Shell to focus future investment in Nigeria on gas - Nigeria MD

Shell will focus its future investments in Nigeria on natural gas for domestic consumption and export, the managing director of the oil major's joint venture in the country said on Wednesday.
"Our strategy is to invest a lot more in gas, for domestic consumption and export. We want to grow our deep water and constrain our onshore oil production," Osagie Okunbor told reporters in Port Harcourt, the country's oil hub.
Shell has been divesting onshore oil-producing assets for the last few years and completed another set near the end of March.
The sales are part of an effort to move away from onshore oil projects in Nigeria, which are plagued by industrial scale theft, security problems and pipeline spills, which have become a growing legal liability.
Okunbor added that Shell's flagship project would be the Gbaran-Ubie project, which will increase gas supplies for the Bonny liquefied natural gas (LNG) export terminal. A first phase began production in 2010.
Bonny is Nigeria's only LNG export terminal.

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Nigeria Cbank adjusts fx peg again, naira firms at unofficial mrkt

Nigeria's central bank adjusted its exchange rate peg on Wednesday to 196.95 naira against the dollar from the 197 set since July, traders said, quoting a broadcast from the regulator.
The adjustment is the sixth since the central bank introduced a tight controls on the foreign exchange market in February.

Access Bank chief

The bank said at the time it would sell dollars only at 198 naira to customers through the interbank based on direct orders by banks.
The local currency appreciated on the parallel market on Wednesday, trading at 222 to the dollar, better than 224.50 a dollar on Tuesday after the central bank injected $80 million into the bureau de change market, traders said.
The naira also closed firmer at the new rate of 196.50 to the dollar at the official interbank market compared with 197 per dollar rate the previous day.

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Nigeria plans increase capital for SWF, to get $1bn fresh capital

Nigerian Government to increase its Sovereign Wealth Fund (SWF) to $4.5 billion by 2018, erasing earlier fears that the Fund may not receive additional capital, at least in the near term, due to low oil prices.
Nigeria’s SWF, managed by the Nigerian Sovereign Investment Authority (NSIA ) still has about $1.5 billion assets under management since 2011 when it was established.
The new proposal is coming a few weeks after the fund managers raised concerns that weak oil prices were dampening hopes of additional contributions to the SWF. The plan by the government is to inject at least $1 billion each year for the next three years.

President Buhari

The proposal is contianied in a draft 2016 budget and Medium Term Plan (2016-2020), which also highlights plans to raise the Excess Crude Account (ECA) to $7.65 billion by 2018 and grow foreign reserves to $36.15 billion.
The policy document still being reviewed, has six main pillars, including economy; social development; infrastructure; governance; environment; as well as states and regional development, which would form the thrust of fiscal expenditure between 2016-2020.
The proposal, if pulled through, would bring total assets under mangement by the NSIA to at least $2.55billion by end of next year.
With $1.55 billion total assets under management today, Nigeria’s SWF ranks 52 out of the 84 SWFs globally, which manage assets worth over $7 trillion.
Norway leads the largest global total assets under management at $882 billion, followed by United Arab Emirates at $773 billion and then China at $747 billion.
But African SWFs are still fringe players accounting for just about 2.3 percent of all SWF assets globally, with Algeria and Libya accounting for more than 80 percent of this proportion.
The Nigerian government has not been able to make additional contributions into the nation’s SWF since the initial $1 billion seed capital, and an additional $550m the country’s finances have been battered by more than a halving in crude oil prices in the last one year.
And with oil prices going further South, there were earlier fears that the President Buhari administration may not be able to make more commitments into the fund unless the present tight oil revenue improves.
Uche Orji, CEO, Managing Director NSIA confirmed that funding was a major challenge that the SWF as well as the country faces in the immediate.
“Oil price is below benchmark and because we are supposed to be funded when the oil price is above benchmark, so it will not make any sense for the government to make any contribution now that the oil price is still low,” Orji, said recently, after briefing Buhari on the activities and investments of the fund so far.
But he disclosed that they were currently working out possible alternative means of funding, on which they have also briefed the President and which will be made public when tidied up.
The immediate past President Jonathan administration had established the Nigerian Sovereign Wealth Fund (NSWF) in 2011 with an initial $1 billion seed capital from the nation’s excess crude account, and a commitment to funding from the states and federal government.
Of the $1billion capital, $200 million has been allocated to the Stabilisation Fund, $400 million to the Future Generation’s fund and the remaining $400 million to the Infrastructure Fund.
The NSIA manages additional $350 million and $150 million on behalf of the Nigerian Bulk Electricity Trader (NBET) and Debt Management Office (DMO) respectively.
Orji, said despite the lack of funding, the NSIA had so far made a turnover of N15.7billion profit.
Nigeria’s SWF invests and manages revenue generated when oil prices exceed the figure budgeted by the government.
However, oil prices have been unstable, stifling government’s resources as Nigeria currently almost solely depends on revenue from oil.
The NSIA, the manger of the fund was set up to receive, manage and invest in a diversified portfolio of medium and long term revenue of the Federal Government, State Government, Federal Capital Territory, Local Government and Area Councils, in preparation for the eventual depletion of Nigeria’s hydrocarbon resources, as well as the development of critical infrastructure.

CULLED FROM BUSINESSDAY

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Nigerian firms in trouble as central bank measures backfire

* Nigeria imposes forex controls, bans import of 680 items

* Manufacturers warn import ban might force closure of plants

* Companies wait for weeks to get dollars to pay suppliers

* Africa's biggest economy suffers from oil price crash

Nigerian companies making anything from soap to tomato paste could run out of raw materials and be forced to shut down as Africa's top oil producer has effectively banned the import of almost 700 goods to prevent a currency collapse.

Emefiele, CBN governor

Selected luxury items such as make-up or brown bread imported from Europe have become scarce in some shops as the central bank denies importers dollars, seeking to stem the fallout from a crash in vital oil revenues hammering Africa's largest economy.
The central bank has restricted access to foreign currency to import 41 categories of items to stop a slide of the naira but the Manufacturers Association of Nigeria (MAN) said this in fact amounted to about 680 individual items.
The foreign exchange bans are part of a long-term plan by President Muhammadu Buhari to encourage local manufacturing, but they run the risk of pushing the economy closer to recession after growth halved in the second quarter compared with the same period last year.
Many items on the central bank list - ranging from incense and toothpicks to plywood, glass and steel products -- are not available in Nigeria in sufficient volumes.
While Nigeria grows a lot of tomatoes, transport is poor and it lacks facilities to produce the concentrate needed by factories making tomato paste, a staple in the West African nation.
"We've taken this matter up with the central bank and the highest authority in this country ... Fiscal authorities will also be involved, they weren't before," Remi Ogunmefun, the director general of MAN, said.
MAN had told the central bank 105 items should be removed from the list, but the bank said it could not afford to do so and agreed to look into removing 44 items.

MAN also suggested 93 finished items that should be added to the list because Nigeria produces enough of them.

The economic crisis is a blow to Buhari who wants to end dependence on oil revenues but faces criticism for failing to name a cabinet four months after taking office.

Since the central bank unveiled its controls in June, executives have had to deal with foreign suppliers worried they won't get paid. They also struggle to convince banks to approve dollar payments.

"It takes minimum 10 days now to get dollars, before it was 24-48 hours, and sometimes when you request like $100,000, you only get $80,000 and it's getting worse," said an executive at a large furniture company, asking not to be named.

It's not clear which imports are still allowed as the central bank lists only categories. He can still bring in beds and chairs to be assembled in Nigeria, but not sofas.

Some firms have defaulted on contracts and lost credit lines. "Many companies have defaulted on fulfilling foreign obligations ... even blue chip companies ... for the first time," said Muda Yusuf, director general of the Lagos Chamber of Commerce.



POLICY VACUUM

With no cabinet in place, central bank governor Godwin Emefiele finds himself discussing policies usually reserved for a finance or economy minister.

At a news conference on Tuesday, Emefiele justified the controls -- which Buhari has backed -- as a way to create jobs in a country hit by poverty despite its oil wealth.

"I read an advertisement in a paper that shortly after we announced the foreign exchange exclusion for the importation of tomato paste they advertised for almost 1,000 jobs," he said, citing the example of a tomato paste company, a sector that experts do not in fact expect to flourish now.

Emefiele has ruled out another naira devaluation but on Tuesday loosened monetary policies to inject liquidity into banks, which had been forced to transfer government revenues to a central bank account as part of an anti-corruption drive.

Nigeria stepped up import controls when Buhari led a military government in the 1980s and the economy suffered then too.

Razia Khan, Chief Economist, Africa, at Standard Chartered Bank, said there was little certainty the latest controls would boost manufacturing.

"Nigeria has had substantial experience with similar import-substitution policies in the past," said Khan. "Rarely have they succeeded in creating a vibrant, competitive industrial sector, with the capability of creating the employment growth that Nigerian demographics otherwise demand."

According to the Lagos Chamber of Commerce, Nigeria is short of 600,000 tonnes a year of palm oil, that is used to make soap, detergents and cosmetics that have also been restricted. Pharmaceutical firms lack bottles, and glass manufacturers do not have the glass to make them.



BAGS FULL OF CASH

Companies also suffer from the central bank's attempt to stop the dollarisation of the economy. A ban on cash deposits of foreign currency has forced firms to use informal "transfer markets", whereby people abroad wire dollars on a company's behalf.



That exchange rate is well below the official rate to the dollar. Some executives now carry bags of cash to deposit in neighbouring countries.

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Fitch: Nigerian Banks' Foreign Currency Liquidity Still Tight

Cutting reserve requirements (CRR) will not add liquidity to the Nigerian banking system because it releases no additional foreign currency,  Fitch Ratings has said.

"Substantial government-related foreign currency deposits are exempt from reserve requirements and have already been withdrawn from the system after the government ordered all public-sector deposits to be moved from commercial banks into the centralised Treasury Single Account (TSA) earlier this month,." Fitch said in its latest assessment of Nigerian banks.
Nigeria's Monetary Policy Committee (MPC) on Tuesday reduced mandatory reserve requirements on all local-currency deposits to 25 percent from 31 percent in a bid to ease liquidity pressure, stimulate new lending and boost economic growth.
This should provide some additional liquidity into the banking system, while some analysts estimated that around 1.3 trillion naira of deposits were sucked out of the banks in September, reflecting transfers to the TSA. Public-sector deposits traditionally account for around 10 percent of total banking sector deposits. However central bank governor, Godwin Emefiele said the amount sucked via TSA was less than being estimated by analysts. a banker put the figure at 250 billion naira.
"Lower reserve requirements will not offset the tighter foreign exchange liquidity at Nigeria's banks. A currency split of public-sector deposits is not disclosed but in our opinion, forex deposits are substantial, held up by oil-related deposits,". Fitch noted.

The centralising of public-sector and government-related forex deposits at the TSA has made it increasingly difficult for commercial banks to meet customer demand for forex.
Forex availability was already strained in 2015 due to falling oil revenues, central bank action to defend naira depreciation and heightened negative investor sentiment towards emerging markets. Warnings throughout the year that JP Morgan intended to remove Nigeria from its Emerging Markets index, which occurred in mid-September, also triggered heavy forex outflows as investors sold Nigerian securities.
"Viability Ratings assigned to Nigeria's banks, all in the 'b' category, already reflect a wide range of weaknesses, including the increasingly strained forex liquidity position. Our sector outlook for Nigerian banks remains negative," Fitch said.
The agency said key financial metrics reported by Nigerian banks are likely to continue to weaken in the closing months of 2015. Impaired loans have been rising over the past 12 months. "We expect them to rise above the central bank's informal 5 percent of total loans cap but to remain below 10% at year-end. Pressure is mounting on regulatory capital ratios and we expect Tier 1 capital ratios at many banks to fall below 15%, which is low by recent Nigerian standards. Loan growth is slowing under the strain of lower oil prices. Our expectations for loan growth are muted - a nominal 5% increase in 2015, which is low by Nigerian standards - due to the much deteriorated operating environment.

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Oil up to $50 as U.S. stock-draw balances China data

• U.S. crude inventories fall 1.5 mln barrels - EIA

• China factory PMI falls to 6-1/2-year low

• Weakening Chinese economy to hit global oil demand

The price of Brent crude oil jumped more than 2 percent to $50 a barrel on Wednesday as a drawdown in U.S. crude oil stocks outweighed the negative impact of weak economic manufacturing data from China.

The U.S. Energy Information Administration said U.S. crude inventories fell 1.9 million barrels to 453.97 million last week, exceeding analysts expectations of a draw of 500,000 barrels. [EIA/S]
The data was broadly in line with a report on Wednesday by the American Petroleum Institute (API), which had said U.S. crude stockpiles fell 3.7 million barrels last week.
Although total U.S. oil inventories are near record highs, the draw suggests a rebalancing of the world's biggest domestic oil market is under way as oil production slows in the face of low prices.
"We had a bigger draw down in crude than expected," said Oliver Sloup, director of managed futures at Chicago-based iiTrader.com. "The draw down is giving us a bit of a boost and that's prompted some short covering."
Benchmark Brent for November was up $1.00 a barrel at $50.08 by 1445 GMT. U.S. light crude for November <CLc1> traded up 65 cents at $47.00.
The U.S. industry data helped oil resist the negative impact of a sharp contraction in Chinese manufacturing, which darkened the outlook for the world economy.
Flagging demand is dragging China's factory sector into its sharpest contraction in 6-1/2 years, a private survey showed on Wednesday, triggering a flight to safety in Asian markets that analysts say could extend across the globe.
The preliminary Caixin/Markit China Manufacturing Purchasing Managers' Index fell to 47.0 in September, its lowest since March 2009. Levels below 50 show a contraction.
Oil prices have been weak for over a year and are now less than half their peak levels in 2014 thanks to massive oversupply by oil producers in the Middle East and North America.

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Falling oil price raises doubts over Africa's "middle class"

Lower commodity prices hammer African economies
Definitions of African middle class vary wildly
Investment focused on affluent countries, cities
Growth, investment may not benefit masses, as hoped

Whether it's selling pensions, pasta or toothpicks, investors in Africa have been targeting the booming middle class. But a year of diving commodity prices has exposed how much the continent, and its consumers, still rely on exporting resources.
A decade of growth above five percent in sub-Saharan African economies has drawn a wave of interest in selling consumer goods and providing services to a rapidly urbanising population of 1 billion.
Millions of Africans have moved out of subsistence farming, but national economies have yet to make the transition from relying on commodity exports to mass manufacturing, the model which transformed living standards in much of Asia.
Now the end of an upswing in global prices for energy, minerals and farm products has hammered economies across Africa and pushed their currencies sharply lower.
This, in turn, is raising doubts about whether the growth of the African middle class has been overplayed: has the wealth created by the decade of growth been widely distributed, or have only relatively small pools of urban consumers merely benefited from a transient commodity boom?
The expansion of budget retailer Shoprite, telecoms firm MTN and consumer goods giants Nestle and Unilever shows that many lower-income Africans do have more money to spend.
This spending power, however, seems closely linked to the price of resources. More than 87 percent of government expenditure across Africa is derived from commodity exports, according to consultancy DaMina Advisors.
Foreign direct investment in resource-rich South Africa, Nigeria, Ghana and Mozambique totalled $23 billion in 2013, more than the rest of sub-Saharan Africa combined. Most of that was in commodities production.
As growth slowed, Nestle said in June that it would cut 15 percent of its workforce in Africa because it had overestimated the rise of the middle class.
"The fall in oil and metals prices has certainly shown that Africa remains too dependent on commodities," David Rubenstein, co-CEO of U.S. private equity firm Carlyle, told Reuters. "The 'middle class' theory may need a rethink."
HOW BIG IS IT?
The African Development Bank said in 2011 that 34 percent of Africans were now middle class, in what it described as a bulging "middle of the pyramid". Under its broad definition, anyone living on between $2-$20 a day was middle class.
Consultancy Mickinsey, however, defines the class as households spending $20,000 a year while the OECD's range is $10-$100 a day. Depending on the calculation, the middle class therefore ranges from 16 million to 327 million.
"There have been numerous studies done on the size of Africa's middle class, often at cross-purposes," Razia Khan, head of Africa research at Standard Chartered, told Reuters. "There is now a question mark as to how important the concept of 'middle class' might be."
Backers of the concept say the middle class's emergence proves Africa has achieved inclusive growth that lifts the masses out of poverty, and not just a commodity-fuelled boom which benefits only foreign investors and a local elite.
Mickinsey said the middle class, which it reckons accounts for only 1-2 percent of African households, will contribute 40 percent of spending-power growth, suggesting many investors are really targeting the wealthy.
Krispy Kreme Doughnuts and coffee-giant Starbucks have recently announced plans to enter South Africa, the continent's most developed economy.
Hotel groups such as Marriott and AccorHotels are going ahead with expansion plans in major African cities. These companies are all aiming for high-end consumers, not people living on $2 a day.
RICH GETTING RICHER
"What we are seeing is not a pyramid bulging in the middle but a society where the top spenders are getting richer," said Morten Jerven, author of "Poor Numbers: How We Are Misled by African Development Statistics and What to Do about It".
"This may be good news for some banks and investors, but it does not carry the same connotations for social scientists," he said.
Some of those who are bullish on Africa say the continent has six of the 10 fastest growing economies, but often fail to mention it also has seven of the 10 most unequal countries.
Continent-wide statistics can be misleading because they include economies growing from a very low base, such as South Sudan and the Democratic Republic of Congo (DRC). Here investments beyond the commodities sector aren't attractive.
"Where I come from there are the very rich and very poor," Serge Ramazani, a migrant from the DRC who lives in the rundown Johannesburg suburb of Yeoville, told Reuters. "People are saying Africa has a lot more 'middle class' but they are describing the big boys, the elite."
Whether or not it benefits a small or large "middle class", investment continues to flow into Africa because high returns remain available in pockets. These include established economies such as South Africa as well as the big cities of counties such as Nigeria, Kenya, Ethiopia, Ghana and Angola.
"Perhaps definitions about the middle class aren't clear," Carlyle's Rubenstein said. "But if you ask me: do I think incomes are rising in Africa? Is there a growing consumer class? Are many African countries good investments? I’d say: absolutely, yes."

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Ecobank gets $285 mln loan from Deutsche Bank

The pan-African banking group Ecobank Transnational Incorporated (ETI) said on Wednesday it has obtained a $285 million senior unsecured loan from  Deutsche Bank AB.

The lender in a notice to the Nigerian Stock Exchange (NSE) said was obtained through a syndicates of banks led by Deutsche Bank.

ETI said it appointed Deutsche Bank to be Initial Mandated Lead Arranger, Book-runner and Facility Agent, together with a syndicate of international banks to arrange the facility. 

"Deutsche Bank A.G has successfully closed primary syndication with an over-subscribed order book. The final size of the facility was maintained at $285 million," . ETI stated.

The bank said it worked with Deutsche Bank on this transaction in view of the latter's strong distribution platform and rapid execution capabilities. 

The facility will be used to refinance existing loans, the commercial lender said.

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Nigerian bonds yields fall, interbank lending rates go up

Yields on Nigerian bonds declined on Wednesday after the central bank slashed its cash reserve ratio by 6 percentage points to boost liquidity in the banking system but interest rates remained high at the interbank market, traders said.
"We have seen yields dropping this morning in response to the expected increase in liquidity," one dealer said.

Emefiele, central bank governor

Nigeria's central bank kept its benchmark interest rate on hold at 13 percent on Tuesday but loosened monetary policy by cutting banks' cash reserve ratio to 25 percent to ease liquidity shortages.
The central bank had acted to ease liquidity shortages after authorities forced commercial banks to move government revenue to a Treasury Single Account (TSA) at the central bank, part of a drive to fight corruption.
Yields on Nigerian debt, which had risen to 17 percent after JP Morgan said two weeks ago it would to remove Nigerian bonds from a key emerging markets index by October, slipped below 15 percent.
The benchmark 2024 bond was quoted at 14.93 percent on Wednesday, down from 15.15 percent on Tuesday before the central bank's move. The 2020 paper was trading at 14.99 percent against 15.18 percent closed on Tuesday, while the longest tenor 2034 was quoted at 14.99 percent from 15.16 percent.
But at the same time overnight lending rates were quoted at between 30-50 percent from 15.5 percent the previous day, banking sources and traders said.
Traders said there was a liquidity deficit of about 110 billion naira on Wednesday but banks were holding off deals until an expected injection of cash when the new cash reserve requirement (CRR) would show its effect.
"No one is borrowing at such a high rate for now, most fund takers are quoting between 8-9 percent for overnight because of the expectation of an increase in liquidity," another dealer said.
Some analysts have put the amount sucked out of the banking system at around 1.2 trillion naira or 10 percent of deposits but Bismarck Rewane, chief executive of Lagos-based consultancy Financial Derivatives, said outflows were in the range of 250 billion naira.
Central bank governor Godwin Emefiele declined on Tuesday to specify the amount transferred, saying only people should not believe estimates quoted in newspapers.

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Nigeria's says TSA drains less cash from banks than speculated

The central bank said the amount transferred from the banking system to government treasury Single Account (TSA) was less than the figures being speculated by some analysts.
Some analysts had put the amount transferred from the banking system at around 1.2 trillion naira or 10 percent of banking system total deposits, However a banker says the amount actually transfer was in the region of 345 billion naira.
Dapo Olagunju, head of treasury Access Bank said on a TV programme that net cash transferred was about 2.5 billion naira in the course of moving government revenue to a single account at the central bank.
"TSA is an ongoing exercise, the data review by the committee (MPC) show that liquidity ratio of banks increased moderately. The impact of TSA is moderate on banks," Godwin Emefiele said.
He said "Nigerian banks are safe, Nigerian banks are very strong ... we will continue to monitor their activities,"
"The Committee noted that liquidity withdrawals following the implementation of the TSA, elongation of the tenure of state government loans as well as loans to the oil and gas sectors could aggravate liquidity conditions in banks and impair their financial intermediation role, thus affecting
economic growth, unless some actions were immediately taken to ease liquidity conditions in the markets," Emefiele said at the MPC meeting on Tuesday..

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Nigeria's distributable revenues fell in August to 442.606 bln naira

Nigeria's distributable revenues to the three tiers of government fell in August to 442.606 billion naira, down 69.193 billion naira from July, the finance ministry said on Tuesday.
"A drastic drop in crude oil export, shut down and shut-in of production for maintenance at different times and terminals during the month of July were the major issues that negatively impacted crude oil revenue," Anastasia Nwoabia-Daniel, the permanent secretary, said.
She added that the country's rainy day fund, the Excess Crude Account, totalled $2.257 billion as of Sept. 21.
Africa's biggest oil producer depends on crude sales for the bulk of its government revenues and its public funds have been hit by the more than halving of global crude prices since mid-2014. That has left many states unable to pay public salaries in time or fund infrastructure projects and other state services.
In June, the federal government had to step in with a three-pronged bailout for some cash-strapped states that included the restructuring of their debt to commercial banks.

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Nigeria central bank cuts reserve ratio to boost liquidity

Nigeria's central bank kept its benchmark interest rate on hold at 13 percent on Tuesday but loosened monetary policy by cutting banks' cash reserve ratio to 25 percent to ease liquidity shortages, governor Godwin Emefiele said.
The vote to cut the cash reserve requirement from 31 percent was by 7 to 3 votes of the monetary policy committee, he said, adding that the committee had voted unanimously to keep the main rate unchanged.
Liquidity on the interbank market has dried up since authorities last week forced commercial banks to move government revenue to a Treasury Single Account (TSA) at the central bank, part of a drive by President Muhammadu Buhari to fight graft.
"No organisation has been exempted from the TSA," Emefiele said, denying Nigerian press reports about alleged exemptions.
He warned Nigeria might slip into recession next year unless measures were taken to boost growth in Africa's biggest economy. A sharp fall in oil revenues has whacked public finances, delaying public salary payments and putting pressure on the naira.

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Nigeria to inject dollars again into interbank market-traders

Nigeria's central bank will inject dollars into the banking system again on Wednesday to ease a shortage of foreign currency and take some pressure off the local unit, traders and banking sources told Reuters on Tuesday.
"There was a broadcast from the central bank yesterday (Monday) that we should provide cash backing for dollars sale on Wednesday," one dealer said.

Emefiele, central bank chief

The central bank also intervened in the market on Friday although the volume has not been disclosed, traders said.
Nigerian firms say they have struggled to get hold of enough foreign currency to pay for their imports as a fall in the country's revenues from oil, for which prices have been sliding, has dried up the supply and hammered the public finances.
The central bank had in February scrapped its bi-weekly currency auctions, restricting trading to the interbank foreign exchange market to curb speculation.
"We still have large unmet arrears of demand from our customers," another dealer said.
There was no immediate comment from the central bank.
Central bank governor Godwin Emefiele will hold a news conference on Tuesday following a meeting of the monetary policy committee.
A Reuters poll on Friday showed 17 of 20 analysts expect the bank to leave its benchmark rate unchanged at 13 percent, but some analysts say it will ease the cash reserve ratio on commercial banks.
Liquidity in the interbank market has fallen since last week as commercial banks have been forced to move government revenues into a Treasury Single Account (TSA) at the central bank.
The policy is part of new President Muhammadu Buhari's drive to fight corruption. But analysts say it could suck up as much as 10 percent of banking sector deposits in Africa's biggest economy - hitting banks' liquidity ratios.
Emefiele told Reuters last week he was ready to inject liquidity if needed.
The local currency is trading at 198.50 to the dollar on the interbank market, 1.50 naira above the peg rate of 197 to the dollar. It is stable at 222 naira to the dollar on the unofficial market.

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Nigerian interbank overnight rates at 15 pct, liquidity down

Nigeria's interbank overnight lending rate was 15 percent on Monday but liquidity was low as banks had transferred government revenues to a central bank account, traders said.
Trading on the interbank market has seen disruptions for a week as authorities have ordered lenders to move government funds to a "Treasury Single Account" (TSA) at the central bank, part of an anti-corruption campaign.

Emefiele, central bank governor

"Market liquidity has dropped to 56 billion naira by Monday from around (a) 161 billion naira credit balance on Friday," one dealer said.
Dealers said there had been no trading in the morning because commercial lenders were unwilling to make bids for rates quoted first at between 20-50 percent for overnight lending.
"The market liquidity has shrunken because of the implementation of the TSA (Treasury Single Account), but the central bank injected some liquidity into the system from refunds on cash reserves to some banks on Thursday and Friday, which helped ease pressure in the market," one dealer said.
Analysts said about 1.2 trillion naira or 10 percent of banks' total deposits have left the banking system to comply with the TSA order.
Banks are hoping for a cut in the cash reserve requirement rate at the central bank's rate meeting on Tuesday to boost liquidity, a senior treasurer at a major bank told Reuters.
Nigeria's central bank currently requires banks to keep 31 percent of both public and private sector deposits in a reserve account with the central bank.

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Oil prices up 2 pct after U.S. drilling falls

Oil prices rose more than 2 percent on Monday after data showed U.S. drilling slowed and a report said $1.5 trillion worth of planned production was uneconomic at current prices.
Crude has halved in value over the last year as soaring global production overwhelmed demand and the much lower prices have now begun to hit drilling, particularly in the United States.
U.S. drillers have cut the number of rigs in operation for three straight weeks.

NNPC HQ

Global benchmark Brent crude oil rose $1.28 to a high of $48.75 a barrel before easing back to trade around $48.30 by 1350 GMT. U.S. light crude oil futures <CLc1> were up $1.15 a barrel at $45.83.
"The fall in rig counts (is) supporting an otherwise bearish market," said Tamas Varga, oil analyst at London brokerage PVM Oil Associates.
Goldman Sachs said rig data pointed to a decline in U.S. oil production between the second and fourth quarters of this year of more than 250,000 barrels per day (bpd).
Low prices should have long-term impact on oil production.
"While operators are seeking an average cost reduction of 20-30 percent on projects, supply chain savings through squeezing the service sector will only achieve around 10-15 percent on average," energy consultancy Wood Mackenzie said.
"$1.5 trillion of uncommitted spend on new conventional projects and North American unconventional oil is uneconomic at $50 a barrel," Woodmac added.
Commerzbank head of commodities research, Eugen Weinberg, said reductions in U.S. production should, eventually, turn oil market fundamentals, giving prices a lift:
"We are confident that the incipient decline of production in the United States will herald a long-term and fundamental bottoming out process on the oil market," Weinberg said.
Despite such a cut to U.S. spending plans, analysts said prices were expected to remain at low levels for some time as other producers, especially in the Middle East and Russia, kept pumping near record levels.
"Oil producers continue to battle for market share ... widening the global oil surplus," ANZ said on Monday.
The bank expects U.S. crude to fall below $40 a barrel over the next six months and to average just $41 next year. It expects Brent to average $46 per barrel in 2016.

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Nigeria central bank to hold interest rate on Sept 22

• Central bank to hold key rate at 13 pct on Sept. 22
• Bank to hike benchmark rate to 14 pct in Nov
• C.bank needs to relax fx controls and devalue naira                                                                       Nigeria's central bank will wait until November to hike interest rates in Africa's biggest economy, but analysts say it needs to ease the cash reserve ratio on commercial banks first to free up liquidity and kick-start money market trading as soon as possible.

Emefiele, central bank governor

A Reuters poll on Friday showed 17 of 20 analysts predict the Central Bank of Nigeria (CBN) will leave its monetary policy rate unchanged at 13 percent on Tuesday when the committee concludes its two-day meeting.
Of the three who expect a hike next week, two said by 100 basis points while another expects a 200 basis points raise. The poll was taken September 15-18.
The CBN is expected to raise rates by a 100 basis points to 14 percent at the last meeting of the year in November, slightly before economists predict the U.S. Federal Reserve will raise its key federal funds rate after holding it steady on Thursday.
President Muhammadu Buhari's election winning promise to wipe out corruption has not had a good start as he vies for greater oversight and transparency.
He ordered all revenues to be paid into the "Treasury Single Account" from Tuesday. That triggered a liquidity crisis in the interbank market after the measures froze up the flow of cash and stopped trading for the third consecutive day on Thursday.
"It is very likely that the cash reserve ratio will be cut. This addresses the liquidity issues in the Nigerian banking system, especially after the Treasury Single Account was made," said Razia Khan, Africa research head at Standard Chartered.
"However, for as long as Nigeria is adopting a fixed exchange rate regime, and trying to defend its currency, it does not make too much sense to cut the monetary policy rate just yet," she said.
Authorities have implemented unorthodox measures to protect the currency - the bank has blocked access to foreign currency for importing 41 items ranging from soap and toothpicks to cement and private jets.
In an exclusive Reuters interview on Thursday, Governor Godwin Emefiele ruled out a naira devaluation and told people not to panic about the government revenue directive, which risks draining billions of dollars from the system.
However, the Reuters poll also showed that the two best options for Nigeria to improve investor sentiment are to relax capital controls and devalue the currency, based on a smaller sample of responses.
The oil-rich country is excepted to grow below its potential, by just 3.8 percent this year - a downgrade from a survey in July which pegged growth at 4.4 percent. The economy is seen recovering to 5.0 percent growth in 2016.
The growth estimate downgrade is similar to South Africa's economy that is expected to clock 1.9 percent growth this year as China's economic slowdown gains more traction and hurts Africa's two biggest economies.

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Nigerian interbank market not trading as banks pay for bonds

Nigeria's interbank money market halted trading for the fourth consecutive day on Friday as commercial lenders made provision to pay for 45 billion naira of bonds auctioned on Wednesday, draining cash from the banking system.
"All we have is indicative quotes of between 15-20 percent for Open Buy-Back (OBB) and overnight lending, no trading is taking place for now," one dealer said.
Nigeria sold the naira-denominated bonds maturing in 2020 and 2034 at an auction on Wednesday, and payment was due to be effected on Friday.
There were some deals done at 15 percent on overnight placement late on Thursday, traders said.
Liquidity in the interbank money market has shrunk this week, since the government directed commercial lenders to transfer government revenues to a single account with the central bank as part of a drive to fight corruption and aid transparency.
Cash balances held with the central bank by commercial lenders further dropped to 161 billion naira on Friday from 173 billion naira credit on Thursday, and were likely to decline further after payment for the bond purchases, traders said.

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Angolan central bank looks to stem currency slump

Angola's central bank tightened currency liquidity at an emergency meeting on Thursday, after the currency of Africa's second largest oil exporter weakened a further 6 percent this week.
The kwanza has shed nearly 30 percent against the dollar this year as a steep fall in oil prices has hit Angola's economy, the third largest in sub-Saharan Africa.

Dollars

Currencies across the continent have been hammered by a broad-based slump in commodity prices.
Several measures taken this week, including devaluing the kwanza, are being used to increase foreign exchange reserves and support the local currency, traders said.
The kwanza was officially trading at 135.96 per dollar, according to the Bank of Angola's (BNA) website.
But on the streets of the capital Luanda, informal currency sellers were setting their own rates and doing a booming trade, selling a single dollar for as much as 250 kwanza, close to double the rate set by the central bank.
"There no dollars," said Husman, a 29 year-old Congolese migrant working illegally as a currency trader.
Illegal trade in foreign currency has flourished, particularly in the Mártires do Kifangondo district, near Luanda's international airport, where tourists and middlemen for importers jostle to get their hands on scarce dollars.
"I am afraid to say that the U.S. dollar is gonna be even more costly later today, if you don´t buy it now," Husman told Reuters, giving only his first name for fear of reprisals from policemen regularly conducting raids in the area.
The Bank of Angola devalued the kwanza on Monday, to 135.4 to the dollar, following a similar move last week when it accepted a rate of 149.9 per dollar at a currency auction. B]
Analyst Anthony Lopes Pinto said the BNA was likely to keep devaluing the kwanza until speculative margins had been eroded, something black market traders say is unlikely to happen.
On Thursday, the bank raised its standing lending facility, the rate it charges to lend to primary dealers, to 12.5 percent from 12 percent, it said in a statement. It raised the standing facility liquidity absorption rate at which banks can borrow money through repurchase agreements, to 1.75 percent from zero.
The central bank's benchmark interest rate was left unchanged at 10.5 percent.
"This is definitely a tightening of monetary policy," said Anthony Lopes Pinto, managing Director Imara Securities Angola.

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EXCLUSIVE-"Don't panic," Nigerian central bank governor urges banks

By Reuters

Nigerian central bank Governor Godwin Emefiele ruled out on Thursday a naira devaluation and told people not to panic about the government shifting its bank accounts to the central bank, a move that drains billions of dollars from the financial system.
In an interview with Reuters, Emefiele said he was ready to inject liquidity if needed into the interbank market, which dried up this week following a directive to government departments to move their accounts into a "Treasury Single Account" at the central bank.

Emefiele, central bank governor

The policy is part of new President Muhammadu Buhari's drive to fight corruption, but analysts say it could suck up as much as 10 percent of banking sector deposits in Africa's biggest economy - hammering banks' liquidity ratios.
Amid confusion over implementation of the policy, overnight interbank lending rates spiked to 200 percent this week, but Emefiele denied the policy had provoked a liquidity crisis.
"There is no shortage of liquidity," he said, pointing to an oversubscribed sale of treasury bills on Wednesday. "A spike is a momentary action. It's sentiment," he said.
Emefiele said less than one trillion naira ($5 billion) would be moved into the single account but did not give details.
Emefiele was also emphatic about maintaining the naira currency - which has dived in the past year due to a collapse in oil revenues - at its current level of 197 to the dollar.
"There will not be a devaluation because right now the currency is appropriately priced," he said.
In a series of unconventional interventions to protect the naira, the bank has blocked access to foreign currency to import items ranging from soap and toothpicks to cement and private jets.
Emefiele said the list of restricted items could be expanded to encourage local production.
He rejected claims by Nigerian firms about the difficulties of getting hold of dollars and ruled out the possibility of a default by any company with dollar-denominated debt.

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Nigerian interbank market still not trading on low cash liquidity

Nigeria's interbank money market halted trading for the third consecutive day on Thursday amid a continued decline in liquidity in the banking system after new government directives triggered huge cash outflows.

Wigwe, Access Bank chief

“We only have indicative quotes of about 20-30 percent in the market for overnight lending, but no bank was willing to do any deal even at that rate yet,” one dealer said.
Dealers said system liquidity has continued to drop as more banks move money to the central bank to comply with a directive to transfer government revenues to a single account, while banks also had to provide funding for advance payment for their forex purchases.
Cash balances held with the central bank by commercial lenders stood at 173 billion naira credit on Thursday, down from about  366 billion naira on Wednesday. The balance stood at 486 billion naira on Tuesday.
President Muhammadu Buhari has ordered that all revenues be paid into the "Treasury Single Account" (TSA) from Tuesday, as part of a drive to fight corruption and aid transparency.
The policy caused panic among commercial lenders at the expiry of the deadline on Tuesday, with trading halted on the interbank money market on fear the move could cripple their operations.
Traders said rate moderated from the initial 100-200 percent indicative rate quoted on Tuesday to 15-20 percent because some banks resorted to borrowing fund at the central bank discount window at 15 percent, using their treasury bill holdings as collateral.
"The indicative rates have been kept at a level below 20 percent since yesterday (Wednesday) because of the opening up of the central bank discount window at 15 percent for those who have treasury bills backing to borrow," another trader said.

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Nigeria raises 45 bln naira in 5-, 20-yr bond sales; yields rise

Nigeria sold 45 billion naira worth of naira-denominated bonds maturing in 2020 and 2034 at an auction on Wednesday, paying higher yields than at its previous auction in August, the Debt Management Office said on Thursday.
The amount raised at the auction was short of the 70 billion naira initially proposed by the debt office. Traders said the debt office was constrained by the higher yields that investors demanded and reduced the amount of debt sold.

Emefiele, central bank governor

Investors had asked for yields ranging from 13.5 to 20 percent for the 2020 bond and 14.5 to 20 percent for the 2034 debt, but the debt office decided to cut off the sale at 15.95 and 15.97 percent respectively.
The debt office sold 20 billion naira worth of 2020 debt at 15.95 percent yields, 57 basis points more than 15.38 percent at the last auction in Aug.
A total of 25 billion naira worth of the 2034 bond was sold at 15.97 percent against 15.19 percent last month.
Investors submitted bids worth 121.20 billion naira, lower than the 153 billion naira at the last auction.
Traders said the auction showed the government was no longer willing to borrow at higher yields, especially in the near term.
"The central bank and DMO have decided to cap interest rates on borrowing at below 16 percent in the near term, and this should signal an end to volatility in the debt market," one dealer said.
U.S. investment bank JP Morgan said last week it would remove Nigeria from its Government Bond Index (GBI-EM) by the end of October, after warning the government that currency controls were making transactions too complicated.
But traders said the market has already overcome the effects of that move, and most offshore investors had exited the market prior to the JP Morgan announcement.

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Nigeria's forex reserves down 3 pct in month to Sept 14 -c.bank data

Nigeria's foreign exchange reserves fell 2.97 percent to $30.69 billion by Sept. 14, from $31.63 billion a month earlier, data from the central bank showed on Wednesday.

Dollars

The reserves of Africa's top crude exporter were down 22.42 percent from a year earlier.
The central bank has used the reserves to support the local currency, selling dollars to bureau de change operators twice weekly in a bid to narrow the gap between the official and unofficial exchange rate.
Reserves picked up shortly after President Mohammadu Buhari took office in May, which was attributed to efforts to plug leakage and demand management by the central bank. The central bank restricted access to foreign exchange and introduced tight control of the currency market to curb speculation and conserve reserves.

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Nigerian President says 'does not think naira should be devalued'

Nigerian President Muhammadu Buhari has ruled out possible devaluation of the naira currency in the near term, putting paid to speculations of an imminent relaxation of the current foreign exchange rule by the central bank.
Buhari said on Thursday in an interview with France 24 that he does not think the country's currency, the naira, should be devalued again.

President Buhari

"I don’t think it is healthy for us to have the naira devalued further. That’s why we are getting the central bank to make modifications in terms of making foreign exchange available to essential services, industries, spare parts, essential raw materials and so on -- but things like toothpicks and rice, Nigeria can produce enough of those," Buhari said.
Nigeria's central bank has imposed progressively tighter restrictions on access to foreign exchange in an effort to prop up the naira, which has been sliding since the slump in global crude prices last year. In June, it restricted access to foreign exchange for the import of 41 items ranging from rice and toothpicks to steel products and glass.
The central bank had introduced series of measures including directing commercial banks to pay for their dollar purchases 48 hours in advance, banned them from accepting foreign currency cash deposits and excluding about 41 items from access to official foreign exchange market in a bid curb dollar demand, stem illicit financial flows and conserve its foreign exchange reserves.
The US investment banker JP Morgan said last week it will remove Nigeria from its Government Bond Index (GBI-EM) by the end of October, after warning the government of Africa's biggest economy that currency controls were making transactions too complicated.
The bank had warned Nigeria that to stay in the index, it would have to restore liquidity to its currency market in a way that allowed foreign investors tracking the index to conduct transactions with minimal hurdles.
The central bank had to devalue the naira and pegged it at a fixed rate against the dollar, turning trading into a one-way quote currency market whose lack of transparency upset investors and businesses.

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Nigeria's interbank trading halted again as rule for forex funding change

Nigeria's interbank money market was halted for a second day on Wednesday after the central bank told commercial lenders to provide cash backing for foreign exchange purchases at its proposed intervention on Friday.

Dollar currency

 Trading on the interbank market was also halted on Tuesday as banks complied with a directive to transfer government revenues into a single account with the central bank.
President Muhammadu Buhari had ordered that all revenues be paid into the Treasury Single Account (TSA) from Tuesday, as part of a drive to fight corruption and aid transparency
"The market is not trading yet," one dealer said. "What we have is an indicative rate from some banks because of the instruction from the central bank to provide funding for forex intervention."
"We only have people quoting about 50 percent as indicative rate for overnight placement," another dealer said.
Nigeria's central bank in August directed commercial banks to pay for their dollar purchases 48 hours in advance, in a bid to curb speculations at the forex market and drain liquidity from the banking system.
Dealers said there was minimal trading in the interbank money market at 20 percent for overnight lending on Tuesday, after the central bank released a market figure showing 486 billion naira in cash balances for commercial lenders

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Benin GDP growth to slow to 5.5 percent on Nigeria woes - IMF

Economic growth in Benin will ease to 5.5 percent this year and in 2016 due to a sharp slowdown in its giant West African neighbour Nigeria linked to falling oil prices, the International Monetary Fund (IMF) forecast. 

Lagarde, IMF chief

“This is a moderate slowdown compared to 2014, due to negative spillovers from Nigeria - Benin’s main trading partner," Christine Dieterich, who headed a recent IMF mission to Benin, said in a statement released late on Tuesday.
Inflation in the cotton producer, which is a member of the eight-nation CFA franc zone, is projected at 2 percent next year, the statement said.
With oil exports accounting for 90 percent of foreign exchange earnings and about 70 percent of government revenues, Nigeria, Africa's biggest economy, has been hit hard by a rapid drop in global crude prices since last year.
Annual growth fell to 2.35 percent from 6.54 percent a year earlier, according to second quarter data released by the Nigerian Bureau of Sta

tistics last month.

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Nigeria's Dangote shrugs off slump with new plants, mines in Africa

Africa's richest man upbeat on continent's growth prospects
Billionaire to open new cement plants across Africa
Dangote bets on construction boom, demand for sugar

Africa's richest man, Aliko Dangote, plans to launch several new cement and sugar plants as well as mines across the continent, accelerating an expansion outside his Nigerian home market and shrugging off a downturn in Africa.

Aliko Dangote

A slump in commodity prices, lower demand from China and investor flight from risky emerging markets has hit African economies and state budgets hard, raising borrowing costs and the prospect of instability.
But the Nigerian billionaire said his industrial empire would expand its cement production in several African countries, betting on a future construction boom.
"We believe that the future is mostly to do with infrastructure," he told Reuters. "There is so much of a deficit in infrastructure."
In August, his Dangote Cement said it had signed contracts worth $4.34 billion with China's Sinoma International Engineering Co. to build cement plants and boost production by 25 million tones annually.
But now Nigeria's biggest listed firm will add an extra $400 million as some projects were turning out larger than initially planned. "It will be close to $4.8 billion," he said.
A cement plant in Ivory Coast, for example, would produce 3 million tones annually, double the initial plan, he said.
Plants will be built in Cameroon, Ethiopia, Kenya, Mali, Niger, Nigeria, Senegal and Zambia, according to last month's statement. Another plant will be launched in the Democratic Republic of Congo (DRC) next year, Dangote said.
Dangote could also acquire existing cement plants outside Nigeria if an opportunity came up, he said.
The Chinese partner will build turnkey cement plants buying machines and other technical equipment from German firms such as Siemens "Anything with engines is coming out of Germany," he said, naming apart from Siemens the firms IKN and Loesche.
The financing would be a mix of company cash and debt, he said.
DEVALUATION?
As a second step, Dangote, whose conglomerate also has oil, gas, telecommunications and real estate interests, will expand its sugar business by launching production, in Zambia where he has already a cement plant.
Zambia would be an ideal regional hub as it had borders with eight countries, he added.
Dangote was also planning potash mining sites in the DRC and Ethiopia, he said.
Nigeria's most celebrated business magnate also said restrictions by the central bank on hard currency transactions would encourage more agriculture production in Africa's biggest economy, meaning that less would be imported in the long-term.
In June, the bank, seeking to conserve its dollar reserves, said importers could no longer get hard currency from the interbank market to buy a list of 41 items including rice, rubber, soap and Dangote's core product, cement.
The central bank has imposed these and other restrictions to halt a fall of the naira amid plummeting oil revenues, Nigeria's main source for the budget and hard currency to finance imports.
Critics of President Muhammadu Buhari say his decision not to appoint a cabinet more than three months after coming to power, have increased the impact of the central bank's policies in the absence of a finance minister and economic team.
But Dangote, who was photographed with Buhari as the former general watched his election victory unfold in March, said the central bank's controls made "a lot of sense".
"They have to be careful how people use the foreign exchange because it isn't a tea party any more. You have to restrict people's behaviour," Dangote said, adding that this could encourage Nigeria to grow more rice at home rather than using foreign currency for imports.
Central Bank Governor Godwin Emefiele said in July that the naira was "appropriately priced" at its current level of 197 to the dollar on the interbank market, despite a disparity with the parallel market where the naira has fallen to 240.
Emefiele has rejected calls for the naira to be devalued for the third time in a year - a stance supported by Dangote, who asked: "Why do we need to devalue? What is in it for us?"
"No devaluation will bring in foreign investors. If it is an export based nation it is good," he said, referring to the income-dependent nature of the Nigerian economy. "Devaluation is not going to protect the reserves at all." 

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Kellogg stakes $450 mln in Nigeria's Indomie noodle manufacturer

Kellogg Company has announced the acquisition of 50 percent stakes at a cost of $450 million in Multipro, a premier sales and distribution company in Nigeria and Ghana in a new long-term partnership with leading food company Tolaram Africa.
Tolaram presently holds 49 percent stake in Dufil Prima manufactures and markets several leading food brands, including Indomie noodles.

Indomie Noodles

The acquisition has significantly increased Kellogg's presence in the growing African market and advancing the company's breakfast, snacks and emerging market strategies to drive future growth.
According to John Bryant, Chairman and CEO, Kellogg Company, the new deal include the creation of a joint venture between Kellogg Company and Tolaram Africa to develop snacks and breakfast foods for the West African market.
The company has also been granted the right to acquire a stake in Tolaram Africa Foods (which owns 49 percent of Dufil Prima) in the future. Dufil Prima manufactures and markets several leading food brands, including Indomie noodles, which are often consumed at breakfast, as well as Minimie snacks, Power oil and Power pasta.
"As a region that is experiencing explosive growth, with a population of almost one billion people and an economy that is expected to more than double over the next 10 years, Sub-Saharan Africa provides tremendous opportunity for our company," said John Bryant, Chairman and CEO, Kellogg Company.
"Tolaram Africa has built a highly successful consumer products business and today, it is one of the largest food companies in Nigeria," said Bryant. "Tolaram has a great track record of building beloved consumer brands, including the market leader Indomie noodles, and fueling their growth. This partnership is an excellent strategic fit for Kellogg."
Multipro, established in 1997, has a strong sales and distribution infrastructure in Nigeria. Headquartered in Lagos, the company provides access to approximately 1,000 exclusive distributors, 2600 employees and operates 19 warehouses, across six locations. It is also establishing similar networks in other key African countries including Democratic Republic of Congo, Ivory Coast, Cameroon and Ethiopia.
"Kellogg's well-known and iconic brands and our research and development expertise, combined with Tolaram's strong local sales, marketing, supply chain and distribution capabilities, positions us to become a breakfast and snacks leader in a thriving market," said Amit Banati, President, Kellogg Asia Pacific.
"Kellogg is a world leader in its categories and has successfully built brands that are synonymous with it. We're pleased to have entered into this partnership, as we share similar values and an aligned vision for Africa, a continent we have been operating in for over 35 years. This is another significant step towards providing affordable and wholesome nutrition for our expanding consumer base," said Sajen Aswani, CEO, Tolaram Group.

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Nigeria’s interbank market frozen as banks move govt revenue to cenbank

Nigerian banks made no bids on the interbank money market on Tuesday as they awaited instructions on how to comply with a directive to transfer government revenues into a single account with the central bank, dealers said.

Emefiele and Buhari in hands shake

President Muhammadu Buhari has ordered that all revenues be paid into the "Treasury Single Account" (TSA) from Tuesday, as part of a drive to fight corruption and aid transparency.
"No trading is currently going on because no bank was willing to put out quotes until there is a clearer direction with the implementation of the Treasury Single Account," one dealer said.
"The market is right now frozen, as no trading going on," another trader said.
Analysts have predicted that implementation of the government policy will drain naira liquidity from the banking system, potentially putting some banks in a dire situation.
The overnight lending rate closed at 5 percent on Monday, but dealers said the rate was initially quoted at 200 percent on Tuesday. No deals were done using that rate.
About 1.2 trillion naira, or 10 percent of banking sector deposits, is expected to be transferred to the government account with the central bank in the course of implementing the TSA policy, Bismarck Rewane, chief executive at Financial Derivative company said.
"We expect an initial paralysis in the market and a disruption of operations of some of the banks, but they would overcome that," Rewane said.
He said the central bank could reduce the size of the cash reserve requirement (CRR) commercial lenders are expected to keep with it and inject some liquidity into the banking system to minimise the impact of the new account policy.
The CRR, which is the amount the central bank requires banks to set aside, is currently 31 percent for both public and private sector deposits.

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Nigerian inflation edged up to 9.3 pct in August

Nigeria's consumer inflation was at 9.3 percent year-on-year in August, up 0.1 percent from July, and staying above the central bank's target upper limit, the national bureau of statistics (NBS) said on Sunday.
Food inflation rose marginally to 10.1 percent year-on-year in August versus 10.0 percent in July.
"The marginal increase was as a result of slower increases in alcoholic beverages, tobacco and kola, health, transport and recreation and culture divisions," the NBS said.
"On a month-on-month basis, the pace of increases of food prices ... has slowed, contributing to the relatively slower (overall)pace of increases."
Nigeria's inflation rate rose above the central bank's upper limit of 9 percent in June and is at the highest level since February 2013.
Africa's biggest oil producer has been hit hard by the slump in global crude prices, which has sent its currency, the naira, spiralling. The central bank has imposed increasingly stringent foreign exchange measures to prop up the naira but investors are losing confidence.
GDP growth more than halved in the second quarter year-on-year and JP Morgan said it would drop Nigeria from its influential emerging market bonds index last week due to foreign exchange controls.

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Ghana's central bank raises benchmark rate to 25.0 pct

The Bank of Ghana raised its main policy rate by 100 basis points to 25.0 percent on Monday to offset the risk of inflation, its governor Henry Kofi Wampah said.
Inflation in the West African nation stood at 17.3 percent in August, down from 17.9 percent the previous month, and Wampah said the Bank tightened its rate in order to reach the full-year target of 13.7 percent.

Ghana flag

"It (the decision) is based on what we expect within the next few months or quarters," Wampah told a news conference. "We have noted that in the next quarter we are going to have a lot of liquidity .... That can have an inflationary impact."
Ghana is set to begin a road show on Sept. 22 for a Eurobond of up to $1.5 billion. The government is also due to sign a $1.8 billion loan on Thursday to finance its cocoa sector ahead of the 2015-2016 crop.
It is also expecting to raise utility prices.
Inflation above the regional average is one indication of the fiscal problems facing a country that for years was one of the strongest economies in sub-Saharan Africa due to its exports of gold, oil and cocoa.
Ghana started a three-year aid program worth $918 million with the International Monetary Fund in April to kick-start growth, reduce its fiscal deficit, lower a debt-to-GDP level over 70 percent, and help stabilize its currency.

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Nigerian stocks gain, naira falls on dollar shortage

Nigerian stocks gained almost two percent in early trade on Monday, while the local currency weakened on the parallel market amid a shortage of dollars.
The Nigerian stock index gained 1.73 percent to 30,202 points, lifted by rising prices of banking, breweries, cement and petroleum shares.

Onyeama, NSE boss

The naira fell 0.67 percent on the unofficial market on concern about possible devaluation of the naira in the weeks ahead. It was quoted at 224 to the naira compared with a closing 222.50 per dollar on Friday at bureaux de change.
The currency was trading at 197.50 to the dollar on the official interbank market, slightly weaker than the 197 to the dollar pegged rate where it has closed since February, when the central bank introduced exchange controls in the forex market.
Dangote Cement, Nigeria's biggest listed company, rose 0.3 percent to 168 naira. The local unit of Diego, Guinness Nigeria, rose 7.58 percent to 164.01 naira. Seplat gained 1.76 percent to 230 naira, First Bank Holdings rose 3.15 percent to 6.13 naira and Ecobank Transnational advanced 4.13 percent to 17.95 naira.
The Nigerian index sold off last week after US investment banker JP Morgan announced it would remove Nigerian bonds from its Government Bond Index (GBI-EM) in October. Local investors saw a buying opportunity as prices fell.
"Some investors are taking position in the market because they considered the present prices of stocks very attractive to buy," one stock broker said.
Aminu Gwadabe, president of bureau de change operators, said increase in naira cash liquidity was driving up rates in the unofficial market.

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OPEC sees higher demand for its oil in 2016 as rival output slows

OPEC on Monday predicted higher demand for its crude oil next year, sticking to its view that a strategy of letting prices fall will curb supply from the United States and other rival producers.
The monthly report from the Organization of the Petroleum Exporting Countries, however, trimmed its estimate for 2016 global oil demand growth and predicted a less dramatic slowdown in non-OPEC supply than the International Energy Agency. 

OPEC said it expected demand for its crude next year to average 30.31 million barrels per day (bpd), up 190,000 bpd from last month, despite slower demand growth overall due to a weaker outlook for Latin America and China.
Oil is trading below $50 a barrel, less than half its level of June 2014. But OPEC has refused to cut output, seeking to recover market share by slowing higher-cost production in the United States and elsewhere that had been encouraged by OPEC's former policy of keeping prices near $100.
"Despite moderate economic growth, recent data shows better-than-expected oil-demand in the main consuming countries," OPEC said in the report.
"At the same time, U.S. oil production has shown signs of slowing. This could contribute to a reduction in the imbalance of oil market fundamentals, however, it remains to be seen to what extent this can be achieved in the months to come."
OPEC expects supply from non-member countries to increase by 160,000 bpd next year, a downward revision of 110,000 bpd from last month and marking a sizeable slowdown from growth of 880,000 bpd in 2015.
The 2016 forecast for U.S. tight oil production, also known as shale, was reduced by 100,000 bpd.
But OPEC did not go as far as the IEA, which in its report on Friday said lower oil prices would force non-OPEC to cut output by the steepest rate in more than two decades next year.
The producer group also expects the recent strength in oil demand growth to moderate. OPEC trimmed its estimate of 2016 world oil demand growth by 50,000 bpd to 1.29 million bpd.

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Much ado about the JP Morgan Emerging Market Bond Index

By Obadiah Mailafia

JP Morgan, one of the world’s leading investment bankers, recently announced that, come October ending, they might remove Nigeria from their list of emerging market sovereign bonds index. The announcement was not altogether a surprise. Since January this year they had let it be known that they had placed Nigeria “under watch” and would soon consider whether our country would be fit enough to remain on that “A” list of sovereign emerging nations.

Emefiele, central bank governor

The grouse by the global investment institution centres on 3 issues: first, they are concerned about the drying up of liquidity in the Nigerian foreign exchange market; second, they worry about what they allege to be the opacity and lack of transparency of the foreign exchange market; and thirdly, they complained that Nigeria no longer operates an efficient two-way trading system as far as the foreign exchange market is concerned.

One of the greatest signs of wisdom is ability to listen. Be it individuals or governments, the ability to listen and take criticism in good spirit is one of the signs of political wisdom. The Nigerian media have been all the rage about the JP Morgan announcement. Not a few key actors have taken it rather poorly.

The JP Morgan Emerging Market Bond Index is an investment tracker comprising the sovereign bonds of the leading emerging markets. Nigeria was put on that list in 2012. Before then South Africa had been the sole sub-Saharan African country on the list. There is no doubting that being on that list confers some benefits. Before we were put on that list, foreign investors had invested a mere US$1.8 billion on Nigerian sovereign bonds. The following year, the mere fact of our being on that list magnified foreign investments to the tune of over US$8 billion in our fixed-income market.

I have been a long-term student of investment theory and practice. I know that index investing is the lazy man’s approach to investment management. I know of several investors and asset managers who put all their money on the London Footsie Index. There are others who lump everything into the NYSE or the NASDAQ. Some of these people believe that all the quantum physics-inspired algorithms designed to guide investment decisions amount to nothing but systematic guesswork – as good as trying to find a needle in a haystack.
What is worse, for many foreign investors, Africa is a black box. Indices such as those of JP Morgan’s provide a framework by which they can safely commit their resources. As long as the graph is looking north, they feel they are home and dry.

The mere announcement by JP Morgan sent Nigerian capital markets tumbling last week, losing something like 2.5 percent of total market capitalization. Given the herd-like behaviour of global financial markets, probably more of the scampering by investors is soon to be expected.

The CBN was compelled to release a response on Thursday, 10th September. They argued that the government had lost more than 60 percent of revenues within the past year as a result of the collapse in global oil prices. It is inevitable that this would have some impact on liquidity within the foreign exchange market. They however pointed out that they have taken robust actions to ensure that FX is available for genuine transactions rather than for speculative activities. Secondly, with regard to the alleged opacity of the market, CBN responded that they had put in place a Reuters trading platform that ensures a transparent monitoring of all transactions. Thirdly, they argued that they had modified the two-way trading system (dollar-naira-naira-dollar) by putting in place a mechanism for an order-based two-way trading system. In situations where the economy was awash with dollars during the political-electoral cycle from September 2014 to March 2015, it had become necessary to institute an order-based system so as to dampen the exuberance of speculators.

I recall that during my time at the CBN, JP Morgan were among the few select international custodians that managed our foreign reserves. We had excellent working relations with their top executives at that time. If they had certain misgivings about the conduct of monetary policy, one would have expected them to engage in dialogue with our top monetary authorities. It is certainly unhelpful that they should resort to threats through the media, print as well as electronic, in the manner they are doing. It smacks of blackmail.

There has been a lot of speculation surrounding the impending devaluation of the naira. JP Morgan and their ilk would seem to want a devalued naira. The Nigerian people want a strong and stable naira that will safeguard their individual as well as common treasure. Every responsible administration must listen to international stakeholders, including the global investors. But we cannot run policy on their behalf. Nor can we be expected to be at their beck and call. The sole litmus test of sound economic policy is whether it advances our economy and promotes the welfare and common good of the great Nigerian people.

One of the factors that probably informed their concern may have to do with the absence of a cabinet and economic policy team. President Buhari has resolved that he would not be stampeded into announcing his cabinet team before ending of September. The uncertainty surrounding that decision has obviously had its impact on investor sentiments. If I were on the JP Morgan team I would have given the administration the benefit of the doubt, pending when a cabinet and economic team are in place and we are in a better position to have a better picture of the government’s economic policy thrust.

The mere threat to de-list Nigeria has sent investors ducking for cover. Such herd-like behaviour is quite predictable. What few realise is that shortly before the elections more than US$6 billion of capital flight took place in the Nigerian capital markets. Our sovereign bond investments had been reduced to a mere US$2 billion. An ancient African proverb says that it is a fool who remains on the dance floor after the drummers have departed. We can expect further downturn in terms of investment trends if JP Morgan make good their threat.
However, let me put it on record that the fundamentals of the Nigerian economy remain highly attractive to potential investors. I have been following the JP Morgan Index. The Nigerian sovereign bond was the best performing of the pack, registering a peak of 18 percent returns in early 2014. South Africa was trailing behind at about 6 percent, with India, Russia and Brazil plodding in-between.

The bold initiatives that the Buhari administration has taken so far point to the direction of positive reform that will bode well for our country. Putting together a strong ministerial cabinet and an able economic team will restore hope and confidence and set our country on the path of long-term sustained growth. There shall be showers of blessings. Those who throw their lot with the New Nigeria will reap a rich harvest of returns in gold.

*CULLED FROM BUSINESSDAY

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Nigerian interbank lending rate down as liquidity rises

Nigeria's interbank lending rates fell 75 basis points to an average of 6.50 percent on Friday from 8.25 percent last week, as cash built up in the banking system.
Traders said about 101 billion naira in matured treasury bills was repaid on Thursday and 45 billion naira in cash-reserve-requirement refunds also flowed into the banking system. The greater liquidity lowered the cost of borrowing among banks.

Emefiele, central bank chief

Also, Nigeria's central bank declined to sell short-dated Treasury bills to commercial lenders in the last two weeks. That left more cash in the banking system.
"The central bank has declined to sell open market operation treasury bills to commercial lenders in the past two weeks due to its unwillingness to raise yields in line with bids by investors," one dealer said.
The lenders' balance with the central bank stood at about 300 billion naira on Friday, higher than the 261 billion naira in credit last week.
Nigeria's central bank usually sells treasury bills in the secondary market to mop up perceived excess liquidity from the banking system.
Traders quoted the secured Open Buy Back at 6 percent on Friday, lower than 8 percent last week, and 9 percentage points lower than the central bank 13 percent benchmark interest rate.
Overnight placement was also down to 7 percent against 8.5 percent last week.
Dealers expect rates to inch up next week as the government enforces its policy to consolidate revenue in a single account with the central bank.
"We see rates inching up by next week, to be driven by compliance with government policy on Treasury Single Account which is expected to come to full effect on Sept. 15," another dealer said.
Nigeria has directed that all receipts due to the government or its agencies be paid into the Treasury Single Account, which is maintained by the central bank and linked to other government bank accounts, by Sept. 15 or officials would face "sanctions".

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Nigeria bond yields seen flat at auction next week

Yields on Nigerian bonds are seen stable at the next debt auction on Sept. 16 after central bank declined to sell its short-dated Treasury bills to commercial lenders who were asking for higher returns in the last two weeks.

Okonkwo, DMO boss

Nigeria plans to raise about 70 billion naira ($351.76 million) in bonds with maturities of 5 years and 20 years on Sept. 16. But dealers said yields may not be far from the last auction given government reluctance to borrow at higher returns.
The 2020 bond was sold at 15.41 percent while the 2034 paper fetched 15.19 percent at the last auction.
"The central bank has declined to sell open-market operation (OMO) treasury bills to commercial lenders in the past two weeks due to its unwillingness to raise yields in line with bids by investors," one dealer said.
The market may have seen this development as a signal that government would not be willing to raise yields at the auction next week, spurring local pension funds to instead take positions in the secondary market.
"We have seen some buying interest at the secondary market in spite of the auction of JP Morgan to remove the country's bond from its index," another trader said.
U.S. investment bank JP Morgan said on Tuesday it would remove Nigeria from its Government Bond Index (GBI-EM) by the end of October, after warning the government that currency controls were making transactions too complicated.
The initial reaction to the JP Morgan move led to an increase in yields across the board on Nigerian local debt, but later moderated after regulators introduced a new spread to stem volatility.
Yields on local debt crossed the 17 percent line on Wednesday on initial reaction to the JP Morgan auction, but moderated to 16.13 percent on Friday for benchmark 2024 paper from 16.02 percent last week.
Yield on 2022 paper traded at 16.13 percent compared with 16.08 percent last week, while the longest tenor paper 2034 traded at 16.11 percent against 15.94 percent last week.

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