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CBN Helpless as Naira Plummets, Economists See Danger

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The Naira plummeted further on Friday against major foreign currencies like the dollar, Pound Sterling and the Euro in all segments of the market, an indication that the flexible exchange rate policy of the Central Bank of Nigeria (CBN) is a colossal failure.

At the so-called parallel market otherwise Bureau de Change (BDC) segment of the market, the Naira exchanged at N378 to the dollar down from N375 om Thursday; while the Pound Sterling and the Euro exchanged at N487 and N405, from N485 and N405 it traded on Thursday respectively.

At the interbank window the Naira crashed further to N307.98 to a dollar from N295.38 it traded on Thursday.

It would be recalled that following the floating of the currency by the CBN, the local currency lingered between 346 and 348 on the parallel market before falling to 360 by the end of last week.

It continued trading in an around 360 this week before falling to a new low of 376 at the close of business Thursday.

The dangerous slide of the Naira against major world currencies has prompted economists to advise the federal government and the CBN to consider alternative policy options to halt the currency’s decline and reverse the nation’s fortunes.

Nigerian Economists Society (NES), stated that the flexible foreign exchange, forex, regime of the CBN cannot survive in a non-productive economy, warning that the country may slide into depression.

Warning that some form of managed pegged system is consistent with the structure of the Nigerian economy, the society urged CBN to review the new regime, stressing that managed float policy is a better option given the Nigerian economy’s current local productive capacity and over-dependence on crude oil as its major source of forex earning.

According to the economists, “The new foreign exchange policy which implies that the exchange rate will be determined by market forces (clean float) is faulted as it admonishes a spot and forwards, assumes the economy is sophisticated and productive in producing needed goods and services typically of the advanced economies, when the actual problem in the foreign market is a supply-side issue (scarce availability of foreign reserves) which is insufficient to satisfy the demand.

“Floating will generate macroeconomic instability as financial market participants stand to gain through market speculation which will only stimulate portfolio investment (hot money) as the real or “green field investment’ which is expected to generate wealth and create employment would not be attracted because of macroeconomic uncertainty.

Nodding in agreement, Dr. Ayo Teriba, chief executive officer, Economic Associates, told Venture Africa, that that there was a need for the Federal Government to seek foreign exchange from alternative sources in order to cover for the shortfall.

“There are a number of things we can do as a country to boost our forex supply. Just the way India did some years ago, we can tap Nigerians in the Diaspora to contribute forex to save the situation at home. We can’t say we have done all when we have not done this,” said Teriba.

Citing the case of India, he suggested tapping into Nigerians in the Diaspora to contribute forex and supply the market with liquidity. He also suggested publicly listing government agencies in critical infrastructure like rail, power transmission, oil and gas pipelines to raise forex through an initial public offering (IPO) as was done in Saudi Arabia.

Nigerians are searching for innovative solutions to end the dollar liquidity crisis as most investors would like to see a more liquid forex market before resuming the purchase of local assets.

Foreign investors have welcomed the removal of currency controls, but many are still holding out for signs of a recovery before committing resources.


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E-Financial

Lagos State Appoints MoneyMaster as Payment Partner for “Ounje Eko” Programme

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“Ounje Eko”, the food price discount initiative of the Lagos State Government, has appointed leading payment service bank, MoneyMaster Payment Service Bank Limited (MMPSB), as its collaborator in the bid to ensure ease of payments at the market.

MoneyMaster is one of the Central Bank of Nigeria-licensed Payment Service Banks (PSBs) to promote financial inclusion across Nigeria.

Under the partnership, MMPSB will apply its cutting-edge payment solution to engender easy payment and reconciliation in order to make   the experiences of Lagosians who will be getting their food supplies from the markets pleasurable. Its payment solution is also all-encompassing and ensures real time value to payment destinations.

The mobile bank was appointed as the collection and payment partner for “Ounje Eko” Food Markets programme which is a government initiative serving the five divisions of Lagos State. Consequent on this, MoneyMaster Payment Service Bank will collect payments in 57 LCDAs in the state.

The partnership gives credence to the quality of payment solutions that MoneyMaster is reputed for in its services to its growing business clientele in private and public sectors.

 


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CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

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Central Bank of Nigeria (CBN), is investigating irregular foreign exchange transactions and forward contracts valued at approximately $2.4 billion.

CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

The  inquiry follows an extensive audit by Deloitte, which scrutinized $7 billion in dollar debts accumulated under the bank’s previous leadership.

In the aftermath of the 294th Monetary Policy Committee meeting in Abuja, Yemi Cardoso, governor of CBN,  disclosed to journalists that the investigation, supported by the Economic and Financial Crimes Commission, among other security bodies, aims to clarify the legitimacy of these FX allocations identified as problematic by the audit.

“It was determined that a number of these transactions did not qualify…they were outright illegal. The law enforcement agencies are now looking into those transactions that as far as we are concerned, are not valid to be paid,” Cardoso detailed, emphasizing the unlawful nature of these forex deals.

The crux of the investigation lies in the audit findings that a significant portion of the scrutinized transactions lacked proper documentation and, in many instances, were deemed outright illegal.

However, the unfolding investigation has raised concerns within the organized private sector, with some entities contemplating legal action against commercial banks for unresolved forex bids.

Despite these tensions, Governor Cardoso reassures that the foreign exchange market remains open and transparent, inviting stakeholders to address their forex needs through the official channels.

Furthermore, Cardoso clarified the distribution of fertilizers to farmers as a one-off measure and not indicative of a shift back to direct interventions by the CBN, underscoring a commitment to strategic, regulatory governance rather than direct market involvement.

 

 

 

 

 

 

 

 


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CBN Urges Banks to Expedite Action on Recapitalisation

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Central Bank of Nigeria (CBN) has directed deposit money banks in the country to expedite action to increase their capital base from the current ₦25bn.

CBN Urges Banks to Expedite Action on Recapitalisation

Olayemi Cardoso, governor of CBN

Olayemi Cardoso, governor of CBN, stated this during the apex bank’s 294th meeting of the Monetary Policy Committee (MPC) on Tuesday in Abuja, when the MPC hiked the interest rate by 22.75% to 24.75%.

The apex bank chief said the MPC examined developments in the banking sector and expressed satisfaction that the industry remained stable. The committee, however, said to guard against risk, commercial banks in the country should accelerate their recapitalisation efforts.

Cardoso said, “The MPC also reviewed developments in the banking system and noted that the industry remains safe, sound, and stable. The committee thus called on the bank to sustain its surveillance and ensure compliance of banks with existing regulatory and macro-potential guidelines.

“The MPC also enjoined the banks to expedite actions on the recapitalisation of banks to strengthen the system against potential risks in an increasingly globalised world.”

 

 

 

 


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