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  • Analysts predict fixed exchange rate retention by CBN

    Analysts  at the Afrinvest west Africa have predicted the Central Bank of Nigeria (CBN) will in the next five years, retain the currency fixed exchange and allow gap between official and market-led rates.

    President Muhammadu Buhari last week, renewed the appointment of Godwin Emefiele as the Governor of the CBN for another five years term, starting June 2019.

    In a report released at the weekend titled: Nigeria’s House of Cards: Will Foreign Exchange Policy be Altered?, they said that : “We believe the CBN under Godwin Emefiele would favour keeping the fixed exchange rate and the current misalignment between the official rate of N305.00/US$1.00 and market led rates of N360/$1.

    They said a relatively strong external reserves level at $44.8 billion, which provides more than the recommended three months import cover ensures this in the short-term. However, the boom and bust cycle of the commodity markets is inevitable, making the current stability of the currency untenable over the medium to long-term.

    “There is the need for a more flexible management of exchange rate to ensure adequate response to economic shocks, which in turn, prevents sharp exchange rate adjustments and sustains foreign investment, forex liquidity and growth. Evidence from previous commodity shocks shows that without a flexible exchange rate system, the chance of an economic recession or weak growth and banking system weakness is high,” they said.

    The Afrinvest research team said that due to the boom and bust episodes in commodities market cycle, Central Banks in resource dependent countries are making changes to improve the resilience of the financial sector, responses to external vulnerabilities and to meet the goals of monetary policy. In this regard, strengthening regulatory oversight, and adopting a flexible exchange rate policy and inflation targeting is common.

    This is becoming clearer in emerging markets such as South Africa, Russia and Egypt. In Nigeria, the latest commodity market shock, the mid-2014 oil price slump, revealed faults once again as forex liquidity tightened due to reduced exports. The implication was weaker government revenues, steep currency devaluations, elevated inflation and weak growth.

    “During the week, we observed a faster growth in foreign reserves levels as it rose further by US$30.4m in the week, pulling the foreign reserves up to $44.84 billion (08/05/2019) relative to $44.79 billion in the prior week. We believe that the sustained increase in foreign portfolio buying interest in the fixed income market is largely responsible for the accretions to the reserves although we also acknowledge that stable oil prices and output have continued to favour increased forex earnings,” the report said.

    In the forex market, the CBN resumed its weekly sales, injecting $205 million into the market to support the currency. The wholesale segment of the market was offered $100 million while the Small and Medium Enterprises (SMEs) segment received $55 million. Similarly, customers requiring foreign exchange for invisibles such as tuition fees, medical payments and Basic Travel Allowance (BTA), among others, were allocated $50.0m.

  • Breaking: No money missing, stolen in CBN, says spokesman

    The Central Bank of Nigeria (CBN) has declared that no money is missing or stolen from the bank’s coffers as reported in some section of the media.

    Its Director  Corporate Communications, Mr. Isaac Okoroafor, clarified this in a statement on Sunday, while reacting to a recent article and audio clips in which the CBN Governor and other senior officials were heard  discussing discrepancies in the bank’s accounts.

    Okoroafor said that the audio was distorted in a manner which creates a different impression of the matter being discussed, which was to proffer solutions to a misunderstanding that affected the Bank’s balance sheet.

    “As publicly known the CBN was approached in 2015 by the National Economic Management Team and the National Economic Council chaired by the Vice President, to assist State Governments with Conditional Budget Support.

    “This happened in the aftermath of the significant nose-dive in global oil prices and associated FAAC allocations.

    “In order to ensure that ordinary Nigerian workers  got their salaries, pensions and gratuities, and that the economy continued to recover from recession, the Bank provided about N650 billion in loans at 9 per cent with a two-year grace period to 35 States of the Federation.

    “These monies were distributed to the states monthly with documented approval of the Federal Ministry of Finance and the Presidency.

    READ ALSO: Buhari reappoints CBN Governor Emefiele for second term

    “In closing the Bank’s 2018 accounts, external auditors in their Draft  Account, erroneously classified about N150 billion of these loans as bad, which negatively affected the Bank’s Balance Sheet and shareholders fund.

    “The selective  conversation being circulated was simply a discussion to ascertain why the auditors took that position and next steps to resolving it.

    “Obviously, it soon became clear that a State Government loan cannot be classified as “bad” or “irrecoverable” when the State still exists and getting FAAC allocations.

    “The Bank then reached out to the Federal Ministry of Finance and they jointly gave comfort  to the auditors who accepted in writing that these monies would be repaid.

    “On this basis, the auditors reversed the negative entry and the certified that the CBN’s 2018 accounts were a true reflection of the State of Affairs,” he said.

    Okoroafor urged Nigerians to disregard the audio and continue to trust that the Bank is doing everything it could to represent their interests in the best possible way.

    “Under the leadership of Governor Emefiele, the CBN has always stood for, and vigorously pursued transparency in its stewardship of public resources and policies.

    “The integrity of the CBN Governor remains unassailable.  He has no account in Dubai or anywhere in the world and would never convert the funds of CBN for personal use. Not in the past, not now and not ever.

    “The use of selective  wiretapped conversations of the Bank’s Management, to malign his character and integrity will never stand.

    ” The Bank will pursue every  legal means to bring the perpetrators to justice,” he said. (NAN)



  • CBN lifts interbank market with $205m intervention

    The interbank segment of the Foreign Exchange Market has received a boost of $205 million from the Central Bank of Nigeria (CBN), the apex bank said yesterday.

    Figures obtained from the CBN indicated that authorised dealers in the wholesale segment of the market were offered the sum of $100 million, while the Small and Medium Enterprises (SMEs) segment received the sum of $55 million. The sum of $50 million was allocated to customers requiring foreign exchange for invisibles such as tuition fees, medical payments and Basic Travel Allowance (BTA), among others.

    Read also: CBN, Unity Bank partner on cotton seeds distribution

    The Director, Corporate Communications Department, Central bank of Nigeria, Isaac Okorafor, in confirming the transactions, disclosed that the effort of the bank had helped to stem fluctuations in the exchange rate. This, according to him, had increased the level of confidence investors and the public had in the Naira. It will be recalled that on Friday, May 3, 2019, the Bank injected the sum of $271.8million and CNY41.1million into the Retail Secondary Market Intervention Sales (SMIS) segment.  Meanwhile, the Naira on Tuesday, May 7, 2019, exchanged at an average of N361/$1 in the BDC segment of the market.

  • CBN, Unity Bank partner on cotton seeds distribution

    The Central Bank of Nigeria (CBN), Unity Bank Plc and the National Cotton Association of Nigeria (NACOTAN) have partnered on the  flagg-off distribution of seeds/inputs supplies to cotton farmers for the 2019 planting  season nationwide.

    The partnership is in line with the commitment to grow the economy through the revival  of agricultural sector.

    The distribution of cotton input supplies to farmers  is part of the Anchor Borrowers Programme, an  Agricultural Development  finance initiative of the CBN operated as an on-lending scheme with participating financial institutions  packaged to channel financing support to  beneficiaries  in the Agric sector.

    Unity Bank’s partnership and collaboration with CBN in flagging off this year’s input supplies distribution to cotton farmers to support wet season farming is in recognition of the Bank’s established  pivotal footprints in Agriculture which has been well acclaimed  in various awards received by the Bank, such as the Presidential award at the third anniversary of ABP, CBN award on sustainable transaction in Agriculture, among others.

    Unity Bank’s Executive Director, Corporate Planning & Compliance,  Usman Abdulqadir, said CBN is partnering Unity Bank on account of the lender’s strong participation in the Anchor Borrowers Programme aimed at  rebuilding  customers confidence, alleviating poverty through food and cash crops production to make Nigeria self-sufficient in food and diversifying the economy.

     

  • CBN worried over high forex exposure of banks

    The Central Bank of Nigeria (CBN) has expressed worry over persistent risks in the financial system, especially the high foreign exchange (Forex) exposure of banks, particularly to entities that do not earn forex.

    CBN Deputy Governor, Edward Lametek, disclosed this in his personal statement at the last Monetary Policy Committee (MPC) meeting, released yesterday by the regulator.

    He said the concentration and high non-performing loans (NPLs) is also of great concern to the CBN.

    He however, said that  payment of contractor debts by the Federal Government will go a long way in soothing the pressures in the banking system, while improved surveillance and deployment of sanctions against regulatory infractions will engender good governance and stability.

    “This is important because financial intermediation, especially provision of credit, is highly dependent on the state of health of financial institutions. At end-February 2019, the stock of deposit money banks’ total credit declined by about 2.5 per cent, year-on-year. This trend needs to be halted in the face of the prevailing sluggish performance of economic activity. In this context, the role of other financial institutions (OFIs) in the credit arena becomes important,” he said.

    He explained that these institutions (micro-finance banks, finance companies, mortgage banks, development finance institutions, among others) are expected to play the very important role of closing certain gaps in the financial system including, crucially, financial inclusion. As such, they need to be encouraged to remain mission-focused.

    “Overall, the balance of risks continues to be tilted against economic growth. In my January 2019 statement, I emphasized the need to support growth given the weak outlook for economic activity based on indications from the oil sector (especially the volatility in crude prices and production cuts) and sluggish consumption demand. Of course, I noted that more clarity over the next two months (February and March) would be helpful in deciding the direction of monetary policy beyond third quarter of 2019,” he said.

    “Clearly, the indications then have been justified by subsequent developments particularly as shown by the CIEA, PMIs, and the current outlook for the oil sector.

     

  • CBN: N2b stolen as fraudsters target Mobile Apps users

    GOING by the record of the Central Bank of Nigeria (CBN), e-fraudsters have fleeced customers of self-initiated banking solutions, such as Mobile Apps and Unstructured Supplementary Service Data (USSD) of about N2.08 billion in the last one year.

    CBN Director, Payment System Management, Sam Okojere, who broke the news at the Nigeria Electronic Fraud Forum (NeFF) general meeting in Lagos, said that customers of banks, Other Financial Institutions (OFIs), digital wallets and remittance players are prime targets for cyber criminals seeking quick monetisation of stolen credentials.

    The apex bank’s data showed that Nigeria recorded over 38,000 fraud count with over N9 billion attempted fraud value within 12 months. An estimated N2.08 billion was lost in 2018, with mobile channel recording the highest volume and value, of 11, 492 in volume and N598.8 million in actual loss value. The loss value is 25.7 per cent higher than the 2017 figure.

    Okojere said that the more products (cheques and over-the-counter services) are channeled through those mobile devices as against previously used channels, the more attractive they become to fraudsters.

    He also disclosed that the Nigeria Interbank Settlement System (NIBBS) Fraud Report for last year showed that the mobile channel scored 28.21 per cent on the Fraud Interest Index.

    The bank chief said: “This could be an early warning sign that fraudsters are shifting focus to mobile attacks and testing the waters in different types of mobile and online banking fraud in 2019.

    “It is therefore important that we do not relent in our efforts at protecting this space and increasing public confidence in our electronic channels.

    “The truth is that you do not need to go to a bank’s branch to carry out a transaction. Most people are carrying their cards in their phones. The money is not in the phone, but is a channel through which you can assess your bank account and the money in it.

    “It is because the attentions of the cyber attackers have moved to the mobile platforms. They are one of us, so they know where the interest is going. One of the things we are doing is to create awareness for both the users and the operators, so that they can tighten the security around mobile device.”

    Also speaking at the forum, Executive Director, IT and Operations at Access Bank Plc, Ade Bajomo, said no bank is totally free of cyber-attacks.

    To him, there are two classes of banks in Nigeria, when it comes to cyber-attacks: those that have been hacked, and those that do not know they have been hacked.

    Bajomo, said hacking is a serious concern for the payment industry, given that there are even companies selling hacking toolkits, encouraging people to go into hacking.

    He said: “As we gather here today, there are people who do the same in the dark world. Banks need tone compliant with needed certification for them to be ahead of the e-fraudsters. The nature of sophistication of the e-fraudsters means no one is safe. Some of the mare wares are difficult to understand.

    “Banks are where the money is and that’s why they are the primary target. And I can say that only two things can break a bank, the level of their bad loans and fraud.

    “It does not matter, once one person is porous, the entire system is affected. We need to create more awareness of the need to protect our financial system.”

    Continuing, Okojere, who is also the Chairman of NeFF, urged banks to unite in fighting electronic fraud through a collaboration that will make the ecosystem safer and more inclusive.

    He explained that just like technology, electronic fraud has evolved over the years and fraudsters continue to innovate ways to beat the system and elude authorities around the world.

    Noting that the Nigeria payment ecosystem has come a long way, particularly in developing techniques to prevent electronic fraud, Okojere said: “Given the importance of providing safe, secure and acceptable payments system, as well as engendering public confidence in electronic means of settlement for goods and services (payments), the role of a proactive management cannot be over-emphasised. It was on this backdrop, that the NeFF was created and has since been riding.

    “The aim of NeFF has been to enable information exchange and knowledge sharing on fraud issues amongst key stakeholders with the objective of ensuring a collaborative and proactive approach towards mitigating fraud occurrences, limiting .loses and enhancing confidence.

    “Additionally, NeFF has positioned itself to serve as the official body that represents the industry’s position on fraud related issues, while proffering solutions that restore public confidence in the payment ecosystem.”

  • CBN intervenes with $271.83m, CNY41.14m in Retail SMIS

    The Central Bank of Nigeria (CBN) has made interventions in the Retail Secondary Market Intervention Sales (SMIS) of the Foreign Exchange market totalling $271.83 million and CNY41.14 million.

    Its Director, Corporate Communications, Isaac Okorafor, confirmed that the CNY41.14million was for the payment of Renminbi-denominated Letters of Credit for agriculture as well as raw materials.

    The weekend’s transaction was in addition to the $205 million injected into the Wholesale, Small and Medium Enterprises (SMEs), and Invisibles segments of the market last Tuesday.

    Okorafor expressed satisfaction with the performance and stability of the economy, noting that the country would experience more growth as the bank has placed restrictions on the purchase of forex from the market for items in the textile and cotton value chain.

    Meanwhile, the Naira exchanged at N360/$1 on Friday in the Bureau De Change (BDC) segment of the market.

    The apex bank had a week ago intervened with $210 million to sustain liquidity in that segment of the market.

    According to the CBN, authorised dealers in the wholesale segment of the market, as in previous deals, were offered $100 million, while those in the Small and Medium Enterprises (SMEs) segment got $55 million.

    Customers buying forex for invisibles, such as tuition fees, medical payments and Basic Travel Allowance (BTA) were also allotted $55 million.

    Okorafor confirmed the transactions, reiterating that the CBN will continue to make forex available to ensure the continued stability in the markets.

    In another intervention on April 18, the bank injected  $254.8million and CNY34.8 million into the SMIS segment.

  • N1b Imo debt: CBN, 14 banks deny overseeing state’s account

    The Central Bank of Nigeria (CBN) and 14 other banks of the 17 ordered by an FCT High Court to show cause why plea for garnishee of alleged accounts operated by the Imo State government should not be made absolute have denied overseeing the state’s accounts.

    The denials were contained in the respondents briefs filed by the concerned banks yesterday in Abuja, and shared by lawyer for the Judgment Creditors, Mr. Anthony Agbonlahor.

    The judgment creditors – E.F. Network Nig. Ltd and Mr. Gideon Egbuchulam – on April 17, approached the court with an ex parte motion, praying it to compel 17 banks allegedly overseeing the Imo state government accounts to effect the payment.

    Justice Bello Kawu granted the prayer by directing the listed banks to show cause why the order should not made absolute.

    The banks are Central Bank of Nigeria (CBN), Access Bank Plc, Zenith Bank Plc, Jaiz Bank, Union Bank Plc, United Bank for Africa (UBA), First Bank Plc, Ecobank Plc, Keystone Bank Plc, and Diamond Bank Plc.

    Others are Fidelity Bank Plc, Polaris Bank Plc, GTBank Plc, Stanbic IBTC Bank Plc, Unity Bank Plc, Heritage Bank Plc, and FCMB Bank Plc.

    The Supreme Court in March affirmed the judgment of the Court of Appeal in Owerri, which ordered the defendants to pay the N1 billion contract debt owed the judgment creditors.

    The apex court held that the appeal by the government and Governor Rochas Okorocha, challenging the judgment of the lower court, was not meritorious.

    However, going by the respondents brief filed by the 17 banks, 14 of them denied overseeing any Imo government accounts.

    The CBN said it was not in the position to effect the order since it had only administrative supervisory powers over banks.

    Its lawyer Ahmed Abdullahi said the bank did not maintain accounts in the name of the judgment debtor.

    He further said the bank had such powers to track funds due to the government in the consolidate revenue fund of Imo state. Abdullahi also argued that the bank did not partake in the actual sharing of funds to from the Federation Account. He added that CBN, as a public officer, required the consent of the Attorney-General of the Federation to act on legal matters and the processes served on the bank did indicate consent was sought.

    Abdullahi, therefore, prayed the court to vacate the order and discharge the bank in the interest of justice.

    However, the respondent’s brief filed by Zenith Bank Plc indicated that the government maintained an account with it, but the account was used to obtain a N10 billion loan from the bank in 2016 and spread across 240 months.

    Similarly, Access Bank, in its response, agreed to oversee a number of the judgment debtor’s account, but that the balances in those accounts were abysmally negligible and there were no recent transactions on the accounts.

    But Agbonlahor said Access Bank’s testimony was incorrect.

    The Imo State Attorney-General, Chief M.O Nlemedim (SAN), also filed a Motion on Notice seeking the termination of the garnishee proceedings for want of competence.

    He is asking the court for an order restraining the judgment creditors, agents, representatives or the garnishee banks from relying on the said garnishee order pending the determination of the motion.

    The state is also seeking the setting aside of the April 17 garnishee order for allegedly being an abuse of court process.

    Justice Bello Kawu fixed June 25 for continuation of hearing.

  • CBN faults governors’ alarm on recession

    The Central Bank of Nigeria (CBN) has dismissed the alarm raised by governors that the economy may relapse into recession by the middle of next year.

    Zamfara State Governor Abdulaziz Yari, who doubles as the Chairman of the Nigeria Governors’ Forum (NGF), urged incoming governors to brace for another round of recession.

    It was at the opening of a three-day retreat for returning governors and governors-elect in Abuja on Monday.

    But the CBN Deputy Governor, Economic Policy, Dr. Joseph Nnanna, who represented CBN Governor Godwin Emefiele, dismissed the governors’ claims at the public presentation of the Spring 2019 edition of Regional Economic Outlook (REO) by the International Monetary Fund (IMF) in Abuja.

    “We are making smooth progress towards growth and by end of 2019, all things being equal, we are going to likely have between 2.8 per cent and three per cent GDP (Gross Domestic Product) growth rate,” he said.

    Nnanna noted that “since the third quarter of 2016, when we started coming out of recession, we have embarked on tight monetary policy in all its ramifications.

    “Right now, we are on the path of achieving our price stability goal of single-digit inflation. Are we going to witness increased inflation or are we sliding back into recession? My answer is no. But is that adequate? My answer is no. Three per cent GDP real growth rate is not enough for Nigeria where our population growth rate is 3.2 per cent. Per capita growth rate is still negative but definitely, we are not going through the era of 2016 when we had a recession. That won’t happen –  hopefully. Not under CBN watch.”

    The major problem afflicting Nigeria’s labour sector, Nnanna said, is more of underemployment than outright unemployment “because majority of Nigerians are employed one way or another, but they are functioning below capacity. They are engaged in the informal sector, which is not performing optimally. We also have a huge infrastructure deficit. Infrastructure is the major constraint to economic development and growth. This has to be repaired.”

    Read also: CBN accepts N15b T-Bills as collateral for settlement banks

    Nnanna advised governors and other policymakers to tackle the menace of non-inclusive growth because “it is inclusive growth that we need in Nigeria than any other thing”.

    The apex bank’s deputy governor used the opportunity to assure existing and prospective portfolio and foreign direct investors that they will not encounter problems repatriating either their profits or capital.

    He said: “For the money market, our promise to external investors, be they portfolio investors or foreign direct investors, is that we are going to continue to maintain positive relationship.

    “And the yield in Nigeria is comparative, if not more superior to the yield in other emerging market economies. Those who want to invest in the last frontier markets, the place to be is here.

    “Nigeria’s I&E forex window is a market for willing seller and willing buyer. CBN will not intervene in that market to fix prices. Since this market was introduced in mid-2017, total transaction in the market amounts to $109.1 billion. The inflows through the CBN, as at today, is $16.5 billion while outflows amount to slightly under $10 billion.”

    Earlier, the Director, African Department at IMF, Mr. Abebe Selassie, had urged the Nigerian authorities “to keep inflation down and also grow the non-oil revenue, if the economy must perform optimally. The IMF chief said that its projected 2.1 per cent growth for the Nigerian economy in 2019,  “doesn’t reflect the potentials of Nigeria”.

    He advised that monetary policy needs to be calibrated with an eye on keeping inflation down and facilitating exchange rate.

    For Nigeria, Selassie noted that the IMF sees some economic recovery, adding that growth in 2018 was close to two per cent and 2.1 per cent is projected in 2019 but this is well below the potentials that this economy has.

    He said: “Nigeria needs to maximise its potentials and grow its non-oil revenue. Non-oil revenue is too small, about four per cent to GDP, thus it’s important for government to generate more resources to meet infrastructural deficit.”

    Finance Minister Mrs. Zainab Ahmed, who was represented by the Permanent Secretary, Special Duty, Dr. Mohammed K Dikwa, said the incumbent government has spent about N4.5 trillion on the productive sector of the economy for massive job creation to reduce insecurity and infrastructure development.

  • CBN accepts N15b T-Bills as collateral for settlement banks

    The Central Bank of Nigeria (CBN) has directed that settlement banks provide clearing collateral of not less than N15 billion worth of treasury bills to enable them to perform settlement roles.

    This was contained in the CBN’s Monetary, Credit, Foreign Trade and Exchange Policy Guidelines for the fiscal years 2018/2019.

    The CBN said it would continue to categorise banks into two – settlement and non-settlement banks – for clearing and settlement. Settlement banks participate in the clearing houses and receive their net clearing position in their settlement account with the CBN. Non-settlement banks receive their net clearing position through the settlement account of their settlement bank.

    “Any bank applying for direct participation as a settlement bank shall be required to possess the capacity to provide the required clearing collateral of N15 billion, subject to periodic review. It shall have the ability to offer agency facilities to other banks and to clear and settle on their behalf. It shall also have adequate branch network in all the CBN locations,” the CBN said.

    “Banks that meet the specified criteria shall continue to be designated as “settlement banks.” Consequently, non-settlement banks, called “Clearing banks” shall continue to carry out clearing through the settlement banks under agency arrangement.

    ‘’The terms of agency arrangements shall be mutually agreed between the Settlement Banks and the clearing banks,” the CBN said.

    The CBN said it would continue to adopt the risk-based supervision (RBS) approach in the supervision of institutions under its regulatory purview. “The objective of the RBS approach is to provide an effective process to assess the safety and soundness of banks and other financial institutions. This is achieved by evaluating their risk profile, financial condition, risk management practices and compliance with applicable laws and regulations,” it said.

    It urged banks to pursue profitability in their business models through efficient operations, adding that they should charge competitive rather than excessive rates of interest in their transactions. The lenders are also to disclose their prime and maximum lending rates as fixed spreads over the Monetary Policy Rate.