The Nation Newspaper

Tag: Banks

  • Banks may grow assets to $168b, says KPMG

    Banks may grow assets to $168b, says KPMG

    Nigeria’s banking sector is expected to grow to over $168 billion by 2015, a KPMG report has said. The sector was worth $117 billion in 2011, a Customer Service report by the global auditing firm said.

    The report said that while Nigeria may be Africa’s most populous country, only about 20 per cent of the population is banked and two-thirds have never been banked at all.

    KPMG said the sector has recently experienced a number of regulatory changes including a repeal of universal banking licences and the promulgation of more stringent regulations by the Central Bank of Nigeria (CBN) which was aimed at reducing soaring books of non-performing loans and stamp out severe breaches of corporate governance.

    “However, with the establishment of the Asset Management Company of Nigeria (AMCON) to purchase toxic assets of banks and recapitalise troubled banks, some stability has returned to the sector,” it said.

    This development made the leading rating agency Standard & Poor’s (S&P), to upgrade the sector in 2012 to a positive outlook due to the country’s improved asset quality, capitalisation and corporate governance.

    The report posted on the firm’s website said with Automated Teller Machines (ATMs) becoming almost ubiquitous in the cities, it was not surprising that it had become the fastest growing channel in recent years. “Almost eight in 10 customers surveyed use the ATM and nearly two thirds of these people visit an ATM on a weekly basis with cash withdrawal and balance enquiry amongst the most common transactions customers perform via the ATM,” it said.

    However, it said that despite the proliferation of new channels in recent years, adoption of other alternate channels is still comparatively low.

    It also said very few respondents saying they use internet banking (seven per cent), Point of Sale (six per cent), telephone banking (five per cent) and mobile payments (two per cent). Of the respondents that had used internet banking, one- third were private sector employees and 15 per cent, were students.

  • Banks to raise interest rate, credit facility

    Banks to raise interest rate, credit facility

    • ‘How FirstBank, GTBank, others can become stronger’

    Banks will this year raise in terest rates and the volume of loans.

    According to an Equities Analyst at Renaissance Capital (RenCap), Adesoji Solanke, lenders are going to implement strong loan growth, as they try to offset the lost income from higher Cash Reserve Ratio (CRR) implemented by the Central Bank of Nigeria (CBN).

    In a report titled: ‘Nigerian banks: Tier-one-growth precariously balanced’, Solanke said with an average CRR of 20 per cent, the banking environment does not allow for significant earnings growth, a trend that would be felt by the banks.

    He explained that with yields on Treasury bills having declined, the scope for lower funding costs remains feasible.

    He said Access Bank should begin to witness improved earnings with most of its Asset Management Corporation of Nigeria (AMCON) bonds having been redeemed at end of December 2013 for more liquid assets. “These assets could be deployed into higher-yielding loans while reducing the bank’s reliance on expensive fixed-term funding. The key risk to our forecast is execution; in the past we have expected improved performance only to be disappointed as the year progresses. Nevertheless, we believe Access’s valuation is attractive,” he said.

    For FirstBank, RenCap said although the bank’s September 2013 result was disappointing, a better result is being expected going forward, given its scale and cheap funding base. “We believe management will have to rebuild investor confidence in the Group’s strategy. In our view, the market needs a clear understanding of First Bank’s competitive edge and how this is being exploited to deliver attractive returns to shareholders,” it advised.

    Its report on Guaranty Trust Bank said the lender continues to deliver the best quality of earnings and most sustainable returns. “For investors who want hassle-free exposure to the sector, this remains our top choice,” he said.

    The report said although United Bank for Africa returns have rebounded from the 2011 losses, its Return on Assets (RoAs) require further improvement to drive an ongoing re-rating in the stock.

    For Zenith Bank, Solanke said the lender’s liquid and highly capitalised balance sheet was a key part of its strength in a challenging 2013 banking environment.

    “We expect 2014 to be tougher for the bank, given the decline in Treasury yields and its high exposure to CoT revenue as against other banks. We note that management is confident it can offset these revenue challenges with new sources of income, but delivery will be key to a continued re-rating of the stock,” he said.

    The Nigerian banks have had to operate in an environment of tightening monetary policy for the past three years, which in relative terms has been unfavourable to the tier two banks.

    Also, he said the big banks, otherwise called tier-one lenders, must watch their cost of operations and manage asset depreciation charges to remain profitable, an Equities Analyst at Renaissance Capital (RenCap), Adesoji Solanke, has said.

    The tier-one banks include FirstBank of Nigeria, Guaranty Trust Bank, Zenith Bank, United Bank for Africa and Access Bank. He said the banks’ headache remained the impact of higher Cash Reserve Ratio (CRR) on public sector deposits, now at 75 per cent and cuts in commission-on-turnover (CoT).

    The CRR is a portion of banks’ deposits kept as reserves with the CBN and remains at 12 per cent for all other deposits. The CoT which was N5 per mille was last year cut to N3 per mille and is currently at N2 per mille until next year when it will be zero CoT on all transactions.

    Solanke advised that the lenders must be disciplined on the cost line and properly manage their depreciation charges before they could deliver earnings growth. “We think there is a precarious balance between these headwinds and a number of tailwinds, and think it remains challenging for banks to deliver attractive earnings growth; the risk of another year of flat-to-negative earnings growth cannot be ruled out,” he said.

    The CBN had at the last Monetary Policy Committee (MPC) meeting raised the CRR on public sector deposits from 50 to 75 per cent. That was after initial increase from 12 per cent to 50 per cent in July last year. The CRR is a portion of banks’ deposits kept with the CBN. Analysts said these policy changes in less than a year represent a major policy challenge for the lenders.

    Also, the banks’ heavier reliance on term deposits has left many of some of them competitively disadvantaged as against the scale banks, and the concentration of market share by tier one banks has forced tier two banks to work harder to deliver improved returns in this environment.

     

  • Six banks lead on deposits, asset concentration, says CBN

    Six banks lead on deposits, asset concentration, says CBN

    Six of the 23 Deposit Money Banks (DMBs) dominate the banking industry in terms of deposits and asset concentration, the Central Bank of Nigeria (CBN) has said.

    According to a report by the CBN, the sector is dominated by a few banks as the average market share of assets and deposits of the six largest banks (concentration ratio–CR6) stood at 56.8 per cent and 59 per cent.

    The figure, which is for the second quarter of last year, also showed that the market share of the largest bank on assets and deposits, stood at 13.57 per cent and 15.17 per cent.

    This, it said, compared with 14.99 per cent and 13.47 per cent, at the end of the preceding period of 2012.

    However, it said the industry remained competitive in both deposits and assets even as the sector continued to record improvements in key performance indicators. For instance, capital adequacy and Tier I capital-to risk-weighted assets ratios increased to 19.2 per cent and 17.2 per cent, from 18.1 per cent and 16.1 per cent, at end-December 2012.

    The improvement in the ratios was due mainly to retained profits and the raising of additional Tier II capital by some banks.

    Furthermore, it said total loans increased to N8.8 trillion, of N664 billion or 8.1 per cent while Non-Performing Loans (NPLs) to total loans deteriorated to 3.7 per cent, from 3.5 per cent.

    The NPL ratio, however, remained within the five per cent threshold while the NPL coverage ratio improved to 71.2 per cent, from 68.7 per cent, indicating a reduction in the risk exposure of the sector. Total deposits increased to N15.1 trillion from N14.3 trillion, reflecting an increase of N771 billion or 5.35 per cent.

    Un-audited total profits of the banking industry for the first half of 2013 stood at N300.5 billion, a 22.95 per cent increase over the N244.4 billion achieved in the second half of 2012. Interest income, which increased by 13.47 per cent, largely accounted for the higher profit level.

    The industry liquidity ratio stood at 67.8 per cent compared with 68.0 per cent even as all banks met the 30 per cent minimum regulatory liquidity ratio throughout the review period.

    Commenting on the Financial Satbility Report, CBN Governor, Sanusi Lamido Sanusi said the efforts of the regulatory and fiscal authorities in addressing the challenges of the global economic and financial crises to achieve higher growth and employment were evident in the first half of last year.

    He said the projected weaker global demand, slower growth in key emerging markets and slow recovery of the Eurozone would require the monetary authorities to sustain the implementation of monetary and macro-prudential policies to achieve financial system stability.

    He said the economy recorded some impressive macroeconomic achievements in the first half of last year despite some challenges. In specific terms, the country recorded strong Gross Domestic Product (GDP) growth, single digit inflation, exchange rate stability, capital market recovery and growth in external reserves.

     

  • Banks, telcos fight for mobile money customers

    Banks, telcos fight for mobile money customers

    For the mobile money market,these are not the best of times. The platform which allows mobile phones to be used to send and receive money, buy recharge cards, pay bills, use Point of Sale (PoS) terminals to pay for goods and services, among others, is under threat.

    The telecoms companies (telcos) and banks which are expected to jointly drive the process are working at cross purpose. In other countries, the process could be operator-led model, bank-led model, collaboration model and peer-to-peer model. The Central Bank of Nigeria (CBN) chose the bank-led model in which case a bank deploys mobile payment applications or devices to customers and ensures merchants have the required PoS acceptance capability to carry out the transaction.

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

    The Telcos, have consistently advised the CBN to allow them participate in the regulation of the subsector, but nothing has come out of the demand. The apex bank, which solely regulates the business, has given the Telcos little or no opportunity for control. This model has deprived the business the needed technological and infrastructural backing critical to its success.

    The disagreement has adversely impacted on implementation process of the mobile money platform in the country. General Manager, IBM Africa, Taiwo Otiti, said strategy being adopted by the key stakeholders is stifling the success of mobile money operation in the country.

    Speaking during an interview with The Nation, he said: “The approach we have taken in mobile money is the challenge. We have over 30 million unbanked, compared with over 100 million mobile phone users, the guys who are unbanked, they may have mobile phones, but how would you get them into the financial system. You must be able to get into his lifestyle for you to be able to get him subscribe to mobile money scheme. But many of the stakeholders are doing that”.

    Otiti said the getting the mobile money scheme running requires both the payment and supply chain properly defined and implemented by the stakeholders. He said there is need for a paradigm shift that sees all the stakeholders working together. “The telcos can’t also do without the banks, so also are the banks. It is only by collaboration, will the mobile money project begin the deliver the needed results,” he said.

    He said the stakeholders should not think of who owns the customer, but focus on products and services that can attract more customers into the scheme because nobody owns the customer. “Nobody owns the customer. What is important is collaboration that ensures that end-user gets what he wants. We need to see mobile money in terms of what the customer can get and use in improving his lifestyles,” he said.

    CBN Governor Sanusi Lamido Sanusi said regulation of the telecom sector is not within the apex bank’s control, making it difficult for it to guide mobile money operations under the telco-led model being advocated by the operators.

    Sanusi, who spoke at the 2013 risk management conference in Lagos, said the risk involved in mobile money operations are so high that regulation has to be closely implemented. He said the CBN does not control what the telcos are doing, unlike in the existing bank-led model where it provides the operating guidelines.

    He said mobile money operators are being encouraged to increase access to financial services through mobile phones that are either directly linked to a bank account or use of mobile wallets as intermediary virtual money accounts.

    Experts insist that the current regime of mobile money regulation, which is being bank-driven, is not friendly to telecoms companies who provide the mobile payment platform. They said that though there was a lot that telecoms companies could contribute in a cashless economy, their current mandate was limiting.

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

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

    Analysts also think that telecom companies should be allowed to speak about the capabilities of their networks, the quality of user experience and the choice of mobile payment services available on their networks.

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

    The CBN said over the next few years, the focus of the regulator will be to strengthen the institutional and regulatory frameworks to achieve improved financial inclusion. The application of mobile technology for financial services especially in rural areas will ensure that a large percentage of the population outside the formal banking system would have access to financial services using one of the three models of card-based, account-based and virtual account.

    CBN statistics showed that only 26 million Nigerians own a bank account out of a population of 167 million populations. With telecoms subscriber base put at about 120 million by the Nigerian Communications Commission (NCC), there are indeed limitless opportunities for the country to achieve financial inclusion by bringing the large numbers of the unbanked to the banking sector through mobile money,” he said.

    The Executive Vice-Chairman of NCC, Eugene Juwah, said critical success factors for mobile payment in the country are the integrity and security of the end-to-end transition during a payment transaction process. He said the chain of transaction must be secured from initiation to authentication. Therefore, confidentiality and integrity of the data transition are critical factors in mobile payment.

    Razak Olaegbe, a mobile money analyst said Telcos are licensed to offer telecoms services and not banking services. According to him, the decision was made because the CBN does not regulate telcos and if the telcos are allowed to lead mobile money, it will mean putting two critical segments of Nigeria’s economy in the hands of a few companies. This, they believe, portends great risk for the country.

    World Bank said the global remittance market has grown rapidly over the past decade. In 2010, remittances through official channels amounted to $440 billion, of which, developing countries received an estimated $325 billion. The majority of these transactions are still cash-to-cash transactions, but the share of digital transactions is steadily increasing.

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

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

    Managing Director, Mobile Money Africa, Mr Emmanuel Okogwale, agrees that there are still challenges. According to him, most of the companies licensed to do mobile payment are yet to have accredited agents who will reside in urban, semi-urban and rural areas. He argued that without well trained mobile money agents, the implementation would not be seamless as agents with the requisite tools and handsets are the infrastructure needed to deliver the money to the customers.

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

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

    Also, Stanbic IBTC Bank has reiterated its commitment to financial inclusion by empowering its mobile money customers. The bank said in a statement that it has partnered with Mobile Media InfoTech Limited (MMIT), a mobile software development company, to assist the youths and small business owners who do not have credit cards, to pay for goods through their mobile money wallets online.

    The bank said its mobile money wallets customers will be able to shop on foreign online sites like Amazon, Android store, Playstation and other gaming sites. “They will be given the option of making cardless payments through their mobile money wallets; and with this option, any customer with a smart phone will be able to make purchases on these online sites regardless of where they reside in Nigeria,” it said.

    Head of E-Business at Stanbic IBTC Bank, Thabo Makoko, described the partnership as another step towards financial inclusion for persons who are usually not able to shop online because they do not have credit cards.

    He said: “Mobile payments have taken a new turn in Nigeria and being inconvenienced or excluded from participating in the digital economy is a result of one’s inability to produce credit or debit card details for online payments.

    “We want to provide more opportunities for the under-banked in every part of Nigeria, especially the small business owners; and we want to be known as the financial service partner that opens doors for our customers; empowering them to grow their businesses and lives.

    “Removing the barriers to participating in the digital economy, the online shopping process for small business owners, youths and the under banked will greatly reduce barriers to success in acquiring tools to improve lives.”

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

     

  • ‘Why banks are reluctant to lend’

    Banks are still hunted by mistakes of 2007 when they gave out a lot of non-performing and delinquent loans that triggered the global financial crisis, report by Renaissance Capital (RenCap) has said.

    In a report released yesterday tagged: “Global emerging and frontier markets: Which markets can boom?” RenCap said such fears have made it difficult for the lenders to increase their loans.

    It said despite those mistakes, there are needs for banks to improve on their lending to offer significant support to equity prices. It said the banks need to lend enough to offer significant support to equity prices.

    According to the investment and research firm, banks having lent 14 per cent of Gross Domestic Product (GDP) in 2007, have suffered and have been cautious ever since. It predicted a modest rise in nominal growth from 13 per cent as at last year, to 16 per cent this year. “We expect a modest uptick in nominal growth, from 14 per cent in 2013 and 16 per cent in 2014,” it said.

    According to the report, the growth index suggests the main bid for equities will continue to come from rapidly rising local pension fund money and frontier cash. “In the first quarter of 2014, and perhaps the entire first half of 2014, we see Nigeria outperforming Kenya, due to movements by frontier investors,” the report said.

    RenCap said Nigeria’s rising weight in the Morgan Stanley Capital International (MSCI) index, up from 14 per cent now to 20 per cent in May 2014, is one factor behind this, adding that assumption of naira stability remains critical.

    It said analysis of debt cycles shows that credit booms have tended to drive equity returns. “Conceptually, we think this makes sense, as credit booms have tended to coincide with accelerating economic activity, periods of low interest rates and strong corporate earnings,” it said.

    Continuing, the report said the magnitude of the credit expansion is key especially when credit is growing faster than GDP is expanding; there is a greater opportunity for equity and other assets to perform well.

    Put simply, excess growth of credit tends to spill over into asset prices, including property and equity and can eventually trigger inflation. “Nigeria, Mexico and Turkey also have a somewhat supportive credit-growth trend although Turkish credit growth and pricing are increasingly dependent on the availability of funding,” it said.

  • CBN: banks facing ‘cash crisis’

    CBN: banks facing ‘cash crisis’

    Some of the 23 banks are having cash crisis, according to the Central Bank of Nigeria (CBN) investigation.

    A Capital Adequacy Ratio (CAR) audit of the banks by CBN showed that some have “high level of liquidity crisis”.

    The report showed that only 16 banks have CAR above 15 per cent; five have CAR above 10 per cent, but less than 15 per cent. Also, an analysis of the report showed that a bank’s CAR is below 10 per cent but greater than five per cent. Another one’s CAR was below five per cent.

    The report said the minimum ratio of capital to total risk-weighted assets shall remain 10 per cent for Regional and National Banks and International Banks, 15 per cent.

    According to the CBN Monetary, Credit, Foreign Trade and Exchange Policy Guidelines for 2012 -2013, the banks’lenders should maintain a higher level of capital commensurate with their risk profile.

    The Financial Stability report showed that after a careful study of the liquidity stress test conducted on the banks at the end of June, last year, the CBN mandated them to carry out internal CAR audit at least once yearly to ascertain their liquidity positions. The results showed that the industry liquidity ratio fell to 16.7 and 13.3 per cent after the respective five-day and cumulative 30-day shocks were applied, from the pre-shock position of 67.8 per cent.

    “The banking industry solvency stress test assessed the resilience of the industry based on historical worst case and hypothetical strained macroeconomic situations. The overall banking industry was resilient to liquidity shocks, though a few banks were found to be vulnerable.

    “The diagnostic study earlier commissioned by the CBN to examine the Nigerian financial system, taking into account specific tools required in the light of international developments since the 2007 crisis, was completed in the period under review,” it said.

    The report suggested the enhancement of existing supervisory tools and institutional arrangements based on three major components, namely: macro-prudential policy; micro-prudential policy, and crisis management, necessary for the achievement of financial stability in the country.

    “Henceforth, banks are required to carry out their Internal Capital Adequacy Assessment Process (ICAAP) on an annual basis, as at December 31, and forward copies of the report to the CBN for review,” CBN Director Banking Supervision, Mrs Tokunbo Martins said.

    According to her, the full adoption of Basel Accords will be executed by June but preliminary works would start this month. The Basel Accord is a financial analysis principle expected to give banks’ financials better credibility.

    She said the policies specified approaches for quantifying the risk weighted assets for credit risk, market risk and operational risk for the purpose of determining regulatory capital.

    According to her, the computations are meant to ensure that banks have sufficient high quality capital to support their risk taking activities. The lenders, she said, are also expected to establish effective risk management systems commensurate with their level of operations.

    She said all banks and banking institutions are expected to adopt the basic approaches for the computation of capital requirements for credit risk, market risk and operational risk, adding that the adoption of the Standardised Approach for Operational Risk and other sophisticated approaches will however be subject to the approval of the apex bank.

    “The guidance notes are applicable to all banks and banking groups licensed to operate in Nigeria and should be applied on a solo as well as a consolidated basis. The minimum capital requirement is retained at 10 per cent and 15 per cent for local and internationally active banks,” she said.

    She said banks are reminded of the importance of comprehensive risk management policies and processes that effectively identify, measure, monitor and control their risk exposures in addition to having appropriate board and senior management oversight.

    Associate, Africa Equity International Sales at Renaissance Capital, Akintola, Akinbamidele, said efficient and liquid banks such as GTBank can adapt and have good balance sheets, while banks with high CAR like Zenith, United Bank for Africa may emerge net placers on the interbank market.

     

  • CBN unveils IT standards for banks

    CBN unveils IT standards for banks

    The Central Bank of Nigeria (CBN) says it has released Information Technology (IT) standards to commercial banks to ensure quality service delivery in the banking system.

    In a circular to all banks last Thursday, the CBN said that the standards were in pursuant to the need to identify and adopt global IT standards for Nigerian banks.

    It said that the standards would serve as reference points to ensure quality IT service delivery through Infrastructure Transformation programme

    The circular added that the blueprints for the standards and the framework had been defined and released for adoption pending the completion and launch of the Bankers’ Committee IT Standards Portal.

    The apex bank said that the IT Standard Council would be reconstituted after two years and would drive the adoption, implementation and compliance to IT standards in the banking industry.

    The circular said that the compliance audit would begin at the end of the prescribed periods as indicated on the implementation roadmap.

    It said that the baseline assessment for ‘priority 1’ standards should be carried out in banks in first quart

  • ‘Banks advance loans more to small women-owned business owners than men’

    In Africa, small women-owned business owners find it easier to obtain loans than their male counterparts. The reason for this distortion is that politicians and foreign aid organisations with their focus on bank loans for women encourage African banks to base their credit availability on gender. Contrary to intentions, there is thus a risk of inhibiting growth in the private sector, conclude researchers from the University of Copenhagen in the new study.

    The share of women-owned companies is lower in Africa than elsewhere in the world. However, African women establishing themselves as small company entrepreneurs have higher chances of obtaining bank loans than similar businesses run by men. On the other hand, male African corporate leaders tend to be favoured in terms of obtaining loans for medium-sized companies. These are the findings of researchers from the University of Copenhagen, who have analysed prospects for growth in the lending of African banks. The findings have just been published in the scientific journal Development Studies.

    The survey specifically shows that there is a six percentage point higher chance of small women-owned small businesses obtaining loans than if the businesses have male owners. The opposite is true for large companies with more than 50 employees, where there is a difference of more than six percentage points higher probability of women owners being denied loans compared to men.

    “African women generally have less favourable terms than African men in many aspects of life – also when it comes to the possibility of starting up businesses. However, in relation to obtaining bank loans for running small businesses, men seem to be the ones discriminated against. The reason for this is that African banks receive funding from donor organisations such as Danida to support women business owners. Therefore, the African banks tend to provide loans to women rather than men, even though men may have better investment projects and business ideas, says Henrik Hansen, professor at the Department of Economics, who together with John Rand, professor at the Department of Food and Resource Economics, has headed the research.

    The researchers looked at data collected by the World Bank from 4,838 businesses in 16 African countries south of the Sahara. Among other things, the World Bank asked the businesses about the gender of the owner, their annual sales, whether they have a bank loan, etc. From the figures, the researchers were able to ascertain that small women-owned companies have the same productivity and capacity utilisation as companies owned by men, while their profit rate is actually lower. They can therefore conclude that there is no immediate reason to favour loans to women owners.

    “In the hope of stimulating growth in the African private sector, humanitarian aid organisations such as Danida support the banks to enable them to extend loans for investing in and running businesses. However, when the organisations give banks the green light to make it easier for women than for men to borrow instead of focusing on the nature of the business idea, they run the risk of, at worst, inhibiting growth, “said John Rand.

    “ Our analyses of the figures from the World Bank show that women-owned companies do not perform better, which could prompt us to ask whether it would not be better to focus on viable business concepts rather than gender to boost growth in the African private sector – in particular if the funding is to fuel growth. Our research does not conclude anything about the derived effects of better bank loans for women business owners, e.g. whether favouring women pays because then they will make sure that their children get an education and better health as African women are responsible for the children,” said Henrik Hansen.

    • Courtesy of Finance African

    Brains Wikimedia

  • Banks get marching orders on money laundering

    The Central Bank of Nigeria (CBN) has reviewed its Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) plans.

    In a letter to all banks and other financial institutions, CBN directed that money laundering issues be reported to its AML/CFT Division in its Banking Supervision and Other Financial Institutions Supervision Departments.

    This, it said, followed the establishment of the AML/CFT division in those departments.

    The letter titled: ‘Re: Rendition of AML/CFT Returns to CBN’ was signed by Duniya Y.B., on behalf of the Director, Financial Policy and Regulation Department, CBN.

    “Following the establishment of AML/CFT Division in Banking Supervision Department (BSD) and Other Financial Institutions Supervision Department (OFISD) of the Central Bank of Nigeria (CBN), the AML/CFT off-site activities (hitherto carried out by its Financial Policy Regulation Department –FPRD) will now be undertaken by these departments. With effect from January 31, 2014, all deposit money banks, merchant banks and discount houses are required to render their AML/CFT returns to BSD while other financial institutions should render same to OFISD,” it said.

    The Financial Action Task Force (FATF) had in October, last year, removed Nigeria from the list of countries identified as jurisdictions with significant deficiencies in their AML/CFT regimes.

    The body said Nigeria had taken the right steps including the establishment of legal and regulatory framework that will assist it meet its anti-money laundering initiatives.

    “The FATF welcomes Nigeria’s significant progress in improving its AML/CFT regime and notes that Nigeria has established the legal and regulatory framework to meet its commitments in its Action Plan regarding the strategic deficiencies that the FATF had identified in February 2010. Nigeria is, therefore, no longer subject to FATF’s monitoring process under its on-going global AML/CFT compliance process,” it said.

     

  • ‘Why banks should invest in Nigerian entrepreneurs’

    ‘Why banks should invest in Nigerian entrepreneurs’

    He started his foray in business 15 years ago by trading in rice and sugar. Today, as managing director of Gran Imperio Group, Adeyeye Ogun-wusi is carving a niche for himself in the real estate sector. In this interview with Joe Agbro Jr., he speaks on his beginnings, the challenges of running a real estate company and his recent project, Inagbe Grand Resorts and Leisure, a first-of-its kind resort in Nigeria.

    He would not raise his voice as the interview began in his office. In fact, he admitted to being press-shy. But as the banter progressed, he gradually became animated, talking about what he likes doing most – business.

    “I was selling rice and sugar,” he said of his entrepreneurial journey which began in Ibadan in 1996 where he grew up. “And I did that for a lot of companies.” He also traded in vegetable oil and some of those companies were the Dangote Group and Patience Multidynamics. After doing this actively for two years and putting passion in it, he said, “I was very prominent in the market in Ibadan.”

    He then trained his sights on Lagos where he started trading in cement and iron rods. “When we started that,” he said, “it gave me a lot of insight into the real estate development because the rate at which we consumed rice and sugar in Nigeria dovetailed into the rate at which we consume iron rods and cement as well.”

    He started in-depth training on Engineering Procurement and Construction (EPC). And in 2000, after being armed with knowledge of how real estate development can be done, he started the development arm of the company. Getting the right people and companies, he quickly immersed in the real estate business.

    “I learnt very fast working with a lot of people,” he said. “I like to work with a lot of people, companies, a lot of entrepreneurs.”

    This, he said, made him “realise we have a lot of housing deficit in this country.” And rather than see that as a problem, he viewed it as a challenge.

    Though, Ogunwusi studied accountancy at The Polytechnic, Ibadan, his entrepreneurial smack would not allow him search for a job as an accountant.

    “I’ve always believed in setting up industries because that is the main-stay of the growth of any economy.”

    Over the years, he had involved himself with some Indians, to research the setting up of an iron rod factory in Ikorodu as well as steel rolling mills in Otta. He was also involved in the setting up of the biggest Lead and Aluminium recycling plant in Nigeria.

    “In fact, during the resuscitation of Ajaokuta steel Company, I worked with a couple of Indian companies to see how it could be resuscitated,” he said. “I like to take tall challenges because I believe very strongly and very passionately in this country and what this country stands for in terms of our industrial base.”

    He then decided to set up on his own after working with a lot of people. He then set up a company called Howard Roark with a partner five years ago.

    “The company is now a spin-off company for Gran Imperio Group because that was where started from,” he said. “Gran Imperio Group is less than a year old.”

    With Gran Imperio Group in place, Ogunwusi collapsed other ventures together, making the company a one-stop real estate development and construction management company.

    The construction management bit, Gran Imperio Projects Limited, according to Ogunwusi, “is versatile because we have expertise in different areas.”

    And under this company are companies that produce doors, tiles, blocks, and stones. “In short, our focus is to have a construction management company that has a strong value chain.”

    Hence, ranging the different gamut of construction, Gran Imperio has its hands in nearly every aspect of thee industry. “What we don’t have are the areas that are capital intensive. We don’t have a cement plant, so obviously we have to go to the likes of Dangote and Burham to buy.” He also said the steel sector is something they also buy.

    “But we have a wood processing factory,” he said. “Any other thing, we have them and we produce locally in Gran Imperio Group.”

    “Nigeria is a blessed nation. By virtue of our research, we’ve been able to see that we have so much in this country. A lot of companies, I would implore, should spend more time on research and development.”

    “At some point in time, any inferior products was said to be made in Taiwan.”

    According to him, Gran Imperio focuses on labour-intensive ventures “because we’re very focused on providing a lot of employment to Nigerians.”

    At the moment, Ogunwusi says the company has “110 full-time staff” while, during projects, the number of contract staff employed can swell in thousands. “We are like one big family,” he said.

    Some of the properties to his credit in Lekki include Lakeview Park 1 and 2, North Pointe, Midland Courts, and Jacob Mews in Yaba. And some ongoing projects are The Lords’ Estate in Abeokuta in Ogun State, the Golden Leaf Estate in Lekki, West Pointe in Lekki as well as the Oworonshoki Redevelopment.

    And while to many entrepreneurs, capital is major hurdle, Ogunwusi believes it is surmountable if passion is put first in whatever project one embarks on. Though, he does not dismiss the role of capital, he advises that entrepreneurs should not be overwhelmed by not sourcing capital. “In Nigeria, that is what everybody places first,” he said. “You start from somewhere and let people see what you’re doing.”

    Regarding the horde of Nigerians and complaints about not getting funds from the banks, Ogunwusi believes that it is based on historical facts that Nigerian banks hesitate to fund SMEs.

    “For the mere fact that they funded Mr. A and that thing didn’t work, that doesn’t mean you shouldn’t fund Mr. B for the same thing,” he said. “It’s about the person behind the company.”

    “The system is not well structured. And in Nigeria, we are very impatient. We don’t look at things at a long term basis.”

    He said: “In this country, even a stone processing plant can be started with minimum capital base like N200, 000.

    “We have labour in abundance in Nigeria and there are things that can be done with labour that you don’t need to mechanise. So if you focus more on research, there are several ways you can save your cost or call capital to enter a business.

    “Anything you’re doing, focus mainly on research and development. Once, you can do that, instead of you to spend, assuming N5m to start a business, but if you do proper research and development, you can spend less than five hundred thousand (Naira) to start that business. You can. It is for you to first of all to put in your logistics in terms of your nearness to raw materials, in terms of core equipment, if you cannot afford major equipment, what can you improvise to start? First of all, show what you can do. Then later on, it can now be upgraded. So, in this country, we can actually focus on passion and entrepreneurial developments, capital can now start to come in.”

    He also said the quality of manpower in Nigeria is not at par with global standards yet. “Everybody is in a hurry,” he said. “Unfortunately that is how the system is being wired.”

    “People coming from neighbouring countries like Ghana, Togo, and Benin are more patient. And have the focus that they are coming to do the work, make some money and go back to their country.

    “But we give attention to Nigerians in our company. We like to orientate them (our workers) that look, ‘we’re in this country and this is your country. You must make it work.’”

    As per government succour for SMEs, he says that while the government is still the biggest spender, “we should start thinking beyond government to do anything for us. If private sector is properly empowered, I think it’s best. But I believe strongly, this country will change for good.”

    And when it comes to his mistakes which he prefers to call challenges, Ogunwusi said he has made many – the most monumental being the pulling down of Jacob Mews, an eight storey building his company was building in 2008, because the building was being erected on heterogeneous soil.

    He said: “A land that is heterogeneous is every square metre has different soil profile. So, there is no amount of soil test that you would do that will give you the real result of what you need to do. So, the kind of piling that we needed to do are driven by hydraulic hammers.”

    It is only recently that hammers are being used in the country, he added.

    He said the state and federal government learned from his “costly” project how to tackle landfill lands.

    “We were used as a guinea pig,” he said.

    “It was one of my lowest periods as an entrepreneur.”

    When asked how he copes with land grabbers popularly known as “Omo-Onile” in the southwest, he says, “we’ve had experiences even to the point of death. But the thing is that, ‘don’t run away from your dream and passion.’

    “First of all, we must let them understand the essence of development. Let them understand that you’re not out there to just exploit them. Let them feel the dream.”

    His latest project is Inagbe Grand Resorts and Leisure. Sandwiched between the Lagoon and the Atlantic Ocean, on Inagbe Island in Lagos, the resort is about 15 minutes by speedboat from Victoria Island. Again, preferring to provide employment, Ogunwusi’s team flooded the island; deploying 400 workers made up of largely local inhabitants of the island to work day and night for 90 days. At completion, there will be a golf course, landscaped gardens and walkways, swimming pools, themed water parks, and facilities for other games. Though the eventual dream would take 36 months to unfold, signs of grandeur are sprouting. When completed, the resort will be managed by First Resorts, a South African resort management company and Executive Coach, an indigenous luxury transportation company incorporated in 2005.

    Despite his achievements, Ogunwusi, still refers to himself as an aspiring entrepreneur. He also would not reveal how much has sunk on the project. “You can look at it (the property) yourself,” he said, sweeping expansively at the on-going development. At the unveiling of the first phase early this month, completed were 16 completed chalets, a swimming pool, and the commencement of landscaping around the reception area. And as dusk settles on the shorelines of Inagbe, the lights of the resort shimmer across the water, signposting leisure and the virility of a Nigerian entrepreneur.