By Nze Chidi Duru
The reality of my advocacy over the dwindling value of the Naira is coming nearer home. More than a month ago, I raised a concern over the low values of listed shares on the Nigerian Stock Exchange.
My argument then was that because of the vastly depreciated Naira, the value of all of our high-valuation stocks are at best penny stocks if the valuation were done in dollars.
This concern is also reflected in my latest article which was circulated soon after the inauguration of the Presidential Economic Advisory Committee by President Bola Ahmed Tinubu. The Committee is composed of some of Nigeria’s biggest companies listed on the Nigeria Stock Exchange. In that article, I expressly called on members of the Committee to: ‘save their wealth by saving the Naira.’
Just days after that admonition, it is turning out to be prophetic. On Monday 4 March 2024, the shares of Transcorp Power Plc were listed by introduction on the Nigeria Stock Exchange with an N1.8 trillion capitalization which is the total value of the company as of the day of its listing.
Ordinarily, N1.8 trillion should sound extremely large but not against the N1,600/$ peg of the Naira-Dollar exchange rate on Wednesday 6 March 2024. At this rate, the value of the company in dollar terms is just some fractions above a billion dollars.
Now, one can only imagine what the same N1.8 trillion valuation would have been if the Naira/Dollar exchange rate was N500/$. We would be talking of more than $3 billion. Or better still, if the Naira/Dollar exchange rate was N250/$, Transcorp Power Plc would be worth, at the listing, more than $7.2b.
I am hopeful that Mr. Tony Elumelu, Chairman and majority shareholder of Transcorp Power Plc. and a member of the Presidential Economic Advisory Committee, will take to heart my admonition on the wealthy rescuing the Naira to save their wealth.
Meanwhile, news of the Ghana Central Bank’s sanction of two Nigerian banks – GTB Ghana and First Bank Ghana – over foreign exchange infractions should not come as a surprise to followers of this page. I had always insisted, for good reasons, too, that Nigerian banks are culpable in the brazen manipulation of the foreign exchange rates in Nigeria. I had also called on Mr. President at different times to step into the arena to investigate and take action against these banks.
Obviously, the GCB’s tolerance for manipulating banks is low and that was why it sanctioned the two banks. I wonder what the Central Bank of Nigeria (CBN), the regulatory authority has been doing with banks in Nigeria with many obvious cases of infractions raised against them.
Again, I call on Mr. President to step into the arena to sanitize the Nigerian banking system for the good of the Naira, the good of all Nigerians, and as an enduring legacy of his presidency.
Nze Chidi Duru, OON, is a serial entrepreneur and the Founder/Chairman of Grand Towers Limited as well as National Deputy Organising Secretary of the APC