Naira Crisis: Banks Fear Heighten As Customers Shun Cash Deposit

 The Nigerian economy has started redeeming from the three-month-long naira insufficiency, but there is another infuse risk of a possible banking sector collapse as customers shun cash deposits.

The development is a spill-over effect of the Central Bank of Nigeria’s (CBN) poorly implemented Cashless Policy, which caused Nigerians untold nightmares and hardship.

However, CBN’s massive evacuation of banknotes to commercial banks on March 24, 2023, had served as the antidote to the currency predicaments, though many Nigerians described the move as late.

But, the respite looks short-lived, following an elevated tension of banks’ insolvency amid customers declining steam to deposit cash and conduct other transactions.

New Telegraph reports that Nigerian banks’ assets rose by 10.72 trillion Naira ($22.61 billion) between August 2021 and August 2022 to hit 66.76 trillion Naira ($151.49 billion), according to CBN’s data.

Speaking with the DAILY POST, Adaeze Okolie, a resident of Abuja, said, “I no longer feel the need to deposit my money with the Bank; I rather keep it. The Naira scarcity period did expose the inefficiency of Nigeria’s banking system. It was appalling, I could not withdraw for months, and online transactions were equally frustrating. Many Nigerians have learned their lessons”.

Also, Usman Abdullahi, a yam seller in Suleiman Market, said, “He would rather keep his money rather than go to the bank to deposit cash or better look for other means”.

Augustine Chukwu, a PoS operator in Utako Market in Abuja, said, “I collect cash from market men and women; I rarely visit the banking hall”.

But Abdul Imoye, the Head of Media Relations at Access Bank PLC, confirmed the decline in cash deposits by customers and said the anxiety held by Nigerians for not depositing cash would soon be a thing of the past.

According to him, what is happening now is typical of the Nigerian mentality, but business would bounce back in time.

“It is due to the ‘Nigerian mentality’; customers had struggled with cash scarcity for months, so people are normally apprehensive. But now there is cash in the banking system; I am sure things will return to normal”, he added.

Also, The CEO of SD & D Capital Management, Mr Idakolo Gbolade, said bank customers’ behavior towards cash deposits is a natural resentment.

According to Idakolo, “The bank customers will naturally shun depositing their funds, and deposit is expected to decline due to the experience of depositors in the past few months.

He also said, “Bank customers went through hell to make withdrawals from their deposits, so it is natural for resentment regarding depositing their funds back to the banks.

“This trend will continue for months before depositors adjust accordingly.

“The economy will gradually bounce back with cash infusion into the system,” he stated.

Last Month, Nigerian Deposits Insurance Corporation, NDIC, with the primary responsibility to protect Depositors, reassured that it is committed to ensuring a solid banking system in collaboration with the CBN.

'Big Brother Naija Past Questions' booklet is now being sold in traffic

Honestly, Nigerians play too much. They are actually selling 'Big Brother Naija Past Questions' in traffic for aspiring BBNaija housemates.

There's nothing we won't see.

Dollar drifts in year-end trade as clouds gather

The dollar was broadly steady in thin year-end trading on Monday with the Australian dollar AUD=D3 leading gainers as tensions over a trade dispute between the United States and China faded on expectations of progress in trade talks.

The Australian dollar gained 0.4 per cent to $0.7063 but on the year is down 10 per cent.

The Aussie has suffered against the greenback this year due to tensions between the world’s two biggest economies because of its status as a currency highly correlated to global trade.

In a tweet, which provided relief to financial markets, U.S. President Donald Trump said on Sunday that he had a “long and very good call’’ with his Chinese counterpart, Xi Jinping and that a possible trade deal between the United States and China was progressing well.

The dollar was broadly steady at 96.43 but is set to close the year up nearly five per cent against its rivals on trade tensions and rising interest rates.

China and the United States have been in a trade war for much of 2018, shaking world financial markets as the flow of hundreds of billions of dollars’ worth of goods between the world’s two largest economies has been disrupted by tariffs.

Going into 2019, the outlook for the dollar is more subdued with growing expectations that a three-year rate hiking cycle in the United States has come to a close.

Markets currently expect no rate hikes next year.

“Along with growing expectations of no more rate hikes, the familiar issues of the twin deficits is expected to weigh on the dollar next year,’’said Alvin Tan, a currency strategist at Societe Generale in London.

The dollar has been relatively stable going into the end of 2018 despite falling U.S. Treasury yields.

The U.S. 10-year Treasury bond yield US1OYT=RR was at 2.71 per cent on Monday, having fallen nearly 30 basis points in December.

The euro EUR=EBS was last quoted at $1.1440, flat versus the dollar.

Although the single currency has gained versus the dollar in recent weeks, economic growth and inflation in Europe remain much weaker than the European Central Bank’s expectations.

The euro is set to lose nearly five per cent versus the dollar in 2018.

Elsewhere, sterling GBP=D£, which has been battered this year by Brexit woes, rose to a three-week high in quiet trade.

It rose 0.3 per cent at $1.2732 but has lost more than six per cent of its value versus the dollar this year.

Shoprite charged with anti-competitive behaviour

South Africa’s Competition Commission said on Thursday it had charged retailer Shoprite and its subsidiary Computicket with anti-competitive behaviour, and recommended a fine.

The commission said Shoprite and the event ticket seller had signed exclusive agreements that gave Computicket the ability to discriminate between large and small customers on prices.

The commission said the discrimination had forced third parties to engage with Computicket, excluding its competitors.

“The Commission has asked the Tribunal to impose an administrative penalty of 10 per cent of Computicket and Shoprite Checkers annual turnover,” the commission said in a statement in Johannesburg.

Shoprite was not immediately available to comment.

As a result, shares in the country’s biggest supermarket chain fell more than 4 per cent after the announcement, but had recovered to 183 rand, a decline of 1.84 per cent in early trading.

The case marks the second time the commission has referred Computicket to the Competition Tribunal, with a decision on similar charges.

This is the first time that Shoprite has been added as a respondent to the charges.

Access Bank/Diamond Bank not merged yet – SEC

Following  reports of merger by the boards of Diamond and Access banks, the Securities and Exchange Commission (SEC) has said that both banks are yet to formally merge.

The nation’s apex Capital Market regulator explained that the process is not yet completed, even as it awaits their application on the matter.

The SEC in a statement said: “Access bank and Diamond Bank have both notified the Commission and the general public. It is a notice to merge, they have not merged yet. SEC is awaiting their application on the matter.

“The SEC received on Monday, Dec 17 2018, notice of intention by Diamond Bank & Access Bank to merge. The Commission is currently waiting for their formal Application”.

The completion of the merger is subject to certain shareholder and regulatory approvals expected to be completed in first half of 2019.

MTN sues FG for N3b over $1.3b withholding tax

MTN Nigeria Communication Ltd has filed a fresh suit at the Federal High Court in Lagos to challenge the legality of N242 billion and $1.3 billion import duties and withholding tax demanded from it by the Federal Government.

It is demanding N3billion general and exemplary damages and legal costs from the defendant.

Justice Chukwujekwu Aneke on Thursday adjourned the suit until December 3 for hearing after counsel confirmed that motions have been filed and served on parties.

MTN, in the suit filed on September 10, is challenging the legality of the Attorney-General of the Federation’s assessment of its import duties, withholding tax and value added tax amounting to N242 billion and $1.3 billion.

It is contending that the purported “revenue assets investigation” allegedly carried out by the Federal Government  for the period of 2007 to last year, and its decision conveyed through the Office of the AGF by an August 20 letter, violates the provisions of Section 36 of the 1999 Constitution.

The plaintiff sought a declaration that the AGF acted in excess of its powers by purporting to direct through its letter of May 10 a “self-assessment exercise” which usurps the powers of the Nigerian Customs Service to demand payment of import duties on importation of physical goods.

MTN sought a declaration that the AGF acted illegally by usurping the powers of the Federal Inland Revenue Service (FIRS) to audit and demand remittance of withholding and value added taxes.

It is praying the court to hold that the purported self-assessment exercise instituted by the AGF via its May 10 letter is unknown to law, and therefore null and void and of no effect whatsoever.

It prayed for a declaration that the AGF’s demand of the sums is premised on a process that is malicious, unreasonable and made on incorrect legal basis.

MTN prayed for an order vacating the AGF’s demand letter for N242 billion and $1.3 billion, and claimed N3 billion general and exemplary damages, as well as legal costs.

But, the AGF, in his preliminary objection, argued that the plaintiff was statute-barred, having not filed the suit within three months from the date the cause of action arose.

The AGF argued that the plaintiff commenced the suit in violation of Section 2 of the Public Officers Protection Act, which provides that any action commenced against a public officer must be made within three months from commencement of cause of action.

AGF contends that the plaintiff’s failure to commence the suit within three months as stipulated by law robs the court of jurisdiction to entertain it.MTN Nigeria Communication Ltd has filed a fresh suit at the Federal High Court in Lagos to challenge the legality of N242 billion and $1.3 billion import duties and withholding tax demanded from it by the Federal Government.

It is demanding N3billion general and exemplary damages and legal costs from the defendant.

Justice Chukwujekwu Aneke on Thursday adjourned the suit until December 3 for hearing after counsel confirmed that motions have been filed and served on parties.

MTN, in the suit filed on September 10, is challenging the legality of the Attorney-General of the Federation’s assessment of its import duties, withholding tax and value added tax amounting to N242 billion and $1.3 billion.

It is contending that the purported “revenue assets investigation” allegedly carried out by the Federal Government  for the period of 2007 to last year, and its decision conveyed through the Office of the AGF by an August 20 letter, violates the provisions of Section 36 of the 1999 Constitution.

The plaintiff sought a declaration that the AGF acted in excess of its powers by purporting to direct through its letter of May 10 a “self-assessment exercise” which usurps the powers of the Nigerian Customs Service to demand payment of import duties on importation of physical goods.

MTN sought a declaration that the AGF acted illegally by usurping the powers of the Federal Inland Revenue Service (FIRS) to audit and demand remittance of withholding and value added taxes.

It is praying the court to hold that the purported self-assessment exercise instituted by the AGF via its May 10 letter is unknown to law, and therefore null and void and of no effect whatsoever.

It prayed for a declaration that the AGF’s demand of the sums is premised on a process that is malicious, unreasonable and made on incorrect legal basis.

MTN prayed for an order vacating the AGF’s demand letter for N242 billion and $1.3 billion, and claimed N3 billion general and exemplary damages, as well as legal costs.

But, the AGF, in his preliminary objection, argued that the plaintiff was statute-barred, having not filed the suit within three months from the date the cause of action arose.

The AGF argued that the plaintiff commenced the suit in violation of Section 2 of the Public Officers Protection Act, which provides that any action commenced against a public officer must be made within three months from commencement of cause of action.

AGF contends that the plaintiff’s failure to commence the suit within three months as stipulated by law robs the court of jurisdiction to entertain it.

MTN earlier filed a separate suit against the AGF and the Central Bank of Nigeria (CBN), which is pending before Justice Saliu Saidu of the same court and will be heard December 4.

In the suit, MTN is challenging the $8,134,312,397.63 demanded from it by the CBN over alleged forex remittance infractions.

It is praying the court to restrain the CBN and the AGF from imposing punitive sanctions against it.

The CBN accused MTN Nigeria of improper dividend repatriations and demanded that $8.1 billion be returned “to the coffers of the CBN”.

The Federal Government also accused MTN of unpaid taxes on foreign payments and imports, asking it to pay approximately $2billion in relation to the taxes.

According to the CBN, MTN and four banks – Standard Chartered Bank, Citi Bank, Stanbic IBTC Bank and Diamond Bank – deliberately flouted the “laws and regulations…including the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995 and the Foreign Exchange Manual, 2006.”

The banks allegedly colluded with MTN, using irregular Certificates of Capital Importation (CCI), to illegally remit foreign exchange abroad. The four banks were slammed a combined N5.87 billion fine.

MTN denied the allegations and subsequently filed the suit.