The Nation Newspaper

Tag: cbn

  • ‘Support Ndokwa aspirants’

    The people of Ndokwa in Delta State have said it is their turn to produce the next governor.

    The Chairman of the Organisation for Ndokwa Unity, also known as Ndokwa Unite, Steve Uweh, said it would be fair for an Ndokwa man or woman to be governor.

    He observed that Ndokwa land is strategically located and serves as a bridge among ethnic groups.

    “We are not insisting that it is compulsory for the next governor to come from Ndokwa land but, in terms of fairness and objectivity, reasonable Deltans will see reasons to advocate for the next governor to come from Ndokwa land.

    Uweh congratulated Godwin Emefiele on his confirmation as the Central Bank of Nigeria (CBN) governor.

    He said the appointment was a good development and urged him to use his experience to handle the nation’s banking sector well.

  • CBN bars mortgage banks from leasing

    CBN bars mortgage banks from leasing

    The Central Bank of Nigeria(CBN) has spelt out operating modalities for microfinance banks (MfBs), primary mortgage institutions (PMIs) and finance companies.

    In a statement, the CBN said PMBs shall maintain a minimum ratio of 50 per cent of mortgage assets to total assets, 75 per cent of which must be residential mortgages.

    Also, a minimum of 60 per cent of PMBs’ loanable funds, defined as total deposits plus on-lending loans, shall be devoted to the creation of mortgage assets.

    According to the CBN, the PMBs are not to engage in leasing business or take proprietary position in real estate development.

    “The maximum loan from a PMB to an individual shall not exceed 5.00 per cent of its shareholders’ funds unimpaired by losses and 20 per cent in the case of a corporate body. All PMBs shall be required to comply with the uniform underwriting standards for mortgages and commercial real estate financing,” it said.

    For MfBs, the CBN said the sector’s loan portfolio would, at all times, comprise a minimum of 80 per cent micro-loans and a maximum of 20 per cent macro-loans. The maximum loan by an MfB to any individual borrower, director or related borrower is not exceed one per cent of the shareholders’ funds unimpaired by losses, while a maximum of five per cent is prescribed for group borrowers.

    Also, insider-related loans shall not exceed five per cent of the shareholders’ funds unimpaired by losses. For this purpose, loans under a staff scheme shall not be taken into account. State and local government’s equity participation in MfBs is allowed under the revised guidelines to facilitate financial inclusion.

    However, all such investments must be gradually divested to private-sector investors within a maximum of five years.

    In addition to the Head Office, Unit MFBs are allowed to have not more than one branch within the Local Government Area approved for their operation. This is subject to the availability of free funds (shareholders’ funds unimpaired by losses, less fixed assets and long term investments) of at least N20 million and maintenance of the prescribed minimum prudential requirements.

    The minimum capital requirement for finance companies (FC) during the programme period shall be N100 million only. All existing FCs shall be required to comply with this requirement 18 months.

    The minimum amount that a finance firm can borrow from any one person or corporate organisation is N50,000. Conversely, the maximum loan by a finance company to any person or maximum investment in any venture shall be 20 per cent of its shareholders’ funds unimpaired by losses.

  • Missing N59.6 billion: Reps issue 24-hour ultimatum to CBN, NNPC, AGF

    Missing N59.6 billion: Reps issue 24-hour ultimatum to CBN, NNPC, AGF

    The House of Representatives Committee on Public accounts Tuesday issued a 24 hour ultimatum to the acting governor of Central Bank of Nigeria (CBN), Sarah Alade and the Executive Director of Finance, Nigeria National Petroleum Corporation (NNPC) and Accountant General to the Federation (AGF), Mr Jonah Otunla to explain their various roles in the alleged missing  N59.6 billion Service Wide Vote in 2006.

    Representatives of NNPC, CBN and AGF has during the investigative hearing held Tuesday denied knowledge about the disbursement of the fund.

    In his submission, the NNPC GM Accounts, Mr Sambo Aliyu presented a letter written by the Budget Office in response to NNPC’s enquiry on the whereabouts of the missing fund.

    He however noted that the budget office responded that the money was released to NNPC.

    But when asked whether the money was released to NNPC, Aliyu responded that “the cash was not released, we did not see any money.”

    While reacting to his submission, members of the Committee insisted that all the relevant agencies should be summoned once again.

    Also when the representative of CBN, Mr Dipo Fatokun was asked to explain what he knows about the missing fund, he simply replied saying “we will need to get the mandates from the AGF.”

    Unhappy with his response, some of the lawmakers declared that Fatokun should come along with his superiors Wednesday as his response so far has not been encouraging.

    Also when queried on the missing fund, Mrs. Tayo Toluwase a director, in the budget office simply said she does not have all the relevant details on the issue.

    While ruling, Chairman of PAC, Rep Olamilekan Adeola, ordered that the AGF should bring all the documents that involved the disbursement of the fund.

    According to him, such documents include all bank transactions between July and December 2006, a copy of the federation account, copies of statements of accounts through CBN for the period under review.

    He explained that “if there was any mandate on the said missing N59.6bn it will show at a glance.

    “We are tired of all the excuses of all the agencies involved claiming ignorant at one stage or the other.”

  • Agribusiness financing requires $6.5b

    Investments of $6.5billion per year are needed to take agribusiness to the desired growth level, it has been gathered.

    This is at variance with the yearly fund supply of about $1.5 billion, data from the Central Bank of Nigeria (CBN) has shown.

    To secure more funding for agribusiness, the apex bank and banks are, therefore, implementing fresh measures aimed at empowering farmers financially and providing favourable fiscal policies for their operations.

    For instance, the apex bank has granted zero tariffs for the importation of agricultural machinery and equipment. The bank said it took the action, to create a robust agricultural sector and provide enabling environment for investment.

    CBN Director, Development Finance Department, Paul Eluhaiwe said banks are also working with Alliance for a Green Revolution in Africa (AGRA) and other key stakeholders to develop an innovative financing mechanism, tagged Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL).

    The apex bank director said the scheme is expected to provide farmers with affordable financial products, while reducing the risk of loans to farmers under other financing programme offered by the financial institutions.

    The initiative will build capacities of banks to expand lending to agriculture, deploy risk sharing instruments to lower risks of lending and develop a bank rating scheme to assess banks based on their lending to the agricultural sector. It is expected that the initiative will help unlock access to bank finance, critical for stimulating agric lending and increasing food and crop production in the country.

    Besides, the N200billion Commercial Agriculture Credit Scheme (CACS) was established in March 2009 by the CBN in partnership with the Federal Ministry of Agriculture and Rural Development (FMARD) to fast-track the development of commercial agriculture in the country.

    The applicable interest rate under the scheme has been retained at nine per cent even as the fund has continued to be disbursed to eligible applicants through the deposit money banks.

    The banking watchdog admitted that the future of agriculture in sub-Saharan Africa is clouded with various uncertainties that include increasing resource scarcity, heightened risks from climate change, higher energy prices, demand for bio-fuels and doubts about the speed of technical progress.

  • Senate confirms Emefiele as CBN Governor

    Senate confirms Emefiele as CBN Governor

    Newly confirmed Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele Wednesday vowed to probe alleged N262billion deficit in the expenditure of the apex bank.

    Emefiele who was responding to a question during his screening by the Senate in Abuja prior to his confirmation also pledged not to spend any money in contravention of the law.

    There was however a short hit before Emefiele was allowed into the chambers of the Senate.

    Senator Kabiru Gaya had citing an order of the Senate, drew the attention of the lawmakers to the fact that then suspended CBN Governor, Sanusi Lamido Sanusi was still in court and thus it would be unwise to screen a successor.

    Gaya said: “Sanusi went to court, now in the event that the court rules that the governor should  return what will happen? Why don’t we wait until the court case is over?”

    Senate President David Mark however ruled Gaya out of order saying thenSenate would take responsibility for the action.

    Mark said: “Distinguished Senator, you have done your best and you have been seen to have done your best.

    “Unfortunately, your best is not going to carry the day here. So let me and all of us including you take responsibility for what we are going to do.

    “Unfortunately the matter before the court has nothing to do with what we are going to do now. So I rule you out of order.”

    While answering questions from Senators, Emefiele lamented the penchant by Nigerians to spend Dollars instead of the Naira in local transactions.

    He said the development could ruin the economy if not checked.

    Emefiele said he would probe into the various expenditure components of the bank to know how exactly the alleged N262billion deficit became inevitable.

    He said: “I will look into the budget expenditure components in the CBN but I am aware that we have what is called the operational expenditure profile as well as administrative expenditure profile.

    “I think and I imagine, I suspect that more of the deficit would have come from areas that are pertaining to operational expenditure and if it is about Operational Expenditure, it means that unfortunately, we cannot do anything about it.

    “This is because those were the expenditures that were incurred in the course of open market operation which is needed to ensure that we maintain a strong currency and ensure that we continue to have a good country.”

    Emefiele noted that the core mandate of the CBN is to achieve monetary and price stability as well as ensure a strong foreign reserve.

    He added: “We are also expected to ensure that we have a strong financial system in Nigeria.

    “On the back of this mandate we would work very hard to ensure that we achieve macro-economic stability in this country where inflation rate shall be seen to continue to come down.

    “Where interest rate shall be seen to continue to come down. And where we would as much as possible continue to maintain a strong exchange rate for the country and build a strong foreign reserve.

    “We would ensure that if approved, that whatever monetary policy decision that would be taken would be those that would improve the level of employment in Nigeria.

    “Because we know that employment is very important. We know today that we have an employment emergency in Nigeria.

    “We must ensure that whatever decisions we take at the CBN in the Monetary Policy Committee (MPC) would be those that would lead to improvement in the level of employment in Nigeria.

    “We would ensure that we work with the manufacturing companies to ensure that we improve on their level of production and by extension ensure that we improve and achieve economic growth in Nigeria.”

    He stated that aside from the vote mandates of the bank, he said he would ensure that the CBN and all stakeholders in the economy play a central role towards the growth of the Nigerian economy.

    “Growing the economy of Nigeria,” according to him, “is a very important assignment other than just the core mandate of ensuring that we have a stable environment. We would do this through the Development Banking Model.

    “In fact in some of the frontiers and emerging markets in the world we have seen development banking used as a tool towards achieving economic growth, development and industrialization.

    “In the Latin American countries of Brazil and Mexico, development banking was used to achieve economic growth and development in these areas.  And today Brazil is seen to be one of the BRIC states in the world.”

    He said it is necessary for the CBN and the Ministry of Finance to work in the same direction for the sake of the economy.

    He said: “The Central Bank of Nigeria is the monitoring authority whereas the Ministry of Finance is the fiscal authority. It is important that in their relationship they must work in one direction.

    “They must push in one direction. If we push in opposite directions what you will find is that we are not going to be able to achieve economic growth and development that we are talking about.

    “If the decision is that we should pursue a conventional policy, both the Central Bank and the Ministry of Finance should be seen to move in one direction.

    “So, we expect that there should be a collaborative relationship where they are both ready to work together for the common good of Nigerians.”

    He said he would ensure that Nigerian currency is respected.

    He added: “I think one of the core mandate of the Central Bank is to ensure that we maintain a legal tender and they respect it and ensure that whatever is done that our own Naira has to be used as a legal tender.

    “I will take it as a primary responsibility to ensure that the attempt to dollarize the Nigerian economy is discouraged. We should not allow it because it would create problem for the economy.”

    He said the CBN would not support devaluation because of its potential devastating effects on the economy.

    Emefiele said: “It is true that we have seen the reserve dropping, it is as a result of speculative attack on the Naira because I think that there will be devaluation as a result of what is happening in the world today.

    “There is no need for anybody to worry about devaluation because it is a very devastating action to be taken in the country particularly because we are import dependent country.

    “Devaluation will hurt the economy. We have an economy that is still very strong with about $39billion in foreign reserve to sustain about nine months of import.

    “For as long as we have crude prices standing at about $100 per barrel, it is a strong economy. So, if we allow devaluation to happen, it will hurt the economy.

    “So, because we are import dependent, and we allow devaluation, many people will lose their jobs, prices of goods and services will go up, productivity capacity will come down and eventually leads to inflation.

    “The policy being adopted now allows us to hold on to exchange rates and ensure that we do not engage in devaluation should be continued.”

    He added: “On the issue of banking supervision, I want to congratulate the management of the CBN for doing an excellent job.

    “There was a global financial crisis in 2008/2009 but the CBN since then, has ensured a financial system stability to the fact that today, no customer has lost his money and some banks had been bailed out.

    “For an institution that had done such excellent job, it should be commended for ensuring strong financial stability in Nigeria.

    “We will be fair, we will be just but we will be firm in whatever we do.”

    He described the Asset Management Corporation of Nigeria (AMCON) as a child of necessity.

    He added: “If the agency was not established, some of the banks would have been liquidated today and the customers would have lost their deposits.”

    On the exchange rate, he said the CBN would continue to ensure that it maintains strong exchange rate.

    According to him, what the CBN is doing now is to use various instruments of currency policy to control the exchange rate.

    He added: “Actually, the exchange rate that the CBN has is N155 to one dollar. We have the unofficial markets but the CBN usually intervene from time to time to bridge the gap between the official and unofficial market.

    “On the interest in lending rate the national cost of fund in the banking industry, I will try under my leadership to ensure that we intervene and see how deposit rate can be brought down, hence lending rate will also come down.

    “On the amendment of the CBN Act, it is the primary responsibility of the National Assembly. However, in doing so, I will appeal that before we take a decision to amend the Act, let us carry out a deep study; a scientific examination of the issues involved particularly how other countries are doing it.

    “We need to know whether their CBN is independent or not so in taking such a decision, the National Assembly should take a decision that is just, fair and one that is in line with the best world practice. So the decision is yours.

    “On oversight, I agree with you that the CBN should have Operational Expenditure Profile and Administrative Expenditure Profile. I will always make myself available for clarification on these two subject matters anytime you wish.

    “We will try as much as possible to be transparent, fair and try as much as possible to do what is right.

    “On the issue of employment, apart from achieving a macro-economic stability, we would pursue a development banking agenda that would generate employment by substituting import oriented economy with export oriented industrialised economy.

    “We will try and raise bonds and channel to agriculture and manufacturing sector so that small farmers, small scale industrialists have access to loans which we will channel through their cooperative societies without demanding stringent collateral.

    “On the issue of being a banker or an economist managing the CBN; I have taken courses in macro economy and I have the experience as a banker managing one of the biggest banks in Africa and this positions me adequately to manage the CBN with the professional experience I have garnered in my 27 years in the banking industry.

    “For the post of the CBN governor, you need somebody who is a banker, an economist and wealth of experience to be able to handle this task.

    “On the issue of target to bank marketers, it is what I worry about. The point is that every institution in any part of the world set performance target.

    “This is often used to reward excellence performance. We will discuss with some of our colleagues to see how some of the negative aspects can be addressed.”

    Senate President David Mark describes the post of the CBN Governor as a very key appointment and urged Emefiele to discharge “prescribed responsibilities of the Governor of the Central Bank without fear or favour.”

     

  • Fire at CBN Lagos office

    Fire at CBN Lagos office

    •Security agents molest photojournalists

    THERE was fire yesterday at the Central Bank of Nigeria (CBN) Lagos complex.

    The dusk fire affected the administrative offices on the third floor. In the course of battling the fire, on the third floor, a fire service official collapsed, no thanks to suffocation.

    According to National Emergency Management Agency’s (NEMA) Southwest spokesman, Ibrahim Farinloye, the yet-to-be identified fireman was rescued and rushed to the hospital.

    Farinloye said nobody died, adding that the Lagos State Fire Service personnel were on ground on time to contain the situation.

    Lagos fire service Director, Rasaq Fadipe, said his men were clamping down the offices and breaking the windows and doors to check for any small fire that might not have been put off.

    In a statement last night by Isaac Okorofor, the CBN said:”The Central Bank of Nigeria (CBN) wishes to inform its stakeholders and the general public that a fire incident occurred at its Lagos Branch Office at about 5:30 this evening (Tuesday, March 25, 2014).

    “The fire, which occurred on the first floor of the building, has been put out by a combined team of fighters from the CBN and other institutions.

    “We wish to assure our numerous stakeholders that the records of the Bank are intact, as the Bank has an effective backup of all its records, as part of our disaster recovery infrastructure”

    Two photojournalists with the National Mirror Newspapers, Yinka Adeparusi and Samuel Adetimehin, were yesterday brutalised and had their cameras vandalised and confiscated by men of the Nigeria Police Force at the scene of the fire.

    Both photojournalists were ordered to surrender their cameras were beaten.

    Adeparusi was later whisked to the Area ‘A’ Police Station where he was detained before he was released later.

    Adetimehin, who was the first to be attacked was left to writhe in pain after he had received punches from the policemen.

    The two photographers have been placed under medical care.

  • CBN sets N15b clearing benchmark for ‘Settlement Banks’

    CBN sets N15b clearing benchmark for ‘Settlement Banks’

    Settlement banks are to provide collateral of not less than N15 billion worth of treasury bills for clearing, the Central Bank of Nigeria (CBN) has said.

    A settlement bank maintains accounts for clearing and those of other clearing members.

    This is contained in the CBN’s Monetary, Credit, Foreign Trade and Exchange Policy Guidelines for 2014/2015. Part of the policy also states that a settlement bank must develop and implement a risk-based pricing model. It must also offer agency facilities to other banks for their clearing.

    “Banks that meet the specified criteria shall continue to be designated as ‘settlement banks.’ Consequently, non-settlement banks, called ‘clearing banks’ shall continue to carry out clearing through the settlement banks under agency arrangement. The terms of the arrangements shall be mutually agreed between the settlement banks and the clearing banks,” the CBN said.

    The apex bank said it would adopt the risk-based supervision (RBS) approach in supervising institutions under its purview.

    “The objective of the RBS approach, is to provide an effective process to assess the safety and soundness of banks and other financial institutions. This is achieved by evaluating their risk profile, financial condition, risk management practices and compliance with applicable laws and regulations,” it added.

    It enjoined banks to pursue profitability in their business models through efficient operations, adding that they should charge competitive, rather than excessive rates of interest in their transactions. The lenders are also to disclose their prime and maximum lending rates as fixed-spreads over the Monetary Policy Rate.

    According to the CBN, Open Market Operations (OMO) auctions will continue as the major tool for liquidity management. OMO is an activity of the CBN that entails buying and selling of government securities in the open market in order to expand or contract the amount of money in the banking system.

    The CBN said the conduct of OMO will be discretionary and will involve the sale, or purchase of Treasury Bills and CBN Bills through appropriate market mechanisms that would include auctions and two-way quote trading.

    It said the securities will be of specified tenor and volume, linked to assessed liquidity conditions in the banking system. Participants at OMO auctions would be the authorised Money Market Dealers (MMDs) comprising commercial and merchant banks, non-interest financial institutions and discount houses.

    Also, based on market liquidity conditions and the subsisting Monetary Policy Rate (MPR), OMO will be complemented by repurchase agreements (repo/reverse repo), at the applicable rates.

    The CBN said commercial and merchant banks would maintain a minimum Liquidity Ratio (LR) of 30 per cent and 20 per cent. Discount houses would invest at least 60 per cent of their borrowings in government securities while the ratio of individual bank loans to deposits, is retained at 80 per cent.

    It said the discount window at the CBN be available to give authorised dealers access to effective management of their temporary liquidity shortages or surpluses.

    Thus, standing facilities would continue to be open to them on overnight basis in line with subsisting guidelines. The facilities would be in the form of Standing Lending Facility (SLF); to address temporary shortfalls in liquidity, and Standing Deposit Facility (SDF) to aid effective management of short-term liquidity surpluses.

    The CBN would determine the applicable interest rates on the facilities would be determined by the from time to time. It would also allow outright rediscounting of eligible securities at the discount window promptly, and at rates it considers appropriate.

  • NNPC denies receipt of N59.7b from Service Wide Vote

    NNPC denies receipt of N59.7b from Service Wide Vote

    •Reps summon CBN, AGF, Budget Office over ‘missing’ fund

    The House of Representatives Committee on Public Accounts is seeking answers to what became of the N59.7billon given to the Nigerian National Petroleum Corporation (NNPC) from the Service Wide Vote.

    According to the Solomon Adeola-Olamilekan-led committee, the fund was paid from the Service Wide Vote in 2006.

    The committee said there was need to have wider deliberations on the issue and summoned the Accountant-General of the Federation, Mr. Jonah Otunla, the acting Governor of the Central Bank of Nigeria (CBN), Dr. Sarah Alade and the Director-General of the Budget Office of the Federation, Bright Okogu.

    But the NNPC management yesterday denied receipt of the N59.7 billion allegedly approved from the Service Wide Vote for the payment of oil subsidy.

    According to Timothy Okor, NNPC’s GMD, (Strategy), the N59.6 billion was not remitted to the corporation as alleged.

    He said efforts to get the requisite documents from the Office of the Accountant-General of the Federation and Budget Office on the payment of the N59.7 billion proved abortive.

    NNPC said attempt to make the Budget Office and the Accountant-General of the Federation Office to write a formal letter that the N59.6 billion was not cash backed was not heeded.

    The committee chairman said there was need to summon the parties to explain why the subsidy money, removed from the Service Wide Vote and meant for NNPC could not be traced.

    Olamilekan said the NNPC should write a formal letter explaining the non-receipt of the N59.6 billion from the Service Wide Vote.

    He said: “NNPC for now cannot be indicted until otherwise proven when AGF and Budget Office come out with evidence that the money was disbursed and cash backed.

    “This committee hereby summons the CBN, AGF and Budget Office to explain why such sum of money was disbursed without any documentary evidence.”

  • Why investment return is low in Africa, by CBN chief

    Why investment return is low in Africa, by CBN chief

    Return on Investment (RoI) in many African countries is relatively low compared to most developed economies, Central Bank of Nigeria’s (CBN) Deputy Governor, Operations, Kingsley Moghalu, has said.

    Moghalu, who spoke at the Second Africa CEO Forum last weekend in Switzerland, said this was due mostly to multiple taxes and tariff, high business registration costs and port charges.

    Speaking on the theme: “Competitiveness and economic transformation- Africa’s imperative,” he said the high cost of funds, policy inconsistency as well as high level of insecurity were also affecting Africa’s ROI.

    “All these factors combine to heighten the cost of operation that undermine the realisation of corporate objectives. To make African economies competitive, the high cost of doing business must be drastically reduced through sustainable economic and institutional reforms. There is also a need for substantial reforms in the banking sector so that African banks will be able to finance long-term growth enhancing projects to guarantee competitiveness of the African economy,” he said.

    Moghalu said the major economic challenge in Africa is the need to diversify the productive base of their economies from commodity exports to manufacturing.

    He explained that economic diversification was vital to countries’ long-term economic growth, but many resource-rich countries in Africa rely mainly on revenues generated from export of primary products, mining or oil production, thereby jeopardising their chances for sustainable growth.

    “Economies heavily dependent on natural resources can face serious challenges in sustaining growth because of swings in prices of those resources. African economies depend heavily on commodities as the main source of their foreign earnings accounting for over 81 per cent,” he said.

    Moghalu said enhancing the competitiveness of economies transcends pricing to include critical factors, such as industrialisation, cost of labour and doing business, economic diversification, infrastructure, security, investment climate and institutions as well as corporate governance, transparency and accountability.

    He said Africa’s competitiveness is important because the continent needs to secure its position in the global market for trade, investment and services.

    “The continent should enhance its competitiveness by harnessing its huge endowments in natural and human resources in an efficient manner that promotes global and intra-regional trade,” he said.

    This, he said, imposes a strategic imperative for African countries to improve their individual investment and business environments through the development of infrastructure, strong institutions, human capital, stable political and macroeconomic environment, as well as technological advancement and innovation. All of this will translate into sustainable economic growth and transformation.

     

  • CBN’s, IFC’s push for sustainable banking

    The Central Bank of Nigeria (CBN) and the International Finance Corporation (IFC) are working to ensure that banks are cautious in financing transactions that may affect the environment. COLLINS NWEZE examines the steps banks must take to achieve this objective and avoid sanctions.

    To sustain profitability in banking there is need for lenders to ensure that their activities are not targeted at short term goals. This, experts say, can be achieved when the lenders think of the long term effects in financing projects that have negative impact on the environment.

    In this regard, the Central Bank of Nigeria (CBN) and the International Financial Corporation (IFC) have urged banks to consider environmental and social policies in their decision-making and lending.

    According to the apex bank, if the oil firms that degrade the environment and their cohorts in other sectors are starved of funds by local and international banks, they will comply. The CBN said there is need to ensure that people do not conduct their businesses in an unfriendly manner and get away with it.

    The reason is that as an industry, banks cannot continue to take savings and deposits from Nigerians and then, lend to firms that are destroying the environment.

    To ensure that this is achieved and defaulters sanctioned, the regulator also developed a template for banks in filling their reports on loans to firms whose operations have negative impact on the environment.

    For the CBN, sustainable banking is aimed at minimising or mitigating the negative impacts of financial institutions’ operations on the environment and local communities in which they operate especially on agric, power and the oil and gas sectors.

     

    Sanctions coming

    The CBN Acting CBN Governor, Dr. Sarah Alade said banks that fail to comply with the guidelines on sustainable banking practices will be sanctioned.

    She spoke at an International Sustainable Banking Forum organised by the CBN in collaboration with the International Finance Corporation (IFC).

    She said lenders that consistently fail to comply with the guidelines would not be spared.

    Alade, represented by CBN Deputy Governor, Operations, Dr. Kingley Moghalu, said the regulator would not set guidelines for the lenders, but that their levels of conformity would be assessed at least every two years.

    “The banks are trying to apply those principles on their operations. Although the principles have become part of banking system supervision process, we cannot set a compliance timeline for that. However, if a bank does not comply, then we will take sanctions if non-compliance becomes consistent,” she said

    She also said the CBN directive on board membership would be assessed by year-end, adding that that would bring them to key board positions. She said the CBN is also partnering with the IFC to create a movable collateral registry that will make lending to women much easier. She said there was need to increase lending to women by ensuring that collateral to loans are creative.

    “The CBN recognises that unless social concerns, such as gender disparity and women economic empowerment are addressed, economic and environmental goals and overall sustainable development will be difficult to achieve,” she said.

    Alade added that sustainable practices will look at how banks are managing environmental and social risks in lending investment decisions, safeguarding human rights, promoting women economic participation and empowerment and leveraging collaborative partnerships to accelerate sector progress.

     

    NDIC’s role

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

    NDIC Managing Director Umaru Ibrahim said banks should ensure that activities of firms that pollute the environment were 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, made it a priority for financial systems across the world.

    He said sustainable banking in Nigeria, therefore, is focused on energising the influence of the sector towards transforming the long term interest of environmental preservation and societal balancing into key parameters for allocation of capital.

     

    IFC’s position

    IFC’s Country Manager for Nigeria Solomon Adegbie-Quaynor said the CBN has encouraged the adoption of sustainable banking in Nigeria.

    “Today’s forum presents a platform for regulators to share insights on environmental and social risk management and sustainability-related tools for long-term economic growth,” he said.

    Adegbie-Quaynor also said sustainability is central to inclusive economic growth and aligns with IFC’s strategy for long-term economic development, adding that sustainable banking helps banks and financial institutions to better understand the benefits and risks of environmental and social impacts of their investments and loans.

    It provides a framework for them to further integrate these considerations into their policies, operations and procedures. This creates environmental and social responsibility in the financial sector and adds long-term values for clients and other stakeholders, he said.

    He said the International Sustainable Banking Forum is a voluntary platform of bank regulators and banking associations established to facilitate knowledge sharing and development of standards, policies and guidelines on environmental and social risk management for regulators in emerging markets. The Network members include Nigeria, Bangladesh, Brazil, China and Colombia. Others are Indonesia, Lao, Mongolia, Peru, Philippines, Thailand and Vietnam.

     

    CBN’s roles

    According to the CBN, for the successful implementation of the principles, the institutions would be required to develop a management approach that balances the environments and social ( E &S) risks identified with the opportunities to be exploited through their businesses.

    “The adoption of the principles will not only help banks in mitigating the E & S risks associated with their business operation and those of their clients, but also help them to achieve greater efficiencies and better position them to take advantage of opportunities in the global market place where environmental and social issues are becoming increasingly important.

    “They will also enjoy higher productivity, higher staff morale, lower turnover and absenteeism due to strong employee relations and workplace practices. The CBN would need to provide the structural mechanism to encourage consistent and widespread implementation of the principles and develop its institutional capacity to support the banks in their implementation of the principles,” it added.

    While noting that the process of developing the sustainable banking principles and guidelines has so far been driven by the banks, the apex bank assured that it will create the enabling environment for banks to succeed in their implementation of the principles.

    The CBN has also recently set new rules for lending to the agricultural sector of the economy. This resolution stemmed from the reports from banks and discount house, which indicated that lending to the subsector, remains a high-risk, which should be followed with caution.

     

    Women’s role in sustainable banking

    According to the CBN, sustainable banking entails ensuring that women are well represented in the banking sector.

    Alade said the apex bank will by year-end, review banks’ compliance with its directive that lenders give 40 per cent of board positions to women.

    She said the CBN has told the banks that compliance was important, adding that the sector is committed to increasing the number of women in decision-making: 40 per cent of top management positions and 30 per cent of board positions occupied by women within this year.

    “Although we want this achieved, we will have to wait till the end of 2014 to assess compliance. We expect that many banks will comply. We recognise that simply issuing the circular is the beginning of the journey. It is not an easy thing to comply, as witnessed in other parts of the world. Even in the United States, there are problems with women being represented on the boards of corporates. Even the European Union has made it compulsory, and mainly because there is a structural impediments, to getting women in corporate leadership position,” she said.

    She said the CBN has taken proactive steps to promote gender equality and women empowerment.

    The CBN, she said, is promoting women’s economic empowerment to achieve sustainability by launching the N220 billion Micro, Small and Medium Enterprises Development Fund, 60 per cent of which would be committed to women owned or headed businesses and enterprises.

    “The CBN recognises that unless social concerns, such as gender disparity and women economic empowerment are addressed, economic and environmental goals and overall sustainable development will be difficult to achieve,” she said.

    She explained that just like in every part of the country, there are qualified people to fill any position. It also follows that in firms, there are qualified women to fill vacant position.