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Tag: Godwin Emefiele

  • Breaking:Emefiele still in office, says CBN

    The Central Bank of Nigeria (CBN) has dismissed claims that the CBN governor, Godwin Emefiele has been sacked.

    Responding to enquiries from The Nation on Monday, the Director Corporate Communications of the CBN Mr. Isaac Okorafor told The Nation that “the governor is in his office working. I don’t know what you’re talking about.”

    Another official of the CBN also told The Nation Correspondent that “there is nothing like that, the governor is here, his tenure expires in June.

    Read Also: Emefiele to Atiku: your monetary policy agenda disastrous

    “In fact he has functions to attend to tomorrow, one of which is to meet with stakeholders in the cotton value chain on Tuesday March 5, 2019.”

    An online medium had reported on Monday afternoon that the CBN governor has been sacked by the presidency and given two weeks to clear his table and “handover to an unnamed successor.“

  • Emefiele: Scholars hail Buhari, task FG against replacing security chiefs

    President Muhammadu Buhari has again received a pat on the back over the reappointment of Godwin Emefiele as the Central Bank of Nigeria (CBN) for a final five-year term.
    The Association of Nigerian Scholars in Diaspora, an umbrella organization of Nigerian scholars in the Diaspora, which gave the commendation, noted that reappointment of Godwin Emefiele as the apex bank governor’s boss was indeed a welcome development that depicts a strong political will by the government of Nigeria towards repositioning Nigeria to take its pride of place in the comity of Nations.
    The Association of Nigerian Scholars as a prelude delegated its committee on Economic Development that consists scholars versed in Economic Development to assess the tenure of Godwin Emefeile as the CBN governor in Nigeria and discovered that the Nigeria economy indeed gained substantial traction in the last four years and also commended the dexterity with which the governor of the CBN handled our economic crisis.
    Prof Bitrus Gwamna, President of the group in a statement on Sunday averred that it would have been counter-productive if President Muhammadu Buhari had effected a change in the leadership of the CBN, especially in this critical stage of our existence because the country just exited recession.
    The group also cautioned the presidency against replacing the current security chiefs the country.
    The statement reads.
    The Association of Nigerian Scholars in Diaspora consequently wishes to charge President Muhammadu Buhari to continue to bring on board more seasoned individuals to assist in Nation building regardless of their ethnic or religious affiliations.
    The reappointment of Godwin Emefiele as the governor of the CBN is indeed a step in the right direction, which should be replicated in other critical sectors such as security.
    The Association of Nigerian Scholars in Diaspora also notes the invaluable efforts of the security agencies in curtailing the activities of criminal elements that have attempted to hold the country to ransom through their nefarious actions and inactions.
    Worthy of mention is the role of the Nigerian Army in the fight against terrorism in Nigeria. The position of the Association of Nigerian Scholars in Diaspora is that the military hierarchy indeed displayed capacity and competence in arresting the various security challenges that almost brought the country to its knees.
    Consequently, the position of the Association of Nigerian Scholars in Diaspora is that the various heads of the security agencies in Nigeria should be supported and not replaced in the critical point of our existence.
    This is in our opinion is so, upon a careful assessment of how the Nigerian military has carried on with the fight against terrorism in North East Nigeria, as well as other militant groups in other parts of Nigeria.
    The Association of Nigerian Scholars in Diaspora having assessed the performances of the Service Chiefs in Nigeria, unanimously agreed that President Muhammadu Buhari would indeed write his name in gold if he extended same gesture in the economy by the reappointment of Godwin Emefiele as CBN governor to the current set of Service Chiefs who by all parameters have performed creditably well in onerous task of keeping the country safe and secured.
    It is necessary so due to the volatile nature of the security situation in Nigeria. And an attempt to tinker with the current security architecture might have some consequences, which in our opinion might rubbish all the gains that have been made in the fight against terrorism in Nigeria.
    It is, therefore, the position of the Association of Nigerian Scholars in Diaspora that the Service Chiefs should be retained so that can consolidate in the gains made in the security sector in Nigeria.
    The Association of Nigerian Scholars in Diaspora is in tandem with the position of the Senate of the National Assembly of Nigeria on the reappointment of Godwin Emefiele as the governor of the Central Bank of Nigeria.
    The Association of Nigerian Scholars in Diaspora wishes to state that President Muhammadu Buhari deserved commendation in the areas of the economy and security with the quality of appointments made so far, and having the will to resist political pressure to effect a change in the leadership of the Central Bank of Nigeria.
    The Association of Nigerian Scholars in Diaspora sees the current Service Chiefs as the best in the annals of the country and highly recommends that just like in the case of the Central Bank of Nigeria, the status quo should remain for consolidation of the gains already made in the past four years in the sensitive security sector in Nigeria by the present administration.

  • Unpaid salaries: Court dismisses ex-officer’s suit against army

    The National Industrial Court of Nigeria in Lagos has dismissed a suit by an alleged “deserter”, Idris Abdulrahman, against the Nigerian Army and Chief of Defence Staff.

    Justice Nelson Ogbuanya held that the suit was statute-barred, having been filed 13 years late.

    The claimant sued the army for refusing to pay his salaries.

    Abdulrahman, who enlisted in the Army in August 1980, said while he was serving with the Artilery Regiment in Epe, Lagos, he obtained a three-day pass sometime in 1997 to enable him take his sick brother to a hospital in Ikeja.

    On his way to his brother’s house in Shangisha Estate at about 8pm, he had an altercation with a vigilante group, which denied him access.

    He said he was framed up and detained at the Kirikiri Maximum Prison for seven and a half years without trial following the altercation.

    The claimant said his salary was stopped from August 1997 and he did not receive any salary all through his detention period.

    According to him, following the intervention of a lawyer, Isaac Boro, the false charges against him was struck out by a Chief Magistrate’s Court.

    Abdulrahman said his lawyers wrote the army asking that he be reinstated and his salaries paid, but the letters were not acknowledged.

    He prayed the court to hold that he was still a military officer, and to order the army authorities to pay his accumulated salaries to the tune of N732, 000 as at November 2017.

    Read Also: Court asks EFCC to release ex-Skye Bank Chair

    But, the defendants maintained that Abdulrahman was declared a deserter having been away without leave (AWOL) by operation of military law.

    The army said he was deemed to have been convicted by the court marshaled when his three-day pass expired and he did not resume duties.

    According to the defendants, the military law provides that after seven days of absence, an absent officer would be declared AWOL; after 21 days he would be declared a deserter and after another 21 days of absence, he would be deemed to have been convicted by a Court Marshall and dismissed from the services of the armed forces.

    The army said his salaries were stopped in compliance with military rules guiding officers’ employment.

    In his verdict, Justice Ogbuanya found that Abdulrahman was released on November 1, 2004 but filed the suit on November 22, 2017.

    “The claimant rather alluded to poverty as reason for his not pursuing legal action since his release from detention but offered no explanation as to why he did not quickly visit the Army Headquarters to incident his issues. It would not cost him much to pay such visit,” the judge said.

    Justice Ogbuanya held that the claimant ought to have filed the suit within three months of his release from prison in November 2004.

    “Thus, such action should have normally been commenced latest in February 2005, but it was commenced in November 2017, a period of about 12 years after the cessation of the cause of action.

    “I, therefore, find that the suit is caught up by the limitation provisions of Section 2 of Public Officers Protection Act (POPA). Accordingly, this suit is statute-barred. I so hold.

    “Where a court comes to the finding that the suit before it is statute barred, the legal consequence is that of dismissal.

    “In the circumstance, this case is liable to be dismissed. It is hereby dismissed. I so hold.

    “Having so dismissed this suit based on the preliminary objection, the issue bordering on the substantive issue also submitted for determination hereby abates as I find no further jurisdictional competence to pronounce further on it. I so hold. Judgment is entered accordingly. I make no other as to cost.”

     

  • Atiku’s monetary agenda will lead to perdition, says Emefiele

    Governor of the Central Bank of Nigeria (CBN) Mr. Godwin Emefiele has warned the Peoples Democratic Party’s (PDP) presidential flag bearer’s suggestion the exchange rate should be free float is recipe for disaster that will surely lead to perdition.

    Reacting to Atiku Abubakar’s criticism of the CBN and Emefiele’ management of monetary policies and his suggestion that the exchange rate should be free-floating, the CBN governor said: “The MPC reviewed it and concluded that it would be wrong. It is as good as saying that we should go back to the era of Structural Adjustment Programme (SAP) in Nigeria.

    “The implication can better be imagined. It will certainly lead to capital flight, lead to massive depreciation or devaluation of the currency and ultimately to currency crisis in Nigeria and I think we should all know that it is a road to perdition to ever go in that direction.”

    Addressing reporters at the end of the bi-monthly Monetary Policy Committee (MPC) meeting, the first for the year, and weeks before the general elections, Emefiele maintained: “There is no capital control in Nigeria today because you cannot find the CBN trying to intervene in the market for demand and supply of foreign exchange.”

    He insisted: “We cannot be talking about allowing import of items that can be produced in the country today, exporting jobs from Nigeria to foreign countries, and we say we have the interest of Nigeria at heart?

    “We don’t agree with anybody. It is a wrong premise to say that you will allow imports to just flood the country just because you want to please anybody. It is not in our interest.”

    Read Also: Emefiele outlines policy thrust for 2019

    Emefiele pointed out the CBN is apolitical. “We will remain apolitical. We will not want anybody to drag the central bank into issues within our remit otherwise, we would respond to it.”

    The CBN governor admitted the apex bank has instructed banks to suspend interest on loans for fuel imports.

    With regards to forex restrictions on imported items, Emefiele said CBN will get even more aggressive to see to it that any or all food items that can be produced in Nigeria and consumed in Nigeria and are currently being imported into Nigeria may face forex restrictions.

    Highlighting his successes and achievements as CBN governor, Emefiele argued that “Dangote is today establishing the biggest refinery I have ever seen.

    “The size of Dangote refinery is at least 10 times the size of Victoria Island. By April 2019 when Dangote Fertilizer Plant begins to roll, we will place a ban on the importation of fertilizer because Nigeria will both be self-sufficient and even export.”

    He also disclosed that he has “written to governors in the South-South and South East that time has come to stop importation of crude palm oil.

    “A barrel of crude palm oil is more expensive than crude petroleum per barrel. I told them that we will re-establish the oil palm belt in the South-South and South Eastern parts of the country.

    “Edo State has reacted positively like some other states. With support and intervention from CBN and government, we would reverse the trend.

    “That should be the direction. It is important to say this so that people can know that the economy is doing well.

    “A lot of work still needs to be done, there are still a couple of vulnerabilities and fragilities that we see in the economy but we are determined to resolve them.“

  • Dont let politicians use you for money laundering – CBN warns banks

    … Retains interest rate at 14%’

    As the 2019 elections approach and political maneuvering intensify, the Central Bank of Nigeria (CBN) has warned Deposit Money Banks (DMBs) to be careful not to violate the money laundering Act.

    Banks that violate the money laundering Act in the guise of handling money for politicians the CBN warned, risk very stiff penalty. CBN governor Mr. Godwin Emefiele gave warning on Thursday at the end of the Monetary Policy Committee (MPC) meeting in Abuja.
    Emefiele told journalists that the CBN’s position and warning was handed down to the DMBs Chief Executives at a recent meeting to intimate them of the dangers they may be exposed to as a result of the activities of politicians.
    According to Emefiele, “On the 2019 elections, we had a meeting with the banks. We advised them to be very careful of money laundry issues. If they are caught, they will be heavily penalized. But banks have their rules and criteria; I don’t think banks will do anything that will violate the rules. When they go wrong, we will deal with them.”
    On lending to politicians, he said, “of course, when you say banks lending to politicians, banks have their acceptance criteria and I don’t think that the banks will do that at this time. Everybody must have learnt their lessons and I believe that the right thing for everybody is to conduct their businesses carefully. But we as central bank, we are staying behind and watching to make sure that when things go wrong or about to go wrong we will deal with it appropriately.”
    On the raging MTN repatriation issue, Emefiele disclosed that they are on the verge of making an announcement and pleaded with journalists to give all the parties some time to tidy up lose ends.
    According to him, “We have held meetings with the MTN Group from South Africa and we are at the verge of announcing the resolution. I am very certain that we have reached the end of the road on this issue, and I will continue to say that the sanctity of the CCI issued by our banks remain sacrosanct.”
    He stated that “No other company is being investigated on the issue of CCI, no other person is being investigated on the issue of CCI, this is an isolated matter and I will also say that we have foreign investors in Nigeria like Nigerian Breweries, Guiness and lots of foreign investors who have been carrying out their businesses for over fifty years and they have conducted their businesses in a way that we instructed and that is why there have not been issues.”
    The issue of MTN be said “is being resolved and there is no need for anybody to be worried. This issue will be resolved equitably and amicably for the benefit of all.”
    Elaborating further, Emefiele told journalists that “you must know that in issues like this, there are several things involved in this matter, such as whether the capital repatriation CCI was issued in 24 hours, and several others. Of course, these issues were dealt with over the period but the one that appears to have generated the kind of attention that we think it shouldn’t be generating is the issue of repatriation.”
    He cautioned that “it is better for you to be slow in taking some of these decisions and when you take them you know that they are potent, and rational for those decisions. We were rational for the decisions we took because there were certain documents we expected to be submitted, those documents are now been submitted. We are in a process where we are saying this matter will be resolved.”

    Read Also: CBN lifts forex market with $210

    The monetary Policy Committee (MPC) of Central Bank of Nigeria (CBN) rose from its 264th meeting Thursday to announce the retention of the Monetary Policy Rate (MPR) at 14 percent along with all the other base rates. These include Asymmetry Corridor at +200-500 basis points around MPR, Cash Reserve Ratio (CRR) at 22.5 percent and Liquidity Ratio at 30 percent.
    Reading the communique of the meeting, CBN Governor, Mr. Goodwin Emefiele said the decision to hold the rates was unanimously agreed upon by all the 11 members. According to him, “the decision to hold was also an expression of confidence in the direction of the economy which outlook is positive.”
    Reviewing the economy in the last two months, the MPC lamented that “credit to the private sector grossly under-performed below the 2018 benchmark of 12.4 percent. The under performance of the monetary aggregate was of concern to the MPC, which impressed it on CBN to ensure credit delivery to the small and medium scale enterprises”.
    Emefiele noted that “Improvement in productivity in the oil and non-oil sectors are also expected to drive output growth in the medium term. The committee however, acknowledged the downside risks to this outlook to include absence of fiscal buffers, low domestic credit and weak aggregate demand”.
    The MPC also said improvement in security, improved harvest, as well as stable exchange rate are expected to moderate inflation. “Overall, the outlook for the economy remains positive with a growth projection of 1.75 percent in 2018.”
    The committee however advised Nigerians to look out for increase in inflation rate in the coming months due to anticipated election spending, end of year spending, high cost of energy, flooding, farmers/herdsmen crisis. The MPC cautioned that reduction in inflation figures seen in October was unsustainable.
    The MPC urged fiscal authorities to work towards containing these menaces and sustain implementation of the 2018 budget,as well as the Economic Recovery and Growth Plan (ERGP) of the Federal Government to ameliorate the supply side constraints.

  • CBN targets stable exchange rate to protect Naira’s strength

    A stable exchange rate to avoid depreciation of the naira is Nigeria’s target now, Central Bank of Nigeria (CBN) Governor Godwin Emefiele said yesterday.

    He said as good as building reserves is, the present economic situation cannot allow that.

    Besides, the country is not ready to increase taxes although there is the necessity to diversify the economic base, according to Minister of Finance Zainab Ahmed.

    They spoke yesterday, the final day of the International Monetary Fund (IMF) and World Bank Group (WBG) Annual Meetings in Bali, Indonesia and after the Nigerian delegation’s meetings with investors and institutions.

    Emefiele said all frontiers and developing markets had suffered depreciation and loss of reserves.

    “We are very conscious of the need to build buffers but, unfortunately, I must say that we are in the period where it will be difficult to talk about building reserve buffers.

    “We can only build reserve buffers if we want to hold on to the reserve and then allow the currency to go, and wherever it goes is something else.

    “So it is a choice we have to make and at this time the choice for Nigeria is to maintain a stable exchange rate so that businesses can plan and we do not create problems in the banking system assets,” Emefiele said.

    According to him, like other emerging markets nations, Nigeria has also lost reserves but only marginally because it has managed to sustain stability in its foreign exchange market.

    The CBN governor said that the IMF and the World Bank advised that nations should build country specific policies and fiscal and structural reforms that would boost economic growth.

    The Finance minister described the World Bank’s Human Capital Development Index (HCI) ranking, which placed Nigeria low at 44 per cent, as “stunting, disheartening and depressing”.

    It is a wake-up call to the government, she said, adding: “We admit that this pervasive action was due to long years of under-investment in human capital, which we have before now realised and which we have been addressing.

    “Apart from major policy actions, some decisive actions are being taken to address the situation.”

    On possible tax hike, Mrs. Ahmed, who is the leader of the Nigerian delegation to the 2018 IMF and WBG meetings, said although there had been suggestions by the global financial institutions to increase local revenue generation along that line, raising tax was not being considered by the government.

    She said government will keep the current tax regime unchanged”, as “to increase taxes would mean changing the laws and we are not ready to increase taxes”.

    Mrs Ahmed, however, said she agreed with the IMF and the WBG that Nigeria should explore ways and means of diversifying the economy and increasing the country’s revenue profile.

    Mrs. Ahmed, who addressed the Nigerian media, with Minister of Budget, Senator Udoma Udo Udoma, Emefiele, Nigeria’s Ambassador to Indonesia Hakeem Toyin Balogun and  Securities and Exchange Commission (SEC) Acting Director-General Ms. Mary Uduk, said Nigeria’s problems were not so much that of debts, as much as of  revenues, adding: “What we have is revenue problems not debt problems.”

    According to her, the delegation held meetings with two rating agencies-Fitch and Moody’s – and presented to them the summary and synopsis of the recent economic and financial developments in Nigeria.

    She added that it was an opportunity for the rating agencies to be able to objectively evaluate Nigeria’s credit.

    Mrs Ahmed said she met IMF Managing Director Christine Lagarde and discussed Nigeria’s economy in view of the 2019 general elections.

    She assured Lagarde that the election year would not pose any threat to the nation’s economic prospects.

    Udoma said to improve HCI, the nation had improved budgetary allocation to health and education.

    He said that allocation to education moved from N22.5 billion in 2015 to N102.9 billion in 2018.

    The allocation to health was reviewed from N26.6 billion in 2015 to N86.49 billion in 2018.

    Udoma said N55.19 billion had been added to the health budget in 2018 through the National Health Act.

  • IMF to release World Economic Outlook

    The International Monetary Fund (IMF) will this week release the much awaited World Economic Outlook which project to the trajectory the world economies will take in the 12 months.

    The World Economic Outlook report will be released on Monday while the Global Financial Stability Report and the Fiscal Monitor  will be released on Wednesday.

    Already world economic leaders have started gathering in Bali Indonesia to deliberate on these reports and hold bilateral meetings on the sidelines of the meetings to prepare themselves for the fall out of the Outlook.

    Nigeria’s finance minister Zainab Ahmed and Governor of the Central Bank of Nigeria Mr. Godwin Emefiele will lead the Nigerian delegation to the meetings.

    Some of the crucial meetings that Nigeria participate in include the African Region Vice President Meeting;  Angola, Nigeria and South Africa (ANSA) Constituency Ministerial Meeting; AfreximBank Meeting; meetings with rating agencies, Fitch, Moody’s and Standard and Poors; the G24/ African Finance Institution Roundtable Meeting; Commonwealth Finance Ministers Meeting; Investors Forum; G-24 Finance Minister and Central Bank Governors Meeting (Ethiopia, Kenya, Nigeria and South Africa among others.

    34,000 participants will be Bali for two weeks to chart an way forward to the world economy. Addressing journalists on the events of the coming days, Minister of Communications and Information Technology of the Republic of Indonesia, Rudi Antara said Indonesia has “spent enough time preparing Bali to host the annual meetings, but this is considered a big one because there will be 34,000 participants  gathered in Nusa Dua, Bali to participate in the annual meetings.

    Read Also: 2019: Massive defection looms in Abia PDP

    “By hosting the meeting, central bank Governors and Minister of Finance from across the world are putting their eyes on Indonesia, particularly Bali, and there will be the Bali declarations. We hope to come up with a breakthrough to respond to the global uncertainties in the world economies” Antara hinted as the possible gains of hosting the meeting.

    To achieve this he said “There will be discussions by the 189 ministers of finance and another 189 central bank governors to discuss the Bali declarations. We will come up with new human capital index for the globe.

  • Nigeria might slide back to recession – CBN

    ..Why we changed Skye bank’s name
    …CBN reviewing MTN documents for amicable resolution
    …retains Interest rate at 14%

    The Central Bank of Nigeria (CBN) has raised the alarm that Nigeria risks sliding back to recession.

    Addressing journalists at the end of the September, 2018 Monetary Policy Meeting in Abuja on Tuesday Governor of the CBN, Mr. Godwin Emefiele said members were worried “that the exit from the recession may be under threat as the economy slowed to 1.95 percent and 1.50 percent within the first and the second quarter 2018 respectively.”

    It would be recalled that the CBN raised similar alarm in 2015 and 2016 of an impending recession if certain steps were not taken to address obvious threats to the economy. From late 2016 to 2017, Nigeria plunged into an excruciating recession which the country is barely out of now.

    According to Emefiele, “the Monetary Policy Committee (MPC) appraised the microeconomic environment and noted that at its July meeting, modest stability was achieved in key indicators including inflation, exchange rate and reserves. In particular, relative stability returned to the foreign exchange market, going by a robust level of external reserves with inflation trending downward for the 18th consecutive months. These gains so far achieved, appear to be under threat of reversal following the new data which provides evidence of weakening fundamentals.”

    This threat to the economy he said come from “rising inflation and pressure on the external reserves created by the capital flow reversal as the current challenges grows. It noted that the inflationary measure has started rebuilding, and capital flow reversal has intensified as shown by the bearish trend in the equities market even though the exchange rate remains very stable.”

    The MPC he said “noted that the slowdown emanated from the oil sector, with strong linkages to employment and growth in the key sectors of the economy. In this regard, the committee urged the government to take advantage of the current rising trend in the oil prices to rebuild fiscal buffers, strengthen government finances in the medium term and reverse the current trend of decline in output growth.”

    Other threats to the economy which may aggravate the onset of recession, Emefiele warned include “the potential impact of liquidity injection from election related spending, and increase in FAAC distribution which is rising in tandem with increase in oil receipt.”

    The Committee he said “was concerned with the rising level of non performing loans in the banking system, traced mainly to the oil sector and urged the banks to closely monitor and address the situation.”

    Members of the MPC also expressed concern over the weak intermediation by the Deposit Money Banks and its adverse impact on credit expansion and investment growth by the private sector.

    In view of the development, the MPC noted that the economy was still confronted with growth challenges and inflationary pressure but reiterated the need for synergy between the monetary and fiscal authorities as availed option for macroeconomic stability.

    The MPC also called on the fiscal authorities “to intensify the implementation of the Economic Recovery and Growth Plan (ERGP) to stimulate economic activities, bridge the output gap and create employment.”

    The committee lamented that the threats to the food supply chain in major food producing states due to poor infrastructure, flooding and the ongoing security challenges may lead to a “rise in food prices contributing to the uptake in the headline inflation.”

    However, the committee was optimistic that as harvests progresses, “in the coming months, pressure on food prices would gradually continue to recede while growth enhancing measures would over the medium term, have some moderating impact on food prices.”

    The MPC also called on the government to fast track implementation of the 2018 budget to help jump start the process of sustainable economy recovery and to facilitate passage of the Petroleum Industry Bill in order to increase contribution to the overall GDP.

    While answering questions on the recent take over of Skye Bank and the change of name to Polaris Bank, Emefiele assured that “the strategic health of the Nigerian banking system remains sound. In every chain, there will always be strong points and weak points in a chain, but what we will continue to do is to make sure that that chain remains strong in all aspects of it.”

    Speaking specifically to the Skye Bank issue, the CBN Governor maintained that he will “love to see a situation where banks are not liquidated, that we have to think outside the box to see how much we can ensure that we have more banks in the country than have less number of banks in the country, and that is what we are doing.”

    The situation with Skye Bank he explained “is that as at two years ago when the news broke that the bank had slid into negative capital as a result of Non-Performing Loan, at that time, we compelled the entire board and executives to resign and they did.

    “After that, before we conducted an internal audit the hole (financial gap) was about N370 billion . After the forensic audit, it came to the level it was today, which is almost about N800 billion. So what we did was to say that having established a hole at this level, tax payers money will be invested in this bank as a loan.

    “So we decided that there is a need to let shareholders know, particularly those that have lost their investment, we will try to make sure that small investors remain protected.

    “It is for this reason that the name had to be changed for from Skye bank to a sexy name Polaris bank. The name had to be changed for legal reasons, having gotten to the point where the Central Bank of Nigeria has invested close to N800 billion in this bank, at some point it must be seen to be owned by the CBN until we find investors that can pay a fair price for the bank. That is the reason why the name had to change from Skye bank to Polaris Bank.”

    On whether Polaris was registered or not before it assumed control of Skye bank, Emefiele stated that, “the insinuations that the company wasn’t registered, is false. It was first of all registered as a limited liability company about three weeks and was registered as a bank on Friday, which is a day before we took that action.

    “We should look beyond all that and focus on the real issue, which is that we are embarking on a journey to keep a bank alive, to protect depositors monies and also ensure that we don’t throw over 5,000 staff out into the labour market.”

    On the face off with MTN and four other banks, the CBN Governor explained that it was “important to know that the N8.1 billion is the dollar equivalent of MTN’s Naira generated from their profit. So I would neither call it a fine or a penalty.”

    What CBN sought by asking MTN to return that money is that we want a reversal of that transaction because it was not finally authorized by the CBN, and because the Fund moved through these four banks, the quantum of dollars that passed through the banks is what we said the banks needed to remit back, or the company needed to remit back to the CBN through the banks.”

    He said “it did not mean that these were the banks’ obligation and we understand that there was some interpretation in some quarters that aside from the Naira penalty, that there was some conclusion that those dollars attributed to have been remitted by these banks on behalf of MTN were indeed the liabilities of the bank and that is why we provided a clarification to the banks when they called us that the liability is that of MTN and not theirs and that the CBN was not in any position or in anyway going to debit the banks for the dollar because it was not their liability.”

    Emefiele said he felt vindicated that in the history of the banking sector, I at least gave a chance where the regulator, the governor sitting in the meeting, the Director Banking Supervision with over 20 examiners sitting in a hall, with the company (MTN) and the banks, asking them to resolve the issue, because we agreed that MTN is an important telecom company in Nigeria.”

    After that meeting that held on May 25, 2018 the discussion was inconclusive. The CBN gave MTN and the banks one week to send relevant documents, but it was not done. But realizing the importance of this company, we gave extra two weeks for them to provide relevant documentation to the examiners. Unfortunately this didn’t happen and we felt that we couldn’t wait indefinitely and that is the reason why we released the investigation reports.”

    Right now, they have responded and provided documents which I have sent to the examiners to review. We will go through the pain again to invite the banks and MTN to prove their case, because it is normal that we should allow them to clear themselves and that is what we are doing and I believe that in due course we should make a final call on this subject.

    At the end of the MPC meeting, the Committee decided by a vote of seven members to retain the MPR at 14 percent. However, three out of the seven members, voted to raise Cash Reserve Requirement by 150 basis points. The other three members voted to raise the MPR by 25 basis points.

    In summary, the MPC retained the MPR at 14 percent, retained the Asymetric Corridor at +200 and -500 basis points around the MPR, retain the CRR at 22.5 percent. However, other members believed that the CRR should be raised to 24 percent which actually signaled that they preferred to tightened and to retain the liquidity ratio at 30 percent.

    Before arriving at this decision, the committee had identified two likely policy options: Tightening or maintaining the status quo ante.

    By tightening, it would have tamed inflationary measure, tamed the reversal of portfolio capital, improved the external reserves position and any other position and maintain stability in the foreign exchange market.

    Conversely, the committee also noted that raising rate would further weaken growth, as credit would become more expensive, non performing loan will increase further, leading to a deceleration in output.

    “In the committee’s opinion, the upward adjustment would not only signal the bank’s commitment to price stability but also its desire to maintain all policy interest rate” Emefiele said.

    A decision to hold all policy parameter however “will sustain natural improvement in output growth. There is need to maintain the current policy stance and await a clearer understanding of the quantum and timing of liquidity injection into the economy before deciding on possible adjustment” he said.

  • Skye Bank: Expert advises CBN to strictly enforce financial guidelines on banks

    A financial expert, Dr Samuel Nzekwe, has advised the Central Bank of Nigeria (CBN) to intensify efforts to  enforce  the implementation of  its  financial guidelines  in banks,  to forestall collapse of the financial sector  in the  country.

    Nzekwe, a former President, Association of National Accountants of Nigeria (ANAN), gave the advice in an interview with our reporters on Sunday in Ota. Ogun.

    He was reacting to the announcement  of CBN that Skye Bank had been taken over by Polaris Bank.

    Mr Godwin Emefiele, the CBN Governor,  announced on Friday  that Polaris Bank had taken over the assets and liabilities of Skye Bank.

    According to him, if Skye Bank had strictly followed and looked into the CBN financial guidelines on granting loans to investors, the bank would not have problems.

    Nzekwe said that it could have been devastating and terrible if  depositors of the troubled bank lost all their money.

    “We have to appreciate the apex bank for not allowing people’s money to go down with the troubled bank because when bank has problems like this, it is the customers that bear the burdens and the loss, ” he said.

    Read Also: CBN revokes Skye Bank’s licence

    The former ANAN president noted that the action of the CBN would make people to have confidence in the financial sector since customers were safe when there in times of crises in the banking sector.

    Nzekwe further said that it would boost financial inclusion in the financial sector as people would be willing to bring their money to the banks.

    “When people brought more funds into the financial sector, the banks would be able to perform their financial roles which would make the economy to develop,” he said.

    The expert, however, said that the direct effect of the troubled bank would be on the shareholders as they would lose all their shares in the bank.

    Nzekwe explained that this would make investors to reduce purchasing banks’ shares on the floor of Nigeria Stock Market as people would begin to lose confidence in banking stocks.

    The former ANAN president also advised shareholders to always vote out non-directors at the Annual General Meetings (AGM), to avert collapse of such company.

    He, however, said that CBN should not have changed the name of the Skye Bank so as not to scare investors away from the bank.

    NAN

     

  • Economy looking up, says MPC

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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