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Editorial

Addressing the fraudulent acts surrounding forex exchange

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It is a goodomen for recent policy introduced by the Central Bank of Nigeria (CBN) against the transaction with foreign currencies.

The apex bank has banned the use of foreign currency-denominated collaterals for naira loans. This was contained in a circular dated April 8, 2024 and directed to all banks by CBN’s Acting Director of Banking Supervision Department, Adetona Adedeji.

The apex bank official listed two exceptions to the rule as foreign currency collateral which are Eurobonds issued by the Federal Government or guarantees of foreign banks, including Standby Letters of Credit.

“The Central Bank of Nigeria has observed the prevailing situation where bank customers use Foreign Currency (FCY) as collaterals for Naira loans,” the circular partly read.

“Consequently, the current practice of using foreign currency-denominated collaterals for Naira loans is hereby prohibited, except, where the foreign currency collateral is:Eurobonds issued by the Federal Government of Nigeria; or”Guarantees of foreign banks, including Standby Letters of Credit

“In this regard, all loans currently secured with dollar-denominated collaterals other than as mentioned above should be wound down within 90 days, failing which such such exposures shall be risk-weighted 150 percent for Capital Adequacy Ratio computation, in addition to other regulatory sanctions.”

Meanwhile, the CBN, also on Monday, announced the sales of dollars to over 1, 500 Bureau De Change (BDC) operators to meet retail market demand for eligible transactions. The apex bank said it would sell $10, 000 to each of the BDCs at the rate of N1,101/$1, a move which has been seen as part of CBN’s efforts to maintain the gain of the naira over the dollar.

The naira has appreciated against the dollar in recent weeks, gaining over 40 percent, from about N1,900/$ to about N1,200/$1 now.

The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has disclosed that the security agencies and the Economic and Financial Crimes Commission (EFCC) are currently investigating questionable foreign exchange allocations and forward contracts estimated at $2.4billion. The probe came on the heels of the forensic audit of $7billion debt reportedly inherited by the present leadership of the CBN from the previous one under Godwin Emefiele.

The Cardoso-led CBN had late last year engaged the services of Deloitte Management Consulting to unravel how the debts were incurred. Following the forensic audit report, CBN said it had provided the investigators with the relevant documents that will focus primarily on the details of the forex transactions that did not meet the standards of the regulatory agency.

Some banks’ Chief Executive Officers are expected to be invited for interrogation by the security agencies soon. It is not yet clear how long the probe will last. But the CBN said the Deloitte report revealed that a good number of the forex allocations did not meet the laid down criteria for payments, among other alleged infractions and discrepancies contained in the audit report. Let the probe of forex racketeering be transparent. It should not be used for witch-hunting.

Clearly, public confidence in the CBN went to all-time low following the ouster of the immediate past governor of the apex bank as a result of sundry allegations of abuse of office. According to the CBN governor, as of recent, all valid forex backlog amounting to $1.5billion had been cleared. Others need to be diligently verified. Undoubtedly, the credibility of the banks is very much in doubt. This makes every effort towards restoring public confidence in the banking sector very crucial. The current probe is coming after the CBN and the anti-graft agency accused the banks of series of financial malfeasance.

For instance, last month, the Chairman of EFCC, Ola Olukayode, indicted banks as being “linked to 70 per cent of the financial crimes in Nigeria.”  This is a weighty allegation that should be investigated. Speaking at the Annual Retreat and General Meeting of the Association of Chief Audit Executives of Banks, the EFCC boss, represented by the Director, Internal Audit of the commission, Mr Idowu Apajoye, claimed that the banking sector has “increasingly become a cesspool of fraudulent activities.”

He said the development has raised considerable challenges and concerns to the agency. Therefore, he calls for concerted effort of audit executives to tackle the challenges in the banking sector.

Probe of the forex racketeering in the banks is appropriate and timely. It will strengthen the regulation of the banking industry and make them comply with the extant prudential guidelines.  The banking sector is very vital in every plan to rescue the economy.

Unfortunately, the sector has witnessed fraudulent practices in recent times. Recent audit reports by the Nigeria Deposit Insurance Corporation (NDIC) have raised alarm over some infractions in the banking sector. Some of the insider abuses include outright selling of customers’ deposits or identity theft as well as unauthorised loan facility, forgery and several others.

However, those charged with the probe of forex racketeering must be patriotic in carrying out the assignment. Proper reconciliation of the banks’ accounts, with periodic checks, in accordance with accounting requirements, must be adhered to. The findings of the probe panel must be made public, and sanctions imposed on those found to have breached the relevant laws. There must be strict supervision of the banks by the apex bank. It is likely that inadequate supervision of the banks must have accounted for abuses in the sector, including the alleged forex racketeering.

While ensuring transparency in the financial services sector is part of the confidence-building process, there is a need to formulate policies that will make Nigeria’s business environment attractive to foreign investors. We advise the CBN and the federal government to meet the forex demands of the organised private sector and small-scale industrialists.

Let the CBN ensure that valid documentation of all forex allocations are kept to curb infractions such as the allocation of millions of dollars to fictitious entities, and the provisions of forex allocations without the corresponding naira value. This is one of the best ways to avoid the frequent forex racketeering.

The anti-corrupt agencies like the EFCC and ICPC are also in support by threatening to arrest and probe educational institutions that collect fees payment in dollars or other foreign currencies. It is important that stakeholders including the DSS, NFIU, should work collaboratively with the CBN to eradicate the menace surrounding forex racketeering in the country.

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Editorial

Nigeria must act now to mitigate flood disasters

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As the rainy season looms ahead, a palpable sense of concern grips the nation.The recent cautionary message from the                      Federal Government to 31 state governors  regarding the looming threat of floods from April to November serves as a wake-up call, demanding swift and concerted action from both state and federal authorities.

Presented by Minister of Water Resources and Sanitation Joseph Utsev, the 2024 Annual Flood Outlook paints a bleak picture, underscoring the urgent need for preemptive measures. It is not merely an emphasising advisory; it is a resounding call to arms.

The spectre of past flood calamities in Kano, Taraba, Lagos, and other states still haunts our collective memory.

The haunting images of devastated homes, displaced families, and shattered livelihoods serve as poignant reminders of the human toll exacted by our complacency.

It is imperative that we glean lessons from these tragedies and take proactive steps to forestall the impending catastrophe.

The warning issued by the Federal Government is crystal clear: floods are imminent, and the time to act is now.

The Nigeria Hydrological Services Agency’s classification of 148 local government areas across 29 states, including Lagos, Kano, and Delta, as high flood-risk zones emphasising the gravity of the situation.

Every moment of inaction heightens the risk to countless lives and properties. State governors, local authorities, and relevant agencies must set aside differences and collaborate effectively to implement robust flood preparedness and mitigation measures.

From infrastructure reinforcement to early warning systems and community awareness campaigns, a comprehensive approach is imperative to safeguard vulnerable communities.

As responsible stewards of our nation’s welfare, we cannot afford to be caught off guard. Let us heed the warning, unite in purpose, and proactively address this looming threat.

The cost of inaction is too grave to contemplate, and the time to act decisively is now. This is not a drill.

The minister’s revelation that 31 states face high flood risks, while all 36 states and the Federal Capital Territory will experience moderate flooding, demands immediate attention and collective action.

“The high flood-risk states are Adamawa, Akwa Ibom, Anambra, Bauchi, Bayelsa, Benue, Borno, Cross River, Delta, Ebonyi, Edo, Imo, Jigawa, Kaduna, Kano, Katsina, Kebbi, Kogi, Kwara, Lagos, Nasarawa, Niger, Ogun, Ondo, Osun, Oyo, Plateau, Rivers, Sokoto, Taraba, Yobe,” the Minister said.

We cannot afford to wait until the waters rise and lives are lost. The time to act is now. It’s imperative that federal and state governments, agencies, and local communities join forces to mitigate the impact of floods.

This requires a coordinated response, including public awareness campaigns, infrastructure upgrades, emergency preparedness plans, and investment in flood mitigation projects.

The future of our nation depends on it. Let us heed the warning and take proactive steps to build a more resilient Nigeria, where lives and properties are protected from the ravages of flooding. The clock is ticking; let us act now to avoid a catastrophe.

While 31 states face high flood risks, the remaining five states must also be proactive in their preparations. It’s not enough to simply warn residents to relocate from flood-prone areas; state governments must provide safe and conducive spaces for relocation, complete with essential services like relief materials, healthcare, and security.

This will help mitigate the trauma faced by displaced families. Citizens, too, have a critical role to play. They must be willing to relocate from their homes and comfort zones to prevent avoidable deaths and losses. The stark reality is that flood disasters are devastating, as seen in 2023 when 45 lives were lost, 171,545 persons displaced, and 22,666 homes partially damaged, with 5,358 others completely destroyed.

The economic toll was equally staggering, with a $4.6 billion bill that significantly dented Nigeria’s GDP. Let us learn from the past and take collective responsibility for flood preparedness. State and federal governments, agencies, and citizens must work together to build a more resilient nation, where lives and properties are protected from the ravages of flooding. The time to act is now.

In 2022, flooding claimed 662 citizens; 2.43 million others were displaced and 3,174 were injured nationwide, per NEMA.

The financial losses were estimated at $9.12 billion by the Federal Government, and by a United Nations agency at $7 billion. A UN report stated that food insecurity was aggravated in the country as 569,000 hectares of farmland were destroyed by the flood.

According to the then Minister of Water Resources, Suleiman Adamu, 178 LGAs in 32 states were declared “highly probable flood risk states.”

Although climate change remains a global concern, leading to flash floods, droughts, forest fires, and cyclones, the government must not make excuses.

They need to take lessons from previous floodings and replace their nonchalance with strategic actions and campaigns. They must do all they can to avoid the repetition of losses of lives and properties.

The citizens must play their part by clearing drainage in their vicinity, cultivating good waste disposal and environmentally friendly culture. To entrench this, the government must place strict surveillance and enforce stiff penalties against erring residents.

State governments should demolish structures erected on flood paths to enable rainwater to drain appropriately.

NGOs in the environmental niche should activate campaigns distilled in local languages through the media to prepare citizens for the flood.

The federal and state governments should be proactive in the deployment of ecological funds to provide guardrails against natural disasters. This must be used for pre-emptive measures like building bridges, desilting rivers, evacuating canals and drainage, and building dams and levees. The dams would help preserve excess rainfall to irrigate farmland during the dry season.

The government must fully embrace its onerous duty to safeguard lives and properties.

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Editorial

Preparing for a challenging farming season: NiMet’s forecast and the need for proactive action

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As the farming season beckons, Nigerian farmers are bracing themselves for a turbulent ride. The Nigerian Meteorological Agency’s (NiMet) forecast of a delayed and shorter rainy season has sent shockwaves across the agricultural community, threatening to upend the delicate balance of our food security.

With millions of farmers poised to plant their crops, the clock is ticking. Will our policymakers and stakeholders rise to the challenge, or will we reap a harvest of regret? According to NiMet, this year’s rainy season will commence later than usual, with the central states expecting the onset of rains around May 29 and the northern states around June 13.

Moreover, the season is predicted to end earlier than usual, between October 6 and November, in many states. This forecast raises concerns for farmers, as a shorter rainy season can lead to reduced crop yields and increased risk of drought.

To mitigate these challenges, NiMet advises planting early-maturing crop varieties at the beginning of the season. This is a wise recommendation, as it allows farmers to adapt to the predicted weather patterns and minimize potential losses.

With predictions ranging from October 6 to November, regions including Yobe, Jigawa, Sokoto, and Lagos are bracing for a shorter agricultural window. This forecast emphasised the critical importance of proactive planning and early adoption of fast-maturing crop varieties.

The essence of NiMet’s warning is clear: farmers must act swiftly to secure the necessary resources for a successful harvest. From fertilizers to seeds, the time to procure vital inputs is now, to mitigate potential setbacks and ensure a fruitful season. Traditionally, this period marks the commencement of government initiatives to facilitate the purchase and distribution of agricultural inputs. However, the silence on this front is deafening.

Instead of prioritising the long-term sustainability of agriculture, many officials seem fixated on short-term palliative measures, neglecting the imperative of future agricultural prosperity. As the countdown to the abbreviated season begins, the call to action grows louder. Farmers must seize the moment, equipping themselves for the challenges ahead, while policymakers must refocus their attention on fostering a resilient agricultural sector for generations to come.

Only through collective effort and foresight can we navigate the uncertain terrain ahead and ensure a bountiful harvest for all. As the federal government pledges to revamp the textile industry, Nigerian farmers are grappling with a more pressing concern – the exorbitant cost of fertilizers and other essential inputs. A bag of fertilizer now costs a staggering N48,000, forcing farmers to either purchase substandard products or resort to traditional alternatives, resulting in poor yields and revenue losses. The high costs of seeds, herbicides, pesticides, labour, and fuel have pushed small-holder farmers to the brink.

Despite President Bola Ahmed Tinubu’s assurances of support, including a promise to release 225,000 metric tons of fertilizers, seedlings, and other inputs in August 2023, concrete actions are yet to be seen. With food prices soaring nationwide, it is imperative that the government takes immediate steps to address the plight of farmers, who are crucial to the nation’s food security.

We urge the government to translate its promises into tangible support for farmers, including affordable access to quality inputs, to ensure a bountiful harvest and a food-secure future for Nigeria. We commend the Central Bank of Nigeria’s release of 2.15 million bags of fertilizer to the Federal Ministry of Agriculture and Food Security. However, it is alarming that there has been no update on the distribution of this vital commodity since the handover over a month ago.

Furthermore, we urge state governments to take their responsibilities in ensuring adequate input supply to farmers more seriously. We also call on the federal government to implement policies that facilitate the supply of fertilizers, seeds, and other inputs to the markets, thereby controlling rising prices.

The Presidential Fertilizer Initiative needs to be reviewed to ensure fertilizer blending plants resume production. Our farmers urgently need government support to access necessary inputs for successful cultivation. As the rains continue to falter, Nigerian farmers face an uphill battle. We urge the government to seed hope by providing essential resources – quality seeds, fertilizers, and equipment – to help them weather the storm.

Climate-resilient agriculture initiatives and weather insurance schemes will also help farmers adapt and thrive. But, there’s a greater challenge to tackle – the menace of bandits and militias terrorizing farmers, forcing them off their lands, and threatening our food security.

It’s time for decisive action! The government must act swiftly to protect our farmers, their farms, and our collective future. Let’s join forces to cultivate a brighter tomorrow, where our farmers can plant, grow, and harvest without fear. The time to act is now, for the sake of our nation’s food security and stability. Let’s sow the seeds of resilience and reap a bountiful harvest for generations to come!

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Editorial

Epileptic national grid in Nigeria: The way forward

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It is now commonplace to hear about the collapse of the national grid in Nigeria. In short, the news is now a periodic ritual. And for a country like Nigeria with all its potentials to be galloping with power in the name of national grid collapse is to say the least pathetic. Countries within our neighborhood we often refer to as smaller nations have since left us behind in terms of steady power supply.

Records have it that Nigeria has recorded about 140 national grid collapses since 2013 when the National Electricity Power Authority (NEPA) was unbundled and still counting. In first quarter of 2024 alone, Nigeria has recorded two national grid collapses, one on 4/2/2024 and  the other on 28/3/2024. One may now ask,what is the real problem? The country generates 4,000MW of electricity for a population of approximately 200m people. This is a far cry! What do we think 4,000MW will do for such a gargantuan population? Only God will save us!

According to reports, the Federal Government is targeting about 30,000MW in 2030. But experts say Nigeria needs about 33,000MW of electricity supply with its current population to be comfortable. Until that is achieved, it remains a dream. Now that power has been put into the concurrent list, states should wake up and embark on power generation projects to fill the existing gap created by the big brother, the Federal Government. It is not enough for states and local governments to continue to cry wolf when actually they can do something about the problem.

What are the effects of frequent national grid collapse? When there is a power outage, companies and organisations must provide their outfits with alternative power supply. That is, diesel or petrol.  This will automatically increase the cost of production. Private companies with little or no stamina to absorb the extra cost will close shop and the economy will be impacted negatively on. Workforce will be reduced or entirely laid off. Unemployment will creep in with its attendant factors of restiveness, social vices, and outright insurgency.

The country will start grappling with insecurity and its allies. Money that would have been spent on developmental projects will now be channelled to security, just as we have now. Lack of power equally brings about lack of social amenities, such as lack of potable water, healthcare services and poor infrastructures.In a situation like this, investors will take flight and the economy will collapse. We pray that our situation in the country does not get to this stage, because that will amount to a socio-economic crisis that no nation longs to experience.

What is the way out? The reason is that wishes and prayers are not economic strategies. The remedy of course is within our reach. The operators of the power sector often complain of gas supply challenges. The question is who is holding the gas from being supplied? Are there rough curves that should be smoothened in the contractual agreements? Who is responsible for tidying up such spots? It is a matter of putting the round peg in a round hole and the results will be natural.

There must also be commitment, patriotism on the part of the supervising agencies. Enough political will must be generated to drive these processes. This, of course, boils down to good leadership. And we strongly believe that the Renewed Hope Agenda of the President Ahmed Bola Tinubu-led Federal government is out to provide that. So there is nothing stopping us from achieving any goal we set for ourselves.

Another cause of national grid collapse is poor transmission. Others are poor infrastructures, vandalism, and liquidity crisis. These problems are not insurmountable.  All hands must therefore be on deck to achieve this.

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