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  • IFC, CBN to launch Collateral Registry

    The International Finance Corporation (IFC) is collabo-rating with the Central Bank of Nigeria (CBN) to establish a National Collateral Registry (NCR), IFC’s Project Manager, Ubong Awah, has said.

    Speaking on the sideline at a  workshop on the N220 billion MSME Fund organised by the Bankers’ Committee’s sub-committee on Economic Development, Sustainability & Gender in collaboration with the CBN, Awah said when established, the Registry would help in stabilising micro, small and medium enterprises (MSME) financing and also boost the confidence of local banks in playing active roles in financing the sector. The establishment of the Registry will also assist in minimising the risks associated with MSME financing.

    According to Awah, the MSME sector is an important catalyst for economic growth; therefore, financing the sector requires serious attention.

    He said: “As an organisation, IFC is bringing the experience we have garnered over the years across geographies to bridge the knowledge gaps and lay emphasis on the fact that globally, collateral for MSME is moving away from fixed assets to movable assets; hence, the need to establish a collateral registry for the financial industry. We are excited to partner with the CBN on this initiative.’’

    According to the apex bank, MSMEs are the engine room for economic growth, vehicle for job creation, tools for poverty alleviation and wealth creation for any country’s economy. The Director, Development Finance Department of the CBN, Dr. Mudashiru Olaitan represented by the Assistant Director, MSME Development Fund, Mr. Tobin Jonathan, said the workshop was organised to cross-fertilise ideas and bridge the knowledge about the MSME sector by the lending institution and to also correct the wrong perception of the risky nature of the sector.

    Jonathan further explained that the rejection rate of MSME application by commercial banks is very high, which he said is due to commercial banks’ aversion to risk from MSMEs operators. These risks he noted to include lack of entrepreneurial skills and poor governance structure of most MSMEs; hence, the need for the workshop to enlighten bankers and encourage them more on the need to partner with the CBN on the need to grow the MSME sector.

    In similar vein, the Assistant Director, Development Finance department of the apex bank, Mrs. Amina Umar, said since the N220 billion MSME intervention fund was launched in 2014, the uptake by the Deposit Money Banks had not been encouraging. “There is then the need to interact with SME officers of banks to understand the banks’ challenges in MSME financing,” she said.

    Umar said it is the hope of the CBN that with the workshop, more than 50 per cent of the fund would have been accessed by the end of 2015 in compliance with the target set by the Bankers’ Committee and driven by the Economic Development, Sustainability and Gender chaired by the managing director, Standard Chartered Bank, Mrs. Bola Adesola.

    She said that the deliberations and various presentations at the workshop would now help to increase awareness about the intervention fund, build capacity within the sector, develop innovative MSME financing products and also take advantage of the over 17 million MSMEs within the sector. Other Speakers at the workshop included, Mr. Peter Bamkole, Director, Enterprise Development Centre, Pan Atlantic University, Dr. Kamakhya Singh, CFO, Lapo MicroFinance and Ms. Olabisi Talabi, Entrepreneur and CEO, Centre of Hospitality Studies.

    It would be recalled that that the N220 billion MSME intervention fund was launched by President Goodluck Jonathan in August 2014 to stimulate growth in the sector as a means of strengthening the link between the entrepreneurs and access to financial services.

     

     

     

  • CBN disburses N40b MSMEs’

    The Central Bank of Nigeria (CBN) has disbursed a total of N40.3 billion out of the N220 billion Micro, Small, and Medium Scale Enterprises (MSMEs) fund it inaugurated last year.

    The disbursement of the funds to Deposit Money Banks (DMBs), Microfinance Banks (MfBs) and other stakeholders, falls below the N9.6 trillion financing deficit of this critical sub-sector of the economy.

    Its Head of Relationship Management, MSME Development Finance Department, Tobin Jonathan, who spoke at an MSM forum, said the apex bank is worried by low access to the fund by operators of the sector.

    The N220 billion, he added, is designed to address the gap and unlock the potential of the MSMEs  as an innovative way of improving their access to finance, shoring up their potentials for job creation and enabling them to reduce poverty within the country.

    He said the apex bank is, particularly, worried that since the fund was launched in August last year, stringent conditions attached to accessing it have prevented any segment of the economy targeted by the fund from accessing it.

    He said: “As we speak, N40.3 billion has been disbursed to state governments, commercial banks, MfBs,  financial co-operatives. We have disbursed to 19 state governments, some of them have taken first tranche of N1 billion.”

    He said complaints from the MSME operators suggested that the criteria were too strict and difficult to meet. This he said made the CBN Governor, Godwin Emefiele, to relax the criteria across board to make the funds more accessible.

    He added that the CBN has also addressed all other complaints raised by participating financial institutions including the spread of profit to cover their cost of operations.

    “They can collect the forms at two per cent and give it out at five per cent. So they have seven per cent spread which is good enough. That has encouraged so many of them to begin to apply,” Jonathan said.

    Participants in the fund include Micro, Small and Medium Entrepreneurs, DMBs, MFIs, MfBs, state governments, Federal Ministers, Heads of Government Agencies and Departments, International Development Agencies and captains of industries.

    The guidelines for disbursement showed that a 80:20 ratio for on-lending to micro enterprises and Small and Medium Enterprises (SMEs) and request that 60 per cent of the fund, representing N132 billion, be earmarked for providing financial services to women-owned businesses.

    The banking watchdog said that to ensure that productive sectors of the economy continue to attract more financing necessary for employment creation and diversification of the country’s economic base, a maximum of 10 per cent of the commercial component of the fund will be channeled to trading and commerce.

     

  • Oil, gas entrepreneurs to tap from CBN’s N220b MSME cash

    Oil, gas entrepreneurs to tap from CBN’s N220b MSME cash

    The Federal Govern ment has unveiled an entrepreneurship, empowerment and employment initiate for young Nigerian entrepreneurs in the oil and gas industry.

    To speed up its take off, a window has been opened through the Central Bank of Nigeria (CBN) for qualified young entrepreneurs to access funding from the N220 billion Micro Small Medium Enterprises (MSME) fund.

    This new initiative, under the Youth Empowerment Strategy of Nigeria for the oil and gas sector will be executed through the Nigerian Content and Development Monitoring Board (NCDMB).

    The entrepreneurship, empowerment and employment programme will be manned by an Advisory Team from Annabel Group, that will prepare young Nigerians to become entrepreneurs in the oil and gas industry.

    Under the programme, young registered entrepreneurs would be equipped with training and funding to participate in the oil and gas sector to create jobs remain sustainable and expand globally.

    Speaking at the launch of the youth entrepreneurship scheme in Abuja yesterday, the Minister of Industry, Trade and Investment, Mr. Olusegun Aganga, said the initiative would attract participation from the oil and gas sector of the economy as the government would assist young Nigerians to become Small and Medium Scale Entrepreneurs in the oil and gas sector.

    Addressing the youths gathered at the event, Aganga said: “The greatest asset you have now is your brain and that is where the future is.

    “The power of the youth in economic development is very important today. So any country that does not tap the potential of the youth can’t compete globally.

    “It is important we reinvent ourselves and position our economy for industrialisation and entrepreneurship.”

    The Chief Executive Officer, Annabel Group, Mr. Nicholas Okoye said the initiative is an idea that was borne out of the need to empower Nigerians in the oil and gas industry.

    Annabel’s role in this initiative he said “is that of facilitation by supporting with bankable business ideas. We want to take advantage of the Nigerian Content Development Act by assuring Nigerians to participate in the oil and gas sector to become the next generation of billionaires.”

    “A commitment has been received from the Central Bank of Nigeria that part of the N220 billion MSME fund would be deployed to fund MSMEs in the oil and gas sector through the initiative,” he said.

  • CBN sets N100b capital base for DFIs

    CBN sets N100b capital base for DFIs

    The Central Bank of Nigeria (CBN) has set N100 billion as the minimum capital base for Wholesale Development Financial Institutions (WDFI).

    The guideline for the sector released by the apex bank yesterday said at least N20 billion of the capital shall be paid before grant of Approval in Principle (AiP).

    The CBN also put the minimum capital for Retail Development Finance Institutions (RDFI) at N10 billion and a non-refundable application fee of N100, 000 for RDFI while N250, 000 is for WDFI.

    The CBN expalined that the DFIs were established in order to accelerate the pace of development of the Nigerian economy and the realisation of the key roles of some critical sectors in the process.

    It said the DFIs will provide financial interventions in enterprises in the identified sectors to complement the efforts of banks and other financial institutions (OFIs).

    It explained that due to limited access to long-term and low-interest funds, in addition to other factors, the DFIs have recorded limited success.

    “Consequently, the Federal Government in collaboration with development partners and international financial institutions (IFIs) decided to sponsor the establishment of a WDFI to bridge the gap and to increase the availability and access to finance, in particular, for micro-, small and medium enterprises (MSMEs) being the engine of growth, without excluding Large Enterprises (LEs). The benefits of WDFIs are documented and acknowledged in both developed and emerging markets,” the apex bank said.

  • CBN to disburse 50% of N220b MSMEs’ fund by year-end

    CBN to disburse 50% of N220b MSMEs’ fund by year-end

    The Central Bank of Nigeria (CBN) is targeting 50 per cent disbursement of the N220 billion Micro, Small, and Medium Scale Enterprises (MSMEs) fund by year-end.

    CBN Head of Relationship Management, MSME Development Finance Department, Tobin Jonathan who disclosed this yesterday at an MSME workshop in Lagos, said the apex bank is jolted by operators’ low access to the fund.

    He said that the apex bank is particularly worried that since the fund was launched last August only N40.3 billion has been disbursed to operators because of the stringent conditions attached to accessing the funds.

    He said: “As we speak, N40.3 billion has been disbursed to state governments, commercial banks, Micro Finance banks, and financial Co-operatives. We have disbursed to 19 state governments, some of them have taken first tranche of N1 billion”.

    He disclosed that complaints from the MSME operators suggested that the criteria were too strict and difficult to meet, hence the CBN Governor, Godwin Emefiele decided to relax the criteria across board to make the funds more accessible.

    He added that the CBN has also addressed all other complaints raised by participating financial institutions including the spread of profit to cover their cost of operations.

    “So they can collect the forms at two per cent and give it out at five per cent. So they have seven per cent spread which is good enough. That has encouraged so many of them to begin to apply,” Jonathan said.

    Also, the Project Manager, Financial Infrastructure Project to the CBN, International Finance Corporation (IFC) and a resource person at the workshop, Ubong Awah, said:“We are collaborating with the CBN to establish the National Collateral Registry which will be launched by June”.

    He said it is important as part of effort to stimulate financing to the MSME sector in Nigeria stressing that collateral registry will provide part of the infrastructure for pushing the initiative ahead.

     

  • CBN wants Chief Risk Officers on banks’ board

    CBN wants Chief Risk Officers on banks’ board

    The Central Bank of Nigeria (CBN) is taking steps that would ensure that Chief Risk Officers (CROs) are admitted into banks’ boards as directors.

    Its Director, Risk Management, Folakemi Fatogbe who spoke yesterday at a ‘Solution Jam’ organized by IBM in Lagos, said implementing such decision will make it possible for the CROs to advise the boards appropriately on risks they are taking.

    She said: “By being on the board of these banks, the CROs will be able to speak directly to the board of directors, on risks they are taking and implications for the industry, and they will listen.”

    Fatigbe, who was represented by a Deputy Director, Risk Management , Dr. Dozie Okwuosah , spoke on ‘Operational Risk from Regulatory Point of View’, said the position now is that CROs must be Assistant General Managers in banks, a position that makes it difficult for them to communicate the risks directly to the board.

    She said e-payment fraud is the biggest headache faced by CROs and that needs to be tackled by adopting strong risk management procedures. She also said CROs are working closely with the CBN to address skills gap in the industry, which is making it difficult for them to manage risks.

    He advised lenders to share information on fraud to make it easier for them to control fraud within the industry.

    Fatogbe said as it stands now, not much is done by banks in terms of information sharing on fraud within the industry.

    She advised banks to develop a strategy that would enable them achieve a balanced risk management framework. She said such risk management framework should also go with improved technology. She said although banks were doing well in terms of risk management, more needed to be done.

     

     

  • CBN okays 10-year tenor for N213b electricity stabilisation loan

    CBN okays 10-year tenor for N213b electricity stabilisation loan

    The Central Bank of Nigeria (CBN) has okayed a 10-year tenor for the N213.4 billion Nigerian Electricity Market Stabilisation Facility (CBN-NEMSF).

    Besides, says CBN Director, Financial Policy and Regulation, Kelvin Amugo, the facility would enjoy a 12-month moratorium on the principal amount.

    The facility, Amugo added, would attract 10 per cent charge per year, on the monthly balance.

    The disbursement of the loan, he said, would be subject to negotiation, execution and exchange of the transaction documents.

    The CBN director explained that the fund was set up to tackle problems arising from several factors, including insufficient gas supply and higher baseline aggregate technical commercial and collection losses following the hand-over of the Power Holding Company of Nigeria (PHCN) successor companies to private concerns on November 1, 2013.

    The facility is aimed at settling outstanding payments due to market participants, service providers and gas suppliers as well as the legacy gas debts of the PHCN generation firms to gas suppliers and the Nigerian Gas Company Limited, which have been transferred to the Nigeria Electricity Liability Management Company Limited.

    “The facility will attract an all-inclusive charge of 10 per cent per annum on the outstanding balance and payable monthly in accordance with the transaction document,” CBN added.

    The terms, according to CBN, shall remain effective until full payment of the facility. “The security to be provided for the CBN-NEMSF shall be by way of a declaration of trust as set out in the amended and restated Disco Disbursement Agreement over the line item in the invoices issued by the Disco representing the collection of the facility, which has been provided in the MYTO 2.1 for the repayment of the facility and an obligation on the Discos to ensure such collections,” it added.

    Following the handover of the PHCN successor companies to private investors in November 2013, the Nigeria Electricity Supply Industry (NESI) faced liquidity challenges arising from, among others, insufficient gas supply and higher baseline aggregate technical commercial collection losses than what was assumed under the Multi-Year Tariff Order (MYTO) Two.

     

  • Bank Verification Number

    Bank Verification Number

    •Banks and their customers must take the initiative seriously to curb frauds

    Worried by the increasing incidence of bank frauds due to the emergence of revolutionised payments system in the country, which also opened new windows for fraudulent manipulations, the Central Bank of Nigeria (CBN) initiated the Bank Verification Number (BVN) scheme last year. It is a system whereby individual banks collect their customers’ biometric data that is then collated to serve as a centralised biometric identification system for the entire industry.

    Unfortunately, many bank customers are yet to key into the scheme, barely three months to the deadline given to all bank account holders to collect the new number. Obviously, many people do not understand its essence because, only a few years back, bank customers were asked to migrate to the 10-digit Nigeria Uniform Bank Account Number (NUBAN), as part of efforts to improve services in the financial sector. So, asking them to go for yet another scheme that seems to them to serve the same purpose as the NUBAN is unnecessary.

    But this is where such bank customers are mistaken. Trust is a critical element in banking. Where this is eroded, people become wary of keeping their money in the banks. And in Nigeria, as in many other parts of the world where bank frauds are on the increase, it becomes imperative for the bankers and regulatory agencies to move miles ahead of fraudsters who are never tired of inventing new tricks to beat whatever security arrangements that are put in place, to checkmate their activities.

    We also have people who take advantage of the lack of the centralised platform that the BVN offers to operate multiple accounts and take loans that they never intended to repay. The activities of such people who constitute serious risks to the banking sector would be drastically curtailed, if not eliminated, when every bank customer gets the BVN.

    Part of the beauty of the scheme is that the individual bank customer’s biometric information that is generated from the registration is a once-and-for-all requirement. So, even if a customer has many bank accounts, all he or she needs do is register for the BVN in any of the banks and the information would automatically be linked to all his or her bank accounts as well as be integrated in the banking system, generally.

    Because it is not easy to manipulate biometric information, BVN protects customer bank accounts from unauthorised access, thus strengthening the financial system; it also makes detection of fraudulent/duplicate bank accounts as well as blacklisted customers easier. When fully integrated, BVN is expected to provide a synchronised efficiency to banking since all banking operations will be verified using the same method, reducing cases of human error or inconsistency.

    With BVN, transaction authentication would be done essentially using only biometric and a PIN; eliminating the use of cards. So, illiterate bank customers therefore do not have to worry much about the difficulties posed by the use of cards because transactions can still be done even if one forgot one’s PIN.

    In order to make registration for the BVN customer-friendly, enrolling for the scheme has been simplified. All a bank customer is supposed to do is walk into his or her bank branch, fill and submit the BVN enrolment form; the customer’s biometric information such as fingerprints and facial imagery, signature, etc. are then recorded and an acknowledgment slip with transaction ID is issued to him or her. A BVN is then created and customer is alerted to arrange to pick it up. To guarantee the integrity of the process, registration can only be done by the individual customer in the bank, not online or by proxy.

    Bank customers must take advantage of the initiative before the restrictions on customers without the BVN take off on July 1. With effect from that date, such customers would be deemed to have inadequate know-your-customers and their transactions may be declined. But the CBN and the deposit banks too must sustain the tempo of enlightenment until everyone that should be included has joined the scheme.

  • No restriction on foreign investors repatriating funds, says CBN

    The Central Bank of Nigeria (CBN) has said it will not impose any restriction on the financial market’s regime of “free entry, free exit”, allying fears that the pressure from declining foreign reserves and devaluation of Naira might force the government to impose capital control measures.

    Foreign investors account for about 53 per cent of transactions on the stock market with transactions valued at more than N1.5 trillion in 2014.

    Concerns about political, currency, fiscal and monetary risks, among others, have seen a spike in foreign outflows. The resultant pressure on foreign exchange has exacerbated the depreciation of the Naira.

    But the CBN said in spite of the pressure, the apex bank would not resort to imposition of capital control, which last vestiges were removed in 2009.

    CBN Governor, Mr. Godwin Emefiele, said capital control is not an option in the bank’s fiscal and monetary management.

    According to him, Nigeria wants to maintain its status of a “free entry, free exit” market, where foreign investors will not be impeded in their legitimate decisions to invest their funds in the country and also to take profits, repatriate their dividends and capital gains or outright divestment.

    Emefiele was asked to respond to the question on capital control by President Goodluck Jonathan during the interactive session with stakeholders in the capital market at the Nigerian Stock Exchange (NSE). President Jonathan indicated that the Federal Government would not interfere with such position of the apex bank, noting that regulatory agencies are in the position to take the best decisions on their areas of control.

    The CBN Governor pointed out that the preponderance of foreign investors in the stock market was a reflection of the foreign investors’ appreciation of the flexibility of the market, among other factors.

    While acknowledging the continuing pressure on the foreign exchange and the decline in foreign reserves, Emefiele reiterated that capital control would not be an option for the government.

    Naira-Dollar exchange rate closed weekend at about N200/$1. Nigeria’s foreign exchange reserves had fallen to $30.87 billion on March 4, a decline of 9.04 per cent from $33.94 billion recorded a month earlier.

    Foreign investors had taken out more than N154 billion in portfolio investments in 2014 as concerns over Nigeria’s risk profile saw many foreign investors opting for the sideline in spite of the attractive valuations of Nigerian equity investments.

    The latest Foreign Portfolio Investment (FPI) report of the NSE showed that Nigeria recorded a foreign portfolio investment deficit in 2014 as against surplus recorded in 2013. The report, obtained at the weekend, indicated that Nigeria recorded negative net foreign portfolio position of N154.14 billion in 2014 as against a positive net position of a modest N20.48 billion in 2013.

    The NSE report is regarded as a credible gauge of foreign portfolio investments in Nigeria as it coordinates data from nearly all active investment bankers and stockbrokers. Nigeria  operates a mono stock exchange, which makes the NSE the sole gateway to the nation’s stock market and the NSE’s benchmark indices, the country indices for Nigeria.

    The NSE report used two key indicators-inflow and outflow, to gauge foreign investors’ mood and participation in the stock market as a barometer for the economy. Foreign portfolio investment outflow includes sales transactions or liquidation of equity portfolio investments through the stock market while inflow includes purchase transactions on the NSE.

    The 12-month report showed that foreign portfolio outflow was N846.53 billion as against inflow of N692.39 billion in 2014, representing a net deficit of N154.14 billion. In 2013, total foreign inflow stood at N531.26 trillion compared with outflow of N510.78 trillion, leaving a positive balance of N20.48 billion.

    The report showed a notable spike in foreign transactions, although the negative colouration indicated that the propensity was towards divestment rather than investment. Total foreign transactions rose by 52.5 per cent to N1.54 trillion in 2014 as against N1.01 trillion in 2013.

    Meanwhile, foreign investors remained the dominant bloc at the Nigerian stock market. Foreign transactions accounted for 52.52 per cent of total transactions in 2014 while domestic investors accounted for 42.48 per cent. In 2013, foreign investors had accounted for 50.80 per cent while Nigerian investors accounted for 49.20 per cent. Domestic investors traded N1.137 trillion in 2014 as against N1.009 trillion in 2013.

    Market analysts said investors were anxious about Nigeria’s macroeconomic and monetary outlook in the light of the declining global oil prices and rising economic risks. They also cited the increasing political risk. However, analysts were positive on the outlook for the Nigerian market noting that the attractive valuation, resilience of the market fundamentals and the commitment of the government to pull through the global crude oil price challenge.

     

  • CBN, NDIC should play complementary roles – Financial expert

    CBN, NDIC should play complementary roles – Financial expert

    A lecturer at the Nassarawa State University, Dr Uche Uwaleke, has urged the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) to complement their roles in their regulatory responsibilities.

    Uwaleke, an associate Professor of Finance, said this in an interview with the News Agency of Nigeria (NAN) in Abuja on Thursday.

    It would be recalled that there was a disagreement between the CBN and the NDIC over some core mandates of both organisations on the supervision on banks in the country.

    The CBN had rejected some of the proposed amendment to the NDIC Act.

    The CBN said some of the provisions in the document were targeted at usurping some of its core mandates, especially on the supervision of the banks.

    Uwaleke, however, said both institutions had powers to supervise the activities of Deposit Money Banks under our laws.

    He said that Section 32 of the Banking and Other Financial Institutions Act 2004 (BOFIA) as amended empowered the CBN to order special investigation of the books and affairs of a bank in certain circumstances.

    He also added that NDIC was also empowered by the NDIC Act to appoint examiners for the purpose of carrying out a special examination of the affairs of an insured bank.

    Uwaleke said that the CBN’s role as the apex regulator of financial institutions in Nigeria should not be diluted while the NDIC should also be empowered to carry out effective supervision of insured institutions.

    He said that the empowerment would reduce the risk of failure and ensure that unsafe and unsound practices were minimised.

    He said the roles of both government establishments should therefore be complementary.

    Uwaleke advised that in the event of conflict in the discharges of their responsibilities, such conflicts could be resolved by the Financial Services Regulation Coordinating Committee (FSRCC).

    He said the FSRCC was set up under the CBN Act to mandate and coordinate the supervision of financial institutions.

    It is also meant to harmonise the different regulation and supervision standards among supervisory authorities in Nigeria.