CBN Cuts Nigerian Banks' Cash Reserve Ratio to 25 Percent

The Central Bank of Nigeria following its Monetary Policy Committee meeting on Tuesday has decided to keep benchmark interest rate on hold at 13 percent.

The CBN Governor Godwin Emefiele, while briefing newsmen, said the apex bank however loosened monetary policy by cutting banks' cash reserve ratio to 25 percent to ease liquidity shortages.

He said the vote to cut the cash reserve requirement from 31 percent was by 7 to 3 votes of the monetary policy committee, adding that the committee had voted unanimously to keep the main rate unchanged.

Liquidity on the interbank market has dried up since authorities last week forced commercial banks to move government revenue to a Treasury Single Account (TSA) at the central bank, part of a drive by President Muhammadu Buhari to fight graft.

        

NNPC, others may finally get exemption on TSA policy

 There are indications that the Federal Government is now working out possibilities to exempt some of its agencies, including the Nigerian National Petroleum Corporation (NNPC), from the Treasury Single Account (TSA) policy on account of the nature of their operations.

It was gathered that the decision to exempt some of these agencies from the policy thought to promote transparency in government finances was reached after a meeting of their officials with the Accountant-General of the Federation, Ahmed Idris, who had insisted recently that there were not going to be any form of exclusion.

Sources said that President Muhammadu Buhari had been fully briefed by the AGF on why some agencies had to be allowed to receive revenue into bank accounts other than the TSA, domiciled at the Central Bank of Nigeria.

Those working out the possible exemption say the agencies’ operations would suffer if they are compelled to move in all their revenue into the CBN before they secure approvals through the bureaucracy before they can draw money to finance operations.

Apart from NNPC, it was learnt that Bank of Industry, BOI, Federal Mortgage Bank, Bank of Agriculture, Urban Development Bank, Nigeria Export Import Bank, Nigeria Independent Power Project, NIPP, Galaxy Backbone, Nigeria Railways would possibly be exempted also.

So many fears and views have trailed the full implementation of the TSA policy with the most concerns coming from banks on possible liquidity challenges if all federal government funds are transferred to into the Central Bank of Nigeria.

The government quasi-commercial entities had also mounted pressure on the government, arguing that the TSA could prevent the smooth operations of their organisations.

The policy guidelines are still being awaited from the AGF, but it looks like there is going to be a long list of many departments and agencies of government that would be exempted from the policy when finally released.

Despite possible exemptions, the government insists that it would no go back on the implementation of this policy.

The AGF assured at the weekend that the detailed guidelines would be announced within a short time.

Oyo’ll pay salary arrears this week – Ajimobi

Governor Abiola Ajimobi of Oyo State has assured workers in the state that their outstanding salaries would be paid this week.

Ajimobi gave the assurance in Ibadan while addressing newsmen after an unscheduled inspection tour of ministries and departments at the state secretariat.

The governor confirmed that the state had received the bailout loan from the Federal Government, adding that efforts were being made to ensure that the payment was effected this week.

“The banks being operated by the state government have confirmed the receipts of the bailout from the Central Bank of Nigeria.

“We will pay the money and clear the air of speculations that the state government is planning to sack some workers,” the governor said.

He told the workers that the present administration would not reduce the work force in the state but would effect a re-alignment and re-posting of workers for effective performances.

Speaking to officials of the state Ministry of Education, Ajimobi urged them to brace up for new challenges in the education sector and improve on the standard of education.

The Permanent Secretary, Ministry of Education, Mrs. Aderonke Makanjuola, assured the governor of the workers’ readiness to give the best in improving the standard of education in the state.

The News Agency of Nigeria reported that the governor also inspected the office of the Surveyor-General where he challenged them to redouble their efforts.

He urged them to improve on their productivity and Internally Generated Revenue for the state government.

Ajimobi explained that he would continue to work closely with the ministries through regular inspection to ensure better performance and improved service delivery.

NUPENG threatens strike action over Chevron workers’ crisis

The Nigerian Union of Petroleum and Natural Gas Workers (NUPENG) on Monday issued a seven-day ultimatum to the Federal Government on the unresolved issues affecting Chevron contract workers over alleged anti-labour practices, with a threat to embark on a nationwide strike action.

The union in a statement made available to the media and signed by Igwe Achese, its president, said, “if the Federal Government fails to intervene in the unresolved anti-labour practices of Chevron at the expiration of the seven-day ultimatum,” it would commence a national-wide strike action immediately.

The union added that it had watched with keen interest the resolution reached with the Union, Chevron and the Federal Ministry of Labour and yet there was an ongoing termination of the jobs of our members.

It alleged that despite the intervention of the federal ministries of labour and petroleum resources, “Chevron and its labour contractors have not deemed it fit to honour the resolutions reached at all its meetings.”

NUPENG added that some of the unresolved issues include job categorisation of its members who had workers as contract staff for over 25 years. “But Chevron Nigeria Limited in their bid to deplete the numerical strength of NUPENG introduced an obnoxious criteria of using remuneration to determine which union the contract workers should belong to in the company,” it said.

Other issues include the massive retirement of our members by the management of the various Chevron Labour Contractors without due process.

The union further stated that some of the workers transited from the former six contractors to the new 16 contractors, and were not paid their full entitlements as documented by NAPIMS, and other were therefore short paid.

NUPENG added that all agreements reached with the Federal Ministry of Labour were reneged by Chevron and that they even refused to appear in a meeting convened by the group managing director of the NNPC in Abuja last week.

The union alleged that the company had begun secret recruitment of workers in order to phase out NUPENG members, and that would be resisted at all cost.

Shift from public to private sector very good for me – Okonjo-Iweala

Nigeria’s former Minister of Finance and Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, who just got appointed as Senior Adviser at the global investment shop, Lazard, and as the second African chair-elect of Gavi Alliance, has declared that the shift from serving in public sector to the private sector is very good for her.

The ex-Minister, who made this known in an interview with Venture Africa noted that her migration to the private sector was required to keep her on her toes and enable her “continue to give back”.

According to her, “I think the shift to the private sector is very good for me and at the same time good for Lazard in the sense that Lazard is the premier company in the world for sovereign advisory. That’s what I’ll be focusing on, advice to government all over the developing world.

Nigeria losing money from exportation of non-tested commodities – Odumodu

The Director General of Standards Organisation of Nigeria (SON), Dr Joseph Odumodu, has said that Nigeria loses huge sums from the exportation of untested agricultural products.

Odumodu made the disclosure in an interview with the News Agency of Nigeria (NAN) in Abuja on Monday.

He said if the country wanted to promote non-oil export, it could not achieve the target by selling sub-standard commodities.

Odumodu said while Nigeria like other countries was focusing on agro business to earn revenue, its main challenge in the exportation of produce was that exporters never followed the law on standardisation.

Lots of Nigerians are now exporting agricultural products but one of the challenges we have seen is that most of our commodities are not easily accepted in Europe.

The challenge we have is that people try not to do what the law says.

Exporters send goods without testing them and once they get there and are tested, if the goods do not comply with the standard, it will be destroyed or sent back to Nigeria.

So such act gives the country bad image because it is negative news yet it is one person who tries to smuggle the product into that country,’’ he said.

Odumodu said Nigeria must clearly define the process for exporting agricultural products and put sanctions in place for defaulters.

I think what we need to do going forward is to create sanctions, there must be a clearly defined process for export of agricultural products.
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Once those processes are defined, then the onus will now be on us to ensure that before you send any procedure out of Nigeria, it must be tested and certified by an accredited lab. It doesn’t have to be owned by SON.

There is no other agency or any lab that has that level of scope for agricultural products and we test something as complex as metal in food up to fungi contamination,’’ Odumodu said.

He said Nigeria is a member of CODEX Allimentarius Committee, a standardisation body affiliated to World Health Organisation, and responsible for determining standards for food products.

However, every regional economic community also has a right to impose additional restrictions or increase specification,’’ he said.

The director-general said most times, in order to preserve products for export, Nigerians added more chemicals than required and as a result such products were rejected at the point of destination.

Odumodu said there was a need to educate exporters on standards and specifications.

Government must ensure that all the relevant agencies come together to have a standards and saying that “nothing actually leaves Nigeria without the knowledge of the agencies.

The important thing is that all of us must agree that this must be done so that no commodity leaves Nigeria without the certificate of certification.


    

States total debt now N660bn

The Debt Management Office (DMO) has restructured the commercial bank loans of 13 cash-strapped state governments as the federal government seeks to cut domestic debt piled up due to falling oil revenues.

Total debts owed by all the states in the country is currently put at N660 billion, according to reports by Reuters.

Public funds have been hit by the more than halving of global crude prices at the end of last year. Revenues from oil sales make up 70 per cent of state income and are distributed between the three tiers of government.

As a result, many states have been unable to pay public salaries in time or continue infrastructure projects and other state services.

DMO has issued bonds for 13 states which had run into trouble servicing commercial loans worth N252 billion, the National Economic Council, a state body, said in a statement. The bonds were issued to 12 commercial banks with which the states had outstanding loans.
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The measures are a continuation of a three-pronged bailout for the states announced in July.

It included dividing up $2.1 billion in newly acquired Nigerian natural gas export dividends, central bank interventions of N250 to N300 billion and commercial loan restructuring by the DMO.

The debt office had already restructured loans worth N322 billion for 11 states in August while another 18 had obtained soft loans from a special emergency fund, said the council, without giving details.

Nigeria is divided into 36 states and one federal capital territory, which holds the capital Abuja.

Analysts say the short-term loans are being replaced by long-term sovereign debt.

Nigerian states are in debt to the tune of N660 billion ($3.3 billion), the statement said. Several of them borrowed in the domestic bond market and from banks to fund infrastructure projects.

President Muhammadu Buhari is expected to announce his cabinet this month, nearly four months after his inauguration.


    
    
    
    
    

Nigeria lags behind Brazil, Ghana, Kenya in SME access to finance as CBN moves to bridge N9.6trn financing gap

Nigeria lags well behind other countries like Brazil, Ghana, China, Kenya and South Africa in terms of access to finance by the Small and Medium Enterprises (SMEs), Rasheed Olaowuwa, managing director/CEO, Bank of Industry (BoI), said, based on survey of MSMEs in 2014 by World Bank.

A breakdown of the access rate shows that Ghana has the highest record of 36 percent, Brazil and China 30 percent each, Kenya 24 percent, and South Africa 21 percent.

Olaowuwa, who was represented by Abdulganiyu Olariwaju of BoI, at the 2015 annual conference organised by the Finance Correspondents Association of Nigeria (FICAN) in Lagos, said access to finance was the major challenge confronting SMEs, and banks hold the key to addressing that challenge.

However, the Central Bank of Nigeria (CBN) has expressed its commitment to bridging the N9.6 trillion financing gap in the SMEs sub-sector of the economy.

Ibrahim Mu’azu, CBN’s director of corporate communications, said at the weekend that disbursement of significant part of the N220 billion Micro Small and Medium Enterprises (MSMEs) instituted by the regulator remained part of its commitment to providing improved financing opportunities for small businesses.

Mu’azu, who spoke at the conference, said poor access to credit remained one of the biggest limitations faced by small businesses and had to be tackled collectively by stakeholders in the financial services sector.

He said 60 percent of the fund, representing N132 billion, had been earmarked for providing credit to women-owned businesses, hence giving financial backing to one of the most vulnerable segments of the society.

The objective was to unlock the potential of small businesses through credit support and taking such enterprises to positions where they would be able to create jobs and reduce poverty among the citizenry, the CBN director said.

He said a huge channel had been created for the administration of the loans through private or state-owned microfinance institutions, finance houses, as well as commercial banks. State governments, he added, are allowed to access up to N2 billion each for on lending to eligible beneficiaries through participating financial institutions in their respective states.

The CBN’s spokesman said a maximum of 10 percent of the commercial component of the fund was being channelled to trading and commerce to ensure that productive sectors of the economy continued to attract more financing necessary for employment creation and diversification of the country’s economic base.

“The broad objective of the N220 billion MSMEs fund is to channel low interest fund through participating institutions, like banks and microfinance banks and state governments to small businesses that need it to create jobs and empower grassroots population.

“The fund has reduced cost of borrowing and created better opportunities for beneficiaries to declare better results,” he said.

He however said that successfully accessing the fund would require prospective borrowers getting them acquainted with the drawn down procedures and providing the needed information that enable their banks consider the loan requests.

But, Femi Egbesola, president, Association of Small Business Owners, said the draw down criteria were unrealistic and were beyond the reach of small business owners, saying commercial banks authorised by the CBN to disburse the funds do not see SME operators as serous people that need such funds.

Egbesola urged the CBN and commercial banks to rethink their SMEs’ funding strategy because of the huge benefits increased credit access by small businesses would add to the economy.

S & P rating highlights emergence of Nigeria’s non oil sector

Standard and Poor’s Ratings Services  affirmation of Nigeria’s long- and short-term foreign and local currency sovereign credit ratings at ‘B+’, on Friday is a signal of the emergence of Nigeria’s non oil sector and a ringing endorsement of the new government and its policies.

S&P said the outlook on Nigeria is “stable”, reflecting its view that Nigeria’s non-oil economy will continue to support growth in its gross domestic product.

“A series of reforms, including in agriculture, and the rapid growth of sectors such as telecoms and financial services have contributed to non-oil growth momentum in recent years,” S&P said in a statement.

CBN Governor, Godwin Emefiele, welcomed the credit rating but was also quick to acknowledge that there was still more work to be done and urgently too.

He said, “we are very delighted that S&P has shown that they believe in us and in our story. Our story is that we believe we have come to a point as a nation when we must restructure our economy and diversify its base away from oil.”

He said the work being done by the government and the apex bank to clear legacy debts in the oil sector will lead to improvement in power supply which will help to reduce cost of doing business in Nigeria.

He added, “we are also working with the banks, exploring various options to expand the credit generating capacity of  banks to support real sector growth, focusing on SMEs, the agric sector, manufacturing so we can create jobs and expand wealth generation and in the next few weeks some of these steps will become more visible.”

Africa’s largest economy, derives 90 percent of export earnings and 70 percent of government revenue from oil, and is struggling with Brent crude prices, having halved since June.

However Nigeria is predominantly a non-oil economy in terms of economic output, which accounts for 90 percent of total GDP.

Trade, Information and Communication and Agriculture accounted for 17 percent, 12 percent and 20 percent of GDP in 2014.

Cambridge trained economist, Ayo Teriba, who has studied and written extensively about Nigeria’s economic sectors and their strengths, says the potential of the non-oil sector has always been there, even if government did not recognise this.

“Right now the two largest sectors delivering growth in the GDP basket are crop production and trade, with oil coming third. Then after these, you have telecoms, real estate and manufacturing. So the non-oil sector has always been waiting to be harnessed by government,” Teriba said in response to questions.

“These non-oil sectors can grow even more if government will intervene creatively to make them more competitive. There are two main costs that needs to the fixed – transportation cost and high cost of energy. Government can fix transportation by building a modern rail network which can be self financing. They improve on energy supply and these sectors can truly be both activity and revenue generating powerhouses for Nigeria.”

The strength of the non oil economy can be seen in Nigeria’s ability to keep its economy expanding despite the slump in oil prices.

Standard and Poor’s predicts growth of 3.8 percent in 2015 and to average 4.6 percent over 2015-2018.

In the 1980’s when faced with a similar collapse in crude oil prices, Nigeria entered a deep recession that lasted several years.

Bismarck Rewane, economist and CEO of Financial Derivatives Company, called the endorsement of the non-oil sector by S&P as well as the positive outlook rating given Nigeria as steps in the right direction.

He said whereas the economy is getting more diversified, the oil sector still accounts for the bulk of government revenues.

“Nigeria now needs to expand the revenue generating capacity of the non-oil sector for its full potentials to be harnessed. We need to make the investment required to deepen the non-oil sector, so it can generate the revenues and create the jobs Nigeria’s needs,” Rewane said.

The affirmation by S & P will reassure investors and improve perception of the economy, hit by a fall in oil prices, reserves and last week’s ejection from the JPMorgan Emerging Market bond index.

Nigeria: Bank of Industry Secures CBN License

The Bank of Industry (BoI) has secured Central Bank of Nigeria (CBN) licence after meeting the requirements for Development Finance Institutions (DFI), a statement from the institution said.

CBN had stipulated that “all existing DFIs whether established directly by an Act of the National Assembly, incorporated under Companies and Allied Matters Act (CAMA) or any other law shall be required to obtain licence from the CBN.”

Similarly, the bank noted that, to drive industrialization, it has embarked on strategic and tactical initiatives to reposition its operations.

“We have in recent times taken bold steps, both strategic and tactical, to reposition the Bank among which are the formulation of Strategic Plan 2015-2019; institutionalization of corporate governance structures; implementation of enterprise wide risk management and compliance systems; and introduction of mobile and digital platforms for interfacing with SMEs, thereby improving our efficiency.

 

Okonjo-Iweala Gets New Appointment at International Firm

Ngozi Okonjo-Iweala, Nigeria's former Minister of Finance and coordinating Minister for economy has joined the Lazard Ltd (NYSE:LAZ) as a Senior Advisor, with a focus on sovereign advisory.

Announcing her appointment, Kenneth M. Jacobs, Chairman and Chief Executive Officer of Lazard, said, ''Dr. Okonjo-Iweala has built a remarkable international reputation over more than three decades in leadership positions in government and at the World Bank. She will be a strong addition as a Senior Advisor to our firm''; BUSINESS WIRE reports.

''We are proud to welcome Dr. Okonjo-Iweala as a Senior Advisor to our world-leading sovereign advisory group,” said Matthieu Pigasse, Global Head of M&A and Sovereign Advisory of Lazard. “She will bring a unique international expertise and experience that will benefit both our sovereign and corporate clients.”