The Federal Government earned the sum of N1.4tn from oil export in February. Earnings from oil export rose marginally last month, as oil output increased by 100,000 barrels per day, amounting to a rise of 2.8 million barrels in the month, according to data gathered from Reuters’ secondary source survey for February. A breakdown of the statistics showed that a rise in crude oil production by 100,000 per day translates to a 2.8 million output increase in February. The total production for February was put at 1.3 million barrels per day, amounting to an output of about 36,400 million for the month. Nigeria’s crude grade, Bonny Light, was sold for $84 per barrel in February, translating to total earnings of about N1.408tn. Conversely, checks by The PUNCH on production data provided by the Organisation of the Petroleum Exporting Countries Monthly Oil Market Report for January showed that crude oil output, according to a direct source, was 1.2 million barrels per day in January. This amounted to a production output of about 37 million barrels in the month. The commodity was sold at $82 per barrel in January, amounting to earnings of about N1.405tn.The development came on the heels of a recent report by the National Bureau of Statistics, saying that crude oil production contracted by 13 per cent year-on-year in the fourth quarter of last year. According to NBS, Nigeria recorded an average daily oil output of 1.3 million barrels per day in the fourth quarter of 2022, lower than the daily average of 1.50 mbpd recorded in the same quarter of 2021. The Group Chief Executive Officer of the Nigerian National Petroleum Company Limited, Mele Kyari, recently blamed low crude oil production on theft resulting from pipeline vandalism.
SUPREME COURT ORDERS OLD N200, N500, N1,000 NOTES TO REMAIN LEGAL TENDER TILL DEC 31.
The Supreme Court has invalidated the new naira design policy initiated by the Federal Government on the grounds that it was not done with due consultation and in line with constitutional provisions. Following, the apex court ordered that the old naira notes shall continue to be used side by side with the new naira notes till December 31, 2023. The court held that the three months timeline was also not in tune with the Central Bank of Nigeria’s Act and as such unconstitutional. Besides, the apex court argued that the President, Major General Muhammadu Buhari (retd.), usurped the powers of the CBN when he issued the directive banning the old naira notes of N1,000, N500 and N200 notes from February 10, 2023. Delivering judgement, the court considered the defendants’ argument that the court lacked jurisdiction to decide on the case. Justice Agim stated that the act of the president and government of Nigeria is an act of the federation. The court held that the dispute is between the states and the government of the Federation and within the original jurisdiction of the court It held that the government of the federation should have held adequate consultation to avoid massive disruption of government operations and trades. It invalidated the argument that the CBN was the proper party to be sued, maintaining that it was not the action of the CBN that is being challenged but the validity of the decision of the President to redesign the naira, release the new notes into circulation and withdraw the old notes without consultation with Nigerians through the council of states and the National Economic Council. The court held that the CBN does not have to be joined as a party in the suit as the CBN had no power to carry out the policy without the directive of the president and that the suit is not an action against the banks or the CBN.
NIGERIA’S TRADE BALANCE DECLINE FROM $50M TO $20M
The modest gains in oil production was unable to lift Nigeria’s trade balance as the country’s balance of trade position has reversed from surplus to deficit. The country recorded a $20 million trade deficit in November 2022 as against a surplus of $50 million in the previous month of October 2022. The Central Bank of Nigeria (CBN) who disclosed this in its Monthly Economic report said the deficit was a result of low crude oil export receipts during the period. The CBN also said that crude oil and gas export receipts declined month-on-month (MoM) by 9.3 per cent to $3.9 billion in November 2022 from $4.3 billion in October 2022. According to the CBN report, “Trade performance was weaker than expected as trade deficit was recorded, owing largely to lower crude oil export receipts. Provisional data shows that the trade balance swung into a deficit of $0.02 billion from a surplus of $0.05 billion in the preceding month. “Aggregate export receipts declined by 7.7 per cent to $4.33 billion from $4.69 billion in October. Similarly, merchandise imports declined by 6.2 per cent to $4.35 billion from $4.64 billion in October. Crude oil and gas export receipts declined to $3.90 billion from $4.30 billion in October. “In terms of share in total exports, crude oil and gas accounted for 90.2 per cent. Of the total crude oil and gas export, oil constitutes 84.6 per cent, while gas accounts for 15.4 per cent. Non-oil export earnings rose by 16.9 per cent to $0.4 billion, from $0.35 billion in October, due, largely to sustained favorable commodity prices at the international market.“This was due to the 7.0 per cent and 16.1 per cent increase in other non – oil products and re-exports to $0.38 billion and $0.02 billion from $0.36 billion and $0.01 billion respectively.”
NGX, PAPSS SIGN MOU ON CROSS-BORDER PAYMENT
The Nigerian Exchange Limited and the Pan-African Payment Settlement System, on Tuesday, signed a Memorandum of Understanding to facilitate cross-border payments across capital markets on the African continent. At the virtual signing ceremony, stakeholders said the partnership between NGX and PAPSS would boost trade in the capital markets in Africa. PAPSS is a continental payment system developed by the Africa Export-Import Bank to facilitate trade and investment across Africa. At the signing, the Chief Executive Officer, NGX Limited, Temi Popoola, said, “There are not several mechanisms by which investors can carry out cross-border capital market investments on the African continent. One challenge that all of these mechanisms face is the lack of compatibility of local currencies across African countries and, by extension on African exchanges. It is important to efficiently settle transactions in local currencies and this is where the collaboration between NGX and PAPSS comes in. “One fact that data consistently shows is that local capital is extremely critical to driving deep, stable and less volatile capital markets. There is indeed local capital available in many African countries. There is, however, a huge barrier to the flow of this capital as we have seen across the local markets and across the African continent as a whole. We are of the firm belief that the integration of PAPSS into the African capital markets will reduce some of these frictions and as a result deepen the flow of local capital across African exchanges. The Managing Director, PAPSS, Mike Ogbalu, said the effects of the partnership would impact many on the African continent.
CURRENCY IN CIRCULATION DROPS TO N1.38TN – CBN
The total amount of currency-in-circulation in the country dropped from N3.29tn as of the end of October 2022 to N1.38tn as of the end of January 2023 as a result of the naira redesign policy of the Central Bank of Nigeria. Figures obtained from the CBN showed this represents a drop of N1.91tn in the three-month period. The Governor, CBN, Godwin Emefiele, had in October 2022, announced plans to redesign the old N200, N500 and N1,000 notes.Emefiele also announced deadlines for Nigerians to swap their old with the new notes. The banking sector regulator said, “Accordingly, all Deposit Money Banks currently holding the existing denominations of the currency may begin returning these notes back to the CBN effective immediately. The newly designed currency will be released to the banks in the order of first-come-first-serve basis. “Customers of banks are enjoined to begin paying into their bank accounts the existing currency to enable them to withdraw the new banknotes once circulation begins.” He decried the challenges associated with currency management including significant hoarding of banknotes by members of the public, with statistics showing that over 80 per cent of currency-in-circulation was outside the vaults of commercial banks. Other challenges, he added included shortage of clean and fit banknotes with attendant negative perception of the CBN and increased risk to financial stability; and increasing ease and risk of counterfeiting evidenced by several security reports. In recent years, he said, the CBN had recorded significantly higher rates of counterfeiting especially at the higher denominations of N500 and N1,000 banknotes. Although the global best practice was for central banks to redesign, produce and circulate new local legal tender every five to eight years, he said, the naira had not been redesigned in the last 20 years.
