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Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion - Business - Nairaland

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Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by DoggoneDogg: 10:53am On Oct 03, 2021
By Nairametrics Analysts
Nigeria has an estimated $16 billion in domiciliary accounts of commercial and merchant banks, data from the Central Bank of Nigeria reveals. We assumed an official exchange rate of N410/$ based on NAFEX rate used at the Investor and Exporter window.

According to data contained in the apex bank’s statistical bulletin, Nigeria had a total domiciliary account balance of N6.566 trillion as of March 2021 which when converted to dollars at the official rate of N410/$1, translates to about $16 billion.

A further breakdown of the amount reveals corporates own about N4.478 trillion ($11 billion), while retail depositors own about N1.798 trillion ($4.38 billion). The balance is owned by states and local governments and other public institutions.



Foreign Currency Deposits. Exch rate used N360/$1 Jan 2020 – July 2020, N385/$1 Aug-Nov 2020, M410/$1 from December 2020-March 2021.


Why this matters

Nigeria’s foreign currency balances in commercial banks has become a topic of discussion in several quarters with some calling for a conversion of the balances into naira to shore up Nigeria’s dollar reserves. On the flipside, depositors are worried stiff about any such move even though the apex bank has come out to deny it categorically. Much of the discussion has revolved around how robust our domiciliary account balances are and if it can address forex shortages.

Most recently, House of Reps member, Ibrahim Obanikoro, representing Eti-Osa Federal Constituency, Lagos State, called on the Central Bank of Nigeria to close all domiciliary accounts for the next 12 months to ease the slide of the naira. Obanikoro stated this in an online statement on Tuesday evening, adding that he has come up with a bill that will serve the common good.

“I am not the CBN Governor but at this moment, I’m of the opinion that CBN should mandate that all dom accounts be closed for the next 12 months. Let’s see the effect on the Naira. After all, you can’t go to any of the Western worlds and open a foreign currency account.” Obanikoro suggested.

His remarks have been met with harsh criticism with some pointing to a lack of knowledge about currency matters.

This is not the first time Nigerians are experiencing palpable fears of a possible conversion of domiciliary accounts into naira, dating as far back as 2016 when we last had a currency crisis. Last year, a purportedly leaked memo suggested plans to curb usage of money in domiciliary accounts, however, this was categorically denied.

The rumours swelled again in late July, forcing the CBN to deny any such plans in a memo issued by its director of corporate communications. Again, in September of this year, a fake memo appeared with the insinuation that the central bank had approved the conversion of deposits in domiciliary accounts into naira. The Central Bank issued a press release categorically denying this.



See excerpts of the memo for clarity.

“The attention of the Central Bank of Nigeria (CBN) has been drawn to a fake circulation, in social media circles, of a circular with a fake CBN logo curiously dated “13 September 2021”, and purportedly issued by its Trade and Exchange Department to the effect that all Deposit Money Banks, International Money Transfer Operators (IMTOs) and members of the public are to convert domiciliary account holdings into naira. We wish to reiterate that the Bank has not contemplated, and will never contemplate, any such line of action. The speculation is a completely false narrative aimed at triggering panic in the foreign exchange market,” the CBN stated.

Facts versus Fiction

At just $16 billion, the above balances suggest Nigeria’s domiciliary account balances are not robust enough to meet Nigeria’s foreign exchange demand shortages which Nairametrics estimates at about $30 billion.

Nairametrics also believes deposits in domiciliary accounts already forms part of FX liquidity for banks and cannot again be a new source of forex for the central bank.
In addition, retail deposits of just $4.3 billion will not move the needle even if the apex bank is tempted to want to seek liquidity from customer deposits, assuming banks do not include it in their source for funding FX purchases.

Surely, if everyone were to ask their banks to sell their dollars, it will have a positive effect on the exchange rate, but this is not how the market works. Deposits are available for banks to use in the most efficient manner and this inadvertently affects forex liquidity.

Another strong reason that suggests a conversion cannot materialize is that about 68.5% ($11 billion) of the total deposits belong to corporates who earn this money from their foreign currency earnings, through capital importation or loans in form of external credit.
The CBN cannot then tap into these balances as a new source of forex inflow or liquidity when it already serves the same purpose.

Source: Nairametrics

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Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by paskal16: 11:04am On Oct 03, 2021
Emefelie probably pondering on the next action to take

38 Likes 2 Shares

Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by H2ho(m): 11:07am On Oct 03, 2021
shocked

1 Like

Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by dapsoneh: 11:07am On Oct 03, 2021
No wonder those rich people are getting richer

78 Likes 4 Shares

Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by PENISgod: 11:07am On Oct 03, 2021
Please guys is 25k salary a Month good for a single 20 year old living with his parents?

122 Likes 3 Shares

Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by MALIGNANTGuest(m): 11:07am On Oct 03, 2021
Hmmm
Oyaaa BUBU go storm that place to liquidate am.

16 Likes

Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by IMASTEX: 11:07am On Oct 03, 2021
Reading. . . .
Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by Nomorelove: 11:07am On Oct 03, 2021
See money
Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by 360ng: 11:08am On Oct 03, 2021
kiss

1 Like 2 Shares

Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by Terrence99: 11:08am On Oct 03, 2021
It seems stupidity runs in the Obanikoro family. This fool studied Political science and ended up as a fish farmer breeding Tilapia and catfish before becoming an House of Reps Member.

Because he has spent 2 years feeding on government money just like his failure of a father, he thinks he's in a position to give stupid advice on currency and the economy. I don't blame him. It is that bald failure in the CBN who has given nonentities like this Obanikoro mouth to talk. If Emefiele did his job well, fish farmers won't be passing bills on Bank accounts.

148 Likes 12 Shares

Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by whela(m): 11:08am On Oct 03, 2021
Small...
Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by Dreamhighnow(m): 11:08am On Oct 03, 2021
This administration keep destroying our economy and yet they want private individuals to bear the burden whereas they keep looting

I won't be surprise at this sponsored bulletin cos Buhari administration might want to do something with domiciliary accounts of people

My question is it a crime to be a Nigeria? You are eating the future of generations unborn and yet the money they make you are still looking for ways to take it or freeze it. What sort of recommendation by the evil party member?

Lest not forget they once tried to take money left in private people's account left untouch for 6 months or so and also shares yet unclaimed. Where do u see this kind of evil policy anywhere in the world except in Nigeria

Anyway, Nigerians love suffering and smiling

Why do you think BMC members sold their birthright/conscience cos of 30k per month trying to defend the mannequin and result into insults at times

61 Likes 3 Shares

Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by Ugmama(m): 11:08am On Oct 03, 2021
And it's less than 20 people get that money o

13 Likes 1 Share

Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by ecomalchemist(m): 11:09am On Oct 03, 2021
WHERE UNA DEY SEE THIS MoNEY ?

9 Likes

Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by Finnese001: 11:09am On Oct 03, 2021
shocked
Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by Sufferingboy(f): 11:10am On Oct 03, 2021
Buhari should pls borrow this money cheesy grin

6 Likes

Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by ATEAMS: 11:10am On Oct 03, 2021
Lot of money not CIRCULATING

damn ... lemme go spend some bills

15 Likes 1 Share

Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by OmovuduTheBeast(f): 11:10am On Oct 03, 2021
Useless government
Failed country

11 Likes

Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by tnerro1(m): 11:10am On Oct 03, 2021
Leave people’s money alone, go and make good policies that will help the Naira.

53 Likes 3 Shares

Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by Tetrahedron: 11:10am On Oct 03, 2021
Obanikoro and all APC zombies are financial illiterates grin grin grin
The smart ones among them dont even have their assets domiciled in Nigeria e.g thiefnubu

29 Likes 3 Shares

Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by SonofLothbrok: 11:10am On Oct 03, 2021
All i know is that we have a thief as president

22 Likes 2 Shares

Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by PENNYSWAP: 11:11am On Oct 03, 2021
People are wealthy in this country I swear

4 Likes

Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by Sunisonflex39(m): 11:11am On Oct 03, 2021
Abeg waiting this one mean.. I no ready economics for school

1 Like

Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by DoggoneDogg: 11:12am On Oct 03, 2021
PENNYSWAP:
People are wealthy in this country I swear

Na now u just dey know? Nigerians sabi pretend

25 Likes 2 Shares

Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by DOTian: 11:12am On Oct 03, 2021
The Federal government should go and be inventive about generating forex through exports and stop this shamelessly dubious attempt at dictating to people and corporations. It's not the job of the government to lecture folks on how to manage their resources, especially when the said feds have failed woefully and repeatedly on issues like making good fiscal and monetary policies. The solid mineral sector alone is capable of shoring up the forex problems of the country but crooks, herdsmen and Jihadists are allowed to solidly control this sector while ripping off the country... It's insane...

20 Likes 2 Shares

Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by kponkedenge(m): 11:13am On Oct 03, 2021
Mine is among tongue
Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by JavaScript90: 11:13am On Oct 03, 2021
Another avenue for the daft government to steal from Nigerians. Has the 'borrowed' "dead people" and pensions fund returned back?
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2 Likes

Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by AmigoDeDon(m): 11:13am On Oct 03, 2021
Confusion everywhere
Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by Nadaken: 11:14am On Oct 03, 2021
Buhari sef dey eye am for looting

2 Likes

Re: Report: Domiciliary Account Balances In Nigeria Estimated At $16 Billion by Natajo2021: 11:14am On Oct 03, 2021
The parasitic government of Hausa-Fulani led by Wicked general Buhari, always look to reap where they never sew.
Same way they passed a dubious bill to convert and claim all unclaimed dividends that belong to the Southerners.
I look through the list of available unclaimed dividends, I could not see 1% of Hausa-Fulani on the list.
This mean, 99% of unclaimed dividends belong to the Yorubas and ibos.
The worse thing is that the Wicked general is planning to cease the money and use it to develop the desert and non-productive conquered Northern Nigeria area and Niger republic.
Useless government. Always borrowing.
Parasitic and non-ambitious Hausa-Fulani that cannot survive without the sweat, labour and resources of the South.
Very manipulative people.
Specialist in divide , conquer and ruin.

21 Likes 3 Shares

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