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Emefiele: CBN Prioritising Price Stability to Attract Investors, Boost Growth

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Godwin Emefiele CBN - Investors King
  • CBN to Prioritise Price Stability to Attract Investors, Boost Growth

The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, has said the bank will pursue price stability as an anchor for economic growth as well as attract foreign investors as the country battles recession and rising inflation.

Emefiele said in an interview with The Banker Magazine that:
“The CBN does not reckon that curbing inflation, attracting foreign investors and supporting growth are mutually exclusive objectives. Rather, the monetary policy committee’s decision reflects the (central bank’s) prioritisation of its core mandate of pursuing price stability as an anchor and enabler for economic growth.

“As we have consistently said, the bank would continue to ensure that its decisions do not only consider price and financial system stability, but also issues of employment and growth.”
He reiterated that the reintroduction of a flexible exchange rate system has helped increase transparency in the FX market, cleared an estimated $4 billion backlog in FX demand, reduce arbitrage and speculative opportunities, and create a more predictable structure for businesses to prioritise their FX demand, we believe that this policy has been beneficial to the economy.

“This policy has led to a gradual but steady inflow of new FX into the market. All of these have largely met the bank’s expectations in the short term. We believe that these benefits will become magnified as the policy’s sustenance improves the credibility of the CBN and investors trust us more to return more forcefully as active participants in Nigeria’s FX market.

“Obviously, the reintroduction of the flexible exchange rate system immediately led to a depreciation of the naira in the interbank market, and helped close the significant spread with the parallel market. Also, this policy encouraged movement of FX demand from the parallel to the interbank market,” which also brought the two rates closer.

“Finally, new foreign portfolio inflows into the interbank market and our recent policy of allowing commercial banks to transfer some share of diaspora remittances to bureaux de change have also helped moderate rates in both markets,” Emefiele noted.

For now, however, a lack of hard currency is continuing to squeeze economic growth. Businesses, particularly those that must import goods, are bearing the brunt of this, as are Nigeria’s banks. In August, the CBN barred nine lenders for their failure to shift dollar-denominated funds from the state-owned gas group NNPC and the state-owned oil group NLNG to the treasury single account (TSA), a recently introduced single repository for all government funds.

“One of the most sacred obligations of a commercial bank is to produce customers’ deposits ‘on demand’. That is why these deposits are classified as ‘demand deposits’. Some of our banks failed to meet this obligation with respect to deposits of United States dollars by the NNPC and the NLNG. We had given them quite some time to transfer these balances into the federal government’s TSA,” Emefiele added.

Some banks’ failure to comply with this directive led the central bank to expel them from the interbank FX market. International press reports have indicated that some of these lenders blamed their breach of this directive on the lack of dollar liquidity in the market. Nevertheless, the CBN’s actions sit within the wider government’s attempts to impose greater transparency on the movement and allocation of public funds.

“When we became uncomfortable with their plans and seriousness to comply with the TSA, we thought we had to take strong action to ensure these monies were returned. The good news is that this action jolted them and some of the banks have transferred all their balances, while the remainder now have stronger and more credible plans to return these funds,” the CBN governor explained.

Despite the challenges in the economy, Emefiele remained upbeat about the prospects for Nigeria’s economy. As part of a wider package of reforms, President Muhammadu Buhari has tripled capital expenditure plans under the 2016 budget, though this is contingent on securing external financing.

“The Nigerian economy is adjusting to the aftermaths of the oil price shocks that led to a slowdown in output growth in 2015, and eventual contraction in output in the first half of 2016. Energy shortages, high electricity tariffs, FX supply shocks and depressed consumer demand have also exacerbated the adverse nature of this adjustment.”

“However, we are very optimistic that a strong rebound in the economy will occur soon. This optimism stems from our expectations that the reforms pursued by the new administration are in the right direction and are beginning to lay a foundation for renewed growth,” he stated.

Meanwhile, in an attempt to ensure strict compliance with all extant regulations, particularly those relating to forex transactions, Financial Action Task Force (FATF) and Anti-money Laundering/Combating the Financing of Terrorism (AML/CFT), the CBN said it had resolved to enhance the minimum qualification for the position of Chief Compliance Officers (CCOs) of commercial banks.

According to the CBN, going forward, banks are required to appoint not only a CCO who must not be below the rank of a General Manager, regardless of the category of the institution, but also an Executive Compliance Officers (ECOs) who must not be below the level of an Executive Director.

In a circular posted on its website at the weekend, the central bank stated that while the CCO is expected to report to the ECO, the ECO on the other hand would be reporting directly to the board of directors of the bank.

“The CBN will hold the ECO responsible and accountable for any breach of any extant regulation in the bank. For avoidance of doubt, the CBN shall suspend/dismiss any ECO and CCO found wanting in the discharge of his/her responsibility,” the apex bank warned.

According to the circular, the DMBs are required to forward the names of their ECOs and CCOs together with their curriculum vitae to the CBN for approval on or before October 10, 2016.

The ECOs are however allowed to combine the responsibility with other functions while CCOs will focus only on compliance matters in the bank, the CBN added.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Senate Suspends Senator Abdul Ningi for 3 Months Over Budget Padding Allegations

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Abdul-Ahmed-Ningi

The Senate has announced the suspension of Senator Abdul Ningi for three months following his allegations of budget padding to the tune of N3.7 trillion in the 2024 budget.

Ningi, who represents Bauchi Central and chairs the Senate Committee on Population, had made the claims in a recent interview with the Hausa service of the BBC.

During a plenary session, Senator Olamilekan Adeola, the Chairman of the Senate Committee on Appropriations, raised a motion to address Ningi’s allegations, citing the urgent need to address what he termed as “false allegations.”

The transcript of Ningi’s interview was read on the Senate floor, prompting deliberation on the appropriate action to take.

Initially, Senator Jimoh Ibrahim proposed a 12-month suspension for Ningi, but Senator Chris Ekpeyong moved to reduce it to six months.

Eventually, Senator Garba Maidoki amended the motion further, suggesting a three-month suspension.

The amended motion was put to a voice vote, and Senate President Godswill Akpabio announced the decision to suspend Ningi for three months.

Following the ruling, Ningi was escorted out of the Senate chamber by the Sergeants-at-arms.

The suspension comes amidst division within the Senate over Ningi’s claims, with some senators disowning his allegations and calling for a thorough investigation.

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Ekiti Governor Unveils Multi-Billion Naira Relief Programmes Amid Economic Crisis

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Biodun Oyebanji

Ekiti State Governor, Mr. Biodun Abayomi Oyebanji, has announced a comprehensive relief package aimed at alleviating the hardship faced by the people of the state.

The relief programs encompass various sectors to cushion the impact of the economic downturn.

One of the key initiatives entails clearing salary arrears amounting to over N2.7 billion owed to both State and Local Government workers.

This move signifies the government’s commitment to addressing the financial burdens faced by its workforce.

Furthermore, Governor Oyebanji has approved a substantial increase of N600 million per month in the subvention of autonomous institutions, including the Judiciary and tertiary institutions.

This augmentation is intended to enable these institutions to implement wage awards in alignment with State and Local Government workers’ salaries.

In addition to addressing salary arrears, the relief programs extend to pensioners, with the approval of payments totaling N1.5 billion for two months’ pension arrears.

Moreover, an increase in the monthly gratuity payment to state pensioners and local government pensioners will provide additional financial support, totaling N200 million monthly.

The relief initiatives also encompass agricultural and small-scale business sectors.

The allocation of funds for food production and livestock transformation projects underscores the government’s commitment to enhancing food security and economic sustainability at the grassroots level.

Governor Oyebanji emphasized that these relief programs are part of the state’s concerted efforts to mitigate the adverse effects of the economic downturn and foster shared prosperity.

The comprehensive nature of the initiatives reflects a proactive approach towards addressing the challenges faced by Ekiti State residents.

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President Tinubu Orders Immediate Settlement of N342m Electricity Bill for Presidential Villa

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power project

President Bola Tinubu has directed the prompt settlement of a N342 million outstanding electricity bill owed by the Presidential Villa to the Abuja Electricity Distribution Company (AEDC).

This move comes in response to the reconciliation of accounts between the State House Management and the AEDC.

The AEDC had earlier threatened to disconnect electricity services to the Presidential Villa and 86 Federal Government Ministries, Departments, and Agencies (MDAs) over a total outstanding debt of N47.20 billion as of December 2023.

Contrary to the initial claim by the AEDC that the State House owed N923 million in electricity bills, the Presidency clarified that the actual outstanding amount is N342.35 million.

This discrepancy underscores the importance of accurate accounting and reconciliation between entities.

In a statement signed by President Tinubu’s Special Adviser on Information and Strategy, Bayo Onanuga, the Presidency affirmed the commitment to settle the debt promptly.

Chief of Staff Femi Gbajabiamila assured that the debt would be paid to the AEDC before the end of the week.

The directive from the Presidency extends beyond the State House, as Gbajabiamila urged other MDAs to reconcile their accounts with the AEDC and settle their outstanding electricity bills.

The AEDC, on its part, issued a 10-day notice to the affected government agencies to settle their debts or face disconnection.

This development highlights the importance of financial accountability and responsible management of public utilities.

It also underscores the necessity for government entities to fulfill their financial obligations to service providers promptly, ensuring uninterrupted services and avoiding potential disruptions.

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