Retail Supermarkets Nigeria, owners of Shoprite Nigeria, was recently acquired by Persianas Investment Limited and other key institutional investors, making it a fully Nigerian-owned business that contributes to the country’s economy and provides employment opportunities for its citizens.

In an interview in Lagos, Adeleye explained that “despite the challenges posed by the naira depreciation, Retail Supermarkets Nigeria has maintained its high-quality products and services for its customers and plans to open more stores that showcase a wide variety of Nigerian-made products and international brands”.

Adeleye explained that like any retail business operating in a continually evolving economic landscape, Retail Supermarkets Nigeria face various challenges, including naira depreciation.

“While the increased costs of importing goods and supply chain disruptions pose challenges, the depreciation of the naira has also created opportunities for growth and localization. Despite efforts to remain competitive, we have adjusted prices to reflect the increased costs, potentially affecting customer purchasing power,” she explained.

Adeleye explained that the company has faced various challenges such as increased costs of importing goods, supply chain disruptions, and product availability due to naira depreciation. However, the company has implemented robust procurement strategies, strengthened local supplier relationships, and focused on sourcing products locally to mitigate challenges and support the economy.

“To overcome the challenges posed by naira depreciation, we have implemented robust procurement strategies, strengthened local supplier relationships, and focused on sourcing products locally to mitigate challenges and support the economy. It also catered for diverse purchasing powers and promoted affordability through promotions and discounts,” she added.

She disclosed that the company is actively exploring opportunities to expand its business operations to better serve communities and provide convenient access to quality products while fostering economic growth and development. To stay ahead of the competition, the company has adopted various strategies such as a strengthened value proposition, enhanced customer experience, efficient supply chain management, technology integration, local sourcing, and continuous innovation.

“We are considering innovative solutions tailored to the specific needs of customers. We aim to provide convenient access to quality products while fostering economic growth and development,” she said.

On competition in the industry, Adeleye emphasized its importance for growth and market development. The company has adopted strategies such as a strengthened value proposition, enhanced customer experience, efficient supply chain management, technology integration, local sourcing, and continuous innovation. Shoprite keeps up with the latest trends to offer relevant and useful products. It trained the staff to provide better customer service and utilised technology to gain insights into customer preferences and optimise operations.

The company is actively exploring opportunities to expand its business operations to better serve communities and provide convenient access to quality products while fostering economic growth and development. To stay ahead of the competition, the company has adopted various strategies such as a strengthened value proposition, enhanced customer experience, efficient supply chain management, technology integration, local sourcing, and continuous innovation.

Adeleye believes that competition in the retail industry is essential because it helps the industry grow and improve. To stay ahead of the competition, the company has adopted strategies such as a strengthened value proposition, enhanced customer experience, efficient supply chain management, technology integration, local sourcing, and continuous innovation. The company has partnered with local suppliers and distributors, providing quality products, fresh fruits and vegetables, ensuring everyday low prices, and easily accessible stores while monitoring industry trends and consumer needs to ensure that offerings remain relevant.

Overall, she noted that the retail industry in Nigeria is thriving and presents good investment opportunities for those interested. “Retail Supermarkets’ success in adapting to the local market is a testament to the opportunities available for businesses in Nigeria,” she added.

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The exchange rate fell to N1,490 to dollar at the parallel market with traders expecting further weakness in the coming days as dollar shortages worsen.

That was the second time in many months that the official exchange rate was weaker than the parallel market rate.

The naira had on January 30, exchanged at N1,482.57 to dollar at the NAFEM- the official market.

The exchange rate fell to N1,460 to dollar at the parallel market over persistent dollar scarcity. The local currency has continued to depreciate at both official and parallel market over persistent dollar scarcity.

Importers are finding it increasingly difficult to secure the necessary funds from the official FX market and black market.

Legitimate needs driving the demand include Form A applications for Business Travel Allowance (BTA), Personal Travel Allowance (PTA), school fees, and medical fees. Small and Medium Enterprises (SMEs) are also grappling with the scarcity, as highlighted by the use of Form Q.

“The problem is that dollars are scarce in the market. People are not bringing dollars and demand is so high that is why the price is going up,” a street trader told Business Day on Tuesday morning.

Former Executive Director, Keystone Bank Limited, Richard Obire advised that Nigeria’s heavy and skewed outward-oriented  consumption of goods and services as seen in decades of long substantial bills for food and energy imports should be reversed to save the naira.

Also, the massive corruption-driven capital outflows which in turn severely damages Nigeria’s capacity to produce at scale that will enable the country to fully engage its large population to create widespread prosperity works against the naira.

On ways to strengthen the naira, he advised that in the short-term, there is  need to find non-market damaging  ways to increase the supply of hard currencies and reducing the demand for same.

He said that insecurity  hampering food production needs to be tackled with a sense of urgency and effectiveness.

“Priority should be given through deploying pragmatic incentive programs to drive  up the volume of food products for domestic consumption and industrial use to reduce our food import bill. All government consumption expenditures requiring the use of hard currencies should be suspended indefinitely, starting now,” he advised.

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President, Association of Bureaux De Change Operators of Nigeria (ABCON), Dr. Aminu Gwadabe, said dollar sale to BDCs, which was suspended in July 2021 , was one of the group’s strategic proposals submitted to the apex bank team in Abuja yesterday.

He said dollar distribution at the retail end of the market will resume if the apex bank approves the proposal.

The BDCs also sought the return of the self-regulatory status of ABCON by the apex bank  to ensure its members comply with regulatory guidelines and defaulting operators sanctioned.

He said the BDCs will also partner with International Money Transfer Operators (IMTOs), to ensure the economy attracts more forex proceeds  to deepen market liquidity.

The CBN had in July 2021, stopped forex sales and new licence approval for BDCS after the Monetary Policy Committee two-day meeting in Abuja.

The naira yesterday exchanged at N1,490 to dollar at the parallel market. It exchanged at N1,470 to dollar on Monday, representing N20 per dollar depreciation.

At the Nigerian Autonomous Foreign Exchange Market (NAFEM)- the official market, the naira appreciated to N1,418 to dollar as against N1,433 to dollar it exchanged on Monday.

The meeting held at the CBN headquarters, Abuja was attended by CBN directors, ABCON Executive Council members.

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Speaking during Nairametrics Economic Outlook webinar  themed: Resetting Nigeria’s economic growth trajectory, Executive Commissioner (Operations) at the SEC, Dayo Obisan  said more foreign capital will be attracted to the economy when the exchange rates are harmonised.

The panelists include Partner fiscal policy and Africa tax leader, PwC, Taiwo Oyedele;  Managing Director/CEO FITC, Chizor Malize, and Managing Director/CEO Cowry Asset Management Ltd/Chairman, Fidelity Pension, Johnson Chukwu. 

Obisan said he was confident that the apex bank was gradually working towards achieving a unified exchange rate policy.

Obisan, who represented the Director-General of the SEC, Lamido Yuguda, called for that floating the naira and allowing the forces of demand and supply to determine the exchange rate for the naira.

According to him, the implementation of the National Development Plan will help to achieve economic growth in the country.

“The task before the authorities is the proper implementation of the National Development Plan. We should work very hard towards import substitution. There should be sustainable productivity to give the country a leap in its quest for economic growth,” he stated.

Obisan said productivity would alleviate poverty in Nigeria, adding that a lot of policies have been put up, but the issue usually is the implementation of those policies.

On his part, Oyedele said taxing the poor not in the interest of the economy.

He said the best practice was to empower the poor and small businesses to be in a position where they will pay he taxes.

He advised the government to explore an inclusive economic growth rate that will focus on taxes, reduce the economic burden on SMEs, and increase the tax net of non-paying upper middle-class institutions, especially the MDAs.

“What we need to do is make the country work for the rich and poor. Almost 100 million people are living in poverty,” he said.

Chukwu called for more investments in agriculture and industrialization that there is no economy in the world today that has become industrialised based on agriculture because agriculture is basically an extractive industry and can never be the engine of economic growth.

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The reserves depreciated by 0.07 per cent  $38.59 billion from $38.63 billion recorded on May 25, data from the CBN’s website has shown.

The decline in the foreign reserves can be attributed to the continuous intervention by the Central Bank in the FX market in order to ensure the stability of the local currency.

Despite the interventions, the naira has continued to depreciate closing last week at N609 to dollar at the parallel market.

The CBN had committed  $3.36 billion into the foreign exchange market in two months in line with its determination to keep the naira stable.

The apex bank’s January monthly report on ‘Foreign Exchange Market Developments’ showed that $1.71 billion and $1.65 billion were injected in December 2021 and January 2022 respectively.

The naira had made marginal gain after the Monetary Policy Committee (MPC) raised interest rate by 150 basis points.

The local currency appreciated by from N610/$ to N605/$, representing N5 gain after the MPC hiked Monetary Policy Rate (MPR) from 11.5 per cent to 13 per cent per annum.

The naira is however still trading weaker than pre MPC  close of N600/$ at the parallel market but remains stable at N415.72/$ at the official market.

Forex Trader, AZA Finance, Ikenga Kalu said: “We expect the naira to appreciate further in the coming days back to the N600/$. However strains are likely to persist over the medium term given ongoing dollar supply constraints,” he said.

The Central Bank of Nigeria (CBN) said its policies- naira-for-dollar incentives, stoppage of dollar sales to bureaux de change and restriction of forex sales to 43 items that can be produced locally are meant to boost dollar liquidity and create currency convergence.

The CBN Governor, Godwin Emefiele explained that Nigeria, like other emerging market countries reliant on oil exports, the retreat by foreign portfolio investors significantly affected the supply of foreign exchange into the country.

“With the decline in our foreign exchange earnings and successive exchange rate adjustments, the CBN has continued to implement a demand management framework, which is designed to bolster the production of items that can be produced in Nigeria, and aid conservation of our external reserves,” he said.

Emefiele  said the the apex bank has continued to favour a gradual liberalisation of the foreign exchange market in order to smoothen exchange rate volatility and mitigate the impact which, rapid changes in the exchange rate could have on key macro-economic variables.

An economist and Managing Director/CEO Financial Derivatives Company Limited, Bismarck Rewane, explained that CBN’s efforts at naira convergence will help reduce the official-parallel market spread which will in turn decrease the incidence of speculative trading at the parallel market.

“A reduced spread will decrease the incentive (arbitrage) for speculators to obtain forex at the official market and resell at the parallel market. This may result in panic dumping of dollars at the parallel market due to the concern of lower demand for forex and appreciation of the dollar at the parallel market,” he said.

An economist, Bismarck Rewane advised that closing the gap between the official and parallel market rates is likely to reduce the demand for forex at the parallel market, pushing investors and traders to the official market. This will lead to increased forex transactions at the official market.

He explained that the wide official-parallel market spread and the low forex supply at the official market have been the main factors driving investors and traders to source forex at an expensive rate from the parallel market.

For him, reducing this spread, coupled with an improved forex supply at the official market, will decrease uncertainty (volatility) at the forex market and bolster the ability of the official window to meet a higher demand for dollars.

The resulting impact of this is that a reduced exchange rate volatility and improved forex supply will make it easier for foreign investors to repatriate their funds. It will also ensure that traders and manufacturers can access forex at a uniform rate from both the official and parallel markets.

“Reduced naira volatility and improved forex supply are positive for foreign direct investments and foreign portfolio investments as well as the country’s external trade. This is because of the increase in the volume of dollar available for foreign trade and investment,” he said.

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Party primaries for the Presidential and National Assembly polls to nominate candidates are scheduled between April 4 and June 3 this year.

The uptick is dollar demand has led to depreciation of the naira, which closed at N575/$1 at the parallel market.

Data from the Central Bank of Nigeria (CBN) website showed the naira exchanges at N416.36/$1 at the official market/ Investors and Exporters window on Wednesday March 2. The local currency has remained relatively stable at the official market.

However, the uptick in official and parallel market premium  has  continued as a large part of  foreign  exchange  transactions  migrate  to  the  parallel market due to difficulties in accessing dollars at the official market.   

In emailed note to investors titled: “Naira slides to record as election spending kicks off”, Trading Desk Manager, AZA, global forex dealer, Murega Mungai, said the naira slumped to a record low against the dollar on the unofficial market, depreciating to N575/$1. 

“Dollar demand is rising as political spending kicks off ahead of Presidential and National Assembly polls, with party primaries to nominate candidates scheduled between April 4 and June 3 this year,” the analyst said.

He said the surging price of oil—Nigeria’s biggest export earner—has less effect nowadays in the parallel market since the Central Bank of Nigeria (CBN) cut off intervention in the unofficial market. 

But as part of its longer term FX strategy, the CBN announced a rebate scheme to raise $200 billion in earnings from non-oil proceeds over the next three-to-five years by incentivising exporters to repatriate and then sell dollars into the local market. 

“We expect the Naira to hold temporarily at the weaker end of the 570’s range as election spending ramps up,” he said.

Other analysts warned that rising demands for foreign exchange could throw the naira exchange rate out of equilibrium. Such an adverse scenario must be prevented through proactive monetary  policy.

Managing Director, Morgan Capital Securities Limited and an economic analyst, Rotimi Olubi, said electioneering for 2023 general elections will further increase foreign portfolio outflows and cause Foreign Portfolio Investors (FPIs) to remain on the sidelines.

He listed other factors expected to cause further outflow to include rate hikes and capital controls by the monetary authorities.

Olubi added that the foreign exchange would likely come under strong pressure as interest rate hikes in advanced economies would result in portfolio outflows from emerging markets.

He noted that domestic investors would be the key players responsible for the movement of the market and liquidity. “Electioneering, rate hikes, and capital controls by the monetary authorities are expected to cause further foreign portfolio outflows and cause FPIs to remain on the sidelines.

“Even as the economy continues its recovery, corporate earnings of companies in the consumer goods and industrial goods sector are expected to be impacted by high input costs caused by high inflation and higher cost of capital due to interest rate hikes,” he said.

“Interest income of financial services institutions such as banks is expected to rise in Nigeria if interest rates rise as expected. This is because the U.S could decide to raise interest rates. This act by the U.S could lead to downward pressure on commodity prices, drop in global liquidity, increase in the cost of funds from the international debt market and due to the fact that Ukraine and Russia are still having conflicts, oil prices might go up and production could decrease.”

“Companies in the oil and gas sector are expected to have a solid year driven by strong oil prices, increasing global oil demand and OPEC+ cuts,” Olubi said.

He said that with relatively low infection rates and fatalities from the pandemic, the likelihood of an economic shutdown was non-existent.

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In a statement released at the weekend, ABCON President, Alhaji (Dr) Aminu Gwadabe said the BDC sector is becoming comatose since July 2021 Monetary Policy Committee (MPC) meeting where the CBN suspended weekly dollar interventions to BDCs.

He said that while BDCs are licensed to offer retail forex sales, across the counter forex transactions, they equally contribute to Nigeria’s economic development.

The BDCs, he added are ensuring order and confidence in the forex market, providing data for monetary policy, channels for CBN Intervention in Retail forex market and creation of over 15,000 jobs, among others.

According to Gwadabe,  over N1 trillion annual transaction volume by the BDCs sector is under threat while huge capital investment in the sector is becoming redundant, gradually being eroded and winding up.

He therefore advised that just like the apex bank de-risked the agricultural sector, making it easier for agriculturalists   to access cheaper loans at single digit from banks, the CBN can also de-risk the BDCs operations to be able to receive diaspora remittances through the International Money Supply Operators (IMTOs) and deepen foreign capital flows to the economy.

Gwadabe said the ABCON understands the challenges faced by the apex bank due to the dwindling foreign reserves , declining oil output and oil theft, Covid-19 induced economic pains, fiscal policy challenges, debt burden and election spending, which are making it difficult for the CBN to sustain weekly dollar interventions to BDCs.

He suggested that the BDCs should be to allowed to access dollars or diaspora remittances through the autonomous forex windows like allowing operators to receive IMTOs proceeds, carrying out online dollar operations and Point of Sale (PoS) Agency, among others.

He said that ABCON  has developed multiple applications for BDCs’ transformation from being CBN cash dispensers to globally competitive entities with capacity to attract foreign capital flows to the economy.

“We support any measures that would lead to  compliance with the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT), supporting CBN’s exchange rate stability policies and security agencies to punish any BDC operator breaching corporate governance and compliance guidelines. It is our sincere believed that the bdcs need to be integrated back  officially to ensure their continuous potent role in exchange rate stability management,” Gwadabe said.

He disclosed that ABCON is now training Compliance Officers to ensure they are acquainted with what is required of them, especially on monthly rendition of results and  tracking illicit capital flows.

Gwadabe said that ABCON has over the years established itself as a key player in the BDC industry, and has also made several commitments and sacrifices to ensure that the sector continues to thrive despite all odds.

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The naira stability was triggered by drop in dollar  demand by importers and other forex users who are going for substitutes for importee products and raw materials. 

The  Nigeria’s foreign exchange reserves declined to $41.5 billion this week, a drop of around $100 million, according to the central bank’s 30-day moving average benchmark. 

Trading Desk Manager, AZA, global forex dealer, Murega Mungai, said  inflation also fell for a seventh consecutive month, with prices rising by 15.99 per cent in October compared to 16.63 per cent a month earlier, driven lower by falling food costs. 

“With weaker dollar demand unlikely to change, we expect the Naira to remain around the N540 to dollar  handle in the coming week (this week),” he said.

Responding to the naira position, the International Monetary Fund, welcomed steps taken toward unification of the exchange rate and stressed the need for further actions. 

“The discontinuation of the official exchange rate is a step in the right direction but continued dependence on administrative measures to address forex shortages sustains uncertainties and increases the risks of a sudden and large adjustment in the exchange rate. Taking advantage of the favorable global conditions, improving current account and robust oil prices, the mission advised a move to a unified and market-clearing exchange rate without further delays,” the IMF said in its Atricle IV Evaluation report released at the weekend. 

It said that to preserve competitiveness, any exchange rate adjustment should be accompanied by clear communications regarding exchange rate policy going forward, macroeconomic policies to contain inflation and structural policies to facilitate new investment.

“A further move toward a market-clearing exchange rate will also help build foreign exchange buffers through higher capital inflows. Despite the recent Special Drawing Rights allocation and a successful Eurobond issuance, gross reserves remain significantly below the IMF’s recommended adequacy levels,” it said. 

The IMF said slow forex reforms and uncertainties regarding the ability to repatriate foreign funds have discouraged new capital inflows. 

“With an external position that is assessed to be weaker than implied by Nigeria’s economic fundamentals and desired policies, a narrow export base, and limited capital inflows, the mission recommended preserving foreign exchange reserves through sustainable policies. The mission assessed Nigeria’s capacity to repay the outstanding credit from the 2020 Rapid Financing Instrument (RFI) to be adequate,” it said.

The Fund said Nigeria’s economy is recovering from a historic downturn. “Helped by government policy support, rebounding oil prices and international financial aid, Nigeria exited the recession in 2020 fourth quarter, earlier than expected. Output rose by 5.4 per cent (y-o-y) in the second quarter, mainly reflecting base effects from transport and trade sectors and continued strong growth in the IT sector,” it said. 

However, manufacturing and oil sectors remain weak, reflecting continued foreign exchange shortages, and security and technical challenges. 

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“The Naira held steady on the unofficial market this (last) week, trading at N572 to the dollar. The Central Bank of Nigeria (CBN) Governor Godwin Emefiele told investors at a meeting in New York that the country’s new Dangote refinery—which is slated to begin operations early next year—will save Nigeria up to 30 per cent of forex spend on petroleum imports. Forex reserves increased to $39.8 billion last week from $38.4 billion the previous week, according to the CBN’s 30-day moving average benchmark”. 

The CBN had   announced an increase in the amount of foreign exchange allocated to banks to meet the requests of customers.

This follows requests of travellers seeking foreign exchange for travel allowances, payment of tuition and medical fees, among other Invisibles, and a warning issued by the CBN Governor, Godwin Emefiele, at a meeting with the Managing Directors of Deposit Money Banks (DMBs).

The caution is coming due to complaints and challenges faced by customers in accessing forex from banks with the apex bank warning that it will take action against any bank that denied customers the opportunity to purchase foreign exchange for legitimate purposes.

The CBN urged interested members of the public seeking to purchase foreign exchange for PTA, BTA, payment of tuition fees or medical fees to approach their respective banks for that purpose.

The increased liquidity came after the apex bank raised weekly dollar allocation to Deposit Money Banks (DMBs) by over 200 per cent.

The banks, which previously received an average of $100 million weekly now get over $400 million to enable them meet increasing for demand for legitimate transactions.

Confirming the development, an economist and Managing Director, Financial Derivatives Company Limited, Bismarck Rewane, said more dollar allocation is needed to get the naira back to position of strength.

For him, the necessary and sufficient conditions for naira stability at the parallel market is a significant increase in forex supply at the official window rather than administrative solutions.

Nigeria’s Excess Crude Account (ECA) balance has continued to deplete, standing at $60 million this month from $70 million in February 2020, report from AZA, global forex dealer has shown.

Trading Desk Manager, AZA, Murega Mungai, said the current stand of ECA marks  a roughly 98 per cent fall since the account was set up in 2014. 

The National Economic Council (NEC) had earlier announced that the Excess Crude Account (ECA) balance was $72.4 million. Stabilisation Account stood at N24.7 billion as of May 18, while on the Development of Natural Resources, the balance as of May 20 stood at N23.7 billion.

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In a statement, the company said: “abokiFx has taken the decision today, the 17th of September 2021, to temporarily suspend rate updates on all our platforms, until we get better clarity of the situation,” the statement published partly reads.

It said the final rates have been posted Friday evening and that its news section and the Crypto rates section will still be active.

This comes a few hours after the CBN accused Abokifx of carrying out an “illegal activity that undermines the economy, said and that it was after Oniwinde Adedotun, the publisher of the platform.

The CBN governor, Godwin Emefiele, accused Mr Adedotun of using the platform for “illegal forex trading”.

He alleged that Mr Adedotun lives in the UK and publishes arbitrary rates without contacting BDCs.

“He is a Nigerian, living in England, we will track him, Mr Oniwinde, we will track you.

“We cannot allow you to continue to kill our economy.” the CBN governor added.

In the statement published on Friday, abokiFX management debunked the CBN claims, saying all allegations towards it’s director were not confirmed.

“All allegations against our director are yet to be confirmed but we at abokiFX DO NOT trade FX nor do we manipulate parallel market rates,” the statement reads.

“Outside the media allegation, we have not received any communication from any government body and our accounts are not closed as stipulated in the media.

“We sincerely hope this suspension will lead to the Naira appreciation from next week.”

Most local news organisations rely on data posted on Abokifx for the parallel market trading and reporting.

The value of the currency (Naira) fell to N570.00 per $1 on Friday from less than N520.00 to a dollar it traded before the ban of forex sales to the Bureau De Change(BDC) operators on July 27.

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