Nigeria's central bank has reported a $7.5 billion loan from U.S. banks JP Morgan and Goldman Sachs in financial statements published for the first time since 2015, sending the country's international bonds tumbling on Friday, Reuters reported. Nigeria's government has had to seek overdrafts from the central bank to plug a widening deficit amid wide-scale theft in the oil industry, and the large foreign loans could add to the central bank's burden.
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Nigeria declared a state of emergency that will allow the government to take exceptional steps to improve food security and supply, as surging prices cause widespread hardship, Reuters reported. The move will trigger a range of measures, including clearing forests for farmland to increase agricultural output and ease food inflation, Dele Alake, a spokesman for President Bola Tinubu, told reporters late Thursday. It follows the president’s removal of fuel subsidies and exchange-rate reform, which has seen the naira fall by 40% after its peg to the dollar was removed last month.
Nigeria’s debt burden is poised to jump 50% after lawmakers approved President Muhammadu Buhari’s request to convert 22.7 trillion naira ($49 billion) in loans from the central bank into bonds, Bloomberg News reported. The Senate’s acceptance is expected to push the West African nation’s official debt-to-gross domestic product ratio toward a 40% limit set by the government. “The advances were made to ensure that the government does not shut down,” according to a report by a special committee that the upper chamber of parliament endorsed on Wednesday.
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Nigeria’s Securities and Exchange Commission is processing applications for digital exchanges on a trial basis in a bid to widen market participation in Africa’s most populous country where the central bank restricts trading in cryptocurrencies, Bloomberg News reported. The SEC is considering permitting tokenized coin offerings on licensed digital exchanges that are backed by assets including equity, debt, property but “not crypto,” Abdulkadir Abbas, head of securities and investment services at the Abuja-based commission said in an interview in Lagos.
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Nigeria’s central bank beefed up the supply of banknotes to lenders to end shortages that have hampered individual and business transactions and crippled the cash-based economy since January, Bloomberg News reported. Most lenders including United Bank for Africa Plc, Zenith Bank Plc and FBN Holdings Plc called in staff on Saturday and Sunday to help customers access cash in banks or via automated teller machines. The disbursement, in compliance with a central bank directive, is being monitored “personally” by Governor Godwin Emefiele, according to spokesman Isa Abdulmumin.
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Nigeria’s central bank increased the key interest rate to the highest level since it was adopted in 2006 and plans to extend monetary tightening to contain inflation and bolster the differential that makes local assets attractive to foreign investors, Reuters reported. The monetary policy committee raised the benchmark rate for a sixth straight meeting to 18% from 17.5% on Tuesday. That was the smallest increase in its current tightening cycle.
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Nigeria’s central bank has extended the timeline to swap out its old currency for redesigned notes after the change triggered a cash shortage, forcing businesses to close and leaving millions unable to withdraw their money, the Associated Press reported. The Central Bank of Nigeria announced on Monday that the old notes of 200 naira (43 U.S. cents), 500 naira ($1.08) and 1,000 naira ($2.16) will remain legal tender until Dec. 31.
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Nigeria’s top court ordered the central bank to halt its removal of old high-denomination banknotes from circulation, a move that’s created an acute cash shortage in Africa’s largest economy, Bloomberg News reported. The Supreme Court decided Friday that the Central Bank of Nigeria’s plan to discontinue the use of old bills by Feb. 10 was unconstitutional. The judges ruled that the notes should remain in circulation until the end of the year, Nasir El-Rufai, one of the state governors that brought the suit, told reporters afterwards.
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South Africa and Nigeria have been placed on a global financial watchdog’s so-called gray list denoting nations with shortcomings in tackling illicit financial flows, a move that scars their international reputations and may raise costs for banks and asset managers, Bloomberg News reported. The decisions were announced by the Financial Action Task Force on Friday. While South Africa’s inclusion on the list was widely flagged as a risk, the possible addition of Nigeria attracted little attention. Morocco and Cambodia were taken off the list after improving their controls.
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Nigeria’s sovereign-risk premium jumped the most in three months on Monday after Moody’s Investors Service downgraded the country deeper into junk, Bloomberg News reported. The extra yield investors demand to own the West African country’s dollar debt rather than Treasuries widened 49 basis points to 780, according to JPMorgan Chase & Co. data. The rate on the nation’s 2032 bonds jumped 56 basis points to 12%, also the most since October. Forward contracts on the currency traded 28% weaker than the official rate on the one-year tenor.
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