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IMF Insists on Naira Devaluation

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The Central Bank of Nigeria needs to devalue the naira by adjusting the official exchange rate of N199/dollar to a more market-determined exchange rate, the International Monetary Fund has said.

This position sharply differs from that of President Muhammadu Buhari, who insisted that Nigeria would not devalue the currency.

A former Secretary-General of the Commonwealth of Nations, Chief Emeka Anyaoku, has, however, warned that naira devaluation could trigger an economic disaster for the country, urging Buhari not to yield to pressure to devalue the currency.

But the Washington-based monetary fund said in a statement on Wednesday that Nigeria’s economy was suffering from the impact of a sharp decline in oil prices, which made naira devaluation a necessity.

The statement read, “Nigeria is facing the impact of a sharp decline in oil prices. Eliminating existing macroeconomic imbalances and achieving sustained private sector-led growth requires a renewed focus on ensuring the competitiveness of the economy.

“As part of a credible package of policies, the exchange rate should be allowed to reflect market forces more and restrictions on access to foreign exchange removed, while improving the functioning of the interbank foreign exchange market.

“It will be important for the regulatory and supervisory frameworks to ensure a strong and resilient financial sector that can support private sector investment across production segments (including the SMEs) at reasonable financing costs.”

The IMF statement was released after its 2016 Article IV Mission to Nigeria.

It noted that the team met with Vice President Yemi Osinbajo; the Minister of Finance, Mrs. Kemi Adeosun; the Minister of Budget and Planning, Senator Udo Udoma; and the Governor, CBN, Mr. Godwin Emefiele.

According to the fund, foreign exchange restrictions introduced by the CBN to protect reserves have impacted significantly on segments of the private sector that depend on adequate supply of foreign currencies.

“With oil prices expected to remain low for a long time, continuing risk aversion by international investors and downside risks in the global economy, the outlook remains challenging. The authorities’ policy response has focused on seeking to support growth, while preserving international reserves. The draft 2016 budget envisaged, appropriately, a significant shift in the composition of fiscal spending toward capital investment while increasing the allocation for a social safety net. At the same time, the CBN has eased monetary conditions.”

The IMF also noted that “in the light of the significant macroeconomic adjustment that is needed to address the permanent terms-of-trade shock, it will be important to put in place an integrated package of policies centred around: (i) fiscal discipline; (ii) reducing external imbalances; (iii) further improving efficiency of the banking sector; and (iv) fostering strong implementation of structural reforms that will enhance competitiveness and foster inclusive growth.”

Anyaoku said at the 40th and 7th anniversary symposium organised by the Ondo State Government on Wednesday in Akure that “those calling for official devaluation of the naira need to come up with a good answer to Nigeria’s current problematic situation with its currency.

“An incontrovertible fact is that with the current level of the country’s dependence on imported goods resulting in a monthly import bill that is about four times the value of its main export (crude oil) that is traded in the US dollars, official devaluation of the naira via-a-vis the dollar will inevitably produce a further rise in inflation to the detriment of all of us including the masses.

“Besides, in such circumstances, devaluation will lead to an unacceptable drain in the country’s external reserves that is already worryingly depleted.” Punch reported.

 

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Banking Sector

CBN Grants Lotus Bank Non-Interest Banking Licence

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The Central Bank of Nigeria (CBN) on Thursday, June 17, granted a non-interest banking licence to Lotus Bank Limited.

This was contained in a statement titled ‘CBN grants Lotus Bank licence to commence non-interest banking operations’.

The statement read in part: “Lotus Bank seeks to pursue the mission of creating value and growth for all through digital innovation and best-in-class customer experience for Nigerians.”

Commenting on the grants, the founder and managing director of Lotus Capital (the pioneers of non-interest finance in Nigeria), Hajara Adeola, said the bank was starting its operations on a solid foundation of experienced leadership and a strong advisory council of experts.

Adeola explained that the bank is managed by a team of seasoned professionals and financial experts led by the Managing Director/Chief Executive Officer, Kafilat Araoye, who has over 25 years of commercial banking experience.

She added that the institution’s focus and guiding principle is ‘to deliver an alternative option to interest-based banking and to cater to the needs of not just the banked but also the underbanked and unbanked population.

According to her, non-interest banking was geared towards supporting the real sector and Lotus Bank aimed to improve financial inclusion in the country.

The founder of the bank, however, disclosed that it would operate transparent pricing models as it was the norm in non-interest banking.

The statement added: “Our values are deeply rooted in partnership. A critical component of our mission is the provision of innovative solutions that drive ethical prosperity for all stakeholders.

“We pride ourselves on digital solutions that provide our customers with the convenience of unlimited access to our services and products.”

“Our products and service offerings will include non-interest business financing, deposit products (current, savings and investment accounts) and personal financing.”

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Banking Sector

Fidelity GAIM Season 4 Final Draw To Hold On July 22

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One of the leading financial institution in Nigeria, Fidelity Bank Plc, has announced plans to enrich the lives of fifteen Nigerians with a total of 39 million Naira at the final draw of the “Get Alert in Millions Campaign (GAIM)” Season 4 savings promo, slated for July 22, 2021.

The savings promotion, which is specifically aimed at promoting the culture of saving among Nigerians, is one of the bank’s many initiatives aimed at rewarding new and existing customers for their unwavering loyalty and patronage.

Despite the fact that the promotion was halted in 2020 due to the Coronavirus (Covid-19) Pandemic and the resulting global lockdown, hundreds of Nigerians have benefited from this unique reward scheme in which lucky customers are credited with millions of naira and consolation prizes via a draw system.

The Chairman, Promo Committee, Fidelity Bank Plc, Mr. Richard Madiebo expressed his delight at the resumption of the savings promotion, stating that the campaign seeks to reward customers for their loyalty and patronage. According to Mr. Madiebo, for the past twelve years, the bank has empowered new and existing customers, providing an avenue for many to change their fortunes through its savings Promo.

He stated that the bank takes pride in keeping its promises, adding that the lender would continue to look out for innovative ways to satisfy and enrich its customers across the nation.

“And as we wind down on the 4th season of the GAIM promo, we are elated at the prospect of not only driving financial inclusion across Nigeria but also at the unique opportunity to enrich the lives of our customers especially in times of economic uncertainties”, noted Madiebo

Over the years, the leading tier two Bank has continued to intensify its efforts and innovate ways towards ensuring customer and stakeholder satisfaction. Through this promo, Fidelity Bank has promoted financial inclusion through digital channels and enriched the lives of its customers even in times of economic uncertainties.

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Banking Sector

Zenith Bank Gets Recognition for Best Corporate Governance

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Zenith Bank Plc’s strong business ethos, ethical values, and impeccable corporate governance have been rewarded with ‘Best Corporate Governance’ Financial Services’ Africa 2021 award by the Ethical Boardroom.

The bank, in a statement yesterday, said the award, published in the June 2021 edition of The Ethical Boardroom magazine, recognised the bank’s adherence to global best practices and institutionalisation of corporate governance as well as setting an industry-wide example of best practices in that field.

Commenting on the award, Group Managing Director/Chief Executive of Zenith Bank Plc, Mr. Ebenezer Onyeagwu, said: “This recognition is a testament to our commitment to quality, accountability, fairness and transparency in our engagement with all stakeholders.

“It is also an affirmation of the bank’s professionalism, ethical conduct and sustenance of global best practices and standards which is attributable to the joint collaboration of the management and staff.”
The award comes on the heels of others and recognitions that the bank has garnered in recent times for its track record of excellent performance and commitment to global best practices.

For instance, Zenith Bank was voted as Bank of the Year (Nigeria) in The Banker’s Bank of the Year Awards 2020; Best Bank in Nigeria in the Global Finance World’s Best Banks Awards 2020 and 2021, and Best Corporate Governance’ Financial Services’ Africa 2020 by the Ethical Boardroom.

Also, the bank emerged as the Most Valuable Banking Brand in Nigeria in the Banker Magazine Top 500 Banking Brands 2020 and 2021, and Number One Bank in Nigeria by Tier-1 Capital in the “2020 Top 1000 World Banks” Ranking by The Banker Magazine.

Similarly, the bank was recognised as Bank of the Decade (People’s Choice) at the THISDAY Awards 2020, Retail Bank of the year at the 2020 BusinessDay Banks and Other Financial Institutions (BOFI) Awards, and Best Company in Promotion of Good Health and Well-Being as well as Best Company in Promotion of Gender Equality and Women Empowerment at the Sustainability, Enterprise and Responsibility (SERAS) Awards 2020.

Zenith Bank has been generally adjudged a corporate governance compliant bank by the Nigerian Exchange Limited (NGX) hence its listing on the Premium Board of the Exchange.

The bank continues to sustain this reputation and reappraise its processes to ensure that its business conforms to the highest global standards at all times.

The bank places a premium on its core business strategy anchored on people, technology and service, to create value for its numerous clientele.

“With a team of dedicated professionals, the bank leverages its robust Information and Communication Technology (ICT) infrastructure to provide cutting-edge solutions and products through its network of branches and electronic/digital channels,” the statement added.

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