A Lagos-based public affairs analyst and writer, Gbenga Ibrahim, has commended President Bola Tinubu and the governor of the Central Bank of Nigeria (CBN), Yemi Cardoso, for their efforts in driving change through the ongoing anti-corruption campaign at the country’s central bank.
Tinubu announced significant progress in the investigation into the CBN, which is being led by special investigator Jim Obazee.
The probe has uncovered a significant amount of stolen funds, unauthorized bank accounts, and fraudulent transactions totalling billions of naira.
According to sources, the investigation implicated former CBN governor Godwin Emefiele, who has been suspended pending further investigation.
Emefiele is accused of financial misconduct and abusing his position for personal gain.
The probe has revealed a complex web of corruption involving top officials at the CBN and other related entities.
Investigators have discovered numerous unauthorised bank accounts, both within and outside the country, containing billions of naira in stolen funds.
The investigation has also uncovered evidence of fraudulent transactions, including a controversial Naira redesign project that allegedly stifled productivity and led to chaos in October 2022.
The project, according to him, is a conspiracy against the Nigerian people and political class by the then-CBN governor and one of the erstwhile CBN deputy governors.
He also attributed the success to the ability of Cardoso’s leadership to identify capable hands like Bala Bello, an experienced and competent professional.
He noted: “Though I have never met the Governor or his deputies, inside sources confirmed that Bello is a very diligent, meticulous and analytical person, one staff even describing him as workaholic and straightforward, most times the first to come to the office and last to leave is part of the CBN management team led by Yemi Cardoso.
“He rose through the ranks to become Deputy Governor, Corporate Services, a position requiring rigorous security checks and scrutiny. It’s unfair to blame him for implementing recommendations from the special investigation counsel appointed by the president.”
The success at the CBN is a result of teamwork, compliance with APEX Bank policy, and a capable team following the CBN hierarchy.
President Tinubu mandated Mr. Obazee to produce a comprehensive report on public funds held by corrupt individuals and entities. The report exposed 593 unauthorised bank accounts in the US, UK, and China, and revealed billions of naira stolen from CBN accounts.
It also recommended prosecuting Mr. Emefiele and 13 others for alleged financial misconduct.
Ibrahim said that President Tinubu has commendably taken decisive action to combat corruption in the CBN, appointing a special investigator to probe the bank and related entities.
He lauded the administration’s commitment to transparency and accountability, adding that it is a significant step forward in the fight against corruption.
He stated: “The Federal High Court in Lagos has granted an order of interim forfeiture of property valued at N11,140,000,000 linked to Emefiele, further justifying President Tinubu’s efforts to ensure a corrupt-free CBN.
“Additionally, $4.6 billion charges have been levelled against Emefiele, equivalent to N7 trillion Naira, and $6.2 million fraudulently withdrawn from the CBN account in 2023 in the name of logistics to foreign observers, done by forging the signature of the then president Mohammadu Buhari.
“Sources confirm that some staff involved have returned over $1 million to the CBN with confessional statements, and many CBN staff are ready to testify against Emefiele. A former Director of Information Technology, John Ayoh, has admitted to collecting $600,000 on behalf of Emefiele from contractors. Another staff member, Monday Osazuwa, has also admitted to collecting $3 million cash in tranches for Emefiele.
“It’s also on the court record and public records how Mr Monday Osazuwa who is not ready to follow Emefele to prison admitted to having collected $3 million cash in tranches for Emefele, it’s also in public knowledge that Zenith Bank the Bank Emefele left as CEO to CBN as Governor on 28th November 2023 A Compliance Officer at Zenith Bank, Remigious Ugwu, testified in court about a series of large transactions involving the Central Bank of Nigeria (CBN) and April 16 Investment Limited.
“He revealed that the CBN made several payments to the company, including; N39,060,465 on October 19, 2020; N421,953,488 on November 6, 2020; N304,883,720 on November 23, 2020; N304,883,720 on January 1, 2021; N304,883,720 on March 23, 2021
“These transactions totalled over 1.4 billion naira and were paid by the CBN to April 16 Investment Limited over a period of five months. The purpose and legitimacy of these payments were not disclosed in the provided information.
“The investigation is ongoing, with many hailing President Tinubu’s commitment to transparency and accountability in the CBN. The President’s efforts have sent a strong message that corruption will no longer be tolerated in Nigeria’s financial sector. As the investigation continues, Nigerians are optimistic that President Tinubu’s anti-corruption drive will yield even more significant results, restoring public trust and integrity to the CBN and related entities.”
Moves by the National Assembly to review the Central Bank of Nigeria (CBN) Act of 2007 have been hotly debated with opinions divided as to the propriety and otherwise of such a proposal. Nduka Chiejina (Assistant Editor), in this report examines the issues
The National Assembly is currently discussing potential changes to the Central Bank of Nigeria (CBN) Act of 2007, resulting in a heated debate. These proposed amendments contain several significant points.
Firstly, the amendments seek to enforce greater accountability within the CBN. To achieve this, there is a suggestion for the National Assembly to have more influence over the CBN’s budget and, potentially, the appointment of board members. The intention is to create a system of increased oversight.
However, critics argue that these changes could potentially compromise the CBN’s independence, an attribute they believe is crucial for enabling effective monetary policy. They fear that the proposed alterations may undermine the ability of the CBN to carry out its responsibilities independently.
On the other hand, supporters of the amendments argue that they would enhance collaboration between the CBN and the Ministry of Finance, leading to improved coordination in managing the economy. They believe that by increasing cooperation between these entities, economic management will become more efficient and effective.
Additionally, the suggested amendments propose the implementation of stricter penalties for exceeding certain limits on government borrowing from the CBN. This would entail specific penalties for those who surpass these predefined borrowing limitations.
The discussion surrounding the proposed changes to the CBN Act reveals a dilemma between ensuring the independence of the central bank and fostering collaboration for a robust economy. It is essential to strike a balance between these factors to achieve effective economic management in Nigeria.
The CBN plays a vital role in the country’s financial system. It’s responsible for managing inflation, setting interest rates, issuing currency, and ensuring the stability of the banking sector. But the CBN’s operations and powers might be undergoing significant changes if proposed amendments to the CBN Act are passed.
Addressing leadership gaps and strengthening oversight
The first section of the amendments deals with potential leadership gaps and introduces stricter compliance measures. If the CBN Governor and Deputy Governors are not appointed within 90 days, the President can establish a temporary “Interim Board” to carry out the Board’s functions for a maximum of 60 days. This ensures continued leadership even during periods of transition. However, some experts worry that 60 days might be insufficient to find qualified candidates and could raise concerns about political interference in the CBN’s governance.
A new position of Chief Compliance Officer (CCO) is being proposed. The CCO will submit quarterly reports on the CBN’s adherence to the Act and other relevant laws. These reports go to the Board, the President, and relevant National Assembly committees. Additionally, the National Assembly gains the power to issue notices to the Board regarding non-compliance and even recommend suspension or removal of the Governor for persistent issues. This strengthens oversight and accountability, but it’s crucial to ensure a balance is maintained to avoid excessive interference in the CBN’s decision-making.
Transparency in Monetary Policy and Coordination with Fiscal Policies
The second section focuses on improving transparency in monetary policy decisions and establishing a committee for better coordination between monetary and fiscal policies.
The current structure of the Monetary Policy Committee (MPC), responsible for formulating monetary and credit policy, remains largely unchanged. However, the amendments emphasise the need for regular consultation between the CBN and the Ministry of Finance.
The CBN will be required to publish a detailed “Monetary Policy Report” every six months. This report will explain inflation sources and forecasts, the policies used to achieve inflation targets, and the reasons behind those policies. It will also review the implementation of previous policies and explain any situations where inflation targets were missed. The report will propose solutions and timelines for achieving the targets if missed. This report goes to the President and National Assembly, fostering greater transparency and public understanding of the CBN’s actions.
The proposed amendment to Section 16 involves substituting “the Bank” with “a suitable mechanism devised by the MPC and the Coordinating Committee for Monetary and Fiscal Policies.” This change implies that the Monetary Policy Committee (MPC) and the Coordinating Committee would collectively devise mechanisms for monetary policy, rather than these policies being the sole responsibility of the CBN.
The amendment introduces shared responsibility for monetary policy decisions, which could dilute the CBN’s authority and independence. By involving the Coordinating Committee, which includes other government officials and entities, the amendment might introduce political influence into what are typically technical and independent central bank functions.
Central banks are often insulated from political pressures to ensure consistent and technically sound monetary policies. This change could lead to more politicized decision-making, affecting policy consistency and effectiveness.
The second significant change in this segment introduces specific penalties for refusing to accept the Naira or denominating products and services in currencies other than the Naira without CBN permission. The amendment states that anyone who refuses to accept the Naira as payment or conducts business in another currency without CBN approval is guilty of an offence and liable on conviction to a fine of N500,000 or six months imprisonment.
This amendment enhances compliance and enforcement of the national currency’s use, which could help strengthen the Naira’s position as the primary medium of exchange within the country. The clear penalties aim to deter the practice of “dollarization,” where foreign currencies, especially the US dollar, are used for transactions within Nigeria. This is crucial for maintaining the sovereignty and stability of the national currency. Individuals and businesses could face significant legal and financial consequences if they violate this rule, reinforcing the importance of the Naira in the economy.
The overall impact on the CBN is that the amendment to Section 16 could reduce the autonomy of the CBN, making it more susceptible to political influence and potentially affecting the quality and consistency of monetary policy while the new penalties for refusing the Naira would enhance the CBN’s regulatory authority, ensuring better enforcement of currency regulations.
However, reduced CBN independence could lead to less effective monetary policy, potentially resulting in economic instability if policies are influenced by short-term political considerations rather than long-term economic goals. The stricter enforcement on the use of Naira could bolster the national currency’s dominance in the domestic market, which is positive for national economic sovereignty and stability.
The final segment focuses on how the CBN lends money to the Federal Government to cover temporary budget shortfalls, also known as “Ways and Means Advances.”
Imagine the government needing a short-term loan to cover unexpected expenses. The CBN can grant these temporary advances, but with stricter conditions under the proposed amendments. The interest rate on these advances must now be determined jointly with the Coordinating Committee, and it cannot be lower than the average Monetary Policy Rate (MPR) for the previous 12 months (think of the MPR as the baseline interest rate). Additionally, the maximum total outstanding advance is raised to 10 percent of the previous year’s average federal government revenue for the past three years (excluding asset sales).
Currently, there might be loose regulations on how quickly the government needs to repay these advances. The amendments propose stricter terms. Advances must be repaid within 12 months. Failure to repay triggers a 10 percent interest rate hike. The CBN is also prohibited from accepting promissory notes or similar instruments for repayment. Advance repayment cannot be facilitated through the issuance of securities underwritten by the CBN (think of promissory notes and securities as essentially “IOUs”). Breaches of these provisions are punishable by a minimum 21-year prison sentence and potential financial penalties.
The stricter interest rates and repayment terms could incentivise the government to be more fiscally responsible and avoid excessive borrowing. Increased transparency in the process could improve public trust in the government’s financial management. However, the severity of the 21-year minimum sentence for breaches might be seen as excessive.
Giving the interest generated by the proposed CBN Act amendment especially as it potentially threatens the independence of the CBN and, by extension, the broader economic landscape of Nigeria, President Bola Ahmed Tinubu has requested the National Assembly to temporarily suspend proposed amendments to the CBN Act.
At the heart of President Tinubu’s request is a profound concern for the potential ramifications of diminishing the CBN’s autonomy. The President’s stance is clear: any alteration that could weaken the central bank’s independence might have detrimental effects on Nigeria’s economic health. The CBN, as the nation’s monetary authority, plays a critical role in formulating and implementing policies that ensure financial stability. Interference with its functions could undermine these efforts and erode investor confidence.
The President’s apprehension extends to the broader perception of the Nigerian government’s commitment to global economic standards. The belief within the Presidential Villa is that Tinubu is worried that reducing the powers of the CBN would not only damage the government’s reputation but also send the wrong signals to international economic partners and stakeholders. Such a move could be perceived as a step back from established norms of central bank independence, which are crucial for maintaining economic credibility on the world stage.
The Nation reported that the CBN was officially informed of President Tinubu’s request through the Clerk of the National Assembly, who communicated directly with the CBN Liaison Officer. This chain of communication highlights the President’s proactive approach in ensuring that the legislative process aligns with the strategic economic interests of the country.
In the global context, central bank independence is a cornerstone of effective economic governance. It allows for unbiased and technically sound monetary policy decisions, free from political pressures. This principle is widely recognised as essential for maintaining low inflation, stabilising the currency, and fostering sustainable economic growth. President Tinubu’s intervention, therefore, reflects a commitment to uphold these international standards.
The President’s request for a temporary halt opens the door for a more measured and inclusive review process of the proposed amendments. It underscores the need for a balanced approach that considers both the legislative intent and the fundamental role of the CBN in safeguarding economic stability. Moving forward, this could involve consultations with economic experts, stakeholders, and international partners to ensure that any changes to the CBN Act are well-informed and strategically sound.
Speaking to the planned amendments especially with regards to interfering with the CBN’s core mandate of fixing interest rates Mr Gbolade Idakolo, Managing Director/CEO SD&D Capital Management Limited told The Nation that, “The core mandate of the Central Banks across the world includes fixing of interest rates for their economy which is sacrosanct.
“However, the ministry of finance can align fiscal policies with the monetary policies driven by the CBN to achieve the greater goal of strengthening the economy.
“The power to fix interest rates and drive monetary policies is the symbol of independence of the CBN and without that power, the relevance of the central bank will be completely eroded. I want to believe that the Senate or the National Assembly will not want to tamper with the independence of the CBN to carry out its core functions.”
On his part, Dr. Samson Galadima Simon, Chief Economist at ARKK Economics and Data Limited, Abuja said “it’s a grievous error on the part of the Nigerian Senate or National Assembly to strip the CBN of its operational independence. While I understand their angst about the last CBN administration that undermined the CBN itself, impoverished Nigerians and destroyed the economy through abuse of Ways and Means, unorthodox policies, Naira redesign, fiscal interventions and many more.
“However, what’s needed is not to compromise the CBN’s independence even more but rather make it more transparent, fully accountable to the people and absolutely democratic. The CBN governor should not be be-all and end-all. As that status makes a CBN governor too powerful and abusive of his powers.
“What’s more, when the CBN governor feels he has the political backing of his appointors, he might be very destructive as witnessed in the last administration. But, it was political interference that brought Nigeria to this morass. Hence, further entrenching that is as bad a policy as they.
“The Nigerian legislators must not be carried away by emotive forces. They need to stay grounded and make wise decisions that better the lots of the people not exacerbate an already bad economic status quo.
“Central Banks as institutions; not the head only; are meant to be extremely powerful institutions with limitless number of ways to get results. So, reducing their supervisory role does not augur well for the economy,” he said.
The proposed amendments to the CBN Act introduce significant changes affecting the bank’s structure, operations, and relationship with the government. While some amendments promote transparency and accountability, others raise concerns about potential bureaucratic hurdles, diminished CBN autonomy, and a lackof clarity in implementation.
The goal is to strike a balance between ensuring the CBN’s independence in setting monetary policy for price stability and maintaining accountability to the public. The proposed amendments raise important questions that need careful consideration to ensure a sound and effective monetary policy framework for Nigeria’s continued economic growth.
In a statement issued yesterday, the CBN any insinuation in that regard was “false” and deliberately intended to sow panic within the Nigerian financial system, stressing that the Nigerian financial system remains “safe, sound, and resilient.”
In the statement signed by Acting Director of Corporate Communications, Mrs. Hakama Sidi Ali, the CBN said that banks are currently submitting implementation plans in response to the recently revised minimum capital requirements for lenders.
The CBN’s recent review raised capital requirements for Commercial, Merchant, and Non-Interest Banks (CMNIBs). This proactive measure, according to the CBN, aims to achieve two key goals: increased capital reserves will strengthen banks’ ability to withstand economic shocks and unforeseen circumstances and a stronger capital base allows banks to lend more to crucial sectors of the Nigerian economy, stimulating growth and development, especially with government’s desire to make Nigeria a $1 trillion economy.
The CBN reiterated its unwavering commitment to safeguarding the stability of the Nigerian financial system and assured stakeholders that “our financial system remains on a solid footing,” and the CBN will continue taking all necessary steps to ensure its safety and soundness.
These reassurances came on the heels of the CBN’s revocation of Heritage Bank’s operating license on Monday. The CBN appointed the Nigeria Deposit Insurance Corporation (NDIC) as the liquidator, and a process for insured depositors to claim their funds is underway.
The Nation reported the CBN on Monday, June 4, revoked the licence of Heritage Bank.
According to the CBN, the decision was made due to the bank’s inability to improve its financial performance.
“The Board and Management of the bank have not been able to improve the bank’s financial performance, a situation which constitutes a threat to financial stability,” the bank said.
However, the apex said Heritage Bank had not improved and “has no reasonable prospects of recovery”, thereby making revoking the licence the next necessary step.
The governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has called for stronger budgetary processes and accounting systems to improve transparency and accountability in public financial management.
Speaking at the Joint World Bank, IMF, and West African Institute for Financial and Economic Management (WAIFEM) regional training on the Annual Borrowing Plan (ABP) in Abuja, Cardoso, who was represented by Dr Ladies Bala-Keffi highlighted the importance of a comprehensive approach to debt management.
Cardoso noted that developing effective Debt Management Strategies (DMS) and Annual Borrowing Plans (ABP) requires a coordinated institutional framework and a stable macroeconomic environment. This means that all parts of the government need to work together to manage public debt effectively, ensuring that policies are aligned and stable.
The CBN governor also stressed the importance of investing in the training and development of debt management professionals.
By continuously providing them with the necessary training, mentorship, and technical assistance, the government can ensure that these professionals are well-equipped to handle complex debt management tasks.
Regularly disclosing debt portfolios and borrowing activities is crucial for building trust with investors, creditors, and the public.
Cardoso pointed out that transparency in these areas can help reduce borrowing costs and promote more efficient debt management.
Dr. Baba Yusuf Musa, Director General of WAIFEM, represented by Yakubu Aliyu highlighted the unique challenges faced by debt managers in the West African sub-region.
These include volatile commodity prices, high debt levels, limited fiscal space, fluctuating exchange rates, and rising borrowing costs. Such challenges threaten debt sustainability and economic stability, affecting the growth and well-being of citizens.
Dr. Musa explained that while many countries in the region develop Medium-Term Debt Strategies (MTDS), implementing these strategies effectively can be difficult.
The training on Annual Borrowing Plan (ABP) Development is designed to help overcome these challenges by providing a structured framework for operationalizing the MTDS on an annual basis.
This ensures that strategic debt management objectives are translated into specific borrowing activities and targets for the fiscal year.
The ABP aligns with government budgetary and fiscal policy objectives, determining the sources of financing, types of instruments, and maturities while considering market conditions.
The Issuance Plan, which operationalizes the ABP, outlines the timing and details of each debt issuance, ensuring a steady and predictable supply of funds to meet the government’s financial obligations.
Continuous monitoring and evaluation of the ABP process are essential to adapt to changing economic conditions and policy priorities.
This promotes efficient public debt management, ensuring that the government’s financial needs are met in a sustainable manner.
This focus on improving budgetary and debt management practices is expected to enhance transparency, accountability, and overall economic stability in Nigeria and the West African region.
The new policy regime announced by the Central Bank of Nigeria requiring bureau de change operators to apply for new operating licenses with all the associated, albeit unexpected cost implications is threatening the continuous existence of the latter who appear poised for war, reports Ibrahim Apekhade Yusuf
Currency exchange platforms including the licensed and unlicensed agents have literally been fighting the battle of their lives since the forex crisis took a turn for the worse with many of them now living in fear and dread considering the rapidity of assault of events in the forex market.
The reason for this is not far to seek: they have become easy targets of the authorities, who are convinced that the BDC operators are to blame for the dwindling fortunes of the local currency, naira.
The fire this time!
The apex had on Wednesday in a circular signed by the Director of the Financial Policy and Regulation Department, Haruna Mustafa, noted that the BDCs were expected to adhere to corporate governance requirements and anti-money laundering, counter-terrorism financing, and counter-proliferation financing provisions.
The CBN set up two new categories; Tier 1 and Tier 2 BDC licences respectively.
The latest circular was issued barely a day after the Monetary Policy Committee of the apex bank raised the benchmark lending rate to 26.25 per cent to tackle the country’s soaring inflation.
The new guidelines, which are an update on the draft that was exposed earlier in the year, go into effect on June 3.
The CBN removed the mandatory caution deposit, which the industry players had earlier kicked against.
ABC of new CBN licensing guidelines
According to the new guidelines, “A Tier 1 BDC: a. May operate in any State of the Federation and the Federal Capital Territory, b. May establish branches and appoint franchisees in any state and FCT, subject to the written approval of the CBN. c. Shall maintain a minimum distance of one kilometre between its branches, its branch and a franchisee, and between its franchisees. d. Shall exercise oversight on its franchisees. All franchisees shall adopt their franchisor’s name, logo, branding, technology platform and regulatory rendition requirements. 2 Classified as Confidential: e. Shall comply with the franchising standards prescribed in these guidelines.”
A tier 2 BDC Licence allows the operator to operate from only one state of the federation or the FCT, and it is allowed to establish five branches in a state of operation, subject to the written approval of the CBN.
It is also required to maintain a minimum distance of one kilometre between its branches and is not allowed to appoint franchisees.
The BDCs (existing or new) would also be required to meet the capital requirements for their license category within six months.
Besides, according to the new rules, BDCs in the Tier 1 category would be required to have a minimum capital requirement of N2bn, pay N1m as a non-refundable application fee and N5m as a non-refundable licence fee.
The apex bank disclosed that Tier 2 BDCs would be required to have a minimum capital base of N500m, N0.25m as a non-refundable application fee and N2m as a non-refundable licence fee.
The new rules allow BDCs to participate in the Nigerian foreign exchange market as a dealer, following application and approval to the director of the Trade & Exchange Department for an authorised dealership licence.
The CBN said while BDCs could source dollars from individuals, adding, “Sellers of the equivalent of $10,000 and above to a BDC are required to declare the source of the foreign exchange and comply with all AML/CFT/CPF regulations and foreign exchange laws and regulations and customers may sell foreign currencies in their individual domiciliary accounts with Nigerian banks to BDCs. All such sales shall be credited to the BDC’s Nigerian domiciliary account.
“Every BDC shall conspicuously display its buying and selling rates. Such rates shall apply throughout all its branches, and where applicable, its franchisees. Disclaimers or statements by a BDC to the effect that an exchange rate indication is not to be relied on are prohibited. i. A BDC shall not give customers price indications which are misleading or make price comparisons which are not genuine or fair. Every BDC shall maintain adequate records of all its transactions for transparency and compliance with CBN Guidelines, AML/CFT/CPF provisions, circulars or directives,” part of the guidelines stated.
In terms of prudential requirements, the CBN said, “BDCs are required to observe the following prudential requirements: Net Open Position (NOP) limit in foreign currency of the equivalent of 30 per cent of its shareholders’ funds unimpaired by losses or as may be determined by the CBN from time to time. Limit total borrowing to 50 per cent of shareholders’ funds unimpaired by losses and maintain insurance cover over cash (both naira and foreign currency) in office and in transit, fire, and staff fidelity.”
BDC operators can’t deal!
Expectedly, the BDC operators have rejected the new licensing guidelines, saying it is against best global practices.
Speaking in an exclusive interview with our correspondent penultimate Friday, Mallam Aminu Gwadabe mirrored the anxiety of most of the operators.
Gwadabe who attempted a comparative analysis of operations in other climes vis-à-vis what obtains in Nigeria said the requirements are a bit off-putting.
“The requirement is huge and definitely not in line with global practices. The capitalisation in the UK is 50,000 pounds; in Kenya, it is $50,000 and so on. I don’t think it reflects global practice. A BDC is not a deposit taker; it is only buying and selling,” he said.
Besides, the ABCON boss said the deadline given to BDCs is rather short, a development many observers believed was clearly a case of witch-hunt.
“The deadline is quite short. It is not feasible and then we should also guide against what we are trying to avoid. The CBN in its mind is checkmating money laundering and we may meet money laundering in the future,” he argued.
Expatiating, Gwadabe said his team won’t go to sleep until the issues are addressed.
“You see, the problem is that we’re still trying to understand and understudy that (CBN) document. There are lots of things we’re yet to get attune to. Honestly, we need a lot of clarification so that we can put the records straight,” he said.
“As I’m talking to you, we’re trying to even get to the CBN and see how we can streamline some of those issues.”
On whether he is sure something might give positively at the end of the day, he responded in the affirmative.
“We’re in the industry sector as you are aware of. So, we have put out our request and our understanding and hopefully it might be considered or not. But we’re hopeful because it is an industry request,” he assured.
In a related development, the BDC operators, at the end of a virtual meeting last Tuesday tagged, ‘New CBN Regulatory & Supervisory Reforms for BDCs: Challenges and Way Forward’ , decried the move by the CBN.
They noted that the apex bank was threatening their business and came up with recommendations that they claimed would be presented to the CBN.
Reading the recommendations of the association, the President of ABCON, Aminu Gwadebe, demanded, “Immediate reversal of the financial requirements to our submitted proposal on the draft guidelines for Tier 1 N500m, N100m for Tier 2 and N35m for Tier 3 with each having different levels of engagement with the regulators.
“They should allow the existing owners of both the eligible BDCs and revoked BDCs to recapitalise instead of reapplying.”
The money changers demanded that the existing N35m capital requirements should be recognised and be part of recapitalisation.
“The CBN should embark on nationwide enlightenment to address the fears of the willing investors. The timing for compliance should be extended to two years for fairness. Existing BDCs to be allowed to use their generic names as against registration of new names at the CAC.
“The terms of engagement for mergers and acquisitions should be properly explained to allow for inclusion. The ratio of 75 per cent cards and 25 per cent cash should be reversed inversely to encourage smooth takeoff,” the association noted.
Some of the operators expressed outright rejection of the new guidelines amid concerns that the CBN was not seeing them as an important part of the financial sector.
Another operator, Kayode Taiwo, remarked, “As for the recapitalisation, they just want money for the government. When they raised the BDC capital to N70m, did they return 50 per cent of it to the BDCs? There is no guarantee that another CBN governor will not reverse the new guidelines.”
BDC operators as endangered species
It may be recalled that earlier in the year, the CBN revoked the licences of 4,173 bureau de change operators for failing to observe regulatory provisions.
This is just as indications are that the money changers have been having a brush with the law enforcement agencies since the forex crisis heightened with fears rife in some quarters that they have been willing accomplices working with other saboteurs to further exacerbate the crisis.
This followed the recent clampdown on some of the currency operators by the anti-graft agency, the Economic and Financial Crimes Commission (EFCC), which arrested over 200 suspects in connection with foreign exchange scams and manipulation of the financial markets.
Informed sources revealed that no fewer than 200 suspected Bureau De Change operators were in EFCC custody nationwide.
“Over 200 suspects have been arrested by the EFCC for forex scam and currency speculation. Not all the arrested suspects are in Abuja or at our headquarters because they were arrested in various states across the country,” one of the sources revealed.
Pressed further, the source said, “I can confirm that we have arrested over 200 people for foreign exchange scam and manipulation of the financial markets; they are all being interrogated by our investigators to determine the degrees of their involvements. Most of them were arrested in Abuja, Lagos, Rivers, and Kano States.
“The clampdown on the forex scammers yielded positive results. Many of them have been arrested, and they will face the consequences of their actions.”
Confirming this development, some operators within Lagos metropolis and its environs lamented what they described as an obvious attempt to drive them out of business.
Adamu Abdallah, one of the licensed operators in Ilupeju axis of Lagos, said most operators have been practically rendered prostrate on account of the new CBN guidelines.
The operating climate has been anything but pleasant these days, he said, noting that at any rate most operators may be forced to go out of business in no time.
Abdallah’s concerns echo the same sentiments expressed by a majority of the BDC operators.
A forex dealer who simply identified himself as Musbau was however quick to add that before the latest rule, operators have been experiencing some awkward moments lately.
According to Musbau, “Last week alone, a total of 400 operators were arrested by the EFCC in some parts of Lagos. After the operations, they confiscated their valuables which include hard currencies of various denominations. But the situation has calmed down a bit. As a result of that most operators are now very discrete. They don’t sell on the streets. Rather they sell to only sell trusted persons as a result of that fear.”
The Nation reliably gathered that the anti-graft body had carried out a very clandestine operation on BDC operators, thereby arresting traders in Lagos, Kano and Port Harcourt.
The government blamed the actions of speculators in the forex market and digital marketing sphere for the significant depreciation of the naira.
On Friday, May 17, operatives of the Uyo Zonal command of the EFCC arrested five suspected forex speculators at the Ama-Hausa mosque, along Hospital Road, Aba in Abia State.
The arrested suspects are: Hassan Umaru; Haruna Umar, Badamasi Abdullahi, Auwal Muhammed and Kasimu Muhammed.
The spokesperson for the EFCC, Dele Oyewale, in a statement, revealed that the suspects had different currencies in varied sums at the point of arrest.
Oyewale said, “The recovered currencies are: 23,000 Won (Korean currency), 52 (Yuan Chinese currency), $6, 500 Nippon Ginko, 40 notes of Dalawampung Piso (Philippines currency), 20 Gambian Dalasis, 20 Swaziland currency and N382,000.
“Other recovered items from them are seven mobile phones, one power bank, one air pod, and one ATM card.
“They were arrested by operatives of the command, following weeks of surveillance and credible intelligence. The suspects will be charged to court as soon as investigations are concluded.”
In another development, Oyewale revealed that the Enugu Zonal Command of the EFCC arraigned Daniel Chukwuka Koussou, a forex broker, before Justice C. O. Ajah of the State High Court sitting in Independence Layout, Enugu State.
He was arraigned on a one-count charge bordering on criminal conversion and stealing of N112.8m.
The lone count charge reads: “That you, Daniel Chuwuka Koussou sometime in July 2022, in Enugu, Enugu State, within the jurisdiction of this Honourable Court, did commit a felony to wit: stealing by fraudulently converting to your use the sum of N112, 800, 800.00 (one hundred and twelve million, eight hundred thousand, eight hundred naira), property of Chinedu Igbokwe and thereby committed an offence.”
The offence is contrary to Section 342 of the Criminal Code Law, Cap 30 of the Laws of Enugu State and punishable under Section 353 (1) of the same Law.
The defendant pleaded not guilty when the charge was read to him and was thereafter remanded at the Enugu State Correctional facility pending the fulfilment of the bail conditions.
Oyewale disclosed, “Koussou was arrested following claims of a petitioner, who alleged that he sent $276,000 to the defendant, a supposed agent for Providus Bank, to convert into naira and return the same.
“According to the petitioner, on July 6, 2022, Providus Bank paid Koussou the full money in naira but the defendant sent part-payment of N21,759,771 to him (the petitioner) and diverted the rest for his personal use. All efforts made to get him to pay up proved abortive.”
Last two weeks, an unspecified number of BDC operators were arrested in Abuja for allegedly aiding currency speculators.
Currency operators, who spoke to our correspondent, confirmed that the sting operation occurred at various times during the day in Lagos, Kano and Port Harcourt.
Meanwhile, the naira recorded marginal appreciation at the official market and parallel market after the close of trading activities on Friday.
The naira exchanged at 1,334. 55 on Friday compared to 1,500/$ it traded on Thursday at the official market.
The daily foreign exchange market turnover decreased by 54 per cent or $144.7m to $123.45m from $268.17m recorded on Wednesday.
The National Assembly Committee on Banking, Insurance and other Financial Institutions has decided to pause the amendment process for the bill titled “An Act to Amend the Central Bank of Nigeria Act No. 7 of 2007.”
This decision was made to allow for more consultations amid controversy and misleading reports.
Special Adviser to the Chairman of the Senate Committee on Banking, Insurance, and other Financial Institutions, Professor Uche Uwaleke, clarified recent misunderstandings in the media.
He addressed reports claiming that the Senate planned to strip the Central Bank of Nigeria (CBN) of its power to set interest rates and transfer this authority to a committee led by the Minister of Finance.
According to him: “My attention has been drawn to a misleading report currently circulating in the media that the National Assembly plans to transfer interest rate decisions from the CBN to a Committee to be chaired by the Minister of Finance. This is completely untrue.”
“The fact is that the amendment Bill proposes a Coordinating Committee as an institutional framework for the alignment of fiscal and monetary policies and not to usurp the roles of the Monetary Policy Committee of the Bank which were not tampered with.
“Section 12 of the current Act establishes the MPC, as well as stipulates its functions and composition. These provisions are all retained in the amendment Bill.
“Be that as it may, let me seize this opportunity to inform you that in view of the controversy this has generated, the National Assembly has decided to put on hold the entire amendment process to allow for more consultations.
“As an objective and highly reputable international media organisation, it would be appropriate to pull down the misleading post and publish the correct position.”
This new committee, he clarified, is not intended to replace the CBN’s Monetary Policy Committee (MPC) or undermine the CBN’s independence.
He emphasised that Section 12 of the current CBN Act, which establishes the MPC and outlines its functions and composition, remains unchanged in the amendment bill.
The House of Representatives on Wednesday, May 29, directed its committee on banking institutions to investigate the circumstances leading to the recent sack of about 600 staff members of staff by the Central Bank of Nigeria (CBN).
This followed the adoption of a motion of urgent public importance by the member representing Karu/Keffi/Kokona Federal Constituency of Nasarawa State, Hon Jonathan Gbefwi.
The apex bank in in recent times laid off some of its staff including Directors and other staff based on what it called the need to reposition the bank for effective operation.
Leading the debate on the motion, Gbefwi said the CBN as part of an extensive reform, has been downsizing the workforce “which has affected close to 600 employees including directors and nearly all staff members in the governor’s directorate being terminated.”
According to him, “The recent downsizing by the apex bank has raised significant concerns and controversies among stakeholders, including the affected employees, labour unions, and the general public.”
He lamented that those affected by the CBN’s action are top-notch professionals whose skills may be lost to Europe and America, thus, leaving the country short-changed.
He said: “We are worried that these retrenchments, without any sort of fair hearings or panels, could cause the nation a lot in settlements.
“A director’s tenure according to the civil service rules is two terms of four years or 60 years of service, whichever comes first. This makes them like permanent secretaries. The capacity being thrown away be easily replaced?
“The House is worried about staff morale and progression. People choose careers in civil service so that they can end careers like their superiors and mentors who trained them. Seeing their bosses being treated with disregard and like criminals will send a message that professionalism is not rewarded, as well as, meritorious service to our great nation Nigeria.”
The Senate Committee on Banking, Insurance and other Financial Institutions on Tuesday postponed its public hearing on the Central Bank of Nigeria (CBN) Act (Amendment) Bill and the Nigerian Deposit Insurance Corporation Act (Amendment) Bill scheduled for Thursday, 30th May, 2024.
The Clerk to the committee, Mrs Tinuke Ogunrinde, said the public hearing was postponed due to conflicting schedules and clash of national events in commemoration of the first year anniversary of the President Bola Tinubu administration.
On the sideline of the May 29 commemoration, the President and the Commander-in-Chief of the Armed Forces, President Bola Ahmed Tinubu, will be hosted by the National Assembly on Wednesday May 29, 2024.
Also, Minister of Finance and the Coordinating Minister of the Economy, Dr. Olawale Edun; Governor of Central Bank of Nigeria (CBN), Dr. Olayemi Cardoso, among other key stakeholders who are expected to make presentations on the critical Bills will be engaged with the President who would be commissioning several projects all over the country during this period.
She said: “Members of the public are hereby informed that the Public Hearing of the Senate Committee on Banking, Insurance and Other Financial Institutions on the Central Bank of Nigeria and the Nigeria Deposit Insurance Corporation (Amendment) Bills earlier scheduled for Thursday, 30th May, 2024 has been postponed till further notice. A new date and time for the public hearing will be communicated.”
The Chartered Institute of Stockbrokers (CIS) and the Association of Securities Dealing Houses of Nigeria (ASHON) have raised concerns over the proposed amendments to the Central Bank of Nigeria (CBN) Act No. 7 of 2007.
The capital market stakeholders worry that the bill could undermine the Central Bank of Nigeria’s (CBN) independence, warning of potential adverse economic consequences.
The legislation, which has passed its second reading and is scheduled for a public hearing on May 30, 2024, seeks to modify the CBN’s autonomy by subjecting its budget to National Assembly approval and establishing a new coordinating committee for monetary and fiscal policies.
Critics argue that these modifications could introduce political interference in monetary policy decisions, hampering the CBN’s ability to manage the economy effectively and objectively.
President and chairman of the council of CIS, Oluropo Dada emphasised the pivotal role of the Central Bank in maintaining economic stability and preserving international credibility.
He said: “Safeguarding the independence of the Central Bank of Nigeria is crucial for aligning with global economic best practices and ensuring decisions are driven by sound financial principles, free from undue influence.”
However, Dada stressed the imperativeness of ensuring that fiscal authorities do not encroach upon the Central Bank’s operational independence, noting, “This is vital for effective and timely monetary policy responses.”
ASHON Chairman, Sam Onukwue highlighted the potential impact on investor confidence.
“An independent Central Bank is a cornerstone for maintaining the country’s standing in the global financial community, which directly affects investor confidence, credit ratings, and the overall economic outlook,” Onukwue cautioned.
Although both organisations acknowledged the merit of some proposed amendments aimed at enhancing corporate governance and compliance, they underlined the importance of taking into account the wider implications.
Economists, analysts, and participants in the financial markets meanwhile, will be keenly following the proceedings and any legislative moves that ensue as the public hearing draws closer. The result will profoundly impact Nigeria’s economic policy framework and its standing in the global economic landscape.
