The Nation Newspaper

Tag: finance

  • Institute targets poverty eradication with Islamic finance products

    Institute targets poverty eradication with Islamic finance products

    The Institute of Islamic Finance Professionals (IIFP) has partnered a  Dubai-based Centre of Islamic Banking and Economics (CIBE) to combat poverty  with varieties of Islamic banking and financing products.

    The two organisations held a One-day Islamic Finance Workshop yesterday at the University of Lagos Mosque Conference Hall, Akoka, Lagos.

    CIBE Managing Director/Chief executive Officer Dr Muhammad Zubair Mughal, said the products were sourced from the Sharia.

    The products, he said, include loan facilities, partnership, equity, mark-up, agricultural development, manufacturing, among others.

    Dr Mughal said the Islamic financing system and products are unique because they are asset-based and designed to benefit all segments of the society; irrespective of religious affiliations.

    He added that the organisations have different unique products for each segment of the society.

    “Islamic finance has dedicated products to address poverty situation.  Islam is the only religion in the world where poverty elimination is a religious obligation,” he said.

    He urged members of the public to see the Islamic financing products as banking products and not religious products, saying “It should be seen as banking products for all; irrespective of your ideology and religious affiliation.”

    Mughar said the products and services are reviewed every year to allow for the inclusion of more packages that will benefit the people’s businesses and the country’s economy.

    IIFP Chairman, Board of Trustees Dr Tajudeen Yusuf said the institutes were out to to promote ethical banking, financing and insurance in order to grow the Nigerian economy.

    According to him, IIFP was licensed to designing banking products, certifying conventional banking professionals and ensuring compliance with the ethics of the industry.

    He enjoined non-Muslims and the conventional banking system operators to stop antagonising the Islamic financing products, saying: “we don’t see ourselves as substitutes. We see ourselves as alternative to the conventional system. We are not out to destroy the conventional system, rather we want to entertain a healthy rivalry.

    “We have come as an alternative to compliment the efforts of the present government in terms of fighting economic crimes and stabilising the economy.”

    Dr Yususf added that the two institutions (IIFP and CIBE) are also targeting financial inclusion, noting that less than 30 per cent of Nigerians are currently financially included.

  • Hyundai Motors, Diamond Bank renew vehicle finance scheme

    Hyundai Motors, Diamond Bank renew vehicle finance scheme

    Hyundai Motors Nigeria Limited (HMNL) in collaboration with Diamond Bank PLC has launched a vehicle finance scheme to inspire prospective customers and fleet buyers to buy precision engineered and affordably priced made-in-Nigeria Hyundai vehicles.

    The scheme which is ongoing is designed to encourage local patrons to own and drive Hyundai vehicles, using convenient bank credit with low interest rates from 14 per cent without commitment and management fees.

    Announcing the scheme in Lagos, the duo of Hyundai Motors Nigeria, manufacturers and distributors of Hyundai vehicles and Diamond Bank Plc explained that the scheme has convenient monthly repayment tenor between 12 and 36 months, depending on the customer’s payment option.

    While also adding that a comprehensive insurance of 3.5 per cent of the vehicle cost will be borne by the customer, the facilitators of the scheme said customers would in addition be offered free registration, free service for six months or 10,000kms and five years or 100,000kms (whichever is first).

    Both establishments brokered this agreement in Lagos at the launch of the scheme aimed at easing challenges associated with accessing low interest bank credit to procure choice cars.

    “The credit initiative is a seamless plan for desiring patrons and fleet managers to access low interest bank credit for the procurement of discounted Hyundai vehicles without necessarily paying commitment and management fees,” the duo explained.

    Hyundai Motors head of sales and marketing Jatin Nadkarni said: “The joint credit initiative is in line with Hyundai’s strategy and direction of making vehicle acquisition a seamless experience and essentially assists prospective customers to buy new Hyundai vehicles and experience Hyundai inspiring technology.”

    The offer which can accessed in all Hyundai Nigeria Limited accredited dealers nationwide includes select Hyundai models like Hyundai Accent 1.4/1.6litre, Grand Xcent & i10 1.2litre sedans, Azera 2.4litre, Creta 1.6litre and Santa Fe 2.4litre & 3.3litre variants.

    Nadkarni said the offer was intended to ease vehicle acquisition and assist customers including those without functional account with Diamond Bank to access the facility.

    “What we are simply doing is to help prospective buyers starve-off the burden of sourcing funds in one fell-swoop to buy a new car. You can now walk into any Diamond Bank branch to apply for credit to buy your choice car and thereafter, pay at your convenience,” Mr. Nadkarni affirmed.

  • Expert seeks finance devt bank for power sector

    The Group Managing Director of CFL Group of Companies, Mr. Lai Omotola, has canvassed the establishment of a finance development bank for the power sector to address the frequent changes in electricity tariffs.

    He said the recently approved 45 percent increase in electricity tariff by the Federal Government not  not the  answer to the crisis in the power sector. Omotola attributed the increase to the failure of indigenous companies that bought the nation’s power assets to source for the technical partners that could bring in some equities.

    Omotola in an interaction with reporters in Lagos, stated that Nigerian banks provided more than 80 per cent of $2.6 billion that was used to purchase the power assets in 2013 on short tenor loans.

    He said: “It would have been the other way round and the sector would have been virile, had the investors been mandated to bring in foreign investors who would bring in their equities in terms of the capital mix, about 60 percent equity.”

    He explained that most of the funds were sourced from the banks. It is debt, which is now creating a little bit of pressure on our financial system. We find a situation whereby the Nigerian banks are the major, if not the sole financiers of the acquisition of the power assets.

    “There are two factors with the Nigerian banks. One is high interest rate. Two is the tenure of their funds. These factors mean that commercial banks by their very nature cannot finance the electricity industry. They can only serve to raise working capital incentive. What we find today is that the Nigerian banks are financed in dollar-dominated terms.

    “Already, the interest rate has gone on the high side. Even, the value of dollar to naira had doubled over the space of two years. The resultant effect is that the accounts of our indigenous companies are not doing well with our banks.

    “If their accounts are not doing well with the banks, the ability of the companies will be stalled. Also, the ability of the indigenous companies to pay loans will be stalled. Finally, the ability of the indigenous companies to generate additional funding will be stalled,” Omotola said.

    He said the Nigerian banks could only finance projects for about two or three years after which the banks would want to see their funds coming back, so our banks are not suited to fund the power sector. He faulted a statement credited to the Minister of Power, Works and Housing, Mr. Babatunde Fashola that no bank would want to fund the power industry because of the low tariff, which makes it not bankable before the current controversial increase.

    Omotola challenged Fashola to name the bank he was referring to, noting that if Fashola was referring “to Nigerian banks, the business model of the indigenous companies will not work. The interest rate and fund tenure will not make it work.”

    He urged the Federal Government to set up a finance development bank that is strictly meant for development projects such as power projects. If our indigenous banks will play any role, it will be in the area of providing working capital. For these indigenous companies in power sector to survive, they need very low interest rate with very long-term loan, he said.

  • Food security: Finance of rural agric to the rescue

    Food security: Finance of rural agric to the rescue

    Experts are seeking innovative ways of financing rural and subsistence agriculture to boost food production, develop agriculture and transform rural communities, DANIEL ESSIET reports.

    Farmers in the rural areas are responsible for up to 70 percent of food production in most states. In recognition of this, many programmes have been developed to enable them grow food and feed more people. While efforts have been made to enable farmers acquire skills and improve on farming skills to improve farm production, organisations involved in micro credit provision are supporting them to improve their livelihood through expansion of capital.

    Several farmers have borrowed money to expand their operations and the results are good returns to raise their families and had a good life.

    One of such organisations is  Farmers Development Union (FADU); an Ibadan-based agric micro credit cooperative. FADUis a pro-poor financial institution committed to the empowerment of farmers through access to  micro credit.

    Established in 1989, the organisation has been involved in projects aimed at building capacities for wealth creation among the enterprising poor and promoting sustainable livelihoods in marginal and vulnerable populations.

    The major thrust of the organisation’s activities involves financial assistance to farmers, technical training to boost their skills and improve their production.

    At the beginning, its major areas of concentration were Oyo, Ogun and Osun States, but it has now expanded to 29 states of the federation.

    With a loan portfolio put at N357 million, the union has recorded an encouraging repayment rate of 98 per cent.

    FADU has two groups of loans- one for individuals and the other for groups. But essentially the organisation accords more priority to group loans due to the ease of administration and repayment.

    The approach has been profitable, self-sustainable, and very successful. This has helped it in achieving its social mission by obtaining very good results in terms of the extent, depth and quality of reach. Its major growth in points of service has been in the rural areas.

    Its Programme Coordinator, Mr Victor Olowe said FADU has mobilised and financially assisted many rural groups. In addition, the organisation has built self-financed grassroots bodies. Indeed, FADU has shown that it is possible for an agric micro-credit cooperative union to provide credit services to a significant number of farmers and to mobilise a large amount of savings.

    The success of FADU  model has encouraged the growth of many more microfinance organisations and cooperative societies. Over the years, FADU and other cooperatives and micro-credit unions have demonstrated that farmers are viable financial-service customers.

    One of the early strategies was lending to individuals. This has gradually changed because the cost of monitoring loans and enforcing repayments was high and most loans are now made to groups because the costs are lower when they are spread among groups rather than individuals.

    Despite FADU’s achievements, its Programme Co-ordinator  noted that there was  still a long way to go to fill the demand-supply gap, especially in rural areas where delivering financial services presents particular challenges.

    At the grassroots level, microfi-nance institutions (MFIs) are not expanding their reach, while commercial banks and other formal financial institutions are not moving into rural areas to reach farmers.

    For experts, with the state of the economy, the need to improve investment in rural agriculture is increasing due to a rising population and changing dietary preferences of the growing middle class in the urban areas.

    According to estimates, demand for food will increase by 70 per cent by 2050. At least $80 billion annually in investments is needed to meet this demand, most of which is expected to come from the government.

    While groups, such as FADU have made efforts to improve the conditions of local farmers and groups, nationwide funding sources available to farmers are limited. Whereas financial institutions are making funds to other sectors of the economy, farmers still experience higher financial exclusion and are discriminated against when they apply for loans. Because of this, most farmers are trapped in a cycle of poverty and subsistence living.

    Olowe said many local rural Nigerians, who engaged in farming, live in abject poverty and remain vulnerable. Since some 70 per cent of those in rural areas, engage in small-scale farming, he was of the opinion that the government needs to empower them to become drivers of economic growth and food security.

    To achieve this, he said farmers require improved financing to help them transform their farms, their lives and their communities as well as boost the future of food security.

    The Project Director of CAVA II, Prof. Kola Adebayo agrees with this position.

    Though credit unions and some non-governmental organisations help farmers to obtain small loans, Adebayo observed that the funding level was still poor to spearhead agricultural transformation.

    He urged the government to give enough allocation in the budget for agriculture that will boost farm growth and appeal to the rural farmers.

    Such budgets, according to him, should consider irrigation projects, increasing investments in rural roads to help farmers get produce to market and ensure all the country’s villages had electricity.

    Kola Adebayo referred to the commitment made by the African Heads of State to allocate at least 10 per cent of their respective national budgets to agriculture (Maputo Declaration). Unfortunately, he observed that Nigeria has not respected the pledge as there has been reduction in budgetary commitments to the agricultural sector.

    While provision of affordable financial services to the rural population was critical in the development strategy, Adebayo counselled that government and the financial institutions partner with farmers’ organisations when disbursing money to them to  reduce risks and defaults in repayment.

    He urged funding agencies to commit to a concrete, measurable target for increasing agricultural productivity and to support a system of public score cards to maximise transparency for farmers organisations they support.

    He called for the establishment of local banks and institutions to provide agricultural credit at grass root level and to encourage the cooperative societies’ structure in the country.

    The Provost, Federal College of Agriculture, (FECA), Dr Samson Odedina urged the government, development agencies and other donors to develop a sound and sustainable agri/rural financial sector in the country.

    Odedina sought more investments in the rural areas to give farmers a sustainable means of livelihood and increase employment opportunities. The ultimate goal, he maintained, is to improve the farmers’ productivity, quality and security of their produce.

  • ICAN visits Adeosun, supports Public Finance Reforms

    The ongoing reforms in the nation’s public finance sector received a boost on Thursday when the Institute of Chartered Accountants of Nigeria (ICAN) endorsed the measures being undertaken. It passed a vote of confidence on the Minister of Finance, Mrs. Kemi Adeosun, during a courtesy visit to the Ministry of Finance in Abuja.

    The leader of the delegation and President of the Institute, Otunba Olufemi Deru, commended the efforts of the Minister and her team thus far, said ICAN is solidly behind the Federal Government in its efforts to rid the civil service of grafts and other fraudulent activities.

    He lauded the effort of the Minister to achieve cost savings and eliminate ghost workers, saying money recovered from these exercises could be invested for the benefit of the Nigerian people.

    He disclosed that in a bid to key into the government’s programme, ICAN is training its members on forensic investigation so as to assist the Federal Government to trace illicit funds in Nigeria and abroad.

    Mrs. Adeosun said the present administration is resolute on its resolve to plug all loopholes and ensure judicious use of the nation’s resources.

    She explained that the Federal Government is committed to reforming the public finance of the country as one of the levers to unlock the nation’s economic prosperity. She stated that the government plans to introduce a risk-based internal audit system and implement adequate controls.

    She said efforts are being made to present a bill to the National Assembly so as to pass the proposed internal audit into law.

    Mrs. Adeosun also spoke about efforts being made to strengthen the capacity of small and medium enterprises, explaining that the Federal Government is introducing a programme that will mandate big accounting firms to partner with small firms as a condition to be eligible for government business.

    Mrs. said the programme would yield significant benefits including the desired knowledge of the local context that small scale accounting firms would bring to bear across the country, as well as the capacity enhancement that the small scale firms would gain from partnering with their more established counterparts.

  • Way out of Osun crisis, by finance expert

    Way out of Osun crisis, by finance expert

    A finance expert, Deji Akinsola, reviews the economic situation in Osun State, pointing the way forward for the state. He spoke with Basirat Buraimah

    How did Osun State find itself in this financial mess?

    I don’t think it is fair to single Osun State out in the financial predicament enveloping the whole world.

    It is a worldwide crisis. The financial meltdown is global. It cannot be felt equally though. In Nigeria, it will be unfair to single out Osun State to be in crisis and I know it is nation-wide.

    I know many states to be 23 months behind in salary payment. Almost every state owes but then, when it comes to Osun, I think it is a peculiar case because of the giant strides that Ogbeni Rauf Aregbesola came with in the first two years of his administration. It is that standard that people are using to measure him and that is why it appears that the impact is felt more in Osun.

    But the state benefitted from the bail out and financial packages backed by the Federal Government.

    When it comes to public finances, one needs to be very careful; what the states got was not a bail out but a loan. I want to crudely define a bail out. A bail out is meant to be a dash but when you are talking about a package the Federal Government made to the distressed states, it was more of a loan. People have said at different forums that the bail out from our financial crisis is death accumulation. The figures that are being pronounced by the opposition are so ridiculous. They are larger than life figures.

    The payment terms were such that they will be deducted from the federal allocations. One of the criticisms against the Osun administration is in terms of the quantum of the debt that the administration is alleged to have taken. At different quarters, they are saying it is too large.

    Speaking as a chartered accountant, the definition of too much is determined by the returns you are getting from such a loan.

    If you take a loan and you invest it, inasmuch as you can make N1 as return after meeting all obligations, it won’t be too much. If you take a loan for financing and at the end you have negative returns; that is the definition of too much.

    People have been saying that Osun State is grossly indebted and then the bail out of almost N35 billion is going to further compound that alleged indebtedness.

    When you talk about public or private financing, it is made up of two critical aspects. We have equity and debt. Equity means the contributions of stakeholders while debt is borrowing. Those are the two principal sources of funding. There are certain things you cannot do with the loan. The loan shouldn’t be used to pay salaries. If you must borrow, it must go into investments that will yield returns to repay the cost of the capital and leave you with something. If you use loan to pay salaries then you are going into a deep hole. I want to agree with the last administration in terms of bail out. It is better to look for equity to meet the expenditure. That is a way forward.

    Well, if you are talking of the way forward, we should look at where we are coming from. The administration started on a brilliant footing. No matter how brilliant your ideas are, you need funds to execute such ideas. This administration started with a beautiful vision where Osun will surpass Lagos.

    Aregbesola’s vision is to remove poverty. He invested them into the future and education. Any investment in security can never be wrong because it promotes the code of the economy. When you invest in security, it will attract both internal and external investors. It will generate income to create a better income.

    What can be done to revive the state’s economy and take it back to those glorious days?

    We need to look into good governance and education. We need to move away from oil. The 2016 Budget was based on $38 price of oil per barrel with N2.2 trillion deficits. The fall in the price of oil has widened the gap. We need to shift focus and obviously agriculture is it.

    We need to go back to the basics. Government should invest in agriculture. Government should support initiatives that will make agriculture strive. Government should not involve itself in granting agric loans. Government should not bother itself with the provision of fertiliser.

    If agriculture is lucrative, people should source the fund to meet the investment. When they now grow cash and food crops, then they can sell them. Government should negotiate with banks. In terms of sourcing agriculture and fertilisers, they should go to the banks.

    The government should make it a national policy. It should give guarantee to existing farmers and new ones. No matter how many tons of grains produced. The beauty of this is that it will spur people to go into agriculture on a commercial basis not on a sentimental basis.

    In the United States, the government will mop up all the excess products. Even at a loss to it. In most cases, the government sells agricultural products abroad so that they will not discourage farmers and potential ones.

    Apart from encouraging agriculture, which other ways can government go in raising fund?

    If you want to make any progress, there is no other way than go into taxation.

    We have to educate the people about the beauty of taxation. We have to create the awareness. As far as I am concerned, taxation and the application of taxation should be introduced into primary school curriculum, secondary and tertiary institutions so that people will have a very sound understanding and its beauty both to themselves and the government. The government should follow it up with an aggressive collection plan.

    One beauty of taxation is this; when people are taxed normally, it makes lion out of them. They want to be involved, they want to know. It is something that is affecting them directly. There is no direct impact on the people. If you want to embezzle N 2.5 billion, you will need to increase the income tax of people with certain per centage. We have to invigorate our tax drive and initiate aggressive collection.

    As a last resort, we need to look at borrowing and we must know how much we want to borrow and what we want to do with it. We must never borrow for consumption. Salary must be based squarely on Internally Generated Revenue (IGR).

    Any government that wants to succeed should use 25 per cent of its IGR for salaries.

    Other things will be internal and one of it is what we have already embarked upon and that is how to empower the people. Governance shouldn’t be about business. It should be about the provision of environment where people can do business to generate income and pay a portion of that to the government.

    The governor has introduced an Osun Certificate of Occupancy (O Cof O) that gives you a security backing. All over the world, any bank you go to will want to know if you want to go into secured borrowing. The best form of collateral is the certificate of occupancy. It will give them a peace of mind and fast-track the loan application.

    It will reduce the cost of borrowing. You can use the certificate to borrow money from bank to generate wealth and then the state can come to take a portion. We have our younger ones that are willing to leave the country for several reasons because the world is now a global village.

    One of the key requirements of an embassy is that you won’t be relying on them. If you attach your C of O to the application, it will make processing faster. These are the things Aregbesola has put together so that people can borrow money go into trade, make money and pay back loan and pay their taxes.

    We are looking inward and the nation in general. The government should not be directly involved in agriculture, regardless of the quantity of their produce. Any government that wants to make progress must have short-term, medium-term and long-term plans.

    We must invest in security. A secured environment is an attraction. We must invest in health.

    The people are recognising the quality in this administration. Anything that this government wishes to do must have the input of the people and going for aggressive collection of taxes. We collectively got into this mess and we must collectively get out of it. The government must lead people into the Promised Land.

     

  • Way out of Osun economic crisis, by finance expert

    Way out of Osun economic crisis, by finance expert

    Deji Akinsola, a finance expert, reviews the economic situation in Osun State and suggests how it can get out of the economic crisis. He spoke with Basirat Buraimah. 

    How did Osun State find itself in this financial mess?

    I don’t think it is fair and it is not right to single Osun State out in the financial predicament enveloping the whole world.

    It is a worldwide crisis. The financial meltdown is global. It cannot be felt equally though. In Nigeria, it will be unfair to single out Osun state to be in crisis and I know it is nationwide.

    I know many states to be 23 months behind in salary payment. Almost every state is owing but then, when it comes to Osun, I think it is a peculiar case because of the giant strides that Ogbeni Rauf Aregbesola came with in the first two years of his administration and it is that standard that people are using to measure him and that is why it appears that the impact is felt more in Osun.

    But the state benefitted from the bail out and financial packages backed by the federal government.

    When it comes to public finances, one needs to be very careful; form me what the states got is not a bail out but a loan. I want to crudely define a bail out. A bail out is meant to be a dash but when you are talking about a package the federal government made to the distressed states, it was more of a loan. People have said at different fora that the bail out from our financial crisis is death accumulation. The figures that are being bandit by the opposition are so ridiculous. They are larger than life figures.

    The payment terms were such that they will be deducted from the federal allocations. One of the criticisms against the Osun administration is in terms of the quantum of the debt that the administration is alleged to have taken. At different quarters they are saying it is too large. Speaking as a chartered accountant, the definition of too much is determined by the returns you are getting from such a loan.

    If you take a loan and you invest it in as much as you can make N1 as return after meeting all obligations, it won’t be too much. If you take a loan for financing and at the end you have negative returns; that is the definition of too much. People have been saying that Osun state is grossly indebted and then the bail out of almost N35billion is going to further compound that alleged indebtedness.

    When you talk about public or private financing, it is made up of two critical aspects. We have equity and debt. Equity means the contributions of stakeholders while debt is borrowing. Those are the two principal sources of funding. There are certain things you cannot do with the loan. The loan shouldn’t be used to pay salaries. If you must borrow, it must go into investments that will yield returns to repay the cost of the capital and leave you with something. If you use loan to pay salaries then you are going into a deep hole. I want to agree with the last administration in terms of bail out. It is better to look for equity to meet the expenditure. That is a way forward.

    Well, if you are talking of way forward we should look at where we are coming from. The administration started on a brilliant footing. No matter how brilliant your ideas are, you need funds to execute such ideas. This administration started with a beautiful vision where Osun will surpass Lagos.

    Aregbesola’s vision is to remove poverty. He invested them into the future and education. Any investment in security can never be wrong because it promotes the code of the economy. When you invest in security, it will attract both internal and external investors. It will generate income to create a better income.

    What can be done to revive the state’s economy and take it back to those glorious days?

    We need to look into good governance and education. We need to move away from oil. The 2016 budget was based on $38 price of oil per barrel with N2.2trillion deficit. The fall in the price of oil has widened the gap. We need to shift focus and obviously agriculture is it.

    We need to go back to the basics. Government should invest in agriculture. Government should support initiatives that will make Agriculture strive. Government should not involve itself in granting Agric loans. Government should not bother itself with the provision of fertilizer. If agriculture is lucrative, people should source the fund to meet the investment. When they now grow cash and food crops, then they can sell them. Government should negotiate with banks. In terms of sourcing agriculture and fertilizers, they should go to the banks. The government should make it a national policy. It should give guarantee to existing farmers and new ones. No matter how many tones of grains produced. The beauty of this is that it will spur people to go into Agriculture on a commercial basis not on a sentimental basis.

    In the United States, the government will mop up all the excess products. Even at a loss to it. In most cases, the government sells agricultural products abroad so that they will not discourage farmers and potential ones.

    Apart from encouraging agriculture, which other ways can government go in raising fund?

    If you want to make any progress, there is no other way than go into taxation.

    We have to educate the people about the beauty of taxation. We have to create the awareness. As far as I am concerned, taxation and the application of taxation should be introduced into primary school curriculum, secondary and tertiary so that people will have a very sound understanding and its beauty both to themselves and the government. The government should follow it up with an aggressive collection plan.

    One beauty of taxation is this; when people are taxed normally, it makes lion out of them. They want to be involved, they want to know. It is something that is affecting them directly. There is no direct impact on the people. If you want to embezzle N 2.5b you will need to increase the income tax of people with certain per cent. We have to invigorate our tax drive and initiate aggressive collection.

    As a last resort, we need to look at borrowing and we must know how much we want to borrow and what we want to do with it. We must never borrow for consumption. Salary must be based squarely on Internally Generated Revenue (IGR).

    Any government that wants o succeed should use 25 per cent of Internally Generated Revenue (IGR) for salaries.

    Other things will be internal and one of it is what we have already embarked upon and that is how to empower the people. Governance shouldn’t be about business. It should be about the provision of environment where people can do business to generate income and pay a portion of that to the government.

    The governor has introduced an O Cof O (Osun Certificate of Occupancy) that gives you a security backing. Government will do due diligence. A all over the world, any bank you go to will want to know if you want to go into secured borrowing. The best form of collateral is the certificate of occupancy. It will give them a peace of mind and fast track the loan application.

    It will reduce the cost of borrowing. You can use the certificate to borrow money from bank to generate wealth and then the state can come to take a portion. We have our younger ones middle age that are willing to leave the country for several reasons because the world is now a global village. One of the key requirements of an embassy is that you won’t be relying on them. If you attach your C of O to the application, it will make processing faster. These are the things Aregbesola has put together so that people can borrow money go into trade, make money and pay back loan and pay their taxes.

    We are looking inward and the nation in general. The government should not be directly involved in agriculture. Regardless of the quantity of their produce. Any government that wants to make progress must have short term, medium term and longer term plan. Included in the longer term plan should be education. It is kind of empowering the people to make them become responsible citizens. The level of government expenditure will come down in health. If you have a good job you will be able to get qualitative health insurance. We must invest in security. A secured environment is an attraction. We must invest in health. The people are recognising the quality in this administration. Anything that this government wishes to do must have the input of the people and going for aggressive collection of taxes. We collectively got into this mess and we must collectively get out of the mess. The government must lead people into the Promised Land.

    How do you see the streamlining of the ministries by the governor?

    Streamlining the ministry to a manageable 12 is a step in the right direction. We must cut our material according to the cloth that is available. It is a right step. It has now come to a manageable, realistic and focus-oriented team.

    I trust the judgment of the governor to be able to bring in people who have robust understanding. There must be a rigorous understanding. Finance is as sensitive as it can be. The role of the governor in a state is to spend money.

    I want to secure the state; I want to provide social amenities etc will lead to are spending. The role of a good finance commissioner is to look for money, to source funds particularly internally through the IGR to be able to meet the government’s expenditure.

    He is also to be able to report to the governor and the people the amount generated and expended in terms of recurrent expenditure and in terms of capital investments. I’ve spoken specifically about the finance ministry because that is my forte.

    The government must look for able-minded men that will be able to drive its vision and to be able o take our people out of where we are; from the sorry state that we are in to the Promised Land. This is the kind of men that we need in this coming administration.

    The Aregbesola government is the government of Osun people.  We voted this administration in the first time and we did a second time and it is our government and administration. Yes, things are tough now. When the going gets tough, the tough gets going. With the support of the people, we will get to where we deserve to be. People should give their support so that we will reap the glorious benefit at the end of the day.

  • Finance minister can’t approve NCC budget, says senator

    Finance minister can’t approve NCC budget, says senator

    THE senator representing Lagos West Solomon Adeola has faulted Minister of Finance Kemi Adeosun’s call that the Nigeria Communications Commission’s (NCC) budget and those of other revenue generating agencies be submitted for approval.

    According to him, under the NCC Act, only the National Assembly could consider and approve the budget of NCC.

    The senator stressed that any attempt by the minister and the supervising minister to approve the budget of NCC would amount to a breach of the law and an encroachment on the function and power of the legislature.

    ”I am surprised that the minister included NCC among agencies to submit budgets for her and other supervising ministers to approve. As well-intentioned as this may seem in the effort to generate revenue and block leakages, it is a contravention of the NCC Act as well as usurping the power of the National Assembly to approve the budget of NCC,” he stated.

    The vice chairman of the Senate Committee on Communications referred the minister to Sections 17-21 of the NCC Act that dwelt on the financial provisions for commission, adding that the only fund NCC was mandated to pay to the Consolidated Revenue Fund of the federation was  ”monies accruing from sale of spectrum” as contained in Section 17(3).

    Asserting that NCC was a semi-autonomous commission, Adeola said the Finance minister would only come in if the NCC wanted to borrow money.

    He said Section 25 (2) of the Act expressly forbids even the supervising minister from undue interference: “In execution of his functions and relationship with the commission, the minister shall, at all times, ensure that the independence of the commission, in regard to the discharge of its functions and operation under this Act, is protected and not compromised in any manner whatsoever”.

  • ‘Access to finance major threat to SME’s’

    A major threat to the growth and development of Small and Medium Enterprises (SMEs) is that of funding, the Director General, Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Mr. Emmanuel Cobham, has said.

    He commended government for setting up a number of institutions  to strengthen SMEs, noting that what is required is to strengthen such institutions put in place by the government.

    “We need to implement the various policies of government and  ensure that government intervention funds actually get to the SMEs, knowing that as at date the N220 billion Federal Government  Intervention Fund for SMEs as administered by the apex  bank through the commercial banks and State Governments has not been fully utilized,” Cobham said.

    The NACCIMA DG called for an enabling environment where proper financing of SMEs’operations is taken seriously,  and where manufacturing thrives and production capacities of companies radically improved.

    “Currently we have more than enough policies and initiatives by the government for the development of the manufacturing and SMEs sector. All we need now is the harnessing and positive redirection to make the process work – we need the political will to ensure that all the initiatives work,” he said.

    On measures put in place by government to develop the non-oil sector and spur substantial development of the solid mineral sector, Cobham maintained that over dependence on one revenue source is detrimental to the economy hence the need to develop other sources of revenue.

    As part of strategy to make a success of the non-oil sector of the economy, the NACCIMA chief urged the Federal Ministry of Agriculture to evolve a systemic policy aimed at deliberately reducing the number of peasant farmers through aggressive empowerment.

    “Government should increase the budget for agriculture to at least 10 percent of the national budget; evolve a policy frame work that would encourage commercial farming in order to have an easy transition from peasant farming to commercial farming,” he advised.

    He also said government should encourage farmers by buying their farm produce to reduce the attendant waste associated with that level of production. He said under  this proposed arrangement, buyers would be compelled to buy directly from the government or its agency.

    Cobham also encouraged the adoption of the One-State-One mineral policy earlier adopted by the Ministry of Solid Minerals. He said this will increase the generation capacity to cushion the nation’s foreign exchange needs and address salient export trade mechanisms.

    He said government can also help the sector by giving special directives to banks to finance this sector; supply equipments, and guarantee the income of the farmers by buying directly from them.

    On the issue of  high interest rate for manufacturers, he said: “There is no denying the fact that currently many businesses are groaning under the high cost of doing business in the country and this coupled with the issue of high interest rate gives a very wrong signal to the local business man. I believe that tough times call for extra precautionary measures.

    “Given that most businesses are financed by bank loan, equity and the active involvement of most financial institutions at an agreeable interest rate which presently hovers between 18-30 per cent, what we need to do therefore, is join hands with the regulatory agencies to strengthen the Naira as against other international currencies, increase our export for better foreign exchange earnings, and reduce our import of commodities that have local substitutes. “

  • N100m capital base: CBN, Finance Houses hold emergency meeting

    N100m capital base: CBN, Finance Houses hold emergency meeting

    The Central Bank of Nigeria (CBN) yesterday met with finance houses operators to enable both parties discuss the way forward for the industry.

    The emergency meeting, it was learnt, followed last week’s expiration of the December 31 deadline given by the regulator to operators to either meet the new N100 million capital base for the subsector or suspend operations. The initial September 30, last year deadline was shifted to allow more operators comply.

    The Nation gathered that with tight liquidity in the market, many operators are yet to secure funds to continue their business and this may lead to the exit of several fringe players.

    A source at the Financial Houses Association of Nigeria (FHAN), an umbrella body for the sector, said many of the operators had not secured the funds required to stay afloat.

    “The N100 million minimum capital base looks small, but surprisingly, not many operators have been able to get it. I see many of them closing shop after the deadline lapses,” the source said.

    CBN Director, Other Financial Institutions Supervision Department, Ahmad Abdullahi had instructed that operators that fail to meet the deadline will be forced to close shop, or move into new business requiring low capital base.

    He said the subsector also operates on a ratio of non-performing loans to total loans now pegged at maximum of 10 per cent. He said Finance Houses shall consult at least two licensed credit bureaux to obtain credit information on borrowers.

    He said the finance companies’ sub-sector was envisioned to operate at the middle tier of the financial system, to cater for the financial needs of the Micro, Small and Medium Enterprises (MSMEs), adding that they were also expected to leverage on the resources from the banking system among other sources of funding.

    He explained that the CBN had in a bid to sanitise the sub-sector, revoked the licences of 208 finance companies and cancelled the approvals-in-principle of 462 others due to the distress in the sub-sector.

    By 2012, there were 116 FCs in the records of the CBN; 51 licences were revoked by the CBN in September, 2012 thus leaving a balance of 65 FCs with valid licences.

    “The idea is to have finance companies that are strong and virile to perform the functions they were set up to per form. The objective of shareholders in the operation of finance companies is to make profit, but for the CBN, it is to have stable and strong finance companies,” he said.

    Abdullahi said the CBN will continue to sanction finance companies that do not have the licences, but are in operation as such would ensure that the subsector is run efficiently to the benefit of the economy.

    He advised finance companies to maintain a database of their customers and generate quarterly risk management reports to be submitted to the CBN. “Finance companies shall be permitted to participate in accessing and disbursing funds to SMEs via relevant vehicles/ intervention funds set up by the CBN, the Federal/State Governments and other relevant bodies. The CBN shall continue to provide support towards capacity building in the Finance Company sub-sector,” he said.