* Apex Bank postpones MPC meeting
John Danjuma Omachonu
Amid efforts by President Bola Tinubu to attract Foreign Direct Investments (FDI) into the country through Appeals to investors at various opportuned fora, lingering internal contradictions in the economy seem to be threatening realization of these objectives.
From the pervasive shortage of the foreign exchange, lack of clear leadership at the regulatory Central Bank, (CBN) resulting in non adherence to promises, tension ocassioned by the ongoing activities of federal government investigators of CBN and other entities, the conclusion by most analysts is that economic situation is precarious.
Already, the much awaited Monetary policy Committee, (MPC) meeting may have been suspended indefinitely following uncertainty in the policy direction ocassioned by sweeping disengagements, particularly at the management level of the bank recently
Specifically, the exchange rate between the naira and dollar on Thursday morning, September 21, 2023, was hovering between N996 and N1000 to the dollar as forex traders continued to grapple with dollar scarcity.
On Wednesday the exchange rate had weakened to N983/$1 in the afternoon, however, this morning, most of the traders who spoke with metrobusinessnews.com (MBN) quoted N996/$, hinting of the possibility of even hitting N1000 or more against the greenback.
However, the exchange rate also closed at N770.7/$1 on the official NIFEX window on Wednesday, providing arbitrage and roundtripping opportunities for speculators.
In fact, this is happening exactly two weeks since the CBN said that it is working with the commercial banks to clear the $10 billion foreign exchange backlog within the next 2 weeks.
The promise is hanging now following successive activities typified by staff disengahlgements as well as investigation of activities of CBN.
The acting Governor of the CBN, Folashodun Shonubi, broke the news at a forum when he was confronted with questions on the lingering challenges in the foreign exchange market.
Shonubi said the backlogs would be cleared through different structures within the forex market, adding that banks, which control 75% of the forex transactions, will play a significant role in seeing that the backlog is cleared.
As a matter of fact, there is a large amount of the obligations that the banks in Nigeria have already taken on. So, what happened was that at maturity, they made the foreign exchange available for those who needed to use them like importers and what have you.
“There are some customers who still have their obligations and part of the restructuring with the banks in Nigeria, is also to clear that backlog. That is something we have been discussing for a while. I expect that we will do that, within the next one or two weeks.
“What that means, therefore, is that this obligation that people keep on talking about will not be left. Today, we still intervene in the market, so it is not as if it has affected our ability to make monies available to banks in the Investors and Exporters foreign exchange market,”
But, rather than improve liquidity, it appears liquidity is even tighter leading to further exchange rate depreciation.
According to the analysts, the forex market is currently in disarray as most of the banks and licensed operators do not have dollars to sell and as such out of business.
“The FX market is in crisis and as well disarray as nobody can explain what’s really happening. Officials at CBN, have rather kept mute as their bosses have been sacked and no clear direction,” says a source closer to the bank but pleaded for anonymity.
He further said CBN’s plan to improve forex liquidity in two weeks was not possible even from the onset, giving the short time, adding, If CBN wanted to clear the backlog and not playing to gallary, they should have commenced implementation before the announcement.
It should have occurred to the Acting governor that, if in two weeks they do not clear it, they were going to create more problems and anxiety and this is what has happened now, even bigger problems have been created.”
More worrisome is the fact that the exchange rate is depreciating at a time when the president is on a trip to New York (for UNGA) soliciting foreign direct investment into the country.
Also, the US Deputy Secretary of Treasury, Wally Adeyemo, has said Nigeria lacks the macroeconomic framework to attract more dollar-denominated foreign direct investments into its economy.
Responding to a question about investments and the Nigerian economy from the audience, Adeyemo said:
“Nigeria lacks a macroeconomic framework that is going to help to bring more foreign direct investments including dollar-based foreign investments into the country.
“The early steps the government has taken is good in terms of what they have done (fiscal policy), in terms of what they are trying to do with unifying the exchange rates. More needs to be done and they recognise that. The truth is as companies around the world become more comfortable with their approach, you would expect that Nigeria would be a destination for FDI.”
The investigators, whose assignment zeroes on activities of the apex bank and related entities under the suspended governor, Emefiele, are throwing everything into the assignment to untie the web of frauds allegedly committed in the past nine years.
The situation is so tensed that, most officials concerned are maintaining ‘reasonable’ distance from areas of activities, a situation that is stalling major decisions on issues affecting the economy, consequently, resulting in possibly plunging the nation’s currency into serious trouble.
The Nigerian currency, the naira, which has been at a lower ebb since June is expected to plunge further as the CBN is thrown into leadership confusion over last week’s appointment.
President Bola Tinubu last Friday announced the appointment of Yemi Cardoso as the new Governor of the Apex Bank while he also, in a single strike, cleared out the four deputy governors (DGs) namely Aisha Ahmad, Kingsley Obiora, Edward Adamu and the acting governor, Folashodun Shonubi from their positions.
Meanwhile, CBN MBN gathered that CBN has postponed its fifth Monetary Policy Committee (MPC) meeting of 2023 earlier scheduled for September 25th and 26th.
Isa AbdulMumin, Director, Corporate Communications of the CBN, was said to have confirmed the postponement in a statement made available to TheNiche.
The statement did not state the reason for the postponement or the date for the next scheduled meeting.
The statement reads: “The Monetary Policy Committee of the Central Bank of Nigeria (CBN) has deferred its 293rd meeting scheduled for Monday and Tuesday, September 25 and 26, 2023, respectively. A new date will be communicated in due course.”
An analyst who spoke with MBN said the postponement is as a result of the recent announcement of Cardoso as the new CBN Governor, pending confirmation by the Senate.
The MPC, headed by the CBN Governor, is statutorily charged with responsibility for the conduct of monetary policy in Nigeria.
The committee is saddled with the formulation and as well monitors implementation of monetary policy to achieve the policy objectives. It’s last meeting was in July, 2023.