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Tag: Central Bank of Nigeria (CBN)

CBN injects $364m into inter-bank Forex market

The Central Bank of Nigeria (CBN) has intervened in the Inter-Bank market to the tune of 364 million dollars to sustain liquidity in the Foreign Exchange (Forex) Market.

Mr Isaac Okorafor, the Acting Director of Corporate Communications Department, CBN said this in a statement on Tuesday in Abuja.

Okorafor said the Retail Secondary Market Intervention Sales (SMIS) received the largest allocation of about 264.1million dollars.

He said the CBN also offered 100 million dollars to authorised dealers in the wholesale window.

“The CBN also received requests from authorised Forex dealers on behalf of their customers, for which results will be released.

“The bank remains committed to achieving a convergence of rates at the inter-bank and Bureau-de-Change segments of the market,” he said.

The apex bank had recently intervened in the wholesale, Small and Medium Enterprises (SMEs) and invisible windows to the tune of 195 million dollars.

Meanwhile, the CBN said payment for port charges to the Nigerian Ports Authority (NPA) and other agencies by oil marketing companies could now be accommodated by the bank using Form ‘A’.

A circular by the Director, Trade and Exchange Department, Wuritka Gotring, directed authorised dealers to accept the request for the payments of port charges from oil marketing companies.

“Such request should be forwarded to the CBN Forex window,” the circular stated.

August 15, 2017
AFAN partners CBN on cassava cultivation in Auchi

Dr Mohammed Abdullahi, All Farmers Association of Nigeria (AFAN),, on Monday said that youths in the area would cultivate 500 hectares of cassava next year.

Abdullahi disclosed this in an interview with the News Agency of Nigeria (NAN) in Auchi, the headquarters of Etsako-West Local Government Area of the state.

He said that the cassava project would be under the Edo Government/Central Bank of Nigeria (CBN) Anchor Borrowers’ Programme.

He said that no fewer than 200 youths would be registered under cooperative societies and each of the farmers would cultivate one hectare of land.

Abdullahi said the Auchi community had provided land for the project while the government would provide funds for land preparation which would commence in Dec. as well as input.

The chairman said the state government’s Cluster Farming Scheme, was initiated to empower the youths to become self-reliant.

He said that the state government had approved the Ozemhoya Multipurpose Cooperative Society as the off-taker of the produce.

“The state government has directed that we register 200 youths for the project and we are appealing to the youths in the senatorial district to key into the project.

“This is a forum for them to be empowered; this government is showing very serious interest in agriculture.

NAN reports that the Anchor Borrowers’ Programme is a CBN’s initiative which is aimed at creating an economic linkage between small scale farmers (out growers) and reputable large scale processors.

It also has the objective of increasing agricultural output and improving capacity utilization of integrated mills.

August 14, 2017
Why CBN borrowers’ scheme may not outlive current administration – Action aid

An international organisation, Actionaid has expressed concerns on sustainability of the Anchor Borrowers Programne (ABP) of the Central Bank of Nigeria (CBN) aimed to provide credit facilities for rural farmers.

The Non-Governmental Organisation, during public unveiling of an assessment report of government expenditure to farmers, held in Abuja, he disclosed that small holder farmers still lack access to the loan support.

ActionAID Nigeria Food and Agriculture Programme Advisor, Azubike Nwokoye said the Federal Government has remained major funder of the scheme due to little contribution from the formal banking sector.

He explained that small holder farmers, largely made up of women were largely sidelined due to stringent requirements needed to access the credit.

In the scorecard report, Nwokoye said a cumulative of 270,545 farmers got loan support from the Agriculture Credit Guarantee Scheme Fund (ACGSF) from 2012 to 2016.

The ABP was designed for small holder farmers across the country to provide credit, ready market or buyers, improved technologies as well as inputs such as extension services and technical supports. It is expected to create 1 million jobs in five years.

“Currently, the government is heavily funding the ABP of the CBN with little contribution from the formal banking sector, thus sustainability is questionable.

“The ABP program targets few strategic commodities which means many small holder farmers are still excluded.

“Apart from what stakeholders hear over the radio, on television and read on the pages of print and electronic media, not much information can be accessed for analytical reasoning and assessment of the ABP’s activities and performance,” he said.

The report further indicated that, “Smallholder farmers’ access to agricultural credit is biased for the male farmer. Even though, it is a known fact smallholder farmers in Nigeria are mostly women, their access to agricultural credit remains limits.”

“Credit to small holder farmers have not imbibed the habit of banking because they only open accounts with banks when it is required of them to do so for credit transactions; besides the formal banking system is far from their communities,” he added.

He recommended small holder farmers inclusion during programme initiation, especially interventions such as credit.

The National Publicity Secretary of Women Farmers of Nigeria, Mrs. Olaleye Janeth raised the issue of marginalization in accessing the credit.

She expressed worry on hijack of the credit by political farmers and stringent loan collaterals before they could access the credit support.

However, Mrs. Janeth appealed to the federal government to restrategise the project implementation to ensure the support get to real farmers.

August 10, 2017
‘Hidden’ N249b: Court strikes out FG’s case against seven banks

…Six banks get N200, 000 compensation each

A Federal High Court in Lagos has struck out a suit by the Federal Government seeking to recover $793,200,000.00 (about N249, 659,700,000.00) from seven banks which it claimed they hid for ‘unknown’ government officials.

The banks are: United Bank for Africa Plc, Diamond Bank Plc, Skye Bank Plc, First Bank Ltd, Fidelity Bank Plc, Keystone Bank Ltd and Sterling Bank Plc.

Justice Chuka Obiozor, who gave the ruling yesterday, also ordered the government to pay N200,000 as costs to all of the commercial banks except Skye Bank which had no legal representation.

He also barred the government from bringing the same action against the banks without the court’s permission.

The ruling followed a notice of discontinuance dated August 7 brought on Tuesday by the Attorney-General of the Federation through Professor Yemi Akinseye-George SAN.

Akinseye-George told Justice Obiozor that the government had decided to explore an ‘out of court settlement’ with the banks in the public interest.

Last July 20, the government accused the banks of hiding $793m in contravention of the Treasury Single Account (TSA) policy.

It sought and obtained an interim order directing the banks to remit the sum to a designated account at the Central Bank of Nigeria (CBN).

But on Tuesday the Federal Government applied to discontinue the suit on the instruction of the Attorney-General.

Akinseye-George relying on Order 50 Rule 2 Subsection 1, Federal High Court Civil Procedure Rules of 2009, moved the court to strike out the suit.

The application was challenged by the six banks which urged the court to substitute the strike out order for an order of dismissal.

The lawyers, including UBA’s counsel, Dr. Ajibola Muraina, Seyi Sowemimo (SAN) for Fidelity Bank; Abimbola Akeredolu (SAN) for Sterling Bank. N. A. Oragwu (Diamond Bank); E.A. Okorie (First Bank) and Babatunde Ogungbamila (Keystone Bank) also asked for costs of between N10million and N20million for each bank as compensation or damages.

However, following Akinseye-George’s argument that the banks were not entitled to any cost because, among others, they did not file any affidavit to particularise the nature of the damage they claimed to have suffered, Justice Obiozor adjourned till Wednesday for ruling.

Delivering his decision Wednesday, the judge found, among others that since the suit did not proceed to trial the justice of the case was in favour of an order to strike it out, rather than a dismissal.

He said: “I have also considered the reason given for the discontinuance – the demand, as it were, of public interest. I have also considered the fact that when a notice of discontinuance is duly and validly filed, it cannot be recalled, as the suit ceases to exist the moment it is effectively discontinued, subject to the payment of costs.

“I find that as I have not adjudicated on claims in the action before me for a pronouncement on the merits of the issues arising therefrom, the proper order to make, with respect to this matter, is one striking out this suit and not of dismissal and I so hold.

In the instant case before me, the matter is yet to proceed to trial. I do not find that the justice of this case demands that this matter should be dismissed.

Regarding the costs demanded by the banks, the judge said: “Nevertheless, I shall not turn a blind eye to the effect of the interim order on the defendants. This case cannot now go on. I find no reason not to compensate the defendants with costs at least to those of them who have appeared in this matter.”

He however declined to grant the amount demanded as costs, saying “I find the request for N10million or N20million as costs to the defendant not to be founded on, with respect, established principles.”

The judge added: “The defendants deserve compensation which I assess and put at N200,000 against the favour of and to be paid to each of the first, second, fourth, fifth sixth and seventh defendants.

“In the final analysis, the suit is hereby struck out and the plaintiff shall not re-list this suit without the prior leave of court. The interim order of this court made on the 20th of July 2017, are hereby set aside, truncated and discharged.”

August 9, 2017
TSA: FG withdraws suit against seven banks

The Federal Government on Tuesday at the Federal High Court sitting in Lagos filed an application seeking to withdraw its suit against seven banks accused of violating the Treasury Single Account (TSA) policy.

The News Agency of Nigeria (NAN) reports that the seven banks are Diamond Bank, United Bank for Africa (UBA), First Bank, Skye Bank, Fidelity Bank, Sterling Bank and the defunct Keystone Bank (now Heritage Bank).

The Federal Government had alleged that the banks connived with some government agencies to illegally conceal 793.2 million dollars meant to have been transferred to the TSA domiciled in the Central Bank of Nigeria (CBN).

The government had in the suit alleged that 367.4 milliion dollars was illegally hidden by three government agencies in UBA, while 41 million dollars was illegally kept in a NAPIMS fixed deposit account with Skye Bank.

Another 277.9 million dollars was allegedly hidden in Diamond Bank, 18.9 million dollars in First Bank, 24.5 million dollars in Fidelity Bank, 17 million dollars in Keystone Bank and 46.5 million dollars was kept in Sterling Bank.

The funds were alleged to be revenues, donations, transfers, refunds, grants, taxes, fees, dues, tariffs etc accruable to the Federal Government from different ministries, departments, parastatal agencies.

Justice Chuka Obiozor had on July 20 granted an interim order in favour of the Federal Government, directing that the seven banks should temporarily remit the funds to the TSA.

The court then adjourned until Aug. 8 for the banks to show cause why the interim order should not be made permanent.

At resumed proceedings on Tuesday, the Counsel to the Federal Government, Prof. Yemi Akinseye-George (SAN), said he had been instructed by the Attorney-General of the Federation to discontinue the case in the “overall interest of the public”.

Urging the court to strike out the suit, Akinseye-George said,“It is not out of weakness that the Federal Government is withdrawing this case; the banks are corporate citizens and we are interested in the well-being of everybody.”

However, the banks through their counsel, claimed that the Federation Government’s allegation against them was false.

They had noted that they had already been unjustly disparaged and urged the judge not to merely strike out the suit but to dismiss it and award at least N20 million cost against the Federal Government.

The banks said that any case struck out could be re-filed while a case that is dismissed could no longer be re-filed.

The Counsel to the banks, including Mr Seyi Sowemimo (SAN) and Mrs Abimbola Akeredolu (SAN), took turns to argue that the proper order that the court ought to make in the circumstances of the case was to dismiss the suit and not strike it out.

In her submission, Akeredolu, representing Sterling Bank Plc, said that the Federal Government decided to withdraw the case having realised that it was filed in error.

“My Lord should not allow the instrumentation of the law to be used as a vehicle of mischief and nobody is above the law, even the Federal Government of Nigeria.

“We are praying the court to make an order for a meagre cost of N10 million against the plaintiffs,” Akeredolu said.

The Counsel to Keystone Bank, Mr Babatunde Ogungbamila, however, insisted on a cost of N20 million against the Federal Government, saying his client had suffered a substantial damage to its reputation.

“They have destroyed the reputation of our banking industry and they did this recklessly because the fundamental economic underpinning of this country was actually targeted.,”

Countering their arguments, Akinseye-George argued that the parties had yet to join issues because the Federal Government had yet to respond to the court processes filed by the banks.

He added that the Federal Government came to court early enough before the maturation of time to argue on the substantive suit.

Akinseye-George added that the banks were not entitled to any cost because they did not file any affidavit to particularise the nature of the damage they claimed to have suffered.

He urged the court to discountenance their arguments and strike out the suit as prayed by the Federal Government rather than dismiss it.

“The suit is not being withdrawn because it lacked substance or baseless but because it was in the overriding interest of the public to do so,” Akinseye-George said.

Justice Obiozor adjourned the case until Aug. 9 for ruling.

August 8, 2017
Deals on Nigerian Stock Exchange hit N97.08 billion in July

Investors on the Nigerian Stock Exchange (NSE) exchanged 8.66 billion shares valued at N97. 08 billion transacted in 89,911 in July, the News Agency of Nigeria (NAN) reports.

A monthly data obtained by NAN from the NSE showed that the turnover increased by 12.32 per cent when compared with 7.71 billion shares worth N77. 92 billion traded in 100,895 in June.

The Financial Services sector was the toast of investors with 7.45 billion shares valued at N68. 24 billion transacted in 51,991 deals.

United Bank for Africa (UBA) was the most active in the sector having accounted for 2.96 billion shares worth N28 billion in 5,814 deals.

It was trailed by FBN Holdings with 597.61 million shares valued at N3.57 billion transacted in 7,816 deals.

A further breakdown of the month’s activity chart indicated that conglomerates industry came third with a turnover of 432.97 million shares worth N895.02 million in 4,249 deals.

Transcorp was the toast of investors in the sector, accounting for 412.99 million shares valued at N601.78 million achieved in 3,276 deals, while UACN sold 17.11 million shares worth N290.42 million in 833 deals.

Consumer Goods sector traded 346.18 million shares worth N15.02 million in 14,083 deals.

Transactions on NSE in July 2017

Dangote Sugar Refinery was the toast of investors in the sector with 64.94 million shares valued at N606.24 in 1,156 deals and Dangote Flour Mills transacted 56.08 million shares worth N291.27 million in 1,944 deals.

Oil and Gas sector trailed with 124.08 million shares worth N3.56 billion exchanged in 8,407 deals.

Oando dominated activities in the sector with a turnover of 87.56 million shares valued at N659.72 million in 2,886 deals, while Eterna sold 13.12 million shares worth N49.49 million in 599 deals.

NSE in July 2

Also, the All-Share Index during the period inched 2,730.27 points or 8.24 per cent to close at 35,847.75 against 33,117.48 achieved in June.

NSE in July 3

In the same vein, the market capitalisation which opened at N11.452 trillion rose by N901 billion or 7.87 per cent to close at N12.353 trillion.

NSE in July 4

Commenting on the market performance, Mr Ambrose Omordion, the Chief Operating Officer, InvestData Ltd., attributed the growth to increased confidence of foreign and domestic investors on the strength of improving economic and market fundamentals.

Omordion said that the fundamentals were driven by the sustained intervention of the Central Bank of Nigeria (CBN) in the nation’s foreign exchange market.

He said that the creation of foreign exchange products, the import and export, small and medium-scale enterprises windows among others helped to support the continued appreciation of the Naira, thereby ensuring stable exchange rate.

Omordion, however, called for urgent implementation of the Economic Recovery and Growth Plan (ERGP) to complement CBN’s effort at boosting productivity to create employment and sustain the ongoing recovery.

Malam Garba Kurfi, the Managing Director, APT Securities and Funds Ltd., said that the seeming positive data that supported the recovery move in the system for the past five months would likely continue with sustained foreign exchange intervention.

Kurfi said that the apex bank sustained intervention in foreign exchange had boosted liquidity and confidence in the economy.

Kurfi said that the market outlook for the new month remained mixed as less quarterly and full year were expected.

He said that the economic recovery needed to be strengthened with the implementation of 2017 budget.

August 7, 2017
Banking fraud on the decline, says NDIC

… Recommends prohibition of Directors of financial institutions from obtaining credits
The banking industry has recorded a decline in the rate of successful fraud incidences and extent of amount of losses in 2016, compared to 2015.

The Managing Director/Chief Executive, of the Nigeria Deposit Insurance Corporation (NDIC) Alhaji Umaru Ibrahim, made this disclosure while delivering a lecture: “The Role of NDIC in Mitigating Corruption in the Nigerian Banks” at the general meeting of the Abuja Chapter of the Alumni Association of the National Institute (AANI).

The NDIC boss however lamented the rising trend in the level of banks’ non-performing loans (NPLs) and stated that the NDIC had recommended the prohibition of Directors of licensed banks, including microfinance banks (MFBs) and primary mortgage banks (PMBs) from obtaining credit facilities from their respective banks.

Ibrahim pointed out that the NDIC collaborated with other stakeholders such as the Economic and Financial Crimes Commission (EFCC), Police Special Fraud Unit (PSFU) and the Financial Malpractices Investigation Unit (FMIU) to conduct investigations into banking malpractices.

Regarding the drop in successful fraud cases in banks, Ibrahim who was represented by a Deputy Director in Research, Policy and International Relations Department, Mr. Hashim I. Ahmad, noted that “the reported cases of frauds, forgeries and outright theft involving bank staff recorded a huge decline of 48.12 percent from N18.02 billion in 2015 to N8.68 billion in 2016.”

He said “the actual losses to the nation’s banking industry dropped by 24.29 percent from N3.17 billion in 2015 to N2.40 billion in 2016. Also, the level of attempted cases of frauds and forgeries declined by N0.329 billion or 11.94 percent from N2.756 billion in March 2017 to N2.427 billion in June 2017.”

The NDIC boss also stated that “although reported cases of fraud and forgeries rose by 36.42 per cent from 12,279 cases in 2015 to 16,751 cases in 2016, the reduction in the rate of successful fraud incidences and actual losses was an indication of improved regulatory/supervisory oversight, increased vigilance by banks and the deployment of improved security architecture in the banking industry.”

He attributed the factors breeding corruption in Nigerian banks to poor corporate governance, infractions in foreign exchange operations, cumbersome legal processes and lack of effective sanctions of offenders, amongst others.

Umaru Ibrahim reiterated that the NDIC in conjunction with the Central Bank of Nigeria (CBN) continuously supervise the banks to ensure their strict adherence to sound corporate governance practices.

He added that issues bordering on unethical financial practices and the resolution of conflicts between customers and their banks were being addressed by the Bankers Committee.

He also stated that the NDIC provided capacity building programmes for the agencies in addition to seconding some NDIC Staff to the institutions to assist them in investigating financial crimes.

He called for continued cooperation and collaboration between regulatory/supervisory authorities, the banks, the general public and the government in the fight against corruption in the banking industry.

August 3, 2017
CBN injects $195m into Forex market

The Central Bank of Nigeria (CBN) on Monday injected another 195 million dollars into the various segments of the inter-bank Foreign Exchange (Forex) Market ahead of Monetary Policy Committee’s (MPC) decision.

Mr Isaac Okorafor, the Bank’s Acting Director in charge of Corporate Communications, said this in a statement in Abuja.

According to Okorafor, the bank offered 100 million dollars of the sum to the wholesale interventions while 50 million dollars was offered to the Small and Medium Enterprises (SME).

He said the invisible segment, comprising Business/Personal Travel Allowances, tuition and medical fees, received 45 million dollars.

According to Okorafor, the apex bank has continued to intervene in the inter-bank sector, to ensure adequate liquidity in the market.

He said,“ the CBN Management is quite pleased with the performance of the naira against other major currencies around the world, particularly now that the forex rates at both the inter-bank and BDC segments neared convergence.

He expressed optimism that the Bank’s intervention had put a check on the activities of speculators.

He also underscored the determination of the CBN in sustaining stability in the forex market through monitoring of authorised dealers, to reduce sharp practices.

Meanwhile, the naira maintained its steady rate against major currencies around the globe, exchanging for N363 to the dollar in the BDC segment of the market on Monday.

July 25, 2017
NPA gets Senate’s ultimatum on missing vessels

The Senate on Thursday, gave the Managing Director, Nigerian Ports Authority (NPA), Hadiza Usman, four days to explain the whereabouts of over 282 vessels allegedly missing from the sea ports.

Sen. Hope Uzodinma, Chairman, Senate’s Joint Committee on Customs, Excise and Tariff and Marine Transport, gave the ultimatum in Abuja, at an investigative hearing on N30 trillion lost through leakages in Customs and other agencies.

Uzodinma, who expressed displeasure with the managing director for not honouring the committee’s two previous invitations, said the information on the vessels was imperative and must be available within four days.

He threatened that the senate may be compelled to pursue a financial crime case against Usman should he fail to heed the committee’s directive.

“We are looking for these vessels. We have the date of arrival, the ports of discharge and manifest.

“Everything is with us but in information available to us, no money was collected by Customs, the NPA or any other person.

“So you have four days to do your written explanation otherwise, we will consider it a financial crime,’’ he said.

According to Uzodinma, there are also recent missing vessels that we have discovered.

“I mean recent ones that happened under the new management.

“The NPA is the custodian of the vessels; it received the cargoes and the terminal is theirs.

“We want to know under whose authority the cargoes were released, “he said.

The lawmaker said that the committee had also uncovered the activities of a port cabal that had defrauded the nation to the tune of over N30 trillion.

“It is common knowledge that infractions abound in daily transactions at the nation’s ports, commercial banks, shipping companies, terminal owners and operators.

“They connive at ease with officials to defraud the nation of trillions of Naira.

“Preliminary evidence before us suggests that this is the case in all sea ports,’’ he said.

He expressed concern that the leakages and infractions were costing the country huge revenue losses, while also constituting security threat.

The lawmaker, however, expressed optimism that the Senate was determined to tackle the assault on the economy.

He said that in doing so, the committee would be minded by the reality that those who wanted to bleed the nation to death without remorse must be dealt with without reprieve.

“Consequently, all those indicted in this crime will be made to face the full wrath of the law.

“The nature and methodologies of these infractions include abuse of Form M and violation of foreign exchange manual issued by the Central Bank of Nigeria (CBN), incorrect classification, under-valuation and incorrect declaration.

“Others are incorrect origin, error in calculation, temporary importation, exemptions and waivers, foreign exchange manipulations, unit cost analysis on excise, smuggling and illegal removal of cargo from terminals and lack of exit certificate by vessels.

“We shall zero our search light into these areas of infraction and we are certain that our suspicions shall be confirmed.

“Nigeria Customs Service, Nigeria Ports Authority, Nigerian Maritime Administration and Safety Agency (NIMASA), Nigerian Shippers Council(NSC), shipping companies , operators of bonded terminals and importers and exporters have questions to answer,’’ he said.
Uzodinma emphasised that the joint committee would carry out its assignment without fear or favour.

In his remarks, the President of the Senate, Dr Bukola Saraki, decried the indicting reports about the ports.

Saraki said that it was disturbing to hear that trillions of Naira in revenue was lost annually within the import and export value chain as a result of financial leakages caused through various malpractice and infractions within the system.

He said that the Senate would use its oversight functions to expose corruption and ensure that all loopholes and leakages in the revenue system were blocked.

“We are determined to reverse these financial leakages to enable us to get the much-needed resources to fund our children’s education, healthcare and fix the potholes on our roads.

“I urge you not leave any stone unturned to ensure that we incrementally eliminate waste and corruption in the management of our resources,’’ he said.

The president of the senate expressed confidence in the joint committee to carry out a thorough job that would help to sanitise the system.

July 21, 2017
CBN has capacity to sustain forex intervention – Expert

Dr. Biodun Adedipe, the Chief Consultant in Biodun Adedipe Associates, says the Central Bank of Nigeria (CBN) has the capacity to sustain ongoing interventions in the foreign exchange.

Adedipe advised that the CBN should continue to intervene in the foreign exchange market in spite of the pressure on the external reserves.

Speaking at the Finance Correspondents Association of Nigeria (FICAN) Half-Year Economic Review in Lagos on Thursday, he said that with the 30-day moving average, the reserves rose from 29.07billion dollars at end of 2015 to 30.36 billion dollars in July 11.

Adedipe said the liquid portion of the reserves stood at 29.62billion dollars which translated to 12.31 months of imports coverage.

He said the exchange rate steadily depreciated to N168 to dollar at the end of 2014 toN197 to dollar at end of 2015, N305 to dollar at the end of 2016 and N305.85 to dollar as at July 19, 2017.

Adedipe said the required international benchmark was for external reserves to be able to sustain at least six months of the import bill.

He said that Nigeria was still doing great with its reserves covering over 12 months of imports.

The economist said Nigeria’s total import bill in the first half of this year was N2.2 trillion ($7.218 billion) on the average of monthly figure of 2.406 billion dollars.

He said that due to recession, the current import figure was on decline from 14.171 billion dollars or monthly average of 4.724 billion dollars in the first quarter of 2015.

Adedipe said that Nigeria’s external trade had picked up since the first quarter of last year with imports declining.

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

The consultant said the “ongoing 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 US) – the job of the central bank is to defend and protect its currency by intervening in the markets as necessary.

“The voices are coming from too many experts that know nothing other than to echo what the Breton Woods institutions have said,” Adedipe said.

On interest rate, he said the Monetary Policy Rate (MPR), the benchmark rate, was raised to 14 per cent per annum in July 2016 from 12 per cent per annum.

Adedipe, however, said that changes in the MPR had not sufficiently impacted on 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.

“Actual lending rates were much higher – mostly at 29 per cent and above,” he said.

Adedipe said he supported Federal Government’s plans to reflate the economy through borrowing.

He, however, said the borrowed funds should not be used to fund recurrent expenditure, but should be used to fund infrastructure and projects that could 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 said.

July 20, 2017