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  • CBN expresses commitment to FX Code

    CBN expresses commitment to FX Code

    The Central Bank of Nigeria,  CBN, yesterday, expressed its  commitment to the Nigerian Foreign Exchange (FX) Code saying that  it has aligned its roles with the principles of the code.

    In a statement signed by the  Governor, Olayemi Cardoso, Deputy Governor, Economic Policy, Mohammad   Abdullahi and   Director, Financial Markets Department, Dr.Omolara   Duke, the apex bank said its decision follows a review of FX Global Code and acknowledgement that the Code represents a set of principles generally recognised as good practice in the foreign exchange market (“FX Market”).

    The statement added: “The Bank confirms that it acts as a regulator to Market Participant as defined by the Code and it is committed to regulate FX Market activities in a manner consistent with the principles of the Code.

    “To this end, the Bank has taken appropriate steps, based on the size and complexity of the FX Market, and therefore aligns its roles with the principles of the Code.”

  • CBN appoints 16 directors to head key dep’ts

    CBN appoints 16 directors to head key dep’ts

    The Central Bank of Nigeria (CBN) has appointed 16 directors effective March 3.

    The appointments were said to have been made to bolster the apex bank’s operations in a number of policy-driven, regulatory and supervisory capacities.

    The directors are Jide-Samuel Avbasowamen, director of the information technology department; Abdullahi Hamisu, director of the banking services department; Ojumu Adenike, director of the medical services department; and Makinde Olanrewaju, head of the procurement and support services department.

    In the financial department, CBN appointed Sike Ijeoma as director of the financial policy and regulation department; Isa-Olatinwo Aisha, director of consumer protection department; and Oboh Victor Ugbem, director of monetary policy department.

    Also, Nakorji Musa will head the trade and exchange department; Yusuf Rakiya will lead the payments system supervision department; Vincent Modesola was appointed to oversee the strategy management and innovation department; Farouk Muhammad is to lead the reserve management department; and Akinwunmi Olubukola Akinniyi takes charge of the banking supervision department.

    In addition, Solaja Mohammed-Jamiu will be in charge of the other financial institutions’ supervision department (OFISD); Hassan Umar will lead the development and finance institutions supervision department; and Adedeji Adetona will steer the currency operations and branch management department.

    Also, Okpanachi Moses will serve as the head of the statistics department.

  • Consumer Credit Surge: Nigerians Borrowing Hits N4.42 Trillion

    Consumer Credit Surge: Nigerians Borrowing Hits N4.42 Trillion

    In a notable economic shift, Nigeria’s consumer credit outstanding surged by a substantial 26.29%, reaching N4.42 trillion in November 2024, according to the latest Central Bank of Nigeria (CBN) Monthly Economic Report. This significant increase from the previous month’s N3.5 trillion underscores the growing reliance of Nigerian households on credit to navigate rising living costs.

    The data reveals a compelling narrative: as inflation continues to exert pressure on household budgets, more Nigerians are turning to credit, particularly personal loans, to manage essential expenses. “Consumer credit outstanding increased significantly by 26.29 per cent to N4.42 trillion from the level in the preceding month, due largely to inflation expectations,” the CBN report stated.

    Personal Loans Lead the Charge

    The most striking growth was observed in personal loans, which skyrocketed by 37.76% to N3.32 trillion from N2.41 trillion in October 2024. These loans, frequently used for day-to-day household expenditures, now account for a dominant 74.95% of the total consumer credit. Conversely, retail loans, which fund purchases of goods and services, experienced a more moderate increase of 1.83%, rising to N1.11 trillion.

    As a news writer, examining these figures, I can’t help but consider the human element. For many Nigerians, these loans represent a lifeline, enabling them to afford necessities like rent, food, and healthcare amidst escalating prices. The surge in personal loans is a direct reflection of the financial strain faced by countless families.

    Inflation and Monetary Policy

    The CBN’s Governor, Olayemi Cardoso, has acknowledged the challenges posed by inflation, which has prompted aggressive monetary tightening. The Monetary Policy Rate (MPR) has been raised by 875 basis points in 2024, moving from 18.75% to 27.50% by November. While these measures aim to stabilise the economy by curbing excess liquidity, they also place considerable pressure on borrowers.

    Analysts suggest that the slower growth of retail loans indicates a cautious approach to discretionary spending. While consumers are still purchasing goods and services, the high cost of living may be deterring them from making non-essential purchases.

    Balancing Credit Expansion and Financial Stability

    The CBN’s efforts to enhance financial inclusion and credit accessibility are commendable. However, concerns about rising debt levels and repayment sustainability persist. Economic experts urge the central bank to implement measures that balance credit expansion with financial stability. It is crucial to ensure that increased borrowing does not lead to higher default rates, particularly as interest rates remain elevated.

    The sharp rise in personal loans, coinciding with the CBN’s interest rate hikes, highlights the complex interplay between monetary policy and consumer behaviour. Ultimately, the goal is to create an environment where credit empowers individuals without jeopardising their financial well-being.

    As we move forward, it is essential to monitor these trends closely. The data provides a window into the economic realities faced by Nigerians, and informed policy decisions are crucial to navigating these challenges effectively.

  • Loan App Surge: 380 Lenders Approved, Consumer Fears Grow

    Loan App Surge: 380 Lenders Approved, Consumer Fears Grow

    The landscape of digital lending in Nigeria is undergoing a dramatic transformation, with the number of approved loan app soaring to 380 this February, a significant jump from 320 in October of the previous year. This surge, reflecting approvals from both the Federal Competition and Consumer Protection Commission (FCCPC) and licenses granted by the Central Bank of Nigeria (CBN), signals a burgeoning appetite for accessible financial services. However, this growth is shadowed by a rising tide of consumer apprehension regarding the operational ethics of some digital lenders.

    According to the FCCPC’s database, a substantial 322 digital lenders have received full approval, while 42 operate with conditional approval. Additionally, 16 companies are licensed by the CBN, culminating in the 380 approved entities. While this expansion suggests increased financial inclusion, it also raises critical questions about regulatory oversight and consumer protection.

    “It is not enough to issue a licence or grant approval based on the fact that they have met certain conditions set by the FCCPC, the regulator needs to monitor these lenders and ensure that they are operating in ethical ways, especially how they disburse loans and how they recover their loans,” stated Mr. Gbolagunte Ajayi, a financial analyst. His words underscore a growing sentiment that regulatory action must extend beyond mere registration to encompass active policing of lending practices.

    Consumer Experiences: A Growing Sense of Unease

    The concerns voiced by consumers are not merely abstract fears. They reflect real-life experiences, often laden with emotional distress. My chats with a few people regarding the saving capabilities of these loan apps tended to view them as a trap rather than a saviour.

    Omowunmi revealed that she obtained a loan from a well-known vendor out of an urgent need. She voiced her displeasure with the time element and interest rate. “I was offered N44,000 to refund N76, ooo over a two-month period,” she said. This ran counter to the advertisement that said I might receive N100,000 and repay N100,400 over three months. Kemi herself expressed dissatisfaction about the unwanted messages and calls she received from the agent urging her to take out a loan in order to obtain a reduced interest rate.

    Read Also: Nigerian Students Get Two-Year Grace Period for Student Loan Repayment

    Daniel bemoaned the automated calls that occur when a loan default occurs. “Do they think I will be forced to pay for all the calls? I receive up to 35 calls every day telling me to pay. When I phoned their centre to report that my device had a problem and I was unable to access my account to make a payment, the representative asked me to borrow a device, log into my account, and make the payment. She then provided her account information to complete the payment, but regrettably, it was unsuccessful. When the loan was past due, I received forty calls from a machine.”

    These narratives paint a picture of a sector where the lines between legitimate lending and predatory practices blur. The use of harassment and threats, reminiscent of unregulated “loan sharks,” by some licensed apps further exacerbates consumer anxiety. This raises a critical question: how can regulators ensure that the benefits of digital lending, such as increased financial access, are not overshadowed by unethical practices that exploit vulnerable individuals?

    Regulatory Response and Economic Implications

    The FCCPC acknowledges the challenges and has taken steps to address them. Adamu Abdulahi, Executive Commissioner of Operations at the FCCPC, emphasised the commission’s efforts to identify and hold loan app operators accountable through its Interim Regulation. He also mentioned that 47 loan apps have been delisted from the Google Play Store, and 88 are under close watch. “The main aim of the registration and approval of digital lenders in the country is to identify the companies behind the apps through its Interim Regulation to be able to hold them responsible for any infraction,” he clarified.

    Despite the challenges, the FCCPC recognises the vital role loan apps play in the Nigerian economy. These platforms offer crucial financial services to individuals who may be excluded from traditional banking systems, contributing to financial inclusion. However, a balance must be struck between fostering innovation and safeguarding consumer rights.

    The rapid expansion of the digital lending sector necessitates a robust regulatory framework that not only approves lenders but also actively monitors their operations. As we navigate this evolving financial landscape, it is imperative that consumer protection remains at the forefront, ensuring that the promise of accessible finance does not come at the cost of ethical integrity.

  • Capital Inflow Dips to $1.63 Billion in November Amidst Investor Concerns

    Capital Inflow Dips to $1.63 Billion in November Amidst Investor Concerns

    Nigeria’s allure for international investors appears to be waning, as capital inflow into the nation plummeted to $1.63 billion in November 2024, a noticeable 13.8% decrease from the $1.89 billion recorded in October. This concerning trend, revealed in the Central Bank of Nigeria’s (CBN) Economic Report for November 2024, paints a picture of growing investor hesitancy towards the Nigerian market.

    The CBN report clearly outlines the downward trend: “Capital inflow declined to US$1.63 billion in November 2024, from US$1.89 billion in October 2024. A breakdown showed that portfolio investment inflow decreased to US$1.36 billion from US$1.41 billion due, mainly, to lower purchases of equity and shares. Similarly, foreign direct investment decreased to US$0.12 billion from US$0.18 billion in October 2024. ‘Other investments,’ mainly loans, also decreased to US$0.15 billion from US$0.30 billion in the preceding month.”

    I’ve observed over the past five years how crucial foreign investment is for a nation’s economic health. This recent decline raises some red flags. The numbers themselves tell a story of dwindling confidence: Portfolio investment, the lifeblood of the stock market, shrank to $1.36 billion. Even more alarming is the significant drop in Foreign Direct Investment (FDI), which signifies long-term commitment to a nation’s economy, falling to a meagre $0.12 billion. This suggests that investors are becoming increasingly wary of establishing or expanding operations within Nigeria. “Other investments,” primarily loans, also saw a substantial reduction, dropping by half to $0.15 billion.

    Several factors contribute to this unsettling development. Firstly, the CBN’s monetary policies, particularly regarding foreign exchange and interest rates, are creating an environment of uncertainty for investors. The volatility of the Naira, Nigeria’s currency, adds another layer of risk, making it difficult for investors to accurately project their returns. Globally, high interest rates in developed economies are luring investors away from emerging markets like Nigeria, offering seemingly safer havens for their capital. And, unfortunately, the persistent security and political challenges within Nigeria continue to dampen investor enthusiasm.

    Read Also: Nigeria Faces Foreign Investment Drought Amidst Negative Real Interest Rates

    From a human perspective, this decline in investment has real-world consequences. Fewer foreign investments translate to fewer jobs, slower infrastructure development, and a potential strain on government resources. It’s a ripple effect that touches the lives of everyday Nigerians. We need to address the root causes of this decline to restore investor confidence and unlock Nigeria’s vast economic potential. This requires a concerted effort to stabilize the Naira, create a more predictable regulatory environment, and address the security concerns that are plaguing the nation. The future prosperity of Nigeria depends on it.

  • CBN to sanction bankswith ATM withdrawal limit below N20,000

    CBN to sanction bankswith ATM withdrawal limit below N20,000

    The Central Bank of Nigeria, CBN, has threatened to sanction banks that limit Automated Teller Machines (ATM) withdrawal to less than N20,000 per transaction.

    The apex bank disclosed this in a document addressing concerns over the reviewed fees on ATM withdrawal.

    Recall that CBN on Tuesday increased ATM transaction withdrawal fees, saying, from March 1st, bank customers will pay N100 charge for every N20,000 withdrawal from the on-site  ATM of other  banks.

    The CBN in a circular to banks and other financial institutions, the CBN said,  “ATM Transaction Fees On-Us for customers withdrawing at the ATM of the customer’s financial institution in Nigeria with No charge.

    “Not-On-Us for withdrawal from another institution’s ATM in Nigeria; On-site ATMs will attract a charge of N100 per N20,000 withdrawal.

    “Off-site ATMs will attract  a charge of N100 plus a surcharge of not more than N500 per N20,000 withdrawal.

    “The surcharge, which is an income of the ATM deployer/acquirer, shall be disclosed at the point of withdrawal to the consumer.

    “International Withdrawals (per transaction) whether debit/credit card: Cost Recovery – exact charge by international acquirer.

    “Furthermore, the three free monthly withdrawals allowed for Remote-On-Us (other bank’s customers/Not-On-Us consumers) in Nigeria under Section 10.6.2 of the Guide shall no longer apply.”

    However, following widespread concerns over the limit on ATM cash withdrawal by banks, the apex and yesterday released a list Frequently Asked Question, FAQ, to clarify implementation of the new charge.

    Related News
    CBN to sanction banks with ATM withdrawal limit below N20,000
    CBN says ATM withdrawals less than N20,000 also attract an N100 fee
    Shehu Sani knocks CBN over increase in ATM charges

    The CBN noted that the charges for withdrawals made from other banks on-site and off-site ATMs are based on banks allowing customers to withdraw up to N20,000 per transaction.

    CBN said: “The fees are based on banks allowing customers to withdraw up to N20,000 per transaction. Any bank that compels a customer with sufficient funds in his/her account to withdraw less than N20,000 per transaction against the customer’s desire for a higher sum would be contravening this regulation’s spirit and sanctioned appropriately.

    “Consumers that are denied the right to withdraw up to N20,000 per transaction are encouraged to file a complaint with the CBN using cpd@cbn.gov.ng.”

    The regulator also explained that banks can not charge more than the stated fees, but a bank can charge a lower amount depending on its cost structure, among other things.

    “The charges and surcharges are capped. Thus, banks and other financial institutions are not allowed to charge more than the fees prescribed in the circular.

    “Note also that though the surcharge per transaction is capped, there is flexibility for a bank to charge a lower amount depending on its cost structure and business development drive.

    To avoid paying ATM transaction fees, the apex bank said: “You should withdraw money from your bank’s ATM (On-Us transaction) to avoid the transaction fees.

    “Additionally, limiting your use of off-site ATMs is advisable to minimise the surcharge.

    “Further, consumers can explore other payment channels such as mobile apps, POS devices for payments, etc.”

  • Banks’ borrowing from CBN rises 395% to N4.7trn

    Banks’ borrowing from CBN rises 395% to N4.7trn

    Banks’ borrowing from the  Central Bank of Nigeria, CBN, rose sharply by 395.2 percent week-on-week (WoW) to N4.72 trillion last week from N953.11 billion the previous week.

    The CBN has two short term lending windows for banks namely the      Standing Lending Facility (SLF) and Repo lending. The banks resort to these windows to bridge temporal liquidity gaps.

    While the CBN lends money to banks through the SLF at interest rate of 500 basis points (bpts) above the Monetary Policy Rate (MPR), it also lends money to banks through Repurchase (Repo) arrangement, which involves    the purchase of    banks’ securities with the agreement to sell back at a specific date and usually for a higher price.

    On the other hand, the CBN accepts deposits from banks through its Standing Deposit Facility (SDF) and pays an interest rate of MPR minus 100 bpts.

    The rise in banks’ borrowing was triggered by the tight monetary policy of the apex bank, aimed at curtailing the steady rise in inflation.

    In addition to the hike in the Monetary Policy Rate, MPR, the CBN also raised the Cash Reserve Ratio, CRR, of Commercial and Merchant banks to 50 per cent and 16 per cent respectively from 32.5 per cent and 10 per cent at the beginning of the year.

    However, banks’ deposits with the CBN fell sharply despite an increase in interest rates by apex bank.

    According to the CBN data, banks’ deposits    in the apex bank’s SDF fell by 56.8 percent WoW to N1.16 trillion last week from N2.69 trillion the previous week.

    Last year, CBN raised the interest rates on deposits in its SDF  to 25.75 percent in August and 26.5 percent in November.

    The November change was implemented as part of the decisions made during the 298th Monetary Policy Committee (MPC) meeting.

  • Forex Trading: CBN to suspend license of erring BDCs, banks

    Forex Trading: CBN to suspend license of erring BDCs, banks

    The Central Bank of Nigeria, CBN, yesterday, said it will suspend the dealership license of any Bureau de Change (BDC) or Authorised Dealer banks that divert funds or violate the provisions of its newly rolled out foreign exchange trade guidelines.

    Disclosing this in a statement signed by its Acting Director Trade and Exchange Department, Dr. W.J Kanya, CBN also noted that the guidelines were drafted in furtherance to its granting of temporary access to existing BDCs to purchase foreign exchange from Authorised Dealers, subject to a weekly cap of $25,000.

    In addition, the apex bank also pegged the maximum disbursement per transaction in BDCs at $5,000 quarterly.
    The statement reads in part: “Further to the Circular Referenced TED/FEM/FPC/001/030 dated December 19, 2024, which granted temporary access to existing BDCs to the Nigerian Foreign Exchange Market, NFEM, for the purchase of FX from Authorised Dealers, subject to a weekly cap of USD25,000.00, the following modalities/guidelines shall apply.

    “Authorised Dealers shall sell foreign exchange cash to BDCS subject to a maximum of $25,000.00 (Twenty-five Thousand United States Dollars) to a BDC per week.

    “A BDC shall approach its preferred Authorised Dealer Bank (ADB) and can only procure the said amount from only that bank of its choice in a week. Any breach of this condition will attract appropriate sanction.
    “The selling rate by the Authorised Dealers to BDCs shall be the prevailing day rate at NFEM window;
    “Foreign exchange cash purchased by BDCs from Authorised Dealer Banks shall be sold to foreign exchange end-users at a rate not exceeding one (1) percent margin above the buying rate;
    “For the avoidance of doubt, the one (1) percent margin stated in (3) above shall be applicable to all funds to

    be retailed by BDCs regardless of sources of fund;
    “Authorised Dealer Banks shall continue to render weekly returns on sales to BDCs as specified in the attached excel format to Trade & Exchange Department, CBN, Abuja through this email: teddmo@cbn.gov.ng

    “All BDCs are required to render daily returns on foreign exchange purchases from Authorised Dealer Banks and other sources as well as sales (utilization) on the Financial Institutions Forex Reporting System (FIFX); Funds purchased by BDCs shall be disbursed for the following eligible transactions only. In all cases, the maximum disbursement per transaction shall not exceed $5,000.00 quarterly.

    “Business Travel Allowance/Personal Travel Allowance; Overseas School fees; and Overseas Medical fees. Records shall be maintained for all transactions by the BDCs showing the BVN of the end-user, including endorsement of the amount disbursed in the International Passport of the beneficiary; it is to be noted that Authorised Dealer Banks and BDC operators shall ensure strict compliance to the provisions of Anti-Money Laundering Laws and observance of appropriate KYC principles in the handling of these transactions.

    Any Authorised Dealer and BDC that diverts funds or violates the provision of these guidelines shall attract appropriate sanction including suspension of its dealership license.”

  • FX Code: NECA lauds CBN, seeks effective implementation

    FX Code: NECA lauds CBN, seeks effective implementation

    The Nigeria Employers’ Consultative Association, NECA, has commended the Central Bank of Nigeria, CBN, for the launch of the Nigerian Foreign Exchange, FX, Code, describing it as a strategic policy initiative aimed at enhancing transparency, aethical conduct, and governance in Nigeria’s FX market.

    Director-General of NECA, Mr. Adewale-Smatt Oyerinde, in a statement yesterday, said, “The introduction of the FX Code is a commendable step towards enhancing transparency, integrity, and professionalism in Nigeria’s foreign exchange market. This aligns with NECA’s advocacy for policies that foster a conducive business environment and economic stability.

    “We believe that the FX Code will not only promote ethical conduct among market participants but also bolster investor confidence, which is crucial for economic growth. NECA encourages all stakeholders to familiarize themselves with the provisions of the FX Code and ensure full compliance to achieve its objectives.”

    While NECA commends the CBN for this progressive move, Mr. Oyerinde stressed that “the success of the FX Code will depend on effective implementation, enforcement, and stakeholder buy-in.

    It is critical that the CBN ensures full compliance with the FX Code across all market participants, including banks, Bureau De Change operators, and corporate entities. There must also be periodic reviews and stakeholder engagements to fine-tune the policy where necessary.”

  • CBN waives non-refundable license renewal fee for BDCs

    CBN waives non-refundable license renewal fee for BDCs

    The Central Bank of Nigeria,  CBN, yesterday announced that it has approved the waiver of non refundable annual license renewal fees for existing Bureaux De Change (BDCs) in the country.

    The apex bank disclosed this in a circular to all BDC operators and stakeholders in the financial services industry.

    The circular signed by the Acting Director,   Financial Policy and Regulations Department,   CBN, John Onojah stated: “This is to inform all existing bureaux de change that further to the Regulatory and Supervisory Guidelines for Bureau De Change Operations in Nigeria, 2024, and the ongoing transition to the new BDC regulatory structure, the Central Bank of Nigeria (CBN) has approved the waiver of 2025 licence renewal fee, effective immediately.”

    The Bank also advised any bureau that has paid for 2025 licence renewal   to apply to the Director, Financial Policy and Regulation Department, CBN, for refund to its account from which the payment emanated.

    “Any bureau de change that has paid for 2025 licence renewal is hereby advised to apply to the Director, Financial Policy and Regulation Department, Central Bank of Nigeria for refund to its account from which the payment emanated.

    “The CBN remains committed to fostering stability, transparency, and efficiency in the foreign exchange market while ensuring that operators align with the revised regulatory framework.”