Economic Confidential, December, 2008

MONETARY

CBN Seeks ECOWAS Trade Integration…

Warns Banks on International Money Transfer

The Central Bank of Nigeria [CBN] has advocated increased trade relations among ECOWAS countries to bring about the much needed monetary integration. The Governor of CBN, Prof Chukwma Soludo, speaking at the opening of a meeting of committee of governors of central banks of ECOWAS under the auspices of West African Monetary Agency [WAMA] in Abuja said trade integration in ECOWAS was a panacea for tackling the menace of global financial crisis

Soludo who was elected the Chairman of the Committee of Governors of Central Banks of ECOWAS member states at the36th meeting of the Committee stated that though Africa was yet to experience the global financial crisis, the region needed to take proactive steps through monetary and financial integration.

According to Soludo, because of the devastating effects of the global financial crisis, the whole World is rethinking for monetary integration.

Disclosing that this is the time for the central bank governors to do fundamental rethinking in terms of sensitization in our various countries, Prof Soludo said the trade integration has to boost the monetary integration

Soludo, who said that WAMA was primarily instituted to midwife the process of common monetary union within the sub-region, stated that the achievement of all the convergence criteria would be meaningless unless there is trade integration END

In another development the Central Bank of Nigeria has warned the 24 Deposit Money Banks [DMB] in the country to desist from charging high cost on international money transfers. The apex bank in a circular titled BSD/DIR/GEN/VOL2/07 dated November 20 and sent to all DMB noted that banks were charging unnecessarily high cost because of what it termed the exclusivity clause signed by the International Money Transfer Operators and their agent banks in Nigeria

According to the CBN such exclusivity clause aimed at protecting  the International Money transfer Operators constituted a restrain on competition and unnecessarily increase the cost money transfer services to the users. The apex bank warned the DMBs that it would no longer approve any money transfer agreement between the International Money Transfer Operators and agent banks that contained exclusivity clauses

Consequently, the CBN  in the circular signed by the Acting Director of Banking Supervision. Dr. A. N. Eke directed all DMBs to ensure that exclusivity clauses are no longer included in the agreement they are signing with money transfer operators

The apex bank, through the circular mandated all DMBs that had already signed the exclusivity agreement to review the agreement the with immediate effect with a view to expunging these non competitive clauses.