This initiative, set to take place next Wednesday, aims to mitigate the increasing demand pressure in the FX market and stabilise the exchange rate of the naira.In a circular to banks, the CBN noted that it observed a significant rise in unmet FX demands from end users with banks, which has exacerbated the pressure on the FX market and adversely impacted the naira’s exchange rate.It stated: “The CBN has noted growing unmet FX demand from end users with banks. This has continued to increase the demand pressure in the FX market with adverse impact of the exchange rate of the naira.
“Authorised dealer banks therefore are to provide to the CBN, a legitimate list of all outstanding FX demand by end users.“This list must include comprehensive information about each customer, such as their name, address, and contact details including email, telephone number, Bank Verification Number (BVN), account number, Tax Identification Number (TIN), type of transaction, Form A or Form M, and Letter of Credit (LC) Number.“The CBN will undertake a Retail Dutch Auction System (DAS) to mitigate the demand for eligible transactions through authorised dealers on Wednesday, 07 August, 2024.
“Consequently, all authorised dealers are to provide the information above via email in the attached template to [email protected] on or before Tuesday, August 06. 2024.“The account of prospective customer should be naira backed as a prerequisite to participate in the auction for immediate settlement upon confirmation of bid acceptance by the CBN.
“The CBN’s directive mandates authorised dealers to provide this information via email to [email protected] using the attached template. The deadline for submission is Tuesday, August 6, 2024. Additionally, the accounts of prospective customers must be naira-backed to qualify for participation in the auction, ensuring immediate settlement upon confirmation of bid acceptance by the CBN.”Meanwhile, Cardoso, speaking at the opening of the 2024 African Caucus Meeting of Finance Ministers and Central Bank Governors, with the theme, ‘Facilitating Intra-African Trade: Catalyst for Sustainable Economic Growth in Africa’, in Abuja, said the continent stands at a crossroads with unprecedented opportunities for development alongside significant challenges.
He noted that to navigate the complex landscape and set the continent on a path of sustainable economic growth, Africa must leverage the support of its global partners, particularly the International Monetary Fund (IMF) and the World Bank Group (WBG), both of which play critical roles in the equation.Cardoso said their expertise and resources could provide the essential impetus needed to unlock the continent’s vast potential.He said the continent now stands on the threshold of a new era in African economic cooperation through the AfCFTA, the largest such agreement in the world by both area and number of countries.
Citing data from the World Trade Organisation (WTO), Cardoso noted that intra-African trade accounted for about 13 per cent of the continent’s total trade compared to 60 per cent in Europe and 40 per cent in North America.He said, “This indicates that significant efforts are needed to build a robust, economically diversified, and prosperous Africa. As monetary authorities, we have the responsibility to formulate policies that enhance trade among countries on the continent.“We can achieve this by fostering a financial landscape that encourages collaborative research and development (R&D) to support our industries and generate economic wealth for our growing populations.”
He said Nigeria, like many other African countries, faces economic challenges adding however that “we are committed to the vision of a united and economically integrated Africa.”
Cardoso stressed that by sharing experiences, including both successes and setbacks, “we aim to contribute to paving the path toward sustainable and inclusive economic growth that benefits all citizens across the continent.”
He urged stakeholders to leverage their diverse experiences and expertise to tackle the obstacles hindering intra-African trade to set the stage for transformative trade policies that will resonate across our continent and beyond.
He said sound monetary and fiscal policies play a pivotal role in facilitating intra-Africa trade and catalysing sustainable economic growth across the continent.
Cardoso pointed out that in the past few months, the apex bank had embarked upon bold reforms to return to the path of monetary policy orthodoxy as well as remove observed distortions in the foreign exchange market.
He said, “Our efforts have brought some significant outcomes as volatility in the foreign exchange market has reduced measurably and our inflows have also increased significantly. Interbank market activities have deepened while rates have begun to converge around the standing facilities band.
“While challenges remain, the direction of travel is clearly positive. The challenges in the operating environment present significant hurdles. It is crucial that monetary and fiscal policies provide robust responses to mitigate the risks of rising inflation and the lingering effects of adverse supply shocks, which have significantly impacted our economies.
Also, speaking to journalists at the meeting, Governor of the Bank of South Sudan, Mr. James Alic Garang, emphasised the need to reform the global financial architecture to reduce the cost of borrowing and enhance access to finance towards an equitable financing.
He also called for the harmonising of monetary and fiscal policies in the continent as well as ensuring that the voice of Africa is heard.
Garang, who is also the Chairman of the Monetary Affairs Committee for the East Africa Community, said discussions also centered towards ensuring that “Africa sits at the table where decisions around global financial architecture are taken” adding that these will part of the memorandum at the end of the meeting.
He said, “The other two things will of course, be around issues to do with access to energy. And this is the area where African development and the World Bank are taking the lead role to support the continent.
On the preparedness of African central bank governor to rise up to the challenge of youth unemployment, taking advantage of Artificial Intelligence (AI), he said “central bank governors are very conscious about the level of unemployment today in the region and in the continent, and especially among the youths.
“As a result, there’s going to be a session in the memorandum that focuses on improving youth employment and opportunities across the board and not just for one country. It’s from East to South and West to East, Africa. The governors are very conscious. And they’ll be ensuring that policies that focus on youth employment will be addressed.”
