The Nation Newspaper

Category: Money

  • Skye Bank adopts Abuja school

    Skye Bank Plc yesterday adopted Government Secondary School, Wuse II, Abuja for the financial education of its students. Speaking at a ceremony to mark the adoption of the school as part of the 2014 Global Money Week commemoration in Abuja, the Group Managing Director/Chief Executive Officer of the bank, Mr. Kehinde Durosinmi-Etti, said the exercise is in furtherance of the lender’s commitment to promoting financial literacy among students.

    He said the essence of the initiative was to impart knowledge, skills, attitudes, and behaviours necessary to make sound financial decisions to the students.

    The bank CEO said the Financial Literacy Sub Committee of the Bankers’ Committee had set March 13, 2014 to launch Financial Literacy (FL) Day, with focus on children and youth in primary and secondary schools nationwide, both public and private.

    “Skye Bank has adopted and is launching the Financial Literacy Day at Government Day Secondary School, Wuse, Abuja, FCT. We have raised a team that will ensure the sustainability of this initiative which will run over the next nine months”, he explained.

    Speaking on the development, the Principal of the school, Mr. Akoh Joseph, described the event as a milestone and expressed hope that financial education and the adoption of the school would impact positively on the students. Government Secondary School, Wuse 11 is one of the best schools in the Federal Capital Territory and recorded the best Senior School examination results in the Federal Capital Territory in 2013.

  • CBN cuts loans to banks by 75 per cent to N1.44tr

    CBN cuts loans to banks by 75 per cent to N1.44tr

    The Central Bank of Nigeria (CBN) reduced its loans to banks by 74.9 per cent to N1.44 trillion in the fourth quarter of last year.

    This was part of its belt-tightening policy.

    The loans came as Standing Lending Facility (SLF), representing a daily average credit of N24.09 billion to the lenders, while interest paid on SLF stood at N0.87 billion. The CBN loaned banks N5.75 trillion in the preceding quarter, which ended on September 30.

    The drastic cut in the loans, The Nation learnt, was not only meant to support the naira, but also to secure the declining foreign reserves which have lost over $3 billion in the last one month.

    The SLF, given at 14 per cent, is an overnight CBN credit available on banking days between 2 pm and 3.30 pm, with settlement done on same day value.

    The CBN explained that money market rates were influenced by the liquidity condition in the banking system arising from the introduction of the 75 per cent Cash Reserve Ratio (CRR) on all public sector deposits, coupled with the delay in the release of fiscal allocation.

    The CRR on all public sector funds was raised further to 75 per cent at the January 21 Monetary Policy Committee (MPC) meeting of the CBN. The CBN had during the MPC meeting maintained the monetary policy rate (MPR) at 12 per cent, and kept the symmetric corridor of plus two per cent around the MPR for SLF.

    However, the SLFs are available only to banks and discount houses that have executed the Nigerian Master Repurchase Agreement (NMRA) with the regulator. The NMRA covers the operations of the SLF and addresses issues relating to pricing, duration, custodian as well as default resolution in lending.

    Furthermore, the CBN Economic Report for the fourth quarter, showed that the total assets and liabilities of the Deposit Money Banks (DMBs) stood at N24.3 trillion.

    The figure, the report said, represents an increase of 4.4 per cent over the level at the end of the preceding quarter. The funds, it said, were sourced largely from increased mobilisation of demand deposit and Federal Government deposit were used for accretion to reserves and to purchase government’s securities.

    The CBN said banks’ credit to the domestic economy rose by 8.6 per cent to N12.2 trillion, when compared with the date from the preceding quarter. The development, it said, was attributed largely to the 346.9 per cent increase in claims on the Federal Government.

    Also, the liquidity ratio rose by 1.8 percentage points above the level in the preceding quarter, and was 9.5 percentage points above the stipulated minimum ratio of 30 per cent. The loans-to-deposit ratio stood at 36.3 per cent, and was 2.9 percentage points above the level at the end of the preceding quarter, but was 43.7 percentage points below the prescribed maximum ratio of 80 per cent.

    The quarterly report also said gross domestic product (GDP) was estimated to have grown by 7.7 per cent, compared with 6.8 per cent in the preceding quarter. The development, it said, was driven, largely, by the growth in the non-oil sector.

    Broad money supply, (M2), grew by 9.1 per cent, in contrast to the 7.9 per cent decline recorded at the end of the preceding quarter.

    The CBN said the development reflected, largely, the 14.9 per cent increase in domestic credit (net) of the banking system. Similarly, narrow money supply, (M1), rose by 11.4 per cent, in contrast to the 9.3 per cent decline at the end of the preceding quarter.

    Over the level at end-December 2012, broad money supply (M2) grew by 1.2 per cent, owing largely to the 18.5 per cent increase in net domestic credit, which more than offset the 26.0 and 5.9 per cent decline in other assets (net) and foreign assets (net) of the banking system, respectively. Reserve money (RM) rose at the end of the fourth quarter of 2013.

    Available data indicated that banks’ deposit and lending rates generally trended upward, while the weighted average inter-bank call rate fell by 3.23 percentage points to 11.02 per cent, reflecting the liquidity condition in the inter-bank funds market.

    Provisional data indicated that the value of money market assets outstanding increased by 4.1 per cent to N6.8 trillion, compared with the increase of 5.7 per cent at the end of the preceding quarter. The development was attributed to the 4.7 and 3.9 per cent increase in Federal Government of Nigeria Bonds and Nigeria Treasury Bills outstanding, respectively.

    “The introduction of the 50 per cent CRR on all public sector deposits continued to affect the monetary conditions of the market. Open market operations were conducted for various maturities, for liquidity management purposes.

    The bank’s discount window also remained open to authorized dealers to access both the standing deposit facility (SDF) and standing lending facility (SLF). Overall, developments in money market indicators were mixed in the review quarter,” it said.

     

  • ‘Only 12% of Nigerians is aware of mobile money’

    ONLY 12 per cent of Nigerians aged 15 and above is aware of mobile money, while less than one per cent of them use the platform, a group has said.

    The group, Financial Innovation & Access (EFInA), at a workshop on mobile money, said this was the outcome of its survey did with InterMedia.

    It said mobile money awareness and use was slightly higher in “Cash-less Phase II” states, such as Abia, Anambra, Kano, Ogun and Rivers states, and the Federal Capital Territory.

    According to the research, as at October, last year, only four per cent of adults use mobile money, while in the aforementioned states, debit, credit and pre-paid cards were the most widely known and used electronic payment instruments.

    Also, men used e-payments channels more than women.

    The experts said low customer awareness, lack of trust in mobile money, and unreliable cellphone networks remain barriers to the business.

    However, respondents in both studies also shared positive impressions of mobile money, saying they perceived mobile money to be fast, convenient, and safer than carrying cash.

    The Chief Executive Officer of EFInA, Modupe Ladipo said: “The financial services industry can drive uptake of mobile money by educating customers, providing reasonably priced products that meet customer needs, and creating the right incentives for both customers and mobile money agents.”

    Vice President, InterMedia, Peter Goldstein, said Nigeria has a higher percentage of bank account holders, but a lower percentage of mobile money users compared with other countries, such as Uganda and Kenya.

    Mr. Goldstein emphasised the need to educate potential customers about mobile money services, particularly regarding security measures that have been implemented to protect against theft and fraud.

     

  • Banks to decide limits, frequencies for naira cards

    Banks to decide limits, frequencies for naira cards

    TThe issuance of cards and guidelines for the naira, under review will, henceforth, be defined by each bank.

    The Central Bank of Nigeria’s (CBN) Director, Banking and Payment System, ‘Dipo Fatokun, said the limits would not exceed the total combined amount of foreign currency that each individual bank can access through Business Travel Allowance and Personal Travel Allowance, which is pegged at $150,000 per annum.

    In a circular to all deposit money banks, mobile money operators, switches and payment services providers, Fatokun said card users shall render monthly returns to the CBN on the volume of transactions and gross amount of transactions done internationally using their cards for inclusion in the national statistics on payments.

    He said power to issue the guideline was derived from Section 47 (3) of the CBN Act 2007, adding that all stakeholders who process, transmit, and or store cardholder information, should ensure that their terminals, applications and processing infrastructure comply with the minimum requirements for the sector.

    Fatokun said all terminals, applications and processing infrastructure should also comply with the standards specified by the various card schemes.

    He said only licensed banks with clearing capacity shall issue payment cards to consumers and corporations in the country, adding that banks without clearing capacity can issue in conjunction with those with clearing capacity. He said all banks should seek approval from the CBN for each card brand they wish to issue.

    The guidelines also stipulated that the cards issued can be ‘pay now’ such as debit and prepaid, or ‘pay later’ such as credit. He said the use channels, limits, and frequencies shall be defined by the issuing banks.

    It said an issuer should have risk management framework in place that enables it identify, measure, monitor, and manage the range of risks that arise or are borne by its operations.

     

  • We saw CRR hike coming, says Fidelity Bank CEO

    The Managing Director/CEO, Fidelity Bank Plc, Nnamdi Okonkwo, has said the lender took steps ahead of the Cash Reserve Ratio (CRR) hikes by the Central Bank of Nigeria (CBN) to ensure it was not caught unawares.

    He said the challenges were not new, adding that a similar policy was implemented over 24 years ago.

    He said in 1990, the Federal Government withdrew public sector funds and moved it to the apex bank.

    “That created some serious liquidity challenges. It’s just that this time around, it’s been long we had that level,” he said,” maintaining that in terms of liquidity, the CBN did not mince words over the years on what their focus was.

    In a statement, Okonkwo said: “At Fidelity Bank, we saw the hand- writing on the wall. We have been strong in commercial banking, retail and Small and Medium Enterprises over the years.That gave us some kind of stable liquidity, and if you notice, we are present in key commercial centres like Onitsha, Kano, Aba, and Port Harcourt.”

    He said the lender had decided to decongest its banking halls, taking advantage of the e-channels.

    ”Our electronic migration, which actually tried to measure if 100 people came to withdraw in our banking halls, what percentage of that is using electronic channels, and what percentage are using physical cash.

    “As at over a year ago, we are somewhere around 45 per cent, but today, we are 83 per cent and that means that for every N100 that is withdrawn through our system, 83 per cent is done through electronic channels,” he said.

     

  • Investment flows shaping economic growth

    Power, consumer and industrial goods, and the oil and gas sectors need substantial investments to thrive and galvanise activities in the economy. Investment inflows, banks’ asset-mix  are creating hope for renewed economic growth. Analysts spoke during the launch of Meritrade, an on-line stock trading platform by Meristem Securities Limited, in Lagos. COLLINS NWEZE reports.

    Reforms in the power sector are expected to trigger an influx of investments both locally and internationally, Managing Director, Meristem Securities, Oluwole Abegunde has said.

    He said the World Bank has indicated its interest to invest $1 billion in the power sector. International Finance Corporation, a member of the World Bank, is set to mobilise funds for one of the power generation firms and to support about three power distribution firms.

    In addition, the Federal Government has signed an agreement with Chinese firms to build $1.3 billion power plants in the country. Also, General Electric (GE) okayed a $1 billion deal with the Federal Government, starting with $250 million with the balance spread over five years in a multi-model service and manufacturing facility in Rivers State, thus making Nigeria a hub for servicing GE turbine generating machines in Africa.

    MTN Nigeria has also obtained $3 billion syndicated loan deal involving 17 Nigerian and seven foreign banks, as part of efforts to enhance its infrastructure and service delivery across the country. Abegunde said with the quantum of investments coming into the country, the impact on GDP from last year will be sizeable and should contribute to shifting the growth curve outwards.

    Abegunde said government remains the biggest spender in almost all global economies, and Nigeria is not an exception. For him, the level of spending recorded during the 2011 election would be repeated in the 2015 election year. He said such spending creates huge impact on the money and capital markets, which discerning investors can leverage on.

    He explained that from government spending, equities market activities, banking transactions and naira positions are critical in raising the level of activities in the economy.

    Govt spending will keep rising

    Analysts said government spending would rise ahead of the election year. For instance, the Federal Government consumption expenditure accounted for 26.8 per cent while private consumption expenditure and other components accounted for 50.5 per cent and 22.7 per cent in 2012.

    Also, government capital expenditure contributed 2.16 per cent to GDP while the recurrent expenditure contributed 8.2 per cent. The level of the government expenditure has grown by 6.87 per cent over the past five years (2008 to 2012) as against GDP growth of 6.27 per cent over the same period.

    “Assessing expenditure figures in 2010 and 2011 (pre-election and election years), we noted increased contribution of government’s expenditure to GDP. In second quarter of 2010, the government’s expenditure contribution to GDP increased by 30.29 per cent on a quarter on quarter basis and 22.55 per cent year-on year,” Abegunde said.

    Also, the fourth quarter of 2010 and first quarter of 2011 witnessed significant year-on-year increase of 31.74 per cent and 24.14 per cent as against the usual average year-on-year rise of 0.21 per cent (pre-election period from first quarter of 2009 to first quarter of 2010) and an average year-on-year decrease of -11 per cent (post-election period from fourth quarter of 2011 to fourth quarter of 2012), he said.

    Explaining further, he said in second quarter of 2010 and second quarter of 2011, the government expenditure contributed 35.88 per cent and 36.76 per cent to GDP quarterly was 31.48 per cent in pre-election period, 33.03 per cent in election period and 28.09 per cent in post-election period.

    He explained that with the imminent 2015 presidential and gubernatorial elections, the same impact will play out in the year as pre-election fiscal releases emerge.

    “In proposing a ‘winning’ strategy that delivers alpha, our strategy considers the potential risk inherent within the economic and financial landscape in Nigeria in years ahead owing to the uncertainties around the polity amongst other headwinds,” he said.

    Equities market expectations

    He said the equities market posted 47.19 per cent, which is the second highest returns in Africa, after Ghana’s 78.9 per cent. Major thrusts of this robust return include strong, though moderate corporate earnings and benefits, strengthened outlook on emerging and global economies as well as news flow on the United States quantitative easing tapering.

    He said the sector, consumer goods, industrial goods and oil and gas retained dominance in terms of returns and activities.

    He said with recovery in the global economy in sight, attractiveness of the domestic economy and expectation for sustained foreign portfolio investment inflow, with pockets of domestic political concerns and modest equities valuation, “we expect 6.56 per cent return for equities in 2014”.

    Abegunde also said myriad of factors, including reduced interest income and increasing operating costs last year, saw the sector record slower earnings growth which stood at 18 per cent as at September, last year, compared to the previous year when earnings growth averaged 100 per cent.

    “In our view, we expect banks’ asset-mix to tilt towards treasuries with the burgeoning infrastructure and power sector,” he said.

    Abegunde said last year was bad for the agricultural sector when compared with its 2012 performance, as declining commodities’ prices and insecurity in the north affected revenues.

    However, he said firms in the sector have made significant strides in cost efficiency projects, which are expected to yield in the year, even as commodities prices are expected to remain moderate. Also, the increased capacity by firms has led to new business lines which should also drive business performance in the year.

    Meritrade trading platform

    The Meritrade on-line platform with mobile apps will serve as a virtual stockbroking platform, helping users to trade on stocks on the Nigerian Stock Exchange (NSE) from anywhere.

    Abegunde said the innovation will offer investors control and convenience over their investments. According to him, “the Meritrade app will give users a unique experience, convenience and control over their investments. Our customers can n trade and manage their investments 24 hours daily, with their mobile devices without having to come to our office.’

    Abegunde explained that the portal is a do-it-yourself module that allows investors fill and submit account opening forms online and fund their accounts through their internet banking model or designated banks.

    He said the investors will monitor their investments online and can invest in shares and fixed income (bonds) even as they can also make withdrawal requests from their stock broking account online.

    At the launch, Mr. Oscar Onyema, Chief Executive Officer, NSE endorsed the Meritrade app as a reliable and convenient mode of trading on equities.

    He described it as an innovation, noting that it will encourage people from all walks of life, particularly the youth, including students, first- time employees and civil servants to invest in stocks.

    Onyema said: “In June 2013, while discussing technology and some of the NSE’s pillar for growth, I mentioned Mobile and Online trading as part of the next wave in our business development efforts. This position is rooted on the NSE’s realisation that the securities industry is largely driven by technology.

    “Speed, accessibility and robustness of technology systems are critical success factors of modern trading and the Meritrade platform has been demonstrated as one that provides the aforementioned.”

    Presenting the product’s overview, Mrs Gbadunola Sokunbi, the Divisional Head, Stockbroking, Meristem Securities, said the app will allow investors trade in shares and bonds from as low as N50,000. She explained that “to be eligible, interested people should have access to internet, e-mail address, an operational bank account, a moderate understanding of the stock market and a stockbroking account with Meristem Securities.’

    Coordinator, Independent Shareholders Association of Nigeria (ISAN) Sir Sunny Nwosu said investors were glad about the seamless nature of the portal. He said steps taken by Meritem Securities Limited will make it possible for investors to take quick investment decisions and earn better returns on their investments.

    Demography-backed growth

    Report by Meristem said wholesale and retail trade in Nigeria have been majorly driven by operations in the retail sector, which consists of packaged foods, mobile phones, clothing items, and other consumer goods. The sector is one of the major beneficiaries of the changing demography in Nigeria. It said Nigeria’s 170 million population is mainly composed of young people with median age estimated at 19.2 years.

    “With the introduction of the Structural Adjustment Programme in 1980 came the significant shrinking of the middle class as well as major supermarkets. However, since 2011, Nigeria has witnessed an expanding middle income population with channels for wholesale and retail distribution simultaneously rising to cater for their needs,” it said.

    Macro indicators

    The investment and research firm said key global and domestic macro indicators are set to be the pillars of our growth outlook for the year and in the medium-term.

    “While major indicators suggest a positive investment environment in 2014, we note the likely impacts of political tensions in the country as the 2015 elections draw closer. Notwithstanding, these macro factors support our optimistic case for Nigeria as a choice investment destination in 2014,” it said.

     

    Naira role in investment drive

    The report said given the sustained commitment of the CBN to defend the naira, the naira/dollar maintained a relatively stable rate of N156 at the official market for most part of 2013. The interbank and parallel markets opened the year at 0.3 per cent and two per cent premiums respectively to the official rate but closed at wider premiums of four per cent and 12 per cent.

    “Given pockets of observable inefficiencies in the system in 2013, CBN met most of these with stern policy actions. However, given the outlook on the global economy, the possible flow reversal and fiscal environment, the CBN is expected to maintain the current monetary stance for most of June -2014, but there are possible indications that exchange rate will trend up by December 2014,” it said.

    MPR was retained at 12 per cent last year as the CBN maintained its tight policy stance, given the political and fiscal environment. The apex bank has restated its intention to further tighten MPR. Based on the above and impact of policy action in the economy, MPR is expected to be retained for most of the year, or raised. However, uncertainties surrounding the successor of the acting CBN governor remain a concern.

    “Also, domestic output in 2014 is expected to expand by 6.65±0.2 per cent. This GDP growth is to be driven by increased consumer spending buoyed by higher urbanisation rate as well as rising middle class; increased government expenditure from pre-election fiscal spending; and increased FDI as well as local investment arising from favourable economic conditions in the country,” it said.

    Continuing, it said: “The political environment in the country is getting tenser by the day. Continued internal rancour within the ruling party coupled with the strengthening of the main opposition and the continued re-shuffling of the political game cards makes judgment about the political terrain in 2014 a premature and weighty one.”

     

     

  • Why we supported WATFON, by Sterling Bank

    Sterling Bank Plc has said its commitment to youth education and empowerment stimulated its continued support for ‘We are the Future of Our Nation’ (WATFON) project.

    Speaking at the eight edition of the WATFON programme held yesterday in Lagos, Sterling Bank’s Group Head, Strategy and Communications, Sina Atilola, said it remains an avenue for young Nigerians to meet and interact with accomplished professionals and national leaders.

    He said the bank supported the group because of its believe in the need to invest in the children’s collective future. He said the exercise is also in accordance with the bank’s corporate social responsibility focus.

    Atilola said theprovision of a platform for children to meet with accomplished Nigerians will further inspire the children to greatness. “We are also motivated by the need to promote financial literacy among students as such would prepare them into becoming good managers of finances that determines the child’s long-term financial security,” he said.

    Speaking on the programme, Principal Consultant, Edumark, Mrs. Yinka Ogunde said WATFON is grooming a generation of patriotic young people who have been tutored by Nigeria’s role models that also believe in the Nigerian dream. She advised the graduating students to be patriotic and learn positive things from the role models.

  • Meritrade online broking portal makes debut

    Meristem Securities Limited yesterday launched the Meritrade, an online stock broking platform that enables users to buy and sell shares of companies listed on the Nigerian Stock Exchange (NSE). Speaking at the product launch held at the Stock Exchange Building, Lagos, Managing Director, Meristem Securities Limited, Oluwole Abegunde said investors can key into the investment platform with initial deposit of N50, 000.

    He said investors also have the opportunity to monitor their investment account using the MeriTrade online portal using their mobile phones, tablets and laptops anywhere in the world.

    Abegunde explained that the portal is a do-it-yourself module that allows investors fill and submit account opening forms online and fund their accounts through internet banking model or designated banks. He said investors can monitor their investments online; invest in shares and fixed income (bonds) as well as make withdrawal requests from their stock broking account online.

    Chief Executive Officer of NSE Oscar Onyema said the Meritrade portal is part of the Exchange’s dream to adopt global best practices that would transform capital market operation in the country.

    He said the portal provides speed and security making mobile and online trading efficient and beneficiary to investors. Onyema said the NSE will give the product all the necessary support adding that he has no doubt that it will succeed.

    Coordinator, Independent Shareholders Association of Nigeria (ISAN) Sir Sunny Nwosu said investors are glad about the seamless nature of the portal. He said steps taken by Meristem Securities Limited will make it possible for investors to take quick investment decisions and earn better returns on their investments.

  • AMCON stabilises banks with N7.6tr

    The Asset Management Corporation of Nigeria (AMCON) has spent N7.6trillion through the Banking Sector Resolution Cost Fund (Sinking Fund) to stabilise the banking sector, a survey conducted by Financial Derivatives Company (FDC) Limited has revealed.

    The report titled: ‘AMCON: Leading Stabiliser Among Peer Countries’ released yesterday and endorsed by FDC Managing Director, Bismarck Rewane said the expenditure also included a carrying-cost for the banks. Rewane said the first in the series of AMCON bonds for the exercises have been redeemed without any systemic disruption.

    “The AMCON model of financial stabilisation involves a sinking fund set up by the banks to underwrite the funding cost of the detoxification of the system-wide risk asset portfolio. The total amount of the exercise including carrying cost is estimated at $47.5 billion (N7.6 trillion). The first in the series of bonds have now been redeemed without any systemic disruption,” he said.

    Rewane said the size of the banking crisis relative to the economy showed that 21 per cent of nominal Gross Domestic Product (GDP), 35.8 per cent of total banking assets and 71.6 per cent of total banking deposits were all at risk. He said banking systemic crisis in the country is historically a post devaluation phenomenon adding that the naira remains stable for approximately five to six years before a drastic adjustment.

    “The consequence of significant currency depreciation in a country with a high propensity to import cannot be overemphasised. The overvalued exchange rate is the most important factor price in Nigeria and source of elite subsidy. Thus, whenever there is devaluation, it almost leads to a sharp reduction in the exchange rate subsidy whilst magnifying the cross border risk impact on the risk asset portfolio of banks,” he said.

    He explained that in the past, when banks failed, Nigeria Deposit Insurance Corporation (NDIC) paid depositors after many years up to the maximum of its guarantee. The larger depositors, he said, lose their fortunes and savings leading to a flight to quality and more banks especially new ones become fragile and pushed closer to the borderline.

    He explained that the 2009 banking crisis was unique in that bank managements were sacked and the Central Bank of Nigeria (CBN) put in place interim management teams. “The AMCON option was post the interim management process. Therefore, AMCON as an institution was set up with a limited life as a tactical response to self and externally induced crisis. Therefore, AMCON will need to be a strategic institution that will serve the purpose of stabilising the banking industry through its peaks and troughs,” he said.

    The report which reviewed the operations of bad banks in five countries that cut across four continents globally. The countries include the United States, Sweden, Ireland, Malaysia and Nigeria.

    He said the countries were chosen based on their similarities with respect to the magnitude of the crisis, the spread, and duration of the crisis, but to name a few. “Based on this evaluation grid, AMCON was tied in first place with Malaysia, Sweden was third, the United States of America came in fourth and Ireland was fifth,” he said.

  • Sanusi’s suspension sparks investors’ fear

    Sanusi’s suspension sparks investors’ fear

    The Over-The-Counter (OTC) bond market has remained volatile in the last few weeks, reflecting foreign investors’ concerns over short-term naira outlook, analysts have said.

    Currencies analyst at Ecobank Nigeria, Olakunle Ezun, said the investors’ fears were fuelled by the suspension of the Central Bank of Nigeria (CBN) Governor Sanusi Lamido Sanusi.

    President Goodluck Jonathan had on February 20, suspended Sanusi. The suspension was based on reports of the Financial Reporting Council of Nigeria and other investigative bodies that accused Sanusi of financial recklessness and misconduct as well as far-reaching irregularities under his watch.

    The President nominated Managing Director Zenith Bank Plc, Godwin Emefiele as the new Central Bank Governor. The Central Bank Deputy Governor, Economic Policy, Dr. Sarah Alade is already serving as Acting Governor till Emefiele resumes.

    However, Sanusi has already gone to court to challenge his suspension.

    Expectedly, his suspension has led to varied reactions from stakeholders. Chairman, Nigeria Bar Association (NBA), Ikeja Branch, Monday Ubani said Sanusi has the right to challenge the President’s authority in court.

    “Going to court is not ruled out. And I must say that the President has to be careful. There are some people that believe that Sanusi is doing well. He may attract some sympathy or be seen as oppressed,” he said.

    He said what the President has done could create uncertainty and affect the economy negatively. “It may create ripple effect in the economy. The 2014 budget is not yet passed. Interest rate is high. So many things are not in order and the President is creating crisis of this nature,” he said.

    In an emailed report, Ezun said Sanusi’s suspension for alleged financial recklessness and misconduct caused a reaction in the market, which was more pronounced in the foreign exchange OTC market.

    However, the Debt Management Office (DMO) raised N90 billion ($572.6 million) last month through two re-openings of 13.05 per cent Federal Government of Nigeria (FGN) August 2016 and 10 per cent FGN July 2030 bonds. They were competitive, with over-subscription of 102 per cent on the three-year tenor. The stop rates were 13.49 per cent and 13.6 per cent.

    The naira weakened 3.6 per cent, highlighting significant apprehension and uncertainties over naira short-term outlook. It traded N170 to a dollar before CBN intervention doused the tension.

    At the inter-bank rate, the call/overnight and seven-day money market rates were at 11.5 per cent and 11.8 per cent. The three-month Nigeria Interbank-Offered Rate (NIBOR) was 12.5 per cent, though less activities were done on the tenor.

    Improved market liquidity, driven largely by treasury bills (OMO) repayment, monthly statutory (FAAC) inflows, and to a lesser extent lower inter-bank funding requirements helped to stabilise rate around the Monetary Policy Rate (MPR).

    He said the inter-bank secured lending (Open Buy Back) fell to 10.88 per cent. Meanwhile, the CBN liquidity management remained active, supported by the change to Cash Reserve Requirement (CRR) on public sector deposits on January 21.

    Also, the new foreign exchange regulation of January 31 and the circular issued on August 1, reviewing its guidelines for how banks access its Standing Lending Facility (SLF) window and Retail Dutch Auction System (RDAS) foreign exchange auction and the overall CBN’s monetary policy stance. Equally, given the market liquidity, and lower inter-bank funding requirements, rate might remain broadly steady throughout this week.