Economy

EXPOSED: CBN uncovers $2.4bn forex scam

Published

6 months ago

March 27, 2024

In a startling revelation, the Central Bank of Nigeria (CBN), Governor Yemi Cardoso, has disclosed that law enforcement agencies are investigating foreign exchange forwards valued at approximately $2.4 billion.

Cardoso noted that these transactions are deemed ineligible for payment.

This disclosure emerged after the Monetary Policy Committee (MPC) meeting held in Abuja on Tuesday, March 26.

The CBN governor shed light on the meticulous forensic audit conducted on these transactions, uncovering numerous discrepancies and rendering them invalid.

The CBN, upon settling certain tranches of FX backlog, encountered transactions marred by issues concerning their authenticity.

Consequently, Deloitte management consultants were engaged to conduct a comprehensive forensic analysis spanning several months to scrutinize the legitimacy of these forward-contracted transactions.

During the audit process, it was established that several transactions failed to meet the criteria for validation. Instances were found where allocations worth millions of dollars were disbursed without corresponding requests, and some transactions lacked proper documentation or were outright illegal.

According to Cardoso, “In the cause of that forensic audit, we determined that a number of these transactions did not qualify. In some cases, you had some requests, which well you actually had some allocations that were made in millions of dollars, which were never requested for.

“You also had somewhere they had no Naira and they were also allocated, you know, huge sums, the foreign exchange and the list goes on and it was for that reason that we refused to validate those particular transactions.

“We refused to validate them because you know apart from the fact that documentation was not satisfactory in many cases they were outright illegal and the law enforcement agencies of course are now looking into those transactions that are as far as we’re concerned, not valid to be paid.”

Addressing concerns about potential backlogs among stakeholders, Cardoso assured that the market remains open and transparent for them to address any outstanding contractual obligations. However, the CBN has diligently verified and settled recognized backlogs of forward transactions.

Cardoso reiterated the CBN’s commitment to maintaining price stability and fighting inflation. He emphasized the need for strict adherence to the core mandate of the central bank, ensuring the restoration of the average Nigerian’s purchasing power.

To this end, the MPC announced a significant hike in the benchmark interest rate to 24.75 percent as part of efforts to curb inflation. This decision, accompanied by adjustments to reserve requirements for banks, aims to tighten control over the money supply and stabilize prices.

According to Cardoso, the committee decided to: raise the Monetary Policy Rate (MPR) by 200 basis points to 24.75 percent from 22.75 percent; adjust the asymmetric corridor around the MPR to +100/-300 basis points; retain the Cash Reserve Ratio of Deposit Money Banks at 45.0 percent; adjust the Cash Reserve Ratio of Merchant Banks from 10.0 percent to 14.0 percent and retain the Liquidity Ratio at 30.0 percent

Looking ahead, the CBN anticipates a gradual moderation of inflation rates by May, with measures in place to foster economic growth while maintaining price stability. The committee called for the full implementation of agricultural policies to enhance food supply and urged broader fiscal consolidation to improve tax collection.

Furthermore, Cardoso addressed concerns regarding the forex market, emphasizing the need to foster competition and transparency. He criticized the “oligopolistic nature of restrictions on dairy imports,” advocating for an open and inclusive foreign exchange market.

On the issue of cryptocurrency regulation and the Binance scandal, Cardoso clarified the CBN’s limited role, highlighting collaboration with relevant authorities while emphasizing that cryptocurrency regulation falls under the purview of the Security and Exchange Commission (SEC).

Economy

Naira Nosedives Further in parallel market

Published

1 day ago

September 14, 2024

Kayode Sanni-Arewa

The Naira continued its downward trend on Friday, depreciating to N1,660 per dollar in the parallel market.

This represents a slight decline from the N1,655 per dollar traded on Thursday.

In a similar vein, the Naira depreciated to N1,546.41 per dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Friday. According to data from FMDQ, the indicative exchange rate for NAFEM fell from N1,649.76 per dollar on Thursday, indicating a marginal appreciation of N103.35 for the Naira.

However, the gap between the parallel market and NAFEM rates widened significantly, increasing to N113.59 per dollar from N5.24 per dollar the previous day. This growing disparity highlights the ongoing instability in the foreign exchange market.

Economy

FCT, Ogun, Lagos receive 1,000 CNG kits

Published

1 day ago

September 14, 2024

Kayode Sanni-Arewa

The Federal Government says it has commenced distribution of fresh Compressed Natural Gas kits to some states of the federation in its drive to foster rapid adoption of CNG.

This was disclosed Friday by an official of the Presidential Compressed Natural Gas Initiative, Moses Onate, during an inspection of the CNG kit warehouse located in Ibafo, along the Lagos-Ibadan Expressway, Ogun State.

With the hike in fuel prices, many drivers claimed they have been struggling to keep their businesses afloat.

The exercise, which the Federal Government said could reduce the cost of transportation by over 40 per cent started in Abuja and Lagos.

Speaking on the distribution Onate noted that states like Lagos, Oyo, Kaduna, Ogun and the FCT would be getting 1,000 conversion kits to continue the conversion initiative.

Onate added that of the 1,000 kits made available to the warehouse, 450 have been distributed to Kaduna and Abuja while 550 would be distributed to Lagos, Ogun and Oyo.

He said, “As of this morning, 450 have gone out to Kaduna and Abuja. 550 will be going to Lagos, Oyo, and Ogun states today.”

He also said the FG had not got any negative feedback on the kits distributed previously.

According to him, there are up to 10 CNG conversion centres in Lagos State alone.

“This initiative will seriously help people as regards the cost in the sense that fuel is around a thousand naira now, but CNG is around N210/N230.

“The gross margin between what fuel is being sold for and CNG price will have a lot of positive impact on everybody. We will live to enjoy CNG,” he said.

In his reaction, a pipeline engineer at the warehouse, Austin Nwaodhu, urged motorists and vehicle owners to adopt the CNG initiative stressing that it offers a cheaper alternative to fuel because of its low consumption rate, and user-friendliness.

He added that CNG did not emit much fumes into the atmosphere which could cause harm to members of the public.

“CNG is a good initiative by the president that will help to bring down the cost of running a vehicle compared to petrol. It will bring down the cost of running our cars.

“It is friendly to the environment and does not emit fumes unlike petrol,” Nwaodhu stressed.

Economy

Petrol Price Unveiled As Dangote Refinery Begins Supply in Nigeria on September 15

Published

1 day ago

September 14, 2024

Kayode Sanni-Arewa

The much-anticipated arrival of Premium Motor Spirit (PMS), better known as petrol, from Dangote Refinery is set to take place on Sunday, September 15. According to sources cited by Businessday, the Lagos-based refinery is prepared to commence distribution of its refined petrol to marketers across Nigeria.

In preparation for the launch, marketers have been advised to dispatch their trucks to the refinery today (Friday) for loading. This significant initiative is expected to bolster the country’s fuel supply, reduce dependence on imports, and alleviate the existing challenges faced by consumers.

Despite the imminent entry of Dangote’s petrol into the market, Naija News reports that fuel prices are expected to remain stable for the time being. Initially, Dangote Refinery plans to supply 25 million litres of petrol daily through the Nigeria National Petroleum Company (NNPC) Trading Limited.

The Independent Petroleum Marketers Association of Nigeria (IPMAN) has expressed readiness to procure PMS from Dangote Refinery, provided that the price is lower than their current acquisition costs. IPMAN President Abubakar Maigandi stated that members are keen to explore purchasing arrangements but await clarity on Dangote’s pricing structure.

“After a meeting with our members today, we are ready to buy petrol from Dangote Refinery as long as the price remains competitive,” Maigandi explained. He noted that NNPCL, the sole importer of petrol, currently sells to marketers at an average price of N875 per liter. Consequently, petrol is sold at N930 to N940 depending on sourcing conditions, with a depot price of up to N990 per liter.

Maigandi emphasized that if Dangote Refinery offers a more attractive price, there is no reason for marketers to avoid its products. “We have no issue with Dangote Refinery,” he affirmed.

This statement follows comments from Edwin Devakumar, Vice President of Dangote Industries Limited, who suggested that local petroleum marketers are hesitating to purchase from the refinery despite competitive pricing. During an X space session hosted by Nairametrics, he claimed that only 3 percent of local marketers have shown interest in the new petrol from Dangote.

As the launch date approaches, all eyes will be on the impact of Dangote’s petrol on the Nigerian fuel market and the potential shift in purchasing habits among local marketers.