Don says CBN can print money to augment fall in revenue

Eyewitness reporter

A professor of Economics, Lanre Olaniyan, has declared that it was within the fiscal responsibilities of the Central Bank of Nigeria(CBN) to print money to augment Federal Government’s revenue.

Olaniyan said on Tuesday that there was nothing unusual about this phenomenon whenever the need arises.

He was reacting to an allegation made by Gov. Godwin Obaseki of Edo State that the CBN printed money to augment the shortfall of March revenue allocations to states.

However , Prof. Olaniyan, who teaches at the University of Ibadan, said the concept of ‘printing money’ does not always relate to the printing of physical cash.

“This happens virtually all over the world. The money is not always printed as cash.

“Sometimes, it just refers to ‘creation of money’ for the government.

“Cash is only involved when and if the cash reserve is very low.

“But the big issue is that any money that is printed to support the government is a loan.

“It is not a free gift. It appears in the balance sheet as loans given to the government,’’ he said.

The idea, he added, was for the Central Bank to give loans to the government as ‘the lender of last resort’.

“I do not know for sure whether or not the CBN printed money, but there is nothing wrong if it did.

“It is the duty of the CBN to print money, and virtually, every Central Bank in the world prints money.

“Apart from the reason of shortage of cash or replacing mutilated cash in circulation, the CBN can print money to give loan to the government.

“In elementary economics, we are told that the Central Bank is the lender of last resort to the government,’’ he said.

According to the professor, when governments face revenue challenges, they usually resort to their Central Banks for succour.

The Central Banks, he said, would usually raise such monies through the sale of bonds and treasury bills.

He, however, added that the idea of printing money should be under certain economic considerations.

“When the CBN gets such money, either through bonds or treasury bills, it then gives it to the government as a loan with terms.

“It could be a short term of between one month and 90 days, or long term of between one year and five years.

“When government prints money, it is usually to stimulate a productive sector of the economy for increased economic growth and sustainability,’’ he said.

Olaniyan added that high-interest rates usually served as incentives for people to invest in bonds or treasury bills.

“In the last one year, because of the recession that we had, the interest rate has gone low, and people are not too willing to invest in treasury bills or bonds,’’ he said.

According to him, Nigeria has limited choices in sourcing for improved revenue as most revenue sources are getting tight.

“The other alternative is foreign loans, but we already have a high burden of foreign loans.

“The total revenue of the government is about the same amount we are spending on debt servicing,’’ he said.

The Finance Minister also addressed the issue of external debt last Wednesday.

“The Nigerian debt is still within a sustainable limit.

“Our debt, currently at about 23 percent to GDP, is at a very sustainable level if you look at all the reports that you see from multilateral institutions,’’ she had said.

Olaniyan said also that “the only option is to go back to elementary economics and approach the ‘lender of last resort’, the CBN.

“If people are not investing in treasury bills and bonds, the Central Bank embarks on printing of money.

“It is called, ‘Seigniorage’, a process where the apex bank prints money to fund activities of government.’’

The Don said that Nigeria was a country freshly out of recession, which needed to put money in people’s pockets to sustain the post-recession economy.

“The Federal Government will have to spend enough money that will go round a large percentage of the citizenry; it is called ‘Quantitative Easing’.’’

Nevertheless, Zainab Ahmed, Minister of Finance, Budget, and National Planning, has debunked Obaseki’s claim.

“It is not true to say we printed money to distribute at FAAC. It is not true,’’ the minister said last Wednesday at the end of the weekly Federal Executive Council meeting.

Court reverses self over contempt charge against Fidelity Bank chief

Managing Director of Fidelity Bank,Nneka Chinwe Onyeali-Ikpe

The Eyewitness reporter

A Chief Magistrate Court sitting in Ikeja, Lagos has vacated its ruling that convicted and sentenced the Managing Director of Fidelity Bank,Nneka Chinwe Onyeali-Ikpe and Company Secretary of Fidelity Bank, Mrs. Unuigboje Ezinwa to six weeks in prison or a fine of Four Hundred Thousand Naira respectively for contempt.

The Chief Magistrate, Mr. Lateef Owolabi vacated the order in a Suit No: MIK/4726/22 between Justin Ahmed, (judgement creditor), Prince Enabulele Osazee, (judgement debtor) and Fidelity Bank Plc, (1st Garnishee/Applicant).

The court, in an earlier ruling delivered on February 6, 2023, held that the Managing Director of Fidelity Bank, Nneka Chinwe Onyeali-Ikpe and the Company Secretary, Mrs. Unuigboje Ezinwa should be committed to six weeks’ imprisonment over alleged disobedience of a garnishee order of the court restraining the bank from allowing a judgement debtor access to his account.

However, at the resumed proceedings on the matter on Feb 15, 2023, the court vacated the committal order on the premise of facts presented before the court that the alleged acts of contempt were not deliberate but arose out of a communication gap between the said parties and the erstwhile counsel.

The court in its ruling also stated that the error or sin of the counsel should not be visited on a party or litigants. The court also noted that the monies that were the subject matter and fulcrum of the contempt proceedings have since been paid to the judgment creditor.

“From the materials presented before this court by the applicant, this application falls within the classic rule where the error or sin of the counsel should not be visited on a party or litigants. Moreover, the applicant has averred that the monies subject matter, the fulcrum of the contempt proceedings had since been paid to the judgment creditor.

”Having fully discharged this payment to the satisfaction of the judgment creditor, this court should not be seen to cry more than the bereaved”, Mr Lateef Owolabi held.

”The solicitor to the bank explained that Fidelity Bank, being a law-abiding institution that will never or under any circumstance, directly or indirectly denigrate the integrity of the nation’s judiciary, had upon receipt of the garnishee order nisi on December 22, 2022, conducted a search immediately, and the result showed several accounts bearing similar names to the Judgment Debtor’s (Prince Enabulele Osazee).”

”To prevent the bank from erroneously restricting the wrong account, the bank filed an affidavit requesting additional account details to enable it to ascertain the correct account(s) to restrict.”

He further stated that, on January 16, 2023, the bank received the Judgment Creditor’s affidavit showing the account number of the Judgment Debtor. Armed with the correct account number, the bank immediately identified and placed a lien on the Judgment Debtor’s account. Unfortunately, during the intervening period, the judgement debtor had carried on depositing and withdrawing from his account.

In vacating the order on February 15, 2023, the Chief Magistrate held that based on the materials before the court, the applicant has been able to tether the law to the facts to warrant the grant of the relief sought on their own strength and not based on lack of opposition.

Economy

Supreme court restrains FG from enforcing naira swap deadline

The Eyewitness reporter

There was a temporary relief for Nigerians over the scarcity of naira notes as the Supreme Court has issued an order of interim injunction restraining the Federal Government and the Central Bank of Nigeria (CBN) from enforcing the February 10 deadline for the phasing out of the old naira notes.

A five-member panel of the court, led by Justice John Okoro said that it was a matter of urgent national importance that the court intervenes and grant the order.

The ruling was on an ex-parte motion filed by the governments of Kaduna, Kogi and Zamfara states

The order, according to Justice Okoro, who read the lead ruling, is to subsist pending the hearing and determination of the motion on notice filed by the state for interlocutory injunctions.

The court adjourned till February 15 for the hearing of the motion on notice and the preliminary objection filed by the defendant – the Attorney General of the Federation (AGF), challenging the court’s jurisdiction over the case.

Economy

CBN succumbs to pressure, extends use of old naira notes to February 10

The Eyewitness reporter

The Central Bank of Nigeria (CBN) has finally caved in to Public outcry over the February 1st deadline for the use of old naira notes when on Sunday, the apex bank announced February 10 as the new date.

Announcing the new deadline in a statement, Governor Central Bank Of Nigeria(CBN), Godwin Emefiele, said the decision to add extra 10 days was “to allow for the collection of more old notes”

Up till Saturday, CBN had insisted on the 31st January deadline for the validity of the old N200, N500 and N1,000 despite overwhelming complaints that the notes are either not available or in short supply in the banks or their Automated Teller Machines.

Last October, Emefiele announced the Naira redesign policy which entails the issuance of new notes to replace the existing N200, N500 and N1,000 series.