The Nation Newspaper

Tag: Banks

  • Hackers break into banks, corporations vaults, says NIBSS

    Hackers have become more daring, breaking into banks’ vaults to fleece customers of their money, the Nigerian Interbank Settlement Systems (NIBSS) has said.

    Hackers, it said, gained entry into accounts either through internal collusion, customers’ carelessness or breaking into the security system of financial institutions and companies from outside and stole over N6 billion last year.

    Speaking at an event organised by the Lagos Chamber of Commerce and Industry (LCCI) on  The role of ICT in a Cashless Economy’, its Managing Director,  Mr. Adebisi Shonubi said the challenge financial institutions, organisations and individuals face in a cashless economy is that of security of funds.

    Examining the growth of cashless economy, Shonubi said 95 per cent transaction in 2011 was based on cash with attendant high armed robbery cases where bank bullion vans were attacked almost daily. He said people did almost all their transactions in cash to the extent that in every N100 spent, N65 was on cash transaction.

    He however said between 2013 and 2014, for instance, cashless transactions increased to 53 per cent in volume and 78 per cent in value, growing the economy by cutting down on idle time. He said some of the iadvantages of cashless economyare its ability to cut leakages, reduce cases of cash related crimes and boost government revenue.

    Represented by the agency’s Director of Industrial Services, Mr. Olufemi Fadiro, he encouraged the public to be more circumspect in disclosing their personal data to strangers or paying online. He argued that somebody can be in Nigeria and lose his life savings outside Nigeria because of the heightened interest of people to pay everything online and also disclose the security numbers to unknown sites.

    Speaking on ‘Providing Seamless Connectivity in E-commerce,’ Managing Director, Vodacom Business Africa (Nig.), Mr. Guy Clarke, outlined the importance of e-commerce to the economy, noting for instance, that it makes life easier for people by giving them alternatives and choice of the durability of the products they are buying.

    He said it also ensures seamless transaction between customers and the service companies. Represented by Mr. Abu Eto, Clarke  however, encouraged the e-commerce companies to ensure adequate security, sustainability and connectivity.

    Earlier, Chairman, LCCI, ICT Group, Mr. Zakari Usman, called for a policy drive towards cashless economy that will benefit everybody. He canvassed a position that will holistically resolve issues and challenges associated with cashless economy by making the products user-friendly.

    He said cashless economy has reduced armed robberies at homes and banks as people no longer carry cash, but do their transactions on phones and other mobile devices.

    He said industries and the economy can only grow if cutting edge technologies where people can sit at the comfort of their homes and offices to transact their businesses is embraced.

     

  • Banks sanction BVN defaulters

    Banks sanction BVN defaulters

    Defaulting depositors have started paying the price for not registering for the Bank Verification Number (BVN) before the expiration, last Saturday, of the deadline for doing so.

    Banks yesterday suspended provision of internet banking, Automated Teller Machine (ATM) and other services to them until they obtain the number.

    CBN Director of Communications Ibrahim Mu’azu told The Nation that the customers would not enjoy any services until they get their BVN.

    He said: “BVN registration will continue but there will not be full banking services for defaulters. We told the banks to continue registration of customers that are yet to comply, but such customers cannot use ATM or enjoy internet banking services.”

    BVN registration was ongoing when The Nation visited some banks in Lagos. At the GTBank Matori branch, there were long queues in the banking hall. One for those yet to enrol, who were required to complete the form and do capturing.

    The other queue was for customers that had enrolled, but had to complete a separate form to link their BVN with their accounts.

    The story was the same at the nearby Fidelity Bank, Zenith Bank and Ecobank branches.

    Mu’azu said the marginal queues in some branches were expected, adding that they were better than what obtained last July. “The exercise is satisfactory. So far there is no decision to extend the deadline. For Diaspora customers, BVN registration is ongoing in 14 countries. Any customer both at home and abroad is considered to have incomplete Know Your Customer (KYC) documentation,” he said.

    Data obtained yesterday from the Nigeria Interbank Settlement System (NIBSS), which is handling the project, showed that 2,533,299 customers have so far obtained their BVN and their numbers linked to their accounts.

    But the CBN said given the Nigerian tradition of multiple accounts holding, it could be safely assumed that over 40 million accounts might have been enroled on the BVN portal.

    Also, some customers in the Diaspora have taken advantage of more facilities provided for enrollment in more locations abroad.

    “It is evident that there has been less pressure in banking halls across the country which goes to buttress the fact that a greater percentage of account holders have been enrolled with the exception of those yet to link their accounts to their BVN,” he said.

    CBN said BVN enrolment for customers in the Diaspora has been extended till January 31, 2016.

    Non-compliant customers, it said, would continue to receive credit inflows, but their accounts will not be deactivated or confiscated.

  • Directors to discuss bank’s oversight roles

    Bank Directors Association of Nigeria (BDAN) is organising a business forum to discuss key issues facing banking.

    According to its President, Dr. Sunny  Kuku, the theme of this year’s forum, “Oversight Functions of the Board: Effectively Managing Key Internal and External Relationships”, is apt in view of recent challenges faced by many organisations.

    He said this year’s forum, which will hold in November 17 in Lagos, has become exigent because for organisations to survive and win in the competitive market in turbulent period in the national economy, they need to identify, engage and manage its key internal and external stakeholders, and the role of the board of directors in promoting effective management of these stakeholders cannot be over-emphasised.

    Selected renowned experts have been invited as resource persons to lead discussions at the event. Former Managing Director of Accenture, Dr Adedotun Sulaiman,  who is a management consultant with specialty in business and organisation strategy, will speak on the management of internal stakeholders while Mr FolaAdeola, a seasoned banker, founder and the first Chief Executive Officer of GTB, will address the management of external stakeholders’ relationships.

    The forum, an annual intellectual event organised by BDAN in fulfillment of its mandate of promoting sustainable banking best practices within financial institutions in Nigeria with focus on the internal and external relationships,  will bring together other key players and operators in the Nigerian business community. Chairmen, Chief Executives and Non-executive directors of banks and other financial institutions as well as investment advisers and officials of regulatory institutions, professional associations and consultants in the industry are expected to attend the event.

  • Court orders banks to disclose Zamfara’s account status

    Court orders banks to disclose Zamfara’s account status

    THE Federal High Court in Lagos yesterday directed banks to disclose how much Zamfara State government has in its accounts with them.

    Justice Okon Abang gave the order following a garnishee application by Ecobank Nigeria Plc.

    The court had ordered Zamfara to pay the bank N3.1billion which it owed it.

    The state has, however, appealed the judgment.

    The judge directed the Central Bank of Nigeria (CBN), the Ministry of Finance and Accountant-General of the Federation to deduct the sum from the money accruable to the state from the Federation Account and remit it to the bank.

    The state is to pay interest on the sum at 30 per cent per annum from March 1, 2013 when the suit was filed, until when judgment was delivered.

    In addition, the state must pay 10 per cent interest on the judgment sum until it is liquidated, the judge ordered.

    The judge awarded N50,000 to the bank as cost of prosecuting the suit and directed the Attorney-General of Zamfara, Ministry of Finance, Accountant-General, Attorney-General of the Federation and CBN “to ensure the full and effectual compliance with the judgment.”

    Justice Abang held that N3, 159,017,740.71 was the outstanding indebtedness on a facility of N1.5billion extended to Zamfara State by Oceanic Bank Plc, which was consolidated with Ecobank.

    Ecobank, in its claims, said the state’s Executive Council passed a resolution authorising its Finance Ministry to accept the loan on Zamfara’s behalf.

    It said the major security for the disbursement of the loan facility was a conditional Irrevocable Standing Payment Order (ISPO) from the state’s Value Added Tax (VAT) account domiciled with First Bank, Gusau branch.

    Ecobank said the facility suffered a setback when First Bank “stopped the warehousing of state Federation Account Allocation Committee (FAAC) and consequently declined further remittance for the payment of the indebtedness that arose from the subject facility.”

    An agreement was subsequently reached to restructure the debt in November 2010, after which the state “honoured rentals for a few months.”

    “However, the rentals to date have not been paid by the Zamfara State government despite that same have fallen due,” the bank said.

    Following the judgment, the bank, through its lawyer, Mr. Kunle Ogunba (SAN), prayed the court for an order nisi attaching the accounts of the judgment debtors/respondents to the garnishees.

    The applicant wants the court to order the banks to pay the debt directly to Ecobank from Zamfara’s accounts.

    Granting the order, Justice Abang ordered that the garnishes (the banks) should disclose forthwith the sums outstanding or that may accrue to Zamfara in their accounts.

    Each of the banks should make such disclosure on oath, verified by an affidavit filed before the court, the judge held.

    He directed the banks to appear before the court on the next adjourned date to show why an order should not be made for them to pay Ecobank the money.

    The bank, in a supporting affidavit, claimed that Zamfara “has not taken any steps to satisfy/liquidate the judgment sum.”

    It said it discovered that Zamfara maintains an account with all the banks in the country.

    “It is only through the attachment of the judgment debtor’s accounts with the garnishes that the judgment creditor/applicant can reap the fruit of its hard- earned judgment entered on September 30, by this honourable court,” Ecobank said.

    The banks are: Zenith, Access, Citi, Standard Chartered, Wema, Union, First Bank, Skye, Enterprise, Sterling, Unity, Keystone, UBA, Mainstreet, FCMB, Diamond, Stanbic IBTC, GTB, Fidelity and Ecobank.

    Justice Abang adjourned till November 6 when all the banks must appear before him.

  • ‘Nigerian banks still have a long way to go’

    ‘Nigerian banks still have a long way to go’

    Mr. Jamiu Ekungba, former Acting Managing Director of defunct Trade Bank Plc, currently sits atop as Chairman/Chief Executive, Royal Gold & Apple Direct Limited, an agent to TALL Security Print, UK, which specialises in security printing among others. In this interview with Akinola Ajibade, he speaks on the crisis bedeviling the nation’s banking sector, dearth of skills in the industry among other issues. Excerpts:

    What is your assessment of the nation’s banking industry?

    The industry is witnessing a period of transition, going by the unfolding events in the country. The transition is in two stages. The first type of transition could be seen in the way and manner in which the leadership of the Central Bank of Nigeria (CBN) was changed. The immediate past governor of CBN, Sanusi Lamido Sanusi had to leave the office for one reason or the other, in order to pave way for the emergence of Mr. Godwin Emiefele as the CBN’s helmsman.  The second form of transition can be viewed from what I describe as a movement from the era of non-disclosure of the true and fair state of the health of the economy to a transparent, true and fair view of the health of the economy.

    Is it right to conclude that the tenure of the new CBN governor coincided with the period the industry is facing some critical problems?

    There is no doubt that we’re facing some pertinent issues in the banking sector. In fact, the governor is facing enormous challenges, when one considers problems such as naira devaluation, among others, in the industry. Emiefele met some problems on ground, while other problems cropped up in the course of discharging his duties.

    In the light of this, it would be difficult to assess the tenure of Emiefele as CBN governor. Assessing his tenure wholesome without examining issues before he came on board would be subjective and whoever wants to do an assessment of Emiefele’s leadership needs to be careful if he or she does not want to make some mistakes.

    In your view do you think the industry has fared better under the leadership of Emeifele?

    Neither has the industry, nor the operators been able to live up to expectations in the last few years, in spite of the policies introduced by successive governors of CBN, to strengthen the sector. In the course of implementing the banking consolidation in 2005, by the then CBN governor, Prof Charles Soludo, the industry lost some of its best hands. Those who know the jobs were shortchanged. The result is that the class of people, which in the banking parlance, are known as ‘depositor bankers’ hijacked the running of the banks. That was one of the problems the industry was facing when Sanusi assumed office of CBN governor.

    Being a risk management expert, Sanusi came with a sharp knife to cut the industry to size in order to ensure effective management of banks.

    However, Sanusi was not all that lucky because he met a difficult operating environment on ground, an environment of rent-seeking, in which it is difficult for anybody doing the right thing to carry it out to its logical conclusion because of some secrets or facts that would come to the open in the process of correcting the wrong in the sector. Another problem, which the industry is contending with, is risk management. The quality of credit risk management personnel in the sector is low, a development that has resulted in the mismanagement of some funds in the sector.

    While the industry has succeeded to some extent, in implementing the cashless scheme introduced by CBN to reduce the cash in circulation, the scheme is facing some problems. The Automated Teller Machines (ATMs), installed in various parts of the country, either out of service or do not have money to dispense. In addition, the apex bank failed to create enough awareness programme on the scheme. The result is that many people do not know that they can sit down in the comfort of their homes, operate their accounts, pay for goods and services, and stop carrying cash around at all cost. Once CBN and other key stakeholders in the banking value chain get their acts right, the inability of CBN, to monitor the quantum of money in circulation would disappear.

    Does that mean that CBN is not keeping a close tab on money in circulation, in view of the explanations you have given on the issue?

    Of course, that is the true position of things in the industry. When you look at the money in circulation and the actual volume of money deposited in the banks; you would discover that there are distortions in the volume of money in circulation and the money released by CBN.  Whenever the leadership of CBN fully implements the cashless policy, it would have a better grasp of the money in circulation.

    To what extent has banks played their roles as growth agents, in view of the frequent adjustment of the Monetary Policy Rate (MPR) by CBN, in order to meet its macro economic targets or postulations?

    Well, the banks are doing their beat in the area of providing credit to some sectors of the economy. That is, the banks are doing the little they can in this area. But the ultimate power of bringing out money for socio-economic activities resides in the hands of the governments whether federal, state or local.

    Prior to the introduction of contributory pension scheme by the government, long-term deposits were not common in banks. In Nigeria, the banks depend on short-term deposits. But the scheme has succeeded in bringing some elements of long-term deposits into the banking sector. Now banks can decide how much they want to keep in both the long-term and short term accounts. For instance, Bank A can keep 40 per cent of its deposits in long-term, while putting the remaining 60 per cent would be in short-term account. Through this, banks were able to get enough money for lending.

    Like I said earlier, the power to make more money available for economic growth lies with the government.   The federal government, after meeting with the executives of the Federal Account Allocation Committee (FAAC), releases money to boost liquidity in the economy. After a week or two, the government withdraws the money either to pay salaries or contractors. As a result of this, banks could not get money to meet their financial obligations to customers.

    Has CBN been fair in its adjustment of the Monetary Policy Rate (MPR), the anchor rate for lending in the industry, giving the fact that banks are lending at higher interest rates?

    One of the functions of the CBN is to regulate the money in circulation. Do not forget the fact that Nigeria is import-dependent. The country imports virtually everything it consumes, and that has limited the flow of foreign exchange into Nigeria.  The aim of an average importer is to get enough Naira, change it to dollars and thereafter use it to import goods.  When this happens, the price of dollar would be heading towards unrealisable target. To curb the trend, CBN has to come in to regulate the sector by adjusting Monetary Policy Rate. As a politician, accountant and former banker, it is not proper for me to say whether is fair or not. But as an industrialist, I know that there is no business that can thrive with double-digit interest.  The only option CBN has is to keep the interest rate low and allow dollar to be exchanged, at let say N400.

    But the economy would suffer more, if naira is exchanged at N400 per dollar. Cuts in

    Has the economy not suffered? This is a question, which every Nigerian must be try and answer objectively. What we all know is that the economy is going to be grounded, if the value of naira falls to N400 per dollar. The reason is because Nigeria is a consuming, and not a producing nation. The country is import dependent.  It is quite unfortunate that successive governments are not doing anything to encourage local production; rather they are politicising the management of the economy.

     Everyday what we saw was our leaders coming on television to tell us that they have put things right. Where are those things, they said, they are putting in the right position? Nothing. They are only talking politics.  Rather than looking for how to reduce our dependence on importation, they are not doing anything. We have had 16 years of democratic government and nobody is talking about how Nigeria would produce fuel locally.  We are still importing fuel. The raw material (crude oil) would be taken abroad, refined and brought back to Nigeria. That is madness. The point I‘m raising is that any government that loves Nigeria would sit down and find ways of reducing the import bills, without introducing what I call ‘Regulatory Importation.’ Instead of using regulatory restriction, we can employ moralsuasion, through which Nigerians would be made to consume their own products. That is the only way out of the economic crisis. It is through this means that the CBN can control foreign exchange and interest rates as well.

    Are local banks on solid footing, in view of the huge profits they are recording?

    I cannot say that our banks are solid, because they do not have the required sources to lend for industrialisation. The banks only have the basic ability to lend for short-term trading and one thing I do tell people about Nigerian businessmen is that many of them like to do business, which they do not expert knowledge on. And so by the time they are sending proposals to the bank, they make mistakes. And because the people approving credit in banks do not have the requisite knowledge, they are carried away by the sweet talks of customers that are looking loans. Many banks have lent out money before they realised that they have made some mistakes. What we are witnessing is a situation whereby the banks and the customers are not ready to learn. The result is excessive lending and huge unrecovered debts.

    Does it mean the profits being declared by banks are bogus and not reflecting their true performance?

    I left the industry 10 years ago, and do not know what is happening in some critical departments or sections of banks. If you ask me this question two or three years after I left the bank, I would tell you precisely what is happening. But now, I cannot do that. What I know is that banks are making money through different means. They make money from lending to customers. Another thing I know is that a lot of illegitimate things are happening in the foreign exchange market. But at what level banks are involving themselves in illegal foreign exchange transactions is what I do not know. I know that things are not really okay or entirely ‘clean’ in the forex market. Probably the banks are getting their huge profits from such illegal foreign exchange transactions. Thankfully, CBN has taken some steps to restore normalcy in the forex market. Despite this, the foreign exchange has been going up and coming down. That means there are saboteurs somewhere. Speculators have taken over and reverse the rate.

    Why is that no Nigerian bank has been able to compete with South African banks 10 years after consolidation, despite policies by CBN to strengthen the industry?

    One of the papers I submitted to the then CBN governor, Prof Charles Soludo was that for us to compete well with banks in South Africa and Malaysia, let us do this. So we looked at the template and if the process of implementing it, Nigerian factors were brought into play.

    What do you have to say on Islamic banking?

    May be because I’m a Muslim, I think it is better to call it Non-Interest Banking and not Islamic banking because as it recommended in the Quran, so also it is recommended in the Bible. It is a system that removes interest and allows a banker and its customer to be at a level playing ground in transaction. Everywhere in the world, Islamic banking has been a huge success.

    Why is has it not recorded much success in Nigeria?

    There are three reasons why Islamic banking is unable to succeed in Nigeria. First, Nigerian environment is so hostile that the packaging itself would make the Muslims themselves to look inferior because of the fact that non-Muslim in Nigeria would find a way as if you are segregating yourself from the totality of people. Secondly, the monetary system in operation in Nigeria does not allow a window because if you are doing non-interest banking, there should be a non-interest open buyback. There should be non-interest treasury bills, non-interest insurance to invest your excess liquidity and all that. Thirdly, we do not have people who are trained along this line. I was in banking for 24 years, what do I know about it and yet you said I should practice it?

  • Banks’ scramble for agric business

    Banks’ scramble for agric business

    The National Bureau of Statistics (NBS) report that agricultural imports declined by 11 per cent from N738 billion in the first quarter of the year to N664 billion in the second quarter, indicates that farmers are beginning to meet food needs. Banks are exploring ways of funding  agric business to create jobs and reduce food importation, writes COLLINS NWEZE.

    Banks with eyes on the future know where to put their money. Many of them have identified the agric sector and its value-chain as a key area to play in this period of deposit drought and reduced profitability.

    Already, farmers are seeking more credit to expand to meet the increasing needs of local consumers.

    For the  Chairman, Tractor Owners & Hiring Facilities Association of Nigeria (TOHFAN), Alhaji Danladi Garba, now is the time for banks to grant more credit to farmers and see the impact of improved food production not only on employment market but on the economy.

    At a media forum on agriculture financing in Lagos, tagged: “Agric Business: Diversifying the Nigerian Economy,” the farmer said Nigeria could produce food, noting that agric business is profitable.

    He is probably right. Gone are the days when borrowers beg banks to lend to the agric sector. Today, the tides have turned. The buzz for agric financing is on, and no lender wants to be left behind.

    Ten years back, no lender would give depositors’ funds to a farmer. Such loans would be considered lost from the date of approval. But today, the lenders have begun to scramble for agric businesses, having seen the potential, and knowing how much a well-priced loan can add to their profitability, many lenders are keying into the agriculture financing scheme.

    Sterling Bank Plc has financed the purchase of tractors for members of the TOHFAN. The bank noted that its involvement in the agricultural sector was based on the need to reposition the sector as the main stay of the economy given the dwindling oil revenue.

    The bank’s Managing Director, Yemi Adeola, said it finances the purchase/acquisition of tractors from reputable manufacturers such as Massey Ferguson, Mahindra, New Holland, John Deere and Tak Tractors, who will also provide basic training on utilisation and offer after-sales maintenance services.

    The tractors which have been distributed to members of the association following the first disbursement would help in the adoption of mechanized agriculture, leading to additional hectare coverage, higher yields and enhance food security in the country.

    “Sterling Bank Plc has continually restated its commitment to the strategic growth of the agricultural sector by providing adequate funding in alignment with the ongoing reforms in the sector aimed at repositioning it as an attractive business proposition, an input provider for the manufacturing sector and a key foreign exchange earner.

    “The best bank in Agric Award was conferred on the Bank in recognition of its critical role in the dispensing of financial services to actors in the Nigerian agricultural value chain. This we have demonstrated again with the financing of the tractors which will add value to the sector,” he said.

    Also, Group Managing Director/Chief Executive of First City Monument Bank (FCMB) Limited, Ladi Balogun, assured that the bank will intensify its support to the agricultural sector and its value chain including lending more to the subsector in the interest of the economy.

    “We note that four basic commodities that are consumed by Nigerians – rice, wheat, fish and sugar jointly account for a significant amount of the country’s annual import bill. We are convinced that the nation has the capacity to produce these consumables in required amounts to meet our domestic consumption needs. With its attendant impact on GDP and job creation, agriculture remains a critical focus sector of the financial system”

    The bank chief said the lender is focused on being a strategic partner to the government and other stakeholders in the agric sector to ensure food sufficiency, employment and revenue generation.

    Balogun assured that the lender will continue to provide credit to the sector and its value chain, including small and medium scale businesses. He said the 30 per cent of Nigeria’s Gross Domestic Product (GDP) come from the agricultural sector, and was 40 per cent before the economy was rebased last year.

    “The agric transformation is real. It is not rhetoric. We built agric business that is at the centre of transforming the economy. If we really want to continue employing the growing population, we need to not only feed Nigeria, but feed the world,” he said.

    He said the bank realises that there are millions of farmers across the country that need credit at affordable rates, considering the level of attraction the agric sector has garnered. That is why we are increasing our level of support.

    Likewise, Group Managing Director, United Bank for Africa, Phillips Oduoza said the bank has continued to channel resources to the sector, given that it remains the mainstay of most economies in Africa. “UBA has a deliberate policy to continue to fund agriculture. Our lending to the sector is already above the industry average. We are doing about seven per cent of our total portfolio in agriculture,” he said.

    He praised the fact that lending to agriculture is generally on the upward trend from Nigerian banks, disclosing that banking sector funding to agriculture has moved from just about 0.5 per cent of total industry portfolio prior to 2009 to about 4.9 per cent of banking industry loan book currently.

    “Interestingly, the non-performing loans coming from agriculture lending is lower than most people would have thought,” he said.

    Oduoza also said UBA is expanding its electronic banking products to improve the way it serves its more-than seven million customers. He said the bank has rolled out an array of electronic banking products, from cards to point-of-sale terminals, which is helping to reduce the cost-to-income ratio of the bank while making a positive impact on the bottom line.

    Group Managing Director of Union Bank of Nigeria Plc Emeka Emuwa urged Nigeria and other African nations to make agriculture more productive in their fight to end poverty in the continent.

    He spoke at the International Conference organised by the African Rural and Agricultural Credit Association (AFRACA) sponsored by the bank.

    In his welcome address to the conference which was themed “propelling Economic Development through Functional Agricultural Value Chain financing models: lessons learnt and emerging opportunities, in Lagos, Emuwa advised the African nations to redouble their efforts  to make agriculture more productive.

    “If you can get agriculture to become more productive, you will be better positioned to tackle the scourge of poverty in the continent. It is unfortunate that there has been a decline in the sector due to the emergence of other economic sectors in Africa,” he said.

     

    CBN’s position

     

    Central Bank of Nigeria (CBN) Governor, Godwin Emefiele said at a workshop on innovative agricultural insurance products, in Lagos that the agricultural sector provides up to 70 per cent of employment in Nigeria and accounts for about 42 per cent of the country’s Gross Domestic Product (GDP).

    Emefiele, who was represented by the Acting Managing Director of Nigeria Incentive Based Risk Sharing System for Agricultural Lending (NIRSAL), Edwin Nzelu, said the large import food products include wheat, rice, flour, fish, tomato paste, textile and sugar.

    “We are confronted, as a nation with a wide range of development challenges especially with the dwindling global crude oil prices and the nation’s dependence on it as its major source of revenue. There is the need to diversify the mono-cultural tendencies of the economy by developing other sectors of the economy especially agriculture,” he said.

    He said that Nigeria’s formal financial system is lending about four per cent of all formal credit to the agricultural sector compared to three years ago when only about one per cent of all credit went to agriculture. He insisted that lending is still low given the lingering perception by banks that agriculture is highly risky.

    Emefiele said development and expansion of the agricultural insurance sub-sector will go a long way in mitigating against natural disasters and eventually encouraging banks to lend to agriculture.

    Former Agricultural insurance has been proven to be instrumental in transferring risks and stabilising farmers’ income, but in Nigeria, agricultural insurance is one of the less developed line of business. Therefore, there is the need for insurance companies in collaboration with relevant stakeholders to develop innovative products that will cater for the needs of farmers in their provision of agricultural insurance,” he said.

    He explained that over the years, only the Nigeria Agricultural Insurance Corporation (NAIC) was licensed to underwrite agriculture insurance in the country, until two years ago when NAICOM liberalized the insurance subsector for conventional insurers to underwrite.

    “I urge private insurance companies to take advantage of this opportunity and consider extending insurance cover to the agricultural sector to create a competitive market which will eventually increase insurance penetration to rural areas,” he said.

    Emefiele said expansion of agricultural insurance products has become imperative especially now that climatic reports have it that Nigerian farmers are prone to risks from natural disaster such as flood, draught as well as different crop and livestock diseases.

    He said that NIRSAL was established to tackle both the financial and commodity agricultural value chains and that its Insurance pillar was created to facilitate the expansion of the agricultural insurance products for lending by encouraging the introduction of new products such as weather index insurance, yield index insurance, multi-peril among others.

    He said the workshop was organized in collaboration with Alliance for Green Revolution in Africa (AGRA) which has garnered experience over time in introducing various insurance products in some African countries and was one of the major stakeholders in designing NIRSAL.

     

    Bankers’ Committee

     

    The CBN and deposit money banks, under the aegis of the Bankers’ Committee also restated its commitment to expanding bank lending in agro-business in order to discourage importation of goods can be produced locally.

    The bankers also stated their resolve to explore large corporates as anchors to lend to participants across the value chain to improve the capacity of Nigeria’s agro-businesses so as to create sustainable jobs and inclusive growth.

    The bankers also affirmed their commitment to financial deepening of the economy, improving financial access to key sectors of the economy, innovative solutions for the critical finance of generation, provide finance for small and medium enterprises, among others.

    “We note that four basic commodities that are consumed by Nigerians – rice, wheat, fish and sugar jointly account for a significant amount of the country’s annual import bill. We are convinced that the nation has the capacity to produce these consumables in required amounts to meet our domestic consumption needs. With its attendant impact on Gross Domestic Product (GDP) and job creation, agriculture remains a critical focus sector of the financial system,” it added.

     

    CBN’s roles

     

    The CBN set the tone when it introduced Nigerian Incentive-Based Risk Sharing Agricultural Lending (NIRSAL) to the banks. By that single policy, banks can lend to agricultural sector and its value chains without fear of losing such funds. The NIRSAL is already being implemented by the banks and is expected to drive agricultural revolution in the country.

    The CBN explained that NIRSAL, unlike previous schemes which encouraged banks to lend without clear strategy to the entire spectrum of the agricultural value chain, emphasises lending to the value chain and to all sizes of producers.

    The Federal Government also plans to double agriculture’s share of banks’ credit to 10 per cent in two years. The loans to agriculture as a share of total credit rose to N320 billion, or five per cent, at the end of last year from less than one per cent in 2011.

    Agriculture Minister Akinwunmi Adesina said the Federal Government has made a fundamental shift that agriculture is not a developmental activity, but a business. “The CBN has shifted the mind-set of the banks. It’s a new agriculture sector in which they can actually invest money and make money,” Adesina said.

     

    Agric potential

     

    Already, banks and the CBN are discussing how to increase lending to the sector. For the apex bank, government needed to pay more attention to agriculture, which still has one of the greatest potentials in growing the economy.

    CBN Deputy Governor, Economic Policy, Dr. Sarah Alade said that one way of achieving this, is by collaborating with the banking system to fix the value-chain problems in the agricultural sector. She said economic development was about enhancing the productive capacity of an economy by using available resources to reduce risks, remove impediments, which otherwise could hinder investment.

    Speaking at an international conference on agricultural value-chain financing held in Lagos, she said the CBN has so far committed about N1.169 trillion to different intervention schemes being promoted by the Federal Government.

    Alade said the funds were committed by the CBN in collaboration with the Federal Government into key economic schemes for economic development.

    She listed the schemes as the Agricultural Credit Guarantee Scheme (N69 billion); Commercial Agricultural Credit Guarantee Scheme (N200 billion); the Nigerian Incentive-Based Risk Sharing System for Agricultural Lending (N200 billion); Small and Medium Enterprises Credit Guarantee Scheme (N200 billion).

    Others are the SMEs Restructuring and Refinancing Scheme (N200 billion) and Power and Airlines Intervention Fund (N300 billion). Alade, who was represented by CBN Director of Research, Charles Mordi said schemes were meant to address the challenges confronting agriculture and agric business in the country.

    She said the Federal Government and CBN instituted the intervention programmes to enable key players in the economy have access to finance adding that access to credit remains important to agricultural value-chain.

    Speaking further, she said the Agricultural Credit Guarantee Scheme was introduced in 1978 to encourage lending to the agric sector. Alade said the scheme has up to date, supported the sector by guarantying loans to over 800,000 beneficiaries.

     

    NIRSAL performance

     

    According to the CBN, NIRSAL is also expected to be a catalyst for innovative risk management strategies, long-term financing for agribusiness and significant job creation by new entrepreneurs.

    “The mandate of NIRSAL is to act as the custodian of all credit guarantee schemes, interest draw back schemes, and commercialisation initiatives related to an integrated value chain approach to agriculture and agribusiness in Nigeria,” the CBN said. Under NIRSAL, there are five pillars to be addressed by an estimated $500 million that will be invested by the CBN, according to the programme document.

    There is also a Risk-sharing Facility of $300 million, planned to address banks’ perception of high-risks in the sector by sharing losses on agricultural loans. There is equally an insurance Facility of $30 million intended to expand insurance products for agricultural lending from the current coverage to new products, such as weather index insurance, new variants of pest and disease insurance.  Besides, there is also a Technical Assistance Facility amounting of $60 million meant to equip banks to lend sustainably to agriculture, producers to borrow and use loans more effectively and increase output of better quality agricultural products, among others.

    The improvement in the sector was linked to access to credit through the new policy on increasing private sector participation, emphasis on the entire agriculture value chain, and using agriculture to boost employment, wealth creation and food security.

    Analysts have commended the performance by the banks as a demonstrating of their belief in the ability of agriculture to transform the economy. The CBN said with the credit trend in the banks, Nigeria may be close to realising its economic diversification objectives that will lead to less dependence on oil.

    “The agric transformation is real. It is not rhetoric. We built agric business that is at the centre of transforming the economy. If we really want to continue employing the growing population, we need to not only feed Nigeria, but feed the world”

     

  • Exchange rate: Different rates for different banks

    Exchange rate: Different rates for different banks

    Although the Central Bank of Nigeria (CBN) stipulates that banks should sell forex for eligible persons who have legitimate request based on the official and interbank exchange rate, investigation shows that majority of the deposit money banks sell forex at arbitrary rates outside the officially approved rate, reports Bukola Aroloye

    A huge industry has been built around the sale of hard currencies, especially the greenback (dollars). Of course, the forex dealers in the parallel market have always been getting a kill anytime the naira falls, as they are most certain to exchange the dollar higher for a weaker naira.

    But thankfully, Central Bank of Nigeria (CBN) which is the apex regulatory body for banks has always risen to the occasion anytime it feels the value of the local currency is being undermined through different policies such as reviewing the exchange rate.

    Only recently, the CBN banned commercial lenders from re-selling central bank dollars among themselves, which was an attempt to curb speculation on the naira.

    Besides, the apex bank had barred 41 items from access to foreign exchange. It had directed that as from August 1, all foreign exchange transactions in any Bureau de Change must have the BVN of applicants as foreigners were said to have invaded the nation’s foreign exchange market.

    Conscious of its mandate to strengthen the local currency, the apex bank had in a circular released signed by the Director of Trade and Exchange, CBN, Olakanmi Gbadamosi, “The Central Bank of Nigeria has considered the recent statements by deposit money banks concerning the large volume of foreign currencies in their vaults and the decision to stop accepting foreign currency cash deposits into customers’ domiciliary accounts as a welcome development.

    “Therefore, in its continued efforts to stop illicit financial flows in the Nigerian banking system which aligns with the anti-money laundering stance of the federal government, the CBN hereby prohibits from the date of this circular the acceptance of foreign currency cash deposits by DMBs.

    “For foreign currency cash lodgements made prior to the date of this circular, the account holder has the option to either withdraw his or her foreign currency cash or the Naira equivalent. For the avoidance of doubt, only wire transfers to and from Domiciliary Accounts are henceforth permissible.

    “The CBN advises individuals that wish to source foreign currency for eligible and legitimate purposes such as BTA, PTA medical, mortgage, school fees, goods etc. to do so through recognised channels with the use of Form ‘A’ for “invisible” and Form ‘M’ for ‘visible’ transactions. By this circular, those who deposited foreign currencies into their accounts before the directive will now have to withdraw the cash as they are not going to be allowed to transfer the funds.”

     

    The fire this time

    The apex bank in line with its mandate also place limitation on spending. In the new arrangement, all ATMs that were hitherto enabled for domestic and foreign transactions have been restructured to limit naira cash withdrawal at ATMs to N60,000 per day while foreign currency is $300 per day. Hitherto, the domestic withdrawal limit was N150,000 per day.

    The new arrangement has separated traditional ATM from MasterCard credit card where the former has now been deactivated and can no longer be used for transactions abroad. Hitherto, a single ATM card serves for transactions for both domestic and abroad.

    Also, the restructured cards now have spending limits on POS/eCommerce (online shopping) pegged at $300 (about N60,000) per day. Before this, the limit was N2 million per day.

    In the new arrangement, a bank customer with multiple debit cards (ATM cards), only the one linked to the primary transactional account will be enabled for use abroad. Hitherto, such customers could transact with any of the cards that is funded and changer high than the official rate.

     

    The fire this time

    It is however instructive to note that most money deposit banks have also join the league of money speculators.

    Investigation by The Nation shows that the official exchange rate is N199 but at the black market, it is N209/210.

    The Nation investigation showed that many banks don’t use the official rate given by CBN.

    Some of the banks officials who spoke with our correspondent while admitting that did not denied it but don’t want their name to be mention.

    GTbank, N225 to dollar, via debit card transition, UBA N210, Fidelity Bank N220, Skye Bank, 210 FCMB 210, why the official rate is 199.25 as at today.

    A banker who spoke with The Nation explained that, if you deposit N1million with any bank in Nigeria today saying 10% can only trade with N390 thousand the remaining N610 is sterilised by government hence cost of borrowing will always be high. At the moment MPC is at 13%. How much is treasury bills today? These are the barometers for you to understand average cost of borrowing as a business man.

    For instance, Standard Chartered Bank has asked its customers to request a complementary ATM card for domestic use only so that the original N150,000 daily cash withdrawal limit can be restored and also reactivate POS/online purchase limit of N2 million per day.

    Meanwhile a banker in one of this new generation said that, why most of the Nigerian banks charge more than the official rate is that since the apex bank has give them directive to source for foreign exchange outside CBN, it is not possible for us to give it at the official rate for transaction, he also accused CBN of devalue the Naira.

    While Zenith allows online transactions the GT Bank chose not to. As one banker confessed, while in the past banking cards linked to naira accounts enjoyed the official exchange rate when used abroad, banks are now using the parallel market rates, removing any previous incentive to adhere to the cashless policy.

    In a CBN circular of July discussing limits and controls on corporate and individual naira denominated cards being used abroad, one of the instructions was for banks to inform customers “the banking industry has instituted a tracking system on the use of naira denominated cards”. If this is possible why put limits on the use of anyone’s money? Set certain triggers for amount and frequency and investigate those flagged.

    An entrepreneur who wanted to pay $2000 to a software developer outside the country, was informed by his bank that he would have to fill out a form and get CBN approval for an exemption to make the payment.

    Apart from the time-is-money cost that this process entails, this surely is an inefficient use of CBN’s time and resources.

    The news about the stash of dollars found in Akwa Ibom State House recently indicates that in the long term, the CBN’s current policy is futile. Those who have access to the type of money that keeps Nigeria at the top of the table for illicit financial flows ($15.7b annually) do not need the banks to keep their dollars safe – they have the state security to do that for them. Two, despite the installation of a special task force at the international airports to harass travellers about how much foreign exchange they have on them, those with access to the type of money which needs to be tracked, either travel on private jets thereby skipping this process or are social and political untouchables who will be waived through by the same members of this task force as has been recently observed and reported. Finally, if part of this current regime of restrictions is to address the high levels of corruption by federal and government officials in the successive administrations, then what happens to the money already out of the country, safely in foreign banks and easily accessible with Barclays or CitiBank cards? If these people have no intention of bringing this money back into Nigeria how does the CBN intend to track their transactions?

    The bank also required their customers to apply for a foreign currency denominated ATM linked to domiciliary account which would be enabled with no daily or annual international transaction limits.

    Earlier, Guaranty Trust Bank Plc had informed its customers of its decision to reduce the daily international spending limit on their Naira MasterCard to $300.

    In a communication to the customers, the bank explained: “In view of the increased difficulty in sourcing foreign currency to settle international transactions on Naira MasterCards, we have reduced the daily international spending limit on your Naira MasterCard to $300.This means that you can only spend up to $300 daily when using your GTBank Naira MasterCard for international payments via POS and online.

    “You will, however, continue to have the option of paying for medical bills, school fees, mortgages and credit cards using Form A, as these are eligible transactions for foreign currency. Simply visit any GTBank branch to complete a Form A along with the required documents to make these payments.”

    A statement from the CBN added that already all the legitimate demands for such transactions through recognised channels have so far been fully met by CBN.

    The statement stated: “The CBN hereby directs all authorised dealers in foreign exchange in Nigeria to henceforth treat as top priority all legitimate demand for foreign exchange for eligible transactions.

    “The CBN once again advises individuals that wish to source foreign currency for such eligible transactions to approach their banks with their legitimate demand as the CBN has made adequate provisions of foreign currency for all such legitimate and eligible purposes.”

    According to Tolu Ajayi a business man told The Nation is expresses with one of the new generation bank, “when I call their customer care line they told me it is N225 and as at that time it was N210, later the rate come back to  N197 still they did not change the rate to the official one. What is going on? What is the official rate? Some banks are even helping to smuggle hard current out of Nigeria ,I was told at the rate between N237 and N240, is Emefiele saying is not aware? Are Nigeria banks now working for the politicians who drilled holes into our treasury or are they the one working for Mallams? Were all quite while this taking place or am I missing something.”

    An aggrieved customer with one of the old generation bank said: “70% of Nigeria banks don’t even use the official rate for online transaction and this is a way to defraud customers especially those who use the money to pay school fees, those who buy goods from outside the country were affected.”

  • NDIC boss urges banks on outsourced staff

    NDIC boss urges banks on outsourced staff

    The Nigeria Deposit Insurance Corporation (NDIC) has called for a closer look at the phenomenon of outsourced or contract staff in banks to ensure healthy and sound practices in the banking industry.

    Managing Director/Chief Executive of the Corporation, Umaru Ibrahim, made the call in Abuja during a courtesy call on him by the President and other Council Members of the Chartered Institute of Bankers of Nigeria (CIBN).

    The NDIC Boss said bank examination reports had indicated that the high incidences of fraud and forgeries in the banking system had been linked to outsourced or contract staff.

    Umaru also said that in as much as regulators appreciated the necessity for banks to cut costs, it was incumbent on all stakeholders to fashion out capacity building and other strategies to motivate all employees to contribute positively rather than engaging in criminal acts that impact adversely on the entire banking system.

    The NDIC CEO also expressed concern about the plight of female employees in the banking industry. He noted that banks often engaged female employees and set for them very high targets on deposit mobilisation and other asset creation ventures, which put undue pressure on the female employees.

    According to him, although some improvement had been recorded with regards to the situation, there was still need to provide a more conducive working environment in order to attract and retain a talented female workforce in the sector.

    The President of the Institute, Mrs Debola Osibogun regretted that over 75 per cent of fraud cases in the sector had been traced to outsourced bank staff who were neither professionals nor members of the CIBN.

    While noting that the Institute had no control over the banks, she disclosed that a Committee of the Institute was already working with heads of operations of banks on the challenges being posed by the outsourced staff and would soon submit its report to the Central Bank of Nigeria (CBN) for consideration.

    The CIBN President also said the Institute had been mandated as the agency for competency framework for banking industry by the CBN, adding that the CIBN had visited banks’ academies and had issued accreditation certificate to the academies of the FirstBank, Access Bank and Guaranty Trust Bank.

  • Why Microsoft partnered MDX-i on cloud solution, by Makwane

    Microsoft Nigeria’s Managing Director, Kabelo Makwane, has said the firm is partnering  MainOne’s Data Centre subsidiary, MDX-1 because of its strength in connectivity and its certification as Tier 3 Data Centre in the country.

    He said the firm will continue to explore ways of working with indigenous firms that have braved the odds to invest in the provision of the state-of-the-art infrastructure to realise the goals of economic development of the country and the continent.

    Makwane spoke during the announcement of the launch of MDX-1’s new cloud-based service offering with Microsoft in Lagos at the weekend.

    The solution, which is built on Microsoft Azure’s enterprise grade infrastructure, provides flexible, highly available and fully secure private computing environments to companies on a pay-as-you-go basis.

    By combining expertise in proven, yet familiar technologies and geographic specialisation, MDX-i Cloud Services deliver a solution tailored to meet the needs of enterprise customers in West Africa. Benefits of the Infrastructure as a Service (IAAS) solution include access to a wide range of computing resources, such as storage, central processing unit (CPU), memory, security firewalls and network bandwidth, provisioned on a subscription basis.

    The new solution is the first Cloud offering MDX-i is launching in partnership with Microsoft, the leading global provider of Cloud Services. With this launch, MDX-i is positioned to meet the computing infrastructure needs of companies deploying private, public or hybrid clouds from its Tier III Data Center in Lagos.This ensures quick and agile provisioning of infrastructure for businesses and government agencies as required, thus improving their time to deliver on-demand applications and services.

    Makwane said: “The Cloud OS Network is a worldwide group of select service providers that partner closely with Microsoft to offer customers hybrid cloud and Azure-enabled solutions. Uniquely combining expertise in Microsoft technology, customer requirements, and geographic specialisation, Cloud OS network members deliver the Microsoft Cloud Platform customised to your specific needs.”

    Also, MDX-i’s Business Development Executive, Rob Lever said the new cloud platform is a scalable and cost effective alternative to dedicated computing resources deployed in-house by companies and includes managed virtual data centers, virtual private servers, and virtual LANs to assure customers of high availability.

    He said: “Businesses are beginning to embrace Cloud services because it promises increased agility in addition to savings in OPEX (operating expenditure) and CAPEX (capital expenditure). Our IaaS platform reduces complexity, interoperability, and security concerns of our customers. It provides them the benefit of leveraging our infrastructure, and the expertise of MDX-i and Microsoft, without their having to incur the substantial costs associated with deploying such solutions.”

    Chief Executive Officer (CEO), PCL Mobisafe, Christian Landmark, said the pilot customer of the new cloud offering, expressed his confidence in the performance levels and reliability of the solution.

    He said: “We chose MainOne as our Cloud Provider because of their excellent reputation for quality and support in the telecoms sector. We are impressed by their technical expertise and willingness to go the extra mile in their provision of what is a fairly complex solution.”

     

  • Banks not doing enough to tackle online fraud, says survey

    Banks not doing enough to tackle online fraud, says survey

    ABOUT half of banks and payment systems prefer to handle cyber incidents, rather than invest in equipment which can prevent them, a survey has revealed.

    The survey was conducted by Kaspersky Lab and  B2B International among company representatives to find out their attitudes toward data security, including financial companies’ policies towards protection from online fraud.

    More than 5000 representatives, including 131 banks and payment services, from 26 countries participated.

    During the survey, 48 per cent of financial organisations said they  protect their clients from online fraud, aiming at mitigating the consequences rather than preventing incidents entirely.

    It said 29 per cent of companies believe it is cheaper and more effective to address cases of fraud, rather than attempt to prevent them.

    According to the responses, whenever a cyber-fraud incident involving a client’s account occurs, only 41 per cent of organisations take measures to prevent it from re-occurring in the future.

    According to Engineer IT, the survey showed that 36 per cent of companies conduct an analysis of the vulnerability exploited in the attack, and 38 per cent compensate the losses. The most popular policy among companies is to try to find out who was behind the attack: two-thirds (66 per cent) of financial organisations are guilty of this practice.

    Global Head, Fraud Prevention Division at Kaspersky Lab, Ross Hogan, said relying on mitigating the negative consequences of fraud is similar to trying to treat the symptoms of an illness rather than its cause.

    The symptoms will recur, and the illness will progress. In this respect, Kaspersky Lab recommends that you do not forget how important prevention is. Many of the world’s leading banks have acknowledged this and have implemented “root cause fraud prevention”, but alarmingly many still rely on “reactive fraud detection”.

    Experts recommend that banks and payment services use comprehensive online fraud protection methods to protect the bank’s clients at several levels.

    One such method is a fraud prevention platform which includes threat control tools installed on client devices, as well as the server component located within the bank’s information infrastructure. Through the special code imbedded in the bank’s web-page, this component can remotely detect a client device infection.

    Hogan laments that each year, cybercriminals invent more and more sophisticated methods of attack, and if the banks do not have preventive measures in place, it enables further growth in the numbers of financial cybercrime and increased losses.

    A recent example is the discovery of Blue Termite – a cyber espionage campaign that has been targeting hundreds of organisations in Japan for over the past two years.

    The attackers hunt for confidential information and utilise a zero-day Flash player exploit and a sophisticated backdoor, which is customised for each victim.

    In October last year, Kaspersky Lab researchers encountered a never before seen malware sample, which stood out from others because of its complexity.

    Further analysis has shown that this sample is only a small part of a large and sophisticated cyber espionage campaign. The list of targeted industries includes governmental organisations, heavy industries, financial, chemical, satellite, media, educational organisations, medical, the food industry and others.

    To infect their victims, Blue Termite operators utilise several techniques. Before July this year, they mostly used spear-phishing emails – sending malicious software as an attachment to an email message with content, which would most likely attract a victim’s attention.

    However in July, the operators changed tactics and have started to spread the malware via a zero-day Flash exploit. The attackers have compromised several Japanese websites so that visitors of the sites would automatically download an exploit once they are on the website and become infected. This is referred to as a drive-by-downloads technique.

    After a successful infection, a sophisticated backdoor is deployed on a targeted machine. The backdoor is capable of stealing passwords, downloading and executing additional payload, retrieving files and conducting other dangerous exploits.

    One of the most interesting things about the malware used by the Blue Termite actor is that each victim is supplied with a unique malware sample that is made in a way that it could only be launched on a specific PC, targeted by the Blue Termite actor.

    According to Kaspersky Lab researchers, this has been done in order to make it difficult for security researchers to analyse the malware and detect it.