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Life insurance annuity hits N322.91bn

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Life insurance annuity hits N322.91bn

Following renewed public confidence in the nation’s life insurance segment, the retiree life annuity fund has increased by 17.46 per cent from N274.91 billion as at end of Q4, 2018 to N322.91 billion as at the end of Q2, 2019.

According to further details of the fund posted on the website of National Insurance Commission (NAICOM), within the same period under focus, the cumulative total payouts stood at N122.09 billion.

The retiree life annuity market has been in existence since the advent of the Contributory Pension Scheme (CPS) and it has so far recorded 73,554 contracts purchased for a total premium of N341.61 billion as at end of Q2, 2019. This represents 13.02 per cent and 6.21 per cent growth in count and volume, respectively in 2019 from end of Q4, 2018.

According to further details, the year-on-year (YoY) growth during the last three years for annuity business has averaged 34.28 per cent and 35.12 per cent in count and volume respectively, while the fund portfolio growth has averaged 27.46 per cent, notwithstanding the RLA payouts being cumulative total payments of N122.09 billion as at end of Q2, 2019.

Retiree life annuity is an insurance product and one of the available retirement benefit options for retirees, which can be purchased from a life insurance companies licensed by NAICOM and authorised to sell annuity under the regulation.

New Telegraph recalled that in 2016, the Nigerian Insurers’ Association (NIA) engaged a South African based Actuarial firm to help review annuity business and align it with current global market practices. The review and other assignments were concluded in 2017.

“In its effort at promoting good order in the management of life annuity business in our market, the NIA has concluded plans to engage a South African based Actuarial firm to assist the Association review and advice on the current market practice leveraging global practices,” Eddie Efekoha, the chairman of NIA then, had said.

This was after the National Pension Commission (PenCom) directed that all annuity funds in the custody of life insurance firms be domiciled with Pension Fund Custodians (PFCs), a development that did not go down well with the underwriters.

Speaking on the feud then, which led to an initial transfer of over N100 billion to the PFCs, Efekoha advised NAICOM and PenCom to address the public and correct the bad impression created by the circular.

According to PenCom, however, the circular was issued to curb unethical practices by some life insurers, who have been wooing retirees with loans, a development that contradicts the pension law.

It was gathered that PenCom took the decision to ensure that all pension funds are kept in the custody of the PFCs as specified the law.

A source at NIA, however, condemned the step taken by PenCom, stressing that proper consultations were not reached before the circular was issued.

He noted that PenCom as a regulator should have properly deliberated the issue with the insurance regulator before issuing the circular.

He said the development would make the public believe there is an unhealthy relationship between both regulators.

However, years after the cold war, the relationship between the two regulators has become cordial with both supervising their agencies as stipulated by law.

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18,663 abandoned housing units litter Lagos metropolis

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Bottlenecks

Paucity of funds, high cost of materials, conflicts adduced for project delay

 

 

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o fewer than 18,663 housing units belonging to the Lagos State government, which construction started over five years ago, are lying fallow at various sites in the metropolis.

 

 

According to New Telegraph’s investigation, some of these housing units, which cut across three senatorial districts, were either being executed directly by government or through joint ventures with the private sector.

It was further gathered that the housing estates were abandoned due to paucity of fund, conflicts and political issues, despite huge accommodation deficit in the state.

 

 

The housing units and their locations are the Chois Estate Agbowa – 400 units; Egan scheme -684 units; Igbogbo 11b -360 units; Odo onosa /Ayandelu -660 units; Sangotedo in Eti Osa  2 phases -1188 units and  Ajara estate -420 units.

Those under joint ventures scheme encompass Ijora Badia- 771 units; Iponri Estate, Surulere -132 units; Imota, Ayobo, Idale -2000 units; Ilamoye,Abijo -2464 units; Tolu Ajegunle, Abule Ado -2126; Ikota Ogombo -3300; Ibeshe Owutu -3000; Igbogbo JV scheme -416 units  and Ilubirin – 472 housing units.

 

 

Contracts for some of the housing projects were awarded between five and eight years ago by past administrators in the state.

 

 

Perturbed by the huge abandonment, the Commissioner of Housing in the state, Morouf Akinderu-Fatai, has ordered all the contractors and developers back to sites.

He charged the contract partners and private investors to ensure completion of all housing schemes, which have been contracted to them within the scheduled timeframe.

 

 

The commissioner lamented the breach of contract schedule by private partners, saying that was responsible for uncompleted housing schemes in the state.

 

 

Akinderu-Fatai described the breach by private nvestors and joint partners as unfortunate to government’s effort to address housing deficit, which is a challenge that require urgent attention.

Speaking on the effort so far, he said: “We are resuscitating some abandoned projects like Egan housing scheme and revisiting some joint ventures for compliance and quick completion of projects.”

 

According to him, the state government had witnessed the completion of 492 homes in Lateef Jakande Gardens in Igando, adding that Igbogbo and Sangotedo schemes are nearing completion.

 

Apart from working hard to deliver ongoing projects within the next 24 months, the commissioner disclosed that government was planning to initiate new schemes in all parts of the state.

 

Beyond this, he said there were solid plans to turn around some of the dilapidated estates in the state into liveable cities to achieve the SDG 11 of sustainable and liveable cities.

 

“We are geared towards making more Lagosians home owners. We are also looking into transit homes for those in emergency situations to reduce homelessness and destitution,” he said.

 

The commissioner for housing listed high costs of building materials and labour as well as funding issue as some of the factors militating against affordable housing in the state.

 

According to him, solution to land matters is having a synergy between government ministries, departments and agencies (MDAs) connected with land matters.

 

He stated that the ministry now had good relationship with the lands bureau, saying that many opportunities were opening up in Lekki and Epe areas.

 

To overcome the challenges posed by high cost of materials and labour, he disclosed that government would be sponsoring researches into development of technology that will reduce cost of building.

 

 

“We will also build human capacity with training programmes for artisans both to reduce unemployment and bring down cost of labour,” he said.

 

 

The commissioner pointed out that building was a highly capital-intensive project, saying that was the main reason government involved private partners in many of the housing projects.

He said: “We are also actively looking for cheap funds to translate our visions into reality.

 

 

“We are also opening a portal for greater relationships between government and operators and investors in estate development for the purpose of transparency and collaboration in the interest of the citizenry of the state.”

On mortgage finance, he said this depended on citizens having sustainable income over a period of time.

 

According to him, Lagos State Government, apart from working on reducing mortgage interest to the minimum on its own houses, is also promoting an environment that is conducive for increased economic activities so that people could meet the basic requirements of mortgage.

 

 

Lagos, Nigeria’s commercial capital, is home to 21 million people. It currently has a housing deficit of about three million.

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Pilots, engineers may down tool over pay disparity

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Seek law to protect sector

 

FRUSTRATION

Aviation professionals leaving country for jobs in Middle East, others

 

 

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xcept a truce is reached, engineers and pilots of two domestic airlines (names withheld) may down tool over pay disparity between them and their expatriate counterparts.

 

The Nigerian workers are frustrated by the huge gap created by their employers at the detriment of more qualified indigenous pilots and engineers.

 

 

Experts are demanding the enactment of local content caw to protect indigenous workers.

 

 

National Vice President, National Association of Aircraft Pilots and Engineers (NAAPE), Capt. Yakubu Dukas, told New Telegraph in Lagos that “engineers in … are fighting for parity. The unfortunate situation is that owners of this business don’t see it that way. An expatriate engineer comes in and earns $10,000. His raw dollars are given to him and a national earns $6,000 but he is not paid the dollar component.”

 

He disclosed that the airline owners pay at a degraded naira to dollar rate, saying “I give you an example. Caverton Helicopters pays N305 to the dollar. Bristow pays N345 to the dollar. It is only Omni Blu that I know and stand to be corrected that pays N360 to the dollar.”

 

“For God’s sake, if you are paying someone at inter-bank rate or Central Bank of Nigeria rate of N305 and you are saying that your salary is $5,000, are you actually paying him $5,000? You are not paying him $5,000; you are exploiting him and these are people who work much more than the expatriates because during your leave, they can call you back, but they wouldn’t call somebody from Spain, Brazil,” he added.

 

 

Dukas maintained that the nation boasted of capable hands to be aircraft commanders and engineers, stressing many of them are far better and experienced than some expatriates that carriers hire, thereby leading to joblessness of indigenous professionals.

 

 

Faced with frustration back home, Dukas stated that there were many high-ranking pilots and engineers that have left the shores of the country in search of jobs in the Middle East and Europe, adding that they are doing well in their chosen careers.

 

 

The situation, he noted, had led to brain drain as many of the professionals are getting engaged by countries like China and Middle East that are in search of pilots to fill huge gaps in their aviation sector.

Dukas reiterated that the brain drain would eventually lead to a big crisis in the next two years if nothing is done to arrest the ugly situation.

 

 

“It is a serious challenge. I can bet with you that in the next two years, the older brigade of pilots are leaving. So, a huge gap will exist. Where do you get the replacement? That is the question.

 

 

“It is very sad, but that is the obvious truth. I tell you one story. About two months ago, I was going to Ikoyi and I called a Taxifier. We were driving on Third Mainland Bridge, my phone rang and I picked it, it was my managing director asking me a question about a flight that I did. I started discussing with him. Having finished the discussion, the cab man said sir, I don’t mean to intrude into your discussion, but I trained as pilot. It is very scary.”

 

 

He stated that the pilot union recently opened a NAAPE headquarters for all pilots and engineers, who are jobless to come and register.

 

Dukas further disclosed that after looking at the register, over 200 of them had written their names, lamenting that the bad thing about the profession is that it is age related.

 

 

“For example, an airline owner will prefer to employ an 18-year-old boy than carry a 36-year-old person. The reason they do that is to make them conform the boy to whatever standards they want. Because you are 36 and independent minded and know what is right and wrong, they wouldn’t want to employ him. Those are some of the challenges in the Nigerian aviation industry today,” he noted.

 

 

He also faulted the aviation regulatory body, the Nigerian Civil Aviation Authority (NCAA), for standing aloof without wielding its powers to correct some of the anomalies in the industry.

 

 

“I can’t go to Brazil. I am a pilot, a qualified one, but I can’t go to Brazil to get employment ahead of a national. It is not possible. Here is a country where everything goes. It is very pathetic like I have said, but the situation is real,” he added.

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Growth: Niger Insurance reassures clients, investors

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…pays N1.4 billion claims

 

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he Managing Director/Chief Executive Officer, Niger Insurance Plc., one of the foremost composite insurance companies in Nigeria, Mr. Edwin Igbiti, has reassured policyholders and the business community that the management’s growth and transformation plan for the future will certainly breathe life into the firm.

 

The new management, he said, was putting strategies in place to reposition the well-known company for service excellence and competitiveness in a rapidly changing operating landscape.

 

Igbiti, who alongside his management team, briefed the press on Friday in Lagos, said as part of the plans, the company’s transformation blueprint over the next five years (2020 to 2024) would focus on operational and technological advancements in delivering bespoke insurance solutions to businesses, institutions and the growing populace of Nigeria.

 

The implementation of the transformation plan already began in the fourth quarter of 2019 following the appointment of the company’s new managing director, a vastly experienced and well- respected business leader who recently completed five meritorious years as MD of AIICO Insurance Plc.

 

The need for Niger Insurance Plc’s transformation is underscored by a combination of market and regulatory changes. Having been in operations for 57 years, it had become imperative to address legacy challenges as well as innovate to achieve service excellence, agility and competitiveness.

 

According to the Igbiti, the three pillars of the transformation plan are “strengthening our balance sheet (financial strength), strengthening our people (talent & innovation), and strengthening our business model (sustained growth & profitability).

 

“In order to ensure a successful execution of this plan, the company recently reconstituted a new board-of-directors, a new management team and an array of strategic partnerships.”

 

 

At its 49th AGM, which held last month, the company’s shareholders approved its recapitalisation plan to meet the new regulatory capital requirements through an equity capital raise via rights issue and/or private placement and a business combination by way of merger or acquisition, which must all be completed by 30 June, 2020.

 

 

In response to the situation regarding unpaid claims and outstanding customer benefits, the managing director expressed regret and attributed the delay to the company’s large asset portfolio, which is skewed towards fixed assets.

 

He, however, assured that the company’s assets were more than sufficient to settle all its liabilities and that it has made significant progress towards liquidating some fixed assets to unlock cash and pay down all outstanding obligations soon.

He stated that the company had paid over N1.4 billion to customers in the past nine months and used the opportunity to assure all others that their claims would be paid soonest.

 

He thanked all of its customers for their patience, trust and understanding during this challenging period in its long and otherwise stellar history while reaffirming the company’s renewed sense of responsibility and commitment to excellence.

“There is a growing sense of purpose at Niger Insurance Plc these days; it feels like a new dawn with management, staff and shareholders all working with passion and a common intent to write a great story in this new chapter of the company’s long and chequered history,” he noted.

 

While providing a progress update, the company’s new Chief Financial Officer (CFO), Mr. Ademola Salami, said: “Working with our financial advisers, the board and management of the company are already engaging with foreign and local investors that have shown interest in the company.

 

 

High-level negotiations are on-going and we expect to secure substantive offers for investment in the coming weeks.”

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60,000 workers join CPS in three months

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bout 60,000 workers from the public and private sectors joined the Contributory Pension Scheme (CPS) in three months thereby, pushing the number of Retirement Savings Account (RSA) holders from 8.79 million as at the end of the second quarter, June 2019 to 8.85 million as at the end of September, 2019.

 

 

The Acting Director-General, National Pension Commission (PenCom) Mrs. Aisha Dahir-Umar, who disclosed this, stressed that the pension fund assets had grown to N9.58 trillion.

 

 

However, the pension industry had earlier witnessed a 1.78 per cent growth in the scheme membership during the second quarter of 2019, moving from 8.63 million contributors at the end of the first quarter, that is, March 2019, to 8.79 million in June 2019.

 

She attributed the consistent growth in pension scheme subscribers to increased awareness on the advantages and enforcement of the new pension scheme by the pension industry regulator, that is, the National Pension Commission (PenCom) and pension fund operators.

 

 

Similarly, as at end of third quarter of the current year, pension fund assets have grown to N9.58 trillion, from 2004 when the new pension scheme debuted, a feat made possible by new pension contributions received, interest from fixed income securities and net realised on equities and mutual fund investments.

 

Investment income, according investigation, was instrumental to the continuous growth in pension funds, despite the fact that government at the state and federal levels are not paying the monthly pension contributions of their workers as and when due.

 

 

This growth, she said, justifies PenCom’s emphasis on the safety of pension funds as the bedrock of sustaining the CPS, assuring all stakeholders that the pension reform remains steadily on course. “These modest

milestones notwithstanding, the Commission and Pension Operators are committed to actualizing the growth potentials of the pension industry, ” she said.

 

On the theme of the workshop, which was, ‘Expanding Coverage of the Pension Industry’, she said, the Commission’s current strategic focus, is aimed at expanding access to pension as a veritable tool for economic development.

 

To her, “This aligns with the pension reform objective of old age poverty reduction and improvement in the welfare and general standard of living. The quest to expand coverage of pension is being pursued through some transformational initiatives especially the Micro Pension Plan.”

 

The Micro pension plan, she said, is targeted at the informal sector and self-employed who are not mandatorily covered under the CPS, noting that, it was designed with significant flexibility in recognition of the peculiarities of the targeted population.

On the other hand, she stated that the Enhanced Contributor Registration System (ECRS) is an in-house developed ICT application which was deployed in June 2019 to enhance the integrity of the contributors’ database.

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WFE launches work plan to drive CCPs

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he World Federation of Exchanges (WFE), the global industry group for central counterparties (CCPs) and exchanges, has said it is starting a 12-month work plan to ensure that the role and nature of CCPs is correctly understood, and is not undermined by narrow interests that diverge from good public policy.

 

In doing so, the WFE will engage with all stakeholders, while continuing to promote the principles that first made the CCP model the trusted approach to counterparty credit issues.

 

 

The WFE programme will take a comprehensive, first-principles look at all relevant questions, including the rationale for CCPs in the financial system and society. It will factor in research that has been produced in this area, while avoiding a selective or one-sided approach.

 

 

According to WFE in a statement, It took a collapsing banking and credit system in 2008 for the wider world to see what some already knew: that there is a major role for neutral, central entities who can enforce discipline on risk takers and, in the process, reduce systemic risk.

 

 

“Ten years on, in close collaboration with supervisors, this is the role that central counterparties continue to perform, requiring those who build up positions to put not just promises but cash (or other collateral) on the table, commensurate with the risk they bring to the system.

 

 

“This is the primary reason why public policy rightly aims to maximise central clearing. Such an approach to risk enforces discipline, rather than allowing risk-originators to pass on responsibility. It is the reverse of the situation pre-2008, where the perception of a public backstop led to excessive risk taking, in a severe case of ‘moral hazard’. As such, it would be irresponsible and reckless to have any CCP act as the system’s underwriter-of-last-resort.

 

 

This, however, is a recurring theme in an increasing number of advocacy programmes.

 

“CCPs’ own resources perform an important but entirely distinct role, backing their own operational continuity and signalling their responsibilities to measure and monitor accurately and impartially the degree of risk being taken in the market. CCP resources are not there merely to insure or underwrite risks assumed by others. While commercial tensions can arise in clearing – for example, regarding the balance of liability as between clearing brokers and their customers – other issues around incentives require particular care, in order to avoid jeopardising the public good.

 

“The WFE’s work will seek to analyse and explain the structure and incentives within central clearing. Its objective is to maximise clarity among market participants who benefit from clearing and to help ensure they are prepared to honour all their commitments. The WFE will discuss some of the empirical findings and work to date at IOMA: WFE’s Clearing & Derivatives Conference in March 2020, where the federation will bring together stakeholders on these issues,” WFE noted.

 

 

Nandini Sukumar, Chief Executive Officer, WFE, said: “As the global industry group for CCPs and exchanges, we consider it vital that there is greater understanding around the role of CCPs. CCPs should not simply take on the risk of others; indeed, the global clearing system is one which aims to ensure that the defaulter pays – not the creditor. There is currently much misinformation around the role, responsibility and working of the CCP. We will be working hand-in-hand with all market constituents, to ensure that stakeholders are well-informed on the topic of risk management.”

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FXTM: Moody’s downgrades dealt blow on investor sentiments

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senior research analyst at FXTM, Lukman Otunuga, has said that investor sentiment towards the Nigerian economy was dealt a blow after Moody’s changed the outlook on government of Nigeria’s ratings to negative from stable.

 

 

Global financial ratings company, Moody’s Investors Service, had downgraded its outlook of Nigerian economy to negative from stable as a result of what it termed the fragility of the country’s public finances and sluggish growth prospects.

 

 

According to Otunuga, given how the negative outlook reflects Moody’s view of increasing risks to the government’s fiscal strength, this should act as another wakeup call for the nation to diversify and move away from oil reliance.

 

 

“Weak government finances exacerbated by depressed oil prices and sluggish economic growth may disrupt fiscal consolidation. With both monetary and fiscal policy needed to support the Nigerian economy, the mounting pressures from the fiscal side must not be overlooked,” he said.

 

 

According to Moody’s, the increasing fragility of Nigeria’s public finances is evident in the greater reliance by the government on financing from the Central Bank of Nigeria (CBN) over the last three years. It added that the government is dependent on oil export proceeds to cover persistently large fiscal deficits, with CBN cash advances reaching 2.5 per cent of gross domestic product (GDP) on a net basis at the end of September 2019.

 

Next year, the CBN is aiming to generate $4 billion from non-oil exports revenue in 2020 but even if this is achieved, it pales in comparison to the $25 billion got from crude oil shipments. Also, $4 billion represents a minute percentage of Nigeria’s total GDP of about $375 billion and with a tax-to-GDP ratio of just 6 per cent, the government is struggling to find ways of funding much-needed infrastructural projects.

 

 

A Moody’s spokesman said: “In particular, CBN advances are more expensive than debt-funded on the domestic capital market as the CBN applies a penalty rate on top of its monetary policy rate currently at 13.5 per cent. Moody’s expects general government revenues to remain very low at around 8 per cent of GDP until 2022, despite measures to such as the value added tax rate increase to 7.5 per cent from 5 per cent in 2020.

 

 

“Consequently, debt affordability will remain weak, with general government interest payments at around 25 per cent of revenues in the next few years. The economy has yet to fully recover from the oil price shock of 2015 and the subsequent recession in 2016, while real growth remains below population growth, denoting an erosion in incomes from already low levels.”

 

Moody’s also projected Nigeria’s real growth to remain weak, at just over 2% over the next few years. It added that this low growth environment makes achieving the government’s objectives of job creation, improvement in social indicators and fiscal consolidation via increased revenue collection highly challenging.

 

 

“However, the continuation of the current policy mix, including the rationing of the supply of US dollars in the economy while suppressing part of the demand for foreign currency aimed at supporting domestic production and job creation over the long term, will constrain economic growth over the short to medium term. Overall, given Moody’s expectation that general government fiscal deficits are likely to remain around 4 per cent of GDP and 50 per cent of revenues and growth subdued over the coming years, rapid debt accumulation will continue,” the Moody’s spokesman added.

 

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Infrastructure: FBNQuest harps on sound policy frameworks

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DEVELOPMENT

Retail investor size sums to circa 3 million and to have meaningful participation would require a great deal of education of this investor category

 

F

BNQuest has stressed the need for sound macroeconomic policy frameworks to enable the capital market capture investors in long term domestic projects.

Head, Debt Capital Markets, FBNQuest Merchant Bank Limited, Mr. Oluseun Olatidoye, stated this in his presentation tagged “Bridging Nigeria’s infrastructure Gap, the capital market option” at the 2019 annual conference of Capital Market Correspondents Association of Nigeria (CAMCAN) in Lagos at the weekend.

 

Olatidoye said: “To successfully tap into the capital market for infrastructural financing, the existence of sound macroeconomic and policy frameworks are pre-conditions, hence, freedom must be given market forces to take its course.

 

“As much as the government has its role, political interference must be limited. This insures investors against any form of political risk, and most importantly corruption which has the potential of crippling the entire endeavour.”

 

 

He explained that on the retail side of the market, it was largely unarguable that capacity was limited in the case of Nigeria.

 

“Retail investor size sums to circa 3 million and to have meaningful participation would require a great deal of education of this investor category. Besides, the mobilization of retail funds is more likely through mutual fund schemes,” he added.

 

Olatidoye, who noted that foreign capital was a great deal in the domestic debt capital market, added that project bonds, Sukuks and other infrastructure-based fixed income products may be unappealing to foreign interest for a couple of reasons.

 

“Top of such concerns include foreign exchange policies, liquidity, and tenor (money market has been the major destination for FPIs). However, asides luring investors with reasonable yields, mitigating structures need to be in place to address risk factors, and this is largely reliant on a significant degree of macroeconomic policy stability and direction to capture offshore investors in long term domestic projects,” he said.

 

He noted that foreign exchange volatility if not addressed in the ‘most market’ approach could deter the interest of foreign counterparties.

 

“Depending on the structure of the bond, projects could be of a nature that exposes the financers to devaluation risks, which will whittle down the dollar value of local currency cash flow from such projects.

 

“Hence, may fail to service the debt (especially if denominated in the dollar). Moreover, investors will be wary of rating characteristics of the issue. As it is often the case for government-sponsored issuances where the state’s creditworthiness influences the rating of its issue or SPV.

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ASHON, five others unveil global securities group

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ssociation of Securities Dealing Houses of Nigeria (ASHON) and five international  associations have signed a Memorandum of Understanding ( MOU) that effectively established the African Stockbrokers and Securities Dealers Association (ASSDA) in Botswana, Southern Africa.

 

The agreement was in a strategic move to facilitate cross-border trading and settlement of securities, promote innovation and diversification.

 

The MOU, jointly signed by ASHON and other founding member securities associations from Egypt, Kenya, Mauritius, Morocco , and the West African Economic and Monetary Union,  ASSDA, is to deepen Africa’s financial market through cross border trading and seamless clearing and settlement of securities among the participating markets in Africa.

 

 

The President, African Stock Exchange’s Association (ASEA), Mr Karim Hajji, is an observer.

 

The Chairman, ASHON, Chief Patrick Ezeagu, who represented Nigeria at the ceremony, explained that the decision to establish ASSDA was taken at a roundtable organised by African Development Bank in Abidjan on April 24, 2019, for the African Exchanges Linkage Project (AELP).

 

According to him, the AELP is a co-initiative by the African Securities Exchanges Association (ASEA) and the African Development Bank (AfDB) to enable and facilitate cross-border trading and settlement of securities across participating exchanges in Africa.

 

A statement from ASHON  provides more insight to the philosophy and benefits of the MOU:

 

 

“It would foster Pan-African investment and trading of securities, and actualize the AELP. The Members present unanimously resolved to create a Pan-African association to be called the African Stockbrokers and Securities Dealers Association (ASSDA) through which they would achieve these and other objectives.

 

“The membership of ASSDA shall be an association of associations constituted of full members that are registered stockbrokers or securities dealers or associations whose members deal in securities in one form or another as approved by the Governing Council of ASDDA. The AfDB and ASEA shall also serve as Observer Members of ASSDA.

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EU agrees to tighter money laundering supervision

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uropean Union (EU) finance ministers at the weekend  backed plans for greater powers to combat money laundering after a series of revelations about large amounts of dirty money flowing through European banks.

 

 

According to Reuters, the EU last year experienced its largest money-laundering scandal when it emerged that 200 billion euros ($220 billion) in suspicious payments were made between 2007 and 2015 through Danske Bank’s (DANSKE.CO) tiny Estonian branch.

 

Several other cases have emerged since then, the latest involving Malta’s largest lender, Bank of Valletta, which the European Central Bank said had for years failed to address dirty-money risks.

 

In a joint statement, ministers called on the European Commission to explore the possibility of transferring supervisory powers to an EU body and to amend rules to strengthen coordination among national authorities.

 

Despite criminal organizations frequently laundering the proceeds of their illegal activities abroad, the fight against financial crime in the EU is currently mostly handled by national authorities, which do not always cooperate fully.

Ministers said an EU body “with an independent structure and direct powers” over banks should be considered, reversing opposition to such a move last year.

 

 

They also urged a fresh overhaul of EU rules to fight dirty money, only a year after the bloc adopted the fifth revision of its anti money-laundering rules.

 

 

 

Last year’s reform was watered down by conflicting interests among EU states, and quickly appeared insufficient as new scandals emerged.

 

Before the meeting, some of the EU’s largest states, including Germany, France and Italy, said powers should be transferred to an EU authority because national watchdogs had proved incapable of tackling financial crime.

They went as far as saying there was a risk of some national supervisors “being influenced directly or indirectly by supervised institutions or interest groups”.

 

Smaller states, such as Luxembourg, Malta, Cyprus and the Baltic countries, have been accused of lax controls which have allowed repeated cases of money laundering.

 

Most ministers supported the joint statement at a public session of their meeting on Thursday, but some, such as Luxembourg, did not join the discussion, leaving it unclear whether they would back the reform.

 

 

Malta’s finance minister, Edward Scicluna, said he fully backed the overhaul. He faces a criminal probe over money laundering in which he denies wrongdoing. The Maltese government has also confirmed support for state-owned Bank of Valletta after its dirty-money shortfalls emerged last month.

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‘Reliance on FPI affects Nigeria’s current account’

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ecent measures introduced by the Central Bank of Nigeria (CBN) to attract and retain foreign portfolio investors’ interest in Nigerian fixed income instruments, thereby ensuring adequate capital inflow for defending the naira, could be negatively impacting the country’s current account, analysts at Coronation Research have said.

 

In a note obtained by New Telegraph at the weekend, the analysts pointed out that despite oil prices being only marginal lower during the period compared with 2018, there was a cumulative negative of $5.68billion in Nigeria’s current account for the first two quarters of 2019 compared with a positive of $5.77billion for the same period of last year.

 

 

According to the analysts, “a part of the deficit in the current account comes from the combination of strong demand for services by Nigerians and payments to the rest of the world for holding financial assets which are greater than the surplus in the goods account.

 

“The latter shows that there is a cost to the CBN’s policy of currency stabilization through lucrative carry trades for foreign portfolio investors,” they added.

 

Specifically, the analysts said: “Portfolio investment in H1’19 was 32 per cent higher than H1’18. At the same time, average bond yields in H1’19 (at anchor) were one percentage point higher than in the same period last year. The short end of the yield curve also partook in the lift-up in yields with average yields on money market securities in H1’19 cfrom their respective levels in 2018.”

 

According to Wikipedia,“ current account is an important indicator of an economy’s health. It is defined as the sum of the balance of trade (goods and services exports minus imports), net income from abroad, and net current transfers.

 

“A positive current account balance indicates the nation is a net lender to the rest of the world, while a negative current account balance indicates that it is a net borrower from the rest of the world. A current account surplus increases a nation’s net foreign assets by the amount of the surplus, and a current account deficit decreases it by that amount.”

 

In a statement  last Wednesday, in which it announced that it has changed its outlook on Nigeria’s ratings to negative from stable, one of the world’s  leading credit rating agencies, Moody’s Investors Service,  had explained  that its negative outlook  on Nigeria was also underpinned by rising vulnerability to an adverse change in external capital flows.

 

It said  that the CBN’  increased issuance of short-term bonds to encourage inflows and protect the naira was hurting the country’s economy  and also leaves it vulnerable to outflows when foreign portfolio investors leave for more attractive prospects elsewhere.

 

The agency stated: “Official foreign exchange reserves at around $40 billion at the end of October, or 5-6 months of import cover, at first appear to be relatively comfortable. However, Nigeria’s external position is increasingly dependent on foreign capital inflows in the form of portfolio investments, which by definition are volatile and susceptible to reversal.

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