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  • CBN defends forex restriction for milk imports

    The Central Bank of Nigeria (CBN) has defended its policy restricting foreign exchange access to importers of milk.

    In a statement, the CBN said there were attempts  by some interests, who feel hurt by the planned policy aimed at promoting the local production of milk, to mislead the public by misrepresenting the unassailable case for investments in local milk production and the medium to long-term benefits of the planned policy.

    “While we are aware that some of our policies may hurt some business interests,  we are thankful to Nigerians for the buy-in and intense interest in the policies  of the CBN. As a people-oriented institution, however, we shall remain focused  on the overarching and ultimate welfare of the Nigerian masses.

    ‘’We, therefore, wish to, once again, reiterate our policy case as it relates to the  planned restriction of access to the Foreign Exchange market by importers of milk,” the statement said.

    Continuing, the CBN explained that the country and the welfare of  Nigerians come first in all its policies. “Being an apolitical organisation, we do not wish to be dragged into politics. Our focus remains ensuring forex savings, job creation and  investments in the local production of milk. For over 60 years, Nigerian children and indeed adults have been made to be heavily dependent on milk imports. The national food security implications of this can easily be imagined, particularly, when it is technically and commercially possible to breed the cows that produce milk in Nigeria.

    About three years ago, we began a policy to encourage backward integration to

    conserve foreign exchange and create jobs for our people,” it said.

    “For the avoidance of doubt, Milk importation is not banned. Indeed, the CBN  has no such power. All we will do is to restrict sale of forex for the importation  of milk from the  foreign exchange market. We wish to reiterate that we remain ready and able to provide the needed finance to enable investors who genuinely want to engage in milk production,” it added.

    “Arising from the success of the restriction policy, we approached some milk importers,  like we did for rice, tomato and starch and asked them to take advantage ofCBN’s low-interest loans to begin local milk production instead of relying  endlessly on milk imports. Today, although there have been some successful attempts at producing milk locally, the vast majority of the importers still treat this national aspiration with imperial contempt,” it stated.

    It said the ongoing resort to blackmail and undue politicisation through the use of social media attacks can only serve to strengthen our resolve to wean our country from the clutches of powerful and highly influential traders and dealers who have kept the masses of our people hostage to foreign consumption and  condemned our youths to perpetual unemployment.

    “We call on Nigerians to enlist in this vanguard to take our economy back from vested interests, make our country a productive economy and create jobs,” it said.

  • LCCI urges CBN to reduce cash reserve ratio

    The Lagos Chamber of Commerce and Industry (LCCI) has urged the Central Bank of Nigeria (CBN) to reduce the Cash Reserve Ratio (CRR) to  increase credit to the private sector.

    Speaking with The Nation, LCCI President Mr. Babatunde Ruwase said the 22.5 per cent CRR by the CBN was too high.

    He said the CRR regime was not effective, as banks were grappling with bottlenecks in accessing the facility.

    He suggested that the CRR framework should be made flexible and faster by the apex finance sector regulatory agency.

    Ruwase added that the Federal Government needed to reduce the current rate at which it sterilises money from the banks because it makes the cost of funds higher for the banks.

    He, however, gave kudos to the CBN for its various efforts on job creation, improving credit for MSMEs, intervention in the agricultural sector, building robust payment system, exchange rate stability and maintaining strong external reserve, among others.

    LCCI, he said, was in support of the move by the CBN in developing a Trade Receivable Portal to enable MSMEs trade their invoices with financial institutions to improve their cash flow.

    “We are, however, sceptical about the workability of this laudable idea judging by the current disposition of commercial banks to lending to MSMEs, except this trend is reversed,” Ruwase said.

    He commended the desire of the CBN to boost consumer spending through a lending framework that will involve large departmental stores, equipment leasing companies, automobile companies in partnership with financial institutions and credit bureaus.

    Ruwase, however, urged the CBN to put all the necessary measures in place before commencement to ensure that the intended goal is achieved, as consumer spending is critical towards ensuring economic growth.

    While acknowledging that all efforts put in place by the CBN in the last five years yielded the intended results, Ruwase, however, commended the CBN’s five year master plan.

    “This five-year plan of the CBN is indeed laudable and commendable. However, we recognise that the role of the CBN is in using monetary policies to stimulate growth of the economy while some of the planned targets are fiscal in nature.

    “It will, therefore, requires that a framework for collaboration with the major economic ministries and other stakeholders be put in place to be able to fully actualise what the CBN sets out to accomplish in the next five years,” Ruwase said.

  • LCCI urges CBN to reduce cash reserve ratio

    The Lagos Chamber of Commerce and Industry (LCCI) has urged the Central Bank of Nigeria (CBN) to reduce the Cash Reserve Ratio (CRR) to increase credit to the private sector.

    Speaking with The Nation, LCCI President Mr. Babatunde Ruwase said the 22.5 per cent CRR by the CBN was too high.

    He said the CRR regime was not effective, as banks were grappling with bottlenecks in accessing the facility.

    He suggested that the CRR framework should be made flexible and faster by the apex finance sector regulatory agency.

    Ruwase added that the Federal Government needed to reduce the current rate at which it sterilises money from the banks because it makes the cost of funds higher for the banks.

    He, however, gave kudos to the CBN for its various efforts on job creation, improving credit for MSMEs, intervention in the agricultural sector, building robust payment system, exchange rate stability and maintaining strong external reserve, among others.

    Read Also: NGBA now Nigerian-German Chamber of Commerce, gets new president

    LCCI, he said, was in support of the move by the CBN in developing a Trade Receivable Portal to enable MSMEs trade their invoices with financial institutions to improve their cash flow.

    “We are, however, sceptical about the workability of this laudable idea judging by the current disposition of commercial banks to lending to MSMEs, except this trend is reversed,” Ruwase said.

    He commended the desire of the CBN to boost consumer spending through a lending framework that will involve large departmental stores, equipment leasing companies, automobile companies in partnership with financial institutions and credit bureaus.

    Ruwase, however, urged the CBN to put all the necessary measures in place before commencement to ensure that the intended goal is achieved, as consumer spending is critical towards ensuring economic growth.

    While acknowledging that all efforts put in place by the CBN in the last five years yielded the intended results, Ruwase, however, commended the CBN’s five year master plan.

    “This five-year plan of the CBN is indeed laudable and commendable. However, we recognise that the role of the CBN is in using monetary policies to stimulate growth of the economy while some of the planned targets are fiscal in nature.

    “It will, therefore, requires that a framework for collaboration with the major economic ministries and other stakeholders be put in place to be able to fully actualise what the CBN sets out to accomplish in the next five years,” Ruwase said.

  • CBN releases N35.9b for agric credit scheme

    The Central Bank of Nigeria (CBN) has released N35.9 billion for 166 projects under the Commercial Agriculture Credit Scheme.

    CBN Governor,  Godwin Emefiele disclosed this at  a meeting with vice chancellors of University-based Poultry Revival Programme in Abuja yesterday.

    Emefiele, who spoke through the CBN Deputy Governor on Economic Policy, Okwu Nnanna, said the apex bank’s interventions such as the Commercial Agriculture Credit Scheme and the Real Sector Support Facility had addressed the problem faced appreciably.

    He said  N507 million was also released to 433 farmers and another N238 million to 112 projects under Agri-Business Small and Medium Enterprises Investment Scheme.

    Emefiele said apart from these interventions, CBN had recently financed the pioneer egg-powder production company in the country with N2 billion under the Differentiated Cash Reserve Requirement-Real Sector Support Facility (DCRR-RSSF) window.

    Read also: ‘SMEDAN protests exclusion from CBN’s N220b MSMEs fund’

    Speaking on the poultry revival programme, he said: “We have asked for information on the capacity of institutions and companies’ poultry pens, hatcheries, feed mills, size of crop farm and number of tractors for grains production.

    “Others are commercially viable and bankable business plan; including processing facility as well as any other information that would enrich your participation in the programme.

    “We rely on the University based poultry production model because you have the existing Infrastructure, experience and human assets to enable production at reduced cost and in a competitive manner.

    “Let me emphasise that we have structured this programme to ensure that they can be accessed by those who need them the most and are ready to operate their facilities in a commercially viable manner.

    “This programme is directly in conformity with our resolve to diversify the economy, be catalyst for job creation and inclusive economic growth. While these are our ultimate goals, our main intermediate objective is to ensure that poultry production is increased as well as end the smuggling of poultry products into the country.

    “The CBN would be committing considerable human, material, and financial resources to monitoring both the disbursement and utilisation of these funds in a robust and verifiable manner.

    “Participating institutions will be required to submit periodic returns on disbursements as well as an analysis of the impacts of the Fund they received” he said.

    Emefiele said that CBN would also undertake regular on and off-site checks to ascertain veracity of the reports received hence enjoined the institutions, to help the bank in achieving these goals by ensuring that these funds were deployed in an effective and efficient manner.

    A participant and President of Poultry Association of Nigeria, Mr Ezekiel Ibrahim, commended the CBN’s initiative.

    Ibrahim said he was optimistic that this initiative would address the main challenge in the sub-sector, the problem of cost per capita.

    According to him, this intervention will also go a long way in addressing smuggling of poultry products into the country.

  • CBN provides N22.9b seed capital for creative industry

    The Central Bank of Nigeria, in collaboration with the Bankers’ Committee, has provided N22.9 billion seed capital for the Creative Industry Financing Initiative (CIFI).

    In a circular released at the weekend, the apex bank said the CIFI project was aimed  boosting job creation, particularly among youths.

    It said the Student Software Development loan will be allocated N1 billion; Information Technology, N5.5 billion; Movie production, N3 billion; Movie Distribution, N4 billion, Music, N5.4 billion and Fashion N4 billion.

    The CBN said beneficiaries could get up to N500 million loans at nine per cent interest.

    It noted that those that could apply must be from   fashion, Information Technology, movie production, movie distribution, music and software engineering student loan.

    The apex bank stated: “Software engineering student can get a loan of up to N3 million, N30 million for movie production business, N500 million for movie distribution business, cover your rental/service fees for fashion and Information Technology business, cover your training fees, equipment fees, and rental/service fees for music business.”

    The CBN urged applicants in the creative industry to submit applications to their banks for approval and disbursement. It also advised them to prepare the business plan or statement on how much they required for the business.

    According to the CBN, the banks will discuss the request and provide the money.

    The maximum interest rate of nine per cent per year (all charges inclusive) is applicable to all.

    According to the guidelines, for software engineering student loan, it is a maximum of three years; for movie production and distribution, it is a maximum of 10 years; for fashion,Information Technology and music, it is a maximum of 10 years.

    The CBN reiterated its commitment to making the CIFI a huge success.

  • CBN, NACCIMA to work out disbursement plan for N500b agric fund

    The Nigerian Association of Chambers of Commerce Industry Mines and Agriculture (NACCIMA) has disclosed the Chamber’s involvement in strategically working with the Central Bank of Nigeria (CBN) to see that agriculture value chain in the country benefit adequately from the recently announced N500 billion agricultural fund earmarked for the sector.

    The Director General of NACCIMA, Ambassador Ayoola Olukanni, who disclosed this over the weekend in Lagos, noted that NACCIMA’s involvement was to make sure that those involved in agricultural produce for export are captured in the funds accessibility.

    He said; “Recently, the CBN Governor unveiled a new roadmap for economic growth and development and I am happy to say that NACCIMA as the voice of Nigeria business has been invited to be part of the funds which have been announced as being earmarked for a few areas of exportables.

    “With N500billion set aside by CBN, we want to strategically work with the CBN to see that Agriculture value chain in the country, and our Chamber members especially those on the Agriculture sector tap into the new programme to boost the food basket of the country.

    “We have been pushing for our members to be more engaged with various initiatives and incentives that have been announced by government. This is part of the things we are doing to expand the capacity of agric value chain programmes and projects.”

    The NACCIMA boss said the body has embarked on sensitisation of its members to enable them access various funding programs of the government that are available; stressing that the smallholder farmers and medium-scale farmers were targeted.

    Commenting on the African Continental Trade Agreement (AfCTA), he said, NACCIMA has thrown its weight behind the Government to sign and to leverage on the advantage of the trade to develop itself.

    He pointed out that AfCTA will help reposition the competitiveness of locally manufactured goods, adding that Nigeria is a major player in Africa and cannot afford to miss out.

    Olukanni pointed out that it will further help in putting the government on its toes, explaining that the trade agreement will lead to the country closing the infrastructural gap that have been existing for decades.

    Speaking on country’s competitiveness, he maintained that when proper trade policies are put in place and thoughtfully enforced, that the country has nothing to be afraid of, as improve its competitiveness.

  • CBN injects 242.04m, CNY 32.3m into Retail SMIS

    The Central Bank of Nigeria (CBN) has injected the sum of $242.04 million into the retail Secondary Market Intervention Sales (SMIS) and CNY 32.3million in the spot and short tenored forwards segment of the inter-bank foreign market.

    The bank’s Director, Corporate Communications Department, Isaac Okorafor disclosed that the intervention was for requests in the agricultural and raw materials sectors, adding that the Chinese Yuan, on the other hand, was for Renminbi-denominated Letters of Credit.

    Okorafor further expressed satisfaction over the stability of the foreign exchange which according to him, was largely due to sustained intervention by the Bank. He assured that the apex Bank Management would remain committed to ensuring that all the sectors of the forex market continue to enjoy access to the needed foreign exchange.

    Read also: MSMEs as alternate revenue source in CBN’s five-year plan

    He reiterated that with improved inflow of foreign exchange, the exchange rate had remained stable around N360/$1 for the past 27 months.

    It will be recalled that the Bank on Tuesday, June 25, 2019, offered authorized dealers in the wholesale segment of the market the sum of $100million, while the Small and Medium Enterprises (SMEs) and the invisibles segments each received the sum of $55 million.

    Meanwhile, $1 exchanged for N361 at the Bureau de Change (BDC) segment of the foreign exchange market, while CNY1 exchanged at N55, June 28.

  • CBN summons currency dealers, others on development in forex market

    The Central Bank of Nigeria (CBN) has summoned all authorized currency dealers for a meeting to discuss development in the foreign exchange market.

    The invitation was contained in a circular released and signed by the bank’s Director, Trade and Exchange, Mr Ahmed Umar, in Abuja, on Friday.

    It explained that the meeting would engage the participants on development so far in foreign exchange market with a view to proffer solutions or to chart a way forward.

    Read Also: CBN, others urged to reposition power 

    The meeting is scheduled for Sheraton Hotel, Ikeja, Lagos, on Thursday, July 4.

    Apart from authorized currency dealers, the representatives of Nigeria Customs Service are also expected at the meeting.

    Other participants are representatives of Standard Organisation of Nigeria (SON) and those of National Agency for Food and Drug Administration and Control (NAFDAC).

  • Emefiele: Need for regular stress test on banks

    SIR: I know you conduct stress tests on the banks, but the frequency does not allow you to get the true picture of financial strength of these banks. Conducting stress tests on the banks every two or three years is not enough, as scenarios change almost after each test due to sliding performance of the economy. Therefore, in my view, stress tests should be done bi-annually.

    I am also worried about CBN’s restricted target during stress test which technically focuses more on effective risk capacity and global benchmark compliance of banks without considering and envisaging concerns on the overall health of the banks.

    Since stress tests determine capital adequacy and capacity of quality of assets of a bank to withstand potential adverse effects and challenges in a dynamic and vulnerable economy like ours, regular disclosure of state of health of these banks are imperative. This will not only instil confidence in the banking public, it will also reassure foreign interests, their partners and other potential investors that all is well with the Nigerian banking industry and, is safe for business.

    As you know, the Nigerian banks are not immune to the vulnerability of the mono commodity nature of the Nigerian economy and high-tide financial environment. That is why I am recommending that stress tests be conducted on a bi-annual basis on the Nigerian banks because of their current feeble substructure and weak capital base. This will put the banks on their toes. Remember, it is the duty of the CBN to identify areas of vulnerability to risk and protect depositors’ funds.

    The role of the internal and external auditors of these banks is unhelpful as some of them conspire with their principals and operators to present a contrived healthy balance sheet. The CBN examiners or inspectors may be aware of these unethical practices and cover-up, yet, opt to collaborate to give them soft landing without appropriate penalties.

    Read Also: Emefiele: Economic diversification option to grow GDP

    As CBN Governor, you know at the moment that some of the large, medium and small banks are not compliant with global regulatory standards on capital adequacy and liquidity, making them fall short of international best banking practices.  Indeed, how resilient are these banks to shocks induced by inherent risks like credit, liquidity, interest rates and foreign exchange?

    Since global standards highlight guidelines for sound and improved quality capital and better risk cover aimed at promoting strong assets that can support periods of stress, it is essential stress tests are conducted every six months, particularly, when oil prices are heading down south with potential impact on macroeconomic stability.

    Besides determination of solvency status, the need for regular stress tests is to save the unsuspecting depositors from falling victim of likely distress in any of the banks.  Some of them exhibit cash strapped symptoms, but wear reversed look of sufficient sound health above capital-adequacy acceptable level, when indeed, all is not well, and are just within bear zone.

    There are Nigerians whose life savings are deposited in these banks, yet, upon withdrawal request, some of the banks are unable to meet their demands due to insufficient funds. This is more prevalent with domiciliary account holders.  Rather, the banks opt to cap the amount that can be withdrawn.

    Since non-performing loans contribute significantly to the weak state of health of these banks, it is high time CBN took specific interest in the underpinning reasons for the classification of bad debts by these banks. The stress tests should take into consideration, the trend of debtor-companies that deliberately secure loans with the intention of not paying back.

    Even without sufficient and rigorous efforts at recovery, some of these banks are quick to write-off bad loans. Banks should no longer be allowed to freely write-off these loans without CBN’s concurrence.  However, this process should be preceded by sufficient attempts to ensure that all such loans are restructured for purposes of acquisition, failing which, before write-off.

    Besides, debtor companies linked to members of board of such banks should be severely sanctioned, including replacement of management or total takeover. Connivance by board members to create toxic loans through their proxy companies in the system is an indication of deficient corporate governance and, should not be condoned.

    The CBN must be transparent and firm in its efforts at enthroning high corporate ethical standards in banks in consonant with international best practices.

     

    • Michael Owhoko, <mibroko@yahoo.com>

  • Nigeria records $14.2b capital flow in five months

    Total capital flows to Nigeria between January and May stands at $14.2 billion. Of this, Foreign Direct Investment (FDI) accounts for $2.87 billion.

    This represents a 20.18 per cent of the total amount. The Central Bank of Nigeria (CBN) gave this figure and denied  Reuters claims that Nigeria suffered a decrease of over 40 per cent in FDI inflows last year.

    A statement by the CBN explained that “in 2018, the total capital inflows to the country stood at $19.07 billion out of which FDI accounted for $7.78 billion.”

    Nigeria, the CBN said “continues to enjoy steady capital flows due to the prevailing stable macroeconomic environment and sustained investors’ confidence in the economy.”

    The statement said “the CBN is not privy to the methodology used in arriving at the figures, we wish to state that available records show a significant increase in FDI in Nigeria during the period 2018, contrary to the Reuters’ report.”

    Reuters had quoted the World Investment Report, 2019, recently released by UNCTAD on Foreign Direct Investment (FDI) to African countries, alleging that there was a decrease of over 40 per cent in FDI inflows to Nigeria last year.