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Tag: Access

  • ‘Access to economic opportunities bane of businesses’

    ‘Access to economic opportunities bane of businesses’

    Irene Ochem studied Archaeology and History for first degree at the University of Nigeria, Nsukka. She also holds a Master’s in Business Administration from the University of London and a diploma in translation from the University of Trieste, Italy. After working in Europe for over two decades, she is back in Nigeria helping female entrepreneurs as CEO of the African Women Innovation and Entrepreneurship Forum (AWIEF). In this interview with Yetunde Oladeinde, she talks about investing in women, new opportunities available, organising conferences across Africa and more.

    What inspired you to work with women?

    It all started from my upbringing. I was raised by a widowed mother. She struggled to train us and see us through our education. Then, I’ve lived in different countries and continents, and in all the places where I’ve lived and travelled to, I have also observed the lack of recognition of women’s contribution to the economic development of the society. Then there are the obstacles most of these women have to go through. Maybe the situation is not very bad in the west, but in Africa it is.

    Also, across the world, it has become a global agenda that women must be empowered economically. It makes good economic sense because women have a natural instinct to do certain things. If you empower a woman, she tends to invest her earnings into the household, into the education of her children, and they go out to contribute to their communities, the nation and the African continent. So, why not give women the same opportunities men have?

    Women in Africa encounter a lot of challenges trying to start a business. Access to finance is one major problem, but having access to economic opportunities is where it starts. Then there are cultural obstacles. For example, in some communities, a woman cannot source for a loan without acquiring the signature of either her husband or a male figure, even though the person is not bringing anything into that business. In some societies, women don’t have rights to land, even in the Igbo community I come from.

    Then, across Africa, there is a lot of economic growth. Everybody is talking about Africa rising, Africa growing and Africa moving on. The Global Entrepreneurship Summit just ended in Nairobi and Barrack Obama identified some of the problems. There, it was general entrepreneurship that they were talking about but he identified the problem in Africa that women represented 50 per cent of the population but they do not have access to equal opportunities. There he put it aptly that if half of your team is not playing, then you have a problem. So Africa is rising, Africa is the new investment frontier because you have people coming from China, America, Europe and all over the world wanting to grab a piece from what’s happening in Africa. So, why can’t we Africans do it ourselves or why not empower our women? So these are part of the motivation for me. I saw there was need to create awareness; there is need to make our government see the importance of economic empowerment. There is need to empower the African woman because she represents the potential for Africa’s socio-economic development.

    What are some of the things you learnt from your mother?

    My mother was widowed at a very tender age, and seeing how hard she had to work, juggling children and several jobs, in order to make sure we had food in the house, quality education. After finishing high school, I went to study at the University of Nigeria, Nsukka. I graduated, did my youth service, taught, worked for one year in Nigeria, before leaving for Europe. That inspiration was good and being her only daughter, she instilled in me that as a woman, you make the difference.

    Who are your targets?

    We are bringing together established, successful businesswomen, and, also, young, emerging and aspiring female businesswomen. We are bringing together policymakers, the government, non-governmental organisations, and also the academia. Being a pan-Africa event, we are trying to create a platform for networking and learning across borders, and also for potential business partnerships and mentorship.

    There will be a small fee to pay. But we have two very high-level training workshops for delegates. One will be on leadership and ethics, and will be presented by Leap Africa, and the facilitators are top-notch. Then the second one will be presented by the Business School Netherlands, and this is a school people go to get their MBA.

    This is one of the reasons why we are looking for sponsorships. Because if we are able to raise enough sponsorships, then we will be able to make the participation free for all young and emerging entrepreneurs. So, we are working very hard to ensure that happens.

    Apart from the pre-conference workshop, there will be an exhibition. So, companies and industries can come to showcase their products, services, technology. Being an entrepreneur event, the exhibition is not sector-specific. So, any product a woman can consume is welcome.

    Most of the businesses owned by women are SMEs. How do you intend to empower them?

    A lot of the businesses we are talking about are MSMEs. Many of the female businesswomen entrepreneurs are operating in that arena. We also want to bring focus on the challenges faced by women in the rural area. We are not leaving them behind. We are bringing the grassroots to this conference, and to help us do this, we are partnering with the Quintessential Businesswomen Association. They have members in every local government in the country and they are empowering women in the agricultural sector, teaching them how to do things and manufacture local products like honey. So, we are bringing some of these women to participate.

    One of the problems female entrepreneurs face is access to credit. How can this be solved?

    We have a section dedicated to access to finance. We have experts who will make presentations on the topic. One of them is our speaker from Tanzania, Mrs. Sabeta Mawenja, who is the Director-General of the first purpose-built bank to empower women entrepreneurs. She’s coming to present a case-study on how we can innovate in the banking sector, just like they have done in Tanzania. Maybe after the event, a bank can come up and decide to open a bank dedicated for women. They’ve done the same in Ethiopia.

    Then we will have a panel discussion with experts from the banking and business sectors. They will help us explore the problem and find solutions.

    Oby Ezekwesili will be making a presentation titled Securing the Future: The Imperative of Girl-Child Education. So, we have to educate the girl-child, keep her safe; that’s where it all starts. That’s why you have low ratio of women participating in entrepreneurship schemes. We have been able to engage, at very high level, relevant stakeholders like social entrepreneurs like Leap Africa, nongovernmental organisations, the Federal Ministry of Women Affairs. So, our expectation is that, at the end of this conference, we would have created a more enhanced awareness and more informed approach to the challenges that women encounter in their businesses. Then we hope to be able to proffer solutions.

    What are some of the challenges encountered?

    Of course, I’m also an entrepreneur. There have been challenges with finance, finding a skilled workforce, and all the regular challenges. Putting up an initiative like this is far from simple, but when you are passionate about something, it appears seamless.

    What motivated you to start a business around conferences and events?

    I’ve a lot of experience with conferencing. My second university degree was as a translator. So, when I finished, instead of going to work as an interpreter, I went into conferencing. Why? The nearest opportunity was to work for the European Union, but I wasn’t an EU citizen at the time. So, I started organising conferences across Europe. From there, I joined UNIDO, where I worked for ten years. So, I’ve had to organise very high profile conferences. Then I worked in Cape Town, South Africa, as a research manager, before going to Ethiopia.

    My love for professional and international conferencing started in 1996 when I organised the 16th General Meeting of the European Grassland Federation (EGF 1996), September 15 – 19, in Grado, Italy. Not only was I employed to organise the conference, but it turned out that I was the only black head in the crowd during the event. Instead of being intimidated, I felt rather motivated to go on, and today I am glad I did.

    How many languages do you speak?

    I speak Igbo, English, Italian and French.

    You still look smart and fit. What is the secret?

    I eat healthy, do exercises, and practise yoga, essentially. That is what I do to unwind. Then I read a lot when I have the time.

    My family motivates me. I’m passionate about Africa. After working for decades in Europe, I realised that with all of our resources, Africa can be better. I’m one of those people who believe in Africa.

    What are some of your memorable moments in life?

    It’s connected to my family life. My marriage and the birth of my children.

    My husband is a retired scientist, Dr Alex Ochem.  We met in Nigeria while he was on holiday.

    If you had to advise female entrepreneurs, what would you tell them?

    They should stick in there. It’s not easy, but it’s worth trying. They shouldn’t give up.

  • CBN bans dud cheque issuers from clearing, loan access

    CBN bans dud cheque issuers from clearing, loan access

    The Central Bank of Nigeria (CBN) yesterday mandated commercial banks to ban any of their customers that issues dud cheques from use of the clearing system for a period of five years.

    CBN Director, Banking Supervision,  Mrs. Tokunbo Martins who disclosed this in a circular, said the banks are to also ban the serial issuers of dud cheques from accessing credit facilities from the banking system for a period of five years.

    She noted with great concern the impunity with which some customers of banks issue dud cheques on their accounts despite the provisions of the Dishonoured (Dud) Cheques Act of 1977 and its recent directives to banks’ customers to desist from such practice.

    She said the names of the offenders should be forwarded to the three Private Credit Bureaux and the Credit Risk Management System (CRMS) adding that no institution shall, except with the prior written approval of the CBN, remove such a person’s name from the three Credit Bureaux and the CRMS.

    Martins said the customers’ names would be listed on the database of the private credit bureaux and CRMS for a period of five years from the date of submission, after which offenders will be eligible for removal.

    However, if the offender is found wanting after the name is removed, such an offender shall be permanently reinstated in the data base of both the three Credit Bureaux and the CRMS.

    The CBN director said that where an Institution fails to report a serial dud cheque issuer in its return to the CBN CRMS and Private Credit Bureaux as required, it shall be considered as concealment and misrepresentation of material fact and the affected institution shall be penalized in accordance with the relevant provisions of the Banks and Other Financial Institutions Act, LFN 2004 CAP B3 (BOFIA).

    Martins said that to sustain the positive achievements already recorded in the Nigerian Payment System, it is essential that confidence and integrity in negotiable instruments, especially cheques, should be restored and enhanced.

    “Consequently, it has therefore become imperative for the CBN to implement further measures to dissuade the issuance of dud cheques to the barest minimum. The CBN has put in place additional regulatory measures against dud cheque issuers. Upon CBN’s compilation and dissemination of information on serial issuers of dud cheques based on bank’ returns, banks would be required to Recall/cancel all unused cheque books issued to serial issuers of dud cheques,” she said.

  • Enhancing access to N220b MSMEs’ fund

    Enhancing access to N220b MSMEs’ fund

    Limited access to credit has been a major challenge to Micro, Small and Medium Enterprises (MSMEs). To get round the problem and unleash MSMEs’ potential to create jobs, boost production and reduce poverty, the Central Bank of Nigeria (CBN) created the N220 billion MSMEs Development Fund in August 2013. How can operators access the fund with ease? Assistant Editor Chikodi Okereocha reports.   

    The Federal Government, through the Central Bank of Nigeria (CBN), wet the appetite of operators when it launched the N220 billion Micro, Small and Medium Enterprises (MSMEs) Development Fund in August 2013. The lifeline, expectedly, offered hopes of closing the financing gap in the sector. It was acknowledged globally as the engine of economic growth because of its potential to create jobs, boost production, generate income and reduce poverty.

     

    MSMEs before the scheme

    Before the roll out of the scheme, about 80 per cent of MSMEs  had no access to the financial market, according to a survey by the International Finance Corporation (IFC) and Mckinsey & Company, a United States (US)-based multinational management consulting firm. Between 2003 and 2012, commercial bank loans to small scale enterprises dropped at an exponential rate. Analysis of the yearly trend in the share of commercial bank credit to small-scale industries indicated a decline from about 7.5 per cent in 2003 to less than one per cent in 2006 and a further decline in 2012 to 0.14 per cent.

    To make matters worse, commercial banks charge as high as between 22 and 25 per cent. Micro-finance Banks (MFBs) charge higher, insisting on between 30 and 40 per cent interest rates. The exorbitant interest rates charged by the commercial banks is said to be partly responsible for the shutting of many industries. Others simply relocated to neighbouring countries where they are sure of interest-friendly credit facilities.

    Despite the high cost of credit, Nigeria’s  MSMEs estimated at 17.6 million employed about 32.4 million people as at 2012. It also contributed about 46.54 per cent of nominal Gross Domestic Product (GDP), a figure which raised hope that the N220 billion would, perhaps, be a shot in the arm of operators in the MSMEs sector. CBN Governor Godwin Emefiele amplified this expectation when he described the intervention as an innovative way of improving MSMEs access to finance, shoring up their potential for job creation and enabling them reduce poverty in the country.

     

    Access becomes an issue

    However, MSMEs’ ability to play this critical role on the strength of the N220 billion lifeline has come under serious threat due to difficulties in accessing the fund. Some of the operators lamented that it is easier for the camel to pass through needle’s eye than to access the fund because of the stringent conditions and guidelines for accessing it.

    For instance, the Nigerian Association of Small Scale Industrialists (NASSI) lamented that accessing the fund has become extremely difficult. “The problem with funds like that and over the years, we have had so many funds like that, you cannot access them. So, they remain a mirage. And this N220 billion has continued to be a mirage, which means you can’t touch it. The CBN guideline as published makes it impossible for anybody to access that fund. That is what happened to all kinds of funds domiciled in the CBN, nobody can access them,” the National President of NASSI, Chief Chuku Wachuku said.

    Chief Wachuku, a Consultant Economist, told The Nation that by giving the fund and other similar funds to government agencies to administer instead of putting them directly into private sector organisations or development finance institutions, such government agencies would create bureaucratic empires.

    “You are going to have managing directors and deputy managing directors with all the attachments and appurtenances thereto and then the money will just go. But, the correct thing to do is to find a critical strategy to get these funds directly into the businesses to create employment and when you create employment you create wealth,” he argued.

    He also said putting the funds into development finance institutions would have been more ideal because they understand the concept of small scale enterprises. Noting that Deposit Money Banks do not understand the concept of short-term financing, he, however, urged the development finance institutions, such as the Bank of Industry (BoI) and Bank of Agriculture (BoA) to understand that they are intervention agencies of the Federal Government set up to give effect to the fiscal policies of government. “Their duty is not to make money or show increased balanced sheet; once they do that, we are going to call on the Presidency to scrap them,” he said.

     

    Operators call for invovement in fund’s administration

    Wachuku said putting such funds directly into private sector organisations, or development finance institutions, would mean getting the fund as quickly as possible without too many bottlenecks. He said this would be done by working with members of the Organised Private Sector (OPS), who would translate the interventions into real industrial growth. “I am using this opportunity to call on the Presidency to re-evaluate these huge sums of money pumped into public sector agencies and put them directly into private sector organisations,” he stated.

    He wondered why the government continued to pump more intervention funds into government agencies despite the fact that they he not lived upto expectation, pointing out that “the correct thing to do is to find a critical strategy to get these funds directly into the businesses to create employment and when you create employment you create wealth”.  He insisted that everywhere, the government cannot create employment rather; employment and wealth creation must be private sector-driven.

    Members of Enugu Chamber of Commerce, Industry, Mines and Agriculture (ECCIMA) are also kicking, saying that access to the fund has remained a challenge for close to two years after it was launched. To ease access to the fund, the Director-General (DG) of ECCIMA, Mr. Emeka Okereke, said OPS members should be brought into its administration. He argued that since the fund is a developmental initiative, OPS members should be involved in its administration. According to him, this would allow ECCIMA and other private sector organisations vouch for the integrity of their members wishing to access the fund.

    This, Okereke said, would go a long way in reducing incidents of loan default, as the OPS would be engaged in setting eligibility criteria for accessing the loans. The ECCIMA chief also said there was need for banks to create SMEs desk to help operators package their business proposals very well to attract the required funds. Noting that the N220billon MSMEs intervention fund is not charity, he said OPS members must possess all the basic criteria for accessing the fund including presenting a bankable proposal.

    The Director-General said most MSMEs lack the capacity to package their feasibility studies very well. Besides, they lack good management structure and accounting system to make them attractive to financial institutions for any form of assistance. Reminded that the Bank of Industry (BoI) had earlier signed a service agreement with Business Development Service Providers (BDSPs) to help operators package their loan requests, develop bankable business plans and proposals for to facilitate their access to finance, Okereke said most of the MSMEs don’t have the financial resources to hire experts or professionals to their feasibility studies.

    Also worried by lack of access to the fund, the Abuja Chamber of Commerce is canvassing the inclusion of the OPS in setting criteria for assessing the fund. Its Vice President, Public Relations, Jude Igwe, commending the N220billion scheme launched by President Goodluck Jonathan as a policy in the right direction, advised that the OPS should be engaged in setting eligibility criteria for assessing the loans.

     

    CBN’s guidelines

    Under CBN’s guidelines, the fund, which attracts nine per cent interest rate,would be administered through private or state owned Micro-Finance Institutions (MFIs), Finance Houses, and Cooperative Finance Agencies. Such MFIs or micro-finance banks must pass CBN’s competency and proficiency tests in order to certify them capable of distributing these funds to MSMEs. State governments will be able to access up to N2 billion each for lending to eligible beneficiaries through Participating Financial Institutions (PFIs) in their states.

    In other words, the CBN will not be lending directly to farmers or businesses. What the fund does is a wholesale fund. It provides funding to the PFIs. MFIs or micro-finance banks can also come to the fund. The CBN will assess them; give them the money at low interest rate. The PFIs would undertake that they will lend at low rate of interest to micro-entrepreneurs, the low-income earners, farmers, artisans and the active poor who operate in the informal sector.

    Also, PFIs can only finance agricultural value chain activities, trade and commerce; cottage industries, artisans, among others. The apex bank in a bid to ensure that productive sectors of the economy attract more finance necessary for employment creation and diversification of the country’s economic base, also said a maximum of 10 per cent of the commercial component of the fund should be channeled to trading and commerce.

    Although, CBN requests that 60 per cent of the fund, representing N132 billion, be earmarked for providing financial services to women-owned businesses, Emefiele said PFIs would be required to submit periodic returns on disbursements as well as an analysis of the social impacts of the fund. He added that the finance sector regulator will also undertake regular on and off site checks to ascertain the veracity of the reports received.

    That is not all. The CBN also demanded that borrowers provide 100 per cent near-cash cover in treasury bills or fixed deposit, a situation said to have made it difficult for most finance house operators to draw from the fund. Most of the finance house operators are therefore, reluctant to draw from the loan. In their own thinking, the CBN cannot force people to invest in treasury bills or keep fixed deposits because they want to borrow. Because of this, only commercial banks are said to be meeting the drawn-down policy and are accessing the loans. The snag however, is that this arrangement defeats the objective of setting up the fund.

    However, Wachuku argued that this should not be so, pointing out thatthe economy of the emerging nations or even developed nations appreciate, that economies must necessarily depend on MSMEs and the informal sector because it’s the engine of growth. He said 70 per cent of all new net jobs in the US are created by small and medium enterprises. He also said in Nigeria, SMEs contribute 90 to 95 per cent to GDP, but their only problem is that whereas they contribute this percentage to GDP, the wealth addition stands at only 46 per cent.

    Indeed, in developed economies of the world, the private sector is the engine of economic growth, propelling the economies of those countries by creating the bulk of job opportunities. Government only creates the enabling environment for the private sector to thrive through unfettered access to credit facility to MSMEs in those countries. Government also provides the necessary infrastructure, including guaranteeing the security of lives and property. But this is not the case in Nigeria where the government remains the largest employer of labour.

     

    Conclusion

    The hope was that the fund, seen by not a few stakeholders as a practical approach to boost the employment and wealth creation capacity of operators of MSMEs, would reverse this trend. But as things stand, OPS members believe that the initiative can still deliver on its promises if private sector players are brought into the administration of the fund.

  • ‘OPS yet to access N220b MSME fund’

    The Onitsha Chamber of Commerce has decried the inability of members of the Organised Private Sector (OPS) to access the Federal Government intervention fund for Micro, Small and Medium Enterprises (MSME). The President of the Chamber, Dr Tim Anosike, expressed this concern in an interview with reporters. “The OPS is still having difficulties in accessing the Federal Government’s N220b MSME fund,” he said.

    Dr. Anosike disclosed that the problems facing the sector included the complicated procedures in accessing the fund and lack of interest of many banks in the programmme. “The current N220 billion MSME intervention fund by the Central Bank of Nigeria (CBN) is a laudable initiative. This chamber believes that if the fund could be made available for the target groups, the national economy would received a significant boost at the end of the day.

    He said this is more, considering that 60 per cent of the fund goes to women entrepreneurs. He, however, expressed fears over the complicated

  • Access seeks uniform reporting standard

    Access seeks uniform reporting standard

    Chief Risk Officer, Access Bank Plc, Dr. Gregory Ovie Jobome has called on stakeholders in the Nigeria Sustainable Banking Principles (NSBP) to follow uniform reporting standards for them to achieve the desired objective.

    Speaking at the NSBP Pre-Reporting Workshop held yesterday in Lagos, he said stakeholders needed to ensure that they formulate policies that will enable them achieve their sustainable banking objectives. The workshop was organised by Access Bank.

    He said operators needed to ensure that issues around human rights, environment, sectors to bank and other critical issues are reported uniformly.

    The NSBP, he said, should be the minimum standard that banks follow, adding that global standards can also be domesticated.

    The Managing Director of Sustainable Finance Limited, Carey Bohjanen said banks should think through the NSBP and implement them. He said the NSBP is a regulatory requirement that lenders have to adhere to because it is also cost-saving.

    She said in line with global trends on sustainability, the CBN, on March 6, issued the NSBPs reporting template to banks, discount houses and development finance institutions for compliance.

    The purpose of the reporting template, she added, was to provide reporting institutions with a uniform format for reporting their implementation efforts.

    To successfully implement the guidelines, she said, it is necessary for reporting institutions to have an implementation plan with realistic timelines, stressing that all hands must be on deck to ensure successful implementation of the NSBPs.

    She said the reporting template developed by the CBN will encourage consistency in reporting by banks, discount houses and development finance institutions as well as provide the CBN with a standard for assessing the commitment of reporting institutions to implementing the principles and sector guidelines.

    The CBN expects that these policies and procedures would have been ratified by the bank’s Board of Directors; and exposed to management staff and subsequently, all staff of respective institutions.

  • Access Bank on technical suspension for right issue

    The Nigerian Stock Exchange (NSE) announced it has granted anticipatory approval for the shares of Access Bank Plc to be placed on technical suspension.

    This is coming on the heels of the proposed Rights Issue of N68 billion by the bank.

    According to the NSE, Access Bank will hold an Extraordinary General Meeting (EGM) on October 13, this year to seek its shareholders’ authorisation for the board of directors to raise additional equity capital in the sum of up to N68 billion by way of a Rights Issue.

    The board of the lender said it believes that the technical suspension is in the overall interest of its shareholders and will preserve their value, on account of the proposed corporate action.

    “The Technical Suspension will be lifted on January 27, 2015 and normal trading activities will resume on January 28, 2015,” the NSE said.

     

     

  • Kwara to access N2b loan from CBN for SMEs

    Kwara to access N2b loan from CBN for SMEs

    The Kwara State government will soon access N2billion from the Central Bank of Nigeria (CBN’s) N220billion micro-credit funds for its small and medium-scale enterprises (SMEs).

    Senior Special Assistant to Governor Abdulfatah Ahmed on SMEs, Lukman Adams told participants at a public/private dialogue organsied by Kwara Coalition of Business and Professional Associations (KWACOBPA) yesterday in Ilorin that  the state governor has signed a Memorandum of Understanding with the CBN on the scheme.

    According to him, the credit facility would aid the growth of the SMEs sector and boost the state’s economy.

    He said the loan which is guaranteed by Irrevocable Special Payment Order (ISPO) would be managed by a special purpose vehicle (SPV) to be established by the state government to guard against its mismanagement.

    The governor’s aide, while pointing out the importance of the private sector, said the future of the country is in the hands of the private sector.

    He said: “When there is a preponderance of the private sector in any economy, there can’t be chaos but when there is the preponderance of the public sector, there will be chaos.”

    Adams who commended  KWACOBPA on the steps it is taking by demanding for one per cent of the state’s budget as micro-credit fund for the SMEs assured that the government would not be indifferent to the demand.

  • Access Bank awaits CBN’s approval for half-year results

    Access Bank Plc has sent its audited report and accounts for the first half to the Central Bank of Nigeria (CBN) for the regulator’s review and approval.

    A regulatory filing at the Nigerian Stock Exchange (NSE) indicated that the bank’s half-year report for the period ended June 30, 2014 would be released towards the end of this month.

    According to the report, the interim report was submitted to the apex bank last weekend, following approval of the financial statements by the board of the bank.

    Many analysts expected Access Bank to declare interim dividend, in line with its dividend policy. The board of Access Bank had in 2013 distributed N5.72 billion as interim dividends for the first half of 2013 in spite of substantial decline in the performance of the bank during the period.

    The interim dividend in 2013, similar to previous interim payouts in 2012, represented an interim dividend per share of 25 kobo. The dividend was paid on September 17, 2013 to shareholders in the book of the bank as at close of business on September 4, 2013.

    Access Bank’s share price rose marginally by 4.0 kobo to N9.78 per share at the Nigerian Stock Exchange (NSE) on Monday.

    Agusto & Co recently upgraded Access Bank’s credit rating from “A” to “A+” with a stable outlook. The rating reflects the full synergy of the merger with Intercontinental Bank Plc (ICB), which has propelled the bank to be one of the Systematically Important Banking (SIB) Institutions in Nigeria.

    The rating also recognises the bank’s good liquidity position, satisfactory capitalisation, as well as improved risk management framework and the positive impacts on assets quality.

    The rating agency stated in their report that the bank’s extensive branch network has created improved visibility among the banking population and has translated to good market share across the key market indicators. NPLs to gross loans ratio stood at 2.4 per cent, the lowest recorded in the last five years and compares favourably with the industry average of 3.6 per cent.

    Access Bank’s improved rating was attributed to its strong liquidity and funding position which is a clear affirmation of its position as one of Nigeria’s tier 1 banks. The rating upgrade further corroborates the Bank’s enhanced capacity to execute larger transactions as well as access long-term funding from local and foreign multilateral agencies and institutions. This was further confirmed in the successful tier II capital of $400 million Eurobond recently raised by the Bank. This will provide sufficient headroom for the bank to achieve its targeted 20 per cent asset growth in 2014.

  • Investors await GTBank, Access Bank, Dangote Cement results

    A recent directive on exclusion of non-distributive regulatory reserve and other reserves in the computation of the capital base of banks and discount houses could quicken the pace of fund raising by banks and other financial institutions.

    Many banks have been raising funds in recent period. Diamond Bank is currently raising N50.4 billion new equity funds. Unity Bank had recently closed application list for a combined new equity issue of N39 billion. Wema Bank and Sterling Bank had earlier raised new equity funds.

    The Central Bank of Nigeria (CBN) last week in a circular to all banks and discount houses highlighted details on the exclusion of non-distributable regulatory reserves and other reserves in the computation of regulatory capital of banks and discount houses.

    The highlights of the circular indicated that the regulatory risk reserve will be excluded from the regulatory capital when computing the  Capital Adequacy Ratio (CAR), collective impairment on loans and receivables and other financial assets will henceforth not form part of Tier-2 capital, other comprehensive income reserves will be recognised as part of Tier-2 capital but limited to 33.3 per cent of total Tier-1 capital and while unaudited other comprehensive income gains will not be recognised as part of capital, unaudited other comprehensive income will be deducted from total qualifying capital.

    The circular, which implementation started immediately, was part of efforts to ensure more prudent assessment of the regulatory capital of Nigerian banks and in line with global efforts aimed at raising the quality and loss absorbency of the capital base of banks.

    Capital market pundits said the new policy would significantly impact on the capital adequacy ratios of banks and might spur them to seek additional equity funds to bolster their capital base.

    Increased fund raising by banks, which represent the most active block in the capital market and control nearly one-fifth of total market capitalisation at the Nigerian Stock Exchange (NSE), is expected to enliven the primary market.

    Analysts at Afrinvest (West Africa) noted that the new policy would further exert pressure on the banks’ capital adequacy ratios in the third quarter of 2014, when the policy will be used in calculating third quarter earnings and financial statements.

    The capital adequacy ratios of tier 1 banks had declined to 20.0 per cent by the end of 2013 as against 23.3 per cent in 2012.

    Analysts pointed out that the regulatory risk reserves accommodates the difference between the allowance for impairment losses on loans and advances based on CBN’s prudential guidelines compared with the loss incurred model used in calculating impairment charges under International Financial Reporting Standards (IFRS).

    A review of the banks’ capital adequacy ratios (CAR) as at first half 2014 showed that Ecobank Transnational Incorporated (ETI) has the lowest CAR at 16.0 per cent, at par with the 16.0 per cent regulatory requirement for systemically important banks (SIBs). FBN Holdings has 17.6 per cent, slightly above the requirement for SIBs. Among tier 2 banks, Diamond Bank has the lowest CAR with 17.3 per cent, which underlined the strategic importance of the bank’s ongoing rights issue.

    “The recently introduced 33.3 per cent Tier-2 ceiling of total Tier-1 capital, places a restriction on some of the banks that intend to raise further Tier-2 capital in the second half of 2014, hence, they may be forced to explore the Tier-1 capital’s equity raise option,” Afrinvest stated.

    Analysts noted that the new policy would increase confidence of foreign banks in Nigerian banks, based on the stringent capital requirement, which is in tandem with global counterparts, noting that in the light of Nigerian banks’ exposure to the Eurobond market, the prospects of volatility or depreciation in foreign exchange can be significantly absorbed.

    The new CBN policy comes in the wake of impending implementation of the Basel II by the Nigerian financial services authorities. The Nation had recently reported that Nigerian banks might raise some N400 billion in the current capital raising phase to strengthen their capital base in view of the impending implementation of the Basel II.

    Basel II seeks to strengthen banks’ risk and capital management through three main areas, otherwise known as pillars. The first pillar deals with minimum capital requirements, the second pillar deals with supervisory review process while the third pillar deals with processes relating to market discipline. The pillars generally ensure that the greater the risk to which a bank is exposed, the greater the amount of capital and required supervisory framework.

    After initial delay, Nigeria has set October 31, 2014 as the cut-over date for the implementation of Basel II.

    Market sources had noted that while the average capital adequacy ratio in the Nigerian banking industry is currently high and most banks are above regulatory benchmark, banks might need to support their adequacy ratios, which are expected to fall after the cut-over.

    Several analysts’ reviews on the banking sector have outlined capital raising as a major theme for the Nigerian banking sector citing new regulations and emerging business opportunities.

  • GES: Kogi women farmers seek access to fertiliser

    Women farmers in Kogi State have appealed to the Federal Government to improve on the Growth Enhancement Support (GES) scheme and make fertiliser and other farm inputs more accessible to them.

    The leader of the women farmers drawn from the 21 local government areas of the state,Hajia Hazarat Momoh, made the appeal at the Annual Women Farmers’ Forum in Lokoja.

    She said the meeting was facilitated by Actionaid Nigeria and Kogi-based Participation Initiative for Behavioural Change in Development (PIBCID), a non governmental organisation (NGO), in collaboration with the state Ministry of Agriculture.

    Mrs Momoh said the women farmers organised themselves into groups to be able to participate in the Agricultural Transformation Agenda (ATA) of Federal Government, which the GES is a critical component.

    She said the scheme was designed for the specific purpose of making affordable, agricultural inputs such as fertilisers and hybrid seeds through the e-wallet system, to registered farmers.

    Mrs Momoh said the major goal of the GES was to increase yield per hectare for all Nigerian farmers.

    She however, expressed concern that none of her registered members in the state received fertiliser for last year’s farming season.

    The Director of Women in Agriculture in the Ministry, Mrs Rachael Tokula, commended members of Women-in-Agriculture and Small-Scale Women Farmers Association of Nigeria (SWOFAN) for their commitment to agriculture.

    She advised them to always liaise with the Ministry of Agriculture instead of the Ministry of Women Affairs to pursue their demands.

    After a careful evaluation of the impact of GES scheme on the ATA, the participants identified some areas to be enhanced.

    They listed inadequate awareness, distance between beneficiaries and agro-dealers, communication, time of delivery and quantity of the inputs, among others, as areas to be improved upon.

    The Executive Director of PIBCID, Mr Victor Adejoh, said the forum was aimed at enhancing the involvement of women farmers in the scheme.

    Mr Alemeru Olusegun of the GES Unit of the Federal Ministry of Agriculture assured the women that the government was committed to improving on its services.

    The women farmers also elected nine members, three from each of the senatorial districts of the state to serve as link between them and the government.