80 CSOs Laud CBN’s MPR Increase To 17.5%

<strong>80 CSOs Laud CBN’s MPR Increase To 17.5%</strong>
  • Apex bank tightens cash supply, withdraws N1.6trn old naira notes from circulation
  • Says no extension of January 31 deadline
  • Only N370.89bn stamp duty collected in 6yrs –Emefiele

By Mariam Sanni

Over 80 Civil Society Organisations, CSOs, under the auspices of Coalition of Civil Society Organisations on Good Governance, CCSGG, has applauded the Governor of Central Bank of Nigeria, CBN, Mr Godwin Emefiele for his determination in driving the GDP growth in 2023 include financial services, Information and Communication Technology ,ICT, trade, manufacturing, agriculture and real estate/construction. According to them, the inflation trajectory in 2023 would average 16.27%.

“For the exchange rate, more aggressive measures will be taken to keep the Naira stable in 2023 and a unitary/ floating exchange rate system is likely to be adopted in the later part of the year.

They projected that the country’s Gross external reserve is expected to rise to 41 billion dollars on expected increase and sustained levels of oil output

The CSOs made this known in a joint press statement made available to the media in Abuja and AljazirahNigeria was there.

According to the group, the decision to increase the MPR to 17% will go a long way in checking inflation in the system.

The CSOs leadership took turns to hail the apex bank governor for his dexterity and focus in delivering his mandates. The group said that Emefiele’s ingenuity in providing direction and purposeful leadership amid distractions is commendable. The CSOs also commended his resolve to stand on its policy of ending the old naira notes by January 31.

In the same vein, the Central Bank of Nigeria, CBN Monetary Policy Committee, MPC has decided to raise the Monetary Policy Rate, MPR to 17.5% as committee members voted to sustain the fight against inflation.

Governor Godwin Emefiele who announced the MPC decision at the end of the first meeting of the year said the decision was upon the global and local conditions which made it untenable to loosen the rein on inflation despite four successive hikes in the last MPC meetings.

While noting that all 12 members were unanimous in the view to still guard against inflation, Emefiele said that they were, however, divided on whether to mount an aggressive fight against inflation or a moderate fight.

Emefiele who said that the apex bank projects the economy to grow by 2.88% in 2023, however, expressed concern that the month on month rise in December tempered with the year on year drop in inflation.

“With inflation at 21.3% we cannot afford to celebrate”, Governor Emefiele said in reaction to the drop in year-on-year inflation from 21.4%.

In the last MPR meeting in November 2022, the CBN hiked the interest rate to 16.5% to curb inflation which rose to 21.09% in October 2022.

But inflation is decreasing as the National Bureau of Statistics said prices decelerated to 21.34% in December 2022 from the 21.47 recorded in November 2022

After the CBN increased MPR in November 2022, Maximum Lending Rate in Nigeria rose to 29.13% in December from 28.14% held in November.

Prime Lending Rate also rose from 13.17% in November to 13.85% in December of the same year.

 CBN Governor said yesterday that the decision was taken due to progress in inflation.

According to him, generally, the Nigerian economy will grow in 2023 but at a subdued rate.

The Governor said the MPC was not convinced of the decline in inflation as reported by the CBN.

He said loosening the rate will negate the objective of damping pent-up aggregate demand which fueled inflation. He said the MPC considered the tightening of inflation to moderate prices.

The CBN, however, considered holding the rate at 17.5%. The MPC however retained all other parameters.

However, Emefiele broke his silence on the allegation that the apex bank withheld N89trn realized from stamp duty revenues.

The Governor expressed surprise that such conversations will come up considering the size of the banking system.

He said during the Monetary Policy Committee Meeting that the said amount is far bigger than the total asset of the entire banking industry in the country.

The apex bank boss revealed that N370.89bn has been collected between 2016 to date.

Emefiele said, “N89trn is so large. The total asset of the banking industry if you understand accounting is about N71trn or N71.5trn. The total deposit of the banking system is N44.49trn. So, how then it is possible that stamp duty is N89trn while a deposit of banks is N44.49trn.

“So, when it became a story everywhere, we went into our records, told Banking Supervision, Banking Payment System to go into the system and rake out the total amount that has been collected on stamp duty from 2016 to date.

 “We told our people in Banking Supervision to contact the banks. Let the banks give us from their records how much they have collected from 2016 to date and tell the banks to sign on their headed paper that this is the amount they have collected on Stamp Duty from 2016 to date.

“The report that we have in CBN is that Stamp Duty collected to date is N370,886,315,505.28. This is a public account. We owe Nigeria public accountability. Out of that, the Federal Inland Revenue or the Ministry of Finance has disbursed to Federation Accounts Allocation Committee, FAAC, N226,451,720,158.88.

“And the balance with the account of the CBN is N144,234,535,346.40. We did calculations and the highest collection from the oldest bank in Nigeria, First Bank, collected N71.6bn in seven years. I truly don’t know where N89trn is?”

The reaction is in response to a member of the House of Representatives, Mr Muhammed Kazaure, who claimed that Emefiele siphoned the sum of N89trn which had allegedly accrued to the federation.

Kazaure alleged in December last year that about N89.1trn realized from the collection of N50 Stamp duty and bank charges from all transactions valued above N2,000 between 2017 and 2020 it kept with the CBN, was missing.

Kazaure also claimed that it was also discovered that the CBN was charging another N100 from every transaction above N5,000, the proceeds of which were going into private accounts, with the apex bank and the 27 commercial banks in the country sharing in the ratio 60:40.

According to the lawmaker, between April 2017 when the I&E window account was opened, and April 2000, accrual from stamp duty and bank charges from transactions on Forex totaled about $171bn.

However, Emefiele said, “The truth is that the CBN will not be joined in any argument with anybody because it will overheat the system. But it is important for me to say that Stamp Duty is the revenue that needs to be collected from people who are conducting electronic transfers. It is about public accounts and accountability”.

Meanwhile, the Central Bank of Nigeria has said that there is no going back on the date set to withdraw the legal tender status of the old naira notes.

 Emefiele said this during the first Monetary Policy Committee meeting of 2023.

The CBN launched redesigned N1,000, N500 and N200 notes in December with a deadline to withdraw the old notes on January 31, 2023.

Emefiele said, “Unfortunately, I don’t have good news for those who feel that we should shift the deadline. My apologies! The reason is because just like the President has said on more than two occasions and even to people privately, for us 90 days or 100 days we feel is enough for anybody who has money or old currency to deposit it in the banks.

“We took every measure to ensure that all the banks were open or remain open to receive the old currencies. One hundred days we believe is more than adequate. We called on the banks to extend banking hours and keep doors open on Saturdays. The banks did not have any reason to even keep their banking halls open on Saturday nor did they see the kind of rush. It was the normal people who came and deposited in the banks.

“We do not see any need to talk about a shift because people could not deposit their old money into their banks. About the circulation of the new currency, we said the currency was available”.

According to him, the apex bank stopped banks from paying new notes over the counter because they were not paying to the vulnerable people that needed the new notes.

He said banks “Paid new notes to their friends. We told the banks to fill their ATMs with new notes and not put in old notes again. We increased the volume of disbursement of new notes to the banks and at some points; we told banks to reduce the volume of old notes in their banks at a certain percentage because on the first you should have zero old notes in their vaults”.

He lamented that in 2015, N1.42trn was in circulation but the figures jumped to N3.23trn in 2023. According to him, N1.7trn out of the N3.23trn is outside bank vaults. “It has made the efficacy of monetary policy difficult”, Emefiele revealed.

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