Business

Naira in major fall, exchanges N1,000 to dollar at black market

Published

3 months ago

September 22, 2023

Naira in major fall, exchanges N1,000 to dollar at black market

The foreign exchange crisis in the country worsened on Thursday as a dollar exchanged for over N1,000 at the parallel market, Daily Trust reports.

Survey at popular black markets in Lagos indicated that a dollar exchanged for between N1,000 and N1,050 in the early hours of Thursday, before settling for N990 in the evening, indicating a difference of N252 from the Investors & Exporters FX window, where the naira closed at N738.

The gap between the official and parallel market has steadily widened, since the Central Bank of Nigeria (CBN) announced unification of all segments of the foreign exchange markets in June.

However, despite the unification policy, the parallel market has continued to witness patronage due to the scarcity of the greenback at the official market, according to operators.

Naira crashes to N970 at black market

“There is scarcity at the market,” said Ismail Muhammed, one of the operators at Allen Roundabout.

“We are now buying dollars for N990 but earlier in the day, it was sold for N1, 000. Some people exchanged it for N1, 050,” he said.

Another operator, Abdullahi Olugbede, said that the surge was caused by the scarcity as most licensed Bureau De Change Operators do not have dollars to trade with.

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“When there is scarcity, the dollar will go up against the naira but we are not happy. We should pray that it will come down because this is not good,” he said.

Implications are negative — Experts

Experts have warned that the implications of the depreciation of the naira in the black market are negative as it will adversely affect the economy.

Professor of Accounting and Financial Development at Lead City University, Ibadan, Godwin Oyedokun, said it will make it difficult to do business in Nigeria because of the relevance of exchange rate in the economy.

“I am not currently in the country. Let me cite an example, I wanted to buy a can of coke today in Jordan. I could buy the same can of coke for $2 that is almost N2, 000 if a dollar exchanges for N990 in Nigeria as you said. This is just because the strength of our currency is very weak.

“The implication is that goods that Nigerians should get from abroad, let’s say if dollar to naira is 1/1, Nigerians will now spend as high as 990 minus 1; that is, goods worth N300,000 will now be worth times 990 of it. So, it makes it so difficult to do business. Every sector of the economy will adjust to this and will make the price of commodities become costly,” he said.

The tax and forensic expert, however, said, the pressure on the naira will reduce if the government implements the right policies and also boost local production so that Nigeria can also earn more foreign exchange.

“The only way to address this is to have the right policies in place which the current government is doing and have things that we can also export to earn foreign exchange. The finance minister and the new CBN governor will need to think about how the fiscal and monetary policies can work together effectively so that we can have a country of our own. It will interest you that Jordan’s currency, Jordanian Dinar, is higher than the dollar, it is about $1.41. If we get the policies right, the pressure on the naira will reduce,” he said.

Economist and former Director General of the Lagos Chamber of Commerce and Industry (LCCI), Dr Muda Yusuf, said that among others, it will have an effect on inflation as the economy is very sensitive to exchange rate movement.

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“The implications are very negative to put it mildly because it shows there are some fundamental challenges that we still need to deal with that are driving the exchange rate. We need to further interrogate how deep the parallel market is and what percentage of economic activities are being funded by the parallel market.

“We need that research, we need that data because each time we talk about the exchange rate, people don’t even talk about the official rate anymore, we just talk about the parallel market,” he said.

Citing the likely effects on the different sectors of the economy, he said, “Diesel price has gone up, gas price is likely to go up. The PMS is under pressure and should have gone up if not for the fact that the president said that NNPC should hold on, otherwise petrol price should have jumped to over N800 by now.”

Dr Muda, who is also the Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), said that some extraneous variables including money laundering might be responsible for the pressure on the naira.

“I think there are some extraneous variables that have not been captured in our analysis because this speculative assault on the naira is not looking ordinary anymore. I am beginning to worry that perhaps, there are quite a number of illicit funds that are putting this pressure on the Naira because how many manufacturers can continue to buy dollars at this rate? And yet it keeps going up and people are buying it. How many people with genuine income or resources can do that? It is possible there are factors around money laundering, possibly people have loads of naira they are seeking to convert to dollars,” he said.

While noting that the current pressures have defied the forecasts of many economists when the unification policy was introduced, he counselled the government against jettisoning the policy.

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“The government can’t afford to be chasing the parallel rate at this time because the situation will become worse. It means they have to move the official rate from N700+ to N800 or N850. The situation now is not responding to the kind of forecast that many of us predicted. This is not the kind of impact we thought convergence will have because on the face of it, convergence normally encourages more inflows and should normally reduce demand,” he said.

Financial analyst, Abiola Rasaq, who said that the backlog of demand in the system continues to put pressure on the naira, however, said the positive outlook for oil price will likely strengthen the country’s currency against the dollar.

“The market is still somewhat speculative, especially as autonomous supply of FX is still weak whilst demand remains relatively elevated. More so, the backlog of demand in the system continues to put pressure on price. Interestingly, we are close to the end of the seasonal Q3 demand cycle, thus the naira should have some respite. Even as FX supply may remain relatively weak, moderation in demand should help calm the pressure and provide relative stability to the naira in the rest of the ember months, especially if some of the efforts of the government towards improving oil export comes to fruition.

“Notably, the positive outlook for oil price is also supportive of stronger naira in the months ahead, especially if oil export is complemented with steady rise in non-oil exports,” he said.

President Bola Tinubu recently nominated a banking executive and former civil servant, Olayemi Cardoso to serve as the new governor of CBN.

Tinubu also approved the nomination of Emem Nnana Usoro, Muhammad Sani Abdullahi Dattijo, Philip Ikeazor and Bala Bello as deputy governors of the apex bank, for a term of five years at the first instance, pending their confirmation by the Nigerian Senate.

It is unclear if the former CBN governor, Godwin Emefiele, who was suspended and has been in detention since June, has resigned.

Related Topics:black market Dollar Naira

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Business

C’River ‘ll become largest cocoa producer in Nigeria soon – CFAN President

Published

1 day ago

December 9, 2023

Trends Admin

cocoa

C’River ‘ll become largest cocoa producer in Nigeria soon – CFAN President

NATIONAL President of Cocoa Farmers Association of Nigeria (CFAN), Mr Adeola Adegoke, has said that Cross River will soon become the largest producer of cocoa in Nigeria.

Adegoke stated this at the inauguration of the Executive Committee of CFAN in Cross River’s, on Friday in Calabar.

According to him, Ondo State is presently known to be the largest producer of the crop in the country.

He said that the average age of a cocoa farmer in the state was between 55 and 60, describing this as an ageing population.

Adegoke said that Cross River had the potential in massive land and forest for cocoa farming, coupled with the youthful population cultivating the crop in the state.

Though the CFAN national president acknowledged the potentials, he, however, said that the state had to tap into them to succeed, as cocoa alone could run the state’s economy effectively.

“Enough of talking about cocoa estates established by the old Eastern Region. We need to start establishing new estates now.

“We want to see nothing less than 1,000 hectares of new cocoa estates established by the state.

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“Enough of export of raw cocoa beans. We need to start adding value and coming up with cocoa wines, biscuits, sweets and soaps that we can consume and export.

“We cannot prosper by just exporting raw cocoa beans. It is, therefore, important for the state government to be deliberate in infrastructural development in cocoa farming communities,’’ he said.

Adegoke also stressed the need for extension services in the state through innovation.

He urged CFAN members to repay the loans they collected from government and also pay their annual dues to the association.

The CFAN national president disclosed that in 2024, the Third Cocoa Festival would be held in Calabar.

On his part, Gov. Bassey Otu, represented by Secretary to the State Government, Prof. Anthony Owan-Enoh, said that the state would do all within its powers to ensure that cocoa farmers got all the necessary inputs.

According to him, the state has been shortchanged for so long because it produces cocoa but doesn’t get the necessary recognition.

“Others come to the state to buy their cocoa but at the end, it is not counted for Cross River as the producing state.

“Going forward, Cross River will produce, sell and export, because we have the capacity and the farmers will get maximum yields for their investments.

“I will have a private meeting with the newly-inaugurated chairman of CFAN in the state, where he will table the concerns of the farmers so we can chart a new course for the sector,” he said.

In his remarks, the new CFAN chairman, Dr Ramsey Tiku, said that cocoa remained the mainstay of the state’s econony.

According to him, if cocoa development is relegated, the state will be relegating the development of its people.

Tiku said that CFAN would partner with different groups and ministries to create an action plan that would add value to cocoa production in the state.

While thanking members of the association for the confidence reposed in him, he stressed the need for them to start looking at the regeneration of cocoa estates in the state and how to generate data for farmers.

C’River ‘ll become largest cocoa producer in Nigeria soon – CFAN President

(NAN)

Business

Excitement as Dangote refinery welcomes first crude oil shipment

Published

2 days ago

December 8, 2023

Trends Admin

Excitement as Dangote refinery welcomes first crude oil shipment

Excitement rippled through the air as the Dangote refinery marked a significant milestone by receiving its first shipment of crude oil, heralding the commencement of operations for the eagerly anticipated $20 billion plant.

The OTIS tanker, carrying a cargo of 950,000 barrels of Nigeria’s Agbami crude, set sail on December 6 and is en route to Lekki, the closest land port to Dangote’s offshore crude receiving terminal. This shipment, chartered by the Nigerian National Petroleum Company (NNPC), signifies the initiation of crude supplies for the refinery’s operations.

The tanker’s estimated arrival on Thursday, December 7, at 8 pm marked the beginning of a new era for the Dangote refinery, which former President Muhammadu Buhari officially commissioned in May. The excitement was palpable as the refinery gears up to contribute to Nigeria’s oil industry.

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The NNPC, holding a 20% stake in the refinery, agreed to supply 6 million barrels of crude oil as feedstock to jumpstart Dangote’s operations. The first shipment is a symbol of this initial supply.

Agbami, operated by Chevron, is a major deepwater development in Nigeria’s central Niger Delta, producing approximately 100,000 barrels per day of light sweet crude. The refinery is designed to process multiple crudes concurrently, with plans to handle three Nigerian crude grades—Escravos, Bonny Light, and Forcados.

As the ship approached the Lekki Anchorage area in Lagos, an insider from Dangote revealed that preparations were in place to receive the shipment. Following regulatory clearances, the refinery’s management is set to commence the process of barging the crude, with ceremonies planned to commemorate this historic event.

Jasper Nwachukwu, an oil and gas expert, emphasized the significance of ensuring sustainable domestic supply to the refinery for maximum benefit to Nigeria. He suggested that as an oil-producing nation, Nigeria should be the direct supplier to the Dangote refinery. The commencement of operations is not only a momentous event for Dangote but also a positive development for the Nigerian oil industry.

Excitement as Dangote refinery welcomes first crude oil shipment

Railway

Lagos-Ibadan rail to get three more trains as NRC opens two new stations

Published

3 days ago

December 7, 2023

Trends Admin

Lagos-Ibadan rail to get four more trains as NRC opens two new stations

The Nigerian Railway Corporation will soon increase the daily train trips on the Lagos-Ibadan standard gauge rail line from two to six.
Railway District Manager (RDM) for Lagos, Augustine Arisa, an engineer, disclosed this in an interview with some select journalists including NewsTrends reporter.

He said four more trains, two each from Lagos and Ibadan, would be added as soon as ongoing work on the telecommunication facility was completed. The facility will ensure smooth communication and between the train driver and the control tower.
Arisa spoke just as the corporation has opened for operation two recently completed train stations along the route, Ijoko and Papalanto.
The RDM said, “We currently run two return trips on Lagos-Ibadan standard gauge line. I want to run six trains daily when the telecommunication facility is fully ready.
“I also want to move more containers from the port. This will no doubt positively affect the prices of goods in the market.
“It’s a lot of trailers that will be taken off the road. In the long run, it makes the products being carried cheaper for the final consumers/ buyers
“The double issue of accumulated demurrage and port congestion will also be solved with the evacuation of cargoes by rail. It saves the importer the cost of demurrage and ultimately makes the goods cheaper.”
He also spoke on the measure being taken to reduce the cost of moving containerised goods from Apapa port, Lagos, to Ibadan, Oyo State, following complaints by importers and customs agents.
Already, he said the Managing Director of the NRC, Fidet Okhiria, (an engineer), had set up a committee to review the container haulage rate in order to make it competitive and attractive to more people.
He said, “When the issue came to us, the MD immediately called a meeting and set up a committee to review the situation.
“All over the world, people complain of double handling.”
“On the complaint, we are expecting the report of the committee for a possible downward review of the freight rate,” Arisa added.
Meanwhile, the corporation has officially inaugurated the Ijoko and Papalanto train stations.
The report of the opening was obtained by NewsTrends from the NRC website on Tuesday.
This is therefore good news for people hoping to board or drop the train at these stations.
Before now, the train only stopped at Agege, Abeokuta and Omi Adio after taking off from Mobolaji Johnson Station in Lagos or Obafemi Awolowo Station in Ibadan.