EnuguSME, Author at Enugu SME Centre

CBN Mandates Banks To Enrol For Credit Risk Management In System

In pursuit of a, sound financial system in Nigeria, the Central Bank of Nigeria, CBN, has asked all Development Financial Institutions (DFMs), Micro Finance Banks MFBs, Primary Mortgage Banks (PMBs and other Financial companies to enrol for the Credit Risk Management (CRMS).

The apex bank said the redesign CRMS would help improve the Credit Risk Management of the financial sector, thereby promoting safe and sound financial system in the country.

In a circular, FPRD/DIR/PUB/CIR/01/002, dated April 8th and released on Monday by Kelvin N. Amugo, Director Financial Policy and Regulation Department, the CBN Mandated all DFIs, MFBs, PMBs, FCs are required to report all credit facilities (principals and interest) to the CRMS and to update same on monthly basis.

“As part of its effort to promote a safe and sound financial system in Nigeria, the Central Bank of Nigeria (CBN) introduced the CRMS to improve Credit Risk Management in commercial, merchant, non- Interest banks as well as to prevent predatory borrowers from undermining the banking system.

With the successful implementation of the CRMS in deposit money banks, it has become expedient to commence the enrolment of other financial institutions (OFIS) on the CRMS platform.”

The regulator also stated that Bank verification Number (BVN) and TAX identification Number (TIN) would be needed to undertake the CRMS process.

“Accordingly, all DFIs, MFBs, PMBs, FCs are required to report all credit facilities (principals and interest) to the CRMS and to update same on monthly basis. OFIs shall note that Bank verification Number (BVN) and TAX identification Number (TIN) are the only basis for regulatory renditions.

“To ensure full compliance, OFIs are reminded to conclude the tagging of all live credit files for all individual and non individual borrowers with BVN and TIN respectively by May 14, 2021.

According to CBN, Other financial institutions should avail themselves with regulatory guidelines, adding that stiff penalties await those who fail to comply with the directives

“Furthermore, the concern OFIs are advised to acquaint themselves with the regulatory guidelines for the operation of the redesigned CRMS for commercial, merchant and non- interest Banks in Nigeria(February 2017) and the additional regulatory guidelines of separation 2017.

Naira appreciates at NAFEX as Nigeria’s external reserve is set to get a boost

The exchange rate between Naira and the US Dollar closed at N409/1$ in the Importers and Exporters window, where forex is traded officially.NAFEX

Naira gained against the US Dollar at the NAFEX window on Friday to close at N409/$1. This represents a 0.16% gain when compared to N409.65/$1 recorded on Thursday, as the country’s external reserve is set to receive a boost with the planned issuance of $500 million Eurobonds.

Meanwhile, the naira maintained stability at the parallel market on Friday, 9th April, 2021 to close at N485 to a dollar, the same rate as maintained since last week.

Trading at the official NAFEX window

Naira appreciated against the US Dollar at the Investors and Exporters window on Friday to close at N409 to a dollar. This represents a 65 kobo gain when compared to N409.65/$1 recorded on Thursday, 8th April 2021.

The opening indicative rate closed at N409.79 to a dollar on Friday. This represents a 71 kobo gain when compared to N410.50/$1 recorded on Thursday.
Also, an exchange rate of N420 to a dollar was the highest rate recorded during intra-day trading before it closed at N409/$1. It also sold for as low as N395/$1 during intra-day trading.
Forex turnover at the Investor and Exporters (I&E) window dropped by 41.1% on Friday, 9th April 2021.
A cursory look at the data tracked by Nairametrics from FMDQ showed that forex turnover declined from $93.69 million recorded on Thursday, April 8, 2021, to $55.21 million on Friday, April 9, 2021.

Cryptocurrency NAFEX watch

The world’s most popular digital currency, bitcoin recorded a 3.05% increase in value on Saturday evening, 10th April 2021.

Bitcoin went up by 3.05% to trade at $59,907 on Saturday evening, compared to $58,135 recorded at the close of trade on Friday.
This is coming after it had risen to $61,222.22 on Saturday, its highest in nearly a month, propelled by talks of constrained new supplies against evidence of wider adoption.
Bitcoin (BTC) is up 116% from the year’s low of $27,734 on January 4. It crossed the $60,000 mark for the first time on March 13, hitting a record $61,781.83 on Bitstamp exchange, just after U.S. President Joe Biden signed his $1.9 trillion fiscal stimulus package into law.
The digital currency has been widely adopted by many, replacing gold as the global digital-reserve asset.

NAIRA NAFEX

Nigeria’s accelerating food inflation shows failure of border closure

The continuous rise in the prices of food in Africa’s most populous country since 18 months ago is an indication that the border closure policy implemented by the Nigerian government failed to serve its purpose.

Food prices in Nigeria have been making rapid climbs since August 2019 – when the policy was introduced and have shown no sign of receding despite the reopening of the country’s land borders for the African Continental Free Trade Area (AfCFTA) agreement.

It has caused headline inflation to accelerate to a 4-year high of 17.3 percent in February 2021, mainly driven by food inflation that has quickened to 20.6 percent – highest in 13 years.

“The policy brought hardship to Nigerians which we are still experiencing despite the reopening of the borders. It was the policy that triggered an upsurge in food prices,” said a CEO who does not want his name mentioned on print.

“The policy did not increase local production but only enriched few who benefitted at the expense of majority Nigerians,” he said.

Nigeria had in August 2019 closed its land borders with neighbouring West African countries to stem the smuggling of goods – rice in particular, and encourage local agricultural production.

However, the policy failed to stem smuggling as foreign rice and other key staples made entry into the Nigerian markets through new routes at higher costs, thus raising questions about the effectiveness of the policy.

A report by the Institute for Security Studies states that the border closure policy only resulted in creating new smuggling routes as illicit dealers were determined to move their goods across borders.

Nigeria still has an increasing demand-supply gap in most of its staple foods, as the country’s population of 2.6 percent per annum is growing faster than its food production.

According to experts, it was the shortfall in food supply that resulted in surging prices.

“We are yet to bridge our huge demand-supply gaps in most staples, so when we introduced the border closure policy, prices started escalating because of these gaps,” said Abiodun Olorundenro, manager, AquaShoots, said in a telephone response to questions.

“The demand-supply gaps and cheaper imported products are what is constantly fuelling smuggling of agricultural produce. What we need to do is to make our agricultural commodities competitive,” Olorundenro said.

He noted that Nigerians were worse off than they were before the introduction of the protectionist policy owing to the upsurge of food prices.

Similarly, differences in policies across West African countries, prices of goods, and preference for imported commodities by Nigerians also shore up smuggling in the region.

Nigerians prefer to source certain products from Benin Republic because the prices are cheaper compared to the locally-produced ones.

Boost For Business In Off-Grid District.

Boost For Business In Off-Grid District As Mass Solar Power Debut.

Small, Medium and Large Scale business owners in the off-grid environment may now be relieved following the launch of Solar Power Naija Programme which will take care of their electricity need.

Vice President, Yemi Osinbajo weekend flagged off the pilot phase of the programme in Jangefe Community in Roni Local Government Area, Jigawa State, from where it will get to all geopolitical zones in the country.

The project is coming under the Economic Sustainability Plan, as part of the promises made by President Muhammadu Buhari to provide renewable energy for over 25 Million Nigerians.

The epileptic power situation in the country has inspired the collapse of numerous businesses and pushing many into joblessness.

Following the launch in Jigawa State, Laolu Akande, the Senior Special Assistant on Media and Publicity to the Vice President said the rollout will continue across the six geopolitical zones in Edo, Lagos, Adamawa, Anambra, Kebbi and Plateau.

The Solar companies are also in the pipeline for the Solar Power Naija facility to continue the march to 5 million connections during the life of this present administration.

The scheme is targeted to go to the entire 36 States and the FCT covering 25 million Nigerians in the end.

The commencement of the Solar Power Naija programme means the community and business will get 1,000 Solar Home Systems connections for its about 5,000 population.

The Jangefe community in Jigawa State, which is the first location to be covered by the A-Solar company, will pay monthly energy payments until the systems are fully paid for at the point in which there will be a transfer of ownership to each consumer in the community.

The Vice President noted that the “President had emphasised that we could no longer rely solely on the grid if we were to electrify the whole country. Which meant that we had to develop an effective strategy for decentralizing the power supply. Two obvious things to do were, first to think of implementing more off-grid solutions and to use renewable energy especially solar power.”

Regulate SMEs with human face, CEO urges govt

Chief Executive Officer, CEO of a leading multipurpose investment organisation, Blue Diamonds, Mr. Raphael Chukwujekwu, has stated that only regulation with a human face can create an enabling environment for small and medium businesses SMEs to thrive in the country.

Mr. Chukwujekwu who made this remark at the in Abuja at the unveiling of a new product, Smart Blue Money Mobile App, advised government at all levels not to introduce counter-productive regulations capable of stifling small businesses and killing young people’s initiatives.

According to Chukwujekwu, government can make the environment business-friendly such that small businesses would be able to grow, adding that part of the activities of Blue Diamonds is to provide project financing to young people with viable SMEs plans.

He said the Smart Blue Money Mobile App helps people to save, invest, manage and grow their income with a view to securing their future.

On other benefits of the new product, he said, “In saving money, it creates a certain level of employment opportunities, because there is provision for agency in the app. Through it, people can be gainfully employed by downloading the app and helping people to transfer money, helping people to buy data, buy recharge cards or airtime, pay for cable subscriptions and electricity bills. By so doing, it reduces unemployment and it adds to the nations GDP. ”

SOURCE

Nigerian economy: We are in huge financial trouble – Obaseki

“We say remove fuel subsidy, they say no. This April, next week again, we will go to Abuja to share. By the end of this year, our total borrowing is going to be in excess of 15 to 16 trillion”. Obaseki.

Governor Godwin Obaseki of Edo State, an economist and former investment banker, at a public forum recently painted a gloomy picture of the Nigerian economy. Below are his exact words:

At the end of the month we all just go to Abuja, we collect money and we come back and we spend. My brothers and sisters, I am an economist, and I am an investment banker; we are in trouble. Huge financial trouble!

We say remove fuel subsidy, they say no. This April, next week again, we will go to Abuja to share. By the end of this year, our total borrowing is going to be in excess of 15 to 16 trillion. My worry is that we would wake up one day, like Argentina, the naira would be 1000, 2000 to a dollar, and it would keep moving. You can imagine a family, you don’t have money coming in, and you just keep borrowing and borrowing without any means or idea of how to pay back.

And nobody is looking at that; everybody is looking at 2023. Everybody is blaming Mr President as if he is a magician, Obaseki.

So, that change in the world economy which is now affecting Nigeria is going to be one of the major factors that will affect our politics going forward; whether we like it or not.

SOURCE LINK

Why SEC banned investment technology platforms from offering foreign stocks to Nigerians

Some big-name investment technology platforms that allow Nigerians to invest and trade in stocks listed on the Nigerian and foreign stock exchanges have been declared illegal by the Federal Government.
A circular issued on April 8 2021, by the Nigerian Securities and Exchange Commission warned unregistered investment tech platforms against providing foreign securities.
Chaka, Trove, Bamboo, and Risevest are among the investment tech platforms required to secure a license before continuing operations.

What’s the issue?

The Securities and Exchange Commission (SEC) on Thursday issued a directive on the “proliferation of unregistered online investment and trading platforms” in the country, declaring that only foreign securities listed on any Exchange registered in Nigeria may be issued, sold or offered for sale or subscription to the Nigerian public.

In other words, foreign stocks such as Microsoft, Tesla, Amazon, Netflix, which are currently not listed within Nigerian jurisdiction, should not be offered to Nigeria-based residents and businesses.

Why did SEC ban investment technology platforms from offering foreign stocks to Nigerians?

The SEC is using its jurisdiction to remind participants and investors that only approved securities can be sold to the Nigerian public.

Sections 67-70 of the Investments and Securities Act (ISA), 2007 and Rules 414 & 415 of the SEC Rules and Regulations, states that only foreign securities listed on any Exchange registered in Nigeria may be issued, sold or offered for sale or subscription to the Nigerian public.

In the circular issued, the SEC added that “CMOs who work in concert with the referenced online platforms are hereby notified of the Commission’s position and advised to desist henceforth.

The Commission enjoins the investing public to seek clarification as may be required via its established channels of communication on investment products advertised through conventional or online mediums.”

According to Techcabal, the SEC’s action is within its powers, and in fact, these rules show that the investment-tech model of offering foreign stock to Nigerians is illegal. But this is hardly an indictment of these startups; it’s instead a reflection of how fast innovation moves.

Critics also say that the new directive by the SEC is because of the surging shares of big tech companies such as Amazon, Microsoft, Apple, Netflix and Google-parent Alphabet that have all led the market higher in recent weeks. Young Nigerians have been leveraging these new investment tech service providers to help diversify their portfolios, and with as little as $5, anyone can get in on the action happening outside the Nigerian Stock Exchange.

Who would be affected?

FAAC: Nigerian states share N9trn in 4 years, yet some owe salaries

Nigeria’s Federal Accounts Allocation Committee (FAAC) has doled out in excess of N9.13 trillion to states in the past four years, BusinessDay can disclose. Year-on-year (yoy) FAAC distribution data obtained from the National Bureau of Statistics (NBS) also disclosed three South-South states – Delta, Akwa Ibom and Rivers as recipients of the larger portion of the ‘Abuja’ money doled out to the 36 states and FCT.

Ironically, most Nigerian states depend primarily on monthly receipts from the FAAC to fund their budgets. Despite the record FAAC distribution in four years, some state governments are still unable to fund worker’s salaries, particularly those that claim they get lean FAAC and Internally Generated Revenue (IGR).

While there is palpable fear of expected FAAC to states becoming lean this time, it is worthy to note that in 2020, net FAAC allocation to states was N2.30 trillion. Our four-year FAAC allocation trend also reveals net allocation of N2.47 trillion to state in 2019, 2018 (N2.57trn), and 2017 (N1.79trn).

Many Nigerian states need to further embrace transparent reforms by expanding monitoring and reporting of all public spending as well as ensuring easy public access to spending data.

The COVID-19 pandemic has placed Nigeria at a critical juncture – as the country entered the crisis with falling per capita income, high inflation and governance challenges. Policy adjustment and reforms designed to shift the country from its dependence on oil and to diversify the economy toward private sector-led growth will set Nigeria on a more sustainable path to recovery.

The Nigerian economy exited recession in the fourth quarter (Q4) of 2020 with a modest 0.11 percent growth. Earlier this week, the International Monetary Fund (IMF) revised upward its growth forecast for the Nigerian economy in 2021 to 2.5 percent from its earlier projection of 1.5 percent it announced in January. The IMF announced the new projection in its World Economic Outlook update released on Tuesday.

The new growth projection is 1 percent higher than the multilateral institution’s 2021 forecast in January. January’s forecast was a downward review from the forecast it shared in October 2020.

Oil and non-oil revenues are the major sources of government finances. The oil revenue includes proceeds from sales of crude oil, petroleum profit tax (PPT), rents and royalties, while the components of non-oil revenues are companies’ income tax (CIT), customs and excise duties, value-added tax (VAT) and personal income tax (PIT).

“Nigeria has one of the lowest revenue levels as a share of GDP worldwide. A large share of revenues is spent on the country’s public debt service payments, leaving insufficient fiscal space for critical social and infrastructure spending and to cushion an economic downturn. In this context, mobilising revenues through efficiency-enhancing and progressive measures is a top near-term priority.

“Revisiting tax exemptions and customs duty waivers, increasing and broadening the base for excise taxes, developing a high-integrity taxpayer register, enhancing digital infrastructure, and improving on-time filing and payment are important measures,” IMF had said in its “Five Questions About Nigeria’s Road to Recovery.”

The Fund had noted that once economic recovery takes root, Nigeria will need to increase the value-added tax rate to at least 10 percent by 2022 and 15 percent by 2025 — “the average in countries belonging to the Economic Community of West African States (ECOWAS) — to create effective fiscal space.”

In 2020, the FAAC disbursed N2.49 trillion to the Federal Government of Nigeria while states received a total of N2.30 trillion within the period under review.

The months with the highest Net Allocation in 2020 were January and August with N243.45 billion and N232.34 billion, respectively, while the least amount disbursed to the Federal Government in 2020 where in December and November with N160.59 billion and N176.29 billion, respectively.

The total Net FAAC Allocation to state government stood at N2.30 trillion, Delta and Akwa Ibom states received the highest allocation of N186.83 billion and N146.27 billion, respectively, in 2020, while Osun and Cross River states received the least allocation of N30.63 billion and N32.89 billion in that order. Gbetiokun Derivation and Suko Derivation accounted for N1.03 billion and N994.94 million, respectively.

Nigeria sets ambitious target for manufacturing sector

Nigeria has an ambitious target of raising the share of manufacturing to a whooping 20% of GDP according to Niyi Adebayo, the federal minister for industry, trade and investment.

He told a virtual event on 30 March that the sector’s size should reach 20% share in GDP by 2023.

In this report analysts at FBN Quest say this would mark an impressive step up from the 12.8% attained at current prices in 2020.

Adebayo also told the event, co-chaired by the Nigerian Economic Summit Group (NESG), that his ministry will work out strategic plans for three segments (clothing and textiles, oil palm and auto assembly) in place by end-year.

Alongside the strategy, the government offers selective incentives (such as those offered by the special economic zones) and funding (including its NGN75bn package of support for MSMEs to counter the COVID-19 virus).

Recall that the Central bank approved a more substantial NGN1trn programme of credit interventions for the sector for the same purpose, of which NGN800bn had been disbursed by mid-March.

· The minister highlighted a number of areas where manufacturing needed to raise its game: these included marketing, brand strength, research and development. Others would add training and quality control.

· Manufacturing in Nigeria, as elsewhere, had a very difficult 2020, contracting by -8.8% y/y in Q2 due to the lockdown and by -2.8% over the full year.

· Performance did improve in H2. The CBN’s index of manufacturing production rose by 1.5% q/q in Q4 to 181.1 (2010=100). The national accounts show more rapid growth of 5.6% for the sector in the same quarter, led by 18.6% for textiles, apparel and footwear.

Price War: Dangote Petitions Trade Ministry, Wants BUA Sugar Refinery Shut Down

A major war has been raging in the Nigeria sugar industry for some time now and the bubbles seemed to have burst with Dangote s decision to petition the Federal Government asking the Ministry of Trade to shut down BUA Group’s Sugar Refinery located in Port Harcourt.

In the letter dated 28th January 2021 signed by Aliko Dangote himself as the Chairman Dangote Industries Limited, the billionaire claimed that when the BUA Sugar refinery was opened , he warned the Government and they told him that no new refinery would be allowed to operate in Nigeria’. Dangote accused BUA of operating with impunity by contavening the laws as laid down in the National sugar policy by selling it’s products locally instead of producing for export alone.

BUA in its own defence sent to the Honourable Minister of Trade however clarified issues by stating that the law allows it to sell inside Nigeria.

BUA also warned that DANGOTE group and the other major player have not been involved in any backward integration project, rather they depend on 80% raw sugar allocation which is detrimental to the Nigerian economy in long term analysis.

BUA on the other hand has been involved in backward integration project with BUA’s Lafiagi Sugar BIP set to be completed in 2022.

Over 250million dollars is believed to have been spent on the export focused BUA sugar refinery already and it is also employing over 1,000 Nigerians.

Meanwhile, BUA also noted that at the centre of this fight to force FG to close BUA Sugar refinery down is the price war.

Insiders said last year, before Ramadan, sugar sold for around 18,000 Naira per bag. But as Ramadan fasting started the price jumped to 30,000 per bag. The people had no choice but to buy it because they needed a lot of it during the period.

So the manufacturers were smiling to the bank. BUA group noticed the trend and decided that it had to change. There was no reason to increase the price during Ramadan simply because the demand is high.

Usually the increase happens about one month to commencement of fasting.

When the other manufacturers got across to BUA, Samad Rabiu refused. They put pressure on him, saying it was the right time to make good money but he put his feet down.

After failing to do that, they petitioned the Federal Government that he was breaking the law by selling sugar locally instead of for export.

A source however claimed that already, BUA group has dragged the Trade Minister to court to ensure that the operations of the sugar refinery is not tampered with all because of the desperate attempt by Dangote Group to monopolize the sugar trade in Nigeria

Our reporter has seen copies of the letters from Dangote to the Minister, the Minister’s letter to BUA as well as BUA’s reply to the Minister.