The Nation Newspaper

Category: Money

  • Tax implication of mergers and acquisition

    Merger is defined as ‘‘any amalgamation of the undertakings or any part of the undertakings or interest of two or more companies or the undertakings or part of the undertakings of one or more companies and one or more bodies corporate’’. Simply put, a merger is a combination or integration of existing companies to form a single company.

    Acquisition on the other hand, is known as take-over. It is the take-over of by one company of sufficient share in another company to give the acquiring company control over that other company.

    A merger may result in any of the following situations:

    • Formation of a new company.

    • Continuation of the consolidated business by one of the merging parties, in its name or under a new name.

    • Cessation of business by the other merging parties.

    In acquisition, there is only an acquiring company and the company being acquired.

     

    Statutory Requirement under Companies Income Tax Act (CITA)

    The CITA in Section 29(12) Cap (21, LFN, 2004) provides that ‘‘no merger, take-over, transfer or restructuring of the trade or business carried on by a company shall take place without having obtained the Board’s direction under sub-section 9 of this section and clearance with respect to any tax that may be due and payable under the Capital Gains Tax Act’’. The implication of this provision is that the approval of the Federal Inland Revenue Service (FIRS) is a necessary condition for the completion of the process in a merger or acquisition bid. Therefore, no merger or acquisition bids would be fully consummated without the companies involved having obtained the consent of the FIRS.

     

    Procedure for obtaining the Board’s Approval

    From the start, the merging companies are required to submit to the Board, copies of the scheme of merger and scheme of arrangement on the consolidation request for its study and proper evaluation in order to ensure that taxes which may result from the companies’ transactions are correctly assessed and collected. Herein lies the relevance of the Board’s powers under Section 29(9)(i) to require either of the companies directly affected by any direction which is under the consideration of the Board to guarantee or give security to its satisfaction for payment in full of all tax due or to become due by the company which is selling or transferring such asset or business.

     

    Emergence of a new company

    1. Rendition of Annual Returns

    Where a new company emerges from a merger process, then the new company is expected to file its returns in line with the provisions of Section 55(3)(b) of CITA. The section provides that “every new company shall file with the Board, its audited accounts and returns within eighteen (18) months from the date of its incorporation or not late than six (6) months after the end of its first accounting period as defined in section 29(3) of this Act, whichever is earlier”.

    It should however be understood that a mere change of name does not make an existing business entity a new company. Such companies will continue to be treated as old businesses on an on-going concern basis.

    2. Basis of Assessment

    Commencement rule as provided under Section 29(3) will apply to the new company, except where any of the under-listed circumstances arise:

    a) Where the merging parties are connected parties, the Board may direct that commencement rule be set aside, in which case, the new company will file its returns as an on-going concern and its assessment will be determined on preceding year basis.

    b) Where the new business is a reconstituted company, taking over the trade or business formerly run by its foreign parent company.

    3. Claim of Allowances

    CITA did not categorically address the value at which assets may be transferred for the purpose of capital allowances claim. However, International Accounting Standard 22 prescribes that in merger accounting, the assets, liabilities and reserves must be recorded at their carrying balances, implying that merger process does not permit the recording of assets at their fair value in the event of consolidation. The new company will therefore not be entitled to any investment allowance claim or initial allowance on the transferred assets; it will only be entitled to claim annual allowance on the Tax Written Down Values (TWDV) of the transferred assets.

    4. Unabsorbed losses and un-Utilised Capital Allowances brought forward

    The new company may also not be permitted to inherit the unabsorbed losses and capital allowances of the absorbed companies, except under the following circumstance:

    Where a reconstituted company is carrying on the same business previously carried on by this company and it is proved that the losses have not been allowed against any assessable profits or income of that company for any such year; in that case the amount of unabsorbed losses shall be deemed to be a loss incurred by the re-constituted company in its trade or business during the year of assessment in which the business commenced.

    5. Taxes and deductibility of related expenses

    • Stamp Duties

    Duty payment will arise on the share capital of the new company, subject to the provisions of Section 104 of the Stamp Duties Act, in relation to capital and duty relief.

    • Consolidated Expenses

    Fees paid to statutory bodies such as SEC, NSE, CBN, Land Authorities etc, including professionals like accountants, stockbrokers, issuing houses, and solicitors are regarded as capital in nature and will therefore not be allowed as deductible expenses by virtue of Section 27(a) of CITS.

    • Taxation of Consolidation Fees:

    Fees paid to professionals for services rendered in connection with consolidation will be subject to VAT and WHT at the rates of five per cent and 10 per cent.

    6. Tax Indemnification

    Section 29(9)(i) of CITA provides that the Board may require the new company to guarantee or give security for payment in full, for any tax due or that may become due by any of the ceased companies.

    7. Approval for Pension Scheme

    The new company will need to obtain a Joint Tax Board (JTB) approval for its staff pension scheme.

     

    Status of a surviving company in relation to taxation

    It is a possibility that one of the merging companies survives with its old name or a new name to inherit the assets, liabilities, reserves and entire operations of the merging parties. Where this happens, the following points must be noted:

    • the surviving company must file its returns in line with the provisions of Section 55(3)(a) of CITA.

    • Commencement rules under Section 29(3) of CITA will not apply to the surviving company, as it will be regarded as an existing company.

    • The surviving company will not be allowed to claim investment allowance on the assets which were transferred to it and will also not claim initial allowance on such assets.

    • The surviving company may however claim annual allowance only on the TWDV of the assets transferred to it.

    • The surviving company may not inherit the unabsorbed losses and capital allowances of the merging companies, except it is proved that the new business is a reconstituted company.

    • All fees payable on merger bids or consolidation will be liable to VAT and WHT just like it is applicable on the emergence of a new company. Stamp Duties will be paid on the increase in share capital and the company will have to obtain its own staff pension scheme approval from the JTB.

     

    Ceased businesses

    The merger or consolidation exercise may also result in cessation of business for any of the merging parties. In this case, cessation rule as applicable under Section 29(4) of CITA will apply to any of the merging companies which have now ceased business permanently, except if any of the following circumstances occur:

    a) Where the merging companies are connected. Here, the Board may direct, in line with its discretionary powers, under Section 29(9) of CITA that the cessation rule may not apply.

    b) Where a reconstituted company is formed to take over the trade or business formerly run by its foreign parent company. (see Section 29(10) of CITA).

     

    Capital gains tax shares or cash received

    Section 32A of Capital Gains Tax Act (CGTA) Cap 121LFN 2004 provides that a person shall not be chargeable to tax under the Act, in respect of any gains arising from the acquisition of the shares of a company, either merged with, or taken over or absorbed by another company, as a result of which the acquired company has lost its identity. However, where shareholders are either wholly or partly paid in cash for surrendering their shares in the ceased business, the gains arising from the cash payment will be subject to CGT.

     

    Effect of taxation on consolidation of acquiring/acquired companies

    The tax implications of consolidation on acquiring or acquired companies are similar to those of mergers. Acquisition expenses are non-deductible while fees paid to professional bodies are equally subject to WHT and VAT.

  • CBN: Fed Govt recorded N89b deficit in November

    CBN: Fed Govt recorded N89b deficit in November

    The fiscal operations of the Federal Government resulted in an estimated deficit of N89.45 billion last November, a Central Bank of Nigeria (CBN) Economic Report has shown. The report obtained by The Nation, said the Federal Government estimated retained revenue was N252.58 billion, while total estimated expenditure was N342.03 billion.

    “The fiscal operations of the Federal Government resulted in an estimated deficit of N89.45 billion, compared with the provisional monthly budget deficit of N73.92 billion,” it said.

    According to the apex bank, available data indicated a general increase in banks’ deposit and lending rates during the review month as the spread between the weighted average term deposit and maximum lending rates narrowed by 1.1 percentage point to 117.79 per cent.

    It said the margin between the average savings deposit and maximum lending rates narrowed by 0.0.04 percentage point to 22.47 per cent at the end of the review month.

    “The weighted average interbank call rate rose to 11.15 per cent from 11.08 per cent in the preceding month, reflecting the liquidity condition in the interbank funds market. Provisional data indicated that the value of money market assets outstanding at end-November 2013 was N6.6 trillion, indicating a decline of 2.01 per cent, in contrast to the increase of 0.3 per cent at the end of the preceding month,” it said.

    The development was attributed, largely, to the decline of 3.4 and 0.32 per cent in Federal Government of Nigeria (FGN) Bonds and commercial Paper (CP) outstanding, respectively.

    It said total federally-collected revenue (gross) stood at N744.02 billion. This, it said, was lower than the monthly budget estimate by 21.3 per cent, but an increase of 0.5 per cent over the receipt in the preceding month.

    “Agricultural activities across the country were dominated by harvesting of tubers, fruits and vegetables in November 2013. In the livestock sub-sector, farmers were engaged in fattening and other husbandry activities in anticipation of end of the year sales. Crude oil production was estimated at 1.83 million barrels per day (mbd) or 54.90 million barrels during the month. The end-period inflation rate on a year-on-year basis, was 7.9 per cent, 0.1 percentage point above the level in the preceding month,” it said.

    Foreign exchange inflow and outflow through the CBN were $3,125.45 million and $3,837.84 million, respectively, and resulted in a net outflow of $712.39 million.

    Foreign exchange sales by the CBN to the authorised dealers amounted to $3.34 billion, showing an increase of 13.4 and 109.5 per cent over the levels in the preceding month and the corresponding month of 2012, respectively.

    Also, the gross Federal Government revenues from petroleum stood at N521.28 billion, about 70.1 per cent of the total revenue. The report showed that earnings were lower than both the monthly budget estimate and the level in the preceding month by 19.1 and 1.0 per cent, respectively.

    It said the fall in oil receipts was attributed, largely, to the shortfall in receipts from crude oil and gas exports in the review period. Also, non-oil receipts (gross), stood at N222.74 billion (29.9 per cent of the total).

  • Cleric launds Ecobank on CSR

    Cleric launds Ecobank on CSR

    Archbishop of Lagos Catholic Archdiocese, Alfred Adewale Martins, has commended Ecobank’s various corporate social responsibility (CSR) initiatives targeted at supporting the education sector and youth development in the country.

    Speaking during the presentation of electronic boards by the lender to the proposed Augustine University, Ilara-Epe, Lagos at the Catholic Archdiocese, Lagos, Archbishop Martins said the donation has once again put the bank as a leading corporate socially responsible organisation in the country.

    He said: “The donation is close to our heart because this is to help us achieve development and education of youths in the country. In Catholic Church, we treasure soul and education because they go together. We will forever be grateful to Ecobank for its generosity.”

    The Archbishop restated the commitment of Catholic Church to the bank. Earlier in his speech, its Deputy Managing Director, Mr. Tony Opanachi, said the electronic boards put at several millions of naira, was part of the bank’s efforts at supporting the education sector and various institutions of learning in the country.

    He said:“It is a privilege to partner with the Catholic Church in this education project. We treasure our long standing relationship with the church. This is just our first donation; we will surely come back with more assistance until the project is completed.”

    Opanachi further outlined some of the recent CSR initiatives of the bank across the country, stressing that, the bank is ensuring that its impact is felt everywhere it operates.

    On his part, Chairman, Augustine University Project Fund Raising Committee, Chief Molade Okoya-Thomas, said the timely response of the bank to donate to the university still under construction, was laudable.

    He enjoined other public-spirited individuals and corporate organisations to emulate the bank by donating to the school.

    Ecobank Nigeria is a full-service bank providing wholesale, retail, investment and transaction banking services and products to governments, financial institutions, multinationals, international organisations, medium, small and micro businesses and individuals

  • Fidelity Bank empowers women entrepreneurs

    Fidelity Bank empowers women entrepreneurs

    Fidelity Bank has said it is committed to the wellbeing of rural women and children. In a statement, the lender said its workers at the Yola Branch supported the Women Development Centre, Yola, in Adamawa State.

    The workers also renovated two workshop blocks and donated sewing machines to the centre in line with its Corporate Social Responsibility (CSR) vision driven by the Fidelity Helping Hands Programme (FHHP).

    Commissioning the project, the State Commissioner for Women Affairs and Social Development, Hajiya Halima Mohammed Hayatu lauded the bank for its efforts.

    She said the lender’s gesture would go a long way in alleviating poverty and empowering women in the state.

    While calling on other corporate institutions and wealthy individuals in the state to emulate the bank, the commissioner said the ministry would work with the bank to reduce the plight of women and children in the state.

    Presenting the equipment on behalf of the Managing Director of the bank, Mr. Nnamdi Okonkwo, the General Manager, North Bank, Mr. Idris Yakubu, explained that the FHHP is the bank’s CSR platform by which the bank’s staff initiate and execute projects in communities using funds contributed by themselves.

  • Banks, discount houses get N314b CBN loans

    Banks, discount houses get N314b CBN loans

    The Central Bank of Nigeria (CBN) offered N314.22 billion to banks and discount houses to boost liquidity, according to the apex bank’s Economic Report.

    There are 21 banks and four discount houses in the country.

    The figure, the last November report of the CBN, stated, represents a daily average of N14.96 billion for the 21 business days. This is against the N263.36 billion with a daily average of N12.45 billion in the preceding month.

    The fund, which came as a Standing Lending Facility (SLF), was given at 14 per cent. It is an overnight CBN credit available on banking days between 2 pm and 3.30 pm, with settlement done on same day value.

    Interest paid on SLF in November stood at N0.09 billion, compared to N0.02 billion in the preceding month.

    The CBN showed that total assets and liabilities of the deposit money banks (DMBs) amounted to N23.5 trillion, showing a marginal increase of 0.2 per cent above the level at the end of the preceding month.

    Funds were sourced mainly from time, savings and foreign currency deposits, as well as accretion to unclassified assets. The funds were used, largely, to extend credit to the private sector and payment of claims on demand deposit.

    The report also said that DMB’s credit to domestic economy rose by 2.4 per cent to N11.5 trillion, above the level in the preceding month. The development was attributed largely to the rise in banks’ credit to the private sector during the review month. Total specified liquid assets of the banks stood at N6.6 trillion, representing 41.4 per cent of their total current liabilities.

    Further analysis of the report showed that liquidity ratio fell by 0.6 percentage point below the level in the preceding month, but was 11.4 percentage points above the stipulated minimum ratio of 30 per cent.

    The loans-to deposit ratio, which stood at 36.1 per cent, was 1.5 percentage points above the level at the end of the preceding month, but 43.9 percentage points below the prescribed maximum ratio of 80 per cent.

    Further, the CBN data indicated that total assets of the Discount Houses stood at N131 billion, showing an increase of 11.7 per cent. The development was accounted for, largely, by the 15.9, 14.8 and 7.6 per cent rise in claims on the Federal Government, Banks and “Others Assets”.

    Correspondingly, the increase in total liabilities was attributed, to the 32.5 and 4.1 per cent rise in money-at-call and other liabilities, which more than offset the 4.5 per cent fall in capital and reserves.

    Discount Houses’ investment in Federal Government securities of less than 91-day maturity rose by nine per cent to N36.4 billion and accounted for 35.4 per cent of their total deposit liabilities.

    At that level, discount houses’ investment in treasury bills rose by 16 per cent above the level at the end of the preceding month but was 24.6 percentage points below the prescribed minimum level of 60 per cent. Total borrowing by the discount houses was N45.07 billion, while their capital and reserves totaled N18.4 billion.

    The CBN attributed the significant increase in activities in the standing facilities window mainly, to the banks’ preference for depositing their overnight balances at the discount window rather than placing at the interbank.

    It explained that money market rates were influenced by the liquidity condition in the banking system arising from the introduction of the 50 per cent Cash Reserve Ratio (CRR) on all public sector deposits, coupled with the delay in the release of fiscal allocation. The CRR on all public sector funds has been raised further to 75 per cent at the January 21 Monetary Policy Committee (MPC) meeting of the CBN.

    The CBN had, during the MPC meeting, maintained the Monetary Policy Rate (MPR) at 12 per cent, and kept the symmetric corridor of plus two per cent around the MPR for SLF.

    However, the SLFs are available only to banks and discount houses that have executed the Nigerian Master Repurchase Agreement (NMRA) with the regulator.

    It covers the SLF and addresses issues pricing, duration, custodian as well as default resolution in lending.

    The MPC said the CBN is taking immediate step to redress the supply-demand imbalance in the BDC segment while maintaining its focus on anti-money laundering.

     

  • Eight lenders control N20tr assets

    EIGHT banks control N20.8 trillion or about 80 per cent of the total assets in the banking system.

    According to a report by Afrinvest West Africa Limited, an investment and research firm, the sector is characterised by a “policy induced” earnings, and aggressive competition for cheaper deposits.

    The eight lenders are also expected by the end of the year to control 76.3 per cent of the industry’s gross earnings.

    The top five banks are: FirstBank, Zenith Bank, Guaranty Trust Bank, United Bank for Africa and Access Bank. The other three are: Skye Bank, Diamond Bank and Ecobank Nigeria.

    According to the report titled: Nigerian banking league: The fate of small players, the bigger banks, with an average total assets of N2.6 trillion, the banks appear more competitive in squeezing out higher earnings compared to tier-2 (smaller banks) with N900 billion of total asset as at September.

    However, the operating expenses margins and cost funds for the bigger banks are rising.

    It said the era of real banking appears to be re-emerging as traditional sources of high income continue to face significant threat from tighter regulation and increased competition.

    It said the era of real banking appears to be re-emerging as traditional sources of high income continues to face significant threat from tighter regulation and increased competition.

    Tier-2 banks, on the other hand, are faced with the challenge of expanding their local franchise, to absorb cheap deposits and aggressively generate more risk assets. This has left Tier-2 banks with the option of either “Specialise”; or “Expand inorganically”.

    “While most banks are hinged on product differentiation strategy using innovation to remain afloat, we keep a keen watch on the industry’s competitiveness as events unfold. Nevertheless, the future of banking is set to take a dramatic turn,” it said.

    According to the report, the era of double digits earnings growth in the industry has begun to thin-out.

    “The numerous liquidity tightening policies introduced by the CBN is exerting pressure on the banks’ profitability in the last few months. A review of the banking industry’s last nine months Profit before Tax (PBT) revealed an average nine per cent decline across the Tier 1 banks, and a 6.3 per cent growth within the Tier-2 echelon,” it said.

    The analysis also revealed that Tier-1 banks accounted for 82 per cent of the total income in the banking industry; with GTBank and Zenith Bank leading with a nine-month Profit After Tax of N69.2 billion and N69.8 billion as atlast September.

    It said a further review spots the downward trend in Tier-1 bank’s Net Income Margin from 7.9 per cent in 2012 to 7.1 per cent in June and 6.1 per cent in September, last year.

    This, it said, could be attributed to a reduction in the industry wide interest and non-interest income.

    Similarly, the net profit margin for Tier-1 banks shrank quarter on quarter to 23.3 per cent in September from 24.3 per cent in June, last year.

    It said liquidity tightening policy of the Central Bank of Nigeria (CBN) had an impact on the banks.

    The policy targeted at price and exchange rate stability, has affected the earnings of the banks, particularly the 75 per cent Cash Reserve Ratio (CRR) on public sector deposit.

     

  • ‘Funding SMEs lead to economic growth’

    ‘Funding SMEs lead to economic growth’

    Small and Medium scale Enterprises (SMEs) have been tipped as key to Nigeria’s growth and transformation project. However, positioning them for the role requires banks to give the subsector the needed support through funding and skills development. FirstBank of Nigeria Limited has taken some steps, including an alliance with CNN’s African Start-Up show, to help SMEs achieve their growth potential, writes COLLINS NWEZE.

    Small and Medium Enterprises (SMEs) remains a key driver of the economy. The challenge, however, is that not too many banks are willing to lend to the subsector.

    Over the years, when the loans come, they are priced higher than what obtains when lending to multinationals or other operators in the real sector of the economy in most cases. Determined to reverse the fortunes of the subsector, FirstBank of Nigeria Limited has reiterated its commitment to providing cheap and long-term funding for SMEs in the country.

    Gbenga Shobo, Executive Director (Retail Banking South), who gave this indication during the maiden edition of the bank’s SME conference, titled: “SMEConnect”, reiterated the need to create successful SMEs that would help the economy achieve its full potentials.

    “Definitely there is a lot of large buzzword right now, as a lot of banks are saying they want to do SMEs finance. But we have been relatively successful in financing SMEs. A recent survey shows that the efforts of FirstBank in this regard more than double those of any other bank in the last three years,” he said.

    He said at present about 50 per cent of the funds of the lender come from retail banking.

    “Those funds are from our SMEs, our affluent and our mass market. Retail banking is split into those segments. The Cash Reserve Ratio (CRR) itself doesn’t affect retail banking directly because it was meant for public sector funds. But it shows how more important to the banks the funds from retail banking would be because no CRR affects it. So, obviously, there is more focus on retail banking funds. So that is why we are doing more to get more SMEs,” he said.

     

    African Start-Up project

    As part of its strategic focus to grow and sustain the development of SME’s in Nigeria and Africa at large, the bank, through its SME support programme, SMEConnect, which is sponsored CNN’s African Start-Up show, is exploring how ideas are generated, formulation of business plans, and access to capital and product development amongst other things.

    African Start-Up is a 30-minute programme, which follows entrepreneurs across African countries to see how they are working to make their dreams become reality. It offers viewers the opportunities to see entrepreneurship in a broader perspective, with each show dedicated to an entrepreneur taking viewers through daily challenges.

    The programme tries to highlight the fact that the rules of entrepreneurship are not defined, its setbacks are frustrating and that the opportunities are for those with vision and creativity. Each segment is aimed to inspire the viewers as they witness one determined individual after another defying the odds. The programme, which hit the airwaves last November has featured entrepreneurs such as Fomba Trawally, a Liberian businessman who started his career as a street vendor and just recently opened Liberia’s first paper and toiletry product manufacturing company; Isaac Oboh, who started Media 256, a film and production company in Kampala, Uganda; as well as Tola Ogunsola, Damola Taiwo and Dolapo Taiwo, who pioneered the establishment of a new digital store where Nigerians can access local music.

    According to Celine DeCarlo, Account Director at CNN International. “We’re delighted that FirstBank has chosen to connect with CNN’s global audience of key business decision-makers and opinion leaders around the world via ‘African Start-Up’. This is the first time CNN has created dedicated programming looking at African SMEs. FirstBank’s exclusive sponsorship provides a unique opportunity to support a series that will shed light on efforts of successful entrepreneurs contributing to the growth and development of Africa’s economy.

    According to FirstBank’s spokesperson and head, Marketing and Corporate Communications, Folake Ani-Mumuney, the bank’s sponsorship of CNN’s “African Start-Up” is a firm commitment of our drive to sustain the development of SME’s in Nigeria and Africa as a whole. “We are proud to sponsor ‘African Start-Up’ on CNN International. SMEs play a critical role as the engine of growth in the economy, providing employment to thousands of people and contributing significantly to GDP. This segment is a critical platform for repositioning the national economy for sustained growth, and one which aligns with FirstBank’s position as the number one SME bank in Nigeria.

    “FirstBank is pleased that CNN has created this dedicated programme, which in itself is a first that takes a critical look at the lives of these entrepreneurs and the ways they have contributed to their societies in their countries. Having supported SME’s in Nigeria for over a century with first class products and services, CNN’s African Start-Up aligns with our commitment to drive and sustain the growth of SME’s in Nigeria,” she said.

    The “SMEConnect” is one of FirstBank’s SME’s value propositions designed to empower small and medium enterprises in the country. The programme is geared towards building SMEs capacities to deliver and contribute significantly to national development. FirstBank’s value proposition goes beyond an SME product or suite of products to a robust engagement programme designed in every way to help SMEs succeed.

     

    Relationship management

    As part of the engagement programme, SMEs are given access to dedicated Relationship Managers (RMs) with deep industry knowledge of the customer’s business and challenges. They can offer basic advisory services to the customer.

    The subsector are also provided with opportunities for capacity-building and business networking through National Conferences, Open Seminars, Industry-specific Forums as well as Town Hall Meetings. SMEs are also offered a free payments-and-collections platform to drive the payment and receipt aspects of their businesses and deepen their transaction capabilities and speed, with a free web presence on a social cum business online portal to enable them trade as well as network.

    Start Up Africa follows several entrepreneurs in various African countries to see how they’re working to make their dreams become reality. It explores how they generate their ideas, formulate their business plans, raise capital and distribute their products. The entrepreneurs take viewers through their daily challenges. The series’ online component encourages user participation, and serves as a forum for ideas.

     

    Branch expansion

    Shobo said the bank’s branch network has increased tremendously in the last two years. “This is just to make sure that we bank the mass population more comfortable, without queues and things like that. Why do we have queues? It’s because we have more customers than the number of branches that can handle them. We have expanded the number of branches; our ATM network is by far the most in the whole industry. Of course, if you treat your customers better, the more funds they give you. So we are really concentrating on servicing our customers in all segments much better,” he said.

    He also said that the bank found out that it needed to have different ways of approaching different segments within the youths. “What we are also doing on the youth side is that we realised that times are changing. The way the youths see things is different from the way older people see things. The youths do not prefer going to the branches, they like online banking. You find out that a lot of the hits on the website are from the youths,” he said.

     

    SMEs in Nigeria

    Shobo said SMEs in Nigeria have to grow; because that is the only way the economy. “So it must grow and that is why we are doing the national conference and after that, we are going to have regional conferences. After that, we are going to have industry specific conferences to make sure that we take the SMEs to another level,” he said.

    The bank’s experience in SMEs financing, he added, is what separates it from other lenders. “We have the most SMEs; we have had them for a long time, we understand their needs better than anybody else and clearly that informed the way we approach them. Most other banks don’t even focus on SMEs. We have relationship managers focused on them. We have products that support SME operators that do not have collateral, which a lot of other banks don’t have. I think what we haven’t done well in the past is the capacity building and that is where we want to focus on now. Like I said earlier, we like double the other banks in terms of support to SMEs,” he said.

    He said the bank listens to SMEs to know their problems and address them. “We are the number one SMEs’ bank in Nigeria, but we do not want to stop there. We want to be able to create value for our SMEs. In listening to them, survey and focus discussions and all that, we found out that capacity is a big problem. When I say capacity, I mean being able to develop proposals which banks can finance or indeed which anybody can put money to finance for them. A lot of people have dreams on what they like to do, but how do I actualise those dreams? You find out that a lot of SMEs cannot do that successfully. That is one,” he said.

    Shobo said several SMEs go into businesses and they run into trouble because they just can’t do the business properly. It is capacity that is still the problem because if you had capacity and you understand them, you wouldn’t do a business that will fail.

     

  • Dermalog chief refutes bankruptcy claims

    The Managing Director, Dermalog, Gunther Mull, has faulted bankruptcy reports on his firm.

    Dermalog is handling the biometric project of the Central Bank of Nigeria (CBN).

    Speaking at the launch of the project in Lagos, Mull said reports that the firm had gone into liquidation since 2012 were false, adding that it has been in profitable business in the last 12 years, with an average profit of 15 per cent.

    He said the CBN has been courageous in executing the project, adding that in other countries where the project had been implemented, it was mainly government-driven.

    The report had claimed that the German firm was broke at the time it got the contract in Nigeria.

    Chairman, Bankers’ Committee sub-Committee on Biometrics, Godwin Emefiele, said the project would revolutionalise the banking system.

    Emefiele, who is the Group Managing Director, Zenith Bank, said the project would lead to re-setting of credit standards in the banking sector, as well as enhance consumer credit.

    He said: “It is a rare opportunity that needed to be embraced. This project has the capacity to serve over 160 million people. The good thing is that even when one forgets his/her Personal Identification Number (PIN), once the information is verified, transactions can be done.”

    The Managing Director, Nigeria Interbank Settlement System (NIBSS), Ade Shonobi said the biometric solution is needed to bring sanity to the payment system, adding that an effective payment system is key to building the economy.

     

  • Enterprise Bank assures of improved services at ATMs, PoS

    Enterprise Bank Limited has reassured its customers of an improved electronic transactions across the nation.

    In a statement, the lender assured customers using the Automated Teller Machines (ATMs), Point of Sale (PoS) terminals, mobile and internet banking services, among others, that they would continue to enjoy seamless banking services.

    It said the lender has strengthened its e-banking channels across its branches nationwide.

    “Through the internet banking channel, for instance, customers will be delighted with the different platforms, which allow banking transactions from the comfort of peoples’ offices and homes anywhere in the world,” it said.

    These transactions, the bank said, range from checking account balances, viewing or downloading statements of accounts, requesting for cheque books and banking transfers to as much as N10 million in one go.

    The banking transfers can be intra or interbank as the case may be with the use of personal computer (PCs) or smart phones.

    The interesting thing, the statement added, is that both new and old customers can sign on for these safe and secured services. The services, it said, also provide added value in the form of convenience banking in any of the bank’s branches.

     

  • Lagos pegs mobilisation fee to contractors at 20 per cent

    Lagos pegs mobilisation fee to contractors at 20 per cent

    The new Procurement Law okayed by Lagos State Governor Mr. Babatunde Raji Fashola has pegged the mobilisation fee to contractors at 20 per cent of the total contract value.

    Commissioners for Economic Planning & Budget Ben Akabueze said this at a parley organised by the Ministry to interfere with state government contractors and other stakeholders on the implementation of new procurement law and payment procedure.

    He explained that the directive will make more funds available to service many contracts at a time. He condemned the attitude of contractors who get mobilisation fees and months after, are yet to mobilise to site.

    The Commissioner warned that contractors who collect advance payment and use a fraction of it on the jobs while keeping the rest as profit when the jobs were yet to be completed are not doing themselves any good. He opined that a contractor is assumed to have her own financial resources to execute contracts awarded to them, and that the advance payment is only to assist in the seamless cash flow to ensure timely project completion.

    Akabueze advised that contractors could raise fund from banks and other financial institutions as the Lagos State Government has enough goodwill and integrity in the sector.

    He said project will be subjected to at least three inspection stages namely pre-payment process, work in progress and inspection upon job completion. This, he said, is in accordance with world best practices.

    Earlier in his paper titled “Tendering procedures in Lagos State under the public procurement Law 2011” GM/CEO, Public Procurement Agency, Engr. Akin Onimole said that the objective of the state government in enacting the law is to ensure transparency, competitiveness, professionalism and also to generate integrity and public trust in the public procedures.

    He took contractors through all the procedure and tender requirements to bid for contracts in the category to which they belong. Onimole re assured that performance and technical qualifications backed with financial capability and lowest reasonable bid is all a constructor require to get contracts as the system epitomise transparency.