Business

Knocks, Kudos Trail CBN’s Planned Redesign Of Naira Notes

Published

2 years ago

November 1, 2022

Editor

Financial experts and analysts have expressed mixed reactions over the proposed Naira notes redesign by the Central Bank of Nigeria (CBN).

Recall that the CBN, on October 26, made known its decision to redesign the N200, N500 and N1000 notes by December 15, 2022.

The apex bank added that the existing notes will no longer be regarded as legal tender by January 31, 2023.

Justifying the development, CBN Governor, Dr Godwin Emefiele, lamented that 85 per cent of the currency in circulation is being hoarded by Nigerians.

Emefiele added that the redesigning of Naira notes would help to curb counterfeit, as well as hamper ramson payment to terrorists and kidnappers.

CBN’s announcement has generated polarised reactions even within the government itself.

Minister of Finance, Budget and Planning, Zainab Ahmed became a known critic of the planned policy following her comment at the Nigeria Senate that she was not consulted.

Although President Buhari Muhammadu seems to have saved the situation when he stated that he backed the CBN on its move to redesign naira notes.

However, speakingon Monday, some financial experts described the Naira notes redesign idea as wasteful, without economic value, while others justified the move.

A Financial Inclusion/Wealth Management expert, Mr Idakolo Gbolade, said the decision will not positively lift the ailing Nigerian economy.

He explained that the pronoucement has further devalued the Naira against Dollar.

“The reasons given for redesigning the Naira notes regarding efforts to trace ransom payments or curbing counterfeiting may be germaine but it’s attendant cost could further increase inflationary pressures on the economy. This decision will not positively lift the economy.

“Presently the pronouncement has further devalued the Naira with its exchange rate going for N815/$ in the black market.

“The sudden change could be politically correct but economically damaging due to the short period of implementation which could cause upheavals in the financial system.

“This sudden rise is the exchange rate of Naira to US Dollars is largely due to massive request to exchange the Naira notes to dollars which has further increased the scarcity of dollars and put more pressure on the Naira thereby reducing our foreign reserves.

“The continous devaluation of the Naira will further hurt the economy and increase the cost of production and cost of living”, he stated.

On his part, the Chief Executive Officer (CEO), Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf disclosed that the exercise has no monetary policy significance.

Muda added that the country can survive without such intervention rather CBN should devote its attention to solving the issue with liquidity in the foreign exchange market, Naira depreciation and soaring inflation.

In his words, “Currency as a percentage of money supply is less than seven percent. The exercise therefore has no monetary policy significance.

“Besides it will come with huge logistics costs, and avoidable dislocations to small businesses, most of whom are in the informal sector.

“This is one intervention we can do without. There are more urgent issues demanding the attention of the CBN. We have issues with liquidity in the foreign exchange market, the depreciating currency the recent Moody’s downgrade of nigeria, soaring inflation and many more.

“The CBN should save the citizens and the economy the trauma of this currency redesign. It is a distraction we can do without.”

Meanwhile, Professor of Management and Accounting, Lead City University, Ibadan, Godwin Oyedokun, said the move could help distort flow of illicit funds.

“Well, I have reviewed it, I actually do not have problem with it. I don’t have to support it because of the opinion of others, ones it is correct and according to the law, I will support it.

“I believe it is the right thing to be done. Like Buhari said, it is only those that have issue that will not support it. Some people said it will affect exchange rate, I don’t believe in this.

“It can be used to distort the flow of illicit funds. If you don’t have business in holding dollars, you shouldn’t hold it. A lot of money will be in circulation now but it is temporary. I expect by January, February, another policy should come in, because one should not have any reason in holding cash. The cost of printing Naira is more; everybody will be ok without physical exchange of cash”, he said.

It was learnt that commercial banks have put forward measures to facilitate an easy cash collection process from depositors before the January deadline.
DAILY POST

Business

Stock Market Review: FBN Holdings Leads 41 Others As Investors Gain N811bn

Published

12 hours ago

May 4, 2024

Editor

FBN Holdings Plc has topped 41 other advanced equities to pull the Nigerian Exchange Ltd.(NGX) market indices up by 1.46 per cent, week-on-week, making investors gain N811 billion.

The market, having opened for four days in the week, following the May Day holiday, had FBN Holdings leading the gainers’ table by 32.68 per cent to close at N27 per share.

Sterling Financial Holdings followed by 27.75 per cent to close at N4.88, while UACN gained 24.60 per cent to close at N15.45 per share.

Julius Berger added 23.76 to close at N72.40, while Flour Mills rose by 20.66 per cent to close at N36.80 per share.

Conversely, Nascon Allied Industries Plc led the losers’ table by 17.03 per cent to close at N43.60, University Press trailed by 16.67 per cent to close N2.05 per share.

Neimeth International Pharmaceuticals shed 14.14 per cent to close at N1.70, Berger Paints Plc declined by 9.87 per cent to close at N13.70 and Vitafoam Nigeria lost 9.81 per cent to close at N17 per share.

Meanwhile, 42 equities appreciated in price during the week, higher than 27 equities in the previous week.

Thirty-six equities depreciated in price, lower than 43 in the previous week, while 76 equities remained unchanged, lower than 84 recorded in the previous week.

Consequently, the All-Share Index and Market Capitalisation appreciated by 1.46 per cent to close the week at 99,587.25 and N56.323 trillion, respectively, in contrast to 98,152.91 and N55.512 trillion posted last week.

Similarly, all other indices finished higher with the exception of NGX Consumer Goods, NGX Oil and Gas and NGX Industrial Goods which depreciated by 0.26, 0.68 and 0.36 per cent, respectively, while NGX ASeM and NGX Sovereign Bond indices closed flat.

Meanwhile, a total turnover of 1.941 billion shares worth N32.644 billion in 35,807 deals was traded this week by investors on the floor of the Exchange, in contrast to a total of 1.839 billion shares, valued at N34.258 billion, that exchanged hands last week in 37,528 deals.

The financial services industry measured by volume led the activity chart with 1.496 billion shares valued at N22.453 billion traded in 19,225 deals, thus contributing 77.08 and 68.78 per cent to the total equity turnover volume and value, respectively.

The consumer goods industry followed with 144.722 million shares worth N5.063 billion in 4,966 deals.

In the third place was the conglomerates industry, with a turnover of 109.978 million shares worth N1.539 billion in 2,064 deals.

Trading in the top three equities, namely Abbey Mortgage Bank Plc, Guaranty Trust Holdings Company Plc and Access Holdings Plc, measured by volume, accounted for 898.940 million shares worth N14.314 billion in 5,518 deals.

These contributed 46.31 and 43.85 per cent to the total equity turnover volume and value, respectively.

(NAN)

Business

BREAKIN: NDIC Increases Maximum Deposit Insurance Coverage

Published

3 days ago

May 2, 2024

Editor

The Nigeria Deposit Insurance Corporation (NDIC) on Thursday increased the maximum deposit insurance coverage levels for Deposit Money Banks from N500,000 to N5 million.

The Managing Director of NDIC, Bello Hassan, announced this in Abuja at a press conference, stating that it takes effect immediately.

He said, “For Deposit Money Banks, the increase of the maximum deposit insurance coverage from N500,000 to N5,000,000, would provide full coverage of 98.98% of the total depositors compared with the current cover of 89.20%.

“In terms of the value of deposit covered, the revised coverage would increase the value of deposits covered by deposit insurance to 25.37% compared with the current cover of 6.31% of total value of deposits.

“The increase of the maximum deposit insurance coverage from N200,000 to N2,000,000, would provide full coverage of 99.27% of the total depositors compared with the current level of 98.76% and would increase the value of deposits covered by deposit insurance to 34.43% compared with 14.38% of total value of deposit, currently covered.

“The increase of the maximum deposit insurance coverage from N500,000 to N2,000,000 would provide full coverage of 99.34% of the total depositors compared with the current 97.98% and would increase the value of deposits covered by deposit insurance to 21.04% compared with 10.77% of total value of deposit, currently covered.”

Hassan also stated that raising the maximum deposit insurance coverage for primary mortgage banks from N500,000 to N2,000,000 would provide full coverage for 99.99% of total depositors and increase the value of deposits covered by deposit insurance to 43.10% of the total deposit value, up from the current 40.60% cover.

The Corporation has also raised the maximum pass-through deposit insurance coverage for subscribers of Mobile Money Operators from N500,000 to N5,000,000 per subscriber.

Business

Dangote Speaks On Devaluation Of Naira

Published

4 days ago

May 1, 2024

Editor

Chairman of Dangote Industries Limited, Aliko Dangote has said that the devaluation of Naira created the biggest mess for the company in 2023.

Speaking at the annual general meeting of Dangote Sugar Refinery, Dangote said this affected lots of companies in the country.

He said: “We are doing whatever it takes to make sure that at the end of the day, we will be paying dividends because if you look at our dividends last year, it was almost 50 percent more so we will try and get out of the mess.

“The biggest mess created was actually the devaluation of the naira from N460 to N1,400. You can see almost 97 percent of the companies, especially in food and beverages businesses, none of them will pay dividends this year for sure but, we will try and get out of it as soon as possible.

“We want to see that at the end of the day, no matter how small, we will be able to pay some dividends, especially if there is a rebound of the naira.”