Money market
CBN declares $2.4bn of FX backlog invalid after forensic audit
…Justifies relocation of departments, says headquarters currently overpopulated
By Sodiq Adelakun
In a recent development, the Governor of the Central Bank of Nigeria, Yemi Cardoso, announced on Arise Television that approximately $2.4 billion of the foreign exchange backlog reported as federal government liabilities is not eligible for settlement.
This revelation came to light following a comprehensive forensic audit conducted by Deloitte Management Consultant.
The initial figure of $7 billion in FX liabilities has been under scrutiny, leading to the discovery of several discrepancies.
The audit uncovered a range of infractions, including claims from non-existent entities and unauthorised foreign exchange allocations. These findings have led to the conclusion that a significant portion of the reported liabilities is invalid.
Governor Cardoso’s statement has brought clarity to the financial situation, as the Central Bank moves to rectify the discrepancies identified in the audit.
The Nigerian government’s commitment to transparency and accountability in its financial dealings is underscored by this rigorous examination of its foreign exchange liabilities.
The Central Bank’s actions are expected to have implications for the country’s financial stability
Cardoso said, “We contracted Deloitte Management Consultant to do a forensic of all these obligations and to tell us what was valid and what was not. Of course, we were committed to ensuring that we would pay all valid transactions.
“The result that came out of this was startling in a great respect; it was quite startling. We discovered that of the roughly $7 billion, about $2.4 had issues, which we believed had no business being there – and the infractions from that range from so many things.
“For example, not having valid import documents and in some cases, even entities that did not exist and in some cases, beneficiaries and account parties that asked for FX and got more than they asked for. And those who didn’t even ask for any and got. So, there was a whole load of infractions there, which I said amounted to about $2.4 billion out of the $7 billion headline figure.”
He also said that the CBN has already settled legitimate FX requests totalling $2.3 billion, leaving an outstanding obligation of approximately $2.2 billion. The governor emphasized the bank’s determination only to honour validly constituted FX requests and to address the outstanding liabilities promptly.
The CBN Governor said, “We are not paying if you don’t qualify; they are not validly constituted requests. And of the validly constituted ones, we have settled about $2.3 billion and that applies to the airlines and a whole load of different entities spread throughout our economy – we’ve settled that already.
“And now what remains is about $2.2 billion to be settled and I am confident that we will shortly be addressing those and be able to move on and make progress.
“Now, how are we dealing with those that are not valid?/ As they were identified, we wrote to the authorsed dealers to come in and explain what the situation was and where the numbers differed. And sadly, quite frankly, I think much of those have not been disputed to our satisfaction.”
In dispelling rumours, Cardoso denied any plans by the federal government to convert domiciliary accounts into naira accounts as part of currency stabilisation efforts.
He reiterated the CBN’s commitment to resolving the outstanding FX obligations and ensuring economic stability.
In the same vein, The Governor of the Central Bank, Olayemi Cardoso, has defended the bank’s decision to relocate departments and personnel to other branches, citing the current “overpopulation” at the headquarters.
Cardoso stated that the move was a normal process for any vibrant entity like a central bank and was aimed at aligning the bank’s structure with its functions and objectives.
The redistribution of skills would also ensure a more even geographical spread of talent.
The decision to redeploy over 1,500 personnel from the headquarters to other branches has sparked outrage, but the bank maintains that it is part of a decongestion action plan to optimize the operational environment.
”This initiative aims to ensure compliance with building safety standards and enhance the efficient utilisation of our office space.”
Although the Northern Elders Forum and some other Northern groups had condemned the move, the move now being implemented reduced the HQ occupancy level to 2,733 personnel from 4,233.
According to reports, the departments relocated by the CBN include Banking Supervision, Other Financial Institutions Supervision, Consumer Protection Department, Payment System Management Department, and Financial Policy Regulations Department.
Cardodo said, “I think there’s been an attempt to sensationalise what is a normal process for any vibrant entity like a central bank. Bear in mind that as a national institution, the central bank has a presence in every state of the federation.
“A situation where a large number of technical skills are in one particular location to the detriment of others does not speak well. So this has been an attempt to realign that and to ensure that skills are moved from where there’s an overabundance to where there’s a great shortage of those skills. So that’s basically what that is about.
“And with respect to Lagos which you mentioned, from our perspective, it makes a lot of sense that the entities which we are attempting to regulate and need to be on top of that are based in Lagos and they should have the right skills from the central bank right next to them so they can adequately and effectively do their jobs.”
When asked if the CBN headquarters was above its carrying capacity, Cardoso replied in affirmation, stating, “It is overpopulated. And with what we are doing right now, we are hoping that will also help in easing the issue of overpopulation, which it is.
“And quite frankly, anybody that comes to the bank and interacts on that level will see that it is. It is overpopulated. And we’ve got to ensure that we can manage potential issues that could fall out from an overpopulated environment.”
In April 2024, the headline inflation rate rose to 33.69 percent, up from 33.20 percent in March 2024, marking an increase of 0.49 percent points according to the Nigeria Bureau of Statistics (NBS).
Comparing year-on-year data, the inflation rate in April 2024 was 11.47 percent points higher than in April 2023, where it stood at 22.22 percent. This indicates that the headline inflation rate has risen significantly over the past year.
Additionally, on a month-to-month basis, the inflation rate for April 2024 was 2.29 percent, which is 0.73 percent lower than the 3.02 percent recorded in March 2024. This suggests that the rate at which prices increased in April 2024 was slower than the rate in March 2024.
In April 2024, the food inflation rate reached 40.53 percent on a year-on-year basis, marking a substantial increase of 15.92 percentage points from the 24.61 percent recorded in April 2023. This significant rise in food inflation can be attributed to higher prices for several items including millet flour, garri, bread, prepacked wheat flour, and semovita, all of which belong to the Bread and Cereals class, as well as for yam tuber, water yam, and cocoyam and others.
For the year ending in April 2024, the average annual rate of food inflation stood at 32.74 percent, representing an increase of 9.52 percentage points over the 23.22 percent average annual rate recorded in April 2023.
Core inflation, which excludes the prices of volatile agricultural products and energy, reached 26.84 percent in April 2024 on a year-on-year basis, an increase of 6.87 percent from the 19.96 percent recorded in April 2023. The most significant price rises were observed in actual and imputed rentals for housing, motorcycle journeys, bus journeys within a city (under Passenger Transport by Road Class), consultation fees for medical doctors, X-ray photography (under Medical Services Class), and accommodation services.
On a month-on-month basis, the core inflation rate was 2.20 percent in April 2024, down from 2.54 percent in March 2024, representing a decrease of 0.34 percent. The average annual core inflation rate for the twelve months ending in April 2024 was 22.84 percent, which is 5.15 percentage points higher than the 17.70 percent recorded in April 2023.
In April 2024, the urban inflation rate on a year-on-year basis reached 36.00 percent, which is 12.61 percentage points higher than the 23.39 percent recorded in April 2023. On a month-on-month basis, the urban inflation rate for April 2024 was 2.67 percent, showing a decrease of 0.50 percentage points from the 3.17 percent seen in March 2024. The average urban inflation rate over the twelve months ending in April 2024 was 30.02 percent, marking an increase of 8.53 percentage points from the 21.50 percent reported in April 2023.
In April 2024, the rural inflation rate was 31.64 percent on a year-on-year basis, which is 10.50 percentage points higher than the 21.14 percent seen in April 2023.
On a month-on-month basis, the rural inflation rate for April 2024 was 1.92 percent, a decrease of 0.95 percentage points from the 2.87 percent recorded in March 2024. The average rural inflation rate over the twelve months ending in April 2024 was 26.38 percent, which represents an increase of 6.20 percentage points from the 20.18 percent reported in April 2023.
…Counts gains of previous edition of investment summit
By Matthew Denis, Lafia
The Governor of Nasarawa state, Engr. Abdullahi Sule has taken steps to woo investors to invest in the state at the ongoing Nasarawa Investment Summit.
Delivering his opening speech, Governor Sule disclosed that the state is expanding the existing industrial, agricultural and mining sectors towards a better economy.
He said, “What we are witnessing today will further expand our existing pathways to leverage on the industrial, agricultural and mining sectors towards enhancing inclusive and sustainable wealth creation and economic prosperity.
“It is with a sense of fulfillment and responsibility that I address you today on the occasion of the Nasarawa Investment Summit, 2024.
“I must acknowledge our most cherished investors and other development partners, who are here to be part of this auspicious occasion. I have no doubt that the coming together of these distinguished and eminent personalities will, no doubt offer us the opportunities to continue to map the future of our State economic landscape in our relentless commitment to explore business opportunities and forge investment partnerships across business endeavour.”
The Governor stressed that it is pertinent to remind you that Nasarawa State organised the first edition of the Nasarawa Investment Summit in 2022 under the theme “Diamond in the Rough: The Making of a New Investment Frontier,” aimed at ushering investment and showcasing our mineral resources to potential investors.
“I am happy to state that the outcome of the Summit informed the influx of investors into the State Who are variously harnessing our God-given endowment.
“Interestingly, the recently commissioned Avatar New Energy Materials Company Limited in Nasarawa State performed by Mr. President, the ASGARD Mining and Processing Plant, Karu, the Nasarawa Technology Village Project in Karu, as well as other numerous investments being carried out in the State were all informed by the outcome of the Summit conducted in 2022.
“It is also heartwarming to state that the Federal Government commissioned the spud-in of the Ebenyi-A Oil Well in Obi Local Government Area of the State. The discovery of Oil and Gas and its subsequent exploration and exploitation will further boost the economic prosperity of our dear country and put Nasarawa State among the comity of Oil producing States.
“I, therefore, call on the investors on Oil and Gas to take advantage of the exploration activities to begin to invest in the sector for the benefit of the society.”
“To ensure full utilisation of our potentials, we have pledged to sustain the Investment Summit in order to further showcase other solid mineral resources which are yet to be identified by interested investors. This is why the theme of this year’s Summit is deliberately coined as ‘The Industrial Renaissance,’ having built some of the key fundamentals required to drive our industrial agenda and present other minerals to our potential investors.”
He explained that the staging of the 2024 Nasarawa Investment Summit,which we are witnessing today will further expand our existing pathways to leverage on the industrial, agricultural and mining sectors towards enhancing inclusive and sustainable wealth creation and economic prosperity.
“It is pertinent to point out that, as a State, we have been deliberate in stimulating our economy, building human capacities, creating wealth and generate employment to our people. It is for this reason that we have adopted our policy document christened ‘Nasarawa Economic Development Strategy (NEDS)’ as a driving force towards the initiation and implementation of various programmes and policies which we have achieved so far.
“I must acknowledge that with the assemblage of the experienced and versatile resource persons to engage the participants on the topics earmarked for discussion, I believe that the outcome of this Summit will go a long way towards actualizing our dream of industrialising Nasarawa State and position it as a leading champion.”
While applauding President Bola Ahmed Tinubu for his sustained effort in driving the Nigeria economy to prosperity, he said, “I assure Mr. President of our unalloyed loyalty and continued support in order to take our country to greater heights.”
“Let me as always, call on our development partners to continue to invest in Nasarawa State with the view to open the frontiers of economic prosperity for the benefit of all. Indeed, Nasarawa means business.”
The Central Bank of Nigeria (CBN) has activated plans to double foreign-currency remittance flows through formal channels by granting 14 new International Money Transfer Operators (IMTOs) Approval-in-Principle (AIP).
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