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CBN

  • BREAKING: CBN raises MPR by 400 bps from 18.75% to 22.75%

    BREAKING: CBN raises MPR by 400 bps from 18.75% to 22.75%

    The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has raised the Monetary Policy Rate (MPR) by 400 basis points (bps) from 18.75% to 22.75%.

    TheNewsGuru.com (TNG) reports CBN Governor, Yemi Cardoso made this known on Tuesday in Abuja, following the 293rd meeting of the MPC.

    It would be the first meeting of the CBN MPC in 2024 and the first since the one last held between 24th and 25th July 2023.

    The MPR had been pegged at 18.75 percent since the last MPC meeting between 24th and 25th July 2023.

    Cardoso who chairs the MPC also said the Cash Reserve Ratio (CRR) has been raised to forty-five percent while the liquidity ratio was left unchanged at thirty percent.

    TNG reports monetary policy is the macroeconomic policy laid down by the central bank.

    It involves management of money supply and interest rate and is the demand side economic policy used by the government to achieve macroeconomic objectives like inflation, consumption, growth and liquidity.

     

    Details shortly…

  • Dollar scarcity: CBN bans staff, govts, banks, others from owning BDCs

    Dollar scarcity: CBN bans staff, govts, banks, others from owning BDCs

    The Central Bank of Nigeria (CBN) has excluded governments, commercial banks, merchant banks, Other Financial Institutions (OFIs), public officers among other parties from owning Bureau De Change (BDCs) directly or indirectly.

    CBN disclosed this on Friday in its Guidelines for the operations of BDCs in Nigeria.

    The apex bank noted that no person is permitted to carry on the business of BDC in Nigeria without its authorization.

    Section 2.0 of the guidelines stated: “The following shall not be allowed to participate in the ownership of BDCs, directly or indirectly: Commercial, merchant, non-interest and payment service banks, OFIs, including holding companies and payment service providers, serving staff of financial services regulatory and supervisory agencies;

    Serving staff of regulated financial services providers, Governments at all levels, public officers as defined in 5th Schedule Part IV of the Constitution of the Federal Republic of Nigeria;

    “Non-Governmental organizations, cooperative societies, charitable organizations, academic and religious institutions, non-Nigerian non-resident natural persons, non-Nigerian resident natural persons, non-resident non-regulated companies, telecommunication services providers;

    “Sanctioned individuals and entities, a shareholder in another BDC (whether directly or indirectly), any other entity that the CBN may from time to time designate.”

  • BDC: CBN mandates sellers above $10,000 to declare sources

    BDC: CBN mandates sellers above $10,000 to declare sources

    The Central Bank of Nigeria (CBN) has mandated foreign exchange sellers to Bureau De Change (BDC) of the equivalent of 10,000 dollars and above to declare their forex sources.

    Haruna Mustapha, Director, Financial Policy and Regulation Department of the CBN, said this in a revised regulatory framework to curtail excesses of BDCs and check uncertainty in the foreign exchange market.

    Mustapha said that such sellers would also be required to comply with all Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regulations.

    He said that the guidelines would significantly enhance the regulatory framework for the operations of BDCs as part of ongoing reforms of the Nigerian foreign exchange market.

    According to him, the guidelines revises the permissible activities, licensing requirements, corporate governance and AML/CFT provisions for BDCs.

    “It also sets out new record-keeping and reporting requirements, among others,” he said.

    The guidelines also specify that no person shall carry on the business of BDC in Nigeria except with the prior authorisation of the CBN.

    It described BDC as a company licensed by the CBN to carry on only retail foreign exchange
    business in Nigeria.

    It banned commercial, merchant, non-interest and payment service banks, other Financial Institutions (OFIs), including holding companies and payment service providers from promoting BDCs.

    It also precluded serving staff of financial services regulatory and supervisory agencies, serving staff of regulated financial services providers, governments at all levels, among others, from promoting BDCs.

    The guidelines permitted BDCs to acquire foreign currency from authorised sources like tourists, returnees from the diaspora and expatriates with foreign exchange inflows from work, travel, investment or their domiciliary accounts.

    Other permissible sources are International Money Transfer Operators (IMTOs), embassies, hotels that are authorised buyers of foreign currencies, the Nigerian Foreign Exchange Market (NFEM) and any other source that the CBN may specify.

    It warned the BDCs not to engage in street-trading, maintaining any type of account for any member of the public, or accepting any asset for safe keeping/custody.

    It said that the BDCs were also not permitted to take deposits from or grant loans to members of the public in any currency and in any form.

    “Retail sale of foreign currencies to non-individuals, except for BTA, international outward transfers, engaging in off-shore business or maintaining foreign correspondent relationship with any foreign establishment are also not permissible,” it said.

  • CBN amends formula for fixing FX rates for Customs Duty on importation

    CBN amends formula for fixing FX rates for Customs Duty on importation

    The Central Bank of Nigeria (CBN) has reviewed the formula for fixing foreign exchange rates for Customs duty on importation.

    Dr Hassan Mahmud, the Director, Trade and Exchange Department of the CBN said this in a memo addressed to the Nigeria Customs Service (NCS) and the general public on Friday in Abuja.

    According to Mahmud, the idea is to check irregular changes in the Import Duty Assessment levies applied by the NCS.

    “Following the liberalisation of the FX market, the CBN has noted the concern of Importers of goods and services in the irregular changes in the Import Duty Assessment levies applied by the NCS.

    “These developments have further built uncertainties around the pricing structure of goods and services in the economy.

    “It is creating abnormal increase in the final sale prices of items, which is largely driven by uncertainty rather than traditional market fundamentals, with implications to near term inflation trend.

    “To this effect, the CBN wishes to advise that the NCS and other related parties adopt the closing FX rate on the date of opening Form M for the importation of goods, as the FX rate to be used for Import Duty Assessment,” he said.

    The director said that this rate would remain valid until the date of termination of the importation and clearance of goods by importers.

    He said that this would enable the NCS and the importers to plan appropriately and reduce the uncertainties around varying daily exchange rate in determining their revenue or cost structure.

    “Therefore, effective Feb. 26, the closing rate on the date of opening of Form M for the importation of goods and services will be the rates that will apply for the assessment of import duty.

    “This supersedes the requirements of Memorandum 9 of the CBN Foreign Exchange Manual.

    “While the CBN is mindful of the initial volatility and price distortions in the aftermath of the FX market liberalisation, the apex bank is confident that these reforms would ensure stability in the market and entrench market confidence,” he said.

    The NCS had adjusted its FX rate for tariffs and duty collection to N1,413 to the dollar on Feb. 3.

    The NCS had earlier adjusted the rate from N951 to N1,356 to the dollar on Feb. 2.

    The frequent review of Customs exchange rates for computing Import Duty had raised concerns among Nigeria’s business community.

  • Forex: ONSA, CBN join forces to crackdown on speculators

    Forex: ONSA, CBN join forces to crackdown on speculators

    In a concerted effort to safeguard Nigeria’s foreign exchange market and combat speculative activities, the Office of the National Security Adviser (ONSA) and the Central Bank of Nigeria (CBN) are joining forces to address challenges impacting the nation’s economic stability.

    This is contained in a statement by the Head, Strategic Communication at ONSA, Mr Zakari Mijinyawa, on Tuesday in Abuja.

    Mijinyawa said the recent intelligence reports had highlighted continued illicit activities within the Nigerian foreign exchange market, saying the ONSA and CBN were embarking on collaborative approach to tackle the infractions.

    He said the partnership would involve a coordinated effort with key law enforcement agencies, including the Nigeria Police Force (NPF), the Economic and Financial Crimes Commission (EFCC), the Nigeria Customs Service and the Nigeria Financial Intelligence Unit (NFIU).

    According to him, the primary objective of this alliance is to systematically identify, thoroughly investigate and appropriately penalise individuals and organisation involved in wrongful activities within the FX market.

    “By leveraging the expertise of these agencies, we aim to deter malicious practices, protect investor interests, and promote sustainable economic growth.

    “This joint effort underscores the commitment of the Nigerian government to improving its Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) framework and exiting the grey list of the Financial Action Task Force.

    “In addition, the efforts will make progress in ensuring a stable and transparent foreign exchange market, fostering investor confidence, and advancing the nation’s economic well-being,” he said.

    Mijinyawa said that the CBN’s proactive measures to stabilise the foreign exchange market and stimulate economic activities had been commendable.

    He said the effectiveness of the initiatives was being undermined by the activities of speculators, both domestic and international, operating through various channels.

    These activities, according to him, is exacerbating the depreciation of the Nigerian Naira and contributing to inflation and economic instability.

    “Recall that to address the exchange rate volatility, the CBN initiated a comprehensive strategy to enhance liquidity in the forex market, including unifying FX market segments, clearing outstanding FX obligations, introducing new operational mechanisms for Bureau De Change operators.

    “The CBN is also enforcing the Net Open Position limit for commercial banks, and adjusting the remunerable Standing Deposit Facility cap.

    “To reduce the pressure on the naira, the Economic and Financial Crimes Commission (EFCC) has raised a 7,000-man special task force across its 14 zonal commands to clamp down on dollar racketeers,” he added.

     

  • Inflation: CBN increases PVS limit from 2.5% to 15%,

    Inflation: CBN increases PVS limit from 2.5% to 15%,

    The Central Bank of Nigeria (CBN) has announced an upward review of the Price Verification System (PVS) from 2.5 per cent to 15 per cent.

    According to a circular by Dr Hassan Mahmud, Director, Trade and Exchange Department of the CBN, this is in a bid to check global inflation and other challenges.

    The PVS was initially introduced in 2022 to curb over-invoicing of imports.

    It was mandated to ensure that prices of imported items that were above 2.5 per cent above the global average prices were queried.

    The PVS is meant to streamline and regulate financial transactions and documentation in the banking sector and to reduce over-pricing and ensure price accuracy of imported goods.

    According to Mahmud, due to global inflation and other related challenges, the CBN has reviewed the allowable limit of price deviation for exports and imports to -15 per cent and +15 per cent of global average prices respectively.

    “Authorised dealer banks and the general public are hereby advised to note and comply accordingly,” he said.

    He, however, said that the PVS was not meant to determine the actual prices of items for tariffs or duty charged by the government.

    “It will, rather, enable the CBN curtail the excess outflow of limited foreign exchange through over-invoicing and other price manipulation activities,” he said.

    In a related development, the apex bank also directed all authorised dealer banks to, henceforth, effect payment of Personal Travel Allowance (PTA) and Business Travel Allowance (BTA) through electronic channels only.

    According to Mahmud, in a separate circular, this is in line with the commitment to ensure transparency and stability in the foreign exchange market and avoid malpractices.

    “For the avoidance of doubt, payment of PTA/BTA by cash is no longer permitted.

    “Authorised dealer banks shall henceforth effect payout of PTA/BTA through electronic channels only, including debit or credit cards.

    “Authorised dealers and the general public are hereby to note and comply accordingly,” he said.

  • Consult before altering customs exchange rates, Reps tell Finance ministry, CBN

    Consult before altering customs exchange rates, Reps tell Finance ministry, CBN

    The House of Representatives has urged the Federal Ministry of Finance and the Central Bank of Nigeria (CBN), to provide adequate notice to stakeholders in maritime industry/general public before altering customs exchange rates.

    The resolution followed the adoption of a motion by Rep. Leke Abejide (ADC-Kogi) during plenary in Abuja on Thursday.

    Abejide had titled his motion: “Need to Rescue the Nigerian Economy from imminent Collapse and Restore Investors’ Confidence in the System.

    Abejide  said that conventional fiscal policies required a minimum of 90 days to manifest, in contrast with  the current
    trend in Nigeria where immediate enforcement was prevalent.

    He said this necessitated the need for a shift toward a collaborative approach which integrated fiscal and monetary policies with stakeholder’s engagement.

    This, according to him,  is to prevent isolation and guarantee active stakeholders’ involvement in consequential decisions.

    Adopting the motion, the house said that the move was to ensure transparency and allow stakeholders to prepare for any changes that might affect their operations;

    The house also urged the CBN to maintain the system exchange rate for Customs duty and Excise duty purposes below N1,000/ One dollar,  preferably N951.941/ One dollar to encourage patronage in Nigerian ports.

    This,  according to the lawmakers,  is to prevent galloping inflation, aiming to balance economic stability with competitiveness globally.

    The house further urged the Federal Ministry of Finance to ensure the international best practice of allowing a 90-day grace period for fiscal policy changes to facilitate the completion of ongoing transactions under existing policies.

    The house subsequently mandated the Committees of Customs and Excise, Finance and Banking Regulations to interface with the Minister of Finance, CBN Governor, and Comptroller General of the Nigeria Customs.

    This, according to them, is to know how fixed exchange rate for Customs and Excise duties will work for the system to boost exports and encourage patronage in the nation’s ports.

  • FX crisis: CBN bars travel allowances by cash

    FX crisis: CBN bars travel allowances by cash

    In order to curtail the foreign exchange crisis in the country, the Central Bank of Nigeria (CBN) says Personal and Basic Travel Allowances will only be paid through electronic channels.

    A circular issued on Thursday to all authorized dealer Banks titled ‘Allowable Channels for Payout of PTA and BTA’, signed by the Director of Trade and Exchange of the CBN, Dr Hassan Mahmud, stated that the directive takes effect immediately.

    The circular stated that “memorandum 8 of th foreing exchange maul and the circular with reference FMD/DIR/CIR/GEN/08/003 dated February 20, 2017 stipulate the eligibility criteria for accessing personal and business travel allowances (PTA/BTA).

    “In line with the bank’s commitment to ensure transparency and stability in the foreing exchange market and avoid foreing exchange malpractices, all authorized dealer banks shall henceforth effect payout of PTA/BTA through electronic channels only including debit aor credit cards.

    “For the avoidance o doubt payment of PTA/BTA by cash is no longer permitted. Authorized dealers and the general public are hereby to note and comply accordingly.”

     

     

     

  • CBN stops international oil companies from remitting 100% of forex proceeds  

    CBN stops international oil companies from remitting 100% of forex proceeds  

    The Central Bank of Nigeria (CBN) has issued a circular in addition to its barrage of moves to boost foreign exchange liquidity, with the latest barring international oil companies (IOCs) from repatriating 100 per cent of their foreign exchange proceeds at once.

    In a circular issued and signed by the Director, Trade and Exchange department of the CBN, Dr Hassan Mahmud, the apex bank said only 50 per cent of forex proceeds can be repatriated at once.

    The CBN noted that the practice, which is known as “cash polling” has an impact on liquidity in the domestic forex market.

    According to the new guidelines, IOCs will now be allowed to repatriate only 50% of their proceeds immediately while the balance of 50% will be repatriated 90 days from the day of inflow.

    “The Central Bank has observed that proceeds of crude oil exports by International Oil Companies (IOCs) operating in Nigeria are transferred offshore to fund parent accounts of the IOCs (otherwise referred to as cash polling). This has an impact on liquidity in the domestic foreign exchange market.

    “While the CBN strongly supports the need for IOCs to have easy access to their export proceeds, particularly to meet their offshore obligations, this must be done with minimal negative impact on liquidity in the Nigerian foreing exchange market,” it stated.

    It noted that in line with the ongoing reforms in the foreign exchange market, it has become necessary to take measures to address this trend. Thus, it directed that “banks are allowed to pool cash on behalf of IOCS, subject to a maximum of 50 per cent of the repatriated export proceeds in the first instance. The balance 50 per cent may be repatriated after 90 days from the date of inflow of export proceeds.”

    The apex bank introduced rules that will guide “cash polling” by IOCs going forward. They include approval from the CBN before repatriation of funds under the cash polling framework, parent entity of IOCs will have to reach an agreement with the CBN before “cash polling.”

     

  • Tinubu seeks Senate confirmation of Chairman, members of CBN MPC

    Tinubu seeks Senate confirmation of Chairman, members of CBN MPC

    President Bola Tinubu has sought the confirmation of Senate for the appointment of a Chairman and Members for the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC).

    Tinubu’s request was conveyed in a letter addressed to President of Senate, Godswill Akpiabio and read at plenary on Wednesday.

    Tinubu in the letter titled Constitution of Monetary Policy Committee for the Central Bank of Nigeria (CBN) said, “in accordance with the provisions of section 12 of CBN Act 2007.

    “I am pleased to present for confirmation by the Senate the confirmation of the underlisted 12 persons as Chairman and members of the Monetary Policy Committee of the Central Bank of Nigeria.”

    Tinubu in the letter listed the 12 persons to include: Olayemi Cardoso, CBN Governor (Chairman), Muhammad Abdullahi CBN Deputy Governor (Member), Bala Bello CBN Deputy Governor (Member), Emem Usoro CBN Deputy Governor (Member), Philip Ikeazor CBN Deputy Governor (Member).

    Others include, Lamido Yuguda, Director General, Security and Exchange Commission (SEC) (Member), Jafia Lydia Shehu, Permanent Secretary Federal Ministry of Finance (Member), Muritala Sabo CBN Director (Member), Aloysius Uche (Member), Agu Paulin (Member), Mustapha Akinwumi (Member), Bamidele Amon (Member),

    “While hoping that the request will receive the expeditious consideration of the Senate, please accept the distinguished Senate President, the assurance of my highest regards,” Tinubu said.

    Akpabio thereafter referred the request to Committees on Finance Banking, Insurance and other Financial Institutions for further legislative inputs and report back to plenary in one week.