Naira Devaluation: Latest CBN News Today 8th June 2023
In the most recent update from the Central Bank of Nigeria (CBN) on 8th June 2023, there are growing concerns about the naira redesign , scarcity of the naira, naira devaluation. President Tinubu has expressed worry regarding the redesign of the currency and its potential effects on its availability. The CBN’s announcement sheds light on the current situation of the currency and its potential ramifications for the economy. Please stay tuned for further updates as this matter unfolds.
Cashless policy: CBN takes E-Naira to Kano varsity for payment of tuition, others
The Central Bank of Nigeria (CBN) has extended its efforts to promote the E-Naira policy by visiting Aliko Dangote University of Science and Technology (ADUST) in Kano. The Kano Branch Controller of the CBN, Umar Ibrahim Biu, addressed the university community and urged them to adopt the E-wallet system for various transactions, including tuition and salary payments. Biu emphasized the benefits of the cashless system, such as enhanced financial security and efficiency, through the E-Naira initiative.
The CBN has been actively engaging with different merchants and institutions to encourage the use of E-Naira. Biu mentioned previous engagements with markets, universities, and now ADUST. The objective is to familiarize students and staff with the E-Naira wallet and enable them to conveniently make payments, particularly for tuition fees. Biu highlighted the advantages of the E-Naira system, such as increased safety, reduced corruption, avoidance of carrying large amounts of cash, financial inclusion, and improved financial literacy.
The Vice Chancellor of ADUST, Alhaji Musa Tukur Yakasai, expressed gratitude for the CBN’s initiative and assured the university’s support for the E-Naira. He emphasized that ADUST, being a science and technology university, already had students accustomed to electronic platforms for various academic activities. The Vice Chancellor addressed concerns about security, stating that the CBN had addressed such issues, leading to a better understanding and acceptance of the E-Naira. He pledged to encourage students and other stakeholders to embrace the initiative, highlighting the convenience it offered by eliminating the need for carrying large amounts of cash.
Overall, the CBN’s visit to ADUST aimed to raise awareness and promote the adoption of the E-Naira among students and staff for various transactions, with the Vice Chancellor expressing support and assuring the university’s commitment to the initiative.
CBN Update : Why microfinance banks are endangered species
The Central Bank of Nigeria (CBN) has recently taken action by revoking the operating licenses of 132 Microfinance Banks (MFBs), three finance companies, and four Primary Mortgage Banks (PMBs). This decision was made due to the failure of these institutions to comply with the obligations set by the CBN and the provisions of the Banks and Other Financial Institutions Act. Over the past 13 years, a total of 356 microfinance banks have had their licenses revoked by the CBN.
Microfinance Banks (MFBs) are licensed companies that offer financial services such as savings and deposits, loans, domestic funds transfer, and non-financial services to microfinance clients.
The reasons for the license revocation vary and may include mismanagement, illiquidity, capital erosion, continuous contravention of CBN rules, and failure to submit required returns for six months. This action is seen as a way to sanitize the industry and ensure the stability and health of the microfinance sector.
MFBs are permitted to engage in various activities, including accepting different types of deposits, providing credit to customers, offering housing micro loans, providing ancillary services like capacity building and safe custody, issuing debentures with CBN approval, collecting money on behalf of customers, and acting as agents for mobile banking and micro-insurance.
Microfinance banks can be established by individuals, groups, community development associations, private corporate entities, or foreign investors. Their target clients are the economically active poor, low-income households, the unbanked and underserved population, vulnerable groups such as women, youth, and the physically challenged, informal sector operators, micro-entrepreneurs, and subsistence farmers.
There are different categories of MFB licenses available, with varying minimum capital requirements. Tier 2 (rural) MFBs are expected to pay a minimum capital requirement of N50 million, tier 1 (urban) MFBs N200 million, state license MFBs N1 billion, and national license MFBs N5 billion.
Returns rendition by MFBs is a regulatory requirement and must be submitted to the Directors of Financial Policy and Regulation Department (FPRD) of the CBN and Special Insured Institutions Department (SIID) of the Nigeria Deposit Insurance Corporation (NDIC) within 14 days after the end of each month. The managing director/CEO and the chief accountant of the MFB are responsible for signing and ensuring the authenticity of the returns. Failure to comply with these requirements can have serious implications for the MFBs.
Paris Club Refund: Again, court summons Emefiele over $53 million debt
The Federal High Court in Abuja has issued an order for Godwin Emefiele, the Governor of the Central Bank of Nigeria (CBN), to appear before the court on July 19. This order is in relation to a $53 million judgement debt resulting from the Pars Club refund. Judge Inyang Ekwo made it clear that the court would not consider Mr. Emefiele’s motion for a stay until he appears in court. The case involves a lawyer named Joe Agi, who sued Linas International Ltd, the Minister of Finance, and the CBN as judgment debtors. The lawsuit is part of a series of legal actions related to the federal government’s refund to states and local governments, aimed at reimbursing funds that were over-deducted from their accounts to offset Paris Club and London debts incurred between 1995 and 2002. Many other individuals and entities have also come forward, claiming to have provided consultancy services in recovering these funds for the states and local governments.
Naira Drops to a Record Low as Devaluation Bets Swirl
Following a currency auction by the central bank, Nigeria’s currency has reached an all-time low. The auctioned dollars were exchanged at a naira rate that was approximately 30% weaker than the rate set in the tightly regulated official market.
The central bank, confronted with significant demand for US dollars from industries and importers, sold the currency at a rate of 645 naira per dollar. This has led to speculation that a devaluation of the currency may occur following the recent inauguration of a new president.
Nigeria’s currency has hit a historic low as the central bank conducted a dollar auction, offering a naira rate that was nearly 30% weaker compared to the tightly regulated official market.
The central bank of Nigeria, responding to significant demand from industries and importers for US dollars, sold the currency at a rate of 645 naira per dollar. This move has fueled speculation that a devaluation of the currency may be imminent, especially following the recent inauguration of a new president.
