The Nation Newspaper

Category: Money

  • Visa backs financial literacy mobile app

    Visa International, a global payment firm, has announced a mobile application development challenge, meant to stimulate the development of innovative web, mobile applications and games. The platform is also expected to assist in teaching money management skills and supporting the advancement of financial literacy in the country.

    In a statement, the firm said the Financial Literacy Challenge is sponsored by Visa and delivered by the Co-Creation Hub Nigeria, using their unique approach of involving stakeholders in the co-creation of new products and services.

    “The challenge will bring key financial services players like the Central Bank of Nigeria, commercial banks, personal finance Non- Governmental Organisations and other stakeholders together with software developers and designers, to create interesting applications and games. These applications and games will advise Nigerians on how best to manage their money and financial affairs, and also educate them on the tools available to meet their financial needs,” the statement said.

    Country Manager for Visa in West Africa, Ade Ashaye, said these applications and games will advise Nigerians on how best to manage their money and financial affairs, and also educate them on the tools available to meet their financial needs.

    “At Visa, we are dedicated to increasing financial literacy among the unbanked through strategic partnerships and educational programs. This is the motivation behind the Financial Literacy Challenge,” the statement quoted him sayin

    Bosun Tijani, the CEO of Co-Creation Hub Nigeria, said: “Collaborating with Visa on the Financial Literacy Challenge creates room for Nigeria’s technology talent to turn their energy and skills to building apps that will boost the skills and confidence of Nigerians as they make financial decisions. We are pleased to be deploying our Open Living Labs approach to generate and develop truly innovative apps and games that are reflective of the Nigerian experience.”

     

  • CBN, NDIC to quit NERFUND in October

    CBN, NDIC to quit NERFUND in October

    • Team still working on ‘N5.7b loss’

    Acombined team of the Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC) officials managing the National Economic Reconstruction Fund (NERFUND) will quit in October, The Nation has learnt.

    The team was deployed in NERFUND on October 14, last year to revamp the agency following a N5.7 billion loss.

    The team appointed by the Ministry of Finance is headed by Muhammad Gidado Kollere of the NDIC as Managing Director/Chief Executive Officer. Mr Ihua Elenwor of the CBN is the Executive Director (Operations).

    It is involved in the recovery of outstanding loans, and reconciling all accounts with correspondent banks. It also renders quarterly report to the Board of the Fund, headed by the Permanent Secretary, Federal Ministry of Finance.

    An insider in NERFUND said the agency’s receivership is for one year, after which a substantive Managing Director will be appointed to replace the former one, Baba Maina Gimba, who left last year. The source said there was intense lobbying on who replaces Gimba. The new managing director, the source said, might not be an insider.

    The source also faulted the N5.7 billion loss, saying the total fund obtained by the body from government since inception was not up to N5.7 billion being declared as loss.

    The Fund received N2.8 billion in 2010, and $141 million from the Africa Development Bank (AfDB) at an exchange rate of N9.9 to a dollar, in 1991.

    NERFUND also got another N350 million loan from the Federal Government. The source said the cumulative funds, made available to NERFUND till date were below N4 billion.

    NERFUND was established by Decree No. 2 of 1989 to provide medium to long-term loans to participating banks (PBs) for on-lending to small and medium enterprises (SMEs) for the promotion and acceleration of productive activities in such enterprises.

    The government took over the Fund following President Goodluck Jonathan’s approval of the recommendations of the CBN and NDIC Joint Special Examination report on its books.

    It claimed that the capital invested in the institution by the Ministry of Finance had been eroded with the gross losses.

    The Fund, it was learnt, has not been able to service loans taken for on-lending from the AfDB, the Ministry of Finance and other sources.

    The source said the agency’s last governing board was dissolved in 1993, adding that it was being run by an Interim Management Committee headed by Permanent Secretary, Federal Ministry of Finance before the arrival of the new CBN/NDIC team.

     

     

     

    She said the firm has over time canvassed for reconstitution of its corporate governance board, recapitalisation and total restructuring. The spokesman said there were also previous plans to merge it with other Development Finance Institutions (DFIDs), which also failed.

    Conditions set for accessing the NERFUND Micro Enterprises Credit Scheme entails that prospecting businesses must be engaged in manufacturing, mining, quarrying, agro-allied, industrial support services, equipment leasing and other ancillary services.

    Besides, the enterprise should be wholly Nigerian owned and must source its raw materials for the project locally but could source plant and machinery either locally or from abroad. The projects to be financed must be financially and economically viable, and should have positive impact especially in employment creation in the operating environment.

    According to NERFUND statutes, the expected project could be a start-up, expansion, rehabilitation or diversification of existing business while the beneficiaries are expected to own 10 per cent equity of the proposed business. The prospective beneficiary must have a limited liability company or registered enterprise and can only access between N100,000 and N5 million.

    It further explained that the first step securing the loan is the identification of a bankable project, which is one that is technically feasible and commercially viable. Also, applications for funding are to be accompanied with a simple business plan attached with a pro forma invoice, stating the price and source of proposed plant and machinery.

     

  • World Bank, WTO joint database coming

    The World Bank and the World Trade Organisation (WTO) have agreed to jointly develop and maintain a database on trade in services for Nigeria and more than 100 other countries globally.

    A statement from the global lender said the joint database covers various sectors such as financial, transportation, tourism, retail, telecommunications, and business services, including law and accounting.

    It said the database is an area that is becoming increasingly important and yet for which little information is publicly available.

    It said the data will be presented in four modules covering: members’ commitments under the WTO’s General Agreement on Trade in Services (GATS); commitments on trade in services in regional trade agreements; members’ applied measures affecting trade in services; and services statistics.

    The first version of the database has just been launched, as part of the WTO’s Integrated Trade Intelligence Portal (I-TIP) Services portal.

    Policy makers, researchers, trade negotiators, and the general public can access the database for free. Policy transparency is a public good and a shared objective of both institutions. The World Bank makes trade data publicly available under the Open Data Initiative, as does the WTO with the I-TIP.

    Transparency is particularly important in the dynamic area of trade in services because the regulatory framework is complex and little information is publicly available. Cross-border trade in services makes up one-fifth of all world trade, even without considering international transactions through foreign affiliates and the temporary movement of people. This WTO-World Bank arrangement exploits synergies between both institutions.

    “Among other things, the joint database combines WTO data, including those on legal commitments trade policy reviews (TPRs) or trade monitoring reports with World Bank data on applied policies from the Services Trade Restrictions Database, which went public last year. Both institutions will work hard to make sure the joint database stays up to date and expands to cover more sectors and countries,” it said.

     

  • December inflation may drop to 7.8%

    December inflation may drop to 7.8%

    There is hope for a drop in inflation rate in the last quarter of 2013.

    A financial analyst, Bismark Rewane, has said inflation may drop to 7.8 per cent from 7.9 per cent in November 2013 when the National Bureau of Statistics (NBS) releases the inflation data for the month before weekend.

    He said the price level was within the target range of the Central Bank of Nigeria (CBN) for 2014.

    Rewane said the reasons for the moderation in the price level include the stability of the naira in the forex market and negative growth in money supply of 7.39 per cent in October 2013. He explained that money supply is now N14.73 trillion adding that other factors include the higher rates of interest in the money markets and the contractionary stance of the CBN.

    He said the base year prices in December 2012 were much higher because of the flood effect, adding that Nigeria suffered from severe floods with a devastating impact on food production and transportation in 2012.

    “Our monthly survey revealed that in the Lagos area, the urban CPI declined by 0.26 per cent to 9.43 per cent in December. In 2013, the level of festivity was relatively subdued compared to the previous year. Most traders complained of less sales than usual. The food basket declined by 0.82 per cent to 9.14 per cent while the non-food was 8.07 per cent compared with 8.39 per cent in the previous month,” he said.

  • Ecobank promotes 400 staff

    Ecobank Nigeria has promoted over 400 staff. This is about 10 per cent of the workers.

    In a statement, the bank said the exercise was in line with its commitment to its policy of rewarding excellence and performance.

    The staff were selected through an appraisal.

    The Managing Director of the bank, Mr. Jibril Aku, said the promotion was to keep the desired level of excellence to “maintain service quality standards, uphold customer satisfaction and enhance brand experience”.

    He said Ecobank maintains a high professional culture where exceptional performance, innovativeness and hard work are recognised and rewarded.

     

  • African countries issue $8.1b bonds

    North and sub-Saharan Africa countries raised $8.1 billion bonds in the last one year, the largest ever amount of hard currency from international capital markets.

    A report by Financial Times (FT) said the bond issuance record set in 2010 has been broken by this year’s feat.

    Egypt and South Africa have issued the largest share of United States’ dollar bonds so far this year in Africa, with smaller contributions from Ghana, Nigeria and Rwanda.

    Moody’s, the credit rating agency, said the raised fund is above the previous record of $7.2 billion set in 2010 for the whole year and far above the $1.2 billion they raised from bonds a decade ago.

    It said although the issuance has increased substantially, the size of the international bond market in Africa remains small. Moody’s put the total stock of government and corporate debt in hard currency at 3.7 per cent of the size of the African economy, compared to 11.3 per cent in Latin America and 5.1 per cent in Asia.

    The record issuance comes as the World Bank warned that Africa’s economic outlook could suffer due to the impact of higher global interest rates arising from the “inevitable” tightening of monetary policy in developed countries.

    “The search for yields among investors has supported strong capital flows to developing countries in recent years, including sub-Saharan African countries,” the Washington-based body said in its semi-annual report on the continent, adding that a “disorderly increase in interest rates”represented an economic risk.

    African officials and some investors are worried that an increase in interest rates in countries such as the US would reduce the significant portfolio inflows that nations including Kenya and Nigeria have seen in their local securities markets.

    But Aurelien Mali, a senior analyst at Moody’s, told FT that the African region had shown considerable resilience to financial shocks.

    “We expect that investors’ interest for the region will be sustained given the strong macroeconomic growth outlook for Africa, which we estimate to average five to six per cent over the next five years,” he said.

    The JPMorgan Nexgem Africa index, which tracks the bond market in the region, is yielding 6.8 per cent, down from a peak this year of 7.9 per cent in late June when fears about the direction of Fed policy drove rates higher. But the index is up from a low-point in January of 5.3 per cent. Yields move inversely to prices.

    Moody’s anticipates that six new African countries will debut in the international capital markets with hard currency bonds within the next few years: Angola, Cameroon, Kenya, Tanzania, Uganda and Mozambique.

    “We see significant potential in Africa for increasing the use of international capital markets in the medium to long term,” the rating agency said in a report.

    “African sovereigns will probably lead the region’s bond issuance, and we believe this will promote further international issuance by government-related institutions,” Moody’s added, saying that state-owned, strong utility companies could use the yield on any existing government bonds as a benchmark for their own issuance.

    Africa showed up on foreign fixed income investors’ radar first in 2001, when Egypt issued its first global bond.

    South Africa, Tunisia and Morocco had earlier tapped the international capital markets in small amounts. The region’s attractiveness increased after the Seychelles and Ghana became the first sub-Saharan African countries outside South Africa to issue bonds in 2006 and 2007, respectively.

  • Three banks fail liquidity test

    Three banks fail liquidity test

    The liquidity stress test conducted on 23 banks by the Central Bank of Nigeria (CBN) at the end of June showed that three lenders have problems.

    The CBN Financial Stability Report released at the weekend was okayed by the CBN Governor, Sanusi Lamido Sanusi.

    It said the industry liquidity ratio declined to 16.7 and 13.3 per cent after the five-day and cumulative 30-day shocks were applied, from the pre-shock position of 67.8 per cent.

    The liquidity ratios of most banks were below the regulatory threshold of 30.0 per cent for the five-day and cumulative 30-day scenarios.

    Similarly, three banks recorded negative liquidity ratios, following the application of a cumulative 30-day shock. However, the overall banking industry was resilient to liquidity shocks, though a few banks were found to be vulnerable.

    According to the report, the pre-shock liquidity ratios for the banking industry, large, medium and small banks rose by 14.14, 19.47, 3.15 and 3.07 percentage points to 69.70, 70.22, 75.45 and 68.47 per cent, compared with that of end of December 2012.

    “The banking industry was resilient to credit risk as the impact of the most severe credit risk shock (200 per cent rise in non performing loans, NPLs) resulted in Capital Adequacy Ratios (CARs) of 11.99 per cent, which was 1.99 percentage points above the 10 per cent threshold,” it said.

    According to the report, the large and medium banks were less vulnerable to the most severe shock, as they maintained CARs of 13.58 and 11.35 per cent. However, the small banks’ CAR deteriorated to 2.39 from 18.33 per cent, requiring N96.03 billion to raise their CAR to 10 per cent. Under this scenario, 11 banks maintained CARs above 10 per cent, six banks had between five and 10 per cent, three banks had less than five per cent but greater than zero per cent and three others recorded negative CARs

    It said the banking industry and the three peer groupings showed significant levels of concentration risk as indicated by the level of capital deterioration. “If the credit facilities of the five biggest corporate obligors were to deteriorate from “doubtful” to “lost”, the CARs of the banking industry, large, medium and small banks would decline from 18.69, 18.86, 18.25 and 18.33 per cent to 7.34 the banking industry resulted in the liquidity ratio falling to 33.48 per cent, though above the threshold of 30 per cent from 69.70 per cent,” it said.

    Also, large banks followed the same trajectory as their liquidity ratio deteriorated to 30.27 per cent from 70.22 per cent.

    “The medium and small banks showed more resilience as their liquidity ratios were 37.50 per cent for the medium and 45.37 per cent. Under this scenario, only five banks would be able to maintain CARs equal to or above 10 per cent, while the remaining 18 would record less than 10 per cent CAR,” it said.

    It said liquidity risk was moderate as the impact of a 10 per cent general runs on for the small banks, from 75.45 and 68.47 per cent. However, all the categories remained above the 30 per cent benchmark. The banking industry and the three peered banks were, therefore, resilient to the liquidity shock at the level indicated.

    Sanusi said in a statement that the efforts of the regulatory and fiscal authorities in addressing the challenges of the global economic and financial crises to achieve higher growth and employment were evident in the first half of last year.

    He said the projected weaker global demand, slower growth in key emerging markets and slow recovery of the Eurozone would require the monetary authorities to sustain the implementation of monetary and macro-prudential policies to achieve financial system stability.

    “The economy recorded some impressive macroeconomic achievements in the first half of 2013 despite some challenges. In specific terms, the country recorded strong GDP growth, single digit inflation, exchange rate stability, capital market recovery and growth in external reserves. As well, it maintained a stable banking system.

    However, oil production was less than expected owing to supply disruptions. Also, the high proportion of foreign portfolio investments (FPIs) in the financial markets presented a potential risk in the event of sudden capital reversals,” he said.

  • Investors stake N22b on equities

    •Nigeria’s first domestic ETF hits market

    Investors staked more than N22 billion on quoted equities on the Nigerian Stock Exchange (NSE) as stocks fluctuated between profit-takers and bargain-hunters. In what indicated the cautious mood of the market, the main index closed the week with a marginal gain of 0.07 per cent.

    The modest positive market position was due mainly to gains by cement companies, especially Dangote Cement, which in many instances was the rallying point for the market recovery. Most indices at the NSE indicated widespread declines in share prices.

    The All Share Index (ASI), the main index that tracks prices of all equities on the NSE, inched up from the week’s index-on-board of 41,450.48 points to close the week at 41,480.62 points. Average year-to-date return for 2014 thus increased slightly to 0.37 per cent. Aggregate market value of all quoted equities also increased slightly from opening value of N13.265 trillion to close the week at N13.275 trillion.

    With the exception of cement-driven NSE Industrial Index, all sectoral indices closed on the negative. The NSE 30 Index, NSE Consumer Goods Index, NSE Banking Index, NSE Insurance Index, and the NSE Oil/Gas Index depreciated during the week by 0.56 per cent, 0.49 per cent, 3.20 per cent, 3.0 per cent and 3.08 per cent respectively. The NSE Industrial Goods Index appreciated by 0.85 per cent, driven largely by Dangote Cement and Lafarge Cement Wapco Nigeria. The NSE Lotus Islamic Index- an Islamic law-based index that groups some influential selected Shariah compliant stocks, made the highest gain with an increase of 2.23 per cent.

    Total turnover stood at 1.72 billion shares worth N22.44 billion in 29,600 deals. Financial services sector remained the most active with a turnover of 1.2 billion shares valued at N10.85 billion in 15,134 deals; representing about 70 per cent of total turnover. The oil and gas sector rode on the back of increased demand for Oando to place second on the activity chart, pooling 182.28 million shares worth N2.22 billion in 4,866 deals. Also, conglomerates sector rode on the back of Transnational Corporation of Nigeria (Transcorp) to occupy the third position on the activity chart with 124.13 million shares worth N665.14 million in 1,982 deals.

    The three most active stocks were FBN Holdings Plc, Transcorp and Unity Bank Plc, which altogether accounted for 407.95 million shares worth N3.23 billion in 5,007 deals, representing 23.7 per cent of total turnover volume.

    Meanwhile, Nigeria’s first domestic Exchange Traded Fund (ETF) will open for public subscription today following the approval of Securities and Exchange Commission (SEC).

    The ETF-Vetiva Griffin 30 Exchange Traded Fund (VG 30 ETF) is being promoted by Vetiva Fund Managers Limited, a Nigerian investment management firm. Vetiva is offering 100 million units of VG 30 ETF at par in this initial public offering (IPO). Application list for the IPO will open for 15 working days, up till January 31, 2014, in line with extant rule of SEC.

  • My exit won’t affect chance to succeed Sanusi, says Lemo

    The Central Bank of Nigeria (CBN) Deputy Governor, Operations, Tunde Lemo said his exit from office won’t affect his chances of possibly succeeding Governor Lamido Sanusi.

    Lemo, 54, will leave the bank today after having served the maximum two, five-year terms, he told Bloomberg.

    Sanusi, 52, said last year he won’t renew his contract when it expires in June. While President Goodluck Jonathan hasn’t given any indication yet of who will be the next governor. Lagos-based Vetiva Capital Management Limited said in an October 28 report that potential candidates include Lemo and Sanusi’s other three deputies.

    Lemo said his departure “doesn’t affect that speculation,” citing a previous case where a retired deputy governor became Nigeria’s central bank governor. “But one doesn’t want to preempt authorities,” he said.

    A statement from the CBN said Lemo’s retirement is with effect from today, “he is expected to be pulled out of service on Friday, being the last working day before his retirement date.”

    Prior to his appointment as a Deputy Governor in 2003, Mr. Lemo was the Managing Director/Chief Executive Officer of Wema Bank Nigeria, Plc between 2000 and 2003.

    Lemo was born in 1959, and he attended Lisabi Grammar School, Ogun State and the University of Nigeria, Nsukka, where he emerged as the Best Overall graduating student in the Faculty of Social Sciences with a Bachelor of Science degree in Accountancy (First Class Division) in 1984.

    Lemo is said to have attended Advanced Management Programme (AMP) at the Wharton College, University of Pennsylvania, Philadelphia, U.S.A in 2002 as well as executive training programmes in world class institutions including Harvard University, INSEAD, Fontainbleau, France, Brandies University, Boston.

    The retiring Deputy Governor is credited with playing a key role in the implementation of the Banking Sector Consolidation resulting in the 24 stronger and well capaitalised banks with combined equity of over N1.6 trillion from 89 largely weak banks, formulation and implementation of the Microfinance Policy and Supervisory Framework both under the supervision of the Governor.

  • Centre for Financial Studies gets advisory board

    An Advisory Board of the Centre for Financial Studies (CFS), a subsidiary of the Chartered Institute of Bankers of Nigeria (CIBN) and Lagos Business School of Pan African University was inaugurated in Lagos.

    CIBN President/Chairman of Council, Segun Aina who commissioned the board said it was meant to assist in producing new breed of bankers with requisite knowledge and skills to drive the financial services sector.

    He said the board has reputable personalities experienced in the banking profession. The members of the board include Central Bank of Nigeria (CBN) Deputy Governor, Economic Policy, Dr. Sarah Alade who serves as the Chairman; Vice-Chancellor, Ahmadu Bello University (ABU), Zaria, Prof. Abdullahi Mustapha; Director-General, Nigeria Institute of Social and Economic Research (NISER), Prof. Olufemi Taiwo; Managing Director/Chief Executive, First Bank of Nigeria Plc, Mr. Olabisi Onasanya; Rector, Federal Polytechnic, Nekede, Owerri, Dr. Mrs. Cele Njoku; and Registrar/Chief Executive, Dr. ’Uju Ogubunka. The Administrator of the Centre, Mr. Habila Amos, serves as the Secretary of the board.

    The CIBN has equally entered into strategic partnership with Lagos Business School/Pan Atlantic University, with a view to improving the quality of manpower in the financial services sector.

    This is coming on the heels of the signing of an Affiliation Agreement between the CFS, a subsidiary of the CIBN.

    Aina said the affiliation will among other things enable CFS and LBS/PAU to strategically engage in a number of activities to achieve the objectives of the CFS.