Daily Watch – Banks’ borrowing leapt 200% in 4 months, Ethiopia joins the IMF trek

Commercial banks’ borrowing from the Central Bank of Nigeria (CBN) surged by 204.71 percent in four months, signalling that they faced a liquidity squeeze in the period as the country’s demonetisation drive triggered chronic cash shortages. CBN data showed that deposit money banks’ (DMBs) borrowing from the bank’s Standing Lending Facility (SLF) increased to ₦240.57 billion on Wednesday from ₦78.95 billion as of 12 December 2022, when new naira notes were launched by President Muhammadu Buhari. When compared with the figure in October 2022, when the naira redesign programme was announced, the banks’ borrowing from the SLF rose by 7.95 percent from ₦222.85 billion. In a related development, the bank has proposed that DMB should transfer funds in accounts that have been dormant for up to 10 years into a trust fund account. This is contained in the recently released exposure draft of guidelines on the management of dormant accounts and unclaimed balances and other financial assets.

Nigeria’s contributory pension is nearing 10 million registered contributors, with assets under management by Pension Fund Administrators (PFAs) standing at ₦15.5 trillion as of February 2023. The National Pension Commission’s (PenCom) latest unaudited report on the industry portfolio for the period ended on 28 February 2023 showed that Retirement Savings Accounts (RSAs) membership stood at 9,919,281, while assets under management by PFAs was ₦15,449,896.600,000. Data from PenCom reveals that pension contributions remitted to individual RSAs in Q4 2022 stood at ₦237.24 billion, and out of this, the public sector accounted for ₦129.06 billion or 54.40 percent, while the private sector contributed ₦108.18 billion or 45.60 percent. The cumulative pension contributions from inception to the end of the fourth quarter of 2022 amounted to ₦8.47 trillion, which is an increase from ₦8.23 trillion at the end of Q3 2022. The aggregate pension contributions of the public sector increased from ₦4.27 trillion in the third quarter of 2022 to ₦4.40 trillion as at the end of the fourth quarter.

Ghana’s Finance Minister, Ken Ofori-Atta says the country should expect an International Monetary Fund (IMF) Board approval for a programme by the close of May 2023. According to him, Ghana has made significant progress, hence the need for it to get approval as soon as possible. Addressing Eurobondholders at an investors presentation forum in Washington D.C., Ofori-Atta called on external creditors to support Ghana’s quest in securing the programme. We have made significant efforts on all fronts. We hope we can reach an agreement in principle with our Eurobond holders quickly,” he said. Ofori-Atta said access to the international capital market is key on the agenda of the government to restore macroeconomic stability.

Ethiopia is in talks with the International Monetary Fund (IMF) to borrow at least $2 billion under a reform program, four sources familiar with the matter told Reuters. The IMF is still working on assessing the country’s debt sustainability after a request for a program equivalent to about 500 percent of the size of its stake in the global lender, the sources said on condition of anonymity because the talks are private. In this first debt analysis, the IMF calculated that Ethiopia is set to face a financing gap of at least $6 billion until 2026, according to two sources close to the negotiations. That would still leave a funding hole of roughly $4 billion over that period should the country succeed in securing the amount under discussion.