $60 a barrel, it's a very different story. "For some oil and gas companies in Nigeria, there will be pressures on revenue because the oil price has dropped dramatically, especially for the smaller oil and gas companies," says Oni at Ecobank.
The international banker based in Lagos says: "No matter what banks tell you, banks lent to oil and gas companies in Nigeria with price decks of $90 a barrel. Then prices plummeted to $45 a barrel and are only starting to recover to around $60. With this fall in revenue, how easy is it going to be for corporates to repay their debt?"
Then add to this the fact that some of these companies were given pioneer status by the government when they first acquired assets, which meant a three- to five-year tax break to LOCs depending on their level of capital expenditure. These tax breaks were often factored in to earnings when local banks offered loans to indigenous companies.
"When the government commenced single five-year pioneer status certificates to oil and gas companies in the early 2000s, it was fully supported by the government as part of the incentive available under existing law. But now, the ministry of finance has turned around and deemed a single five-year grant of pioneer status to oil and gas companies as illegal because, according to the ministry, there is no legal basis for a single grant of five years. There is a chance that these five-year tax holidays will be cut short to three years, or that the government will seek to claw back tax reliefs that have already been enjoyed above three years. Essentially, the government needs to shore up its revenue, which has been hit by the falling oil price, and back pedalling on the five-year grant of the pioneer status is one tool they can use," says Akpata. "This will affect around 22 indigenous companies that were granted pioneer status. So far, 10 of these companies are being assessed by the tax authorities."
Since picking up these assets, local banks have also seen their exposure to foreign currency grow. In 2010, Fidelity Bank's and Skye Bank's exposure by loans to foreign exchange was 0 percent and 2 percent respectively. By September 2014, exposure had risen to 38 percent for Fidelity and 34 percent for Skye Bank. Those that already had substantial exposure to FX in 2010 also saw bullish growth. Access Bank saw exposure rise from 18 percent to 45 percent, while First Bank saw a rise from 21 percent to 40 percent.
"Some analysts expected the oil price to recover by now," says Dele Kuti, head of oil, gas, power and infrastructure at Stanbic IBTC. "The truth is, it hasn't and I don't see the price surpassing $60, or $65 a barrel in the next nine to 12 months. In light of a deal with the US, Iran could flood the market with another 2 million barrels of oil a day and the fact that large shale gas producers in the US are becoming much more active and managing costs better, global oil prices could remain low."
But is the situation really so bad? As the international banker in Lagos points out: "In the last 12 to 18 months, around $7 billion to $8 billion-worth of assets divested by the IOCs which were acquired by the LOCs. The estimation of debt for these acquisitions is about half - say, $4 billion - so we're not talking big numbers when compared with total banking assets. Unless banks structured loans in a rush and didn't do their due diligence, most loans will be OK."
Akpata says: "A couple of banks and their borrowers did structure loans well, taking into account a variety of risks. In particular, they ensured corporates had hedges in place. With hedges at around $90, these companies have cashed in and are still making profits. In such cases, the banks and companies are happy."
And there are other options open to banks. For example, the central bank has put in place an intervention fund for the oil and gas sector that is expected to fill some of the shortfall in oil revenues.
"In my opinion, the intervention fund was something put together by Goodluck Jonathan's [Nigeria's recently defeated president] government to appease some shareholders of oil and gas companies who were friends of government," says Bismarck Rewane, CEO of Financial Derivatives Co, a financial services institution based in Lagos. "Now government has changed hands, what will happen to these people's interests? Could the fund be closed? I wouldn't expect much clarity until May 29 when the new government is sworn in. We should keep an eye on this."
There could even be a chance that the government itself may find it difficult to meet payment obligations on existing contracts for infrastructure and development projects throughout the country because oil revenues have taken a hit Dele Kuti, Stanbic IBTC
As for the corporates, they can cut back on exploration, renegotiate contracts with the midstream sector, increase production - many still haven't reached full capacity in terms of output - and some can even look towards diversification into the gas industry.
Gas is a potentially attractive area: exploration has largely been carried out and infrastructure is already in place. "In most cases, we extended loans to companies that were already diversified away from the oil and gas sector so they already have other channels of revenue to leverage off of," says the local banker based in Lagos. "Where they haven't, we would advise them to do so as there are increasingly tax incentives associated with gas production and exploration."
Remi Oni, executive director, corporate and institutional clients at Standard Chartered in Lagos, is optimistic. "I genuinely think things will be OK," he says. "Firstly, because there is a sense that there will be a recovery in the second half of this year and secondly, if there isn't a recovery, Nigeria will be able to survive with oil prices around $45 a barrel with all the cuts to capex and opex that companies are putting in place, as well as austerity measures by the government."
The knock-on effects, however, are numerous. Renegotiating contracts, for example, will have repercussions on the service sector and other midstream-sector companies. "Then these companies could have issues honouring their debt repayments if they are out of work," says Kuti at Stanbic IBTC.
"Put simply, services and the midstream sector are driven by drilling more wells," says Oni at Stanbic IBTC. "But companies aren't drilling any more wells. While the upstream sector has underlying assets to protect them and can cut back on capex, the midstream sector doesn't really have any of these tools and could begin to find it difficult to maintain revenue levels where they are."
As Kuti highlights, "there could even be a chance that the government itself may find it difficult to meet payment obligations on existing contracts for infrastructure and development projects throughout the country because oil revenues have taken a hit."
There can also be problems if the acquirer of an oil and gas asset used a bank loan to finance their equity portion of the acquisition, says the regional head of a South Africa-based bank. "Where that is the case, issues like their ability to pay back the loans within the stipulated tenor also becomes a problem in a lower oil price environment. Acquirers themselves could see lower dividends, which will take it longer to service debt," he says.
His observation comes with a caveat: "Don't forget, this is not happening in a vacuum. This will only affect banks where appropriate collateral, such as provisions, hedging and restructuring are not in place," he says. As the international banker says: "Corporates will service debt but profitability will be gone and thus dividends will be impacted. This is the new reality."
One remaining option open to banks is the ability to restructure loans, which will give them the breathing space needed to stay in shape and keep NPLs off their balance sheets. "Assets are prolific so owners should focus on increasing production before they begin to restructure loans. Restructuring should be the final option," says the local banker.
But in some cases, assets aren't so "prolific". Before the most recent period of divestment, before local content laws and before pioneer status, there was a period in 2003 where the federal government transferred the operations of 24 marginal fields to 31 Nigerian companies. This marginal field program was one of the first initiatives to promote indigenous participation in the upstream sector of the petroleum industry. But more than 10 years on, few LOCs have made much of the opportunity.
For banks that didn't insist on a hedge, and for those that can't rely on production, restructuring existing loans will probably be the next best option. For instance, banks may need to revise terms of existing facilities, and corporates may have to give away more equity, or bring in new parties through farmouts, Rolake Akinkugbe, FBN Capital
Of the 24 marginal fields, around nine are producing oil; banks involved in lending to these LOCs could be under more pressure than others. "I've been there, I've seen some of the fields, and there is nothing going on at all. It seems like such a waste," says one analyst in Lagos. Some believe that licences for the fields could be revoked because of the lack of activity.
"For banks that didn't insist on a hedge, and for those that can't rely on production, restructuring existing loans will probably be the next best option," says Rolake Akinkugbe, head of energy and natural resources origination and client coverage at FBN Capital. "For instance, banks may need to revise terms of existing facilities, and corporates may have to give away more equity, or bring in new parties through farmouts."
Simply extending tenors, however, will create liquidity mismatches for banks, limiting activity as well as appetite for additional assets in other sectors. Some banks are already teetering on the edge of capital adequacy ratios (CARs), set at 10% for national banks, 15% for international banks and 16% for systematically important banks in Nigeria, which include the likes of First Bank, Guaranty Trust Bank, Zenith Bank and UBA among others. According to Adesoji Solanke, sub-Saharan Africa analyst for Renaissance Capital, First Bank's capital position at 15% to 16% is the most cause for concern because it's so close to the recommended threshold.
Banks will be forced to adjust their risk portfolios by selling down oil-related assets to give them access to liquidity and increase CARs. "Restructuring can mean higher risks and liquidity mismatches, but banks will work with clients to try and limit these issues," says Akinkugbe. "And trying to help banks sell down exposure, bringing in international counterparties on secondary deals not only frees up liquidity and capital for banks but it also has the knock-on effect of helping develop Nigeria's capital markets."
She adds: "For some banks, there will be additional fees for those involved in origination and restructuring. Some banks will see benefits through additional business." It's one potentially encouraging side-effect to Nigeria's oil crisis.
Analysts, bankers and experts are split over how Nigeria's banking sector will cope with the onslaught of oil price-related issues. "Banks are overexposed and there is a huge concentration of risk in the oil and gas sector as a whole. Smaller banks in particular will be in trouble," says Rewane, highlighting Skye Bank and Heritage Bank
Says Kuti: "Let's look at it this way: at least this time, banks are backing real assets as opposed to vapour [as they did] back in 2009 when Nigeria experienced its first banking crisis. I don't think we will see a full blown crisis as we did back then as banks and the regulator are in a better position to deal with the fallout."
It was a different when Nigeria's banking system fell into crisis in 2009. Looking for quick profits, banks played the stock markets but with the onset of the sub-prime crisis, repercussions were felt in Nigeria. The stock market plummeted by as much as 70 percent and the banking sector collapsed. To try to save what it could, the central bank reacted with a N620 billion liquidity injection and created Amcon to absorb the bad debt. Banks are in a much stronger position today.
But the mood surrounding the oil and gas sector, and banks' loans to it, will remain subdued for some time. "At the moment, banks generally have a policy to wait and see what will happen," says Gbenga Sholotan, equity research analyst at Stanbic IBTC. "Corporate loans to the downstream oil sector have basically come to a halt. For now, there is very little going on in this part of the value chain."

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Nigerian interbank rates dip as retired T-bills boost liquidity

Nigeria's interbank lending rate fell to an average of 8.5 percent on Friday from 14.25 percent last week as funds from matured Treasury bills offset the impact of the central bank's new Cash Reserves Requirement (CRR).
The central bank on Tuesday harmonised the CRR on public and private sector deposits to 31 percent. Previously the CRR on private sector deposits was 20 percent and 75 percent for public sector deposits.
The central bank recalled about 140 billion naira ($704 million) in CRR from the banking system on Thursday in line with its new regime but about 191 billion naira in retired Treasury bills was repaid, boosting liquidity in the market.
Traders said market liquidity was also increased by flows of about 198 billion naira in budgetary allocations to states and local government during the week.
Banks had a cash balance of about 220 billion naira at the central bank by Thursday versus 214 billion naira last week.
The secured Open Buy Back eased to 8 percent from 14 percent last week, below the central bank's 13 percent benchmark rate.
The overnight placement also fell to 9 percent against 14.5 percent last week.
A trader said lending rates would likely be stable next week on further cash flows from the government to its crude oil production joint venture partners as well as other remittances to government agencies.

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Nigerian bonds to rise

A further sell-off by some investors booking month-end profits and others covering their short positions could push yields on Nigerian bonds higher.
Traders said the market experienced a sell-off this week after the central bank harmonised the Cash Reserves Requirement (CRR) on public and private sector deposits to 31 percent at its rate-setting meeting on Tuesday.
Previously the CRR on private sector deposits was 20 percent and 75 percent for public sector deposits.
"We are anticipating further a sell-off next week by some investors, especially banks with higher private sector deposits content to make up for shortage of liquidity after the central bank debited CRR on Thursday," one dealer said.
The central bank recalled CRR from the banking system on Thursday in line with its new regime, leaving some commercial lenders in deficit.
Yields on the benchmark debt maturing in 2024 rose to 13.60 percent on Friday, from 13.49 percent last week.
The 2022 paper traded at 13.58 percent against 13.60, while the 2016 note rose to 13.82 percent from 13.72 percent.

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Nigeria raises 111 bln naira in T-bills, yields lower

Nigeria sold 110.99 billion naira ($558 million) in Treasury bills at lower yields across all tenors compared with the previous sale on May 6, the central bank said on Friday.
Investors submitted a total of 243.39 billion naira in bids at the auction held on Wednesday, compared with 329.97 billion bids at the previous auction.
The yield on the 3-month bill fell to 9.95 percent from 10.09 percent at the previous auction, the central bank said, adding that it sold 32.43 billion naira of the 3-month paper.
The bank sold a total of 22.82 billion naira of the six month paper at 12.75 percent against 12.89 percent yield at the last auction. It also sold 55.68 billion worth of the one-year paper at 13 percent, compared with 13.39 percent last month.

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IFC, SECO launch corporate governance for Nigerian business

The International Finance Corporation ( IFC), a member of the World Bank Group, and
the State Secretariat for Economic Affairs, Switzerland on Wednesday jointly
launched the Africa Corporate Governance Program for Nigeria, to support
economic and business expansion.
The program aims to improve the performance of businesses by helping them
adopt good corporate governance practices and standards that are adapted to
regional priorities. Improved corporate governance helps businesses attract
and retain investment, among other benefits.
This formal program launch was organized to raise awareness of the
cross-sectorial reach of activities and set the pace for a program that
will eventually include encouragement of improved policies,
standard-setting, network events, and regional outreach programs.
The guest speaker at the launch, Mr. Uyi Akpata, Regional and Country
Senior Partner, PricewaterhouseCoopers, emphasized the need for business
operators to move beyond setting corporate governance rules into adopting
behaviors that establish the practice of good corporate governance in
everyday business decisions.
Roman Zyla, IFC regional Corporate Governance Lead for Africa, provided a
presentation on the impact of improved corporate governance practices in
multiple countries. “The adoption of good corporate governance practices
has demonstrated increased productivity in businesses in country after
country,” he said.
Eme Essien Lore, IFC Country Manager for Nigeria said, “IFC is committed to
promoting good corporate governance practices that will help businesses
become more sustainable and contribute to long term economic growth. When
businesses adopt these practices, they are able to improve their
performance and attract more investment. IFC and SECO are jointly offering
businesses the opportunity to adopt good corporate governance practices and
improve their overall performance.”
IFC’s Corporate Governance intervention in Nigeria was introduced in 2008,
through the Nigerian Corporate Governance Banking Program, which focused on
financial institutions. The AfCGP will seek to build on the progress
already made within the Nigerian financial sector and strive for similar
success across a wide range of sectors in the Nigerian economy and West
Africa.
The AfCGP is funded by SECO, Switzerland and IFC is the implementing
partner for the program.

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Nigerian local debt yield up on new cash reserves rule

Yields on Nigeria's local bonds rose slightly on Wednesday after central bank's harmonisation of the Cash Reserves Requirement (CRR) on public and private sector deposits triggered a sell-off by some investors.
At it's rate-setting meeting on Tuesday, the (CRR), the amount the central bank requires banks to set aside, was revised to 31 percent for both public and private sector deposits. Previously the CRR on private sector deposits was 20 percent and 75 percent for public sector deposits.
Some banks that held more of the private sector deposits in CRR would be required to make an additional provision of 11 percent due by Thursday, triggering the selling down of their investment in bonds to raise additional money.
"Some banks that have their deposits skewed to private sector are selling down their bond holdings in order to make provision for the increase in the CRR on the deposit, driving up yields at the market," one dealer said.
The yield on the benchmark bond maturing in 2024 inched up to 13.63 percent from 13.60 percent the previous day, while that on the 2022 paper rose to 13.59 percent from 13.51 percent.
Interest rates on short borrowing among banks eased, following the injection of portion of the budgetary allocations to states and local government in the banking system on Tuesday.
"Market liquidity increased to around 235 billion naira ($1 billion) on Wednesday from deficit level the previous day," a currency dealer said.
Secured Open Buy Back (OBB) eased to 7 percent, while overnight placement fell to 8 percent from 15 percent the previous day, traders said.

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INTERVIEW-Martell cognac chief says aims to double sales

Martell, the cognac brand of French drinks group Pernod Ricard is betting on recovering demand in China, and growth in the U.S., travel retail and Africa to double sales within 10 years, its chief executive told Reuters.
Martell numbers alongside Ballantine's whisky and Absolut vodka among Pernod Ricard's 14 strategic brands and is the top sales and operating profit contributor at the world's second-largest spirits maker after Diageo
"Over 10 years we have doubled our sales volume," Philippe Guettat, CEO of Martell Mumm Perrier-Jouet, said in a phone interview. "We can reasonably expect to do the same in the next 10 years and reach 4 million cases."
Martell sold 1.9 million cases last year, making it the world's second-biggest cognac brand behind Hennessy, which sold more than twice as much.
Analysts estimate it contributes around 10 percent of Pernod Ricard group sales and 12-13 percent of operating profit. China accounts for more than half of Martell's sales volume
it is the country's top cognac brand - but a crackdown on conspicuous consumption that started there in 2013 sent net sales 9 percent lower in 2013/14.
The launch of lower-priced cognacs such as Martell Noblige, sold for 70-80 euros, has helped lead to signs of improvement in China, however.
"The Chinese market has regained growth momentum, and Martell is benefiting from it as it gains market share, but it's hard to say when higher-priced cognac will recover," Guettat said. "In two years, possibly next year, we may be back to our highest levels in volume, but in value it may take longer."
In the United States, where it makes 5 percent of its sales volume and ranks fifth behind Hennessy, Remy Martin Courvoisier and Salignac, another Courvoisier brand, Martell feels "like an outsider", Guettat said.
"We must regain ground in the U.S.," he said. "Our mid- to long-term goal is to be among the top three best-selling cognac brands."
To achieve that, Martell aims to increase the availability of its cognac in U.S. stores and is banking on its Martell "Caractere" cognac, priced at $30 a bottle.
Martell also wants to tap growing demand for international spirits in Africa, notably in Nigeria, as South Africa has long been Pernod's only foothold on the continent.
Martell celebrates its 300th anniversary this week with limited editions including the 10,000 euro ($11,108) "Premier Voyage" blend in a Sevres crystal decanter.

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2,000 MTN workers on strike

About 2,000 workers at MTN Group went on strike on Wednesday demanding higher pay, union leaders said, threatening a prolonged walkout at South Africa's second-biggest telecoms firm by subscribers.
Zodwa Kubeka, spokeswoman for the Communication Workers Union (CWU), said its members at MTN want a 10 percent pay rise and higher allowances for work done over weekends and holidays.
"We will remain on strike on until our demands are met," Kubeka said.
MTN, Africa's biggest mobile phone network, employs about 6,500 people in its home market, where it trails rival Vodacom by subscribers.
MTN officials were not immediately available to comment.
The company's shares fell 2.9 percent to 229.05 rand by 0843 GMT, lagging Vodacom, which had lost 1.8 percent to 137.54 rand.

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Nigeria's foreign exchange reserves rise by 1 pct by May 15

Nigeria's foreign exchange reserves rose marginally by 1.05 percent month-on-month to $29.80 billion by May 15 from $29.49 billion a month earlier, data from the central bank showed on Tuesday.
    The forex reserves of Africa's biggest economy and top crude exporter have been on the decline since last year when the central bank used the reserves to support the ailing naira currency, which has depreciated by 7.5 percent so far this year due to falling global oil prices.
    The reserves were however down 20.6 percent year-on-year, compared with $37.54 billion in the same period a year ago.

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S.Africa to start 9,600 MW nuclear procurement process this year

South Africa will start the process to procure a nuclear fleet to generate 9,600 megawatts of power this year, the energy minister said on Tuesday, as Africa's most advanced economy battles an energy crunch.
To meet its targeted nuclear generation capacity, South Africa plans to build six new nuclear power plants by 2030 at a cost estimated between 400 billion rand and 1 trillion rand ($34-$84 billion).
"We expect to present the outcome of this procurement process to cabinet by year-end," Energy Minister Tina Joemat-Pettersson told parliament, adding that the exercise would be carried out in a "fair and transparent" manner.
South Africa has signed nuclear power deals with various countries, including France, China, South Korea and the United States after surprising energy watchers in September when it announced a deal with Russia to build plants worth $10 billion.
Government officials were compelled then to clarify it was in fact just the early stages of a long procurement process, after opposition parties suggested official procurement rules were being flouted.
Joemat-Pettersson also said South Africa, which runs the continent's only nuclear power station near Cape Town, would also re-establish its nuclear fuel cycle industry.
This would include developing domestic uranium enrichment and conversion plants as well as nuclear fuel production sites in a country with vast uranium reserves.

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Nigerian court orders GTB to refund 5.3 bln naira to a customer

A Nigerian Court has ordered Guaranty Trust Bank (GTB) to refund 5.3 billion naira illegally withdrawn from the account of one its customers, Dr. Ted Edwards.

In a ruling on the case brought by Edwards against the bank, by Justice Valentine Ashi, directed that the sum to be refunded will also attract 10 per cent interest from a week after the day the judgement was delivered, till the time the money was paid back to the owner.

The court also ordered that the money should attract another 21 per cent interest from December 12, 2014 when GTB allowed the illegal withdrawal, until the fund was eventually paid back to Edwards.

The judge, while reviewing the case in his judgment, held that the bank did not have any defence to its action of the withdrawal of the total sum of N5,240,516,186.21 from the customer’s account and thereby ordered the bank to pay the money to the owner through his Zenith Bank Plc account.

Edward, a lawyer of Edwards and Partners Law Firm, had initiated the suit, FCT/HC/CV/939/2015, in January 2015 following the alleged illegal withdrawal of the money on December 12, 2014.

The money was paid into the plaintiff’s law firm’s account with the GTB on January 2, 2014 by the Accountant-General of the Federation, Jonah Otunla.

The money was said to be for the settlement of a judgment got by his clients, Impecca Services Limited and His Royal Highness, Eze Ezekwo, against the Association of Local Government of Nigeria, as cost of consultancy services they rendered to the 774 local governments.

But in his judgment on Monday, Justice Ashi struck out the Central Bank of Nigeria, the Accountant General of the Federation, Minister of State for Finance, Anaocha Local Government Area, and the Incorporated Trustees of ALGON from the suit as defendants on the grounds that they were not necessary parties.

The plaintiff stated, in the suit’s originating processes, that shortly after the money was paid into his account on behalf of his clients, GTB made some disbursements from the account as directed, but that he was only informed on December 12 by an official of the bank that the Central Bank of Nigeria had withdrawn the N5.3bn.

He said that when he enquired from the bank why it made deduction from his account without his consent, he said GTB only insisted that the withdrawal was made in obedience to CBN directive, which it could not disobey.

Justice Ashi held in his judgment that GTB betrayed the banker-customer relationship between it and the plaintiff.

The judge held that   it was wrong for GTB to have made withdrawal from the customer’s account without the customer’s knowledge and consent.

The judge held that GTB’s claim that it was helpless and that the withdrawal was at the instance of CBN was not tenable.

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Fuel truck drivers in Nigeria go on strike

The Petroleum Tanker Drivers arm of the Nigeria Union of Petroleum and Natural Gas Workers, has suspended loading of petroleum products in the entire South West zone, including Ilorin, a situation that has aggravated the scarcity of the product in Lagos and its environs.

The action will worsen the petrol supply situation because products for most parts of the country are usually loaded from the zone for delivery to other parts.

Sources in Apapa, Lagos said the suspension of product loading by the drivers would be for a long time.

“This is, indeed, a very challenging time for businesses in the downstream sub-sector of the petroleum industry. As we speak, there was no loading today (Monday) in the whole of the South West, including llorin,” one marketer, who did not want to be named, told our correspondent in a telephone interview.

“We don’t know when this action will be called off,” the source added.

Another marketer, who was willing to reveal the content of the message sent by the PTD, said the situation had got out of hand.

The message from the PTD group to NUPENG members read, “Comrades/unit chairmen/executives, you are directed to suspend all loading activities in all the depots as from Monday, 18th of May, 2015.

“There will be severe sanctions for any chairman/others that does not comply.”

Our correspondent learnt from industry sources that the tanker drivers were advised to take the action by the marketers, who were owed subsidy arrears running into over N200bn by the Federal Government.

There have been heightened fears among the marketers that they may not be paid the subsidy arrears if the current government does not take full responsibility to liquidate the debt.

Two weeks ago, the tankers were withdrawn from the roads by the National Association of Road Transport Owners in protest against the failure of the marketers to pay their transport claims for lifting products from the depots to filling stations across the country.

The Executive Secretary, Major Oil Marketers Association of Nigeria, Mr. Thomas Olawore, had hinged the inability of the marketers to pay the transporters on the settlement of the subsidy claims owed the marketers by the Federal Government.

Despite the payment of N154bn to the marketers, who in turn made a part payment to NARTO, the scarcity of petroleum products, especially petrol, has persisted, grounding economic and social activities in the country.

Olawore had earlier confirmed that the marketers paid NARTO from the N154bn subsidy claims paid to them by the Federal Government.

He said NARTO’s N20bn outstanding claims would be paid as soon as the government paid the outstanding N200bn subsidy claims.

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Nigerian interbank rates rise on energy firm's NNPC cash recall

Nigeria's interbank lending rates rose to 14.25 percent on average on Friday from 9.25 percent last week, after state-owned energy company NNPC recalled some of its deposits from banks.
NNPC sells dollars to some lenders on a monthly basis and transfers a portion of the naira proceeds to its account with the central bank, leading to a rate spike.
Banks had a balance of 214 billion naira at the central bank by Friday compared with 494 billion naira last week.
In addition, cash outflows to bonds and Treasury bills purchases totalling 202 billion naira ($1 billion) negatively impacted the liquidity level in the system and caused rates to rise, traders said.
Nigeria sold bonds worth a total of 60 billion naira ($302 million) at lower yields on all tenors at an auction on Wednesday.
The secured Open Buy Back rose to 14 percent from 9 percent, higher than the central bank's 13 percent benchmark rate.
The overnight placement rose to 14.5 percent compared with 9.5 percent last week.
"We see rates dropping to 10 percent level next week because of the anticipated disbursement of budget allocations to government agencies," traders said, citing rising liquidity.
The liquidity level is expected to rise after the government injects money into the banking system to fund its transactions.

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S.Africa can expect three more years of power outages, against privatisation -minister

South Africa can expect three more years of power cuts, a cabinet minister said on Thursday, as utility Eskom struggles with supply shortages that have hobbled key mining and manufacturing sectors in the worst outages since 2008.
South Africa's only nuclear plant is expected to add more than 900 megawatts of power to the national grid by the end of May after undergoing maintenance, Public Enterprises Minister Lynne Brown told reporters.
Meanwhile, Brown, who oversees state-owned power utility Eskom, said on Thursday she was not in favour of privatising basic services such as electricity but did not rule out a strategic partner in some instances.
South Africa's Treasury said on Wednesday it is considering either partially privatising Eskom or putting up some of its assets for sale to secure funding for the cash-strapped power, which is struggling with serious power supply shortages.
"I actually don't really believe we should have privatization when it comes to basic services ... (however) there are parts of what we own that could go to a strategic partner, but when it comes to basic services I am not in favour," Lynne Brown told reporters in response to a question on the possible privatisation of Eskom.

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Nigeria sells 60 bln naira bonds, yields dip across all tenors

Nigeria sold bonds worth a total of 60 billion naira ($302 million) at lower yields on all tenors at an auction on Wednesday, the Debt Management Office said on Thursday.
The debt office said in a statement that investors submitted total bids of 183.34 billion naira compared with 184.72 billion naira at the last auction.
The lower yields reflected the trend in the secondary market, which remain at below 14 percent following a sharp rise immediately after Nigeria's peaceful elections in March.
The 5-year, 10-year and 20-year tenors each received a total of 20 billion naira, the debt office said.
The 5-year paper was sold at 13.84 percent, lower than 14.44 percent the debt attracted at the last month's auction.
The 10-year bond fetched a yield of 13.48 percent against 14.22 percent last month, while the 20-year debt attracted a yield of 13.88 percent compared with 14.45 percent last month.

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Ghana's consumer inflation rises to 16.8 pct in April

Ghana's annual consumer price inflation rose to 16.8 percent in April from 16.6 percent in the previous month due in part to a rise in the price of utilities, the statistics office said on Wednesday.
The year-on-year non-food inflation rate for April was 23.2 compared with 23.1 percent in March, while the food inflation rate that stood at 7.2 percent, said government statistician Philomena Nyarko.
Housing water, electricity, gas and other fuels rose at 25.0 percent, she told a news conference.
The West African nation started a three-year aid program worth $918 million with the International Monetary Fund (IMF) in April to restore fiscal balance to an economy dogged by a deficit, a debt-to-GDP level close to 70 and a falling currency.
Ghana received the first disbursement of $114.8 million as part of the IMF program and the government said the funds would be used to boost the central bank's reserves.
The government also expects the deal to unlock additional donor and investor inflows in support of the local cedi currency.

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Kenya's Equity Bank plans Nigeria, 9-nation Africa expansion

• Expansion will be via acquisition or new operations
• CEO given 10 more years to oversee expansion
• Equity to formally launch mobile banking service in July

 Kenya's Equity Bank plans to expand its operation to 10 more African countries, including Nigeria in the next 10 year, in addition to the five it already serves, by building operations from scratch or acquiring existing lenders, its chief executive said on Wednesday.
James Mwangi told Reuters the bank, Kenya's largest by number of customers, had extended his contract by 10 years in April, to steer the expansion.
During his first 10-year term as CEO, Mwangi turned a specialist in small loans with 600,000 customers in Kenya into a full-scale commercial bank with 10 million customers, now also operating in Uganda, Tanzania, Rwanda and South Sudan.
He said the bank's expansion strategy aimed at moving into Democratic Republic of Congo, Burundi, Zambia, Zimbabwe, Malawi, Mozambique, Botswana, Ghana and Nigeria. He also wants to enter Ethiopia, currently off limits to any foreign bank.
"It involves seeking to raise the number of customers from 10 million to 100 million over the same period," Mwangi said.
Equity will consider acquisitions in Nigeria, Democratic Republic of Congo and Ethiopia, once it opens up, he said, adding it planned new operations in other markets.
"Our best experiences have been on greenfields, so for the small countries we know greenfield it will be," Mwangi said, referring to Equity's experience of expanding in east Africa.
For bigger markets, he said "sometimes you need an engine to scale as opposed to a greenfield."
With the exception of the move into Nigeria that may require a cash injection, the 10-nation expansion would be funded from operations, Mwangi said, citing Equity's return on assets of 5.5 percent and return on equity of 31 percent last year.
Equity has also committed to preserving its dividend policy of paying out 40 percent of available profit after tax even during the expansion, he said.
The bank is testing a mobile phone-based banking service, Equitel, which it aims to formally launch in July and break even by September, he said.
Equity has 768,000 active SIM card users after launching its network in partnership with telecoms operator Airtel Kenya, aiming to take on market heavyweight Safaricom's M-Pesa service.
Equitel users can transfer money, access credit and make payments by phone. It also offers typical mobile services of calls, text messages and Internet browsing.
Equity leases Airtel's telecoms infrastructure network, so it keeps all the revenue. "We have really focused on what we believe is the future infrastructure of banking," Mwangi said.

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Nigerian interbank rates rise on Treasury bills sales

Nigeria interbank lending rates rose 3.25 percentage points week-on-week on Friday to 9.25 points on average, driven by large treasury bills sold at both primary and secondary market by the central bank, which soaked up liquidity from the system.
The central bank sold about 250 billion naira ($1.26 billion) in the open market operations bills and 150.6 billion naira worth at an auction on Wednesday.
"The market has been very liquid from the spillover from budget allocations and large matured bonds two weeks ago, but the outflows to fresh treasury bills sales drained some liquidity and caused rates to rise on Friday," one dealer said.
Nigerian interbank lending rates dropped below 10 percent three weeks ago, their lowest this year, because of a liquidity boost from a large cash injection into the banking system from retired bonds, treasury bills and budget allocations to government agencies.
Banks had a balance at the central bank of 494 billion naira on Friday compared with over 840 billion naira on Monday, traders said.
The secured Open Buy Back rose to 9 percent from 6 percent, 4 percentage points below the central bank's 13 percent benchmark rate.
Overnight placement rose to 9.5 percent against 6 percent last week.
"We expect little change in lending rates next ... week, unless central bank embark on aggressive mopping up of liquidity" to reduce excess cash in the system, another dealer said.

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Nigerian bond yields seen falling at auction

Nigerian bond yields are likely to fall at auction next week after the debt office slashed the amount of debt it will borrow.
Nigeria plans to sell 60 billion naira ($301.51 million) of 5, 10 and 20-year Treasury bonds next week, short of the usual 70 billion naira worth of bonds sold at the previous auction last month.
"The bond market has been active all week, with yields trending down to 13.60 percent levels as some investors taking position in the market ahead of next week's auction after the debt office slashed amount on offer," one dealer said.
Traders said though some investors were taking profit in the market on Friday, but say this could be short-lived.
Yields on the benchmark maturing in 2024 traded at 13.77 percent on Friday compared with 14.06 percent last Thursday, 2022 traded at 13.70 percent against 14.11 percent, while the 2016 traded at 13.98 percent compared with 14.01 percent.

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Nigerian naira to remain flat on CBN tight control

Nigeria's naira is not seen making any dramatic moves in the near term as the central bank sustains its tight control over the local currency, though there have been some dollar flows from month-end sales by some oil companies.
    The local currency has held flat at 197-199 to the dollar since February when the central bank introduced controls to halt rapid depreciation in the wake of a sharp fall in global oil prices.
    Traders said each bank now depended on dollar flows from oil companies to augment supply from the central bank in order to meet their customers' demand.
    "We are looking forward to a change in policy direction by the incoming government because the forex market has remained low in activity since the introduction of controls by the central bank," one dealer said.
    Traders said the central bank sells dollars at the interbank market at irregular intervals to sustain the exchange rate at the present level.

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Nigeria raises 150.6 bln naira in Treasury bills

Nigeria raised 150.60 billion naira in Treasury bills, with yields mixed compared with the previous sale last month, the central bank said on Thursday.
The yield on the 3-month bill was stable at 10.09 percent, the same as at the April 22, auction. The central bank sold 45.17 billion naira in the 3-month paper.
A total of 23.43 billion naira was sold in the six months paper at 12.89 percent, higher than the 12.80 percent yield at the last auction, while 82 billion worth of the one-year paper was sold at 13.39 percent against 12.99 percent last month.
Investors - mostly domestic banks and pension funds - submitted bids worth a total of 329.97 billion naira against 669.66 billion naira at last month's auction.

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Angola says to end petrol subsidies as oil drop bites

• Fuel price rises since Oct saved Angola $1 bln - finmin
• Lower oil prices hit spending in major crude exporter
• Angola slashed budget, increased borrowing this year

Angola will end petrol subsidies and increase the price of other fuels, the finance ministry said, after last year's plunge in global oil prices hammered the finances of Africa's second largest crude exporter.
In February, Angola slashed spending in its 2015 budget, widened its fiscal deficit projections and said it would sharply increase borrowing.
Angola imports most of its fuel due to insufficient refining capacity and it spent around 4 percent of its 2013 budget on fuel subsidies, according to Control Risks.
"Gasoline now joins the free price system, ending the burden on the state of the cost of subsidies," a ministry statement seen by Reuters on Thursday said, adding that the changes come into effect on Sept. 30.
"The ongoing effort to adopt realistic prices will help strengthen social programmes and reduce inequality, since subsidies benefit the most favoured groups and encourage fuel smuggling to neighbouring countries."
Angola has been gradually increasing fuel prices in recent months and has saved 110 billion kwanza ($1 billion) from reduced subsidies since October last year, the statement said.
The price of diesel will increase by 25 percent to 75 kwanza per litre, although the state still subsidises 21 percent of the cost, the finance ministry statement said.
State-oil company Sonangol will now determine the price of petrol, the finance ministry said. Angola increased the price of gasoline last September by 25 percent to 75 kwanza per litre.
The International Monetary Fund, which entered a $1.4 billion loan deal with Angola in 2009, has urged the southern African country to reduce fuel subsidies to free spending for infrastructure and encourage the building of refineries.
Fuel price increases have prompted widespread protests in other African countries, including Mozambique and Nigeria.
Angola, which has well-funded security services, has not suffered from serious unrest after previous fuel price rises.

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World food prices fall to near 5-year low in April - UN FAO

Global food prices fell in April to their lowest since June 2010, as dairy led most commodities down, the United Nations food agency said on Thursday.
The U.N. Food and Agriculture Organization's (FAO) price index, which measures monthly changes for a basket of cereals, oilseeds, dairy, meat and sugar, averaged 171 points in April, 1.2 percent below its reading in March.
High global production, a strong U.S. dollar and cheaper crude oil have helped cap food prices for the past year and the index has been declining since April 2014.
There are no major concerns about supply, so external factors are likely to have more influence over price developments in the near future, FAO senior economist Abdolreza Abbassian said.
"My gut feeling is that the exchange rate would have the biggest influence, and if the dollar does get weaker this could be supportive to prices," Abbassian said.
Meat prices bucked the trend, rising in April for the first time since August 2014.
The FAO forecast world cereal production in 2015 would fall by 1.5 percent from the previous year, with overall output reaching 2.509 billion tonnes. Most of the decrease would come from reduced planting of maize, the agency said.
Cereal stocks at the end of the 2015-16 season are forecast to reach 626.6 million tonnes and world wheat output is due to hit 719.1 million tonnes, the FAO said.

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Nigeria borrows N473 bln in four months to fund budget -fin minister

Nigeria has borrowed 473 billion naira in the first four months to fund its 2015 budget, which was approved by the parliament last month, finance minister, Ngozi Okonjo-Iweala said at a press briefing on Tuesday.
The Senate had last week approved 4.493 trillion naira budget, while the house of representatives had earlier approved 4.42 trillion naira, 51 billion naira more than the senate's approval.

The budget was presented to both chamber of the parliament about five months ago by Okonjo-Iweala.

The minister finance minister said in spite of the none approval of the budget by the parliament and signed by the president, the constitution allowed the government sustain its business within a certain limit in the first six months of the year.
She noted that the fall in global oil price since last year had continued to impact negatively on government revenue.
Okonjo-Iweala said the country experienced 50 per cent cut in revenue due to fall in oil prices coupled with low revenue receipts from non-oil sources as most companies had yet to file in their tax returns in the first quarter of the year.
She said the government resorted to borrowing 473 billion naira, more than half of the N882 billion naira debt provided for borrowing in the 2015 budget.
The minister said in as much as the government had in the past tried to reduce the level of borrowing, such could not be achieved this year due to cash flow problems.
For instance, she said government borrowing was brought down to about N570 billion last year, noting that the figure was reviewed upward this year to cushion the negative impact of drop in revenue.
According to her, government plans to borrow about N380 billion of the N882 billion from external sources, while the balance would be borrowed locally.
She said, “We have tried to work within the budget. The budget provides for N882bn in borrowing and we have had to increase the borrowing budget this year as compared to last year when we actually brought it down.
“If you all recall, we said we would be bringing down borrowing to finance the budget and we have been doing that steadily.
“Last year, the borrowing came down to about N570bn; but this year, because of the very difficult cash flow situation, we have provided N882bn in borrowing.
“About N380bn of that is external borrowing and the balance of N502bn is for domestic borrowing. So, what we’ve had to do to manage this first half is to front-load the borrowing programme, which is a normal reaction that you have because the cash crunch has been very difficult.
“In the budget, we provided for N882bn and all we have borrowed is within the budget. What we have borrowed so far is N473bn; so, we still have more room for borrowing.”
Okonjo-Iweala described the first half of this year as the most difficult time for the government, adding that it would do all within its powers to ensure that the country would not end up bankrupt.
According to the minister, the first part of the year usually witnesses low revenue because tax receipts come in from the middle of the year.

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Nigeria to sell 60 bln naira in bonds on May 13

Nigeria plans to sell 60 billion naira ($300 million) of 5, 10 and 20-year sovereign bonds on May 13, its fifth debt auction of the year, the Debt Management Office (DMO) said on Tuesday.
The DMO said it would sell 20 billion naira each of the papers, due to mature in 2020, 2024 and 2034 respectively.
The papers are re-openings of previous issues and the results of the auction will be published the following day.
Nigeria, sub-Saharan Africa's biggest economy, issues sovereign bonds monthly to support the local bond market, create a benchmark for corporate issuance and fund its budget deficit.

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