Central Bank of Nigeria (CBN) has postponed its Monetary Policy Committee meeting. The meeting, which was supposed to hold for two days (next Monday and Tuesday May 25 & May 26, 2020), has been shifted to Thursday May 28, 2020.
This was disclosed in a statement issued by Director, Corporate Communications, CBN, Isaac Okorafor and seen by Nairametrics.
Okorafor explained that the meeting was shifted due to the public holidays the Federal Government declared and that coincides with the old dates chosen for the meeting.
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He said, “This is to inform our stakeholders and the general public that the May 2020 meeting of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), earlier scheduled for Monday and Tuesday, May 25 and 26, 2020, respectively, will now hold on Thursday, May 28, 2020. This is as a result of the declaration of Monday and Tuesday, May 25 and 26, 2020, as Eid-el Fitr holidays.
“For the avoidance of doubt, the CBN has put in place all necessary machinery for the meeting to now hold for only one day on account of the on-going COVID-19 national lockdown and to align this meeting with extant rules of the Presidential Task Force (PTF) on COVID-19 and advisories from other relevant agencies. All inconveniences caused by these changes are regretted.“
UPDATED: CBN revises timelines for resolution of dispense errors, refund complaints
The apex bank said this is in line with its resolve to enhance the quality of service bank customers are given. Nigerian banks are, therefore, required to implement the revisions starting from June 8, 2020.
The Central Bank of Nigeria, CBN, has revised the timeframes for the resolutions of all botched online transfers, POS transactions, and ATM withdrawals.
According to a brief statement that was posted on its official Twitter handle this evening, the apex bank said this is in line with its resolve to enhance the quality of service bank customers are given. Nigerian banks are, therefore, required to implement the revisions starting from June 8, 2020.
Below are the revisions
In line with the revisions, any failed ATM transaction that occurs when a customer tries to withdraw from their bank must be reversed instantly. In the event that instant reversal fails due to technical challenges, the money must be manually reversed within a 24-hour period. Note that prior to the revision, the timeframe for such reversal is usually three working days.
a.1 Failed “On-Us” ATM transactions (when customers use their cards on their bank’s ATMs) shall be instantly reversed from the current timeline of three (3) days.
— Central Bank of Nigeria (@cenbank) May 31, 2020
Similarly, the resolutions for failed ATM withdrawals occurring when bank customers use their ATM cards on other banks should not exceed 48 hours, the CBN said. Before now, such a resolution would normally take three working days.
Also, starting from June 8, banks will be required to resolve all disputed/failed online transfers and POS transactions within 72 hours. In other words, resolution for such disputes shall no longer be taking five working days as it used to.
In the meantime, the apex bank advised banks to ensure that all pending failed transactions/complaints are resolved “within two weeks starting June 8, 2020”.
“Meanwhile, key service providers in the Nigerian payments system have also committed to establish an integrated dispute resolution platform for the industry and enhance their payment system infrastructure and processes to reduce incidences of transaction failure,” the statement further disclosed.
What Nigeria is not getting right with PPPs
We need to develop greater capacity for our public service to engage in public private partnerships. PPP is not a gift. The public sector is not charity and so you need to understand what you are doing with them.
To achieve the Sustainable development goals, public-private partnerships (PPP) is not just an option for Nigeria but a necessity. That is because it is not possible for government alone to raise the kind of money needed for it.
According to Dr Joe Abah, Country Director, Development Alternatives Incorporated (DAI), the government needs to provide a safe and stable environment for the private sector to invest, and also restructure public-private partnerships in order to get more value out of it.
Speaking during a virtual conference on Saturday, he referred to a report from the United Nations general assembly which stated that Africa needs “an incremental amount from $200 billion to $1.3 trillion per annum to be able to achieve the SDGs”.
This, he noted, calls for restructuring of public private partnerships, to harness the strengths of both sectors towards sustainable development.
“We need to develop greater capacity for our public service to engage in public private partnerships. PPP is not a gift. The public sector is not charity and so you need to understand what you are doing with them.
“We need to monitor performances very closely and that is one thing that the private sector does very well that we don’t do in the public sector,” he stated adding that the public sector needs to have delivery target tied to remunerations.
Removing socio-economic constraints
In his presentation, chairman of Citibank Nigeria limited, Yemi Cardoso stressed the need to remove constraints that hinder people from thriving.
“In one of the studies done where they looked at 8 high-growth countries, they discovered that there were no identical policies in all of them, but there was a common theme – liberate people from their societal economic constraints and they flourish,” he said
He explained how tax rates and regulations that frustrate free enterprise could also impede a countries growth and pointed out countries that had removed such bottlenecks.
According to him, the negligible tax rates in Hong Kong are a source of encouragement to businesses, and so is the ease of doing business in Singapore.
“There is also Macedonia where the sectoral competitive strategy is focused on attracting foreign direct investment (FDI) in automotive industry. Malaysia has also reduced dependence on agricultural exports by paying attention to manufacturing,” he added.
If Nigeria could focus on her competitive advantage, tweaking it as the time changes and attracting strategic investments to the country, she would well be on her way to economic prosperity.
Can a lower MPR rate really prevent this recession?
We are on the brink of a recession. Whilst policies like these could offer a buffer, the prolonged existence of the pandemic on the economy is one nail in the coffin that can only be halted by the provision of a vaccine.
The world is in a fix. Covid-19, unprecedented as it is, has led to economic shocks owing to severe disruptions in the global supply chain, rising levels of corporate and public debt, rising levels of unemployment, negative shocks to commodity prices, and more. To cushion the negative impacts on economies around the world, global leaders have put policies in place hoping that it will stop or, at least, slow down the negative trajectory of these failing economies. It was in the same light that the Central Bank of Nigeria decided to lower the MPR rate to 12.5% from 13.5%.
How the Decision Came About
In a meeting held by the CBN’s Monetary Policy Committee (MPC) on Thursday this week, a majority of the members voted to cut the rate from 13.5% to 12.5%. During an earlier meeting held in March, the decision to hold rates had been unanimous. However, given the deepening challenges of the present time, seven out of the 10 members at the MPC meeting voted to cut the rate. Even more interesting is the fact that the rest of the panel opted for a more aggressive easing, with two voting for a 150 basis-point reduction and one for 200 basis points.
Why the Decision Was Made
COVID-19’s adverse effects on the global economy have been unprecedented and severe. During the meeting, which was broadcast live on Thursday 28th May, the MPC had noted key observations in the macroeconomic environment resulting from the adverse impacts of COVID-19 as well as the drop in crude oil prices. Some of the key highlights of the current economic situation include:
- The significant decline in Manufacturing and non-Manufacturing Purchasing Manager’s Indices (PMIs) to 42.4 and 25.3 index points, respectively, in May 2020, compared with 51.1 and 49.2 index points in March 2020.
- The marginal growth in broad money (M3) to 2.66 percent in April 2020 from 2.42 percent in March 2020, largely due to increases in Net Domestic and Foreign Assets.
- The significant growth of aggregate net credit by 8.07 percent in April 2020 compared with 4.90 percent in March 2020 (still below the indicative benchmark of 16.85 percent for the year.
The committee also mentioned the gradual improvement in macroeconomic variables, particularly the improvement in the equities market, the containment measures of the COVID-19 induced health crisis, as well as the impact of the increase in crude oil price on the external reserves. It also noted the stability in the banking system as shown by the increase in total assets by 18.8 percent and total deposits by 25.52 percent (year-on-year).
Given the overall economic situation and its impact on the average Nigerian, the MPC was of the view that any tightening of policy stance is, for now, inappropriate as it will result in further contraction of aggregate demand, thereby leading to a decline in output – which is necessary to sustain the supply chain for growth recovery. For the option of holding previous policy stance, the MPC believed holding may indicate that the monetary authorities are insensitive to prevailing weak economic conditions. Also noteworthy is the fact that this move to cut rates have been carried out by many other central banks across the globe, including Australia, Malaysia, and the U.S. Federal Reserve.
The Impact Of The Decision
The expected outcome of the decision of the CBN is to ensure that the economy reverses from the recession quickly. As such, the decision is geared towards stimulating growth and swift recovery. The cut, being the lowest in four years, rests on the optimism that it will possibly avert a recession. It, however, has its limitations. A clear challenge is the impact the rate cut will have on inflation which has been way above the target range of 6% to 9% for five years. There is also the issue of increasing pressure on the naira.
The rising question is whether the rate cut will do enough to prevent a recession. This is an important question, taking into account the volatility in the crude market – a sector that accounts for about 90% of exports and more than half of government revenue, the fall in private sector credit of 61% from just a year earlier, as well as all of the same challenges that spurred the making of the decision in the first place.
We are on the brink of a recession. Whilst policies like these could offer a buffer, the prolonged existence of the pandemic on the economy is one nail in the coffin that can only be halted by the provision of a vaccine. It is only when life reverts to normalcy that we can begin to undo the damage thus far.