Tag Archives: Central Bank

Ghana gets new Central Bank Governor two days after incumbent’s exit

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Three months after he was inaugurated, President Nana Akufo-Addo has appointed a new governor for Ghana’s Central Bank.

He is Ernest Addison, an Economist. He takes over from Abdul-Nashiru Issahaku, who tendered his resignation from the bank on March 29 about 11 months after being appointed.

According to a statement by Eugene Arhin, the Director of Communications in the Presidency, the president after receiving the outgoing governor’s letter decided to appoint a replacement.

The incoming governor had served as Director of Research in the bank between 2003 and 2011 and Chief Economist for the West Africa Monetary Institute from 2001 to 2002.

Until his appointment, he was a leading regional economist of the African Development Bank at its Southern Africa Resource Centre.

 

Source: Xinhua/NAN

BREAKING: Ghanaian Central Bank Governor Resigns

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Governor of Ghana’s central bank, Abdul-Nashiru Issahaku has resigned, sources who asked to be anonymous have revealed.

According to sources within the central bank, the governor who officially started his four-year term around September last year tendered his resignation on Wednesday citing personal reasons.

Although the governors of the central bank have been insulated against political risk through an amended Bank of Ghana Act which assures them the security of tenure, speculations have been rife immediately after the December election that the current government would like the governor to leave office so they could appoint a replacement.

Issahaku was first appointed by former president John Mahama in April 2016 in an acting position when Henry Wampah tendered his resignation six months before the end of his tenure.

Mahama was defeated at the polls by current president, Nana Akufo-Addo who won the election by 53 per cent.

Sources within the central bank also named former head of the research department at the bank, Ernest Addison now with the African Development Bank as one of the front-runners to occupy the Bank of Ghana chair.

The outgoing governor held his last Monetary Policy Committee press briefing on Monday, where he announced a 200 basis point reduction in the bank’s benchmark policy rate from 25.5 per cent to 23.5 per cent.

 

Source: Xinhua/NAN

CBN orders all banks to open foreign exchange kiosks at major airports

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The Central Bank of Nigeria (CBN) yesterday ordered all banks to open foreign exchange (forex) kiosks at major airports and approved outlets.The order was issued barely 24 hours after The Guardian exclusively reported that passengers were stranded at the international airports on account of dollar scarcity.

The move is to ease acute forex scarcity and reduce the wide gap between the official and parallel markets to enhance efficiency. It also indicates that the apex bank has stepped up the foreign exchange liberalisation plan, as it switched back to an earlier policy of selling dollar through banks.

Yesterday, the regulator said in a statement that it would now provide direct funding to banks to meet the needs of Nigerians for personal and business travel, medical needs, and school fees, with immediate effect, a few days after the National Economic Council (NEC) ordered it to review the policy.

Responding to the development, the Acting President, Association of Bureau De Change Operators of Nigeria, Aminu Gwadabe, said the move “to sell invisibles at 20% above interbank rates to end-users by CBN, hopefully will add confidence in the market.”

He, however, hoped that banks would be directed to sell a “certain percentage of interbank sources to BDCs at 20% margin. This, to me, will be lucrative for banks to do and at the same time put the liquidity in the market.”

He added that given its capacity to adequately meet the critical retail needs of the market, “the injection of additional liquidity to the BDCs subsector will definitely have a wider positive impacts on naira.”

A sub-Saharan Economist at Rencap, Yvonne Mhango, in a note to The Guardian, expressed optimism that the foreign exchange policy may be up for adjustment in the short term, given key developments in the economy.

“But we think the most probable outcome of a forex policy adjustment is a managed float, possibly a new peg, but a full float is unlikely. We heard this was being ‘fine-tuned’.

“Making the interbank FX market work is key for the central bank. Improved liquidity, a smaller premium between the parallel and interbank rates, price discovery, and transparency would signal success,” she said.

The banker to the government, in the statement, also said that having cleared the historic backlog of matured letters of credit at the inception of the current flexible exchange rate system, it would immediately begin to provide foreign exchange to all commercial banks to meet the needs of Nigerians.

Frontline economist, Bismarck Rewane, described it as a move in the right direction, but queried why the money was not directed to the official market.

“It is good, but a complicated ‘Manna’. Rather than the banks, it should have been in the interbank market for manufacturers and travellers so that when it is exhausted, everyone will know and its supply can help to determine the true position.

“It is either we believe in free and open market or not. There is no need for the discriminated market. But we will watch and see how developments unfold,” he said.

According to CBN, all banks would receive amounts commensurate with their demand per week, which would be sold to customers who meet usual basic documentary requirements.

However, banks will now pay directly to the institutions specified by those who are seeking to make payments of educational fees for their children and wards.CBN said it would ensure that this process is as smooth as possible and that many customers get the foreign exchange they genuinely demand.

The same rule applies to customers seeking to make payments, or purchase foreign exchange, for medical bills to be paid directly to hospitals.To increase the availability to all end-users, the CBN has decided to significantly reduce the tenor of its forward sales from the current maximum cycle of 180 days, to no more than 60 days from the date of transaction.

To sustain confidence in the new rule, CBN said it had concluded plans to begin the implementation of its articulated programme to clear all the unfilled orders in the interbank market.

While the provision of forex to the manufacturing sector would remain the CBN’s strong priority, it will no longer impose allocation/utilisation rules on commercial banks and would support the inter-bank market to ensure adequate liquidity.

In this regard, the Director-General, Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, commended the apex bank for approving lingering letters of credit even as he urged the bank to address the supply side of the revised foreign exchange policy.

 

Source: Guardian

Despite worsening recession, Nigeria’s Central Bank keeps fiscal policy rates unchanged

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The Central Bank of Nigeria (CBN), on Tuesday opted to retain all monetary policy instruments, despite the report by the National Bureau of Statistics, NBS, on Monday that the country’s economy sunk deeper into recession.

 

The Monetary Policy Rate (MPR), which sets the lending rate for banks and businesses for a period, was left at 14 per cent, while the Cash Reserve Ratio, CRR, was retained at 22.5 per cent.

 

The CRR sets the specified minimum fraction of customers’ total deposits commercial banks could hold as reserves either in cash or deposits with the CBN.

 

The Central Bank governor, Godwin Emefiele, said at the end of the two-day Monetary Policy Committee, MPC, meeting in Abuja that the liquidity ratio was left by the MPC at 30 per cent, with the symmetric window kept at +200 and -500 basis points around the MPR.

 

The NBS in its gross domestic product (GDP) report for the third quarter said the country’s recession deepened, with the economy contracting further by 2.24 percent year-on-year basis, from 2.06 slump in the second quarter.

 

Last week, the NBS said that inflation for October 2016 rose by 18.3 per cent (year-on-year) from 17.9 per cent recorded in September.

 

The CBN appears to be fighting on several fronts at the same time, with dollar scarcity as a result of the currency restriction policies of the bank driving the exchange rate of the Naira to soar against other international currencies like the dollar.

 

Details later…

Thousands Of Zimbabweans Lose Money As MMM Crashes

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Thousands of people, among them civil servants and vendors, have lost thousands of dollars to fraudulent online pyramid scheme MMM Global Zimbabwe after it collapsed recently. The social financial network, which relied on an accelerating number of new members to pay off the old, abruptly terminated its services last week leaving participants stranded.

This comes as Econet’s mobile financial service platform, EcoCash yesterday distanced itself from the pyramid scheme. Participants claimed they were using EcoCash for their transactions.

Zimbabweans have in the past months been joining the online investment scheme in droves in a bid “to get rich quickly”. The Reserve Bank of Zimbabwe warned people that the scheme was fraudulent and there was no legal recourse in the event they lost their money.

The central bank said MMM, which advertises its operations through a website and recruiting agents, was not a registered or regulated entity. EcoCash yesterday said: “We have noted that some of these pyramid schemes are allegedly advertising in a manner that suggests that the Ecocash facility is a medium for prospective members to deposit their money. This is not correct.

“We advise our valued customers and all stakeholders that Ecocash is a licensed mobile payment platform that enables customers to make financial transactions such as sending money, buying prepaid airtime as well as paying for goods and services within the confines of the law of Zimbabwe. EcoCash promotes safe and legal transactions but will not be held liable for any losses arising from the use of EcoCash to engage in illegal activities such as Ponzi schemes.”

The scheme advertises itself as a mutual aid fund under which recruited members contribute money to assist others and are promised investment returns of 30 percent per month. Some of the people left counting their losses told The Herald that they received emails that the scheme had been suspended until September 15.

“All along things were moving in the right direction and we now have nowhere to claim our investments,” said Mr Tinashe Muza of Harare.

“When we started putting our funds in the scheme one could get assistance within seven days but things later changed to 14 days and when we were shut out the waiting period was 21 days. What it simply means is that the number of people in need of help has outnumbered the number of people joining. Right now we have nowhere to get our money which we invested.”

MMM stands for Mavrodi Mondial Moneybox and takes its name from its founder, Sergei Panteleevich Mavrodi of Russia. He founded MMM in 1989 and the scheme was declared bankrupt three years later leading to the disappearance of Mavrodi until his arrest in 2003.

Another victim, Mrs Rosemary Mawonde said: “We never thought the scheme would end this way as we believed that by using EcoCash to do the transactions, things were in order. I am surprised that EcoCash is also distancing itself from the scheme and it is clear that I will never recover the $300 that I invested.”

While some people who were skeptical about the scheme started with small amounts, it is believed some poured in thousands of dollars anticipating higher returns. The RBZ said the schemes were fraudulent as existing investors were ‘paid money not from genuine market investment of their funds, but from contributions made by new investors, until a point when the scheme can no longer attract new investors,”

“The participants are made aware that they make their money by recruiting new members who in turn must recruit more members,” warned the Central Bank.

Central Bank In No Mood To Devalue Naira

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Nigeria’s central bank is no mood to devalue the naira given the risks to inflation from a weaker currency, its spokesman said on Friday, potentially delaying investment flows into Africa’s biggest economy.

The central bank (CBN) said in a statement it believed the 22 percent depreciation in the naira after it scrapped the official foreign exchange window “is optimal at this time” and the bank would not be pressured into “desperate measures”.

International investors, who think a naira devaluation is long overdue, are holding back from buying Nigerian assets, raising risks of a deeper financing crisis for Africa’s top oil producer and most populous country.

“The CBN believes that the 48 percent decline in oil prices may not be transitory and made bold policy changes including closure of the subsidised official FX window, which resulted in a 22 percent depreciation in the naira,” bank spokesman Ibrahim Muazu said.

“We believe that this adjustment is optimal at this time.”

The central bank scrapped its bi-weekly currency auction in February and pegged the naira near to where it was trading on the interbank market at the time, curbing speculation.

The naira fell steeply on the parallel market after the bank, seeking to conserve its dollar reserves, last week banned importers from sourcing hard currency from the interbank market to buy a wide range of goods.

The naira hit a record weak point of 230 to the dollar on Wednesday while the bank rate was 196.95. Investors have questioned how long the central bank can hold the peg, which it has tweaked slightly four times since February.

CREDIBILITY AT STAKE

“The credibility of the interbank market has been lost at this point,” said Alan Cameron, economist at Exotix.

“The more volumes move to the black market, the harder it will become for the CBN to re-establish the credibility of any official rate. The window for a more modest devaluation is now closing, in our view,” he said.

Stocks, bonds and the currency have been on the ropes since the price of oil plunged last year.

Devaluation worries “will delay any recovery in investment flows … complicate the financing of Nigeria’s fiscal deficit, and potentially delays any economic recovery,” said Razia Khan, chief economist for Africa at Standard Chartered Bank.

Muazu said the central bank’s job was to ensure policy stability: “The CBN does not panic and will not take desperate measures to satisfy a few misguided interests in the market.”

Credit: Reuters