Nigerian interbank rate rises on payments for debt purchases

Nigeria's overnight lending rate rose by 2.5 percentage points this week after the central bank debited bank accounts for debt purchases, draining liquidity in the money market.
The overnight lending rate increased to 14.5 percent on Friday, up from 12 percent at the start of the week, after central bank debits of bank accounts for cash payments related to dollar and treasury bill purchases.
The central bank sold around $250 million forwards at a special auction and an undisclosed amount at the spot market in its bid to improve dollar liquidity and support the country's ailing naira currency.
The sales drew liquidity out in the money market and pushed up the interest rate.
Although the central bank repaid around 234 billion naira in matured treasury bill on Thursday, the same amount was rolled over into another set of treasury bills sold at an auction on the same day.
Market liquidity stood at around 35.06 billion naira surplus on Thursday, compared with 40 billion naira in surplus last week.
Traders said the cost of borrowing among commercial lenders may further increase next week as the central bank continues to inject more dollars into the foreign exchange market to defend the local currency.
The value of the naira has plummeted in the last few weeks due to a scarcity of dollars, although its value has fluctuated in the last few weeks due to the central bank's interventions.
The naira closed at 306.15 to the dollar on the official interbank market on Friday, slightly firmer than 306.20 per dollar the previous day.
But the local currency weakened on the black market to 405 to the dollar compared with 395 per dollar the previous day.
The International Monetary Fund (IMF) said on Wednesday the naira was overvalued by around 10 to 20 percent and called for changes to Nigeria's exchange rate policy, increasing pressure on the local currency despite the improved supply of dollars.

(C) Reuters News

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Sporadic violence in Johannesburg as South Africans protest against Zuma

Sporadic violence broke out in Johannesburg as more than 50,000 people marched in South African cities to protest against President Jacob Zuma on Friday, demanding he quit after a cabinet reshuffle triggered the latest crisis of his presidency.

Zuma's sacking of Finance Minister Pravin Gordhan in the reshuffle last Thursday has outraged allies and opponents alike, undermined his authority and caused rifts in the ruling African National Congress (ANC), which has governed South Africa since the end of white-minority rule in 1994.
Fitch on Friday followed S&P Global Ratings and downgraded South Africa to "junk", citing Gordhan's dismissal as one reason. S&P had issued its downgrade on South Africa in an unscheduled review on Monday.
In Johannesburg, police "fired rubber bullets at protesters who were attacking other protesters with stones. Four protesters sustained minor injuries," Johannesburg Metro Police Department spokesman Wayne Minaar said. Some ANC backers were trying to breach a cordon separating them from members of the opposition Democratic Alliance.
Elsewhere in the city, the marches were peaceful.
Mmusi Maimane, leader of the DA, which had called for the marches, held a rally of more than 10,000 people that was calm, a few streets from the scene of the violence. Some held placards saying "Fire Zuma".
"Our country is in crisis," Maimane, who wore a bullet-proof vest under his shirt after the DA said it had received threats to the protest's leaders, said. "The time to act is now."
"We are unhappy about his leadership because he does not seem to care about the people," said Syriana Maesela, 65, a retiree carrying a South African flag. "The irony is I did the same thing in 1976 when I was a student. I also marched then," she said, referring protests against the apartheid regime.
About 10,000 gathered in a field outside the Union Buildings, the site of Zuma's offices in Pretoria, South Africa's capital.
A PROTEST SURVIVOR
Zuma, 74, has faced protests in the past. The ANC on Wednesday rejected calls for Zuma to quit, and analysts doubted marches would shake the president. It said its members in parliament would vote against a motion of no confidence in Zuma on April 18, a key rallying call for the marchers on Friday.
And Zuma supporters also gathered. About 300 camouflage-clad veterans of the ANC's now-disbanded Umkhonto we Sizwe (MKMVA ) military wing ringed the party's Luthuli House building in downtown Johannesburg, mounting mock parades and singing in support of the president.
Some clad in the yellow, green and gold colours of the ANC also danced, waving placards emblazoned with the words: "I'm prepared to die for my ANC" and "Hands off our President".
"They are free to march freely but not to try and remove a government that was elected democratically," said Kebby Maphatsoe, the head of the veterans group and also Deputy Minister of Defence and Military Veterans.
"Let them wait for 2019 and we will take them on, but the ones that want to remove it undemocratically, MKMVA will rise up to the occasion."
The rand weakened slightly after Fitch's announcement. The currency has tumbled more than 11 percent since March 27, when Zuma ordered Gordhan to return home from overseas talks with investors, days before firing him.
"The bottom line is we are paying for the consequences of the political regime that has lost direction," said Gary van Staden, analyst at NKC African Economics. The downgrade will add to pressure on Zuma to leave office, he said.
Capital Economics Africa economist John Ashbourne said in a note that although there was mounting opposition to Zuma "we think that the most likely outcome is still that Mr. Zuma will decide the timing of his own exit."
PARLIAMENT
In Cape Town, motorists hooted in support of the march as about 10,000 people gathered at various points in the city, including outside parliament.
"It's not simply a question of his removal. It is about the renewal of the ANC and democracy," said Gerrald Ray, 56, a business strategist.
About 4,000 people were also marching in the coastal city of Durban, the main city in the KwaZulu Natal province, an ANC stronghold.
"We need to unite and fight this corruption," said Michelle Fortune, 48, a manager who declined to say where she works. She wore a South African flag bandana.
Meanwhile, members of the ANC Youth League gathered in downtown Durban, singing "Awuleth'umshini wami", a song popularised by Zuma, which means "bring me my gun" and held placards supporting the president.
© Reuters News

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Nigeria plans to import high grade fuel as from July 1

Nigeria will increase quality standards for its imported gasoline, diesel and kerosene from July 1, a change health campaigners have long said is necessary to protect citizens from toxic fuel.
All imported diesel from July 1 can contain a maximum of 50 ppm sulphur, while gasoline and kerosene can contain a maximum of 150 ppm, according to an environment ministry official and information from the Standards Organization of Nigeria, the body responsible for setting requirements for imported goods.

Nigeria's current import standards are 3,000 ppm on diesel and 1,000 ppm on gasoline.
West African nations had promised higher quality fuel late last year as part of a United Nations Environmental Programme (UNEP), but details on the timeline and precise implementation had been unclear.
Ghana had targeted an even earlier deadline, but sources said it had not yet finalised its new fuel requirements or issued a fresh timetable.
Several groups, including UNEP and the African Refiners Association, have been pushing West Africa for years to mandate higher quality fuel and ban fuels that are illegal in Europe and the United States due to what experts say are calamitous effects on respiratory health - particularly in dense urban areas such as Lagos.
Late last year, the Swiss-based campaign group Public Eye blamed international traders for using the continent as a dumping ground for toxic fuels that are banned elsewhere.
Other African nations, including Kenya, Tanzania, Uganda and Morocco have also increased fuel quality requirements.
But there was some concern in Nigeria, currently struggling with an economic recession, over the substantial up-front cost of demanding higher standards. International oil traders said the proposals would cost at least $10-15 per tonne, or more than $250,000 for each cargo of gasoline.
© Reuters News

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Nigerian naira weakens as central bank raises dollar sales to retail bureaux

Nigeria's naira weakened against the dollar on the black market on Wednesday even as the central bank increased the supply of dollars to currency retail bureaux in an attempt to boost support for the local currency.
The naira weakened to about 398 a dollar on the black market, against 390 per dollar on Friday, as speculators took advantage of increased demand to make quick gains, traders said.
The president of the association of bureau de change operators, Aminu Gwadabe, said the central bank had offered to sell an additional $10,000 to its members on Thursday in a bid to provide support for the naira.
"The central bank is selling additional $10,000 to bureau de change on Thursday beside the earlier one disbursed on Tuesday, making it a total of $20,000 per week to each member," Gwadabe said.
With the planned sales, retail currency bureaux will receive around $65 million per week from the central bank, he said.
"We hope to see the naira appreciating on the impact of the fresh dollar sales by the central bank to the bureau de change operators," he said in a telephone interview.
Last week, the central bank set a rate of 362 naira for exchange bureaux to sell the U.S. currency to consumers and also increased the amount of dollar sales to each currency seller to $10,000, up from $5,000, in its bid to improve dollar liquidity.
The International Monetary Fund (IMF) said on Wednesday that the naira is over-valued by around 10 to 20 percent, and called for changes to exchange rate policy.
The Nigerian currency closed at 306.20 to the dollar on the official interbank market, slightly higher than it closed on Tuesday.
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IMF says Nigeria's naira over-valued by around 10 to 20 percent

Nigeria's naira is over-valued by around 10 to 20 percent, the International Monetary Fund's (IMF's) country head said on Wednesday, when the organisation released a critical report on government efforts to boost growth in Africa's largest economy.
"We do find there to be some over-valuation at this point of the naira, of the official currency, somewhere to the tune of 10 to 20 percent," Gene Leon, IMF mission chief for Nigeria, said in a telephone media briefing.
In the report, the IMF urged Nigeria to introduce immediate changes to its exchange rate policy - characterised by central bank curbs, multiple exchange rates and an artificially high naira valuation - or risk "a disorderly exchange rate depreciation".

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IMF says Nigeria economy needs urgent reform, no FX curbs

The International Monetary Fund (IMF) warned Nigeria its economy needs urgent reform in a report published on Wednesday that highlighted the risks to growth for the recession-hit country and the dangers of a volatile foreign exchange market.
The document, a report from IMF staff which Reuters saw an earlier version of last month, outlines a raft of failings in Nigeria's handling of Africa's largest economy and could affect talks over at least $1.4 billion in international loans. 

Nigeria's finmin, Adeosun

It strikes a more critical tone than the Fund's board adopted in a statement last week, though that also said Nigeria should lift its remaining foreign exchange restrictions and scrap its system of multiple exchange rates.
Nigeria fell into recession in 2016, its first in 25 years, largely due to the impact of low oil prices and militant attacks on energy facilities in the Niger Delta oil hub. Crude sales account for more than 90 percent of foreign exchange earnings and two-thirds of government revenue.
The country, whose economy contracted 1.5 percent last year, has also been plagued by a conflict with Boko Haram militants since 2009, creating a humanitarian crisis in the northeast which authorities are struggling to handle.
The Washington-based fund's analysis came on the same day that Nigeria's President Muhammadu Buhari held a launch ceremony for a flagship economic recovery plan.
But the IMF said the plan, criticised by economists for including few concrete measures, is not enough to drag Africa's biggest economy out of recession.
If Nigeria's economy is to recover, "much more needs to be done", the IMF said in the staff report.
It also urged the major oil producer to introduce immediate changes to its exchange rate policy - characterised by central bank curbs, multiple exchange rates and an artificially high naira valuation - or risk "a disorderly exchange rate depreciation".
The presidency, budget and planning ministry, finance ministry and central bank did not immediately respond to requests for comment.
The Fund said the Nigerian authorities were concerned about the IMF staff report's view.
Nigerian authorities had said further measures were under way which included the implementation of a more flexible foreign exchange market and "maintaining tight monetary policy to underpin price stability", according to the IMF report.
Nigeria has not asked the Fund for fiscal support but its recommendations may influence institutional lenders ahead of the annual spring meetings with the World Bank.
The World Bank has been in talks with Nigeria for more than a year over an application for a loan of at least $1 billion and the African Development Bank has $400 million on offer. But talks have stalled over economic reforms.
© Reuters News

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Nigeria to raise 135 bln naira in bonds - debt office

Nigeria plans to raise 135 billion naira ($429.25 million) in naira-denominated bonds at its April 12 debt auction, the fourth this year, the Debt Management Office said on Wednesday.
The debt office said it would raise 35 billion naira in bonds due to mature in 2021, 50 billion naira maturing in 2027, and 50 billion naira due in 2037, using a Dutch auction system.

Settlement is expected on the day following the issue. The bonds are reopenings of previous issues, except the 2037 bond which is a new issue.
Africa's biggest economy auctions sovereign bonds on a monthly basis to help fund its budget deficit, support the local debt market and maintain a benchmark for companies to follow.
Nigeria expects a 2.36 trillion naira budget deficit for 2017, with half of it funded through domestic borrowing.
At the last two auctions, the debt office sold more bonds than expected due to an increased demand for the local debt by investors.
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