The Nation Newspaper

Tag: credit

  • Ugwuanyi plans credit facilities for traders

    Ugwuanyi plans credit facilities for traders

    Enugu State Governor Ifeanyi Ugwuanyi has said his administration is discussing with financial institutions, international corporations and other relevant organisations on how to extend easier and more convenient lines of credit and other facilities to assist the state’s traders grow their businesses.

    Ugwuanyi said his administration was also making efforts to upgrade the capacity of the State Marketing Company to arrange special import services for traders in line its policy trust.

    The governor spoke at a meeting with leaders of the 37 organised markets in the state at the Government House in Enugu.

    He noted that the meeting was convened at his behest “to show appreciation and express our gratitude for all the support and solidarity that you, along with teeming members of your associations, have continued to accord this administration since its inception”.

    Ugwuanyi said his administration was indebted to the traders for the resounding success of the Enugu Traders Empowerment Scheme, which was launched early this year, adding that the scheme was enjoying nationwide acclaim because of their support.

    The governor said his administration would take necessary actions that would improve the traders’ businesses.

    He said: “We will never allow anyone to subject traders in Enugu State to undue harassment, oppression or exploitation as they go about their legitimate businesses.”

     

  • Nigerian banks’ credit report poorest worldwide

    Nigerian banks’ credit report poorest worldwide

    The entire 22 deposit money banks in the country process a paltry 1, 500 credit report on a daily basis, The Nation has learnt.

    Making this disclosure recently was Mr. Miguel Llenas, who sits atop Dun and Bradstreet Credit Bureau Limited, a world acclaimed credit reporting agency with headquarters at the Dominican Republic.

    Mr. Llenas, who was the lead speaker at a public forum organised by CRC Credit Bureau Limited in Lagos, noted that most banks in the country today were technically in distress because they chose to jettison core banking regulations.

    Specifically, he said most businesses in the country were experiencing stagnant growth because they lacked access to finance from banks, who favour conglomerates and corporates with better loan facilities at the detriment of hundreds of businesses that can actually drive the economy.

    “South Africa records over 60, 000 credit report on a daily basis alone. Argentina does about 160, 000. Sri Lanka does over 25, 000, Egypt processes over 50, 000, Dominican Republic does 40, 000. But sadly, Nigeria with a population of over 170million people process a ridiculous 1, 500 credit report. This may account for the slow economic growth witnessed across the sectors,” he said.

    “Most Nigerian banks are not involved in serious lending, especially to the retail market,” he said.

    Raising some posers, Llenas, who boost of over three decades experience as a credit expert said: “Do banks really need a credit bureau? How do you extend credit to customers if you don’t use credit report?”

    Most of the banks in the country today, he insisted, “Have swift from lending to survival mode. Most of the banks are risk averse. This is partly why the economy is not moving forward.”

    According to him, Nigeria with 22 banks only process just about 1, 500 credit reports, which are prerequisite to loan requests.

    Most deposit money banks in the country today are still smarting from the losses incurred over the years as a result of toxic debts.

    Llenas who leads the over 170 year old credit bureau firm, said Nigeria’s credit reporting was very poor for a size of the country when compared to countries within Africa and globally.

    Speaking further, Llenas, who has traverse over 40 countries as part of his commitment to help grow the capacity of credit bureaus, stressed that Nigerian banks have the potential to drive the economy by lending to the critical sectors, especially the retail market rather than the high end market in order to enable them better manage risks when they occur.

    “With credit monitoring, and a credit score, banks and lenders alike can easily predict the future. The use of credit report has to be a powerful tool if well harnessed,” he maintained.

    Speaking earlier, Tunde Popoola, Managing Director/CEO, CRC Credit Bureau Limited, observed that most of the banks were exposed to a lot of risks, especially oil and gas, whose revenue projections have been badly affected by the economic crunch.

    According to him, the challenges confronting most of the banks is how to reduce their risk portfolio given the bad debts they incurred these past years, especially at a time they are have more risk assets.

    Thankfully, he said, the CRC Credit Bureau has been able to develop fool-proof measures that can help the banks contain the incidence of bad debts.

    At the risk of sounding immodest, Popoola said what banks need to do to reduce the incidence of bad debts is to be more circumspect in the way they spread risks.

    “Most of the toxic debts within the banking sector happened because they were done without proper due diligence analysis as it were. But that can be taken care of with our products and services like I-CON Plus, which can help to build a good credit industry.”

    Echoing similar sentiment, Mrs. Peggy Chukwuma-Nwosu, Haed of Sales and Marketing at CRC Credit Bureau Limited, who gave a presentation on CRC Credit Monitors: Useful Tools to better manage Customer Loans, disclosed that the different products developed by her organisation rsets on the wing of technology.

    Specifically, she said, the CRC Prospector, which is one of her company’s offerings, “Provides alternative contact information of customers you can no longer reach.”

  • CBAN improves access to credit

    The Central Bank of Nigeria (CBN) and International Finance Corporation (IFC) have praised the Credit Bureau Association of Nigeria (CBAN) for their contribution towards improving access to finance in the country.

    This was disclosed at the third National Credit Reporting Conference organised by CBAN on Wednesday in Lagos.

    Speaking at the event, CBN Governor, Godwin Emefiele, who was represented by CBN Branch Controller, Lagos, James Omebere Tyari, said the success of credit reporting underpins the stability and economic development of Nigeria has the dangers of Non-Performing Loans (NPL) are a major threat to the stability of our financial system.

    “The quantum leap in data captured by private credit bureau operators has contributed in no small way to the successes recorded in improving the financial environment and access to credit, which has improved the standard of living of Nigerians.”

    IFC Lead Financial Sector Specialist, Mrs. Luz Maria Salamina, who was represented at the event by Ubong Awah stated that a well-developed credit infrastructure is critical to ending poverty and promoting shared prosperity.

    CBAN Chairman and MD/CEO of Credit Registry Services, Mrs. Jameelah Sharrieff-Ayedun expressed optimism that the contribution of the credit bureau segment of the financial services sector will have immense impact on the growth of the economy. She said: “I strongly believe we will consolidate on past successes, enhance the promotion of regulations and policies that will improve access to credit, deepen our strategic business ties and grow the credit bureau segment, financial services sector and Nigeria will get better for it.

  • MAN frets over pending letters of credit

    MAN frets over pending letters of credit

    The Manufacturers Association of Nigeria (MAN) supports the  new flexible Foreign Exchange (forex) regime introduced by the Central Bank of Nigeria (CBN), but the question of who bears the loss by manufacturers from pending Letters of Credit (LCs) opened before the new forex regime remains an issue, the Director-General, MAN, Remi Ogunmefu, has said.

    He spoke on the sideline of the “Business Luncheon for Managing Directors/CEOs” organised by the Ikeja branch of MAN in Lagos, last week.

    This year’s edition with the theme: “Manufacturing in a depressed economy: The way forward,” was to X-ray the challenges facing manufacturers, particularly under the forex regime to proffer solutions.

    Ogunmefu expressed optimism that the new flexible forex policy announced by the CBN would work, which was why manufacturers should support it, “because it has opened the market and it’s going to be transparent and beneficial to members of MAN who will now get forex”.

    He, however, said the only thing that is still an issue for manufacturers is who bears the loss from standing LCs before the new regime.

    LC is a document issued by a financial institution, or a similar party, assuring payment to a seller of goods or services provided certain documents have been presented to the bank. The LC serves as a guarantee to the seller that it will be paid regardless of whether the buyer ultimately fails to pay.

    It ensures that the risk that the buyer will fail to pay is transferred from the seller to the letter’s issuer. The letter can also be used to ensure that all agreed standards are met by the supplier, provided that these requirements are reflected in the documents described in the letter of credit.

    Ogunmefu said before the new forex regime that replaced the June 2015 CBN monetary policy, which barred importers of 41 items that can be sourced locally from having access to its official forex), manufacturers had standing LCs, which they opened with their bankers for the supply of critical inputs for production. The challenge for manufacturers now, he said, was how they will cope with the loss.

    The Nation learnt that before CBN’s forex restriction last year, it took about a week or a maximum of one month for banks to convert LC’s into the equivalent of the forex required by importers and manufacturers to import or carry out transactions.

    But because the volume of foreign currency available for business transactions seriously reduced on account of the forex restriction, most banks insisted that customers must pay the full value of what they are importing within 48 hours before their LCs could be attended to. As a result a lot of LCs was left standing, unattended to.

    With the introduction of the new flexible forex policy, Ogunmefu said manufacturers with standing LCs now have cause to worry. All the standing LCs before this new forex regime who is going to bear the loss?” he asked, noting that it is an issue MAN will be discussing with the CBN Governor Godwin Emefiele as time goes on, “because manufacturers had already concluded the deals and the LCs had been opened.”

     

  • Fitch cuts MTN’s credit rating

    MTN Group Ltd.’s credit rating was cut one level by Fitch Ratings Ltd. because of the increased risk that Africa’s largest phone company faces in its two biggest markets, Nigeria and South Africa.

    The rating was cut to BBB-, Fitch Ratings said in a statement on Thursday. The outlook was raised to stable from negative.

    In Nigeria, Africa’s largest economy, the telecommunications regulator has fined MTN $3.9 billion for failing to switch off unregistered mobile-phone customers, which was revised down from an original penalty of $5.2 billion. South Africa’s credit rating was cut by Fitch last week because of a worsening growth outlook that threatens fiscal credibility.

    ”These changes result in increased credit risk to MTN given its reliance on emerging markets and its exposure to South Africa and Nigeria, in particular,” Damien Chew, an analyst at Fitch, said in the statement. “An upgrade is unlikely in the short term due to MTN’s significant exposure to countries with high political and regulatory risk.”

  • Bharti Airtel secures $22b credit line

    Bharti Airtel secures $22b credit line

    Chinese banks have granted $2.5billion in credit lines to Bharti Airtel, the Indian telecoms group, in one of the biggest Beijing-backed financings for an Indian group to date.

    The $22billion in business deals was signed during Indian Prime Minister Narendra Modi’s visit to China.

    In meetings with President Xi Jinping and other Chinese leaders, Mr Modi sought to strengthen commercial ties between India and its more prosperous neighbour as well as ease tensions over their disputed 4,000km Himalayan border. China had already promised $20billion of infrastructure during Mr Xi’s visit to India last year.

    “We are very keen to develop the sectors where China is strong, We need your involvement. The scope and potential, the breadth and length of infrastructure and related developments is very huge in India,” Mr Modi told Indian and Chinese business executives in Shanghai.

    According to Financial Times, Airtel said it had agreed a $2billion credit line from China Development Bank (CDB)— which it called the single largest bilateral commitment by CDB to any telecoms operator globally and the largest to a private Indian company — and a further $500million from Industrial and Commercial Bank of China. Loan maturities extend up to nine years.

    “These financings further complement the strong collaboration with Chinese partners,” said Bharti Airtel, which announced a “strategic collaboration” with China Mobile in March. Bharti is already sourcing equipment from Chinese equipment makers Huawei and ZTE, putting the new lines of credit squarely within China’s existing practice of financing projects overseas that enable business for Chinese companies.

    The deal is one of the first since CDB’s capital injection last month, with a mandate to finance projects under Mr Xi’s “one belt, one road” initiative to promote Chinese industry overseas.

    Other big Indian groups that have benefited from Chinese bank credit include Essar Oil and the Reliance group of Anil Ambani, which secured a $1.2billion loan from three Chinese banks, including CDB, in 2012.

    Among other agreements signed during Mr Modi’s visit, India’s Adani Group and China’s Golden Concord Holdings said they would set up an integrated solar photovoltaic industrial park, while Welspun Energy of India signed a memorandum of understanding (MoU) with China’s Trina Solar for the production of photovoltaic cells and panels.

    Mr Modi’s government, elected a year ago, has announced ambitious plans to install 100 gigawatts of solar electricity capacity by 2022.

    “India is ready for business,” Mr Modi said in China before heading to its northern neighbour Mongolia. “I strongly believe that this century belongs to Asia.”

    In Mongolia, he announced a $1billion line of credit for the country, upgraded bilateral relations to a “strategic partnership” and called Mongolia “the new bright light of democracy in our world”.

    Mongolia is an active democracy and has had several peaceful transfers of power between parties since the fall of the Soviet Union, which is unusual among soviet satellite states.

    Trade and other ties between India and China have been surprisingly thin since Silk Road traffic slowed 1,000 years ago but have quickened in recent years as India taps Chinese financing and engineering for its infrastructure needs.

    The two countries also signed a joint accord on climate change, reminiscent of the agreement signed between the US and China in November. India and China called for developing countries to fulfil pledges of financing and technology transfer. Neither China nor India has yet submitted its detailed commitments ahead of an international climate change meeting in Paris in December.

  • Stanbic IBTC secures $90m credit

    Stanbic IBTC secures $90m credit

    Stanbic IBTC Bank has concluded a $90 million credit facility from the FMO (Nederlands eFinancierings Maatschappijvoor Ontwikkelingslanden N.V).

    The purpose of the facility is for Stanbic IBTC Bank to end to small and medium sized companies for the financing of projects in the infrastructure sector, which include agriculture, oil and gas, power, ports, telecoms and others.

    The facility which will run for a term of five years was provided to Stanbic IBTC Bank by FMO along with European Financing Partners (EFP) and DEG – Deutsche Investitions- und EntwicklungsgesellschaftmbH).

    The primary lender, FMO, is a Dutch development bank that was established in 1970 by the Dutch government, commercial banks, the national employers’ association, labour unions, and private investors, in order to make investments in private sector projects within developing countries and emerging markets. FMO is present as a development finance partner in over eighty different developing countries and emerging markets around the world.

    The company’s mandate is to provide long term capital for projects in these countries. Thereby, maximising development impact with a methodology designed to ensure that FMO’s return on investment is not just financial but also has positive environmental and social effects.

    The secondary lender, DEG, is a subsidiary of KfW andone of the largest European development finance institutions. For more than 50 years, DEG has been financing and structuring the investments of private companies in developing and emerging market countries.

  • Foreign varsities designate Onalo professor of credit management

    Foreign varsities designate Onalo professor of credit management

    Professor Chris Onalo, Registrar/Chief Executive Institute of Credit Administration (ICA), has been designated a professor of credit management by two prestigious universities including the American University of London, UK and the International University of Panama, (IUP)in the Republic of Panama.

    The recognition by the two universities is coming three months after the London Postgraduate Credit Management College (LPCMC) UK, in collaboration with its affiliate universities appointed Onalo as professor of credit management.

    In two separate letters of recommendation signed on behalf of the American University of London by its President, Prof. Michael Nimier and his counterpart at the International University of Panama, Prof. Dr. Jorge Laurencena, they acknowledged Onalo’s unparallel commitment towards the growth of credit and financial management in Nigeria, and the globe at large as what earned him the well-deserved recognition.

    Specifically, Professor Nimier said, considering the enormous contribution to the body of knowledge in the area of credit management, Onalo has earned his place in the history as someone whose interest in the development and growth of credit management is unwavering and therefore worthy of recommendation.

    On his part, Professor Laurencena said the governing council of IUP was persuaded to recommend Onalo for professorship owing to his industry and devotion to the scholarly growth and development of credit management.

    The governing council of IUP, Laurencena said, would formally recognise Onalo on June 10th 2015, in Panama.

  • Credit bureaux patronage rises by 25%, says operator

    The Central Bank of Nigeria (CBN) policy mandating banks to use at least two credit bureaux for credit approvals has boosted patronage by over 25 per cent, Managing Director of CRC Credit Bureau Ltd Tunde Popoola has said.

    He said since the policy became effective, banks have seen  showing interest in what is going on between them and the credit bureaux.

    According to him, this has also shown how committed the CBN is to making sure that there is success for credit bureau operations.

    He said: “It has been very significant, I must tell you. Since August last year, we got to daily threshold of usage that we have not had for a long time. That showed us that banks take the policy very seriously. So, that has led to significant improvement in relationship between us. We now have banks showing interest in collecting data, updating data. Even the ease with which they submit data now has increased. Every bank should submit data not later than five days after month-end. The numbers of institutions that are submitting data now have increased tremendously. It cannot be less than 25 per cent increase in the number of institutions and volume of transactions.”

    He said the competition in the sector was healthy. “As you know, lenders are known. It is a market that everyone knows. What we are trying to do is focus in the formal market, which are the regulated segment of the market, which are commercial banks, merchant banks, the leasing companies, microfinance banks, primary mortgage institutions. So, the competition has been very keen around that area. So, we are competing for all these institutions.

    “But the issue has been how  innovative you been as a credit bureau. Can these people be able to access your platform? How long does it take them to be able to download information from your platform? What is the level of your relationship management? How easy is it for them to reach you, or for you to reach them?

    “And again, the quality of your report and depth of information they get from your platform, which have to do with the quantum of information you have and the number of institutions that are submitting information to you.

    “These are what constitute competitive edge for us at CRC. For us, we have a much more robust credit information report that is rounded and comprehensive.”

    According to Popoola, the company has produced significant products to support our customers.

    He said: “We have prided ourselves as the market leader, and we are focusing on thoughtful leadership. We want to be in the mind of everybody. We have moved from just collecting information from regulated entities to non-formal sectors. So, you se some level of patronage from corporative societies, pharmaceutical companies, among others.”

  • ‘Why credit bureau patronage is rising’

    The Managing Director, CRC Credit Bureau Limited, Tunde Popoola has said Central Bank of Nigeria (CBN’s) policy mandating banks to use at least two credit bureaux for all credit approvals has boosted patronage by over 25 per cent.

    He said since the policy became effective, top management of banks have demonstrated their interest on what is going on between the banks and credit bureaux.

    This, he added, has also shown how committed the CBN is to making sure that there is success for credit bureau operations.

    “It has been very significant, I must tell you. Since August last year, we got to daily threshold of usage that we have not had for a long time. That showed us that banks take the policy very seriously. So, that has led to significant improvement in relationship between us.

    “We now have banks showing interest in collecting data, updating data. Even the ease with which they submit data now has increased. Every bank should submit data not later than five days after month-end. The numbers of institutions that are submitting data now have increased tremendously. It cannot be less than 25 per cent increase in the number of institutions and volume of transactions,” he said.

    He said the competition in the sector is very healthy.

    He said: “As you know, lenders are known. It is a market that everyone knows. What we are trying to do is focus in the formal market, which are the regulated segment of the market, which are commercial banks, merchant banks, the leasing companies, microfinance banks, primary mortgage institutions. So, the competition has been very keen around that area. So we are competing for all these institutions.

    “But the issue has been how you have been how innovative have you been as a credit bureau. Can these people be able to access your platform. How long does it take them to be able to download information from your platform. What is the level of your relationship management. How easy is it for them to reach you, or for you to reach them?

    “And again, the quality of your report and depth of information they get from your platform, which have to do with the quantum of information you have and the number of institutions that are submitting information to you. These are what constitute competitive edge for us at CRC. For us, we have a much more robust credit information report that is rounded and comprehensive.”

    According to Popoola, the company has produced significant products to support our customers.

    “We have prided ourselves as the market leader, and we are focusing on thoughtful leadership. We want to be in the mind of everybody. We have moved from just collecting information from regulated entities to non-formal sectors. So, you se some level of patronage from corporative societies, pharmaceutical companies, among others,” he said.