The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), today, voted to leave the Monetary Policy Rate (MPR) at 14% and all other variables unchanged.
The Cash Reserve Ratio (CRR) was thus, left at 22.5% and the Liquidity Ratio at 30%. The asymmetric corridor was left at Asymmetric +200 and -500 basis points.
The Monetary Policy Rate (MPR) is the rate at which the CBN lends to commercial banks. This, in turn, serves as the benchmark rate (in theory) which banks lend to customers.
The Cash Reserve Ratio (CRR) is the proportion of a bank’s deposits it has to hold as deposits either in cash or with the CBN.
Liquidity ratio is the ratio of a bank’s liquid assets to its liabilities. In other words, a bank’s cash balance plus assets that it can easily convert to cash to the total liabilities owed by the bank, which is typically deposits.
The Asymmetric corridor is the range within which the MPR can either be raised or lowered. The maximum the rates can thus be increased is 2%, and the lowest it can be lowered by is 5%.
CBN Governor, Godwin Emefiele, in his post MPC remarks reassured that the Bilateral Currency Swap Agreement with People’s Bank of China will ease pressure in the Forex market .
He also noted that since China is Nigeria’s largest trading partner, importers from China are now free to carry out their transactions in Renminbi, instead of Dollar. CBN a few days ago started the trading of Yuan for the first time, after the country secured a Naira-Yuan currency swap deal. The Asian country and Nigeria signed a Naira-Yuan currency deal equivalent to $2.4 billion in May, 2018.
In addition, he urged accelerated implementation of the 2018 budget to support fragile growth recovery.
Why the MPC left rates unchanged
CBN Governor Godwin Emefiele had stated that the MPC had left the rates unchanged for several reasons including:
- The rising trend of inflation in global markets.
- Expect liquidity inflow in the 2nd half of the year from the 2018 budget and pre-election spending.
Markets had priced it in
The financial markets had apparently priced a HOLD decision, in view of the macroeconomic landscape. Q1 2018 GDP figures by the National Bureau of Statistics (NBS) show growth dropped slightly from 2.11 in Q4 2017 to 1.98 in Q1 2018.
Caught between weak growth figures and a looming increase in liquidity, the CBN thus opted for the most feasible option of a HOLD.
How does this affect you?
As a borrower
As rightly stated by the CBN Governor, even if the MPR were to be lowered, it would not translate to lower interest rates for the average Nigerian. This is because banks have to contend with high operating costs.
Borrowers should thus expect interest rates to remain at their current levels. Except they are blue chip.
Investors holding treasury bills and bonds would be glad the rates were left unchanged as a reduction in the MPR could have led to lower yields. The downward trend in inflation, however, means yields on government securities will continue to trend downwards
For investors in the capital market, the HOLD decision was largely priced in. An increase in the MPR would have led to an exit of funds from the market.
A reduction in the MPR would have led to an influx of funds into the market, by investors seeking higher returns.
Tax on rents and Certificate of Occupancy is valid – Akabueze
FIRS had announced that stamp duty will be paid on house rent and C of O.
The Director-General of the Budget Office of the Federation, Ben Akabueze, announced that the recent FIRS taxes on Certificate of Occupancy and rents is not new and has been around since the 1980s.
He disclosed this in the 2021-2023 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF&FSP) on Friday, adding that ever since the 80s, his landlord had always given him a postage stamp on his rent receipts, and that the law was not just recognized for a long time.
“Over time, because the culture of postage has dropped off and that was not being implemented. What FIRS has done now is to make that into electronic stamp that you can still use to comply with the existing law,” Akabueze said.
Last week, the Federal Inland Revenue Service (FIRS) announced that stamp duty will be paid on house rent and Certificate of Occupancy (C of O), in line with its new adhesive duty. The new duty was inaugurated in Abuja at the official inauguration of the Inter-Ministerial Committee on Audit and Recovery of Back Years Stamp Duties.
FIRS Director for Communication and Liaison Department, Mr Abdullahi Ahmad, said the new policy was necessary so as to give the instruments the legal backing required and make them legally binding on all parties involved in such transactions.
Consequently, Ahmad asked Nigerians to ensure that documents that related to rent and lease agreements for homes or offices, C of O, and other common business-related transaction instruments were authenticated with the new FIRS Adhesive Stamp Duty.
He also advised Nigerians to make sure that any document related to leasing agreements and rents related to offices and homes, including C of O and other transaction instruments used in these seals were authenticated with the new FIRS Adhesive Stamp Duty.
Port-Harcourt International airport resumes flight operations
The first flight to Port Harcourt was conducted by Air Peace 5N EUV from Lagos.
The Port Harcourt International Airport formally resumed flight operations on Saturday, July 11, with the Federal Airports Authority of Nigeria (FAAN), restating its commitment towards a zero coronavirus transmission.
This was disclosed by the Regional Manager South-South and South-East of FAAN, Abayomi Akinbinu, on Saturday, July 11, during the arrival of the first flight after 3 months of shutdown due to the coronavirus outbreak.
The first flight, which was conducted by Air Peace 5N EUV from Lagos, arrived Port-Harcourt International Airport terminal at 7.50 am.
He said the Port-Harcourt airport management was ready to ensure zero chances of the coronavirus transmission with the management giving no room for default of the COVID-19 safety guidelines by regulatory authorities as flight operations resume at the airport.
He frowned at the non-adherence to physical distancing rule, while also commending safety compliance level by service providers and passengers at the airport.
According to Abayomi, “Our markings of 1.5 metres apart are visibly on the floor, but maybe because of excitement it’s not being properly followed; so we need to make quick enforcement in that regard.”
He said although there was low turnout of passengers, he expected a gradual increase in the coming days.
He said, “On the departure section, we are gradually getting more passengers and I believe that going forward passengers’ turnout is going to increase. My message to prospective passengers is that the Port Harcourt International Airport terminal is safe.”
On his own part, the Head of Aviation Medical Clinic of the airport, Dr Nuhu Mwabi, said that the Port Health is seriously conducting mandatory temperature checks on both service providers and passengers before allowing them into the airport terminal building.
Nuhu said, “This is because we want to fish out persons with a temperature of 38 degrees Celsius and above, so that we can isolate such individual. Our cardinal objective is to ensure that we contain the spread of COVID-19 as well as other communicable diseases within the airport.”
He added that the World Health Organization and the various medical teams were ready to professionally handle any suspected case, should the need arise.
It can be recalled that the Minister of Aviation, Hadi Sirika, had last week announced the resumption schedule for flight operations for the various airports across the country. The Murtala Muhammed Airport Lagos and the Nnamdi Azikiwe International airport resumed flight operations on July 8.
Lagos Govt Seals Acouns Medical Lab for conducting illegal COVID-19 tests
The lab conducted COVID-19 tests without required government approval.
The Lagos State Ministry of Health has sealed a private medical laboratory that was conducting illegal COVID-19 tests inside a pharmacy at Banana Island in Ikoyi, Lagos.
The ministry stated that the laboratory, Acouns Medical Laboratory and Diagnostic Centre, conducted COVID-19 tests without required government approval.
Yesterday, @LSMOH through @HEFAMAA_LASG sealed a private laboratory located on Banana Island, Ikoyi for carrying out #COVID19 tests without the required government approval. The lab; Acouns Medical Laboratory and Diagnostic Centre was also situated in a pharmacy! @followlasg pic.twitter.com/KkMzxYDBFq
— LSMOH (@LSMOH) July 11, 2020
According to a NAN report, the laboratory was sealed on Friday, July 10 by one of the agencies of the Ministry of Health – Health Facility Monitoring Accreditation Agency (HEFAMAA).
The ministry warned in its Saturday morning tweet, that such health facilities posed a danger to their communities and staff, and discouraged residents from patronising facilities that had not been duly accredited for such purposes.
“It is illegal to manage COVID-19 cases outside of an accredited facility. We implore the public not to go for tests or treatment in a private facility that has not been accredited by government.
“It is dangerous and it might put you at more risk,” it said.
The ministry promised to ensure that health facilities in the state adhered strictly to the standards put in place, and urged residents to cooperate with the authorities.
Recall that a few weeks ago, the Lagos State government announced it has added Seven Private Laboratories into its testing strategy to expand capacity in Nigeria’s commercial capital.
Lagos state has, through its accredited health facilities, conducted over 45,000 COVID-19 tests, with over 7000 confirmed cases from the number.
The ministry had also recently announced the private health facilities accredited for the purpose of COVID-19 testing.
The approved private labs are;
📍Total Medical Services
📍Medbury medical Services
📍Biologix Medical Services
📍02 Medical Services
📍Clina Lancent Lab pic.twitter.com/GS2f1FfP5j
— Prof. Akin Abayomi (@ProfAkinAbayomi) June 30, 2020