Greetings. Tekedia Live Zoom Schedules for the week are as follows:
Thur, March 11 | 7pm – 8.30pm WAT | General Topic, Your Edge Over Bigger Companies – Ndubuisi Ekekwe
Sat, March 13 | 7pm – 8.30pm WAT | Consumer Marketing in FMCG – Emmanuel Agu. FNIMN, FIMC, FIPMA, MSC, MBA, Ashridge Alumnus, Group Marketing Director, Jotna (the LaCasera Company).
All links in the Board.
As the Central Bank of Nigeria (CBN) policy of Naira 4 Dollar Scheme kicks off tomorrow, we would be looking at how the policymakers respond when live data begins to arrive. I have called it a “quasi-devaluation” of the Naira, but with the understanding that it is a short-term experiment, we should wait for the data to hit the CBN headquarters. But before that happens, this is what I expect to happen across most countries: remittance inflow will improve but most may not be real!
The Central Bank of Nigeria (CBN) needs US dollars desperately to help cushion the nation’s balance of payment, and fight deterioration of the Naira, and is going to Nigeria’s best export: the diaspora community. Yes, the apex bank has unveiled a really ingenious scheme called “Naira 4 Dollar Scheme”. Largely, if you wire US dollars to Nigeria via the approved IMTO (international money transfer operators) like Western Union, the payout bank will pay your recipient N5 per $I besides the recipient receiving the full amount you wired in US dollars. The CBN Governor mentioned in a Diaspora Series organized by Fidelity Bank Plc.
Yes, expect someone to wire $10,000 from New York, gets paid $10,000 in Lagos, and then the N50k bonus. The cost of wiring that money is never going to be more than N50k ($120); the cost to wire $10k from US to Nigeria is $17 via Western Union. Some do think they can use peer-to-peer platforms to move that $10k back to New York, and send it back again for another N50k in Nigeria. This loop can continue, and they will rip big bonuses from the Nigeria treasury!
But note one thing: CBN is aware of this potential risk and that is why it has this requirement that people use the approved IMTOs like Western Union and MoneyGram. Those entities most times will not allow anyone to wire more than $10,000 in a month. And by the time you start shopping for who to help you make extra N50k on your $10k, you can lose that $10k entirely! Yes, a snake can swallow that money, big time, even in New York.
I do think that this policy is designed to incentivize Nigerian diasporas to send money home. It is too early to know if that will improve remittance over long-term; I mean after the program ends later in the year. Personally, my choice, as I noted in my Fidelity Bank presentation, would be to offer a seamless tax holiday on all profits through a special fund vehicle I called Diaspora Growth Nation Fund.
Yes, if you invest in SMEs, startups, real estate or other productive areas, via official channels like banks, all taxes on profits over 5-10 years would be waived! That is a better way to get people to unload US dollars and hard currency on Nigeria. I am not sure people with many benjamins will care that $1 will add extra N5! That is a distraction!
And if CBN is not careful, it could have a ponzi scheme on its hands with USD for Naira, being round-tripped, outside international money movement ordinance. Yet, the good news is that the bad guy will have to beat the US, UK in addition to Nigeria. And that is why I think abuse will be limited. But it is good to experiment and CBN is doing that which I think is good. It will see data and over time decide on what works.
Consistent with the global trend, Nigeria aspires to ensure that remittance flows and diaspora investments become a significant source of external financing. #Emefiele
— Central Bank of Nigeria (@cenbank) March 6, 2021
On Friday, I invested in a downstream technology sector of the oil, gas & renewables sector. It is a California-based startup. We will bring visibility on how people buy refined crude products & renewables, orchestrating demand and supply into a more optimal equilibrium, through reduction of information asymmetry. From finance to logistics to payment, we want to uber the downstream sector! And that downstream includes renewables.
I will make a proper announcement within the week. We need to digitize the energy sector.
The conversation on the latest Central Bank of Nigeria (CBN) policy – Naira 4 dollar scheme, i.e. extra N5 is paid by the apex bank for every remitted $1 into Nigeria – has generated many opinions in our platforms. While I truly welcome the opinions, let us not be personally attacking elected or appointed officials. Make your point, challenge their policy choices, but do not insult them. If you check, we are saying the same thing and we know that the mess in Nigeria did not start today. Nigeria used to have tons of dollars that we were looking for countries to pay their bills!
The Central Bank of Nigeria (CBN) needs US dollars desperately to help cushion the nation’s balance of payment, and fight deterioration of the Naira, and is going to Nigeria’s best export: the diaspora community. Yes, the apex bank has unveiled a really ingenious scheme called “Naira 4 Dollar Scheme”. Largely, if you wire US dollars to Nigeria via the approved IMTO (international money transfer operators) like Western Union, the payout bank will pay your recipient N5 per $I besides the recipient receiving the full amount you wired in US dollars. The CBN Governor mentioned in a Diaspora Series organized by Fidelity Bank Plc.
Godwin Emefiele cannot fix this overnight. Obasanjo cannot fix it overnight. Jonathan cannot fix it overnight. Buhari cannot fix it overnight. I cannot fix it overnight. You cannot fix it overnight. We know one thing: unless we produce things in Nigeria, all the financial engineering will fail. Factories and warehouses hold Nigeria’s future, not CBN HQs working financial model with Naira! Sure, we hope the policies provide the path to have those factories and warehouses; the Policies should be the focus, not the persons.
We must challenge these men and women but we must do so with civility. The number of registered voters for Lagos and Kano States were 6.5 million and 5.4 million respectively for the 2019 presidential election. Out of that, about 1.1 million voted in Lagos while Kano had 1.9 million. Simply, 5.4 million people in Lagos where many of us live registered but did not vote. This number does not include qualified people who did not even bother to register.
Run the number and you will see the same pattern across the nation. Simply, nothing is unpredictable: that we stay home and allow party faithfuls to run the show, only to complain later, will not change the outcome. Yes, if there were Candidate M who could have received all the votes of those who registered but did not vote, from state to federal to presidency, that Candidate M would have WON all positions in Nigeria. So, the power is in our hands but we do not use it.
This is what happens: the extremely motivated party faithfuls go out and vote and elect their members. You who stay home or out of the system, come only to complain after the outcome. We need to be real in Nigeria! Insulting those elected officials or their appointees will not change anything because you gave up your rights to help Naira! Sure – challenge their policies but do not think you are not part of the problem.
