The Nation Newspaper

Author: The Nation

  • Entrepreneurship will revamp economy, says minister

    Entrepreneurship will revamp economy, says minister

    Minister of State for Labour and Employment, Nkeiruka Onyejeocha has said the efforts of the Federal Government towards promoting entrepreneurship will revamp Nigeria’s economy and reposition it on the path of steady growth, enhance job creation and reduce unemployment and insecurity.

    The Minister made the remarks in her speech at the ongoing 112th Session of the International Labour Conference in Geneva, Switzerland, as a response to the Director-General’s report on the renewed social contract, outlining Nigeria’s position on the global agenda for decent work and social justice.

    In a statement by her Special Adviser (Media), Emameh Gabriel, the minister reaffirmed the government’s commitment to fostering a culture of constructive social dialogue and promoting decent working conditions in Nigeria, ensuring a fair and equitable work environment for Nigerian workers.

    According to the statement, the minister highlighted the government’s policies targeting food security, job creation, poverty alleviation, and social cohesion, aligning with President Bola Tinubu’s “Renewed Hope Agenda.”

    Read Also: Labour strike and illegality  of national grid shutdown

    Speaking on the new national minimum wage, she said: “The Federal Government is currently negotiating through its tripartite committee to review the National Minimum Wage as part of its efforts to promote decent work for workers in both the public and private sectors.”

    The minister told the gathering that Nigeria has been implementing international labour standards, including promoting social justice, and boosting national productivity through the recently launched Labour Employment and Empowerment Programme (LEEP), aimed at creating jobs and equipping youth with entrepreneurship skills.

    “The Government also recognise skill acquisition as a viable strategy for youth empowerment and job creation, and has identified the informal sector as the driving force of economic growth in most developing countries of the world.

    “As an intentional strategy towards achieving the goals of the Renewed Hope Agenda, the Federal Government launched the Labour Employment and Empowerment Programme (LEEP) on Thursday 25th April,2024, with the fundamental vision to create jobs by training and equipping 2.5 million persons every year within the next 4 years with requisite entrepreneurship skills,” she added.

    The minister emphasised the need for global cooperation to address technological challenges and build a more resilient and inclusive society for future generations.

    She applauded the Director-General’s office for selecting a timely and relevant theme, which highlights the mutual interdependence between individuals and societies in promoting social unity, economic robustness, and political stability.

    She observed that this year’s theme aligned with the “Renewed Hope Agenda” of President Bola Tinubu’s administration, a visionary policy framework designed to transform Nigeria into a premier investment hub on the global stage.

    The minister said: “The agenda is hinged on the Core Pillars ‘4-D Diplomacy Strategy’ centred on promoting democracy, driving economic development, harnessing Nigeria’s demographic potential, and engaging with the diaspora community. The eight Priority Areas of the Agenda aims to pursue economic prosperity for the country through food security, poverty eradication, economic growth, job creation, access to capital, inclusiveness, improving the security of life and property, rule of law and fight against corruption which will help build a more just and equitable society reminding both Nigerians and the global community that Nigeria stands ready to embrace the future and conduct business in line with International Best Practice.

    “The Nigerian government has provided enabling environment for social dialogue with the tripartite constituents to advance social justice and has solicited tripartite plus cooperation to align with government’s agenda in the labour sector to promote workers welfare and boost national productivity.”

    The minister identified the following areas where the government has made giant strides: “Implementation of the Decent Work Country Programme III; Ratification of the 10 ILO Fundamental Conventions and most recently ratified 4 additional Conventions, including Convention 190 on Violence and Harassment; Revival of the National Labour Advisory Council, Nigeria’s highest tripartite consultative structure; Tremendous progress in the review of our Labour Law.

    “Establishment of Job Centres across the country; Upgrading Skill Acquisitions Centres across the six geo-political zones; Establishment of Migration Resource Centres, as part of government’s commitment to providing good governance for Labour Migration; Reducing child labour to the barest minimum by promoting universal basic education and encouraging school enrolment of minors, especially for the girl child; Granting direct loans to farmers in the agricultural sector geared towards food security; and Provision of portable water, energy and massive road infrastructure, just to mention a few.”

  • Rabiu lifts widows with N10m grant

    Rabiu lifts widows with N10m grant

    The Abdul Samad Rabiu Initiative for Africa (ASR Africa), powered by industrialist and Chairman of BUA Group, Abdul Samad Rabiu, has empowered about 200 widows with N10 million grant.

    Managing Director, Abdul Samad Rabiu Initiative for Africa (ASR Africa), Dr. Ubon Udoh, announced this donation yesterday during a ‘Widows and Empowerment Feast’ organised by the International Women’s Society (IWS), in Lagos.

    The grant, which is part of ASR Africa’s ongoing efforts to invest in social development as one of its primary areas of focus, was aimed at bringing relief to the beneficiaries.

    It will be distributed to the widows in partnership with the IWS, and it was in commemoration of the 2024 International Widows’ Day.

    June 23 each year is observed as International Widows’ Day by the United Nations, to draw attention to the voices and experiences of widows around the world and to galvanize the unique support that they need.

    Read Also:Democracy Day: military reaffirms loyalty to constitution, Tinubu

    Dr. Udoh, in his goodwill message, appreciated the good job done so far by IWS since its establishment in 1957. He said the grant is a testament of the commitment of the Chairman of ASR Africa and the BUA Group at improving the livelihoods and welfare of Nigerians.

    ASR Africa, a brainchild of Rabiu, was established in 2021 to provide sustainable, impact-based, homegrown solutions to developmental issues affecting Health, Education and Social Development within Africa.

    Speaking at the event, the Chairperson of the Widows’ Trust Fund of IWS, Mrs. Adeola Adebanke, expressed her outmost joy and satisfaction toward the grant donated to the organisation by the Chairman of ASR Africa and the BUA group, Rabiu.

    She prayed that the Chairman continues to make giant strides and break new boundaries. “BUA Group is one of one of our main sponsors for today’s event and we want to say a big thank you to them for their support, and we hope that we continue to collaborate with them on all other events,” she said.

    Adebanke explained that the essence of the ‘Widows and Empowerment Feast,’ which is an annual event, was to make widows feel happy, feel loved and also make them independent and be able to stand on their own, take care of their children and their families.

    “We are going to empower about 200 widows today with different tools. We have sowing machines, grinding machines; there are some that want to do POS business, some of them want to sell provisions. We also have some that want to go into catering business.

    “We have some that we are going to augment their working capital. So, they are going to be given some cash courtesy of BUA Group. Some want to sell drinks. So, we are going to give them freezers and fridges and all that,” the IWS Chairperson said.

    Adebanke further said apart from the Widows’ Trust Fund through which the society raises money from different organisations, “We also have a Scholarship Fund, a Skills Acquisition Centre and an ICT Centre where we train them on different vocations.

    “If you go round, you will see we have facilities such as sowing machines, we have a huge kitchen where we train them on catering. We arrange different trainings for them such as gele tying, make-ups, different kinds of things that they can do to be independent,” she said.

    The high point of the event was the presentation of the grant to the beneficiaries. In addition, 250 widows received palliative care packs from BUA Foods Plc which comprise rice, pasta and semolina.

    The widows who were visibly grateful, expressed their gratitude to ASR Africa, its chairman and executives of BUA Foods Plc for the timely palliative care packs received.

  • Senate challenges NLNG on $43m projects

    Senate challenges NLNG on $43m projects

    The Senate has called on the Nigeria Liquified Natural Gas (NLNG) Limited to prudently allocate the $43 million from the $4.3 billion Train-7 project for human capital development.

    Chairman, Senate Committee on Local Content, Senator Natasha Akpoti-Uduaghan made the call during an interactive session with representatives from NLNG, NCDMB, Saipem Contracting Limited, and Daewoo Engineering & Construction, on Tuesday at the National Assembly.

    Akpoti-Uduaghan urged the NLNG to ensure compliance with the Nigerian Oil and Gas Industry Content Development (NOGICD) Act.

    The Kogi Central Senator, according to a statement by her Chief Press Secretary, Arogbonlo Israel, in Abuja said the amount which represents one percent of the total project value, “is designated for human capacity development and institutional strengthening.”

    She stressed the importance of transparency and effective utilisation of the fund to benefit Nigerians and enhance the country’s human capacity development and institutional strengthening.

    Read Also: Senate passes N1.911trn NDDC’s 2024 budget

    “Learning institutions from public primary to tertiary institutions nationwide should benefit from the $25.8million which is 60 per cent of the $43million worth of HCD projects owed Nigerians,” she said.

    She also emphasised the infrastructure deficit in Nigeria’s primary and secondary schools by UBEC report which has it that about 40,000 classrooms are in deplorable conditions.

    “It would do well if NLNG’s HCD schemes can support UBEC in their quest to provide befitting educational facilities,” she said.

    She noted the discrepancies in reported figures for the NLNG Train-7 project, saying that if the project is valued at $6.5 billion, the human capacity framework would allocate $39 million for institutional strengthening, $13million for advanced-level training, and $13million for auxiliary training, totaling $65 million.

    “If the project is worth $10 billion, the allocation would be $60 million for institutional strengthening and $20 million each for training, totaling $80 million worth of projects across the country.

    The Kogi lawmaker explained that for projects in the oil and gas sector worth over $500 million, 1% of the project value is allocated to human capacity development and institutional strengthening.

    “The committee is expected to collaborate with NLNG and NCDMB to establish a framework and select public institutions across the country that will benefit from the strategic programme, aimed at enhancing learning institutions’ capacity.

    “The effective utilisation of these funds will positively impact the country’s human capacity development and institutional strengthening and will help address the issue of out-of-school children and improve learning structures in public institutions,” the statement added.

  • Illegal fund manager sentenced to five-year jail

    Illegal fund manager sentenced to five-year jail

    A Federal High Court, sitting in Abuja, has sentenced the Chairman and Managing Director of Famzhi Interbiz Ltd, Mariam Suleiman to five years’ jail for operating and luring unsuspecting investing public into an illegal fund.

    Suleiman was sentenced to five years’ imprisonment without option of fine for defrauding investors of more than N2 billion.

    Justice Inyang Ekwo of Federal High Court, Abuja, found Suleiman and her company guilty of the allegations preferred against them in counts one and two by the Federal Government.

    “Upon the provisions of Section 516 of the Criminal Code Act and Section 56(6) of the Securities and Investment Act being read to the defendants, for understanding of the terms of punishment therein.

    “And upon hearing the allocutus of the learned counsel for the defendants and considering same, I am minded not to impose the full punishment on the 1st defendant (Suleiman) particularly,” Ekwo said.

    He, consequently, sentenced Suleiman to three years’ imprisonment in count one and two years’ imprisonment in count two which would run concurrently from the date of the order.

    Read Also: Counsel to Lagos pastor asks court to stall proceedings 

    He equally ordered the company to be wound up and all its property to be forfeited to the Federal Government.

    “The said property shall be sold and the proceeds there-of used to compensate the victims of this crime,” Ekwo said.

    He said it was clear that the first and second defendants conspired among themselves together with their other staff to do an illegal act.

    “That is, to lure and offer for subscription an unregistered investment collective scheme valued over N2 billion to the unsuspecting general public.

    “On that note, I find that the offence of conspiracy in count one is proved as required by law and I so hold,” Ekwo said.

    He also held that by the evidence of the prosecution witnesses and the exhibits tendered, it was established that the defendants “ran a scheme in pursuance of which members of the public were invited or permitted to invest money in a portfolio for a participatory interest.

    “This evidence was never controverted by the defendants. The position of the law as settled in many authorities is that evidence adduced in court, that is relevant to the issue in controversy, and has neither been challenged nor successfully debunked becomes good and credible evidence, which ought to be relied upon by a trial judge,” Ekwo said.

    He said it was also pertinent to note that Suleiman herself admitted both in her evidence-in-chief and during cross-examination of running the scheme.

    Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC), had three years ago disclaimed the activities of Famzhi Interbiz Limited, warning that neither the entity nor the ‘illegal products’ they offered were registered or regulated by the Commission.

    Despite not being registered by SEC, the company had proceeded to unlawfully solicit funds from the investing public on product neither registered nor approved by the Commission, with the promise of a guaranteed return on investment in clear violation of the Securities and Investment Act (ISA) 2007.

    Consequently, SEC referred the company to the appropriate law enforcement agency for criminal investigation and possible prosecution for violation of the provisions of the Investments and Securities Act 2007 and other relevant laws in Nigeria.

  • ‘Fed Govt invests $50m in CNG initiatives’

    ‘Fed Govt invests $50m in CNG initiatives’

    The Presidential Compressed Natural Gas Initiative (P-CNGi) said it is set to roll out 20,000 CNG conversion kits at 50 per cent cost. This is coming with free installation for transport union members as part of efforts to ensure rapid growth of the scheme.

    P-CNGi Programme Director and Chief Executive, Engineer Michael Oluwagbemi disclosed during a Northern Stakeholders Engagement Forum in Kaduna, Kaduna state.

    He said 120 conversion centers were under construction across the country with eight ready for commissioning in four states namely Kwara, Rivers, Abuja and Lagos.

    “We are here to engage stakeholders, labour unions, transport workers, state government, technicians and private sector on the Compressed Natural Gas (CNG). We have over 20,000 kits that we are making available immediately with the transport sector, National Union of Road Transport Workers (NURTW), Road Transport Employees Association of Nigeria (RTEAN) and National Association of Road Transport Owners (NARTO) being our immediate concern.

    “We are making the kits available at 50% discount and installation will be free. With the pilot states being Ilorin, Kwara state, FCT, Abuja, Lagos state and Port Harcourt, Rivers state. The plans of Mr. President are to roll out CNG vehicles immediately, but we need the labour unions and private sector to drive the initiative. Eight of the conversion centers in the four states will be launched in the next week.

    “The conversion center in Kaduna is ready to go and it’s going to be part of the eight to be rolled out. We also have some conversion centers in Kaduna state that are under construction. We have Nippco Center and Bain Center in Kaduna, NITT in Zaria and others in Kano and Abuja. Over 120 conversion centers are currently under construction, from just seven last November. The President is working to ensure that 1 million CNG vehicles are converted by the end of 2027.

    Read Also: Democracy Day: Nobody is immune against slipping, APC chieftain tells Nigerians

    “Over $50 million have been invested in the last one year and more would be invested in the coming years to achieve CNG powered vehicles that is cleaner, safer, cheaper and more available. We are working with Ferma and other business agencies,” the P-CNGi boss said.

    One of the stakeholders and Vice President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Alhaji Hammed Adekunle Fashola, said his association would support the P-CNGi with 150 conversion centers at their filling stations across the country.

    In his message to the occasion, Kaduna state Governor Uba Sani, who was represented by the state Commissioner for Public Works and Infrastructure, Architect Ibrahim Hamza, said: “Transportation is one of the major promoters of our socio-economic activities which deals with the movement of persons, goods and freight from one point to another. “According to the Nigeria Bureau of Statistics (2018); there are almost 12 million vehicles plying our roads daily.

    “Hence you can imagine the volume of contaminated emissions release into the air by this massive number of fleet and the number of aquatic and terrestrial lives that they are affecting daily. These burning gasoline and diesel fuel creates harmful byproducts like nitrogen dioxide, carbon monoxide, hydrocarbons, benzene, Sulphur oxide and formaldehyde.

    “The effects of pollution to our environment affects our health status in so many negative ways by releasing harmful substances which we inhale into our respiratory systems,” he said.

  • Ogun seeks to acquire hydro power plant to boost energy supply

    Ogun seeks to acquire hydro power plant to boost energy supply

    Ogun State Government has expressed interest in acquiring the hydro power plant situated at the Ogun-Osun River Basin Authority to facilitate the availability of energy for household and commercial uses in the state.

    Governor Dapo Abiodun made this known at a meeting with the new Managing Director of the Ogun Osun River Basin Development Authority, Engr. Adedeji Ashiru and his management team.

    The Governor said given the status of the state as the nation’s emerging industrial belt and investors’ haven, it would be necessary to revitalise the long-abandoned hydro power plant to attract sufficient energy for business interests.

    He highlighted the potential for the state to become a hub for industrial activities by ensuring affordable energy costs through this acquisition.

    “We are aware there is a hydro power plant that is installed in the river basin for several years. It was a Federal Government initiative.

    “As a state government, we have expressed interest in the acquisition of that hydro power plant.

    “It is almost obsolete by now. Only God knows the level of vandalization, but we believe that if it is transfered to us as a state government, I think they’ve already spoken to the OEM, the original equipment manufacturer and we can jointly look at how to ensure that not only do we resuscitate it, but actually expand it.

    “You are aware that we are the industrial capital of Nigeria and electricity is a key enabler in the industrial revolution and one of the vision we have as a state government is to ensure that Ogun State becomes one of the state if not the state where the cost of energy will be the cheapest.

    “I believe that if we are able to acquire this Hydro Power Plant, it will go a long way to supporting the actualisation of our vision,” he said.

    Furthermore, Abiodun acknowledged the importance of effective management of the river basin in controlling flooding, particularly in areas like Ibafo, Isheri, and Kara.

    He disclosed plans to engage consultants to address the recurring flooding challenges and enhance water resource management.

    He said: “As a state government, we are looking at engaging consultants to recommend to us what we can do to ensure that this perennial recurrent problem is finally resolved.

    “I am sure you also know that the management of that river basin is also very key to the control of flooding in Ogun State.

    Read Also: Oil Exploration: Ogun on the path to eldorado

    “The water table rises and falls. The areas between Kara, Mowe, Ibafo, Isheri North have in the recent times been flooded that many people cannot even access their homes.

    “We’ve called the attention of the Ministers of Water Resources, Humanitarian and a few other ministers have come here to look into what are the immediate causes, what can be done to manage the situation in the immediate and the long term.”

    Recognizing the critical role of the river basin in water supply and agriculture for the South West states, Abiodun stressed the need for collaborative efforts to leverage the Basin Authority’s resources for agricultural development and food security initiatives in the region.

    “This River Basin is also very fundamental to agriculture and food security. This is an area that is extremely important to the President and his Renewed Hope agenda.

    “As a state government, we are looking forward to working with you collaboratively to ensure that we tap into the advantage of having you and having the Basin Authority in this state to ensure that it becomes a resource that will catalyse the agricultural program we are currently implementing and our food security initiatives.

    “Through that River Basin Authority, we can ensure that there is adequate water supply for our farmers that are either upstream or downstream from the dam,” he added.

    Abiodun also noted that the antecedents of the new managing director had prepared him for the task, thanking President Bola Ahmed Tinubu for finding his nomination acceptable.

    Earlier in his remarks, Engr. Ashiru said that the basin under his watch would enhance water resources management, promote agriculture, and also support infrastructure development within the region.

  • Nigeria is top sixth investor in Tanzania

    Nigeria is top sixth investor in Tanzania

    •Tanzania Investment Centre, LCCI extend invitation to more Nigerians

    Nigeria currently ranks number six in the order of foreign investors in Tanzania. Nigeria has about 28 companies currently operating in the East African country.

    This was disclosed by the Senior Investment Officer, Tanzania Investment Centre, Gaudence Nicholaus Mmassy during a Strategic Investment Forum organised by the High Commission of the United Republic of Tanzania at the Eko Hotels and Suites, Victoria Island, Lagos.

    Chairman, Tanzania Investment Centre, Dr. Bimlith Manhenge, said the idea behind the forum was to show Nigerian investors with investment opportunities available in Tanzania as well as the incentives.

    Read Also: Democracy Day: Better days ahead, APC assures Nigerians

    “We believe we can exchange what is there in Nigeria with what we have in Tanzania and vice versa. And this can only be done through investment and exploring the investment opportunities that we can have. African countries have always looked to the West for investors, but the fact is that we have not developed through those kinds of investments, because they always go for building capacity. Nobody will come and build the road for us, nobody will come and build the factories for us order than ourselves,” Manhenge said.

    He noted that Tanzania has 61 million population, of which the youth forms the largest demography.

    He pointed out that several Nigerian investors and businessmen, including The Dangote  Group, RiceAfrika Technologies, Guaranty Trust Bank, United Bank for Africa, are already doing well in the East African country and therefore serve as the country’s ambassadors to Nigeria.

    Using statistics, Mmassy reeled out areas of opportunities to include agriculture and agro processing sector, and allied products, fishing and aquaculture, oil and gas, pharmaceuticals, tourism, real estate, mines and metals, financial services, forestry and financial services.

    Former president of the Lagos Chamber of Commerce and Industry (LCCI) and Honorary Consul  of Tanzania in Lagos, Mrs Toki Mabogunje, said Nigeria, as Africa’s largest economy, has a lot to offer the world, adding that Tanzania, in the same vein, has so much more to offer.

    “Tanzania at this point is spreading its wings. Tanzania is more like the secret of Africa; they have so much to offer, yet so little is known about the economy of that country. So this forum is to inform and educate business investors in Nigeria about the opportunities in that country and to jaw jaw with the chairman of the Tanzania Investment Centre,” Mabogunje said.

    President, Lagos Chamber of Commerce and Industry, Gabriel Idahosa, said the forum was to apprise Nigerians with the reality already on ground, which is that a number of Nigerian businesses are already doing well in Tanzania and to invite a lot more Nigerians in partnership with the LCCI, to invest profitably in that country.

  • Nigerian banks safe, resilient, says CIBN

    Nigerian banks safe, resilient, says CIBN

    Nigerian banks are safe and sound and there’s no threat to the operations of the generality of banks.

    The Chartered Institute of Bankers of Nigeria (CIBN) yesterday decried malicious information aimed at linking the recent revocation of the licence of Heritage Bank to the general state of the banking sector.

    The CIBN stated that using a single regulatory action to impugn the safety of the banking sector was misleading.

    President, Chartered Institute of Bankers of Nigeria (CIBN), Prof. Pius Olanrewaju, said the Nigerian banking system remains very safe, sound and resilient.

    According to him, the mendacious information making rounds in the public domain that the banking licenses of more banks would be revoked after the regulatory action taken by the Central Bank of Nigeria (CBN) against Heritage Bank on June 3, 2024 is false and misleading.

    “We would like to allay the fears of bank customers and the generality of the public that the assertion is false and misleading. The Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) have debunked the claim.

    Read Also: CBN probe: Tinubu, Cardoso’s anti-corruption drive yielding results, says analyst 

    “The ongoing recapitalisation process announced by the CBN is also aimed at further strengthening the resilience of the Nigerian banks and their capacity to support the envisaged growth of the Nigerian economy.” Olanrewaju said.

    He urged the public to continue to conduct their banking services without hesitation or apprehension.

    He noted that the CIBN, as the umbrella professional body for banks and bankers in Nigeria, working with other stakeholders in the ecosystem is committed to promoting best practices and ensuring that the banking sector remains safe and sound.

    The CBN had reviewed the minimum capital requirement for commercial, merchant and non-interest banks. The apex bank increased the new minimum capital for commercial banks with international affiliations, otherwise known as mega banks, to N500 billion; commercial banks with national authorisation, N200 billion and commercial banks with regional license, N50 billion.

    Others included merchant banks, N50 billion; non-interest banks with national license, N20 billion and non-interest banks with regional license will now have N10 billion minimum capital. The 24-month timeline for compliance ends on March 31, 2026.

    Most experts agreed that the injection of new capital into banks would support national economic growth.

    The experts included Managing Director, Arthur Steven Asset Management, Mr Olatunde Amolegbe; Managing Director, AIICO Capital, Mr Femi Ademola;  Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf; President, Association of Capital Market Academics in Nigeria, Prof. Uche Uwaleke and Managing Director, HighCap Securities, Mr. David Adonri.

    Experts agreed that considering the increase changing dynamics in the banking sector and the overall economy since the last recapitalisation, it has become necessary to strengthen the banks’ financial positions. However, they differed on the definition of new minimum capital by the apex bank, which excludes reserves and narrows the relevant capital to share capital and share premium.

    They also agreed that the extended timeline till 2026 provides ample opportunity for banks to meet the capital requirements without resorting to forced options.   

    Amolegbe said the peculiar definition of minimum capital by the CBN implies that the banks will need to raise fresh funds, because if retained earnings of some of the banks had been allowed, they may not even need to come to the market at all in order to meet the new requirements.

    “We now have a situation where virtually all the banks have about 50 per cent of requirements and they will all on aggregate need a cumulative of more than N2 trillion of fresh capital to remain in business. We expect significant capital market activities in the next 24 months,” Amolegbe, a former president of Chartered Institute of Stockbrokers (CIS) said.

    Ademola, a chartered financial analyst, said the changes in the economy, banking sector and particularly foreign exchange (forex) dynamics underlined the imperatives for the recapitalisation.

    He however noted that while the announcement of recapitalisation in itself is not unexpected, the exclusion of additional tier-1 capital, such as preference shares and convertible debt and the banks’ other reserves, especially retained earnings, is unexpected and creating a serious fuss in the market.

    “Since the retained earnings are distributable earnings that belong to the shareholders, it is expected that it should count as part of capital available to run the business. It is even more confusing when the CBN recently said that the huge incomes recorded by banks due to exchange rate devaluation on 2023 should not be distributed as dividends due to possible reversal of fortunes when the naira strengthens. So, the shareholders are not able to get the incomes as dividends and won’t also be able to recapitalise as share capital. This appears ludicrous since the shareholders would have been asked to provide additional fund to recapitalise the bank should this have been a loss to the bank.

    “One other issue that needs to be clarified is in a situation where a bank meets the share capital and premium required but has negative other reserves thereby making its shareholders fund to be lower than the minimum requirement but in line with the capital adequacy ratio (CAR) requirement. How would this be dealt with? I did not see this in the explanatory notes on the circular,” Ademola said.

    He noted that it was clear that the CBN wants the banks to be freshly capitalized, urging the apex bank to make the recapitalisation exercise a very smooth one without creating any negative investors confidence for the banks.

    “I will suggest that the apex bank conducts a stress test for the banks and estimate what should be provided for from both existing liabilities and contingent liabilities. What is left in the retained reserves of the banks should be capitalised by increasing the share capital and share premium to the required minimum capital. This would be done through the issue of bonuses so as to move the fund from distributable reserves to non-distributable reserves; thus preventing any cash payout from the banks’ capital,” Ademola said.

    Yusuf said there was the need for regulatory authority to ensure that the soundness and stability of the banking sector is preserved and improved upon, especially because of the recent macroeconomic headwinds.

    He pointed out that the last major review of minimum capital requirement was done in 2005 with the minimum statutory capital requirements for banks then pegged at N50 billion for international banks; national banks, N25 billion and regional banks, N10 billion.

    “The real issue is that inflation had weakened the value of money overtime which makes recapitalisation imperative and inevitable.  The essence is to ensure the safety of depositors’ fund, strengthen the stability of the financial system, deepen resilience of the banking system and reposition the bank to support growth. The reality is that the capitalisation requirement has not increased materially in real terms, that is, when adjusted for inflation,” Yusuf said.

    Uwaleke said the recapitalisation was “a welcome development that will help strengthen the country’s financial system and a potential boost to the stock market”.

    He said the calibration of the new minimum capital base on the basis of scope of authorization is better, urging the apex bank to applying a differentiated cash reserve requirement (CRR) according to the category of license instead of a uniform rate of 45 per cent for commercial banks.

    “In view of the young age of non-interest banks in Nigeria, they should be allowed a longer period, say, three years to meet the minimum capital requirements,” Uwaleke said.

    Adonri said the apex bank has justification for the new minimum capital base given the erosion of the value of naira, which may expose Nigerian banks to risks through their foreign operations.

    He however cautioned that extending the policy to local banks with adequate capital may precipitate the kind of over capitalisation that caused unsustainable credit boom that nearly collapsed the economy between 2005 and 2008.

    “A blanket policy like this fails to consider the differentiated risks borne by each bank thus making a risk based supervision a superior approach. It is important to note that it is erroneous to tie the capital base of a bank to its ability to service a large economy because banks have access to deposit liabilities which they form into working capital finance. It is worrisome that this policy has come at a time when banks are in the surplus end of the economy from where capital ought to flow to production which occupies the deficit end,” Adonri said.

    Yusuf said the proposed recapitalisation of banks should be done in a manner that would minimise shocks and disruptions to the banking system and the economy at large.

    He urged the CBN to ensure that all players in the banking sector do not engage in predatory and other anti-competitive practices in the industry on account of the recapitalisation policy.

    “With the current approach and timeline given by the CBN, the risk of banks collapse or hasty mergers and acquisitions should be minimised. It is also laudable that the current categorisation of banks with differential capital requirements has been maintained – international, national and regional.  This is necessary to allow for inclusion and reduce the risk of dominance of the banking space by a few big banks,” Yusuf said.

  • ‘CNG is future of auto industry’

    ‘CNG is future of auto industry’

    A local auto assembler, Lanre Shittu Motors, is set to unveil its first set of Compressed Natural Gas-powered buses to be used for airport shCNG is future of Nigeria’s auto industry, says Lanre Shittuuttle.

    Managing Director and Chief Executive Officer of the auto firm, Mr Taiwo Shittu, said this in a statement obtained on Tuesday.

    He also said Lanre Shittu Motors considers the CNG vehicles as the future of the Nigerian automobile industry with the abundance of natural gas and economic benefits of CNG buses to both operators and commuters.

    Shittu said the company would roll out the CNG buses this month and deployed the first set in airports across the country for shuttle.

    He said the move was part of the Presidential CNG initiative (Pi-CNG) and palliatives to provide succour for the masses following fuel subsidy removal.

    Read Also: Nigeria will come out of 2023 stronger, says Dogara

    He said, “Apart from assembling CNG buses from start to finish at the LSM plant, Lanre Shittu has enough kits to convert petroI-powered automobiles to CNG vehicles.

    “We will unveil the CNG buses this month (June 2024) for airport shuttle and release more later for other mass transportation needs.”

    He assured prospective customers of quality after-sale maintenance of any stock rolled out from the LSM assembly plant.

    Following a recent presidential directive that CNG buses must be given a priority in vehicle purchase by the various ministries, departments and agencies, the LSM MD said the government had shown its determination to encourage the local auto assembly plants.

  • Why naira is volatile, by Dogara

    Why naira is volatile, by Dogara

    A former Speaker of the House of Representatives, Yakubu Dogara, is convinced that the insatiable demand for the United States Dollars (USD) by Nigerians is responsible for the steady decline in the value of the naira.

    Dogara, conveyed his sentiment on the volatility of the naira at a programme organised by the Covenant Nation church in Lagos, to mark the 2024 Democracy Day.

    The event with the theme: “Democracy and the Free Market Economy” also has in attendance Anambra State Governor, Chukwuma Soludo; former Minister of Works and Housing, Babatunde Fashola; the Bishop of the Catholic Diocese of Sokoto, Rev. Matthew Hassan-Kukah; among others.

    The former lawmaker argued that the initial withdrawal of “ill-gotten money stashed in USD in private vaults” from the banking system triggered the first web of the hyper demand for dollars which ultimately led to the free fall of the nation’s legal tender.

    He said the advent of the Bank Verification Number (BVN) significantly limited the ability of corrupt officials and shady individuals to conceal their loot in anonymous bank accounts.

    He said: “I think the only inflection point we witnessed was due to the advent of the BVN which crippled the ability of corrupt officials and other shady characters to keep their loot in anonymous bank accounts. Almost all ill-gotten money is stashed in USD in private vaults as the naira is too bulky to warehouse.”

     The initial withdrawal of such funds from the banking system triggered the first web of hyper-demand for USD.

    Read Also: NLC seeks cash availability as Dogara hails policy

    “Therefore, I’m of the firm belief that our insatiable demand for the USD is what is killing the naira. Believe it or not, nearly all big-ticket deals and transactions both legitimate and shady are closed in USD in Nigeria.”

    According to Dogara, the dollar is the preferred currency in Nigeria, where it is used for exports, fees, and bribes thereby ensuring that demand exceeds supply.

    “Just find out, there’s no hefty bribe that is not paid for in USD. Some schools in Nigeria charge fees in currencies USD. And even our most valued export is paid for in USD. So, to me wittingly or unwittingly, the USD is our currency of choice and as long as we don’t kill our appetite for USD, the demand for it would always outstrip the supplies,”

    The challenge before the government, the ex-lawmaker noted, is how to unlock and make the USD locked up in private vaults in Nigeria begin to chase the naira.

    “That to me is the commonsensical solution. I believe we have enough dollars in this country that we can unlock to make our economy work and crash the FX rate.

    Read Also:

    “So, to achieve this, the government must demand that all Nigerian exports including crude oil exports, be paid for in naira, just as we don’t pay for any import into Nigeria from any country in naira. It’s not too much to demand that,”

    To salvage the naira, Dogara also proposed that the government raise loans from Nigerians with large FX holdings by applying moral suasions.

    “As we all know, Nigerians at home and abroad are said to hold some substantial amount of FX in domestic and foreign domiciliary accounts which are currently idle. For Nigerians to reach an understanding with holders of these funds, two conditions must be made; propose that the government should be able to build trust and engender confidence in the economy and the holders of the funds are sufficiently incentivized to act -incentives will have to be agreed upon mutually,”

    The government, Dogara emphasised, through credible intelligence generated by security agencies, ought to know those individuals in Nigeria who have taken advantage of the system and have idle USD stashed in their private vaults.

    “Such individuals should be offered the incentive I discussed in paragraph two above. Should they fail to respond, it is my opinion that Mr President should invoke and apply the MBS solution, the Mohammed bin Salman Al Saud in Saudi Arabia.

    “No one who has taken advantage of the system should have the liberty to store in excess what his or her country desperately needs to lift millions of its people out of multidimensional poverty,”

    Dogara expressed further concern about the downturn of the nation’s legal tender saying, “If the current downward spiral of the naira is not arrested, I fear we may get to a point where we will have to ditch the naira altogether.

    “And Nigerians at that point won’t mind or bother whether their CBN headquarters is in London, Washington, Brussels or Beijing, provided their currency is very strong; may God forbid that,” he added.