In a bid to enhance foreign currency access for businesses within Nigeria, the Nigerian Exchange Ltd. has put forth a proposal to permit dollar-denominated bond listings on its platform according to report from Bloomberg.

This initiative is seen as a potential solution to alleviate the foreign currency challenges faced by companies in Africa’s largest economy.

The Nigerian Exchange is even contemplating extending this opportunity to include dollar-denominated stock listings.

CEO of Nigerian Exchange Ltd., Temi Popoola, speaking to Bloomberg said the primary goal of this proposal as facilitating companies operating from the country’s special economic free trade zones, as well as those generating revenue in foreign currency.

Popoola explained, “Our primary objective is to enable these companies to issue bonds denominated in dollars and eventually offer equity in dollars as well. It could potentially address the challenges posed by fluctuations in foreign currency.”

The move comes as a response to consistent concerns raised by oil companies, a prominent sector in Nigeria, regarding access to dollars for procuring raw materials.

President Tinubu’s reforms

Despite recent efforts, such as the foreign-exchange market overhaul in June under President Bola Tinubu’s new administration, which triggered a 40% devaluation of the naira, the shortage of foreign currency has persisted.

While the CEO, Popoola, refrained from providing a specific timeline for the potential implementation of these proposals, he did note that the government has displayed a keen interest in broader market reforms. He also highlighted the feasibility of effecting changes to listing regulations within a relatively short timeframe.

In addition to easing foreign-exchange controls, Nigeria has taken steps to address other economic challenges. Notably, the country has eliminated fuel subsidies, which amounted to $10 billion in the previous year, and initiated an agricultural overhaul to combat soaring food inflation. #fx #crypto2023

The role the CBN Governor is coming up with is the answer to the free fall. When you have a market that is almost like a jungle, where there are no rules, anything comes and goes, what you get is what we are getting now.”#fx #Meme Sulaiman emphasized the importance of clear and enforceable rules for the market, citing the current lack of transparency in exchange rates as a prime example of the challenges facing Nigeria’s economy.He stated that the problem in Nigeria is not just the lack of rules but also the failure to enforce the existing ones but also in enforcement of rules and the development of a more organized regulatory environment.Speaking on investment, he stressed that investment decisions require a clear understanding of the parameters and factors influencing the market, both controllable and non-controllable. He believes that discipline and confidence in the system are essential to inspire investment, as no one is willing to invest in a situation characterized by unpredictability.“It is the confidence that inspires investment; nobody will invest in a situation where you don’t know what will happen,” Sulaiman said.Also, according to him, Nigeria needs a stronger collaboration between the public and private sectors, highlighting that the government alone cannot resolve the country’s economic challenges.He stressed that a conducive environment, enforcement of rules, and inspired confidence are necessary to encourage investment.More insightsInvestment, according to Suleiman, is about taking a risk today for returns in the future. However, he acknowledged that a lack of certainty and clear boundaries hamper investment in Nigeria, which he attributes to the absence of a rule of law and a breach of contracts.Sulaiman also touched on the issue of Nigeria’s mounting debt and its impact on the economy. He advocated for improved productivity as a means to tackle the country’s debt woes, suggesting that a productive economy would reduce the need for borrowing.He noted that Nigeria’s debt had become burdensome due to the mismanagement of borrowed funds and the disproportionate interest burden relative to revenue.#pol g g The solution, Sulaiman argued, is not to borrow less but to generate more revenue internally, including through increased tax collection.He stressed that Nigerians pay some of the lowest taxes relative to GDP in the world, making it imperative for the government to boost tax revenue.What you should knowi-invest, a platform that aims to democratize investing in Nigeria, was introduced five years ago. The platform simplifies investing for people from all walks of life, allowing them to invest in various financial instruments with as little as ₦5,000.The initiative is designed to encourage a culture of saving and investment among the general public, making investment opportunities accessible to a broader spectrum of the population.The unsettled Foreign Exchange (FX) forward contracts by the Central Bank of Nigeria (CBN) have remained source of concerns among analysts in the financial service sector, as the persistent delays worsened investor confidence and linked to the slow economic growth.FX forwards are like promissory agreement by CBN to allocate FX but will not deliver the real FX until a date in the future. The future date could be 90 days, 180 days or 360 days forward. With this, companies can expect that the forex will be delivered that day for them to settle their offshore obligations of a Letter of Credit (LC). If the dollar is not delivered on the agreed day, it will affect their ability to meet up with their obligations and would imply a foreign currency denominated loan and poor credit score. This is tough on local companies as CBN would have debited them NGN through their banks at the start of the contract hence double funding in such instances.So, if the CBN fails to deliver, it means those companies will not be able to deliver FX to its offshore bank for importation of goods. When there is a default, the cost on that transaction will increase and that may affect the bottom-line. It could also mean that subsequently, those companies may not be able to access such transactions or credit, as confidence would have been eroded”, said an analyst who pleaded anonymity.In his opinion, Uche Uwaleke, professor of Capital Market at the Nasarawa State University Keffi, said FX forwards is a binding contract between two parties to deliver FX in the future at an exchange rate agreed to in advance.“Failure to settle or deliver FX forward on the agreed date amounts to breach of contract and could lead to litigations and loss of confidence, which are capable of scaring investors,” he said.Abiodun Keripe, managing director, Afrinvest Research & Consulting, said the major nexus is the dependence of the economy on key imports across sectors.“Take for instance, there are material items required for infrastructure and manufacturing projects such as iron and steel which manufacturers have to import. The Ajaokuta steel mill is non-functional until date. Where manufacturers and importers have locked their FX demands through forwards, and settlements are delayed, it results in the inability of importers to fulfil their obligations as at when due. Also, it creates a negative perception from the view of our trading partners” he said.Some estimates put the FX backlog at between $6 and $10 billion, which equates to less than 10 percent of the country’s external reserves.Data from JPMorgan Chase & Co. compiled by FSDH Research showed that FX forwards stood at $6.8 billion (N3.2 trillion) as of 2022.CBN used to sell about $200 million in FX forward contracts every two weeks but soon ran into troubled waters as dollar inflows dried up and a dollar demand backlog swelled.Nigerian businesses from manufacturers to equipment importers, who have been on a long queue for dollars, are not the only ones worried about the backlog, which is also undermining foreign investor confidence in the CBN’s move to float the naira in June 2023.#trading Stakeholders are wondering why the apex bank is not able to tap into its external reserves to settle the contracts.The foreign exchange reserves have declined by 7.79 percent year-to-date to $33.22 billion as of October 12, 2023 from $36.03 billion recorded on January 3, 2023, data from the CBN website indicated.$XRP $BTC

The Nigerian Stock Exchange (NSE) maintained its upward trajectory, building on last week’s momentum.

The market capitalization witnessed a significant surge, adding N157 billion to reach a total of N35.842 trillion. This marked a positive shift from the previous closing value of N35.685 trillion.

The significant rise in market value can be attributed to the prevailing positive outlook that dominated today’s trading session.

As a result, the All-Share Index (ASI) was up by 0.44%, affirming a bullish trajectory in market performance. The Index managed to tack on 286.26 points, reaching an impressive 65,488.67 points, clearly surpassing the previous day’s closing mark of 65,202.41 points.

Furthermore, the Year-to-Date (YtD) return for the stock market experienced a noteworthy uptick, now resting at 27.78%. This upswing shows a commendable improvement from its earlier closing position of 27.22%, underscoring the market’s consistent growth and potential. #fx #crypto2023