Nigerian Deposit Money Banks borrowed N5.38 trillion from the Central Bank of Nigeria (CBN) in the first five days of July 2024.

This was a 245 percent increase from the N1.56 trillion borrowed in the same period in June 2024 and a 202 percent rise from the N1.78 trillion borrowed in the first week of July 2023, according to data released by the CBN.

The surge in borrowing was facilitated through the Standing Lending Facility (SLF), a mechanism that allows the central bank to provide liquidity to commercial banks.

Analysts suggest that this spike indicates short-term liquidity shortages within the banking sector, necessitating borrowing to meet immediate obligations, such as covering withdrawals or funding loans.

“We are currently experiencing an illusion of money. In absolute terms, the amount appears lower,” said Ayokunle Olubunmi, head of financial institutions ratings at Agusto Consulting.

Olubunmi explained that while the figures seem substantial, converting them to dollars and comparing their value to three years ago reveals a significant decline.

The dramatic increase in borrowing coincides with the CBN’s recent monetary policy adjustments.

In May 2024, the CBN raised its benchmark interest rate, the Monetary Policy Rate (MPR), by 750 basis points to 26.25 percent from 18.75 percent in July 2023.

This move was aimed at controlling inflation, which stood at 33.95 percent as of May 2024.

Also, the CBN has issued over N1.5 trillion in Open Market Operation (OMO) bills since Olayemi Cardoso assumed office as governor, in an effort to manage inflation and support the naira.

The liquidity tightening by the CBN has driven banks to the SLF window. Alatise Yusuf, chief investment officer at Cowry Asset Management, noted that banks see the CBN as their lender of last resort, especially in a high-interest-rate environment.

“On Thursday, we saw the Overnight NIBOR at 32.4 percent, indicating that system liquidity is thinning while lending rates are trending upward,” he said.

Yusuf added that the CBN’s actions aim to mop up excess liquidity, leading to a reduction in the total banknotes in circulation.

“Banks’ treasuries are drying up due to investors reclassifying their assets because of high rates. So, banks need to shore up with CBN as the lender of last resort.”

In February 2024, the CBN raised the Cash Reserve Ratio (CRR) of banks from 32.5 percent to 45 percent.

In March 2024, it adjusted the CRR for merchant banks from 10 percent to 14 percent, further tightening liquidity.

Ayodele Akinwunmi, senior relationship manager at Corporate Banking Group, FSDH Merchant Bank, explained that borrowing from the CBN is a standard practice globally.

“When banks need to cover short positions, they can turn to the interbank market or borrow from the central bank. This lending is always secured and typically short-term to cover immediate needs.”

In contrast to the surge in borrowing, commercial banks’ deposits with the CBN under the Standing Deposit Facility (SDF) dropped to N172.17 billion in the first week of July 2024, compared to N232.18 billion in the same period in 2023.

This decrease follows the CBN’s decision last year to lift the N2 billion daily limit on funds placed at the SDF window, resulting in increased net deposits from banks over the past year.

The Nigerian government generated N78.95 billion from the N50 levy imposed on electronic bank transfers in the first five months of 2024.

This revenue collection revealed the importance of the Electronic Money Transfer Levy (EMTL) introduced under the Finance Act 2020.

The EMTL, established to tap into the burgeoning sector of electronic funds transfers, applies a singular and one-off charge of N50 on electronic receipts or transfers of funds amounting to N10,000 and above.

This levy is imposed on any deposit money bank or financial institution account.

The National Bureau of Statistics, in its Federal Allocation Accounts Committee report, disclosed that the 36 state governments received a combined allocation of N31.84 billion from January to April 2024.

This distribution forms part of the government’s broader revenue-sharing framework, which allocates 50% of EMTL proceeds to state governments, 35% to local governments, and 15% to the Federal Government.

The monthly breakdown of revenue collected from the EMTL revealed consistent inflows: N15.9 billion in January, N15.15 billion in February, N14.75 billion in March, N18 billion in April, and N15.14 billion in May.

The states benefited significantly from this revenue stream. From January to April, the federal allocation indicated that N8.93 billion was shared in January, N7.96 billion in February, N7.58 billion in March, and N7.38 billion in April.

Among the states, Anambra received the highest allocation with N1.03 billion, followed by Bauchi with N818.98 million, and Akwa-Ibom with N796.81 million.

The 2023–2025 Medium Term Expenditure Framework and Fiscal Strategy Paper had projected government earnings from EMTL at N137.03 billion in 2023, N157.59 billion in 2024, and N189.11 billion in 2025.

This year’s collections suggest the government is on track to meet, if not exceed, its 2024 projection.

In addition to direct government revenue, digital banking channels have shown robust growth, generating approximately N438 billion for 10 financial institutions in 2023. This represents a 37.54% increase from N318.64 billion in the previous year.

E-business income, encompassing revenue from electronic channels, card products, and related services, has continued to rise, driven by stable platforms and increased consumer adoption.

Lilian Phido, Head of Corporate Communications at the Nigeria Inter-Bank Settlement System (NIBSS), highlighted the growing acceptance and reliability of electronic payment channels.

“With stability, these components have grown. More and more people are moving towards these platforms,” she commented in an earlier interview on Sunday.

The consistent revenue from the EMTL not only reflects the success of the Finance Act 2020 in capturing the economic potential of digital transactions but also underscores the crucial role of electronic banking in the country’s financial ecosystem.

Access Holdings Plc has received approval from the Securities and Exchange Commission (SEC) to proceed with its N351 billion rights issue capital raising programme.

The approval, disclosed in a statement released by Access Holdings on Sunday, confirms the commencement of the capital raise, which aims to generate up to $1.5 billion.

The rights issue is designed to offer 17,772,612,811 ordinary shares at N0.50 each, priced at N19.75 per share, on the basis of one new ordinary share for every two existing shares held as of June 7, 2024.

The offer is set to open on July 8 and close on August 14.

The capital raised from this programme is strategically planned to bolster Access Holdings’ financial health, provide working capital, and fund organic growth across its banking and non-banking subsidiaries.

This move aligns with the group’s vision of expanding its footprint and delivering exceptional value to its stakeholders.

Karl Toriola, Chief Executive Officer of Access Holdings, expressed his satisfaction with the SEC’s approval, stating, “This rights issue is a critical step in our ongoing efforts to strengthen our balance sheet and support our growth strategy. It underscores our commitment to maintaining financial stability while continuing to invest in our business and deliver value to our shareholders.”

The lead issuing house for the rights issue is Chapel Hill Denham Advisory Ltd., with Atlas Registrars Ltd. serving as the registrar to the offer.

The rights circular will be distributed to shareholders by Atlas Registrars, and application forms will be available on its various websites. Shareholders are advised to contact their stockbrokers for more details about the offer.

The approval of the rights issue is a testament to Access Holdings’ resilience and strategic vision. As the group navigates the complexities of the financial landscape, the successful execution of this capital raise will further solidify its position as a leading financial services provider in Africa and beyond.

Former President Olusegun Obasanjo, represented by former Cross River Governor Donald Duke at the event, called for synergy between fiscal and monetary policies to revolutionize the banking industry and achieve economic stability.

He praised Anambra State Governor and former CBN Governor Professor Chukwuma Soludo for his courageous banking sector consolidation in 2005,