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  • ‘Rate of cybercrimes in financial industry alarming’

    ‘Rate of cybercrimes in financial industry alarming’

    Peter Sunday Adebola is the Managing Director, Edgefield Capital Management Limited, an investment-driven firm. In this interview with Ibrahim Apekhade Yusuf, the stock market analyst speaks on the wave of cyber fraud in banks and other financial institutions. Excerpts:

    What in your view could be responsible for the spate of cyber fraud in the banking and financial service sector especially?

    Cyber fraud in the banking and financial service sector is basically caused by high rate of unemployment among our youths, low real per capita income, get-rich-quick syndrome among our youths, moral degradation in our society where nobody ask questions about wealth of some people and a situation where the only people that get respect from society are rich people irrespective of the sources of their wealth.

    Does this also happen with stocks too? I mean cyber fraud?

    Cyber fraud is everywhere in the financial industry. In the past, the stock market also witnessed cyber fraud through phishing where these criminals fraudulently obtained information of investors and impersonated them by selling their stocks. The Market Regulators have addressed and are still addressing the issue of cyber-attacks to prevent cyber fraud in the market.

    According to the latest report by the NDIC, banks lost over N9bn to cyber fraud in the last couple of months. Where does this leave the liquidity status of the bank? Is this a cause for concern?

    Cyber-attacks in the financial industry are very alarming and that is why both operators and regulators are fighting very hard to fight the menace. However, many banks and other financial institutions are taking insurance policies against the cyber fraud so as to indemnify them in case of the occurrence of the adverse event. However, it is prudent to put measures in place to prevent cyber-attacks and that is the reason for banks spending a lot of money on Information Technology to ensure cyber security.

    What is the place of law enforcement in stemming this tide given the fact that we have the Nigeria Financial Intelligence Unit (NFIU), the Economic and Financial Crimes Commission (EFCC), the Independent Corrupt Practices Commission (ICPC) and other support agencies?

    Read Also: FG denies news of expulsion of envoy from Niger Republic

    The law enforcement agents are actually working hard to stem the tide. However, the technology is evolving everyday and the law enforcement agents need to put in place surveillance equipment that can assist them in combating the cybercrime by working with the financial institutions that are the main targets of these criminals.

    Would you advise stiffer measures like capital punishment for culprits as is the case in China and Hong Kong?

    In my opinion, to curb crime generally, the punishment should be far greater than the offence committed. Once we put this in place in our country, the crime rate will be drastically reduced if not eradicated. Our laws have to be amended in such a way that anyone that is caught in cybercrime should be mercilessly punished.

  • Jail terms no longer deterrence for illicit financial flow, says Buhari

    President Muhammadu Buhari on Sunday said that the sanctions of jail terms for illicit financial flow is no longer sufficient to fight the menace.
    According to him, stringent actions should be taken against perpetrators of illicit financial flows, including crackdown on safe heavens and return of stolen assets to countries of origin.
    He spoke while delivering his statement on “Illicit Financial Flows (IFFs) and Corruption: The Challenge of Global Governance’’ at the Peace Forum attended by about 70 world leaders in Paris, France.
    The Forum was organised by the French Government and a number of Non-Governmental Organisations (NGOs).

    It was based on the simple idea that international cooperation is key to tackling global challenges and ensuring durable peace.

    Buhari warned that continuous impunity will encourage more pilfering of countries’ resources to the detriment of poor and vulnerable populace.

    Nigeria, he said, has strengthened its laws and institutions to fight corruption, fast-track recovery of stolen assets and punish offenders.
    He called for more commitment from governments and international organizations.
    He said that illicit financial flows pose a risk to the realisation of the Sustainable Development Goals (SDGs) as many countries grapple with the challenge of gathering resources to improve their Human Development Index, while a few privileged individuals continue to explore the weaknesses in financial systems.
    He said “Our experience in Nigeria is that financial crimes, such as corruption and fraudulent activities, generate enormous unlawful profits which often prove so lucrative that the threat of a jail term is not sufficient to deter perpetrators.

    “A more powerful deterrent is to ensure that profits and assets generated from illicit financial flows and corruption are recovered and returned to countries of origin.

    “This is not to under-estimate the value of strong institutions. It only indicates that asset recovery represents significant deterrence compared to the traditional focus on obtaining conviction by the law enforcement agencies of the countries of origin.

    “As we take stock of the strengths and weaknesses of domestic, regional and international mechanisms against Illicit Financial Flows, I seize this opportunity to recall the Global Declaration Against Corruption made in London in 2016 and our commitment thereto.

    “Among other things, the Declaration encapsulates our collective commitment to the principles of Open Government Partnership, especially the National Action Plans to actualize beneficial ownership transparency, enhance the capacity of Financial Intelligence Units (FIUs), reinforce Independent Reporting Mechanisms and support the activities of the Global Forum on Transparency and Exchange of Information for Tax Purposes. We should remain resolute in our commitment to the aforementioned goals.

    “Similarly, we must crack down on safe havens for corrupt assets. I also advocate sanctions by professional bodies against transactional middlemen (lawyers, bankers, brokers, public officials, etc.) who facilitate Illicit Financial Flows.

    “I would like to reiterate that the Government of Nigeria remains open and is ever willing to continue to identify and share experiences and strategies to give life to the ideas that will lead to winning the fight against corruption.” he said

    He urged the world leaders and global institutions to remain resolute on the Global Declaration Against Corruption made in London in 2016, which encapsulates the collective commitment to the principles of Open Government Partnership, especially the National Action Plans to actualize beneficial ownership transparency and enhance the capacity of Financial Intelligence Units (FIUs).
    Buhari also called reinforcement of the Independent Reporting Mechanisms and support for the activities of the Global Forum on Transparency and Exchange of Information for Tax Purposes.
    “As we take stock of the strengths and weaknesses of domestic, regional and international mechanisms against Illicit Financial Flows, I seize this opportunity to recall the Global Declaration Against Corruption made in London in 2016 and our commitment thereto,’’ he said.
    According to him, tremendous progress has been achieved through the enactment of global instruments, adding that some fundamental technical issues have remained unresolved.
    “These revolve around the formulation of policy and regulatory frameworks that cut across different jurisdictions. We must not lose sight of the role played by secret companies, banks and law firms, all too often based in developed economies and their related offshore centres.
    “Recent studies reveal that flaws in the global financial system enable corrupt individuals to hide details of their financial dealings under the noses of governments and law enforcement agencies.
    “This underscores the need to urgently address the issue of Mutual Legal Assistance, as well as continental legal frameworks, in the context of safe havens for illicit transfers,’’ he said.
    The Whistle-Blowing policy in Nigeria, he said, has facilitated recovery of billions of naira from corrupt persons, which had been redirected to the development of critical infrastructure and programmes that will benefit all Nigerians and realisation of the SDGs.
    At the continental level, the President said the African Union had bestowed on him the honour to champion the fight against corruption, which would be focused on strengthening international cooperation on asset tracing, recovery and repatriation, and enhancing cooperation between the African Union and the United Nations’ anti-corruption monitoring mechanisms.

    “Finally, let me reiterate the importance of unity and collective action. It is only together that we stand a better chance to win the fight against the menace of Illicit Financial Flows and corruption.” he stated

    The President is scheduled to meet Nigerians living in France on Monday.

  • Financial experts lament 2018 Budget delay

    Some financial experts yesterday in Lagos frowned at the failure of the National Assembly to pass the 2018 Budget and confirm nominees of the Monetary Policy Committee (MPC).

    In separate interviews with the NFinancial ews Agency of Nigeria (NAN), the stakeholders said the continued delay arising from the lingering impasse between the executive and legislature was affecting the nation’s development.

    Sheriffdeen Tella, Professor of Economics, Olabisi Onabanjo University, Ago-Iwoye, Ogun, said that fiscal and monetary policies were important in driving major economic activities.

    Tella said that the blame game between the executive and the legislature in budget passage and MPC members’ confirmation were not in the nation’s interest.

    “The fiscal policy side is held to ransom, the monetary side is also in limbo by not approving members that should consider and approve the CBN monetary policy proposals.

    “These are the two major economic policies that drive economic activities,” Tella said.

    He observed that further delay in the passage of the 2018 budget, and by implication delay in implementation, would have negative effects on the country’s economic growth.

    He said the nation’s interest should be of paramount interest to elected public office holders.

    “There is the need for a change of attitude for the economy to move forward, and in the right direction,” he said.

    The don lamented that it was disheartening that the budget had not been approved since November 2017, because of budget defence by ministers and directors.

    He said that the nation should not be held to ransom because of budget defence, noting that the Minister of Budget and Planning, Udoma Udo-Udoma, and his officials be invited for clarification if the need arises.

    Mallam Garba Kurfi, the Managing Director, APT Securities and Funds Ltd., noted that the nation’s recovery from recession would have been accelerated if the 2018 budget was released on time.

    Kurfi said that budget approval and implementation were critical to investment decisions and enhanced economic activities.

    He said the first quarter would soon end without budget approval, noting that it was not good for the country’s quest for both local and foreign investors.

    Kurfi called for urgent political solution to the looming crisis, saying the economy was suffering with the muscle-flexing between the executive and the legislature.

    NAN reports that the MPC meeting earlier scheduled for Jan. 22 and 23 was cancelled due to the non-confirmation of the MPC nominees by the Senate.

    President Muhammadu Buhari, in October 2017, nominated Mrs Aisha Ahmad as Deputy Governor of the Central Bank of Nigeria.

    He also sought the confirmation of Mr Adeola Adenikinju, Mr Aliyu Sanusi, Mr Robert Asogwa and Mrs Asheikh Maidugu as members of the CBN’s Monetary Policy Committee, but the Senate has yet to confirm the nominees.

  • Defence chief advises military officers on financial literacy

    Chief of Defence Staff, Gen. Abayomi Olonisakin, has called on military officers to embrace financial literacy and save for retirement.

    He spoke during a three-day workshop conducted for the Nigerian Armed Forces by ABO Services and Konsult, an investment and personal finance training company. The training titled: ‘Impact of Financial Literacy on Successful Retirement Planning and Wealth Creation’, was held at the Army Resource Centre, Abuja.

    Olonisakin, who was represented by the Director of Veteran Affairs Division, Maj-Gen. Edmond Obi, said the workshop was necessary to train officers on how to navigate the financial challenges they might experience when they are no longer on regular salary incomes, adding that it would help them to be financially organised and appreciate their jobs better.

    He attributed the hardship faced by many retired officers to “poor or lack of proper planning while in active service” and called on officers to embrace proper financial management skills from the early days of their careers.”

    He added: “The aim of the workshop is to educate officers and men of the armed forces on the significance of financial literacy with a view to preparing them for a successful retirement life. It has been discovered that lack of financial literacy is one of the major reasons there is wide economic disparity in the country.

    “It is believed that, in addition to the vocational and professional skills that are taught in training institutions, money skills, which can only be acquired through financial education, must be taught to fully equip individuals for retirement.”

    Managing Director of ABO, Abimbola Olanrewaju, said financial literacy was necessary for all categories of employees and professionals. He said financial literacy skills would help individuals to have blissful retirement.

  • Ahmed seeks financial autonomy for judiciary

    Ahmed seeks financial autonomy for judiciary

    Kwara State Governor Abdulfatah Ahmed has thrown his weight behind financial autonomy for judicial and legislative arms of government.

    The governor said the financial independence of these arms of government was necessary because “we cannot hope to achieve the separation of powers, and checks and balances, as envisaged by our constitution, if the arms of government are financially reliant on another”.

    A statement by his Chief Press Secretary, Abdulwahab Oba, said the governor spoke at the National Executive Council meeting of the Nigeria Bar Association (NBA), at the Kwara State Banquet Hall, Ilorin.

    He noted that the national economy has hindered the desired autonomy rather than accelerate it.

    The statement reads: “As desirable as this autonomy is, it is more likely to succeed when our economy becomes more stable, and our revenues improve.

    “While some of the constitutional amendments are necessary because of the changing dynamics of our country, I believe that Nigeria is more in need of institutional reforms than anything else. What Nigeria needs are strong institutions to implement our laws, improve management of public resources, create prosperity for the good of the majority, and secure the confidence of all citizens, regardless of who is leading the country.”

    NBA National President Abubakar Balarabe Mahmud (SAN) praised the state’s initiative in developing the state over the years.

    He appealed for more investment in judicial infrastructure and improvement of judges’ welfare.

    Mahmud decried the spate of insecurity in Taraba, Benue, Zamfara and other states, and appealed to the Federal Government to address the multiplicity of security challenges in the country.

  • Equities in marginal gain as financial stocks rebound

    Nigerian equities traded almost on the balance yesterday at the Nigerian Stock Exchange (NSE) as bargain-hunting in financial services stocks counterbalanced continuing selloff in other sectors to sustain the positive overall market position with a marginal gain of N3 billion.

    With large-cap banking stocks dominating the gainers’ list, benchmark indices closed with a marginal day-on-day average gain of 0.02 per cent, equivalent to net capital gain of N3 billion. This nudged the average year-to-date return to 10.2 per cent.

    The All Share Index (ASI)-the value-based benchmark index that tracks share prices at the NSE, inched up from its opening index of 42,148.40 points to close at 42,158.32 points. Aggregate market value of all quoted equities also improved marginally from its opening value of N15.126 trillion to close at N15.129 trillion.

    With 30 losers against 21 gainers, the positive overall market position was boosted by gains recorded by large-cap banking stocks. The NSE Banking Index rallied by 1.1 per cent while the NSE Insurance Index inched up by 0.7 per cent. Other sectoral indices closed negative. The NSE Oil & Gas Index dropped by 1.2 per cent while the NSE Consumer Goods Index and NSE Industrial Goods Index declined by 0.9 per cent each.

    Guaranty Trust Bank-Nigeria’s second most capitalised quoted company led the gainers with a gain of 75 kobo to close at N48. Nascon Allied Industries and Flour Mills of Nigeria rose by 55 kobo each to close at N20.55 and N32.55 respectively. Zenith Bank appreciated by 45 kobo to close at N31.50. United Bank for Africa added 40 kobo to close at N12.60 while Dangote Flour Mills and FBN Holdings chalked up 30 kobo each to close at N16.30 and N11.15 respectively.

    On the negative side, Nestle Nigeria led the losers with a drop of N10 to close at N1,370. 11, formerly Mobil Oil Nigeria, followed with a drop of N9 to close at N190. Nigerian Breweries lost N3.50 to close at N124.50. Conoil declined by N3.40 to close at N32.10. Julius Berger Nigeria dipped by N1.35 to close at N25.95 while PZ Cussons Nigeria dropped by N1.15 to close at N23 per share.

    Total turnover stood at 570.26 million shares valued at N5.33 billion in 5,794 deals. Custodian Allied topped the activities chart with a turnover of 94.45 million shares valued at N377.82 million. FBN Holdings followed with 61.64 million shares valued at N683.26 million while Fidelity Bank placed third with a turnover of 55.93 million shares worth N169.24 million.

    “Despite the marginal gain today (Wednesday), the improvement in sentiment shows the market is gradually stabilising. Thus, we expect performance in subsequent trading sessions to remain positive,” Afrinvest Securities stated.

  • Financial closure for $550m power project coming

    King Line Development (KLD) Nigeria, which signed a $550million Power Purchase Agreement (PPA) for 550megawatts (Mw) with the Federal Government last week, has set the fourth quarter of next year for the project’s financial close.

    Its Managing Director, Akinnola Fola, who spoke with reporters Abuja at the weekend, said the cost of developing the deal is being borne by Kingline, adding that discussions are ongoing for another investor to jointly fund the remaining development activities’ financial close in January next year.

    On equity contribution, he said it would be partly provided by Kingline and other investors, while land has been provided by Ondo State government as its contribution.

    Confident of securing all equity need at financial,  Fola explained that for the project finance “discussions are with various options available. ECA’s from  South Korea, France and Canada, according to him, are all options. African Development Bank (AfDB), OPIC and international lenders options are all available and very viable”, adding that the PPA gives some credibility to would-investors and lenders.

    According to the Managing Director investors are now ready for the project to go to the next level.

    The agreement, he said, will ensure that 550Mw, which is 12 per cent of the 6,000Mw will come to the national grid for the benefits of Nigerians.

    Continuing, he said after the PPA, “we still need to sign other transaction agreements such as partial risk guarantee, but we are looking at fourth quarter 2018 to achieve financial close. And after that we have 24 months to do the construction. So tentatively we are looking at first quarter 2020.”

    He said there is a mechanism put in place by government of which one is the partial risk guarantee, political risk insurance, which are all measures that international lenders will need to put money into the business to ensure returns on investment (RoI).

  • Financial markets: No dull moments in 2017

    Financial markets: No dull moments in 2017

    The outgoing year has been a busy one for the financial markets and the economy. From the naira’s huge recovery against global currencies, massive borrowing by the Federal Government from the International Capital Markets, the Bank Verification Number (BVN) policy and the Anchor Borrowers’ Programme to the implementation of the Financial System Strategy (FSS2020), there were no dull moments within the year. COLLINS NWEZE captures some of the major events that shaped the financial markets in 2017. 

    It was difficult to name one event that created the biggest anxiety for banks and managers of the economy within the last one year.

    However, the   Federal High Court, Abuja ruling on an ex parte application filed by the Federal Government through the Office of the Attorney-General of the Federation on October 21, which granted the temporary forfeiture of funds in accounts not linked to Bank Verification Number (BVN) stood out.

    The biggest casualties in terms of deposit loss should the Federal Government go-ahead to implement the court order  will be the first generation banks. They seem to have the largest number of customers who have stayed with them for close to or over 100 years.

    The banks with the largest impact are likely to lose deposits running into billions of naira, may have to recall loans, and suffer liquidity problems. The Federal Government has secured an interim forfeiture order from Federal High Court which would now allow it to freeze the accounts of bank customers in Nigeria who have no BVN.

    The order gave the Federal Government the nod to instruct the banks to disclose any investments made with these funds and to freeze any outward movement from these accounts.

    The court order mandates the Central Bank of Nigeria (CBN) to appoint an examiner to look into the books of any commercial bank that fails to comply. The banks are expected to provide the names of accounts without BVN, account numbers, outstanding balances, domiciliary accounts without BVN, branch/locations where these accounts are domiciled.

    Although the Federal Government seems to have soft-pedaled on the policy implementation, the anxiety it created within the financial markets, especially among Tier-1 banks, is yet to go away.

     

    Naira stability achieved

     The naira started the year exchanging at N490 to dollar in the parallel market. By February 6, the exchange rate worsened to N497 to dollar and by ending of February, it was exchanging at N520 to dollar.

    The local currency was however, stable in the official market where it exchanged for N305.5 to dollar. Interestingly, the naira stabilized at N363 to dollar at the weekend, and has remained within that band in the last four months.

    The state of the naira then, prompted the CBN Governor, Godwin Emefiele to call for a change of lifestyles among Nigerians. He said in a campaign that: “The size of Nigeria’s reserves and the value of the naira critically depend on our lifestyles and on the value and types of imports we allow into the country.”

    Emefiele’s message implied that a change in consumption pattern from foreign to indigenous goods would impact positively on the value of the local currency.

    However, some stakeholders attributed the naira’s woes to CBN’s inability to fully liberarise the foreign exchange market and allow the naira to float.

    But sub-Saharan Africa Economist at Renaissance Capital (RenCap), Yvonne Mhango in a report titled: Nigeria: Winds of change- More flexible Forex Policy, predicted that the naira would not be allowed to float on the interbank market. “This view is informed by the partial deregulation of petrol prices on May 11, and Nigeria’s history of managing the forex rate. The ideal scenario would be for the CBN to let the market set the new interbank forex rate without restriction, and in so doing, allow for an appropriate level to be found,” she said.

    Mhango predicted that consumption expenditure would continue to underperform (and weight on aggregate Gross Domestic Product (GDP)  in the near term due to declining real wage and thrifty consumers who are wary of uncertain economic outlook and also taking advantage of high interest rate environment to save.

    “We believe policy measures to ease supply side shortages in the economy, particularly for forex, and subsequent easing of monetary policy will go a long way in stimulating investment and consumption spending to support aggregate economic performance and naira’s recovery,” she said.

     

    Measures to strengthen naira

    Some of the measures put in place by the CBN to end the crisis include the first Naira-Settled Over-the-Counter (OTC) Forex Futures Market (FFM) launched in June 27 with FMDQ OTC Securities Exchange and the planned resumption of dollar sales to the BDCs.

    The FMDQ OTC Securities Exchange (FMDQ) is an organisation with the strategic intent of bringing about revolutionary changes and fostering the development of the Nigerian financial markets.

    The naira-Settled OTC Forex Futures are non-deliverable forwards, or a contract where parties agree to an exchange rate for a pre-determined date in the future, without the obligation to deliver the underlying dollar on the maturity/settlement date.

    On the maturity date, it will be assumed that both parties would have transacted at the spot forex market rate. The party that would have suffered a loss with the spot forex rate will be paid a settlement amount in naira to ensure that both parties enjoy the rate that had been guaranteed to each other through the OTC Forex Futures.

    FMDQ’s Managing Director/Chief Executive Officer Bola Onadele Koko said: “The naira-settled OTC Forex Futures product is a major milestone development in the evolution of the Nigerian financial markets. The Futures market is an opportunity to transform risk into certainty – a major paradigm shift in the financial markets landscape.

    “This innovation offers opportunities for government, businesses, pension fund administrators, investors and individuals among others to hedge (not speculate) to cope with exchange rate risk.

    “It also affords the CBN a greater opportunity to manage exchange rate volatility, thus achieving greater market confidence, liquidity, improvement in business planning, job security, employment, better allocation of resources, global competitiveness of the Nigerian financial markets, and all in all, a thriving economy.”

     

    Foreign exchange interventions continue

     While the BVN policy was on the table, the CBN consistently funded the foreign exchange (forex)  market to protect the naira and make forex available to importers.

    Dollar injections into the economy are estimated at $9 billion since February and have helped the CBN achieve long-term naira stability and curb volatility in the forex market.

    The CBN had, in the last 10 months, sustained its weekly dollar interventions in the forex market; a large part of it goes into the interbank market, bureau de change (BDCs), Retail Secondary Market Intervention Sales (SMIS) and wholesale spot.

    The dollar injections were made to enable stakeholders secure enough forex for their operations, and in the process boost naira’s stability.

    The gap between official and black market rates started to shrink since February 20, when the CBN resumed dollar interventions in key segments of the economy. Industry sources said the CBN has injected over $9 billion in the last nine months into the market.

    The CBN’s Deputy Governor, Financial System Stability, Joseph Nnanna, said the introduction of the Investors’ & Exporters’ (I&E) Forex Window was targeted at increasing forex supply; and allowing the timely settlement of transactions helped to achieve the current exchange rate. He said over $10 billion has been attracted to the economy through the I&E Forex window, adding that the window’s success rate exceeded stakeholders’ expectations.

     

    The Financial System Strategy 2020

     The implementation of the Financial System Strategy 2020 (FSS 2020) blueprint launched 10 years ago and meant to transform Nigeria’s financial sector into a growth catalyst also featured prominently in the outgoing year.

    The FSS2020 was also meant to engineer the country’s evolution into an international financial centre to strengthen domestic markets and enhance their integration with external financial markets.

    The need to get Nigeria onto the same wavelength as the rest of the world prompted the CBN’s inauguration of the FSS 2020 which clocked 10 years this year.

    The vision was to enhance Nigeria’s chances of playing big in the global financial space and sustaining its leadership position in Africa. It was also to allow Nigeria achieve Goldman Sach’s prediction of being among the Next 11 countries poised for rapid economic growth by 2020. But, achieving this requires Nigeria to have a robust and vibrant financial system and reformed payment system to power the new economy.

    To make the vision a success, the CBN, in collaboration with key stakeholders in the payments community, developed the National Payments Systems Vision 2020 (NPSV 2020). The NPSV 2020 is a sub-set of the Financial Systems Strategy 2020 (FSS 2020).

    Former CBN Deputy Governor, Corporate Services and Coordinator, FSS 2020, Suleiman Barau, said that in measuring the milestone of FSS 2020, there was a need to examine them from the existing sector perspectives. For mortgage sector, a robust secondary mortgage has been created with the CBN and mortgage operators streamlined, which has led to the establishment of the Nigeria Mortgage Refinancing Company (NMRC).

    Again, the uniform underwriting standard which was nonexistent has now been codified and introduced in the mortgage industry to regulate their practice. “In addition, the framework for the mortgage asset registry has been developed to capture mortgage transactions on a common IT platform.  The CBN has also introduced the categorisation of primary mortgage banks into national, state and local. The pension asset has grown from about N3 trillion in 2013 to N6.02 trillion in 2017,” he said.

    Also within the year, the Nigerian Sovereign Investment Authority (NSIA) was appointed advisers to manage the deployment of pension funds into long term infrastructure deployment. He said through sensitisation and mass advocacy, PenCom has stepped up prompt settlement of pension claims for retirees and is embarking on massive technical trainings, using the Information Technology platform, to ensure prompt service delivery and implementation of the micro pension scheme.

     

    Anchor Borrowers’ Programme

     The CBN committed N44.1 billion to the Anchor Borrowers’ Programme (ABP) through the 13 participating financial institutions.

    Its spokesman, Isaac Okorafor, said the CBN is moving into commodity associations where over 300,000 farmers will be mobilised and about two million jobs will be created.

    Okorafor listed the CBN’s intervention schemes that have impacted positively to the economy as, Agricultural Credit Guarantee Scheme Fund (ACGSF), which has created a total of 5,045,900 jobs; N200 billion Commercial Agricultural Credit  Scheme (CACS) – 1,134,772 jobs; N200 billion Small and Medium Enterprises (SME) Restructuring and Refinancing Facility (SMERRF) – 89,860 jobs; N300 billion Power and Airline Intervention Fund (PAIF) – 7,899 direct jobs and 14,304 indirect jobs; the N220 billion Micro, Small and Medium Enterprises Development Fund (MSMEDF) – 139,156 jobs.

    Others are Textile Sector Intervention Facility (TSIF) – 1,668 jobs; Nigeria Electricity Market Stabilisation Fund (NEMSF) – 1,180MW Capacity Recovery by Generating Companies (GENCOS) and over 414,000 units of meters procured; and Anchor Borrowers’ Programme (ABP) created 653,250 direct jobs.

    He said a total sum of N44.18 billion has been released through 13 Participating Financial Institutions (PFIs) in respect of 200,000 small holder farmers across 29 States in the country cultivating over 234,581 hectares of farmland in the ABP.

    The CBN targets 500,000 participants by end of 2017 on the ABP. He said the CBN is expanding the ABP through the direct engagement of commodity associations. “Currently we are working with the Rice Farmers Association of Nigeria (RIFAN) to mobilise 300,000 rice farmers who would add two million tons of rice to the national output in one year.

    He said the CBN is also working with the Federal Ministry Agriculture and rural development which aims at the pilot stage to create at least 10,000 jobs in each state of the federation.

    In order to provide access to finance for MSMEs, the acting director noted that the CBN has facilitated the establishment of the National Collateral Registry (NCR) to ensure that MSMEs and the millions of budding entrepreneurs across the country can use their movable assets to raise finance.

     

    FGN Savings Bond

    The Federal Government also within the year, generated over N6.69 billion through the monthly issuance of the Federal Government of Nigeria Savings Bond (FGNSB) since in March this year. The bond issuance, was in pursuit of its objective of financial inclusion by attracting retail investors into the bond market.

    The amount raised since inception grew to N6.69 billion following the conclusion of the FGNSB Offer for October 2017. Out of the N6.69 billion raised since inception of the FGNSB, N3.71 billion was for the 2-Year Bond while N2.98 billion was for the 3-Year Bond.

    The Debt Management Office (DMO) which issues the FGNSB on behalf of the Federal Government said the high level of subscription by investors since the debut offer in March, shows that the product appeals widely to investors. According to the DMO, 9,103 subscriptions have been received so far from investors across the county.

    Analysts praised the DMO for introducing the Savings Bond into the securities market for retail investors and taking the instrument to the grassroots. The DMO plans to sustain investor interest in the product through sensitization of the public about the gains of investing in the Bond which has a competitive fixed interest rate with its income exempted from taxes.

    Besides, the Federal Government within the year, raised N100 billion through the Sovereign Sukuk, also called Islamic Bonds.

    According to DMO Director-General, Patience Oniha, the fund will be used for the construction and rehabilitation of sections of key economic roads across the six geopolitical zones in the country.

    The Federal Ministry of Power, Works and Housing also listed 25 road projects the fund will be used for. For the CBN and DMO, Islamic finance is needed to take financial services to the grassroots, and open new investment frontiers in government-issued securities.

     

    Eurobond borrowings

    The Moody’s Investors’ Service downgrade of Nigeria’s long-term issuer and senior unsecured debt rating to B2 from B1 (with a stable outlook) within the year means higher cost of international borrowing, top financial analyst Bismarck Rewane has said.

    In an email report, the Financial Derivatives Company Limited boss, said Moody’s action means that the Federal Government’s plan to raise $5.5 billion through Eurobonds sales within this fourth quarter will attract higher pricing.

    This will bring the total funds raised through the Eurobond–International Capital Market (ICM) by the Federal Government to $7 billion in less than one year. A total of $1.5 billion was previously raised in two tranches of $1 billion and $500 million.

    In a report, Vice President – Senior Analyst Moody’s Investors Service, Lucie Villa, said Nigerian authorities’ efforts to address the key structural weakness exposed by the oil price shock by broadening the non-oil revenue base have so far proven largely unsuccessful.

    But in a swift reaction, the Federal Ministry of Finance (FMF), Central Bank of Nigeria (CBN) and the Debt Management Office (DMO) said the challenges that are highlighted in Moody’s rating are clear, and are being addressed by the government with the environment having improved significantly since the last period of assessment.

    Mhango said the plan to borrow $5.5 billion through Eurobonds will raise the country’s debt service to revenue cost beyond 62 per cent.

    She said capital releases for the 2016 budget continued into the first quarter of this year while public debt has increased by seven percentage points of Gross Domestic Product (GDP) since 2014.

    On the debt service/revenue, she said: “Nigeria’s debt service/revenue has risen sharply in recent years to 62 per cent as at June 2017 against 29 per cent in 2014. This largely reflects the Federal Government’s low revenue/GDP target of four per cent this year. The Federal Government plans a $5.5 billion Eurobond issuance before year-end 2017, as part of its efforts to lower local interest rates, by reducing domestic debt/total public debt to 60 per cent, against over 70 per cent today.”

    Mhango said budget performance in the first seven months of this year and debt developments showed there were no capital releases for the 2017 budget, because it was passed late. She said the Federal Government’s 2017 budget of N7.4 trillion was 6.2 per cent of GDP, and was signed by the executive, after being passed by the Senate in May.

  • Afreximbank: innovative financial solutions support SMEs’ growth

    Afreximbank: innovative financial solutions support SMEs’ growth

    The African Export-Import Bank (Afreximbank) has said that innovative financial solutions like credit insurance will help promote Small and Medium Enterprises (SMEs) growth and boost regional economic integration.

    The position was disclosed at the end of one-day workshop organised by the Afreximbank in collaboration with FCI and the African Capacity Building Foundation (ACBF), in Sal Island, Cape Verde as part of the Bank’s Annual Structured Trade Finance Seminar.

    The FCI is the leading global association for factoring and open account receivables finance. ACBF supports capacity building initiatives in Africa through investments in capacity building institutions; technical assistance for capacity building projects and programmes; and engagement in knowledge and learning activities.

    The bank said that the basic tenets of factoring or debtor finance, the role of credit insurance in unlocking access to finance for SMEs and the best ways to promote the development of the two financial instruments, support economic growth and regional integration in Africa.

    Managing Director of Afreximbank’s Intra-African Trade Initiative and Chairman of the Africa Chapter of FCI, Kanayo Awani, told participants that “despite new market opportunities opened up by the process of globalisation and increased regional integration, SMEs continue to be constrained due to their lack of resources, their difficulties in achieving economies of scale and the higher transaction costs they face compared to large firms”.

    “We are persuaded, though, that the solution to these challenges exist in rolling out effective and innovative financial products such as factoring,” she said.

    Awani noted that Africa currently accounted for less than one per cent of the global factoring turnover, saying that the industry was largely dominated, at 60 per cent, by European factors whose turnover represented 10.4 per cent of the European Union’s Gross Domestic Product (GDP) in 2016. That figure amounted to 1.5 trillion Euros.

    She disclosed that to promote the emergence and growth of factors across Africa, Afreximbank provides dedicated lines of credit and offers technical assistance to players in the financial industry. The bank also provides legal advice to regulators using the Model Law on Factoring which it developed.

    Awani added that Afreximbank had forged strong partnerships with leading institutions, such as FCI and ACBF, as part of its education and training activities.

    In his contribution, Executive Director at the Central Bank of Cape Verde, Carlos Furtado, who stood in for the Governor of the bank, said that by providing immediate liquidity to SMEs, factoring gave them the financial boost to allow them to integrate into regional and global value chains of growth sectors.

  • Assembly cautions workers on financial regulations abuses, others

    Assembly cautions workers on financial regulations abuses, others

    The National Assembly has cautioned its members of staff against acts capable of causing financial embarrassment to it and the public service.

    The Clerk to the National Assembly, Mohammed Omolori, who gave the warning at the  presentation of the Code of Ethics in National Assembly Service, in Abuja, urged members of the staff on the need for strict adherence to Public Service Rule. This, he said, will enable them discharge their duties with diligence and honesty.

    He said: “One of my first major assignments on assumption of office as the Clerk to the National Assembly was to take stock of so many variables in respect of human resources and productivity.

    “This is necessary as it is obvious that competent and well-grounded staff is key to the realisation of our overall objectives in the formation and implementation of service goals.

    “The exercise revealed the existence of gaps in the staff attitude and understanding of Public Service Rule, Disciplinary Code and Ethics.

    “Following the stocktaking, a disciplinary committee was set up to come up with strategies for ensuing attitudinal changes in staff,” he said.

    According to him, the committee considered suitable options and strategies and eventually came up with the publication of a pocket friendly “Code of Ethics” to serve as a means of enlightenment and constant reminder to staff.