Business

CBN Begins Gradual Harmonisation Of Exchange Rates

Published

4 years ago

May 17, 2021

The Central Bank of Nigeria (CBN) has begun gradual harmonisation of exchange rates with the removal of N379/$1 official rate from its website.
The move by the apex bank is one of the first indications of exchange rate harmonisation and tactical devaluation of the naira.
The policy shift also confirmed long time speculation that the Nigerian Autonomous Foreign Exchange Rate (NAFEX), also called the Investors’ and Exporters’ Forex Window, is the default official rate.
The apex bank had last adjusted the official exchange rate in August 2020 to N379/$1. The exchange rate displayed on the website has historically been referenced as the official exchange rate even as multiple exchange rate regimes have for years dominated the forex market.
However, all government transactions since 2021 have been converted, using the prevailing exchange rate at the official NAFEX window.
The CBN had last November devalued the naira by N6/$1 across all exchange rate lines in line with the exchange rate unification agenda of the apex bank as recommended by the International Monetary Fund (IMF) and World Bank.
In a weekly exchange rate for disbursement of proceeds of International Money Transfer Service Operators (IMTOs), all authorised dealers, Bureau De Change (BDC) operators and service providers were advised to add N6 across all rates.
The naira exchanges at N411.25/$1 on the Investors and Exporters (I&E) Window after the CBN extended its ‘Naira for Dollar’ policy to attract more foreign capital to the economy.
At the parallel market, the local currency exchanged at N484/$1, weaker than N483/$1 it exchanged last Thursday.
CBN governor, Godwin Emefiele, said that in Nigeria, like other emerging market countries and countries reliant on oil exports, the decline in crude oil earnings, as well as the retreat by foreign portfolio investors, significantly affected the supply of foreign exchange into Nigeria.
Speaking at the 55th Annual Bankers’ Dinner in Lagos, the CBN boss said the need to adjust for the decrease in supply of foreign exchange led to the depreciation of the naira.
“With the decline in our foreign exchange earnings and successive exchange rate adjustments, the CBN has continued to implement a demand management framework, which is designed to bolster the production of items that can be produced in Nigeria, and aid conservation of our external reserves,” he said.

Business

CBN Unveils NTNIA, NRNOA Accounts For Diaspora Nigerians’ Investment

Published

10 hours ago

January 15, 2025

The Tide

Central Bank of Nigeria (CBN) has introduced two accounts: Non-Resident Nigerian Investment Account (NRNIA) and Non-Resident Nigerian Ordinary Account (NRNOA), to manage funds (both in foreign and local currencies) from Nigerians abroad.

In a circular signed by its Acting Director, Trade amd Exchange Department, W. J. Kanya, the apex bank said with the NRNOA, Non-Resident Nigerians (NRNs) will be able to remit their foreign earnings to Nigeria and manage funds in both foreign and local currencies.

“The NRNOA enables Non-Resident Nigerians (NRNs) to remit their foreign earnings to Nigeria and manage funds in both foreign and local currencies, while the (NRNIA) enables Non-Resident Nigerians (NRNs) to invest in assets in Nigeria in either foreign currency (FCY) or local currency (Naira)”, the statement read.

It continued rhat “Account holders may maintain both a foreign currency (FCY) account and/or a local currency (Naira) account to facilitate transactions and participate in diverse investment opportunities”.

CBN also explained that NRNs can use their NRNIA to participate in Nigeria’s Diaspora Bond and other debt instruments issued locally specifically targeted at the Nigerian diaspora or available to the investing public.

The account is also to serve as a conduit for NRNs to manage their funds directly in a safe and secure environment, and reduce the reliance on third parties in meeting local commitments and obligations.

According to the bank, effective January 1st 2025, eligible NRNs shall have the opportunity to own any of the non- resident Nigerian accounts, subject to meeting KYC requirements which will be made available in FAQs to be released soon.

The CBN added that “This policy is without prejudice to Memorandum 17 of the CBN Foreign Exchange Manual (2018)”.

Business

Diesel Price Hike: Manufacturers Opt For Gas

Published

10 hours ago

January 15, 2025

The Tide

Manufacturers in Nigeria are gradually opting for natural gas as a solution to increasing diesel and petrol prices which have negatively impacted on production expenses.

Recall that following the removal of fuel subsidies by President Bola Tinubu in his inaugural address on May 29, 2023, the prices of diesel and petrol have skyrocketed, further worsening the cost-of-living crisis for people.

Recognising the potential of its vast natural gas reserves, which is over 200 trillion cubic feet, has initiated a Compressed Natural Gas (CNG) programme aimed at reducing transportation costs by nearly 50 per cent.

The initiative encourages the conversion of vehicles to CNG and aims to introduce CNG buses across major cities.

Additionally, the recent commencement of diesel sales by Dangote Refinery has led to a notable decrease in diesel prices, dropping from approximately N1,700 to N1,350 per litre. This reduction is expected to alleviate some financial pressure on manufacturers’ reliance on diesel for operations.

Industry leaders emphasise that transitioning to natural gas not only addresses immediate cost concerns, but also aligns with global sustainability goals.

The Manufacturers Association of Nigeria (MAN) has, therefore, urged businesses to adopt sustainable energy practices, as energy costs constitute 30-40 per cent of production expenses.

Commenting on the development, Managing Director of Tiget Business International Limited, Zheng Wei, said some Nigerian manufacturers are leveraging improved gas supply around Lagos to boost production despite recurring grid collapses.

Wei, who oversees one of the country’s largest footwear manufacturers, described this shift as vital to sustaining operations amid Nigeria’s power crisis.

Wei noted that while manufacturers face challenges like inflation, currency instability, and regulatory hurdles, power remains the most critical issue.

According to the MAN, energy costs make up nearly 40 per cent of manufacturers’ expenses, with limited and unstable grid supply disrupting production and reducing output.

To address this, Tiget partnered Clarke Energy to install a 6.6 megawatt Jenbacher gas power plant, sourcing gas from a supplier along the Lagos-Ibadan Expressway.

The project included assessments, engineering designs, and maintenance services, enabling Tiget to transition to cleaner, more efficient, and cost-effective energy.

Wei said, “The gas plant is producing cleaner electricity and saving us significant operational costs compared to diesel. It has addressed efficiency issues, making our operations more sustainable”.

On hos part, the Managing Director of Clarke Energy for sub-Saharan Africa, Yiannnis Tsantilas, emphasised that adopting resilient and cost-effective energy solutions is key to sustainable productivity for manufacturers.

He commended Tiget’s leadership for enhancing Nigeria’s economy by improving local market access to quality footwear, reducing unemployment, and increasing investment.

Tiget, incorporated in Nigeria in 2020 and based in Sagamu, imports polyvinyl chloride as a key raw material for its footwear products.

The company plans to expand its operations through backward integration and establish offices across Nigeria and Africa.

Wei expressed confidence in Nigeria’s potential as a regional economic hub, citing its young, talented population and vibrant local market.

He, however, acknowledged the challenges of high fuel costs on logistics and competitiveness, and called for investments in refineries to provide feedstock for plastic industries and a stable gas supply to support manufacturers, arguing that these measures would drive industrial growth and enhance Nigeria’s economic stability.

With a population exceeding 220 million, Nigeria’s dynamic market presents significant opportunities.

Tiget, Wei said, aims to contribute by producing high-quality footwear that aligns with Nigeria’s rich cultural identity and evolving fashion industry.

Business

TCN Debunks Grid Collapse, Says Lines Tripped

Published

10 hours ago

January 15, 2025

The Tide

The Transmission Company of Nigeria (TCN) has debunked last week’s declaration of grid collapse due to power disruption, saying it was due to the tripping of the Benin-Omotosho Line, not a national grid collapse.

Recall that the media widely reported last week that the national grid had experienced its first collapse in 2025.

TCN spokesperson, Ndidi Mbah, said the report was a misinformation.

“The TCN, hereby states that the nation’s grid did not experience any collapse today, contrary to the widely published misinformation in the media.

“Earlier today, at about 13:41 Hrs, the Osogbo–Ihovour line tripped, followed by the tripping of the Benin–Omotosho line. These consequently affected bulk supply to only the Lagos axis alone”, Mbah explained.

She also clarified that at about 13:00 pm, just before the tripping, total generation on the grid was 4,335.63MW, amd that after the trippings, generation was 2,573.23MW, showing clearly that the grid did not experience a collapse.

She noted that the transmission line tripping affected Egbin, Olorunsogo, Omotoso, Geregu, and Paras, but these have all been restored except for the Benin-Omotoso 330kV line whose restoration is ongoing.

“As TCN continues to work hard to put in place a robust transmission grid, in spite of prevailing challenges. It is imperative that we understand the negative impact of deliberately misinforming the public and the value of disseminating true and verifiable facts”, Mbah said.