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  • CBN’s FX policies push $18.5b remittances into unofficial market

    CBN’s FX policies push $18.5b remittances into unofficial market

    A large chunk of Diaspora remittances meant for the Nigerian economy is channeled through the unofficial markets by Nigerians living abroad to maximise returns, a foreign exchange (FX) flows report has shown.

    In its weekly market report released at the weekend, Afrinvest West Africa said $18.5 billion out of the $20.5 billion diaspora remittances meant for the Nigerian market came into the country through the back door (unofficial channels).

    The rest of the fund – $2 billion – came through the official channels, the company said.

    The report linked year-on-year decline in remittances to persistent foreign exchange rate volatility, high cost of transactions, and Central Bank of Nigeria-driven policy changes, especially for the International Money Transfer Operators (IMTOS); hence, luring significant chunk of remittances flow to the unofficial channels.

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    “For instance, while the World Bank estimated remittances flow to Nigeria in 2023 at $20.5 billion (38.0 per cent of total receipt in Sub-Saharan Africa ), the official record by the CBN put inflows at $2 billion,” the report said.

    Also, a CBN data showed that in the first quarter of this year, through the interbank price delivery, Nigeria recorded $282.6 million as the total direct foreign exchange (FX) remittances in the period, representing a 6.3 per cent year-on-year decline, from the first quarter of 2023 but a 127.9 per cent improvement from the low base of $124 million in fourth quarter of 2023.

    The report showed that the total direct foreign exchange remittances included money transfers from other countries to family members or other individuals in Nigeria through the official channel.

    A breakdown of the data on a monthly basis showed that the bulk of this year’s first quarter remittances came in January ($138.6 million), followed by March ($104.9 million).

  • CBN withdraws circular on implementation of national cybersecurity levy

    CBN withdraws circular on implementation of national cybersecurity levy

    The Central Bank of Nigeria (CBN) has withdrawn its earlier circular directing financial institutions to implement the national cybersecurity levy.

    The circular, issued on May 6, 2024 with reference PSMD/DIR/PUB/LAB/017/004, mandated commercial banks, mobile money operators, and other financial institutions to collect a 0.5 percent levy on all electronic transactions.

    This move comes amid widespread public criticism and concerns raised by various stakeholders regarding the levy’s potential impact on the financial sector and the overall economy.

    Critics argued that the levy would be an additional burden on Nigerians already grappling with rising inflation.

    Additionally, concerns were raised about the clarity and transparency of the  implementation process outlined in the initial circular.

    Last week, President Bola Tinubu ordered the suspension of the National Cybersecurity levy.

    The latest CBN circular is in response to the President’s order.

    The CBN’s decision to withdraw the circular is contained in a new directive jointly signed by Mr. Chibuzo A. Efobi, Director, Payments System Management Department, and Mr. Haruna B. Mustafa, Director, Financial Policy and Regulation Department.

    Read Also: Tinubu appoints InfraCorp to develop Nigeria’s Green Industrial Zone, Evergreen City

    The new circular, titled “RE: Cybercrimes

    (Prohibition, Prevention, etc) (Amendment) Act 2024-Implementation Guidance on the collection and remittance of national levy)” simply states that the previous circular is withdrawn with no further explanation provided.

    The decision to enforce the National Cybersecurity levy was met with public outcry and fears that the levy had the potential to hinder economic activity.

    The new circular suggests the CBN may be re-evaluating its approach to funding cybersecurity initiatives.

    Nigerians who had braced themselves for the additional levy are likely to welcome this development.

    However, questions remain regarding the government’s alternative plans for financing cybersecurity efforts in the country.

    It is expected that the CBN and relevant authorities will provide further clarification on the future of the National cybersecurity levy and potential alternative solutions in the coming days.

  • CBN takes action to double remittance flows, boost Naira value

    CBN takes action to double remittance flows, boost Naira value

    The Central Bank of Nigeria (CBN) is making efforts to double the amount of foreign currency remittances flowing through official channels.

    This initiative aims to increase the availability of foreign exchange, promote financial inclusion, and stabilize the naira’s exchange rate.

    The CBN on Wednesday, May 15, announced the issuance of “Approval-in-Principle (AIP)” to 14 new International Money Transfer Operators (IMTOs). 

    Mrs. Hakama Sidi Ali, Acting Director of Corporate Communications for the CBN, in a statement, explained that this “will help increase the sustained supply of foreign exchange in the official market.”  Increased competition among IMTOs is expected to “lower the cost of remittance transactions” and “boost financial inclusion.”

    The CBN governor, Olayemi Cardoso has set an ambitious goal of “doubling remittance flows into Nigeria within a year.” 

    He expressed “firm belief” in the goal being achievable.

    The CBN governor had earlier emphasised the apex bank’s commitment to “removing any bottlenecks hindering flows through formal channels permanently.” 

    Governor Cardoso outlined a “determined pathway and a sequenced approach” to address these challenges, highlighting collaboration with “key stakeholders in the remittance industry.”

    Mrs. Sidi Ali underscored the importance of remittances as a source of foreign exchange.  She stated that remittance inflows currently account for “over 6 percent of GDP” and play a significant role in “reducing the historical volatility in Nigeria’s exchange rate caused by external factors.” 

    Read Also: Why CBN should license cryptocurrency dealers, by IMF

    By increasing formal remittance flows, the CBN hopes to achieve greater stability in the value of the naira.

    The increase in the number of licensed IMTOs is a key action initiated by the CBN’s newly established remittance task force.  Governor Cardoso leads this collaborative unit, which brings together specialists to “work closely with the private sector and market operators” to facilitate remittance transactions in Nigeria. 

    The task force was formed following an “executive learning session with IMTOs” during the World Bank/IMF Spring Meetings held in April 2024. 

    This group will “meet regularly to implement strategy and monitor the impact of its measures on remittance inflows.”

    The CBN’s focus on remittance flows reflects a strategic approach to strengthening the Nigerian economy. By increasing foreign exchange availability, promoting financial inclusion, and stabilizing the exchange rate, the CBN’s initiatives have the potential to benefit both businesses and individuals in Nigeria.

  • Court strikes out N400m account freezing suit against CBN

    Court strikes out N400m account freezing suit against CBN

    The Federal High Court sitting in Abuja has dismissed a suit filed by one Mr Babatunde Victor Segun, who claimed that his bank account was unlawfully frozen by the Central Bank of Nigeria (CBN) and United Bank of Africa (UBA).

    Justice Emeka Nwite, in his judgement on Friday, May 10, 2024, held that the suit lacked merit and dismissed it without cost.

    The Applicant had approached the court in 2021 in a suit marked FHC/ABJ/CS/1339/2021, claiming that the CBN and UBA blocked his UBA account from October 15, 2020, till November 4, 2020, without due process.

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    He asked the court to award him N400 million as compensation for the alleged unlawful restriction of the account, and cost of his action.

    In arguing the Applicant’s case, Segun’s lawyer, Femi Falana (SAN) argued that blocking his account without due process of law was unconstitutional, and a violation of his rights to own property under the Constitution, the United Nations Declaration of Human Rights and African Charter of Human and Peoples Rights.

    But countering Falana, Lead Counsel to CBN, Prof. Fabian Ajogwu (SAN) of Kenna Partners leading Abdulfatai Oyedele, Esq. of Vantage Attorneys LP, submitted that the CBN does not provide banking services to individuals and does not have any banker-customer relationship with Mr. Segun.

    Ajogwu further submitted that the Applicant had failed to adduce any evidence that his human rights were infringed upon by the CBN.

    But delivering judgement, Justice Nwite agreed with Ajogwu’s position that the apex bank does not transact with individuals.

    The judge also upheld Ajogwu’s submission that the Applicant failed to provide evidence in the action to prove that his fundamental human rights were violated by the CBN and UBA when his UBA bank account was frozen.

    The court thus held that the suit lacked merit and dismissed the suit without cost.

  • IMF backs CBN on banks’ recapitalisation

    IMF backs CBN on banks’ recapitalisation

    The International Monetary Fund (IMF) has given its nod to the ongoing Central Bank of Nigeria (CBN)-led bank recapitalisation plan.

    The IMF’s  approval for the project was contained in the Fund’s Article IV Staff Consultation Report on Nigeria, released yesterday.

     The Fund also called for stronger supervision of the banking sector and improving the functioning of the forex market for a stronger financial sector.

    The Fund recommended: “Further strengthening bank capitalisation and tight supervision are needed to mitigate emerging financial sector stability risks. Improving the functioning of the domestic securities and FX markets should enhance the monetary transition mechanism and attract capital inflows. Broadening access to financial services and fostering financial inclusion remain priorities.”

    Reiterating the need for recapitalisation of banks, the Fund said that at the end of 2023, most commercial banks reported profits thanks to FX valuation gains, and banks’ capital adequacy ratio (CAR) improved to 13.3 per cent.

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    However, it said that three commercial banks that were unable to meet capital requirements have been placed under a special supervisory regime.

    “Two development finance institutions are severely undercapitalised. Last year, CBN revoked the licenses of 132 insolvent microfinance banks, four mortgage banks, and three finance companies. NPLs stood at 4 percent for commercial banks but are rapidly increasing at microfinance banks (14 per cent), development finance institutions (19 per cent), and mortgage banks (20 per cent),” the report said.

     The CBN recently announced a two-year bank recapitalisation exercise which commenced on April 1, 2024, and is expected to end on March 31, 2026.

    The plan requires a minimum capital of N500 billion, N200 billion, and N50 billion for Commercial Banks with International, National, and Regional licenses respectively.

  • FULL LIST: CBN releases licensed Deposit Money Banks

    FULL LIST: CBN releases licensed Deposit Money Banks

    The Central Bank of Nigeria (CBN) has released a comprehensive list of 44 licensed Deposit Money Banks operating within the country.

    The apex bank made this public in a post on its official website on Tuesday.

    According to CBN, seven banks, including Zenith Bank, Access Bank, First Bank, First City Monument Bank, United Bank of Africa, Fidelity, and Guaranty Trust Bank, have Commercial Banking licenses with international authorisation as of April 26, 2024.

    Also, fifteen banks have commercial banking licenses with National Authorisation.

    Four banks have commercial banking licenses with regional authorisation and four non-interest banks have national authorisation.

    The bank said the country has six merchant banks licensed with national authorization.

    It stated that financial holding companies increased to seven.

    CBN added that the country has a Mauritius commercial bank representative office.

    The list comes months after the CBN raised the minimum capital requirement for all banks in Nigeria to strengthen the country’s financial sector.

    Here are Banks with international authorisation:

    1. Access Bank Limited,
    2. Fidelity Bank Plc,
    3. First City Monument Bank Limited,
    4. First Bank Nigeria Limited,
    5. Guaranty Trust Bank Limited,
    6. United Bank of Africa Plc, and
    7. Zenith Bank Plc.

    Read Also: CBN extends suspension of cash deposit charges

    Here are Commercial banks with national authorisation:

    1. Citibank Nigeria Limited,
    2. Ecobank Nigeria Limited,
    3. Heritage Bank Plc,
    4. Globus Bank Limited,
    5. Keystone Bank Limited,
    6. Polaris Bank Limited,
    7. Stanbic IBTC Bank Limited,
    8. Standard Chartered Bank Limited,
    9. Sterling Bank Limited,
    10. Titan Trust Bank Limited,
    11. Union Bank of Nigeria Plc,
    12. Unity Bank Plc,
    13. Wema Bank Plc,
    14. Premium Trust Bank Limited and
    15. Optimus Bank Limited.

    Here are Commercial banks with regional licenses:

    1. Providus Bank Limited,
    2. Parallex Bank Limited,
    3. Suntrust Bank Nigeria Limited, and
    4. Signature Bank Limited.

    Here are players in the non-interest banking sector with national authorisation:

    1. Jaiz Bank Plc,
    2. Taj Bank Limited,
    3. Lotus Bank Limited, and
    4. Alternative Bank Limited.

    Here is a list of Marchant Banking Licence with National Authorization

    1. Coronation Merchant Bank Limited,
    2. FBN Merchant Bank Limited,
    3. FSDH Merchant Bank Limited,
    4. Greenwich Merchant Bank Limited,
    5. Nova Merchant Bank Limited, and
    6. Rand Merchant Bank Limited.

    Here are the financial holding companies listed

    1. Access Holdings Plc,
    2. FBN Holdings Plc,
    3. FCMB Group Plc,
    4. FSDH Holding Company Limited,
    5. Guaranty Trust Holding Company Plc,
    6. Stanbic IBTC Holdings Plc, and
    7. Sterling Financial Holdings Limited.

    Here is a Bank Representative Office

    1. The Mauritius Commercial Bank Representative Office (Nigeria) Limited was listed as the sole representative office.

  • CBN extends suspension of cash deposit charges

    CBN extends suspension of cash deposit charges

    The Central Bank of Nigeria (CBN) has extended the suspension of charges on cash deposits above certain thresholds.

    The new directive, effective immediately, will see Nigerians continuing to deposit cash without incurring processing fees until September 30th, 2024.

    This announcement comes after a brief period of confusion. On May 1st, banks resumed charging processing fees on cash deposits, in response to the CBN’s “Guide to Charges by Banks, Other Financial Institutions and Non-Bank Financial Institutions” issued in December 2019.

    These fees were two per cent for individual accounts exceeding N500,000 and three per cent for corporate accounts exceeding N3 million.

    Read Also: PRP condemns CBN’s cybersecurity levy

    The CBN, in a new circular signed by Adetona Adedeji, Director of Banking Supervision, referred to a previous suspension of these charges implemented in December 2023 and officially extended that suspension until the end of the third quarter of 2024.

    The latest circular reads: “Please refer to our letter dated December 11, 2023, referenced BSD/DIR/PUB/LAB/016/023 on the above subject, suspending processing charges imposed on cash deposits above N500,000 for Individuals and N3,000,000 for Corporates as contained in the “Guide to Charges by Banks, Other Financial Institutions and Non-Bank Financial Institutions” issued on December 20, 2019.

  • PRP condemns CBN’s cybersecurity levy

    PRP condemns CBN’s cybersecurity levy

    …tasks fed govt to rescind plan

    The Peoples Redemption Party (PRP) has strongly condemned the Central Bank of Nigeria’s (CBN) recent directive to impose a 0.5% cybersecurity levy on electronic transfers, describing it as “heartless” and “unjust”.

    The party has therefore urged the CBN and the Nigerian government to immediately rescind the policy, which it says will only serve to exacerbate the financial woes of Nigerian citizens who are already grappling with economic hardship.

    According to its acting national publicity secretary, Comrade Muhammed Ishaq, the PRP said the policy is ill-timed and insensitive, coming at a time when Nigerians are struggling to make ends meet.

    “This policy will have a disproportionate impact on the most vulnerable sections of society, including hardworking individuals, families, and small business owners”, the party said.

    The party also criticized the alleged lack of transparency and accountability in the utilization of the funds collected, which will directly benefit the National Security Adviser’s office.

    It said: “It appears to be yet another instance of the government extracting additional resources from its citizens without providing any tangible benefits in return.”

    Read Also: FULL LIST: Those exempted from CBN’s 0.5% cybersecurity levy

    The PRP has questioned the rationale behind the policy, saying it seems to be another instance of the government imposing additional burdens on an already overburdened populace.

    “The ongoing struggles of Nigerians, including skyrocketing food inflation, fuel scarcity, depreciating currency, and general insecurity, make it clear that the imposition of this levy is heartless, callous, and unjust”, it said.

    Instead of imposing additional levies, the PRP has urged the CBN and the federal government to focus on implementing measures that genuinely address the pressing concerns of citizens.

    “We call upon the authorities to prioritize policies that promote economic growth, job creation, and equitable distribution of resources, rather than imposing additional burdens on an already overburdened populace”, it said.

    The PRP has demanded that the CBN immediately retract the directive and seek alternative, more inclusive solutions to safeguard the financial well-being of Nigerians.

    “The PRP stands in solidarity with the citizens of this great nation and remains committed to fighting for a fairer and more prosperous future for all.

    “We must stand together to reject this heartless policy and demand a government that truly serves the people”, the PRP said.

  • CBN orders all PoS operators to register with CAC before July 7

    CBN orders all PoS operators to register with CAC before July 7

    The Central Bank of Nigeria (CBN) has ordered all Point-of-Sale operators in the country to register their businesses with the Corporate Affairs Commission (CAC) in two months.

    This was revealed after a meeting between Fintechs and the Registrar-General/Chief Executive Officer, CAC, Hussaini Magaji (SAN) in Abuja on Monday, May 7.

    The CAC boss said the two-month timeline for the registration, which will expire on July 7, was not targeted at any groups or individuals but was “in line with legal requirements and the directives of the Central Bank of Nigeria.”

    The statement read: “The Corporate Affairs Commission and Fintech companies in Nigeria, better known as PoS operators, have agreed to a two-month timeline to register their agents, merchants, and individuals with the CAC in line with legal requirements and the directives of the Central Bank of Nigeria.

    Read Also: FULL LIST: Those exempted from CBN’s 0.5% cybersecurity levy

    “The Corporate Affairs Commission and Fintech companies in Nigeria, better known as PoS operators, have agreed to a two-month timeline to register their agents, merchants, and individuals with the CAC in line with legal requirements and the directives of the Central Bank of Nigeria.

    “The agreement was reached today during a meeting between Fintechs and the Registrar-General, CAC, Hussaini Ishaq Magaji, in Abuja.”

  • Cybersecurity levy: Everything you need to know about CBN’s new directive

    Cybersecurity levy: Everything you need to know about CBN’s new directive

    The Central Bank of Nigeria (CBN) has issued an order to all banks operating within the country to impose a cybersecurity levy on transactions.

    In a circular released on Monday, May 7, the apex bank stated that the implementation of the levy would begin two weeks from the date of the circular.

    The circular was directed to all commercial, merchant, non-interest, and payment service banks.

    According to the circular, “the introduction of the levy would begin in two weeks.”

    Here’s everything you need to know about the new CBN directive:

    The circular read in part: “After the commencement of the Cybercrime (Prohibition, Prevention, etc.) (Amendment) Act 2024 and in accordance with the provision of Section 44 (2) (a) of the Act, a levy of 0.5% (0.005) equal to half a percent of all value of electronic transactions by the company specified in the Second Schedule of the Act,’ shall be transferred to the National Cyber Security Fund, which shall be administered by the Office of the National Security Adviser.

    “Deductions shall commence within two weeks from the date of this circular for all financial institutions and the monthly remittance of the levies collected in bulk to the NCF account domiciled at the CBN by the fifth business day of every subsequent month.”

    Levy

    The levy is 0.5% (half a percent) of the electronic transaction value. It applies to transactions specified in the Second Schedule of the Cybercrime (Prohibition, Prevention, etc.) (Amendment) Act, 2024.

    How it works

    The levy is paid by the originator of the electronic transaction and withheld by the financial institution. The deducted amount will appear on the customer’s bill with the text: “Cybersecurity Levy.”

    Transfer

    Financial institutions will remit collected levies to the National Cybersecurity Fund, administered by the Office of the National Security Adviser.

    Date of commencement

    The deductions will begin within two weeks from May 6 and financial institutions must pay the collected levies by the fifth business day of the following month.

    Read Also: FULL LIST: Those exempted from CBN’s 0.5% cybersecurity levy

    Deadline

    Financial institutions have deadlines to update their systems to handle tax deductions and transfers. Failure to pay the levy can lead to fines, including a fine of up to 2% of a financial institution’s annual turnover.

    Exemptions

    Loan disbursements and repayments, Salary payments, Intra-account transfers within the same bank or between different banks for the same customer, Intra-bank transfers between customers of the same bank, Other Financial Institutions (OFIs) instructions to their correspondent, Banks Interbank placements, Banks’ transfers to CBN and vice-versa, etc.