The UK government has announced that it will introduce legislation to regulate the use of digital pound, a new form of digital currency that will be backed by the Bank of England. The digital pound, also known as Britcoin, will be a complement to cash and bank deposits, and will aim to provide a secure and efficient way of making payments in the digital age.

According to the government, the digital pound legislation will ensure that users have adequate protections for their privacy and control over their money. The legislation will also set clear rules and standards for the providers of digital pound services, such as banks, fintech firms and payment platforms. The government said that it will consult with stakeholders and the public on the design and implementation of the digital pound system.

The government claimed that the digital pound will bring several benefits to the UK economy, such as:

Enhancing financial inclusion and access to digital payments for everyone. Supporting innovation and competition in the financial sector. Reducing costs and risks associated with cash handling and cross-border payments. Strengthening the resilience and stability of the payment system. Supporting the UK’s role as a global leader in fintech and digital finance

The government also said that it will work closely with the Bank of England, which will have the sole authority to issue and destroy digital pounds, as well as to oversee the monetary policy implications of the new currency. The Bank of England has been conducting research and experiments on the feasibility and impact of a central bank digital currency (CBDC) since 2015 and has recently established a CBDC unit to coordinate its work on the topic.

The Bank of England is exploring the possibility of creating a new form of digital money that would be issued by the central bank. This is known as a central bank digital currency (CBDC), and it could have significant implications for the future of money and payments in the UK.

A CBDC would be a new type of money that would exist alongside cash and bank deposits. It would be denominated in pounds sterling and backed by the Bank of England. Unlike cash, which is physical, or bank deposits, which are electronic, a CBDC would be digital and accessible through devices such as smartphones or computers.

The Bank of England has not decided whether to introduce a CBDC or not. It is still conducting research and experiments to understand the benefits, risks and challenges of a CBDC. The Bank is also engaging with stakeholders from the public sector, private sector and civil society to gather their views and feedback on a CBDC.

Some of the potential risks and challenges of a CBDC include:

Disrupting the banking sector by reducing the demand for bank deposits and affecting the profitability and business models of banks. Affecting privacy and data protection by creating new issues around the collection, storage and use of personal information related to CBDC transactions. Introducing operational and cyber risks by requiring a complex and secure technological infrastructure to support a CBDC.

The Bank of England is committed to ensuring that any decision on a CBDC is based on rigorous analysis and evidence. The Bank is also committed to ensuring that any CBDC would be designed in a way that respects the values and expectations of the British people, such as privacy, security and trust.

The UK is not the only country that is exploring the possibility of launching a CBDC. According to a recent survey by the Bank for International Settlements (BIS), 86% of central banks are actively researching CBDCs, 60% are experimenting with them, and 14% are deploying pilot projects. Some of the countries that have already launched or are planning to launch CBDCs include China, Sweden, Bahamas, Japan, South Korea and Nigeria.

In secondary school, James Ene Henshaw’s “Jewels of the Shrine” was a memorable and intriguing book . Mr Okorie was looking for how to engineer a great burial for himself even though he did not have means stored for that. He tricked his two grandsons who never really liked him because they felt that he was a relic of the past.

He created an illusion that he was loaded with wealth which they could inherit. But only the person who could muster a great burial for him will get the goodies – and the key to his long lost heirloom. He designed an illusive rivalry system which ended up making the grandsons deliver a superb burial for him. But when they checked for the thrones, they discovered that grandpa had tricked them to give him a great burial. The man had nothing, factually!

That takes me to Nigeria where banks are declaring record profits and manufacturing companies are declaring record losses: “In its fiscal year 2023 performance report, Cadbury Nigeria Plc, a prominent multinational corporation operating in Nigeria, disclosed a substantial loss of N27.63 billion. This marked a significant downturn, representing a staggering 2,228% decline from the N1.30 billion pre-tax profit recorded in the previous fiscal year.”

Who is tricking who in Nigeria’s economy?

Summary:

Ndubuisi reflects on James Ene Henshaw's "Jewels of the Shrine" and draws parallels with Nigeria's economic situation, questioning the discrepancy between banks declaring record profits and manufacturing companies, like Cadbury Nigeria Plc, experiencing significant…

— Summarize (@summarizest) January 27, 2024

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Comment 1: Whenever you see stats like that though alarm bells must go off! What potential sneaky trickery lies within their financial statements and MD&A reports? What did they do? Did they change amortisation schedules? Did they right down some assets? Did they fool around with unearned revenue accounts? Unscheduled goodwill?

Financial report analysis is a skill that takes not only mathematical aptitude but some general business sense and experience and some basic common sense. Always look at the numbers with a doubting eye and examine what lies beneath the facade of numbers. The truth is often stated within the MD&A reports so take those and examine them while looking at the financial statements. Often times, trickery lies beneath the numbers.

My response: Actually, it is not complicated. I have made that point before. A bank with assets of $20m in the UK or New York can book a virtual profit of N12 billion between Jan 1 and Dec 31 2023 (delta of N415 to N1,000 per $ today). But a foreign manufacturer bringing raw materials can also book a reverse. So, Cadbury could be making profit on N415/$ but could switch to losses on N1,000 purely on FX. If they imported say $30m worth of items, multiply that by N600, you will see those losses are possible.

Cadbury Nigeria Records N27.63 Billion Loss in FY 2023

In a significant stride towards attracting foreign investments, the Nigerian Federal Government has successfully secured a substantial $7 billion investment deal from India.

The official announcement was made by Mr. Gangadharan Balasubramanian, the Indian High Commissioner to Nigeria, during the 75th Republic Day celebrations on Friday night.

This development comes on the heels of India’s earlier commitment to invest $14 billion in Nigeria, pledged during the G20 Summit held in September of the previous year.

President Tinubu’s active participation in the G20 Summit proved instrumental in solidifying the $14 billion pledge aimed at bolstering the Nigerian economy and fostering stronger economic ties between the two nations.

Balasubramanian revealed that, following President Tinubu’s engagement in the G20 Summit, $7 billion of the promised investment has now been formalized through a signed agreement.

“Out of the $14 billion promised during this visit as investment into Nigerian economy, $7 billion has already been signed immediately after the visit,” he said.

During the Republic Day celebrations, the Indian High Commissioner noted the robust economic relations between India and Nigeria. He highlighted the historical and enduring ties between the two nations, dating back to before Nigeria gained independence.

“India and Nigeria enjoy strong and historical relations. With the ties dating back to before Nigeria’s independence, our bilateral relations have been nurtured by the leadership of both the countries,” he said.

Balasubramanian noted that currently, close to 150 Indian companies are operating within Nigeria, collectively contributing a substantial investment of $27 billion. This investment, primarily concentrated in the manufacturing sector, has translated into job creation, making Indian companies significant employers in Nigeria, second only to the Federal Government.

Highlighting the unique and special relationship between India and Nigeria, Balasubramanian recounted the memorable visit of H.E. Mr. Bola Ahmed Tinubu, President of the Federal Republic of Nigeria, to the G20 Summit in September 2023. He said the visit played a crucial role in consolidating bilateral ties, and as a testament to the commitment made during that summit, $7 billion of the pledged investment has already been finalized.

Furthermore, the Indian High Commissioner provided insights into the ongoing efforts to deepen business relations between India and Nigeria. He mentioned the successful visit of India’s External Affairs Minister Dr. S. Jaishankar for the Joint Commission meeting earlier in the week. During this visit, meaningful interactions took place with Nigerian leadership, the business community, and the Indian Diaspora, further strengthening the ties between the two nations.

Speaking on behalf of the Indian government, Balasubramanian expressed solidarity with Nigeria in their joint journey towards development. He conveyed the unwavering commitment of the Government of India to fortifying the ties and fostering mutually beneficial collaborations.

Adding depth to the economic perspective, Minister of Foreign Affairs, Ambassador Yusuf Tuggar, shed light on the substantial trade volume between Nigeria and India. According to the minister,

Over the last two years, the trade volume reached approximately $20 billion, comprising $14.95 billion in the formal sector and around $5 billion in the informal sector, according to the minister. This economic collaboration spans various sectors, contributing significantly to the growth and development of both nations.

As of the fourth quarter of 2021, India was the main importer of Nigeria’s crude oil. The exports of crude oil to the Asian country amounted to approximately 774.5 billion naira.

However, recent data indicates a notable shift in Nigeria’s crude oil exports. The Netherlands has overtaken India as the largest buyer of Nigerian crude oil. In the first nine months of 2023, the Netherlands purchased Nigerian crude oil worth N2.5 trillion, while India’s imports were valued at N1.6 trillion.

Analysts attribute this shift to sanctions related to the Ukraine conflict, compelling India to seek discounted Russian oil and subsequently reduce its demand for Nigerian crude.

The $7 billion investment deal with India marks a substantial achievement for Nigeria in its ongoing efforts to attract foreign investments and fortify economic ties with strategic partners. This significant financial commitment will undoubtedly contribute to Nigeria’s economic growth and development, fostering a deeper and more resilient partnership with India.