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CBN begins process for the proposed Payments System Vision 2030

The Central Bank of Nigeria (CBN) has begun the process of developing the Payment System Vision 2030 strategy, which will define the strategic agenda for the Nigerian Payments System over the next ten years.

The new Payments System is coming just one year after the introduction of Payment System Vision (PSV) 2020.

The information is contained in an official document obtained by Nairametrics. The document was addressed to all Deposit Money Banks, Other Financial Institutions, and Payment System Providers. According to the CBN, the payments industry is currently experiencing radical change internationally and in many countries domestically.

CBN stated that since 2006, two strategy roadmaps have been published. These have created a robust and well-utilized payments environment. However, the apex bank noted that innovation and competition are now being driven by deployment and adoption of new technology solutions and the encouragement for new entrants through new regulatory regimes.

In light of this and also in an effort to consolidate the previous strategy roadmaps, CBNstated that it is time to create a new agenda for the payments system in Nigeria.

“THE TWO PREVIOUS RELEASES OF PSV2020 HAVE LARGELY ACHIEVED THEIR OBJECTIVES. NOW IS THE TIME TO CREATE A NEW AGENDA FOR THE PAYMENTS SYSTEM IN NIGERIA – PAYMENTS SYSTEM VISION 2030 – ONE THAT DEFINES A FRAMEWORK FOR THE NEXT TEN YEARS.”

Earlier Developments: In March, CBN disclosed that it has commenced a review of Payment System Vision (PSV) 2020, with a view to setting new targets under a refreshed version tagged PSV 2030. This was revealed by the Deputy Governor, Financial System Stability (FSS) of the CBN, Mrs. Aisha Ahmad, at the 2019 Electronic Payment Incentive Scheme (EPIS) Efficiency Awards held in Lagos.

“ELECTRONIC TRANSACTIONS ARE NOT YET AT DESIRED LEVELS, INCREASING DIGITISATION HEIGHTENS CYBERSECURITY THREATS WHILE POLICYMAKERS ARE FACED WITH THE TWIN BUT OFTEN CONFLICTING OBJECTIVES OF FOSTERING TECHNOLOGICAL INNOVATION WHILST MANAGING THE RISKS TO FINANCIAL STABILITY.”

Mrs. Aisha further stated that in furtherance to payment system objectives in response to industry demands, payments system has changed significantly and continues to evolve. New technologies and a growing number of financial technology companies in the markets are supporting faster payments and settlements.

Stakeholders involvement and phases: The CBN stated that given the current rapid pace of change, it is seeking the views of a wide range of industry stakeholders and experts. Essentially, the  PSV2030 framework must recognise the swiftly evolving user requirements, technical solutions, regulatory environments and external threats that typify the industry.

The creation of PSV2030 comprises of three main phases:

Phase 1 – Scope and Consult: During this current phase, the CBN seeks input from current and potential stakeholders, both nationally and from other countries

Phase 2 – Design and Plan: The information received from Phase 1 will be used to develop the Payments Framework that will recognise the approaches being adopted in other countries but will be appropriate for the local market in Nigeria.

Phase 3 – Deploy: Likely to be a sequential implementation over many years and is adaptable within the defined framework to respond to changes in technology and platforms. The framework should look to introduce a new architecture where appropriate and seek to retire legacy environments when no longer relevant.

Upshots: Meanwhile, the CBN stated that the objective is to complete a consultative draft of PSV2030 in time for an International Payments Conference in early September 2019.

Therefore, the CBN request stakeholders contributions on different dimensions of an efficient and effective payments system. Also, to respond to all or part of the questions and topics outlined in the document to provide a framework for consistent responses.

Source: By Bamidele Samuel Adesoji

DMO makes history as FGN risk-free yield curve extended to 30yrs

The Nigerian debt capital markets (“DCM”) experienced a landmark occasion in April 2019, when the Federal Government of Nigeria (“FGN”), via the Debt Management Office (“DMO”), issued its longest-tenored local currency bond – a 30-year bond – for the first time in history.

The issuance of the ₦53.16bn Fixed Rate (14.80 percent) FGN Bond is a clear indication of the commitment of the improving Nigeria’s ability to raise sustainable debt towards promoting economic growth and national development.

Investors demonstrated their ardent appetite for the issue with the results of the April 2019 FGN Bond Auction revealing that a total subscription of ₦80.41bn was received for the ₦20.00bn offered (₦53.16bn allotted) by the DMO for the 30-year bond, representing an over 400 percent subscription rate. This is a glaring indication of investors’ desire for investments at the longer end of the sovereign debt yield curve.

Whilst the decision to issue a long-tenored bond is not an anomaly, this latest issuance comes almost 40 years after the last 25-year bond (previously the longest-tenored local currency FGN Bond) was issued by the FGN in 1980, following previous issuances in 1976 and 1979.

With the success of this offering, the DMO has, in addition to managing government’s debt sustainably, reinforced its role in the development of the domestic capital market by facilitating the extension of the sovereign debt yield curve, which represents appropriate funding for housing credit and infrastructure as well as an investment opportunity for both pension fund administrators (“PFAs”) and insurance companies looking to reduce mismatches in their asset durations and liability horizons.

The DMO has listed the bond on the platform of FMDQ OTC Securities Exchange (“FMDQ”) to enhance its visibility and promote secondary market liquidity for the bond. The DMO also listed the bond on the Nigerian Stock Exchange.

The capital market community has lauded this audacious move by the DMO, which positions Nigeria to stand amongst other African markets such as South Africa and Kenya which have previously issued 30-year bonds. Nigeria remains the leading West African nation as stakeholders expect this bond issuance to serve as a case study for other countries within the region, to take the plunge by extending their yield curves.

“The introduction of the bond is a welcome development as it creates further opportunities for growth in the Nigerian financial markets,” said Bola Onadele. Koko, managing director/CEO of FMDQ.

“Furthermore, yield curve extension creates more impetus and opportunities for the introduction of risk management (hedging) products such as bond futures and interest rate derivatives to help fund managers (such as PFAs) and insurance companies that have invested in the bonds to manage the interest rate risk, which is typically higher for longer-tenored debt securities. We are aware that FMDQ, the capital market regulators and other market stakeholders are intensifying concerted efforts to launch these hedging products soon to improve the diversity and global competitiveness of the Nigerian financial markets,” Onadele. Koko said.

“The DMO should indeed be congratulated for its proactivity in reaction to the desires of the buy-side which motivated the DMO’s request to one of the Exchanges to conduct a survey to determine the local and international markets’ appetite for FGN Bonds with tenors over twenty (20) years, and also on their impressive speed to action on the feedback received from the exercise, which indicated the considerable interest by the surveyed investors in longer-tenored sovereign bonds,” he added.

Other stakeholders have indicated that the DMO has cleared the path for other issuers such as subnationals and corporates to access longer-term funding for their projects as the 30-year FGN Bond serves as a benchmark for pricing of non-sovereign debt at the longer end of the yield curve.

Onadele. Koko further added that evidence from the recent issuances of the Viathan Funding PLC ₦10.00bn 10-year bond (the first power bond in the country) and NSP-SPV Powercorp PLC ₦8.50bn 15-year bond, both of which were also listed on FMDQ, indicates that corporates are already taking initiative by accessing the DCM to channel funds towards infrastructure and other economically stimulating projects. It is expected that many non-sovereign issuers would follow suit in the short to medium term.

Considering the encouraging success of the debut 30-year FGN Bond, the DMO is encouraged to continue to blaze the trail for the markets. The introduction of more diverse bouquet of long-tenored securities such as inflation-linked, floating rate and zero-coupon bonds, will promote better management of realised and real yields among others. This will indeed support the development of the Nigerian economy by further deepening the domestic DCM, making Nigeria a more attractive investment destination.

Source: Business Day

What to consider before taking a loan

At one point in time or the other, we want to make a purchase, pay for a service or settle an obligation we don’t have the money for immediately.

For many it has been concerning a house of their dream, purchasing a new vehicle, paying children’s school fees or even starting a business.

The inability to meet financial obligations at all times is more common than people would really admit to.

Regardless of your salary size, taking a loan may become necessary in such an instance.

Loans are simply money borrowed in exchange for future repayment at an extra charge, whether they are granted by a banking institution, a credit association or your best friend. The difference, however, would usually be the formality of the loan contract.

Given the obvious backlogs in accessing loans from banking institutions especially the “leg and arm” banks demand as interest and the requirement for a collateral

People are often discouraged from taking loans to meet up with financial challenges as they come up.

However, the inability to access credit has created a new market for many financial technology platforms that now provide loans to individuals and small businesses at affordable rates relative to banks and without the usual cumbersome paper works usually associated with approaching banks for loans.

Peer-to-Peer (P2P) lending and a lot of online borrowing platforms actually help individuals smooth out their consumption by providing the opportunity to put future income to use at a cheap rate than is obtainable at traditional platforms.

While this is a welcome development, many individuals can easily get carried away by the ease and lower cost of borrowing.

On most of these platforms, it takes less than five minutes to process a loan and one can get up to N500,000 on the spot without providing too many documents. In short, it has become money at one’s Beck and Call.

Despite the efficiency brought about by leveraging technology to disburse loans, problems of moral hazard and adverse selection remain.

On the part of the borrower it is aptly put: Not knowing how and what to borrow for because loans are easily accessible.’

If you are about taking out a loan, these considerations are critical so you can avoid the debt trap:

What am I borrowing for?

As humans, we can be very impulsive; you come across a salesman that shows you the best car ever manufactured or your favourite retail store urges you to make a purchase for an item running out of stock.

Even when we are not driven by sentiments we tend to borrow for the wrong reasons or at times take more than we actually need which means paying interest on money that is not productive.

To ensure you borrow for the right reasons, you have to ask yourself if what you are borrowing for is an asset or a liability.

An asset doesn’t necessarily mean buying a property, stock or any investment instrument. An asset is simply anything that adds long-term value to you or your loved ones. It could be your child’s school fees.

Again, your asset help reduces your liabilities. For example, investing in your health.

In any case, you may want to be sure you have commensurate value at least for whatever you borrow for.

Remember the cost of paying for that item is the borrowed capital and the interest rate to be paid. Not just the market price.

So to rephrase, the first question is: what am I getting back in return.

Can I repay the loan, what would it cost me?

The income stream is very important although most creditors would do due diligence to ensure you are able to pay.

What matters is how long and at what cost you would service the loan.

It is very possible to repay a loan and has little left for one’s sustenance.

Oftentimes this leads to a spiralling where the debtor takes on more loan from other sources and is quickly entrapped in debt.

To avoid this, do an honest assessment. If a loan would take more than half your salary to service every month, then it has to be justified by greater returns for the burden from whatever it is used for.

What is the Interest rate offered?

Most online lending platforms offer loans at an attractive rate but nothing beats getting credit at the best rate available.

Before taking out the loan, compare rates so you do not short-change yourself.

Consider that rates being offered critically to see if you would be able to afford the loan. Do not take a loan because the lender offers the best rate in town.

You have to be sure the rate is truly affordable for you.

What is the Collateral?

Although many online platforms have a good Know-Your-Customer (KYC) culture and do not need collateral to disburse loans, it is very good to do one’s research and ensure you consider the collateral requirement in the case where it is required.

Collaterals are like an insurance policy for lenders to exchange for any loss they incur in the events of loan default.

You would want to make sure the collateral is not something way more valuable to you than the loan.

What is the term of the loan?

Loans often time come with clauses that spell out new conditions in the case of a default. The term would often specify the rights and responsibilities of both parties when the borrower misses the repayment schedule. Some terms may spell out a higher rate of interest upon default which would put more burden on the debtor. It is very good practice to know the terms of borrowing.

Alternative means of financing

Considering alternative means of financing is a good strategy to ensure you get to achieve your goal at the least possible cost. You may want to consider for example if your small business needs more debt or equity (sharing ownership with someone who has capital you need) or if asking that friend who wouldn’t ask for much interest for a loan instead.

Source: By Segun Adams

Fidelity Bank signs $50m financing agreement with AFDB

FIDELITY Bank and the African Development Bank, AFDB, have signed a $50 million line credit to support small and medium enterprises (SMEs), with 30 percent of the fund to be reserved for female entrepreneurs. Fidelity Bank Managing Director/ Chief Executive Officer, Fidelity Bank, Nnamdi Okonkwo, disclosed this on the sidelines of the Balogun Business Association rally held in Lagos.

Okonkwo said: “My team and I are actually here to get first hand information of what our customers’ need and to do a self-check. Have we satisfied them service wise? Are there areas we can support them?

As you are aware, just yesterday, we signed $50 million service support fund agreement with the AfDB, 30 percent of this will be going to female entrepreneurs. We have a huge number of such entrepreneurs in this market. So it is more than just a coincidence that we are here today to connect with our customers and know how we can serve them better.

” Fidelity Bank rewards customers with N68m On the criteria for accessing the fund, he said: “Fidelity Bank is a strong supporter of SMEs. Most of them are accessing funds at nine percent under the various intervention scheme and for those who do not qualify for the single digit loans they borrow at the commercial rate but as much as possible, we try to make sure we provide a single digit loan for these customers using the various windows available.

“As you know, the world is about sustainability and inclusion. As you know as well women are mostly, in the entire world, by culture, excluded in a way that they have been fighting to actually achieve a balance and Fidelity Bank is very mindful of this. If you look at our executive board, we have the highest number of females than any other bank in this country in terms of Executive Directors.

That is one way that Fidelity Bank is saying that we are a gender-sensitive organization. Now for that reason as well, when you get a facility like the $50 million and thirty per cent is set aside just for women entrepreneurs, it is another step by Fidelity Bank to continue to ensure gender balance.

That is basically why we are doing that.” Speaking on the connection between the bank and BBA, Okonkwo said: “We simply came here to connect with our customers. This is Balogun Business Association Plaza, Lagos Trade fair complex.

Fidelity as you know, we do not only serve the corporate end of the market, we also serve the middle and the lower class of the market. We are very strong in SMEs and most of these people here are SMEs. They are the engine hub of trade and commerce in this country and in line with our customer forum calendar we do this occasionally, we come out here.”

Source: By  Elizabeth Adegbesan

CBN Moves To Halt $4bn Capital Flight In Textile Sector

The Central Bank of Nigeria (CBN) yesterday took bold steps to reverse the $4billion Nigeria spends annually on imported textiles and ready-made clothing by kicking off the distribution of cotton seeds and other inputs to farmers in Katsina State.

CBN governor, Mr. Godwin Emefiele, who flagged-off the distribution of cotton seeds and other inputs to 100,000 farmers in Katsina State for the 2019 farming season under the CBN-Anchor Borrower Programme, said that the gesture was aimed at reviving the country’s moribund cotton, textile and garment sector. He noted that the past 20 years had been very difficult for the cotton, textile and garment sector resulting in 130 firms in the industry being shut down.

To sanitise the system, the apex bank threatened to blacklist individuals, banks and companies involved in illegal textile importation so that the local players can survive and remain in business.

Emefiele said: “Farmers and processors have had to deal with low-quality seeds, rising operating cost and weak sales due to high energy cost of running factories, smuggling of textile goods and poor access to finance. Smuggling of textile goods alone is also estimated to have cost the nation over $2.2billion.’’

According to him, Nigeria was home to African largest textile industry with over 180 textiles mills in operation, which employed close to 250,000 people but “only 25 textile factories are operating today, and the workforce stands at less than 20, 000 people.”

He explained that the CBN resolved to initiate support measures that would drive productivity in the critical sectors of the economy following the over 60 per cent drop in crude oil prices from 2015 to 2017 and its attendant effects on economic growth, inflation and the nation’s external reserves.

The distribution of the cotton seeds to farmers is targeted at improving the commodity’s production from 80,000 tonnes in 2018 to over 300,000 tonnes by 2020 and reviving Nigeria’s cotton, textiles and garments sector.

Emefiele who reiterated that the foreign exchange restriction on finished textiles and other 42 items remained in force noted that the smuggling of textile goods alone was also estimated to cost Nigeria over $2.2 billion annually.

The CBN governor said that the measures taken by the apex bank were yielding results and had helped in driving interest by potential investors who are seeking to make investments to support improved production of textiles in Nigeria.

To curb smuggling, Emefiele said that the CBN was gathering data about and investigating the accounts of individuals and corporate entities involved in smuggling and dumping textile materials in Nigeria with a view to blacklisting them, adding that all banks in Nigeria would be barred from conducting any banking business with such companies, their owners and top management.

He further said that the CBN had identified insufficient cotton seeds as one of the major challenges facing Nigerian farmers, hence the apex bank sought to change the narrative on the cotton and textile industry through the distribution of high yielding cotton seeds to the beneficiaries.

The provision of the seedlings to more than 100,000 farmers cultivating over 200,000 hectares of farmland, along with extensive training on proper farming techniques, Emefiele said would boost the production of high grade cotton lint at much-improved yields of up to four tonnes per hectare, from the current cultivation rate of less than one tonne per hectare. He added that the move would also reduce the amount spent by Nigeria on imported textiles and ready-made clothing estimated at about $4billion annually. Nigeria in the 1970s and early 1980s was home to Africa’s largest textile industry, with over 180 textile mills which employed over 450,000 people, representing about 25 per cent of the workforce in the manufacturing sector.

Emefiele recalled that the industry was supported by the production of cotton by 600,000 local farmers across 30 of the 36 states of the federation, thousands of ginnery workers who processed the cotton from farmers, and a large number of distributors who sold the finished cloths to consumers.

He, however, expressed regrets that the farmers and processors had to deal with low-quality seeds, rising operating cost and weak sales due to high energy cost of running the factories, poor access to finance and smuggling of textile goods, which he estimated cost Nigeria over $2.2 billion annually.

He lamented that only 25 textile factories were currently operating in Nigeria with a workforce of less than 20,000 people, stressing that a large proportion of clothing materials were being imported from China and European countries Emefiele disclosed that no fewer than 130 textile companies had closed shop in the country in recent times due to various constraints.

He told Governor Masari that ‘‘textile industries used to be the largest employers of labour in Nigeria after the public service but due to certain constraints, such as smuggling, dumping, lack of access to finance and issue bordering on power, over 130 textile companies have so far perished. Today, we are complaining about insecurity and kidnapping, the reasons for these are joblessness and hopelessness; so, we need to do something about it.

We must revitalise the textile industry to be the largest employer of labour, we feel that we will set the stage rolling, we must come to Katsina State which is the largest producer of cotton to begin a process.’’ He said that the CBN has held a lot of meetings with the farmers and other people on the value chain on how to achieve the desired success and urged Nigerians to stop smuggling and dumping of cotton and textile materials in order to revive the industry. In his remarks, Masari said that agriculture was the next sector that the state government accorded priority after education.

He said that reviving the textile industry was the biggest and quickest way of solving unemployment in the country and commended the CBN for its efforts in that direction. Masari, however, urged the apex bank to review the procedures for accessing loan facilities by the farmers.

Masari insisted that agricultural revival was akin to breathing life into the people of Katsina State, adding that if the sector was provided with the necessary support, it could employ over 80 per cent of Nigerians.

“The best and quickest way to fight poverty is through agriculture because investment in agriculture will start yielding dividends only after six months and in every planting season and with so many dams around the country, we can produce 12 months in a year,” Masari said. Welcoming the stakeholders, the deputy governor, who doubles as the commissioner for Agriculture, Alhaji Mannir Yakubu, said that about N19 billion had been spent on agriculture by the Masari-led administration in the past three and a half years.

He said: “The funds released for the implementation of the agricultural activities are aimed at boosting agricultural production and the provision of employment to our teeming population particularly the youths. It is in the light of this that the state government has provided facilities, incentives and enabling environment to ensure small-scale farmers in the state are engaged massively all the year round,” he added.

The minister of Agriculture and Rural Development, Chief Audu Ogbeh, said that the reforms initiated by the Emefiele-led CBN had helped Nigeria to escape the economic crisis far worse than the situation in Venezuela today. Ogbeh, who led the apex bank’s chief executive on the courtesy call on Governor Masari, commended the courage of Emefiele in initiating the Anchor Borrowers Programme at one digit interest rate.

He said: “It’s one of the greatest things that has ever happened in this country in the last 40 years and I am in a position to say so because I have been around in the system.

I want to commend you, the CBN governor, for being so tenacious in following this up.” Ogbeh continued: “If this CBN administration had not decided to invest in this method of bypassing the obstacle and mountains standing in the way of agricultural development, by now this country would have been in far worse than the situation in Venezuela because accessing the credit had always been the problem.”

The minister stressed that the revival of the cotton industry remained imperative to stem the collapse of the industry and its implications for the economy in terms of job loss and taxes.

Source: By ANDY ASEMOTA & BUKOLA IDOWU

N2.15bn currency in circulation in March – CBN

The Central Bank of Nigeria yesterday put the total value currency in circulation as of March this year at N2.15 billon. Mrs Eli Kwaghe of the Currency Operation Department of the CBN disclosed at a two-day CBN fair in Makurdi in Benue State.

She said: “8.88 billion pieces valued at N2.15 billion currency in circulation as at March 2019 ending.

” Earlier the branch controller of the CBN in Makurdi, Abba Bulus Ibrahim, said the bank’s mandate could only be achieved when everybody partnered with it in line.

The coordinator of the fair, Sam Okogbue, said the CBN had further interventions to make the country’s economy grow so that people would come out of poverty by improving their living standard in all ramifications.

Source: By Hope Abah Emmanuel

Personal finance management: How to prepare retirement budget

Planning your finances by using a retirement budget can lead to more fun in your golden years. By having a plan, you’ll have less stress, and making a retirement budget helps you avoid one of the biggest retirement mistakes people make of spending too much of their nest egg too soon.

With just few steps, you can develop a budget that helps you plan for the financial changes and events you’ll experience as you enjoy your retirement.

Importance

Of the many factors that affect your retirement income (inflation, rate of return on savings and investments, your retirement date, taxes, spending, part-time earnings, social security, pensions, and more) you have the most control over one critical factor: Your spending. In retirement, over-spending can become financially dangerous.

Creating your best budget

Start by gathering the following items:

Your last 6 to 12 months’ worth of bank account statements. Your last 6 to 12 months’ worth of credit card statements. If still employed, last two pay stubs for you (and your spouse if married) 10 to 12 colored highlighter marking pens.

Last year’s tax return

Review the transactions on your bank account and credit card statements to track where you have spent your money over time, and use the highlighter pens to group expenses into different-coloured categories by following the steps below.

Step 1: Your fixed expenses

Start your budget by listing all your recurring monthly, quarterly or annual payments. To make an effective retirement budget, break this list down into three parts:

Essentials: This includes food, clothing, housing, transportation, and healthcare.

Non-essential monthly obligations: Although we all may think of cable TV and streaming services as an essential, they aren’t. Non-essentials include things like cable, gym memberships, subscriptions, and other items for which you receive bills.

Required non-monthly expenses: Items like property taxes, insurance premiums, auto registration and home warranties may come up once a year. Add up these periodic expenses and divide by 12 to calculate their cost on a monthly basis to include in your retirement budget. To account for the timing of expenses, use lined paper or a computer spreadsheet program to make a budget chart spreadsheet for the calendar year. List the months of January to December across the top in separate columns. Down the vertical side of the spreadsheet, list each expense on a separate line.

If your utility bill runs an average of $200 a month (about N72,000), put $200 (N72,000) in each monthly column. For Christmas gifts, if you spend about $500 (about N180,000) a year, divide the $500 in two and put half each in November and December. Do this for each expense item, then total up each month.

Step 2: Changing healthcare costs

If your employer has been paying your health insurance premiums, once retired you may have to pick up the tab. If you retire prior to reaching age 65, health premiums will be expensive. Between the ages of 60 and 65, before you become eligible for Medicare, health insurance premiums could run $1,000 (about N360,000) a month per person. Shop for plans now so you can add an estimate of that monthly expense into your budget. Don’t forget about dental, eye care, and hearing. Add those expenses to your budget too. Add in estimates for health care costs in retirement in order to develop a realistic expectation of how much you’ll need to live on each year. Getting this item wrong is one of the seven deadly retirement budget killers that can wreak havoc on your retirement plan.

Step 3: Optional items

This includes all the fun stuff, like travel, grandkid outings, sports, and other entertainment.

Step 4: Plan how you’ll spend your time

Consider how your hobbies and lifestyle may change, as this could affect the way you spend. If married, ask your spouse to do this also.

If you have expensive hobbies, you’ll need to budget more for those. Begin to think about changes you may be willing to make that would reallocate money from items that are less important to items that are more important. For example, if you want to travel more, would you be willing to downsize and live in a smaller house?

Source: By Sunnewsonline

Nigeria SWF profits surge 106 percent to N46bn in 2018

The  investment institution of the Federation set up to manage Nigeria’s sovereign wealth fund, has reported a 106 percent increase in its profit for 2018 full year.

The growth in profit from N22.56 billion in 2017 to N46.5 billion in 2018 was largely driven by significant improvements in its other income and net forex gains.

For 2018, total income of the fund manager ballooned 89 percent to N57.74 billion as against N30.62 billion recorded in 2017 on the back of the investment institution’s ability to improve earnings from core and non-core activities.

Interest income grew by 9 percent to N23.82 billion, compared to N21.77 billion in the corresponding period of 2017 while investment income rose 23 percent to N3.21 billion from N2.6 billion in the previous period.

A turnaround to post N797 million from income on financial assets at fair value through profit or loss (FVTPL) was a catalyst for improved performance of the fund in 2018 as in the preceding year there was no income from that source.

Net gains on financial assets, however, declined by 94 percent to N246 million but the weakened earnings was compensated for by a 993 percent rise in net forex gains, from N1.65 billion in 2017 to N18.05 billion in 2018, and a spike in other income from N7.96 million in 2017 to N11.45 billion in 2018, more than 100,000 percent increase year-on-year.

On the other hand, NSIA noted a 44 percent increase in its Investment management and custodian fees from N709 million in 2017 to N1 billion in 2018. In 2018, impairment charges on financial assets rose to N944 million compared to no impairment charges in the preceding year.
Operating and administrative expenses eased by 20 percent, from N4.72 billion in 2017 to N3.76 billion in 2018 while interest expense rose to N2.62 billion as against N85 million recorded in the earlier year. Loss from infrastructure subsidiaries investment also saw an increment as it hit N3 billion in 2018 from N2 billion in 2017.

Despite the increase in expenses, NSIA was able to sustain its performance and announced a 101 percent surge in its profit before tax which grew N22.96 billion to N46.19 billion year on year.

Tax expense reduced by 45 percent to N219.46 million and profit for the year hit N46.5 billion, 106 percent more than NSIA noted for 2017.

A look at the Investment Authority’s balance sheet shows total asset grew by 15.7 percent to N617.7 billion in 2018, compared to N533.82 billion in 2017.

NSIA improved equity by 8.45 percent to N543 billion while retained earnings rose by 50 percent to N257 billion, although Total liabilities jumped significantly to N74 billion in the period.


Current share ownership structure is Federal Government 45.83 percent, States Government 36.25 percent, Local Government 17.76 percent and Federal Capital Territory 0.16 percent.
The Nigeria Sovereign Investment Authority is an agency of the Federation tasked with the management of funds in excess of budgeted hydrocarbon revenue.

NSIA derives its mandate from the NSIA Act which was signed into law in May 2011 and empowers the Authority to receive, manage and invest funds in a diversified portfolio of medium and long term assets on behalf of the three tiers of Government including the Federal Capital Territory, and Local Governments Area Councils.

The essence is to provide a buffer for the eventual depletion of Nigeria’s hydrocarbon resources.
The NSIA established three main funds: the Stabilisation Fund, the Future Generations Fund and the Nigeria Infrastructure Fund to achieve it’s mandate. The Authority commenced operations in 2012.

Source: By ONYINYE NWACHUKWU & SEGUN ADAMS

CBN introduces special intervention fund for MFBs

THE Central Bank of Nigeria (CBN) has introduced a special intervention fund for microfinance banks (MFBs) in the country, even as it assured that it will soon issue a new MFB policy.

Meanwhile the apex bank said it aims to increase the share of micro credit as percentage of total credit to at least 20 percent by 2020 from the current ratio of five percent. CBN Governor, Mr. Godwin Emefiele, disclosed this in a keynote address delivered at the just concluded seminar organised by the apex bank for finance correspondents and business editors held in Gombe State.

The Central Bank of Nigeria head office in Abuja. Emefiele said that while the apex bank recognises the challenges of the MFBs, it is also aware of their contributions to extending credit to the economically active poor.

He said: “Data from the licensed credit bureaus indicate that the operations of microfinance banks have helped to improve financial inclusion amongst smallholder peasant farmers, artisans and other small business operators. As at December 2018, aggregate loans granted by MFBs was N482.896 billion. Of this amount loan sizes below N 1.4 million accounted for 72 percent.

We equally observed that small businesses have been more successful in securing credit from the microfinance institutions rather than conventional deposit money banks (DMBs). “There are challenges, nevertheless. They include; inadequate spread in the location of the MFBs in relation to their target beneficiaries, demand for immoveable collaterals for loans, high interest rate, and absence of a credit reporting system.

We are committed and working assiduously to address these limitations.” Reiterating the apex bank commitment to increasing access to financial services for the economically active poor, Emefiele said: “The target is to increase the share of micro credit as percentage of total credit to at least 20 percent by 2020. “The bank remains committed to the economic empowerment of disadvantaged groups including women and actively seeks to achieve this through the instrumentality of microfinance amongst other initiatives.” Collateral registry to bridge N48trn MSMEs funding shortfall —Emefiele Speaking earlier in a presentation on entitled,

“Appraisal of the new microfinance policy framework,” Director, Other Financial Institutions Supervision Department, CBN, Mrs. Tokunbo Martins disclosed that the apex bank has introduced a special intervention fund for MFBs adding that the CBN is currently reviewing the microfinance bank policy with the aim of releasing the third edition of the policy which was first introduced in 2005. Lamenting the poor performance of MFBs in deposit mobilisation, Martins said:

“The CBN   has approved a special intervention framework for qualified micro finance banks and our hope is that it will incentivise other microfinance banks to get their house in order so they can also qualify to access these funds.

The CBN is working tirelessly so that the banks that are doing well can grow and multiply.” Speaking further, Martins said that, “The SMEs are making great contributions to the   gross domestic product (GDP)  but they don’t have access to credit such that would boost their operations in the massive way needed by the economy. “We have had two earlier Microfinance Policy Frameworks: in 2005, 2011 and the current one.”

Source; By By Babajide Komolafe and Emma Ujah

AfDB to Approve $70m Loan for Road Project in Ebonyi 

The African Development Bank, AfDB, says it has approved a 70 million dollar loan for a road project in Ebonyi. AfDB The bank said on its website on Friday that it would provide $40 million, while its co-financier, the Africa Growing Together Fund (AGTF), would contribute $30 million for the project.

It also said that the bank group’s funding would cover the rehabilitation and asphalting of a 51 km stretch between Nwezenvi and N’Doko, and part of the corridor between N’Doko and Ezzamgbo spanning 38.91 km. The bank noted that the project was expected to be completed in five years.

AfDB said the project would aid the agricultural state of Ebonyi’s aspiration to develop special agro-industrial zones dedicated to the processing of subsistence crops. “It will improve road safety and accessibility of farming communities and small-scale industrial areas.

Some 1,400 jobs will be created during the construction phase. Also read: FG to maintain current forex policy — Lai Mohammed “Once completed, the road network is expected to serve also as an international link between the State of Ebonyi and Nigeria’s eastern neighbour, Cameroun, in addition to connecting Ebonyi to Benue and Enugu,” it said.

The bank added that the project was in line with its development agenda. It said that the project attested to its commitment to improving the quality of life of Africans by improving accessibility and road safety in its member countries. “The bank began financing transport projects in Nigeria in 1972 and has since provided the equivalent of $630 million in financing the sector, including a $69.9 million facility through the private sector,” it said.

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