The Central Bank of Nigeria must pay attention to how it uses interest rates to fight inflation in Nigeria. Why? Unlike the United States, interest rate is a largely weak tool to fight inflation in Nigeria considering that our consumer credit is still at infancy.

Also, the apex bank needs to deal with the demon of Ways & Means lending because it makes no sense to mop/starve cash from companies, via interest rate hike, only to give the same cash to the government.

Source: Tekedia Mini-MBA live session today (full 90-min video in the class board)

Nigeria’s total public debt as of March 31st, 2023, has risen to N49.85 trillion ($108.30 billion) from N46.25 trillion recorded on December 21st, 2022, according to a statement issued by the Debt Management Office (DMO) on Friday evening.

In its statement, the DMO also noted that the recently securitized Ways and Means loans, amounting to N22.719 trillion, would be included as part of the federal government’s domestic debt starting from June 2023.

“As at March 31, 2023, the Total Public Debt Stock comprising the external and domestic debts of the Federal Government of Nigeria (FGN), the thirty-six (36) States, and the Federal Capital Territory (FCT) was N49.85 Trillion (USD 108.30 Billion).

“Comparatively, the Total Public Debt Stock for the preceding period, December 31, 2022, stood at N46.25 Trillion (USD 103.31 Billion). During the period, there were increases in the debt stock of the FGN, States, and the FCT.

“The Public Debt Stock for March 2023 does not include the FGN’s N22.719 Trillion Ways and Means Advances of the Central Bank of Nigeria whose securitization was approved by the National Assembly in May 2023. The amount will be included in the FGN’s Domestic Debt Stock from June 2023,” the DMO said.

Judging by the current exchange rates orchestrated by the recent monetary policy introduced by President Bola Tinubu, the debt figure is expected to rise significantly above the N49.85 trillion declared by the DMO to nearly N80 trillion.

Earlier this month, the Central Bank of Nigeria (CBN) announced the floating of Nigeria’s forex market, in a move to unify multiple exchange rates. The decision has seen the naira depreciate as much as N815 per dollar in the Investor & Exporter window.

This development has prompted calls for the review of the nation’s public debt profile.

On Thursday, the DMO warned the federal government against taking further loans. The office said 73.5% of this year’s revenue will be used to service debt, creating an unsustainable high Debt Service-to-Revenue ratio.

Nigeria’s public debt profile saw a staggering increase to roughly N50 trillion in 2023, from N12 billion in 2015, during the administration of former President Muhammadu Buhari. This also includes the Ways and Means borrowings, which happened in breach of the CBN Act.
The present administration is facing the harsh reality of a depleted treasury – resulting from oil revenue shortfalls.

Against this backdrop, DMO said concerning expansion in fiscal deficit, there is a need to strictly adhere to the provision of extant legislations on Government borrowing, especially the Fiscal Responsibility Act 2007 and Central Bank of Nigeria Act, 2007 as it relates to Ways and Means Advances, in order to moderate the growth rate of public debt.

The office also said there is an urgent need to pay more attention to revenue generation by implementing far-reaching revenue mobilization initiatives and reforms including the Strategic Revenue Growth Initiatives and all its pillars with a view to raising the country’s tax revenue to GDP ratio from about 7 percent (one of the lowest in the world) to that of its peer.

The Central Bank of Nigeria (CBN) has mandated financial institutions to include social media in their Know Your Customer (KYC) applications. This new directive means that the social media handles of bank customers etc. should be obtained for identification.

The directive is contained in the apex bank document: the ‘Central Bank of Nigeria (Customer Due Diligence) Regulations, 2023’, published on its website on Friday.

According to the document, financial institutions are required to obtain email addresses, telephone numbers, and residential addresses, among other things, from customers.

The new KYC exercise under the CBN’s customer due diligence regulations is designed to further strengthen the identification process in the banking system.

The financial sector said the new regulation was designed to provide additional customer due diligence measures for financial institutions under its regulatory purview.

The key objective of the new regulation is to enforce compliance with relevant provisions of the laws designed to checkmate money laundering and terrorism financing.

The document published by the CBN said the aim of the new regulation is “To provide additional customer due diligence measures for financial institutions under the regulatory purview of the Central Bank of Nigeria to further their compliance with relevant provisions of the Money Laundering (Prevention and Prohibition) Act (MLPPA), 2022, Terrorism (Prevention and Prohibition) Act (TPPA), 2022, Central Bank of Nigeria (Anti-Money Laundering, Combating the Financing of Terrorism and Countering Proliferation Financing of Weapons of Mass Destruction in Financial Institutions) Regulations, 2022 (CBN AML, CFT, and CPF Regulations) and international best practices.

“And enable the CBN to enforce compliance with customer due diligence measures in line with the CBN AML, CFT, and CPF Regulations.”
This is the first time a Nigerian regulator is mandating the use of social media accounts as means of identification.”

The CBN said under its customer identification column, financial institutions must identify their customers (whether permanent or occasional, and whether natural or legal persons or legal arrangements) and obtain the following information:

“For Individuals — legal name and any other names used (such as maiden name), permanent address (full physical address), residential address (where the customer can be located), telephone number, e-mail address, and social media handle; date and place of birth, Bank Verification number; Tax Identification number; nationality; occupation; public position held; and name of employer.”

In addition, the apex bank said that an individual must have “an official personal identification number or other unique identifier contained in an unexpired document issued by a government agency that bears the name, photograph, and signature of the customer, such as a passport, national identification card, residence permit, social security records, or drivers’ license.”

The regulator said financial institutions are required to include “Type of account and nature of the banking relationship, and signature, and politically exposed person status.”

The regulatory body further emphasized that financial institutions are prohibited from creating or maintaining anonymous accounts, numbered accounts, or accounts under fictitious names.

These regulations are applicable to all financial institutions under the supervision of the Central Bank of Nigeria, as specified in the document.