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‘How Nigeria can attract FDIs, tackle liquidity constraint’

For Nigeria to surmount its liquidity challenges, generate foreign exchange (forex) and remain competitive, there is a need to target a heavy inflow of foreign direct investment (FDI) through a wholesale listing of its corporate assets, liberalise infrastructure and commercialise greenfield real estate portfolio.

An economist, Dr. Ayo Teriba, while addressing participants at the Economic Associates (EA) one-day quarterly conference on ‘Nigeria’s Economic Outlook’ in Lagos on Thursday, said aside from unbundling its assets, Nigeria needs to aggressively increase its average cross-border mergers and acquisition deal counts from six deals a year in the next 15 years.

According to him, Nigeria needs to initiate policies that will boost its FDI and remittance inflow sustainably.

He pointed out that this would enable the country to attract huge capital inflows, record domestic liquidity, stability, inclusiveness, diversified growth, shared prosperity and national cohesion post-pandemic.

Teriba insisted that the only way Nigeria could achieve sustainable growth is through privatisation of public assets and subsequent listing them on the stock market.

He said ensuring speedy listing of the companies would ultimately improve the depth of the capital market and create wealth for the people.

“There should be a policy that any company that Nigeria has equity in, must be listed on the exchange. It is only when these assets are listed that you can securitise them for financial value.

“Until we generate a third party claim in any of our assets, it cannot be financial. It is only when it is in a financial firm that we can raise liquidity from it to impact our balance sheet.

“To have companies in the petroleum sector that do not have any market value is a tragedy to Nigeria,” he said.

The economist argued that the country is rich in assets but economically poor, noting that until the nation generates optimal returns from its assets, it may not record any meaningful growth.

He also pointed out that trade flows are drying up globally while financial flows are surging significantly due to cross-border investment deals.

Teriba stressed the need for the country to be more strategic to stay ahead of trends in attracting sufficient financial inflow to grow the economy.

 

SOURCE: THE GUARDIAN

FCMB BANK (UK) LIMITED LAUNCHES PERSONAL AND BUSINESS BANKING PROPOSITION TO DEEPEN INCLUSIVENESS

FCMB Bank (UK) Limited, an independently incorporated subsidiary of First City Monument Bank Limited (which is a member of FCMB Group Plc), has introduced its Personal and Business banking proposition in London, United Kingdom and Lagos, Nigeria at an impressive ceremony attended by the top echelon of the business community within and from outside the country.

The development follows the latest variation of permission obtained by the United Kingdom-based Bank to extend its services to include retail (investments) for individuals and business enterprises. This is in addition to the existing wholesale deposit taking activities, foreign exchange, treasury, corporate banking and trade finance offerings to corporate and institutional customers of FCMB Bank (UK) Limited.

The variation of permission was granted by the Prudential Regulation Authority, the financial services regulatory body of the United Kingdom, and it became effective on June 8, 2018.

The Personal and Business banking proposition of FCMB Bank (UK) Limited is anchored on the Bank’s London Leverage and Africa Awareness. This will enable the financial institution deliver its promise of being the Corporate and Private Bank for African-oriented entrepreneurs, investors and professionals across all their banking needs.

The Group Chief Executive of FCMB Group Plc, Mr. Ladi Balogun, explained at the ceremony that the launch of FCMB Bank (UK) Limited’s personal and business banking proposition is as much a statement of substance as it is one of intent. According to him, “our successful UK platform has proven to be of great importance to the Nigeria stockbroking and international trade finance activities of FCMB Group. Leveraging our deep networks in Africa’s biggest economy, the importance of a London presence to many of our Personal and Business banking customers, and technological innovation, we welcome this opportunity to meaningfully serve more of our customers and grow the value of our UK franchise”.

Also speaking, the Chief Executive Officer of FCMB Bank (UK) Limited, Mr. James Benoit, said, “with the extension of its services, the Bank is now able to receive deposits from both customer segments as well as provide them bank loans to enable them meet their financing needs. The deposit products on offer include current, notice savings and fixed deposit accounts at competitive rates; while its lending products include Buy-to-Let Mortgage Loans enabling target customers to acquire a piece of London and purchase property to include in their investment portfolios.’’.

He added that the Bank will be expanding its premises and entering into partnerships with Fintech providers to open up service options to its clients and enhance their overall banking experience.

Dignitaries at the launch commended the Board and Management of FCMB Group Plc for going the extra mile in ensuring the institution has a very strong presence in the United Kingdom through FCMB Bank (UK) Limited, which will go a long way to boost individual and business transactions between Nigeria and the United Kingdom, thereby enhancing customer experience.

Operating in the City of London, FCMB Bank (UK) Limited began its operations as a BIPRU €50k investment firm in September 2009 with CSL Stockbrokers (another subsidiary of FCMB Group Plc), providing the services of “receiving and transmitting” institutional client orders for Nigerian listed securities. Subsequent to the variation of its permission on September 27, 2013, the Bank commenced wholesale deposit taking activities across various segments.

CBN ISSUES NEW GUIDELINES ON E-PAYMENT, FINTECH DEVELOPMENT

The Central Bank of Nigeria (CBN) has issued fresh guidelines aimed at strengthening the payment system and development of other disruptive technologies relating to financial services.

The regulatory frameworks are contained in two separate documents issued by the apex banks. The documents are created to address challenges in regulatory sandbox and quick response (QR) code payment operations in the country.

“In furtherance of its mandates to, ensure the safety and stability of the Nigerian financial system, promote the use and adoption of electronic payments and foster innovation in the payments system, the Central Bank of Nigeria hereby issues the framework for QR code payments in Nigeria,” the CBN said in one of the documents that detailed the operational relationships among issuers, acquirers, merchants, other financial service providers and customers.

In the document, the Bank spelt out risk management issues and the reporting processes while allocating responsibilities to relevant participants in the value chain, warning that it “shall apply appropriate sanctions to any party that fails to comply accordingly”.

It stated: “Issuers and acquirers shall agree to minimum due diligence guidance for merchant onboarding without prejudice to know your customers/anti-money laundering (KYC/AML) requirements of the Bank… Issuers and acquirers shall ensure behavioural monitoring and fraud management systems are implemented to prevent, detect and mitigate fraud and money laundering.

“Issuers shall provide quarterly risk management assessment reports to the Director, Payments System Management Department. The risk management assessment report shall include, among others, fraud reports, vulnerabilities assessment and risk-mitigating measures introduced.”

According to the CBN, participants shall ensure full interoperability of QR code scheme in Nigeria and work towards achieving its seamless operation.

The regulator left the determination of transaction limit to issuers alongside customers. It, however, directed that the threshold should be set based on the outcome of a customer’s risk profile assessment.

Merchants are mandated by the regulatory framework to cooperate with acquiring banks or other participants, as the case may be, to investigate reported fraudulent cases. They are also expected to report all suspicious transactions to acquirers for necessary actions.

“QR code payments in Nigeria shall be based on the EMV® QR Code Specification for Payment Systems. The Bank may also approve the implementation of any other QR Code Standard provided it meets the prescribed security requirements within the framework, demonstrates interoperability with other existing implementation in the industry and/or cost benefits to end-users (merchants and customers),” the apex bank said.

QR code is a type of barcode that could be read by a digital device and which is used for financial transactions. QR code merchant payment is a growing innovation in the payment system. On the other hand, a regulatory sandbox is a formal process where firms conduct live tests of new, innovative products, services, delivery channels or business models in a controlled environment. Regulatory oversight, subject to appropriate conditions and safeguards, is an essential component of the process.

The CBN said: “This framework, therefore, defines the establishment, rules and operations of a regulatory sandbox for the Nigerian payment system to promote effective competition, embrace new technology, encourage financial Inclusion and improve customer experience, with a view to engendering public confidence in the financial system.”

It listed the objectives of the guidelines thus: increasing the potential for innovative business models that advance financial inclusion, reducing time-to-market for innovative products, services, increasing competition, widening consumers’ choice and lower costs and ensuring appropriate consumer protection safeguards in innovative products.

Other objectives are to define the roles and responsibilities of stakeholders and the operations of the sandbox for the Nigerian payments system, to ensure adequate provisions in regulations to create an enabling environment for innovation without compromising on safety for consumers and the overall payments system and to provide an avenue for regulatory engagement with financial technology firms in the payment space.

To participate in the regulator sandbox, products are expected to improve accessibility, enhance the efficiency and effectiveness of financial institution risk management and address gaps or open up new opportunities for financial benefits.

“An applicant shall identify the potential risks to financial institutions and financial consumers that may arise from the testing of the product, service or solution in the sandbox and propose appropriate safeguards to address the identified risks,” the CBN stated.

TAJ BANK SEEKS NATIONAL LICENCE

Nigeria’s second non-interest Bank, Taj Bank, has revealed that it broke in its first eight months of operation, a rare feat that takes some bank’s many years to accomplish.

The Bank, which already has five branches, including the National Assembly Abuja, Abuja Corporate Headquarters, Kano, and Lagos, hopes to expand to the North East states of Borno and Gombe before the end of the first quarter (Q1) of this financial year.

Thereafter, it hopes to expand operations across the entire states of the Federation when its national licence would have been granted by the banking sector regulator, the Central Bank of Nigeria (CBN) by the Q1 end.

These were unfolded by TAJ Bank Founder/Chief Operating Officer, Hamid Joda, and Co Founder/Chief Marketing Officer, Sherif Idi, when The Guardian Newspapers, Abuja Bureau, led by its General Manager, Abuja/Northern Region, Auwal Sa’id Mu’azu, paid a courtesy visit to the Bank.

Joda also indicated that within the short span of operation, the Bank had contributed in reducing unemployment with the recruitment of 213 staff with a potential for many folds increase once the CBN awards it a national license.

He said; “Within this short span, we have also won three key operational awards, namely: Bank of the Year: Best Non-Interest Banking in Nigeria; and Best Islamic Bank in the World.”

He noted that non-interest banking holds several benefits, which most Nigerians are unaware of, and sought the partnership of stakeholders in educating the public on such benefits.

The Guardian’s General Manager, Mu’azu, had earlier explained that the visit was to identify and consolidate corporate relation with TAJ Bank and increase awareness in the area of non-interest banking in Nigeria, and to also congratulate it for its expansion drive within its short existence.
He assured that The Guardian Newspapers was ready to partner with TAJ Bank on its vision by educating the masses about its unique selling points.

Source: The Guardian

SUSTAINED BARGAIN-HUNTING BOOSTS CAPITALISATION BY N325B

For four consecutive sessions, sustained bargain hunting in the shares of blue-chip stocks pushed the Nigerian Stock Exchange (NSE) market capitalisation up by N325 billion.

At the close of trading yesterday, the All-Share Index (ASI) gained 622.09 absolute points, representing an increase of 1.54 per cent to close at 40,963.14 points.

Similarly, the overall market capitalisation value appreciated by N325 billion to close at N21.419 trillion. The uptrend was driven by price appreciation in medium and large capitalised stocks such as Seplat Petroleum Development Company (SEPLAT), Dangote Cement, MTN Nigeria Communications, Ardova Plc and NASCON Allied Industries

For four consecutive sessions, sustained bargain hunting in the shares of blue-chip stocks pushed the Nigerian Stock Exchange (NSE) market capitalisation up by N325 billion.

At the close of trading yesterday, the All-Share Index (ASI) gained 622.09 absolute points, representing an increase of 1.54 per cent to close at 40,963.14 points.

Similarly, the overall market capitalisation value appreciated by N325 billion to close at N21.419 trillion. The uptrend was driven by price appreciation in medium and large capitalised stocks such as Seplat Petroleum Development Company (SEPLAT), Dangote Cement, MTN Nigeria Communications, Ardova Plc and NASCON Allied Industries.

Analysts at Vetiva Dealing & Brokerage said: “Following four consecutive sessions of closing in the green, we expect the market to close the week on a bullish note, as the domestic bourse continues to move higher amidst dominance of the bulls. However, with the index now trading in the overbought region, the possibility of profit-taking cannot be overruled.”

Market sentiment, as measured by market breadth, was positive as 49 stocks gained, relative to seven losers. Champion Breweries recorded the highest price gain of 9.82 per cent to close at N1.23 kobo.

NASCON Allied Industries followed with a gain 9.72 per cent to close at N17.50, while Japaul Gold and Ventures rose by 9.45 per cent to close at N1.39 kobo.

AXA Mansard Insurance went up by 9.42 per cent to close at N1.51, while Ardova appreciated by 9.25 per cent to close at N21.85 kobo. On the other hand, Courteville Business Solutions led the losers’ chart by 8.33 per cent, to close at 22 kobo.

 

Neimeth International Pharmaceuticals followed with a decline of 6.36 per cent, to close at N2.06, while Union Diagnostic and Clinical Services shed 3.13 per cent to close at 31 kobo.

The total volume traded rose by 72.9 per cent to 809.362 million shares, worth N8.906 billion, and traded in 6,706 deals. Transactions in the shares of Transnational Corporation of Nigeria topped the activity chart with 136.578 million shares valued at N130.187 million.

Mutual Benefits Assurance followed with 70.591 million shares worth N27.389 million, while Guaranty Trust Bank traded 68.993 million shares valued at N2.252 billion.

Lafarge Africa traded 61.852 million shares valued at N1.424 billion, while FBN Holdings transacted 44.534 million shares worth N329.473 million.

Source: The Guardian

COVID-19: Africa To Enter Recession With -5% Growth, World Bank Predicts

The COVID-19 pandemic will drive Sub-Saharan Africa into recession with -5% growth, this year, the World Bank has predicted. It would be the first regional recession in 25 Years, the bank said.

The fall would be a sharp contrast from the 2.4% regional growth in 2019 as the new forecast has put it at between -2.1 % to -5.1% in 2020. The forecast was contained in the latest Africa’s Pulse, the World Bank’s twice-yearly economic update for the region. Hafez Ghanem, World Bank Vice President for Africa, was quoted as saying, “The COVID-19 pandemic is testing the limits of societies and economies across the world, and African countries are likely to be hit particularly hard.

“We are rallying all possible resources to help countries meet people’s immediate health and survival needs while also safeguarding livelihoods and jobs in the longer term – including calling for a standstill on official bilateral debt service payments which would free up funds for strengthening health systems to deal with COVID 19 and save lives, social safety nets to save livelihoods and help workers who lose jobs, support to small and medium enterprises, and food security.” The Pulse recommend that African policymakers focus on saving lives and protecting livelihoods by focusing on strengthening health systems and taking quick actions to minimize disruptions in food supply chains. It also recommends implementing social protection programs, including cash transfers, food distribution and fee waivers, to support citizens, especially those working in the informal sector. The analysis shows that COVID-19 will cost the region between $37 billion and $79 billion in output losses for 2020 due to a combination of effects.

 

Source: Vanguard

Net Foreign Inflow Hit $9.35bn In February – CBN

The nation’s economy recorded a net foreign exchange inflow of $9.35bn in February.

The Central Bank of Nigeria disclosed this in its February monthly report.

It said, “Foreign exchange flows through the economy resulted in a net inflow of $9.35bn in the review period, compared with $9.99bn and $4.58bn at end-January 2020 and end-February 2019, respectively.”

It said the external sector performance declined in February due to the 11.7 per cent decrease in the international price of crude oil to $58.45 per barrel.

This was attributed mainly to the continuous spread of COVID-19.

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Labour Ministry, Senators Clash Over Banking Bill Amendments

The relationship between the Ministry of Labour and the National Assembly worsened on Wednesday when the representative of the Minister of Labour, Chris Ngige, clashed with members of the Senate Committee on Banking, Insurance, and other Financial Institutions, at a public hearing.

The public hearing was on Banks and other Financial Institutions Act Cap B3 LFN 2004 (Repeal and Reenactment) Bill 2020 (SB.178) and Electronic Transaction Bill, 2020 (SB.155).

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Why We Increased 2020 Budget Despite Low Revenue ― Presidency

The Presidency at the weekend explained the reason behind the upward review of the 2020 budget, saying it was premised on the need to tailor funds to address critical infrastructure gap and the consequences of the coronavirus pandemic on the economy.

Recall that President Muhammadu Buhari, Friday, signed the Appropriation (Repeal and Amendment) Act, 2020 of N10.8 trillion, which has N216 billion higher than what was initially proposed in the 2020 Appropriation Act. into law. Speaking to State House correspondents on why the revision was made, Senior Special Assistant to the President on National Assembly Matters (House of Representatives) Umar el-Yakub, said the budget was raised to N10.8 trillion after certain realities were considered. He pointed out that whereas the initial 2020 budget was benchmarked on $25 dollars per barrel of crude oil, the revised one had $28, which gave a bit of increased revenue.

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Operators Task Banks on SMEs Lending, Financial Advisory

Following banks’ implementation of reduced charges as recently directed the Central Bank of Nigeria (CBN), analysts and operators have underscored the need for banks to increase lending to growing companies in the small and medium enterprises (SMEs) space to avoid erosion of revenue and boost their bottom-line.

The analysts argued that commercial banks must depart from the usual norm of chasing a few big-ticket firms and focus more on providing loans and advances to small businesses while keeping their non-performing loans (NPLs) under check to guard against eroding income.

They also urged banks to diversify into financial advisory services like fund management, and real estate management to enhance profitability

According to them, if banks are unable to create more streams of income within the system, the hike in the sector’s mandatory Cash Reserve Ratio (CRR), in addition to the reduction of charges on services, would ultimately trigger a rise in NPL ratio, especially for those without framework to manage risks associated with such huge loans.
They argued that since these charges constitute a large portion of banks’ revenue, failure to devise other means to augment the adjustments would impact negatively on them going forward.

Furthermore, the stakeholders argued that the trend could shrink banks’ current profit levels, and ultimately hamper equity investors’ dividend payout.

For instance, the Managing Director of APT Securities Limited, Garuba Kurfi said: “Globally, banks make money by lending, but in the Nigerian context, they do not lend because they have the alternative of buying Treasury Bills and bonds and get a double-digit return, which is also free from risks.

“As long as that option is there, they will prefer to play it, but now that the CBN has made it compulsory that if you do not lend up to 65 per cent, they are going to be punished, is a wakeup call. They are chasing only very few companies, whatever Dangote decides to rise, they are willing to offer, but the growing companies they do not give them and this is why we have not gained ground. Read More