Naira

Abuja, March 9 2024: A Presidential aide, Mrs Olu Verheijen, says President Bola Tinubu’s administration is actively seeking ways to grow the nation’s foreign reserves to stabilise the Naira and economy.

Verheijen, Special Adviser to the President on Energy, said this in her presentation at the Ministerial Press Briefing on Friday in Abuja.

The event was organised by the Minister of Information and National Orientation, Alhaji Mohammed Idris.

Verheijen said the government was committed to accelerating economic growth and diversifying the economy for the benefit of all Nigerians.

This, she said, required timely, credible, clear and consistent policies.

According to her, the country is faced with a revenue crisis which is impacting all Nigerians.

She described the oil and gas sector as critical to the country’s ability to accelerate economic growth, adding that the current oil and gas production and investment levels fell significantly short of the country’s potential.

The aide said since 2016, Nigeria had only accounted for four per cent of Africa’s total oil and gas investments, despite possessing 38 per cent of the continent’s hydrocarbon reserves.

she expressed assurance of the president’s determination to reverse the trend and take decisive steps to ensure a conducive business climate and reposition Nigeria as a preferred investment destination.

“Tinubu issued a Presidential Directive to streamline and clarify the scope of the two regulators in the petroleum sector to provide certainty and create a conducive business environment.

“He also directed the National Security Adviser and me to coordinate enhanced security measures in the Niger Delta.

“Owing to this directive, the pipelines which had been repeatedly vandalised are now enjoying improved uptime; availability has practically doubled since these directives were implemented.

“This has translated to increased liquids of over 200,000 barrels per day being transported over the last six months.

“It has increased the availability of Nigeria Liquefied Natural Gas (NLNG) Train One to Six from 57 per cent in 2023 to 70 per cent in first quarter of 2024,” she said.

She further explained that Tinubu had also introduced fiscal incentives to deepen Compressed Natural Gas (CNG) and Liquefied Petroleum Gas (LPG) penetration.

Verheijen said these incentives were designed to ease the impact of fuel subsidies on transportation cost and enable the displacement of Premium Motor Spirit and Diesel.

She said following extensive engagements, analysis and bench-marking with industry operators and regulators, the President had initiated amendment of primary legislation to introduce fiscal incentives, reduce project execution timelines and promote cost efficiency.

“However, recognising the urgency to accelerate investments to stabilise the economy, Tinubu executed Policy Directives to clearly signal the policy direction of this administration to both the market and regulators.

“The Policy Directives include Fiscal Incentives for Non-Associated Gas (NAG), Midstream and Deepwater Oil and Gas Developments, Streamlining of Contracting Processes, Procedures and Timelines and Local Content Practice Reform.

“Details on the role of each stakeholder are contained in the Policy Directives, which have been Gazetted and will be distributed shortly,” she said.

On coordination, the aide said she would play a coordinating role in ensuring implementation within the timelines stipulated in the directives.

She promised to follow up on the implementation of the directives, and in return expects the operators to commit to their promises to make the desired investments.

“This administration is focused on enabling transformational economic opportunities to lift millions of hardworking Nigerians our of poverty,” Verheijen said.

Abuja,  Feb. 28, 2024: The Governor of the Central Bank of Nigeria (CBN), Mr Yemi Cardoso, says the Naira is grossly undervalued.

Cardoso said this on Tuesday in Abuja, while presenting a communiqué from the 293rd meeting of the apex bank’s Monetary Policy Committee (MPC).

He said that the foreign exchange market had not been functioning effectively and had been distortionary in outcome, thereby creating a serious challenge for the Naira.

“We are presently investigating some of the manipulations that have been taking place.

“For distortions that came up due to bad behaviour, those involved will be made to face the full wrath of the law, ” he said.

The CBN governor said that the apex bank was clearing the backlog of genuine forex claims, adding that the country’s foreign reserves now stood at 34 billion dollars

“Just today, we paid another 400 million dollars to those that have been so identified,” he said.

He said that it was important that the foreign exchange market had a good amount of liquidity and minimal distortion.

“In recent times we have been able to attract liquidity into the system.

“We have attracted up to two billion dollars as a result of the tools that we have used to calibrate interest rate.

“We are collaborating with law enforcement agencies to ensure that we can understand better what is going on in the market.

“We are moving to a very aggressive regulatory environment where we will have zero tolerance for sharp practices,” he said.

“He said that players in the market would have to abide by all CBN regulations as those who refuse would face the consequences.

According to him, a very thorough exercise is going on to identify what went on in the past and what needs to be done.

Cardoso said that the CBN was moving away from interventions programmes and development finance initiatives like the Anchor Borrowers Programme, as they were time-consuming and counterproductive.

“Everybody’s concern js about price stability, and we should put everything we have into ensuring price stability.

“The interventions took away a lot of time for things we do not have the expertise to do, and it created a lot of distortions in the economy through inflow of money supply.

“The interventions that took place in the recent past were estimated in excess of N10 trillion. It did a lot of damage to the economy, ” he said.

He, however, said that the apex bank was taking concrete steps to recover loans that were given out through such interventions.

The Tuesday’s MPC meeting was the first under Cardoso as CBN governor.

Earlier, Cardoso had announced an aggressive tightening of the rates, as the committee increased the benchmark interest rate, the Monetary Policy Rate (MPR) by 400 basis points from 18.75 per cent to 22.75 per cent.

The committee also raised the Cash Reserve Ratio (CRR) from 32.5 per cent to 45 per cent, and adjusted the Asymmetric Corridor from +100/-300 basis point to +100/-700 basis point around the MPR.

It, however, retained the Liquidity Ratio at 30 per cent.

Abuja, Feb. 21, 2024: The Federal Government has expressed determination to raise at least $10 billion to increase foreign exchange liquidity to stabilise the Naira and grow the economy.

President Bola Tinubu made this known at the inauguration of the Public Wealth Management Conference organised by the Ministry of Finance Incorporated (MOFI) on Tuesday in Abuja.

The theme of the conference was, “Championing Nigeria’s Economic Prosperity.”

Represented by Vice President Kashim Shettima, Tinubu revealed plans by his administration to create millions of jobs by unlocking the value of Nigeria’s vast public assets.

This, according to him, is to optimise and double the country’s Gross Domestic Product (GDP).

He stressed the need to identify, consolidate and maximise returns on government-owned assets worth trillions of Naira.

“The Federal Government set a goal to raise at least 10 billion dollars in order to increase foreign exchange liquidity, a key ingredient to stabilise the naira and grow the economy.

“At the core of this is ensuring optimal management of the assets and investments of the Federal Government towards unlocking their revenue potential.

“This includes our bold and achievable plan to double the GDP growth rate and significantly increase the GDP base over the next 8 years.”

Tinubu, however, noted that decades of mismanagement and underutilisation have plagued the country’s assets, spread across Nigeria and outside its borders, leading to revenue losses that have hindered economic growth.

The President gave the assurance that “the newly restructured Ministry of Finance Incorporated, which is to act as custodian and active manager of these assets, will now take the centre stage.”

He emphasised transparency and accountability as key principles, believing that improved corporate governance, innovative partnerships and attracting alternative investment capital would significantly increase returns.

“These improved returns will then be directed towards crucial funding for education, healthcare, housing, power, roads and other areas vital to lifting millions out of poverty.

“And stimulating sustainable economic development and job creation for the youths.”

Tinubu said that by efficiently managing public resources, the government aimed to build a more equitable society and unlock the full potential of its citizens.

He called on all stakeholders, including ministries, development financial institutions and the public and private sector players, to partner with MOFI to optimise the strategic assets.

He expressed hope that the collaborative effort would unlock Nigeria’s full potential and create a brighter future for all citizens.

The Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, said Tinubu was mindful of the pains of his administration’s reform programmes and was deploying appropriate mechanisms to address the challenges.

He said that 42,000 metric tons of assorted grains were being released with 60,000 metric tons to follow shortly, adding that these are part of measures to arrest inflation and reduce food prices in the coming months across the country.

He urged the management and board of the MOFI to develop a specific line of revenue for the national budget.

This, according to him, is part of its renewed mandate of supporting the Federal Government’s fiscal stability.

The Chairman of the MOFI Board, Dr Shamsudeen Usman, said that the MOFI would play a more active role in the management of assets under its purview.

He urged operators of the assets to see MOFI as partners rather than competitors or regulators, adding that the new management was committed to high level corporate governance.

Usman disclosed that the company had integrated a non-conflict of interest policy to guard against practices that undermine professionalism among members of staff.

The Chief Executive Officer of MOFI, Dr Armstrong Takang, announced the launch of a N100 billion Project Preparation Fund as part of its renewed mandate of ensuring professionalism in the management of public assets.

Takang said that the company would transform the fortunes of public assets and restore investor confidence in both the operations and management of the assets.

Abuja, Feb. 5, 2024: The Independent Media and Policy Initiative (IMPI), says the new policies introduced by the Central Bank of Nigeria (CBN) will help stabilise the Naira in the foreign exchange market.

Mr Niyi Akinsiju, the Chairman of the Non-Governmental Organisation (NGO), said this in a statement on Sunday in Abuja.

Akinsiju said that the polices would stem the volatility in the forex market and also sanitise the banking sector.

He said that the new move was a reflection of the commitment of the new CBN management to check the excesses of banks “gaming” the system.

“The prudential guidelines as issued by the CBN, unveils the gaming of the foreign exchange market by Nigeria Deposit Money Banks (DMBs).

“The DMBs hoard the forex they had either borrowed from foreign jurisdictions or raised locally on long term basis and profiteer on the forex holdings.

“They also refuse their customers access to forex while bidding the Naira to depreciate and exploit the market” he said.

He applauded the directive of the apex bank for the DMBs to immediately sell off the foreign currencies they were holding on the long term to zero level.

“It is estimated that between six billion and seven billion dollars is kept by banks in long positions either in cash or locked up in forex swaps deals.

” This truly captures the CBN’s capacity for regulatory oversight,” he said.

Akinsiju said that the new policy would provide incentives for diaspora funds to be channelled into the official market rather than the parallel market.

“The new policy translates to an incentive to International Money Transfer Operators (IMTOs) to redirect forex to the official market rather than the hitherto practice of diversion to the black market.

“This will, ultimately, rechannel more diaspora funds to the Nigeria forex market with possible enhancement of forecast liquidity.

“It will also ameliorate demand pressure with subsequent appreciation of the Naira,” he said.

CBN had initiated a number of policies to halt the free fall of the Naira at the foreign exchange market.

One of such policies was contained in a circular which mandated the DMBs to ensure that they do not surpass 20 per cent short (holding more foreign currency assets than liabilities).

It asked banks currently exceeding these prescribed limits to make adjustments to their positions to align with the new regulations by Feb. 1.

Abuja, Feb. 2, 2024: A Financial Expert, Dr Chijioke Ekechukwu, has advised the Federal Government to create a foreign currency denominated bond to tackle the unending depreciation of the Naira.

Ekechukwu, an Economist and Chief Executive Officer (CEO) of an Abuja based financial consultancy firm, said on Friday.

The expert, who is also a past president of Abuja Chamber of Commerce and Industry, spoke against the backdrop of the continous depreciation of the Naira and instability in the foreign exchange market.

The dollar was exchanged for N1,455 at the official window and N1,511 at the parallel market on Wednesday as a result of scarcity of forex.

This led to Bureau de Change (BDC) operators in Abuja withdrawing their services in protest on Thursday by observing a “no sales ” policy.

According to Ekechukwu, the implication of the action by the BDCs is that whenever they reopen the market, the Naira will depreciate further.

He said that the surest way out of the wide dollar gap was for the Federal Government to create a foreign denominated bond like the Eurobond and increase its volume.

“This will bring the pressure down in the forex market.

“The Federal Government should also recapitalise the banks and ensure that only foreign currencies are brought in as new capital into the banks.

“This will force Nigerians who have monies outside the country to bring them in. Foreign investors will also come in with foreign exchange to buy into Nigerian banks, ” he said.

He advised that the power sector should also be more privatised and better funded.

” in the power sector, the Federal Government should insist that only foreign currency will fund it to achieve better results, ” he said.

Ekechukwu also urged the Federal Government to do whatever it would take for the solid minerals sector to start earning revenue for the country.

“Whatever it takes, we need to break the jinx in the solid minerals sector and ensure that the sector starts producing foreign exchange for the government,” he said.

The Central Bank of Nigeria (CBN) has taken a drastic measure to check the spiralling depreciation of Nigeria’s currency, Naira.

The Naira has consistently fallen against the dollar in the last two weeks, getting to a worrisome N1,500 to a dollar from between N800 and N950 to a dollar.

The apex bank’s new directive is directed at the deposit money banks which it has accused of hoarding for profiteering.

The apex bank noted with concern the growth in foreign currency exposures of banks through their Net Open Position (NOP).

This has created an incentive for banks to hold excess long foreign currency positions, which exposes banks to foreign exchange and other risks.

Therefore, to ensure that these risks are well managed and avoid losses that could pose material systemic challenges, the CBN issues the following prudential requirements”

In order to increase forex liquidity, rein in on the speculation and hoarding of forex by banks, CBN has just released new sets of guidelines.

Banks control over 70% of all forex transactions.

They exposed their “ridiculous hedging” when they started declaring huge profits after devalution.

What banks did was buy dollars and kept it while telling customers they don’t have forex. When the price of dollar goes up, which they engineer with other players(like BDC), they then sell the forex to BDC. They used this method to manipulate the market.

What CBN is saying now is for every dollar inflow banks get, they must lend 80% of it. Meaning if banks receive $100 today, they must ensure to $80 outflow, and cant keep above $20.

The act of keeping dollars just for the sake of hedging and speculation has been stopped.

CBN is also saying banks should adopt “natural hedging”. If banks borrow in naira, they must lend to customers in naira. If banks borrow in dollars, they must lend in dollars.

The act of borrowing money in naira and converting to dollars to lend to customers has been stopped.

CBN said this is with immediately effect, we now await the reaction of the market.

The new directive to all the commercial banks would take effect from Feb. 1, 2024.

The circulated, dated January 31, 2024, was signed by the Director, Trade and Exchange, CBN, Dr. Hassan Mahmud, and representative of the Director, Banking Supervision, CBN, Mrs. Rita Sike.

The CBN in the circular issued prudential requirements that banks must follow. A key focus of these requirements is the management of the Net Open Position (NOP).

The NOP measures the difference between a bank’s foreign currency assets (what it owns in foreign currencies) and its foreign currency liabilities (what it owes in foreign currencies).

The circular mandates that the NOP must not exceed 20 per cent short or 0 per cent long of the bank’s shareholders’ funds.

This calculation, the apex bank said, must be done using the Gross Aggregate Method, which provides a comprehensive view of the bank’s foreign currency exposure.

Furthermore, banks with current NOPs exceeding these limits are required to adjust their positions to comply with the new regulations latest by February 1, 2024.

Additionally, banks must calculate their daily and monthly NOP and Foreign Currency Trading Position (FCT) using specific templates provided by the CBN.

The CBN also directed banks to maintain adequate stocks of high-quality liquid foreign assets, such as cash and government securities, in each significant currency.

According to the circular, all banks are required to adopt adequate treasury and risk management systems to provide oversight of all foreign exchange exposures and ensure accurate reporting on a timely basis.

Banks are expected to bring all their exposures within the set limits immediately and ensure that all returns submitted to the CBN to provide an accurate reflection of their balance sheets.”

Finally, the CBN warned banks that non-compliance with the NOP limit would result in immediate sanction and suspension from the foreign exchange market.