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N300b CBN workers’ pay bailout for 27 states ready

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There is good news for cash-strapped states.

The N300 billion Central Bank of Nigeria (CBN) lifeline, which will enable them pay their workers, will be ready in two weeks.

Of the 36 states, 27 have applied to draw from the cash relief packaged by President Muhammadu Buhari through the apex bank.

The CBN facility is one of the three-pronged reliefs designed by the Federal Government to help financially troubled states.

The other two are:

  • sharing of the $2.1 billion (about N414 billion) 2014 Income Tax/Education Tax; and
  • dividends paid to the Federation Account through the Federal Inland Revenue Service (FIRS) by the Nigerian Liquefied Natural Gas (NLNG) Limited.

Besides, the states’ loans are to be rescheduled.

President Buhari, about three weeks ago, directed the CBN to package the loan to enable the states pay the backlog of salaries owed their workers.

The CBN is to package a Special Intervention Fund ranging from N250 billion-N300 billion to the states with low interests.

Investigation revealed that the apex bank, however settled for the higher figure in view of the magnitude and the depth of the financial commitment of the states .

The decision on the N300 billion relief package was reached at the end of discussion at the last National Economic Council (NEC) meeting, chaired by Vice President Yemi Osinbajo in Abuja last Thursday.

At the meeting were CBN Governor Godwin Emefiele and the governors.

A CBN source told The Nation yesterday that barring any unforeseen circumstances, disbursement to the states will begin in two weeks.

There was no information yet on the identities of the states seeking the relief package, even as it was learnt that in making their requests, each of the 27 states submitted details of its indebtedness to the banks, the amount owed to contractors, arrears of workers’ salaries as well as outstanding pensions.

Presidency sources said Buhari’s recourse to the measures was intended to ease the pains workers have been undergoing.

Many attribute the sudden dip in states’ finances to the crash in global oil prices that have cut Nigeria’s revenue by over 50 per cent, but some governors have blamed it all on the Federal Government, which they alleged owed them backlog of billions they claimed to have spent on maintaining federal facilities in their domains.

They argue that had the Federal Government lived up to its responsibilities and relieved them of that burden, they would have had no course to seek for any palliative from it.

As the states await the disbursement of the CBN package, opinions are divided over the rationale behind the President’s directive.

Workers and many economic experts have hailed the President for his intervention, which they say is not discriminatory, adding that it will bring life to the economy. Others, including some members of the National Assembly, have approached the court to determine if Buhari has the powers to grant relief to states without recourse to authorisation from the legislature.

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BUSINESS

Stock futures fall ahead of a big week of retail earnings

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Stock futures fell early on Monday after a week of steep losses that ended on a high note, and ahead of a big earnings week for retailers.

Futures tied to the Dow Jones Industrial Average slipped by 31 points, or 0.1%, while S&P 500 futures fell 0.47%. Nasdaq 100 futures were down 0.71%.

On Friday, the Dow rose 466.36 points, or 1.47%, while the S&P 500 climbed 2.39%. The Nasdaq Composite jumped 3.82% and posted its strongest one-day gain since November 2020. Still, all three averages posted losing weeks.

The gains came as investors went into relief rally mode to cap off a bad week for stocks in which the S&P 500 nearly descended into bear market territory.

It remains to be seen, however, how long the rally will last or how much further stocks have to fall before this year’s downtrend bottoms.

“Given the history of bear markets, coupled with the fact that the Fed has just begun its rate hike cycle and would like to see financial conditions continue to tighten so that demand pulls back further, this rally will most likely weaken,” said Quincy Krosby, chief equity strategist for LPL Financial.

Still, some investors and analysts say, whether or not the bottom is in, there are good buying opportunities at the market’s current lows.

“I’m not calling the bottom here, but there’s some opportunity here to dollar cost average,” said Sylvia Jablonski, CEO and chief investment officer at Defiance ETFs, told CNBC. “If you’re sitting on a bunch of cash, you’re locking in losses because of inflation. Investing in equities or asset classes that you believe in… it is the lesser evil. The selling fatigue will wane, the market will reset. It’s unlikely the Dow and the S&P are going to be in correction territory six months to a year from now.”

Retail earnings season kicks off this week with several big-box retailers set to report results for the first quarter, including Walmart, Target and Home Depot. Elsewhere, Deere is also on deck, along with a handful of technology companies.

Investors will also have their eye on retail sales data this week, which could give them insight into how retailers are managing inflation, which remains near 40-year highs.

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Nigeria issues new guidelines on cryptocurrencies 

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The Nigerian government has released new guidelines aimed at protecting investors in digital assets as trades in cryptocurrencies get boost in Africa’s most populous nation.

The rules issued by the Securities and Exchange Commission (SEC) offers more clarity on trading in cryptocurrencies, it was learnt.

The rules cover “issuance, offering platforms and custody of digital assets” for virtual technologies, according to a statement on its website.

This is coming amidst controversy over the acceptability of cryptocurrencies in Nigerian financial ecosystem.

Despite order by the Central Bank of Nigeria (CBN) to commercial banks to stop transactions in cryptocurrencies, Nigeria is said to account for the largest volume of cryptocurrency transactions outside the U.S., as data from Paxful, a Bitcoin marketplace reveals.

Experts however believe this would go a long way in boosting trading in cryptocurrencies which is gaining global traction.

The new rules cover the issuance of digital assets as securities, the registration of platforms and digital asset custodians, exchanges and virtual assets service providers.

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BUSINESS

Apple is no longer the world’s most valuable company

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Oil giant Saudi Aramco on Wednesday surpassed Apple as the world’s most valuable firm.

Aramco’s market valuation was just under $2.43 trillion on Wednesday, according to FactSet, which converted its market cap to dollars. Apple, which fell more than 5% during trading in the U.S. on Wednesday, is now worth $2.37 trillion.

Energy stocks and prices have been rising as investors sell off equities in several industries, including technology, on fears of a deteriorating economic environment. Apple has fallen nearly 20% since its $182.94 peak on Jan. 4.

The move is mostly symbolic, but it shows how markets are shifting as the global economy grapples with rising interest rates, inflation, and supply chain problems.

Aramco stock is up over 27% so far in 2022. In March, the oil giant reported that its full-year profit last year more than doubled due to soaring oil prices.

Apple passed Saudi Aramco to become the world’s most valuable publicly traded company in 2020.

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