The Pacesetter Frontier Magazine

Tag: CBN

  • Bank loans from CBN rise by 233 percent

     

    Banks’  borrowings from the Central Bank of Nigeria, CBN, rose by 233 per cent, year-on-year, to N26.9 trillion in 2021 reflecting  increased  reliance on the apex bank to cope with the intense scarcity of funds which prevailed in the interbank money market for most part of last year.

     

    The CBN has two short term lending windows for banks namely the Standing Lending Facility (SLF) and Repo (Repurchase) lendin

     

    While the CBN lends money to banks through the SLF at interest rate of 100 basis points (bpts) above the Monetary Policy Rate (MPR), it also lends money to banks through Repo arrangement, which involves the purchase of  banks’ securities with the agreement to sell back at  a specific date and  usually for a higher pric

     

    On the other hand, the CBN accepts deposits from banks through its Standing Deposit Facility (SDF

     

    Data from the CBN showed that banks’ borrowing through  Repo arrangement rose sharply last year by 1,602 per cent to N13.938 trillion from N819 billion in 2020. Most of the borrowing via Repo occurred in the second  half of the year (H2’21) when banks’ borrowed N7.37  trillion, up by 12 per cent from N6.57 trillion in the first half of the year (H1’21

     

    Similarly, banks’ borrowing through the CBN’s SLF rose sharply by  79 per cent, YoY in 2021 to N13 trillion from N7.25 trillion in 2020. Financial Vanguard analysis however showed that borrowings through the SLF fell by 57 per cent in H2’21 to N3.9 trillion from H9.04 trillion in H1’2

     

    Consequently, banks’ borrowing from the apex bank through the SLF and Repo rose by 233 per cent,  YoY,  to N26.9 trillion in 2021 from N8.1 trillion in 2020

    Similarly, banks’ deposit of idle cash through the CBN’s SDF rose 273 per cent, YoY, to 3.1 trillion in 2021 from N819.3 billion in 2020. Further analysis however showed that banks’ deposits through the SDF fell by 23 per cent in H2’21 to N1.33 trillion from N1.73 trillion in H1’21.

     

     

     

     

     

    Source: www.vanguardngr.com

  • CBN: Criteria for participating in its 100 for 100 policy on Production and Productivity (PPP).

    In its bid to reverse the nation’s over-reliance in imports by creating a platform that supports right companies and projects with potential to immediately transform and jumpstart the productive base of the economy, the Central Bank of Nigeria (CBN) has unveiled the criteria for participating in its 100 for 100 policy on Production and Productivity (PPP).

    According to the apex bank, the intervention under the 100 for 100 PPP instrument shall provide Naira funding under existing CBN Intervention Processes and complete FX funding for new machinery. This instrument is for only new projects and will not cover any refinancing of existing facilities and will be subject to independent evaluation by international audit firms.

    It adds that all intervention under this project will be made public and published in national dailies.

    These are projects that must catalyse sustainable employment-led economic growth through increased domestic production and productivity in the near term.

    The CBN has therefore invited candidate companies with satisfactory performance to apply through their banks with effect from today, November 01, 2021, to the CBN Department of Development Finance, Officce of the Governor, Central Bank of Nigeria, Central Business District, Abuja with complete documentation.

    Source: www.sunnewsonline.com

  • CBN: eNaira is secure and dependable

     

    The Central Bank of Nigeria has said its newly launched e-Naira project is secure and dependable.

     

    The Director of Corporate Communications, Mr Osita Nwanisobi, stated this while speaking at the ongoing CBN-Fair in Abakaliki on Thursday.

     

    According to the apex bank, the security and dependability of the e-Naira stem from the fact that it uses cryptographic technologies encrypted with two factors for authentication.

     

    The CBN, however, observed that the new digital financial project might pose some challenges to Nigerians in the short term because it works with Bank Verification Numbers.

     

    Nwanisobi said, “The issue of security and dependability of the e-Naira platform is guaranteed. It is guaranteed because the technology uses cryptographic encrypted two factors of authentication. And so, the issue of whether the platform is secured is taken, as it is secured.

     

    “The e-Naira project is a journey; we expect that there are going to be minor challenges in the short-term and I can tell you where some of these things are coming from. The e-Naira platform works with BVN and if I ask some people if they have email addresses, they would tell me they do not have.”

    He warned Nigerians to eschew unregulated financial schemes propagated by fake Ponzi operators, saying this had robbed them of their hard-earned money.

     

    “The first is to sensitise the Nigerian public because you are the greatest security for yourselves. So, when we sensitise you, you will begin to see some of these things (fake Ponzi operators) and avoid them. The moment you see them, you will know it,” Nwanisobi stated.

     

    He continued, “The other thing is for us to work with the security agencies to ensure that those who gullibly defraud Nigerians must be brought to book and we have done quite a number in this regard. We work with security agencies to ensure that those who claim what they are not, are brought to book.”

     

    According to him, there is no way a genuine investment can offer 10 per cent monthly returns and 120 per cent per annum.

     

    He said, “You take that to be real? Where is he going to make the money from? What kind of business is the person doing? Is the person regulated?”

     

     

     

     

     

     

    Source: www.punchng.com

  • Buhari has expressed hope that e-Naira “ll help tackle money laundering

     

    President Muhammadu Buhari has expressed hope that the recently launched eNaira would buoy and reposition Nigeria’s economy to attract investors.

     

    He also said the Treasury Single Account (TSA), Bank Verification Number (BVN), and National Identification Number (NIN) initiatives have reinforced his administration’s efforts in tackling corruption.

     

    Speaking at the fifth edition of Future Investment Initiative Summit in Riyadh, Saudi Arabia, Buhari assured that his administration would encourage public and private initiatives that increases investments in health, education, capacity building, youth empowerment, gender equality, poverty eradication, climate change and food security.

     

    “e-Naira, the electronic version of our national currency, which puts us on track to become the first African country to introduce a Central Bank Digital Currency was launched on October 25th, 2021. We believe this and many other reforms, will help us increase the number of people participating in the banking sector, make for a more efficient financial sector and help us tackle illicit flow of funds. To further strengthen our anti-corruption drive, increase accountability and transparency, we have centralised government funds through a Treasury Single Account, and ensuring that all Nigerians with a bank account use a unique Bank Verification Number (BVN). These initiatives, coupled with our nationwide National Identification Number (NIN) exercise, reinforce our efforts to tackle corruption and fraud. We believe that this should give investors a lot of comfort.”

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    The president, who described the summit as a credible forum for interaction between public and private sectors, to explore ways of advancing economic growth, development and global prosperity, said Nigeria’s diversification efforts have continued to yield results, particularly in agriculture.

     

    “We introduced policies that supported investments in agriculture and food processing. We provided loans and technical support to small holder farmers, through the Anchor Borrowers Programme. As a result, Nigeria today has over 40 rice mills from less than 10 in 2014. Nigeria also has over 46 active fertiliser blending plants from less than 5 in 2014.

     

    “Furthermore, in agriculture, we have reformed the process of obtaining inputs such as fertiliser and seeds. We have several million hectares of available arable land and have embarked on the creation of Special Agriculture Processing Zones across the country. These initiatives we believe will make it easier for investors in agriculture,” he said.

     

    President Buhari told the gathering of world leaders, global investors and asset managers that the oil sector was already undergoing a reform that would make it more attractive and inclusive.

     

    “Two months ago, I signed the Petroleum Industry Act. The Act will serve as a catalyst to liberalise our petroleum sector. It has introduced a number of incentives such as tax holidays, 100 percent ownership, zero interest loans and easy transfer of funds. In addition, we have highly skilled in-country workforce and a large domestic market. In mining, we have also made several opportunities available for investors. Nigeria is a country rich in minerals from gold, iron ore, tin, zinc, cobalt, lithium, limestone, phosphate, bitumen and many others. We have made the licensing process easier and also made extensive investments in rail and transportation.

     

    “Infrastructure investments represent significant potential for investors in Nigeria. We have opportunities in seaports, rail, toll roads, real estate, renewable energy and many others. We have created several institutions that are available to co-invest with you in Nigeria. We have the Nigeria Sovereign Investment Authority and more recently, I approved the creation of Infrastructure Corporation of Nigeria. These institutions are run as independent world class institutions to make investments in the country and are available to co-invest with you.”

     

    Buhari urged more interest in infrastructure such as healthcare and education, which “present enormous opportunities for investors in a country our size.”

     

    The president also drew attention of world leaders to the devastating effect of climate change on livelihoods of people around the Lake Chad.

     

    “As we strive to build resilience towards a sustainable economy in our various countries, let us not forget the negative impact of climate change on our efforts to achieve this goal. Nigeria and many countries in Africa, are already facing the challenges posed by climate change. Climate change has triggered conflicts, food insecurity, irregular youth migration, rising level of sea waters, drought and desertification, as well as the drying-up of the Lake Chad.

     

    “In the Lake Chad Basin region, where Boko Haram insurgency continues to undermine the peace, security and development of the region, climate change is largely responsible for the drying up of the Lake Chad which has shrunk by more than 85 per cent its original size. The diminishing size of the lake is at the root of the loss of millions of livelihoods, displacement of inhabitants and radicalisation of teeming youths in the region who are recruited to serve as foot soldiers in the insurgency.

     

    “In order to redress this situation and restore the lost fortunes of the Lake Chad Basin region, strong public-private partnership through massive investments will be needed to recharge the waters of Lake Chad. I am confident that this forum will rise to the challenge in the interest of durable peace and sustainable devel opment of our region.”

     

     

     

     

    Source: www.sunnewsonline.com

  • Court declares CBN cashless policy on 6 states discriminatory and unreasonable

     

    A Federal High Court sitting in Awka, Anambra State, and presided over by Justice N.O. Dimgba, has ruled as discriminatory the cashless policy of the Central Bank of Nigeria on six states of the federation and the Federal Capital Territory.

     

    The states are Anambra, Abia, Lagos, Ogun, Kano and Rivers

     

    This followed a suit instituted by an Anambra-based legal practitioner, Chijioke Ifediora, against the apex court, describing the policy as discriminatory and offending section 42 of the 1999 Constitution.

     

    Ifediora told the court, “On the January 7, 2020, I visited a branch of the Bank in Amawbia Awka, to make payments into my bank account with the sum N600,000 but I was told by a staff of the bank that I would be charged three per cent of the cash amount I had.

     

    “On enquiry, I was shown a Central Bank circular which was pasted across the cash machine PSM/DIR/CON/CWO/02/014 published on September 17, 2019, mandating the bank to charge three per cent for lodgement above N500,000.

     

    “I was prevented from making the lodgement except I paid three percent of the cash amount above N500,000. There is no constitutional foundations for such discriminatory policy neither is any statutory enabler for such biased circular.”

     

    The counsel for the CBN, Jackson Iragunima, in his submission, contended that the policy was not discriminatory, but for the wellbeing of the country.

     

    The CBN maintained that the plaintiff did not have the authority of all the citizens and corporate institutions residing in Anambra, Abia, Lagos, Ogun, Kano, Rivers and FCT to institute the action on their behalf.

     

    In his judgement, Justice Dimgba said, “I believe the claims in these depositions are sufficient to donate the plaintiff  not  only  with  a  locus  standi,  but  also  a reasonableness on the case which he has brought before the court.”

     

    Describing the policy as unreasonable, he agreed with the plaintiff that the CBN policy was discriminatory and offended section 42 of the 1999 Constitution (as amended).

     

    He said, “Assuming that the cashless policy is beneficial to the nation for its financial stability and growth, and inevitably demands the imposition of financial levies on banking customers as an incident of its operationalisation, why will residents in some named states suffer this disability while those in other states do not?

     

    “This nation, as all civilized nations of the modern era, is governed by the rule of law. The rule of law demands that government institutions, such as the defendant in this suit, should provide rational justifications for policy choices they have made and not to act arbitrarily.”

     

    The judge added, “This aspect of the policy imposing financial levies on lodgements/deposits, in my view, appears unreasonable. And it makes no difference if same was applied throughout the federation or limited to only the residents of a few states.”

     

     

     

     

     

    Source: www.punchng.com

  • Nigeria will need $10bn annually to fix its crumbling Infrastructure

     

    The Governor of Central Bank of Nigeria (CBN), Godwin Emefiele , has estimated that the nation would require about $10 billion annually to fix the nation’s dilapidated infrastructure to rejuvenate the economy.

     

    Emefiele, who stated this in his address at the Finance Correspondents Association of Nigeria (FICAN) 2021 annual conference and 30th anniversary celebration at the weekend in Lagos, noted that the current level of infrastructure deficit remained a major constraint to economic development and attainment of average growth rate of 5 to 7 per cent required to boost productivity and sustainable growth for businesses.

     

    Emefiele, represented by Osita Nwanisobi, the Director of Corporate Communications Department of the apex bank, said while the country’s infrastructure deficit was estimated to be about 1.2 per cent of GDP, it is projected that the Federal Government needs to commit about $10 billion annually to address the nation’s infrastructural deficit.

    Speaking on the workshop’s theme: “Financing Infrastructure & SMEs for Inclusive Growth in the post-COVID-19 Economy”, the CBN boss shared his experiences at boosting the economy by stimulating investments towards the development of Small and Medium Enterprises (SMEs) and critical infrastructure in the country. “In realisation of the importance of access to finance and infrastructure to economic growth and development, the CBN has taken steps beyond its traditional macroeconomic mandates of ensuring price and financial system stability, as well as maintaining a strong external reserve.”

     

     

     

     

    Source: www.sunnewsonline.com

  • An anxious wait as CBN launches CBDC (e-Naira) on 1st Oct

     

    With a few days to the official launch of the Central Bank Digital Currency (CBDC), eNaira, in partnership with Bitt Inc, Nigerians are anxiously waiting to experience a new banking product touted to be a game changer on the local business landscape.

    When the Director of Information Technology, Central Bank of Nigeria (CBN), Rukiya Mohammed, mooted the idea few months ago, it was greeted with mixed feelings. While some people believed it would be a federally administered cryptocurrency, many others, especially the illiterate population, thought it was just another bogus hoax meant to titillate them.

    According to records, 85 per cent of Central Banks globally are working dedicatedly on their digital currencies by gradually weaning themselves off rapidly-declining cash payments; and this forms the reason the CBN joined the fray so that Nigeria is not left in the lurch.

     

    According to the CBN Governor, Mr Godwin Emefiele, the eNaira, among others, seeks to help it achieve the apex bank’s monetary policy and financial inclusion objectives. It is also expected to increase the exchange of currency and facilitate cross border trade at a lower cost, especially when more countries unveil their own digital currencies.

     

     

     

     

     

    Source: www.sunnewsonline.com

  • FG owes CBN N15.51tn, borrows N14.86tn under Buhari’s Regime

    The Federal Government’s total borrowing from the Central Bank of Nigeria through Ways and Means Advances has ballooned to N15.51tn, rising by 2,286 per cent in six years, data collated from the CBN have shown.The N15.51tn owed by the Federal Government to the central bank is not part of the country’s total public debt stock, which stood at N33.11tn as of March 2021, according to the Debt Management Office.The public debt stock comprises the debts of the Federal Government of Nigeria, the 36 state governments and the Federal Capital Territory. Ways and Means Advances is a loan facility used by the central bank to finance the government in periods of temporary budget shortfalls subject to limits imposed by law. According to Section 38 of the CBN Act, 2007, the bank may grant temporary advances to the Federal Government in respect of temporary deficiency of budget revenue at such rate of interest as the bank may determine.The Act says, “The total amount of such advances outstanding shall not at any time exceed five per cent of the previous year’s actual revenue of the Federal Government.“All advances shall be repaid as soon as possible and shall, in any event, be repayable by the end of the Federal Government financial year in which they are granted and if such advances remain unpaid at the end of the year, the power of the bank to grant such further advances in any subsequent year shall not be exercisable, unless the outstanding advances have been repaid.” In the first six months of this year, the Federal Government borrowed N2.4tn from the CBN, more than half of what it got in the whole of last year.The N2.4tn is also much higher than five per cent of the Federal Government’s retained revenue of N3.9tn in the previous year.As of June 2015, a month after the President, Major General Muhammadu Buhari (retd.) came into power, the total government borrowing from the apex bank stood at N648.26bn.It jumped from N856.33bn in December 2015 to N2.23tn in December 2016, the CBN data show.The total borrowing from the bank grew by N1.08tn in 2017 to N3.31tn. It rose further by N2.1tn in 2018 to N5.41tn.The Federal Government’s borrowing from the CBN surged by 61.18 per cent (N3.31tn) to N8.72tn at the end of 2019.Last year, the government turned to the apex bank for a record N4.9tn to plug its fiscal financing gap, bringing its total borrowing to N13.11tn as of December 2020.A global credit ratings agency, Fitch Ratings, had in January raised concerns over the Federal Government’s repeated recourse to its ways and means facility with the central bank.According to the agency, the use of central bank financing in Nigeria, which predates the COVID-19 pandemic shock, could raise risks to macro-stability in the context of weak institutional safeguards that preserve the credibility of policymaking and the ability of the central bank to control inflation.“The CBN’s guidelines limit the amount available to the government under its WMF to five per cent of the previous year’s fiscal revenues. However, the FGN’s new borrowing from the CBN has repeatedly exceeded that limit in recent years, and reached around 80 per cent of the FGN’s 2019 revenues in 2020,” it said.In February, the International Monetary Fund said Nigeria’s monetary policy operational framework should be reformed in the medium term, adding that the central bank financing of budget deficit should be phased out in order to reduce inflation.“The increasing reliance on CBN overdrafts has come with negative consequences. The financing is costly for the Federal Government at interest rates of MPR plus 300 basis points, and for the CBN, with sterilisation done through issuance of OMO bills,” it said.The IMF added that a complete removal of central bank financing of fiscal deficits would require higher domestic revenue mobilisation.The Washington-based fund had on April 28, 2020 approved Nigeria’s request for emergency financial assistance of $3.4bn to support the country’s efforts in addressing the severe economic impact of the COVID-19 shock and the sharp fall in oil prices. In a letter of intent to the IMF, the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, and the CBN Governor, Mr Godwin Emefiele, said the recourse to central bank financing would be eliminated by 2025.They added that the existing stock of overdrafts held at the CBN would also be securitised.Central bank borrowing quite large – RewaneThe Managing Director and Chief Executive Officer, Financial Derivatives Company Limited, Mr Bismarck Rewane, described N15.51tn as ‘quite large’, stressing the need for the government to securitise it.Read AlsoOur debts will keep rising, revenues declining – FGNigeria among highest IDA borrowers, says World BankWorld Bank lists Nigeria, nine others as countries with high debt risk exposureHe said, “N15tn is about 45 per cent of total money supply. So, if, for example, those ways and means advances were securitised today, people will have to invest in government securities and it will reduce money supply by 45-50 per cent.“What we need to do is to actually securitised this formally. But I think that right now, the Federal Ministry of Finance or DMO is paying interest on the ways and means advances. So, the effect is that there is a cost to the borrowing, and the central bank is receiving the interest on it.”According to Rewane, the central bank can easily sell the instruments under the open market operations.He said, “The quantum is quite large but to the extent that interest is being charged on it, it may not be as destabilising as the number may make it appear.“Two, the amount that has been taken out of liquidity with CRR (cash reserve ratio) compensates mainly for the extra liquidity that is created by these ways and means advances.”Minimise CBN loan facility, ex-MPC member tells FGA former member of the CBN Monetary Policy Committee, Prof. Akpan Ekpo, said the government should minimise its usage of central bank financing, adding, “I hope they are borrowing to finance capital projects, not for recurrent expenditure.”“The ideal thing is to avoid the ways and means facility, and most countries avoid that,” he said.According to the former Director-General, West African Institute for Financial and Economic Management, government’s dependence on the WMF creates inflation, crowds out private investment and limits the way the CBN can carry out monetary policy.He said, “Assuming that they are printing money to do this, then it will be too much money chasing few goods, which will be inflationary. That is why it is good to minimise it; the jump is quite much.“There is a need for transparency. If they are doing all of this, and they are also borrowing externally, they need to be transparent – telling us what the monies are being used for.“They are also borrowing a lot from IDA (World Bank), ADB, etc; they are issuing Eurobonds and Sukuk bonds. When it is becoming too many, there is a problem. I hope it is well managed, otherwise it is not good for the economy.” The Governor of Edo State, Mr Godwin Obaseki, had said in April that the Federal Government printed N60bn to augment what the three tiers of government shared in March. The claim was faulted by the CBN governor and the finance minister.The MD/CEO, Cowry Asset Management Limited, Mr Johnson Chukwu, said the central bank borrowing was putting pressure on the exchange rate and the inflation rate, with ‘liquidity that has no productivity attached to it coming into the system’.He said, “What that means is that the central bank has been struggling with mopping up excess liquidity as a result of injection of liquidity not coming from productive activities but rather from Federal Government’s W&M borrowing.

    “In the first five months of this year, total Federal Government revenue was N1.8tn, while expenditure was N4.8tn, leaving a gap of about N3tn, which is the reason why you saw that over N2tn borrowed from the central bank. ”According to Chukwu, the securitisation of the ways and means advances will further increase the interest obligations of the Federal Government.“It might be difficult for the Federal Government to securitise those borrowings. The key thing for me is that we need to restructure the fiscal framework of the country so that we take out this dependence by the Federal Government on CBN funding,” he told our correspondent.Bloomberg reported on February 16, 2021 that the Federal Government had set the terms for the conversion of its stock of central bank overdrafts into long-term notes in a bid to create transparency around its dependence on that source of funding.The DMO Director-General, Mrs Patience Oniha, was quoted as saying that the N10tn debt would be exchanged for 30-year notes issued to the central bank, adding that the agreement on timing for the conversion needed to be finalised to get the required approval from the cabinet, at the earliest in the second quarter.In June, London-based Capital Economics, in a report titled ‘The perils of deficit monetisation in Nigeria’, noted that over the past six years, on average around 55 per cent of annual budget shortfalls had been financed by the CBN.“Many of the problems plaguing Nigeria’s economy – from high inflation to a persistently overvalued currency – are tied to the government’s sustained reliance on the central bank to cover fiscal financing gaps,” it said.

    Source: www.punchng.com

  • CBN: $110m weekly Forex sales to Bureau De Change Operators stops on grounds of corruption, illicit profit and Money Laundering

    CBN: $110m weekly Forex sales to Bureau De Change Operators stops on grounds of corruption, illicit profit and Money Laundering

    The Central Bank of Nigeria CBN Governor, Mr Godwin Emefiele, Tuesday disclosed that the $110million weekly allocation and sale of foreign exchange to Bureau De Change (BDC) operators in the country has stopped.

     

    The Governor, who made the disclosure at a media briefing shortly after the July Monetary Policy Committee (MPC) meeting of the bankin Abuja noted that the BDCs have become a fulcrum for corrupt Nigerians to launder money to wreck the economy.

    He also described them as conduits for fraudsters to conduct illicit flows all to the detriment of the country.

    The CBN boss also announced that the MPC chose to retain all policy parameters, including leaving the Monetary Policy Rate (MPR) at 11.5 per cent; asymmetric corridor of +100/-700 basis points around the MPR; the CRR at 27.5 per cent; and Liquidity Ratio at 30 per cent.

     

    On ending forex supplies to BDCs, Emefiele said the apex bank can no longer fold its hands and allow their unwholesome practices to blossom.

    “They have turned themselves away from their objectives. They are now agents that facilitate graft and corruption in the country. “We cannot continue with the bad practices that are happening at the BDC market.

    “Several international organisations, embassies patronise BDC through illegal forex dealers to fund their institutions.

    “We will deal ruthlessly with Nigerian banks that deal with illegal BDCs and we will report foreign organisations patronising them.”

    Emefiele noted that there was evidence of prevailing ownership of several BDCs by the same promoters to procure multiple foreign exchange from the apex bank.

    He added that the forex hitherto allocated to them will now be channeled to Deposit Money Banks (DMBs) to manage, warning banks not to hoard forex as customers have been asked to contact the CBN and report such illicit acts.

    Emefiele explained that bank customers who meet the criteria for forex should get it without delay, stressing that the move was not punitive but to ensure financial stability.

    Reacting to the development, Nigeria’s professor of the capital market, Prof Uche Uwaleke, told Daily Sun that the decision by the CBN to stop forex sales to BDCs has merits and demerits.

    “I think it is in the best interest of the Nigerian economy.

    “On the positive side, it is consistent with the move by the CBN to unify Exchange rates and bring more transparency to the forex market. Exchange rate unification is in line with the IMF and World Bank’s recommendations and so improves the country’s profile and credit standing before International financial institutions. It signifies that the country is serious in her reform efforts.

    “It will slow down the rate of depletion in external reserves. The move is likely to check round tripping of forex and reduce supply of forex in the parallel market.

    “Further, speculative demand for forex is also likely to reduce. “On the flip side, this measure will wipe out the employment opportunities created in the sector with over 5000 BDCs with several others waiting to be licensed.

    This action is probably counterproductive because the CBN may be underestimating the size of demand outside the official market and the policy change will do little to address the sharp disparity in the official and parallel market exchange rates. Whosoever is advising Emefiele and his cohorts are not doing a good job at all. We think this move is correcting a long-standing anomaly. BDCs are licensed to meet demand for personal and business travels and not for big-ticket items that should translate to demand of over $100 million a week.

    Commenting on the development, on television program yesterday, Head of Retail Investments at Chapel Hill Denham, Ayodeji Ebo, while reacting to the development on Channels TV said the decision of the CBN to bar BDCs will have some impact on the parallel market. He noted that the BDCs are a major player in the foreign exchange market and any decision of CBN will definitely impact them

    Governor Emefiele noted that the CBN is the only central bank in the world that sells foreign exchange to BDCs. Some market operators also note that “there is nothing that BDCs do that banks cannot do better” and that over 6,000 BDCs add little or no value to the market today.

    That said, we also think financial markets will react to news and the announcement is expected to spark volatility in the parallel market for foreign exchange, more so because of the timing of the announcement. The move is coming in late July when demand for foreign exchange for personal travel and school fees is typically high.

    He noted that the BDCs are a major player in the foreign exchange market and any  decision of CBN will definitely impact them.

    Source: www.sunnewsonline.com

  • CBN: 50,000 metric tonnes of maize to be released to 12 major producers

     

    The Central Bank of Nigeria has approved the release of 50,000 metric tonnes of maize to 12 major producers from strategic maize reserve under the Anchor Borrowers’ Programme.

     

    According to the CBN, the release of maize to the companies, which is the third of such releases, will reduce the price of grain in the market by checking the activities of middlemen who are hoarding the product and causing artificial scarcity.

     

    A statement issued by the apex bank on Monday read, “The Central Bank of Nigeria, in its bid to moderate and control the prices of maize in the Nigerian market, has approved the release of 50,000 metric tonnes of maize to 12 major producers, from strategic maize reserve under the Anchor Borrowers’ Programme.

     

    “The release of maize to the companies, which is the third of such releases, is also intended to check the activities of middlemen aimed at causing hoarding the product and causing artificial scarcity.”

     

    The statement was titled, “CBN releases 50,000 MT of maize to 12 coys…to check activities of middlemen.”

     

    The Acting Director of the Communication of the CBN, Osita Nwanisobi, who confirmed the development, reaffirmed that the move would crash the price of maize, reduce pressure on the market, and make the product directly available to feed producers, thereby reducing the price of poultry feed in the country.

     

    He added that as part of its financing framework, the bank would continue to fund maize farmers and processors through its various initiatives.

     

    “As part of the Bank’s financing framework, Nwanisobi said the CBN would continue to facilitate the funding of maize farmers and processors through the Anchor Borrowers’ Programme Commodity Association, Private/Prime Anchors, State Governments, Maize Aggregation Scheme, and the Commercial Agricultural Credit Scheme.”

     

    On his part, the National President of the Maize Association of Nigeria Dr Bello Abubakar urged middlemen to desist from leveraging the supply gap to hike the price of the grains.

     

    He also assured that farmers in Nigeria would maintain reasonable pricing of the products.

     

    The listed recipients of the grains include Premier Flour Mills, Crown-Olam, Grand Cereals, Animal Care, Amobyn Hybrid Feeds, Obasanjo Farms, Zartech, Wacot, Sayeed Farms, Pandagri Novum and Premium Farms. It would be recalled that the CBN, in a bid to address the rising cost of food prices in the Nigerian market collaborated with the Rice Farmers Association of Nigeria to distribute 27,000 metric tonnes of rice paddies directly to millers nationwide, earlier this month.

  • Foreign Exchange utilization for food importation dropped by half this year

    The Central Bank of Nigeria (CBN) says foreign exchange (FX) utilisation for food importation dropped by half in January 2021.

     

    The CBN’s economic report on ‘Sectoral Utilisation of Foreign Exchange’ for January said a total of $160 million was spent from Nigeria’s FX on importing food in January.

     

    This represents a 48 percent decline when compared to $310 million spent in December 2020.

     

     

     

    The report said FX worth $2.75 billion was expended across sectors, representing a 40.3 percent decrease from the preceding month.

     

    “Total foreign exchange utilisation by sectors decreased by 40.3 per cent from the preceding month to $2.75billion, reflecting a drop in end-user demand for foreign exchange, owing to year-end ease in economic activities,” the report said. “Visible and invisible imports, constituting 46.9 per cent and 53.1 per cent respectively of the total foreign exchange utilisation declined by 53.4 per cent and 20.7 per cent to $0.77billion and $0.87billion respectively. A disaggregation of foreign exchange utilisation for visible transactions showed that the amount utilised for industrial, manufactured products, and food products sub-sectors amounted to $0.30billion, $0.23billion, and $0.16billion respectively, relative to $0.72billion, $0.38billion, and $0.31billion in the precedi ng month…”

     

     

     

     

     

    Source: www.sunnewsonline.com

  • FG borrows Money from CBN to Pay Salaries

     

    There seems to be no end in sight yet to the controversy between Governor Godwin Obaseki of Edo State and the Federal Government over the alleged printing of N60 billion by the government to augment its March monthly allocations to the states and local governments, as Obaseki yesterday dared the Federal Government to face Nigeria’s economic realities and stop its ongoing monetary rascality.

     

    The governor, in his letterheaded paper titled “Our advice is that we stop playing the Ostrich” and made available to newsmen in Benin, said the government should take urgent steps to prevent the economy from total collapse.

     

    “Rather than play the Ostrich, we urge the government to take urgent steps to end the current monetary rascality, so as to prevent the prevailing economic challenge from degenerating further”, he said.

     

    The Edo governor was quoted as saying at the Edo transition committee stakeholders engagement last week that: “When we got FAAC for March, the Federal Government printed additional N50-N60 billion to top-up for us to share.

     

    “This April, we will go to Abuja and share. By the end of this year, our total borrowings are going to be within N15-N16 trillion”.

     

     

     

    Yesterday’s statement came after the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, told newsmen after the Federal Executive Council meeting in Abuja that what was distributed at the monthly Federation Account Allocation Committee (FAAC) meetings were generated revenue from government institutions available to the public at the ministry’s website.

     

    “The issue that was raised by the Edo State Governor for me is very, very sad. Because it is not a fact. What we distribute at FAAC is a revenue that is generated and in fact distribution revenue is a public information. We publish revenue generated by FIRS, the customs and the NNPC and we distribute at FAAC. So, it is not true to say we printed money to distribute at FAAC, it is not true.

     

    “So our debt currently at about 23 per cent of GDP and it is at a very sustainable level if you look at all the reports that you see from multilateral institutions,” the minister said. In what may be described as a response to the comment by the Central Bank of Nigeria (CBN) Governor, Mr Godwin Emefiele, on Thursday, clarified that government’s printing of Naira simply meant loans advanced to States to pay salaries and survive; and not the literal interpretation of printing money from the factory and sharing to the public, wondering why any controversy should be built around it.

     

    Speaking at the end of a facility tour of Dangote Sugar plantation in Awe, Nasarawa State, Emefiele said the apex bank will ensure the full and timely repayment of all facilities extended to states.

     

    He stated that N614 billion budget support facility was extended to the states between 2016 and 2018 to offset backlog of unpaid salaries and other emoluments due to recession occasioned by crude oil slump.

     

    Again, in July 2015, President Muhammadu Buhari approved a robust intervention package of $2.1 billion to assist handicapped states pay salaries.

     

    Emefiele thus described Obaseki’s position on printing about N60 billion to shore up March subvention by the Federal Account Allocation Committee (FAAC) as totally inappropriate.

     

    He said: “If you understand the concept of printing of money, it’s about lending money. That is our job. To print is about lending money. So, there is no need of putting up controversy about printing money as if we go into the factory, print the naira and start distributing on the streets.

     

    “It’s very inappropriate for people to give colouration to printing money as if it’s some foreign words coming from the sky. So, I think it’s important for me to put it this way that in 2016/16, the kind of situation we found ourselves in, which is even worse than 2015/16, we did provide a budget support facility to all the states of this country. That loan is still unpaid up till now.

     

    “We are going to insist on them paying back those monies since they’re accusing us of giving them loans. Most countries in the world today are confronted not only by the challenges coming from the COVID-19 pandemic, but other issues causing economic crisis and the rest of them.

     

    “What I keep saying is that it will be irresponsible for the CBN or any other federal reserve bank to stand idle and refuse to support its government at this time. And what we are doing here is being done in any clime.

     

     

     

     

     

    Source: www.sunnewsonline.com