A few weeks ago when the Monetary Policy Committee members of the Central Bank of Nigeria voted to reduce Monetary Policy Rate (MPR), not all bankers and financial analysts were enthused. There is a reason for this lack of enthusiasm.
An MPR reduction is ideally supposed to have positive outcomes for banks’ lending rate and the economy in general. However, such a policy move by the CBN can only be effective if some other factors are duly considered and adjusted accordingly. But for certain reasons, that was not quite the case during the last MPC meeting. Some experts who spoke to Nairametrics explained this in details, as you shall see shortly.
First, here’s CBN’s reason for reducing MPR
As Nairametrics had reported, the MPR was reduced from 13.50% to 12.50% during the last MPC meeting that was held on May 28. Governor of the Central Bank, Godwin Emefiele, explained that the decision was informed by the negative impacts of the COVID-19 pandemic on the economy, including high inflationary pressure and restrictions in international trade. Therefore, the reduction in MPR was to, among other things, help reduce cost of capital in order for businesses to be able to afford loans, thereby reinvigorating the economy.
The question, however, is whether the policy move is capable of accomplishing the purpose for which it was intended. This is a critical question, bearing in mind that all the other metrics (such as the liquidity ratio and the cash reserve ratio) were retained; even though they ought to have been adjusted as well. Wole Oluyemi, a Strategy & Financial Advisor who spoke to Nairametrics on this issue, raised this point when he said:
“It was a pleasant surprise when I heard that the MPR was reduced by 100 basis points to 12.5%. The last time the MPC changed the MPR was in March 2019.
“Unfortunately, the CBN decided to retain the Cash Reserve Ratio (CRR). As banks are facing liquidity constraints due to the CRR expectations, this may impede their ability to advance more credits that is expected to stimulate economic activities.”
So, is the MPR still useful?
For Ighodaro Alonge, a fixed-income expert, the Monetary Policy Rate under the current CBN regime headed by Godwin Emefiele, has lost its usefulness. And the reason for this is because Governor Emefiele and his team have recently been more interested in regulating liquidity in the system using Open Market Operations (OMO) bills. He explained:
“MPR has lost its usefulness under this current CBN regime. It doesn’t just work anymore because normally, the MPR is the rate with which the CBN uses to control liquidity.
“So, when it raises MPR, it tightens up other interest rates; other interest rates tend to follow – standing lending facility, standing deposit facility, lending rates banks will use to lend to their customers, even fixed deposit rates and then normal savings rates on accounts. MPR usually adjusts all these rates. If you raise MPR, all the other rates go up, if you drop MPR all those rates go down.
“But we have a CBN that is using Open Market Operations (OMO) bills to regulate liquidity in the system. This is why back when the MPR was 14%, OMO bills were as high as 16% to 17%; they didn’t raise MPR. Why didn’t they raise MPR? It was more political because he didn’t want it to seem like he was tightening the economy.
“Eventually, they have reduced MPR to 12.5%, slashing it by 100 basis points. But the rate for 1-year treasury bills is at 5%. So, it shows that MPR is useless. It doesn’t work with the other rates. The CBN prefers to use OMO because that is a quicker way to control liquidity than MPR. As they issue more OMO, they are able to get out all the liquidity from the system. So, interest rates start to pick up. That’s what they were doing in 2016, 2017, and 2018 until they reversed the whole thing in 2019. They even prevent local investors from accessing the local market. Then they lowered interest on OMO bills. OMO bills are doing like 6, 7, 8%. But where’s MPR? MPR is at 12.5%. So, I think the CBN is just interested in having MPR where it is just for documentation. The reduction doesn’t affect anything.”
Some experts believe the MPR reduction is beneficial, but…
Meanwhile, the Principal Consultant at Hatytude Consultancy Services Ltd, Olufemi Hassan, is one of those who believes that the MPR reduction was a good move by the CBN. He took time to explain some of the ways this could positively influence banks’ ability to lend, although he also pointed out some of the issues that other analysts raised.
“The purpose of the MPR reduction is basically to stimulate the economy. Because of this COVID-19 pandemic, there has been a lot of inactivity in various segments of the economy. And the best way to stimulate that is if you have investors/businessmen having access to credit facilities at good rates. So, if for instance, the banks have been saying that their cost of funds have to be taken care of, their cost of risk has to be taken care of, reducing the MPR helps to ensure that the cost of funds invariably reduces for the banks. This will then make it possible for them to be able to avail loans to good investors/businesses at the rates that those investors are comfortable with. This is important because some of the large borrowers are also very pricey in terms of negotiation of their interest rates to the banks. So, typically, the banks may not be able to expand the disbursement to them because they cannot afford the loan rates these borrowers are asking for. But with the reduction in MPR, that could be enhanced.
“Of course, most of these large borrowers end up having a very huge value chain which involves the suppliers, the distributors, some vendors, and so many other people within the value chain. Invariably, the money will trickle down to them and the banks are usually more comfortable with that. So, that way, the economy gets stimulated. The bank lends are able to avail more loans to the large good borrowers, and the good borrowers are able to enhance their productive capacity.
“But having said that, it’s also a bit sticky because, on one hand, the Central Bank has actually reduced the MPR while on the other hand, they are also debiting the banks. I think the CBN needs to be lenient on the banks with regards to the loan to deposit ratio. It will take some time before banks are able to meet the requirement. Loan appraisal/loan disbursement is not something you do in a rush. The banks will to do their appraisals and measure their risks before they can end. This helps to ensure that they don’t deplete their shareholders’ funds by lending anyhow. Now, because the banks need to consider all these things, they may not be able to meet the LDR as quickly as the CBN wants them to. So, the CBN really needs to calm down a little bit and be lenient because if you keep debiting them, where will the funds they give out as loans come from? On one hand, you are trying to stimulate the economy by lowering MPR, on the other hand, you are debiting the banks and the cash you debit will become sterilised in the CBN vaults.”
Financial Expert and Nairametrics’ economic commentator, Kalu Aja, also agreed that the MPR reduction is a good move. However, he noted that the reduction may not be enough to effect any desired change.
Explore advanced financial calculators on Nairametrics
“A policy rate reduction is intended to drive down cost of capital to the economy positively impacting SMEs cost of doing business. I think it’s positive, but not a big change to actually impact materially. In terms of impact on banks? On paper, the banks can lend at a lower rate. Again, I am critical it’s not a large drop. Remember, perception is important,” he said.
The next Monetary Policy Committee meeting of the scheduled to hold in July this year, according to the CBN’s MPC calendar for 2020. It remains to be seen whether any further adjustments will be made to the rates by then. Also, Nairametrics will monitor the market to observe whether there is a drop in banks’ lending rates following the MPR reduction.
Top Nigerian FinTech Apps that are leading the competition
It is estimated that there are about 210-250 fintech operators/companies operating in the Nigerian space.
Financial technology is one of the new waves of disruptions in the financial sector, that is fuelled by the internet of things and the increasing digitalisation of the world. In the last decade, the industry has grown by more than 100 times from $1.8billion in 2010 to $19billion in 2015. Recently, the size of the global FinTech industry has been valued at $127.66 billion and is expected to grow at an annual average of 24% to amount to $309.98 billion by 2022.
Fintech refers to the ecosystem where technology companies as well as financial institutions use the innovations in technology to foster financial services and increase access to finance in the market. It an umbrella term that refers to the innovations in technology that are challenging and changing the traditional approaches in the financial service industry.
Almost every corner of the world has been touched by FinTech in as little as 20-25 years of its existence with the likes of PayPal charging at the front by helping people make seamless money transfers across the world and facilitating online payments. In almost every mention of FinTech in Africa, the name m-Pesa is mentioned under the same breathe. Founded in 2007, M-Pesa helps Kenyans make all money transfers and payments online even allow for deposits and withdrawals with the ease of a mobile app.
The advent of FinTechs in Nigeria and regulations
In Nigeria, the presence of FinTech is equally notable, and like its ecosystem, there is a continuous rise in the number of FinTech startups looking to offer better services than pre-existing ones. FinTechs in Nigeria are looking to expand the tentacles of the financial sector to reach its un-banked population of 60 million people (more than a quarter of its estimated 200 million population) through mobile apps that make services.
Also, they are looking to make an array of financial services more available to the banked population by providing seamless services like promising interests on savings and investment more than traditional banking. It is estimated that there are about 210-250 FinTech operators/companies operating in the Nigerian space, and these players brought about the valuation of the industry to $153.1 million in 2017 and are projected to rise up to $543.3 million by 2022.
Regulation of FinTech in Nigeria is overseen by the Central bank. As a measure of risk management, the CBN places a financial barrier of a minimum of $275,000 on entry into the FinTech market to help secure funds and credibility of operators.
Categories of FinTech
As earlier noted, the term FinTech is an umbrella term. It is an ecosystem with many species of habitats. These species are the different sectors in the finance industry from insurance to banking to investment to money transfers and other emerging areas like cryptocurrencies and Agritech.
This paper focuses on five categories for the Nigerian market: Agritech, Savings, and Investments (financial instruments), Crowdfunding, Mobile Payments, and Cryptocurrencies. In ranking the top players in each category, this paper will base its ranking on google play store’s data.
Agritech: Farm Crowdy
In FinTech, agrotech is the use of internet technology to close the funding gap and infrastructural deficits plaguing the agricultural sector. They look to help farmers feed the world, cutting off middlemen and making farming more profitable. Most notably, it is a crowdfunding platform that allows investors to make short-term harvest cycle investments in agriculture and reap high interests.
As the first digital agriculture platform in Nigeria, Farm Crowdy has succeeded in keeping its first position in the industry by providing a platform that connects small-scale farmers with prospective investors who do not necessarily need to know about agriculture to invest. In allocated funds to small-scale farmers that helps them increase their output by adopting capital intensive/mechanised farming, providing them seedlings, training on crop yields, access to more farmlands, and providing insurance for agric products.
Since its launch in 2016, Farm Crowdy has helped 25,837 farmers, provided over 16,000 acres for farming, gained nearly 70,000 farm sponsorships from investors, reared more than 2.5 million chickens, and pays investors 13-25% returns on their investment. On google play store, Farm Crowdy is ranked 3.5 stars with 265 reviews and has over 50,000 downloads. Cumulatively, it has nearly a hundred thousand active users.
Other Agritech platforms that offer similar services include Thrive Agric, Growsel, Pork Money (which is crowdfunding for a pig farm), Requid, Agropack, Releaf, FarmNGA, Probity Farms, among many others.
Savings and Investment:
Fintechs in Nigeria offers investment platforms that tend to bridge the knowledge gap in investments in financial instruments, eliminating information asymmetry, and reducing the hassles associated with financial instruments. In the Nigerian space, the savings and investment subsector is one of the most populated by fintech firms, among which the most dominant factor in this section is the Piggyvest app.
Piggyvest offers users the financial freedom to not only save responsibly but put their savings into use by investing them. It launched in 2016 as a savings platform – Piggybank – and later rebranded to include investments – Piggyvest. It prides itself as the first online savings and investment platform in West Africa and boasts of 350,000 active users.
Piggyvest promises users 10-13% interest rates on their savings and up to 25% on investment in financial securities. At just two years into the business, Piggybank announced that it had raised $1.1 million in seed fund, and saw a growth in savings rate by up to 3000% between 2016 and 2017. On Google play store, it records more than 500,000 downloads which are about five times more than its two closer competing savings and investment platforms like Cowerywise and i-invest (100k+ each). It also ranked 4.7 stars with 20,000 reviews.
While the aforementioned fintech companies have gained ground in the demand for fintech services, Wealth.ng is introducing high-scale innovation into the market. Recently it entered into a partnership deed with Paga, one of the dominant names in the money transfer sector of the industry, to improve the quality and efficiency of service delivery. Among the industry, there are hardly any existing partnerships, instead, each company competes for customer acquisition and better service.
Wealth.ng sees business differently. A decade ago, many people would dismiss the thought of investing in financial securities for lack of adequate knowledge of how it works or understanding of the trends. Wealth.ng has completely bridged this gap by including consumer education as part of its services. With this, they walk potential investors through every step and provide an array of investment options for each person.
Other players in the savings and investment subsector include Afrinvest, Wealthdotng, Kudi, Investment one, Payday investor, and many others.
Mobile Payments: Interswitch
This is no doubt the busiest in the FinTech industry in Nigeria, and one of the top FinTech areas globally. According to the Central Bank, between January to December 2019, the volume of transactions via mobile monies stood at 377,265,208 which reflects a transaction value of N5 trillion. The FinTech company at the forefront of this charge is Interswitch. In 2019, it sold a 20% share of the company to Visa for $200 million which brought the company’s valuation to $1 billion (N360 billion) – a unicorn status. At this valuation, it surpasses giant financial houses like Access bank (N327 billion), and UBA (N227 billion).
Unlike savings and investment platforms that people use for savings from time to time – hence mobile apps, mobile payment apps are used for the likes of utility bills, cash transfers, deposits, and withdrawals. Businesses use mobile payment platforms for transaction purposes. However, on play store, Interswitch still boasts of more than 100,000 downloads in its quickteller app and over 50,000 downloads in its quickteller agent app, which top other of its complementary payment apps for Nigeria and other African countries.
Other major players in the payment platform in Nigeria include Flutterwave, Paystack, Remita, e-transact, Vogue Pay, among others.
To many people, cryptocurrencies are still a mirage. As such, investing in any form of cryptocurrency would be considered a wasteful investment. In the Nigerian fintech ecosystem for cryptocurrencies, Quidax is helping cryptocurrency spreading the knowledge and raising awareness for cryptocurrencies, and helping enthusiasts and investors make crypto investments.
Launched in 2018, Quidax has made its platform seamless for trading different cryptocurrencies like Bitcoin, Ethereum, Ripple, Litecoin, and other cryptocurrencies using the naira. Its market approach of trading directly with naira and boycotting exchange rate variations is a major development in the crypto market. One year after it started, CEO Buchi Okoro said they saw a transaction volume of more than $110 million from users in 70 countries from 6 continents. On play store, it has over 10,000 downloads and rated a 4.1 star.
As an alternative to raising funds for personal and business projects like hospital bills, school fees, and the likes, crowdfunding platforms help users source funds from a sea of ‘strangers’ willing to spare some funds to help out. On the global scale, GoFundMe leads other crowdfunding platforms by ensuring a transparent system where people seeking for financial assistance could present their ordeals and receive solidarity.
Although GoFundMe shares a strong presence in almost every country, it doesn’t deter other industry players from participating. In Nigeria, NaijaFund presents itself as one of the foremost indigenous crowdfunding platforms. Although mainly present as a web app, it has since its 2016 launch helped Nigerians bridge the funding gap for personal and business projects, in which it claims 10% of the total funds raised.
COVID-19 Update in Nigeria
On the 3rd of July 2020, 454 new confirmed cases and 12 deaths were recorded in Nigeria bringing the total confirmed cases recorded in the country to 27,564.
The spread of novel Corona Virus Disease (COVID-19) in Nigeria touched a new milestone as the latest statistics provided by the Nigeria Centre for Disease Control reveal Nigeria now has 27,564 confirmed cases.
On the 3rd of July 2020, 454 new confirmed cases and 12 deaths were recorded in Nigeria, having carried out a total daily test of 3,308 samples across the country.
To date, 27,564 cases have been confirmed, 11,069 cases have been discharged and 628 deaths have been recorded in 18 states and the Federal Capital Territory. A total of 144,833 tests have been carried out as of July 3rd, 2020 compared to 141,525 tests a day earlier.
COVID-19 Case Updates- 3rd July 2020
- Total Number of Cases – 27,564
- Total Number Discharged – 11,069
- Total Deaths – 628
- Total Tests Carried out – 144,833
According to the NCDC, the 454 new cases were reported from 19 states- Lagos (87), Edo (63), Abuja (60), Ondo (41), Benue (32), Abia (31), Ogun (29), Oyo (19), Kaduna (17), Delta (16), Enugu (15), Borno (14), Plateau (9), Nasarawa (8), Kano (5), Bauchi (2), Gombe (2), Katsina and Kogi 1 case each.
Meanwhile, the latest numbers bring Lagos state total confirmed cases to 10,910, followed by Abuja (2,080), Oyo (1,451), Edo (1,266), Kano (1,262), Delta (1,165) Rivers (1,114), Ogun (927), Kaduna (835), Katsina (579), Bauchi (516), Borno (515), Gombe (513), Ebonyi (438), Plateau (402), Ondo (394), Abia (382), Enugu (357), Imo (352), Jigawa (318).
Kwara state has recorded 269 cases, Bayelsa (234), Nasarawa (221), Sokoto (152), Osun (148), Niger (116), Akwa Ibom (104), Benue (97), Adamawa (89), Kebbi (81), Zamfara (76), Anambra (73), Yobe (61), Ekiti (43), Taraba (19), while Kogi state has recorded 5 cases.
Lock Down and Curfew
In a move to combat the spread of the pandemic disease, President Muhammadu Buhari directed the cessation of all movements in Lagos and the FCT for an initial period of 14 days, which took effect from 11 pm on Monday, 30th March 2020.
The movement restriction, which was extended by another two-weeks period, has been partially put on hold with some businesses commencing operations from May 4. On April 27th, 2020, Nigeria’s President, Muhammadu Buhari declared an overnight curfew from 8 pm to 6 am across the country, as part of new measures to contain the spread of the COVID-19. This comes along with the phased and gradual easing of lockdown measures in FCT, Lagos, and Ogun States, which took effect from Saturday, 2nd May 2020, at 9 am.
On Monday, 29th June 2020 the federal government extended the second phase of the eased lockdown by 4 weeks and approved interstate movement outside curfew hours with effect from July 1, 2020.
|Date||Confirmed case||New cases||Total deaths||New deaths||Total recovery||Active cases||Critical cases|
|July 3, 2020||27564||454||628||12||11069||15867||7|
|July 2, 2020||27110||626||616||13||10801||15693||7|
|July 1, 2020||26484||790||603||13||10152||15729||7|
|June 30, 2020||25694||561||590||17||9746||15358||7|
|June 29, 2020||25133||566||573||8||9402||15158||7|
|June 28, 2020||24867||490||565||7||9007||14995||7|
|June 27, 2020||24077||779||558||4||8625||14894||7|
|June 26, 2020||23298||684||554||5||8253||14491||7|
|June 25, 2020||22614||594||549||7||7822||14243||7|
|June 24, 2020||22020||649||542||9||7613||13865||7|
|June 23, 2020||21371||452||533||8||7338||13500||7|
|June 22, 2020||20919||675||525||7||7109||13285||7|
|June 21, 2020||20242||436||518||12||6879||12847||7|
|June 20, 2020||19808||661||506||19||6718||12584||7|
|June 19, 2020||19147||667||487||12||6581||12079||7|
|June 18, 2020||18480||745||475||6||6307||11698||7|
|June 17, 2020||17735||587||469||14||5967||11299||7|
|June 16, 2020||17148||490||455||31||5623||11070||7|
|June 15, 2020||16658||573||424||4||5349||10885||7|
|June 14, 2020||16085||403||420||13||5220||10445||7|
|June 13, 2020||15682||501||407||8||5101||10174||7|
|June 12, 2020||15181||627||399||12||4891||9891||7|
|June 11, 2020||14554||681||387||5||4494||9673||7|
|June 10, 2020||13873||409||382||17||4351||9140||7|
|June 9, 2020||13464||663||365||4||4206||8893||7|
|June 8, 2020||12801||315||361||7||4040||8400||7|
|June 7, 2020||12486||260||354||12||3959||8173||7|
|June 6, 2020||12233||389||342||9||3826||8065||7|
|June 5, 2020||11844||328||333||10||3696||7815||7|
|June 4, 2020||11516||350||323||8||3535||7646||7|
|June 3, 2020||11166||348||315||1||3329||7522||7|
|June 2, 2020||10819||241||314||15||3239||7266||7|
|June 1, 2020||10578||416||299||12||3122||7157||9|
|May 31, 2020||10162||307||287||14||3007||6868||7|
|May 30, 2020||9855||553||273||12||2856||6726||7|
|May 29, 2020||9302||387||261||2||2697||6344||7|
|May 28, 2020||8915||182||259||5||2592||6064||7|
|May 27, 2020||8733||389||254||5||2501||5978||7|
|May 26, 2020||8344||276||249||16||2385||5710||7|
|May 25, 2020||8068||229||233||7||2311||5524||7|
|May 24, 2020||7839||313||226||5||2263||5360||7|
|May 23, 2020||7526||265||221||0||2174||5131||7|
|May 22, 2020||7261||245||221||10||2007||5033||7|
|May 21, 2020||7016||339||211||11||1907||4898||7|
|May 20, 2020||6677||284||200||8||1840||4637||7|
|May 19, 2020||6401||226||192||1||1734||4475||7|
|May 18, 2020||6175||216||191||9||1644||4340||7|
|May 17, 2020||5959||388||182||6||1594||4183||7|
|May 16, 2020||5621||176||176||5||1472||3973||7|
|May 15, 2020||5445||288||171||3||1320||3954||4|
|May 14, 2020||5162||193||168||3||1180||3815||4|
|May 13, 2020||4971||184||164||6||1070||3737||4|
|May 12, 2020||4787||146||158||6||959||3670||4|
|May 11, 2020||4641||242||152||10||902||3589||4|
|May 10, 2020||4399||248||142||17||778||3479||4|
|May 9, 2020||4151||239||127||11||745||3278||4|
|May 8, 2020||3912||386||118||10||679||3115||4|
|May 7, 2020||3526||381||108||4||601||2818||4|
|May 6, 2020||3145||195||104||5||534||2507||1|
|May 5, 2020||2950||148||99||5||481||2370||4|
|May 4, 2020||2802||245||94||6||417||2291||2|
|May 3, 2020||2558||170||88||2||400||2070||2|
|May 2, 2020||2388||220||86||17||351||1952||2|
|May 1, 2020||2170||238||69||10||351||1751||2|
|April 30, 2020||1932||204||59||7||317||1556||2|
|April 29, 2020||1728||196||52||7||307||1369||2|
|April 28, 2020||1532||195||45||4||255||1232||2|
|April 27, 2020||1337||64||41||0||255||994||2|
|April 26, 2020||1273||91||41||5||239||994||2|
|April 25, 2020||1182||87||36||3||222||925||2|
|April 24, 2020||1095||114||33||1||208||855||2|
|April 23, 2020||981||108||32||3||197||753||2|
|April 22, 2020||873||91||29||3||197||648||2|
|April 21, 2020||782||117||26||3||197||560||2|
|April 20, 2020||665||38||23||1||188||466||2|
|April 19, 2020||627||86||22||2||170||436||2|
|April 18, 2020||541||48||20||2||166||356||2|
|April 17, 2020||493||51||18||4||159||317||2|
|April 16, 2020||442||35||13||1||152||277||2|
|April 15, 2020||407||34||12||1||128||267||2|
|April 14, 2020||373||30||11||1||99||263||2|
|April 13, 2020||343||20||10||0||91||242||2|
|April 12, 2020||323||5||10||0||85||228||2|
|April 11, 2020||318||13||10||3||70||238||2|
|April 10, 2020||305||17||7||0||58||240||2|
|April 9, 2020||288||14||7||1||51||230||2|
|April 8, 2020||274||22||6||0||44||226||2|
|April 7, 2020||254||16||6||1||44||204||2|
|April 6, 2020||238||6||5||0||35||198||2|
|April 5, 2020||232||18||5||1||33||194||2|
|April 4, 2020||214||5||4||0||25||185||0|
|April 3, 2020||209||25||4||2||25||180||0|
|April 2, 2020||184||10||2||0||20||162||0|
|April 1, 2020||174||35||2||0||9||163||0|
|March 31, 2020||139||8||2||0||9||128||0|
|March 30, 2020||131||20||2||1||8||121||0|
|March 29, 2020||111||22||1||0||3||107||0|
|March 28, 2020||89||19||1||0||3||85||0|
|March 27, 2020||70||5||1||0||3||66||0|
|March 26, 2020||65||14||1||0||2||62||0|
|March 25, 2020||51||7||1||0||2||48||0|
|March 24, 2020||44||4||1||0||2||41||0|
|March 23, 2020||40||10||1||1||2||37||0|
|March 22, 2020||30||8||0||0||2||28||0|
|March 21, 2020||22||10||0||0||1||21||0|
|March 20, 2020||12||4||0||0||1||11||0|
|March 19, 2020||8||0||0||0||1||7||0|
|March 18, 2020||8||5||0||0||1||7||0|
|March 17, 2020||3||1||0||0||0||3||0|
|March 16, 2020||2||0||0||0||0||2||0|
|March 15, 2020||2||0||0||0||0||2||0|
|March 14, 2020||2||0||0||0||0||2||0|
|March 13, 2020||2||0||0||0||0||2||0|
|March 12, 2020||2||0||0||0||0||2||0|
|March 11, 2020||2||0||0||0||0||2||0|
|March 10, 2020||2||0||0||0||0||2||0|
|March 9, 2020||2||1||0||0||0||2||0|
|March 8, 2020||1||0||0||0||0||1||0|
|March 7, 2020||1||0||0||0||0||1||0|
|March 6, 2020||1||0||0||0||0||1||0|
|March 5, 2020||1||0||0||0||0||1||0|
|March 4, 2020||1||0||0||0||0||1||0|
|March 3, 2020||1||0||0||0||0||1||0|
|March 2, 2020||1||0||0||0||0||1||0|
|March 1, 2020||1||0||0||0||0||1||0|
|February 29, 2020||1||0||0||0||0||1||0|
|February 28, 2020||1||1||0||0||0||1||0|
CBN adjust naira from N360 to N380 at SMIS
Reports reaching Nairametrics indicates the CBN has instructed bidders at its Secondary Market Intervention Sales (SMIS) to increase their bidding price to N380/$1 floor. The SMIS is the market where importers bid for forex using Letters of Credit and Form M.
According to our sources, the central bank informed banks that they will only accept bids from N380/$1 and above and no longer N360/$1 meaning those who bid lower will not get any forex allocation. Transaction success in this market is based on bids with those who bid higher than the floor as they are often in an advantageous position to secure forex.
This is essentially a huge attempt at unifying the naira and another adjustment of the exchange rate by the CBN. Recall the CBN Governor had informed investors that the bank will be unifying the exchange rate towards what is being traded at the NAFEX market where investors and exporters trade forex.
Nairametrics understands a circular has been sent to banks but we are yet to see it.
The SMIS window was created by CBN for importers to ease the pressure faced by businesses in the foreign exchange market through sales of foreign currency to authorized dealers (wholesale) or to end users through Authorized dealers. Businesses usually conduct their bid for forex at the SMIS window every two fortnight.
Currently, rates are set at a floor of N360/$1 and a ceiling of N385/$1. Thus bidders are expected to bid within that range. The higher the bid the better your chances at getting forex. It is unclear if there were any buyers that bid above N360 as we gather most of the importers were not informed of the changes in prices until today.
In February, the CBN has injected $218.41 million into the inter-bank retail Secondary Market Intervention Sales (SMIS). The dollar sold at the time meant for only agricultural and raw materials sectors, is in continuation of its intervention in the inter-bank foreign exchange market. In May, the central bank surprised the market by injecting estimated $90-$100million to the system.