CBN Dollar Sales on I&E Forex Window Falls Below 30%

• Bankers’ committee simplifies BVN registration process for MFB customers

Obinna Chima

The Central Bank of Nigeria (CBN) dollar sales on the Investors and Exporters’(I&E) foreign exchange (forex) window have reduced to below 30 per cent, the Deputy Managing Director, Stanbic IBTC Bank Plc, Mr. Demola Shogunle, disclosed thursday.

Shogunle, who said this while addressing journalists on the outcome of the 333rd Bankers’ Committee meeting in Lagos, said the development on the I &E window was a reflection of the renewed confidence in the Nigerian economy.

THISDAY reported last Tuesday that cumulative transactions on the I&E window which was created in April has risen to $2.2 billion, from about $1 billion last month.

Speaking yesterday, Shogunle said the Bankers’ Committee acknowledged that the efforts and measures that had been put in place regarding trying to encourage foreign portfolio investors (FPI) were already yielding fruits.

The Stanbic IBTC boss explained: “Specifically, you would remember that about six weeks ago, a new window was opened which is called the Investors and Exporters’ FX window. Between when it was opened and now, turnover in that market is in excess of $2.2 billion, which is very impressive. The CBN’s share of that market is less that 30 per cent.

“What does that mean? It means that FPI and exporters are the ones playing in that market and because of that, when that window initially opened, the bid and offer spread was as wide as N40-N60. As we speak now, the bid and offer spread has reduced significantly.

“Also, we have seen a kind of convergence between the rate on that window and that of the parallel market, which means that confidence is returning into that market, price discovery is returning into the market, price visibility is returning to the market and that is encouraging. Those who have been sitting on the fence have started to look in. You can also see the impact on the equities market. Overall, we are seeing positive trends and the Bankers’ Committee acknowledge that.”

Responding to a question on when the CBN would stop intervening in the market, Shogunle said: “The CBN is also a buyer or seller in the market. Don’t forget we are coming from a regime in the past one year, whereby the central bank was the sole provider of dollars, 100 per cent. But today, on the I & E window, the CBN is now a minority player.

“So, it is not impossible that we get to a point where the CBN intervention in the market would be zero. If FPIs continue to bring dollars into the system, if exporters continue to bring dollars into the system, of course the CBN would keep its dollars.”

Also, Shogunle said with increased liquidity, the issue of multiple exchange rate would be addressed, “not by fiat, or by decree,” but through an inerplay of demand and supply.

Earlier, the CEO of Fidelity Bank Plc, Mr. Nnamdi Okonkwo, who also joined in briefing the media, disclosed that as part of efforts to simplify the Bank Verification Number (BVN) registeration process for customers of microfinance banks (MFBs), the committee decided that such customers can walk into any commercial banks to get register for BVN.

The committee also warned MFBs to desist from charging customers for BVN enrolment.
“Anything that would stop more people from being included in the formal financial sector, we work jointly as banks to make sure that such bottleneck is removed. So, one key issue that came up today was the issue of customers of MFBs who do not have their Bank Verification Numbers.

“Some feedback we got as a committee was that some banks charge such customers when they try to register BVN. So, the Bankers Committee decided today that MFBs can walk into any bank and register their BVN free of charge. That would make sure we don’t discourage financial inclusion. So, registration of BVN for MFB customers is free and you can do that in any bank,” the Fidelity Bank boss explained.

His counterpart, the CEO of Standard Chartered Bank, Mrs. Bola Adesola, said the Economic Sub-Committee of the Bankers’ Committee is working with the Development Finance Department of the CBN, CBN Legal Department, Banking Supervision Department and five highest contributors Agric/SMEs Equity Fund, adding that once customers meet the criteria, the committee would start investing.

“After the audited accounts of banks were published, we all contributed five per cent of our profit after tax to a fund at the CBN towards contributing equity to Agric and SMEs. As you know, many companies cannot just survive on debt because of the cost of debt. So, long term capital required to catalyse growth in SMEs to make them viable and sustainable.

“Right now, there is about N26 billion in the fund. We are working on the framework for the investment. We are looking at partnerships, we are looking at co-investing, maybe with private equity firms as well. The objective basically is to catalyse growth in SMEs, to ease access to finance, build capacity in the SMEs, create jobs and ultimately improve prosperity,” she said.
On his part, the Director, Banking Surpervision, CBN, expressed optimism that the economy would record positive GDP figures by the third quarter, owing to decelerating inflation, renewed investors’ confidence, exchange rate stability, among others.