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CBN Resumes OMO Auction with N150bn Offer to Investors

The Central Bank of Nigeria (CBN) on Thursday resumed Open Market Operation (OMO) auction offering N150 billion to investors in the secondary market, but the short and medium-term instruments were gripped with low patronage due to high rates.

OMO simply means the buying and selling of government securities, which enables a central bank to control the supply of money in the banking system.

Godwin Emefiele, governor of the CBN, said in London this week that the regulator would offer more OMO auctions to counter the upcoming maturities due in September/October. There have been fewer OMO auctions of late. In fact, there may be a requirement to increase yields a bit here to maintain Nigeria’s relative attractiveness to Egypt for fixed income flows (CBN argues Nigeria could remain attractive to Egypt on slightly lower yields given the FX stability).

Of the amount offered on Thursday, a total of N115.89 billion was subscribed by investors but the sum of N88.66 was sold.

“This is due to more attractive rates in the secondary market. Offshore investors have continued to take profit on their fixed income investments in Nigeria,” Ayodeji Ebo, managing director, Afrinvest Securities Limited, told BusinessDay.

The breakdown of the OMO auction shows that N20 billion was offered for 84-day tenor and it was undersubscribed by N5.89 billion. Investors’ bid range was between 11.79 percent and 12.68 percent, but there was no sale and no stop rate.

For the 175-day tenor, the CBN offered a total of N30 billion at a stop rate of 11.8 percent, although investors earlier sought to buy at a bid range of between 11.25 and 12.48 percent. The offer which matures on February 6, 2020 recorded a total sale of N0.69 billion.

The sum of N100 billion was offered for 364-day tenor but a total of N87.97 billion was sold at a stop rate of 12.88 percent after the investors earlier bid at a range of between 12.25 percent and 13.50 percent. The instrument was oversubscribed by a total of N106.27 billion and will mature on August 13, 2020.

The CBN on Wednesday, after the two-day holiday, conducted a Primary Market Auction (PMA), rolling over maturing bills worth N34.4 billion across 91-, 182- and 364-day tenors.
Ayodele Akinwunmi, head, research, FSDH Merchant Bank Limited, said over N9.6 trillion worth of government securities are expected to mature in the financial market between August and December this year.

A report by Afrinvest revealed that on Wednesday last week, the apex bank offered a total of N100.0bn across three tenors (85-, 183- and 344-day). However, the CBN did not allot any sale on the mid-term bill despite 2.9x oversubscription while the short- and long-term bills were both oversubscribed with bid-to-cover ratios of 1.2x and 3.8x, respectively.

“We advise investors to cherry-pick bills with attractive yields across the short-medium term space as the sell-offs may persist this week,” the analysts said.

The report indicated that last week, the secondary market for Treasury Bills started on a mildly bullish note as market players showed interest in short-term bills in the first trading session due to the high system liquidity (N191.7bn positive) on Monday.

This was, however, short-lived, following a reduced demand on mid- and long-term bills by Tuesday as investors awaited the OMO.

On Thursday, the bullish trend was reversed as offshore investors sold off big across all tenors pushing average yields up by 1.3 percent. Thus, average yield on the short- medium- and long-term bills advanced 177bps, 159bps and 94bps, respectively.

Source: businessdayNG

What Nigeria Govt. Should Know About Impact of Housing Sector Development

The housing sector is the bedrock of the economy of most developed nations, an important tool for stimulating growth. Housing construction indices are some of the most common measures used by analysts to gauge economic trends in OECD countries. In more advanced countries like the United States of America, Britain and Canada, the sector contributes between 30 percent and 70 percent of their Gross Domestic Product (GDP). Investment in housing accounts for 15 percent to 35 percent of aggregate investment worldwide and the sector employs approximately 10 percent of labour force worldwide.

The sector of the Nigerian economy that has a very bright future is real estate. Despite the economic downturn, the sector has been growing in leaps and bounds, with high rise buildings, shopping malls, hotels springing up everywhere from Lagos to Abuja, to Port Harcourt, to name just a few.

According to a 2014 forecast by the International Monetary Fund (IMF), strong developments in the construction, real estate, and technology sectors in developing countries such as Nigeria has supported the world economy through tough financial periods in recent years. It also predicts that these developing nations will account for about 70 percent of world growth over the next decade.

Nigeria is touted at the moment as one of the developing countries with great potentials in real estate, and one of the competitive players in the global real estate market that is fast becoming increasingly attractive to investors.

Recently, the National Bureau of Statistics put real estate contribution to Nigeria’s GDP at 7.5 per cent, a figure that left many stakeholders surprised at what they described as a very poor rating by the body.

To really appreciate the importance of real estate to the country’s GDP, they called on the federal government to integrate the construction and building sector into the formal sector in order to capture their contributions accurately.

However, though real estate is still a small contributor to the country’s GDP, its importance cannot be over-emphasised. Perhaps the best way to really understand the importance of the real estate sector to Nigeria’s economy is to compare it to other emerging and developed countries of the world. Another way to do this would be to compare its growth to the country’s economic growth.

Let’s start with the latter. The Nigerian economy grew by 2.35 percent year-on-year in the second quarter of 2015, down from 3.96 percent expansion reported in the previous quarter.

This has been attributed to the decline in oil production and prices, and recently, the Federal Government admitted that the country’s economy was “technically in recession” having gone on two quarters of negative growth.

That admission, though coated in technicality, corroborates the recent forecast by the International Monetary Fund (IMF) who predicts that Nigeria’s economy was likely to contract by a further 1.8 per cent this year. In other words, the country which had earlier overtaken South Africa as the fastest growing economy in Africa is now heading towards recession.

Ironically, while the country’s economy suffers from stunted growth, the real estate sector has been on the upswing, growing faster than the average GDP at a rate of about 8.7 per cent, according to the accounting and auditing firm, PricewaterhouseCoopers (PwC), as well as stakeholders like the Centre for Affordable Housing Finance, with a projection to grow by 10 per cent in the near future.

In its May 2015 report titled, ‘Real Estate: Building the Future of Africa,’ PwC further predicted that Nigeria’s real estate investment will rise by about 49 per cent, from $9.16 billion last year to $13.65 billion this year. It attributes this to a growing middle class driving demand for residential property development, and indirectly, retail, industrial and commercial real estate development.

However, experts believe that the sector could do better with the right incentive. According to them, despite its growth, the real estate sector still remains a small contributor in the country’s GDP, especially when compared to other emerging and developed countries like South Africa, Brazil, China, and the US.

This could be attributed to several problems plaguing the sector. One of them as highlighted by the PwC report is access to finance. “There are existing problems with access to finance; with a lack of long-term debt financing and an underdeveloped mortgage market, with mortgage loans representing less than 1 per cent of the nation’s GDP.” Another, the report says, is the cumbersome and time-consuming process for land acquisition and ownership documentation which makes land acquisition difficult, even though land is very cheap in Lagos, compared to other emerging cities across the world.

Lack of infrastructure still remains a major concern for the sector as the non-availability of basic services such as water and energy has forced developers to provide these amenities themselves, thereby raising their total development costs by up to 30 per cent, the report further lamented.

All these have led to a severe shortage in the sector, with the yearly supply nowhere near what is needed. The country, like the rest of Africa, remains severely undersupplied, especially when it comes to high-quality commercial space.

Retailer expansion also continues to be hindered by a lack of high-quality retail accommodation. Jones Lang LaSalle estimates that the stock of ‘Grade A’ shopping malls across.

The economy of developed countries like USA, UK, France, Germany, Japan and many more relies heavily on the real estate sector. This is why crashes in real estate markets often result to global economic meltdowns. It proves how important the sector is in the development of an economy.

Africa (excluding South Africa) is less than 1.5 million square metres – that’s barely equivalent to the stock of Hungary, a country of just 10 million people against one billion in Africa.

In Nigeria, a country of over 180 million people, the housing shortage can be seen in low, middle income residential and office spaces. And as the country’s population increases, we will see further strains on an already challenged industry. At the moment, Nigeria is believed to have a housing deficit of 17 million. According to experts, affordable housing and accommodation must be the major driver if the nation’s real estate sector is to deliver at the rate and scale needed to contribute significantly to the nation’s economy.

To plug the housing gap, the World Bank in its 2014 study stated that N59. 5 trillion would be needed at N3.5 million per unit. What this means is that despite the harsh economic conditions, the real estate sector still represents a huge opportunity for positively impacting the economy to promote growth and inclusion.

This is because housing is not only a basic necessity that affects the welfare of the citizenry, but also a critical sector of an economy. Therefore a viable and sustainable housing finance plan is essential.

To achieve this, experts insist, the industry requires the availability of affordable long-term funds to be provided by the capital market. According to them, funding from the capital market reduces the cost of mortgage loans, cost of funds and allows for longer repayment tenor.

In addition, there should also be a general review of the house types, as well as their sizes and quality, with more efficient designs. Also needed is high quality infrastructure such as the ones provided in the Eko Atlantic City.

Modeled after the skyscraper District of Manhattan Island in New York City, it is expected that the new city will be home 450,000 residents, with commuter volume expected to exceed 300,000 people daily. Self-sufficient and sustainable, it includes state-of-the-art urban design, its own power, clean water, advanced telecommunications, spacious roads and over 200,000 trees.

The uniqueness of the initiative for the region is that the residential units will be constructed as vertical high-rise apartment towers due to limited space for the traditional single family detached units. There are already over 500 units of apartments of various room sizes ranging from one bedroom to four bedroom apartments already under construction. The first residential tower is completely sold out and the first set of units will be delivered over the next couple of months.

With such ambitious projects, stakeholders remain optimistic that the real estate sector can contribute immensely in resolving the current economic problems faced by the country also be a major source of employment for the country’s fast growing population.

Nigeria’s Former Minister of Power, Works and Housing, Babatunde Raji Fashola agrees, describing the real estate industry as a strategic sub-sector in the construction industry that has remained an important contributor to the Gross Domestic Product with vast potentials for energizing and catalyzing growth of the overall national economy.

This is therefore a clarion call on the federal and state governments, the national and state assemblies to rise up with the political will that will encourage investment in the real estate sector of Africa’s most populous country – Nigeria.



The Bank of Ghana (BoG) has revoked the licences of twenty-three insolvent savings and loans companies and finance house companies.

The affected institutions include Ideal Finance, GN Savings and Loans, First Allied Savings and Loans, ASN Financial Services, Midland Savings and Loans, IFS Financial Services, Unicredit Savings and Loans and Women’s World Banking Savings and Loans.

A statement issued by the BoG on Friday August 16, 2019 said the revocation of the licences of the institutions had become necessary because they were insolvent even after a reasonable period within which the Bank of Ghana had engaged with them in the hope that they would be recapitalized by their shareholders to return them to solvency.

“These actions were taken pursuant to Section 123 (1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), which requires the Bank of Ghana to revoke the licence of a Bank or Specialised Deposit-Taking Institution (SDI) where the Bank of Ghana determines that the institution is insolvent,” the statement said.

The Bank of Ghana has also appointed Eric Nipah as a Receiver for the specified institutions in line with section 123 (2) of Act 930.

The companies are:

  • 1. Accent Financial Services Ltd
    2. Adom Savings and Loans Ltd
    3. AllTime Finance Ltd
    4. Alpha Capital Savings and Loans Ltd
    5. ASN Financial Services Ltd
    6. CDH Savings and Loans Ltd
    7. Commerz Savings and Loans Ltd
    8. Crest Finance House Ltd
    9. Dream Finance Company Ltd
    10. Express Savings and Loans Company Ltd
    11. First African Savings & Loans Company Ltd
    12. First Allied Savings and Loans Co. Ltd
    13. First Ghana Savings and Loans Co. Ltd
    14. FirstTrust Savings and Loans Ltd
    15. Global Access Savings and Loans Company Ltd
    16. GN Savings and Loans Ltd
    17. Ideal Finance Ltd. Finance House
    18. IFS Financial Services Ltd
    19. Legacy Capital Savings and Loans Ltd
    20. Midland Savings and Loans Company Ltd
    21. Sterling Financial Services Ltd
    22. Unicredit Savings and Loans Ltd
    23. Women’s World Banking Savings and Loans Co. Ltd

Source: graphic


Politicians and Independence of the Central Bank of Nigeria

The presidential directive to the Central Bank of Nigeria (CBN) not to stop providing foreign exchange for food importation is worrying. It is a continuation of the now-established practice of the current administration to interfere and usurp the independence of the Central Bank of Nigeria (CBN)

The practice is not only dangerous and unlawful, but detrimental to the growth and development of the economy, and ultimately, the image of the country before investors and international financial institutions.

History has taught us – and scholars are now documenting the lessons – that a great deal of the difference between developed/prosperous societies and those that are not are traceable to the presence and quality of institutions. For instance, Daron Acemoglu and James Robinson – in their highly acclaimed book “Why Nations Fail” conclusively show that the reason why some nations are rich and others poor, is as a result of the quality of institutions in the former and its absence or weakness in the latter.

Take Korea – a remarkably homogenous nation – yet the people of the South are among the richest while those of the North are among the poorest in the world. The contrasting fortunes of the two Koreas are in the nature and quality of their economic and political institutions. While those of the South are open, encouraging innovation and full participation in the economy coupled with a workable political system that is fully accountable and responsive to citizens, those of the North are closed, dependent on individuals and unaccountable and responsive to citizens.

That is why countries that seek to build prosperous and sustainable societies anchor them on strong institutions rather than on personal rule or strong men. Institutions are impersonal and enduring and not subject to the whims and caprices of leaders. They outlive individuals and guarantee progress regardless of the people inhabiting them at any point in time.

And the literature on political economy has been quite clear: central banks have had the greatest impact in maintaining economic stability when they act independently and free from political interferences.

In Nigeria however, though our law books guarantee the independence of the CBN, politicians (more particularly the Buhari administration) usurp its powers and determine monetary policy.

Early in the life of this administration, the president made it quite clear who was in charge of monetary policy decisions.

The President has voiced his ignorance of economics, and unconvinced of an “economic explanation” for devaluing the naira, shown his displeasure for the D-word. He has pointedly said devaluation is not good for a country that imports toothpicks. Despite the shortage a rigid administration of available dollars and multiple exchange rates has caused. Consequently, the preoccupation of the CBN has been to tailor all its policies to the disposition of the president.

The results of all these interferences in the economy have been negative. They portray the CBN as a rudderless institution that relies on the body language of its political masters for important decisions. Decisions that are normally the exclusive preserve of professionals.

This administration must realise that prosperous and sustainable societies are built on strong institutions not the whims of a strong man. It never works!

Source: businessdayng

How Executive Interference Erodes CBN’s Independence

…as FG order on FX for food imports may be illegal

President Muhammadu Buhari’s directive to the Central Bank of Nigeria (CBN) to stop providing foreign exchange for importation of food into the country is a trampling of the independence of the apex bank, according to leading Senior Advocates of Nigeria (SANs) who spoke to BusinessDay on the matter.

The President had on Tuesday said he had directed the CBN to stop providing foreign exchange for importation of food into the country, claiming there has been a “steady improvement in agricultural production and attainment of full food security”.

“Don’t give a cent to anybody to import food into the country,” Buhari said, according to Garba Shehu, presidential spokesman, in a series of tweets.
But the legal luminaries faulted the Presidential directive, saying it amounted to usurpation of the powers of the CBN.

“As things will be, perhaps unknown to the Presidency, the law no longer allows executive control of the CBN. Indeed, the President has no constitutional, legal or executive powers over the CBN that enables a directive as to the operational activities of the CBN – in the way he has over his general staff,” said Konyin Ajayi, a professor and Senior Advocate of Nigeria (SAN).

Ajayi explained that it would be a usurpation of powers if the statement credited to the President is seen other than as an opinion or desire in his overall view of government’s position on exchange controls of monetary policy.

“As the courts are, for instance, granted independence, so has the CBN by virtue of the CBN Act which the President is under oath to uphold,” he noted.

Another SAN, who does not want his name mentioned, agreed with Ajayi.
“Legally, the president cannot order an independent entity like the Central Bank of Nigeria to do what he wants even if that which the President wants done might be a good thing to do,” the SAN told BusinessDay.

He, however, added that the CBN might be to blame for the development.

“But we have a dilemma here. The CBN may have made itself amenable to supervision by the president by its foray into the fiscal space, the political space – on account of the demonstrable incompetence of the executive branch. So the president may now begin to see the governor of the bank as he sees one of his ministers and think he can order him around,” he said.

Even though the constitution empowers the President to appoint a CBN governor subject to approval from the Senate, the CBN Act of 2007 provides the apex bank with the autonomy that makes it free from direct political or government interference in the conduct of monetary policy.

The monetary authority is usually in charge of attaining price stability by managing the interest rates as well as the total supply of money in circulation and is controlled by the central bank of a country, while a country’s fiscal policy is determined by the executive and legislative branches of the government, charged with the responsibility of influencing economic activities through taxes and government spending.

Osaro Eghobamien, another Senior Advocate of Nigeria, said it was necessary to understand the context in which the President’s directive was given; whether “the directive issued was one that relates to fiscal policy (a statement to achieve full employment, price stability and sustained growth in the economy, with the intention of stimulating local demand) or whether it was one that relates to monetary policy (the mechanism for controlling the total supply of money in circulation)”.

“If categorised as a statement tending towards fiscal policy, undoubtedly the President has the powers to make such directives regarding economic policies just as the Minister of Finance would do. The complexity is that the Central Bank is not created to execute fiscal policies. The situation is different when dealing with issues relating to monetary policy in which case the President will not have the powers,” Eghobamien said.

“The CBN is in control of the mechanism that regulates the FOREX and as a result there is some overlap in its functions. Under the law, whereas the CBN has the powers to hold FOREX, it is the executive that has the powers to decide the sector to which the CBN may allocate FOREX. The intricacy inherent in this issue is demonstrated in the intervention role that the CBN is performing. It is pertinent to note that the CBN has in the past assumed the role of allocating FOREX and it is must be presumed that it takes directives from the President in that regard,” he said.

Eghobamien said the CBN is independent and its independence is in relation to its stated objectives.

“These objectives are as stated in the CBN Act including: (a) ensure monetary and price stability; (b) issue legal tender currency in Nigeria; (c) maintain external reserves to safeguard the international value of the legal tender currency;(d) promote a sound financial system in Nigeria; and (e) Act as banker and provide economic and financial advice to the Federal Government. (see section 2(a) of the CBN Act 2007),” he said.

He said the provisions of section 1(3) of the Central Bank Act, 2007 must be viewed from that perspective and that if the President had made a directive in connection with any of the above objectives, it would be undermining the independence of the CBN.


“We do not consider that the President’s statement undermines or relates to any of these objectives. Instead, the statement relates more to enhancing the agricultural sector, boosting employment and using the allocation of forex to re-enforce the enhancement of the sector.

“Whilst it is readily conceded that the function of maintaining external reserves to maintain the value of the legal tender (ascertain exchange rate) is a matter for the CBN, we take the view that the question as which sector is permitted to purchase the scarce resource is for the executive and not for the CBN to decide,” he said.

“On a final note, the CBN ought to be seen as an independent institution and as such the President ought not to convey the impression that he controls the CBN. This is notwithstanding the fact that his comments were more of general economic policies. After all, the CBN is not statutorily mandated to execute fiscal policy. Better still such pronouncement should be left to the CBN governor after consultations with the President,” he said.

Previous administrations had one way or the other meddled in the affairs of monetary authorities. While former President Goodluck Jonathan removed the then CBN governor Sanusi Lamido Sanusi, late President Umaru Musa Yar’Adua stopped Chukwuma Soludo from implementing some monetary policies.

Source: businessdayng

CBN to Disburse Lower Currencies to Micro-Finance Banks

The Central Bank of Nigeria says it has released guidelines for the disbursement of lower denominations of the Naira through micro-finance banks across the country.

The bank’s Director, Corporate Communications Department, Mr. Isaac Okorafor, made this known in a statement in Abuja on Thursday.

Okorafor said this development was contained in a circular issued by the Director, Currency Operations Department of the bank, Mrs Patricia Eleje, in Abuja on Thursday.

He explained that the circular indicated that all microfinance banks must have a Composite Risk Rating (CRR) of above average in the most recent Risk Based Supervision (RBS) target examination before they were considered for the scheme.

He explained that the measure was to ensure that only MFBs with good corporate governance practices took part.

“Meanwhile, the participating MFBs must be willing to accept a mixture of new and other banknotes, and that the MFBs shall give 20 per cent of any withdrawal in lower denomination notes subject to a maximum of N50,000.

“Where beneficiaries withdraw more than once in a day, the circular said that disbursement will only apply to one transaction per day.

“Similarly, the MFBs are allowed to exchange notes subject to a maximum of N50,000 for customers with bank accounts and N10,000 for customers without bank accounts.

“In that situation, the banks must not exchange for same beneficiaries more than once a week,” he added.

According to him, MFBs are to maintain a register of amounts received from the CBN through their correspondent commercial banks.

Okorafor said the MFB must also maintain another register of the beneficiaries of the lower denomination notes as well as ensure that withdrawal teller slips contain breakdown of the denomination of the currency to customers with accounts.

“The circular also warned MFBs against hawking, hoarding or using of funds obtained under the intervention for any other purpose.

“It also instructed the banks to put in place effective control measures that will ensure that banknotes disbursed to customers with or without accounts are not sold.

“Furthermore, the circular directed the banks to render weekly and monthly disbursement return to CBN branches where the intervention would be monitored periodically, and appropriate sanctions applied to erring MFBs,” he said.


Why Nigeria Has One of Africa’s Most Rigid Rent Payment Systems

The larger population of Nigerians who cannot afford to buy their own houses are usually at the mercy of landlords for accommodation and due to the rigid rent payment system in most cities, tenants are forced to pay through their nose.

To rent an apartment in Nigeria, one has to make a down payment of not less than one year. In some cases, tenants are expected to pay up to 3 years rent upfront.

Data from a survey by Lagos-based Estate Intel analysed by BusinessDay shows that this is not the case in some African countries like Botswana, South Africa, Benin Republic, Togo and Rewanda, where rents are paid on monthly basis without an upfront or down payment.

“I borrowed money to finish my building; I need someone that can pay me as much as possible. I spent a whole lot on the house; so two years rent is the least I can take from any one,” Johnson Babajide, a landlord with three different properties on Lagos state the mainland, said.

He added that, for him, “property development is a serious business; I have other projects I want to complete, so you won’t blame me for wanting urgent cash plus the bank loans I need to repay.”

The frequencies at which rent is paid and how much is required as an upfront payment are the two criteria in determining rent payment system in a country.

Using both indicators, Nigerian cities come at the bottom of the pyramid, accompanied by Cameroun, Ghana and Sierra Leone, as the data from the survey by Estate Intel revealed that they are all at the same level.

According to Adeniyi Akinlusi, president of Mortgage Bankers Association of Nigeria (MBAN) and CEO, Trustbond Mortgage, landlords in some cities in Nigeria collect upfront payment of 2 years because of the high interest rate on the loans they borrowed from banks and as such are constantly in search of ways to recoup and pay up as soon as possible.

“The second reason may be because they are not sure that the tenants will be consistent in their monthly payment,” he added, noting, “the fear of high default rate due to lack of credit collection system is also a challenge.”

The Lagos Tenancy Law 2012 provides that it is unlawful for a landlord or his agent to demand or receive from a new or prospective tenant, rent in excess of 1 year in respect of any premises; it is also unlawful for the new or prospective tenant to offer or pay rent in excess of 1 year.

“Most of these landlords collect 2 years rent because they are trying to raise funds to pay up the loans they usually take from banks to execute their projects,” James Olanrewaju, an agent that covers Unilag, Akoka area, said.

Nigeria has over 17 million housing deficit and, according to the Association of Housing Corporation of Nigeria (AHCN), an umbrella organization for all federal and state housing agencies, more than 90 percent of new homes utilise funds from personal savings for incremental construction.

Credit Sales reports that the average rent of Nigerians between 20-35 years of age is around $230 monthly and the average price of one-bedroom in mega cities like Lagos, Abuja and Port Harcourt is around $300 per month.

“This means that a lot of people cannot afford to rent by themselves and there is the problem of upfront annual rent requirement; this means that there is need for products that can break those payments into monthly denomination because a lot of people earn their salaries on monthly basis,” Ibraheem Babalola, MD/Cofounder of Muster, an AI-powered peer-to-peer shared housing market place said.

Eze Arua is a 22-year old accounting graduate who recently relocated from Abakaliki in Ebonyi State to Lagos. Since his five months stay in the city of excellence, Arua has been squatting with his friend.

“The money I brought to Lagos to secure an accommodation is half the price of the cheapest apartment I have seen. I pleaded for the landlords to allow me stay for some months but none has agreed; so I am saving up to get one year rent,” Arua lamented.

He is not the only one on this table. A call by BusinessDay to some other cities revealed that Nkiruka in Portharcout and Ahmed in Abuja were going through the same situation.

“Another reason landlords demand upfront payment is due to the high demand for accommodation which doesn’t have an affordable and corresponding supply to meet the need. This gives the landlords the power to dictate the conditions,” Akinlusi said.

Nigeria has one of the most expensive property markets in the world. It is the second most expensive in Africa after Angola and the reasons for this go beyond just the construction cost which is also a factor.

Other factors, which are extraneous, include high cost of funds, government charges, high cost of land, and market uncertainty or the shelf life of the property which means the time the property has to stay in the market before it is sold.

Also, a key factor for the housing challenge in Nigeria is the high mortgage rate. Typical mortgage interest rates in Nigeria range between 7-10 percent for Federal Mortgage Bank of Nigeria (FMBN) and between 15-25 percent for commercial mortgage institutions, making it one of the highest in the world.

In advanced economies, the mortgage industry makes significant contribution to economic development with single digit interest rates. Nigeria’s roaring inflation rate and the attendant high mortgage rate dampen housing demand and blunt developers’ investment appetite.

No wonder Nigeria has one of the world’s lowest mortgages to Gross Domestic Product (GDP) rate at 0.6 percent which lags Ghana’s 2 percent, South Africa’s 30 percent and crawls after the U.S and UK rates of 60 percent and 70 percent respectively

IFMA commends Lagos move to engage facility managers on govt’s estates

The move by Lagos State government to engage facility managers to provide professional management and services on government estates has been commended by International Facility Management Association (IFMA), Nigerian chapter.

The association has therefore assured the state government of its readiness to support and complement this laudable initiative through advisory and recommendation of credible and reliable facility managers with professional capability and pedigree.

“This move, in our view, is long overdue considering the value–adding benefits the tate government and the residents of the estates will derive from its effective execution,” Segun Adebayo, Acting President of the association noted.

“It will not only promote the wellbeing of the residents but also create a sustainable model of management of the estates through professionalism and international best practice,” he added.

Adebayp explained that, apart from the above benefits, the plan would also create jobs and employment for artisans and technicians in Lagos which would further translate to the preservation and enhancement of the life cycle of the assets in the estates in particular and the estates in general.

Over the years, IFMA has been a progressive partner with the state government through quality collaboration with Lagos State Infrastructure Asset Management Agency (LAIAMA)and government technical colleges in the state.

“Our strategic partnership and collaboration with the state agency and technical colleges has led to several initiatives like Facility Management Advocacy, Mentorship Programme for the students of the technical schools and celebration of World FM Day which is an annual global celebration of the achievements of facility managers,” Adebayo disclosed.

Source: businessdayng

Banks Intensify Credit Push to Costumers as Sept. 30 Deadline Nears

Deposit Money Banks (DMBs) are aggressively pushing credit to consumers in compliance with the directives of the Central Bank of Nigeria (CBN).

The CBN had given the banks September 30 as deadline for attaining a minimum loan to deposit ratio (LDR) of 60 percent, which was targeted at increasing credit to the real sector of the economy.

The LDR is a ratio between a bank’s total loans and total deposits, which is generally expressed in percentage terms. A high loan to deposit ratio means that the bank is issuing out more of its deposits in loans and vice-versa.

Some banks have unveiled to the public their loan portfolio plans, targeting key sectors of the economy, while some others are sending SMS to their customers for access to quick cash of up to N5 million.

For instance, one of the messages from a tier-one bank reads: “Dear customer, need cash urgently? Dial ….. to get QuickCredit of up to N5 million instantly. Repay, at 1.75 percent monthly. No collateral. No hidden charges.”

Polaris, a tier-2 bank, announced yesterday that it has launched a collateral-free salary advance solution, where customers can access up to 50 percent of their net monthly salary capped at N500,000 for a 30-day tenor or next salary date by dialling *833*12#. The service is available 24/7 on all telecommunication networks.

“FSDH Research has observed that many banks and other credit providers in Nigeria have recently begun aggressively pushing credit to their customers,” said Ayodele Akinwunmi, head of research, FSDH Merchant Bank Limited.

Godwin Emefiele, governor of the CBN, had at the last Monetary Policy Committee (MPC) meeting in July explained that the core role required of the banks is to act as financial intermediaries to provide credit to the private sectors of the economy.

“We give them incentives that when they lend to the SMES, private sectors, they will be granted certain dispensations to make them happy while failure to comply will result into taking 50 percent of the un-lent portion of their loans into the Cash Reserve Ratio,” Emefiele said.

The deadline for compliance to the directive is September 30 and after that the CBN will begin a month-by-month monitoring.

Recently, Access Bank plc unveiled its loan portfolio plans targeting education, health and technology after disbursing a total of N37 billion to Small and Medium Enterprises (SMEs) in 2018.

Fidelity Bank plc has disbursed about N17.9 billion to SMEs in the country.

“We talked about the funding; we also need to look at creating an enabling environment by the government, improving ease of doing business,” said Ernest Ebi, chairman, Fidelity Bank.
Sterling Bank has committed 10 percent of its loan portfolio to agriculture and further plans to strengthen the sector through its forthcoming Agriculture Summit Africa.

The MPC had at its July meeting noted the need to boost output growth through sustained increase in consumer credit and mortgage loans and granting loans to Nigeria’s SMEs.

To mitigate credit risk, the MPC enjoined the management of the CBN to de-risk the financial markets via the development of a reliable credit scoring system, similar to what applies in advanced countries, as this will encourage banks to safely grow their credit portfolios.

Source: businessdayng

Nigeria Needs 3.3m Fresh Jobs Yearly To Maintain Record-High 23% Unemployment Rate

…manufacturing, construction, professional services strategic to job creation

For Nigeria to keep its unemployment rate stable at record-high 23 percent, assuming this was desirable, the country would need to create at least 3.3 million jobs every year. Keeping the unemployment rate stable would help the country avoid exacerbating joblessness and absorb new labour market entrants. But Nigeria struggled to create only a fifth of this number of jobs in the last four years.

What is desirable, though, is for Nigeria to drastically reduce its current rate of unemployment, which climbed to 23.1 percent in the third quarter of 2018, from 8.2 percent in 2015.
Creating 3.3 million jobs annually means Africa’s largest economy would need to revert to the private sector by attracting more foreign direct investments (FDI), the Nigerian Economic Summit Group (NESG) stated in its latest report.

“At the moment, Nigeria’s private sector does not have the capacity to absorb the rapidly increasing unemployed population in the short term,” the NESG said.

Nigeria’s jobless rate embarked on an upward spiral in 2015 after a decline to 6.4 percent a year earlier, a development which followed a 36 percent dip in FDI inflows to $1.45 billion in 2015 from $2.28 billion. In the last four years, Nigeria was able to attract an average FDI of about $1.17 billion each year.

Since 2017 when oil-dependent Nigeria emerged from its economic recession, not only has the growth been sluggish but also only a few sectors triggered the expansion, further undermining the country’s capacity to create enough jobs to meet the growing number of labour market entrants.

Out of about 4.8 million Nigerians who entered the country’s labour market between 2015 and 2018, about 635,000 jobs were created within the period, indicating only a job was available for every 8 people who joined Nigeria’s economically active workforce.

While there seems to be no end in sight for the country’s soaring jobless rate, the challenge could be resolved through private sector expansion and industrial growth, according to the research arm of NESG.

For instance, in 2018, 13 out of the 19 major sectors contributed positively to GDP growth. Out of these 13 sectors, only 6 sectors accounted for 90 percent of GDP growth during the period.

Meanwhile, comparable data from Indonesia show that the top 6 sectors contributed 72 percent to the country’s GDP growth in half-year 2018, leaving room for the remaining 11 sectors.

“The GDP data for Nigeria show that there are many sub-sectors such as metal, iron and steel, and electrical and electronics, that contribute almost nothing to GDP growth, yet these sectors have the capacity to create jobs and meet the needs of consumers both in the local and export markets,” it stated.

To achieve these, the government would need to embark on urgent reforms capable of opening up key sectors that are strategic to job creation and have significant potential for growth such as manufacturing, construction, professional services, education, health and trade. This is expected to deliver about 12 million jobs over the next five years.

“The sectors were selected based on their larger weight in share of employment, share of GDP, strong backward and forward linkages and strong growth potential,” NESG stated.

These sectors “can meet the demand of consumers both at the local and export market and have the capacity to absorb a significant number of the country’s labour force”, it said.

Source: businessdayng

How to Survive a Slow Property Market

The latest economic and property data points to a prolonged period of slow activity for the remainder of the year, says Ross Levin, managing director of Seeff in the Atlantic Seaboard, Waterfront and City Bowl area.

In a market seeing both volumes and values considerably lower than in preceding years – and a growth rate which is experiencing deflation in many areas – conditions are challenged, he says.

At the same time, the challenges are not insurmountable, he adds. He has some advice for buyers and sellers on how to survive the slow market conditions.


Often a buyer ends up buying a property in an area that they weren’t originally considering.

There is no reason why you can’t find what you are looking for, as well as a seller willing to negotiate right now.

Few sellers are achieving their full asking price, and the difference between what is actually being achieved versus expectations can vary greatly.

Have your “ducks in a row” by ensuring you are pre-approved for bond finance.

If you need to sell your property and buy subject to that sale, have your property valued and either ready to market, or already on the market, as this will strengthen your offer.


Levin says that almost two thirds of his branch’s sales over the last year were on sole mandate. In his view, in the current market, this plays an important part in protecting the value of your asset.

“In a challenging market, you are going to want your agent to be an area expert, someone who is hyper-locally focused and knows and understand the area intimately,” he says.

Price is a tough discussion, but probably one of the most important elements in the positioning and sale of your property, especially in a slow market.

You need to measure what is actually selling, rather than looking at what other properties are listing for.


In a market that continues to see increased stock levels, you need to consider what sets your property apart.

Be clear with your agent about when you need to sell by. This will determine many aspects of their marketing plan, pricing and strategy for your property.

It is likely that you will receive an offer that is subject to a bond, sale of another property, or both, along with other possible suspensive conditions. Your agent will advise you about continued marketing within the ambit of the typical “72-hour clause,” says Levin.

To expedite the transfer period, which is typically about three months, look to have your approved plans, title deeds and other documents in place to avoid any delays.

Source: fin24

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