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  • CBN launches N220b MSME fund

    CBN launches N220b MSME fund

    The Central Bank of Nigeria (CBN) has launched a N220 billion Micro Small and Medium Enterprises (MSME) Development fund.

    It is expected to provide funds at a cheap cost and longer terms compared to what obtains at commercial banks, enhance women entrepreneurs to finance by allocating 60 per cent of the fund to businesses managed by women.

    Speaking at the launch of the fund in Abuja yesterday, at the Seventh MSME financing conference and D-8 workshop, the CBN Governor Mallam Sanusi Lamido Sanusi, said the fund is  designed to further enhance access to financing by micro/small enterprises.

    The objectives of the new fund, he said, is to enhance the ability of the micro finance institutions to shape themselves into low interest, long term funding organisations that would provide a financing window that would improve the capacity of the PFI to meet the credit need of the micro small and medium enterprises.

    The responsibility for the successful intermediation of the financial sector, Sanusi said, lies in the financial market to intergrate the  micro entrepreneurs, with low income earners, farmers, artisans into the financial system to improvethe effectiveness of the polity.

    The conference, the CBN governor noted, was focused on financing the SMEs because they are contribute to growth, income and employment generation and innovation in the country.

    He disclosed that “in 2012 Nigeria had about eight million MSMEs employing about 42.4million people and contributing about 46.5 per cent of nominal Gross Domestic Product (GDP).”

    A recent survey, he said, projected that 80 per cent of these MSMEs are excluded from the financial market, while the state of the MSMEs underscores the importance of the conference.

    Sanusi lamented that “in 2012 commercial bank loans to SMEs dropped at an exponential rate, analysis of the annual trend in the share of commercial bank credit to small scale industries indicates a decline of about 7.5 per cent in 2003 to less than one per cent in 2006 and a further decline in 2012 to 0.14 per cent.”

    The CBN chief reiterated that some reasons had been identified for the poor funding of MSMEs by commercial banks to include the lack of managerial capacity, inadequate collateral and poor record keeping among others.

    He said there are problems, such as high transaction costs and lack of understanding by the banks about the operations of MSMEs which make them vulnerable.

    Sanusi called on the government to roles policies “to strengthen the MSMEs’ sub- sector”.

    The CBN, he said, had been working towards improved access to finance for the subsector vis-a-vis microfinance policies, regulatory and supervisory framework, the fortification programme of micro finance banks, designated financial businesses  and professionals, consistent framework and payment system transformation, the development of unmovable collateral registry, the financial ombudsman board with the National Assembly and the encouragement of lending.

    Speaking on behalf of governors, the Ekiti State Governor Dr. Kayode Fayemi expressed happiness that the conference was focused on the “rural poor.”

    He said: “The population of the unbanked in our country is wobbling around 70 per cent of our entire population, which is pretty much all of us, apart from some of us who are in the urban areas, and you know there are regional disparity to that but the critical point remains that majority of our people are unbanked in financial transactions and these clearly enhances poverty.”

  • CBN spends N250b on naira

    CBN spends N250b on naira

    The Central Bank of Nigeria (CBN) spent N250 billion to on the nation’s currency in 2012, the Deputy Governor, Operations, at the apex bank, Tunde Lemo, has said.

    Lemo, who spoke at the Marble Arch Hotels in Awka, the Anambra State’s capital on the proposed implementation of the cashlite policy, said the money went into processing, transportation,  storage and destruction of old naira notes.

    He said the cost which stood at N114.5 billion in 2009, has continued to rise until last year when the cashless policy was introduced by the CBN in Lagos, adding that the cost of producing and managing the naira has become too huge for the country to bear.

    The Deputy Governor, who was represented by a Deputy Manager, BabatundeAjioye, spoke at a forum to sensitize stakeholders in Anambra State on the proposed implementation of the cashlite policy of the CBN scheduled to start in Anambra and five other states by October, 2013.

    He listed reduction in crimes, like armed robbery, kidnappings targeted at cash, reduction in election rigging which is perpetrated with the use of cash; elimination of cash shortages; inefficient revenue management and cut in corruption levels, as some of the benefits of the cashless regime.

     He said since the cashless policy was introduced in Lagos State , the state’s revenue projections has increased tremendously, while the state’s cost of generating revenue had also dropped significantly.

     Earlier, the Branch Controller of the apex bank in Awka, Azubuike Okoro, said the choice of Anambra as one of the first set of states to commence the cashless policy, was based on its high cash transactions, arguing that introducing the policy would not pose much problem because of the high literacy and innumeracy level in the state.

     He said: ”Anambra people have over the years been operating cashless schemes in doing their businesses, that is why there is no longer news of highway bus robberies anymore because the traders no longer carry cash to markets outside the state for their transactions.”

      ”We are targeting Onitsha ,Nnewi, Ekwulobia and Umunze for market mobilization because of the heavy use of cash in those cities and towns,” he said.

    Meanwhile, the Central Bank of Nigeria will take delivery of new naira notes before the end of September for circulation, the Deputy Director, Operations, Dr Tunde Lemo, has said.

    The apex bank had earlier said that new naira notes would be in circulation by June, and that the smaller denomination notes (N5, N10, N20, and N50) would be reprinted on paper.

    Lemo, who spoke with the News Agency of Nigeria (NAN) yesterday in Abuja, said: “We are going to take delivery of the new notes from this month of August,” adding that the process will be completed before the end of September.

    He said the public will get a large quantity of the new notes to replace the old and mutilated ones, “particularly the higher denomination notes in the first instance, then later, the lower denominations.’’

    On the scarcity of the lower denomination notes, Lemo blamed commercial banks for what he called “poor circulation.’’

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

    “Most people don’t require small denomination. But for buying things in the market, if you look at the veracity, you find out that the N50 circulate more than the smaller ones,’’ he said.

    Meanwhile, Lemo has urged law enforcement agencies to arrest all illegal hawkers of new naira notes.

    He also called on commercial banks to keep watchful eyes on their staff to avoid being used as conduit for illegal transfer of new notes to unauthorised hands.

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

    “We have done all we can do in the sense that we have criminalised this in the 2007 Act. It is clear that if you hawk notes, if you abuse the currency, it is a criminal offence and it is punishable.

    “We expect law enforcement agencies to do the arrest. We don’t have power to arrest. We know it is going on,’’ he said.

    Lemo said commercial banks should “dispense and pay their customers with new notes’’.

    He said the apex bank had carried out sensitisation campaigns to inform the public and warn them about the dangers of patronising hawkers.

    “I think that is the limit the central bank can go,’’ the deputy governor said.

    NAN reports that new naira notes are sold at Dei Dei along Kubwa Express Road, Abuja, as well as other locations across the country.

  • CBN spends N250b on naira

    CBN spends N250b on naira

    The Central Bank of Nigeria (CBN) spent N250 billion to on the nation’s currency in 2012, the Deputy Governor, Operations, at the apex bank, Tunde Lemo, has said.

    Lemo, who spoke at the Marble Arch Hotels in Awka, the Anambra State’s capital on the proposed implementation of the cashlite policy, said the money went into processing, transportation,  storage and destruction of old naira notes.

    He said the cost which stood at N114.5 billion in 2009, has continued to rise until last year when the cashless policy was introduced by the CBN in Lagos, adding that the cost of producing and managing the naira has become too huge for the country to bear.

    The Deputy Governor, who was represented by a Deputy Manager, BabatundeAjioye, spoke at a forum to sensitize stakeholders in Anambra State on the proposed implementation of the cashlite policy of the CBN scheduled to start in Anambra and five other states by October, 2013.

    He listed reduction in crimes, like armed robbery, kidnappings targeted at cash, reduction in election rigging which is perpetrated with the use of cash; elimination of cash shortages; inefficient revenue management and cut in corruption levels, as some of the benefits of the cashless regime.

    He said since the cashless policy was introduced in Lagos State , the state’s revenue projections has increased tremendously, while the state’s cost of generating revenue had also dropped significantly.

    Earlier, the Branch Controller of the apex bank in Awka, Azubuike Okoro, said the choice of Anambra as one of the first set of states to commence the cashless policy, was based on its high cash transactions, arguing that introducing the policy would not pose much problem because of the high literacy and innumeracy level in the state.

    He said: ”Anambra people have over the years been operating cashless schemes in doing their businesses, that is why there is no longer news of highway bus robberies anymore because the traders no longer carry cash to markets outside the state for their transactions.”

    ”We are targeting Onitsha ,Nnewi, Ekwulobia and Umunze for market mobilization because of the heavy use of cash in those cities and towns,” he said.

    Meanwhile, the Central Bank of Nigeria will take delivery of new naira notes before the end of September for circulation, the Deputy Director, Operations, Dr Tunde Lemo, has said.

    The apex bank had earlier said that new naira notes would be in circulation by June, and that the smaller denomination notes (N5, N10, N20, and N50) would be reprinted on paper.

    Lemo, who spoke with the News Agency of Nigeria (NAN) yesterday in Abuja, said: “We are going to take delivery of the new notes from this month of August,” adding that the process will be completed before the end of September.

    He said the public will get a large quantity of the new notes to replace the old and mutilated ones, “particularly the higher denomination notes in the first instance, then later, the lower denominations.’’

    On the scarcity of the lower denomination notes, Lemo blamed commercial banks for what he called “poor circulation.’’

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

    “Most people don’t require small denomination. But for buying things in the market, if you look at the veracity, you find out that the N50 circulate more than the smaller ones,’’ he said.

    Meanwhile, Lemo has urged law enforcement agencies to arrest all illegal hawkers of new naira notes.

    He also called on commercial banks to keep watchful eyes on their staff to avoid being used as conduit for illegal transfer of new notes to unauthorised hands.

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

    “We have done all we can do in the sense that we have criminalised this in the 2007 Act. It is clear that if you hawk notes, if you abuse the currency, it is a criminal offence and it is punishable.

    “We expect law enforcement agencies to do the arrest. We don’t have power to arrest. We know it is going on,’’ he said.

    Lemo said commercial banks should “dispense and pay their customers with new notes’’.

    He said the apex bank had carried out sensitisation campaigns to inform the public and warn them about the dangers of patronising hawkers.

    “I think that is the limit the central bank can go,’’ the deputy governor said.

    NAN reports that new naira notes are sold at Dei Dei along Kubwa Express Road, Abuja, as well as other locations across the country.

  • New naira notes ready September ending – CBN

    New naira notes ready September ending – CBN

    The Central Bank of Nigeria would take delivery of new naira notes before the end of September for circulation, the Deputy Director, Operations, Dr. Tunde Lemo, has said.

    Lemo stated this in an interview with the News Agency of Nigeria (NAN) on Wednesday in Abuja.

    The apex bank had earlier said that new naira notes would be in circulation by June, and that the smaller denomination notes (N5, N10, N20, and N50) would be reprinted on paper.

    “We are going to take delivery of the new notes from this month of August. We are taking delivery of the new notes before the end of September.

    “The public would get a large quantity of the new notes to replace the old and mutilated notes, particularly the higher denomination notes in the first instance, then later the lower denominations,’’ he said.

    On the scarcity of the lower denomination notes, Lemo blamed commercial banks for what he called “poor circulation.”

    “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 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 the N50 circulate more than the smaller ones,’’ he said.

     

  • Disputed N4.423b between PPPRA, NEITI traced to CBN

    Disputed N4.423b between PPPRA, NEITI traced to CBN

    The N4.423 billion in dispute between the Petroleum Products Pricing Regulatory Agency (PPPRA) and the Nigeria Extractive Industries Transparency Initiative (NEITI) has been reconciled and traced to the Petroleum Support Fund (PSF) account domiciled with the Central Bank of Nigeria (CBN).

    The resolution of the disputed amount followed a reconcilaitory meeting by the two organisations.

    A communique, which was signed by the Executive Secretaries, Mrs. Zainab Ahmed and Mr Reginald Stanley of the NEITI and PPPRA, said: “There is nothing outstanding against the PPPRA.”

    The communique said the meeting evolved strategies for NEITI and PPPRA to address other issues arising from the NEITI Report, adding that it used the platform of the Inter-Ministerial Task Team (IMTT) set up by President Godluck Jonathan to address remedial issues arising from NEITI’s Report.

    The executive secretaries also resolved to ensure the effective communication network between the two agencies for Inter-agency cooperation.

     

    The statement reads in parts: “Following the sustained media engagement between Petroleum Products Pricing Regulatory Agency (PPPRA) and the Nigeria Extractive Industries Transparency Initiative (NEITI), over the recently released 2009-2011 Industry Audit in the Oil and Gas Sector, and the findings as they affect PPPRA, a joint meeting between the two Agencies was held today (yesterday), August 13, 2013, in Abuja, with the Managements of the two Agencies in attendance.”

  • CBN, stakeholders meet on cashless policy

    CBN, stakeholders meet on cashless policy

    The Central Bank of Nigeria on Tuesday met with banks and Bureau de Change operators on the need for them to sensitise their customers on the cashless policy.

    A Deputy Governor in CBN, Mr. Tunde Lemo, told the audience that it was time Nigeria updated its payment system to enhance her global competitiveness.

    Lemo said the effectiveness of the policy would depend largely on the collaboration of all stakeholders and the government.

    “Some of the benefits include safety of cash from robbers, electoral malpractice and the promotion of financial inclusion.

    “Others are the reduction in cost of credit, transparency and it curbs corruption and leakages,” the CBN chief said at the forum.

    Lemo was represented by Babatunde Ajiboye, a Deputy Manager in the bank.

    Earlier, Mazi Azubuike Okoro, the Branch Controller of CBN in Awka, said that Anambra was strategic because of her high commercial activities.

    Okoro said the policy was also a good option for the people in view of the high volume of cash transactions in the state.

    The News Agency of Nigeria recalls that the cashless policy, which was earlier scheduled to begin in Anambra and five other states on July 1, was rescheduled till October 1.

     

  • Service providers’ contract extended

    The contract for the six pre-shipment inspection agents(PIAs) for the exportation of petroleum products has been extended by one year by the Federal Government. The government also appointed two monitoring agents to oversee the operations of the six PIAs.

    According to a circular from the Central Bank of Nigeria (CBN) on the issue, the contract extension expected began from June 7, 2013 to the same period next year.

    The circular signed by Batari Musa, the Director in charge of Trade and Investment, with reference number: TED/FEM/FPC/GEN/01/012, dated May 4, 2013 on the appointment of additional Pre-shipment Inspection Agents for oil and gas export under the Nigerian Export Supervision Scheme (NESS), said authorised dealers and the public are hereby informed that the Federal Government has extended the contract for the under-listed pre-shipment Inspection Agents (PIAs) for a period of twelve months with effect from June 7, 2013.”

    According to the circular, while Globalscan Systems Technology Limited is to handle Qua Iboe, Bonny and Pennington terminals, JBIS Integrated Resources Limited has been allocated Akpo, Agbami, Erha Bonga and EA terminals and Robinson International Energy Limited is expected to handle terminals at Yoho, Brass Oyo, Antan, Oso Ebok and Okono.

    Similarly, Trobel International Nigeria Limited got Okwori, Okoro, Ukpokiti, Escravos and Obe, while Candid Oil Services Limited is expected to handle Abo, Usan, Forcados,Tulja, Odudu and Ima; and Gulf Inspection Services Limited (GIS) is to take charge of all gas terminals.

    The two monitoring agents, Messrs Arlington Securitas Limited and Swede Control Intertek Limited will oversee JBIS Integrated Resources Limited, Trobel International Nigeria Limited; Gulf Inspection Services Limited (GIS) and Robinson International Energy Limited; Globalscan Systems Technology Limited and Candid Oil Services Limited.

    The circular noted that “all authorised dealers, oil and gas exporters and the general public to take note of the provision of the circular for compliance”.

  • CBN removes exclusivity agreement with Money Transfer Organisations

    CBN removes exclusivity agreement with Money Transfer Organisations

    The Central Bank of Nigeria (CBN) has removed the exclusivity agreements which Money Transfer Organisations (MTOs) signed with Nigerian banks.

    In addition, the apex bank said it will continue to do all that’s needful to ensure that the charges are effectively moderated.

    The CBN Governor, Sanusi Lamido Sanusi, who stated this when he addressed Students for the Advancement of Global Entrepreneurship in Abuja, said the apex bank was “working towards eliminating rigidities accountable for high remittance charges having established that over 15 per cent of diaspora remittances is for educational purposes of the youths, while 12 per cent supports new businesses in which youths are engaged as either owners or employees.”

    Represented by the Director, Development Finance of the CBN, Paul Eluhaiwe, Sanusi, said the bank is now in the process of formulating guidelines to improve remittance services delivery environment in Nigeria, adding that an integral part of the bank’s financial inclusion strategy, “is the establishment of Entrepreneurial Development Centres (EDCs) across the country.”

    He said this is a critical component since it has been established that “poor income is a key contributory factor to financial exclusion in Nigeria.”

    He said the EDC initiative will provide empowerment opportunities for the youth to encourage their entrepreneurial endeavors and promote job creation through the activities of youths in business.

    He said through the EDCs, the apex bank has counseled over 100,000 entrepreneurs, trained over 41,000 and facilitated access-to-finance for more than 1,000, thereby keeping their visions of owning thriving enterprises alive.

    For the women and mothers of the youths, Sanusi said the CBN, “has set a target of ensuring that financial exclusion among women is reduced from 54 per cent to 20 per cent by 2020,” because for a society to grow, women who typically constitute half the population must be elevated and provided with equal opportunities.

  • CBN plans special vehicles to drive mortgage firms, MfBs

    Why is the property market not well funded? It isbecause of the dearth of long-term funds, says the Central Bank of Nigeria (CBN).

    Acording to a Financial Stability Report released by the CBN, the dominance of short-term funds has led to a mismatch between the long-term mortgage assets and short-term-oriented liabilities of primary mortgage banks (PMBs).

    To address this problem, the CBN is promoting the establishment of a mortgage re-finance company (MRC) in collaboration with other stakeholders.

    According to the report, the real-estate sector contributed 1.73 per cent to the Gross Domestic Product (GDP) last year. Credit to the real-estate sector declined to N376.6 billion in December last year, from N380.7 billion at the end of June that year. The quality of the exposures measured by the ratio of the sector’s non-performing loans (NPLs) to total credit, however, improved to 3.1 per cent as against 4.2 per cent during the same periods.

    As part of efforts to address the disparity between long and short-term funds, the CBN is collaborating with other stakeholders. The PMBs are also being repositioned to serve as veritable channels for mortgage/housing finance and home ownership. The MRC will provide short-term liquidity and long-term funding or guarantees to mortgage originators and housing finance lenders. It will also serve as a catalyst for the development of the secondary mortgage market and a precursor to mortgage-backed securitisation.

    To minimise the risks associated with the operation of MRC and ensure it remains mission-focused, the Regulatory and Supervisory Framework for the operation of MRC has been drafted, in collaboration with the World Bank, the report said.

    The CBN is also planning to launch a Microfinance Development Fund (MDF) for microfinance banks (MfBs) the sector’s capability to grant loans.

    CBN Director, Other Financial Institutions Supervision Department (OFISD), Olufemi Fabamwo, at a confab for the MfBs in Lagos said the MDF was a pool of funds created for MfBs to enhance their lending.

    He said part of the criteria to access the loan include show of track-record of good performance and low loan default by operators. This, he said, would show that beneficiaries have the capability to lend to MfBs.

    The CBN, he said, would provide guidelines on how the fund will be accessed by beneficiaries, adding that the delay in not releasing the fund is to ensure that appropriate frameworks are in place. The CBN reiterated its commitment to deepening the financial system by providing loan and introducing new products and appropriate control structures.

    The MDF, when established, would assist in addressing the challenges of underfunding for microfinance institutions. It will further complement past and current efforts aimed at strengthening the microfinance sub-sector; improve financial inclusion and the Gross Domestic Product (GDP).

    The structure of commercial banks’credit as at December last year showed that short term maturities remained dominant. Outstanding credits maturing within one year accounted for 57.6 per cent, compared with 59.1 per cent at the end of the first half of last year.

    Similarly, deposits below one year constituted 97.5 per cent of the total, of which 76.31 per cent had maturities of less than 30 days, while long-term deposits constituted only 0.01 per cent.

    “In addition to the consequences of the maturity mismatch, the near-absence of long-term deposits continued to constrain the ability of banks to create long-tenored risk assets crucial for economic development,” the report noted.

     

  • NIRSAL: CBN guarantees N25b agric loans

    The Central Bank of Nigeria (CBN) has guaranteed N25 billion agricultural loans under the Nigerian Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) initiative.

    Data from the CBN indicates that banks’ total loan to the agric sector increased to four per cent, from the average of 1.5 per cent it stagnated since 2009. The NIRSAL guarantees up to 75 per cent of bank loans to the sector.

    Introduced in July last year, NASAL, the brainchild of the CBN, the Bankers’ Committee and the Federal Ministry of Agriculture & Rural Development (FMARD), seeks to create incentives and catalyse processes that will encourage the growth of formal credit, direct and indirect, for the agriculture value chain. This, the CBN said, is key in driving wealth creation among value chain participants.

    The apex bank plans to spend an estimated $500 million to create further incentives for the banks to sustain the flow of agric credit. There is also a Risk-sharing facility of $300 million, planned to address banks’ perception of high-risks in the sector by sharing losses on agricultural loans.

    There is an insurance facility of $30 million intended to expand insurance products for agricultural lending from the coverage to new products, such as weather index insurance, new variants of pest and disease insurance.

    Besides, there is also a Technical Assistance Facility amounting of $60 million meant to equip banks to lend sustainably to agriculture producers to borrow and use loans more effectively and increase output of better quality agricultural products, among others.

    The increase in loans to the sub-sector has also been linked to the N200 billion agriculture credit scheme and N600 billion NIRSAL. The current improvement in the sector was also linked to access to credit through the new policy focused on increasing private sector participation, emphasis on the agriculture value chain, and using agriculture to boost employment, wealth creation and food security.