No Devaluation of the Naira

Sat, Sep 28, 2013
By publisher

Banking Briefs, BREAKING NEWS

THE Central Bank of Nigeria has resumed direct intervention by selling dollars to end users in the market. The apex bank took the decision as a strategy to protect the value of the naira. Sanusi Lamido Sanusi, CBN governor, said he would do everything possible to defend the naira and ensure its stability, including using the nation’s foreign reserves to achieve the purpose.

“As far as the naira is concerned, we have always said we are committed to its stability. I have not heard any economic argument that there is any economic value in devaluing our currency. My view and that of the CBN is that if we need to tighten money, use some of our reserves to support the economy, we will. No central bank governor will say he will support the currency at all cost. But we want to be very clear that there is no country that allows its currency to just be determined by the market. We are not looking for a stronger currency neither are we looking at a weaker one. People want to pay fees and investors want to know if they will have returns on investments. We will use the reserves, we will use interest rates, we have gone through difficult months; hopefully, the next few months will not be difficult. We will not allow the naira to be weakened and we are committed to that,” he said.

He said the bank has resumed intervention by selling dollars to end-users. “The bank has a dealing whereby it sells to the Wholesale Dutch Auction System, but very rarely sells to end-users directly. “If the market is tight, we can sell or buy from end users, but it is uncommon. The implication is to increase supply and make the naira appreciate.”

There had been speculations that the CBN would devalue the naira, thereby fuelling excessive demand of the currency. The naira had last week lost 1.63 per cent to trade at N163.11 to the dollar at the inter-bank market, representing its lowest value in 15 months.

NDIC Warns Premium Defaulters


THE Nigeria Deposit Insurance Corporation, NDIC, has threatened to withdraw insurance cover from any microfinance bank that consistently fails to pay its premium. Umaru Ibrahim, managing director, NDIC, said the move might be adopted as part of punitive measures to discourage the practice whereby microfinance banks refused to pay premium. Insurance premium is what the NDIC relies upon to settle depositors in case of bank distress.

Ibrahim said so far, N398m had been received from the sector as insurance premium, adding that about N44m was still being expected from about 100 MFBs. “The need for self regulation cannot be overemphasised. You have even advocated that we come up with a system of punitive measures of enforcing payment of premium. This is a big issue to us, and from the figures, most of the MFBs this year have paid their premium. The figures I have are that about N398m have been collected and we have yet to collect about N44m from almost 100 of your members,” he said.

He said the initiative that would have enabled the corporation to debit their accounts directly in case of default had not been accepted by majority of the operators in the sector. “We introduced this about a year ago when we sent out a form of dialogue with your members on the need and how it would work. Unfortunately, the response we got was not too encouraging. But these are measures that we want to undertake to safeguard potential default and I will like to urge you to continue to educate your members on this. These days they say no premium, no cover. And we can decide to say that any MFB that consistently ignores its obligation to us, we will remove our insurance cover from those banks and we will tell everybody and you know what that means to the public.”


Feather in Oduoza’s Cap


PHILLIPS Oduoza, group managing director, United Bank for Africa, UBA, Plc, has been named a Socially Responsible Investment, SRI 30 “Chief Executive Officer, CEO of the Year” by African Investor. He received the award at the Africa Investor CEO Institutional Investment Summit, held at the New York Stock Exchange, on Tuesday, September 24.

The SRI index series were instituted in 2008 at the United Nations, as a concrete step to engage investors and businesses in support of the UN Millennium Development Goals, MDGs, in Africa. Commenting on the award, Oduoza said, “I am excited about the significant strides we are making at UBA.  I dedicate this award to the multi-cultural, multilingual staff of UBA. We take pride in our pan-African heritage, and the significant contributions we are making to economic development on the continent,” he said.

Since becoming managing director, Oduoza has been spearheading a number of growth initiatives including the recently launched Project Alpha; UBA’s three-year road map of key transformation initiatives, designed to consolidate the group’s strategic positioning, and fully exploit the burgeoning opportunities from Africa’s economic renaissance, and the group’s unique platform.

The award organisers said in a statement that the UBA boss was chosen in recognition of his exceptional achievements over the last year which is seen as an inspiration for business and government leaders working to raise Africa’s investment profile. The panel of judges considered excellent leadership skills, enhanced organisational image, innovation and originality as well as alignment with the millennium development goals in choosing the Socially Responsible Investment, SRI 30 CEO of the year. African Investor is one of the leading investment and specialist communications firm advising governments and businesses on investments in Africa.

The UBA group remains a highly diversified financial services provider with operations in 19 African countries, New York, London and Paris. It has, over the years, built a strong retail franchise across the continent, offering its more than seven million customers, a bouquet of products and services tailored to meet their different financial needs.

Compiled by Anayo Ezugwu


— Oct. 7, 2013 @ 01:00 GMT