Finance

Nigeria’s CBN Repays 85% of Chinese Yuan from Currency Swap Pact

Published

1 month ago

August 29, 2023

The Central Bank of Nigeria (CBN) has announced that it has repaid 85% of the Chinese yuan (CNY) borrowed from the currency swap agreement with China.

This repayment marks a substantial milestone in the financial relationship between the two countries and underscores Nigeria’s commitment to prudent financial management.

The currency swap agreement, initiated in July 2018 and renewed in April 2021, allowed Nigeria to access a pool of CNY 15 billion for trade and investment purposes. The agreement aimed to facilitate smoother transactions between the two nations by reducing the need for intermediary foreign currencies.

It also sought to strengthen economic cooperation, improve financial stability, and bolster foreign exchange reserves management.

Since the agreement’s renewal, Nigeria has drawn CNY 9 billion from the facility, utilizing CNY 6 billion while leaving CNY 3 billion as an outstanding balance.

However, in a move that demonstrates Nigeria’s fiscal responsibility, the CBN has successfully repaid CNY 5.10 billion of the utilized funds. This leaves just CNY 900 million to be repaid before the agreement’s expected renewal in 2024.

Femi Falana, a prominent human rights lawyer, had initiated this disclosure when he submitted a Freedom of Information (FOI) request to the CBN, seeking detailed information about the currency swap agreement.

His request brought this remarkable achievement to the forefront, highlighting the transparency and accountability in Nigeria’s financial governance.

Despite this significant repayment, concerns persist about the limitations faced by federal and state governments and the business community when transacting in naira and yuan. Addressing these concerns and maximizing the benefits of the currency swap agreement remains a priority for both Nigeria and China.

The initial signing of the currency swap agreement in April 2018 marked the culmination of over two years of diligent negotiations by both central banks. Godwin Emefiele, the suspended governor of the CBN, led the Nigerian delegation, while Yi Gang, the PBoC governor, led the Chinese team at the signing ceremony in Beijing, China. This event solidified Nigeria’s position as the third African country to establish such an agreement with the People’s Bank of China (PBoC).

With the successful repayment and continued partnership between Nigeria and China, the operationalization of this agreement has paved the way for Nigerian manufacturers, small and medium-sized enterprises, and cottage industries to conduct their businesses more efficiently.

By leveraging the available renminbi liquidity from Nigerian banks, they can import raw materials, spare parts, and basic machinery without the complexities of seeking other scarce foreign currencies.

Nigeria’s CBN’s repayment of 85% of the Chinese yuan from the currency swap pact demonstrates the country’s commitment to financial responsibility and strengthening economic ties with China. As the two nations continue to collaborate, this achievement sets the stage for further economic growth and cooperation between Nigeria and China.

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Finance

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

Published

2 days 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

2 days 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

3 days 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.