The Nation Newspaper

Tag: cbn

  • CBN okays 60% forex allocation to end-users

    CBN okays 60% forex allocation to end-users

    •MAN canvasses
    5% single-digit
    interest rate

    MANUFACTURES have commended the Central Bank of Nigeria (CBN) for directing all authorised dealers to henceforth dedicate to them at least 60 per cent of their foreign exchange purchases from all sources.

    Manufacturers Association of Nigeria (MAN) – their umbrella body – has been at the forefront of agitation for a special consideration and allocation of forex to the manufacturing sector.

    MAN’s President Dr Frank Udemba Jacobs told a news conference in Lagos yesterday that the policy will encourage the local indigenous investors in the export business and multinationals in the repatriation of their funds.

    The old policy, according to him, prevented local and foreign investor from bringing back their export proceeds.

    He renewed the call of the Federal Government to reconsider its policy on the banned 41 items classified as raw materials, describing them as raw materials and machineries that keep the factories running.

    Jacobs, who regretted that more than 56 companies have closed shop following the ill-advised policy, called for the removal of essential raw materials that cannot be sourced locally from the list.

    He said: “The government should create a special interest rate regime for manufacturers at a single digit of not more than five per cent if we truly want to reflate the economy.

    “We will encourage our members not to bid too high as the new policy will help our members to determine the value of the naira henceforth. Government should indeed subsidise interest rate for manufacturers as they are the engine of growth for any economy.

    “The new policy will also encourage our members to engage in backward integration, import substitution and the realignment of operations in line with present economic realities.”

    The MAN chief also canvassed the recapitalisation and proper funding of the Bank of Industry (Bol). According to him, the government should channel all its intervention funds through the bank which he noted, has  the capacity to manage such funds, judging from  the bank’s interactions with the Small and Medium Enterprises (SMEs) and large corporations.

    On if manufacturers will not abuse the new policy of granting them 60 per cent forex, Jacobs said that no genuine manufacturer will engage in round-tripping.

    On the emergency powers proposal to enable the President fix the economy, Jacobs urged the National assembly to act with dispatch, noting that “the economy is in a sorry state and need urgent solutions to fix it.

    He said some of the powers being sought such as granting of 50 per cent as advance payment to contractors as against the current 10 per cent will rejuvenate the economy and check cases of project abandonment.

    Jacobs commended the request to compel the government to patronise made-in-Nigeria products to check unbridled importation of imported materials, noting that if adhered to, the manufacturing sector will grow and boost the comatose economy and also check job losses.

    He said: “Nigeria must buy made in Nigeria goods to boost the economy and   stimulate the manufacturing sector. I must stress that most of our members are affected as a result of the 41 items and except they are addressed, the moribund companies may not come back.

    “However, the forex challenge is not the only problem manufacturers encounter daily but other issues such as power, multiple taxation and dearth of infrastructure needs to be addressed holistically before all the troubled  firms  can bounce back will come back.”

     

  • TSA: CBN bars nine banks from forex

    TSA: CBN bars nine banks from forex

    The Central Bank of Nigeria (CBN) on Tuesday banned nine deposit money banks (DMBs) from the foreign exchange market, for hiding over $2 billion belonging to  the Nigerian National Petroleum Corporation (NNPC) from the Treasury Single Account (TSA).
    The President Muhammadu Buhari has been briefed on the breach by the banks, and they have all been mandated to move the monies to the TSA before any consideration for their re-entry into forex trading.
    On Monday, the banks came under fire from the apex bank which accused them of engaging in round tripping and threatened punish them for doing so.
    In a circular addressed to authorised dealers titled: Re: Transactions in ‘Free Funds’ by Authorised Dealers’, signed by its Acting Director, Trade & Exchange, W.D. Gotring, the apex bank accused banks of buying and selling forex without following stipulated guidelines.
    “The CBN has noticed that some Authorised Dealers have continued to buy and sell foreign exchange referred to as ‘free funds’ despite the provision of the circular of March 4, 2004 on the subject,” he said and cautioned the lenders that their action was a breach of extant regulations.
    “Against the background, authorised dealers are to note that dealing in foreign exchange without appropriate documentation, which includes relevant entries, blotters, physical documents and non-disclosure to the Regulatory Authorities is a breach of extant regulations”.
    He stressed that as provided for in the laws and regulations governing dealings in foreign exchange, authorised dealers shall not sell foreign exchange without appropriate documentation and disclosure to the regulatory authorities, irrespective of the source of the funds.
    “Accordingly, authorised dealers shall deal in eligible transactions only, and not engage in any foreign exchange transactions on terms inconsistent with the extant laws and or regulations,” he said.
    The banks, further findings showed, are engaging in round-tripping, taking advantage of the huge forex gaps between the official and the parallel markets.
  • CBN to punish banks for illegal forex transactions

    CBN to punish banks for illegal forex transactions

    Apex bank levels round tripping allegations

    Banks were yesterday hit with allegations of round tripping.

    Acting Director, Trade & Exchange, W.D. Gotring, in a circular to authorised dealers titled: Re: Transactions in ‘Free Funds’ by Authorised Dealers’,  accused banks of buying and selling forex without following stipulated guidelines.

    “The CBN has noticed that some Authorised Dealers have continued to buy and sell foreign exchange referred to as ‘free funds’ despite the provision of the circular of March 4, 2004 on the subject,” he said.

    He cautioned the lenders that their action is a breach of extant regulations. “Against the background, authorised dealers are to note that dealing in foreign exchange without appropriate documentation, which includes relevant entries, blotters, physical documents and non-disclosure to the Regulatory Authorities is a breach of extant regulations”.

    He reiterated that as provided in the laws and regulations governing dealings in foreign exchange, authorised dealers shall not sell foreign exchange without appropriate documentation and disclosure to the regulatory authorities, irrespective of the source of the funds.

    “Accordingly, authorised dealers shall deal in eligible transactions only, and not engage in any foreign exchange transactions on terms inconsistent with the extant laws and or regulations,” he said.

    The banks, further findings showed, are engaging in round-tripping, taking advantage of the huge forex gaps between the official and the parallel markets.

    The naira yesterday closed at N305.50 to dollar in the interbank market, but was exchanging at N398 to dollar in the parallel market/ black market, hence creating huge temptations for greedy lenders to exploit. This structural defect is exploited by authorised dealers (banks) to make huge trading profits, but it weakens the naira.

    The naira yesterday closed firmer on the interbank market after the CBN sold dollars to some commercial lenders towards the end of a session that featured no trades in the first four hours, traders said.

    The naira was 0.81 percent firmer than its Friday close. The CBN has been selling dollars almost daily to boost liquidity and support the naira

    About 20 to 25 per cent of the volume of forex traded in the country is from autonomous sources, usually diverted into the parallel market through round-tripping.

    Also, the CBN directed authorised dealers to sell 60 per cent of all sourced forex to manufacturers.

    Gotring said: “Following the review of returns on the disbursement of foreign exchange to end users, it has been observed that negligible proportion of foreign exchange sales are being channelled towards the importation of raw materials for the manufacturing sector”.

    “Against this background and in order to address the observed imbalance, authorized dealers are hereby directed to henceforth dedicate 60 per cent of their total foreign exchange purchases from all sources, interbank inclusive, to end users strictly for the purposes of importation of raw materials, plant and machinery. The balance of 40 per cent should be used to meet other trade obligations, visible and invisible transactions,” Gotring said in a statement.

  • Banks defy CBN’s order on dollar sales to BDCs

    Banks defy CBN’s order on dollar sales to BDCs

    Commercial banks are defying Central Bank of Nigeria’s (CBN’s) directive for them to sell $50,000 weekly from Diaspora remittances to bureau de change (BDCs), President, Association of Bureau De Change Operators of Nigeria (ABCON) Aminu Gwadabe said yesterday.

    In a statement, the ABCON boss said only 10 per cent of BDCs from the Lagos market have so far accessed dollar from banks since the CBN gave the directive nearly three weeks ago. The banks that are so far involved in the dollar sales include FirstBank, Ecobank Nigeria, Fidelity Bank, United Bank for Africa and Unity Bank. Others are Diamond Bank, Zenith Bank and Stanbic IBTC Bank.

    Gwadabe regretted that BDCs in Port Harcourt, Kano, Abuja, Onitsha, Maiduguri, Benin and Enugu are yet to get a single dollar from these banks.

    He said that the banks are also selling between N345 and N355 to dollar, far above the interbank rate of N305 to dollar exchange yesterday. The banks, he added, are supposed to sell to the BDCs on the same day within the week, but have failed to do so. “Instead of staggering the payment, the banks should sell to the BDCs on the same week day, so that the impact will be felt in the market. We also want the CBN to licence more International Money Transfer Operators (IMTOs) to deepen the market,” he said.

    “Our members across the country have funded their accounts since two weeks ago but the banks are not selling to them. The BDCs that met the CBN’s policy guidelines on the disbursement and cleared by the banks have still not received a dime from the banks,” he added.

    Gwadabe also called on the CBN to outsource the dollar distribution role to independent distributor since the banks have failed in their assigned role.

    “I think the banks are compromising the policy and CBN’s directive on the matter. And like I said earlier, since the banks are not co-operating, I expect the CBN to take that role from them and assign it to a reputable independent distributor,” he advised.

    The CBN had directed through a circular to authorised dealers that all agents to approved IMTOs sell foreign currency accruing from inward money remittances to licensed BDCs.

    It said the foreign currency proceeds of IMTOs sold to BDC operators shall be retailed to end users in accordance to CBN regulation. Also, only BDCs that have been cleared by the compliance department of the banks as fully compliant with the Know Your Customer (KYC) requirement were allowed to buy. The CBN issued a follow-up circular to all the banks, asking them to sell $50,000 weekly to BDCs.

    The directive was meant to ensure stability of the exchange rate and encourage participation of critical stakeholders in the foreign exchange market.

    The CBN said a BDC shall nominate its preferred authorised dealer, a commercial bank, and can only procure the said amount from only that bank of its choice in a week. The CBN warned that any breach of this condition will attract appropriate sanction.

    Speaking further on the Diaspora remittances, Gwadabe said: “The proceed of the international money transfer fund, is not CBN money. It is not from the foreign reserves of the CBN. This is money that Nigerians in Diaspora, are sending into the economy. Before, this money come through unofficial means, some sending through hands, and at the end of the day, the beneficiary will not even get the money”.

     

  • CBN, IFC, CBAN to host conference

    The Credit Bureau Association of Nigeria (CBAN) will be hosting its third National Credit Reporting Conference with the theme: “Credit bureaux and access to finance: Nigeria’s success story” on Wednesday.

    Chairman of the association, Mrs. Jameelah Sharrieff-Ayedun, said this year’s conference coincides with the 25th anniversary of credit reporting in Nigeria and it’s the third edition of the national conference series.

    The Credit Bureau Association of Nigeria was established to promote the use of credit reporting in Nigeria, access to finance, execution of policies favorable to the health of the financial system and to promote the interests of credit bureaux.

    According to Mrs. Sharrieff-Ayedun, the gathering provides the opportunity to evaluate the successes recorded over the 25-year period and achievements of credit reporting in Nigeria. Credit Bureaux have been stimulating economic growth through the provision of critical risk management and fraud prevention services to the financial services sector, and the promotion of regulations and policies that have generally improved access to finance for households and the real sector of the economy.

    Central Bank of Nigeria (CBN) Director, Banking Supervision, Mrs. Tokunbo Martins, who will be speaking on an analysis of the guidelines on licensing and operations of credit bureaux: its relevance to the Nigerian financial sector, said the conference is expected to bring industry leaders together to forge a common front towards financial system stability through adequate monitoring and improved access to finance.

     

     

  • Ibom Power gets CBN’s endorsement as it celebrates 150 days without forced outage

    Ibom Power Company (IPC) has been lauded by the Central Bank of Nigeria (CBN) for the effective utilisation of the CBN-Nigerian Electricity Market Stabilization Facility (CBN-NEMSF).

    The company was a third batch beneficiary of the facility disbursed about a year ago under the N213Bn CBN-NEMS Facility.

    In a testimonial on utilisation of the fund at the nationally televised 4th tranche disbursement ceremony which held in Lagos, it was noted that the CBN-NEMS Facility aided improvement of Ibom Power operations.

    The fund was utilised to implement Ibom plant capacity recovery through the completion of Unit 2 and black startwhich has increased total available capacity to 155MW.A Dead Bus closure technology was also installed in Ibom Power Unit 3 which has improved plant operations including stability on the grid.

    Ibom Plant Unit 2 is capable of restarting the National Grid during system collapse which is a regular occurrence.

    Speaking at the event which had the Minister of Power, Works, and Housing, Mr. Babatunde Fashola in attendance, the Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, said the CBN-NEMSF was implemented “to address shortfalls in the power sector”.

    He expressed the CBN’s commitment to support the power sector in solving the electricity supply challenges in the country.

    Meanwhile, Ibom Power Company has celebrated the milestones of attaining 155MW available capacity and 150days without forced outage.

    The 150 days and counting means that Ibom power plant supplied power to Akwa Ibom State, Aba and Calabar  every day for 150 days.

    The additional available capacity is due to the completion and testing of Unit 2 with about 40Megawatt (MW) capacity.

    With the completion of Unit 2, Ibom Power is well positioned as a major player in ancillary services market ready to offer spinning reserve and black start services.

    This accomplishment has added extra generation capacity to address the country’s severe power needs. It is also a major step in Governor Udom Emmanuel’s industrialisation initiative.

  • Skye Bank not distressed, says CBN

    Skye Bank not distressed, says CBN

    The Central Bank of Nigeria (CBN) has defended the liquidity position of Skye Bank Plc, saying the lender is neither distressed nor liquidated.

    In a statement, its Acting Director, Corporate Communications, Isaac Okorafor, said the regulator was drawn to the content of a message urging customers of Skye Bank to withdraw their deposits or transfer them to other banks.

    The message alleged that  Skye Bank has been liquidated by the apex bank.

    “The CBN wishes to state, and emphatically so, that it has not liquidated Skye Bank or any other deposit money bank for that matter. The bank also wishes to reiterate its earlier assurance that Skye Bank is not in distress and remains a healthy bank in the Nigerian banking system. Indeed, the health of the Nigerian banking system remains strong, all banks in Nigeria are safe and depositors have no cause to fear over their deposits.

    “While it will be recalled that Skye Bank had corporate governance challenges, the CBN has since taken proactive steps to resolve the issues identified. Indeed, the CBN is satisfied with the efforts of the new management to reposition Skye Bank for effective service delivery. Accordingly, customers of Skye Bank and other stakeholders are advised to disregard any message purporting a liquidation of the bank.”

  • CBN raises BDCs weekly dollar sales to $50,000

    CBN raises BDCs weekly dollar sales to $50,000

    The Central Bank of Nigeria (CBN) yesterday increased banks’ weekly Diaspora-related foreign exchange (forex) sales to Bureaux De Change (BDCs) from $30,000 to $50,000.

    Addressing reporters after the Bankers’ Committee meeting in Abuja, the Group Managing Director/CEO of United Bank for Africa (UBA) Plc, Kennedy Uzoka, said the increase was to ensure that more operators have access to the dollar.

    He said it would also enable more people get enough dollars to pay school fees abroad and procure Business Travel Allowance (BTA) and Personal Travel Allowance (PTA).

    Members of the committee urged BDCs to approach banks and apply for forex. They said the decision was not a reversal of the committee’s earlier policy, but meant to ensure that the country surmounts its currency crisis.

    Acting CBN Director of Corporate Communications Isaac Okorafor said the apex bank “will now monitor strictly to ensure that people do not abuse the process”.

    Reacting, Association of Bureau De Change Operators of Nigeria (ABCON) President Aminu Gwadabe  expressed surprise at the increase at a time he said banks were finding it difficult to meet the $30,000 limit.

    Many of the banks, he said, were not even selling to BDCs, but preferred to return the cash to the CBN because of the limited time they can hold the funds. “We should be happy that the volume has been increased but unfortunately, the majority of the BDCs in Port Harcourt, Kano, Benin and other states are not getting the funds,” he said.

    Gwadabe said the BDCs started funding their accounts since last week, adding that many of them could not even access $10,000 weekly let alone $30,000 or now $50,000.

    He said the banks had not even sold dollars to the BDCs they cleared for complete documentation, adding that only 10 out of 100 cleared BDCs got the fund.

    The practice, he said, made it difficult for the naira to appreciate noting that the local currency exchanged at N388/ N390 to the dollar yesterday.

    The CBN, he said, should include the BDCs in the Bankers’ Committee meetings to ensure that their voices were heard.

    CBN’s Director of Banking Supervision Mrs. Tokunbo Martins said a decision was taken at the end of the committee’s meeting to start disbursing the special intervention fund to support primary agricultural projects and core manufacturing.

    She said: “The CBN took from the bank’s cash reserves called the special intervention fund, that fund has been with the CBN for some time.”

    This special intervention fund, she said, would be “for projects that support import substitution, projects that will help protect foreign exchange such that whatever we were importing before can be manufactured.”

    This fund, she added “will be released to this kind of projects, it will not be released to any kind of project and once these funds are released there will be some ease on the system and there will be more liquidity; so important projects will get financing at a lower single digit interest rate.”

    Martins said the decision to get banks to write off their Non-Performing Loans (NPLs) was not  arbitrary,  adding “only NPLs that have been fully provided for in the books for the banks are those that can be written off and not an arbitrary right off of NPLs.”

    Zenith Bank Managing Director Peter Amangbo said in keeping with the coming celebration of World Savings Day, all banks in Nigeria will break into different groups to cover all the local government areas to sensitise those at the grassroots on the need to save massively.

    Amangbo said the exercise “is to grow the pool of funds available for lending and the need to save.”

    The Zenith Bank boss noted: “There will always be disparity in savings and interest rate stressing,” that the gap is not as wide as people think it is and the longer people save the more interest they will earn.

    On CBN’s directive to banks to open savings account with zero amount, Amangbo said the decision was not new, adding that it has been in effect for about two years now. According to him, “there are lots of accounts that can be opened with minimal documentation.”

    On the need to have bank branches in all parts of the country, Amangbo said: “You don’t need brick and mortar branches any more because mobile apps are now game changers as a result there is no need to have branches in local government areas (LGAs).

     

  • CBN, NAICOM disagree on bancassurance

    CBN, NAICOM disagree on bancassurance

    The Central Bank of Nigeria (CBN) and the National Insurance Commission (NAICOM) have disagreed on terms and conditions for the operation of bancassurance for the banking and insurance industry.

    As a result, NAICOM has directed all insurance companies to stop transacting business on bancassurance where they pay Commission/fees to Banks for Insurance transactions, referral or introduction in any guise with the banks.

    Th Commissioner for Insurance, Mohammed Kari made this known while speaking at the Insurance Distribution Channels at the investiture of Eddie Efekoha,  as the 22nd Chairman of the Nigeria Insurers Assocaition (NIA), held yesterday at Eko Hotels & Suites, Victoria Island, Lagos.

    Kari warned that insurance companies utilising, or intending to utilise any institution, including banks, airlines, online or web-based aggregators shall ensure that those institutions have been licensed by the Commission, as they have resolved to ensure strict compliance with the rules, adding that   appropriate sanctions will be imposed on erring insurance institutions.

    He stated that the Commission is making all efforts to libralise the channels of distribution.

    He said: “This became necessary because distribution play a key role in the propagation and marketing of insurance products to the consumers. Licensing such channels is imperative to protecting the consumers and also to ensure  ethical and orderly practice  in  protecting the credibility of the insurance sector which is the principal mandate of the Commission.

    “However, the employment of such channels can only be utilised if that institution is licensed by the Commission in line with the provisions of the extant law. It is the licensing of those distribution channels that would authorise them to sell, distribute, refer or introduce insurance products through another licensed Insurance entity to their customers and earn a fee or commission.

    “As you aware, the Commission has been in discussion with the Central Bank on the Bancassurance distribution channel for sometime now. But in a letter received last week, the CBN asserted that NAICOM is not in a position to licence Banks and thus we cannot go ahead with the arrangement for now. However, NAICOM would continue to engage the CBN until all the grey areas are resolved, Kari said.

  • Shareholders, analysts praise CBN for banking sector stability

    Shareholders, analysts praise CBN for banking sector stability

    Shareholders and public affairs analysts have  praised  the Central Bank of Nigeria (CBN), for taking measures to stabilise and safeguard the banking sector.

    President, Renaisssance Shareholders’ Association, Olufemi Timothy, who spoke on the role of the apex bank, said the CBN acted wisely and proactively in the last couple of years to protect shareholders.

    He urged Nigerians to decry negative rumour making the rounds, insisting that CBN’s interventions over the years ensured that no bank is distressed. He said such interventions have preserved shareholders’ interest and value.

    “I can tell you authoritatively that our banks are strong and safe. Despite the global economic recession, and the attendant effect on the financial system, our banks are robust and healthy. The apex bank’s interventions have strengthened our banks”, he said.

    It would be recalled that the CBN, had on July 4, 2016 intervened and re-constituted the Board of Skye Bank Plc following the voluntary resignation of some members of the former Board, with the new Board swinging into action.

    The CBN subsequently extended guarantees to depositors funds and other trading instruments of Skye Bank in the interbank market to boost operators’ confidence in the bank.

    As a mark of renewed confidence in the board and management of the bank, some state governments, notably Lagos threw its weight by entering into a strategic partnership with the bank, followed by renewal of Internally Generated Revenues mandates from others states like Bauchi, Nasarawa, Kano among others.

    Similarly, a renowned economist, Dr. Biodun Adedipe praised the resilience of Nigerian banks in the face of a tough operating environment.

    Adedipe, who is also the Lead Strategist at Adedipe & Associates, said recent reports from the apex bank have confirmed the position of analysts that the banking industry is stable and safe. He said the CBN demonstrated good judgment by intervening where necessary, adding such interventions have strengthened the industry.