The Nation Newspaper

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  • Banks grow assets, liabilities to N23tr in Q3

    Banks grow assets, liabilities to N23tr in Q3

    Deposit Money Banks (DMBs) grew their assets and liabilities to N23.3 trillion in the third quarter which ended in September, the Central Bank of Nigeria (CBN) has said.

    According to the CBN Economic Report for the quarter released at the weekend, the figures represent about 3.4 per cent growth, compared to those of the previous quarter.

    It said the funds, which were sourced largely, from increased mobilisation of demand deposit and unclassified liabilities, were used for accretion to reserves, extension of credit and acquisition of foreign and unclassified assets.

    Also, at N11.2 trillion, banks’ credit to the domestic economy declined by 5.8 per cent below the level in the preceding quarter. It attributed the development largely to the 125.8 per cent decline in claims on the Federal Government.

    However, CBN’s credit to the banks rose by 1.5 per cent to N233.4 billion at the end of the review period, reflecting the decline in overdrafts to banks, while total specified liquid assets of the DMBs stood at N5,992.8 billion, representing 37.7 per cent of their total current liabilities.

    It explained that at that level, the liquidity ratio, fell by 18.4 percentage points below the level in the preceding quarter, but was 7.7 percentage points above the stipulated minimum ratio of 30 per cent.

    It said loans-to-deposit ratio, which stood at 33.4 per cent, was 10.5 and 46.6 percentage points below the levels at the end of the preceding quarter and the prescribed maximum ratio of 80 per cent, respectively.

    The report said total assets/liabilities of the discount houses stood at N202.83 billion, indicating a decline of 41.1 and 30.3 per cent below the levels at the end of the preceding quarter and the corresponding quarter of last year.

    “At 37.7 per cent, the liquidity ratio in third quarter was 7.7 percentage points above the stipulated minimum ratio, while the loan-to-deposit ratio fell below the prescribed maximum of 80 per cent by 46.6 percentage points.

    It said discount houses’ investment in Federal Government securities of less than 91-day maturity declined significantly by 77.5 per cent to N33.4 billion, representing 22.6 per cent of their total deposit liabilities.

    “At this level, discount houses’ investment was 37.4 percentage points below the prescribed minimum level of 60.0 per cent for fiscal 2013. Total borrowing by the discount houses was N41.7 billion, while their capital and reserves stood at N41.9 billion. This resulted in a gearing ratio of 1.0:1, compared with the stipulated maximum of 50 to one for fiscal 2013,” it said.

     

     

    Available data from the National Bureau of Statistics (NBS) showed that gross domestic product (GDP) was estimated to have grown by 6.9 per cent in the third quarter of 2013, compared with 6.2 per cent in the preceding quarter. The development was attributed, largely, to the increase in the contribution of the non-oil sector.

    It said broad money supply, (M2), fell by 7.8 per cent at the end of the third quarter, compared with the decline of 0.5 per cent at the end of the preceding quarter, but contrasted with the increase of 4.3 per cent recorded at the end of the corresponding period of 2012.

    The development, relative to the preceding quarter reflected largely the 1.5 and 13.9 per cent fall in domestic credit (net) and other asset (net) of the banking system, respectively. Similarly, narrow money supply, (M1), fell by 9.3 per cent, in contrast to the growth of 0.02 per cent at the end of the preceding quarter. Reserve money (RM) rose at the end of the third quarter of 2013.

    It said available data indicated mixed developments in banks’ deposit and lending rates adding that the spread between the weighted average term deposit and maximum lending rates narrowed by 0.20 percentage point during the review quarter.

    Provisional data indicated that the value of money market assets outstanding increased by 0.34 per cent to N6.5 trillion, compared with the increase of 5.96 per cent at the end of the preceding quarter.

    The development was attributed to the 94.13 and 53.15 per cent increase in Commercial Paper and Banker’s Acceptances outstanding.

     

    Also at N13.1 trillion, aggregate banking system’s credit (net) to the domestic economy, fell by 1.45 per cent at the end of the third quarter of 2013, in contrast to the increase of 4.34 per cent at the end of the preceding quarter. The development relative to the preceding quarter was due largely, to the 33.08 per cent decline in claims on the Federal Government, which more than offset the effect of the 3.83 per cent rise in claims on private sector.

    Over the level at end-December 2012, aggregate banking system’s credit (net) to the domestic economy, rose by 3.18 per cent, due largely to the 7.5 per cent increase in claims on the private sector.

    Banking system’s credit (net) to the Federal Government, at the end of the review quarter, fell by 33.08 per cent to negative N3.1 trillion compared with the decline of 21.52 per cent in the corresponding period of 2012. This contrasted with the growth of 4.9 per cent recorded at the end of the preceding quarter.

    The development relative to the preceding quarter was accounted for, largely, by the 120.48 per cent decline in holdings of treasury instruments by the banking system. Over the level at end-December 2012, credit (net) to the Federal Government fell by 30.04 per cent, reflecting largely the decline in banking system’s holding of Federal Government securities.

  • 2015 election: Sanusi worried over public spending

    2015 election: Sanusi worried over public spending

    The Central Bank Governor Lamido Sanusi said he is bracing for public spending “shocks” as Africa’s most populous nation prepares to vote in 2015, reducing the chance of lower interest rates.

    “Toward the elections there will be a supplementary budget,” Sanusi said in an interview on Bloomberg TV’s African Business Weekly programme, over the weekend in Abuja. “I don’t think I have seen an election cycle in any country in which the government has not spent money.”

    Sanusi held the bank’s key interest rate at a record high of 12 percent on Tuesday, saying policymakers may raise borrowing costs if government spending surges in a pre-election year. While President Goodluck Jonathan has pledged to keep the budget deficit under control, oil revenue has slumped this year and lawmakers are pushing to boost expenditure, adding to pressure on inflation.

    “We are bracing ourselves for the possibility of shocks from the fiscal side, and we will have to respond on monetary side,” Sanusi said in the interview, which was conducted in the capital, Abuja. “We have always made it very clear that if we have to tighten then we will tighten.”

    Sanusi, who is due to leave his position when his term ends in June, raised concerns about high recurrent spending in the budget, such as salaries.

    “There’s a lot of money in there that’s recurrent expenditure and overheads, and when you go down and start looking at the fine lines and the numbers, they’re quite frightening,” Sanusi said. “And there’s a significant reduction in capital spending, which is a problem.”

    The apex bank has kept its benchmark rate unchanged since October 2011 to help stabilize the naira and keep inflation under control. Consumer prices rose at the slowest pace in more than five years in October, gaining 7.8 percent from a year ago, while the naira has gained 1.1 percent against the dollar since the beginning of September to trade at 158.65 as of 2:08 p.m. in Lagos, the commercial capital.

  • New naira notes due in June 2014 — CBN

    New naira notes due in June 2014 — CBN

    The Central Bank of Nigeria, CBN, has said that Nigerians should expect a new generation of naira notes before the second quarter of 2014.

    Deputy Governor, Operations, Mr Tunde Lemo, said the apex bank had earlier announced its decision to move the local currency from polymer back to paper, but disclosed that all the notes in circulation would not be withdrawn at the same time.

    “Nigerians will be having new generation notes in paper in the next few months. We will wait until the notes wear tear. When they wear, and they travel back to Central Bank, of course they will be re-issued,” he stated.

    According to him, the life cycle of a note in Nigeria is between six months and a year and if CBN took that decision six months ago, “I reckon that in the next three to six months, you will begin to see these denominations re-appear in paper.”

    He said that, the CBN would have started producing the lower denomination notes in paper by the middle of last year, but due to logistics challenges, the plan was not accomplished.

    “My plea is that Nigerians should be patient with us. It wasn’t the fault of the CBN; it is just because we have to go back to the drawing board. We will correct that in the course of the year. Polymer certainly will be phased out. In fact, no new note is being printed in polymer now,” said Lemo.

    On the scarcity of the lower denomination notes, Lemo blamed inflation and commercial banks for what he called “low transactionary value” and “poor circulation,” respectively.

    “For the lower denomination, well, I think the banks are really the ones that are really not allowing the lower denomination in circulation, largely, because of the cost and carrying value.

    “Most people don’t require small denomination. But for buying things in the market, if you look at the veracity, you find out that it is the people that are losing interest because of its bulkiness and inflation,” he said.

    Lemo said this should be done to ensure effective protection of the currency from abuse.

  • CBN warns against further depletion of ECA

    CBN warns against further depletion of ECA

    • MPR/CRR stays at 12%

    • Inflation target of 6-9% for 2014

     

    The Central Bank of Nigeria’s (CBN) Monetary Polic Committee (MPC) has warned against depleting the Excess Crude Account (ECA). It urged the Fiscal Authority to step up efforts at building buffers.

    Addressing journalists at the end of this year’s MPC meeting in Abuja, CBN Governor, Sanusi Lamido Sanusi, said the erosion of the fiscal buffers through the depletion of the ECA has further exposed the economy to vulnerabilities, while the fall in oil revenue has left capital inflows as the only source of external reserves accretion.

    He called on the fiscal authorities to rebuild buffers in the excess crude account, saying this could be done by blocking fiscal leakages in the oil sector and increasing oil revenues.

    “Clearly, the major risk on the fiscal side at present is not one of escalation of spending, but loss of revenue from oil exports,” Sanusi warned.

    He said the MPC resolved to “keep the Monetary Policy Rate (MPR) at 12 per cent +/- 2 per cent; private sector Cash Reserve Ratio (CRR) at 12 per cent; public sector CRR at 50 per cent and liquidity ratio at 30 per cent.”

    He said the Committee formally adopted an inflation target of 6-9 per cent in 2014, reaffirming its commitment to move Nigeria firmly into being a low-inflation environment, noting that, while Federal Government spending overall this year has not been significantly higher than that of last year, oil revenues have continued to decline in spite of the relative stability in oil price and output, when compared with preceding years.

    As a result, Excess Crude savings have fallen from about $11.5 billion at year-end of 2012, to less than $5 billion as at November 14, this year.

    “External Reserves have remained in excess of $45billion only because of a massive inflow in portfolio funds. The implication of this is that financial markets are extremely fragile and susceptible to external shocks,” Sanusi said.

    According to the CBN governor, the Federal Government debt “has also risen phenomenally along with its deposits at the deposit money banks, making the government a net creditor to the system. This underscores the urgent need for immediate implementation of the Treasury Single Account. The continued delay in returning government accounts to the central bank is adding to the huge cost of government debt due to poor cash flow management.”

    MPC noted that the increase in external reserves to $45.37 billion as at November 15, 2013, represented an increase of $1.26 billion or 2.85 per cent above the level of $44.11 billion at end- September 2013.

    External reserves, he disclosed, increased by $0.95 billion or 2.14 per cent on a year- on-year basis over the $44.47 billion at end-November 2012. MPC, he said was disappointed at the low rate of reserve accretion in spite of strong oil prices which is a result of the absence of fiscal savings.

    The MPC also noted that the Asset Management Corporation of Nigeria (AMCON) is expected to reduce its debt by N1 trillion by next month. He said the CBN has directed that AMCON redeem its bonds for cancellation by exchanging them for Federal Government of Nigeria (FGN) Treasury Bills on its books.

    Consequently, the only impact of the repayment Sanusi said is that the Balance Sheet of AMCON (and the contingent liability on the FGN from its guarantee of AMCON Bonds) will shrink by N1 trillion.

    This, he noted is positive for the economy and the credit rating of the FGN and the banking industry. Its impact on the markets he explained “will be minimal given that only AMCON’s Balance Sheet is affected significantly and AMCON is not a player in these markets.”

    Also the committee has expressed concern at the massive depletion of the Excess Crude Account (ECA) and called on the Fiscal Authorities to rebuild buffers in the excess crude account.

  • Sanusi cautions banks on oil, gas financing

    Sanusi cautions banks on oil, gas financing

    Banks should consider the environmental impact of their financing and investments, especially when they concern the oil sector, the Central Bank of Nigeria (CBN) Governor, Sanusi Lamido Sanusi, has said.

    Speaking at the Banking and Allied Matters conference for judges, he explained that global environmental impact of businesses which are largely financed by the industry suggests that the sector has not given adequate attention to environmental impact of their funding.

    The seminar, which has as theme, Sustainable banking practice in Nigeria: The journey so far and the way forward, was organised by the Chartered Institute of Bankers of Nigeria (CIBN) and the National Judicial Institute (NJI).

    Sanusi said the tendency to view banking as an environment-friendly business was common place, adding that on the surface, it seems not to be of harm to the environment and society.

    “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.

    Sanusi said statistics abound on how spillage has degraded environment and destroyed farmlands and aquatic life, thereby incapacitating the people economically and perpetuating poverty, adding that there have also been various reports of chemical emissions from our industries resulting in health complications within affected localities with its attendant societal/public cost.

    He said until recently, the country’s banking 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.

    He said since the 1980s, banks in the United States had been held directly answerable (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 thereof.

    The Europeans followed suit in the mid-90s while the activities of multilateral development institutions, such as the World Bank, International Finance Corporation (IFC), European Bank for Reconstruction and Development, had influenced sustainability considerations in the financial sectors in Asia and South America.

     

     

    CIBN President, Segun Aina said the seminar had become a significant forum where respected jurists, legal luminaries and other key legal personalities interact with the chieftains of the banking industry.

     

     

    He said that it helps the stakeholders to discuss contemporary banking and legal issues aimed at improving the Nigerian banking environment and related judicial processes.

  • Why CBN got ISO 20071 certification

    Why CBN got ISO 20071 certification

    The Central Bank of Nigeria (CBN) has been issued the ISO 20071 certification, meaning that Nigeria’s apex bank has developed near-fool proof mechanism to protect valuable information and documents for itself and its clients and assets involved that need protection, report Nduka Chiejina (Assistant Editor) and Bridget Adah Agiounim.

    By 2015, the Central Bank of Nigeria (CBN) aims to become the model central bank by delivering price stability conductive to economic growth. In addition, the bank hopes to achieve safe, stable, and sound financial system by encouraging credible, reliable and efficient payment system.
    To achieve all these, the CBN has recently been certified ISO20071 by the British Standards Institution (BSI) to ensure that the apex bank’s confidential information and documents are secured.
    The 20071 certification of the CBN has also been extended to all commercial banks with a directive to Deposit Money Banks (DMBs) to get their Information Security Management System (ISM) certification by the end of 2015.
    To ensure compliance, the CBN said it will set up a review committee within the Bankers Committee “and consultants would go around the banks and check for compliance with that standard on a periodic basis.”
    The benefits of ISMS include: to demonstrate leadership in compliance with information security standards; provide systematic safeguards for CBN’s information assets; improve security and ensure a reduction in risk through better understanding and enhance the CBN’s reputation not just at the national level but at the international level.
    According to Dr (Mrs.) Sarah Alade, Deputy Governor, Economic Policy of the CBN, “the aim of this programme was to significantly enhance operational efficiency and cost effectiveness of banks in Nigeria through shared services.
    The Central Bank of Nigeria, she said, “had in conjunction with the Bankers Committee committed the implementation of the selected standards as an integral part of the financial services industry infrastructure transformation programme (IITP).”
    This, she pointed out, “led to the selection of the highest standard for information security management of the CBN. The ISO 27001 – 2005 for information security framework as part of the IITP.”
    Why adopt ISO 27001? The Central Bank of Nigeria (CBN) is charged with the responsibility of governing the banks and other financial institutions under Banks and Other Financial Institutions (BOFI) Act (1991) as amended, with the sole aim of ensuring high standards of banking practice and financial stability through its surveillance activities, as well as the promotion of an efficient payment system.
    The motivation to implement the ISO27001 Standard the CBN said emerged from the need for it to take the lead in compliance with information security best practices in line with its status as the regulator of the financial services industry in Nigeria by complying with an appropriate and systematic management framework to adequately protect the Bank’s information assets, and to leverage on the opportunity for continuous operational excellence that will yield positive result on investment.
    The ISO27001 standard was identified as one of the IT standards within the financial services IITP. The process was initiated by engaging a consultant, Global Infoswift Limited (GIS), to carry out an Information Security Gap Analysis, give a roadmap where the Bank needed to move in terms of its Information Security Management System (ISMS).
    According to Afolabi Oke, Project Director, Global Infoswift Limited (GIS), his company was engaged based on their pedigree and experience, having led the First Bank of Nigeria to achieving the certification.
    Prior to commencing implementation of the ISO27001 ISMS within CBN, an information security gap analysis was conducted by Global Infoswift LTD and the results used as a baseline for determining the ISMS project approach.
    The CBN governor, Mallam Sanusi Lamido Sanusi, noted that the certification “is a clear affirmation that the Central Bank has adopted the highest framework in the world for information security management and CBN being a regulatory authority decided to take the lead in practices that are consistent with its status.”
    John Ayoh, Director, information Technology Department of the CBN, explained that “for this phase of the information security programme, we will definitely say that we have achieved our immediate objective of establishing the information security management system.
    Implementing ISO27001 has helped the CBN establish a leadership position as financial regulators not just at the national level but at the international level.
    It also gives CBN’s stakeholders a level of assurance in knowing that controls have been implemented in ensuring the safety and security of their information assets.
    Folakemi Fatogbe, Director of Risk Management Department of the CBN said they “took a pro-active approach to risk assessment and management through the use of risk management tools, leading to a more structured Risk Treatment Plan.
    The British High Commissioner expressed delight that the CBN “is the first regulatory agency in Nigeria to achieve ISO certification. That is a major achievement in itself, it is rather more important than that. It is not just a benchmark that is difficult to attain, it is a confidence-building method. The Central Bank is a verified international company by the IMF and the World Bank.”

  • Banks lose N159bn to fraud

    Banks lose N159bn to fraud

    •CBN steps up efforts to stem fraud

    The Central Bank of Nigeria (CBN) has set machinery in motion to help the banks tide over the increasing loss of funds as a result of poor electronic payment system.
    Available statistics show that Nigerian banks have lost a whooping N159 billion to electronic fraud between 2000 and first quarter (Q1) of 2013.
    To address this malaise, the CBN has disclosed plans to reposition Payments System Policy and Oversight Office in order to be more responsive to challenges and realities of today.
    The apex bank is also looking to evolve appropriate policies and regulation to proactively tackle electronic fraud in the country.
    Speaking at the 4th Annual Payment System and Fraud Conference organised by the Electronic Payment Providers Association of Nigeria (E-PPAN) in Lagos, recently, Tunde Lemo, deputy governor, operations, CBN, said the cashless economy scheme has continued to make appreciable progress within the context of the peculiarity of Nigerian business environment. According to Lemo electronic fraud has become a significant snag of the success of the cashless initiative, further adding that the apex bank is constantly devising innovative ways of curbing the menace.
    Christabel Onyejekwe, executive director, business development, Nigerian Inter-Bank Settlements Systems, (NIBSS) plc, said the huge losses to e-fraud is a deterrent to improving the consumer confidence and adoption of Nigeria’s cashless strategies. Onyejekwe quoted recent research data on e-fraud in Nigeria by the Financial Institutions Training Centre (FITC).
    Analysing the annual e-fraud trend in the banking industry since 2000 till date, Onyejekwe, in an interview, said that the figure stood at N1.65 billion in 2000; N3.12 billion in 2001; N8.20 billion in 2002, but declined to N5.13 billion in 2003 while in 2004, the figure moved up to N89.43 billion.

  • Sure fraud?

    Sure fraud?

    •Where is N500bn SURE-P funds? That is the question

    WE cannot fathom why stakeholders in the fuel subsidy conundrum have found it difficult to account for the N32 subsidy removed on each litre of Premium Motor Spirit (petrol) sold from January 2012 to September 2013. The money is meant for use of the Subsidy Reinvestment and Empowerment Programme (SURE-P). Unfortunately, the Nigerian National Petroleum Corporation (NNPC), Central Bank of Nigeria (CBN) and the Ministry of Petroleum Resources have treated the summons by Senate’s ad hoc committee on SURE-P with contempt. The committee wanted them to give account of how the accrued fund was disbursed and managed.

    The amount being sought is huge, something reportedly in the range of about N500billion public funds based on N32 removed on each of the 25 billion litres of fuel sold in 21 months. Senator Kabiru Marafa, a member of the committee confirmed in a report that the amount was contained in a response dated October 9, 2013, to the committee’s correspondence which was signed by Salmanu Faskari, Ministry of Petroleum Resources’ Director of Finance and Accounts.

    Marafa puts it thus: “The committee had earlier written the NNPC to ascertain the quantity of fuel sold from when the subsidy programme started till date. NNPC gave us the quantity sold from January 2012 and September 2013, covering 21 months…The SURE-P team led by Christopher Kolade said they were receiving N15bn flat rate every month. If you multiply 21 months by N15bn, it will be about N350bn. What we are even asking is what happened to the over N500bn difference. That is what we ask the NNPC…and the CBN as the custodian of the fund to come and tell us.’’

    The committee is not asking for too much. If by January 2012, the country, according to the ministry’s position, consumed about 1.3 billion litres which had dropped to 941million litres by February 2013 and further dipped to 770, 695, 645 in September 2013; Nigerians have a right to know why subsequent remittances remain constant. It is our view that these should have dropped, too. The difference should be accounted for by the relevant authorities saddled with managing the SURE-P funds.

    The apparent lack of transparency in how SURE-P funds are deployed is condemnable. Any fund duly appropriated by the National Assembly should be properly managed and accounted for. It is sad that Diezani Alison-Madueke, petroleum minister, Sanusi Lamido Sanusi, CBN governor and Andrew Yakubu, NNPC’s group managing director consider themselves to be above Nigerians whose representatives invited them to personally appear before the Senate committee to shed more light on this important issue. The law in the country is no respecter of people in high office.

    We note the NNPC’s denial of involvement in the matter; but it does not amount to much. Its management should have appeared before the committee to say whatever it had to say instead of issuing press release to say it knew nothing about how the funds are disbursed.

    The rigmarole over SURE-P funds is expected in view of the untidy and hasty manner of its creation. The programme, we have always said, is undesirable because it was not created with the best of intentions by the Federal Government. No meaningful achievement can so far be pointed to as having been attained by the programme. What it professes to be doing is what other existing agencies were already doing. So, it is nothing but a mere duplication of duties and sheer waste of public funds. The initiative is, ab initio, a failure and it would continue to suffer from perception problems for as long as it exists and the current shady manner of its administration continues.

     

  • How CBN’s policy is killing real sector

    How CBN’s policy is killing real sector

    •Sanusi: it’s not true

    The Central Bank of Nigeria (CBN) has drawn the flak for its monetary policy, which some say is stunting real sector’s growth.

    The policy, according to an industrialist, Henry Boyo, supports “relentless substitution of monthly naira allocations for dollar-derived revenue”.

    This , he said, created a “continuous supply of naira, which provides to banks excess cash that is also not loanable to manufacturers as banks find them unattractive.”

    Boyo spoke at a symposium organised by the Lagos Chamber of Commerce & Industry (LCCI) in Lagos, titled “Nigeria’s Monetary policy and its impact on industrial Growth.”

    The Managing Director of Abel Sell Limited criticised the CBN for creating what he called ”excess liquidity or surplus cash on one hand only to turn around to say there is no money to lend to the manufacturing sector in the much touted monetary policy”.

    Boyo said: “CBN is encouraging unemployment because of its contractual policy, which makes it to leave its money in the banks and go back to borrow from the same banks at very high rate which heighten the cost of fund for the manufacturing sector.”

    Boyo queried why government must borrow its money back especially when it is not putting it into the real sector that will grow the economy.

    He argued that the apex bank from several of her policies have shown that it is not positioned to help the manufacturing sector.

    According to him, one can safely say that the CBN is devaluing the Naira and in no way helping the manufacturing sector to grow as companies close shop preferring to import finished goods because they come cheaper.

    He also criticised the Asset Management Corporation of Nigeria (AMCON) which buys bad debt from banks but in no way to help the real sector.

    The excess liquidity indirectly created by CBN through the conversion of dollar to naira, he said, is creating bottlenecks in the growth of the economy and should be jettisioned as a bad policy.

    Excess liquidity, he said, had adverse effects including rising rate of inflation, reduced purchasing power of incomes, high interest rate, low capacity utilisation and high cost of funds.

    Others he listed are the collapsing industrial base, high level of unemployment, depreciating currency, capital flight, continuous horrendous supply of naira, which provides excess cash supply to banks and increasing national debt burden, he added.

    To deal with the excess liquidity challenge , he said, it requires innovative approaches, which include the creation of new money and boosting the naira value in the foreign exchange market.

    CBN Governor, Mallam Sanusi Lamido Sanusi who spoke on “Nigeria’s monetary policy and its impact on Industrialisation,” said the performance of the manufacturing sector has fallen below expectation.

    The abysmal performance of the sector, he said remained a source of worry for both the CBN and the Federal Government.

    The growth of any nation, he said, depended on its manufacturing sector, which creates jobs and wealth.

    He debunked Boyo’s claim that the sector was not growing because of lack of access to credit, noting that though some banks are wary of some manufacturing sub-sector firms, they lend to those that are low risk.

    Sanusi, who was represented by the CBN Director, Research Department, Mr. Charles Mordi said no apex bank could manage both the interest and exchange rate at the same time.

    At best, what the bank can do is to manage one and leave the other to the vagaries of the market to determine the parameters of the economic indices.

    History, he said, has shown that any country coming out of a financial crisis has to contend with the challenges of access to credit for its manufacturing sector as banks are wary to lend, citing United States of America and Europe. “Credit control is always tight for any country coming out from financial crises, Nigeria is not an exception. Our private sector is high risk, so banks shy away from lending to them though we do not support such ,” he said.

    He denied that the CBN policy was inimical to the growth of the manufacturing sector, saying the gain of the sector was eroded by the global financial crisis.

    Sanusi said the apex bank had given N200 billion to the Micro, Small and Medium Enterprises (MSMEs) to thrive. He canvassed the establishment of value chain in the manufacturing sector to discourage dependence on imports. He regretted that this is one country that produces cotton and tomatoes but imports textile and tomato puree from China.

  • CBN urges Islamic financial institutions on innovative products

    CBN urges Islamic financial institutions on innovative products

    The Central Bank of Nigeria (CBN) has urged Islamic financial institutions in the country to advantage of the friendly regulatory environment in the country to develop competitive and innovative products within the context of Sharia.

    CBN Governor, Mallam Sanusi Lamido Sanusi gave the charge yesterday at the National Conference on Islamic Banking and Finance in Nigeria organised by Sheikh Nsir Kabara Research Centre in Abuja.

    The CBN he said believes that by developing competitive and innovative products Islamic financial institutions will make positive impact on the market through the creation of non-interest financial institutions and instruments.

    Sanusi then called on Islamic financial institutions to create more awareness about the Islamic financial products as an alternative finance option in order to help in the realisation of on-going Financial System Strategy Initiative of financial inclusion.

    He said Islamic financial institutions have demonstrated their potential to support financial inclusion in many countries by bringing large numbers of hitherto unbanked and underbanked populations especially Muslims into the organised financial sector.

    He said: “The efficacy of the Islamic finance in attracting liquidity to national economies especially through the Sukuk instruments structured for infrastructure development has also shown the contribution that Islamic finance can give to developing economies in building their much needed infrastructure.”

    According to him, as a result of this, the CBN in conjunction with other institutions have brought together a technical team to explore the prospects of alternative modes of finance and set out the procedures for using the modes in the development of infrastructure.