Nigeria’s beleaguered foreign reserves seems to be gradually regaining its upswing as it rose by $1.030 billion in the last one month to close at $38.136 billion at the weekend.
This represents an accretion by 2.8 per cent, compared to the $37.106 billion it stood as at June 10, 2014.
Most analysts attributed the development to the appreciation of crude oil prices in the international market. In addition, some noted that the moderate demand for the US dollar observed at the central bank’s regulated Retail Dutch Auction System (RDAS) was also influencing the gradual build up of the reserves.
Data gathered from the central bank showed that the current value of the reserves which is mostly derived from crude oil earnings is the highest in the last two months.
In the New York Mercantile Exchange, West Texas Intermediate crude oil for delivery in August traded at $101.00 a barrel at the weekend, while Brent oil futures for August traded at $106.701 a barrel, while the spread between the Brent and US crude contracts stood at $5.70 a barrel.
The Chairman, Lagos state branch, Chartered Institute of Bankers of Nigeria (CIBN), Mr. Bolade Agbola pointed out that the CBN governor’s agenda of maintaining price stability would help in the forex reserves accretion.
“The CBN governor has said that one of his goals is to ensure that the forex is stable. There are so many advantages in that. It allows forex inflow. That is why all central banks across the world, one of their main objectives is to maintain price stability and when you are talking about price stability you are talking about the pricing variables.
“The challenge the naira was facing was as a result of the recovery of advanced economies. Many investors came to Nigeria for higher yield investments and had an incentive to repatriate their money to go back and invest. But the only way to minimise that is to defend the naira which I think is what the CBN has been doing in the last few years,” he said.
Furthermore, the CIBN boss stated that the sustained crude oil production by the country would also support the growth of the forex reserves.
“The global oil market is not doing badly and we have been trying as a nation to sustain production as an export-oriented country. Government is also making efforts to improve non-oil exports,” he added.
Concerned by the perennial depletion of the foreign exchange reserves, the central bank recently announced new capital requirements for the licensing of Bureau De Change (BDC) operators in the country.
Part of it included a new minimum capital base of N35 million, up from the N10 million it was previously. Thisday
NDIC Denies Seeking Power To Liquidate Insurance Firms
The Nigeria Deposit Insurance Corporation (NDIC) has denied newspaper reports last week that it is seeking powers to liquidate insurance companies and terminate the insurance companies’ licences.
The NDIC at the weekend stressed that the amendment of its Act is not to give it powers to liquidate insurance companies, saying, “As a deposit insurer and liquidator of insured deposit taking financial institutions, the liquidation of insurance companies does not fall under the purview of the corporation.”
The NDIC in a statement issued at the weekend and signed by its head of communications and public Affiars, Hadi Birchi, said, “The corporation wishes to make it categorically clear that its proposed amendments bill which is before the National Assembly does not seek for powers to liquidate insurance companies or terminate the insurance firm’s licences as erroneously published in the national dailies.”
NDIC stated that the proposed amendments are to enable the corporation discharge its mandates effectively and efficiently, noting that some of the proposed amendment included prompt payment of insured deposits following failure of an insured institution by reducing time of reimbursement (payment to depositors) from 90 days to 60 days as well as powers to deal with parties at fault, i.e. directors and officers who caused the failure of an insured institution.
The NDIC is also seeking powers to reimburse insured depositors notwithstanding pending court suits; prevent execution of judgment against the assets of the corporation (as body corporate) for a liability of a failed insured institution.
Aside these, proposed amendment of the NDIC Act 2006 also seeks limitation of court orders aimed at preventing the corporation from carrying out its statutory functions of deposit protection; enhance corporate governance practices in the corporation; increase funding for the corporation to be able to carry out its core mandate of depositor protection and enhance its debt recovery efforts .
The NDIC was established in 1989, in deference the NDIC Act of 1988, with powers among others to supervise insured institutions, resolve banks’ distress conditions and act as liquidator of closed insured financial institutions whose licences have been revoked.
These powers were not only retained by the NDIC Act 2006, which replaced the NDIC Act of 1988, but were strengthened for greater effectiveness. The NDIC Act of 2006 had enabled the corporation to collaborate effectively with the CBN in resolving banking crises in Nigeria, particularly the crises of 2009.
However, emerging challenges after the crises as well as the experience garnered in the operation of deposit insurance in Nigeria in the past 25 years have necessitated the need for a further review of the 2006 Act in order to empower the corporation to address the emerging challenges.
It could be recalled that last week, at a one-day public hearing of the House of Representatives Committee on Banking and Currency on a bill for an Act to repeal the NDIC Act 2006 and re-enact the NDIC Act 2014, the Central Bank of Nigeria (CBN) kicked against current legislative moves to give the NDIC powers to liquidate insurance companies in the country, saying it will be duplicating a responsibility it plays already.
The CBN director, Banking Supervision, Mrs Tokunbo Martins, noted at the hearing that there were some amendments, including mandate, self-appointment as liquidator and termination of insurance firms’ licenses which needed to be harmonised between the NDIC and CBN.