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  • LCCI praises CBN over MPR reduction

    The Lagos Chamber of Commerce and Industry (LCCI) has commended the Central Bank of Nigeria (CBN)  for  reducing the Monetary Policy Rate (MPR) by 50 basis points from 14 per cent to 13.5  per cent. Its Director-General, Mr. Muda Yusuf in a statement said the action aligned with the clamour of the private sector.

    He said the private sector had canvassed for a relaxation of the tight monetary policy regime in the light of weak consumer demand, fragile economic growth and high rate of unemployment.

    Yusuf argued that though the reduction is not materially significant, it however, it is the appropriate policy choice at this time.  He said the economy is currently characterised by fragile growth at 2.3 per cent; unemployment at 23 per cent and youth unemployment at 36.5 per cent.

    Others he noted are high dependence on crude oil export; weak diversification and high poverty incidence.  He maintained that the economy needs both monetary and fiscal stimulus at a time like this.

    He said: “Although, the major monetary policy instruments of Cash Reserve Ratio (CRR) and Liquidity Ratio are still high at 22.5 per cent and 30 per cent respectively are still high and in tightening mode, the reduction in the MPR has a symbolic and signaling significance.  We expect that other monetary instruments will be adjusted over time”.

    Read also: LCCI: AfCFTA is game-changer

    He subscribed to the new policy by insisting that economic policies are typically characterised by tradeoffs and policy choices driven by what is utmost economic objective at a given point in time.  He added that the priority at this time is to stimulate growth.

    He also advised on the need to address the mis-alignment between the banking system activities, stimulation of economic growth and promotion of economic inclusion.

     

  • CBN slashes interest rate to 13.5%

    FOR the first time in more than two years, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) yesterday adjusted interest rate downwards to 13.5 per cent.

    Central Bank Governor Godwin Emefiele told reporters after the second MPC meeting that “the MPC voted to adjust the Monetary Policy Rate (MPR) by 50 basis points from 14 to 13.5 per cent; retain the asymmetric corridor of +200/-500 around the MPR; retain CRR at 22.5 per cent and retain the liquidity ratio at 30 per cent.”

    Emefiele said in arriving at the decision to adjust MPR (interest rate) downwards, “the committee was convinced that doing this will further uphold the banks’ commitment to promoting strong growth by way of encouraging credit flow to the productive sectors of the economy.

    “The MPC also felt that through loosening by a marginal rate, will serve to manage the sentiments in the capital flow market owing to the wider spread in yields in the emerging markets and the developing economies relative to the advanced economies. Moreover, the real interest rates will still remain positive.”

    Asked if there was a relationship between slashing interest rates and the loosening stance of the MPC as signalled yesterday, and funding Small and Medium Enterprises (SMEs), Emefiele explained: “To a reasonable extent, there is a relationship between lending to not just SME but to the agriculture, manufacture and the real sectors of the economy and our decision today.

    “The reason being that if you consider the fact that, for instance, January 2017, inflation had risen 18.72 percent and by December 2017, as a result of the pressure on the foreign exchange market, reserves have dropped to about $23 billion and by that same month, even what was accruing into Central Bank had dropped to about $500 million from as high as over $3 billion sometime in August 2013/2014.

    “Exchange rate as a result of the pressure had accelerated to as high as N525 to a dollar. But if you compare those numbers with where we are today, the inflation at 11.3 per cent, foreign reserves at close to $45 billion, and we feel this trend will continue. Exchange rate converging in all the markets at between N358 to N360, GDP being in positive trajectory consecutively for five to six quarters, then you will agree with me that there is relative stability and we have proved that there is sustainability in the level of macroeconomic indices in Nigeria.”

    Defending the decision further, Emefiele noted that “having being on this part, particularly the MPR  at about 14 per cent since July 2016,  and with the relative stability we have seen in the macroeconomic variables over the last two to two and a half years, we just think that this should be the next phase where we begin to think about consolidating growth. This should be the next phase where you should be talking about how do we create more jobs and reduce the level of unemployment in our country for people.

    “We believe this should be the next phase where we should be talking about how do we diversify the base of the Nigerian economy? And that in doing that, we will continue to keep our eyes on the stability that we have achieved so far in the macroeconomic environment. We will continue to do what we have been doing that is keeping inflation low, we will continue to do what we are doing that is keeping the exchange rate stable, we will continue to do what we are doing to ensure the reserves remain on positive trajectory at comfortable levels to be able to sustain the level of growth in our economy.”

    Read also: CBN lauds Ecobank’s Sustainability Efforts

    The CBN boss, however, sounded a note of caution, saying “there is a need for us to say, listen, we need to consolidate on what we have achieved so far and that is to begin to look at the level of growth again.

    “Looking at growth again also means that while keeping our eyes on those other parameters, let’s see whether we can signal a direction from the monetary policy to the direction of supporting and really accelerating growth in the country.”

    Accelerating growth, he explained, “means that we need to push harder to consolidate GDP, we need to push harder to make sure we create jobs and we need to push harder to diversify.

    “So, doing this will naturally mean that we are softening gradually, but I repeat and it shouldn’t be mistaken that we will continue to do what we are doing, what we have done in the past, keeping inflation at a moderated level, we will continue to do so. I think we are moving in the right direction.”

    Asked if this new level of ease on the interest rate will put pressure on the naira, Emefiele said: “The answer is a capital no, I don’t see that happening. Like I just told you that we have seen stability in the market over the last two to two and a half years and there is no need for anybody to worry. We will withstand any pressure.”

    When questioned if Nigeria is prepared for any economic pressure, the governor answered: “We have gone through it in 2015, 2016 and 2017. With the support of everybody, our management and MPC members were able to overcome such challenges and I do not think that there is any challenge that the management of the Central Bank cannot surmount. We would surmount them.”

    On the growth projection of 2.7 per cent by the CBN, Emefiele said: “We have actually been in positive growth trajectory in the last five to six quarters with an average GDP growth of about 1.9 per cent. I think that if you look at the trend from 2017 into 2018, we will naturally say that if we push hard, even harder than we have done in the past, that we should be able to attain the 2.7 per cent and three per cent growth.

    “What we are just trying to say here is that with the data available, and with consistency and with the push, that we are positive we will be trending towards 2.7 per cent  to three per cent in growth rate which is actually not fantastic if you consider where Nigeria’s growth trajectory has always been around five per cent.

    The MPC decided by a vote of six out of 11 members to reduce the MPR by 50 basis points, that is 0.5 per cent. Two members voted to reduce MPR by 0.25 per cent –  that is 25 basis points. A member voted to reduce it by 100 basis points, which is one per cent.

    Two members, however, voted to hold MPR at its current level. Ten members voted to hold all other parametres constant while a member voted to reduce the Cash Reserve Ratio (CRR) by 100 basis points from 22.5 per cent to 21.5 per cent.

    The CBN governor also reacted to concerns raised over the impact of the discounted CRR, stressing. “We received a couple of demands but not many of those demands met our expectations. Don’t forget that this is money – liquidity that should be sterilised in central bank as cash reserve requirement, making them available to the banks and doing that we must make sure that they go into the employment and growth stimulating sectors of the economy: like agriculture and manufacturing. We will make sure that this liquidity given to the banks must be for projects and expansion plan.”

    The decision to slash interest rate, he explained, followed the action of “banks themselves which have started dropping the interest rate very marginally. But we are trying to let them know that in fact, in this case, I will say that we are following them. That is why we say that we are signaling. We are signaling in the sense that with time this will permeate the entire banking sector and people will begin to see the expected impact.”

    When asked if it will be the beginning of MPC rate cutting circle, Emefiele said: “I’ve not said so. I repeat, don’t quote me wrong, I only said it is a signal, but we will continue to do what we are doing that is keeping our friends happy, keeping everybody happy. But we are going to see if it will take us to the real growth trajectory that we so desire for Nigeria.”

    The MPC also noted the need to rebase the economy (GDP), which was last done in 2010.

    Reacting to this development, Prof Uche Uwaleke of the Nasarawa State University said: “The reduction in MPR by 50 basis points signals the CBN’s desire to relax monetary policy to support economic growth. Obviously, it is a right response to the declining inflationary pressure and the relative stability in exchange rate which have prevailed for quite some time.

    “Moreover, on the external front, crude oil price has stabilised around $65 per barrel while the US interest rate normalisation has slowed down. All these must have combined to influence the MPC decision which is expected to increase the flow of credit to the real sector.

    “The reduced MPR will also be positive for the capital market as some of the increased liquidity that will ensue will flow into the equities market. Also, it will be cheaper for the government to issue bonds, given that part of this year’s budget deficit will be financed through domestic borrowing.”

  • CBN lauds Ecobank’s Sustainability Efforts

    The Central Bank of Nigeria (CBN) has recognized and awarded Ecobank Nigeria on its laudable sustainability and Corporate Social Responsibility (CSR) initiatives.

    The CBN at its 2018 annual awards for sustainability in Lagos, recognized Ecobank’s activities in four categories which include Sustainability Bank of the Year;; Sustainability Bank of the Year -oil and gas; Sustainability Bank of the Year -power sector and the Women Empowerment category  – the bank was first runners up in all four categories. These recognitions are an acknowledgement not only of the bank’s efforts at supporting industrial sector development but also in the development of efficient sustainability programmes for the good of the citizenry.

    Read also: CBN slashes interest rate to 13.5%

    The CBN Sustainability Awards – a part of the Nigerian Sustainable Banking Principle, NSBP, initiated in 2012, is an award that appreciates the efforts of financial service providers who have been able to successfully integrate social and environmental considerations into their operations, spanning across their processes and strategies.

    In his comment, Managing Director, Ecobank Nigeria, Patrick Akinwuntan, said:  “it is a deliberate policy of Ecobank Nigeria to embark on sustainable projects that impact people and the environment.

     

     

  • Lessons of 2019 elections

    The recent general elections underscored a collective progression to political stability and democratic consolidation. Group Political Editor EMMANUEL OLADESU writes on the importance of the exercise and implications for the polity.

    Public consciousness is growing. The electorate is waxing stronger in their capacity for wise choices during elections. Many observers contend that future polls may get better since blind voting may continue to give way.

    The recent general elections were an eye-opener. The presidential election lacked a predictive value in some states. While voters endorsed President Muhammadu Buhari in some states, they turned their back on the All Progressives Congress (APC) governors.

    The candidates were on the weighing scale on poll day. Many of them lost at their polling booths, units,wards and local governments.

    A veteran journalist, Bayo Onanuga, pointed out that the power of social media was over-exergerated during the electioneering. Those who dominated the social media campaigns got fewer votes.

    Also, the endorsement of candidates by ethnic organisations paled into futility. Many big wigs fell as they were rejected by local voters during the parliamentary and governorship elections.

    The poll revealed that President Buhari’s strength lay in the power and influence of local voters from his native North.

    For the first time in Nigeria’s electioneering history, 73 individuals vied for the country’s presidency. For the first time also, Nigerians had to vote not with their thumbs but with any finger; to prevent “ink spilling into the box meant for another party”, according to the Independent National Electoral Commission (INEC).

    At the end of the day, just one winner was expected – even if the contest went into a run-off.

    On Wednesday, February 27, Chairman of INEC, Prof Yakubu Mahmood, declared President and candidate of the All Progressives Congress (APC), Muhammadu Buhari, winner of the election, having fulfilled the legal requirement of winning not only the highest number of votes (15,191,847), but also at least 25 per cent of the votes in two-thirds of Nigeria’s 36 states. Indeed, he scaled this hurdle in 34 states. The candidate of the People’s Democratic Party (PDP) and Nigeria’s Vice President from 1999 to 2007, Atiku Abubakar, came second with 11,262,978 votes.

    Atiku has vowed to legally challenge the results because of alleged irregularities; even as local and international observers have affirmed the overall credibility of the elections despite pockets of violence in a few states and, in the words of the European Union Elections Observation Mission (EU EOM), some “operational shortcomings”.

    Without any iota of doubt, this is his right. There is, however, a growing consensus that he should rather concede defeat, for the common good.

    What Nigeria needs now is an intensification of its economic diversification, scaling of its infrastructural drive and fortification of its territories against insurgency.

    Even as several Western media may have concluded that President Muhammadu Buhari’s re-election is as a result of his honesty, integrity, there are evidences that Nigerians believe that there is need for at least four more years for the administration to finish the projects being undertaken across the 36 states and the Federal Capital Territory. As experience has shown, a new government often means abandonment of projects. To the credit of the Buhari Administration, it has been completing many projects abandoned for many years by previous successive governments. And, even so, with much less resources.

    Prior to the elections, while urging Nigerians to make a “sensible choice” of retaining President Buhari, the Minister of Power, Works and Housing Babatunde Fashola, had said: “Fundamentals of the economy are heading in the right direction. What we need to do is to consolidate on that.”

    Indeed, according to the latest report of the National Bureau of Statistics (NBS), issued a few days to the presidential election, before it was postponed for a week, many of the economic indices showed positive performances. The Gross Domestic Product (GDP) grew at about 2.38 per cent in the fourth quarter of 2018. The growth in real terms (year-on-year) rose from about 1.81 per cent in the previous quarter of the year. Good performance, though, economists warned that more needed to be done to stem unemployment. One good reason why there must be consolidation.

    Read also: Buhari, APC chiefs endorse Lawan for Senate President

    In sectors such as agriculture, which recorded annual GDP growth of about 14.27 per cent, higher than 11.29 per cent recorded in 2017.

    The sector contributed about 23.08 per cent to nominal GDP in Q4 of 2018, as against 21.93 per cent in the corresponding period in 2017.

    Nigeria’s drive to be self-sufficient in the production of rice is being relentlessly pursued. Indeed, according to the Africa Rice Center, Africa’s foremost research organisation on rice, with its production of 4 million tonnes a year, Nigeria now ranks the highest producer of rice in Africa.

    Manufacturing recorded 10.11 per cent in the last quarter of 2018, as against 8.53 in the corresponding period in 2017 and third quarter performance of 2018.

    Manufacturing PMI, according to the Central Bank of Nigeria (CBN), which had, for many months, recorded expansions rose, to an all-time high of 61.10 in December 2018, although it fell to 57.1 in February 2019.

    In his 2019 State of the Union address President of the United States of America, Mr Donald Trump admonished opposing parties to  rejection “the politics of revenge, resistance, and retribution” and embrace “the boundless potential of cooperation, compromise, and the common good.”

    For all contestants to various elective offices in Nigeria’s political season, this should be the mantra.

    The last words should go to President Muhammadu Buhari: “The new Administration will intensify its efforts in Security, Restructuring the Economy and Fighting Corruption. We have laid down the foundation and we are committed to seeing matters to the end. We will strive to strengthen our unity and in-clusiveness so that no section or group will feel left behind or left out.”

     

  • Sterling named Nigeria’s Most Innovative Bank

    Sterling Bank Plc has won the Innovative Bank of the Year Award at the 2019 edition of the Electronic Payment Incentive Scheme (EPIS) Efficiency Awards organised by the Central Bank of Nigeria (CBN) and the Nigeria Inter-Bank Settlement System (NIBBS).

    The CBN EPIS Efficiency Awards, now in its fourth edition is held annually to celebrate financial institutions, merchants and all other stakeholders at the forefront of driving electronic payments in Nigeria.

    Sterling Bank beat all other Nigerian banks in the innovation and platform efficiency categories. The awards were presented by senior officials of CBN and NIBSS at an elaborate event which held at Eko Hotels and Suites, Lagos over the weekend.

    Group Head, Transaction Banking at Sterling Bank Plc, Abidemi Asunmo, said the bank has always been at the forefront of efforts to provide customers with unique electronic payments channels that promote financial inclusion.

    “Understanding each customer while providing bespoke solutions to suit them is at the core of all we do at Sterling Bank and we are delighted to be recognised as the leading innovative bank of the year by the CBN and NIBSS. We will continue to ensure that our customers enjoy the best of services through our various portals including Specta and I-invest, among others.”

    According to NIBSS, the awards are based on objective analysis of all e-payment data collated by NIBSS over a full calendar year in addition to public voting and surveys administered to industry stakeholders for transactions within the year under review.

    Speaking at the awards ceremony, Mrs. Aisha Ahmad, Deputy Governor, CBN, said NIBBS would retain the vision for the future. She advised banks and other merchants to scale up their capacities to innovate as well as enhance capacity to handle large transaction values.

    The Deputy Governor enjoined stakeholders to look at issues of interoperability, cyber security framework, collaboration and shared threats to their security systems.

     

  • GTBank dominates CBN e-payments awards

    Guaranty Trust Bank Plc continued its dominance of Nigeria’s most qualitative digital financial service awards for the fourth year in a row, winning eight of the 12 honours available to banks in the 2019 edition of the Central Bank of Nigeria (CBN) Electronic Payment Incentive Scheme (EPIS) Efficiency Awards. The foremost African financial institution, renowned for its innovative products and services, won awards for efficiency and excellent service delivery in virtually every E-payment channel.

    The CBN EPIS Efficiency Awards is organised to celebrate financial institutions, merchants and other stakeholders at the forefront of driving electronic payment in Nigeria. Now in its fourth year, the awards are based on objective analysis of all E-payments data collated by the Nigeria Inter-Bank Settlement System (NIBSS) over a full calendar year.

    With eight awards, GTBank took home two more honours than the six awards the bank won the previous year and the highest number of awards presented to financial institutions, Fin-techs, merchants and other stakeholders in the Electronic Payment Incentive Scheme.

    The eight awards won by GTBank include: Best Customer Experience Award: for having the highest level of overall customer satisfaction rating in the delivery of electronic payment services to customers in 2018.  Real-Time Payments Transaction Efficiency: for achieving the lowest failure rate in the processing of Instant Payments transactions in 2018 among others.

    Commenting on the Bank’s EPIS awards, the Managing Director and Chief Executive Officer of Guaranty Trust Bank plc, Segun Agbaje, said; “We are proud to be recognised by the CBN EPIS Efficiency Awards for our efforts in driving excellence in electronic payments and providing customers with a superior banking experience across all digital touch points. These awards serve as extra motivation for us and we continue to find new and exciting ways to reduce our customers’ pain points and offer them benefits beyond banking.

     

     

  • CBN slashes interest rate to 13.5 percent

    The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has for the first time in over two years adjusted interest rate downwards to 13.5%

    Addressing journalists at the end the second MOC meeting in 2019, Central Bank Governor Godwin Emefiele disclosed that “the MPC voted to adjust the Monetary Policy Rate (MPR) by 50 basis points from 14% to 13.5%; retain the asymmetric corridor of +200/-500 around the MPR; retain CRR at 22.5% and retain the liquidity ratio at 30%.”

    Emefiele stated that in arriving at the decision to adjust MPR (interest rate) downwards, “the committee was convinced that doing this will further uphold the bank’s commitment to promoting strong growth by way of encouraging credit flow to the productive sectors of the economy.”

    He noted that “the MPC also felt that through loosening by a marginal rate, will serve to manage the sentiments in the capital flow market owing to the wider spread in yields in the emerging markets and the developing economies relative to the advanced economies. Moreover, the real interest rates will still remain positive.”

    When asked if there was a relationship between slashing interest rates and the loosening stance of the MPC as signalled on Tuesday, and funding Small and Medium Enterprises (SMEs) Emefiele stated that, “to a reasonable extent, there is a relationship between lending to not just SME but to the agriculture, manufacture and the real sectors of the economy and our decision today. The reason being that if you consider the fact that for instance, January 2017, inflation had attend the level of risen 18.72 percent and by December 2017, as a result of the pressure on the foreign exchange market, reserves have dropped to about $23 billion and by that same month, even what was accruing into central bank had dropped to about $500 million from as high as over $3 billion sometime in August 2013/2014.”

    Emefiele added that “exchange rate as a result of the pressure had accelerated to as high as N525 to a dollar. But if you compare those numbers with where we are today, the inflation at 11.3 percent, foreign reserves at close to $45 billion, and we feel this trend will continue. Exchange rate converging in all the markets at between N358 to N360, GDP being in positive trajectory consecutively for five to six quarters then you will agree with me that there is relative stability and we have proved that there is sustainability in the level of macroeconomic indices in Nigeria.”

    Defending the decision further, Emefiele noted that “having being on this part particularly the MPR at about 14% since July 2016, and with the relative stability we have seen in the macroeconomic variables over the last two to two and a half years, we just think that this should be the next phase where we begin to think about consolidating growth. This should be the next phase where you should be talking about how do we create more jobs and reduce the level of unemployment in our country for people.”

    “We believe this should be the next phase where we should be talking about how do we diversify the base of the Nigerian economy? And that in doing that, we will continue to keep our eyes on the stability that we have achieved so far in the macroeconomic environment – I mean we will continue to do what we have been doing that is keeping inflation low, we will continue to do what we are doing that is keeping the exchange rate stable, we will continue to do what we are doing to ensure the reserves remain on positive trajectory at comfortable levels to be able to sustain the level of growth in our economy.”

    All these notwithstanding, Emefiele was cautious when said “there is a need for us to say, listen, we need to consolidate on what we have achieved so far and that is to begin to look at the level of growth again. Looking at growth again also means that while keeping our eyes on those other parameters, let’s see whether we can signal a direction from the monetary policy to the direction of supporting and really accelerating growth in the country.”

    Accelerating growth he said “means that we need to push harder to consolidate GDP, we need to push harder to make sure we create jobs and we need to push harder to diversify. So doing this will naturally mean that we are softening gradually but I repeat and it shouldn’t be mistaken that we will continue to do what we are doing, what we have done in the past keeping inflation at a moderated level, we will continue to do so. I think we are moving in the right direction.”

    Asked if this new level of easing on the interest rate will put pressure on the Naira, the CBN Governor said, “the answer is a capital NO, I don’t see that. Like I just told you that we have seen stability in the market over the last two to two and a half years and there is no need for anybody to worry. We will withstand any pressure.”

    When questioned if Nigeria is prepared for any economic pressure, the governor answered by saying, “we have gone through it in 2015, 2016 and 2017, with the support of everybody, our management and MPC members were able to overcome such challenges and I do not think that there is any challenge that the management of the Central Bank cannot surmount. We would surmount them.”

    On the growth projection of 2.7% by the CBN, Emefiele said, “we have actually being in positive growth trajectory in the last five to six quarters with an average GDP growth of about 1.9%. I think that if you look at the trend from 2017 into 2018, we will naturally say that if we push hard, even harder than we have done in the past, that we should be able to attain the 2.7% and 3% growth. What we are just trying to say here is that with the data available, and with consistency and with the push, that we are positive we will be trending towards 2.7% to 3% in growth rate which is actually not fantastic if you consider where Nigeria’s growth trajectory has always been around 5%.

  • For better micro-credit

    The extended recapitalization deadline and re-categorization of Nigeria’s 898 micro-finance banks (MfBs), by the Central Bank of Nigeria (CBN), is a tacit admission of their shortcomings, as well as an opportunity to ensure that they live up to their full potential.

    In a circular released by the apex bank last week, the original deadline for the recapitalization of microfinance banks was moved from 2020 to 2021. National MfBs are required to attain a N5 billion minimum capital base. That for state MfBs is set at N1 billion.  At the very base, Tier 1 Units are expected to rev up their capital to N200 million, while Tier 2 Unit MfBs must have minimum capital base of N50 million.

    National MfBs are to attain a threshold of N3.5 billion by April 2020 and N5 billion by April 2021.  State MfBs must reach N500 million by April 2020 and N1 billion by April 2021. Tier 1 Unit MfBs must hit N100 million capitalization by April 2020, and N200 million by April 2021; while the Tier 2 MfBs must peak from N35 million in April 2020 to N50 Million capital base by April 2021.  By April 2021, therefore, the least capitalized MfB would boast a capital base of N50 million.

    The recapitalization and re-categorization exercise is clearly a good thing. Better-capitalized microfinance banks would theoretically be able to perform their functions of grassroots-level financial intervention and intermediation more effectively. The introduction of new categories is aimed at ensuring that the traditionally-neglected rural areas have greater access to banking products and services.

    However, it is also obvious that recapitalization is an undeniable indication of the fact that MfBs have failed to live up to the high expectations placed upon them. The CBN expected them to cover the majority of the nation’s economically-active poor citizens by 2020; to increase the micro-credit’s share of total credit to the economy from 0.9 per cent in 2005 to at least 20 per cent by 2020; to ensure that at least two-thirds of state and local governments participate in micro-credit financing by 2015; and to help the nation attain the 80 per cent financial inclusion target set by the CBN which currently stands at a little above 50 per cent.

    Far too many micro-finance banks are plagued by poor management structures, weak internal controls and an overall lack of institutional capacity. Indeed, instead of filling the gap left by the nation’s commercial banks, many of them have in fact widened it.

    The outrageously high-interest rates charged by MfBs rival those of their commercial counterparts. In September 2018, the CBN revoked the licenses of 154 MfBs, explaining that 62 had already folded up, while 73 were insolvent, 11 terminally distressed, and five had filed for voluntary liquidation.

    If micro-finance banks are to make the positive impact desired of them, they must be better-regulated. The CBN must enhance its capacity to properly monitor them and ensure that they are staffed by competent managers and run in accordance with laid-down banking principles.

    It is particularly important that the MfBs resist the temptation to operate as mini-commercial banks.  That is often the main reason so many find themselves in financial trouble. The Nigeria Deposit Insurance Corporation (NDIC) paid N2.9 billion to 81,328 insured depositors in failed MfBs in December 2015. The Corporation claims to have settled over 525,009 MfB depositors, as at September 2017.

    Nigeria’s micro-finance banks, for their own part, must understand that the administrative standards they should adhere to are as stringent as those prescribed for commercial banks. Competence, trust and integrity are non-negotiable requirements of any successful banking operation. They must plan for the long-term, stick to prescribed rules and regulations, and avoid the temptation to cut corners. The better they are able to do this, the sooner their positive impact will be felt across the nation.

  • Unity Bank wins EPIS award

    Unity Bank Plc has been named “Most Extensive Fraud Channel Coverage” at the Electronic Payments Incentive Scheme (EPIS) fourth  Efficiency Award 2019 held in Lagos at the weekend. The award was organized by the  Central Bank of Nigeria (CBN) and Nigerian Inter-Bank Settlement System (NIBSS).

    The bank won the award in recognition its outstanding compliance in fraud and cybercrime reporting and for being the financial institution with the most fraud channel coverage on the Central Antifraud System in 2018.

    The CBN has a central anti-fraud channel which monitors the number of fraud cases and the percentage of such cases reported. Not only was Unity Bank rated as the Bank that is most compliant in fraud reporting, the bank was also acknowledged for deploying efficient tools for monitoring fraud across all her electronic channels.

    The CBN and NIBSS praised the bank for promoting e-payment system and fraud prevention initiative in a manner that boost market confidence on CBN’s cashless policy.

    Receiving the Award, the Head of e-Business, Unity Bank Plc, Oluremi Tinuolu-Gabriel, commended EPIS, NIBSS and CBN for the award of recognition for the Bank which he noted as being special and remarkable. He added that “this honour is being received in a category where the Management of the bank has been very passionate not only with compliance directives but also to support with constant ICT infrastructural upgrade as well as effective information and cyber security practice to deliver optimum performance”.

    For the bank, the award is a motivation to all end users of e-payment channels who have kept faith in this journey to sustaining the cashless initiative. As a Bank, the award also inspires us to continually raise the bar of all compliance standards in fraud reporting.

  • Local bond market attracts $6b, says CBN

    THE successful conduct of the general elections is rubbing off positively on investments, with the inflow of over $6 billion into the local bond market.

    Central Bank of Nigeria (CBN) Governor Godwin Emefiele described the foreign capital inflows to the bond market as an indication of the continued investors’ confidence in the strength of the economy.

    The CBN boss, who spoke yesterday at the BusinessDay Post-Election Economic Agenda Conference in Lagos, also set a post-election agenda for the nation’s monetary policy. The current policy stance of the bank is expected to continue while inflation is estimated to rise to 12 per cent and moderate thereafter.

    Emefiele said the Nigeria bond market remains one of the most attractive investment destinations – In Bloomberg’s Emerging-Market Local-Currency Government Bonds index, which covers major emerging markets, including Nigeria, South Africa and Argentina.

    He said Nigeria’s bond continue to top the chart due to the stability of the Investors’ & Exporters’ Forex rate and the yields being high by emerging-market standards.

    Investors, Emefiele said, are sure that they can exit their positions if they want, which has been crucial in driving other investors into the market.

    Emefiele hinged the monetary policy stance of the bank on rising inflation expectations.

    He, however, noted that the bank would adjust the policy rate in line with unfolding conditions and outlooks. Just as in the previous year, he said the Bank would continue in its drive to ensure that the policy interest rate is set to balance the objectives of price stability with output stabilisation.

    The CBN boss also explained that since the establishment of the I&E Window in April 2017, the country has recorded about $35 billion in autonomous inflows through the window alone.

    He said: “As a result, exchange rate pressures eased considerably across all markets as the rates converged to about N360/$ and the distortive premium almost eliminated. At the Bureau De Change (BDC) segment, we saw a significant appreciation of the naira from over N525/$ in February 2017 to about N360/$ today. Rates at the I&E window also appreciated from nearly N382/$ in May 2017 to just over N360/$.”

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    On the exchange rate policy, he said the bank, despite the expected pressures from the volatility in the crude oil markets, will maintain its stable exchange rate over the next year.

    “Gross stability is projected in the foreign exchange market, given increased oil production and contained import bill”, he said.

    Emefiele expressed optimism that the country’s Balance of Payments would remain positive in the short-term, adding that the current account balance could improve further if oil prices continued to recover. He assured that this would be “supported by improved non-oil performance as diversification efforts begin to yield results to reduce undue imports.”

    Warning that the issues that led to the economic crisis between 2015 and 2017 remained visible, Emefiele stressed the need to significantly increase the country’s policy buffers, including fiscal measure, to increase its external reserve. He also reiterated the need to diversify the revenue structure of the Federal Government, in order to reduce dependence on direct proceeds from the sale of crude oil.

    He further advised that cheap financing be provided to boost local production of priority goods in critical sectors of the economy in order to reduce reliance on foreign imports.

    He also used the platform to highlight the efforts made by the CBN in the past five years in monetary policy and development finance, disclosed that the weakening of the Naira impacted the balance sheets of domestic banks.

    However, he said the bank took some measures such as monitoring the financial position and performance of supervised institutions and the assessment of the risk profile and governance management practices of banks, to guarantee financial stability.

    He listed other efforts carried out by the Bank to ensure financial system stability and the promotion of sustainable economic development to include the establishment of the investors and exporters’ window; conservation of foreign exchange through the restriction of access to foreign exchange on 43 items; and increased lending to the agricultural and manufacturing sectors.

    The governor, while soliciting continued support for the policy measures that restrict import of items that could be produced in Nigeria as well as increased penalty for smuggling of restricted items in Nigeria, expressed optimism that the Nigerian economy in post-May 2019 will witness growth and reduced unemployment.