The Nation Newspaper

Category: Money

  • Forex inflows decline to $27.5b

    Foreign exchange inflows to the economy dropped by 2.44 per cent from $28.19 billion in first quarter, to $27.50 billion in second quarter of 2012, data from the Central Bank of Nigeria (CBN) website has shown.

    However, total outflows increased marginally by 0.32 per cent from $10.09 billion, to $10.11 billion, while a net inflow of $17.38 billion was recorded in second quarter contrary to $18.10 billion in first quarter of this year.

    According to the apex bank, net inflow through the CBN declined by 17.07 per cent from $12.11 billion in the preceding quarter to $10.05 billion. Similarly, outflow through the bank declined marginally, by 1.70 per cent, from $9.76 billion in the first quarter of 2012 to $9.59 billion in second quarter.

    Total foreign exchange transactions through the bank therefore resulted in a substantially lower net inflow of $0.46 billion, which reflected in the marginal accretion to the stock of external reserves. The level of external reserves as at end June 2012 stood at $35.41 billion as against $35.20 and $31.89 billion in the preceding quarter and corresponding quarter of 2011.

    “The current level of reserves could finance 11.1 months of foreign exchange disbursements and 7.3 months of imports compared to 10.8 months of foreign exchange disbursements and 7.8 months of imports recorded in the pre-ceding quarter,” the report said.

    Analysis of foreign exchange utilisation by sectors revealed that $7.74 billion or 63.8 per cent was spent on importation of various items into the country in the second quarter.

  • CBN curtails surging liquidity with N129b TBs

    CBN curtails surging liquidity with N129b TBs

    The Central Bank of Nigeria (CBN) will on Thursday, mop N129.8 billion from the financial sector by selling treasury bills (TBs) with maturities ranging from three months to one year. The exercise is part of monetary control measures to help banks manage their liquidity. It will involve issue of N32.05 billion in 91-day paper, N50 billion in 182-day bills and N47.78 billion in the 364-day paper. TBs are also issued to reduce money supply and curb inflation.

    “We are anticipating a situation where the central bank would intensify its effort to mop-up idle funds from the system this week (last week) and this should see rates inching up,” one dealer told Reuters.

    The naira traded flat against the dollar on the interbank as expectations of dollar inflows from energy companies and offshore investors buying local debt provided forex liquidity. The naira closed at N155.74 to the dollar early last Friday.

    Analysts at Afrinvest West Africa projected marginal gains for the naira across markets last week. They said that compared with a year ago, the naira is stronger and more resilient, owing to a more robust external sector and higher reserves. “We believe the strong naira will help to subdue imported inflation, and thereby mute the effect of the floods on food prices and distribution costs,” they said in an emailed report.

    Other traders said the naira is seen trading within the present band for the rest of the week because of anticipated dollar inflows from offshore investors buying local debt and from the Nigeria National Petroleum Corporation (NNPC).

    The foreign exchange reserves climbed 30 per cent year-on-year to hit a more than 32 month high of $42.56 billion by October 29, data from the CBN website showed. The reserves stood at $32.72 billion last year and rose 3.4 per cent from September 28 to October 29 and have not been this high since February 11, 2010 when they stood at $42.74 billion.

     

    Banks’ assets

    Banks’ total assets and liabilities for the first time this year hit N20 trillion, data from the CBN Economic Report for August released recently showed. The data is an increase of 0.8 per cent when compared with the level at July ending 2012. It said the funds were sourced mainly from mobilisation of time, savings and foreign currency deposits and disposal of Federal Government securities.

    The report said that N12.5 trillion banks’ credit to the domestic economy fell by two per cent, when compared with the level in the preceding month. On a month-on-month basis, banks’ credit to the private sector rose by 0.4, while credit to the government fell by 14.5 per cent relative to the level in the preceding month.

     

    Third party cheques

    The apex bank said last week that implementation of its N150, 000 restrictions on third party cheques now in Lagos State would be extended to other states of the federation from January 2013,

    Deputy Director, Banking and Payment System Department, CBN, Mr. Emmanuel Obaigbhona explained at the end of a retreat of Committee of E-Banking Industry Heads (CeBIH) that under the cashless policy, third party cheques with values above N150, 000 cannot be cashed across the counter but through bank accounts. This restriction, he said, was however, implemented only in Lagos State as part of the Cashless Lagos Initiative. “The N150,000 maximum limit imposed on third party cheques for across the counter withdrawals will be implemented nationwide from January next year”, he said.

     

    Concession rate for pilgrims

    Pilgrims travelling for this year’s pilgrimage will obtain a concessionary rate of N145 to a dollar exchange rate, the CBN said.

    In a statement to all designated banks and stakeholders, CBN Director, Trade and Exchange, Musa Batari said the Federal Government approved the commencement of the 2012 Christian Pilgrimage operations from October 25 and has approved a concessionary exchange rate of N145 to the dollar for purchase of pilgrims travelling allowance (PTA) of $750 and $1,000.

    The pilgrims that will benefit from the first batch of the exercise are Cross River, Ekiti, Kebbi, Kogi, Lagos, and Nasarawa states. Others are Niger, Ogun, Ondo, Osun, Taraba and Kwara states.

     

    InterSwitch

    The Group Chief Risk and Compliance Officer, Interswitch Ltd, Osioke Ojior, said the process and technologies used to uniquely identify a person and what their affiliations are, remain critical for the implementation of the electronic banking policy of the CBN.

    In a statement titled: ‘Challenges of Identity Management on E-Payment Systems in Nigeria’, he said such technology, should have capacity to maintain the attributes for each person and provide a unique identifier to each person that can be used for authentication and authorisation.

    Mr Ojior said that in doing this, regulation to establish an Identity Management System and Implementation should be separated, adding that successful Identity Management System should be accessible to users who need the information.

     

    Autonomy

    The Chartered Institute of Bankers of Nigeria (CIBN) said that the proposed amendment of the CBN Act would jeopardise the membership composition of the Board.

    CIBN President, Segun Aina said the proposed bill will reduce the impact of the CBN’s management on the board’s decisions, as it will create situations where only one member of its management, the Governor, sits on the CBN’s seven man  board.

    He said that currently, five members of the management of CBN, that is, the Governor and Deputy Governors, sit on a 12 -man board.  This, he said, does not augur well for good governance and management succession.

    The board composition proposed by the Bill increases the number of direct government officials on the CBN Board from two to five despite the almost 50 per cent reduction in the board’s size. “Consequently, the new composition would create the perception of a government majority on the Board.  This is capable of undermining the “independence”of the Central Bank of Nigeria and may lead to unintended consequences,” he said.

     

    Prepaid cards

    The CBN last week also reviewed its policy for prepaid cards issuance and operations. The exercise was meant to address hitches being experienced in the implementation of initial guidelines issued in 2010.

    CBN Director, Banking and Payments Systems, ‘Dipo Fatokun, disclosed this in a circular to all deposit money banks titled: ‘Revised Guidelines on Stored Value/Prepaid Cards Issuance and Operations’. He said there was need to recognise cards issued to meet the needs of corporate organisations as distinct from retail individuals.

    Mr Fatokun said that banks must comply with the new laws to achieve improved payment system in the country. He said the guidelines have been developed to provide minimum standards and requirements for the operation of stored value/prepaid card issuance and operations.

    The new law stipulates that only deposit-taking banks or financial institutions licensed by the CBN with clearing capacity would issue stored value/prepaid cards while those without clearing capacity can issue in conjunction with lenders with clearing capacity. He said that only one stored value or prepaid card would be issued per person per currency and per product by an issuer at any anytime.

     

    NeFF

    The Nigeria Electronic Fraud Forum (NeFF) has said there is urgent need enact a law that will check identity crisis in the Nigerian banking sector.

    Speaking at the NeFF October briefing held in Lagos, the Chairman of the Forum, Emmanuel Obaigbena, said enacting such laws will be a first step towards checking duplication of identities that has become common occurrence among bank customers.

    He said such practice has become a major hindrance to the fight against fraud in the sector, adding that where a recognised law that spells out how individuals can present their identities in public, it would become much easier to fight fraud.

    “We have seen many cases where a particular bank customer will have more than 10 bank accounts with different names. These accounts will be opened and running concurrently without interference. Such practice has not favoured the renewed fight against frauds and money laundering,” he said.

     

    External debt

    Nigeria’s external debt rose to $6.04 billion in September from $5.99 billion in March 2012, a CBN report on the external development in the economy released last week has shown.

    According to the apex bank, external debt sustainability index computed as the ratio of external debt to nominal Gross Domestic Product (GDP) remained unchanged at 0.1 as in the preceding quarter and corresponding quarter of 2011.

    It said the private sector external debt stood at $0.22 billion in the review period compared with $0.27 billion in the first quarter of 2012 and $0.32 billion in second quarter of 2011. It also showed that public sector debt service payments stood at $0.06 billion in the second quarter of 2012, indicating a downward trend in comparison with $0.09 billion in first quarter.

     

    IFC/World Bank

    The new report by the International Finance Corporation (IFC) and the World Bank indicates that of the 50 economies making the most improvement in business regulation for domestic firms since 2005, 17 are in Sub-Saharan Africa.

    In an emailed statement, the World Bank said this year’s report marks the 10th edition of the global ‘Doing Business’ report series and over the life of the report, Africa has consistently recorded a high number of reforms. It said Rwanda stands out as having consistently improved since 2005.

    “A case study in this year’s report features Rwanda, which since 2005 has implemented 26 regulatory reforms as recorded by Doing Business,” it said.

     

    Bank to bank report

    First Bank of Nigeria Plc said it will pursue an “aggressive” expansion strategy into next year as it seeks to tap into the growing consumer market in Africa’s most populous country.

    Managing Director of the bank, Bisi Onasanya told a conference call with analysts that the lender will focus on an organic growth plan by opening new branches to mop cheap retail deposits and drive profitability into 2013. It had a total of 721 branches in September 2012.

    Sterling Bank Plc rewarded five winners in its ongoing Facebook Campaign meant to promote patriotism for the country among Nigerians. The winners were: Breezy Jumbo, Akinyere Uko, Timothy China, Ajayi Olabambo and Abanbola Olaniposi.

    Group Head, Corporate Development, Shina Atilola, explained that the bank had through Facebook, requested from members of the public to write under the topic:  ‘1,000 things I can do  for my country’, and post their answers in the social network. He said that participants in the exercise sent comments on what they can do as individuals to improve the image and perception of the country both locally and internationally.

    Staff of United Bank for Africa (UBA) Plc have provided relief materials and other items to flood displaced persons in Delta State. In a statement, the bank said it was moved by the plight of victims of the recent flood in parts of Delta State and decided to support them.

    Specifically, UBA staff at Ughelli in Delta State recently mobilised funds through voluntary contributions and bought relief materials for displaced persons at the Oharisi Primary School camp caused by the recent floods in the state.

    As part of activities to mark the World Customer Service Week, Unity Bank PLC restated its commitment to its customers and meeting the yearnings of its entire stakeholders through value creation. The bank, which is presently at a N45 billion capital base, is working towards raising a tier one capital from the Nigerian Stock Exchange (NSE) in the next few months

  • Telcos fault bank-led mobile money operations

    Telcos fault bank-led mobile money operations

    Telecommunication companies (telcos) have kicked against the bank-led mobile money option adopted by the Central Bank of Nigeria (CBN).

    Globacom’s Director, Telebanking Unit, Tunde Kuponiyi, said the regime of mobile money regulation, is not friendly to telecoms’ firms that provide the mobile payment platform.

    He said though there is a lot that telecoms companies could contribute in a cashless economy, their mandate is not being fully utilised.

    Kuponiyi argued that since the mobile payment business is 90 per cent dependent on the mobile industry, it is unfair that the mobile networks are prevented from advertising their mobile payment products which are the foundation on which the bank products operate.

    “From the customer’s mobile phone, to the mobile payments system and the feedback to the mobile phone, mobile payment transaction utilises mostly mobile resources, makes use of mobile time and supported largely by mobile engineers, but unfortunately, the CBN has restricted telecoms companies from advertising in the mobile payments space,” Kuponiyi said.

    He said telecoms firms should be allowed to speak about the capabilities of their networks, the quality of user experience and the choice of mobile payment services available on their networks, lamenting that the passive role to which the telecos have been compelled to play, has led to the slow growth of the mobile payment sub sector.

    “It is roughly a year since the first mobile money went live and approaching a year since cashless economy came into operation. Meanwhile, none of the individual players can boast of having more than 10,000 active subscribers”, he stated.

    The apex bank chose the bank-led model whereby, a bank deploys mobile payment applications or devices to customers and ensures merchants have the required point-of-sale (PoS) acceptance capability to carry out the transaction.

    Here, mobile network operators’ networks merely serve as vehicle through which transactions take place. This is based on the regulatory framework for mobile payment services issued by the apex bank in 2009, which prevented telcos from operating mobile money except through strategic partnerships with licensed operators.

    CBN Deputy Governor, Operations, Tunde Lemo, said over the next few years, the focus of the regulator will be to strengthen the institutional and regulatory frameworks to achieve improved financial inclusion.

    “The application of mobile technology for financial services especially in rural areas will ensure that a large percentage of the population outside the formal banking system would have access to financial services using one of the three models of card-based, account-based and virtual account,” Lemo said.

    “CBN statistics showed that only 22 million Nigerians own a bank account out of a population of 167 million population. With telecoms subscriber base put at 105 million by the Nigerian Communications Commission (NCC), there are indeed limitless opportunities for the country to achieve financial inclusion by bringing the large numbers of the unbanked to the banking sector through mobile money,” he said.

    Analysts said telcos companies are licensed to offer telecoms services and not banking services. Therefore, the decision was made because the CBN does not regulate telcos and if the telcos are allowed to lead mobile money, two critical segments of Nigeria’s economy will be put in the hands of a few companies, a practice that constitutes great risk for the economy.

    Driven by the development of mobile money systems in emerging markets, experts estimate that $16 billion worth of international money transfers will be received with mobile phones in 2015.

    In Nigeria, the scheme is, however, confronted with many problems but the CBN said the draft National Payments System Bill, which is undergoing legislative passage, is expected to address the legal barriers to electronic payments such as the admissibility of electronic evidence in the law courts.

    Despite the inherent challenges, banks have been launching mobile money products to support their operations. FirstBank of Nigeria launched FirstMonie, its mobile money service positioned to assist the lender’s commitment to financial inclusion.

    “With the launch of this service, the stage is now set for the bank’s customers and anyone in Nigeria with a mobile phone to enjoy financial services, using their mobile phones to send money, pay bills, top up their phone airtime, do shopping, deposit and withdraw cash, without the need to visit a bank branch,” the First Bank Managing Director, Bisi Onasnaya said.

    He said the product is a game changer in Nigeria’s banking sector and will leverage on the bank’s transaction integrity to enhance local money transfer services.

    Stanbic IBTC Bank also, has partnered Star Times, one of the digital terrestrial transmission operators in the country to assist subscribers pay for their subscription fees using mobile money tool provided by the bank.

    Head, e-Business, Stanbic IBTC, Thabo Makoko, said by partnering with the company, the bank is making it easier for subscribers to make their payments electronically. According to him, the lender is committed to ensuring that users of the Mobile Money get the best in terms of service and security of their transactions.

    Analysts said the African mobile money market has the potential to grow to a money-making market, but operators, banks and regulators need to work toward developing an enabling environment for business models that meet service providers’ revenue demands.

    Mobile money allows mobile phones to be used to send and receive money, buy recharge cards, pay subscription fees for DStv, pay electricity bills, use of Point of Sale (PoS) terminals to pay for goods and services among others. The operator-led model, collaboration model and peer-to-peer model which are usually adopted in other countries was jettisoned by the regulator.

  • CBN tasks banks on Customers’ due diligence

    The Central Bank of Nigeria (CBN) has advised banks to conduct thorough customers’ due diligence during transactions that are above regulatory designated threshold.

    It urged the banks to ensure due diligence when information about customers have expired to avoid unwholesome practices.

    The Acting Director, and Regulation Department, CBN, Mr Chris Chukwu, said the measure is necessary to protect depositors’ fund.

    At a stakeholders’ forum in Lagos, Chukwu said CBN had made the safety of the industry a priority through certain regulatory frameworks. The apex bank, he said, was concerned about the status of the ownership of the banks because the issue is critical to the wellbeing of the industry.

    He said CBN conducted investigations on who is buying into the banks to ensure that they are not of dubious characters.

    Chukwu said: “Banks are required to maintain all records of transactions (local or international) or ( on-going or terminated) for at least a minimum of five years, following the completion of the transactions. Also, they should carry out thorough investigations on their customers, irrespective of their status. The aim is to put the industry on a sound footing, and make it competitive with others globally”.

    He said any bank that failed to apply customers’ due dillgence measures would not be permitted to open accounts, enter into business relationship or perform transactions with customers.

    Banks, he said must conduct due diligence on non-resident customers, arguing that the issue would help in knowing a lot about customers who are hardly seen.

    He said CBN is insisting that the banks must adopt a staff training policy, adding that the idea would help the workers to know the importance of customers’ due diligence.

  • Lawyer flays proposed composition of CBN Board

    Lagos-based lawyer, Chukwuemeka Eze, has opposed the proposed amendment of the Central Bank of Nigeria (CBN) Act.

    In a statement, Eze, said the business of the CBN is too serious to be handed over to a Director in the Ministry of National Planning, Director of Federal Inland Revenue Service, among other nominees as proposed in the amendment.

    He said appointing a former CBN Governor as chairman of the Board may create problems that would polarise the Board. “A former CBN Governor may have ‘analogue’ ideas while the sitting CBN Governor may have ‘digital’ ideas. The latter may be hampered by the former who may refuse to acknowledge the rapid changes manifesting in global economic trends,” he said.

    He said the power of the National Assembly to appropriate public fund of the Federation is derivable from the Constitution of the Federal Republic of Nigeria, 1999 as amended. Various sections of the Constitution confirm this position. For instance, section 80 (3) of the Constitution provides that: No moneys shall be withdrawn from any public fund of the Federation, other than the Consolidated Revenue Fund of the Federation, unless the issue of those moneys has been authorised by an Act of the National Assembly.

    He said that Section 81 (1) and (2) of the Constitution makes it mandatory for the president to lay before the National Assembly budget estimates through an Appropriation Bill before money could be expended from the Consolidated Revenue Fund of the Federation.

    He, however, said the Act can be amended, if need be, to promote accountability and transparency.

  • ‘Dollar accounts for 82.1% of forex holdings’

    The currency composition of foreign reserves showed that the holdings in United States dollar are $29.09 billion, constituting 82.1 per cent of the total during the first quarter, according to data from the Central Bank of Nigeria (CBN).

    Other currencies listed in the basket include Euro which accounted for 6.9 per cent; Pounds, 2.2 per cent, Chinese Yuan, 1.4 per cent and Saudi Riyal, 7.2 per cent.

    The apex bank said composition of Euro at 6.9 per cent is still high considering the prevailing economic conditions in the Euro-Zone area and should be diversified to other relatively stable currencies. The Japanese yen accounted for 0.05 per cent while holdings in Swiss franc (CHF) were 0.004 per cent.

    The aggregate demand for foreign exchange by the authorised dealers consisting of Wholesale Dutch Auction System (WDAS) and Bureau De Change (BDCs) operators during the period under review stood at $7.18 billion, indicating a decline of 0.74 and 28.26 per cent when compared with the levels recorded in the preceding quarter and corresponding quarter of 2011.

    This development was traced to the on-going reform in the oil sector, which is aimed at ensuring efficient allocation of resources through the liberalisation of the downstream oil sector. It said a total amount of $7.05 billion was supplied in the review period consisting of $5.38 billion and $1.67 billion to the WDAS and BDC operators.

    This indicated a decline of 18.21 per cent and an increase of 3.37 per cent when compared with the corresponding quarter of 2011 and preceding quarter.

    The data showed total of $12.14 billion was utilised during the review period consisting of $7.74 billion and $4.39 billion for visible and invisible trade. This represented 63.80 and 36.20 per cent. This pattern of domination by visible trade was evident during the three quarters analysed.

    Analysis of foreign exchange utilisation by sectors revealed that $7.74 billion or 63.8 per cent was spent on importation of various items into the country during the quarter. The importation of oil, industrial, food and manufactured products gulped 30.0, 25.0, 21.0 and 15.0 per cent of the total amount utilized for visible imports.

    The importation of food items at 21.0 per cent is exceptionally high and should be discouraged through huge investment in the agricultural sector by the government, private sector or through public-private partnership.

  • FirstBank sponsors Team Naija

    FirstBank of Nigeria PLC will be sponsoring Team Naija to the finals of the global Cyberlympics in Miami, United States.

    In a statement, the bank said information security involves the protection of information and information systems from unauthorised access, use, disclosure, disruption, modification, perusal, inspection, recording or destruction.

    The Global CyberLympics is an international cyber security competition that seeks to build capacity across nations, create awareness for global cyber defense and promote global peace.

    Team Naija and Team Broken Cipher of Sudan will represent the Africa and compete against teams from other continents at the finals which kicked off yesterday. Team Naija’s four-man contingent comprises Abolusoro Oluboyede David (FirstBank staff), Nasiru Abimbola Jaiyeola (FirstBank staff), Oluseyi Akindeinde (Digital Encode) and Adewale Obadare (Digital Encode).

    FirstBank’s spokesperson, Mrs. Folake Ani-Mumuney, said the bank considers the opportunity to support Nigeria’s contingent to the CyberLympics as another platform to promote youth empowerment and contribute to the growth of information security in the country.

  • NIMC, banks disagree over biometric data

    NIMC, banks disagree over biometric data

    THE National Identity Management Commission (NIMC) is not happy with banks’ decision to continue to provide their biometric data base.

    The decision would cause waste of funds, duplication of efforts and financial exclusion, NIMC said.

    It said banks would increase their cost of operations, if they insisted on providing the database themselves.

    NIMC spoke against the backdrop of arrangement for getting the biometric data of all Nigerians.

    It’s Chief Executive Officer, Chris Onyemenan, said it would amount to waste of funds for banks to embark on the exercise since the Federal Government has budgeted money for it.

    He said: “Already, banks have a lot of costs on their neck. So, if they go ahead with decisions to provide biometric database for their operations, the development would stretch their cost of operations further. This amounts to a waste of funds because the Federal Government had committed huge amount of money for the production of biometric data of Nigerians vis-a-vis the management of the NIMC.”

    Besides, it would amount to duplication of efforts since NIMC is charged with the responsibility of integrating the databases of the private and public sectors, asking: Why should banks provide their own biometric database since the government has already made arrangement for one?

    He added: “If banks should go ahead and have the biometric database of all their customers with them, it will lead to financial exclusion. This implies that non-account holders are going to be excluded from data capturing nets.”

    Onyemenan said banks do not have a strong database in place, hence their decision to direct customers to bring all sorts of documents to ascertain their identities and further achieve the objectives behind the introduction of Know Your Customer(KYC) initiative of the Central Bank of Nigeria (CBN).

    He said banking core functions include keeping accounts of their customers, and ensuring judicious use of depositors’ funds, arguing that banks need to link up with a centralised and biometric database system to achieve growth.

    However, banks have taken a different position by supporting the idea of having their own biometric database.

    Sources close to the Committee of Chief Compliance Officers of Nigeria said the use of a separate biometric data capturing is non-negotiable as banks are to achieve their objectives of reducing frauds in the industry. According to a member of the association, who spoke on condition of anonymity, banks’ decision on the matter is line with the Central Bank of Nigeria’s (CBN) goals of tightening loopholes that could lead to fraud in the industry.

    He said the position of the banks was reinforced by the need to prevent untoward development in the area of transactions management.

    “No bank is ready to leave anything to chance, having gone through the CBN’s stress test in 2009. Now, banks are tightening all loopholes as relate to cash and credit management. To achieve this, there must a biometric data capturing system in place in the banks,” the sources added.

  • Group seeks insolvency law execution

    Group seeks insolvency law execution

    The Business Recovery and Insolvency Practitioners Association of Nigeria (BRIPAN) has called on the Asset Management Corporation of Nigeria (AMCON) to institute a general insolvency law structure that would encourage business rescue.

    BRIPAN said it was committed towards drafting insolvency legislative reform bill and the legislative agenda committee on the draft bill, which will be presented to the National Assembly soon.

    The insolvency legislative reform bill, when introduced, is expected to provide modern techniques that would make it easier for companies to survive.

    These, included business rescue options, moratoriumsm which it noted would give the business an opportunity to get an appraisal. “There are certain benefits that would be incorporated in the law that if you have a rescue plan, which would be prepared by experts you would get those benefits and that would encourage people to go for rescue rather insolvency,” the association said.

    President of the association, Anthony Idigbe, advised AMCON to come up with a structure that would encourage general business rescue in the country.

    He said that AMCON played a critical role in the market sector in terms of business rescues, but regretted that assets management was restricted only to banks and was not generally available. He added that it is about the only area where there is a modern law for assisting institutions in this regime.

  • ‘Nigeria, South Africa drive region’s growth’

    ‘Nigeria, South Africa drive region’s growth’

    Nigeria and South Africa account for major portion of Africa’s Gross Domestic Product (GDP), the International Monetary Fund (IMF) report said.

    It said intraregional trade and financing links within sub-Saharan Africa have been expanding significantly in recent years. However, it recognised that there is a long road to travel in terms of achieving close economic integration at the regional and sub-regional level.

    “As this integration proceeds and economic linkages deepen, the importance of spillover effects from large countries to the rest of sub-Saharan Africa, and within their own sub-region, will grow: closer economic linkages inevitably imply increased exposure to shocks, both favorable and unfavorable, in partner countries,” it said.

    IMF African Department senior economist Cheikh Gueye said that to a large extent, South Africa is shaping the structure of trade within sub-Saharan Africa. He said that at least 12 countries in sub-Saharan Africa export to South Africa and this represents one per cent of their GDP.

    “On the investment side, we have noticed that South African companies are investing in the rest of Africa, and this has an impact in shaping trade flows. Third, there are linkages in the financial system. Since 2005, Nigerian banks have extended their operation in many countries in sub-Saharan Africa. That is also true of South African banks,” he said.

    According to him, Nigeria has different trade policies through its neighboring countries, and these policies have been a source of transmission of shock from Nigeria to the other countries.

    “Let us look at South Africa and its trade channel because it is quite large. South Africa is part of the SACU, the South African Customs Union.  The country and the other members of the SACU have what we call a customs revenue sharing formula.

    This means almost 50 per cent of the customs revenues within the zone will go to the remaining countries of the SACU,” he said.