The Nigerian government has introduced a nine-month dollar cash deposit program beginning October 31, 2024, in its latest attempt to stabilize the naira amidst its free fall.

Announced by Finance Minister Wale Edun following the 144th National Economic Council (NEC) meeting, the initiative permits Nigerians to deposit dollar bills held outside the formal banking system without facing penalties, taxes, or scrutiny. The move aims to increase the nation’s dollar reserves and ease inflationary pressures caused by high foreign exchange (FX) demand.

At a post-NEC briefing, Edun emphasized the government’s hands-off approach to scrutinizing deposits, saying, “There will be no penalty; there will be no taxes, and there will be no questions.”

He explained that individuals holding cash dollars outside the formal banking system can safely bring them into the financial network by meeting basic Know-Your-Customer (KYC) requirements without facing penalties, provided the money is not tied to criminal activity. The intent, he stated, is to secure these funds and make them available for legitimate economic activities.

The program reflects a larger pattern of currency reform measures by President Bola Tinubu’s administration, aimed at strengthening the naira against an ongoing FX crisis. The naira’s downward slide has been linked to a combination of FX illiquidity and Nigeria’s reliance on imports amid low productivity and a limited export base.

Against this backdrop, the government has been counting on diaspora remittances to boost FX inflow amid the decline in oil revenue. Although the central bank announced recently that Nigeria’s FX reserves have reached $40 billion, the naira has kept depreciating in the FX market, falling as low as N1,700 per dollar.

“One element of the cost increase is the foreign exchange rate, which is demand and supply,” Edun said, underscoring the government’s desire to address inflation and support the naira’s stability through increased liquidity.

“The program will allow people to bring in cash from outside the banking system. Let me emphasize once again: it is to bring dollars they are holding outside the system, to credit their bank accounts, as long as it is not proceeds of crime or illicit money,” he added.

Under the program, the Ministry of Finance, alongside the Central Bank of Nigeria (CBN), will soon release comprehensive guidelines to operationalize this initiative. The government hopes that, by attracting dollar bills into the financial system, it can increase dollar reserves, add liquidity, and in turn strengthen the exchange rate while discouraging currency speculation.

This strategy, however, has sparked mixed reactions among economists and policy analysts who question its potential impact on Nigeria’s broader economic issues. Criticism centers on the government’s tendency to employ short-term monetary solutions without addressing core structural problems such as low productivity and a limited export base.

Oluseun Onigbinde, founder of the civic group BudgIT, expressed concern about the focus on financial tweaks rather than production-driven solutions.

“Instead of locking yourselves inside a room for 18 hours on how to make this country an oil and non-oil export powerhouse in the next three years, within a clear future global trade simulation; we are still playing with mirrors,” he remarked, emphasizing the need for policies focused on strengthening Nigeria’s productive capabilities.

Onigbinde went on to highlight the importance of fiscal discipline and sustainable economic growth strategies, stating, “One day, Nigerian leaders will realize that there’s no substitute for production and fiscal discipline. It might be too late.”

His comments echo the views of other experts who argue that the country must prioritize boosting local production and reducing dependency on imports if it hopes to attain meaningful currency stability.

This nine-month program is the latest in a series of strategies by the Tinubu administration aimed at restoring confidence in the naira. However, economists have advised that a holistic approach focusing on fiscal responsibility, production incentives, and investment in non-oil exports will be needed if Nigeria is to achieve lasting economic stability.

The world of cryptocurrency investment has witnessed a significant milestone with BlackRock’s IBIT Bitcoin ETF recording an unprecedented $875 million of inflows. This event marks the most substantial single-day inflow since the ETF’s launch, signaling a robust confidence from investors and a bullish outlook on the future of Bitcoin.

The IBIT Bitcoin ETF, which was introduced by BlackRock in January, has been a game-changer in the crypto investment space. It has provided investors with a regulated and secure avenue to gain exposure to Bitcoin without the complexities of direct cryptocurrency ownership. The record inflow occurred on October 30th and has surpassed the previous high of $849 million set in March, reflecting a growing institutional appetite for Bitcoin exposure through traditional financial instruments.

The surge in inflows coincides with a broader crypto market rally, with Bitcoin trading near its March high of $73,679. Analysts are closely watching the upcoming U.S. presidential election on November 5th as a potential catalyst for Bitcoin to break out to new highs. The sentiment is buoyed by the fear of missing out (FOMO) among investors, as the ETF’s daily trading volume topped $3.35 billion on October 29th, its highest since April 1st.

BlackRock’s performance has notably overshadowed its competitors, with the other 10 U.S.-listed spot Bitcoin ETFs collectively bringing in just $21.3 million in inflows. Fidelity’s Wise Origin Bitcoin Fund came in second with $12.6 million in inflows, while Bitwise’s Bitcoin ETF saw outflows of $23.9 million.

The 1-inch DEX gets compromised

On October 30th, 2024, between 9:12 PM and 11:22 PM CET, users of the 1inch dApp experienced a vulnerability that could have had significant consequences for their digital assets. This incident has raised concerns about the safety of DeFi platforms and the measures taken to protect users’ investments.

The security issue stemmed from a glitch in a third-party tool called “Lottie Player,” which is used to display animations on the 1inch web dApp. An attacker exploited this vulnerability to send out fake signature requests to users. If signed, these requests would grant the attacker control over the user’s funds, potentially leading to a complete drain of their assets.

Fortunately, the 1inch team responded swiftly to the incident. They identified and resolved the issue within hours, removing the compromised Lottie Player tool from their dApp. The quick action taken by the team prevented any further potential losses and restored the integrity of the platform.

In the wake of the incident, 1inch has taken steps to reinforce their security measures and protect users from similar vulnerabilities in the future. They have also confirmed that parts of their ecosystem, such as the 1inch Wallet, API, and protocols, were not affected by this breach.

For users, this event serves as a reminder of the importance of vigilance when interacting with DeFi platforms. Double-checking unexpected requests and being cautious with signature approvals are crucial habits for safeguarding one’s digital assets.

The 1inch DEX compromise highlights the ongoing challenges faced by DeFi platforms in ensuring the security of their systems. As the DeFi space continues to grow, so does the sophistication of attacks. It is imperative for DeFi projects to invest in robust security frameworks and for users to remain informed and cautious.

The 1inch DEX compromise was a stark reminder of the risks associated with DeFi platforms. However, the effective response and the measures taken by the 1inch team demonstrate their commitment to user safety and platform security. As the DeFi industry evolves, both platforms and users must work together to foster a secure and trustworthy ecosystem.

President Bola Tinubu has taken a strong stance against the recent recommendation by the National Economic Council (NEC) to withdraw his administration’s tax reform bills, which are currently under consideration in the National Assembly.

Headed by Vice President Kashim Shettima and comprising governors from across the country, NEC recommended withdrawal of the bills, suggesting that more engagement with stakeholders is needed to address these concerns before proceeding.

However, Tinubu’s decision means that the federal government is staying the course against regional interests, particularly as governors from Nigeria’s 19 northern states and influential traditional rulers have voiced sharp opposition to the proposed reforms, arguing that the new tax framework could disproportionately impact their regions.

The tax reform bills in question, four in total, were transmitted to the National Assembly in early September while President Tinubu was on a brief vacation in London. The bills—the Nigeria Tax Bill 2024, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill—are designed to reshape Nigeria’s fiscal framework.

If passed, the reforms would streamline tax administration processes, overhaul tax operations, and establish institutions such as the Nigeria Revenue Service, a tax tribunal, and a tax ombudsman to replace the existing Federal Inland Revenue Service (FIRS). According to Tinubu, these changes are critical to advancing his administration’s goal of fostering economic growth through a modernized and efficient tax system.

Following their review of the bills, the northern governors convened in Kaduna, releasing a communiqué that criticized aspects of the proposed legislation. They were particularly opposed to amendments in the Value Added Tax (VAT) distribution system, which, they argued, could disadvantage the North by shifting revenue from the federal pool to wealthier states that generate more economic activity, such as Lagos and Rivers.

“We find that the recent Tax Reform Bill does not take into account the unique circumstances of the North and other sub-nationals,” read the communiqué. “We cannot, in good conscience, support a reform that could further marginalize our people economically.”

The communiqué also had the endorsement of traditional rulers from the region, signaling a unified northern stance.

Despite the resistance from NEC and regional leaders, President Tinubu, through his media aide Bayo Onanuga, expressed a commitment to see the legislative process through.

“President Tinubu commends the National Economic Council members, especially Vice President Kashim Shettima and the 36 State Governors, for their advice,” Onanuga stated. “He believes that the legislative process, which has already begun, provides an opportunity for inputs and necessary changes without withdrawing the bills from the National Assembly.”

Tinubu stressed that public hearings in parliament could provide a forum for further discussion and refinement of the proposed reforms.

“Further inputs can be made during public hearings at parliament,” the statement continued, emphasizing that the tax committee responsible for the proposal had conducted a wide-reaching consultation process.

“When President Tinubu set up the Presidential Committee on Tax and Fiscal Policy Reform in August 2023, he had only one objective: to reposition the economy for better productivity and efficiency and make the operating environment for investment and businesses more conducive,” the statement elaborated. “This objective remains more critical even today than ever before.”

The statement clarified that the tax bills were crafted after consultations across Nigeria’s geopolitical zones, involving diverse voices, including trade associations, professional bodies, government agencies, governors, and representatives from the organized private sector.

President Tinubu’s decision to stand by the reform package underscores his commitment to structural fiscal change, which he views as crucial for Nigeria’s economic stability. However, the growing resistance from northern leaders suggests that the administration may face significant hurdles as it pushes forward with its agenda.

Northern states, which often depend on VAT redistributions from economically vibrant states, are concerned that changes in the tax distribution system could reduce their share of federal revenues.

For Tinubu, the broader objective of the tax reforms is to address Nigeria’s fiscal challenges and foster a tax regime that aligns with international standards.

“The tax reform bills before the National Assembly aim to streamline Nigeria’s tax administration processes, completely overhaul the nation’s tax operations, and align them with global best practices,” the statement from his office emphasized.

Tinubu contends that these reforms will not only boost efficiency within Nigeria’s tax system but will also attract foreign investment by creating a more predictable fiscal environment.

Onanuga’s statement further emphasized Tinubu’s openness to regional feedback, suggesting that NEC’s advice had not gone unheeded but rather would be channeled into the legislative process.

“The president welcomes further consultations and engagement with key stakeholders to address any reservations about the bills while the National Assembly considers them for passage,” the statement read, inviting all concerned parties to participate in the legislative review process.

Looking ahead, the public hearings scheduled in the National Assembly will likely serve as the next battleground for the tax reform debate. While Tinubu has indicated he is open to adjustments, his firm stance on the overarching goals of the reforms suggests he is unlikely to allow any changes that would significantly dilute the impact of the bills.

For Nigeria, the outcome of these reforms carries significant implications. Should the tax reform bills pass with minimal changes, they could mark a shift toward a more fiscally autonomous framework, potentially reducing the country’s reliance on oil revenue and paving the way for diversified economic growth.

What does your workspace look like? Mine looks orderly for circuits and systems! I am an engineer and the founder of FASMICRO, Africa’s only Intel Corporation’s programmable microprocessor knowledge partner. We design systems, and make critical systems work in Africa. Most are so critical that we cannot even tell you about them.

We make power plants run well. We help telcos. We enable intelligent systems. We support  universities. We program systems and build device drivers to enable hardware systems to communicate. #WeAreEngineers.

Celebrate engineers in the house. #BeAnEngineer, the zenith of all professions because engineers build nations, and tools for every profession to function (pardon the bias, that is typical.) Nice weekend everyone and think how to engineer a #betterAfrica. A #greaterAfrica on my mind.