Business

CBN and global instability, vulnerability of cryptocurrencies

Published

3 years ago

July 24, 2021

When in February, the Central Bank of Nigeria, CBN, directed banks and other financial institutions to cease transactions in cryptocurrencies and facilitating payment for cryptocurrency exchanges, several stakeholders raised concern about the directive.

In the memo, dated February 5, the apex bank instructed banks and other financial institutions to identify individuals or entities that transact in cryptocurrency or operate cryptocurrency exchanges and close their accounts.

The memo was sequel to an earlier 2017 warning by the CBN that cryptocurrencies were not legal tender and that investors were unprotected.

It explained that cryptocurrencies transaction was devoid of proper regulation and prone to financial crimes.

In spite of assurance by the CBN Governor, Mr Godwin Emefiele, that the directive was not inimical to the development of technology-driven payment system in Nigeria, many stakeholders still kicked against it.

They urged the apex bank to revisit the ban and see digital currencies as a tool for economic growth.

Emefiele had explained that the Nigerian payment system had evolved significantly over the past decade, boosted by reforms driven by the CBN, adding that cryptocurrency had no place in the Nigerian monetary system.

Sometime in May, the price of Bitcoin, which is the most popular cryptocurrency, fell drastically, after China imposed fresh restrictions.

China had earlier banned banks and payment firms from providing services related to cryptocurrency transactions, and warned investors against speculative crypto trading.

Crypto-currency trading has been illegal in China since 2019 in order to curb money-laundering, but people were still able to trade in currencies such as Bitcoin online.

Mr Elon Musk, Chief Executive Officer, (CEO) of Tesla, an auto manufacturer, was also accused by stakeholders of contributing to the fall in value of cryptocurrencies.

After his electric car company invested 1.5 billion dollars in Bitcoin in February, and assuring consumers that he would accept Bitcoin as payment for Tesla cars, Musk reversed that decision, citing the environmental effects of mining new coins.

This further resulted in a fall in Bitcoin of more than 10 per cent. Meanwhile, other digital currencies such as Ether, which acts as the fuel for the Ethereum blockchain network, and Dogecoin also plummeted in value.

Early in the week, Bitcoin jumped past 30,000 dollars as Elon Musk said Tesla is “most likely” to start accepting it as payment again.

This instability in value, and vulnerability to policy decisions from both state and non-state actors further accentuated the high risk involved in cryptocurrency.

It also vindicated the idea by CBN to suspend its transactions in the Nigerian banking system.

Many countries are yet to come up with effective and efficient means of regulating the cryptocurrency space conceived to be a money laundering den and a tool for terrorists.

Due to the anonymous mode of transactions of these currencies, the world’s biggest criminal groups seem to have made them convenient and global source for laundering money.

Meanwhile, the CBN has assured Nigerians that it would soon create its own, more secure digital currency.

Emefiele said this while addressing journalists after the last meeting of the Monetary Policy Committee, MPC, in May.

He said that the idea of a digital currency

would soon become a reality in the country, and that the central bank had already set up a committee, which is working on the concept.

CBN’s Director, Information Technology Department, Mrs Rakiya Muhammed, at the end of the meeting explained that the Bank had been conducting research in regards to central bank digital currencies since 2017 and may conduct a proof of concept before the end of the year.

“Currently, there are two currencies, notes and coins. The CBN’s digital currency will be a third type of currency to supplement cash. Rather than carry cash about, digital currency lodges the money in a mobile phone,” she said.

Citing a recent report which indicated that Nigeria was at about 60 per cent in financial inclusion, she explained that the proposed CBN digital currency would enhance the inclusion drive, reduce the cost of cash management as well as enable innovations in the nation’s financial market.

The director noted that, with a target of 80 per cent at the end of the year, such a step needed to be taken to raise the percentage of the nation’s financial inclusion.

She added that a central governance structure would be set up to address all associated risks with a view to ensuring that the Nigerian public got the best technology for the digital currency.

Also, Director General of Securities and Exchange Commission, SEC, Lamido Yuguda, revealed that SEC was working with the CBN for a better understanding and regulation of cryptocurrencies in the country.

Analysts expressed confidence that a collaborative effort by the CBN and SEC would go a long way to deliver a safe digital currency platform in the country.

As the frailties and instability in cryptocurrency investment continue to manifest across the globe, and as more countries continue to take more stringent steps to restrict and regulate its transactions, stakeholders are commending the CBN for having the foresight to blaze the trail in identifying inherent dangers in cryptocurrency and restricting its transactions.

CBN’s move tallies with the thoughts of policymakers around the world, who have been considering the idea of central banks issuing their own digital currencies, called Central Bank Digital Currencies, CBDCs, and to be made available to everyone, rather than just to licensed commercial banks.

Analysts agree that a national digital currency managed on a single network could allow money to change hands almost instantly like in crypto transactions, but in a more secure business environment.

NAN/Kadiri Abdulrahman

Business

Businesses count losses amid power outage in Bauchi, Gombe, and Jigawa

Published

4 weeks ago

October 28, 2024

Matthew Eloyi

Business owners in Bauchi, Gombe and Jigawa are recording losses due to week-long blackout ocassioned by vandalism of the power transmission line in parts of northern Nigeria.

The sudden disruption in electricity supply in the past days, also affected essential services such as water, sanitation, street lighting and healthcare delivery as most hospitals have been operating without light.

Some of the affected businesses including shop keepers, millers and artisans, who spoke while reacting to a survey by the News Agency of Nigeria (NAN), described the situation as “pathetic”.

The survey examined the perennial collapse of national grid and the need for alternative power supply in the country.

Rice millers in Gombe had decried the impact of the erratic power supply on their businesses.

A Miller, Musa Arab, at Nassarawo Industrial Layout in Gombe, said the trend was crippling their operations as they relied on electricity supply from the grid to process paddy.

He said the mills were not operational power outage as they could not afford exorbitant pump prices of petrol or diesel to run their machines.

This, he said, reduced the volume of rice supply to the market and posed serious challenge to food security.

“We must invest in power because it is the biggest determining factor for industries to thrive.

“I have over 20 workers in my mill, and we have 100 mini rice mills here, so you can imagine those who have no jobs for the past 10 days.

“Government must go tough on those responsible for the perennial grid collapse because some persons may be benefitting from it,” he said.

Also, Yusuf Ibrahim said the situation might trigger the already fragile inflation, as prices of local varieties would shot up ocassioned by the diminish supply.

He said that some had jerked up their charges to cover the expenses on diesel thereby affecting rice prices.

A check by NAN at the Gombe Main market showed that a 100 kilogramme of rice was sold for between N120,000 and N160,000, as against N110,000 and N150,000, before the blackout.

Mr Usman Sani, a rice dealer, attributed the hike in price to low supply of the produce to the market in spite of the number harvest recorded this cropping season.

He said the prices had decreased slightly at the onset of the harvest, however, it showed sprawling increase due to power outage.

“The price of rice is already dropping as a result of harvest but the trend reverse since the blackout in the past days “ he said.

Ugochukwu Daniel, a bartender in Bauchi, decried the epileptic power supply in the country, adding that lack of durable energy supply would retard Nigeria’s quest to attain social and economic greatness.

Daniel said that she spent much on fuel to run power generator for refrigrator and lightening the beer parlour, to enable her to keep the business running.

He said that businesses could only thrive in an enabling environment with stable electricity supply, to enhance wealth creation and reduce poverty among Nigerians.

“My trade is about chill drinks and it survives on electricity to operate otherwise you will out of bussiness.

“Without electricity there is nothing you can do, and not only business but about everything. We depend on it,” he said.

Similarly, Samuel Adamu, said the persistent power outage had forced him to patronised charcoal for ironing clothes in spite of its high cost and cumbersome processes.

He said that most cleaners in the area had resorted to fabricated iron charcoal in spite of hike in its prices which suddenly jumped from N5,000 to N15,000.

Adamu said the situation also encouraged division of labour in laundry to cut cost and make some gains.

“Presently, I do wash the cloth, and engage someone for ironing. The charge is N300 per set as against N150”.

While advocated development of renewable energies to enhance power supply in the country, Adamu urged security agencies to entensify efforts towards electrical installations in the country.

In the same vein; Mr Muhammad Adamu, Chairman, Jigawa State House Assembly Commitee on Power and Energy, said the Jigawa Electricity Law 2024, made sound provisions to improve power generation and distribution in the state.

This, he said, was an offshoot of the devaluation brought about by the 5th alteration of the constitution, where removed power from the executive legislative list and to the concurrent list.

“It empowered the state houses of assembly to enact laws on power.

“The committee has also carefully pursued the bill and reviewed its structure and the promise it holds for the state power sector, infrastructure and the overall economy of the state.

“The new law will pave way for the establishment of Jigawa Electricity Commission, to regulate the state’s electricity market,” he said.

According to Adamu, the law will protect residents and investors in the energy sector through ensuring prepaid meter installation and possibility of recouping investor’s funds as well as address vandalism.

“The law will lead to provision of reliable, affordable and sustainable power, essential for development of all sectors of the economy, particularly in rural areas,” Adamu said.

“Vandalism will be over because we pay Kano Electricity Distribution Company (KEDCO) money for powered supplies, but whenever there is problem of damages or broken down transformers, it is either the communities or individuals that pay for the repairs”.

Business

Mercedes urges delay of EU tariffs on Chinese electric vehicles

Published

1 month ago

October 21, 2024

Matthew Eloyi

Mercedes urges delay of EU tariffs on Chinese electric vehicles

The head of German luxury carmaker Mercedes-Benz, has called for the European Union to de-escalate the dispute with China over tariffs on electric cars.

“We need more free trade instead of new trade barriers.

“That is why it is important to find a solution that suits both the EU and China,” chief executive Ola Källenius told the Monday edition of Bild newspaper.

“The negotiations for this take time. In order not to jeopardise them, the EU should postpone the enforcement of the planned tariffs,’’ he said.

At the start of the month, a majority of EU countries paved the way for additional tariffs of up to 35.3 per cent on battery-powered electric vehicles imported from China.

Germany, however, voted against the measure amid concerns over retaliatory actions which could hurt the country’s giant car industry.

The European Commission had pressed for extra tariffs after an investigation accused Beijing of subsidising domestic electric car manufacturers, and thus distorting the market in the EU.

But whether the import tariffs would actually come into force at the beginning of November is still up to the commission.

The plans can still be dismissed if Brussels reaches a solution with China at the negotiating table.

Business

ACCI moves to promote business connections, balance work-life

Published

1 month ago

October 16, 2024

Matthew Eloyi

ACCI moves to promote business connections, balance work-life

The Abuja Chamber of Commerce and Industry (ACCI), is taking innovative steps to enhance professional relationships and promote a healthy work-life balance.

The President of ACCI, Dr Emeka Obegolu, said this in a statement on Tuesday in Abuja.

Obegolu said ACCI was committed to creating environments where professionals could connect beyond the confines of traditional boardrooms.

He said the upcoming “Business Meets Golf’’ Tournament epitomises this vision.

“Scheduled for Oct. 18 to Oct 19 at the IBB Golf Club, the tournament will gather industry leaders, top executives, and key decision-makers for a unique networking experience.

“This two-day event aims not only to strengthen business ties but also to foster partnerships that can drive economic growth.

“The ACCI’s initiative reistates the importance of maintaining a balance between professional achievement and personal well-being.

“By encouraging corporate cultures that prioritise relaxation and self-care, the Chamber acknowledges that such balance is vital for productivity and overall success,” he said.

According to Obegolu, the event will feature a range of activities designed to facilitate both business engagement and relaxation.

“Highlights include a Business-to-Business (B2B) cocktail on the first day, followed by the golf tournament and additional networking opportunities on the second day.

“The tournament will culminate in an awards ceremony recognising outstanding golfers among the participants.

“‘Business Meets Golf’ exemplifies our dedication to fostering innovative networking opportunities.

“We aim to create spaces for meaningful discussions that can lead to impactful collaborations,” Obegolu said.

The ACCI boss said in addition to promoting business connectivity, the council aimed to restate the importance of relaxation and a balanced lifestyle.

Obegolu said through events like this, the Chamber continued to play a pivotal role in supporting trade and industry in Nigeria while driving sustainable growth within the private sector.

He said to raise awareness about this landmark event, ACCI was partnering with the News Agency of Nigeria (NAN) and Media Trust Limited, to ensure broad visibility and engagement from leading brands.