. Kicks off National Theatre renovation with $50M
In addition to better due diligence in know-your-customer (KYC) practices, banks have also devised an electronic means of tracking foreign exchange (FX) disbursement in the financial system.
Banks said the move is to check fraudulent activities and round tripping in FX, warning that fraudulent transactions will be decisively dealt with, and customers engaged in such acts would be handed over to security operatives for appropriate sanctions.
Disclosing the digitalisation of FX operations at a virtual press conference today (Thursday), the Bankers’ Committee, comprising the Chief Executive Officers (CEOs) of banks and the Central Bank of Nigeria (CBN), said under the new tracking system, both the customer and the bank staff will be made to bear the consequences for any infraction.
The move comes even as Nigerians had expressed reservations over banks’ ability to take over the process in an efficient and transparent manner due to difficulties associated with accessing FX from commercial banks.
But the Committee reassured that the e-transaction system will not only check FX abuses but also stem further devaluation of the Naira, following the counter-narratives that trailed the July 27th ban of FX sale to bureau de change operators (BDCs) by the CBN.
The CBN Monetary Policy Committee (MPC), had accused the BDC’s of creating artificial FX scarcity and other rent-seeking behaviours in order to maximise profits and a host of other offences that undermine the financial system.
Such unethical practices, Governor Godwin Emefiele said, have continued to hurt ordinary Nigerians who truly require FX for legitimate purposes, but are forced to bear the brunt through higher costs.
Global FX principles
The activities in the domestic market may have been a fall-out of the updated FX Global Code released in July 2021, by the Global Foreign Exchange Committee, obtained by Sustainable Economy Nigeria.
The Global Code is a set of global principles of good practice in the FX market, developed to provide a common set of guidelines to promote the integrity and effective functioning of the market, which was developed by a partnership between central banks and market participants from 20 jurisdictions around the globe.
The Committee also explained that the principles are intended “to promote a robust, fair, liquid, open, and appropriately transparent market in which a diverse set of market participants, supported by resilient infrastructure, are able to confidently and effectively transact at competitive prices that reflect available market information and in a manner that conforms to acceptable standards of behaviour.”
Noting that the Global Code does not impose legal or regulatory obligations on market participants nor does it substitute for regulation, the Committee added that “it is intended to serve as a supplement to any and all local laws, rules, and regulation by identifying global good practices and processes.”
The Global Code is focused on six leading principles:
- Ethics: Market Participants are expected to behave in an ethical and professional manner to promote the fairness and integrity of the FX Market.
- Governance: Market Participants are expected to have a sound and effective governance framework to provide for clear responsibility for and comprehensive oversight of their FX Market activity and to promote responsible engagement in the FX Market.
- Execution: Market Participants are expected to exercise care when negotiating and executing transactions in order to promote a robust, fair, open, liquid, and appropriately transparent FX Market.
- Information Sharing: Market Participants are expected to be clear and accurate in their communications and to protect Confidential Information to promote effective communication that supports a robust, fair, open, liquid, and appropriately transparent FX Market.
- Risk Management and Compliance: Market Participants are expected to promote and maintain a robust control and compliance environment to effectively identify, manage, and report on the risks associated with their engagement in the FX Market.
- Confirmation and Settlement Processes: Market Participants are expected to put in place robust, efficient, transparent, and risk-mitigating post-trade processes to promote the predictable, smooth, and timely settlement of transactions in the FX Market.
New transaction process
Going forward, some members of the committee each explained what is expected of bank customers, under the digitalised process.
The CEO, Guaranty Trust Holding Company Plc, Segun Agbaje, said aside from instituting greater efficiency and effectiveness in FX transactions, the new process will boost the migration to cards and check avoidable risks of carrying cash around.
Agbaje said: “The new FX policy with regards to PTA, BTA, School, Medical fees and SME transactions is working well as banks have taken it upon themselves to make it work. Although we do not have full information of how much we have sold since the new policy kicked off, we are looking at digitalising the sale of FX, because we want to integrate customers into the changes in the digital world.
We have a digital portal in which we will be sharing information to the public and we want to state that the FX policy is for people who have genuine needs. We are not looking at making money for ourselves or via domiciliary accounts but curbing abuses in the system.
“We have a digital portal in which we will be sharing information with the public, and we want to state that the FX policy is for people who have genuine needs. We are not looking at making money for ourselves or via domiciliary accounts but curbing abuses in the system.”
Also, the Managing Director (MD) of Citibank Nigeria, Mrs Ireti Samuel-Ogbu, warned that there will be sanctions against defaulters, noting that abuses also come with responsibilities.
Similarly, her counterpart at FCMB, Mrs Yemisi Edun, reassured banks’ preparedness to meet customers’ FX needs, adding that “We don’t want a situation where customers will present travel tickets, and as soon as they get the FX, they go and cancel the tickets. We don’t want customers to gain from the system, which is why we are calling for transparency.”
On his part, the CEO of Access Bank Plc, Herbert Wigwe, warned that banks will exercise due diligence to track fraudulent transactions and urged customers to comply with the guidelines set by the CBN.
National theatre renovation
Wigwe, who also gave an update on the renovation of the National theatre, Iganmu, Lagos, said work has commenced in earnest on the first phase, saying: “The revamp of Nigeria’s National Theatre in Lagos kicked off with a $50 million investment, financed by the Bankers’ Committee, in a partnership with the Nigeria Government. Apart from the renovation, the sprawling grounds will be redeveloped into a Creative Hubs for film, fashion, music and IT industry.”
Also commenting, the MD of Unity Bank Plc, Mrs. Oluwatomi Somefun, said the restoration of what she described as the “iconic building” will boost job creation, and tourism in Nigeria, while serving as a landmark centre for hosting events in West Africa.
For the CEO of StanbicIBTC Bank Group, Yinka Sanni, the National Theatre upon its completion will boost FX earnings in view of its tourism potential and stem capital flight.