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Nigeria’s External Debt Rises to $40bn Under Buhari



Nigeria’s total external debt has risen from $10.32bn on June 30, 2015, to $40.06bn as at June 30, 2022, according to The Punch.

This shows that there has been an increase of 288.18 per cent in seven years, according to the external debt stock reports by the Debt Management Office.

A breakdown shows that in 2015, 36 states had $3.27bn external debt while the Federal Government had $7.05bn.

By 2022, states’ external debt rose to $4.56bn, while the Federal Government’s external debt increased to $35.5bn.

The debts included loans from multilateral sources such as the World Bank, the African Development Bank and the International Monetary Fund.

They also included bilateral loans from China, France, Japan, Germany and India, as well as commercial sources including Eurobonds and Diaspora bonds.

Nigeria’s external debt ballooned as the naira lost value, increasing Nigeria’s debt service burden and worsening its ability to service debt. The International Monetary Fund recently said that the long-term rate of the depreciation of the naira equated to a loss of 10.6 per cent of its value annually since 1973.

According to the IMF, this rate was 1.5 times higher than the long-term rate of the currencies of other emerging markets and developing economies at 7.2 per cent and sub-Saharan Africa at seven per cent over the same time period.

The IMF said, “Its exchange rate underwent more persistent depreciation. Nigeria’s long-term rate of currency depreciation (on average 10.6 per cent annually since 1973) was 1.5 times higher than both EMDE (7.2 per cent) and SSA (seven per cent). Given limited availability of long-term data, it is difficult to estimate the exact reasons.”

The Bank of America recently said Nigeria’s local currency unit was set to weaken further next year as its current exchange rate to the dollar was well above fair value.

According to a report by Bloomberg, the bank said, “Three indicators, the widely-used black-market rate, the central bank’s real effective exchange rate, and our own currency fair value analysis shows the naira is 20 per cent overvalued.

“We see scope for it to weaken by an equivalent amount over the next six-nine months, taking it to as high as 520 per USD.”

During a workshop on tax expenditure organised by the ECOWAS Commission in Abuja, financial experts advised that Nigeria and other West African Countries should move away from reliance on foreign assistance to the financing of developmental projects in the region.

According to them, over-dependence on financial aid and external loans might affect long-term prosperity of the entire region.

The Special Advisor to the Director (Custom Union and Taxation in ECOWAS), Gbenga Falana, while emphasising that the debt profile of most of the countries in the sub-region was mounting, stressed the need for West African countries to look inwardly and finance local projects through effective domestic resource mobilisation.

Reacting, the Managing Director/Chief Executive Officer of Cowry Asset Management Limited, Mr Johnson Chukwu, said that high external debt would impose a huge debt service on the economy.

He said, “This will impose a huge debt service on the economy, particularly at a period when we have low revenue from oil sales. If the revenue from oil sales does not improve, then the government will be struggling to meet that debt service obligation to foreign lenders.”

However, he noted that Nigeria could service its foreign debt at the current level, but a constant increase in debt without a corresponding increase in foreign currency earnings could put the country in a difficult position.

The Punch

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Senate Summons CBN Governor over Naira Free Fall




The Senate, on Wednesday, summoned Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, over the free fall of the Naira and hyper inflation.

The summons was through its Committee on Banking, Insurance and other Financial Institutions headed by Senatorial Adetokunbo Abiru.

The governor and his team were asked to appear on Tuesday next week to explain the state of the economy and the free flow of the Naira at the forex market.

The committee, at a meeting on Wednesday, expressed concern over the endless depreciation of Naira that saw it rise to N1,520 to a US dollar as of Wednesday.

Speaking with journalists after the meeting held behind closed door at the National Assembly, Senator Abiru said the state of the economy, especially the inflation index, is of great concern to the lawmakers.

He said: “We have held a meeting this afternoon essentially to focus on the direction of the Nigerian economy.

“We are all living witnesses of what is going on.

“Underlining the major issue of the economy is the way the inflation index has been and of course it is a major concern to us.

“We have deliberated among ourselves. Critical issues were addressed and we believe that the next line of action is to summon the governor of the Central Bank on Tuesday at 3 O’clock to brief us properly on the state of the economy.

“That we have resolved, and will communicate to the governor of the Central Bank after which we will have further communication with members of the press.”

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Despite Controversy, 1,500 Redeployed CBN Staff Resume at Lagos Office




At least 1,500 members of staff of the Central Bank of Nigeria will on Friday resume at its Lagos office following their redeployment from the headquarters, according to The Punch.

A source at the apex bank told our correspondent exclusively that the plan, though heavily criticised, was still in motion, and affected staffers would be resuming on Friday.

“Yes, the plan is still on and they will resume work by February 2, which is the first week of next month,” an official said.

The latest development comes on the backdrop of the decision of the new management to relocate some of CBN’s departments to the country’s economic hub for staff safety, increased productivity, and to decongest its head office.

CBN said the action was necessitated by several factors, including the need to align the bank’s structure with its functions and objectives and redistribute skills to ensure a more even geographical spread of talent.

It added that it was also in compliance with building regulations, as indicated by repeated warnings from the facility manager, and the findings and recommendations of the Committee on Decongestion of the CBN Head Office.

A memo issued to staff read, “This is to notify all staff members at the CBN Head Office that we have initiated a decongestion action plan designed to optimise the operational environment of the Bank.

“This initiative aims to ensure compliance with building safety standards and enhance the efficient utilisation of our office space.”

According to reports, the departments penciled down for relocation by the CBN governor Yemi Cardoso include Banking Supervision, Other Financial Institutions Supervision, Consumer Protection Department, Payment System Management Department, and Financial Policy Regulations Department.

Although the Northern Elders Forum and some other Northern groups had condemned the move, our correspondent gathered that the CBN governor was committed to implementing it, as it is expected to reduce the  HQ occupancy level to 2,733 personnel from 4,233.

Another source told the PUNCH that some of the affected staffers had started relocating to Lagos.

“Some have already gone ahead. Over 80 per cent of the Banking Supervision Department staff have been redeployed and the same for the Payment System Department,” the source hinted.

The NEF had, in a statement, expressed worry over the potential negative impact of relocating those essential departments on both the institution itself and the country as a whole.

“The movement would involve increased costs, loss of talent, disruption in operations, reduced coordination, regional economic disparities, impaired economic development in Northern Nigeria, and decreased investor confidence in the nation’s economy.

“Therefore, relocating them entirely to Lagos will only serve to further strengthen the already dominant position of Lagos, while potentially weakening the significance and role of Abuja,” it claimed.

More so, the Chief Whip of the Senate, Senator Ali Ndume, warned that there would be “political consequences” if the plan to relocate some departments of CBN as well as the corporate headquarters of Federal Airports Authority of Nigeria to Lagos were implemented.

He said, “Those misleading the President are not doing him any good because this is going to have some political consequences. If Tinubu were not elected president, the CBN governor would not be there. It was not Lagos votes that put Tinubu there.”

Northern senators and youths also expressed displeasure over the move, which they claimed was a calculated move to short-change the North.

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Banks Serve Notice of Electronic Transfer Levies Deduction from Customers’ Accounts




Deposit money banks in the country have announced that they will comb their customers’ accounts to deduct the backlog of Electronic Money Transfer Levy (EMTL) on old foreign currency transactions.

The deductions, which will be effected in January 2023, will cover all the affected transactions between 2021 and 2023,.

In a message sent by the banks to their customers on Tuesday, the lenders noted that the action was in line with the directive from the Federal Inland Revenue Service (FIRS).

Last month, the FIRS directed deposit money banks to deduct and remit the EMTL on foreign currency (FCY) transactions going forward.

The tax body said the levy is in line with the Finance Act 2020 and Stamp Act 2004, which impose an EMTL on the transfer of money deposited in any financial institution on any type of account.

Before the latest directive, the N50 charge on transactions from above N10,000 was only applicable to local currency transactions.

In a notice to the customers sent on Tuesday, a Tier-1 lender, Access Bank, said:

“We write to inform you of the Federal Inland Revenue Service (FIRS) notice to all banks, in line with the Finance Act 2020 and Stamp Act 2004, to remit the Federal Government Electronic Money Transfer Levy from foreign currency (FCY) inflows.

“Previously, the Electronic Money Transfer Levy was solely applicable to accounts receiving electronic deposits of N10,000 and above or its equivalent. However, starting January 2, 2024, the deduction will be extended to FCY inflows equivalent of N10,000 and above, incurring a charge of N50 (FCY equivalent).

“In compliance with this notice, outstanding Electronic Money Transfer Levy on FCY inflows from January 2021 to December 2023 are also to be deducted by January 31, 2024. We appreciate your understanding and thank you for trusting Access Bank.”

In September 2023, Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Mohammed Bello Shehu, while providing an update on remittances to the federation account, revealed that the sum of N83.02 billion accounted for revenues from the electronic money transfer levy out of which N3.32 billion was paid to FIRS as cost of collection between January and June 2023.

The policy directive is coming on the heels of excruciating hardship encountered by bank customers over intense cash shortage that has hampered smooth business transactions across the country.

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