Showing posts with label Finance. Show all posts
Showing posts with label Finance. Show all posts

Friday, March 1, 2024

Central Bank of Nigeria revokes licences of 4,173 exchange bureaus

Nigeria's central bank said on Friday it had revoked the licences of 4,173 exchange bureaus that failed to comply with its guidelines and directives, including rendering returns of transactions and payment of required renewal fees within the due period.

The central bank, which resumed dollar sales to exchange bureaus this week, outlawed street-trading of foreign exchange and raised minimum capital levels for exchange bureaus to at least 2 billion naira ($1.3 million) under new guidelines released on Feb. 23.

The moves are part of broader reforms to Nigeria's forex market which has been grappling with chronic foreign exchange shortages.

Central Bank of Nigeria (CBN) spokesperson Hakama Sidi Ali said the licences of the affected exchange bureaus were also revoked due to non-compliance with anti-money laundering and terrorism finance regulations.

"The CBN is revising the regulatory and supervisory guidelines for Bureau de Change operators. Compliance with the new requirements will be mandatory for all stakeholders in the sector when the revised guidelines become effective," Sidi Ali said in a central bank statement. 

By Elisha Bala-Gbogbo, Reuters

Related story: Video - Nigeria detains Binance executives

 

Wednesday, February 21, 2024

Video - Nigeria sees hundreds hit the streets over growing crisis



The protesters say they want immediate action from the government to help reduce the soaring cost of living in the country.

CGTN

Related story: Protests in Nigeria over skyrocketing inflation as local currency hits record low value

Naira hits record lows, stocks sink

 

 

Nigeria plans clampdown on Binance, other crypto firms

The Nigerian government is considering blocking the online platforms of Binance and other crypto firms to avert what it considers continuous manipulation of the forex market and illicit movement of funds, officials with knowledge of the policy option have told PREMIUM TIMES.

The recent unprecedented weakening of the Nigerian currency has seen the naira falling to all-time low of N1,800 to a dollar in the parallel market.

Presidency and regulatory sources say the government decided to move against Binance and other crypto firms following reports that currency speculators and money launderers were using them to execute criminal activities. Authorities believe the ‘criminal activities’ going on on platforms are contributing significantly to the weakening of the naira.

Binance, a digital assets platform, serves as a window for peer to peer transaction allowing users to advertise interest to sell or buy currencies of their choice.

In September 2023, Nigeria’s Securities and Exchange Commission (SEC) placed a disclaimer on Binance Nigeria Limited, saying the platform was “neither registered nor regulated by the Commission and its operations in Nigeria are therefore illegal”.

Despite the warning by the regulatory agency, the firm continued its operation, attracting huge patronage especially among urban youths and suspected speculators and money launderers.

Aside suspicions of economic sabotage, officials also speak of national security concerns as the platforms are often patronised by other criminal groups including for payment of ransom.

Law enforcement sources say the digital asset platforms are also routinely deployed for manipulation of forex values through fake deals that serve to prop up values or cause a fall.

A source at the Economic and Financial Crimes Commission (EFCC) involved in probing criminal complaint against digital asset platforms, who was however not authorised to speak to the press, described the process as a “sophisticated heist against the Nigerian economy”.


According to her, by allowing simultaneous opening of buy and sell windows for a single user, manipulators often fake interest to sell dollars which they then buy at a speculated rate to themselves through the buy window.


“This therefore gives the dollar a fake value against the naira which then sets a frenzy and mislead the market. This fake price is then often quoted by BDCs who raise their prices to meet the Binance benchmark even without any corresponding demand in that segment,” she said.

A senior executive at the Central Bank of Nigeria (CBN) described as “troubling” the bearish downward trade of the naira against the dollar in the last 10 days, attributing it to artificial devaluation caused by the speculative sites.

“Through manipulative rent seeking, Binance’s global reach results in higher USD to NGN exchange rates often being used as a benchmark for currency trading, misleadingly devaluing the Naira in global markets.”

But he added that trading on the platform is encouraged by activities of money-launderers and terrorist financiers “who have no qualms with the arbitrage”.

“We started noticing this sharp trend from February 9, and since then it has caused significant devaluation of the naira against the USD. This is simply criminal,” he said.

Binance has had similar accusations of currency manipulation and unethical conduct leading to sanctions in many countries and an ongoing lawsuit in the United States.

If the government decides to invoke a ban on the digital asset trading site it would be treading the path of countries like Malaysia, France and Malta, among others.

The Office of the National Security Adviser (ONSA) had announced Tuesday that it was joining forces with the Central Bank of Nigeria to clamp down on currency speculators and economic saboteurs.

The Head of Strategic Communication at ONSA, Zakari Mijinyawa, hinted in his Tuesday statement that individuals and organisations involved in wrongful activities in Nigeria’s Forex market would be identified, investigated and penalised.

Contacted on Thursday night on the planned clampdown on Binance and other crypto firms, Mr Mijinyawa said he was at an “important meeting”. He did not answer or return subsequent calls made to him.

Binance could not be reached Wednesday morning. Multiple calls to a customer service number listed for it rang out unanswered.

By Abdulrahman Abdulmalik, Premium Times

Related story: Video - Central Bank of Nigeria gives guidelines on cryptocurrency

Tuesday, February 20, 2024

Protests in Nigeria over skyrocketing inflation as local currency hits record low value

Nigerians are facing one of the West African nation’s worst economic crises in years triggered by surging inflation, the result of monetary policies that have pushed the currency to an all-time low against the dollar. The situation has provoked anger and protests across the country.

The latest government statistics released Thursday showed the inflation rate in January rose to 29.9%, its highest since 1996, mainly driven by food and non-alcoholic beverages. Nigeria's currency, the naira, further plummeted to 1,524 to $1 on Friday, reflecting a 230% loss of value in the last year.

"My family is now living one day at a time (and) trusting God," said trader Idris Ahmed, whose sales at a clothing store in Nigeria’s capital of Abuja have declined from an average of $46 daily to $16.

The plummeting currency worsens an already bad situation, further eroding incomes and savings. It squeezes millions of Nigerians already struggling with hardship due to government reforms including the removal of gas subsidies that resulted in gas prices tripling.
 

A SNAPSHOT OF NIGERIA’S ECONOMY

With a population of more than 210 million people, Nigeria is not just Africa’s most populous country but also the continent’s largest economy. Its gross domestic product is driven mainly by services such as information technology and banking, followed by manufacturing and processing businesses and then agriculture.

The challenge is that the economy is far from sufficient for Nigeria’s booming population, relying heavily on imports to meet the daily needs of its citizens from cars to cutlery. So it is easily affected by external shocks such as the parallel foreign exchange market that determines the price of goods and services.

Nigeria's economy is heavily dependent on crude oil, its largest foreign exchange earner. When crude prices plunged in 2014, authorities used its scarce foreign reserves to try to stabilize the naira amid multiple exchange rates. The government also shut down the land borders to encourage local production and limited access to the dollar for importers of certain items.

The measures, however, further destabilized the naira by facilitating a booming parallel market for the dollar. Crude oil sales that boost foreign exchange earnings have also dropped because of chronic theft and pipeline vandalism.


MONETARY REFORMS POORLY IMPLEMENTED

Shortly after taking the reins of power in May last year, President Bola Tinubu took bold steps to fix the ailing economy and attract investors. He announced the end of costly decadeslong gas subsidies, which the government said were no longer sustainable. Meanwhile, the country's multiple exchange rates were unified to allow market forces to determine the rate of the local naira against the dollar, which in effect devalued the currency.

Analysts say there were no adequate measures to contain the shocks that were bound to come as a result of reforms including the provision of a subsidized transportation system and an immediate increase in wages.

So the more than 200% increase in gas prices caused by the end of the gas subsidy started to have a knock-on effect on everything else, especially because locals rely heavily on gas-powered generators to light their households and run their businesses.


WHY IS THE NAIRA PLUMMETING IN VALUE?

Under the previous leadership of the Central Bank of Nigeria, policymakers tightly controlled the rate of the naira against the dollar, thereby forcing individuals and businesses in need of dollars to head to the black market, where the currency was trading at a much lower rate.

There was also a huge backlog of accumulated foreign exchange demand on the official market — estimated to be $7 billion — due in part to limited dollar flows as foreign investments into Nigeria and the country’s sale of crude oil have declined.

Authorities said a unified exchange rate would mean easier access to the dollar, thereby encouraging foreign investors and stabilizing the naira. But that has yet to happen because inflows have been poor. Instead, the naira has further weakened as it continues to depreciate against the dollar.
 

WHAT ARE AUTHORITIES DOING?

CBN Gov. Olayemi Cardoso has said the bank has cleared $2.5 billion of the foreign exchange backlog out of the $7 billion that had been outstanding. The bank, however, found that $2.4 billion of that backlog were false claims that it would not clear, Cardoso said, leaving a balance of about $2.2 billion, which he said will be cleared "soon."

Tinubu, meanwhile, has directed the release of food items such as cereals from government reserves among other palliatives to help cushion the effect of the hardship. The government has also said it plans to set up a commodity board to help regulate the soaring prices of goods and services.

On Thursday, the Nigerian leader met with state governors to deliberate on the economic crisis, part of which he blamed on the large-scale hoarding of food in some warehouses.

"We must ensure that speculators, hoarders and rent seekers are not allowed to sabotage our efforts in ensuring the wide availability of food to all Nigerians," Tinubu said.

By Friday morning, local media were reporting that stores were being sealed for hoarding and charging unfair prices.
 

HOW ARE NIGERIANS COPING WITH TOUGH TIMES?

The situation is at its worst in conflict zones in northern Nigeria, where farming communities are no longer able to cultivate what they eat as they are forced to flee violence. Pockets of protests have broken out in past weeks but security forces have been quick to impede them, even making arrests in some cases.

In the economic hub of Lagos and other major cities, there are fewer cars and more legs on the roads as commuters are forced to trek to work. The prices of everything from food to household items increase daily.

"Even to eat now is a problem," said Ahmed in Abuja. "But what can we do?"

AP

Related stories: Naira hits record lows, stocks sink

Nigeria's latest devaluation may be 'turning point' in currency reform drive

Authorities in Nigeria Voice Worry as Rising Cost of Living Sparks Protests

Monday, February 19, 2024

Naira hits record lows, stocks sink

The Nigerian naira fell to record lows on both the official and unofficial markets on Monday, while stocks posted their biggest one-day fall in more than a year, as jittery investors sold off local assets.

The currency dropped to 1,712 naira per dollar in late trades on the official market and to around the same level on the unofficial market after extending losses.

Africa's largest economy has been experiencing crippling dollar shortages that have pushed its currency to record lows, though central bank Governor Olayemi Cardoso has said that foreign exchange liquidity is improving.

The latest fall on the currency and stock markets comes after data showed on Thursday that the country's inflation rate had accelerated further in January, reaching almost 30% in annual terms, driven by soaring food costs.

"Without policy moves in sight to rein in inflation, the naira will continue to devalue simply on a purchasing power basis. There are also risks that it could further deter foreign investors, given the increasingly negative real yield found in Nigerian debt securities," said Kyle Chapman, FX markets analyst at London-based Ballinger & Co.

Stocks on Nigeria's All-Share Index fell 3.15% on Monday after banking, consumer goods and industrial shares dropped, to post their single biggest fall since Oct. 2022.

Heavyweight Dangote Cement and MTN each fell the maximum 10% allowed on the bourse, to help drag the index to 102,395.21 points.

Stocks had been acting as a hedge against inflation for investors.

Cardoso has hiked open market rates to draw investors to bills which had lost their shine to equities as inflation climbed, but treasury rates still lag the benchmark policy rate and the fall in the naira means yields would have to rise further. 

By Chijioke Ohuocha, Reuters

Related stories: Nigeria's latest devaluation may be 'turning point' in currency reform drive

Video - Nigeria caps foreign exchange position for banks

Thursday, February 15, 2024

Nigeria to clear debt, fix gas shortages in plan to end power woes

Nigeria plans to fix its chronic power woes by settling outstanding debts of about $2.16 billion to energy producers and tackling gas supply shortages to generating firms, the power minister said on Wednesday.

Africa's largest economy has 12,500 megawatts of installed capacity but only produces about a quarter of that, forcing households and businesses, including manufacturers to resort to diesel and petrol generators.

Power Minister Adebayo Adelabu told reporters on Wednesday that outstanding debts, inadequate gas supplies and ageing equipment were the key barriers hampering optimal power output.

Adelabu said power generators are currently owed 1.3 trillion naira ($858.65 million), in addition to a $1.3 billion legacy debt from a decade ago.

"Part of preparation to turn around and transform the sector is the settlement of existing outstanding debt obligations to the gas supply and power generation companies using partly cash payments and guaranteed debt instruments," he said.

Last week, Adebalu proposed a naira payment for gas sales to power plants as a solution to solve dollar shortages as costs are expected to balloon after a second currency devaluation in less than a year.

Natural gas is sold in dollars to power plants because investments tied to building gas processors and pipelines are priced and paid for in dollars.

Grid power is erratic in Nigeria, Africa's most populous nation. The grid collapsed on Feb. 4, causing a national blackout, and at least three times in 2023, which authorities blamed on technical problems. 

By Camillus Eboh, Reuters 

Related stories: Video - Nigeria suffers from most power cuts in the world

Video - Nigeria grapples with higher electricity prices amid supply constraints

Monday, February 12, 2024

Nigerian bank CEO, family among the 6 killed in California helicopter crash

The CEO of one of Nigeria's largest banks was among the six people killed when the helicopter they were on crashed Friday night in California, a World Trade Organization official said.

The chartered helicopter departed Palm Springs at 8:45 p.m. en route to Boulder City, Nevada, but "impacted the ground" near Halloran Springs, California, at 10:08 p.m., National Transportation Safety Board member Michael Graham said at a news conference Saturday night.

All six people on board — the pilot-in-command, a safety pilot and four passengers — were killed, Graham said.

Authorities have not publicly identified the victims.

Ngozi Okonjo-Iweala, the director general of the World Trade Organization, said in a post on X that Herbert Wigwe, the group CEO of the Lagos-based Access Bank, was on board the helicopter with his wife and son. She did not include the names of Wigwe’s wife and son.

A fourth passenger, Bimbo Ogunbanjo, also known as Abimbola Ogunbanjo, was among the dead, she said. He is the former chair of NGX Group, the Nigerian stock exchange.

Graham said the aircraft, an Airbus Helicopters H130, was operated and chartered by Orbic Air. The California-based company did not immediately respond to a request for comment.

Multiple motorists on nearby Interstate 15, which runs from near the U.S.-Mexico border to Las Vegas en route to Canada, reported seeing either the crash or its resulting fire Friday night, he said.

"There was fire when the aircraft did contact the terrain," Graham said, citing witness accounts.

Halloran Springs, the name for a natural springs site in the Mojave Desert and its surrounding community, is about 80 miles south of Las Vegas, where the Super Bowl between the San Francisco 49ers and the Kansas City Chiefs is set to be held Sunday.

Boulder Springs is about 25 miles outside Las Vegas.

NBC

Friday, February 9, 2024

Nigeria to propose naira payment for local gas sale

Nigeria is proposing for gas producers to sell gas to local power plants in naira to solve problems of dollar shortages after a second currency devaluation in less than a year is expected to balloon costs and make it hard for firms to pay.

Nigeria has 24 gas power plants with a combined output capacity of 11,434 megawatts, but it only delivers around a third of its capacity to the grid due to issues with gas supply.

"Proposing domestic gas payment in naira is a key step toward stability, aligning with our economy's needs and promoting sustainable energy production," Power Minister Adebayo Adelabu said in a post on X.

Adelabu added that he plans to create legislative measures that will mandate naira payments for domestic gas supply.

Natural gas is sold in dollars to power plants because investments tied to building gas plants and pipelines are priced and paid for in dollars.

However, local operators have had difficulties making dollar payments since a currency crisis which has seen the naira lose significant value. The currency weakness is expected to force the price of gas in the domestic market sharply higher.

Nigeria has proven gas reserves of 206 trillion cubic feet which it has struggled to tap due to capital constraints. The government hopes it can fix the challenges by switching to naira payments and capping dollar prices.

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the local gas regulator, has asked producers to keep gas prices at $2.18 per million British Thermal Units (MMBtu) as per agreement with unions three-years ago. 

By Isaac Anyaogu, Reuters

Related stories: No More Dollars: Banks in Nigeria to Pay Customers' Money from Abroad in Naira

Video - Nigeria caps foreign exchange position for banks

 

Tuesday, February 6, 2024

Nigeria's latest devaluation may be 'turning point' in currency reform drive

Nigeria's second currency devaluation in less than a year and new forex rules suggest the central bank is gearing up to let the naira float freely, but a huge backlog of orders for dollars and low liquidity may stall reform momentum, investors and analysts said.

Foreign investors in particular will need more convincing that Africa's biggest economy is finally ditching the controls that have for long distorted its currency market, making the country of 200 million people less attractive to foreign capital.

The official naira exchange rate last week plunged to as low as 1,531 per dollar from 900, well below black market levels, after the market regulator changed its closing rate calculation methodology, in a de facto devaluation. The official rate had been drifting towards parallel market levels as forex shortages funnelled demand to unofficial sources.

Also last week, the Central Bank of Nigeria (CBN) announced limits on how much banks can hold in foreign currencies and eased rules on international money transfer operators, allowing them to quote the naira at prevailing market rates.

"You could call this a turning point," said Kyle Chapman, FX markets analyst at London-based Ballinger & Co.
"Now that there is no longer a more favourable (exchange) rate, the lack of incentives to take part in the official markets may turn into a tipping point that sees a true free float emerge if the central bank does not intervene," Chapman added.

Nigeria is struggling with a record amount of government debt, high unemployment and power shortages that have contributed to years of anaemic economic growth. Oil output is shrinking, and rampant insecurity means swathes of the countryside are outside government control.

In his first days in office last year, President Bola Tinubu scrapped a costly fuel subsidy and lifted some forex controls.

But the reform drive appeared to lose steam as the naira continued to weaken without central bank intervention.

Andrew Matheny, senior economist with Goldman Sachs, said the latest devaluation made the naira look "cheap."

"This makes foreign portfolio inflows potentially appear attractive, however only in the circumstance that other aspects of monetary policy come together," said Matheny.

These include ending financing the budget deficit through central bank overdrafts, which increases the money supply and helped propel inflation to 28.92% in December, the highest level in nearly three decades.


FOREX BACKLOG

Years of forex controls have created pent-up demand for dollars while the country struggles to raise its production of oil, its single largest export earner.

Foreign currency shortages have created a large backlog of unpaid dollar transactions, which the CBN last year put at nearly $7 billion.

On Monday, CBN governor Yemi Cardoso told broadcaster Arise TV that $2.2 billion remained outstanding and that $2.4 billion would not be honoured after an audit found irregularities.

Goldman put the backlog at $12 billion, which has kept foreign investors away due to worries they will not be able to take their money out.

"The economy is severely starved of dollars. The (forex)injections so far appear to have not made a dent," said David Omojomolo, Africa economic at Capital Economics.

"The FX backlog to my knowledge is still large, and the pronouncements that it will be cleared 'soon' made for months now appear to encourage speculation rather than stabilisation."

The CBN will later this month hold its first monetary policy meeting since last July and it is under pressure to deliver a big hike in its benchmark interest rate from the current 18.75%.

"For us to take a more active position in the local currency market we would still need greater clarity on the direction... and exactly how they're going to support the operations on the forex side with ... the monetary policy side," said Yvette Babb, a hard and local currency debt portfolio manager at William Blair.

The central bank's one-year treasury bill, for example, was selling at 17% while the government's bill sold at 11% as the government seeks to keep its borrowing costs low.

As long as big downside risks to local bond prices remain due to the unanchored nature of short-term yields with regard to the policy rate - reflected in the significant gap between the two - foreign investors will avoid local debt, said Gergely Urmossy, emerging markets strategist at Societe Generale.

"To restore the anchoring role of the policy rate, the CBN will have to deliver money market reforms," Urmossy said.

By Macdonald Dzirutwe, Reuters

Related story: Video - Nigeria caps foreign exchange position for banks

Friday, February 2, 2024

Video - Nigeria caps foreign exchange position for banks



Nigeria's central bank has announced limits on how much banks can hold in foreign currency. The move comes after the apex bank expressed concern about the growth of forex exposure on the balance sheets of commercial banks. The naira has tumbled against the U.S. dollar affecting dollar-denominated sovereign bonds that have suffered sharp falls.

CGTN

Monday, January 29, 2024

Nigeria naira reaches record low of 1,421 per dollar on official market

Nigeria's naira dropped to a record low against the dollar on the thinly traded official market on Friday, FMDQ Exchange data showed on Monday, as the currency swung widely to overshoot the unofficial parallel market rate.

The naira fell as low as 1,421 to the dollar, during trading on Friday, FMDQ data showed, compared with around 1,400 naira quoted on the parallel market. The currency later closed at 891.90 naira on the official market.

The latest fall occurred after central bank Governor Olayemi Cardoso last Wednesday said the bank was trying to improve liquidity in the foreign exchange market.

Kyle Chapman, FX markets analyst at London-based Ballinger & Co. said the naira has overtaken the record low level it hit on the parallel market which could hamper the influx of capital needed to stabilise the exchange rate.

"The downwards spiral is becoming self-perpetuating at this point. The further it falls, the less investors want to enter Nigeria, and the deeper the risk premium embedded into the naira rate," Chapman said.

The naira's official exchange rate has been drifting towards the parallel market level as the central bank is yet to clear outstanding amounts owed in forward deals, worsening a shortage of foreign-currency in the West African nation. 

By Chijioke Ohuocha, Reuters

Central bank of Nigeria to replace policymakers as shakeup continues



Nigeria’s central bank is set to replace the external members of its monetary policy committee who say they have been sidelined ahead of a meeting in February. This comes amid an ongoing shakeup of the institution.

CGTN

Monday, January 8, 2024

Video - Analysts in Nigeria call for increased new foreign investments



Nigeria faces forex shortage due to reduced capital investments, with capital importation dropping to 650 million U.S. dollars in the third quarter of 2023, prompting analysts to call for increased foreign investment efforts.

CGTN

Nigeria central bank pays nearly $2 billion towards Foreign Exchange backlog

Nigeria's central bank has paid nearly $2 billion in outstanding foreign exchange forwards in the last three months in a bid to clear a backlog of dollars, a spokesperson has said, but forex shortages continue to hobble the country's naira currency.

Africa's biggest economy has nearly $7 billion in forex forwards that have matured, a major concern for investors, but the Central Bank of Nigeria (CBN) has promised to pay up to boost confidence in the foreign exchange market.

"In the past three months, the CBN has also redeemed outstanding forward liabilities amounting to almost USD 2 billion," acting spokesperson Hakama Sadi Ali said in a statement late on Sunday.

"This underscores the Bank's commitment to the resolution of pending obligations and a functional foreign exchange market."

Nigeria's foreign currency shortages have been worsened by declining oil production, which is the country's largest export, accounting for more than 90% of dollar inflows.

Ali said the CBN had recently paid $61.64 million to foreign airlines, who sold tickets in the local naira currency but have not been able to get their money out of the country.

Foreign airlines were owed more than $700 million at the end of November.

"These payments signify the CBN's ongoing efforts to settle all remaining valid forward transactions, with the aim of alleviating the current pressure on the country's exchange rate," Ali said.

President Bola Tinubu has promised to boost foreign currency inflows into Nigeria by attracting new investment, ramping up oil production and reforming the foreign exchange market. 

By Camillus Eboh, Reuters

Thursday, December 28, 2023

Central Bank of Nigeria Lifts Ban on Crypto Transactions

The Central Bank of Nigeria (CBN) has lifted a ban on transacting in cryptocurrencies.

At the same time, the bank said there is a need to regulate virtual asset service providers (VASPs), including cryptocurrencies and crypto assets, Reuters reported Wednesday (Dec. 27), citing a Friday (Dec. 22) circular issued by the bank.

The CBN imposed a ban on banks and financial institutions dealing in or facilitating transactions in crypto assets in February 2021 due to concerns over money laundering and terrorism financing, according to the report.

However, the Securities and Exchange Commission, Nigeria published regulations in May last year that aimed to find a middle ground between an outright ban and unregulated use of crypto assets, the report said.

In its circular dated Dec. 22, the CBN outlined guidelines for banks and financial institutions regarding the opening of accounts, designated settlement accounts, settlement services, and acting as channels for foreign exchange inflows and trade for firms transacting in crypto assets, per the report. The guidelines emphasize the need for VASPs to obtain licensing from the Nigerian SEC to engage in crypto business.

The circular also states that banks are still prohibited from trading, holding or transacting cryptocurrencies, according to the report.

Nigeria has witnessed a surge in cryptocurrency adoption, particularly among its young and tech-savvy population, the report said. Many individuals have turned to peer-to-peer trading offered by crypto exchanges as an alternative to traditional financial services.

The volume of crypto transactions in Nigeria grew by 9% year over year to $56.7 billion between July 2022 and June 2023, per the report, which cited data from blockchain research firm Chainalysis.

It was reported in October 2021 that despite the ban from their country’s central bank, people in Nigeria had turned to cryptocurrency to conduct business, send payments and guard their savings.

In November 2022, the Securities and Exchange Commission, Nigeria said that it had no plans to make crypto part of its digital asset trading goals until regulators agree to standards that keep investors safe.

The commission said at the time that it would promote investment in “sensible digital assets,” with investment protection while also looking into blockchain technology to drive virtual and traditional investment products.

PYMNTS

Related stories: Crypto usage growing further in Nigeria

Video - Nigeria continues to record surge in adoption of cryptocurrencies

Thursday, November 30, 2023

President Tinubu says Nigeri budget offers 'renewed hope'

Nigeria's president has delivered his first budget since taking office, as the country faces a deepening cost of living crisis.

He announced government plans to spend 27.5 trillion naira ($34.85bn; £27bn) in the new financial year.

Bola Ahmed Tinubu said the plans would attract investment, offering "renewed hope" during tough economic times.

Mr Tinubu had called for patience after inflation skyrocketed following an ambitious set of reform policies.

After winning disputed elections with 37% of the vote back in May, he shocked many Nigerians in his inaugural address when, in an off-the-cuff remark, he scrapped a decades-old fuel subsidy.

The move led to a sharp rise in the price of fuel and other goods, worsening the cost of living crisis for many.

Mr Tinubu also scrapped foreign exchange controls, which also contributed to pushing up inflation to its highest levels in nearly two decades, at 25%.

The value of the naira fell, increasing the cost of imports and making it more difficult to pay off international loans.

But Mr Tinubu stood by his decision, saying the fuel subsidy had proven to be "harmful" to the economy.

He insisted the budget's impact on the cost of living crisis would be temporary and has repeated calls for patience, saying the moves would benefit the country in the long term and attract more foreign investment.

Mr Tinubu said his "Budget of Renewed Hope" would guarantee macro-economic stability, lead to "job-rich" growth and reduce the budget deficit.

The government's spending priorities included improving security and infrastructure, as well as taking measures to ease the cost of living crisis, he added.

Mr Tinubu projected higher oil production and tax collection would boost government revenues and allow his administration to borrow less.

He added that the economy was expected to grow by at least 3.76% in 2024, and inflation would be at around 21.4%.

It stood at 27.3% in October, up from 26.72% in September, according to official statistics.

The economic crisis in Nigeria has led to a huge exodus of young professionals who have struggled to find jobs.

The budget will have to be approved by lawmakers before it comes into effect.

By Danai Nesta Kupemba, BBC

Tuesday, November 28, 2023

Cabinet of Nigeria approves $1 billion African Development Bank loan

Nigeria's cabinet has approved a $1 billion concessionary loan from the African Development Bank (AfDB) to support financing the budget and improve foreign exchange supply, Finance Minister Olawale Edun said on Monday.

The AfDB loan will fetch an interest rate of 4.2% for 25 years with eight-year moratorium, Edun told reporters after a cabinet meeting in the capital city, Abuja.

Nigeria's cabinet on Monday revised the country's 2024 budget upwards by 1.5 trillion naira to 27.5 trillion naira ($32.76 billion), after increasing the oil price benchmark and lowering the naira exchange rate assumption.

"(Federal Executive Council) approved a $1 billion concessionary loan for general budget support and to be used to improve forex availability in the country," Edun said.

"The $1 billion loan from AfDB is a budget support fund for ongoing economic reforms. It is to support government programs ... in power sector, social inclusion and the fiscal policy reforms as a whole sector policy initiative."

The cabinet approved a limit of 2 trillion naira for use to refinance expensive government debt and save on debt servicing cost, Edun said. Nigeria has been spending the bulk of its revenue on debt service due to low tax collection.

"The view is that there will be an opportunity to save about 50 billion naira or more in debt servicing over time by giving back expensive debt, refinancing it with cheaper funding," Edun said.

President Bola Tinubu has embarked on Nigeria's boldest reforms in decades by scrapping a popular but costly subsidy on petrol and a system of multiple exchange rates that had kept the currency artificially strong, curbing trade and growth.

Tinubu is trying to rebuild Nigeria's economy and attract investors to revive growth, which has been sluggish for almost a decade, tackle a high debt burden, and lower double-digit inflation. 

By Felix Onuah, Reuters

Friday, November 17, 2023

Ex-central bank chief of Nigeria remanded in custody pending bail hearing

A Nigerian court on Friday remanded former central bank governor Godwin Emefiele in custody on charges of procurement fraud, pending a bail hearing scheduled for Wednesday.

Emefiele applied for bail after pleading not guilty to six new graft charges that accused him of "conferring corrupt advantage". Prosecutors cut the charges from a previous 20-count indictment, which he faced along with two others, so he could be tried separately and quickly.

"The matter is hereby adjourned to Wednesday, November 22, for ruling on the bail application. Meanwhile, the defendant should be remanded in Kuje Correctional Centre pending the ruling on his bail," Justice Hamza Muazu said.

The main trial is set to start on Nov. 28, the judge said.

Last week, Emefiele was granted bail by a separate judge after successfully challenging five months in detention.

Emefiele, who has not commented publicly on the case, was suspended by President Bola Tinubu on June 9 and was arrested a day later.

He resigned in August while in detention, paving the way for the appointment of new central bank governor Olayemi Cardoso in September. 

By Camillus Eboh, Reuters

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Suspended central bank governor of Nigeria denies firearm charges

 

Wednesday, November 15, 2023

Nigeria central bank says old bank notes to remain legal tender

ABUJA, Nov 14 (Reuters) - Nigeria's central bank said on Tuesday old bank notes that were due to be removed from circulation next month would now remain legal tender, ending months of uncertainty after an attempt earlier this year to remove them caused serious cash shortages.

The Supreme Court in March ordered the Central Bank of Nigeria (CBN) to extend until Dec. 31 the use of old 1,000, ($1.18) 500 and 200 naira notes, whose initial withdrawal from circulation became an election issue after it caused widespread hardship and anger.

The bank had defended the removal of the notes, saying new ones would be harder to counterfeit and that the process would also help control liquidity in an economy where most money is held outside banks.

On Tuesday, the CBN, which has had a new governor since September, said the old bank notes "will remain legal tender ad infinitum, even beyond the initial December 31, 2023 deadline".

During the election campaign, President Bola Tinubu had opposed the removal of the old bank notes.

By Camillus Eboh, Reuters

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Video - Supreme court suspends currency swap deadline in Nigeria

 

Friday, November 3, 2023

SUVs and Yachts in Nigeria Budget During Economic Hardship

Nigerian President Bola Tinubu’s first supplementary budget includes a fleet of SUVs for himself and his wife, a presidential yacht and the renovation of his villa amid a cost-of-living crisis for some of the poorest people in the world.

The proposal — which seeks additional funding beyond the annual budget approved by Tinubu’s predecessor — comes as the government asks Nigerians to persevere through pain caused in part by a raft of economic reforms ushered in by the new president. Africa’s most populous country faces rampant unemployment, soaring food prices and a plummeting currency.

Federal lawmakers approved the president’s request for extra spending on Thursday, but eliminated the provision of 5 billion naira ($6.01 million) to buy a presidential yacht. Instead, the doubled the allocation to a student loan fund to 10 billion naira, according Abubakar Bichi, chairman of an appropriations committee in the House of Representatives.

The lawmakers approved 1.5 billion-naira proposed to purchase SUVs for the office of First Lady Oluremi Tinubu — an amount larger than that allocated to many individual federal colleges. The supplementary budget also proposes almost 6 billion naira to purchase SUVs for the presidency — more than the amount initially allocated to fund a student loan program for poor families.

A spokesman said the president didn’t ask for a yacht and criticized coverage of the budget. The “public attack” is because of the “very simplistic way some of the line items are described by civil servants, who prepare the budget,” Temitope Ajayi said in a column posted to a local media outlet. New vehicles, he said, will be used by aides and civil servants, not Tinubu himself.

The legislature has also been slammed for buying hundreds of its own expensive SUVs.

Tinubu, who took office in May, ended a popular but costly fuel subsidy and removed currency restrictions that saw prices spike and the naira sharply devalued. That’s left many households struggling to survive in Africa’s most populous nation, where at least 40% of its more than 200 million people live in extreme poverty.

Last year, the country spent about 96% of its revenue servicing debt and the government plans to raise 9 trillion naira to help fund next year’s budget.

By Nduka Orjinmo, Bloomberg