E-Financial
CBN Raises Interest Rate to 13 Percent
Central Bank of Nigeria (CBN) has raised interest rate in the country to 13 percent, showing an increase of 1.5 percent.
The interest rate had been at 11.5 percent initially before the hike by the apex bank on Tuesday.
Godwin Emefiele, governor of CBN, who announced this in Abuja on Tuesday at a news conference, said the move was to halt the rising inflation in the country.
But in reality, when interest rates rise, the cost of borrowing money becomes more expensive.
This makes purchasing goods and services more expensive for consumers and businesses.
Emefiele, however, said the Monetary Policy Committee (MPC) took the decision because it suspected that there might be an aggressive accretion of inflation, which needed to be halted.
According to him, to prevent the looming inflation, the MPC had to increase the monetary policy rate by 150 basis points above the previous rate.
Nigeria’s inflation currently stand at 16.82 per cent in April, recording the highest jump in eight months, according to the National Bureau of Statistics (NBS).
The consumer price index, which measures the rate of increase in the price of goods and services, jumped amid increases recorded in food and energy prices.
The NBS said on Monday that the rate is 1.3 per cent points lower compared to 18.12 per cent recorded in April 2021.
However, the new annual rate is the highest since September 2021 (16.63 per cent).
Six members of the MPC voted to increase the main lending rate by 150 basis points, four of them by 100 basis points and one by 50 basis points.
“(MPC members) felt that tightening will help rein in inflation before it assumes a galloping trend,” Emefiele said.
“The committee decided to raise monetary policy rate for the first time in two and a half years to rein in the current rise in inflation as members were of the view that the continued uptrend may adversely impact growth.”
Food and energy prices are rising in Africa’s most populous country after Russia’s invasion of Ukraine pushed up oil prices and disrupted supplies of commodities like corn and wheat.
The rate hike sent the yield on Nigeria’s longest 30-year bond soaring 75 basis points to 13.8%.
Overnight lending rates climbed 200 basis points to 14% while the main share index fell to a two-week low.
Razia Khan, chief economist for Africa and the Middle East at Standard Chartered, said the rate increase raised questions about whether this could be a precursor to a change in the central bank’s policy on foreign exchange.
“This could be the most important signal yet of eventual FX policy intentions … but we will not really know until we see whether and how much market rates reprice,” she said.
The naira recovered from a record low of 609 on the black market to 606 naira against the dollar after the hike but it weakened to 443.50 naira on the official market from 413.80 naira and later traded at 417 naira.
The central bank governor, said the economy was expected to expand 3.25% this year, lower than the federal government’s projection of 4.2% growth.
Titan Trust Bank has selected Oracle FSS for its core and digital banking technology, it is understood.
The start-up bank recently obtained its license by the Central Bank of Nigeria (CBN).
It’s understood that Temenos and Infosys also competed for the deal.
The shortlist came down to the two most widely installed international core systems in Nigeria, Infosys’ Finacle and Oracle FSS’s Flexcube.
The Nigerian banking sector has seen a great deal of upheaval over the years, with many mergers, start-ups and closures. Flexcube is a well respected name since the late 1990s (the pioneer was Access Bank, now one of the country’s top five banks) and has been a commonly selected platform since then.
The new bank is believed to be one of five to have gained regulatory approval of late (Globus Bank is another).
Local media sources say the new licences stem from the Central Bank’s desire to attract new investments into the sector and better serve the country’s 50 million+ unbanked and under-banked citizens.
Titan Bank is said to be headed by a former executive director of Heritage Bank (which is a Finacle user).
Oracle FSS did not respond to request for comment.
International Monetary Fund (IMF), has appointed Tony Elumelu, Nigerian billionaire and group chairman of Heirs Holdings, owners of United Bank of Africa, to its advisory council on entrepreneurship and growth, convened by Kristalina Georgieva, the fund managing director.
The announcement was disclosed in a statement on Friday.
According to the statement, the IMF advisory council comprises global business leaders, policymakers, and academics dedicated to identifying and addressing regulatory barriers to entrepreneurship.
The IMF said Elumelu will be instrumental in ensuring that Africa’s entrepreneurship is central in policy making.
“Elumelu, Africa’s leading advocate of entrepreneurship and whose Foundation has funded, mentored, and trained over 25,000 African entrepreneurs since 2015, champions entrepreneurship as the engine for the economic transformation of Africa,” the statement reads.
“A self-made entrepreneur, Elumelu’s embracing of entrepreneurship is fundamental to his concept of Africapitalism, his belief that Africa’s private sector can and must play a leading role in the continent’s development, making long-term investments that deliver social and economic value.
“Elumelu will be instrumental in ensuring that Africa’s entrepreneurial potential is central to global economic policy making.”
Speaking at the inaugural meeting of the advisory council on March 26, Georgieva said the appointees would share their experiences on how macroeconomic and financial policies “can provide a supportive environment for innovation, entrepreneurship, and productivity — key ingredients for a thriving private sector and strong economic growth”.
Africa’s Micro, Small, and Medium Enterprises, fintech industry, scaling remittances, and cross-border payments will be the driving forces behind the continent’s digital ballooning payments system, which is estimated to reach $1.5 trillion by 2030.
This is according to a MasterCard-commissioned study by Genesis Analytics, which states that the digital payments economy is growing faster on the continent.
This comes as the World Bank says Sub-Saharan Africa has shown significant growth in financial inclusion over the past decade, much of it driven by mobile money account adoption.
Dimitrios Dosis, president, Eastern Europe, Middle East and Africa at MasterCard, comments: “Africa is filled with immense possibilities, and its people have the potential to shape the global economy in the decades ahead.
“MasterCard remains deeply committed to driving digital transformation across the continent, working closely with entrepreneurs, merchants, banks, start-ups, telcos, and governments. By increasing our investments, expanding innovation, and fostering inclusion, we are helping build a more connected and accessible digital future.”
The payment technology company went on to say as a longstanding technology partner to Africa, its continues to strengthen its commitment to the continent’s digital growth through strategic investments, public-private partnerships, and innovation initiatives that drive financial health and economic growth.
In addition, it says trends in Africa signal a strong shift towards digital transactions, with businesses and consumers increasingly embracing contactless solutions, further accelerating economic participation and financial accessibility across the region.
“For over five decades, MasterCard has worked alongside African governments, businesses, and communities to advance financial inclusion and economic development.
“With Africa projected to host nine of the world’s 20 fastest-growing economies, we are focused on leveraging our expertise and a technology to support the continent’s continued digital transformation.
“Our investments today will help build a more resilient economy for the future,” says Mark Elliott, division president, Africa, MasterCard
By fostering collaboration with key stakeholders, MasterCard says it aims to enhance digital connectivity, expand economic opportunities, and enable millions of people and businesses to thrive in the digital economy.
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