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Bank Credit To Govt Hits N28.43tn

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Banks’ credits to the government rose by N3.77tn in the first two months of 2023.

Figures obtained from the Central Bank of Nigeria revealed that the total government credit which ended December 2022 at N24.66tn rose to N28.43tn as of the end of February 2023.

The CBN disclosed in its ‘Money and credit statistics’ report that the credit rose from N14.9tn as of the end of January 2022 to N26.65tn in the corresponding period of 2023.

According to statements released by the CBN, a member of the Monetary Policy Committee, Aliyu Sanusi, said at the January meeting that tightening of the rates was needed to moderate the effects of election-related spending and the liquidity associated with the proposed government borrowing in 2023.

He also said that the key drivers of the NDA was net claims on government which grew by 78.15 per cent (y-t-d) in December 2022, which in turn was driven by FGN’s borrowing from the central bank (93.21 per cent), commercial banks (44.26 per cent) and non-interest banks (79.13 per cent).

READ ALSO: JUST IN: CBN Raises Interest Rate To 18%

“This suggests that monetary and fiscal factors have continued to play an important role in the current inflationary processes,” he said.

Another MPC member, Adeola Adenikinju, said, “The World Bank forecast Nigeria’s real GDP growth to decline to 2.9 per cent in 2023.

“The slow growth is because of the effects of flooding, the tight fiscal space and rise in borrowing costs, security challenges and moderation in oil prices.”

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JUST IN: CBN May Increase Bureau De Change’s Share Capital To N2bn

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The Central Bank of Nigeria is considering plans to increase the share capital of Bureau De Change operators to N2bn and N500m for Tier 1 and Tier 2 licenses.

The currency operators were previously charged N35m for a general license.

This was contained in the draft paper of a “Revised Regulatory And Supervisory Guidelines For Bureau De Change Operations In Nigeria” published by the apex bank on Friday.

The new guidelines contain several new changes to the guidelines for BDC operations in the country and if endorsed will be effective at a date decided by the CBN.

READ ALSO: CJN To Swear In New Supreme Court Justices Monday

Recently, operations of the currency operators have suffered heavy backlash following the free fall of the naira against the dollar.

Government officials have severely blamed the black market operators for this fall though liquidity remains a huge challenge.

This week, operatives of the Economic and Financial Crimes Commision arrested over 250 BDC operators in Abuja and many more in other states of the federation.

Under the minimum capital requirements, the central bank is introducing a two-tier license for BDC operators in the country.

A Tier 1 BDC is authorised to operate on a national basis can open branches and may appoint franchisees, subject to the approval of the CBN.

READ ALSO: Economic Hardship: Delta Protest Canceled As Soldiers Arrest Journalist

A Tier 1 BDC (which is the franchisor) shall exercise supervisory oversight over its franchisees. All franchisees shall adopt their franchisor’s name, branding, technology platform, and rendition requirements.

Also, a Tier 2 BDC is authorised to operate only in one state or the FCT. It may have up to three locations – a head office and two branches, subject to approval of the CBN. It is not permitted to appoint franchisees.”

Under Tier 1 operators are expected to have N2bn as minimum share capital while also depositing a Mandatory Caution Deposit of N200m.

The application and license fee is also N1 million and N5 million respectively.

“Under Tier 2 operators are expected to have N500 million as minimum share capital while depositing a Mandatory Caution Deposit of N50 million. The application and license fee are also N250,000 and N2 million respectively.”

The apex bank also stated that the prescribed minimum capital of BDCs and any subsequent capital injection shall be subject to verification by the CBN.

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MPC Nominees Promise To End Forex, Food Crises

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The Senate on Wednesday grilled nominees for membership of the Central Bank of Nigeria’s Monetary Policy Committee over the forex crisis and unending food crisis.

President Bola Tinubu had, last week, forwarded to the Senate for confirmation, the names of nominees for the committee of the CBN.

In giving the request expeditious consideration ahead of the MPC meeting slated for next Monday, February 26, the Senate, through its Committee on Banking, Insurance, and Other Financial Institutions, grilled six out of the nominees with questions on required urgent solutions to forex volatility and food crisis.

READ ALSO: EFCC Grills Former Kwara Gov AbdulFatah Ahmed For Second Day Over ₦10bn

The first to be grilled was the Director-General of the Securities and Exchange Commission, Lamido Yuguda, who informed the committee that his nomination into MPC would give the SEC the needed voice in monetary policy.

Yuguda lamented that the value of the Naira as it is today, is not real, having lost its intrinsic value but that the MPC, when inaugurated on Monday, would join other stakeholders to stabilise the national currency.

He said, “The value of any currency is measured by the goods and services that it can buy. The Naira, as it is today, does not possess that value sufficiently which is being critically looked into.”

READ ALSO: Nigerians Knock Seyi Tinubu For Preaching Endurance Over Economic Hardship

In his submission, the nominee from Lagos State, Dr. Mustapha Akinkunmi, said the way out now is to target the exchange rate and not inflation as currently being tackled which hasn’t yielded so much result.

He saod, “A more proactive way of addressing the Naira volatility problem at hand is for the CBN to target the exchange rate itself and not inflation.

“The inflation the country is facing now is largely that of food inflation, which is beyond CBN but for the entire country.

“Production and distribution of food commodities across the country would help to reduce the food inflation, while the aggressive target of the exchange rate, would help to stabilise the Naira with the required increase in productivity.”

READ ALSO: VIDEO: Reject IMF, World Bank Offers – Falana Cautions FG

In a similar submission, the nominee from Imo State, Mrs Aku Odinkemelu, said productivity is the key to arresting the volatility of the Naira and food inflation.

Other nominees grilled at the session by the committee were Prof. Murtala Sagagi, Kano State; Bamidele Amoo, Kwara State; and Aloysius Ordu, who worked with the World Bank and the African Development Bank for 30 years at different times.

In his closing remarks, the committee’s chairman, Senator Tokunbo Abiru (APC, Lagos East), told the nominees that their screening was done ahead of the MPC meeting slated for next Monday by the CBN.

Abiru said what Nigerians expect to come after the meeting are solutions to the rising inflation rate, worsening Naira volatility in the forex market and the general rejuvenation of the economy.

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MTN, Dangote Cement, Others Drag Equity Market To N1.8tn Loss

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The equity market opened in the reds on Monday as investors lost about N1.82tn.

Substantial depreciations were observed in bellwether stocks, fuelled by strong sell interest in the market. Specifically, securities such as Dangote Cement, MTN Nigeria, NGX Group, NEM Insurance, and Tantalizer dipped by 10 percent, 10 percent, -9.76 percent, -9.74 percent, and -9.52 percent, respectively.

Both the All-Share Index and the market capitalisation of the local bourse depreciated by 3.15 percent to close at 102,393.23 points and N56.03tn due to waning market sentiment. Hence, the year-to-date return of the index dipped to 36.94 percent from 41.39 percent in the previous trading session.

Trading activities remained subdued into the new week with notable decreases in the total traded volume and value by 17.60 percent and 5.59 percent to 273.85 million units and N7.44bn, respectively. However, the total deals for the day bucked the trend, advancing by 17.60 percent to 9,688 trades.

In eight months of Tinubu administration, Nigeria’s stock market leads the world
Despite the market sentiments, buy pressure was observed in Juli Plc, Daar Communications, Sunu Assurances, ABC Transport, and NAHCO, as their share prices rose by 9.52 percent, 8.64 percent, 6.74 percent, 6.67 percent, and 5.86 percent.

READ ALSO: NAFDAC, PCN Raid, Seal 1,321 Patent Medicine Outlets In Kano

On the sectoral front, tracked sub-sector indices closed in red territory. The Industrial Goods sector topped the chart for the most losers with a massive 6.02 percent decline, primarily driven by sell-pressure in Dangote Cement. This was followed by the Insurance sector with a loss of 2.49 percent, attributable majorly, to share price declines in NEM Insurance, Linkage Assurance, and VeritasKap.

Sectors such as Banking, Consumer Goods, and Oil/Gas declined by 0.24 percent, 0.77 percent, and 0.28 percent, respectively.

Guaranty Trust Holding Company Plc was the most traded security by volume with 28.85 million units, while Geregu led in value at N1.74bn.

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