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Tag: cbn

  • Jitters in CBN over redeployment of eight directors

    Jitters in CBN over redeployment of eight directors

    In a move that has sent shockwaves through the Central Bank of Nigeria (CBN), eight directors have been redeployed to the Financial Sector Surveillance (FSS) Department in the Maitama office.

    The decision has raised concerns among staff members who fear that it could be a prelude to more redeployments and possibly layoffs.

    The FSS Department is often seen as a less prestigious posting within the CBN, and the redeployment of eight directors there has been likened to being sent to “Siberia.”

    The move has fueled speculation that the CBN is under pressure to re-jig its workforce and more redeployment could be in the offing.

    A source, who confirmed the redeployments, told The Nation that “nothing happens at the FSS. Instead of sacking these directors, they were sent to Siberia.”

    The source also revealed that other directors who were moved last week include Dr. Mahmoud Hassan, formerly of the Monetary Policy Department, who now heads the Trade and Exchange Department, and the former Director of Human Resources, who has been moved to Capacity.

    The redeployment started over two weeks ago and has generated anxiety among other staff members of the bank.

    The Nation reliably gathered that “the directors were redeployed as part of efforts by the new CBN Governor Yemi Cardoso and his team of Deputy Governors to restructure the apex bank.”

    One of the affected directors sent to FSS is Mr. Philip Yusuf Yila, who served as the Director of Development Finance of the CBN.

    Read Also: CBN fails to convene MPC meeting again

    Under Yila’s leadership, the DFD played a crucial role in supporting businesses through increased access to finance for priority sectors under a variety of programmes such as the Anchor Borrowers’ Programme (ABP), the Agri-Business/Small and Medium Enterprises Investment Scheme (AGSMEIS), and the Micro, Small and Medium Enterprises Development Fund (MSMEDF) and disbursement to households and small businesses during the outbreak of the COVID-19 pandemic to cushion the impact of the consequent lockdown.

    The DFD reduced the cost of finance for priority sectors through a variety of initiatives, including the Interest Rate Reduction Scheme (IRS) and the Refinancing and Rediscounting Scheme (RRF).

    The new CBN Governor, Yemi Cardoso, has criticised these quasi-fiscal policies of his predecessor, Godwin Emefiele, saying that they resulted in N10 trillion being pumped into the economy through intervention programmes.

    Cardoso has pledged to address these issues and restore corporate governance at the CBN.

    The redeployment of eight directors to FSS is likely to further fuel the speculation that the CBN is considering more drastic measures directed at the workforce.

  • CBN fails to convene MPC meeting again

    CBN fails to convene MPC meeting again

    The Central Bank of Nigeria (CBN) has again failed to convene its statutory bi-monthly Monetary Policy Committee (MPC) meeting. It was the second consecutive time this year that the meeting did not hold.

    Going by the calendar published on its central website, the CBN had scheduled the MPC meeting for yesterday and today.

    The apex bank has not held the MPC meeting since Mr. Olayemi Cardoso came on board as CBN governor.

    Cardoso assumed office on September 22, three days to the 293rd MPC meeting scheduled for September 25 and 26. The meeting was postponed.

    There was no official explanation to the development. But, an industry source, who did not want to be quoted, said that with four consecutive meetings held between January and July, the apex bank had completed the required minimum MPC sittings in a financial year.

    The source said: “The MPC has met four times this year, and that is what the CBN Act stipulates. Besides, the governor will be unveiling his economic blueprint at the Chartered Institute of Bankers’ of Nigeria – CIBN Annual Bankers Dinner on Friday in Lagos, where most of the issues on the economy will be discussed.”

    At its last meeting in July, the MPC raised the Monetary Policy Rate (MPR) from 18.5 per cent to 18.75 per cent; adjusted the asymmetric corridor (AC) to +100/-300 basis points around the interest rate; retained the Cash Reserve Ratio (CRR) at 32.5 per cent; and liquidity ratio at 30 per cent.

    According to the CBN Act 2007, to facilitate the attainment of the objective of price stability and to support the economic policy of the Federal Government, there shall be a Committee of the CBN known as the Monetary Policy Committee (MPC).

    The MPC consists of the CBN governor, who is the chairman; his four deputies; two members of the Board of Directors of the apex bank; three members appointed by the president and two members appointed by the CBN boss and the MPC shall have responsibility within the bank for formulating monetary and credit policy.

    The CBN Act stipulates “The appointment of a member of the MPC pursuant to Sub-Section 2 (d) and (e) of this Section, the remuneration, filling of temporary vacancies, qualification, tenure of office and disqualification shall be subject to the same terms as are stipulated for a Director under sections 10 and 11 of this Act.

    “The governor shall preside at every meeting of the Board and in his absence, a Deputy Governor designated by him, shall preside at such meeting.”

    Read Also: Port-Harcourt-Maiduguri rail project to be completed, operational soon – Minister

    “Five members of the board, three of whom shall be Directors other than the governor or the deputy governors, shall form a quorum at any meeting.

    “Unless otherwise provided in this Act, decisions shall be by a simple majority of the votes of the members present, but in case of any equality of votes, the person presiding shall have a casting vote. There shall be for the Board a Secretary who shall be appointed by the Board and be responsible to the Board through the governor.

    “The secretary shall be responsible for convening, on the authority of the chairman, meetings of the Board recording the minutes of all meetings of the Board and such other meetings as the board may direct and acting as Secretary to any committee of the board; maintaining and keeping minute books and a register of the directors of the bank and keeping in safe custody the common seal of the bank.”

    Former Executive Director, Keystone Bank Limited, Richard Obire, said that with inflation reported at about 27.33 per cent last month and average savings accounts interest rate at five per cent per annum, it would seem reasonable to expect that the MPR will be increased when members of the MPC meets.

    The thinking is that if real interest rates for savers and depositors cannot be positive, without having very high interest rates, they can be moderated to be less negative than they are now.

    Obire said: “Some people have suggested that the direction of the average interest rates on Open Market Operation (OMO) Bills issued since August through early November signal a likely upward review of the MPR by at least 100 basis points.

    “In August, the average T-Bills Stop rate for all three tenors of bills issued was 12.49 per cent p.a. By October/November, in spite of the high levels of subscription of the bills, the average stop rate for all three tenors of bills issued had reached 15.36 per cent and the rate for the longest tenor (365-Day Bill) closed at 17.98 per cent p.a.”

    Obire said the committee’s decision on the MPR will probably depend on what it thinks the major driver of inflation is: cost of money or pass through effects of currency value pressures.

    “When the various contending factors are considered, the MPR may well just be left where it is now at  18.75 per cent for the time being and revisited again early in 2024,” he said.

    Despite the hitches, the naira yesterday made major gains at the Investors & Exporters (I&E) window.

    The data from the FMDQ Exchange showed the local currency closed at N750/$ at the official market, one of the lowest rates recorded after the CBN unified the exchange rates in June.

    The market had recorded $176.75 million transaction volume, with expectations that liquidity will continue to rise as end of year dollar inflows continue to pour in.

    At the parallel market, the local currency also showed strength as it closed at N1, 125/$ with expectations of further appreciation in the months ahead.

  • State govts open security vote accounts with CBN

    State govts open security vote accounts with CBN

    Governors will henceforth draw their security votes from the Central Bank of Nigeria (CBN).

    The development followed the agreement reached earlier in the year between the 36 governors and the Nigerian Financial Intelligence Unit (NFIU).

    With the agreement, the governments in the states were mandated to open dedicated accounts for their governors’ security votes with the apex bank.

    The opening of such accounts will enable the NFIU to monitor cash withdrawals for security purposes by the governors.

    Prior to the NFIU January 5, 2023 directive, banning cash withdrawals from public accounts, governors were getting their security votes from the monthly subventions from Federal Accounts Allocation Committees (FAAC).

    But, the states were forced to steer away from commercial bank channels by the NFIU.

    A source at the NFIU told The Nation: “Under this arrangement, states governments have established accounts with the CBN specifically designated for their security votes.

    “The rationale behind this decision, the NFIU official said is to facilitate fast and easy access to funds during security exigencies.”

    State authorities have argued that denying them access to cash from their security votes in times of crises could hold them unduly accountable for any security lapses within their jurisdictions.

    The consensus among state governments has led to compliance with the directives against cash withdrawals, aligning with the Federal Government’s preference for non-cash dealings.

    However, challenges persist, primarily rooted in certain state governments’ insistence on retaining cash reserves to tackle pressing security issues. Despite this, the NFIU will ensure oversight and monitoring mechanisms are in place for these funds.

    Read Also: CBN: New, old naira notes remain legal tender indefinitely

    Addressing concerns over the withholding of cash palliative meant to cushion the impact of subsidy removal, the NFIU official emphasized that investigating such actions falls within the purview of the Economic and Financial Crimes Commission (EFCC) and the Independent Corrupt Practices and Other Related Offences Commission (ICPC).

    The high-ranking NFIU official, who spoke on the condition of anonymity, highlighted the protocol for initiating investigations into such cases, noting that the EFCC or ICPC would need to request pertinent details from the NFIU before any probe commences.

    Amid mounting concerns from Nigerians, regarding alleged withholding of cash palliatives, the NFIU’s recent statement has underscored the critical need for transparency and accountability in managing public funds.

    In January, the NFIU imposed a ban on cash withdrawals from all public accounts held in banks across federation, state, and local government levels.

    The decision was prompted by the alarming rate at which cash was being withdrawn from these accounts, often in contravention of anti-money laundering laws and for potentially corrupt purposes.

    From 2015, until the imposition of the ban in January, state governments withdrew approximately N701 billion from their respective accounts.

    The Federal Government bodies and local government council authorities respectively withdrew N225 billion and over N156 billion in cash, during the same period.

    The federal government granted state governments a grace period, till April 15, 2023, to withdraw cash for security votes only.

    The NFIU granted the extension to the state governments after intense negotiations.

    Minister of Finance and Coordinating Minister for the Economy Mr. Wale Edun said the source of the cash palliative fund is “a blend of grant to and borrowing by the state governments”.

    The minister said: “On the issue of the N5 billion, it’s a combination of grant from the federal government and borrowing by the states. Though the sum of N5 billion is the amount, you will agree with me that to release such fund at once across all the states will be self-defeating because it could lead to an inflationary spiral, exchange rate changing.

    “So, it is two billion naira that has been released as an initial intervention and the FCT will be included” he said..”

    Since the cash was released in August, many state governors have remained silent on what they have done with the money.

    Osun State Governor Ademola Adeleke admitted that he had not spend anything out of the money, despite the urgent need to alleviate the sufferings of the people because of the pain of petrol subsidy withdrawal.

  • CBN: New, old naira notes remain legal tender indefinitely

    CBN: New, old naira notes remain legal tender indefinitely

    The Central Bank of Nigeria (CBN) has announced that it will allow the old design of N200, N500, and N1,000 banknotes to continue to be legal tender indefinitely. This decision the bank said was made in line with international best practices and to prevent a repeat of earlier experiences.

    The CBN in a statement issued and signed by Dr Isa AbdulMumin Director Corporate Communications stated that all banknotes issued by the bank will continue to be legal tender, even beyond the initial deadline of December 31, 2023. The bank AbdulMumin said “is also working with the relevant authorities to vacate the existing court ruling on the matter”.

    Read Also: Partial compliance as Lagos workers join NLC strike

    All CBN branches across the country have been directed to continue issuing and accepting “all denominations” of Naira banknotes, both old and redesigned. The CBN is also encouraging the public to embrace alternative modes of payment, such as e-channels, for daily transactions.

    The decision to extend the legal tender status of the old design of N200, N500, and N1,000 banknotes is a welcome one. It will help to alleviate the cash squeeze that has been affecting many Nigerians in recent months. It will also give people more time to exchange their old banknotes for new ones.

  • Importers, agents groan as CBN increases Customs’ exchange rate

    Importers, agents groan as CBN increases Customs’ exchange rate

    Importers and clearing agents operating at the nation’s seaports are groaning following the new exchange rate policy given to the Nigeria Customs Service (NCS) by the Central of Nigeria (CBN).

    The new directive from the CBN has increased the foreign exchange rate to be used by the Customs for the clearing of imported goods and vehicles across the nation’s ports.

    Findings on Customs’ official website revealed that the exchange rate to clear goods has increased from N770.88 to N783.174 per dollar. The figure revealed that the CBN has added an additional N12.29 to every dollar in the process of clearing goods from the port.

    Stakeholders in the maritime industry told The Nation at the weekend, that with the new rate, the cost of imported goods in the market will increase geometrically, as we approach the New Year.

    Importers who spoke with our correspondent said, they are not happy that within the last three to four months, the CBN has reviewed Customs’ duty consistently, urging the leadership of the Apex Bank to look into the pains the new adjustment would bring to many Nigerian homes.

    A member of the Nigerian Importers Integrity Association (NIIA), Albert Samson said, the time has come for the CBN to give the importers the opportunity to breathe by providing a stable official exchange window for them to do their legitimate business and boost international trade.

    Samson decried the situation, as he pointed out that the country relies heavily on imported vehicles and goods to feed and move the people across the country.

    A few days ago, the Comptroller General of the NCS, Bashir Adewale Adeniyi, admitted that the floating exchange rate was the major cause of the surge, adding that nothing had changed in Customs duty.

    But the former President of ANLCA, Prince Olayiwola Shitty explained that the balance of trade influences currency exchange rates through its effect on foreign exchange supply and demand.

     For instance, Shittu said: “When a country’s trade account does not net to zero, that is, when exports are not equal to imports, there is relatively more supply of or demand for a country’s currency.

    This influences the price of that currency at the international market.”

    The ANLCA chief explained further: “Currency exchange rates are quoted as relative values; the price of one currency is described in terms of another. For example, one U.S. dollar might be equal to 3 Saudi Arabia Riyad. In other words, an American business or person exchanging dollars for Riyad would buy 3 Riyad for every dollar sold, and a Nigerian would buy $1 for every N800 sold if that is the official exchange rate.”

     Other stakeholders pointed out that in the last few months, the exchange rate for clearance of vehicles and other imported goods has been changed severally by the CBN. First, it was changed from N422.30/$1 to N589/$1 before it was later changed to N770.88/$, thereby, causing an outrage amongst importers and clearing agents.

    Read Also: CBN liquidates Allied Bank, Commerce Bank, Fortune Bank, Gulf Bank, Hallmark Bank, 15 others —NDIC

    Clearing agents and freight forwarders are mostly affected by this adjustment as those who have been paid by importers on the old exchange rate to clear their cargoes out of the seaports will have to call for upward adjustment.

     An importer, Folagbade Adesanya said the increment will affect vehicle clearance, saying clearing agents are engaging the importers to forestall disagreement.

    He said: “The Central Bank has increased the Dollar exchange rate, from N422.30 to N589.45 and N770.88. Now we are at N783.174 to a dollar. What it means is that, if clearing agents have a Debit Note that has not been paid on the system or Pre-Arrival Assessment Results (PAAR) or they have given you the value and you have not captured, it has affected your business.”

  • Bill to create separate chairmanship position for CBN board scales second reading

    Bill to create separate chairmanship position for CBN board scales second reading

    A proposed bill to establish the role of chairman of the Board of the Central Bank of Nigeria (CBN), separate from the position of the governor, successfully passed its second reading in the House of Representatives on Thursday, November 9.

    The sponsor of the Bill, Hon Francis Waive, said there was a need to amend Section 6 to separate both positions so the Governor can be checked and not have all the power.

    The Bill also proposes that in the event of the need for a currency swap of Naira redesign, as witnessed from late last year to early this year, the Bank would be directed to call in its notes or coins, subject to a notice of not less than one year.

    This amendment reinforces the need for adequate time for the notice of change of the Naira notes before exercising the power to call in the old notes, Waive said.

    The Bill is titled, “A Bill for an Act to Amend the Central Bank of Nigeria Act, Cap. C4, Laws of Federation of Nigeria, 2004 and for Related Matters (HB.16).”

    Waive said the proposed amendment to Section 6 of the Central Bank of Nigeria Act represents a significant step toward strengthening the governance structure of the CBN.

    He said the amendment which seeks the differentiation between the Chairman of the Board and the Governor of the Bank introduces a level of independence, oversight, and accountability that is essential for the effective functioning of the CBN.

    The amendment to Section 6, he said, aligns with international best practices and demonstrates a commitment to transparent and prudent monetary policy management.

    “The proposed amendment introduces a crucial change in the composition of the CBN’s Board of Directors as outlined in Section 6 of the Principal Act. The proposed amendment adds a new paragraph, Section 6(2)(a), which mandates that the Chairman of the Board shall be a Former Governor of the CBN, a former Chairman of the Bank, or a former Managing Director of a bank.

    “This provision introduces an essential shift by requiring the Chairman to have a background outside of the current leadership of the CBN. Secondly, the amendments also provide for the separation of the Chairman of the Board from that of the Governor. Importance of a Distinct Chairman.”

    Read Also: Customs rakes in N333b in four months

    Speaking on other areas of amendment, he said: “Amendment to Section 7 (1): Day-to-Day Management and Accountability. The proposed amendment to Section 7 (1) of the Principal Act addresses the day-to-day management of the Central Bank of Nigeria (CBN). This amendment states that ‘Section 7 (1) the Governor or in his absence the most senior Deputy Governor shall be in charge of the day-to-day management of the Bank and shall be answerable to the Board for his acts and decisions.’

    “This is opposed to the current provision which gives the Governor the power to choose which of the Deputy Governors to act in his absence. This amendment clarifies the chain of command within the CBN, ensuring that the Governor or the most senior Deputy Governor takes on the role of managing the Bank’s daily operations. This allocation of responsibility minimizes ambiguity and ensures efficient decision-making.

    “The provision that the Governor or Deputy Governor is accountable to the Board for their actions strengthens oversight. It enhances the Board’s role in reviewing operational decisions and ensures that such decisions are aligned with the broader objectives of the CBN.

    “Amendment to Section 8 (3): Determination of Salaries. The proposed amendment to Section 8 (3) of the Principal Act addresses the Governor and Deputy Governors of the CBN subject to the approval of the Revenue Mobilization and Fiscal Commission and not the Board of the Bank.

    “Section 8 (3) The salaries or allowances including pension and other allowances payable to the Governor and to the Deputy Governors shall be as stipulated, from time to time, by the Revenue Mobilization Allocation and Fiscal Commission subject to the approval of the President Strengthening Fiscal Accountability.

    “Amendment to Section 16: Exchange Rate Mechanism. The proposed amendment to Section 16 of the Principal Act addresses the determination of the exchange rate of the Naira. The amendment states that; ‘The exchange rate of the Naira shall be determined, from time to time, by a suitable mechanism devised by the Bank for that purpose, provided that such rates shall at all times be uniform throughout the country both at the Bank, Commercial Banks or any such persons licensed to carry on the business of Bureau De Change.”

    This amendment, he said, empowers the Bank to devise a suitable mechanism for determining the Naira’s exchange rate. It emphasizes stability and consistency in exchange rates across the country.

    On uniform exchange rates, he said the provision ensures that the exchange rates remain uniform throughout the country, regardless of the entity involved in currency exchange. This fosters economic predictability and prevents distortions.

    He continued, “Amendment to Section 20 (3): Call-in of Notes and Coins protect public interest in the event of the need for currency swap of Naira redesign as witnessed from late last year to early this year, direct the Bank to call in its notes or coins, subject to a notice of not less than one year. This amendment reinforces the need for adequate time for the notice of change of the Naira notes before exercising the power to call in the old notes.

    “Clarity in Transition: The provision that both old and new notes can be used as legal tenders during the notice period minimizes disruptions in economic activities and ensures a smooth transition.”

    The amendment also introduced a new Section 48 on the budgetary process.

    Waive said, The Introduction of New Section 48: Budgetary Process. The proposed introduction of a new Section 48 to the Principal Act addresses the preparation and submission of the Bank’s budget estimates to the National Assembly. ‘The Board shall prepare and submit to the National Assembly through the President no later than 30th September of each year an estimate of its expenditure and income during the next succeeding year.’

    Waive said proposed amendments to the Central Bank of Nigeria Act would contribute to a more transparent, accountable, and effective operation of the Central Bank.

    These amendments, he said, underscore the commitment to good governance, fiscal responsibility, and the prudent management of the Nigerian economy.

  • CBN assures of sufficient cash supply

    CBN assures of sufficient cash supply

    The Central Bank of Nigeria (CBN) yesterday said it has enough cash-in-circulation to meet the transaction needs of Nigerians.

    In a statement, CBN Director, Corporate Communications, Isa AbdulMumin said denied reports on alleged scarcity of cash at banks, automated teller machines (ATMs), Points of Sale and among Bureaux de Change (BDCs) in some major cities across the country.

    He said: “Our findings reveal that the seeming cash scarcity in some locations is due largely to high volume withdrawals from the CBN branches by Deposit Money Banks (DMBs) and panic withdrawals by customers from the ATMs.”

    “While we note the concerns of Nigerians on the availability of cash for financial transactions, we wish to assure the public that there is sufficient stock of currency notes for economic activities in the country. The branches of the CBN across the country are also working to ensure the seamless circulation of cash in their respective states of operation”.

    AbdulMumin advised members of the public to guard against panic withdrawals as there is sufficient stock to facilitate economic activities.

    “Nigerians are also advised to embrace alternative modes of payment, which would reduce pressure on using physical cash,” he said.

    Findings showed that the apex bank has commenced clearance of an estimated $7 billion forex forwards backlog to strengthen the naira and bring stability to the forex market.

    Read Also: Imo/Bayelsa/Kogi polls: Tinubu appeals for free, fair process

    The CBN had in recent months reiterated its commitment to clearing the backlogs to firm up the naira and bring stability to the forex market.

    CBN Governor, Olayemi Cardoso, said the apex bank is working on clearing the $7 billion FX backlog.

    Unconfirmed report estimates that between 75 to 80 per cent of the outstanding matured FX forwards will be cleared in the coming days through the commercial banks.

    The Minister of Finance and Coordinating minister for the Economy, Wale Edun, stated last month that the country anticipates receiving $10 billion in inflows in the upcoming weeks.

    These inflows would help ease liquidity and clear the backlog of past-due forward contracts that are weighing on the naira.

    Analysts said that the settlement by the CBN is a positive move for the Nigerian economy, the FX market, the value of the naira, and the country’s gross external reserves.

  • BREAKING: No plans to redenominate Naira, says CBN

    BREAKING: No plans to redenominate Naira, says CBN

    The Central Bank of Nigeria (CBN) has denied the claims that it is planning to redenominate the Naira.

    There had been a rumour circulating on social media that the apex bank was planning to redenominate the nation’s currency.

    These rumours started over the last week because the Naira reached its highest low against the dollar in that period.

    However, the statement posted on the CBN’s X page reads: “The attention of the Central Bank of Nigeria (CBN) has been drawn to the wide circulation of a text message suggesting that the Bank plans to redenominate the country’s legal tender, the Naira, with effect from January 2024.

    “We are concerned that this narrative, which we had refuted before now, appears to be gaining traction with several debates on the implication of such a policy for the Nigerian economy.

    Read Also: Transfer Yakubu’s seized funds to registrar’s account, court orders EFCC, CBN

    “We wish to reiterate that the contents of the message are misleading. The authors of the message, in their mischief, modified text eked from an old policy move by a previous CBN Governor in 2007 to make it appear recent.

    “For the avoidance of doubt, there is currently no plan by the Bank to restructure and redenominate the naira. Whilst the Bank may be considering reforms, such are subject to laid down procedures in line with the provisions of the CBN Act, 2007.

    “The public is hereby advised to ignore the news report, as it is speculative and calculated to cause panic in the polity.”

  • CBN offers N108b T-bills across three tenors

    CBN offers N108b T-bills across three tenors

    Central Bank of Nigeria (CBN) has offered N108.1 billion Treasury Bills (T-Bills) across three tenors of 91 days, 180 days and 360 days.

    In an auction report released at the weekend, Afrinvest West Africa analysts said the CBN offered N108.1 billion worth of instruments across three tenors – 91-day (N2.8 billion), 182-day (N7.9 billion), and 364-day (N97.3 billion). 

    Demand at the auction was strong as the bid-to-cover ratio stood at 3.7 times. The 364-day instrument received the most buying interest with a bid-to-cover ratio of 6.3 times, while the ra o of the 182-day and 91-day bills were three times and 1.8 times. 

    Compared to the previous auction, the stop rate on the 91, 182 and 364-day instruments rose 2.3 percentage points (ppts), 3.9 ppts, and 3.8 ppts to six per cent, nine per cent, and 13 per cent.  In the secondary market, the bearish segment lingered as the average yield rose 94bps week-on-week (w/w) to eight per cent. 

    This negative outing was influenced by sell-o s on the short (91-day) and mid-dated (182-day) instruments as yield advanced 318bps and 22bps w/w. 

    Read Also: Nigerian equities net N121b gains amid global decline

    Nonetheless, the long-dated (364-day) instrument posted gain as yield fell 58bps w/w. In the coming week, we expect the Federation Account Allocation Committee (FAAC) inflow to boost liquidity and drive trade. 

    The apex bank had also conducted three rounds of T-bills auctions worth N532.5 billion in September.

    The breakdown showed offer of N203.2 billion on only the 364-day instrument in the first, N152.2 billion, and N177.1 billion across the three tenors in the second and third respectively. 

    Investors’ appetite registered strong in the month with a bid-to-cover ratio of 4.2 times, albeit weaker than August’s demand of 5.4 times. 

    Notably, the 182-day instrument recorded the strongest buy interest with bid-to-cover ratio of 4.3 times with sales worth N2.5 billion. Trailing, the bid-to-cover ratio of the 364 and 91-day instruments stood at 4.3 times and 2.9 times times, following sales worth N527.1 billion and N2.8 billion. 

  • PND restriction that should not have been 

    PND restriction that should not have been 

    Sir:  On July 27, the Central Bank of Nigeria (CBN), directed deposit money banks (DMBs) to vacate the Post-No-Debit restriction placed on 440 individuals and corporate account holders. This order, which came on the heels of the suspension of the former CBN governor, Godwin Emefiele, is seen by many stakeholders as a sign of a new dawn in the operations of the apex bank under the administration of President Bola Ahmed Tinubu.

    PND is a restriction on an account which stops an account holder from carrying out debit card transactions, money transfer out of the account, and check transactions. When an account is placed on Post No Debit, it means that funds can flow into the account, but there can be no withdrawals.

    The rationale behind implementing “Post No Debit” can vary, and it is often introduced as a protective measure by banks and financial institutions in response to potential risks associated with the account or account holder. Common reasons for its implementation include suspected fraudulent activities, irregularities in transactions, account disputes, court orders, or concerns over the account’s solvency.

    It is a global phenomenon to freeze any account that is suspected to be used for illegal inflow or outflows or if an account holder is a debtor who fails to pay their debts as when due, a creditor may obtain a court order to stop the debtor from making a further withdrawal from their account balance.

    In 2020, without a court order, some companies in the non-financial sector had a PND placed on their accounts for sourcing foreign exchange from non-official sources or the black market. Some exporters were also victims for the failure to repatriate foreign currency proceeds.

    In the case of the exporters, it was unreasonable to repatriate their dollar earnings to be sold at the exchange rate of N461/$ in the I&E forex window which was 62 percent lower than what could be obtained in the parallel market at N750/$. This means the CBN is telling these exporters to lose 62 percent of their revenues in naira terms.

    Read Also: Bills to bar CBN governor from partisan politics, reposition apex bank scale second reading

    Realising its mistake, the CBN introduced a scheme that now compensated exporters N25/$ for every dollar they repatriated.

    The consequences of these sudden and unlawful sanctions on the accounts of individuals and businesses are devastating. Many struggled to go about their everyday business and to meet obligations. Some companies could not pay salaries to staff and settle invoices to suppliers as and when due. Experts say this kind of action harms the entire economy by destroying commerce and employment.

    Weighing in on the issue, Professor Godwin Oyedokun of Lead City University, Ibadan, said it was an economic suicide to have placed such restrictions on those accounts at the time it was done knowing the fragile nature of the Nigerian economy. He said it is possible many of the companies whose accounts were placed on PND have closed shop as they could not meet their obligations.

     “I am glad that some reforms are already taking place at the Central Bank of Nigeria at least to bring it to the point where it will respect the laws of the land. How can you place PND on an account for two years, three years, when the law says not more than 90 days?” he was quoted to have said

    He said it is a good thing that the restrictions have been lifted adding that the monies saved in the accounts those many months will now form part of money supply to the economy that will stimulate more economic activities for economic growth.

    He also advised the victims of the restriction to demand for interest on their money as it has turned out that the restriction was not because of any wrong doing.

    Reversing the PND restrictions is certainly a timely intervention for the affected companies and individuals given the current challenging economic environment. The easing of the PND restriction means a new lease of life as the affected individuals and institutions can now access funds to better support their operations and stakeholders. The economy should also receive a boost in the form of better output, spending and employment. Domiciliary accounts with restrictions that have now been lifted could potentially support better forex liquidity, no matter how little.”

    • Kelvin Gilbert, Abuja.