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Naira’s Fall: CBN Moves Against Banks For Hoarding $5Billion

Apex bank deploys monitors in DMBs to enforce compliance with extant rules. The Central Bank of Nigeria (CBN) hit the nail on the head yesterday.

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Apex bank deploys monitors in DMBs to enforce compliance with extant rules. The Central Bank of Nigeria (CBN) hit the nail on the head yesterday.

It accused commercial banks of hoarding over $5 billion in foreign currencies against the threshold approved by the apex bank.

CBN blamed the prevailing forex scarcity and naira’s free-fall against the dollar on the actions of the Deposit Money Banks (DMBs).

The accusation came a day after the apex bank expressed concern about banks’ excessive forex exposure.

At the close of the market yesterday, the naira exchanged N1,450/$ at the parallel market.

It was a substantial gain (N70) against the dollar, having closed on Wednesday at N1, 520/$.

Erring banks have till to set by the CBN.

“Consequently, the CBN has mandated these banks to release any excess foreign currency they hold to individuals and businesses in need of foreign exchange by today’s deadline.

“Failure to comply with this directive will result in sanctions in accordance with existing rules and regulations.”

To show how serious the CBN is about this directive, the official said that “teams of examiners have been deployed to all commercial banks heavily engaged in FX transactions to monitor compliance with the directive.”

The CBN has moved to address the biting scarcity of foreign currency.

By releasing the surplus foreign currency, it is expected that the market will experience increased liquidity, and subsequently alleviate the strain on naira’s value, it was learnt.

Initial market response to the CBN directive, the official said, can be described as mixed.

Some banks have swiftly adhered to the directive, ensuring they meet the deadline for releasing the excess dollars.

The approach is seen as a positive step towards easing the pressure on the naira and promoting a more favourable exchange rate.

On the other hand, some financial institutions, the source said, “are cautious about revealing their exact dollar reserves and are treading carefully before fully complying”.

Their hesitation might stem from concerns about potential disruption to their operations and the potential impact on their customers.

“Just as some Nigerians prefer to keep their money in dollars because the naira is not a good store of value, banks also hold excess dollar liquidity to make gains. They do their own at the institutional level.

“What the CBN is saying with this new circular is that you cannot hold excess dollar liquidity again.

“Any foreign exchange you are holding must be committed to something, a transaction or obligation you can prove.

“Banks have made a lot of revaluation gains. Some banks, I believe, got approval under the last administration to hold more dollars than the requirement.

“The idea is that if banks sell all these excess dollars, there will be liquidity and the exchange rate will stabilise. Foreign investors will come in,” the top banker explained.

The source added: “The CBN remains resolute in its stance and all banks must cooperate to stabilise the naira and address the foreign currency shortage.

“The apex bank aims to ensure adequate foreign exchange supply for critical sectors such as manufacturing, agriculture, and essential imports.”

What the expert says:

Dr. Wahab Balogun of Ambosit Capital Managers sees potential benefits and drawbacks in the CBN directive.

He said: “While increased FX liquidity and a stabilised Naira are desirable, managing potential disruptions to banks, inflation, and other sectors is crucial.

“Careful monitoring, adjustments, and communication from the CBN and banks will be vital for navigating the complexities of this intervention and achieving its intended positive outcomes.”

Balogun highlighted the positive implications of the development to include: increased FX liquidity as releasing excess foreign currency into the market can alleviate the current shortage, leading to smoother transactions and potentially stabilizing the naira’s exchange rate.

He argued that “businesses reliant on foreign exchange, especially critical sectors like manufacturing and agriculture, could benefit from easier access to funds for imports and operations”.

The directive to the banks by the CBN, he noted, will encourage “banks to adhere to regulations and avoid excessive foreign currency holdings, potentially promoting a more efficient and transparent FX market in the long run.”

“Addressing the FX shortage and stabilizing the Naira can contribute to overall financial stability, boosting investor confidence and economic activity.”

On the negative side, Balogun stated that releasing large amounts of foreign currency might cause temporary operational challenges for banks, which in turn would impact their liquidity and financial ratios.

He said: “Banks earn income through foreign exchange transactions, and a sudden decrease in their holdings could affect their profitability. Most importantly, increased liquidity could fuel inflation if not managed carefully, especially if demand for goods and services rises faster than supply.

Balogun noted that “the sector’s heavy reliant on a weaker naira (e.g., exports) could face challenges if the exchange rate strengthens significantly and the reaction of foreign investors and speculators to the increased FX liquidity could influence the exchange rate and market stability”.

 

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President Trump Signs Executive Order To End Birthright Citizenship

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United States President, Donald Trump, has signed an executive order attempting to end birthright citizenship — a right guaranteed by the US Constitution and affirmed by the Supreme Court more than 125 years ago.

On Monday, Trump issued a blitz of executive actions to start reshaping federal immigration and border policy, many of which are expected to face significant legal challenges.

“As commander in chief, I have no higher responsibility than to defend our country from threats and invasions, and that is what I’m going to do,” Trump said in his inaugural address.

CBS News reports that the US government has long interpreted the US Constitution to mean that those born on American soil are citizens at birth, regardless of their parents’ immigration status.

The 14th Amendment to the Constitution says, “All persons born or naturalised in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.”

But Trump directed federal agencies to stop issuing passports, citizenship certificates, and other documents to children born in the US to mothers who are in the country illegally and fathers who are not citizens or legal permanent residents, or to mothers who are temporary visa holders (and fathers who are not citizens or legal permanent residents).

Trump said his edict, which would not apply retroactively, should be enforced in 30 days. But just hours after it was issued, the American Civil Liberties Union and other advocacy groups filed a lawsuit challenging the action in federal court.

He also cited extraordinary presidential powers to effectively suspend US asylum law, accusing migrants of staging an “invasion” at the southern border and endangering public health.

He authorised officials to “repel, repatriate, or remove” migrants, suspending their “physical entry” into the US through his constitutional powers. The far-reaching order essentially allows the U.S. government to stop adhering to American asylum law until Mr. Trump issues a “finding that the invasion at the southern border has ceased.”

 

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You’ll Soon Learn Your Lessons – Prof Akinyemi Tells Kemi Badenoch

How the daughter of a professor of UNILAG, her father who was a medical doctor, a girl who went to the international school at UNILAG would make it sound like she was selling groundnut and selling water in Lagos to advance her political career.

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Former Nigerian Minister of External Affairs, Prof Bolaji Akinyemi, says Britain’s Conservative party and Nigeria-raised Kemi Badenoch will soon learn her lessons that “you don’t throw your people and your culture under the bus”.

Prof Akinyemi, a former Director General of the Nigerian Institute of International Affairs (NIIA), said Badenoch was making a mistake denigrating Nigeria on the global stage to “advance her political career”.

The foremost Professor of Political Science, who was a guest on Channels Television’s Politics Today programme on Monday, said the UK Conservative party leader should leave Nigeria alone and focus on strengthening her party in Britain.

The octogenarian said, “How the daughter of a professor of UNILAG, her father who was a medical doctor, a girl who went to the international school at UNILAG would make it sound like she was selling groundnut and selling water in Lagos to advance her political career.

“She would soon learn that you don’t throw your people and your culture under the bus to advance your career. She is making a mistake but she would soon learn.

“After all, right now, there is even Right Wing political party in the United Kingdom that is even to the right of the Conservative Party. So, what she should be focusing on is how to regain that rightwing profile of the Conservative Party and leave Nigeria alone.”

Days earlier, presidential spokesman Daniel Bwala said Badenoch’s scathing comments about Nigeria are targeted at gaining acceptance from her party members.

In December 2024, Nigeria’s Vice President Kashim Shettima criticised Badenoch for disparaging Nigeria, saying that she is entitled to her own opinions and has every right to remove the Kemi from her name.

In 2022, Badenoch, a UK member of parliament of Nigerian descent and then UK Prime Minister hopeful, accused Nigerian politicians of using public funds for their private matters.

After her election as UK Conservative Party leader in November 2024, the Chairman of the Nigerians in Diaspora Commission (NIDCOM), Abike Dabiri-Erewa, said her office reached out to Badenoch but received no response.

 

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NATCOMS To Challenge NCC’s 50% Telecom Tariff Hike In Court

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The National Association of Telecommunications Subscribers (NATCOMS) has announced plans to contest the Federal Government’s approval of a 50% tariff hike for telecom operators in court.

This decision, according to NATCOMS, was made without adequate consultation with key stakeholders, including subscribers.

Mr. Deolu Ogunbanjo, President of NATCOMS, expressed dissatisfaction with the tariff increase approved by the Nigerian Communications Commission (NCC) in an interview with NAN.

He described the decision as burdensome, particularly for small businesses and individual subscribers.

“This will affect everyone from the biggest industry to the smallest company, such as the Point of Service (POS) operators. It will increase operational costs,” Ogunbanjo stated.

He acknowledged the financial challenges facing the telecommunications sector but emphasized that a marginal increase of 5% to 10% would have been more acceptable.

“We painfully agreed that, look, a moderate or marginal five per cent to 10% increase will be fine. We do not mind an increase if it is to salvage the industry that is helping us, that means so much to us and that is also contributing double-digit to Nigeria’s Gross Domestic Product,” he added.

Alternative funding options

Ogunbanjo suggested that telecom operators explore alternative funding sources, such as Initial Public Offerings (IPO), to raise capital instead of imposing a 50% tariff increase on subscribers.

“The industry operators can opt for an Initial Public Offer (IPO) for Nigerians to buy shares in their companies as a way of raising funds.

However, a situation where a whole 50% is granted for tariff hike is not cheap and it is a no! no! from us subscribers,” he insisted.

Ogunbanjo confirmed that NATCOMS would challenge the decision in court, citing the financial strain the hike would impose on subscribers already grappling with economic challenges.

NCC defends the tariff adjustment

The Nigerian Communications Commission (NCC), in a statement signed by its Director of Public Affairs, Dr. Reuben Muoka, justified the 50% tariff adjustment as a necessary measure to address rising operational costs in the industry.

“The NCC has prioritised striking a balance between protecting telecoms consumers and ensuring the sustainability of the industry, including the thousands of indigenous vendors and suppliers who form a critical part of the telecommunications ecosystem,” the statement read.

The commission noted that while some operators had requested a 100% tariff increase, it approved a maximum adjustment of 50% after extensive consultations with stakeholders.

“The NCC recognises the financial pressures faced by Nigerian households and businesses and remains deeply empathetic to the impact of tariff adjustments. To this end, the commission has mandated that operators implement these adjustments transparently and in a manner that is fair to consumers,” the NCC stated.

Benefits of the adjustment

The NCC assured subscribers that the tariff increase would enable operators to invest in infrastructure and innovation, leading to improved service quality.

“These adjustments will support the ability of operators to continue investing in infrastructure and innovation, ultimately benefiting consumers through improved services and connectivity,” the commission added.

 

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