…NASME, NACCIMA blame banks for scheme’s flop
By Bimbola Oyesola
President Muhammadu Buhari’s dream to get the economy out of recession through the Micro, Small and Medium Enterprises (MSMEs) with the injection of about N220 billion into the sector is turning out a tall order.
This is sadly so because the N220 billion set aside by the Central Bank of Nigeria (CBN) for MSMEs financing using five commercial banks has been hijacked and diverted to some wrong hands, Daily Sun investigation has shown.
Under the original programme, entrepreneurs can access loans of N500,000, N5 million, N50 million at 9 per cent interest from Nigerian banks approved for the project.
It was considered a major breakthrough for SME financing at its launch as the regular interest rates were dropped by over 100 per cent for entrepreneurs under the MSME fund.
Each of the 36 states and the Federal Capital Territory (FCT), is also entitled to access as much as N2 billion, to be disbursed to the states through banks, which are expected to effect the disbursements directly to the beneficiaries. But immediately the various state governments got the MSME lsargese, many became emergency entreprenuers, and appropriating the facility to themselves and their cronies.
Banks that signed agreement with the CBN for onward disbursement to entrepreneurs in the country, include United Bank of Africa (UBA), Skye Bank, GTBank, Zenith Bank and Fidelity Bank with stakeholders expressing high hopes of SMEs contributing more to the nation’s Gross Domestic Product (GDP), accounting for over 60 per cent, the effectiveness and transparency of the disbursement of the CBN’s funds will determine the impact on the economy.
In developing economies like Nigeria, that MSMEs hold the key to government’s plan to develop the non-oil sector and generate income from it, hence the need for their empowerment through easier access to credit and specific business-friendly policies.
According to the Director General of the Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, the MSME intervention fund was a concept designed to correct market failures in the financial markets.
According to him, some growth sectors would naturally find it difficult to access fund from the regular or conventional commercial banks because of competitiveness issues as well as the concerns around risk perception of the real sector.
“Besides, the Nigerian banking system has not got much of long term funds, and cost of funds is also very high. Intervention funds are long term and often at single digit. These are the gaps the intervention funds are designed to fill,” he explained.
The CBN has explained that it initiated the fund to unlock the potential of Nigerian MSMEs, thereby shoring up their potential for job creation and enabling them reduce poverty within the country.
“Our optimal goal is to see that this fund gets to our people at the bottom of the economic and social pyramid at single digit interest rate without which it will be impossible to achieve job creation and poverty reduction.
“In order to ensure the attainment of our goal, therefore, the CBN will be committing human, material and financial resources to monitoring both the disbursement and utilisation of these funds in a robust and verifiable manner.”
Though other participating banks have not disclosed how much they have disbursed nor their mode of disbursement, Fidelity Bank, one of the five designated banks, was reported to have disbursed N2.2 billion to the beneficiaries so far.
The report credited to the Managing Director, Mr. Nnamdi Okonkwo, said the loan beneficiaries have been committed to its repayment, adding that the bank has not recorded any default.
He had said that CBN was very serious about the N220 billion SMEs’ fund. “We are witnesses because we have customers who accessed the SME funds through us. We have done about N2.2 billion of the funds. We have got repayment of about N400 million. We haven’t had any default because of the process through which these funds were accessed,” Okonkwo said recently.
But from Nigerian Association of Small and Medium Enterprises (NASME), Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Nigeria Employers Consultative Association (NECA), Network of Entrepreneur Women (NNEW) and all other reputable Business Management Organisations (BMOs) interviewed, none has accessed any of the funds, raising some questions as to who owns the SMEs that have accessed the fund so far.
While some of the groups said they shunned the fund due to previous experiences, some who approached the banks said their applications were turned down because of the stringent requirements attached to the loans by the banks.
President of NASME, Prince ’Degun Agboade, said the organisation has got nothing from the N220 billion fund despite claims by banks of so many windows open to SMEs to raise funds.
According to him, “I’m not aware of anybody that has got anything. N220 billion was supposed to be given out by the banks at 9 per cent, but there are so many stringent measures, conditions that are not possible to meet, including collateral and unrealistic turnover. It is so cumbersome. Lots of applications were rejected. Even the Bank of Industry (BoI) loan, First Bank has just informed us that it has stopped disbursement because CBN wants it to guarantee the loan 100 per cent. With the way it is structured presently, I think it can never work,” he said.
Though both the real sector and MSMEs have applauded the formation of the new Development Bank of Nigeria (DBN), which they considered would fill the vacuum created by BoI, NASME President said the new bank has equally failed the SME group.
“The bank also said it would not give out loan directly but through commercial banks whose interest would be between 29 and 30 per cent. How would SMEs be able to access such loans?” Agboade queried.
“Banks should tell us who they have disbursed the money to because the way they treat SME is like leper, which is not the practice in other countries like India, China, or Malaysia. We’re told that about 13 windows are available but we cannot access any. The only fund our members have been able to access is Dangote Fund, which is N5 billion at 5 per cent, while banks added 1 per cent as their profit and it was allocated per state, and some states exhausted this within a month. For example, we have over 55 per cent of the SMEs in the country in Lagos alone but this was not factored in while disbursing the funds.”
Lamenting the plight of SMEs, Agboade called on CBN to moderate and prevail on the banks to ensure that the funds actually get to the right group.
Also expressing his displeasure on the fate of MSMEs in Nigeria, the National Vice President of NACCIMA and the Chairman of SMEs group, Alhaji Sanusi Maijamaa, confirmed that no member of NACCIMA has accessed the funds due to their past experiences.
He, however, wondered on which platform the funds being disbursed by the banks if not through the Organised Private Sector (OPS) like NACCIMA, NASME and others.
Maijamaa noted that the system of disbursement was not transparent, adding that the SME clinic launched by the Acting President, Yemi Osinbajo, in Abuja and Aba equally failed to address the problem at hand.
“The conditions set by banks cannot allow our members to get the loans because there are lots of cumbersome requests. We look for the same treatment given to the multinationals. There is need to recognise informality when dealing with SMEs. When they grow, you can now formalise the conditions,” he said.
Maijamaa stated that though there are lots of impacts on what the government is doing, they, however, do not reflect directly on the SMEs. “There is need to involve the grassroots in all these developmental plans because lots of SMEs are in the grass roots. The government also needs to emphasise cluster arrangement, and role of states and local governments should be spelt out clearly to support the intervention of the Federal Government,” he said.
Sharing the same view as others, the Vice President of NNEW, Edobong Akpabio, said it has been frustration galore for the members of the group in accessing loans from any of the commercial banks designated to disburse the fund.
“We have made several applications, but till date, none of us has been able to get anything. Actually, we were happy when we discovered that such fund has been set aside for the SMEs sector but the conditions set by the banks to access the loan are unattainable. This makes us wonder whether it is actually meant for us or another ploy by commercial banks to give it to their privileged clients,” she said.
The LCCI Director General, Muda Yusuf, however, berated government on the management of the intervention fund. He said, “for most of the funds, the deposit money banks are expected to provide 100 per cent cover (to the CBN) for the funds disbursed and this should be done with securities such as treasury bills and Federal Government bonds. The implication is that the banks are made to bear full credit risk for the facility.
“They would be held fully responsible in the event of default. This is why the banks also impose stringent collateral conditions for granting the loans, which invariably creates a major problem of access to the funds, especially by the small scale industrialists or farmers. Some banks are not even keen about intervention funds for this reason. The risk and reward metrics are not often favourable.”
To succeed with intervention fund
The LCCI DG expressed the view that for better results, the risk bearing responsibilities of the banks in the funds should be reduced considerably through other forms of guarantees.
Yusuf lamented that intervention funds lay too much emphasis on equipment and machineries, whereas what most of the small scale industrialists and agricultural investors need is working capital.
“Many are carrying idle capacity because they lack adequate working capital. Funding provision for working capital should therefore be given better accommodation in the intervention funds scheme than is currently the case,” he said.
He also noted that for the desired outcomes to be realised from intervention funds in the promotion of the real sector, some other complementary conditions must be in place. According to him, “infrastructure (especially power and transportation); policy consistency; effective regulatory environment to curb smuggling, faking and counterfeiting, and many more, need to be given attention. Advancing the frontiers of the real sector is not just about funds, the operating environment and policy context must also be right. Unless this is addressed, default rates will remain high and the impact will remain marginal.”
He recalled that one of the biggest beneficiaries of intervention funds is the textile manufacturing sector but till date, the sector is still comatose. Many of the companies, he said, could not repay the loans; some are already in receivership. “This underscores the point that while funding is important, other factors which impact on competitiveness are equally critical,” he stated.
He added further: “The obsession of policy makers (in the context of interventions funds) for real sector also needs a rethink. There is a perception that for jobs to be created in the economy, focus on funding should be almost entirely in the real sector. But the integrated character of the economy needs to be understood.
“The inter-sectoral linkages also should be appreciated. The distributors, for instance, need funds to buy the products of the manufacturers for onward transmission to consumers; the transporter that moves the products to different parts of the country needs funds to buy and maintain trucks; the fashion designers need funds to buy fabrics from textile manufacturers; the advertising companies that undertake marketing and promotions of the real sector products need funds; real sector needs various forms of IT support, and so on.
“Besides, the service sector of the economy is fast growing and currently creates more jobs and more incomes for citizens and therefore contributes to improving purchasing power in the economy from which all sectors, including the real sector, benefit. While not diminishing the importance of the real sector, the role of the service sector in wealth creation and employment generation needs to be better appreciated. There is need for the sector to be better accommodated in the intervention funds scheme.” (The Sun)
The economic recession currently rocking the country has increased the volume of fraud cases in the banking industry, with the attendant loss of money, IFEANYI ONUBA writes
The banking sector recorded 31,736 fraud cases involving the sum of N16.5bn between January 2014 and December 2016, figures obtained by our correspondent from the Central Bank of Nigeria have revealed.
The fraud statistics are contained in the Nigerian Electronic Fraud Report, which was prepared by the Banking and Systems Payment Department of the CBN.
The frauds were perpetrated through various payment channels in the banking sector such as Across the Counter, Automated Teller Machines, cheques and electronic-commerce platforms.
Others are Internet banking, mobile banking, Point-of-Sale and web transactions.
The report stated that in the last three years, there had been more attempts in the number of fraud cases, adding that the development might be linked to the economic hardship being experienced in the country.
For instance, the report stated that the volume of fraud cases rose by 635.3 per cent from 1,461 incidents in 2014 to 10,743 in 2015.
Between 2015 and 2016, the report stated that the incidents of fraud rose by 81.8 per cent from 10,743 to 19,532 cases.
Cumulatively, the incidence of fraud rose by 1,236 per cent during the three-year period.
In monetary terms, an analysis of the report showed that while there had been an increase in fraud volume, the rate of increase could not be achieved financially.
For instance, the report stated that in 2014, out of the total transaction value of N43.85tn in the banking sector, about N7.75bn was fraud-related.
However, it noted that while the transaction volume rose from N43.85tn in 2014 to N48.93tn in 2015, the amount involved in fraud-related transactions declined by N3.38bn or 43.6 per cent from N7.75bn to N4.37bn.
Between 2015 and 2016, the report stated that while the value of financial transactions rose significantly from N48.93tn to N64.18tn, the amount of fraud involved during the period dropped marginally from N4.37bn to N4.36bn.
The report read in part, “Although, values of the year 2016 are almost same with those of 2015, the difference in its volume, when compared to 2015, suggests more success in curbing fraud.
“More attempts in volume can be seen over a period of three years, and the rate is expected to increase significantly if the current recession is to be taken into consideration.
“The current economic recession has and will always drive persons deeper into fraudulent activities.”
In terms of payment channels from which the frauds were perpetrated, the report stated that in 2014, fraudulent transactions conducted through the ATM were 491 cases; Internet banking, 287 cases; and web channels, 218 cases, were the top three.
In 2015, there were 5,133 ATM fraud incidents; PoS, 1,853 cases; and the web, 1,463 cases, accounting for the top three most used channels to perpetrate fraudulent transactions.
In 2016, ATM with 9,522 cases; mobile, 3,832; and web channels, 2,677, were the three most used channels.
The report added, “Apparently, ATM and web channels have consistently appeared in the top three channels used to perpetrate fraudulent transactions for three years running.
“This is something we have to look at collectively in the industry as it can be deduced that ATM channel has been the focal point for fraudsters in the last three years.
“The emergence of mobile channel in this category cannot be extraneous to the various financial products and services we have these days, which ride on mobile platforms.”
Speaking of the increasing rate of frauds in the banking system, financial analysts called on the CBN and the Nigerian Deposit Insurance Corporation to step up their regulatory oversights, adding that sensitive positions in banks should not be given to those who were not members of relevant professional bodies.
Those that spoke to our correspondent in separate telephone interviews are the Head, Banking and Finance Department, Nasarawa State University, Keffi, Uche Uwaleke; and a former Managing Director Unity Bank Plc, Mr Rislanudeen Muhammed.
Uwaleke, an Associate Professor of Finance, said the value system in the country, which celebrates wealth with no questions asked as to the source, needed to be changed.
He said, “There is also a justice system that is very slow and, therefore, fails to act as a deterrent to fraud. Equally are lapses in internal control systems of banks, which are circumvented by fraudulent staff sometimes with the connivance of auditors.
“Furthermore, the flip side of electronic banking is the level of sophistication associated with bank frauds and the specialist skills required in detecting such. So, it is not a surprise that the level of bank frauds is on the rise. Worse still, banking in Nigeria has become an all-comers affair where anybody who can bring deposits is employed.”
As a way forward, he suggested that the control systems in banks should be strengthened.
“Only professionals who belong to bodies that self-regulate their members, such as the Chartered Institute of Bankers of Nigeria, should be assigned to sensitive positions in the banks,” he added.
Muhammed said since bank frauds were a threat to the stability of the financial sector, both the CBN and the NDIC should step up strategies for tackling the menace.
He said, “Recently elevated risk in fraud cases will naturally impact negatively on the individual bank’s loan loss provision, other known losses as well as profitability and capital adequacy ratios.
“The risk of under capitalisation will also impact negatively on solvency ratios. This underscores the imperative for strengthening internal control as well as risk management divisions in banks.
“The Central Bank of Nigeria should ensure compliance by banks of having internal control officers in each branch. This ensures that fraud cases are dealt with timely and proactively rather than reactively or after the fact.”
He stated that in situations where fraud cases were at the corporate level, the chief internal control officers were duty-bound to report directly to the regulators as provided by the law. (Punchng.com)
Still smarting from the far-reaching impact of the recession that the economy slid into shortly after the start of the second year of the President Muhammadu Buhari-administration, many Nigerians are eager to see recovery.
But the Gross Domestic Product report released last week by the National Bureau of Statistics showed that the recession failed to end in the first three months of this year contrary to expectations.
The nation’s GDP contracted by 0.52 per cent (year-on-year) in real terms in the first quarter of 2017, representing the fifth consecutive quarter of contraction since the first quarter of 2016.
The economy had shrunk by 1.5 per cent in 2016, the first full-year contraction in 25 years.
After several months of slowdown in growth on the back of the steep fall in crude oil prices, the economy contracted by 0.4 per cent in the first quarter of 2016, 2.1 per cent in the second quarter, 2.2 per cent in the third and 1.3 per cent in the fourth.
Amid the sustained low oil prices, the resurgence of militant attacks on oil and gas facilities in the Niger Delta last year disrupted the nation’s oil production and worsened government’s revenue woes.
But analysts have said that the way the government handled the economy, particularly the delays by monetary authorities in implementing a flexible foreign exchange policy, exacerbated the impact of weaker oil earnings on the economy.
While the nation has seen a slowdown in the negative growth rates in the last two quarters, the Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane, said the journey to recovery would take time.
“Two years, we have gone down into the pit and we are coming back out. But the recovery journey is slow, painful and it is going to take time. Even if we get 0.1 per cent positive growth, we are out of recession. But that is not enough to make people comfortable,” he told our correspondent on Sunday.
The Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, said the Buhari’s government performed below par in its first two years, given the current state of the economy compared to what it was in 2015.
He said, “When the government took over in 2015, the unemployment rate was 7.5 per cent; as of the end of the third quarter of 2016, when the last report was made available, the unemployment rate had gone up to 13.9 per cent. In 2015, the inflation rate was below nine per cent; in April 2017, it was 17.24 per cent.
“In 2014, the GDP grew by 6.22 per cent; in 2015 when the government took over, it grew by 2.78 per cent. In 2016, it contracted by 1.5 per cent. Those are the highlights of parameters you use to measure an economic performance.”
Chukwu said the government should take responsibility for the deterioration of the economy, adding that the government would need to move at a fast pace in driving its economic recovery and growth plan.
The nation’s inflation rate, which climbed to 18.72 per cent in January, fell for the first time in 15 months to 17.78 per cent in February, 17.26 per cent in March, and 17.24 per cent in April.
The stock market has rebounded significantly in recent times as the market capitalisation of listed equities hit the $10tn mark on Friday from N8.716tn on April 21, when the Central Bank of Nigeria established a forex window for investors and exporters to boost liquidity in the forex market.
The foreign reserves, which rose to $30.988bn on May 4 from $25.84bn on December 30, 2016, have declined to $30.494bn as the CBN continued effort to prop up the naira by supplying the forex market.
The naira, which slumped to an all-time low of 520 to the dollar on the parallel market in February, stood at 382 to the dollar on Friday.
Electricity generation in the country has yet to reach the peak generation of 5,074.70 megawatts achieved on February 2, 2016. It stood at 4,206.10MW on Sunday, according to data from the System Operator.
The Global Chief Economist, Renaissance Capital, Charles Robertson, in an emailed report, noted that Nigeria’s per-capita GDP had fallen to around $1,740, from over $3,000 in 2014.
“We think most metrics in Nigeria will be demonstrating improvement in 2017, provided that oil prices and production do not plunge. We are cautiously positive on equities and bonds at an exchange rate of around N400/$,” he said.
Analysts at SBM Intelligence, in a new report on the Buhari’s administration, said perhaps the biggest economic item that dominated the conversation over the last year had been the government’s management of the foreign exchange market and its far-reaching impact on economic performance.
They said, “In this regard, the central bank and the Ministry of Finance have shown less than convincing mastery in handling this hot button issue.
“The announcement in June 2016 of a currency float, which was initially met with delight from investors and the market, turned to be the start of a multi-exchange rate system that bred a mix of frustration and confusion, while doing little to achieve the CBN’s intent of reining in the distortionary effect that short sellers and black marketers were having on the national currency.”
Rewane said the country would not get back to its five-year average growth rate until 2019/2020.
“The government needs to invest and spend. If you are going to be spending only N7tn in a year, which is four per cent of your GDP, that is not going to cut it. You need to do almost three times that for the impact to be felt. As far as I am concerned, everything directionally is okay but in nominal terms, we are still way below what we should be doing,” he added. (Punchng.com)
· You lied, Soludo replies ex-Edo governor
’Femi Asu and Tunde Ajaja
There was a mild drama at the Vanguard Economic Discourse in Lagos on Friday when a former Governor of the Central Bank of Nigeria, Prof. Charles Soludo, and the immediate past Governor of Edo State, Mr. Adams Oshiomhole, made allegations and counter-allegations.
The development, which generated grumblings among the audience, occurred during a discussion session moderated by the founding Group Managing Director/Chief Executive Officer, Guaranty Trust Bank, Mr. Fola Adeola.
Soludo, who delivered the keynote speech on the topic, ‘The hard facts to rescue the Nigerian economy’, had earlier highlighted some of the failures of the President Muhammadu Buhari-led government, particularly in terms of fiscal and monetary policies.
But in his remarks during the panel session, where the Minister of Solid Minerals Development, Dr. Kayode Fayemi, defended the government, Oshiomhole accused Soludo of wrongly allocating millions of dollars to two new generation banks shortly before the naira was devalued.
He said, “I got some intelligence from my comrades who worked in the system and we found out that the CBN under Soludo had just allocated couple of millions of dollars to two, as they were then known, new generation banks.
“And I asked Prof (Soludo), if you were going to devalue by Friday, why did you auction dollar at a lower rate on Thursday? I accused Soludo, I said you have enriched these two young men to the tune of N8bn, courtesy of your internal abuse.
“When the regulator behaved in this manner, then the Nigerian condition is much more serious than we can appreciate it. We need to deal with issues of attitude.”
However, this did not go down well with Soludo, as he said some people tend to change the subject when they did not have an answer to his earlier comment, a response that caused boisterous laughter and clapping by the audience.
At this point, the moderator told him he was running out of his time, but this was greeted with shouts of “No” from the audience.
“This debate has only begun. Adams made the point about exchange rate and exchange allocation to two banks. I want to say for the record that Adams Oshiomhole has lied. I didn’t say he misquoted anything; he has lied.” Soludo stated.
He said at the time, banks were bidding for forex two to three times weekly, and only the successful banks at each of the bids were allocated forex, adding that he was not even part of the bid as there was a committee for the purpose.
“Every bid produced a different exchange rate and there were different winners at every bid. We didn’t do devaluation as the case may be; we had the currency depreciating as the market determined day to day. With all due respect, I think if you (Oshiomole) don’t know what to say, sir, just don’t get into this kind of personal allegation,” he added.
Soludo had earlier said nothing much would be achieved with the 2017-2020 Economic Recovery and Growth Plan, which was released by the Federal Government last week.
“Whose plan is it? Ownership will determine whether the plan is just a public relations document or whether it will be implemented. To what extent is the plan consistent with the APC manifesto, which promised a conscious plan for post-oil economy and to restructure the country and devolve power to units with the best practices of federalism? Is this plan that plan?” the ex-CBN boss asked.
He described the envisaged 15 million jobs to be created under the plan as a “very nice wish.”
“The plan envisages to continue the practice of the past government of borrowing to finance recurrent expenditure. Up until 2018, recurrent expenditure will continue to exceed total revenue. The deficit will continue to exceed capital budget, meaning that capital expenditure will continue to be borrowed, as done by the last government. So, what has changed?” he queried.
Soludo said there were no projections for the trajectory of exchange rate or foreign reserves in the plan, stressing the need for a competitive real effective exchange rate.
He said, “The plan as packaged is a good effort, but in terms of our expectations as a plan for transition to a post-oil economy as promised by the APC, it is a missed opportunity.
“I am willing to bet that not much will happen in terms of the structure of the economy or the structure of fiscal and export revenue at the end of the plan.”
He noted that the current government inherited a bad economy, adding that by May 2015, the Federal Government was already borrowing to pay salaries and about 30 states had challenges meeting their salary obligations.
“The previous government had an unprecedented rate of debt accumulation even at a time of unprecedented oil boom, and was even depleting our foreign reserves instead of more than doubling what it met,” he noted.
Soludo added that most Nigerians acknowledged the Federal Government’s effort in fighting Boko Haram insurgency and corruption.
On the economic front, he said the government had implemented the Treasury Single Account, but that it could have been better implemented.
Soludo said, “Most macroeconomic variables have worsened in the last two years. Inflation from about nine per cent to 19 per cent; dollar exchange rate from about N197 (official) and N215 (parallel market) to now N305 (official) and N465 (parallel); unemployment from 7.5 per cent to 14 per cent; GDP from about two per cent to -1.5 per cent; poverty is escalating and youth agitation increasing; business confidence remains very low; foreign reserves remain depleted, and the current account balance is negative, and sovereign credit ratings have worsened.
“Nigerian workers have suffered a double whammy. The average nominal wages are declining, while real wages dramatically shrunk with high inflationary pressure.”
He stated that the Federal Government had continued to spend over 100 per cent of its revenue on recurrent expenditure as done by the previous government, while borrowing 100 per cent of all its capital expenditure.
“There remains half-hearted commitment to deregulation of petroleum pricing as well as the privatisation of refineries. The budgetary framework remains largely the same with all the institutional inefficiencies. Monetary and exchange rate policies were in their own worlds,” Soludo said.
He added that the economy had suffered massive compression, adding that its size had shrunk to anything ranging from about $354bn (using official rate) to $232bn (parallel rate) from $575bn when the government took over.
“Nigeria has lost the first and second positions in Africa’s ranking,” he said, adding, “We will get out of recession any moment from now with oil price and output increasing. But it will be a miracle if the government is able to return the GDP in US dollar terms to the level it met, even in 2023.”
He congratulated the government for plugging some of the loopholes and stopping some of the bleeding, but added that the challenge was that much of its efforts had focused on the micro.
Soludo added, “While trying to tie down the chickens, we were either stopping the cows from coming in or chasing them away. For example, while we are fixating with stopping the import of toothpicks and stopping the petty traders from taking dollars away, we have created havoc that has shut down many factories and with low capacity utilisation as well as ignited massive capital flight with the attendant impoverishment of millions, escalating unemployment and inflation.
“Put simply, we have missed the macro picture. While we are winning selected micro battles, we are losing the war on the macro economy.”
The Editor-in-Chief, Vanguard Newspapers, Mr. Gbenga Adefaye, said the essence of the discourse was to provide a platform to enrich the debate about the Nigerian economy and assist the government to quickly achieve a turnaround of the depressed economy.
Other panellists were a former Deputy Governor of the CBN, Dr. Obadiah Malaffia; Director-General, Lagos Chamber of Commerce and Industry, Mr. Muda Yusuf; former Group Managing Director, Diamond Bank Plc, Dr. Alex Otti; Managing Director, Financial Derivatives Company, Mr. Bismarck Rewane; and a member of the National Executive Committee of the Nigeria Labour Congress, Mr. Issa Aremu.
Dignitaries at discourse the included the Publisher of Vanguard Newspapers, Chief Sam Amuka; former Speaker of the House of Representatives, Mr. Dimeji Bankole; former Delta State Governor, Dr. Emmanuel Uduaghan; and former Chairman of Punch Nigeria Limited, Chief Ajibola Ogunshola. (Punchng.com)
The Central Bank of Nigeria on Thursday announced the reintroduction of bank charges on certain categories of cash deposits and withdrawals.
This came about three years after the apex bank stopped the charges.
In a circular to all Deposit Money Banks posted on its website, the regulator said the decision to reintroduce the charges on cash deposits was part of the review of charges on deposits and withdrawals under the cashless policy.
It said the decision was taken at the Bankers’ Committee meeting, which held in Abuja two weeks ago.
The circular, signed by the Director, Banking and Payments System Department, CBN, Mr Dipo Fatokun, stated that the committee decided that the cashless policy should be extended to the remaining 30 states of the federation.
It also directed that with effect from April 1, 2017, banks in the states where the cashless policy was already operating, Lagos, Ogun, Anambra, Abia, Kano, Rivers and the Federal Capital Territory, would begin to impose charges on deposits and withdrawals above N500,000.
Banks will from that date begin to charge individuals 1.5 per cent and two per cent for deposits and withdrawals between N500,000 and N1m.
According to the circular, individuals depositing or withdrawing between N1m and N5m will be charged two per cent and three per cent, respectively.
For amounts above N5m, banks will charge such individuals three per cent and 7.5 per cent for deposits and withdrawals, respectively.
With regard to corporate customers, the CBN stated that deposits and withdrawals under N3m would not attract any charge, but that such customers depositing or withdrawing between N3m and N10m would be charged two per cent and five per cent, respectively.
Also for deposits and withdrawals between N10m and N40m, customers will be charged three per cent and 7.5 per cent, respectively. Deposits or withdrawals above N40m by corporate customers will attract a charge of five per cent and 10 per cent, respectively.
According to the CBN, the new policy on charges will be implemented in selected states on May 1 and August 1, this year; while the total implementation will be concluded on October 1.
The regulator noted that the committee agreed that income generated from the processing fees above the allowable cash limits would be shared between it and the banks in the ratio of 40:60.
However, the CBN said that existing exemptions to the policy such as revenue generating agencies of the federal, state and local governments (for lodgements) will be sustained. Also exempt from the processing fees are embassies, diplomatic missions, multilateral and aid agencies.
The CBN directed lenders to train their employees to enlighten customers on the new policy. (Punchng.com)
The Nigerian equities market appreciated by N29bn on Monday as the Central Bank of Nigeria released a new foreign exchange policy in the country with immediate effect.
The Nigerian Stock Exchange market capitalisation rose to N8.738tn from N8.709tn, while the NSE All-Share Index closed at 25,249.49 basis points from 25,164.91 basis points.
The new policy is the outcome of the last Thursday’s directive by the National Economic Council for immediate review to stem the widening gap between the inter-bank foreign exchange and parallel market rates.
The CBN said in order to ease the difficulties encountered by Nigerians in obtaining funds for foreign exchange transactions, it would henceforth be providing direct additional funding to banks to meet the needs of Nigerians for personal and business travel, medical needs, and school fees, with immediate effect.
The equities market started the week on a positive note, advancing by 0.34 percent, to settle the year-to-date return at -6.05 per cent. There were 10 gainers and 18 losers.
A total of 110.016 million shares worth N985.667m were traded in 2,160 deals.
PZ was the top gainer for the second consecutive trading day, advancing by 9.04 percent, to close at a year high of N14.60.
Diamond Bank Plc, Nascon Allied Industries Plc, Nigerian Breweries Plc and Caverton Offshore Support Group Plc also appeared on the top gainers’ list appreciating by 4.88 per cent, 4.55 per cent, 4.18 per cent and 3.33 per cent, respectively.
Meanwhile, Forte Oil Plc declined the most in share price by 5.02 percent to close at N53.87. UACN Plc, Nigerian Aviation Handling Company Plc, Honeywell Flour Mill Plc and Neimeth International Pharmaceuticals Plc also appeared on the top losers’ table dropping by 4.95 per cent, 4.67 per cent, 4.55 per cent and 4.35 per cent, accordingly.
The NSE food and beverage index was the only index to close positive, with the oil/gas, banking and insurance indices declining by 0.63 per cent, 0.20 per cent and 0.11 per cent, respectively, while the industrial index traded flat.
Responding to the state of the market, analysts at Meristem Securities said, “The much-expected upturn witnessed in the market today can be attributed to bullish activities on certain large-cap tickers, as well as intensified position-taking ahead of the 2016 financial year earnings releases and corporate actions.
“As we expect this to continue for most of the week, we advise value-seeking investors to temper their optimism with caution.”
Meanwhile, there was a decline in system liquidity, resulting in a 2.57 percent increase in the average money market rate to 20.82 percent, at the close of the trading session. The open buy-back and overnight rates rose by 2.67 per cent and 2.47 per cent, respectively, to settle at 20.50 per cent and 21.14 per cent, accordingly.
Activities in the Treasury bills space were characterised by bearish sentiments on February 17, 2017.
The one-month, three-month and six-month instruments recorded yield increases of 0.15 per cent, 0.02 per cent and 0.32 per cent, respectively. The average Treasury bills yield stood at 16.24 per cent (+0.16 per cent), at the close of Monday’s trades.
Similarly, in the treasury bonds space, yields advanced across most instruments, save for the March-2036, May-2018 and June-2019, which recorded declines of 0.04 per cent, 0.18 per cent and 0.03 per cent, accordingly. Consequently, the average bond yield increased by 0.12 per cent, to peg at 16.65 per cent at the close of trades.
The naira continued its downward trend at the parallel forex market, as it depreciated by 0.77 percent, to settle at N520/dollar. However, the currency appreciated by 0.08 per cent at the interbank forex market, to close at N305.25/dollar. (Punchng.com)
The naira tumbled to 520 against the United States dollar at the parallel market on Monday as scarcity of the greenback continued to keep the exchange rate in a free fall mode.
The naira had closed at 516/dollar on Friday, after hitting 510/dollar and 507/dollar last Thursday and Tuesday, respectively.
Experts said demand for dollar for school fees payment overseas as well as Personal Travel Allowance by intending travellers was taking a toll on the exchange rate at the parallel market.
This came just as retail currency traders tried to digest the Central Bank of Nigeria’s new decision to sell dollars to retail users through commercial banks, Reuters reported.
The CBN is planning to sell $1m weekly to each of the country’s 21 commercial banks at a rate of N375 to clear a backlog of demand for retail users and try to narrow the premium between the official and black market rates.
Retail currency users buy dollars from licensed Bureaux de Change operators. However, due to the CBN’s inability to meet dollar demand, the BDCs have tended to source dollars from private sources and resell at a much higher margin, fuelling the black market.
Forex traders told Reuters that some banks had compiled a list of bids from customers awaiting dollars.
The CBN has been selling dollars at N305 to clear a backlog of demand from manufacturing, agriculture and airline companies, hoping also to help drag the country out of its worst recession in 25 years.
Experts are divided over the outlook for the naira this year. Some experts have said the naira may hit between 520/dollar and 1000/dollar at the parallel market this year unless the CBN reviews its forex policy.
An economic expert and Chief Executive Officer of CocoSheen Nigeria Limited, Mr. Henry Boyo, said the naira would hit 1000/dollar unless the central bank reviewed its monetary policy framework.
He said the framework was skewed against the naira. (Punchng.com)
Leke Baiyewu, Abuja
The Senate, on Monday, asked the Economic and Financial Crimes Commission to investigate officials of the Central Bank of Nigeria and the Nigerian National Petroleum Corporation over alleged racketeering in foreign exchange transactions.
The lawmakers also urged the EFCC to identify owners of mansions in highbrow areas of Abuja, alleging that several senior officials in Ministries, Departments and Agencies of government had become billionaires through corrupt enrichment.
Members of the Senate Committee on Anti-Corruption and Financial Crimes made the call when the Acting Chairman, EFCC, Mr. Ibrahim Magu, led the commission’s leadership before the lawmakers for 2017 budget defence.
The lawmakers, while criticising the EFCC for usually going after former public officials, said the anti-graft agency should focus on financial crimes prevention.
A member of the committee, Senator Isa Misau, said since the EFCC was now encouraging whistle-blowers, he wished to blow the whistle on the CBN and the NNPC.
He cited the recent recovery $9,772,000 and £74,000 from Mr. Yakubu Andrew, who was the Group Managing Director of the NNPC between 2012 and 2014.
Operatives of the commission had, on February 3, 2017, raided a building in Sabon Tasha, Kaduna, belonging to the former NNPC boss, and recovered the staggering cash stashed away in a huge fireproof safe.
Misau stated, “I can’t imagine the over $9m recovered from a former GMD (of NNPC). If somebody who left (public) office has such money stashed somewhere, then, you can just make a guess about the other people who have been on the seat.
“Therefore, today, I am giving it as a challenge to the EFCC to go and see what the NNPC or CBN or the finance ministry is doing.
“Look at (the case of) somebody, who left office about five years ago. This is an era of whistle-blowing. I am blowing my whistle: go and check CBN. That is the reason why, today, we have (this) recession. Today, dollar, at the parallel market, is N520. And there are allegations against the CBN; the way they give these dollars.
“This committee is challenging the EFCC to go and look at these records: what is our revenue in dollars? Who are the people collecting these dollars?”
The lawmaker added that Nigerians were no longer using forex for international transactions, stressing that rather than use the dollar for importation, people now took advantage of the forex crisis in the country.
He said, “People now buy these dollars and keep them in their houses. The amount of dollars in Nigeria in cash is more than the amount of dollars in the whole of the USA. If you (EFCC) tell us, we can cooperate with you and tell you (about) the people hiding these monies.
“Go and see unoccupied buildings in Asokoro, Maitama and Wuse 2 (all in Abuja). For over five years, nobody will be there (in the buildings). And EFCC is not looking at these houses. A lot of transactions are taking place with ill-gotten money to the tune of N2bn or N3bn, and somebody will bring the money in cash to buy a house.
“Without digging into these landed properties and knowing their owners, you may end up being only after somebody who just left office, and arresting and detaining them for one week, and they will get bailed. And the business continues.”
Misau lamented that the anti-graft war was being threatened by the aspect of the law which enabled suspected looters to enjoy their freedom while under EFCC probe.
He said if he could steal N10bn from public funds and all he had to suffer was being in EFCC custody for a few days, “I will do it.”
According to him, a lot of looters are encouraged by such provision in the law.
Misau added, “We want a situation whereby you will get the cooperation of judges. I see no reason why somebody will take (steal) billions and after two days with the EFCC, they will be granted bail.
“If we need another law that once it has to do with government money, we can keep such person with EFCC for one year; if there are certain laws you want, where you can detain somebody for one year, we are ready.
“Go and check the houses in Maitama, Wuse 2 and Asokoro. How did they (the owners) get the money? Check the directors, who are still serving; they are all billionaires. I can mention more than 30 directors; they are still serving and they are billionaires.
“These are the kinds of things that make up institutional corruption that we have to check. Go and see the procurement officers and permanent secretaries; they give contracts to themselves and inflate contracts.
“If we have to wait for somebody to blow whistle, it will be business as usual and nobody is afraid of it now. I am blowing this whistle about CBN so that any recovery from the CBN, I am the one who blew the whistle; and any recovery from the NNPC, I blew the whistle.”
The Chairman of the committee, Senator Chukwuka Utazi, stated that going by the mandate of the EFCC, 60 per cent of its task should be on preventive measures, while 40 per cent should be for all other issues combined.
He, however, noted that the commission did not focus on preventive measures in its budget defence.
Utazi said, “Looking at your core mandate, the essence is to curb corruption to a large extent but in the budget you have provided, I have not seen the issue raised in the prayers here. There is no prayer that is talking about enlightenment, which is the money thing you are expected to do.
“All we hear from the press is negative publicity; chasing people who have been caught; that is what we hear all the time. We want to change the narration to ‘what are we doing to ensure that instead of chasing after people, who are giving us a headache, why can’t we stop other people from joining the gang?’ There is nothing like that here in this budget.” (Punchng.com)