The Nation Newspaper

Category: Business

  • Nigerians advised to use brokers

    Nigerians have been urged to patronise registered brokers when taking insurance covers.

    General Manager (Technical), Relics Insurance Brokers Limited, Mr Festus Alikwe, said it is better and safer because the registered brokers are experts and will give good advice.

    He said: “For those seeking to take up insurance cover for their properties, businesses and even those seeking to take up life insurance covers, they should do so through qualified and registered insurance brokers.”

    He said this is important because brokers understand the technicalities of the business more than the intending client, adding that this is for the good of the client.

    Alikwe told The Nation that the way brokers see insurance firms is not the same way the prospective clients who are not insurance experts, see them.

    He said if an intending client goes s to an insurance company, it is still the same amount of premium he will have to pay if he goes through the brokers.

     

     

     

  • Lagos pays N14.45b to retirees

    The Lagos State Government paid N14.486 billion to 2,604 retirees of the contributory pension scheme in two years, the Director-General Lagos State Pension Commission (LASPEC), Rotimi Hussain, has said.

    Hussain, who made this known at the Third Pre-Retirement seminar for workers retiring from the state’s service between January and June, said the contributory pension scheme, has continued to record huge success, adding that the amount was paid between October 2010 and December 2012.

    He noted that the event was designed to help the would-be retirees prepare for their physical, emotional and financial well-being upon retirement.

    He said with effective planning, retirees would be afforded the benefit of being in a better position and frame of mind to build a vibrant and rewarding life in retirement.

    He said: “I am pleased to state that the contributory pension scheme in Lagos State has continue to record huge success. As we speak, 2,604 retirees who retired from the State public service under the scheme have been paid N14.486 billion between October 2010 and December 2012.

    “This feat gives hope that with the contributory pension scheme, the future is absolutely bright for workers in the state.”

    Hussain said the state is poised to provide comfortable live for its workers during retirement.

     

     

     

     

  • STI adopts risk framework to drive operations

    Sovereign Trust Insurance Plc is embracing enterprise risk management framework to drive its operations.

    The Managing Director/Chief Executive Officer, Mr Wale Onaolapo, said the framework is designed to assist the Board and Management to align the company’s risks to its business strategy, enhance risk response decisions, reduce operational surprises and losses, identify and manage interdepartmental risks, allow for more informed risk decisions and improve capital management.

    He said the regulatory environment has evolved with regulators seeking assurance as to the robustness of the risk management capacity and the financial viability of financial institutions in a stressed environment.

    He addded that part of the company’s policy is to maintain a strong capital base to support the growth and the development of its business and to also be able to meet regulatory capital requirements at all times through its corporate governance, processes and procedures.

    Its spokesperson, Segun Bankole, said the move became necessary to ensure that operations of the organisation are carried out on sound business principles to protect shareholders and other stakeholders’ interest.

    Head of Risk Management and Control of of the firm, Mr Sanni Oladimeji, said it has become imperative to apply sound risk management principles to ensure that organisations are safeguarded against unforeseen risks.

    He further said the company’s management is committed to the execution of the framework in the years ahead.

    He noted that the creation of a Risk Management and Control Department in the organisation has given a voice to staff. He said employees have been trained to make decisions on risks.

  • CBN: 50 big customers owe banks N2.39tr

    No fewer than 50 top customers are owing banks N2.39 trillion, the Central Bank of Nigeria (CBN) has said.

    Their debt represents 30 per cent of the N7.87 trillion owed the banks, according to CBN Financial Stability Report for June, last year.

    The report put the banks’total credit at N7.2 trillion at the end of December 2011.

    The report signed by CBN Governor Sanusi Lamido and Deputy Governor, Financial System Stability, Kingsley Moghalu, said top 100 obligors accounted for 39.1 per cent of the gross credit, indicating a high loan concentration within the banking sector. The ratio of non-performing loans (NPLs) to gross loans declined by 0.6 per cent from 4.9 per cent, but falls within the regulatory threshold of five per cent.

    The ratio decline, the report said, was partly attributable to the sale of N52.85 billion Eligible Bank Assets (EBAs) to the Asset Management Corporation of Nigeria (AMCON) by six banks.

    The NPL classified as substandard was N74.81 billion (22.3 per cent), doubtful, N123.44 billion (36 per cent) and lost loans, N141.63 billion (41.7 per cent). The NPL also declined by 5.6 per cent to N339.88 billion from N360.09 billion.

    A further deterioration of earlier classified loans resulted in an increase in loan loss provisions from N202.27 billion to N242.13 billion.

    The CBN said it received 444 petitions, amounting to N1.41 billion from customers, relating to alleged excess charges and other unethical practices. Its intervention resulted in banks refunding N5.76 billion to customers.

    The report said banks are facing current or prospective risk arising from changes in the business environment and adverse decisions. Others are improper implementation of decisions or lack of responsiveness to changes in environment.

    The CBN noted that as the environment changes because of changes in economic and regulatory framework, it is critical that financial institutions manage the risk from their business strategy.

    The report said a stress test conducted at the end of June last year, evaluated the solvency risks in banks’ balance sheets and imbalance in the financial system. The result of the exercise reaffirmed the increasing resilience of the industry to shocks. Comparatively, the results showed slight improvements over the December 2011 position in credit, foreign exchange and interest rate risks; liquidity risks increased marginally.

    The reforms in the sector, CBN said, would address liquidity and exchange rate volatility concerns in the near to medium term. It added that liquidity risks were adjudged significant as the impact of 10 per cent general run on the industry’s liquidity resulted in 815 basis points reduction in liquidity ratio. The results, according to the report, showed that small and medium banks were less vulnerable to liquidity risks than big ones.

     

  • CBN won’t relax control of MfBs, mortgage firms, others

    The Central Bank of Nigeria(CBN) will continue to monitor Development Finance Institutions (DFIs) for growth this year.

    In a report on activities of Other Financial Institution Department (OFID) on its website, it said the aim of monitoring CBN primary mortgage banks, finance houses, microfinance banks, among others, grouped under DFIs is to see whether they are in order.

    CBN said: “The aim of monitoring DFIs is to institutionalise strong corporate governance and risk management programmes in those firms. The exercise will enable the companies to effectively deliver on their mandates. The bank shall also continue to enforce the Uniform Prudential and Assessment Standards prescribed for DFIs in Africa, developed under the aegis of the Association of African Development Finance Institutions (AADFI) for benchmarking operations of the DFIs.

    “All Other Financial Institutions (OFIs) are required to strictly comply with the prudential requirements specified in the existing guidelines/circulars, directives and provisions of BOFIA CAP B3 Laws of the Federation of Nigeria, 2004. Appropriate sanctions shall be imposed on any OFI found in contravention of the prudential guidelines, circulars, directives or provisions of the BOFIA, 2004.”

    The CBN also said it would sustain the implementation of the Microfinance Certification Programme for Microfinance Banks (MfBs). It added that it would continue to license microfinance banks in line with the prescribed new capital regime of N20 million, N100 million and N2 billion for unit, state and national microfinance banks.

    The apex bank said it is introducing specialised second-tier institutions that would provide short-term liquidity, long-term funding or guarantees to mortgage banks and housing finance providers.

    According to CBN, reforms of the primary mortgage banks shall, among other things, target the enhancement of access to mortgage/housing finance, introduction of sound risk management, strong corporate governance and the promotion of secondary mortgage market.

     

  • Dana Air crash: ‘Only two families of victims are fully paid’

    ONLY two families of the victims of the crashed Dana Air have been paid the balance of $70, 000, Controller, Claims of the airline’s local insurer, Prestige Assurance Plc, Mrs Josephine Gbuji, has said.

    The payments were made based on the advice of the lawyers, Clyde & Co, who are represented by Yomi Oshikoya & Co.

    She said aviation insurance requires foreign backing to accommodate the magnitude of the losses, adding that local insurers lack the capacity to do so.

    Mrs. Gbuji told The Nation that her firm had paid the initial $30, 000 each to 81 families of Dana Air crash victims as at January 31, 2013.

    “We have paid every passenger’s family who has come forward and have been able to prove their title the initial amount of $30, 000. From my own record, we have paid 81 families out of the lot; two passenger’s families have been paid the balance of $70, 000.

    “This was after the two families got the letters of administration duly confirmed by the lawyers and they advised us on that,” she said.

    According to her, the lawyers are in charge because there are many issues involved in confirming who the bereaved representatives of the passengers are.

    She said the process was more rigorous for the balance of $70, 000, adding that the insurance company did not determine who collects what.

    “The lawyers have to be thorough because if they do not do it well, there will be law suits later and they too would be held liable,” she said.

    Mrs. Gbuji said nine families of beneficiaries, who were confirmed to them by the lawyers, got their cheques for $30, 000 on the 30th day after the crash happened, in conformity with international aviation laws, adding that the cheques were issued and sent to the lawyers who would disburse to the beneficiaries to ensure they got proper discharge.

    “We have our funds here. So, each time we have advice, we issue cheques to those cleared. The cheques are written exactly the way the lawyers instructed,” she said.

    However, an official of Yomi Oshikoya & Co, the representative law firm of Clyde & Co in Nigeria, said the lawyers were not disposed to discussing the issue with the press.

    According to her, the firm is dealing with the solicitors to the beneficiaries of the airline crash victims. She refused to talk on the fate of those affected on ground.

    This is because apart from the initial ‘hand outs’ to cushion the effect of their immediate losses, none of them has been paid any claim by the insurance firm.

     

  • AfDB blames National Assembly for non-release of $700m SMEs loans

    The African Development Bank (AfDB) has explained the rationale for delay in the release of the $700 million (N108 billion) loans for small and medium scale enterprises (SMEs). It blamed the delay on what it called technical hitches and the National Assembly.

    In 2011, AfDB approved $700 million for the development of SMEs in Nigeria. It also provided loans to the Bank of Industry (BoI) and NEXIM Bank two weeks ago following the signing of an agreement. The loans were given in two tranches of $500 million to BoI and $200 million to NEXIM for distribution to the qualified SMEs.

    AfDB’s representative in Nigeria Dr Ousmane Dore told The Nation that the loans arrived late because the National Assembly did not approve it in time.

    He said: “This is a sovereign-guaranteed (Federal Government-backed) credit lines. In this case, the credits must be approved by the parliament. So, it was one of the loans that had to wait for the approval of the National Assembly before it can be released.

    “We are trying to work out some conditions guiding the release of the loans.These are technical issues relating to the capacity of the beneficiaries to pay back the loans. Some negotiations need to be done to ascertain whether the banks have the capacity to undertake the risks of collecting the loans. This is important to ensure that confidence between the AfDB and Nigeria is intact.”

    Dore said the board of the AfDB has since approved the loans, adding that the technical issues must be sorted out before the cash is released to the would-be-beneficiaries.

    According to him, the bank is lifting its operational goals to employment generation to foster the growth of the continent. This, he said, is evident by the decision of the bank to approve and release the $700 million loans promised the operators of small and medium scale enterprises in the country.

    He said AfDB has set up loans for capacity building in some countries, including Nigeria, adding that the loans are sovereign guaranteed.

    The AfDB, he said, looks at the conditions attached to sovereign- guaranteed loans, before it releases the loans to the beneficiaries. He added that the loans are given to people at a considerable terms to ensure flexible mode of payments.

    He berated banks for not providing enough funding for the agricultural sector, adding that the sector plays a critical role in the economy. The agricultural sector, he said, is poorly funded, and as such cannot deliver expected results.

    “If you look at the overall credit in the economy, only two per cent goes to a sector like agriculture identified as one of the strongest contributors to the Gross Domestic Product(GDP). The Federal Government can work towards improving the scheme. I think the government has some schemes on that,” he added.

    He said the AfDB has dedicated loans for the growth of the power sector, stressing that infrastructural development is of major priority to the institution.

    The bank has medium-term projects in Nigeria, with a gestation period of four years.The projects spanning road construction, transportation, water, irrigation, among others, aimed at meeting the nation’s infrastructural challenges.

     

  • Power assets: Fed Govt to seal deal with bid winners in March

    Power assets: Fed Govt to seal deal with bid winners in March

    THE Federal Government’s on-going negotiations with winners of bid for the power projects would be concluded by the end of March, the Finance Minister and Coordinator of the Economy, Dr Ngozi Okonjo Iweala, has said.

    Speaking yesterday at the Renaissance Capital (RenCap) investor conference in Lagos, she explained that government has been pursuing one of the most ambitious power reforms that is transparent.

    She said every two weeks, the President holds meetings on development in the power sector to ensure that there are no lapses, adding that fixing the financing of the power sector is essential to the government.

    She said the government is committed to ensuring that negotiations on all the projects being sold need to be concluded before the projects will begin to come on stream.

    “We are currently looking at letters of comforts, signing of power purchase agreements and master plan power agreement. We do not want to do it company- by-company. Give us till the end of March and you will see all these things taking shape,” she said.

    Dr Okonjo-Iweala said Nigeria has been growing at seven per cent in the last decade, a situation that has made people to ask questions on why the growth trend is not impacting on their lives.

    “We need to address jobs and rising inequality challenges in the country, because they remain the biggest problems government is trying to tackle,” she said.

    Mrs Okonjo-Iweala, said budget deficit may narrow to 1.8 per cent of the GDP this year after adjustments by the National Assembly.

    She said government is correcting past records of fiscal lapses including the need to balance fiscal consolidation with liquidity control.

    Mrs Okonjo-Iweala explained that current budget statistics of 31 per cent fiscal expenditure and 68 per cent recurrent expenditure, is not enough, saying the target of government is to achieve 60/40 ratio on budget implementation for capital and recurrent expenditure respectively.

    She defended Nigeria’s debt-to-GDP ratio of 20 per cent, saying the country’s contemporaries have 40 per cent. “Inflation is on downward trend. We are in good place in terms of microeconomic stability, although we still face constraints of inadequate power and other key infrastructure.”

    She said that Federal Government will before the end of this year, redeem N100 billion bond. She said that the bond market remains a viable area of investment for both local and foreign investors.

    Meanwhile, the Central Bank of Nigeria (CBN), has placed restrictions on banks’ lending to their Holding Companies (HoldCo) to protect shareholders’ funds from insider abuse.

    CBN Governor, Sanusi Lamido Sanusi, who stated this at the RenCap programme, said any bank that violates the rule will have the loaned funds deducted from its shareholders’ funds as return capital.

    FirstBank of Nigeria, Stanbic IBTC and First City Monument Banks (FCMB) have adopted the HoldCo structure last year.

    The structure became exigent after the CBN set aside the universal banking regime in 2010 and gave banks the option to either: divest from their non-banking subsidiaries and become pure commercial banks, or form a holding company. The HoldCo structure allows commercial banks to be properly ring-fenced from the other non-commercial banking activities.

  • ‘N100b Textile Intervention Fund saves 8,070 jobs’

    ‘N100b Textile Intervention Fund saves 8,070 jobs’

    The Minister of Trade and Investment, Olusegun Aganga, has said about 8,070 jobs have been saved through the disbursement of the N100billion Cotton Textile Garment Intervention Fund.

    Also, the Vice-President, Nigeria Labour Congress and General Secretary, National Union of Textile Garment and Tailoring Workers of Nigeria, Issa Aremu, confirmed that 38 textile firms have so far benefitted from the Fund.

    The duo, who spoke during the Stakeholders Retreat on the Cotton, Textile and Garment Sub-Sector of the Nigerian Industrial Revolution Plan in Abuja, said the retreat was necessary because of the importance of a revitalised Cotton, Textile, Garment sub-sector in the efforts towards achieving sustainable and inclusive economic growth and development.

    He said: “This is the beginning of an important journey. We want to make this sector number one in Africa. It is not just about talking, we will come up with actionable points to kick-start the needed revolution.

    “We are already making progress with the reforms that are in place. Figures by the Manufacturers Association of Nigeria revealed that the capacity utilisation in this sector has increased significantly from 29.14 per cent in 2010, to 49.70 per cent as at 2011.

    “In addition, a number of hitherto moribund textile mills have been re-opened, while about 8,070 jobs have been saved. Also, over 5,000 new jobs have been created. We cannot continue to be a raw materials exporting nation because by doing so, we are exporting jobs, development and wealth. This is one area that the Nigerian Industrial Revolution Plan is trying to address.

    “The textile industry is one of those areas we are looking at. We want to remove the barriers to increased productivity in this very important and strategic sector. One of these barriers is access to affordable finance. The Cotton Textile and Garment Fund, which the Bank of Industry manages at a very low interest rate, has achieved some remarkable success.

    “I am very optimistic that before the end of 2013, the whole of the N100billion would have been disbursed.

    “But from what we’ve heard, we need more than N100 billion to be able to get to where we want to be, because textile is one sector that creates significant amount of jobs globally. So, for Nigeria, investing in the textile industry makes sense both from the economic point of view and from the job creation point of view,” he noted.

    He added that the Ministry of Trade and Investment, is working with stakeholders in the textile industry to address the current challenges facing the sector in order to reposition it as the major driver of job creation and wealth generation in the country.

  • Naira rises after CBN dollar sale

    Naira rises after CBN dollar sale

    The naira gained the most this month after the Central Bank of Nigeria (CBN) increased the amount of dollars it sold at an auction.

    The naira climbed 0.1 percent, the most on a closing basis since January 31, to N157.25 per dollar.

    The CBN sold $180 million to lenders, it said in an e-mailed statement, the highest in three auctions. The apex bank sells dollars on Mondays and Wednesdays to support the naira.

    “The increase in dollar supply was a boost to the naira,” Sewa Wusu, a currency analyst at Lagos-based Sterling Capital Limited, said by phone yesterday.

    The yield on the country’s 16.39 per cent domestic bonds due in January 2022, fell four basis points to 10.88 per cent in the secondary market, according to yesterday’s data compiled on the Financial Markets Dealers Association’s website.

    Borrowing costs on Nigeria’s $500 million of Eurobonds due January 2021, were little changed at 4.179 per cent yesterday.