The Nation Newspaper

Category: Money

  • Leap Africa emerges finalist at Citi awards

    Leap Africa emerges finalist at Citi awards

    LEAP Africa has been announced as a finalist in the 2013 Financial Times /Citi Ingenuity Awards, for its Leadership, ethics and civics programme in Nigeria.

    In a statement, the firm said that last year, the Financial Times and Citi, a leading global financial services company, initiated the FT/Citi Ingenuity Awards: Urban Ideas in Action, a global programme.

    The awards aim to recognise individuals, teams, organisations and community groups that have developed groundbreaking solutions to urban challenges that benefit cities, citizens and urban communities.

    The awards recognise individuals and organisations with the most innovative solutions enabling urban progress across fields including education, social services, infrastructure and health.

    It said submissions were received from 44 countries and judges selected the finalists by region, based on the innovative solutions enabling urban progress across city administration, transport systems, energy and utilities.

    The FT/Citi Urban Ingenuity 2013 Awards Forum, held in London recently, brought together contenders from Europe, Middle East and Africa to discuss their innovative solutions and the impact of these solutions have had on their cities.

    Director of Programmes, LEAP Africa, Mr. Oje Ivagba discussed how LEAP Africa is collaborating with teachers in public secondary schools to equip and engage Nigerian teenagers as positive change makers in their communities.

    Launched in 2008, the Leadership, Ethics and Civics programme is a unique curriculum combining leadership and life skills.

  • FITC, IoD hold workshop for permanent secretaries

    Financial Institutions Training Centre (FITC) and the Institute of Directors (IoD) are organising one-day corporate governance workshop for the public sector.

    A statement from the organisers said the workshop is targeted at permanent secretaries, directors-general, directors and other senior officials of the public service in Nigeria. The workshop, titled, “Effective governance: Taking the public service to the next level”, will hold on October 24 in Lagos.

    FITC and IoD, observed that there have been relatively few trainings directed at public sector organisations, institutions, and parastatals, which tend to have much impact on the lives of members of society by reason of their daily choices and decisions. In view of this, those at the helm of issues in the public agencies ought to continually avail themselves with requisite knowledge and skills necessary to perform optimally, in line with best governance practices.

    “The workshop was specially designed to enable public sector participants examine governance arrangements, and likely outcomes that effective governance practices could have on the potential quality of public service delivery in Nigeria.

    At the end of the programme, participants should have an enhanced understanding of governance principles in public service, an appreciation of the characteristics of good governance and applicable leadership principles.

  • Foreign exchange reserves drop to $45b

    The foreign reserves have declined to $45 billion as at October 11, data from the Central Bank of Nigeria (CBN) website has shown. Analysts have projected a further fall of the reserves to $44 billion by year-end. The reserves were at $45.4 billion as at September 30, as against $46.8 billion on August 30, reflecting a loss of $1.4 billion in 30 days, before declining to current level.

    The CBN data 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 $46.77 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.

    The CBN had consistently maintained that inflow into the reserves was not consistent with the oil prices and, this underscores the need for tighter fiscal controls around oil revenues.

    The apex bank has also said there was urgent need to pursue policies that would foster macro-economic stability, economic diversification as well as encouraging foreign capital inflows. It said a higher rate of retention of oil revenues should facilitate the efforts at maintaining exchange rate stability as an antidote to imported inflation even without excessive reliance on monetary tightening measures.

  • Cleared cheques in Lagos slump to N2.2tr

    Cleared cheques in Lagos slump to N2.2tr

    he volume of cheques cleared in Lagos dropped to N2.2 trillion in August, 10.33 per cent below the level in July, Managing Director, Financial Derivatives Company (FDC) Limited, Bismarck Rewane, has said. The July figure stood at N2.42 trillion.

    He disclosed this at the Business Breakfast Meeting of the Lagos Business School.

    Rewane attributed the decline to Central Bank of Nigeria’s (CBN) N150,000 restriction on third party cheques, which he said is beginning to have an impact on transactional trend. He said further decline is expected in coming months.

    The policy which became effective from June 1, 2013 places N150,000 limit on all over-the-counter cheque withdrawals involving third party cheques in commercial banks, microfinance banks and primary mortgage institutions (PMIs) nationwide. Before that date, the policy was only applicable to Lagos.

    Rewane also said the impact of the Cash Reserve Ratio (CRR) on public sector funds will begin to wane in the third quarter, adding that the Federation allocation fund disbursed remained relatively unchanged at N715 billion, but N240 billion was sterilised at the CBN due to the CRR policy which became effective in August 7.

    According to him, this implies that only N478 billion was actually shared among the three tiers of government while money supply declined to N14.81 trillion, five per cent lower than the N15.59 trillion recorded in previous month.

    Rewane said the figure remains at the lowest level this year, with the decline attributed to the 1.2 per cent and 10 per cent decline in net foreign assets and net domestic credit respectively.

    He said the monetary policy stance is expected to remain contractionary when the Monetary Policy Committee (MPC) meets this month adding that the CBN Governor, Sanusi Lamido is committed to protecting the value of the naira.

    “There is no going back for Sanusi in his resolve to maintain the value of the naira. He has resisted the urge to devalue the naira despite exchange rate trading outside the CBN’s target band of N150 to N160 to a dollar,” he said.

    Rewane said the management of monetary policy will remain a major subject of discussion as Sanusi leaves next year.

    According to him, the CBN was highly independent and autonomous under Sanusi’s regime.

    However, interest rates have remained high and volatile, even as the MPC is expected to keep all rates and variables unchanged. He sees a further drop in external reserves to $44 billion.

     

  • Biometric database for customers takes off in March

    Biometric database for customers takes off in March

    Biometric database for bank customers will be ready by March next year. The project, which is the brainchild of the Central Bank of Nigeria and the Bankers’ Committee, is meant to have a central database where all bank customers’ information will be collated and stored. Since biometric identifiers are unique to individuals, they remain reliable in verifying identity of each bank customer.

    According to the CBN, the platform, when completed, would help operators and regulators of the financial system address issues of Know Your Customer (KYC), anti-money laundering (AML), and access to credit. This will help fast-track use of channels, such as biometric Automated Teller Machines (ATMs) and Point of Sale (PoS) terminals, among others.

    The CBN said it is also planning a Consumer Complaints Management System that will make it possible for it to monitor banks’ breaches in customers’ accounts. When completed, the platform will enable the regulator see which customer complaints are being treated, and which are not being considered. The CBN to, with the platform, see the complaints by bank customers and track the turnaround time of their resolution.

    It said the role of consumer protection is not limited to the CBN alone, but remains a collective responsibility of everyone. It said the Consumer Protection Unit of the CBN is mandated to educate consumers and defend their interest, detect money laundering and combat financial terrorism as well as enhance awareness on these issues. The apex bank is also reviewing the framework on consumer protection to ensure that all complaints by customers are promptly addressed.

    Also, where any of the cases is proved, the affected bank will be required to make necessary amends and where financial obligations are involved, will be required to refund the money. The measures are aimed at encouraging good banking habits and promoting efficiency in the delivery of financial services as well as boosting public confidence in the system.

  • e-clearing at branches may begin in Q4

    e-clearing at branches may begin in Q4

    Electronic clearing (e-clearing), being implemented only at banks’ headquarters, will be extended to banks’ branches in the fourth quarter of this year. However, this is subject to Central Bank of Nigeria’s (CBN) approval, it was learnt.

    The policy, which took effect last August, could not be fully decentralised to banks’ networks because of poor technical know-how and infrastructure needed for a seamless takeoff in the units.

    e-clearing involves stopping the physical movement of cheques and replacing the physical instrument with the image of the instrument and the corresponding data contained in Magnetic Character Ink Character Reader (MICR) line.

    The cheque details are captured, typically by the bank presenting the cheque or its clearing agent and electronically presented in an agreed format to the clearing house for onward delivery to the paying bank for payment. Unlike the more common form of presentation where a cheque is physically presented to the paying bank, a truncated cheque is typically stored by the presenting bank electronically.

    Clearing period under the new rule would allow cheques clear on a T+1 basis such that customers receive value in the morning of T+2 even as the clearing house is also expected to operate three sessions.

    Besides, the images of all the instruments in a batch/file shall be duly captured along with MICR data using scanners set up for the purpose. The amount needs to be captured/ keyed in to complete the data record.

    “The incoming images are subjected to validations. The images which fail validations are rejected with an appropriate response file. The bank may rescan the instrument and present in line with bank’s internal processes/ control procedures. The member banks have to maintain control over such re-presentments,” it said.

    Besides, banks are expected to plan transmission of their outward presentation by taking into account presentation volume, the bandwidth of network with the clearing house, and the session window. In the event of an exchange file being received at the clearing house within a session time but not passed to the clearing house, the clearing house would unbundle the exchange file, and reattach to a new session.

    In case validation of digital signature of presenting bank fails, paying bank may return such items with appropriate return reason codes. The introduction of the truncation process changes the roles and the responsibilities of the various participants in the clearing system and may lead to introduction of certain risks.

  • NDIC stresses need for microfinance training institute

    The Nigeria Deposit Insurance Corporation (NDIC) has lent its support to the establishment of a world-class microfinance training institute in the country to enhance capacity building in the banking subsector.

    The Managing Director/Chief Executive of NDIC, Alhaji Umaru Ibrahim, who made this known , also advocated the incorporation of All Women Microfinance Bank (MFB) to be wholly owned by Women non-governmental organisation (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 hosted the Executive Members of the National Association of Microfinance Banks (NAMB) in his office, said NAMB’s request for unit MFBs to have multiple branches and operate cash centres in local government areas of their operations was before a joint committee, and it 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.

    The NDIC boss reminded the association of the fundamental role of MFBs as grassroot business units toward enhancing financial literacy and consumer protection in promoting financial inclusion.

    He emphasised that only happy and satisfied depositors could guarantee the much needed public confidence in the banking system, saying that the NDIC had put in place a 24-hour toll free Help Desk to respond to all enquiries from depositors across the country.

    Ibrahim lamented the low level of payment of assessed premium among the MFBs which necessitated the need for a tripartite agreement between the corporation, MFBs and their correspondent banks to facilitate prompt collection of premium in the subsector.

    He advised MFBs to avoid the extreme situation that would warrant the withdrawal of NDIC insurance cover on erring MFBs. Such a move, he said, would not augur well for the advocacy of financial inclusion and development of the subsector.

    According to him, the purpose for which the corporation set aside N16 billion intervention fund to rescue technically insolvent MFBs and Primary Mortgage Banks (PMBs) was based on defined criteria instead of the wrong impression that it was meant as a form of financial stability fund for MFBs.

    He reiterated that N2.5 billion of the fund was used to reimburse the depositors of 103 MFBs liquidated in 2010 and, therefore, advised the NAMB to take a cue from the deposit money banks (DMBs) by mobilising resources for the establishment of a financial resolution sinking fund.

     

    He informed the association that the NDIC in collaboration with the judiciary and the police had concluded plans to prosecute operators and debtors who were culpable for the breach of trust and abuse of office that contributed to the collapse of the 103 MFBs in 2010.

    A case in point, he said, was that of Integrated MFB which accounted for over 60 per cent of the fund lost in the subsector. This would go a long way to institute the right attitude and financial discipline in the subsector for the future.

    Ibrahim also emphasised the need for adequate risk management framework and sound corporate governance practices as well as self regulation and market discipline to promote confidence and stability in the subsector.

  • Why MPC is tightening monetary policy

    The need to counter the negative impact of fiscal slippage, oil theft and pressure on the naira exchange rate has prompted the Central Bank of Nigeria (CBN)-led Monetary Policy Committee (MPC) to tighten its monetary policy stance, FBN Capital has said.

    The investment and research firm said in an emailed report that the MPC meeting of September 24 left its monetary policy rate (MPR) and cash reserve requirement (CRR) for banks unchanged at 12 per cent. It also retained the CRR for public sector deposits at 50 per cent.

    The CBN, which provides the majority of members on the committee, has also announced administrative measures to plug some foreign exchange leakages to save the naira.

    The research firm said 11 of the 12 members voted for no-change in the policy rate of 12 per cent, adding that the dissenter, who voted for a 50 basis points reduction, argued that monetary policy should enhance growth and development.

    He said blockages in the transmission mechanism are no excuse for inaction adding that in Nigeria’s case therefore, the CBN has to do more “administratively” to encourage bank lending to the real economy, and to reduce high interest rate margins.

    One member noted that crude oil output was just 1.85 mbpd in July and 1.88 mbpd in August.

    Another noted that production over the last four months of the year would have to average an implausible 3.67 mbpd to compensate for the shortfall of the first eight months against the 2013 budget assumption of 2.53 mbpd. The National Bureau of Statistics (NBS) forecasts growth of 6.9 per cent and 7.7 per cent year-on-year for third quarter and fourth quarter respectively. However, members had their reservations, given the oil losses and the security problems in the north east. The slowdown in distribution sector growth could also reflect pressures on consumer demand.

    “The share of foreign currency deposits in total deposits increased from 16.2 per cent in June to 21.3 per cent in August. Explanations include preparations for the elections in 2015 and money laundering,” they said.

    The most pronounced theme in the statements was the vindication of previous policy, evident from the fact that the naira has avoided the marked sell-off suffered by most emerging and frontier market currencies.

    The Committee considered the developments in money market rates which rose astronomically to peak at 40 per cent on 18th September 2013.

    However, these developments were temporary, arising from the postponement/stalemate in sharing the monthly Federation Account Allocation Committee Revenues. Banks which participated in the Wholesale Dutch Auction System (WDAS) widow expressed a preference for paying high interbank rate for one day rather than their borrowing from the CBN at 14 per cent and being barred from the WDAS window.

    It also observed the continued dependence of the banking sector on monetised oil revenues for its liquidity and stressed the need to keep pushing banks into altering their business model to reduce vulnerability.

  • StanChart targets Nigeria, others for Africa retail growth

    Standard Chartered Plc (StanChart) expects to open 100 new branches in Africa by 2016 to benefit from the continent’s $1 trillion annual retail spending,it has said. The lender will be focusing in key African countries, including Nigeria, where only about 14 to 15 per cent of the population has bank accounts.

    The lender opened 27 new outlets last year and will “invest heavily” in digital technology over the next four years, Raheel Ahmed, the bank’s Dubai-based head of consumer banking for the Middle East, Africa and Pakistan, has said. The bank will focus on small and medium-sized companies and private banking, he said.

    “There is so much growth potential, particularly where economies are growing rapidly,” Ahmed said.

    “In Nigeria, only 14 or 15 per cent of the people have bank accounts,” he said.

    StanChart’s operating revenue at its Africa consumer banking unit rose 9.4 per cent in the first half to $257 million. Economic growth in Sub-Saharan Africa will accelerate to 5.1 per cent this year and 5.9 per cent next year from 4.9 per cent in 2012, according to the International Monetary Fund.

    The bank posted a 24 per cent drop in first-half profit to $2.18 billion after a $1 billion write-down of its Korean business. Revenue rose 6.6 per cent as growth in Hong Kong and India helped offset declines in Korea, Singapore and China.

    Its income from retail banking in Africa, including credit cards and personal loans, is growing helped by expansion in Kenya and Botswana, Ahmed said. Income in Ghana grew 32 per cent and in Zambia by 45 per cent in the first half, he said. The bank has a “high single digit” market share in consumer banking in most countries on the continent in which it operates and more than 10 per cent in some, he said.

    The bank also expects to benefit from growing trade between Africa and China, which it forecasts to rise to $1.7 trillion by 2030 from $200 billion in 2012. Its presence in Asia, the Middle East and Africa will help it connect companies and help facilitate trade, Ahmed said.

  • Joint Tax Board moves to tackle multiple taxation

    Joint Tax Board moves to tackle multiple taxation

    The Joint Tax Board (JTB) has said multiple taxation is adversely affecting Nigeria’s level of competitiveness and makes the tax system inefficient.

    The practice entails levying of tax by two or more authorities on the same declared income, asset, or financial transaction, the board said, would soon be addressed.

    Established by Section 86(1) of the Personal Income Tax Act, 2004, JTB is the umbrella body for revenue agencies in the country. It has over the years contributed to the advancement of tax administration in the country especially harmonisation of personal income tax administration.

    The body explained that collection of taxes by all the tiers or any tier of government does not constitute multiple taxation. However, if the tax being collected is not in the approved list of taxes or not backed by any other law at the state or local government levels respectively, it is regarded as multiple taxations either for individuals or companies.

    It said the Tax Identification Number (TIN) introduced by the board, is one of the strategic pillars aimed at bringing to an end the issue of multiple taxation in Nigeria, and also bringing as many Nigerians as possible into the tax bracket.

    “There is a list of approved taxes and levies, containing 39 different taxes and levies applicable to all sections of the Nigerian economy. Out of these, eight are reserved for the Federal Government to collect, 11 for states and 20 for local governments. Unfortunately, the Federal, States and Local Governments have all gone out of this list resulting to multiplicity of taxes,” the JTB explained in a statement.

    According to the body, revenues collected as taxes by states and local government are not sufficient for them to run the states, forcing them to seek alternative sources of revenues in the form of Internally Generated Revenue (IGR) and multiplicity of taxes. It said that in most cases, a tier of government looks into the approved list, selects one of the taxes it is supposed to collect and creates additional taxes and levies under the same heading. These different new taxes are subsequently put on the taxpayers.

    For an individual who pays personal income tax on either his salaries or wages, if he is in a state or local government where he has to pay other taxes that are imposed or collected by the states or local governments, these other taxes apart from his income tax are multiple taxations on the part of that individual.

    Equally, where a local government subjects individual taxpayers to different kinds of levies like radio levy, wagon levy, generator levy, among others; all these levies that are imposed on individuals can be termed as multiple taxations.

    Manufacturers have also complained about levies that are paid apart from companies’ income tax, tertiary education tax, capital gains tax, and others in the approved taxes and levies list but if they are not backed by relevant laws, they are seen as multiple taxation.

    It said environmental levy and other levies being collected for the purpose of the environment by state governments amount to multiple taxations.

    “There ought to be only one levy to cover the environment but whereby you allow the Federal Government to take levies on the environment, the states take levies on environment, that amounts to multiple taxations. Also, there is the Value Added Tax (VAT), which is a consumption tax but some tiers of government have gone ahead to introduce other consumption taxes. Some states collect hotel consumption tax, restaurant tax, wine tax, eating tax, food tax or levies, they are all on consumption and amount to multiple taxation,” it said.

    It said multiple taxation has attracted criticisms from the Manufacturers Association of Nigeria, the Institute of Chartered Accountants, the Institute of Directors, various Chambers of Commerce and many other industry groups. The bodies have repeatedly called for a harmonisation of Nigeria’s tax regime.

    The Acting Chairman of the JTB, Kabir Muhammad Mashi pointed out that “The Taxpayer Identification Number (TIN) is a platform which will harmonize taxpayers’ identification and registration in Nigeria. It will create closer linkages between the various tax authorities in Nigeria, which is a cheaper and more convenient means of creating an efficient and effective tax system for the entire country.