A report by African Export-Import Bank (Afreximbank) has stated that the current “high gold prices offer African countries an opportunity to strengthen their reserve portfolios with a safer asset like gold”.

The report also advised African countries that relied on gold to take advantage of the increasing prices of the commodity in the medium term by investing in their gold sector and improving their value chain in the long-term.

The report forecasted that gold prices could remain high for a long time due to reduction in interest rates by many central banks.

The report, titled, “The Ongoing Gold Price Rally: Macroeconomic Implications for African Producers,” said, “The gold sector is macro-critical in several African countries.”

It added that the African continent produced approximately one-quarter of the world’s gold and generated substantial foreign exchange earnings and fiscal receipts from it, while creating employment opportunities in producing countries.

The report stated that in the medium term, the gold rally was an opportunity for long-term infrastructure and social investments to diversify the production base. It urged governments to implement soft and hard measures to tame the activities of illegal miners.

The report added, “Recently, its value has surged and reached an all-time high. The rally began in mid-February of 2024.

“As of April 12, 2024, the spot price was $2,401.5 per ounce, a 21 per cent increase since mid-February 2024. Considering a longer timeframe, since October 2023, the value of the precious metal has risen by 32 per cent. Future prices are projected to be consistently upward, with 68 months of future pricing quoted at $ 2,776 per ounce.

“The current price rally is attributed to several factors, including the anticipation of monetary easing by major central banks, robust demand from central banks in emerging economies, and ongoing geopolitical instability in the Middle East and Ukraine.”

The report added, “African continent produces about one-quarter of the world’s gold production. According to data from the World Gold Council, African countries produced a total of 979.2 metric tons of gold in 2022.

“Ghana, South Africa, Sudan, Mali, Burkina Faso, the DRC, Tanzania, Zimbabwe, Togo, and Côte d’Ivoire are the top 10 producers, which collectively account for 90 per cent of the continent’s production. In 2022, the top 10 producers received $66 billion in gold export receipts.

“These top 10 producers also account for 14.6 per cent of the continental GDP. Any change in the price of gold can have significant macroeconomic implications and trade dynamics for these gold dependent countries and the African continent.”

The said as of December 2020, the World Gold Council reported that central banks held roughly 35,000 tons of gold, amounting to approximately 18 per cent of all the gold in the world.

According to the same source, African central banks held about three per cent of global central bank gold reserves. It said African central banks could exploit the high prices and shore up their reserve holdings by storing the produce reserves or buying on the markets.

It stated that as of 2023, North African countries held the most gold as a reserve asset, with approximately 446 tons, with Algeria holding 174 tons, Egypt holding 126 tons, Libya holding 117 tons, Morocco holding 22 tons, and Tunisia holding seven tons. Elsewhere on the continent, South Africa held 125 tons, Nigeria held 21.4 tons, Mauritius h12.4 tons, Ghana 8.7 tons, and Mozambique held four tons.

The report said, “It is important to note that gold plays a significant role in the exports and GDP of several African economies. Therefore, its price volatility has significant macroeconomic implications.

“In the near term, the recent rally in gold prices is expected to benefit countries whose economies are heavily dependent on the precious metal. However, caution should be exercised to avoid macroeconomic instability, which could arise from the fluctuation of gold prices with its attendant effects.

“While windfall export receipts resulting from increased gold revenue will improve fiscal accounts, it is key to manage them carefully to avoid any extra spending that could destabilise the macroeconomic environment. The growth effect has remained subdued, and more effort may be needed to boost economic growth.”

According to the report, gold is a precious metal that symbolises stability and acts as a secure investment during economic turmoil.

It is an asset that maintained its value over the long term and is frequently utilised as a store of wealth, the report stated.

The report said while inflation eroded the real value of wealth, gold had usually maintained or even increased its value over time. Gold had proven to be a stable or even an appreciating asset during high inflation, making it a valuable secure investment.

The Nigeria Deposit Insurance Corporation (NDIC) Thursday announced increase in the maximum deposit insurance coverage levels for all licensed deposit-taking financial institutions with immediate effect.

Mr. Bello Hassan, Managing Director/Chief Executive, NDIC, disclosed this at a media briefing in Abuja.

He said the maximum deposit insurance coverage for Deposit Money Banks (DMBs) had been increased from N500,000 to N5 million, to provide full coverage of 98.98 per cent of total depositors compared to the current 89.20 per cent.

In terms of the value of deposit covered, he said the revised coverage would increase the value of deposits covered by deposit insurance to 25.37 per cent compared to the current 6.31 per cent of total value of deposits.

Under the new regime, the maximum deposit coverage for Microfinance Banks (MFBs) was raised from N200,000 to N2 million to offer full coverage of 99.27 per cent of depositors compared to 98.76 per cent currently.

Hassan said this would increase the value of deposits covered by deposit insurance to 34.43 per cent compared to14.38 per cent of total value of deposit currently covered.

Furthermore, maximum deposit coverage for Primary Mortgage Banks (PMBs) was also increased from N500,000 to N2 million to provide full coverage of 99.34 per cent of depositors compared with the current 97.98 per cent.

He said this would increase the value of deposits covered by deposit insurance to 21.04 per cent compared to 10.77 per cent currently applicable.

The adjustments also involved an increase from N500,000 to N2 million for Payment Service Banks (PSBs) to offer full coverage of 99.99 per cent of depositors, to increase the value of deposits covered to 43.10 per cent from 40.60 per cent.

In addition, the maximum Pass-through deposit insurance coverage for Mobile Money Operators (MMOs) was increased from N500,000 to N5 million per subscriber per MMO as the applicable coverage level for depositors of DMBs.

The NDIC boss said the revised deposit coverage had balanced the corporation’s goals of deposit protection and financial system stability with incentives for depositors to practice market discipline and prevent banks from unnecessary risk-taking and moral hazard.

He said consideration was given to ensure that the coverage was limited but adequate enough to protect a large number of depositors and credible enough to prevent the destabilising effect of bank runs.

According to him, the adoption of the revised maximum coverage was supported by the corporation’s current funding, represented by the balances in the various Deposit Insurance Funds (DIFs), expected annual premium collection, enhanced supervision that would reduce the likelihood of bank failures, effective bank resolution frameworks and other funding arrangements provided by the NDIC Act No. 33 of 2023.

He said, “I will like to reaffirm the NDIC’s unwavering commitment to protecting depositors and contributing to the stability of the financial system.

“These adjustments to the maximum deposit insurance coverage reflect our dedication to adapt and evolve in response to the changing landscape of the financial industry, and we remain steadfast in our pursuit of a secure and resilient banking environment for all.”

In line with its upward growth trajectory, leading financial institution, Fidelity Bank Plc, has posted an impressive 120.1% growth in Profit Before Tax from N17.9bn at the end of Q1 2023 to N39.5bn for Q1 2024. This was made known in the Bank’s unaudited financial statements released on the issuer portal of the Nigerian Exchange (NGX) on Tuesday, 30 April 2024.

According to the statement, Gross Earnings increased by 89.9% yoy to N192.1bn from N101.1bn in Q1 2023. The increase was led by a combination of interest income (90.7% yoy) and non-interest income (84.0% yoy). Growth in interest income was primarily spurred by a higher yield environment and strong earning assets base, while the increase in non-interest income was led by double-digit growth in account maintenance charges, FX-related income, trade, banking services, and remittances, supported by increased customer transactions.

Commenting on the results, Nneka Onyeali-Ikpe, MD/CEO, Fidelity Bank Plc stated, “We are pleased to report another quarter of strong financial performance driven by our strategic focus on customer-centricity, digital innovation and operational excellence. Despite the challenging macroeconomic environment, we remained resilient and agile, delivering double-digit growth on key income lines while advancing our business sustainability agenda.”

In the period under review, the bank grew Net interest income grew by 89.5% yoy to N99.6bn from N52.6bn in Q1 2023, driven by interest and similar income as the yield on financial instruments improved to 14.7% from 10.1% in Q1 2023 (2023FY: 11.6%). In line with the steady rise in interest rates through the year, average funding cost increased by 80bps ytd to 5.2%. However, NIM came in at 8.8%

compared to 8.1% in 2023FY, as increased yield on earning assets surpassed funding cost to 15.1% from 13.3% in Q1 2023 (2023FY: 13.5%).

Similarly, Total Deposits increased by 17.2% ytd to N4.7tn from N4.0tn in 2023FY, driven by double-digit growth across all deposit types (demand, savings and term). Net Loans and Advances increased by 21.2% to N3.7tn from N3.1tn in 2023FY.

“Beginning the year on this inspiring note reaffirms our strategy of helping individuals to grow, inspiring businesses to thrive and empowering economies to prosper. We are committed to our guidance as we build a more resilient business franchise with a well-diversified earnings base in 2024,” explained Onyeali-Ikpe.

Ranked as one of the best banks in Nigeria, Fidelity Bank is a full-fledged customer commercial bank with over 8.5 million customers serviced across its 251 business offices in Nigeria and the United Kingdom as well as on digital banking channels.

The bank has won multiple local and international awards including the Export Finance Bank of the Year at the 2023 BusinessDay Banks and Other Financial Institutions (BAFI) Awards, the Best Payment Solution Provider Nigeria 2023 and Best SME Bank Nigeria 2022 by the Global Banking and Finance Awards; Best Bank for SMEs in Nigeria by the Euromoney Awards for Excellence 2023; and Best Domestic Private Bank in Nigeria by the Euromoney Global Private Banking Awards 2023.