News

CBN Says Recapitalization Policy Strengthened Financial Position Of Banks

Published

3 months ago

October 15, 2024

Gloria Ikibah

…as macroeconomic performance projection indicate 3.2%, 3.3% growth rate for 2024, 2025 respectively

By Gloria Ikibah

The Governor of Central Bank of Nigeria (CBN), Yemi Cardoso, has highlighted plans of the Apex bank to address the spiralling inflation in the country.

Cardoso also said the Bank’s recapitalization policy has prompted banks to strengthen their financial positions, a process which he said was expected to result in a more robust and resilient banking sector by March 2026.

The CBN Governor who stated this while addressing the House of Representatives Committee on Banking, on the on policy measures and strategies to address domestic macroeconomic challenges.

The exercise, according to him, is expected to support the realisation of $1 trillion economy by the year 2030.

On the macroeconomic performance in 2024, he said projections indicates a growth rate of 3.2% and 3.3% for 2024 and 2025 respectively, and that Nigeria is projected to maintain a more robust 4.3% growth rate.

Cardoso said the non-oil sector maintained strong performance, contributing 94.30% to GDP with a steady 2.80% growth rate.

He added that the oil sector’s growth rate has almost doubled to 10.15% in Q2, 2024 from 5.70% in Q1, 2024, due mainly to improved security surveillance which resulted in increased production of crude oil and natural gas.

He said the Services sector continues to be the primary economic driver, contributing 58.76% to GDP with a robust growth rate of 3.79%.

Similarly, he said the Industrial sector has shown remarkable improvement, with its growth rate surging to 3.53% from 0.31%.

He pointed out that the contribution of agriculture to total GDP also increased, in addition, the growth rate of the sector rose to 1.41%, from a negative territory of -0.90%, indicating a substantial turnaround in productivity.

He also said the foreign exchange reserves have grown significantly, with remittance flows currently representing 9.4 per cent of total external reserves.

The CBN Governor further stated that the reserves grew by 12.74% to US$39.12 billion as of October 11, 2024, from US$34.70 billion at end-June 2024, driven largely by foreign capital inflows, receipts from crude oil related taxes and third-party.

“In Q2 2024, we maintained a current account surplus and saw remarkable improvements in our trade balance”, he said.

Cardoso further explained that the current external reserve position is able to finance over 12 months of import of goods and services, or 15 months of goods only.

“This is substantially higher than the prescribed international benchmark of 3.0 months, reflecting a robust buffer against external shocks.

“Inflation trended upward, driven largely by high food prices, cost of energy and legacy infrastructural challenges, but it commenced deceleration from 34.19% in June 2024 and to 33.40% in July 2024.

“The moderation in inflation became more pronounced in August 2024, as headline inflation further eased to 32.15%, largely attributed to monetary policy measures taken by the Bank”, he added.

” With aggressive monetary policy tightening coupled with robust monetary- fiscal policy coordination, inflation is expected to further trend downward in the near-to-medium term, Cardoso said.

“To combat inflation, he said they had fully reverted to orthodox monetary policy approach and implemented a comprehensive set of monetary policy measures.

“These include raising the policy rate by 850 basis points to 27.25%, increasing Cash Reserve Ratios and normalising Open Market Operations as our primary liquidity management tool.

“In addition, we have adopted an Inflation-Targeting (IT) monetary policy framework as part of the Bank’s Enterprise Strategy (2024 2028).

“The IT framework, widely adopted across various global economies, is renowned for its effectiveness in combating persistent inflation.

“These integrated measures are aimed at stabilizing prices, optimizing liquidity management, and engendering an effective monetary policy framework.

“Regarding the foreign exchange market, the the Bank implemented various reforms including a unification strategy, which streamlined various exchange rate windows into a single model, adopting the ‘Willing Buyer, Willing Seller’ approach to enhance FX liquidity and financial market stability.

“This move was aimed at fostering transparency, reducing market distortions, and enhancing the efficiency of foreign exchange allocations.

“This consolidation involved the implementation of new operational guidelines, which included removing the International Money Transfer Operators (IMTOS) quote cap.

“Additionally, the Bank resumed the sales of FX at the Nigerian Autonomous Foreign Exchange Market (NAFEM) and Bureau De Change (BDC) segments, bolstered by an improved supply from Foreign Portfolio Investors (FPIs)”, he added.

On banking supervision, Cardoso emphasised that the CBN has taken decisive actions to ensure the safety, soundness, and resilience of the banking industry.

“One of the key measures include the recapitalization of the banking sector by raising the minimum capital base to support the $1 trillion economy envisioned by the Federal Government of Nigeria (FGN) by 2030.

“Banks are required to meet these new thresholds by March 31, 2026, with several options available for reaching these targets.

“These options include issuing of new equities, engaging in mergers and acquisitions, or adjusting their operational licenses. The Bank also revoked the licence of Heritage Bank, facilitated the successful merger of Unity Bank and Providus Bank, revised Cybersecurity Rules for Banks and PSPs, suspension of processing fees on cash deposits, and enhanced Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) supervision, amongst others”, he stated.

On Monetary and fiscal policy coordination, he said they had strengthened collaboration during the period under review.

“In this regard, several joint committees have been instituted to build synergy and to provide platforms for key stakeholders’ engagements to explore ways through which monetary policy implementation and fiscal operations can be conducted in a mutually reinforcing manner.

“Overall, our policy measures reflect a holistic approach to addressing various challenges in the economy. While some measures have immediate effects, others are designed to bring about long-term structural changes. Our ultimate goal is to create a more stable, resilient, and efficient monetary and financial system that can better serve the Nigerian economy, while adhering to global best practices”, he noted.

Cardoso said the Bank’s numerous policy initiatives have begun to yield significant results across various sectors of the economy.

He said: “In the foreign exchange market, we have achieved increased transparency and improved overall supply. By allowing the foreign exchange rate to be determined by market demand and supply, the CBN has reduced arbitrage and speculative activities, and eliminated the front-loading of FX demand.

“These policy measures have effectively narrowed the exchange rate disparities between the NAFEM and BDC segments, which have largely led to the convergence of FX rates. Improved transparency in the market has restored market confidence leading to increased capital inflows which enabled the CBN to clear existing FX backlogs.

“The settlement of all legitimate backlogs of outstanding FX obligations by the Bank has significantly improved Nigeria’s credibility and ratings across the global financial market, helping to boost investor confidence, and enhanced liquidity in the foreign exchange market.

“With improved investor confidence, foreign investments have increased as evidenced by a significant rise in capital importation by 65.56% to $6.49 billion between January and July 2024, compared to US$3.92 billion in the corresponding period of 2023.

“Collectively, these actions have contributed significantly to the stability of the financial system. While inflation remains a major concern, we are not relenting in ensuring that requisite measures are taken.

“Headline inflation slightly increased from 32.15% in August to 32.70% in September 2024. The MPC further tightened the policy rate in its September meeting in anticipation of an uptick in inflation due to the upward adjustment of the petroleum pump price.

“On a positive note, there was a moderation in core inflation from 27.58% to 27.43% over the same period. We therefore expect the year to end with significant moderation in inflation, as our policy measures permeate the real economy,” he said.

On the outlook for the economy, Cardoso said he was confident as the country expects continued positive growth, especially in the non-oil, oil and industrial sectors.

News

FG endorses Bola Ahmed Tinubu Polytechnic

Published

21 minutes ago

January 22, 2025

Kayode Sanni-Arewa

By Kayode Sanni-Arewa

The federal government has endorsed the establishment of the Bola Ahmed Tinubu Federal Polytechnic in Gwarinpa, Abuja.

The decision was part of the government’s drive to ensure that every state in the country had at least one federal polytechnic.

The approval of Bola Ahmed Tinubu Polytechnic was conveyed in a letter dated January 9, 2025, by the Education Minister, Dr. Tunji Alausa.

It was addressed to the Minister of the Federal Capital Territory (FCT), Nyesom Wike.

The FCT Minister’s office confirmed receipt of the letter on January 16, 2025.

In the correspondence, Dr. Alausa urged Wike to identify suitable locations in Gwarinpa for both temporary and permanent sites of the polytechnic.

A joint team from the Federal Ministry of Education and the National Board for Technical Education have been listed to inspect the proposed locations before finalizing the site selection.

The Bola Ahmed Tinubu Federal Polytechnic is expected to boost technological education, vocational training, and entrepreneurship development, aligning with the government’s commitment to enhancing technical skills and economic empowerment across Nigeria. [With GWG report]

News

NNPC Ltd says vandals responsible for Buguma wellhead fire

Published

24 minutes ago

January 22, 2025

Kayode Sanni-Arewa

By Kayode Sanni-Arewa

The Nigerian National Petroleum Company Limited (NNPC Ltd) reports that the fire incident at its Buguma Wellhead 008, operated by its subsidiary, NNPC Eighteen Operating Ltd (NEOL), was directly caused by the activities of pipeline vandals attempting to compromise the Christmas Tree and steal crude oil.

This unfortunate act of sabotage, which also resulted in severe damage to the well’s back pressure valve, reflects a disturbing pattern of repeated attacks on wellheads in the zone. Since March 2023, crude oil theft on this asset has been persistent, with criminals now resorting to extreme measures, including the use of dynamite to destroy installations and illegally access hydrocarbons.

NNPC Ltd remains committed to combating these fires and mitigating the financial losses associated with these criminal activities, which place a significant burden on the nation’s economy. The company is working closely with relevant security agencies to put an end to these acts of vandalism.

Additionally, NNPC Ltd reaffirms its commitment to supporting communities affected by these destructive activities and will continue to provide necessary relief efforts to mitigate the impact on those affected.

Olufemi O. Soneye
Chief Corporate Communications Officer
NNPC Ltd.
Abuja

20th January, 2025

News

Nigeria Commiserates With Republic Of Turkiye Over Kartalkaya Ski Resort Hotel Fire Incident

Published

2 hours ago

January 21, 2025

Gloria Ikibah

By Gloria Ikibah

The Federal Republic of Nigeria has commiserated with the Government and People of the Republic of Turkiye over the unfortunate fire incident at the Grand Kartal Hotel in the Kartalkaya Ski Resort.

This was contained in a statement by the

Acting Spokesperson of the Ministry of Foreign Affairs, Kimiebi Imomotimi Ebienfa, on Monday in Abuja.

The statement reads in part: “The Federal Government of Nigeria sympathizes with the Government of the Republic of Turkiye and the families of the victims of the fire incident, and also wishes a speedy recovery of the injured”.

Naijablitznews.com recalled that the fire, which claimed the lives of 66 persons and injured over 50 others in Bolu Province in Northwestern Turkiye, was reported to have started in the early hours of Tuesday 21st January 2025.