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  • 13 Nigerian banks make world’s top 1000

    13 Nigerian banks make world’s top 1000

    Thirteen Nigerian banks made the list of this year’s Top 1000 World Banks Ranking of The Banker magazine of the Financial Times Group, London, United Kingdom.

    Zenith Bank Plc, however, topped Nigerian banks in this year’s rating, while Union Bank of Nigeria Plc, which had been out of the league since 2009 when the banking audit revealed that the lender was undercapitalised, returned to the league of top global banks.

    A statement from the Country Representative – Nigeria of The Banker, Mr. Kunle Ogedengbe, listed the 13 Nigerian banks to include Zenith Bank, First Bank of Nigeria Plc, Guaranty Trust Bank Plc, Access Bank Plc, United Bank for Africa Plc, Ecobank Nigeria Plc, Fidelity Bank Plc and First City Monument Bank Plc.

    Also included are Skye Bank Plc, Diamond Bank Plc, Stanbic IBTC Plc, Union Bank and Standard Chartered Bank.

    Zenith Bank moved 35 places from 322 in the world last year to 287; First Bank moved from 338 to 367, Guaranty Bank moved to 417 from 455; Access Bank moved to 506 from 541 and UBA moved to 553 from 563.

    Analysts see these movements as a good sign of the improvements of the soundness of the Nigerian banks among the world global banks and the robust monetary policies of the Central Bank of Nigeria (CBN).

    The ranking is usually based on the definition of Tier–1 Capital as set out by Basel’s Bank for International Settlements (BIS). It also aims to show global international banks’ soundness in relation to the Basel guidelines on capital adequacy.

    The percentage change in the Tier-1 Capital, which underlines the strength of banks, for Zenith Bank increased by 23.82 per cent, the highest in the wholly Nigerian banks that made the ranking.

    In the capital asset ratio of soundness parametre, Zenith Bank came top at 17.70 per cent, trailed by Guaranty Trust Bank at 16.23 per cent. Third was Fidelity Bank at 15.67 per cent. Standard Chartered Nigeria was fourth at 13.38 per cent, followed by FCMB at 12.00 per cent and First Bank at 11.96 per cent; Access Bank at 11.60 per cent; Stanbic IBTC at 11.55 per cent; Ecobank at 11.14 per cent.

  • Reps, CBN alleged deal stalls BOFIA Act amendment

    Reps, CBN alleged deal stalls BOFIA Act amendment

    There are indications that the bill to repeal and re-enact the Banking and Other Financial Institutions Act (BOFIA) may not be passed in the seventh House of Representatives. There are allegations that the House leadership has been compromised over it.

    The House was alleged to have sold the soul of the BOFIA amendment to the Central Bank of Nigeria (CBN) for an undisclosed amount. There appears to be a consistent and orchestrated attempt by the House leadership to bury the BOFIA Act, or at best to ensure that it was not passed during the Seventh House, The Nation gathered.

    It was learnt that February 18, a day to the presentation of the BOFIA amended Act for consideration at the Committee of the Whole House by its sponsor, Betty Apiafi, the CBN was sent a copy to enable it to remove aspects that are offensive to the financial sector’s regulator.

    Though independent sources at the CBN confirmed receiving the bill on the eve of its consideration, the apex bank authority denied any passage of money- for -non-passage of the bill.

    The bill entitled: “An Act to Repeal the Banking and Other Financial Institutions Act, 2004 and to Re-enact the Banking and Other Financial Institutions Act, 2010, and for Matters Connected Therewith” in its current form, whittles down the powers of the CBN Governor and bars directors from collecting loans in banks where they work. It also revises upwards the outdated penalties for various offenses in the banking sector.

    The repeal and re-enactment of the BOFIA bill is also aimed at improving regulatory regime as well as protecting depositors from losses in situations where banks fail.

    The consideration of the bill on the floor on February 19, 2013 was stalled by the Deputy Speaker, Emeka Ihedioha and the Chairman of the House Committee on Banking and Currency, Mr Chukwudi Jones Onyereri, to the amazement of members.

    Since then, only three clauses were considered in the bill and that was at the instance of the Speaker, Aminu Tambuwal, on a day he presided over plenary.

    The Speaker, who is said to be unaware of the deal, called for the consideration of the bill and three clauses were subsequently considered.

    Every other attempt to continue the presentation has been continually frustrated, as the House allegedly await the CBN version of the bill.

    There are allegations that the CBN was promised by some members of the House leadership that the presentation and consideration of the bill would be delayed by whatever means to ensure the non-passage untill the CBN makes its input.

    Efforts to initially present the bill was rebuffed by Ihedioha who always refused to mention the bill when it is listed. The Rules and Business Committee also ensures that the bill comes last on the few occasions it was listed so that members never get to it at plenary.

    But Oke Epia, Chief Press Secretary to Ihedioha, said he would not speak on the issue and referred the reporter to Onyereri.

    Onyereri said the allegation is not true, adding that the new BOFIA bill, “ is the best thing that has happened to the country,” no one would be allowed to truncate it. He further stated that the bill is at the Committee of the Whole for consideration and that at that level, “no one, can stop it.”

    The committee chair, while applauding Apiafi, said the House was going through the bill and that at the end of the day, “ the country will applaud the BOFIA we will present.”

    The spokesman of the CBN,Ugochukwu Okoroafor, told The Nation that people who are insinuating that the CBN is stalling the BOFIA Amendment Act “are mischievous.”

    His words: “The bill is a public document and there are many copies flying around . People saying that CBN is trying to stall the process are mischievous. When we come to public hearing CBN makes presentations.

    “Amendment of BOFIA is not a CBN issue but what do we want as a country, is what we have different from other countries, The BOFIA is not such a big deal. What if Sanusi steps down, will the bill be stepped down?

    “The bill might send wrong message. In a country where people know that the laws can be fiddled with, it will drive away foreign investors. Why should they hid it from CBN, we proposed some bills ourselves.”

  • CBN commences registration of agent banks

    CBN commences registration of agent banks

    The Central Bank of Nigeria (CBN) yesterday said it had commenced registration of agent banks to drive its financial inclusion strategy.

     Mr Paul Eluhaiwe, CBN Director of  Development Finance, disclosed this at 18th seminar for finance correspondents and business editors in Umuahia, Abia.

     The theme of the seminar is “Financial Inclusion Initiatives in Nigeria: Issues, Challenges and Prospects”.

     Eluhaiwe said that more agent banks would be registered before the end of the year.

     News Agency of Nigeria (NAN) reports that agent banking was introduced in the country last year as a measure to further promote the financial inclusion strategy of the apex bank.

     Eluhaiwe said that the country was still lagging behind Kenya and South Africa in the financial inclusion strategy.

     He stressed the importance of financial inclusion, saying that the financial inclusion policy was aimed at reducing the percentage of financially excluded in the country.

     Eluhaiwe said that the ratio of financial excluded  dropped from 46.3 per cent in 2010 to 39.7  in 2012 with the optimism to reduce it to 20 per cent by the year 2020.

     He said that the South-West geo-political zone of the country now had the lowest exclusion rate of 24.8 per cent, a 25 per cent improvement over 33.1 per cent in 2012.

     “The North-Western part of the country, however, recorded the highest level of financial exclusion and the lowest improvement between 2010 and 2012.

     “At 63.8 per cent exclusion rate, the zone has recorded a 6.3 per cent improvement over the 2010 figure of 68.1 per cent.

     “Financial exclusion has also reduced in the North-East, North-Central,South-East and South-South by 12.9, 26.7, 19.8 and 17.3 per cent to 59.5, 32.4, 25.6 and 30.1 per cent, respectively.

     The director said that the CBN expected that about 60 per cent of funds in circulation would be captured in the financial system through the financial inclusion strategy.

  • Fed Govt earned N805b in April, says CBN

    Fed Govt earned N805b in April, says CBN

    •Incurs N50.47b deficit

    The Federal Government earned N805.91 billion last April, the Central Bank of Nigeria (CBN) Economic Report for the month released yesterday has revealed.

    The report said the earning was below the provisional monthly budget estimate by 14.7 per cent, but exceeded the receipt in the preceding month by two per cent.

    At N620.97 billion, oil receipts (gross), which constituted 77.1 per cent of the total revenue was below the provisional monthly budget estimate by 3.7 per cent, but surpassed the level in the preceding month by 4.3 per cent. It said the decline relative to budget estimate was attributed largely, to the fall in receipts from crude oil and gas exports in the review period.

    The CBN said gross non-oil receipts stood at N184.94 billion, but was lower than both the monthly budget estimate and the level in the preceding month by 38.5 and five per cent, respectively.

    The decline relative to the monthly budget estimate it said reflected largely, the low receipts from Corporate Tax, Customs and Excise Duties and Independent Revenue of the Federal Government.

    Federal Government estimated retained revenue was N323.96 billion, while total estimated expenditure was N374.43 billion. It said the fiscal operations of the Federal Government resulted in an estimated deficit of N50.47 billion, compared with the estimated monthly budget deficit of N73.92 billion.

  • Investment One eyes one-stop investment services

    The regulatory regime of the Central Bank of Nigeria (CBN) that redirected Nigerian deposit money banks to core banking activities created challenges and opportunities.

    CBN’s Scope of Banking Activities and Ancillary Matters No 3, 2010 requires banks to fully concentrate on core banking functions. It requires banks to either sell non-core banking businesses or form a holding company to hold such non-core banking businesses including activities such as insurance, asset management and capital market operations.

    Most banks, including Access Bank Plc, Diamond Bank Plc, Fidelity Bank Plc, Guaranty Trust Bank (GTB) Plc, Skye Bank Plc, Sterling Bank, Zenith Bank, Unity Bank and Wema Bank chose to divest from non-banking subsidiaries. Five banks including First City Monument Bank (FCMB) Plc, First Bank of Nigeria (FBN) Plc, Stanbic IBTC Bank Plc, United Bank for Africa (UBA) Plc and Union Bank of Nigeria (UBN) Plc have adopted the holding company structure, which separates core banking entity from other entities as subsidiaries under a single holding company.

    Altogether, restructuring banks have had to divest from about 80 subsidiaries. The challenges of such massive restructuring included divestments, spin-offs, changes in boards and shareholdings, delisting, listing, relisting, new strategic business plan, rebranding and several other anxious concerns that come with divestment, acquisitions and mergers. The new regime meanwhile created several opportunities too including new investments, prospects of improved professionalism, improved corporate governance and more importantly, financial sectors’ stability.

    However, the main challenge is ironically the main opportunity for the newly divested entities-standing alone after several years of group structure and comfort. For thriving erstwhile subsidiaries, the divestment was an opportunity to scale up and ‘live their visions’. But for others, it was a change too hard to muster.

    Investment One Financial Services Limited, the emergent company from the sale of erstwhile GTB Asset Management Limited (GTBAM), knows the challenges but rather sees opportunities in the changing landscape of investment services. With eyes on gains and the future of the new entity, GTBank had opted for management buy out (MBO) as divestment vehicle for GTBAM. Investment One is now owned by management and staff of the company and few select investors that share the philosophies of excellence and service that form the core values of GTBank and its former subsidiaries, the pedigree upon which Investment One is building on.

    With three acquisitions, three high-profile approvals for new functions and many awards in the past 12 months, Investment One is arguably the fastest growing investment company. In the latest acquisition, regulatory filing showed Investment One has acquired 99.9 per cent equity stake in Kakawa Asset Management Ltd (KAML), a former subsidiary of Kakawa Discount House Limited. The new acquisition brought with it complementary investment management expertise and products. Established in June 2004, KAML is registered by Securities and Exchange Commission (SEC) as a corporate investment adviser and fund manager and it is also dealing member and stockbroking firm at the Nigerian Stock Exchange (NSE). Over the years, it has established a niche as a bespoke provider of investment solutions and shared a common pedigree with Investment One through its affiliation to GTBank.

    The acquisition of KAML brought its Kakawa Guaranteed Income Fund (KGIF) into the portfolio of bespoke investment products under Investment One. KGIF is a premium unit trust scheme that delivers minimum return indexed to CBN’s Monetary Policy Rate (MPR), currently 12 per cent, and it makes dividend payment twice a year. Besides, a potential investor can earn additional return of 35 per cent of the net income of the fund. Investors can also use their funds in KGIF as collateral to borrow loans, finance children education and bequeath assets to children. The combined assets of Investment One and KAML amount to more than N50 billion in funds under management.

    Earlier, Investment One had acquired fund and management rights the Nigerian International Growth Fund (NIGFUND), a mutual fund of over N3billion, from Fidelity Bank Plc.

    Last month, it added Royal Trust Pension Fund Administrators Limited (RTPFA) as one of its subsidiaries following acquisition of 99.9 per cent shareholdings in the pension fund administrator. RTPFA already looks forward tom leveraging on the scale and expertise to enhance its profile in the pension industry. Managing Director, Royal Trust Pension Fund Administrators Limited (RTPFA), Mr Charles Sanni being a part of Investment One would enable the company to offer world-class products and services to its clients.

    According to him, RTPFA would leverage on Investment One’s core values of market insight, innovation and service excellence to achieve its vision of being Nigeria’s foremost pension manager.

    Besides the many acquisitions, Investment One’s stockbroking subsidiary, Investment one Stockbrokers International Limited has secured three high-profile additional functions at the stock market. It was appointed as one of the six Fixed Income Market Makers (FIMMs), companies that will provide two-way quotes for the sale and purchase of government and corporate bonds on the NSE to retail investors who do not meet the N100 million per transaction volume requirements of Primary Dealers-Market Makers (PDMMs). PDMMs deal mostly with banks and discount houses. It was also appointed as one of the 12 Supplementary Equity Market Makers (SMMs). Investment One Stockbrokers will provide two-way quotes and regular liquidity to a basket of 10 stocks including United Bank for Africa (UBA), Access Bank, Zenith Bank, Flour Mills of Nigeria, Mansard Insurance, Julius Berger, May and Baker Nigeria, CAP Plc, Total Nigeria and Red Star Express Plc.

    Investment One Stockbrokers was also recently appointed as one of the 14 Designated Advisers (DAs) for emerging stocks at the stock market. With this appointment, the company will act as advisers to companies listed on the Alternative Securities Market (ASeM) of the NSE. ASeM is primarily a vehicle to provide amenable access to capital for small and medium enterprises with good prospects, but still immature for the more rigorous requirements of the main board at the NSE. Investment One Stockbrokers’ arrays of new functions further confirmed its profile as one of the main market-driving stockbroking firms. It had emerged as one of the top 10 stockbroking firms by volume and value on the NSE in 2012.

    Besides immediate strategic positioning, Investment One recognises the importance of growing Nigeria’s investors’ base. It has launched a SEC-approved online investment education platform, Virtual Investment Simulator, which encouraged participants to learn about how to make informed investment decisions as well as enhance knowledge of the financial market. It allows investors to form exclusive investment clubs within the portal whereby participants can invite friends and colleagues to join, compete with one another as well as share ideas and post comments on the portal’s blog page. It had recently presented N500, 000 as star prize to the pioneer winner of the simulated investment game.

    With all these, Investment One was recently recognized as one of top 50 Fast Growing Companies in Nigeria. It was one of the three financial Sector companies recognised in the award category, which took into consideration the awardees’ growth rate of not less than 100 per cent per annum, employment of more than 6,500 people, business spread and business incubation records.

    The acquisitions and new functions, coupled with aggressive corporate development initiatives, have broadened Investment One’s one-stop investment services vision. Primarily licenced by the NSE and SEC to provide a wide portfolio of capital market services including investment management, trusteeship, issuing house, financial advisory and securities brokerage, additional functions and subsidiaries would enable Investment One to provide individual and institutional investors a holistic investment experience.

    Speaking recently, managing director, Investment One, Mr. Nicholas Nyamali, said the name ‘Investment One’ mirrors the company’s desire to be a one-stop shop for comprehensive investment services and the first point of call for insightful and innovative financial solutions.

    According to him, the name also reflects the firms’ strategic positioning as a service-oriented firm that is responsive to the investment needs of its customers while its payoff-forward thinking investment solutions, underscores its commitment to delivering financial services solutions backed by its long-standing core values of service excellence, innovation and market insight to individual and institutional investors.

    “The company is uniquely positioned to provide comprehensive services to meet our customers’ investment requirements. Whether to advise, execute, manage or transfer wealth to future generations, our customers will find the full compliments of investment solutions in our one-shop location – we call this the 360° Investment Partnership,” Nyamali said.

    According to him, the company is reputed for its ability to discover and generate new ideas to meet the diverse needs of its clients with a wide array of products and services including local and offshore equities and fixed income securities as well as alternative investment such as real estate securities, commodities and derivatives.

    “Our primary objective in meeting clients’ expectations is built upon three service benchmarks- execution, performance and efficient reporting. We execute clients’ mandates speedily and generate regular market reports that serve to update our clients about the status of their transactions,” Nyamali noted.

    With all these, Investment One appears to be well-positioned in the competition-driven realignments of operators and products and services in the Nigerian capital market.

     

  • Turbulent time for naira

    Turbulent time for naira

    The Naira

    Three factors put the naira at a cross-roads during the second quarter of the year: increased oil importation, reduced sales of crude oil at the international market and exit of foreign investors repatriating their profit in the capital market.

    These dynamics bolstered the demand for the dollar and weakened the naira. On June 17, the naira was at 18-month low, dropping 0.8 per cent to N162.60 a dollar, culminating in a weekly decline of 1.8 per cent. It was the worst performance since December 23, 2011.

    The naira’s decline steepened last month after the CBN broke its rule of only selling dollars at its bi-weekly auction within a three per cent band around N150 to the dollar, a system designed to stabilise forex trading.

    But analysts see the naira fluctuations as temporary, given the position of the reserves, which currently stands at $48.3 billion, which means the apex bank can defend the naira.That defence occurs regularly at critical points.

    Jide Solanke, an analyst at Lagos-based FSDH Merchant Bank Ltd told Bloomberg, that there’s was high demand for dollars as people are taking profits and their money out of the country. He noted that the reserve position is robust, which means the CBN can defend the naira.

    Currencies Analyst at Ecobank Nigeria, Olakunle Ezun, said though the naira has breached CBN’s three per cent above N155 to a dollar target, the banking watchdog is positioned to stabilise the local currency in the short term.

    During the last week of the quarter in a bid to tame the naira from further depreciation, the CBN increased the weekly offer at Wholesale Dutch Auction System (WDAS) market, offering $800 million from the usual $600 million, weekly. The marginal rate at both auctions remained N155.75 to a dollar. The Naira depreciated further last week losing 212 kobo week-on-week to close at N161.57 to a dollar from N159.45 the previous week.

     

    KYC

    The CBN also extended Know Your Customer (KYC) deadline for Designated Non-Financial Businesses and Professions (DNFBPs) from April 30 to December 31, this year.

    CBN Acting Director, Financial Policy and Regulation, A.O. Ikem advised DNFBPs that have not registered with Special Control Unit Against Money Laundering (SCUML) to do same before the deadline ends, failing which they would not be allowed to operate such accounts. The CBN said the extension was meant to address some of the challenges encountered by SCUML as a result of the number of persons seeking to enjoy late compliance.

    The CBN had earlier issued a circular, mandating DNFBPs on the need to provide additional KYC requirements to their banks and Other Financial Institutions (OFIs). It said compliance is in line with international best practice against adverse developments resulting from money laundering and financing of terrorism globally.

     

    World Bank hammer

    The World Bank Group announced the banning of the Nigerian firm, Scientific Energy and Environmental Management Systems Limited (SEEMS) for two years for fraudulent practices under the Second Lagos Urban Transport Project financed by the banks.

    It said the ban was part of a Negotiated Resolution Agreement, which includes satisfactory compliance with its Integrity standards, including corporate ethics training for all its employees within three months.

    SEEMS, however, agreed to fully cooperate with the World Bank’s Integrity Vice Presidency (INT), the unit mandated to investigate fraud and corruption in Bank-financed activities. The INT is responsible for preventing, deterring and investigating allegations of fraud, collusion and corruption in World Bank projects, capitalising on the experience of a multilingual and highly specialised team of investigators and forensic accountants.

     

    BoI’s credit

    To safeguard its loanable funds, the Bank of Industry (BoI) now demands 10 per cent equity contribution from prospective borrowers to enhance their commitment to the loans, the bank’s General Manager, Operations, Joseph Babatunde, has said.

    He spoke during the media workshop in Lekki, Lagos. He explained that the development finance institution is nearing conclusion in securing $500 million loan from the African Development Bank (AfDB), which would enable it expand its lending capacity to the economy.

    He disclosed that the AfDB will also be extending $200 million facility to the Nigeria-Export-import (NEXIM) Bank, adding that part of the delay in securing the loan was because the lender (AfDB) was awaiting Federal Government’s sovereign guarantee. “We have already secured the needed approvals for the loan aside getting a sovereign guarantee,” he said.

    He said rates for such loans are always at small margin above the Nigeria Interbank Offered Rate (NIBOR), adding that it will be a moving rate, rotating around NIBOR, and will be at single digit.

     

    Vision 20: 2020

    The Nigeria Inter-Bank Settlement System (NIBSS) also said the vision of Nigeria being among the top 20 economies in the world providing efficient e-payment services by 2020 will be achieved.

    NIBSS Executive Director, Business Development, Chritabel Onyejekwe disclosed this at during the 13th Card, ATM & Mobile Expo in Lagos. She said the cash-less banking initiative has recorded huge success and had drastically reduced banks’ operational costs.

    She said NIBSS in collaboration with the CBN, banks and other international partners are committed to the journey of transformation for the e-payment industry via cash-less economy. He said all the parties agree that a lot of work needs to be done at the grassroots.

     

    Private sector pension

    The private sector is well ahead of the public sector in pension fund contributions, FBN Capital, had shown. The report indicated that the private sector now contributes about 60 per cent of the N3.4 trillion pension assets under the management of Pension Fund Administrators (PFAs).

    The research firm said data released by the National Pension Commission (PenCom) showed that as at end of March 2013 (when pension assets were N3 trillion), the private sector contributed N1.8 trillion to the scheme. Also, the public sector’s contribution from ministries, departments and agencies (MDAs) of the federal and some state governments, was N1.2 trillion. This, it said, is a marked change from its composition in 2004 when the Act kicked off.

    FBN Capital said the increase to N3.4 trillion as at the end of May, this year was largely due to the filing in of 12 states into the contributory pension scheme, although only six states had collected and remitted contributions in compliance with the provisions of the Pension Reform Act (PRA) 2004.

     

    Religious bodies account

    The CBN refuted reports that it had ordered the freezing of the accounts of some religious organisations, citing alleged suspicion of links with terrorist groups. In a statement posted on its website, the banking watchdog said it had not ordered the closure or freezing of the bank account of any religious body or any institution.

    It explained that prior to 2006, Nigeria was on the list of the Non-Cooperating Countries and Territories (NCCTs) of the Financial Action Task Force (FATF), a global watchdog on financial crimes.

    The country was removed from the list on account of stringent actions taken by the Federal Government. However, by 2007, as a result of loopholes in Nigeria’s legal and regulatory system, the country was included in the ‘grey list’ of countries that had not made appreciable progress in their Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regime by FATF.

    “It was, therefore, incumbent on Nigerian authorities to ensure that her financial processes and procedures as well as the provisions of the Money Laundering (Prohibition) Act (MLPA) of 2011 and the Prevention of Terrorism (PTA) Act of 2011, were in conformity with FATF recommendations and international best practice,” it explained.

     

    Mobile money transactions

    The cumulative transactions by the Mobile Payments Operators in the last one year were worth over N64 billion, more than 60 per cent of which were done in the last three months, CBN Deputy Governor, Operations, Tunde Lemo has said.

    Speaking at the conference on cash-less policy held in Lagos, with the theme: Transiting to a cash-less society – Charting the way forward, he said the CBN had licensed about 18 mobile payment operators to offer payment services via the mobile phone that over 100 million Nigerian are using. This, he said, will help promote financial inclusion and by extension, make the nation a cash-less one.

    Lemo said the CBN has released the guidelines on agent banking to guide banks and other financial service companies who may wish to offer financial products and services, on how to appoint and manage the agents.

    He said central banks all over the world are usually at the centre of the development of the banking and payments system. This, he said, was imperative, given that they perform the role of facilitating the exchange of goods and services among the economic agents.

     

  • Experts: CBN’s projected drop in inflation rate will boost economy

    The ability of the Central Bank of Nigeria (CBN) to reduce inflation rate to seven per cent by September will augur well for the economy, experts have said.

    Such a drop in inflation rate from nine per cent to seven per cent will result in a growth of the treasury bills, bonds, equities and other traded financial instruments, they said.

    In line with its sound macroeconomic stance, CBN projected that inflation would fall from nine per cent to seven per cent in September.

    The development, which came on the heels, of the achievement of a single digit inflationary rate early in the year, according to experts, portends a good omen for the country.

    The Managing Director, BGL Securities Limited, Mr Sunday Adebola, said there would be positive real returns on investments once inflation falls to seven per cent in September. He said when investors made nominal returns and deflated them by inflationary rates; they achieved positive real returns on investments.

    He said: “Simply put a situation whereby inflationary rate is unable to affect the gains recorded from investing in tradable instruments could be described as positive real returns on investments.

    “When inflation falls to seven per cent in the third quarter of the year as projected by the CBN, real returns on investments in tradable instruments will increase.  A further decline in inflation means an increase in the prices of instruments. This is a good development for investors and the market in particular. This will lead to a corresponding increase in the aggregate turnover of instruments traded in the market.”

    Besides, he said the functionality of one rate is dependent on the other. “The moment the inflationary rate comes down, the interest rate moves in the same direction. When interest rate goes up, the prices of instruments will rise. If there is a decline in interest rate, investors would be able to move funds into the market.  When this happens, the prices of tradable instruments would increase. The market operators are going to be happy because they would make good returns on investments,” he explained.

    According to him, CBN has consistently been meeting its projections to encourage the growth of the economy.

    “If by September end, the rate of inflation falls to seven per cent, we should automatically expect a decline in interest rate. The Monetary Policy Committee would be compelled to adjust the benchmark interest rate, which has remained at 12 per cent in the past 12 months. I think this is a sign of good things in the nation’s financial market. What this means is that investors are going to get better returns. Whether it is headline or core inflation that experiences a decline, operators are bound to get positive real returns,” he said.

    Also, the General Manager, Treasury Department, Consolidated Discount House, Mr Bolanle Okunubi, said a fall interest rate would boost the bond and other financial market instruments. Okunubi said inflation and interest rate function together for the growth of the financial market. He said when there is a convergence of the two rates, the market is better for it.

    He said an average investor wants inflationary and interest rate to fall because that is the only way he or she can achieve growth.

    Noting that there are upside and downside effects in financial markets, Okunubi said the latter can be minimised when the market rates are favourable.

    He said high interest rates, inflationary rates, inconsistent economic policies, political crises; among other variables, affect the operations of the financial market, adding that they are growth inhibitors.

     

  • FRC advises banks on infrastructure

    The Chief Executive Officer, Financial Reporting Council (FRC), Mr Jim Obazee, has advised banks to provide enough infrastructure for growth.

    He said problems, such as poor accounting ideas and planning would reduce, when banks put in place necessary infrastructure.

    Speaking during a stakeholders forum in Lagos, Obazee said technology is vital to the operations of financial institutions globally, adding that it has helped in minimising accounting errors.

    He said poor infrastructure was one of the problems that caused crisis in the industry in 2009, adding that many banks gave out loans to their directors without putting in place measures to ascertain their credit history.

    He said: “We do not collect adequate information on burrowers. That is why banks have problems when customers defaulted. Once there is good infrastructure, banks would be able to monitor their burrowers, know their companies, their capacity to pay back among other information. Based on these, banks would be able to know the credit rating of their customers. The moment they know that the credit rating of some companies is poor, they would not give loans to such companies.”

    The banks would provide faultless accounting policies, when they have the necessary facilities in place.

    Obazee said fighting inflation should not be the job of the Central Bank of Nigeria (CBN) alone, advising stakeholders to make data in their sectors available as at when due.

     

  • Dangote vies with China over tomato market

    Dangote vies with China over tomato market

    Shittu Ibrahim ekes out a living for his two wives and 11 children by selling tomatoes he grows to passers-by along a highway that runs through the Kadawa Valley near Kano, the biggest city in the north. With no way to find new customers, about two-thirds of his crop rots.

    The Central Bank of Nigeria (CBN) and richest man, Aliko Dangote, have teamed up to establish a $25 million tomato-paste factory that could boost income for Ibrahim and the 8,000 farmers who live in the valley.

    Tomatoes are sold in a market in Maiduguri.

    Aliko owns businesses including flour mills, fruit canning plants and palm oil refineries.

    “We are doing this only to feed, as you can see, I can’t afford the luxuries of life,” the stocky 56-year-old said as he sat on a stool on June 6 outside his mud-walled house, which is surrounded by tomato fields as far as the eye can see. “There are better prospects in supplying Dangote because people will buy from them from all over the country. We hope that things will improve,” he told AFR.

    The intervention by the apex bank, which commissioned a study to show that processing local tomatoes is cheaper than importing paste from China, is part of the government’s drive to cut annual food imports of more than $10 billion. It also plans to boost agriculture in a country that was food self-sufficient in the 1960s, and create jobs in the north where poverty and unemployment have fueled an Islamist insurgency.

    “We want to take Kadawa as a model and prove that with the right application of government policy we could get finance to the sector, improve productivity, create jobs and raise income,” CBN Governor Lamido Sanusi said in a June 25 e-mailed response to questions.

    The 2011 study according to AP, showed that Nigeria pays $360 million to import more than 300,000 metric tons annually of tomato paste from companies including Hebei, China-based Baoding Sanyuan Food Packing Co. and Singapore’s Olam International Ltd (OLAM). a year. Nigeria produces 1.5 million tons of tomatoes annually of which about 900,000 tons rot, Agriculture Minister Akinwunmi Adesina said at a June 13 presentation in Abuja.

  • CBN’s cash-less policy begins in six states today

    CBN’s cash-less policy begins in six states today

    The moderated cash-less policy of the Central Bank of Nigeria (CBN) begins today in the Federal Capital Territory (Abuja), Abia, Anambra, Kano, Ogun and Rivers states.

    Ahead of today’s take-off of the policy, several commercial banks have, through emails, text messages and formal letters, been sensitising their customers on the need to embrace the alternative payment options.

    The policy, which was hitherto operational in Lagos State, is aimed at promoting the use of electronic-based transactions instead of cash for the payments for goods, services, transfers, among other services. The implementation of the “Cash-less Lagos”, as it is known, began on January 1, last year. It recorded improvements in the use of Point of Sale (PoS), Automated Teller Machines (ATMs) and other e-payment tools.

    The service charges/fees did not apply until March 30, last year, to give people time to migrate to electronic channels and experience the infrastructure that has been put in place.

    The CBN Deputy Governor, Operations, Mr Tunde Lemo said the policy is expected to drive development and modernise Nigeria’s payment system in these states.