" /> (Editorial) CBN’s BVN distraction and matters arising | Hallmarknews
Published On: Mon, Nov 13th, 2017

(Editorial) CBN’s BVN distraction and matters arising

Nigeria’s fiscal and monetary authorities have a frustrating way of responding to the seizure of private assets; they typically gloat with glazed eyes over private citizen’s money ready to pounce on the cash like a pack of hyenas starved witless. The recent order by the Central Bank of Nigeria that customer accounts that are not linked to a bank verification number (BVN) be seized and passed on to the CBN is a call for fiscal fascism. While this newspaper cannot in clear conscience condone the hording of the spoils of corruption by commercial banks it also cannot sensibly accept the brusque and dubious seizure of customer’s monies by an overextending central bank.

The convenient excuse that accounts that are not linked to BVN’S are likely conduits of corruption is vacuous at the very least and capricious at the worst.  Investigations suggest that quite a number of these accounts are owned by customers who have died and whose family members are in the process of transferring ownership to designated survivors. A large number of the accounts belong to individuals who died intestate (meaning without a will) but who have established next of kin. To deny these family members the benefits of access to such dormant accounts based on the technicality of non-linkage to a BVN number while such accounts are undergoing legal regularization is willfully dishonourable and shamefully dishonest.

Besides dormant accounts that are being reactivated by families of deceased persons, there are accounts that have been tied to Nigerians in the diaspora who left the country for the proverbial ‘golden goose’ and are yet to return. Some of these accounts still hold small balances of a few thousand naira, seizing such accounts punishes people who have left the country struggled to eke a living in their respective abodes and remit huge sums back to the country. In 2015 alone Nigerians sent back a thumping $21billion or over 60 per cent of the nation’s recent official foreign exchange reserves. Rewarding these citizens for their industry by confiscating their local accounts seems desperately ill-advised.

We advised that the best way to go about the BVN issue is to make it a routine part of bank account operations such that those accounts without BVN numbers would be allowed to take lodgments but would not be qualified for payments. This would allow Nigerians in the diaspora to continue to make payments to the accounts which they can operate normally once they return to Nigeria and regularize the account status by way of obtaining a BVN. Appropriating honest and hardworking citizen’s sweat in a misguided attempt at recovering looted funds is unconscionable.  There are already laws that require banks to inform the government of unusually large lodgments, existing laws concerning money laundering simply need to be applied more rigorously. Taking the easy and least preferred way to check the movement of stolen public funds by way of hijacking accounts without BVN’s is lazy, apparently  illegal and definitely downright unreasonable.

The fact that that 46 million bank customer accounts out of a total estimated 70.2 million accounts or 66 per cent are without BVN clearly shows that several Nigerians have not been able to process BVN’s for a patchwork of reasons. The total amount involved is a stunning estimated N3 trillion or 37 per cent of the total 2018 federal fiscal budget. Removing this staggering amount from the commercial banking system in one fell swoop would not only result in a skyrocketing of domestic interest rates but also lead to several of the banks going belly up as their liquidity (the amount of deposit liabilities available to meet asset creation) swirls down a very dark hole very close to where the devil himself resides.

Pulling N3trillion from banks will effectively cripple the manufacturing and commercial sectors of the economy, worsen domestic unemployment and unravel the inflation gains of the Central Bank over the last three quarters. Inflation which has dropped to 15.98 (edging closer to the government’s economic recovery and growth plan (ERGP) target of 15.74 per cent for 2017) would rebound a supply side shocks push prices upwards. To make matters worse falling commercial and industrial production will reduce import tax revenues; slash corporate income tax earnings and virtually snuff life out of personal income tax payments as workers lose their jobs like lemmings jumping into an ocean.

This would equally mean that the federal fiscal deficit would widen and the government would have to scramble for loans (either domestic or foreign) to cover the gap. The government’s 2018 budget deficit implies a deficit of 1.77 per cent of gross domestic product (GDP), but this should be paid little attention as a more likely figure would be 2.5 per cent next year. Both the fiscal and monetary authorities need to urgently review their positions concerning accounts unattached to BVN’s and find better administrative ways to ensure compliance, especially ways that would not expropriate private wealth and at the same time disrupt financial system stability. Business Hallmark is of the opinion that it takes a fool to decapitate himself to cure a nagging headache.

The CBN has some of the finest economic minds in the country, and all it needs to do is to use that firepower.

Leave a comment

XHTML: You can use these html tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Recent posts

  • PDP in fresh crisis over chairmanship zoning, threatens 2019

    By Obinna Ezugwu The December 9 Convention of the People’s Democratic Party (PDP) will be the most critical in its history; it is a convention that would, to a large extent, determine its fate and course for action ahead of the much awaited February 2019 general election and may also determine its chances of returning […]

  • Why South East should ignore President Buhari

    By UCHE CHRIS   President Buhari’s last week visit to the south east on APC campaign for Anambra governorship poll and his promise to give more appointments to the region is a clear and abundant proof that he is either a bad politician or he takes the Igbo for a fool. It is sad and […]

  • GTBank doubles stock value as investors go bullish

    By OKEY ONYENWEAKU GT Bank’s share price has doubled in the last one year, leading investors to grin satisfactorily as there gambit on the stock seems to have panned out. The stock’s price has risen from N24.00 in January 2017 to N43.00 as at November 17, 2017, creating a capital gains opportunity of 79.2 per […]

  • Moody’s rating exposes poor state of banks

      .           Experts predict more recapitalization next year FELIX OLOYEDE Deposit Money Banks (DMBs) in the country have been caught in the web of liquidity squeeze, capital adequacy challenge and the encumbrance of raising fresh funds  as Moody’s Investors Service (Moody’s) downgraded their long-term local currency deposit and issuer ratings. The credit rating agency lowered […]

  • Brain drain: Doctors, nurses’ exodus cripples Nigeria’s health sector

    By AYOOLA OLAOLUWA The mass emigration of health care professionals, especially doctors, pharmacists and nurses, is on the verge of crippling the nation’s health sector, Business Hallmark findings have revealed. Though, the mass exodus of these skilled health workers abroad for greener pasture has been on unabated over the years, it has now reached an […]

  • S&P rates UBA highly, affirms ‘B/B’ credit ratings

    FELIX OLOYEDE S&P Global Ratings has given United Bank for Africa (UBA) a B/B rating based on the rating agency’s interpretation of UBA’s competitive strength in the Nigerian banking market. The agency’s latest report released on Friday showed that the bank has benefited from a strong brand franchise in the corporate and retail segments of […]

  •  Nigeria: The disquieting nuisance of elitism

    By TESLIM SHITA-BEY   At the heart of Nigeria’s social and economic dysfunction is not just the usual suspects of tribe and religion but also, and quite disturbingly, the self-preening and self-adulation of Nigeria’s elite. The failure of the educated leaders of the country to bring about a collective sense of nationhood and build a […]

  • (Across the counter) University of Ibadan banking services waiting for relief

    Banks within university environment usually have a large turnout of customers. It wasn’t any different when our across the counter team visited some banks within the University of Ibadan environment to review the quality of service being rendered. Our criteria included bank professionalism, customer care efficiency, security consciousness, corporate environment and ATM efficiency. Here is […]

  • Time is ripe for rates cut, says Rewane as inflation slows further in Oct.

    FELIX OLOYEDE This is the appropriate time for the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) to cut benchmark monetary rates after inflation rate slows down for the ninth consecutive time in October, said Mr Bismarck Rewane, Managing Director, Financial Derivatives. The National Bureau of Statistics on Tuesday released Consumer Price […]

  • ELAN National Lease Conference Focuses on Revamping Nigerian Economy

    FELIX OLOYEDE In furtherance of its objective of promoting the business of leasing in Nigeria, Equipment Leasing Association of Nigeria (ELAN) has concluded plans to organise the 15th Annual National Lease Conference with focus on revamping the Nigerian economy. The conference which is the biggest gathering of stakeholders in the leasing industry is expected to […]

  • Nigeria-centric restaurant, Labule, opens new outlet in Lagos

    Labule, Nigeria-centric restaurant, operated by an indigenous company, Roots Foods Limited, offering real Nigerian local delicacies in a unique environment that combines the setting of a modern quick service restaurant with that of an African setting of a local ‘buka’, has opened a new outlet on Admiralty Road in Lekki Phase 1, Lagos. The brand […]

  • Nigerian banks shine in Ghana

    By JOHNMARK UKOKO Nigerian banks have been credited with “revolutionizing “the banking sector in Ghana, due to the many innovations they brought to Ghana’s banking sector. The Ghana Deputy Minister of Trade and Investment Hon. Carlos Kingsley Ahenkorah said in Lagos that the innovation and transformation of the Ghana’s banking sector is credited to the […]

  • Ajimobi moves to save Oyo APC from disintegration

    By OLUSESAN LAOYE The seeming crisis in Oyo APC has now forced the Governor of the state, Abiola Ajimobi, to begin consultations with stakeholders to convinced members on why they must come together as a body to face the 2019 general elections, Although the internal crisis is yet to break open as the aggrieved party […]

  • YolaDisCo sale stalled as no potential buyers emerge

    By ADEBAYO OBAJEMU Two years after the core investors of the Yola Electricity Distribution Company, YolaDisCo, declared a force majeure owing to their inability to operate under the reign of terror unleased by Boko Haram, the Federal Government is yet to find any investor interested in operating the utility company, it has been learnt. In […]

  • Company Analysis: Much Ado about Seplat

      By TESLIM SHITA-BEY The oil and gas sector has had a bumpy since the beginning of 2017 with local oil major, Seplat, seeing its financials whipped raw by prior year liabilities despite rising revenues over the nine months (9M). The company in the last two years has moved from being distinctively bad to singularly […]

  • How to start a photography business

    By ZUBAIR DANIE While photography could be accounted for as a full blown course in any offering institution of learning for professionalism, the field equally provides a platform for individuals whose passion it is to project images as a form of livelihood. The socio-cultural aspect of Nigerians that play host of events like: wedding, naming, […]

Visit us on Google+