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Nigeria: Antigraft agency EFCC says 70% of financial crimes traceable to banks

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Banks are implicated in about 70% of financial crimes in Nigeria, according to the Economic and Financial Crimes Commission (EFCC).

This was revealed by EFCC Chairman, Ola Olukayode, during a speech at the Association of Chief Audit Executives of Banks in Nigeria’s 2023 Annual Retreat and General Meeting in Abuja. He pointed out that the banking sector was increasingly becoming a cesspool of fraudulent activities, and this had been raising considerable challenges and concerns for the commission.

Olukayode, who was represented by the Director, Internal Audit, EFCC, Idowu Apejoye, said there was a need for concerted effort by relevant authorities and professionals, especially audit executives, to prevent and tackle issues of fraudulent practices in the sector.

He said, “Broadly speaking, banking fraud in Nigeria is both inside and outside related. Inside-related fraud comprises outright selling of customers’ deposits, authorising loan facilities, forgery and several other kinds of unhealthy and criminal practices.

“The outsider related ones include hacking, ATM fraud, and conspiracy, among others. And then the absurd one is when both collaborate—that is, collaboration among the bankers and the outsiders.

“That one is the one that is really absurd because when you do that, that means you are selling out the system. It is estimated that about 70% of financial crimes in Nigeria are traceable to the banking sector, this scenario is disturbing and unacceptable.”

Olukayode said that ACAEBIN should make sure that accounts are properly reconciled each month in compliance with accounting regulations in order to stop the inconsistencies.

He gave the group tasks like keeping an eye on banks’ financial operations, comparing actual and planned revenue and expenses, conducting periodic assessments, and conducting checks.

Prince Akamadu, the chairman of ACAEBIN, declared that the organisation would strive to implement some of the suggestions made by the head of the EFCC.

He added that one of the goals of the retreat was to address the association’s complete commitment to resolving Nigeria’s foreign currency problems.

“That is part of the reason why we are having this retreat—to ask ourselves, to do an introspection and ask ourselves, given our position in the banking industry, or the executives of banks in Nigeria, are we doing enough?

“Have we done enough? What more can we do to help in sanitising the system? Are there things the banks could do to help in sanitising the FX in this country?”

“By the end of this retreat, we are expected to come up with a communique, and we hope to address some of the issues, one way or another, that will address the role of banks in FX challenges in this industry.”

For the past year, e-payment channels like computer/web, mobile, and point of sale have continued to be targeted by scammers. FITC’s “Reports on Frauds and Forgeries in Nigerian Banks” show that banks record 78,584 occurrences of online fraud annually, indicating that the growth of electronic payments has allowed for the persistence of this crime.

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Ethiopia might devalue currency to secure IMF loan

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Ethiopia may need to decide on a big currency devaluation soon to get a rescue loan from the International Monetary Fund (IMF).

In December, East Africa’s most populous country went bankrupt, making it the third African country in as many years to not pay its debts. The country already had high inflation.

Ethiopia hasn’t gotten any money from the IMF since 2020, and its last loan deal with the fund fell through in 2021. In late 2022, the federal government and a rebellious regional authority made a deal to end a cold war that had been going on for two years.

Although the IMF has not said that currency reform is necessary for its backing, it however maintained that progress was made during its most recent visit. However, the Fund usually favours flexible, market-determined exchange rates. Ethiopia has requested $3.5 billion of support from the IMF, sources told Reuters last year.

The birr currently trades at between 117 and 120 per dollar on the black market, which is more than double the official rate of about 56.7. This is because there is a constant lack of foreign cash and the exchange rate is tightly controlled.

“It seems that the Ethiopian authorities have found accepting the demands of the IMF hard,” said Abdulmenan Mohammed, an Ethiopian economic analyst based in Britain.

“The Ethiopian authorities are worried about the devaluation of the birr, (which) would have serious negative economic repercussions, including soaring inflation… and surging foreign currency denominated debts in terms of birr.”

Early in 2021, Ethiopia asked the G20’s Common Framework to restructure its debt. This was set up in response to the COVID-19 pandemic to include new creditor countries like China and India. Other African countries like Tunisia and Zambia also suffered a similar fate with their foreign debt at the time.

As of the end of March, Ethiopia’s foreign debt totals $28.2 billion. According to Boston University’s Chinese Loans to Africa Database, the country’s biggest bilateral creditor, China, agreed to stop collecting its debts in August 2023. From 2006 to 2022, China promised to give the country $14 billion.

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Nigerian govt to save N1.5tn from removal of electricity subsidy

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The Nigerian government says a recent increase in the price of electricity for Band A customers to N1.5tn means it could save more this year.

The government also said that about 2.5 million meters would be installed this year to close the metering gap across the country and make sure that people pay the right amount for electricity.

The Federal Ministry of Power, in a document made public by Bolaji Tunji, who is the media assistant to the power minister, on Wednesday evening said that the recent tariff change would save the country N1.5tn.

It said, “FG (Federal Government) to save N1.5tn with tariff adjustment. FG still subsidising Bands below A. Pricing change will help improve liquidity to the NESI (Nigeria Electricity Supply Industry).

“Discos (power distribution companies) will be sanctioned for supplying less than 20 hours to Band A consumers.”

Electrical consumers in the Band A group, which makes up about 15% of the country’s 12.82 million power users, no longer get any subsidies on their bills. Those affected would now pay N225 per kilowatt-hour, which is about 240% more than the old rate of N68/kWh.

In reaction, manufacturers and organized labour spoke out against the tariff increase that about 1.9 million consumers will have to pay. The increase was passed and announced by the Federal Government on April 3, 2024.

For the past few months, the terrible state of the electricity supply has gotten even worse because gas producers to gas-fired thermal power plants have stopped sending gas to those plants because they owe $1.3 billion in debt.

Meanwhile, the argument around subsidies of essential products and services in Africa remains active with some analysts positing that the earning power and GDP of most countries in the continent puncture the likely gains of a no-subsidy regime, given the lack of economic means by a large percentage of the public.

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