The Nation Newspaper

Tag: NERFUND

  • Govt to close NERFUND over N17.5b loans

    Govt to close NERFUND over N17.5b loans

    The Federal Government plans to shut down the National Economic Reconstruction Fund (NERFUND) over non-performing loans of over N17.5 billion.

    Pursuant to this, a committee has been formed to ensure the smooth liquidation of the company by the end of this month.

    The agency said a source in the ministry of finance disclosed this.

    The committee is expected to come up with recommendations concerning the welfare of the NERFUND workers and also what to do with the office equipment.

    The committee is also expected to recommend an agency that would handle the numerous pending court cases initiated by NERFUND to recover billions of naira in bad loans.

    About 1,143 projects in the small and medium enterprises (MSMEs) sector were reportedly financed with the NERFUND loans between 2010 and 2013.

    A source said NERFUND currently has problems recovering the loans, adding that out of N17.5billion, the sum of N14.2billion representing 80 per cent was borrowed by a few people.

    He said the ratio of non-performing loans was high because many of the loans were not collateralised.

    NAN reports that workers of NERFUND have been officially informed about the development.

    “We have been given the choice to either resign or be sacked. The managing director told us the management is working with the permanent secretary of the federal ministry of finance.

    “They have promised that at the end of the day, we will not be jobless. They will place us somewhere else, so we are expectant,” a worker said.

    NERFUND was established by Decree  2 of 1989 to act as a catalyst towards the stimulation of the rapid rise of real production enterprises in the country, with a seed capital of N300 million.

    In 2002, the federal government merged Nigeria Industrial Development Bank (NIDB) and Nigeria Bank of Commerce and Industry (NBCI) to form Bank of Industry (BOI).

    The federal government excluded NERFUND from the fusion of all development finance institutions (DFIs).

    However, the agency’s capital had grown into billions of naira, but due to poor management the organisation had been in comatose since late 2013, losing its capacity to carry out its mandate.

    In June 2016 the staff of NERFUND took to the streets to protest the mismanagement of the agency funds.

    The Federal Government through Kemi Adeosun, the minister of finance, intervened by first shutting down the agency following failure to reconcile the differences between the executive management and the entire staff.

    Two weeks after the shuown, Adeosun instructed staff to return to work and later appointed Ezekiel Oseni as managing director.

     

     

  • Proposed National Dev. Bank: Anxiety over fate of BoI, NERFUND staff, others

    There is palpable fear in the air over what fate might befall the staff of some of the existing development finance institutions (DFIs) in the country as the proposed National Development Bank of Nigeria kicks off.

    Speaking with a cross-section of some of the agencies at the weekend, most of them maintained studied silence when The Nation attempted to feel their pulse.

    The Nation was reliably informed that some staff of the affected agencies are not at ease with the development because of the gloomy prospect of job loss.

    Investigation by The Nation revealed that some of the affected agencies being penciled down are already jittery over the development as some of them are expecting formal letters of disengagement or redeployment to other ministries and department agencies.

    Among the DFIs that may be affected include: the Bank of Industry, Bank of Agriculture, Nigeria Export-Import Bank, Nigeria Export Promotion Council, Small and Medium Scale Enterprises Development Agency, National Economic Reconstruction Fund and Federal Mortgage Bank among others.

    For instance, staffs of the NERFUND, who were sent on compulsory leave by the federal government last year, are wary that they may never be recalled again as the crisis fueled by mismanagement and alleged embezzlement is yet to be resolved.

    It may be recalled that the federal government had directed all workers of the agency to proceed on indefinite leave pending further action on the agency and subsequently mandated the Ministry of Finance set up a committee to investigate the allegations of corruption leveled against the current interim management of the agency.

    When The Nation put a call to the BoI boss, Mr. Waheed Olagunju, he could not be reached as at press time. However, a highly placed source at the agency who asked not to be named because of the sensitive nature of the matter, said the management was convinced that the organisation was on a path of progress. “Our position is that BoI is a viable entity as such we think the status quo should be maintained,” the source said.

    However, in a telephone chat with Mr. Festus Akanbi, the Special Adviser to the Finance Minister on Media Matters, he confirmed that the federal government was still working out the finer points of the new bank. “The Development Bank of Nigeria is a separate entity and the process is ongoing,” he said matter-of-factly.

  • Senate hearing on NDBN bill rekindles NERFUND’s workers’ hope

    Senate Committee on Banks, Insurance and Other Financial Institutions held a public hearing on the bill to establish the National Development Bank of Nigeria (NDBN). Some stakeholders say the proposal is timely, reports JOHN OFIKHENUA.

    The deliberations on the bill proposing to establish the National Development Bank of Nigeria (NDB) has revived the dying hope of staff and management of the National Economic Reconstruction Fund (NERFUND), whose faith has been hanging in the balance since 2000. Soon after the hearing on December 5 in Abuja, some of the staff cheered,, saying that they see light at the end of the tunnel. They said the public hearing has reawakened the hope that should the bill scale through, at the very minimum, their jobs will be secured.  One of them who asked not to be named, said: “We are very elated. At the end of the day our cries have been heard and our sufferings will now be assuaged by the legislative action. We, in  NERFUND are of the opinion that if it is passed, it will help to safeguard their jobs. We have  been waiting for this day,” they said.

    Former President Olusegun Obasanjo in 2001, merged the Bank of Industry (BoI), the Nigeria Industrial Development Bank (NIDB) and NERFUND to form the Bank of Industry, but along the line, the merger wasn’t consummated. However what only took place was the amendment of the Memoranda and Articles of Association of NIDB in order to absolve the assets of NBCI. The ploy made the merger cumbersome and encumbered till this day. This new bill wants to sanitise this whole exercise by repealing the NERFUND Act, dissolve the Bank of Industry and establish a National Development Bank (NDB).

    During the Public Hearing, the Chairman, Senate Committee on Banks, Insurance and Other Financial Institutions (BOFI ), Senator Rafiu Ibrahim said that he was aware that vested interests did not allow the merger to happen as the Federal Government directed, saying he is aware that BoI is claiming that it has today merged with NIDC and NBCI to become the  Bank of Industry. But he is aware that the management of the Bank of Industry did not resolve and settle the staff of NBCI, but simply took over the asset of NBCI and allowed the staff to go away disgruntled. They were never severed even though they were qualified to be absolved. They are still there angry and they are writing petitions every day. NERFUND has been under the supervision of the Federal Ministry of Finance, hence its insulation from the fate of NBCI.

    Although NERFUND has not been through the NBCI journey, it has its own history of neglect and near abandonment. The last board of NERFUND was dissolved in 1993, and since then, the Federal Ministry of Finance has not constituted another board. Instead it created an Interim Management Committee (IMC) chaired by the Minister/Permanent Secretary, Ministry of Finance. Consequently, the ministry has been nominating acting Managing Directors of NERFUND from 2000 till date.  An industry source who made this known to The Nation on the condition of anonymity, said the situation has plunged the FUND into limbo, culminating in its poor performance.

    The source said due the absence of a substantive leadership, “ NERFUND began to do what DFIs should not do. It started funding political projects which may not have met the minimum eligibility for funding. But because they are coming from some politicians or politically exposed individuals, they will just collect notes and give them the money.”

    The bill is now seeking to  repeal the NERFUND Act and also dissolve the Bank of Industry (BOI) , and as well repeal the Act establishing the Nigerian Bank of Commerce and Industry (NBCI).

    In his memorandum at the hearing, the National President, National Association of Small Scale Industries (NASSI),  Ezekiel Essien pointed out that the association was pleased that the Federal Government has decided to float the NDB, expressing the hope that it’s establishment would deepen diversity in the sub sector and not otherwise.

    Making case for the establishment of the new bank, he said despite the popular notion that it is more desirable to have one single Development Finance Institutions (DFIs), for the whole country to service over 180 million population, it is clearly not the usual practice in other countries across the world. For instance, while Nigeria has only five DFIs, South Africa has 12.”

  • Reps to investigate BoI, BoA, FMBN, NERFUND, others

    •To probe banks, others over casualisation of jobs

    The House of Representatives is to investigate the activities of federally-owned development financial institutions (DFIs) over their failure to fulful their statutory mandates.

    An ad-hoc committee that will undertake the investigation is expected to also proffer solutions on ways of streamlining the institutions’ activities with a view of repositioning them for effective service delivery.

    The resolution of the House followed the adoption of a motion by Chukwuemeka Ujam (PDP, Enugu), who regretted that the primary aim of establishing DFIs like the Bank of Industry (BoI),  Bank of Agriculture (BoA), Small and Medium Enterprises Development Agency (SMEDAN), National Economic Reconstruction Fund (NERFUND), and the Federal Mortgage Bank of Nigeria (FMBN) among others has been defeated.

    According to him, none of the DFIs has been able to meet its mandate of providing long-term financing to the industrial and productive sector of the economy.

    He also said that the DFIs, set up to finance the establishment of large, medium and small scale industries,  as well as facilitate the expansion, diversification and modernisation of the existing concerns have failed to carry out their set objectives.

    He said: “It is of concern that despite the huge budgetary provisions being made for these DFIs over the years, their impact in stimulating economic renaissance is yet to be felt as these agencies have seemingly been unable to fulfill their statutory mandares, the resultant effect being the stultification of the nation’s economic growth.

    “I am however convinced that the current economic challenges being experienced in the country can be reversed within the shortest possible time if these DFIs are made to live up to their statutory obligations.”

    The ad-hoc committee has six weeks to report back to the House after the motion was unanimously passed.

    Similarly, the  House has mandated its Committee on Labour, Employment and Productivity to investigate the incidence of casualisation and outsourcing of jobs in both private and public sectors of the economy.

    This followed the adoption of a motion by Wale Raji (APC, Lagos), who noted that casualisation and outsourcing of jobs negates the provision of Section 7(1) of the Labour Act that no worker should be engaged on probation or temporary employment for more than three months.

    Raji said: “It is however disturbing that some employers, especially in the banking and sectors, in an attempt to cover up their illegal acts, outsourced jobs to firms to recruit workers for them.

    “We should be concern about the negative effects of casualisation on workers which lead to deprivation of employment benefits and lack of legal status  thus making them dispensable at the convenience of the employers.”

    The Committee was given six weeks to report back to the House for further legislative action.

    In a similar development, the House also has also mandated Committees on Commerce as well as Industry to liase with the Ministry of Commerce and Industry, and Trade and Investment to formulate a blueprint that would encourage manufacturers of cell phones, electronics and electrical appliances tonsite theoe factories in Nigeria.

    Following the adoption of a motion by Henry Archibong (PDP, Akwa Ibom), the lawmakers pointed out that the  technological, financial and economic gains Nigeria stands to benefit from the localization of the plants and factories of those manufacturers through job creation and reduction of capital flight are immense.

    The mover of the motion said the import duties paid for the importation of the finished items are not commensurate with the skills and manpower training that will be acquired by millions of Nigerians across the country if such plants and factories are sited in Nigeria.

    The joint Committee was given six weeks to complete its assignment.

     

  • NERFUND gets new Chief Executive

    The federal government appointed Dr Ezekiel Oseni the Acting Managing Director of the National Economic Reconstruction Fund (NERFUND).

    A statement from the Ministry of finance on Wednesday said the Minister, Mrs Kemi Adeosun gave the approval under a Management Agreement between the ministry and the Bank of Industry (BoI). The appointment is with immediate effect.
    The statement which was signed by the Permanent Secretary of the Ministry, Dr Mahmoud Isa-Dutse said Dr. Ezekiel Oseni until his appointment was a General Manager and Chief Risk Officer at BoI.
    With this appointment, Oseni has been mandated to “reposition NERFUND and ensure that all outstanding indebtedness are recovered.”
    In June this year, Mrs. Adeosun directed all staff of the National Economic Reconstruction Fund (NERFUND), to immediately return to their duty posts after intervening to resolve the crisis within the organisation.

    Staff of the Agency had earlier been directed in a Circular signed by the Permanent Secretary, on June 15, 2016,  to stay away from work to forestall further breakdown of law and order as a result of disputes between the Executive Management, Senior Management and other staff of the organisation.

    NERFUND was established in 1989 to provide medium to long-term financing to viable Small and Medium scale production enterprises to increase the quantity of goods and services available for local consumption and export, provide needed employment, expand the nation’s production base and add value to the economy. 

    The Fund has so far extended credit facilities for 2, 829 projects valued N9.5 billion between 1989 and 1999. 

  • Minister orders NERFUND staff back to work

    Minister orders NERFUND staff back to work

    • Govt to revive YouWin programme

    The Minister of Finance, Mrs. Kemi Adeosun has directed all staff of the National Economic Reconstruction Fund (NERFUND), to immediately return to their duty posts as the crisis within the organisation have been resolved.

    The agency’s staff were directed in a circular signed by the Permanent Secretary, Federal Ministry of Finance, Dr. Mahmoud Isa-Dutse to stay away from work to forestall further breakdown of law and order as a result of disputes between the executive management, senior management and other staff of the organisation.

    The NERFUND was established in 1989 to provide medium to long-term financing to viable Small and Medium scale production enterprises to increase the quantity of goods and services available for local consumption and export, provide needed employment, expand our production base and add value to the economy.

    Meanwhile, the Federal Government is to start consultations with beneficiaries and other stakeholders on the restructuring and refocusing of the multi-billion naira Youth Enterprise with Innovation in Nigeria (YouWin) programme with the objective of injecting new ideas for its sustainability.

    The Federal Ministry of Finance, which has been running the programme from inception, has sched-uled the consultation for July 22, in Abuja, where representatives of the beneficiaries drawn from the six-geo-political zones and other stakeholders would chart a way forward for the programme.

    Under the programme which took off in 2011, a total of 18, 000 young entrepreneurs have been trained in various aspects of Small and Medium Enterprises management and business skills;   and 3, 900 of them, including 1, 200 women, were each given non-repayable take-off grants for businesses of their choice ranging from N1 million up to a maximum of N10 million.

    The third edition of the programme, which is still running with 1,500 beneficiaries, has received the sum of N11.2 billion in funding, and so far grants totaling N7.4 billion have been disbursed to the awardees.  In June 2016 alone, the sum of N1.687 billion was paid to 638 awardees.

    Adeosun, said that as part of the change agenda of the current administration, the YouWin programme has to be restructured to ensure efficiency, transparency and accountability in investing the capital grants given to the beneficiaries by the Federal Government.

  • Fed Govt shuts NERFUND

    Fed Govt shuts NERFUND

    The Federal Government has shut down the Nigerian Economic Reconstruction Fund (NERFUND).

    A letter to all staff and management of the organisation signed by the Permanent Secretary, Federal Ministry of Finance, Mahmoud Isa-Dutse noted that “following the recent developments in your organisation and the failure to reconcile the differences but the Executive Management, Senior Management and staff and in spite of interventions by the Federal Ministry of Finance, the ministry has decided to close down the organisation with immediate effect.

    The letter advised “all staff and management to proceed on compulsory leave.” When contacted, Festus Akanbi the Special Adviser to the Minister of Finance confirmed the development.

    Early in the month, members of staff of NERFUND protested the failure of successive governments to make a pronouncement over the status of the organisation almost 16 years after former President Obasanjo muted the idea of merging DFIs, comprising NERFUND, NDIB and NBCI to form BoI.

  • FG shuts down NERFUND

    FG shuts down NERFUND

    The federal government has shut down the Nigerian Economic Reconstruction Fund (NERFUND).

    This is contained in a letter to all staff and management of NERFUND signed by the Permanent Secretary, Mahmoud Isa-Dutse, Federal Ministry of Finance.

    The letter noted that “following the recent developments in your organization and the failure to reconcile the differences, but the Executive Management, Senior Management and staff and in spite of interventions by the Federal Ministry of Finance, the ministry has decided to close down the organization with immediate effect.

    The letter advised “all staff and management to proceed on compulsory leave.” When contacted, Festus Akanbi the Special Adviser to the minister of finance confirmed the development.

  • NERFUND managers stay put as tenure lapses

    NERFUND managers stay put as tenure lapses

    Has the one-year tenure of National Economic Reconstruction Fund (NERFUND) interim managers, which expired last October, been extended? This is the questions being asked by industry watchers as the managers are still in office over two months after their tenure expired.

    NERFUND workers are wondering what the managers are still doing when there is no indication of their tenures extension.

    NERFUND, which is under the supervision of the Ministry of Finance (MoF), is managed by a team from the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC). The team was seconded to overhaul NERFUND following a N5.7 billion loss.

    The team, which assumed duty last October 9, is headed by Muhammad Gidado Kollere of NDIC’s as Managing Director/CEO, CBN’s Ihua Elenwor is the Executive Director, Operations.

    The managers are expected to recover outstanding loans and reconcile all accounts with correspondent banks. They are also expected to render quarterly reports to NERFUND’s board, headed by the Permanent Secretary, MoF.

    A source at NERFUND said the managers should be concerned with how the firm should be wound down now, following the National Assembly’s plan to repeal the law establishing it. They said the managers should also be concerned about the workers’ terminal benefits.

    The source advised the MoF to pay attention to what is happening in NERFUND to protect it from further losses. The source said the agency’s receivership is for one year, after which a substantive Managing Director would be appointed.

    The source said there is intense lobbying for the job. “You see, these managers from the CBN and NDIC may not want to quit as their tenure expired in October. They are more professional than the past managers of the Fund. They are also likely to seek extension of their tenure,” the source said.

    It said the CBN/NDIC team has been able to restructure some of the ‘political loans’ that led the Fund into incurring losses. “Majority of the political loans that dented NERFUND’s balance sheet has been restructured, and secured with requisite collateral,” the source said.

    The source also faulted the N5.7 billion loss claim by the government, saying the total amount NERFUND has obtained from government since inception is not up to that amount. The Fund received about N2.8 billion in 2010, and $141 million from the Africa Development Bank (AfDB) at an exchange rate of N9.9 to a dollar in 1991.

    NERFUND also got another N350 million loan from the government. The source said the cumulative funds, made available to NERFUND till date, are below N4 billion. The source said there are also plans to restructure the operations of the Fund.

    This may necessitate the merger of NERFUND with the Bank of Industry (BoI) to deepen credit access to small and medium enterprises (SMEs). NERFUND was established by Decree No. 2 of 1989 to provide medium to long-term loans to participating banks (PBs) for on-lending to SMEs for the promotion and acceleration of productive activities in such enterprises.

    The government took over the Fund following President Goodluck Jonathan’s approval of the recommendations of the CBN and NDIC Joint Special Examination report on its books. It claimed the capital invested in the institution by the MoF had been eroded with the gross losses.

    The Fund, it was learnt, has not been able to service loans taken for on-lending from the AfDB, the MoF and other sources. The source said the agency’s last governing board was dissolved in 1993, adding that it was being run by an Interim Management Committee headed by Permanent Secretary, MoF before the CBN/NDIC team came on board.

    The source said the firm has over time canvassed for reconstitution of its corporate governance board, recapitalisation and total restructuring. There were also previous plans to merge it with other Development Finance Institutions (DFIDs), which also failed.

    Conditions set for accessing NERFUND’s Micro Enterprises Credit Scheme entail that prospecting businesses must be engaged in manufacturing, mining, quarrying, agro-allied, industrial support services, equipment leasing and other ancillary services.

    Besides, the enterprise should be wholly Nigerian owned and must source its raw materials for the project locally but could source plant and machinery either locally or from abroad. The projects to be financed must be financially and economically viable, and should have positive impact especially in employment creation in the operating environment.

    According to NERFUND statutes, the expected project could be a start-up, expansion, rehabilitation or diversification of existing business while the beneficiaries are expected to own 10 per cent equity of the proposed business. The prospective beneficiary must have a limited liability company or registered enterprise and can only access between N100,000 and N5 million.

  • NERFUND’s interim managers lobby for tenure extension

    NERFUND’s interim managers lobby for tenure extension

    Interim Managers at theNational Economic Reconstruction Fund (NERFUND) are alleged to be lobbying the Federal Government to renew their one-year term which expired October 9, The Nation has learnt. They are asking for a fresh one year tenure.

    NERFUND, which is under the supervision of the Ministry of Finance (MoF), is managed by an interim management team drawn from the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC). The team was seconded October 9 last year to overhaul NERFUND following a N5.7 billion loss.

    The NERFUND team is headed by Muhammad Gidado Kollere of the NDIC as Managing Director/CEO; Ihua Elenwor of the CBN is the Executive Director, Operations.

    The managers are to recover outstanding loans and reconcile all accounts with correspondent banks. They are also expected to render quarterly reports to NERFUND’s board, headed by the Permanent Secretary, MoF.

    An insider at NERFUND said instead of the managers to be thinking of tenure elongation, they should rather be concerned with how the firm should be wound down, following ongoing moves by the National Assembly to repeal the law establishing it.

    They said the interim managers should also be concerned about the terminal benefits of the current staff.

    The source advised the MoF to pay more attention to what is happening in NERFUND to protect it from further losses.

    The source said the agency’s receivership is for one year, after which a substantive Managing Director would be appointed.

    The source said there is intense lobbying for the job. “You see, these managers from the CBN and NDIC may not want to quit as their tenure expires in October. They are more professional than the past managers of the Fund. They are also likely to seek extension of their tenure,” the source said.

    The source said the CBN/NDIC team has been able to restructure some of the ‘political loans’ that led the Fund into incurring losses. “Majority of the political loans that dented the balance sheet of the FUND has been restructured, and collateral secured,” the source said.

    The source also faulted the N5.7 billion loss claim by the government, saying the total amount NERFUND obtained from government since inception is not up to that amount. The Fund received N2.8 billion in 2010, and $141 million from the Africa Development Bank (AfDB) at an exchange rate of N9.9 to a dollar in 1991.

    NERFUND also got another N350 million loan from the Federal Government. The source said the cumulative funds, made available to NERFUND till date, are below N4 billion. The source said there are also plans to restructure the operations of the Fund.

    This may necessitate the merger of NERFUND with the Bank of Industry (BoI) to deepen credit access to small and medium enterprises (SMEs). NERFUND was established by Decree No. 2 of 1989 to provide medium to long-term loans to participating banks (PBs) for on-lending to SMEs for the promotion and acceleration of productive activities in such enterprises.

    The government took over the Fund following President Goodluck Jonathan’s approval of the recommendations of the CBN and NDIC Joint Special Examination report on its books. It claimed  the capital invested in the institution by the Ministry of Finance had been eroded with the gross losses.

    The Fund, it was learnt, has not been able to service loans taken for on-lending from the AfDB, the MoF and other sources. The source said the agency’s last governing board was dissolved in 1993, adding that it was being run by an Interim Management Committee headed by Permanent Secretary, MoF before the CBN/NDIC team came on board.

    The source said the firm has over time canvassed for reconstitution of its corporate governance board, recapitalisation and total restructuring. There were also previous plans to merge it with other Development Finance Institutions (DFIDs), which also failed.

    Conditions set for accessing NERFUND’s Micro Enterprises Credit Scheme entail that prospecting businesses must be engaged in manufacturing, mining, quarrying, agro-allied, industrial support services, equipment leasing and other ancillary services.

    Besides, the enterprise should be wholly Nigerian owned and must source its raw materials for the project locally but could source plant and machinery either locally or from abroad. The projects to be financed must be financially and economically viable, and should have positive impact especially in employment creation in the operating environment.

    According to NERFUND statutes, the expected project could be a start-up, expansion, rehabilitation or diversification of existing business while the beneficiaries are expected to own 10 per cent equity of the proposed business. The prospective beneficiary must have a limited liability company or registered enterprise and can only access between N100, 000 and N5 million.