Chinwendu Obienyi with agency report
Nigeria’s perennial foreign exchange (FX) shortage is squeezing life out of Africa’s largest economy even as production retreats towards a second contraction in four years. This is coming after GT Bank revealed yesterday that payment of dividends to its holders of global depository receipts (GDRs) has been delayed due to difficulties in sourcing dollars.
The bank, in a note to GDR holders, revealed that its registrar – the company which maintains lists of bond and shareholders – was in a queue with the Central Bank of Nigeria (CBN) for dollars to make the payout following a recent surge in dollar demand.
When quizzed on the size of the dividend to be paid, the bank declined to comment on the size of the dividend to be paid to holders of its GDRs, which are traded in London. GT Bank had issued the GDRs in 2007 to raise $750 million and paid out a total dividend of N2.80 per share in 2019.
The Federal Government, which relies on oil exports for over 50 per cent of its revenue, has had its treasury emptied after the tap of oil money ran dry following the recent oil crash and the pandemic outbreak. In response to that, analysts said the immediate future holds a little hope as Nigeria requires oil prices of $70 a barrel and daily output of 2 million barrels to balance its budget, but prices have been hovering around $40 and OPEC cuts have limited the country’s production to around 1.4 million barrels a day.
Daily Sun investigations gathered that the apex bank’s foreign reserves sustained its descent, dipping by $32.03 million w-o-w to $35.62 billion last week, as FX outflows continue to outpace inflows. Nevertheless, the naira was flat against the US dollar at N386.00/$ and NGN475/$ at the I&E window and parallel market, respectively.
In the forwards market, the naira depreciated against the US dollar in the 1-month (-0.03 per cent to N387.51/$), and 1-year (-0.3 per cent to N409.32/$) contracts but appreciated against the dollar in the 3-month (+0.05 per cent to N389.81/$), and 6-month (+0.1 per ce to N393.79/$) contracts.