E-Financial
Bloomberg: Nigerian Economic Policy Dispute Hinders Chances of Recovery
A dispute between Nigeria’s monetary and fiscal policy makers over how to lift the economy out of its worst slump in more than two decades may delay a recovery in Africa’s most populous country, Bloomberg said in a report.
Godwin Emefiele, Central bank Governor, in earlier in this month ignored calls by Finance Minister Kemi Adeosun to cut borrowing costs and kept the key interest rate unchanged at 14 percent, hours after she said in a television interview looser policy is necessary to stimulate the economy.
Emefiele also called out the government for its inadequate efforts to boost growth, saying monetary policy alone can’t get the economy out of stagflation and that “complementary fiscal policies” are needed to resuscitate output and consumption. GDP contracted in the first half of the year as the effects of a 15-month currency peg, fuel and power shortages and lower oil prices and production weighed on output.
The economy is forecast to shrink this year for the first time since 1991.
The delayed approval of a 6.1 trillion-naira ($19.3 billion) budget has stalled the government’s efforts to stimulate economic activity and the naira’ s slump since the removal of the 197-199 per dollar peg on June 20 has fueled inflation to the highest in more than a decade, extending the decline in consumer spending.
“The problem is that neither the government nor the Central Bank have a ‘grand strategy’ to fix Nigeria’s economic woes,” Malte Liewerscheidt, an Africa analyst at consultant VeriskMaplecroft, said in an e-mailed response to questions. “What we have seen over the past 18 months are mostly short-sighted tactical responses to ever more pressing problems.”
Inflation at 17.6 percent and a currency that weakened about 40 percent against the dollar since June, coupled with an economy forecast by the IMF to contract by 1.8 percent, underline the policy dilemma.
Adeosun said the nature of inflation is not being driven by consumer demand as it is “cost-push” and won’t respond to interest-rate increases, while Emefiele said the tightening stance has helped to lure more than $1 billion in net portfolio inflows. Cheaper borrowing would fuel demand for goods the economy can’t produce due to a lack of action to boost industrial output and increase price growth, he said.
This sort of divergence between fiscal and monetary authorities “tend to be pronounced when there are no clear best options available to policy makers,” Manji Cheto, senior vice president at Teneo Intelligence in London, said by email.
“Ultimately, the fiscal authority will have to realize that the heavy lifting will have to come from its own end.” The difference in policy approaches between the government and the central bank is not new.
President Muhammadu Buhari opposed the devaluation of the naira for more than a year, saying it would fuel inflation and hurt ordinary Nigerians. A shortage of foreign currency which led to rapid price growth and a slump in output eventually forced the central bank to move to a free float.
Lowering the monetary policy rate “will further fuel inflation and you will reduce the yield on fixed income at a time you want to attract foreign exchange,” former central bank Governor Muhammadu Sanusi II said in a speech on Sept. 21.
“The immediate oxygen that this economy needs is foreign exchange coming into the economy and foreign investors are responsible for that.”
The government will spend its way out of a recession, Adeosun said in an interview with broadcaster CNBC Africa on Sept. 19. Half of the planned 1.9 trillion naira of debt to help fund the fiscal gap, which widened by 30 percent this year, would come from the domestic debt market and the remainder from external sources, according to budget documents.
Higher borrowing costs and the loss of almost half of the revenue projected for this year could push Nigeria’s debt service-to-revenue ratio above the projected 35 percent of GDP, according to documents from the budget and national planning ministry. The nation will finalize a $1 billion loan from the African Development Bank next month and may borrow more than $4 billion over the next two years to shore up its budget, according to the lender.
“The misalignment between monetary and fiscal policy will remain in the short term,” Pabina Yinkere, Lagos-based head of research at Vetiva Capital Management Ltd., said by phone. “By March, when inflationary pressures reduce, the Central Bank will have room to reduce interest rates and we will see monetary and fiscal policy get aligned.”
Nigerian banks have resumed international transactions on naira-denominated debit cards, marking a significant shift in banking operations for customers who rely on foreign payments.
This is coming nearly three years of suspension.
United Bank for Africa (UBA) and Wema Bank, in separate communications to their customers, announced the restoration of international payment services on their naira cards.
In a notice to its customers, UBA said the reactivation of international transactions on its premium naira cards aligns with its commitment to delivering improved and seamless banking experiences.
“We are pleased to inform you that all UBA Premium Naira Cards, including Gold, Platinum, and World variants, are now enabled for international transactions,” the bank stated.
“This means you can now use your Premium Naira Card for global payments — including online shopping, POS, and ATM transactions — with ease and flexibility. If you haven’t used your card recently, now is a great time to rediscover the convenience and prestige that comes with being a UBA premium cardholder.”
Similarly, Wema Bank announced that its customers can now make dollar payments on international platforms using their naira Mastercards.
“Your Wema Naira Mastercard just went global!” the bank said. “Now you can pay in dollars on all your favourite international platforms — Amazon, eBay, AliExpress, Netflix, Spotify, YouTube.”
The development marks a major relief for Nigerian customers who have had to rely on dollar cards or alternative payment methods since most banks suspended international usage of naira cards in 2021 due to foreign exchange scarcity.
Flutterwave, Africa’s leading payments technology company, today announced the relaunch of its flagship remittance solution, Send App, across U.S. states following its newly acquired Money Transmitter Licences (MTLs).
This comes after Flutterwave secured 20 additional MTLs in the U.S., adding to the 14 licenses the brand has held since 2023.
Altogether, this achievement raises Flutterwave’s total number of direct licenses to 34, allowing the company to operate across many U.S. states and territories without partners or intermediaries.
Users in the U.S. can now send money to Nigeria, Ghana and Egypt, unlocking new remittance corridors that were previously unavailable.
Alongside this expansion, the onboarding process has been streamlined with a quick ID check, making it faster and easier for new users to get started.
Additional improvements include optimised payment support for US-issued Visa and Discover cards, enhanced security measures to safeguard transactions and maintain compliance, and improved in-app flows for a simpler, more efficient sending experience.
This return also highlights Flutterwave’s commitment to delivering a seamless, secure, and regulatory-compliant user experience for all Send App customers in the U.S. Users can now send money from DC, Georgia, Maryland, North Carolina, Michigan, South Carolina, Tennessee.
Other U.S. states and territories where Send App by Flutterwave supports outward remittances include Alaska, Arizona, Arkansas, Delaware, Idaho, Illinois, Indiana, Iowa, Louisiana, Maine, Minnesota, Mississippi, and Missouri, Nebraska, New Hampshire, New Mexico, North Dakota, Oklahoma, Oregon, Puerto Rico, Rhode Island, South Dakota, Utah, Washington, West Virginia, Wisconsin, and Wyoming.
Commenting on the relaunch, Olugbenga “GB” Agboola, Flutterwave Founder and CEO, said, “By expanding our reach and enhancing our services, we are empowering millions of Africans in the U.S. to maintain strong financial ties with their home countries, support their families, and contribute to economic development across the continent. Additionally, we are staying true to our core mission of bridging Africa with the global economy and vice versa.”
Earlier this year, Flutterwave integrated Swap into Send App for seamless FX transactions and strengthened its services in Ghana by securing approval for inward remittance from the Bank of Ghana.
Federal High Court in Abuja on Friday affirmed the authority of the Nigeria Inter-Bank Settlement System (NIBSS), to manage the Bank Verification Number (BVN), database across the country, in line with the Central Bank of Nigeria (CBN), Act and other relevant banking laws.
This is according to a judgment delivered by Justice James Omotosho on Friday.
Wolemi Esan, senior advocate of Nigeria, NIBSS’s counsel, and Kofo Abdulsalam-Alada, lead counsel for the CBN, among others, had sought a restraining order to prevent any institution in Nigeria from challenging the agency’s statutory authority to maintain and manage the BVN database.
This comes as NIBSS had alleged that Digital Rights Lawyers Initiative filed multiple suits, either directly or through proxies, challenging its authority to manage the BVN database and claiming that such management violates constitutional privacy rights.
However, Justice Omotosho, delivering his judgment, said the BVN does not infringe on the constitutional right to privacy.
“The initiative does not infringe on the constitutional right to privacy but rather serves as a necessary tool for safeguarding public interest and enhancing financial security.
“NIBSS has the power to manage the BVN,” the judge said, citing relevant CBN laws.
“The court grants the reliefs of NIBSS as prayed,” he stated.
Nigerian Banks End Years of Embargo, Resume Intl Transactions on Naira Cards
Flutterwave Secures 20 more US Money Transmitter Licences
Court Affirms NIBSS Authority to Manage BVN
NIMC Says NIN Services Back Online
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