The Nation Newspaper

Category: Money

  • Leaving lasting legacies via estate planning, wealth transfer

    FBNQuest Trustees has shared insights on the importance of corporate trust management, estate planning and wealth transfer, which it said are crucial elements in ensuring the preservation of legacies. The firm used its 40th anniversary with the theme:  A Legacy that preserves Legacies, to educate Nigerians on the gains of leaving a will and the necessity to engage institutions rather than an individual in its execution, reports COLLINS NWEZE.

    Not many people want to talk about death. While it is not a pleasant experience, the loss of a loved one can be very traumatic both for family members and friends. To compound issues, in-fighting amongst family members and legal problems or delays, could add to the grief if the deceased did not leave a will.

    That explains why FBNQuest Trustees decided to use the occasion of its 40th anniversary to educate Nigerians on estate planning and the company’s achievements in its 40 years of operation.

    The firm explained that estate planning is more important now than ever. Without proper planning, one could lose a large share of what he had spent his whole lifetime accumulating.

    Managing Director, FBNQuest Trustees, Kunle Awojobi, explained that  the company was modeled as a representation of forward thinking culture of FBN Holdings group, to improve and develop specialised capabilities within the trusteeship, asset and fund management service to Nigerian financial system.

    “Over the past 40 years, FBNQuest Trustees has not only become a leading trust company in Nigeria, but is now a pillar in the trusteeship business. The company continues to be the preferred local partner for international and multilateral entities looking to have business in Nigeria, and in 2013, served as the sole bond trustee on the first bond issued in Nigeria by the International Finance Corporation’s $50 million fixed rate senior secured bond.

    “In terms of growth and financial performance, the company has created shareholder value with its share capital rising from N30 million in the 90s to N3 billion in 2019. Its liquid trust assets under management is in excess of N40 billion as at June 30, 2019 and over N6 trillion  transactions being done.

    “ These achievements may be laudable, but those of us now bearing the torch must task ourselves with the objective of doing more by ensuring that the company competes at the international level. In another 40 years, the succeeding generation must also be proud of their achievements as we are today,” Awoobi said.

    FBNQuest Trustees has published an educative compendium on estate planning to actively engage, and educate stakeholders on the importance of Estate Planning in Nigeria, through its Legacy Series; and is a pioneer for Islamic finance in Nigeria, which led to its co-management of the first government issued Sukuk instrument launched by the Federal Government of Nigeria in 2017. The company also partnered and organised a stakeholder engagement on Voluntary Asset and Income Declaration Scheme (VAIDS) and its implications for estate planning.

    Awojobi, emphasised the firm’s impact on trusteeship business in Nigeria, and by extension, the economy. He said:”We are extremely proud to be a part of the 125 year old legacy of First Bank of Nigeria Limited, and the rich heritage of FBNHoldings as we celebrate a 40 year track record of distinction, dependability and professionalism in the trustee business.”

    “We want to thank everyone who has contributed to the growth of the company over the years, as we continue to provide excellent services to our clients. We also take this opportunity to recommit to excellently servicing of our clients across diverse sectors to ensure that their legacies are preserved,” he added.

    In terms of growth and financial performance, the company has continuously delivered shareholder value in alignment with the mandate of the Group. From a share capital of about N30 million , it has increased to N3 billion in 2019; and has grown its profit after tax (PAT) year-on-year consistently, with liquid trust assets under management in excess of N40 billion as at June 30 2019.

    Group Managing Director, FBN Holdings Plc, Urum Eke, congratulated FBNQuest Trustees for the achievements so far, adding that the group was proud of what the company had achieved in the last 40 years.

    Senior Partner, TLcom Capital, Dr. Omobola Johnson, said both companies and individuals need to leave good legacies behind, including good will and assets.

    She said leaving a good legacy is one of the best assets one can leave foe the family. She added that even good customer relations and track record of performance as a company can be a good legacy to be inherited and  by subsequent managers.

    Speaking at the panel session of the event, Publisher, Clever Clogs Books, Mrs. Olubunmi Aboderin Talabi, said there was need for people to teach their children the gains of building good savings culture.

    “I teach my children to be prudent, embrace budgeting and practice delayed gratification. It is also important for our children to know that who they marry and surround themselves with also could play a major part in their lives.”

    Founder and Chief Executive officer, best man Games, Mrs. Nimi Akingkugbe, said leaving a good legacy will also entail not over indulging one’s children and also teaching them the need to work hard remain a good legacy one can leave behind.

    Head Private Trust at FBNQuest Trustees, Mofoluke Keshinro,  said that family business needed not be run by family members, saying the right people whether from the family or outside the family should run family businesses. She added that a family member can be included in the company’s board if need be.

    “One’s children need not be at the front in running  family  business . It is also important we teach our children the importance of money,” she said.

    Chief Executive Officer, Teach for Nigeria, Folawe Omikunle, said people should spend quality time with their children to understand them and their areas of strength. She also advised that helping the children to build the right network could also be a good legacy.

    Lecturer, Islamic Studies Department, Bayero University, Kano, Dr. Bashir Umar said Islamic finance is now an alternative funding option for companies and individuals and should be embraced.

    He said that Islamic finance is also offering an alternative way of estate planning which is very important for the people.

    Umar said estate planning is about making sure your assets are distributed as you wish both now and after you are gone, you need to consider three very important questions before you begin your Estate Planning. The big questions are who takes charge of the deceased’s assets, which assets are you bequeathing and when and how will that be done?

    “You will require the services of a professional estate planner. We recommend that you do not try to do it yourself. Seek competent legal advice when creating your estate plan, though you may want to discuss different strategies with family and friends,” the company said.

    FBNQuest Trustees commitment to Islamic Estate Planning is premised on the understanding that generally and across the globe, family fights often occurs when inheritance matters crop up.

    He said regardless of the laws in place; Islamic or otherwise, people would sometimes find ways to explore the loopholes in the system or the law, and find ways to circumvent the express guidelines provided.

    Umar said when money is involved, the dynamics change for everyone and subjectivity starts to come in, saying that is why it is important that one engages the services of institution rather than that of a person in will, or trust execution.

    The major challenge has basically been education. While some Muslims believe that estate planning is important and compulsory based on the teachings of Prophet Muhammad (SAW), some others think otherwise despite the specific instructions in the Qur’an regarding this.

    The company has for long, been educating Muslims on Islamic Estate Planning through the Legacy Series, both on radio and other media. We have also established relationships and partnerships with key players in the Islamic Finance space.

    The beauty of Islamic Inheritance Law is the fact that the distribution plan of a Muslim’s assets have already been taken care of. The Qur’an provides specific guidelines for how to distribute two-third of a Muslim’s assets to parents, spouse(s), children and other family members. Then freedom is given on the remaining one-third. With a proper trust structure, the one-third can be managed over generations – depending on your preference.

    This one-third can be used to create and manage the activities of foundations, make Zakat distributions and take care of the less privileged by way of charity.

    In non-Islamic Estate Planning, tax is a major consideration which makes distributors seek ways of reducing the tax impact on the estate of the deceased. In Islamic Estate Planning, however, reducing the impact of estate tax is not a consideration.

    FBNQuest Trustees helps with both the computation and management of Islamic instruments like Zakat, Wakaf (charity), Hibah, Mong others.

    The Islamic Estate Planning business is a relatively new one in this part of the world. You will also agree with me that development of the market is a fallout from the recent prominence of Islamic Finance, catalysed by the successes of the FGN N100 billlion Sukuk Bond, to which FBNQuest Trustees was also delegate.

  • VAT increase to generate additional N479.7b revenues

    The proposed 7.2 per cent Value Added Tax (VAT) proposal by the Federal Executive Council (FEC) is expected to generate additional N479.7 billion in revenues based on the N1.1 trillion collected in 2018, analysts at Afrinvest West Africa, have said.

    They explained that based on the sharing formula, the Federal Government is to receive additional N72 billion (15 per cent), states to receive N239.8 billion (50 per cent) and local governments to get N167.9 billion (35 per cent) upon implementation.

    “While the states would receive a significant boost, the increase is unlikely to make a dent on Federal Govern-ment’s fiscal deficit which we estimate at N3.4 trillion in 2019. We believe the Federal Government requires a significant revenue boost, which would come elsewhere. Our analysis shows that removing petrol subsidies and adopting a market reflective exchange rate of N360/$1 for the computation of oil receipts would increase Federal Government’s revenue by N880 billion,” they said.

    They added that the new VAT rate will also help government in the payment of the N30,000 per month minimum wage for workers.

    The Federal Executive Council (FEC) recently approved an increase in the Value Added Tax (VAT) rate to 7.2 per cent from the initial five per cent established since January 1, 1994.

    The analysts said the timeline for the implementation of the new rate is unclear, but the Minister of Finance, Budget and National Planning hinted at 2020. As there are plans for wide consultation and amendment to the existing VAT Act, implementation may take longer than expected.

    They said the increase in VAT rate is  not surprising as governments have been keen but civil protests have led to reluctance despite Nigeria’s low VAT rate relative to peer economies.

    “Nigeria’s VAT rate at five per cent is the lowest among African peers such as Kenya (16 per cent), South Africa (15 per cent), Egypt (14 per cent) and Ghana (12.5 per cent). Similarly, VAT receipts to Gross Domestic Product (GDP) is only 0.9 per cent of GDP compared with three per cent in Ecowas and Commonwealth countries according to PwC. We note that Nigeria’s effective VAT rate is believed to be significantly higher than the current five per cent due to the difficulty in claiming refunds, the high cost of compliance and non-allowable expenses for input VAT purposes,” the report said.

    While we align with the age-long call to boost non-oil revenue, we believe the Federal Government has chosen an easy but less impactful route with the proposed increment in VAT. “The increase should be part of a comprehensive fiscal reform package that would seek to boost collection efficiency, rein in recurrent spending, remove subsidies and widen the tax net,” they added.

    According to the former minister of finance, Kemi Adeosun, Lagos and Abuja account for 55 per cent and 20 per cent of VAT revenues respectively, meaning more pressure on consumers in both cities. We suspect that this is due to the large size of the informal economy which governments have been unable to integrate with the formal economy due to issues such as multiplicity of taxes. In the broader economy, we expect the adjustment to VAT to lead to higher consumer prices and in turn inflation. The attendant weakness to consumer spending would also impact growth negatively.

  • Union Bank empowers female entrepreneurs

    Union Bank Plc has in conjunction with Leading Ladies Africa unveiled 40 female entrepreneurs who will be participating in the keenly sought after Enterprise and Leadership Programme (ELP).

    The initiative, being put together by women-focused non-profit organisation, Leading Ladies Africa, is a two-month, practical, hands-on pro-gramme that is focused on enabling women entrepreneurs in Nigeria to identify business opportunities, create and sustain viable enterprises, and scale up their businesses.

    Speaking  at the official media parley to unveil the participants, Lola Cardoso; Chief Digital and Innovation Officer; Union Bank said: “We identified this initiative as one that will help amplify our efforts to support women and drive gender balance in Nigeria. Union Bank is proud to support these female entrepreneurs and enable their success. We are excited about the impact the programme will have on the women and their businesses, and the ripple effects on the society at large.

    “We are pleased that Union Bank, through its ±lpher Initiative is fully supporting Leading Ladies Africa’s Enterprise and Leadership Program said Francesca Uriri; Founder Leading Ladies Africa. “We’re running this programme because we understand that there is a very clear need for most micro, small and medium sized businesses to develop structure and systems that enable them scale, generate profit and become sustainable.”

    Continuing further she said: “We received over 1,700 entries for this programme from female entrepreneurs in Nigeria, and even from other African countries, further reiterating the need and value in supporting enterprise. The pro-gramme will be run in conjunction with the China Europe Business School (CEIBS), because we understand how important it is for the ladies to benefit from a global academic and business faculty.”

  • Unity Bank unveils new lending plans for farmers

    Unity Bank Plc has reiterated its commitment to lending more to farmers and supporting them in getting more value for their farm produce.

    The bank is partnering with Binkabi, a blockchain-based commodity trading network to ensure that farmers get the right pricing and profitability for their produce.

    The Head, Risk Management and Compliance, Unity Bank, Usman Abdulqadir, said the collaboration would also help to provide end-to-end solutions for farmers and the entire agribusiness value-chain.

    Abdulqadir, who spoke at the launch of an agro commodities trade platform in Lagos, said,  many farmers who harvest their crops sell them at the time of harvest when the prices are still low. But the partnership will help such farmers to transfer the produce to warehouse directly, or sell them to people that will send the produce to the storage facilities to reduce post-harvest losses.

    “By way of strategy, we look at the various value chains across the agric sector, and why some banks prefer to concentrate on certain types of customers – the very big ones with little or no risk exposure, we lend across the entire value chain.

    “What we are doing today is just to integrate all the various components of the value chain into one single entity to have an integrated approach to funding the agric sector. We have a huge portfolio of primary production; as we speak today, about 40 per cent of our entire loan portfolio is in one aspect of agriculture or the other. We are the leading bank in funding primary production; we are also deepening agriculture mechanisation.”

    The Co-Founder and Chief Operating Officer, Binkabi, Manrui Tang, said the platform would help to address the issues associated with lending to the agricultural sector.

    “We are a platform for issuing trading and financing commodities on blockchain. We connect with banks, warehouses, commodity exchanges, logistics companies and farmers, aggregators and all parties in the supply chain,” she said.

     

  • N7.9tr dirty notes: CBN’s deadline ends today

    THE three-month deadline set by the Central Bank of Nigeria (CBN) for bank customers to deposit dirty naira notes in their banks will elapse at the close of business today.

    The CBN had disclosed that a large proportion of the N7.9 trillion pieces of naira notes in circulation are dirty, mutilated and unfit for Automated Teller Machines (ATMs) and over-the-counter payments.

    The regulator therefore, directed Nigerians to deposit mutilated Naira notes in any bank branch closer to them.

    It said the exercise was part of its efforts to improve the overall quality of the Naira notes in circulation.

    Many banks have continued to sensitise their customers on the need to comply with the directive.

    In an emailed note to customers, GTBank said: “As part of its efforts to improve the overall quality of the Naira notes in circulation, the CBN has introduced the Clean Note Policy and Banknotes Fitness Guidelines. What does this mean for you?

    “If you have in your possession,  overused or mutilated Naira notes, you are required by the Central Bank of Nigeria (CBN) Clean Note Policy to deposit such notes at any branch near you on or before Monday, September 2, 2019,” it said.

    Read Also: Food import restriction has taken effect – CBN

    It explained that overused notes include any Naira note that is now weak to such an extent that it could easily tear at further handling or processing. Mutilated notes include any Naira note that has been partially or permanently damaged, but which clearly still has more than half of its original size together.

    “As Nigerians, it is our patriotic and collective responsibility to handle the Naira with care, and as your Bank, we urge you to comply with this directive in order to improve the quality of our national currency,” the bank said.

    For many Nigerians, the sorry state of the Naira notes in circulation is appalling and a serious source of worry. The CBN said 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.

    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  the Clean Note Policy launch 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.

  • Access Bank, BloomFEY take leadership lessons to youths

    ACCESS Bank Plc and  Bloom Initiative for Empowering Youth (BloomFEY) have partnered to hold the the Bloom Week where children from secondary schools are selected to learn leadership skills, financial literacy and entrepreneurship.

    The Bloom 2019 graduation programme was concluded on August 30, with students drawn from different secondary schools across the country in attendance. The scheme is targeted at talented youths, some of who may already exhibit leadership potential.

    The programme involved use of interplays of case studies, texts and group exercises to provide participants with knowledge and wisdom needed to excel in life.

    Speaking on the programme at a ceremony held at the Access Bank headquarters in Lagos, the BloomFEY Founder, Mrs. Uwa Osa-Oboh, said the initiative was to address the need for leadership development as a means of increasing the global competitiveness of youths.

    She said this year’s exercise was attended by top best students from schools in Lagos and other parts of the country.

    “The project, which started in 2014, graduated over 50 students in the 2019 edition with parents of the participants in attendance. Bloom Week , targeted at talented youths, some of who may already exhibit leadership potential, featured interplay use of case studies, texts and group exercises to provide participants with knowledge and wisdom at the end expose young minds to the science, challenges and context for effective leadership for the aspiring Nigerian in the 21st century,” she said.

  • Analysts discuss N614b bailout funds for states

    ANALYSTS at Afrinvest West Africa, an investment and research firm, have described Federal Government’s plan to recover N614 bailout fund to states as illusive.

    In an emailed report to investors, the firm said based on the terms of the loan, a positive response from states to the sudden request for repayment by the minister of finance is unlikely.

    “The terms of the loan are such that repayments are supposed to be over the long-term while the risk of default is significantly minimised by Irrevocable Standing Payment Orders (ISPOs). As the Central Bank of Nigeria loan was extended to states through commercial banks, we believe the ministry of finance is not best placed to demand for repayments. This further raises concerns about the independence of the CBN, which continues to take cues from the fiscal policy arm of the economy,” it said in the report titled: Bailout Funds to States: The Fed Govt’s Wild Goose Chase

    The Minister of Finance, Budget & National Planning estimates the size of the bailout provided to 35 states to be N614 billion but CBN data show that this was N656.5 billion as at December 2018. States issued ISPOs, which ensures that repayments will be deducted at source, before FAAC allocations are disbursed,” it said.

    It explained that in a surprising turn of events, the Minister of Finance, Budget & National Planning recently demanded the refund of the bailout provided to Nigerian states to support their budgets and enable them cope with low oil revenues.

    “The states were unable to balance their budgets between 2014 and 2016 due to the significant reduction in government revenues after the oil price crash of mid-2014 and a slump in oil production in 2016. This led to the accumulation of salary arrears, pension arrears, contractor debts and uncompleted capital projects. There was no reprieve from weak Internally Generated Revenues (IGR) nor in the debt market as states were already highly leveraged, with huge interest payments,” the report said.

    Continuing, it explained that in 2015, the National Executive Council (NEC) of the Federal Government of Nigeria, with the help of the CBN, took measures to assist states. First, existing loans with commercial banks were restructured, leading to reduced debt service costs. The second measure, which is our primary focus, was the budget support to states struggling to meet salary arrears.

    Read Also: Food import restriction has taken effect – CBN

    The CBN provided a facility to states through on-lending from commercial banks at an interest rate of nine per cent, a tenor of 20 years (Ogun State – 10 years) and two years grace period.

    Also, the report on the said the Federation Account Allocation Committee (FAAC) allocations to states recovered from a low of N1 trillion in 2016 to N2.2 trillion in 2018, the highest in nominal terms based on CBN data from 1981.

     

  • Apex bank rolls over N208.6b maturing T-bills

    THE Central Bank of Nigeria (CBN) has rolled over N208.6 billion Treasury Bills across all maturities at the Primary Market Auctions.

    The marginal rates across tenors closed higher at 11.1 per cent, 11.6 per cent and 12.9 per cent for the 91-day, 182-day and 364-day tenors respectively.

    This compared with previous auction marginal rates of 9.7 per cent, 11.4 per cent and 12 per cent. The higher rates indicate increasing investor appetite for higher yields in compensation for the country’s riskiness.

    The apex bank had asked banks to back all Treasury Bills bids with customer demand.

    The directive is part of the bank’s plan to improve lending to domestic economy. In the past, banks have bought government debt rather than assume risk by lending.

    The CBN barred banks from buying bills for their own accounts at an open market auction held, a move intended to force them to lend rather than invest in government debt.

    The bank is stepping up a campaign to get credit flowing. Last week, it limited the size of interest-bearing deposits it would hold for banks, the latest in a series of measures aimed at reviving an sluggish economy.

    The CBN, which had not issued market stabilisation bills for about a week before Friday’s auction, told banks bids must be backed by customer demand.

     

  • Elumelu challenges global leaders to empower African entrepreneurs

    Chairman, Heirs Holdings, Tony Elumelu, has asked Japan to invest $2.5 billion representing  five per cent of its $50 billion commitment to Africa.

    Elumelu, African investor and philanthropist, spoke at the seventh Tokyo International Conference on African Development (TICAD) in Yokohama, Japan.

    “At TICAD 2016 in Kenya, Japan pledged $30 billion for Africa. This year you have generously increased this to $50 billion. If we invested just five per cent in Africa’s new generation of entrepreneurs, following my Foundation’s robust, proven model of getting capital directly to those best placed to catalyse growth and create real impact, we could touch 500,000 lives, across the 54 African countries, broadening markets, facilitating job creation, improving income per capita, and laying the key foundation for political and economic stability”, Elumelu said.

    Read Also: UNDP partners Elumelu Foundation to empower 100,000 young entrepreneurs

    His statement captured his vision of a relationship between Japan and Africa, which prioritises economic and shared prosperity. He outlined the three key pillars of a bold and transformative structure: investment in infrastructure, partnership with the African private sector, and investment in Africa’s youth.

    He urged Japan to learn from the example of the Tony Elumelu Foundation, which champions empowering African entrepreneurs, as the most sustainable means of accelerating the development of Africa. The Tony Elumelu Foundation, in just five years has assisted over 7,500 African entrepreneurs across every African countries, with seed capital, capacity building, mentorship and networking opportunities through its $100 million Entrepreneurship Programme.

  • NSE begins entry for annual essay

    THE Nigerian Stock Exchange (NSE) on Thursday announced the commencement of entry period for the 2019 edition its annual NSE Essay Competition. Students in Senior Secondary Schools in Nigeria were expected to start submitting entries from Monday, August 26, 2019. This year, each student will write on the topic, “How can the capital market create a better future for all”.

    To enter for the competition, participants are required to submit their typewritten entries, which should not be more than 1,000 words through email to essay@nse.com.ng. An online submission form is also available on www.nse.com.ng and The Nigerian Stock Exchange’s Facebook page. Students can also submit to any NSE office across the country. The entry submission is expected to close on October 18, 2019.

    The NSE Essay Competition is one of the Exchange’s financial literacy and inclusion initiatives aimed at bridging the gap in classroom learning with practical knowledge required for long-term personal financial planning. The competition’s overall goal is to develop a culture of wealth creation amongst youth towards “Building a Financially Savvy Generation”.

    Head, Corporate Communications, Nigerian Stock Exchange (NSE) Mr. Olumide Orojimi said the success of the NSE Essay Competition over the years continues to encourage and inspire the Exchange to strengthen the initiative.

    “This year, we are positioning this flagship financial literacy programme as a platform to educate the younger generation about innovative financial instruments such as green bonds which contribute to achieving the Sustainable Development Goals (SDGs) and other related global commitments,” Orojimi said.

    According to him, this year’s topic aims to tasks students on their understanding of the role of the capital market in achieving the sustainable development goals (SDGs).

    The top three winners of this competition will receive a combination of equity investments, scholarships towards their university education and laptop computers at the ceremony which is scheduled to hold on November 15, 2019. The winners will also be honoured with a closing gong ceremony at the NSE and the schools of the top three winners will be recognised and presented with various prizes including trophies, desktop computers and printers.

    Entries for the competition undergo three rigorous stages of review to ensure the best candidates emerge at the finals. At the first level, entries are graded by a team of examiners from the Chartered Institute of Stockbrokers (CIS). Successful writers will proceed to the second stage by writing an in-person follow up essay on a related topic at any of the NSE branches closest to them to select the top ten finalists. At the NSE Headquarters in Lagos, the top ten finalists will be interviewed to select the top three winners.

    Now in its 19th year, the annual NSE Essay Competition has inspired over 67,000 young people in more than 12,000 schools across Nigeria.