Tag: cbn

The Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, has participated in a high-level forum organized by the International Monetary Fund (IMF) and the World Bank Group (WBG), marking the 80th anniversary of the Bretton Woods Conference. 

The prestigious event, held at Bretton Woods, New Hampshire, USA, where the original post-World War II financial system was born, brought together a select group of global leaders to critically assess and shape the future of international financial systems.

A statement from the CBN on Sunday said: “Cardoso’s presence at this historic forum highlighted Nigeria’s and Africa’s growing influence in international economic discussions. His participation underscored his pivotal role as a representative of African interests, advocating for the continent’s financial needs and priorities in the global economic space”. 

With his vast experience as the former head of Citibank Nigeria and Commissioner for Economic Planning and Budget in Lagos State, Cardoso was uniquely positioned to contribute to discussions on the evolving role of multilateral financial institutions.

The Bretton Woods at 80 Forum focused on key issues such as sustainable development, financial inclusion, climate resilience, and investment strategies aimed at fostering inclusive growth. 

The session provided a platform for brainstorming actionable strategies to address these pressing global challenges and to ensure that the IMF and World Bank evolve to meet the demands of today and the future. 

Cardoso’s participation in the Bretton Woods at 80 Forum is significant not just for Nigeria but for the entire African continent. His involvement in these critical discussions is a reflection of Africa’s growing influence in shaping global financial policies. As the Bretton Woods institutions face calls for reform, Cardoso ensured that the voices of developing economies were heard, particularly as Africa seeks greater participation in the governance of these institutions.

The forum, which gathered some of the world’s most renowned figures in international finance, economic policy, sustainability, and global governance, addressed the evolving role of the IMF and World Bank in a rapidly changing global economy. Among the key topics discussed were the impact of climate change on economies, the importance of financial inclusion in promoting economic stability, and the need for investment in resilient infrastructure to foster sustainable growth in emerging markets.

The exclusive gathering included former executives of major global financial institutions and leading figures shaping the future of markets, climate action, and social development. Together, these leaders explored the challenges and opportunities facing the global financial system, particularly in light of increasing global inequality, climate crises, and the shifting landscape of international trade.

As global financial institutions face unprecedented challenges, including calls for reform to address the needs of emerging markets and developing economies, the Bretton Woods at 80 Forum offered a crucial platform for reshaping the international financial architecture. The discussions during the forum centered on how the IMF and World Bank can become more responsive to the needs of regions like Africa, which have long been underrepresented in global financial governance.

Olayemi Cardoso’s role in these discussions was instrumental in pushing for a more inclusive global financial system that reflects the realities of both advanced and developing economies. His advocacy for Africa’s unique financial challenges, including the need for more accessible funding for infrastructure projects and greater support for financial inclusion, was recognized as key to the forum’s recommendations for reform.

Cardoso’s participation in the Bretton Woods at 80 Forum underscores his commitment to advancing Africa’s economic priorities on the global stage. His involvement in the forum is a testament to his leadership in central banking and his deep understanding of the economic reforms needed to build resilient financial systems in Africa. Cardoso’s contributions are expected to have a lasting impact on how the IMF and World Bank approach their support for emerging markets, particularly in areas such as financial inclusion and climate resilience.

The Central Bank of Nigeria (CBN) has announced the provision of additional U.S. dollars to Bureau De Change (BDC) operators.

This decision was communicated through a circular issued by the Trade and Exchange Department of the CBN, titled TED/FEM/PUB/FPC/001/028, on Wednesday.

The circular, signed by Dr. W. J. Kanya, Acting Director of the Trade and Exchange Department, informed all BDC operators and the general public of the apex bank’s approval for the sale of $20,000 to each eligible BDC operator at an exchange rate of N1,590 per dollar.

The funds are intended to meet demand for eligible invisible transactions, such as personal travel allowances, business travel allowances, tuition fees, and medical bills, among other non-physical imports.

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According to the CBN’s directive, BDC operators are required to sell foreign exchange to eligible end-users at a margin not exceeding one percent (1%) above the purchase rate from the CBN. This measure aims to ensure that retail customers can access foreign exchange at fair rates, preventing undue price hikes and speculation in the retail market.

Eligible BDCs interested in purchasing the $20,000 from the CBN have been directed to make their Naira payments into designated CBN deposit accounts.

The payment confirmation, along with all necessary documentation, is to be submitted to CBN branches in Abuja, Awka, Kano, and Lagos for disbursement of the funds.

The CBN’s intervention in the foreign exchange market comes amidst ongoing efforts to stabilize the Naira and provide adequate liquidity for legitimate transactions. By supplying the BDC segment of the market with additional dollars, the central bank aims to address shortages and ease pressure in the retail segment, where individuals and small businesses often face challenges in accessing foreign exchange.

This announcement is part of a broader strategy by the CBN to manage the foreign exchange market and support economic activities reliant on the availability of foreign currency.

The sale of forex at a regulated margin also aligns with the bank’s commitment to maintaining a stable exchange rate while ensuring that BDCs remain a viable source of foreign currency for everyday transactions.

The move is expected to provide significant relief to Nigerians and businesses engaged in international trade or seeking foreign exchange for various permissible activities.

• Says levy not reintroduced

The Central Bank of Nigeria (CBN) has temporarily withdrawn its biennial Monetary, Credit, Foreign Trade, and Exchange Policy Guidelines for 2024-2025 following widespread media misreporting.

This decision comes in the light of misunderstandings surrounding the now-suspended Cybersecurity Levy, initially mentioned in the guidelines published on September 17, 2024.

 In a detailed statement, the CBN clarified that the levy had been suspended since May 2024, following public outcry and a decision by the Federal Executive Council (FEC).

The CBN explained that the guidelines were intended as a reference to past policies and directives issued up to December 31, 2023, and not as new regulations. However, some media outlets misrepresented the information, which has prompted the temporary withdrawal of the document.

The cybersecurity levy, which had its roots in the Cybercrime Prevention and Prohibition Amendment Act of 2024, was originally mandated by the CBN for collection by commercial banks, payment service providers, and non-interest banks.

 These institutions were to remit the levy to the appropriate authorities to enhance the nation’s cybersecurity infrastructure. However, due to strong public resistance, the Federal Executive Council opted to suspend the levy during its last meeting in May 2024.

In line with the FEC’s decision, the CBN formally withdrew its earlier circular instructing financial institutions to collect and remit the levy. This development was communicated to relevant stakeholders through a circular that superseded previous directives. The CBN stated that the withdrawal was made to “minimize risk of any further misrepresentation” and ensure clarity in the nation’s cybersecurity framework.

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 The CBN emphasised that the primary aim of its biennial guidelines is to provide stakeholders with a comprehensive reference for monetary, credit, foreign trade, and exchange policies. The document, the CBN noted, is not a collection of new policies but a compendium of previously issued directives and guidelines, meant to streamline access to policy information for stakeholders.

 According to the CBN, the guidelines serve three core purposes. First, they act as a single reference source for stakeholders, allowing for ease and convenience when navigating CBN policy. Second, they serve as a basis for adjudicating policy conflicts involving stakeholders, providing a valid framework for resolving disputes. Third, the guidelines offer additional clarification on CBN policies and directives, ensuring stakeholders understand and apply the policies correctly.

 The apex bank reiterated that the provisions in the guidelines are only applicable to the extent that no updates or revisions have been made to the policies contained therein. The bank further stated that recent amendments and revisions to certain policies—particularly in 2024—have rendered parts of the guidelines outdated.

 The bank pointed out that, in line with previous editions, the most recent publication (January 2024) includes policies and guidelines that were in effect up to December 31, 2023. While some of these policies will remain relevant through 2024 and 2025, many others will no longer apply due to subsequent revisions or updates. This clarification is critical, the CBN said, to prevent further misunderstandings about the applicability of outdated policies.

The Central Bank of Nigeria (CBN) has withdrawn its latest Monetary, Credit, Foreign Trade and Exchange Policy Guidelines publication.

The publication was released on Tuesday, September 17, 2024.

It said the revocation of the document is to minimise risks of any further misrepresentation or misinterpretation, resulting in confusion among stakeholders.

On Tuesday, reports of the policy documents stated that the Bank will sustain its Ways and Means Advances to the Federal Government at a 5 per cent limit for the fiscal years 2024-2025, contrary to a bill passed by the National Assembly which raised the maximum borrowing percentage in the Act from five per cent to ten per cent.

Another controversial excerpt was the reinstatement of the cyber security levy, which was earlier suspended early this year due to serious public backlash.

However, refuting these claims in a new statement published on its website on Friday, the Apex Bank said the new release was, however, not signed by any CBN official.

The CBN said the guidelines were misunderstood by some outlets as new policies when, they are a compilation of previously issued policies and directives effective until December 31, 2023.

It also noted that some policies mentioned in the guidelines have been revised or replaced by newer updates.

The statement read: “The attention of the Central Bank of Nigeria has been drawn to certain instances of misinterpretation or misrepresentation of its biennial publication on Monetary, Credit, Foreign Trade and Exchange Policy Guidelines published on September 17.

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“In response, the CBN has temporarily withdrawn the document to minimize risk of any further misrepresentation.

“As is stated explicitly in the document to guide stakeholders, the CBN reiterates that the publication is a compilation of previously issued policies and guidelines issued by the bank up to a cut-off date, typically December 31 of the relevant year.

“As in all previous editions, the current document is intended to achieve the following objectives: A single reference source for the ease and convenience of stakeholders. A valid compilation of policies, directives, and guidelines for adjudication in conflict situations involving stakeholders.”

It stated further that “as a compendium of previously issued policies and guidelines, the provisions are applicable only to the extent that there have been no updates or revisions to the guidelines and policies contained therein. This is stated explicitly in the document to guide stakeholders.

“In line with prior editions, the most recent publication (January 2024) contains policies and guidelines issued by the Bank up to 31st December 2023, some of which will remain relevant

during the period 2024 – 2025.”

Continuing, the statement noted that, “In the light of these clarifications, we ask stakeholders to note the following: Some recent media publications referencing aspects of the Guidelines refer to policy positions of the Bank issued prior to 31st December 2023, which have changed in the light of revisions and updates in 2024. One example is the Cyber Security Levy, which was suspended in May 2024, superseding the circular reported in the Guidelines.

“Certain technical aspects of the guidelines have been widely misreported and misrepresented. For example, reports have mistakenly sought to link the fuel subsidy removal to external reserves. Such reports essentially missed the analytical basis for the original statement, which was intended to observe a potential risk that was to be mitigated by the policy. More recently, policies of the Bank around the Naira exchange rate and those of the fiscal authorities have positively altered the outlook of the subject in question.

“In summary, the guidelines must primarily be viewed as a record of policies, circulars and directives issued by the bank up to the end of 2023. They are not new directives and should not be reported as such.”

“The Bank will continue to provide clear monetary policy direction and advice for the overall good of the Economy. We urge all stakeholders to seek clarification of information about the Bank before publishing,” the statement concluded.

The Central Bank of Nigeria (CBN) is maintaining a five per cent limit on Ways and Means advances to the Federal Government for the 2024-2025 fiscal year, it was learnt yesterday.

The decision negates the recent amendment passed by the National Assembly, which sought to raise borrowing limit from five per cent to 10 per cent.

This information is contained in the apex bank’s Monetary, Credit, Foreign Trade, and Exchange Policy Guidelines for 2024-2025, published yesterday, which shed light on the bank’s fiscal strategies amid rising economic pressures.

Ways and Means advances refer to temporary loans the CBN offers to the federal government to bridge fiscal deficits.

Under the policy, the federal government is permitted to borrow up to five per cent of the actual collected revenue from the previous year.

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The CBN rules stipulates that these advances must be repaid within the fiscal year they are granted, with liquidation being prioritised “as soon as possible.”

This move highlights the apex bank’s intention to avoid long-term debt accumulation while balancing the government’s financial needs.

It was learnt that contrary to the National Assembly’s push for a 10 per cent borrowing cap, the CBN decision reflects its cautious approach toward expanding fiscal deficits and ensuring stricter financial discipline.

Analysts believe that the conservative stance may signal the CBN’s concerns about inflationary pressures and the country’s growing debt profile, despite the legislative approval for higher borrowing.

The policy also reinforced the continued operation of the Treasury Single Account (TSA), a key public financial management reform tool.

The TSA consolidates all federal government accounts into a single system linked to the Consolidated Revenue Fund (CRF), allowing the government to monitor its cash position more effectively.

For the 2024-2025 fiscal year, Ways and Means Advances will be determined after accounting for the sub-accounts of various Ministries, Departments, and Agencies (MDAs) under the TSA framework.

The CBN, in collaboration with the Office of the Accountant-General of the Federation (OAGF), aims to improve TSA operations, ensuring efficient liquidity management and minimising financial leakages across government departments.

Interest rates in the upcoming fiscal years will continue to be influenced by market conditions, with the CBN adjusting its Monetary Policy Rate (MPR) as necessary. The guidelines stipulate that banks will offer negotiated interest rates on current and savings account deposits. For special-purpose deposits held as collateral, the interest rate will be no less than 30 per cent of the MPR for naira-denominated deposits, ensuring that depositors receive a competitive return on their funds.

Furthermore, the CBN’s guidelines extend flexibility to foreign currency-denominated deposits, with interest rates being negotiable between banks and customers. This structure reflects the CBN’s broader efforts to ensure alignment between market dynamics and the regulatory framework governing the financial system.

The guidelines impose a ceiling on domestic banks’ foreign currency borrowings, limiting such exposure to 125 per cent of shareholders’ funds, excluding inter-group and inter-bank loans.

The CBN mandates that these borrowings must be hedged, using appropriate financial instruments and must have a minimum tenure of five years, except for trade lines.

These provisions aim to mitigate exchange rate risks and ensure the financial system remains insulated from adverse currency movements.

In its foreign exchange management, the CBN reaffirmed its commitment to the Bilateral Currency Swap Agreement (BCSA) with the People’s Bank of China (PBoC), an arrangement that facilitates trade-backed Renminbi (RMB) transactions.

Banks engaged in these transactions must comply with strict provisions, including holding RMB-denominated accounts and ensuring that foreign exchange acquired through the RMB auctions is used exclusively for trade with China.

The policy is expected to boost bilateral trade while providing Nigerian importers with an alternative to dollar-denominated transactions, reducing pressure on the nation’s foreign exchange reserves.

The CBN’s commitment to enhancing eNaira, Nigeria’s Central Bank Digital Currency (CBDC), also features prominently in the 2024-2025 guidelines.

The apex bank is working on deploying eNaira Version 2.0, with a focus on expanding its use in wholesale transactions and increasing participation by deposit money banks.

The introduction of offline functionality, programmable money, and further collaborations with federal and state governments are among the initiatives aimed at driving wide spread adoption of the digital currency.

The guidelines also emphasize the CBN’s ambition to interface directly with the Government Integrated Financial Management Information System (GIFMIS) to streamline TSA payments and ensure real-time transactions.

The integration of eNaira Wallets for Ministries, Departments and Agencies (MDAs) will allow them to initiate vendor and beneficiary payments through the eNaira system, further enhancing transparency and efficiency in government transactions.

The CBN anticipates Nigeria’s economic growth will remain on a positive trajectory in the next two fiscal years, buoyed by ongoing reforms in the agriculture and oil sectors, and continued foreign exchange market interventions. The implementation of the Finance Act 2023 and the 2022-2025 Medium-Term National Development Plan (MTNDP) are expected to provide further stimulus to the economy.

However, the CBN cautions that several risks, including rising global energy prices due to the Russia-Ukraine war, and persistent domestic security and infrastructural challenges, could pose threats to economic growth.

Inflation is expected to remain elevated, driven by global supply chain constraints and exchange rate fluctuations, further complicating the government’s efforts to stabilize the economy.

As Nigeria enters the 2024-2025 fiscal years, the CBN’s policies reflect a careful balancing act between supporting government borrowing needs and maintaining financial stability.

The apex bank’s commitment to limiting Ways and Means Advances to five per cent despite legislative efforts to raise the cap, underscores its cautious approach to fiscal management.

With the TSA reforms, digital currency innovations, and market-driven interest rates, the CBN’s guidelines point to a broader strategy aimed at bolstering economic resilience while navigating global uncertainties.