The Nation Newspaper

Category: Money

  • Recapitalisation: MfBs’ funds hit N173b

    Recapitalisation: MfBs’ funds hit N173b

    Microfinance Banks (MfBs) paid-up capital and shareholders’ funds have risen to N173.45 billion, the Central Bank of Nigeria (CBN) has said.

    Its Deputy Governor, Financial Sector Stability, Dr. Joseph Nnanna, made this known in the Financial Stability Report released at the weekend.

    He said the increase in capital was due to the recapitalisation of MfBs which upgraded from Unit to State MfBs and State to National MfBs.

    He said the funds increased by 13.48 per cent and 7.37 per cent to N82.44 billion and N91.01 billion  at the end of December last year, from N72.65 billion and N84.76 billion, at the of end of June, last year.

    He said the total deposit liabilities and net loans/advances also increased by 0.99 and 25.80 per cent to N145.83 billion and N162.91 billion, compared with N144.4 billion and N129.5 billion, as at last June.

    He explained that the improvement in the operations of MfBs was attributed to the impact of the CBN’s initiated Microfinance Certification Programme (MCP) for the boards and management of MfBs, and the growing acceptance of the microfinance banking model.

    Reserves, he said, however, decreased by N3.5 billion to N8.6 billion at the end of last December, from N12.1 billion at the end of last June, no thanks to increased loans.

    The bank chief said the apex bank collaborated with development partners and other stakeholders to establish a unified application (Core Banking System) for the MfB sub-sector.

    The proposed unified platform, and the Rural Financial Institutions (RUFIN) project for online rendition of electronic returns by MfBs, he added, is expected to facilitate accurate and prompt rendition of statutory returns.

    He said in the review period, 289 candidates completed the Microfinance Certification Programme (MCP), bringing the number of certified operators to 2,882 at last December.

    The certified operators are spread over 632 microfinance banks, representing 71.5 per cent of the sub-sector.

    The number of primary mortgage banks (PMBs) increased to 42  by December last year, from 40 at by last June, as two dormant PMBs were reactivated following their recapitalisation.

    “National PMBs remained at 10 at end of December 2014, while State PMBs increased to 32 from 30 at the end of June 2014,” he said.

    Nnnanna said the CBN extended the deadline, from last June 30 to last December 31, for some PMBs that are recapitalising. However, the total assets of PMBs decreased by 5.97 per cent to N389 billion at the end of last December, compared with N413.7 billion at the end of  last June.

    “However, their paid-up capital, deposit liabilities and loans/advances increased by 51.78, 35.33, and 22.18 per cent to N121.69 billion, N703.74 billion and N133.02 billion, at the end of December 2014. Aggregate reserves declined by 74.53 per cent, from N94.61 billion to N24.10 billion, while shareholders’ funds increased by 35.95 per cent, from N107.24 billion to N145.79 billion at end-June 2014,” he said.

    Continuing, he said: “There were 3,538 Other Financial Institutions (OFIs) in Nigeria at the end of December last year, compared with the 4,220 licensed institutions at the end of June last year, representing a decrease of 682 institutions (16 per cent).

    “The change was attributed to the net effect of the exit of 733 Bureaux De Change (BDCs) owing to their inability to meet the recapitalisation requirements, the licensing of 54 new OFIs (51 MfBs and three Finance Companies (FCs); and the revocation of two MfBs licences during the review period.

    “The total number comprised six Development Finance Institutions (DFIs), 42 Primary Mortgage Banks (PMBs), 903 Microfinance Banks (MfBs), 64 Finance Companies (FCs) and 2,523 Bureaux de Change (BDCs).”

    He said the total assets of the sub-sector increased by 23.2 per cent to N1.69 trillion at the end of December, last year, from N1.37 trillion at the end of June, last year. The total paid-up capital, however, decreased by 0.36 per cent to N444.8 billion at the end of December, last year, from N446.4 billion at end-June, last year, while the total net loans/advances increased by 58.03 per cent to N1,048.5 billion at end December 2014, from N663.5 billion at end-June 2014.

    Total deposits decreased by 22.81 per cent to N357 billion as at last December, from N462.5 billion last June.

  • AFREXIM mulls $1b loan

    AFREXIM mulls $1b loan

    The African Export-Import Bank (AFREXIM) is to raise over $1billion in bonds and loans in Renminbi, the Chinese currency, as trade with China rises.

    Bloomberg quoted Jean-Louis Ekra, president of the Cairo-based lender, as saying a Eurobond of between $400 million and $600 million might be sold this month.

    He spoke in Abidjan, Ivory Coast, where the bank opened its third regional office after Harare in Zimbabwe and Abuja.

    The firm will seek the loans from 35 banks later in the year, he said.

    “We want to help the regional economies grow by supporting the private sector. We plan to raise funds in the Chinese currency because of increasing trade between Africa and China,” he said.

    AFREXIM is considering borrowing in Chinese renminbi to take advantage of rising trade in Africa with China, which is the top trading partner of Africa’s five-largest economies, including South Africa, Nigeria and Angola. The lender, which started in 1993, is raising debt as borrowing costs on existing bonds drop to record lows and companies across sub-Saharan Africa issue Eurobonds to benefit from a global hunt for yield.

    Rates on AFREXIM’s $700 million of notes due July 2019 dropped 115 basis points, or 1.15 percentage points, this year to an all-time low of four percent last week.

    Companies in the world’s least-developed continent issued $2.8 billion of dollar-denominated debt in the year, the best start to a year since 2011, as investors take their search for returns further afield amid dwindling gains elsewhere. Interest in African debt is being driven partly by falling yields in other emerging markets, in turn spurred by record-low developed-nation interest rates.

  • Lloyds shares to be offloaded by UK government

    The government has launched another massive sale of publicly-owned shares in Lloyds, in a sell-off comparable to the massive privatisation schemes of Margaret Thatcher.

    Proceeds from previous sales have now reached half the original bail-out package of £20 billion. New plans should raise money for the government while giving some people in the UK their first taste of the stock market. The total raised should exceed the billions raised by Thatcher from the sale of British Telecom and British Gas.

    Chancellor George Osborne has told UK Financial Investments to continue the drip-drip sell-off of taxpayer shares through broker Morgan Stanley which began last December. Since then the broker has sold 4.2 billion shares in the market at an average price of just over 80p raising a total of £3.4 billion.

    That represented just over five per cent of Lloyds and thanks to the reintroduction of dividend payments, the disappearance of Labour’s threat to banks at the General Election and rising profits from Lloyds the shares were all sold above the average 73.6per cent paid by the taxpayer in 2009’s bail-out.

    Morgan Stanley has now been mandated to sell a further five per cent or so of the Government’s stake so long as it can do so above that bail-out price. After sales on Friday the stake has come down to below 19p. It was just under 25per cent in December.

    Osborne said: “The trading plan has been a huge success, with almost £3.5 billion raised for the taxpayer so far. This means we have now recovered over £10.5 billion in total, more than half of the taxpayers’ money put into Lloyds, and we now own under 19per cent of the bank.

    “But we’re determined to get on with the job of returning Lloyds to private ownership. That’s why I’m extending the plan for six months so that we can make even more progress in returning money to the taxpayer and paying down the national debt.”

    He added that this would be part of his Budget announcement that the Treasury planned to raise £9 billion through further Lloyds shares sales in the current fiscal year. That includes just over £1 billion already raised by the first tranche of Morgan Stanley sales.

    The Chancellor made no mention of his pre-election pledge to offer Lloyds shares to retail investors at a five per cent discount to the stock market price and with the promise of a bonus one-for-ten free share to those who held on for at least a year. That sell-off could come late this year or, more likely, early next year.

  • Access Bank’s ‘W Initiative partners Audrey Pack

    The Access Bank ‘W Initiative’  is partnering Business Direct and Services on the Audrey Pack project in Nigeria to support women.

    The project is focused on the reduction of maternal and child mortality.

    The group said Nigeria loses about 2,300 under-five year-olds and 145 women of child-bearing age daily. This makes the country the second largest contributor to the under–five and maternal mortality rate in the world.

    The Audrey Pack is a free co-branded bag distributed to expectant and new moms in government and private hospitals. It contains free products’ samples from multi-nationals, antenatal and healthcare information and information on managing family finances.

    With this collaboration, Access Bank W Initiative will be liaising with both private and government-owned hospitals to deliver free the packs to expectant and new moms. Specifically, there will be educative sessions where women will be trained to help them make informed choices before, during and after pregnancy.

    In addition, the project is also poised to provide access to better health care services with the Maternal Health Service Support (MHSS), which is specially designed to support women and families with easy and convenient options to pay for medical expenses.

    According to Ope Wemi-Jones, the Group Head of Inclusive Banking at Access Bank, the W Initiative covers women and transcends a banking relationship.

    “It is our approach to banking women based on our understanding of their financial and lifestyle needs. In the quest to support access to quality health care, the Bank introduced the first of its kind Maternal Health Service Support (MHSS) which provides affordable financing options for medical procedures peculiar to women. This includes IVF procedures, natal care, myomectomies, hysterectomies, and specialised surgeries, among others,” she said.

    She also said the recipients of the Audrey Pack could benefit from the unique offerings of the W Initiative which includes access to women around the world through the W community, the No 1 online interactive platform designed to Inspire, Connect and Empower women.

    The Audrey pack project is a further attestation of Access Bank’s commitment to the empowerment of the Nigerian women and families.

     

  • BVN cuts forex to $50,000

    The Bank Verification Number (BVN) initiative, when fully implemented, will help to curb arbitrage in the foreign exchange (FOREX) market and reduce the spending limit on the use of the naira denominated debit cards for transactions abroad, from $150,000 to $50,000 per person yearly. The daily cash withdrawal limit on the card was also fixed at $300 per person.

    Sterling Bank’s Executive Director Abubakar Suleiman, who disclosed this at an interactive session with reporters in Lagos, explained that with the BVN, each bank customer will have a unique identification, which will make it easy to prevent people from flouting the Central Bank of Nigeria (CBN)’s policy on the use of naira-denominated debit cards for transactions abroad.

    According to the Managing Director/Chief Executive Officer, Union Bank of Nigeria Plc, Mr. Emeka Emuwa, the decision was taken because of some cases of card abuse abroad which impacted exchange rate stability.

    The Union Bank boss had explained: “We did find that in a number of cases people were using the cards in a manner that they were not expected to use them and there have been cases of arbitrage. So, in order, to sustain stability, what was agreed by the committee was that the limit for the use of the naira debit cards would be reduced.”

    However, industry watchers argued that bank customers could attempt to circumvent this policy by opening several bank accounts and using the naira debit cards they will be given to make withdrawals above the limit.

    But, according to Suleiman, this will not be feasible when the BVN initiative is fully implemented, as each bank customer will have a BVN that will give him/her a unique identity that will be known to every player in the financial sector. Thus, when such a customer has reached the limit of his naira debit card spending abroad, he will not be able to use another card as the system will immediately recognise him.

    The BVN, which is an initiative of the CBN and the Bankers’ Committee, was launched on February 14, last year.  It is a unique identifier for each bank customer across the financial industry, making it possible to build and track customer financial history and activity. This will allow banks access to more reliable information that could inform decisions on customer loan and credit applications and other complex transactions.

    The initiative is expected to boost financial inclusion as those who have typically stayed away from mainstream banking due to low literacy levels will be able to open and access their bank accounts using their biometric information rather than traditional identification methods.

    To encourage enrolment for the BVN, the CBN had directed banks to  honour only transactions over N100 million from customers with BVN from March 2015. Such transactions,  the Central Bank said, include but not limited to, money transfers, loans, and contingencies.

    The CBN also urged bank customers to register for their BVN by this month, warning that any customer without a BVN would be deemed to have inadequate Know-Your-Customers by that date.

    The Managing Director, Nigeria Interbank Settlement System Plc (NIBSS), Mr. Ade Shonubi, said customers who have done the mandatory biometric registration at any bank branch would soon start collecting their BVN cards as the cards were already with the banks awaiting collection by customers.

    Shonubi said bank customers would not be charged for the cards.

    The NIBSS boss said: “We are giving the BVN cards out for free. The cost is borne by the Bankers’ Committee, which considers the whole biometric project very important. They have been bearing the cost; the cost of the cards, cost of almost everything else that has to do with the BVN.

    “I have got my BVN card. I would encourage bank customers to talk to their banks as well. They have been printing them and sending them to the banks to distribute to the branches where you have enrolled, you would be sent an SMS. For those that have given email address, it would be sent to their emails.”

    Indeed, investigations reveal that some banks have started giving the cards to their customers.

  • How Federal Govt can avoid debt crisis, by ICA

    The Federal Government needs to undertake immediate assessment and restructuring of its debts and future debt issuance in order to stem a looming debt crisis and free funds for development of the country.

    Registrar and Chief Executive Officer, Nigerian Institute of Credit Administration (ICA), Prof. Chris Onalo, said government would require critical restructuring of its debt programme to be able to move in from the right direction that would stem the tide of further debt growth.

    According to him, in order to make fund available to the new government, there may be need to really tie the noose here and there in order to create fund necessary for the liquidation of these debts.

    Onalo, regarded as the doyen of credit management in Nigeria, noted that the country is indebted to the tune of N8.5 trillion in domestic debts rising from issuance of bonds by the federal government in addition to state governments’ debt burden of N1.69 trillion.

    “Obviously, the new administration will be looking for fund to run the economy and if they have to start with borrowing, I can tell you the country may snowball into another regime of excess debt hanging on our neck. The government must be ready to put in place the mechanism that can enable it to retrieve ill-gotten wealth or some elephant projects that are tied to financial obligation but has no immediate value as far as economic development is concerned,” Onalo said.

    Reacting to recent complaints by some governors that they were contending with empty treasuries, the credit economist said they also share in the blame.

    “We know that there has been sharp reduction in oil prices resulted to the slimmer funds available for sharing. But then, hitherto very few state governments can be said to have mobilised enough internal resources to generate revenue. Other than that, majority of the states have been depending on what they get from the federal government to run the affairs of the state. So you should expect that when there is a major crash in bunch of what constitute the national wealth obviously their fall would be without measure, it will be very devastating,” Onalo said.

    According to him, most states could not boast of capital projects that may enable the citizen to embark on their own economic activities whilst in turn deliver revenue to the government by way of levy, taxes that they pay.

    “So much went into corrupt practices, the corrupt window and then much also went into the bloated civil service structure that we run, too many workforce doing nothing, you can’t have a good economy in that kind of state. So the recurrent expenditure has never been brought down, but then the income has gone down. So, obviously the state would be in deficit and that cannot be blamed on the centre because the centre equally is affected by the oil price crash,” Onalo pointed out.

    He faulted the penchant by state governments to shop for money from internal or external sources against their incomes, describing such practice as unconstitutional.

    According to him, it is not constitutional for the federal government by all means to allow states to borrow against internal revenue which is considered in this case inadequate to justify such borrowing.

    He added that the state governments would not likely get out of the wood or even be able to service the debts until they can look inwardly to stimulate economic growth.

    For quick wins, Onalo said the federal government should be able to come up with policies that would develop and distribute the economic development on an even basis so that less people will be coming to the urban sector.

    “I think that the incoming government need to do something differently and one of it is why don’t you look at the broader economic circle of the country, where lies the strength of a typical economy of a sovereign state, is it in the hands of multinationals? Are you leaving the strength of the economy in the hands of multinationals or is the strength of an economic of a sovereign state in the hands of entrepreneurs?

    “So, if you define that, then the new administration should be able to say look we see opportunity to do something differently. And what oils economic growth is policy friendliness, remove some of the taxes that are draconian which has never help business growth over the years, the various organised private sector have been crying to the government that certain tariffs should be removed, certain levy should be removed; introduce some concessions that would encourage entrepreneurs to bring out the whole best in them and then give a bit of tax holiday, and then cut down on government spending; reduce the level of recruitment of people into civil service structure.

  • Shareholders thumb down Unilever’s tender offer

    Shareholders thumb down Unilever’s tender offer

    Nigerian minority retail shareholders appeared set against a proposal by Unilever Overseas Holdings, the United Kingdom-based foreign core investor in Unilever Nigeria Plc, to acquire shares owned by minority shareholders to increase its majority equity stake in the Nigerian subsidiary.

    In a transaction valued at about N43 billion or £144.5 million, Unilever Overseas Holdings plans to increase its equity stake in the Nigerian company from 50.04 per cent up to a maximum of 75 per cent. Unilever Overseas Holdings proposes to acquire about 944.47 million ordinary shares in Unilever Nigeria at an intended offer price of N45.50 per share in cash.

    Unilever Nigeria’s share price opened yesterday at the Nigerian Stock Exchange (NSE) at N45.10 per share. The conglomerate had traded at N34 per share in the wake of the announcement, at a period the general market was extremely bearish.

    Shareholders’ leaders and other stakeholders who spoke to The Nation said they would mobilize against the tender offer describing it as a disservice and another way to sideline Nigerians from the benefits of the company they had helped to nurture with their funds and patronage.

    Shareholders said besides the unattractive offer price, giving the foreign investor undue control could short-change the minority shareholders citing the voluntary delisting of Nigerian Bottling Company (NBC) by the foreign core investors, who used their majority shareholdings to push through delisting of the iconic company.

    President, Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu, said the tender offer is another way of taking control of Nigerians’ shares and it would detract from Nigerians’ ability to benefit from the wealth creation from their national and personal resources.

    According to him, shareholders and other stakeholders need to look beyond the metrics of pricing, procedures and technicality of such tender offer to real national issue of economic wealth creation, participation and empowerment.

    “I am totally against it, and the regulators should sit down and review the proposal. If they can stop GlaxoSmithKline from such transaction, I don’t see reason why they shouldn’t take a second look at this,” Nwosu said.

    He berated Nigerian capital market professional rooting for such acquisitions, noting that they were putting their personal interests above the general interest and benefit of Nigerian shareholders and capital market.

    Alhaji Gbadebo Olatokunboh, a founding member of the Nigeria Shareholders Solidarity Association (NSSA) and shareholders’ activist, said there were no incentives in the tender offer and it could lead to future regrets for Nigerian shareholders.

    According to him, Unilever neither hold private or public consultation with the minority Nigerian shareholders before launching the acquisition plan to explain the rationales for such move or seek the inputs of the Nigerian shareholders on the future plan of the conglomerate.

    “GSK tried it and failed, they will also fail,” Olatokunboh said.

    Other shareholders berated Unilever for its unfriendly investors’ relation management noting that Nigerian shareholders might be in for worse if the core investor gets a deciding majority equity stake. Extant Nigerian laws require 75 per cent vote in favour of major corporate changes including mergers and acquisitions, share restructuring and delisting among others.

    Some shareholders, who craved anonymity, said the conglomerate appeared to hold Nigerian shareholders in disdain citing the use of teargas to disperse rowdy shareholders at the conglomerate’s annual general meeting.

    The nation had reported exclusively that Unilever had filed the tender document with the Securities and Exchange Commission (SEC) and secured the necessary approval to launch the tender offer. A source in the know at SEC confirmed that the apex capital market regulator has granted “no objection” letter to the tender document, a market refrain for regulatory approval.

    Sources said Unilever will soon send out the tender offer document to shareholders. As a tender offer, the offer will be made to shareholders directly and any shareholder who elects to sell some or all of their shares in Unilever Nigeria will have the opportunity to do so.

    Citigroup Global Markets Limited and Chapel Hill Advisory Partners Limited have been the financial advisers to Unilever on the proposed transaction.

    While the attainment of 75 per cent equity stake will give Unilever Overseas the needed majority shareholding to effect major changes including delisting, mergers and acquisitions and share capital and corporate restructuring among others, the foreign core investor has promised to maintain Unilever Nigeria’s listing on the Nigerian Stock Exchange (NSE).

    Unilever Nigeria has been struggling with rising financing expenses. While it witnessed considerable growth in its top-line and effectively curtailed its operating expenses in the first quarter, burgeoning financial expenses undermined the performance of the conglomerate during the period.

    Interim report and accounts of Unilever Nigeria for the three-month period ended March 31, 2015 showed that while sales grew by eight per cent and the group reduced operating expenses by nine per cent, a double in financial charges within the three months overwhelmed the performance of the conglomerate.

    Unilever Nigeria’s pre and post tax profits dropped by 21 per cent each, a situation that simultaneously cut basic earnings per share by four kobo from 20 kobo in first quarter 2014 to 16 kobo in first quarter 2015.

    Key extracts of the unaudited report showed that sales rose to N14.91 billion in first quarter 2015 as against N13.83 billion recorded in comparable period of 2014. Financial charges jumped by 114 per cent from N381.6 million in first quarter 2014 to N817.91 million in first quarter 2015. With this, profit before tax dropped from N1.09 billion to N864.74 million while profit after tax slipped by same margin from N750.63 million to N590.45 million.

    Key extracts of the audited report and accounts of Unilever Nigeria for the year ended December 31, 2014 showed declines in the top-line and the bottom-line. While sales were tepid, the bottom-line performance was however worsened by significant increase in finance charges.

    Turnover dropped by seven per cent from N60 billion in 2103 to N55.75 billion in 2014. Interest expense, otherwise known as finance charges, however rose by 65 per cent from N1.16 billion to N1.91 billion. This further constrained the profitability of the conglomerate as pre-tax profit dropped by 58 per cent from N6.79 billion to N2.87 billion. After a 78 per cent reduction in tax provisions, net profit after tax dropped by 49 per cent to N2.41 billion in 2014 as against N4.72 billion recorded in 2013.

    Earnings per share consequently dropped from N1.25 in 2013 to 64 kobo in 2014. The contraction also affected the company’s balance sheet as shareholders’ funds dropped by 20 per cent from N9.35 billion to N7.48 billion. In latest dividend payout, shareholders received a dividend per share of 10 kobo for the 2014 business year as against N1.25 received for the 2013 business year.

    The board of the conglomerate said it took the difficult decision to drastically reduce its dividend payout as a delicate balancing act to provide the company with enough retained earnings to finance its growth targets while meeting immediate expectation of shareholders.

    Chairman, Unilever Nigeria Plc, HRM Nnaemeka Achebe, said the decision on the dividend payout was difficult because the directors of the company were mindful of the dividend expectation of the shareholders but were also focused on the financing need for the company’s future growth.

  • Taking cash-less banking to greater heights

    Taking cash-less banking to greater heights

    Telecoms technology and banking services are creating a new growth in the financial services sector via mobile money. This payment module has grown beyond its initial concept and is expected to bridge the gap between the banked and unbanked, writes COLLINS NWEZE.

    The dream of getting finan-cial services to the nooks and crannies of the country is being realised by banks, the Central Bank of Nigeria (CBN), telecoms operators and the Nigeria Communications Commission (NCC) via money.

    That vision, many analysts said, would be driven by mobile money. This refers to payment services operated under financial regulation and performed from or via a mobile device.

    Mobile money system refers to the various components required to deliver mobile money to the banking and non-banking community. The providers of these services and solutions are required to operate within the defined regulatory framework specified in this document and any other regulation/guideline issued by the CBN.

    The CBN is responsible for defining and monitoring the mobile money systems in Nigeria.

    With mobile money, instead of paying with cash, cheque, or credit cards, a  consumer can use a mobile phone to pay for many goods and services.

    In 2008, the global market for various mobile payments was projected to reach more than $600 billion by 2013. In developing countries, including Nigeria, mobile payment solutions are deployed as a means of extending financial services to the unbanked or under-banked. These groups constitute about 50 per cent of the world’s population, according to Financial Access’ Report.

    Analysts insist that financial exclusion persists because of the inaccessibility of the unbanked mostly people in the lower strata of the economy, by the financial services providers.

    The unbanked are often far removed from the centre of commerce, which tends to lower their participation in economic transactions.

    Thus, a combination of low demand for financial services and prohibitive costs without commensurate returns dissuades financial services providers such as banks, insurance, and pension administrators from establishing its presence in these locations.

    However, mobile technology and innovations in the financial services industry, coupled with the phenomenal growth in telecoms’ subscriber numbers, have altered this situation.

    However, financial services providers continue to leverage the reach of telecoms networks to provide mobile money services to otherwise inaccessible locations.

    The spate of agreements on mobile money services among financial institutions and telecoms networks, MTN and Diamond Bank, UBA and Airtel, Stanbic IBTC Bank, FirstBank, Ecobank and Globacom, will, doubtless, ramp up the synergy that should lead to further growth in mobile money.

     

    NIBSS Network

    The CBN insists that Mobile Money Operators (MMO) are required to, henceforth, connect to the Nigeria Interbank Settlement System (NIBSS) otherwise called the National Central Switch (NCS) to ensure ease of communication for schemes in the system.

    In a guideline for the sector, the apex bank said a scheme operator can either be a bank or a licensed corporate organisation.

    It said the NIBSS is responsible for connecting the various players in the financial system using various players, such as banks, MMOs, non-banking financial institutions, payment terminal providers, card acquirers, government institutions and their customers to send, receive and process funds, documents and other instruments electronically through its platform.

    The apex bank said MMOs are the lead initiators for the mobile scheme and shall be responsible for ensuring that the various solutions and services within an approved mobile payment scheme meets the entire regulatory requirements as defined in this framework and as may be specified from time to time.

    The regulator said the MMOs shall be ccountable to the CBN and the end users. The CBN recognises that, with the evolution of the mobile money system, spin-off services would be identified by MMOs, which can be outsourced to entities with specialised skills and resources to support such services in a more efficient and effective manner. The service providers may employ the infrastructures of the MMOs to provide services to the end users.

    “The MMOs shall provide a detailed payments management process that covers the entire solution delivery, from user registration and management, Agent recruitment and management, Consumer protection/dispute resolution procedures, Risk management process to transaction settlement. These processes shall cover the scope of the value chain across all the participants in the mobile money ecosystem,” it said.

     

    The M-Pesa example

    The poster boy of the successful integration of the rural/informal populace into banking system via mobile money services is usually Kenya. M-PESA, Kenya’s mobile money system, has been hugely popular and successful in that country. It has over 40,000 agents and 17 million users (“equivalent to more than two-thirds of the country’s adult population, conducting more than two million transactions daily.

    In 2010, Kenya had just 840 bank branches and 1,510 ATMs to serve a population of 47 million. M-PESA, with its 40,000 agents, helped to plug the supply hole and provide access to financial services to ordinary Kenyans.

    Micro finance institutions piggybacked on M-PESA to penetrate remote areas quickly without increase in costs.

    In other countries, some financial institutions seemed to have found the right mix to ensure the successful deployment of mobile money. Standard Bank (parent bank of Nigeria’s Stanbic IBTC Bank), for instance, has been successful with mobile money in Uganda, Tanzania, and South Africa.

     

    Bank-led model

    The bank-led mobile money model adopted by Nigeria may be slightly different from Kenya’s telecoms-driven model but the underlying peculiarities are broadly similar.

    Access, costs, lower economic activities, and partnerships are common threads. The lessons of M-PESA are not lost though as mobile operators like MTN Nigeria is beginning to play more significant roles in mobile money.

     

    CBN Vs telco-led model

    The CBN said it avoided the implementation of the telco-led model in the mobile money operation to have control of monetary policy operations. The policy, it said will also enable it minimise risks and ensure that the offering of financial services are driven by organisations it licensed.

    In new guidelines, the CBN said the telco-led model, where the lead initiator is Mobile Network Operator (MNO), shall not be operational in the country. The apex bank said the overriding vision of achieving a nationally utilised and internationally recognised payments system necessitates strategies to bring informal payment transactions into the formal system.

    This framework has identified two models for the implementation of mobile money services namely; Bank Led – Financial Institution(s) and/or its Consortium as Lead Initiator and Non-Bank Led- A corporate organisation licensed by the CBN as Lead Initiator.

    “The CBN recognises the importance of Mobile Network Operator (MNOs) in the operations of mobile money and appreciates the criticality of the infrastructure they provide,” it said.

    The CBN said a robust payments system is vital for effective monetary policy implementation and the promotion of economic efficiency. “The introduction of mobile telephony in Nigeria, its rapid growth and adoption and the identification of person to person payments as a practical strategy for financial inclusion, has made it imperative to adopt the mobile channel as a means of driving financial inclusion of the unbanked,” it said.

    Chief Excutive Officer (CEO), MTN Nigeria, Michael Ikpoki, said the network would focus on meeting the significant market demand for financial services and mobile content with an expected positive impact on data revenue.

    “The success of Diamond Y’ello Account and other basic mobile money services is expected to lead to the adoption of more sophisticated mobile payment solutions such as bulk mobile payment designed for corporate organisations. This service makes it easier for organisations to send money in bulk to their suppliers, employees or other business partners without the beneficiaries necessarily having to own a bank account,” he said.

    Mobile money providers are also expected not be shy to adapt and replicate what works in other places but continue to innovate and develop bespoke products and services to excite consumers and boost conversion rate.

     

    Benefits to consumers

    Some of the benefits to the consumer include security, convenience, accessibility, speed and ease of transaction, competitive charges, access to quality advisory services, and integrity of transactions; the customer literally carries his bank in his pocket or bag wherever he goes.

    Other not-so-obvious benefits, which are nonetheless important, are better cash flow management, enhanced financial planning, and inculcation of sustainable savings habit, which boost financial security and comfort in retirement.

    “Mobile payments, which I perform on my phone, help to reduce my travelling costs,” a farmer in the rural area who uses mobile payment services said.

    Mobile money also has the potential to galvanise economic activities, leading to higher socio-economic development, lower cost of transactions and reduction of cash handling costs, among other benefits.

     

    Role of regulators

    CBN Director, Payment Systems Unit, ‘Dipo Fatokun, said apex bank believes that mobile money and agent framework is the frontier of cashless boom.

    “Mobile money is the next thing expected to transform CBN’s cash-less policy. The apex bank believes that such initiative will aid both telecommunications and banking industries to further serve Nigerians better,” he said.

    Nigeria’s telecoms subscriber base, put at 131 million as of September, last year by the Nigerian Communications Commission (NCC) should play a major role in bringing the unbanked into the formal banking system.

    With over 50 per cent of Nigeria’s unbanked adult population, mobile banking could be the catalyst that will help quicken the adoption of banking services by this critical segment of the population.

    Offshore portfolio managers appear to be similarly persuaded and they are already positioning to take advantage of the expected growth in mobile money.

    For instance, Carlyle Group, a United States-based global alternative asset manager with $203 billion of assets under management across 129 funds and 141 fund of funds vehicles, recently acquired a $147 million (about N27 billion) minority stake in Diamond Bank, partly on the strength that the bank’s new mobile banking service “will help rapidly boost the lender’s customers and profits.”

    Also strengthening mobile money is the Nigerian Deposit Insurance Commission (NDIC’s) extension of deposit insurance cover of up to N500,000 to mobile money account holders.

     

  • Access Bank’s ‘W Initiative partners Audrey Pack

    The Access Bank ‘W Initiative’ is partnering Business Direct and Services on the Audrey Pack project in Nigeria to support women.

    The project is focused on the reduction of maternal and child mortality.

    The group said Nigeria loses about 2,300 under-five year-olds and 145 women of child-bearing age daily. This makes the country the second largest contributor to the under–five and maternal mortality rate in the world.

    The Audrey Pack is a free co-branded bag distributed to expectant and new moms in government and private hospitals. It contains free products’ samples from multi-nationals, antenatal and healthcare information and information on managing family finances.

    With this collaboration, Access Bank W Initiative will be liaising with both private and government-owned hospitals to deliver free the packs to expectant and new moms. Specifically, there will be educative sessions where women will be trained to help them make informed choices before, during and after pregnancy.

    In addition, the project is also poised to provide access to better health care services with the Maternal Health Service Support (MHSS), which is specially designed to support women and families with easy and convenient options to pay for medical expenses.

    According to Ope Wemi-Jones, the Group Head of Inclusive Banking at Access Bank, the W Initiative covers women and transcends a banking relationship.

    “It is our approach to banking women based on our understanding of their financial and lifestyle needs. In the quest to support access to quality health care, the Bank introduced the first of its kind Maternal Health Service Support (MHSS) which provides affordable financing options for medical procedures peculiar to women. This includes IVF procedures, natal care, myomectomies, hysterectomies, and specialised surgeries, among others,” she said.

    She also said the recipients of the Audrey Pack could benefit from the unique offerings of the W Initiative which includes access to women around the world through the W community, the No 1 online interactive platform designed to Inspire, Connect and Empower women.

    The Audrey pack project is a further attestation of Access Bank’s commitment to the empowerment of the Nigerian women and families.

     

  • Factory activities growth slows in U.S.

    Containers await departure as crews load and unload consumer products at the Port of New Orleans along the Mississippi River in New Orleans, Louisiana June 23, 2010.

    Growth in the U.S. manufacturing sector slowed very slightly in May, as a deceleration in new orders offset an improvement in employment, according to an industry report released on Monday.

    Financial data firm Markit said its final U.S. Manufacturing Purchasing Managers’ Index was 54.0 in May, up slightly from the preliminary reading of 53.8 and essentially flat with the April reading of 54.1.

    A reading above 50 indicates expansion in the sector.

    The index’s new order component fell to 54.3 from April’s 55.3 to its lowest since January 2014, though it was up a hair from the preliminary reading of 54.2. The employment index rose to its highest level since November and improved on the preliminary reading.

    “With manufacturers reporting the smallest rise in new orders since the start of last year, the survey provides further evidence that the strong dollar is hurting the economy,” said Chris Williamson, chief economist at Markit. “While the economy still looks set to rebound from the decline seen in the first quarter, the extent of the second quarter recovery therefore remains highly uncertain and could well disappoint.