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CBN to Cut Naira Supply Next Year Ahead of 2015 Polls

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Central Bank of Nigeria (CBN) may further reduce money supply next year under her new tighter monetary policy for the 2014 fiscal year, in a bid to check the excessive pressure on prices due to the 2015 general elections.

Rising from Monetary Policy Committee (MPC) meeting in Abuja, the apex bank also warned against depleting the Excess Crude Account (ECA) and urged Fiscal Authority to step up buffers.

The 12-member MPC committee had met on Monday and Tuesday at the CBN headquarters to review the global and domestic economic environment from January to October 2013.

It also re-assessed the short-to medium-term risks to inflation, domestic output and financial stability and the outlook for the rest of the year.

Sanusi Lamido Sanusi, CBN governor told journalists at the end of the MPC meeting that the erosion of the fiscal buffers through the depletion of the ECA has further exposed the economy to vulnerabilities.

“Clearly, the major risk on the fiscal side at present is not one of escalation of spending, but loss of revenue from oil exports,” Sanusi warned.

He said, “It further noted the positive impact of monetary policy in engendering a stable exchange rate regime and attracting portfolio investment, thus driving the strong recovery of asset prices on the Nigerian Stock Exchange.

“The outlook for 2014, however, portends some potential headwinds that may lead to further tightening in monetary conditions. It is also the year in which election spending is likely to take place domestically, thus bringing more pressure to bear from the fiscal side.

“As a result, the MPC is of the view that we are not yet at the end of the tightening cycle and may need to tighten further in response to these eventualities next year.”

The committee, Sanusi said, also noted that while the Federal Government’s overall spending in 2013 had not been significantly higher than in 2012, oil revenues had continued to decline in spite of the relative stability in oil price and output.

As a result of declining oil revenue, the committee said the Excess Crude savings had fallen from about $11.5bn at the end of 2012 to less than $5bn on November 14, 2013.

External reserves, he noted, had remained in excess of $45bn only because of a massive inflow in portfolio funds.

He said the implication of this was that “financial markets are extremely fragile and susceptible to external shocks.”

He added, “The MPC again calls on the fiscal authorities to rebuild buffers in the Excess Crude Account, and this can be done by blocking fiscal leakages in the oil sector and increasing oil revenues.

“Clearly, the major risk on the fiscal side at present is not one of escalation of spending but the loss of revenue from oil exports.”

The committee also adopted an inflation target of between six per cent and nine per cent for 2014.

Sanusi said since the ECOWAS heads of state had set a five per cent target at the Convergence Council, the MPC would ensure that Nigeria moved firmly into being a low-inflation environment in the medium term.

“However, the MPC recognises the high cost of rapid adjustment and plans to make the transition gradually,” he added.

On the country’s Monetary Policy Rate, Sanusi said the committee decided to leave the rate unchanged at 12 per cent.

This is the 13th consecutive time the MPR is left untouched by the committee.

The private sector Cash Reserves Requirement was also left unchanged at 12 per cent; public sector CRR at 50 per cent and Liquidity Ratio at 30 per cent.

Sanusi said the decision was taken after considering the success of monetary policy in attaining price and exchange rates stability; the potential headwinds in 2014; the ultimate goal of transiting to a truly low-inflation environment; and the need to retain portfolio flows in view of the erosion of fiscal reserve buffers.


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E-Financial

Lagos State Appoints MoneyMaster as Payment Partner for “Ounje Eko” Programme

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“Ounje Eko”, the food price discount initiative of the Lagos State Government, has appointed leading payment service bank, MoneyMaster Payment Service Bank Limited (MMPSB), as its collaborator in the bid to ensure ease of payments at the market.

MoneyMaster is one of the Central Bank of Nigeria-licensed Payment Service Banks (PSBs) to promote financial inclusion across Nigeria.

Under the partnership, MMPSB will apply its cutting-edge payment solution to engender easy payment and reconciliation in order to make   the experiences of Lagosians who will be getting their food supplies from the markets pleasurable. Its payment solution is also all-encompassing and ensures real time value to payment destinations.

The mobile bank was appointed as the collection and payment partner for “Ounje Eko” Food Markets programme which is a government initiative serving the five divisions of Lagos State. Consequent on this, MoneyMaster Payment Service Bank will collect payments in 57 LCDAs in the state.

The partnership gives credence to the quality of payment solutions that MoneyMaster is reputed for in its services to its growing business clientele in private and public sectors.

 


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E-Financial

CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

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Central Bank of Nigeria (CBN), is investigating irregular foreign exchange transactions and forward contracts valued at approximately $2.4 billion.

CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

The  inquiry follows an extensive audit by Deloitte, which scrutinized $7 billion in dollar debts accumulated under the bank’s previous leadership.

In the aftermath of the 294th Monetary Policy Committee meeting in Abuja, Yemi Cardoso, governor of CBN,  disclosed to journalists that the investigation, supported by the Economic and Financial Crimes Commission, among other security bodies, aims to clarify the legitimacy of these FX allocations identified as problematic by the audit.

“It was determined that a number of these transactions did not qualify…they were outright illegal. The law enforcement agencies are now looking into those transactions that as far as we are concerned, are not valid to be paid,” Cardoso detailed, emphasizing the unlawful nature of these forex deals.

The crux of the investigation lies in the audit findings that a significant portion of the scrutinized transactions lacked proper documentation and, in many instances, were deemed outright illegal.

However, the unfolding investigation has raised concerns within the organized private sector, with some entities contemplating legal action against commercial banks for unresolved forex bids.

Despite these tensions, Governor Cardoso reassures that the foreign exchange market remains open and transparent, inviting stakeholders to address their forex needs through the official channels.

Furthermore, Cardoso clarified the distribution of fertilizers to farmers as a one-off measure and not indicative of a shift back to direct interventions by the CBN, underscoring a commitment to strategic, regulatory governance rather than direct market involvement.

 

 

 

 

 

 

 

 


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CBN Urges Banks to Expedite Action on Recapitalisation

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Central Bank of Nigeria (CBN) has directed deposit money banks in the country to expedite action to increase their capital base from the current ₦25bn.

CBN Urges Banks to Expedite Action on Recapitalisation

Olayemi Cardoso, governor of CBN

Olayemi Cardoso, governor of CBN, stated this during the apex bank’s 294th meeting of the Monetary Policy Committee (MPC) on Tuesday in Abuja, when the MPC hiked the interest rate by 22.75% to 24.75%.

The apex bank chief said the MPC examined developments in the banking sector and expressed satisfaction that the industry remained stable. The committee, however, said to guard against risk, commercial banks in the country should accelerate their recapitalisation efforts.

Cardoso said, “The MPC also reviewed developments in the banking system and noted that the industry remains safe, sound, and stable. The committee thus called on the bank to sustain its surveillance and ensure compliance of banks with existing regulatory and macro-potential guidelines.

“The MPC also enjoined the banks to expedite actions on the recapitalisation of banks to strengthen the system against potential risks in an increasingly globalised world.”

 

 

 

 


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