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FXTM: Nigeria’s Economic Recovery Could Become Reality By Year End

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Nigeria’s ongoing mission to diversify away from oil reliance, and a sharp drop in oil which triggered a currency crisis, have encouraged the Central Bank of Nigeria to maintain its key interest rates at 14% in July, Lukman Otunuga, research analyst at ForexTime (FXTM) acknowledged on Wednesday

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

Mr. Godwin Emefiele, Governor of Central Bank of Nigeria (CBN), 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.

Analyzing the MPC’s decision, Otunuga said, “although the nation still remains exposed to external risks, there has been optimism over the economic landscape stabilizing, with the improving macro fundamentals fueling speculations of a potential economic rebound by the end of 2017.

“Inflation has cooled for the fifth consecutive month in June at 16.1%, further illustrating signs of price stability, while manufacturing and non-manufacturing activities have both moved in a positive trajectory. Although CBN’s repeated intervention has played a significant role in the Naira’s recovery against the Dollar on the parallel exchange, confidence over Nigeria’s economic recovery continues to play a leading role.

“As we head deeper into the third quarter of 2017, there is likely to be an increasing focus on domestic data in order to measure the nation’s health and assess if an economic recovery could become a reality by the end of the year. A potential economic rebound by year end and further signs of stability at home may prompt the Central Bank of Nigeria to cut interest rates in the medium to longer term”.


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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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E-Financial

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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