The Nation Newspaper

Tag: cbn

  • Stakeholders urge CBN to liberalise forex market

    Stakeholders urge CBN to liberalise forex market

    Stakeholders in the financial services industry have urged the Central Bank of Nigeria (CBN) to  liberalise the foreign exchange (forex) market and allow the naira to float freely.

    This is coming amid concerns that CBN’s decision to stop banks from selling dollars to bureaux de change  (BDCs) and the clampdown on BDCs for selling dollar above N400 may worsen the exchange rate at the parallel market.

    Though the naira has weakened by 36 per cent since June to around N310 per dollar in the official market, investors believe the exchange rate is still being controlled by CBN.

    This has led the FMDQ Over-the-Counter (OTC) exchange to announce the suspension of the FMDQ interbank spot rate, replacing it with the CBN spot rate until the general market structure becomes more credible and transparent.

    The naira has fallen to N460 from N335 on the black market in that period as businesses struggle to access foreign exchange from their banks. The depreciation occurred despite continuous intervention by the CBN almost on weekly basis, in the market.

    FMDQ Over-the-Counter Securities Exchange Chief Executive Officer, Bola Onadele, accused the CBN of using “strong moral suasion” to prevent the naira from depreciating to a market-related level, and called on the regulator to let the currency float freely.

    “The average daily turnover in the spot market used to be $1 billion and now it’s less than $100 million. I don’t believe the parallel market is illegal any more. We have inadvertently legitimised it through some of our actions. It may no longer be as small a market as we used to think. If you have $1,000 to convert to naira, will you sell it at 315? No rational person will do that. You’ll sell to a bureau de change and get N460,” Onadele, a former chief dealer at Citigroup Inc’s Nigerian unit,  told Bloomberg.

    “No one believes the N305 price of the naira on their screens,” Onadele said, “That devaluation risk is still there. It would only melt away when the market establishes a credible price formation on the back of transparent trading operations by the banks. We need to have proper price discovery.”

    Afrinvest West Africa Managing Director, Ike Chioke, said his expectations of further fragmentation of the forex market and a liquidity constraint at the parallel market materialised last week as black market operators refused to sell dollars at the regulatory mandated rate of N400/$1 but willing to buy at N395/$1.00, most likely to hoard.

    However, he said the naira/dollar rate at the underground parallel market for operators willing to defy regulatory directives on rate traded between N455/$1 and N465/$1 without liquidity constraints.

    Chioke said dollar scarcity at the official market was reaffirmed by drop in daily forex turnover to about $1 billion, while approximately $100 million was recorded as unmet demands.

    “Accordingly, investor sentiment remained depressed by currency risk as liquidity crunch lingers.  Performance at the parallel market however improved as the naira firmed against the dollar on all trading days of the week amidst reports of dollar sales to Bureau De Change operators by Travelex. Parallel market rates closed at N460 to dollar,” he said.

    Meanwhile, security agents have continued to raid the offices of black market currency dealers, detaining some dealers and ordering others to sell dollars at a lower rate in a bid to break the fall of the currency, dealers said.

    “The police and state security service officials are raiding black marketers in Lagos and Abuja to compel an appreciation of the naira,” Mallam Adamu, a bureau de change operator, said.

    Another trader said security agents visiting BDCs told dealers not to sell dollars for more than N395 but that only created more anxiety in the market, with fears that the practice may worsen exchange rate worries.

    “We’ve stopped buying dollars from just anybody that walks into our shop due to the harassment from security agents and a directive from our association,” said a dealer, who asked not to be named.

     

  • Equities hit 7-month low as CBN holds rates

    Nigerian equities yesterday slipped to their lowest values in the past seven months as the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) decided to retain the benchmark interest rate at 14 per cent. The MPC concluded its two-day meeting yesterday and decided to maintain status quo, implying no change in key monetary policy instruments.

    With the decision of the apex bank, the Monetary Policy Rate (MPR) remains at 14 per cent, with asymmetric window of +200 and -500 basis points while Cash Reserve Ratio (CRR) and Liquidity Ratio (LR) remain at 22.5 per cent and 30 per cent respectively.

    Benchmark indices at the Nigerian Stock Exchange (NSE) dropped for the eighth consecutive trading session as investors continued to sell down their portfolios to cushion the generally tough cash crunch in the country.

    The All Share Index (ASI), the main index that tracks prices at the NSE, dropped by 0.15 per cent from its opening index of 25,499.00 points to close at a seven-month low at 25,461.34 points. The average year-to-date return thus worsened to -11.11 per cent.

    With 17 losers to 11 gainers, aggregate market value of all quoted equities on the NSE also dropped by N13 billion from N8.778 trillion to close at N8.765 trillion. Oil majors continued to lead the downtrend. The NSE Oil & Gas Index dropped by 2.5 per cent. The NSE Consumer Goods Index declined by 0.02 per cent while the NSE Industrial Goods Index and NSE Insurance Index closed flat. However, the NSE Banking Index recorded a modest gain of 0.05 per cent.

    Total Nigeria remained atop the losers’ list with a loss of N13.45 to close at N255.58. Forte Oil also retained its second position with a loss of N8.05 to close at N74.62. PZ Cussons Nigeria dropped by 50 kobo to close at N14.49. Nascon Allied Industries lost 36 kobo to close at N7.19 while Eterna dropped by 25 kobo to close at N2.90 per share.

    Total turnover improved slightly by 7.6 per cent to 120.93 million shares valued at N1.19 billion in 2,397 deals. Diamond Bank was the most active stock with a turnover of 18.33 million shares worth N16.56 million. Access Bank followed with 14.64 million shares valued at N80.76 million. Transnational Corporation of Nigeria placed third with a turnover of 13.7 million shares valued at N9.2 million.

    On the positive side, Mobil Oil Nigeria topped the gainers’ list with a gain of N5 to close at N195.01. Flour Mills of Nigeria followed with a gain of 85 kobo to close at N17.85. Champion Breweries rose by 19 kobo to close at N2.45. Africa Prudential Registrars added 13 kobo to close at N2.78 while Guaranty Trust Bank chalked up 6.0 kobo to close at N21.06 per share.

    Market analysts had generally predicted retention of rates by the apex bank but the absence of additional guidance on the management of the current foreign exchange structure further unnerved the stock market, where foreign portfolio investors hold significant stakes.

    Analysts at Afrinvest Securities noted that the failure of the MPC members to give any guidance or market-friendly opinion on the current administrative structure of the foreign exchange left investors in the wilderness.

    “Thus, with no end yet in sight to the pegged exchange rate regime, we believe sentiment for equities would remain weak in the short to medium term,” Afrinvest Securities stated.

  • Bankers Committee, CBN plan N1.7tr agric funding

    The Bankers’ Committee has unveiled plans by the Central Bank of Nigeria (CBN) to commit N1.7 trillion intervention funds into five agric sector projects to support the government’s economic diversification agenda.

    In a report released at the weekend, the committee said the funds, disbursed through commercial banks, were meant to stimulate development of various agricultural value chains from primary production to market access with multiplier effects on the economy.

    It also called for continuous awareness around Nigerian banks’ efforts and most importantly educating the public on available opportunities and gains of active participation in the ongoing efforts to support government’s drive to diversify the economy.

    The committee said the scheme also highlights its commitment to CBN’s economy diversification project. The funding plans, it added, would also support small, medium and commercial/large scale agriculture and help government achieve its economy diversification plans.

    The committee listed some of the schemes under the CBN’s intervention plans as the Agricultural Credit Guarantee Scheme (N69 billion), Commercial Agricultural Credit Guarantee Scheme (N200 billion), the Nigerian Incentive-Based Risk Sharing System for Agricultural Lending (N200 billion), and Small and Medium Enterprises Credit Guarantee Scheme (N200 billion) among others.

    It explained that aside the funds created by the CBN, the Deposit Money Banks (DMBs) have also set up agriculture desks in their respective organisations signaling a renewed commitment to support and sustain the growth of the sector.

    The committee report also said the Nigerian banking system plays the important role in promoting economic growth and development through the process of financial intermediation. “One of the more recognised ways of creating jobs, reducing poverty and achieving economic growth and development is by the timely extension of credit to the to the agricultural sector through the activities of Deposit Money Banks (DMBs),” it said.

  • CBN denies knowledge of Forex Act Amendment

    The Central Bank of Nigeria (CBN) says it has no plans to amend the Foreign-Exchange Act to provide for the imprisonment of anyone who holds foreign currencies, particularly the United States dollars, for more than 30 days.

    A statement from the CBN on Monday  in Abuja said the apex bank “has nothing to do with such.”

    The Acting Director, Corporate Communications of the CBN, Isaac Okorafor, stressed that “the CBN, in line with its mandate, was committed to safeguarding the international value of the country’s legal tender currency.”

    He then denied knowledge of the proposed clause recommending a jail term for as long as two years or a fine of 20 per cent of the amount for any holder of foreign exchange in cash.

    According to him, “to the best of my knowledge, the Central Bank of Nigeria (CBN) has not proposed any bill seeking to arrest and jail persons holding foreign exchange for more than 30 days.”

    He also denied that the CBN was planning to confiscate funds in domiciliary accounts of individuals, saying any such claim was false.

    There have been speculations  suggesting that the Federal Government and the Central Bank of Nigeria were considering imprisoning anyone who holds foreign currencies, particularly the United States dollars, for more than 30 days as a way of stemming the volatility in the exchange rate and strengthen the international value of the Naira.

  • CBN launches ABP to boost local production

    CBN launches ABP to boost local production

    When he launched the Central Bank of Nigeria (CBN) initiated Anchor Borrowers’ Programme (ABP), President Buhari expressed high hopes that the scheme would lift thousands of small farmers out of poverty and create millions of jobs even as he expressed high hopes.

    CBN Governor Godwin Emefiele said the apex bank’s concern was about the huge foreign exchange being spent on the importation of food items that could be produced locally.

    According to him, the allocation of foreign exchange to the importation of items such as rice, wheat, milk and fish, among others, had contributed greatly to the depletion of the nation’s foreign reserves, especially in the face of low oil revenue resulting from falling oil prices.

    He said the ABP aims at creating economic linkages between over 600,000 small holder farmers and reputable large-scale processors with a view to increasing agricultural output and significantly improving capacity utilization of integrated mills.

    This, he noted, would close the gap between local rice production and domestic consumption levels, as well as complement the Growth Enhancement Support (GES) Scheme of the Ministry of Agriculture by graduating GES farmers from subsistence farming to commercial production.

    According to him, the CBN has set aside N40 billion from the N220 billion Micro, Small and Medium Enterprises Development Fund for farmers at a single-digit interest rate of nine per cent.

    Under the programme, the apex bank is setting aside more than N20 billion for disbursement as loans to boost rice and wheat production in 14 participating states at 9.0 per cent single digit interest rate per annum.

    The states are Kebbi, Sokoto, Niger, Kaduna, Katsina, Jigawa, Kano, Zamfara, Admawa, Plateau, Lagos, Ogun, Cross-Rivers and Ebonyi.

    Agriculturalists, nonetheless, urged government to involve the private sector in the implementation processes of the ABP to ensure its sustainability.

    They also proposed that indigenous and multinational companies operating should be made to set aside a certain percentage of their profits to fund the programme.

    Stakeholders have predicted a boost in local rice production in the coming years due to the increase in rice acreage, number of rice crops, and improvement of productivity courtesy of the CBN anchor borrowers’ programme.

  • Bankers Committee, CBN in N1.7tr funding plan for agric

    The Bankers’ Committee has disclosed plans by the Central Bank of Nigeria (CBN) to commit N1.7 trillion intervention funds into five agric sector projects to support government’s economy diversification agenda.

    In a statement at the weekend, the committee said the funds, disbursed through commercial banks, were meant to stimulate development of various agricultural value chains from primary production to market access with multiplier effects on the economy.

    It also called for continuous awareness around Nigerian banks’ efforts and most importantly educating the public on available opportunities and gains of active participation in the ongoing efforts to support government’s drive to diversify the economy.

    The committee said the scheme also highlights its commitment to CBN’s economy diversification project. The funding plans, it added, would also support small, medium and commercial/large scale agriculture and help government achieve its economy diversification plans.

    The committee listed some of the schemes under the CBN’s intervention plans as the Agricultural Credit Guarantee Scheme (N69 billion), Commercial Agricultural Credit Guarantee Scheme (N200 billion), the Nigerian Incentive-Based Risk Sharing System for Agricultural Lending (N200 billion), and Small and Medium Enterprises Credit Guarantee Scheme (N200 billion) among others.

    It explained that aside the funds created by the CBN, the Deposit Money Banks (DMBs) have also set up agriculture desks in their respective organisations signalling a renewed commitment to support and sustain the growth of the sector.

    The committee report also said the Nigerian banking system plays the important role in promoting economic growth and development through the process of financial intermediation. “One of the more recognised ways of creating jobs, reducing poverty and achieving economic growth and development is by the timely extension of credit to  the agricultural sector through the activities of Deposit Money Banks (DMBs),” it said.

    “The agriculture sector contributed 22.5 per cent to Nigeria’s overall Gross Domestic Product (GDP) in the second quarter of this year and real agricultural GDP growth for the period was 4.53 per cent (year-on- year), data from the National Bureau of Statistics (NBS) showed”.

    Continuing, it said the Commercial Agriculture Credit Scheme (CACS) showed that tremendous progress has been recorded under the scheme. For example, from inception in 2009, a sum of about N266.025 billion has so far been released to the economy through 20 participating banks funding about 347 projects.

    “The analysis of the number of projects financed under CACS by value chain showed that out of the 347 CACS-sponsored projects, production accounted for 57.06 per cent while processing accounted for 33.14 per cent, followed by marketing, storage and input supplies. A total of 29,046 jobs were also created comprising of 11,717 direct and 17,329 indirect jobs. Also, five out of the 310 private projects are owned and managed by women,” it said.

    The committee said Union Bank of Nigeria and United Bank for Africa (UBA) are some of the banks that have demonstrated huge commitments to agricultural financing, with both offering agricultural micro-loans to farmers in the country.

    “Union Bank has over a sustained period of time provided revolving micro credit to rural farmers as a means of driving investment in the agriculture sector while UBA in 2009, floated the largest private sector funding scheme of N50 billion to support agriculture and agro-processing industries in Nigeria and targeted at all segments of the agriculture chain, from small and medium scale farmers to large, industrial farming projects in poultry, fishery, crop cultivation, production, plantation, farm machinery, and hire services,” it said.

  • Sultan of Sokoto commends CBN’s rice initiative

    Sultan of Sokoto commends CBN’s rice initiative

    The Sultan of Sokoto, Alhaji Sa’ad Abubakar III, says the Central Bank Nigeria (CBN), Anchor Borrowers’ Programme has boosted local rice production.

    The Sultan spoke at the launch of the dry season wheat farming and distribution of wheat seeds to farmers under the Anchor Borrowers’ Programme, in Isa Local Government Area of Sokoto State.

    Mr Isaac Okorafor, Director, Corporate Communications, CBN, via a statement issued on Sunday in Abuja, said the Sultan commended the CBN for making dry season farming possible.

    The Sultan enjoined farmers to continue to be diligent in their farming activities as oil would only provide funds but would not put food on the table.

    He harped on the need for partnership among all levels of government in order to end the farmers and herdsmen crisis.

    He stated that inability to resolve the crisis could frustrate government’s efforts at food security.

    Kebbi Governor, Alhaji Abubakar Atiku Bagudu, said that tremendous success had been achieved since the launch of the Anchor Borrowers’ Programme.

    Bagudu who is also the Chairman, Presidential Task Force on Rice and Wheat, revealed that where farmers have benefited from the programme, their yields increased tremendously.

    The governor said that adequate funding would guarantee diversification and transformation of the agricultural sector to ensure sufficient rice production in the country.

    Gov. Aminu Tambuwal of Sokoto State, said that almost 85 per cent of the state’s estimated population of about five million were engaged in farming as their main occupation.

    Tambuwal disclosed that with the advent of the Anchor Borrowers’ Programme, 12,000 wheat and 25,000 rice farmers had been registered.

    He said that the state government would continue to pursue policies to ensure the improvement of agriculture and its value chains.

    CBN Governor Godwin Emefiele, said that President Muhammadu Buhari’s administration was committed to reduce heavy reliance on imported food into the country.

    He commended the Sokoto State Government for meeting its equity counterpart funding, noting that the state could now access the N220 billion Commercial Agriculture Credit Scheme (CACS).

  • ‘CBN, SEC, PTDF, others didn’t remit N450b’

    ‘CBN, SEC, PTDF, others didn’t remit N450b’

    The Central Bank of Nigeria (CBN), Petroleum Technology Development Fund (PTDF), National Agency for Food and Dr ug Administration and Control (NAFDAC), Nigerian Television Authority (NTA),  the Securities and Exchange Commission (SEC), among others have been accused of failing to remit about N450billion  operating surpluses.

    To recover this funds, the  Ministry of Finance has constituted a committee.

    The committee, led by the Accountant-General of the Federation, Alhaji Ahmed Idris, was mandated to reconcile the operating surpluses of 31 revenue-generating agencies of government between 2010 and 2015.

    A statement from the Ministry of Finance endorsed by Festus Akanbi, Special Assistant, media to the Finance Minister, Mrs Kemi Adeosun, explained that “the findings of the committee so far, have shown under-remittance of over N450 billion, which accrued within the period.”

    The Finance Ministry said  workers at the Office of the Accountant-General of the Federation have critically reviewed the accounting statements of the agencies. It added that the Committee will therefore be inviting the management of the affected agencies to explain why their operating surpluses were not remitted as mandated by the Fiscal Responsibility Act 2007.

    Some of these agencies, the ministry lamented, “have incurred huge expenses on overseas training and medicals, and huge expenses on behalf of supervisory ministries and/other organs of government involved in oversight or regulatory functions without appropriate approval.”

    Other infractions include payment of salaries and allowances to workers and board members, governing councils, and commissions which are outside or above the amount approved by the Revenue Mobilisation and Fiscal Allocation Commission (RMFAC) and the National Salaries, Income and Wages Commission.

    The list also includes unacceptable expenses incurred on donations, sponsorships, and others; unfavourable contract signed for revenue collection by a third party; granting of loans to workers that have not been repaid as well as sale and transfer of assets to board members, among others.

    According to the Finance Ministry, the overall effect of these practices is that operating surpluses of these agencies are lower than should be.

    As a result of this, Mrs. Adeosun has directed the Accountant-General of the Federation to issue a circular that will limit allowable expenses that can be spent as part of measures to ensure that these agencies face strict monitoring.

    This development, the statement explained, is part of the resolve of the minister to ensure that leakages are blocked.

  • Heritage Bank not in distress, says CBN

    Heritage Bank not in distress, says CBN

    The Central Bank of Nigeria (CBN) yesterday gave Heritage Bank Limited a clean bill of health. The apex bank in a statement dismissed speculations going rounds that the commercial bank which only last year, acquired Enterprise Bank Limited, was having financial difficulties and unable to meet depositors’ payment needs.

    A report by an online publication had alleged that Heritage Bank Limited is unable to meet its customers’ immediate withdrawal requests and has wiped out all foreign currency domiciliary accounts through physical theft of cash by the bank’s directors.

    The report further alleged that the lender is facing infighting at the board level which adversely affects its ability to function affectively.

    But a statement signed by CBN’s Acting Director, Corporate Communications, Isaac Okorafor, described the report against Heritage Bank as malicious and false.

    “The attention of the Central Bank of Nigeria (CBN) has been drawn to false and malicious stories on the social media insinuating that Heritage Bank is under financial distress and therefore unable to discharge its obligations to its depositors. We wish to state that Heritage Bank is not in distress and as such its depositors should go about their transactions without fear,” the statement said.

    Continuing, Okorafor said no Nigerian bank was in distress. “For the avoidance of doubt, we wish to further state that no Nigerian bank is in distress. The CBN, as the industry regulator, has a duty to depositors, in particular, and the economy, in general, to ensure the soundness of all financial institutions,” he stated.

    The CBN’s spokesman therefore assured all depositors of the safety of their deposits. “The CBN also wishes to state that it will remain alive to its responsibility of ensuring banking system stability and soundness through constant monitoring and supervision of all licensed institutions. The Central Bank of Nigeria wishes to reiterate that the banking system remains resilient enough to weather the current economic storm,” he said.

    Also, Divisional Head, Corporate Communications at Heritage Bank, Olusola Longe-Okenimkpe said: “Whilst we acknowledge the challenging operating environment currently experienced in all sectors of the economy, Heritage Bank remains financially stable and has continued to discharge its obligations to all customers and stakeholders. This position is buttressed by the commendable results posted by the bank in the past financial year and the last three quarters of 2016, resulting in shareholder approvals to list its shares on the Nigerian Stock Exchange within one year of its business combination with the erstwhile Enterprise Bank Limited”.

  • Heritage Bank not distressed, says CBN

    Heritage Bank not distressed, says CBN

    The Central Bank of Nigeria (CBN) has denied claims that Heritage bank is in distress.

    The CBN in a statement issued on Tuesday in Abuja and signed by Isaac Okorafor, Acting director, corporate communications of the bank said the apex bank’s attention has “been drawn to false and malicious stories on the social media insinuating that Heritage Bank is under financial distress and therefore unable to discharge its obligations to its depositors.”

    The CBN, he said “wish to state that Heritage Bank is not in distress and as such its depositors should go about their transactions without fear.”

    The CBN spokesman further stated that no Nigerian Bank is in distress and that “the CBN, as the industry regulator, has a duty to depositors, in particular, and the economy, in general, to ensure the soundness of all financial institutions.”

    The CBN also stated that it will remain alive to its responsibility of ensuring banking system stability and soundness through constant monitoring and supervision of all licensed institutions. 

    Isaac Okorafor reiterated that “the banking system remains resilient enough to weather the current economic storm.”