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Non-remittance of dollars to foreign reserve by NNPC behind free fall of Naira, says CBN

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Abuja—Non-remittance of dollars to foreign reserves by the Nigerian National Petroleum Corporation (NNPC) is responsible for naira’s free fall in the official and parallel markets, the Central Bank of Nigeria (CBN) has said.

The Nation reports that as of the close of work yesterday, the naira traded for N700/$1 at the parallel market and N415.96/$1 at the official market.

The CBN explanation was given in the report that was released yesterday.

NNPC and its subsidiaries are the sole managers of crude oil which accounts for more than 80 per cent of Nigeria’s Foreign Exchange (forex) earnings.

On Tuesday, an abridged communique of the Federation Account Allocation Committee (FAAC) showed that the Excess Crude Account (ECA) shrank to $376,655.09 from $35.377 million in May.

The ECA is supposed to be a savings buffer meant to steady the government’s revenue and serve as a bailout for the economy in dire times.

The abridged version of the FAAC communique was released at the end of the monthly FAAC meeting in Abuja by the Director in charge of Information in the Office of the Accountant-General of the Federation (OAGF), Henshaw Ogubike.

In the CBN report titled: “The forex question in Nigeria: Fact sheet”, the apex bank disclosed that “domestically, there has been zero dollar remittance to the country’s foreign reserve by the NNPC, insisting that the CBN does not print dollars.

The report states: “As noted by the CBN Governor, Godwin Emefiele, monetary policy alone cannot bear all the burden of the expected adjustments needed to manage these difficulties. It’s our collective duty as Nigerians to shore up the value of the naira.”

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According to the apex bank, Nigeria earns foreign exchange from four sources – proceeds from oil exports; proceeds from non-oil exports; diaspora remittances, and Foreign Direct/Portfolio Investments (capital flows).

The bank noted that the past six years have been characterised by two recessions triggered by a slowdown in the global economy as well as the effects of COVID-19.

These, it said, were further accentuated by sharp declines in the prices of crude oil, the major source of Nigeria’s foreign exchange.

The bank said:“Considering Nigeria’s heavy dependence on oil exports for foreign exchange earnings and government revenue, the impact of the oil market crash severely affected the government’s naira revenue and other macroeconomic aggregates including economic growth.

“Hence, the rate of exchange between the naira and other currencies has widened over the past few years.”

On the key facts about the economy, the apex bank said it issues legal tender in Nigeria (naira) and does not print foreign exchange. It said the pressure on the naira has both local and global perspectives.

“There is un-abating demand for foreign exchange for both goods and services, thereby creating a demand challenge.

“The current exchange rate of the Naira, like other major currencies, is not driven by cryptocurrencies, given the volatility in the cryptocurrency space, which lost over two trillion in the past two years in face of high inflation,” it said.

The high inflation in other climes and the hike in interest rates have heightened pressures on the exchange rate. This has triggered capital flow reversals from Emerging Markets and Developing Economies (EMDEs) to more advanced economies.

“The United States (U.S.) dollar is gaining against all major currencies of the world. The imbroglio in Nigeria’s tertiary educational sector has triggered an exodus of students from Nigerian schools, with its attendant payment of fees in foreign exchange.

“Summer travels by Nigerians has also impacted the demand side of the foreign exchange market,” it said.

According to the apex bank, Nigeria is not producing, hence the propensity to import is directly affecting the value of the Naira but the apex bank has attempted to address the challenge through policies.

It listed policies like the RT200 FX Programme, 100 for 100 Policy on Production and Productivity, Naira4Dollar Scheme, Anchor Borrowers’ Programme (ABP), Export Development Facility (EDF); and the Non-Oil Export Stimulation Facility (NESF).

The bank said that all these and many of its other initiatives were aimed at diversifying the economy, stimulating production, enhancing inflow of foreign exchange, maintaining the stability of the naira against other currencies and reducing foreign exchange demand pressure.

Business

Cash withdrawals limits: PoS operators get waiver

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Abuja —The Director of Corporate Communications of the Central Bank, Mr Osita Nwanisobi, has said that Point-of-Sale operators can take advantage of an exemption to request more cash beyond the new limit, the Punch reports.

According to the Punch newspaper, Nwanisobi noted that there is an exemption stipulated in the newly released circular, which PoS operators can take advantage of, based on the requirements and in line with the amount of transactions they process.

He said, “The circular is very clear. If you are doing PoS, it is online and mobile transaction. Whenever cash is involved, then there is a limit. However, there is an exemption in the circular, which PoS operators can apply for based on the volume of their transactions.”

Following the new directive, the National President, Association of Mobile Money and Bank Agents of Nigeria, Victor Olojo, had said that PoS operators would protest against the policy which he said was targeted at killing their livelihood.

Olojo argued that the cash limit would harm their business as it translated to shutting down PoS terminals.

However, there was an exemption that allows up to N5m for individuals and N10m for corporate organisations once a month but with certain requirements.

To enjoy the exemption, banks were required to obtain some information from the drawee and upload the same on the CBN portal created for the purpose.

The requirements include a valid means of identification such as the National Identity Card, international passport, driving licence; Bank Verification Number of the payee; notarised customer declaration of the purpose of the cash withdrawal; senior management approval for the withdrawal by the managing director of the drawee where applicable and approval in writing by the MD/CEO of the bank authorising the withdrawal.

According to the guidelines, monthly returns on cash withdrawal transactions above the specified limits will be rendered to the banking supervision department.

Also, compliance with extant anti-money laundering and countering the financing of terrorism regulations relating to Know Your Customer, ongoing customer due diligence and suspicious transaction reporting are required in all circumstances.

On the likely effect of the policy on the people in the rural areas, who regularly deal with cash, Nwanisobi said, “The policy only states that you cannot go beyond a particular limit. It doesn’t stop anybody from using cash. So, those in the rural area can still transact with the available cash.

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Naira redesign: CBN denies plan to print ₦‎5,000 note 

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Port Harcourt—The Central Bank of Nigeria (CBN) said there’s no plan to introduce N5,000 denominated bank note following the naira redesign.

Daily Post reports that Ahmed Umar, CBN Director of Currency Operations made the clarification on Tuesday in Port Harcourt, Rivers State.

Umar attended the Nigeria Deposit Insurance Corporation (NDIC) workshop for Financial Correspondents Association of Nigeria (FICAN) and Business Editors.
We are not introducing any new note. Some people have seen one N5000 note that we don’t know about”, NAN quoted him saying.
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Umar was represented by Amina Halidu-Giwa, Head of Policy Development at CBN Currency Operations Department.

The official said note restructuring would mean that lower bills like the N100 note would become coin.

Umar added that the focus of the apex bank is printing notes that would replace the currencies to be withdrawn.

“What we are printing is going to be very limited because we want other means of settling transactions to be used,” he explained.

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If elected president, I will name, shame oil thieves—Atiku to business leaders

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Lagos—The 2023 presidential candidate of the Peoples Democratic Party (PDP), Atiku Abubakar has threatened to name and shame oil thieves in the country if elected Nigeria’s President in 2023.

Channels TV reports that Atiku made this known on Saturday when he interacted with the Business Dialogue Stakeholders Forum at Eko Hotel in Lagos.

Atiku also said he would confiscate all oil blocs allocated to some Nigerians who have failed to make them operational.

“If you are not going to develop oil blocs given to you, we will take it away and give it to those who will develop it.

“We will also assemble the names of those involved in oil theft, publish same and prosecute them,” Atiku told the stakeholders.

He reiterated his commitment to privatizing the refineries in Kaduna, Port Harcourt and Warri.

Atiku was at the event with his running mate and Delta State Governor, Ifeanyi Okowa.

Both Governors Udom Emmanuel and Aminu Waziri Tambuwal of Akwa Ibom and Sokoto states; who are the Chairman and Director General of the Atiku/Okowa presidential campaign team, urged the stakeholders to support Atiku for a better Nigeria.

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