E-Financial
Rising Gold Prices Could Offer Nigeria Some Support- Otunuga
The call for the diversification of Nigeria’s economy from mono-economy to a diversified one is getting more traction by the day, with the rising Gold prices; occasioned by the effects of COVID-19 pandamic. Analysts believe that this could offer Nigeria the much needed support in the medium term.
Lukman Otunuga, a research analyst at FXTM said that the newly regulated Gold mining sector in the country could provide the needed impetus for the diversification of Nigeria’s economy from monolithic to one that could build economic growth for the country.
Speaking on Thursday at a virtual media roundtable, organized by FXTM and themed: “Is Nigeria heading for a prolonged recession?” Otunuga noted that the high Gold price we are witnessing now could offer employment to Nigerian youths in the mining sector.
According to him “The more Gold that Nigeria is able to find, this has potentials to create more jobs, especially in the mining industry.
“If Gold price continues to rise and if Nigeria continues to mine more Gold, I think in the medium to longer term, it could provide a tailwind to Nigeria’s GDP.
“The higher Gold price trades, it could offer employment to teeming youths as well as support Nigeria’s Gold prospects in the medium term”.
Similarly, Otunuga stated that diversification and infrastructure development remain key in building Nigeria’s economic growth.
“The key to eradicating poverty in Nigeria and getting that potential depends on domestic production, rather than being a heavily import dependant country, we need to start producing those goods domestically, so that it will create jobs and at the same time export those domestically produced goods.
“This will not only impact positively on the trade balance but will also feedback on the GDP growth.
“Nigeria really needs to invest heavily in its infrastructure, if poor infrastructure remains a common thing in Nigeria, she may not be able to move on in building economic growth.
“This is something that will continue to hamper economic growth even if she continues to make a move to diversify away from oil reliance to agriculture”, he added.
Speaking further on things that could impact Nigeria’s economy in 2021, Otunuga explained that with Joe Biden’s election as the 46th President of the United States, the demand for oil in the global market could witness a massive dip as Biden an advocate of renewable energy-driven economy, Could pursue his plans to transit US economy from fossil fuel to one driven by wind, solar, and other renewable energy sources, this he said would mean that countries like Nigeria whose economy is heavily dependent on oil revenue will be tremendously impacted.
According to him, “The Nigerian government is looking forward to funding its 2021 budget largely from oil revenue despite its claims that it’s diversifying the country’s economy for many years”.
“Just like we witnessed last year when the 2020 budget was revised; oil prices have always tumbled far below the benchmark which is likely to affect the present budget. Nigeria is still exposed to external risks”.
Nigeria and the African continent at large are optimistic that Biden’s election could mean stronger bilateral ties than Donald Trump’s administration.
Otunuga argues that Nigeria is one of the strongest economies in the African continent and the Biden election means stronger bilateral ties. “Of course, this is not going to happen immediately but in the long term.”
He added that aside from the Covid-19 which has disrupted the economy globally, uncontrolled inflation in Nigeria coupled with low domestic production after the border closure, poor infrastructure would continue to hamper the economic growth potentials of Nigeria.
Federal High Court in Lagos has fixed July 1, 2025, for the commencement of trial in a money laundering case involving Cititrust Holdings PLC and three of its subsidiaries.
The subsidiaries are Cititrust Funding PLC, Cititrust Credit Limited and Cititrust Financial Services Limited,
The companies are facing an eight-count charge filed by a team of prosecutors from the Economic and Financial Crimes Commission (EFCC), comprising Anasoh Henry Onyekachi, Frankklin Ofoma, Abdulhamid Lamido Tukur, and A.A. Usman.
According to the charge, between 2021 and 2023, the companies, all incorporated in Nigeria, allegedly operated investment management services without a valid licence from the Central Bank of Nigeria (CBN).
This act contravenes Section 57 of the Banks and Other Financial Institutions Act (BOFIA) 2020 and is punishable under Section 57(5) of the same legislation.
The prosecution also alleged that the companies conducted a Collective Investment Scheme without registering with the Securities and Exchange Commission (SEC), another violation of regulatory requirements.
In one of the counts, Cititrust Credit Limited is specifically accused of failing to report high-value financial transactions to the Nigerian Financial Intelligence Unit (NFIU).
These transactions include a N20 million transfer on January 7, 2021; a N200 million transfer on April 4, 2021; and a N200 million lodgement on January 29, 2021.
Additionally, both Cititrust Credit Limited and Cititrust Financial Services Limited are alleged to have made a single transfer and lodgement respectively of N42 million into their bank accounts on January 29, 2021, without proper disclosure to relevant authorities.
The alleged offences are in breach of Sections 11(1)(b) and 11(3) of the Money Laundering (Prohibition) Act 2022, as well as Section 54(1) of the Investment and Securities Act 2007, and are punishable under the respective laws.
The court is expected to begin full proceedings on July 1.
Ecobank Nigeria’s long-term issuer credit rating has been downgraded to ‘CCC-’ from CCC, with the outlook placed at negative by S&P Global Ratings. This is a resultant effect of the $150 million bond buyback offer on the bank’s $300 million Senior Unsecured Eurobond.
Part of the tender offer made by Ecobank includes an early tender premium of $12.50 for every $1,000 in principal (equivalent to 1.25%), with the anticipated settlement date set for July 8, 2025. The offer also requests bondholders’ consent to eliminate the capital adequacy covenant on the outstanding notes.
These actions also led S&P to downgrade the $300 million Eurobond from ‘CCC’ to ‘CCC-’. Although S&P notes that it does not consider the tender offer a distressed debt restructuring.
However, this assessment is at risk of changing if the bank does not receive the promised capital injection from the parent group, Ecobank Transnational Incorporated (ETI).
Following the naira devaluation, Ecobank was unable to meet the regulatory Capital Adequacy Ratio (CAR) requirement, as its CAR dropped to 7 per cent. This was below the 10 percent regulatory minimum. The breach of the CAR caused the bank to seek the consent of its bondholders to pause the capital adequacy notes on the Eurobond notes till September 2025.
Following this development, the bank received a $50 million prepayment on promissory notes from its parent company, ETI, along with early repayments on certain foreign currency loans. However, it has been insufficient in restoring the capital adequacy to regulatory levels.
According to S&P, the bank is expected to receive another $50 million capital injection from its parent group before August 2025. However, the ratings agency notes that if the bank is unable to receive this capital injection, it will inevitably default on its bonds. A situation that would cause a further downgrade to ‘CC’.
It was recommended that Ecobank Nigeria consider raising $150 million through additional Tier-1 instruments to strengthen its liquidity buffers. Additionally, the bank was advised to intensify efforts to recover its foreign currency-denominated loans.
Fidelity Bank Plc, leading financial institution has reaffirmed its commitment to corporate social responsibility with the donation of food and essential items to the Old People’s Home in Yaba, Lagos.
The donation was made possible through the generosity of the bank’s Nexus Inductees Class, under its Corporate Social Responsibility initiative known as the Fidelity Helping Hands Programme (FHHP).
Through the FHHP, staff across Fidelity Bank branches nationwide identify crucial interventions needed in their immediate community and raise funds to execute them. The bank’s management then matches this contribution with an equal amount and disburses it for the selected project.
Commenting on the donation, Divisional Head, Brand and Communications, Fidelity Bank Plc, Dr Meksley Nwagboh, emphasized the bank’s unwavering commitment to impacting its host communities positively noting that the community is an essential part of the bank success story.
“Today’s donation is a token of our appreciation for our incredible parents and guardians who have raised outstanding individuals that trust us with their banking needs.
“Our donation to the Old People’s Home reflects our deep commitment to supporting the well-being and dignity of our senior citizens.
“We are honored to contribute to a cause that ensures they receive the care, comfort, and respect they deserve.” Nwagboh stated.
Appreciating the gesture from the bank, the Director-in-Charge of the Home in Yaba, Adetutu Ipaye, said “Community support initiatives such as this from Fidelity Bank is vital to sustaining our mission and enhancing the quality of life for the elderly.
“We urge other organizations to follow in the Bank’s footsteps as this kind of support will go a long way to ensure that the elderly live with dignity and comfort”.
One of the beneficiaries from the home, Mr. Kamoru Adeyetu noted that, “Your presence today has brought us immense joy, and our greatest happiness lies in seeing the younger generation thrive. Beyond the gifts, your visit means the world to us and please remember to visit us regularly.”
Ranked among the best banks in Nigeria, Fidelity Bank Plc is a full-fledged Commercial Deposit Money Bank serving over 9.1 million customers through digital banking channels, its 255 business offices in Nigeria and United Kingdom subsidiary, FidBank UK Limited.
The Bank is the recipient of multiple local and international Awards, including the 2024 Excellence in Digital Transformation & MSME Banking Award by BusinessDay Banks and Financial Institutions (BAFI) Awards; the 2024 Most Innovative Mobile Banking Application award for its Fidelity Mobile App by Global Business Outlook, and the 2024 Most Innovative Investment Banking Service Provider award by Global Brands Magazine. Additionally, the Bank was recognized as the Best Bank for SMEs in Nigeria by the Euromoney Awards for Excellence and as the Export Financing Bank of the Year by the BusinessDay Banks and Financial Institutions (BAFI) Awards.
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