Aboki FX and CBN Rift on Naira Dwindling: The Big Questions from the Public

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September 19, 2021

Since the Central Bank of Nigeria announced its intention of probing the activities of the Aboki FX, a platform that provides foreign exchange information, based on the perceived influence the information had on Naira valuation in recent times, Nigerians across the world have been expressing mixed reactions.

Professionals in the country believe that the decision of the apex bank is not appropriate considering the fact that there are other fundamental issues that the bank and other stakeholders need to address, not tackling the currency spectators or operators of the Bureau De Change.

One of the professionals said in a recent conversation with a local newspaper that “AbokiFX might be influencing the forex market, depending on the size of the forex transactions it conducts, the operations of the platform was not the major driver of forex scarcity and Naira devaluation. As a general principle, I disagree with that approach. Of course, markets need to be regulated and have boundaries, but I think that it is too easy to blame markets when sometimes the problem might be from within.”

In another engagement with a local newspaper, another revered professional walked the stakeholders through stages employed by currency spectators to attack and affect Naira value. Some hours ago, our analyst had to the conversation on the appropriateness of the apex bank’s decision, exploring the possible influence of the Aboki FX’s activities on the currency.

The piece has received a number of great counter and alternative reactions from Nigerian. Like previous and ongoing national issues, two schools of thought have emerged. There is a school which believes the fundamental issues should be addressed not following a particular organisation, using it as a scapegoat. In this regard, the Central Bank and concerned political leaders should do the needful by concentrating on fixing macro and micro economic problems that enhance the dwindling of Naira every day.

The second school believes that Aboki FX cannot be totally exonerated from the fall of the currency. This is hinged on the fact that buyers and sellers access the platform before making decision. It is also possible, according to some members of this school, because national newspapers use the platform in their reportage of the currency depreciation and appreciation daily.

It is interesting to note that from the two schools, the counter and alternative comments have deepened the ongoing discourse on the currency performance. However, it is imperative that members of the schools embrace constructive and restorative narratives in their comments. There is a need to address issues instead of personalities as we continue to have great conversations on the issues of national importance towards sustainable development in Nigeria. The big questions that need the big answers from concerned stakeholders asked in some of the reactions are reproduced below.

The Big Questions from the Public

Why don’t other countries ban FX arbitrageurs who similarly publish black market rates?
Our needs and problems are many, but who can take up the challenge?
How many of us here can actually say we value the naira as a unit of value storage?
Do BDCs (share of total matters) visit the Abokifx website to get their rates before they sell FX to their customers?
Do customers visit Abokifx before or after they contact their BDCs (reference rate or as a second check)?
What system does Abokifx use to update its rates? Does its use differ between Nigerians in Nigeria and Nigerians in the diasporas?
Is Aboki FX Naira problem?
How many Nigerian graduate are employable?
Where’s the electricity?
Are there hospitals? Where are the leaders?

Who Will Own VAT On Cloud Business Operations in Nigeria – Federal or State?

By

Ndubuisi Ekekwe

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September 18, 2021

2

The cloud business in Nigeria belongs to the federal government jurisdiction since it is operating on the web! So, all taxes on cloud companies and broad ecommerce companies, and digital companies, belong to the federal government. With that, physical address may not matter! So, if that is the case, one day and when every business goes fully online and stays in the cloud, Nigerian states will have zero VAT to collect. Really?

So, Rivers state, Lagos state, and all the state-VATing crusaders (including me), you need to ask yourself now: who controls transactions which take place in the cloud? If all transactions for Interswitch, Flutterwave, etc take place in the cloud, Lagos state despite being their local physical Nigeria domain may not have the rights to collect the VATs associated with transactions therein. Lawyers, correct?

John Mc Keown has pushed this postulation in a piece in Tekedia and it is super-intriguing considering the new playbook the federal government is pushing on ecomemrce: “The Federal Government has said that it is targeting an increase in e-commerce trading, from the current market value of $13bn to about $75bn by 2025. The Permanent Secretary, Ministry of Industry, Trade and Investment, Dr Evelyn Ngige, who disclosed this on Tuesday in Abuja at the second National E-commerce Roundtable organised by the ministry noted that e-commerce had grown from 14 percent in 2019 to 17 percent in 2020.”

Conceivably, since E-Commerce transactions actually take place in ‘The Cloud’, it can be an interpretation by FGN that such transactions do not enjoy the jurisdiction of any specific state within the Federation.

This is irrespective of where any e-Commerce business chooses to site its physical activities, such as its administrative HQ, its distribution management or its warehousing (as applicable).

People, more fights ahead on VAT as more firms move online.

Comment on LinkedIn Feed

Comment #1: Fortunately for those states canvassing for VAT, we can’t drink beer in the cloud and so many other things.

My Response: Do not count on that. If you begin to pay for beer via payment apps, all transactions will happen in the cloud even if consumption takes place physically. When the waiter brings his bill and you open that wallet to bring the debit card, that transaction is hitting NIBBS in Lagos and magically your beer seller is selling in NIBBS cloud headquarters and not there in front of you! So, the physicality of the consumption may not matter.

Comment #2: This is obviously calls for new regulations in e-commerce that will cover some aspect of cloud companies. I think Changing banking policies will not solve the problem but approaching the change constitutionally will be better.

My Response: Yes, they may need to look at this as they begin to review the constitution. It is a big issue as all payments in Nigeria can be assumed to be taking place in NIBBS cloud!

Does AbokiFX’s Foreign Exchange Information Provision Facilitate Naira Dwindling? Insights From Public Behaviour

By

Mutiu Iyanda

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September 18, 2021

11

Out of 166 global currencies ranked by Xe, the world’s favourite currency site, in terms of popularity, Nigeria is in 58^th. The Africa’s most populous country’s currency is behind Kenyan Shillings, Egyptian Pounds, Tunisian Dinars and Moroccan Dirhams. Over the years, Naira performance against the most popular currencies such as US Dollar, Euro and Great Britain Pounds has been a game of ups and downs. However, being popular does not mean being valuable in the world. World Data notes that between January 2015 and September 2021, the exchange rate for 1000 NGN developed from USD 5.03 to USD 2.43, indicating that for 81 months it fell by 51.7%.

During the challenging periods [days, months and years], the Central Bank of Nigeria made and still making a number of strategic decisions to salvage the currency total collapse. In spite of this, it appears that the decisions have not really yielded desired results as the currency continue to dwindle every day.

From the stakeholders in the banking and financial sectors, and citizens to the government, there are have been counter and alternative arguments on how the stakeholders are sabotaging various policy measures of the apex bank. It has reached a stage that if necessary steps are not taken, manufacturing sector and other essential sectors of the economy would suffer greatly, when it becomes practically impossible to access forex for importation of essential raw materials and manufactured goods.

In its efforts of making the currency strong, the CBN recently outlawed operators of the Bureau De Change across the country. This yields little or no results as the currency refuses to bounce back and be valuable among other currencies in the world. Some days ago, the apex bank after its Monthly Meeting figured Aboki FX, a platform that provides foreign exchange information to the public using gathered data from the BDC, as “manipulator” that contributes to the dwindling of the currency.

As the CBN and the platform exchange statements on the issue, our analyst examines the CBN’s position through the public information seeking behaviour in relation to foreign exchange features. The submission from the CBN and national newspapers has been that the reportage of Aboki FX’s daily information and application by the public [buyers and sellers] facilitate the fall of Naira every day. Our analyst verified this proposition and analysis reveals a number of surprising results and insights.

Aboki FX’s Presence on the Internet

In the first instance, there is a quite volume of publications about activities of Aboki FX on the Google Search Engine. Our check reveals that in relation to Aboki FX, people are also searching Abokifx BDC Rate, Abokifx Euro to Naira, Abokifx Pounds to Naira, Abokifx Exchange Rate in Nigeria today Black Market and CBN Exchange Rate. While over 200,000 publications are available for understanding Abokifx, there are over 2 million publications for the public to understand foreign exchange rate within the context of the Central Bank of Nigeria in line with other sources.

Exhibit 1: Aboki FX on Google Search Engine

Source: Google Search Engine, 2021; Infoprations Analysis

With these, our analyst notes that there is no way the apex bank would not have issues with Aboki FX because of the huge volume of existing information regarding exchange rate understanding via Black Market, which indicates that people are getting relevant information through the platform. This position is further reinforced with the rate at which the public sought information between January 1 and September 18, 2021 [see Exhibit 2 and Exhibit 3].

Exhibit 2: Nigerian Population Information Seeking between January 1 and September 18, 2021 Across Select Indicators

Source: Google Trends, 2021; Infoprations Analysis, 2021

Exhibit 3: Nigerian Population Interest Across Select Indicators by Month

Source: Google Trends, 2021; Infoprations Analysis, 2021 ***Key:*** *Aboki FX=335, Foreign Exchange=10, US Dollar=258, Pounds =1225, Euro=1680*

Naira’s Hobbling in the Midst of Public Information Seeking

Analysis further shows strong a connection between the public interest in Aboki FX and Euro [90.9%], Pounds [73.9%] and US Dollar [52.6%]. In terms of the extent to which public information seeking using Aboki FX platform facilitates their interest in these currencies, Euro and Pounds are also better off than the US Dollar. With this, we expect Naira to react based on the information public consumed from Aboki FX and put into use. This was further verified with a Ripple Effect Analysis [REA] carried out using extrapolating approach. The Monthly Average Rate of CBN, covering January to April, 2021 and Aboki FX’s Lagos Bureau De Change Rate, spanning September 1 to September 17, 2021 were harvested for analysis.

Exhibit 4: Percentage of Influence Public Interest in Knowing Foreign Exchange through Aboki FX had on Buy and Sell of the Foreign Currencies

Our analysis reveals that 67.6% connection of the public interest in Aboki FX’s and CBN’s Monthly Average Rates. However, only 45.7% of the interest could be explained from the interest in the CBN’s rate. Like the previous results, the interest in seeking information about the foreign exchange through Aboki FX partially aligned with the Lagos Bureau De Change Rate within the buy and sell categories. By 23.9%, the interest in Aboki FX and the categories are resonated within Euro, while it was 16.7% and 10.3% for Pounds and US Dollar respectively. This pattern also emerges when the extent to which the interest could be determined from the categories [buy and sell] was considered [see Exhibit 4].

Strategic Options

The emerged insights have shown that there is a need for the stakeholders to come up with sustainable solutions to the currency’s dwindling. The CBN’s decision to sanction Aboki FX could deliver certain results in the short term. It won’t address fundamental issues that fuel the poor performance of the currency locally and globally, preventing volubility of the currency in the world. Nigerian government needs to address issues of high importation of non-essential goods and help SMEs in their quest of building sustainable manufacturing sector.

How You Can Become A Millionaire In Crypto

By

Progress Ibrahim

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September 18, 2021

0

A friend made a great statement about the future of wealth that got me thinking. Many never took him seriously, but I know what he meant.

Here is what he said that you should pay attention to. He said, here is how different industries and the market had created millionaires.

It started with the agriculture industry where those that have cash crop farms become very rich. But when time passed, the trend faded.

Then what followed in places like Nigeria was the oil business. This business created many millionaires, some are still millionaires today. Then came the gold rush, where those that have gold become millionaires.

The new trend is technology. But to be very specific, Cryptocurrency is the new gold rush. It is likely creating millionaires faster than any other invention in human history.

I have been saying that Cryptocurrency is more than a business, it’s rather a disruptive technology. Those that embrace it early will reap the first-mover advantages.

The goal of this article is very clear. It is to show you how you can also make your millions in crypto. That way is the Trenndify way. Are you excited already? Now let’s get started.

The Trenndify Blueprint To Make Millions In Crypto

What works always ends up becoming a blueprint or a template. During my research for this article, I discovered a thread on Twitter. The thread asked this question; what is the one word to be rich. The responses were mind-blowing, but it is similar to what I will be sharing.

Crypto Compounding

Compounding is an investment principle that means the multiplicative growth of an asset. It is like planting a seed and harvesting hundreds in return. In crypto, your investment has the potential to compound 10X and even 1000x. This is due to the speed in the adoption of crypto innovations by institutional investors and the growth of the crypto industry.

But, it is not all crypto projects that have compounding potential. The risk is very high, as there is a 100% chance that the project may not succeed. But, good projects like Solana(SOL), Avalanche (AVAX), Axie Infinity Shard (AXS) will always succeed.

Here is the secret.

Crypto Portfolio

In investing, a portfolio is a term used to mean a collection of investment vehicles like a basket containing different fruits. So, in crypto, a portfolio is a collection of different crypto assets with the goal of growth.

How do you know the digital assets to include in your crypto portfolio? How do we know the ones that will compound in value after sometimes?

Trenndify uses a tool called the 7G indicators to research and build portfolios for its clients. The 7G indicator helps you to research great coins from shit coins on Coinmarketcap and those not on Coinmarketcap.

Imagine, you have a crypto portfolio worth $10000 and in 1 year it grows to $1000, 000. What do you call that, it is the compounding nature of crypto.

This was exactly what happened to Solana (SOL) investors and holders.

After that, you need a set of skills to manage the portfolio. They are explained in the next session.

Crypto Essential Skills

It is good to hold crypto assets or digital assets but it is better to hold crypto assets with certain skills. Here are the basics skills you need to develop.

Knowledge Skill: You certainly need to know how to use your wallet and manage your crypto assets. You need to know how to protect your passphrases; you might share them with an untrusted fellow.
Timing Skill: Holding digital assets or crypto assets is a business of time as investing is time in the market. So, you need to know two things, the time to enter the market and the time to exit the investment.
Patience: While the patient dogs eat the fastest bones, the greedy dogs eat no bones. You need to be patient and don’t be emotionally glued to the market.

Here is an analysis of how to make decisions based on market phases.

The market is volatile but over time your investment will compound and not overnight.

But when it does grow, don’t allow greed to keep you longer in the market, the negative side of volatility is loss-making.

Trenndify believes the above three areas form the basic template and blueprint for making your millions in crypto. It is faster to become a millionaire in this age than it was decades ago.

With Cryptocurrency, the possibility has become a reality. What a generation and a moment to be alive and be active.

Originally published at Trenndify

As Nigeria Waits for Dangote Refinery on Fuel, CBN Detours To AbokiFX on Naira

By

Ndubuisi Ekekwe

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September 18, 2021

5

Great decision from the AbokiFX team and it is a very smart one because FX manipulation is a global crime. But as I have noted, you cannot believe anyone including the Central Bank of Nigeria (CBN) on this one since there is really nothing compelling the nation is doing to strengthen the Naira.

Our balance of payment continues to move to the unfavourable territory due to lack of catalytic infrastructures like electricity to drive local production. Our productivity continues to fade as Nigeria continues to remove merit from all domains of the public sector. As the nation waits for Dangote Refinery to save it from fuel subsidies and wastes, AbokiFX is now expected to save the collapsing Naira from the forex paralysis.

But AbokiFX has offered a challenge: we will not publish new FX rates on Naira, and now it is for the nation to see what happens to Naira. This is a pseudo experiment and with no information on what the parallel rates are, people can converge, in the short-term, on whatever the apex bank offers with a variance of few points.

But that will not last. Yes, you cannot take Nigeria to the industrial age, pre-internet era where supply was the most dominant part of the market systems due to information asymmetry (think of buying an air ticket where you paid whatever the agent told you because you did not know what the airlines were charging). Today, aggregators and demand controllers are catalytic because everyone has unbounded sources, and platforms remove the frictions by brining all info in one place. So on that, I am not sure the suspension of AbokIFX will save Naira when Naira cannot save itself fundamentally because another aggregator will emerge.

Why? Once people do not believe whatever the apex bank is posting as the FX rate, they will converge to another AbokiFX to believe whatever it has there to conduct transactions. Of course we do hope the digital platform will be decent enough not to use its market power to illegally distort market equilibrium.

Following the news that the Central Bank of Nigeria (CBN) is going after exchange rate aggregator and publisher, AbokiFX, the online platform has issued a statement announcing that it’s suspending its publishing of parallel market exchange rates until further notice.

The CBN governor Godwin Emefiele on a TV interview, alleged that AbokiFX has been responsible for the free-fall of the naira by manipulating market prices.

The naira depreciated to N570/$1 on Friday despite the apex bank’s efforts through monetary policies to stem the tide. However, experts believe that the continuous crash of the naira is as a result of insufficient dollar liquidity in Nigeria. Increase in demand for is said to be forcing the CBN to deplete Nigeria’s dollar reserve, fueling the fall of the naira.

Data from the CBN shows $116 billion to be the total dollar inflow to Nigeria’s economy in 2020. Compared to 2019’s $142 billion and 2014’s $160 billion, there are 20% and 30% drop in dollar inflow to the economy respectively. The situation was compounded by the economic strains emanating from covid-19 pandemic.

AbokiFX said it hopes the suspension of its FX rates operation, among other things, will help the naira to appreciate in parallel market. Read full statement below:

With AbokiFX self-suspending, Naira may start waking from coma but until we have warehouses and factories operating well, Naira’s FX disease will remain. CBN should work to fix that and wake up those engines of exports.

AbokiFX Announces Operation Suspension Over Allegation of FX Market Rates Manipulation

Aboki FX and CBN Rift on Naira Dwindling: The Big Questions from the Public

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