Naira falls by 17% to N951/$ on I&E window

The naira fell by 17.91 per cent to N951.22/$ on the official Investor and Exporter forex window on Wednesday.

This was as the dollar supply fell by 4.94 per cent to $135.58m from $142.63m.

Data from FMDQ Securities Exchange revealed that the naira lost N144.49 against the dollar after closing trading on Tuesday at N806.73/$.

The naira opened trading at N828.33/$ on the day before hitting a high of N1159.10/$ and low of N701.00/$. It eventually closed trading at N951.22/$. Total dollar turnover on Wednesday was $135.58m.

The naira’s volatility in the market continued despite efforts by the Central Bank of Nigeria to stabilise the national currency.

The PUNCH recently reported that Nigeria’s foreign exchange reserves fell by $1.6bn to $32.97bn since the CBN tried to unify the country’s foreign exchange rates, putting pressure on the naira.

In its recent Africa Outlook report, the Economist Intelligence Unit, said, “In Nigeria, an unsupportive monetary policy implies that the naira will remain under pressure, while the central bank lacks the firepower to adequately supply the market or clear a backlog of foreign exchange orders, which will keep foreign investors unnerved.

“High inflation and a continued spread with the parallel market will leave the exchange rate regime unstable and result in periodic devaluations.”

Recently, the CBN Governor, Olayemi Cardoso, lamented that fiscal deficits and public debt increases had piled pressure on the external reserves and contributed to exchange rate instability.

Speaking at the recent Chartered Institute of Bankers of Nigeria 58th Annual Bankers’ Dinner and Grand Finale of the Institute’s 60th Anniversary, the governor said, “We have already witnessed improvements in FX market liquidity in recent weeks, as the market responded positively to tranche payments which have been made to 31 banks to clear the backlog of FX forward obligations.

“We have been subjecting these payments to detailed verification to ensure only valid transactions are honored.  In a properly functioning market, it is reasonable to expect significant FX liquidity, with daily trade potentially exceeding $1.0bn. We envision that, with discipline and focused commitment, foreign exchange reserves can be rebuilt to comparable levels with similar economies.”

(Punch)

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Invitation: HoReps issues warrant of arrest on CBN Governor, AGF, others

The House of Representatives Committee on Public Petitions has issued a warrant of the arrest on the Central Bank Governor, Mr Olayemi Cardoso, the Accountant General of the Federation, Mrs Oluwatoyin Madein and 17 others for refusing to appear before it to answer questions on their operations.

This followed the adoption of a motion by Rep Fred Agbedi (PDP-Bayelsa) at the committee’s hearing on Tuesday.

Moving the motion, Agbedi said that the arrest warrant had become inevitable following the attitude of the invitees.

He said that the parliament worked with time and the CEOs had been invited four times, but failed to respond.

He said that the CEOs should be brought to appear before the committee by the Inspector General of Police through a warrant of arrest after due diligence by the Speaker, Rep Tajudeen Abbas.

In his ruling, the Chairman of the Committee, Rep Micheal Irom (APC-Cross River), said that the IG should ensure the CEOs were brought before the committee on December 14.

Earlier, the petitioner, Mr Fidelis Uzowanem, said that the petition was anchored on the Nigeria Extractive Industries Transparency Initiative (NEITI) report of 2021.

“We took up the challenge to examine the report and discovered that what NEITI put together is a report is only consolidation of fraud that has been going on in the oil and gas industry.

“It dates back to 2016 because was have been following and we put up a petition to this committee to examine what has happened.

“The 2024 budget of 27.5 trillion that has been proposed can be confidently funded from the recoverable amount that we identified in the NEITI report.

“It is basically a concealment of illegal transactions that took place in NNPCL; they have been in a sink with some oil companies where some companies that did not produce crude were paid cash core, an amount paid for crude oil production,” he said.

(Daily Post)

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CBN to freeze accounts without BVN, NIN April 2024

The Central Bank of Nigeria has directed a “Post no Debit” restriction on all bank accounts without a Bank Verification Number and National Identification Number effective April 2024.

“Post No Debit” is a term used to describe a restriction imposed by banks on specific accounts, preventing customers from making withdrawals, transfers, or any other debits from their accounts.

This measure effectively freezes the funds in the account, rendering it inaccessible for the duration of the restriction.

The CBN’s directive was contained in a circular issued by the apex bank and sent to all deposit money banks on Friday.

The Central Bank also stated that all the BVN or NIN attached to and/or associated with all ccounts/wallets must be electronically revalidated by January 31, 2024.

The circular was jointly signed by the Director, Payments System Management Department, Chibuzo Efobi, and Director, Financial Policy and Regulation Department, Haruna Mustapha.

The bank said the directive was part of efforts to promote financial system stability and strengthen the Know Your Customer procedures in all financial institutions.

It also amended Section 1.5.3 of the Regulatory Framework for BVN to ensure mandatory registration of all tier-1, 2, and 3 bank accounts and wallets with BVN or NIN.

The circular read, “As part of its efforts in promoting financial system stability, it becomes necessary to strengthen the Know Your Customer procedures in financial institutions under the purview of the Central Bank of Nigeria.

“Accordingly, the CBN hereby issues an amendment to Section 1.5.3 of the Regulatory Framework for Bank Verification Number Operations and Watch List for the Nigerian banking industry.

“In this regard: it is mandatory for all Tier-1 bank accounts and wallets for individuals to have BVN and/or NIN. It remains mandatory for Tiers 2 & 3 accounts and wallets for individual accounts to have BVN and NIN.

“The process for account opening shall commence by electronically retrieving BVN or NIN related information from the NIBSS BVN or NIMC’s NIN databases and for same to become the primary information for onboarding of new customers.

“All existing customer accounts/wallets for individuals with validated BVN shall be profiled in the NIBSS ICAD immediately and within 24 hRS of opening accounts/wallets.”

As a result of the new guidelines, the bank said any unfunded account/wallet shall be placed on “Post No Debit or credit until the new process is satisfied.

It added that all accounts/wallets will be electronically revalidated by January 31, 2024.

The circular further read, “Effective immediately, no new Tier1 accounts and wallets should be opened without BVN or NIN,

“For all existing Tier1 accounts/wallets without BVN or NIN: i. Effective immediately, any unfunded account/wallet shall be placed on “Post No Debit or credit until the new process is satisfied.

“Effective April 1, 2024, all funded accounts or wallets shall be placed on “Post No Debit or Credit, and no further transactions permitted.

“The BVN or NIN attached to and/or associated with all accounts/wallets must be electronically revalidated by January 31, 2024.”

Continuing, CBN further directed all Executive Compliance Officers, Chief Compliance Officers, or Heads of the Compliance Functions to acquaint themselves with the attached guidance notes to ensure full and uniform compliance.

“To ensure uniform and full compliance, the Executive Compliance Officers, Chief Compliance Officers, or Heads of the Compliance Functions are advised to acquaint themselves with the attached Guidance Notes which becomes applicable to ALL institutions regulated by the CBN.

“Also, a comprehensive BVN and NIN audit shall be conducted shortly and where breaches are identified, appropriate sanctions shall be applied.

“Finally, all financial institutions regulated by CBN are required to apply strict compliance on restrictions on Tier1 accounts/wallets as they relate to limits on transaction values and cumulative balances,” the circular concluded.

(Punch)

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Bank CEOs, others begin merger, acquisition talks over CBN fresh recapitalisation mandate

Indications emerged on Saturday that the chief executive officers and other top executives of Deposit Money Banks had begun moves to raise fresh capital to bolster their respective institutions’ capital base in line with the pronouncement of the Governor of the Central Bank of Nigeria, Dr Olayemi Cardoso.

Sunday PUNCH gathered from top sources in the banking industry that the top executives might have also commenced preliminary merger and acquisition talks, as some of the big banks are eyeing some weaker ones for possible acquisition, while some middle strength and weak ones are looking for alliances that may result in mergers.

Cardoso had said in Lagos on Friday that the apex bank would be asking the DMBs to increase their capital base in order to service the $1tn economy projected by President Bola Tinubu.

Speaking at the 58th Annual Dinner of the Chartered Institute of Bankers of Nigeria where he was the special guest of honour, Cardoso said, “In my recent speech at the 370th Bankers’ Committee meeting, I highlighted the economic agenda of the President. The administration has set an ambitious goal of achieving a GDP of $1tn over the next seven years.

“Attaining this target necessitates sustainable and inclusive economic growth at a significantly higher pace than current levels. It is crucial to evaluate the adequacy of our banking industry to serve the envisioned larger economy.

“It is not just about its current stability. We need to ask ourselves, can Nigerian banks have sufficient capital relative to the finance system needs in servicing a $1tn economy in the near future, in my opinion, the answer is no, unless we take action.  As a first test, the central bank will be directing banks to increase their capital.

“Therefore, we must make difficult decisions regarding capital adequacy. As the first step, the CBN will be directing banks to increase their capital.”

He added, “The removal of petrol subsidy and the adoption of a floating exchange rate and other government policies are anticipated to have a positive effect on the economy in the medium term.

“These measures are expected to enhance investors’ confidence, attract capital inflow, stimulate domestic investors and ultimately improve the level of external reserves. Additionally, they are expected to contribute to the stability of the local economy.

“Despite the challenging global and local economic environment, Nigeria’s financial sector has demonstrated resilience in 2023 with key indications of financial soundness largely meeting regulatory benchmarks.

“Stress test conducted on the banking industry also indicates its strength under mild to moderate scenario on sustained economic and financial stress. Although there is room for further strengthening and enhancing resilience to shocks. Therefore, there is still much to be done in fortifying the industry for future challenges.”

A bank CEO, who spoke to Sunday PUNCH, welcomed the CBN policy direction regarding the recapitalisation of the banks and said his institution was ready to raise fresh capital though it had yet to conclude the modality.

“Even before the CBN governor made the pronouncement, our bank was already considering raising fresh capital to significantly increase the capital base. This should happen in the first quarter of 2024. So, we are in tune with the CBN governor,” the CEO of a Tier-1 lender told one of our correspondents on Saturday.

In the last few months, First Bank of Nigeria Holdings, Wema Bank and Jaiz Bank have proposed Rights Issues, while Fidelity Bank announced plans to raise additional capital via the issuance of 13,200 billion ordinary shares via public offer and rights issue.

An executive director in a bank with regional presence told Sunday PUNCH on condition of anonymity that the announcement by Cardoso did not come as a surprise, but said the current state of the economy might make raising adequate capital a bit of a challenge, adding that his institution was planning to talk to others for possible merger.

When asked when the talks would begin, the executive director said preliminary discussions would begin this week, but such would be accelerated when the CBN releases the guidelines for the new capital base and how much would be considered as adequate.

Another top bank executive told one of our correspondents that lenders had been exploring merger talks on the periphery before now, but that would be escalated now and that the banks might look more towards institutional investors rather than raise money through public listing due to the current economic situation in the country.

The President, Association of Corporate and Marketing Communications Professionals in Banks, Rasheed Bolarinwa, advised members of the public to wait for the formal unveiling of the recapitalisation plan so as to know the detail.

He told Sunday PUNCH, “Why don’t you wait until this get actualised? Let us wait for a formal announcement with clear guidelines; until then, why not hold your breath.”

On insinuations that a fresh capital raise might shrink the industry, he said, “This observation may happen or not depending on how investors react when the banks go to the market. What is not in contention is that going by the performance of bank stocks on the Nigerian bourse, investors will be receptive to the banks if they approach the market to recapitalise.

“If you look at the capitalise base of some banks, are they not already overcapitalised? And what if those who choose to approach the market perform creditably due to investor confidence in bank stocks?

“The regulator is well resourced and knows what it needs to do at any point in time in managing Nigeria’s banking sector, including the recapitalisation process, which was mulled yesterday (Friday) in Lagos.”

Experts advise banks

The Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, welcome the move to increase banks’ capital base, adding that the current capital base was grossly inadequate.

He said, “The minimum capital requirements of the banking industry need to be reviewed in the light of the considerable loss of value amid depreciating domestic currency. During the banking consolidation of 2004, the minimum capital requirement for banks was raised from N2bn to N25bn. The revised capital requirement was an equivalent of $187m. Today, the same N25bn is an equivalent of just $32.5m.

“This is a clear indication of the phenomenal erosion of the capital base of the banks. Recapitalisation of the banks has therefore become imperative. It is important to ensure that the capital base of banks can support their current exposures in the interest of the stability of the financial system.”

A professor of Capital Market at the Nasarawa State University, Uche Uwaleke, urged the CBN not to coerce banks into increasing their capital base as was the case during the last recapitalisation drive; rather, they should be incentivised.

“The idea of recapitalisation of banks is a welcome one. It goes without saying that capital is needed to finance big-ticket projects, especially when the government is targeting a $1tn economy in a few years’ time. But I think the strategy should be somewhat different from the approach adopted in 2005. It should be more about incentives than coercion,” he said.

Uwaleke, who is also the President of the Association of Capital Market Academics of Nigeria, added that a number of Deposit Money Banks were already making moves to increase their capital base.

He said, “Some DMBs (especially many in the FUGAZ category) are already making efforts to increase their capital base. The CBN can use prudential guidelines to strengthen the present tiered arrangements. The use of the CAR (the ratio of a bank’s capital to risk weighted assets) is a good example.

“The apex bank can also use differential cash reserve requirements as well as preferential participation in the forex market for well-capitalised banks as some of the incentives. For whatever it is worth, smaller banks playing at the regional level should not be regulated out of existence.”

Echoing Uwaleke’s stance, an economist and former Vice-Chancellor of the University of Uyo, Prof Akpan Ekpo, warned that the planned move might lead to mergers and acquisitions, creating unemployment, economic uncertainty and discouraging investors.

Rather, Ekpo said the banks should be incentivised to stay vibrant, adding, “Well, the central bank has to be careful because you don’t force banks to recapitalise. The last time this happened, there was a serious problem. You will have to give them incentives for those who will want to go through that process, but never should the apex bank force them to recapitalise.

“Otherwise, it will result in mergers and acquisitions, and that will create unemployment, adding to the already high rate in the country, which will send uncertainty and anxiety into the system. That is not good for the economy. The CBN governor talked about the plan by the current administration to create a $1tn economy, but don’t hound banks to recapitalise; rather, give them incentives.

“The last CBN governor printed so much money through Ways and Means.  What they have to do is stick to the rule, which says that the CBN can only give the government five per cent of the previous year’s annual revenue. Once that is adhered to, there will be no issues, but I don’t think it’s a good idea to force banks to recapitalise.”

Another economist, Leo Ukpong, said bank recapitalisation meant raising the capital base through more borrowing or the issue of new equity of banks.

He said, “If additional funds are acquired from borrowing more debt, the debt level of the company will rise compared to equity. This could raise the default riskiness of such banks. If it’s done through the issuance of new stocks to investors, this will raise the equity ratio of the bank and spread future profit or loss among more investors. In other words, raising additional capital through new equity could reduce the default risk of banks.”

Listing the advantages of such a move, the financial economist stated that a raise in capital would imply more available funds for loans and private investments.

He explained, “More loans could be made to the private sector investors and the public sector for national infrastructural development, and for household consumer loans. It will help spread the lending or default risks among several investors and risks diversification.

“Also, it could be more of a window dressing to give the investors the impression that the bank is now larger and more stable.”

He, however, added a caveat that “all banks must channel the additional funds raised through recapitalisation to the capital projects and not lend the funds to state and federal governments to be used for buying SUVs for legislators and presidential yachts.”

A former Chief Economist at Zenith Bank Plc, Marcel Okeke, argued that before looking at the banks, the apex bank needed to look inwards at some of its policies, those of the Federal Government and their unintended consequences, which were casting a shadow over the economy.

Okeke said, “All that the CBN governor has said is right and he also acknowledged some of the policies, which will have unintended consequences on the economy. If care is not taken, that will preoccupy them for a long time. As we speak the government is battling with what we call the palliatives. Before the present government came in place, who was talking about palliatives? It shows that something is fundamentally wrong and they are just trying to patch things up.

“The journey to achieve a $1tn economy has not even started. The productive sector is dying. Look at the GDP growth rate for example. The real sector is functioning sub-optimally because of the policies that have been put in place. The CBN governor also mentioned the level of insecurity in the land. Has that been tackled? Handling insecurity is a precondition for other sectors to thrive in Nigeria. He also mentioned agriculture. Many of the farmlands are left desolate because of insecurity and other social ills. These things are tied together. It’s not just talking about the $1tn economy. The question is, how do you get there?”

Okeke also raised concerns as to how the economy would be able to support a recapitalisation drive.

He said, “On recapitalisation, banks are supposed to be sources of funding for activities or projects that will drive that $1tn economy. If the banks are financially strong, they will drive and contribute seriously to it. You can also imagine when all the banks are trying to meet capital in today’s economy.

“He (Cardoso) didn’t mention a timeline or set any deadline, so the race has started. I don’t know where the market will go with it. The economy has a trust deficit already. There are question marks all over the place. The CBN should be encouraging export and it has to be policy-driven.”

A professor of Development Economics, Abayomi Adebayo, faulted the recapitalisation plan, saying Cardoso should rather be worried about the foreign exchange market and concentrate more on how to facilitate productivity in the economy.

He further advised the CBN governor to engage intelligent people in the country on how to develop productivity, and an active financing of the economy, adding that entrepreneurship should be encouraged in order to solve the petrol problem by building internal refineries to tackle the crisis.

Adebayo stated, “I don’t know what he wants to achieve with that. Is it that the banks are distressed now? Where is he going to get the capital from? Is it the people who are still struggling to eat that will put money in the account now? What was our experience with the shares that we bought? All of us see it as not better than ordinary paper because of the amount that each clocked for that share and what they command in the market today. Who is the right-thinking person in this economy who will think of buying shares that cannot be guaranteed how it will turn out in the future buy what we have experienced before?

“Every step in economics has assumptions around it, but to me as a person, I feel he should bother about facilitating real sector productivity. Motivating and cultivating how the refined rate will wipe off the importation of refined fuel in Nigeria. These are issues that could remove pressure on dollars and others rather than looking for paper function on the table. You know there were some people speculating about redenomination. If you remove two zeros, is it the one that will produce in the economy? Is it decimalisation causing the naira to be falling? Is it the psychological feeling that the naira is big that you want?

“I thank God we have a government that is listening so that as we are bringing ideas; they are not the government that will just close their eyes and mind. That is why we should begin to think together because we are running an economy that is very complex and challenging so all of us must think to find direction to make sure things work.’

The don added, “I don’t know how successful that recapitalisation will be. If people who have stolen money think they can go and buy banks and begin to be proud that they are the owner of a particular bank now. I’m talking about over 80 per cent of salary earners who will say they want to buy shares when they haven’t eaten in their house and when fuelling their cars to work is very difficult.”

A professor of Economics at the Olabisi Onabanjo University, Sheriffdeen Tella, stated that a positive result would be achieved for the economy if the CBN governor could match words with actions.

Tella said, “What he has presented are the right things to do if he backs it up with action, the desired result will be achieved. The central bank under Emefiele engaged in rigid banking like giving loans and others. It is not the duty of the central bank. The banks created for that purpose are the Bank of Industry, Bank of Agriculture, and others. The central bank should have channelled the money through those banks and monitored them. The CBN under Emefiele gave out such loans and made noise on the difficulty of recovering the loans. In the first instance, it is not their duty to issue such loans.

On recapitalisation, he said, “There is a need to recapitalise and the CBN governor has said because inflation and depreciation have affected the initial capitalisation, there is a need to recapitalise and revalue to make them stronger and be able to compete globally.

“It depends on how the recapitalisation will be and how big the banks are, but some banks will still have to merge and others take over. Some others can absorb those that don’t have the opportunity of merger. Also, the central bank may carry the process out in such a way that all of them may not have the same capitalisation.”

A professor of Economics at the University of Uyo, Edet Akpakpan called on the CBN governor to do whatever was necessary to alleviate the sufferings of Nigerians.

He said, “I am sorry, I have not seen much seriousness in what he has said. He needs to show us the plan of what he wants to do and how he wants to go about it. It is not enough to roll out policy. I am happy he mentioned that he is working with the minister of finance and coordinating minister of the economy. They should both get solid economic teams in place and work together to set the economy in place to alleviate the suffering of common Nigerians.”

(Punch)

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Projected $1tn economy: DMBs to increase capital base, says CBN Gov

The Governor of the Central Bank of Nigeria, Dr Olayemi Cardoso, has said that the apex bank will be asking Deposit Money Banks to increase their capital base in order to service the $1tn economy projected by President Bola Tinubu.

This is as he noted that he knew that there was much work to be done in the way the apex bank ran its operations, adding that he would need the collaboration of all stakeholders.

Speaking on Friday at the 58th Annual Dinner of the Chartered Institute of Bankers of Nigeria in Lagos where he was the special guest of honour, Cardoso said, “In my recent speech at the 370th Bankers’ Committee meeting, I highlighted the economic agenda of the President. The administration has set an ambitious goal of achieving a GDP of $1tn over the next seven years.

“Attaining this target necessitates sustainable and inclusive economic growth at a significantly higher pace than current levels. It is crucial to evaluate the adequacy of our banking industry to serve the envisioned larger economy.

“It is not just about its current stability. We need to ask ourselves, can Nigerian banks have sufficient capital relative to the finance system needs in servicing a $1tn economy in the near future, in my opinion, the answer is no, unless we take action.  As a first test, the central bank will be directing banks to increase their capital.

“Therefore, we must make difficult decisions regarding capital adequacy. As the first step, the CBN will be directing banks to increase their capital.”

He added that it was crucial to prioritise price stability to safeguard the livelihood of Nigerians.

He also blamed the recent negative perception of the apex bank on corporate governance failure, diminished independence and deviation from the core mandate, inefficient forex rules, and venture into development financing.

“I’m confident and optimistic that by taking appropriate corrective actions and strategic steps, we can restore macroeconomic stability and address fundamental flaws,” he stated.

Cardoso also noted that the fluctuating exchange rate was hampering business growth and promised to be transparent and fair to all as the bank performs its function.

He added, “The removal of petrol subsidy and the adoption of a floating exchange rate and other government policies are anticipated to have a positive effect on the economy in the medium term.

“These measures are expected to enhance investors’ confidence, attract capital inflow, stimulate domestic investors and ultimately improve the level of external reserves. Additionally, they are expected to contribute to the stability of the local economy.

“Despite the challenging global and local economic environment, Nigeria’s financial sector has demonstrated resilience in 2023 with key indications of financial soundness largely meeting regulatory benchmarks.

“Stress test conducted on the banking industry also indicates its strength under mild to moderate scenario on sustained economic and financial stress. Although there is room for further strengthening and enhancing resilience to shocks. Therefore, there is still much to be done in fortifying the industry for future challenges.”

Cardoso also noted that the previous forex ban on those 43 items widened the gap between official and parallel market rates.

Speaking on the activities of the CBN before his appointment, Cardoso stated that the quasi-fiscal policies of his predecessor, Mr Godwin Emefiele, resulted in N10tn being pumped into the economy through intervention programmes.

He said, “I am aware that events over the past few years have also put the CBN in a bad light. These issues can be attributed to various factors, such as corporate governance failures, diminished institutional autonomy of the Central Bank of Nigeria, a deviation from the core mandate of the Bank, unorthodox use of monetary tools, an inefficient and opaque foreign exchange market that hindered clear access, a foray into fiscal activities under the cover of development finance activities. There was also a lack of clarity in the relationship between fiscal and monetary policies, among other challenges.

“Hitherto, the CBN had strayed from its core mandates and was engaged in quasi-fiscal activities that pumped over N10tn into the economy through almost different initiatives in sectors ranging from agriculture, aviation, power, youth and many others. These clearly distracted the bank from achieving its own objectives and took it into areas where it clearly had limited expertise.”

The apex bank boss however promised that the issues affecting the bank would be tackled under his watch.

He said, “Under my leadership, the Central Bank of Nigeria will vigorously address these issues. We will tackle institutional deficiencies, restore corporate governance, strengthen regulations, and implement prudent policies. We assure investors and the business community that the economy will experience significant stability in the short-to-medium term as we recalibrate our policy toolkits and implement far-reaching measures.”

The President/Chairman-of-Council at the CIBN, Ken Opara, in his welcome address, pointed out that governors of the CBN as the guest speaker had historically used the platform to share perspectives on economic and financial market development in the current year and provide insights into its economic outlook for the year ahead.

Opara went on to highlight some of the initiatives from the CBN since Cardoso took office and stated that there was still much to do.

“It is important to mention that within the short time in office, the Central Bank governor has activated some key initiatives aimed at repositioning and stabilising the economy.

“I will mention a few, focusing on the core monetary mandate of price and exchange rate stability, the unification of the exchange rate, and initiating steps to improve liquidity in the foreign exchange market, therefore achieving real positive change.

“We are on a journey and we are not yet there but we believe that we are progressing as we are not oblivious of the inflationary pressure that has intensified and has reached a high of an all-time high of 27.33 per cent in October 2023 while the exchange rate continues to rise. We believe that the focus should continue to be on reforms and incentives that will boost non-oil export revenue as well as attract Diaspora and foreign portfolio investment.

“These achievements tie into the Renewed Hope Agenda of the President, whose comprehensive development plan aims to address Nigeria’s most pressing challenges as encapsulated in the eight points agenda of economic growth and transformation, access to capital, job creation, food security, ending poverty, improved security, rule of law, fighting corruption and improved playing field for business to operate.”

The Vice President, Senator Kashim Shettima, was represented by the Special Adviser to the President on National Economic Council and Climate Change, Mrs Rukayat El-Rufai.

Lagos governor, Mr Babajide Sanwo-Olu, represented by the Commissioner of Finance, Abayomi Oluyomi, in his goodwill message said, “In the last few months, we have witnessed what have been described as the new dawn in the management of our monetary policy and fiscal policy in line with the renewed hope agenda of the current administration led by President Bola Tinubu.

“I am confident that in the first full fiscal year of this administration and the management of the Central Bank of Nigeria under Dr Yemi Cardoso, these anticipated positive impacts of the monetary and fiscal policies of the new administration will fully manifest in our macro and micro economic indices, most importantly, for us as politicians, in the living conditions of our people.”

In his remarks, the Chairman of the Body of Bank Chief Executive Officers, Ebenezer Onyeagwu, stated that the banking industry was becoming stronger even as the issue of FX forwards is being dealt with.

Onyeagwu, who is also the Group Managing Director/CEO of Zenith Bank Plc, said, “The industry is getting stronger and the elephant in the room, FX forwards has been caged and we are moving forward.”

The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, in his goodwill message, said, “The industry is thriving and relatively healthy. Taking Nigerian banks to the rest of Europe and other regions shows what we are able to offer the rest of the financial world. It has been difficult but we must stay the course.”

(Punch)

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Naira drops to N956/$ at I&E window as dollar supply falls by 46%

The naira fell, on Thursday, to N956/$ on the official Investor and Exporter forex window as dollar supply declined by 46.77 per cent.

This is a 13.78 per cent decline from the N840.53/$ the naira closed trading on Wednesday according to data from the FMDQ Securities Exchange. Also, the turnover of dollars traded in the market fell to $105.50m from $198.21m on Wednesday.

The naira began trading at N800.90/$ for the day before hitting a high of N1136/$ and N615/$ within the day. It eventually closed trading at N956.33/$.

The instability of the naira has persisted despite recent moves by the Central Bank to clear the backlog of foreign exchange forward contracts. The naira is one of the worst-performing currencies in the world, losing about 40 per cent of its value since June, the World Bank recently disclosed.

Recently, the Economic Intelligence Unit, the research and analysis division of the Economist Group, disclosed that the CBN does not have the required firepower to clear the backlog of foreign exchange orders. This is expected to continue to put pressure on the naira.

It stated, “In Nigeria, an unsupportive monetary policy implies that the naira will remain under pressure, while the central bank lacks the firepower to adequately supply the market or clear a backlog of foreign exchange orders, which will keep foreign investors unnerved. High inflation and a continued spread with the parallel market will leave the exchange rate regime unstable and result in periodic devaluations.”

(Punch)

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FG to dock Emefiele today over alleged economic sabotage criminal charges

Former Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, will today be put on trial by the Federal Government on alleged economic sabotage-related offences.

Emefiele, whose trial was aborted about 24 hours ago, will be arraigned at a High Court in the Federal Capital Territory, Abuja.

A notice for his trial before Justice Hamza Muazu, sighted by DAILY POST, indicates that the ex-CBN Governor will be docked along with one Ramalan Yaro.

A registrar with the court, who wished to remain anonymous, confirmed that Emefiele would be brought before the court this morning for his plea of guilty or not guilty to be taken.

Similarly, one of the lawyers in his defence team, Maxwell Opara, confirmed that the notice of arraignment had been served on the former CBN Governor for him to appear in court.

The former CBN governor will be produced in court by Senior Advocate of Nigeria (SAN) Matthew Burkaa, who signed an undertaking to bring him for trial while being granted bail by Justice Olukayode Adegbola Adeniyi, also of the FCT High Court.

(Daily Post)

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NDIC clarifies reports of 20 liquidated banks by CBN

The Nigeria Deposit Insurance Corporation (NDIC) has clarified the reported liquidation of 20 banks by the Central Bank of Nigeria.

The Corporation said the alleged 20 banks were previously shut down between 1994 and 2018 over license revocation, noting that the sanction is not a recent one.

The Director of Communication & Public Affairs at the NDIC, Bashir Nuhu, in a statement, said the NDIC, in meeting its obligation by July 2023, paid guaranteed sums to depositors, totalling N45.45 billion in liquidation dividends.

He said an additional N16.18 billion has been scheduled for depositors, creditors and shareholders.

The statement urged stakeholders in the highlighted banks to visit the NDIC offices or the website to verify and submit their claims.

The affected banks include, ”Liberty Bank, City Express Bank, Assurance Bank, Century Bank, Allied Bank, Financial Merchant Bank, Icon Merchant Bank, Progress Bank, MBA, Premier Commercial Bank, North-South Bank, and Prime Merchant Bank. Others are Commercial Trust Bank, Cooperative and Commerce Bank, Rims Merchant Bank, Pan African Bank, Fortune Bank, All States Trust Bank, Nigeria Merchant Bank, and Amicable Bank in-liquidation.

Nuhu noted that liquidation dividends exceed insured sums and cover payments to creditors and shareholders post full payment to depositors of defunct banks.

(Daily Post)

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Old N200, N500, N1000 notes to remain legal tender indefinitely, says CBN

The Central Bank of Nigeria, CBN, has said that the old naira banknotes will remain a legal tender.

NEWS FLASH had reported in October 2022 that the CBN had introduced the redesign of N200, N500 and N1,000 denominations and certain deadlines were set for the old notes of these denominations to cease as legal tenders.

But on Tuesday, the CBN informed the public of its desire to extend the legal tender status deadline of the old design of N200, N500 and N1,000 denominations, ad infinitum.

“This is in line with international best practices and to forestall a repeat of earlier experiences,” a statement signed by Isa AbdulMumin, Director, Corporate Communications, said.

“Thus, all banknotes issued by the Central Bank of Nigeria (CBN), in accordance with Section 20(5) of the CBN Act 2007, will continue to remain legal tender, ad infinitum, even beyond the initial December 31, 2023, deadline.

“The Central Bank of Nigeria is working with the relevant authorities to vacate the subsisting court ruling on the same subject.

“Accordingly, all CBN branches across the country will continue to issue and accept all denominations of Nigerian banknotes, old and redesigned, to and from deposit money banks (DMBS).

“The general public is enjoined to continue to accept all Naira banknotes (old or redesigned) for day-to-day transactions and handle these banknotes with utmost care, to safeguard and protect the lifecycle of the banknotes.

“Also, the general public is encouraged to embrace alternative modes of payment, e-channels, for
day-to-day transactions,” it said.

(Daily Post)

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Trouble for bank CEOs as Tinubu’s investigator probes N1.27trn CBN intervention funds

The Chief Executive Officers and top management staff of banks may also be probed during the ongoing investigation of the activities of the Central Bank of Nigeria, according to findings by Punch.

It was learnt that some bank CEOs would be invited in an effort to ascertain any discrepancies around the management of intervention funds by deposit money banks.

This newspaper had earlier reported that the Central Bank of Nigeria may be asked to withdraw its audited annual financial reports, which were recently released.

This came after a team investigating the apex bank discovered discrepancies and irregularities in the financial accounts.

In August, the CBN released its financial accounts for the years 2016 to 2022 amid an ongoing probe of the financial services sector regulator by a Special Investigator appointed by President Bola Tinubu.

Tinubu had on July 28 appointed a former Chief Executive Officer of the Financial Reporting Council of Nigeria, Jim Obazee, as Special Investigator to probe the activities of the apex bank under its suspended governor, Godwin Emefiele.

Aside from the CBN, the special investigator is also investigating the Nigerian National Petroleum Corporation Limited, FRC, and other Government Business Entities.

The President, in the letter which he personally signed, said the move was in continuation of the government’s anti-corruption fight.

The letter, dated July 28, 2023, read, “In accordance with the fundamental objectives set forth in Section 15(5) of the Constitution of the Federal Republic of Nigeria 1999 (as amended), this administration is, today, continuing the fight against corruption by appointing you as a Special Investigator, to investigate the CBN and Related Entities. This appointment shall be with immediate effect and you are to report directly to my office.

“The full terms of your engagement as Special Investigator shall be communicated to you in due course but require that you immediately take steps to ensure the strengthening and probity of key Government Business Entities, further block leakages in CBN and related GBEs and provide a comprehensive report on public wealth currently in the hands of corrupt individuals and establishments (whether private or public).

“You are to investigate the CBN and related entities using a suitably experienced, competent and capable team and work with relevant security and anti-corruption agencies to deliver on this assignment. I shall expect a weekly briefing on the progress being made.”

The President also attached a copy of his directive suspending Godwin Emefiele as Governor of the CBN on June 9, 2023.

According to findings by this newspaper, the CBN Special Investigator is working with a team of accountants, auditors, and forensic accountants to carry out the investigation.

The Secretary to the Government of the Federation, George Akume, recently said the Federal Government will soon unveil the audit report of the probe of the CBN.

The SGF said that the probe report of the CBN when made public, would reveal how poor governance brought the country to the present predicament.

According to him, the report will enable Nigerians to know what really went wrong and how the country got to its present situation.

According to a top official, who spoke with this newspaper on the condition of anonymity, some top bank officials will be invited as the investigations proceed over undisbursed intervention funds.

Findings by this newspaper showed that N1.27tn intervention funds sit in the accounts of five banks.

This was based on an analysis of the half-year financial statements of Access Bank, Fidelity Bank, Guarantee Trust Bank, United Bank for Africa, and Zenith Bank.

The intervention funds cover lending facilities provided by the CBN through local banks, and the facilities include Accelerated Agriculture Development Scheme, Anchor Borrowers’ Programme, Commercial Agriculture Credit Scheme, Healthcare Sector Intervention Facility, and Paddy Aggregation Scheme.

They also include Micro, Small, and Medium Enterprises Development Fund, Real Sector Support Facility, 100 for 100 Policy on Production and Productivity, Export Facilitation Initiative, and the Creative Industry Financing Initiative.

Findings by The PUNCH showed that there was at least N530.07bn worth of intervention funds in Access Bank.

This included about N3.56bn under the Commercial Agriculture Credit Scheme, N1.57bn to facilitate the rapid rollout of agent networks across Nigeria supporting the expansion of a shared Agent Network, N58.84bn under the salary bailout fund, N99.04bn outstanding balance on the excess crude account loans, N9.34bn for the Real Sector Support Facility, N1.14bn for the Accelerated Agricultural Development Scheme.

It also included N955.61m for the Creative Industry Financing Initiative, N8.62bn for the Non-Oil Export Stimulation Facility, and N17.64bn for the Health Sector Intervention Facility, among others.

This newspaper also learnt that at least N310.52bn of the intervention funds sit in Fidelity Bank.

It included N80.65bn state bailout fund, N190.06bn Real Sector Support Facility – Differentiated Cash Reserves Requirement, N7.28bn Commercial Agriculture Credit Scheme, N2.5bn Paddy Aggregation Scheme, and N6.36bn 100 for 100 PPP.

This newspaper further observed that about N288.42bn of the intervention funds are in Zenith Bank.

It included N23.54bn Commercial Agriculture Credit Scheme Loan, N1.86bn Power & Aviation Intervention Fund, N125.14bn salary bailout fund, N71.53bn Excess Crude Loan Facility, N28.73bn Real Sector Support Facility and N9.13bn Non-Oil Export Stimulation Facility.

This newspaper also observed that there was about N115.09bn in GT Bank and N25.16bn in UBA as of June 30, 2023.

The new Governor of the Central Bank of Nigeria, Olayemi Cardoso, during his screening at the Senate, stated that there is a need to pull the apex bank from direct development finance interventions to refocus the priorities of the bank.

According to the new governor of the apex bank, the bank needs to move into a limited advisory role that supports economic growth rather than actively play a prominent role in the financing of these projects.

He emphasised the need to restore the apex bank’s independence and credibility by refocusing on its core mandate and ensuring a culture of compliance.

“Much has been made of past CBN forays into development financing such that the lines between monetary policy and fiscal intervention have become blurred.

“In refocusing the CBN to its core mandate, there is a need to pull the CBN back from direct development finance interventions into more limited advisory roles that support economic growth,” he said.

In 2015, the former governor of the CBN, Godwin Emefiele, stated that the bank had over the years been involved in the financing of growth-enhancing programmes and projects of the Federal Government.

He stated that these involvements are incidental to the bank’s core mandates and part of its development and corporate social responsibilities, to accelerate growth and development of the country’s economy.

As of October 2022, about N9tn had been released as intervention funds by the apex bank.

The bank had said that about N3.7tn had been repaid by beneficiaries while over N5tn was not yet due for recovery.

The PUNCH observed that the agricultural sector has been the major beneficiary of the intervention funds, especially through the Anchor Borrower Fund and the Commercial Agriculture Credit Scheme.

About nine banks have at least N208.33bn undisbursed funds from the CBN for the Anchor Borrower Fund and the Commercial Agriculture Credit Scheme at little interest rates.

According to the first half financial statements released to the Nigerian Exchange Limited, three of the banks; Guaranty Trust Holding Company, Wema Bank and Sterling Financial Holdings had N114.10bn of the Anchor Borrowers Fund still in their coffers.

While seven banks including GTCO, Wema Bank, Sterling Financial Holdings, United Bank for Africa, Access Holdings, Zenith Bank Plc, Fidelity Bank, Stanbic IBTC Holdings and FCMB Group combined had N94.23bn of the Commercial Agriculture Credit Scheme funds in their books not disbursed as of the end of June.

The Anchor Borrowers’ Programme was established by the CBN in line with its developmental function. It was launched by former president Muhammadu Buhari on November 17, 2015, to create a link between anchor companies involved in the processing and smallholder farmers of key agricultural commodities.

The CACS is a scheme powered by the CBN in collaboration with the Federal Government represented by the Federal Ministry of Agriculture and Rural Development with the aim of providing concessionary funding for agriculture so as to promote commercial agricultural enterprises in Nigeria.

So far, there have been controversies about the beneficiaries and repayments of the ABP fund.

Stakeholders in the economy also have to deal with a high cost of financing, which has been affecting production and expansion plans in some sectors of the economy.

According to the financial reports of GTCO, the lender still had N75.35bn of the Anchor Borrowers Fund as of June 2023 (December 2022: N78.42bn), which shows that only N3.06bn had been disbursed in six months. The bank revealed that the tenor of the facility depends on the gestation period of the targeted commodity but will not exceed two years. The facility is disbursed at an all-inclusive interest rate of nine per cent.

For the CACS intervention fund, GTCO still had N3.29bn (December 2022: N5.05bn. The facility is for a period of seven years at two per cent annual cost to the company. The maximum interest rate to the borrowers under the scheme is nine per cent annually inclusive of all charges.

Sterling Financial Holdings had N37.90bn of the ABP funds in its coffers which reflected a N12bn increase in six months showing that it disbursed less of the loans to the targeted users. For the CACS, Sterling Holdco had N33.40bn, indicating another increase over N31.59bn recorded as of December 2023.

Zenith Bank still had N 23.53bn of the CACS intervention fund in its coffers. Compared to N32.89bn it had as of December, the bank has disbursed N9.35bn between January and June 2023.

In its report, Stanbic IBTC said that it obtained an interest-free loan from the CBN for the purpose of on-lending to customers under the CACS. The tenor is also based on an agreement with individual beneficiary customers. It had N 6.78bn as of June 2023(December 2022: N8.99bn) showing N2.21bn was disbursed in the first half of the year.

Access Bank said, “The amount of N3.55bn represents the outstanding balance on the on-lending facility granted to the Bank by Central Bank of Nigeria in collaboration with the Federal Government of Nigeria in respect of Commercial Agriculture Credit Scheme established by both CBN and the FGN for promoting commercial agricultural enterprises in Nigeria.

“The facility is for a maximum year of seven years at a zero per cent interest rate to the Bank. The Bank did not provide security for this facility. From this creditor, the bank has nil undrawn balance as at 30 June 2023.”

Wema Bank in its half-year report said that it had N848.23m of the AB Fund in its coffers from N1.96bn signifying that it had disbursed N846.26bn between January and June 2023.

Fidelity Bank reported N7.27bn in yet-to-be disbursed CACS funds as of June 2023, a decrease compared to N8.08bn in 2022 and FCMB had in its till N1.82bn of the same intervention fund as of June 2023, down from N3.58bn as of December 2022, reflecting that N1.76bn had been disbursed.

The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, told The PUNCH on Sunday that it is necessary to assess the intervention funds in order to find out what went wrong and what can be done to fix it.

He said, “If you want to reform the system, you have to do a study of what is on the ground. For the intervention fund, it is good to do an assessment. What they are doing is an assessment to know, which areas they need to improve.

“As you know, the default rate is also very high. That is another reason it is important to do a proper assessment to know what went wrong and what can be improved.”

Also speaking, a development economist, Dr Aliyu Ilias, stressed that the apex bank ought not to be involved in handling intervention funds.

He also criticised the structure of the Anchor Borrowers’ Programme, which has been a major point of controversy.

He said, “First and foremost, CBN should not be involved in any intervention fund. We have Ministry of Agriculture and the Bank of Industry. So, any intervention that want to come should go through these agencies.

“If you look at Anchor Borrower, I think the structure is not very good. I think there is policy problem and we need to look at it.”

He added that it is usually not advisable to have a CBN governor with a background in banking as there tends to be a “romance” between the banks and the apex bank.

“There is no way they will not call those bank CEOs. Some people need to be called to assess the funds. Banks must have comprise the criteria or list of people to get the loans,” he noted.

(Punch)

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