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Tag: Emefiele

  • Foreign direct investment rising, says Emefiele

    Foreign direct investment rising, says Emefiele

    •Foreign reserves hit $38.2b

    Central Bank of Nigeria (CBN) Governor Godwin Emefiele has said the restriction of foreign exchange access for 41 items has led to massive foreign capital inflow.

    Inaugurating Unilever Nigeria’s 10 million Euros Blueband factory in Agbara, Ogun State, yesterday, Emefiele said that global confidence in the economy was rising, with  investors finding Nigeria’s market irresistible.

    Emefiele said the economy was witnessing positive feedback from foreign investors who are seeing great potentials in it. “We are singing positive songs. We have seen growth in Gross Domestic Product (GDP), inflation has dropped while we continue to take impressive steps to strengthen the economy,” he said.

    The CBN boss also said foreign exchange reserves had climbed nearly three-year high at $38.2 billion, as more investors key into the opportunities presented by the Investors’ & Exporters Forex Window created in April. The foreign reserve rose to current position from its low of $23 billion in October 2016. He said the I&E Forex window has attracted over $10 billion investment inflows since inception.

    Emefiele described the factory as part of the feedback from foreign investors whom he had  encouraged to begin production in the country to create jobs and empower the people.

    He said Nigeria cannot continue to create jobs in other countries, and shutting down local factories, as is the case when local raw materials that should be produced locally are imported.

    The CBN boss was “very delighted” by the project. He said: “Nearly two years ago, we restricted forex access for 41 items and we were criticised. Before that time, Unilever had a factory producing Blueband Magarine which was also part of the 41 items. And the managing director and the entire management team visited me in Abuja, asking that we grant the company some forbearance and I said there was not going to be any forbearance.”

    “But they promised to re-establish that factory in Nigeria because the factory was dismantled in Nigeria and taken to another country. And he made a promise that within 12 to 18 months it will re-establish the factory in Nigeria. And based on that, we granted them some form of forbearance that made them to be able to import into Nigeria. But we were discussing. The managing director, Unilever Nigeria Plc., Yaw Nsarkoh, is a man of his word and that is why we are commissioning this factory today”, he added.

    Emefiele explained that by re-establishing the factory, the company creates direct jobs for Nigerians and also creates indirect jobs because the company buys palm oil used to produce the product from Nigerians. “By doing that, the company feeds thousands and millions of people. We do not have foreign exchange to import products that can be produced in Nigeria. When they create jobs, they save the country foreign exchange. They are doing 10,000 metric tonnes per annum and promise to raise it to 50,000 metric tonnes per annum later,” he said.

    Emefiele said:  ”The promise I have made to Unilever and other companies is that if there is any foreign investor that wants to re-establish companies that left the country, we will support them to do so. We are ready to support you because you are going to create jobs for the people. Creating jobs is not just the function of the government; private sector has to also play a major role.”

    Managing Director, Unilever Nigeria / Ghana, Yaw Nsarkoh, said Unilever is a long-term investor, adding that when other companies were leaving the country, it was busy thinking of boosting its investment.

    The factory has capacity to produce 10,000 metric tonnes of blueband magarine. There are plans to raise it to 50,000 metric tonnes. “We are building a competitive ecosystem. We want to empower Nigeria’s industrial base,” Nsarkoh said.

     

  • Emefiele is best CBN Governor ever, says Ovia

    Emefiele is best CBN Governor ever, says Ovia

    Zenith Bank Plc Chairman Jim Ovia has described Godwin Emefiele as the best governor the Central Bank of Nigeria (CBN) has ever had.

    Ovia spoke at the 47th convocation of the University of Nigeria, Nsukka (UNN) in his acceptance speech on the conferment of Honorary Degree of Doctor of Business Administration (DBA) (Honoris Causa) on him by the university. Ovia and Emefiele are alumni of the UNN.

    Ovia described Emefiele as one of the shinning lights of UNN who had continued to make the institution proud.

    He said Emefiele’s achievements at the CBN had put him ahead of his peers.  “As the present Governor of the Central Bank of Nigeria, Godwin Emefiele’s performance and current results arguably puts him as the best central bank governor in the history of Nigeria. These performances are no doubt due to the excellent training he received at the University of Nigeria, Nsukka,” he said.

    The Zenith Bank Chairman said Emefiele’s tenure as the Chief Executive Officer and Group Managing Director of Zenith Bank Plc was marked by excellent performance and growth in profitability for the Tier-1 lender.

    “I can attest that this university is indeed a training ground for capable, committed, and compassionate change agents, having witnessed firsthand, the quality of a product of this institution, in the person of Dr. Godwin Emefiele, who was the Chief Executive Officer and Group Managing Director of Zenith Bank Plc., between July, 2010 and May, 2014. During which time the bank witnessed exponential growth and phenomenal profitability,” he said.

    The Zenith Bank chairman said: “I am truly honored and humbled to accept this honorary doctoral degree from the great Den of the Lions – the University of Nigeria, Nsukka – on this auspicious occasion of your 47th convocation ceremony. In this regard, I sincerely thank the Vice Chancellor, the Council and the Senate of this great and noble institution for bestowing on me this Honorary Doctoral Degree of Business Administration,” he said.

    He described UNN as a center of excellence and institution that has produced industrious individuals in the private as well as public sectors of this country. The UNN, he added, remains a training ground for change agents and highly successful leaders of thought.

    “In my role at the helm of one of the leading financial institutions in the country, I have had the privilege of meeting several alumni of this great university. The “Lion” appears as a symbol of strength on the university banner. In reality and particularly in the corporate steeple chase, the lions have always devoured their prey and beaten their competitors to the game. I’m always lucky to be on their side,” he stated.

  • Inflation drops by 15% in 11 months, says Emefiele

    Inflation drops by 15% in 11 months, says Emefiele

    The Governor of Central Bank of Nigeria (CBN), Mr. Godwin Emefiele has said inflation rate declined by about 15 per cent over the past 11 months as fiscal and monetary reforms continue to impact positively on the Nigerian economy.

    Delivering the 47th Convocation Lecture of the University of Nigeria, Nsukka, (UNN) entitled “A Mindset for Succeeding in Today’s Nigeria” yesterday, Emefiele pointed out that inflation had declined from a peak of 18.7 per cent in January 2017 to 15.9 per cent in November.

    The apex bank chief lauded the improvements in the macro economy noting that the Gross Domestic Products (GDP) recovered after five quarters of continuous contraction, recording positive growth of 0.7 per cent and 1.4 per cent respectively in second and third quarters of 2017.

    He added that the exchange rate has appreciated significantly from N525/$1 in February 2017 to about N360/$1 now, tapering premium across various windows and segments of the market.

    “Foreign exchange supply has improved since the establishment of the Investors & Exporters Window, with autonomous inflows of over $10 billion through this window alone from April 2017 to date. Foreign Exchange Reserve has recovered significantly from a low of just over $23 billion in October 2016 to about $35.2 billion by November 27, 2017,” Emefiele said.

    He pointed out that the World Bank’s “Doing Business Indicators” for 2018 indicated improvement in Nigerian macro economy as Nigeria rose by 24 places to rank 145 out of 190 countries.

    According to him, there has been a significant boost in local production, which is due to CBN’s development finance efforts and the dogged implementation of its foreign exchange policies.

    “Today many local manufacturers are reporting major boosts to their revenue and profit,” Emefiele said.

    Emefiele said that the growing Nigerian population presents additional opportunities for economic empowerment for Nigerians.

    He noted that Nigeria is now estimated to have a population of over 180 million people and this population is predicted by the United Nations to grow to 398 million people in 2050, which would make Nigeria, the third largest in the world by that time.

    According to him, the population trend presents a significant opportunity for Nigerian graduates to turn whatever challenge they may be facing into opportunities that can harness these demographic shifts.

    “Imagine what would happen if Nigeria and Nigerians cannot provide food, shelter, clothing, health, education, and other basic things for this teeming population. Even though these trends should already begin to bother current leaders in our country today, I believe that young Nigerians can begin today to see these trends as opportunities and think of what they can do take advantage of the situation,” Emefiele said.

  • Interest rate will come down in 2018, says Emefiele

    Interest rate will come down in 2018, says Emefiele

    •$40b foreign reserves targeted

    For the first time in 16 months, the Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, on Friday night, hinted on possibility of lowering interest rate in the New Year.

    The CBN boss spoke at the 2017 Annual Bankers’ Dinner organised by the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos, on the positive economic outlook expected in 2018.

    He explained that monetary policy stance could change in 2018 when the underlying fundamental such as drop in inflation becomes more supportive. The CBN boss did not say how low the interest rate could drop in 2018.

    The CBN had at the peak of rising inflation, embarked on a cycle of tightening with Monetary Policy Rate (MPR)-the benchmark interest rate hiked in July 2016 from 12 per cent to the present 14 per cent.

    “If the pace of disinflation becomes adequate and we see inflation at predicted levels, I am very optimistic that Monetary Policy Committee (MPC) may begin to see strong justification for an easing of monetary policy, which may further accelerate the recovery process,” Emefiele said.

    Speaking on the theme; Policy Options for Sustaining Nigeria’s Economic Upturn, he said that from a peak of 18.72 per cent in January 2017, headline inflation recorded eight straight months of disinflation, with the rate declining to 15.98 in September.

    During this period, core inflation and imported food inflation, similarly fell from 17.90 per cent and 20.95 per cent, respectively, to 12.12 per cent and 14.83 per cent.

    He said the country has also seen a significant appreciation of the naira from over N500/$1 to about N360/$1. “In addition, we have seen stability in the rate for over six months now. I am glad to note that the exchange rate is not only stable, it is also converging across various windows and segments of the market,” he said.

    The CBN boss disclosed that since the establishment of the Investors’ & Exporters’ Forex Window, $10 billion has been recorded in autonomous inflows through the window. This, he said, reflected the effect of the increased transparency which that window accorded the forex market and its benign impact of improving investor confidence and business sentiments.

    He said that foreign reserves have recovered significantly from a low of just over $23 billion in October 2016 to over $34.3 billion as of November 3, 2017.

    “The accretion in reserves does not only reflect increased inflow but also our shrewd forex demand management strategy. When we introduced a policy restricting 41 items from our forex markets, we were called all manners of names. Today ladies and gentlemen, among the benefit of that policy is the considerable decline in our import bills. From an average of about $5.5 billion, our monthly import bill has fallen consistently to $2.1 billion in 2016 and $1.9 billion by half year 2017,” he said.

    According to him, the All-Share Index (ASI) and market capitalization recorded 32.10 and 32.30 per cent, respectively, to 35,504.62 and N12.24 trillion as at August 31, 2017 from the end-December 2016 levels.

    Due to the dogged implementation of our forex restrictions on certain items, the CBN recorded spectacular improvements in domestic production of most of these items. Local manufacturers are reporting 20 major boosts to their revenue and profit due to the policy.

    The apex bank boss said the CBN will strive to sustain the pace of recovery in the economy. He said that Nigeria’s import bill may have fallen but manufacturing and agriculture sectors still have a long way to go if we must attain self-sufficiency in those sectors.

    He said forex Reserves will continue to grow. “Over the last 12 months Nigeria’s forex reserves grew by over $10 billion from just over $23 billion in October 2016 to over $33 billion in October 2017. It is my belief that if we remain resolute with our efforts, policies and actions we can attain a forex reserve position of about $40 billion by end 2018.”

    On the sustenance of exchange rate stability, he explained that as the CBN entrenches and sustains the transparency in the forex market, as forex reserves accretion continues, and market confidence and improved sentiments remain, the exchange rate will not only be stable but would begin to appreciate against major currencies.

    Read Also: IMF: banks must recapitalise

  • Emefiele wins Forbes Achievement Award

    Emefiele wins Forbes Achievement Award

    Forbes has given the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, the 2017 ‘Best of Africa Achievement Award’

    The Chief Executive Officer, Corporate Council on Africa, Florizelle Liser, said Emefiele merited the honour because the body is happy to see the work that is being done on the Ease of Doing Business in Nigeria and “we believe they are going to pay off,” adding, “many of our members welcome it as an opportunity to see how they can trade more with Nigeria and invest more in Nigeria.

    “So, we thank you (Emefiele) for your efforts. We note that you have a number of agricultural related businesses and seen that there is large support for agricultural development in Nigeria at this stage.”

    While presenting the award, the CEO Forbes Business Solutions, Mike Furlong, said the award was to let the CBN chief know that each year, Forbes Emerging Markets honours a person whose achievements falls within the mission of our organisation, which is to promote further investment in Africa by United States investors.

    He listed past winners to include Aliko Dangote, Obama’s Chief of Staff, Bill Delly, adding that today, “we are honoured to welcome Godwin Emefiele to join that club”.

    Responding after receiving the award, Emefiele thanked Forbes for finding him worthy of receiving the award, tagged: “Best of Africa” on behalf of the Central Bank of Nigeria.”

    Emefiele said it was most important to thank Nigerians for standing with “us particularly during the very difficult times. I say difficult times then, although I make bold now to say we are out of it. Like you all know, the last three years have been tumultuous not just for Nigeria but the global economy, arising largely from the external shocks that hit, particularly the commodity exporting countries.”

    The shocks, he pointed out, led to the plummeting of Nigeria’s reserves as crude oil price fell to a point where it dropped by February 2016, “to as low as $28 per barrel. If you compare this price to the time when it averaged $100 per barrel for five straight years from 2009 to middle of 2014, you will all agree with me that we have gone through a lot.”

    He said another shock that hit Nigeria like other countries was the United States normalisation to the point that in the last quarter of 2016, about $40 billion left emerging and frontier markets back to US. He said geopolitical tensions also affected flow of funds, including Nigeria, and these, he pointed out, climaxed when “we recorded negative growth. It also got to a point in the third quarter of 2016 where we got negative 2.3 per cent. We also saw inflation hitting us badly. By January 2016, inflation was just nine per cent, but by January 2017, prices have gone up and inflation had hit up to 18 per cent and Nigerians no doubt became uncomfortable.”

    At this point, the CBN chief said, “we at the Monetary Policy Committee felt that at this level, something needed to be done. In a study at the CBN, we came to a conclusion that at the level it would be difficult to stimulate growth. So we decided to take inflation head on.

    “We are happy today that we are doing about 16 per cent now and it would be tamed with other policies in place.”

    He also spoke on the reserves. By June 2014, Nigeria’s reserves stood at about $37 billion. As a result of the shock, by October 2016, with all the measures we have taken, it dropped to about $23 billion,

    “We felt that having taken all the measures so far- currency adjustments three times from N155 to N168 to N197 and above N200, and February this year, a section of the market hit N525, we said something had to be done. But I am happy today that we are here.”

    Emefiele praised the foreign investor community for being very supportive, saying “we took some of the decisions that they didn’t like, but I know that we have taken one this time around that excited them. The opening of the Investors’ & Exporters’ Forex Window has been particularly exciting to them.”

    He said that in six months, the window has attracted about $10 billion in inflows into Nigeria. “We feel so grateful to them for showing the confidence in Nigeria again. But I think all this also is because President Muhammadu Buhari has always said that: we had unfortunately been hit by this exogenous shock and it had resulted in inflation and plummeting in reserves, but that we needed at some point to look at the items Nigeria imports into the country,” he said.

    Emefiele said Nigeria is a big market with 180 million people growing at an average population rate of three per cent annually. “There was a time in Nigeria when we produced everything we were eating. We were producing rice, palm oil etc. Nigeria was the highest producer and exporter of palm oil in the world with over 40 per cent market share sometimes in the 60s and 70s. But unfortunately because we found oil, we decided to take things easy”.

    We are delighted we put FX restriction on 41 items and that has increase patronage for local goods.

    “Today, companies that require starch and glucose for their pharmaceuticals and formulations patronise Nigerians. This has created jobs for us. That is the spirit of Nigerians. This is part of the reasons the President said we needed to patronise Made-in-Nigeria and I am happy that we are doing this. But I think it is also important that we thank everybody, particularly Nigerians. Yes, we have just managed to exit the recession with a fragile growth of 0.5 per cent; we have seen inflation trending downwards, we have seen exchange rate and reserves looking stronger and firmer. But I think we are determined to continue to push further to see to it that Nigeria returns to its historical growth path”.

    He said the new commitment to support agricultural development, will help reduce unemployment.

    “Countries that have progressed have done so because they took the agriculture sector very seriously. We are determined to make agriculture the sector where people make money and we have decided to put in place the Anchor Borrowers Programme. Before we introduced the ABP, farmers go to farm rice and all the yield they were getting was one to 1.5 metric tonnes per hectare”.

    “After we started the ABP, today we are beginning to see farmers getting yield as high as eight metric tonnes per hectare, reducing their costs and making it possible to make their money in rice cultivation. We have seen that there is a need for us to thing about how do we improve the wealth of our rural community. We started that journey and through rice, we have achieved that,” he stated.

    The award ceremony which held on Thursday in Washington D.C, the US capital, was attended by Deposit Money Bank chief executives, including the Managing Director/CEO of Diamond Bank Uzoma Dozie, that of FirstBank of Nigeria, Dr,.Adedotun, Asset Management Corporation of Nigeria’s CEO, Ahmed Kuru, former US Ambassador to Nigeria, Sarah Sanders, the Economic Adviser to the President, Dr. Dipeolu and other  leaders in private and public sectors and Nigerians in Diaspora.

  • FG’s 360,000 jobs for youth ready soon, says Emefiele

    FG’s 360,000 jobs for youth ready soon, says Emefiele

    Central Bank of Nigeria governor, Mr Godwin Emefiele, yesterday explained how President Muhammadu Buhari’s promise to provide 360,000 jobs for youths nationwide will be actualised.

    Emefiele told stakeholders at a meeting on the operational framework for the Accelerated Agricultural Development Scheme (AADS), under which the jobs will be created, that the scheme was targeted primarily at unemployed youths between the ages of 18 and 35.

    Emefiele said through the scheme, a minimum of 10,000 youths in each state, willing to engage in sustainable and profitable activities along the agriculture value chain, would be employed and trained.

    He said: “I believe we are on the verge of something very significant with the AADS.

    “This scheme has been designed to create an ecosystem with the active participation of the public sector, state governments and the private sector.”

    Emefiele said the objectives of AADS included the creation of economy of scale of farming on contiguous land.

    “It will also assist farmers in embracing modern farming practices, such as use of tractors and irrigation schemes.

    “It aims to reduce cost of production with availability of high quality inputs at competitive prices and lowering delivery cost of extension services,” he explained.

    Emefiele said that state governments were expected to provide contiguous arable land, basic infrastructure, more efficient extension services, training and mentoring of the beneficiaries.

    “The CBN on its part will provide financing at single digit interest rates.

    “Beneficiaries are not expected to come up with any physical collateral but they must be grouped into formally registered cooperatives and cross-guarantee each other.

    “All loan beneficiaries must also have valid Bank Verification Numbers (BVN), which will be registered on the National Collateral Registry and used to track repayments and also blacklist any defaulters.”

    Emefiele said that with the release of the operational framework for the scheme, engagements with stakeholders would be continuous to ensure that the scheme began during the dry season cultivation of the outgoing year.

    Agriculture Minister Audu Ogbeh, said the Federal Ministry of Agriculture and Rural Development would be providing technical support for the project.

    “We will be fully involved in the land clearing aspect of the project. In some places we will also be building dams and lakes to ensure all season farming.

    “We will also provide advice because we have a team of experts at the ministry on crops, soil testing and the right kind of fertiliser so that when these young people go into agriculture, they won’t lose money,” he said.

    The Governor of Kebbi, Mr Atiku Bagudu, thanked the Federal Government for recognising the significance of agriculture in economic development.

    “We could not have recovered from recession as early as we did if not for the intense agricultural intervention initiated by President Muhammadu Buhari,” he said.

    Bagudu also stressed the need to involve financial institutions whose banking models allow to support agriculture for the programme to succeed.

  • FG’s 360,000 jobs for youths ready soon – Emefiele

    FG’s 360,000 jobs for youths ready soon – Emefiele

    The Central Bank of Nigeria (CBN) governor, Godwin Emefiele, on Friday explained how President Muhammadu Buhari’s promise to provide 360,000 jobs for youths nationwide, will be actualized.

    Emefiele told stakeholders at a meeting on the operational framework for the Accelerated Agricultural Development Scheme (AADS), under which the jobs will be created that the scheme was targeted primarily at unemployed youths between the ages of 18 and 35.

    The CBN governor said through the scheme, a minimum of 10,000 youths in each state, willing to engage in sustainable and profitable activities along the agriculture value chain, would be employed and trained.

    “I believe we are on the verge of something very significant with the AADS.

    “This scheme has been designed to create an ecosystem with the active participation of the public sector, state governments and the private sector,’’ he said.

    Emefiele said the objectives of AADS included the creation of economy of scale of farming on contiguous land.

    “It will also assist farmers in embracing modern farming practices, such as use of tractors and irrigation schemes.

    “It aims to reduce cost of production with availability of high quality inputs at competitive prices and lowering delivery cost of extension services,’’ he stated.

    Emefiele said state governments were expected to provide contiguous arable land, basic infrastructure, more efficient extension services, training and mentoring of the beneficiaries.

    “The CBN on its part will provide financing at single digit interest rates.

    “Beneficiaries are not expected to come up with any physical collateral but they must be grouped into formally registered cooperatives and cross-guarantee each other.

    “All loan beneficiaries must also have valid Bank Verification Numbers (BVN), which will be registered on the National Collateral Registry and used to track repayments and also blacklist any defaulters,” he added.

     

     

  • Emefiele: why we retained interest rate at 14%

    Emefiele: why we retained interest rate at 14%

    The Central Bank of Nigeria (CBN) retained the  benchmark interest rate at 14 per cent to enable it achieve more clarity in the evolution of key macroeconomic indicators, the Governor, Godwin Emefiele, said yesterday.

    The apex bank’s chief who spoke at the close of the Monetary Policy Committee’s (MPC’s) meeting in Abuja, listed the indicators that influenced the decision to include budget implementation, economic recovery, exchange rate, inflation and employment generation.

    He said the effects of the fiscal policy measures taken to stimulate the economy had begun to manifest as evident in the exit of the economy from the 15-month recession.

    He said the MPC voted to retain the Monetary Policy Rate (MPR) at 14 per cent; the Cash Reserve Ratio (CRR) at 22.5 per cent; the Liquidity Ratio at 30.0 per cent, while   retaining the Asymmetric corridor at +200 and -500 basis points around the MPR.

    “Although still fragile, the fragility of the growth makes it imperative to allow more time to make appropriate complementary policy decisions to strengthen the recovery,” pointing out that the Committee was of “the view that economic activity would become clearer between now and the first quarter of 2018, when growth is expected to have sufficiently strengthened and gains in receding inflation, very obvious.”

    He held the view that the most compelling argument for holding interest rate at 14 per cent, “was to achieve more clarity in the evolution of key macroeconomic indicators, including budget implementation, economic recovery, exchange rate, inflation and employment generation.”

    On what will warrant a change of interest rate, Emefiele said, “monetary policy authorities in a year, if they must change their stance will not do it for more than  once or twice, so there is nothing wrong or extraordinary in the MPC holding positions constant for a considerable length of time.”

    In retaining the MPR at 14 per cent, he said: “We started 15 months ago at a point where growth was decelerating, inflation had doubled from nine per cent to 18 per cent in January 2016 to January 2017, we saw the risks in foreign exchange markets and the massive depreciation that happened in the foreign exchange market at a point the market was at about N525 to the dollar.

    “But by virtue of the fact that we decided to hold position  (we had taken some tight monetary policy stance), we began to see that growth had started to improve all be it fragile at 0.55 per cent, inflation was moderating, although slowly to where it is now from about 18.7 per cent or so in January, to 16 per cent now, we’ve seen exchange rate appreciate from N525 in February to N360 at this time. What that means is that certain correct decisions had been taken and that there is a need for us to see how far we will begin to have positive effects of those decisions.”

    Emefiele also denied claims that the apex bank was overfunding the federal government. While reacting to a report that a member of the MPC had raised alarm that the apex bank was overfunding the government, he  said “the CBN has not overfunded the Federal Government,” saying “the Federal Government, on its own decided that all its funds that are in banks, in both local and foreign currency should be moved to the CBN, into the Treasury Single Account (TSA) like we all know.”

    Putting the issue into perspective, the CBN governor explained that “if as the customer of a bank you have fixed deposit in an account and for some reasons you want some spontaneous financing to meet your obligation, your own commercial bank can be approached and asked to allow the customer overdraw his account temporarily, your bank will oblige you. This has nothing to do with the CBN or any bank but the assurance I would like to give to you is that there is no truth in the initial story of overfunding because whatever is overdrawn is much less than what the federal government also has it CF account.”

    He assured Nigerians that the MPC “recognise that there is a need to deal with the issue of interest rate and we are very conscious of the need to bring down interest rates but we think we are not there yet because if we reverse the trend or if we do what most people expect, the truth is that it may reverse the gains we have so far achieved in exchange stability and moderation of inflation. That’s why we decided to wait and see how far we go in these areas.”

  • CBN worried over insider abuses in banks

    CBN worried over insider abuses in banks

    The level of insider abuses perpetrated by bank chief executives and other key stakeholders are worrisome to the Central Bank of Nigeria (CBN).

    CBN Governor Godwin Emefiele, who yesterday expressed the apex bank’s dismay over the level of corporate governance abuses perpetrated by the top echelon in banks, said the regulator would henceforth punish offenders.

    He spoke yesterday at this year’s edition of the CBN-Financial Institutions Training Centre (FITC) Continuous Education Programme for Directors of Banks and Other Financial Institutions.

    Emefiele, who spoke on the theme: “The Next Level of Corporate Governance Practice”, said fit and proper persons should be appointed into the boards of banks, adding that corporate governance is undoubtedly an essential pillar in financial system stability.

    He said the failure of banks’ boards in carrying out their oversight functions by checking management excessive risk taking, conflict of interest, undue concentration on short term gains and excessive executive compensation fundamentally affect the ability of financial institutions to meet their core mandates.

    To Emefiele, a safe and sound financial system is dependent on the quality of corporate governance practices, which in turn depends on the quality of the board of directors and their ability to discharge their responsibilities honourably.

    The CBN boss directed independent bank directors to rise up to their responsibilities and be the conscience of their institutions in the interest of depositors and minority shareholders. “Independent directors do not need to be friends of the managing directors. They can’t fire you but the CBN can remove you if you don’t do your job well,” he said.

    Emefiele said banking needed independent directors who “are bold, sound and experienced to do what we want them to do.”

    Emefiele said the CBN will get tougher on insider related loans, adding that many bank chiefs and executive directors borrow from the banks at very low interest rates.

    He said banks are not owned by shareholders who he said were simply used by God to establish them. He said depositors funds are 10 times higher than shareholders’ funds, hence the interest of the depositors should be paramount. “A bank managing director who feels he set up the bank has only been used by God to set up such bank. The real owners of the banks are depositors,” he said.

    In Emefiele’s view, even though shareholders are important to banking, the most important stakeholders are the depositors. “It is important for us to ensure we all protect them. That is why in the programme, we said that independent directors must remain independent and perform their roles and responsibilities, no matter how tough it is.  They have to look at insiders who are shareholders and tell them what is good and what is not right. Yes, we are going tough because it is a dynamic environment and we will continue to take drastic actions against that insider abuse,” he said.

    He spoke of a bank with 4.5 million depositors that the CBN is monitoring but has decided the lender will not be allowed to go down.

    “If we allow the bank to go down, how can we explain to the 4.5 million customers that their money is lost? The impact of such closure on the economy will be tough,” the CBN boss said.

    To him, running an efficient and sound bank is all about strong governance, adding that weak governance ensues when shareholders employ inexperienced or unenlightened people to run their banks.

    “Weak governance will ensure that liquidity position in banks is eroded. We want to make sure that banks remain strong by ensuring that strong governance exists. It is also about checking your conscience to tell yourself, have you performed your role diligently, that you are not only serving your own interest as shareholders but also serving the interest of larger stakeholders? These are some of the issues we will be looking at going forward because those depositors are very important,” he added.

    ”It encompasses the protection of minority shareholders, disclosure provisions,  the role and structure of the board, complexity on the definition of related parties, compensation structures and much more. Therefore weak corporate governance can undermine financial stability by heightening vulnerability of financial institutions to external shocks,” he said.

    He said institutions with sound corporate governance and effective board oversights are more resilient to shocks and operate more profitably. “Given the crucial financial intermediation role which banks and other financial institutions play in the economy, corporate governance for financial institutions is, arguably, of great importance in contrast to governance in non-financial companies,” he said.

     

    He said that prior to the global financial crisis of 2007 to 2009, it was taken for granted that the banking sector in Nigeria was safe and sound. However, this trust proved to be misplaced as it was realised that none of the 25 banks that scaled the CBN consolidation exercise was immuned from failure if they operated in a poor corporate governance environment.

    Accordingly, the 2014 CBN Code of Corporate Governance for Banks and Discount Houses (an improvement on the 2006 Code) was one of many responses to the industry’s post-consolidation corporate governance challenges arising largely from the integration processes. The mass enlightenment on corporate governance in the industry today could very well be attributed to the issuance of the CBN Code. The implementation of the Code largely addressed ineffective board oversights; overbearing influences of chairmen on MDs/CEOs; weak internal controls and prolonged tenure on the board amongst other anomalies.

    “While appreciable momentum had been attained in corporate governance practices in the Nigerian Banking Industry, we need not rest on our oars as vulnerabilities are still evident. The recent economic recession has shown that the financial industry still harbours weaknesses in governance, exemplified by instances of unclear rendition of returns, corporate governance abuses, such as unreported losses, huge exit packages for directors, insider non-performing loans, over-domineering executive management, contravention of regulatory/prudential guidelines and lending limits, poorly appraised credits and weakening of shareholders’ funds among others.  Overall, the huge challenge of ‘key-man’ risk abound in our industry,” Emefiele said.

    Emefiele stressed that ensuring good governance is a responsibility of all stakeholders.

  • CBN will support domestic production needs – Emefiele

    CBN will support domestic production needs – Emefiele

    The Governor of Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, said on Wednesday the bank would continue to explore further avenues to ensure that interest rates are supportive of domestic production needs.

    The CBN governor stated this while delivering a keynote address at the 24th edition of the CBN annual seminar for finance correspondents and business editors in Awka.

    The theme of the seminar is: “Import Substitution and the Dynamics of Interest and Exchange Rates Management in Nigeria.”

    Emefiele, represented by the Acting Director, Corporate Communications Department of CBN, Mr. Issac Okorafor, said the apex bank would also continually fine tune measures to guarantee stable exchange rate regime.

    With ongoing recovery in economic performance, he said the CBN would record improved outcomes in its effort towards taming inflation, reducing interest rates and guaranteeing exchange rate stability.

    Emefiele added that the bank was consistently devising ingenious approaches to solve the country’s peculiar challenges and would continue to learn from the experiences of other countries, particularly developing nations.

    He noted that the bank had consistently sought to formulate interest and exchange rate policies that were conducive to the development of domestic private industrial activities.

    According to him, the CBN is also taking due cognisance of other macroeconomic variables.

    NAN