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Elite Figures Grapple for Reprieve Amid CBN Investigation

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Central Bank headquarters

As the Jim Obazee-led special investigative panel concludes its scrutiny of the Central Bank of Nigeria (CBN), a slew of influential Nigerians entangled in alleged financial malpractices are clamoring for a meeting with President Bola Tinubu, hoping to secure a lenient outcome.

The list of individuals seeking clemency is topped by prominent importers, manufacturers, and politically-exposed businessmen, accused of engaging in foreign exchange round-tripping exceeding a staggering $5 billion.

Presidential aides are, however, staunchly limiting access to President Tinubu to ensure an untainted investigation.

President Tinubu’s unwavering resolve to cleanse the financial landscape and rejuvenate the economy has curbed any leniency for those implicated in financial infractions.

A reliable source close to the panel disclosed that “Those implicated in wrongdoing will face the full extent of the law. There are no sacred cows in this endeavor. They have significantly contributed to the upheaval in the foreign exchange market, and our ongoing efforts are directed at restoring order and trust in the system.”

Numerous influential individuals are reportedly lobbying vigorously for a meeting with President Tinubu to secure a more favorable resolution, possibly entailing returning the misappropriated foreign exchange and evading prosecution.

The investigative panel has already unveiled a trove of illicit activities, with implicated figures and their staff subjected to extensive interrogations.

The panel is expected to release its comprehensive report imminently. Meanwhile, panel members have been subjected to threats as they exposed various financial misdeeds perpetrated by foreign exchange traffickers and their associated firms.

In July, President Tinubu established the special investigative panel to scrutinize the operations of the CBN and other government-owned entities. He directed the panel to report directly to his office to mitigate bureaucratic obstacles.

In September, the panel extended its investigation to companies owned by high-ranking CBN officials and board members.

While the names of these companies have been withheld, evidence suggests their involvement in acting as conduits for anchor borrowers’ loans and foreign exchange irregularities, with no corresponding investments to justify the substantial facilities they received.

Following the investigation, former CBN Governor Godwin Emefiele and his deputies resigned, with Dr. Yemi Cardoso now leading a fresh team at the CBN. Furthermore, in August, the CBN publicly disclosed its consolidated financial statements for the past seven years, marking the first time since 2015 that the institution’s financial records have been available for public scrutiny.

President Tinubu’s unwavering commitment to transparency and accountability remains evident as the investigation nears its conclusion.

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Forex

CBN Set to Boost Naira: Resumes Weekly Forex Interventions for BDCs

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Central Bank of Nigeria (CBN)

The Central Bank of Nigeria (CBN) has announced plans to reinstate its weekly intervention in the foreign exchange (forex) market through Bureau de Change (BDC) operators.

The decision comes after the CBN halted forex sales to BDCs in 2021 as part of efforts to address forex scarcity and enhance the value of the naira.

However, the current move signals a strategic shift to inject liquidity into the forex market through targeted interventions.

Starting this week, the CBN will resume its weekly intervention program, which involves both funding and collection processes.

The initiative aims to supply much-needed forex to BDCs, which play a vital role in ensuring liquidity and accessibility of foreign currency to businesses and individuals across Nigeria.

Under the plan, designated CBN branches in Lagos, Abuja, Kano, and Awka will facilitate the collection of forex funds for BDCs.

Moreover, the CBN will publish a list of eligible BDCs based on specific compliance criteria, ensuring transparency and accountability in the distribution process.

The Association of Bureau De Change Operators of Nigeria (ABCON) welcomed the CBN’s decision, highlighting its potential to boost market liquidity and stabilize the naira against major currencies, particularly the US Dollar.

ABCON emphasized the need for its members to adhere strictly to regulatory guidelines, warning that any infringement or non-compliance would lead to license revocation and legal action.

The move underscores the CBN’s commitment to implementing effective monetary policies geared towards fostering economic stability and restoring confidence in the Nigerian financial system amidst prevailing challenges.

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Nigeria’s Modular Refineries Grapple with Forex Woes, Operations at Risk

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Dangote refinery

Nigeria’s modular refineries, a critical component of the country’s petroleum industry, are facing an existential threat due to challenges in accessing foreign exchange (forex) for the purchase of crude oil, a commodity priced in United States dollars.

The situation puts their operations at risk and could lead to potential shutdowns.

With 25 licensed modular refineries across Nigeria, boasting a combined capacity of producing 200,000 barrels of crude oil daily, these facilities play a crucial role in refining petroleum products for domestic consumption.

However, the worsening foreign exchange crisis in the country has made it increasingly difficult for the operational modular refineries to procure crude oil.

The current global benchmark for crude oil, Brent, trading at over $80 per barrel, underscores the urgency of the situation.

Despite their significant refining potential, the modular refineries are struggling to access the necessary foreign currency to purchase crude oil, which is priced in dollars.

The Crude Oil Refinery Owners Association of Nigeria has highlighted the challenges faced by modular refinery operators.

They assert that the scarcity of dollars has made it nearly impossible to procure crude oil, resulting in a domino effect where refined products cannot be supplied to oil marketers for distribution.

Eche Idoko, the association’s Publicity Secretary, emphasized that unless a solution is found, modular refineries may be forced to cease operations.

He called attention to the need for crude oil to be sold in naira, a move that could ease pressure on the currency and make diesel more affordable.

The threat to modular refineries not only jeopardizes the country’s petroleum production capacity but also underscores the broader economic challenges facing Nigeria amidst the ongoing forex crisis.

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Forex

Nigerian Bureau De Change Operators Weigh Merger Options Amidst CBN Regulations

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DOLLAR CURRENCY

As the Central Bank of Nigeria (CBN) proposes new regulatory guidelines for Bureau De Change (BDC) operators, Nigerian currency traders are contemplating mergers as a potential strategy to navigate the evolving regulatory landscape.

The proposed guidelines, outlined in a draft paper titled ‘Revised Regulatory And Supervisory Guidelines For Bureau De Change Operations In Nigeria,’ suggest significant increases in capital requirements for BDC operators, including a jump in share capital to N2 billion for Tier 1 licenses and N500 million for Tier 2 licenses.

Aminu Gwadebe, President of the Association of Bureau De Change of Nigeria (ABCON), highlighted the potential for consolidation within the industry as members grapple with the proposed regulatory changes.

Gwadebe explained the need for a temporary halt on issuing new licenses to allow existing operators to merge and form consolidated entities capable of meeting the stringent capital requirements.

Speaking with media Gwadebe noted that the proposed cautionary deposits, amounting to N200 million for Tier 1 and N50 million for Tier 2 licenses, were not in line with global practices for BDC operations.

He stressed the need for dialogue and review of the proposed figures, asserting that such high deposit requirements were unprecedented in the industry.

In anticipation of the CBN’s finalization of the regulatory guidelines, BDC operators are exploring various options to bolster their capital base.

Some operators have begun discussions about potential mergers to pool resources and meet the proposed capital thresholds, recognizing the challenges of raising substantial capital individually within a short timeframe.

As the regulatory landscape evolves, BDC operators are keenly observing developments and engaging in strategic deliberations to ensure compliance with regulatory requirements while sustaining their operations in Nigeria’s dynamic financial environment.

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