E-Financial
IMF Tells Nigeria, Others to Devalue Currency, Hike Interest Rates
The International Monetary Fund (IMF) has advised emerging economies including Nigeria to allow their currencies to depreciate in response to tighter funding conditions and an imminent policy tightening by the Federal Reserve Bank of the United States.
The Washington-based lender also counselled the Central Bank of Nigeria and the apex banks of emerging economies to raise their benchmark interest rate in preparation for the Fed policy tightening.
The IMF disclosed this in a blogpost titled, ‘Emerging Economies Must Prepare for Fed Policy Tightening,’ on Monday.
According to the fund, while changes in the global economic outlook appear positive, especially in the United States, these changes are uncertain for emerging markets.
It noted that emerging markets with high public and private debts, foreign exchange exposures, and lower current-account balances had been seeing larger movements of their currencies relative to the US dollar in recent months.
As a result, the IMF said the combination of slower growth and elevated vulnerabilities could create adverse feedback loops for the emerging economies.
It said, “Some emerging markets have already started to adjust monetary policy and are preparing to scale back fiscal support to address rising debt and inflation.
“In response to tighter funding conditions, emerging markets should tailor their response based on their circumstances and vulnerabilities. Those with policy credibility on containing inflation can tighten monetary policy more gradually, while others with stronger inflation pressures or weaker institutions must act swiftly and comprehensively.
“In either case, responses should include letting currencies depreciate and raising benchmark interest rates. If faced with disorderly conditions in foreign exchange markets, central banks with sufficient reserves can intervene provided this intervention does not substitute for warranted macroeconomic adjustment.
“Nevertheless, such actions can pose difficult choices for emerging markets as they trade off supporting a weak domestic economy with safeguarding price and external stability. Similarly, extending support to businesses beyond existing measures may increase credit risks and weaken the longer-term health of financial institutions by delaying the recognition of losses. And rolling back those measures could further tighten financial conditions, weakening the recovery.”
The IMF said that to manage the tradeoffs, emerging economies must take steps to strengthen policy frameworks and reduce vulnerabilities now.
It added that central banks needed to be clear and consistent in communicating its tightening measures to contain inflation pressures in order to enhance the public’s understanding of the need to pursue price stability.
According to it, countries with high levels of debt denominated in foreign currencies must try to reduce it and hedge its exposures where feasible, and while reducing rollover risks, the maturity of obligations should be extended even if it increases costs.
The IMF said heavily indebted countries might need to start fiscal adjustment sooner and faster.
It added that emerging economies were currently battling elevated inflation rates, and high public debt profiles.
It said, “Beyond these immediate measures, fiscal policy can help build resilience to shocks. Setting a credible commitment to a medium-term fiscal strategy would help boost investor confidence and regain room for fiscal support in a downturn.
“Such a strategy could include announcing a comprehensive plan to gradually increase tax revenues, improve spending efficiency, or implement structural fiscal reforms such as pension and subsidy overhauls.”
The Washington-based lender said the average gross government debt in emerging markets was up by almost 10 per cent since 2019, reaching an estimated 64 per cent of Gross Domestic Product by the end of 2021, with large variations across countries.
FDI into Telecoms Sector Plummet by 70 Per Cent
Foreign capital flows into the Nigerian telecommunications sector shrank by 70.5 per cent to $107.46m in nine months last year, compared to the same period of 2020.
Data obtained from the National Bureau of Statistics’(NBS) reports on capital importation showed that the foreign capital inflows stood at $364.3m from January to September 2020.
According to the NBS, capital importation data is obtained from the Central Bank of Nigeria and is inclusive of imported physical capital, such as equipment, and financial capital importation.
It added that capital importation is divided into three main investment categories: foreign direct investment, portfolio investment, and other investments.
Capital importation into the telecoms sector fell from $157.48m in first quarter of 2020 to $105.64m in Q2 and $101.18m in Q3.
In Q1 2021, foreign capital flows into the sector plunged from $56.28m in Q1 2021 to $0.34m in Q2 but rose to $50.84m in Q3.
Isa Pantami,inister of Communications and Digital Economy recently described the Information Communication Technology sector as an important catalyst for the diversification and growth of the economy, according to Punch
Going by recent developments in the sector, capital inflow is expected to increase as investments are directed towards increasing broadband penetration in the country.
MTN recently committed to invest N640bn (about $1.5bn) over the next three years to expand broadband access in Nigeria.
The Nigerian Communications Commission (NCC) auctioned in December two of its available lots of 100 MHz TDD slots of 3.5 GHz band for the deployment of fifth-generation network for $547m.
According to the Global System for Mobile Communications Association, $500m and 6000 base stations will be needed for 5G rollout in 10 cities in Nigeria, driving the inflow of capital into the sector.
A source in the Association of Licensed Telecommunication Operators of Nigeria (ALTON) blamed the fall in capital inflows on the scarcity of foreign exchange, and government policy.
The source said, “Lack of forex has impacted on how we can import equipment into the country. This has reduced investments too. There is also the issue of end-user certificate. Because for us to import some equipment into the country, we need the certification of the security agencies, especially the National Security Adviser’s office.
Debt Management Office (DMO) said the federal government spent N3.14 trillion on servicing its domestic debt in the first quarter of 2026.
The office disclosed the data in its latest domestic debt service report for Q1 2026.
The figure comprises N2.97 trillion in interest payments and N169.68 billion in principal repayments.
The agency said in January, the government spent N741.82 billion on domestic debt service, while the figure rose to N967.67 billion in February.
Debt service increased further to N1.43 trillion in March, bringing the total for the quarter to N3.14 trillion.
The March figure was 47.7 percent higher than the N967.67 billion recorded in February and 92.7 percent above the N741.82 billion spent in January.
Also, the debt office said interest payments accounted for about 94.6 percent of total domestic debt service during the quarter.
The DMO said treasury bills accounted for the largest share of interest payments at N1 trillion, while interest on federal government bonds stood at N1.96 trillion.
The agency said the government also paid N4.24 billion in interest on FGN savings bonds during the period.
The DMO said the principal component of the debt service comprised N169.68 billion in repayments on local-denominated promissory notes.
Overall, the government’s domestic debt service rose sharply through the quarter, with March accounting for almost half of the N3.14 trillion spent between January and March.
Nigeria’s public debt increased by 0.01 percent to N159.35 trillion in the Q1 of 2026.
Interswitch Group, an integrated digital payments and commerce company, together with global banking software provider, Temenos have reassured the Central Bank of Nigeria (CBN) of their commitment to advancing the modernisation of Nigeria’s financial services sector.
Interswitch and Temenos had earlier in June announced a strategic partnership across Africa which would see Interswitch leverage Temenos solutions – across core banking, digital banking, payments, wealth management and financial crime mitigation – to provide cloud-hosted and on-premises managed services to banks and financial institutions across Africa.
This will enable institutions to progressively transform their banking platform and evolve to more customer-centric business models. The service will initially support key African markets including Nigeria, Ghana, Côte d’Ivoire, Kenya and others.
The recent regulatory visit to CBN headquarters in Abuja, was led by the Founder and Group Chief Executive Officer of Interswitch, Mitchell Elegbe, and Managing Director for the Middle East and Africa (MEA) at Temenos, Santhosh Rao, as part of the ongoing efforts by both organisations to deepen collaboration with Central Banks across the African region on the future of digital banking infrastructure across Nigeria and key African markets.
Discussions centred on the strategic partnership between Interswitch and Temenos, and how it will enable Nigerian financial institutions to progressively modernise their core banking platforms and transition to more customer-centric business models.
The two organisations also explored opportunities to work with the CBN in charting new frontiers in Central Bank Digital Currency (CBDC) innovation, leveraging resilient financial networks and decentralised application platforms to support the issuance and management of CBDCs.
Commenting on the visit, Elegbesaid: “Our partnership as Interswitch with Temenos and our continued engagement with the Central Bank of Nigeria reflect a shared commitment to building banking infrastructure that is resilient, inclusive, and ready for the next phase of Africa’s financial evolution.
We are proud to be at the table as these conversations shape the future of digital banking technology and innovation across key Africa markets…”
The Bank of Industry, through BOI Financing SPV Plc, has opened subscriptions for its inaugural Series 1 Fixed Rate Bond worth up to N250bn under its $1bn multi-currency instruments programme, seeking to raise long-term capital to finance businesses across Nigeria’s priority sectors.
The offer, which opened on 5 August and closes on 11 August, is being arranged by Chapel Hill Denham as the lead issuing house. The five-year bond is priced within a yield range of 17.35 per cent to 17.50 per cent and will be listed on the FMDQ Securities Exchange.
According to the offer document, proceeds from the issuance will be deployed to finance eligible businesses and projects across sectors, including agriculture and food processing, healthcare, engineering and technology, renewable energy, petrochemicals, oil and gas, creative industries and solid minerals, in line with BOI’s development finance mandate.
The lender said the financing is expected to improve access to medium and long-term funding for Nigerian enterprises, expand productive capacity, create and preserve jobs, deepen local value addition, support import substitution, boost exports and strengthen domestic value chains.
BOI, Nigeria’s foremost development finance institution, said it has provided funding to more than one million businesses across the country and disbursed over N1.27tn between 2023 and 2025. The institution operates across 34 states and the Federal Capital Territory and is jointly owned by the Ministry of Finance Incorporated and the Central Bank of Nigeria.
The bank also highlighted its financial performance, reporting a 36 per cent compound annual growth rate in gross earnings between 2021 and 2025.
Interest income rose 64 per cent to N884bn in 2025 from N538bn in the previous year, while its capital adequacy ratio stood at 39 per cent, nearly four times the regulatory minimum of 10 per cent. Its non-performing loan ratio was 1.7 per cent, below the CBN’s prudential limit of five per cent.
The bond has been assigned AAA ratings by Agusto & Co. and Intelligence Africa, reflecting the issuer’s strong capitalization, profitability, liquidity and ownership structure.
The issuance is open to institutional and qualified investors with a minimum subscription of N5m and additional investments in multiples of N1m. Interest will be paid semi-annually at a fixed rate, while principal repayment will begin in the third year through equal semi-annual amortised instalments until maturity in 2031.
The bond is also exempt from tax, making it an attractive investment option for investors seeking stable returns amid expectations of declining interest rates.
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