Latest CBN News Today 11th May 2023

This article has Latest Central Bank of Nigeria (CBN) News Today, 11th May 2023, most recent and relevant news, developments, and insights from the CBN and its stakeholders.

From policy updates and regulatory changes to market trends and industry analysis, Fox Nigeria has compiled comprehensive and important news as well as events affecting the Nigerian financial system.

CBN authorizes Banks to give Nigerians loan in Dollars, gives reason

Fox Nigeria reports that apex bank has authorized representatives of foreign banks in Nigeria to collaborate with their parent companies in providing and syndicating foreign currency-denominated loans (specifically, dollar loans) to Nigerian businesses, as per the guidelines.

The move is expected to enhance dollar liquidity and alleviate foreign exchange pressure, according to The Nation.

Additionally, the CBN's guidelines outline a range of activities that representatives of foreign banks in Nigeria are allowed to undertake, including marketing their parent company's products and services, conducting research activities, acting as an intermediary between local banks, private institutions, and other customers in Nigeria and their foreign parent, and connecting banks and financial institutions with their parent company.

Moreover, they can assist Nigerian exporters with finding new markets through their international offices and provide information to Nigerian exporters about laws and markets in target countries where the parent company or any of its affiliates has a subsidiary.

They can also organize seminars, forums, and other events in Nigeria that allow a foreign parent to meet with existing or potential customers in Nigeria, as well as collect and distribute financial and economic information or country reports to their foreign parent for use by the parent's customers.

The CBN specifies that revenue earned by representative offices is acceptable as long as it does not originate from non-permissible activities and is linked to intra-group services given to the parent company, with such revenue taxed in compliance with transfer pricing regulations. The revenue in this context is limited to staff costs and business premises leasing fees, among other line items.

Naira exchange rate to US dollar improves in one month despite 46% drop in FX

Naira's Performance Against Dollar in April 2023

At the Unofficial Market

The Naira's impressive performance against the US dollar in April 2023 was notable, especially given the decrease in forex transactions. It was a better performance at the black market as the Naira closed the month of April at N739/$1, which represents a significant improvement from N752/$1 it kicked off the month.

Dollar Supply at the Official Market

According to FMDQ Securities data, the turnover of dollars traded in the foreign exchange market's Investors and Exporters (I&E) window fell by 46% month-on-month (MoM) to $1.4 billion in April 2023 from $2.6 billion in March. This contradicts the sharp increase in March when the I&E turnover rose by 52.9 percent from $1.7 billion in February 2023.

Nigerian Breweries Blames CBN

Meanwhile, in another report, Nigerian Breweries disclosed that it experienced a decline in revenue of N10.71 billion in its Q1 2023 financial result. The NB board attributed the drop in revenue to several challenges, including CBN's naira redesign policy. The CBN announced the withdrawal of the old 1000, 500, and 200 naira notes in February, which led to a severe cash scarcity.

CBN to Introduce Guidelines for Contactless Payment Technology in Nigeria

The Central Bank of Nigeria (CBN) has revealed its plans to release guidelines for using contactless payment systems in the country.

The objective is to encourage the secure and efficient use of cashless payments. Adeyemi Adefuye, Deputy Director of the Payment System Management Department of the CBN, announced this development while speaking in Calabar, Cross River State.

According to the Nation, he explained that the guidelines would address the technical and operational requirements for implementing contactless payment systems.

Additionally, the guidelines will highlight security measures to safeguard customers' information.

Adefuye further highlighted the advantages of contactless payment. Firstly, it will offer easy and convenient cashless options for users. It will also reduce queues at checkout points.

Secondly, it will enhance customers' experience through speedy and convenient in-person phone transactions.

Additionally, the payment method is likely to increase spending, revenue and profitability, leading to growth in the retail business, and subsequently an increase in the GDP.

Furthermore, Adefuye identified an exciting feature of contactless payment called “Free on board (FOB),” where the risk of loss shifts from the buyer to the seller.

This feature is likely to attract more sellers to embrace the payment method. Contactless payments also offer increased security, reduce printing costs, and minimize the risk of spreading contagious diseases during transactions.

CBN's Naira Redesign Policy Causes Loan Repayment Issues for Nigerians

According to a survey by Successory Nigeria Ltd, Nigerian banks experienced high loan default due to a shortage of cash caused by the Central Bank of Nigeria's redesign policy of the Naira. The survey analyzed responses from top bank staff and found that loan approvals peaked between January and March 2023, but customers were unable to repay due to the scarcity of cash. This resulted in a sharp increase in loan defaults and overdue payments, which affected the banks' earnings and increased operating costs.

The CBN's introduction of new N1,000, N500, and N200 notes and withdrawal of the old notes caused a chronic cash crunch, leading to losses for businesses such as the Poultry Association of Nigeria (PAN) and frustration for banks trying to recover loans.

The survey revealed that financial institutions increased loan approvals and disbursements during the naira crunch, but faced challenges with rising corporate running costs due to inflation. The survey also highlighted the greed of some Nigerians who profited from citizens during the shortage of cash, and concluded that the policy was a deliberate punishment that made people poorer. The survey suggests that future policies and economic decisions should consider the impact on people's livelihoods to avoid further negative effects on the economy.

In March, the Central Bank of Nigeria (CBN) injected N701.4 billion back into circulation, resulting in a significant increase in currency in circulation to N1.68 trillion. This represents a month-on-month (MoM) rise of 71.4% from N982.1 billion in February. According to CBN figures, this injection of cash helped reverse the downward trend that had seen currency in circulation fall to a 14-year low in February. The increase in cash supply was due to a Supreme Court ruling ordering the CBN to continue using old banknotes in circulation until December 31, following a lawsuit filed by some governors against the implementation of the naira redesign policy.

CBN Speaks on Plans for New Naira Notes as Banks, Nigerians Complain of Scarcity

CBN Clarifies: No Plans to Phase Out Redesigned Naira Notes, Despite Reports of Scarcity

The Central Bank of Nigeria (CBN) has issued a statement to refute reports that it plans to withdraw the newly redesigned N200, N500, and N1,000 notes from circulation. The apex bank's clarification comes amid rising concerns about the apparent disappearance of the new notes, which have led to speculation and complaints from bank customers.

Acting director of corporate communications, Isa Abdulmumim, stressed that the speculation was unfounded and a strategy employed by certain groups to incite fear among the public. He also reiterated that both the old and new currency notes were being used concurrently and that the CBN was regularly receiving a substantial amount of updated banknotes from the Nigerian Security Printing and Minting Company (NSPMC) Limited.