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Single Currency: Nigeria, Ghana, Others Fail to Meet Criteria

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  • Single Currency: Nigeria, Ghana, Others Fail to Meet Criteria

The inability of some countries within the West African Monetary Zone to meet up with the macroeconomic convergence criteria is currently threatening the take-off of the single currency regime for the sub region.

The development was confirmed on Thursday during the 37th meeting of the Committee of Governors of Central Banks of the West Africa Monetary Zone, which held at the headquarters of the Central Bank of Nigeria in Abuja.

The ECOWAS authority had approved the reduction of the macroeconomic convergence criteria from 11 (four primary and seven secondary criteria) to six criteria (three primary and three secondary criteria).

The three primary criteria being used are a budget deficit of not more than three per cent; average annual inflation of less than 10 per cent with a long-term goal of not more than five per cent by 2019; and gross reserves that could finance at least three months of imports.

The three secondary convergence criteria that have been adopted by ECOWAS are public debt/Gross Domestic Product of not more than 70 per cent; central bank financing of budget deficit should not be more than 10 per cent of previous year’s tax revenue; and nominal exchange rate variation of plus or minus 10 per cent.

Presenting a progress report at the opening session of the meeting, the Director General, West Africa Monetary Institute, Dr Ngozi Egbuna, explained that as of December 2017, none of the countries met all the four criteria.

She, however, said the average performance of the member countries of the zone improved during the year under review.

For instance, Egbuna stated that The Gambia, Guinea and Nigeria attained three criteria each.

She said The Gambia missed the fiscal deficit criterion; Guinea slipped on the gross external reserves, while Nigeria missed inflation criteria.

She explained further that Ghana and Liberia achieved two criteria each.

Ghana, according to her, missed the inflation and fiscal deficit criteria, while Liberia missed the inflation and central bank financing criteria.

Sierra Leone, Egbuna added, met one criterion, which was the gross external reserves criterion.

Addressing delegates at the meeting, the Governor, CBN, Mr Godwin Emefiele, cautioned member countries not to let the desire for a common currency blind them to the adverse and contagion factors associated with a unified monetary environment.

He said, “Our desire for greater economic prosperity for our people through a common monetary union must not vitiate our awareness of the potential adverse and contagion factors associated with unified monetary area and common currency.

“The unfolding trade war between the United States, China and the West portends both opportunities and challenges for our region’s economy, depending on how we approach it individually as nations.

“Nonetheless, while the shocks to individual economies might vary in magnitude and intensity, it might yet be an opportunity for us to look inward and strategize on how best to fill the trade gap that will ensue.”

Emefiele added, “Now is the time to create the West African Monetary Zone Commission to drive our common interests and aspirations.

“We must intensify our level of cooperation and collaboration through strong bonds to work as a unit within the ECOWAS monetary union programme to achieve our shared objective.”

Emefiele called for greater collaboration among member countries as the ECOWAS region embarks on a thorough review of the economic conditions of member countries through their levels of preparedness for the monetary union and economic integration.

Meanwhile, the CBN governor has been elected as the Chairman of the West Africa Monetary Zone.

He was elected at the sub-regional meeting of the body being hosted by Nigeria.

The WAMZ was established in 2000 and comprises countries within the Economic Community of West African States that are working towards adopting their own common currency, the eco.

Speaking shortly after his unanimous election, Emefiele said that there was a greater work to be done to achieve the single currency objective of the zone by 2020.

“A lot of work needs to be done, especially in respect of the attainment of ECOWAS single currency by 2020,” he stated.

He further noted that everything that was required to be done would be actualised towards the achievements of the objectives of the regional organisation.

Emefiele restated Nigeria’s unflinching commitment to the single currency project in the sub-region and urged ECOWAS member countries to work towards achieving the convergence criteria.

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.

Finance

Emefiele Pledges Accommodative Monetary Policy to Boost Economic Growth

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Godwin Emefile

Emefiele Pledges Accommodative Monetary Policy to Boost Economic Growth

The Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, has pledged to adopt accommodative monetary policy stance in 2021 in order to support economic growth in the country.

Emefiele, said this on Friday, while speaking at a CBN/Bankers’ Committee’s initiative for economic growth, which is a one-day special summit on the economy by bank chief executive officers.

The theme of the summit is: “How to Overcome the Pitfalls of Recession.”

Nigeria’s economy recently came out of recession, according to the Gross Domestic Product report for fourth quarter 2020 released by the National Bureau of Statistics.

Owing to the slump GDP growth of 0.11 per cent that lifted the economy out of recession, Emefiele said it was imperative that, “we do all we can in 2021 and beyond to ensure that we build on the positive momentum and strengthen our efforts at stimulating growth.”

He expressed optimism that with the discovery and deployment of vaccines worldwide, 2021 would be a year of massive global recovery and Nigeria must not be left out.

“The banks CEOs are here, whether by moral suasion or by force, they will have to participate in this journey. In order to drive and sustain this recovery therefore, we need to sustain the accommodative fiscal and monetary policy measures aimed at improving access to finance for households and businesses.

“Secondly, we must prevent a resurgence in Covid-19 related cases. Thirdly, we must ensure that a significant number of our population is significantly vaccinated and also improve foreign exchange inflows into our country,” he added.

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Banking Sector

CIT Microfinance Bank Disburses Over N16bn Loans

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CIT Microfinance Bank Disburses Over N16bn Loans

CIT Microfinance Bank Limited says it has disbursed about N16bn loans since it commenced operations as part of its contributions to the financial sector and empowerment of businesses.

The Managing Director of the microfinance bank, Mr Kingsley Eremionkhale, disclosed this during the company’s 10th anniversary in Lagos recently.

He reiterated that the bank was committed to supporting the growth of small and medium-scale enterprises in the country.

“Since inception, we have disbursed loans worth about N16bn. Our operation is not just about profit-making, but we have impacted many lives, empowered many businesses, and done a lot in terms of our core mandate as a microfinance bank.”

While appreciating its customers who had been loyal to it for years, he said it was concerned about their business success.

The managing director said, “We are part of our customers’ businesses. We provide services beyond lending and savings products and we also give financial advisory services.”

He appreciated the customers who had stayed with the financial institution for many years.

The managing director noted that the MfB is a state-licensed bank operating in Lagos, and a subsidiary of Capitalfield Investment Group.

He also attributed the success of the MfB to the board of directors which it said had been supportive, the management team and its workforce in the past 10 years.

While saying that the bank could lay claims to exponential growth, he said the public should expect more from it.

He also said that it was driving its operations through its digital offerings and our e-channels, to improve its services to our customers.

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Finance

FMDQ Approves Valency Agro’s N5.12bn Commercial Paper

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FMDQ

FMDQ Approves Valency Agro’s N5.12bn Commercial Paper

FMDQ Securities Exchange Limited has announced the approval of the quotation of the Valency Agro Nigeria Limited N5.12bn Series 1 Commercial Paper under its N20bn CP Programme on its platform.

The Exchange said in fostering the development of the Nigerian debt capital markets, it had continued to avail its credible and efficient platform as well as tailor its listings and quotations services to suit the needs of issuers and registration members through innovative and uninterrupted service delivery.

It said in a statement on Thursday that the Valency Agro Nigeria CP debut issue came at a time when the Nigerian economy was bedeviled with soaring food prices, amidst compounding challenges of insecurity.

It said the agricultural sector and its attendant transformation agenda had never been more important in driving increased and sustainable production of agricultural products as well as the derived foreign earnings through exports.

The Exchange said the proceeds from the issue of the CP would be applied by Valency Agro towards meeting the mid-term working capital requirements of the various agricultural produce under its portfolio such as cashew, sesame, cocoa and in value addition prior to export.

The Executive Director, Valency Agro Nigeria Limited, Mr Sumit Jain, was quoted as saying, “We are thankful to our investors towards showing their faith in our agenda to grow the agriculture-focused business with a clear aim to maximise value addition and create employment opportunities in Nigeria.

“We would also like to commend the efforts made by FBNQuest Merchant Bank Limited’s team to build the reach and FMDQ for their unconditional support for the industry”.

The Head, Capital Markets, FBNQuest Merchant Bank, Mr Oluseun Olatidoye, said, “FBNQuest Merchant Bank Limited is delighted with the successful debut of the N5.12bn Series 1 CP issued by Valency Agro Nigeria Limited. This reiterates our effort to enable underserved sectors access the debt markets, optimise their capital structure and further deepen the domestic capital markets.

“We are proud of the instrumental role FBNQuest Merchant Bank played in this transaction and appreciate the trust the management of Valency Agro placed in us to assist them. Our clients remain our priority, and we strongly believe their success is our success.”

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