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NEXIM, others sign pact on water transport

Nigerian Export – Import Bank (NEXIM), the National Inland Waterways Authority (NIWA) and Sealink Implementation Committee have signed a pact to revive the neglected inland water transportation system. Implementation of the initiative will attract huge investments into inland waterways thus making it possible for goods on smaller vessels and barges to move through Rivers Niger, Benue and others.

Nigeria is perhaps one of the few countries in the world with a huge transportation challenges yet it has not developed its inland waterways capability as a part of the integrated transport mix. Speaking at the MoU signing ceremony in Abuja, the Managing Director/CEO NEXIM Bank, Mr. Abba Bello said, the framework “would promote waterway operations for hinterland, transit and coastal trade, especially for bulk cargo.

“It is noteworthy to highlight that it is projected that this development would enhance non-oil exports annual revenue receipts to between $500 million and $1.2 billion annually on bulk solid minerals exports,” he said. Chairperson of the Sealink project, Mrs Dabney Shallholma the commencement of Nigeria’s inland waterways and intra-coastal operations will be announced soon.

The MD of NIWA, Sen. Olorunnimbe Mamora said,“We will work with these two great partners to ensure that to ensure that the full potential of our economy is realized by harnessing the untapped waterways resources that will add to our GDP,” he said.

Source: By Chris Agabi

Dealers seek better risk management for banks

Banks and other financial institutions need better risk management structure to deepen banking penetration and security, financial market dealers have said.

In a communique at the end of the seminar organised by Financial Markets Dealers Association (FMDA) Bonds Workgroup in Lagos, the group said risk management needs more attention, and that the futures market should be deployed to deepen risk management.

“Futures market in Nigeria will further support the Government on achieving the targets set out in the Economic Recovery and Growth Plan (ERGP). Improve risk management tools to better serve the opening-up of the financial services sector towards global competitiveness – effectively deployed, will mitigate the risks to which market operators including governments are exposed to,” it said.

Speaking on the theme: The Nigerian futures market – A tool for risk management, Debt Management Office (DMO) Director-General Patience Oniha said the debt office remains committed to the development of the financial market. She said by issuing the 30-year bond, the debt office has showed confidence in the economy.

“While one of our primary responsibilities is to raise money for government, we realised that the government alone cannot develop the economy. It in attempt to develop the market and support the private sector the DMO is committed to it. In introducing the 30-year bond, obviously, we monitored developments in the market and the demands of investors, the trends in inflation and monetary policy indicators of which direction the economy is going,” she said.

Continuing, she added: “And I think that the important thing for the 30-year bond is that it is not only government raising 30-year money, but creating a 30-year benchmark that supports the economy.The private sector can raise money because there is now a reference point for private sect or to raise a 30-year bond.”

Also, FMDQ OTC Securities Exchange Managing Director/CEO, Bola Onadele, said the operators were doing their best to deepen the derivatives and futures market.

Speaking on the theme: Futures as a an asset & liability management tool, he added: “We are looking at futures as a tool for asset/liability management. Of course, you know banks have to focus on managing their assets and liabilities. And there are six elements in that. Managing the balance, managing the funds transfer, managing the capital, institutions, compliance, law and regulations. All those things come under the purview of asset and liability management. But, the one that is most visible that people talk about is the mismatch that come in interest rate. The banks can borrow short-term and lend long term. Nigeria has just issued 30-year bond, and pension funds and banks bought 30-year bonds.

“They did not use 30-year money to buy 30-year assets so that  they do not mismatch it.’’

He added: ‘’But what is important, which you see in other climes, are risk management tools. When you have taken such position, how do you hedge the exposure you have? And this exposure come as interest rate risk, foreign exchange rate risk, which you know the CBN promoted the Forex Futures. So, what we are dealing on here are other types of futures or commodities.

Onadele said in the past, 2017 and last year, the banks had loans towards margin lending for equities.

“So, the risk factors, interest rate risk, foreign exchange risks, equity price risk and commodity price risk are called risk factors and banks have to deal with them in managing their balance sheets and financial positions, which are highly dynamic everyday.

‘’The CBN made a statement, trying to put caps on what a bank can hold on government securities. If they do that, which is because the CBN wants money to go to the real sector, but if they do that, the demand for government securities will go down, what happens is that immediately demand goes down, price will go down, yield will go up, meaning that the government will borrow much higher,” he said.
Source: The Nation Online

Africa’s relationship with China beyond just loans

Margee , in 1992, wrote in her book, Doing Good or Doing Well to assess Japan’s foreign aid programme then. ‘Doing Good’ is charity service or so-called selfless service where one renders assistance and walks away without waiting for any returns. ‘Doing Well’ is what China in relating with Africa aptly describes as ‘win’win’.

In diplomacy of course, no country does ‘good’. All they do is ‘well’, because the doer is also a stakeholder and has an intention to benefit, at least in goodwill and friendship.

Our getting this right at the beginning would help our perception of the multilateral relationship between China and Africa, especially on the Forum on China Africa Cooperation (FOCAC) platform that is 19 years old now. Today, at the centre of global issues as Japan was then is China but attention has been concentrated on Chinese loans to African countries, the motives and how they presumably enslave or are re-colonize Africa.

This slant worries China as many Chinese journalists in interviews in the country have asked many times what Africa thinks about it. My answer has been the same – if Africa allows China to recolonise her today, then Africa is miserable and should blame herself for such unfathomable folly. But a closer look at the details of the relationship between the two sides would show it has not all been just loans and re-enslavement of Africa by China as the Asian economic giant has been of made good impact on the development of the human capital of Africa which is the best way to make lasting input in the future of a people.

On July 31, 2018, as the Confucius Institute of the University of Lagos held its graduation and job fair, the body of Chinese investors in Nigeria announced the award of scholarships to about 63 students of the university to study in Chinese institutions.

While some of them were for short programmes, most were for first degree and second degree courses with all the bills paid. That development was part of the consolidation of the growing links between China and Africa, and by extension, with Nigeria.

However, four months after, the same institute in liaison with the investors body took up a challenge the Vice Chancellor of the university had thrown at them to establish more links with the university for better relationship.

That day in November, the university’s Nigeria-China Development Studies Institute was established. And, on April 12, 2018, in Abuja, the Chinese construction giant, CCECC held career workshop for some Nigerian fresh university graduates immediately after their one year national service. The outcome of the training was an immediate employment of 50 of them in that firm. The management of the company had said it was one of the first steps for large scale employment of Nigerians in the system and ensuring that Nigerians have good skilled labour presence in the company.

At the middle of May 2019, during a visit to the Chinese Ambassador to Nigeria, Dr. Zhou Pinjian in Abuja, his secretary during a discussion revealed that the number of Nigerian students in Chinese universities on scholarship as at last year is more than 6500.

Moreover, CNN reported in June 2017 that, ‘the surge in the number of African students in China is remarkable. In less than 15 years, the African student body has grown 26-fold — from just under 2000in 2003 to almost 50000 in 2015.

According to the UNESCO Institute for Statistics, the US and UK host around 40,000 African students a year. China surpassed the number in 2014, making it the second most popular destination for African students studying abroad, after France which hosts just over 95,000 students.

‘This dramatic increase in students from Africa can be explained in part by the Chinese government’s targeted focus on African human resource and education development. Starting in 2000, China’s Forum on China-Africa Cooperation summits have promised financial and political support for African education at home and abroad in China.

Since 2006, China has set scholarship targets to aid African students coming to China for study. For example, at the most recent 2015 summit, China pledged to provide 30,000 scholarships to African students by 2018.’

Taking it in sectors, the Chinese president, Xi Jinping had pledged in Johannesburg in 2015 at the FOCAC summit that the country would host about 10,000 African journalists in exchange trainings in 2016 alone.

While on tour of Shandong Province as journalism Fellows of the China Public Diplomacy, 2016, we visited companies in Qingdao in September and one of the points of call was a power company where the management received us with 50 African students. They were later introduced to us as Zimbabweans studying in universities in the province on the scholarship of the company. In fact, one of us, a Zimbabwean, interacted with and recognized some of them.

At the Sinotruk headquarters in Jinan, capital city of Shandong, I met Mr. Zhang Yuzong, Executive Director, Africa Division, who told me he would be travelling to Nigeria two months later for the commencement of their production at a Lagos factory in partnership with the Dangote Group. And in March of the following year, I attended a seminar on investment by Chinese investors and their Nigerian counterparts alongside the Chinese ambassador to Nigeria,  during which we toured the truck assembly plant within the Lekki Free Trade Zone, Lagos, a multi-billion dollar project powered by Chinese investors and Dangote. The mega project is not about loans.

Another important report by the africanews.com reflected that; China’s direct investment in Africa soared by 64 percent, the Chinese commerce ministry said on Thursday. Sun Jiwen, spokesman at the ministry outlined that this recent rise is linked to China’s change in trade policies in 2015. China’s total trade with Africa rose 16.8 percent to $38.8 billion in the first quarter, its first quarterly increase on a yearly basis since 2015, Sun said during a regular news briefing in Beijing.’

The report examines the relationship between the “dragons”—Chinese firms investing in Africa—and the “lions”—African economies receiving Chinese investment. Through face-to-face interviews with 1073 Chinese firms across eight African countries—Angola, Côte d’Ivoire, Ethiopia, Kenya, Nigeria, South Africa, Tanzania, and Zambia—McKinsey explored the current and future plans of different Chinese businesses there.

Global management consulting firm McKinsey & Company published a report entitled “Dance of the lions and dragons,” which analyzes the current and long-term trajectory of Chinese engagement in Africa, noting that China has become Africa’s biggest economic partner over the past two decades. In fact, presently, more than 10,000 Chinese firms are conducting business operations on the continent.  According to the report, 74 percent of surveyed Chinese firms feel optimistic and confident about investing in Africa. Relatedly, most investments by Chinese firms reflect long-term commitments to Africa. The features show that 63 percent of the investments made by the surveyed Chinese firms in Africa require long-term commitments, while 26 percent are low-commitment. Indeed, 44 percent of the surveyed firms have made capital-intensive investments—the hardest investments to reverse. These investments tend to come in the form of factory acquisitions and the purchase of manufacturing equipment. Conversely, trade and non-labour-intensive contracting investments (e.g., telecommunications) are the easiest investments to extract and comprise a smaller proportion of investments by Chinese firms in sub-Saharan Africa.’ This was published by reputed American Brookings Institute.

Likewise, foreign investments from China to Africa have far outstripped those of the US in Africa in the past four years, especially in the establishment of production bases.

These narrations are to buttress that the relationship between Africa/Nigeria and China is beyond mere advance of loans to her which issue has been a raging global one with incitement that China, the world second largest economy and number one in foreign direct investment has been enslaving and recolonizing Africa with loans.

 Source: By Ikenna Emewu

Pension Funds lose N60 billion to Nigerian stock market as index return 12% loss

Nigeria’s Pension Fund Index closed the Month of May in negative territory posting a return of -4.12%. The index has so far returned a whopping -11.96% year to date May 2019 (2019 so far).

NSE Pension Index: Nigeria’s Pension Fund Index is a selection of stocks that meet the criteria for pension funds to invest in. Follow the link for stocks that make up this index. They are some of the largest companies quoted on the stock exchange and meet criteria such as float, financial reporting standards, transparency, and corporate governance.

According to data from the Pension Commission, total Pension Fund Assets as at March 2019 was N9 trillion out of which N590.6 billion was invested in the stock market. Thus pension fund contributors have lost about 12% (about N60 billion) of that amount to the stock market. Nigerians are apprehensive about investing in the stock market which explains why demand has been low despite impressive results over the last few years. Nevertheless, Pension Fund Managers have no choice but to place some of their investments in the stock market

Fundamentally most of these stocks are profitable and are market leaders in their sectors. They include FUGAZ Banks, Dangote Cement, Dangote Sugar, Presco, Okomu Oil, Seplat, etc. Stocks in this index have a market value of N9.3 trillion about 68.3% of the total market capitalization of N13.6 trillion. When they sneeze the stock market catches a cold.

What this means: Nigerians who are pension fund contributors have in general lost 11% of the value allocated to the stock market. However, in general terms pension fund asset returns may be positive as just 6.5% of pension assets are allocated to stocks. About 72% of contributions are allocated to various FGN Securities which pay interest ranging between 7% and 17%.

Other things to note

  • Though the NSE Pension Index returned 12% it is possible that some Pension Funds may have performed better than others.
  • This also suggests there are pension funds out there that may have posted a negative return on their stock market portfolio that is larger than the 11% recorded in general.
  • The 11% return does not factor in the dividend payments that have been earned by Pension Funds. As indicated most of the stocks listed above are profitable and have sound fundamentals.
  • For pensioners close to retirement, withdrawals from pension funds that are heavily skewed towards stocks will be significantly lower compared to others that are not.
  • Foreign investors parsing through these data have one more reason to avoid investing in Nigerian stocks further worsening an already dire situation.

The Optics: This is an obvious bad Omen for the Nigerian stock market despite the renewed interest following MTN’s listing. The stock market like any market depends on demand and supply to reflect the true value of stocks. But with demand basically drying up stock prices continue to be depressed month after month not considering that companies are actually posting impressive profits.

Source: Nairametrics

Dangote Retains Position as Most Admired African Brand

For the second straight year, a Nigerian company, Dangote Group, has emerged as the most admired African brand, of African continent origin, by consumers ahead of the telecommunication giant, MTN in a survey of 100 Africa best brands announced in Johannesburg at the weekend.

According to the South Africa based Brand Africa in a survey carried out in collaboration with the Johannesburg Stock Exchange (JSE), the seventh edition which was released at the weekend, of 15,000 brands mentioned, Dangote ranked first brand when consumers are prompted to recall the most admired African brand.

In the top 100 list, the United State sports and fitness mega brand, Nike, a non-African brand retains the overall number one brand in Africa spontaneously recalled by consumers.

South African telecoms brand, MTN, is the number one African brand spontaneously recalled brand, while surging Ethiopian brand Anbessa Shoes, at number two, swopped positions with Nigerian conglomerate, Dangote, which is the number three most admired brand of African of origin.

However, when consumers are prompted to recall the most admired African brand, Dangote retains the number one position. Just last year Dangote brand was named the most valuable brand among the top 50 brands in Nigeria for 2018 by Brand Nigeria.

Further analysis of the ranking indicates that Overall, the 2018/19 Brand Africa 100 list, which is calculated from 15,000 brand mentions illustrates a very diversified range of brands in Africa and shows year on year consistency with 80 per cent of the top 100 brands having been in the top 100 Most Admired Brands in previous years.

Overall, African brands faltered to an all-time low 14 percent share of the top 100 most admired brands in Africa. However, MTN (South Africa), Dangote (Nigeria) and Safaricom (Kenya) are the most admired highest listed brands on sub-Sahara’s leading bourses, the JSE, Nigeria Stock Exchange and Nairobi Securities Exchange respectively.

Faced with a relentless focus on the African opportunity and investment by non-African brands, Africa’s share of the most admired brands has been rapidly declining over the past three years from a high of 25 percent in 2013/14 to lows of 16 percent in 2015/16, 16 percent in 2016/17 and 17 percent in 2017/18.

“Today at the JSE, at an event with industry leaders from across Africa, hosted by the JSE in partnership with Geopoll, Kantar and Brand Leadership, Brand Africa announced the Top 100 brands in Africa in their 7th annual Brand Africa 100:  Africa’s Best Brands. Nike, MTN, Dangote, Ecobank and BBC were recognised as the most admired brands on the continent,” a statement from the Brand Africa read.

“Non-African brands have entrenched their positions in Africa, with North American brands, dominated exclusively by United States of America brands (28%), leading with a growth of 17% versus 2017/8.  The strength of USA brands was boosted by the entry and/or re-entry of stalwart American brands such as number 71 Levi’s, number 91 Chevrolet and Pepsi’s Miranda at number 80, who are all among the 20 new entrants.  European brands (41%) are up by 2,5% and Asian brands (17%) down by 10%, round up the continental spread of brands Africans admire.

The Brand Africa 100 rankings are based on a survey among a representative sample of respondents 18 years and older, conducted in 25 countries across Africa.  Covering all African economic regions, collectively these countries account for an estimated 80% of the continent’s population and 75% of the GDP.

In a reconfigured category listing where technology and electronics and telecoms categories were separated and new categories of luxury and personal care were introduced or re-introduced, the Top 100 is dominated by technology and electronic brands (18%) and telecoms (7%), consumer (non-cyclical) (16%), auto manufacturers (11%), luxury (10%), automobile (11%), apparel (8%), retail (7%), food (4%), non-alcoholic beverages (5%), personal care (4%), sports & fitness (4%) and media (1%) categories are the top categories.

Thebe Ikalafeng, Founder and Chairman of Brand Africa and Brand Leadership said of the outcome of survey “It is disappointing that despite its vibrant entrepreneurial environment, Africa is not creating new competitive brands to meet the needs of its growing consumer market.

“These rankings are an important metric of and challenge for creating home-grown competitive African brands that will transform the African promise and change its narrative and image as a competitive continent.  African brands have an important role in helping to build the African brand”, he added.

Brand Africa 100 was developed by pan-African branding and reputation advisory firm, Brand Leadership Group supported by GeoPoll, the leader in mobile-based market research throughout Africa, and strategic analysis and insights by Kantar TNS, the world’s leading data, insights and consulting company.

It is an inter-generational movement to inspire a great Africa through promoting a positive image of Africa, celebrating its diversity and driving its competitiveness. It is a brand-led movement which recognizes that in the 21st century, brands are an asset and a vector of image, reputation and competitiveness of nations. Brand Africa seeks to inspire a brand-led African renaissance.

Its ranking of Africa’s 100 Best Brands is an initiative to survey, rank and recognize the best brands in Africa in recognition of the growth of African brands, which were beginning to challenge global brands in Africa or lead global brands in new categories such as telecommunications. The aim of Brand Africa is to identify, acknowledge and promote African and global brands that are catalysts for Africa’s growth, reputation and value.

In his reaction, Group Chief Corporate Communication Officer of the Dangote Group, Mr Anthony Chiejina, said the management was not unexpected of the ranking because the company has a long-standing reputation for quality, relevance compliance and social stewardship. “Our mission and vision engage and inspire us to by extension connects us to with both our internal and external stakeholders.

“We fervently believe that only Africans can develop Africa, and this gives us stronger sense of relevance in all the countries where we have our operations. we are touching lives by providing their basic needs and empowering Africans more than ever before creating jobs reducing capital flight, helping government conserve foreign exchange drain by supporting different industrial infrastructural projects of African government.”

Mr Chiejina stated further that Dangote Cement has been producing high quality and affordable cement, reducing poverty, engaging in unprecedented philanthropy and above all respecting the laws of the land where we operate.

“All these are our credo and we do not compromise it; it is our way. And the ranking is just an acknowledgement of all these by our stakeholders, we keep our brand promise and stay authentic,” he concluded.

Source: By Dipo Olowookere

Profit taking: NSE market indices decline by 0.17%

The crucial market indices of the Nigerian Stock Exchange (NSE) dropped by 0.17 percent on Thursday after the work-free day to mark the May 29 inauguration date.
Specifically, the All-Share Index lost 52.81 points or 0.17 percent to close at 31,254.19 compared with 31,307.00 achieved on Tuesday.
Similarly, the market capitalisation, which opened at N13.789 trillion, shed N23 billion or 0.17 percent to close at N13.766 trillion.
In spite of the decline recorded by market indicators, market breadth closed in favour of the bull with 20 gainers against 19 decliners. Nestle led the gainers’ table, gaining N4.50 to close at N1,454 per share.
MTN Nigeria Communication followed with a gain of N3.45 to close at N136, while Stanbic IBTC appreciated by 75k to close at N43 per share. United Bank for Africa added 35k to close at N6.60, while Julius Berger also garnered 35k to close at N23.85 per share.
Conversely, Unilever recorded the highest loss to lead the losers’ table, shedding N2.70 to close at N31 per share.
Dangote Cement trailed with a loss of N1.80 to close at N199.80, while Forte Oil was down by N1.10 to close at N26.90 per share.
Guaranty Trust Bank plc declined by N1 to close at N32, while Ecobank Transnational Incorporated dipped 95k to close at N11.15 per share.
However, the volume of shares traded appreciated marginally by 9.44 per cent with an exchange of 376.80 million shares valued at N5.89 billion in 4,549 deals.
This was in contrast with a total of 344.31 million shares worth N7.27 billion transacted in 4,456 deals.
Union Diagnosis was the most active, trading 43.36 million shares valued at N10.41 million.
United Bank followed with an account of 42.61 million shares worth N280.20 million, while Zenith Bank traded 39.11 million shares valued at N803.81 million.
Access Bank sold 34.38 million shares valued at N220.11 million, while Law Union and Rocks traded 29.58 million shares worth N14.19 million.
Source: NSE

This is the Average Take-Home Pay in South Africa Right Now

Take-home pay for South Africans declined in April as the tougher economic environment slowed payment growth, according to the latest BankservAfrica Take Home Pay Index.

The group said that the decline had a direct impact on the relationship between salaries and retail sales – which reached a significant low – and reflects the struggles of consumer spending.

Real take-home pay decreased by 1.5% for the year to April, averaging R13,741.

“This represents the third consecutive month of declines,” said Shergeran Naidoo, head of Stakeholder Engagements at BankservAfrica, who added that, although March’s figures were revised and seasonally adjusted, the average take-home pay still amounted to R13,829 in that month.

“Even with the adjustments, April’s figures were still lower,” he said.

According to Chief Economist at Economists.co.za, Mike Schüssler, all indications show that consumers are likely to remain under pressure as inflation slows slightly.

“April’s decline is likely to be from tax brackets not being adjusted for inflation. We believe that public service salary increases of between 5.2% and 6.2%, as announced by government, will have a very big impact on these numbers,” he said.

If government wage increases were implemented, this would mean private sector increases have been far below the inflation rate of 4.4% in April. Government’s payroll makes up close to 30% of BankservAfrica’s Take-home Pay Index sample.

“It is clear that employee salaries are not increasing at the same pace as before. Also, for the first time, salary adjustments are in decline when deflated with the Retail Price Index,” Schüssler said.

The Retail Price Index measures inflation in shops, not the total consumer inflation that includes electricity, rent, property taxes, schooling and health care costs.

Source: Businesstech

Good News for South Africa’s Property Market: Banks are Lending

The property market was even more buoyant in the first few months of 2019 than during the “Ramaphoria” period that gripped South Africa at the start of 2018, according to new data from bond originator BetterBond.

“Consumers and investors have maintained their enthusiasm for SA real estate even in the face of all the economic and political ‘noise’ leading up to the General Election on 8 May,” said BetterBond CEO Rudi Botha. “We believe the momentum can be maintained in the coming months if President Ramaphosa is seen to start delivering on his election promises.”

The statistics reveal that the number of applications for bonds has shown an increase for every month of the year so far when compared to the same month of 2018. In January, the number of applications was 7% ahead of the number for January 2018, for example, and in April, the number was 16% up on the number for April 2018. The year-on-year increase for the first four months of the year was 7.4%.

Betterbond noted that bond grant numbers for the first four months of the year have shown even bigger increases when compared with the same period in 2018. Botha said this is a reflection not only of rising demand among consumers, but of the banks’ continued willingness to lend into the residential real estate sector.

“And this is borne out by similarly large increases in the value of bonds granted. The oversupply in the market means that home prices have certainly not achieved increases of this order, so the higher bond values are largely a function of the banks being willing to accept lower deposits and grant bigger loans to borrowers with healthy credit records and low debt loads,” he said.

Comparison of bond applications and bond approvals 2019 v 2018

MonthNumber of bond applicationsNumber of bonds approvedValue of bonds approved
January 2019 vs January 2018+7%+21%+22%
February 2019 vs February 2018+4%+16%+22%
March 2019 vs March 2018+4%+16%+20%
April 2019 vs April 2018+16%+27%+30%

The latest available statistics from the National Credit Regulator (NCR) show the extent to which the banks have been growing their collective home loan “book” over the past year.

The figures show that R42 billion worth of new home loans were registered in SA during the final quarter of 2018 (compared to R40 billion in the previous quarter) and that this brought the national total of mortgage debt outstanding to R939 billion, compared to R904 billion at the end of 2017- an 8.7% increase).

They also show that home loans currently account for around 29% of all new credit being extended to consumers, but almost 51% of all consumer debt outstanding.

Betterbond said that there are now just over 1.7 million active home loan accounts in South Africa, out of a total of more than 38.2 million accounts held by 26 million credit-active consumers.

“The NCR figures also underline the value of seeking assistance from a reputable bond originator like BetterBond when applying for a home loan,” said Botha. “They show that the overall approval ratio for new credit applications in SA has fallen to 44%, while our approval ratio for home loan applications has remained at more than 75% for the past two years.”

Botha said that by using the correct channels, favourable rates can be secured.

For example, the average variation between the best and worst interest rate offered on a bond application is currently around 0.5%, and on a 20-year bond of R1.5 million, that translates into potential savings of more than R120,000 of interest over the lifetime of the bond, as well as a total of about R6,000 a year off the monthly bond instalments.

Source: Businesstech

FBNInsurance pays N4.8b claims in 2018, declares dividend

FBNInsurance Limited, one of the leading life insurance companies in Nigeria, has presented its annual report to shareholders at the company’s Annual General Meeting (AGM) held in Lagos, declaring a profit before tax of N4.2 billion, a 44 percent increase from the previous year’s figure.

Val Ojumah, managing director/CEO, FBNInsurance Limited commenting on the result stated that the company closed the year with positive results and also made prompt claims payments to customers despite the unpredictable economic situation in the country occasioned by preparation for the just concluded general election.

Reviewing the year, Val Ojumah stated “we grew Gross Premium Written (GPW) by 33 percent to N26.0 billion in 2018 from N19.6 billion in 2017; while Profit Before Tax (PBT) appreciated by 44 percent from N4.2 billion in 2017 to N6.13 billion in 2018. The performance, he said, was driven by the company’s sustained growth and penetration into the retail segment of the industry.

“Over the same period, as a responsive and responsible organisation, we promptly paid claims to our clients to the tune of N4.8 billion which is a 66 percent increase from N2.9 billion in 2017. Our strategy remains to provide financial security to our customers.

We are keen to attain uncontested leadership status in the life insurance sub-sector as well as aggressively exceed our customers and shareholders’ expectations,” he said. The company also announced a dividend of 65k per share, representing 81 percent increase from 36k that was declared for 2017.

Commenting on the company’s financial returns, Adenrele Kehinde, chairperson of the Board of Directors, FBNInsurance Limited attributed the growth and outstanding performance of the company in 2018 to its commitment in putting its clients first and resilience in achieving remarkable milestones.

“Ours is a business of trust and as part of our efforts geared towards maintaining indisputable leadership in the life insurance sub-sector, we have built a solid foundation where our clients can insure their trust because of our reputation over the years of paying claims promptly” she said.

FBNInsurance is an FBNHoldings company associated with the Sanlam Group of South Africa.

Source: By  Modestus Anaesoronye

Need for self-regulation in microfinance banks

The need for self-regulation in Microfinance Banks (MFBs) cannot be overemphasised as it enhances performance and sustainability of the sub-sector.

The 2011 revised microfinance policy framework prescribes self-regulation by apex associations of Microfinance Banks and Institution.

In view of this, the Central Bank of Nigeria, (CBN), and the International Finance Corporation, IFC, have charged Microfinance Banks, (MFBs) to embrace self-regulation and consolidation in order to enhance transparency and good corporate governance practices among their members.

Meanwhile, the National Association of Microfinance Banks, NAMB, has called for standardized performance measures and requirements for operators in subsector.

These were highlights of the 5th annual symposium of the Nigeria Microfinance Platform held in Ibadan, Oyo State, with the theme, “Self-Regulation for Sustainability and Development of the Microfinance sector”.

In her Keynote address, deputy governor, Financial Sector Surveillance, Central Bank of Nigeria, CBN, Aisha Ahmad stressed the need for self-regulation in the MFB subsector, saying: “A comprehensive oversight mechanism is required for effective supervision of microfinance activities of over 900 licensed MFBs; this is where the relevance of a self-regulatory organization comes into play.”

Stressing the expectation of the CBN from MfBs operators in terms of self-regulation, Ahmad, who was represented by Tokunbo Martins, director, Other Financial Institutions Supervision Department (OFISDs) said: “We believe that the effectiveness of self-regulation in   driving performance of the microfinance sector depends on an effective and efficient mechanism for addressing non-compliance, standardized performance measures driven by the best performing operators in the microfinance sector.  It is therefore important that the umbrella associations set the tone right from the onset and clearly communicate their expectations which should be congruent with the regulators’ expectations for the microfinance industry.”

Also speaking, Eme Essien, country director of IFC, noted while selfregulation is important it will not happen immediately but gradually as operators and regulators work together.

She however stressed that in addition to self-regulation, there is need for consolidation in the MfB sector, noting that most of the MFBs in the country are small and their viability is fragile.

She said: “There must be pursuit of consolidation in the sector. We hope that the smaller banks will look for partnership with other larger ones. You can join forces, you can grow your network in that way, you can expand your offerings in that way, you can grow the credibility of the sector in that way and you can build trust among customers. In fact, overtime we see a very significant benefit in combining businesses.  This will also reduce the pressure on the CBN, but broadly it will lead to a high level of sustainability in the sector so that the microfinance sector really has its place in driving financial inclusion in Nigeria.”

NAMB President, Rogers Nwoke averred that self-regulation has been one of the cardinal objectives of the association since inception, adding that there is huge prospect for self-regulation in the sector.

He noted that self-regulation among other things will eliminate the regulator-anxiety of the operator and enhances compliance, adding that it will also streamline compliance indicators according to size, status and risk framework of the microfinance banks. He added that in addition to the above self-regulation will grossly reduce cost of statutory regulation and promote consumer protection.

He however averred that for these to happen there is need to  develop effective mechanism for addressing noncompliance, standardized performance measures and requirements driven by best performing operators in sector. He said  in addition to these, there must be focus on developing, disseminating and promoting best practice through developing guidelines, ratings and codes of conduct.

He said the CBN will also have to make MFB ratings a condition to receiving intervention funds and other incentives, and allow for peer-group differentiation, use of external validation, production of scores and penalties for non-compliance.”

Source: By Hope Ashike

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