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  • CBN okays offshore capital for Finance Houses

    CBN okays offshore capital for Finance Houses

    • Rolls out guidelines for subsector

    The Central Bank of Nigeria (CBN) has released new guidelines for Finance House (FCs) operations in the country. Under them, operators can raise offshore funds to recapitalise, but such funds must be approved by it.

    The draft guideline obtained exclusively by The Nation over the weekend, said the FCs were envisioned to operate within the middle tier of the financial system, with a focus on the Micro, Small and Medium Enterprises (MSMEs) segment.

    The FCs sub-sector is to play complementary roles to banks, bridging financing gaps and meeting the financial needs of its target customers. However, FCs have not demonstrated the capability required to thrive in this space. This has resulted to underperformance of the sub-sector and aroused the concern of the CBN and other key industry stakeholders.

    The guidelines noted that as part of the initiatives to establish financial stability within the financial services industry and the FC sub-sector in particular, the CBN undertook a review of the Guidelines for Finance Companies. These Revised Guidelines were issued by the CBN in exercise of the powers conferred on it by CBN Act 2007 and the Banks and Other Financial Institutions Act 2004 (BOFIA).

    It added that the Revised Guidelines are to regulate the establishment, operations and other activities of FCs; replace the existing Guidelines for FCs and should be read in conjunction with the provisions of the CBN Act, the BOFIA, as well as written directions, notices, circulars and guidelines that the CBN may issue from time to time.

    The guideline stipulates that an FC, unless otherwise stated, means a person or company licensed to carry out FC business. FC business means the business of providing financial services for consumers and industrial, commercial, or agricultural enterprises.

    The guideline also states that FCs must demonstrate compliance with the CBN Code of Corporate Governance and show evidence of a competent, independent board as stipulated in the CBN Prudential Guidelines for Licensed Banks, among others. It said the board shall have a minimum of five and maximum of nine directors, with not more than 50 per cent non-executive directors.

    It said the Board shall have a minimum of one and a maximum of two independent directors.

    The maximum tenure of two terms of four years each for independent directors.

    ”The tenure of the chief executive officer and directors of finance companies shall be limited to a maximum of two terms of five years each. However, the CBN recognises the need for proper transition and shall define proper transition guidelines and timelines for implementation,”the guideline stated.

     

    It said the Board shall lay down a code of conduct for all Board members and senior management staff. All Board members and senior management personnel shall affirm compliance with the code on an annual basis.

    “To qualify for the position of a director in a Finance Company, it is required that the person(s) must not be current employees or directors of banks or other financial institutions, except the Finance Company is promoted by the banks or other financial institutions and are representing the interest of such institutions,” it said.

    It added that in circumstances where current directors or employees of banks or other financial institutions are proposed for the position of director in a finance company, the consent of their employers must be given in writing to the CBN.

    “Conversely, in circumstances where current directors or employees of finance companies are proposed for the position of director in a bank or other financial institutions, the consent of their employers must also be given in writing to the CBN,” it said.

     

  • Fed Govt eyes 10 per cent agric credit by 2016

    Fed Govt eyes 10 per cent agric credit by 2016

    The Federal Government plans to double agriculture’s share of banks’ credit to 10 per cent in two years as it seeks to cut food imports, Agriculture Minister Akinwunmi Adesina has said.

    “We made a fundamental shift that agriculture is not a developmental activity, agriculture is a business. And so it shifted the mind-set of the banks. It’s a new agriculture sector in which they can actually invest money and make money,” Adesina said in a report.

    Loans to agriculture as a share of total credit rose to N320 billion ($2 billion), or five per cent, at the end of last year from less than one per cent in 2011, Adesina said.

    He said the Agriculture Ministry is partnering with the Nigeria Incentive-Based Risk-Sharing System for Agricultural Lending (NIRSAL), a unit of the Central Bank of Nigeria (CBN), to provide credit guarantees to enable banks lend to farmers.

    Nigeria, he said, is trying to reverse decades of neglect of its farming industry and push agriculture as its “new frontier for growth” because it can no longer depend on oil to drive its economy.

    The government’s efforts to boost food supply by 20 million metric tons from 2011 to 2015 has seen the country’s food import bill drop by more than half to $5 billion from $11 billion two years ago, Adesina said.

    The NIRSAL initiative, which is a brainchild of the Central Bank of Nigeria, the Bankers’ Committee and the Federal Ministry of Agriculture & Rural Development (FMARD), seeks to create incentives and catalyse processes to encourage the growth of formal credit, direct and indirect, for the agriculture value chain, as a mechanism for driving wealth creation among value chain participants.

    According to the apex bank, NIRSAL is also expected to be a catalyst for innovative risk management strategies, long-term financing for agribusiness and significant job creation by new entrepreneurs.

  • Okonjo-Iweala, NNPC and $10.8bn

    Okonjo-Iweala, NNPC and $10.8bn

    SPEAKING at a reception held in her honour last week in Lagos, the Minister of Finance, Ngozi Okonjo-Iweala, argued that it might be necessary for the Nigerian National Petroleum Corporation (NNPC) to show proof it spent the unremitted $10.8bn on key operational matters. The services of auditors could be required, the minister added. It will be recalled that the CBN governor, Sanusi Lamido Sanusi, had alleged that the NNPC could not account for over $48bn it ought to have remitted to the Federation Account. It was after a controversial reconciliation of accounts that the amount was whittled down to $10.8bn.

    Dr Okonjo-Iweala talked of the NNPC showing proof of how the money was spent. That clearly is not enough, no matter what she, the Minister of Petroleum Resources and the presidency think. What the Minister of Petroleum and the NNPC must show is why they spent that controversial $10.8bn at all. In answering why, they should let the public understand just how powerful they had become to capriciously spend money anyhow without appropriation. In a well-run country with bold and competent legislature, it is hard to see the NNPC and the Petroleum minister get away with that offensive and unacceptable behavior, even if they show how the money was spent.

  • CBN removes $250,000 limit on FOREX sales to BDCs

    CBN removes $250,000 limit on FOREX sales to BDCs

    The maximum weekly forex sales to Bureau De Change (BDC) operators were, yesterday, removed by the Central Bank of Nigeria (CBN).

    The action, contained in a circular to Authorised Dealers and BDC operators, said the action was meant to shore up liquidity in the FOREX market. Dollar scarcity in the market had affected naira exchange rate in recent months, hence the policy review.

    The circular, signed by CBN Director, Trade and Exchange, Batari Musa, said the policy review followed the circular of September 26, last year in which a limit of $250,000 was put in place.

    “All authorised dealers are hereby informed that the provisions of paragraph (1) of the circular under reference have been reviewed with immediate effect. Consequently, the limit of $250,000 as the maximum weekly forex sales to BDC is hereby removed in order to shore up liquidity in that segment of the foreign exchange market,” he said

    Henceforth, authorised dealers are free to sell FOREX to BDCs subject to compliance with the provisions of extant Anti-Money Laundering/Financing Terrorism laws and regulations in the disbursement of forex.

    “Furthermore, all transactions between authorised dealers and BDCs as well as the latter and end-users must be supported with appropriate documentation,” he said.

    Musa said authorised dealers and BDC operators are to continue to render weekly returns on their transactions to the CBN and other relevant regulatory agencies, failing which appropriate sanctions, including revocation of operating licence, shall be imposed.

    The regulator had in September replaced Wholesale Dutch Auction System (WDAS) with Retail Dutch Auction System (WDAS) because of the ineffectiveness of the former in addressing hitches in the forex market.

    It also withdrew the licences of 20 bureau de change (BDCs) operators for violating forex rules, an indication that more licences withdrawal may be seen in future, should the violation continue.

    Under the RDAS, banks and other authorised dealers place bids on behalf of individual clients who qualify to buy forex at the official auction. The change from WDAS to RDAS allows the authorities to monitor more accurately various sources of forex demand and any potential duplication of forex demand in the system. Banks will remain responsible for all documentation requirements.

  • CBN: banks facing ‘cash crisis’

    CBN: banks facing ‘cash crisis’

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  • Reserve depeletion worries CBN

    Reserve depeletion worries CBN

    The Central Bank of Nigeria (CBN) has warned that continued depletion of the Excess Crude Account (ECA) and the Foreign Reserve will leave politicians with no money to prosecute their electoral agenda.

    Addressing reporters at the end of the Monetary Policy Committee (MPC) in Abuja yesterday, CBN Governor Sanusi Lamido Sanusi noted that as elections approach in 2015, “one of the good things about not having a lot of money in the Excess Crude Account is that there isn’t enough ammunition to spend even if you want to spend”.

    This, he said (sarcastically), is good from a monetary policy perspective “but there isn’t too much fiscal fire power available to spend and that is helpful”.

    But Sanusi advised against further depletion of both the ECA and Foreign Reserve stressing that “if we continue having a reversal in inflow and pressure on exchange rate and we don’t have our savings, then ultimately even our (CBN) commitment to exchange rate stability cannot be effective”.

    On the depletion of fiscal buffers (ECA and Foreign Reserve), Sanusi “decried the continuous fall in revenue from oil despite stable price of oil and production in 2013.”

    Sanusi said: “It is a fiscal issue, not a monetary issue. We all have to face the reality. We had about $11 billion in Excess Crude Savings at the beginning of 2013 and we had less than $2.5 billion at the end of 2013. I suppose there are ongoing discussions with the Minister of Finance to review some of the reasons for that.”

    Though the committee acknowledged output losses due to theft and vandalism, this the MPC said “could not wholly explain the magnitude of the shortfall in revenue.”

    “As a consequence, accretion to external reserves remained low while much of the pervious savings have been depleted, thereby undermining the ability of the Central Bank to sustain exchange rate stability.”

    The MPC, therefore, urged the fiscal authorities to block revenue leakages and rebuild fiscal savings needed to sustain confidence and preserve the value of the naira.

    Giving details of the extent if depletion of the ECA and the external reserve, Sanusi stated that “gross external reserves as at December 31, 2013 stood at US$42.85 billion, representing a decrease of US$0.98 billion or 2.23 per cent, compared with US$43.83 billion at end – December 2012. The committee noted that the decrease in the reserves level resulted largely from a slowdown in portfolio and FDI flows in Q4 2013 resulting in increased funding of the foreign exchange market by the CBN to stabilise the currency.”

    The committee again expressed concern over the continued depletion of the excess Crude Account (ECA) which balance stood at less than US$2.5 billion on January 17, 2014, compared with about US$11.5 billion in December 2012. This absence of fiscal buffers, Sanusi said, “increased our reliance on portfolio flows thus, constituting the principle risk to exchange rate stability, especially with uncertainties around capital flows and oil price”.

    As the inflow begins to slow down, the government, Sanusi noted, needs “to be able to retain our own revenue. We need to be able to stop the theft, stop the vandalism, stop the leakages and basically save our own money in order to build up reserves because oil prices are at an average of $110 and the gap between 2012 and 2013 was less than $2.”

    The CBN governor lamented that “there was absolutely no reason why oil revenue should have collapsed from $8 billion to less than $2.5 billion in one year. So they need to tighten their (fiscal authorities) control. They need to check where the money is going. If we can do that, it is within our control that is really the biggest irony here. This is not the case of the crisis we faced between 2008 and 2009; this is really an internal thing. It is theft in the Niger Delta, it is leakages in resources; they are all issues within our control as a country. It is a good place to be, where you can actually take charge of the situation. So it should be top on the fiscal priority.”

    As for tightening, the Central Bank, Sanusi said “should continue tightening for as long as the challenges require. If the foreign reserves accretion improves, governance improves, that would be easier for us to continue to maintain stability.”

    He was concerned when he said “if we don’t have our own savings and we have to rely on trading portfolio inflow, it could happen in my tenure, it could be after; this is January, we will see what happens in March and in May, if we need to tighten we will and if we need to remain where we are we will remain. It is not just very likely that we are going to see any kind of accommodation in the year before an election.”

    On the monetary side, at the end of MPC meeting, all members voted for an increase in CRR on public sector deposits from 50 per cent to 75 per cent with effect from February 4, 2014.

    It was also decided that MPR should remain at 12 per cent +/-200 basis points and liquidity ratio (LR) at 30 per cent; Private sector CRR was retained at 12 per cent and the CBN was advised to take immediate steps to redress the supply- demand imbalance in the BDC segment while maintaing its focus on anti-money laundering (AML) activities.

    With regards to foreign exchange developments in the economy, Sanusi stated that “the end-period exchange rate remained stable at the w/rDAS and interbank segments but depreciated significantly at the BDC segment. The exchange rate at the w/rDAS-SPT in 2013 opened at N157.33/US$ (including 1 per cent commission) and closed at N157.26/US$, representing an appreciation of N0.07k or 0.04 per cent. The inter-bank selling rate opened at N156.25/US$ and closed at N159.90/US$, representing a depreciation of N3.65k or 2.34 per cent for the period. However, at the BDC segment of the foreign exchange market,the selling rate opened at N159.50/US$ and closed at N172.00/US$, representing a depreciation of N12.50k or 7.84 per cent.”

    Giving these developments, Sanusi said, “it is clear that the RDAS is not a window for politicians to buy dollars. About the issue of politicians, I have very high regards for them, I will not make any comment about that.”

    The Committee’s considerations were that the MPC welcomed the sustained stability of the exchange rate and single digit inflation in 2013. It however, identified four key concerns for policy in the short-to medium-term these include: depletion of fiscal buffers following the continuing decline in oil revenue, rundown of reserves and depletion excess crude oil savings; falling portfolio and FDI inflows; widening gap between the official and the BDC exchange rates; and Creeping increase in core inflation.

    The MPC also noted the reduction in portfolio inflows driven by the commencement of the Quantitative Easing (QE3) tapering by the Fed, transition concerns at the CBN and continued depletion of the ECA, thus dampening investor confidence.

    The reduction of the US stimulus, especially, could in addition, trigger capital flow reversals and put greater pressure on the naira exchange rate. The committee then expressed concern about the widening gap between the official and the BDC exchange rates,noting that this could precipitate speculation and round-tripping. “Though, the BDC’s represent a small component of the foreign exchange market,the widening spread appeared to have fed into creeping increases in core inflation” Sanusi said.

    The committee re-affirmed it’s commitment to a stable exchange rate regime while urging the fiscal authority to provide support by reducing fiscal leakages, improving controls around oil revenues and reviewing terms around production sharing agreements with oil companies,while awaiting the passage of the Petroleum Industry Bill (PIB).

     

  • CBN, finance firms bicker over N200m capital base

    Finance House operators have rejected N200 million minimum capital base being proposed by the Central Bank of Nigeria (CBN) to enable it foreclose ongoing reforms in the subsector, The Nation has learnt.

    An insider in the Finance Houses Association of Nigeria (FHAN), who spoke anonymously, said the operators are bent on getting the minimum capital base raised to N100 million instead of the N200 million being proposed by the CBN Board of Governors in the subsectors’ prudential guidelines, now at its final stage. The minimum capital base for the sector stands at N20 million, and approval of the N200 million, would represent 180 per cent raise, the source added.

    It was further leant that other policy issues such as procedures for appointment of managing directors and their tenure limits have already been agreed with the regulator. The source said operators and investors are eagerly awaiting the conclusion of the reforms which started nearly two years ago.

    The source said both local and foreign investors are willing to recapitalise and invest in some of the ailing finance houses but have to await the CBN to specify the guideline.

    He explained that unlike banks, finance companies are not allowed to accept deposits. This limitation means they can only source funds from shareholders, private equity companies, development finance institutions and other institutional investors.

    The subsector offers a variety of services including; funds management, equipment leasing, project financing, local purchase order financing, debts factoring, financial consultancy among others. The subsector also provides financial services for consumers’ industrial, commercial, or agricultural enterprises.

    The execution of reforms in the subsector, the source said is being hindered by government bureaucracies. He said that there are several investors who have carried out due diligence on the strengths and weaknesses of some of the finance houses but cannot move in funds because the regulation in the sub-sector remains unclear.

    He said a new capital base for the subsector remains a critical factor that investors want to be acquainted with before staking their funds. This, he said, will ensure that only seriously minded operators are allowed to carry on the businesses of finance houses in the country.

    The reform is expected to look at regulatory framework that will govern finance lease practice; institutionalise a funding pool to stimulate lending activities; structured programme to address the reputation and poor visibility challenges of the sub-sector among other issues.

    The source said the reforms in the sector would transform, and reposition the finance firms’sub-sector to enable it play increasing role in Nigeria’s financing value chain.

    The CBN had in March 2012 given a 30-day notice to 47 finance houses closed or inactive to submit evidence of their existence and/or operations, or lose their operating licences. The order had expired on Tuesday, April 18 2012 and the banking watchdog is yet to conclude decision on the matter. The CBN said that the affected finance companies had closed shop, ceased to operate, or abandoned finance company business.

     

     

  • CBN: banks facing ‘cash crisis’

    CBN: banks facing ‘cash crisis’

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

     

  • Fed Govt’s retained revenue hits N1.89tr

    Fed Govt’s retained revenue hits N1.89tr

    FEDERAL Government’s retained revenue for last year has been put at N1.89 trillion, a Central Bank of Nigeria (CBN) report has shown.

    According to the first-half report for last year released by the apex bank, the government’s expenditure for the period was estimated at N2.26 trillion; it was N2.76 trillion in 2012.

    It said the growth in money supply was slow in the first half of last year with broad money supply (M2), growing by 0.7 per cent to N15.5 trillion, compared with the growth of 14.8 per cent at the end of the previous period.

    On an annualised basis, M2 grew by 1.4 per cent, compared with an indicative benchmark of 16.4 per cent for fiscal 2013. The growth in money supply reflected the 4.7 per cent rise in net domestic credit of the banking system. It said net domestic credit (NDC) to the economy grew by 4.7 per cent to N13.2 trillion, at the end of the relative to the level at the end of the second half of 2012.

    This contrasts with the decline of 6.4 per cent at the end of the preceding period. The development, it said, reflected the growth in net claims on both the Federal Government and the private sector.

    It said net claims on the Federal Government (NCG) rose by 2.3 per cent, in contrast to the decline of 116.4 per cent at the end of the preceding period. This development, it said, reflected mainly the banking’s investment in government securities, especially treasury bills, which grew by 16.7 per cent at the end of the review period.

    “The growth in net claims on the Federal Government poses a risk to domestic interest rates and private sector credit. However, the Federal Government, as in the second half of 2012, remained a net lender to the system, a situation which tends to mitigate the risk,” it said.

    Credit to the private sector (CP) increased by 3.6 per cent at the end of first half of last year, compared with the growth rate of 3.1 per cent at the end of the previous period.

    “The growth in private sector credit reflected, wholly, the 3.8 per cent rise in claims on the core private sector, compared with the 2.6 per cent growth at the end of the preceding period. The contribution of claims on the private sector to the change in total monetary assets stood at 3.5 per cent, compared with 7.3 per cent recorded at the end of the preceding period,” the report said.

    Also, consumer credit, which stood at N628.6 billion, grew marginally by 0.8 per cent in the review period, compared with the 7.5 per cent growth in the second half of 2012.

    As a ratio of credit to the core private sector, consumer credit constituted 4.2 per cent, compared with 4.3 per cent at the end of the second half of 2012.

     

    “The slow growth in consumer credit in the review period reflected the general decline in private sector credit granted by the commercial banks, due to the preference for government securities, which were more profitable and less risky,” it said.

  • Hopeful contenders for CBN top job

    Hopeful contenders for CBN top job

    As the Central Bank Governor, Mallam Sanusi Lamido Sanusi prepares to leave office in June this year, the list of contenders for the top job continues to swell, with technocrats and bureaucrats gunning for the coveted office, report Ibrahim Apekhade Yusuf and Bukola Afolabi

    It is the contention of analysts that whoever is likely to become the new CBN helmsman has to have the professional and practical track record to sustain the well-applauded gains in fiscal and monetary reforms under the outgoing CBN governor, Mallam Sanusi Lamido Sanusi. Although the president has the constitutional power to pick the governor and the board of the CBN, after that, the CBN governor and the board act independently for a five-year term during which it is not accountable to the ruling class, especially fall to the whim and caprices of the powers that be, thanks to the CBN’s subsisting Act. So, the CBN governor will serve as the moderator between fiscal and monetary interactions, and in many instances, as the independent watcher of the economy.

    As the nation wait with bated breath for the announcement of Sanusi’s successor, The Nation can authoritatively report that the list of interested candidates for the top job continues to swell, with some of them already aligning with high net worth individuals as well as those close to the presidency.

    The profile of some of the highfliers includes but is not limited to the following, Tunde Lemo, who only recently retired having served his term as deputy governor. Like Lemo, Dr. Kingsley Moghalu, deputy governor, Financial System Stability and Mrs. Sarah Alade, deputy governor, Economic Policy, are also in the race.

    Dr. Bright Okogu, Aigboje Aig-Imoukhuede, Atedo Peterside and a host of others like Mr. Philip Oduoza, Group Managing Director, United Bank for Africa (UBA) Prof. Pat Utomi, renowned professor of political economy and management expert and Bisi Onasanya, Managing Director, First Bank of Nigeria are also likely prospects for the CBN top job.

    TUNDE LEMO

    Lemo, a highly cerebral consummate banker with appreciable wealth of experience, according to many economic watchers, is a ripe candidate for the job because he is untainted.

    Under the guidance of the outgoing governor, Lemo, who served as the Deputy Governor for three terms having worked with Joseph Sanusi, Professor Chukwuma Soludo, and Sanusi, has a lot going for him.

    Among other things, he reformed the payments system recording tremendous growth in electronic transactions and reduction in fraud. Payments by mobile phone grew by 533.8%, online instant transfers grew by 228.9% while Point of Sale transactions increased by 209.6%. Electronic payments fraud was brought down by over 96%. He acclaimed as the brainchild behind Cashless Nigeria and whatever successes it has recorded thus far.

    Clearing of cheques which took hitherto took four days as at January 2008 now takes two days, thanks to the payments system reform which he managed.

    Besides, he implemented the upgraded Real Time Gross Settlement (RTGS) system and the Scripless Securities Settlement System (S4) as well as led the migration of the banking industry to a single account structure (Nigerian Uniform Bank Account Numbering System) leading to ease in clearing, payments and settlements.

    Lemo equally instituted the payments system oversight function of the Central Bank of Nigeria by setting up the Payments System Policy and Oversight Office, the issuance of the Agency Banking Regulation which is currently operational, even as banks have commenced gradual reduction in their charges to customers as evidenced by the reduction in COT from N5 per mile to N3 per mille as a result of the industry infrastructure transformation plan which he supervised.

    With direction provided by the Governor, Lemo implemented reforms that led to cost of currency management were brought down by 44.75%, from N57.09bn in 2009 to N31.54bn in 2013, just as he assisted the CBN governor to implement the banking sector reform including the consolidation reform of 2004 as well as supervised the Special Examination of the banks in 2009, leading to the reform of 2009.

    Other achievements counting for Lemo include the Treasury Single Account for the federal government, which was implemented under his supervision and the benefits to the government treasury are beginning to accrue to government as dependence from borrowing for deficit financing will decline further in coming years.

    Under the guidance of the Governor, he was responsible for the formulation of the microfinance policy and ensured its effective implementation. He enhanced the policy further in 2013 by establishing the framework for agency banking to enhance financial inclusion for the un-banked.

    As the Chairman of the Nigeria Inter-Bank Settlement System, he restructured the company to efficiently and effectively serve the banks (who are the owners) as a shared service infrastructure.

    Lemo led the Nigeria Export Import Bank (NEXIM), as the Chairman of the institution, just as he improved the operational efficiency of the Central Bank of Nigeria and supervised the transformation of its IT infrastructure for improved service delivery.

    The former Managing Director of Wema Bank, who is also considered as an insider, shares similar views with Sanusi on monetary policies and is most likely to ensure monetary policy continuity, analysts have further argued.

    Sources close to the government say he is the right candidate for the job as he would be able to put sentiments aside and work assiduously to steer the nation’s economy in the right direction without causing undue panic.

    KINGSLEY MOGHALU

    Another strong contender is Dr. Kingsley Moghalu, a deputy governor of the central bank and head of the financial system stability directorate. A bystander at his book launch in June said that a joke made about the upcoming position prompted raucous laughter from the crowd, suggesting that it is no secret he is vying for the bank’s top spot.

    Geopolitics, too, may play a part in hampering Moghalu, who hails from the south east.

    “In Nigeria, these things still matter, particularly in the run-up to elections,” says Wale Shonibare.

    Many of the most prominent financial regulators come from this region, including Finance Minister Dr. Ngozi Okonjo-Iweala, Director General of the Securities Exchange Commission, Ms. Arunma Oteh, and Managing Director of the Asset Management Corporation of Nigeria, Mustafa Chike-Obi, who has also been vying for the role but is not considered a serious contender in some quarters.

    AIGBIOJE AIG-IMOUKHUEDE

    It is widely speculated that Aigboje Aig-Imoukhuede, the chief executive of Access Bank, may be the new man for the Central Bank of Nigeria job.

    Aig-Imoukhuede has been the head of Access Bank since 2002 and his tenure is up at the end of this year.

    He works well with the central bank, supporting its reforms and often representing the banking sector, has proven leadership experience and is intellectually well-rounded.

    But there is also a snag here. The only drawback is that other bankers may view him as an upstart and a young hand.

    ATEDO PETERSIDE

    Stanbic IBTC chairman Atedo Peterside has been touted as a strong contender. He is a trusted economic adviser to President Jonathan. He is also chairman of the Technical Committee of the National Council on Privatisation.

    Power privatisation is one of President Jonathan’s landmark reforms, and any successes he makes will feature heavily in a possible re-election campaign. Speculations and shortlists aside, the race is wide open. Analysts and bankers agree on one thing – that there is a strong chance that a candidate outside the short- list could be appointed.

    The race to succeed outgoing Central Bank (CBN) governor, Mr. Lamido Sanusi has begun as three key persons are strategising to take over the number one banking job in the country.

    There are strong indications that former managing director of Stanbic/IBTC, Mr. Atedo Peterside, a first class banker and technocrat is a front runner for the office.

    Mr. Peterside, considered as a close friend of the president, enjoys immense support from both within the government and among the organised private sector. The Rivers State banker and businessman who currently sits as the chairman, Technical Committee of the National Council on Privatisation (NCP), has some credit to his advantage and enjoys the support of President Jonathan.

    One of his achievements is the successful conclusion of the technical bids for the unbundling of the power sector that eventually led to the sale of 15 distribution companies to the private sector a few months ago.

    A member of the National Economic Management Team, which is headed by the president, Mr. Peterside is the president and founder of ANAP, a non-profit organisation committed to promoting good governance.

    Economic watchers are, however, skeptical of Mr. Peterside’s political strength to actually bring the successes he has recorded in the private sector to bear in a critical institution as the CBN, which is the financial strength of the nation.

    OLUSEGUN AGANGA

    Serving Minister of Industry, Trade and Investment, Mr. Olusegun Aganga, and the Minister of State for Finance, Dr. Yerima Ngama, have joined the list of contenders for the CBN top job.

    Aganga, who has the confidence of President Goodluck Jonathan, is also currently being adjudged as probably the best minister in the trade and industry portfolio in years. Another thing going for him is the fact that he bestrides the two geopolitical zones of the South-south and South-west, more so as both the South-east and North have successively produced Professor Chukwuma Soludo and Sanusi as central bank governors.

    Aganga, though originally from Edo State, was born and bred in Lagos, and represents the state as well as the South-west zone in the Federal Executive Council (FEC). Ngama, on the other hand, is from Yobe State and would bring to the job extensive experience as a commercial banker and regulator, having worked for many Nigerian banks and the Nigeria Deposit Insurance Corporation (NDIC).

    He was first nominated by Jonathan as Minister of Finance in April 2010. In July 2011, Aganga was redeployed by the president to the Ministry of Trade and Investment, to make way for Ngozi Okonjo-Iweala to return as the Minister of Finance.

    Aganga previously worked in Arthur Young in Nigeria, Ernst & Young in London UK, and Goldman Sachs International in London, where he was Managing Director, Hedge Funds. As finance minister, one of his key accomplishments was the establishment of the Nigerian Sovereign Investment Authority (NSIA), better known as the Sovereign Wealth Fund (SWF). His only drawback is his not being so well acquainted with the banking industry in Nigeria, which he is also expected to oversee.

    YERIMA NGAMA

    Ngama’s professional experience, however, covers several banks at top executive management positions ranging from First Bank Nigeria Limited, Diamond Bank Plc and Victory Merchant Bank. He also worked in NDIC where he was the head of Bank Analysis Unit, Off-site Supervision Department. He was appointed Minister of State for Finance by Jonathan in July 2011.

    Born in 1961, Ngama obtained a Bachelor of Science degree in Accountancy from the University of Maiduguri and Masters of Science in Accountancy from the University of Glasgow in Scotland, United Kingdom. He also obtained a second Masters’ degree and Ph.D in Money & Banking and Finance from the University of Birmingham, where he received the coveted Ashley Prize award for producing the best thesis in his faculty. In addition to his academic qualifications, Ngama has significant training in Islamic Banking and Islamic Capital Market Products.

    BRIGHT OKOGU

    Dr. Bright Okogu, current Director General, Budget Office under the ministry of finance, also sits on the economic management team of the government.

    Okogu, who hails from Delta state, is a first class financial expert with a background in global economic management. He worked at the Organisation of Petroleum Exporting Countries (OPEC), where he served as a Market Analyst between 1989 and 1997 and as a Senior Operations Officer at the OPEC Fund for International Development both in Vienna, Austria, before proceeding to the International Monetary Fund (IMF) in 1999.

    He played a key role when he worked closely with the coordinating minister for the economy and Nigeria’s minister of finance Mrs. Ngozi Okonjo-Iweala and other officials to close the deal that made Nigeria achieve the popular debt relief from the Paris Club of creditors.

    Since his appointment into government the DG Budget has been at the center of crafting the nation’s fiscal policies.

    Dr. Okogu who is a close confidant of Mrs. Ngozi-Okonjo-Iweala is a shrewd economist and financial manager.

    Unfortunately, Dr. Okogu would not be the favourite of the ministry, agencies and departments (MDAs) of government as he is constantly at daggers drawn with state governments over lamentations of inadequate funds. So he is not in the states good books in a manner of speaking.

    “He has helped the government cut down drastically on wastage’s,” a top presidential aide told our reporter ,adding that “this is the kind of person that should sit as the next governor of the CBN and not some politician or businessman but things don’t work that way.”

    SYLVESTER MONYE

    The current special adviser on project monitoring and evaluation to President Goodluck Jonathan, Professor Sylvester Monye are also said to be interested in the job.

    Whoever emerges Sanusi’s eventual successor will be the 11th central bank governor in Nigeria. As specified in the CBN Act 2007, the central bank governor’s principal charge is to provide economic advice to the Federal Government, while acting as the official banker to the government of the federation. Apart from signing every currency denomination, the governor among other duties, oversees the country’s banking sector.

    Besides, the Monetary Policy Committee of the CBN, the governor also determines the monetary policies of the country, which have an impact on the financial system and the macro-economy.

    Many analysts said the letters and spirits of the CBN Act and the current socio-economic and political situations swing more in favour of Lemo, who is believed to have the track records, experience and independence of mind to sustain macroeconomic gains and steer the monetary and banking environment to further accelerate national development.