The Central Bank of Nigeria (CBN) increased its supply of the United States dollar at its regulated Wholesale Dutch Auction System (WDAS) last week by 46 per cent as it offered a total of $350 million, compared with the $240 million offered the preceding week.

This was as a result of the rising appetite for foreign exchange observed across various segments of the market during the week.

The total amount sold by dealers at the bi-weekly auction last week was the highest since this year.

However, the naira slipped marginally against the dollar by one kobo to close at N155.75 to a dollar, compared to the N155.74 to a dollar it was the preceding week. The apex bank sells dollar at the Wholesale Dutch Auction System (WDAS) to keep the local currency around the band of + or – three per cent of N155/$1.

But the pressure of dollar demand was heavier at the interbank segment of the market as the local currency was hurt by 84 kobo. It closed at N158.22 to a dollar at the interbank on Friday, compared to the N157.38 to a dollar it stood the preceding Friday.

Currency Analyst at Ecobank Group, Mr. Kunle Ezun, attributed the trend to ‘seasonal month-end pressure.’

Ezun explained: “It is just corporate demand and increased outflow from the market. By next week, the pressure should be over. So, it should be a source of concern to anybody. Also, it has not breached the CBN band.”

He added: “Although the naira has a weakening outlook, the steady rise in reserves to $47 billion (around 10 months equivalent of imports) provides a large cushion to support the naira in the weeks ahead. Over the short term, the naira will likely continue to trade on the interbank market within the CBN’s three per cent band either side of N155/$1.”
 
NIBOR Movement
The Nigerian Interbank Offered Rates (NIBOR) rose marginally to an average of 11.29 per cent on Friday, from 11.8 per cent the preceding Friday as the volume of outflow was neutralised by inflow into the system.

Data made available by the Financial Market Dealers Association (FMDA) showed that while the overnight tenor maintained its preceding Friday’s position of 10.25 per cent, the 7-day tenor closed at 10.71 per cent, compared with the 10.75 per cent it attained the preceding Friday. Also, just at the 30-day tenor fell to 10.87 per cent on Friday, from 11.42 per cent the preceding Friday, the 60-day tenor also closed at 11.33 per cent, from 11.79 per cent. However, dealers predicted that rates would rise this week as the apex bank continues its open market operations.
 
Three-tiered KYC
The CBN last week made public the implementation strategy for its three-tiered Know Your Customer (KYC) policy that was introduced recently. The three-tiered KYC was conceived in line with the CBN’s efforts to achieve financial inclusion as well as to reduce the incidence of identity fraud in the system.

The apex bank explained in the new circular that the success of the three-tiered KYC regime would not only promote financial inclusion, but increase the effectiveness of KYC requirements and improve the quality of KYC information obtained by financial institutions from their customers.

It added: “We have, however, observed that the laudable policy would produce lasting result if it is properly implemented and monitored timely from its inception. It is on this note that the implementation strategy was developed by the CBN, in order to ensure its success.”
 
KYC for DNFBPs
The apex also disclosed last week that it had extended the deadline for the implementation of the additional KYC requirement for Designated Non-financial Businesses and Professions (DNFBPs) had been extended to April 30th.

It explained: “Following representations made by some stakeholders for an extension of the deadline, the CBN hereby extends the deadline by three months from February 1, 2013, to April 30, 2013.

“For avoidance of doubt, DNFBPs that have not registered with SCUML may do so and update their bank accounts information with such evidence on or before 30th April, 2013, failing which they would not be allowed to operate such accounts until they comply.”
 
IFC’s ‘Naija’ Bonds
Standard Chartered Bank last week announced that it had successfully completed a N12 billion ($76 million equivalent) Senior Unsecured Fixed Rate Notes issuance due 2018 for the International Finance Corporation (IFC), a member of the World Bank Group.

The IFC Naija bond was issued to support Nigeria’s domestic capital markets, increase access to local-currency finance and target investors such as pension funds, insurers, asset managers and banks seeking to diversify their respective portfolios. With the fixed income securities, IFC has established a benchmark for other international issuers to tap the growing naira market.

The bank described the deal as a landmark transaction, adding that it was the first onshore issuance in the Nigerian naira market by an international issuer and the lowest spread achieved for an onshore issuance in the market.

Standard Chartered Bank was the Lead Issuing House and Lead Bookrunner for this bond. Proceeds from the bond would be used by the IFC to support its private sector development program.”
 
Bank of Agriculture
The Bank of Agriculture (BoA) last week said it had concluded arrangement to disburse about N5 billion agricultural loans to farmers across the country this year.

Managing Director/ Chief Executive Officer, BoA, Dr. Mohammed Kudu Santuraki, said the loans would be provided to small, medium and large-scale farmers in the country.

Santuraki explained that while micro-farmers would receive about N250, 000 each, middle scale farmers about N5 million, large-scale farmers would be provided facilities above N5 million each.

According to him, the initiative was to support farmers as well as to promote agriculture and rural development. Santuraki attributed the cause of unrest in the north to the neglect of agriculture by successive governments. He pointed out that it was in view of the current situation in the region that the Federal Government decided to channel huge investment in agriculture in order to promote wealth creation and tackle poverty.

 Loans for Agro Dealers
The Federal Government and CBN last week announced that N60 billion loans had been provided to agro-dealers in line with the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) initiative. Permanent secretary, Federal Ministry of Agriculture and Rural Development, Mrs. Ibukun Odusote, said the loans would allow the small scale input retailers to have access to finance to stock up on seeds and fertilisers.

She added that President Goodluck Jonathan had approved N15 billion to recapitalise the Bank of Agriculture at less than 10 per cent interest rate for farmers and agribusiness.

Odusote said the GES scheme is a major milestone in the federal government attempt to modernise agriculture and ensure that Nigeria farmers benefit from the subsidised fertilisers, seeds and tractors.

She hinted that with the scheme, the ministry plans to register an additional five million farmers with the aim of reaching them directly with farm inputs such as seeds, fertilisers and credits.

Cashless Policy
The Bankers’ Committee last week revealed plans to extend the cashless policy to Ogun from July 1, 2013. With this, Ogun will join Rivers, Kano, Anambra and Abia States as well as the Federal Capital Territory (FCT) announced earlier for July 1, implementation of the policy aimed at reducing the dominance of cash in the economy.

The decision to extend the policy to Ogun was made at the recent Bankers’ Committee meeting held in Abuja. Head, Shared Services, Central Bank of Nigeria (CBN), Mr. Chidi Umeano, said the aforementioned states and the FCT were chosen because of the large volume of cash transactions in some of their major cities such as Aba, Kano, Port Harcourt and Onitsha among others.

Fitch Raises Lagos Outlook
Fitch Ratings last week raised its outlook on Lagos state to positive from stable, citing “improving debt management” and moves towards a balanced budget by 2015.

The agency noted that increasingly, bonds with “fixed repayment schedules, longer maturities and monthly provisions into the debt reserves fund, were replacing the traditional concentration of short-term bank loans” for Lagos State.

“Fitch views this as a sign of the state’s improving debt management,” it added. Lagos State Government had sold N80 billion ($505 million) of debt last November, its third and biggest issue in six years, to fund developments including an urban rail system that needs about $1 billion to complete. The seven-year notes were priced with a 14.5 percent coupon.

Source: Thisday (By Obinna Chima)