The Nation Newspaper

Tag: Central Bank of Nigeria

  • Polaris Bank: Normalcy returns to branches in Abuja

    Normalcy seems to have returned to Polaris Bank (former Skye Bank) branches across Abuja as staff, clients and customers were seen going about their expected and normal banking operations without itches or delay.

    It could be recalled that the now Polaris Bank was set up by the Central Bank of Nigeria (CBN) as a bridge bank to assume the assets and liabilities of the defunct Skye Bank under the strict supervision of the CBN, Asset Management Corporation of Nigeria (AMCON) and Nigeria Deposit Insurance Corporation (NDIC).

    However, bank managers and customer service officers had a constant and more than normal flow of customers making inquiries, clarifications and assurances of the safety of their funds in the bank.

    One of the banks customers, Mrs. Adeyemi, an octogenarian and a school owner, said she initially went to the bank with a resolve to withdraw or transfer all her funds to another bank.

    Read Also: CBN revokes Skye Bank’s licence

    According to her, “I came here to withdraw or transfer all my money in the bank because of the experiences I have had in the past with liquidated banks. When I heard the news about Skye Bank I almost had a heart attack; it was by God’s grace that I didn’t pass to the beyond.

    “After speaking with the branch manager today, my confidence in the bank has been restored and my fears reduced; though not totally.”

    Another customer of the bank who chose to remain anonymous, said he had a very long weekend as his mind was set on how to get out his money from the bank come Monday. He however said that his fears were assuaged after his encounter with the bank’s customer representative.

    Another customer who came to open a current account said she was assured and adequately educated by the Customers’ service representative that the bank is not in any form of crisis and that her funds are safe and secured.

    She however did not like the fact that the current account form given to her still had the Skye Bank logo; the customer service officer had to use her pen to strike out the name and wrote Polaris Bank at the top.

    The NDIC, as Deposit Insurer, has over the weekend assured customers of the continued safety of their funds in furtherance of the regulatory authority’s resolve to proactively manage potential threats to financial system stability.

    Also, employees of the defunct Skye Bank cum Polaris Bank are confident that the organization is back and better, and that they had already received their provisional employment letters as staff of the new bank. However, whether or not the legitimate fears and concern of the customers and shareholders is tenable will be a matter of time.

  • Osun 2018: Security beef up in Osogbo

    As the Independent National Electoral Commission (INEC) put finishing touches to its preparation for Saturday’s governorship election in Osun state, security is being beefed up within Osogbo, the state capital and some of its adjourning towns.

    Earlier Thursday morning, at the commission’s office located on the Gbongan/Ibadan road, security men who were deployed to the state on election duties were seen arriving to be accredited and briefed on their involvement in the election process. Accreditation of security and other officials, including pressmen and election monitors was still ongoing as at the time of filing this report.

    Expectedly, security has been beefed up at and around the INEC office. Some other locations within the state capital, including the state secretariat at Abere and the Central Bank of Nigeria building on Ede road, among others, are also being manned by security operatives.

    Not less than two armoured personnel carriers (APC) were sighted by our correspondent at the entrance of INEC office while another one was noticed around the Olaiya axis of the state.

    Read Also: Osun: INEC’s ban on phones will reduce vote buying – CSO

    Men of the Counter Terrorism Unit as well as mobile and regular policemen are involved in the task of providing security for lives and properties as the people of Osun prepare to elect a new governor on Saturday.

    The Nation also learnt that the security beef up in the town may not be unconnected with the arrival of sensitive materials meant to be used during Saturday’selection, earlier in the day. Sources who spoke to our reporters said the commission took early delivery of the materials to avoid any delay in the distribution of the materials for the election.

    “With the sensitive materials in town, one can understand the security beef up around town. It is all to forestall any attempt by any person or group to act funny. Don’t forget that 18, 426 policemen were deployed to be part of this election process. We are taking the issue of security very serious as we go along,’ he said.

  • CBN promises help for rural farmers

    Farmers in rural areas have cause to smile as the Central Bank of Nigeria (CBN) has pledged assistance towards boosting their yield as part of his social responsibility roles.

    Development Finance Officer, CBN, Ado-Ekiti Branch, Mr. Sowunmi Sogunle, disclosed this on Monday during a five-day training on Agricultural Value Chains Upgrade Services for National, Regional and Global Competitiveness.

    At the training, organized by the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending, (NIRSAL), an offshoot of CBN, Sogunle said the problems facing the average Nigerian farmer in the remote village, was of paramount concern to the bank.

    Sogunle said: “NIRSAL plays a key role in CBN intervention s such as the Anchor Borrowers Programme which focused at small holder farmers in rural communities

    “This is being done in order to boost their production, create employment and boost the Gross Domestic Product

    “NIRSAL, through us, has done quite a lot for the agricultural Value-Chain in Nigeria by reaching to the rural communities to create awareness on agricultural practice and opportunities, and this has helped reduce financial exclusion in their areas.”

    Read Also: ‘CBN needs to take more risks’

    The Project Monitoring Reporting and Remediation Officer of NIRSAL in Ekiti state, Mr. Ayo Ashade, in his welcome address, observed with regrets that principal among factors destroying farmers’ fortunes in the country was poor attitude of consumers to foods grown by local farmers, especially local rice.

    He enjoined farmers to cultivate habit of looking inwards by forming themselves into groups or cooperatives so as to benefit more from government programmes and policies.

    According to him, the goal of NIRSAL was to trigger an agricultural industrialization process through increased production and processing of greater part of what is produced on the farm to boost economic earnings.

  • Is CBN agribusiness loan a Greek gift?

    Mixed reactions have trailed the Central Bank of Nigeria (CBN) new policy regime which pegs interest rate for agriculture and manufacturing sector at 9 per cent payable in seven years with a two years moratorium at maximum of N10 billion.
    Daniel Adeleye in this report examines the issues

    To say that the recent announcement by the Central Bank of Nigeria (CBN) which pegged interest rate at nine per cent for agribusiness and manufacturing sectors for long-term borrowing as much as N10billion was cheery news indeed is simply stating the obvious.

    What CBN policy portends for economy

    Stakeholders in the agriculture, manufacturing and other sectors consider the apex bank’s new credit policy called Guidelines for Accessing Real Sector Support Facility (RSSF) through CRR and Corporate Bonds as growth and employment stimulating, stressing that it will bode well for the economy ultimately.

    According to one of the stakeholders in the sector, this new credit policy, no doubt marks a big departure from the excruciating interest rate regime of 25-30 per cent that has been over the years blaming for enterprises in Nigeria.

    While applauding the new scheme by the CBN and Committee of Bankers for pegging interest rate to farmers at nine percent, the Minister of Agriculture and Rural Development, Chief Audu Ogbeh during an interactive session in Abuja, described the policy as a first major step Nigeria was taking to reverse the ‘horrible damage’ done to Africa through Structural Adjustment Programme in the mid 1980s.

    Ogbeh said the development will assist the agricultural sector create jobs and promote food security through loans disbursement to rural women and youths at the grass roots.

    Speaking further, the minister believed that the tenure for the loan is good, seven years tenure, two years moratorium and maximum of N10 billion per borrower but appealed to the borrowers to ensure whatever was being borrowed are repaid as financial institutions are profit making organisations.

    “We have to grow our agriculture and to grow agriculture, you need cheaper credits, 18, 25 and 35 percent interest rates are for traders, not producers and I am glad the central bank has recognised this. I have complained about this since 1986.

    In a related development, while speaking on the policy in Abuja, the CBN acting Director, Corporate Communications, Isaac Okoroafor said the new directive aimed to increase the flow of credit to the real sector, agriculture and manufacturing.

    Okoroafor added that Deposit Money Banks (DMBs) would henceforth be incentivised to direct affordable, long-term bank credit to the manufacturing, agriculture, as well as other sectors considered by the Bank as employment and growth stimulating.

    Cautious optimism over CBN agribusiness policy

    Expectedly, a lot of respondents who spoke with our correspondents have expressed cautious optimism with the new policy regime, as they are not convinced that government’s real intentions may be implemented to the letter judging by past experiences.

    In his own assertion, an economist and senior lecturer, Department of Economics, Pan-Atlantic University, Prof. Adi Bongo described the policy as ‘too little too late.”

    He said though it’s understandable that the policy is coming late as a result of government facing challenges spiraling inflation and due to insolvency issues.

    The economist however tasked the federal government on proper implementation of the scheme, stressing that the targeted beneficiaries get the money rather than using same for bait to win elections in 2019.

    The erudite scholar described the manufacturing and agricultural sector as the most critical sector in a nation that needs more attention to grow economy.

    “Agriculture is the only sector that survives recession. But again being the sectors that employ greater percentage of Nigerians, everybody knows that sector is the sector that has the ability to help the economy grow again and also cater for a large majority household. So those are the two critical sectors, manufacturing and agriculture. We don’t know if the loan will get to the people the money is meant for but if it does it would boost productivity there is no doubt about it. It is a good development but some of us think that it should have come earlier.”

    Also speaking with The Nation on the policy, a renowned economist and professor of International Economic Relations at the Covenant University, Prof. Jonathan Aremu described the policy as a good development.

    Aremu who left CBN in 1992 as acting Assistant Director of Research said the CBN has introduced such policy before the Structural Adjustment Policy of 1986 and was successful.

    The financial expert urged the CBN to ensure that Deposit Money Banks (DMBs) disbursed the money for the purpose it is meant for.

    “I believe it’s a very good development and CBN must make sure that the money is directed to the national activity, the money earmarked for national interest, it should be monitored and that’s what the CBN should do. They shouldn’t just give the money to the banks,” he said.

    Reacting to the feelers that the loan would be meant for people that have godfathers or may turn to a political thing, Prof. Aremu flayed the statement by saying the CBN will not dabble into such arrangement.

    “I don’t believe that CBN will go to such arrangement that you have to be a party man or have a godfather to access their loan. If APC did not win election in 2019 and the money has not been paid back, what would now be the gain of CBN? So the money is not about politics and I won’t like to drag CBN to politics. I don’t believe that,” he submitted.

    Applauding the nine per cent interest, Policy of the CBN, an Oyo State-based poultry farmer who asked not to be named, said the policy is commendable but he however called on the CBN for prompt monitoring of the banks to guarantee effective implementation.

    According to the poultry farmer, if the money is properly controlled by the CBN, it would help improve the production of agricultural commodities that will guarantee food security in Nigeria.

    While noting that this was not the first time the CBN was directing commercial banks to give money to agricultural sector, he however lamented more often than not commercial banks don’t usually comply with such directive from the apex bank.

    He said some of the commercial banks in Nigeria assessed agriculture as very risky, adding that it should not be business as usual.

    Unpleasant stories of past agribusiness loan beneficiaries

    Sharing his own experience with The Nation, the Managing Director of Adejumo Farms Lagos, said no matter what, he would never take loan from commercial banks again to finance his farm business.

    Going down memory lane, Adejumo recalled that in 2005 he took a loan from some commercial banks in Nigeria (names withheld), but literally had his fingers burnt.

    “I recalled that some years ago, the CBN did a policy and the interest rate was also 9 per cent. But the commercial banks gave out at 19-23 per cent and after the payment of the loan, they will now pay you the difference which may be very difficult to calculate and you as a borrower may also default at the end,” he recounted.

    Adejumo who noted that he had the unsavory experience with the then Intercontinental Bank, now Access Bank lamented that the loan is still paying back till date.

    “It was agric loan and they said they will give me at 9 per cent. They asked me to meet a particular target in my turnover and if I don’t meet up with that target they will charge another amount into my account. But it wasn’t easy for me at the end,” he explained.

    Speaking on whether the loan may turn out to be a political jamboree or a plot by the current administration to stay in power beyond 2019, Adejumo flayed the statement, stressing that commercial banks are the stumbling blocks frustrating CBN good intentions.

    The experienced farmer however expressed pessimistic over the current CBN loan policy, saying except the loan is disbursed through the Bank of Industry or Bank of Agriculture, it may be difficult to access them from the commercial banks.

    “Commercial banks are the problems, they are not sincere. I’ve made up my mind that I will never collect loans from any Nigerian bank again, no matter the situation.”

    “But through commercial banks, you need to have a long spoon to deal with them. There is no amount of encouragement anybody gives me, I will rather go to my cooperative to get money than to go to the commercial banks to get loan,” he submitted.

    Also speaking, a Lagos-based crop and livestock farmer, Adekunle Ayandele, said he attempted to get a loan from the Bank of Agriculture in 2017 but later backed off when the bureaucracy became almost unbearable for him.

    According to him, giving loan to farmers at 9 per cent with two years moratorium depends on the minimum and maximum given out to people.

    Expressing doubt on the policy, Ayandele said the farmers and manufacturers who do not have politician as godfathers may not be able to access the loan.

    Echoing the same sentiments with Adejumo, he said Bank of Industry or Bank of Agriculture is the proper channel to give loan to farmers and manufacturers and not commercial banks that would muffle the process.

    “Although I have not borrowed money from any CBN programme before but in 2017, I attempted to get loan from Bank of Agriculture. When I got there to make enquiry, the first bottleneck was that I was going to open an account with them. The interest rate then was not a single digit, it was like 12 per cent but later brought down to a single digit. Apart from opening account with them, they asked for a guarantor with a certain criteria. They asked for the farm document, the registration and all that. When I saw that the requirements were getting too high I backed off from the loan.

    “The fact is no continuity in such programme, if a government leaves, another one coming will have its own plan. Everything in Nigeria is always politically motivated no matter what,” he expressed.

    Banks await CBN directive on agribusiness loan

    Almost three weeks after the CBN announced the new policy regime on agribusiness loan, the commercial banks which are supposed to be the implementing partners are yet to be properly briefed.

    When our correspondent visited some of the banks, they all said they were still awaiting further directives from the apex bank.

    A source who spoke with our correspondent at First Bank, Diamond Bank, GTB, Access Bank amongst others said the CBN was yet to officially communicate to them.

    However the sources were unanimous in saying that the conditions would not be different from the past requirements which include: opening account with minimum of N250, 000 to get N2.5 million.

    Enquiries rebuffed

    When our correspondent sought to speak with the CBN acting Director, Corporate Communication, Isaac Okoroafor on the outcome of his findings, especially to get him to react to the misgivings being expressed by prospective beneficiaries, he simply fobbed him off with untenable excuses.

    “Let me tell you, I cannot speak with you on phone because I don’t know you. And the way you sound, you may misquote me. Secondly there are three people from The Nation who cover CBN, get in touch with any of those guys, let them call me or you put down your questions I will answer you,” he deadpanned.

  • Economy looking up, says MPC

    After an analysis of the economy and banking sector, the Monetary Policy Committee (MPC) believes the economic indicators are showing positive trend, writes COLLINS NWEZE

    For the Central Bank of Nigeria (CBN) led Monetary Policy Committee (MPC), the economy is on the road to full recovery. MPC is chaired by CBN Governor Godwin Emefiele.

    Feelers from the committee’s last meeting in Abuja indicated ongoing economic recovery which will be sustained with a positive outlook over the medium- term. The recovery is anchored on oil price recovery, fiscal spending and stability in the foreign exchange market.

    Although the banking sector is equally upbeat, but the committee members advised the lenders to continue on aggressive debt recovery drives, realize collaterals of non-performing credits as well as get the insurance companies to settle claims relating to insured debts.

    They are also expected to strengthen risk management practices and strictly enforce the CBN restrictions on payment of dividends by banks with high Non Performing Loans (NPLs).

    For instance, data from the National Bureau of Statistics (NBS) showed that real Gross Domestic Product (GDP) grew by 1.95 per cent in the first quarter of 2018, compared with 2.11 per cent and a contraction of 0.91 per cent in the preceding and corresponding quarters of 2017, respectively.

    The oil sector, which contributed 1.26 per cent in first quarter of 2018, compared with 0.76 per cent during fourth quarter of last year was the major source of the growth. The Purchasing Managers Indices (PMI) for manufacturing, and non- manufacturing activities rose for the 15th and 14th consecutive months to 57.0 and 57.5 index points, respectively, in June 2018. The committee noted the positive impact of the sustained improvement in foreign exchange supply on the performance of manufacturing and other key sectors of the economy.

    The committee welcomed the positive economic growth, but observed that the recovery was still fragile and called for the speedy implementation of the 2018 Federal Government budget and the Economic Recovery and Growth Plan (ERGP) to strengthen output growth in the Nigerian economy.

    The MPC noted with satisfaction the fourth consecutive quarters of growth in real Gross Domestic Product (GDP) and the positive growth outlook in the domestic economy. This is shown by the sustained improvement in the Manufacturing and Non- manufacturing Purchasing Managers’ indices in the second quarter of the year.

    The MPC commended the approval of 2018 Federal Government budget and called for an accelerated implementation to further support the fragile growth recovery. The committee also called for sustained implementation of the ERGP to further stimulate output growth. The committee was, however, concerned about the liquidity impact of the 2018 expansionary fiscal budget and increasing Federation Accounts Allocation Committee (FAAC) distribution, arising from rising prices of crude oil as well as the build-up in election related spending.

    For the CBN Deputy Governor, Corporate Services, Edward Lamtek Adamu, had in his personal note, said the corrective actions by the apex bank have put key banking industry indicators at the path of recovery as the non-performing loans (NPLs) ratio moderated and the capital adequacy ratio (CAR) rose mildly since June this year.

    He explained that other financial soundness indicators (FSIs) including return on equity (ROE) and return on asset (ROA) also suggested growing industry resilience. However, these improvements are yet to translate to the much needed real intermediation.

    “This is quite concerning because financial stability isn’t an end in itself; it must lead to improved services to the critical sectors of the economy, to be meaningful. It is in this light that the committee committed at the July meeting to another initiative directed at promoting private sector credit,” he said.

    Lamtek, said the meeting was held against the backdrop of improvements in key (domestic) economic and financial system indicators relative.

    “On the global front, geopolitical tensions and trade issues have remained, even as the outlook for global output growth continues to be largely positive. However, the outlook for domestic economic conditions going into 2019 is laden with uncertainties around liquidity and capital flows, among others,” he said.

    “As I evaluated the available data and forecasts, I noted especially, the fragile nature of the gains in the current macroeconomic and financial outcomes. This essentially strengthened my persuasion on the need for more reforms in the country’s fiscal and financial systems to deal with persistent liquidity threats and ensure better credit intermediation, respectively. Whereas measures by the Bank continue to be relevant stop gap, those alone would not permanently solve the fundamental structural impediments to lasting economic stability. Infrastructure continues to be a key imperative towards easing some of the constraints on credit delivery and growth in the economy”.

    Furthermore, he explained that in considering policy options for managing the risks to inflation and the naira exchange rate, there was need to factor-in economic growth and employment concerns.

    “In the absence of firm real GDP data for second quarter, 2018, indications from the Purchasing Managers’ Indices (PMIs) came quite handy. Both manufacturing and non-manufacturing PMIs, at 57.0 and 57.5, respectively for June, showed some prospects of output expansion, which should be sustained and possibly strengthened in the interest of jobs and poverty reduction,” he stated.

    While the private sector credit is expected to soothe the situation in the short-term, a long-term solution would be one that comprehensively addresses the risk concerns and apprehensions of commercial banks with non-prime borrowers in particular. On their part, industry managers need to grow banks’ resilience to shocks as well as their capacity to function by stepping up deposit mobilization and capitalization.

    Adenikinju Festus, a committee member explained that for Nigeria economy, a number of good news continue to be recorded: foreign reserves accretion continues, annual output is projected to grow by about 2.3 per cent at the end of the year, disinflation path continues year on year, Purchasers’ Manufacturers index (PMI) climbs slightly. Besides, staff presentation shows a slight drop on quarterly unemployment rate.

    “Domestic deposit banks continue to record improved performance. NPLs continue its downward trend. Deposit and asset values of the banks continue to grow, however, credit growth to the private sector was negative. This is unacceptable in the face of huge unemployment and relatively low capacity utilisation in the industrial sector. Bank operational costs remain unacceptably high. This continues to keep lending rates unacceptably high, which may affect the efficacy of simple reduction in the MPR,” the committee member said.

    He said the low appetite for risky investment and flight to safer fixed income assets is a source of concern to unlocking credit to the economy.  “I support the MPC decision for the CBN to explore unconventional way of unlocking credit to the private sector by exploring smart use of monetary instruments and other methods.

    However, the fiscal positions continue to be a source of major concern. High deficit in the 2018 budget remains a source of concern. “We are just not building buffers in a period of high oil prices, we are also not living within our means. Components of government revenues continue to underperform while non-capital expenditure remains fairly sticky downwards in the first quarter of 2018”.

    Continuing, he said there is a genuine anxiety about liquidity surfeit in a pre-election year, with anticipated high election spending, as political parties fail to keep to election spending guidelines, late passage of the 2018 appropriation bill, the supplementary bill submitted to the National Assembly, and the tensions between the executive and the legislature.

    CBN Deputy Governor, Ahmad Aisha, explained that half way into the year, the path of growth and other macro-economic indices are more evident, but the effect of the emerging global and domestic economic landscape still bears uncertainty.

    She insisted that stability and improved convergence in the exchange rate reflects the importance of Nigeria’s external reserves buffer which has grown substantially over the last two years and currently stands at N47.6 billion as at July 18th 2018.

    “Accretion to reserves has been driven mainly by the sustained recovery in crude oil prices, innovative exchange rate policies of the Central Bank of Nigeria (CBN) across various segments and export expansion / import substitution initiatives. These have given the CBN greater flexibility in managing the exchange rate”.

    “For instance, BDC rates appreciated to N360.5/$ (June 29) from N362.4/$ in November 2017, whilst the premium between the interbank and BDC rates narrowed to 17.9 per cent from 18.48 per cent, over the same period, indicating increasing rate convergence due to sustained supply of Foreign exchange (FX) by CBN and its commitment to promoting stability, liquidity and transparency in the FX market.

    Forex flows through the economy from CBN and autonomous sources also improved; reports from bank staff indicate forex from non-oil exports increased by 22 per cent from January to April 2017 compared with same period in 2018, and overall funds inflow into the forex market grew by 18 per cent over the same period”.

    “Although recent foreign investor exits have put pressure on the reserves, the CBN has been able to retain confidence of global investors by maintaining the supply of investment outlets and intervening to support market liquidity where required to facilitate seamless exits for international investors who are so inclined. This willingness to defend the naira stability has gone a long way to enhance market confidence and retain net positive forex flows which have remained largely positive over the first half of 2018”.

    Another committee member, Asogwa Chikwendu, said banking sector soundness indicators improved considerably by end of June 2018 based on CBN Staff report. For instance, there were improvements in the capital adequacy ratio, the non-preforming loans ratio as well as the profitably indicators (return on assets and return on equity).

    The capital adequacy ratio which was 11.95 per cent by April had increased to 12.08 in June while the non-performing loan ratio which is a measure of the Industry’s asset quality had reduced to 12,45 per cent in June from the previous level of 14.15 per cent in April 2018.

    The committee member said the trend in total deposits and total assets declined marginally between May and June 2018, but there was an increase in new credit which raised the overall total credit between May and June. In addition, the spread between maximum lending rates and the consolidated deposit rates narrowed in June when compared to the earlier months.

    However, another committee member, Obadan Idi, said although Nigeria has exited recession, the growth rates achieved averaged only 1.50 per cent which is very low compared to the rate of growth of population of about three per cent and very much below the economy’s potentials.

    “The outlook for growth remains fragile, as the recurring incidence of herdsmen attack on farmers, would affect agricultural output and increase prices. Other militating factors include the expected liquidity challenge from late passage and implementation of the 2018 budget, election spending, likely wage increase and the lingering challenges of critical infrastructure necessary for job creation and economic growth,” he said.

    “Inflationary pressure in the economy continued to moderate such that all measures of inflation (headline, core and food) decreased further in June, 2018. The headline inflation declined to 11.23 percent, thus sustaining the downward trajectory that began in 2017. The downward trend in domestic prices reflects the bank’s tight monetary policy stance coupled with the impact of significant reforms in the foreign exchange market”.

    He also agreed that the financial system remains sound based on various measures of financial soundness. “The few cases of high non-performing loans in the portfolios of a few commercial banks have negative consequences on the banks’ earnings and capital. However, the problem is being addressed by the CBN with corrective actions to prevent spill over to other institutions or adverse impact on financial system stability,” he stated.

     

  • Forex: CBN injects $303m, CNY 46.58m into retail SMIS

    The Central Bank of Nigeria (CBN) has injected $303.91 million into the interbank retail Secondary Market Intervention Sales (SMIS). This is in addition to the sale of Chinese Yuan (CNY) 46.58 million in the spot and short-tenored forwards.

    The figures obtained from the CBN last Friday, showed that the US dollar-denominated interventions were only for concerns in the agricultural and raw materials sectors.

    CBN’s Corporate Communications Director, Isaac Okorafor said the exercise, which was in tune with the CBN guidelines, was for the payment of Renminbi denominated Letters of Credit for agriculture as well as raw materials. He added that the sales in the Chinese Yuan were through a combination of spot and short-tenored forwards, arising from bids received from authorised dealers.

    While noting that availability of Renminbi was sure to ease pressure on the Nigerian foreign exchange market, Okorafor attributed the relative stability in the foreign exchange market to the intervention of the CBN as well as the sustained increase in crude oil prices in the international market. He assured that the CBN would remain committed to ensuring that all the sectors continue to enjoy access to the needed foreign exchange by Nigerians.

    It will be recalled that the bank last Tuesday intervened to the tune of $210 million to cater for requests in the wholesale segment of the forex market.

    Meanwhile, $1 exchanged for N361 at the Bureau de Change (BDC) segment of the foreign exchange market, while CNY 1 exchanged for N53.35.

  • CBN awaits MTN’s action on $8.1b refund order

    The Central Bank of Nigeria (CBN) is not worried by MTN’s denial of alleged illegal repatriation of $8,134,312,397.63 it levelled against the mobile giant.

    An official, who was reacting to MTN’s denial of the allegation, was asked what the CBN will do “in the event that MTN refuses to pay back the $8.1 billion and when the ‘immediate effect’ deadline given to MTN will expire?”

    The official, who refused to be named, said: “When we get to that bridge, we’ll know how to cross it.”

    To some experts, the CBN has taken a bold stand against banks and the company for alleged money laundering.

    The MTN on Thursday rejected the CBN’s claim in a statement.

    It said: “MTN Nigeria strongly refutes these allegations and claims. No dividends have been declared or paid by MTN Nigeria other than pursuant to CCIs issued by our bankers and with the approval of the CBN as required by law.

    “MTN Nigeria, as a law-abiding citizen of Nigeria, is committed to good governance and to abiding by the extant laws of the Federal Republic of Nigeria. The re-emergence of these issues is regrettable as it damages investor confidence and, by extension, inhibits the growth and development of the Nigerian economy.

    “We will engage with the relevant authorities and vigorously defend our position on this matter and provide further information when available”.

    Prof. Uche Uwaleke of Nasarawa State University told The Nation that “by sanctioning the affected banks, the CBN has demonstrated that the country’s financial markets have laws which must be complied with by all participants”.

    Uwaleke lamented the scale of alleged money laundering and illegal repatriation of foreign currency out of the country, stressing that “the scale of the infraction could not have been possible without collaborators within the Deposit Money Banks (DMBs).”

    Uwaleke, who is “the first Professor of Capital Market” in Nigeria, urged the Nigerian authorities to go “beyond the fines imposed on the banks”, adding that “it is vital that the Economic and Financial Crimes Commission (EFCC) is involved to fish out individuals or professional services firms that aided these banks to perpetrate the use of fake Certificates of Capital Importation, fraudulent conversion of investors’ loans to preference shares and rendering false returns to the CBN”.

    The implications for the economy, he said, are anything but salutary. To Uwaleke, “the illegal repatriation of forex by these banks would have contributed to the pressure on the exchange rate which negatively impacted production and the general price level.”

    According to the NBS capital importation report for Q2 2018, Standard Chartered Bank and Stanbic IBTC were responsible for the bulk of capital importation during the quarter. “This development will no doubt change this narrative at least in the near term,” Uwaleke said.

    He also cautioned that perhaps the stock market will be hit badly because two of the banks –  Stanbic IBTC and Diamond Bank  – are listed on the Stock Exchange and “the fall in their share prices could drag down the banking index as Investors are most likely to shy away from banking stocks till this issue is sorted out.”

    Uwaleke also predicted that “this development could roll back the plan by MTN to list on the Nigerian Stock Exchange”.  “Be that as it may, the sanctions carry a positive signalling effect for the economy in the long run,” he said.

    Our regulatory agencies Uwaleke said, “should continue to ensure that the Multinational companies operating in Nigeria particularly in the oil, banking and telecom sectors comply with extant laws”.

    Mr. Odilim Enwegbara, a development economist and financial expert who is the Chairman/CEO at Pan Africa Development Corporate Company (PADCC), was excited that “for the first time, I am proud of the CBN and its forex administration for identifying this huge infraction of illegally converting shareholders’ loan to preference shares (interest free loan) of $399,594,146.00″ leading to the sum $8.1 billion being illegally repatriated on behalf MTN between 2007 and 2015, which CBN‘s regulatory and supervisory departments detected.”

    Eweagbara said he was “happy to hear that not only are the banks involved in this illegal transfer accordingly fined for breaking the country’s foreign exchange law, but that MTN, which has been acting like an economic hit corporation in Nigeria is asked to return the said $8.1billion illegally repatriated out of the country.”

    Eweagbara suggested that “the CBN should also insist that besides the $8.1 billion, MTN should pay all the accumulated interest based on our prevailing interest rate”.

    He also called on the CBN to appoint a team of forensic auditors “to fully audit MTN’s books since its commencement of operation in Nigeria”. “It should include examining all the past forex repatriation out of Nigeria and processes and taxes.”

    Eweagbara said: “I will also go further to suggest that there should be Forex Repatriation law that should insist that no foreign, domestic corporation or individual should be allowed to repatriate more than $10 million out of the country without first having been approved by the President himself based on the advice of the Federal Ministry of Finance and Federal Inland Revenue Services (FIRS) with the first approval coming from the CBN.”

    “Both Ministry of Finance and Federal Inland Revenue Service should crosscheck and confirm through attached memos from the CBN, evidence that explains why the said corporation or individual has fully met all the forex repatriation laws of Nigeria. While the CBN memo will approve the source of the money, the authenticity of the overseas recipient(s), and that all international and domestic anti-money laundering laws have fully been satisfied, the FIRS memo should show that all required taxes have been duly paid.”

    The PADCC Chairman and CEO added that, ”it is high time we established the Nigerian Banking Regulation Commission, which as a spin-off from the CBN, will be fully responsible for ensuring that banking infractions are minimal, given its eagle-eye focus on the activities of banks in the country.”

    This way, he noted, “the CBN will be responsible for monetary policy making alone”. “If countries like China, US, UK, etc.have since created banking regulatory and supervisory agencies separate from their apex banks and as a result are enjoying the huge benefits, why shouldn’t Nigeria do the same in order to drastically reduce bank infractions?”

    The CBN last Wednesday imposed heavy sanctions totaling N5.87 billion on four banks under its regulatory purview and asked MTN to refund $8,134,312,397.63 for what it described as ”flagrant violation of extant laws and regulations of the Federal Republic of Nigeria, including the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995 of the Federal Republic of Nigeria and the Foreign Exchange Manual, 2006″.

    The four banks are Standard Chartered Bank, Stanbic-IBTC, Citibank, and Diamond Bank.

    The actions of the CBN became necessary following allegations of remittance of foreign exchange with irregular Certificates of Capital Importation (CCIs) issued on behalf of some offshore investors of MTN Nigeria Communications Limited and subsequent investigations carried out by the apex bank in March 2018.

    The CBN  asked five banks and MTN to immediately refund $8,134,312,397.63 illegally repatriated by the company to its coffers.

     

  • Ezekwesili: Nigeria needs leadership with vision

    Former World Bank Vice President, Oby Ezekwesili, and former Central Bank of Nigeria (CBN) Deputy Governor, Kingsley Moghalu, were among dignitaries at the Summit of The Alternatives (SOTA) in Abuja.

    The summit held at the Shehu Musa Yar’Adua Centre.

    It focused on how to develop a national vision and strategy to ensure effective democracy for the country.

    In her welcome address, Ezekwesili, who is also the convener of the Red Card Movement, commented on the idea behind the Summit of The Alternatives.

    She stressed the need for citizens to fashion out “a new Nigeria of our dream” and consider the economic implication of having visionary leadership with character, competence and capacity.

    Moghalu called for accelerated economic development in all sectors.

    The summit comprised of influencers and thought leaders who have demonstrated good character, competence and capacity in their various fields.

    They expressed a strong desire to build and remodel the nation through active engagement in Nigeria’s political space.

    Read Also: Ezekwesili: Presidency has a lot to tell Nigerians

    The first day kicked-started with a keynote address, titled: A Rallying Cry for an Alternative.

    Speakers and partners made presentations which centered on the need for Nigeria to get it right.

    They insisted on creating leadership criteria of character, competence and capacity.

    The keynote speaker, Prof. Lumumba, lauded the efforts of the organisers for uniting to rescue Nigeria from political nightmare and creating hope for Africa and Africans.

    He said: “Nigeria is blessed with everything you can think of but leadership. Nigeria has shown its leadership position in the African continent through various peace-keeping operations in Liberia, Sierra Leone and other places. Nigeria is the only link to Africa’s success.”

    The summit will also include panel discussions to further drive the new agenda for a new Nigeria.

    Campaign/party finance; cultivating grassroots movements; media approaches to elections; nuances and metrics of youth and women inclusion in today’s democracy; INEC: an overview of electoral preparations in the areas of hardware, software and process; youth inclusion and building a political brand.

    The second day had alternative political parties and presidential aspirants, like Omoyele Sowore, Fela Durotoye, Elishama Ideh, Kingsley Moghalu, Emmanuel Etim, Thomas-Wilson Ikubese, Martins Onovo, and Tope Fasua addressing the participants on topical issues which centred on “a new Nigerian of our dream”. The aspirants and political parties examined the need for a coalition of the 89 alternative parties to strengthen the objectives of the summit.

    The summit was collaboration among various groups, like Red Card Movement; Centre for Democracy and Development, Yiaga Africa, Nigeria First Project, BudgIT, EiE Nigeria and Passionate Citizens Framing the New Nigeria of Our Dream.

  • CBN unveils new guidelines for credit to agric, manufacturing

    The Central Bank of Nigeria (CBN) plans to increase the flow of credit to the real sector of the economy to consolidate and sustain the nation’s economic recovery.

    To this end, the apex bank on Thursday released new guidelines for its intervention in the sector.

    Speaking on the guidelines, the CBN Acting Director of Corporate Communications, Mr Isaac Okorafor, said that the bank intended to achieve this through the commercial banks.

    The Monetary Policy Committee (MPC) at its meeting on July 23 and July 24 introduced revised guidelines for Accessing Real Sector Support Facility (RSSDF) through Cash Reserves Requirement (CRR) or Corporate Bonds (CBs).

    Okorafor said that commercial banks would, henceforth, be incentivised to direct affordable, long-term bank credit to the real sector.

    He said that priority sectors included the manufacturing, agriculture and other sectors considered by the CBN as employment and growth stimulating.

    Okorafor said that Corporate/Triple-A rated companies would be encouraged to issue long-term Corporate Bonds (CBs), adding that a Corporate Bonds (CB) Funding Programme had been put in place.

    The programme, according to him, involves investment by the CBN and the general public in CBs issued by corporate organizations subject to the intensified transparency requirements for participating corporates.

    He said that the requirements would include publishing of an Information Memorandum on the bonds.

    Read Also: Forex: CBN injects $327m, CNY 69m into Retail SMIS

    Okorafor said that the memorandum would spell out the details of the projects for which the funds were required together with terms and conditions.

    He said that it would also indicate that the long-term projects were employment and growth stimulating.

    Okorafor said that the apex bank had also put in place a programme under the Differentiated Cash Reserves Requirement (DCRR) Regime.

    He said commercial banks interested in providing credit financing to greenfield (new) and brownfield (expansion) projects in the real sector could request four release of funds from their CRR.

    This, he said, would help to finance projects subject to commercial banks’ providing verifiable evidence that the funds would be directed to the approved projects by the CBN.

    Okorafor said that the tenor for the Differentiated CRR would be a minimum of seven years with a two-year moratorium.

    For the Corporate Bonds (CBs) Programme, he said the tenor and the moratorium would be specified in the prospectus by the issuing corporate.

    Okorafor said that the maximum facility would be N10 billion per project and the facilities would be administered at interest rate or charge of nine per cent per annum.

    He advised stakeholders to comply with the guidelines.

    NAN

  • NCC, CBN may clampdown on electronic fraudsters

    The Nigerian Communications Commission (NCC) and the Central Bank of Nigeria (CBN) may soon introduce a scheme that will enable banks and telecommunications companies to ban owners of any bank account or the mobile phone line traced to fraud.

    The CBN and NCC  are reportedly working with the Nigeria Deposit Insurance Corporation (NDIC), following the spate of electronic fraud involving Unstructured Supplementary Service Data (USSD ) telephone lines and internet banking transfers.

    When introduced, owners of any bank account or mobile line traced to any fraud case, especially electronic fraud, would be banned for life from operating any bank account or GSM in Nigeria.

    The pervasive electronic banking fraud in the banking sector has left customers, banks and regulators worried.

    Some experts claimed that the most significant risks to banks are self-serving or criminal acts carried out by some insiders.

    According to them, when these insiders use their technical knowledge to alter or disable security controls, it can be even more difficult to detect abuse.

    But it becomes more dangerous when insiders conspire with criminals outside, showing that depositors money in the banks are not safe.

    For instance, fraudsters now inundate banks’ customers with text messages to authenticate accounts with banks.

    The preciseness of the messages with accompanying data show they could only have got the details from insiders in the banks.

    Elsewhere, cyber security experts have also berated telecommunications operators over the prevalence of SIM swap fraud in the country, arguing that such fraud could be possible with an insider in the network operator of the subscriber that is targeted.

    SIM swapping is a sophisticated form of fraud and falls under social engineering. Fraudsters will distribute phishing emails, trying to ascertain as much personal information from victims as possible, according to Nigeria CommunicationWeek..