E-Financial
Sad! Value of Naira Determined by Forex ‘Black’ Market- Otunuga
An economic research analyst has bemoaned the inability of the Central Bank of Nigeria to contain the free fall of the Naira in the currency market.
Lukman Otunuga, a research analyst at Forex Time (FXTM) said that the economic disequilibrium has left naira’s value to be determined by the ‘black market’ foreign exchange market.
Otunuga who spoke during an exclusive with Nigeria CommunicationsWeek said that the CBN must realize that foreign investors and indeed the world are “watching Nigeria’s economy like movie series”.
A keen follower of macroeconomic events, with a strong professional and academic background in finance, Lukman is well versed in the various factors affecting the currency and commodity markets. Lukman provides in-depth analysis on the global currency and commodity markets and is often quoted by leading international media outlets such as: MarketWatch, CNBC, NASDAQ, Reuters, AFP, The Guardian and Yahoo.
Prior to joining FXTM, Lukman spent two years as a research analyst with international currency broker FXCM, where he focused on technical and fundamental analysis of the global currency, commodity and stock markets. Lukman was also responsible for leading educational seminars for international and local high net worth individuals, and has published a series of educational articles on forex trading with City A.M.
Lukman holds a BSc (hons) degree in Economics from the University of Essex, UK and an MSc in Finance from London School of Business and Finance, where he studied corporate finance, mergers & acquisitions and the role of international financial institutions. He spoke to peter oluka. Excerpt.
Predictions About Nigeria’s Economy 2017
“First, the world is actually watching Nigeria’s economy and issues like series. Right now, everybody knows that Nigeria is under pressure. Last year we spoke about the economy and I said diversification will be the key. This year the focus is on getting the economy out of recession. So, the emphasis is now on policies. I feel that in the next six months Nigeria will remain at risk because of obvious factors like investments from China. When China sneezes Nigeria catches cold. Donald Trump’s policies will have impact in Nigeria. I read in the newspaper that he is already considering limiting the number of visa issuance to the country (Nigeria).
“These are external factors. Internally, the Central Bank of Nigeria (CBN) will be under pressure. They have actually kept the monitory policy interest rate at 14%. The truth is they are under pressure which is the reason they are under conscious approach. Even though the International Monetary Fund (IMF) and the World Bank gave Nigeria’s economy a positive outlook for the year 2017; to get out of recession, I don’t think it will be that easy.
New Approaches CBN Should Adopt
“On the physical side of the economy there is no clear direction. Everybody is waiting to see what will happen. This speaks on the fact the World Development Bank (WDB) has kept Nigeria from the $1billion loan, because there is no transparency or clear direction on how it will be utilized. But on monetary side, I think Nigeria may be forced to devalue the Nigeria.
“The official rate is about N305 to $1, but they may take it to N380 to close the gap with the black market.
Manufacturers, Industries Should Be Given Priority In Forex Disbursement
“It is very interest to bring in the manufacturing sector in here, because the CBN has allocated about 60% of the forex to them as they represent about 10% of the GDP. Nigeria’s problem is cost caused inflation. Let me break it down. We have a situation where manufacturers imports raw materials but do not have access to the official forex rate. Of course, they need profit, so they push the cost to the consumers. It keeps circulating and should be checkmate to avoid hyper-inflation.
Oil and Gas
“Nigeria plans to diversity on long term, but in the short term it is still about oil. And OPEC gave Nigeria a very good trust to make comeback if she (Nigeria) can still produce about 2.2million barrels per day. But if you consider the militancy in the Niger-Delta, last December, the country was producing 1.4million barrels per day. So, we have a situation here that even as OPEC is magnanimous to the country by taking a supply cut, still Nigeria may not be able to take the advantage. I don’t even know how Nigeria will get to 2million barrels per day from the present output should the militancy continues.
Trump’s Policies, China and Nigeria
“The main thrust of Donald Trump’s government is protectionism- the Americans first, which is de-globalisation. So, we have a situation where all the countries that had access to United States will lose such opportunities. They need to approach the alternative, which is China, the second strongest economy in the world. How will it impact Africa? Nigeria? Of course, if you look at China it is giving and getting a lot from Nigeria.
“So, when China gains it is to the advantage of Nigeria. Trump has already abolished the TPP; which is just a way to remove trade from China. This could be a situation where Africa comes back (up); where other nations measure up by taking critical decisions.
Leveraging Nigeria- China Trade Agreement on Yuan
“I still think that agreement is valid, although there are concerns that China is facing pressures, but we have to keep in mind that what Nigeria needs now is not to make the dollar king. Dollar is not the legal tender in this country but a typical Nigerian would prefer to have dollar to Naira; that speaks volume. Therefore, we do a lot of businesses with China and it will do us good to dust up that agreement.
Why FDI Is Eluding Nigeria
“First, let’s refer to how Fietch downgraded Nigeria’s long term rating to negatives. Initially, that will discourage foreign investors. I understand that in March Nigeria is trying to get the $1B Euro-bond. This news of Fietch turning Nigeria’s rating down will affect the Euro-bond. First, Nigeria should establish foreign exchange rate stability. No body wants to invest in a speculative environment.
Bridging CBN and Black Market Forex Rates: How Possible?
“The CBN needs to understand the bitter truth: value of the Naira is determined by the (forex) black market. Some people has said that the fundamentals behind the black market do not make sense, but it is simply the principle of demand and supply that makes the market what it is. Now, we are talking about N500 to $1; that is the true value of the Naira.
The quicker the CBN understands the truth and actually allow the Naira have a free flow; otherwise inflation will continue to skyrocket. If they do that, it is going to be a short term pain but will be beneficial at the end.
Late Passage of the Appropriation Bill (Budget) And Impact On Economy
“For certainty this has huge impact on the economy. For instance the 2016 budget was released about five months later. It causes uncertainties in the economy, because it shows there is no transparency. Uncertainty will also cause people to offload the Naira.
Economic Diversification
“The more I look at agriculture I see that even though God Blessed Nigeria with oil, but it has been a curse on the economy. This wasn’t the situation in the 60s’ and 70s’. So, we really need to embrace agriculture and develop the infrastructure. Power is very much in demand. No economy performs better than it is doing in power generation. We need to fix the roads and other amenities, having in mind that technology is the way to go too.
“Take a leaf from the United States where Dollar has appreciated so much just because the new administration sad they are going to be focusing on the physical side- massive infrastructure development. This is what Nigeria needs to do.
Banks in Nigeria closed 29.4 million accounts as of March 2025, according to the latest report by the Nigerian Interbank Settlement System (NIBSS).
The figure represents a sharp year-on-year increase of 30.43 per cent from the 22.54 million closed accounts recorded in March 2024.
It also reflects a steady rise in account closures over recent months, with 33.29 million closed accounts reported in February 2025 and 29.43 million in January.
The report also revealed a significant increase in dormant accounts, which surged to 33.39 million in March 2025, up from 19.79 million in the same period in 2024, a 71.3 per cent rise in inactive accounts over the past year.
Despite the spike in closures and dormant accounts, the number of active bank accounts rose from 219.64 million in March 2024 to 320.05 million in March 2025, representing an increase of over 100 million, or 45.7 per cent.
NIBSS defines a dormant account as one that has seen no deposit, withdrawal, transfer, or point-of-sale transaction for a period of six months.
The surge in account closures and dormancy follows the Central Bank of Nigeria’s directive issued in December 2023, mandating commercial banks to restrict Tier-1 accounts not linked to a Bank Verification Number (BVN) and National Identification Number (NIN) by March 1, 2024.
In response to the directive, BVN enrolment increased from 61.6 million in April 2024 to 66.23 million by July 2025, as more Nigerians rushed to meet the CBN’s compliance deadline.
The Joint Committee of the House of Representatives on Public Accounts and Public Assets has threatened to issue a warrant of arrest against Mr. Olayemi Cardoso, governor of the Central Bank of Nigeria (CBN), over repeated failure to honour its invitations regarding the probe into non-compliance with the Fiscal Responsibility Act 2007 and Finance Act 2020.
Olayemi Cardoso,, Gov, CBN
In a joint statement released on Friday and signed by Hon. Bamidele Salam and Hon. Ademorin Kuye, chairmen of the committees, the lawmakers decried the CBN governor’s continued disregard for legislative summons.
The committee is investigating the non-remittance of operating surplus as well as the mismanagement of unclaimed dividends and dormant account balances.
According to the committee, the Office of the Auditor General for the Federation reported a liability of N5.2 trillion in unremitted operating surplus due to the federal government from 2016 to 2022; a claim corroborated by the Fiscal Responsibility Commission in a separate submission to the National Assembly.
The committee cited provisions of the Finance Act 2020, which mandate that unclaimed dividends from publicly listed companies and dormant bank account balances older than six years be transferred into the Unclaimed Fund Trust Fund. The fund is to be managed by a Governing Council led by the Minister of Finance and the Debt Management Office (DMO).
Contrary to this, the CBN maintains that the Financial Institutions Act 2020 empowers it to manage dormant balances.
However, the committee noted that the Attorney General of the Federation has issued a legal opinion affirming that the Finance Act 2020 remains the valid law guiding the management of such funds.
Following extensive submissions, the committee resolved that the CBN must remit N3.64 trillion, representing 70% of the undisputed N5.2 trillion operating surplus, within 14 days from receipt of its June 27, 2025, directive, pending final reconciliation of the disputed amount.
Additionally, the apex bank was directed to submit a detailed report on the total sum of unclaimed dividends and dormant account balances by June 30, 2025.
The CBN was also ordered to transfer these funds into the Unclaimed Fund Trust Fund within 14 days and furnish the House with evidence of the transaction.
The lawmakers expressed frustration that, despite the clear directives and ample time, the CBN governor has failed to respond or appear before the joint committee to provide an explanation.
“In view of this continued defiance, the Committee will be compelled to exercise its constitutional powers to compel Mr. Olayemi Cardoso to appear before it,” the statement warned.
Moody’s has upgraded the outlook on Ecobank Transnational Incorporated’s long-term issuer and senior unsecured debt ratings to stable from negative.
In the latest rating commentary, made available to media on Thursday, Moody’s also affirmed the pan-African banking group’s B3/Not Prime long- and short-term issuer ratings; B3 senior unsecured debt rating; b2 notional Baseline Credit Assessment and b1 Adjusted BCA.
ETI’s subsidiaries operate across 38 countries, including 35 African countries, and total assets of $28.9bn as of March 2025, details from the rating note highlighted. Moody’s said the decision to change the outlook to stable on the long-term issuer and senior unsecured ratings reflects ETI’s resilient financial performance.
The rating upgrade also takes into consideration higher dividends being upstreamed to ETI, resulting in lower double leverage and reduced refinancing risk.
The rating adjustment also reflects an expectation that the recapitalisation process of Ecobank Nigeria Limited will be completed by the end of 2025, with limited impact on the group’s financial fundamentals.
“The stable outlook also captures our expectation that a series of capital-boosting initiatives and actions to cure Ecobank Nigeria’s total capital position will be completed before the end of 2025”, according to the ratings agency.
In May 2025, ETI received shareholder approval to raise $250 million in Additional Tier 1 (AT1) capital and announced the launch of the transaction effective 9 July 2025, of which a portion is expected to be downstreamed to Ecobank Nigeria as AT1 capital during Q3 2025.
Ecobank Nigeria’s plan to raise $200m in AT1 capital was noted in the rating note. The ratings analysts said they consider
“We also note that Ecobank Nigeria’s recent successful offer to tender $150m of its February 2026 $300 million notes and consent to remove the capital adequacy ratio covenant from this bond’s terms alleviates risks of an event of default in Nigeria that would trigger cross default at the ETI level. Over the past year, ETI has shown resilience in its financial performance, which supports our change in outlook to stable. Liquidity risks are being moderated by the group’s gradually improving profitability during 2024 and Q1-2025.
“This has translated into a 22 per cent increase in dividends upstreamed to ETI during 2024, these being received from 22 dividend-paying subsidiaries compared to just 14 in 2021,” the rating commentary revealed.
In turn, albeit high, ETI’s double leverage ratio, which measures the liquidity risk taken on by the holding company, as a result of it borrowing in order to invest in the equity of its subsidiaries, has eased to 168 per cent as of December 2024 from 173 per cent in 2023.
Additionally, the stable outlook reflects reduced liquidity risk at the holding company level with the refinancing of short-term liabilities in 2024 with longer-term funding.
Moody’s said this is underpinned by demonstrated market access, notably through senior unsecured notes issuance of $400m in October 2024 and a tap increase of $125m in May 2025, maturing in October 2029.
ETI’s B3 long-term issuer ratings affirmation reflects the affirmation of the group’s b2 notional BCA; the affirmation of the group’s b1 adjusted BCA as captured by a one-notch uplift for affiliate support, reflecting Moody’s assessment of a moderate probability that the firm’s major institutional shareholders would extend support to the group. Moody’s said asset quality for the group has improved over recent years.
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