The Nation Newspaper

Category: Money

  • Visa chief hails online payment

    Online shopping remains one of the best innovations experienced by shoppers, Country Manager for Visa in West Africa, Ade Ashaye, has said.

    In a statement, he said instead of trawling the malls for gifts in the hectic pre-Christmas shopping season, one can leisurely browse through the best deals from the comfort of his own home or office and make purchases.

    He said card users can compare prices across sites and get the best deal for that perfect gift. “In fact, in a Visa survey, 70 per cent of people said they shop online because it allows them to find and compare items easily. A lot of online shopping sites will also offer free shipping or home delivery to try and get the edge over their competitors, so take advantage,” he said.

    Ashaye however said that to be safe online, one has to look for secure websites that have an address that starts with http”s” for ‘secure’.

    “You can also look for a padlock icon in the browser that means your payment information is protected. Some websites will also provide further protection with identity authentication services such as Verified by Visa which requires you to enter a password before you can make a purchase. All you need to do is register your Visa card with your card-issuing bank or during the checkout process at a participating website, and then you’re good to go,” he said.

    According to him, people travelling a distance to visit family and friends over the festive period should reserve their flight or bus ticket online with debit card or via mobile money payment option and collect your ticket just before departing.

    “This not only means you have a reserved seat at a time that suits you and can enjoy a more comfortable journey, but it also means you can grab the best early-bird deals and stick to the all-important budget. As you are monitoring your account to make sure you are sticking to your budget, you should also watch out for any unauthorised transactions and report such to your bank immediately to stay protected,” he said.

     

  • CRR on private deposit may go up

    The Central Bank of Nigeria(CBN) may in the coming year, raise Cash Reserve Ratio (CRR) on private sector deposits by 20 per cent and further increase that of government deposits to 75 per cent, Managing Director, Financial Derivatives Company (FDC) Limited, Bismarck Rewane has said.

    In an FDC Economic report released at the weekend, he said the 38 per cent increase in CRR on public sector funds, which became effect in August, mopped over N1 trillion out of the financial system.

    He said the CBN targets a low-inflation rate of six to nine per cent next year, adding that further monetary policy tightening anticipated in January.

    He said inflation will be flat in the first quarter of the next year, but would spike to 11 per cent in the second quarter.

    According to him, the naira official trading band will be N155 to N165 to a dollar, with midpoint at N160, adding that stock market rally will continue in first half of first quarter.

    The CBN had in July raised the CRR for public sector deposits by 38 per cent to 50 per cent. The CRR is the portion expressed as a percentage of banks’ deposit balances, which they must have as reserve in cash with the CBN.

    CBN Deputy Governor, Economic Policy, Dr. Sarah Alade said the apex bank took time to study banks’deposit compositions before implementing the CRR policy. She explained that the CRR hike was necessary because there were pockets of liquidity that was destabilising the system.

    The CBN had in August reviewed guidelines for CRR reporting. The regulator said deposits from the Asset Management Corporation of Nigeria (AMCON), Bank of Industry (BoI), Nigerian Export-Import Bank (NEXIM) and Federal Mortgage Bank of Nigeria (FMBN) will not be reported as public sector funds.

    Others removed from the CRR list include Bank of Agriculture (BOA), Bank of Infrastructure, closed pension funds belonging to Government Institutions, State pension Boards, Governments Staff associations and cooperative societies.

    However, deposits from all Federal Government Ministries, Departments and Agencies (MDAs) and Companies, State Government MDAs and Companies as well as Local Government MDAs and their Companies were included.

    Also, deposits from the Nigeria National Petroleum Corporation Joint Venture accounts; Sovereign Investment Funds Government MDAs/Companies’ Collection Accounts such as Customs, Federal Inland Revenue Service among others fall within public sector funds. Also in this list are pilgrim welfare board and all accounts belonging to government universities.

     

  • Ecobank Capital raises $500m pre-export facility

    Ecobank Capital, the investment banking arm of Ecobank Group, has raised for Orion Oil Ltd, $500 million.

    In a statement, the bank said the fund would be used for the prepayment of crude oil cargos to be supplied by Société Nationale des Pétroles du Congo.

    The facility comprises a dollar denominated $342 million tranche and a XAF denominated $158 million tranche.

    Ecobank Capital acted as the Mandated Lead Arranger, working with United Bank for Africa Plc as co-arranging bank. Participating lenders were Afreximbank, BGFIBank Group, UBA Group, Banque Atlantique Group and the Ecobank Group.

    Acting Managing Director of Ecobank Capital, Ikenna Onyejiaka said: “This landmark transaction underscores Ecobank Capital’s capabilities as a Lead Arranger of syndicated loans, working with Africa’s key financial institutions to provide vital support to Congo’s economic growth, especially at a time when the Eurozone crisis is threatening African businesses’ access to international markets.”

    Executive Director of Ecobank Nigeria, Foluke Aboderin, said the bank was proud to be associated with Orion Oil Limited. “We are indeed excited to have participated in the $500 million transaction. For us at Ecobank, this transaction is undeniably strategic and represents what we are about – leveraging on our large footprint across middle Africa to support viable business for the development of our continent,” he said.

    Managing Director of UBA Cameroon, Georges Wega, said: “UBA Group’s strong participation in this deal underscores our passion to support African businesses and develop the economies of the continent. We look forward to doing more with more African businesses.”

  • Interbank rate falls on improved market liquidity

    Interbank rate falls on improved market liquidity

    The inter-bank rate fell slightly, by 75 basis points, partly due to improved market liquidity from treasury bills repayment, and to a lesser extent, lower inter-bank funding pressure.

    The call/overnight and seven-day money market rates were at 11.8 per cent and 12.3 per cent at the close of transactions on Friday. The three-month Nigeria Interbank Offered Rate (NIBOR) slowed to 13.2 per cent, though fewer activities were done on the tenor.

    The inter-bank secured lending (Open Buy Back) fell to 11.3 per cent but the Central Bank of Nigeria (CBN) liquidity management remained active during the week, supported by recent change to Cash Reserve Requirement (CRR).

    Meanwhile, the Debt Management Office (DMO) raised N75 billion on Wednesday through two re-opening of 13.05 per cent Federal Government of Nigeria (FGN) August 2016 and 10 per cent FGN July 2030 bonds. The stop rates were at 12.9 per cent and 13.2 per cent.

    In addition, there were N42 billion of the 13.05 per cent FGN August 2016 was allotted on non– competitive basis. The Central Bank Nigeria (CBN) sold N124 billion of 91-day, 182-day and 364-day treasury bills on December 4 at stop rates of 10.95 per cent, 11.2 per cent and 11.66 per cent.

    Currencies Analyst at Ecobank Nigeria, Olakunle Ezun said given the market liquidity and likelihood of increased funding pressure, rates might rise slightly to 12 per cent within the week.

    The naira strengthened by 0.1 per cent against the dollar in the Inter-bank and has lost 1.5 per cent of its value year-to-date. Inter-bank stability continued to reflect the impacts of CBN’s 26 September circular reducing foreign exchange sales to Bureau de Change, in addition to dollar supplies from oil companies.

    It closed the week at N158.6 to a dollar. Initial volatility at the twice-weekly Retail Dutch Auction System (RDAS) has ended, partly due to improved dollar supplies of $400 million per auction. The CBN sold $299.99 million on December 11, at N155.72 to a dollar.

    Meanwhile, the twice-weekly CBN’s RDAS continues to be influenced by 26 Sep circular regarding dollar sales to small scale importers. The naira remains under pressure due to structural imbalance between dollar supply and demand; and lower US oil demand.

     

    GDP rebasing

     

    Rebasing of Nigeria’s Gross Domestic Product (GDP) expected by year-end would take the figure from current $283 billion to $400 billion, Managing Director, Financial Derivatives (FDC) Limited, Bismarck Rewane has said.

    An FDC Economic Report for November said rebasing would entail changing GDP’s mode of calculating growth in output and using a more recent base year of 2010 from 1990 prices.

    This, Rewane explained, was meant to portray a better picture of the size and composition of the economy, by taking into account new sectors such as telecoms and the movie industry that have emerged over the years.

    He said GDP rebasing has been done by several countries such as Ghana, South Africa and Malaysia, and has significant implications on the structure of an economy.

    Nigeria, with a five-year average annual growth rate of seven per cent, has been using a 1990 base year to calculate the growth of its real GDP. “In nominal terms, this is estimated to be $283 billion in 2013, according to the Economist Intelligence Unit (EIU). Nigeria has a young and growing populace, estimated at 170 million, who have a per capita annual income of $1,624. Based on the above, Nigeria can be classified as a low-income economy that is heavily dependent on oil,” he said.

     

    Agric financing

     

    The Bankers’ Committee is targeting a loan growth of seven per cent to the agricultural sector of the economy by 2015, CBN Governor, Sanusi Lamido Sanusi has said.

    The Bankers’ Committee is an association of Managing Directors of Deposit Money Bank’s (DMB’s), top officials of the CBN, the Nigerian Deposit Insurance Corporation of Nigeria (NDIC). The group meets bi-monthly to discuss the state of banking sector and the economy. Credit to the agricultural sector rose from 1.6 per cent in 2009 to 3.7 per cent this year.

    A statement from the committee said the current figure, indicates an increase of 85 per cent over the 1.6 per cent growth of the agricultural sector share of banks’ credit four years ago.

    Sanusi, who chairs the committee, said the group also expects credits to the sector to rise to five per cent next year. He assured Nigerians and other stakeholders in the sector to partner in promoting an efficient and stable economy for the country. He said that part of the 2014 action plan of the committee would be to deliver price stability, financial stability, financial inclusion and economic growth.

     

    Customs revenues

     

    Revenues from Customs have declined to N304.6 billion as a result of Federal Government fiscal incentives, Coordinating Minister for the Economy and Mister of Finance, Dr. Ngozi Okonjo-Iweala has said.

    Speaking in Lagos at a breakfast meeting with the organised private sector on the performance of the economy, she said the figure which is for January to September represented a 14 per cent decline from N356.01 billion recorded for same period in 2012.

    She said Federal Government revenues in 2014 are estimated at N3.58 trillion showing a 13 per cent decline from 2013 budget estimates adding that expenditure in 2014 is also tighter and projected at N4.5 trillion, a 9.9 per cent decline from 2013.

    Okonjo-Iweala said addressing revenue shortfalls in the 2014 would require eliminating inefficiencies in government expenditure through fighting corruption in the public service, reducing the costs of governance, rationalisation of agencies in line with recommendations of the Orosanye Report among other processes.

    She said systems such as the Integrated Payroll and Personnel Information System (IPPIS) which enhances efficient personnel cost planning have been put in place to curb wasteful spending.

    The minister said 260 Ministries, Departments and Agencies are on IPPIS as at June, this year, adding that work is ongoing to bring in other 321 MDAs not yet on IPPIS.

    She said government savings on payroll cost to date is 139.6 billion and about 46,821 ghost workers have been identified through the introduction of the Government Integrated Financial Management and Information System (GIFMIS) in April 2012.

     

    Basel Accords

     

    The full adoption of Basel II will be executed by June 2014, the Central Bank of Nigeria (CBN) Director, Banking Supervision, Mrs Tokunbo Martins has said. the Basel Accord is a financial analysis principle that is expected to give Nigerian banks’ financials better credibility.

    According to her, banks are expected to start parallel run of both Basel I and II minimum capital adequacy computation based on the requirements of these guidelines effective January 2014.

    In a circular to all banks and discount houses on the implementation of Basel Accords in the country, she said both policies specify approaches for quantifying the risk weighted assets for credit risk, market risk and operational risk for the purpose of determining regulatory capital.

    According to her, the computations are consistent with the requirements of Pillar I of Basel II which is expected to ensure that banks have sufficient high quality capital to support their risk taking activities and that they establish effective risk management systems commensurate with their level of operations.

    She said all banks and banking institutions are expected to adopt the basic approaches for the computation of capital requirements for credit risk, market risk and operational risk. “Within the first two years of the adoption of these approaches under Pillar I; it is hoped that an effective rating system would have developed in Nigeria. Banks and banking groups are projected to have gathered more reliable data and gained more experience that would prepare them to consider the adoption of more sophisticated approaches,” she said.

    Analysts said the global knowledge and expertise in Basel principles reduces the risks of getting things wrong adding that the adoption of the model will further enhance transparency and facilitate the restoration of investors’ confidence in the on-going efforts to sanitise and rebuild the financial services sector.

     

    Revenue formular

    review

     

    The CBN has said it recognises that there is an urgent need to review fiscal terms of sharing revenues between the Federal Government and oil companies and to improve governance and transparency in the official oil sector.

    In a statement, CBN Director of Communications, Ugochukwu Okoroafor said, this underscores the need to urgently pass a Petroleum Industry Bill (PIB) that addresses fiscal terms and structure of the Nigeria National Petroleum Corporation (NNPC).

    He said the apex bank’s attention has been drawn to a letter expressing concerns over the non-remittamnce of oil revenue by the NNPC. He said it was aware that, on the instruction of the Minister of Petroleum Resources, the audit firm, PwC has been directed to audit the NNPC.

    “The capacity of the bank is to perform its role effectively is strengthened or undermined by the extent to which the nation is able is able to increase foreign exchange earnings and savings from these earnings, thus boosting the Excess Crude Account, raising reserve levels, providing currency stability and moderating interest rates with limited risks to inflation and financial stability,” he said.

     

    Bank to bank report

     

    FirstOnline, an internet banking product developed by FirstBank of Nigeria Limited, has been upgraded to enable customers achieve an efficient digital payment plans.

    Speaking at a media interactive session announcing the New FirstOnline, the bank’s Head, Marketing & Corporate Communication, Folake Ani-Mumuney said the lender upgraded ‘FirstOnline’ to maximise its customers’ Internet banking experience by making accessibility to banking services delivery swift and efficient in real time regardless of customers’ location.

    “This all-inclusive new ‘FirstOnline’ Internet banking platform is aimed at revolutionisig banking services delivery by giving the customers access to banking services without necessarily having to leave the comfort of their homes or offices,” she said.

    Guaranty Trust Bank Plc has been adjudged the “Most Innovative Bank” in Africa at the 2013 EMEA Finance Awards Dinner on Wednesday in London.

    In a statement, the bank said the award celebrates Africa’s Most Innovative Bank taking into consideration its market strength, profitability, growth & earnings, potential and quality of management of the financial institutions.

    The awards event also named the GTBank Managing Director/CEO, Mr. Segun Agbaje as the 2013 Pan Africa- CEO of the Year.

    Access Bank has won the inaugural edition of the Nigerian Risk Awards. In a statement, the bank said it was judged the overall winner in the Banking and Investments Services category at the awards ceremony.

    The award, organised by Conrad Clark Nigeria in collaboration with Business Day and the UK Institute of Risk Management, was in recognition of the lender’s measurable results through the effective implementation of enterprise risk management principles.

    The organisers said emphasis was placed on the development of creative and innovative solutions in overcoming the challenges facing business in Nigeria. They said the winner demonstrated commitment and effectiveness in its risk management processes.

    The First City Monument Bank (FCMB) Limited has rewarded its customers with cash and gift prizes in the ongoing ‘’FCMB 30th Anniversary promo’’.

    The regional and zonal draws held yesterday, nationwide saw three customers winning N1million each at the Regional draws held in Ogun State, Abuja and Rivers State. Also a total of 130 others won LCD Television, fridge/generator, DVD players among others.

    Ndubuisi Ifeanyi Franklin, Okechukwu Eze and Opia Peter Azubuike all won N1 million each at regional draws held in Lagos/South-west; the north and South-east/South-south regions respectively.

  • Foreign investment in FGN Bonds, T-Bills hits $11.6b

    Foreign investment in FGN Bonds, T-Bills hits $11.6b

    •Investors to closely watch CBN succession plans

    Foreign investors have a combined $11.6 billion stake in Federal Government of Nigeria (FGN) bonds and Treasury Bills (T-Bills), Razia Khan, Head African Research at Standard Chartered Bank, has said.

    In a report released at the weekend, she said the five-year term of Central Bank of Nigeria (CBN) Governor Sanusi Lamido will end in June 2014 and that the CBN boss was seen as the architect of reforms that stabilised Nigeria’s banking sector.

    Sanusi, she said, removed the minimum one-year holding period for offshore investors in FGN bonds, and a more credible anti-inflation policy with a commitment to foreign exchange stability.

    Khan said given Sanusi’s close identification with factors that contributed to Nigeria’s 2012 Government Bond Index-Emerging Markets (GBI-EM) index inclusion, investors will closely watch CBN succession plans.

    She said the 2014 budget was not presented in November 2013, the typical timeframe. This, according to her, was ostensibly because of disagreement over the benchmark oil price. “The contentious political backdrop raises the risk that no budget will be passed by end-March 2014 , the deadline for approving the budget. In addition, the still-ambitious oil output assumption (2.39mmbd versus 2.53mmbd in 2013) is likely to require further augmentation of budget revenue using Excess Crude Account (ECA) proceeds,” she said.

    According to her, with ECA savings thought to have declined to close to $3.3 billion, this raises upside risks to borrowing projections. also, given revenue constraints, the capital expenditure budget will be cut according to the Medium Term Expenditure Framework, with the share of recurrent expenditure set to increase to 74 per cent. While the framework foresees a reduction in spending to N4.5 trillion in 2014 from N5 trillion in 2013, the rise of a stronger political opposition is likely to result in pressure for increased spending.

  • Curbing urban mobility menace

    Curbing urban mobility menace

    The theme for this year’s world Habitat Day was Urban Mobility. Lagos, which is arguably one of the fastest growing cities in the world, is not immune to the attendant problems of urbanisation, such as mobility, migration and security. Seyi Odewale writes on how to confront these challenges.

    To a new comer to Lagos, the sheer number of vehicles on the road and the traffic snarl could be terrifying. But Lagos will always be Lagos. Its allure as an ever-growing city, where dreams can be actualised, continues to draw people to the city despite the transportation, migration and security challenges, among others.

    In a paper delivered during the World Habitat Day in Lagos, a professor of Urban and Regional Planning, Kayode Oyeniku, noted that over the past two decades, urbanisation trend has been fastest in developing countries, adding that as an all-inclusive generalisation, the faster the rate of economic growth, the more rapid its movement towards urbanisation.

    Urban population, he said, was expected to grow steadily with an estimation showing that by 2050, 70 per cent of the world’s population would live in urban areas. Lagos, according to Oyesiku, has the smallest land mass in Nigeria with about 356,861 hectares of land. Of this, about 75,755 hectares are wetlands. Its incredible population density, which is over 50 per cent of the national estimate, puts the state as the third largest megacity in two years.

    A United Nations (UN) estimate, put the present growth of Lagos at 3.2 per cent,while the metropolitan part of the metroplis, an area of about 37 per cent land mass, is the abode for over 85 per cent of the population. “Demographic trend analysis, revealed that the population growth rate of eight per cent has resulted in its capturing of 36.8 per cent of Nigeria’s urban population,” Oyesiku said, citing a 2006 World Bank report.

    According to Oyesiku, the effectiveness of a city lies within the realm of good infrastructural facilities like road networks. Adequate transportation system, he said, can foster spatial interactions, but rapid and uncoordinated growth of cities, he noted, “have compromised the existing transportation systems and significantly increased the challenge of creating future transportation systems, especially for developing cities.

    The increase in the number of vehicles on most roads has brought with it attendant problems of traffic congestion. “In urban areas of less developed countries, car ownership rate has been on the increase. Lagos has continued to experience traffic congestion because many car owners find it more convenient to travel to work by car rather than public transport in congested conditions. This increased use of personalised motor vehicles is choking already congested roads. The environmental and social impacts are significant and directly related to quality of life and urban productivity,” he said.

    Other challenges of urban mobility, he said, are: longer hours spent on commuting; inadequate public transport and environmental impacts and energy consumption, in which case, pollution of various types become serious impediments to the quality of life and health of the urban population.

    To mitigate these challenges, particularly in Lagos, roads must be widened and traffic free zones created; inter-sections and road signals must be improved upon; there must be freeway bottlenecks removal initiatives; there must also be special event management strategies in place; while traffic signals, lightings and signage must be improved.

    Others, such as parking policy, park and ride facilities and peak hour congestion management strategies must be in place with a working Bus Rapid Transit (BRT) and Light Rail Rapid Transit in optimal level of performance.

    He also suggested as optional, intermodal transportation as a basic option for urban mobility. Quoting Webster Dictionary, Oyesiku described intermodal transportation as involving more than one mode of carrier during a single journey

    He said: “In other words, intermodalism is characterised by multiple carriers or mixed mode of commuting during a single journey. The US Department of Transportation further noted that intermodal transportation involves the use of more than one type of transportation of people (passengers), goods (freight) and services.

    “Against the background of the definition, mixed mode transport focuses on rapid transport usually by rail, to be combined with low speed mobility, which is the bus or tram. Obviously, rail rapid transit or trains offer quick transit and provides the transition and accessibility where passengers embark and disembark very quickly in the course of a single journey.”

    He enumerated advantages this mode of transport has, saying it provides speed to ones destination; convenience; lower environmental impact; lower vehicle emission; insurance; lower fuel and maintenance costs, as well as increased automobile life expectancy.

    The Chief Executive Officer (CEO) of Lagos State Security Trust Fund, Mr Fola Arthur-Worrey, who presented a paper on Migration and Security said research showed that there is a high concentration of migrants from different parts of the country, the sub-region and the world in Lagos State.

    He said although it is reputed as one of the fastest growing cities in the world and by United States Agency for International Development’s (USAID) calculation in 2002, to have 25 million people in 2020, Lagos’ problems are compounded by the fact that “while yearly budgets of other cities with similar megacity status such as New York and Sao Paulo are relatively large, with 2013 budgets of $70 billion and $89 billion, Lagos only has an annual budget of about $3 billion.”

    With Lagos as a preferred destination for so many people for over six and half centuries; serving as trade outposts, harbour, Slave Trade depot, administrative capital of the country and the land of opportunities for everyone, migrations to the place are sure to happen. But these, according to Arthur-Worrey, come with attendant security challenges.

    Rural-urban migration, he said, brings with it problems of overcrowding, heavy pressure on existing infrastructure/resources/institutions, leading to reduced quality of life and urban tensions; large unskilled workforce; cultural confusion; criminality; resistance to public order and rising cost of living among others.

    On the impact of migration on security, particularly in Lagos, Arthur-Worrey said Federal institutions operating in the states are not properly resourced and expanded to cope with the present day realities, which include population growth. This often, according to him, put undue pressure on the state by subsidising federal expenditure. Such expenditures according to him, include supporting the police and other federal agencies, providing energy and creating numerous task forces.

    Large number of undocumentary immigrants, he said, makes identifying criminals difficult. To him, the presence of large, desperate and unskilled body of migrants that are predominantly averse to public order, especially if it restricts their economic activity such as Okada riding and street trading impacts negatively on security.

    The impunity of the nouveau riche, Arthur-Worrey said, leads to institutional failure, which encourages criminal activity and breakdown of law and order.

    He noted that undocumented migration always brings with it criminal activity “like the relationship of the ant and sugar” and areas of relative prosperity and disposable income with a high human density always attract the criminal classes such as kidnappers, robbers and burglars.

    The growth of unplanned settlements, which over-stretch security resources, according to him, provide havens for criminals, just as it leads to loss of control of public spaces to destitute and itinerant migrants who pose environmental challenges. They are also involved in anti-social behaviours.

    Another issue, which, Arthur-Worrey considered as impacting negatively on the security of major cities like Lagos, is what he termed “tyranny of the poor.”

    According to him, there is always some sorts of resistance from the poor whenever government intends to embark on certain urban renewal programmes.

    “Whenever the government attempts to institute order, e.g. by urban renewal programmes or restrictions on certain activities, there is resistance, encouraged by NGOs and other groups, ostensibly working on behalf of the poor, that accuse the government of being anti-poor. “The poor” are, therefore, to be left alone to do whatever they like. And these NGOs do not proffer any alternatives oor provide capital for improving the lot of the poor,” he said.

    Raising major issues and questions, Arthur-Worrey asked if the current national political economy was a working model. “Is the developing world adopting the correct strategies for real economic and social development? What exactly is our definition of social development? Have we disconnected too far from our traditional values in addressing our social problems?-e.g. the current focus on individual as against communal well-being/materially. Have we critically examined the real causes of our social inequality? And what exactly is our practical and sustainable template for human development, rural or urban?”

    His possible solutions to security challenges in megacities such as Lagos include: a “need to rethink our whole development philosophy in terms of actual targets and objectives-what really constitutes progress; a need to re-define our concept of liveable urban spaces; a national need to create more social programmes, especially massive investment in social infrastructure/welfare; identification of more public spaces to be converted into parks/leisure spots; a need for more effective resident and migrant documentation by governments (state and Federal) and a need for more public/private investment in security (a lot more needs to be done to bridge the equipment deficit) and investment in CCTVs by private sector,” he said.

  • Leasing to boost project financing, economy

    Leasing is a financing alternative for projects and businesses that would create wealth for the economy, Executive Secretary, Equipment Leasing Association of Nigeria (ELAN) Andrew Efurhiewe has said.

    In a communiqué issued after this year’s leasing conference in Lagos, he said globally, leasing had been used to facilitate the sale of vendors’ goods, enhance lessors’ profits and grant lessees the access to productive assets.

    He said the lessor, vendor and lessee need to collaborate for them to achieve set objectives. “There exists a communication gap between the lessor and vendor which must be adequately bridged to produce a more robust leasing environment.

    ‘’The potential of leasing is high considering the low lease penetration in Nigeria in comparison with other countries. There is need to regulate the activities of vendors in order to check the unscrupulous acts of some vendors which are detrimental to the growth of the leasing industry,” he said.

    Efurhiewe said professionals should facilitate accurate valuation of leased assets and create a strong secondary market for used assets. He said improved synergy between lessors and vendors will create growth and employment for the economy.

    He said ELAN would liaise with vendors and other stakeholders to create an efficient leasing industry that will continue to build wealth for the economy.

    He said the body will continue its proactive initiative by bringing to the membership fold reputable vendors and work towards setting standards for their dealings with lessors.

    ‘’Lessors should know their vendors very well and ensure they understand their products to enable them educate the final users of the assets – the lessees. Vendors should support efforts of ELAN such as the pursuit of the leasing law, aimed at improving the regulatory framework for the leasing industry that will invariably create more businesses for vendors,” he advised.

     

  • Women to get 40% of banks’ top positions

    Women to get 40% of banks’ top positions

    • CBN: many financial, risk officers unqualified

    The Central Bank of Nigeria(CBN) has directed that 40 per cent and 30 per cent of top management and board position in banks be reserved for women from the end of next year.

    CBN Governor Sanusi Lamido Sanusi said at a women empowerment conference in Lagos that banks had keyed into the supervisory bank’s plan of getting more women into these position.

    “Most of the banks have done so well. I have seen them going to look for women to put on their boards. There are now more female in the senior levels than ever before, even as the market is also asking for gender-balanced boards,” he said.

    Banks now, he said, were getting incentives from Development Finance Institutions (DFIs) like the World Bank and the International Monetary Fund, among others when they put more women on their boards. “The banks that promote these principles get funds from Development Finance Institutions as incentives to promote gender equality in the banks,” he said.

    CBN, he said, had taken action to break the glass ceiling that continues to block female talents from reaching the top by issuing a circular that by 2014, 40 per cent of banks’ top management and 30 per cent of Board directors should be women.

    He said as much as the banks and CBN wanted these targets to be achieved, merit and competence would never be sacrificed. “I am a very strong believer in diversity, be it gender, ethnic or religious, but I believe it can never be achieved by sacrificing merit and competence. We want women, but we need qualified women. If we want to fill a position in the bank and you are a woman, if you have the right qualifications, we will support you, if you don’t, then you have to go and get it,” he said.

    Sanusi also explained that just like in every part of the country, there are qualified people to fill any kind of position. It also follows for companies to also have qualified women to fill any kind of position.

    “If you say I want a woman with these qualifications to come, people should look at their structure and get the right persons to fill the positions. And if you don’t have enough qualified women, banks can go to other banks to get qualified women to fill the positions. And that is actually how this is going to work,” he said.

    He regretted that in most banks, key control functions were still being occupied by people without the requisite qualifications and competence.

    In some banks, he said, only about 50 per cent of their chief financial officers, chief risk officers were qualified, based on CBN criteria.

    The banks, he said, were not being asked to sack the less qualified staff, but to train and retrain them. “We have not asked banks to sack anyone. We advised banks to train and retrain them to ensure they reduce the level of non-compliance,” he said.

    Sanusi said women, who constitute half of the world’s human capital, were one of its most underutilised resources. Studies have shown that if better use were made of the world’s female human capital, economic growth will increase and the number of people living in poverty will decrease.

    He said 70 per cent of the world’s 1.3 billion people living on less than $1 a day are women and girls adding that in Africa, although the economic growth has witnessed an average of five per cent Gross Domestic Product expansion since 2010, there are more than twice as many extremely poor people living in sub-Sahara Africa.

    Globally, he said, women made up less than 30 per cent of the total labour force in some countries, and they are often concentrated in the low-productivity and low-paid agricultural sector.

    He said despite the impressive growth rate being experienced in Nigeria, women who constitute 49 per cent of the population make up only 21 per cent of the non-agricultural paid labour force.

    “But for Nigeria to continue on this high growth rate sustainably, skilled women should be deployed to drive productivity improvement by breaking the barriers and creating conditions to unlock the full potential of women. Similarly, women’s representation in management positions is remarkably low-known as the “glass ceiling” phenomenon. At corporate level, the number of skilled women reduces quickly as you move up the corporate hierarchy,” he said.

    He said this gender gap persists despite evidence that women managers can improve the economic performance of companies and organisations adding that it is this realisation of the economic benefit of gender equity that led CBN and the Banks to have deliberate policies to advance women to leadership positions.

    The CBN boss said Norway was the first to enact quota of 40 per cent women on boards, and women now hold 35 per cent of board positions. Similarly the European Commission has proposed a 40 per cent quota for the whole EU region. The United Kingdom has recommended a 25 per cent target by 2015.

    He said the CBN is focusing on gender diversity and women’s economic empowerment as pathways to achieve sustainable development through the implementation of the Nigerian Sustainable Banking Principles. The NSBP is to ensure that gender diversity is a business imperative.

    CBN makes gender diversity a priority because of the advantage of having a talent that is difficult to replicate adding that at the apex bank, seven out of the 27 Directors are women with some deliberately made to head traditionally male dominated departments.

    Also, 650 employees have received gender training and currently we have 25 per cent affirmative action with the target being 50 per cent.

     

  • Sustainable living: The new face of banking

    The Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC) are asking banks to look beyond profit and return on investment (RoI) in funding projects to sustainable banking practice. The proposal, which emphasises sustainability of the environment and corporate social responsibility (CSR), was the thrust of a workshop hosted by NDIC in Uyo, the Akwa Ibom State capital, report SIMEON EBULU and  COLLINS NWEZE.

    Should a bank lend money to a company that pollutes the environment or a borrower that funds terrorist activities? Should a bank base its lending plans on return on investment and profitability only, without recourse to the nature of business the borrower does? These and many more were the issues in focus in the forum that was designed to address the new phase of banking, tagged Sustainable Banking.

    But financial sector’s key regulators: the Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC) want banks to shift focus from profitability alone and consider also other issues around sustainability, before lending.

    The United Nations Environment Programme (UNEP), through its UNEP Financial Initiative on the Environment and Sustainable Development at the Earth Summit in 1992, placed it as pertinent concern for financial systems across the world.

    It said sustainable banking in Nigeria, therefore, is focused on energising the influence of the banking sector (being financier of economic and social activities) towards transforming the longer term interest of environmental preservation and societal balancing into key parameters for allocation of capital.

    It was, therefore, not surprising that the CBN and commercial banks are working out a framework that would restrict lending to companies that adopt and implement environmentally friendly policies. By this, International Oil Companies (IOCs) and other firms that engage in activities that cuase pollution of the ecosystem will be denied loans, going forward.

    The CBN Governor, Sanusi Lamido Sanusi said if the oil companies that degrade the environment and their cohorts in other sectors are starved of funds from both local and international banks, they will have no choice than to comply.

    He spoke during the Nigeria Sustainable Finance Week conference tagged: “Moving frontiers in sustainable finance”, which was meant to attract funding to agriculture, assist in global carbon trading and protect the environment from degradation.

    For him, there is urgent need for a policy ensuring that people do not carry on their businesses in environmentally unfriendly manner and get away with it. He said the agenda would be presented to the Bankers’ Committee to agree on the way it can be realised. The reason is that as an industry, banks cannot continue to take savings and deposits from Nigerians and then, lend to companies that are destroying the environment.

    “Why must Nigeria bring multinational oil companies to destroy our environment? How do we feel about it? They can get the funds and still use it in a responsible manner. I want to see more banks coming to identify with issues of sustainability and protection of the environment,” he said.

    He said banks should not just look at profitability of lending decisions, but should also consider contributions of the borrower to the environment.

    Sanusi, however, admitted that such might be an uphill task in a highly competitive banking sector ‘where dog eats dog’. “How can banks do that when they are competing for accounts? Banks should stop looking at size of balance sheet but on how to build sustainable finance,” he said.

    For him, competition in the sector has drastically risen, compared with what was obtainable in the 80s. He therefore admitted that the policy may be stalled by banks not wanting to lose businesses to competitors that care less about the environment, where a borrower has not adhered to set standards.

    Loan process

    The CBN boss explained that for firms to secure loans from banks, they have to meet certain standards that are applicable in other parts of the world like Brazil, Egypt, Saudi Arabia and Malaysia, among others. “Our environment has been taken for granted for too long. Look at what has happened to the Niger Delta. Imagine that people in the Niger Delta cannot put a net in the river and catch fish to eat and that is a fisherman who is not an employee of the oil company. So, he has to find money to buy imported fish. So, we are saying that even though these things may look simple, they are actually the foundation to the insecurity that we have in the country,” he said.

    NDIC’s role

    Also, the NDIC has called on banks and other financial institutions to improve their commitment to addressing environmental and social impacts of their services. The corporation made this known in a statement at the conference.

    It said more lenders have realised that ignoring social and environmental issues could increase their exposure to credit, compliance and reputational risks. It said to advance sustainability, banks must seek improved performance and results on ground in affected communities and environments.

    It explained that sustainable banking is a value system, which ensures that a bank’s commercial activities do not only benefit its staff and shareholders, but also its customers and wider economy.

    It said financing of the energy sector which is usually the villain on matters of environmental degradation across the world is a trite example. This sector is perhaps the most capital intensive sector and depends on the financial system to mobilise funds for its highly capital intensive operations.

    It said until recently the industry had not given much attention to sustainability beyond ticking off environmental impact assessment on checklist for credit risk assessment for evaluation of loan applications, other jurisdictions have for decades been engraving sustainability ethos in their financial system.

    It said since the 1980s, banks in the United States had been held (under CERCLA- Comprehensive Environmental Response, Compensation and Liability Act) for the negative impact the businesses they financed had on the environment and some of them became bankrupt thereafter.

    Banks’ funding of oil projects

    Eight banks, which include Ecobank, Zenith Bank, Diamond Bank,GT Bank, United Bank for Africa (UBA), Standard Chartered Bank, Access Bank and Fidelity Bank, provided funding for local contractors operating in the nation’s oil and gas sector.

    The banks signed Memorandum of Understanding (MoU) between Total E&P Nigeria Limited, Total Upstream Nigeria Limited and eight leading banks in the country, on a $7.5 billion Nigerian Contractors’ Initiative, in Port Harcourt, the Rivers State capital.

    The programme was put together by Total to manage its value chain, including suppliers and distributors. The essence is to empower local contractors to play more active role in the oil sector through sustainable funding.

    Managing Director/Chief Executive, Total, Mr. Guy Maurice, said the key objective of the MoU and launch of the fund, is to bridge the funding gap for the company’s local contractors which includes vendors and suppliers.

    He noted that the initiative provides for sustainable funding relationship between the selected banks and Total’s indigenous contractors, adding that the programme is in line with the local content laws.

    The Total boss lauded the eight banks for scaling through the rigorous selection process, expressing confidence that, the initiative will enhance local contractors’ participation in the company’s entire value chain business.

    CBN takes case to judges

    Sanusi, while speaking at the Banking and Allied Matters conference for Judges on the theme: ‘Sustainable banking practice in Nigeria: The journey so far and the way forward’, explained that global environmental impact of businesses, which are largely financed by the banking industry suggests that the sector has not given adequate attention to environmental impact of their funding activities.

    He said the tendency to view banking as an environment friendly business is commonplace as it seemed, on the surface, not to be harming the environment and society directly.

    “However, the banking sector has been profiting from financing of environmentally unfriendly sectors. Financing of the energy sector which is usually the villain on matters of environmental degradation across the world is a trite example. This sector is perhaps the most capital intensive sector and depends on the financial system to mobilise funds for its highly capital intensive operations,” he said.

    Template for violators

    The CBN has also developed a reporting template for banks in filling their reports on loans to firms whose operations have negative impact on the environment. This is in line with the Sustainable Banking Practice being promoted by the banking watchdog.

    The CBN said sustainable banking is aimed at minimising or mitigating the negative impacts of financial institutions’ operations on the environment and local communities in which they operate especially on agric, power and the oil and gas sectors.

    According to the regulator, for the successful implementation of the principles, the institutions would be required to develop a management approach that balances the environments and social (E&S) risks identified with the opportunities to be exploited through their business activities.

     

  • Retail Dutch auction triggers dollar scarcity

    Retail Dutch auction triggers dollar scarcity

    Effects of the Central Bank of Nigeria (CBN) policy introducing the Retail Dutch Auction System (RDAS) in place of the Wholesale Dutch Auction System (WDAS) have begun to emerge. The foreign exchange market last week witnessed dollar shortfalls which analysts have linked as the first of the many implications of the policy, writes COLLINS NWEZE

    The introduction of the Retail Dutch Auction System (RDAS) into the foreign exchange market has created a short term scarcity of the dollar and a marginal depreciation at the Bureau De Change segment of the market, analysts at Afrinvest West Africa Plc have said

    The investment and research firm, said last week’s dollar shortfall two months after the Central Bank of Nigeria (CBN) implemented the RDAS policy gave insight into market positions in the coming months.

    The naira last week traded at over N170 to a dollar at the black market.

    The RDAS was introduced to curb the excessive dollarisation of the Nigerian economy though the influx of likely political funds.

    The CBN had said it found tens of billions of naira was traded for dollars in cash, much more than importers needed to buy goods or investors to repatriate funds, and there was no trace of where the money came from or where it was going.

    Also, bond yields at the market continued to spread out due to sell-offs from both local and offshore players. At the close of the trading last week, average yields expanded 23 basis points to 13.3 per cent week-on-week (W-on-W).

    The benchmark bonds (10-year and 20-year maturities) both touched 13.4 per cent W-o-W. The shorter end of the yield curve remained the most active during the week as liquidity concerns dominated most market players. However, analysts expect yields to remain relatively stable this week.

     

    Revenue leakages

     

    The CBN has initiated processes meant to address high level of revenue leakages in the government and private sectors of the economy. The apex bank at the weekend, mandated banks to dishonor payment instructions for all forms of salaries, pensions, suppliers and taxes payment not transmitted through e-payment channels. The CBN said the policy applies to organisations with more than 50 employees.

    It said the process will reduce time and costs of transactions, minimise leakages in government revenue receipts and at the same time provide reliable audit trails, thereby making the Nigerian payments system comply with global payment standards.

    The action was taken to save cost for government, promote transparency and accountability in governance and increase internally generated revenue (IGR) for the country. The e-payment policy is also expected to ensure confidentiality of information of e-payment of taxes, salary, pension and suppliers.

    It said henceforth, payment instructions and associated schedules are no longer to be transmitted to banks by all public and private sector organisations through unsecured channels such as paper-based mandates, flash drives, compact discs, email attachments, among others.

    The transactions must be routed through bank approved electronic platform which transmits the instruction to debit a payer’s account and credit a beneficiary’s bank account, mobile account, electronic wallet or any other electronic channels.

    It shall include the ability of a payer to independently monitor and obtain electronic feedback on the status of any payment, at any time without depending on any third party, manual or semi-manual means.

     

    World Bank

     

    The World Bank and the French Development Agency has given a $230 million loan to Adamawa, Enugu, Osun and Niger states. The fund came under the Second Rural Access and Mobility Project, for which the World Bank and the French Development Agency are contributing $170 million and $60 million to the project.

    In a statement, the firms said they are building on the experience from the First Rural Access and Mobility Project (RAMP-1), that is rehabilitating more than 420 km of rural roads and 130 river crossings in Kaduna state.

    There is also the Second Rural Access and Mobility Project (RAMP-2) launched in Abuja will support rehabilitation, upgrading and maintenance of about 1,450 km of rural roads and building 65 river crossings. By improving the marketing of agricultural products, RAMP-2 contributes to the government’s Agriculture Transformation Agenda, designed to boost the competitiveness of high-value crops such as rice, cassava, sorghum and cocoa.

    Commenting on the Project, Marie Francoise Marie-Nelly, World Bank Country Director for Nigeria said, “Agriculture remains the backbone of Nigeria’s rural economy and growth in the non-oil sector can be accelerated by improving roads that are vital to increase agriculture productivity, access to health as well as education for rural communities.”

     

    Digital payment

     

    Visa, MasterCard and American Express have introduced a proposed framework for a new global standard to enhance the security of digital payments. The global payment firms are also looking at ways consumers can simplifying purchasing experience when shopping on a mobile phone, tablet, personal computer or other smart device.

    In a statement, they quoted an August 2013 report from the US Census Bureau, which said six per cent of all retail sales are conducted digitally, up nearly 200 percent since the first quarter of 2004.

    “As the number of digital transactions has increased, so has consumer demand for increased protection of their payment information. A host of industry activities, led by issuing and acquiring financial institutions, have already been introduced to help streamline and further secure payments in digital channels,” they said.

     

    Reserves

     

    The foreign reserves declined to $44.6 billion on December 5. The reserves were $46.8 billion on August 30, before declining to current level.

    Data obtained from the Central Bank of Nigeria (CBN) website showed that the reserves were on a steady and continuous decline throughout September.

    The reserves were at $46.82 billion on September 2, 446.81 billion on September 3 and 446.77 billion on September 9. The decline continued on September 19, when they stood at $46 billion before dropping to $45.9 billion on September 20.

    The reserves stood at $47 billion on August 19, dropped to $46.9 billion on August 21. The reserves were at $47.7 billion on July 1, and dropped to $47 billion on July 15.

    They stood at $48.33 billion on June 24, declined to $48.15 billion on June 27 and closed the month at $48 billion. The CBN data showed that the reserves were at $43.83 billion at end of December, 2012 as against $68 billion in August 2008 before the global financial crises impacted negatively on them.

     

    NDIC

     

    The Nigeria Deposit Insurance Corporation (NDIC) has stressed its total support for the establishment of a world-class Microfinance Training Institute in the country to enhance continuous capacity building in the banking subsector.

    The Managing Director /Chief Executive of NDIC Alhaji Umaru Ibrahim who made the clarion call also advocated for the incorporation of All Women Microfinance Bank (MFB) wholly owned by Women NGOs in the country, to protect the interest of small depositors and boost public confidence in the microfinance banking sub sector.

    Ibrahim, who made the call when he played host to the Executive Members of National Association of Microfinance Banks (NAMB) who paid him a courtesy visit in his office, said that the NAMB request for Unit MFBs to have multiple branches and operate cash centres in local government areas of their operations was before a joint Committee which must be critically analysed and judged based on its merit. He, therefore, advised the Association to await the recommendations of the Committee on the matter.

     

    Cash Reserve Ratio

     

    The Central Bank of Nigeria (CBN) increase by 38 per cent, cash reserve ratio (CRR) on public sector funds will reduce banks’ profit by 30 per cent, managing director, Financial Derivatives Company (FDC) Limited, Bismarck Rewane has said.

    Rewane, who disclosed this on the FDC Lagos Business School Breakfast Report released yesterday, said the policy implemented by the CBN in August, had mopped up liquidity in the system.

    He explained that despite expected impact on profits, banks stocks may remain in the coming year.

    He said the CBN targets a low-inflation rate of six to nine per cent in 2014 adding that further monetary policy tightening anticipated in January.

    Rewane said the CBN may in the coming year, raise CRR on private sector deposits by 20 per cent and further increase that of government deposits to 75 per cent.

    He said inflation will be flat in the first quarter of next year, but would spike to 11 per cent in the second quarter.

    According to him, the naira official trading band will be N155 to N165 to a dollar, with midpoint at N160 adding that stock market rally will continue in first half of first quarter.

    The CBN had in July raised the CRR for public sector deposits by 38 per cent to 50 per cent. The CRR is the portion expressed as a percentage of banks’ deposit balances, which they must have as reserve in cash with the CBN.

     

    Taxation

     

    Multiple taxation is a disincentive to foreign direct investment (FDI) and therefore hinders economic development, President, Chartered Institute of Taxation of Nigeria (CITN) Mark Dike has said.

    Speaking at the weekend during the CITN induction in Lagos, he said multiple taxation, in whatever guise name or manner is a major hindrance to economic development and social emancipation.

    “There is no doubting the fact that taxation is inevitable because it provides the resources for government to provide infrastructures for its citizens, but when taxes are severally replicated on the income of an individual, then there is a big cause for concern. For instance, some State and Local Governments request people to pay for registration of business premises and licence of business premises respectively,” he said.

    Dike explained that the above examples are one of the same as the only difference is the change of name. He regretted that governments, unfortunately, seemed not to have the wherewithal to enforce discipline and sanctity in the tax system as it is obvious that all levels of governments today are bent on collecting any taxes, anyhow.

    He said that clients and policy makers have continued to look up to us in their constant search for solutions to these various taxation and fiscal policy problems.

    “For instance, there had been several agitations from some quarters for an upward review of Property Tax. This call, though, seems good on the surface but definitely not the major solution or panacea to the problem of insufficiency of revenue or eradication of corruption which has eaten deep into the fabric of the Nigerian system,” he said.

    The CITN boss said the success of a unified tax system depends largely on the Government’s use of tax professionals who are its members to handle their tax matters in order to eliminate quacks in the tax system.