The Nation Newspaper

Category: Money

  • UBA rewards staff

    United Bank for Africa (UBA) Plc at the weekend held the third edition of the Most Valuable Performers (MVP) recognition award ceremony designed to motivate and encourage individual staff performances toward the attainment of the bank’s corporate goals and business targets.

    In a statement, the bank said a total of 120 best performing workers that will henceforth be known and recognised as MVPs were honored at the decoration ceremony which took place simultaneously at the bank’s Head Office in Lagos and across different locations in the country and UBA Country Subsidiaries.

    Group Managing Director/CEO, UBA Plc, Mr. Philips Oduoza, said the UBA MVP programme is one of the career management initiatives of the bank geared towards achieving talent attraction, development and retention.

    He described MVPs as employees that create extraordinary value for the organisation by consistently exceeding expectations.

    He said: “We are honouring today’s MVPs for their exceptional performance and in appreciation of what they have contributed to the growth of the bank. They are top performers and have met the minimum criteria in terms of performance and adherence to the Bank’s core values.”

    He congratulated the MVPs and urged them to wear the special lapel pins with pride even as they enjoy the associated privileges which include, accelerated career development, unrestricted access to company events, cash reward, leadership exchange programmes, cross country postings as well as the much-coveted UBA citizenship membership.

  • NSE advocates review of pension fund investment rules

    NSE advocates review of pension fund investment rules

    The Nigerian Stock Exchange (NSE) is seeking to have rules on the investment of pension-fund relaxed to attract funds and boost Africa’s third-best performing gauge this year, Chief Executive Officer Oscar Onyema has said.

    He told Bloomberg that Nigeria has more than N3.5 trillion in invested retirement savings, according to the National Pension Commission (Pencom).

    Investors should be able to put that money into companies with at least three years of financial statements, less than the five required now.

    He said: “Most of Pencom’s regulations are designed to protect investors, but investors are becoming more sophisticated. We are working very closely with them, the National Assembly, and other appropriate bodies to highlight areas where we believe there is a need for enhancement.”

    Onyema wants reforms to boost stocks, which have led the market’s all-share index move 32 per cent higher this year, and bolster an economy set to expand 6.2 per cent this year and 7.4 per cent in 2014, according to the International Monetary Fund (IMF).

    South Africa’s pension assets were worth about 3 trillion rand ($307 billion) by the second quarter, according to Bloomberg calculations made using Reserve Bank data, while the Johannesburg Stock Exchange’s all-share index gained 15 per cent this year.

    Ghana which ended the state pension fund’s monopoly on retirement savings, had assets of 1.06 billion cedis ($484 million) last year, according to the country’s pensions regulator. Ghana’s Composite Index is Africa’s best performer this year, jumping 75 per cent.

  • World Bank seeks growth for ecnomy

    World Bank seeks growth for ecnomy

    Nigeria’s short term macroeconomic outlook looks strong, with the likelihood of higher growth, lower inflation, and reserve accumulation, the World Bank has said.

    In a statement, the global lender said the development will present the government with an opportunity to make progress in key reforms and public investments associated with the Transformation Agenda for job creation, diversification, and more effective governance.

    The Nigeria Economic Report (NER) launched by the World Bank earlier in the year however sounded a cautionary note, indicating that the country’s economic growth has not automatically translated into better economic and social welfare for the citizens.

    NER notes: “Poverty reduction and job creation have not kept pace with population growth, implying social distress for an increasing number of Nigerians.”

    As part of its forecast for the country, NER also suggested that the nation will need to build up its fiscal reserve to protect the country from oil price volatility. It will also need to increase internally generated revenue to compensate for what will likely be declining oil revenues relative to the size of the economy, NER added.

    Given that the Gross Domestic Product (GDP) is growing much faster than oil output, and is experiencing significant inflation at a stable exchange rate, the size of g overnment oil revenues relative to GDP should increase.

  • Nigeria, others get $12b private equity fund

    Private equity firms have invested nearly $12 billion in Nigeria, South Africa and other Africa countries. The firms have also raised almost $10 billion, according to a study by Ernst & Young and the African Private Equity & Venture Capital Association (AVCA).

    Reuters in a report released yesterday, said many private equity firms have no doubts that Africa is the next hot spot for the industry as its burgeoning middle class continues to grow, but the pension and endowment funds who invest in private equity funds are more cautious.

    Principal Portfolio Manager at the World Bank Pension Plan, Alona Ponomareva, said Africa is the last frontier.

    According to the study, it is not difficult to see what has attracted them to the continent, adding that over the last 10 years, the continent’s economic output has increased threefold to $2 trillion while six countries on the continent have been among the fastest-growing economies in the world.

    Principal at private equity firm Hamilton Lane, Daniel Schoneveld, told a conference earlier this month that because of the uncertainty and many risks involved, many pension funds are hesitant.

  • N400b fund stabilises interbank market

    The interbank market which was volatile after the Cash Reserve Ratio hike by the Central Bank of Nigeria (CBN) is beginning to stabilise as the policy influence on the financial market wanes. The rate which was as high as 55 per cent in September dropped to 10.54 per cent for call funds, last Friday, writes COLLINS NWEZE.

     

     

    The interbank market was relatively steady last week Friday after the Central Bank of Nigeria (CBN) announced to foreign exchange traders, a market liquidity value of N400 billion for the day.

    The CBN, daily, gives market liquidity update to traders which guides their decision on that day. The market liquidity for last week Thursday stood at N600 billion.

    Data from the Financial Market Dealers Association of Nigeria showed that as at Friday, call rate stood at 10.54 per cent, seven-day 11 per cent, 30-day 11.62 per cent, 60-day 12.08 per cent while 90-day funds was traded at 12.37 per cent.

    Market liquidity is an asset’s ability to be sold without causing a significant movement in the price and with minimum loss of value. Money or cash at hand, is the most liquid asset, and could be used immediately to perform economic actions like buying, selling or paying debt and meeting immediate wants and needs.

    Currencies analyst at Ecobank Nigeria, Olakunle Ezun told The Nation on phone that the stability reflected improved market liquidity from treasury bills and Open Market Operation (OMO) repayment, and to a lesser extent, redemption of sovereign debt notes. The CBN sold N94.3 billion of 91-day, 182-day and 364-day treasury bills last Wednesday.

    It sold N32.8 billion of 91-day; N30 billion of 182-day and N31.4 billion of 364-day on competitive and noncompetitive basis. The stop rates were 10.8 per cent, 11.58 per cent and 11.7 per cent.

    He said the call/overnight and seven-day money market rates were at 10.5 per cent and 11 per cent while three month Nigeria Interbank Offered Rate (NIBOR) was 12.5 per cent, though less activity is done on the tenor.

    The inter-bank secured lending (Open Buy Back) rose 10.33 per cent for commercial banks and 10.5 per cent for discount houses last week Wednesday.

    Meanwhile, the CBN liquidity management remained active, supported by recent change to Cash Reserve Requirement (CRR), the circular issued on 1 August reviewing its guidelines for how banks access its Standing Lending Facility window and Wholesale Dutch Auction System forex auction, disclosed. There was also the latest CBN’s Monetary Policy Committee decision to hold rate unchanged at 12 per cent on September 24.

     

    Currency in circulation

     

    The volume of currency-in-circulation dropped to N1.44 trillion in August, representing a drop of about one per cent against the July figure, according to the CBN Economy report released last week.

    The report said the development, relative to the preceding month, reflected the fall in currency outside banks and vault cash, respectively. It added that the total deposits at the apex bank amounted to N6.5 trillion, indicating an increase of 7.5 per cent above the level as at the end of the preceding month.

    The development reflected the increase in commercial banks’ and Federal Government’s deposits, which more than offset the fall in private sector deposits.

    It said the introduction of the 50 per cent CRR on all public sector deposits in August, precipitated volatilities in most financial market indicators. It added that there was a reduction in the level of liquidity in the system due to the sterilisation of N896.43 billion and the delay in the release of fiscal allocation which did not impact on the banking system liquidity until August 26, 2013.

    It said the government’s bonds and treasury bills were issued at the primary market on behalf of the Debt Management Office (DMO) for the fiscal operations of the Federal Government, adding that the provisional data indicated that the total value of money market assets outstanding as at end of August, this year, was N6.5 trillion, indicating a decline of 0.1 per cent, in contrast to the increase of 0.3 per cent at the end of the preceding month.

     

    Bank directors

     

    Improved funding is needed to address infrastructure deficit and enhance the development of the economy, President, Bank Directors Association of Nigeria (BDAN), O’lorogun Sunny Kuku has said.

    He said Nigeria was at crossroads at this stage of her development, adding that fixing infrastructure through improved funding by banks will be beneficial to the economy.

    He said the forum which which the group will host soon, will have “Public Private Partnership Innovations in Public Sector Financing” as its theme. He said the theme was chosen because funding the infrastructural deficit in the economy remains the greatest challenge for all tiers of government.

    “Nigeria’s governance is peculiar with our funding structure wherein the tiers of government receive funds on a monthly basis and a greater percentage of revenues are allocated for recurrent expenditure. “This inevitably leads to regular capital funding deficits for majority of the leadership of the component states in the federation,” he said.

    Kuku advised government to consider other sources of funding for capital projects and social infrastructure adding that some state governments have already embraced Public-Private Partnership (PPP), either through outright concession, Build Operate Transfer (BOT) or Build, Own, Operate, Transfer (BOOT) with mixed results.

     

    Know Your Customer (KYC)

     

    Inter-Governmental Action Group against Money Laundering in West Africa (GIABA), advised banks to strengthen the enforcement of Know-Your-Customer (KYC) policy of the CBN.

    GIABA Representative in Nigeria, Timothy Melaye, told The Nation that removing Nigeria from the list of countries identified as jurisdictions with significant deficiencies in Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) regimes was good for the country.

    He said banks should do more in ensuring that they understand their customers’ businesses better. According to him, Nigeria has taken the right steps including the establishment of legal and regulatory framework that will assist it meet its anti-money laundering initiatives, the Financial Action Task Force (FATF).

    GIABA said: “The FATF welcomes Nigeria’s significant progress in improving its AML/CFT regime and notes that Nigeria has established the legal and regulatory framework to meet its commitments in its Action Plan regarding the strategic deficiencies that the FATF had identified in February 2010. Nigeria is therefore no longer subject to FATF’s monitoring process under its on-going global AML/CFT compliance process. Nigeria will work with GIABA as it continues to address the full range of issues identified in its Mutual Evaluation Report.”

     

    Dollar exchange

     

    Christian pilgrims to Israel, Rome or Greece will get foreign exchange (FOREX) from the banks at N146 to a dollar, a CBN circular issued to all authorised dealers last week said.

    Eleven banks were enlisted by the CBN to sell forex to the pilgrims. The banks include Union Bank, Zenith Bank, United Bank for Africa, Fidelity Bank and First City Monument Bank. Others are Unity Bank, FirstBank, Ecobank, Sterling Bank, Skye Bank and Keystone Bank.

    CBN Director, Trade and Exchange, Musa Batari, who endorsed the circular, advised the banks to always comply with the sale conditions to avoid sanctions.

    The regulator had in a previous circular of October 14, pegged maximum Personal Travelling Allowance (PTA) sale to intending pilgrims at $1,000 at a concessionary rate of N146 to a dollar.

    “The Federal Government has approved the purchase of a maximum of $1,000 at a concessionary rate of N146 to a dollar by each intending pilgrim as Personal Travelling Allowance (PTA). Consequently, each pilgrim travelling to Israel is entitled to maximum of $750 while those going to Israel/Rome or Greece are entitled to a maximum $1,000,” the CBN said.

     

    ABCON

     

    The Association of Bureaux De Change Operators of Nigeria (ABCON) has said bureau de change (BDC) operators should comply with the anti-money laundering policy being implemented by the CBN.

    Recently, the CBN announced some measures to check money laundering tendencies observed in the foreign exchange market. These include the ban on importation of foreign currencies and suspension of 20 BDCs for not rendering returns and non-compliance with anti-money laundering regulations.

    ABCON Acting President, Aminu Gwadabe said the measures of the CBN were in line with the group’s position on compliance with regulatory requirements.

    “When it comes to the issue of non-compliance with regulatory requirements, especially rendering returns as well as compliance with approved limits for foreign exchange transactions, the association has a zero-tolerance position.

    “We have made it known to our members that we would not hesitate to impose sanctions or report to the CBN, any member found guilty of not complying with these requirements. So we are fully in support of the actions of the CBN,” he said.

    He said the action is necessary to ensure sanity in the foreign exchange market, and most importantly the stability of the naira, which is critical to our economy.

     

    Bank to bank report

     

    Wema Bank Plc said the N40 billion capital raised from shareholders will be channeled into growing its loan volume by over 60 per cent in the next few years.

    Its Chief Financial Officer (CFO), Tunde Mabawonku, said in an interview at the weekend that the lender was committed to growing its loan volume from N89 billion to between N150 billion and N160 billion over the next few years.

    He said management was aware that the expectations of shareholders were extremely high, adding that management was committed to ensuring that such expectations were met. He disclosed that over 90 per cent of the new fund will be used as working capital.

    “We are not spending any money in terms of infrastructure or strengthening of Information Technology (IT) base because they are already in place. As we have got this money now, it will be strictly used for business. In terms of business plan, our primary market simply remains the South-west, South-south and the Federal Capital Territory,” he said.

    He described last year as a challenging year for the lender as it was hampered by lack of capital and adverse effects of loan provisioning. He said: “Those two factors affected our operations in 2012, we had very low capital and were unable to do as much business as we had wanted to.”

    According to him, while that lasted, lending was slowed, but deposit mobilisation continued, adding that with the restrictions lifted, the lender was now on a path of growth.

    Fidelity Bank Plc funded the Alausa Independent Power Project (IPP) launched in Lagos last week, Lagos State Commissioner for Energy and Mineral Resources, Taofiq Tijani, said.

    Tijani, who spoke at the inauguration of the project, said the bank did not only provided the funds, but also followed the project to completion.

    He said power development and delivery was no longer a rocket science, adding that the state government had earlier inaugurated power plants at Akute, Marina, which are running.

     

     

  • JPMorgan emerges Lead Manager for Eurobond

    Kenya, East Africa’s largest economy, invited JPMorgan Chase & Co. (JPM) to arrange the sale of a debut Eurobond that it plans to issue by January, Treasury Secretary, Henry Rotich, said.

    Bloomberg report said after negotiations to hire the lead manager, which would probably be completed in the next week or two, Kenya would start marketing the securities abroad over about six-weeks and then issue the dollar-denominated debt, Rotich said in a phone interview yesterday from the capital, Nairobi.

    In September, Rotich said the country planned to raise $1.5 billion to $2 billion to repay a $600 million syndicated loan and finance infrastructure including rail links and power-generation projects.

    “We have notified JPMorgan and invited them to discuss a letter of mandate, which is essentially a contract, to be the lead manager of the sovereign bond. The bond could be issued in November or the plan could flow over to January, since December is usually a bit quiet,” Rotich said.

    Kenya’s move to tap foreign debt markets follows similar issuances by other African nations. Rwanda became the first East African country to sell a Eurobond, raising $400 million in April, while Nigeria and Ghana both issued their second batch of international notes in July. The country has repeatedly delayed plans for the sovereign bond since at least 2007 when the global financial crisis squeezed credit markets. Kenya prefers to have two to three lead arrangers for its inaugural overseas bond, though JPMorgan will have the option to seek co-managers once the contract is signed, Rotich said.

    Kenya has also invited Arnold & Porter LLP, based in the U.S., to be lead counsel, Rotich said. The exact timing and amount of money Kenya will seek to raise will be determined in consultation with the arrangers, he said.

    Standard & Poor’s and Fitch Ratings have a B+ rating on Kenyan debt. That’s four levels below investment-grade and on par with Zambia and Cape Verde. It has the equivalent B1 rating from Moody’s Investors Service.

  • Nigeria’s infrastructure overhaul to cost $350b, says Rewane

    Fixing Nigeria’s infrastructure will cost $350 billion, the Managing Director, Financial Derivatives Company (FDC) Limited, Bismarck Rewane, has said.

    In FDC’s Monthly Economic Report released yesterday, he said Nigeria’s debt to Gross Domestic Product (GDP) ratio was 35 per cent, adding that the figure has renewed the argument of optimal debt level.

    Rewane said for a country like Nigeria that has an infrastructure deficit of $360 billion, according to the African Development Bank (ADB), a 40 per cent debt cap is insufficient in getting the job done.

    “An overhaul of the infrastructure gap would cost approximately $350 billion for an economy with an estimated GDP of $282 billion, and an annual GDP growth rate of approximately 6.8 per cent,” he said.

    The Fiscal Responsibility Act of 2007 set a 40 per cent ceiling for Nigeria’s public debt to GDP and the International Monetary Fund raised the threshold to 56 per cent in 2013.

    However, Rewane said the establishment of a debt ceiling is arbitrary at best, since there are many variables that should determine optimal debt level that are not included in determining the ceiling, pointing out that two crucial and often missed points are the causation of increase in debt/GDP ratio and the use of debt raised.

    “Since the economic well-being of a country should be seen through the prism of a sound business entity, there ought to be a distinction between “bad debt run up” and “good debt build up,” he said.

    In addition, the old practice of using the debt/GDP ratio as a measure of the health of an economy is questionable. It is a tool designed for advanced countries and not developing economies.

    Rewane advised that instead of focusing on the rate of increase in debt to GDP ratio in Nigeria, what should be of utmost concern is the direction of the naira. Since most of the recent debt issuance is foreign currency denominated, depreciation of the naira would prove costly, and if sustained, threat of default becomes imminent, therefore, jeopardizing Nigeria’s strong BB- rating.

    He said South Africa’s gross debt would balloon to 48 per cent of gross domestic product in the year through March 2017 from an estimated 43 percent last year. That he attributed to rising debt costs and tax receipts falling short of targets.

    South Africa’s debt levels compares with 80 percent in Hungary, 59 per cent in Brazil and 36 percent in Mexico. “The increase in debt levels is not a problem if you compare South Africa with some other countries,” Johann Els, an economist at Old Mutual Investment Group of South Africa, said adding “The fact that the deficit is getting smaller means we are putting a damper on the growth in debt,” Rewane said.

    South Africa’s reliance on foreign investors to finance the budget deficit has increased in recent months- to the nation’s economic risks, according to the Treasury.

    Rewane said Nigerian oil and gas sector remains a challenging environment to operate in. “In order to improve the outlook for this sector, the government has to ensure consistency in policies, address security issues and double down on initiatives to improve innovation for increased efficiency in the sector,” he said.

    Rewane explained that Nigeria remains a net importer of innovation and hence, must make the necessary investments in training institutions to provide capable human capital and innovation to meet the needs of the sector.

  • Market Cap crosses N12tr

    Total market capitali-sation of quoted equities at the stock market crossed the N12 trillion mark yesterday as substantial gains by petroleum stocks and other highly capitalised stocks sustained the positive outlook of the market.

    Aggregate market value of all equities on the Nigerian Stock Exchange (NSE) rose from N11.952 trillion to close at N12.017 trillion. The All Share Index (ASI), the main index at the stock market, indicated an average daily gain of 0.54 per cent at 37,611.65 points compared with its opening index of 37,408.56 points. The sustained bullish rally pushed average year-to-date return on equities to 33.95 per cent.

    The market showed mixed but tight trade perspectives with improved risk appetites mitigating the adverse impact of obvious profit-taking. There were 30 losers to 27 gainers, but investors’ appetites for downstream oil and building and housing stocks boosted the market situation.

    Investors also remained bullish on low-priced conglomerate-Transnational Corporation of Nigeria (Transcorp), with underlying sentiments being its newly acquired power plant and increasingly diversified business portfolio. Transcorp, which has remained consistently as one of the top-five most active stocks in recent period, was the most active stock yesterday with more than one-quarter of total market turnover.

    Conoil, the upwardly petroleum-marketing stock, was at the peak of the rally yesterday with a gain of N4.53 to hit a high of N49.15. CAP trailed with a gain of N4.05 to close at N46.87. Dangote Cement, NSE’s most capitalised stock, provided the main boost for the common index with a gain of N3.50 to close at N190. MRS Oil and Gas rallied N3.30 to close at N37.56. UACN Property Development Company rose by 78 kobo to N18.25. Flour Mills of Nigeria gathered 50 kobo to close at N84. Lafarge Cement Wapco Nigeria chalked up 47 kobo to close at N98.50 while Zenith Bank garnered 33 kobo to close at N21.75.

    Investors staked N2.93 billion on 329.24 million shares in 5,044 deals. Transcorp accounted for a total of 91.47 million shares worth N171.10 million in 241 deals. Banking subgroup was however the most active with a turnover of 135.50 million shares valued at N901.84 million in 1,577 deals.

    Profit-taking transactions saw several stocks depreciating, a cycle that would become more pronounced as investors begin to readjust market considerations in the light of third-quarter earnings. Guinness Nigeria topped the losers’ list with a drop of N4 to close at N241. Northern Nigeria Flour Mills followed with a loss of N1.28 to close at N24.37. UAC of Nigeria lost N1.01 to close at N64.99. Presco and PZ Cussons Nigeria dropped by N1 each to close at N34.50 and N39 respectively.  Ashaka Cement lost 86 kobo to close at N22.04. Oando dropped by 54 kobo to N11.31 while Nigerian Breweries and GlaxoSmithKline Consumer Nigeria dropped by 50 kobo each to N173.50 and N65 respectively.

  • Group supports microfinance institution

    Lift Above Poverty (LAPO), a microfinance institution committed to raising the socio-economic status of low-income people, particularly women in Nigeria, is on its way to becoming a world class organisation through the support of the African Management Services Company (AMSCO).

    In a statement, the group said it was motivated by the need to strengthen the company’s financial management processes.

    “Since the strategic partnership with AMSCO, we have been able to touch more lives in the last years and provide more solutions to women entrepreneurs than ever before. AMSCO’s input has had a tremendous impact on our operations,” LAPO Executive Director, Godwin Ehigiamusoe said.

    LAPO has enjoyed robust growth, now serving more than 500,000 microenterprise borrowers, 90 percent of whom are women. This growth has enabled LAPO to lower interest rates by almost 20 percent, and it has also become the first microfinance provider in Sub-Saharan Africa to use a nationally representative poverty scorecard to select its clients and track their poverty levels. The organization aims to continue to enhance leadership skills, literacy status and political participation among poor women.

    “Being associated with LAPO has been one of the highlights of my years at AMSCO. The institution has successfully pulled hundreds of Nigerians, mostly women out of poverty by listening to its customers and by focusing on adapting its operations to their needs. This is financial inclusion at its best,’’ said AMSCO Regional Manager; West & Central Africa, Mohamed Ky.

  • Stanbic IBTC, InfoTech partner on mobile money

    Stanbic IBTC Bank has reiterated its commitment to financial inclusion by empowering its mobile money customers.

    The bank said in a statement that it has partnered with Mobile Media InfoTech Limited (MMIT), a mobile software development company, to assist the youths and small business owners who do not have credit cards, to pay for goods through their mobile money wallets online.

    The bank said its mobile money wallets customers will be able to shop on foreign online sites like Amazon, Android store, Playstation and other gaming sites. “They will be given the option of making cardless payments through their mobile money wallets; and with this option, any customer with a smart phone will be able to make purchases on these online sites regardless of where they reside in Nigeria,” it said.

    Head of E-Business at Stanbic IBTC Bank, Thabo Makoko, described the partnership as another step towards financial inclusion for persons who are usually not able to shop online because they do not have credit cards.

    He said: “Mobile payments have taken a new turn in Nigeria and the days of being inconvenienced or excluded from participating in the digital economy as a result of one’s inability to produce credit or debit card details for online payments are over.

    “We want to provide more opportunities for the under-banked in every part of Nigeria, especially the small business owners; and we want to be known as the financial service partner that opens doors for our customers; empowering them to grow their businesses and lives.

    “Removing the barriers to participating in the digital economy, the online shopping process for small business owners, youths and the under banked will greatly reduce barriers to success in acquiring tools to improve lives.”