The Nation Newspaper

Tag: cbn

  • CBN to sanction banks denying forex access to SMEs

    CBN to sanction banks denying forex access to SMEs

    The Central Bank (CBN) threatened on Friday to sanction banks denying Small and Medium Enterprises (SMEs) access to foreign exchange (Forex) from the newly instituted SMEs Forex Window.

    The window which opened about two weeks ago is designed to help SMEs import eligible finished and semi-finished items not exceeding $20,000 for an enterprise per quarter.

    Speaking on the sideline of the ongoing IMF/ World Bank Spring Meetings in Washington, CBN Acting Director, Corporate Communications, Isaac Okorafor, said appropriate sanctions are spelt out by the   CBN Act and the Banks and Other Financial Institutions Act (BOFIA).

    He said staff and even chief executives of banks could be punished where necessary.

    The CBN spokesman said the apex bank has already received series of complaints from bank customers, especially those that operate in the SMEs segment of the market that banks are frustrating their efforts at getting forex.

    Okorafor said some entrepreneurs still complain that banks are frustrating their efforts at obtaining forex for their eligible imports after the stipulated 48 hours.

    He said the regulator has reviewed the complaints and discovered they are not evidence-based.

    He appealed to bank customers and the SMEs to “please give us concrete evidence against these banks so that we can hold them responsible by way of sanctions.”

    He added: “Get a photocopy of your Form Q, Form X, Form A or Form M. Give us the name of the bank, branch and send to us and we will deal with them as example to others.

    “The only way we can make things better for Nigerians is for them to call the CBN whenever they are in trouble or whenever, or are getting frustrated by banks.

    “We have a number you can call or you send an email to our Consumer Protection Department. We want to urge everyone who is frustrated by banks to call and lay complaints. We assure you that you will get redress.”

  • CBN disburses $100m to interbank market

    CBN disburses $100m to interbank market

    •Banks buy $68.51m

    The Central Bank of Nigeria (CBN) again yesterday carried out spot, wholesale interventions in the interbank FOREX market by offering a total sum of $100m to authorized dealers to meet the 7 to 15-day forwards requests of customers.

    The latest intervention was confirmed by the Acting Director, Corporate Communications Department, CBN, Mr. Isaac Okorafor, who, however disclosed that the banks and authorized dealers were only able to pick up $68.51 million.

    Okorafor attributed the inability of the authorized dealers to fully subscribe to the CBN to a surfeit of forex in the system, which may lead to further appreciation of the naira.

    He also disclosed that the CBN will on Thursday, April 20, 2017 continue its sale of $20,000 to Bureax de Change (BDCs) for onward sale to small-end users.

    According to him, the trend monitored by the Bank indicated that deposit money banks are now able to meet the forex demands of their customers within the time frame stipulated by the CBN.

    Speaking further, Okorafor said feedback on the Bank’s forex new window for Small and Medium Enterprises (SMEs) in the country revealed that majority of the small importers were heading for a major boost in their activities. This he said was responsible for the current appreciation of the Naira, stressing that the Naira will continue to gain strength with the relentless efforts of the CBN to  to supply the market with forex.

    The spokesman also reiterated the determination of the CBN to continue to intervene in the various sectors of the interbank forex market in order to guarantee access to all categories of customers requiring forex for legitimate obligations and ultimately ensure stability in the forex market.

  • IMF advises CBN to adopt flexible exchange rate

    IMF advises CBN to adopt flexible exchange rate

    • Seeks fiscal policies adjustment to oil price fall

    The International Monetary Fund (IMF) yesterday released its World Economic Outlook (WEO) in which it advised Nigeria to adopt flexible foreign exchange regime to restore values of revenues and the naira.

    Speaking at a media briefing to unveil the report at the ongoing IMF/World Bank Spring Meetings in Washington D.C, its Chief of World Economic Studies Division, Oya Celasun, said the economy can benefit, if exchange rate regime allows for adjustment.

    She also challenged Nigeria and other African countries to adjust their fiscal policies, in line with the continued drop in crude oil prices.

    “Fiscal policy has to adjust to new realities of oil price fall, even though it is a difficult adjustment. It requires coherent of policies. In many cases, that should be achieved by focusing more on domestic revenue mobilisation and to some extent, by rationalising expenditures,” she said.

    Celasun said there was also broader need to diversify the economy away from basic commodities for growth, such as crude oil to achieve sustainable growth.

    Also speaking at the press conference, its Economic Counsellor/ Director of Research, Maurice Obstfield, said the Fund will continue to engage governments in emerging markets, but added that it was hard to be optimistic because of the challenges faced by such economies.

    He said each African country remains different in terms of economic challenges they face, and such problems will require diverse solutions.

    He projected that world economy will grow at 3.5 per cent this year, up from 3.1 per cent last year, and 3.8 per cent in 2018.

    He said despite the signs of growth, many countries will continue to struggle this year with growth rates significantly below past readings. “Commodity prices have firmed since early 2016, but at low levels, and many commodity exporters remain challenged- notably in the Middle East, Africa, and Latin America. At the same time, a combination of adverse weather conditions and civil unrest threaten several low-income countries with mass starvation,” he said.

    According to him, income growth could fall slightly short of population growth in sub-Saharan Africa, but not by nearly as much as last year.

    Extracts from the WEO showed that while chance growth will exceed expectations in the near term, significant downside risks continue to cloud the medium-term outlook, and indeed may have intensified since IMF’s last forecast.

    It said commodity exporters, including Nigeria, will account for most of the projected pickup in emerging market and developing economy growth in 2017–19, even though their projected growth recovery is relatively modest compared with the striking decline in their growth rates over the past five years.

    It said the negative impact of the large decline in Chinese growth on aggregate growth in emerging market and developing economies is  attenuated by China’s rising weight in the group, which reflects a growth rate substantially above most of the rest of the group.

    The report said share of the 1.6 percentage point decline in growth between 2011 and 2016 is attributable to the drastic slowdown in Nigeria, an oil exporter that in 2016 accounted for more than 20 per cent of purchasing- power-parity GDP of low-income countries and about half of the GDP of commodity exporters in emerging markets.

  • CBN pumps $280m to BDCs, SMEs, as naira appreciates

    CBN pumps $280m to BDCs, SMEs, as naira appreciates

    The Central Bank of Nigeria (CBN) yesterday sustained its liquidity boosting measures in the foreign exchange market with the injection of $280 million into bureaux de change (BDCs), SMEs and other segments of the economy.

    The naira appreciated by 1.2 per cent to N405/$ in the parallel market on news of a 300 per cent increase in dollar supply to BDCs to $40, 000 per week.

    Retail commodity prices have remained relatively unchanged as manufacturers capitalize on margins. The fear of an exchange rate reversal continues to haunt traders, who are now taking precautionary steps by increasing inventory level

    The regulator also began implementation of $20,000 weekly sale to licensed BDCs and announced the opening of bids for offering $100 million wholesale 7-45 days forwards through the Deposit Money Banks (DMBs).

    A breakdown of the intervention shows that invisibles such as Basic Travel Allowance, Personal Travel Allowance, medical bills and tuition received $80 million, while the Small and Medium Enterprises (SMEs) window received $100 million. Together with the wholesale bid auction, the bank, on Tuesday, sold $280 million into the market.

    The CBN’s spokesman, Isaac Okorafor, confirmed the releases, disclosing that the new window for SMEs would no doubt boost the business of SMEs through the importation of eligible finished and semi-finished items, thereby boosting FOREX supply to the retail business segment of the market.

    Okorafor further explained that the CBN introduced the use of FORM Q for the SMEs, which requires just basic documentation, to ease their documentation challenges usually encountered by this category of businesses. He reiterated that SMEs are allowed to purchase $20,000 per quarter on this arrangement.

    He restated that the new form, which must be completed by all SME applicants, requires the applicant to fill the form with a supporting application letter as well as beneficiary invoice and bank wire transfer. According to him, eligible applicants must have operated their bank accounts for a minimum of six months. On the sale of forex to BDCs, the bank said the decision was taken to ensure that the high volume demand by low-end users are met promptly.

    Meanwhile, with the intervention of the CBN in the various aspects of the market, analysts are of the view that the naira will strengthen against other major currencies of the world in the forex market this week and beyond.

    While urging market participants to abide by the rules to ensure the preservation of our external reserves, stability of our financial system, and growth of our economy to the benefit of all Nigerians, the Bank’s spokesman warned that the CBN would neither tolerate unscrupulous actions nor hesitate to bring serious sanctions on offenders, be they banks or their staff.

  • CBN vows to sustain forex liquidity

    CBN vows to sustain forex liquidity

    The Central Bank of Nigeria (CBN) has vowed to sustain liquidity in the foreign exchange market with the injection of $280 million into various sectors of the market.

    The CBN has also commenced its weekly $20,000 sale to licensed Bureaux de Change (BDCs) and further announced the opening of bids for offering $100m wholesale 7-45 days forwards through the Deposit Money Banks (DMBs).

    A statement from the CBN on Tuesday gave a breakdown of the intervention indicating that “invisible such as Basic Travel Allowance, Personal Travel Allowance, medical bills and tuition received $80 million, while the Small and Medium Enterprises (SMEs) window received $100 million. Together with the wholesale bid auction, the CBN, on Tuesday, sold $280 million into the market.”

    The Bank’s spokesman, Isaac Okorafor, confirmed the releases, disclosing that the new window for SMEs would no doubt boost the business of SMEs through the importation of eligible finished and semi-finished items, thereby boosting FOREX supply to the retail business segment of the market.

    Okorafor further explained that “the CBN introduced the use of FORM Q for the SMEs, which requires just basic documentation, to ease their documentation challenges usually encountered by this category of businesses. He reiterated that SMEs are allowed to purchase $20,000 per quarter on this arrangement.”

    He restated that the new form, which must be completed by all SME applicants, “requires the applicant to fill the form with a supporting application letter as well as beneficiary invoice and bank wire transfer.”

    According to him, eligible applicants must have operated their bank accounts for a minimum of six months.

    On the sale of forex to BDCs, the Bank said the decision was taken to ensure that the high volume demand by low-end users are met promptly.

    While urging market participants to abide by the rules to ensure the preservation of our external reserves, stability of our financial system, and growth of our economy to the benefit of all Nigerians, the Bank’s spokesman warned that “the CBN would neither tolerate unscrupulous actions nor hesitate to bring serious sanctions on offenders, be they banks or their staff

  • Liquidity boost to BDCs narrows exchange rate gap, says Gwadabe

    Liquidity boost to BDCs narrows exchange rate gap, says Gwadabe

    Alhaji Aminu Gwadabe,  the President of Association of Bureau De Change Operators of Nigeria (ABCON), says  lower exchange rate gap is due to liquidity boost to the BDCs sector.
    Gwadabe told the News Agency of Nigeria (NAN) on Tuesday in Lagos that the increase in the weekly volume of foreign exchange offered to BDCs  had seen the reduction in the exchange rate gap from N418 to N403 to the dollar.
    “The review of volumes upward of the proceeds of International Money Transfer Services Operators (IMTSOs) and the removal of disparity in applicable exchange rates is impacting the rates positively,’’ Gwadabe said.
    The ABCON chief said that the naira rebounded to an all time low of N360 from N520 to the dollar at the onset of the CBN’s injection of liquidity to the inter-bank market.
    He, however, said that it was surprising that the gains of the injection of over 1.5 billion dollars by the CBN could not last for more than two weeks in spite of liquidity boost to the banking sector.
    “The naira witnessed another somersault to a new high of N420 to the dollar in spite of the liquidity boost to the banking sector,’’ he said.
    Gwadabe said that all these were happening at a time when the banks were returning most of their purchases for invisible from the CBN on the premises of poor customer patronage and resistance.
    The president of the association said that the CBN was left with the only option of using the BDCs to ensure the renewal of confidence in the foreign exchange market.
    He said that the apex bank’s move was also to check the renewed onslaught by speculators, parallel market operators and currency hoarders.

    Gwadabe said the BDCs were collaborating with the CBN and the security agencies to ensure the stability of the naira, adding that the naira might strengthen further during the week.

  • N60b UBE funds idle in CBN, says UBEC chief

    N60b UBE funds idle in CBN, says UBEC chief

    •States’ inability to pay matching grant hinders access

    About N60 billion Universal Basic Education (UBE) fund meant to be accessed and used for the growth of basic education by states is lying idle with the Central Bank of Nigeria, Executive Secretary, Universal Basic Education Commission Dr. Hamid Bobboyi has said.
    The matching grant, which is an intervention fund disbursed by the Federal Government to states through the Universal Basic Education Commission (UBEC) is meant to support the development of basic education and implementation of UBE scheme.
    Bobboyi, who spoke at a meeting with education correspondents in Abuja, said the inability of many states to access the intervention fund had hampered the growth of basic education.
    According to the statistics obtained from the commission on the un-accessed matching grant from 2005 to 2016 as at March 31, only two states had so far accessed last year’s grant.
    The states are Borno and Rivers. Ebonyi is the least performed state in terms of access and utilisation of the fund as it has about N4 billion un-accessed fund with UBEC.
    Other states include: Ebonyi, Enugu and Ondo with over N3 billion each un-accessed. Bayelsa, Niger, Ogun, and Oyo, each have N2.8 billion un-accessed fund lying idle with the Central Bank of Nigeria.
    He said: “On the issue of matching grant to states, if we provide N1billion to a state, the state is expected to bring its own N1billion and this expands the resource base available to the basic education sector.
    “This is the reason why I feel very worried that after the Federal Government pays its own matching grant, the state would withdraw its own counterpart fund.
    “This is not only against the law, but it negates the entire arrangement that is made in terms of the partnership between the states and the Federal Government.”
    Bobboyi lamented that besides refusal to access the fund, some governors were involved in illegal diversion of their states allocation.
    He said five states were involved in illegall withdrawal of their counterpart funds after the Federal Government released the matching grant to them.
    Besides, he said the commission noticed and closed down the accounts of some states, which placed the funds on fixed deposit .
    The UBEC boss added that some outgoing governors allegedly moved the money from the account of the states’ Universal Basic Education Boards (SUBEBs) to the states’ main accounts against the law, thereby creating confusion in the system.
    This, he said, created problems for incoming governors. In some cases, UBEC had to ask for the return of the money before such a state could access fresh allocation.
    “There are many states that were involved in the withdrawal of funds over a period of time. We don’t go out to embarrass anybody but we take action. The kind of action we take is that if we noticed gross violation, we close down the matching grant account, we freeze it and then ask the state to come and tell us exactly what had happened with the fund,” Bobboyi said.
    He, however, said some of these infractions had been minimised with the coming of the President Muhammadu Buhari administration.
    The UBEC boss, who hailed some governors for their achievements in basic education, lamented that there were serious challenges, including payment of salaries.

  • CBN denies knowledge of Ikoyi loot

    CBN denies knowledge of Ikoyi loot

    The Central Bank of Nigeria (CBN) has washed its hands of the controversial N15 billion Osborne Towers, Ikoyi, Lagos cash haul.
    CBN spokesman Isaac Okorafor told The Nation that the apex bank did not know the source of the money.
    Okorafor said the CBN issues serial currencies to banks which are at liberty to give such currencies to their clients.
    “I do not know the source of the money; we (CBN) only issue currencies to banks which then transmit the currencies to their customers,” Okorafor said.
    Operatives of the Economic and Financial Crimes Commission (EFCC), acting on a tip-off on Wednesday, stormed an apartment at Osborne Towers, Ikoyi Lagos where they found $43,449,947, £27,800 and N23,218,000 stacked inside a fireproof safe.
    The discovery has generated controversies over who the owner of the fund is as well as the owner of the apartment where it was found.
    The Nation reported on Monday that “when the EFCC began the investigation of some Politically Exposed Persons (PEPs), it traced the movement of the cash to NIA account. Instead of seeking explanation from the Director-General of NIA, Ambassador Ayo Oke, the EFCC wrote directly to the Central Bank of Nigeria (CBN) to demand the details of the transactions on the said account.
    “In fact, the documents obtained from CBN included other sensitive operations and overhead. The NIA took exception to it. When President Muhammadu Buhari intervened, he saw all the records that neither NIA DG nor any staff benefited from the said funds.”
    There have been questions on the money. Why did NIA not share intelligence about the money with other agencies? If the cash was for operations two years ago, why was it lying idle in the apartment? Shouldn’t the huge cash have been kept at the Central Bank?
    President Muhammadu Buhari is said to have asked the EFCC and the NIA to file briefs on the discovery to the Attorney-General of the Federation.
    Rivers Governor Nyesom Wike accused his predecessor Rotimi Amaechi of being the owner of the money, saying it was part of the proceeds of the state’s turbines, which were sold. He threatened to launch a legal battle to secure the cash and urged residents to pray for its return.
    Amaechi denied owning the money and the apartment in which it was recovered. He has threatened to sue those who linked him to the matter.

  • CBN policies at the core of economic recovery

    CBN policies at the core of economic recovery

    The Central Bank of Nigeria, CBN, holds the key buttons to the success of the Federal Government Economic Recovery and Growth Plan (ERGP), which should redistribute and diversify our crude oil earnings into building a robust private sector (primarily small and medium scale businesses) as the backbone of our economy.

    Expanding the local economy involves these basic areas: 1. Job Creation. 2. Private sector growth in small and medium businesses (SMBs) – Food and agro-allied industries, Construction (infrastructure and real estate) which are the backbone sectors of economic development. 3. Quality/Standard of Living. 4. Local Production Capacity. So, are the current CBN policies geared towards achieving the aforementioned and supporting sustained economic recovery?

    For the CBN to play this crucial role it also requires the collaboration of FGN owned financial institutions – Bank of Agriculture, Bank of Industry, Bank of Infrastructure, Federal Mortgage Bank of Nigeria, FMBN, etc. and other financial institutions, to cause a major transformation and expansion of our economy and complement the FGN thrust. Rather, the CBN, with high interest rates is contracting the economy and stunting growth.

    In addition, the FGN owned financial institutions are running bureaucracies that ensure limited or no access to credit for SMBs, which has further exacerbated the negative economic situation. Our policymakers should note that no nation has ever achieved sustainable real economic growth with double digit interest rates. So, the Economic Team and CBN must therefore think out of the traditional, theoretical economic box, bringing uniquely innovative and creative ideas, as the Asian Tigers and China did, to carve out our own success story that will form the new body of future economic work.

    Furthermore, no economy has achieved real growth by discouraging borrowing and blocking access to credit and financing for SMBs. This is even more serious in our peculiar situation, where over 50% (estimates) of the businesses and the working population are informal; reducing inflation cannot be achieved and should therefore, not be priority. Our policy thrust should be to expand the local productive capacity by encouraging SMBs in the real sectors.

    On the currency market area, the method of shoring up the Naira by dumping foreign currencies in the market is not a sustainable policy, as the source is finite, unpredictable and unreliable. In addition, the discriminatory policy regime for the exchange rate encourages corrupt practices such as “round tripping”, so No preferences, whatsoever, should be given for foreign currency purchases.

    Indeed, if the lower interest rates are given to businesses in the real sectors, there will be no need to give them any preferences for foreign currency purchases.

    In order to accelerate our development in general, I wish to propose a radically different approach to the FGN: Eliminating Capital Expenditure, CAPEX, for infrastructure development from its annual budget and transferring it to the CBN and other FGN owned financial institutions, including the responsibility for obtaining borrowed funds, both local and foreign, ensuring its utilisation and repayment, so that the Federal Ministries will only perform administrative and oversight functions. This process will become even more efficient when CAPEX involves borrowed funds, domestic or external. The implication is that the FGN annual budget will only deal with administration, education, foreign affairs and security. This is a revolution that will gut corruption and improve efficiency!

    In operating this system, the FGN owned financial institutions, will initiate borrowing guaranteed by the CBN, who will house such proceeds and release Naira to them. Lending in Naira at very low interest rates will be to SMBs involved in agriculture and related industries, construction (infrastructure and real estate), manufacturing and other real sectors. The CBN shall sell the foreign currencies through the commercial banks and bureau de change, causing availability for currency stabilisation, with no preferences to any individual, business or sector. I believe it is absolutely essential for this change to be made, as it will greatly increase accountability, reduce corruption (round tripping and mismanagement) and the politicisation of critical development projects.

    It is against this background that the full impact and value of these key institutions: Bank of Agriculture, Bank of Industry, Bank of Infrastructure, Federal Mortgage Bank of Nigeria, FMBN, Nigerian Import Export Bank, NEXIM and Nigerian Mortgage Refinance Corporation, NMRC, would be appreciated. These development institutions, given strict targets, should be the primary drivers of our economic recovery and sustained development. If the FGN is not confident in the capacity of their boards and management, which explains their under usage, then they should change them, as these institutions are fundamental to the success of the ERGP and our nation.

    Finally, I have proposed these non-traditional, unconventional policy approaches in line with the peculiar disposition of the Nigerian economy and her corruption index, with some bend to pragmatic capitalist and socialist economic policies.

    On the side of economic history, real economic development and growth have been accelerated mainly through small and medium businesses, where some grew into large businesses, even multinational corporations. These businesses are the engine for employment, redistribution and recycling of funds to the larger population in a myriad of ways. The Four Asian Tigers, Hong Kong, Singapore, South Korea and Taiwan, are classic cases for review. Their uniquely creative economic policy ingenuity, which blossomed into unprecedented growth and prosperity, that transformed their economies in less than 30 years, remains a concrete point of reference.

    China is even more significant, as it made adjustments to straddle between her communist political structure and the Asian Tigers’ model of capitalism to deliver a unique economic innovation and model, whose success remains unparalleled in economic development history!

    Our economic policymakers must therefore, wean themselves of the Western Colonial Complex Mentality, WCCM, and reach within, to structure our own contribution to further economic thought and theory,  derived from a combination of our peculiar circumstances and various other approaches!

    • Aniagolu is Managing Partner, Fit Consult Limited (Finance, Investment & Trade Consult Ltd)
  • CBN: Banks breach forex borrowing limit

    CBN: Banks breach forex borrowing limit

    The Central Bank of Nigeria (CBN) yesterday said some commercial lenders have breached its regulatory limit of foreign currency borrowings due to the recent fall in the value of the naira.

    In a remedial action, the regulator increased the foreign currency borrowing limit for lenders to 125 per cent of their respective shareholders’ fund from 75 per cent previously, it said in a new circular quoted by Reuters.

    The apex bank also said that banks failed to take all $100 million foreign exchange (forex) allocations it offered.

    The demand for forex by authorized dealers seems to have slumped, as the dealers were only able to pick $45 million out of the $100 million offered by the apex bank on wholesale spot.

    Industry experts have attributed the slump in demand to the rate of forex liquidity being pumped into the system by the CBN, noting that it is only a matter of time before the dollar begins another round of crash. The experts also attributed the new trend to the general cash crunch in the financial system.

    The dollar has also crashed against major currencies since US President Donald Trump’s surprising declaration that China is not manipulating the value of the yuan.

    In a chat with newsmen, the Acting Director of Corporate Communications at the CBN, Isaac Okorafor, said the major injections made by the Bank in the course of the week were aimed at providing access to all stakeholders with legitimate need for forex.

    “The CBN remains upbeat that the forex market will remain liquid and that Nigerians who genuinely require the forex will get ample access to the currency,” Okorafor noted.