The Nation Newspaper

Tag: bank

  • When can a bank deny a customer’s claim?

    This is an appeal against the judgment of the High Court of Ondo State sitting at Akure Division delivered on August 8, 2012 granting the Respondent’s Claim in the main.

    The Respondent before the consolidation of banks at the behest of the Central Bank of Nigeria was maintaining one account with Trans International Bank Plc and two accounts with Omega Bank Plc and it enjoyed credit facilities from the two banks independently. Upon consolidation, the said Trans International Bank Plc, Omega Bank Plc and some other Banks joined to form Spring Bank Plc. The Respondent continued to maintain the three accounts at the Spring Bank although the accounts were then in debit.

    The Appellant in line with its policy and universal banking practice, classified the three accounts and transferred them to the Remedial Asset branch in the Appellant’s Head Office, a unit created by the Appellant to supervise such loans accounts that are classified. However, the Respondent claimed that in respect of the one account earlier maintained with Trans International Bank Plc, there were certain remittances sent by its overseas customers that were not credited to its accounts by the Trans International Bank Plc. To ascertain the amount that was not credited, the Respondent engaged the services of a firm of Chartered Accountants, Okunoye, Adeniyi & Co. to carry out the audit and reconciliation of the said account. The audit and reconciliation report prepared by Okunoye, Adeniyi and Co. was forwarded to the Appellant to comply with and the Appellant refused.

    The Respondent as Plaintiff therefore brought an action against the Appellant as Defendant at the High Court of Ondo State claiming amongst others, a declaration that the Defendant is indebted to the Plaintiff to the tune of N311, 503, 947.51k, a declaration that the Plaintiff is not indebted to the Defendant to the tune of N12, 697,152. 52K or any sum whatever, the sum of N311, 503, 947.51K being uncredited forex in flows unexplained debit and credit entries, general and exemplary damages for N50 million, and interest on the judgment sum at the rate of 10% from the date judgment is given until finally liquidated.

    The Appellant via its Amended Statement of Defence denied all the material facts and contended that the firm of Okunoye, Adeniyi and Co. lacked the necessary skill to carry out the audit of the said Respondent’s account. While the matter was pending, Spring Bank Plc. was restructured and came to be known as Enterprise Bank Limited. Necessary amendments were effected and the matter went to trial. In a considered judgment, the Learned Trial Judge granted the prayers of the Respondent in the main. Dissatisfied, the Appellant filed a notice of appeal in the Court of Appeal. In accordance with the Rules of Court brief of arguments were filed.

    In the Appellant’s brief of argument, the learned counsel for the Appellant distilled four (4) issues for determination of this appeal thus:

    Whether a firm of Chartered Accountants (Okunoye, Adeniyi & Co.) can sign in the firm’s name an audit report of a company incorporated in Nigeria to be relied upon by a superior court of record when the law provides that such audit report must be signed by an auditor or an accountant.

    The appellant having categorically countered or denied all the facts of the Respondent’s case, was the learned trial court not wrong to have held that the Appellant admitted liability to the Respondent.

    Was the learned trial judge not wrong in ignoring and discountenancing the evidence of the DW1 because the DW1 was not in the employ of the appellant when the transactions leading to the suit were carried out?

    Was the learned trial judge not wrong to have conducted an investigation?

    (By doing math) base its decision on such investigation without calling on parties to address it on the result of its math.

    The respondent on the other hand raised five (5) issues for resolution of this appeal. The Court adopted the four issues as raised by the Appellant in resolving this appeal.

    Arguing the appeal, Counsel for the Appellant submitted that the Institute of Chartered Accountants does not enroll “firm” but individual members of the Institute and it is the individual that is entitled under the law to practice as an accountant and auditor and prepare auditor’s report of a company registered in Nigeria. Counsel argued that the reports were carried out and signed by “Okunoye Adeniyi & Co.” who at best is a business name and not an accountant or chartered accountant enrolled under the Institute of Chartered Accountant Act as required by law. Counsel further argued that the said “Okunoye Adeniyi & Co.” being a business name does not possess the necessary knowledge and skill in the science of accounting to prepare and sign an audit report upon which the learned trial judge relied upon in his judgment against the appellant. Counsel called in aid the case SLB Consortium Ltd. v. NNPC (2011) ALL FWLR (Pt. 583) 1902 at 191; (2011) LPELR-3074(SC) to submit that a business name in law is neither accorded legal personality nor recognized as a person capable of taking or defending action in law court or preparing and signing documents statutorily required to be prepared and signed by a person qualified under the law.

    Reacting, learned Counsel for the Respondent submitted that the Appellant’s counsel arguments are based on the assumption that reports were “auditor’s report” and hence ought to be signed in a particular form and once that form is lacking, the document is incompetent. Counsel contended that the learned Appellant’s counsel reached that conclusion because he labored under serious error of fact and law. Counsel then submitted that the reports though described by the auditing firm as “audit and reconciliation report” and “addendum” are neither the Statutory Auditors Reports in Financial Statement of a company in the strict sense of the word which are usually presented at the Annual General Meetings of a company in compliance with the requirements of the Companies and Allied Matters Act nor are they documents within the contemplation of the various laws cited and copiously relied upon by the appellant’s counsel in his argument.

    He argued that they are special reports to a private company prepared by its own appointed external auditors in respect of a special transaction between a Banker, the Appellant and its Customer the Respondent seeking to reconcile and determine the level of indebtedness or otherwise of the Respondent to the Appellant in respect of the Respondent’s account with the Appellant banker. That there is no where a report of this nature can be expected to comply with the statutory requirements of Auditors Report. Therefore counsel submitted that the reports are not within the contemplation of ICAN Act or CAMA as submitted by learned counsel for the Appellant.

    The court in determining the appeal noted that, learned counsel for the Appellant placed reliance on the provisions of Institute of Chartered Accountants of Nigeria Act and the Supreme Court decision in Okafor V. Nweke (2007) ALL FWLR (Pt. 368) 1068; (2007) LPELR-2412(SC) as an authority that the report attachments were irregularly signed and therefore incompetent. The Court held that for the principle of law in Okafor V. Nweke (2007) ALL FWLR (Pt. 368) 1068; (2007) LPELR-2412(SC) to apply to the practice of accountancy profession in Nigeria, there must be provisions similar to those upon which the decision of Okafor V. Nweke (supra) were based. The Court stated that having considered the entire gamut of the provisions of the ICAN Act, the Court is unable to find a similar provision in the Act with Sections 2 (1) and 24 of the Legal Practitioners’ Act.  The Court further stated that from the circumstances of this case, it is not in dispute that J.S.O. Adeniyi who signed the report is a qualified chartered accountant who operates under the name of Okunoye, Adeniyi & Co. Nonetheless, that the facts giving rise to this case has to do with perceived irregularities in the Respondent’s account with the Appellant bank.

    The Court noted that had the Respondent done the auditing by itself and presented to Court as the amount standing to his credit in the Appellant bank, would the Court reject same because the Respondent is not a chartered accountant whose name is enrolled in the register kept by the Registrar of the Institute of Chartered Accountants of Nigeria. The Court stated that the answer must be in the negative. The Court held that in the circumstances of this case that the marker of attachments to the report is of no moment and the said attachments were validly signed.

    The Court held that the duty of a banker to its customer is predicated on the principle of uberrimae fidei and it is appalling the rate at which banks these days betray this principle with impunity. The Court stated that the conduct of the Appellant herein is highly reprehensible and ought to have been reported to the regulatory agency for necessary disciplinary action. Having resolved the four issues in this appeal against the Appellant, the Court dismissed the appeal as lacking in merit. The judgment of Ondo State High Court sitting in Akure Division in Suit No. AK/164/2009 delivered by Hon. Justice O. A. Adegbehingbe was affirmed.

     

     •Edited by LawPavilion

    LawPavilion Citation: (2014) LPELR-23503(CA)

  • Can we bank on Nigerian bond market?

    Can we bank on Nigerian bond market?

    The Nigerian bond market hitherto an exclusive preserve of blue-chip companies have since become a fad among the different tiers of government who see it as a veritable source of income to drive development projects. In this report, Bukola Afolabi takes a look at the fortunes of the nation’s bond market vis-à-vis challenges of sustaining capital

    Time was when the bond market was strictly an exclusive market. But not anymore. Today, it has become the beautiful bride sought after by everybody who is anybody, especially the different tiers of government. And the reason for this is not far to seek: the realization that the bond market is perhaps one of the easiest means of raising funds out there with little or no encumbrances at all.

    The game changer

    Following the reforms in the bonds market, the Federal Government in October 2003 issued three-year, five-year, seven year and 10- year bonds. While the three year bonds were 87.5 per cent oversubscribed and allotted, investors showed apathy towards the longer tenured bonds.

    The low turnout for the other bonds resulted in subscription and allotment of less than 50 per cent of the issue. No bonds were issued in 2004. Following investors’ aversion for the long tenured bonds, the government offered only two and three-year bonds on seven separate dates in 2005, raising a modest N178 billion from investors at yields between 8.25 per cent and 17 per cent.

    In 2006, the Federal Government was able to raise N282 billion from the three-year, five-year, seven year bonds. The amount raised was 58 per cent above amount raised in the prior year, while subscription was N613 million. From then onwards, the bond market has grown rapidly, with the Federal Government beginning a tradition of monthly issuance of bonds.

    In 2006, for the first time since the re-opening of the market, special purpose bonds were issued to selected banks for the settlement of N75 billion pension arrears in 2006

    According to Ms. Arunma Oteh, Director-General of Nigeria’s Securities & Exchange Commission (SEC), “interest in (Nigeria’s) bond market is not limited to local issuers as the reformed environment is attracting interest from multilateral financial institutions such as the IFC (International Finance Corporation) and the ADB (African Development Bank).”

    Addressing participants on “recent reforms in the Nigerian bond market,” at a seminar organised by the Capital Market Correspondents Association of Nigeria (CAMCAN) in Badagry, Lagos, Oteh said: “the ADB has also filed for an MTN (Medium Term Note) programme of about $1.5 billion to be denominated in the local currency.”

    She recalled “that the IFC issued its maiden ‘Naija Bond’ in February last year and has already approached us for a medium term note (MTN) programme to be naira-denominated worth about $1 billion.”Both programmes will be free from the eliminated limitation on the lifespan of a shelf programme,” she assured.

    “You may also recall that we approved two new trading platforms, both over-the-counter (OTC), i.e. the National Securities Dealers Association (NASD) platform and the Financial Markets Dealers Association platform, the FMDQ. The former, which was launched recently has already started operations and is expected to revolutionise the entire bond market by boosting liquidity and simplifying bond trading.

    “The Nigerian bond market is certainly on the verge of a revolution buoyed by an improved, competitive and conducive environment that attracts issuers and investors alike. The yield curve of the FGN bonds which has been extended to 20 years provides a good benchmark for issuers of all stripes to leverage the bond market to attract capital, both foreign and local. The market will continue to attract significant amounts of capital internationally since the FGN bond attracted inclusion into the emerging markets indices of Barclays and JP Morgan,” Oteh stressed.

    Continuing, she said the result of these initiatives have been encouraging, as can be seen from the upswing in the domestic bond market, resulting in current total capitalisation of about N5.65 trillion.

    What is more noteworthy, she continued, “is the increasing interest in the bond market by corporates and State Governments.”

    State government bond

    In its annual National Debt Sustainability Analysis (DSA) released by the DMO last year, the total domestic debt of the 36 states and the Federal Capital Territory (FCT) reached N1.471 trillion last year. This is an increase of 19.34 per cent compared with the N1.233 trillion domestic debt figures the previous year.

    The figure indicates an abuse of the opportunity that the bond market provides reported recently that only sixteen states of the federation have raised bonds totalling N520 billion in the last six years without clear outlines on how the funds were used.

    This is against the backdrop of massive unemployment and infrastructural deficit across the country, which the debts could have addressed.

    Specifically, the 16 state governments were found to have raised the bonds without their citizens’ understanding of what the funds are meant for.

    Filings by the state governments at the NSE showed that Kogi state’s N5 billion bond is the smallest so far while Lagos emerged the biggest debtor with a total of N187 billion issued so far.

    Analysis of numbers obtained showed that Osun state with internal generated revenue and federal allocation of less than N2 billion has so far raised N30 billion including the just concluded N11.4 billion sukuk.

    Others include: Kwara N17 billion, Niger N15 billion, Kaduna N8.5 billion, Gombe N20 billion and Edo N25 billion.

    Benue, Ebonyi state Ondo state, Ekiti state, Bayelsa state, Imo state and Delta state have also raised N13 billion, N16.5 billion, N27 billion, N25 billion N50 billion, N18.5 billion and N50 billion respectively.

    Investigation by The Nation also revealed that Oyo, Ekiti, Zamfara, Rivers and Adamawa states respectively have concluded arrangements to head to the stock market to have a taste of the binge findings also revealed that the states activities at the bond market have crowded out corporates, particularly the manufacturing sector thus inhibiting their ability to create value and employment.

    Although safety of the funds is paramount, experts believe that pension funds administrators (PFAs) should do more than rely mainly on state and federal government bonds to invest pension contributions.

    The PFAs held bonds totalling N1.9 trillion at the end of March, equivalent to 45 per cent of their assets under management and 42 per cent of the outstanding stock of debt instruments.

    The project of the state government

    The number of listed state governments bonds currently being auctioned at the Nigerian Stock Exchange (NSE) has risen to 35, with a total market value of N565 billion. The above amount was raised between 1978 and 2013 from the capital market to finance various developmental projects.

    The Nigerian bond market has provided N565 billion to 18 states to finance various infrastructure projects in the last 35 years, 75 per cent of the funds were raised in the last five years. In the last two years, four state governments had raised funds through the bond market to finance various developmental projects.

    Leading the pack in terms of volume and value is Lagos State, which got approval to raise N167.80 billion from the capital market but has so far raised N80 billion in 2012 to finance construction of Adiyan Waterworks (Phase II), infrastructure developments, health facilities and redevelopment of Eric Moore Schools.

    On December 31, 2013, Ekiti State Government concluded its N25 billion bond issuance programme with the successful raising of the balance of N5 billion from the exchange. Ekiti State had in 2012 embarked on the bond issuance programme raising N20 billion as the first tranche with a coupon of 14.5 per cent to fast-track its infrastructural development and economic transformation.

    Having begun the execution of the various projects, Ekiti State returned to the market to raise the remaining N5 billion with a coupon of 14.5 per cent to complete the projects. Earlier in 2012, Ondo State Government under the 50 Billion Debt Issuance Programme issued N27 billion bond to finance developmental projects.

    It was followed by Gombe State in the same year which raised the sum of N20 billion to finance the building of township and regional roads, schools, purchase of earth moving equipment, mega park, School of Nursing and refinancing of existing loan while Osun State got approval to raise N60 billion from the capital market.

    But has so far raised N30 billion in 2012 and N17.4 billion in 2013 under its Tranche 1 and 11 to finance road infrastructures, commercial infrastructure, urban renewal, Ede waterworks and refinancing of loan while the second Tranche will be used to finance education.

    Recently, Director General of Securities and Exchange Commission (SEC), Ms Arunma Otteh said while the state governments have benefitted significantly from the market, the federal government had also been an active participant in both the domestic and international bond markets.

    More disciplined funding

    Also, Director-General of the Debt Management Office (DMO), Dr. Abraham Nwankwo noted that his agency is busier now and has helped by its enabling law ensured Federal Government is now more accountable for its spending. In the days before the advent of the office, he explained further, government funded its deficit budgetary expenses through ways and means, in which case more currency is printed to fund the shortfall in the annual budget. This was particularly the case, he recalled, during the military era and in the years immediately preceding the DMO’s birth.

    Speaking on “the transformation of the Nigerian bond market,” Nwankwo , who was represented by Joseph Ugwuala, head, Policy, Strategy and Risk Management at the office, said between 2003 and this year, Abuja has funded N4.612 trillion or 57.74 per cent of total deficit of N7.986 trillion arising from fiscal operations through bonds issuance at the domestic market.

    Giving a breakdown of the figure, showing that in 2003, fiscal deficit stood at N202.72 billion, representing 2.04 per cent of the nation’s Gross Domestic Products; dropping in 2004 to N172.6 billion or 1.51 per cent of GDP. By 2005, national deficit level fell again to N161.86 billion or 1.11 per cent of GDP; before beginning soaring to N341.86 billion or 2.35 per cent of GDP, and representing a 111.79 per cent jump. The deficit level jumped again to N580.19 billion or 3.64 per cent; and then N537.95 billion or 0.84 per cent in 2008. In 2009, deficit was N836.6 billion, 3.02 per cent of GDP. The figure more than doubled once more as government’s revenue obviously stagnated as needs mounted, Federal Government’s fiscal operations resulted in a 2010 deficit of N1.993 trillion or 6.11 per cent of GDP, the highest within the 10-year period. It dropped to N1.136 trillion or 2.96 per cent in the following year; and N1.135 trillion or 2.85 per cent in 2012. Last year’s deficit is forecast to reduce below the trillion Naira mark at N887.06 billion or 1.85 per cent of GDP.

    He noted that in 2003 at the onset of the bond market, N72.75 billion of the deficit or 36 per cent was funded by domestic borrowing, dropping to N27 billion or 16 per cent the following year; and N25 billion or 15 per cent by 2005, In 2006, the figure rose to N1087.2 billion or 31 per cent; rising further to N200 billion or 34 per cent in 2007; a dropping to N155.47 billion or 29 per cent in 2008. In 2009, the quantum of the deficit funded through the domestic bond market ballooned to N542.11 billion or 63 per cent, a level from which it has never dropped. In 2010, domestic funding of deficit catapulted further to N1.36 trillion or 68 per cent; falling to N852 billion or 75 per cent the following year; last year, N744.44 billion or 65 per cent of the federal deficit was funding domestically; while N544.06 billion or 61.33 per cent of this year’s deficit is to be sourced from the domestic bond market.

    According to Nwankwo, “the current practice of financing part of the country’s fiscal deficits by borrowing from the market has not only led to the development of the domestic debt market, it has brought other salutary benefits for monetary policy operations and the economy.”

    These, he continued, include “removal of conflict of interest – clear separation of debt management functions from monetary policy operations – thereby allowing each agency, especially the CBN, to concentrate on its core mandate; subjecting government’s borrowing to market discipline; use of long-term as against short-term funds to finance long-term projects – a clear case of optimal asset-matching; significant reduction in refinancing risks through tenor elongation.”

    One other benefit, he added, was the “establishment of a Sovereign Yield Curve and benchmark for private sector borrowing.”

    The domestic bond market, according to the DMO boss, has not been just for financing government’s fiscal deficits, as it served as a platform for issuance of the Asset Management Corporation of Nigeria (AMCON) bonds to buy toxic debts off the balance sheets of Nigeria banks. Proceeds of the domestic bond issuance, he noted, were also used to fund special government stimulus spending initiatives like the N200 billion commercial agriculture programme, whereby the funds raised by the DMO were made available to the CBN for lending to agriculture enterprises through the commercial banks between 2008 and 2010. Also, proceeds from the issue was used to fund the cotton, textile and garments revitalisation programme, part funding to the tune of N100 billion with FGN bond proceeds. Others include “the purchase of locomotives for the revitalisation of rail transportation; and, the provision of seed money for the development of infrastructure in new districts in the Federal Capital Territory.”

  • Central bank meetings to set stage for parting of ways

    After the Federal Reserve maintained its path towards raising United States interest rates next year, other major central banks will jostle for space on a crowded stage this week.

    The European Central Bank, Bank of Japan, Bank of England and the central banks of India and Australia all hold meetings. While imminent action is unlikely, the time when policy settings start pointing in different directions is nearing.

    U.S. growth rebounded in the second quarter and the Fed upgraded its assessment of the economy last week. It is on course to stop creating money in October but the expectation is that there will be no interest rate rise before mid-2015.

    That puts the Bank of England in pole position to be the first major central bank to push rates up from their record low 0.5 percent, perhaps before the year is out.

    Although the UK economy is expanding at an annualized clip in excess of 3 percent and unemployment is tumbling, the absence of wage pressure means there is no immediate reason to act.

    The consensus is that rates will not rise until early 2015 but polling by Reuters last week found economists expect a first voice or two on the nine-strong Monetary Policy Committee to call for a rate rise this week.

    The last time the MPC was considering raising rates was in 2006. In May of that year, one MPC member voted for a hike and it took just three months before a majority followed suit.

    “We expect the jobless rate will continue to fall rapidly, with the BoE hiking earlier and further than markets project,” said Michael Saunders, chief UK economist at Citi.

    The voting pattern will only become public when minutes of the meeting are released two weeks hence.

    The Fed has just registered its first dissenter, with the hawkish Charles Plosser saying the commitment to keep rates near zero for “a considerable time” did not reflect the gains made by the economy.

    Lack of wage inflation has been a common theme in the United States and euro zone as well, though U.S. labor costs recorded their biggest gain in more than five to one and a half years in the second quarter. That spooked Wall Street last week as it may hasten the Fed’s first move.

  • World Bank gives $200m Ebola assistance

    World Bank gives $200m Ebola assistance

    The World Bank yesterday announced up to $200 million in emergency assistance to help Liberia, Sierra Leone and Guinea, to contain the spread of the deadly Ebola virus.

    The funding will also help those countries to improve their public health systems and cope with the epidemic’s economic impact, the Washington-based lender said in a statement.

    The countries’ resources and health systems have been strained by the worst outbreak of the virus since its discovery four decades ago.

    Guinea’s economic growth could fall by a full percentage point to 3.5 per cent due to the epidemic, according to the World Bank and International Monetary Fund’s initial assessment.

    “I have been monitoring (Ebola’s) deadly impact around the clock and I’m deeply saddened at how it has ravaged health workers, families and communities, disrupted normal life and has led to a breakdown of already weak health systems in the three countries,” World Bank President Jim Yong Kim said in a statement.

    The global bank said its money would go toward medical supplies, salaries for medical workers and to help communities dealing with the financial hardship caused by the virus.

    Rural workers in the three countries hit with Ebola have fled affected areas, hitting agricultural production, though the food supply has not been affected for now, the bank said.

    The epidemic has also slowed cross-border commerce and grounded flights across the region, leading to lower revenues and financial inflows.

    Mining production could also decline, if more skilled expatriate workers leave the affected regions, the bank said.

    The World Bank’s executive board must still approve the emergency lending. Kim said he would brief the board as soon as possible to seek their approval.

  • Falana urges African leaders to challenge IMF, World Bank on economy

    Lagos lawyer Mr. Femi Falana has urged African Heads of State and Governments to challenge the alleged manipulation of the continent’s economy by the International Monetary Fund (IMF) and the World Bank as a summit of the United States (U.S) and African leaders opened in Washington, DC, this week.

    American President Barack Obama is expected to host the summit, which focuses mainly on trade and investment in Africa. The theme of the summit is: Investing in the Next Generation. A number of signatures and side events have been organised to acknowledge the role of civil society, women and youth in the development of Africa.

    Forty African Heads of Governments are in Washington, DC for the summit.

    As part of the run-up to the summit, 15 civil society organisations (CSOs) from Africa, in an open letter on August 1 by Pamela Timburwa and addressed to the U.S. and Heads of African State and Governments, urged the leaders “to ensure that serious consideration is given and firm commitments are made to ensure an enabling environment for the participation of civil society, women and youth in Africa’s development”.

    The 15 CSOs include Action for Southern Africa (ACTSA), Human Rights Watch, International Commission of Jurists (ICJ), Africa Regional Program, International Federation for Human Rights (FIDH), Lawyers for Human Rights, Regional office; Liga Moçambicana dos Direitos Humanos (LDH), Mozambique, Liga Guineense dos Direitos Humanos (LGDH), Guinea Bissau.

    Others are: Open Society Initiative for Southern Africa (OSISA); Southern African Litigation Centre (SALC), South Africa; Swaziland Coalition for Concerned Civic Organisations, Swaziland; Women and Law in Southern Africa (WLSA), Malawi; Women and Law in Southern Africa (WLSA), Mozambique; Women and Law in Southern Africa (WLSA), Regional office and Women of Zimbabwe Arise (WOZA), Zimbabwe.

    Reacting to the letter, which was copied to him by Ms Timburwa, the Lagos lawyer disagreed with the issues tabled by the civil societies before U.S. and Heads of African State and Governments.

    The activist said the letter was silent on the economic system in the 54 member-states in Africa.

    He said the African Union (AU) and the regional economic groupings had not addressed the empowerment of Africans, adding that without addressing unemployment, poverty and insecurity, majority of Africans cannot enjoy any human right.

    Falana said: “Africa must challenge the manipulation of the economy of the continent by the IMF and the World Banký. The lower interest rates in the West and the very high interest rates in Africa, being endorsed by the Bretton Wood institutions, should be seriously challenged. Instead of aid, the emphasis should be on trade. After hundreds of years of crude exploitation of her resources, Africa should no longer be a dumping ground. Having been on the receiving end, Africa should champion the struggle for a new world economic order based on justice and fair play.”

    The frontline lawyer noted that apart from condemning the level of corruption in Africa, the U.S government had not deemed it fit to ensure that the stolen wealth is repatriated.

    He said: “While countries risk losing aid for enacting laws against same-sex marriage, the Obama administration has not even imposed a travel ban on corrupt African leaders. Or, is America not unaware of the fact that some of the leaders who are attending the summit have endangered the development of their countries on account of grand corruption?”

  • Our transformation yielding results, says Union Bank

    Our transformation yielding results, says Union Bank

    The management of Union Bank of Nigeria (UBN) Plc has assured that the transformation of the bank is on course and yielding good results.

    Against the background of modest decline in performance in the first half, the bank said its underlying performance has remained strong as it continues to implement key elements of its transformation programme.

    Group Managing Director, Emeka Emuwa, said the bank has continued the implementation of it’s transformation initiatives, which he stressed, have been delivering results.

    He said the bank has continued to invest heavily in its technology infrastructure to enhance operations and customer service delivery as all branch links have been upgraded to fibre optic connections.

    “The bank also continues to invest in people, hiring into key strategic senior roles. Notwithstanding the significant investments made in these areas, Union Bank maintained strong underlying performance and sustainable profitability. We remain focused on our long term strategic priority of ensuring banking becomes simpler for all our clients, whether retail, corporate or commercial,” Emuwa said.

    The Chief Financial Officer, Union Bank of Nigeria (UBN) Plc, Oyinkan Adewale, noted that the bank’s loan book has continued to grow, as it focuses on driving business in key sectors of the economy, including oil and gas and manufacturing.

    “Loans are up 55 per cent compared to same period for June 2013. The bank has so far successfully completed the sale of four subsidiaries, with two other divestments almost completed, in compliance with CBN’s Regulation 3 and in line with the strategy to focus on core banking activities. The bank is aggressively focused on recoveries, with N3.5 billion recovered in the first half of 2014 versus N1.5 billion for the same period in 2013,” she said.

    Union Bank of Nigeria (UBN) Plc witnessed modest declines in incomes and profit during the first half. Gross earnings dropped to N49.6 billion in first half 2014 as against N56.2 billion in comparable period of 2013. Interest income had declined from N41.2 billion to N36.6 billion while net interest income dropped from N29.7 billion to N25.1 billion.

    Net operating income stood at N36 billion as against N39.5 billion while profit before tax dropped from N9.8 billion to N6.5 billion. Profit after tax stood at N6.3 billion in first half 2014 as against N9.4 billion in first half 2013.

    Meanwhile, loans and advances to customers increased by 47 per cent to N261.1 billion as against N177.7 billion in December 2013. Customer deposits stood at N480.8 billion compared with N482.7 billion by December 2013 while Total assets dropped from N1.003 trillion by December 2013 to N979.7 billion by June, this year.

  • Bank seeks improved PoS use

    There is a need to educate stakeholders and consumers  on Point of Sales (PoS) so they can benefit from the cash-less policy, Keystone Bank’s ManagingDirector/Chief Executive, Mr. Philip Ikeazor, has said.

    In his assessment of the cash-less policy at a media parley in Lagos, Ikeazor noted that given what happened to the economy prior to the cash-less policy, the country has gianed tremendously.

    The only area that financial services providers should do more is in the education on PoS uptake, he said.

    Ikeazor noted that it is only in the PoS that the market is slow in understanding the cash-less policy.

    He said: “I don’t have the statistics here. But if you see the volume of cash that goes through Automated Teller Machines (ATMs) and the volume of cash that goes through Internet transfer alone, it shows that banks have improved in the country in terms of efficiency of transfers and cost reduction.

    “We should understand that before the advent of Internet banking and the advent of using ATM cards, we carried around huge cash with the inefficiency that comes with it.  But, today, that story is different. All that our customers require from us is to ensure that our channels work.

    “Banks have done very well in terms of Internet transfer, so have we (at Keystone Bank).  Banks have also done very well in terms of providing ATMs. The only place that the cash-less policy requires education is the uptake of PoS machines.”

    Ikeazor, however, noted that Nigeria still has a long way to go in the execution of the cash-less policy when compared with her counterparts abroad.

    He said: “We have not reached anywhere in terms of what we have abroad. If we can get to that level, then we can get to the stage where PoS machines that can be used to send details and the money goes straight into his account.”

  • Access Bank boosts healthcare

    Access Bank boosts healthcare

    AS part of its corporate social responsibility, Access Bank has been leading in efforts at salvaging the Nigerian health sector in recent times.

    It has particularly shown tremendous commitment to supporting the fight against malaria and other scourges that plague Nigerians and Africans at large by demonstrating its willingness in partnering non-governmental organisations and private institutions to advance its corporate social responsibilities.

    Speaking about one of its major sponsorship contributions to the 2014 GBCHealth/CAMA Annual Technical Forum themed:”Capitalising on Competences: Partnering to Eliminate Malaria and Accelerate Impact on Maternal and Child Health”, Group Managing Director/Chief Executive of the bank, Mr. Herbert Wigwe justified the need for big corporations to lend a helping hand in the fight against the disease in the society.

    According to him:”The fight against malaria is one that all should embrace, because a healthy society is beneficial to all.  The decision to partner GBCHealth on this issue was not a difficult one. The bank is very passionate about its corporate social responsibility. Thus we cannot close our doors to offers that aim to uplift the wellbeing of our host communities and Nigeria at large.”

    The bank had recently led massive efforts at attracting the needed financing from international partners towards fixing the system, spearheading an initial campaign “gift from Africa” in 2010 ” where it led several private sector institutions including Dangote to raise about $5 million to support the fight against HIV,  tuberculosis and malaria.

    Wigwe said:”Health financing in itself is critical to solving it from the private sector but also government support is also critical but there are other things that are just as critical to ensure we fight this issue of disease and health and all of that which is around partnerships and the mode of implementation in terms of this crusade to make Africa a much better place.”

    The Access Bank boss also noted that all banking and investment efforts would actually be meaningless if the health of the people to whom products and services were being targeted at is in danger, stressing it is the responsibility of the banking industry to help restore the health system.

    Also, Head, Development Banking, Access Bank, Mr. Oluwatoyin Idowu said:”We believe in strong corporate social responsibility (CSR) and being one of the leading banks in the country we believe that we need to give back to the community and this is one of the things that we have been doing under our CSR. We have done a couple of things in the past and we will continue to do it. We partner with them (GBC Health) to ensure that the subject of discourse, which is eradication of malaria and maternal and child mortality is addressed.”

    The World Bank estimates about $4.5 billion is required to make quality health services accessible to Nigeria.

  • Cataloguing NEXIM Bank’s achievements

    Cataloguing NEXIM Bank’s achievements

    Prior to the reconstitution of the Board of Directors of the Nigerian Export-Import Bank on14th August, 2009, the bank was at its lowest ebb. It experienced a decline in risk assets.

    The bank’s total loan portfolio as at 20th August, 2009 was N14.6b out of which 72% was non-performing. Within that category, N10.03b or 69.05% was classified lost. This led to the bank’s income decline with the called-up capital standing at N32.74b, depletion of its shareholders’ funds, significant decrease in income and tolerance of excess and escalating overheads, worsening assets quality and poor record keeping, lack of strategic focus, ineffective risk  management framework, non-adherence to corporate governance tenets, and over-bloated staff  strength.

    The new board under Mr. Roberts Orya initiated plans to enable the bank to contribute significantly to Nigeria’s economy. The board, in 2010, undertook a corporate transformation exercise on strategy, risk management and corporate governance, financial performance, operations, organisation and people, with assistance from KPMG Professional Services. The corporate transformation project tagged Project Spring led to the re-definition of the bank’s mission, vision and objectives, to channel its resources into the development of manufacturing, agro-processing, solid minerals and services which have high employment and foreign exchange earning potential aimed at becoming a major contributor to non-oil exports, build a world-class institution which imbibes best-in-class corporate governance and risk management practices, become a relevant player in the export market, build a profitable institution with a robust balance sheet size, and improved workforce.

    There were also a five-year strategic plan with clearly defined market penetration action plans, robust corporate governance and risk management architecture/frameworks to improve visibility and project the bank’s image.

    They encompassed organising action-wide key performance indices and scorecards to enhance monitoring of the bank’s operations and its shareholders; redesign policies to ensure efficiency; initiate IT-transformation project; reduce redundancies and ensure adequate controls.

    The bank currently complements commercial banks and other development financial institutions by focusing on unserved markets globally. It also adopted an optimal operating model with a robust structure and structured market-facing departments along the key target sectors of manufacturing, agro-processing, solid minerals and services.

    NEXIM also adopted a performance-driven organisational culture which has led to strong shareholders’ support through fresh capital injection, as well as institutional support through supervisory and regulatory oversight and guidance from the CBN and Federal Ministry of Finance. This increased the bank’s capacity to support the growth of the non-oil exports and complement the export credit support of commercial banks.

    Within sixteen months, the bank became profit-making with an impressive performance in 2010, with an audited profit of N189.00m as against the loss of N5.460b incurred in 2009.

    Since the inception of the bank in 1991, this is the first time it made profit consistently from 2010 to 2013 and declared dividends for the CBN and Federal Ministry of Finance Incorporated.

    Nexim, via its operational interventions, generated direct jobs of 24,139 as at May 2014, plus indirect jobs. It has also, between August 2009 and May 2014, generated foreign exchange earnings of US$325.25m annually. The management has maintained appreciable returns on equity investment of its shareholders. A dividend for the 2010 financial year performance was declared and paid, which was the first time since 2003. Dividend for 2011 has also been declared and paid, while that of 2012 is in the process.

    The bank also achieved a cumulative loan recovery of N1.96b. To sustain it, a remedial management department was created.

    The ratio of NPL as reduced from 72% in August 2009 to 14.95% as at April 2014. The management also initiated Enterprise Risk Management Framework to take care of all risk-related issues. It includes all aspects of the risk buckets, including environmental and social risk. A loan monitoring unit was also created to maintain a healthy loan book.  The success story abound. Awareness has been created on the bank’s objectives, products and services. The improvement in corporate performance and market standing globally led to its being adjudged as one of the leading development finance institutions in Africa in 2013 by the Association of African Development Finance Institutions based in Abidjan.

    In human resources, the bank engaged skilled and motivated personnel such as chief risk officer, internal auditor, head remedial management, head strategic planning and head, corporate communications.

    To ensure sustainability of its success, the bank re-established partnerships with other export credit agencies and multilateral financial institutions towards attracting/availing concessionary lines of credits. Thus, over $80m has been attracted as investment by way of commercial lines of credit from the African Export-Import Bank (Afrexim), Exim India and ECOWAS Bank for Investment and Development (EBID).

    To enhance access to credit by the SMEs, Nexim obtained an approval for a loan of US$200m from the African Development Bank, backed by the sovereign guarantee of the federal government. The bank also has strong transactional relationships with the United States Export-Import Bank (US EXIM), the Guarantee Fund for Private Investments in West Africa (GARI Fund) and the Africa Biofuels and Renewable Energy Company (ABREC), while it has signed a memorandum of understanding with the Industrial Development Corporation of South Africa.

    NEXIM also has credit insurance agency collaboration with the Islamic Corporation for Insurance of Investment and Export Credits, a division of the Islamic Development Bank.

    Sequel to an application by the Federal Ministry of Finance on behalf of the federal government, and subsequent presentation by NEXIM in November, 2013, the bank was admitted into OECD in observer status. OECD is a multilateral development organisation based in Paris.

    Membership of the organisation integrates Nigeria’s financial sector into the global financial system. The bank also partners the Borderless Alliance, a private sector-led partnership in collaboration with USAID/West African Trade Hub and other stakeholders, to promote regional integration and seamless trade in West Africa by addressing the problem of non-tariff barriers through policy advocacy. The alliance operates a border information centre, which provides pertinent information to assist exporters and also acts as a collation centre for trade data to support evidence-based research and policy advocacy.

    It has continued to support the transformation agenda of the federal government such as the production of the ECOWAS Trade Support Facility to improve the current trade level of less than 12% and deepening the volume of recorded/formal trade within the sub-region, and to foster the implementation of the government’s trade policy and regional integration policies like the ECOWAS Trade Liberalisation Scheme. Other goals of the ETSF are to facilitate formal trade within the ECOWAS sub-region, deepen intra-regional payment system, increase Nigeria’s trade flows within ECOWAS, broaden trade and market access for Nigerian goods and services.

    Nexim supported the entertainment industry through funding intervention with lending commitments of about N1b in the industry’s various value chains in the last three years.

    The intervention is to address issues regarding the establishment of credible structures, attract investment in the development of content and facilitate improvement in production standards, distribution, marketing and exhibition standards.  In the built industry, the bank commissioned EXIM India to undertake a study to review the industry and recommend best financing programmes in line with global best practices. It also sponsored capacity building programmes and film festivals such as Zuma Film Festival, BOBTV African Film and TV Programmes Expo, Eko International Film Festival, Nigeria Music Video Awards, Nigerian Copyright Commission’s Stakeholders’ Forum on Review of the Copyright Law.

    It also sponsored the Nigerian Pavilions at Cannes International Film Festival, France, in partnership with the Nigerian Film Corporation and DISCOP Africa, South Africa to showcase Nigeria’s creative talent and attract investment capital and partnerships.

    Nexim also collaborated with the Federal Ministry of Culture and National Orientation on the first National Policy Dialogue on the Development of the Creative/Entertainment Industries in Nigeria, British Council on Creative Industry Expo and Mapping of the Industry and also engaged in policy dialogues with development partners, relevant regulatory and statutory institutions in the entertainment value-chain on ways of improving industry structures on issues relating to access to finance, monetising intellectual property/copyrights and risk mitigating instruments.

    It also initiated the establishment of a transnational shipping company in collaboration with the organised private sector associations in West and Central Africa in partnership with the Federation of West African Chambers of Commerce and Industries and Transimex S. A Cameroun to mitigate current non-tariff barriers and high logistical costs that hinder intra-regional trade and competitiveness of Nigerian manufactured exports regionally.

    The Sealink Project is essentially a public private partnership initiative and the private placement for the raising of US$60million is currently going, with application list closing on 30th June, 2014, while the shipping company is expected to commence operations within the fourth quarter of this year. The offer is being handled by FBN Capital, Nigeria (Issuing House) and SGI, Benin Republic. The initiative is endorsed by the ECOWAS Commission with technical support by the African Development Bank, the Directorate of Technical Cooperation in Africa, Maritime Organisation of West and Central Africa (MOWCA) and the Nigerian Shippers’ Council, amongst others.

    The bank’s transformation has led to increase in the demand for its products and services, leading to huge amount of pipeline projects under processing. The bank, therefore, requires significant increase in its capital to perform more, considering the recent rebasing, which placed Nigeria as the largest economy in Africa with a GDP of $510bn. There is also need to provide the Seed Funds to enhance some of the bank’s activities viz the Political Risk Fund to support its export credit insurance service; the Interstate Road Transit Scheme to mitigate non-tariff barriers in cargo movement by road transport within the ECOWAS region, and rediscounting and refinancing facility designed as an interbank window to liquefy the books of commercial banks, lower the cost of credit to exporters and boost the intervention of commercial banks to the export sector.

    • Uju, a public affairs analyst, wrote from Abuja

  • Stanbic IBTC Bank secures $100m facility for SME, energy financing

    Stanbic IBTC Bank secures $100m facility for SME, energy financing

    In its bid to support the economic growth and development of the country, Stanbic IBTC Bank has received a USD100 million Line of Credit (LOC) from the African Development Bank (AfDB) for on-lending to small and medium-size enterprises (SMEs) operating in various sectors of the Nigerian economy.

    It was gathered that part of the fund will also be applied to the financing of renewable energy and energy efficiency projects in Nigeria, in line with the requirements of the Clean Technology Fund (CTF).

    According to information made available to The Nation of the total amount, Stanbic IBTC Bank will fund SME projects in Nigeria with USD75 million, while USD25 million will be used for the funding of renewable energy and energy efficiency projects. Stanbic IBTC Bank is the first Nigerian bank to receive CTF’s approval.

    Speaking, the Chief Executive of Stanbic IBTC Bank, Mr. YinkaSanni, said that the bank will continue to partner with reputable institutions to create avenues for growth and development of the Nigerian economy. “We will continue to explore various channels of credit to empower small and medium-sized businesses. We recognise that the SME and energy sectors form an integral part of the Nigerian economy as a whole. As a result, we will remain at the forefront to empower our clients and help them achieve their business goals,” he added.

    “We appreciate the trust bestowed upon us by the African Development Bank in granting us this facility which is devoted to the funding of SMEs, energy and energy efficiency projects in Nigeria,” Sanni noted.

    The USD100 million LOC to Stanbic IBTC Bank was approved by AfDB’s board of directors on Wednesday, 26 March 2014 and April 13th 2014 in Tunis. In approving the LOC, the board of directors emphasised that the SME sector represents a strategic pillar for Nigeria’s quest to modernise and improve its economy. The AfDB highlighted financial inclusion as part of CBN’s drive to diversify the Nigerian economy.