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  • CBN pays N105bn caution fees to BDCs

    CBN pays N105bn caution fees to BDCs

    The Central Bank of Nigeria (CBN) yesterday said it will refund caution deposits worth N105 billion to nearly 3,000 registered bureau de change (BDC) operators.

    A circular signed by CBN Director, Financial Policy & Regulation, Kelvin Amugo, said the decision was reached following recent development in the operations of BDCs in the economy, prompting the apex bank to refund the mandatory caution deposit of N35 million each to all BDC operators.

    He, however, said the regulator will retain the N1 million licensing fee paid by each of the operators. Amugo urged the eligible BDCs to apply for refund of their caution deposit, attaching evidence of payment and bank transfer details.

    President, Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadabe, told The Nation that the cash refund is a welcome development.

    He said the refund plan is an indication that the CBN has finally shut its doors to the BDCs. He said since the caution deposits were to enable operators access the official forex window, the stoppage of dollar sales to BDCs by the CBN means the funds should be refunded.

    Gwadabe said the operators are still awaiting CBN’s modalities on accessing the autonomous forex market to enable them continue in business.

    He said the funds will go a long way in boosting the capacity of operators to stay in business and source funds from other sources.

    The CBN Governor Godwin Emefiele had announced  a new foreign exchange (forex) policy that includes the stoppage of weekly dollar sales to BDCs.

    “The bank (CBN) would henceforth discontinue its sales of foreign exchange to BDCs. Operators in this segment of the market would now need to source their foreign exchange from the autonomous source. They must, however, note that the CBN would deploy more resources to monitoring these sources to ensure that no operator is in violation of our anti-money laundering laws,” Emefiele said at news conference on the review of the contentious forex policy at CBN’s Abuja head office.

  • CBN to refund mandatory caution deposits to all BDCs

    CBN to refund mandatory caution deposits to all BDCs

    The Central Bank of Nigeria (CBN) Friday opted to refund the N35 million Mandatory Caution Deposits to the Bureaux De Changes (BDCs) as part of the strategy to curb the excesses of the BDCs  and stop the free fall of the Naira

    But the apex bank will retain the N1 million licensing fee collected from the BDCs.

    The  CBN in a circular  signed by Mr Kevin N Amugo, Director, Financial Policy and Regulation Department said:  “given the recent development in the operations of BDCs in the economy, the CBN has decided as follows: The refund of mandatory caution deposit of N35 million to all BDC operators and the retention of N1 million licensing fee.”

    The CBN asked all eligible BDCs “to apply for refund of their caution deposits, attaching evidence of payment and bank transfer details.”

    What this means is that patrons of BDCs from now on will be at the mercy of the operators and where there is an infraction, the CBN may not step in to intervene on behalf of the customers.

    On January 11, CBN governor Godwin Emefiele while rolling out new forex policies had lamented that “it is almost impossible for the CBN to monitor over 2700 BDCs with its limited number of examiners.

    “It is almost practically impossible and because of inadequate foreign exchange, the BDCs have to source their foreign exchange autonomously. We do not have the resources to cope with over 2,000 BDCs in the country right now.

    “BDCs not happy with this decision are free to return their license and get a refund of the N35 million cautionary fees besides we need more people to go into other forms of businesses like agriculture where we believe there is a lot of scope at this time.”

    Emefiele said that stakeholders in some of the subsectors “have not been helpful in this direction. In particular, we have noted with grave concern that Bureaux De Change (BDC) operators have abandoned the original objective of their establishment, which was to serve retail end users who need US$5,000 or less. Instead, they have become wholesale dealers in foreign exchange to the tune of millions of dollars per transaction. Thereafter, they use fake documentations like passport numbers, BVNs, boarding passes, and flight tickets to render weekly returns to the CBN.”

    Emefiele noted that “despite the fact that Nigeria is the only country in the world where the Central Bank sells dollars directly to BDCs, operators in this segment have not reciprocated the Bank’s gesture to help maintain stability in the market.”

    According to him, “whereas the CBN has continued to sell US Dollars at about N197 per dollar to these operators, they have in turned become greedy in their sales to ordinary Nigerians, with selling rates of as high as N250 per dollar.”

    Given this rent-seeking behaviour, Emefiele said “it is not surprising that since the CBN began to sell foreign exchange to BDCs, the number of operators have risen from a mere 74 in 2005 to 2,786 BDCs today. In addition, the CBN receives close to 150 new applications for BDC licenses every month.”

    The CBN, he said, noted  the following unintended outcomes: Avalanche of rent-seeking operators only interested in widening margins and profits from the foreign exchange market, regardless of prevailing official and interbank rates; Potential financing of unauthorized transactions with foreign exchange procured from the CBN; Gradual dollarization of the Nigerian economy with attendant adverse consequences on the conduct of monetary policy and subtle subversion of cashless policy initiative; and Prevailing ownership of several BDCs by the same promoters in order to illegally buy foreign currencies multiple times from the CBN.

    More disturbing to the CBN the governor said was the financial burden being placed on the Bank and the country’s limited foreign exchange.

    The CBN, Emefiele explained, “sells US$60,000 to each BDC per week. This amount translates to US$167 million per week, and about US$8.6 billion per year. In order to curtail this reserve depletion, we have reduced the amount of weekly sales to US$10,000 per BDC, which translates into US$28.4 million depletion of the foreign reserve per week and US$1.476 billion per annum.”

     

  • CBN’s forex policy raises production capacity for manufacturers

    Local manufacturers are pleased with the Central Bank of Nigeria’s (CBN’s) forex policy, saying it has raised  production capacity and enhanced their operations.

    Two leading local manufacturers in the packaging industry, acknowledged that the impact of the CBN policy on forex  has more than doubled their productive capacities, helping them to meet increased demand for their products.

    Deputy Managing Director, Tempo Paper Pulp & Packaging Limited, Nassos Sidirofagis, said since the policy’s implementation started, his firm has  increased its production capacity from 50 per cent to 70 per cent.

    He said this raised their export volume and foreign exchange earnings for their firms and the economy.

    He said the policy has helped manufacturers to realise the urgent need to expand because of increasing demand for their products.

    Sidirofagis said the company planned to start an expansion project due to expected increase in demand within this year and next.  “We have since developed capacity to also attract foreign investors, who we believe are exploring investment opportunities in our organisation. Therefore, on all sides this is a win-win situation for Nigeria and local manufacturers”, he said.

    On mitigating challenges facing local manufacturer’s capability to expand, he noted that government should focus more on manufacturers so that the local economy will not experience what Greece experience.

    For him, the CBN should continue to implement the policy for the next two or more years, to facilitate full development of local capacity to attract investors.

    Also speaking, Group Operation Manager of SREN Chemicals Limited, Oluwasesan Taiwo-Tijani, said his firm has benefitted from the CBN foreign exchange policy. He explained that the policy has forced several companies who are import-driven to patronise SREN Chemicals and hence, raised their transaction volume and profitability.

    “This impacted on our sales with our productive capacity increased by 30 per cent,” he said.  Taiwo-Tijani urged the Federal Government to retain the policy so as to sustain local content development and to turn Nigeria into an export dependent country.

    He urged the CBN and Federal Government to mitigate challenges facing local manufacturer’s capability to expand so as to enhance the economic development f the country.

  • CBN’s forex policy raises production capacity for manufacturers

    CBN’s forex policy raises production capacity for manufacturers

    Local manufacturers have praised the Central Bank of Nigeria’s (CBN’s) forex policy, saying it has raised their production capacity and enhanced their operations.

    Two leading local manufacturers in the packaging industry acknowledged that the impact of CBN policy on forex since its inception has more than doubled their productive capacities, helping them to meet increased demand of their products.

    Deputy Managing Director of Tempo Paper Pulp & Packaging Ltd, Nassos Sidirofagis disclosed that since policy implementation started, his firm has been able to increase its production capacity from 50 per cent to 70 per cent.

    This, he said, has raised their export volume and foreign exchange earnings for their firms and economy.

    Speaking further, he said the policy has helped the manufacturers to realise the urgent need to expand because of increasing demands for their products.

    Sidirofagis said the company planned to start an expansion project due to expected increase in demand within this year and next.  “We have since developed capacity to also attract foreign investors, who we believe are exploring investment opportunities in our organisation. Therefore, on all sides this is a win-win situation for Nigeria and local manufacturers,” he said.

    On mitigating challenges facing local manufacturer’s capability to expand, he noted that government should focus more on manufacturers so that the local economy will not experience what Greece experience.

    For him, the CBN should continue to implement the policy for the next two or more years, to facilitate full development of local capacity to attract investors.

    Also speaking, Group Operation Manager of SREN Chemicals Limited, Oluwasesan Taiwo-Tijani, said his firm has benefitted from the CBN foreign exchange policy.

    He explained that the policy has forced several companies who are import-driven to patronise SREN Chemicals and hence, raised their transaction volume and profitability.

    “This impacted on our sales with our productive capacity increased by 30 per cent,” he said.

    Taiwo-Tijani urged the Federal Government to retain the policy so as to sustain local content development and to turn Nigeria into an export dependent country.

    He urged the CBN and Federal Government to mitigate challenges facing local manufacturer’s capability to expand so as to enhance the economic development f the country.

  • CBN’s pill for better, longer life

    CBN’s pill for better, longer life

    These days, the Central Bank of Nigeria (CBN) is playing up its development function role. To enable Nigerians live longer and better, it is focusing on delivering price and financial system stability (FSS) and promoting sustainable economic development. COLLINS NWEZE writes on the bank’s key developmental functions, including its plans to further reduce interest rates and enhance the real sector.

    The Monetary Policy Committee’s (MPC’s) decision to cut the benchmark interest rate from 13 per cent to 11 per cent during its last meeting indicated the Central Bank of Nigeria’s (CBN’s) commitment to economic development.

    The action, the first rate slash in six years, showed CBN’s determination to stimulate growth in the real sector. Also, the MPC reduced Cash Reserve Requirement (CRR) from 25 per cent to 20 per cent to shore up liquidity in the financial sector and create more loanable funds for banks. The  CRR is a portion of banks’ deposits kept with the CBN as reserves.

    CBN Governor Godwin Emefiele explained that the liquidity from CRR reduction would only be released to banks that are willing to channel it to employment generating activities, such as agriculture, infrastructure and solid minerals.

    He said the MPC evaluated the options for ensuring increased credit delivery to the key sectors, capable of generating employment and improving productivity and growth.

    Even the Federal Ministry of Finance and the World Bank are working together to ensure that the economy rebounds.

    Last weekend, CBN Director, Financial Policy Regulation Kelvin Amugo urged banks to appraise their customers’ loan requests relating to agricultural value chain, manufacturing, solid minerals, infrastructure and other sector-related projects and send same to the CBN for approval and disbursement.

    Amugo said the CRR cut is part of the bank’s initiatives towards stimulating output growth, expanding the industrial base, diversifying the economy and increasing the accretion to foreign reserves. Banks are now required to appraise their customers’ loan requests relating to the agricultural value chain, manufacturing and solid minerals, infrastructure and other sector-related projects forward same to the CBN for final approval and disbursement.

     

    Price stability

    Aside need to lend to productive sectors of the economy, CBN’s price stability role can rarely be adjudged a goal in itself except cast against the ultimate objective of improvement in the quality of life. Price stability, therefore, remains a cardinal contribution, indeed a cornerstone, to the ultimate goal of economic development.

    “I believe that reasonably stable prices provide a catalyst for rational consumption and investment decisions and for orderly economic progress. That is why throughout most of economic history, periods of price and financial system stability have coincided with economic growth and development,” Emefiele said.

    This, it said, can be achieved by championing policies that promote the sustainability of its macroeconomic stability. The CBN pursues a gradual reduction in interest rates.

    “A comparison of selected macroeconomic aggregates from some emerging market countries including South Africa, Brazil, India, China, Turkey, and Malaysia indicate that Nigeria has one of the highest T-bill rates. Such high rates create a perverse incentive for commercial banks to simply buy virtually risk-free government bonds rather than lend to the real sector,” he said.

    The regulator is also pursuing policies targeted at making Nigeria’s T-bill rates more comparable with other emerging markets and by extension, pursue a reduction in both deposit and lending rates.

    “While a reduction in deposit rates would encourage investment attitudes in savers, a reduction in lending rates would make credit cheaper for potential investors. The bank would also begin to include the unemployment rate as one of the key variables considered for its Monetary Policy decisions,” he said.

    The bank chief explained that in view of the high import-dependent nature of the economy and significant exchange rate pass-through, a systematic depreciation of the naira would literarily translate to considerable inflationary pressure with attendant effect on macroeconomic stability.

    Emefiele said under his leadership, the apex lender will continue to focus on maintaining exchange rate stability and preserving the value of the domestic currency.

    “We will sustain the managed float regime in the management of the exchange rate, as this will allow the bank to intervene when necessary to offset pressures on the exchange rate. To support this strategy, we will strive to build up and maintain a healthy external reserves position and ensure external balance,” he said.

    “There is no doubt that reducing the interest rate and maintaining the exchange rate are very daunting twin goals. However, the CBN would work assiduously with all stakeholders to device countervailing measures that would ensure that these goals are mutually achieved”.

    The CBN also wants to sustain the effective management of potential threats and avoid systemic crisis. The apex bank also effectively manages potential threats to financial stability, and creates a strong governance regime that is conducive for financial intermediation, innovative finance and inclusiveness. This, it does by managing factors that create liquidity shocks and zero tolerance on practices that undermine the health of financial institutions.

    “We work with the relevant stakeholders to aggressively shore up reserves. We hope to engage the fiscal and political authorities, as well as other stakeholders to improve our policy buffers, which will further create space for the bank to implement monetary policy using its limited instruments,” he said.

    The regulator is also collaborating with commercial banks to significantly improve the credit culture in the Nigerian banking system. The CBN’s focus would be directed at serial debtors who access loans from different banks and default on all of them even when they have the means to pay. Going forward, the CBN will work towards reducing the effect of information asymmetry in the credit market,” the CBN said.

    Its target on banking supervision would be to work towards a better risk-based supervision framework. This will be achieved by training sector-specific bank examiners. For example, while the banking industry has excessive concentration in oil and gas loans, the CBN does not have the expertise to analyse and monitor the risks inherent in these credits. In other words, every examiner is a generalist.

    It believes specialisation will help reduce an increasing reliance on outside consultants, ensure that confidential supervisory information are protected and guarantee a staff depth that can generate robust in-house data to help senior Central Bank officials prepare adequately for public engagements.

    Although Nigeria produces millions of barrels of crude oil per day, the importation of refined petroleum products alone consumes about 35 per cent of our annual import bill. The CBN is supporting efforts at domesticating Nigeria’s oil and gas resources to ensure that much more of these resources are produced and used here in Nigeria. This will stimulate inclusive growth, create jobs and reduce the pressure on the exchange rate occasioned by demand for imports of finished petroleum products.

     

    Incentives for FDI in

    upstream

    The CBN recognises that there is a significant requirement for investment in the upstream sector especially for the Federal Government owned component of Upstream Joint Ventures. They currently struggle to match the investment in infrastructure provided by the International Oil Companies partners.

    Alongside the Ministry of Finance and the Ministry of Petroleum and Natural Resources, is supporting efforts to secure these investments. It is exploring how this can be done through international capital markets. This will require looking at the current Joint Venture structures and ensuring that its proposals sit alongside the Petroleum Industry Bill proposals.

    The apex bank also promises to support the Ministry of Petroleum and Natural Resources by looking at investment incentives in refining and promoting investment in the construction of much needed gas pipelines.

    It also backs the establishment of small-scale modular refineries that can serve some of our domestic markets.

    Also, given the myriad of issues facing the health sector, which has led to a huge bill of foreign exchange use for medical travels overseas, the CBN intends to play a facilitating role by unlocking the potentials that exist for the private sector to invest at various points along the healthcare value chain including hospital services, health insurance, pharmaceuticals, supply chain, and financing.

    This window of opportunity, has already led the private sector to establish an institutional platform for health known as the Private Sector Health Alliance of Nigeria (PHN), with the support of the government.

    The CBN is also exploring opportunities for partnering with the PHN to galvanise the private sector into playing a more active role in the health sector. The bank will maintain a keen interest in supporting the development of institutions, create an enabling environment to trigger private sector investment and curb the growing trend of medical tourism.

     

    Experts’ views

    Meanwhile, economists and financial experts have reacted to the policy decisions of the Central Bank of Nigeria’s Monetary Policy Committee, saying the moves might necessarily achieve the intended objective to stimulate economic growth and boost job creation.

    An Economist, Michael Abiodun, said stimulating lending should be complemented by the fiscal authority if there would be lending to the real sector. He praised the central bank for the decision, stating that the move would assist in the reduction of the cost of funds as well as stimulate investments in the stock market.

    He said: “The reduction in MPR from 13 per cent to 11 per cent will mean that interest rate will come down and this is good news for companies as it will assist in reducing the cost of capital for some of the businesses that borrow funds.

    “Whenever there is liquidity in the financial market, it leads to a corresponding increase in the capital market through volume, and this will help the capital market to rebound. The reduction will also curb the fears that the economy will slide into recession, because a lot of productive activities will now pick up and more jobs will be created.”

    Aside these benefits, Emefiele insists the regualator will continue to pursue a gradual reduction in key interest rates, and include the unemployment rate in monetary policy decisions. The regulator will also maintain exchange rate stability and aggressively shore up foreign exchange reserves while strengthening risk-based supervision mechanism of Nigerian banks to ensure overall health and banking system stability.

    Going forward, the apex bank will continue to build sector-specific expertise in banking supervision to reflect loan concentration of the banking industry and in view of inadequate trigger thresholds from a macro-prudential perspective, consider and announce measures to effectively address this anomaly.

    The apex bank also wants to renew vigorous advocacy for the creation of commercial courts for quick adjudications on loan and related offences.

    “We must, by now, have been tired of hearing people talk about the “potentials” of Nigeria. Now is the time to live that dream. I truly believe that working together, we can achieve our goals and give Nigerians the chance to live longer, better and more fulfilled lives,” Emefiele affirmed.

  • Why credit bureaux were established, by CBN

    Credit bureaux were established by the Central Bank of Nigeria to play the vital role of assisting the regulator in the effective management of credit risk within the banking system whilst facilitating access to finance in the economy, its deputy director, Steven Nwadiuko, has said.

    Speaking yesterday at the awareness and education programme for credit reporting held in Lagos, he said the bureaux were also meant to provide relevant information (especially on the borrowing history and behavior of a loan applicant) that will enable lending institutions make good lending decisions. They were to also encourage reliance on “reputational” collateral rather than “physical” collateral and thereby drive responsible credit expansion.

    He said the CBN, in furtherance of the powers conferred on it in the then newly enacted Central Bank of Nigeria Act, Cap 7 of 2007, released the Guidelines for the Licensing, Operations and Regulations of Credit Bureaux in Nigeria in 2008. He said the three privately owned credit bureaux – XDS Credit Bureau, CR Services Credit Bureau and CRC Credit Bureau were subsequently licensed by the apex bank.

    Nwadiuko said the CBN has been saddled with the responsibility of ensuring the stability of the financial system and has been formulating policies aimed at achieving a sound and stable financial system.

    “ In doing that, the bank found it pertinent to pursue policies that targeted the stability of the financial system which is regularly threatened by unpleasant banking practices and the accretion of toxic assets. It was our commitment to establishing a sound and strong financial system that led us to vigorously pursue the development of the key financial infrastructures like the payments system, credit reporting systems and collateral registry,” he said.

    He explained that a credit reporting system comprises of the legal, regulatory and institutional arrangements put in place to deal with the information asymmetry inherent in credit and related financial transactions.

    Also, credit reporting has been acknowledged as the fastest and most successful way to facilitate the necessary growth in accessing credit finance and where it is working smoothly, the system unlocks the power of credit for enterprise development and individual prosperity.

    “It also acts as a social accountability mechanism that promotes responsible behavior in the credit /financial markets. It has long been established that a weak credit reporting regime constrains lending and is a threat to the overall stability of the financial system.  Credit Reporting in Nigeria has its antecedents in the financial crisis of the late 1980’s and early 1990swhen large quantum of non-performing credits bedeviled the banking industry,” he said.

    According to the CBN director, that era witnessed persistently rising incidence of abandoned facilities in Nigerian banks with attendant losses and erosion of banks’ capital.

    He said that to arrest the situation, the Central Bank of Nigeria in January 1998 established the Credit Risk Management System (CRMS), a public credit registry operated by the CBN that Banks were to report to and check-up all credits above N1 million.

    According to him, the CBN is committed to providing the required regulatory support to enable the credit reporting industry to thrive in Nigeria.

    “In the same vein, we have made it mandatory for all financial institutions to have data exchange agreements with at least two credit bureaux. All banks are required to obtain credit report from at least two (2) credit bureaus before granting any facility to their customers whilst quarterly portfolio checks must also be carried out to enable them determine borrowers’ current exposure to the financial system. We also review compliance levels and in line with our zero tolerance policy for infraction, sanction erring institutions,” he said.

    Continuing, he said the credit reporting industry in Nigeria has performed creditably.

    “Notwithstanding the numerous challenges facing this sub-sector, we have witnessed a significant improvement in the utilization of credit bureaus’ products which invariably has impacted on their turnover. The credit bureau operators have continued to record steady increase in the number of records of registered borrowers. From a mere 78,189 in December 2010, the total number grew to 18,640,000 in June 2012,” he said.

  • CBN to resume disbursement of N213b power intervention fund

    CBN to resume disbursement of N213b power intervention fund

    The Central Bank of Nigeria (CBN) may resume disbursement of N213 billion power intervention funds next month, following the planned implementation of the new electricity tariff regime slated for take-off on February 1.

    The facilities with 10 years repayment period at 10 per cent interest, was created to assist the electricity generation and distribution companies to upgrade their facilities through the purchase and installation of new equipment such as turbines, transformers and meters, among others.

    The decision to create the facility was necessitated by the increasing inability of the generation and distribution to meet their responsibilities and required service delivery, because from the period of handover to the private sector in November 2013 to the end of 2014, the power sector already had a shortfall of about N290 billion in expected revenue.

    However, shortly after rolling out the loan facility with a few generation and distribution companies as beneficiaries, the Governor of CBN, Mr. Godwin Emefiele in October last year announced the suspension of the disbursement.

    According to him, the apex bank had issues it needed to resolve with the Nigerian Electricity Regulatory Commission (NERC) and the Nigerian Bulk Electricity Trading Plc (NBET), adding the fund has been of great help for the beneficiaries but some things needed to be resolved before the CBN continues to release the funds.

    The Nation, however, learnt that the CBN after conducting background checks on some of the generation and distribution companies, it discovered that they didn’t have repayment capacity as their revenue generation was very poor, hence it suspended further disbursement.

    But industry sources said the CBN will resume the disbursement in February because of the new tariff regime, which is expected to boost the income of the distribution companies and consequently that of the generation companies.

    The power sector had a shortfall of about N290billion between November 2013 and December 2014. The CBN loan facility was meant to address the N290billion shortfall, which has risen to about N 478 billion as at end of October 2015.

    According to the sources, N202.5billion of the CBN fund was meant for the generation and distribution companies while the remainder was earmarked for legacy gas debt prior to take over of the power companies by the private sector. Out of the N213 billion funds, the CBN only disbursed N65 billion leaving the generation and distribution companies with a shortfall of about N85billion as at end of 2014. The CBN also plans to create a fresh intervention fund for the transmission company when it is through with the generation and distribution companies’ matter.

  • Abductors of CBN worker demand N15 million

    Abductors of a Central Bank of Nigeria (CBN) worker Nelson Amuwa have demanded a ransom of N15 million.

    Amuwa was kidnapped on Friday at about 10.30pm off Channels Avenue, River Bank Estate, near Opic Estate in Ogun State.

    The three gun-totting men forced Amuwa out of his car. They left the engine running. His two phones were not taken.

    The abductors later called his brother to demand N15 million ransom. The case, which  was reported at the Ojodu police station, is said to have been transferred to the Eleweran Police Headquarters in Abeokuta .

  • CBN lifts ban on dollar deposit transfers

    CBN lifts ban on dollar deposit transfers

    Commercial banks are back in the business of foreign currency (dollar) transfer after the Central Bank (CBN) lifted restrictions on such transactions.

    The banks can now transfer foreign currency in customers’ domiciliary accounts to their local and international business partners subject to a daily cumulative limit of $10,000.

    Violation attracts regulatory sanctions.

    Confirming the policy shift yesterday to The Nation, Central Bank of Nigeria (CBN) spokesman, Ibrahim Mu’azu, said the apex bank decided to reverse the policy because its finding showed that currency substitution by customers which made it enforce it in the first place has been tackled.

    According to him, bank customers before now were converting naira to dollar and depositing the proceeds in the hope that the dollar would continue to appreciate at the parallel and official markets.  He said stability has now returned to the market despite the volatility in the parallel market rate with the naira exchanging for over N300 to one dollar.

    The banks are already communicating the new changes to their customers.

    Guaranty Trust Bank (GTB) in an e-mail entitled: Resumption of Transfers for Forex Cash Deposits to its domiciliary account holders said: “We are pleased to inform you that you can now transfer Foreign Currency Cash deposits made into your GTBank domiciliary account(s) via Internet Banking, Mobile App or at any of our branches nationwide, subject to a daily cumulative limit of $10,000.”

    Keystone Bank in a similar message said: “We are pleased to advise that you can now deposit forex or dollars into your domiciliary accounts and transfer up to $10,000,” the lender said yesterday in an email to customers.

    The lifting of the over six-month old ban, followed complaints  by  local and international stakeholders that the restriction was not only killing businesses but had led to diversion of huge forex to neighbouring countries.

    The lifting of the Central Bank of Nigeria (CBN’s) ban on dollar deposit transfer is part of the gradual relax of its stringent foreign exchange (forex) policies triggered by sharp drop in crude oil prices and reduced inflow of petrodollars.

    It is also in response to International Monetary Fund (IMF) directive that the polices should be relaxed to avoid alienating Nigeria from its international trade partners and calls from small businesses, manufacturing concerns, the International Monetary Fund (IMF), and political leaders.

    CBN Spokesman, Ibrahim Mu’azu had defended the ban on dollar deposit receipt, saying it was to curtail illicit fund flows, money laundering, and terrorism financing both in Nigeria and around the world.

    The apex bank, according to him, would increase its vigilance to ensure that Nigerian banks were not used as conduits for illicit fund flows, especially in foreign currencies.

    He said that the banks would continue to curtail the acceptance of foreign currency cash deposits, much the same way as customers in other countries cannot just walk into banks and make foreign currency cash deposits without proper documentation.

    ”We will also ensure that persons who venture into currency speculation and currency substitution find it unattractive and dangerous.

    “In these efforts, we seek the continued cooperation of all Nigerians to make this work for the enhancement of our shared progress, rather than the prosperity of a greedy few amongst us,” he said.

    Mu’azu did not respond to a text message on the matter sent to his phone.

    But experts said they expect the CBN to further lift ban on its directive that commercial banks pay for their dollar purchases at the official forex window 48 hours ahead of the bid date.

    Under the policy, banks and other forex dealers are required to deposit the naira equivalent of the total forex bids at the apex bank 48 hours in advance.

    But analysts insist that the fall in Nigeria’s monthly forex earnings from $3.2 billion to $1 billion in the last six months due to drop in crude oil prices was responsible for the strict forex restrictions being implemented by the CBN.

    Oil prices have dropped from a peak of $114 barrel in July 2014 to as low as $29/barrel this month.

    The reserves have also suffered great pressure from speculative attacks, round-tripping and front loading activities by actors in the forex market.

  • Foreign currency deposits in domiciliary accounts restored

    Bank customers can now transfer Foreign Currency Cash deposits made into their domiciliary accounts via Internet Banking, Mobile App or at any branch nationwide.

    Amount to be transferred is however subject to a daily cumulative limit of $10,000.

    The new policy has been communicated to bank customers.

    Late last year, the Central Bank of Nigeria banned cash deposit into domiciliary accounts.