Weekly Nuggets

Key developments this week in Nigerian personal finance

Saturday, August 29, 2020

Central Bank to Resume Forex Sales to Money Changers on Sept. 7

The Central Bank of Nigeria said it will resume sale of foreign exchange to bureaux des change from Sept. 7 to alleviate a biting shortage.

The decision comes with Nigeria resuming international flights on Sept. 5, with sales having been suspended at the start of lockdown earlier in the year to stop the spread of coronavirus. 

The six-month sales suspension has seen a widening of the gap between the official exchange rate and the parallel market to more than 90 naira per dollar, a premium those with access to dollars are tempted to exploit.

The CBN is expected to step up dollar sales as it works to fulfill its pledge to unify the country’s multiple exchange rate system. An equally handy move will be to further devalue the naira, to bring the official and parallel rates together. 

Payment Service Banks Get Updated Operating Guidelines 

Payment Service Banks rolling out across Nigeria have to contend with updated guidelines for their operation issued by the Central Bank of Nigeria specifying permitted and non-permitted activities.

They will be able to receive deposits from individuals and businesses, undertake payments and remittances, including sending and receiving payments from abroad, issue payment cards and operate electronic wallets, according to a circular issued by the regulator on August 28.

Such payment banks are required to sell foreign exchange from remittances to authorized dealers.  They can also provide financial advisory services and be able to invest in government bonds and other securities.

However, they’re barred from giving out loans and advances (including providing guarantees in such transactions), accepting foreign-currency deposits or engaging in insurance underwriting, according to the circular.

Eligible participants include telecommunications companies, retail chains such as supermarkets and filling stations, postal or courier companies, mobile money and financial-technology companies.

Capital Importation Falls 78% in Second Quarter to $1.29 Billion

Capital importation into Nigeria plunged by 78 percent in the second quarter of this year from volumes recorded in the first quarter, according to official data.

Only $1.29 billion was imported into the country between April and June, which coincides with the peak of the lockdown imposed in Nigeria and worldwide to curb the spread of the coronavirus. Between January and March, $5.85 billion was brought into the country as capital, figures released by the National Bureau of Statistics show.

Portfolio investment fell sharply during the period, losing its usual top place to miscellaneous  flows officially categorized as “Other Investment,” which at $761 million represented 58 percent of the total. Portfolio funds stood at $385.3 million followed by foreign direct investment with $148.6 million. 

Measured by country, the U.K. was the biggest source, accounting for $428.83 million, or 33 percent of total. Not surprisingly,  the U.K. bank, Standard Chartered,  was the biggest importer with $425 million.