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Money market

CBN’s foreign reserves decline by $2.2bn



Nigeria’s foreign reserves have fallen by $2.202 billion to $38.318 billion as of September 29, 2022, from $40.520 billion as of December 31, 2021. This is a 5.42% decrease in foreign reserves.

Despite rising oil prices this year, Nigeria’s foreign exchange reserves have been depleted by billions of dollars. The country’s reserves fell by $706 million last month, down from $39.024 billion on September 1, 2022.

Furthermore, the Nigerian economy is suffering from a lack of foreign exchange as currency traders continue to complain about limited forex liquidity, forcing the local currency to decline more in the FX market. This forex crisis is present despite the central’s bank’s intervention in the forex market.

Nonetheless, the exchange rate at the official window has been relatively stable but mostly inaccessible to most Nigerians. The exchange rate at the investors and exporters window trades around N437.03/$1, while the black market rate is around N735/$/  at the time of writing.

The apex bank would continue its  intervention policy with the hope that the oil price surge would boost the reserves. This was revealed by the CBN governor, Godwin Emefiele, as he briefed the media following the end of the monetary policy committee meeting.

He said, “The Committee noted the marginal increase of 0.39% in the level of external reserves to US$38.46 billion at end-August 2022 from US$38.31 billion at end-July 2022 despite continued demand pressure. With crude oil price forecast to continue to moderate in the short to medium term, members urged the Bank not to relent on the various policies put in place to support non-oil exports to shore up external reserves.”

Money market

Naira continues to weaken as black market exchange rate reaches N1165/$1



By Sodiq Adelakun

In the latest developments in the foreign exchange market, the black market exchange rate for the Dollar to Naira, also known as the parallel market or Aboki fx, has been reported.

According to sources from Bureau De Change (BDC) yesterday, players in the Lagos Parallel Market are purchasing a dollar for N1162 and selling it at N1165.

It is important to note that the Central Bank of Nigeria (CBN) does not officially recognise the parallel market and advises individuals engaging in Forex transactions to approach their respective banks.

The CBN’s official exchange rate for the Dollar to Naira stands at a buying rate of 952 and a selling rate of 953.

However, it is crucial to keep in mind that these rates may vary based on market dynamics and individual transactions.

Therefore, individuals are advised to check with their banks for the most accurate and up-to-date rates. Several factors influence foreign exchange rates, including inflation rates, interest rates, government debt levels, speculative activities, and conditions of trade.

Inflation plays a significant role in determining black market exchange rates, and stabilising the Nigerian economy and controlling inflation can contribute to the strengthening of the Naira against the Dollar.

Additionally, changes in interest rates can impact the economy and lead to a depreciation of the Naira. National debt levels also impact investor confidence and fund influx, which can favor the Naira in the exchange market.

Speculative activities and conditions of trade, such as trade deficits and sourcing products from various countries, also play a role in the exchange rate dynamics.

Meanwhile, individuals and businesses involved in foreign exchange transactions should stay informed about these factors and consult with their banks for the most accurate rates.

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Money market

UBA pledges $6bn to support SMEs in AfCFTA trade deal



United Bank for Africa (UBA), one of Nigeria’s leading lenders, has announced that it has signed a Memorandum of Understanding (MoU) worth $6 billion with the African Continental Free Trade Area (AfCFTA) secretariat.

The agreement aims to provide funding for Small and Medium Enterprises (SMEs) in order to help them take advantage of the opportunities presented by the AfCFTA.

The Head of SME Banking at UBA, Babatunde Ajayi, made this announcement during the Nigerian Canadian Business Association Business 2023 Roundtable, which took place in Lagos.

The roundtable, themed “Enabling Growth by Unlocking Access to Capital, Technology, And Markets,” was the second of its kind.

During a panel session at the event, Ajayi expressed concern about the low level of intra-African trade, which currently stands at less than 20 percent. In comparison, other continents have seen higher levels of trade between countries.

UBA’s partnership with the AfCFTA secretariat is expected to address this issue by providing financial support to SMEs. By unlocking access to capital, technology, and markets, UBA aims to empower these businesses and enable them to participate more actively in regional trade.

The AfCFTA, which came into effect on January 1, 2021, is a landmark agreement that aims to create a single market for goods and services across the African continent.

UBA’s commitment to supporting SMEs aligns with the broader goal of the AfCFTA, which seeks to promote inclusive and sustainable economic development across Africa.

Through this partnership, UBA aims to play a significant role in driving the growth and success of SMEs in Nigeria and beyond.

He said, “I’m the one driving the newly signed $6bn in partnership with the AfCFTA to fund SMEs across Africa. We are focusing on four sectors – Agro-processing, Automotive, Pharmaceuticals and Transport and Logistics.

“Across Africa, what we found is that these sectors have the highest potential for import substitution and those are the sectors we can easily make huge gains within Africa.”

On his part, the Director of Trade Promotion at the Lagos Chamber of Commerce and Industry, Sunny Omeiza said energy, access to finance and multiple taxation have continued to constitute an albatross for SMEs.

He added that the high cost of production in Nigeria had made the prices of commodities produced by Nigerian SMEs not competitive with the prices of products imported from other countries.

In her welcome address, the Chairperson of the NCBA, Ebi Obaro noted that the three pillars of access to capital, technology, and markets provide essential guidance for SMEs navigating the intricacies of the global economy.

She said, “Technology is drastically changing the future of business and holds a lot of potential for small and medium-sized enterprises. Our goal is to explore the many ways in which we can harness technology to improve efficiency and productivity in businesses in both Nigeria and Canada.”

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Money market

CBN to freeze bank accounts without BVN, NIN from March 2024



By Sodiq Adelakun

Starting from March 1, 2024, individuals holding Tier-1 bank accounts and wallets in Nigeria will be required to have either the Bank Verification Number (BVN) or National Identity Number (NIN), or both.

This announcement was made by the Central Bank of Nigeria (CBN) on Friday, emphasising the importance of these identification numbers in the banking sector.

The CBN further warned that any funded accounts or wallets without BVN or NIN after the deadline will be placed on “Post No Debit or Credit,” and no further transactions will be permitted.

This move is aimed at promoting transparency and accountability in the banking industry, as well as reducing the risk of fraud and money laundering.

Also, the CBN has mandated that all BVN or NIN attached to and/or associated with all accounts or wallets must be electronically revalidated by January 31, 2024.

The implementation of this policy is expected to have a significant impact on the banking sector, as it will encourage more Nigerians to obtain their BVN or NIN and promote financial inclusion. It will also help to strengthen the country’s financial system and improve the overall economy.

The apex bank addressed to all commercial, merchant, non-interest and payment service banks; as well as Other Financial Institutions (OFIs), and mobile money operators, which was signed jointly by the CBN Director, Payments System Management Department, Chibuzo Efobi and Director, Financial Policy and Regulation Department, Haruna Mustafa.

The apex bank noted that henceforth, all existing customer accounts or wallets for individuals with validated BVN shall be profiled in the NIBSS Industry Customer Account Database (ICAD) immediately and within 24 hours of opening accounts/wallets.

The circular highlighted key amendments to Section 1.5.3 of the Regulatory Framework for Bank Verification Number (BVN) Operations and Watch-List for the Nigerian Banking Industry (The Guidelines).

The central bank said the development was part of its effort in promoting financial system stability by strengthening the Know Your Customer (KYC) procedures in financial institutions under its purview.

Among other requirements, the CBN said it remained mandatory for Tiers 2 and 3 accounts and wallets for Individual accounts to have BVN and NIN.

It stated that 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.

The CBN also ordered for the immediate implementation of the new policy, stressing that no new Tier-1 accounts and wallets should be opened without BVN or NIN.

Also, for all existing Tier-1 accounts/wallets without BVN or NIN, the CBN said effectively, any unfunded account/wallet shall be placed on “Post No Debit or Credit” until the new process is satisfied.

In order to ensure consistent and complete adherence to the new procedures, the CBN has instructed Executive Compliance Officers, Chief Compliance Officers, and Heads of Compliance Functions to familiarise themselves with the applicable Guidance Notes for all institutions regulated by the CBN.

The CBN will conduct a thorough audit of BVN and NIN records, and any violations discovered will be met with appropriate penalties.

Furthermore, the CBN has advised all financial institutions under its supervision to strictly comply with restrictions on Tier-1 accounts/wallets, including transaction value limits and cumulative balances.

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