The African Development Bank has held high-level consultations with the Dutch government about developing a platform for providing women with market information to enhance their participation in agricultural trade.
The bank’s Special Envoy on Gender, Geraldine Fraser-Moleketi and experts from the Centre for the Promotion of Imports (CBI) from developing countries, a unit under the Dutch’s Ministry of Foreign Trade and Development Cooperation, explored options of designing a user friendly platform to ensure needs of women were met.
Of importance was how to address gaps prohibiting women from accessing relevant information that can help them reap maximum profits from agriculture. The SEOG emphasised the need for timely, accurate and transparent information, and the economic empowerment of women in the sector.
She pointed out that the initiative was opportune, given the African Union Commission’s (AUC) declaration of 2015, as the “Year of Women Economic Empowerment”.
The Special Envoy expressed the urgent need to go beyond conventional approaches in meeting the information needs of women. “It is time to employ innovative ways in alleviating gender-based constraints in agricultural trade,” said Moleketi.
The discussions were held at the bank’s headquarters in Abidjan. They focused on designing, developing and implementing an Agricultural Trade and Investment Market Intelligence Platform.
Just recently, the office of the SEOG completed a study on “Women in Agricultural Value Chains”, which identified gaps including information asymmetry, that compound market access constraints. The Market Intelligence Platform will serve as a knowledge-driven one-stop-shop, closing market access information gaps that deter women, youth and men from equitable, profitable and sustainable participation in agricultural trade.
CBI experts lauded the platform’s market intelligence aspect, saying it provided exporters/users with practical tips that had a direct boost to their businesses and sustained market share”.
The bank’s Director of Agriculture and Agribusiness department, Chiji Ojukwu, reiterated the initiative’s potential to contribute to improved intra-African agricultural trade and regional economic integration. He described it as an innovative and transformative catalytic tool for Africa’s inclusive agricultural trade-driven economic and developmental growth.
The Central Bank of Nigeria (CBN) has taken measures that will encourage banks to support Small and Medium Enterprises (SMEs). Many banks have keyed into the policy, instituting internal measures and finding ways to woo SMEs, COLLINS NWEZE reports.
Banks product development and risk management units are becoming more creative on how they fund Small and Medium Enterprises (SMEs). The banks, which have the backing of the Central Bank of Nigeria (CBN), are thinking outside the box on their approaches to SMEs’ financing.
CBN set the ball rolling when it set up guidelines for the management of the N220 billion Micro, Small and Medium Enterprises Development (MSME) fund it launched last year to support SMEs’ financing. It said the fund would be managed by a Special Purpose Vehicle (SPV). But CBN will manage the fund, pending the establishment/appointment of the SPV or Managing Agent (MA).
The regulator said many unserved and under-served clients are in the MSME sub-sector, stressing that to address the funding requirement of this critical segment of the economy, an 80:20 ratio for on-lending to micro enterprises and SMEs respectively has been designed.
The CBN said women’s access to financial services should increase by 15 per cent annually in order to eliminate gender disparity. It also said to achieve this, 60 per cent, N132 billion of the fund has been earmarked for providing financial services to women.
The regulator said that in operating the fund, special consideration will be given to institutions that will provide financial services to graduates of the Central Bank of Nigeria’s Entrepreneurship Development Centres (EDCs).
Also, 10 per cent of the fund will be earmarked for social and developmental objectives as grants, N11 billion; Interest Drawback Programme, N6.60 billion; MA’s Operational Expenses N4.4 billion. However, MA is expected to generate income from its operational activities to fund its future expenses on a sustainable basis.
It explained that N6.6 billion earmarked for Interest Drawback will be used to settle the rebates to financial institution’s customers under the fund who repay their loans as and when due while the N11.0 billion for grants will fund programmes that are aimed at developing the MSME sub-sector.
However, 90 per cent of the fund, amounting to N198 billion, will be utilised for the provision of direct on-lending facilities to participating financial institutions.
It said participating financial institutions can only finance agricultural value chain activities; trade and general commerce; cottage Industries; artisans among others.
The banking watchdog said to ensure that productive sectors of the economy continue to attract more financing necessary for employment creation and diversification of the country’s economic base, a maximum of 10 per cent of the commercial component of the fund will be channelled to trading and commerce.
Lenders’ responses
• Adeola
Managing Director, Sterling Bank Plc, Yemi Adeola said the bank is introducing in an innovative manner competitions, ideas, innovations; making it possible for young entrepreneurs to be able to think beyond the negative society ills and build strong businesses.
The bank, he said, instituted the “Meet the Executive” programme meant to select three young Nigerian entrepreneurs that will not only get project-based grants but would be introduced to local and international investors.
Speaking during a meeting with participants in the programme, he described entrepreneurs as the backbone of the economy, adding that the programme is driven by the lender’s passion for helping budding entrepreneurs attain great heights.
“We plan to choose three out of the whole people, and work out the modalities or logistics of the fund with them, but it is easy money. The fund will be project-based,” he said.
Also, KPMG, an international consulting firm, has named First City Monument Bank (FCMB) Limited as the fourth most customer-focused bank in Small and Medium Enterprises (SMEs).
The report on the ranking showed the bank got the recognition after scoring 74.94 per cent. It also came fifth in retail banking with 73.16 per cent based on comments by customers surveyed by KPMG.
This performance, which is coming barely four years after the Bank transformed to become a retail and commercial banking-led lender, is an improvement when compared to 2014 when it occupied the eight and seventh positions in the SMEs segment and retail banking space, respectively.
The rating, as contained in the 2015 report of the KPMG Banking Industry Customer Satisfaction Survey (BICSS), was on the basis of Customer Satisfaction Index (CSI), which took into account convenience, product/service offering, excellence, and value for money and customer care. The KPMG BICSS survey was launched in 2007 to heighten the consciousness of service delivery among Nigerian Banks. The survey has evolved over the years and in 2015, the scope covered over 23,000 retail customers, 2,800 SMEs and 400 corporate/commercial organisations across the country.
• Balogun
The Group Managing Director/Chief Executive, Mr. Ladi Balogun, said that, “this is a welcome development”, adding that, “it shows that we are on the right path towards achieving our goal of attaining the highest levels of customer advocacy in the industry”. He further stated that the upward rating of the bank, “is a demonstration that the various initiatives we are driving in the areas of service, products offering and operations to enhance customer experience are yielding the desired results and our customers appreciate them”.
Skye Bank Plc has gone into a consultancy partnership with the International Finance Corporation (IFC), to evolve an effective lending framework for medium, small and medium enterprises (MSMEs).
In a statement, the bank said the partnership would produce a new lending framework for Small and Medium Enterprises (SMEs) that would de-emphasise relying on collateral rather than evaluating business viability.
Based on this new framework, when a business passes the viability test, the bank can consider nontraditional collateral options outside real estate to reduce the difficulty faced by business owners in their bid to secure credit facilities from banks.
It said the bank has also concluded plans to stop charging commission on turnover (COT) on all retail current accounts, well ahead of the deadline given by the Central Bank of Nigeria.
Heritage Bank Limited expressed its commitment to building a network of Entrepreneurial Leaders necessary to drive the growth of Micro Small and Medium Enterprises (MSMEs) in the country.
Its Managing Director/Chief Executive Ifie Sekibo said the lender developed and introduced wide range of services to address the capacity and financing needs of MSME businesses.
“The goal of Heritage Bank’s MSME offerings is to build a network of entrepreneurial leaders that will drive the growth of the sector. This would enhance the ability of the MSME sector to effectively play its role as the engine growth of the economy,” he said.
Heritage Bank’s commitment to leadership building in the MSME sector is reflected in the bank’s SME Clinic. “The Heritage Bank SME Clinic is designed to enhance the entrepreneurial capacity of our SME customers. Through the Clinic, Heritage Bank understands the different aspects of the customer’s business in order to identify areas where it can add value. As a result we are able to develop customised products and services based on the identified needs of each SME customer,” Sekibo said.
This, he added, is complemented with Heritage Governance Model, through which the lender introduces Corporate Governance Framework to its MSME customers. The phase one of the scheme focuses company secretary services; auditing and assurance; accounting services; and tax consultancy. These services, he said, are rendered to SME customers of the bank at subsidised fees by network of consultants.
• Wigwe
Likewise, the Group Managing Director, Access Bank Plc, Herbert Wigwe has reiterated the bank’s commitment to financial empowerment of SMEs and youths in Africa.
Speaking at the Africa Sustainable CEO Business Roundtable held in Lagos, the bank chief who discussed how the lender is financing youth entrepreneurs and SMEs in the continent said traditional problems such as access to finance, environment and the right knowledge on the society where they operate are some of the factors affecting today’s youths.
Wigwe, who was represented by the Executive Director, Personal Banking, Victor Etuokwu disclosed that the lender has a team that drive and add value to SMEs in the country.
Fund disbursement
However, the CBN has reported that only about 20 per cent of the N220 billion Micro, Small, and Medium Scale Enterprises (MSMEs) fund has been disbursed to beneficiaries, the Central Bank of Nigeria (CBN) has said.
CBN Director, Banking Supervision, Mrs. Tokunbo Martins, said the supervisory bank was working on ways of ensuring that more funds get to the critical sectors of the economy.
Head, Relationship Management, MSME Development Finance Department, Tobin Jonathan, said CBN was jolted by low access to the fund by operators.
CBN, he said, is worried that since the fund was launched last August only insignificant portion has been disbursed to operators because of stringent conditions attached to accessing the funds.
MSME-operators, Ibrahim said, were complaining that the criteria were too difficult to meet hence CBN Governor Godwin Emefiele relaxed them to make the funds more accessible. He added that the CBN also addressed other complaints by participating financial institutions, including the spread of profit to cover their cost of operations.
“So, they can collect the forms at two per cent and give it out at five per cent. So they have seven per cent spread which is good enough. That has encouraged so many of them to begin to apply,” Jonathan said.
He said it is important as part of efforts to stimulate financing to the MSME sector in Nigeria, stressing that collateral registry would provide part of the infrastructure for pushing the initiative ahead.
Visa and MasterCard’s challenges in China are just beginning. The country is set to open its $7 trillion bank card market to outsiders. But once in, Visa and MasterCard will face an entrenched incumbent and unpredictable online rivals like e-commerce group, Alibaba.
The duo’s shares have soared since Beijing’s announcement last October, but the hype around gaining a foothold in the People’s Republic looks premature.
Five billion bank cards, according to Reuters, had been issued in China as of the first quarter of this year. Currently, payments made using those credit and debit cards – 12 trillion yuan ($1.9 trillion) in the first three months of 2015 – must go through UnionPay, the state-backed monopoly responsible for processing and clearing local transactions between banks and merchants.
For Visa and MasterCard, processing payments in what will be the world’s largest bank card market by 2020 looks attractive. Assume consumer spending on credit and debit cards increase at a compound rate of 20 per cent annually for the next 10 years. By 2024, card payments in China will hit over $42 trillion.
Yet card transaction fees are tightly regulated and much lower than in the West. Supermarkets, for instance, pay around 0.38 per cent for every card transaction while restaurants and luxury retailers pay up to 1.25 percent, according to Barclays. That fee is split: 70 per cent goes to the bank that issued the card, 20 per cent to the merchant’s payments company, and just 10 per cent to UnionPay. In comparison, MasterCard charges supermarkets up to 1.48 per cent for certain credit cards in the US.
If the average Chinese card transaction fee is around 0.5 per cent, a combined 10 per cent market share for Visa and MasterCard would translate to $1.1 billion in revenue from each company’s clearing business in 2025. While both companies already have strong ties to Chinese banks, convincing merchants to switch to a different clearing network may be an uphill battle: the most popular payments company used by retailers is owned by UnionPay and had a 40 per cent share of the market in 2013, according to iResearch.
Online companies will also add uncertainty. Alibaba’s payments affiliate, Alipay, which is also applying for a clearing licence according to people familiar with the situation, can bypass UnionPay since it does not require customers to use cards and charges retailers lower rates.
A chunk of Fidelity Bank’s profit was cut by a N3.1 billion provision for bad loans between January and last month, an analysis has shown.
The analysis of the bank’s half-year result for last month showed that Profit After Tax (PAT) grew by 39 per cent year-on-year to N4.3 billion, despite recording a flat Profit Before Tax (PBT) which stood at N4.96 billion year-on-year.
Head of Markets at FBN Capital Limited Olubunmi Ashaolu said the bank reported a negative result of (N1.2 billion) on the other comprehensive income line in half year ended June 2014 against N39 million during the same period in 2015.
He explained that Fidelity’s sizeable impairment charges is similar to that of other banks that have reported their second quarter 2015 results. This has confirmed worsening asset quality position for most banks due to the weak macro conditions.
“When annualised, Fidelity Bank’s second quarter 2015 provisions of N3.1 billion imply a cost of risk of 1.2 per cent. This is higher than the 0.7 per cent cost of risk that the bank reported in the first quarter of this year, and is slightly higher than management’s guidance of one per cent for the full year. Further up the Profit and Loss, both revenue lines contributed strongly to the 20 per cent year-on-year expansion in profit before provision,” he said in an emailed report.
He explained that funding income, which advanced by 22 per cent year-on-year, was the stronger of the two, helped by relatively high yields, a five per cent quarter-on-quarter expansion in the loan book and a three per cent quarter-on-quarter decline in deposits.
Ashaolu said Fidelity Bank’s first half PBT of N9.7 billion appears to be tracking ahead of consensus 2015 PBT of N14.8 billion. However, its 2015 return on average equity (ROAE) performance of a company over a financial year, of 8.1 per cent is less compelling than the 16 per cent average for the banks.
Although profit before provisions was up by 20 per cent, a rise in loan loss provisions and a 15 per cent year-on-year rise in operating expenses led to a flattish year-on-year PBT. A loan loss provision is an expense that is reserved for defaulted loans or credits. It is an amount set aside by a bank to cover potential losses on loans.
Sequentially, the bank’s PBT grew by five per cent quarter-on-quarter. In contrast, PAT declined by 14 per cent quarter-on-quarter mainly because of a significant reduction in other comprehensive income.
The bank’s Managing Director/CEO, Nnamdi Okonkwo, said businesses were challenged by a difficult operating environment, weaker government revenues, a tighter monetary policy environment during the first half of the year.
He explained that the bank’s Net Fee Income increased by 25.9 per cent year-on-year to N15.2 billion but declined by 25.6 per cent quarter-on-quarter due to lower forex income on the back of trading restrictions in the market.
Total Deposits declined by 2.9 per cent year-to-date to N796.5 billion and 0.1 per cent quarter-on-quarter as tighter monetary policy and the Cash Reserve Ratio harmonisation increased effective funding costs.
“With Private Sector Depositors accounting for 87 per cent of our deposits, we sterilised an additional N21 billion due to the CRR harmonisation. Though Interest expense increased by 9.1 per cent year-on-year, it declined by 1.9 per cent quarter-on-quarter due to the diversification of our funding sources,” he said in a statement.
The Nigeria Interbank Settlement System (NIBSS) and an international technology firm, OIS Services, have extended the Bank Verification Number (BVN) registration to account holders in the United States of America (USA), United Kingdom (UK), China and India.
This was disclosed at the weekend by the NIBSS Managing Director/CEO, Ade Shonubi during a meeting with the reporters at the weekend, in Lagos.
He said that 18 million bank accounts have been enrolled since the project began over a year ago and that it is the primary responsibility of all stakeholders to ensure that bank customers are identified and their accounts fully secured.
Shonubi explained that the BVN enables each individual to have a single identification within the financial system and gives each customer maximum protection and security of transactions. “In many advanced countries, biometric technologies have been used to analyse human characteristics as an enhanced form of authentication for real-time security processes. Biometrics refers to identifying an individual based on physiological or behavioral attributes – fingerprint, signature among others. The customers unique BVN is accepted as a means of identification across all banks,” he said.
He said that the handler of the offshore BVN Registration, OIS Services, is experienced on the job, given that it had conducted similar exercises in other countries before.
Shonubi said the firm was engaged because in many countries, the law prevents data of their nationals captured abroad and that OIS Services is already conducting the registration exercise at the Nigerian embassies in those countries.
“We looked at the Nigerian embassies and we were confident that they can help implement the project. We also looked at the issue of cost. We made applications to some countries, and we are waiting for approvals. We need people who are already on ground and OIS was duly qualified,” he said.
He said that NIBSS data will remain local, for its own protection and that a 50 Pounds Sterling fee is to be paid by bank customers registering abroad.
He said the collaboration between the Central Bank of Nigeria (CBN) and banks have helped to get more customers enrolled within the West Africa sub region, adding that Ecobank Plc and Diamond Bank Plc are all involved in the West African registration.
Head, BVN Project in NIBSS, Seyi Ademonsu said that to achieve a seamless registration process, OIS Services is now conducting appointment booking for bank customers in the UK, who are required to enroll with after providing their identity cards.
He said that BVN gives a unique identity that can be verified across the banking industry making it easier for customers’ bank accounts to be protected from unauthorised access. It is expected to address issues of identity theft, and reduce exposure to fraud in the banking sector.
Adenmosun said the BVN would also provide a uniform industrially accepted unique identity for customers and authenticate transactions without the use of cards using only biometric features and PIN.
Collaborating Bankers’ Committee position, Adenmosun said “the enrolment process is simple and easy”. He explained those banks customers are expected to walk into any branch of you’re their bank, fill and submit the BVN Enrolment form and also do data capturing (such as fingerprint, facial image among others.
He said an acknowledgment slip with the transaction identity is issued to the customer. Within 24 hours, the system confirms the application, the BVN is generated, and SMS is sent to the customer for pickup.
He said a customer can only enroll once, while his BVN will be linked to all his bank accounts across Nigeria banks. “The BVN solution is to ensure accountability, protect bank customers’ account from unauthorised access, reduce exposure to fraud, check identity theft, enhance credit advancement to Bank customers, and also encourage financial inclusion,” he said.
He said the initiative addresses issues of identity theft and ensures that your bank accounts is protected from unauthorised access, thus reducing your exposure to fraud. It will also promote a safe and sound financial system in the country, especially as it will keep records of suspected fraudulent individuals in the banking system.
“It will make life and banking operations easy for bank customers as BVN is accepted as a means of identification across all banks in Nigeria. This will improve speed of service and reduce queues in banking halls.
At the point of enrolment, individuals shall be required to submit an acceptable means of identification, and update their information at the bank branch physically. Customers of banks will be required to enroll within a fixed period after which they shall no longer be able to operate their bank accounts,” he said.
Skye Bank Plc has reinforced a new focus on the retail segment of the market with the introduction of a new customer reward scheme titled: ‘Reach for the Skye Millionaire Reward’.
The scheme, launched last month, was to encourage a savings culture amongst the mass segment of the market.
The bank’s Head of Retail Banking Group, Nkolika Okoli, said the lender would continue to encourage the adoption of savings culture among the population. She described the scheme as a win-win for both the bank and its customers as it seeks to reward the customers while at the same time helping the bank to grow its deposit base.
She said the bank will give out a total of N60 million to lucky customers in the promo and that the winners will be selected through an electronic draw.
During the monthly draws, three customers will win N1 million each; four others will win N250, 000 each; 10 others will each win N100, 000 making it a total of N5 million win monthly. The lucky winners were selected in an electronic draw conducted in public under the presence of officials of the National Lottery Commission.
To win, a customer will operate Skye Save plus savings account with at least a minimum credit balance of N2, 000 and incremental credit balances in multiples of N2, 000.
Already, winners have emerged. Last week, the first draw, which took place in Bodija market Ibadan, saw 17 customers emerging as the beneficiaries of the N5 million cash prize. Three customers won N1 million each, while four others became N250,000 each. Ten others won consolation prize of N100,000 each. Those who won the N1 million prize were Mr. Damie Morrison of Garki ,Port Harcourt Branch; Innocent Oguabi of Katako branch, Abuja; and Donatus Okoro of Badagry Branch.
The lucky winners of the N250,000 prize include Okunola Olabiyi Najeem of Fagbewesa, Osogbo Branch; Ukana James Funsho of Trans Amadi, Port Harcourt Branch; Ifesie Chukwuagozie of Ikoyi Branch and Odinnaya Linus Sani of Trade Fair, Lagos. Those who won the N100,000 prize money are Solomon Michael Nkume, Gaya Felix Falum, Olugbenga Mustapha Lasisi and Ologunagba Adenike Adejoke.
Morrison, a civil servant with the Rivers State government, said he had never trusted banks promos until now that he won. According to him, he had thought the selection of prize winners was an arrangement between the bank and some ‘chosen’ customers to deceive the public. “When I first told my friends that Skye Bank called me to inform me that I won N1 million, they said it was a lie; that it was ‘419’. However, they have now believed that it is real”, Morrison explained. He said he would continue to patronize the Bank, describing it as ‘the best and most transparent Bank’ around.
Innocent Oguabi, an Abuja based businessman, expressed joy for winning the money. According to him, he would use the money to further expand his business. As a result of the transparent process that brought fortune to him, he said he has started convincing his friends and colleagues to Bank with Skye Bank.
“It was a surprise to me. I didn’t even know that they were doing a draw. But they called me that I won N1 million in the draw that they did. I didn’t believe it initially but after several calls from the Bank, I now believe. I thank Skye Bank for this gesture. It shows that they are a Bank that follows process” he said.
The Area Manager, National Lottery Commission, Oyo State, Mr. Tayo Fasuhanmi, described the electronic draw conducted as open, transparent and credible, saying it conformed to the commission’s requirements of a credible draw. He advised members of the public to take advantage of the bank’s promotion to transform their businesses by opening accounts with Skye Bank so as to be able to take part in future draws.
The interbank lending rates rose on Friday to an average of 12 per cent from 9.25 per cent last week after a series of cash outflows from the banking system drained liquidity.
Traders said interbank rates hit 30 per cent in early trade following cash withdrawal by state-owned energy company Nigeria National Petroleum Corporation and Central Bank of Nigeria (CBN’s) cash reserves requirements (CRR) debit as well as large open market operations bill sales by the regulator. “(The) market rate went as high as 30 percent today on cash shortage, before some banks were credited with CRR surplus, bringing down rates to an average of 12 per cent,” a trader said.
The Central Bank of Nigeria (CBN) had debited some lenders for unspecified amounts to meet their CRR but later credited some bank accounts with surplus from the debit, putting more cash into the system.
Reuters said that Secured Open Buy Back (OBB) traded at 12 per cent, up from nine per cent last week and one percentage point below the 13 percent Central Bank’s benchmark rate. Overnight placement also climbed to 12 per cent from 9.5 percent from last week. Traders said rates should ease next week as a portion of budgetary allocations for the month of June is still being expected to filter into the money market by mid-week.
Meanwhile, more investors could exit Nigeria’s bond market on concerns that new foreign exchange policy would hinder capital repatriation.
The CBN restricted access to forex by importers in its bid to protect its reserves, but dealers say the measure is threatening the future of Nigeria’s bonds on JP Morgan government Bond Index. The rules curb access to forex to fund purchase of foreign shares and bonds, among others.
Yields rose across maturities last week, spurred by the sell-off by some offshore investors cutting their risk in emerging markets and lack of interest from local pensions. “We have seen a number of offshore investors exiting their positions in the debt market in reaction to the new central bank foreign exchange measures and this trend will continue until we have a clear policy direction from the new government,” one dealer said.
Traders said some banks are also exiting their positions in the long tenor debt market and switching to short-dated paper because of the fore control measures by the central bank. JP Morgan has threatened to eject Nigeria from its Government Bond Index (GBI-EM) by the end of the year unless it restores liquidity to currency markets in a way that allows foreign investors tracking the benchmark to conduct transactions with minimal hurdles.
The Central Bank of Nigeria (CBN) led Monetary Policy Committee (MPC) may at the conclusion of today’s meeting, review its Cash Reserve Ratio (CRR) policy on both private and public sector deposits, Chief Economist at Standard Chartered Bank, Razia Khan, has said.
The CRR is a portion of banks’ deposits kept with the CBN to control banking sector liquidity. It has been harmonised at 31 per cent for both private and public sector deposits.
In an emailed report released yesterday, Khan said that amid pressure on oil prices, the CBN could announce its monetary policy decision today and that the Monetary Policy Rate (MPR) is expected to be on hold at 13 per cent.
She said inflation accelerated to 9.2 per cent year-on-year in June and that it is expected to break into low double digits in within the second half of the year.
She said the CBN has limited scope for conventional monetary policy easing through a Monetary Policy Rate cut. “Tight liquidity is an increasing problem for Nigeria’s banking system, and will need to be addressed. Although the CBN harmonised its cash reserve ratios (CRR) at 31 per cent in May, pressure is rising to amend the CRR, or at least ease its impact on the banking system,” she said.
She explained that since the May CBN meeting, the withdrawal from the banking system of public-sector money, representing the revenue accounts of the Federal Government and its agencies has resulted in further liquidity tightening.
She explained that the rise in the CBN’s foreign exchange reserves, reportedly up to $31.9 billion, may have been due to the withdrawal of state-owned oil company deposits from the banking system, with forex-denominated deposits remitted back to the Federation account.
“Forex reserves may be higher as a result, but this is likely to have been a one-off. Given ongoing weak oil prices, and with Nigeria undershooting its budgeted oil output targets, forex reserves will likely remain pressured. While a slowing economy and negative m/m money supply growth may support easing, Nigeria’s forex regime does not allow easy solutions,” she said.
Having already introduced import controls, the CBN may rely more on administrative support of the naira exchange rate.
The last MPC meeting had considered that the current discriminatory CRR on public and private sector deposits has not only constrained the policy space but could inspire moral hazard by private market participants. Consequently, it was recognised that while additional tightening measures may not be appropriate now to avoid overheating the economy, a harmonisation of the CRR was imperative to curb abuses and improve the efficacy of the monetary policy.
Khan, said although the measure has resulted in an eventual tightening, the immediate impact on market liquidity will depend on the ratio of private sector to public sector deposits in the Nigerian banking system.
Also speaking on today’s MPC meeting, Head Markets at FBN Capital, said the CBN will keep MRR unchanged. He said the authorities favour administrative measures to counter perceived forex speculators and rebuild reserves.
“In time we think that the MPC will close the gap between the interbank and parallel rates but not until later in the year. The steady pick-up in year-on year inflation on a headline and, more importantly, a core basis for six successive months would normally prompt a hike in the 13 per cent monetary policy rate. Further, the headline rate of 9.2 per cent year-on-year is now above the official target range and is projected in the latest CBN in-house forecasts to climb to 10.1 per cent year-on-year in October”.
He said the imports listed in the circular of 23 June have to be funded at the parallel market rate so we do not expect inflationary pressures to subside.
“We continue to see a policy rate increase of 100 bps before year-end. Our take on this week’s meeting is not influenced by the fact that President Mohammadu Buhari has yet to appoint a federal executive council (cabinet). The committee and indeed the CBN enjoy considerable autonomy,” he said.
Stanbic IBTC Asset Management Limited has won ‘Best Mutual Fund Provider Nigeria 2015’ and ‘Best Non Pension Fund Manager Nigeria 2015.’ The winners were announced at a gala dinner and awards ceremony in London recently.
Organized by Global Banking & Finance Review, a reputable online banking and finance performance review platform, the awards recognize achievements and innovations by companies in the global financial community, cutting across banking, Islamic finance, hedge funds, asset and wealth management, real estate, and corporate social responsibility, among others.
Commenting on this year’s award, Wanda Rich, Editor, Global Banking and Finance Review, stated: “Stanbic IBTC Asset Management Limited’s dedication to excellence throughout its investment advisory and management services is what made them stand out as the clear winner this year,” adding: “We look forward to seeing further industry-leading solutions from them in the years to come.”
Chief Executive Officer, Stanbic IBTC Asset Management Limited, Mr. Olumide Oyetan, who described the award as an incentive to work harder, stated that “the firm remains totally committed to helping Nigerians build a portfolio of financial instruments from which they canuse to meet their unique investment objective(s)’’. He also reiterated “the numerous benefits in investing in mutual funds, especially the expertise that is brought to bear in maximizing returns to investors without compromising safety”.
The Vice President and Head, Energy and Natural Resources at FBN Capital Limited, Rolake Akinkugbe, has said that local sources of finance have risen over the past decade because of improved capitalization among African banks.
She spoke at the 2015 Oil Council Africa Assembly which held in Paris. She said the lenders will take advantage of new opportunities in the oil and gas sector.
She emphasised that the new oil price environment has had an impact on the terms and structure of funding that have become available to oil and gas companies and projects.
According to her, “The price shift is forcing renewed policy focus on those parts of the oil and gas value-chain that creating the greatest dividends in terms of contribution to economic growth. The implementation of such policies would have to be balanced with the need to keep Direct Foreign Investors (DFI) incentivised.”
Highlighting the challenges with achieving this balance from a sector finance perspective, she said “sector exposure limits and tight regulation, as well as challenging oil price environment, have ushered in a more moderate risk appetite within Africa’s banking community. Often, their foreign counterparts try to offer more competitive rates for deals. In response however, local African banks are collaborating much more in order to build their pool of funds and match value so as not to lose too much market share to foreign banks”.
She stated that emphasis on the value-add benefit of oil and gas projects goes hand in hand with governments’ push to demonstrate the benefits of the energy sector to the broader economy. In any case the capital requirements of such infrastructure-related projects are often more than local banks can handle by themselves.
