JP Morgan, an American multinational financial services firm, estimates that Nigeria’s net foreign exchange (FX) reserves fell to $3.7 billion as of the end 2022.

This is contained in the firm’s latest report titled ‘Nigeria: Reform pause rather than fatigue’.

Gross FX reserves represent the government’s total holdings of foreign currency reserves. Net FX reserves deduct foreign currency liabilities from gross foreign currencies reserves. According to Central Bank of Nigeria (CBN) data, the country’s gross FX reserves was $36.61 billion as of end of 2022.

Nigeria’s FX reserves play a crucial role in defending the naira and covers the country’s huge import bills.

In its report, JP Morgan said the $3.7 billion figure is significantly lower than prior estimates, owing to larger-than-expected currency swaps and borrowing against existing reserves.

“Based on partial information from the audited financial accounts, we estimate that CBN’s net FX reserves were around US$3.7bn at the end of last year, from US$14.0bn at end-2021,” the report reads.

The firm clarified that it arrived at $3.7 billion by making some assumptions which if incorrect would change the estimated figure.

“In arriving at said estimate we make a few assumptions which if incorrect would substantially change the picture. They include: (i) an addition of US$5.0bn in IMF Special Drawing Rights (SDR) to external reserves in order to arrive at total gross FX reserves of US$37.8bn, broadly in line with the 30-day moving average of US$37.08bn previously published on the central bank’s website,” the report further reads.

(ii) adjusting the gross external reserves with three key FX liability lines that include FX forwards (US$6.84bn), securities lending (US$5.5bn) and currency swaps (US$21.3bn); and (iii) estimating currency swaps by backing out FX forwards and outstanding OTC Futures balances from an overall aggregate published in the financial accounts.”

JP Morgan, however, said that although low net FX reserves mean continued FX market pressures, the CBN still has the ability to source FX at commercial and semi-commercial rates.

“Given the highly profitable nature of the currency swap arrangements between the CBN and domestic commercial banks, we expect these to continue for sometime, albeit in smaller sizes and arguably more punitive rates,’ the report adds.

“Furthermore, authorities are in the initial stages of identifying assets for sale, which may provide some medium-term relief. For example, the President’s policy advisory council has recommended the government sell down its stake in the most joint-venture oil and gas assets, a proposal that is estimated to bring in up to US$17bn.

“In addition, the recently announced US$3bn loan to NNPC could help partly improve FX liquidity conditions in the market. We expect NNPC to sell the dollars to CBN and remit the naira proceeds to the government as upfront payments for oil revenues and taxes. That being said, the large external financing needs of the private sector will sustain FX pressure.”

‘HEADLINE INFLATION TO RISE IN COMING MONTHS’

JP Morgan said it expected that headline inflation will still remain elevated, particularly due to higher food costs.

“We believe July’s inflation print is early evidence of the impact of the fiscal and FX reforms which are likely to continue pushing headline inflation higher over the coming months,” JP Morgan said in its report.

“Higher parallel market rates in recent weeks are also likely to have an impact on August’s inflation reading and will be most notable in higher food and core prices. The core inflation measure (excluding food and energy costs) rose by 20.5% in July, from 20.1% recorded in June. We now see headline inflation rising towards 28% by year-end.”

The firm said President Bola Tinubu’s decision to keep a cap on petrol prices is likely to provide some relief but the exchange rate is likely to remain on a depreciating path and put further pressure on prices.

Director of Payment Systems Management of the Central Bank of Nigeria (CBN), Musa Jimoh, who doubles as the Chairman of Nigeria Electronic Fraud Forum (NeFF), yesterday disclosed that accumulated Electronic Fraud (E-Fraud) within the banking sector and payment systems network has led to a loss of N9.5 billion so far in 2023.

Jimoh, speaking at the Q3 2023 general meeting of NeFF in Lagos, where stakeholders converged to discuss “New Strategies for Combating E-Fraud in a cashless Environment”, called for enhanced collaboration within the payment systems’ ecosystem to curtail the rise in E-Fraud.

Jimoh said: “We are gathered to see how we can secure our environment, how we can secure our digital environment, and how we can secure cyberspace. We all keep our money in electronic form.

“Today, we are here to continue that conversation to look at new strategies by which we can combat E-fraud. If we don’t combat the cyber criminals, they will take us down and disrupt the entire system. So, we all need to work together to see how we can make life extremely difficult for cybercriminals.

“We need to look at new ways, new techniques, and more efficient manners by which we can improve and guard against the banking and payment infrastructure and educate ourselves on how we can safeguard our bank credentials or tokens and all the information that the banks have provided to us to safeguard. The more information we have about what they’re doing, the more we are protected.

“The objective is to have zero fraud, but you know, this is a gradual process because as you’re building techniques, they’re also exploiting other areas. As more people come into the financial sector, as more transactions happen, people are vulnerable and so we need enlightenment, education. We will continue to push it, which is why it’s going to be a very long journey.

“But I know that with the kind of enlightenment and the push by the bankers’ committee, and other stakeholders, a lot of Nigerians will be well educated to know that they have to keep all the accounting details very secret and therefore we anticipate that the incidence of fraud we taper down almost to zero.”In giving insights into E-fraud data in 2023, the Managing Director of Nigeria Inter-Bank Settlement System (NIBSS), Premier Oiwoh noted that the industry in 2023 recorded its highest actual loss value of N2.7 billion in January while June 2023 had the lowest value of over N800 million.

He added that the highest fraud count in the last six months was recorded in May 2023 with 11,716 records while the lowest count was in June 2023 with 6,240.Represented by the Chief Risk Officer, NIBBS, Temidayo Adekanye, he said: “Recently, we had the cashless policies from CBN, which was incurring a dramatic increase in the volume of transactions in the industry which variably has the impact of the volume of fraud in the industry itself. Now, the increase and efficiency have also meant that fraud has dramatically increased across the industry. For Q1 2023, the total fraud reported through the industry forum portal was at N5.1 billion.

“For fraud trends over the last five years, in 2019, we’re looking at about N3 billion and currently 2023, we are looking at about N9.5 billion to date. Fraud losses have increased dramatically over the last five years.

”He further stated that in recent periods, scammers have developed a method to redirect funds via betting platforms and wallet accounts, resulting in minimal success rates for recovering those funds through these avenues due to insufficient identifications.

Adekanye said: “What we see most is the fact that the primary channels are the betting platforms. So once the money hits the betting platform or a wallet account or in some cases, POS agents, once it is cashed out, it is a black hole. There is no way you can recover that money. We’re talking about potentially 5 per cent recovery rates across the industry. So, we all have to identify those betting and wallets accounts, POS agents, cryptocurrency accounts, and in some cases purchases.”

Also, the CBN Director, accompanied by the Managing Director Fidelity Bank, Nneka Onyeali-Ikpe, and other stakeholders unveiled the NeFF official website to aid collaboration and information sharing to curtail E-fraud.Onyeali-Ikpe said the gradual escalation of E-Fraud is beginning to erode customers’ trust in the financial system. She emphasised the need for a swift and decisive approach to address E-fraud within the financial sector.

She said: “As technology continues to advance at an unprecedented pace, our reliance on digital transactions have grown exponentially. However, with the rise of these digital interactions, the threat of E-fraud has become a significant challenge affecting individuals, businesses, and the industry. The data we have from the NiBBS is that the volume of electronic payment transactions in Nigeria increased by 298 per cent Year-on-Year.

“The banking industry lost a total of N14.3 billion to electronic fraud in 2022 up from N12.7 billion in 2021. As Q1 2023 is about today it’s N5 billion and then the problem here is that the trend so far shows that if this continues unchecked, it would rise to N20 billion for the full year.“E-fraud has permeated multiple industries, spanning from banking and finance to e-commerce and beyond. These cybercriminals leverage advanced methods to exploit vulnerabilities, gaining unauthorised access to crucial data and funds. The repercussions of e-fraud are not limited to financial losses; they also extend to eroding trust and eroding brand reputation.”

The police in Edo State on Wednesday confirmed the arrest of one Gabriel Ahuwa, 84, for allegedly killing his 75-year-old wife for denying him sex.

The Public Relations Officer of the command, SP Chidi Nwabuzor, announced the suspect’s arrest during a news conference in Benin.

The octogenarian, Nwabuzor said, is among the 198 suspects apprehended in the State for various crimes, such as armed robbery, kidnapping, murder, among others.

”The suspect is not remorseful. After killing his wife, he still claimed that his action was the only solution to her starving him of sex,” he said.

Speaking of newsmen, the suspect said his wife had been denying him sex for a long time.

“My wife does not listen to me. Anytime I asked her to come and sleep with me, she would decline. We have given birth to seven children.

“I reported my wife to my family and hers too, but she failed to listen to them and continued with her old ways.

”Meanwhile, I heard that she has been sleeping with some pastors,” the suspect said.

He, however, said that he regretted his action. (NAN)

A daily post report last week, that says, GlaxoSmithKline, GSK, was exiting Nigeria sent shockwaves across the country.

GSK, one of the country’s major pharmaceutical companies, manufactures some of the best-known prescription medicines, vaccines, and consumer healthcare products, including brands like Panadol, Macleans, Andrew Liver Salt, and Amoxil.

Scarcity looms for these essential drugs and others manufactured by GSK even as prices of pharmaceutical drugs, generally, skyrocket in response to the free fall of the naira.

Presently, some drugs have become unaffordable to the average citizen.

A survey, corroborated by some medical doctors and hospital pharmacists, showed that prices of drugs and medical services rose steeply by at least 80 per cent to 150 per cent in the last two months.

For instance, Ciprotab (Fidson), an antibiotic tablet, used to cost an average of N2,300. Today, it goes for between N3,000 and as much as N3,500 in some retail shops.

Ventolin inhaler (by GSK Pharmaceuticals) cost an average of N4,500 per canister two months ago. Today, it goes for between N6,500 and N12,000 in some retail shops. While Augmentin used to cost N5000, today, it costs N17,000.

Some patients who spoke to journalists said they now resort to traditional medicine since they could no longer afford conventional treatments.

However, a media consultant to the National Agency for Food, Drugs Administration and Control (NAFDAC), Sayo Akintayo explained that it is not in the purview of NAFDAC to determine the price of drugs.

He said: “We don’t have anything to do with the cost of drugs. Yes, we are only concerned with the manufacture, distribution and sale of drugs. So, that has to do with the operations of the companies, given the variables in the economy.

"It is not in the purview of the NAFDAC to determine the price of drugs. We don’t manufacture drugs. What we do is to ensure that whatever is manufactured or produced for the consumption of Nigerians is of good quality and effective, and we ensure that it is safe for human consumption. 

"Determining the price of drugs rests with the manufacturers. And quite a number of things come to play when you want to determine that too. You consider your cost of production, and you consider so many other variables, but it is completely out of the control of NAFDAC.”

The National President of the National Association of Resident Doctors, NARD, Dr Emeka Orji believes it was worsened by the current government’s various economic policies released in quick succession, citing the removal of fuel subsidy and the floating of the Naira. 

Orji in an interview said that the prices of products in the country depend on exchange rates, fuel prices and inflation.

According to him, many of the medications and pharmaceutical products being used in the country are either manufactured abroad in whole or in parts, noting they would be affected by the exchange rate.

He suggested the government should increase access to healthcare via a comprehensive healthcare insurance scheme in the country.

"The hardships were caused by the high inflation rate, and it has been there even before this current government came into place, but it was worsened by the various economic policies that were released in quick succession by this government. One of them was the issue of the removal of fuel subsidy and the floating of the Naira.

“Many of the prices of products in this country are dependent on exchange rates and, of course, fuel prices and inflation. You will realise that many of the medications and pharmaceutical products we use in this country are either manufactured abroad in whole or in parts. So those things will be affected by the exchange rate, and because of that, the price of pharmaceutical products has skyrocketed.

“These days, we don’t even know what the price is because if you go today to buy something, they will tell you a high price, and by the time you go tomorrow, the price has further increased.

“So, it is a problem. Most of these pharmaceuticals are currently beyond the reach of ordinary Nigerians. And the government that is talking about palliatives and other measures to cushion the effect, one should expect that they should look the way of medicare and pharmaceuticals.

“What has happened is that many Nigerians cannot afford medical treatment, and they are resorting to unorthodox means, which is dangerous to their health.

"When it comes to the personnel themselves, the health workers, of course, we are all Nigerians, and what is happening is affecting us. In fact, it is affecting us the most because we realise that part of our duties is to live a nomadic kind of life; we are always on the move.

“I am talking about doctors because we receive calls to visit hospitals several times, and sometimes people call you and expect you to come out and attend to their medical needs. So you need to always be moving around and in this era of very high prices of fuel, it has terribly affected our work.

“Incidentally, that has been part of the reason we have been shouting, clamouring that the government should look into this and find a way of coming to our aid and now give a kind of support to help us.

“There is no reason we should not have a comprehensive health insurance scheme in this country. The truth is that as long as we don’t have this, there is no amount of speech or policies that will help Nigerians.

“The current coverage of Nigerians in the health insurance scheme is still less than 10 per cent. And so, out-of-pocket spending for health is the most important cause of the inaccessibility of healthcare services by Nigerians. We in the hospitals used to see these patients come to hospitals, and by the time you write drugs for them, they can not afford it.

"You want to operate on them, they can’t pay for the surgery. We see it happen. Many of them discharge themselves against medical advice because they cannot afford treatment. And that is part of the challenges we face as doctors because sometimes you see yourself even having to pay for your patients. It can be that bad.

“Government should also find a way to increase funding. Yes, we know it is not something that the government can do alone; we need both public and private sector participation to increase healthcare funding. We always say that the annual budget for health is abysmally poor. It is not even up to 15 per cent that is expected based on the Abuja declaration of 2021.

"The 2023 annual budget for health is less than seven per cent, and it has been like that for years. Only when the government increases healthcare infrastructure funding will the personnel be there and other necessities required to deliver a standard healthcare delivery system in Nigeria.

“Government should also find a way of regulating trado-medical people. I can tell you that medical practice is regulated much more than the trado-medical. This is very dangerous because many of these concoctions they give patients do result in kidney and liver failure and other failures of organs occasioned by those concoctions.”

Meanwhile, some patients said they have resorted to traditional medicine since they could no longer afford conventional treatments.

Also, some citizens who are on routine drugs, are now on drug holidays.

The worst hit are Nigerians treating chronic conditions like cancer.

Mr Gregory Ani, who said he had been on diabetes drugs for over a decade, said he could no longer afford the treatment.

“I am losing faith. Before now, with N3,000, I could buy my two weeks of routine drugs. These days I need nothing less than N10,000 to do two weeks of treatment.

"I have decided to ration it. I only take it when I notice any strange feeling,” he said.

Stakeholders in the pharmaceutical industry fear that many drug companies may fold up due to the inability to access foreign exchange and the cost of diesel, among others.

A pharmacist at Save Health Pharmacy in Port Harcourt, Giginna Mathias, told correspondent that the free fall of the Naira contributed to the problem.

“The worst part is that people are not patronising us like before.

“Some drugs are even off the shelf because you can’t buy what you know you cannot sell. It is not good for business,” he lamented.

The economic situation for Ekot Bassey, a Sales Representative at a leading Pharmaceutical company in Ogun State, is frustrating.

Bassey said that drug prices keep increasing daily.

He said, “Inflation is affecting our sales because people are no longer buying drugs”.