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Mr. Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), announced significant foreign investment flowing into Nigerian banks as part of the ongoing recapitalization exercise. Speaking at the Afrinvest 2024 Banking Sector Report Launch in Abuja, Cardoso, represented by Acting Director of Financial Policy and Regulations, Mr. John Onoja, highlighted the exercise’s role in strengthening Nigeria’s banking sector and supporting the federal government’s $1 trillion economy target by 2030.
Cardoso emphasized the recapitalization’s potential to enhance bank resilience and financial system stability. “This initiative is crucial for fortifying our banks and aligning with our economic goals,” he stated. He noted that the capital infusion would bolster banks’ lending capacities, improve foreign investments, and enhance forex liquidity through certificates of capital importation.
The CBN Governor assured that stringent measures would be implemented to prevent illicit funds from entering the banking sector. “We are committed to enforcing the Fit and Proper Persons criteria rigorously to ensure that only legitimate capital and reputable individuals become involved in our financial institutions,” Cardoso said.
Impact on GDP and Investment Opportunities
The recapitalization exercise is expected to positively impact Nigeria’s Gross Domestic Product (GDP), improving risk management and credit ratings for banks. Cardoso also pointed out that the process would create opportunities for retail investors to acquire shares in financial institutions, thus invigorating the equity market.
Foreign Investor Assurances
Cardoso reassured foreign investors that their capital would remain protected, even if it could not be fully utilized. “We are implementing policies to ensure that foreign investors can repatriate their funds without experiencing devaluation losses,” he confirmed.
MTN Nigeria Reports N887 Billion FX Losses for H1 2024
In related news, MTN Nigeria Plc reported a substantial foreign exchange (FX) net loss of N887.6 billion for the first half of 2024. This represents a dramatic increase of 95.2% compared to the N454.6 billion loss recorded in the same period last year.
The company’s FX losses included N367.9 billion from foreign exchange transactions and N519.7 billion from unrealized losses. CEO Karl Toriola attributed the significant loss to naira devaluation, which impacted operating costs and earnings. Despite strong revenue performance, the company’s EBITDA margin decreased to 35.6%, down 17.4 percentage points from the previous period. Adjusting for forex effects, the EBITDA margin would have been 50.9%.
Toriola noted that the naira’s depreciation led to a net loss after tax of N519.1 billion, compared to a restated loss of N85.6 billion in H1 2023. The company’s retained earnings and shareholders’ equity also saw substantial negative impacts, standing at N727.2 billion and N577.7 billion, respectively.
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