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BusinessDay

Invisible sector gulps 33.6% of CBN January forex supply

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Out of a total $1.02 billion foreign exchange (forex) sold by the Central Bank of Nigeria (CBN) to authorised dealers in January 2013, the invisible sector accounted for 33.6 percent, the apex bank has said.

Wale Abe, executive secretary, Financial Markets Dealers Association (FMDA), who spoke with BusinessDay on phone, said the invisible sector may constitute payment of various kinds of services such as remittances, education, medical, maintenances in aviation industry, among others.

Analysts said on Tuesday that the invisible sector’s higher percentage leaves much to be desired considering its susceptibility to abuses. This is so as details of disbursement of the foreign exchange are usually not made open in the sector as opposed to others with details.

Additionally, the fact that the sector is subject to various interpretations by analysts lend credence to the likelihood of abuses, which have been in practice despite efforts by CBN to eliminate them.

“It is like the security votes which governors spend without accountability”, an analyst said.

According to the CBN’s Economic Report for the month of January 2013, the invisible sector was followed by the minerals and oil sectors which accounted for 25.0 percent of the total foreign exchange disbursed during the month.

Other beneficiary sectors in a descending order included: industrial sector, 15.7 percent; food products, 12.7 percent; manufactured product, 9.4 percent; transport, 3.5 percent and agricultural products, 0.1 percent.

Provisional data from the CBN indicated that foreign exchange inflow through the CBN in the month of January 2013 was $3.32 billion and outflow stood at $1.54 billion, resulting in a net inflow of $1.78 billion, compared with the net inflow of $1.26 billion in the preceding month and $1.36 billion recorded in the corresponding period of 2012, respectively.

Relative to the level in the preceding month, inflow rose by 0.03 percent, but fell by 22.9 percent below the level in the corresponding period of 2012. The increase in inflow was wholly attributed to the 40.5 percent rise in the receipts from non-oil inflows. Outflow fell by 25.4 and 47.8 percent below the levels in the preceding month and the corresponding period of 2012, respectively. The development was attributed, largely to the decline in drawings on Letter of Credits (L/Cs).

Other official payments at $0.46 billion fell by 33.3 percent below the level in the preceding month, driven largely by the fall in NNPC/JV cash calls payments.

However, estimated aggregate demand for foreign exchange by authorised dealers under the Wholesale Dutch Auction System (WDAS), bureau de change (BDC) and WDAS-forward contract was $1.14 billion in January 2013, showing a decline of 7.6 and 56.5 percent below the levels in the preceding month and the corresponding month of 2012, respectively.

The decline in aggregate demand was attributed to the increased activity in the inter-bank segment of the market. A total of $1.02 billion was sold by the CBN to authorised dealers during the period, reflecting a decline of 17.4 and 59.1 percent below the levels in the preceding month and the corresponding period of 2012, respectively.

On the other hand, currency in circulation fell by 10.7 percent to N1,457.3 billion in the review month, in contrast to an increase of 4.2 percent at the end of the preceding month.

The development reflected, wholly, the 11.2 percent decline in currency outside banks.

Total deposits at the CBN amounted to N6,787.5 billion, indicating a decline of 7.7 percent below the level at the end of the preceding month. The development reflected, largely, the fall in Federal Government and banks’ deposits, which more than offset the increase in deposits by “others”, the CBN has said.

 

HOPE MOSES-ASHIKE