Forex: NACCIMA Lauds CBN’s Sanction against Banks
Written by stylemonument on May 11, 2017
The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) has commended the Central Bank of Nigeria (CBN’s) decision to stop some banks from participating in the SME wholesale window of the forex market following series of complaints that some of the banks were deliberately frustrating efforts by many SMEs to access forex from the window.
This is as the Chamber has predicted that Nigeria would be out of her current economic downturn by third quarter of 2017.
The country, it noted, has started its growth out of economic recession with the continual decline in the negative growth rate of the Gross Domestic Product (GDP) standing at -1.3 per cent in the fourth quarter of 2016 as against -2.24 per cent recorded in the third quarter of 2017.
The national president, NACCIMA, Dr. Bassey Edem, during its review of the state of the economy, said although the official figures for the first quarter of 2017 is yet to be released, there are noticeable signs that the growth rate will further appreciate in the first quarter of 2017.
He noted that leading indicators suggest that the economy is slowly picking up with public finances improving as a result of the fiscal and monetary policies initiated and adopted by the federal government, supported by stable crude oil prices and production. He also warned that the growth is still fragile and may be constrained by policy inaction of the government.
However, the NACCIMA boss also lauded the sanction on some banks, saying that this would serve as a deterrent to others not to abuse the system.
He said the foreign reserves have continued to increase steadily, and stood at about $30 billion as at 31st March 2017 from $25.72 on December 31, 2016, while year-on-year inflation stood at 17.26 per cent in March 2017 as against 17.78 per cent in February 2017.
On the macroeconomic indicators, the NACCIMA president commended the CBN’s new policy of providing direct funding to banks to meet the foreign exchange needs of Nigerians, saying that this was followed with the introduction of a special platform for small and medium enterprises (SMEs) to access a maximum of $20,000 per quarter and a special window for investors and exporters.
These policies, he noted, have resulted in strengthening the naira, which fell in the last quarter of 2016 to about N500 to a dollar in the parallel market.
He applauded the effort of the federal government in ensuring that the country is on its way out of the economic recession, adding that the Economic Recovery Growth Plan ( ERGP) launched by the federal government which is expected to grow the economy by 2.19 per cent in 2017 and 7 per cent in 2020 is a step in the right direction.
Following persistent complaints that some banks have deliberately frustrated efforts by many SMEs to access FX from the window created for small businesses in the country, the CBN last week barred all but eight banks from participating in the weekly SME wholesale spot and forwards interventions.
Sources at the CBN disclosed that the banking system regulator took the decision to bar the errant banks based on field reports, which revealed that only eight banks had sold FX to the SME segment since the inception of the window.
According to a source, the CBN frowned on the action of the banks that declined to sell FX to SMEs to enable them import eligible finished and semi-finished items despite the availability of FX from the CBN wholesale intervention window.
CBN spokesman, Isaac Okorafor, who confirmed the sanction said the CBN’s management decided to bar banks that were yet to utilise any portion of the funds allocated by the CBN under the SME window, since its inception last month.
The affected banks will be barred from participating in the weekly wholesale spot and forwards interventions, he said.
He listed the banks not barred to include Access Bank Plc, Diamond Bank Plc, Fidelity Bank Plc, Heritage Bank, Jaiz Bank, Sterling Bank Plc, Unity Bank Plc and Zenith Bank Plc. Stanbic IBTC and Keystone Bank were readmitted after it was confirmed that they have been selling FX to the SMEs.
The CBN spokesman warned that the bank would not sit back and allow any form of instability in the interbank FX market through the actions of institutions or individuals.
He, however, disclosed that the action will be lifted immediately any of the affected banks show evidence of significant utilisation of the funds allocated to them under the SME window.
As an incentive, Okorafor said banks that had utilised their SME funds were allocated all of the $100 million sold at last Tuesday’s wholesale auction.
He urged all stakeholders to play by the rules for the benefit of the country and the economy.