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Hoarding, Counterfeiting, Reasons for Naira Redesigning- CBN

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Against projections, CBN raises interest rate to 17.5%

The Central Bank of Nigeria (CBN) on Thursday said counterfeiting and hoarding were the main reasons for redesigning and issuing new Naira notes.

Mrs. Amina Abdulmalik, Deputy Director, Currency Operations Department, CBN, said this at the apex bank’s special day, at the ongoing 36th Lagos International Trade Fair in Lagos.

“We have a huge challenge of counterfeiting; Nigerians have set up factories and are just chunning out bank notes because those bank notes don’t come back into the banking system.

“We are not able to fish out the counterfeits, and most central banks in the world redesign when they see the level of counterfeits growing. But if you don’t have confidence in your bank notes then there’s a problem.

“Also hoarding is another challenge; people simply love to keep this money at home, because of that hoarding, you find out that 84 percent of our currency in circulation is outside the bank.

“Whoever does that is into illegal activities, like kidnapping. If you are afraid of taking your banknotes to the bank, then you have something to hide,” she said.

Abdulmalik also said the apex bank’s major mandate, which was the issuance of currency was a serious challenge to the bank as it involved lots of activities.

She said, “before we issue currency we have to plan, we have to determine the volume of bank notes that will be appropriate for the economy.

“This, we have been doing over the years and once this is done we have to send it to our Security Printing and Minting company to print.

“They are CBN’s sole printer. We have a printer in Lagos and Abuja, and that is where CBN does all the printing of currency.

“When printing is done we have to distribute, distributing the currency around Nigeria is lots of work which involves lots of logistics and costs.

“The bank notes we issued are meant to come back where they will be processed into fit and unfit. The unfit notes are meant to be withdrawn and the fit ones reissued.

“Unfortunately in Nigeria, once we issue, the notes disappear. These are the challenges around currency management that necessitated us to do a redesign,” she said.

She said redesigning of bank notes was a normal CBN process and the responsibility of Central Banks around the world.

She said, “we’ve done it in the past, it did not generate concerns but because of social media, we seem to have a challenge.”

“We registered CIT companies, if you go to our website, you will see the requirements, you can move cash, that aspect of distribution, we can outsource to the private sector.

“So it’s something that we expect Nigerians that have the resources to do.

“You can also participate in processing, you can go to our website, and you will see the requirements, if you have the required capital, we can outsource that to you.

“Banks can bring in the bank notes, you help them to sort clean and unclean. That will also help in currency management.

“There’s need to reduce that cash in circulation so that we can use other channels.”

Dr. Michael Olawale-Cole, president, Lagos Chamber of Commerce and Industry (LCCI), urged the apex bank to consider converting lower currency notes into coins.

“As regards issuance of new naira notes, the CBN should also consider converting the country’s lower currency notes into coins to facilitate highly repetitive retail transactions and avoid printing pieces of low-value notes with a short lifespan.

“We also appeal to the CBN to adopt more innovative ways, establish appropriate policies and take actions that will drive down the inflation rate and strengthen the value of our naira,” he said.

Olawale-Cole was represented by Mr. Gabriel Idahosa, deputy president, LCCI.

The theme of the 2022 annual fair is, “Connecting Businesses, Creating Value.”

Banking & Finance

Against projections, CBN raises interest rate to 17.5%

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Against projections, CBN raises interest rate to 17.5%

 Against projections by some experts, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has increased the monetary policy rate by 100 basis points to 17.5 percent.

This is contained in a communiqué issued at the end of the first MPC meeting in 2023, in Abuja on Tuesday.

CBN Governor, Mr. Godwin Emefiele, who read the communiqué said that the previous increases had yielded results, with a slight drop in the inflation rate recorded in December 2022.

The committee, however, held all other parameters constant.

While the Asymmetric Corridor of +100/-700 basis points around the MPR was retained, the Liquidity Ratio of 30 percent and the Cash Reserve Ratio (CRR) of 32.5 percent were also retained.

The MPR had witnessed four consecutive increases, from 11.5 percent in early 2022 to 16.5 in November 2022.

According to Emefiele, the committee deliberated on whether to hike rates further or hold on to examine the impact of the past increases.

“The options considered were primarily to hold the rate or tighten it further to consolidate the previous gains.

“However, the MPC noted that loosening the rate would gravely undermine the gains of the last four increases, hence the hike in rate,” he said.

Some financial experts had projected that the apex bank would most likely retain the previous rates.

According to Umhe Uwaleke, a Professor of Capital Market at the Nasarawa State University, Keffi, increasing the MPR can jeopardise economic growth.

Uwaleke said that the MPC was likely to hold all the existing parameters for two reasons.

“One, historical evidence suggests that the MPC seldom adjusts policy rates in January, due to the need to allow the markets to stabilise in the new year.

“Secondly, inflationary pressure is beginning to reduce as seen in headline inflation numbers for December 2022, not only in Nigeria but also in the United States of America.

“I do not advise a further hike in MPR, as doing so beyond the current high rate of 16.5 percent is capable of jeopardising economic growth,” he said.

An economist, Dr. Tope Fasua, urged the CBN to shun the temptation to further increase the rates.

Fasua suggested that the rates should be retained and be guided by market trends, adding that constantly increasing interest rates could spur recession.

” I hope they hold the rate as it is and watch what happens.

“Already, inflation trended down 0.14 percent; they may be tempted to further increase rates to accelerate the fall.

“But, they need to now think about the fact that constant raising of interest rates could spur recession, as life becomes harder for manufacturers,” he said. 

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Banking & Finance

Naira redesign: Jan. 31 deadline for old notes remains – Emefiele

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Naira redesign: Jan. 31 deadline for old notes remains – Emefiele

The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, says the Jan. 31 deadline to stop the circulation of old Naira notes remains.

Emefiele gave the clarification on Tuesday in Abuja, after the Monetary Policy Committee (MPC) meeting of the apex bank.

According to him, the 90 days window given by the CBN for Nigerians to deposit their old currencies was enough.

“We called on the Deposit Money Banks (DMBs) to extend their working hours and to work on weekends.

“There is no reason to talk about a shift. The new currencies are available,” he said.

Emefiele said that the apex bank had mandated the DMBs to feed the new notes into their Automated Teller Machines (ATMs) for Nigerians to have equal access.

“We have increased disbursement of the new notes to them. There is an adequate quantity of new notes available.

“Our mint is producing and we are supplying the banks. We have super agents in underserved areas like riverine communities, and CBN staff members have been out on mobilisation.

“We believe that by Jan. 31, the new naira notes would have permeated the nooks and crannies of the country,” he said.

He said that the CBN had so far received about N1.5 trillion of the old Naira notes.

He urged Nigerians to accelerate the process of taking their old notes to the banks before the deadline, adding that they should not fear harassment for security agents.

“We have begged the EFCC and the ICPC to allow Nigerians deposit their old Naira notes,” he said.

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Banking & Finance

Stock Market Capitalisation Drops N18bn; Linkage, Hallmark Insurance Lead Losers’ Table

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Stock Market Capitalisation Drops N18bn; Linkage, Hallmark Insurance Lead Losers’ Table

 The local bourse ended the last trading of the week on a negative note as the performance indices declined by 0.06 per cent.

Specifically, the market capitalisation dropped by N18 billion or 0.06 per cent to close at N28.646 trillion as against N28.664 trillion posted in the previous session.

Also, the All-Share Index (ASI) fell by 31.74 points or 0.06 per cent to close at 52,594.68 compared to 52,626.42 recorded on Thursday.

The negative performance of the market was driven by selloffs in Nestle, Zenith Bank and Guaranty Trust Holding Company (GTCO).

Consequently, the year-to-date (YTD) return rose to 2.62 per cent.

Market breadth closed flat as 11 stocks advanced, while 11 others declined.

A breakdown of price movement showed that Abbey Mortgage Bank topped the gainers’ table with a gain of 9.8 per cent to close at N1.68 per share.

Prestige Insurance trailed with a gain of 9.25 per cent to close at 46k while International Energy Insurance rose by 8.89 per cent to close at 49k per share.

Cornerstone Insurance was up by 7.14 per cent to close at 60k, while Courteville Business Solutions increased by 3.57 per cent to close at 58k per share.

Conversely, Linkage Insurance led the losers’ table, dropping by 9.62 per cent to close at 47k per share.

Consolidated Hallmark Insurance with a loss of 7.35 per cent to close at 63k, while WAPIC Assurance declined by 3.23 per cent to close at 30k per share.

Dangote Sugar decreased by 2.58  per cent to close at N17, while Jaiz Bank fell by 2.22 per cent to close at 88k per share.

Analysis of the market activities showed trade turnover settled lower compared to the previous session, with the value of transactions down by 7.42 per cent.

A total of 443.75 million shares valued at N1.68 billion were exchanged in 3,100 deals.

Transactions in the shares of Veritas Kapital topped the activity chart with 347.05 million shares valued at N69.41 million.

Access Bank followed with 11.35 million shares worth N102.4 million, while Zenith Bank traded 6.99 million shares valued at N170.9 million.

Fidelity Bank traded 6.62 million shares valued at N33.13 billion, while Chams transacted 5.99 million shares worth N1.57 million.

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