Deposit Money Banks have yet to comply with the Central Bank of Nigeria’s directive asking them to sell $50,000 from Diaspora remittances to Bureau De Change operators on weekly basis, the President, Association of Bureau De Change Operators of Nigeria, Aminu Gwadabe, has said.
In a statement on Monday, the ABCON boss said only 10 per cent of the BDCs from the Lagos market had accessed dollars from the DMBs since the CBN gave the directive about three weeks ago.
According to him, the banks that have been involved in the dollar sales so far include First Bank of Nigeria Limited, Ecobank Nigeria, Fidelity Bank Plc, United Bank for Africa Plc and Unity Bank Plc.
Others are Diamond Bank Plc, Zenith Bank Plc and Stanbic IBTC Bank.
Gwadabe regretted that the BDCs in Port Harcourt, Kano, Abuja, Onitsha, Maiduguri, Benin and Enugu had yet to get dollars from the banks.
He said that the BDCs were also selling the dollar between N345/dollar and N355/dollar, far above the interbank rate of N305 to the dollar on Monday.
The banks, he added, were supposed to sell to the BDCs on the same day within the week, but had failed to do so.
He said, “Instead of staggering the payment, the banks should sell to the BDCs on the same week’s day, so that the impact will be felt in the market. We also want the CBN to license new International Money Transfer Operators to deepen the market
“Our members across the country have funded their accounts since two weeks ago but the banks are not selling to them. The BDCs that met the CBN’s policy guidelines on the disbursement and cleared by the banks have still not received a dime from the banks.”
Gwadabe therefore called on the CBN to outsource the dollar distribution role to an independent distributor since the banks had failed in their assigned role.
“I think the banks are compromising the policy and CBN’s directive on the matter. And like I said earlier, since the banks are not cooperating, I expect the CBN to take that role from them and assign it to a reputable independent distributor,” he said.
The CBN had directed, through a circular to authorised dealers, that all agents to approved IMTOs sell foreign currency accruing from inward money remittances to licensed BDCs.
The directive was meant to ensure stability of the exchange rate and encourage participation of critical stakeholders in the foreign exchange market.
Speaking further on the Diaspora remittances, Gwadabe said, “The proceed of the international money transfer fund, is not the CBN money. It is not from the foreign reserves of the CBN. This is money that Nigerians in Diaspora are sending into the economy. Before, this money comes through unofficial means, some sending through hands, and at the end of the day, the beneficiary will not even get the money”.
According to him, the CBN is trying to increase liquidity, and deepen the market. “Before the circular on Diaspora remittances, the proceeds were exclusive reserve of the banks. And in other climes, it is not like that. That kind of money is exclusive to the BDCs in other countries. But what we have here is the reverse case. It became monopolised by the banking sector,” he said.
“This money should all go to the BDCs. But we want the banks to give us part of it, so that we begin to see activities in the market. And based on that submission, the CBN saw reasons in what we are saying. And they issued circular directing banks to sell part of the funds to the BDCs so that we can ensure that the demands of the critical retail sector are being serviced.”
FirstBank Expands Its International Money Transfer Network, Reinforces its Commitment to Customer Service
In furtherance of the need to expand diaspora remittance inflow into the country, First Bank of Nigeria Limited has increased its network of International Money Transfer Operators (IMTOs), targeted at easing the accessibility of its customers to receive money from close to 100 countries across the world in a safe and secured manner. With over 750 branches across the country, customers can receive money from the nearest FirstBank branch closest to them.
Over the years, FirstBank has been in partnership with Western Union, MoneyGram, Ria, Transfast, and WorldRemit. The bank is also in partnership with other IMTOs which include Wari, Smallworld, Sendwave, Flutherwave, Funtech, Thunes and Venture Garden Group to promote remittance inflow into the country, thereby putting Nigerians and residents at an advantage in receiving money from their families, friends and loved ones across the world.
Beneficiaries can receive remittance in US dollars in any of our over 750 branches spread across the country. Customers without an existing domiciliary account can have dollar account automatically created for their remittances. You can also receive inflow directly into your account through Western Union.
In addition, FirstBank has launched its wholly owned remittance platform named First Global Transfer product to promote the international transfer of funds across its subsidiaries in sub-Saharan Africa. These subsidiaries include FBNBank DRC, FBNBank Ghana, FBNBank Gambia, FBNBank Guinea, FBNBank Sierra-Leone, FBNBank Senegal.
Reiterating the Bank’s resolve in promoting diaspora remittances, regardless of where one is across the globe, the Deputy Managing Director, Mr Gbenga Shobo said “at FirstBank, expanding our network of International Money Transfer Operators is in recognition of the significant roles diaspora remittances play in driving economic growth such as helping recipients meet basic needs, fund cash and non-cash investments, finance education, foster new businesses and debt servicing.
We are excited about these partnerships, as it is essential to ensure our customers are at an advantage to receive money from their loved ones and business associates, anywhere they are, across the world.”
FirstBank pioneered international funds transfer and remittances over 25 years ago and has been at the forefront of promoting cross border payments in the country, having started the journey with Western Union Money Transfer. The Bank’s wealth of experience and operation in over 750 locations nationwide gives it the edge in the market.
Private Sector Seeks FG’s Directive on VAT Payment
The Organised Private Sector of Nigeria (OPSN) on Sunday in Lagos called on the Federal Government to urgently make a pronouncement on the ongoing controversy over VAT payment so that businesses will know what to do.
OPSN chairman, Mr Taiwo Adeniyi, made the call at a news conference and said delays in addressing the issue could cause negative effects on businesses, most especially in the collection and remittances of VAT.
“We are aware that by Sept. 21 we get penalised if we do not pay or remit the VAT for the month of August.
“We are also aware that laws are not made in retrospect. It then means that even if those laws have been enacted, particularly the Lagos State law which came into effect in September, it will not affect the payment by businesses in the state.
“Due to our remittances, we have issues with the fact that the law for Rivers was made in August and the majority of the businesses in Lagos usually will have a relationship with the Rivers State Inland Revenue too.
“The confusion in the public space is the reason we are calling on the government to come to our aid as we want to pay.
“It is for the government at the center to make a pronouncement as to what becomes of us,’’ he said.
Adeniyi, who is also the President of, Nigeria’s Employers Consultative Association (NECA), said that the ongoing challenge had the potential to make businesses pay double VAT in view of demands by the FIRS and state governments.
He said that businesses, as the collecting agents, were practically unclear on the authority to remit to and without a clear path, this would further aggravate the pain on businesses.
“It is a popular saying that where two elephants fight, it is the grass that suffers.
“It is no longer news that Nigerian businesses have been battling with myriads of challenges, making the survival of enterprises and ease of doing business in the country among the worst in this part of the world,’’ he said.
There has been controversy over the collection of VAT after a Federal High Court ruled that it was not the duty of the Federal Government to collect the tax.
VAT is normally collected by the Federal Government since the military era and the money is shared by the three tiers of government.
Following the court ruling, however, Lagos and Rivers states passed laws that allowed them to collect VAT.
FIRS, which used to collect the VAT on behalf of the Federal Government, has challenged the court ruling at the appellate court.
OPSN comprises the Manufacturers Association of Nigeria, the Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture, NECA, Nigeria Association of Small Scale Industries and the Nigeria Association of Small and Medium Enterprises.
Global Banking Sector Grows 40% Reviving Pandemic Losses in Just 12 Months
In 2020, the global banking sector took a hit following the economic impact of the coronavirus pandemic, which was reflected in the overall market capitalization. However, with the ongoing global recovery, the banking industry has regained most of the losses incurred during the health crisis.
According to data acquired by Finbold, in just 12 months between Q2 2020 and Q2 2021, the global banking sector’s market cap has surged 39.62%, adding €2.1 trillion from €5.3 trillion to €7.4 trillion. On the path to recovery, the market cap slightly plunged in 2020 Q3 to €5.2 trillion before gaining 17.3% the next quarter.
Among the Western European banks, Spain’s BBVA bank recorded the highest total shareholder return rate at 19.7% between April 2021 – July 2021, followed by Société Générale from France at 13.8%, while Banco Santander, also from Spain, ranks third at 12.1%. United Kingdom’s Barclays is the worst performer with a TSR of -8%. Data on the global banking sector’s market cap is provided by Banking Hub.
How banking sector sustained growth
The registered market capitalization is supported by the large-scale reopening of economies due to the vaccine rollout. Additionally, the banks, especially from major economies like the United States and Europe, have reaped from policies meant to cushion the economy from the adverse effects of the pandemic. Notably, the decisions by most banks to retain a low-interest-rate environment has been beneficial to banks.
Worth noting is that during the pandemic, banks found themselves in a tight spot. Historically, the banking sector has been considered the custodian of the economy but the pandemic also plunged the banks into a crisis. The banking sector’s profits were adversely affected considering they are bound to the business cycle and interest rates.
At the same time, banks also put in place measures like approaching loans with caution due to uncertainty in repaying which directly impacted profits. However, banks were tapped to facilitate the distribution of stimulus packages boosting their capital reserves in return.
Worth pointing out is that institutions like the European Central Banks allowed banks to continue using their capital buffers flexibly with a planned extension until 2022. With such moves helping banks sustain growth, it eliminates the worry of straining capital buffers while the health crisis is still impacting the banks’ balance sheets.
Furthermore, the crisis highlighted the need for banks to keep huge reserves of capital that can be activated in the wake of economic turmoil. Although most banks have historically relied on assets for future cushion, a crisis like the coronavirus calls for more capital because selling assets in such an environment is challenging.
Besides the policies, the banking sector recovery was partly aided by existing operational risk management arrangements. The pandemic tested all financial market participants and most leading banks successfully invoked business continuity plans. The plans ensured that the financial markets continued to run smoothly and orderly.
The sector’s recovery has also been accelerated by other factors like the increased adoption of pre-pandemic trends like digitalization and sustainability. Digitization of operations has been backed by consumers who are willing to conduct transactions online. At the same time, the digital shift has presented a competitive factor in the sector, with institutions that had established online presence benefiting the most.
Notably, the recovery was at some point under threat during the third quarter of 2020 amid concerns of the pandemic’s second wave. However, the sector sustained the gains with the rollout of the vaccine. Furthermore, moving into 2021, the industry appears not to be bothered by the Delta variant.
The future of the banking sector
By sustaining the market capitalization for two consecutive quarters, it can be assumed that the banking sector response to the health crisis is bearing fruits. However, it is still early to determine if the recovery is sustainable.
The rally will be tested, especially when central banks eliminate all the policies meant to cushion the economy. However, in the long run, banks will have to tailor their operations towards changing consumer behaviour.
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