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  • Remita selected based on merit – CBN

    Remita selected based on merit – CBN

    The Director of Banking Services, Central Bank of Nigeria (CBN), Mr Hamisu Abdullahi, said the selection of Remita to provide an electronic platform essential for facilitating payments from Ministries, Departments, and Agencies (MDAs) to beneficiary accounts across commercial banks was based on merit.

    He said this when officials of the CBN appeared before the House of Representatives Public Accounts Committee to respond to queries about leakages through the Remita platform.

    He said: “In 2011, the CBN was directed to provide an electronic platform that would facilitate payments on behalf of MDAs to beneficiaries accounts in the commercial banks.

    “And as at that time there was no platform available to use. So CBN deemed it fit to source for an alternative way of doing this and engaged two companies and out of the two, Remita, Systemspec, was selected based on merit and based on the fact they had been rendering similar services to commercial banks.”

    The Managing Director of Remita Payment Services Limited, ‘Deremi Atanda again underscored the importance of incorporating all Federal Government agencies within the Treasury Single Account (TSA) framework to bolster accountability and transparency.

    He said the TSA initiative was designed to create a single window through which all inflows and outflows of government can be monitored in real-time for transparency and accountability and especially for the effective management of the government’s cash assets.

    “However, some MDAs are operating outside TSA. The investigations have unravelled that some MDAs are only partially complying with the TSA Revenue policy while some are in absolute breach,” he said.

    The Nigeria Customs Service, Immigration, Federal Medical Centres, FRSC, and Nigeria Railway Corporation, were identified as entities not fully adhering to the TSA guidelines.

    He further explained how the government can track and account for every single transaction through a unique Remita Retrieval Reference (RRR) code assigned to each revenue inflow.

    “It allows the government to identify the receiving MDA, the destination account, the date and time of the transaction, the purpose of the payment, and the name of the payer. The RRR has become the ultimate reconciliation reference point for all payers, banks, and MDAs involved in government revenue collection.”

    “As Nigeria continues its march towards economic stability, some government forex revenue collections still occur outside the TSA framework,” he stated. 

    Read Also: CBN reports over $1.5b forex inflow in March

    Atanda highlighted the importance of adhering to the TSA’s original intent of consolidating all government inflows and outflows, regardless of currency, stating It was vital to prevent the diversion of the federal government’s foreign exchange revenues into the hands of unscrupulous entities.

    “At a time when the Nigerian Government is seeking ways to generate Forex and prevent the devaluation of the Naira amid increased demand for the US Dollar, allowing such diversions is inadvisable,” he stated.

    Chairman of the Committee, Hon Bamidele Salam, said a House resolution mandated the PAC to investigate an allegation concerning revenue leakages through Remita platform as well as none adherence to service level agreements between parties on the Remita gateway platform.

  • CBN reports over $1.5b forex inflow in March

    CBN reports over $1.5b forex inflow in March

    • Says Forex market stabilising

    The Central Bank of Nigeria (CBN) yesterday announced the inflow of $1.5 billion foreign exchange into the country 48 hours after the Monetary Policy Committee (MPC) meeting.

    The apex bank believes this is a fresh indication of the improving status of the foreign exchange market in Nigeria arising from the ongoing monetary policy efforts.

    The Acting Director of Corporate Communications of the CBN, Mrs. Hakama Sidi Ali, said data showed that the inflows stemmed from the CBN’s initiatives to stabilise the foreign exchange market.

    The Naira has recorded some appreciable recovery in the Autonomous Foreign Exchange (AFEX) market in the last few days.

    On Thursday, March 28, 2024 for instance, the Naira traded at N1,309/$1; a significant improvement compared to N1,611/$1 in the second week of March.

    Read Also: Five Nigerian meals for Easter vacation

    While acknowledging the positive trend, Mrs. Ali emphasized the CBN’s unwavering commitment to maintaining exchange rate stability and ensuring the Naira reflects its appropriate value against other major global currencies.

    This development, she noted, “aligns with Governor Olayemi Cardoso’s recent pronouncements following the Monetary Policy Committee (MPC) meeting on March 26, 2024”.

    The MPC meeting resulted in a 2 per cent increase in the benchmark interest rate, rising from 22.75% to 24.75%.

    Cardoso also confirmed the clearance of all verified foreign exchange backlogs; a move intended to improve liquidity within the market.

    On Wednesday, March 27, the CBN conducted a Nigerian Treasury Bills (NTBs) auction of N1.64 trillion, “at stop rates of 16.24 per cent, 17 per cent, and 21.124 per cent for the 91-day, 182-day, and 364-day tenors, respectively”.

    The CBN’s recent actions, coupled with the reported foreign exchange inflows, suggest a multi-pronged approach to address market concerns and foster stability. While the Naira’s appreciation is a positive sign, the CBN acknowledges the need for continued vigilance and a commitment to sound monetary policies.

  • BREAKING: CBN reports over $1.5bn Forex Inflow 

    BREAKING: CBN reports over $1.5bn Forex Inflow 

    …Fx Market stabilizating

    The Central Bank of Nigeria (CBN) has disclosed that the Nigerian economy witnessed $1.5 billion foreign exchange inflow into the country, two days after the Monetary Policy Committee (MPC) meeting.

    By this development, the CBN is optimistic about the health of the foreign exchange market in Nigeria.

    This positive development, according to the CBN, is a direct result of its ongoing monetary policy efforts.

    Mrs. Hakama Sidi Ali, Acting Director of Corporate Communications for the CBN, stated that data shows that the inflows stemmed from the CBN’s initiatives to stabilize the foreign exchange market. 

    This stabilization is reflected in the Naira’s appreciation within the Autonomous Foreign Exchange (AFEX) market. As of Thursday, March 28th, 2024, the Naira traded at N1,309/$1, a significant improvement compared to N1,611/$1 in the second week of March.

    While acknowledging the positive trend, Mrs. Ali emphasized the CBN’s unwavering commitment to maintaining exchange rate stability and ensuring the Naira reflects its appropriate value against other major global currencies. 

    This development she noted “aligns with Governor Olayemi Cardoso’s recent pronouncements following the Monetary Policy Committee (MPC) meeting on March 26th, 2024”.

    The MPC meeting resulted in a two-percent increase in the benchmark interest rate, rising from 22.75% to 24.75%.  

    Read Also: CBN: Remita’s choice as payment facilitator merit-based

    Governor Cardoso also confirmed the clearance of all verified foreign exchange backlogs, a move intended to improve liquidity within the market. 

    Additionally, on Wednesday, March 27th, the CBN conducted a Nigerian Treasury Bills (NTBs) auction of N1.64 trillion, “at stop rates of 16.24 percent, 17 percent, and 21.124 percent for the 91-day, 182-day, and 364-day tenors, respectively”. 

    The CBN’s recent actions, coupled with the reported foreign exchange inflows, suggest a multi-pronged approach to address market concerns and foster stability. While the Naira’s appreciation is a positive sign, the CBN acknowledges the need for continued vigilance and a commitment to sound monetary policies. 

  • CBN: Remita’s choice as payment facilitator merit-based

    CBN: Remita’s choice as payment facilitator merit-based

    The Central Bank of Nigeria (CBN) has said that Federal Government’s selection of Remita to provide an electronic platform essential for facilitating payments from Ministries, Departments and Agencies (MDAs) to beneficiary accounts across commercial banks was based on merit.

    Director of Banking Services, CBN, Hamisu Abdullahi, spoke yesterday when officials of the apex bank appeared before the House of Representatives Public Accounts Committee to respond to queries about Remita’s operation of the Treasury Single Account (TSA) platform.

    The hearing was presided over by Bamidele Salaam, Chairman of the House Committee on Public Accounts. Salaam had said: “The investigation is not a witch-hunt targeting any company but rather a crucial step towards transparency and ensuring accountability for the federation’s revenue.

    “The CBN was directed to provide an electronic platform that would facilitate payments on behalf of MDAs to beneficiaries accounts in the commercial banks.

    “CBN deemed it fit to source for an alternative way of doing this and engaged two companies and out of the two, Remita, was selected based on merit and based on the fact they had been rendering similar services to commercial banks.”

    Managing Director, Remita Payment Services Limited, Mr. ‘Deremi Atanda, also highlighted the previous system’s shortcomings, where government agencies independently received funds and arbitrarily decided the timing and amount of operating surplus to remit, a practice that has been streamlined by the TSA.

    Read Also: Tinubu appoints Usman Bello as new CCB Chairman

    “There has been an evolution and it has been positive for the country on account of TSA. Some things that started manually have now become automated. What MDAs were doing was that they were receiving inflows and at their instance determine what its operating surplus when to they remit,” he said.

    Atanda said the TSA initiative is designed to create a single window through which all inflows and outflows of government can be monitored in real-time for transparency and accountability and especially for the effective management of the government’s cash assets.

    It would be recalled that the Director-General, Bureau of Public Service Reforms, Dr Dasuki Arabi, in the past reported that the TSA has been instrumental in uncovering and removing approximately 70,000 non-existent employees from the civil service payroll. The government has realized savings of at least N220 billion through the Integrated Payroll and Personnel Information System (IPPIS)

    Atanda further explained how the government can track and account for every single transaction through a unique Remita Retrieval Reference (RRR) code assigned to each revenue inflow.

  • Bank mergers likely as CBN directs N500b capital base

    Bank mergers likely as CBN directs N500b capital base

    • •Apex bank expects roadmap by April 30
    • •Financial institutions get March 31, 2026 deadline

    A Significant increase in the minimum capital requirements for all banks operating in the country was yesterday announced by the Central Bank of Nigeria (CBN).

    Acting Director, Corporate Communications, Mrs. Hakama Sidi-Ali, listed requirements for the various categories of banks in a circular.

    The step marks a turning point in Nigeria’s banking history.

    Banks are expected to play a significant role in the attainment of the $1 trillion economy projection of the Bola Ahmed Tinubu Administration.

    In the circular, the minimum capital base for banks with international authorisation has been raised to N500 billion from N50 billion.

    The minimum capital base of N25 billion for commercial banks with national authorisation has been raised to N200 billion (translating to an eight-fold increase).

    Banks with regional authorisation have been mandated in the circular to raise their minimum capital base from N10 billion to N50 billion.

    The circular pegged the minimum capital requirement for merchant banks at N50 billion.

    Non-interest banks with national and regional authorisations now have minimum capital requirements of N20 billion and N10 billion respectively.

    The circular states that the new requirements will come into effect on April 1, 2024, with a two-year window for compliance.

    Banks are required to meet the minimum capital base by March 31, 2026.

    As at December last year, the highest share capital and share premium stood at N251.81 billion.

    CBN also outlined several strategies for banks to achieve the set goal.

    They are at liberty to raise additional capital through private placements, rights issues, or public offers.

    Consolidation through mergers and acquisitions (M&A) is another option to meet the higher capital requirements.

    The banks may choose to downgrade or upgrade their licenses to comply with the new capital requirements for their desired authorisation level.

    According to the apex bank, meeting the minimum capital requirement is not the sole focus.

    The banks must also maintain the minimum capital adequacy ratio (CAR) mandated for their specific license authorisation.

    Failure to comply with the CAR could result in mandatory capital injections to regularise the bank’s position.

    The new minimum capital requirements apply not only to existing banks but also to all new applications for banking licenses submitted after April 1.

    The CBN said it will continue to process pending applications where capital deposits have already been made or an Approval-in-Principle (AIP) has been granted.

    However, promoters of these proposed banks “will need to bridge the gap between their deposited capital and the new requirement by March 31, 2026”.

    All banks are expected to submit an implementation plan by April 30, outlining their chosen approach to meeting the new requirements and the timeline for each step. The CBN said it will monitor the institutions to ensure compliance with the new regulations within the specified timeframe.

    The circular says the CBN assessed various factors in determining the appropriate level of the minimum capital requirements.

    These include the risk profile of banks, global and domestic headwinds and their potential impact on banks’ balance sheets.

    Also considered was the impact of inflation and stress tests on banks’ balance sheets to gauge their resilience and ability to absorb current and unexpected shocks.

    To guard against illicit funds making their way into the banks, the CBN said “it has robust anti-money laundering regulations which will be strictly enforced, with the active collaboration of relevant law enforcement agencies”.

    “In addition, the CBN will require all banks to ensure that appropriate and effective anti-money laundering screening/checks (Know Your Customer, Customer Due Diligence and Suspicious Transactions Monitoring, etc) are conducted.

    Read Also: Projects: Wike thanks Tinubu for the opportunity to serve

    “There will be strict enforcement of fit and proper checks for all prospective and significant shareholders as well as directors and senior management staff of banks.

    “The CBN will actively monitor and supervise the recapitalisation process to ensure compliance with set guidelines.

    “This will involve the conduct of on- and off-site reviews, verification of capital, periodic interventions when necessary and broader stakeholder engagements.”

    Working in collaboration with the Nigeria Deposit Insurance Corporation (NDIC), the CBN said it would “ensure that depositors’ interests are protected during the programme”.

    The circular adds: “The CBN will enhance its monitoring and supervisory oversight over the banks and will apply appropriate sanctions for violations of extant laws and regulations as well as ensure the protection of depositors’ interests.

    “In a merger or acquisition scenario, depositors’ accounts and funds will remain secure.

    “The acquiring institution will assume responsibility for all liabilities and obligations, including the protection of depositors.”

    The banking sector has experienced periods of both prosperity and vulnerability.

    The consolidation exercise of 2004, which raised the minimum capital requirement to N25 billion, is considered a turning point. However, with a growing economy and evolving financial landscape, concerns have grown regarding the adequacy of capital buffers held by Nigerian banks.

    The CBN’s decision to raise the minimum capital requirements signals a new era for Nigerian banking.

    This move aims to create a more robust and resilient banking sector, capable of supporting the nation’s projected $1 trillion economic growth and fostering financial stability.

    The coming months will be crucial as banks strategise to meet the new requirements.

    The success of this reform will depend on effective implementation, strategic manoeuvring by banks, and continued regulatory oversight by the CBN.

  • CBN raises minimum capital requirements for banks

    CBN raises minimum capital requirements for banks

    The Central Bank of Nigeria (CBN) has unveiled a significant increase in minimum capital requirements for all banks operating in the country.

    CBN’s Acting Director Corporate Communications Mrs Hakama Sidi-Ali made this announcement in a statement in Abuja.

    The new minimum capital requirements for banks marks a turning point in the banking history.

    The banks are expected to play a significant role in the attainment of $1 trillion economy projected by the Bola Ahmed Tinubu administration.

    The new minimum capital base for banks with international authorisation is pegged at N500 billion.

    The minimum capital base for commercial banks with national authorisation has been raised to N200bn, an eightfold increase from the previous N25bn.

    Banks with regional authorisation now require a minimum capital base of N50bn compared to the prior N10 billion.

    The minimum capital requirement for merchant banks has been set at N50 billion.

    The new minimum capital for non-interest banks with national and regional authorisations are N20 billion and N10 billion respectively.

    The new requirements will come into effect on April 1, 2024 with a two-year window for compliance.

    Banks are required to meet the minimum capital base by March 31, 2026. 

    The CBN has also outlined several strategies for banks to achieve this goal: banks can raise additional capital through private placements, rights issues or public offerings.

    Consolidation through mergers and acquisitions (M&A) is another option for banks to meet the higher capital requirements.

    Banks may choose to downgrade or upgrade their licenses to comply with the new capital requirements for their desired authorization level.

    The CBN emphasised that meeting the minimum capital requirement is not the sole focus.

    Banks must also maintain the minimum capital adequacy ratio (CAR) mandated for their specific license authorization. Failure to comply with the CAR could result in mandatory capital injections to regularize the bank’s position.

    Read Also: Tinubu appoints Usman Bello as new CCB Chairman

    The new minimum capital requirements apply not only to existing banks but also to all new applications for banking licenses submitted after April 1, 2024. 

    The CBN said it will continue to process pending applications where capital deposits have already been made or an Approval-in-Principle (AIP) has been granted.

    However, promoters of these proposed banks “will need to bridge the gap between their deposited capital and the new requirement by March 31, 2026”.

    The CBN requires all banks to submit an implementation plan by April 30, 2024, outlining their chosen approach to meeting the new requirements and the timeline for each step. The CBN said it will monitor banks to ensure compliance with the new regulations within the specified timeframe.

    The banking sector has experienced periods of prosperity and vulnerability. The consolidation exercise of 2004, which raised the minimum capital requirement to N25 billion, is considered a turning point.

    However, with a growing economy and evolving financial landscape, concerns have grown regarding the adequacy of capital buffers held by Nigerian banks.

  • CBN measures unsettle forex dealers in Lagos, Abuja

    CBN measures unsettle forex dealers in Lagos, Abuja

    The measures introduced by the Central Bank of Nigeria (CBN) to rescue the naira have triggered volatility among currency dealers.

    A survey yesterday by The Nation showed that inconsistent pricing and cautious optimism characterised the parallel market in Lagos and Abuja where traders grappled with the implications of the apex bank policies.

    The triggers are the reduction of dollar sales to Bureau De Change operators from $20,000 by half and the hike in interest rate by the apex bank to 24.75 per cent from 22.75 per cent at the 294th Monetary Policy Committee (MPC) meeting on Tuesday.

    According to a CBN circular released on Monday, BDC operators will as from today, be able to buy $10,000 worth of forex at N1, 251 per dollar as against the $20,000 allocation and N1, 301 per dollar rate offered last month.

    It was confusion for potential forex buyers yesterday at Wuse Zone 4, a major foreign exchange hub in Abuja, as currency traders offered the dollar at varying rates. Some quoted N1, 250 per dollar and others offered to sell as high as N1, 330 per dollar. The inconsistency created uncertainty for those seeking to exchange the naira for the dollar.

    But despite the price disparity, there was a general consensus among traders that holders of foreign currencies were cautiously selling their holdings.

    The measured approach suggests a wait-and-see attitude, where market participants gauge the long-term impact of the CBN’s actions.

    Traders at the parallel market remain unconvinced that the dollar price will experience a significant drop in the days ahead.

    The Nation learnt that the apex bank’s decision to sell $10,000 to BDC operators at N1, 251 per dollar with a 1.5 per cent spread is viewed with skepticism.

    Read Also: Tinubu, CBN policies strengthening the Naira, says policy think-tank

    Many believe that the price point may not be enough to entice a substantial downward movement in the parallel market.

    The MPC decision to raise the interest rate benchmark has instilled a sense of panic in the parallel market with traders anticipating an influx of portfolio investors seeking to capitalize on the higher interest rates offered on naira-denominated assets.

    The potential inflow of foreign exchange could theoretically lead to a decrease in the dollar price.

    Many forex dealers in Lagos turned down requests by ambitious sellers – mainly speculators – insisting on old dollar rates despite appreciation of the naira against dollar.

    At the Central Business District (CBD), in Marina, Lagos, the naira exchanged at N1, 300 per dollar (a N34 appreciation from N1, 334 it exchanged on Tuesday).

    Many speculators, who had recorded heavy losses, were forced to sell at the new rate after initial hesitation.

    Hassan Abdul, a BDC trader in Central Lagos, said the naira was trading at N1,300 per dollar around 12 noon, and sustained the rally till the close of business yesterday.

    He said: “Many currency dealers, who bought on Monday when the rate was higher, were initially not ready to absorb high level of losses based on today’s rates. But they sensed that delay meant more losses, and decided to offload at the new rate.  The improved liquidity in the market makes it even more risky for those holding back dollars,” he said.

    Another forex dealer, Abiodun Mohammed, blamed the losses at the parallel market on the CBN policies.

    He He said: “The new policies, especially the discounts given to bureau de change operators drastically reduced the rates of the dollar against naira. Many of us that bought when the dollar was high are recording major losses. But, we understand the risks involved in the business”.

    Mohammed said he will slow down new purchases to avoid further losses.

    “The risk in this business is too high at the moment. I have to slow down until the rates settle at a more market-friendly rate,” he said.

    Naira will continue to stabilize, says Shettima

    Vice President Kashim Shettima has assured that the naira will continue to stabilise in the coming weeks and months.

    Shettima gave the assurance at the inauguration of the National Design and Innovation Competition organised by the Interior Designers Association of Nigeria (IDAN) at the Presidential Villa in Abuja yesterday.

  • Abuja forex market in confusion after CBN moves

    Abuja forex market in confusion after CBN moves

    The Abuja foreign exchange market is experiencing a period of volatility following recent announcements by the Central Bank of Nigeria (CBN).

    Inconsistent pricing and cautious optimism characterize the parallel market, where traders are grappling with the implications of the CBN’s new policies.

    A visit to Wuse Zone 4, a major foreign exchange hub in Abuja, reveals a confusing situation for potential buyers.  Currency traders are offering the dollar at varying rates, with some quoting N1,250/$ and others as high as N1,330/$. This inconsistency creates uncertainty for those seeking to purchase dollars.

    Despite the price disparity, a general consensus exists among traders that holders of foreign currencies are cautiously selling their holdings. This measured approach suggests a wait-and-see attitude, where market participants are gauging the long-term impact of the CBN’s actions.

    Traders in the parallel market remain unconvinced that the dollar price will experience a significant drop in the coming week. The CBN’s decision to sell $10,000 to Bureau De Change (BDC) operators at a rate of N1,200/$ with a 1.5% spread is viewed with skepticism.  Many believe this price point may not be enough to entice a substantial downward movement in the parallel market.

    Read Also: CBN uncovers $2.4bn foreign exchange scam

    The recent decision by the Monetary Policy Committee (MPC) to raise benchmark interest rates has instilled a sense of panic in the parallel market.  Traders anticipate an influx of portfolio investors seeking to capitalize on the higher interest rates offered on Naira-denominated assets.  This potential inflow of foreign exchange could theoretically lead to a decrease in the dollar price. However, the extent to which this materializes remains to be seen.

    The Abuja foreign exchange market is currently in a state of flux.  The combined effects of the CBN’s policy adjustments – increased dollar sales to BDCs and a higher interest rate – are yet to be fully understood.  In the coming days and weeks, market participants will closely monitor exchange rates and adjust their strategies accordingly.

  • CBN uncovers $2.4bn foreign exchange scam

    CBN uncovers $2.4bn foreign exchange scam

    In a startling revelation, the Central Bank of Nigeria (CBN), Governor Yemi Cardoso, has disclosed that law enforcement agencies are investigating foreign exchange forwards valued at approximately $2.4 billion.

    Cardoso noted that these transactions are deemed ineligible for payment.

    This disclosure emerged after the Monetary Policy Committee (MPC) meeting held in Abuja on Tuesday, March 26.

    The CBN governor shed light on the meticulous forensic audit conducted on these transactions, uncovering numerous discrepancies and rendering them invalid.

    The CBN, upon settling certain tranches of FX backlog, encountered transactions marred by issues concerning their authenticity.

    Consequently, Deloitte management consultants were engaged to conduct a comprehensive forensic analysis spanning several months to scrutinize the legitimacy of these forward-contracted transactions.

    During the audit process, it was established that several transactions failed to meet the criteria for validation. Instances were found where allocations worth millions of dollars were disbursed without corresponding requests, and some transactions lacked proper documentation or were outright illegal.

    According to Cardoso, “In the cause of that forensic audit, we determined that a number of these transactions did not qualify. In some cases, you had some requests, which well you actually had some allocations that were made in millions of dollars, which were never requested for.

    “You also had somewhere they had no Naira and they were also allocated, you know, huge sums, the foreign exchange and the list goes on and it was for that reason that we refused to validate those particular transactions.

    “We refused to validate them because you know apart from the fact that documentation was not satisfactory in many cases they were outright illegal and the law enforcement agencies of course are now looking into those transactions that are as far as we’re concerned, not valid to be paid.”

    Addressing concerns about potential backlogs among stakeholders, Cardoso assured that the market remains open and transparent for them to address any outstanding contractual obligations. However, the CBN has diligently verified and settled recognized backlogs of forward transactions.

    Cardoso reiterated the CBN’s commitment to maintaining price stability and fighting inflation. He emphasized the need for strict adherence to the core mandate of the central bank, ensuring the restoration of the average Nigerian’s purchasing power.

    To this end, the MPC announced a significant hike in the benchmark interest rate to 24.75 percent as part of efforts to curb inflation. This decision, accompanied by adjustments to reserve requirements for banks, aims to tighten control over the money supply and stabilize prices.

    According to Cardoso, the committee decided to: raise the Monetary Policy Rate (MPR) by 200 basis points to 24.75 percent from 22.75 percent; adjust the asymmetric corridor around the MPR to +100/-300 basis points; retain the Cash Reserve Ratio of Deposit Money Banks at 45.0 percent; adjust the Cash Reserve Ratio of Merchant Banks from 10.0 percent to 14.0 percent and retain the Liquidity Ratio at 30.0 percent

    Read Also: BREAKING: CBN raises interest rate to 24.75% in bid to curb inflation

    Looking ahead, the CBN anticipates a gradual moderation of inflation rates by May, with measures in place to foster economic growth while maintaining price stability. The committee called for the full implementation of agricultural policies to enhance food supply and urged broader fiscal consolidation to improve tax collection.

    Furthermore, Cardoso addressed concerns regarding the forex market, emphasizing the need to foster competition and transparency. He criticized the “oligopolistic nature of restrictions on dairy imports,” advocating for an open and inclusive foreign exchange market.

    On the issue of cryptocurrency regulation and the Binance scandal, Cardoso clarified the CBN’s limited role, highlighting collaboration with relevant authorities while emphasizing that cryptocurrency regulation falls under the purview of the Security and Exchange Commission (SEC).

  • CBN crashes retail forex rate by 3.4%

    CBN crashes retail forex rate by 3.4%

    Currency reform yielding early gains

    The Central Bank of Nigeria (CBN) yesterday undercut foreign exchange (forex) speculation and deepened its quest for stronger naira by offering to sell forex to retail end-users at a lower rate.

    In a circular announcing a new round of forex sales to Bureau De Change (BDC) operators, the apex bank slashed the effective retail market rate for end-users by 3.4 per cent.

    The reduction was from a maximum of N1, 314.01 per dollar to N1, 269.765 per dollar.

    According to the circular, BDCs will be able to buy $10,000 worth of forex from the CBN at a rate of N1, 251 per dollar as against the $20,000 allocation and N1, 301 per dollar rate offered in February.

    Under the new regime, the BDC operators have been allowed to sell to eligible end-users at a maximum spread of 1.5 per cent above the purchase price from the CBN.

    Previously, the spread was capped at 1.0 per cent. BDCs are expected to fund their accounts before the close of business on Thursday for the latest round of forex sales.

    The apex bank warned that it would sanction any BDC found violating the terms of the forex sales to the retail market.

    In a letter addressed to the President of the Association of Bureau De Change Operators of Nigeria (ABCON), Director, Trade and Exchange Department at the CBN, Dr. Hassan Mahmud, explained the rationale behind the adjustments. The CBN stated it aims to address “continued price distortions at the retail end of the market,” which the apex bank believes contributes to a wider gap between the official exchange rate and the black market rate.

    The circular reads: “The CBN has outlined specific instructions for the BDCs to access forex, including that all eligible BDCs must make naira payments to designated CBN naira deposit accounts before the close of business on Thursday, March 28th, 2024 and confirmation of payment, along with required documentation, must be submitted for forex disbursement at designated CBN branches in Lagos, Abuja, Awka, and Kano.

    “The CBN’s revised forex policy for BDCs highlights its ongoing efforts to achieve a stable and market-driven exchange rate in Nigeria. This move follows the initial resumption of forex sales to BDCs in February 2024, which aimed to address challenges in the retail forex market.”

    The naira had appreciated by 12.0 per cent to N1, 431.49 per dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM).

    The latest adjustment in forex rate came as analysts highlighted the positive effects of the ongoing monetary reforms by the CBN.

    Read Also: FEC approves fund to bridge $878bn national infrastructure deficit

    In a report released yesterday, investment banking think-tank, CardinalStone, stated that “monetary reforms are yielding early fruits”, noting that recent developments in monetary policy has led to “notable recovery of the naira and the resurgence of foreign capital flows”.

    “In the last few weeks, the CBN leadership has intensified efforts to restore market confidence and improve communication with investors, which has largely been positive for Nigeria’s investment case.

    “To provide context, confidence in the Nigerian forex market has materially improved due to the restructuring of market frameworks, intensifying of hawkish rendition, and the clearing of all legal outstanding forex backlogs”.

    According to analysts, investors are taking a bet on Nigeria as the payments of forex backlogs and improving carry trade opportunities are piquing investors’ interest.

    “Precisely, the cumulative foreign inflows – Foreign Portfolio Investments (FPIs) and Foreign Direct Investments (FDIs), since the beginning of the year are estimated at $2.1 billion, compared to $1.6 billion in 2023.

    “The level of inflow is consistent with robust trade vis-a-vis those of major African countries and aided by hawkish monetary policy and the relative stability of the naira evinced by the 12-month currency forward,” CardinalStone stated.

     The analysts noted that daily forex turnover – a measure of liquidity — has surged to a year-to-date average of $4.3 billion compared to $2.3 billion last year.