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Analysis: Nigeria Strengthening Economy Attracts Forex Traders

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The forces behind currency markets and what makes them tick is always an interesting topic, especially when you talk about the Nigerian Naira.

The strength of a country’s currency is often in direct proportion to their fiscal health and political stability, and this can clearly be seen when you look at the Nigerian economy.

The Naira has been battling all kinds of vagaries, such as currency controls imposed by the government and the fallout from a thriving black market, where it trades at a discount to the official rate set by the Central Bank of Nigeria (CBN).

The CBN has made huge efforts to stabilise the currency and has made some inroads. The short-term goal of closing the gap between official and black-market rates has partially been achieved. More good news is that in July 2017, the International Monetary Fund (IMF), projected that Nigeria’s economy will grow at a faster pace than South Africa’s in 2018.

According to its World Economic Outlook, South Africa’s economy is expected to grow at 1.2% and Nigeria’s at 1.9%.  Growth in agriculture, increased oil output and government spending will continue to drive Nigeria’s growth, and strengthen the Naira.

The Naira is an interesting currency to watch, and like most emerging market currencies, it has economic challenges to overcome. As a result of its volatility but increasing stability, it has attracted the attention of investors who want to try their hand at trading.

The volume of global forex traders is steadily growing and it is estimated that in 2016, the volume from retail foreign exchange trading represented 5.5% of the entire foreign exchange market, a massive $282 billion in daily trading turnover.

Despite the increased interest and numbers of newcomers entering the markets, there are many more aspirant traders who feel they do not have the confidence to trade.

Their concern is not misplaced because not all investors have the discipline to thoroughly learn and master the craft of forex trading.

A successful trader has to understand both the technical and fundamental aspects of trading, in other words they need to know that politics, natural disasters and even climate change can affect the value of a currency and that timing is a critical part of trading.

Forex transactions are executed in fractions of a second, and a lack of discipline can cause a trader to take unnecessary risks. Forex brokers have recognised this and acknowledged that some traders need extra support.

To address this issue the industry has developed tools to help traders stick to their strategies. Expert Advisors (EAs) for example, provide traders with a platform to code the parameters of their trading strategies.

EA’s are basically automated trading algorithms and while complex by nature, they are simple to use tools that assist traders to refine their trading strategies and gain a greater potential advantage over the markets.

A novice would not derive much benefit from an EA however, because learning how to code takes tuition and practice.

This is why Copy Trading programmes have become extremely popular – they offer less experienced traders the opportunity to follow the trades of suitable traders, and products like FXTM Invest provide a welcome middle ground.

They are not as technical as an EA, but they enable traders to make decisions based on input from a suitable Strategy Manager.

Copy Trading platforms are beneficial to all parties. Strategy Managers make their trades public and investors copy the strategies to earn on the successful trades; in turn, Strategy Managers then take a commission from the Investors.

Products like this will continue to evolve and attract individuals into the Forex markets because they give traders at all levels the opportunity to increase their earnings from profitable trades.

As the financial markets in Nigeria continue to evolve and the Naira gets closer to becoming a stable and respected currency, so will the interest in Forex trading grow.

FXTM regards Nigeria as one of their most important markets and will continue to evolve products, and provide education to assist traders in this region.

Nigeria CommunicationsWeek believes that technology makes life more exciting and helps improve the lives of people around Nigeria and indeed the world.

So since 2007, we have devoted our energy to independent reportage of technology and how they affect lives.

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E-Financial

CBN, NDIC Push Banks to Return to Northeast

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There are ongoing moves by the Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC) to get commercial banks and microfinance banks return to the troubled North-East region, Umaru Ibrahim, Managing Director, NDIC, has said.

Speaking at the ongoing NDIC Annual Workshop for financial journalists in Kano, Ibrahim, called on the CBN to provide incentives for commercial banks and microfinance banks to come back to the North-east after they closed shops because of the impact of the Boko Haram on their operations.

He said the Northeast has potentials to support economic growth and should be supported by banks to achieve the desired result. He spoke on the theme: “The Nigerian banking sector: Challenges, opportunities and the way forward.”

He said: “Many bank CEOs have forgotten the economic potentials that exist in the Northeast. We need to awaken the banks to see the economic potentials in the Northeast. During the next special Bankers’ Committee meeting, the Northeast infrastructural revival will be discussed. The CBN already has planned to rebuild the Northeast,” he said.

He called on the CBN and other major stakeholders in the financial system to rebuild the financial infrastructure in the troubled North-East region.

He said the activities of insurgents in the region in the last few years have led to huge damage of financial infrastructure in the region.

The NDIC boss disclosed that given the crisis in the North-East region, so many businesses have been adversely affected while some investors have moved their investments out of that region.

He said the rate at which people are being financially excluded in the region has increased due to lack of adequate provision of financial services which was caused by insurgents.

The NDIC boss said he would personally table the issue to the Bankers’ Committee during their next meeting so that concrete steps could be taken to address the problem.

To encourage Deposit Money Banks to open more branches in the North-East, he said there was need for the CBN to provide more incentives to banks. He said, “We need to have the government of the North-East on board, they need to be sensitised on this issue.

“We need more collaboration with the CBN and government of the North-East because without this, not much can be done.

“It is necessary for the CBN to provide incentives for various banks in order to come back to the North-East because many bank CEOs have forgotten the potentials that exist in this region.”

In his presentation titled “Rebuilding Financial Infrastructure in the North East”, Mudashiru Olaitan, Director Development Finance, CBN, lamented the low level of access to the bank’s interventions in the region.

Olaitan, who was represented by Sani Mohammed, Deputy Director in the Department, said out of the N82 billion that was spent between 2001-2008, no state in the region accessed the apex bank’s interventions.

“In the commercial agricultural scheme intervention by the CBN, no state in the North-East accessed this intervention except in Taraba and Gombe which have only one each.”So there is need for the region to tap into the interventions,” he added.

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IFC Invests to aid Better Access to Quality and Affordable Healthcare in Nigeria

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International Finance Corporation (IFC) the largest global development institution focused on the private sector in emerging markets has announced that it recently committed an equity investment of USD 8.5 million in Santa Clara Africa Limited, to support the development of a 150-bed hospital and two 10-bed clinics in Lagos, Nigeria.

 

The project is promoted by AXA Mansard Plc, the Nigerian subsidiary of AXA Group, who provided equity to the project alongside IFC, the CAPE IV Fund, managed by African Capital Alliance and the hospital operator, Healthshare Ltd, through its parent company EOH Holding Ltd.

The two clinics will create a strong referral system of patients to the hospital.

 

These three facilities together will provide the necessary economies of scale to deliver better value for money in healthcare services.

 

The project is expected to provide healthcare at a price point that is below that of comparable hospitals and clinics in the market.

Eme Essien Lore, Country Manager, IFC, Nigeria, said “with this investment, IFC wants to contribute to increase the capacity of Nigeria’s healthcare system to offer quality and affordable services.

 

“We will look to scale up this efficient and integrated model nationwide” She added.

Nigeria’s healthcare sector remains underserved as demand – driven by population growth, higher income levels, rapid urbanization, and a rise of non-communicable diseases – continues to outstrip supply of quality healthcare infrastructure.

 

Diagnostic and primary care services are also limited, and at varying qualities. As a result, Nigerians spend an estimated US$1 billion annually on health services abroad.

The lack of secure access to affordable and good quality healthcare with an appropriate service mix has also hampered the growth of health insurance in Nigeria.

 

The low levels of health insurance penetration, which currently constitutes less than 10 percent of the population, contributes to the high cost of healthcare in Nigeria.

 

An increased availability of health insurance schemes would not only provide sustainable access to health services but also motivate the service providers to adopt cost-effective models.

This is IFC’s second investment with the AXA Group in the health sector. Earlier this year, IFC supported AXA’s insurance business in Egypt which includes health insurance, also through an equity investment.

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Linkifin to provide Supply Chain Financial Solution in West Africa

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Linkifin, a leading financial technology company in Nigeria, announces a new partnership with the South African company Propell.

 

This partnership is part of Linkifin’s International Development plan. Linkifin, based in Lagos Nigeria, provides end to end Supply Chain Finance (SCF) solutions across West Africa.

 

Both companies recently signed an agreement to provide Prime Revenue’s award-winning supply chain finance platform in South Africa..

 

Ms. Omolade Fadase, business development and Ibukun Ekujumi, technical lead both at Linkifin spoke to Nigeria CommunicationsWeek on the challenges in the supply chain ecosystem, stating that one of the biggest headaches in the supply chain link was cash flow challenges and delays in payments due by buyers to suppliers and this is what Linkifin SCF platform is about to change.

 

Obinna Mejeh, head of Business Development, added, “Our platform is basically one for invoice trading, adding flexibility and visibility in a supply chain ,unlike the legacy systems used by banks , discount houses and factoring companies. One of the beautiful things about this platform is that it is a win-win situation for all – buyers, suppliers and funders.

 

Hussaini Yakubu, MD/CEO of Linkifin, further commented, “Nigeria is the second strongest economy in Africa and the largest in West Africa. In order to gear the region towards a robust supply chain finance solution for the future we have to act now. The potential is huge and untapped amongst our target of small and medium sized businesses. We have already met with several major local companies and are going to announce new customers in the coming month”.

 

He ended by expressing his optimism that Linkifin will be able to bridge the gap in the supply chain ecosystem and ended the interview by saying the future for supply chain finance in Nigeria was bright.

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