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  • CBN launches non-resident Nigerian accounts

    CBN launches non-resident Nigerian accounts

    The Central Bank of Nigeria (CBN) has announced the launch of two new account types targeted at Nigerians in the Diaspora: the Non-Resident Nigerian Ordinary Account (NRNOA) and the Non-Resident Nigerian Investment Account (NRNIA). 

    These accounts are designed to enhance diaspora participation in the local economy while offering secure and flexible financial management options.

    The introduction of these accounts was detailed in a circular by Dr. W. J. Kanya, Acting Director of the Trade and Exchange Department. 

    According to the circular, the NRNOA allows Non-Resident Nigerians (NRNs) to remit their foreign earnings to Nigeria and manage funds in foreign and local currencies. 

    On the other hand, the NRNIA provides NRNs the opportunity to invest in assets within Nigeria, using either foreign currency (FCY) or local currency (Naira).

    Account holders can maintain foreign currency and Naira accounts, facilitating diverse transactions and investments. 

    The initiative promises significant benefits, including improved access for NRNs to Nigerian economic opportunities and increased diaspora contributions to the nation’s socio-economic development. 

    Additionally, the NRNIA provides a pathway for diaspora participation in Nigeria’s Diaspora Bond and other locally issued debt instruments.

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    The accounts are set to be available from January 1, 2025 with eligibility subject to Know Your Customer (KYC) requirements, details of which will be released in forthcoming Frequently Asked Questions (FAQs). 

    The CBN noted that this policy aligns with Memorandum 17 of the CBN Foreign Exchange Manual (2018).

    The NRNOA enables NRNs to deposit foreign earnings such as salaries, dividends, and rental income into accounts held in freely convertible currencies specified by the CBN. 

    Funds can also be converted to Naira at prevailing exchange rates through authorised dealers, allowing account holders to meet personal expenses in Nigeria, such as family maintenance, education, and healthcare.

    Balances in FCY accounts under the NRNOA can be fully repatriated without restrictions, while interest earned on deposits will be subject to applicable Nigerian tax laws. The accounts also comply with global Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) standards, ensuring secure and transparent transactions.

    The NRNIA focuses on investment opportunities, enabling NRNs to invest in both foreign and local currency assets. Account holders can explore financial markets and instruments, including foreign currency bonds, fixed deposits, equities, government securities, and mortgage products.

    The NRNIA ensures ease of capital mobility, with investment principal and profits fully repatriable. Tax obligations will apply to investments, except for specific exemptions like government bonds. This account also aligns with international AML/CTF standards, ensuring secure investment transactions.

    Eligibility criteria for the NRNIA include a valid or expired Nigerian passport with a foreign passport, or evidence of Nigerian citizenship through parentage. Proof of residency and source of income documentation, such as salary slips or business registration documents, are also required.

    The CBN is leveraging digital platforms to simplify onboarding and KYC updates. Banks are encouraged to integrate with the Nigeria Inter-Bank Settlement System (NIBSS) platform, enabling NRNs to acquire Bank Verification Numbers (BVNs) for account opening.

    Repatriation of FCY balances in the NRNOA and NRNIA are unrestricted, while Naira balances linked to prior foreign inflows and investment proceeds can also be repatriated. Local transfers within Nigeria are allowed only in Naira, and local deposits are prohibited except for traceable proceeds from approved local investments.

    The CBN noted the integration of these accounts with Nigeria’s Diaspora Bond and financial markets. NRNs can use the NRNIA to participate in local and FCY-denominated financial instruments, furthering their investment diversification. The initiative also seeks to reduce reliance on third parties for managing local obligations, providing a secure and efficient alternative for NRNs.

  • CBN halts export proceeds repatriation extensions

    CBN halts export proceeds repatriation extensions

    The Central Bank of Nigeria (CBN) has suspended approvals for the extension of export proceeds repatriation. This is a move aimed at enforcing compliance with existing foreign exchange (forex) regulations.

    This directive, which came through a circular dated January 8, 2025, applies to both oil and non-oil export transactions.

    The circular, signed by W.J. Kanya, Acting Director of the CBN’s Trade and Exchange Department, pointed to the Foreign Exchange Manual (Revised Edition, March 2018), specifically Memorandum 10A (23a) and Memorandum 10B (20a), as the legal basis for this decision.

    According to the CBN, exporters must strictly adhere to the timelines for repatriating export proceeds: 180 days from the bill of lading date for non-oil exports and 90 days for oil and gas exports. The apex bank insisted that these timelines are non-negotiable.

    “With effect from the date of this circular, the Central Bank of Nigeria will no longer approve requests for the extension of repatriation of export proceeds by authorized dealers on behalf of their customers. For the avoidance of doubt, proceeds of oil and non-oil exports are to be repatriated and credited into the exporters’ export proceeds domiciliary accounts within 180 days and 90 days from the bill of lading date for Non-Oil and Oil and Gas exports, respectively,” the circular stated.

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    This policy places stricter obligations on exporters and their authorized dealer banks to ensure compliance with repatriation rules. Banks are required to inform their clients of these updated regulations and enforce adherence.

    The CBN also warned that non-compliance could result in penalties or other regulatory actions. This measure aligns with the apex bank’s broader efforts to enhance foreign exchange inflows and strengthen Nigeria’s external reserves.

    The CBN’s latest policy is a follow up to the earlier initiatives intended to improve foreign exchange management. In 2024, the apex bank implemented measures affecting international oil companies (IOCs) operating in Nigeria.

  • CBN suspends export proceeds repatriation extensions

    CBN suspends export proceeds repatriation extensions

    The Central Bank of Nigeria (CBN) has suspended approvals for the extension of export proceeds repatriation, a move aimed at enforcing compliance with existing foreign exchange regulations.

    This directive, which came through a circular dated January 8, 2025, applies to oil and non-oil export transactions.

    The circular, signed by W.J. Kanya, Acting Director of the CBN’s Trade and Exchange Department, pointed to the Foreign Exchange Manual (Revised Edition, March 2018), specifically Memorandum 10A (23a) and Memorandum 10B (20a), as the legal basis for this decision.

    According to the CBN, exporters must strictly adhere to the timelines for repatriating export proceeds: 180 days from the bill of lading date for non-oil exports and 90 days for oil and gas exports. The apex bank insisted that these timelines are non-negotiable.

    “With effect from the date of this circular, the Central Bank of Nigeria will no longer approve requests for the extension of repatriation of export proceeds by authorized dealers on behalf of their customers.

    “For the avoidance of doubt, proceeds of oil and non-oil exports are to be repatriated and credited into the exporters’ export proceeds domiciliary accounts within 180 days and 90 days from the bill of lading date for Non-Oil and Oil and Gas exports, respectively,” the circular stated.

    This policy places stricter obligations on exporters and their authorized dealer banks to ensure compliance with repatriation rules. Banks are required to inform their clients of these updated regulations and enforce adherence.

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    The CBN also warned that non-compliance could result in penalties or other regulatory actions. This measure aligns with the apex bank’s broader efforts to enhance foreign exchange inflows and strengthen Nigeria’s external reserves.

    The CBN’s latest policy is a follow up to the earlier initiatives intended to improve foreign exchange management. In 2024, the apex bank implemented measures affecting international oil companies (IOCs) operating in Nigeria. These measures limited IOCs’ ability to immediately remit 100 percent of forex proceeds to their parent companies abroad.

    Instead, IOCs were required to repatriate 50 percent of their proceeds immediately, with the remaining 50 percent to be repatriated 90 days after the inflow. The CBN also introduced rules governing cash pooling by IOCs, mandating prior approval for repatriation under the cash pooling framework and detailed expenditure statements before pooling.

    Under these rules, IOCs could use 50 percent of their repatriated proceeds to settle financial obligations within Nigeria over 90 days and sell the remaining 50 percent to authorized foreign exchange dealers.

    The suspension of repatriation extensions underscores the CBN’s commitment to enforcing foreign exchange regulations and boosting foreign currency inflows. By ensuring timely repatriation of export proceeds, the CBN aims to stabilize the naira and build foreign reserves, critical for economic growth and resilience.

    Exporters and financial institutions are now under greater scrutiny to comply with these directives, signaling the CBN’s resolve to maintain discipline in foreign exchange management.

  • CBN, ex-staff clash in court over disengagement

    CBN, ex-staff clash in court over disengagement

    Some former employees of the Central Bank of Nigeria (CBN) have gone to court to challenge their disengagement by the apex bank last year.

    They are alleging violations of Labour laws, internal policies and constitutional provisions.

    In multiple lawsuits filed at the National Industrial Court of Nigeria (NICN) in Abuja, the claimants, led by Stephen Gana and 32 others, argued that their termination process was illegal, arbitrary, and unconstitutional.

    They alleged that the CBN disregarded its Human Resources Policies and Procedures Manual (HRPPM) and failed to adhere to fair hearing principles as mandated by Section 36 of the Nigerian Constitution.

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    The aggrieved litigants alleged that “the terminations, which occurred between March and May 2024 under the guise of ‘reorganization and human capital restructuring’, were carried out without consulting the Joint Consultative Council (JCC), as stipulated by Article 16.4.1 of the HRPPM. The claimants stated that they were given only three days to vacate their positions, hand over official property, and leave their offices.”

    An official of the apex bank confirmed the development even, saying that the litigants have asked the court to declare their terminations null and void, restrain the CBN from further dismissals without proper procedures and reinstate the claimants and pay their outstanding salaries and benefits.

  • 1000 CBN staff left voluntarily, says Cardoso

    1000 CBN staff left voluntarily, says Cardoso

    Central Bank Governor Olayemi Cardoso said the 1,000 staff who left the services of the bank in December were not forced to leave.

    Cardoso, who spoke through the Deputy Director Corporate Service, Bala Bello at the resumed investigative hearing on the disengagement of the 1000 workers by the apex bank and how the N50 billion terminal benefits was arrived at for them, said the 1,000 members of staff were not forced to quit

    He explained the early exit programme and the restructuring as well as reorganisation was to optimise the bank for enhanced efficiency.

    He said they “are basically ways and means through which the performance of an organisation is optimised by putting, ensuring that round pegs are put in right holes. The manpower requirement of the bank is actually met.

    “The man loading, which is the key responsibilities, key performance indicators of the bank, vis-a-vis the number of people driving the performance of that bank, is at a level where it’s optimum, balancing the human resource requirement, the capital requirement, the skill requirement, as well as the IT requirement of the bank. 

    “You are very much aware, Chairman, the entire world is going through a process of digitizing its operations and once that is done, a lot of opportunities are created, just like a lot of redundancies are equally created.

    “You have had instances where the request for staff to exit the bank voluntarily actually emanated from the staff. And I believe the Central Bank is not necessarily the first organization to have done that. I’m very happy to mention, Mr. Chairman and members of the committee, that the early exit program of the Central Bank is 100 percent voluntary. 

    “It’s not mandatory. Nobody has been asked to leave, and nobody has been forced to leave. It’s a completely voluntary programme that has been put in place.

    “I believe several organizations across the world, and even within this country, both in the private sector and the public sector, are undertaking similar exercises. So nobody has been asked to leave. With lot of humility, I will tell you that this same program that is taking place is not at the instance of the bank. 

    “Of course, we have our own challenges, and we know where we want to take the bank to. That’s Cardoso and his team, myself included. But this popular request actually came from the staff.

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    “In the past, you have had cases of stagnation and lack of career progression. I mean, in an organization, you’ve got a pyramid where from each level to the next level, you know, the gap keeps narrowing. If not, you are going to have a quasi-organization, inverted pyramid.

    “It doesn’t work. It gets to the level where you have, for example, 30 departments in the Central Bank. You cannot have 60 directors, manning 30 departments. It’s not going to work. So, once those vacancies are filled, it gets to a level where some people, even though they are very qualified, very capable, and are very willing, but the vacancies are not there and are stagnated for a period of time.

    “There are several instances in which similar exercise took place in the Central Bank, which has happened several times. This is not the first time. It’s not the second time. It’s not the third time. It has happened several times. You’ve had instances in which people at the top request that, look, it’s going to take me X number of years to actually aspire to become a director in an organization. But right now, there’s no vacancy. And the person sitting next to me probably has eight years to go. Meanwhile, I have seven.

    “So there’s no career growth. And a lot of opportunities are out there. For example, among the people that have left, there are, like, three or four people who are going to set up a bank.

    “The approach that we told them, literally, anything you want to do, if you need the support of the Central Bank, you are done. So the popular demand then was at the top, people that are stagnated, people that don’t have any career progression any longer, they have reached their peak, and they are willing to go and take other risks before they get to an age where they become scared to take risks.

    “You know, those programmes are actually put in place to ensure that those people are given an opportunity to actually exit, go and start other things with their lives.

    “But in this particular case, based on popular request, and I came with the Union Leader of the bank, the staff requested that in this case, similar opportunity should be extended to other categories of staff. In the entire period that similar exercise has taken place, it’s only people within a certain cadre, within the director cadre. The deputy director and directors who feel they want to go and start some other things, and assistant directors are given.

    “But for the first time in the over 60 years history of the bank, the early exit program is extended to everybody who is actually willing to take it. And this came at the instance of the staff. So it’s not mandatory, it’s not compulsory, there’s no coercion, there’s no forceful exit, and there’s no intimidation for anybody to take it.

    “In fact, when this same thing was approved by the bank, and it was open, the number of staff that actually came forward to take it was even very amazing. Like I told you, there are some other people that are even thinking of going to start with their own bank. Those who want to take it, took it, and those who don’t want to take it are still in the bank.”

    Chairman of the Ad-hoc Committee, Hon. Usman Kumo, who assured the committee will be fair to all the parties involved in the investigation, noted that the Committee’s responsibility is to submit the report to the House.

  • 2021 Audit: ‘CBN can’t account for N2.73tr interests on Ways & Means advances’

    2021 Audit: ‘CBN can’t account for N2.73tr interests on Ways & Means advances’

    The Office of the Accountant General of the Federation (AOGF) has said the Central Bank of Nigeria (CBN) allegedly misappropriated over N4.4 trillion the interest it charged on the Ways and Means advances it granted to the government.

    It said the apex bank treated the Ways and Means advances as if they were a facility from local and foreign lenders and should therefore be asked to refund the over N2.7 trillion to the Federal Government.

    The position of the Accountant General is contained in its response to a query from the OAGF on the consolidated financial statement of the Federal Government for the year ended December 31, 2021, submitted to the National Assembly by Auditor General Shaakaar Chira with reference number AuGF/AR.2021/01 and dated July 31, 2024.

    The AGF had said in the 2021 audit report that “the Consolidated Revenue Fund (CRF) and four other Ministries, Departments and Agencies (MDAs) had overdrawn bank balances amounting to N17.106 trillion without evidence of approval by relevant authorities to support the overdrawn bank accounts”.

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    Responding to the issue, which formed part of the 50 audit queries, the AGF said: “The CRF negative balance of N17,105,111,709,523.00, as at December 31, 2021, included actual Ways and Means advance of N4.4 trillion taken by government and interest charged on it for the sole use of the CBN as though the Ways and Means was a loan from CBN funds or from any syndicated group of lenders.

    “The interest charged on Ways and Means by the CBN was misappropriated by CBN for its sole use, whereas the actual Ways and Means was not a facility from its funds or balance sheet nor was it a syndicated facility from a group of local and foreign lenders. CBN must therefore refund to the Federal Government of Nigeria the interest of N2.73 trillion it cornered for its sole use as of December 31, 2021.”

  • 2021 Audit: CBN misappropriated N2.73trn interests on ways and means advances – OAGF

    2021 Audit: CBN misappropriated N2.73trn interests on ways and means advances – OAGF

    • …as report reveals N6.84 trillion debt by state governments

    The Office of the Accountant General of the Federation (OAGF) has said that the Central Bank of Nigeria (CBN) misappropriated the interest it charged on the Ways and Means Advances of over N4.4 trillion granted to the government. 

    The OAGF said the apex bank treated the Ways and Means Advances as if it was a facility from local and foreign lenders and should therefore be asked to refund the over N2.7 trillion to the federal government. 

    The position of the Accountant General is contained in its response to a query from the Office of the Auditor General for the Federation on the consolidated financial statement of the federal government for the year ended 31st December, 2021 submitted to the National Assembly by the Auditor General, Shaakaar Chira with reference number AuGF/AR.2021/01 and dated 31st July, 2024.

    The Auditor General for the Federation had said in the 2021 audit report that “the Consolidated Revenue Fund (CRF) and four (4) other Ministries Departments and Agencies (MDAs) had overdrawn bank balances amounting to N17.106 trillion without evidence of approval by relevant authorities to support the overdrawn bank accounts. 

    Responding to the issue which form part of the 50 audit queries, the Accountant General said “the CRF negative balance of N17,105,111,709,523.00 as at 31st December, 2021 included actual Ways and Means advance of N4.4 trillion taken by Government and interest charged on it for the sole use of CBN as though the Ways and Means was a loan from CBN funds or from any syndicated group of lenders

    “The interest charged on Ways and Means by CBN was misappropriated by CBN for its sole use whereas the Actual Ways and Means was not a facility from its funds or balance sheet nor was it a syndicated facility from a group of local and foreign lenders. CBN must therefore refund to the Federal Government of Nigeria the interest of N2.73 trillion it cornered for its sole use as of 31st December 2021”. 

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    The OAGF also said while ongoing securitisation by DMO to reconciled domestic debt service, ways and means actual withdrawal, re-imbursement of Paris Club over deduction, states deferred loans deductions and CPV coupon payments is okay, the interest on ways and means should not be securitised, but refunded to the CRF by CBN.

    It also said that additional interest accrued on the ways and means  advances cornered by the CBN after the issuance of the CRF Bank Statement as at 31st December 2021 must equally be refunded by CBN. 

    While insisting on its finding, the OAuGF said “there was no evidence such as approvals and supporting documents to support the overdrawn account. The Cash advance of N4.4 trillion taken by Government as Ways and Means, interest charged on it and other loan related drawings from the Consolidated Revenue Funds (CRF) and the negative cash balances from the other MDAs should be approved, appropriately recognized as liabilities and the sources properly disclosed”.

    Also, the Audit report said that as at 31st December, 2021, total external and domestic debt of the 36-state governments stood at over N6.840 trillion, adding however that there was no contingent liability relating to borrowings by the 36 State Governments guaranteed by the Federal Government of Nigeria was not disclosed in the FGN CFS.

    The Audit report said “the Debt Management Office (DMO)’s report on States’ Domestic and External Debts showed that the 36 State Governments’ indebtedness stood at over N6.840 trillion”.

    “The figure is made up of Domestic Debts of over N4.870 trillion and External Debts of over N1.970 trillion” with the External Debt component of the total Debt being guaranteed by the Federal Government of Nigeria, implying that FGN would be held responsible if the States failed to honour their debt obligations which constitute contingent liability to the FGN”. 

    In addition, the Auditor General said that while reviewing the over head cost to the FGN consolidated financial statement, it was discovered that 235 MDAs exceeded their Overhead budget by over N116.350 billion, saying that total expenditure disclosed for the affected MDAs was N158,384,274,551.00, while their budget for the period under review was N42,034,056,219.00.

    It said that the source of the extra spending by the MDAs were not disclosed neither was there evidence of supplementary appropriation or approved virement by the National Assembly as requured by law, attributing it to weaknesses in the internal control system surrounding the consolidation process at the Office of the Accountant General of the federation.

    It also said that about N31.205 trillion was recognized as Long Term Borrowings in the Consolidated Statement of Financial Position of the government,  while the current portion of long-term borrowings that were due for repayment within twelve months after the reporting date was not recognized in the Consolidated Statement of Financial Position under the Current Liabilities. 

    The report also said that 16 MDAs reported zero overhead expenditure despite having a total budget of N1,473,317,709.00, saying “no additional information was disclosed to enable users to understand how the MDAs operated without overhead costs”, in addition to 11 other MDAs incurring overhead expenditure of N841,787,875.00 without evidence of an approved budget, supplementary appropriation or virement.

    According to the report, 8 selected MDAs exceeded the budget for their Personnel Cost by N9,475,226,780.90, saying “the personnel expenditure incurred by the 8 MDAs amounted to N63,753,429,332.90, while the total budget was N54 ,278,202,552.00 hence the extra budgetary expenditure with no evidence of an approved budget, supplementary appropriation or virement.

    It also said that about 44 agencies of government spent about N92,678,924,613.32 on Employees Benefits without appropriation with National Pension Commission accounting for N56,972,052,733.66  representing 61%, without evidence of an approved budget, supplementary appropriation or virement.

    The OAuGF also reported that 110 Ministries, Departments and Agencies (MDAs), had nil balances of Property, Plant, and Equipment (PPE) in the FGN CFS for 2021 without justification for presenting nil balances of PPE, adding that the Accountant General’s excuse was that most of the agencies are not fully self-Accounting while Federal pay offices assets belonged to Office of the Accountant General.

    He also said that the Agencies under the Ministry of Health such as PHS, ONCHO are equipped by the Ministry of Health, while the Foreign Missions will be contacted to make a report of their legacy Assets for inclusion in the Accounts. 

     The report also said that N1.985 trillion was recognized as Intangible Assets to the FGN CFS with no disclosure of the classes of Intangible Assets to ascertain the assets with finite or infinite life, a basis for determining whether amortization should be charged or not. 

    But the Accountant General’s office disagree with the report saying “this is the items classified as Intangible Assets. From this listing, hardly can any of them be classified as required by the audit observation? Therefore, the treasury has classified every item here as research and development pending when a proper meeting shall be conveyed between the Ministry of Finance/Budget Office/Office of the Accountant-General and Auditor-General Office to reclassify items under “Other Capital Projects”

    It also report that “there was an offset of debit balance of N1.380 trillion against a credit balance of N13.791trillion in Note 28 (Cash and Cash Equivalent) to the FGN CFS, and the offset above, resulted in the net overdrawn balance of N12.410 trillion.

    It also said that while about N1.105 trillion was recognized as repayment of borrowing under cash flow from financing activities in the Consolidated Cash Flow Statement, while the sum of N896.008 billion  was the total repayment of borrowing disclosed in the financial records leading to a difference of N209.120 billion. 

  • How CBN is stablising naira, by deputy governor

    How CBN is stablising naira, by deputy governor

    The Central Bank of Nigeria (CBN) has phased out high-interest foreign exchange (FX) swaps to stabilise financial markets.

    It has settled 80 per cent of FX forward obligations, thereby boosting liquidity and market confidence.

    Deputy Governor, Monetary Policy, Mohammed Sani, said the CBN has also maintained robust external reserves to support exchange rate appreciation.

    He stated these in a presentation titled “Enhancing FX Market Efficiency” at a meeting of the Economic Management Team (EMT) convened by the Federal Government to assess critical economic policies and progress in key sectors.

    Sani highlighted the launch of the Electronic Foreign Exchange Matching System (EFEMS), which aims to improve transparency and enhance market operations.

    The meeting, chaired by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, focused on strengthening economic resilience.

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    A statement by Mohammed Manga, Director, Information and Public Relations at the Ministry of Finance, said the meeting noted efforts to address market reforms and agricultural performance.

    Edun commended the progress made in the foreign exchange and agricultural sectors.

    He urged stakeholders to accelerate efforts toward achieving economic stability, food security, and sustainable growth.

    He emphasised the importance of coordinated implementation of policies to support President Bola Ahmed Tinubu’s Renewed Hope Agenda, aimed at ensuring affordable food and improved living conditions for Nigerians.

    Minister of Agriculture, Senator Abubakar Kyari, presented a report on the 2024 wet season performance, revealing a 4.5 per cent increase in overall crop production.

    However, millet production declined slightly by 0.2 per cent.

    The minister expressed concern over rising production costs, particularly maize, which surged by 69.7 per cent, and significant food price increases, with cowpea prices rising by 300 per cent.

    He lamented the food crises reported in 31 states, which have severely impacted the Northeast.

    Despite these challenges, there were slight improvements in mechanisation and farmland expansion, with a two per cent increase in tractor use and a 2.3 per cent rise in cultivated farmland.

    The Ministry of Agriculture outlined ambitious plans for 2025, which include boosting food security through hybrid seed production, technology adoption, and climate-smart practices; promoting export crops such as cocoa, sesame, and ginger; and enhancing rural infrastructure with cold chain facilities, feeder roads, and electrification.

  • CBN tasks treasurers to protect banks’ financial health

    CBN tasks treasurers to protect banks’ financial health

    The Central Bank of Nigeria (CBN) has tasked treasurers of financial institutions to take major steps that would safeguard the financial health of their organisations.

    CBN Deputy Governor, Economic Policy Directorate, Muhammad Sani Abdullahi, disclosed this during the 8th annual Financial Markets Conference organized by Financial Markets Association of Nigeria (FMDA) in Lagos, with theme: “Global Economic and Domestic Outlook: Implications for Nigerian Treasurers”

    Abdullahi, who was represented by CBN Director, Financial Markets Department, Omolara Duke, disclosed that in the face of global economic turnaround, treasurers should strategically position themselves to navigate the evolving trend and optimize the positive impact on the financial markets.

     “So, our distinguished treasurers you bear the responsibility to relentlessly managing the ever evolving opportunities and challenges presented by global dynamics and safeguarding the financial health of your organisations. As treasurers and financial experts is crucial that you recognise the interconnectivity of the global and economic system,” he said.

    He said that FMDA has continued to show formidable strength, as exemplified in its doggedness at leading its members to embrace the adoption and implementation of the new policies.

    “The ability to tactically position treasury activities to manage the evolving global trend will have significant implication on our domestic markets,” he said.

    Abdullahi said the deceleration in global inflation is projected to continue in 2025, particularly towards the long run inflation targets of the Central bank.

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    He said the role of monetary policy in managing inflation expectation also played a major role in moderating global inflation.

    Other speakers at the event include Managing Director/CEO Optimus Bank Ltd, Dr. Ademola Odeyemi, MD/CEO Financial Derivatives Co. Ltd, Bismarck Rewane, who spoke on Navigating the Regulatory Landscape: The Treasurer’s Role in Driving Economic Growth” and “Strategies for Managing Inflation and Interest Rate Risks in a Volatile Economy” and Ifeanyi Edward’s who spoke on “Effective Risk Management and Hedging Strategies for Treasury in Uncertain Times”. All the speakers highlighted the risks associated with the job of treasurers and how they should protect the health of their financial institutions.

    President FMDA, Ms. Nadia Zakari delivered the opening address at the event.

    Rewane, called for a balanced monetary policies to prevent inflation-induced asset bubbles and stabilize the stock market.

    He explained that rising interest rates make fixed-income investments more attractive, potentially pulling capital out of equities

    Rewane, who spoke on strategies for managing inflation and interest rate in a volatile economy, said:  “Investors may shift allocations to shorter-duration bonds to minimize duration risks. Also, interest-sensitive sectors (e.g., real estate, utilities) may underperform due to higher borrowing costs. Companies reliant on debt financing face higher interest expenses, which may erode profitability”.

    According to Rewane, higher interest rates often lead to reduced consumer spending and demand while higher interest rates increase yields, leading to more activity in bond markets even as demand for floating-rate instruments may increase.

    He said although several measures are put in place to manage inflationary pressure but have proof abortive but aggressive shift in the rightward supply curve can bring inflation down.

    He explained that inflation risk refers to the possibility that the purchasing power of money will decrease over time due to rising prices of goods and services. He said higher inflation primarily impact on investors, and borrowers who rely on fixed-income instruments, loans, or bonds.

    Rewane said inflation impacts individuals, businesses and governments by reducing the real value of income, investments, and savings. He said inflation risks becomes significant when inflation rates are high or unpredictable.

    He said: “Inflation leads to complete loss of purchasing power and collapse of financial institutions. It also devastates savings and disrupts economic activity. It reduces consumer confidence, increases inequality, and complicates policymaking”.

    The Financial Markets Dealers Association of Nigeria is a body of licensed Deposit Money Banks (DMBs) and other Financial Markets Institutions operating in Nigerian with emphasis on regulatory policy engagement, advocacy and professional ethics in the financial market.

  • A year of tightening: Analysing the CBN’s monetary policy decisions

    A year of tightening: Analysing the CBN’s monetary policy decisions

    The Central Bank of Nigeria (CBN), this year, implemented a series of interest rate hikes, raising the Monetary Policy Rate (MPR) from 26.25% in May to 27.50% by this month, to combat rising inflation and stabilise the economy. These measures, alongside foreign exchange reforms, boosted the nation’s GDP growth to 3.46% in Q3 2024, driven by resilience in the services sector and improved oil production. However, agriculture and manufacturing lagged behind, highlighting the need for targeted support to these critical sectors. Assistant Editor Nduka Chiejina looks at the developments

    The year 2024 presented the Central Bank of Nigeria (CBN) with a formidable challenge: taming rampant inflation. In response, the CBN’s Monetary Policy Committee (MPC) embarked on an aggressive tightening cycle, culminating in a series of interest rate hikes. The journey began with a significant increase in May 2024, raising the Monetary Policy Rate (MPR) to 26.25%. This was followed by another 50-basis-point hike in July, bringing the MPR to 26.75%. The tightening continued unabated in September, with another 50-basis-point increase to 27.25%. Finally, at the last MPC meeting of the year, the rate was further increased to 27.50%.

    These successive rate hikes underscore the MPC’s unwavering commitment to curbing inflationary pressures. The rationale behind these decisions stems from the recognition that rising prices erode purchasing power, stifle economic growth and exacerbate social inequalities. By increasing borrowing costs, the CBN aimed to dampen aggregate demand, thereby cooling inflationary pressures.

    Expanding access and strengthening the financial system

    Beyond monetary policy tightening, the CBN undertook several initiatives in 2024 aimed at strengthening the Nigerian financial system and expanding access to financial services for individuals and businesses. Under the banking sector expansion initiative, the CBN approved one new non-operating financial holding company, allowing for greater diversification and complexity within the banking sector. Additionally, one merchant bank successfully transitioned to a national commercial bank, signifying a vote of confidence in its operations and financial strength.

    Two banks received “Approval-in-Principle” (AIPs) for regional commercial bank licences, while another received an AIP for a regional non-interest banking licence. This move aims to deepen financial inclusion in underserved regions by encouraging the establishment of regional banks better equipped to cater to the specific needs of local communities. The CBN recognised the crucial role of microfinance institutions in financial inclusion by licensing 16 new microfinance banks and re-licensed 53 previously revoked institutions. This action was intended to revitalise the microfinance sector and enhance access to credit for small businesses and low-income individuals. In addition, five new finance companies were granted operating licenses, further diversifying the financial landscape and providing alternative sources of financing for businesses and consumers.

    In November 2023, the CBN announced a new directive requiring banks to meet higher capital thresholds by March 31, 2026. This move was made to strengthen the resilience of the banking system and enable banks to better withstand economic shocks and support the growing needs of the economy. Banks have been given the flexibility to meet these new capital requirements through various options, including equity issuance, mergers, or adjustments to their business models. Implementation strategies commenced on April 30, 2024.

    The CBN updated guidelines for Bureau de Change operators, introducing new licensing requirements, capital standards and a franchise model. These reforms aim to enhance the regulation and oversight of the foreign exchange market, improve transparency, and combat illicit financial flows. The Financial Services Regulation Coordinating Committee (FSRCC) continued to play a vital role in fostering inter-agency collaboration and coordination on key regulatory issues. Regular meetings and joint initiatives on matters such as cryptocurrency frameworks and infrastructure financing have enhanced regulatory effectiveness and ensured a consistent approach across different sectors. Furthermore, the CBN conducted a comprehensive review of its consumer protection regulations in February 2024 to address emerging risks, particularly those associated with Fintech innovations. This review was intended to strengthen consumer protection standards, enhance financial literacy, and promote fair and ethical practices within the financial sector.

    These initiatives demonstrate the CBN’s commitment to strengthening the financial system, promoting financial inclusion and fostering a conducive environment for sustainable economic growth. By expanding access to finance, improving regulatory frameworks, and enhancing consumer protection, the CBN aims to build a more robust and resilient financial sector that can better serve the needs of the Nigerian economy.

    Enhancing consumer protection and driving financial inclusion

    The CBN, in 2024, demonstrated a strong commitment to consumer protection, financial inclusion and the responsible development of the financial sector. The introduction of a pilot Consumer Protection Risk-Based Examination represents a significant step forward. This approach allows the CBN to proactively identify potential risks and address emerging issues within the financial sector, complementing traditional compliance checks. The CBN rigorously enforced sanctions against financial institutions that violated regulations, deterring unethical behaviour and promoting a culture of compliance within the sector.

    The apex bank addressed numerous consumer complaints, resolving a significant portion and facilitating refunds to customers who had disputes with financial service providers. This demonstrates the CBN’s commitment to fair treatment of consumers and ensuring their rights are protected. The implementation of the Unified Complaints Tracking System (UCTS) and the development of a USSD code (*959#) for verifying licensed financial institutions have significantly improved service delivery and enhanced transparency for consumers. In addition, the launch of the Women Entrepreneurs Finance Initiative (We-FI) Code in June 2024 marks a significant step towards closing the gender gap in financial inclusion. This initiative aims to improve access to financial services for women-owned MSMEs, empowering female entrepreneurs and contributing to economic growth. Also, the CBN updated the National Financial Literacy Framework and the Financial Education Curriculum (FEC) in Nigerian schools, aligning them with global best practices and promoting sound financial decision-making among youth.

    The adoption of ISO 27001 standards and the introduction of a Risk-Based Cybersecurity Framework demonstrate the CBN’s commitment to enhancing the resilience of the financial sector against cyber threats while the CBN has revised guidelines to include Virtual Assets Service Providers (VASPs) within the anti-money laundering/combating the financing of terrorism (AML/CFT) framework, reflecting the evolving nature of financial crime in the digital age.

    During the year, the CBN actively engaged with the fintech sector, promoting transparency and disclosure while ensuring compliance with regulatory standards. New guidelines were introduced to address cybersecurity threats, facilitate diaspora remittances, and improve capital inflows. Furthermore, the CBN implemented stricter Know Your Customer (KYC) and AML requirements, including linking Tier 1 and wallet accounts to Bank Verification Numbers (BVNs) or National Identification Numbers (NINs), to combat fraud and enhance the integrity of the financial system.

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    The CBN implemented several key regulatory reforms, including revising the minimum Loan to Deposit Ratio (LDR), prohibiting foreign currency (FCY) denominated collaterals for local currency (LCY) loans, and adjusting the Cash Reserve Ratio (CRR) framework. These measures aim to support monetary policy objectives, stabilise the financial system, and ensure the soundness of financial institutions. The bank introduced a crucial measure to enhance market integrity and strengthen bank resilience by prohibiting banks from distributing unearned income, such as foreign currency (FCY) revaluation gains, for the financial year ending December 31, 2023. This ensures that investors have a clearer picture of bank performance, fostering informed investment decisions and promoting market transparency. These initiatives demonstrate the CBN’s multifaceted approach to strengthening the Nigerian financial system. By prioritizing consumer protection, fostering financial inclusion, and embracing technological advancements, the CBN aims to create a more robust, resilient, and inclusive financial sector that supports sustainable economic growth.

    Strengthening the financial system and enhancing global standing

    The CBN undertook several crucial initiatives in 2024 to further strengthen the Nigerian financial system and enhance its global standing. It intensified efforts to combat money laundering, terrorist financing, and proliferation financing (AML/CFT/CPF). Through enhanced supervision and conducting spot checks on Nigerian banks and their foreign subsidiaries, the CBN aimed to address the concerns raised by the Financial Action Task Force (FATF) and expedite Nigeria’s delisting from the Grey List. Delisting from the Grey List is crucial for attracting foreign investment, improving Nigeria’s international reputation, and fostering a more secure and stable investment environment.

    In July 2024, the CBN issued new guidelines to improve the management of dormant accounts, unclaimed balances, and other financial assets. These guidelines are intended to: identify and reunite dormant accounts and unclaimed balances with their rightful owners; hold these funds in trust for their rightful owners; standardize management practices across the financial system and establish clear procedures for reclaiming warehoused funds. These guidelines address concerns regarding inadequate compensation for funds held in dormant accounts and the risk of fraudulent transactions, thereby reinforcing trust and confidence in the financial system.

    Recognising the importance of cash in the Nigerian economy, the CBN suspended processing fees on cash deposits exceeding N500,000 for individuals and N3,000,000 for corporates from May 6 to September 30, 2024. Additionally, a three-month waiver was granted to Deposit Money Banks (DMBs) for depositing lower denominations (N50 and below) with the CBN at no cost. These measures aim to encourage cash deposits, strengthen financial intermediation, and facilitate the effective transmission of monetary policy. The CBN enhanced its Early Warning Systems (EWS) to proactively identify and mitigate potential systemic risks and vulnerabilities. Key developments include: enhanced monitoring of financial soundness indicators and net open positions and implementation of regulatory sanctions on non-compliant banks. These measures enable the CBN to intervene promptly to address potential contagion risks and ensure the safety and soundness of the financial system.

    In the outgoing year, the CBN continued to support the growth of the fintech ecosystem, building upon the successes of the Payments System Vision (PSV) 2020. Fintech innovations, such as mobile banking, online payments, and block-chain technology, have democratised financial services, reduced costs and enhanced efficiency, particularly benefiting underserved regions. Under the leadership of Governor Mr. Olayemi Cardoso, the CBN has strengthened consumer protection regulations to enhance consumer confidence and safeguard against unethical practices. This includes increased focus on consumer education and awareness initiatives to empower consumers to navigate the financial system effectively. The CBN has vowed to remain committed to maintaining a robust regulatory framework to support sustainable economic growth and stability. The CBN aims to position Nigeria as a leading financial hub in Africa, driving long-term economic development and growth through innovation, collaboration, and a commitment to sound financial practices.

    Fostering economic stability and confidence

    The CBN has taken significant steps in 2024 to enhance economic stability and foster investor confidence. Through the implementation of sound economic policies, the CBN has cultivated an environment of increased confidence in the Nigerian economy. These policies have attracted foreign investment and encouraged business growth. It has enhanced its communication strategy by, providing clear and timely information on monetary policy decisions and economic developments. This transparency has minimised economic uncertainties and built trust among investors and the public.

    The apex bank has adopted a contractionary monetary policy stance, including raising the Monetary Policy Rate (MPR) and adjusting the Cash Reserve Ratio (CRR) and Liquidity Ratio, to combat inflationary pressures. The implementation of an Inflation-Targeting (IT) framework is meant to stabilize price levels, reduce currency volatility, and foster sustainable economic growth. The pace of inflation has slowed down significantly. While inflation remains a concern, recent data from the National Bureau of Statistics (NBS) shows a reduction in headline inflation year-on-year, indicating progress in the fight against inflation.

    The CBN streamlined the foreign exchange (FX) market into a single framework, enhancing liquidity and reducing market distortions. The clearing of a $7 billion backlog of valid FX forwards has stabilised the exchange rate and boosted market confidence. These reforms have contributed to reduced FX volatility and an increase in external reserves. The introduction of EFEMS for FX transactions in the Nigerian Foreign Exchange Market (NFEM) aims to curb speculation and market distortions.

    The development of the Fiscal and Monetary Policy Coordination Framework (FMPCF) has improved the synergy between monetary and fiscal policies, ensuring a more coordinated and effective approach to economic management. The CBN has significantly improved its communication of monetary policy decisions through strategic planning and increased engagement with media and stakeholders. The introduction of podcasts and enhanced social media presence has provided timely updates and increased public engagement with the CBN’s activities.

    Data-driven decision-making and a positive outlook

    The CBN has prioritised data-driven decision-making and technological advancements to enhance the effectiveness of its monetary policy. It has leveraged big data analytics through tools like Dynamic Integrated Analytic Modeling (DIAMoND) and the Macro Diagnostic Framework to gain deeper insights into economic trends and inform more accurate policy decisions. It has maintained high forecast accuracy and developed news-based indices to better assess and quantify policy uncertainty. In 2024, the CBN invested heavily in capacity-building programmes for its staff, enhancing their expertise in economic analysis, policy-making, and the use of advanced analytical techniques. The integration of mobile technology has improved data collection and analysis, enabling the CBN to make more informed and timely policy decisions.

    In May 2024, Fitch Ratings revised Nigeria’s economic outlook from stable to positive, reflecting improved financial stability and the effectiveness of the CBN’s policy measures. This positive rating upgrade signals increased confidence in the Nigerian economy and its future prospects. The year has been marked by significant strides in financial regulation and market conduct under the guidance of the CBN Governor. From enhancing market transparency through the restriction on unearned income distribution to facilitating Nigeria’s delisting from the FATF Grey List, the CBN has demonstrated a steadfast commitment to strengthening the financial system. 

    The introduction of new guidelines for dormant accounts, the suspension of processing fees to encourage cash deposits, and the advanced use of Early Warning Systems further underscores the Bank’s dedication to promoting stability and trust within the financial sector. As we celebrate these accomplishments, we acknowledge the Governor’s role in driving progress and ensuring a resilient financial environment for Nigeria.

    The CBN faced significant challenges in 2024, primarily cantered around managing inflation while supporting economic growth. In 2025, the key challenges the CBN will face include: balancing price stability with economic growth; addressing potential shocks like global recession or geopolitical instability; enhancing regulations and mitigating emerging risks and deepening financial inclusion,  expanding access to finance for underserved populations. Others are: maintaining a stable and competitive exchange rate; ensuring effective collaboration with other government agencies; integrating climate considerations into monetary policy; navigating the opportunities and challenges of fintech and ensuring transparency and clear communication of policies.

    Success in addressing these challenges will be crucial for maintaining macroeconomic stability and fostering sustainable economic growth in Nigeria. The CBN has demonstrated a strong commitment to fulfilling its mandate of promoting price stability and supporting sustainable economic growth. Through a combination of monetary policy tightening, regulatory reforms, and a focus on financial inclusion, the CBN has taken significant strides in strengthening the Nigerian financial system and enhancing its resilience. While challenges remain, the CBN’s proactive approach, data-driven decision-making, and commitment to continuous improvement position the apex bank to effectively navigate the complexities of the global and domestic economic landscape.