The Nation Newspaper

Category: Money

  • Firm launches new products

    Firm launches new products

    ForexTime Ltd (FXTM) has announced the launch of seven new currency pairs for trading to enable traders to choose from a variety of options.

    The firm, in a statement, said the new currency pairs include exotic pairs, crosses with the Swiss Franc and crosses with the Australian Dollar, a major commodity currency.

    ForexTime gives its clients access to the global currency market and offers trading in forex, precious metals, commodities, shares and indices.

    Chief Executive Officer, ForexTime,Olga Rybalkina, said: “The new currency pairs include exotic currencies, such as the Turkish Lira, the Danish Krone, Norwegian Krone and Swedish Krone. These currencies tend to make quicker and larger movements than major currency pairs and it is this volatility that makes these pairs popular with experienced traders.”

    The firm said the currency pairs are USD/TRY (US dollar vs Turkish Lira);EUR/TRY (Euro vs Turkish Lira); AUD/DKK (Australian Dollar vs Danish Krone); AUD/NOK (Australian Dollar vs Norwegian Krone); AUD/SEK (Australian Dollar vs Swedish Krone); AUD/SGD (Australian Dollar vs Singapore Dollar); CHF/SGD (Swiss Franc vs Singapore Dollar).

  • ICAN seeks improved financial skills

    ICAN seeks improved financial skills

    The Registrar/Chief Executive, Institute of Chartered Accountants Nigeria (ICAN), Olutoyin Adepate, has emphasised the need for improved skills among accounting experts to tackle money laundering and financial crimes.

    At the induction of new members of the Association of Accounting Technicans (AAT) in Lagos, Adepate said the promulgation of the Money Laundering and Anti-Terrorism laws demanded specialised professional expertise to deal with emerging issues in the banking and economic environment.

    He said accounting technicians need to develop skills to assist the government in the crusade to curtail the growth of the practice. With the government making legislations to combat money laundering and terrorist financing, Adepate urged accounting officers to ensure the soundness, integrity and stability of the financial system is not compromised.

    Adepate stressed the need for officers to acquaint themselves with international accounting standards to institutionalise greater transparency in financial reporting.

    The registrar said the world is moving to a single set of high quality accounting standards, ones that would make financial statements comparable around the world.

    He urged the young practitioners to get them selves equipped to respond to the changes.

  • ECOWAS fixes 2015 for takeoff of single currency

    ECOWAS fixes 2015 for takeoff of single currency

    After a long delay, the much-anticipated single currency for West Africa may come into being in 2015, some 12 years behind the initial target date.

    The currency was expected to come into being in 2003, but it didn’t because of some problems.

    It was thought it could take off this year before what was described as “irregular cash flow” among the six promoting-countries again stalled its coming.

    The countries are Nigeria, Ghana, The Cambia, Benin, Liberia and Senegal.

    In an email, FBN Capital said the West Africa currency union (the Eco), is faltering in difficult circumstances. It said a technical meeting of the six-member states of the West African Monetary Zone (WAMZ) in Abuja indicated that none of them met the four primary macro-convergence criteria as at June last year.

    Rather, the performance of the zone on its convergence scale deteriorated from 79.2 in June 2011 to 62.5.

    Inflation, one of four primary criteria, averaged 12.6 per cent in June, last year, compared with 11.6 per cent one year earlier.

    It said the latest deadline for the launch of the single currency in WAMZ is 2015. Also, a second stage would see the inclusion of the nine other members of the Economic Community of West African States (ECOWAS).

    “The view of the zone’s secretariat is that the two most challenging primary criteria are inflation and a budget deficit of no more than four per cent of Gross Domestic Product (GDP). The two others cover central bank financing of that deficit and external reserves,” it said.

    Central Bank of Nigeria (CBN) Deputy Governor Sarah Alade told the meeting that the challenges in the Eurozone had contributed to WAMZ’s inability to meet its criteria, citing uneven capital flows and increased unemployment.

    She said the Eurozone’s challenges are largely the function of its institutional and policy weaknesses.

    “Currency union is often said to boost trade between members. The Franc Zone has been in operation for more than 60 years, and trade between members remains negligible. Its own members produce unprocessed agricultural commodities for export and the same semi-manufactures,” it said.

    FBN Capital said the Franc Zone has a good record of low inflation on the back of its shared currency pegged to the Euro, provided that its harvests do not fail.

    A potential risk to the Eco lies in the dominance of Nigeria in WAMZ. The five other members, The Gambia, Ghana, Guinea, Liberia and Sierra Leone will be sensitive to voting rights in the currency union’s structures while Nigeria will be wary of the entry of countries, in the manner of Greece and the Eurozone, without genuinely meeting all the criteria. Monetary union is not a priority for Nigeria, and in any event is highly doubtful for 2015.

    Meanwhile, the central banks of West and Central Africa are considering merging their currencies to boost trade within the region, Lucas Abaga Nchama, governor of the Bank of Central African States, said.

     

  • Micro-refinance firms get four-month accounts’ timeline

    Micro-refinance firms get four-month accounts’ timeline

    Micro-refinance companies (MRCs) are required to publish their audited financial statements four months after the close of their financial year, the Central Bank of Nigeria (CBN) has said.

    CBN Director, Other Financial Institutions Supervision, Olufemi Fabamwo said this is in accordance with Section 27(1) of Banks and Other Financial Institutions Act (BOFIA), 2005.

    The MRCs, he said, must submit their audited financial statements and the abridged version of the accounts to his office for approval before publication. He said every published account should disclose in details, penalties paid for contravention of the law, policy, circulars and guidelines in force during the financial year in question and the auditor’s report would reflect such contravention(s).

    He said a new framework has been approved for the subsector by CBN, providing for the licensing and establishment of MRCs as specialised second-tier institution, which would provide short-term liquidity, long-term funding and/or guarantees to mortgage originators and housing finance lenders.

    He said the establishment of MRC is aimed at increasing the liquidity within the mortgage sub-sector and availability of mortgage credit in the country. It will also reduce mortgage, related costs, and make residential housing more affordable.

    Fabamwo also specified the standards and criteria for, and timing of, periodic assessments of the creditworthiness of borrowers, obligors, or other counterparties, and for the establishment of credit limits.

    The CBN director said the fees to be charged for obtaining, or pre-paying, advances, including any schedules or formulas pertaining to such fees must be specified. To be specified too are the standards and criteria for the pricing of the MRC’s products, including differential pricing of advances.

    “The number of directors on the board of the MRC will be a minimum of seven and a maximum of 15 while the non-executive members must be at least twice the number of the executive directors at any point in time. The CBN will approve the appointment of each director who meets the qualifications for licensed bank directors as specified in the Banking and Other Financial Institutions Act (BOFIA), or as may be specified by the bank from time to time,” he said.

    Also, executive directors of the MRC is to hold office for a fixed term of not more than five years and such term may be renewed only once, while non-executive directors shall serve for a fixed term of not more than four years and such term may be renewed only twice.

    He said the maximum tenure of an executive director will not exceed 10 years while a non-executive director will not serve for periods exceeding 12 years in total.

    Fabamwo explained that the internal control framework adopted by the MRC should be developed in line with key components of the Committee of Sponsoring Organizations of the Treadway Commission’s Integrated Framework for Internal Control (2004) and should comprise the control environment, risk assessment, control activities, information and communication and monitoring.

     

  • Competition’ll drive banks’ growth, says RenCap CEO

    Competition’ll drive banks’ growth, says RenCap CEO

    Growth in the banking sector will be driven by competition and improved corporate governance structure, Chief Executive Officer, West Africa, Renaissance Capital (RenCap), Mrs Yvonne Ike, has said.

    In an interview in Lagos, she said growth in the sector would be driven by competition, which could spur fresh mergers and acquisitions taking some lenders to mega bank status. Besides, she said the growing interest of foreign investors in the sector would spur its growth.

    She said: “I think we would see a bit more consolidation in the banking sector. The banking sector is a very strong sector and it is going to continue to be very competitive. We see a bank like Guaranty Trust Bank (GTBank) that has a cost to income ratio of 41 per cent and has return on equity of over 20 per cent. So, we would see people struggling to compete and banks that have the platform and align their strategy with the growth sectors of the economy would outstrip others. We are gradually seeing more international banks looking at the market. This is something that is taking longer than we anticipated.”

    Ike listed poor infrastructure, security and corruption as major factors affecting the growth of the economy. She was, however, upbeat with the ongoing reforms, saying that the country would continue to record economic growth.

    She urged both local and foreign investors to take advantage of the investment opportunities in the economy. “The issues that Nigeria faces predominantly are around infrastructure, corruption and security. But we are seeing developments in those areas. But we are all impatient for it to move a little quicker. We do think that everything is moving in the right direction. That is why we think that the country is an investment destination. You can’t wait for everything to be fixed before you invest. We think that the time to invest especially in the banking sector is now,” she declared.

     

  • CBN intervention strengthens naira

    Intervention of the Central Bank of Nigeria (CBN) and foreign exchange upswing in the last one week forced the naira to halt a five-day decline. The local currency rose 0.9 per cent and traded 0.6 per cent stronger at N158.65 per dollar last Friday after the banking watchdog intervened with about $50 million dollars.

    Also, the reserve, which rose to $48.2 billion on March 14, strengthened the naira, which has dropped to 1.5 per cent this year, according to data obtained from the CBN website.

    “There was intervention from the central bank. There was a lot of corporate demand” and the regulator is trying to stabilise the market, he said,” Tega Adeda, a foreign exchange trader at Stanbic IBTC Holding Co, told Bloomberg.

    The bank reduced dollar sales to lenders by six per cent last week to $360 million. The regulator uses the twice-a-week auctions to stabilise the naira as costs of importing refined fuel, which accounts for 70 per cent of the local gasoline market, boosts dollar demand and puts pressure on the currency, according to the central bank.

    The CBN held the rate at the record level on January 21 to control consumer prices and maintain the naira’s level. Inflation eased to nine per cent in January from 12 per cent in December, the statistics bureau said last month.

    Borrowing costs on the country’s 16.39 per cent domestic bonds due January 2022 rose nine basis points to 11.27 per cent, according to Thursday’s data compiled on the Financial Markets Dealers Association website. Yields on the nation’s $500 million of Eurobonds due January 2021 fell two basis points to 4.204 per cent.

     

    Cashless

     

    The Central Bank of Nigeria (CBN) will from June 1, 2013 implement a policy that places N150,000 limit on all over the counter cheque withdrawals in commercial banks, microfinance banks and primary mortgage institutions (PMIs) nationwide.

    In a circular to all stakeholders, CBN Director, Banking and Payment System, Dipo Fatokun said the policy is in recognition of the success recorded in Lagos and the need to extend such success to other states within the federation. He said the Lagos success story has also contributed to the reduction of fraud on cheques and aided the National Financial Inclusion (NFI) Strategy.

    “All banks are therefore directed to ensure that implementation of N150,000 limit on third party cheques that could be cashed over the counter nationwide, with effect from June 1, 2013,” he said.

    Also, the CBN chief stopped banks from charging their customers payments for third party cheques below N150,000 cashed over the counter. “All banks are hereby directed to stop charging their customers for third party cheques of up to N150,000 cashed over the counter,” he said. He explained that the policy is in recognition of the CBN’s role in the development of an efficient payment and settlement system that is well modernised.

     

    GDR

     

    The admission of Zenith Bank’s Global Depositary Receipts (GDR) to the official list of the London Stock Exchange (LSE) and trading same on the LSE is expected to take place within the month, Renaissance Capital (RenCap), an investment and research firm had said.

    “Our understanding from management is that the listing of the instruments should happen in March 2013,” it said in an emailed report obtained by The Nation.

    It said the objectives of the GDR issuance are to increase the bank’s visibility and trading in its securities, as well as to expand and diversify its investor base. “Given that Zenith Bank is the most highly capitalised Nigerian bank with a capital-adequacy ratio of 29 per cent as at last September, and does not require any capital injection, it makes sense to us that the GDRs are non-capital-raising,” RenCap said.

    The GDR issuance, it added, simply gives existing shareholders the option to convert to an LSE-traded instrument. The conversion ratio is 50 common shares to one GDR.

     

    MfBs

     

    The National Microfinance Development Strategy will soon be released by the CBN. The document is expected to outline modalities for developing the subsector and rules that operators will follow to achieve improved performance s well s sector’s stability.

    The CBN is also working on consolidating on the achievements recorded so far by the country in the development of MfBs by strengthening the regulatory frameworks and other guidelines. This also includes formation of National Microfinance development Strategy with the United Nations Development Programme (UNDP) and the recent signing of a major agreement with the Alliance for a Green Revolution in Africa (AGRA).

    Besides, the CBN is considering the establishment of a Microfinance Development Fund (MDF) as a further step to deepen the financial market. The MDF when established, would assist in addressing teething challenges of underfunding for microfinance institutions in the country.

     

    Mortgage banking

     

    The CBN also last week approved the Regulatory and Supervisory Framework for the Operations of a Mortgage Re-finance Company (MRC) as an exposure draft. Its Director, Other Financial Institutions Supervision Department, Olufemi Fabamwo, said the framework is drawn based on provisions of the CBN Act 2007, Banks and Other Financial Institutions Act (BOFIA) CAP B3, Laws of the Federation of Nigeria (LFN) 2004, other relevant Laws.

    The CBN also set a minimum capital base for the subsector at N5 billion, but intending operators will have to pay non-refundable application fee of N100,000 and non-refundable licencing fee of N200,000.

    He said the framework provides for the licensing and establishment of a MRCs as specialised second-tier institution which would provide short-term liquidity, long-term funding and/or guarantees to mortgage originators and housing finance lenders.

    He said the establishment of MRC is primarily aimed at increasing the liquidity within the mortgage sub-sector and availability of mortgage credit in the country. It will also reduce mortgage and related costs, and make residential housing more affordable. It specified the standards and criteria for, and timing of, periodic assessments of the creditworthiness of borrowers, obligors, or other counterparties, and for the establishment of credit limits.

     

    IFRS

    The CBN has set up a roadmap on International Financial Reporting Standard (IFRS) stipulating compliance by all Small and Medium Scale Enterprises (SMEs) by January 31, 2014.

    The roadmap requires that the business community in the country would implement and converge in phases while the phases are submerged within a general implementation framework. The general plan would therefore ensure that appropriate changes and restructuring are made to processes, systems and the personel in terms of training and capacity building.

    The IFRS is a globally-accepted set of accounting standards, framework and interpretations, adopted by the International Accounting Standard Board (IASB and its interpretative body, the International Financial Reporting Interpretations Committee (IFRIC).

    The IFRS was issued by the IASB. It was issued to serve as the global accounting language for the purpose of meeting the information needs of global business investors, shareholders and financial services providers.

    The Financial Reporting Council (FRC) had earlier announced its decision to converge to IFRS in the last quarter of 2010, but the commencement date was later shifted to January 1, last year to ensure legal and capacity building in the project.

     

    Economy

     

    There is need to carry out radical reforms in the financial system of the country to achieve stability in the economy, CBN’s Deputy Governor, Corporate Services, Suleiman Barau, has said.

    Speaking at this year’s EuroFinance Conference in Lagos at the weekend, Barau, who was represented by the Deputy Director of Banking Supervision, Steve Nwadiuko, said such the restructuring was the only way to avoid massive corporate failure witnessed during the financial crisis of 2007 to 2009, which exposed the weaknesses in many banks.

    He said reforms were needed to strengthen the stability and resilience of the global financial system and prevent the reoccurrence of systematic crisis.

    He said chief finance officers of banks across the globe need to design strategies that would adequately address possible hitches in the financial system.

     

    Bank to bank report

     

    Sterling Bank is set to organise a fashion competition for undergraduates of tertiary institutions in Lagos State. In a statement, the bank said the exercise was meant to discover and celebrate the creativity of the youth.

    The competition, which is part of the bank’s Corporate Social Responsibility (CSR) efforts in the education sector, seeks to transform the perception artistically inclined undergraduates have of themselves in relation to corporate organisations, their acceptability and the difference they can make given the opportunity and a suitable platform.

    The competition tagged “Sketchamania,” is a break from the norm and an unequivocal statement by Sterling bank that it seeks to identify new opportunities to make a difference in a distinct manner by impacting society through deliberate interventions aimed at encouraging and celebrating unique talents, which abound in Nigeria.

    The Managing Director, Bank of Agriculture (BoA), Mr Muhammadu Satunraki, has said the institution would promote agricultural biotechnology.

    He said the development would help in increasing food production. The bank, in a statement, quoted Satunraki as saying that biotechnology is a new field that must be supported to foster growth of the country.

    Fidelity Bank Plc has given out five Hyundai Accent cars to five winners in its ongoing Cars and Cash Savings Splash held in Lagos. Twenty-one other winners also went home with cash prizes ranging from N100, 000, N500, 000 and N1 million.

    Some of the customers, who won cars are Arinzechi Victus, Nwambu Chinwetara, Tansi Grace & Josephine, Umorem Etido Akpan and Maduka Stepenie. Also, Ozoeze Ndidi Amaka won N1 million while Oku Felix and Samuel Emua won N500,000 each. Those who won N250,000 are Paul Abraham, Elizabeth Korgba Nkwa Eze while Nnachi Franklin, among others won N100,000.

    Enterprise Bank customers will henceforth, enjoy additional convenience with the introduction of the lender’s dual purpose prepaid MasterCard used locally and internationally.

    In a statement, the bank said the new addition is a multi-purpose chip and pin debit card that can be pre-funded with cash. The card can then be used to effect cashless payments (like a bank debit card) on the internet, Point of Sale (PoS) terminals and cash from Automated Teller Machines (ATMs).

    It said that the unique benefits of the card, which is open to both customers and non-customers of the bank alike is that the individual would have no need to open or have a bank account in order to have the prepaid card. The card, which can be pre-funded in naira or dollar denominations, is ideal for students, corporate accounts expense cards, estacode, and corporate travel and travel cards among others.

    The card, the bank added, also eliminates the burden of carrying cash around just as it allows its holders to spend more than their approved daily spend limits since both the Personal Travel Allowance (PTA) and Basic Travel Allowance (BTA) are loadable on it.

     

  • Adoption of IFRS: Tax implications

    In line with Section 8 of Federal Inland Revenue Service (FIRS) Establishment Act 2007, FIRS issued a draft circular in October last year to provide direction to stakeholders on the tax implications of the adoption of the International Financial Reporting Standards (IFRS). IFRS is expected to have far reaching implications on taxpayers, knowing that quoted companies are expected to adopt it, beginning from 2012, other businesses from 2013 while SMEs are to fully adopt the guidelines in 2014.

    This is to give effect to the Federal Executive Council’s acceptance of the recommendation of the Committee on the roadmap for the adoption of IFRS in Nigeria, which places emphasis on the adoption of globally accepted accounting standards by reporting entities. The adoption of International Financial Reporting Standards (IFRS) in a phased transition in a process is to be supervised by the Financial Reporting Council of Nigeria(FRCN) formerly Nigerian Accounting Standards Board (NASB), under the supervision of the Nigerian Federal Ministry of Trade and Investment.

    Section 55 (1) of the Companies Income Tax Act (CITA), Cap C21, LFN 2004 requires a company filing a return to submit its audited account with the Service while sections 8, 52 and 53 of the Financial Reporting Council of Nigeria Act, 2011 gave effect to the adoption of International Financial Reporting Standard. This implies that the audited accounts to be submitted to the Service after the adoption of International Financial Reporting Standard shall be prepared in compliance with standards issued by IFRS. It is in line with the above that FIRS has published these draft guidelines on tax treatments to be given to each of the Standards especially where there are deviations from the present Generally Accepted Accounting Practice (GAAP) after the adoption. The objective is to highlight some salient points in the FIRS draft policy document in alignment with the IFRS guidelines.

    IFRS 1 – FIRST TIME ADOPTION -An entity shall prepare and present an opening IFRS statement of financial position at the date of transition to IFRS. This is the starting point for its accounting in accordance with IFRS. An entity shall use the same accounting policies in its opening IFRS statement of financial position and throughout all periods presented in its first IFRS financial statements. Those accounting policies shall comply with each IFRS effective at the end of its first IFRS reporting period.

    In particular, the IFRS requires an entity to do the following in the opening IFRS statement of financial position that it prepares as a starting point for its accounting under IFRS:(a) recognise all assets and liabilities whose recognition is required by IFRSs; (b) not recognise items as assets or liabilities if IFRS do not permit such recognition. (a) reclassify items that it recognised in accordance with previous GAAP as one type of asset, liability or component of equity, but are a different type of asset, liability or component of equity in accordance with IFRSs; and (d) apply IFRS in measuring all recognised assets and liabilities”. FIRS draft guidelines emphasise that the new net asset based on the accounting balance shall be adopted for minimum tax computation and where dividend is paid from retained earnings, it shall be subject to tax in line with section 19 of CITA.

    Also, the details of recognitions, de-recognitions and reconciliation must be forwarded to FIRS by the taxpayer including all adjustments to opening retained earnings. Furthermore entities shall have the option to either completely expense or spread within 3 years the revenue expense component of its cost of conversion to IFRS as first time adopters. All conversion cost (Capital & Revenue) must be verified and confirmed by the Service before it can be allowed as Qualified Capital Expenditure or expense. While any additional tax/refund as a result of the conversion shall be settled by the company or refunded by FIRS as may be agreed by FIRS within three years of adoption. For the treatment of Finance Lease the FIRS guideline notes that in compliance with IFRS re-classification of lease asset, there could be a situation whereby an operating lease becomes a finance lease. Where two parties had correctly applied the old principle but are now compelled by the IFRS standard to reclassify operating lease as finance lease, FIRS will rely on the Tax Written down value of the asset in granting further capital allowance to the leasee.

    Also, investment allowance and Initial allowance shall not be granted to the leasee on reclassification of the asset and where there are errors in compliance with previous standards on leases, the tax consequences resulting from the errors shall be adjusted for accordingly. For assets reclassified to finance lease, paragraph 18(2) and (3) of schedule two of CITA which relates to Rights to Claim Capital Allowances on finance lease shall apply. The guideline on finance lease as described in FIRS information circular No. 2010/01 dated 12th April, 2012 which relates to Value Added Tax (VAT) and With- Holding Tax (WHT) shall apply.

    In IAS 19 – which dwells on EMPLOYEE BENEFITS, the FIRS draft guidelines notes that provisions in respect of other long-term employee benefits (other than post- employment benefits and termination benefits) that are not due to be settled within twelve months after the end of the period in which the employees render the related service shall not be allowed for tax purposes until actual payment is made. Profit sharing and bonus payments shall be allowed for tax purposes only if the amount and basis for its computation has been agreed and approved at the beginning of the accounting period and notably Personal Income Tax is payable on the bonus and profit sharing in line with the provisions of Personal Income Tax (amended 2011). For Pension remittances employer’s contributions over and above the 7.5 per cent compulsory threshold is an allowable deduction by virtue of the provision of the National Pension Commission Act (section 7 & 9 of Pension Act) and Actual contribution paid to the pension fund in the current year shall be allowed for tax purposes in line with the existing practice. The National Pension Commission has been empowered to approve defined benefit plan for any entity that wants to run it. However, FIRS must be satisfied that a proper scheme manager is appointed for the security of the fund before allowing any expenses on the scheme for tax purposes. Any provision charged to Statement of Comprehensive Income (SOCI) that does not have the approval of Pension Commission (PENCOM) and FIRS shall be disallowed. Provision made for benefits payable to the employees offered voluntary redundancy shall not be an allowable deduction for tax purposes unless they result into cash payment to the employees.

    There is no doubt that the transition to IFRS is a huge task, with over 100 countries already signed to it. IFRS has become the global reporting standards for accounts and it is imperative for various stakeholders to work together to engender a workable solutions in terms of capacity and enlightenment on the cut off dates. Its revolutionary impact tax requires a great deal of decisiveness and commitment. It is a new world order in corporate reporting that will alter not only the financial accounting and reporting landscape in Nigeria but also tax accounting, tax cash flow and tax distributable reserves.

  • IFRS: CBN sets 2014 deadline for SMEs’ compliance

    IFRS: CBN sets 2014 deadline for SMEs’ compliance

    The Central Bank of Nigeria (CBN) has set up a roadmap On International Financial Reporting Standard (IFRS) stipulating compliance by all Small and Medium Scale Enterprises (SMEs) by January 31, 2014.

    The roadmap, The Nation learnt, requires that the entire business community in the country would implement and converge in phases, while the phases are submerged within a general implementation framework. The general plan would therefore ensure that appropriate changes and restructuring are made to processes, systems and the personel in terms of training and capacity building.

    The IFRS is a globally-accepted set of accounting standards, framework and interpretations, adopted by the International Accounting Standard Board (IASB and its interpretative body, the International Financial Reporting Interpretations Committee (IFRIC).

    The IFRS was issued by the IASB. It was issued to serve as the global accounting language for the purpose of meeting the information needs of global business investors, shareholders and financial services providers.

    The Financial Reporting Council (FRC) had earlier announced its decision to converge to IFRS in the last quarter of 2010, but the commencement date was later shifted to January 1, 2012 to ensure legal and capacity building in the project.

    There has been mixed reactions to the IFRS, especially among the organisations in the first phase. The banking and discount houses sub-sectors had the greatest momentum, while most other corporations waited on their external auditors to drive implementation and compliance.

    Risk Expert and Chairman, IFRS Interpretations Committee, at the IASB, Bob Garnett, had explained that harmonising the IFRS and Basel Accords will give Nigerian companies’ financials better credibility.

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

    He said businesses would, therefore, be required to identify and understand the similarities and differences between the Nigeria General Accepted Accounting Practice (Nigeria GAAP), including changes that would occur within the transition period up to its full adoption and implementation.

    He explained that for a truly global economy, where companies and accounts issuers interrelate around the globe, to be efficient, it is appropriate to have a common standard in business and financial reporting. IFRS therefore, became the set of high quality, transparent and globally renowned accounting standards and framework that provide for international comparison.

    At the global level, such standards, he said are regarded as a major component of a good financial system that reduces cost of capital, allowing for transparency and disclosure, as well as facilitating increase in capital formation.

    The world-wide adoption of IFRS is expected to facilitate presentation of financial information in a manner that allows and helps evaluators and users to determine the financial status and liquidity position of a company.

    According to CBN, the number of countries that have either moved, or are in the process of moving, to IFRS increased to 117 involving more than 12,000 companies at end of December 2011 from 100 at end-December 2009. At end-December 2012, nearly 20 African countries, including Nigeria, had either adopted, converged to or made a commitment to implement IFRS.

    It explained that in Nigeria, the bodies responsible for the regulation of accounting information are statutory agencies such as the FRC, the Securities and Exchange Commission (SEC), Nigerian Stock Exchange (NSE) and the CBN. The NASB, established in September 1982, under the sponsorship of the Institute of Chartered Accountants of Nigeria (ICAN), is a government agency statutorily responsible for issuing Statements of Accounting Standards (SAS) in Nigeria on various accounting matters, after taking into account all peculiarities of the business environment, customs, laws and level of development.

    The banking watchdog explained that convergence to IFRS would promote uniformity in operations and auditing of companies. This is expected to have a significant impact on firms’ financial performance and ultimately on their financial position.

     

    It said that implementation of the IFRS (Uniform Global Accounting Language) would, among other things, allow for easy access to efficient global capital; increase demand for, and enhance practice of public accountability and transparency; enhance understanding and ability to generate value from strategic activities and synergies; facilitate comparison between entities as well as enhance attraction and encouragement of foreign investors.

     

  • NeFF: Mobile payment guidelines’ll strenghten sector

    NeFF: Mobile payment guidelines’ll strenghten sector

    The on-going review of the mobile payment guidelines will strengthen electronic financial transactions, the Chairman of Nigerian Electronic Fraud Forum (NeFF), Mr Emmanuel Obaigbona, has said.

    Speaking with The Nation, Obaigbona said when the review is completed, the e-payment system would be better, stronger and well standardised.

    He said no date has been given for the completion of the review, which contains many phases.

    Obaigbona said: “The approval processes prepared for the guidelines are many. The fact that several areas of the guidelines have to be approved makes the completion of the review an open-thing. But we know that everything about the e-payment system would come out better when the revised guidelines are out.

    He said it would be difficult to pre-empt the committees saddled with reviewing the guidelines, stressing that they know what they are looking for.

    “Until the review of the guidelines is completed, it would be difficult to say what and what would be given enough considerations, or the extent it is going to address the pitfalls inherent in the e-payment frameworks provided by the Central Bank of Nigeria,“ he added.

    He said the committee has gone far on the issue, adding that Neff would present the amended guidelines to the Bankers’ Committee for approval and implementation soon.

    Operators have faulted the implementation of laws relating to the activities of the 16 mobile payment companies granted approval in 2011.

    A Business Development Manager, Fortis Mobile Money, Mr Kunle Ogunmola, said infrastructure was a major problem inhibiting the operations of mobile money firms. Ogunmola said the cost of operations of mobile payment firm is high relative to the prevailing economic situation. He said the issue of transaction processes vis-à-vis the time of payment money to customers affected most operators in the beginning. He said many are ignorant of the activities of the mobile money firms, despite the pilot studies carried out on mobile activities by CBN.

    “When people do not know the functions of mobile money firms, how would the companies expand their market base? That is the major reason behind the partnership between Fortis and the microfinance banks. We want to leverage on the huge market of the banks for growth,” he said.

    Also, the Managing Director, One Network, Mr Sola Bickersteth, said the problem of agent location is one of hurdles the firms must cross to survive.

    He said the mobile money industry requires an estimated 250,000 or one agent per 3,000, adding that the agents will operate like a financial and citizen service supermarket for their neighbourhood of 3,000 or more. He said the industry is yet to get half of such agents, adding that the issue is having negative impact on the firms.

  • BoA to support Biotechnology

    BoA to support Biotechnology

    The Managing Director, Bank of Agriculture (BoA), Mr Muhammadu Satunraki, has said the institution would promote agricultural biotechnology. He said the development would help in increasing food production. The bank, in a statement, quoted Satunraki as saying that biotechnology is a new field that must be supported to foster growth of the country.

    He said: “Biotechnology is an emerging field in Nigeria and this is an area that has attracted our attention. In fact, we have signed a Memorandum of Understanding (MoU) on Biotechnology Institute and we are working with them to see how we can promote biotechnology.”

    He added: “It also depends on how you look at biotechnology because people come to me to say they want to borrow money to grow crops for fuel. That is good but that is not the mandate we are supporting right now.”

    He said the challenge for Africa now is food, adding that most countries in the West are growing crops for fuel. “But for us in Africa, it should be for food,” he said, adding that Africa would continue to have problems, until it can feed itself sufficiently.

    According to him, biotechnology is an area that most countries are focusing on to bring about the desired growth, advising Nigeria to key into it.