The Finance Dude

In order to bring the economy out of recession, the rule of the thumb has always been that government can do two things; it is either government increases spending and/or cut the tax. By increasing government spending, government saves the idle production outputs and hence sustain the production activities. The continued productions benefit people by giving them wages, interest, rent, and profits. In the end, people’s income and buying power increase. In Nigeria however, it is a dire situation as operators in the real sector have to deal with hydra-headed challenges of low purchasing power from consumers, inflation and high cost of doing business. How are Nigerian firms coping in recession? FEMI ADEKOYA writes. When the Minister of Power, Works and Housing, Babatunde Fashola, in February argued in favour of the increase in electricity tariffs, describing government’s move as “a painful pill,” which consumers have to “swallow”, little did many know what is yet to bef...

Access to portable water is something every Nigerian is entitled to. The reality, though, is that millions of Nigerians have no access to portable water. The rural areas are usually the worst hit by this problem. Even in urban areas, access to portable water is dwindling with negative consequences to many aspects of Nigerian life. However, the Minister of Water Resources, Suleiman Adamu has explained how the FG proposes to reform the sector to meet with the demands of Nigerians. He did this in a public presentation of the water sector road map. The road map is entitled ‘Immediate and Long-term Strategies for Water Sector- 2016-2030’ He stated that there were about 116 water projects currently ongoing in the country. However, these projects would require about 505.6 billion Naira to complete them. Some of these projects have been lying idle for over 15 years. This was because outstanding fees to contractors a...

Bonds are issued by governments and companies to raise money to finance their operations or for capital projects. When an investor buys a bond, the bond issuer promises periodic (annually or semi-annually) interest payments on the money invested at the coupon rate stated in the bond certificate. A coupon rate is the yield paid by a fixed-income security; a fixed-income security’s coupon rate is simply just the annual coupon payments paid by the issuer relative to the bond’s face or par value. The coupon rate is the yield the bond paid on its issue date. This yield changes as the value of the bond changes, thus giving the bond’s yield to maturity. The bond issuer pays interest annually until maturity, after which the issuer returns the principal amount (or face value). The coupon rate of a bond is calculated on the bond’s face value (par value). Example of how Coupon rates is determined: If you own a 10 year – N100,000 bond with a coupon rate of 10%, you will re...

The exchange rate rebounded on Friday to close at N308 at the official interbank market. The local currency gained about 5.2% reversing the N325 it closed with on Thursday. According to reports, the gains was mostly due to a sale of forex by the Central Bank of Nigeria providing enough liquidity to meet the demand currently in the market. The naira has closed at an all time low of N364 to the dollar on Thursday following a surge in demand. The central bank has been selling dollars almost daily to boost liquidity and support the naira. Join our BBM channel for instant updates : C0030863D

The Federal Government is about to spend about N60 billion ($180 million) more spending on capital projects as part of the 2016 budget in a bid to boost the economy, Finance Minister Kemi Adeosun said on Friday. Government capital spending so far has exceeded 400 billion naira this year, Adeosun said, despite the budget being held up for months by wrangling between President Muhammadu Buhari and parliament. The Government’s 2016 capital expenditure Budget is about N1.8 trillion However, with oil prices dropping, the government has struggled to fund the budget. It is now seeking advisers to manage a $1-billion eurobond it intends to offer this year. “We are going for another capital allocation meeting where we are going to allocate another 60 billion. We are pumping money into the economy at a very rapid rate,” Adeosun told reporters. Buhari on Thursday said the country needed to balance monetary and fiscal policies in order to return to growth. Adeosun said apa...

The official exchange rate hit an all time low on Thursday after it traded for about N365.25 to the dollar in a single interbank market trade of $1 million,  according to data from Reuters. According to Reuters, the Interbank trading started two hours after the market opened and offered the naira sharply lower against the dollar. A total of $13 million had been traded at the time of Reuters reporting. A look at the official closing rate displayed at the CBN’s website also showed that the exchange rate closed at a price of N325 the highest we have seen in the website of the CBN since the flexible exchange rate policy was introduced. Naira closed at about N321.5 on the website of the FMDQOTC and N347.25 according to Bloomberg’s data. Also, the CBN website also confirms Nigeria’s foreign reserves dipped to as low as $25.78 billion, the lowest in over 10 years (July 2005 to be precise). We reached out to analysts to understand what was going on. Early ...

Nigeria’s foreign exchange reserve fell to $25,780,765,483 (25.78 billion) as of August 16, the lowest we have seen since 2005. The drop was down 2.11% from a month ago. The Nations external reserves dropped below $26 billion for the first time on the 5th of August 2016 after it closed at about $25,971,610,949. In fact, the external reserves has dropped by about $480 million dollars in August alone compared to just $100 million in the whole of July. Ironically, the current balance of $25.9 billion is worth about 80% more than what it was in Naira following the depreciation of the naira after it was floated. The CBN has in the past few days ramped up sales of dollars at the interbank in the hope that it will create liquidity in a market that is yawning gape to swallow forex after nearly almost two years of intense rationing by the CBN. The Naira weakened to its lowest ever at the interbank after it closed at about N362.5/$1 in midday trading. The Naira will eventua...