CBN’s main political commitments in 2021

From companies declaring cryptocurrency trading illegal to the launch of Nigeria’s digital currency, eNaira, and the introduction of 100 percent PPP, the outgoing year, 2021, saw numerous policies from the Central Bank of Nigeria. Nigeria (CBN) which has changed, shaped or redefined the Nigerian business environment. In this report, NCHETACHI CHUKWUAJAH examines some of them.

Declare crypto trading as illegal

In February 2021, the Central Bank of Nigeria (CBN) ordered depository banks, non-bank financial institutions and other financial institutions to close the accounts of individuals or institutions engaged in cryptocurrency trading.

CBN Governor Godwin Emefiele had said these accounts were conduits used to facilitate terrorist financing, illegal financial flows, money laundering, scams, etc.

The CBN has been granted its request by a Federal High Court, to freeze accounts belonging to certain technological crypto-trading platforms that offered foreign and local stocks for 180 days pending the completion of investigations into their transactions.

The umbrella bank had alleged that the companies, which include; Rise Vest Technologies Limited, Bamboo Systems Technology Limited, Chaka Technologies Limited and Trove Technologies Limited were complicit in operating unlicensed as asset management companies “and using currencies from the Nigerian foreign exchange market to buy bonds. / foreign actions in violation of the CBN Circular. referenced TED / FEM / FPC / GEN / 01/012, dated July 01, 2015. “

CBN’s Naira for a Dollar Initiative

In order to increase diaspora remittances to the country, the CBN introduced an incentive called “Naira-$ 4 Scheme” in March 2021. The initiative ensured that for every $ 1 received through operators CBN approved international money transfer agency, N5 is paid.

The initiative aimed to strengthen the country’s foreign exchange (FX) inflows.

The BDC-CBN operators debacle

Towards the end of July 2021, CBN Governor Godwin Emefiele, following his meeting of the Monetary Policy Committee, announced the bank’s decision to halt the weekly allocation and sale of currencies. to exchange office operators.

Emefiele had said the BDCs frustrated the bank’s efforts to maintain the country’s foreign exchange reserves by defeating their primary goal of selling dollars to retail end-users who need $ 5,000 or less to bill. exorbitantly dollar exchanges, thus creating an artificial scarcity.

He accused BDC operators of being facilitators of corruption, illicit financial flows and money laundering through their operations.

“We have noted with disappointment and great concern that our currency exchange operators have abandoned their establishment’s original goal of serving retail end-users who require $ 5,000 or less. Instead, they have become (illegal) foreign currency wholesalers to the tune of millions of dollars per transaction.

“Despite the fact that Nigeria is today the only country in the world where a central bank sells dollars directly to the operators of the bureau de change, but the operators of the Nigerian segment of the bureau of change have not returned the gesture of the bank to help maintain price stability in this market.

“Given this behavior, it is not surprising that since the CBN started selling currencies to Bureau De Change, the number of operators has grown from 74 in 2005 to over 2,700 in 2016 and nearly 5,500 BDC to date (July 27, 2021), ”Emefiele said.

The governor of the CBN also warned that the CBN would not hesitate to sanction any bank found complicit in facilitating illegal foreign exchange transactions with BDC operators.

In July, the Naira sold for N505 to one dollar in the parallel (black) market, but reached an all-time high between N565 and N570 in December 2021.

Aboki FX ban

Following the halt in sales of currencies to BDC operators, the CBN clamped down on the operations of Aboki FX, a website that collects and publishes exchange rates on the parallel (black) market in Nigeria.

Emefiele had said that the owner of the website, Mr. Adedotun Oniwinde, had used the website for “illegal activity that undermines the economy”.

The governor of the CBN said that by living in England and forecasting the exchange rates in the country, Aboki FX was putting undue pressure on the forex and further devaluing the Naira.

“He’s a Nigerian who lives in England; we’ll follow him, Mr Oniwinde. We will follow you. We cannot allow you to continue killing our economy. Added the governor of the CBN.

As a result, the management of Aboki FX, in a statement, announced its decision to suspend the publication of exchange rates and denied the allegations against its director by the CBN.

“All of the allegations against our director have yet to be confirmed, but at AbokiFX we do NOT trade currencies or manipulate parallel market rates,” the statement said.

“Apart from the media allegation, we have not received any communication from any government agency and our accounts are not closed as stated in the media. We sincerely hope that this suspension will lead to the appreciation of the Naira from next week. “

Launch of enaira

In October 2021, the CBN launched the central bank’s digital currency (CBDC), eNaira, which is a digital equivalent of the physical naira.

During the launch of eNaira, President Muhammadu Buhari said the CBDC has the capacity to increase the country’s gross domestic product by $ 29 billion over the next 10 years.

The CBN said the digital currency will boost financial inclusion, strengthen electronic payment in the country and improve the movement of people from the informal to the formal sector.

A statement posted on the eNaira website said: “eNaira is a digital currency issued by the Central Bank of Nigeria which provides a unique form of currency denominated in naira. eNaira serves as both a medium of exchange and a store of value, offering better payment prospects in retail transactions compared to cash payments.

The CBDC, which owns the eNaira quick wallet and eNaira merchant wallet, was launched along with Google Playstore and Applestore after four years of incubation. The app recorded more than 600,000 downloads in less than four weeks after launch, according to Emefiele.

“In less than 4 weeks since its launch, nearly 600,000 downloads of the e-Naira application have taken place.

“Efforts are underway to encourage faster adoption of the e-Naira by Nigerians who do not have smartphones,” Emefiele said at the Chartered Institute of Bankers of Nigeria (CIBN) 56th Annual Bankers Dinner. in November 2021.

CBN 100 for 100 PPP

Also in October, the CBN introduced a new financial instrument, 100 per 100 PPP (Production and Productivity Policy).

The policy is designed to financially support 100 targeted private sector companies every 100 days from November 1.

Under this program, companies can apply for a loan of up to 5 billion Naira, while loan applications over 5 billion Naira require approval from the management of CBN.

The CBN said the initiative was aimed at providing long-term loans to businesses to acquire machinery, plant and working capital.

“On a quarterly basis, starting November 1, 2021, the initiative will select 100 private sector companies with projects that have the potential to significantly increase domestic production and productivity, reduce imports, increase non-exports. and to improve the overall capacity of the Nigerian economy to generate foreign exchange.

“The initiative, which will be led by the bank, will be renewed every 100 days (i.e. quarterly) with a new set of companies selected for funding under the initiative,” the umbrella bank said.

He said the interest rate under the intervention would not exceed five percent per year (all inclusive) until February 28, 2022, adding that interest on the facility would return to nine percent per year ( all inclusive) from March. 1, 2022.


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