Tag: Central Bank of Nigeria (CBN)

  • No evidence of firm’s investment in Nigeria, says Emefiele

    CENTRAL Bank of Nigeria (CBN) Governor Godwin Emefiele said on Tuesday that “there is no evidence to show that a foreign company which came into this country deserved to be awarded $9.6 billion without investing any money in Nigeria.”

    Speaking at Tuesday’s news conference, he said: “We have heard and also read in some media that P&ID or the contractor in this case, had mentioned that it had invested close to about $40 million in the project.

    “On our part as the Central Bank of Nigeria (CBN), we note that P&ID is a foreign company.  As a foreign company, if you are investing either in a contract or a project in Nigeria, there are various options you will adopt in bringing in your investment.

    “If you are bringing in capital, in which case you are bringing in the money, you will fill from A and you will also collect a certificate of capital importation.

    “If you are bringing in machine or assets to execute your contract, then in this case, you will fill form M and also collect a certificate of capital importation to prove that you actually brought in money.

    Read Also: Emefiele: Need for regular stress test on banks

    “We have gone through our records, we do not have any information in our records to show that this company brought in one cent into this country and we have accordingly written to the Economic and Financial Crime Commission (EFCC), and the Intelligence Department of the Nigeria Police that are currently investigating this matter.

    “I think just following from what the honorable Minister for Finance and Budget and Planning had said, time has come when Nigerians must rise against incidence of people alleging to be doing contract in Nigeria without investing a penny, all with an intention to defraud our country.

    “The money that they want to take is our own commonwealth that belongs to all of us. It is very sad that you will find some Nigerian collaborators with some foreign interest under bourgeois intentions trying to defraud this country.

    “If they have proof of their investment, we are calling on them to please come forward and provide us proof of how they invested money in this project.

    “You have heard the Attorney-General talking about the fact that it was a contract that was meant to fail abinitio   and I think, we read even some Nigerian  media organizations castigating and saying Nigeria should pay.

    “This is time for us to be patriotic and rise . If you find a fault in what Nigerian, a governor, a minister or anybody has done stand up and say it but not for you to collaborate and begin to join forces with people who want to defraud the country.”

     

  • Borrowers to forfeit money in accounts for bank loan default

    IT will no longer be business as usual for recalcitrant borrowers that take loans from one bank and run to another bank to avoid repayment.

    The Bankers’ Committee on Monday directed all borrowers to sign an asset seizure agreement with their banks.

    The agreement empowers the lender to seize all deposits of the borrower across the industry, should he failed to repay the loan.

    Breaking the news on Monday at the 346th Bankers’ Committee meeting in Lagos, Central Bank of Nigeria (CBN) Deputy Governor (Financial System Stability), Mrs. Aishah Ahmad, said the committee had come up with a clause that would enable banks include in the offer letter that customers’ assets across the industry would be deployed to loan servicing should they fail to payback.

    She said: “At the last Monetary Policy Committee (MPC) meeting, we were concerned over the level of credit in the industry. We need to give out more loans to revitalise the economy, stimulate demand and serve the SMEs sector.

    “I am not unaware of the reasons why credit has not been growing. Part of that was the appetite of banks to lend, especially where you have customers that have willfully refused to repay their loans.”

    Mrs. Ahmad said the CBN policy, mandating banks to lend 60 per cent of their deposits by September 30, remains in force.

    She said: “At the time we made this pronouncement, the industry loan to Deposit Ratio was around 57 per cent. In our view, if all the banks that are required to meet this threshold do, we will see growth of about N1 trillion. But there are factors that have made it difficult for banks to lend.”

    The CBC official explained the new clause on asset seizure as a ‘credit risk protection’ that will be in all offer letters going forward.

    “Basically”, she said, “it will contain the Bank Verification Number (BVN) details of customers, and the Tax identification Number (TIN) and more. It will be a commitment or covenant by the customer that in taking the loan, he also agrees and promises to repay the loan.

    “And the customer will also agree that in case of default in repaying the loan, the total amount of assets or deposits  across the banking industry will be applied towards  repaying the loan.”

    Read Also: Senate rejects Kaduna’s $350m World Bank loan

    According to the CBN deputy governor, banks had a clause in their loan plan, indicating that all deposits in the bank would be applied in repaying the loan, adding that the new clause is simply extending it across the industry.

    “We think that there are very many honest Nigerians that are willing to take loans, and repay their loans. But those who have refused to pay back their loans are affecting the chances of more people having access to loans. I am very optimistic that the policy will enable the banks lend more, and make all Nigerians have access to loans, especially SMEs,” she said.

    Speaking further, she said that risk aversion on the part of the banks accounted for insufficient credit facilities.

    Mrs. Ahmad said: “And how do you address that risk aversion? It is by ensuring that banks have a framework on which they can rely upon to ensure that when they give money to customers, the money will come back. We know what it took us to bring Non-Performing Loans (NPLs) in the industry down to current status. We know what it took use to bring down NPLs from double digits to single digit of 9.36 per cent. We do not want the pronouncement saying banks should give 60 per cent of their deposits to raise the NPLs level again.”

    CBN Director, Banking Supervision Abdullahi Ahmad spoke of the need for banks to lend more, reiterating that all new loans coming on board, must have a BVN, and the new clause whereby the borrower will have to sign an agreement, in case of a default on that particular loan, the bank will set off any deposit that the obligor has in the industry.

    Guaranty Trust Bank Plc Managing Director Segun Agbaje said the idea behind the new clause is to stimulate the economy through improved lending.

    “Banks are now giving salary advance loans to customers.  It is pure consumer credit. But after some people take loans, they will abandon the account, and start doing business in another bank. The salaries will go to the new bank. What the CBN is saying is that if you do such a thing, they will pool the money in the other bank and use it to service your obligations”, he stated.

  • CBN’s report: AMCON N3.8tr Bonds mature 2023

    The Asset Management Corporation of Nigeria (AMCON) N3.8 trillion six-year Notes will mature in 2023, a report by the Central Bank of Nigeria (CBN) has shown.

    According to the CBN’s Annual Activity Report, the AMCON Bond was issued in December 2014 at six per cent interest rate and have remained outstanding as at last December.

    The bond, which were taken up by the CBN, were issued during a restructuring.

    AMCON, which is expected to wind down by 2021, is working hard to recover over N5 trillion debts owed it.

    Its Managing Director/Chief Executive Officer Ahmed Kuru said the corporation was working with other sister agencies, such as the Economic and Financial Crimes Commission (EFCC), the Independent Corrupt Practices Commission (ICPC), the Nigeria Deposit Insurance Corporation (NDIC) to produce a television documentary on the corporation’s recalcitrant obligors.

    The AMCON MD, who was guest speaker at the Breakfast Meeting, organised by the Nigerian-American Chamber of Commerce (NACC), said the idea was to document for the future  the debtors.

    He said, unlike what happens in other climes,  these obligors still manipulate their way to emerge as top government functionaries.

    Read Also: CBN deputy governor to chair AMCON

    Kuru added: “Sadly, these are the calibre of people we respect in Nigeria but these people are not role models. How can you be a role model when you cannot honour a simple obligation? That is why I have been consistent in the call for the return of the failed bank act. The way we are handling the issue in the country suggests that we are encouraging a lot of financial rascality. People have to be held accountable for their actions, which, I believe, would serve as deterrent to others.

    “Economies all over the world depend on the financial infrastructure for growth. If we allow or encourage the destruction of the basis of our financial structure, then the economy would not grow. These are men and women who go to banks borrow money with no intention to pay and in the process bring down banking institutions. It takes a lot for a bank to fail. AMCON just rescued Skye Bank with an investment of nearly N1trillion. In a decent society, those who are responsible are supposed to be held accountable.

    “We are talking about recovering over N5trillion debt, which sits with the Central Bank of Nigeria (CBN) and we know that the Federal Government through the CBN cannot afford to write the debt off so we just have to recover. With such huge recovery, the country can do a lot in the areas of infrastructure development in energy, rail line, health, road construction, and lot more. To enable you understand the magnitude of what we are talking about, only 350 individuals account for 80 per cent of the debt amounting to N4.6trillion.’’

    On why AMCON cannot deal with these obligors, Kuru said the Act establishing the corporation does not empower it to arrest and prosecute people like some other agencies of the government. “As AMCON, we have no power to arrest these ‘powerful’ people as we depend largely on judicial processes to recover and we all know the slow pace of judicial processes. Given our sunset date, which is around 2013/24; we are determined to go after these obligors within the ambit of the law in line with the AMCON Act.

    ‘’Already, we have changed our strategy to more of enforcement, because the negotiations have failed. We want to go a step further by working with the ICPC and the EFCC, which will enable us to investigate the credit processes. If we do not establish this deterrent, we are likely to go round the era of NPL circle again,” Kuru stated.

    The AMCON boss urge NACC to lead the campaign for the strengthening of corporate governance structures in both the financial services industry and other sectors of the economy as lack of it destroys institutions and organisations. Again he said, “Your chamber must be in the forefront to champion good corporate governance structures; you must preach that people must learn how to meet their obligations; people must obey the rule of law and be transparent in their dealings with others. Above all, we must promote the culture of holding people accountable, especially the leadership class in both politics and business.

  • Lending: Banks race to beat CBN’s deadline

    BANKS are in a race to beat the September 30 deadline given by Central Bank of Nigeria (CBN) to implement the 60 per cent minimum Loan to Deposit Ratio (LDR) policy.

    They are scrambling for credible borrowers, The Nation learnt on Thursday.

    The apex bank had mandated banks to give out 60 per cent of their deposits as loans. The regulator said banks that did not comply with the directive would have their Cash Reserve Ratios (CRR) increased. Cash reserve ratio is the share of customers’ deposits kept with the CBN.

    To ensure compliance as the timeline nears, Tier-1 banks, lenders with assets greater than or equal to N1 trillion, are luring credible borrowers in Tier-2 banks with mouth-watering interest rates.

    The industry average lending rate is around 23 to 26 per cent per annum, but premium borrowers still get credit at 16 to 17 per cent per annum.

    Confirming the development during the presentation of banking sector report in Lagos, Senior Analyst, Banking & Insurance Department at Agusto & Co, Mrs. Ada Ufomadu, said Tier-1 banks are now going for big and credible borrowers in Tier-2 banks, offering them reduced lending rates for new loan plan.

    FirstBank, Access Bank, Zenith Bank, United Bank for Africa and GTBank fall within the Tier-1 bank category.

    According to Ufomadu, the focus of the LDR minimum is to promote consumer and mortgage credit to drive demand.

    Read Also: CBN issues banks new consumer protection rules

    She said: “Most Tier 2 banks comply with the new LDR minimum requirement, but not all Tier- 1 banks have complied with the CBN policy and short timeline for the policy implementation remains a challenge.”

    Mrs. Ufomadu said the industry LDR stood at 80.1 per cent in 2016; 75.1 per cent in 2017 and 66.4 per cent in 2018 and has continued to trend southwards as lenders cut their credit exposures, focusing on high-yielding government securities- Bonds and Treasury Bills.

    She said the industry’s total assets stood at N25.49 trillion in 2014; N25.7 trillion in 2015; N28.02 trillion in 20116; N30.82 trillion 2017 and N33.3 trillion 2018. These statistics, she added, should ordinarily provide good opportunity for banks to lend to to the real sector.

    Mrs. Ufomadu said the banks are at present, engaging in ‘cautious growth’ lending on government securities.

    According to her: “The top five banks have 57 per cent combined industry assets and 59 per cent loan book, adding that there is steady decline in industry assets.

    “Tier-1 banks lost N1.1 trillion to the implementation of the International Financial Reporting Standards 9 (IFRS 9) implementation, which helps lenders to be more stringent in classifying their loans.

    “In the last three to four years, banks have not been bullish in lending. Even the CBN regulation cannot change that reality. Banks are also rejecting expensive deposits and going for low interest deposits.”

    Speaking on the LDR policy, Head, Currencies Market at Ecobank Nigeria, Olakunle Ezun, said the policy would stimulate lending to Small and Medium Enterprises (SME), retail, mortgage and consumer lending.

    He explained that the mandate to banks is to maintain a minimum LDR of 60 per cent (compared to current industry average Loan to Deposit Ratio (LDR) of 58.5 per cent as at May 2019 and regulatory maximum of 80 per cent), subject to quarterly review.

    By this regulation, the CBN aims to improve market liquidity and, subsequently, encourage deposit money banks to increase lending to the productive sector of the economy. This comes with additional incentive of a weight of 150 per cent to the preferred sectors in the computation of LDR.

    ”The CBN’s recent move could be positive, as we expect improved lending to the productive sectors of the economy,” Ezun said.

     

  • Nigeria to save $20b from food import ban

    THE implementation of the ‘no forex for food import’ directive could save $20 billion for the economy, a Central Bank of Nigeria (CBN) data has shown.

    President Muhammadu Buhari on Tuesday ordered the CBN to exclude importers of food items from accessing forex from official windows.

    According to a CBN source, Nigeria saved around $21 billion in 2018 following the restriction of forex on 41 items. “With the addition of cotton, textile and garments, poultry, palm oil and their derivatives and other food/agricultural items imported into the country, it is expected that Nigeria will save more forex from the directive.

    The National Bureau of Statistics (NBS) in its report said “the value of total imports rose 3.39 per cent in the first quarter of 2019 compared to the fourth quarter of 2018, and by 25.84 per cent over the corresponding quarter of 2018. From this figure, Imported Agricultural products were 7.98 per cent higher in value than in the fourth quarter of 2018, and 28.1 per cent higher than in the first quarter of 2018.

    If these imports that consume forex is checked as directed by the President, an immediate benefit of the directive will be an accretion to the foreign reserve which now stands at over $44 billion. This increase in foreign reserve will help keep the Naira at an appreciable rate to the dollar and the CBN will be better equipped to defend the naira against forex volatilities.

    Read Also: I’ll fight insecurity to standstill, Buhari vows

    Another positive implication of  the directive is that there will be increased agricultural activities across all food segments to produce the basic needs and also all the value chains associated with every food item will be motivated to expand. In other words, jobs and processes that were exported will now be domiciled in Nigeria. A fall out is more jobs and more food for Nigerians.

    While it has been reported that the Central Bank of Nigeria (CBN) will implement the directive in phases in order to manage the impact on prices and inflation, this decision by apex bank will give respite to nursing mothers who rely heavily on imported milk to feed their babies and for Nigerian companies to develop more acceptable infant formula than what currently obtains.

    CBN Governor Godwin Emefiele, while delivering the keynote address at the 53rd Annual Bankers’ Dinner of the Chartered Institute of Bankers (CIBN) in Lagos last year, noted that there was 97.3 per cent cumulative reduction in monthly rice import bills, 99.6 per cent in fish, 81.3 per cent in milk, 63.7 per cent in sugar, and 60.5 per cent in wheat.

    Emefiele insisted that “If we continue to support the growth of smallholder farmers, as well as help to revive palm oil refineries, rice mills, cassava and tomato processing factories, you can only imagine the amount of wealth and jobs that will be created in the country.

    “These could include new set of smallholders farmers that will be engaged in productive activities; new logistics companies that will transport raw materials to factories, and finished goods to the market; new storage centres that will be built to store locally produced goods; additional growth for our banks and financial institutions as they will be able to provide financial services to support these new businesses; and finally, the millions of Nigerians that will be employed in factories to support processing of goods.

    Ex AGF hails Buhari

    Former   Attorney  General of the  Federation ( AGF) and Minister of Justice Chief Mike Aondoakaa commended Buhari for the ban on food importation into the country. Aondoakaa stated that the directive was coming at the right time when the country had achieved food security.

    He urged the people to eat made-in-Nigeria food so that farmers would have value for their products.

    The former AGF, who is a rice farmer with one of the biggest rice milling plant in Makurdi, stated that agriculture is a huge employer of Labour and the ban on food importation will increase participation in Agriculture and many will now see it as a Big business.

    He urged the youths who are looking for white-collar jobs to embrace farming now.

  • Lifting cash-less banking with multi-currency card

    Cashless banking was introduced with fanfare seven years ago and has remained impactful to the financial inclusion and efficiency target of banks and other financial institutions. The scheme has provided opportunity for banks to be more creative on their product offerings as seen in FirstBank introduction of the Visa Multi Currency Card, that allows customers link their cards to their naira, dollar, Euro and British Pounds Sterling accounts. The card was designed to meet the cash-less transactional needs of customers anywhere in the world, writes COLLINS NWEZE.

     

    THE introduction of the cash-less banking was one of the biggest news that hit the sector in January 2012. The objective, the Central Bank of Nigeria (CBN) says, is to change the cash-driven economy and reduce the rising cost of banking.

    The policy was also designed to promote financial intermediation, financial inclusion, minimise revenue leakages, eliminate robbery and encourage e-payment in any currency around the world.

    The policy was initiated against the backdrop of cash dominance in the payments system, a development which encouraged the circulation of huge sums of money outside the banking system and imposed huge currency management cost on the economy.

    The policy was meant to ensure price stability through effective monetary policy; sound financial system and efficient payments system. It was a critical part of the payment system modernisation, designed to promote the use of Automated Teller Machines, Point of Sale (PoS) terminals, web payment, online transfers and even mobile money in banking transactions instead of relying on cash.

    Seven years after the scheme was unveiled, banks are taking advantage of the opportunities it created to innovate and give value to customers. FirstBank of Nigeria Limited, has introduced the Visa Multi Currency Card, an All-in One-Card and first of its kind to be offered by any financial institution in Nigeria. This card can be linked to four currencies: Naira, United States dollar, Euro and British Pounds Sterling accounts.

    With the Visa Multi-Currency card, FirstBank customers – within and outside Nigeria – can now enjoy the luxury of having their local and foreign denominated accounts in any currency, linked to a single debit card. The Visa Multi-Currency Card is designed to ease the daily cashless transactional needs of customers regardless of where they are across the world.

    Amongst the many benefits of the Visa Multi-Currency card are Point of Sale and Online purchases, access to and use of ATMs worldwide. There is no cash collateral requirement prior to its issuance.

    Speaking on the product, Group Executive, e-Business & Retail Product at FirstBank, Chuma Ezirim, said the lender takes pride in pioneering the Visa Multi Currency Card in the country, as we remain committed to providing products and services that are designed to ensure the banking convenience of our customers regardless of their location.

    “This card is designed to make traveling fun for our customers and ensure they have a seamless transaction experience during their vacation, tourism and other business-related trips around the globe.

    “Traveling abroad for summer, walk into any FirstBank branch today for your Visa Multi Currency Card,” he said.

    According to the bank, the card can be used  to make purchases online, pay bills and access cash at ATMs worldwide. “ It is secured by Chip & Personal Identification Number technology with a lifespan of three years, requires no cash collateral before issuance, global acceptance on ATM, PoS and web as well as additional protection for web-based transactions with “Verified by Visa(VbV),” the lender said

    It has a limit of N150,000 for local ATM, and $1,000 on international transactions; on PoS, current account limit on local transactions is N2.5 million, and N500,000 on savings account while international transaction limit is $2,500. On web transactions, it has a limit of N1 million on local transactions and $6,250 on international transactions.

    On FirstBank Visa Gold card, customers enjoy higher daily spending limit on ATM ($1,000) , POS ($10,000) and WEB ($5,000) anywhere in the World with your Visagold card. Access to international emergency services with your Visagold card i.e. Emergency Card Replacement & Emergency Cash Advance in situations where your card gets lost or damaged,” the bank said.

    Also, on the FirstBank Naira Master Card, customers enjoy increased limits for international transactions. “Customers can spend $5000 monthly with their FirstBank Naira Master Card on all channels, with a daily ATM cash withdrawal limit of $300. The customers should change their PIN before travelling out of the country to avoid transaction failures / invalid card and must  not swipe their cards on any terminal, rather, should insert card and use their PIN. In the UK, customer can tap with their Naira MasterCard contactless cards to make payments for their transport fares among other benefits.

    “Customers can activate or deactivate their cards for all types of transaction, using the Card-in-Control Service on Firstmobile or the Unstructured Supplementary Service Data (USSD) option. See steps below.

    These products have enabled the bank to issue  10 million cards to customers across the country. The bank is now among two other African banks to achieve the milestone.

    Other banks are also making card payment a priority. For instance,  Access Bank has migrated its entire network of ATMs to CR2’s ATM driving and card switching solution. The project also includes the migration of the lender’s card management system, according to a company press release.

    As part of the deal, CR2, which is headquartered in Dublin, Ireland, will be responsible for the largest ATM network in the entire West African country, which includes more than 3,000 ATMs.

    The move follows the lenders deployment of CR2’s BankWorld, a digital banking platform. The software, which enables banks to tailor their branding and messages to customers via the ATM, is fully certified for Verve Card issuing and acquiring. Verve is an ATM debit and payment card used exclusively in the Nigeria.

    Additionally, the platform supports all local requirements for the Nigerian payment systems and services market,

    CR2 is one of only two switch vendors running an ATM network for banks in Nigeria, according to the bank.

    United Bank for Africa Plc says it has issued over three million Near Field Communication technology-enabled contactless cards to its teeming customers.

    “UBA has revolutionised the payments landscape in Nigeria in 2015, with the introduction of contactless payment cards which enable customers pay with ease by leveraging the NFC technology,” it said in a statement.

    The NFC technology allows wireless communication between devices that are a few centimetres apart. The NFC payment Card uses microchips/antenna to transmit data via shortwave radio frequencies.

    Usually, when one NFC-enabled device is close enough to another NFC device, a connection can be established and data shared between them. The card communicates data to the reader to initiate and complete the transaction using the NFC technology.

    “In addition to the contactless cards,  the bank has issued well over 10 million debit and prepaid cards, serving both customers and non-bank customers in its countries of operation,” it added.

    UBA’s Group Head, Cards, Yinka Adedeji, was quoted as saying: “We are delighted to reaching this milestone. Our customers have found out that with our contactless cards, they make payments for everyday essentials and other things that money can buy the contactless way, and these cards can be used across all the channels where you use your regular card – ATM, PoS and Web.”

    Also, about two years ago when the bank in December 2015 and May 2016, FirstBank was the first financial institution in the country to achieve sustained alternative channels transaction volumes of 100 million transactions in December 2015 and May 2016.

    According to the Managing Director/Chief Executive Officer, First Bank of Nigeria Limited,  Adesola Adeduntan said: “Delivering to this feat at this time, is a testament to the bank’s drive in delivering to its brand promise – putting customers first and continuously improving our business to serve them better. One of the ways by which we were able to sustain this winning edge is the use of our Instant issuance/Instant activation technology, which we pioneered about 10 years ago.”

    “We have also consistently maintained the highest active Card ratio in the industry. This feat also implies that our customers are becoming more technology savvy and we would continue to encourage this attitude with our commitment to world class service delivery. Therefore, we must work to ensure optimal performance and availability of all our channels such as ATM, FirstMobile etc. to guard against customer dissatisfaction.”

    In addition, FirstBank recently bagged a hat trick of awards, which are clear signs that the giant strides taken by the pan-African leading bank-brand towards fostering its banking technologies are well aligned to the fast paced technological advancement in modern day banking.

    First Bank of Nigeria Limited has also won three awards in the Interswitch Connect Sales Dinner & Awards Night held this year in Lagos.

    The event, which had Mrs. Ibukun Awosika, Chairman, FirstBank of Nigeria Limited as keynote speaker, was convened to recognise excellent partners and institutions that are front liners at bolstering cashless transactions and payments in Nigeria, while promoting financial inclusion, thus bridging the gap between the banked and unbanked in the nook and cranny of the country.

    The awards won by FirstBank at the event are; Most improved Mobile Application, Highest Transacting Bank (across interswitch’s solution) and Highest Number of Verve Transacting Cards (Unique Cards) for respectively having the highest total volume of transactions to the tune of 95.1 million transactions across three services (Airtime, Bill payment and transfers), its outstanding performance in revenue generation (as regards having highest transactions across Interswitch’s solutions) and being the Bank with the highest and outstanding performance in the issuance of unique Verve cards. FirstBank has issued a total of 7million unique Verve cards.

    Receiving the awards on behalf of FirstBank, Mrs. Folasade Femi Lawal, the Bank’s Head, Card Business said “We are pleased to be recognised for these awards, especially as they add to the spice of an eventfulness 2019, the year of our 125th anniversary.

    The awards are indeed a reflection of the trust by Nigerians on our digital channels as we leave no stone unturned at reinventing ourselves, products and services with a view to remain steadfast at being a frontrunner at promoting digitisation of the industry bearing in mind that we are that very institution that have since 1894 witnessed the various facets and growth that defines banking in the country. We commend Interswitch for their giant strides at being a gateway to promote a cashless Nigeria.

    Only recently, FirstBank was recognised for its high transactional volume and leading role at promoting cashless transactions and financial inclusion in the country by winning two awards – Cashless Driver: Highest Volume in Bill Payments and Cashless Driver: Highest Transaction Volume in Real-Time Payments –  at the CBN Electronic Payments Incentive Scheme (EPIS) Efficiency Awards.

     

  • Food importation: Buhari’s directive stokes controversy

    The directive by President Muhammadu Buhari that the Central Bank of Nigeria (CBN) should not sale foreign exchange (Forex) to food importers has attracted varied reactions from stakeholders. While some people believe that the order will help Nigeria become self-sufficient in food production, others insist that it will further make it difficult for Nigerians to afford stable food. For foreign investors, the order is an affront on CBN’s independence and is capable of hurting foreign capital inflows, write NDUKA CHIEJINA, COLLINS NWEZE and DANIEL ESSIET.

     

    NOT many people saw it coming. And when President Muhammadu Buhari directed the Central Bank of Nigeria (CBN) not to sell foreign exchange (forex) to food importers, it took many stakeholders by surprise.

    President Buhari said he asked the CBN to stop providing foreign exchange for food importation.

    In a statement issued on Tuesday by Garba Shehu, presidential spokesman, the president said the directive is to ensure the steady improvement in agricultural production and attainment of full food security.

    The president, who hosted All Progressives Congress (APC) governors to eid-el-Kabir lunch at his country home in Daura, said the foreign reserve will be conserved and used for the diversification of the economy, and not for encouraging more dependence on foreign food import bills.

    “Don’t give a cent to anybody to import food into the country,’’ he said.

    The president said some states like Kebbi, Ogun, Lagos, Jigawa, Ebonyi and Kano had already taken advantage of the federal government’s policy on agriculture with huge returns in rice farming, urging more states to plug into the ongoing revolution to feed the nation.

    “We have achieved food security, and for physical security, we are not doing badly,’’ he said.

    Buhari said he was delighted that young Nigerians, including graduates, have started exploring agriculture-business and entrepreneurship, with many posting testimonies of good returns on their investments.

    But the order has attracted several reactions from farmers, industrialists, economists and financial pundits. But while many of the speakers said the directive will resurrect Nigeria’s long-time dream of being sold-sufficient in food production, others believed that it will make access to stable food elusive to the common man on the streets.

    But a larger group of people with interest in foreign direct investment said the President’s directive was an affront on the independence of the CBN, as is the practice across the world where the central banks are expected to operate without government interference.

    Former Executive Director, Keystone Bank, Richard Obire, also said the President’s directive will help grow the agriculture sector. He said there is need to also provide the infrastructure needed to move food from where they are produced to where they are needed. ” It is not enough to produce food. You need to also have the infrastructure to move the foods to areas of need. I also believe that the forex that would have been used for food import will now go to education, and health sector,” he said.

    Continuing, Obire said: “With the President directing the CBN to stop giving a cent of forex for food imports, investors and businesses will be increasingly concerned about the independence of the country’s central bank. These concerns were already there with the multiple exchange rates regime seen to be driven by the Government. This new directive will heighten those concerns”.

    Director-General, Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, said there was a need to get more details and clarifications on what exactly constitutes food items in the context of the Presidential directive.

    “The Harmonised System codes of the items affected need to be indicated. It is hoped that these details would be made available in subsequent releases by the CBN. This is essential for proper analysis of the possible impact on investment, the welfare of citizens and the economy. Meanwhile, the CBN before now had placed many food items on the forex exclusion list. It will be interesting to see what additional food items are being contemplated as additions to the list. In all of these, we need to worry about the implications of policy pronouncements for investors’ confidence and the general sentiments of investors,” he said.

    Yusuf said unemployment levels in the country has reached a disturbing level of over 23 per cent and rising. “Youth unemployment is even much more. Yet the panacea for dealing with the scourge of unemployment and poverty is an investment. If policy and regulatory risks continue to escalate as we are currently experiencing, the chances of stimulating investment, whether domestic or foreign, would remain dim. Current forex policy conceptualisation and management are adversely impacting investment,” he said.

    He said it was critical to scale up stakeholder engagement on the strategies for economic diversification and self-reliance.

    He said rigorous impact study should precede major policy changes, supported by empirical data. This is necessary to minimize shocks and dislocations in the investment environment. This is also imperative to stem the increasing cases of job losses.

    “Over the last couple of years, food inflation had been a source of worry. It has consistently been ahead of core inflation. This is a reflection of the productivity challenges in the agricultural sector which has lately been complicated by security challenges across the country and attacks on farming communities. The sector is still largely dependent on smallholder farmers, with little mechanisation and application of technology. Transportation is another key impediment to food security in the country. These are fundamental issues that need to be addressed, and urgently too,” he added.

    Former President, Chartered Institute of Bankers of Nigeria (CIBN) Mazi Okechukwu Unegbu, said the president’s pronouncement was in order. He, however, added that there was the need for him to take into consideration, Nigeria’s peculiar environment before making such pronouncement. “Are Nigerians feeding well and producing enough at the moment. What is the gestation period for the policy implementation?”.

    He said the President’s pronouncement is not bad, provided there is enough time for farmers to produce the right quantity of food for the population.

    Chairman, Rice Farmers Association, Kebbi State, Alhaji Muhammad Sahabi Augie, said President Buhari asking the CBN to stop providing forex for the importation of food into the country was a welcome development.

    For instance, in Kebbi State, he said the Government‘s ban on rice importation which occasioned increased local rice production led to the fall in the price of paddy.

    He said the volume of rice harvested from different farm locations in the state was unprecedented under the Anchor Borrower’s dry season rice farming programme.

    He said the harvest was so high that it forced down the price of paddy at the market.

    He added that the government’s ban on food importation crashed the price of a bag of maize from N10, 000 to N7, 000, that of a bag Sorghum from N13, 000 to N7, 000.

    According to him, restricting forex for food import will boost local food production.

    The South-West Chairman, All Farmers Association of Nigeria (AFAN), Chief Femi Oke expressed gratitude to President Buhari on the matter.

    He explained that importers in the food industry were killing the efforts of the local processors to implement massive processing of food products which hitherto were imported expressively into the country.

    He said the Government ban on importation of rice has helped the sector to take advantage of the policy of the Federal Government to generate huge returns.

    According to him, the decision will ensure forex savings, job creation and investments in farming and local processing of food products.

    He said the CBN’s action will help to unlock the huge potential of the sector by developing agricultural value chains and agro-allied industries that process and add value. This, according to him, will help local farmers to become competitive and raise their incomes.

    The Chairman, Agriculture and Non-oil Group, Lagos Chamber of Commerce and Industry, African farmer Afioluwa Mogaji said the restriction was a positive one, adding it was capable of bringing development if efforts were made to stimulate investment in infrastructure.

    While the restriction is targeted at protecting the local industry and saving forex,  Mogaji said the government must mobilise the different agencies to work together to create synergies in production, regarding infrastructure to boost food availability and distribution.

    For example, he added that while Nigeria’s climate is perfect for tomato production, some of it goes to waste due to lack of refrigeration and transport facilities. This is why the country is heavily dependent on tomato imports and local farmers struggle to survive.

    He noted that while the Presidency has placed irrigation and other farming equipment on zero duty, the Customs is yet to enforce it, thereby working at cross purpose with the government’s goal to achieve food security through provision of infrastructure for farming and local food processing.

    According to him, the challenge of value-added features in all areas of agriculture, attributing it to low levels of investments in agribusiness and the macro level and lack of capital and even economies of scale at the micro level for rural farmers.

    According to him, the Group shares the commitment of the government to addressing agriculture and food security issues, as the issues are critical not only to economic development but to the future of food production.

    Former Presidential candidate of the Young Progressives Party (YPP), Kingsley Moghalu faulted President Buhari’s directive to the CBN, on non-provision of forex for food importation.

    In a series of tweets on his official handle, the former deputy governor of the CBN also asked Buhari to allow the apex bank to discharge its mandate independently.

    Moghalu also noted that political interference in CBN’s economic policies leads to poverty and also weakens institutions.

    He wrote on Twitter; “Is @cenbank now a ministry to be “directed” by President @MBuhari? Article 1(3) of the CBN Act 2007 states ‘To facilitate the achievement of its mandate under this Act…the Bank shall be an independent body in the discharge of its functions.

    “The issue here isn’t whether or not CBN should allow access to forex for food imports. It is about whether such an economic policy of a central bank should be imposed by a political authority. A major reason for our poverty, instability and a weak economy is weak institutions.

    “Our marketplace should be regulated and guided in a rational manner that creates a level playing field. Our economy will not be saved by Ad Hoc political decisions like this, handed down by the very institutions that should be shielded from the whim and caprice of politicians.

    “Nigeria’s entire economy appears to have been sub-contracted to our central bank, including industrial and trade policy. In the process, the economy has fared poorly and the Bank has lost its independence. This is sad!

    “@NGRPresident should leave @cenbank alone to discharge its mandate independently within the ambit of the CBN Act and stop “directing” it. @cenbank should on its part assertive its independence (assuming it actually believes it should be independent, but the Act says so, clearly!”

    Recall that while giving the directive at his hometown in Daura, when hosting APC Governors, Buhari said that his order to the CBN to starve food importation of foreign exchange stemmed from the steady improvement in agricultural production and attainment of full food security in the country.

    Former president of the Association of National Accountants of Nigeria (ANAN), Samuel Nzekwe, commended President Buhari for the directive.

    He said that the Federal Government’s decision to put a halt to the practice was a welcome decision which would go a long way in stabilising the economy and freeing forex for more crucial items.

    He, however, urged the Federal Government to be cautious in the implementation of the directive while also ensuring that the nation produces enough food for local consumption.

    Nzekwe noted that a situation where imported foods on the list of banned items were not met by local production may cause some discomfort in the country. “The nation is currently facing insecurity and other challenges which had prevented farmers from going to the farm.

    “A shortfall in the production of those banned food items could create another problem for the country,” he said.

    Nzekwe stressed the need for government to urgently address the security challenge in the country to ensure that food insufficiency that could hinder the implementation of the forex ban was tackled.

     

     

  • AfCFTA may affect agric sector, says Sterling Bank

    THE  Group Head, Agric Finance and Solid Minerals at Sterling Bank, Bukola Awosanya, has said agriculture productivity in Africa is low and a source of concern.

    According to her, the sector  accounts for 60 per cent of the continent’s labour force and 75per cent of its domestic trade.

    “The creation of a single African market with over 1.2 billion people through the Continental Free Trade Area (AfCFTA) treaty is not without possible adverse impact on the sector’s growth which calls for a pan-African agriculture summit.”

    She said to strengthen agriculture, Sterling Bank will bring together policy makers, development agencies, international financial institutions, and value chain players on the continent through Agriculture Summit Africa scheduled  September 5 and 6 in Abuja.

    The summit with: Agriculture – Your Piece of The Trillion-Dollar Economy as theme,  will seek the actualisation of the $1 trillion African agribusiness economy dream by 2030. More than 50 per cent of the world’s fertile and unused land estimated as 450 million hectares is in Africa.

    She said: “Sterling Bank has been at the forefront of Nigeria’s agricultural transformation agenda which seeks commercialisation at scale nationwide through focus on value chains where the country has comparative advantage. This market-led transformation driven by strategic partnerships is stimulating investment, creating new jobs, wealth and food security. It is imperative that this same model is adopted across the 54 countries that now make up the single African market to improve productivity, guarantee food security and ensure a future of shared prosperity for all Africans.”

    Read Also: Sterling bank is top best place to work in Africa

    She added that the international summit would foster an integrated approach to agricultural value chain transformation on the continent while also facilitating intra-African trade. It will also unveil current agricultural trends, innovations and opportunities for private and public-sector investment and participation in Africa.

    Last year, the lender brought together smallholder farmers, input suppliers, agro processing entrepreneurs, development finance agencies, policy makers and captains of industry through a technical workshop on the agriculture value chain in Abuja. The workshop which focused on co-creating a sustainable Nigerian economy through rural agricultural enterprise was chaired by former Minister of Agriculture, Chief Audu Ogbeh.  This year’s agriculture summit is a more ambitious attempt to discuss issues that will propel Africa to attain her full potential in the Agriculture sector.

    A thought leader and preferred lender by players in the local agriculture value chain, Sterling Bank has the  record of being the first commercial bank to lend under the Central Bank of Nigeria (CBN) and Nigeria Incentive-Based Risk-Sharing System for Agricultural Lending (NIRSAL) led Anchor Borrower Programme (ABP) with over 22,000 small holder farmers as beneficiaries.

     

     

     

  • CBN asks banks to back T-bills bid with demand

    The Central Bank of Nigeria (CBN) has asked banks to back all Treasury Bills bids with customer demand, The Nation has learnt.

    The directive is part of the bank’s plan to improve lending to domestic economy. In the past, banks have bought government debt rather than assume risk by lending.

     The CBN barred banks from buying bills for their own accounts at an open market auction held yesterday, a move intended to force them to lend rather than invest in government debt, traders told Reuters.

    The bank is stepping up a campaign to get credit flowing. Last week, it limited the size of interest-bearing deposits it would hold for banks, the latest in a series of measures aimed at reviving an sluggish economy

    The CBN, which had not issued market stabilization bills for about a week before Friday’s auction, told banks bids must be backed by customer demand.

    It was unclear if the order applied to Thursday’s auction only. Banks can still purchase bills on the secondary market, traders said.

    At Thursday’s open market auction, the central bank offered N75 billion ($245.14 million) of bills, drawing demand totaling 475 billion naira for the various maturities. The bank sold one-year bills at a yield of 12.25 per cent.

    A trader said Thursday’s auction was aimed at non-bank investors, adding that the central bank has considered offering bills directly to foreign investors to support the currency.

    The CBN had been issuing securities at high yields to mop up naira, a policy it maintained for more than two years to attract foreign inflows into bonds and support the naira.

    Read Also: CBN injects $210m in forex market

    It was unclear which option the central bank wants to pursue: boosting credit flow locally or maintaining a stable currency in the face of high inflation and dollar shortages.

    At its last rate meeting in March, the bank cut rates by 50 basis points for the first time since November 2015, saying it wanted to signal a new direction. Analysts expect another 50-bp rate cut on Tuesday.

    Bankers doubt the measure will do much to boost lending unless credit risk is addressed through reforms.

     “I’m not quite sure this is an effective way of getting banks to put their balance sheet on the line to areas where they clearly perceive risk,” one banker told Reuters. “The central bank wants to drive growth in the economy without structural reforms, which is counter-productive.”

    Analysts said recent policies aimed at boosting loans to revive the economy could have a knock-on effect by lowering yields to unattractive levels for foreign investors, which could weaken the naira.

  • CBN promises strong system

    Central Bank of Nigeria (CBN)  Governor, Godwin Emefiele, at the weekend in Kano, said the bank will remain a people’s-focus institution. He said it will keep  building a resilient financial system that will grow, as well as develop the needs of the country.

    Emefiele, who spoke at the two-day CBN sensitisation fair, said various initiatives are geared towards enlightening Nigerians on monetary policy, modernisation of payment system, developing financial programme and financial literacy.

    Represented by the team leader, who is  a Deputy Director in the apex bank, Aliyu Katuka, he said the apex bank attached great importance to the sensitisation programme in order to create awareness about its activities, with regard to economic development.

    Emefiele, said some of the apex bank’s initiatives include Agricultural Credit Guarantee Scheme Fund (ACGSF), Micro-small and Medium Scale Enterprises (MSME), Micro-Finance policy, Commercial Agricultural credit scheme CACS), Electronic payment system, Mobile banking, Right of consumers financial services, financial inclusion, biometric Verification number (BVN) and pursuit of sound and stable financial system.

    “These initiatives, no doubt, are quite capable of repositioning the economy, if well understood and the opportunities and adequately tapped into,” Emefiele said.