Retains 12% lending rate, foreign reserves hit $35b
THERE are strong indications that the Central Bank of Nigeria (CBN) is set to shut out foreign companies in the printing of security documents such as bank cheques by July this year.
Ahead of the date, the apex bank has reportedly directed that only security printers with visible domestic operations should be accredited after June 30, 2012 under the Nigerian Cheque Printers Accreditation Scheme (NICPAS).
NICPAS was initiated to improve automated cheque clearing, reduce incidence of fraud and encourage localisation of security printing operations of accredited security printers.
At present, 14 companies are accredited to print cheques for banks in the country, of which only three are local operators. They are the Nigerian Security Printing and Minting Plc, Tripple Gee and Company Plc, and Superflux International Limited, which recently opened shop in Lagos.
The offshore accredited printers, which may lose out under the new dispensation, are Kalamazoo Secure Solutions Limited, Security Print Solution, CFH Total Document Management Limited, Smith and Ouzman Limited, Tall Security Print Limited, A1 Trade Print Services, Papi Printing Company Limited, and Corrinum Continouss Limited, all based in the United Kingdom (UK).
Others are Osu Regal from Accra, Ghana; De La Rue Global Services Pty and Shave and Gibson Group, all from South Africa.
The cheque printing domestication exercise was said to be part of the Federal Government's local content enhancement policy.
According to the CBN, the initiative is among measures scripted to stimulate indigenous entrepreneurship and the economy in general.
Meanwhile, the Monetary Policy Committee (MPC) of the CBN has retained the Monetary Policy Rate (MPR) also known as lending rate at 12 per cent.
At its meeting yesterday, the CBN said the need to keep inflationary pressures under check, support the naira, and build up external reserves informed the decision.
The MPR is the rate at which the apex bank lends money to commercial banks for on-lending to customers. This rate influences interest rate at any point in time.
The CBN governor, Sanusi Lamido Sanusi, who briefed reporters in Abuja yesterday at the end of the MPC meeting, explained that the decision was also influenced by the need to attract and retain foreign investments and for consistency and stability in the macro-economic environment.
The MPC, which is the economic think-tank of the CBN, meets every two months to review and take monetary decision.
The Guardian learnt that offshore cheque printers had been informed that companies, "whose premises are outside Nigeria and have no visible plan to domesticate their operations in the country will not be considered for accreditation or re-accreditation" from July 1.
It was however not confirmed if the directive would not be reversed in view of the assessed poor response of the foreign printers to the domestication policy.
Experts, who spoke with The Guardian on the issue, concurred that the CBN might extend the deadline because of certain limitations, noting that the three known local printers might lack the capacity to meet the nation's demand.
A CBN source said the policy would be pursued to the letter, as the local printers had since enhanced their capacities and more companies in the country had come up to fill any expected shortfall in the production.
"The CBN since 2009 is a new outfit. If we say we will do something, we will do it. If you don't comply, you will not be accredited," the apex bank's official said.
At the recent commissioning of Superflux International plant in Lagos, Sanusi warned that all foreign-based accredited security printing concerns currently trading in Nigeria must have verifiable evidence of local production programmes to merit renewal of accreditation."
He added: "We are also not unmindful of the challenges of setting up local manufacturing in our environment as the implementation of this policy will be strictly enforced by the supervising department in CBN.
"Patronage, especially local patronage, is very key to the success of any business endeavour. We, therefore, hope that both private and government institutions will patronise institutions such as this, in the sourcing of their security documents."
In 2006, foreign-based accredited printers were directed to establish their presence in Nigeria within two years. The CBN later extended the deadline to give them more time to domesticate their operations and also allow the local printers the opportunity to expand their production lines.
On the retention of the monetary policies, Sanusi said: "The apex bank needs to maintain its clear focus on price stability and it is not evident that a moderation in February is sufficient to establish a trend, and warrant a reversal of monetary tightening."
Sanusi declared that in the light of the above, and considering the clear impact of previous tightening on inflation and exchange rates up to February 2012, the committee unanimously decided as follows:
• Retain MPR at 12.0 per cent with interest rate corridor of +/- 200 basis points;
• retain Cash Reserve Ration (CRR) at 8.0 per cent;
• retain minimum Liquidity Ratio of 30 per cent, and to watch closely developments with respect to the fiscal stance and to respond appropriately if, and when, the need arises.
He told reporters that the MPC while reviewing the performance of the last two months observed the resurgence of inflationary threat starting in January after it had moderated towards the end of 2011.
He said: " The National Bureau of Statistics (NBS) data on prices shows that the headline inflation in February 2012 stood at 11.9 per cent, lower than 12.6 per cent in January, but higher than 10.3 per cent in December 2011. Food inflation on year-on-year basis was 12.9 per cent in February compared with 13.1 per cent in January and 11.0 per cent in December. The year-on-year core inflation was high at 13.5 per cent in February relative to 12.7 per cent in January and 10.8 per cent in December. The moderation in food inflation has helped to lower headline inflation. The rise in core inflation, however, must be kept in view in the formation of inflationary expectations. Given the partial removal of fuel subsidy in January, the moderation in inflation in February is probably attributable to a number of variables, including re-allocation of spending by consumers due to higher expenditure on transport and fuel; the slowdown in monetary aggregates and fiscal spending; the stable and strengthening exchange rate of the naira; seasonal effect of food prices and statistical base effects.''
Commenting on the activities of the money market during the period under review, Sanusi said the committee asked the CBN to monitor the credit developments and ensure that the private sector gets adequate credit from banks so that the current growth momentum was not impeded by lack of adequate finance.
Sanusi said there was accretion to the Nigeria's reserves as the account had risen to $35.43 billion as at last March 14 from the last December $32.64 billion level.
"Foreign exchange reserves amounted to $35.43 billion as at March 14, 2012. This is an improvement over the level of $32.64 billion at end-December 2011. The exchange rate at the DAS auctions moved from $/N158.6205 at the end of January 2012 to $/N157.6206 as on March 14, 2012. This partly reflected the moderation in the demand for foreign exchange due to increased inflows and reduced demand."
The Guardian