Economic growth in Nigeria will accelerate this year, driven by sectors outside its dominant energy industry, while inflation will continue its downward path, the International Monetary Fund said on Friday.
Africa’s second-largest economy is set to grow 7.3 percent this year, up from 6.4 percent in 2013, the IMF said, a more optimistic outlook than Nigerian Finance Minister Ngozi Okonjo-Iweala’s projection for 6.75 percent growth.
Inflation will end the year at 7 percent, down from 7.9 percent at the end of 2013, continuing a two-year downward trend supported by tight monetary policy, the IMF said.
Africa’s most populous nation plans this year to recalculate its gross domestic product, which could push it above South Africa as the continent’s biggest economy, although the rebasing has missed several deadlines already.
The IMF’s forecast does not account for the rebasing.
“Economic growth is expected to improve further in 2014, driven by agriculture, trade, and services,” the IMF said in a report following consultations with Nigerian officials.
“Inflation should continue to decline, with lower food prices from higher rice and wheat production and supported by a tight monetary policy and a budget execution that maintains medium-term consolidation objectives,” it said.
The IMF said there were risks to its projections, including the uncertain pace of the global recovery, lower oil prices and production, slow implementation of reforms and the continuation of a bloody Islamist insurgency in the north.
It also cautioned against draining fiscal buffers.
Nigeria’s excess crude account, where Africa’s biggest oil exporter saves money from excess oil revenues not allocated for in the government’s budget, contained $2.28 billion at the end of last year, down from around $9 billion a year earlier.
Forex reserves have also fallen, to a 19-month low of $40 billion, and the naira, which had been stable, is under pressure from the emerging market asset sell-off and since President Goodluck Jonathan unexpectedly suspended respected central bank governor Lamido Sanusi last month, hitting investor confidence.
Reserves remain at a relatively comfortable 5.6 months of imports, the IMF noted.
Nigeria will hold presidential and parliamentary elections next February and investors are concerned about a possible spike in government spending ahead of the vote and potential leakages in oil revenues, in a sector which has suffered a number of corruption scandals in recent months.
“Policies should focus on rebuilding external and fiscal buffers, avoiding spending pressures from the political cycle, strengthening the transparency and governance of the oil sector,” the IMF said in its report.
Nigeria estimated oil output would average 2.39 million barrels per day (bpd) this year, which oil industry experts think is overly optimistic and is likely to lead to an underfunded budget, as happened last year.
Large scale oil theft, which can reach 400,000 bpd, and outages caused by ageing pipelines and other infrastructure deficiencies are keeping output well below the sector’s 2.7 million bpd capacity.
Despite robust growth and an attractive investment outlook, Nigeria still suffers from gaping inequality, the IMF noted. Thousands of new millionaires are created each year but most of the country’s 170 million people live on less than $1 a day and unemployment is stuck at around 25 percent.
“Despite significant job creation, unemployment and poverty are high and social indicators lag those of peers,” the IMF said.
“Continued weaknesses in labour markets, access to electricity, cost of doing business, and small and medium enterprises’ access to finance have prevented a transition to a more robust and inclusive growth path,” it said.
The Nigerian President Goodluck Ebele Jonathan on Tuesday sacked virtually all aviation chiefs in the troubled industry, just weeks after sacking Stella Oduah as the minister of aviation.
The president sacked the Managing Director of the Federal Airports Authority of Nigeria, FAAN, George Uriesi, the Managing Director of the Nigerian Airspace Management Agency, NAMA, Namdi Udoh and the Director General of the Nigerian Civil Aviation Agency, NCAA, Fola Akinkuotu and the Rector of the Nigerian College of Aviation Technology, NCAT, Chinyere Kalu.
A statement by Sam Nwaobasi, Special Assistant (Media) to the Secretary to the Government of the Federation, said under the new arrangement, Engr. Saleh Dumona (Director Projects, FAAN) is to replace Mr. George Uriesi as Managing-Director of the Federal Airports Authority of Nigeria (FAAN) while Engr. Ibrahim Abdulsalam (General Manager, Procurements, NAMA) is replacing Engr. Nnamdi Udoh as Managing Director of the Nigerian Airspace Management Agency (NAMA).
Also Capt. Samuel Akinyele Caulcrick (Government Safety Inspector & ICAO Focal Point for Nigeria on line Aircraft Safety Information Systems, OASIS) is to replace Capt. (Mrs.) Chinyere Kalu as Rector of the Nigerian College of Aviation Technology (NCAT).
(iv)Capt. Muhktar Usman (Commissioner, Accident Investigation & Prevention Bureau, AIPB) to replace Capt. Fola C. Akinkuotu as Director-General of the Nigerian Civil Aviation Authority (NCAA) subject to confirmation by the Senate. Engr. Benedict Adeyileka is to act as DG, NCAA pending the confirmation by the Senate.
Dr. Engr. Felix A. Abali (Director Licencing, NCAA) is replacing Capt. Muhktar Usman as Commissioner, Accident Investigation and Prevention Bureau (AIPB).
Only Dr. Tony Anuforo retained his position as Director-General of the Nigerian Meteorological Agency (NIMMET).
Listed companies in Nigeria’s downstream petroleum sector outperformed the Nigeria Stock Exchange (NSE) in 2013 even as the sector had been enmeshed in a series of probes relating to fuel subsidy payments.
This consequently led to the delay in disbursements of payments by the ministry of finance, and slowing the growth potential of the sector.
However, the subsequent payments of subsidy arrears after thorough reconciliation by the finance ministry enabled some of the companies pay back loans owed to banks thus reducing finance cost and boosting operational performance as can be seen from the results of five firms in the downstream sector namely: Forte oil Plc, Conoil Nigeria Plc, Oando Nigeria Plc, Total Nigeria Plc, and Mobil Nigeria Plc.
Forte Oil has a superb 12M13FY result as it recorded double digit growth in revenue of 40.7 percent y/y to N128.02 billion from N90.98 billion 12M12FY ,while pre-tax profits surged by 467percent to N6.52 billion year end 2013.
The company recorded higher returns to the owners as return on Asset (ROA) jumped to 5 percent 2013FY from 2 percent 2012FY, while Return on Equity ( ROE) remained flat at12 percent 2013FY from13 percent 2012FY.
Conoil Plc also had an impressive performance in the review period as its revenue grew by 6 percent to N121.81 billion as against N114.77 billion-this is still lower than the double digit growth rate, while pretax profits jumped by 341 percent to N3.08 billion.
We attribute the spurt in profits to judicious management of debt as finance cost dropped by 42 percent.
Further, Return on Assets (ROA) increased to 2.85 percent 9M13 from 0.58 percent last year, while ROE jumped to 11.7 percent from 3.12 percent.
Oando’s 9M13 Q3 results based on our analysis showed turnover shrinking by 20.8 percent y/y to N386.25 billion from N487.76 billion 2012FY, while pre-tax profit reduced by 46 percent to N9.76 billion.
The company has a debt ratio of 162 percent in its capital structure which was as a result of expansion drive by the company last year.
We see Oando having stellar performance in 2014 with the acquisition of Conoco Philips Plc. This will expand operation and boost growth of the company.
Oando raised around N85.9bn (US$539m) from a rights issue (N55.2bn) and special placement (N30.7bn) as well as financing commitments worth US$815m from local and foreign banks in 2013.
The East Horizon Gas Company (a midstream subsidiary of the Oando) was also sold in Q4 2012 to Seven Energy in a deal worth US$250m.
Total’s lagged in the third quarter 2013 as gross revenues dropped by 5 percent to N174.33 billion as against N166.38 2012FY.while pre-tax profits were down 9 percent to N5.67 billion.
Huge finance cost which had risen by 48 percent and recurring operational expenses slowed efficiency and affected its profitability.
Mobil’s gross revenue for the period Q3 2013 declined by 4 percent y/y to N58.73 percent from N61.3 last 9M12, while Pre-tax profits increased by 53 percent to N2.45 billion.
Drastic reduction in operational expenses during the period and declining finance cost by 71 percent y/y to N67.08 million are responsible for the improved efficiency.
Despite the fact that performances vary from one company to another, we see a better 2014 with the passage of the PIB bill. We also see a possible removal of subsidy; post 2015 elections which will increasingly bring about more competition and reposition firms in the downstream oil and gas sector.
The finance and coordinating minister for the economy, Ngozi Okonjo-Iweala, in a brief statement has reiterated the expatriate and independent audit of the NNPC’s supposedly inaccurate books must be done.
The statement indicated the finance ministry’s stand into the alleged missing $20 billion, which suspended CBN governor Mallam Sanusi Lamido in a ‘later leaked’ letter, alerted President Goodluck Jonathan to.
It said: “The Minister of Finance and Coordinating Minister for the Economy Dr. Ngozi Okonjo-Iweala has asked for urgent action with regard to an independent forensic audit of conflicting claims of unaccounted funds made by the Nigerian National Petroleum Corporation (NNPC) and suspended Governor of the Central Bank of Nigeria (CBN), Mallam Sanusi Lamdio Sanusi.”
Outgoing CBN governor, Lamido Sanusi, was suspended last week. He blew the lid on the missing money.
Ngozi Okonjo Iweala was also quoted as saying, “My position on this has been clear from the start. The Ministry of Finance’s reconciliation showed a shortfall of $10.8bn in NNPC remittances to the Federation account. After this, the conflicting claims continued with new figures such as $20bn being mentioned.
“So since 13th February I have called for an independent forensic audit.
“President Goodluck Jonathan indeed announced last night that there will be an investigation into whether there are any funds missing from NNPC. He also indicated that the correct process needs to be followed in this investigation and I understand that the entity that has the proper authority to initiate such an investigation is the Auditor-General of the federation.
“I therefore want to see the truth from an investigation under the auspices of the Auditor-General, which in my view should be undertaken as a matter of extreme urgency by independent external auditor.”
Ngozi Okonjo-Iweala insists that an audit of NNPC’s books must be done.
This statement may help to soften the impressions that some Nigerians have that the president and this administration supports corruption. Also, may downplay the notion that the suspension of CBN governor Sanusi Lamido, was a witch hunt to keep him quiet.
Goodluck Jonathan suspended Nigeria’s central bank governor last week for “various acts of financial recklessness and misconduct”. The president has insisted that his decision to suspend the governor was taken “in absolute good faith, in the overall interests of the Nigerian economy and in accordance with our laws and due process”.
Governor Sanusi, whose international reputation is strong, had been criticising the government over oil subsidies and apparent shortfalls in oil revenues.
All banks met the minimum regulatory liquidity ratio (LR) of 30 percent at end-June 2013, according to the Central Bank of Nigeria (CBN). The industry liquidity ratio at the end of June 2013, stood at 67.8 percent, compared with 62.7 percent at end-June 2012.
Consequently, the industry ratio of non-performing loans (NPLs) to total loans at end-June 2013, stood at 3.7 percent, compared with 4.3 percent at end-June 2012. This was within the maximum threshold of 5 percent set by the CBN. The reduction in the NPL ratio was attributed to the intervention of Asset Management Corporation of Nigeria (AMCON) in the industry and improved risk management practices by deposit money banks (DMBs).
The CBN’s 2013 half year Economic Report revealed that the health of banks in the system further improved in the first half of 2013. All the banks, with the exception of one, met the regulatory minimum capital adequacy ratio (CAR) of 10 percent in the first half of 2013. The affected bank had commenced a private placement of new shares aimed at raising N20 billion fresh capital and an additional capital injection of N20 billion from a core investor. Overall, the average CAR in the industry was 19.1 percent, compared with 8 and 17.7 percent minimum international standard and the level at the end of the corresponding period of 2012, respectively.
However, the report shows that the total credit to the priority sectors of the economy, comprising agriculture, solid minerals, exports and manufacturing, was N3,266.2 billion at the end of the first half of 2013, accounting for 37.2 percent of the total, compared with 37.1 percent in the corresponding half of 2012. The less priority sectors (real estate, public utilities, transport and communications, finance and insurance, and government) accounted for 40.2 percent of total claims on the private sector, while the unclassified sectors accounted for the balance.
According to the report, short-term maturities continued to dominate the credit market in the first half of 2013. Outstanding credits maturing within one year accounted for 57.1 percent, compared with 57.4 percent at the end of the second half of 2012. The proportion of the medium-term (≥1yr and < 3yrs) and long-term (3yrs and above) maturities stood at 19.7 and 23.2 percent, compared with 17.9 and 24.7 percent, respectively, at the end of the second half of 2012.
Similarly, deposits below one year constituted 96.9 percent of the total, of which 75.9 percent had maturities of less than 30 days. Long-term deposits constituted only 3.1 percent, slightly higher than the 2.6 percent recorded at the end of the second half of 2012. The near-absence of long-term deposits continued to constrain the ability of banks to create long-tenored risk assets crucial for economic development.
The AMCON continued to discharge its function as a multipurpose resolution vehicle empowered to purchase toxic assets from banks and inject needed funds through the issuance of appropriate securities. At the end of the first half of 2013, the Corporation had a total bond liability of N5,410.0 billion (face value), the first tranch was due on December 31, 2013.
During the first half of the year, the Corporation commenced the process of divestment from Enterprise Bank, Keystone Bank and Mainstreet Bank, with the placement of a public notice in the dailies; and the engagement of a financial adviser to oversee the process of divestment from Enterprise Bank. Furthermore, a Resolution Cost Trust Fund Deed, which would replace the existing MoU on the Banking Sector Resolution Cost Sinking Fund was drawn up for execution by the CBN and DMBs during the review period. A key provision of the Deed was the increase in the annual contribution of the DMBs from 30 basis points of their total assets (per audited annual financial statements of the previous year) to 50 basis points of total assets and 33.33 percent of off-balance sheet items.
In addition, the Corporation proposed amendment to its enabling Act to the National Assembly, to include the Sinking Fund contribution and its management in the Act.
Emefiele, the nominee for Central Bank of Nigeria governorship has been a Silent Achiever At Zenith Bank
Godwin Emefiele is a University of Nigeria, Nsukka-trained astute banker and also a Harvard University-trained financial strategist. He graduated as the best MBA student (Finance) from UNN after obtaining a Second Class Upper degree in Banking and Finance in 1984.
He went on to deepen his knowledge of Macroeconomics at Oxford University having obtained various qualifications and Executive Education studies in Negotiation, Strategy, Leadership, Critical Thinking, Delivering Value/Profit from Harvard University, Stanford University and University of Pennsylvania (Wharton Business School).
He took Zenith Bank to another height last year when he became the first GMD/CEO in the banking industry to achieve N100 billion after tax profit in a financial year. He is an astute manager of people and resources and a corporate governance savvy professional banker who has earned several personal and corporate endorsements and achievements.
Emefiele is an expert in forecasting and takes steps, leveraging on his excellent acuity and calculated-risk-taking skills to crystallise any benefits from existing and future opportunities. Zenith, which by balance sheet size and other positive financials has shaped and is shaping certain critical aspects of developments in the sub-sector, is in sheer entrepreneurial energy and a bank without equal, one which has taken after its lead-manager.
The several achievements of Zenith Bank plc since he took over stand Emefiele out as an accomplished banker and erudite manager of human and material resources. His capacity for leadership and eye for growth opportunities is evident in Zenith’s performance and geometric progression on a number of parameters.
A system’s person and unassuming achiever, Emefiele knows and understands banking and the unique Nigerian economy like the palms of his hands. He had been part of the core people who built the Zenith culture, and understands the direction of the board and shareholders of the bank viz-a-viz the realities and focus of the larger economy. He knows and understands that the responsibility to deliver is non-negotiable.
Before he came into banking he was a don at the University of Nigeria Nsukka and the University of Port Harcourt, where he lectured in finance, bank management and insurance. He is a banker whose years of experience are backed by sound academic knowledge of the job he is engaged in. He is a dyed-in-the-wool banker, very steadfast at what he does and has remained strong in the Zenith tradition of producing results. And those results have been manifested in the laurels and recognition that the bank has received both locally and internationally.
Currently, Zenith is the largest bank in Nigeria and the seventh largest in Africa by tier-1 capital. Forbes & CNBC Africa ranks Zenith bank as the 3rd biggest company in West Africa. Capital Finance International (CFI) adjudged the bank the ‘Best Commercial Bank in Africa’.
World Finance voted the bank as the best Nigerian Bank in Corporate Governance in 2013. The Corporate Governance award is in recognition of the bank’s ability to set an industry-wide example of best practices in Corporate Governance. The bank was evaluated on a wide range of criteria that included quality of policies and procedures, quality of disclosures, elements of innovation in Corporate Governance practices and excellence in stakeholder relationship management. In 2013, Zenith Bank was recognised as one the 20 Global super brands and KPMG rated the bank as the ‘Best Customer-Focused Bank’.
In January 2009, the bank was adjudged to be the ‘Most Customer-focused Bank in Nigeria’ according to a survey conducted by KPMG. The survey which focused predominantly on corporate customers of banks, including companies in a variety of sectors found that customers were most satisfied with the services offered by Zenith Bank.
The bank was rated as the “Best Bank in Nigeria in 2012” by BusinessDay Newspapers following a survey of all the banks in Nigeria. Zenith Bank also won ‘Bank of the Year Nigeria 2013’ by The Banker Magazine, a publication of Financial Times of London. Nominees for The Banker award were judged by their ability to deliver shareholder returns and gain strategic advantage in terms of market visibility and positioning. According to The Banker Magazine, Zenith Bank was selected based on the overall performance of the institution and the opinion of leading financial analysts from the world’s financial markets. The award also indicates the level of trust and confidence on the brand and is a testament to the strong management, sound business model and prudent risk approach of Zenith Bank plc.
Zenith Bank has greatly impacted banking in Nigeria, literally lifting the sector from the era of over-conservatism to one of healthy conflict and dynamism, characterised by a culture of excellence and global best practices. This has been achieved through a combination of the power of vision and a skilful union of banking expertise and cutting-edge technology to create products and services that meet and anticipate customers’ expectations.
Under his leadership, Zenith Bank has grown its Agric loan portfolio ranking amongst the highest contributors in growing the industry agric portfolio from 1 per cent in 2010 to over 4 per cent in 2012. The bank also took active part in financing some of the power projects that changed hands from government to the private sector investors. With this in mind, Zenith Bank’s contributions to Nigeria’s macroeconomic growth are seen to be very commendable.
The bank is adjudged to be of incredibly high standard not just on a national level but an international one. Testimony to Emefiele’s leadership qualities is a succession of excellent ratings from local and international agencies. Zenith bank ranks amongst the world’s 500 valuable brands. Brand Finance plc ranked Zenith Bank as the 11th most valuable brand in Africa.
Under Emefiele’s watch, Zenith Bank shares currently trade on the London Stock Exchange (LSE) following a listing of the $850 million worth of its shares at $6.80 each in a major step aimed at improving liquidity in the stock through Global Depository Receipts.
Impressive performance parameters such as these are an eloquent indication of Emefiele’s rare penchant for banking and unflinching ability to mitigate existing inefficiencies that often exist in business.
As an institution, Zenith Bank has kept abreast related and unrelated developments and addressed the best it could circumstantial challenges in the course of 2013. It is evident that despite business and economic realities, it did not lose sight of its priority: to remain a leading and financially stable and sustainable institution.
Speaking at a forum on 2014, he said, “Year 2014 is obviously a harbinger of change in several aspects of our endeavours and it is not unlikely that even business-to-business and business-to-customer interactions will be recalibrated. The reform in Agriculture and power will begin to take roots and positively impact Nigeria and the citizenry and at Zenith, we are well poised to take advantage of opportunities there-from in a manner that would support the Nigerian government determination to ensue and sustain achievements in the social and economic realms of our livelihood.”
He said, “We will leverage on new experience gathered, knowledge acquired and successes achieved but in large part, we shall make conscious effort to contribute to the overall development of the economy the best we can. We shall focus on creating greater mileage from our engagements through a deliberate diversification of our approaches, expectations and focus.”
Emefiele is confident that going forward, with the rich experience garnered over the years and his institution’s collective commitment and determination to its corporate goals, Zenith Bank shall achieve even better results and further impact the economy in the years ahead.
Although the bank’s 2013 financial year-end results are expected to be published, market analysts are of the view that the bank will post one of the best results in the banking industry.
With Mauritian youth steadily leaving in search of job opportunities elsewhere, prime minister Navin Ramgoolam has urged the unemployed to stay in the country, arguing that there more than enough jobs to go round.
The Indian Ocean island is one of the most prosperous in Africa but growing unemployment is becoming a national concern, as a robust economy still struggles to create jobs.
Speaking in the northern Tombeau Bay town on Sunday, Mr Ramgoolam however admitted that it is not always easy for the youth to find jobs.
However, government measures to arrest the slide in opportunities would pay off, he said.
Since 2013, the Youth Employment Programme (YEP) has seen some 4,000 youth gain employment, authorities said last month.
Together with an additional $9 million allocation to combat jobless rates, this has helped stem the brain drain, ministry of Finance documents showed.
The rising unemployment on the island has stoked debate, with 23 per cent of those aged 15-24 out of work, according to the Central Statistics Office. Many of these are graduates.
Additional figures show that individuals under 30 constitute about half of all the country's unemployed.
Mauritians students have in recent years headed out to countries such as Australia and Canada for further studies with a view to gaining residence or access to work permit programmes while studying.
Last month, Tertiary Education minister Rajesh Jeetah said that part of the blame should rest on students who were unrealistic in the employment aspirations due to improper career path planning.
Former executive member of the Mauritius Chamber of Commerce and Industry, Mr Mahmood Cheeroo, has said that the country's education policies need to be readjusted in view of realities.
Figures from major employment services company MyJobMu shows that there are currently some 148,400 candidates for just 382 positions advertised.
Last week, the Mauritius Employers Federation projects that the situation will be more positive this year especially in the growing sectors of IT, finance and hospitality.
However many service-based companies have complained of a skills shortage due to a mismatch between market needs and graduate training.
Mauritian analysts and international organisations such as the ILO have said that economic growth does not necessarily translate to job creation in Africa.
The pessimistic global economic outlook has also compounded the situation, they said.
Kenya's prosecutions chief has ordered the arrest of the country's central bank governor for alleged abuse of office.
Mr Keriako Tobiko also gave consent for the governor’s prosecution in a letter to the country's Ethics and Anti-Corruption Commission seen by the independent Daily Nation newspaper.
"I have looked at the file and returned it to the EACC with the directive to charge," Mr Tobiko said in a telephone interview.
The charges arise from the award of a Sh1.2 billion ($13.9 million) tender for the installation of security software at the Central Bank.
Mr Tobiko’s letter is in response to last month’s recommendation by the anti-corruption commission that Prof Ndung’u and other senior central bank officials be charged with abuse of office for failure to comply with public procurement regulations which it says led to the loss of more than Sh400 million ($4.64 million) in public funds.
Though he does not sit in the bank’s tender committee, Prof Ndung’u has found himself at the centre of the procurement controversy because of the protracted battles he fought with the tender committee before the job was awarded to Horsebridge Networks Systems East Africa Limited.
Prof Ndung’u did not respond to questions on the matter. Neither could he be reached on the telephone
The governor has, however, in the past defended himself against the alleged procurement irregularities, saying that the culprits will soon be known.
Mr Tobiko on Monday declined to confirm or deny plans to charge the governor but acknowledged that he had responded to the anti-corruption commission on the matter.
At the centre of Prof Ndung’u’s troubles is his alleged rejection of advice by internal and external legal teams to appeal a decision by the Public Procurement and Administrative Review Board’s to award the contract to Horsebridge Networks.
Horsebridge, an international IT company with a Kenyan presence, was among the six firms which participated in the tender. The firm moved to the appeals board asking it to reverse the Central Bank's tender committee’s decision to reject all the bids.
Investigations revealed that Horsebridge filed its appeal before the tender committee announced its decision, raising questions as to how it knew the outcome.
Africa's biggest oil producer Nigeria is facing questions about where billions of dollars in oil money is going, amid suspicions of fraud and it being siphoned off to fund election campaigns.
The issue has been rumbling on since September, when the governor of the Central Bank of Nigeria accused the Nigerian National Petroleum Corporation of withholding $49.8 billion in oil revenue.
Sanusi Lamido Sanusi, who steps down as central bank chief in the coming months, later revised his figures down to $12 billion, sparking claims of political pressure.
But this week he again claimed that the state-run NNPC owed the central bank money -- this time $20 billion from the $67 billion earned from oil between January 2012 and July 2013.
"It is now up to NNPC... to produce the proof that the $20 billion unremitted either did not belong to the federation or was legally and constitutionally spent," he told a parliamentary committee.
Nigeria produces about two million barrels of oil per day, and crude exports account for about 80 per cent of government revenue.
Government figures indicated it earned some $49 billion in export revenue in 2012, down from $54 billion the previous year.
Some of the funds go into a rainy-day fund, called the Excess Crude Account (ECA), to ensure the government budget is financed in case world oil prices fall sharply.
Last year, as global oil prices held above $100 per barrel, revenue above a benchmark of $79 per barrel set by the government and lawmakers went into the fund.
According to the latest central bank figures, the ECA held $11.5 billion at the end of 2012, but this had dropped to $2.5 billion in January this year.
The reduction comes at the same time as a decrease in foreign reserves. Last May they stood at $48 billion but are now at about $42.7 billion, according to CBN data.
"It's unfortunate that the government has indulged in a spending jamboree without any noticeable improvement in the standard of living of the people," said Lagos economist Abolaji Odumesi.
"The ECA is meant to protect Nigeria in the event of price shocks but the purpose for setting the fund aside is now being defeated," the former banker told news wire AFP.
"Those in government are not thinking of tomorrow. They are not bothered about what becomes of the economy if the ECA dries up and there is drop in the international price of crude."
Nigeria's influential governors' forum, led by Rotimi Amaechi of the oil-rich Rivers state, has accused the federal government of unilaterally taking money from the account.
The group even went to court to challenge President Jonathan's withdrawal of $1 billion for a new Sovereign Wealth Fund, set up to invest the savings from the difference in budgeted and actual oil prices.
Suspicions abound that the money has been used to weaken states controlled by the opposition, which has been boosted by the defection of dozens of members from the ruling party.
Mr Amaechi, who switched from Jonathan's Peoples Democratic Party to the All Progressives Congress last year, has long argued that his state is being short-changed.
For their part, the NNPC and the government say the money has gone to legitimate projects and that oil theft and vandalism have contributed to the reduction in revenues.
There is a widespread consensus that oil-theft, or "bunkering", is a problem in Nigeria.
Estimates range up to 150,000 barrels per day being stolen, robbing the exchequer of about $6 billion a year.
Anti-corruption campaigners allege the money may have been diverted to fund the 2015 election campaign, which looks set to be the closest since Nigeria returned to civilian rule in 1999.
"The Jonathan administration is merely siphoning money to prosecute its re-election agenda," said Debo Adeniran, of the non-political, non-profit Coalition Against Corrupt Leaders.
"It is absurd that at a period when our oil is sold $30 above the benchmark price, the foreign reserves and excess crude accounts are going down.
"The only explanation for this abnormality is that politicians and officials are stashing money for elections."
Mr Adeniran praised Mr Sanusi for blowing the whistle on what he called a "monumental fraud", but said it was wrong for the NNPC to have spent the money -- regardless of how much was involved.
"The NNPC has been a haven for corruption and inefficiency in this country," he said.
"It does not have the power to spend any money without appropriation." (AFP)
Ahead of expected impact of earnings season on stocks pricing, investors are likely taking advantage of low prices of stocks currently at the Nigerian bourse to position themselves for short-term gains when market recovers.
At the stock market, ‘early birds’ are seen taking position in value counters ahead of full-year earnings release by listed companies.
The Nigerian stock market bottomed-out last week erasing almost N427 billion in past gains as liquidity-pull from both domestic and foreign investors caused stocks prices to crash.
Despite a turnover of 2.221 billion shares worth N21.045 billion in 27,855 deals traded last week by investors on the floor of the Nigerian Stock Exchange (NSE) in contrast to a total of 1.758 billion shares valued at N21.024 billion that exchanged hands the preceding trading week in 28,949 deals, the liquidity-pull caused the stock market to record a negative return of 1.83 percent.
Amid improved bargain tendency witnessed in the banking sub-sector, the equities market took off this week on a positive note, signalling investors’ gradual return to buy side in the equities market.
In what many market participants saw as a correction point, the stock market recently witnessed a huge decline in the prices of most equities, the worst hit being stocks in oil/gas, banking, consumer goods, and insurance sub-sectors at the bourse.
Despite the market’s current state and the value erosion that caused the returns trajectory to go negative, many investment and equity analysts within the market are still positive that the market will close positive this week.
For instance, in their view, Meristem Securities analysts say, although the equities market sentiments are downbeat, relative pricing reflects investors would still reap good returns with companies’ corporate actions to serve as the major driver.
“While Quantitative Easing (QE) tapering poses a major downside to the exchange rate, the attractiveness of yields at current levels compared with peer countries will sustain the flow of funds. Hence, the need for investors to stay calm as macro-economic indicators as well as supply and demand dynamics stabilise in the near term,” say market analysts at Meristem Securities.
Also, market analysts at Morgan Capital say: “We expect the onslaught on banking shares to subside as some of the banks have opened good entry windows.”
Partnership Investment Company plc in their market outlook said “Liquidity tightening may trigger a sell down, shift to low priced equities and dumping of banking stocks. Positive corporate result may reverse the trend in the short term.”
They anticipate cautious trading “as foreign portfolio investors keep eye on the US tapering. We advise clients to do less of speculation. Medium priced equities with good fundamentals provide safety at this time.”
In a similar view, a team of economic intelligence at Access Bank plc who says that stock market direction is uncertain due to the lagged effects of the US Fed QE taper and Central Bank of Nigeria (CBN) Cash Reserve Ratio (CRR) on public sector deposit, however, adds that “short-term investors may want to take advantage of the low pricing to position for short-term gains in anticipation of market recovery and adjustment to shocks.”
Also in their market outlook this week, Cowry Asset Management analysts say they expect to see interplay of the bulls and the bears; “albeit, we are overweight on the former given bargain-hunting opportunities created by recent profit-taking activities.”
Recently in their economic outlook for 2014, CBO Capital says “expensive equities should see period correction. A lot will also depend on the subsequent pace of QE unwinding and the implications for portfolio flows.”
Accordingly, market analysts at the advisory and investment management firm note that growing domestic institutional and retail investors interests might provide a buffer.
“Return profiles of equities could soften as the market factors current valuations, and while foreign investors are guided by US QE tapering.
Foreign investors expect to stay on the short to mid end of the yield curve while targeting value stocks,” they further state in their outlook.