CBN abandons official exchange rate of N197/dollar

The Central Bank of Nigeria, CBN, yesterday declared a flexible exchange rate regime. This is aimed at making foreign currencies more accessible. In other words, the CBN has annulled the official exchange rate regime of N197/dollar.  To explain this further, the fixed exchange rate of N197/dollar will no longer obtainable in any bank in Nigeria.

According to today’s vanguard report, the CBN took the measure following severe pressures on external reserve and foreign exchange supply crisis. CBN Governor, Mr. Godwin Emefiele, who announced this at the end of the Monetary Policy Meeting, in Abuja, also said the Monetary Policy Rate, MPR, was retained at 12 per cent; Cash Reserve Ratio, 22.5 per cent; and Liquidity Ratio, 30 per cent.

Following the severe pressures on external reserves and foreign exchange supply crises, the CBN abandoned its fixed exchange rate policy in favour of a flexible and multiple market models, which implied a floating exchange rate regime. The apex bank’s Monetary Policy Committee, MPC, which made this decision, choose to retain its Monetary Policy Rate, MPR, at 12 per cent, Cash Reserve Ratio, CRR, at 22.5 per cent and Liquidity Ratio at 30 per cent. According to the CBN Governor, Mr. Godwin Emefiele, details of the new foreign exchange market policy, would be released in due course. He, however, added that the apex bank would retain a special window to fund critical transactions in foreign exchange, which would likely attract a concessionary rate. By this development, the interbank foreign exchange market, which has been dead for some time now is revitalised on unrestricted exchange rate basis, while the Bureaux de Change, BDCs, would continue their operations, thus creating multiple exchange windows. The Governor however, ruled out any consideration for channelling foreign exchange to the BDCs. Briefing the media after the MPC meeting, Emefiele explained that “the MPC voted unanimously to adopt a flexible exchange rate policy to restore the automatic adjustment properties of the exchange rate,” adding that it voted also to “retain a small window for funding critical transactions” and that “details of operations of the market would be released by the Central Bank at the appropriate time.”

What is the fate of commercial banks on this new exchange rate regime?

Most of the bankers that spoke to Vanguard appear unsure of what the market direction would be today or this week in respect of foreign exchange trading. President of the bank treasurers’ association, Mr. David Adepoju, said bankers would not trade outside the existing policy as CBN had not rolled out the details of the new policy. According to him, if the apex bank allocates foreign exchange on the basis of the existing policy which fixed exchange rate at between N197 and N199 to USD1, the banks would stay on that official rate. There would possibly be dual rates in the banks where the official rate might persist on foreign exchange supplied by CBN at the official rate.

What are the implications of this new exchange rate regime?

  • Exchange rate is expected to spike. You can expect the inflation picture to worsen in the near term as a result of the emergence of a new exchange rate to consumer prices. Naira will remain under pressure as market forces adjust the fixed CBN’s clearing rate to a more realistic parallel market rate.
  • The possibility that this will work is uncertain even as the CBN need to put a massive structural operational framework in place to ensure it works perfectly.
  • The expectation that black market will disappear as all you need to do is walk to the bank and ask to buy forex at the market rate is actually unpredictable.
  • Commercial banks are likely going to work under dilemma unless the CBN comes out with a baseline exchange rate and ways of implementation.
  • Expect Interest Rate to continue to hover at current levels with an increased double digit outlook.
  • The special window will give room for an abuse. It will create distortion in the economy.

Whether the new flexible exchange rate of CBN will in a long run lead to a stabilization in exchange rate is a question that I cannot answer  until CBN spell out the full details of the new policy.

Updated on 5th June 2016: Details of the new foreign exchange market policy, according to the CBN Governor, Mr. Godwin Emefiele, would be released in due course.

Read; CBN inconsistency FOREX TRADING policies since the new Government;

Online Payment Gateway for Multi-vendor eCommerce store in Nigeria

Are you about to launch a multi vendor ecommerce website or have you launched one already? Whichever one, I believed that one of thing you must have considered is an online payment gateway that will be suitable for your multi-vendor ecommerce store. Maybe, if that is what you are searching for then you have landed on the right page.

Nobody in Nigeria with sound knowledge of online businesses who invest e-commerce industry and receives online card payment that will not succeed even if it was only Nigerian online market that is being targeted.   So, integrating online payment gateway into your ecommerce is sure road to your success.

So many merchant have asked me for the best Online Payment Gateway for Multi-vendor eCommerce store in Nigeria.  Here below is an Online Payment Gateway for Multi-vendor ecommerce store – I have on many occasions recommended it to them.

But before I begin to share this recommended Online Payment Gateway for Multi-vendor ecommerce store, I will suggest you read these;

 Multi-vendor ecommerce store Online Payment Gateway

Fortunately or unfortunately, there are many online payment gateways in Nigeria today but only few offer Payment solution for Multi-vendor ecommerce store. The ones I have often recommended is

  • Remita e-collection payment gateway

Remita e-payment system took the tenth position in our 2016 year review of top 10 online payment gateways in Nigeria because of this. Remita- e-payment platform allow merchants and payers to specify unique collection speculation and rules. Remita can be integrated into a website, portal or ecommerce store.

As a biller, you can specify as many field as you want for each payer to provide while paying; this makes your operational processing easier.

Remita presents you with a “Push” and a “Pull” model to receive funds. The Push model empowers you to push an e-Invoice to your payers to empower them to pay you easily electronically.

The “Pull” model empowers your payers to either visit your website and click a “Remita-Pay-Now” button or select you as a beneficiary at Either way, they would be requested to complete a pre-defined form requesting for their details before proceeding to pay you easily electronically.

Make it easy for customers and service users to pay you using any of the following channels:

  1. All Bank Branches in Nigeria;
  1. Online Banking site;
  2. Debit/Credit cards (Verve, Visa, MasterCard, UnionPay);
  3. Remita profile;
  4. POS;
  5. Direct Debit;
  6. Micro Finance Banks; and
  7. Digital Wallets.

There are many other Online Payment Gateways for Multi-vendor eCommerce store in Nigeria but for now, I recommend this.

If you think there is any other one that I must include here then you can suggest that and I will include it. You can use the comment box below.