AfDB votes this week on Nigeria’s bid to withdraw $200m

TWO of the nation’s banks, GTBank and Skye Bank yesterday posted impressive quarterly results, giving a boost to the nation's financial market.

This is coming on a day the African Development Bank announced it will, this week, vote on Nigeria’s request to withdraw $200 million of its contributions to the Bank as plunging oil prices undermine the country’s economy.
Guaranty Trust Bank Plc in its first quarter result released yesterday posted net profit increase of 63 percent to N9.47 billion ($65 million).

Gross earnings rose 55 percent to N35.81 billion compared to the same period last year, the bank said in its latest financial report to the Nigerian Stock Exchange.

Also, Skye Bank Plc saw net profit jump 43 percent to N9.61 billion ($66 million) in its second quarter to March 31, the Nigerian Stock Exchange said yesterday.

Gross earnings leapt 87 percent to N51.66 billion, the bank told the Nigerian bourse in its latest report.
Skye’s fixed assets grew to N24.43 billion from N15.59 billion a year ago, while cash and bank balances rose to N62.68 billion from N39.34 billion.

The bank more than doubled its net assets to N86.90 billion from N26.55 billion in the same period of the previous year.
The board of governors of the Tunis-based AfDB will vote on the request during its annual meeting this week, the bank said in a statement released in Dakar, Senegal yesterday.

The Federal Government wants to withdraw $200m from the $330 million Nigeria Trust Fund, which was established in 1976 to help development projects on the continent. Africa’s biggest oil producer is struggling to fund spending on power plants and roads as the global economic crisis slashes government’s revenue from oil.

“It’s a decision for the board of governors to make and I can’t say whether it will be approved,” Pierre van Peteghem, treasurer of the African Development Bank, or AfDB, said in an interview in Dakar.

“The fund was going to be terminated three years ago, but it was not because Nigeria restated its commitment to development on the continent.”

Nigeria established the 30-year fund during the 1970s oil boom as a way to increase its influence in the AfDB. When the fund expired in 2006, Nigeria agreed to extend it for a further two years. At last year’s AfDB meeting in Maputo, Mozambique, Nigeria agreed to let the fund run for another 10 years.

However, the withdrawal of the money is not expected to affect AfDB’s funding of projects since most of the bank’s finances are drawn from member countries, donors and borrowing, van Peteghem said.

Nigeria’s revenue from crude oil declined to $1 billion in January from a monthly average of $2.2 billion in 2008, Remi Babalola, the country’s minister of state for finance, said last week. Oil makes up 80 percent of government revenue and 95 percent of foreign exchange earnings.

The price of crude oil has dropped 58 percent in New York since the beginning of July 2008. Nigeria’s foreign currency reserves declined to $45 billion in April from about $53 billion in January.

The AfDB expects Nigeria’s economy to expand 4 percent this year, down from an estimated 6.1 percent in 2008. Standard & Poor’s on March 27 cut the outlook on Nigeria’s BB- credit rating to ‘‘negative’’ from ‘‘stable.’’