- As Equities lose N42b as selloff continues
The Central Bank of Nigeria (CBN) yesterday appointed Deposit Money Banks (DMBs), Microfinance Banks (MfBs) and Development Finance Institutions (DFIs) to disburse N220 billion targeted at the Anchor Borrowers’ Programme (ABP).
The apex bank also released guidelines for the implementation of ABP which it said was established in line with its developmental function.
According to the CBN, the ABP fund shall be provided from the N220 billion Micro, Small and Medium Enterprises Development Fund (MSMEDF). Loan amount for each farmer shall be arrived at from the economics of production agreed with stakeholders.
“Interest rate under the ABP shall be guided by the rate on the N220 billion MSMEDF, which is currently at nine per cent per annum (all inclusive, pre and post disbursement). The Participating Financial Institutions (PFIs) shall access at two per cent from the CBN and lend at a maximum of nine per cent per annum,” it said.
The guidelines also said banks that fail to apply the nine per cent interest charge on the loans shall reverse the excess fees/interest charged and will be issued a warning letter to the and outright ban from participating under other CBN Interventions after two infractions.
“The tenor of loans under the ABP shall be the gestation period of the identified commodities while repayment loans granted to the farmers shall be repaid with the harvested produce that shall be mandatorily delivered to the Anchor at designated collection center in line with the provisions of the agreement signed. The produce to be delivered must cover the loan principal and interest,” it added.
In a circular, the CBN said the ABP, which was launched by President Muhammadu Buhari in November 2015 was intended to create a linkage between anchor companies involved in the processing and small holder farmers (SHFs) of the required key agricultural commodities.
It said the programme thrust of tABP was the provision of farm inputs in kind and cash (for farm labour) to small holder farmers to boost production of these commodities, stabilize inputs supply to agro processors and address the country’s negative balance of payments on food.
It said at harvest, the SHF supply his/her produce to the Agro-processor- the Anchor who pays the cash equivalent to the farmer’s account.
The ABP, the CBN added, evolved from the consultations with stakeholders comprising Federal Ministry of Agriculture & Rural Development, state governors, millers of agricultural produce, and smallholder farmers to boost agricultural production and non-oil exports in the face of unpredictable crude oil prices and its resultant effect on the revenue profile of Nigeria.
“The broad objective of the ABP is to create economic linkage between smallholder farmers and reputable large-scale processors with a view to increasing agricultural output and significantly improving capacity utilisation of processors.
“Other objectives include: Increase banks’ financing to the agricultural sector. It was also meant to reduce agricultural commodity importation and conserve external reserves Increase capacity utilisation of agricultural firms and create new generation of farmers/entrepreneurs,” the CBN said.
In the meantime, the selloff at the Nigerian stock market continued for the second consecutive trading session yesterday as sustained profit-taking transactions shaved off N42 billion from market capitalisation of quoted companies.
The All Share Index (ASI), the common value-based index that tracks prices at the Nigerian Stock Exchange (NSE), declined by 0.46 per cent from 26,616.89 points to close at 26,495.04 points. Aggregate market value of all quoted companies dropped from N9.158 trillion to close at N9.116 trillion, indicating a loss of N42 billion. The two-day decline pushed the average year-to-date return to -1.4 per cent.
Sectoral indices generally indicated widespread selling sentiment. The NSE Banking Index dropped by 1.6 per cent. The NSE Industrial Goods Index declined by 1.0 per cent. The NSE Insurance Index dropped by 0.6 per cent. The NSE Oil & Gas Index lost 0.46 per cent while the NSE Consumer Goods Index closed flat.
The downtrend was driven largely by losses recorded by highly capitalised companies in the banking, oil and gas and cement sectors. Guaranty Trust Bank, the most capitalised banking stock, led the 17-stock losers’ list with a loss of N1.10 to close at N22.90. Lafarge Africa followed with a loss of 95 kobo to close at N40. Forte Oil dropped by 62 kobo to close at N83.60. Ashaka Cement declined by 59 kobo to close at N11.43. Ecobank Transnational Incorporated lost 23 kobo to close at N9.54 while Cement Company of Northern Nigeria declined by 20 kobo to close at N4.55 per share.
Investors traded 602 million shares valued at N1.20 billion in 2,150 deals. Unity Kapital was the most active stock, by turnover volume, with a cross deal for 435.96 million ordinary shares valued at N335.69 million. Omoluabi Savings and Loans placed second with 104 million shares worth N83.3 million while United Bank for Africa (UBA) staged a distant third with 9.23 million shares valued at N41.67 million.
On the positive side, Flour Mills of Nigeria led 13 other stocks on the upside, rising by 49 kobo to close at N18.49. Zenith Bank followed with a gain of 15 kobo to close at N14.55. UACN Property Development Company added 13 kobo to close at N2.88. Vitafoam Nigeria rose by 12 kobo to close at N2.54 while Africa Prudential Registrar chalked up 9.0 kobo to close at N3 per share.
Market analysts said the bearish sentiment underlined expected portfolio rebalancing by investment managers in line with earnings outlook for the current business year.
“Given the bearish sentiment in the market and with little fundamental drivers to support performance, we expect the benchmark index to continue to post losses until bargain opportunities surface,” Afrinvest Securities stated.