- Production, purchasing power decline
- As Naira further nosedives against the Dollar at 380
CENTRAL Bank of Nigeria, CBN, has revealed that the Nigerian employment level index declined for the seventh consecutive month in July 2016.
This was contained in the apex bank’s monthly economic survey posted in its website yesterday.
Also yesterday, the Naira-Dollar exchange rate dipped to a record N380 at the black market.
CBN conducts a monthly survey of purchasing and supply executives of manufacturing and non-manufacturing organisations in 13 locations in Nigeria – two states in each of the six geo-political zones, and the Federal Capital Territory, FCT.
The survey result is used to compute the monthly Purchasing Managers’ Index, PMI. The survey for the month of July was conducted on July 14 to 22, 2016, and recorded a response rate of 77.9 per cent, with a total of 1,519 responses received from a sample of 1,950 respondents.
At 41.9 index points, the employment level declined at a faster rate when compared to the 42.5 points recorded in June 2016. All the 18 sub-sectors recorded declines in employment level index in the order: construction, management of companies, public administration, real estate, rental & leasing, water supply, sewage & waste management, utilities, professional, scientific & technical services, arts, entertainment & recreation, health care & social assistance, repair, maintenance/washing of motor vehicles, accommodation & food services, wholesale trade, agriculture, finance & insurance, information & communication, educational services, electricity, gas, steam & air conditioning supply, and transportation & warehousing.
Also at 42.8 index points, business activities declined for the seventh consecutive month in July 2016.
Thirteen of the 18 sub-sectors recorded decline in the order: professional, scientific, & technical services, management of companies, construction, accommodation & food services, wholesale trade, real estate, rental & leasing; water supply, sewage & waste management; repair, maintenance/washing of motor vehicles; arts, entertainment & recreation; health care & social assistance; information & communication; transportation & warehousing; and electricity, gas, steam & air conditioning supply. The remaining five sub-sectors recorded growth in the review month in the order: agriculture; public administration; utilities; finance & insurance; and educational services.
The manufacturing PMI rose marginally to 44.1 index points in July 2016, compared to 41.9 in the preceding month.
This indicates a slower rate of decline in the review period. Of the 16 manufacturing sub-sectors, 13 recorded decline in the review month in the following order: electrical equipment; primary metal; non-metallic mineral products; furniture & related products; fabricated metal products; printing & related support activities; food, beverage & tobacco products; textile, apparel, leather & footwear; paper products; petroleum & coal products; plastics & rubber products; transportation equipment; and chemical & pharmaceutical products. The appliances & components sub-sector recorded no change, while the remaining two sub-sectors however recorded expansion in the following order: computer & electronic products; and cement.
At 43.0 index points, the production level index for manufacturing sector declined for the seventh consecutive month, but at a slower rate than that recorded in June 2016. Of the sixteen manufacturing sub-sectors, twelve recorded declines in production level during the review month in the following order: primary metal; plastics & rubber products; printing & related support activities; furniture & related products; appliances & components; nonmetallic mineral products; fabricated metal products; electrical equipment; paper products; food, beverage & tobacco products; transportation equipment; and textile, apparel, leather & footwear. The cement sub-sector remained unchanged. The remaining three recorded growth in production level during the review month in the following order: computer & electronic products; chemical and pharmaceutical products; and petroleum & coal products.
…bars saving acc cheque deposit
Also, the CBN has directed that savings account customers with Bank Verification Number, BVN, should be allowed to deposit cheques not more than N2million in value into their accounts per customer, per day.
This was contained in a circular with number BPS/DIR/GEN/CIR/03/005 posted at the bank’s website yesterday.
Signed by the director, Banking Payment System Department, Dipo Fatokun, the apex bank stated that the action was in furtherance of its efforts at strengthening the Nigeria Payment System.
It also ordered removal of fixed interest on credit cards and discontinuation of actual address verification in account opening with the BVN.
It further directed Deposit Money Banks, DMB, to begin to embed BVN biometric data in payment cards henceforth to facilitate off-line BVN verification and biometric-based customer authentification on such payment devices as, ATMs, POS, kiosks, etc.
The apex bank also approved BVN watch-listing modalities and release by CBN of necessary Credit Risk Management System, CRMS, data to facilitate its use for enriching the BVN watch-list.
It would be recalled that the CBN in collaboration with all Nigerian banks introduced the BVN as a unique identification number for all bank customers.
The BVN gives each bank customer a unique identity across the Nigerian banking industry. This can be used for easy identification and verification of bank customers.
The BVN initiative is part of the overall policy of the financial inclusion policy of the Financial Sector Strategy, FSS, agenda of ensuring Nigeria becomes one of the top 20 largest economies in the world by 2020.
Naira further nosedives
Meanwhile, the Nigerian naira has continued to slide down against the United States dollar, as the exchange rate value dropped to 382 as against the 380 recorded at the close of business on Friday.
The naira has continued to hover around 375 and 380 points against the dollar.
The continuous slide of the naira has been attributed to the inadequate forex liquidity at the interbank market by economic and financial experts.
The hope of the Nigerian naira rising against the greenback is, however, bleak as analysts have predicted that the local currency will further weaken against the dollar as the week continues owing to the limited supply of dollar.
Foreign investors, due to the current economic situation in the country, have continued to stay on the sidelines until the naira recovers against the dollar.
Recall that following the new policy implemented by the Central Bank of Nigeria last week which ordered an increase in interest rate in a bid to lure foreign investors into the local market, the naira on Wednesday recorded an all time low of 334.50 to a dollar.
The naira which at the end of last week closed at 321.16 last Friday, further sliding down as compared to the previous Friday which it closed at 292.40 rose a few points against the dollar to close at 316.37 on Monday.
A currency analyst at Ecobank Nigeria, Mr. Kunle Ezun said: “The market still lacks enough liquidity, we need to do more to boost liquidity. The current rate is a measure of the amount of dollar liquidity at the interbank market”.
Also on the current economic standing of the naira, the Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, said: “We are in a very challenging situation as a country and the CBN needs to do something urgently to stabilise the exchange rate at the interbank market.
“If the CBN fails to intervene, the naira may fall further against the dollar at the interbank market. If it does, the naira may appreciate to say about 310 to the dollar. But the point is that the market needs sustained intervention until there is a calm that will assure the foreign investors that things are now normal.”