Coronavirus: OPEC+ planned deeper cut heralds deeper revenue woes for FG
OPEC and its allies are considering an aggressive production cut in a bid to support oil price after data suggested a worse-than-anticipated outcome for the commodity market hit by coronavirus.
The oil producers met in Vienna yesterday to strategies but a decision would be announced next week following rounds of meetings, an OPEC official said.
The latest efforts by the oil cartel leaves Nigeria no better as efforts to lift oil prices which dipped below the country’s budget benchmark Monday will come at the expense of its budget-tied production target.
Already, Nigeria is missing its daily production mark of 2.18 million barrels per day by a minimum of 480,000 per day.
FG’s N2.64tn oil revenue target in 2020, around 32 percent of its expected income, is also tied to an oil price of $57 per barrel.
Corporates turn to debt market for cash amid liquidity glut
CBN’s decision to restrict non-banking corporates and individuals from participation in the OMO market pushed liquidity into bonds and crashed interest rates. Now, corporates are trooping back to the debt market for cash.
Checks by BusinessDay show that currently, two corporates namely Nigerian Breweries Plc, the nation’s largest brewer by market size and Flour Mills of Nigeria Plc are in the market to raise a total of N65bn through bonds issuance and commercial paper.
Issuers are fully taking advantage of the liquidity glut in the money market, particularly as maturities of debt securities are expected to peak this month. Inflows from OMO maturities from instruments worth N327.56 billion are expected this week.
“The unprecedented unorthodox policy measures of the CBN have also raised the risk appetite of local investors in search of investable assets offering higher yields, including corporate debt securities,” Chapel Hill Denham said in a report.
Union Bank sees biggest daily gain in 3 years amid divestment plan
Shares of Union Bank rallied by the most allowable in a day on Tuesday, amid a divestment plan by the mid-tier bank aimed at boosting Nigerian business.
Union Bank rose 10 percent to N6.60 to jointly lead advancers alongside Wapic.
Tuesday saw the highest gain of the bank in three years, the last time it gained 10 percent was December 7, 2017.
A total of 4.56million volumes of shares were also traded, the highest since September 25, 2019, when it traded 19.18 volumes of shares.
The bank recently announced that it has entered a share sale and purchase agreement to divest its 100 percent equity stake in Union Bank UK Plc.
“Following a competitive bid process, MBU BidCo Limited an acquisition vehicle wholly owned by MBU Capital Limited was selected as the preferred bidder,” the bank said in a release.
According to the management, the sale is in line with the bank’s strategy to geographically streamline its business operations to focus on growth opportunities in Nigeria.
Coronavirus: Nigeria turns its back on citizens in China, BusinessDay check uncovers Lai Mohammed’s lies
Nigerians in China, where the novel coronavirus outbreak started, have been left on their own by the government amid efforts by other countries to help their citizens leave the country with cities under lockdown.
The House of Representatives on Tuesday voted against a motion by Benjamin Kalu, the Chairman of the House Committee on Media and Public Affairs, for the evacuation of Nigerians from China.
Meanwhile, the Chinese Embassy in Nigeria contradicted claims by Lai Mohammed, the minister of information, that there are only 16 Nigerians in Wuhan.
Lai Mohammed claimed Nigerians in the city at the epicentre of the global pandemic were unwilling to return home, but BusinessDay checks and the Chinese Embassy confirm 60 Nigerians living in Wuhan and begging to return home.
New Nigerian visa policy praised but concerns remain
Nigeria announced 79 classes of visas under the new Visa Policy aimed at attracting innovation, specialized skills and knowledge from abroad to complement local capacity, a move that has been praised as a step in the right direction but deemed insufficient.
The policy enhances Nigeria’s Visa on arrival which came into effect in January this year to pave the way for realising gains from the recently signed AfCTFA deal.
The President noted that the Nigeria Visa Policy 2020 provides an avenue to achieve African integration by the introduction of visas on arrival for short visits to Nigeria for holders of passports of African Union countries.
Nigeria expanded its Visa from six classes to 79, for comprehensive coverage of all areas of human endeavours.
Health, education, religion, business, aviation, security, intelligence, diplomacy, trade, investment, tourism, manufacturing etc., are among the categories included, said Muhammad Babandede, the Comptroller General of the Nigeria Immigration Service (NIS).
“The visa policy is a step in the right direction given that it is very difficult for foreigners to get the Nigerian visa,” said Bongo Adi, a faculty at the Lagos Business School. “However, that is just one aspect because foreigners are following news about insecurity in the country.”
Nigeria recently fell out of favour with the US which placed the country on an immigrant restriction visa following concerns related to identity management and security concerns in the country.
Nigeria’s abysmal performance in recent international rankings including Transparency International’s corruption index, a downgrade by Fitch Ratings as well as IFC’s removal from top five investment destination in emerging markets.
Nigeria improved by 15 places but still rank low at 131st on the World Bank’s 2020 Doing Business Index.
FDI in the country as at the third quarter of 2019 accounted for 3.73 percent ($200.08m) of total capital inflow compared to 18.58 percent ($530.63m) of total capital imported in the same period of 2018.
“Buhari has not shown enough commitment to tackling insecurity in the country. His service chiefs should have been sacked by now,” said a banker who asked not to be named. “Nigeria saying it wants to boost tourism under this current situation is laughable while its readiness for AfCFTA is questionable.”
