The Central Bank of Nigeria had a very busy year 2021, battling in particular against the effects of the pandemic, the depreciation of purchasing power and the promotion of economic growth.

To navigate this economic phenomenon, the Governor of the Central Bank of Nigeria, Godwin Emefiele, has implemented various innovative policies to achieve the goals of the CBN.

The extension of interest rate reductions on the CBN’s intervention facilities, the establishment of the “Naira 4 Dollar Scheme”, the acceptance of the NAFEX rate as an interbank reference rate and the introduction of the eNaira are just a few examples.

As a result, Nairametrics has compiled a list of major CBN policies aimed at achieving goals such as price stability, moderate inflation, employment, and economic growth.

Fintech policy: Issuance of the framework for the regulatory operation of the sandbox

The regulatory framework for the sandbox was published on January 13, 2021, following the publication by the CBN of a draft framework in July 2020.

Because it provides a formal method for companies and start-ups to undertake live testing of any new product, service delivery channel, or business model, the regulatory framework sandbox allows CBN to actualize control. innovation in the FinTech industry.

The Regulatory Sandbox is not only intended for CBN licensees, but also other Nigerian companies and businesses that want to test their products but are not regulated by the CBN.

Regulatory framework for open banking in Nigeria

In February 2021, the CBN released its regulatory framework for Open Banking in Nigeria, often referred to as the “Open Banking Framework”. Through the establishment of a single industry application program interface (API) standard, the Open Banking Framework takes an open banking-friendly approach and provides guidelines for data exchange in the banking and financial services ecosystem.

APIs are essential to achieve the integration of the entire banking industry, as well as the underlying philosophy of Open Banking. In addition, the framework would encourage innovation, increase competition, increase financial inclusion, and expand the range of financial products and services available in Nigeria.

CBN on cryptocurrency

The Central Bank of Nigeria has reminded DMBs, non-bank financial institutions and other regulated financial institutions that trading in cryptocurrencies and facilitating payments for cryptocurrency exchanges is illegal. The CBN had already published a circular entitled, “Circular to Banks and Other Financial Institutions on Virtual Currency Operations in NigeriaIn January 2017, expressing reservations about the unregulated and anonymous nature of virtual currencies, as well as the danger of criminal abuse.

While the CBN has not formally banned cryptocurrencies, it has prevented regulated institutions from facilitating or engaging in bitcoin transactions. The umbrella bank has also ordered all financial institutions in the country to identify and terminate the accounts of traders and cryptocurrency exchanges.

In addition, in a circular dated February 5, 2021 and distributed to regulated financial companies, the umbrella bank of Africa’s largest economy warned and reminded local financial institutions not to conduct crypto transactions or facilitate crypto transactions. payments for crypto exchanges.

The Nigerian Central Bank took further action and locked down the bank accounts of some fintech platforms, including RiseVest, in August.

Regulatory forbearance for restructuring of credit facilities

The Bank, on March 3, 2021, extended the window for reducing the interest rate from 9% to 5% per year on its intervention facilities, until February 28, 2022, as part of the measures aimed at mitigating the impact of the COVID-19 pandemic on the economy. In addition, the renewal of the moratorium on the reimbursement of intervention facilities would be considered on a case-by-case basis.

“Naira 4 Dollar Scheme” for Diaspora Remittances

The Bank introduced the “Naira 4 Dollar Scheme” on March 8, 2021, to stimulate the influx of Diaspora remittances into the country. The program serves as an incentive, as all recipients of diaspora remittances, through CBN-approved international money transfer operators, would be paid N 5 for every USD 1 received as a remittance. The Plan, which was originally scheduled to end on May 8, 2021, was extended indefinitely by the Bank on May 5, 2021.

Adopt the NAFEX rate as the reference rate

In an effort to ensure uninterrupted services to customers on Unstructured Supplementary Service Data (USSD), a meeting was held on March 15, 2021 attended by Mobile Network Operators (MNOs), the Association of Nigeria’s licensed telecommunications operators, the Nigerian Communications Commission (NCC) and CBN, have deliberated and resolved the key challenges.

The resolutions were: on May 24, 2021, adopted the NAFEX rate as the benchmark rate on the interbank market.

Prohibition on selling foreign currency to BDCs

The CBN banned the sale of foreign exchange (forex) to exchange bureau operators (BDCs) in July 2021. CBN Governor Godwin Emefiele made this known when speaking to the press at the MPC briefing , July 27, 2021.

The central bank also confirmed that it will no longer allow new BDC operations in the country and has also halted all ongoing processes for new licenses.

The governor noted that this act of the BDC is in contradiction with the agreement with the bank apex, which emphasizes that the BDCs are allowed to make a small margin on the sales of the US dollar allocated to them by the CBN. However, he felt that they became somewhat greedy, taking abnormal profits, which further affected the country’s exchange rate.

BDC operators are now relying more than ever on peer-to-peer transactions to fund their dollar supplies under the CBN dollar sales ban. Those with stronger networks of buyers and sellers are able to attract more business, while those who do not struggle with volume.

However, exchange rates are still traded at exorbitant black market rates rather than the rates preferred by the central bank.

eNaira, Nigeria’s first digital currency

In October, the Central Bank of Nigeria (CBN) launched eNaira, the country’s first digital currency. eNaira serves as both a medium of exchange and a store of value, offering better payment prospects in retail transactions compared to cash payments. Apex Bank has partnered with Bitt Inc., a Barbados-based company, to launch digital currency operations.

The eNaira, Africa’s first digital currency, debuted on October 25, 2021 and successfully closed N46.3 million in transactions within two weeks of launch.

CBN’s technical partner, Bitt Inc, has announced plans to roll out a new mobile app to allow the unbanked population to access eNaira.

100 percent policy

The CBN announced the launch of its new financial instrument, dubbed “The 100 percent PPP policy on production and productivity”, October 25, 2021.

The 100 Percent PPP is a program that will provide financial support to 100 designated private sector companies every 100 days. Under this program, companies can apply for up to 5 billion naira in financing. Any payment in excess of N 5 billion would require special authorization from CBN management.

However, the scheme’s selection criteria limit the instrument to new projects exclusively, and it does not cover the refinancing of existing installations. The project, according to the CBN, is a long-term loan for the purchase of plant and machinery as well as working capital.

TIES

The Central Bank of Nigeria (CBN) introduced the Tertiary Institutions Entrepreneurship Scheme (TIES) at the end of the year. TIES provides a platform for undergraduates and graduates to access loans.

The underlying goal of TIES is to provide access to capital for Nigerian undergraduates and graduates with innovative entrepreneurial and technological ideas from polytechnics and universities.

TIES intends to move undergraduates and graduates from white collar activities to a culture of entrepreneurship development for economic development and job creation.

CBN policies focused on agriculture

According to the CBN, the program will help more than 150,000 farmers and will initially be implemented in 15 states nationwide.

Earlier in 2021, the CBN launched the country’s first-ever rain-fed wheat program, with the goal of reducing wheat imports by 60% and saving $ 2 billion in foreign money per year. According to the CBN, the program will help more than 150,000 farmers and will initially be implemented in 15 states nationwide.

The CBN has also set aside around 5.7 billion naira in loans to 10,000 farmers in Bauchi State to support the cultivation of dry season wheat, of which 4,500 farmers have benefited so far.

Between September and October 2021, the bank disbursed 43.19 billion naira under the Anchored Borrower Program to support the cultivation of 250,000 hectares of maize, sorghum, soybeans and rice during the dry season agricultural season. 2021, as well as $ 5.88 billion to fund six large-scale agricultural projects under the Commercial Agricultural Agribusiness Program.