Category: Issues

The Nigerian Ports Authority (NPA) has converted the Lilypond Terminal into a Transit Trailer Park (LTTP) to ease the crippling Apapa gridlock. The initiative has reduced the agony of port users who can now access the Lagos Port Complex (LPC) in good time. OLUWAKEMI DAUDA examines what many have termed the Lilypond magic.

For years, efforts to ease the traffic congestion caused by the indiscriminate parking of container-laden vehicles on the Lagos ports access roads, particularly the Ijora/Apapa and Oshodi/Apapa corridors, did not yield results. But according to stakeholders, the Nigerian Ports Authority (NPA) initiative in turning the Lilypond Terminal, Ijora, to a Transit Trailer Park (TTP) has reduced the perennial gridlock by over 50 per cent and boosted revenue.

Association of Nigerian Licensed Customs Agents (ANLCA) Vice-President Kayode Farinto said it was a big relief to all stakeholders as the NPA, has succeeded in putting an end to their hardship with the conversion of  terminal to a park.

Farinto and other stakeholders, who spoke with The Nation, said it was part of the laudable efforts of NPA to end the gridlock in Apapa, boost the ease of doing business and make the port a hub of international trade in West and Central Africa.

 

Lilypond terminal

Lillypond terminal, which is located in Ijora, along the Western Avenue, Lagos, was a Dry Port with full compliment of Customs and housed other security agencies before it was converted, few weeks ago, to a trailer park by the NPA.

Findings revealed that during the port concession period in 2006, the terminal was leased to APM Terminal for a period of 10 years and the lease period expired in 2016. The terminal, it was gathered, was re-leased out by the agency in September last year, before its recent conversion to trailer park by the NPA to boost efficiency.

 

NPA explains

The General Manager, Corporate and Strategic Communications, NPA, Mr Jatto Adams, told The Nation that the NPA had to revoke a five -year lease agreement it had earlier entered with Lillypond Container Terminal Limited to bring succour to Nigerians.

According to him, the authority  is allowing truck drivers to park their haulage vehicles in the facility after carrying out some expansion work and ascertaining the number of trucks to be accommodated in the yard.

Over 1, 000 trailers, it was gathered, can use the facility in a day. Truck drivers using the facility, Jatto said, are those that have business to do with the ports and “they are not going to pay any amount of money for using the facility for the next months.”

The NPA image maker added that truck drivers are expected to have concluded their business arrangements within 48 hours and remove their vehicles from the facility since they are all on transit trade.

NPA, he said, has adopted an orderly manual call-up system for all the trucks to be parked in the terminal before they access the ports in Lagos to address the traffic issues.

“Lillypond Container Terminal was erroneously concessioned ab-initio; this was because the said terminal does not have a water front for loading and offloading of cargo. Consequently, after the expiration of the lease, the terminal was, however, reclassified and granted a five-year development lease before it was revoked and converted to a befitting transit trailer park,” Jatto said.

Jatto added that the Managing Director of NPA, Ms Hadiza Bala Usman, had taken a bold step to ensure that the TTP would be managed by Public Private Partnership (PPP) after going through the procurement process.

 

Other measures taken to free the road

The spokesman added that NPA had provided short, medium, and long term solutions to the gridlock. For instance, Jatto said the present management of NPA had also engaged the support services of the Federal Ministry of Works, Power and Housing, Dangote Group and Flour Mills of Nigeria to reconstruct the road from end of Ijora bridge to Lagos Port Complex to improve NPA’s services to customers.

He also said that under the long-term solutions provided, the Federal Ministry of Transportation is working assiduously to ensure that containers are evacuated to the hinterland through the rail system being put in place by the Federal Government.

 

Current situation of the road

When The Nation visited the Lagos Port Complex last week, trailers and other heavy-duty vehicles were no longer parked indiscriminately on top of Ijora Bridge, making traffic on the major road leading to the LPC not hellish.

Stakeholders said that the current situation is one that has made life easy and bearable for them, particularly for port users and Lagosians living in Apapa, Ijora,  Ajegunle, Orile and Surulere.

Before the current initiative by the NPA, investigation revealed that most of the port users and residents of these areas suffered untold hardship.

Some of them were killed by truck drivers; others were injured by the motorcycle riders, while  some trekking long distances were robbed by hoodlums as they were trapped in the traffic deliberately induced by bad policies of the government and some notorious and uncharitable truck drivers.

Many importers, port users, stakeholders and residents of Apapa, who spoke with The Nation, lamented endlessly at how tankers and trailers made their roads impassable and their lives miserable before the conversion of the Lillypond terminal to a transit trailer park.

An importer, Mr Julius Benjamin, said the Ijora road to Lagos Port Complex was totally blocked. He said: “We could not drive in or drive out of the port. For me to come to Apapa, I took my vehicle to CMS, paid N500.00 to park the vehicle, go to the jetty and paid another N150,00 to Apapa from CMS. From there, I took N100.00 bike to LPC to carry out my business.

“That is how many of us operated in Apapa before the current intervention by the Managing Director of NPA, Hadiza. We are happy that she has come to our aid. It takes me less than 10 minutes now to drive from Ojuelegba to LPC gate in Apapa. That is fantastic. We give kudos to Hadiza and her team for this laudable initiative and we hope the Federal Government will support her to do more.”

 

Health benefits of the TTP

A resident of Ijora, Chief Bakare Ajetunmobi, pointed out the health hazards they were exposed to  before the NPA turned the Lillypond terminal to a Truck Transit Park.

“The notorious truck drivers have deliberately turned the walk-way, our drainages and the bridge into their toilets. You can imagine the filth and health risk such nasty and dastardly acts exposed our wives, children and aged parents, most especially at night and during the rainy season,” he said.

 

Pains reduced

Another resident of Apapa, Mrs Debora Augustine, said words were not enough to express their pains before the TTP, Ijora, was conceived and delivered for use by the NPA.

She said: “No one can imagine the pains  we the residents of Apapa and its environs went through. We suffered so much pains going and coming back to our homes. What we experienced here cannot be compared to what the commuters and motorists faced on the roads during the sad period.

“The entire Apapa Community was kept under subjugation by the federal, state and the local governments before that woman in NPA came to our rescue. It was so terrible. Our community was defaced by the tankers and trailers that parked indiscriminately on the major road leading to our place of abode.”

Mrs Augustine, who is a secondary school teacher in Obanikoro, noted that the two-week ultimatum given by the Vice President, Prof Yomi Osinbajo, for the trucks to be cleared out of the Apapa roads was not as effective as the current step taken by the NPA because “the order was abused by the security personnel deployed to the job. They saw it as avenue to exploit the truck drivers.

“For instance, after the order given by Osinbajo, the Ijora/ Apapa corridor was still overwhelmed by trailers and tankers. From the Ijora Bridge to Ojuelegba, the situation was shameful for our nation. Heavy-duty vehicles took over a good portion of our expressway and the security personnel seemed helpless until a woman turned the Lillypond terminal to TTP and brought happiness to our homes and neighbourhoods. That tells you that what a man can do, a woman can do better.”

 

Gains of the TTP

The greatest beneficiaries of the TTP now at Ijora are importers and clearing agents who had to  pay additional cost to terminal operators and shipping companies for their goods that were trapped in the port. They were hit hard by the gridlock.

According to Farinto and other clearing agents, the gridlock ate deep into their pockets. He claimed that they were losing over N12 billion every month before the TTP was introduced.

“We were losing over N12 billion every month before the NPA came up with the idea of TTP at Ijora. Initially, we were paying N50,000 to ferry our containers out of the port, but when the gridlock became seemingly intractable, we were paying between N450,000 and N500,000 locally while up-country was N1 million,” he said.

 

What needs to be done

Stakeholders while commending the NPA for the laudable efforts it has taken so far, urged the agency to ensure that all the shipping companies operating in the country have holding bays or revoke their licences.

The former President of ANLCA, Prince Olayiwola Shittu, accused the terminal operators at the Lagos sea ports of largely being responsible for the sorry situation. He said their connivance with the shipping companies to use their facility as holding bays, was a major issue that needed to be addressed by the NPA to solve the problem permanently.

Shittu said there was need for installation, configuration and deployment of a purpose-built Truck Call-up System across all ports, terminals and container holding bays in the country.

Also, a maritime lawyer and university don, Dr Dipo Alaka, said that NPA or its agent needs  to install electronic call-up system, deploy Radio Frequency Identification (RFID) tags, readers and related infrastructure on all certified trucks, terminal access gates and trailer park access gates to facilitate the real time monitoring and tracking of truck movements around the Lagos sea ports and its environ.

The lawyer berated the deplorable situation of the Oshodi/Apapa port access roads and urged the Federal Government to address the issue.

Alaka said over 60 per cent of trucks loitering daily at Apapa have no business to transact at Lagos Port and that NPA and other agencies at the ports must collaborate in finding a lasting solution to the problem.

The maritime lawyer said the concession of the port was skewed in favour of the terminal operators and done without operational guidelines.

The situation, he said, makes it difficult to control and penalise the terminal operators.

His words: “The objectives of ports reform are located in the overall desire to achieve fast clearance of cargo, quick turn-around time for ships calling at our ports, removal of duplications in the functions of security and related government agencies, and the facilitation of trade.

“The concession was done illegally because it had no constitutional backing and this is one area we hope the Ninth National Assembly will address to move the country forward.

“The concession was wrongly done. It was illegally done because there was no law backing it and the concession did not take into cognisance the issue of holding bays.”

 

Holding bay & trailer park

“The holding bay is all about vehicles coming to load in the ports and where they will stay for a while before they go in for loading. Holding bay is different from trailer park. A trailer park is where the trailers park. It is not an issue that is supposed to be done by a private sector.

“The Lagos State Government or the Federal Government must be interested in doing it. Before concession, the trailer park was constructed by the government at Berger and it is still there; but holding bays are supposed to be in front of the ports or inside the ports. Then they were constructed and owned by NPA because that is where the trailers are supposed to go, inside the ports,” Alaka said.

Continuing he said: “Before the ports were concessioned, we had holding bays at Tin Can, Brawa, Lillypond and Nigerian Port, that is the Apapa Port complex. The holding bay was established under the bridge by the Federal Government.

“That of Tin Can was at the front of the canteen. You see the holding bays at Apapa. Most of them are inside. Then you see a trailer park at Berger constructed by the Lagos State government under the Lateef Jakande regime.”

 

Number of empty containers in the port

Shittu said there was need to reduce the number of empty containers in the ports to boost the current efforts of the NPA

“There is need for NPA to ensure that the number of cargo-laden containers that are being brought into the country should be the same number of containers that should be moved out of the country,” he said.

The President of Association of Maritime Truck Owners (AMATO), Chief Remi Ogungbemi, said many of the problems associated with his members were caused because of the lack of holding bays.

He noted that there are other challenges and issues that need to be addressed. According to him, most policies reeled out by the NPA, Lagos State Government, terminal operators and even shipping companies, contradict one another.

This, he said, has become increasingly difficult to operate in the country, especially in the face of decayed infrastructure, multiple and often conflicting regulations.

“We are truck drivers who through our services add value to the import and export trade. But it is not our responsibility to provide the necessary infrastructure like container holding bays, truck terminals and good roads.

“The roads leading to Apapa ports are very bad and affect our vehicles negatively. Above all, we are faced with extortion and that is why we are collaborating with the NPA on the TTP initiative,” he said.

 

Shoreline protection at Tin-can

Stakeholders said the Minister of Works, Power and Housing, Mr. Babatunde Raji Fashola, needs to complement the efforts of NPA by re-awarding the contract for the completion of his ministry’s shoreline protection at the Tin-can Island truck park to end the gridlock on the Oshodi/Apapa Expressway.

A huge number of the unstructured population of Nigerians from the informal sector remains uninformed on retirement and pension benefits. At old age, they rely on their children, brothers and sisters for handouts that would last for only a few days. Many even resort to begging. The Federal Government has introduced a micro pension plan which, it hopes, will address this challenge, writes Omobola Tolu-Kusimo.

Before now, many self-employed categorised under the informal sector knew nothing about retirement.

Professionals, such as lawyers, accountants, artisans, and farmers, are not aware that they could save for old age. neither do they know when they should retire or why they should retire and have a deserving rest after working for decades.

Despite modernisation, they work hard year in, year out. They save and later spend the savings. They till the soil, trade in the sun and labour hard. Their concern is mostly to train their children through school or apprenticeship so that they could depend on them at their old age. The trend, which is a typical Nigerian culture, goes round in many families.

While the family is still a strong basis for support for the elderly, varying resources and opportunities produce different levels, types and frequency of support. Also, while economic help is more often given to women than men, male households are more likely, for demographic and economic reasons, to include service providers than female-headed households.

Elderly widows without children are the most likely to get inadequate assistance since they often lack enough resources to attract people to look after them in their old age. In spite of the help they receive, economic insecurity, compounded by inflation, remains a major challenge for the elderly. At the end, many live their old age in penury, anguish and pain.

To eradicate this trend and ensure that hard working citizens in the informal sector retire well and with dignity, President Muhammadu Buhari om March 28, this year, launched the Micro Pension Plan.

With this, the economy is set to witness a major growth through the pension sector while a social safety net has been created for the low and medium income earners  across the country.

 

Micro Pension Plan

Pension is a regular income received by a person at retirement when he or she stopped working because of having reached a certain age or based on health condition in order to cater for his or her needs at old age.

Micro pension plan, on the other hand, refers to an arrangement under the Contributory Pension Scheme (CPS) that allows the self-employed and persons working in organisations with less than three employees to make financial contributions towards the provision of pension at their retirement or incapacitation.

The Federal Government, through the National Pension Commission (PenCom), introduced the scheme because it wanted to guarantee a secure future through steady income at retirement. The Commission also wantsed to reduce old age poverty through a process that it described as ‘easy, simple and flexible’.

PenCom Acting Director-General Mrs. Aisha Dahir Umar said the Commission is hoping to generate additional N3 trillion pension assets and 20 million contributors from the micro pension plan.

Speaking with reporters after the launch of the plan, she said the plan is aimed at democratising the savings culture in a systematic and efficient manner.

She said the CPS has been very impactful  since the commencement of its implementation in 2004.

According to her, the formation of long-term domestic capital, represented by the over N8.74 trillion worth of pension assets as at January this year, belonging to 8.46 million formal sector participants, is slowly but surely changing Nigeria’s financial landscape.

She noted that this, by extension, is also transforming the course and pace of the country’s socio-economic development.

She said, for instance, N6.51 trillion, representing 73 per cent of the total pension assets is invested in Federal Government securities issued to finance various activities of Government.

She said: “Thus, in the area of infrastructure alone, the pension funds invested about N95.31 billion in the N200 billion Sukuk issued by the Federal Government. Similarly, out of the N10.67 billion Green Bond issued by the Federal Government, pension funds invested N7.19 billion. Consequently, we believe that the enlistment of the informal sector into the pension savings net would boost the quantum of available long-term investable funds that would galvanise national development efforts.”

The micro pension plan is looking forward  to generating additional N3 trillion assets and 20 million contributors. The product also perfectly aligns with the current social empowerment programmes of the Federal Government as it seeks to ensure, in the long term, the sustainability of the benefits of the empowerment programmes for the participants, who may seize this opportunity to save for their old age.

“Micro Pension Plan targets the significant majority of Nigeria’s working population who, incidentally, operate in the informal sector. Participants are expected from various informal sector workers including market women, members of the National Union of Road Transport Workers (NURTW), Textile, Garment and Tailoring Associations, Keke Napep and Okada Riders Associations, Butchers Associations, workers in the movie and performing art industry, mechanics and other workers in the automotive industry and single professionals such as lawyers, accountants and many others. It is designed to fit the peculiarities of these informal sector groups.

“We have extensively engaged all relevant stakeholders and obtained their inputs before the product was developed to suit their requirements. The product is flexible with respect to contribution amount and the channel of remittance of contributions to the respective pension accounts. Access to accumulated contributions is also flexible, seamless and facilitated by technology through varied payment system platforms. The commission has issued a robust guideline on the plan pursuant to provision of section 2 (3) of pension reform Act 2004. The Guideline spelt out detailed legal, institutional and operational frameworks for the administration of the product by licensed pension operators from the point of enrolment to the point of accessing benefits from the pension account by participants. Already, the licensed pension fund operators have, pursuant to the Guidelines, put in place appropriate structure, infrastructure and trained manpower to ensure adequate coverage and the provision of excellent customer service to the Micro Pension Plan participants,” she explained.

 

Getting started

According to her, a prospective micro pension contributor is required to open a Retirement Savings Account (RSA) by completing a physical or electronic registration form with a Pension Funds Administrator (PFA) of his/her choice. The contributors may make contributions daily, weekly, monthly or as may be convenient to them. Every contribution shall be split into two, comprising 40 per cent for contingent withdrawal and 60per cent for retirement benefits. The contributor may, based on his/her needs, periodically withdraw the total or part of the balance of the contingent portion of his/her RSA, including all accrued investment income thereto. The contributor may also choose to convert the contingent portion of the contributions to the retirement benefits portion. The remaining balance in the RSA shall be available to the contributor upon retirement or attaining the age of 50 years.

“Pursuant to its regulatory and supervisory mandate, the Commission had established a separate Department dedicated to the supervision of all matters relating to Micro Pension Plan, including enforcement of compliance with the Guidelines and customer complaint handling and resolution. Our objective is to ensure efficiency and effectiveness in service delivery as well as transparency and accountability in the administration of the product by licensed pension operators. With the formal launch and subsequent successful implementation, the micro pension plan is expected to significantly expand pension coverage to greater number of Nigerians and further generate additional long term funds for Nigeria’s economic development. The Commission would collaborate with relevant stakeholders to sensitise and enlighten the target participants and members of the public on the features and benefits of the Micro Pension Plan,” she explained.

 

Challenges

The President, Pension Fund Operators Association of Nigeria (PenOp), Mrs Aderonke Adedeji said Pension Fund Administrators (PFAs) have started selling the micro pension product and enrolling workers in the informal sector.

Mrs Adedeji who is also the Managing Director of Leadway Pensure, said there are still some operational issues that are being ironed out to ensure that the entire scheme is seamless.

She said: “There has been a formal launch of micro pension led by the industry regulator, PenCom. We have started selling the product, and people have been enrolled into the micro pension scheme.

“But there are still some operational issues that are being ironed out to ensure that the entire scheme is seamless. We also need to ensure that we learn from lessons and take advantage of the lessons that we learnt from the implementation of the current CPS particularly in terms of how we register people and the quality of data that we collect as operators. The process is ongoing and presently, there is an ongoing dialogue between operators and the regulators and once all these issues are sorted out, there will be much more activity and publicity.

“The micro pension fund is extremely important and significant to the nation’s development. As a nation, up until 12 to 14 years ago, we did not have any structured pension scheme and when the Pension Reform Act was enacted in 2004 it only covered the formal sector. Pension is a necessity in any nation because it is used to provide financial stability in old age.  Any nation that cannot look after its own people would weaken the entire fabric of the society. So micro pension is very significant.

“Right now it would be impossible to put a number to how much we have sold but what I think is most important is the enlightenment and education that needs to go on. We want people to change their habit and imbibe savings culture. There’s a need for a lot of enlightenment and PenCom and the operators have embarked on enlightenment campaign. Even the formal sector took a lot of enlightenment for us to get to where we are now. So the key really would be a lot of publicity, enlightenment and a lot of engagement at all levels.

“To make the scheme attractive, different types of incentives have already been built into the scheme. For example, the ability to pay contributions any time you feel like it. Another incentive is that there is a contingent part of that contribution that would enable you to withdraw up to 40 per cent of your savings anytime you feel like. These are some of the incentives built into it and like anything, it will evolve and as we gain experience I am sure that there will be more incentives that would be built in overtime.”

Managing Director, IEI-Anchor Pension Managers Ltd, Glory Etaduovie, said the social security challenge in the country is assuming a frightening height.

According to him, this is so from the  economic and political uncertainities that has been the hallmark of successive adminsitrations which the current government has inherited.

He said as people age, increasing fears and concerns of what the future offers come to the fore.

“For those in more structured environments, responsible employers think and put in place an internal plan to help aging and retiring staff to settle down to a secure retirement. However, the larger number of the unstructured Nigerian population remain not catered for. They are left to chance and limits of their knowledge and capacity to deal with the challenges and vagaries of getting old. Ironically, we are all affected, because they are our uncles and aunties; brothers and sisters; fathers and mothers who now lean on us for family pension plans (if any), or handouts of stipends that caters for only a few days, and back to square one. Aging becomes undignified. Health and maintenance remain a critical issue of aging. The working population is thus under siege. There are endless requests for support here and there. Sadly, this has also promoted corruption – greed apart.

“Micro pension has thus become an invaluable tool to bridge this terrible deficit in financial inclusion and its ripple effects for no plans for aging and retirement in the unstructured business circles – whether with official retirement age or not. Often, no retirement age in this sector but reduced business activities due to reducing energy and health issues. Financial Inclusion is total,total in the sense that this philosophy drags in the so-called underprivileged or low income segment into the opportunities and exposures that financial world offers. A lot of people are shut of a world of opportunities of the financial sector offers to enhance their present and future lives. Though beyond pension only, this platform now sucks them in through their cluster bodies to expose them to the knowledge and benefits of not only pension plans, but puts them into a community of people who can tap into other benefits accrue-able to cluster bodies. This thus makes up for short falls of individual small businesses access to comprehensive financial services available to all. This of course leads to empowerment and economic growth and development.”

He said financial inclusion involves helping the low income, the unstructured businesses, individual professionals, retail outlets, the unexposed, the artisans, develop a virile savings culture, getting benefits of financial advise, affordable credits and enhancing minimum capacity to access same, payment and remittances platform and benefits of insurance and banking services.

“Why are these essential? For instance, we live in an indulgent world where most people satisfy just the present and think little of the future. So, good savings for critical long term value projects have often been relegated to the background for social values of short term values, such as almost every weekend “aso ebi”, as well as other social unnecessary “taxes”.

“Financial inclusion now assists people through structured approaches to develop valuable habits that will help their future in a near effortless and systematic approach. They thus can have bank-able projects and support like mortgages, personal cash accumulation for business growth – as no business grows without good capital venture. Further benefits include the good feelings of not being left out in mainstream events, but a platform to be involved; a platform to be listened to and get structured regular information; a platform for the options of informed choices, a platform for positive relationships, and overall enhancements.

Etaduovie further said PenCom has done well so far in financial inclusion with the introduction of the micro pension plan.

“It is a new learning needing to be domiciled. PenCom has had to wade through un-structured parts to create in-routes for industry path and public assimilation and integration. Change pioneering and buy-ins are amongst most difficult things to achieve. This is through the micro pension plans. It is for individual professionals, artisans, retail or individual entrepreneurs, farmers among others. it captures the unstructured working environment. It is not necessarily micro by way of income. Micro as a name might just be for want of a better name. This sector creates financial inclusion for these groups for pension needs sensitisation and action plans opportunities. This exposes them to other benefits overtime – short term and long term.

“This requires extensive and insightful planning against failure. Remember, the larger and probably less informed population is involved. Trust and confidence are involved. Transparency and modernity must be incorporated. As you already know, all modern businesses are strong on ICT platforms. There are intensive activities going on in PenCom and high level interactions with PenOp and other stakeholders. It should be a massive social and economic relative success. Sensitisation is going to create increasing trust and awareness. This is critical, because the common man has distrust not only for government promises due to previous failures, but also from many fraudulent activities in the various financial sectors, as well as security of their hard earned money. This is part of the reasons for this briefing.”

Stanbic IBTC Pension Managers Limited Managing Director Mr. Eric Fajemisin urged workers in the informal sector to secure their future and reinforce the need to save and plan for retirement, irrespective of the nature of their jobs or the profession the may find themselves in.

He said it was all about taking a decision by signing up for a retirement plan, making the right move now towards a secure future or simply put having a game plan.

Fajemisin said it is meant to insulate those not covered in the formal sector of the economy as well as income earners in every category against old-age poverty and would help in deepening asset accumulation in the country.

According to him, the scheme will also help provide the crucial capital required for investment in critical sectors of the economy.

“As an initiative designed to cover an estimated 70 per cent of Nigeria’s working population, currently in the informal sector, the scheme offers enormous benefits to the society, regardless of challenges associated with its seamless implementation.

“Among its other benefits is improved standard of living for the elderly, safety of funds and access to other incentives, flexible contribution remittances, the opportunity to make withdrawal prior to retirement and the enhancement of financial inclusion in the country,” Fajemisin said.

Radix Pension Managers Limited Managing Director Mr Kunle Adeboye, on his part, there was need for more sensitisation to drive the plan.

He added that on their part as operators, they need to improve on customer service.

Torn and smelly banknotes have been in the banking system for long. Banks have kept recycling the notes to save sorting costs without considering the implications to the financial system and customers’ businesses. The clean note policy and banknote fitness guidelines unveiled by the Central Bank of Nigeria (CBN) is expected to reverse the trend as nearly N7.9 trillion pieces of unfit notes will be withdrawn from circulation. COLLINS NWEZE examines what it takes to rid the economy of such notes.

Edith Okafor, a consumer goods distributor based in Lagos, is worried that for the past four years, what she has been paid with were worn-out banknotes from her customers.

Some of the notes are so bad that her customers kept rejecting them as balance after transactions. In some of the occasions, her customers would throw the dirty banknotes back at her, saying they needed cleaner notes.

Whenever Edith tried to reject the banknotes, the feedbacks from her customers are always the same: “I got this money from my bank or do you think I print money? Where do you want me to get cleaner notes?”

Perhaps, the customers are right. Finding new naira notes is like finding a needle in a hay stack despite the fact that a country’s currency is its national pride.

When the local currency is dirty, soiled, mutilated, or even defaced, such abuses impact negatively on the perception of the nation.

For many Nigerians like Edith, the sorry state of the Naira notes in circulation is appalling and a serious source of worry. The Central Bank of Nigeria’s (CBN’s) disclosure that a large proportion of the N7.9 trillion pieces of naira notes in circulation are dirty, mutilated, unfit for Automated Teller Machines (ATMs) and over-the-counter payments has given credence to Edith’s worries.

The worrisome development is already affecting businesses, especially micro, small and medium enterprises (MSMEs) that need the local currency, especially the lower denominations to transact their businesses.

The development has, therefore, prompted the CBN to begin the process of getting the commercial banks and stakeholders in the currency circulation project to implement its  clean note policy and banknote fitness guidelines that will involve withdrawal of the dirty notes from circulation.

CBN’s Deputy Governor, Operations, Folashodun Shonubi and Director, Currency Operations Department, Mrs. Pricilla Eleje, spoke of plans to withdraw the dirty notes from circulation at last week’s  launch of the policy in Lagos. The officials said the bank had the obligation of providing adequate supply of clean banknotes to facilitate seamless payment and settlement of transactions by the public, the government and banks.

The CBN described the measure as the first step in its bid to address the disturbing state of the notes in  circulation and create a new culture for better handling of the currency.

Mrs Eleje said the clean note policy provides a uniform standard for the circulation of only clean and fit banknotes; while the banknote fitness guidelines provide the industry with clear and acceptable criteria for determining the quality of notes in circulation.

The policy guidelines, she explained, were developed after extensive collaboration and engagements with key industry stakeholders under the auspices of the Nigerian Cash Management Scheme, a Bankers’ Committee initiative.

The plan will ensure that unfit, dirty, mutilated and counterfeit banknotes are not in circulation. This is pursuant to Sections 18, 20 & 21 of the CBN Act 2007, which prohibits the counterfeiting, sale and abuse of the naira.

She said: “The CBN cannot achieve these objectives without the collaboration of Deposit Money Banks (DMBs), merchant banks, microfinance banks, government agencies, cash-in-transit (CIT), cash processing companies (CPCs), market associations, merchants/retailers, chambers of commerce and industry, security agencies, currency management equipment manufacturers , bank customers and the public.”

She explained that over the years, the growth in economic activities and the upsurge in population had necessitated the rise in the volume of banknotes in circulation.

The CBN said: “In view of technological advances, the CBN, like other central banks, has introduced various forms of electronic payment systems for effective and efficient settlement of transactions and to reduce the volume of cash usage with its attendant cost implications.

“Despite the prevalence of other forms of payment, cash remains ‘king’ in our day to day economic transactions. As such, people still prefer to use cash in making payments, especially where there are no digital payment platforms.

“Consequently, demand for cash continues to grow despite technological advances. Thus, the volume of currency in circulation as at the end of 2012 rose significantly by 10.34 per cent to 7,914.70 billion pieces, as at half year of 2018. A large proportion of the notes in circulation were dirty, mutilated, not fit for ATMs and over-the-counter payments.

“To overcome the challenge, the CBN increases the supply of clean notes and withdraws the soiled and mutilated notes from circulation.

“In addition, the bank introduces from time to time a number of currency management initiatives to ensure that the production, issuance of new notes, processing by third service providers as well as recirculation by the deposit money banks (DMBs) conform to the predetermined standards.

“To ensure that the banknotes in circulation are clean and of high quality, the bank hereby issues the clean note policy. The clean note policy enunciated therefore, by the bank, entails a spectrum of diverse currency management activities geared towards the efficient circulation of premium quality banknotes and withdrawal of unfit/soiled banknotes to guarantee public confidence and usage of the naira banknotes as a medium of exchange.

 

Stakeholders back policy

The Association of Bureaux De Change Operators of Nigeria (ABCON) has given its support to the Clean Note Policy and Banknote Fitness Guidelines.

ABCON President, Aminu Gwadabe, said the launch of the CBN Clean and Banknote Fitness Policy is not only apt, but timely giving the high volume of unfit and dirty notes in circulation across the country.

He said the policy will discourage the attitude of the public in stashing naira notes in their homes and farms as witnessed recently.

He said the policy will also increase the level of money supply in the economy, and subsequently  deepen the volume and value  of credit available to real sector operators and other major segments of the economy.

Gwadabe said the policy entails diverse currency management plans geared towards the efficient circulation of premium quality banknotes and withdrawal of unfit/soiled banknotes. This, he said, will guarantee public confidence and usage of the naira banknotes as a medium of exchange.

According to Gwadabe,  the move by the apex bank to sanitise the estimated N7.9 trillion   pieces in circulation will enhance transparent currency management system, promote financial inclusion and enhance confidence of the informal sector in the financial system.

The ABCON boss said the CBN has through the new policy plans, demonstrated its commitment to seamless payment system adding that the regulator has the obligation of providing adequate supply of clean banknotes to facilitate efficient payment and settlement of transactions by the public, government and banks.

He said the policy guidelines is backed by the Sections 18, 20 & 21 of the CBN Act 2007 which prohibits the counterfeiting, sale and abuse of the naira.

Gwadabe said ABCON, and its over 4,500 members will collaborate with the CBN to make the new policy a success. He said that Nigeria remains a cash-based economy, and that the new policy is crucial to ensure that the local currency remains attractive to the people.

The ABCON boss said despite the use of e-payment channels,  majority of Nigerians still use cash in their day-to-day economic transactions, especially in making payments especially where there are no digital payment platforms.

He said the BDCs have remained resolute in ensuring sustainable and stable exchange rate, price discovery and uniformity in the market pricing for the dollar against the naira.

He said the CBN-licenced BDCs under the aegis of ABCON is not in business solely to make profit, but to protect the local currency and ensure that the economy thrives through its contribution to job creation and improved dollar liquidity in the economy.

 

Policy implementation

To ensure that the policy succeeds, Eleje asked bank customers to report any commercial bank that rejects dirty, soiled, worn out, defaced or mutilated naira notes for sanction.

She said the apex bank will soon circulate the guidelines on clean note policy to banks, which will also be made available to bank customers for them to know when any lender is not complying.

Eleje said the regulator will regularly carry out spot checks on bank branches, based on complaints from customers, which will serve as guide on where to go.

“Complaints from customers on any bank not accepting dirty notes will serve as a trigger for the CBN to know where to go and penalty for defaulting banks. There should also be a banner in every banking hall for customers to understand the Note Policy and Banknote Fitness Guidelines and also their rights as stipulated in it,” she said.

The CBN Director,  also said the apex bank is planning mobile courts to try currency counterfeiters to serve as a deterrent to others.

She said the CBN will continue to sensitise the public on the basic security features of the notes, the dangers of sale of the Naira, and proper handling habits of the banknotes by the public. She said that any abuse of the Naira is a criminal offence, punishable under the CBN Act of 2007.

In his keynote address, CBN Governor, Godwin Emefiele, said  that currency management is vital to people’s daily lives because despite the improvements in electronic payments system, banknotes remain predominant for payment and settlement of commercial transactions in Nigeria.

“The effective use of these documents by relevant stakeholders would ensure that banknotes in circulation are clean and of high quality. Characteristics that are key to sustaining public confidence in the National currency,” Emefiele said in an emailed statement.

He added: “The CBN has registered eight companies to carry out cash-in-transit and two cash processing companies to operate in Nigeria. Deposit money banks (DMBs) are expected to patronise only these registered companies for Cash-in-Transit and sorting services. It is expected therefore that more private sector participation in the currency management value chain would further strengthen the efforts toward ensuring availability of clean banknotes”.

He said the CBN has also put in place strategies to enable direct disbursement of lower banknotes to various market associations and merchants through their respective DMBs adding that the intervention commenced in Abuja and has been extended to Lagos, Kano, Enugu, Umuahia, Yola, Jos, Gombe, Asaba, Ibadan, Kastina, Uyo, Minna and Port Harcourt.

Also, the apex bank has reduced the processing charges for DMB deposit of lower denomination banknotes N5 to N50 to encourage the return of unsorted banknotes to CBN for processing.

“The bank also intends to embark on a project that would enable mop-up of the over-circulated and mutilated banknotes from circulation. Furthermore, the CBN would continue to embark on sustainable institutional reforms and enact policies that will promote efficient currency management in Nigeria,” Emefiele said.

He urged Nigerians to handle the Naira banknotes properly; as it is a criminal offence to abuse the Naira adding that the local currency is Nigeria’s identity as a country and needed to be respected.

He said it will affect commerce, because people will be more inclined to spend where there is new notes in their hands. We believe it will definitely help the economy and it will complement the cash-less economy.

He said the CBN has put in place measures to ensure that banks circulating unfit notes are sanctioned.  “The majority of the notes that are new, are processed notes. We are hoping that the private sector will help in sorting out the notes, to ensure that only fit notes are circulated. In an ideal situation, it is only the unfit notes and counterfeit notes that should come to the CBN for replacement. That’s the part we would want the private sector to help us in achieving desired results,” he said.

 

Classifying mutilated notes

Eleje described a mutilated banknote as a poor quality banknote that requires a special examination to determine its value. The note could be partially or permanently damaged by fire, water, dye, insects, rodents or destroyed by natural disasters.

The new policy, she added, was in a bid to enhance the availability of clean notes and effect expeditious withdrawal of dirty notes from circulation.

The apex bank said Deposit Money Banks and Cash Processing Companies (CPCs) making deposits at the CBN should classify their cash deposits into fit and unfit notes.

The CBN said the unfit notes should be sorted, classifying mutilated notes differently.

“An unfit banknote refers to a genuine banknote that is no longer fit for circulation in accordance with the quality standard set by the CBN. A banknote would be considered unfit for recirculation if it was badly soiled or if there was a general distribution/localisation of dirt. Other features that could make a note be classified as unfit were if the note presented a limp/rag appearance due to excessive folding that resulted in the breakdown of the texture and structure of the note or if the note had added image or lettering marked on it or if had a hole that was more than 10 mm,” the regulator said.

Continuing, it added: “Other features that classify notes as unfit are torn parts of the banknote that are re-joined with adhesive tape in a manner that tries to preserve as nearly as possible the original design and size of the note; reduction in the original size of the note through wear and tear or fire, rodents and chemicals; perforation of the notes; and loss of more than half of the original size of the banknote.

“Unfit banknotes shall not be re-circulated by DMBs and CPCs. However, a penal charge of N12,000 per box, or any amount determined by the management of the CBN shall apply for the deposit of unsorted banknotes.

“In addition, penalties as may be determined by the CBN, shall apply for the re-circulation of unfit banknotes.”

The CBN said offenders would be liable to a fine of N50,000 or six months imprisonment or both under the provision of Section 21 of the CBN Act, 2007.

It said the writing or graffiti paintings, mutilation, stapling, tearing or making hole of any kind, spraying, soiling and matching is highly offensive and punishable.

The CBN said it would ensure that the Automated Teller Machines deployed by DMBs and other service providers were configured to dispense and accept only genuine banknotes in all denominations.

It added that the ATMs would only dispense notes that had been duly checked for authenticity and fitness according to the CBN’s standard and operators whose ATMs contravene this provision shall be sanctioned in line with the existing guideline.

”The CBN and DMB shall continue to receive mutilated notes from the public. The procedures for the treatment of mutilated notes and the notes for exchange are as enshrined in the Central Bank Operational Manual for the Operation of Mutilated Notes,” it said.

 

Bankers’ Committee to sanction naira abusers

Those who “spray” naira notes at parties risk going to jail, the Bankers Committee has also warned.

Mobile courts are to try those bastardising the national currency, it said.

Issuing the warning after its meeting in Lagos, the Bankers Committee said the mobile courts would be deployed nationwide to try those mishandling the currency.

Speaking on the development, CBN Director, Corporate communications, Isaac Okorafor said the Police and the Ministry of Justice would be involved in the operation, adding: “If a celebrant is dancing and you spray him/her, you may go to jail from the party venue because the law enforcement agents will be there, waiting to arrest you.

“It is the duty of law enforcement agencies to catch offenders and take them to court. Our collaboration with the police will intensify as we move to implement the mobile court for offenders.”

Admonishing Nigerians on how to use cash as gift, Okorafor said: “If you want to give, put the money in an envelop, and give it the celebrant. Let’s know that anybody hawking and writing on the naira will face six months in jail or N50,000 or both.”

Managing Director of First Securities Discount House (FSDH) Merchant Bank   Mrs. Handa Ambah said people selling naira notes would be punished.

She said: “We need to let them know that this is money. The fact that you cannot spray money at parties does not mean that you cannot put money in an envelope and pass it to the celebrants.”

Other financial pundits insist that getting the clean note policy working would require banks and other stakeholders to ensure notes in circulation are clean and of good quality.

The banks, they added, are also expected to classify notes into a fit and unfit category and return unfit ones to the CBN. The lenders are to equally ensure the adequacy and availability of currency banknotes in the right denominational mix to meet public demand and maintain confidence in the local currency.

Only then will the dirty smelly banknotes circulating across the country and killing businesses will be a thing of the past.

The seemingly intractable traffic gridlock in and around Apapa ports has continued to hurt port operations. This has put the Federal and Lagos State governments under intense pressure, as stakeholders, including port users, investors and residents, clamour for a lasting solution. The Nigerian Ports Authority (NPA) has been advised to make the eastern ports attractive for business as a viable alternative to the crisis-ridden Lagos ports, writes Correspondent OLUWAKEMI DAUDA.

The Vice President, Association of Nigeria Licensed Customs Agents (ANLCA), Dr. Kayode Farinto, echoed the collective frustrations of various stakeholders in the maritime industry when he said: “Our total dependence on the Lagos Ports is no longer good for business. It is overburdening the city and its amenities, especially roads and bridges.”

He said the parlous state of the nation’s premier ports in Apapa, Lagos, which has been hurting businesses, has necessitated the need “for us to do the right thing for the overall good of our country”.

To Farinto, the right thing to do is for the Nigerian Ports Authority (NPA) to look towards the eastern ports, which if developed, will be a viable alternative to the current crisis at the nation’s premier ports in Apapa, Lagos.

The ANLCA vice president’s call, which resonates with not a few operators and other critical stakeholders in the maritime industry, The Nation learnt, became imperative in view of the seemingly intractable traffic gridlock in and around Apapa ports, which has become a pain in the neck of port users, investors and the city’s residents.

More importantly, it was prompted by the existence of other viable, but largely under-developed ports outside Lagos, which in the thinking of industry operators and stakeholders, could be made attractive for business and reduce the pressure on the Lagos ports.

For instance, apart from the Lagos ports, there are seaports at Warri, Koko, Onne, Port Harcourt, Calabar and Ibom Deep Seaport at Ibaka, Akwa Ibom State, which is still at the design stage. There are also numerous inland dry ports and fuel depots.

Unfortunately, the main problem with these ports, The Nation learnt, is that the river channels leading to them are too narrow to accommodate large vessels. The shipping companies find it more convenient to take their vessels to Lagos than to the eastern ports.

The situation, it was also gathered, worsened after the concession of the ports started in 2006. This was sequel to the withdrawal of the 30 per cent incentive granted vessel owners to use the eastern ports when the Federal Government controlled the ports.

Currently, apart from the Onne Port, most of the other ports servicing the Southeast, Southsouth and the Eastern flank of the North are virtually idle.

The channels into these ports need to be dredged, their facilities need to be upgraded and incentives provided to enable them take up more of the nation’s maritime business.

The fact that Lagos State governor Akinwunmi Ambode recently joined in the call for other ports in the eastern parts of the country to be revived to enable them take some of the load off Lagos and make living in the state more bearable for residents underscored the urgent need to turn to the eastern ports for succour.

The former President of ANLCA, Prince Olayiwola Shittu, said because of fear of paying for unnecessary delay of vessels, shallow waters and activities of sea robbers, importers and clearing agents are not patronising the eastern ports of the country.

Shittu said the challenges that have crippled the activities in the four eastern ports of Calabar, Warri, Port Harcourt and Onne have consistently made trade facilitation and life difficult for the importers using the ports.

 

Other challenges

Apart from shallow channels, which make bigger vessels unable to access the port, decrepit port infrastructure is said to have led to the continued dwindling revenue fortunes of the NPA and other government agencies at the ports.

While the Calabar Port suffers from shallow draught, the Onne Port is contending with insecurity such as pirate attacks and sea-robbery among others.

Other identified challenges include deplorable berths, dearth of finger mooring jetties to berth NPA crafts, lack of operational vehicles and fire hydrants at quays.

Cargo handling equipment and the port quays areas are also inadequate to make trade facilitation efficient.

Also, while high siltation at the Calabar Port has impeded safe navigation, the Port Harcourt Port suffered under constant pirate attacks, which made the port unattractive for foreign shipping lines.

Because of the afore-mentioned challenges, no fewer than 754 vessels are said to have deserted the eastern ports between 2013 and 2016.

Specifically, the number of vessels that berthed at the ports reduced from 2,268 vessels in 2013 to 1,514 in 2016.

According to the National Bureau of Statistics (NBS), the number of vessels that berthed at the Delta port fell from 609 in 2013 to 433 in 2016, while the Gross Registered Tonnage at the port also dropped from 8,687,160 in 2013 to 6,177,809 in 2016.

 

High level of insecurity

An importer, Mr. Robert Francis, said shipment of cargoes from China to Lagos, which used to cost about $1,500, now costs between $4,000 and $4,500 because of insecurity and high salinity of the sea. He therefore, urged youths in the area to give peace a chance to make the ports attractive and competitive.

“In addition, vessels calling at Onne Port in Rivers State also slammed $45,000 (N16.2milion) on importers for  an average of six hours per night for delay to berth. The delay, which is estimated at $7,500 per hour, is said to be caused by incessant robbery and shallow port channels,” he said.

Worried by the problems, Transportation Minister, Rotimi Amaechi, at the second stakeholders’ interactive session in Warri last year, explained that one of the factors militating against the success of the maritime sector was insecurity in the Niger Delta region, which he said was also hampering the growth and development of the region.

He said Niger Delta was not working because of the people in the area. His words: “How many Lagosians are on the water in Lagos? None. The reason vessels will not come to the eastern ports is because there is no war insurance on vessels because of restiveness in the region.

“War insurance means if the goods cost N10, 000 in Lagos, it will get it N20, 000 here because there is extra cost on it. There is insecurity in Lagos, but not as bad as it is in the eastern ports.”

A senior government official, Mr. Chidi Izuwah, also expressed worry over the inability of vessels to sail out at night at Onne Port. He regretted that vessels cannot sail out of the port as it is done in Lagos Ports.

 

Low utilisation of eastern ports

NPA Managing Director, Hadiza Bala Usman, regretted the low utilisation of the Eastern Ports. She said for the Eastern Ports to attract cargo, there must be improvement on infrastructure that would aid port transaction in the zone.

NPA, she said, has awarded the contract for the dredging of Warri Port to make the zone attractive for business. Her words: “There is no need for shippers to en route their cargoes to places where they will find it difficult to reach their warehouses and end users.

“There has been this issue of restiveness in the area, and no investor will like to toy with his or her goods, hence they prefer Lagos Ports where security is guaranteed unlike in the Eastern Ports.

“Calabar Port is strategically located to service the Northeast and the Northwest, but the link roads to the area from Calabar is bad. articulated vehicles cannot ply the route.”

The Nation learnt that the Onne Port has been a source of concern to stakeholders, especially shipping companies. For instance, night voyage is absolutely prohibited at Onne Port due to insecurity fuelled by pirate attacks.

The National Council of Managing Directors of Licensed Customs Agents (NCMDLCA) President, Lucky Amiwero, said Nigeria had lost its maritime leadership position to other countries not only because of security lapses, but because of shallow draft.

 

NPA takes the gauntlet

Aware of the perennial gridlock in Lagos and determined to change the narrative, the NPA management said it is working with professionals in the maritime sector to make the eastern ports attractive for business.

Last year, the NPA deployed equipment worth over $30 million in Onne Port, Rivers State. The measure, which was taken by Ms Usman, it was gathered, was  to boost efficiency, security and make the port attractive for business. Onne Port Complex is one of the key ports under the NPA. It is situated on the Bonny River Estuary along Ogu Creek.

Findings revealed that six pilot cutters, tug boats and 17 meter offshore patrol boats, have been deployed in the port to make the port attractive and stem the cycle of criminalities within and around the port.

Sources at Onne Port confirmed to The Nation that it cost the NPA more than $30 million to deploy the sophisticated equipment.

One of the sources, who is a senior NPA official, however, condemned what he described as indiscriminate anchorage of vessels and urged the perpetrators to desist. He also urged investors to take advantage of the strategic location of the port, located in one of the largest oil and gas free zones in the world.

Apart from supporting exploration and production for economic activities, the free zone provides a logistic oil service centre for the oil and gas industry in Nigeria (Onshore and Offshore), while also providing easy access to the entire West African and sub-Sahara oil fields.

The official, who declined to have his name in print, assured stakeholders and investors that adequate depth of the channel leading to the port would be dredged to accommodate big ocean going vessels and guarantee adequate security.

Shittu commended the NPA for repositioning the port for greater efficiency. He urged other stakeholders to collaborate with the NPA in its efforts to make the port a hub of maritime activities.

Another stakeholder, Mr. Felix Abraham, said the deployment of the equipment has assisted the port in taking its rightful position as hub for the East and Central Africa sub-regions in oil and gas and has an advantage of accessibility and proximity to the Eastern commercial centres  like Onitsha, Nnewi and Aba, among others.

“Activities such as pipe coating, waste treatment and boat building are provided by companies located in Onne. The port is highly industrialised with modern facilities and equipment that can stand the test of time anywhere in the world.

“It has one of the biggest habour mobile cranes in Africa, (Liebherr 600) with a lifting capacity of 208 metric tonnes. Also, 220 Gmk 5220 grove twin cranes that have capacity of lifting single heavy duty cargo of 300 tonnes,” he said.

The Olu of Warri, Ogiame Ikewoli 11, has also called on stakeholders in the Delta Ports to give maximum and unflinching support to NPA management so that the transformation the authority has brought to the region could be sustained.

The paramount ruler pointed out that Calabar Port, which also has the same challenge of shallow draught, has been improved upon by the NPA with the use of Flat Bottom Vessels (FBV) to attract more cargoes to the port in Warri.

 

Fed govt hands over Warri port to operator

As part of measures to make the eastern ports attractive for business, the Bureau of Public Enterprises (BPE) recently handed over Terminal B of the Warri Old Port to private concessionaire, Ocean & Cargo Terminal Services Limited.

BPE Director-General Mr. Alex Okoh, who spoke at the handover ceremony, said President Muhammadu Buhari’s administration was committed to a private sector-driven economy.

He also called on local and international businessmen to take advantage of the government’s open door policy to establish businesses in the country.

Okoh said the Nigerian ports are the main gateway to the country and key to the Federal Government’s objective of diversifying and growing the economy.

He pointed out that the objective of the government in port concession was to increase efficiency at the ports with the ultimate goal to modernise the ports and make them more competitive.

The BPE boss said: “The objective is to increase efficiency in our ports, improve service delivery, upgrade and modernise facilities in the ports, reduce the cost of shipping and clearing of goods at the ports and relieve the government of the burden of financing the sector.”

According to him, the concession is for a period of 25 years at an annual lease fee of $1,621,500, in addition to the entry fee and monthly throughput fee chargeable on the volume of cargo handled.

Okoh assured that the implementation of the development plan for the concessionaire would be closely monitored by the relevant government agencies, including the NPA, the BPE and Infrastructure Concession Regulatory Commission to ensure compliance.

The Association of Bureaux De Change Operators of Nigeria (ABCON) has digitalised its operations, ending years of manual filling of regulatory reports. The portal is expected to boost the financial system ahead of the planned Financial Action Task Force (FATF). It will also change the perception of BDCs as the weakest link in the financial chain. Will this digitalisation raise their transaction from one per cent to the five they have been agitating for? COLLINS NWEZE writes.

Bureau De Change (BDC) operators have for long complained of low transaction margin. Through the Association of Bureaux De Change Operators of Nigeria (ABCON), they consistently called on the Central Bank of Nigeria (CBN) to review their transaction margin upward to five per cent.

To them, the current one per cent they take is not sufficient and falls below global standard of 10 per cent. However, the regulator had based its reluctance to review the margin on the BDCs poor operating standards, especially non-digitisation of their operations.

But all that changed last week, following the launch of the ABCON Live Run Automation Portal in Lagos, which is seen as a good step in getting the regulator to consider raising the transaction margin for them.

For decades, the BDCs were filling their weekly regulatory reports to the CBN and Nigerian Financial Intelligence Unit (NFIU) manually.

They also lacked the technology to test the genuineness of documents presented to them by foreign exchange end-users and this had severally led to sanctions, loss of revenues and damage to their reputation in the eyes of international community.

But when the ABCON Live Run Automation Portal was unveiled on  February 5, to allow over 4,500 BDCs digitise their operations, the wrong perception people and the international community had changed for good.

The portal is the final phase to automating all BDCs’ operations and integrating their operations with those of the CBN, NFIU and the Nigeria Inter-Bank Settlement System (NIBSS) for improved compliance with regulation and seamless operations.

ABCON President, Dr. Aminu Gwadabe, who unveiled the platform at the event attended by over 4,000 BDCs, regulatory agencies and players in the financial sector, described it as a game changer in the Nigeria BDC industry.

Gwadabe, who spoke on the theme: Digitizing  BDC Operations for Efficiency, Transparency and Regulatory Compliance, said the project will enhance BDCs compliance with set regulations, restore their lost glory and promote market integrity.

The platform, Gwadabe explained, allows BDCs send their reports online real time, thereby removing the challenge of manual rendition of reports, which have been confronting operators for decades.

The ABCON boss said: “The objective of this launching is firstly, to change the negative perception towards the BDCs in Nigeria. We have a very negative perception from the public and regulators. This is due to the nature of our operations, which have been manually-driven for decades. Today, we are by this ABCON Live Run Automation Portal project, automating BDCs operations nationwide. This will not only bring efficiency to our business, but change the local and global perception of our operations for good.”

According to Gwadabe, even foreign investors look at the perception of every country before deciding to do business with such country. “So, this is our own way of improving the image of Nigeria in the eyes of international community. Remember that this year will witness the visit of Financial Action Task Force (FATF) to Nigeria for the assessment of the country. The FATF views BDCs as one of the weakest links in the Nigerian financial services value-chain.   So, because of that, we want to improve the entire perception of BDCs in Nigeria more importantly by putting tested IT infrastructure for our members to utilise,” he said.

He further explained that the automation integrates three of Nigeria’s regulatory agencies. First, it addresses the CBN, NIFU and the NIBSS platforms.

“We send our Suspicious Transactions Reports (STRs) daily utilisations and purchases  fillings to the CBN. To the NFIU, we conduct our Cash Transfer Report, STR. The NIBSS platform will capture  Know Your Customers (KYC) validation and Bank Verification Number (BVN) validation of our clients. So, you can see, it is robust and all encompassing in addressing anti-money laundering and terrorism financing. The anti-money laundering and terrorism financing is fast damaging the image of financial institutions, and BDCs are no exceptions. That is why we are putting this automation for our members to be empowered to compete globally, and comply with regulations with ease,” Gwadabe said.

The ABCON boss said the world is going digital, and BDC operators under his leadership are committed to staying ahead of the competition by deploying time-tested technology in delivering effective services to forex end-users.

According to him, the portal will sustain transparent transactions in the BDC corridor, boost the morale of its members and ensure sustained operations.

The CBN was represented at the event by Assistant Director, Trade and Exchange Department, Mrs. Adebola Ayedun; Samuel Oluyemi represented NIBSS Acting Managing Director, Niyi Ajao; and NFIU was represented by Adangbe Williams while Tony Ewerem represented Travelex Nigeria

 

Higher Transaction Margin for BDCs

Travelex Nigeria General Manager, Tony Enwereji, who also spoke on the transaction margin, said in other countries where the company operates, transaction margin is always around six per cent. “Our least margin globally is six per cent. But your patience perseverance will pay off one day. I believe that once this automation is completed, your margin of transaction will go up because I believe that the leadership of ABCON is heading in the right direction,” he said, adding that ABCON and Travelex have come a long way.

He thanked the BDCs for their support, praising the ABCON management led by Gwadabe for its foresight and ideas that have continued to lift BDC business in the country.  “ Where you are taking ABCON to is a good place. It is future full of possibilities of growth and expansion for BDCs. I urge all BDCs to be part of this automation, which is a proactive move by the ABCON leadership to take BDC operation to the next level of growth, compliance with set regulations and profitability,” Enwereji said.

The CBN Assistant Director, Trade and Exchange Department, Mrs. Adebola Ayedun who represented the apex bank, said ABCON has taken a laudable step to support the economy, adding that the apex bank is in support of the automation project.

NIBSS representative, Samuel Oleyemi, said ABCON and NIBSS started the automation journey when everyone was doubting its possibility. He said BDC business is globally recognised and contributes immensely to financial system growth. “The financial system is incomplete without BDCs. We, at NIBSS, want you to continue to comply with set regulations. NIBSS will partner ABCON to ensure that only 36.6 million people in Nigeria with BVN will buy dollar from BDCs,” Oleyemi said.

Representative of Head Compliance at NFIU, Adamgbe Williams, urged the BDCs to always comply with set regulations. “File your reports as and at when due. File reports on all transactions from N10 million for companies and N5 million for individuals. File these reports on weekly basis to NFIU and you have done your work. Always do your KYC and due diligence report. Once you do that, there is nothing to worry. But when you fail to file your reports to us, we will sanction you or report you to the CBN for sanction if we lack the power to act,” he stated.

 

The IMTOs’ challenge

The ABCON boss said the group is  still discussing with the CBN on making BDCs International Money Transfer Operators (IMTOs) direct agents after the regulator approved additional agents for the country.

“Partly, the complain of CBN is whether the BDCs have the right infrastructure in place. The IMTOs looked at that criterion too. They want to know if BDCs have  internet, computers, scanners to capture their transactions. And all our members here today have put those structures in place. And there is about $24 billion that come into Nigeria annually from the Diaspora,”he said.

He continued: “The CBN only captures six per cent of this Diaspora remittances and the rest goes under the counter without any tracing.  And the BDCs with our number of 4,500, (only China that has 1,500 in the world), we are actually the best to utilise the inflow of IMTOs. They are about 60 now, and we are still pushing to the CBN, letting them know that we can do it and the full automation of BDCs’ operations launched today is another milestone and proof that we are ready to play that role in the interest of the economy,” he said.

According to Gwadabe, forex business is a live business that has direct impact on the economy and the livelihood of every family.

He said forex inflows through the IMTOs window are sustainable, because Nigerians in Diaspora will keep sending money home to cater for the families. “That is why ABCON has taken this bold move to ensure that forex business is sustained through automation and by regulatory compliance, to keep the business going,” he said.

The ABCON boss also said the automation is a form of rebranding for the group, and separating genuine BDCs from fake, adding that in 2014, there was a CBN circular where the regulator increased the BDC’s capital base from N10 million to N35 million and compulsory deposit of N35 million. It also promised in a circular that it will make BDCs IMTOs direct agents.

“We are working with Travelex, and Western Union to see how we can become direct agent of Western Union. And there is a benefit to that. Right now, the IMTOs are selling their proceed at N355 to dollar. So, we will be part of that rate, and that will also enhance price discovery, transparency and more inflows will come. We are playing a role in the Investors’ and Exporters’ (I &E) Forex window, whereby we advise the CBN that instead of the investors saying they will not come because of multiplicity of rates, why not give us  those inflows. And today, that is what we are doing and that’s why we have recorded this level of success,” he said.

The BDCs, Gwadabe said, have unified the street rate and the official BDC rate. “We are talking of N358 to dollar official rate and even N360 to dollar, which is the benchmark of the CBN. So, I congratulate our members and we are celebrating ourselves and that’s why we are coming with IT to ensure that we record more successes,”he said.

According to him, with this development, the NFIU, EFCC and the CBN supervision officials do not need to physically visit BDC offices to look at their books and ascertain the level of compliance. He added that the technology driving the project is cloud-based. He said the scheme will enable the BDCs to save cost  and make more money from their operations.

“If you remove compliance, we become enemies of NFIU, CBN and even EFCC. So, operators have to give priority to compliance and following due process in their work. Remember, the ABCON members are the key drivers of the forex market and their contributions to exchange rate stability are being acknowledged by the regulators, hence the level of quality representation we have seen at today’s event,”he advised.

He explained that once a BDC operator violates set regulation due to non-compliance, it will adversely affect such operator and can lead to outright withdrawal of operating licenses.

 

How the portal works

Gwadabe explained that the project came with three layers and stages. First layer is on online real time registration of our members with a success rate of over 4,500 BDCs registered nationwide. This layer is to enable our members conduct their membership registration from any of their location without coming physically to ABCON Secretariat.

The second layer bothers on automation of ABCON’s operational process, book keeping, issuance of receipt, preparation of accounts, balance sheets, ledgers and sales/purchase registers. The most important of this layer is the online real time rendition of returns to regulatory agencies.

Another important feature of this layer is the BDCs on boarding and integration of the BVN platform on the NIBSS portal for verifications and validation of clients’ BVNs, which is a most vital requirement forex sale.

 

EFCC, ABCON deepen anti-money laundering fight

The Economic and Financial Crimes Commission (EFCC) and the ABCON have taken the campaign against money laundering and terrorism financing to BDC operators at the Murtala Muhammed Airport 2 (MM2), Lagos.

Speaking during the sensitisation programme against money laundering and terrorism financing campaign at MM2, which was attended by many BDC operators, EFCC Chairman, Ibrahim Magu, called for continuous sensitisation on issues around Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) reporting  to improve transparency in BDCs operations. He said the EFCC will continue to campaign for financial integrity and transparency in BDCs’ operations.

Other stakeholders at the event also spoke on the use of BDCs for illicit political transactions, illegal border cash evacuation, reporting of suspicious transactions, fraud accounts transactions and cash dollar deposits on domiciliary accounts.

Independent sources alleged that the choice of MM2 was because the centre remains a major spot for illegal funds transfer and border cash evacuation in the country.

Speaking at the event, Gwadabe said the BDC sector is part of the financial system and is seen as the weakest link in the financial system. He appealed to the regulators to approve  the group’s request  for the establishment of the institute’s Training Centre  and building capacity of over 4,500 BDC operators for better understanding of the menace of money laundering and terrorism financing.

Gwadabe, said the anti-money laundering sensitisation programme  was intended to familiarise BDC operators with the process of money laundering – the criminal business used to disguise the true origin and ownership of illegal cash – and the laws that make it a crime.

He  said the programme was also meant to help BDCs maintain minimum standard of record keeping and increasing level of investors’ confidence for the economy.

He said the group will continue to pursue Nigeria’s admission into the Financial Action Task Force (FATF) due this year.

The  FATF is an inter-governmental body established in 1989 by the Ministers of its Member jurisdictions.

The FATF is therefore a “policy-making body” which works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.

Gwadabe said the sensitisation of BDCs and other capacity building for BDCs will create awareness on the need to check money laundering and terrorist financing in this period of electioneering; ensure that BDCs are not used to launder funds by Politically Exposed Persons (PEPs).

It will also upscale BDCs’ compliance with the Anti-money Laundering and Combating the Financing of Terrorism (AML/CFT) for Banks and other Financial Institutions in Nigeria Regulations, 2013.

ABCON has for years been an active group in the financial services sector, concentrating more on the BDC segment of the market and ensuring that global best practices are followed in BDCs operations.

The association has on its own, organised trainings for its members, and partnered NFIU and the EFCC to build capacity for operators. BDC operators have been trained on how they can help in tackling money laundering, terrorist financing and the benefits of keeping records of their transactions.

The anti-money laundering training, which ABCON organised with NFIU in Lagos was meant to familiarise BDCs with the process of money laundering—the criminal business used to disguise the true origin and ownership of illegal cash—and the laws that make it a crime.

The EFCC/ABCON goal is to ensure that BDCs are not used to launder funds by politically exposed persons (PEPs), especially at this period of electioneering.