Tag: cbn

  • ‘No payment for contracts yet to be executed’

    ‘No payment for contracts yet to be executed’

    As the year winds to a close, the Office of the Accountant-General of the Federation (OAGF) has ordered that “no processing for payments, or payment vouchers should be raised, or mandates issued in respect of contracts yet to be executed”.

    A circular to this effect has been issued to Ministries, Departments, Agencies and all arms of government.

    According to the circular, “all payments must comply with the Due Process Guidelines as contained in Public Procurement Act (PPA 2007), saying any officer found violating these rules shall face disciplinary actions and appropriate sanctions shall also be imposed on the erring Ministry, Extra-Ministerial Offices, and other Arms of Government in accordance with existing Rules and Regulations.”

    The circular stated that Treasury officers will be deployed to ministries, extra-ministerial offices, agencies and other arms of government on Tuesday, December 31, 2013 by 1:00pm to rule off all cash books and take cash book balances, while the MDAs on Treasury Single Account (TSA) will have their accounts on the system closed online real-time, from the treasury and balances of unspent balances will automatically remain in the TSA it added.”

    The circular also notified government establishments that “the annual board of survey shall be convened as from Thursday, January 22, 2014, to examine balances, stamps and other security documents held by all arms of government including ministries, extra-ministerial offices and agencies.”

    Similarly, the circular noted that by January 31, 2014, “Treasury officers shall be deployed to all ministries, extra-ministerial offices, agencies and other arms of government, to extract all relevant accounting information pertaining to the closure of all books of accounts for the financial year 2013, to ascertain the level of compliance with the provisions of this circular.”

    The Accountant-General of Federation (AGF) lamented that “some Ministries, Extra-Ministerial Offices, Agencies and other Arms of Government collect revenue (such as VAT, Withholding Tax, fees, fines and interests without promptly remitting same into the Consolidated Revenue Fund (CRF).”

    As a result, he directed that “all outstanding advances must be retired on or before December 31, this year as it is the responsibility of Accounting officers to ensure that all advances granted to officers are fully recovered in line with FR 1420 and Treasury Circular No: TRY/A5 &B5/2012/OAGF/CAD/026/V.1/164. Failure to do this will lead to enforcing the applicable sanctions as provided in the Financial Regulations (FR).

    All outstanding imprest the AGF said must be retired on or before Tuesday, December 31, while special imprests are expected to be retired immediately the reason for which they are granted cease to exist as contained in FR No:1011.

    Renewal of imprest accounts in the new year the AGF added “shall be subject to evidence of retirement of the previous ones. Unretired imprest balances of the previous years must similarly be retired on or before December 31, to avoid  imposing necessary sanctions as provided in the Financial Regulations.”

    Government, the office, said requires accounting officers to exercise due economy and ensure adherence to the value for money concept in all financial transactions of their MDAs because “money shall not be spent merely because it has been voted”.

    The OAGF maintained that “all entries into the Departmental Vote Expenditure Allocation (DVEA) books, ledgers, mandate summary register and imprest accounts shall be concluded on Tuesday, December 31. All cash books should be balanced before 12:00 noon on Tuesday, December 31.”

  • CBN to restore confidence in banking system

    CBN to restore confidence in banking system

    The Central Bank of Nigeria (CBN) has said bank customers deserve effective service and must derive maximum satisfaction in their transaction with banks across the country.

    Director, Consumer Protection Department of the CBN, Hajiya Khadizat Kasim, who made this known in Jos yesterday in a press conference, said the apex bank has put up several measures aimed at protecting consumers and restoring confidence in the financial system.

    “In line with the mandate of CBN to promote a sound and stable financial system as enshrined in the CBN Act, the consumer protection department saddled with the responsibility of regulating conduct of financial services providers, will not shy away from that responsibility, she said, adding that it was lack of consumer sophistication amongst several other factors that was responsible for the near collapse of the financial system in the recent past.”

    She said the apex bank introduced several reforms to sanitise and stabilise the financial system and consumer protection was included as a cardinal component of the reform program.

    “Protecting the consumers can be achieved through intensive consumer enlightenment activities. We must increase awareness and understanding of financial products and services and empower Nigerians with requisite knowledge to make informed choice and take effective action that will enhance their financial well-being.

  • ‘Cashless’ll limit cash usage’

    ‘Cashless’ll limit cash usage’

    An Don at the Department of Marketing, Abia State Polytechnic, Aba, Anyaogu Peter Maduabughichi, has described the recently introduced cashless policy of the Central Bank of Nigeria (CBN) as one that would curb some of the negative consequences associated with the high usage of cash in the economy.

    Anyaogu, who spoke at the annual lecture of the National Institute of Marketing of Nigeria held in Aba, Abia State, entitled, ‘Database Marketing in Nigeria’s Cashless Economy: Challenges and Prospects,’ said that high cash usage enables corruption, leakages and money laundering among Nigerians.

    He listed informal economy, high subsidy, inefficiency, corruption, high cost of cash, and high subsidy, as other negative consequences associated with high usage of physical cash in the economy.

    He said the policy was introduced to “drive development and modernisation of our payment system, and as well improve the effectiveness of monetary policy in managing inflation and driving economic growth.

    He said if the cashless policy is well packaged and adequate facilities are provided up to the rural communities, especially as it relates point of sales (POS) terminals, it woild enhance and facilitate exchange process.

  • So long a letter

    So long a letter

    The Senegalese, Mariama Ba (1929-1981), wrote So Long A Letter, a semi-autobiographical novella, that chronicled the plight of the African woman, under the combined pressure of African and Islamic cultures.

    The male chauvinists that dominate both worlds would scoff at the late Madame Ba’s “ranting” against the marital status quo, so violently skewed against the woman in both cultures. But her 1980 classic has provided gender rights activists, determined to right these age-old wrongs, an evocative literary tool.

    On December 12, former President Olusegun Obasanjo made public his own long letter, not for any overriding public good, but a litany of woes against his estranged protégé, President Goodluck Jonathan. Obasanjo played his usual grandstand as some self-appointed overseer of Nigeria; and postured without end as the all-consuming patriot.

    Yet, it was nothing but another unabashed glorification of the Obasanjo self — that ever intrusive persona that, on the balance of fair evidence, can’t even pass the muster of the model citizen.

    Like most of Obasanjo’s hyper-reported public interventions, it was another grand show of a show-actor craving a stage and cheap applause — cynical applause at the expense of some political foe. The former military head of state (1976-1979), two-term elected president (1999-2007) and fundament of the Nigerian problem is crying wolf!

    Yes, there is indeed some “wolf”. But Obasanjo himself was its author and finisher: Goodluck Jonathan, after all, was Obasanjo’s political creation. But the creator would rather Jonathan was some tabula rasa — on which he could write and erase at will — which the protégé has resisted.

    Godson cannot, therefore, hear the godfather. Things have fallen apart, so mere anarchy, to paraphrase the Irish poet, William Butler Yeats, is loosed upon their once cosy world! But how is that a problem of Nigeria and Nigerians as Obasanjo now trumpets?

    Indeed, Yeats in his poem, “The Second Coming”, somewhat echoes the loud but empty Obasanjo interventions: “The best lack all convictions, while the worst are full of passionate intensity!”

    That brings the discourse to Obasanjo’s “permission” to share the Jonathan letter with the quad of Generals Theophilus Danjuma, Ibrahim Babangida, Abdulsalami Abubakar and 2nd Republic Vice President, Alex Ekwueme — to earn some high profile sympathy? Ah!

    But which of these, aside from Abubakar, has not tasted Obasanjo’s rather crude tongue, in his endless playing to the gallery?

    Is it Danjuma who, not long ago in a fit of media anger, dismissed Obasanjo as “Aremu of Ota”?

    Or Babangida, who earlier as self-proclaimed “military president”, endured the Jonathan treatment, the same grand hypocrisy the grim Sani Abacha could not stand and, before the infernal theatrics started, despatched the grand dramatist to gaol on phantom coup charges?

    Or is it Ekwueme that Obasanjo muscled into silence while, as president, he started destroying the Peoples Democratic Party (PDP), the logical conclusion of which he now, ironically, accuses and ridicules the luckless Jonathan, though his name be Goodluck?

    If Jonathan has his Bamanga Tukur, didn’t Obasanjo have his own Garrison Commander, Ahmadu Ali, both relentless presidential puppets that smashed the ruling party so a bully president could stand tall, like some Gulliver in Lilliput?

    Yet, no tears for President Jonathan. He plunged his knife into a dead hippo, fallen by the pool; and he richly deserves his running diarrhoea. There is always a stiff price for crass opportunism!

    Besides, despite being the first Nigerian president to bear the academic prefix of PhD, Jonathan’s actions have no rigour, no grace, no gravitas, just plain humdrum! Indeed, by his actions and inactions he has, perhaps more than any other, afflicted his presidency with a rare pull him down (PHD) complex.

    His is a grand study in wilful conspiracy against self; and the resultant harsh wages of promotion beyond competence. His presidency is therefore a grand let-down, right from the beginning — and there appears no redeeming factor.

    Indeed, as one contemplates the Jonathan Presidency, with its welter of terrible constitutional infractions and heinous allegations, and the man at the vortex of it all feigning none the wiser, the disturbing image of the Biblical wolf in sheep’s skin floods the mind.

    But even as the president sweats under the crushing weight of his elephantine troubles, his feet, in fatal distraction, appear still foraging for needless troubles with ants.

    The induced Rivers crisis is an abiding case in point, with the Police not even hiding their hideous partisanship; and rogue legislators, backed by rogue “federal might”, threatening to plunge that state into anarchy.

    Then there are opposition allegations of Jonathan turning the Ecological Fund into some crony gravy — allegedly rewarding friends, punishing foes.

    Of course, there is also the abiding allegation, supported by CBN Governor, Sanusi Lamido Sanusi, that the Nigerian National Petroleum Corporation (NNPC) is undercutting the country and the president doesn’t appear to have a clue about it all.

    That these allegations are made at all show the near-hopeless depth the Nigerian presidency has plumbed under Jonathan. That is unfortunate. But even more grievous is Obasanjo’s allegation that Jonathan is arming snipers to despatch political foes.

    Though the now crusading Obasanjo had more than a fair share of unresolved politically motivated killings during his presidency, this is one allegation Jonathan must deal with, if only to clear his presidency’s sagging reputation.

    But aside from this alleged killer squad, most of Obasanjo’s charges, in his long epistle of lamentation, were pure gas. There was nothing Obasanjo accused Jonathan of that he himself did not do during his best-forgotten presidency.

    NNPC is opaque. But how open was it during Obasanjo’s term, even when he was his own oil minister?

    On corruption — what has Obasanjo to teach, after his Obasanjo Presidential Library’s bared-faced extortion? If Jonathan responded with a contractor building his village a marvel of a church, it is evidence that Jonathan is master of his political father’s rotten tactics, corruption be damned!

    Jonathan wants to run for second term — and so what? Didn’t Obasanjo do two legal terms and was plotting an illegal third? Fortunately, Jonathan is doing more than enough to be guillotined at the polls. So, let the people decide his fate.

    Therefore, to now grandstand at some ogre, hinting at some non-democratic change, under some pseudo-messianic complex, is not only cheap but outright subversive. But it is another cynical drama, for Obasanjo knows that he too would vanish without trace, should Jonathan meet his electoral waterloo. So, would his and Jonathan’s credo of power without responsibility; and lollies without service.

    Obasanjo and Jonathan are an inglorious past and ignoble present that must be electorally swept away, from polluting the future. The Ebora Owu’s long letter of tumbling adjectives, and buzz words like honour and credibility that, from Obasanjo’s own conduct in office hardly meant anything, is his way of buying time and shopping for new puppets.

    He fails — except, of course, with the gullible and the excitable!

  • Sack Oduah, Allison-Madueke now, lawmaker tells Jonathan

    Sack Oduah, Allison-Madueke now, lawmaker tells Jonathan

    CHAIRMAN, Committee on Information, Strategy, Security and Publicity of the Lagos State House of Assembly, Hon. Segun Olulade, has called on President Goodluck Jonathan to relieve the Minister for Petroleum Resources, Dieziani Allison-Madueke and her Ministry of Aviation counterpart, Ms. Stella Oduah, of their duties without further delay.

    The lawmaker was reacting to the letter written by the Central Bank of Nigeria (CBN) Governor to the president in which he alleged that the Nigerian National Petroleum Corporation (NNPC) has failed to remit $49.8billion crude oil proceeds to the Federation Account.

    Olulade described as “stinking” the retaining of both ministers in the federal executive council in spite of allegations of gross inefficiency and corruption levelled against them since the inception of this administration.

    While expressing worry that the president has not done enough to tackle the issue of corruption in the country, Olulade noted, “This is the first time in the history of Nigeria that we are seeing reckless female ministers in government. If Mr. President fails to do the needful, the National Assembly should bring the erring ministers to book.”On the recent letter written by former President, Chief Olusegun Obasanjo to President Jonathan, Olulade advised Jonathan to take the matter in good faith by addressing critical issues of national importance raised in it.

  • Sanusi playing politics with $49.8b claim – NNPC

    Sanusi playing politics with $49.8b claim – NNPC

    The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Engr. Andrew Yakubu, on Friday described the Central Bank of Nigeria (CBN) Governor, Mallam Sanusi Lamido Sanusi’s claim that the corporation failed to remit $49.8 billion into the Federation Account from January 2012 to July 2013 as a “political instrument for the 2015 general elections.”

    Yakubu, who spoke at a world press conference at Abuja, said it is a baseless and unfounded allegation targeted at ridiculing the management of the NNPC.

    He said: “In conclusion, I want to say from what I have said clearly that the allegation is unfounded. It is baseless and it has become a political instrument in the current politically charged environment. And we consider this as an attempt to ridicule the corporation and its management.”

    Asked to explain what he meant by political instrument, the NNPC boss added, “So, I am taken aback that this issue that came up about four months ago, we made our clarification to the Hon. Minister of Petroleum Resources four months ago and for it to surface at this time that the political atmosphere is charged, then we find it difficult. We are taken aback, then it is left for you journalists to do your investigative journalism to unravel the reason behind this attack.”

    Yakubu, however, explained that NNPC crude oil lifting include equity crude, royalty oil, tax oil, volume for third party financing and Nigeria Petroleum Development Company equity volume.

     

     

  • $49.8b ‘missing’ oil money: Governors insist on probe

    $49.8b ‘missing’ oil money: Governors insist on probe

    Sambo postpones NEC meeting

    Vice-President Namadi Sambo shifted yesterday the National Economic Council (NEC) meeting fixed for tomorrow.

    But governors are planning a meeting of the Nigeria Governors Forum (NGF) for tomorrow to demand answers to the nine posers they have raised on the state of the economy.

    Consultations were on yesterday on the need for a emergency session of the NGF in Abuja.

    The governors are likely to hold a briefing in Abuja after the NGF session.

    They were determined to find out at the NEC session how about $49.8billion oil sales proceeds was not remitted to the Federation Account between January 2012 and July 2013. The governors may insist on a probe, it was learnt.

    Central Bank of Nigeria (CBN) Governor Sanusi Lamido Sanusi raised the alarm over the “missing” fund in a memo to President Goodluck Jonathan.

    The postponement of the meeting was contained in a notice titled “Cancellation of 9th (53rd) NEC meeting” from the secretariat in the Office of the Vice-President.

    It reads: “Please, I am directed by the Vice-President and Chairman of the Council to inform Your Excellency that the NEC meeting scheduled for Thursday, 12th December 2013 has been postponed due to unforeseen circumstances.

    “A new date will be communicated to you.”

    No reason was given for the postponement. A source said the shift followed security reports on the likelihood of the governors creating a scene on the nine posers they raised for the Presidency to address.

    A governor, who pleaded not to be named, said: “We have got a notice on the postponement of the NEC meeting due to unexplained unforeseen circumstances. We know that the shift was based on fears by the Presidency because certain matters on the state of the economy are now in the public domain.

    “The revelation on the alleged diversion of $49.8billion from the sale of oil has caused more tension among the governors. For the CBN Governor to have confirmed that only 24 per cent of the revenue from oil proceeds was remitted into the Federation Account is scandalous.

    “The issue at stake is beyond party leanings. We are all disturbed by this disclosure from the CBN Governor in a memo to the President.”

    Another governor said: “Sambo was being “tactical” in shifting the meeting because President Goodluck Jonathan is away in South Africa for Nelson Mandela’s burial and he will not want the NEC meeting to degenerate to an embarrassing level for the government in the absence of the President.

    “They are trying to device means of managing the situation in a manner that there would be a soft-landing bend for the Federal Government. We are however wiser than that,” he added.

    The governors plan to meet on these nine issues and come up with a position on the state of the economy.

    Another source said: “They can postpone NEC meeting; they cannot stop us from talking on how the economy is being run. Why will the Federal Government present 2014 Budget without consulting NEC? Why will NNPC not remit $49.8bilion oil proceeds and the government is keeping quiet?

    “In 1980, we were talking of missing N2billion but now it is $49.8billion that cannot be traced. Someone needs to talk to the governors if we are truly practising Federalism.”

    The posers raised are:

    •Was $50billion oil money not remitted to the Federation Account? Where is the money?

    •Is Nigeria broke or not;

    •Why was the NEC consulted before the 2014 budget was presented to the National Assembly;

    •How much has Nigeria earned from its oil sales in 2013 and what percentage of the budget is funded by these receipts?

    •Is it really true that $5b is missing from Excess Crude Account

    •How much oil does the country produce per day?

    •Clarification that the benchmark price for oil in the 2013 budget is $79?

    •Is it a fact that crude oil was sold at prices that hovered around $110 throughout the year?

  • CBN: we’ve varsities’ N200b cash

    CBN: we’ve varsities’ N200b cash

    •ASUU’s strike illegitimate, says Presidency

    The Central Bank of Nigeria (CBN) has written to the Accountant-General of the Federation, confirming the execution of the N200 billion in the Revitalisation of Universities Infrastructure Account.

    The confirmation was conveyed through a memo to the Accountant General, dated December 10.

    A copy of the memo, signed by CBN’s Deputy Governor (Operations), Tunde Lemo, was circulated by the Senior Special Assistant to the President on Public Affairs, Dr. Doyin Okupe yesterday.

    Lemo’s memo said: “I write to confirm the execution of the following mandates by the Central Bank of Nigeria for funding of the above mentioned accounts.

    “I wish to further confirm that the available balance in the aforementioned account is N200, 000, 000, 000 (Two Hundred Billion Naira only).”

    Okupe, who addressed reporters yesterday, said with the execution of the mandates, the strike has lost its legitimacy.

    The spokesman maintained that President Goodluck Jonathan is fully committed to the implementation of the agreements reached with ASUU leadership.

    He added that a Needs Assessment Implementation Committee, which has ASUU representatives on board, would be inaugurated today to fast track the utilisation of the released funds and tackle infrastructural deficiency in the university system.

    The President’s aide said: “Government has received a number of representations from eminent Nigerians and stakeholders on the need to temper justice with mercy regarding the ultimatum issued to the striking lecturers.

    “Government appreciates the fact that some universities have either resumed academic activities or announced resumption dates in line with the directives earlier issued by the Committee of Pro Chancellors.

    “Now that evidence has been provided as to the availability of N200 billion for immediate disbursement to universities, we expect that ASUU will call off this strike so that normalcy will fully return to our campuses.

    “Government does not intend to victimise anyone who participates in a legitimate strike action.”

    Okupe assured ASUU on its three other demands, saying the government has no reason to reject the conditions.

  • ‘Global economy will grow faster in 2014’

    ‘Global economy will grow faster in 2014’

    World economic growth will pick up next year, paced by improvements in the United States of America (USA) and the euro area, Mohamed El-Erian, chief executive officer of Pacific Investment Management Company has said.

    The Newport Beach, California-based asset manager said the world economy is likely to expand 2.5 per cent to 3 per cent in 2014, up from 2.3 per cent this year. US growth will accelerate to 2.25 per cent to 2.75 per cent from 1.8 per cent.

    “The US economy is healing,” El-Erian said in an interview. “Household balance sheets are in a better place.”

    El-Erian, whose firm has $1.97 trillion in assets under management, said it’s virtually certain the Federal Reserve will begin moderating its asset purchases by the end of March, with a 50-50 chance of a move next week.

    He said the Fed is likely to couple any tapering announcement with a cut in the interest rate it pays on banks’excess reserves and a strengthened commitment to keep monetary policy easy for an extended period.

    The euro region’s economy will expand by 0.25 pe cent to 0.75 percent in 2014, after contracting 0.4 per cent this year, he said in a news report by Bloomberg.

    The Pimco executive said he was heartened by the broad-based improvement in the US job market last month. Payrolls increased by 203,000, while the unemployment rate fell to seven per cent from 7.3 per cent in October, the Labour Department reported on December 6. The employment-to-population rate also rose while hourly earnings increased.

    “The breadth of improvement was notable,” El-Erian said.

    The Fed’s “hyperactive” monetary policy has given the US economy time to mend after its deepest recession since the Great Depression, according to El-Erian.

    The Fed is buying $85 billion of bonds per month. It has also promised to keep its target for the federal funds rate near zero at least as long as unemployment remains above 6.5 per cent and forecast inflation is not above 2.5 per cent.

    “You’re looking at a transition where the Fed will remain engaged but will alter its policy mix,” by gradually reducing its bond buying while strengthening its forward guidance on short-term interest rates, he said.

    He said he expects the Fed to cut the 0.25 per cent rate it pays commercial banks on excess reserves as part of that transition. While such a move would not have a “dramatic impact,” it would underscore the Fed’s commitment to keeping rates low, he said.

    Banks’ reserves have mushroomed as the Fed purchased securities from them in its bid to lower long-term interest rates. Banks currently have more than $2 trillion in extra cash at the Fed, according to data from the central bank.

    Even as the economy improves next year, it won’t achieve “escape velocity,” according to El-Erian. The big missing ingredient is stepped-up capital spending by companies.

    “We have yet to see business investment really pick up,” he said. “Companies still prefer to use their excess cash for financial engineering” such as buying back shares or boosting dividends.

    Also, Reuters reported that Goldman Sachs strategists expected economic growth in developed economies to accelerate next year and urged investors to buy U stocks, partly on the likelihood that central banks’ monetary policies will remain accommodative.

    The gross domestic product (GDP) growth of the United States and the United Kingdom will exceed expectations, the strategists said, and US stocks look attractive since the Federal Reserve will likely keep short-term interest rates low.

    A key trade in 2014 will be to invest in the Standard & Poor’s 500 stock index while betting against the Australian dollar, said Noah Weisberger, head of the macro equity team within Goldman Sachs’ Global Markets Group. He cited the Fed’s stance of keeping policy rates low through “forward guidance” as a reason to buy US stocks.

    The strategists also touted stocks within the US, Japanese and European banking sectors.

    The S&P 500 has hit record highs this year and surged nearly 27 per cent. The Fed’s $85 billion in monthly purchases of Treasuries and agency mortgages have kept bond yields low, leading investors to seek higher income in stocks.

    Forward guidance refers to the language the Fed uses to tell markets how long it will keep short-term rates near zero. The central bank has kept the key federal funds rate near zero since late 2008 to help the economy recover from recession and has promised to keep it there for a while longer, probably until 2015.

    Risks remain that economic growth could lag their optimistic forecast, the strategists said. Also, if investors in general begin to expect higher economic growth, bonds could sell off and result in volatility for stocks, they added.

    The continued easing of risks stemming from the euro zone will be a positive influence on economic growth in developed economies next year, said Francesco Garzarelli, co-head of the global macro and markets research team. He added that inflation will remain “relatively low.”

    While touting stocks broadly, the strategists recommended betting against commodities such as copper, iron ore and gold. Copper and iron ore prices will suffer from supply growth, said senior metals analyst Max Layton.

    Investors should buy Chinese stocks while “shorting” or betting against copper prices, said Kamakshya Trivedi, executive director within the global macro and markets group. Trivedi said that a stable China might be “good enough” next year.

    Analysts have warned this year of an end to the “supercycle” of strong commodity performance over the past decade in response to a potential unwinding of the Fed’s bond-buying program, along with fragility in the US and European economic recoveries.

  • Sustainable living: The new face of banking

    The Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC) are asking banks to look beyond profit and return on investment (RoI) in funding projects to sustainable banking practice. The proposal, which emphasises sustainability of the environment and corporate social responsibility (CSR), was the thrust of a workshop hosted by NDIC in Uyo, the Akwa Ibom State capital, report SIMEON EBULU and  COLLINS NWEZE.

    Should a bank lend money to a company that pollutes the environment or a borrower that funds terrorist activities? Should a bank base its lending plans on return on investment and profitability only, without recourse to the nature of business the borrower does? These and many more were the issues in focus in the forum that was designed to address the new phase of banking, tagged Sustainable Banking.

    But financial sector’s key regulators: the Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC) want banks to shift focus from profitability alone and consider also other issues around sustainability, before lending.

    The United Nations Environment Programme (UNEP), through its UNEP Financial Initiative on the Environment and Sustainable Development at the Earth Summit in 1992, placed it as pertinent concern for financial systems across the world.

    It said sustainable banking in Nigeria, therefore, is focused on energising the influence of the banking sector (being financier of economic and social activities) towards transforming the longer term interest of environmental preservation and societal balancing into key parameters for allocation of capital.

    It was, therefore, not surprising that the CBN and commercial banks are working out a framework that would restrict lending to companies that adopt and implement environmentally friendly policies. By this, International Oil Companies (IOCs) and other firms that engage in activities that cuase pollution of the ecosystem will be denied loans, going forward.

    The CBN Governor, Sanusi Lamido Sanusi said if the oil companies that degrade the environment and their cohorts in other sectors are starved of funds from both local and international banks, they will have no choice than to comply.

    He spoke during the Nigeria Sustainable Finance Week conference tagged: “Moving frontiers in sustainable finance”, which was meant to attract funding to agriculture, assist in global carbon trading and protect the environment from degradation.

    For him, there is urgent need for a policy ensuring that people do not carry on their businesses in environmentally unfriendly manner and get away with it. He said the agenda would be presented to the Bankers’ Committee to agree on the way it can be realised. The reason is that as an industry, banks cannot continue to take savings and deposits from Nigerians and then, lend to companies that are destroying the environment.

    “Why must Nigeria bring multinational oil companies to destroy our environment? How do we feel about it? They can get the funds and still use it in a responsible manner. I want to see more banks coming to identify with issues of sustainability and protection of the environment,” he said.

    He said banks should not just look at profitability of lending decisions, but should also consider contributions of the borrower to the environment.

    Sanusi, however, admitted that such might be an uphill task in a highly competitive banking sector ‘where dog eats dog’. “How can banks do that when they are competing for accounts? Banks should stop looking at size of balance sheet but on how to build sustainable finance,” he said.

    For him, competition in the sector has drastically risen, compared with what was obtainable in the 80s. He therefore admitted that the policy may be stalled by banks not wanting to lose businesses to competitors that care less about the environment, where a borrower has not adhered to set standards.

    Loan process

    The CBN boss explained that for firms to secure loans from banks, they have to meet certain standards that are applicable in other parts of the world like Brazil, Egypt, Saudi Arabia and Malaysia, among others. “Our environment has been taken for granted for too long. Look at what has happened to the Niger Delta. Imagine that people in the Niger Delta cannot put a net in the river and catch fish to eat and that is a fisherman who is not an employee of the oil company. So, he has to find money to buy imported fish. So, we are saying that even though these things may look simple, they are actually the foundation to the insecurity that we have in the country,” he said.

    NDIC’s role

    Also, the NDIC has called on banks and other financial institutions to improve their commitment to addressing environmental and social impacts of their services. The corporation made this known in a statement at the conference.

    It said more lenders have realised that ignoring social and environmental issues could increase their exposure to credit, compliance and reputational risks. It said to advance sustainability, banks must seek improved performance and results on ground in affected communities and environments.

    It explained that sustainable banking is a value system, which ensures that a bank’s commercial activities do not only benefit its staff and shareholders, but also its customers and wider economy.

    It said financing of the energy sector which is usually the villain on matters of environmental degradation across the world is a trite example. This sector is perhaps the most capital intensive sector and depends on the financial system to mobilise funds for its highly capital intensive operations.

    It said until recently the industry had not given much attention to sustainability beyond ticking off environmental impact assessment on checklist for credit risk assessment for evaluation of loan applications, other jurisdictions have for decades been engraving sustainability ethos in their financial system.

    It said since the 1980s, banks in the United States had been held (under CERCLA- Comprehensive Environmental Response, Compensation and Liability Act) for the negative impact the businesses they financed had on the environment and some of them became bankrupt thereafter.

    Banks’ funding of oil projects

    Eight banks, which include Ecobank, Zenith Bank, Diamond Bank,GT Bank, United Bank for Africa (UBA), Standard Chartered Bank, Access Bank and Fidelity Bank, provided funding for local contractors operating in the nation’s oil and gas sector.

    The banks signed Memorandum of Understanding (MoU) between Total E&P Nigeria Limited, Total Upstream Nigeria Limited and eight leading banks in the country, on a $7.5 billion Nigerian Contractors’ Initiative, in Port Harcourt, the Rivers State capital.

    The programme was put together by Total to manage its value chain, including suppliers and distributors. The essence is to empower local contractors to play more active role in the oil sector through sustainable funding.

    Managing Director/Chief Executive, Total, Mr. Guy Maurice, said the key objective of the MoU and launch of the fund, is to bridge the funding gap for the company’s local contractors which includes vendors and suppliers.

    He noted that the initiative provides for sustainable funding relationship between the selected banks and Total’s indigenous contractors, adding that the programme is in line with the local content laws.

    The Total boss lauded the eight banks for scaling through the rigorous selection process, expressing confidence that, the initiative will enhance local contractors’ participation in the company’s entire value chain business.

    CBN takes case to judges

    Sanusi, while speaking at the Banking and Allied Matters conference for Judges on the theme: ‘Sustainable banking practice in Nigeria: The journey so far and the way forward’, explained that global environmental impact of businesses, which are largely financed by the banking industry suggests that the sector has not given adequate attention to environmental impact of their funding activities.

    He said the tendency to view banking as an environment friendly business is commonplace as it seemed, on the surface, not to be harming the environment and society directly.

    “However, the banking sector has been profiting from financing of environmentally unfriendly sectors. Financing of the energy sector which is usually the villain on matters of environmental degradation across the world is a trite example. This sector is perhaps the most capital intensive sector and depends on the financial system to mobilise funds for its highly capital intensive operations,” he said.

    Template for violators

    The CBN has also developed a reporting template for banks in filling their reports on loans to firms whose operations have negative impact on the environment. This is in line with the Sustainable Banking Practice being promoted by the banking watchdog.

    The CBN said 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.

    According to the regulator, 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 business activities.