Financial experts yesterday expressed optimism that the Monetary Policy Committee (MPC) would review the interest rate at its subsequent meetings when the 2018 budget would have been passed.
They told the Tide source in Lagos while reacting to the outcome of the first MPC meeting for the year that the Monetary Policy Rate (MPR) review would be expected after the passage of the budget.
Former President, Chartered Institute of Bankers of Nigeria (CIBN), Mazi Okechukwu Unegbu said that the MPC would tinker with the rate when the budget would have been approved.
Unegbu said that the members had no choice but to retain the rates the way they were at the moment because the budget was still pending as well as other economic factors.
He said that the capital market had been experiencing a mixed performance, while the interest rate for manufacturing companies had skyrocketed.
“When the budget is passed and implementation commences, things will start working. We will now know if they will do a downward review, retain or take it up.
“They are right to retain the rates the way they are at the moment, if they tamper with it, it will create more problems for them,’’ Unegbu said.
He said that apart from the budget, the Federal Government needed to embark on human capital development to achieve the desired growth, noting that money was not the major thing.
The Managing Director, APT Securities and Funds Ltd. Malam Garba Kurfi, expressed dissatisfaction with the MPC decision to keep Nigerians in suspense as to when the rates would be reviewed.
Kurfi said that the members would have done better by setting a limit to when Nigerians should expect a change in the benchmark interest rate.
He said that the committee would have set an inflation rate target when the interest rate review would be expected rather than allow people to guess.
According to him, banks keep their money in Treasury Bills (TBs) and Federal Government Bonds rather than lend to the real sector to accelerate economic growth.
“As of today, most banks lend to companies between 22 per cent and 30 per cent which is higher than the apex bank approved limit,’’ Kurfi said.
He said that the development if not addressed would affect economic growth and the three per cent Gross Domestic Product (GDP) projected by government for 2018.
Mr Ambrose Omordion, the Chief Operating Officer, InvestData Ltd., noted that the outcome was in line with expectations.
Omordion observed that the present socio-political environment did not give room for a rate cut due to uncertainties surrounding the coming general elections despite the positive economic data.
He said that rates remaining unchanged for nine sessions of MPC would favour foreign investors.
This may keep the inflow of capital to the economy and market, knowing that their funds are for different investment purpose and limit exposure to different markets.
Fund managers have the choice of where to put their funds for profit with less associated risk,’’ Omordion said.
He said that the outcome of MPC meeting would likely slow down the panic in the market ahead of first quarter companies earnings and first quarter economic data.
Mr Bayo Adeleke, immediate past Secretary, the Independent Shareholders Association of Nigeria, said that the committee was trying to be careful in terms of adjusting the key variables since they have not met for some time.
“This is good for our market (capital market). The stability will continue because the returns on TBs is low (10-11%) largely due to increase in price of crude oil,’’ Adeleke said.
The Tide reports that MPC members of the apex bank have voted at the end of the two-day meeting in Abuja to retain MPR at 14 per cent, alongside all other policy parameters.
Mr Godwin Emefiele, Central Bank of Nigeria (CBN0 Governor, said at the end of meeting that the committee was keeping monetary policy rates because of the fear that loosening the rates may lead to a rise in consumer prices.
CBN Kicks As MTN Begins Charges For USSD Transactions, Today
The Central Bank of Nigeria (CBN) has opposed plans by the telecommunication service provider, the MTN, to charge their subscribers for Unstructured Supplementary Service Data access to banking services from today.
The Governor of CBN, Mr. Godwin Emefiele, gave the bank’s position at a news briefing by the Nigerian delegation to the just-concluded World Bank/International Monetary Fund Annual Meetings, in Washington, yesterday.
The Tide reports that MTN, in an SMS message to its subscribers, had said the decision was on the request of the banks and would take effect from October 21 (today).
“Yello, as requested by your bank, from October 21, we will start charging you directly for USSD access to banking services.
“Please, contact your bank for more info,’’ the message said.
Responding to a question seeking his reaction to the announcement, the CBN governor said the bank would not allow that to happen.
“About five, four months ago, I held a meeting with some telecom companies as well as the leading banks in Nigeria at Central Bank, Lagos.
“At that time, we came to a conclusion that the use of USSD is a sunk cost.
“What we mean by a sunk cost is that it is not an additional cost on the infrastructure of the telecom company.
“But the telecom companies disagreed with us. They said it was an additional investment on infrastructure and for that reason, they needed to impose it.
“I have told the banks that we will not allow this to happen.
“The banks are the people who give this business to the telecom companies and I leave the banks and the telecom companies to engage.
“I have told the banks that they have to move their business, move their traffic to a telecom company that is ready to provide it at the lowest possible, if not zero cost.
“And that is where we stand, and we must achieve it,’’ he said.
The Tide reports that the transactions to be affected by the charges include intra- and inter-bank money transfers, through USSD, among others.
OML 53: NDPR, Omerelu Community Sign GMoU
The Niger Delta Petroleum Resources (NDPR), operators of the Oil Mining Licence (OML) 53, and Omerelu Community in Ikwerre Local Government Area of Rivers State, have signed the Global Memorandum of Understanding (GMoU).
After back and forth deliberations which began in May 2019, the two parties finally signed the document which was read to the hearing of all stakeholders, last Friday, by representative of the Permanent Secretary, Rivers State Ministry of Justice (Mrs.) Florence Fiberesima,
Representative of the state government, and Permanent Secretary, Ministry of Chieftaincy and Local Government Affairs, Mr Felix Odungweru, who expressed happiness shortly after the ceremony, stated that the signing of the GMoU would enhance the economy of federal, state and local governments, due to the peaceful coexistence that would emanate from the official pact between NDPR and the Omerelu community.
According to him, “it portends that the economy of the state, federal and local governments would be enhanced, where there is peace, there is a working understanding.”
Odungweru noted that with the signing of the GMoU, the company would not shy away from its Corporate Social Responsibilities (CSRs), saying “in executing it’s Corporate Social responsibilities, the company goes into a GMoU with host community where all issues are straightened and stretched out”.
He said further that the pact was a “demand driven action, triggered by the community, which process started in May 2019 and concluded in October”.
On his part, the representative of the Board of Trustees, NDPR, Chief Enyindah Chukwu, expressed optimism that the GMoU would bring growth for both the community and the company operating in the community, in this case NDPR.
Chief Chukwu said, “if they play by the rules, the company would have a conducive environment to operate in as well as peace”, adding that the host community would benefit from the presence of the company operating in the area.
He explained that the GMoU was renewable every three years from the date of signing.
Also speaking, the paramount ruler of Omerelu, Eze Ben Ugoh, the Eluwa 8th of Omerelu, expressed appreciation to God and the company for the pact and expressed optimism that the community would benefit in terms of employment, development and empowerment.
Nigeria To Get $3bn World Bank Loan For Power
The Minister of Finance, Mrs. Zainab Ahmed, has said that the Federal Government’s request for a World Bank loan to finance the power sector is on the verge of being granted.
Ahmed stated this yesterday at a media briefing on the activities of the Nigerian delegation to the just-concluded annual meetings of the World Bank/International Monetary Fund Annual Meetings in Washington.
“We put a request for financing of the power sector at a range of $1.5bn to $4bn.
“At the end of the day, it looks like we will be looking at a funding size of $3bn that will be provided in four tranches of $750m each.
“Our plan is that the team will be able to go to the World Bank for the approval of the first tranche in April 2020,’’ she said.
The minister explained that the loan would be used to plug funding gaps and tariff differentials, which she said private investors in the sector had always complained about.
She said a portion of the money would go into the transmission segment of the electricity value chain.
If the government is able to expand the facility to four billion dollars, the additional one billion would be used for the distribution segment, she said.
“It will help us to exit the subsidy that is now inherent in the power sector.
“It is supposed to be to reform the sector and to restore the distribution business side of the sector especially to put it on a stronger footing.
“This is to ensure that they are freed up enough to be able to go out and raise financing to invest in expanding the distribution networks,’’ she said.
Ahmed stated further that the financing would also cover the gap between the current tariff and the actual cost of generating electricity.
“It will also enhance our ability to pay previous obligations in the sector that have crystallised so that investors in the sector can go on with expanding investments in the sector.
“The distribution sector will be at the backend when the other reforms have been carried out.
“It will be a loan to the distribution companies because they are owned by the private sector,” the minister said.
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