ADVERTISEMENT
  • The Membership Club
  • #EndSARS Dashboard
  • PT Hausa
  • About Us
  • Advert Rates
  • Careers
  • Contact Us
Monday, May 23, 2022
Premium Times Nigeria
  • Home
  • Gender
  • News
    • Headline Stories
    • Top News
    • More News
    • Foreign
  • Investigations
  • Business
    • News Reports
    • Financial Inclusion
    • Analysis and Data
    • Business Specials
    • Opinion
    • Oil/Gas Reports
      • FAAC Reports
      • Revenue
  • Opinion
  • Health
    • COVID-19
    • News Reports
    • Special Reports and Investigations
    • Data and Infographics
    • Health Specials
    • Features and Interviews
    • Multimedia
    • Events
    • Primary Health Tracker
  • Agriculture
    • News Report
    • Special Reports/Investigations
    • Data and Infographics
    • Features and Interviews
    • Multimedia
  • Arts/Life
    • Arts/Books
    • Kannywood
    • Lifestyle
    • Music
    • Nollywood
    • Travel
  • Sports
    • Football
    • More Sports News
    • Sports Features
  • Projects
    • #EndSARS Dashboard
    • Parliament Watch
    • Panama Papers
    • Paradise Papers
    • AGAHRIN
  • #PandoraPapers
  • AUN-PT Data Hub
  • Home
  • Gender
  • News
    • Headline Stories
    • Top News
    • More News
    • Foreign
  • Investigations
  • Business
    • News Reports
    • Financial Inclusion
    • Analysis and Data
    • Business Specials
    • Opinion
    • Oil/Gas Reports
      • FAAC Reports
      • Revenue
  • Opinion
  • Health
    • COVID-19
    • News Reports
    • Special Reports and Investigations
    • Data and Infographics
    • Health Specials
    • Features and Interviews
    • Multimedia
    • Events
    • Primary Health Tracker
  • Agriculture
    • News Report
    • Special Reports/Investigations
    • Data and Infographics
    • Features and Interviews
    • Multimedia
  • Arts/Life
    • Arts/Books
    • Kannywood
    • Lifestyle
    • Music
    • Nollywood
    • Travel
  • Sports
    • Football
    • More Sports News
    • Sports Features
  • Projects
    • #EndSARS Dashboard
    • Parliament Watch
    • Panama Papers
    • Paradise Papers
    • AGAHRIN
  • #PandoraPapers
  • AUN-PT Data Hub
Premium Times Nigeria
BUA Group Ad BUA Group Ad BUA Group Ad
ADVERTISEMENT

Why the CBN’s Latest Initiative Is A Mark Of Undistilled Genius, By Uddin Ifeanyi

In restructuring domestic incentives (for this is what the promo scheme aims to do) could the apex bank not have achieved more were domestic interest rates positive?

Ifeanyi UddinbyIfeanyi Uddin
March 8, 2021
in Columns, Opinion

Godwin Emefiele, Governor of Central Bank of Nigeria (CBN)

Basically, then not to worry. Anyone who remembers how the banks used to sequence their promos, will understand why after this first, “Buy 1 Get 5 free” phase of the new management of the nation’s gross external reserves, there will be others… next phase will involve leading remitters of dollars into the country winning CBN-branded T-shirts, face caps, and key chains.

So unusual is the latest intervention by the Central Bank of Nigeria (CBN) in the monetary policy space that it was bound to set tongues wagging. Last week, in a circular dated March 5, the CBN introduced its “Naira 4 Dollar Scheme”, in which it promised that through commercial banks, it will “pay to remittance recipients the incentive of N5 for every US$1 remitted by sender and collected by designated beneficiary”.

Our talking heads have ranged from the “Why?” of the scheme (consensus seems to be that the balance on the gross external reserves have breached the “reserve” mark) to the “What?” (a boondoggle with remarkable little chance of success, or an innovative contribution to monetary policy making). Some have been quicker with the arithmetic. Comparing the difference between the official exchange rate (US$410:N1) and the rate at the parallel market (US$475:N1), more numerate commentators have concluded that even with the N5 gained on every dollar, remittances to the country would yield less by flowing through official channels.

But surely, this is a tunnel-visioned reading of the intent of this policy. That is if you ignore the false maths. Current policy is that beneficiaries of remittances through international money transfer organisations are paid in dollars. Thus, the CBN’s N5 bonus is but an extra, especially for those who may then swap their dollars for naira at the parallel market. True, in recent times the CBN has dusted up its pitch for diaspora remittances. Ultimately, but for the inefficiencies in the market, which account for the price differences at the different windows, the economy ought to be indifferent as to the route by which these funds reach the country. Far more important, is how big the remittance pot is. And here lies the appeal of the new initiative – an original effort to boost the inflow of remittances at a time when global economic conditions suggest a worsening of our external trade numbers.

The fundamentals of personal home remittances differ from that of retail trade, I’m told. With consumer spending, promos encourage the front loading of expenditure. Thus, when a customer buys two months data subscription in order to get an extra month free, s/he not only brings forward next month’s spend… Remittances, however, are a bit different.

Within this latter context, the CBN’s “Buy 1 Get 5 free” promo comes into its own. Over the last two decades, we have seen a plethora of domestic industries employ sales and marketing promotions to push their goods and services of the shopping aisles faster. Telecommunications companies seem to have been at the vanguard of this practice. But fast moving consumer goods businesses have also used it. Banks have resorted to this device to push up deposits. As regulator of the latter sector, the apex bank could not have failed to note the efficacy of the promo. So why should the central bank be excluded from use of this tool?

The fundamentals of personal home remittances differ from that of retail trade, I’m told. With consumer spending, promos encourage the front loading of expenditure. Thus, when a customer buys two months data subscription in order to get an extra month free, s/he not only brings forward next month’s spend, s/he also gets more value for that spend. Remittances, however, are a bit different. They come out of diaspora nationals’ earnings. And so may not be increased discretionarily. Except, of course, the remitting person were the beneficiary of a windfall – unlikely in our post-COVID-19 world. Besides, because nearly always, remittances are tied to specific responsibilities which beneficiaries are expected to carry out (constructive of a place of residence, payment of school fees, healthcare bill, or stipends for the upkeep of family), they may not be increased as one would a savings account, by diverting funds away from current spending, or from savings pots abroad.

Unsurprisingly, the discussion around the CBN’s promo initiative touched on the yield on money market assets. In restructuring domestic incentives (for this is what the promo scheme aims to do) could the apex bank not have achieved more were domestic interest rates positive? But again, this reasoning is to be stuck in yesterday’s orthodoxy on economics. As the CBN has not failed to demonstrate at every opportunity it has had, the new economic heterodoxy that it has plighted its troth to is unashamed to borrow useful tools from anywhere.

Phase Three…will, of course have these lucky compatriots entered into a lottery that will have a Learjet as the first prize… That way, we would have conducted ourselves in the monetary policy space as have others in different spheres of the economy in order that the outcomes that were available to those others become ours.

Basically, then not to worry. Anyone who remembers how the banks used to sequence their promos, will understand why after this first, “Buy 1 Get 5 free” phase of the new management of the nation’s gross external reserves, there will be others. This phase ends on May 8, 2021. Thereafter, next phase will involve leading remitters of dollars into the country winning CBN-branded T-shirts, face caps, and key chains. Phase Three, which will be designated the “Grande Finale”, will, of course have these lucky compatriots entered into a lottery that will have a Learjet as the first prize.

That way, we would have conducted ourselves in the monetary policy space as have others in different spheres of the economy in order that the outcomes that were available to those others become ours.

Uddin Ifeanyi, journalist manqué and retired civil servant, can be reached @IfeanyiUddin.

  • WhatsApp
  • Tweet
  • Email
  • Print
  • Telegram
  • More
  • Share on Tumblr
  • Pocket

CITIZEN-FM AD


Support PREMIUM TIMES' journalism of integrity and credibility

Good journalism costs a lot of money. Yet only good journalism can ensure the possibility of a good society, an accountable democracy, and a transparent government.

For continued free access to the best investigative journalism in the country we ask you to consider making a modest support to this noble endeavour.

By contributing to PREMIUM TIMES, you are helping to sustain a journalism of relevance and ensuring it remains free and available to all.

Donate


TEXT AD: Why women cheat: what every Nigerian man should know







PT Mag Campaign AD

Tags: Central Bank of Nigeria (CBN)Ifeanyi UddinRemittances
Previous Post

Niger President wins $5 million Ibrahim Prize for Achievement in African Leadership

Next Post

APC chieftain denies involvement in alleged N51 billion scam, demands retraction, apology

Next Post
Nasiru Danu

APC chieftain denies involvement in alleged N51 billion scam, demands retraction, apology

Read All Comment

Search

AUN-PT Ad





Transport-Technology


Stanbic Ad


Access Bank Ad





Glo Ad


Subscribe to News via Email

Enter your email address and receive notifications of news by email.

Join 1,844,878 other subscribers.

Advertisement






netherland biz school Advert



Zenith Advert

ADVERTISEMENT

Our Digital Network

  • PT Hausa
  • Election Centre
  • Human Trafficking Investigation
  • Centre for Investigative Journalism
  • National Conference
  • Press Attack Tracker
  • PT Academy
  • Dubawa
  • LeaksNG
  • Campus Reporter

Resources

  • Oil & Gas Facts
  • List of Universities in Nigeria
  • LIST: Federal Unity Colleges in Nigeria
  • NYSC Orientation Camps in Nigeria
  • Nigeria’s Federal/States’ Budgets since 2005
  • Malabu Scandal Thread
  • World Cup 2018
  • Panama Papers Game
  • Our Digital Network
  • About Us
  • Resources
  • Projects
  • Data & Infographics
  • DONATE

All content is Copyrighted © 2020 The Premium Times, Nigeria

No Result
View All Result
  • #PandoraPapers
  • Gender
  • News
    • Headline Stories
    • Top News
    • More News
    • Foreign
  • Investigations
  • Business
    • News Reports
    • Financial Inclusion
    • Analysis and Data
    • Business Specials
    • Opinion
    • Oil/Gas Reports
      • FAAC Reports
      • Revenue
  • Health
    • COVID-19
    • News Reports
    • Investigations
    • Data and Infographics
    • Health Specials
    • Features
    • Events
    • Primary Health Tracker
  • Agriculture
    • News Report
    • Research & Innovation
    • Data & Infographics
    • Special Reports/Investigations
    • Investigations
    • Interviews
    • Multimedia
  • Arts/Life
    • Arts/Books
    • Kannywood
    • Lifestyle
    • Music
    • Nollywood
    • Travel
  • Sports
    • Football
    • More Sports News
    • Sports Features
  • #EndSARS Dashboard
  • Projects
    • Panama Papers
    • Paradise Papers
    • Parliament Watch
    • AGAHRIN
  • AUN-PT Data Hub
  • Opinion
  • The Membership Club
  • Dubawa
  • DONATE

All content is Copyrighted © 2020 The Premium Times, Nigeria

Our website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
loading Cancel
Post was not sent - check your email addresses!
Email check failed, please try again
Sorry, your blog cannot share posts by email.