Connect with us

Business

Bank Of America Analysis Of Naira’s Value After Free Float

Published

on

The Bank of America’s insights on the value of the naira and its potential growth amidst foreign exchange reforms and efforts to curb oil theft in Nigeria and the impact on oil production, current account surpluses, and the country’s economy is in the front burner.

The Bank of America (BoA) has recently shared its analysis, indicating that the value of the naira is projected to settle at N680 to the dollar by the year-end. This assessment signifies a significant shift from an overvalued status to an undervalued state for the currency. The transition is attributed to the Nigerian government’s recent foreign exchange reform. Additionally, BoA speculates on President Bola Ahmed Tinubu’s potential course of action, aiming to address the prevalent issue of oil theft that has been plaguing the nation.

Predicted USDNGN Fair Value And Future Outlook

As per Bank of America analysts, the projected fair value for the USDNGN rate is now 680 per USD, an increase from the previous estimation of 580. However, it is anticipated that the actual trading value will surpass this level, reaching around 700 by the end of the year. Subsequently, in early 2024, the rate is expected to stabilize between 650 and 680. BoA emphasizes that the transition period necessitates time to synchronize rates and unlock further USD inflows into the formal market. Once the dust settles, the analysts anticipate a stronger and appreciating value for the naira.

Potential Impacts Of Oil Theft Curbing Efforts On Crude Production

Bank of America highlights the significance of President Tinubu’s potential actions in combating oil theft as a crucial step forward. The suggested approach involves implementing reforms within the security sector and involving host communities situated near oil pipelines. If successfully executed, this strategy could lead to a substantial increase in Nigeria’s crude oil production. The Bank of America predicts that production levels may rise to 1.6 million barrels per day (bpd) within a span of 12 to 18 months, surpassing the current output of 1.2 million bpd. However, these estimates are subject to OPEC limitations.

ALSO READ:  SEC partners AfDB to boost Nigeria’s green finance leadership

Prospects For Enhanced Oil Production And Economic Growth

Bank of America expresses optimism regarding the feasibility of increasing crude oil production to 1.6 million bpd within the next 12 months, representing a significant structural improvement compared to the current levels. Taking into account condensates, the total oil production in Nigeria could reach 1.8 million bpd within two years, a level comparable to pre-pandemic figures. It is important to note that Nigeria heavily relies on hydrocarbons, which contribute to approximately 90 percent of its exports, at least half of fiscal revenues, and around 6 percent of the country’s GDP.

Potential Benefits Of Increased Oil Revenues And Non-Oil Revenue Focus

The Bank of America suggests that higher oil revenues, combined with intensified efforts to generate non-oil revenue, could help alleviate the burden of high debt service. By diversifying income sources and reducing dependency on hydrocarbons, Nigeria can strengthen its economic stability and resilience.

This comprehensive analysis offers insights into the Bank of America’s observations on the value of the naira, the potential impact of curbing oil theft, and the prospects for increased crude oil production in Nigeria. By addressing the challenges and leveraging the nation’s resources, Nigeria can work towards a more robust and sustainable economy.

Achieving Current Account Surpluses And Economic Stability

Bank of America highlights the potential for consistent current account surpluses over the medium term through higher oil exports and a liberalized import regime. The projected increase of $12 billion in oil exports and a $10 billion rise in non-oil imports could significantly contribute to achieving this goal. By maintaining this positive momentum, Nigeria can strive towards economic stability and reduce its reliance on volatile external factors.

ALSO READ:  Price of 5kg cooking gas stood at N6,430.02 in August – NBS

Strengthening Security Sector And Involving Host Communities

To effectively combat oil theft, Bank of America suggests that President Tinubu should focus on implementing reforms within the security sector. Strengthening security measures along oil pipelines and ensuring the involvement of host communities in the protection of these vital assets can help deter criminal activities and safeguard Nigeria’s valuable oil resources. This concerted effort has the potential to restore confidence in the sector and attract further investments.

Impact On Crude Oil Production And National Revenue

The projected increase in crude oil production from 1.2 million bpd to 1.6 million bpd, and potentially even 1.8 million bpd when considering condensates, holds significant implications for Nigeria’s national revenue. Higher production levels directly translate into increased oil revenues, enabling the government to invest in critical sectors such as infrastructure, healthcare, education, and social welfare programs. Moreover, with enhanced revenue streams, Nigeria can reduce its debt service burden and allocate resources towards economic diversification initiatives.

Diversifying Revenue Sources And Economic Resilience

While Nigeria heavily relies on hydrocarbons, there is a growing recognition of the need to diversify revenue sources to enhance economic resilience. Bank of America emphasizes the importance of intensifying efforts to generate non-oil revenue, which can be achieved through various means such as taxation reforms, encouraging private sector growth, and promoting sectors like agriculture, manufacturing, and tourism. By broadening the revenue base, Nigeria can reduce its vulnerability to fluctuations in global oil prices and create a more balanced and sustainable economy.

Unlocking Economic Potential And Seizing Opportunities

ALSO READ:  Patience Has Limit, Reforms Should Yield Results, Tomori Tells FG

Nigeria possesses immense economic potential, from its abundant natural resources to its youthful population. Realizing this potential requires a strategic and concerted effort to address key challenges and seize opportunities. By implementing effective economic reforms, promoting investment-friendly policies, and fostering a business-friendly environment, Nigeria can attract both domestic and foreign investments, which will serve as catalysts for sustainable economic growth and development.

Bank of America’s analysis sheds light on the undervaluation of the naira following the government’s foreign exchange reform. It also emphasizes the importance of curbing oil theft and the potential for increased crude oil production in Nigeria. By leveraging these opportunities, strengthening the security sector, diversifying revenue sources, and fostering a conducive business environment, Nigeria can unlock its economic potential, achieve sustainable growth, and enhance its position on the global stage.

As Nigeria navigates the challenges and opportunities that lie ahead, it is essential for policymakers, businesses, and stakeholders to collaborate and work towards a shared vision of a prosperous and resilient nation.

Through strategic planning, targeted investments, and effective implementation of policies, Nigeria can pave the way for a brighter future and ensure the well-being of its citizens for generations to come.

Business

MTN Nigeria posts N1trn revenue surge

Published

on

MTN Nigeria Communications Plc generated N1.0 trillion in service revenue in the first quarter of 2025.

This marks a 40.5 per cent increase from the N752.99 billion earned in Q1 2024.

The company confirmed this in a corporate filing with the Nigerian Exchange Ltd. on Tuesday.

Profit after tax dropped by 134 per cent, falling to N133.7 billion from N392.7 billion in the same period of 2024.

Its total subscriber base grew by 8.2 per cent to 84.1 million, with 3.2 million new additions in Q1 2025.

Active data users rose by 13 per cent to 50.3 million, following the addition of 2.6 million users.

EBITDA climbed 65.9 per cent to N492.7 billion, while EBITDA margin improved by 7.2 percentage points to 46.6 per cent.

The company recorded free cash flow of N209.9 billion and earnings per share stood at N6.38.

MTN Nigeria CEO, Karl Toriola, expressed satisfaction with the Q1 2025 results, citing strong strategic execution and resilient service demand.

He said momentum from Q4 2024 had helped put the firm on track to restore profitability and achieve a positive net asset position.

He added that regulatory approval for price adjustments was essential to sustain investment and maintain service quality.

This approval enabled N202.4 billion in capital expenditure, up 159 per cent, aimed at expanding capacity and enhancing user experience.

Toriola said the 40.5 per cent growth in service revenue underscored strong demand and commercial discipline.

He noted that Q1 results do not yet reflect the full impact of price changes made late in the quarter. (NAN)

ALSO READ:  Senate Threatens Sack, Jail Of NNPCL GMD, Others Over N12trn Turn Around Maintenance
Continue Reading

Business

NGX transacts 733.05m shares worth N35.29bn

Published

on

The Nigerian Exchange Ltd. (NGX) on Tuesday transacted 733.05 million shares worth N35.288 billion in 16,619 transactions.

This is in contrast with 500.59 million shares worth N12.110 billion that was traded in 17,637 deals earlier.

Meanwhile, transactions in the shares of Fidelity Bank topped the activity chart with 285.15 million shares worth N5.774 billion.

MTN Nigeria followed with 86.850 million shares valued at N20.931 billion while Access Corporation transacted 35.56 million shares worth N851.27 million.

Universal Insurance traded 29.810 million shares valued at N15.188 million and Guaranty Trust Holding Company sold 28.510 million shares worth N1.935 billion.

Meanwhile, the stock market on Tuesday witnessed a downturn as investors lost N1.116 billion with mixed performance indices.

Market capitalisation dropped by N1.116 billion or 0.70 per cent to close at N65.577 trillion, compared with N66.693 trillion posted on Monday.

Similarly, the All-Share Index (ASI) fell by 185 points or 1.17 per cent, to settle at 105,931.18 from N106,116.18 earlier recorded.

The negative trend was driven by profit taking in MTN Nigeria, Africa Prudential, PZ, First Bank Holding Company and others.

However, the market breadth closed positive with 33 gainers and 19 losers, suggesting positive sentiment.

On the gainers’ chart, Legend Internet Plc rose by 10 per cent, closing at N8.25 while ABC Transport gained by 9.94 per cent, to settle at N1.88 per share.

Cadbury Nigeria rose by 9.91 per cent, ending the session at N32.15 and Champion increased by 9.79 per cent to close at N4.71 per share.

Similarly, Eterna soared by 9.46 per cent, closing at N48.00 per share.

ALSO READ:  Collaborate to tackle fuel scarcity, Disco exploitation —CNG implores Presidency , NASS

On the losers’ chart, Livestock Feeds declined by 9. 71 per cent, settling at N7.22 while Multiverse Mining fell by 9.62 per cent, closing at N7.05 per share.

McNichols Plc dropped by 9.47 per cent to close at N1.72 and Omatek lost by 9.23 per cent, closing at 59k per share.

Also, MTN Nigeria shed by 6.07 per cent to finish at N240.00 per share. (NAN)

Continue Reading

Business

CAC Gives Unregistered Businesses 6 Weeks to Register or Face Prosecution

Published

on

The Corporate Affairs Commission (CAC) has directed companies, limited liability partnerships, and business owners operating under unregistered business names to register within six weeks.

In a statement on Tuesday, the CAC warned that failure to register will result in enforcement action, including prosecution.

“The commission wishes to inform the general public that its a criminal offence under Section 863 of the Companies and Allied Matters Act, 2020 to carry on business in Nigeria as a Company, Limited Liability Partnership, Limited Partnership or under a Business Name without registration under the Act or by a name (or acronym) other than the name (or acronym) by which the business was registered under the Act,” the statement reads.

“The General Public should note that Section 729 of the Act requires every Company registered under the Act to state its name as registered and its registration number outside every place where it carries on business.

“In addition, the Company is required to state its registered name and registration number on all its official publications, including its letterhead, signage(s), marketing and publicity materials.

“In particular, the General Public should note the provisions of Section 862 (1) of the Act which provides that any person who, in any document required by, or for the purpose of any of the provisions of the Act (including the aforementioned official publications of a Company), makes a statement which is false in any material particular knowing it to be false, commits an offence and is liable on conviction to imprisonment for a term of two years in addition to a daily fine against the Company for every day during which the offence continues.

ALSO READ:  President Tinubu Signs Electricity Act 2023 Into Law

“In view of the foregoing, every Company, Limited Liability Partnership, Limited Partnership and Business Name proprietor(s) is hereby required to ensure full compliance with the above requirements of the Act within six (6) weeks of this notice failing which the Commission shall take all necessary steps (including prosecution) to enforce compliance.”

In April 2024, Mahmud Bello, the commission’s registrar-general, said business owners in Nigeria can conveniently register their businesses online within 48 hours.

Continue Reading