The Pacesetter Frontier Magazine

Tag: CBN

  • Nigeria gains massively on the ‘Naira for Dollar’ policy

    The ‘Naira for Dollar’ policy of the Central Bank of Nigeria (CBN) has led to positive accretion to the foreign reserves exactly one month after takeoff.

     

    The foreign reserves, on April 1, stood at $34.85 billion, representing $404 million increase compared to $34.41 billion on March 11.

     

    The uptick in reserves has been attributed to CBN’s ‘Naira for Dollar’ policy which has seen dollar inflows pass through commercial banks, instead of unofficial channels.

     

     

     

    Also helping reserves accretion is the continued rise in benchmark Brent crude oil price, which stood at $63.29 per barrel as at April 8, representing about $23.29 above the $40 per barrel benchmark for 2021 budget.

     

    According to the CBN Governor, Godwin Emefiele, the ‘Naira for Dollar’ policy, gives N5 rebate for every $1 sent by Nigerians in diaspora to the country, which is paid directly to the account of the beneficiaries, following receipt of the remittance inflows.

     

    The CBN had promised that the new policy would provide Nigerians in the Diaspora with cheaper and more convenient ways of sending remittances to Nigeria.

     

    Defending the dollar policy, Emefiele said the move was also to increase the transparency of remittance inflows and reducing rent-seeking activities. He expressed optimism that the new policy measure will encourage banks and financial institutions to develop products and investments vehicles, geared towards attracting investments from Nigerians in the diaspora.

     

    Reiterating the provision a new circular on remittances, the CBN boss said the bank introduced the rebate of N5 for every $1 of fund remitted to Nigeria, through International Money Transfer Operators (IMTOs) licensed by the Central Bank in order to incentivise the process of remittance.

     

    He emphasised that the new measure would help to make the process of sending remittance through formal bank channels cheaper and more convenient for Nigerians in the diaspora.

     

    Also, Forex Trading Associate, AZA, a global forex dealer, Oghenefejiro Eduviere, said naira would remain stable on the parallel market, hovering around the N480 to N490 level, as the Central Bank of Nigeria’s ‘N5 for $1’ incentive scheme encourages forex flows to go through banks.

     

     

     

    “We see trading on the Investors and Exporters (I&E) Forex window extending depreciation towards N435 in the short term,” he said in emailed notes to investors.

     

    “The naira strengthened on the parallel market, trading in the 478/485 to the dollar range vs. 482/486 at the end of last week, while depreciating on the official I&E window, from N408.67 to N411 to dollar amid accumulated demand for dollars carried over from the long Easter break,” he added.

     

    On the foreign reserves, Fitch Ratings, a global rating agency predicted that Nigeria’s external reserves would rise to $42 billion by year-end.

     

    In a report titled, “Depreciatory Pressures on Key Sub-Saharan African Currencies to Lessen,” Fitch Ratings had hinged the forecast on its expectation that Brent crude would average $53 per barrel, compared to the $43.1 per barrel recorded in 2020. Moreover, the agency anticipated that the CBN would allow the official naira exchange rate to depreciate further over the course of 2021, notwithstanding improved terms of trade and foreign exchange reserves.

     

    “Given rising oil prices in 2021, we expect forex reserves to rise to an average of around $42 billion in 2021 (around eight months of import cover), compared to $36 billion in 2020.

     

    “However, this will not negate the impact of persistent depreciatory pressures on the naira, notably as a result of rising dollar demand driven by the domes tic economic recovery,” it stated.

     

     

     

     

     

     

    Source: www.thenationonlineng.net

  • Nigeria’s external reserves has shrunk by $522,525,964 in 16 days.

    According to recent figures on the Central Bank of Nigeria’s (CBN) website, on March 1, 2021 the external reserve was $34,998,144,389 but by March 16, it had shrunk to $34,475,618,425.

     

    Since January 25, 2021 when the reserve stood at $36,469,940,426.08 it has been on a steady decline to the current $34,475,618,425. In other words, between January 25 and March 16, the external reserves declining declined by $1,994,322,001. That is a little shy of $2billion.

     

    The CBN had recently stated that Nigeria’s external reserve at $35bilion was sufficient to finance the country’s seven months’ imports.

     

    The rapid drop in Nigeria’s external reserve coincides with a steady rise in the price of crude oil sales which check recently rose to $71 per barrel within the same period.

     

    Some reasons have been preferred for the sharp drop in external reserves. These include, the CBN’s intervention in the forex market to stabilize the exchange rate, and low foreign inflows.

     

    It is believed that the drop in the country’s external reserve can be linked to shortages in the supply of foreign exchange brought on by a decline in the flow of forex into the country.

     

    In addition receipts from the sale of crude oil take a while before they hit government accounts.

     

    In recent times, forex inflows from International Money Transfer Operators (IMTOs) has whittled down, export proceeds have reduced drastically and flow from the the I and E window have declined as well. All these have prompted reactions from the CBN to change the volume of accretion into the external reserve positively.

     

    Between January and March, many debt obligations matured thus prompting the CBN to make pay out for mature Euro bonds and promissory notes.

     

    The apex bank also engaged in FX swap with international and local dealers a development which would have compelled the CBN to pay off matured obligations as expected of a sovereign.

     

     

     

     

    Source: www.thenationonlineng.net

  • Aggregate Foreign exchange inflow in the country increases to $23.60bn

    Aggregate foreign exchange inflow into the country in the fourth quarter of 2020 rose to $23.60bn from $21.46bn in the third quarter, figure from the Central Bank of Nigeria revealed on Tuesday.

     

    The CBN stated in its report on ‘Foreign exchange flows through the economy’ for the fourth quarter that though there was an increase in foreign exchange flows through the economy in the review quarter compared with the preceding quarter due to the reopening of most economies including Nigeria, the second wave of COVID-19 hampered a return to the levels experienced in the corresponding quarter of 2019.

     

    Part of the report read, “Consequently, aggregate foreign exchange inflow in the fourth quarter of 2020 was $23.6bn, compared with $21.46bn and $36.32bn in the third quarter of 2020 and corresponding quarter of 2019, respectively.

     

    This indicated an increase of 10.0 per cent over the previous quarter, but a decline of 35 per cent below the level in the corresponding quarter.

     

    It added that foreign exchange outflow through the economy rose by 13.1 per cent above the third quarter of 2020 to $8.38bn in the review period but declined by 51.5 per cent below the level in the corresponding quarter of 2019.

     

    Accordingly, foreign exchange flow through the economy resulted in a net inflow of $15.22bn in Q4, 2020, compared with the net inflow of $14.05bn and $19.05bn in the preceding quarter and corresponding quarter of 2019 respectively

     

     

     

     

     

    Source: www.punchng.com

  • Emefiele Advises Nigerians to Embrace Agriculture for Food Security

    In pursuit of the nation’s economic diversification agenda, the Governor, Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, charged Nigerians to embrace agriculture; as the gains of Anchor Borrowers’ Programme will ensure Nigeria attains food security in the shortest possible time.

    Mr. Emefiele gave the charge in Zauro, Kebbi State, yesterday, during the flag-off of the 2020 wet season harvest aggregation and 2020 dry season input distribution under the CBN-Rice Farmers’ Association of Nigeria (RIFAN) Anchor Borrowers’ Programme, as part of the fifth anniversary of the Anchor Borrowers’ Programme (ABP). He noted that Nigeria was naturally blessed to meet its food requirement and had no reason to continually repeat mistakes of the past of neglecting agriculture. “The rhetoric around neglect of previous years will remain part of our history and the best time to correct those mistakes is now and every stakeholder must contribute their quota to guarantee the realisation of these national targets. “COVID-19 and the associated lockdowns globally have shown that nations only export out of their reserves. Let us start building our own reserves now,” he added. The flag-off, which comes barely three months after the CBN showcased sky-high pyramids in Minna, Niger State, to highlight its intervention in the maize value chain, also featured the display of pyramids, which were rice harvests brought in by farmers in the state.

     

    He noted that the ABP, which is an essential part of President Muhammadu Buhari’s drive for economic diversification, had improved the fortunes of rural farmers, transforming agriculture into a potential for economic growth.

    According to Emefiele, the ABP, in the past five years, had been characterized with huge successes, learning points and challenges. Specifically, he noted that a total of 2,923,937 farmers cultivating 3,647,643 hectares across 21 commodities through 23 participating Financial Institutions had been financed in the 36 States of the Federation and the Federal Capital Territory from inception till date.

    He also disclosed that the Bank, under the 2020 wet season CBN-RIFAN partnership, financed 221,450 farmers for the cultivation of 221,450 hectares in 32 States.

    “The North-West zone with 85,261 farmers that cultivated 120,218 hectares represented 38.5% in total number of farmers and 54.3% in total number of hectares financed,” he disclosed, adding that the massive pyramids being launched in Kebbi were harvests from various fields across Kebbi State and a confirmation of the positive outlook of the Anchor Borrowers’ Programme.

    Speaking further, Mr. Emefiele said the partnership between the CBN and the Kebbi State Government and RIFAN aimed at strategically complementing the Economic Sustainability Plan of the Buhari Administration. Following the President’s approval of the resuscitation of the Nigeria Commodity Exchange (NCX) and the commitment of N50b by the CBN and other Stakeholders, he said a vibrant commodity exchange would enhance post-harvest handling, guarantee effective pricing for farmers, minimize the adverse effect of middle men and ultimately transfer the gains from primary production to other nodes of the value chain.

    While acknowledging the importance of loan repayment to the sustainability of the programme, he stressed that the CBN was constantly engaging the farmers to enhance their trust in the system, provide a competitive price arrangement and facilitate effective market linkages for their outputs.

    To further create value and transfer these gains along the value chain, he said the CBN also maps miller to off-take the paddies and track the release of outputs to the market as the Bank strives to manage inflation and grow the rice value chain in Nigeria.

    The CBN Governor revealed that CBN and RIFAN both target cultivation of 1million hectares of rice farms; which is over 350% increase from the 221,450 cultivated in 2020. He said the Bank and RIFAN equally nursed an ambitious two cycles of production in the dry season, which will trigger a continuous drop in price of rice in the country.

    While also noting that henceforth, farmers will repay their loans in paddy for ease of repayment, he urged beneficiaries to repay their loans in order for others to equally benefit.

    In his remarks at the event, which featured the sale of paddy to millers as loan repayment by rice farmers under the CBN-RIFAN 2020 wet season cultivation, the Kebbi State Governor, Sen. Abubakar Atiku Bagudu, commended the CBN Governor and his team for the novel initiatives. He noted that the moves had not only brought succour to the country in terms of food security and diversification but had also successfully made the country exit recession in two quick successions.

    Governor Kayode Fayemi of Ekiti State, who doubles as the Chairman, Nigeria Governors’ Forum, commended the CBN for thinking outside the orthodox paradigm of growing GDP only.

    Also speaking, the President, Rice Farmers Association of Nigeria (RIFAN), Alhaji Aminu Goronyo expressed gratitude to President Buhari for his vision that Nigeria must feed herself by producing what she eats and eating what she produces. .

    While also noting that the CBN had done well to actualise the Buhari vision, Goronyo said the CBN Governor had proved to the world that agricultural revolution was  doable.

     

     

     

    Source: www.sunnewsonline.com

  • CBN: The reason why cryptocurrency is outlawed in many countries

     

    The Central Bank of Nigeria (CBN) on Sunday said Nigeria is not the only country where Cryptocurrency is outlawed.

    It explained that many other countries, central banks, international financial institutions, and investors and economists have also warned against its use.

     

    They include China, Canada, Taiwan, Indonesia, Algeria, Egypt, Morocco, Bolivia, Kyrgyzstan, Ecuador, Saudi Arabia, Jordan, Iran, Bangladesh, Nepal and Cambodia, all of whom have all placed a certain level of restrictions on financial institutions facilitating cryptocurrency transactions.

     

    The apex bank said the countries had also all made similar pronouncements based on “significant risks” that transacting in cryptocurrencies portend, such as the risk of loss of investments, money laundering, terrorism financing, illicit fund flows and criminal activities.

     

    It noted that in China, for example, cryptocurrencies are completely banned and all exchanges closed as well. Banks and other financial institutions are not allowed by law to transact or deal with cryptocurrencies.

     

    “China’s Central Bank, called the Peoples Bank of China (PBoC), has provided several directives ruling out the use of these currencies. The PBOC views cryptocurrencies as illegal because they are not issued by any recognised monetary institution and do not hold any legal status that can make them equivalent to money. Hence, banks and all stakeholders are strongly advised against their use as a currency,” the CBN said.

     

    The apex bank defined cryptocurrencies as digital or virtual currencies issued by largely anonymous entities and secured by cryptography.

     

    Cryptography is a method of encrypting and hiding codes that prevent oversight, accountability, and regulation.

     

    It said it did not place any new restrictions on cryptocurrencies, given that all banks in the country had earlier been forbidden, through CBN’s circular dated January 12, 2017, not to use, hold, trade and/or transact in cryptocurrencies. Indeed, this position was reiterated in another CBN Press Release dated February 27, 2018.

     

    It explained that because they are issued by unregulated and unlicensed entities, cryptocurrencies use in Nigeria goes against the key mandates of the CBN, as enshrined in the CBN Act (2007), as the issuer of legal tender in Nigeria.

     

    The CBN said: “In effect, the use of cryptocurrencies in Nigeria is a direct contravention of existing law. It is also important to highlight that there is a critical difference between a Central Bank issued Digital Currency and cryptocurrencies. As the names imply, while Central Banks can issue Digital Currencies, cryptocurrencies are issued by unknown and unregulated entities.

     

    “Second, the very name and nature of “cryptocurrencies” suggests that its patrons and users value anonymity, obscurity, and concealment. The question that one may need to ask therefore is why any entity would disguise its transactions if they were legal?

     

    “It is on the basis of this opacity that cryptocurrencies have become well-suited for conducting many illegal activities including money laundering, terrorism financing, purchase of small arms and light weapons, and tax evasion.

     

    “Indeed, many banks and investors who place a high value on reputation have been turned off from cryptocurrencies because of the damaging effects of the widespread use of cryptocurrencies for illegal activities.

     

    “In fact, the role of cryptocurrencies in the purchase of hard and illegal drugs on the darknet website called “Silk Road” is well known. They have also been recent reports that cryptocurrencies have been used to finance terror plots, further damaging its image as a legitimate means of exchange.”

     

    The apex bank stated further that some cryptocurrencies have become more widely used as speculative assets rather than as means of payment.

     

    Youths under the aegis of Ethnic Youth Leaders of Nigeria backed the CBN’s move, saying it would help to checkmate financial criminals.

     

    A statement on Sunday by the Ohanaeze Ndi’Igbo Youth Secretary-General and Head of Coalition Secretariat, Nwada Ike Chiamaka, in Abuja, said the move was both patriotic and courageous.

     

    They urged the CBN to ensure that the policy is strictly implemented as well as sanction those who may violate the rule.

     

    The Council, which is made up of the Arewa Consultative Youth Movement, Ohanaeze Ndi Igbo Youth Movement, Niger Delta Youth Council, Oduduwa Youths and Middle Belt Youths,  viewed the ban as patriotic and courageous.

     

     

     

    Source: www.thenationonlineng.net

  • CBN: FG records a deficit spending of N4.45 trillion in 10 Months

    The Federal Government has recorded a N4.45 trillion deficit spending in ten months.

     

    The deficit which climbed by 17 per cent, year-on-year (y/y), against N3.8 trillion recorded in the corresponding period of 2019.

     

    The sharp increase in deficit was driven by the decline in revenue which worsened in October, falling by 6.5 per cent, month-on-month (m/m) to N275 billion from N294 billion in September.

     

    The Central Bank of Nigeria (CBN) disclosed this in its monthly economic report for October 2020. Breakdown of the CBN economic reports from January to October last year showed 28 per cent, y/y, decline in FG’s retained revenue during the ten months period, to N2.88 trillion from N3.99 trillion recorded in the same period in 2019. In the same vein, the FG recorded 6.0 per cent y/y decline in expenditure to N7.33 trillion during the ten months period to October 2020, from N7.78 trillion in the same period of 2019. Narrating how the fiscal position of the FG worsened in October last year, especially the deteriorating trend in revenue, the CBN, in the report said: “The persisting effects of the COVID-19 pandemic on the fiscal profile and operations of the Federal Government led to a huge deficit in October 2020. The estimated deficit amounted to N451.22 billion compared to the budget benchmark of N414.63 billion, the N418.50 billion in September 2020 and the N323.84 billion in October 2019.

     

    “The estimated fiscal deficit rose by 8.8 per cent and 7.8 per cent above the 2020 budget benchmark and the level in September 2020, respectively. The development was attributed to the 6.6 per cent decline in retained revenue,and the 1.9 per cent increase in aggregate expenditure relative to the level in the preceding month “The revenue profile of the FGN revealed a lingering challenge due to declines in statutory receipts and persistent shortfalls in FGN Independent revenue. The total retained revenue of N274.48 billion recorded in October 2020, was significantly below the budget benchmark and the level recorded in October 2019 by 43.6 percent and 52.8 per cent, respectively. “Releases to MDAs in respect of personnel cost and capital expenditure, were the major drivers of government expenditure in October 2020.

     

    At N725.70 billion, provisionally estimated aggregate expenditure of the Federal Government, rose by 1.9 per cent above the N712.30 billion in September 2020, but declined by 19.8 per cent below the N904.77 billion in the corresponding period of 2019.

    “Overall, total expenditure fell below the budget benchmark of N900.88 billion by 19.4 per cent, indicative of government’s revenue constraint.”

     

     

     

    Source: www.sunnewsonline.com

  • Finance: FG owes CBN N9.8tn debt

    Part of the report read, “Sustained use of direct monetary financing could raise risks to macroeconomic stability – given the current weak institutional safeguards – but we expect the FGN to reduce its use of the facility in 2021.

     

    “The FGN directly borrowed 1.9 per cent of GDP from the CBN to fund its fiscal deficit in 2020, estimated by Fitch at 3.6 per cent of Gross Domestic Product.

     

    “A number of emerging markets resorted to central bank deficit financing in 2020 against a background of urgent spending needs and temporary market dislocations associated with the coronavirus pandemic.

     

    “However, the use of central bank financing in Nigeria predates the pandemic shock.”

     

    The report added, “We estimate that the balance of the government’s WMF with the CBN was around N9.8tn (6.7 per cent of GDP) at end-2019, up from N5.4tn (4.2 per cent of GDP) at end-2018.

     

    “Unlike the government, we include this balance in our metrics for Nigeria’s government debt. Borrowing from the facility accounted for 30 per cent of the FGN’s debt at end-2019, on our estimates.”

     

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    Fitch Rating stated that repeated central bank financing of government budgets 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, it added, the FGN’s new borrowing from the CBN had repeatedly exceeded that limit in recent years, and reached around 80 per cent of the FGN’s 2019  revenues in 2020.

     

     

    Source: wwwpunchng.com

  • CBN pre-export requirements frustrating the export of goods from Nigeria to other countries

    The pre-export requirements recently introduced by the Central Bank of Nigeria is currently frustrating the export of goods from Nigeria to other nations, exporters declared on Wednesday.

     

    Speaking under the aegis of the Network of Practicing Non-oil Exporters of Nigeria, they stated that the electronic Nigeria Export Proceed Form being required by the bank from exporters had come with enormous bottlenecks.

     

     

    The President, NPNEN, Ahmed Rabiu, said in a statement issued in Abuja that the new procedure had so many layers of activities that often led to delays and loss of income on the part of exporters.

     

    He said, “We acknowledge the CBN’s desire to ensure that all exports out of Nigeria are documented in order to ensure that the proceeds of such exports are repatriated.

     

    “However, the reality on the field shows that the process is causing undue delays and consequently, encouraging corruption.”

     

     

    In the new pre-export requirements, the CBN wants an export transaction to be initiated through eNXP processing on the trade monitoring system.

     

    Exporters stated that after this, the pre-shipment inspection agent, the Nigeria Customs Service and other designated government agencies would now carry out their pre-export inspections.

     

    They stated that the PIA was expected to issue a Clean Certificate of Inspection, while the Customs would issue the Single Good Declaration.

     

    According to them, a recent report showed that N868bn worth of goods bound for export were stuck at the ports due to the new procedure, as they called for urgent attention to reverse the trend.

     

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    Providing further explanation, Rabiu said, “For example, for the PIA to issue the CCI, the exporter is required to upload a certificate of origin as one of the supporting documents for the eNXP.

     

    “The PIA is also required to upload the CCI to the TRMS(M) and until this is done, the Customs service will not issue the Single Good Declaration.”

     

    He added, “After issuing the SGD, the customs is further required to upload it into the TRMS before the goods are allowed to be gated into the port and loaded on the vessel by the shipping line.”

     

    He argued that the layers created by the new CBN procedure had made the export of goods from Nigeria cumbersome, as it had also led to the deterioration and losses fo r agro commodity exporters.

     

    Source: www.punchng.com