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CBN Uncovers $2.4Bn False Forex Claim Pressuring Naira – Cardoso

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Central Bank of Nigeria (CBN) uncovered invalid foreign overdue claims totalling $2.4 billion, which have pressured the naira for long and spooked the currency market, Olayemi Cardoso, governor, Central Bank, said on Monday.

CBN Uncovers $2.4Bn False Forex Claim Pressuring Naira - Cardoso

Olayemi Cardoso, governor, Central Bank,

Cardoso said the discovery was made after an audit by the consultant that the Central Bank engaged brought several shady deals to light.

After seven years of being concealed from public knowledge, the audited accounts of the CBN became public last year during which auditors revealed a $7 billion backlog of unmet dollar demand from investors and currency users.

That has created an overhang in the market which, unless cleared, could keep the naira pressured, leaving the currency on a continued free fall against the dollar.

The CBN hired Deloitte to investigate the forex claims to get a true picture of things,

Cardoso said during an interview with local TV Arise, broadcast Monday morning.

The Deloitte report found that as much as $2.4 billion of the said backlog are false claims, with claimers unable to present import documents in some instances, he said

“We had had reasons to believe we needed to take a harder look at these obligations. So we contracted Deloitte management consultants to do forensics of all these obligations and to actually tell us what was valid and what was not,” Cardoso said.

“The result that came out of this was startling in a great respect. It was startling. We discovered that of the roughly $7 billion, about $2.4 billion had issues, which we believe had no business being there and the infractions on that ranged from so many things, for example not having valid import documents and in some cases, entities that do not exist.

“There were account parties who had asked for foreign exchange and got more than they asked for. There were some who didn’t even ask for any and got. So there were whole loads of infractions there,” he added.

Nigeria’s naira has been on a much-prolonged retreat, dating back to the pandemic days, against the dollar as a heap of unmet obligations to investors and exporters continues to strain the currency, which has weakened to a dross.

Naira finished 2023 as the world’s worst-performing currency, weighed down by illiquidity and commonplace speculative practices among market operators and street traders.

Currency users are having to throng the parallel market, where the exchange rate is higher but the dollar is in greater supply, to have their needs met.

President Bola Tinubu set out shortly after his inauguration last year to liberalise the foreign exchange system, which has been bogged down by an unorthodox regime that pegged the exchange rate rather than allowing the naira to trade freely and find price discovery.

The CBN collapsed the multiple naira exchange rates, adopted under the immediate past CBN governor, Godwin Emefiele, into a single window as part of a slew of currency reforms that followed. It went further to initiate its first devaluation round under the current administration around mid-June.

Those market-friendly moves were aimed at courting international investors but they are hurting Nigerians at home, considering that they are adding fuel to an already elevated inflation by making imported goods and raw materials much more expensive.

In the week that just went by, naira’s official rate dived by over 36 per cent, dropping to a lower level than the street rate, after the CBN overhauled its approach to setting the rate in the official market and came hard on traders involved in misguiding the public with distorted prices.

Between the point Mr Tinubu took office and now, the naira has depreciated by approximately 68 per cent, 50 per cent in 2023 alone.

But banks also have been fingered in the speculative activities that are pressuring the naira.

Cardoso gave a tall order to banks at the end of January, ordering them to increase dollar supply to the market by ensuring their foreign exchange net open position does not exceed 20 per cent of shareholders’ funds unimpeded by losses.

Put differently, the gross amount of loans lenders can grant in foreign currency must not exceed one-fifth of their shareholders’ funds, which could force banks to make the remaining cash available to the market, a push that could boost liquidity in the system.

Cardoso said at the interview that those making invalid claims of $2.4 billion would not get anything.

“As they were identified, we wrote to the authorised dealers to come in and explain what the situation was. Sadly, quite frankly, much of those has not been disputed to our satisfaction.”

So far, the apex bank has settled requests in the neighbourhood of $2.3 billion including those from airlines operating in the country, he went further to say. That leaves the balance of the genuine arrears of dollar demand at $2.2 billion.

Cardoso assured that the remainder will be cleared very shortly.

“I think we are at the end of this, to put it that way,” he said.

Last month, Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, told Bloomberg the government had opened talks with the World Bank with a view to securing a lifeline of between $1 billion and $1.5 billion from the World Bank to rescue the naira.


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E-Financial

Afreximbank Mulls Currency Trading Platform to Bridge $50bn Intra-Africa Trade Gap

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The African Export-Import Bank (Afreximbank) has announced plans to launch its currency trading platform in a bid to bridge the Intra-African trade financing gap estimated at over $50 billion annually.

The President and Chairman of Board of Directors, Afreximbank, Prof. Benedict Oramah disclosed this at the 8th Goddy Jidenma Foundation (GJF) biennial public lecture tagged, “The trade route to poverty reduction in Africa in a de-globalising world.”

He said plans are ongoing to launch the platform in May, 2024, stating the urgent need to aggressively fill the intra-African trade gap.

Afreximbank, he said, operates an intra-African Trade Division that has disbursed over $40 billion since 2016, with an amount of about $11 billion outstanding, equivalent to about 28 per cent of Afreximbank’s loan portfolio.

According to him, “The Currency Trading Platform will also be launched under the auspices of Pan-African payment and settlement system (PAPSS).

“It is now becoming possible for a small farmer in Malawi to use his cell phone to purchase a Nollywood streaming movie and pay in the Malawian Kwacha while the seller in Nigeria receives Naira. We are nearing the stage when an Egyptian can buy shares on the Nigerian Stock Exchange paying in Egyptian Pounds.”

The Afreximbank boss said access to trade and investment information is key, “as lack of access is perhaps the greatest impediment to intra-regional trade.”

To address this challenge, He said Afreximbank offers an Artificial Intelligence-enabled Trade Information Platform under the brand name Tradar Intelligence.

“It is for the same reason that Afreximbank collaborates with the African Union Commission (AUC), the AfCFTA Secretariat, and others to host a biennial intra-African trade Fair. The three editions so far held since 2018 attracted an aggregate of over 70,000 visitors, 4,000 exhibitors and about 120 billion US dollars in deals,” he said.

On the status of implementation, he said the African Continental Free Trade Agreement (AfCFTA) Secretariat is operational in Accra, Ghana where 54 countries have signed the Agreement, and 47 have ratified it.

“While much progress has been made, a lot is still required to ensure that trading under the Agreement is boosted. For example, to avoid its falling victim to the discontent that negatively impacted globalisation, the AfCFTA must be complimented by the Free movement of Africans across the continent, with the right to work.

Although 32 countries have signed the Treaty, only four countries ratified it, falling short of the required 15 ratifications for the Free Movement Protocol to enter into force. We must continue to make aggressive push for countries to ratify the Treaty so as to get the requisite ratifications for it to come into force,” he urged.

Also speaking, the Founder and Executive Secretary, GJF, Dr. Ije Jidenma, said there is a perfect congruence between Prof. Oramah’s Pan African vision and the GJF quest to be part of the national think tank and solution to the nation’s developmental challenges.

“Even though the developmental turf is tough, as a seasoned public intellectual and one with a great sense of history, Prof Oramah is one person that is not ready to give up hope about Africa’s renaissance,” she said.

On his part, the Chairman, Board of Trustees GJF, Pat Utomi, said the world has gone through rounds of globalisation, recession and war, advising that the challenge is for Nigeria to think outside the box on ways it cpuld prosper in this new swing in Africa.


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OPay Redefines Customer Service With Innovative Solutions, Expands Accessibility

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OPay, Nigeria’s leading financial technology company headquartered in Lagos, has revolutionized customer service by prioritizing user satisfaction and implementing cutting-edge solutions to enhance customer experiences.

OPay

OPay is pioneering a customer service revolution built on convenience and efficiency. Recognizing the diverse needs of its users, OPay offers a top-notch and seamless blend of physical and digital touchpoints, ensuring everyone receives the exceptional service they deserve.

With the company’s headquarters situated in Lagos, OPay has established a network of 17 customer service centers across the country, catering to individuals who prefer face-to-face interactions for their service-related queries and concerns.

This extensive network guarantees easy access to friendly support, a welcome respite from long queues and impersonal interactions. But OPay doesn’t stop there. For the users that prefer online enquiries and technical resolutions, a robust and responsive online customer service center awaits.

Users can access a wealth of self-service resources, chat with helpful Customer Service Agents (CSAs) via real-time Live Chat, and even report disputes directly through the App. No more frustrating hold times or inconvenient branch visits – OPay puts the power in user’s hands, wherever they are.

Mr. Dauda Gotring, Managing Director of OPay stated that, “Transparency and timely resolution are cornerstones of the OPay experience. Dispute issues like transfer or card problems are handled with diligence, with progress updates and a satisfying resolution timeline conveniently communicated within the App.”

He further added that, “With a dedicated team of over 500 Customer Service Agents, OPay ensures exceptional care around the clock. Whether you need a quick query answered or complex assistance, a friendly and knowledgeable representative is always just a click away.”

THE KEY FEATURES OF OPAY’S ENHANCED CUSTOMER SERVICE INCLUDE:

Progress Updates Through the App:

Customers now have the ability to report disputes directly through the OPay app. The company ensures transparency by updating customers on the progress of their reported issues, such as transfer disputes or card-related concerns, along with a well-defined resolution timeline. This feature empowers users with real-time information and reassurance during the resolution process.

Live Chat with OPay Customer Service Agents:

OPay has introduced a Live Chat option, available online 24/7, where customers can connect with more than 500 Customer Service Agents (CSAs). This instant and interactive channel allows users to seek assistance, resolve queries, and receive support at their convenience. The Live Chat feature underscores OPay’s commitment to accessible and responsive customer service.

As OPay continues to lead the way in financial technology, these customer-centric innovations solidify the company’s position as a trailblazer in the industry. By combining traditional face-to-face support with cutting-edge online solutions, OPay aims to create a seamless and satisfying experience for its diverse user base.


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CBN Raises BDC’s Share Capital to N2bn

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Central Bank of Nigeria (CBN) has proposed two categories of Bureau De Change (BDC) licence- Tier 1 and Tier 2- that would see the minimum capital requirement of operators in the former and latter categories pegged at N2 billion and N500 million respectively.

The apex bank stated this in the draft Revised Regulatory and Supervisory Guidelines for BDC operations in Nigeria posted on its website late on Friday.

Under the extant regulations, BDCs had to apply for a general license and have a minimum capital requirement of N35 million.

The new guidelines contain several new changes to the guidelines for BDC operations in the country. If approved, the new guidelines will be effective at a date that will be announced by the CBN.

Specifically, the proposed new guidelines state that: “Tier 1 BDC is authorized to operate on a national basis. It can open branches and may appoint franchisees, subject to the approval of the CBN. A Tier 1 BDC (which is the franchisor) shall exercise supervisory oversight over its franchisees. All franchisees shall adopt their franchisor’s name, branding, technology platform and rendition requirements.

“A Tier 2 BDC is authorized to operate only in one state or the FCT. It may have up to three locations – a head office and two branches, subject to approval of the CBN. It is not permitted to appoint franchisees.”

Furthermore, in addition to the N2 billion capital requirement, a Tier 1 BDC is expected to pay an N200 million mandatory caution deposit, N1 million non-refundable application fee, N5 million non-refundable license fee and N5 million non-refundable annual fee.

Tier 2 BDC operators, apart from N500 million minimum share capital, are expected to deposit a mandatory caution deposit of N50 million as well as non-refundable application and license fees of N250,000 and N2 million respectively.

In addition, Tier 2 BDCs are expected to pay a non-refundable annual fee of N1 million.

The apex bank also stated that the prescribed minimum capital of BDCs and any subsequent capital injection shall be subject to its verification.

On operators’ permissible and non-permissible activities, the new guidelines propose that BDCs should 25 per cent of foreign exchange purchased for Business Travel Allowance or Personal Travel Allowance in cash while the remaining 75 per cent should be transferred electronically to the customer’s Nigerian domiciliary account or prepaid card.

However, the guidelines said that customers receiving $500 or less than $500 should be paid fully in cash.

The guidelines also stipulate that BDCs should retrieve resident customers’ Bank Verification Numbers, (BVN), or Tax Identification Numbers, TIN before carrying out foreign exchange transactions.

Other highlights of the guidelines include: “A BDC or its franchisee shall not engage in the following activities: Street-trading, maintaining any type of account for any member of the public, including accepting any asset for safekeeping/custody; Taking deposits from or granting loans to members of the public in any currency and in any form;

“Retail sale of foreign currencies to non-individuals, except for BTA International outward transfers; Engaging in off-shore business or maintaining the foreign correspondent relationship with any foreign establishment; Opening or maintaining any account with any bank or financial institution outside Nigeria;

“Acting as custodian of foreign currency on behalf of customers; International inward transfers, except for operators that serve as cash-out points for IMTOs;

“Borrowing sums which in aggregate exceed the equivalent of 30 per cent of its shareholders’ funds unimpaired by losses, in the BDC’s audited financial statements of the preceding year;

“ Engaging in forwards, futures, options, or other derivative/speculative transactions; obtaining foreign exchange from sources other than those listed in Section 4.0;

“ Granting of loans and advances in any currency; selling foreign exchange on credit to any customer; engaging in any trade-related import activities and serving as payment or collection agents on behalf of customers.”


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