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UBA partners British Airways to reward customers

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UBA partners British Airways to reward customers

United Bank for Africa (UBA) Plc and global airline, British Airways, have announced a collaboration to reward loyal customers, who are cardholders of the bank.

The promo, which will last for six months from November 2019, will witness UBA customers getting significant discounts when they purchase their British Airways tickets using their UBA cards. 

The promo will allow customers to enjoy up between 10 per cent to 15 per cent discount on any ticket purchased during the campaign. The ticket fares is exclusive of taxes as is applicable to purchases of all goods and services.

The collaboration is aimed at increasing customer experience and satisfaction for both UBA cardholders and customers of British Airways.

The General Manager, Corporate Banking, UBA Directorate, Mr Muyiwa Akinyemi, who expressed delight at the collaboration, noted that the promo between the two organisations was carefully thought out to ensure that loyal customers of the two institutions are duly rewarded, while ensuring that they also receive more value for their money.

He added that  for persons without a UBA account, all they require to benefit from this promo is to procure a card instantly from any UBA branch nationwide.

He said:  “UBA is excited to collaborate with one of the foremost Airlines in the world to run a promotion aimed at rewarding our cardholders and premium customers who will enjoy discounted tickets and other ancillary benefits such as loyalty points on the British Airways Executive Club.”

He explained that as a customer-centric institution, UBA is always on the look-out for services and reward schemes that will ultimately benefit the customers, in line with its Customer 1st policy.

Akinyemi noted that the bank had plans to partner with other airlines in future to provide further opportunities of reducing cost of travel for its customers.

“For now, we are partnering with a pre-eminent airline that offers class and distinction,” he said.

The Commercial Manager for British Airways in West Africa, Mr Kola Olayinka, noted that the airline was pleased to partner with the bank due to its huge customer base and wide reach, adding that with the partnership, more customers would be able to enjoy the promo.

He said: “British Airways is excited to partner with UBA, Africa’s Global Bank, to create a mind-blowing promotion aimed at raising awareness about this service to be rendered by both institutions.

“In addition, the discounts provided by British Airways will reduce the cost of travel and encourage the Bank’s customers to make more foreign trips during the period and also reward their customers and staff as a way of giving them something very tangible.”

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CBN sold CNY512.43m in H1’19

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CBN sold CNY512.43m in H1’19

Initiative

Apex bank flagged off Yuan sales on July 20, 2018

 

T

he Central Bank of Nigeria (CBN) sold a total of 512.43million Chinese Yuan (CNY) in the first half of this year, latest data released by the apex bank shows.

 

According to the CBN’s “Half Year Activity Report 2019” posted on its website yesterday, the 512.43million Renminbi (Yuan) was sold during a total of 13 auctions conducted by the regulator during the review period.

 

The report said: “During the review period, the bank continued with the implementation of the Bi-lateral Currency Swap Agreement with the People’s Bank of China through bi-weekly Renminbi auctions, which commenced in July, 2018.

 

“In the review period, 13 auctions were conducted and Renminbi worth CNY512.43 million were sold from the drawdown of CNY1.00 billion. A total of Renminbi worth CNY669.66 million was sold through 12 auctions conducted from July to December 2018, from the same initial draw down of CNY1.00 billion.”

 

This means that between July 2018 and June 2019, the CBN sold a total of CNY1.2billion to stabilise forex demand.

 

The CBN had on July 20, 2018 commenced its intervention in the sale of forex in CNY, thereby flagging off the consummation of the Bilateral Currency Swap Agreement (BCSA).

 

The currency swap agreement allows importers of goods from China to conclude their transactions in the Chinese currency, the Renminbi (Yuan), instead of the dollar, thus easing the demand for the greenback in the forex market.

 

Meanwhile, the CBN disclosed in the report that “the first half of 2019 recorded an overall reduction in foreign exchange demand pressure, as well as moderation in exchange rate volatility compared with the corresponding period in 2018.”

 

Specifically, the apex bank said it sold  a total of $8.28billion at the foreign exchange market in the review period,  comprising: “$2,142.63 million at the Inter-bank spot, $550.70 million for Invisibles, $810.00 million for SMEs, $212.11 million at the I&E window and $4,572.03 million as Forwards sales.

 

 

“The increased sales at the inter-bank spot market in 2019 were attributable to the bank’s foreign exchange management strategy of sustaining liquidity and maintaining exchange rate stability,” the report added.

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NSE advances, records N69bn gain

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NSE advances, records N69bn gain

T

he bulls maintained grip on market activities yesterday as stocks sustained rally for the second trading session following gains recorded mainly by blue chip stocks.

 

 

The key market performance measures, the NSE All Share Index and market capitalisation, rose by 0.54 per cent as market sentiments extended gaining streaks following investors’ sustained optimism on undervalued stocks.

 

 

Consequently, the All-Share Index gained 141.9 basis points or 0.54 per cent to close at 26.456.39 as against 26.314.49 recorded the previous day while the market capitalisation of equities appreciated by N69 billion or 054 per cent to close at N12.878 trillion from N12.809 trillion as market sentiment remained on the green zone.

 

Meanwhile, a turnover of 378.3 million shares exchanged in 4,798 deals was recorded in the day’s trading.

 

 

The premium sub-sector was the most active (measured by turnover volume); with 198.7 million shares exchanged by investors in 2,186 deals.

 

 

Volume in the sub-sector was largely driven by activities in the shares of Zenith Bank Plc and Access Bank Plc.

 

 

The banking sub-sector boosted by activities in the shares of GTB Plc and Fidelity Bank Plc followed with a turnover of 65.8 million shares in 572 deals.

 

 

The number of gainers at the close of trading session was 18 while decliners closed at 11.

 

 

CCNN  Plc led the gainers’ table with a gain of 9.14 per cent to close at N19.10 per share while Union Dicon Plc followed with a gain of 9.09 per cent to close at 24 kobo per share. Cornerstone Insurance Plc added 8.16 per cent to close at 53 kobo per share.

 

 

On the other hand, Ikeja Hotel Plc led the price losers’ table, dropping 9.28 per cent to close at 88 kobo per share. Courtville Business Solutions Plc followed with 8.70 per cent to close at 21 kobo per share while Wapco Plc trailed with a loss of 3.74 per cent to close at N14.15 per share.

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AG Leventis reports N904m loss in 9 months

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AG Leventis reports N904m loss in 9 months

A

G. Leventis (Nigeria) Plc has posted a loss after tax of N904.258 million for the nine months ended September 30, 2019 as against a loss of N574.361 million reported in 2018.

 

Loss before tax stood at N1.329 billion from N844.648 million posted in 2018. The group’s revenue declined by 33.24 per cent from N8.210 billion in 2018 to N5.481 billion reported in 2019.

 

 

Cost of sales stood at N4.260 billion in 2019 as against N6.274 billion posted in 2018.

The group had sustained loss position during half year ended June 30, 2019 with a total compressive loss  for the year of N282.292 million as against N545.904 million reported in 2018.

 

Loss before tax stood at N415.136 million from N802.800 million in 2018 while cost of sales was N3.033 billion as against N5.423 billion posted in 2018.

 

Revenue during the period under review  by 42.75 per cent to N3.960 billion as against N6.918 billion reported in 2018.

 

Chairman, AG Leventis, Ahmed Kazalma Mantey, speaking at the group’s 59th Annual General Meeting (AGM), said: “The effect of the recession in our economy continued to impact adversely on our operations as there was a reduction in credit opportunities which in turn affected our income.

 

“This harsh environment along with the continued lag in infrastructure especially power and road network added to our cost of doing business. Nevertheless, we strove to ensure that we continued to develop our business as much as possible.”

 

AG. Leventis Nigeria recently notified the Nigerian Stock Exchange that Boval S.A, acting on behalf of itself, Leventis Holding S.A., and Leventis Overseas Limited, haf approached the board of directors of the company with an intention to acquire the shares held by other shareholders at an offer price of 53 kobo per share and subsequently delist the company from the exchange.

 

The offer price of 53 kobo, according to a statement signed by Bola Adebisi (Ms.), Company Secretary/Legal Adviser, represents a premium of 85 per cent to the 60-day volume weighted average share price and 104 per cent to the company’s closing share price on 23 September 2019.

 

 

The proposed transaction will be implemented under a scheme of arrangement in line with section 539 of the Companies and Allied Matters Act, Cap C.20 Laws of the Federation of Nigeria, 2004.

 

“The proposed transaction is still subject to the review and clearance of the Nigerian Stock Exchange and the Securities and Exchange Commission as well as the approval of the shareholders of the company.

 

 

“The terms and conditions of the proposed transaction will be provided in the Scheme Document which will be dispatched to all shareholders following the receipt of the “no-objection” of the regulators and an order from the Federal Hiqh Court to convene a Court-Ordered Meeting.

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ICDs: Excellent initiative but dead on arrival

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ICDs: Excellent initiative but dead on arrival

The Inland Container Depot (ICD) in Kaduna, commissioned last year to facilitate import, export of raw materials and equipment for importers in northern states and landlocked countries, has failed like others that never moved beyond their foundations, BAYO AKOMOLAFE reports

 

 

T

here was jubilation among shippers in 2006 when the dry port or Inland Container Depot (ICD) concept was introduced by the Federal Government.

 

 

Dry port model has gained widespread importance in international transportation as a result of container revolution and introduction of door-to-door delivery of cargo.

 

 

Dry port

 

Inland Container Depot is the equivalent of a seaport located in the hinterland and receives containers by rail from the seaports for examination and clearance by customs.

 

The Federal Government, while conceiving the idea had said that the dry port would bring cargo clearance nearer to land locked states and countries.

 

However, 13 years after, the dry port projects located across six states in the country are still facing some challenges due to inabilities of the concessionaires and government to put them into use.

 

Some of the dry ports were concessioned by the Nigerian Shippers’ Council (NSC) in 2006 under the Build, Own, Operate and Transfer (BOOT) agreement to six companies.

 

 

Presently, the country has six non-functional ICDs located in IsialaNgwa, Aba;  Erunmu, Ibadan;  Heipang, Jos; Zawachiki, Kano; Zamfarawa, Funtua and Jauri, Maiduguri. They have all been idle since 2006 but for Kaduna, which was commissioned by the Federal Government but still came to a sudden halt.

 

 

In 2006,  Duncan Maritime Services Limited was commissioned to build one in Jos;  Eastgate Inland Container Terminal Limited, Isiala Ngwa;  Dala Inland Dry Port,  Kano ; Migfo Nigeria Limited,  Maiduguri ; Catamaran Logistics Limited, Erunmu at Ibadan  and Equatorial Marine Oil & Gas Limited,  Funtua (Kaduna).

 

Complaints

 

Worried by the low spate of development of the ICDs, the Executive Secretary of Nigerian Shippers Council, Barrister Hassan Bello, had warned the concessionaires in 2016 that government would cancel their licences if they fail to show some level of commitment in the development of the depots.

 

However, the concessionaires blamed their non-performance on their financiers and technical partners, who were reluctant to support the projects because of security challenges in some states.

 

Also, they complained that some of the host governments had not been able to meet their obligations in the agreements they had with them.

 

Outstanding

 

 

Nevertheless, only the one operated by the Inland Container Nigeria Limited (ICNL) at Kaduna commenced operation in January, 2018. The dry port was commissioned by President Mohammadu Buhari to bring trade facilitation nearer to interior importers and the land locked countries.

 

 

As soon it was inaugurated, the president warned Nigeria Customs Service (NCS) and port officials against frustrating business, commercial and industrial enterprises at ICD with unnecessary bureaucracy.

 

 

One year after the warning, the dry port has been abandoned by importers, northern state governments, shipping lines and Niger Republic over non- recognition as port of destination.

 

Dilemma

 

 

Justifying why the port was abandoned and persistence examination of transit cargoes to the ICD by the NCS, the Council for the Regulation of Freight Forwarding in Nigeria (CRFFN) explained recently that the Kaduna Inland Dry Port (KIDP) and other dry ports were yet to be approved as port of destination by the Federal Government.

 

 

Challenge

 

 

For instance, the council said that it would constitute a security risk for cargoes to be moved out of the seaports directly to Kaduna without checks by customs irrespective of the owners of the cargo.

 

 

The Chairman of Research and International Liaison of CRFFN, Mr. Increase Uche, who is also the National President of National Association of Government Approved Freight Forwarders (NAGAFF),observed that inland container depots  in the country were not being patronised, despite the fact that they were established to reduce the pressure on port terminals.

 

 

He noted:  “Today, there is no ICD that has been approved as a destination port in the country.

 

 

According to him, Kaduna ICD had not got the approval of web results of the International Federation of Freight Forwarders Associations (FIATA), which is the umbrella of freight forwarding globally and the International Maritime Organisation (IMO).

 

 

He noted: “We are yet to carry out the relevant moves that would enable them identify Kaduna ICD as a destination port. Now, any cargo meant for the ICD that lands at our port, ordinarily cargoes landed from the vessels need to undergo pre-scanning.”

 

 

Also, the National President, Association of Nigeria Licensed Customs Agents (ANLCA), Mr Tony Iju Nwabunike, explained at a round table forum recently in Lagos that stakeholders, who were supposed to make the place viable did not understand the principles of dry port in the country.

 

 

He said that the dry port lacked adequate logistics to move t cargoes.

 

Issue

 

According to him, the KIDP was made a port of destination operated with True Bill of Laden (TBL) just like the Apapa seaport and any other port.

 

However, the national president noted that the TBL was the source of problems for dry port, stressing that shipping lines that are supposed to give importers TBL were not doing it.

 

 

Nwabunike stressed that the shipping lines had failed to issue the TBL because they did not have logistics to transport cargoes from Apapa port to the hinterland.

 

He noted: “The shipping lines do not have the capacity to get the trucks, there are no locomotives and wagons from Nigerian Railway Corporation, so these have become the bane.”

 

Foreign shipping companies are expected to charge importers freight rates and deliver their cargoes to the final port of destination.

 

Last line

 

The way the ICDs were planned from the beginning appeared like projects that were doomed to fail as the rail system that was supposed to be a vital part of the project was never revitalized nor new rail tracks put in place.

 

 

However, considering the fact that government is currently working zealously to improve on the country’s rail system, it is advisable that stakeholders in the maritime sector begin a widened collaboration with relevant bodies to factor in the ICD project, which fortunately had already started even though they have not been functional.

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Mobilising domestic savings for infrastructure devt

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Mobilising domestic savings for infrastructure devt

The growing financing need for Nigeria’s infrastructure development requires urgent mobilisation of domestic savings. Chris Ugwu writes

 

 

W

orld over, infrastructure contributes to economic development by increasing productivity and providing amenities, which enhance the quality of life. The services generated as a result of adequate infrastructure translate to an increase in aggregate output.

 

 

However, investment in infrastructure, such as transportation (roads), electricity and water, is intermediate inputs to production because infrastructure services tend to raise productivity of other factors as it is often described as the ‘unpaid factor of production.’

 

 

Although, Nigerian capital market has suffered monumental losses due to sustained decline in stock prices, the country’s huge infrastructural deficit in power, housing, roads, healthcare, port services among others has contributed to a large extent in retarding the overall growth and development of the sector, which is central to capital formation.

 

 

The importance of a strong and viable domestic savings and bonds market as alternative sources of finance in emerging economies has been affirmed by the success it enjoys in countries such as Brazil, India and China.

 

 

With government’s economic reforms running at full throttle, prospects are high for sustained mobilisation of domestic savings, foreign capital and development of the Nigerian bond market as viable tool for financing Nigeria’s infrastructure development. This is even more apt as the country just wriggled out of recession.

 

 

Meanwhile, against this backdrop of the comatose state of infrastructure, government and stock market operators last week stressed the need to mobilise domestic savings and foreign capital for development of infrastructure.

 

This is because since the banking sources have not adequately meet the growing financing needs in Nigeria’s infrastructure, there is need to bridge the gap through these sources to achieve the desired growth.

 

 

Clamour for domestic savings

 

 

The Federal Government recently stressed the need for mobilisation of domestic savings and foreign capital to finance the country’s needs for infrastructure, agriculture, housing SMEs and other services.

 

Vice President, Prof. Yemi Osinbajo, stated this last week in a keynote address delivered at the 2019 FMDQ Nigerian Capital Markets Conference in Lagos.

 

Osinbajo, represented by Ms. Mary Uduk, acting Director-General, Securities and Exchange Commission (SEC), said that the country needed to mobilise more funds to address its needs.

 

He said that Nigeria as a country required more capital to grow, develop and attain its potential.

 

“We need to mobilise domestic savings and capital as well as attract the necessary foreign capital to finance our needs in the areas of infrastructure, agriculture, mining, industry, housing, SMEs, information and communication technology, transportation and other services,” he said.

 

The vice president said that the administration of President Muhammadu Buhari was doing everything possible to close the gap in infrastructure deficit.

 

 

He explained that this was being done through direct expenditure and also by incentives given to private investors, domestic and foreign, to invest in the critical sectors of the economy.

 

 

“The Economic Recovery and Growth Plan (ERGP) (2017-2020) has a major objective of building a globally competitive economy through investment in infrastructure, improvement in business environment and promotion of digital-led growth.

 

 

“No doubt, this objective requires fresh and adequate capital. This approach to diversifying our sources of capital has assisted in making our country a destination of capital and further deepening our capital market.

 

 

“Private issuers are also encouraged to issue these instruments, leaning on the success recorded by the Federal Government. The secondary markets of some of these instruments are also getting more liquid as observed on the exchanges,” Osinbajo added.

 

 

He said that government had increased allocation to capital projects in annual budget to boost infrastructure development.

 

 

“For instance, we have been allocating, on the average, close to 30 per cent of our expenditure to capital projects. We are proposing about 21 per cent of the N10.33 trillion of the 2020 budget as capital expenditure,” he stated.

 

 

Speaking on some of government’s plan for 2020, Osinbajo said that the Federal Government would sustain growth and ensure creation of more jobs in 2020.

 

 

“However, we recognise that government alone cannot muster and deploy enough resources that are necessary for Nigeria’s development. This is due to competing and rising needs as well as challenges in revenue sources and collection,” he said.

 

 

Earlier, in her opening address, Uduk said that the Capital Market Master Plan (2015-2025) was launched to transform the Nigerian capital market to make it more competitive, while contributing its quota to developing the nation through funds mobilisation.

 

She said that the plan was hinged on four strategic themes, namely; Contribution to National Economy, Competitiveness, Market Structure and Regulation & Oversight.

 

 

Uduk said that SEC in partnership with the market had worked on initiatives that simplified the process of raising capital and reduced time to market in contributing to the national economy.

 

 

“The recent efforts towards developing the Nigerian commodities ecosystem and the Fintech space are also important contributions to the Nigerian economy.

 

 

“In order to enhance market competitiveness, the minimum capital requirements for capital market operators were raised, transaction costs have been reduced for both equities and fixed income segment of the market, a robust complaint management framework was introduced and various other initiatives are being implemented to enhance liquidity.

 

 

“Towards improving the market structure, minimum operating standards for all market operators have been implemented.

 

 

“Some of the ongoing initiatives such as the e-dividend, multiple subscription, direct cash settlement and electronic distribution of companies’ annual reports are geared towards achieving an innovative market structure,” she said.

 

 

Government’s efforts on domestic savings

 

 

In order to boost financial inclusion, the Federal Government took a step further by introducing savings bond to encourage retail investors.

 

 

The first issue of the sovereign savings bond opened on Monday, March 13, 2017 and closed on Friday, March 17, 2017. At the first issue, a total of N2.068 billion was allotted via 2,575 successful subscriptions.

The Debt Management Office (DMO) accredited 87 stockbroking firms of the Nigerian Stock Exchange to market and distributed the savings bond.

 

 

Last month, the Federal Government also offered for subscription two-year savings bond at 11.244 per cent and three-year savings bond at 12.244 per cent per annum, DMO said.

 

According to the offer circular obtained from the DMO website, the two-year bond will be due in October 2021 while the three-year bond will be due in October 2022.

 

 

It, however, did not state how much was offered, but added that the maximum subscription was N50 million at N1,000 per unit, subject to minimum subscription of N5,000 and in multiples of N1,000.

 

 

The savings bond issuance is expected to help finance the nation’s budget deficit.

 

 

It is also part of Federal Government’s programme targeted at low income earners,  to encourage savings and also earn more income (interest), compared to their savings accounts with banks.

 

Backed by the full faith and credit of the Federal Government of Nigeria, the bond, among several objectives, is purposed to deepen the national savings culture, provide opportunity to all citizens irrespective of income level to contribute to national development, enable all citizens participate in and benefit from the favorable returns available in the capital market and more importantly diversify funding sources for the government.

 

 

The savings bond put Nigeria in the league of sovereigns like Sweden, Thailand, Slovenia, Indonesia, United States, and United Kingdom with savings bonds.

 

 

Benefits of savings bond

 

 

A former Executive Director, Capital Market Division of NSE, Mr. Haruna Jalo-Waziri, said: “NSE retail bond market was launched in 2012 with the aim of providing retail investors access to high quality debt instruments, as well as afford them portfolio diversification opportunities in an efficient and reliable way.

 

 

“The launch of the Federal Government National Savings Bonds is consistent with the NSE’s commitment to grow domestic investor participation in the Nigerian capital market, and it is our pleasure to have worked with the DMO and the dealing member community to deliver yet another innovative product that will foster financial inclusion in Nigeria.

 

 

“After the offer closes, the bond will be listed on the NSE and can be traded on our retail bonds market. DMO accredited distribution agents and the government broker will provide liquidity by continuously making two-way quotes throughout the trading session”

 

“With an estimated population in excess of 150 million, if the targeted audience successfully offtake this product, we shall be seeing yet another paradigm shift where ordinary Nigerians irrespective of their income levels can pool resources to boost government’s effort to mobilize domestic capital required to fund priority sectors of the economy and ultimately serve as a catalyst for economic growth.

 

 

“The launch of this savings bond offer is coming on the back of recent innovative capital market instruments deployed by the Federal Government, having listed the first FX denominated bonds, Eurobond on local bourses,” he said.

 

 

Last line

 

 

The growth of investment business in any nation largely depends on economic development hence the need for the authorities to intensify efforts on infrastructural development to enhance citizens’ standard of living.

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Oil and gas investors lose N91bn in stocks

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Oil and gas investors lose N91bn in stocks

 

APATHY

Escalation in trade dispute between the US and China has set off warning signals for oil-producing countries like Nigeria

 

 

S

hareholders in oil and gas companies quoted on the main board of the nation’s stock market recorded a loss of about N91.409 billion in 10 months (between January and October 2019) following sell offs that have persisted in equity market.

 

 

Available statistics show that the oil and gas sub-sector recorded a loss of N91.409 billion or 34.26 per cent to close at N175.354 billion in market capitalisation on October  31, 2019 as against opening figure of N266.763 billion at the beginning of trading on January 2.

 

 

The sub-sector has continued to witness persistent sell pressure as the price of crude dropped following upset in financial sector and increasing trade dispute between the U.S and China.

 

 

Reacting to the development, senior analyst at FXTM, Lukman Otunuga, said that another escalation in the trade dispute had punished crude oil prices and set off warning signals for oil-producing countries like Nigeria.

 

 

He noted that at the same time, Nigeria’s GDP slowed down to 1.94 per cent in the second quarter from 2.1 per cent in the first quarter, following the trend seen in several economies such as Germany and the UK.

 

 

“It is becoming quite clear that as long as oil dependence remains one of Nigeria’s biggest risks, this will continue weighing heavily on the economy for the rest of 2019. While the GDP data should nudge the Central Bank of Nigeria (CBN) to cut interest rates for the second time this year in September in an effort to stimulate growth, this is a temporary fix to a bigger problem

 

 

“Persistent trade dispute between the world’s two largest economies is set to fuel fears over a global slowdown or even recession. Oil prices declined on the basis that a decelerating global growth may result in lower demand for the commodity Nigeria relies on for 90 per cent of its export earnings.

 

 

“In the context of a trade dispute, tariffs are like bombs exploding on trading relationships, supply deals and eventually on company profits.

 

 

“Trade tensions also remain a direct threat to Nigeria’s economy. The risk factors are escalating along with the probability that the world may see an economic slowdown in the short-to-medium term.

 

 

“Under the current circumstances, there are three main challenges Nigeria must navigate. They are China’s slowdown, lower oil prices, and the need for fast and adaptive monetary policy to handle local and external shocks.

 

 

“The prospect of high debt levels to China amid lower oil prices is something that must not be overlooked.

 

 

“At the time of writing, Oil benchmarks come under continuous pressure from demand-side concerns, including recession fears stemming from trade disputes.

 

 

“The money from Oil sales is the lifeblood of the Nigerian economy. In the worst-case scenario, if Oil prices start drifting lower there could be unwelcome consequences such as even slower GDP growth, job losses, sovereign debt defaults, less money in the fiscal budget for development, and constrained consumer spending.

 

 

“Reduced crude Oil sales would affect government revenues and reserves, meaning the capacity to fund projects will be weakened. Stock markets together with investor sentiment domestically and externally would be impacted and possibly even trigger capital outflows,” he said.

 

 

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AfDB, Reuters foundation partner on workshop

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AfDB, Reuters foundation partner on workshop

T

he African Development Bank (AfDB), in collaboration with the Thomson Reuters Foundation, at the weekend, hosted the second edition of its reporting workshop for African journalists  in Pretoria.

 

 

“Let’s work together in creative ways to ensure accountability in our countries, and build a new Africa for future generations,” Victor Oladokun, the bank’s Director of Communication and External Relations, said in a presentation at the programme.

 

“Permit me to say it is not all doom and gloom. Together, we need to tell the stories of some of the positive developments taking place on our continent and of a resurgent Africa,” Oladokun told participants.

 

 

The workshop was attended by journalists from 21 southern and eastern African countries.  The programme offered them specialised reporting knowledge and skills focusing on impact development placing people at the center of the continent’s development narrative.

 

 

The three-day programme delivers on a pledge that AfDB President Akinwumi Adesina made at the bank’s annual meetings last year in Busan, South Korea, where he promised to provide development training to journalists.

 

 

As part of the rigorous course, trainees visited Ekurhuleni East TVET College in Germiston, Gauteng Province, where the bank‘s support has impacted 200 students, instructors and Small Medium and Micro Enterprise (SMMEs) in the local community. This has led to improved performance of students and productivity for SMMEs.

 

 

The AfDB’s High 5 priorities sharpen the focus and adapt the global agenda and the Paris Climate Agreement to the Agenda 2063 for Africa developed by the African Union.

 

 

The High 5s target inclusive growth and a transition to green growth through five priorities to improve the quality of life for the people of Africa.

 

 

The Thomson Reuters Foundation promotes impartial, independent evidence-based reporting.

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‘Border closure’ll hinder ACFTA’s prospects’

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‘Border closure’ll hinder ACFTA’s prospects’

P

resident of Ghana’s Importers and Exporters Association, Samson Awingobit, has reportedly said that he did not see any future for the African Continental Free Trade Area (ACFTA) agreement if Nigeria continues to shut its land borders with neighbouring  countries.

 

 

In an interview with Citi News, he noted that it was time for the respective heads of states to resolve the matter as the standoff risks the successes of ACFTA.

 

He was quoted as saying “we all know that in July next year, we will be implementing the Africa Continental Free Trade. I don’t see the future of this free trade agreement which we are happy about if this border closure issues persist. If it will be supported, there is the need for a head of state meeting immediately. I think it is beyond the ministries of foreign affairs and trade. For where we are now, there is supposed to be a round table discussion between Ghana’s President and that of Nigeria with regard to what is happening at the moment.”

 

 

The Federal Government closed Nigerian land borders to some African states, including Ghana, since August 2019, a situation that is affecting traders and their businesses in the sub-region.

 

The move, the government said, is aimed at stopping the smuggling of products from neighbouring West African countries into Nigeria.

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LDR: Banks woo customers with credit

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LDR: Banks woo customers with credit

As  the December 31, 2019 deadline set  by the Central Bank of Nigeria (CBN) for banks to have a minimum Loan-to-Deposit Ratio  (LDR) of  65 per cent draws closer,  lenders are coming up with different types of innovative loan products to attract customers, writes Tony Chukwunyem

 

 

D

eposit money banks (DMBs) in the country  do not seem fazed by concerns in some quarters that  the Central Bank of Nigeria’s (CBN) decision to significantly  raise the  minimum Loan-to-Deposit Ratio  (LDR) for the industry could push  them  into risky lending practices, thereby leading to an increase in Non-Performing Loans (NPLs).

 

 

Reason: Efforts by the DMBs to ensure they comply with the apex bank’s new minimum 65 per cent LDR policy before its December 31 2019 deadline have triggered a fierce competition for borrowers among the lenders. 

 

 

Attractive offers

 

 

New Telegraph’s findings show that many Nigerians are daily receiving unsolicited credit offers from lenders eagerly searching for people to extend credit to. Significantly, such offers are so attractive that they are being snapped up by bank customers.

 

 

For instance, a Lagos-based businessman, Mr. Fred Halim, told New Telegraph that in recent times he had been getting a loan of not less than N100,000 every month  from a Tier 1 bank.

According to him, not only does the  bank not ask for any collateral before granting him the credit, it is given to him at   four per cent interest rate, which  when added to the one per cent management fee charged by the lender as well as the insurance cost of 0.15 per cent, is still quite affordable for him. 

 

 

However, Halim said the most attractive feature of the loan productwas the fact that he does not need to pay a visit to any of the bank’s branches to enjoy the credit facility.

He said: “Everything from start to finish is done from my mobile phone. All I need to do is to dial the required code and I will be told how much loan I’m entitled to for that month. The bank has its way of calculating the amount. The other condition is that I must pay back within one month.” 

 

 

Another Lagos-based trader, Mr. Ikenna Obi, also said that given the widespread perception among Nigerians that banks are reluctant to extend credit to Micro Small and Medium Enterprises (MSMEs), he had initially ignored several messages from his bank that he was qualified to apply for a collateral-free loan.

 

 

But, according to him, after learning more about the product from his account officer, he was convinced about its benefits and has been a frequent borrower.

 

 

Access Bank’s announcement

 

 

 

Interestingly, about a month ago, Access Bank announced that its expanded digital lending portfolio, which gives Nigerians quick and 24/7 access to funds for emergencies without any collateral, had hit a record N1billion daily in loan value.

 

 

The Tier 1 lender said that since the launch of its digital loan portfolio with “PayDay Loan” as the flagship product, it had expanded its digital loan offerings to other multi-tenured variants.

 

 

Commenting on the success of the lender’s loan products, Executive Director, Retail Banking, Access Bank Plc, Victor Etuokwu, said:  “We are at the forefront of digital lending across the continent. This is a deliberate choice we made when we introduced the first USSD based digital lending product in Nigeria based on our deep understanding of our operating environment.

 

 

“In the past two years, we have disbursed over 3.5 million loans to individuals. We acknowledge it is no mean feat when compared to where the market is coming from, but this is still a scratch in the overall potential of this market. This year alone we have disbursed over N45billion in over two million disbursements to individuals and have recently witnessed a spike in our volumes hitting N1billion daily. This achievement and our focus on retail lending reiterate our commitment to democratize access to financial services leveraging digital technology.”

 

 

LDR hike

 

 

 

Analysts point out that although DMBs have realised for some years now that they needed to aggressively pursue retail lending in order to remain profitable, the CBN should take the credit for the recent surge in lending to MSMEs.

Having used moral suasion as well as  carrot and stick approach (without much success), over the last few years,   to try to encourage lenders to extend credit  to the real sector and thus  boost  economic growth,  the CBN had in a letter dated July 3, 2019, directed all DMBs to maintain a minimum LDR of 60 per cent by the end of September 2019.

 

 

The LDR is the portion of customers’ deposit that is given out as loans.

 

 

The apex bank also warned that failure to meet the LDR requirement would lead to a levy of additional Cash Reserve Requirement (CRR) equal to 50 per cent of the lending shortfall of the target LDR. This means 50 per cent of a bank’s deposit will be immediately sent to the CBN.

 

 

Sanctions

 

 

At the expiration of the September 30 deadline, the CBN debited the accounts of 12 DMBs to the tune of N499.18billion for failing to comply with its directive even as it announced that it was raising the LDR target upwards to 65 per cent and  which lenders  must achieve  by December 31, 2019.

 

 

The banks sanctioned included four Tier 1 lenders-Zenith Bank, First Bank of Nigeria Ltd, UBA and GTB- and three international banks-Citibank, Standard Chartered Bank and Rand Merchant Bank.

Others were FBN Quest Merchant Bank, Jaiz Bank, FCMB, Keystone Bank and Sun Trust Bank.

 

 

A breakdown of the charges showed that Citibank was sanctioned N100.774 billion, Firstbank (N74.67billion), FBN Quest Merchant Bank (N270 billion), FCMB(N14.37 billion), GTBank (N25.15 billion) and Jaiz Bank (N7.53 billion).

 

 

Others are Keystone Bank (N4.16 billion), Rand Merchant Bank (N2.82 billion) Standard Chartered Bank (N30.03billion), SunTrust Bank (N1.70 billion), UBA (N99.68 billion) and Zenith Bank (N135.63 billion).

 

 

However, on October 17, the CBN indicated that it had released part of the deducted N499.18billion to some of the affected banks after they increased lending.

 

 

Bloomberg quoted the Head of Banking Supervision at the apex bank, Mr. Ahmad Abdullahi, as saying that “most of them that were involved got a refund,” after they met the requirement at the end of September. It is not a penalty where a bank is to forfeit money. ”

In fact, at the end of its meeting in Abuja early last month, the Bankers Committee had clarified that the deduction was neither a fine nor a levy, adding that the monies would be refunded once the banks met the LDR requirements.

 

 

Speaking on behalf of the committee, Chief Executive Officer of Zenith Bank, Mr. Ebenezer Onyeagwu, had stated that the monies would be refunded once the banks met the LDR requirements.

 

 

He said: “The CBN never stated that the debits were fines. If you go back to the circular, what it said was that at the cut-off point at the event that you do not meet the threshold, funds will be debited from you and added to your CRR. So, what you have there is not a fine rather is it a levy but it’s just a shortfall based on the parameters that the CBN has set.

 

 

“However, even if at the cut-off point of September 26 adopted by CBN, you were short in terms of what you were supposed to do, CBN is not a closed session, it continues. CBN would look at your figures subsequently and where you achieve a loan growth, you have a refund, if you also have a drop in your deposit compared to that cut-off, you will now have debit.

 

 

“So, it’s going to be a continued dynamic process where the whole essence is to see that we don’t just have a one-off growth but a continued process of creating an enabling credit in the system.”

 

 

Warning

 

 

Still,  financial experts here in Nigeria and globally warn  that the increase in LDR would hurt the nation’s banking industry as it could push lenders into granting risky credit, thereby  swelling NPLs ratios.

 

In a statement it issued on July 5, Fitch Ratings said it believed the move “will push some banks to significantly increase lending to riskier borrowers, potentially with looser underwriting or underpricing of risk.”

 

The agency said that following announcement of the new LDR requirement, it had raised its 2019 loan growth forecast to an average of 10 per cent for Nigerian banks that it rates, compared with 1 per cent growth in 2018.

 

 

According to the agency, “achieving the new LDR requirement in such a short timescale will be very difficult for some banks given their lending levels, particularly if customer deposits continue to grow at present rates. The sector’s overall LDR was 57% at end-May, according to CBN data. This is low relative to many markets, and reflects banks’ concern about the risk to asset quality from Nigeria’s often volatile operating environment. Nigeria’s largest banks, with the exception of Access Bank, have LDRs below or close to 60% and will be among the most affected by the new requirement.

 

 

“It is unlikely that there is sufficient demand from good-quality borrowers for banks to meet the target without relaxing their underwriting or pricing standards. Banks continue to struggle with high impaired and other problem loans, which is partly the cause for muted lending since 2016. The present operating conditions are not conducive to loan growth, and rapid lending during the fragile economic recovery could increase asset-quality problems in the future. Chasing loan growth could also weaken banks’ profitability if they cut margins to attract customers, and because of the need to set aside expected credit loss provisions under IFRS 9 when loans are originated.”

 

 

CBN vows to sustain policy

 

 

But commenting on the policy during his presentation at the 2nd Nigeria-Canada Investment Summit  in Abuja,  last week, CBN Governor,  Mr. Godwin Emefiele, vowed that the apex bank would  sustain its implementation.

 

 

He said: “We will continue to compel banks to undertake their statutory licensed roles of financial intermediation. In this regard, the recently announced policy to raise the domestic loan-deposit ratio from 57 per cent to 60 per cent by end-September and to 65 per cent by end-December 2019 would be sustained, intensified and resolutely implemented. This we believe will help to support greater growth and improved investment into the Nigerian economy.”

 

 

Indeed, latest data obtained from the CBN indicates that the total value of banking sector credit to the private sector rose by 2.6 per cent or N646 billion to N25.466 trillion at the end of September 2019, up from the N24.819 trillion recorded at the end of August. The Regulator attributed the rise in lending to its aggressive push for banks to lend to the real sector of the economy.

 

 

 

 

Conclusion

 

 

Industry analysts, however, told New Telegraph at the weekend that while it may still be too early to tell whether the concerns that Fitch and other such analysts have about the policy are legitimate, the fact that it seems to be already changing the widespread perception among  bank customers that  getting loans from DMBs  in these parts  could be as difficult as getting  blood from a stone, is progress in itself.

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NIBSS: 9.6m bank accounts opened in one year

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NIBSS: 9.6m bank accounts opened in one year

Growth

DMBs intensify efforts to attract new customers

 

A

total of 9.6million new bank accounts were opened in the country between October 2018 and October this year, latest data released by Nigeria Interbank Settlement System (NIBSS) shows.

 

According to the “Industry Customer Bank Account Data,” released by NIBSS at the weekend, the total number of bank accounts in the country as at October 31, 2019, stood at 124.11million compared with 114.55million in the same period of last year. This means that the total number of bank accounts increased by 9.6 million or 8.3 per cent in the period under review.

 

New Telegraph’s analysis of the NIBSS data also indicates that between January and October this year, a total of 6.01million new bank accounts were opened. According to NIBSS, the total number of bank accounts in the country as at December 31, 2018, stood at 118.1million.

 

A breakdown of the data shows that the number of active bank accounts increased from 74.43million at the end of October2018 to 78.87million at the end of October this year.

 

 

However, the data shows that the number of active bank accounts surged from 74.664million in September this year to 78.87million at the end of October, indicating that the number of such accounts increased by 4.20million within a four-week period.

 

 

In addition, the NIBSS figures show that the total number of current accounts grew from 25.7million as at December 31 2018 to 29.81million at the end of October this year. This means that 4.11 new current accounts were opened during the review period.

 

 

Similarly, the total number of saving accounts rose from 89.1million at the end of last year to 124.11million at the end of October this year. This means that a total of 35.01million new saving accounts were opened in the period under review.

 

 

New Telegraph gathered that several factors were responsible for the  general  increase in the total number  of  the different types of bank accounts between October  2018 and October this year.

 

 

According to industry sources, aside from the fact that rising competition compelled banks to intensify efforts to attract new customers, the instruction given to lenders by the Federal Inland Revenue Service (FIRS) in February this year to freeze accounts of companies and business owners suspected of having tax liabilities, pushed many bank customers affected by the FIRS directive into opening new personal current  accounts  thereby enabling them to escape the tax authorities’ sanctions.

 

It would be recalled that, citing provisions of its Act as well as the Companies Income Tax (CIT) Act, which, according to the FIRS, gave it powers to appoint a bank as a collecting agent for the full recovery of tax payable by the taxpayer, the service had, late last year and early this  year, written to DMBs, instructing them to freeze accounts of companies as a way of recovering billions of naira in unpaid taxes from the   firms.

 

 

Consequently, many of such companies received notifications of tax bills running into millions of naira that they were required to pay before the lien on their accounts would be lifted.

 

 

A manager at a Tier 1 bank, who spoke on condition of anonymity, said that the FIRS action forced many business owners to shun their corporate accounts and resort to opening personal current accounts.

 

 

According to the bank official, “although the FIRS suspended the directive for 30 days, a lot of individuals who own these companies resorted to opening personal current accounts as a way of avoiding the FIRS hammer.”

 

 

The official explained that unlike saving accounts, which have certain transaction limits that could hinder business, personal current accounts give companies a lot more room to carry out some financial transactions.

 

 

The bank official also attributed the significant  increase in the number of active accounts to DMBs’ stepping up their efforts to get more customers to activate  their inactive or dormant bank accounts.

 

 

The official noted that with the Central Bank of Nigeria (CBN) putting pressure on banks to increase lending to the real sector of the economy, many lenders were introducing innovative loan products which are proving quite popular with customers, thereby making such customers to be eager to activate their bank accounts.

 

It would be recalled that in December last year, the then acting Managing Director of NIBSS, Mr.  Niyi Ajao, disclosed that one million bank accounts were opened monthly by Nigerians.

 

 

Ajao, who stated this at the launch of the 2018 Financial Inclusion Survey by Enhancing Financial Innovation and Access (EFInA) in Lagos, where it was announced that the nation’s financial inclusion rate had increased to 63.6 per cent from 45.4 per cent recorded in 2016, said the growth in new bank accounts was an indication that the efforts of stakeholders in the financial industry were beginning to pay off.

 

 

He, however, said that there was need to do more if the country would meet the 20 per cent exclusion rate by 2020, adding that majority of the new accounts were opened by people who already had accounts.

 

 

According to the EFInA survey, 63.6 per cent of Nigeria’s adult population of 99.6 million has access to financial services, while 36.4 per cent, equalling 36.6 million of the adult population are financially excluded.

 

 

Out of the 36.6 million adults that are financially excluded, 55.9 per cent are women, while 44.1 per cent are men.

 

 

 

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