Nigeria Content Online

The Nigeria Export Import (NEXIM) Bank plans to spend about $40
million (N6 billion) within the next two years to support potential buyers of
Nigerian products in order to boost the country’s export market.

Managing director and chief executive, Roberts Orya, told
reporters in Abuja on Wednesday that the aim is to make Nigerian products more
competitive within the sub region.

“As part of our mandate to facilitate and promote Nigeria’s
trade, NEXIM has engaged consultants in the region to develop a sea-link
project, which is expected to culminate in the establishment of a company to be
owned by investors from all ECOWAS sub-region, to facilitate sea transportation
of goods across the region,” Mr. Orya said.

Potentials and opportunities

According to him, the bank has set an ambitious target on how to
deepen cross border trade and payment system within the Economic Community of
West African States (ECOWAS) sub-region and Africa, to make it the traditional
market for exporters, as is the practice in most EXIM (Export Import) banks
around the world.

“What we have in the ECOWAS or the Central African region is a
non-traditional market, which nobody wants to go and do business, while we
allow other countries’ EXIM banks to take advantage of the huge potentials and
opportunities.

“If trade in the sub-region is deepened, it will help create
jobs and halt capital flight within the region, while every benefit that go
with deepening of trade would come to the region,” he said.

In order to discontinue the current scenario of huge non
performing loans among its clients, he said the institution has resolved to
follow stringent conditions in approving fresh facilities to prospective
beneficiaries.

Out of a total portfolio of over N10 billion recorded in its
books as non-performing loans to various groups since 2009, the bank has been
able to recover less than N1billion.

Tackling non performing
loans

“Loan recovery is usually a challenge in Nigeria. As at August
2009, the total amount of non-performing loans that had 100 per cent provision,
based on the grading of the prudential guidelines, was only N10.03 bilion.
NEXIM was able to recover about N540 million that year; less than N300 million
was recovered between January and December last year,” Mr. Orya said.

A special remedial management department, he said, has been
established charged with the responsibility of following up on customers on a
daily basis to help reduce the high level of non-performing loans, while
stricter conditions are to be adopted in approving future loans facilities.

“We have decided to carry on this transformation, knowing that
going forward, any credit to be created must be of good quality. Apart from the
one per cent general provision that the prudential guidelines require the bank
to make, we do not want to create any bad loans. We have taken time to
establish the pillars necessary to ensure that the bank does not go the same
way in the next two to three years, in terms of bad loans.

“We have learnt from our mistakes. We must ensure that any money
that is given is judiciously used. Any exporter that is not prepared to comply
with our conditions would not be attended to, as there are no political loans
in NEXIM. Any project that the bank must support must be bankable and viable.
Such projects must not only be able to pay back itself, but must also be seen
by all that the capacity is there to do so,” he declared.

He said the bank would henceforth be more concerned with its
ability to generate more foreign exchange for the country as well as facilitate
jobs creation, pointing out that only businesses with healthy balance sheets as
well as those with proven capacity to make sufficient returns to their
shareholders and those in a position to approach the international capital
market to raise money and have good relationships with other EXIM banks around
the world enjoy its patronage.

According to him, Nigeria, with a population of over 150
million, is well-placed to control the political and economic advantages within
the ECOWAS sub-region, pointing out that NEXIM, as Nigeria’s trade policy bank,
is poised to take up the challenge.

The Nigerian central bank looks set to win a showdown with the foreign
exchange market as it resists pressure for major depreciation of the naira
ahead of national elections.

Businesses and rich Nigerians are going long on dollars to hedge against the
risk of any prolonged political upheaval or security problems due to the April
9 presidential vote, in which President Goodluck Jonathan faces a determined
challenge from his main rival, ex-military ruler Muhammadu Buhari.

A downtrend in Nigeria’s foreign exchange reserves has added to the market’s
jitters. The International Monetary Fund warned last month that the naira could
become subject to “intense speculation” if the reserves continued to
fall, and recommended greater exchange rate flexibility.

But central bank governor Lamido Sanusi, who has won international praise
for his clean-up of Nigeria’s debt-ridden banking system, insists the naira is
flexible enough.

He has repeatedly said a stable exchange rate is key to maintaining investor
confidence, and told Reuters two weeks ago that devaluing the naira would increase
Nigeria’s import bill and fuel inflation.

Some clever maneouvering by the central bank in the market, and a recent
improvement in the foreign exchange reserves, now suggest it will probably
succeed in keeping the naira in a corridor of plus or minus 3 percent around
150 to the dollar, as it has been doing for over a year.

“We remain confident in the sustainability of the 150 level despite the
current naira weakness, notably given the country’s favourable external
fundamentals, the tightening in monetary conditions and, to a lesser
extent…the nearly flat spending outlook implied by this year’s budget,”
said Samir Gadio, emerging markets strategist at Standard Bank.

Weakness

The naira edged down to trade around 156.90 against the dollar on Thursday,
its lowest level in about 18 months, compared to 155.10 at the start of the
week and 153.40 around two weeks ago.

Dollar supplies from the central bank at its
bi-weekly auctions have slowed the decline but have not been large enough to
halt it. Traders say strong dollar demand from companies with unconfirmed
letters of credit, payments on foreign credit cards and large foreign exchange
purchases by bureaux de change are eating up dollar supplies in the interbank
market.

“I see the naira going up to 158 depending on whether the central bank
is willing to defend it,” said a treasury executive at a multinational
consumer goods firm.

The executive said a rate of 160 would affect his company’s operations.
“Anything above 155 naira would be a worry and anything above 160 naira,
we would have to put contingency measures in place like forward
contracts,” he said.

“Any increase in forex charges would be added to our bottom line and
reduce our profits, and it’s got the potential to increase our prices and
affect our operations.”

A senior commercial banker, noting the shallowness of the foreign exchange
market meant a single large deal could shift the rate significantly, said
Nigeria’s reserves were a concern. Their decline over the past year, despite
rising oil prices, has raised questions among some analysts about the quality
of the government’s economic management.

“Reserves of $37 billion would not anchor the currency in the event of
a concerted market drive against the naira,” the banker said.

Fiscal policy is another concern for investors. The Senate on Wednesday
passed a 4.972 trillion naira 2011 budget, increasing spending plans from
Jonathan’s initial proposal three months ago. Over half of the planned spending
is recurrent, meaning Nigeria is spending more on keeping government running
than on badly needed new infrastructure and development projects.

A Nigerian government bond auction on Thursday suggested some investor
disquiet about fiscal policy and the currency. Five-year paper was sold at a
marginal rate of 12 percent, up from 11 percent last month, and three-year
paper at 10.50 percent against 9.25 percent.

Support

Nevertheless, the treasury executive at the
multinational, and many analysts, said they expected the naira to recover to
normal levels after next month’s elections to the presidency, parliament and
state governorships.

Nigeria only emerged from military rule just over a decade ago, and all of
its elections since then have been marred by rigging and intimidation. But this
has not seriously threatened stability at a national level and Jonathan remains
the favourite to win, though the opposition is hoping to force a run-off vote.

Recently there has been good news on the foreign reserves; they rebounded to
$36.4 billion on March 8, up 10 percent from the end of February, though they
remained well down from $42 billion a year ago, according to the central bank.

The government has attributed reserves’ decline in the past year to
counter-cyclical spending during an economic downturn, the defence of the
naira, seed capital for a planned sovereign wealth fund, and financing for
infrastructure projects.

Those explanations do not fully satisfy everyone, but authorities insist
that with oil output and prices rising, reserves will build up once again.

And the central bank has taken some clever administrative steps to reduce
pressure on the naira. It has asked banks buying foreign exchange at its
auctions to submit lists of customers for which the purchases are occurring, to
verify the demand is for commerce rather than for speculation.

It also plans to start selling short-tenored forex forward contracts from
next Wednesday as part of efforts to smooth demand and help businesses hedge
their currency risk. This could reduce the threat of panicky sales of naira.

Razia Khan, economist for Africa at Standard Chartered Bank, said the
current naira corridor might conceivably be shifted, but only carefully and
gradually.

“We all believe that the mid-point is around 150 but there is nothing
to stop the central bank adjusting it up gradually in response to high
demand…and then maybe allowing it to go down again when conditions allow.

“Do we think that they are about to announce a big devaluation in the
naira? No. But do we think the recently announced spending plans are going to
create more pressure on the currency? Yes.”

REUTERS

The Bureau of
Public Enterprises (BPE) has issued the requirement for the next stage
of the privatisation process of distribution companies created out of
the Power Holding Company of Nigeria (PHCN).

The director
general of the Bureau, Bolanle Onagoruwa, said on receipt of
Information Memorandum and Request for Proposal, pre-qualified bidders
will be given access to physical and e-data room; will be able to carry
out physical due diligence; will be issued with draft copies of the
Multi-Year Tariff Order (MYTO); will be encouraged to submit comments
on MYTO; and Bidder comments on MYTO will be subject of conference to
be organised by sector regulator (Nigerian Electricity Regulatory
Commission).

The Nigerian
privatisation agency chief made the remarks on Tuesday as a panel
discussant at POWERINBADA in Johannesburg, South Africa, according to a
press statement on the firm’s website.

A total of 331
applications were received by the Bureau of Public Enterprises (BPE) on
Friday, March 4, 2011 – the deadline for the submission of Expressions
of Interest (EOIs) in the privatisation of the successor companies
created out of the Power Holding Company of Nigeria (PHCN.)

One hundred and
seventy four applications were received from prospective
investors/concessionaires interested in acquiring the four thermal
stations and the two hydro stations. One hundred and fifty seven
applications were harvested from prospective investors interested in
acquiring the eleven distribution companies.

Mrs. Onagoruwa told
her audience that the reform of the Nigerian power sector presents
enormous investment opportunities, adding that the government has put
in place investment-friendly initiatives. This includes the fact that
foreigners can own 100 per cent of investment; that there is guarantee
against expropriation of investments; that repatriation of profits are
guaranteed by law; that there will be generous tax incentives; and that
the nation has one of the highest Returns on Investment (ROI) in the
world.

She pointed out
that the objectives of the electric power sector reform are to increase
electrification; ensure cost reflective tariffs; attract private sector
investments into the sector; create competitive electricity market;
induce investments in new power generation facilities; rehabilitate
existing power generation facilities; improve efficiency by increasing
collections; reduce costs and technical and non-technical losses; and
improve customer service.

Chukwuma Nwokoh,
the spokesperson of the firm, said the firms would have to be
shortlisted first, before the request for proposals would be sent to
the successful ones.

“We would
shortlist, and then when we do, we would send them their Request for
Proposal. It is the next stage after the submission of Expressions of
Interest.”

The core investor
sales to be carried out through international competitive bidding will
cover the eleven electricity distribution companies in the country.
They are Abuja Electricity Distribution Company Plc; Benin Electricity
Distribution Company Plc; Enugu Electricity Distribution Company Plc;
Eko Electricity Distribution Company Plc; Ibadan Electricity
Distribution Company Plc; and Ikeja Electricity Distribution Company
Plc.

Others are Jos
Electricity Distribution Company Plc; Kaduna Electricity Distribution
Company Plc; Kano Electricity Distribution Company Plc; Port Harcourt
Electricity Distribution Company Plc; and Yola Electricity Distribution
Company Plc.

Investors at the Nigerian Stock Exchange (NSE) yesterday recorded
more losses on the value of their equities, as market closed trading on
negative note.

The NSE market capitalisation of the 194 First-Tier equities
closed on Thursday at N7.775 trillion after opening the day at N7.969 trillion,
reflecting 2.43 per cent decline or N194 billion losses. The market has lost
over N399 billion since transaction started this week.

Commenting on Thursday’s trading performance, analysts at
Proshare Nigeria Limited, an investment advisory firm, said the continuous
downward trend could be attributed to “the intense sell activities” by
investors, adding that the sell pressures were “very dominant in some blue
chips stocks” in sectors like Banking, Building Materials, Breweries, and
Foreign Listings.

Stockbrokers at GTI Capital, a stockbroking firm, said the
market had “staged a stabilisation trial during the better hours of trade only
to tumble and succumb to sellers’ mood at the concluding session.”

Low gainers

At the close of trading on Thursday, the number of gainers
closed lower at 10 stocks as against the 14 gainers recorded previous session;
while losers also closed lower at 42 stocks when compared with the 45 losers
recorded on Wednesday.

Transnational Corporation and Red Star Express topped the price
gainers’ table with an increase of 4.35 per cent and 4.26 per cent, to close at
72 kobo and N2.94 per share, respectively.

Starcomms and Goldlink Insurance followed on the gainers’ table
with an increase of 3.80 and 3.64 per cent, to close at 82 kobo and 57 kobo per
share.

On the flip side, Dangote Sugar Refinery, Stanbic IBTC Bank, and
Cement Company of Northern Nigeria led the price losers’ chart with a loss of
five per cent each, to close at N12.35, N8.74 and N10.84 per share,
respectively. First City Monument Bank followed with a loss of 4.99 per cent,
to close at N6.48 per share.

Active subsector

The Banking subsector led the market transaction volume on
Thursday with 107.122 million units valued at N788.799 million. The volume
recorded in the subsector was driven by transaction in the shares of Diamond
Bank, First Bank, Oceanic Bank, and Skye Bank.

Trading activities in the Insurance subsector was second highest
yesterday, with 36.063 million shares valued at N29.005 million. Volume in the
subsector was boosted by deals in shares of Goldlink Insurance, Aiico
Insurance, and Mutual Benefit Assurance.

The Conglomerates subsector was third with 33.694 million shares
valued at N874.380 million. PZ Cussons Nigeria, Transnational Corporation, and
Unilever Nigeria boosted volume in the subsector yesterday.

I read a news
report in the media recently about Toyosi Akerele, the founder of
R.I.S.E, a youth development organisation. She was quoted as saying her
organisation can mobilise about 60 million youth.

I gave her comment
serious thought and was beside myself imagining how it could happen.
However, it is possible, as R.I.S.E network has been a veritable
platform for youth networking. The organisation utilises social media
as a potent tool to reach out to millions of youth out there and has
achieved huge success through this platform.

Social media has
become an integral part of our daily existence. With consumers getting
more sophisticated, companies should begin to refocus their marketing
strategies. It is actually the ‘in’ thing and has definitely come to
stay.

Companies now use
social media, such as blogs and community sites, to market their
brands. Popular social sites such as Linked In, Facebook, Twitter,
Flickr, and You Tube have more than five million visitors daily. In
Nigeria, bellanaija.com, Naijapal, Linda Ikeji, and others have become
veritable channels of engagement.

Promoting brands
using these sites is very attractive and will definitely reach the
target audience. This is due to the huge amount of human traffic that
passes through the sites on a consistent basis. Social media helps
brands maintain a consistent and constant presence in the lives of
consumers, bridging the gap between the two.

This platform is
also attractive to brands, as it is a low cost investment when compared
to other available options. Conventional methods of advertising cost a
lot more, while effectiveness and reach are achieved with social media,
which guarantees consumer attention and loyalty to brands. Social media
fosters a two-way communication and builds meaningful connections with
the target audience companies intend to reach.

It also promotes
the word-of mouth concept which drives visibility for brands. When more
people tell good stories about a brand, it helps build goodwill and
brand acceptability. Companies, through their brands, can make lasting
impact on consumers through the adept use of social media marketing.
Brand advocates are created through the influence of this platform.
Through networking, some causes are promoted online in order to
mobilise support and enlist others.

For instance, on
Facebook, a group is created to advance a particular issue and within
the twinkle of an eye, thousands of people sign up for such.

Imagine if a group
on ‘Good Health is in Our Hands’ campaign of Dettol is created online.
It will massively drive visibility for the brand through its key
messages on why we need to have maximum protection against germs. The
brand will have advocates that will ultimately become consumers.

However, in
adopting social media, there should be a strategic plan to communicate
the brand offerings. This is important in order to maximise the
enormous potentials and leverage that social media offers. The brand
should be properly defined in clear and concise language.

The core target
segment should be identified, while opportunities for the brand are
also explored. A content and engagement strategy that appeals to the
identified needs of the target audience is important.

It is also key to
listen and observe the trend of online conversations. It is not just
enough for a brand to adopt social media marketing. This is because
each target segment has something that appeals to it than the others.

Observation will
enable companies measure the impact of usage of social media. There
should be a tangible reason for doing so. It is one thing to have fans,
but the fans should be turned to consumers and advocates.

The importance of
having the right message cannot be underestimated in social media. This
is because of its effective role in reaching a dynamic audience. Brands
should paint realistic pictures of what they stand for in the
marketplace. There should be a linkage between brand promise and
consumer satisfaction. Social media helps in spreading the good sides
of a brand only when the consumer experience is exciting.

Social media indeed brings new opportunities which should be
leveraged for impact. It helps companies learn how to achieve results.
It also builds brand loyalty and followership. This creates an online
community of brand loyalists and enthusiasts who have had an exciting
experience with the brand.

An explosion was
heard at a Nigerian onshore oil flow station operated by Agip in the
Niger Delta on Wednesday, security sources said, but the cause was not
immediately clear.

A joint military
task force confirmed there had been an explosion in Bayelsa State in
the Niger Delta, but did not specify the exact location. Italian oil
firm, Agip, was not immediately available for comments.

The explosion was heard in the early hours at Agip’s Clough Creek oil flowstation in Bayelsa, one security source said.

The Nigerian Stock
Exchange recorded a total loss of N260 billion on equities at the close
of trading activities in February, after recording significant gains of
N662 billion in the preceding month.

The market value of
the 217 listed equities, which opened the month at N8.575 trillion,
closed on the last trading day in February at N8.315 trillion,
reflecting a N260 billion loss or 3.03 per cent decline.

The 217 listed
equities accounted for 80.74 per cent of total market capitalisation of
the 263 listed securities, which closed February at N10.298 trillion;
down by 2.7 per cent from the N10.583 trillion in January.

The Exchange’s
strategy and business development department said the downturn in stock
market activities, which started in late-January and continued during
February, “severely constrained growth” of the Nigerian capital market.

“The stock market
continued to suffer from low liquidity arising from low incomes and
reduced savings, mixed performance by quoted companies, and profit
taking/loss cutting,” the NSE said, adding that “the scenario continued
to dampen investors’ confidence.”

Low turnover

The market recorded
a turnover of 6.5 billion shares valued at N60.61 billion in 119,477
deals during February, in contrast to a total of 10.84 billion shares
valued at N104.1 billion exchanged during January in 139,950 deals.
Trading days last month were 19 compared with the 20 days in January.

Aggregate stock
market turnover between January and February were 17.334 billion shares
valued at N164.7 billion exchanged in 259,427 deals.

In the comparable
period during 2010, the market recorded turnover of 16.14 billion
shares valued at N100.8 billion in 429,306 deals.

Measuring by
turnover volume, the Banking subsector was the most active in February
with traded volume of 4.5 billion shares valued at N37.3 billion, while
the Insurance subsector was second with traded volume of 450.23 million
shares valued at N666.9 million. The Maritime subsector was third with
transaction volume of 218.41 million valued at N390.56 million.

Aanalysts at
Financial Derivatives Company Limited, a business consultancy firm,
said as trading proceed in the year, market drivers would be “the
progress of the Asset Management Corporation of Nigeria,” activities of
“investors taking position in anticipation of favourable year end
results” of some quoted companies, and “expansion of operations by
listed foreign multinationals.”

Bond trading

Over-The-Counter
(OTC) bond market, a turnover of 926.1 million units worth N841.05
billion was recorded in February 2011, in contrast to a total of 875.62
million shares valued at N801.134 billion exchanged during the
preceding month.

The most active
bond, in terms of volume, was the 10.00 per cent Federal Government of
Nigeria (FGN) Bond July 2030, with a traded volume of 218.6 million
units valued at N170.2 billion. It was followed by 5.50 per cent FGN
Feb 2013, with traded volume of 206.9 million units valued at N194.2
billion.

Only 24 of the available 33 FGN Bonds were traded during the month, same as in the preceding month.

As in the preceding
month, the most active bond, in terms of volume, was the 10.00 per cent
Federal Government of Nigeria (FGN) Bond July 2030 with a traded volume
of 269.4 million units valued at N214.54 billion.

It was followed by
5.50 per cent FGN Feb 2013 with traded volume of 199.85 million units
valued at N191.4 billion. Only 21 of the available 32 FGN Bonds were
traded during the month, compared with the 24 in the preceding month.

Nigeria’s inflation
rate stood at 11.1 per cent year-on-year in February 2011. This is
lower than 12.1 per cent recorded in the previous month in the new
Composite Consumer Price Index (CPI) series released by the nation’s
bureau of statistics. The monthly change of the CPI was 0.96 per cent
improvement when compared with January 2011.

The percentage
change in the average composite CPI for the twelve-month period ending
February 2011, over the average of the CPI for the previous
twelve-month period was 13.2, slightly lower than the figure for the
preceding month.

Average monthly
food prices rose by 2.9 per cent in February 2011 when compared with
January 2011 figure. The bureau says the increase in the month-on-month
index was caused mainly by upward movement of the prices of some food
items like yam, beverages, fruits, vegetables, fish, and cereals.

The ‘All items less
Farm Produce’ index, which excludes the prices of agricultural
products, increased by 0.9 per cent in February 2011 when compared with
January 2011. The increase was mainly on some household items, building
materials, diesel, and kerosene.

In the twelve-month
to January 2011, the index rose by 10.6 per cent while the average
annual rate of rise of the index was 12.1 percent for the twelve-month
period ending February 2011.

Bismarck Rewane,
managing director, Financial Derivatives Company, said a relatively
stable exchange rate and the fact that the dollar appreciated against
other currencies are some of the reasons behind the drop.

“Nigeria’s
inflation rate has fallen. This could be a reflection of the relatively
stable foreign exchange rate over the months. The prices of imported
goods may not have influenced the market as they used to because of the
stable rate.

“However, this
doesn’t mean that prices of goods have gone down; it doesn’t mean that
general prices have actually reduced. This means that the rate at which
prices increase have reduced,” Mr. Rewane said.

“This is happening probably because the Central Bank is holding the forex rate stable, within a specific range,” he added.

Samir Gadio,
Emerging Markets Strategist, Standard Bank, says given the surge in oil
price and the turnaround in oil output, the Central Bank is keen to
support exchange rate stability.

“Oil production and
price dynamics, coupled with incrementally tangible signs of some
fiscal restraint in 2011, as government borrowing declined sharply in
recent months, should ultimately support the Central Bank’s willingness
and ability to maintain the exchange rate within the +/-3 per cent
range around the 150 dollar to naira level.

“Furthermore, the
Central Bank’s governor, Lamido Sanusi, reiterated several times in
recent weeks that any currency devaluation would have a negative effect
on inflation and other macroeconomic control variables, but would not
necessarily result in improved external competitiveness, due to the
structural and infrastructure bottlenecks of the economy and its
import-dependent nature,” Mr. Gadio said.

Experts say the
monetary tightening by the Central Bank since September 2010 has helped
curtail naira liquidity and contain speculative demand for the dollar.

The Monetary Policy
Rate was gradually rose by 50 basis points to 6.5 per cent between the
September and January Monetary Policy Committee (MPC) meetings, and the
Standing Deposit Facility rate was raised 350 basis points to 4.5 per
cent in the same period.

Outlook

The chances of the
Central Bank increasing rates further at the next Monetary Policy
Committee meeting to be held later in the month are reasonably high,
according to forecasts by industry watchers.

“The exchange rate
has come under pressure again and the risks to inflation remain to the
upside, despite the drop in consumer prices to 11.1 per cent year on
year in February, from 12.1per cent in January,” Mr. Gadio said.

FirstRand, South
Africa’s No. 2 banking group, is in advanced talks with Nigeria’s
Sterling Bank over making a strategic investment in the lender, banking
sources familiar with the deal said.

Managing director,
Sizwe Nxasana, who took over the reins of FirstRand over a year ago,
told Reuters last year the South African bank was looking to invest
“meaningful amounts of capital” in Nigeria and would fund any deal from
its reserves.

It was the first
foreign bank to announce its interest in buying one out of the nine
Nigerian banks rescued by Central Bank in a $4 billion bailout in 2009
but later got cold feet.

Banking sources
said FirstRand prefer to enter the Nigerian market through a strategic
alliance with a healthy local bank and would be looking to deploy
around $300-$400 million to fund such an investment.

Sterling Bank, not
one of the bailed-out banks, has a market valuation of around 33.7
billion naira ($225 million) as at March 10. FirstRand and Sterling
Bank both declined to comment.

“They (FirstRand) are looking at making a strategic investment in Sterling,” one banking source told Reuters.

Apart from FirstRand, other deals are looming in
Nigeria’s banking sector as new investors seek to recapitalise the
rescued banks and a state-run “bad bank”. AMCON has set a June
timeframe to resolve the country’s banking crisis.

Banking sources
said a consortium involving Vine Capital, a relatively unknown private
equity firm, has put in a bid to acquire Finbank after the lender
dismissed an earlier bid by local rival, First City Monument Bank
(FCMB).

“Finbank rejected FCMB’s bid and asked Vine Capital to make a bid,” another source told Reuters, declining to be named.

Banking sources
said Vine Capital has signed a recapitalisation agreement with Afribank
and intends to bid for Finbank in order to merge it with Afribank.

Central Bank
governor, Lamido Sanusi, said last week two of the rescued banks have
signed Memoranda of Understanding (MoU) with new investors and two more
should sign this week or next.

Mr. Sanusi said he expected the deals to be completed within 8 to 12 weeks of the agreements being signed.

“The MoU more or
less captures negotiations that have been completed. What is left is
basically … implementation of the terms, obtaining the necessary
shareholder and regulatory approvals,” Mr. Sanusi told Reuters in an
interview in his office.

Reuters

Demand
for foreign exchange is gradually edging up, as the Central Bank of
Nigeria (CBN) offered $1.3 billion so far this month at the official
Wholesale Dutch Auction System (WDAS) window.

Even
though there are five more auctions for the month of March, the amount
so far traded exceeds the average traded figure since the beginning of
the year.

A
total of $2.25 billion was traded in January while $1.7 billion was
traded in February. In January, an average of $281 million was traded
per session while $242 million was traded in February. For March, an
average of $325 million has been the figure so far, even though it is
still the middle of the month. This represents an increase of over 34
per cent from the previous month.

Upsurge

The
upsurge in foreign exchange demand comes amidst mixed expectations from
operators on the direction of the market this week. Analysts at FSDH
Securities Limited, a financial advisory and investment firm, stated
that there would not be much pressure on that window of the financial
market.

“We
are of the opinion that the current fiscal position of the Federal
Government should not exert excessive demand pressure on the foreign
exchange. Thus, we expect the foreign exchange rate to remain stable in
the short to medium term,” the firm stated in its report for last week.

However,
the naira has continued to face undue pressure due to market forces.
While the national currency closed last week at N150.79 to the dollar,
it declined to N150.90 at Monday’s trading, a drop of 0.07 per cent.
The naira sold N155.50 at the parallel market, a decline of 0.71 per
cent from the previous trading.

This
development, according to Afrinvest, a Lagos-based financial services
firm, is due to the sustained level of demand for the dollar and
reduced inflows from oil majors.

“We
expect further downward pressure on the naira this week as we do not
foresee any significant increase in supply by the CBN,” the firm
reported.

Speculative activities

Currency dealers, however, blame the activities of speculators for the current dip in the value of the naira.

According
to Suleman Gali, a bureau de change operator in Marina, even the banks
are increasing their rates due to the pressure to sell to currency
speculators.

“We
were selling at N157 to the dollar only for my bank to send me a mail
this morning (yesterday) increasing their selling price to N157.50.
Automatically, we also had to increase,” Mr. Gali said.

He
said the Central Bank would need to monitor the banks to ensure that
they respect the two per cent band, which is the official rate approved
by the regulator between buying and selling.

“Since
last week, the banks have been increasing their rate. So, instead of
selling direct to us, they prefer to sell internally to people who are
ready to pay more,” he added.

Attractive entry point

Samir
Gadio, Emerging Markets Strategist, Standard Bank, said the current
weakness of the naira represents an attractive entry point for
investors ready to position for a post-electoral rally in the foreign
exchange market in April 2011.

“Dollar
to naira has traded above the +3 per cent upper end of the Central Bank
exchange rate objective (156.2 on 15 March), probably driven by the
usual uncertainty associated with any electoral cycle in African
countries and rising corporate and speculative demand at the WDAS
window, as well as in the inter-bank market.

“We also think the forthcoming initiation of a forward market for
30-, 60- and 90-day tenors by the Central Bank should further support
naira by smoothing foreign exchange demand and volatility,” Mr. Gadio
said.