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Why CBN May Not Raise Rates in 2019

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  • Why CBN May Not Raise Rates in 2019

The uncertainty surrounding global growth is forcing central banks to make monetary adjustments in order to stimulate and sustain growth.

Global View

On Tuesday, the Federal Reserve Chair, Jerome Powell, said the central bank will do anything possible to sustain U.S economic productivity.

The comment was after previously signaling zero rate hike earlier this year, however, the inability of President Trump to reach an agreement with the Chinese has changed the dynamics of global trade in recent months and expected to further erode productivity in developed economies if nothing is done.

According to the U.S central bank, weak global growth amid efforts to maintain 2 percent inflation rate will necessitate monetary adjustments.

This has led to many experts projecting that the Federal Reserve will cut rates by 50 basis points this year, with the odds of that happening jumping to 70 percent this week.

In Australia, the story is not different, the Reserve Bank of Australia cut rates by 25 basis points for the first time in over three years on Tuesday, citing weak growth amid record low unemployment rate and sluggish wage increase.

The European Central Bank and the Bank of Japan are expected to increase economic stimulus, especially after the Fed’s comment and Australia move.

Nigeria

While the Central Bank of Nigeria lowered interest rate by 50 basis points to 13.5 percent in the first quarter, citing improved macro factors. The truth is the CBN led Monetary Policy Committee lowered interest rate after enough evidence showed the U.S., the European Central Bank, Bank of England, the People’s Bank of China and Bank of Japan won’t be raising rates in 2019 given the fragile state of global economy and the uncertainty surrounding the U.S-China trade talks.

The apex bank anticipated that the disruption in crude oil exports from Venezuela and Libya, Iranian sanctions and OPEC+ production cuts will sustain crude oil at about $70 a barrel, while expecting foreign investors to continue to invest in Nigeria considering 13.5 percent is still high and knowing developed economies are not raising rates in 2019.

But with the crude oil now trading at about $61 a barrel, down from $73 following the fallout between the U.S and China, Nigeria’s foreign reserves would benefit from the likely capital inflows into emerging economies.

This coupled with the foreign reserves currently standing at a record high of $45.2 billion, moderating inflation rate of 11.37 percent and the implementation of the signed N8.91 trillion 2019 budget will give the CBN enough room to adjust to global happenings and still manage the economy effectively without necessarily raising the interest rate.

A situation that would sustain the CBN’s ability to regulate the foreign exchange market through its intermittent intervention.

Still, a clear economic policy is needed to encourage capital inflow given the surged in the risks associated with emerging assets –U.S experts/analysts are already predicting economic recession for 2020.

Therefore, Nigeria’s economy needs to be positioned with a strong economic team and a clear policy path to attract investors ahead of South Africa and other emerging markets with better economic policies.

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.

Banking Sector

TAJBank Deploys NQR Solution To Ease Customer Transactions

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TAJBank, Nigeria’s non-interest bank, has announced the deployment of the NQR Payment solution, an indigenous Quick Response Code (QRC) by the Nigeria Interbank Settlement Scheme (NIBSS), for merchants and customers as the newest addition to its innovative e-business channels.

The NQR Payment solution is a secure QR-code-based payments and collections platform developed for merchants and customers to receive and make payments for goods and services in a quick, easy, contactless and secure manner.

A statement signed by the Founder/Chief Operating Officer of the bank, Mr. Hamid Joda, indicated that the ingenious solution would further drive TAJBank’s culture of innovation and create a seamless payment experience for its rapidly growing individual and corporate customers in their banking transactions.

“We are excited to have this payment channel introduced into the nation’s financial system as an addition to other innovative solutions we have deployed over the past few months.

This is a proof that, as we have said in our communications signature line, TAJBank’s interest is always in our customers”, Joda enthused.

In his remarks, the non-interest lender’s Chief Marketing Officer/Co-Founder, Mr. Sherif Idi, also maintained that the deployment of the NQR payment solution would revolutionize the e-payment experience and open new frontiers for small, medium and large scale businesses who are major stakeholders of the bank.

Since it commenced operations in the non-interest banking segment of the financial services industry, TAJBank is noted for its impeccable track record of growth and innovation, rendering exceptional quality services to customers.

The lender’s NQR solution is open to all customers of the bank, both merchants and individuals, across all its branches and digital channels globally.

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Finance

African Development Bank’s First Virtual Business Opportunities Seminar of 2021, Draws 450 Global Partners and Suppliers

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AfDB

The African Development Bank hosted its first virtual business opportunities seminar (BOS) of 2021 on 6 and 7 April.

The BOS seminars offer a one-stop shop for companies, civil contractors, manufacturers, consultants, and suppliers from the Bank Group’s regional and non-regional members seeking to provide goods and services to projects or to the Bank.

Held virtually as a result of the ongoing Covid-19 pandemic, delegates were informed about the Bank’s strategy for supporting economic growth, its priority areas, rules and procedures for project and corporate procurement, and ongoing public and private sector operations.

During the sessions staff discussed the sectors that offer opportunities for partners and suppliers: climate change; infrastructure, cities and urban development; industries and trade; finance and SMEs; agriculture; health, human capital, youth, and skills development.

“The Bank’s 2021 Business Opportunities Seminar was an impressive learning experience and an open door to interact virtually with different experts and gain insights into best practices and directions for conducting effective business approaches within the Bank,” said David Andrés Rojas Mejía, Senior Business Development Specialist at Catalonia Trade and Investment Promotion Agency.

Private sector partners contributed richly to the discussion, sharing their experience around partnering and contracting with the Bank. They included Kwame Boate, country director of TechnoServe Inc., (Ghana) and Cletus Kayenwee of the Rural Enterprises Program at the Ghanaian Ministry of Trade, who shared their experience contracting with the Bank on Ghana’s “One District One Factory” Enable Youth Program. The program aims to build the entrepreneurial capacity of graduate youth. Participants also heard from Abdelillah Zenjari, Deputy General Director of TEKCIM. He shared his experience partnering and obtaining a loan of €45 million to build a cement factory with a capacity of 1.4 million tons in the region of d’El Jadida in Morocco.

Over the years, the seminars have hosted approximately 2,500 delegates from 55 countries, with an average of 75% of delegates from non-regional member countries and 90% from the private sector.

For the Bank, the seminars increase interest in Bank-financed projects and enhance competition, thereby promoting higher-quality offers that deliver optimal value for money for its regional member countries.

“The sessions have also helped me to understand how to find opportunities for my firm by being better able to navigate your procurement framework and processes,” said Dede Watkin, Business Development Manager at Beale &Co, a participant.

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Finance

Nirsal: CBN Reopens Application for N50 Billion COVID-19 Loan for Households and Small Businesses

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The Central Bank of Nigeria has started receiving fresh applications for N50 billion COVID-19 loan for small businesses and households affected by the pandemic.

The CBN through Nirsal Microfinance Bank announced it has reopened its portal for households and Micro Small and Medium Enterprises (SMEs) affected by COVID-19 to access up to N25 million.

Bashir Ahmad, the Personal Assistant to President Muhammadu Buhari on New Media, disclosed this on March 10, 2021 via his Twitter handle.

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