FX Transactions on I & E Window Hit $60bn

Godwin Emefiele
CBN Governor, Mr. Godwin Emefiele

Obinna Chima

Cumulative transactions on the investors and exporters’ (I&E) foreign exchange (FX) window of the Central Bank of Nigeria (CBN) since it was established in April 2017 have risen to $60 billion.

The CBN Governor, Mr. Godwin Emefiele, disclosed this friday, in his opening address at the ongoing two-day annual Bankers’ Committee retreat taking place at Ogere, Ogun State, with theme: ‘Delivering Inclusive Growth: Leveraging Digital Finance’.

The surge in the inflows recorded on I&E, THISDAY gathered, was as a result of offshore investors’ interest in Nigeria’s fixed income securities.

The central bank had introduced the Nigerian Autonomous Foreign Exchange Fixing Mechanism (NAFEX), commonly known as I&E window, including a raft of other measures then, to improve dollar liquidity, when the country faced a severe forex crisis.

The central bank had explained that the purpose of the window was to boost liquidity in the forex market and ensure timely execution and settlement for eligible transactions.

Continuing, Emefiele, pointed out that Nigerian banks were presently in a much better position towards supporting stronger economic recovery.

According to him, the impact of a tighter monetary policy regime, attractive yields in the money market, as well as efforts at supporting domestic productivity in the agriculture and manufacturing sectors; along with improvements in oil production, have supported continued FX inflows into the Nigerian market.

He said the title of this year’s retreat came at a critical time in the nation’s history, when efforts were being made by the monetary and fiscal authorities to structurally rebalance and diversify the Nigerian economy.

This, he said, could be achieved by leveraging digital finance tools in supporting growth across key sectors of our economy including agriculture, manufacturing and the creative industries.

Digital finance refers to the use of mobile phones, electronic cards and the internet to facilitate the movement of funds between individuals, governments and businesses.

“When properly deployed by banks and other financial institutions, it could be used towards the development of savings, insurance and investment products for consumers. “Additionally, it can provide Nigerians with a faster and more efficient payment service, as well as improved access to credit. Access to credit in particular is often recognised by smallholder farmers and MSMEs as a strong constraint to their expansion and growth.

“For the monetary policy authorities, improved access to finance for a majority of Nigerians through digital channels, enhances the efficacy of monetary policy actions, by aiding our ability to influence credit conditions in the economy.

“It could also enhance fiscal buffers by increasing tax revenues and minimising waste in government intervention programs,” the CBN Governor explained.

He noted that notwithstanding the gains available to Nigerians from improved access to finance, close to 36 per cent of eligible Nigerians did not have access to formal financial services.

According to him, these individuals often access finance and credit at an exorbitant price, which act as huge deterrence to the growth of their businesses.

“In addition, the high cost of maintaining bank branches in rural communities, which are less dense in population relative to urban communities, also limits the supply of banking services in many rural communities.

“Given our large population size of almost 200 million, a report by McKinsey and Company notes that improved access to finance and credit could bolster Nigeria’s GDP by about 10–12 per cent by 2025.

“Supporting policy measures that improve access to finance and credit through digital channels is therefore imperative, as part of our efforts to boost Nigeria’s economic growth.

“With increased usage of mobile phones by over 87 per cent of Nigerians and its ability to support financial transactions through USSD and mobile app channels, the Central Bank of Nigeria has implemented policy measures that will enable underserved Nigerians access finance and credit via mobile devices. “Individuals are now able to open bank accounts and e-Wallets from their mobile devices or through the internet. This alternative has resulted in a significant reduction in the cost of providing financial services, relative to traditional brick and mortar system of opening accounts at bank branches.

“Customers are also able to save time and money by conducting transactions on mobile devices, relative to travelling to distant bank branches,” Emefiele added.

In his remarks, the Governor of Ogun State, Mr. Dapo Abiodun, who was the Special Guest of Honour, pledged that his administration would continue to provide a conducive environment for businesses to thrive.

He noted the importance of banking to the development of any economy.

He disclosed that his administration has established an ICT hub, the Ogun State job portal, as well as other areas digital technology had been deployed.