Business
Capital Market: Banks Scrutiny May Harm Investors’ Confidence
The scrutiny of banks by the Central Bank of Nigeria may harm investors confidence in the capital market, stakeholders have said. The apex bank would be auditing the 24 banks out of which 10 had passed through the process, which led to five banks’ CEOs getting the sack.
The CBN wielded the big stick against the banks’ CEOs for allegedly failing to recover about N1.2 trillion loans, of which margin loans amounted to N456.2 billion.
The CBN governor promised that the auditing exercise of the banks would end by mid September.
The zonal chairman of shareholders Association, Mr. Aderemi Oyepeju, said that the issue had further dampened investor confidence in the capital market, as the five banks were put on full suspension while the others are still being audited.
He pointed out that as at Monday, August 17, 2009 investors were dumping their shares, especially banking stocks. According to the National Secretary of Nigerian Shareholders’ Solidarity Association, Mazi Robert Igwe, the exercise will affect investor confidence and reaction to the market but that it is a good development for the Nigerian economy.
He urged the CBN to carry out strict and periodic checks on the banks after the current exercise, saying that it is a good thing to strengthen the banks.
He stressed that there was need to ensure that the action taken by the CBN does not create a backlash that will create further problems within the banking system. Igwe noted that the decision taken by the market regulators to place the affected banks on full suspension would worsen investor confidence in the market and in the banking stocks.
The shareholders pointed out that the banking sector affects all other sectors of the economy. The stock market is generally down and this is as a result of the announcement within the banking sector that is impacting negatively on the stocks on the Exchange. He assured investors that after the exercise there will be rebound of the market and investor confidence.
Commenting on the issue, Mr. Vincent Ukoh, a stockbroker with Securities Trading and Investments Limited, said that there is panic among investors in the capital market and for now investors are not willing to put their money in the capital market.
“They are watching to see the direction of the CBN and the market”, Ukoh said. He stressed that the banking sector accounts for more than 50% capitalisation of the market.
“It is a good sign to strengthen the banks. The pains might be there but in the long run investors would get to understand that there is a lot to be confident about”.
Some Commercial drivers in Port Harcourt have said that the Federal Government’s N1,350 fuel discount is yet to reduce their daily operating cost.
A cross session of commercial drivers who spoke to The Tide correspondents in Port Harcourt said they are yet to feel the impact of the government discount, adding that most filling stations in the city are even selling above the pump price
A driver Jude Ogbo who operates the mile 1 Rumuokoro axis of Port Harcourt said plies the discount has not reflected in his daily fuel expenses.
“Since the discount was announced, many filling stations still sell at the old price. When you go there, you discover they sell you two litres at the price of one. For now, we have not seen any reduction,”_ he said.
Another commercial driver, Comrade Ishmael Uzeho who operates within the Port Harcourt metropolis, said the discount is not being implemented across the country.
“How has the discount affected us? I will say it has not. Many stations are not working. Only NNPC is working and that is just one person in the whole country. If government really wants to help, let the fuel price go down properly,”_ he said.
Uzeho added that if the price of fuel goes down, transport fares will also go down. He noted that his route fare has remained at N500.
On his part, Mr. Moses Dapa, Supervisor at Sam Jaja Foundation Transport Company, said the company has not increased its fares despite the high cost of fuel.
“We are still running normal price. We charge N2,000 and N5,000 depending on the destination. We will not increase our price. I don’t know about other parks, but for Sam Jaja, we are maintaining normal price,”_ Dapa said.
He appealed to passengers to understand that drivers are not using high fuel price as an excuse to charge excessive fares.
Other drivers who spoke said the federal government should monitor the NNPCL retail stations to ensure that the directive is implemented.
Recalled that The Federal Government in abid to reduce transportation cost in the country had announced a 30-day margin discount at NNPC Retail stations across the country from October 1 to 31,
However investigation revealed that the policy is yet to affect transportation cost in the country.
By; Stephens Sopakriba and Saint Davies
In a press statement released to The Tide’s source on Friday in Abuja, the group said Nigeria had a significant resource advantage due to its vast natural gas reserves.
“At a time when global energy markets face unprecedented volatility and rising operational costs, Nigeria stands on a massive resource advantage with its vast natural gas reserves,” the group said.
Highlighting this potential, Alfa Designs urged the nation to move past complaints over energy costs and aggressively embrace Compressed Natural Gas (CNG) as a sustainable engine for economic growth.
While federal policy adjustments have sought to cushion the impact of global energy shocks, industry experts emphasised that long-term relief hinges on a rapid, nationwide transition to gas.
“Transitioning away from expensive traditional petroleum products promises to ease the financial burden on ordinary citizens.
“It will also reposition Nigeria as an attractive industrial hub capable of drawing foreign direct investment and driving job creation,” it said.
To demonstrate the practical feasibility of this transition, the group said it recently partnered with a global Original Equipment Manufacturer (OEM) to lower the entry barriers for commercial drivers.
“By negotiating directly with the manufacturer, we reduced the total cost of acquiring and installing a CNG conversion kit for commercial tricycles (commonly known as Keke NAPEP) from up to N700,000 down to under N450,000.”
The group said this shift offers dramatic immediate financial benefits for local operators, with petrol currently selling at roughly N1,390 per liter.
It said that, in comparison, at a CNG equivalent price of about N98 per liter, a daily commercial driver using 10 liters of fuel reduces its daily energy expenditure from N13,900 to N3,980.
“This represents a daily net savings of N9,920, or more than 71 per cent.
“Over a standard 26-day working month, drivers save over N257,000, allowing them to fully recover the cost of the CNG conversion in less than 46 operational days.”
The company further stated that when scaled nationally, the economic implications are monumental.
“Nigeria consumes approximately 50 million liters of gasoline daily, costing roughly N69.5 billion per day.
“A nationwide 71 per cent reduction in fuel expenditure would generate daily national energy savings of N49.6 billion.
“On an annualised basis, this shift equates to approximately N18.1 trillion, or $13.5 billion, kept within the domestic economy.”
The group added that those recurring national savings would offer a vital mechanism to help address Nigeria’s estimated $2.3 trillion infrastructure deficit.
It said reinvesting those funds into the economy helps eliminate the 30 to 40 per cent operational overhead currently consumed by imported fossil fuels.
“The resulting boost to corporate margins expands the national tax base, generates reliable user-fee revenues to make major transit projects bankable, and creates a self-sustaining financial cycle,” it said.
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