Commercial Papers are now very common in Nigeria, and the Central Bank of Nigeria is partly the reason that is the case in the banking sector: “Nigerian banks increasingly rely on short-term commercial papers (CPs) to navigate liquidity challenges as the Central Bank of Nigeria (CBN) enforces stringent cash reserve policies, significantly driving up the cost of deposits.”
Yes, it is costing banks more to hold your deposits because of the cash reserve ratio (CRR) which the apex bank has pushed to help manage some of the monetary issues in the nation. Take a look and read what is happening here.
I used the OA Lawal textbook of economics in secondary school. I am not sure he explained CP (he did explain “promissory note” though, and CP is a subset of that). But today, I want to believe that the popularity of CP in the Nigerian financial market will make it a key section in any O’Level Econ textbook.
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Good People, the market is evolving and our highly financialized economy (though not industrializing) has huge niche opportunities. I want young people to think about how to unlock value in this economy. There are huge evolutions in instruments and derivatives are coming up. It looks exciting and we’re investing also in the capital market because locally, new species of asset classes can be bred. By Q4, our goal is to hire about 50-60 people as we unveil our new company. I am bullish in Nigeria and possibly one of the most committed diasporan investors in the nation!!! Lol.
*Commercial paper is largely an unsecured, short-term debt instrument which companies issue to finance their short-term liabilities which could be payroll, accounts payable, and inventories. It does help to handle short-term liquidity challenges.
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