Just In: Tinubu Nominates Olayemi Cardoso New CBN Gov; Announces 4 Dep Govs

In a momentous development, President Bola Tinubu has put forth the name of Dr. Olayemi Cardoso as his nominee for the position of Governor of the Central Bank of Nigeria (CBN). If confirmed by the Senate, Dr. Cardoso will undertake a five-year term in this pivotal role. This nomination adheres to the stipulations of Section 8 (1) of the CBN Act, 2007, which empowers the President of the Federal Republic of Nigeria to appoint the CBN Governor along with four Deputy Governors. Concurrent with the nomination of Dr. Cardoso, President Tinubu has also granted approval to the nominations of Mrs. Emem Nnana Usoro, Mr. Muhammad Sani Abdullahi Dattijo, Mr. Philip Ikeazor, and Dr. Bala M. Bello as Deputy Governors of the CBN, all slated for five-year terms, pending Senate confirmation. The President also impressed upon the nominees the critical importance of initiating substantive reforms within the apex bank. These reforms are designed to instil confidence not only among the Nigerian populace but also among international partners as Nigeria continues its journey of economic restructuring. The Senate confirmation process will play a pivotal role in shaping the leadership of the CBN for the foreseeable future. It marks a significant step in the evolution of Nigeria’s economic policies and financial stability. Dr. Olayemi Cardoso, if confirmed, will shoulder the responsibility of overseeing monetary policy and financial regulation in Nigeria, which includes managing inflation, exchange rates, and fostering economic growth. The President’s nominations and the subsequent Senate confirmation proceedings underscore the commitment of the Nigerian government to ensuring a robust and effective financial and monetary system. The new leadership at the CBN will play a crucial role in shaping Nigeria’s economic trajectory in the coming years, making these appointments a focal point of interest and discussion in both domestic and international financial circles.

Banks secured ₦12trn in borrowings over 8 months -CBN

Central Bank of Nigeria (CBN) data indicates that between January and August of the current year, commercial and merchant banks accessed a total of ₦12.46 trillion in borrowings. This data underscores an escalating dependence on the regulatory body for liquidity. Comparatively, this amount signifies a 79% Year-on-Year surge in borrowing when contrasted with the ₦6.96 trillion recorded during the same period in 2022. The increased reliance on borrowing was mainly triggered by the CBN’s new naira note policy, which led to a cash crunch in the economy, impacting the initial months of the year. Banks interact with the CBN through two avenues: the Standing Lending Facility (SLF) for liquidity access and the Standing Deposit Facility (SDF) for cash deposits. The growing trend of banks seeking liquidity from the SLF mirrors the expanding currency outside banks and currency in circulation (CIC) in the economy. In the initial five months of 2023, borrowing from the CBN surged to ₦7.5 trillion, marking a remarkable 276% increase from the ₦1.99 trillion recorded in the same period of 2022. This upward trajectory continued into the first half of the year (H1), reaching ₦10.25 trillion, a 138% Year-on-Year surge from the ₦4.3 trillion borrowed in H1 2022. A detailed monthly breakdown of the 2023 borrowing figures reveals that ₦528.16 billion was accessed by banks in January. The following month, February 2023, saw the figure slightly decrease to ₦453.7 billion. March 2023 experienced a substantial spike of 776.22%, soaring to ₦3.98 trillion. April 2023 witnessed banks borrowing ₦4.47 trillion from the CBN. Subsequent months reflected borrowing amounts as follows: ₦590.29 billion in May, ₦235.06 billion in June, ₦908.43 billion in July, and ₦1.3 trillion in August.

CBN opens FX price verification system portal

*Vows to sanction infractors   In a bid to address the constraints that has bedeviled the foreign exchange market, the Central Bank of Nigeria has introduced a foreign exchange price verification system, specifically for importers to access forex. The portal is scheduled to begin on August 31, 2023. The CBN’s Trade and Exchange Department said in statement that the price verification report from the portal is now mandatory for all ‘Form M’ requests. “Following the successful conduct of the pilot run and various trainings held with all the banks, the Central Bank of Nigeria hereby announces the Go- Live of the Price Verification System (PVS),” the statement reads. “All applications for Forms M shall be accompanied by a valid price verification report generated from the price verification portal. “For the avoidance of doubt, by this circular, the price verification report has become a mandatory trade document precedent to the completion of a Form M,” the statement said. The Apex Bank insisted that it would not fail to sanction any case of infraction. “Please, ensure compliance,” the Bank said.

Allow us access banks’ autonomous window, BDCs appeal to CBN

President of the Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadebe has urged the Central Bank of Nigeria (CBN) to immediately leverage the BDCs by allowing them access banks’ autonomous window and agency of international money transfer operators. This, he said, will allow them to provide liquidity in the retail end of the foreign exchange market and help stop the free fall of the Naira occasioned by forex scarcity in the country. Gwadebe also urged the CBN to reinstate its 2015 policy guidelines which allow the BDCs to effectively provide liquidity in the retail end of the market through the forex windows. The 2015 policy guidelines allow the BDC operators to access foreign exchange from the autonomous window of the commercial banks as well as act as agents for diaspora remittances. Gwadebe in his statement said BDCs are effective tools of the transmission mechanism of the CBN. “I quickly want to advise the apex bank to leverage on the BDCs and allow them access banks’ autonomous window and agency of international money transfer operators. Gwadebe, who accused some of the International Money Transfer Organizations (IMTOs) of diverting diaspora remittances, said the commercial banks revealed that they don’t even see most of these remittances. “Imagine you are the IMTO and then you are the one that will pay the beneficiary the naira, invariably, then I as well just give you the naira without paying you the dollar.’’ “Even the banks have been saying that they are not seeing the diaspora remittances that the fintechs have taken over. We had a meeting with the banks where we even tried to bring up the issue of diaspora remittances so that we can harness it and bring liquidity, but they said they don’t see it. That’s the truth of the matter, a lot of unlicensed online firms are in the process.’’ The black market rate fell to as low as N950/$1 last week, opening up about N200 disparity with the I&E window as demand continued to outstrip supply. Meanwhile, the official rate averaged N765/$1.

CBN resumes OMO on system liquidity

The Central Bank of Nigeria (CBN) is set to suck in some liquidity from the system as it last week resumed the Open Market Operation (OMO). The immediate result was system liquidity slumping 51.8 percent week-on-week (W/w) to N33.8 billion. Analysts at Afrinvest attest that the reduction was a result of the auctions conducted by the central bank at the OMO window and Treasury Bills (T-Bills) front. “Nonetheless, OPR and Overnight (OVN) rates closed the week lower at 2.0 percent and 2.8 percent respectively from 5.8 percent and 6.8 percent”, said analysts at Afrinvest. At the bond market, the bearish sentiment in the domestic bonds market extended last week, as average yield across tenors rose 21 basis points (bps) w/w to 13.3 per cent. The most selloffs were seen on short-term bonds as the average yield increased 51bps w/w. Similarly, the average yield on the mid-and long-term bonds advanced 21bps and 13bps w/w, respectively. The domestic equities market sustained weekly gains, with the All Share Index (ASI) going up 0.2 per cent w/w to close at 65,325.37 points. Consequently, market capitalisation increased N92.7 billion to N35.6 trillion, while Year-To-Date (YTD) return grew to 27.5 per cent (previously 27.2 per cent). Activity level faltered as average volume and value traded declined by 32.4 per cent and 15.3 per cent w/w to 348.2 million units and N5.0billion respectively. Brent crude oil saw an uptick of 0.8 per cent w/w, to reach $86.88/bbl. This momentum was despite renewed economic concerns in China and a large inventory buildup in the US. Meanwhile, Nigeria’s foreign reserves plunged 0.2 per cent w/w, reaching $33.9 billion as of August 10th, 2023… On the global scene, last week was marked by the absence of substantial positive catalysts, the MSCI World Index experienced a 0.8 per cent w/w decline. In the US, the S&P 500 and NASDAQ indices fell 0.4 per cent and 2.0 per cent w/w respectively. Analysts at Afrinvest said the drop was influenced by pressure on bank shares, triggered by Moody’s decision to downgrade the credit ratings of 10 small- to mid-sized banks.

7 years after, CBN publishes consolidated financial statements

The financial statement comes two weeks after ex-CEO of Financial Reporting Council of Nigeria’s Jim Obazee was appointed by President Bola Tinubu as special investigator to look into the books of the Apex Bank.Godwin Emefiele was suspended by President Tinubu with Folashodun Shonubi appointed as acting Governor.  After a seven-year hiatus, the Central Bank of Nigeria (CBN) has published its financial report for the year ended December 31, 2022. After a seven-year hiatus, the Central Bank of Nigeria (CBN) has broken its silence, revealing consolidated financial statements for the fiscal year ending on December 31, 2022. This marks the first financial report published by the CBN since 2015. The long-awaited financial statement emerges in the wake of recent developments, which is notably as former CEO of the Financial Reporting Council of Nigeria, Jim Obazee’s assumption of the role of special investigator, appointed by President Bola Tinubu. Obazee’s task is to meticulously examine the financial records of the CBN. This move follows the suspension of Godwin Emefiele, with Folashodun Shonubi stepping in as the acting Governor. Spanning the years 2016 to 2022, the Consolidated Financial Statements have finally seen the light of day. These statements disclose a net profit of N65.63 billion for this period. Furthermore, the CBN extended a substantial N23.18 trillion loan to the Federal Government through the Ways and Means mechanism. Within the same timeframe, the bank’s group performance has been impressive, showcasing a commendable profit of N103.85 billion during the identical period. “The financial results for the year demonstrate a substantial achievement. Both the group and the bank independently reported profits of N103,854 million and N65,626 million, respectively. (Comparatively, the figures for 2021 were N75,125 million and N31,044 million),” the official report articulates. The stipulations of the Fiscal Responsibility Act 2011 dictate that 20 percent of the bank’s net income will be allocated to retained earnings. The remaining balance will be disbursed to the federal government of Nigeria. In compliance with the CBN Act 2007, the bank’s annual report should be released within a span of two months following the closure of each fiscal year. “The mandate states that the Bank shall provide a certified copy of its annual accounts, audited by a qualified Auditor, to both the National Assembly and the President within this stipulated time frame,” the report highlights. Delving into the expenses, the CBN incurred a total of N888.3 billion in operating costs. A meticulous breakdown discloses that N346.2 billion resulted from foreign exchange revaluation losses. Additionally, N155.5 billion was expended on rebate allowances from the RT 200 and Naira4Dollar initiatives. These policies were strategically crafted to attract foreign exchange inflows. “Rebate expenses encompass the financial outlay associated with the RT200 and Naira 4 Dollar schemes. These initiatives were introduced by the Bank to amplify foreign currency inflow, diversify the channels of FX inflow, elevate non-oil exports, ensure the stability and longevity of FX inflows, and provide support for companies oriented towards exports, facilitating their expansion of export activities and capabilities,” elucidates the comprehensive report.

Naira falls record all-time low of N900 at parallel market

The naira plunged to a record low of N900/$1 on the parallel market on Tuesday, as demand for foreign currency outstripped supply with traders quoting the exchange rate as high as N900/$1 for “inflows” and N895/$1 for cash trades. The peer-to-peer market, where cryptocurrency traders exchange forex, also saw the exchange rate soar above N900/$1. Meanwhile, in the official Investor and Exporter Window, the exchange rate closed at N774.78/$1 while the NAFEX rate was N776. The official market also faces supply constraints, with daily turnover averaging $80 million since July. Forex traders attributed the depreciation of the naira to supply constraints saying there were more buyers than sellers in the market and that the situation was unlikely to improve anytime soon. When asked about the source of the increased demand, traders mentioned a diverse set of buyers, including importers, foreign travellers, and speculators. There are concerns among some traders that the state of depreciation is unlikely to improve as demand continues to rise unchecked. Analysts explained that there was a huge backlog of unmet forex demand in the official market, estimated at $8-10 billion. Some of this demand also spills over to the parallel market, as buyers struggle to find enough supply to meet their needs in the official market. The exchange rate between the naira and dollar has weakened by 16 per cent since the reunification of the exchange rate windows. This compares to a depreciation of 2.5 per cent between January 1 and June 14th. The exchange rate weakened by 22.9 per cent in the whole of 2022. The naira has been under pressure in the parallel market for several weeks, as the supply of forex from official sources remains inadequate. On July 1st, the beginning of the second half of the year, the exchange rate in the parallel market was around N772/$1. However, a surge in demand from various segments of the economy, such as importers, foreign travelers and speculators, has triggered exchange rate volatility.

Tinubu employs special investigator to probe Emefiele, CBN’s activities

President Bola Tinubu has taken a significant step in the fight against corruption by appointing Jim Obazee as a Special Investigator. Mr. Obazee’s primary task is to conduct a thorough investigation into the activities of the Central Bank of Nigeria and other Related Entities. This decision, as stated in a letter dated 28 July, is firmly grounded in Section 15(5) of the Constitution of the Federal Republic of Nigeria (as amended), underscoring the administration’s commitment to combating corruption. The appointment of Mr. Obazee is already in effect, and he will be reporting directly to President Tinubu. The specific terms of his engagement as a special investigator will be communicated to him in due course, according to the letter signed by the president. It is worth noting that Mr. Obazee brings significant expertise to this role, having previously served as the chief executive officer of the Financial Reporting Council of Nigeria (FRCN). Tinubu also requested regular updates from Mr. Obazee on the progress of the assignment. In the same letter, he directed Mr. Obazee’s attention to his earlier directive to suspend the CBN governor, Godwin Emefiele, on 9 June. This move indicates a keen interest in ensuring a comprehensive investigation into the matter. Regarding the suspended CBN governor, there have been subsequent developments. After being suspended by Mr. Tinubu, Godwin Emefiele was arrested at his Lagos residence by operatives of the State Security Service (SSS). He was subsequently transported to Abuja for further proceedings. The SSS is prosecuting him for allegedly possessing an unregistered firearm. However, last week, the Federal High Court in Abuja granted him bail. Despite being granted bail by the court, Mr. Emefiele was re-arrested by the SSS on the court premises, leading to a confrontation between SSS officers and personnel from the Nigerian Correctional Centre, who attempted to take him into their custody. The reason for Mr. Emefiele’s continued detention has not been publicly disclosed by the secret service. This ongoing situation has sparked considerable interest and concern, and the appointment of Jim Obazee as Special Investigator is expected to shed light on the matter. With his expertise and the mandate given by President Tinubu, the investigation aims to bring transparency and accountability to the activities of the Central Bank of Nigeria and associated entities.

Nigeria’s forex inflow grows by 4% to $17.6bn –CBN

Nigeria’s total forex inflow into the economy increased by 4% quarter-by-quarter (q/q) to $17.6 billion. According to the latest Quarterly Statistical Bulletin (QSB) of the Central Bank of Nigeria (CBN), the key driver of the rise in forex inflow in Q4 relative to the previous quarter was forex revenues from autonomous sources, which climbed by 18 percent q/q to $11.4 billion. In contrast, forex inflow through the CBN, which accounted for about 35 percent of the total forex inflow, decreased by -15 percent q/q to $6.2 billion. However, on a year-to-year (y/y) basis, forex inflow into the economy declined by -15 percent y/y to $17.6 billion in Q4’22. Based on the data, the total outbound flow of forex (outflow) from the Nigerian economy declined by -9 percent q/q and -27 percent y/y to $9.1 billion during the quarter. The data, taken together, imply a net forex inflow of $8.5 billion in Q4‘22. This compares favourably with $7.0 billion and $8.3 billion in Q3‘22 and Q4’21, respectively. The outflow of forex through the CBN decreased by -12 per cent q/q to $7.5 billion. This accounted for 83 percent of total forex outflows in Q4’22. The forex outflows from the CBN largely constitute payments made to service external debts and third-party transfers for government ministries, departments and agencies (MDAs). The combination of total forex flows (inflow and outflow) through the CBN resulted in a net outflow of $1.3 billion. The net outflow position largely mirrors the increased demand pressure on Nigeria’s gross official reserves, which has maintained a downward trend in the past months. Autonomous outflow of forex increased by 11 per cent q/q to $1.5 billion during the quarter. Combined, autonomous forex flows through the economy resulted in a net inflow of $9.8 billion. On an aggregate basis, the total forex inflow into the Nigerian economy fell by -23 per cent y/y to $73.0 billion in financial year of 2023 (FY’22), while the total forex outflow decreased by 2 per cent y/y to $41.0 billion. This resulted in a net forex inflow of $31.4 billion in 2022. It is significantly lower than the $52.7 billion recorded the previous year. “We continue to advocate for effective monetary and fiscal policies toward attracting foreign direct and portfolio investments into the economy,” CBN said.

CBN debunks BVN expiration reports

The Central Bank of Nigeria (CBN) has debunked reports that the Bank Verification Number (BVN) issued by the Bank in Nigeria has a ten-year lifespan. Nigerian Anchor reports that the CBN, in collaboration with the Nigeria Inter-Bank Settlement System (NIBSS), issued the BVN. According to a press release issued by the Ag. Director, Corporate Communications, Isa AbdulMumin PhD, “the BVN remains for life.” It urged bank customers in the country to continue using their unique identifiers as they last their entire lifetime “The attention of the Central Bank of Nigeria (CBN) has been drawn to reports suggesting that the Bank Verification Number (BVN) issued by the Bank, in collaboration with the Nigeria Inter-Bank Settlement System (NIBSS), expires after a ten-year period. “Contrary to these claims, we wish to clarify that the BVN issued in Nigeria has no expiry date. Once a customer’s biometrics have been captured and enrolled in the database of NIBSS, the BVN remains for life. However, the Regulatory Framework for BVN issued by the CBN in 2021 stipulates that customers can only change their records due to certain conditions spelt out in the document and after being cleared by relevant authorities. “Therefore, we urge bank customers in the country, especially those whose biometrics have been captured by the system, to continue using their unique identifiers as they last their entire lifetime. “Be guided accordingly,” the statement read. The BVN is an 11-digit number that is unique to each individual, but the same across all bank institutions for the same individual. To own and operate a banking account in Nigeria, you must first have a bank verification number.