There are indications that exchange rate crises that trailed the foreign exchange market reforms in June 2023 may linger further as supply gap led to further depreciation of Naira in the parallel market yesterday to N930/ $1, down from N925 mid last week.
However, the exchange rate improved week-on-week in the Investors and Exporters (I&E) window to N758.1 from N775.6.
The prevailing exchange rates indicates a rising parallel market premium which is the gap between the parallel market rate and that of the I&E window.
The gap, as at last week Wednesday, was N153.41 per dollar, but has risen to N171.9 per dollar by yesterday, a development which has created a huge incentive for round-tripping and arbitraging in the foreign exchange market ecosystem.
READ ALSO: Naira Gains At Investors, Exporters Window
Moreover, market observers have also noted that the Bureau de Changes, BDCs, have not helped the market as envisaged a month ago when the segment was re-admitted into the Central Bank Of Nigeria, CBN, official trading window for the purpose of opening the market to more independent forex supply and better access for individual retail end users.
The BDCs have, instead, lamented that the renewed depreciation of the local currency was mainly due to the scarcity of the foreign currencies.
A BDC operator told Vanguard that the scarcity is so much that ‘‘even some Nigerians are unable to withdraw forex from their domiciliary accounts in banks”.
He said the lifting of the ban by the CBN on sales of forex to BDC operators has failed to help resolve the scarcity as the banks are not selling to the BDCs.
A total of $42.26 million was traded in foreign exchange at the I&E window.
On Tuesday, CBN said a review of the change in the forex regime showed that banks are in a position to profit from its potential to significantly increase the naira value of banks’ foreign currency (FCY) assets and liabilities.
The apex bank directed deposit money banks, DMBs, to stop utilising gains from the revaluation of the naira to pay dividends or finance operations.
Some financial market analysts
CBN should reduce BDCs through mergers, acquisition—Prof Uwalake
Commenting on the renewed depreciation of the naira even with the lifting of ban on sale of forex to BDCs, Prof Uche Uwaleke, President. Association of Capital Market Academics of Nigeria, ACMAN said: “Recall that the ban was placed in the first place due to the abuses associated with the selling of Forex to BDCs due to their large and unmanageable number.
‘‘If the CBN has established a need to resume such sales, then it should first trim the over 5000 BDCs to a controllable number of less than 1000 through a regulatory-induced merger and acquisition.
‘‘It is only then that the CBN can be in a position to effectively supervise the BDCs else the CBN ends up going round in circles.”
Allocation of forex to BDCs may not address scarcity- Adonri
Also commenting, David Adonri, analyst and Executive Vice Chairman at Highcap Securities Limited, said: “Since BDCs are authorized retail dealers licensed by CBN, sale of forex to them is in order.
‘‘However, CBN should endeavor to sell to all its authorized buyers at the prevailing open market price in order to avoid rent seeking abuses. This U-turn may not address scarcity but provide a level playing field for participants in the foreign exchange market.”
READ ALSO: CBN May Lose Control Of The Naira
I doubt there will be any improvement Chiazor
Another financial expert, Victor Chiazor, Head of Research and Investment at FSL Securities Limited, said: “The CBN’s decision to lift the ban on sale of Forex to BDCs would have aided liquidity in the FX market if the CBN actually had enough FX in its vaults.
‘‘But I doubt there will be any change to the current pressure on the Naira.
“The case today is that our FX reserves which is at around $33 billion while the net liquid position is far lower, which means that in real terms the CBN does not have the required FX liquidity to meet the current FX demand, not also forgetting the existing backlog of FX payments owed to businesses.”
Bank Customers Pay N154bn Fees For E-banking Services
Customers of nine leading commercial banks paid N154 billion fee for using electronic banking services in the first half of the year (H1’23).
Details of the banks’ financial statements for H1’23 showed that the fee represents a 16.7 percent year-on-year (YoY) rise when compared to N131.97 billion paid in H1’22.
The banks are Guaranty Trust Bank which raked in N21.2 billion from the customers, Access Bank (N43.9), Zenith Bank (N22.27 billion), United Bank for Africa Plc (N51.07 billion), Stanbic IBTC (N2.14 billion), First City Monument Bank (N7.4 billion), Unity Bank (N1.96 billion), Fidelity Bank (N1.85 billion) and Wema Bank (N3.13 billion).
Electronic Banking is a service that enables banking transactions through electronic payment channels like internet banking, mobile banking, Automated Teller Machines (ATMs), Point of Sale (PoS) among others.
The rise in electronic banking fees and commission indicates that Nigerians’ adoption of electronic payment channels has continued to increase.
According to the Nigerian Interbank Settlement System (NIBSS) e-payment data for Q1’23 the volume of e-payment transactions grew YoY by 209 percent to 4.7 billion from 1.52 billion in Q1’22.
The value of e-payment transactions increased YoY by 48 percent to N137.52 trillion in Q1’23 from N92.85 trillion in Q1’22.
Meanwhile, in H1 ’23, the nine banks earned N66.7 billion from account maintenance fees and commission income, representing a 14.7 percent YoY rise when compared to N57.5 billion recorded in the corresponding period of 2022, H1’22.
In terms of highest account maintenance fees and commission income, Zenith Bank had the highest (N21.02 billion), followed by Access Bank (N13.36 billion), Guaranty Trust Bank (N10.5 billion), United Bank of Africa, UBA, (N9.6 billion), First City Monument Bank, FCMB, (N3.85 billion), Fidelity Bank (N3.4 billion), Stanbic IBTC (N2.64 billion), Wema Bank (N1.63 billion) and Unity Bank ( N742.6 million).
However, in terms of growth, UBA had the highest YoY growth of 47.6 percent at N9.6 billion in H1’23 from N6.5 billion in H1’22.
Edo, GIZ Strengthen Partnership To Enhance Ease Of Doing Business
As part of reforms to boost ease of doing business in Edo State, the state government has strengthened partnership with the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ).
Addressing journalists after the meeting with the representatives from the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) at the Edo State Investment Promotion Office (ESIPO), in Benin City, the Managing Director of ESIPO, Mr. Kelvin Uwaibi, said the primary objective of the meeting was to evaluate the outcomes of prior collaborations and chart a more robust path, aimed at elevating Edo’s standing in the Presidential Enabling Business Environment Council (PEBEC) ratings.
He noted that GIZ has been a steadfast partner to Edo State over the years, offering invaluable support in the state’s mission to enhance the Ease of Doing Business.
He added, “This partnership has yielded noteworthy successes, and the recent meeting provided an opportunity to assess the tangible achievements and strategise for the future.
“One of the top priorities identified during the meeting was the enhancement of EODB for Micro, Small and Medium Enterprises (MSMEs). Both parties were committed to ensuring that these businesses encounter fewer obstacles and experience a more streamlined process.
“A key area of focus was simplifying business-related processes and reducing bureaucratic complexities. Streamlining these procedures can significantly enhance the overall EODB environment.
“Recognising the importance of reducing the cost of doing business, both parties underscored the need to implement measures that make it more affordable for enterprises, particularly small and medium-sized ones.”
Representative of the Head of Component, Policy and Strategy, Mr. Omoware Akinropo, and Access to Finance Policy Advisor, GIZ, Mr. Pearse Akinwande, reiterated GIZ’s unwavering commitment to supporting Edo State in its EoDB initiatives.
Naira To Dollar: Edo Businessman Wants FG To Intervene
An Edo State businessman, Mr. Osazee Gift Osazuwa, has called on the Federal Government to wade in and tackle the falling rate of the naira against the dollar.
He made the call in Benin while addressing Journalists as regards the current exchange rate of the naira against the dollar.
Osazuwa said on Saturday, the naira was sold for 1,000/$ at the black market, a trend he described as “very worrisome.”
He said the falling strengthen of the naira against the dollar is not helping them in the electronics business as they have to spend more to buy goods due to the exchange rate.
Osazuwa said if the naira keeps falling without any action from the Federal Government to salvage the situation, it might get worse and thereafter push them out of business.
Osazuwa, while expressing confidence on President Bola Tinubu’s ability to revamp the nation’s moribund economy, said those of them in the electronics business still have hope that he has the magic wands to turn it around.
He called on the Federal Government to arrest the situation before it gets out of hands.
He said if the government can check the falling rate, stem the tide and restore the dignity of the naira against the dollar, the country will be better for it.
Also speaking, Mr. Matthew Oshodin, decried the high cost of living in the country which is made worse by the fuel subsidy removal.
He said Nigerians are currently finding it difficult to cope rising from the high cost of fuel that has robbed off on every other aspect of the economy.
Oshodin further used the medium to call on the federal government to fix up the nation’s moribund refineries rather than sharing N5 billion as palliatives to states.
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