Connect with us


BIG STORY

Naira Slides To 505/$ As CBN Stops Forex Sale To BDCs

Published

on

The naira fell slightly to the dollar at the parallel market a few hours after the Central Bank of Nigeria on Tuesday announced the discontinuity of forex supplies to the Bureau de Change Operators in the country.

The CBN Governor, Godwin Emefiele, announced the end of forex sales and new license approval after the Monetary Policy Committee’s two-day meeting in Abuja on Tuesday.

He expressed the MPC’s disappointment over their continuous abuse of the privilege.

At the end of the meeting, the MPC retained the lending rates and other parameters.

Reading the MPC’s decision, Emefiele said, “Based on the above considerations, the MPC made the decision to hold all policy parameters constant; believing that a hold stance will enable the continued permeation of current policy measures in supporting the recorded growth recovery and macro-economic stability.

“The committee thus decided by a unanimous vote to retain the Monetary Policy Rate at 11.5 percent; retain the asymmetric corridor of +100/-700 basis points around the MPR; retain the CRR at 27.5 percent, and retain the Liquidity Ratio at 30 percent.”

Speaking on the decision to stop forex to the BDCs, Emefiele said the MPC noted with disappointment and great concerns that the BDCs had defeated their purpose of existence to provide forex to the retail users, but instead, they had become wholesale and illegal dealers.

He said, “Operators in the BDC have not reciprocated the gesture to help maintain price stability in the market since the CBN had been selling forex to them.

“They have remained renegade and so greedy, recalcitrant with abnormally high profit from these sales while ordinary Nigerians have been left to feel the pain and therefore suffer.

“Given this rent-seeking behavior, it is not surprising that since the CBN began to sell forex to the BDCs, the number of operators has risen from a mere 74 in 2005 to over 2,700 in 2016, and almost 5,500 BDCs as at today.

“In addition, the CBN constantly receives nothing less than 500 new applications from BDC licenses every month, and we, therefore, begin to wonder, what is in this business that everybody must be in it?”

The BDCs, he observed, had continued to make huge profits while Nigerians suffered in pain.

He said the commercial banks would be monitored to provide forex for the legitimate use of Nigerians.

“The Central Bank will henceforth discontinue the sale of forex to Bureau de Change operators,” Emefiele said.

Meanwhile, the naira fell slightly to the dollar a few hours after the CBN’s announcement.

According to naijabdcs.com, the official websites of the BDCs, the naira which exchanged to the dollars at N503/$ on Monday was bought and sold for N503 and N505 on Tuesday evening.

The CBN had been supplying each licensed BDCs $10,000 twice per week at the rate of N393 with the instruction that they should sell with a margin of N2.

When contacted to respond to the new development, the President, Association of Bureaux de Change Operators of Nigeria, Alhaji Aminu Gwadabe, replied an SMS, “In a meeting with BDCs operators. For now, no comment.”

Economist and former Director-General, Lagos Chamber of Commerce and Industry, Dr Muda Yusuf, said what was happening in the foreign exchange market was a consequence of the CBN’s policy choice of a fixed exchange rate regime and administrative allocation of forex.

He said, “It is a policy regime that has created a huge enterprise around foreign exchange – round-tripping, speculation, over-invoicing, capital flight, etc.

“The action of the apex bank amounts to tackling the symptoms rather than dealing with the causative factors, which is not a sustainable solution.

“It is regrettable that the CBN does not believe in the market mechanism. Yet market systems are time tested as instruments of efficient resource allocation in leading economies around the world.”

He added, “Moving retail forex transactions from BDCs to the banks was like kicking the can down the road. The same issues would manifest even with the banks.”

According to him, the way out of the foreign exchange conundrum was for the CBN to allow the market to function.

He said, “The CBN needs to give the market a chance. Its current approach would continue to deepen distortions in the economy, perpetuate round-tripping, fuel speculation, suppress forex supply, and boost the underground economy.”

A past President, Association National Accountants of Nigeria, Dr Sam Nzekwe, said it was a good decision to stop forex allocation to the BDCs.

He said, “BDC is meant for light travelers, someone that is traveling and has no time to go to the bank who can just stopover at the airport and buy few dollars and travel with it. The CBN was allocating forex to them which was a wrong decision and it is a terrible thing. That is why they encouraged round-tripping.”

According to him, the BDCs need to source their monies themselves because they were doing illegal dealings with the privilege.

The Chairman, Mutual Benefits Assurance Plc, Dr Akin Ogunbiyi, said that it was not appropriate to be allocating scarce forex to the BDCs.

“Why will you allocate something that is so scarce to a set of people. The way to solve the forex problem is to have one single exchange rate so that anywhere you turn to this it is the same rate you get it, there will be some sanity.”

He said it was important to have a single conversion rate.

Some financial experts warned of the possibility of further deprecation of the naira against the dollar following the CBN directive.

A senior lecturer in economics at the Pan Atlantic University, Dr Olalekan Aworinde, said there was a risk of naira depreciation, depending on how the CBN manages foreign exchange.

An economist and a former presidential candidate, Prof Pat Utomi, said people who engaged in exports or any activities that involved dollar exchange would be affected by this ban, adding that the country was at risk of depleting reserves and endangering the economy.

He said, “I think the bottom line is that there is already a challenge to people who are exporting. Foreign exchange is already scarce right now, even for people buying basic travel allowance.

“The real issue is simple. We are not earning as much foreign exchange as we are using. So, we are running the risks of depleting reserves and endangering trades long term. So, there is the pressure to better manage foreign exchange.”

He added that the ban signaled more foreign exchange crises as there would likely be more hoarding of dollars, which would further lead to the depreciation of naira.

Utomi said, “What this ban signal is that there is a foreign exchange crisis. This signal will lead to more hoarding, and lead to a spiral that can make the exchange rate deteriorate much faster because there may not be enough supplies to keep the market reasonable.

“So, prices are going to tumble. People are talking about the one thousand naira to a dollar. God forbid that it happens so quickly but it can happen.”

He advised the government to focus on expanding the economy, especially driving growth in export earnings.

 

BIG STORY

It’s Insulting Comparing Me With Hushpuppi, He Can Never Achieve What I’ve Achieved — Invictus Obi Speaks From Prison

Published

on

As a seasoned criminal journalist of Virginia, Obi’s case fascinated me as I wondered how a successful businesses man that graced the front pages of several business magazines found himself in jail.

I reached out to Obinwanne Okeke, popularly known as Invictus Obi, for a prison interview and he kindly accepted. I met Obi on a hot summer August day where he greeted me with a firm handshake, a confident smile, and the charisma of someone very intellectual. My interview was to find out his journey, thoughts, and regrets as he now starts his 10-year prison sentence.

Hi Obi, thanks for accepting this interview, how are you doing?
I am doing very well thank you, I am alive and healthy which I always give thanks for.

How is your reality now you have started serving your 10-year sentence?
The transition from the outside world to prison is hard but I have to face the music. I did what I did and I accept the consequences. I am just making sure I become a better man day by day.

Let’s go back a bit, how would you describe Nigeria growing up?
Nigeria is great when you are young and naive but when you become old enough to fend for yourself you quickly realize that Nigeria is a hazardous obstacle course that most will never navigate their way through. Nigeria is a beautiful country but poverty is too widespread and you can’t rely on the government for help but you have to find your own way. Basic needs such as 24 hours electricity is unheard of, fuel scarcity is common, inflation is high and many are dying of hunger. Most Nigerians are in a state of desperation.

How did the journey to the frauds you are accused of come about?
I was doing a little here and there but the level changed through this one particular friend I used to look up to. I visited him one day and he was living very comfortably with three new cars and a huge house at a young age. When at his house I noticed him on a website www.vionz.to that was selling crypto and bank logins. I asked him about the website and he showed me that he buys bank and crypto logins from there and easily withdraws above $20,000 at a time, that’s how he was funding his lifestyle. In 15 minutes he demonstrated it to me and from there I tried it myself when I got home. After successfully doing my first transfer so easily it was hard to stop after that. From there I got introduced to other money-making schemes that got me where I am today.

How much money have you made from fraud?
I didn’t really keep count, I am a very ambitious person in anything I do regarding money. I believe I will always be an overachiever.

According to your case charges, you made $11 million?
Then there’s your answer, you already know the details.

People compare you to Hushpuppi (Abbas Ramon) who is also facing jail if found guilty, what are your thoughts?
It’s insulting, I and Hushpuppi are not on the same level. Hushpuppi could never achieve what I achieved. He cannot run a business and we are not similar in any way. He was out to please the crowd, I was out to change lives, create jobs, and conquer the business world. I have done so much for my community back home with my charity foundation, which lives has he helped? Nobody.

It sounds like you dislike Hushppupi?
No, I have never met him, but I just find the continued comparison very annoying. Our impact on the world is very different. I have made a much more positive contribution to society than he has.

What do you miss most about the outside life?
I miss being in business, I was a workaholic and most of my joy came from growing my businesses bigger and bigger. I miss family too and of miss my daughter.

Do you have any regrets?
Of course, I do, if I was a little more patient I could have achieved everything I achieved in business by not rushing to get startup capital the way I did, however, hopefully, I can be a lesson to the younger generation that may be tempted to take the quick route in life.

What’s your advice to the youth of Nigeria?
Pick your role models wisely, look up to great leaders and people of good character that look after their communities and families. Believe and you will achieve. Also, remember life is a marathon, not a sprint.

Yahoo News.

 

Continue Reading

BIG STORY

BREAKING: Gunmen Kidnap Air Vice Marshal Sikiru Smith In Lagos

Published

on

Masked gunmen have abducted Air Vice Marshal Sikiru Smith (retd.), in the Ajah area of Lagos State.

Smith is a cousin to a former Inspector-General of Police and current Chairman of the Police Service Commission, Musiliu Smith.

It was learnt that the retired general, who is currently the Chairman of Double Wealth Ventures Limited – a dredging and engineering firm – was supervising work on a site in the Ajah area of Lagos State on Monday when masked gunmen invaded the place and shot sporadically.

The gunmen were said to have whisked the retired general away in a waiting speedboat and sped away.

According to an SOS voice note shared by his driver, Corporal Odiji, the retired AVM engaged in a struggle with the gunmen before he was subdued.

Odiji stated, “This is an emergency. I am Corporal Odiji attached to Air Vice Marshal Smith. They just abducted him from the site where we were working. Some gunmen who were wearing masks just came and snatched my boss now. They shot everywhere. I was near where I was fixing my boss’ vehicle.

“As I was coming, I saw them leaving in a boat but I wasn’t armed so I just ran to the site and I saw his glasses and where he struggled with them. Please pass this information. It is an emergency.”

When contacted on the telephone, the Spokesman for the Lagos State Police Command, Mr. Adekunle Ajisebutu, promised to make inquiries and give a detailed response in due course.

The Spokesman for the Air Force, Air Commodore Edward Gabkwet, also promised to make inquiries and provide information on the matter later.

AVM Smith was commissioned into the Nigerian Air Force as a Pilot Officer in 1979 and had a highly successful military officer that combined soldering with serious academic pursuit.

He holds BSc, MSc, MBA, and Ph.D. degrees. He is an Alumnus of Harvard University and a fellow of many professional bodies including the Institute of Management, Nigeria.

Smith attended several military courses both locally and overseas which include flying and engineering. He was awarded numerous military decorations such as Distinguished Service Star, Pass Staff College (Dagger), and Fellow of the prestigious National Defence College.

The notable appointments he held include Commanding Officer Air Engineering Wing, Sierra Leone/Liberia; Commander, Nigerian Air Force Station, Calabar; Deputy Director, Air Engineering, Nigeria Air Force Headquarters, Abuja, Commander 333 Logistics Group, Kaduna, Commander, 401 Aircraft Maintenance Depot, Ikeja; Chief of Logistics, Nigerian Air Force Headquarters, Abuja and Chief of Defence Communications, Defence Headquarters, Abuja.

Smith, who was a guest on The PUNCH Roundtable recently, had advocated for the use of drones in security surveillance and military offensives in the country to curb the use of military jets.

 

Continue Reading

BIG STORY

eNaira: All You Need To Know About Nigeria’s New Digital Currency

Published

on

The official website of the Central Bank of Nigeria’s (CBN) digital currency, the eNaira, has gone live, exactly one week to the planned launch of the initiative.

The CBN will launch the eNaira on October 1, 2021.

Let us take a closer look at the eNaira, what it means for you, and how you can position to take advantage of its launch.

What is the eNaira?

eNaira is a central bank digital currency (CBDC) issued by the Central Bank of Nigeria (CBN) as a legal tender. It is the digital form of the Naira and will be used just like cash.

The e-Naira will be a digital representation of the paper Naira currency issued by the CBN. The eNaira will be a “complementary” legal tender in Nigeria, having the same exchange value as the Naira, and maintain a “parity of value” with the Naira. The e-Naira will not earn any interest to holders. The e-Naira is built on a blockchain open ledger technology. Creating the eNaira on the blockchain means you cannot have a duplicate or fake eNaira. Each eNaira note will be unique.

What is eNaira wallet?

The eNaira wallet is a digital storage that holds the eNaira. It is held and managed on a distributed ledger.
The eNaira wallet is required to access, hold and use eNaira.

What makes eNaira different from the money in your bank account?

eNaira is the digital form of cash and is a direct liability on the Central Bank of Nigeria while the customer deposits are direct liabilities on the financial institutions.


Is the eNaira a Stablecoin?

A stable coin is a cryptocurrency backed by reserves. The keyword is reserves, but what kind of reserves? Stable coins are backed by holding an equal equivalent of FIAT money like the US dollar. FIAT means government-issued but usually not backed by any commodity, e.g., gold. Thus a stable coin like USDT is tied to a currency, the US dollar, and maintains a stable exchange value. Note, stable, not immovable. The eNaira technically is linked to the FIAT Naira, but is the Naira stable? Well, not exactly. To be a stablecoin, the eNaira has to be tied to a currency like the US Dollar or Euro or even the Yuan.

How safe is the e-Naira?

Think of the e-Naira in this way; you want to send N100 to an uncle in a remote village without a bank branch. A common practice is to buy mobile phone recharge cards of that value, load them to your phone, and text your uncle. Your uncle can then go to any phone card retailer and discount his N100 mobile phone credit for N95. The mobile retailer can redeem the call credits and pay cash because he trusts the person doing the exchange; however, he cannot tell if the mobile numbers are real.

The eNaira is designed to solve this verification risk by assuring all holders that each eNaira is a valid token. This authenticity is achieved by building the eNaira on the blockchain. Thus instead of buying phone credits, I will debit my bank account for N100, convert to eNaira, and transfer it to my uncle. My uncle can spend the funds directly from his phone or transfer and get cash. Every retailer is more likely to accept the eNaira because it can’t be easily faked.

How will I get the eNaira?

The CBN has planned a rollout in a tiered manner; first, it will issue the e-Naira, to financial institutions like banks. Your bank will then retail the e-Naira to you. If your transaction value is less than N50,000 a day, you don’t need a bank account to get the eNaira; you can use a NIN verified phone number to buy eNaira. If you want to withdraw more than N50,000 but up to the daily limit of N1 million, then you will need a BVN in addition to a NIN verified phone number. The CBN has very strict ‘Know Your Customers” protocols for this process, the aim being to assure all retailers of the safety and utility of the eNaira.

Why should I use the eNaira?

The eNaira has a low-cost advantage when compared to FIAT. The daily transfers between accounts are at no cost to the holder of the account. Lower transaction cost is a massive incentive as traders will pay no fees for withdrawals and deposits to and from their bank account. No transaction fees reduce the cost of commerce while improving safety.

How will dollar remittance to eNaira work?

The e-Naira will be integrated into the CBN’s forex process, and this is to make it easier to receive remittances to Nigeria. These transfers could be from the CBN crediting e-Naira directly to the International Money Transfer Organisation (IMTO). A Nigerian abroad sending $100 to his uncle can debit his US bank account and credit $100 to an IMTO, who will buy eNaira from their corresponding Nigerian bank. The $100 is converted to e-Naira instantly at a far lower transfer fee which is a real benefit and a significant advantage the e-Naira will enjoy.

What about inflation?

The street definition of inflation is too much cash chasing too few goods; however, not all inflation is this simple. Coins in Nigeria are scarce; thus, most merchants round up their prices to match with available currency, usually notes. This rounding up induces an artificial rise in prices because any cost-push does not cause the price hike but other factors, for example, selling eggs for N100 instead of N88. With the e-Naira, it becomes possible to transfer the exact cash price in the marketplace, especially in rural areas. This reduces the possibility of “round-up inflation.”

The eNaira can be the ECOWAS currency

The eNaira can be used by any two parties who can credit a Nigerian banking institution with corresponding currency. This means a trader banking with UBA in Burkina Faso can settle his import bills from the Gambia using e-Naira. This will be the next level of the rollout. The financial institutions and FINTECH start to build out an ecosystem with eNaira as the base product.

The eNaira helps the financially excluded

The e-Naira will also bring in the vast majority of the unbanked Nigerians who have no bank account but have a phone into the formal financial economy. With the e-Naira, salary payments and payments for goods and services can be concluded. A plumber can accept payments on his phone, store them in his wallet, and make transactions with any vendor.

What are the risks?

Data security. The e-Naira is online, the BVN and NIN information is also online, the risk of malicious actors attempting to hack or gain access to the data is very low. The process of minting and burning eNaira tokens by the CBN has to be top-notch.

Overall, it’s a plus to the Nigerian economy, and it’s a positive progression towards a cashless society, with lower costs, and higher productivity.

(Additional information by Nairametrics)

Continue Reading

Most Popular