Nigeria: Monies in Dormant Accounts Prone to Fraud, Warns CBN Governor Cardoso

The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has raised concerns about the susceptibility of monies in dormant bank accounts to fraud.

Speaking at the conclusion of the 296th Monetary Policy Committee (MPC) meeting on Tuesday, where the benchmark interest rate was increased to 26.75%, Cardoso highlighted the risks associated with leaving accounts dormant.

The CBN has recently directed financial institutions to transfer funds from dormant accounts, unclaimed balances, and other financial assets to the CBN’s custody for safekeeping. This move aims to identify and reunite these assets with their rightful owners, manage them in a standardized manner, and establish clear procedures for reclaiming the funds.

Risks of Dormant Accounts

Cardoso explained, “Dormant accounts in banks are often more susceptible to fraudsters who might attempt to exploit these accounts by stealing identities and accessing the funds. This is a significant problem faced by many banks.”

He emphasized that the new policy ensures these funds are securely managed by the CBN at no cost to the beneficiaries. “The central bank will safeguard the money, and when the rightful owner is identified, the funds will be returned along with any accrued income,” he added.

Food Import Duty Waiver

During the MPC meeting, Cardoso also discussed the recently announced duty waiver for food imports, emphasizing the need for a clear exit strategy. He noted that the committee is optimistic about the Federal Government’s stop-gap measures to address the food supply deficit, including the 150-day duty-free import window for key food commodities such as maize, husked brown rice, wheat, and cowpeas.

“These measures are expected to moderate domestic food prices without injecting liquidity into the economy, which could further inflation. However, it is crucial to implement these measures with a defined exit strategy to sustain the gains in domestic food production,” Cardoso stated.

Economic Growth and External Reserves

On the country’s economic outlook, Cardoso noted that Nigeria’s real GDP grew by 2.98% year-on-year in the first quarter of 2024, compared to 3.46% in the fourth quarter of 2023. The growth was driven by both the oil and non-oil sectors. The CBN projects a growth rate of 3.38% for 2024, while the IMF forecasts a growth of 3.1%. As of July 18, 2024, Nigeria’s external reserves stood at $37.05 billion, representing 11 months of import cover for goods and services.

Analysts’ Concerns

Despite the CBN’s optimism, analysts at Afrinvest expressed reservations about the effectiveness of the duty-free import window in significantly reducing food prices. They pointed out that without addressing the rising costs of logistics, driven by high energy prices and insecurity, the impact of the policy would be short-lived.

“There has been no formal model announced to ensure that beneficiaries of the duty-free window sell the staple items at fair prices across the country,” the analysts added.

The CBN’s initiatives aim to safeguard dormant funds and stabilize food prices, but successful implementation and continuous monitoring will be crucial to achieving these goals.