General News
NNPC’s Withdrawal of $1.2Bn Triggers Panic in Banks
Nigerian National Petroleum Corporation (NNPC) has withdrawn $1.2 billion (N240 billion) from banks, triggering more dollar liquidity squeeze in the money market and causing the value of the naira to depreciate further at the parallel market, according to New Telegraph.
The NNPC reportedly wrote to the lenders last Tuesday, intimating them of its intention to transfer its domiciliary accounts to the Central Bank of Nigeria (CBN).
A top NNPC official, who pleaded anonymity, confirmed the withdrawal yesterday. He said the decision to move the accounts to the CBN stemmed from the ongoing probe of the corporation, stressing that it was to harmonise all “their accounts.”
A CBN official, who also asked not to be named because he has no clearance to speak on the issue, corroborated the NNPC official’s statement.
He said the NNPC’s directive to transfer its funds to the Central Bank was in order given the fact that the CBN is a banker to the government and that the oil corporation is also an institution of the government.
He, however, said the funds would boost the CBN’s reserves and improve its ability to stabilise the naira, which has received severe bashing at the parallel market, where forex end users that do not need documentation source for their dollars.
Besides, he said the decision to move the NNPC accounts to the CBN might not be unconnected with the ongoing probe of the oil swap deal and NNPC.
But the withdrawal of the funds has continued to jolt the money market, as banks, which had already created assets with the dollars, were said to be running helter-skelter to restructure the mis-matches that had been created with the NNPC funds.
According to New Telegraph, a treasurer in one of the tier-one banks said lenders may have to start calling back their dollar loans extended to customers.
“This is a serious problem for us because the CBN has not been selling dollars to banks and we have used the dollars being recalled by NNPC to pay for trade obligations to customers offshore,” said another senior treasurer of a tier-two bank.
Renaissance Capital, a leading investment banking firm originating from Russia that operates in high-opportunity emerging and frontier markets, few days ago, put the shortfall in the forex market, which the apex bank had not been able to meet at $4 billion.
This has exerted enormous pressure on the parallel market, where N243 exchanged for a dollar yesterday. The official exchange rate, however, remained stable at N196.95 per dollar.
Since June 24 when the markets started reacting to the CBN’s latest policy to restrict access to foreign exchange for certain categories of importers, the naira has declined against the dollar almost on a daily basis.
Although most analysts are predicting another devaluation to around N210, Non-Deliverable Forwards – currency derivatives traded offshore – pointed to it being priced at around N255-N261 to $1 before the end of the year.
Just last week, the release of part of the N400 billion funds approved by the Federal Government to clear the backlog of salaries in states and local governments had further worsened the fortunes of the ailing naira.
Aminu Gwadabe, president, Association of Bureau De Change Operators of Nigeria (ABCON), said the demand for dollars had surged as individuals rushed to convert their naira to dollars.
He said: “There is a lot of demand with the recent injection of cash by the government. Part of the funds is being converted to dollars.”
Similarly, another BDC operator, who asked not to be named, said, “The scarcity is really serious; there is no dollar anywhere. So, people who have the money are buying available dollars with a view to later selling at a higher rate.” As at April, the CBN had spent $4.7 billion in defending the naira. Last February alone, it used at least $3.4 billion in fixing the exchange rate.
Nigeria’s reserves, according to the latest data on the banking watchdog’s website, is $29.95billion as at last Monday, which is totally at variance with the $31.89 billion announced by the CBN Governor, Mr. Godwin Emefiele, last week during his meeting with the Senate.
Some critical stakeholders in the economy, including the Managing Director of Financial Derivatives Limited, Bismarck Rewane, had stressed the need for a further devaluation of the naira.
For instance, Mr. Bisi Onasanya, Managing Director and Chief Executive Officer of First Bank of Nigeria Limited, , contended that the CBN needed to let the naira devalue because the foreign- exchange trading restrictions had started to harm growth in the economy.
“People just don’t believe the CBN has what it takes to sustain the exchange rate at the present level.
The market needs to reopen. You cannot peg the naira at a level that the whole world knows is unrealistic.
“We are in a situation where Nigerian banks are shopping for foreign exchange in the international market. We need to bite the bullet and move on, or there will be repercussions over the long term,” he said.
But reacting to the steady decline in the value of the naira on the parallel market last Thursday, Mr. Ibrahim Mu’azu, CBN’s Director, Corporate Communications, stated that the apex bank would not be distracted by the development and would not take it into consideration in determining the exchange rate.
He said the volume of trading in foreign exchange taking place in the market was so marginal that it should not be used to determine the naira’s rate.
New Telegraph had reported last week that the banking watchdog had begun probing banks to ascertain those that have complied with its directive on the transfer of public sector revenue accounts to the CBN account.
The investigation followed the expiration of the June 30, 2015 deadline that the banking watchdog set for the exercise.
Dr. Bosun Tijani, Minister of Communications, Innovation, and Digital Economy, on Wednesday said that no fewer than twelve federal universities will benefit from high-fibre digital infrastructure before the end of the year.
In addition, some Nigerian universities are set to begin enjoying 24-hour electricity supply to enhance teaching, research, and learning on campuses, according to the Minister of Education, Dr. Maruf Alausa.
Dr. Tijani disclosed this at the commissioning of a High-Fibre Digital Facility at the University of Abuja’s old Boys Hostel. He said the initiative aims to equip students with digital skills and access needed to explore emerging opportunities in the global tech ecosystem before graduation.
Citing examples of young Nigerians who have successfully built billion-dollar online payment firms, Dr. Tijani urged students to leverage the digital infrastructure being provided by the current administration to develop themselves and build a future in tech.
The project is a collaboration between the federal government, Galaxy Backbone Nigeria Ltd, Huawei Technologies Nigeria, and other tech firms. It will deliver free Wi-Fi services across campuses, serving as a digital equalizer for students.
Present at the inauguration were the Director-General of the National Information Technology Development Agency (NITDA), Kashifu Inuwa; the National Commissioner for the Nigeria Data Protection Commission, Dr. Vincent Olatunji; the Managing Director of NigComSat, Mrs. Jane Egerton-Idehen; and the Postmaster General of the Federation, Mrs. Tola Odeyemi.
Also the Vice chancellor of the University of Abuja, Prof Patricia Lar and the institution’s Registrar and the Managing Director of Huawei Technologies Nigeria, Mr Teorens Wu attended the event.
Dr Tijani further said digital inclusion was necessary especially for the students to navigate contemporary challenges and become successful in the digital space without waiting for white collar jobs on graduation.
He said the University was the first of the seven universities for the first phase of the pilot scheme. And that by the end of June, they would have connected the seven universities for the first phase.
“This initiative we are launching here today is the first of the seven in a pilot scheme, and by the end of July, we will have connected the seven universities”, he said.
“Galaxy Backbone has the infrastructure in place already; all we are doing is to take the fibre to hostels,” the Minister added.
“Your challenge today is what you do with the knowledge that you’re being given. And this is why to actualise the dream of our president, we’ve taught it to be important that Nigerian university students cannot continue to learn without access to meaningful connectivity.
“It is unacceptable because we know when we give you this access that not only are you going to be better in what you’re learning, but you’re actually going to create the future that our president is asking that we create as a nation”, Dr Tijani said.
Dr. Alausa, on his part, noted that the University was a special institution selected by the government to enjoy a 24-hour power supply. And that other special institutions will enjoy 24hrs power before the end of 2026.
“The president is energising institutions. We have special institutions in the country today enjoying 24-hour electricity via the presidential renewable mini-grid project, the solarisation project.
“The University of Abuja is one of the beneficiaries. You have a 3.3 megahertz mini-grid here and everybody can attest to it now that you have a 24-hour electricity supply.
“The president is not stopping there. Before the end of next year, all the special institutions will have a mini-grid. You will all enjoy a 24-hour electricity supply, “Dr Alausa said.
The Acting Vice Chancellor, University of Abuja, Prof. Patricia Lar in her welcome address described the project as a laudable one that would benefit the school community.
“It’s a special initiative that’s going to create opportunities for students of all economic status to access data to be able to use for knowledge and education, and to feed their creativity with ease.
“We are grateful for deploying fibre to our hostels. This also works with the solar power backup that has been installed in our campus,” she said.
Nigeria has approved a fresh $500 million replenishment of the Nigeria Trust Fund (NTF) at the African Development Bank (AfDB), extending the facility for another 15 years.
President of the AfDB, Dr. Akinwumi Adesina, announced this during his opening remarks at the ongoing AfDB Annual Meetings in Abidjan as he expressed deep appreciation to President Bola Ahmed Tinubu and Vice President Kashim Shettima for their continued support.
“To President Bola Ahmed Tinubu and to Vice President Kashim Shettima, for your support over the past two years, I am profoundly grateful. Thank you for graciously approving the replenishment of the Nigeria Trust Fund for another 15 years for $500 million.”
The Nigeria Trust Fund (NTF) was set up in 1976 through an agreement between the Nigerian government and the African Development Bank Group. It’s a revolving fund that sustains itself over time and is designed to support the development of low-income African countries in need of concessional financing.
The fund can be used in a number of ways—either to co-finance projects alongside the African Development Bank and the African Development Fund (ADF) or to finance projects independently. It supports both public and private sector initiatives and can also be used to top up funding for ongoing Bank Group-backed projects.
Unlike the ADF, which allocates funds to countries, NTF resources are tied to specific projects. This allows for more flexible, needs-based support where it’s most effective.
The National Assembly has hinted that it may consider passing the harmonised tax reform bills by Tuesday, following a successful review of the troubling clauses in the proposed legislation.
This was disclosed by the Chairman of the House Committee on Finance, James Faleke, via his official X account on Sunday. Faleke is the leader of the House delegation for the bills harmonisation exercise.
He tweeted, “The conference committee set up by the House and the Senate on the Tax Reform Bills has successfully concluded its work. The joint committees thoroughly reviewed all sections and addressed the grey areas of the four bills, examining each clause strategically and resolving contentious issues.
“After an intensive deliberation that stretched through Thursday night, all day Friday, and into the early hours of Saturday, I am pleased to report that the bills are now ready for presentation to both the House and the Senate for final passage.
“I would like to especially appreciate the Senate conference committee, ably led by the Chairman of the Senate Committee on Finance, the Distinguished Senator Sani Musa, as well as all members of the Senate Conference Committee.
“I also extend heartfelt gratitude to my colleagues on the House Conference Committee, which I had the honour to lead, for their unwavering commitment to the Nigerian people. We are truly grateful for your dedication and resilience in bringing this important task to a conclusion.”
It was reported that the four tax bills were sent two weeks ago to the joint harmonisation committee made up of members of the Senate and the House of Representatives to reconcile the amendments of both Chambers before it is transmitted to President Bola Tinubu for his assent.
After announcing the passage of the bills following a majority voice vote, the Senate President, Godswill Akpabio, praised the lawmakers for their sacrifice in ensuring that the tax system in Nigeria meets an international standard.
He said, “These four executive bills seek to transform and modernise the tax system in Nigeria.”
The move came barely 24 hours after the Upper Chamber earlier cleared two of the bills before pushing the remaining legislation for consideration on Thursday.
Addressing journalists after the plenary, the Chairman of the ad hoc committee for the tax reform bills and the lawmaker representing Niger East Senatorial District, Senator Sani Musa, explained that they did their best to ensure the taxation system in Nigeria meets international standards.
Musa also disclosed that parts of the tax proceeds will be used to fight cybercrime, boost defence infrastructure, the TETfund, and aid soldiers in their efforts to restore peace and safety in the country.
Continuing, the Niger Senator explained that the senators recommended that the President needs to appoint a chairman and create an ombudsman to arbitrate and adjudicate on tax-related matters.
The legislator also harped on the need for the establishment of a tax tribunal, which he said cannot be overemphasised.
“It is not à court of record. We have looked at the issue of VAT, coĺlection of taxes, development levies, and inheritance tax, which had been expunged.
“I believe Nigerians wiĺl see something nice from this. We also commend the President for giving a level playing field to all,” he said.
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