Business News
Insufficient electricity, unfavourable economy are among challenges hindering companies –CBN
Stakeholders have highlighted insufficient electricity supply and unfavourable economic realities as some of the most serious challenges hindering their business operations.
Stakeholders, who were surveyed in the latest business expectations data, as published by the Central Bank of Nigeria (CBN), highlighted insufficient electricity supply and unfavourable economic realities as some of the most serious challenges hindering their business operations in the country.
Other challenges, according to the respondents, included high interest rate, unclear economic laws, inadequate access to credit, unfavourable political climate, increasing competition, and lower demand.
Interestingly, despite the above-highlighted challenges, the 1050 businesses that participated in the survey expressed optimism in terms of Nigeria’s business outlook.
According to the report, their overall confidence index stood at 26.6 index points and, which is indicative of optimism in the state of Nigeria’s macroeconomy last month. In the same vein, the respondents also showed high confidence in the economy for March, with 58.1 index points.
The CBN business expectation data, which was for the month of February, went further to highlight responses by businesses regarding other major indicators. For instance, in terms of their expectations on exchange rate, businesses expect the naira to appreciate in the coming months.
[READ MORE: Power sector loses N19.15 billion to gas shortages, transmission infrastructure challenges)
They also expected that not only will borrowing rates increase in February, but that such would be the case throughout the course of 2020.
Furthermore, the respondents noted that they expect Nigeria’s inflation rate to stand at 11.6% and 11.8% in the next six months and in the next twelve months, respectively. Interestingly, the respondents expressed satisfaction with the way the government is managing inflation.
“Respondent firms expressed satisfaction with the management of inflation by the Government, with a positive net satisfaction index of 2.4 in February 2020. The net satisfaction index is the proportion of satisfied less the proportion of dissatisfied respondents.”
Finally, the respondents were optimistic in terms of Nigeria’s economic growth. They gave an economic growth index rate of 43.3 for the month of February, as well as a growth index rate of 49.5 points for the next six months as well as the next twelve months.
You may read the full report, which was compiled by the CBN’s Statistics Department, by clicking here.
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ABCON asks CBN to check impact of cryptocurrencies on diaspora remittances
The association also noted that the apex bank needs to address other issues driving the patronage of cryptocurrency exchanges for remittance transfers.
The Association of Bureau De Change Operators of Nigeria (ABCON) has asked the Central Bank of Nigeria (CBN) to introduce measures that will neutralize the positive effects of cryptocurrencies as a channel for diaspora remittances.
This is to redirect diaspora remittances away from cryptocurrency exchanges to official channels and also protect such against potential disruptions.
This call was made by ABCON during its Quarterly Economic Review for the first quarter of 2021 where it commended the CBN for the N5/$ rebate scheme introduced to encourage diaspora Nigerians to use official channels to remit their funds.
However, the association noted that the apex bank needs to address other issues driving the patronage of cryptocurrency exchanges for remittance transfers.
READ: Nigeria among worst countries to start a career, and they all don’t accept crypto
What ABCON is saying in their statement
The association in its statement said, “It is noteworthy that public acceptability for cryptocurrency exchanges are rising which could be quite accountable for the wide drop in diaspora inflows to Nigeria. Insecurity in the country is giving it greater prominence as investors and citizens are finding Cryptocurrency a safe haven for their wealth in case of any eventuality.
In most Emerging Markets Bitcoin transfers surged last year, as the pandemic exposed the cheaper and more efficient digital remittance services. Migrants sending money across borders to their families prefer the minimal transaction costs of cryptocurrency exchanges against the exorbitant costs of traditional money transfer companies like Western Union.”
READ: Atsu Davoh is building ways for Africans to easily acquire and spend cryptocurrency
According to ABCON, “Cryptocurrency transactions are faster than the conventional transfers, which require passing through banks reliant SWIFT, the sluggish, half-century-old interbank messaging system that handles cross-border payments.
These exchanges override the political complications of official channels. The global reach of cryptocurrencies avoids the inflation risk inherent to official currencies, especially in politically unstable countries reliant on fickle foreign investors.
Thus, while we commend the efforts of CBN in introducing the package of Five Naira for One Dollar transfer, it can be seen from the analysis above that the challenges exceed just non-payment of foreign currency by the IMTCs and the exchange rate. Strategies that satisfy the most sensitive of these advantages of Cryptocurrency exchanges must be introduced to redirect flows to the official channel.”
ABCON also expressed concerns over the country’s huge unemployment rate, urging the government to apply radical approaches with the use of both conventional and unconventional economic and political tools to redress the trend.
READ: Afreximbank President reveals ways Nigeria can boost diaspora participation in economy
What you should know
- It can be recalled that the apex bank had about 2 months ago, warned the Deposit Money Banks, Non-Financial Institutions and other Financial Institutions against doing business in crypto and other digital assets.
- The CBN directed financial institutions to immediately close the accounts of persons or entities transacting in or operating cryptocurrency exchanges, warning of severe regulatory sanctions in the event of any breach of the directive.
- The Securities and Exchange Commission (SEC) had a few days ago, revealed that it is working with the CBN for a better understanding and regulation of cryptocurrencies in the country.
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