The Central Bank of Nigeria (CBN) says it will no longer sell fores to Bureau De Change operators in Nigeria because they are involved in illicit activities.
The CBN Governor, Mr Godwin Emefiele disclosed this while briefing Journalists at the end Monetary Policy Committee (MPC) meeting held Tuesday at the CBN headquarters in Abuja.
The MPC also retained theMonetary Policy Rate (MPR) at 11.5 percent.
Emefiele explained that the CBN will henceforth channel sale of foreign exchange to banks while directing that all banks should create a teller point for sale and disbursement of forex to their customers.
He disclosed that CBN receives about 5,000 applications every month for BDC registration, noting that the operators are making efforts to dollarise the Nigerian economy.
Emefiele said BDC operators have become a conduit for illegal financial flows working with corrupt people to conduct money laundering in Nigeria.
He added that there is evidence of prevailing ownership of several BDCs by the same promoters to procure multiple foreign exchanges from the central bank.
Similarly, the CBN governor said the apex bank will no longer process any new application for BDC licenses.
While reading communique of the MPC meeting held 26th and 27th, 2021, he said MPC was faced with cautious optimism for the recovery of both the global and domestic economies.
He said MPC noted that the performance of the global economy in the first two quarters of the year had been favourable and is expected to continue for the rest of the year.
However, he noted that there is renewed downside risk to this optimism associated with the fast spread of new and deadlier strains of the COVID-19 virus, adding that the high rate of vaccination across the globe seems promising to drive herd immunity to reduce mortality rates.
In the domestic economy, he said continued support by both the monetary and fiscal authorities, is expected to yield favourable outcomes and hopefully return the economy to a strong recovery path in the next few quarters.
The Committee reviewed the developments in the global and domestic economic and financial environments over the second quarter of 2021 and the outlook for the rest of the year.
On global economic developments, the Committee noted that while there has been reasonable gains in subduing the pandemic, lowering of restrictions and reopening of several economies, the fast pace of mutation of new and deadlier strains of the virus is posing a downside risk to the full recovery of the global economy.
In addition, the uneven access of vaccines across several countries is a significant risk to the attainment of global herd immunity. Despite the above challenges, governments all over the world have continued to ease restrictions to enable the recovery of supply chain networks and enhance aggregate demand.
Then expected rebound in global output growth is dependent, therefore, on the efficient deployment of COVID-19 vaccines with the expectations that the evolving deadlier strains would be subdued.
Even with the current outlook, the International Monetary Fund (IMF) projects global growth at 6.0 per cent in 2021, compared with the last projection of 5.5 per cent.
In line with this, the Advanced Economies are projected to grow at 5.1 per cent while the Emerging Markets and Developing Economies are projected to grow at 6.7 per cent.
Price development across several economies is expected to remain moderate in the short to medium term with some prospects of a mild uptick.
The Committee further noted the rise in inflation above the long run objectives of some key Advanced Economies, although reported as transient and therefore not expected to lead to an adjustment of the stance of monetary policy.
There however, remains the lingering risk of an early return to monetary policy normalization, should price development continue to trend upwards.
Across several Emerging Market and Developing Economies, inflationary trend was on average mixed, with some of the economies recording higher rates, compared with their peers.
This was largely due to exchange rate pressures, capital flow reversals, high energy costs, weak supply chains and poor response to policy stimulus to combat the macroeconomic slowdown associated with the pandemic.
In the global financial markets, the Committee noted the increased demand for equity securities, an indication of improved investor confidence in th, it observed the progressive weakening of long-term sovereign bond yields, as the demand for equities pick up.
The MPC further noted the moderation in the price of gold, signaling reduced demand, as investors return to the financial markets.
The unprecedented stimulus provided by monetary and fiscal authorities to ease the impact of the pandemic has, however, heightened the risks of global financial crisis post-Pandemic and calls for central banks across the globe to remain vigilant, should the need for sudden policy adjustments arise.
On Domestic Economic Developments, the MPC disclosed that the Real Gross Domestic Product (GDP) grew by 0.51 per cent in the first quarter of 2021, compared with 0.11 per cent in the preceding quarter.In the non-oil sector, Agriculture and Industry sub-sectors, were the major drivers of growth, with growth rates of 2.28 and 0.94 per cent, respectively.
The oil sector, year-on year, contracted by -2.21 per cent in first quarter of 2021, compared with -19.76 per cent in the previous quarter.The weak performance in the oil sector was attributed to several factors, including the declining quality of oil infrastructure, lack of new investment in the sector and the need to comply with the OPEC production quota.
The Committee noted that the Manufacturing Purchasing Managers’ Index (PMI), improved to 46.6 index points in July 2021, compared with 45.5 index points in June 2021. Though it remained below the 50-index point mark, the improvement is an indication of gradual recovery of output growth in the economy.
The Non-Manufacturing Purchasing Managers’ Index (PMI) also increased to 44.8 index points in July 2021, compared with 43.0 index points in June 2021.The employment level index for July 2021 stood at 46.5 index points, relative to the preceding month’s figure of 45.0, but, remained below the 50.0-index point
