Business
Nigeria gets $3bn as IMF lifts member nations with $650bn
The International Monetary Fund has announced $650bn special drawing rights (SDRs) for member countries to boost the liquidity, with Nigeria getting $3.35 billion.
Managing Director of the IMF, Kristalina Georgieva, disclosed this in a statement on Monday.
The SDR is an international reserve asset created by the United Nations specialised agency to supplement its member countries’ official reserves.
The value of the SDR is based on a basket of five currencies – the U.S. dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound sterling. They are units of account for the IMF, not a currency per se.
Georgieva said the SDRs would be distributed to countries in proportion to their quota shares in the IMF.
She said $275 billion would go to emerging and developing countries, with low-income countries receiving about $21 billion.
“The largest allocation of Special Drawing Rights (SDRs) in history—about $650 billion—comes into effect today. “The allocation is a significant shot in the arm for the world and, if used wisely, a unique opportunity to combat this unprecedented crisis,” the IMF said.
It also stated, “The SDR allocation will provide additional liquidity to the global economic system – supplementing countries’ foreign exchange reserves and reducing their reliance on more expensive domestic or external debt. Countries can use the space provided by the SDR allocation to support their economies and step up their fight against the crisis.
“The SDRs are being distributed to countries in proportion to their quota shares in the IMF. This means about $275 billion is going to emerging and developing countries, of which low-income countries will receive about US$21 billion – equivalent to as much as 6 percent of GDP in some cases.”
The IMF leader said countries should ensure that decisions on the use of the SDRs must be prudent and well-informed.
She further stated that the IMF would provide a framework for assessing the macroeconomic implications of the new allocation, its statistical treatment and governance, and how it might affect debt sustainability.
The bank would also provide regular updates on all SDR holdings, transactions, and trading – including a follow-up report on the use of SDRs in two years’ time.
“To magnify the benefits of this allocation, the IMF is encouraging voluntary channeling of some SDRs from countries with strong external positions to countries most in need,” the statement said.
It added, “Over the past 16 months, some members have already pledged to lend US$24bn, including US$15 billion from their existing SDRs, to the IMF’s Poverty Reduction and Growth Trust, which provides concessional loans to low-income countries. This is just a start, and the IMF will continue to work with our members to build on this effort.
“This SDR allocation is a critical component of the IMF’s broader effort to support countries through the pandemic, which includes: US$117 billion in new financing for 85 countries; debt service relief for 29 low-income countries; and policy advice and capacity development support to over 175 countries to help secure a strong and more sustainable recovery.”
The new SDR allocation is the highest in the history of the IMF.
In June, President of the African Development Bank (AfDB), Akinwumi Adesina, said G7 countries had also agreed to reallocate $100 billion in their IMF SDR to African states by October.
Aviation
Safety: NCAA to audit all domestic airlines, says Aviation minister
Safety: NCAA to audit all domestic airlines, says Aviation minister
Minister of Aviation and Aerospace Development, Festus Keyamo, has said the Nigerian Civil Aviation Authority (NCAA) will carry out a comprehensive audit on all local airlines over safety concerns.
This is coming after a runway incursion incident in which Dana Air’s plane carrying 83 passengers with six crew members skidded the runway at the Lagos airport leading to diversion of flights
The operations of Dana Air were immediately suspended and NCAA directed to commence a comprehensive audit on the airline.
Keyamo spoke on the general audit of all domestic airlines on Thursday when he appeared on Channels TV Politics Today programme.
He said beyond the suspension of Dana Airlines and the ongoing audit of the airline, all other carriers in the country would be audited to guarantee the safety of passengers and the health of the civil aviation industry.
The directive to suspend the operations of the Dana Air was contained in a letter issued and endorsed by the NCAA Acting Director General, Chris Najomo, in Abuja.
It is the second time within two years that the NCAA would suspend the airline’s operational licence over safety violations.
It said the latest action was based on “elevated safety concerns” posed by the airline.
“As a precautionary step, and in accordance with Sec 31 (7) of the Civil Aviation Act 2022, the Authority has imposed a suspension on your Air Operator Certificate (AOC) with effect from 24″ April, 2024 at 23:59 to allow for a thorough safety and economic audit,” the letter partly read.
The NCAA also stated, “The safety audit will entail a re-inspection of your organisation, procedures, personnel, and aircraft as specified by Part 1.3.3.3 of the Nigeria Civil Aviation Regulations, while the economic audit will critically examine the financial health of your airline to guarantee its capability to sustain safe flight operations.”
Business
Anxiety as dollar exchanges for N1,420/$ on parallel market
Anxiety as dollar exchanges for N1,420/$ on parallel market
There are fears prices of essential goods including food items in Nigeria may begin to rise again as naira witnessed a major slide against the United States dollar at the foreign exchange market on Thursday.
The naira fell to N1,309/$ on the official market and N1,420 on the parallel market, according to multiple sources.
This indicates a fall of N90 or 6.8 per cent from N1,330 recorded on Wednesday.
The latest downward trend in naira rate after recording appreciable gain for some weeks followed high demand for dollars.
A report by The Punch quoted currency traders at the popular Wuse Zone 4 market in Abuja as buying the greenback note at N1,340 and selling at N1,420, leaving a profit margin of N80.
In Lagos, a trader Ibrahim Garba told Newstrends that the naira-dollar rate changes almost hourly.
“It was selling at N1,380/$ at 11am today (on Thursday) and by 2pm, it had moved to N1,400/$,” he said.
The naira has this lost 26.2 per cent in two weeks when compared to N1,125/$ on April 12, 2023 on the parallel market.
The Central Bank of Nigeria on Monday approved the allocation of $15.83 million to 1,583 BDC operators.
This was aimed at enhancing liquidity in the unofficial market.
The CBN in a letter to BDCs announced the allocation of $10,000 to operators across the country.
The allocation came at N1,021)$, aimed at stabilsing the foreign exchange market and ensuring accessibility of foreign currency to eligible end users.
Last weekend, the CBN Governor, Yemi Cardoso, said the Naira was declared the best-performing currency globally as of April 2024.
The naira was about the worst currency in March when it fell to as low as N1,600/$1 on the official market and N1800/$1 on the parallel market
Business
BDCs blame peer-to-peer Binance, others for naira fall
BDCs blame peer-to-peer Binance, others for naira fall
The president of the Association of Bureau De Change Operators of Nigeria, BDCs, Aminu Gwadabe, says BDC operators are committed to preventing speculators from attacking the naira.
Mr. Gwadabe said this in an interview on Wednesday in Abuja.
The Association of Bureau De Change Operators of Nigeria, as a self-regulatory body, has platforms to check the excesses of BDC operators, he noted.
“We have inaugurated state chapters whereby we can have a database of participants in the forex market. This is for the Financial Action Task Force (FATF) to understand this market and to know the participants; give them a simple registration,” he said.
Mr. Gwadabe said that the foreign exchange market needed a kind of harmonisation, centralization, and KYC to identify all business participants.
“This will enable the CBN to track other players in the market other than the BDCs and their levels of involvement. The BDCs is collaborating with the regulatory authorities for physical verification of offices using technology.
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“We want to balance international obligations with our own objectives. International obligations are templates that have been built without our input. We are coming up with our own template to balance it. We have seen some illegal economic behaviour, and the CBN and the security agencies are aware, and I am sure they will nip it in the bud,’’ he added.
He said the recent wave of naira depreciation was of concern to the BDC operators.
Mr. Gwadabe explained, “I am happy that the authorities, and even the BDCs as operators, have identified the peer-to-peer (P2P) platform. P2P is a platform like Binance where speculators use the dollar to buy USDT, a stablecoin that is pegged at one to the dollar.
“As long as Binance and such other platforms continue to be profitable, the naira will continue to depreciate. There are many of them in the system. Binance has been nipped in the bud, but there are still many. They are online platforms with no registration or restrictions.”
Mr. Gwadabe said that the CBN and the security agencies were already aware of the antics of the platforms. According to him, they are more of an illegal form of economic behaviour, and the people behind them lack patriotism.
“People have turned the dollar into an asset—a commodity of trade—which is why those platforms continue to thrive. We have seen where people are buying dollars into their domiciliary accounts to finance these schemes. A lot of millions of dollars are going out of the system. It is one USD to one USDT. The market can be liquid.
“Binance alone has four billion dollars of liquidity and more than two million transactions. Most of them source money to finance their transactions on the open market, and that is one of the reasons why the naira is depreciating,’’ he said.
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