The Nation Newspaper

Category: Money

  • Why Sterling Bank is raising more capital, by MD

    The Managing Director, Sterling Bank Plc, Mr Yemi Adeola, at the weekend explained why the lender is raising additional capital.

    Speaking with reporters in Lagos, he said the net proceeds of the bank’s ongoing rights issue would be used to upscale growth and strengthen the lender’s operations for continuous improved benefits to all stakeholders.

    He said the new capital would also be used to fund the bank’s growth plan, including expansion and modernisation of branch network and information technology. The funds will also be used to support the bank’s growing retail and corporate banking businesses.

    Sterling Bank is raising N12.5 billion through a rights issue of about 5.889 billion ordinary shares of 50 kobo each at N2.12 per share. The lender had traded at a high of N3.05 at the stock market. The shares have been pre-allotted on the basis of three new ordinary shares of 50 kobo each for every eight ordinary shares of 50 kobo each held as at May 20, 2013. Application list, which opened on June 24, 2013, will run till July 31, 2013.

    The rights circular indicated that the net proceeds of the rights issue, estimated at N12.13 billion, would be used mainly to finance branch expansion and increase working capital

    A detailed breakdown of utilisation of net proceeds indicated that 35 per cent estimated at N4.24 billion, will be used for branch expansion; 15 per cent estimated at N1.82 billion for infrastructure upgrade, 10 per cent equivalent to N1.21 billion for information technology and the largest chunk of 40 per cent, estimated at N4.85 billion, will be used as additional working capital.

    Adeola explained further that the ongoing rights issue and other capital raising exercises were meant to support the bank’s next growth agenda, which is aimed at consolidating its stable performance over the years and enhance its competitiveness in terms of size and resilience to macroeconomic changes.

    He said additional capitalisation had become necessary because size has become increasingly important and relevant in the banking industry and the extent of capital base could be a limit to expansion in terms of physical presence and operations.

    The Sterling Bank boss pointed out that the additional working capital will enable the bank to expand the scope of its corporate banking business, noting that the lender is currently limited by the single obligor limit, which is a function of available capital base.

    He outlined that the bank would use the net proceeds from the rights issue to open more branches in places such as Abuja, Aba, Bayelsa, Delta, Ebonyi, Ekiti, Gombe, Kaduna, Katsina, Kebbi, Kogi, Kwara, Lagos, Ogun, Osun, Owerri and Port Harcourt as it seeks to consolidate its pan-Nigerian franchise.

    He expressed confidence that given the well-thought out growth plan and the itemised uses of the net proceeds, the bank would leap on the back of this recapitalisation to achieve its top-five bank goal while delivering better returns to shareholders.

    Savouring early reports from receiving agents and stockbrokers, Adeola reassured shareholders that picking up their rights amounts to raising the proverbial golden hen that will continuously build up their nest eggs.

  • Inter-bank rate steady on improved liquidity

    The inter-bank rate was steady last week, reflecting improved market liquidity from treasury bills (T-Bills) repayment. The stability was linked partly to slowdown in Central Bank of Nigeria’s (CBN’s) liquidity management exercise from June till date. In a special Open Market Operation (OMO) auction conducted last Thursday, the apex bank sold N92.46 billion of 210-day T-Bills. It offered N300 billion and sold N92.46 billion at 13.125 per cent.

    Last week’s rate showed that the call/overnight and seven-day money market rates were 10.3 per cent and 10.7 per cent respectively while the three-month Nigeria Inter-bank Offered Rate (NIBOR) also fell to 11.4 per cent although less activities are done on the tenor.

    The inter-bank secured lending (Open Buy Back) was steady on 10.25 per cent for commercial banks and discount houses respectively.

    Currencies Analyst at Ecobank Nigeria, Olakunle Ezun, projected that due to improved market liquidity, inter-bank rate would likely remain steady on 10.5 per cent during the week. The naira weakened 0.6 per cent against the dollar in the Inter-bank and has lost 3.4 per cent of its value year to date reflecting strong dollar demand to support import. Ezun said the naira remains under pressure notwithstanding CBN’s interventions mainly because of sliding foreign reserves and rising petroleum imports.

     

    Financial inclusion

     

    The CBN policy on financial inclusion reduced the adult exclusion rate in the financial system from 46.3 per cent in 2010 to 39.7 per cent. CBN Acting Director, Consumer & Financial Protection, Mrs Dutse Umma Aminu, disclosed this at the media Finance Correspondents and Business Editors seminar in Umuahia, Abia State.

    Mrs Aminu, who was represented by CBN Head, Consumer Education, Khadijah Kasim, said the overall strategy of the policy is to reduce adult exclusion rate from 46.3 per cent in 2010 to 20 per cent in 2020 as such feat would support the empowerment of many Nigerians and promotion of economic growth.

    He said the CBN strategy defined clear objectives and sets specific targets across five primary products and services bothering on payments, credits, savings, pensions and insurance. He said the priority is on transforming the Know Your Customer (KYC) regulation into simplified risk-based tiered framework that allows individuals who do not meet formal identification requirements to enter the banking system.

    He said the CBN and banks have achieved rapid progress regarding the new KYC regulation already released to commercial banks. He explained that the CBN is also pursuing the development and implementation of regulatory framework for agent banking to enable financial institutions deliver services through agents such as post offices in locations that will otherwise be unprofitable to open physical branches.

    Eluhaiwe said the CBN has also developed and is implementing a National Financial Literacy Framework to guide delivery programmes that will increase the awareness and understanding of financial products and services with the ultimate goal of increasing sustainable users.

    The banking watchdog, he added is also implementing a comprehensive consumer protection framework to safeguard the interest of consumers of financial products and services and sustain confidence in the financial system.

     

    Govt earnings

     

    The Federal Government earned N805.91 billion in April, CBN Economic Report for the month showed. The report said the earning was below the provisional monthly budget estimate by 14.7 per cent, but exceeded the receipt in the preceding month by two per cent.

    At N620.97 billion, oil receipts (gross), which constituted 77.1 per cent of the total revenue was below the provisional monthly budget estimate by 3.7 per cent, but surpassed the level in the preceding month by 4.3 per cent. It said the decline relative to budget estimate was attributed largely, to the fall in receipts from crude oil and gas exports in the review period.

    The CBN said gross non-oil receipts stood at N184.94 billion, but was lower than both the monthly budget estimate and the level in the preceding month by 38.5 and five per cent.

    The decline relative to the monthly budget estimate, it said reflected, largely, the low receipts from corporate tax, customs and excise duties and independent revenue of the Federal Government.

    Federal Government estimated that retained revenue was N323.96 billion, while total estimated expenditure was N374.43 billion. It said the fiscal operations of the Federal Government resulted in an estimated deficit of N50.47 billion, compared with the estimated monthly budget deficit of N73.92 billion.

     

    Mobile payment

     

    The total value of mobile payment transactions from November 2011 when it was inaugurated to May, 2013 was put at N74.2 billion by the CBN.

    CBN Director, Banking and Payment System, Oladipupo Fatokun, said the figure rose from N9.99 billion in November 2011 to N74.26 billion in May 2013, while the number of agent banks grew from 4,031 to 51,095 during the same period.

    Fatokun, who was represented by the Manager, Payment Policy and Oversight Department, Mr Chai Gang, said the number of operators in the payment scheme was 18 in May 2013. According to him, some mobile payment users also stood at 5.73 million in May.

    He explained that agent banking and mobile payment deployments had demonstrated that effective agent network was key to the growth of any economy.

    Fatokun said that the CBN was working with stakeholders in solving some challenges affecting mobile payment transactions. He listed some of the challenges to include public enlightenment, epileptic power supply and poor telecommunication connectivity.

    He explained that mobile payments are payment services operated under financial regulation and performed from or via a mobile device. “It is a payments transaction where the mobile phone plays a key role in the initiation, authorisation and/or consummation of the transaction. Mobile payments are a substitute or a replacement for cash payments. Instead of paying with cash, check or credit cards, a consumer can use his mobile device to pay for a wide range of services and receive payments,” he said.

     

    Bonds

     

    Nigeria returned to the international bond market for the first time in two years with a $1 billion sale of Eurobonds, raising funds for power projects amid a sell-off in emerging-market debt.

    Blomberg report said Nigeria issued $500 million of five-year notes to yield 5.375 per cent and $500 million of 10-year securities at 6.625 per cent.

    In January 2011, the nation paid 6.75 per cent on dollar debt due 2021 in its first overseas offering and the yield on the securities surged a record 133 basis points in June to 6.02 percent. Yields on emerging-market bonds jumped 73 basis points to 5.80 per cent, JPMorgan Chase & Co. data show.

    Demand is waning after the Federal Reserve signaled in May and June plans to rein in $85 billion a month of assets purchases that drove borrowing costs to record lows and fueled demand for emerging-market assets. Dollar debt sales this year by developing nations including Honduras and Rwanda have lost as much as 14 per cent for investors.

     

    Cash-less

     

    Bank customers that fail to meet the deposit or withdrawal limits under phase two of the CBN cash-less policy will not pay default charges for the next three months. The CBN placed a three-month moratorium on all bank charges for customers in the Federal Capital Territory (Abuja), Abia, Anambra, Kano, Ogun and Rivers states which fall within the phase two implementation schedule of of the policy.

    Confirming this development, CBN Director of Communications, Ugochukwu Okoroafor, told The Nation that the apex bank took the decision to defer the charges until October 1, 2013 because it wants the policy to succeed. He said the apex bank considered the need to give people time to migrate to electronic channels and experience the infrastructure put in place by banks.

    The implementation of the policy began in the six states last Monday. The policy, which before now was only operational in Lagos State, is aimed at promoting the use of electronic-based transactions instead of cash for payments for goods, services, transfers among other services. The implementation of the ‘Cash-less Lagos’, as it is known, began on January 1, 2012 and falls under the phase one of the project.

     

    Agric scheme

     

    The CBN disbursed a total of N199.25 billion to 270 projects under its Commercial Agriculture Credit Scheme. The total fund available to the scheme is N200 billion.

    CBN Governor, Sanusi Lamido Sanusi, who disclosed this at a workshop on tomato value chain development in Nigeria in Abuja, said the amount covers 30 state government projects.

    Sanusi, who was represented by CBN Deputy Governor, Economic Policy, Mrs Sarah Alade, said: “The SME restructuring fund (SMERRF) has disbursed N235.00 billion to 535 projects.

    “The CBN intervened with programmes, such as the N200 billion Commercial Agricultural Credit Scheme and Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL) to support the Federal Government.”

    NIRSAL, he added, was introduced to stimulate agricultural development in Nigeria through value chain financing and adopts a value chain approach to guaranteeing lending while banks will be free to choose which part of the chain they are interested in lending to.

    The intervention programmes the governor said, builds the capacity of banks to engage and deliver loans, reduce counter-part risk through an innovative crop insurance scheme, and rewards performance in agricultural lending.

     

    Bank-to-bank report

     

    The Board, Access Bank Plc has appointed Mr. Herbert Wigwe, 46, as the Chief Executive Officer (CEO) designate. He will succeed the Group Managing Director/ CEO of the bank, Aigboje Aig-Imoukhuede, at the end of this year when he retires. Wigwe is the Deputy Managing Director (DMD) of the bank.

    In a statement, the bank said Aig-Imoukhuede will be leaving the Group after 11 years and five months of service. Chairman, Access Bank Plc, Mr. Gbenga Oyebode said he appreciated Aigboje’s commitment to excellence and sustainable business practices, which have propelled bank to position of leadership in Nigeria and the sub-region. “His vision, integrity and enterprise have earned him local and international recognition,” he said.

    He said: “Having received the necessary regulatory approvals, I am pleased to announce that Mr. Herbert Wigwe, currently Group Deputy Managing Director has been appointed CEO designate and will succeed Aigboje Aig-Imoukhuede at the end of 2013.”

    Meanwhile, indicated interest in investing over $100 million on 110 new branches in Kenya, Ghana and, Nigeria Reuters report said.

    This will be done alongside five other core markets over the next three years, as well as making substantial hires across both the wholesale and consumer banking business, including over 900 sales staff in the consumer banking business.

    Standard Chartered’s CEO for Africa, Diana Layfield, set out her vision for the African franchise over the next five years against a backdrop of how far the business has travelled to date.

    The bank said investment spend will also be accelerated in mobile payments technology, physical infrastructure, staff hires, establishing new onshore presences and deepening existing ones.

    The bank currently covers 37 markets in the region – 15 on a full presence basis and 22 further markets on a transaction basis following its clients; providing extensive reach across the continent, thereby covering 92 per cent of sub-Saharan African Gross Domestic Product (GDP).

     

  • Two brokers delisted, one suspended

    The Chartered Institute of Stockbrokers (CIS), the statutory regulatory body for the stockbroking profession in Nigeria, has delisted two of its members from its register as institute continued efforts to maintain professional integrity.

    The two stockbrokers Peter Temidayo Ola and Mr. Kingsley Okwudiri Nnaji, were deregistered and barred for life from practising as stockbrokers for alleged involvement in unprofessional conducts. Another stockbroker, Mr. Akinwale Olagundoye, was suspended from trading in the Nigerian capital market for six months. He has however, appealed against the decision.

    The deregistration of the brokers followed the judgment of CIS Disciplinary Tribunal, which found them guilty of various offences. The CIS Tribunal is saddled with adjudicating and enforcing market practices and rules with a view to protecting investors in the market. Justice George Oguntade (rtd)is the legal assessor to the tribunal.

    In the judgments of the tribunal made available by Secretary of the tribunal, Ola was found guilty of infamous conduct contrary to and punishable under Regulations 5(vi), 5(vii) and 5 (xii) and section 11(1)(a) of the CIS Act of 1992.

    Four count charges were brought against Ola, including the collection of money from persons with the pretence that he had shares to sell; conniving with securities houses not registered with the Securities and Exchange Commission (SEC) and Nigerian Stock Exchange (NSE) to defraud unsuspecting investors.

    According to some of the charges, Ola was alleged to have between May and June 2009 collected N320, 000 from two persons under the false pretence that he had shares of Friesland Campina Wamco Nigeria when he knew he had none to sell.

    Nnaji, was deregistered because of infamous conduct for which the Disciplinary Committee of the Exchange had already found him guilty and his dealership clerkship withdrawn since last year.

    After reviewing the decision of the NSE committee, the tribunal affirmed that the conduct of Nnaji was of such magnitude that warranted the penalty given by the Exchange.

    However, Nnaji could appeal for relisting of his name if the decision of the NSE against him is reversed by an appellate tribunal.

  • Investors stake N15b as equities gain N268b

    THE stock market regained its vibrancy last week as sustained uptrend in the last two trading days of the week evened out earlier fluctuations to leave investors with capital gain of N268 billion.

    Transnational Corporation of Nigeria (Transcorp) Plc was the toast of investors during the week with transactions on the conglomerate accounting for 56.4 per cent of aggregate turnover for the week.

    Aggregate market value of all equities rose by 2.35 per cent to close at N11.694 trillion, representing an increase of N268 billion on the week’s opening value of N11.426 trillion. The All Share Index (ASI) indicated a weekly return of 2.11 per cent at 36,926.29 points compared with its index-on-board of 36,164.31 points for the week. The market overtly on the upswing with 44 gainers against 36 losers.

    Investors staked N14.90 billion on 3.48 billion shares in 24,576 deals with Transcorp accounting for 1.96 billion shares, representing 56.41 per cent of total turnover for the week. Turnover on Transcorp represented 7.6 per cent of the company’s total outstanding shares.

    The demand-supply situation on Transcorp indicated an uptrend as the stock appreciated by 17.97 per cent last week to close at N1.51 per share.

    With the voluminous turnover by Transcorp, the conglomerates sector was atop activity chart with a turnover of 1.97 billion shares valued at N2.83 billion in 1,400 deals. The financial services sector followed with 762.03 million shares valued at N6.19 billion in 12,479 deals. The telecommunications subsector recoded a turnover of 497.34 million shares valued at N994.53 million in 26 deals.

    On the over the counter (OTC) market, investors staked N151.21 billion on 134.83 million units of sovereign bonds in 929 deals.

     

  • Credit to private sector hits N15.5tr

    • State govts borrow N691b

     

    Lending to the private sector increased to N15.5trillion ( $96.8billion) in May, this year, FBN Capital Limited has said.

    The investment and research firm in its report titled: “Lending growth to the private sector subdued’, said state governments that are part of the private sector, borrowed N691billion ($4.3 billion) as at April, this year.

    Noting that the Federal Government is not part of the private sector, FBN Capital said that the private sector stands for the domestic sector of the economy.

    “Net loans from the banking system to the private sector increased in May by just 0.5 per cent monthly and seven per cent yearly. The private sector in this case is defined as the domestic economy other than the Federal Government of Nigeria, and thus includes the state governments, whose borrowings amounted to N691billion ($4.3billion) as at end-April,” the investment firm said.

    The total for the private sector in May was N15.5trillion ($96.8billion).

    The firm said the deposit money banks accounted for about 70 per cent of N15.5trilliion loan, while the Central Bank of Nigeria (CBN) accounted for the remaining 30 per cent in the form of Asset Management Corporation of Nigeria (AMCON) bonds, which are to be refinanced.

    It noted that banks’ credit to the private sector has increased in April by 1.0 per cent month to month and 11 per cent year-to-year, adding that the data is one month older when stripping the CBN from the figure for the banking system.

    According to the firm, soaring loan growth in 2007 and 2008 resulted in the country’s domestic event – that is the two bailouts by the CBN in 2009.  It noted that the granting of the bailouts coincided with the global financial meltdown, adding that the banks have learnt some lessons as a result of the developments. Besides, it noted that the regulatory authorities have put in place financial tightening measures.

    “ Nonetheless, the banks have indicated a more rapid loan book expansion this year than in 2012, and some have guided to as high as 20 per cent,” FBN Capital added.

  • Banks adopt new IT solution for cash-less

    To enhance cash-less banking, banks are striving to become Payment Card Industry Data Security Standard (PCI-DSS) certified and further secure their payment channels, the Central Bank of Nigeria (CBN) has said.

    Last year, CBN directed banks to comply with the standards to improve electronic payment channels and operate in line with  best global practices. Financial institutions including Sterling Bank Plc, Guaranty Trust Bank Plc, Stanbic/IBTC Bank Plc, among several others, have been certified.

    Head, Shared Office Department, CBN, Mr Chidi Umeano, said banks were showing interest in complying with the standards, adding that many have complied with the standards.

    He said: “A lot of banks have complied with the directive on PCI-DSS. There has been appreciable progress on this issue. Those that have not complied with the standards have expressed commitment to enhancing the securities of their payment channels. They are at various stages of compliance.”

    Also, the Enterprise Solutions Director, Microsoft Nigeria,Mr Ade Famoti, said many banks were working or leveraging components of Microsoft products to meet PCI-DSS compliance.

    He said many banks found out that the time, resource and process cost associated with PCI-DSS compliance have limited their ability to comply with the standards, hence their decision to leverage on the expertise of Microsoft.

    “Many organisations discovered that the time, resource and process costs associated with PCI DSS compliance limit their ability to implement a secure development process.

    “This is where we come in – helping businesses address PCI DSS security requirements when creating software or systems, while speeding adoption of the security development lifecycle in their organisations,” he added.

    The CBN’s spokesman, Mr Ugochukwu Okoroafor, said the issue of PDI-DSS compliant is very important to CBN, adding that it is part of effort to ensure the success of the cashless project.

    Okoroafor, however, said he needs to confirm the level of compliance of banks to the standards because the issue is sensitive.

     

  • ANAN tasks members on professionalism

    The Association of National Accountants of Nigeria (ANAN) will ensure professionalism among its members, the Chairman of its Ikeja Branch, Mr Oladimeji Solomon, has said.

    He said the country would produce half-baked and incompetent workforce, once professionalism is relegated to the background.

    Speaking during a seminar with the theme: The role of professional association in economic development and sustainability in the midst of unsecure and corrupt environment and organised by the body in Lagos, Solomon said accountants play an important role in the fight against corruption in the country.

    He said the need to have well trained and non-corrupt accounting professionals cannot be under-emphasised, if the country is to tackle corruption among other crimes.

    He said the association’s main goal is to produce highly qualified accountants, and save the country from corruption. He said accounting is a delicate and specialised area that requires integrity, discipline, sound knowledge and commitment of its practitioners, adding that the field is not for everybody.

    “Once you cannot show that you are a man of integrity, discipline, methodical, and hardworking, then accounting is not for you. This is what we emphasise on daily basis, and we would not relent it. We need to safeguard to promote ethical standards to contribute to the socio-economic development of the country,” he added.

     

  • Turbulent time for naira

    Turbulent time for naira

    The Naira

    Three factors put the naira at a cross-roads during the second quarter of the year: increased oil importation, reduced sales of crude oil at the international market and exit of foreign investors repatriating their profit in the capital market.

    These dynamics bolstered the demand for the dollar and weakened the naira. On June 17, the naira was at 18-month low, dropping 0.8 per cent to N162.60 a dollar, culminating in a weekly decline of 1.8 per cent. It was the worst performance since December 23, 2011.

    The naira’s decline steepened last month after the CBN broke its rule of only selling dollars at its bi-weekly auction within a three per cent band around N150 to the dollar, a system designed to stabilise forex trading.

    But analysts see the naira fluctuations as temporary, given the position of the reserves, which currently stands at $48.3 billion, which means the apex bank can defend the naira.That defence occurs regularly at critical points.

    Jide Solanke, an analyst at Lagos-based FSDH Merchant Bank Ltd told Bloomberg, that there’s was high demand for dollars as people are taking profits and their money out of the country. He noted that the reserve position is robust, which means the CBN can defend the naira.

    Currencies Analyst at Ecobank Nigeria, Olakunle Ezun, said though the naira has breached CBN’s three per cent above N155 to a dollar target, the banking watchdog is positioned to stabilise the local currency in the short term.

    During the last week of the quarter in a bid to tame the naira from further depreciation, the CBN increased the weekly offer at Wholesale Dutch Auction System (WDAS) market, offering $800 million from the usual $600 million, weekly. The marginal rate at both auctions remained N155.75 to a dollar. The Naira depreciated further last week losing 212 kobo week-on-week to close at N161.57 to a dollar from N159.45 the previous week.

     

    KYC

    The CBN also extended Know Your Customer (KYC) deadline for Designated Non-Financial Businesses and Professions (DNFBPs) from April 30 to December 31, this year.

    CBN Acting Director, Financial Policy and Regulation, A.O. Ikem advised DNFBPs that have not registered with Special Control Unit Against Money Laundering (SCUML) to do same before the deadline ends, failing which they would not be allowed to operate such accounts. The CBN said the extension was meant to address some of the challenges encountered by SCUML as a result of the number of persons seeking to enjoy late compliance.

    The CBN had earlier issued a circular, mandating DNFBPs on the need to provide additional KYC requirements to their banks and Other Financial Institutions (OFIs). It said compliance is in line with international best practice against adverse developments resulting from money laundering and financing of terrorism globally.

     

    World Bank hammer

    The World Bank Group announced the banning of the Nigerian firm, Scientific Energy and Environmental Management Systems Limited (SEEMS) for two years for fraudulent practices under the Second Lagos Urban Transport Project financed by the banks.

    It said the ban was part of a Negotiated Resolution Agreement, which includes satisfactory compliance with its Integrity standards, including corporate ethics training for all its employees within three months.

    SEEMS, however, agreed to fully cooperate with the World Bank’s Integrity Vice Presidency (INT), the unit mandated to investigate fraud and corruption in Bank-financed activities. The INT is responsible for preventing, deterring and investigating allegations of fraud, collusion and corruption in World Bank projects, capitalising on the experience of a multilingual and highly specialised team of investigators and forensic accountants.

     

    BoI’s credit

    To safeguard its loanable funds, the Bank of Industry (BoI) now demands 10 per cent equity contribution from prospective borrowers to enhance their commitment to the loans, the bank’s General Manager, Operations, Joseph Babatunde, has said.

    He spoke during the media workshop in Lekki, Lagos. He explained that the development finance institution is nearing conclusion in securing $500 million loan from the African Development Bank (AfDB), which would enable it expand its lending capacity to the economy.

    He disclosed that the AfDB will also be extending $200 million facility to the Nigeria-Export-import (NEXIM) Bank, adding that part of the delay in securing the loan was because the lender (AfDB) was awaiting Federal Government’s sovereign guarantee. “We have already secured the needed approvals for the loan aside getting a sovereign guarantee,” he said.

    He said rates for such loans are always at small margin above the Nigeria Interbank Offered Rate (NIBOR), adding that it will be a moving rate, rotating around NIBOR, and will be at single digit.

     

    Vision 20: 2020

    The Nigeria Inter-Bank Settlement System (NIBSS) also said the vision of Nigeria being among the top 20 economies in the world providing efficient e-payment services by 2020 will be achieved.

    NIBSS Executive Director, Business Development, Chritabel Onyejekwe disclosed this at during the 13th Card, ATM & Mobile Expo in Lagos. She said the cash-less banking initiative has recorded huge success and had drastically reduced banks’ operational costs.

    She said NIBSS in collaboration with the CBN, banks and other international partners are committed to the journey of transformation for the e-payment industry via cash-less economy. He said all the parties agree that a lot of work needs to be done at the grassroots.

     

    Private sector pension

    The private sector is well ahead of the public sector in pension fund contributions, FBN Capital, had shown. The report indicated that the private sector now contributes about 60 per cent of the N3.4 trillion pension assets under the management of Pension Fund Administrators (PFAs).

    The research firm said data released by the National Pension Commission (PenCom) showed that as at end of March 2013 (when pension assets were N3 trillion), the private sector contributed N1.8 trillion to the scheme. Also, the public sector’s contribution from ministries, departments and agencies (MDAs) of the federal and some state governments, was N1.2 trillion. This, it said, is a marked change from its composition in 2004 when the Act kicked off.

    FBN Capital said the increase to N3.4 trillion as at the end of May, this year was largely due to the filing in of 12 states into the contributory pension scheme, although only six states had collected and remitted contributions in compliance with the provisions of the Pension Reform Act (PRA) 2004.

     

    Religious bodies account

    The CBN refuted reports that it had ordered the freezing of the accounts of some religious organisations, citing alleged suspicion of links with terrorist groups. In a statement posted on its website, the banking watchdog said it had not ordered the closure or freezing of the bank account of any religious body or any institution.

    It explained that prior to 2006, Nigeria was on the list of the Non-Cooperating Countries and Territories (NCCTs) of the Financial Action Task Force (FATF), a global watchdog on financial crimes.

    The country was removed from the list on account of stringent actions taken by the Federal Government. However, by 2007, as a result of loopholes in Nigeria’s legal and regulatory system, the country was included in the ‘grey list’ of countries that had not made appreciable progress in their Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regime by FATF.

    “It was, therefore, incumbent on Nigerian authorities to ensure that her financial processes and procedures as well as the provisions of the Money Laundering (Prohibition) Act (MLPA) of 2011 and the Prevention of Terrorism (PTA) Act of 2011, were in conformity with FATF recommendations and international best practice,” it explained.

     

    Mobile money transactions

    The cumulative transactions by the Mobile Payments Operators in the last one year were worth over N64 billion, more than 60 per cent of which were done in the last three months, CBN Deputy Governor, Operations, Tunde Lemo has said.

    Speaking at the conference on cash-less policy held in Lagos, with the theme: Transiting to a cash-less society – Charting the way forward, he said the CBN had licensed about 18 mobile payment operators to offer payment services via the mobile phone that over 100 million Nigerian are using. This, he said, will help promote financial inclusion and by extension, make the nation a cash-less one.

    Lemo said the CBN has released the guidelines on agent banking to guide banks and other financial service companies who may wish to offer financial products and services, on how to appoint and manage the agents.

    He said central banks all over the world are usually at the centre of the development of the banking and payments system. This, he said, was imperative, given that they perform the role of facilitating the exchange of goods and services among the economic agents.

     

  • Experts: CBN’s projected drop in inflation rate will boost economy

    The ability of the Central Bank of Nigeria (CBN) to reduce inflation rate to seven per cent by September will augur well for the economy, experts have said.

    Such a drop in inflation rate from nine per cent to seven per cent will result in a growth of the treasury bills, bonds, equities and other traded financial instruments, they said.

    In line with its sound macroeconomic stance, CBN projected that inflation would fall from nine per cent to seven per cent in September.

    The development, which came on the heels, of the achievement of a single digit inflationary rate early in the year, according to experts, portends a good omen for the country.

    The Managing Director, BGL Securities Limited, Mr Sunday Adebola, said there would be positive real returns on investments once inflation falls to seven per cent in September. He said when investors made nominal returns and deflated them by inflationary rates; they achieved positive real returns on investments.

    He said: “Simply put a situation whereby inflationary rate is unable to affect the gains recorded from investing in tradable instruments could be described as positive real returns on investments.

    “When inflation falls to seven per cent in the third quarter of the year as projected by the CBN, real returns on investments in tradable instruments will increase.  A further decline in inflation means an increase in the prices of instruments. This is a good development for investors and the market in particular. This will lead to a corresponding increase in the aggregate turnover of instruments traded in the market.”

    Besides, he said the functionality of one rate is dependent on the other. “The moment the inflationary rate comes down, the interest rate moves in the same direction. When interest rate goes up, the prices of instruments will rise. If there is a decline in interest rate, investors would be able to move funds into the market.  When this happens, the prices of tradable instruments would increase. The market operators are going to be happy because they would make good returns on investments,” he explained.

    According to him, CBN has consistently been meeting its projections to encourage the growth of the economy.

    “If by September end, the rate of inflation falls to seven per cent, we should automatically expect a decline in interest rate. The Monetary Policy Committee would be compelled to adjust the benchmark interest rate, which has remained at 12 per cent in the past 12 months. I think this is a sign of good things in the nation’s financial market. What this means is that investors are going to get better returns. Whether it is headline or core inflation that experiences a decline, operators are bound to get positive real returns,” he said.

    Also, the General Manager, Treasury Department, Consolidated Discount House, Mr Bolanle Okunubi, said a fall interest rate would boost the bond and other financial market instruments. Okunubi said inflation and interest rate function together for the growth of the financial market. He said when there is a convergence of the two rates, the market is better for it.

    He said an average investor wants inflationary and interest rate to fall because that is the only way he or she can achieve growth.

    Noting that there are upside and downside effects in financial markets, Okunubi said the latter can be minimised when the market rates are favourable.

    He said high interest rates, inflationary rates, inconsistent economic policies, political crises; among other variables, affect the operations of the financial market, adding that they are growth inhibitors.

     

  • Firm to assist banks, others on CSR

    RyteDeals Nigeria Limited has introduced a product to help banks, microfinance banks (MfBs), mortgage institutions and manufacturing companies to improve on their Corporate Social Responsibility (CSR).

    Tagged ‘Dial-a-Deal programme, the idea, according to a statement, will help companies to make maximum use of their CSR’s budget.

    The Chief Executive Officer, RyteDeals, Mr Victor Alaofin, said the firm was committed to helping institutions get a fair deal or value for their CSR’s materials.

    He said the development was aimed at helping companies spend less on CSR, while at the same time getting more values for their efforts.

    The RyteDeals boss said the firm would help institutions to get discount on CSR’s items such as gadgets, food, electronics, clothing’s, medical services, trainings, events, accessories, cars among others.

    He said: ‘The company is value-driven, has a wide range of ideas and is structured to serve its customers better. One of these ideas is “dial-a-deal”, through which customers can dial a phone number to get ‘enhanced, convenience service’. Also, business owners equally have opportunity to get the “Ryte customers, market recognition and reach for their products and services.”

    He said the firm carries out deals online by asking clients to subscribe to its products, adding that the company has wider reach, as evident by its long list of individuals and companies that have requested for CSR-induced services.