The Nation Newspaper

Tag: cbn

  • Banks’ bad loans hit N856.9b, says report

    Banks’ bad loans hit N856.9b, says report

    Banks’ assets have depreciated in the last two years, with provisions for Non Performing Loans (NPLs) hitting N856.9 billion, a financial market report has said.
    The report by the investment and research firm Afrinvest West Africa Plc was released yesterday. It said provisioning for the NPLs, which rose 3.1 times from N280.4 billion in December 2014 to N856.9 billion last August, trimmed qualifying capital for mid to small-sized banks. The high concentration of forex denominated loans has nominally increased risk weighted assets following pressure on forex rate, it said.
    The report titled: “The Nigerian Economy and Financial Market 2016 Review and 2017 Outlook: Reform or be Relegated”, attributed the rise in NPL to foreign exchange (forex) crisis, low oil prices, which fell below trend production volumes and tight monetary policy, which plunged the economy into recession while the asset quality of banks has sharply deteriorated.
    These, the report said, were at the heart of a slow-burning solvency and liquidity crisis in the financial sector.
    It said the NPL ratio increased from 2.9 per cent in 2014 to 11.7 per cent as of June 2016, with the forecast it could rise to 12.1 per cent as at December 2016. The pressured portfolios of the banks include upstream oil and gas, general commerce, manufacturing and power sectors, which account for 48.1 per cent of total industry loan book.
    The report also said FBN Holdings, Diamond Bank Plc, Heritage Bank Limited, First City Monument Bank Limited, Union Bank of Nigeria Plc, Unity Bank of Nigeria Plc and Skye Bank Plc would either require fresh capital or aggressively capitalise their earnings to stay within prudential limits in the next one year.
    The Capital Adequacy Ratio (CAR) for banks that operate in Nigeria alone is 10 per cent, and is 15 per cent for lenders with offshore subsidiaries and 16 per cent for Systematically Important Banks (SIBs).
    Central Bank of Nigeria (CBN) spokesman Isaac Okorafor said he was yet to receive the report and would not comment. A spokesman of one of the banks said his lender would not source any fresh capital, but would rather capitalize its earnings. He pleaded not to be named.
    The report said: “In our estimation, seven banks- FBN Holdings, Diamond Bank of Nigeria Plc, Heritage Bank Limited, Unity Bank Plc, First City Monument Bank Limited, Skye Bank Plc – would need to raise capital or aggressively capitalise earnings to stay within prudential limits in the next one year.”
    According to the report, access to capital market for debt and equity financing remains tight due to the weak macroeconomic backdrop and investor sentiment even as profitability going forward will also be pressured as banks would be required to adopt International Financial Reporting Standards (IFRS) in reporting impairment charges from 2018.
    It said the new accounting policy is much stiffer in that it forces early recognition of impairments. “We forecast NPL ratio to stay in double-digit in 2017 as the macro pressures persist whilst the delayed but certain adjustment of the currency in 2017 will further increase provisioning cost,” it said.
    It said there were suggestions that regulators were considering another Asset Management Corporation of Nigeria (AMCON)-type bailout to acquire stressed assets, “but we doubt the feasibility of this, given the stretched finances of the federal government, already encumbered balance sheet of the CBN and the public backlash another bailout will generate”.
    The report said the impact of the above factors had put pressure on the CAR of banks across all Tiers with four lenders currently below or at threshold of regulatory limit.
    “To create a soft landing for banks and stabilise the financial system, the Central Bank of Nigeria (CBN) recently issued a regulatory guideline to allow a one-off write-off of already provisioned loans before the mandated one-year period. The CBN also took over a Tier-2 lender, Skye Bank, which fell four percentage points below the mandated CAR limit and below liquidity ratio guidelines.”

    “The management of the bank was changed while the CBN injected N100 billion of liquidity to prevent a run on the bank. We also understand that a sizeable portion of the bank’s oil and gas loans have been restructured and the quality of the portfolio should significantly improve in subsequent months as oil prices rally,” the report said.
    Continuing, it said despite the above situation, it did not believe that risk to financial system stability has materially reduced on account of the level of provisioning, both for restructured and un-restructured assets, is not adequate with Loan Loss Reserve/Non-Performing Loan ratio currently below 50 per cent and at a six-year low.
    The report said Nigeria’s business cycle would be highly dependent on the ability of policy makers to deliver incremental oil output in 2017, restore macroeconomic stability by rebuilding confidence in monetary policy and the administrative side of the forex market structure as well as showing commitments to structural reforms.
    Afrinvest believes that activities in the Nigerian economy in 2017 will be broadly dependent on the Federal Government’s resolve to implement tough but necessary structural reforms in order to recalibrate the economy towards a path of recovery and rebuild confidence in monetary policy.
    Said the report: “We note that oil prices which had hitherto overwhelmingly driven Nigeria’s business cycle will play a reduced role in the medium term. Despite the recent OPEC/Non-OPEC deal to cut production volumes, the balance of oil resources (between conventional low cost-drillers in OPEC countries and increasingly resilient and efficient shale producers) as well as diversification into clean energy in advanced countries suggests that structurally, the era of more than $80.00/b oil is over.”

    It said the short to medium term outlook would be highly dependent on the ability of policy makers to deliver incremental oil output in 2017 while also reviewing the current structure of the currency market. “The 2017 budget, which is broadly optimistic, given current macroeconomic realities, will require the focused commitment of both the Executive and Legislative arms of government in order to get passed into law so that timely implementation can begin to achieve the objective of stimulating economic recovery through increased infrastructure spending,” Afrinvest said.

  • $28.9b reserves: CBN warns against reckless forex spending

    $28.9b reserves: CBN warns against reckless forex spending

    • Retains interest rate at 14%

    With Nigeria’s foreign reserve standing at $28.9 billion, the Central Bank of Nigeria (CBN) has warned against reckless depletion of the kitty.

    Addressing reporters at the end of the bi-monthly Monetary Policy Committee (MPC) meeting in Abuja yesterday, CBN Governor, Godwin Emefiele said the reserves today stands at $28.9 billion. “The fact that we have began to see some accretion to the reserve does not mean we should be reckless,” he warned.

    He said the CBN “will continue with the policy of ensuring that forex is made available to those who are importing raw materials and supporting the agricultural sector but not to those who want to engage in less important sectors of the economy.”

    “It is exciting to see this (rise in foreign resreves) happen. We do not run a floating regime, we run a managed float. What that means is that from time to time we will continue to intervene in the market to ensure that the exchange rate does not go beyond our expectations and those interventions would be to moderate the risk as we deem necessary,” he said.

    Reacting to accusations that the apex bank is keeping multiple exchange rates, the CBN governor appealed to “those who are out there fomenting this bad stories in order to portray the monetary authorities in bad light to please assist us, if they have questions they should please approach us, we would respond to them as appropriate.”

    Emefiele said the allegations of multiple rates is unfortunate and unfair from those with direct access to information in the CBN. “What I had expected is that they would talk to us, I know they know but of course the objectives they’re pursuing is best known to them,” he said.

    He explained the “budget rates are forecast rates which has always been there from history; it is a rate used to determine the budget, we seized the opportunity when the issue of pilgrimage came up last year to explain what happened and you must put yourself in the position of a businessman where you have struck a deal but because the conditions have changed you now pull back and begin to change the conditions. That is an unfair business practice. What happened was that sometime last year the pilgrims commissions (both Christian and Muslim) approached the CBN when the rate was N197/$ and those who were going on pilgrimages started to make payments at N197/$.”

    He added that “they made their full payments in advance of the pilgrimages so when they now wanted to embark on their pilgrimages in July and August, somebody says because market has moved they should pay N300+/$. That would have, on the part of the CBN, been seen to be an unfair business practice just like if the rate had gone down. All other rates operate within the interbank segment and operate within the range.”

    On the recent call by Vice President Yomi Osibajo for both monetary and fiscal authorities to meet on the fate of the naira, the CBN governor stated that “we have been operating flexible exchange rate policy since June 2016 and that document is sound. There may be a few fine tuning in terms of the implementation strategies; we would look at it from time to time but there is nothing wrong with that document and there is nothing wrong with what the CBN is doing at this time to stabilise exchange rate but we will see to it that the currency stabilises at a rate that we consider to be in line with any model that anybody wants to use to determine the price and value of our currency. There is no need for anybody to panic.”

  • Forces against CBN’s 60% forex allocation policy

    Forces against CBN’s 60% forex allocation policy

    To help manufacturers, the Central Bank of Nigeria (CBN) dirceted banks to allocate 60 percent of their foreign exchange to them. But, months after, manufacturers are still running around for forex because of what some call “ineffective monitoring and enforcement” of the policy. Assistant Editor CHIKODI OKEREOCHA reports. 

    It took sustained push by members of the Organised Private Sector (OPS) and others to get the Federal Government to heed the call for a 60 per cent special foreign exchange (forex) allocation window for manufacturers. The intervention was supposed to allow manufacturers fund importation of critical raw materials, plants and machinery not available locally.

    Specifically, it was envisaged that the preferential forex allocation window would help cushion the effects of forex scarcity, which hit real sector operators, particularly import-dependent manufacturing businesses, following the Central Bank of Nigeria’s (CBN’s) policy that restricted importers of 41 items from accessing its official forex market.

    Manufacturers kicked against the policy, describing it  as “obnoxious, superfluous, and ill-conceived”. They argued, for instance, that apart from not being consulted, those who needed the raw materials and products restricted from the forex market as their primary products in the manufacturing process were adversely affected.

    The inclusion of essential raw material input for manufacturing in the CBN import prohibition basket forced many firms to shutdown, leading to massive job losses. So, manufacturers were relieved when the CBN, last August, directed commercial banks and other authorised dealers in the forex market to allocate 60 per cent of their total forex purchases from all sources (interbank inclusive) to them.

    But five months after, manufacturers are still running around for forex The forex scarcity persists, forcing some firms to shut down, relocate to other  countries or scale down their operations. Many of them still complain of inability to access forex to import critical raw materials.

    For instance, Erisco Foods Limited, one of the key players in the tomato paste industry, has since relocated to China, citing lack of forex access. That move alone cost about 1,500 workers, mostly Nigerians, their jobs. Only 40 members of staff are left to run the Nigerian company.

    The company’s President/CEO, Chief Eric Umeofia, lamented: “My business has been deliberately frustrated by the way the CBN has managed forex bidding and allocation. They won’t give us forex to import machinery, machine spare parts and raw materials for processing Nigerian fresh tomatoes into paste in our Lagos factory and they won’t give us approval to use our own money generated from our foreign operations to import our raw materials.”

    Umeofia’s decision to vote with his foot by relocating the manufacturing aspect of his business to China from where finished products would be imported and sold to consumers in Nigeria and other parts of the world was pre-warned.

    The relocation of the $150 million tomato paste processing plant came after the expiration of a 30-day ultimatum he handed down to the Federal Government to compel the CBN to make available enough forex to import raw materials and equipment to keep the plants run profitable.

    Before shutting down the Nigerian plant, with a production capacity of 450, 000 metric tons of tomato paste yearly, Umeofia said the company, which had 22 brands with over 2,000 workers in Nigeria, lost over N3.5 billion in Nigeria. This was partly why he made relocation as his final option.

    “This decision is final and there is no going back on it; nothing will make us come back even in the future because we have found out that we can import tomato paste into Nigeria and still make huge profits,” the obviously embittered and frustrated entrepreneur said, at a briefing in Lagos.

    Umeofia is not alone in his agony over lack of access to forex despite CBN’s 60 per cent preferential forex allocation to manufacturers. Nigerian Textile Manufacturers Association (NTMA) Director-General, Mr. Hamma Kwajaffa, also lamented that no textile manufacturer had accessed forex in spite of the $660 million earmarked for manufacturers at the official interbank market.

    It would be recalled that the CBN, in keeping with its promise to strengthen the real sector by ensuring that 60 per cent of available forex goes to manufacturers, made available $660 million worth of forex to manufacturers through the inter-bank market for the purpose of procuring industrial input.

    The injection of the fund was expected to provide a new lease of life in the manufacturing sub-sector, thereby boosting industrial output and employment. But Kwajaffa said despite this gesture, the textile industry nearly went into extinction due to inability to access foreign exchange for critical raw materials.

    Similarly, May and Baker Managing Director, Mr. Nnamdi Okafor, said manufacturers’ inability to access forex through the interbank had affected industrial production and contributed to inflation. “It’s been a herculean task running any business in Nigeria, especially import-dependent manufacturing business.

    “I can confirm to you that as a company, we have not been able to access official forex allocation in the past six months. In fact, some of the Letters of Credit (LCs) we opened as far back as the fourth quarter of 2015 have not been funded by the banks,” he said.

    Okafor and, indeed, other operators’ outcries over banks’ refusal to fund LCs have been on since June, last year when the apex bank announced the flexible, market-driven forex regime. Manufacturers had hoped that this policy would drive down the exchange rate of the naira to the dollar, spurred economic growth and development, and encouraged more Diaspora remittances, among others.

    But, as it turned out, the new forex policy appeared to have left the real sector operators worse than it met them. For instance, the Apapa branch Chairman of Manufacturers Association of Nigeria (MAN), Mr. Babatunde Odunayo, said manufacturers had lost N500 billion to CBN’s implementation of the flexible forex policy.

    Odunayo, who spoke in Lagos at the Annual General Meeting (AGM) of the branch with the theme: “Economic recession and the future of manufacturing in Nigeria”, said the losses arose from the exchange rate difference between the approved Form ‘Ms’ and LCs before the CBN introduced the new flexible exchange rate system on June 20, last year.

    According to him, the LCs and approved Form Ms were documented at the CBN intervention rate at about N197/US$, but affected manufacturers are now expected to redeem them at the flexible exchange rate of N320/US$.

    “The pricing of related manufactured goods was made at between N197 and N198 to a US dollar at the time the Form Ms was approved and LCs established,” Odunayo said, lamenting: “Unfortunately, this unfolding situation posed a great burden on manufacturers.”

    He added that the huge exchange rate loss of N500 billion, which must now be reflected in manufacturers’ profit and loss accounts, was already leading to factory closures, loss of unemployment and investments in the sector.

     

    Good policy marred by lack of enforcement

    To manufacturers, the CBN’s 60 per cent preferential forex allocation was a ruse. “As far as I am concerned, it hasn’t worked. Our members have not benefited from it… It was something they dangled on our face without substance,” MAN President Dr. Frank Jacobs reportedly said.

    Indeed, findings by The Nation showed that the policy intervention described as revolutionary by some operators might have failed to make any significant impact on manufacturers because of the CBN’s lack of proper monitoring, supervision and enforcement to ensure that banks and other authorised dealers in the forex market comply with the directive.

    “Of course, the challenge, as always, is how to enforce the directive. This is always our default line. Good policies, good intentions, good pronouncements and launching ceremonies, but after that, the Nigerian factor steps in,” former President/CEO, Neimeth International Pharmaceuticals PLC and Managing Consultant, Starteam Consult, Mazi Sam Ohuabunwa, said.

    The industrialist, who spoke at an event organised by the Ikeja branch of MAN, said for the palliative to work, the CBN would have to watch the backs of banks and analyse their monthly returns and publications on forex utilisation.

    Ohuabunwa also said manufacturers also have a role to play. “They (manufacturers) have to set up a mechanism to monitor weekly allocations and provide feedback to the CBN and Nigerians because emergency manufacturers will arise, which will not be entirely bad, if only they will actually manufacture. Industry groups have to authenticate their memberships,” he said.

    He did not stop there. Ohuabunwa also said to eliminate possible abuse by manufacturers , the CBN and banks must ensure that forex allocated is used strictly to import manufacturing input only and not finished goods or diverted to other uses. “We must have a way of assessing the impact of this initiative to be sure it is achieving the intended objective,” he recommended.

    For the immediate past President of National Union of Textile Garment and Tailoring Workers of Nigeria, Comrade Oladele Hunsu, the 60 per cent forex benchmark for manufacturers, ab-initio, should not have been in place if the government was serious to drive Gross Domestic Product (GDP) growth through the real sector, which is economy’s growth engine.

    “Who measures the benchmark,” Hunsu asked, insisting: “Manufacturers must be allowed unfettered access to the CBN official forex window rather than the 60 per cent special forex allocation”. He told The Nation that rather than a piecemeal approach, a holistic review of the nation’s monetary and fiscal policies had become imperative to eliminate ill-conceived ones that are inimical to manufacturing sector’s growth.

  • CBN policies serve best interest of Nigerians, says Emefiele

    CBN policies serve best interest of Nigerians, says Emefiele

    The Governor, Central Bank of Nigeria, Mr Godwin Emefiele has debunked the insinuations in some quarters that policies of the government were meant to benefit few in the society.

    He said instead, the policies were designed to serve the best interest of majority of Nigerians.

    Emefiele, who was responding to concerns raised by a panelist at the Annual Media Trust Dialogue in Abuja yesterday, noted that “policies were put in place to help Nigeria pull through the hard time.”

    He observed that the country found itself in the present situation due to lack of appropriate commitment to economic diversification, especially when the earnings from oil were as high as $140 per barrel.

    He noted that earnings of the government that had risen to  $3.2 billion and fell to about $500 million per month recently.

    According to him, there was also a time when the crude oil price stabilised at $105 per barrel over a period of five years.

    He asked rhetorically: “What did we do with the huge accretion to the reserves then?”

    Emefiele therefore, counseled the critics of the CBN and government policies that “priority will be given to Nigerian masses by managing the limited resources to provide for industrial raw materials, plants and equipment and agricultural inputs in order to create employment and generate wealth.”

    One of the panelists, Atedo Peterside, had raised concern that the foreign exchange policies of the CBN is hurting business interests. The CBN governor responded that policy makers don’t make policies in isolation or designed to hurt the citizenry but with the objectives to improve the life of all concerned not just for a few powerful and rich individuals.     t

  • Fed Govt, CBN to close forex rates’ gaps

    Fed Govt, CBN to close forex rates’ gaps

    Vice-President Yemi Osinbajo yesterday said the Federal Government is in talks with the Central Bank of Nigeria (CBN) to close the foreign exchange (forex)  rates at the official and parallel markets.

    “The gap between the official and parallel market… it isn’t helpful.

    “If you look at economic recovery and growth plan, it is the expectation that this is a conversation we are having with central bank,” Osinbajo was quoted to have said by Reuters while speaking with reporters at the World Economic Forum (WEF) in Davos, Switzerland.

    The vice-president, who was in the Niger Delta on Monday and early yesterday, led the country’s delegation to the forum, where pivotal issues concerning the Nigerian and global economy will be addressed.

    The Special Assistant to Osinbajo on Media and Publicity, LaoluAkande, in a statement, explained that the vice-president would be accompanied by the Special Adviser on Economic Matters to the president, Adeyemi Dipeolu “At the forum, the vice-president will lead a discussion on business in Nigeria, where ministers from the Federal Cabinet who are members of the Nigerian delegation would also feature.

    “The yearly forum, which draws together governmental and business leaders around the world to discuss economic issues and review developments, is normally composed of such panel discussions, country/continent-specific themes and other subjects,” the statement read.

    Aliko Dangote, Africa’s richest man, and Akinwumi Adesina, president of the African Development Bank (AfDB), are also at the forum.

  • CBN to Nigerians: stay away from bitcoin

    CBN to Nigerians: stay away from bitcoin

    The Central Bank of Nigeria (CBN) has warned Nigerians against the use of virtual currencies, including bitcoin, ripples, litecoin.

    In a statement yesterday, CBN said virtual currencies are largely used in terrorism financing and money laundering, considering the anonymity of virtual transactions.

    The statement read:“The attention of bank and other financial institutions is hereby drawn to the above risks and you are required to take the following actions actions pending substantive regulation or decision by the CBN.

    “Ensure that you do not use, hold, trade and/or transact in any way in virtual currencies. Ensure that existing customers that are virtual currency exchangers have effective capital AML/CFT controls that enable them to comply with customer identification, verification and transfer, monitoring requirements.

    “Where banks or other financial institutions are not satisfied with the controls put in place by the virtual currency exchanger/customers, the relationship should be discontinued immediately.

    “Any suspicious transactions by these customers should immediately be reported to the Nigerian Finance Intellignece Unit (NFIU).”

    The apex bank said anyone trading in bitcoin is doing so at his or her own risk.

    “The CBN reiterates that VCs such as bitcoin, ripples, monero, litecoin, dogecion, onecoin, etc., and similar products are not legal tenders in Nigeria.

    “Thus, any bank or institution that transacts in such businesses does so at its own risk.”

    Bitcoin was the best performing currency of the year 2016. It has appreciated from four cents in 2010 to over $1,000 in 2017.

  • N9.8bn entitlements: Ex-bankers sue CBN. NDIC, others

    Over 10, 000 ex-staff of banks have sued the One of those convinced that Nigerians should adopt bitcoins is the Managing Director of the Nigeria Deposit Insurance Corporation (NDIC) and the Central Bank of Nigeria (CBN) over nonpayment of their N9.8billion gratuities 1 years after they were retrenched.

    The former bankers filed a class action suit through the Registered Trustees of the Association of Ex-Staff of Non-Consolidated Banks of Nigeria and all ex-staff of eight banks not consolidated in the banks consolidation exercise at the National Industrial Court, Lagos Judicial Division.

    Also joined in the suit are Ecobank Nigeria Plc, UBA Plc, Skye Bank Plc and Zenith Bank Plc.

    The claimants had instituted the cation on behalf of the ex-staff of eight banks including: Allstates Trust Bank, Assurance Bank, Eagle Bank, Gulf Bank, Hallmark Bank, Liberty Bank, Metrolpolitan Bank and Trade Bank respectively.

    A breakdown of the claimants’ gratuities showed that Allstates and Hallmark Bank both acquired by Ecobank were owed over N7billion.

    Besides, UBA which acquired Gulf Bank, Liberty Bank, Metropolitan Bank and Trade Bank was owing ex-staff of the respective banks over N1.3bn just as Skye Bank and Zenith Banks were owing over N600m and N22million.

    At the inaugural hearing of the suit held at Court 2, presided over by Justice Benedict Kanyip over the weekend, the claimants’ counsel recalled that following the N25billion recapitalisation benchmark set by the apex for banks under the ‘Guidelines and Incentives on Consolidation in the Banking Industry,’ the CBN had assured that those whose employment would be jeopardised as a consequence of the exercise will be paid their due entitlements in line with industry standards and even provided with soft loans to set up their small and medium scale enterprises (SMEs).

    The claimants’ lawyer further averred that even the Act had imposed a duty upon the NDIC to ensure that acquiring banks take up the deposits and other liabilities of the acquired banks, including the terminal benefits of ex-staff.

    Regrettably, the acquiring banks implemented the act in breach by “cherry picking” and left out both the liabilities and staff benefits unattended to.

    Consequently, the claimants according to Omotilewa have had to suffer lots of privations including loss of lives, source of income to mention just a few as a result of the refusal of the defendants to redeem their promise to pay compensation due to them.

    “We’re asking for the terminal benefits of the claimants simply because it is part of their fundamental human rights which should be enforced,” he said.

    Justifying the need for the class action, Magnus Maduka, the chairman of the group, while addressing journalists said it was disheartening to note that over 100 members of the group have faced their untimely death as a result of the inhuman conditions they had been subjected to these past years.

    “We were trying to explore the possibility of not going to court at all these past years believing that the CBN and NDIC and the banks concerned would do the needful. But it does appear that we may have to wait forever and that is why we decided to take the matter before the court to get justice for all the affected parties,” Maduka stressed.

    Justice Kanyip while taking the claimants pleas however observed that the court was not properly served.

    Specifically, Justice Kanyip said the court had no jurisdiction to decide the case because the umbrella body under which they were filing the class action was strictly within the purview of the Corporate and Allied Matters Act (CAMA), which is clearly at variance with the act setting up the NIS Act.

    Meanwhile, the four banks represented by Messrs Olusola Oyebowale, Jenifer Aburime, C.M Omeke and Adekola Isaac Olawoye had raised preliminary objections over irregularity of the suit filed by the claimants just as they argued that it was statute-barred.

    Speaking further, Justice Kanyip said the court could only take the claimants’ pleas on a case-by-case basis and not as a group.

    He therefore moved for the adjournment to April 26th, 2017, since according to him, the face was just for mention.

  • CBN’s Anchor Borrowers Programme berths in Delta

    CBN’s Anchor Borrowers Programme berths in Delta

    More than 30, 000 farmers across the selected enterprises of cassava, oil palm, rice and fisheries have been registered for the Central Bank of Nigeria (CBN) Anchor Borrowers Programme (ABP).

    Delta State Commissioner for Agriculture and Natural Resources Mr. Austin Chikezie, who broke the news in Asaba, the state capital, said the aim was to boost the production of fisheries, cassava, oil palm and rice production under the CBN‘s ABP in the state.

    The commissioner explained that the state policy on agriculture was directed at achieving agricultural growth and development. He said the state government would focus on providing food in excess for local consumption and industrial raw materials for agro-industries, employment and poverty alleviation.

    While noting that the CBN’s ABP would be used as a financial model for small holder farmers in those selected enterprises, Chikezie said about 30,000 farmers have been registered, and that high quality inputs and technical assistance would be provided for the farmers.

    The Commissioner, who emphasised that the scheme was designed to increase production and supply of raw materials to food processors, said through the programme, qualified commodity out growers are assisted to identify an anchor firm (off taker or processor) and supported with loan at nine per cent interest rate to increase their farm holdings in the state.

    Chikezie said for oil palm, the state government had commenced the raising of 220, 000 improved oil palm seedlings for distribution to 250 farmers for cultivation on 500 hectares of oil palm plantations.

    He added that five mini-oil mills have been fabricated and ready for distribution to farmers, and that the mills cost the state government about N115 million to execute. According to him, the oil palm programme will create 100 direct jobs and over 300 indirect jobs in the state.

    “In rice production, plans are on to ensure that rice cultivated in the state meets international standards, even as the state government has approved N51 million to boost its production by ensuring all season farming,” the Commissioner said.

    Similarly, government’s intervention in fisheries, particularly in aquaculture, he said, has yielded results with more than 5,000 being engaged in various clusters across the state through cooperatives societies. Annual fish production has also increased from 15,273 metric tonnes in 2008 to 24, 413 metric tonnes in 2016.

    The state government had last February inaugurated an agricultural marketing coordination committee, with a charge to reform the agriculture sector in the state. The committee would focus on developing the agricultural sector in line with the Governor Ifeanyi Okowa administration’s objectives of economic diversification, food security, self-reliance and prosperity for all.

  • FG applies for banking licence for DBN

    FG applies for banking licence for DBN

    After completing the recruitment of the executive management team of the Development Bank of Nigeria (DBN), the Federal Government has formally applied for the bank’s operational license from the Central Bank of Nigeria (CBN).

    A statement from the Federal Ministry of Finance on Thursday said the DBN will have access to $1.3 billion (N396.5 billion) which has been jointly provided by the World Bank, KfW (German Development Bank), the African Development Bank (AfDB) and the Agence Française de Development (French Development Agency).

    The DBN is also finalising agreements with the European Investment Bank (EIB).

    The ministry said, “The operations of the DBN will not in any way, result in the elimination of the Bank of Industry (BOI), Bank of Agriculture (BOA) or any other existing development bank. The operations of the DBN are clearly distinct from other development banks as it is focused on supporting small businesses defined by size and not by sectors.”

    The DBN, the ministry said will provide loans to all sectors of the economy including, manufacturing, services and other industries not currently served by existing development banks thereby filling an important gap in the provision of finance to Micro, Small and Medium Enterprises (MSMEs).

    As a wholesale bank, the DBN will lend wholesale to Microfinance Banks which will lend medium to long-term loans to MSMEs.

     

  • CBN sells N173b T-Bills, fixed income securities’ yields rise

    CBN sells N173b T-Bills, fixed income securities’ yields rise

    The Central Bank of Nigeria (CBN) has sold N172.85 billion ($550 million) at its first treasury bill (T-Bills) auction of the year with yields unchanged from the previous auction, held on December 21.

    Yields on fixed income securities have been rising in recent months with the CBN mopping up naira liquidity to try to lure back foreign investors who sold naira assets following the plunge in the price of oil, the country’s economic mainstay.

    Fixed income traders said the apex bank auctioned N115.85 billion of one-year debt at a rate of 18.68 per cent, the same as the previous auction.

    The traders said the CBN also sold N35 billion of 91-day paper at 14 per cent and N22 billion of six-month bills at 17.5 per cent, unchanged from the previous auction.

    Subscription at the auction came to N194.12 billion, well up from N42.68 billion at the previous auction.

    T-bills are marketable short-term money market securities that serve the purpose of raising money for the government and also help in monetary policy management of the CBN. The T-bills’ maturities range between three months and a year and would be raised today, according to the CBN.

    The CBN issues treasury bills to raise cash to fund the government budget deficit, help manage banking system liquidity and curb rising inflation.

    The CBN had on August 3, raised N245.18 billion ($773.44 million) worth of T-bills to settle short-term obligations. The CBN issued N45.18 billion in three-month debt, N80 billion of six-month paper and N120 billion of one year bills in a Dutch auction, traders said. Indicative rates for the auction are 16 per cent for three-months, 18 per cent for six-months and 18.5 per cent for one-year bills. The auction’s results will be published the day after the sale.

    The main investors in government securities are mainly pension funds and commercial banks which control more than 60 per cent of the market, followed by insurance funds and a few micro-finance institutions.