Finance

Digital Currency: IMF Calls For Increased Adoption of Payment Method to Avert Cash Shortage

Published

2 years ago

February 14, 2022

The International Monetary Fund (IMF) has reiterated the risks involved in Central Bank Digital Currency (CBDC), urging countries to embrace the payment method in monetary transactions.

IMF stated that countries operating digitally of which Nigeria is one may experience cash shortage, difficulty in making payments and multiple hurdles in transactions.

Investors King recalls that the Central Bank of Nigeria, CBN launched Nigeria’s Digital currency called e-naira in October, 2021.

The e-Naira was introduced to promote cross-border trade, accelerate financial inclusion, and lead to cheaper and faster remittance inflow.

According to CBN, the e-naira will enhance macro management and growth, cross-border trade facilitation, financial inclusion, monetary policy effectiveness, improved payment efficiency, revenue tax collection, remittance improvement, and targeted social intervention.

Investors King gathered that some other countries with digital currency include: Ghana (e-cedi), South Africa (digital Rand), Tunisia (eDinar), China (digital yuan), Bahamas (sand dollar), Eastern Caribbean (DCash).

Sweden, Japan, South Korea, Bahamas, Russia amongst others have also launched their digital currencies.

In December 2021 and January 2022, Nigerian banks faced cash crunch at some of their branches in Lagos, Abuja and Port Harcourt whereby customers were denied access to cash leading to long queues.

The IMF, in its report titled, ‘Behind the Scenes of Central Bank Digital Currency-Emerging Trends, Insights, and Policy Lessons’ averred that there may be difficulty in making payments if cash flow drops.

It noted that those in remote areas with less investors and private firms experience more of its effects.

In the report, IMF opined that CBDC should be designed with the interest of the general public for continued access to convenient cash payments.

“In countries where cash and check use is high, operational costs are elevated. And in some countries, existing digital payments are also relatively expensive.

“The CBDC is, therefore, a potential policy tool to offer digital forms of payments that are cheaper to operate. The non-profit nature of central banks means that they could potentially offer low-cost payments as a public good, potentially subject to the need to eventually recover costs.

“Some features of cash, including anonymity and the lack of an audit trail, make it attractive for illicit transactions like tax evasion, money laundering, and terrorist financing. CBDC could potentially reduce this problem,” the report read.

IMF added that digital currencies could increase competition in terms of payment, the existing modes of payment or as a platform open to private payment service providers.

The financial institution, however, stated that Nigeria’s e-Naira has the potential for financial inclusion as well as increase diaspora remittances but could pose risks to Nigeria’s financial stability.

It, therefore, charged the apex bank to look into its digital currency to correctly manage it to avert its negative effects on the economy.

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Finance

Nigeria’s Tax Revolution: Shifting Burden to the Wealthy and Streamlining the System

Published

14 hours ago

September 29, 2023

Samed Olukoya

President Bola Tinubu’s administration is set to revolutionize the nation’s tax system.

The ambitious plan seeks to redistribute the tax burden, making the wealthy pay their fair share while stimulating business growth through corporate tax cuts.

The cornerstone of this tax reform initiative is a push to increase Nigeria’s tax revenue from 11% to 18% of Gross Domestic Product (GDP) within three years.

Spearheading this transformation is Taiwo Oyedele, who leads a panel appointed by President Tinubu.

Oyedele articulated the primary objectives of the reform, saying “We aim to make the rich pay what is fair and protect those in poverty.”

This move is crucial in a country where extreme wealth disparities persist, with only a small fraction of the population enjoying immense riches.

Notably, the plan also includes a reduction in the corporate income tax rate, which currently stands at an effective rate of over 40%.

The aim is to benchmark this rate against Nigeria’s international peers, fostering a more business-friendly environment.

Nigeria’s tax system has long been plagued by complexity, with nearly 70 different taxes and overlapping jurisdictions.

The reform initiative seeks to simplify this by streamlining tax structures and drastically reducing the number of taxes to single digits.

Also, a tax amnesty is under consideration, aimed at encouraging tax compliance and offering relief for past debts. The hope is that by fostering transparency and accountability, more Nigerians will willingly contribute to the country’s fiscal health.

In a nation where government debt has surged dramatically in recent years, this tax revolution is seen as a pivotal step towards reducing the deficit and ensuring sustainable economic growth.

Finance

Federal Government’s $3 Billion Rescue Plan to Bolster Naira Stability

Published

14 hours ago

September 29, 2023

Samed Olukoya

The National Economic Council (NEC) has confirmed the deployment of the $3 billion emergency loan-for-crude oil, secured by the Federal Government in August, for the stabilization of the national currency.

The naira’s value has been under siege, with fluctuations in the Investors & Exporters’ window and a parallel market rate that briefly hit N1000/$ this month.

Addressing reporters following the 136th NEC meeting at the Aso Rock Presidential Villa, Nasarawa State Governor Abdullahi Sule expressed confidence in the plan.

He stated, “With the plan that will come out and with all these items that have been listed on the improvement of revenue, the $3 billion shall be useful to us down the line.”

The emergency loan, secured from Afrexim Bank, was initially intended to relieve pressure on the naira, facilitate the settlement of taxes and royalties in advance, and provide the Federal Government with vital dollar liquidity for naira stabilization.

The recent nomination of Olayemi Cardoso as the new Central Bank of Nigeria (CBN) governor by President Bola Tinubu has already shown promise.

The naira experienced a boost in the black market, strengthening by N10 against the dollar, closing at N990/$1.

Governor Sule indicated that the implementation of the intervention would require careful planning and time.

He emphasized the need for the new CBN team to devise effective strategies. In response to inquiries about a supplementary budget, Sule stated that there is no immediate need for one, as the situation does not warrant it.

As Nigeria’s economic landscape faces evolving challenges, the NEC’s decision to harness the $3 billion loan offers a glimmer of hope for a more stable naira in the near future.

Finance

Former FIRS Chairman Muhammad Nami Accused of Controversial N6 Billion Payments After Sudden Exit

Documents reveal questionable approvals and alleged backdating, raising concerns over financial misconduct

Published

1 day ago

September 28, 2023

Samed Olukoya

Muhammad Nami, the former chairman of the Federal Inland Revenue Service (FIRS), is under scrutiny for approving payments totaling N6 billion to contractors and consultants just days after his abrupt removal from office.

Documents obtained by TheCable shed light on these controversial transactions.

Nami, who was succeeded by Zacchaeus Adedeji, greenlit the payments on September 16, two days after his removal on September 14.

Sources privy to the situation, although not authorized to speak publicly, claim that Nami directed staff to work over the weekend to finalize these transactions.

Additionally, files were allegedly moved from the FIRS headquarters to his residence, where they were purportedly “backdated and signed.”

Perhaps the most eyebrow-raising revelation is that Nami transferred approximately N5 billion from the FIRS account to the Joint Tax Board (JTB) without apparent justification.

It is reported that the FIRS director of finance and accounts reluctantly approved these payments after warning Nami about potential repercussions.

Nami allegedly reassured his subordinates that the incoming FIRS chairman would remain oblivious to these approvals.

Also, documents indicate that Nami approved significant payments, including N1.4 billion for a ‘Business Case for Strategic Leadership’ retreat, N250 million for FIRS Data Mining Management and Analytics in Taxation Course, and N221 million for a ‘Skill Development and Management Improvement Workshop Training.’

Curiously, Nami also appropriated over N81 million for a study visit to the Inland Revenue of Malaysia.

The FIRS, when contacted for comment, remained tight-lipped about the situation. Spokesperson Abdullahi Ismaila stated that he had no knowledge of the payments, while Tobi Johannes, Nami’s former media aide, distanced himself from the matter, emphasizing that his role ceased when Nami’s tenure ended.

These revelations have ignited concerns about financial misconduct within the FIRS and have raised questions about the oversight and accountability of government agencies. The full extent of these allegations is yet to be determined as investigations into the payments and their legitimacy continue.