Exploring Nigeria’s flourishing ‘illicit’ crypto space
Despite opposition to the implementation of the five per cent telecoms tax on calls and data by the Communications and Digital Economy Minister, Prof Isa Pantami, and other stakeholders in the economy, the Federal Government has insisted it was not backing down on tax. Instead of over-taxing the telecoms sector, the government should provide the regulatory space for crypto transactions to boost its digital tax earnings, writes LUCAS AJANAKU.
The Minister of Communications and Digital Economy, Prof Isa Pantami, appeared to have captured the mood of the nation, aligning with the masses when he expressed his opposition to the five per cent telecom tax.
One of the reasons he opposed the tax is its timing. To Pantami, it is rather inauspicious for the Federal Government to add to the yoke of over-burdened Nigerians. Pantami is not alone. The President, National Association of Telecoms Subscribers (NATCOMS), Deolun Ogunbanjo, is also against the tax because of the poverty some of the policies of the government has visited on the citizens.
For the Chairman, Association of Licensed Telecoms Companies of Nigeria (ALTON), Gbenga Adebayo, the tax is one too many. He wondered why the fixation of the telecoms sector for taxation. He said no fewer than over 40 taxes, levies, dues, including payment for rough-necks that would insist on cash before fueling base transceiver stations (BTS), exist in the sector.
Pantami, Adebayo and Ogunbanjo are indeed on point on the rising poverty in the land and the need for the government to show empathy. Nigeria’s inflation rate in June, surged further to 18.6 per cent compared to 17.71per cent recorded in the previous month, according to the last CPI report for the month of June 2022, by the National Bureau of Statistics (NBS).
Inflation rate climbed to its highest level in 65 months (over five years), and the fifth consecutive monthly rise. The last time the inflation rate hit the 18.6 per cent ceiling was January 2017, when it stood at 18.72per cent.
Monthly, the inflation rate increased to 1.82 per cent in June, this is 0.03 per cent higher than the rate recorded in May 2022 (1.78 per cent). Also, the urban inflation rate increased to 19.09per cent (year-on-year); this is 0.74per cent points higher than the 18.35 per cent recorded in June 2021, while the rural inflation rate increased to 18.13per cent in June 2022 from 17.16 per cent recorded in the corresponding period of 2021.
Despite regulatory reservations, cryptocurrencies have over the years gained enormous popularity, making people adopt them as a tool for financial transactions. In fact, cryptocurrencies have delivered several benefits, such as minimal transaction fees, instant accessibility and high levels of transparency.
With the benefits cryptocurrency has over traditional currency and even other asset classes, it’s hard to argue that there’s no value in transacting with or investing in crypto. The utility provided by many cryptocurrencies is of great benefit to people who value fast and secure transactions. And this is only going to grow more accessible over time with fewer technical hurdles being curbed.
As a demonstration of the fact that if crypto is given a regulatory breathing space, it could boost earnings from digital cash, Mara, a pan-African crypto exchange trading platform, Mara, said plans to impact 1 billion people over the next five years in Nigeria and other parts of Africa.
Its co-founder/CEO, Chi Nnadi, said: “Starting this September with Hack The Mara, we will periodically hold hackathons to solve predominately African problems. We want to train one million people through our training programs and impact a billion in Africa over the next couple of years.”
Speaking on leveraging the platform to establish youths and crypto community, he said platform, which recently raised $23 million in pre-seed, would raise more money on token next year to build more in Africa.
The CEO also said more tokens were going to be listed after building up the Mara community.
As a digital payment system, cryptocurreny doesn’t rely on banks to check and verify transactions. It utilises a peer-to-peer network that makes it possible for anybody, anywhere, to send and receive payments. This system uses encryption to verify transactions and the aim of this is to provide added security and safety.
Just like traditional systems, blockchain networks are not exempted from potential obstacles. However, despite the prevalence of this, there are tools that enable anyone to look up transaction data such as the location, timing, and quantity of cryptocurrency sent from a wallet address. The amount of cryptocurrency saved in a wallet may also be seen by anyone, and this level of transparency helps cut down on any insecurities.
Recently, an automated market maker (AMM), Wine Swap, engaged in an exit scam, and the Binance Security team was able to effectively recover an estimated 99.9 per cent of the nearly $345,000 worth of stolen bitcoins. The platform’s busiest and most dedicated community builders, Binance Angels, have been instrumental in raising money for recovery operations. The volunteer organization assisted a user in recovering 98,000 USDC in funds that were unintentionally sent to the incorrect address.
Keys to enhancing crypto security
While the element of transparency in crypto transactions as well as blockchain networks to conquer any potential insecurities, there is still a need to adopt stringent security measures.
Advanced security measures, offline money storage, real-time activity monitoring, and data encryption are a few of Binance’s main platform security initiatives. In addition to ensuring that only users have access to their personal information and the safety and integrity of user cash, these initiatives also analyze user activity through Binance’s risk management system in the event of any unexpected activity on the account.
While guaranteeing industry-wide compliance with crypto security standards, it’s critical to take user-level security into account, which takes us to the user-first approach.
A high level of security is maintained on the user’s side thanks to the user-first approach. Maintaining a security measure on the user’s side is as crucial to maintaining crypto compliance on the industry side. This is a vital key to enhancing crypto security. The Binance platform consistently prioritises user protection through its cutting-edge security measures and stringent data privacy laws because users are the foundation of the Binance ecosystem. This consists of a comprehensive risk management system, real-time monitoring, and cutting-edge data privacy solutions.
Safe sign-in, access control, and security notifications are among the user-level security measures to ensure adequate crypto security. In addition to the user-first approach measures, Binance also put the following actions in place to guarantee user-level security: prompt alerts in the event of questionable activity, a stringent sign-in policy, and opt-in security measures.
Also, Binance includes a cooling-off time feature that stops trading in derivatives, allowing users to refrain from compulsive buying after experiencing losing streaks. This capability is also accessible for margin trading, allowing for the temporary suspension of activities like borrowing and isolated or cross-margin trading. Along with these capabilities, the platform also contains user-generated material, help articles, an auto-deleverage liquidation indication, and client knowledge tests.
The greatest level possible of cybersecurity must be maintained regardless of the rise in crypto vulnerability, and Binance has taken this step to retain their commitment to user safety by adopting a user-first approach.
Also, it is important for users to take security measures seriously. Keep your devices safe, and also conduct personal research on the cryptocurrency you’re transacting with. This is important as it keeps you informed about the cryptocurrency market and improves your future investments decisions.
CBN devalues Naira to 630/$1
The Central Bank of Nigeria (CBN) has devalued the Naira to N631 to the dollar from N461.6 it sold at the Importers and Exporters (I&E) window the previous day, Daily Trust gathered.
The devaluation came 48 hours after President Bola Ahmed Tinubu announced the plans of the federal government to unify the country’s exchange rate to stimulate the economy.
In his inaugural speech, minutes after he was inaugurated as the 16th president of the country, Tinubu said, “Monetary policy needs a thorough house cleaning. The Central Bank must work towards a unified exchange rate. This will direct funds away from arbitrage into meaningful investment in the plant, equipment and jobs that power the real economy.”
There has been a wide margin between the I&E window and the parallel market, a situation that experts say encouraged round-tripping with Bureau de Change operators.
The situation has seen the CBN devise several measures to check the practice as well as completely stop the sale of forex to BDCs.
On Tuesday, President Tinubu met with the top echelon of strategic institutions including the CBN Governor, Godwin Emefiele, at the presidential villa.
At the end of the meeting, neither the presidency nor Emefiele disclosed the outcome of the briefing. It was, however, gathered that the issue of the exchange rate was discussed at the meeting.
The President also met with the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited, Mele Kyari. The removal of petrol subsidy was discussed, it was gathered.
Findings, however, revealed that at the resumption of the weekly bidding for foreign exchange, the apex bank sold the spot rate to banks on behalf of their customers at N631 to a dollar and most bidders got the full amount they requested.
One of the customers told this paper that they applied and that their request was fully granted at N631 as against N461.6.
The move has also seen prices at the parallel market trend downwards. Checks by this paper revealed that prices dropped from N750 to a dollar in the early hours of yesterday to N745 by evening in Abuja and Kano respectively.
The naira weakened in the parallel market to the lowest level in a year on expectations of a possible change in exchange rate management after Tinubu takes office on Monday.
The naira dropped to N762 a dollar on Friday from 775 the previous day in the unauthorized market in Lagos, said Umar Salisu, a BDC operator who tracks the data in the nation’s commercial capital.
The unit has weakened steadily in the parallel market since last week after stabilizing for most of this year.
The market arbitrage (difference between the official and parallel markets) has widened in the past three years from N100 per dollar or about 30 per cent in 2020 to over N400 per dollar (above 100 per cent) sometime last year when the black market rate spiked to N880/$.
Development institutions, including the International Monetary Fund (IMF), are wary of exchange rate differential in excess of five per cent and warn that such could trigger unhealthy manipulation that could negatively affect other efforts on market stabilisation.
From 2020 to 2022, the CBN spent about $42 billion intervening in the foreign exchange market to stabilise the naira. The amount was sold to the end-users, including students and tourists, at the official rates, which are way off the effective exchange rate of the naira.
According to the Financial Stability Report, a publication of the CBN, the apex bank sold $9.2 billion in the market in the first half of last year.
The full data for the second half are not available, but the annualised value is assumed to have surpassed that, especially with the level of social and economic activities associated with the second half.
Whereas the black market rate averaged N730/$, the I&E window finished at suppressed N447/$ on average. That puts the arbitrage at N283/$, pushing the CBN’s FX subsidy in the year to about N3.65 trillion.
EEDC blames rainstorm for lack of electricity supply in South East
The Enugu Electricity Distribution Company PLC, EEDC, has informed her esteemed customers across the South East that the loss of supply in some areas within its network was due to the rainstorm which occurred on Sunday evening and early hours of Monday
EEDC explained this through a message issued by Mr Emeka Eze, its Human Capital Development Head and made available to reporters.
This he explained had resulted in faults, occasioned by fallen trees and a high rate of broken High and Low Tension poles, causing supply disruption to their 11KV and 33KV feeders across the business districts.
He explained that their various technical/maintenance teams have since commenced patrol of the network to evaluate the extent of damage and treat faults where they are minimal.
EEDC expressed regret over the inconveniences these developments have caused their esteemed customers and appealed for their patience and understanding while these challenges are addressed.
Emeka Eze maintained that EEDC remained committed to delivering improved services to her esteemed customers.
CBN gives reason for raising interest rate to 18.5 per cent
The Central Bank of Nigeria has opened up on why it raised the Monetary Policy Rate, also known as the interest rate, to 18.5 per cent from 18 per cent.
In a communique from the 291st Monetary Policy Committee meeting posted on CBN’s website on Wednesday, the Governor of the apex bank, Godwin Emefiele, stated that its investigation and research found that the country’s interest would have been higher but for its intervention by raising interest rates.
According to Emefiele, Nigeria’s April inflation rate of 22.22 per cent would have been 30.48 per cent if the MPC had not raised the interest rate.
The bank’s decision to raise interest rates since May 2022 positively moderated the country’s rising inflation rate.
“The results revealed that following each monetary policy rate hike, the rise in inflation moderated relative to what it could have been if the MPC had not aggressively raised rates at all.
“The empirical evidence provided showed that whereas inflation in April 2023 stood at 22.22 per cent, the counterfactual evidence suggests that, it could have risen to 30.48 per cent in April 2023, had the MPC not taken any action to raise policy rates as it did since May last year,” he said.
CBN’s MPC raised the interest to 18.5 per cent.
CBN retained the Asymmetric Corridor of +100/-700 basis points around the MPR, Retained the CRR at 32.5 per cent, and Retained the Liquidity Ratio at 30 per cent.
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