The Nation Newspaper

Tag: Banks

  • Banks to submit bids for second Yuan auction

    The Central Bank of Nigeria (CBN) has asked banks to submit bids for the Chinese yuan in line with the regulator’s determination to meet foreign exchange demands at the retail end of the market.

    The second auction of the Asian currency, which will likely take place this week, became exigent after the CBN agreed a swap with the People’s Bank of China in May.

    The CBN sold 69.86 million yuan ($10.16 million) in its first auction of the Chinese currency two weeks ago.

    The regulator bank, in July, launched the sale of foreign exchange in Chinese Yuan (CNY), signalling the consummation of the Nigeria-China Currency Swap Agreement.

    Its acting Director,  Corporate Communications, Isaac Okorafor, said the sale would be done through a combination of Spot and Short Tenored Forwards, adding that the sale would be conducted through a Special Secondary Market Intervention Sales (SMIS) window.

    He explained that the window would be dedicated to the payment of Renminbi Denominated Letters of Credit for raw materials, machinery and agriculture. He said: “Due to the peculiarity of the exercise, the CBN will not be applying the relevant provisions of its Revised Guidelines for the Operation of Inter-Bank Foreign Exchange Market, that is the guidelines which direct that SMIS bids be submitted to CBN through Forex Primary Dealers.

    “The CBN will also not be applying the guidelines, which provide that Spot FX sold to any particular end-user shall not exceed 1 per cent of the overall available funds on offer at each SMIS session.”

    On the bid period, Okorafor said authorised dealers were requested to submit their customers’ bids from 9 a.m. to 12 p.m. on weekdays, adding that any bid received after the stipulated time would be disqualified.

    On funding, he said authorised dealers were to debit the customers’ accounts for the Naira equivalent of their bids. He added that the CBN would debit authorised dealers’ current account on the day of intervention to the tune of the Naira equivalent of their bid request. Okorafor explained that there would be no predetermined spread on the sale of CNY by authorised dealers to end-users under the Special SMIS-Retail window. He said authorised dealers would, however, be allowed to earn 50 kobo on the customers’ bids.

    He advised customers, who are not willing to accept the settlement terms not to participate in the Special SMIS – Retail, adding that Forward Bids would be settled through a multiple-price book building process and would cut-off at a marginal rate to be disclosed after the conclusion of the Special SMIS Retail process.

    He also urged customers  not willing to accept the terms of the forward rate not to participate in the Special Chinese Yuan SMIS Intervention.

    According to Okorafor, the CBN reserved the right not to make a sale if it had the impression that the exercise did not provide effective price for the determination of the CNY to NGN exchange rate.

    The Federal Government on April 27 signed a 2.5-billion-dollar Currency Swap Agreement with the People’s Bank of China. The primary aim is to provide adequate local currency liquidity to Nigerian and Chinese industrialists and assist both countries in their foreign exchange reserves management.

     

  • CBN orders banks to give loans to agric, manufacturers at 9%

    The Central Bank of Nigeria (CBN) will be refunding Cash Reserve Ratio (CRR) to banks that fund projects in agriculture and manufacturing sectors, its Director of Banking Supervision, Abdullahi Ahmad, has said.

    Speaking yesterday at the end of the Bankers’ Committee meeting in Lagos, Ahmad said the outlook for the economy in 2018 is much better than 2017. The CRR is a portion of banks’ deposits kept with the CBN.

    He said the CBN has been very supportive to banks adding that banks should be able to lend to companies that are doing new capital expenditures and expansions to factories using some of their Cash Reserve Ratio (CRR) at nine per cent. These, he added, are not short term loans but long term loans of seven year loans, two year moratorium on principal.

    “It would probably be the first time in the history of this country where manufacturers would be able to take fixed interest rate loans for seven years which means they would be able to plan. The volatility that they fear for all kinds of risks would be taken out and I think these are very laudable steps in improving and growing the economy,” Ahmad said.

    For him, the idea is to have job creating activities in the economy and also to bring interest rate down. Although agric and manufacturing are the initial sectors that are being considered, later on or now, a bank can apply if there is a job creating sector that bank is operating in, it may be considered.

    “We can refund the CRR of a bank that has engaged in lending in a new project or an existing one in the agriculture or manufacturing sector as a way of utilising the CRR. So, anytime a bank lends to manufacturing or agric at the rate the CBN has prescribed, it would have its CRR refunded up to the amount it has lend. The guidelines are coming up any moment from now and once they do it take off,” he said.

    Also speaking, Executive Director, Finance at First City Monument Bank (FCMB) Mrs. Yemisi Edun, said the CRR that is taken from banks would be positively deployed to grow the real sector as well as the agriculture sector in the economy. “This is very positive for the economy and also positive for banks because we would be able to access these funds and earn on it. And because it would be coming at single digit rate, it would be positive for the economy,” she said.

    “For now, it would be channeled to agricultural sector and manufacturing but it for growth expansions enhance creation of jobs. the focus it ensure the economy grow now that we have achieved stability we need to now see a positive trend of growth and that is what we are committed to do at this time,” she said.

    “We have seen stability in the exchange rate being sustained, Gross Domestic Product (GDP) growth higher than 2017 and although there are capital reversals in our capital market, it is a little bit bearish but the fact is that capital outflow in the Nigerian economy is far less compared to many emerging economies is a sign there is high confidence in the Nigeria economy,” Ahmad said.

  • Banks review foreign currency holdings

    Commercial banks are revaluing their foreign currency holdings and paying off debts ahead of timeline as dollar liquidity improves, The Nation has learnt.

    The improvement seen in foreign reserves at $47 billion, regular Central Bank of Nigeria (CBN) foreign exchange interventions, over $51 billion in Investors’ & Exporters’ Forex Window and other foreign capital inflows have all helped to boost banks’ dollar positions and strengthened investors’ confidence in the economy.

    First Bank Nigeria Limited redeemed a $300 million Eurobond before maturity and paid all bondholders. The seven-year bond was issued in 2013 at 8.25 per cent and had been due to be repaid in 2020. The bank announced its intention last month to repay the debt before maturity. It said the redemption had no impact on its capital ratios and that it had built up dollar liquidity over the past year.

    The bank said it did not plan to issue another Eurobond in the near term, because it had ample liquidity to meet its foreign and local currency funding needs.

    Also, a report by Exotic Capital, emerging market investment bank, on GTBank showed the lender enjoys “robust net long dollar position”, which should continue to provide a natural hedge to further exchange rate adjustments.

    The bank’s non-interest revenue for the second quarter of 2018 was boosted by strong foreign exchange trading gains, including N6 billion in forex trading gains compared with N21 million loss in second quarter of 2017 when forex crisis was intense. This, in addition to notable increases in dividend income/recoveries, net fee income and foreign currency revaluation gains put the lender in good position.

    The CBN, in the communique released after the last Monetary Policy Committee (MPC) meeting, acknowledged the progress made in recent times in stabilizing the foreign exchange market and anchoring inflation expectation lower.

    It said supportive external account condition – stable oil prices, rising current account surplus and external reserves – which empirical studies have emphasised to be the major anchor of monetary policy all point to improvement in the foreign currency positions for the economy and banks.

    Nigerian banks cut lending last year due to weak economic growth and foreign currency risk. However, several of them are eyeing loan growth this year, citing economic improvements and especially as the CBN introduces liquidity to the banking sector targeting credit to manufacturers.

    The foreign exchange reserves currently at $47 billion have continued to ensure that the naira remains stable at the official and parallel markets.

    The naira exchanges at N361 to dollar in the parallel market and N305.6 in the official market, and has remained at that rate since April, last year after the CBN resumed foreign exchange interventions in the market.

    The Exotic Capital report said although the level of reserves was still significantly below the record high of $64 billion recorded in August 2008, it is nearly double the low of $24 billion recorded in October 2016, increasing by more than $22 billion in a mere 15 months.

    “We have written extensively on Nigeria’s multiple exchange rate system and will abstain from further discussion at present, suffice to say that a fairly valued naira at N360 to dollar combined with high domestic rates has led to a tremendous increase in the level of gross foreign reserves held at the CBN,” it said.

    “With reserves at their current levels, it is easy to imagine the MPC being in a position where it could afford to cut as it is less dependent on attracting dollar inflows than it has been to both build reserves and stabilise the naira,” it said.

    A similar report by FBN Capital, titled: “Towards the $50 billion threshold, and counting”, said the rapid accumulation of $15.96 billion over 12 months is due to two sizeable Eurobond launches, a small diaspora bond issue, the recovery in oil export revenues (through the Nigeria National Petroleum Corporation’s share of production and, more recently, the steady bid by the CBN at the I&E Forex window.

    “We should stress that the data are gross and mask the swap transactions the CBN has entered into with local banks. The steady bid by the CBN has been seen variously as a response to the softening of demand for forex by importers and other economic actors, and as a move to contain naira appreciation,” the FBN Capital said.

  • Banks, ex-CEOs indicted as N720b cash disappears

    NHIS audit uncovers how funds were stolen through curious investments

    THERE is the N720 billion “invested” by the National Health Insurance Scheme (NHIS) in 12 years?

    Nobody seems to have an answer. Not even NHIS boss  Prof. Usman Yusuf, The Nation has learnt.

    He said the “investments” had no approvals of successive Ministers of Health, past boards of the NHIS and the Office of the Accountant-General of the Federation (OAGF).

    He said billions were lost to diversion and under-payment of interest.

    Banks, former Executive Secretaries, select management staff and interest groups were all neck-deep in the scandal, Yusuf alleged.

    According to the NHIS Executive Secretary/Chief Executive Officer, there is no trace yet of the N720billion.

    Yusuf opened the lid on the corrupt practices in NHIS in a power-point presentation to the agency’s Governing Council in response to a query by the board.

    He said when he discovered the scandal, he engaged forensic accountants to get to the root of the matter.

    The Nation had exclusively reported that a team raised by the Federal Government  discovered  that over N138billion of the NHIS cash was trapped in 17 banks, financial companies and individuals’ pockets from January 2011 to date.

    In a memo to the Executive Secretary, the Chairman of the Governing Council of NHIS, Dr. Enyantu lfenne, asked him to “clear these concerns(trapped funds and Forensic Audit)  and guide Council on the way forward.”

    In his response to the query, the Executive Secretary said the rot in the NHIS was unimaginable.

    He said: “Over N720billion of NHIS funds were “invested” over 12 years. No approvals from Minister, Board or Office of the Accountant-General of the Federation(OAGF).

    “There was no transparency. In the deals were the Chief Executive Officers, banks and other interest groups. Billions of Naira were lost to diversion and underpayment of interest.

    “The Executive Secretaries and select management staff were all neck deep in this.”

    The Executive Secretary gave insights into the rot he inherited in NHIS and the dispute over forensic audit of the finances/ investments of the agency.

    He added: “When I resumed in August 1, 2016, I could not ascertain the state of the finances of the Scheme. My preliminary findings from the review of financial records were shocking to say the least.

    “I was unable to ascertain how much of the Scheme’s funds was with commercial banks, for how long and at what rate of return.

    “It was unclear to me how much of the Scheme’s money was still with commercial banks before TSA and how much was transferred to TSA.

    “The audited accounts of the Scheme for years ended 31st December 2011 to 2016 were in arrears and had not been signed by the previous CEOs.

    “In view of all these anomalies and to bring transparency in the finances of the Scheme on December 21st 2016, I engaged the services of professional accounting firm Messrs. Sofura Professional Services to carry out a forensic review of the Scheme’s accounting system and banking transactions.

    “Their scope of work included reconciliation of all NHIS current and investment accounts held with commercial banks, reconciliation of NHIS TSA with the CBN.

    “Upon their engagement, I called a meeting of NHIS Management made up of all heads of departments and introduced the firm and its partners and the  work they have been engaged to do.

    “After the meeting, the firm began its work reviewing documents and interacting with relevant staff. I was briefed regularly by the firm on the progress of the work.

    “As part of the work, I wrote letters to commercial banks requesting and mandating them to give them all necessary cooperation relating to their engagement.

    “Terms of their engagement were clearly spelt out in their letter of engagement; (I) An annual engagement fee of N2, 300,000.00 per annum for retainership and;

    ”Reimbursable expenses and fees for each specific service undertaken for the Scheme as may be agreed upon by both parties from time to time will be paid on submission of evidence for payment to the Scheme at the end of each assignment.

    “I am pleased to report that this is the first time in the 13-year history of the NHIS that a forensic audit has been undertaken in the operation of the Scheme including a review of the records of the Finance & Accounts, Contribution Management, Audit and Procurement Departments.

    “Following my resumption from suspension on February 6, 2018, I became aware of the  engagement of Aruna Bawa & Co. by the office of the Attorney General of the Federation to carry out an audit and recovery of NHIS funds held by financial institutions, Companies and individuals into the Federal Government’s treasury.

    “The information on the basis of which Aruna Bawa & Co. sought to recover NHIS funds is a product of work that I, as the CEO of NHIS,  commissioned by engaging Messrs Sofura Professional Services.

    “It is noteworthy that  Bawa the principal partner of Aruna Bawa & Co. worked for Sofura professional Services on this assignment.

    “In the course of the work, I knew Mr Aruna Bawa as a member of the Sofura team. NHIS has never had any contractual agreement with Mr Bawa or his firm.

    “On March 5, 2018, I wrote a letter to the Attorney-General of the Federation (AGF) asking him to cancel the engagement of  Aruna Bawa and his firm as it was based on misrepresentation and that NHIS has no contractual agreement with him.

    “I visited the NHIS Council Chairman at her home after inauguration of the board and told her about the issue and that I had written a letter to the AGF asking him to cancel Mr Bawa’s engagement.

    “The Chairman suggested I should see the AGF and personally brief him which I promptly did.

    “I have been receiving letters from banks asking me to confirm if Bawa is representing the Scheme.

    “I have written to the AGF asking him to write to him and all the institutions he had introduced him.

    ”Messrs Sofura Professional Services is the only legitimate firm that the Scheme has a valid contract with and have been working since engagement.

    “In fact, I authorized them to meet with the CBN team yesterday to explain their work at the request of the CBN team which they gave me an update on.

    ”Apparently, Bawa has been going to the Chairman’s house with bags of documents telling her that I and Messrs Sofura Professional Partners have ulterior motives in our quest to recover NHIS funds, hence the Chairman’s “query”.

    The NHIS Executive Secretary also explained why he attended the 71st World Health Assembly in Geneva, Switzerland from May 21 to 26.

    He said the trip was not a jamboree as being insinuated in some quarters.

    He said: “The World Health Assembly is an annual event by Ministers of Health from member nations.

    “Nigeria’s delegation included the Minister of State for Health(HMSH) as the  leader and heads of Agencies under the Federal Ministry of Health(FMoH).

    “The theme of the Assembly this year was Universal Healthcare Coverage (UHC). As a signatory to the Commitment to UHC, Nigeria’s delegation was ably represented by the

    NHIS which is the lead Agency in Nigeria’s drive to UHC.

    “With the commitment of President Muhammadu Buhari’s government to fund the Basic Health Care Provision Fund (BHCPF) for the first time since the passing of the National Health Act, the NHIS will receive N275bn to cover vulnerable Nigerians across all geopolitical zones.

    All our development partners are very excited for our government’s political will.

    “The World Bank and Gates Foundation have already committed an initial $20m into the fund.

    “NHIS delegation of only five was grossly inadequate considering the multiple presentations on UHC, Healthcare financing, Equity in Health care, Resource mobilization, aggregation of fragmented pools etc.”

    The Governing Council of NHIS was yet to take action on the submissions of the Executive Secretary and response to its query as at the time of filing this report.

  • IMF: rising risks constrain lending by banks

    The International Monetary Fund (IMF) has said the risk associated with lending is limiting the volume of loans being granted by banks.

    The view was among the preliminary findings by the IMF Staff at the end of their visit to Nigeria.

    The IMF staff team led by Amine Mati, Senior Resident Representative and Mission Chief for Nigeria, visited Nigeria from June 27 to July 9, this year to discuss recent economic and financial developments, update macroeconomic projections, and review reform implementation.

    At the end of the visit, Mati issued the following statement: “Higher oil prices and short-term portfolio inflows have provided relief from external and fiscal pressures but the recovery remains challenging. International reserves remained stable at about $47 billion, supported by some convergence in existing foreign exchange windows, and despite some reversal of foreign inflows since April. Inflation declined to its lowest level in more than two years. Real GDP expanded by two per cent in the first quarter of 2018 compared to the first quarter of last year. However, activity in the non-oil non-agricultural sector remains weak as lower purchasing power weighs on consumer demand and as credit risk continues to limit bank lending.

    “A coherent set of policies to reduce vulnerabilities and increase growth remains urgent. This includes specific and sustainable measures to increase the currently low tax revenue—including through avoiding new tax exemptions — and ensuring budget targets are adhered to even in an election year. This process should be supported by keeping monetary policy tight through appropriate monetary policy tools that will help contain inflationary pressures and support a move towards a uniform market-determined exchange rate. Moving ahead with structural reforms is needed to invigorate inclusive growth, particularly in the power sector where faster progress would be needed to ensure financing shortfalls in the sector are met in a sustainable manner.

    He said that: “Corporate tax collection efforts improved but revenue shortfalls and the late adoption of the 2018 budget impede its implementation. Revenue from higher oil prices is limited by net losses from retail fuel sales while non-oil revenue remains below expectations, with yields from tax administration measures—including the Voluntary Asset Income Declaration Scheme (VAID) and increased tax audits—yet to fully materialize. Current spending remains in line with expectations. Carryover from 2017 to 2018 helped increase capital spending in the first four months of 2018, despite delayed approval of the 2018 budget. Lower yields have kept interest payments within the budgeted envelope, but the Federal Government’s interest-to-revenue ratio is expected to absorb more than half of revenues this year.

    Continuing, he said reforms to improve the business environment are progressing, including through identification of priority investment projects and the adoption of the Company and Allied Matters Act (CAMA)—a legislative landmark for private sector development. The implementation of the Power Sector Recovery Plan is advancing through a mini-grid policy, and regulations on eligible customers and meter asset providers.

    “Under current policies, the outlook remains challenging. Growth would pick up to about 2 percent in 2018, weighed down by lower than expected oil production and relatively weak agriculture growth. The fiscal deficit would narrow slightly, with higher oil revenues offsetting increased spending, including those planned in a supplementary budget. Inflation would pick up in the second half of 2018 as base effects dissipate and higher spending and supply constraints in agriculture put pressure on prices. Increased oil exports would keep the current account in surplus, helping stabilize gross international reserves even if the current pace of foreign portfolio outflows continues,” Mati said.

     

     

     

    “The team held productive discussions with senior government and central bank officials. It also met with representatives of the banking system, the private sector, civil society, and international development partners. The team wishes to thank the authorities and all those with whom they met for the productive discussions, excellent cooperation, and warm hospitality.”

     

  • The marriage between value proposition and distruptive fintech innovation: The key to deepening financial inclusion in Nigeria

    Financial inclusion as a challenge is a mysterious concept. Experts agree that there is a pressing problem that needs immediate solution. Scary numbers are thrown about. Two billion people are excluded globally and a whole lot more are underbanked, lacking access to the suite of financial services they need to live, do business and thrive. There is a consensus that the current traditional banking system; driven by the brick and mortar infrastructures and underpinned by their legacy platforms holds little value for the excluded who at worst lack financial literacy, are innumerate and could do with a financial system that is affordable, simple, flexible, agile and solves more problems than it creates.

    In Nigeria, the problem is acute and The Central Bank, the Nigerian Communications Commission and other stakeholders have been very active. They have charted roadmaps, sponsored seminars, undertaken researches and has held numerous meetings as they seek to chart a formidable financial inclusion roadmap.

    However, whenever the stakeholders gather in their air-conditioned rooms, clad in three piece suits, colourful ties and squeaky clean shoes, they exchange ideas, make resolutions, formulate policies and launch products that adds no value in the quest to deepen financial inclusion in Nigeria.

    In such confusing sessions, some banks will show off their latest Artificial Intelligence programme that will replace Bank Tellers. Some will launch their Crowdfunding platform, others will start an impressive tirade on how Machine Learning and Big Data will revolutionize financial services. At the end of the session, thunderous applauses will ring out and yet the smallholder farmer, deep inside Mashegu in Niger State, Baruten in Kwara, Yala in Cross River or Otuocha in Anambra State is forgotten. The stakeholders will retire for tea or lunch and at the end of the day enter their big cars to their massive offices in Abuja or Lagos while congratulating themselves.

    The truth is that the financial inclusion challenges bedeviling Nigeria is wildly different from the one confronting Canada and United Kingdom. In developed economies, the demography is different. The literacy levels are higher, there are increased access to critical infrastructures like good roads and network services due to industrialization. Therefore the higher standard of living means that mobile penetration are optimal. These are the countries that should be launching financial inclusion services through products that leverages Machine Learning, Cloud Computing, Artificial Intelligence or even Internet of Things.

    Not Nigeria.

    There is a discomforting disconnection between the excluded and the Nigerian financial services system. The disconnection is in value proposition. It is the gap between what the butcher in Tangazza, Sokoto needs and what The CEO of a Nigerian Bank is delivering. The Butcher wants a payment system that will enable him deposit money and withdraw conveniently. The butcher would want the ability to process transactions offline securely. The CEO is offering him that finds it difficult to utilize his basic phone, an artificial intelligence powered chatbot that will assist him with paying bills, trading stocks and buying airtime. These suites of products is a mismatch. The system places the cart before the horse. In this case, the tail wags the dog.

    The system knows precisely what the financially excluded needs. At least they know that a robust, effective proposition accounts for a customer’s pain points and proposes a product that will address them. Therefore, when a bank states that they expect their Artificial Intelligence and Machine Learning platform to spearhead their financial inclusion quest, it reveals a disconnect. That should not be the purpose and certainly, without mincing words, chatbots and cloud computing has nothing to offer the excluded in Nigeria especially when we confront the realities of their demography. The excluded are either illiterate or semi-literate, despite mobile phone penetration ranked high at 84% in Nigeria according to the Nigerian Communications Commission, a lot of the excluded lack access to mobile phones and their locations often lack access to mobile network services. Indeed, the NCC has been confronting this issue headlong but has made incremental progress at best. Mobile network is a critical requirement for the basic mobile money offerings that rides on USSD. According to an article published by Business Insider, The number of Smartphone users in Nigeria stands at 97 million. This figure is impressive until one considers the demography of the users and its spread. Further still, a juxtaposition with the population of the country, touted at 180 million people reveals that only roughly half of the population have smartphones. Smartphones are usually clustered in the cities and often concentrated in the hands of the middle class who can afford to own two or three smartphones.

    So maybe the mobile phone might not replicate its MPesa utility in Nigeria. Particularly, I believe that the payment system that will deepen financial inclusion in Nigeria measurably is the system that simplifies transaction, give consumers decisive powers over their accounts while sparing them from the irrelevant processes. That system will be underpropped by a strong agency network. A customer in remote locations should be able to replicate the basic banking scenarios at an Agent Location. She/He should be able to present an ID, thumbprint or input a PIN to withdraw or deposit from her account. A basic, low-end phone equipped with calls and text messaging capacity costs averagely between $10 – $20. This is costly, especially when About 152 million Nigerians live on less than $2 a day, representing about 80 per cent of the country’s estimated 190 million population (Africa Development Bank). In sharp contrast, an ID card costs less than a dollar and the government can provide that free of charge. That could be a veritable payment tool and will not take too much thought.

    The problem seems to be a lack of will. Nigerian entrepreneurs are incredibly smart. They have seen the opportunity in the sector. Foreign Direct Investment into innovations or products targeting financial inclusion in the past 5 years is already above $20m. There is an entire unserved segment of the market to capture and the potential return on investments far outweigh the risks. At the danger of sounding crude, there is money to be made by striving to include the excluded. The stakes are about over 70 million new customers. According to EFINA, billions of Naira circulate through the informal sector (Informal sector according to EFINA is anyone who do not have any banked or formal other products, but have access to or use only informal services and products eg. Esusu/Ajo) which could be a source of resource mobilization resulting in a positive impact on Nigeria’s economic growth and development. Their earlier Access to Financial Services in Nigeria 2014 survey revealed that 25.5 million adults save at home; if for illustration, just 50.0% of these adults were to save N1,000 per month in the formal sector, then up to N153 billion could be mobilised annually, this indicates there is a significantly large un-tapped market for formal savings products which is sufficient data for CEOs of Financial Institutions could craft a business strategy around.

    Does it mean that our business development experts and corporate strategists are not seeing this palpable need and opportunity to reach the excluded through a deliberate disruption of the financial system driven by innovative financial technology and a strong value proposition? Are we victims of a self-imposed glass ceiling that advises a one-size fits all strategy to solving the exclusion puzzle? Must it be either Mobile Money or the highway?

    Some FinTech organizations have started looking at the possibilities of leveraging disruptive processes and technologies towards driving the inclusion of the unbanked. Launching QR based payment platforms that can enable beneficiaries access their accounts at remote locations ID cards, NFC payment technologies and Biometric-based payments models, layered on top of an innovative agency network and management model, Fortis Mobile Money has emerged as a partner of choice for both The Federal Government and International Non-Governmental Organizations. The organization wields a most critical understanding of the base of the pyramid propositions and has included offline options for their cash transfer programs. Digital Finance for Rural Agricultural Development (DIFRAD) which was also launched to wide publicity found an innovative way to fund smallholder farmers and has currently channeled funding to fifty farmers who has farmed six hectares of rice in Kaduna by partnering with banks and cooperative organizations.

    Suffice to note that these drives were established in partnership with Banks, Microfinance Banks, Cooperative Societies and Payment Terminal Service providers because the organization is running on a mobile money license from The Central Bank of Nigeria.

    There is a war. A war of will. The will to innovate. To create something new.

    Regulators are willing to entertain innovations from the private sectors and have expressed a willingness to run an agile system that will protect consumers’ interest and still allow innovation to have expression.

    The only thing holding us back is a stubborn refusal to give consumers what they are asking for. The Bible cites that as wickedness, for “which of you fathers, if your son asks for a fish, will give him a snake instead?”  

    In business, that is no way to get results.

    Pius Okwuanya is a Digital Finance Professional with avid interest in FinTech innovation and disruption.

     

  • President seeks stronger partnership with banks on infrastructure

    President Muhammadu Buhari yesterday called for stronger partnership with lending banks to reduce the nation’s infrastructure deficit.

    He also assured of his administration’s full commitment to implement all agreements.

    The President spoke while receiving the Board of African Export and Import Bank (AFREXIM), led by Dr Benedict Okey, at the Presidential Villa, Abuja.

    A statement by the Senior Special Assistant on Media and publicity, Garba Shehu, quoted the President as saying that the Federal Government would keep “knocking on the doors’’ of the banks to participate more in building infrastructure and developing the real sector.

    “We are grateful for the much you are doing for us, but we will continue to knock on your doors for more and more as we strive to overcome our infrastructure deficit.

    “We realise that we do need money to fix the appalling state of infrastructure we met; to do roads, railways, power and communications – a sector now mostly in private hands which is doing very well.

    “Don’t be tired of us. We will be coming to you again and again.  Please accommodate us,’’ the President told the Board of AFREXIM.” he said

    President Buhari said the nation already faced a challenge of fixing and putting in place long delayed infrastructure and will need strong partnerships for quick and better results.

    The President said it was an honour for Nigeria to host AFREXIM’s Annual General Meeting and 25thAnniversary in Abuja.

    President and Chairman of AFREXIM Board of Directors, Dr. Oramah, expressed satisfaction with the support of the Nigerian government in the operations of the bank, noting that the bank’s confidence in Nigeria justifies the huge loans it had granted to the country.

    He said the 20,000 participants attending the Annual General Meeting had already expressed their satisfaction with the quality of arrangements for the event, which includes security.

  • Banks stop cash withdrawal from overseas ATMs

    Banks have suspended all cash withdrawals from overseas Automated Teller Machines (ATMs), except for customers whose cards are linked to domiciliary accounts funded locally, The Nation has learnt.

    Banks have been encouraging travellers to open and fund dollar accounts, which aside having no spending limits, provide them the flexibility to spend at all times.

    The lenders are also raising their card spending limits on Point of Sale (PoS) and online card transactions abroad, an indication of increased dollar liquidity and rising exchange rate stability.

    Guaranty Trust Bank (GTBank) and First City Monument Bank (FCMB) at the weekend raised their monthly card spending limit on overseas PoS and online transactions from $1,000 to $3,000 and around $2,000 to $5,000.

    GTBank informed its customers of the increase via email. “We would like to inform you that our monthly spending limit on your GTBank Naira MasterCard has been reviewed to $3,000 from $1,000 for your international online and PoS transactions. Kindly note that international ATM cash withdrawal is still restricted,” it said.

    “Clothing, shoes, electronics, books…whatever your needs are FCMB Naira Debit Card gives you instant full access to $5,000 monthly to shop online”, FCMB said in an email sent to its customers at the weekend.

    GT Bank had nearly two years ago during the height of the dollar scarcity limited monthly transactions on PoS and online transactions using cards to $100, British Pounds Sterling 90, Euro 130 and Canadian Dollar 360. The prevailing dollar scarcity at that time made it difficult for travellers to pay their hotel bills and make reservations and other transactions using their debit cards.

    Many banks which announced the suspension of their overseas ATM card services in October 2016 have all lifted the suspension and raised monthly transaction volumes for customers on foreign currency-denominated deals, including those conducted on PoS machines and online.

    The dynamics changed in April last year when the Central Bank of Nigeria (CBN) introduced the Investors’ & Exporters’ (I&E) Forex window which has so far attracted over $53.9 billion to the economy. The dollar inflows have helped to strengthen the naira against the greenback and brought stability to the forex market.

    Financial analysts at Afrinvest West Africa said stability in the forex market followed the increased volume of forex interventions and the coming of I&E FX window, which allows for flexibility in pricing of forex as well as efficiency and transparency in allocation.

    For instance, in the first half of 2018, transactions in the I&E Forex window stood at $30 billion, surpassing the $23.9 billion total turnover recorded in 2017 and bringing the overall transactions to $53.9 billion. Although the CBN’s participation is estimated at 30 per cent of the transactions in the window, the increased level of participation to some extent underscores the flexibility of the market as well as investors’ preference of the I&E as the platform for Forex deals.

    According to an Afrinvest report titled: “Nigerian economy and financial market H1:2018 review’ released at the weekend, the investment and research firm, said Nigeria’s economic recovery path had been reinforced by the sustained stability in oil prices with four consecutive quarters (since second quarter of 2017) of positive, slow but steady growth.

    It, however, said economic activities slowed in the first half of this year, given the delayed passage and implementation of the 2018 “Budget of Consolidation”, a major limiting factor in the drive towards implementing the Federal Government’s Economic Recovery and Growth Plan (ERGP) – the fiscal paper drafted to address some of the deep-rooted structural imbalances in the economy.

    “In addition, food supply disruptions resulting from the current security crises – which in turn fuelled inflationary pressures – coupled with tighter monetary stance of the CBN towards stabilising the currency market, contributed to the slow growth rate reported. Nonetheless, the domestic macroeconomic performance has been largely satisfactory on the back of persistent disinflation, rising oil prices and external reserves, increased foreign exchange liquidity with frequency of interventions, improved total capital flows into the country and favourable balance of trade,” the report said.

    It said the rise in oil prices impacted positively on Nigeria’s foreign reserves, rising 22.7 per cent to $47.6 billion on June 13, 2018 from $38.8 billion on December 29, 2017.

    Consequently, the CBN maintained its exchange rate peg with the naira appreciating to N305.80/$1 (June 2018) from N306/$1 (December 2017) in the official window while the stability and liquidity in the foreign exchange market improved as seen in the growing confidence by investors in the I&E Forex window in the first half of this year relative to fiscal year 2017.

    The forex window has largely removed the pressures from the parallel market rate which now, sometimes, trades at a discount to the Nigerian Autonomous Foreign Exchange (NAFEX) rate.

    Also, Renaissance Capital’s (RenCap’s) Sub-Saharan Africa (SSA) Economist, Yvonne Mhango, predicted that the naira would end the year at N356 to dollar in the parallel market. RenCap is a leading frontier market research and investment firm based in many countries, including Nigeria. The local currency exchanges around N360/$ in the parallel market.

    In a report titled: “Nigeria: First Quarter 2018 Current Account – surplus swells” ,  she said Nigeria’s current account (CA) surplus increased to 4.6 per cent of Gross Domestic Product -GDP (annualised) in first quarter against 3.3 per cent in first quarter of last year.

    “This was in part due to strong export growth of 44 per cent year-on-year in first quarter against 31 per cent in first quarter of last year. That said, imports are also recovering; they grew by the fastest rate since 2014. A one-third increase in current transfers (remittances) helped mitigate a strong increase in income outflows and payments to foreign service providers. We revise our 2018 CA/GDP forecast up slightly to 3.4 per cent, from 3.3 per cent previously. This supports naira stability and our year forecast is N356/$1,” she said.

  • CBN to banks: Don’t take fees on transactions you initiate

    The Central Bank of Nigeria (CBN) has directed commercial banks not to charge fees on transactions initiated by them.

    Speaking at the Meet The Executive forum, organised by Finance Correspondents Association of Nigeria (FICAN) in Lagos, CBN Director, Banking & Payment Systems Department, ‘Dipo Fatokun, said bank-induced transactions should not be charged on customers’ accounts.

    The CBN also directed the banks to resolve disputes arising from use of Unstructured Supplementary Service Data (USSD) channel within three days.

    Fatokun said such resolution would help build more confidence in the payment system and bring more people into the financial services net.

    He said some provisions of the regulatory framework for USSD, such as the authentication measures for transactions, International Mobile Subscriber Identity (IMSI), Date of SIM Swap, Date of Device change, International Mobile Equipment Identity (IMEI), among others, were to make the channel more effective.

    Represented by the Assistant Director, Banking & Payments System Department, Taiwo Oladimeji, he said maximum USSD transaction limit remained N100,000 per customer per day, adding that any amount above that requires the customer to execute indemnity at the bank.

    Speaking on: Half-Year Review of Developments in the E-Payment Industry and Customer Protection, Fatokun said: “USSD transactions above N20,000 require two-factor authentication (2FA). No USSD financial service should be activated for customer unless the deactivation mechanism is put in place with effect from October, 2018. In addition, the CBN is currently working to properly structure and formalise the sandbox arrangement in Nigeria by collaborating with some infrastructure providers like the Nigeria Interbank Settlement System (NIBSS) to interact with FinTechs.”

    Fatokun said the financial system was undergoing transformation through technology, adding that it was not only peculiar to the financial services sector, but all sectors of human endeavours.

    “We are seeing new operators with technology savvy, more efficient models, and collaborations among new entrants as well as established participants in payments systems in ways that exhibit regulatory challenges. To meet up with the challenges, some countries have adopted regulatory sandbox approach which is not totally novel to the CBN. We are however working to properly structure and formalise the sandbox arrangement in Nigeria by collaborating with some infrastructure providers to interact with FinTechs,” he said.

    He said a well-functioning National Payments System (NPS) was crucial to the financial sector development as it increases confidence in the financial sector by ensuring a credible, reliable and efficient payment system. He said in recent years, the payment landscape has experienced a lot of innovation, bursting with enterprise and reaching the unbanked and undeserved.

    Speaking further, he said consumer protection involved a whole range of laws, policies, structures, actions and behaviours designed to protect consumers from the abuse and exploitation of service providers.

    “Consumer protection is critical in improving access and usage of financial products and services;  ensures that increase access and usage of financial services, translate into benefits for the economy and individuals; helps protect consumers from probable market abuse and exploitation; helps con-sumers benefit from well informed decisions; helps consumers appreciate how best to use and manage financial products and services,” he said.

     

  • Banks lift economy with sustainable regulations

    Commercial banks, Discount Houses and Development Finance Institutions (DFIs) are showing commitment to a directive by the Central Bank of Nigeria (CBN) on the implementation of the Nigerian Sustainable Banking Principles (NSBP). The NSBP rule is to make the banks look beyond profitability and project funding to boost economic growth but to protect the environment, writes COLLINS NWEZE.

    It is now business unusual in commercial banks, discount houses and Development Finance Institutions (DFIs).

    The guidelines aimed at integrating environmental and social policies into decision-making processes have been rolled out by the Central Bank of Nigeria (CBN) to guide their operations. They (guidelines) are contained in the Nigerian Sustainable Banking Principles (NSBP).

    The apex bank said that trends in international business reporting take account of the impact of business on the environment and the socio-economic risks affecting business concerns.

    According to the regulator, sustainability reporting allows organisational measure, understand and communicate their environmental, social and governance performances.

    Although the reporting system has gained currency and acceptance globally, only a few local banks and organisations encourage sustainability practices in their reports.

    Central Bank of Nigeria (CBN) Governor Godwin Emefiele said the apex bank will continue to renew its commitments towards the implementation of the NSBP and the achievements of the United Nation’s (UN) Sustainable Development Goals (SDGs) and the Paris Climate Change Agreement because a reduction in plastic use will bring about reductions in greenhouse gas emissions and carbon footprint.

    As one of the lenders, Access Bank Plc has expressed its belief in the implementation of NSBP.

    The bank’s Group Managing Director/Chief Executive Officer, Herbert Wigwe, said the lender defines sustainability as providing innovative solutions to support global efforts in addressing social, environmental and economic challenges.

    Wigwe expressed his bank’s determination to create meaningful impact around the world and its subsidiaries by increasing awareness of best sustainable practices that can be implemented within its operational areas.

    He listed profit, planet and people as the pillars in which corporate sustainability are entrenched, explained that the pillars have been embedded into how the bank carries out its operations.

    The bank chief said: “This comes with a vision to be the most sustainable and respected bank in Africa, financing and facilitating brighter futures for all of our stakeholders through innovative services and best in class operations.”

    He said the lender has in line with the sustainability practices, continued to develop simpler and smarter products and services with relevance to Nigerians, not losing focus of its vision to be the world’s most respected African bank.

    Wigwe restated Access Bank’s determination to set standards for sustainable business practices capable of bringing out the best out of employees, deliver superior value to customers and provide innovative solutions for the markets and communities it serves.

    The bank’s sustainability footprints are grouped into four units- economic development; environmental responsibility; sustaining societies; collaborations & partnerships.

    At a recent launch of Nigeria’s Green Bond market development programme in Lagos, the Group Deputy Managing Director, Access Bank, Roosevelt Ogbonna said: “Our strategy, together with a solid corporate governance structure, has enabled Access Bank to retain its leadership position, contributing significantly to the economic growth of Nigeria and the broader African continent.

    “We recognise that a better and prosperous future is linked to the well-being and health of our planet. Thus, the protection of the environment is relevant to us.

    “This encourages us to continue to invest in innovative technologies and techniques that promote the efficient use of resources and address sustainability issues when managing risk.

    “We continue to impact lives positively and responsibly in communities across Africa. Through this, we are able to continually contribute to the socio-economic development of these communities and help to achieve the new Sustainable Development Goals (SDGs).

    “Over the years, our areas of focus in community investment have included gender equality, women empowerment, entrepreneurship, leadership, education, health, arts, and sports.”

    The launch was one of the major events that took place during the Green Bonds Week, which drew local and international stakeholders in Lagos to discuss the impact of climate risk on investment portfolios, the role of regulators in developing the local market and growing green bond issuance.

    Lagos State Governor Akinwunmi Ambode told his audience at the launch that the initiative would present profitable investment opportunities to stakeholders and investors, adding that the finance would help to reduce greenhouse emission and mitigate harsh effects of climate change in the Centre of Excellence.

    Represented by his deputy Mrs. Oluranti Adebule, the governor assured that his administration would take maximum advantage of the opportunity embedded in the Green Bond Market to reverse the harsh trends of climate change.

    He expressed optimism that the Green Bond will enhance the execution of projects to mitigate the effects of climate change in Lagos, while asserting that the success achieved during the N10.69 billion Green Bond issued by the Federal Government last year was a testimony to the fact that Climate Bond investment is a viable option for promoting sustainable growth in the environment.

    Climate Bonds Director of Market Development Justine Leigh-Bell said: “The Nigeria Green Bonds Market Development Programme is a big step towards unlocking the full potential for domestic issuance while developing a pipeline of green investment opportunities and engaging with local and international investors. We are excited about the future in the region.”

    The sustainable projects covered under the Green Bond proghamme are: renewable energy, energy efficiency, sustainable waste management, sustainable land use (forestry and agriculture), biodiversity, clean transportation and clean water. Their structure, risk and returns are otherwise identical to those of traditional bonds

    Officials of Access Bank said they benchmark the bank’s performance against the nine NSBP and produce at least annually, a public Equator Principles report, on transactions that have reached Financial Close and on its Equator Principles implementation processes and experience.

     

    Other banks’ contributions

     

    Diamond Bank’s Managing Director/Chief Executive Officer Uzoma Dozie described the bank’s investment and focus on the Micro Small and Medium Enterprises (MSMEs) segment as strategic and predictive.

    In his view, the future of sustainable banking in Nigeria is retail, therefore it is necessary to grow and consolidate its strength in the segment.

    Managing Director Development Bank of Nigeria (DBN), Tony Okpanachi, said the bank’s operation in addition to its mandate, seeks to achieve the NSBP, where financial inclusion ranks high, as well as the UN SDGs and also in line with the Economic Recovery and Growth Plan (ERGP) of the Federal Government.

    The First Bank of Nigeria Ltd, a member of FBN Holdings Plc, has also initiated its Corporate Responsibility and Sustainability (CR&S) Week in over 3,000 secondary schools across the country to improve financial literacy and inclusion among students.

    The scheme, which involves career counseling session, is part of activities marking the second edition of the bank’s CR&S Week for the year.

    Speaking at Yaba College of Technology Secondary School, Managing Director, Adesola Adeduntan said the week-long event was the bank’s brand promise to always put stakeholders’ needs first.

    Adeduntan said the event was being commemorated across its business communities in Nigeria, United Kingdom (UK), Democratic Republic of Congo, Ghana, The Gambia, Guinea, Sierra-Leone and Senegal.

    He said the initiative was to reinforce the bank’s role in driving sustainable development in its host communities.  Adeduntan stated that the 2018 Corporate Responsibility and Sustainability week would amplify the bank’s ‘Employee Giving and Volunteering Scheme’ to create sustainable impact, touch lives and make our societies a better place to live.

    Counseling the pupils, he said: “Professional life is rewarding but it always comes with continuous improvement and investment.”

    Adeduntan called on the pupils to always align their interests and passion with their capabilities in career decision as well as personal brand.

    He said: “Even though you think you are young but we believe this is the period you should begin to build your personal brand. You need to be creative, innovative and more especially collaborative as collaboration is very important if you want to grow in career. Whoever you are, the ability to collaborate and communicate is very important.”

    Adeduntan assured the pupils that the bank would continue to invest its time and services to develop the youths as better leaders of tomorrow.

    He said: “At First Bank it’s not just about profitability, it’s also about having an impact on the environment in which you operate and that is our trademark and that is what we have done for the past 124 years. And that is what we would continue to do going forward.”

    First City Monument Bank (FCMB) also said its commitment to environmental protection and sustainability remains a core pillar of its CSR focus.

    The bank said its business and operations are designed to ensure that it lends responsibly, promotes financial inclusion, encourages diversity, adheres to health and safety standards, and reduces (or totally avoids where possible) negative impact on the environment.

    “A high-point of the bank’s environmental sustainability is its ability to identify and innovatively devise means of converting challenges posed by the environment to opportunities,” the bank said.

    The FCMB further said it has been participating in the activities marking the World Environment Day (WED) over the years.

    During the commemoration of the day in 2015, the bank collaborated with the Nigeria Conservation Foundation (NCF) in organising programmes to raise awareness on the need to protect the environment.

     

    Sustainable banking milestones

     

    Every year, one per cent of the Access Bank’s profit before tax is allocated to sustainability initiatives incorporating environmental, social and governance (ESG) rating as part of lending criteria. It has introduced a financial inclusion strategy and developed a USSD platform as fallout to bring the unbanked population into the financial system.

    The bank’s efforts in this regard over the past few years, Wigwe added, has resulted in improvement in environmental footprints.

    For instance, waste reduction initiatives form a key part of the bank’s cost-reduction strategy.

    The Save Paper initiative launched across several business locations was aimed at cutting printing paper use by 50 per cent while N1.4 billion has been invested in capacity building for female employees of the bank who are now happier and better committed to delivering excellent services.

    In terms of gender balance, the bank said its board composition is above the CBN regulation of 30 per cent. It carried out early branch closure policy to cut down electricity costs and introduced employee volunteering scheme to provide employees with a platform for giving back to the society.

    The bank has also created an inclusive and empowering environment for its employees through various initiatives. One of such initiatives is the introduction of sustainability as a part of the ‘W initiative’ targeted at Women Empowerment, whereby it has educated 55,000 women, through the W Academy.

    Sustainability, according to the lender, has been embedded in its culture as it has included it as part of assessment in the performance evaluation process of employees.

    On economic development, Access Bank introduced ‘Beta Mama Beta Pikin’ to promote savings culture amongst the lower band of society whilst providing an opportunity for mothers and their children to gain access to health insurance.

    The bank has supported 30 hospitals through the Hospital Facility Upgrade Support Scheme (HFUSS) and launched “N1 billion Access Nolly Fund”, a new and innovative financial service aimed at improving and providing solutions for the movie industry.

    On environmental responsibility, its efforts have improved the environmental footprints.

    It resulted in 63.4 per cent reduction of emissions from electricity, 16. 7 per cent reduction in emissions from petrol across Nigeria; led to 28.8 per cent reduction in emissions from diesel across Nigeria as validated by the NSBP.

    The bank’s sustainability footprints have also led to 24.9 per cent reduction in diesel usage from early shutdown policy since June 2017, even as it has introduced over 413 solar-powered Automated Teller Machines (ATMs).

    “Our Ogunlana Drive branch is fully powered by solar energy with no connection to the national grid we have four solar-powered branches, 311 branches powered by hybrid of alternative energy sources and national grid and we have LED lightings in all our facilities nationwide,” Ogbonna said.

    On sustaining societies in Africa, the lender said that through strategic investments in communities, it has in the last few years impacted 853 communities, 20,071,453 beneficiaries and 358 Non-Governmental Organisations (NGOs).

     

    Partnerships and disclosures

     

    To underscore the importance of collaborative efforts in achieving the SDGs, Access Bank and the FMDQ securities market recently formalised partnership with the Financial Sector Deepening Africa and Climate Bonds Initiative United Kingdom. The aim is to revolutionise the Nigerian Debt Capital Markets (DCM) into properly- functioning and globally -competitive market.

    The bank won multiple awards. They included: the Sustainability, Enterprise and Responsibility Awards (SERAs), and another awards for “Best Company in Climate Action”.

     

    CBN/NDIC’s roles

     

    The CBN and Nigeria Deposit Insurance Corporation (NDIC) want banks to shift focus from profitability alone and consider also other issues around sustainability, before lending.

    NDIC’s Managing Director Umaru Ibrahim said that banks should ensure that activities of companies that pollute the environment are not financed. He said the United Nations Environment Programme (UNEP), through its UNEP Financial Initiative on the Environment and Sustainable Development at the Earth Summit in 1992, placed it as pertinent concern for financial systems across the world.