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Tag: Central Bank of Nigeria (CBN)

  • House halts CBN’s charges on deposit plan

    THE House of Representatives on Thursday urged the Central Bank of Nigeria (CBN) to pull the brake on the implementation of the cashless policy on deposits and withdrawals by the Deposit Money Banks (DMBs).

    This followed the adoption of the prayers of a motion by Benjamin Okezie Kalu, by the House.

    According to the lawmaker, the extra charges policy on deposits and withdrawals must be suspended.

    The Green Chamber also mandated its Committee on Banking and Currency “to interface with the CBN to ascertain the propriety, relevance and the actual need for the implementation of that aspect of the cashless policy at this time considering the prevailing economic situation of the country.”

    The committee has a mandate to report back to the House within four weeks for further legislative input.

    The motion was titled: “Need to suspend the implementation of the cashless policy on deposits by the CBN.

    Moving the notion, Kalu said:  “We are aware that the CBN introduced a policy on cash-based transactions which imposes a cash handling charge on daily cash withdrawals for individuals and corporate bodies.

    “We are further aware that the policy on cash-based transactions (withdrawals) in bank, was aimed at reducing and not eliminating the amount of physical cash (coins and notes) circulating in the economy, and encouraging more electronic-based transactions (payments for goods, services, transfers, etc);

    “Note that the cash policy was introduced for a number of key reasons, including the need to drive development and modernisation of our payment system in line with Nigeria’s Vision 2020 goal of being amongst the top 20 economies by the year 2020, to reduce the cost of banking services (including cost of credit) and drive financial inclusion by providing more efficient transaction options and greater reach.

    “Note also that that a variety of benefits are expected to be derived by various stakeholders from an increased utilisation of e-payment systems which include: increased convenience, more service options, reduced risk of cash-related crimes, cheaper access to (out-of-branch) banking services, access to credit and financial inclusion for consumers; faster access to capital, reduced revenue leakage and reduced cash handling costs for corporations and increased tax collections, greater financial inclusion, increased economic development for government;

    Read Also: CBN to sanction banks for e-payment breach

    “We are aware that the CBN has signaled the implementation of a policy which would signal the imposition of charges on deposits in addition to already existing charges on withdrawals.

    “We are informed that the charges, which took effect from Wednesday, September 18, 2019, will attract three per cent processing fees for withdrawals and two per cent processing fees for lodgments for individual accounts; five per cent processing for corporate accounts;

    “We are informed again that the charge on deposits would apply in Lagos, Ogun, Kano, Abia, Anambra and Rivers states as well as the Federal Capital Territory; and that the nationwide implementation would take effect from March 31, 2020.”

    He expressed worry that the implementation of the policy so far, has led to significant decrease in deposit mobilisation and credit extension by the DMBs

    Kalu said: “We are deeply worried that the implementation of cashless policy on withdrawals has negative impacts on micro, mini, small, and medium enterprises which are clearly the engine room for growth of the economy and employment generation, thereby throwing many of them out of business and sending more Nigerians into poverty and forcing more traders and micro investors to carry cash about with its attendant security challenges.

    “While the impact of the cashless policy on withdrawals is still starring us all in the face as well as other numerous charges by banks on businesses, the CBN deemed it necessary to impose the implementation of cashless policy on deposits and withdrawals without due consultations with all shades of stakeholders who will be impacted by the policy.”

    The lawmaker said he was deeply concerned that the apex “did not consider the people as the prime, important and in deed the centrepiece of policy-makmg, even as Section 14(2)(b) of the Constitution of the Federal Republic of Nigeria, 1999 (As Altered) provides for the security  and welfare of the people is the primary purpose of government.”

    The House urged “the CBN to suspend the implementation of the cashless policy on deposits which has taken effect from September 18, until appropriate and extensive consultation is concluded.”

  • ‘Nigeria needs unified exchange rate’

    Nigeria operates a multiple exchange rate regime, which the Central Bank of Nigeria (CBN) has defended. But the International Monetary Fund (IMF) has faulted the multiple exchange rate regime and asked the country to unify its exchange rate. The IMF says a unified exchange rate will impact the country’s economy more positively than the multiple exchange rate regime. IMF Nigeria Senior Resident Representative and Mission Chief, Amine Mati, in this interview with COLLINS NWEZE speaks on why Nigeria should unify its exchange rate to grow the economy and tackle inflation.

    What is the International Monetary Fund’s (IMF’)s opinion of Nigeria’s multiple exchange  rate system?

    It is encouraging that progress already made by the authorities towards unifying the exchange rate windows. However, restrictions on access to foreign exchange for certain categories of goods, and the remaining multiple exchange rates create distortions in both private and public sectors decision making. They discourage long-term investment, encourage smuggling and provide avenues for corruption.

    Moving forward, a removal of foreign exchange restrictions, including recently introduced ones, and a full exchange rate unification, in line with the authorities’ Economic Recovery and Growth Plan (ERGP), will help keep the parallel market premium low in a more sustained manner. It will help Nigeria move towards a more diversified economy.

    The Central Bank of Nigeria (CBN) maintains that unifying the exchange rate is not the solution to Nigeria’s inflation problems. Do you agree?

    Global trends suggest that countries with multiple exchange rates struggle to see their economic growth recover and trade pick-up after a crisis. Countries with multiple exchange rates on average also experience higher inflation. With lowering inflation and boosting growth as focal points for Nigeria, unification of the exchange rate can bring major gains.

    How did the IMF reach the conclusion that unifying the exchange rate will further improve Nigeria’s economy? What specific benefits would such a policy bring to Nigeria?

    Our assessment is based on the experience of several countries worldwide. In addition, our research specifically on Nigeria has found that unifying the exchange rates and removing foreign exchange restrictions is also likely to lower income inequality. It helps facilitate more effective ways of protecting consumers through social safety nets.

    How do you measure Nigeria’s economic progress in terms of its multiple exchange rates, against the experience of countries such as Brazil and Egypt?

    We welcome ongoing unification in foreign exchange windows and the ERGP’s goal to move towards a unified regime. This goal is in line with trends seen in other countries over past decades: multiple currency practices are non-existence in developed economies and have been on a declining trend globally in emerging economies.

    What conditions need to be in place before exchange rate unification can be achieved?

    Unifying the exchange rate now being in accordance with the ERGP’s goal would support Nigeria’s economy. It will be most effective as part of a wider policy package, with measures that include a focus on revenue mobilisation to make room for priority spending, tight and transparent monetary policies, a resilient banking sector and structural reforms.

    Are there serious concerns from the IMF and some global leaders that Nigeria could follow the same route as Venezuela if it doesn’t act quickly and unify its exchange rate system?

    The IMF’s view is that Nigeria’s long-term economic potential will be improved significantly with exchange rate unification as it removes distortions, provides greater clarity to economic operators and a level playing field. However, as stated in the past, this is not a panacea by itself as it needs to be part of a tight monetary policy that keeps inflation in check. It also needs to be backed by strengthening banking sector resilience, and structural reforms; such as governance and power sector.

    While currency floating or allowing depreciation may seem like the right thing to do, is Nigeria in a good place to make such a decision?

    Moving towards a more flexible exchange rate would be beneficial to the Nigerian economy, but a flexible exchange rate does not necessarily imply that the currency will depreciate, as that depends on macroeconomic fundamentals. Indeed, our last evaluation published in April, this year implied only a moderate misalignment of the current exchange rate.

    In summary, a more flexible and unified exchange rate will be most effective for Nigeria in the context of more comprehensive policy reform package.

  • Nigeria’s long road to cash-less economy

    The use of Automated Teller Machines (ATMs), Point of Sale (PoS) terminals, web payment, online transfers and mobile phones for transactions are fast getting popular in Nigeria after years of reliance on cash payment writes COLLINS NWEZE

     

    THE Central Bank of Nigeria (CBN) introduced the cash-less payment policy seven years ago. This has promoted the use of Automated Teller Machines (ATMs), Point of Sale (PoS) terminals, web payment, online transfers and mobile phone transactions.

    Without this policy, Nigeria cannot be integrated into the world’s financial system.

    While pushing for the full use of the online payment system, CBN Governor Godwin Emefiele said for Nigeria to actively play at the world stage, “our payment system must be successfully benchmarked against the global best practices, as in most developed nations of the world.”

    The cash-less policy provides safe and efficient mechanisms for making and receiving payments with minimum risks to the CBN, payment service providers and end-users.

    The cash-less payment is catching on to the extent that even the lowly members of the society now do transactions online.

    There are even incentives to discourage the use of cash.

    The Nigeria Interbank Settlement System (NIBSS), collaborating with the CBN Committee of E-Banking Industry Heads (CEBIH) and banks in ensuring that bank customers that use their e-payment cards to pay for goods and services on PoS terminals and web platforms are rewarded with a cashback of 50 kobo for every N100 spent.

    This scheme allows cashback rewards to cardholders for using their cards to make payments on alternate channels.

    The benefits of shifting transactions to web-based platforms are clear. For customers, web-based platforms offer convenience, 24 / 7 access, and freedom of location. For Nigeria’s banks, the shift promises the opportunity to improve service delivery and achieve a lower cost-to-serve.

    A pointer to the success of the cash-less policy is the internet and social media penetration in Nigeria. The internet is the purveyor of cash-less transfers.

    The country is estimated to have more than 148 million mobile telephone subscribers and at least 92 million of them access internet data services on their devices.

    About one-third of Nigeria’s population is now under 24 years old and the middle-class population is growing.

    The use of social media channels is rising significantly. Platforms such as Facebook, Watsaap, Instagram, Twitter, LinkedIn and Tumblr are widely used by Nigerians to communicate with friends and follow up on what is going on around the globe.

    Indeed, a survey showed that 77 per cent of Nigeria’s banking customers now use social media for personal purposes

    However, despite the campaign by the CBN and the statistics of internet access and social media use, cash is still king in Nigeria.

    Many people – mainly outside the big cities – want to touch their cash as clear evidence that their services or goods have been paid for.

    For this category of people, cash transfer is not convincing enough that payment has been made. Besides, a lot of people keep cash at home which they move around to transact their business in spite of the inherent danger in doing so.

    This shunning of e-payment is not limited to the financially lowly in society.

    A recent survey by Visa International showed that high net-worth account holders neither own nor use ATM cards. The survey showed that the more the people earn, the less they own and use debit cards. Majority of the rich, the survey showed, think that avoiding debit cards is the best way to stay protected from online frauds.

    Just 42 per cent of Nigerian banking customers said they use online banking platforms for one or more banking activities. And just 40 per cent said they have interacted with their banks using social media in the past.

    According to NIBSS data, of the 120.9 million bank accounts in the country, only 74 million are active as at January 2019 while there are 37.4 million Bank Verification Number (BVN) enrolled customers. The total active BVN across all banks is 29.4 million.

    However, the NIBSS data showed that Nigerian banks did N1.5 trillion worth of transactions on 56,102 ATMs between January and March this year. The transactions were done in 203 million deals.

    Also, N107.6 billion was transacted through web payment and N810.1 billion through mobile money.

    This explains that although Nigeria is racing on the e-payment track, the statistics are still low when compared with what is obtainable across the world.

    For instance, the cashless society is fully in action in Sweden. By one estimate, only one per cent of the Swedish economy operates on bills and coins. The New York Times reported that only about one in 10 Swedes paid for anything in cash last year.

    Part of the reasons why the rich shun card usage is the fear of cyber fraud. The CBN has promised safe, secure and seamless operation of the cash-less policy with the use of the big stick to sanction banks, mobile money operators, payment solution providers and other financial institutions for electronic payment infractions

    KPMG Nigeria reviewing a survey it conducted said the onus is on the banks to get their customers to buy into the cash-less payment system.

    It explained that to succeed in today’s banking environment, banks need to understand their customers.

    “Banks need to ask them what is important to them in a banking relationship, the channels they currently use and what channels they would like to use and how their current banks compared to their expectations,” it said.

    Partner, KPMG in Nigeria and Head of Financial Services Africa, Adebisi Lamikanra, said a lot had changed in Nigeria’s banking industry in the past three years.

    She said customers are still concerned about financial stability; but what they primarily want from their banks is enhanced high-quality service, more innovation and greater convenience.

  • N614b bailout cash: Governors insist on terms for refund

    STATE governors are not prepared to meet the two-week deadline given them by the Federal Government to refund the N614billion bailout given to them in 2017.

    They are insisting on the 20-year repayment agreement reached by the two sides before the funds were released, The Nation gathered authoritatively on Saturday.

    They are also asking the presidency to prevail on the Central Bank of Nigeria (CBN) and the Office of the Accountant-General of the Federation   to stay action on the deducting the bailout funds until reconciliation has been done.

    A reconciliation team, headed by Governor Nasir el-Rufai of Kaduna State will work with the CBN, the Nigerian National Petroleum Corporation (NNPC) and the Office of the Accountant-General of the Federation (OAGF).

    The governors said over $1billion of the bailout was sourced from the NLNG dividends which the states are ordinarily entitled to benefit from.

    It was learnt that the states are pushing for reconciliation to enable the Federal Government to determine their share of the NLNG dividends and deduct same from the outstanding bail out cash to be refunded.

    Although each of the 36 states involved is expected to refund N17.5billion, the governors said the amount credited to the states might be substantially less.

    There were indications last night that the Nigerian Governors Forum (NGF) might meet on Wednesday ahead of the Thursday meeting of the National Economic Council (NEC).

    The Budget Support Facility was given to 35 out of the 36 states of the Federation following accumulated salaries and their inability to pay.

    The facility was advanced to the states through the Central Bank of Nigeria (CBN) in 2017.

    But at a NEC session on August 23, the presidency decided to ask for the refund of the N614billion bailout.

    The governors however felt “wholesale deductions” will adversely affect the economy of all the states.

    A reliable source said: “The position of the governors is that wholesale deductions will hurt the economy of most states and it will be unfair to the present generation of governors.

    Read Also: 2023: El-Rufai under fire over call to end zoning

    “Most of the governors who secured the bailout have spent the cash and left office. Some did not even spend the bailout for what it was meant for.

    “More importantly, the Federal Government entered into an agreement with the states that the N614billion would be a loan with a 20-year repayment plan.  They want the FG to honour this agreement.

    “Since government is a continuum, the governors have agreed at NEC to refund the N614billion with a caveat that there must be a reconciliation of the outstanding accruals to the states from NLNG dividends and the N17billion debt owed per state.”

    Giving an insight into the background of what led to the conditions given by state governors, another source said: “While we give credit to President Muhammadu Buhari for displaying rare statesmanship in bailing out the states, the truth is that about $1billion of the cash came from the NLNG dividends.

    “All the states are stakeholders in NLNG and they are entitled to dividends. The governors are saying that you cannot lend them what belongs to them. They are demanding a reconciliation of their share of the dividends from NLNG with the outstanding Budget Support loan/ debt.

    “Thereafter, the government and the states will now meet to come up with a refund process of whatever is the difference as outstanding debt.”

    A governor said: “We have raised a reconciliation panel, which is headed by Governor Nasir el-Rufai of Kaduna State. The governor will work with the CBN, NNPC and OAGF.

    “The issues in contention between the Federal Government and the governors are reconciliation of records and the date of the commencement of the refund.

    “As governors, we believe that if there is no reconciliation acceptable to all parties, there should be no refund.

    “The CBN Governor is however adamant that states must refund the bail out because it came from its vault. The apex bank made the bailout available to the states.”

    Speaking ahead of the National Economic Council (NEC) meeting on Thursday, a government source said: “The refund is likely to be part of the agenda because the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed on August 10 said the deduction of the refund will start in two weeks.

    “The governors might meet on Wednesday to review the situation ahead of the NEC session.”

     

  • CBN: leveraging poultry, cattle ranching for protein supply

    The success of the Anchor Borrowers Programme in staple food production has bolstered the determination of the Central Bank of Nigeria to add cattle ranching and poultry farming to its list of intervention schemes in efforts to provide protein for Nigerians, reports Group Business Editor, SIMEON EBULU

     

    The Central Bank of Nigeria (CBN), has not left any area untouched in its drive to ensuring adequate food production and guaranteeing food security in the country. When the CBN kick started its intervention policy, including the Anchor Borrowers Programme (ABP) in 2015, many thought it was going to be a one-off agenda that would be wrapped up after a while, but not so.

    The success of the ABP and its expansion beyond rice production to other arable crops and staple foods, has emboldened the leadership of the apex bank under  Godwin Emefiele, to elongate the scope of its development finance initiatives to areas that are considered critical with respect to meeting the culinary needs of the nation’s population, as well as create employment.

    The ABP at inception focused on increasing rice production ( Nigeria’s staple diet), among other goals, to reducing its importation, make Nigeria self-sufficient in its production and over time become a net exporter of rice. It was intended to generate millions of jobs for unemployed Nigerians and lift thousands of small farmers out of poverty.

    The successes recorded in the ABP with rice, have propelled the CBN to expand the scheme to include other arable and food crops

    Emefiele said since the inauguration of ABP in 2015, several states and the Federal Capital Territory (FCT) have embraced it, saying the programme has created economic linkages between smallholder farmers and reputable large-scale crop processors, thus increasing agricultural output and capacity utilisation of integrated mills.

    He said ABP has closed the gap between local rice production and domestic consumption, while complementing the Growth Enhancement Support (GES) Scheme of the Federal Ministry of Agriculture and Rural Development (FMARD) by facilitating the transformation of GES-farmers from subsistence farming to commercial farming.

    CBN Director, Corporate Communications Department, Isaac Okoroafor, said in 2018, N36.37 billion was disbursed to 155,732 farmers, while N12.57 billion was paid to 27 farmers in the first half of 2017, bringing the total disbursements to N91.90 billion.

    He said more than 412,037 smallholder farmers are beneficiaries in 36 states and the Federal Capital Territory (FCT), saying that the programme has created over 500,000 jobs and added over two million tonnes of rice to domestic rice supply.

    Okoroafor said the volume of rice importation into the country drastically reduced in 2018 judging by figures obtained from various official sources. “Figures obtained from India and Thailand, which are dominant rice exporters to Nigeria indicated that as at September 2018, Thailand exported about 5,161 tonnes of rice to Nigeria, while India exported only a paltry 426 tonnes to Nigeria as at July 2018, “ pointing out that CBN had not allocated any foreign exchange for the importation of rice. Okorafor said part of the success of this feat should be attributed to the concerted efforts of FMARD and Rice Farmers Association of Nigeria (RIFAN).

    As a further push to enhancing food productivity, the CBN has made available some concessionary funds to the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) for disbursement as loans to rice, wheat, maize, cotton, cassava, poultry, soybeans and groundnut farmers, the Managing Director of NIRSAL, Aliyu Abdulhameed,  said.

    Abdulhameed said the outcome of the venture has been very positive, as NIRSAL, through the ABP, has been able to create over 250,000 direct jobs and 1.25 million indirect jobs across the country.

    Also, the National President of Rice Farmers Association of Nigeria (RIFAN), Alhaji Aminu Goronyo, said  more than two million rice farmers who registered for ABP were supported with funds and farm inputs such as water-pumping machines, with a view to facilitating their participation in dry season farming, saying  beneficiary rice farmers could either pay back the loans with cash or harvested paddy rice at the end of the farming season.

    Enter Ranching

    Having substantially addressed the staple food supply  need of the nation, the apex bank is now directing attention to growing the protein content in the agric sector by directing attention to cattle ranching and poultry farming.

    The CBN’s commitment to supporting cattle and poultry farmers is being done with the aim of improving protein availability in the nation’s food chain .

    The CBN chief, while announcing a new policy to end milk imports into the country, assured that the bank was ready to provide loans for those who want to go into the cattle business, stating that Nigeria could no longer continue to spend between $1.2billion-$1.5billion on milk importation, annually. He said Nigeria has what it takes to produce milk, assuring that the CBN was ready to give loans to those interested in ranching and other businesses in the livestock value chain.

    Emefiele said he is convinced that milk is one of the products that can be produced in Nigeria and as such, does not require that Nigeria should continue to spend scarce foreign exchange on its importation. He said for over sixty years, Nigeria has been importing milk,  saying the commodity is a very high import product into the country, “given that it’s a product that we are convinced can be produced in the country.”

    Former Dean, Faculty of Agroculture, University of Ilorin, Prof Abiodun Adeloye, told The Nation that  ranching will  provide a system for tracing livestock from farm to slaughter.

    He said  cattle ranching is a very important industry  and can provide rural employment and livelihood, saying the nation ’s prevalent cattle raising system is inefficient.  He said  ranching is one strategy that will boost the fortune of the sector.

    He said it would help in creating jobs, enhance growth and ensure long-term prosperity for the livestock sector, adding that building farm and ranch infrastructure is an important way to increasing producer profitability and securing a safe future for our producers’ livelihoods.

    Adeloye said establishing a secure source of water is crucial to the long-term success and livelihood of  farmers and ranchers and investment in long-term water infrastructure is essential to the future growth of the agriculture industry .

    He said supporting the sector will assist the Government in creating  jobs, while growing the economy, urging the  relevant authority to commit itself to working with farmers, ranchers and processors to ensure its continued innovation, growth and prosperity.

    Currently, the  most important motivation for ranching is the huge fast-food industry that has grown  across the country.

    The President, Federation of Agricultural Commodities Association of Nigeria (FACAN), Dr. Victor Iyam, said farming and ranching should be promoted  as staples of the nation’s  economy, saying government should support  excellence in food safety and sustainability and lay the foundation for the nation to  an emerging centre for all aspects of agribusiness.

    He said the government must support innovations around crop sciences and livestock to  create business opportunities, adding that agribusiness is a key sector that supports growth and diversification.

    Iyama commended Emefiele  for  his support through  the ABP to make the nation’s agriculture and food system a key driver of the country’s economic growth, saying  the gesture will help  the sector grow trade, advance innovation, while maintaining and strengthening public confidence in the food system, and increase its diversity.

    He commended the CBN’s  policy   of providing loans for those who want to go into the cattle business, underscoring the readiness of  FACAN  to work with the CBN to develop a partnership  that will benefit a wide range of stakeholders, including producers, processors, indigenous communities, women, youth, and small and emerging sectors to focus on the issues that matter most to them.

    He said  farmers are interested  in partnership  that deliver programmess that help them grow their businesses through research, marketing and operational support, and protect their livelihoods through risk management programmes.

    Loans for ranching

    The CBN boss has assured that the bank was ready to provide loans for those who want to go into the cattle business. He told milk importers that the bank was ready to advence credit to them whenever they were ready for backward integration.

    He said: “By the time we restrict you, if you need a loan to acquire land we’ll give you. If you need a loan to grow your grass, we will give you. To produce water, we will give you a loan. But that you will continue to import milk into the country, I think we are getting to the end of the road. I will repeat, we are really getting to the end of the road,“stressing that the nation could no longer continue to spend between $1.2-$1.5 on milk importation, annually. He said that the nation has the capacity to produce its milk requirements and that the CBN was ready to give loans to those interested in ranching and other businesses in the livestock value chain farm produce in the country.

    The CBN chief said prior to introduction of the ABP, allocation of foreign exchange to the importation of items such as rice, wheat, milk, tomato, fish, cotton and fertilizer among others, had contributed greatly to the depletion of the nation’s foreign reserves, especially in the face of low oil revenue resulting from falling oil prices.

    The apex bank had set aside a portion of the N220billion Micro, Small and Medium Enterprises Development Fund to finance agricultural projects at a single-digit interest rate of nine per cent. Chiefly among the aims was to create economic linkages between over 600,000 smallholder farmers and reputable large-scale processors with a view to increasing agricultural output and significantly improving capacity utilization of integrated mills.

    Noticeably, the gap between the levels of local rice production and domestic consumption has been reduced within a space of three years.

  • CBN makes DisCos’ remittance condition for N600b disbursement

    THE Central Bank of Nigeria (CBN) has warned would-be beneficiaries of the N600billion power sector intervention fund that the disbursement of the fund will be based on the accountability system of distribution companies (DisCos) which is driven by their performance through revenue remittance.

    The apex bank, according to the Nigerian Electricity Regulatory Commission (NERC), has also pledged to support the Commission in enforcing actions against any defaulting party.

    This was contained in NERC’s sixth meeting with Nigerian Electricity Supply Industry (NESI) stakeholders in Lagos.

    “The CBN cautioned that the disbursement of the NGN600billion intervention fund is premised on an accountability framework which hinges heavily on the performance of DisCos and should be reflected in improved collection efficiency and revenue remittance. The CBN also reaffirmed its support to the Commission that enforcement action be taken against defaulting Operators,” it read.

    NERC, according to the communique, also resolved  to investigate the differences emanating from the reports of the Nigerian Bulk Electricity Trading Company (NBET) and the Market Operator (MO) of the Transmission Company of Nigeria (TCN) over energy received. “NERC shall investigate the discrepancies between energy received as reported by MO and NBET,” it added.

    Other decisions taken by NERC were among others, to monitor critical feeders in real time in order to check the inconsistencies of energy received and dispatched to consumers by DisCos.

    Read Also: CBN’s foray outside its core mandate

    The communique stressed the need to finalise the procurement of Spinning Reserves  and the meeting agreed that TCN shall consult with GenCos for the procurement of Spinning Reserves and report back to the Commission within one week.

    “The GenCos highlighted the challenges in the market and it was agreed that the Commission shall convene a dedicated meeting with them to discuss their issues with respect to payment for generated capacity, gas supply obligations and applicable exchange rates.

    “The Commission raised concern with the abysmal level of the implementation by DisCos of their Customer Enumeration, and Meter Roll-Out targets under the MAP Scheme and cautioned that enforcement action will be taken against non-compliant DisCos.

    “Only 26,000 customer meters had been installed under the MAP Scheme since its inception on May 1, 2019, emphasising that it is the responsibility of the DisCos to meter their customers and directing that DisCos take appropriate measures, including calling up the Performance Bonds entered into with MAPs if need be, to ensure that metering targets are met,” the document said.

    The Commission raised concern over verified incidences of load rejection by DisCos and cautioned against this practice, failing which appropriate enforcement action will be taken by the regulator.

  • CBN Injects $210m into forex market

    The Central Bank of Nigeria (CBN) has injected 210 million U.S. dollars into interbank segment of the Foreign Exchange Market following sales concluded on Tuesday.

    The bank’s Director, Corporate Communications Department, Mr Isaac Okorafor, made this known in a statement in Abuja on Tuesday.

    Okorafor explained that the figures released by the CBN indicated that authorised dealers in the wholesale segment of the market were offered 100 million dollars while the Small and Medium Enterprises (SMEs) segment received 55 million dollars.

    He said that another 55 million dollars was allocated to customers requiring foreign exchange for invisibles such as tuition fees, medical payments and Basic Travel Allowance (BTA), among others.

    The director reaffirmed the bank’s commitment towards ensuring stability in foreign exchange market.

    Read Also: CBN’s Business Expectations report predicts stable naira

    News Agency of Nigeria (NAN) reports that CBN had on Friday, Sept. 6, injected 321.11 million U.S. dollars and CNY33.3 million into the Retail Secondary Market Intervention Sales (SMIS) segment.

    Meanwhile, N357 exchanged for a dollar at the Bureau De Change (BDC) segment of the market on Tuesday.

    NAN

  • CBN’s foray outside its core mandate

    The Central Bank of Nigeria (CBN) has renewed financing activities outside of its core areas. Agriculture, education and health sectors have received generous aids, a development which does not sit well with some critics who expect it to stick to promoting a sound financial system, writes MUSTAPHA SUMAILA

     

    CBN initiatives

    • COMMERCIAL AGRICULTURE CREDIT SCHEME
    • REAL SECTOR SUPPORT FACILITY (RSSF)
    • SME CREDIT GUARANTEE SCHEME (SMECGS)
    • SME RE-STRUCTURING AND REFINANCING FUND (SMERRF)
    • NIGERIA INCENTIVE-BASED RISK SHARING SYSTEM FOR AGRICULTURAL LENDING
    • POWER AND AIRLINE INTERVENTION FUND
    • NIGERIA ELECTRICITY MARKET STABILISATION FUND
    • ANCHOR BORROWERS

     

    SECTION 2 of the Central Bank of Nigeria (CBN) Act stipulates that the principal objectives of the bank shall be to ensure monetary and price stability, issue legal tender currency in Nigeria and promote a sound financial system.

    The section further states that the apex bank shall maintain external reserves to safeguard the international value of the legal tender currency, act as banker and provide economic and financial advice to the Federal Government.

    The CBN has, however, over the years, been directly or indirectly involved in the financing of growth-enhancing programmes and other projects of the Federal Government which are incidental to the bank’s core mandates.

    Some of these developments and corporate social responsibilities interventions by the bank have received accolades while some, public opprobrium.

    For instance, in 2012, the bank, under the leadership of Sanusi Lamido Sanusi, (now Emir of Kano), came under criticism when it donated N100 million to victims of the Boko Haram menace in Kano.

    Critics of the action claimed it was illegal for the bank to engage in philanthropic activities outside its core and statutory mandate.

    One of the leading critics of the bank’s action, Mr Femi Falana (SAN). had called on the then President, Goodluck Jonathan, to sanction Sanusi.

    “From the law setting up the Central Bank of Nigeria, the diversion of public funds to assist victims of disasters is illegal in every material.

    “The management of the Central Bank cannot be allowed to continue to dissipate public funds under the pretext of carrying out any social responsibility outside the ambit of the law,” the human rights activist had said.

    However, when Sanusi was summoned by the then House of Representatives’ Committee on Banking and Currency, mandated to investigate the donations, he said it was legal.

    Sanusi argued that the apex bank had always intervened in the economic development of Nigeria, adding that the legal basis for the interventions in certain sectors of the economy were contained in Section 31 of the CBN Act 2007.

    Notwithstanding the legal justification or otherwise, stakeholders have commended the CBN for its initiatives and interventions encompassing real sector, agriculture, small and medium enterprises, infrastructure and youth empowerment.

    Some of the CBN initiatives undertaken by Sanusi’s successor, Mr Godwin Emefiele are Commercial Agriculture Credit Scheme; Real Sector Support Facility (RSSF); SME Credit Guarantee Scheme (SMECGS); SME Re-structuring and Refinancing Fund (SMERRF).

    Others are Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL); Power and Airline Intervention Fund (PAIF); Nigeria Electricity Market Stabilisation Fund (NEMSF); Anchor Borrowers, among others.

    The recent interventions by the bank in the education and health sectors have received accolades from stakeholders.

    Here, about N63 billion was committed by the apex bank into building Centres of Excellence in nine Federal Government-owned universities to enhance post-graduate studies in financial related courses.

    The CBN also planned to build diagnostic centres in the six geopolitical zones of the country and Abuja. The F.C.T. facility is expected to have both heart and cancer diagnostic centres.

    Inaugurating one of the centres of excellence at Ahmadu Bello University (ABU), Zaria recently, CBN Governor Emefiele said the project was part of the apex bank’s intervention in education.

    He explained that the centres would be delivered in phases and the first phase, which comprised the University of Nigeria Nsukka, University of Ibadan and ABU, Zaria had been completed and ready for the use by the institutions.

    He said the others, nearly completed, are those in University of Lagos, University of Port Harcourt, University of Jos, Bayero University, Kano and University of Maiduguri.

    Emefiele stressed that education and health were the bedrock of any nation’s development and there was the need to invest in them.

    He said the centres, with 500-capacity auditorium, ICT facilities and e-Library, could compete with any business school globally.

    Emefiele said when the centre became operational, programmes such as Forensic Accounting, Global Financial Market, Risk and Compliance Management would be offered at the centres.

    He assured the nation that the bank would get involved in the management of the facilities to forestall decay.

    The governor also disclosed that the bank would engage accounting specialists and practitioners working in central banks across the world to bring their wealth of experience to bear at the centres.

    President Muhammadu Buhari, at the ceremony, lauded CBN for supporting the Federal Government’s investments in the education sector as well as other key areas of the economy.

    Buhari also tasked the apex bank to extend such funding support to researches in the tertiary institutions.

    “It is no longer a secret that the state of facilities in our universities and other higher institutions of learning can no longer meet up with the requirements of our ever growing students popuations.

    “This is largely due to perennial challenges over the years and my government is committed to tackle the challenges,” he said.

    The Vice Chancellor, ABU, Zaria, one of the beneficiary universities, Prof. Ibrahim Garba, commended CBN for the gesture.

    He said the donation of the centre was the highest intervention the university had ever received and that it would enhance academic learning, especially at the post-graduate level.

    Garba said the centre would afford the university the opportunity to establish a Business School to offer Economics, Accounting, Banking and Finance, Business Administration and Statistics at post-graduate levels.

    The CBN boss also disclosed his plan to build seven diagnostic centres in the six geo-political zones of the country and Abuja.

    “If we have funds, the projects are expected to commence by 2020 and ready by 2024,” he said.

    Emefiele said the intervention would help to reduce capital flight and brain drain in the health sector.

    “The centres will be done in a way that a referral will come from teaching and private hospitals and those coming to access care at the centres will be paying to generate revenue.

    “In that case, the centres will be able to fund and manage themselves without CBN interference,” he explained.

    Mrs. Zainab Abubakar, an economist with the Federal University, Dutse in Jigawa, commended CBN for the interventions and described education and health as critical sectors that needed such assistance.

    Abubakar explained that there must be healthy people in the country for optimal efficiency and productivity.

    Like Abubakar, stakeholders believe that the CBN’s interventions in the two critical sectors would spur development and innovation.

     

    • Sumaila is of News Agency of Nigeria (NAN)

  • Economy attracted $5.8b in Q2, says NBS

    GOING by the capital importation report released on Thursday by the National Bureau of Statistics (NBS), the value of capital inflow into the Nigeria economy stood at $5.82 billion in the second quarter of this year.

    The data, supplied administratively by the Central Bank of Nigeria (CBN), verified and validated by the NBS,  represents a decrease of 31.41 per cent, compared to the first quarter of 2019 and 5.56 per cent increase, compared to the second quarter of 2018.

    The largest amount of capital importation was received through portfolio investment, which accounted for 73.76 per cent (about $4.29 billion). It was followed by other investment, which accounted for 22.41 per cent ($1.3 billion) of total capital imported.

    Foreign Direct Investment (FDI) accounted for 3.83 per cent ($222.89 million) of total capital imported in second quarter 2019.

    According to the data, capital importation by banking dominated in second quarter, reaching $1.89 billion of the capital importation within the period.

    Read Also: NBS: Inflation rises to 11.40% in May

    The United Kingdom (UK) emerged as the top source of capital investment in Nigeria in the second quarter with $3.13 billion. It accounted for 53.85 per cent of the total capital inflow within the period.

    Trailing the UK on the list of top 10 were the United States (U.S.) with capital investment of $1.15 billion, the United Arab Emirates (UAE) with capital inflow of $343.59 million and South Africa with $314.16 million dollars in the quarter under review.

    The data explained that investment destination of choice, Lagos State, emerged as the top destination of capital investment in Nigeria in the period under review with $4.13 billion dollars, accounting for 71.09 per cent.

    The NBS added that  the Stanbic IBTC Bank Plc emerged at the top of capital investment in Nigeria in the second quarter with $1.76 billion, accounting for 30.34 per cent of the total capital inflow in the quarter.

  • CBN deposit forfeiture order is legal-Experts

    CONTRARY to insinuations in some quarters, the Central Bank of Nigeria (CBN) new policy regime mandating banks to go after customers who default on the repayment of their loans by seizing their deposits in other accounts is backed by law.

    Speaking with a cross-section of experts at the weekend, they said the CBN Act, 2007 as amended, empowers the apex bank to issues guidelines and directives to persons and institutions under its supervision.

    Firing the first salvo, Mr. Lawrence Agboola Jompe, a member of the Chartered Institute of Bankers of Nigeria, Lagos Branch, said, “The forfeiture order is legally binding, because it is the regulatory body of the country’s financial sector. This is because the CBN has been empowered by the Act that established it.”

    Jompe, who is the Chief Executive of Victleo Investment Ltd, while noting that the CBN pronouncement is not a law of the parliament, however said that it carries the weight of the law, whether it is gazetted or not as long as it is the financial regulatory authority in the country.

    Echoing similar sentiments, Babatunde Fabian, a public affairs analyst, said the CBN has the right legal framework to so mandate the banks.

    He cited Section 45 subsection 5 and 6 of the CBN Act, to back his claims. Besides, he said, the apex bank has power to prohibit any bank which fails to comply with any directive issued under this section, from extending new loans and advances and from undertaking new investments, until the bank complies with the directive to the satisfaction of the Bank.

    Read Also: CBN to defend reserves against UK $9b court ruling

    It would be recalled that the apex bank took the decision to blacklist loan defaulters at the end of the 345th Bankers Committee meeting in Lagos penultimate Monday.

    The meeting presided over by Deputy Governor, Financial Sector Surveillance, CBN, Mrs. Aisha Ahmad, alongside, Chief Executive Officer, Access Bank, Mr. Herbert Wigwe, Chief Executive Officer, GTBank, Mr. Segun Agbaje, Chief Executive Officer, Unity Bank, Mrs. Tomi Somefun, and the Director, Banking Supervision, Alhaji Abdullahi Ahmed, agreed that bank borrowers would be made to sign an agreement that if there was a default, the bank would have a right to access the borrowers other accounts.

    The bankers also decided that vital information should be demanded from bank borrowers such as Bank Verification Number, Tax Identification Number among other documents.

    He disclosed that that to complement this initiative, the Bankers Committee will develop a credit scoring system which will enable people with good credit history to easily access loans. “If your score is high, you will be able to access credit easily. That is the whole idea. So thereabout, you are going to have a good credit scoring rate or position to be able to access credit. If you are not clean, you won’t be able to access loan.