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  • CBN injects $462m into forex market

    CBN injects $462m into forex market

    The Central Bank of Nigeria (CBN) on Friday injected $462,336,426.74 into the foreign exchange market

    The bank had earlier injected $194 million to the forex market on July 24.

    The Acting Director in charge of Corporate Communications at CBN, Mr. Isaac Okorafor, disclosed this in a statement in Abuja.

    He said the intervention was in line with the CBN desire to sustain and deepen flexibility in the foreign exchange market and further enhance foreign exchange flow in the economy.

    Okorafor said the bank offered the largest allocation of $267.336, 426.74 to the Secondary Market Intervention Sales (SMIS) and $100 million was offered to wholesale interventions.

    He said $50 million was allocated to the Small and Medium Enterprises (SMEs), while those requiring foreign exchange for Business/Personal Travel Allowances, tuition and medical fees, among others, got $45 million.

    NAN

  • ‘CBN’s forex policy killing construction’

    •Surveyors canvass use of local materials

    Except urgent measures are taken to encourage the use of local building materials, the construction industry will remain in doldrums, stakeholders have said.

    They spoke at the ninth Annual Distinguished Lecture of the Nigerian Institute of Quantity Surveyors (NIQS), Lagos Chapter.

    At the lecture themed: “Foreign exchange problems, prospects and solutions in Nigeria: Construction industry perspective,” participants called for the use of local building materials.

    The guest lecturer, Henry Boyo, in his presentation, titled: “For the successful resolution of oppressive contradictions in Nigeria’s economy”, said: “It is appalling that the country has become so poor, despite her abundant human and material resources.”

    He said the distress in the economy, based on available evidence, is  a function of “too much money supply,” of the naira, and foreign currencies.

    Boyo said the Central Bank of Nigeria’s (CBN’s) failure to manage an “irrepressibly” surplus naira supply has continued to stimulate a higher inflation rate for several years. This, he explained, has serious consequences on the purchasing power of the persons whose incomes are in naira.

    He emphasised that the naira and the economy would remain stagnant as long as the CBN persistently auctions the dollar against the naira in a market that is suffocated by excess naira supply, created by the apex bank’s unilateral substitution of naira allocations for distributable dollar-denominated revenue.

    “Thus, CBN’s forex interventions are, in fact, deliberate and a suicidal approach to gradually kill the naira, since the CBN would consciously sell its dollar stock for higher naira bids in such auctions. In this situation, the banks flourish, while the rest of the economy wrestles with deepening poverty,” Boyo said.

    The Lagos NIQS Chairman, Mr. Bamidele Mafimidiwo, agrees with Boyo on the effect of foreign exchange (forex) on the industry.

    He explained that the lingering forex problems had caused a huge disruption to businesses in the sector, a situation that has been compounded by the recession. This has grounded new construction projects, leaving builders and suppliers in difficult financial positions, he added.

    To transform the economy and boost industrial activity, Mafimidiwo said there was the need to restructure the monetary framework.

    “Construction, housing, infrastructure, manufacturing, mortgage and other business activities of tangible output represent the construction industry and today’s forum is to provide a platform to x-ray the industry vis-a-vis the meltdown effects and chart a way forward for the sector,” he said.

    Yet, other stakeholders are convinced that the use of local materials for construction projects is the easiest way out of the scathing effect of forex on the sector. This position was shared by a former President of NIQS, Mr. Oluwasegun Ajanlekoko. He said with the use of local materials, importation would be reduced to the barest minimum.

    “It is about time we stopped using blocks when it comes to affordable housing.  We have large reservoir of clay and that is far cheaper, durable and more environment friendly. To solve the problems of exchange rate, we are appealing to CBN to give discretionary interest rates to those in the construction industry,’’ he said.

    Similarly, Executive Director, UACN Property Development Company Plc (UPDC), Yemi Ejidiran, said the forex challenge affected Grade A and B residential projects. “The government should encourage production of most of our finishing materials locally.  We also need to come up with efficient designs, as it is clear that banks are not ready to finance any real estate project,” he said.

  • Economic recovery can relapse, warns CBN 

    Economic recovery can relapse, warns CBN 

    The Central Bank of Nigeria (CBN) has warned that Nigeria’s fragile growth risks falling back into recession.

    Addressing reporters at the end of the bi-monthly Monetary Policy Committee Meeting in Abuja yesterday, CBN Governor Godwin Emefiele said “forecasts of key macroeconomic indicators point to a fragile economic recovery in the second quarter of the year”.

    ”The Committee  cautioned that this recovery could relapse in a more protracted recession if strong and bold monetary and fiscal policies are not activated immediately to sustain it,” he stressed.

    To guard against this, the MPC noted that “the expected fiscal stimulus and non-oil federal receipts, as well as improvements in economy-wide non-oil exports, especially agriculture, manufacturing, services and light industries, all expected to drive the growth impetus for the rest of the year, must be pursued relentlessly.”

    The Committee said it “expects that timely implementation of the 2017 Budget, improved management of foreign exchange, as well as security gains across the country, especially, in the Niger Delta and North Eastern axis, should be firmly anchored, to enhance confidence and sustainability of economic recovery”.

    The MPC of the CBN also expressed concern over the increasing fiscal deficit estimated at N2.51 trillion in the first half of this year.

    Emefiele lamented “the crowding out effect of high  government borrowing.”

    He called for “fiscal restraint to check the growing deficit” and also disclosed that the committee had once again resolved to retain lending rates at 14%.

    The Committee welcomed the government’s proposal to issue sovereign-backed promissory notes of about N3.4 trillion for the settlement of accumulated local debt and contractors arrears.

    The Committee advised the  CBN “to monitor the release process of the promissory notes to avoid an excessive injection of liquidity into the system, thereby offsetting the gains so far achieved in inflation and exchange rate stability”.

    On why the MPC chose to retain Monetary Policy Rate (MPR) for so long, Emefiele noted that “there is a need for a low interest rate because we know that low interest rate will make it easy for people who want to borrow money to borrow at low rates, we know it will inject liquidity into the system but we are saying that inflation at 18.8% and even today at 16.1% is still considered very high in the light of studies that have been conducted”.

    He explained that “there are acceptable models for computing the inflation threshold and this models have computed inflation threshold for Nigeria at a range of between 10%-12%; what that means is that when inflation rises above 12%, no matter the action that you take to stimulate growth, it will retard growth.”

    Emefiele said the authorities “need to look at how we reverse the trend in inflation and we’re happy that we have done so from 18.8%-16.1% and we are hopeful that it will continue to trend downwards and as this is achieved, we also believe that there is a need to ease rate and also bring interest rate down”.

    Defending the decision to retain interest rate at 14%, Emefiele noted that “we’re truly not there yet because of the reasons I have stated but also more importantly because we believe that easing now or reducing interest rate will pull the real interest rate further into the negative territory which is a disincentive to investment”. “Those are some of the fundamental issues,” he added.

    A disincentive to investment, he stressed “will hurt our stability that we have so far achieved in the forex market and there is a need for us to ensure that this does not happen”.

    “That is the rationale and we would continue as much as possible to continue to provide this explanation. We understand the pain but the actions of the MPC will be reflected in whatever direction that we think is good for Nigeria.”

    At the end of the meeting, members of the MPC resolved to retain the MPR at 14 per cent; retain the Cash Reserve Ratio (CRR) at 22.5 per cent; retain the Liquidity Ratio at 30.00 per cent; and retain the Asymmetric corridor at +200 and -500 basis points around the MPR.

    The Committee is satisfied with the gradual but consistent decline in inflationary pressure in the domestic economy, noting ”its substantial base effect,continuous improvements in the naira exchange rate across all segments of the foreign exchange  market, and considerable signs of improved i nvestments  inflow”.

    Emefiele said “the  Committee welcomed the move by the fiscal authorities to engage the services of asset-tracing experts to investigate the tax payment status of 150 firms and individuals in an effort to close some of the loopholes in tax collection, towards i mproving government revenue”.

    However, the Committee expressed concern about the slow implementation of the 2017 Budget and called on the  authorities to ensure timely implementation, especially, of the capital portion to realise the objectives of the Economic Recovery and Growth Plan (ERGP).

    Regarding complaints by banks of liquidity constraints caused by the apex bank’s mop-up activities, Emefiele said he was once there (private sector banking system), adding that “their business is to complain because they’re economic agents that are interested in making profit”. “We, as regulators looking at all the data that confront us, certainly know that we must be alive to our responsibilities and do our work.”

    Doing their work, he said “means we must do what we have done to continue to achieve the sliding trend in inflation and stabilise the forex market, that is what we are doing and we will continue to do so”.

    On the forex trend the CBN governor the apex bank had “left that now for the market”. “The market will decide. Gone are the days when CBN will be seen to be leaning on somebody as to whatever he thinks is the direction of the market will be,” he said.

    However, the CBN, Emefiele said, “remains a player and from time-to-time, given our sensitivities regarding where we think the market will be, we would intervene and that is why you are seeing the level of intervention in the last five months. The intensity of that intervention will continue”.

     

  • ‘CBN can sustain forex interventions’

    The Central Bank of Nigeria (CBN) has the muscle to sustain ongoing foreign exchange (forex) interventions in the economy, Chief Consultant of Biodun Adedipe Associates Limited, ‘Biodun Adedipe, has said.

    Speaking at the Finance Correspondents Association of Nigeria (FICAN) Half-Year Economic Review in Lagos, he said the apex bank could achieve the feat, despite the pressure that could exert on foreign reserves.

    He said on the 30-day average, the reserves rose from $29.07 billion at end of 2015 to $30.36 billion this July.

    Adedipe said the liquid portion of the reserves stood at $29.62 billion, which translate to 12.31 months of imports cover. He said the exchange rate had depreciated to N168 to dollar at the end of 2014; N197 to dollar at end of 2015; N305 to dollar at the end of last year and N305.85 to dollar as at July 19, 2017.

    Adedipe, who spoke on the theme: ‘Nigerian economy: First-Half 2017 and outlook’, said the required international benchmark was for external reserves to sustain at least six months of the import bill, adding that Nigeria is doing well with its reserves covering over 12 months’imports.

    The economist said Nigeria’s total imports for the first-half of the year was N2.2 trillion ($7.218 billion), with an average monthly figure of $2.406 billion.

    He explained that due to the recession, imports represented a decline from $14.171 billion or monthly average of $4.724 billion in the first quarter of 2015. But foreign trade had picked up since the first quarter of last year, with imports declining.

    Adedipe described as aberration calls on the CBN to freely float the naira, adding that no country in the world adopts such approach to exchange rate management.

    He said the spike in naira exchange rate occurred after the CBN was pressured by several stakeholders to adopt flexible exchange rate system and freely float the Naira.

    “That, of course, was a huge aberration, as there is no country that freely floats its currency (even the United States) – the job of the central bank is to defend and protect its currency by intervening in the markets as necessary. The voices are coming fromtoo many experts that know nothing other than to echo what the Breton Woods institutions have said,” Adedipe stated.

    Speaking on the interest rate, he said the Monetary Policy Rate (MPR), which is the benchmark interest rate, was raised to 14 per cent per year in July, last year from 12 per cent per year. He said changes in the MPR havd not impacted bank deposit/lending rates as well as changes in banking credit volumes.

    “The most volatile interest rate variant is the inter-bank rate, which is more of a reflection of the liquidity in the banking system (Federal allocations) rather than of changes in the MPR. The deposit and prime lending rates moved in adverse directions, respectively with deposits becoming cheaper to the banks and borrowing more expensive to borrowing customers. But actual lending rates were much higher – mostly at 29 per cent and above,” he said.

    According to Adedipe, maintaining the MPR at 14 per cent on the argument of inflation risk, stabilising the exchange value of the naira and bond prices are more counter-productive to domestic productive activities than to investment in financial instruments.

    “It only extenuates government’s cost of borrowing and makes government’s debt instruments very attractive to astute investors. This long spell of fixed MPR is also gradually making the rate to lose its strategic relevance as a signal rate,” he said.

    Adedipe also supported Federal Government’s plans to reflate the economy through borrowing. He said such borrowed funds should not be used to fund recurrent expenditure, but should be used to fund infrastructure and other projects that can generate enough resources to repay the loans.

    “When an economy is seeking to get out of recession, the typical response is for the government to embark on massive spending, which is referred to as fiscal stimulus. Often times, the government may lack the volume required and will therefore, have to borrow beyond the normal range for an economy that is either in boom or the recovery mode.

    “No professional economist will argue against borrowing to stimulate a recessed economy. But the question will always be to spend on what? If the answer is infrastructure, my take is to go ahead and borrow as much as you can,” Adedipe advised.

  • CBN retains interest rate at 14%

    CBN retains interest rate at 14%

    The Monetary Policy Committee (MPC) on Tuesday retained the Monetary Policy Rate (MPR) at 14 per cent due to uncertainties in the global market.

    The Governor of Central Bank of Nigeria (CBN), Godwin Emefiele, disclosed this while briefing journalists on the outcome of the 257th meeting of the MPC in Abuja.

    He said: “MPC decided to retain MPR at 14 per cent, retain CRR at 22.5 per cent, retain the liquidity ratio at 30 per cent, retain assymetric corridor at +200 and -500 bases point around the monetary policy rate.’’

    He said the MPR was not eased at this time because it would signal the committees’ sensitivity to growth and employment concern by encouraging the flow of credit to the real economy.

    Emefiele added: “The MPC noted the liquidity suffering in the banking system and continuous weakness in financial intermediation.

    “It agreed on the need to support growth without jeopardising price stability or offsetting other recovering macroeconomic indicators, particularly the relative stability in the Foreign Exchange (Forex) market

    “The MPC thinks that easing at this point would signal the committee’s sensitivity to growth and employment concern by encouraging the flow of credit to the real economy.

    “It observed that easing at this time would reduce the cost of debt service which is actually crowding out government’s expenditure.

    “Also, the risk to easing would further pull the real interest rate down into negative territory.”

    Emefiele said the argument for holding was to ensure workability of the past policies in the economy.

    He said the MPC factored that the high banking system liquidity level, the need to continue to attract foreign investment inflow to support the forex market and economic activity would cause a jump in the system liquidity.

    According to him, the expansive outlook for fiscal policy in the rest of the year and the prospective election related spending will also cause a jump in the system liquidity among other things.

    He said the committee expressed concern over the increasing fiscal deficit estimated at N2.51 trillion in the first half of 2017 and the crowding out effect of high government borrowing.

    NAN

  • Etisalat remains strong – CBN

    Etisalat remains strong – CBN

    The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, said on Tuesday that Etisalat, one of the biggest telecommunication companies in Nigeria, remains strong with a solid revenue base.

    Emefiele stated this while fielding questions from journalists at the end of the Monetary Policy Committee (MPC) meeting of the CBN in Abuja.

    According to him, the Nigeria Communications Commission (NCC), supported by the CBN intervened in the company dispute with some banks because of its huge contribution to the nation’s economy.

    “Etisalat employs more than 4,000 workers, with about 20 million subscribers nationwide,’’ Emefiele said.

    The CBN governor said the apex bank and NCC would not allow the company to go down because of the negative impact on jobs, which was capable of impacting on the economy.

    “The intervention by some potential investors is temporal, it should not last more than 90 to180 days.

    “I am gratified that potential investors are taking part,’’ Emefiele said.

    NAN

     

  • CBN pumps in $195m more to boost forex supply

    CBN pumps in $195m more to boost forex supply

    The Central Bank of Nigeria (CBN) yesterday supplied $195 million to stabilise the inter-bank Foreign Exchange Market.

    CBN spokesman Isaac Okorafor said $100 million was offered through the wholesale segment.

    Small and Medium Enterprises (SMEs) segment received $50 million. Tuition fees, medical payments and Basic Travel Allowance (BTA), among others, got $45 million.

    Okorafor said the CBN was pleased with the state of the market, and assured that the bank would continue to intervene in order to sustain liquidity in the market and guarantee international value of the naira.

    He said the apex bank remained determined to achieve its objective of rates convergence, “hence the unrelenting injection of intervention funds into the foreign exchange market’’.

    Okorafor expressed optimism that the naira would sustain its run against the dollar and other major currencies around the world, considering the level of transparency in the market.

    He advised stakeholders to abide by the guidelines to ensure transparency in the market.

    Last week, the CBN intervened in the various segments of the foreign exchange market with the injection of 396.8 million dollars.

    The naira continued to maintain its stability in the market, exchanging at an average of N364 to a dollar in the Bureau de Change segment of the market.

  • Dogara queries CBN’s non-disclosure of interests in foreign reserves accounts

    Dogara queries CBN’s non-disclosure of interests in foreign reserves accounts

    The Speaker, House of Representatives, Hon Yakubu Dogara has queried the non-disclosure of the interest accrued on Nigeria’s foreign reserves accounts by the Central Bank of Nigeria (CBN).

    He lamented that in spite of spirited efforts by the parliament to know its state, it remains shrouded in secrecy.

    The Speaker, while receiving  a delegation from the Fiscal Responsibility Commission (FRC), led by its acting chairman, Mr Victor Muruako,  who paid him a courtesy visit in his office at the National Assembly, he said agencies such as the FRC should be in custody of such figures for dissemination to the public when necessary.

    On  December 15,  2015, the House had passed a resolution calling on the CBN to declare interests accruable to the foreign reserves accounts of the federation.

    Dogara said: “We earn interest on foreign reserves, like Botswana. Because they don’t have oil, it is the second highest revenue after resources earned from natural resources. You will see it as a budget item: interest earned from foreign reserves.

    In Nigeria, we have been asking the question, “are we earning or are we just running charity with it or just leave people to manage it? Are we capitalising the interest? What is the interest? Nobody has ever told us.

    “So which one is the government agency that you can run to and easily obtain this information? CBN, of course, is the one managing it.

  • CBN promises more support for food production

    CBN promises more support for food production

    The Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, has promised better support for farmers to boost food production.

    Speaking while inspecting rice farms in Itane, Ketar Fulani and Gwadan Gwaji villages in Kebbi State, as part of the Federal Government’s efforts to make the country food sufficient, Emefiele stressed  the government‘s commitment to agricultural production, adding that the bank was ready to provide support to farmers and commercial banks as they advance agricultural development in the country.

    Emefiele, who was accompanied by  Kebbi State Governor, Senator Atiku Abubakar Bagudu and the representative of the Minister of Agriculture and Rural Development Chief Audu Ogbeh, Alhaji Azeez Musibau Olumuyiwa, a director in the ministry, affirmed that the Anchor Borrowers’ Programme (ABP) was yielding result due to farmers’ access to good seedlings, pesticides and fertiliser, as well as support from the state government.

    Emefiele, who expressed satisfaction with farmers who listened to the clarion call to embrace farming as a business venture, said the major objectives of ABP had been largely achieved.

    According to him, the objectives of the ABP include assisting rural small holder farmers to grow from subsistence to commercial production level, increasing capacity utilisation, creating jobs, reducing poverty, and increasing banks’ financing of the agricultural sector, among others.

    He expressed confidence that  Nigeria’s target to feed herself would be achieved.

    Observing that some farmers were yet  to register for the Bank Verification Number (BVN), Emefiele urged the farmers to do so to enable them  access  the ABP facility. He assured that the  facility would be spread to many people.

    Bagudu, who is also the chairman of the National Task Force on Rice and Wheat, said the objective of the tour was to see how farmers and processors were responding to the call by President Muhammadu Buhari to grow more food as well as the impact of ABP.

    Attributing the bumper harvest in all the 31 rice-producing states to the political motivation of the Buhari-led administration, as well as interventions of the CBN and the Federal Ministry of Agriculture, he said the goal of making Nigeria self-sufficient was on course.

    Bagudu hinted that the state government was ready to provide paddies to millers on credit, urging the Federal Government to provide more silos as many farmers were still holding paddies at their homes.

    He praised the CBN for its intervention, assuring the bank that his government would continue to collaborate with the CBN to ensure thatABP’s objectives were met.

    Also, Ogbeh assured of the ministry’s commitment to working with the CBN to ensure the success of the agricultural intervention programmes, in line with the Federal Government’s aspiration.

  • CBN: Nigerians lost N11.9b to Ponzi scheme

    CBN: Nigerians lost N11.9b to Ponzi scheme

    The Central Bank of Nigeria (CBN) yesterday  said Nigerians lost over N11.9 billion to the activities of Ponzi schemes in 2016.

    Speaking in Kano during the 2017 Bank-Wide Sensitisation Campaign, an initiative of the apex bank, its Acting Director, Corporate Communications, Alhaji Yusuf Wali, warned on the inherent danger associated with subscribing to Ponzi scheme.

    He said: “I will also like to reiterate the position of the CBN on the need for the citizens to desist from unwholesome financial engagements in all Ponzi schemes. The Nigeria Electronic Fraud Forum made public a recent daunting report on the losses suffered by the subscribers which amounted to N11.9 billion in December, 2016.”

    He said the sensitisation programme tagged ‘CBN Fair’ is geared towards sensitising citizens on the activities of CBN as well as educating Nigerians on how best to engage in financial transactions.

    “Our objective is simple! We want you to understand what we do at the CBN. We want to sensitise you on your roles as citizens in keeping the Naira clean and other matters.

    “We want to hear your complaints about matters relating to financial sector and we want to let you into how you can access and benefit from the different initiatives of the CBN,” he said.

    He further stated that the CBN has introduced some strategic initiatives and intervention schemes to support the economy with a view to ensuring sustainable growth and development.

    He identified the sectors to include agriculture, power, energy, manufacturing, micro, small and medium scale enterprises (MSME) as well as banking and industry, through credit delivery to the real sector of the economy.

    In his remarks, Kano tate Governor, Dr Abdullahi Umar Ganduje who was represented by the state Commissioner for Finance, Prof. Kabiru Isah Dandago,  lamented that the people of Kano have failed to key into CBN programmes designed to benefit the economy of the state and their private businesses.