AfCFTA Market Offers Nigeria $666.2bn Business Opportunities – Emefiele

The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele has revealed that companies in Nigeria stand to benefit from a market worth $666.2 billion when the African Continental Free Trade Area (AfCFTA) agreement fully comes on stream.

READ ALSO: CBN To Sanction Dealers Who Reject Old, Lower Dollar Notes

AfCFTA is an intra-African trade agreement that was adopted on March 21, 2018, to boost Africa’s trading position in the global market by strengthening Africa’s common voice and policy space in global trade negotiations, with President Muhammadu Buhari signing the agreement in 2019 at the AU summit which held in Niamey.

Emefiele, Tuesday at the Virtual 6th Export Seminar organised by Zenith Bank Plc, said the AfCFTA has a lot to offer the country if its laudable goals and objectives are fully implemented.

Speaking on the theme; “Nigeria’s Economic Prosperity: The role of Intra- Regional Trade and Non – oil Export Initiatives”, said the AfCFTA offers a lot of opportunities for the private sector in Nigeria.

“We believe that the African Continental Free Trade Agreement (AfCFTA) offer significant opportunities for the Nigerian private sector to expand into new markets, and seek new export opportunities, particularly in the area of Manufacturing, ICT, Agriculture and Financial services, given our growing advantage in these areas relative to our counterparts in other parts of Africa.

The CBN Governor noted that businesses in Nigeria should take advantage of the preferential access to $504.17 billion in goods and $162 billion in services.

“Full implementation of the AfCFTA is expected to give Nigerian firms preferential access to markets in Africa worth $504.17 billion in goods and $162 billion in services.

“I believe that we should seize this opportunity to ensure that Nigeria serves as a significant hub for international and domestic manufacturing companies seeking to serve the West, Central and East African Markets.

Emefiele also expressed delight at the young and energetic population of Nigeria.

“In addition, we have a very young energetic, technological savvy population that have been leveraging technological applications to improve service delivery in the areas of finance, logistics and agriculture to consumers in Nigeria.

“I believe the AFCFTA will provide an opportunity for these young talented Nigerians to expand their services across the African region. Developing trade portals that could support instant sales of goods manufactured in Nigeria to consumers in other parts of Africa is one aspect that can help to support the creation of jobs in Nigeria and improve foreign exchange inflows for the country.”

According to Emefiele, the apex bank has earmarked steps to boost the productive capacity of businesses across the country.

“Although Nigeria stands to gain from expanded trade, I believe it is also important that we pay attention to the cost that expanded trade through the AFCFTA could have on local businesses and communities.

“Smuggling of goods produced in non-African countries into Nigeria, and abuse of rules of origin have often resulted in significant job losses and displacements of workers in key sectors of our economy such as agriculture and manufacturing.

“It is vital that we work with the governing body of the AFCFTA in addressing these concerns, as it has profound implications on unemployment and security in Nigeria.”

In his welcome address, the Group Managing Director of Zenith Bank, Ebenezer Onyeagwu, lauded the economic diversification drive by the Federal Government, calling on all Nigerians to leverage on the non-oil sector to reduce over-dependence on the sector.


Naira Dollar Forex

CBN To Sanction Dealers Who Reject Old, Lower Dollar Notes

The Central Bank of Nigeria, CBN, has said it will sanction foreign exchange dealers that reject old and lower denominations of the dollar notes.

READ ALSO: FG to support MSMEs contribution to economy to boost development – Minister

It gave the warning on Tuesday in a circular to all Deposit Money Banks, Bureau De Change Operators and the general public signed by the Director, Currency Operations Department, CBN, Ahmed Umar, titled ‘The rejection of old, lower denomination of United States dollar by DMBs/ forex dealers’.

The circular read, “The Central Bank of Nigeria has in recent times been inundated with complaints from members of the public on the rejection of old/lower denominations of the US dollar bills by Deposit Money Banks and other authorized forex deals.

“All DMBs/authorized Forex dealers should henceforth accept both old series and lower denominations of the United States dollars that are legal tender for deposit from their customers.

“The CBN will not hesitate to sanction any DMB or other authorised forex dealers who refuse to accept old/ lower denominations of US dollar bills form their customers.

“In addition, all authorised forex dealers are advised to desist from defacing/stamping US dollar banknotes as such notes always fail authentication test during processing/sorting.”



CBN resumes $100m weekly sales for SMEs, school fees

CBN resumes $100m weekly sales for SMEs, school fees… concludes plans to resume sales to BDCs

The Central Bank of Nigeria (CBN) on Wednesday said it had resumed $100 million weekly sales for school fees and Small and Medium Enterprises (SMEs).

READ ALSO: SMEDAN To Protect Intellectual Property For MSMEs

The CBN has also made complete arrangements to resume foreign exchange sales to the BDC segment of the market for business travels, personal travels, and other designated retail uses, as soon as international flights resume.

The regulator on March 26, suspended foreign exchange sales to the Bureau De Change (BDC) operators until further notice due to the Covid-19 lockdown as requested by the operators. The suspension notwithstanding, some BDCs are still active in the market.

This is in view of the gradual easing of the COVID-19 lockdown both globally and in Nigeria.

A statement signed by Isaac Okorafor, director, corporate communications department, reads “Central Bank of Nigeria (CBN) has resumed provision of foreign exchange to all commercial banks for onward sales to parents wishing to pay schools fees and SMEs wishing to make essential imports needed to revamp economic activities across the country. In particular, the CBN is resuming the provision of over US$100 million per week for both categories”.

With these actions, the CBN reiterated that it is adequately meeting the needs of all legitimate users, and its continued capacity to do so should not be in doubt.

There is therefore no need for panic by any end-user that could necessitate recourse to illegitimate sources and spike in foreign exchange rates, the CBN said.

Given this, the Bank has ramped up its surveillance of the foreign exchange markets for speculators, smugglers and other illegal users, and will take decisive actions against anyone/institutions involved in such nefarious activities.

Reacting to CBN’ action, Aminu Gwadabe, president of Association of Bureau De Change Operators of Nigeria (ABCON) said, “Yes, it is in line as our product is cash not digital currency and our clients are travellers. In line with our scope, we engage mostly personal travelling allowance and Buisiness travelling allowance which in all scenarios demand ticket visas of our customers”.

The Naira weakened further by N5.00k as one dollar traded at N460 at the close of business on Wednesday compared with N455 traded in the morning at the black market.

The local currency lost N0.20k at the close of business as the dollar traded at N386.45k on Wednesday as against N386.25k on Tuesday at the Investors and Exporters (I&E) forex window, data from FMDQ indicated.

Naira depreciated by N2 at the retail bureaus as the dollar was trading at N467 on Wednesday from N465 quoted on Tuesday.

Gwadabe said the assurances of the apex bank and the partial return of operations in the foreign exchange market will  ensure sanity and discourage frivolous demand and panic buying which pervades the market in recent times.

He said the BDCs will return as soon as lockdown in the international airport are relaxed.



CBN Mandates Banks To Enrol For Credit Risk Management In System

In pursuit of a, sound financial system in Nigeria, the Central Bank of Nigeria, CBN, has asked all Development Financial Institutions (DFMs), Micro Finance Banks MFBs, Primary Mortgage Banks (PMBs and other Financial companies to enrol for the Credit Risk Management (CRMS).

READ ALSO: Naira appreciates at NAFEX as Nigeria’s external reserve is set to get a boost

The apex bank said the redesign CRMS would help improve the Credit Risk Management of the financial sector, thereby promoting safe and sound financial system in the country.

In a circular, FPRD/DIR/PUB/CIR/01/002, dated April 8th and released on Monday by Kelvin N. Amugo, Director Financial Policy and Regulation Department, the CBN Mandated all DFIs, MFBs, PMBs, FCs are required to report all credit facilities (principals and interest) to the CRMS and to update same on monthly basis.

“As part of its effort to promote a safe and sound financial system in Nigeria, the Central Bank of Nigeria (CBN) introduced the CRMS to improve Credit Risk Management in commercial, merchant, non- Interest banks as well as to prevent predatory borrowers from undermining the banking system.

With the successful implementation of the CRMS in deposit money banks, it has become expedient to commence the enrolment of other financial institutions (OFIS) on the CRMS platform.”

The regulator also stated that Bank verification Number (BVN) and TAX identification Number (TIN) would be needed to undertake the CRMS process.

“Accordingly, all DFIs, MFBs, PMBs, FCs are required to report all credit facilities (principals and interest) to the CRMS and to update same on monthly basis. OFIs shall note that Bank verification Number (BVN) and TAX identification Number (TIN) are the only basis for regulatory renditions.

“To ensure full compliance,  OFIs are reminded to conclude the tagging of all live credit files for all individual and non individual borrowers with BVN and TIN respectively by May 14, 2021.

According to CBN, Other financial institutions should avail themselves with regulatory guidelines, adding that stiff penalties await those who fail to comply with the directives

“Furthermore, the concern  OFIs are advised to acquaint themselves with the regulatory guidelines for the operation of the redesigned CRMS for commercial, merchant and non- interest Banks in Nigeria(February 2017) and the additional regulatory guidelines of separation 2017.



CBN advances loans to MSME at single digit

The Central Bank of Nigeria (CBN) says it will continue to provide opportunities for Micro, Small and Medium Enterprises (MSMEs) to access loans without difficulty at single-digit rate as part of efforts to entrench a vibrant economy.

READ ALSO: NNPC Signs $1.5bn PH Refinery Rehab.

Samson Isuwa, the Nasarawa State controller of the apex bank, stated this at the opening of a three-day Nasarawa Entrepreneur Boot-camp in Lafia, the state capital.

According to Samson, CBN has remained consistent in initiating loan schemes covering agriculture, the entertainment industry, small scale business owners, among others at a single-digit interest rate to achieve Federal Government’s drive to economic prosperity.

He said interest rate for small scale businesses was at the moment 7 percent, adding, however, that this would soon rise to 9 percent to address the prevailing economic challenges.

He maintained that, henceforth, CBN would insist on only genuine business owners benefitting from such loans.

He said those collecting loan without utilising for the purpose it was meant would be denied the opportunity. He described the workshop for entrepreneurs as apt and advised participants to seize the opportunity to develop business strategies that would add value to their economic status.

Nasarawa commissioner for commerce, trade and investment, Obadiah Boyi said the loan would complement the effort of the Nasarawa entrepreneurs by encouraging them with all the necessary support required for SMEs to succeed in the state.



CBN to limit intervention in the I&E FX window…

Emerging data about Nigeria’s Foreign exchange inflows into the Investors and Exporters (I&E) forex window indicate that the Central Bank (CBN) is keeping its word to reduce its intervention in the dynamics of the market.

READ MORE: $1.5bn for Port Harcourt refinery repair can build 12 world-class hospitals – Peterside

Inflows into the market dropped to six months low following significant decline by 99.3 percent in interventions by the Central Bank of Nigeria (CBN), which hitherto was a dominant player in the market.

Godwin Emefiele, the CBN governor, said at the last Monetary Policy Committee (MPC) meeting briefing that since January the CBN had not intervened in the I&E window.

The market has always operated within a band of around N409 to the dollar. At some point, it attained N412 and N413, and began to move, and that it is how it is supposed to move, he said. “The CBN job is to moderate the market in line with where we think exchange rate should be,” Emefiele had said.

Data from the FMDQ captured in a report by FSDH Research show that total foreign exchange inflow into the window decreased by 39.48 percent to $565.9 million in February 2021, compared to $935.2 million in September 2020.

The inflows comprised of Foreign Direct Investment (FDI), which fell to $7.5 million in February 2021 from $30.8 million in September 2020; Foreign Portfolio Investment (FPI) $17.9 million in February 2021 ($36.8m in September 2020), other corporate $9.3 million in February 2021 ($22.4m in September 2020), and the CBN $2.9 million in February 2021 ($434.5m in September 2020).

Others include inflows from exporters, which dropped to $175.7 million in February 2021 from ($206.8m in September 2020), individuals $2.5 million in February 2021 from ($29.4m in September 2020), and non-bank corporate, which declined from $350.1 million September 2020, to $175.5 million in February 2021.

Inflows from the CBN fell by 99.3 percent from $434.5 million in September 2020 to $2.9 million in February 2021.

Despite the positive GDP growth in the fourth quarter of 2020, inflows from FDI and FPI remain low in the first two months of 2021.

This suggests low investors’ confidence amid uncertainty relating to foreign exchange management and insecurity concerns, analysts at FSDH said.

Despite rising crude oil prices, Nigeria’s External Reserves have lost 5.7 percent of its value from January 25 to March 17, 2021, according to the report.

Challenged oil inflows due to OPEC’s cuts, weaker foreign investment inflows, high demand for foreign currency to finance imports and other needs and possible clearance of FX backlogs are factors that continue to weaken External Reserves.



CBN holds benchmark interest rate at 11.5%

The Central Bank of Nigeria (CBN) on Tuesday retained its benchmark interest rate, known as the Monetary Policy Rate (MPR), at 11.5 percent after the two-day Monetary Policy Committee (MPC) meeting in Abuja, citing inflation concerns.

READ ALSO: How to invest when inflation bites

This comes not as a surprise as analysts in the financial services sector had expected a hold following persistent uptick in inflation rate and weak growth.

Nigeria’s inflation rose to 17.33 percent in February 2021 from 16.47 percent in January 2021, according to data from the National Bureau of Statistics (NBS).

In the fourth quarter of 2020, Nigeria’s economy sluggishly recovered from a recession it slipped into in the second quarter (Q2) of 2020 – after output contracted for two consecutive quarters.

Real GDP grew by 0.11 percent in the fourth quarter of 2020, from -3.62 percent in Q3 2020, according to NBS data.

The CBN also retained the Cash Reserve Ratio (CRR) at 27.5 percent, Liquidity Ratio at 30 percent as well as the Asymmetric Corridor around the MPR at +100/-700 basis points.

Given the fact that the rise in inflation has been due to cost-push factors rather than demand pull factors, Godwin Emefiele, governor of the CBN, said the Monetary Policy Committee has placed greater weight on utilising tools that would strengthen the nation’s productive base as a nation.

Taiwo Oyedele, head of Tax and Corporate Advisory Services at PwC, had said the rising inflation would be of concern to the MPC as it does not support any expansionary policy changes. He said a contractionary policy adjustment would hurt the fragile economic growth and recovery.



CBN Denies Placing New Restrictions On Cryptocurrency.

The Governor of the Central Bank of Nigeria, (CBN), Gowin Emefiele has denied that the apex bank place new restrictions on the use of cryptocurrency noting that the recent directive was to protect the financial system and generality of Nigeria from the risk inherent in crypto-asset transactions.

READ ALSO: CBN: Digital economy to drive growth, create jobs

CBN in a directive to financial institutions barred banks and other financial institutions in the country from facilitating cryptocurrency. The bank regulator had on February 5, 2021, sent a letter to all local financial institutions to shut down all bank accounts associated with cryptocurrency trading platforms.

This directive generated uproar some quarters and economic analysts who commended the commitment towards building a digital economy.

The CBN Governor in a keynote address at the 30th Seminar for Finance Correspondents and Business Editor over the weekend explained that the directive was not new but only amplified an earlier regulation on the subject of cryptocurrency.

“The recent directive became necessary to protect the financial system and the generality of Nigerian from the risk inherent in crypto-asset transactions, which have escalated in recent time, with consequences on financial stability and implementation of monetary policy.”

He however added, ” our policy does not preclude Nigerian from harnessing the underlying technology that supports crypto transactions, which is distributed ledger, commonly referred to as a blockchain.”

Emefiele disclosed further that there are several examples where blockchain technology has been used to facilitate and improve transparency in the settlement of trade transactions.



CBN: Digital economy to drive growth, create jobs

CBN: Digital economy to drive growth, create jobs says Emefiele

To further expand the economic pie, Nigeria needs to build a solid digital economy, by focusing on digital infrastructure, especially internet connectivity, Godwin Emefiele, governor of the Central Bank of Nigeria (CBN) said on Saturday.

READ ALSO: These 5 Nigerian stocks control 80% market capitalisation

Other focus areas include digital literacy and skills, digital financial services, digital platforms, and digital entrepreneurship and innovation.

Represented by Adamu Lamtek, deputy governor, Corporates Services at a seminar for Finance Correspondents and Business Editors, held virtually in Lagos and Abuja, he said Nigeria, the biggest economy in Africa with one of the largest youth populations in the world, is well-positioned to develop a strong digital economy.

Consequently, he said there is a need to focus on accelerating improvements across five fundamental pillars of a digital economy, which are digital infrastructure, digital platforms, digital financial services, digital entrepreneurship, and digital skills.

In its effort to drive change and development, the CBN has over the last decade and a half worked to build an effective and efficient payment system.

The Payment System Vision 2020 strategy document was published in 2007 and the main objective of the strategy was to promote and entrench electronic payments, as the major channel for payment and settlement by all economic agents, away from the current dominance of cash-based transactions.

The robust regulatory framework put in place by the Bank opened up the payment system to innovation with several new players across the following licensing categories – Payment Service Banks, Payment Terminal Service Providers (PTSP’s), Payment Solution Service Providers (PSSP’s), Mobile Money Operators (MMO’s), Payment Terminal Application Developers (PTSA’s), and Agent Banking.

“A combination of these payment initiatives has immensely helped to create employment opportunities and to further our efforts at building a more financially inclusive economy,” Emefiele said.

Today a small or medium-sized enterprise in Ibadan is able to leverage digital channels to sell their products and services to a wider market beyond their immediate environment.

On cryptocurrency, Emefiele said, “let me use this medium to reiterate that the CBN did not place any new restrictions on the use of cryptocurrency in Nigeria.”

According to him, the recent directive only amplified an earlier regulation on the subject of cryptocurrency. The recent directive became necessary to protect the financial system and the generality of Nigerians from the risks inherent in crypto-asset transactions, which have escalated in recent times, with consequences on financial stability and implementation of monetary policy.

However, he said policy stand does not preclude Nigerians from harnessing the benefits of the underlying technology that supports crypto transactions, which is a distributed ledger, commonly referred to as the blockchain.

There are several examples where blockchain technology has been used to facilitate and improve transparency in the settlement of trade transactions.

“Our regulatory sandbox is available for fintech companies to explore the use of blockchain technology in areas that would be beneficial to the Nigerian economy,” the CBN governor said.

Speaking on ‘leveraging the digital economy to drive growth, job creation and sustainable development-the private sector perspective, Tope Fasua, CEO, Global Analytics Consulting Limited, said Nigeria should target double-digit growth powered by digitisation.


Savings interest

Here are banks that pay higher interest for your savings

Some Nigerian banks are paying higher interest to customers for saving their money with them, while others pay lower than regulatory approved minimum rate of 1.15 percent.

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The Central Bank of Nigeria (CBN) on August 31, 2020, slashed the minimum interest payable on savings deposited in banks across the country to 10 percent per annum of the Monetary Policy Rate (MPR).

The MPR is currently at 11.5 percent. What this means is that the banks are to pay average interest rate of 1.15 percent (10 percent of 11.5 percent) to their customers for saving with them.

The CBN on September 22, 2020, cut its benchmark interest rate by 100 basis points (bps) from 12.5 percent to 11.5 percent.

Some of tier two and three banks are paying higher interest rate on savings account, a development analysts describe as a way of attracting customer deposits.

Out of 21 deposit money banks that published their rates as at March 5, 2021, Heritage Bank pays higher interest rate on savings at an average of 4.2 percent.

It is followed by Suntrust Bank 4.1 percent, Unity Bank 1.9 percent, Ecobank 1.25 percent, Citibank and Standard Chartered Bank 1.2 percent each.

The bank with the lowest interest payment on savings account is Providus Bank Limited. It pays average rate of N0.62 percent followed by Unity Bank plc, which pays N1.07 percent to their customers.

Other banks that pay N1.15 percent interest rate on savings include FCMB, Fidelity Bank, GTBank, Globus Bank, Keystone Bank, Polaris Bank, Stanbic IBTC, Sterling Bank, Titan Trust Bank, UBA, Wema Bank, and Zenith Bank.

Customers’ reaction

Christian Ezegolo, a Nigerian businessman, does not operate a savings account because he needs money to invest in his business and could not accept what he described as peanut that banks pay as interest on deposit.

“To me as an entrepreneur, I don’t save because I need that money to run my business. It does not make economic sense to me that I will go and give bank money and it is paying me 1.1 percent and I will still go to another bank and borrow at 25 percent, it does not make sense,” he says on phone.

What analysts say

Ayodeji Ebo, head, retail investment, Chapel Hill Denham, says banks are not supposed to pay lower than the regulatory prescribed interest rate, noting customers have the option of going to a bank that can compensate them better on their savings.