Business
Financial Markets Remain Shallow- IMF
Nigeria’s money and capital markets still lack the depth of lifting the economy out of the doldrums, the International Monetary Fund (IMF) has said.
Also in the league of markets with shallow profit, according to IMF are most of the other sub-Saharan African countries, despite reports of reforms in the respective economies.
IMF, in a recently released report, noted that the domestic money and capital markets in Nigeria and most sub-Saharan African countries remain underdeveloped and shallow offering mostly short term instruments.
According, stock market capitalisation remains low, while private securities markets are largely underdeveloped.
The IMF stated that the shallowness and lack of versality of hedging instruments in African financial markets likely accentuated short-term exchange rate movements.
Therefore, foreign exchange markets offers a limited array of forward hedging instruments, reflecting a part the concentration of foreign exchange receipts in the hands of the public sector, through aid or commodity exports.
Nabil Ben Ltaifa, Stella Kaendera and Shiv Dixit of the African Development IMF, in their submission, “Impact of the Global Financial Crisis on Exchange Rates and Policies in Sub-Saharan Africa” observed that the currencies of many sub-Saharan African countries, like those of many emerging and developing economies, offered large depreciation with onset of the global financial crisis.
Nigeria’s currency, as one of the countries under study, was said to depreciate by at least 20 per cent between June and March 2009.
After April 1, 2009, while some currencies reversed their depreciating trend with respect to the United States dollar, the Nigerian Naira continued almost unchanged.
Although, while in most countries above-trend inflation mitigated the real effect of nominal depreciation, Nigeria registered a significant (over five per cent) real depreciation in its currency over the whole period.
The trio observed that exchange rate volatility increased significantly compared to the pre-crisis period.
Volatility was generally higher with respect to the United States dollar but broadly less vis-à-vis the euro. The naira experienced significant increases in the volatility with respect to the three major currencies.
In contrast, the Rwandan and Tanzanian currencies displayed similar or lesser volatility before the crisis with respect to the U.S. dollar.
Talking about the factors that affected the value of exchange rates, the experts noted that the first factors were external, reflecting the transmission of the global crisis through the trade and financial channels as well as the volatility of the U.S, the main international reserve currency.
“The impact was commensurate with the extent and nature of each country’s exposure to trade and global financial markets. At the same time, domestic policies played a role in shaping the nature and magnitude of the impact,” they said.
Concerning the external environment, the IMF officials observed that trade had, as expected, an adverse impact on the region’s currencies, but that the magnitude of this impact seems to have varied significantly across countries.
According to them terms-of-trade movements were likely the main factor underlying movements in the exchange rates of Nigeria and Zambia, the two large commodity exporters in the sample.
Conversely, the rebound in copper and oil prices in the later part of the period supported the recovery of the Zambian Kwacha and a stabilisation of the naira.
The IMF officials also attributed policy choices of countries to the depreciation of their currencies.
Nigeria operated a managed floating system, which tended to depreciate more, the economy consequently, registered large depreciation, reflecting the limit of currency management in the face of large charges in the external environment.
It was observed that the domestic policy mix adopted in response to the external crisis also played a role in explaining exchange rate dynamics.
According to them, most countries in the sample intervened in their foreign exchange markets in an effort to stem the shock to their currencies.
\however, they said, managed floating regime like Nigeria intervened in a more regular and extensive manner to halt the depreciation.
“As a result, nominal exchange rates in these countries have tended to be more stable. But intervention by the Nigeria’s Central Bank was however, unsuccessful in preventing a large step depreciation of the currency by the end of 2008, in the large turnaround in trade and capital flows.
Troops of the Nigerian Navy conducting Operation “Dakatar Da Barawo” confiscated crude oil and other illegally refined products worth N2.7billion in June.
This is contained in a statement issued by the Director of Information, Naval Headquarters, Commodore Adedotun Ayo-Vaughan in Abuja.
“The various NN platforms deployed for ‘Operation Dakatar Da Barawo, Calm Waters 11’ and Tripartite Joint Border Patrol, have continued to sustain aggressive patrols to curb the menace of crude oil theft and illegal oil bunkering.
“Accordingly, several Illegal Refining Sites (IRS), metal storage tanks, wooden boats, dugout pits and ovens were destroyed between June 13 and June 19”.
He said five suspects were and the operatives destroyed 14 Illegal refining sites.
The Navy also said that 80 storage tanks, 22 wooden boats, 40 ovens, two-speed boats, a tanker, truck, barge and a Toyota Sienna car were recovered during the various operations during the period.
Similarly, Navy ship VICTORY in Cross River intercepted and impounded three wooden boats laden with drums of suspected illegally Refined Petrol (PMS) around Ikang channel, suspected to be transported to Cameroon.
However, the Navy said, the boats, as well as the products, were taken into custody.
Ayo-Vaughan said,”Forward Operating Base (FOB) Bonny in Rivers” also intercepted two wooden boats laden with about 400,000 litres of suspected stolen crude oil at Iwokiri.
The wooden boats and products, he said, were destroyed.
Similarly, he said, the Navy ship SOROH in Bayelsa intercepted a wooden boat laden with about 60,000 litres of suspected illegally refined AGO.
Subsequently, the boat and contents, he added was destroyed.
The Federation Account Allocation Committee (FAAC) has shared May 2022 Federation Revenue Allocation to the federal, states and local government councils to the tune of N680.783billion.
This is contained in a communiqué issued at the end of June 2022 FAAC meeting held in Abuja.
According to the communiqué, the N680.783billion total distributable revenue comprised distributable statutory revenue of N385.004billion, distributable Value Added Tax (VAT) revenue of N198.512billion and Electronic Money Transfer Levy (EMTL) revenue of N97.267billion.
In May, 2022, the total deductions for cost of collection were N36.996billion and total deductions for transfers and refunds were N186.672billion.
The balance in the Excess Crude Account (ECA) was $35.377million.
The communiqué confirmed that from the total distributable revenue of N680.783billion; the Federal Government received N229.563billion, the state governments received N241.824billion and the local government councils received N175.942billion.
The sum of N33.454billion was shared to the relevant states as 13percent derivation revenue.
Gross statutory revenue of N589.952billion was received for the month of May, 2022.
This was lower than the N635.037billion received in the previous month by N45.085billion.
From the N385.004billion distributable statutory revenue, the Federal Government received N185.197billion, the state governments received N93.934billion and the local government councils received N72.419billion.
The sum of N33.454billion was shared to the relevant states as 13percent derivation revenue.
In the month of May, 2022, the gross revenue available from the Value Added Tax (VAT) was N213.179billion.
This was higher than the N178.825billion available in the month of April, 2022 by N34.354billion.
From the N198.512billion distributable Value Added Tax (VAT) revenue, the Federal Government received N29.777billion, the state governments received N99.256billion and the local government councils received N69.479billion.
The Federal Government received N14.590billion; the state governments received N48.634billion and the local government councils received N34.043billion from the N97.267billion Electronic Money Transfer Levy (EMTL).
According to the communiqué, in the month of May, 2022, Companies Income Tax (CIT) and Value Added Tax (VAT) recorded considerable increases, Import Duty increased marginally while Petroleum Profit Tax (PPT) and Excise Duties decreased marginally.
Oil and Gas Royalties decreased significantly.
The Federal Government has announced that the successful investors in Nigeria’s 57 marginal oil fields for the 2022 bid round would get their various Petroleum Prospecting Licences, tomorrow.
On May 31, 2021, the defunct Department of Petroleum Resources (DPR) issued letters of award to investors for the production of crude oil from 57 marginal fields.
Last January, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) announced that a total of 128 awardees emerged as successful bidders in the bid round and had made complete and part payments for signature bonuses in the oil fields.
It also disclosed at the time that 33 awardees did not make payments during the 45 days window given to successful bidders to pay the required signature bonuses for the oil fields and as such had lost their awards to suitably qualified reserve bidders.
Providing updates on the bid round in Abuja, last Saturday, the Chief Executive, NUPRC, Gbenga Komolafe, announced that the successful awardees would get their licences by Tuesday.
He said, “In fulfillment of the promise made early this year, the NUPRC will on Tuesday in Abuja, issue Petroleum Prospecting Licences to successful awardees of marginal fields in the 2020 bid round, pursuant to the provisions of the Petroleum Industry Act 2021.
“It will also unveil the implementation template for the host communities’ development trust for commencement of the provisions under Section 235 of the PIA, 2021, to positively impact against restiveness in the host communities.”
Komolafe said implementing the development trust would guarantee seamless operations, boost investors’ confidence and provide enabling environment for sustainable improvement of the country’s hydrocarbon resources.
“These will mark the conclusion of some of the most urgent and critical tasks inherited by the commission when it was inaugurated in October, 2021, after the signing into law of the PIA 2021,” he stated.
The commission had in March this year informed all participants in the 2020 marginal field bid round programme that it had put all necessary machinery in place to progress the bid round exercise to conclusion in line with the PIA 2021.
In furtherance of that resolution, the commission constituted an in-house work team to distill and address the concerns of awardees with a view to close out issues affecting multiple awardees per asset and formation of Special Purpose Vehicles by awardees in line with the respective letters of award.
“Awardees were therefore enjoined to avail themselves of the resolution mechanism provided by the commission in the overriding national interest,” Komolafe stated.
He added, “The successful coordination and resolution of the issues culminated in the emergence of the successful awardees that would be handed over licences on Tuesday.”
-
Business4 days agoNigerians Collect 3m Passports From 2019-2022 – Aregbesola
-
Business4 days agoBuhari Seeks UK, EU Countries’ Partnership On Green Energy Policy
-
Business4 days agoStates Lose N19bn Oil, Gas Revenues In 2022 – World Bank
-
Business4 days agoNDLEA, NAGAFF Collaborate Against Illicit Drug Importation
-
Sports4 days ago
Nigeria Others Battle For Relay Tickets In Benin
-
Politics4 days agoWhat Wike Brings To The Party
-
Politics4 days agoSenate Wades Into CJN, S’Court Justices’ Feud
-
Politics4 days ago2023: Utomi Calls For Mass Citizens’ Action