The Nigerian and Angolan governments’ decision to approach the World Bank and the African Development Bank (AfDB) for concessionary loans could lead to a devaluation of the countries’ currencies.
Both countries, Africa’s biggest oil producers, desperately require support to help survive the regime of low crude oil prices and strained public finances.
Nigerian President Muhammadu Buhari’s government is seeking to spend its way out of an economic crisis triggered by a collapse in oil prices.
Mr. Buhari has proposed boosting this year’s budget to a record 6.1-trillion naira ($30.6bn). Nigerian Finance Minister Kemi Adeosun said last month the authorities would borrow about $5bn in external debt from multilateral agencies and the Eurobond market to plug a budget gap of 3-trillion naira.
Legislators in Nigeria’s parliament would begin deliberations this week on the 2016-spending plan, Ms. Adeosun said at the weekend. Authorities would begin non-deal roadshow meetings with investors to sound out a potential sale of $1bn of Eurobonds this month, she said.
While discussions were taking place, a formal request had not yet been made to the World Bank for $2.5bn and the AfDB for $1bn, Ms. Adeosun said.
"A loan from multilateral lenders would be much cheaper than borrowing on the open market," John Ashbourne, an Africa economist at Capital Economics, said on Monday.
Angola has also held talks with the World Bank about securing funding support in a deal that could see the country implementing unspecified reforms.
The World Bank and other institutions such as the International Monetary Fund have recommended that Nigeria and Angola devalue their currencies.
Devaluation could form part of loan deals, two banking sources said on Monday. Mr. Buhari is against devaluing the naira, which trades at about 197/$ officially, compared to street rates as weak as 305/$, while Angola’s kwanza is worth 155/$, but changes hands at more than 400/$ on the secondary market.
About one month ago, on May 15, 2016, between the hours of 5 and 8am Japan time, using compromised card details of customers from a Tier 1 bank in Africa, well over 100 people made physical cash withdrawals to the tune of almost 13Million USD at specific ATM cash points (7-Eleven cash machines; +/-1400 transactions). This incident is no far different from the numerous cyber breach making the rounds on the corridors of cyber reportage e.g. Bangladesh bank.Banking Advisory 1382
The Capital Markets Authority (CMA) has limited individual shareholding in the listed Nairobi Securities Exchange Ltd (NSE) to five per cent in a move that may force sell-offs by some investors. Investors whose shareholding is currently above the set limits have a six-month period to comply with the regulation. A shareholder can seek exception from CMA to hold more than the prescribed levels. The authority will determine if the applicant meets the requirement, which entails integrity, financial standing and absence of criminal record before granting an exception.Banking Advisory 1002
As the high-powered presidential delegation returned from China and the post-summit euphoria dissipated. Nigerians are coming to terms with the reality or otherwise of the mega swap transaction. As they say, Exchange is No Robbery. The big question, therefore is that do people really understand what this means? Or is this exercise that will end-up in a crisis of false expectations? Let’s try and keep this simple.Banking Advisory 1282
The Nigerian and Angolan governments’ decision to approach the World Bank and the African Development Bank (AfDB) for concessionary loans could lead to a devaluation of the countries’ currencies. Both countries, Africa’s biggest oil producers, desperately require support to help survive the regime of low crude oil prices and strained public finances.Banking Advisory 1672
Following the euphoria of December and consequent heightened consumer activity during the festive period, January has brought many an elated individual back to mother earth with a thud.Banking Advisory 1748