Nigerian Autonomous Foreign Exchange Market’s daily turnover surged by 226 per cent in the first half of 2024 compared to the previous year, reflecting successful reforms.
This is as the Central Bank of Nigeria (CBN) has urged customers to report cash withdrawal issues starting December 1, 2024, amid ongoing naira scarcity.
CBN Governor Olayemi Cardoso emphasised penalties for banks failing to ensure cash availability and highlighted a 72 per cent rise in foreign portfolio inflows, alongside a growth in forex reserves from $32 billion to over $40 billion, marking the highest level in three years.
The improved functioning of the forex market is having the desired impact as the average daily turnover in the Nigerian Autonomous Foreign Exchange Market increased by 226 per cent in the 1st half of the year when compared to the same period in 2023.
The CBN charged bank customers to report difficulty in getting cash at banks or Automated Teller Machines (ATM) effective Sunday December 1, 2024, as the end of year festivities commence in full.
This is as it said, it will as part of its Payment System 2025 goals, be reviving the eNaira to foster cross border payments. CBN governor, Olayemi Cardoso speaking at the 2024 Bankers Dinner said banks face stringent penalties if they fail to make cash available to customers in the banking halls as well as ATMs.
Reading the riot act to banks in the country, Cardoso said, the apex bank is also concerned about delays in settlement of transactions in the financial system. It stated that there will be strict penalties for banks who fail to comply with cash availability and prompt settlement of transactions.
Foreign portfolio inflows have increased by over 72 per cent during this period, while foreign exchange reserves have risen from $32 billion in May 2023 to over $40 billion today.
This represents the equivalent of eight months’ import cover and marks the highest reserve level in nearly three years.
The market has also supported over $9 billion in capital outflows over the past year as investors were able to freely repatriate capital and dividends without the need to wait for several months as experienced in the past.
These results reflect improved confidence in the reforms we have embarked on. In addition, we witnessed a $6 billion current account surplus in the first half of 2024 as a result of the impact of these reforms. Reduction in petroleum product imports supported by improved domestic refining capacity, a growing focus on non-oil exports and higher remittance inflows helped to support the positive current account balance.
Cardoso raised concerns, “over recent delays in some payment gateways in settling financial transactions. Trust is fundamental to fostering digital transactions, and we must take every necessary step to preserve that trust in our payment systems. These delays often disproportionately affect vulnerable segments of our population. To address this, we will impose strict penalties on non-compliant institutions to safeguard consumer trust and ensure swift redress mechanisms are in place.
“We also recognise the ongoing challenges with cash availability at ATMs, which disproportionately affect ordinary Nigerians. To address this, we are conducting spot checks across Deposit Money Banks (DMBs) and will impose penalties on underperforming institutions.
“Effective December 1, 2024, customers are encouraged to report any difficulties withdrawing cash from bank branches or ATMs directly to the CBN through designated phone numbers and email addresses for their respective states.
“Guidelines will be distributed widely to raise public awareness. We also urge full regulatory compliance by all stakeholders, including Mobile Money Operators and PoS Agents, to promote digital transaction channels and improve service delivery. I repeat, financial institutions found engaging in malpractices or deliberate sabotage will face stringent penalties.”
On foreign exchange, he said, the previous harsh Forex policies had stifled the much needed foreign investment, and “led to the depletion of our external reserves which fell to $33.22 billion in December 2023. It must also be understood that the cost of the forex subsidy regime is estimated to far exceed that of fuel subsidies.
“In 2022 alone, the potential revenue lost due to a less flexible forex regime was approximately N6.2 trillion, compared to N4.5 trillion from fuel subsidies. These funds could have significantly contributed to critical investments in education, healthcare, and infrastructure development.
“In the past year, we have undertaken critical reforms to unify Nigeria’s exchange rate, eliminating distortions and restoring transparency. This unification has enabled us to clear the outstanding foreign exchange obligations, giving businesses—ranging from manufacturers to airlines—the confidence to plan and invest in the future,” he pointed out.
