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Customs: Vehicle tariff reduction to begin next week

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  •  Finance Act, a short-term measure – Minister

Vehicle importers are from next week expected to start enjoying considerable reduction in tariff on automobiles they bring into the country, the Nigeria Customs Service has said.

The reduced duties on vehicles and tractors from 35 to about 10 per cent are part of the new finance law.

Comptroller-General of Customs, Hameed Ali, who disclosed this to journalists in Abuja, said the management of the service was expecting an official communication from the finance ministry on the matter any moment.

But the Minister of Industry, Trade and Investment, Otunba Adebayo, says the auto section that allows for reduced import tariff in the Finance Act is a short-term measure as part of ways to ease the difficulties coming with the recent lockdown and rise in inflation.

He said the vehicle tariff reduction, as contained in the 2020 Finance Act, was initiated by the NCS to ease the cost of transportation in Nigeria.

He said, “We are the proponents of the new tariff. I’ve been torn apart by many people criticising it, saying I used my connection to get it done. But it is in the overall interest of Nigeria.

“Now, it has become a law. We are now waiting for the finance minister to give us a formal conveyance of that Act. Once we receive it, we commence implementation immediately and inform our commands.

“We are hoping that latest by next week, it will become operational.”

On the African Continental Free Trade Agreement, Ali said all aspects that concerned the NCS had been adhered to.

He, however, noted that the service would need certain inputs from the AfCFTA secretariat, such rules of origin, as this should not be left to chambers of commerce alone, adding that the NCS should part of the team.

Otunba Adebayo said the Federal Government had activated a number of measures to assist automakers in Nigeria to ensure that they would operate well and buoyantly such as government’s agencies.

“The idea is to help people who cannot buy cars in the short term. We’re looking at the medium and long-term measures which will largely benefit the local auto manufacturers,” he said.

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Naira stays above N1600 bandwidth at unofficial market as MPC meeting kicks off

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Naira stays above N1600 bandwidth at unofficial market as MPC meeting kicks off

The naira, week on week, posted some recovery against the haven currency at the unofficial market as the Central Bank of Nigeria set in motion its first Monetary Policy Committee (MPC) meeting under Mr. Yemi Cardoso, with many analysts expecting a significant increase in the benchmark interest rate, also known as the monetary policy rate.

The naira initially traded around N1600 to the USDT early Monday morning at the time of drafting this report, posting a weekly gain of more than 25% for the week, although this has moved above the N1600 mark as at the time of this report.

Binance and Cryptocurrency Usage

A significant number of young Nigerians have become increasingly dependent on Binance to buy digital assets as a hedge against rising inflation and currency devaluation.

Notably, for Nigerian foreign exchange traders, the Binance P2P platform has emerged as a key location for price discovery.

Although Nigeria has not officially stated that it has blocked access to Binance and other cryptocurrency platforms, some Nigerian users of these sites have complained about not being able to access the platform on their X accounts.

These digital service providers have been major players (reference points) in the FX market of the nation, frequently acting as standards for regional FX rates.

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The government wants to take control of the naira’s value and maintain its place in the financial system, so it’s restricting access to these platforms.

Monetary Policy Expectations

Following a few missed monetary policy sessions, Nigeria is expected to implement two aggressive interest rate hikes in less than two months to control inflation and strengthen the naira, according to a Reuters poll released on Friday.

Nigeria’s monetary policy rate is expected to increase by 225 basis points to 21.00% on February 27 during Governor Olayemi Cardoso’s first monetary policy meeting, according to a survey conducted last week.

With the local currency still trading near its record low on the black market and January inflation increasing to 29.9 percent year over year, market pundits anticipate considerable policy tightening and the announcement of de facto system-wide tightening measures.

Dollar Index and Federal Reserve Outlook

Meanwhile, the dollar index used to gauge the dollar’s strength against major currencies posted decent gains in London trade on Monday, following its first weekly loss since 2024.

Though Federal Reserve officials cautioned that the bank was not in a rush to start lowering interest rates early, particularly given the persistently high inflation rate, the dollar managed to hold onto its three-month highs.

This week, the Fed’s main inflation indicator, the PCE price index data, is anticipated to provide additional hints about inflation.

Some additional Fed speakers are anticipated this week, most of whom will probably restate the view of higher interest rates for longer.

Naira stays above N1600 bandwidth at unofficial market as MPC meeting kicks off

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CBN plans to bar BDCs from street trading, limits cash forex purchase to $500

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CBN Governor, Olayemi Cardoso

CBN plans to bar BDCs from street trading, limits cash forex purchase to $500

The Central Bank of Nigeria (CBN) is considering banning Bureau De Change (BDC) operators from street trading and limiting the cash payment for selling FX to a maximum of $500.  

The apex bank disclosed this in its proposed revised regulatory guidelines for BDC operators in Nigeria published by the bank.  

However, the proposed ban on street trading by BDCs is not new as the bank in its revised operational guidelines for BDCs in 2015 prevented street trading by BDCs. 

According to the bank, permissible activities by BDCs include; the acquisition of forex from approved sources, sales of FX in line with its guidelines, serving as cashout points for IMTOs etc.  

On the other hand, the apex bank prevented BDC from engaging in street trading, account maintenance, accepting deposits and granting of loans, facilitating international outward transfers, dealing in precious stones and metals, establishing subsidiaries and others.  

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Forex sellers above $10,000 to declare their source 

Furthermore, the bank noted that sellers of forex above $10,000 are mandated to disclose the source of the forex and proposed to ban cash payment to customers for forex above $500. It also proposed to ensure digital transfer purchases of foreign currencies by customers are made to the BDCs naira account.  

  • It stated, “Sellers of the equivalent of USD10,000 and above to a BDC are required to declare the source of the foreign exchange and comply with all AML/CFT/CPF regulations and foreign exchange laws and regulations.
  • “Payments to customers for cash purchases of foreign currency, the equivalent of above USD500, shall be by transfer to the customer’s Naira bank account. If the customer is a non-resident (whether Nigerian or not), a BDC shall issue the customer a prepaid NGN card. Where such a card is issued, relevant maximum credit and cumulative limits, in line with relevant Know Your Customer requirements, shall apply.” 

What you should know  

The CBN in recent times have blamed the whopping depreciation of the naira to speculation with the Governor stating the naira is “undervalued” and with time returns to its true value.

The apex bank in the past few months has introduced a slew of initiatives aimed at boosting liquidity in the forex market and shoring up the value of the naira.  

  • The proposed regulation aims to sanitise the operations of BDCs across the country, limit the proliferation of BDC operators and enable the CBN to weigh in on their activities. The regulations although a proposal and subject to review over time. 
  • In the past weeks, security agencies such as the EFCC and DSS have begun a crackdown on street traders of foreign currencies in a bid to formalise the industry. Also, there have been reports of restrictions of Nigerian traders from accessing the Binance forex trading platform in what many adjudge to be a crackdown on the platform for Nigerians. 
  • One of the spokespersons to President Tinubu, Bayo Onanuga confirmed the report of the blockade of access of Nigerians to forex and crypto trading platforms Binance and Coinbase. 

CBN plans to bar BDCs from street trading, limits cash forex purchase to $500

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CBN introduces stricter measures for BDCs, imposes N2bn licence fee

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CBN introduces stricter measures for BDCs, imposes N2bn licence fee

Amidst the ongoing forex crisis in Nigeria, the Central Bank of Nigeria (CBN) has implemented stringent measures targeting Bureau De Change (BDC) operators to address the deteriorating economic situation.

The country faces severe economic challenges, with the naira plunging to an all-time low of N2,000 against the dollar. In response, the National Security Adviser, Mallam Nuhu Ribadu, has directed law enforcement agencies, including the Economic and Financial Crimes Commission (EFCC) and the Department of State Services (DSS), to clamp down on currency speculators operating in the forex market. This directive has led to nationwide raids on BDCs and the arrest of illegal operators.

On Friday, the CBN’s Financial Policy and Regulation Department issued a new set of guidelines for BDC operators and stakeholders in the financial sector. Among the key provisions are:

  • License Requirements: BDCs in Tier 1 must have a capital base of N2 billion, while Tier 2 BDCs must maintain a capital base of N500 million.
  • Ownership Restrictions: Entities such as banks, government agencies, and NGOs are prohibited from holding ownership stakes in BDCs.
  • Permissible Activities: BDCs are authorized to buy and sell foreign currencies, issue prepaid cards, and serve as cash points for money transfer operators. However, they are prohibited from accepting deposits, granting loans, dealing in gold, or engaging in capital market activities.

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  • Foreign Currency Sourcing: BDCs can source forex from authorized dealers, travellers, hotels, embassies, etc. Transactions exceeding $10,000 require a declaration of the source.
  • Sale of Foreign Currencies: BDCs can sell forex for travel, medical bills, school fees, etc., within specified limits per customer annually. At least 75% of sales must be via transfer, with the remaining 25% allowed in cash.
  • Operational Standards: BDCs must adhere to customer verification procedures, maintain transaction records, connect to CBN systems, and display exchange rates clearly, among other requirements.
  • Supervision and Compliance: BDCs are mandated to submit specified regulatory returns, maintain accessible records for inspection, and ensure compliance with the established guidelines.
  • Franchising and Prudential Requirements: Tier 1 BDCs appointing franchises must adhere to specified standards regarding policy, monitoring, and branding, while all BDCs must comply with prudential requirements on open positions, fixed assets, borrowings, dividend payments, etc.
  • AML/CFT Compliance: BDCs must comply with Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) regulations, including implementing policies, monitoring activities, and reporting suspicious transactions.

These measures represent a concerted effort by the CBN to regulate and stabilize the forex market while ensuring transparency and accountability among BDC operators.

CBN introduces stricter measures for BDCs, imposes N2bn licence fee

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