CBN Archives — Page 2 of 2 — Business Bells

Business Bells

Tag: CBN

  • Reps Ask CBN To Suspend Recapitalisation Of Microfinance Banks

    Reps Ask CBN To Suspend Recapitalisation Of Microfinance Banks

     

    The House of Representatives has asked the Central Bank of Nigeria (CBN) to suspend the planned recapitalisation of microfinance banks (MFBs) until the economy stabilises and considered safe for a new deadline.

     

    This follows a motion by Saidu Abdullahi, vice-chairman of the house committee on finance, during plenary on Wednesday.

     

    In October 2018, CBN reviewed the minimum share capital requirement of the three categories of MFBs: Unit MFBs from N20 million to N200 million; state MFBs from N100 million to N1 billion; and national MFBs from N2 billion to N5 billion.

     

    The following year, it reviewed the requirement with a view to ensuring continued operations of these banks in rural, unbanked and underbanked areas of the economy.

     

    In April 2020, the apex bank revised the deadlines for MFBs recapitalisation due to the COVID–19 pandemic impacts.

     

    The CBN said: “MFBs operating in rural, unbanked and underbanked areas (Tier 2) shall meet the N35 million capital threshold by April 2021 and N50 million by April 2022.

     

    “MFBs operating in urban and high density banked areas (Tier 1) are expected to meet the N100 million capital threshold by April 2021 and N200 million by April 2022.

     

    “State MFBs shall increase their capital to N500 million by April 2021 and N1 billion by April 2022.

     

    “National MFBs are expected to meet the minimum capital of N3.5 by April 2021 and N5 billion by April 2022”.

     

    Moving the motion, Abdullahi made reference to a survey conducted by the National Association of Microfinance Banks (NAMB) which showed that out of 874 licensed MFBs, about 612 may be negatively affected by the recapitalisation policy.

     

    According to the findings, only 30 percent of MFBs would be able to meet the April 2021 deadline while 70 percent are likely to be out of business with severe consequences for the financial services industry.

     

     “In addition to the negative economic impact of the COVID–19 pandemic, Nigeria’s economy recently exited recession, the implication of which will be a significant slowdown in economic activities as the liquidity position of the government and businesses have been impacted negatively,” Abdullahi said.

     

    “In times like this, economic thinkers advocate for injection of more liquidity into the economy to stimulate economic activities, encourage spending and prevent job losses as well as support indigenous businesses.”

     

    He said the green chamber is worried about the findings, adding that if the result actualises it will aggravate unemployment, compound the challenges of insecurity, youth restiveness, poverty, apathy and hopelessness across the country.

     

    The lawmakers, therefore, mandated the committee on banking and currency to interface with CBN to find a workable solution to the challenges associated with recapitalisation of MFBs, adding that a feedback be submitted within four weeks for further legislative action.

  • CBN Injects $1.47bn Into Forex Market In One Month

    CBN Injects $1.47bn Into Forex Market In One Month

     

    The Central Bank of Nigeria injected $1.47bn into the foreign exchange segment of the market as part of its efforts to stabilise the naira in January.

     

    According to figures from the CBN’s January report on its foreign exchange market developments, this was a decrease of 47.4 per cent and 64.0 per cent from the level in the preceding month and corresponding period of 2020.

     

    Part of the report read, “Total foreign exchange sales to authorised dealers by the bank was $1.47bn in January 2021, a decrease of 47.4 per cent and 64.0 per cent from the level in the preceding month and corresponding period of 2020, respectively.

     

    “A disaggregation showed that foreign exchange sales at the I&E, SMIS, SME, and interbank fell by 79.9 per cent, 38.3 per cent, 19.8 per cent, and 37.3 per cent to $0.22bn, $0.48bn, $0.10bn, and $0.04bn respectively.

     

    “Similarly, foreign exchange cash sales to BDC operators and matured swap transactions fell by 19.3 per cent and 48.7 per cent, compared with its level in the preceding month to $0.42bn and $0.12bn respectively in the review period.”

     

    The report said in order to promote transparency and increase diaspora remittance inflows, the bank further updated and reiterated the modalities for the pay-out of diaspora remittances.

     

    In a circular dated January 22, 2021, the bank said it emphasised that only licensed IMTOs were permitted to carry on the business of facilitating remittance transfers into Nigeria.

     

    It added that all diaspora remittances must be received by beneficiaries in foreign currency cash or into their designated domiciliary accounts; and IMTOs were mandated to desist from allowing remittance pay-outs in naira.

     

    The measures were meant to promote transparency in diaspora remittance transfers and thereby improve remittances inflows.

     

    According to reports by members of the Monetary Policy Committee at the last meeting, the CBN continued to defend the naira in January and February.

     

    It noted that naira exchange rate depreciated across the various windows including the I&E and BDC.

     

    External reserves also declined from $36.6bn in December 2020 to $34.46bn in February 2021.

     

    The committee stated that it was early to know the extent to which the new policy of CBN to boost remittances would impact on pressures in the foreign exchange market.

     

    While capital imports had picked up in recent months, the MPC stated that it was still far below the level it was in January 2020.

  • APPLY NOW: CBN Reopens N50bn COVID-19 Loan Portal for Households, Businesses

    APPLY NOW: CBN Reopens N50bn COVID-19 Loan Portal for Households, Businesses

     

    The Central Bank of Nigeria (CBN) said it is receiving applications for its N50 billion targeted credit facility (TCF) aimed at supporting households and micro, small and medium enterprises (MSMEs) affected by the COVID-19 pandemic.

     

    The stimulus package, set up by the apex bank in March 2020, is disbursed through the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) Microfinance Bank.

     

    Announcing the portal reopening in a tweet on Monday, NIRSAL Microfinance Bank (NMFB) said applicants must be households and MSMEs with verifiable evidence of livelihood adversely impacted by the coronavirus pandemic.

     

    Enterprises with bankable plans to take advantage of opportunities arising from the COVID-19 pandemic are also eligible to apply.

     

    The interest rate on the facility will be nine percent per annum, working capital will be for a maximum period of one year, with no option for rollover.

    The working capital to be offered to eligible businesses has been fixed at a maximum of 25 percent of the average of the previous three years’ annual turnover.

     

    However, if the enterprise is not up to three years in operation, 25 percent of the previous year’s turnover will be offered.

     

    Term loans have a maximum tenor of not more than 3 years with, at least, one-year moratorium.

     

    Households can access a maximum loan of N3 million while the loan amount to SMEs shall be determined based on the cashflow and industry/segment size of beneficiary, subject to a maximum of N25 million.

     

    Interested applicants can access the loan application portal via this link.

     

     

  • CBN Disburses N149.21bn COVID-19 Relief Loans To 316,869 Beneficiaries

    CBN Disburses N149.21bn COVID-19 Relief Loans To 316,869 Beneficiaries

     

    The Central Bank of Nigeria, CBN, has disbursed a total of N149.21 billion to 316,869 beneficiaries through the NIRSAL Microfinance Bank to alleviate the plight of households and businesses and drive economic growth during the COVID-19 pandemic.

     

    The disbursement was part of the N150 billion Targeted Credit Facility (TCF) for affected poor households and Small and Medium Enterprises.

     

    Governor of the CBN, Mr Godwin Emefiele, which stated this also noted that digital economy would help the Federal Government to drive growth in the next few years.

     

    He said that as the pace of technological adoption increased, government and the private sector must find ways to leverage the digital channels to improve access to finance and credit for all Nigerians.

     

    Emefiele spoke at the opening of the 30th CBN seminar for finance correspondents and business editors, themed, “Leveraging Digital Economy to Drive Growth, Job Creation and Sustainable Development in the Midst of a Global Pandemic,” which held simultaneously in Abuja and Lagos.

     

    Emefiele said the country needed robust digital platforms to boost the economic prosperity of the citizens.

     

    Represented by Deputy Governor, Corporate Services Directorate, CBN, Mr. Edward Adamu, Emefiele observed that one of the strongest advantages of technology was its ability to compress time and space and reduce the world to a global village by providing connectivity at the click of a button to anyone anywhere in the world. He said to further drive growth, Nigeria needed to build a solid digital economy, by focusing on the improvement of digital infrastructure, most importantly, Internet connectivity, digital literacy and skills, digital financial services, digital platforms, and digital entrepreneurship.

     

    The CBN governor said as the biggest economy in Africa with one of the largest youth populations in the world, Nigeria was well positioned to develop a strong digital economy. He stressed the need to focus on accelerating improvements across the five fundamental pillars of the digital economy: digital infrastructure, digital platforms, digital financial services, digital entrepreneurship, and digital skills.

     

    He said, “In our 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.”

     

    Emefiele said the robust regulatory framework put in place by the bank opened up the payment system to innovation with several new players across 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.

     

    He pointed out that a combination of these payment initiatives had helped to create employment opportunities and further the bank’s effort to build a more financially inclusive economy.

     

    “Today, an SME in Ibadan is able to leverage digital channels to sell their products and services to a wider market beyond their immediate environment,” he stated.

     

    He said the CBN regulatory sandbox was available for fintech companies to explore the use of blockchain technology in areas that would be beneficial to the Nigerian economy.

     

    Emefiele said, “Given the resounding success of this programme and its positive impact on output growth, we have decided to double this fund to about N300 billion, in order to accommodate many more beneficiaries and boost consumer expenditure, which should positively stimulate the economy.

     

    “In line with the growing need to go digital, the application process is done online and requires limited paperwork from prospective applicants.”

     

    He added, “The bank continues to improve our remittance infrastructure in order to provide Nigerians in the diaspora with cheaper, convenient and faster channels for remitting funds to beneficiaries in Nigeria.

     

    “In a bid to reduce the cost of remitting funds to Nigeria, the Central Bank of Nigeria on March 8, 2021 introduced a refund of N5 for every $1 of fund remitted into the country through IMTOs licensed by the CBN. We believe this measure would help to support improved foreign exchange inflows and enable Nigerians in the diaspora to use more formal channels relative to informal channels.”

     

    Emefiele explained that these measures were not new, as several countries had adopted similar processes to reduce the cost of remitting fund by their diaspora communities, and it led to surges in remittance inflows through formal channels.

     

    He said following the outbreak of COVID-19, the country was able to benefit from some of the measures put in place by the CBN to develop a robust interoperable payment system.

     

    He said the presence of these digital channels, along with various mobile and web-based channels, helped to support households and the business continuity and remained critical in mitigating the negative effect of the pandemic on GDP growth in 2020.

     

    Emefiele noted that as a result of the CBN interventions, the ICT sector grew by 14.7 per cent in 2020, relative to 10.16 per cent in 2019.

  • Olam, Premier Flour, Others Benefit As CBN Releases 50,000mt Of Maize

    Olam, Premier Flour, Others Benefit As CBN Releases 50,000mt Of Maize

     

    The Central Bank of Nigeria (CBN), through its anchor borrowers’ programme (ABP), has released 50,000 metric tonnes of maize to major players in the poultry value chain across the country.

     

    The apex bank, in a statement, said the release is to forestall the pressure and reduce the activities of intermediaries (middlemen) in the Nigerian Maize market.

     

    The beneficiaries of the maize release are Premier Flour Mills, Crown-Olam, Grand Cereals, Animal Care, Amobyn and Hybrid Feeds.

     

    Others include Zartech, Wacot, Sayeed Farms, Pandagri Novum, Premium Farms, the south west, south-south, north west and north central chapters of the Poultry Association of Nigeria (PAN).

     

    The CBN noted that the release had caused the maize market price to drop from N200,000 per metric tonnes to about N180,000 per metric tonnes while still anticipating that the current price will reduce.

     

    “The current shortfall in the quantity of maize available in the market, that CBN is working on mitigating is attributed to activities of banditry, drought in some parts of the country last year, activities of hoarders and middlemen as well as insecurity around the major maize producing belt of Niger, Kaduna, Katsina, Zamfara and part of Kano states,” the statement read.

     

    “As part of the Bank’s financing framework, the CBN facilitates the funding of maize farmers and processors through the Anchor Borrowers’ Programme (ABP) Commodity Association, Private/Prime Anchors, State Governments, Maize Aggregation Scheme (MAS), and the Commercial Agricultural Credit Scheme (CACS).”

     

    In July 2020, the apex bank banned the sale of forex in the import and export (I&E) window to importers of maize into the country. According to the bank, the decision is part of efforts to increase local production, stimulate rapid economic recovery, safeguard rural livelihoods.

  • CBN Extends Interest Rate Cut On Intervention Facilities By One Year

    CBN Extends Interest Rate Cut On Intervention Facilities By One Year

     

    The Central Bank of Nigeria (CBN) has announced an extension period for its reduced interest rates on intervention facilities to businesses by 12 months.

     

    The apex bank, in a statement released on Wednesday, and signed by Kelvin Amugo, director of financial policy and regulation department of the CBN, said the extension became necessary following the expiration of the initial timeline of 12 months granted last year.

     

    The new window will now expire on February 28, 2022.

     

    The bank also said rollover of the moratorium on the intervention facilities shall be considered on a “case by case bases.”

     

    A moratorium is the delay period which is given before the payment of a loan.

     

    This means that any intervention loan currently under moratorium will be granted an additional period of one year.

     

    In March 2020, following the outbreak of COVID-19, the apex bank had announced series of measures to reduce the negative impact of the pandemic on the real sector of the economy.

     

    Some of the measures include the reduction of interest rates on the bank’s intervention facilities from 9 per cent to 5 per cent per annum for one-year, and granting of one-year moratorium on all principal payments effective March 1, 2020.

  • Atiku Faults CBN Shutdown of Cryptocurrency Transactions

    Atiku Faults CBN Shutdown of Cryptocurrency Transactions

    Former Vice President Atiku Abubakar has faulted the decision of the Central Bank of Nigeria, CBN, to shutdown cryptocurrency operations.

     

    The former Vice President noted that with Nigeria’s economic crisis, the country needs all the help it can get to get out of its present economic quagmire.

     

    He said this in a statement titled, ‘We Need To Open Up Our Economy, Not Close It’, which he signed and made available to newsmen in Abuja, on Saturday.

     

    Atiku said, “The number one challenge facing Nigeria is youth unemployment. In fact, it is not a challenge, it is an emergency. It affects our economy, and is exacerbating insecurity in the nation.

     

    “What Nigeria needs now, perhaps more than ever, are jobs and an opening up of our economy, especially after today’s report by the National Bureau of Statistics indicated that foreign capital inflow into Nigeria is at a four year low, having plummeted from $23.9 billion in 2019, to just $9.68 billion in 2020.

     

    “Already, the nation suffered severe economic losses from the border closure, and the effects of the COVID-19 pandemic.

  • CBN Prohibits Cryptocurrency In Nigeria

    CBN Prohibits Cryptocurrency In Nigeria

    The Central Bank of Nigeria (CBN), on Friday, February 5, 2021, issued a stern warning to banks across the country over transactions relating to cryptocurrency.

     

    In a memo addressed to Deposit Money Banks (DMBs) Non-Bank Financial Institutions (NBFIs), Other Financial Institutions (OFIs), and members of the public, the apex bank ordered financial institutions across the country to persons and entities transacting or operating in cryptocurrency exchanges.

     

    The circular signed by Director of Banking Supervision, Bello Hassan stated: ”The CBN circular of January 12, 2017, refFPRIDIRGENT R/06/010 which DMBs, NBFIs, and OFIs and members of the public on the risks associated with transactions in cryptocurrency refers.

    “Further to another regulatory directive on the subject, the bank hereby wishes to remind regulated institutions that dealing in cryptocurrencies or facilitating payment from cryptocurrency exchanges is prohibited.

     

    “Accordingly, or DMBs, OFIs, NBFIs, are advised to identify persons and /or entities transacting in or operating cryptocurrency exchanges within their system and ensure that such accounts are closed immediately.”

  • CBN Retains Lending Rate at 11.5%, says High Recurrent Expenditure Raises Debt Servicing Challenges

    CBN Retains Lending Rate at 11.5%, says High Recurrent Expenditure Raises Debt Servicing Challenges

    The Monetary Policy Committee of the Central Bank of Nigeria on Tuesday retained the Monetary Policy Rate at 11.5 per cent.

     

    The CBN Governor, Godwin Emefiele, disclosed this after the committee’s two-day meeting in Abuja.

     

    It also retained the Cash Reserve Ratio and Liquidity Ratio at 27.5 per cent and 30 per cent respectively.

     

    The committee retained the asymmetric corridor of +100/-700 basis points around the MPR.

     

    At the meeting, the committee also expressed concerns of eminent challenges of servicing the country’s mounting debt liabilities.

     

    Ten members of the committee were in attendance.

     

    “The committee expressed concern over the rising public debt stock, as recurrent expenditure remained relatively high, compared with capital expenditure, thus, signalling future debt servicing challenges,” Emefiele said.

     

    Members of the committee reiterated the adverse impact of insecurity on food production, stressing that the current uptick in inflationary pressure could not be solely associated with monetary factors, but due mainly to legacy structural factors across the economy, including major supply bottlenecks across the country.

     

    The committee called on the government to redouble efforts at strengthening infrastructural efficiency and address the emerging security challenges in the country.

     

     

    In addition to this, the committee called on the government to explore the option of effective partnership with the private sector to improve funding sources necessary to address the huge infrastructural financing deficit.

     

    To improve government revenue sources and investment in capital, the committee called on the government to take advantage of the take-off of the African Continental Free Trade Area, which could boost domestic production and generate sizeable revenues for government, as well as improve domestic productivity and competitiveness.

     

    The committee noted that the COVID-19 pandemic and the necessary measures put in place by the government to forestall its public health impact, such as the lockdown and other associated restrictions, contributed to the Nigerian economy going into recession, much like almost every other country in the world.

     

    Members agreed that the committee’s current priority remained to quicken the pace of the recovery through sustained and targeted spending by the fiscal authority supported by the bank’s interventions.

     

    A professor of capital market at the Nasarawa State University Keffi, Uche Uwaleke, said as usual, the choices before the MPC was whether to reduce, increase or hold the rates.

     

    He said, “While on the one hand, a rate cut appeared justified by need for the CBN to support economic recovery efforts of the government; on the other hand, the need to stabilise exchange rate as well as tackle the rising inflation favoured tightening monetary policy.

     

    “This presented a dilemma which the MPC rightly managed by maintaining the status quo and holding the rates in a bid to strike a balance between the two seemingly diametrically opposing sides of enabling output growth and curbing rising inflation.

     

    “By doing so, the CBN will have some more time to monitor macroeconomic response to all its interventions in the wake of COVID-19 pandemic.

     

    “So, in my view, the MPC did not disappoint. Their unanimous decision is consistent with market consensus and expectations.”

     

    A professor of economics, Babcock University and past President, Chartered Institute of Bankers of Nigeria, Prof. Segun Ajibola, said the rates had very little impact and difference either in the money market or the economic environment as a whole.

     

    He said, “Let’s look at the MPR of 11.5 per cent, as at today, treasury bills rates and deposit rates are hovering between one and three per cent, whereas MPR is supposed to be a reference rate.

     

    “Lending rate is still in the average of over 20 per cent. So you see that the MPR is just hanging somewhere, not necessarily dictating either cost of borrowing or return on your deposit from banks, and it is supposed to be a reference rate for both sides.”

     

    “So there is that disconnect,” he added.

     

    Explaining further, he said, “When you look at the CRR, you tend to ask, if the CBN is still enforcing 65 per cent loan to deposit ratio, add 22.5 per cent to that, you will discover that at the end of the day, the banks themselves are left with little or nothing out of their deposit portfolio, not other businesses.”

  • CBN To Stop Exporters With Unrepatriated Proceeds From Banking Services

    CBN To Stop Exporters With Unrepatriated Proceeds From Banking Services

    The Central Bank of Nigeria (CBN) has directed banks to deny exporters with unrepatriated export proceeds from accessing all banking services by January 31.

     

    The apex bank issued this directive in a circular sent to banks in the country.

     

    Affected exporters are expected to comply with this directive before the specified date. Some banks have already issued a statement directing exporters to comply with the directive.

     

    In August 2020, CBN had instructed banks to submit the names, addresses and bank verification numbers (BVN) of exporters that have defaulted in repatriating their exports proceeds, for further action.

     

    Bloomberg quotes Osita Nwanisobi, CBN acting director of corporate communications, as saying that the new directive applies to exports up until June 2020.

     

    “Proceeds for oil is to be repatriated within 90 days and non-oil within 180 days,” he said.

     

    The news agency noted that the measure is part of an effort to defend the country’s currency by targeting importers and exporters with tougher regulations.

     

    Global decline of crude oil prices coupled with the economic impact of the COVID-19 pandemic led to the scarcity of foreign exchange in Nigeria.

     

    This resulted in a significant difference between the official exchange rate and the parallel market rate.

     

    It added that the differential of about 25 percent has induced exporters to divert forex earnings to unofficial channels.