Following the consensus reached by the Bankers' Committee to publish the returns on utilisation of funds bought from the Central Bank of Nigeria (CBN), a review by THISDAY of the returns published on Thursday by all the Tier 1 banks, including Stanbic IBTC Limited and Diamond Bank Plc for the first two weeks of February, has shown that Stanbic IBTC Limited with total of $23,615,680.90 reported the highest amount of forex purchased from the CBN on behalf of its customers.
Stanbic IBTC was followed by First Bank of Nigeria Limited (FirstBank) and Guaranty Trust Bank Plc (GTBank), with $19,774,888.26 and $19,709,354.41, respectively.
Also, Zenith Bank Plc with total returns of $18,707,309.97 came in fourth, while Diamond Bank reported returns of $17,515,474. Access Bank reported returns of $16,982,208.04 to occupy the sixth place, while the United Bank for Africa Plc (UBA) reported returns of $12,045,150.76.
By Thursday, only seven banks had published their returns on utilisation of funds purchased from the CBN, with others expected to do so today.
The publications from the banks showed that divestment by foreign portfolio investors from the equities and bond markets accounted for a largest chunk of forex, in terms of value, bought by Stanbic IBTC from the CBN, cementing its place as the largest stockbroking firm in the country.
Stanbic IBTC returns showed that BNP Paribas, Brown Brothers Harriman/Stanbic Nominees, HSBC Funds Services London, JPM London, JPM Securities, Northern Trust London, State Street/Stanbic Nominees, the Bank of New York, were some of the investment banks that it sold forex to following their divestment from
Nigeria's
stock market, treasury bills, as well as FGN Bonds.
It also sold dollars for the importation of machinery parts, polypropylene and printing machines, among others. After divestments from the capital market, the purchase of foreign exchange for other invisibles such as school fees, business travel allowance (BTA) and personal travel allowance (PTA), got the second highest volume as shown in the publications reviewed by THISDAY.
Of the three invisibles - school fees, PTA and BTA - the payment for school fees abroad featured most prominently on all the lists of the seven banks.
In the case of FirstBank, its returns on utilisation of the $19.77 million it bought from CBN, showed a diverse allocation to various sectors of the economy.
The sectors were petroleum, manufacturing, agricultural, machine spare parts, pharmaceutical packaging materials, industrial chemicals, bottling machinery spares, poultry meal, raw materials for paper production, school fees, and PTA/BTA, among others.
On the other hand, of the $19.71 million bought by GTB on behalf of 293 firms/individuals, 234 firms/individuals got forex allocations for school fees, while 25 firms/individuals got for PTA/BTA.
However, the value of forex for the importation of industrial raw materials as well as industrial spare parts, pharmaceutical products, and aluminium windows and doors by GTBank was higher.
Also, Zenith Bank Plc's returns showed that the bank sold a total of $18.71 million to 348 customers. Zenith Bank's distribution of forex purchased by its customers showed that a large portion was allocated to the payment of school fees. But some customers were sold dollars for the importation of industrial raw materials, machine tools, and consumables for coding machines, among others.
Similarly, Diamond Bank Plc's returns, revealed that most of its customers purchased forex for the payment of school fees. A total of 165 of the bank's customers, out of the 246 who bought dollars from the bank did so to pay school fees.
Nevertheless, Diamond Bank also sold forex to some customers to import fabricated structural steel, project cargo, raw materials for furniture, and PTA, among others.
Just like some of its peers, Access Bank sold forex to 140 firms and individuals to pay school fees out of 166 of its customers, while the remaining 26 customers on the bank's list, purchased forex for PTA. In the same vein, the bulk of UBA's forex was sold to customers paying for school fees abroad as well as for PTA.
Commenting on the utilisation of forex by the top seven banks in the country, a top banker explained to THISDAY that "forex consumption is a function of the volume of business a bank does, particularly with the larger corporates and manufacturing firms that use huge chunks of forex".
When contacted on the decision by commercial banks to publish their returns on foreign exchange utilisation, CBN's Director, Corporate Communications, Mr. Ibrahim Muazu, explained that it was done to improve transparency in the allocation of forex to the banks. According to him, banks would be publishing their returns almost weekly.
"There was a time when the banks were doing this. This is to make sure we have some kind of control and transparency in the allocation of forex. Also, those who continue to say the CBN is not allocating forex would see the sectors it is going to and those purchasing it. "So in line with what the CBN governor had said, banks would only allocate forex to priority sectors," Muazu explained to THISDAY last night.
Instructively, the volume of demand for forex for school fees was one of the main topics discussed at the Bankers' Committee yesterday. The CBN, at the end of the meeting equally disclosed that 57 million Nigerians, representing a third of the population, now have access to financial services since it commenced its financial inclusion campaign strategy.
It also said efforts were ongoing to increase the numbers of access points for financial services in the North-east. Addressing journalists after the meeting in
Abuja
, CBN Director, Banking Supervision, Mrs.
Tokunbo Martins, alongside other bank chief executives, said the target was to improve financial inclusion to 68.5 per cent.
Should the target be met, she said: "We would have gone a long way to alleviate the sufferings of Nigerians." Also, the CBN director confirmed that the central bank was aware that some banks had imposed unapproved charges on their customers. She, however, explained that the affected banks had been directed to reverse such deductions, adding that the CBN would do everything to ensure bank charges do not scare people away from the banking system.
The Group Managing Director/Chief Executive, Access Bank Plc, Mr. Herbert Wigwe, also said the committee discussed ways of ensuring that the demand for foreign exchange for the purpose of paying school fees abroad, among others, does not crowd out real sector investments.
He said although the banks could not reach a definite consensus on the issue, they harped on the need for local patronage of things that have continued to exert pressure on the naira.
He said discussions also centered on how to redirect foreign exchange to the real sector, particularly industries that utilise raw materials. Wigwe added that discussions focused on cutting back forex for the payment of school fees and re-channeling same to the real sector.
He said: "We find different pressure on different banks in terms of demand, but generally never below 15 per cent of the demand of the current foreign exchange that is being given to the banks is for school fees; that by any stretch of imagination is significant.
"Now the deliberations we had today did not agree on any final position but one thing was clear, which was the fact that we should not allow this demand to crowd out real sector investments, because the money you get to pay these school fees is from industry that is working locally."
Wigwe added that the committee second also wondered why the education system could not be revisited to make children go to school locally.
"Why must we spend a lot of money around children's school fees overseas or medical tourism as they call it? Now the idea is not that you can't do it, it is that you can't access it from the central bank's limited resources; that's the simple point.
"However, we did not reach any formal conclusion but it is part of the general direction in which we are headed," he said. In her contribution, the Managing Director/Chief Executive, Standard Chartered Bank Nigeria, Mrs. Bola Adesola, said the present situation required every Nigerian to make sacrifices through local patronage to further help the local currency.
Also, the Group Managing Director/Chief Executive, Diamond Bank, Mr. Uzoma Dozie, said the committee further sought ways to make documentation on account operations in a cost-effective manner for the benefit of both customers and the financial system.
He said the banks would also seek to drive financial literacy so as to adequately educate customers about the various bank charges, adding that most of the complaints by customers showed they are not well informed. He said banks had agreed to comply with approved charges.
On the impact of the publication of bank debtors, the committee said the move had been helpful, stating that the "list is getting better" by the day.
Meanwhile, the Edo State Governor, Mr. Adams Oshiomhole yesterday threw his weight behind President Muhammadu Buhari and the Central Bank of Nigeria's (CBN) stance against further devaluation of the naira.
The governor, who spoke at colloquium organised by online news medium, The Cable, on whether or not to devalue the naira, argued that devaluing the nation's currency further would reduce workers' wages and their purchasing power.
He also stressed on the need for Nigerians, especially the elite to cut their appetite for foreign goods. According to the former Nigeria Labour Congress (NLC) president, everything was perfect when crude oil price sold for $140 per barrel, adding that at the time, there was no conversation on whether the naira should be devalued or not.
"If oil prices had gone to N200/$1, I suspect nobody would be talking about devaluation. If we don't cut our demand for imports and reorder our consumption pattern and our foreign exchange receipts continue to decline, all things being equal, in the next one year, our foreign exchange reserves would be zero.
"So I think it is the realisation of this danger that all of a sudden everybody is discussing devaluation," he added. Oshiomhole recalled that the subject of the naira's devaluation in
Nigeria
was first triggered by the
International Monetary Fund (IMF) in the 1980s.
"Then, we were lectured about the beauty of devaluation. We were even told the additional benefits of how it was going to help redirect our consumption. We were told by those experts that when you devalue, a couple of things happen immediately: prices of imported goods would go up and so when we will begin to consume less of what is imported.
"These were some of good arguments around the issue of the Structural Adjustment Programme (SAP) introduced by the IMF. But at the end of the day, we didn't see those benefits.
"That is why I believe the issue of national economic policy should not just be left in the hands of experts alone," he added. He said: "The CBN, I understand, took some measures which are beginning to hurt some people and that has triggered this controversy. Rather than the government, as it used to be in the past, indicating their intention to devalue, it is a section of the public that is behind this controversy: the investment bankers.
"These are the investment bankers who want to play on bonds and other commercial papers with hot monies that they can move in and out, they don't want any interference."
He also opined that the present scarcity of dollars in the foreign exchange market was not a supply issue, saying, "We are dealing with pure speculative issues and if you devalue, the main people who would be trapped are the workers." He added: "Will devaluation curb our appetite for imported goods as the IMF had argued in the 1980s? The evidence from the CBN shows that policies in the Nigerian environment cannot curb our appetite for foreign goods.
"The last time the CBN devalued in 2014, as a matter of fact, our exports actually declined and our imports increased by 2.9 per cent after devaluation. When humanbeings don't labour to earn, they do not spend rationally. "Even if we devalue by 300 per cent, it would not curb the appetite of the elite to import toothpicks and frozen chicken, even if it is harmful, and will even import expired rice from other countries.
"So the thesis that when you devalue you will export more is not supported by evidence. The evidence we have is that 98 per cent of our exports is in oil and gas which is priced in dollars. So no matter what your exchange rate is, this percentage will not change.
"On the other hand, when you devalue, will fewer people travel? Again, the evidence is no. This is because those who occupy permanently, the executive seats of British Airways, they are the people who live on rent. They are the subsidy boys, and they are the political class. So, for me, I am not able to see what the benefits of devaluation are." Oshiomhole noted that Buhari had said he would not join forces with those who want to "kill" the naira. "And when he uses the word 'kill,' he means it with every sense in the world.
"He has used that same word, to describe corruption. He said if
Nigeria
does not kill corruption, corruption would kill
Nigeria
. "So he is leading those that do not want the naira to be killed and we have the CBN also among those defending the naira. I associate myself with the position of the president, not because I am a loyal party member, but because I have looked at the statistics and I have seen a strong correlation between devaluation and poverty," he said. He advised that what was required is for Nigerians to have a president with a clear determination to compel the citizens to change their consumption and to reconcile it with current realities.
"Those who live on speculation, we have no business supporting them. And for people to take our policies seriously, as a matter of policy, I think we must move away from the regime of which we make policies in the morning, and reverse them in the evening," he added. But in his presentation, the CEO, Financial Derivatives Company Limited, Mr. Bismarck Rewane, stressed on the need for the CBN to develop a more flexible exchange rate policy and expressed concern over the rent-seeking opportunities created by the wide gap between the interbank and parallel forex markets
According to Rewane, "Ten to 15 years ago, we had Western Union, MoneyGram bringing money into
Nigeria
.
Nigeria's
diaspora had
$21 million every year in earnings which could come in here.
"Why are they no longer coming in? The central bank tells us that it disbursed over $8 billion to BDCs in the last two years, who are the BDCs? "The system is being abused and corrupted, and some of the people sitting down here today are saying they want the policy to continue so that they can continue to abuse and steal the money under the guise that they are protecting the currency."
In his remarks, Director, CBN Monetary Policy, Mr. Moses Tule said there was need to encourage foreign direct investment, while the Secretary General of the Nigerian Union of Textile Garment and Tailoring Workers of Nigeria (NUTGTWN), Mr. Issa Aremu pointed out that
Nigeria
should consume what is produced locally in order to reduce its reliance on foreign exchange and provide employment opportunities for the teeming unemployed people.
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