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Focus shifts to interest rate as banks intensify loan buying

Deposit money banks (DMBs) in Nigeria have intensified competition to acquire retail and corporate customers following a strategic focus around loan refinancing.

The banks are making reasonable efforts at acquiring the loan liabilities of target prospects from other banks, with an offer for discounted interest rates.

Expectedly, banks making the bold move are majorly those that are reasonably liquid to take such risks for an enhanced customer base. They cut across the tier-1 and tier-2 lenders.

BusinessDay learnt these banks meet both large and small corporates as well as individuals with various categories of existing loans, preferably the soft loans offered to salary earners. Very simply, their targets are the salary accounts of the prospects.

A director in one of the tier-1 banks told BusinessDay on the phone that the strategy is an opportunity for collection and credibility.

The director explained that banks target certain names with credibility and also look at the entire value chain of distributors and staff of a company.
The Central Bank of Nigeria’s latest publication of the applicable rates for each of the DMBs as at June 22, 2018 shows that banks charge between 4.20 percent and 20.5 percent for prime lending and between 20.4 percent and 41.5 percent for max lending.

Total value of credit allocated to the private sector of the economy by the banks stood at N15.13 trillion as at the fourth quarter (Q4) 2018, a decline of N455 billion from N15.58 trillion at the end of the third quarter (Q3) 2018, according to the National Bureau of Statistics (NBS).

The banks that are liquid target customers of cash-strapped banks with incentives in form of lower interest rates and afterwards, restructure the loans.

“This is a form of loan refinancing. It makes a business sense where customers have loans with high interest rates which they contracted in periods of high interest rates,” said Taiwo Oyedele, head, tax and regulatory services, PwC.

The CBN has kept its monetary policy rate (MPR) at 14 percent since July 2016, when it lifted the rate by 200 bps.

The regulator has also kept unchanged the liquidity ratio at 30 percent, cash reserve ratio at 22.5 percent and +200/-500 basis point asymmetric corridor around the MPR.

“Now that rates are trending downward, a bank can refinance such loans at a lower rate and still make money in the process. Overall, it is a reflection of the intense competition in the sector which is good for customers and the economy in general,” Oyedele said.

The aggressive loan push by banks has further intensified following the continued drop in Nigerian Treasury Bills yield.

Ayodele Akinwunmi, head of research, FSDH Merchant Bank Limited, said banks offering lower rates to customers is a market strategy.

On the implication of the development on the banking industry, Akinwunmi said if the rates continue to drop, interest income of the banking sector will drop. Income of banks consists of about 70 percent of their loan.

In the week ended March 1, increased foreign investor appetite in emerging markets, sustained low frequency of Open Market Operations (OMO) auctions and buoyant liquidity compressed yields by 122bps W-o-W across tenors in the Treasury Bills (“T-Bills”) secondary market to 13.0 percent, from 14.2 percent the previous week, Afrinvest Securities Limited said in a report.

Source: BusinessDayNg

Singapore’s investors pumped $29.4 bil into offshore real estate in 2018

Singapore-based investors were Asia’s most active group of offshore real estate investors in 2018, contributing US$21.6 billion ($29.4 billion) of the region’s total outbound investment, according to a report by CBRE on March 7.
“Driven by limited opportunities and compressed yields in the domestic market, Singapore investors will continue to seek enhanced yields offshore to diversify their portfolios and achieve more sustainable growth,” says Yvonne Siew, executive director of global capital markets for Asia-Pacific, CBRE.
Singapore-based capital contributed to 40% of Asia’s total outbound investment in 2018, which fell by 36% y-o-y to US$53.8 billion. The decline stemmed from Chinese investors who deployed US$7.5 billion in capital to offshore real estate investments, compared to US$35.4 billion in 2017.
Chinese investors are rebalancing their real estate portfolios and transitioning into net sellers of real estate to strengthen balance sheets and recycle capital for deployment into future outbound investments, says CBRE.
Investors from Malaysia and India also injected more capital overseas, increasingly their total capital investments in 2018 by 132% y-o-y and 291% y-o-y respectively, while Korean investors allocated capital worth US$7.3 billion, compared to US$6.3 billion in 2017.
“The Asian outbound investment story in 2018 was, on the one hand, characterised by a clear moderation from China, but on the other hand, represented cyclical portfolio rebalancing and strategically preparation for future activity,” says Leo Chung, associate director of research at Asia Pacific, CBRE. “The pull-back from China’s investors was not entirely unexpected but encouragingly created opportunities for new strategic investors to amplify offshore investment activities.”
London remained the top destination for Asian capital, and investors from Hong Kong, Singapore, and Korea accounted for over 85% of investment activities in the metropolis last year. About 18% of total Asian outbound capital was deployed to London in 2018, compared to 13% in 2017. At the same time, 9% went to Hong Kong, 9% to Shanghai, and 4% went to Frankfurt real estate investments.
Source: Timothy Tay (Edgeprop.sg)

Google to empower 50,000 women in Nigeria, others

At an International Women’s Day empowerment event themed ‘Balance for better’ in Lagos on Friday, Google announced the launch of 18 new Womenwill chapters across sub-Saharan Africa to drive conversations that promote gender equality for the benefit of everyone.

Google Africa’s Brand and Reputation lead, Mojolaoluwa Akinremi-Makinde, described Womenwill as a Google initiative aimed to create economic opportunity for women everywhere so that they could grow and succeed.

According to her, the programme will help women to make the most of technology to build skills, get inspired, and connect with each other through training, events and advocacy.

“The gender gap can be solved if women have the same access to resources and skill acquisition sources as men. This is why we’re expanding the Womenwill chapters in SSA and continuing our focus on diversity and gender equality into 2019 and beyond,” Akinremi-Makinde said.

She stated that the new chapters were located across sub-Saharan Africa in cities including Accra, Cape Town, Dar es Salaam, Johannesburg, Lekki and Onitsha, bringing the total number of chapters in Africa to 25, with more to launch in the coming weeks.

According to her, the chapters are being launched simultaneously at events in Johannesburg, South Africa; Nairobi, Kenya; and Lagos, Nigeria following a week in which digital skills masterclasses held at various locations in these countries, involving some 5,000 women.

The Country Director, Google Nigeria, Juliet Ehimuan-Chaizor, said research had shown that a lot of women were employed in lower paid jobs in the informal sector, adding that a 2018 gender gap report indicated that it would take up to 165 years to close the gender gap.

According to her, the statistics are unacceptable because of the impact the gender inequality can have on society.

Ehimuan-Chaizor added that the Womenwill programme would empower African women with the right skills for them to grow appropriately.

“Since 2016, we have worked to upskill young people and Small and Medium Enterprises living  and opearting in Africa via our Digital Skills for Africa programme to help them find jobs and grow their businesses,” Akinremi-Makinde said. “Our digital skills training has been offered in 29 countries across Africa with over a million people recording business growth, starting new businesses, finding jobs or growing in their current jobs. We have trained more than three million people in  total of which 48 per cent are women.

“This year, we are playing our part in the contribution to women empowerment and we will be expanding the reach of our Grow with Google programmes in SSA to focus on women empowerment as a key pillar. We aim to empower women with the right skills, coaching, mentorship and community support to access opportunities,” she commented.

Source: Punch

Real estate investing: How much do you need to get started?

Real estate investing interests large numbers of people, especially when home prices are rising. And that’s been the case in recent years. According to the latest figures from the Federal Reserve, “The median net worth of homeowners increased 15 percent between 2013 and 2016, whereas that of renters or other non-homeowners fell 5 percent.”

Logically, if homeowners are doing so well, then doesn’t it make sense to own more than one house? If you want to be an investor, you’ll need real cash. But how much do you need? In some cases, as we shall see, the answer is very little.

Cash needs for real estate investing

The cash needed to purchase investment property will vary according to many factors. The three big items to watch are the cash needed for a down payment, the cash needed to close, and the cash immediately required for moving and repairs. Additionally, buyers should always have reserves in case something unexpected takes place.

Owner-occupants typically finance a home with one of four options: FHA mortgages, VA financing, conforming loans that can be bought by Fannie Mae and Freddie Mac, and USDA mortgages.

For investors, most of those programs are off-limits. Neither FHA nor VA programs allow pure investor mortgages. The property must be owner-occupied to be eligible. On the other hand, with just 3.5 percent down (FHA) or even zero down (VA), you can finance a property with as many as four units if you live in one unit as your prime residence.

Fannie Mae and Freddie Mac do allow investor loans, but buyers must be highly-qualified and bring a larger down payment.

There are situations where real estate investing can be done with less cash. Some options to consider include:

Seller contributions

Many loan programs allow owners to provide a seller contribution, from 2 to 6 percent of the sale price. Typically, such contributions can be used to offset closing costs and mortgage borrowing. However, there is a minimum down payment that must come from the buyer.


While seller contributions typically cannot be used to pay some or all of the down payment, that is generally not the case with gifts. Gifts – especially from friends and family – can offset down payment requirements.

To make sure a gift is really a gift and not a disguised loan, lenders require a “gift letter” from the donor stating that the money is a gift and that no repayment or interest is required. They also often want bank statements from the gift-giver to prove that he or she has the money to give you, and a paper trail showing that the money exited the giver’s account and entered yours.

Co-buyers and co-borrowers

If cash is a problem, perhaps the answer is to find a financially-strong co-buyer. With an equity-sharing agreement, you have an occupant-owner and a non-resident investor owner.

Both partners pay their share of mortgage costs, taxes, repairs, etc. However, the owner-occupant pays rent. For tax purposes, the rent is income to both parties, and the mortgage interest, property taxes, depreciation and other costs count as deductions from that income.

The property may generate positive cash flow to both parties, create paper losses to be deducted from other income — or even both.

When the property is sold, the owners divide the profit or loss. A written equity sharing agreement is a must – speak with a real estate attorney for details.

Private Lenders

Those with an interest in flipping often need to act quickly, or they’ll lose a property. Private lenders, historically known as hard money lenders, can often fund transactions in 10 days or so but such loans require a lot of cash. According to the Housing News Report, “Private lenders often have terms which include 70 percent loan-to-value (LTV) ratios, 3 to 4 points, interest from 8 to 13 percent, and a length of one to two years.”

Financing from private lenders tends to be short-term because the assumption is that flippers will quickly re-sell properties. However, stalled repairs, surprise problems, unexpected costs, and changes in market demand can delay sales and make flipping very risky. An alternative funding approach is to team with other investors, pool money, and buy property for cash.

Assume financing

Today’s FHA and VA home loan programs allow qualified borrowers to assume existing mortgages for investment property purchases. For VA home loans, you don’t need to be eligible for VA financing yourself. you don’t have to be in the military or a veteran.

The upside is that you can save money on mortgage origination costs, and may get a better interest rate than is currently available. (This depends on when the existing mortgage was taken, and how much the home seller is paying.)

However, you’re likely to need a sizable down payment. The reason is that the loan balance has been paid down by the current owner, while the home value is likely to have increased.

If your seller has a 3.75 percent interest rate, that’s much better than you can get right now. That rate was available in 2016. So let’s assume that the current seller paid $200,000 for a home put 5 percent down. Three years later, the loan balance would be about $188,000. meanwhile, if the property value increased at 5 percent per year, it’s worth $231,525. You’d need $43,525 to make up the difference.

Secondary financing

Rather than one loan, why not purchase with two? This is not only a way to reduce cash needed, but it can also eliminate mortgage insurance costs.

For example, you want to buy a $300,000 property. You could buy with $60,000 down (20 percent) and a $240,000 mortgage (80 percent). Alternatively, you could buy with a $240,000 mortgage and a second loan for $45,000. Now you have $285,000 in financing and need just 5 percent down in cash – a total of $15,000 plus closing costs.

Source: Themortgagereports


Seven ways to get your child a first home

It has never been harder to get a foot on the housing ladder. House prices are now nearly eight times the average wage, and they have been rising faster than most can save.

Almost one in four first-time buyers are now turning to the ‘Bank of Mum and Dad’, figures from insurer Aldermore Bank show.

And 30-year-olds whose parents have no property wealth are 60 percent less likely to be homeowners, according to the Resolution Foundation.

But if you can’t hand over a hefty deposit to your loved ones, you could still lend a hand.

Last week we explained how you can aid them in preparing their finances to get mortgage-fit in two years. Here, we explore other ways to help them get the keys to their first home…


Family or friends can give all — or a chunk — of a deposit to the buyer as a simple, tax-free, non-returnable gift.

Simply handing over a deposit is the most common way parents help their children onto the ladder, and this is where the term ‘Bank of Mum and Dad’ originates.

Legal & General figures show the Bank of Mum and Dad gave close to £5.7 billion in 2018.

Alongside savings accounts for first-time buyers such as Help to Buy and Lifetime Isas, a gifted deposit can top up any shortfall.

But this may be an option only for wealthy parents who have money they won’t need in retirement if they intend to give all their loved ones an equal deposit.

Vicky Bradley, a product manager at Skipton Building Society, had saved £9,000 for a deposit when she fell in love with a £125,000 two-bed terraced house in Keighley, West Yorkshire.

Her parents, Bob and Linda Bradley, offered to help cover the 10 percent deposit and fees.

‘They agreed to an informal loan of £3,000, but then told me it was really a gift,’ says Vicky. ‘It was such a lovely surprise and allowed me to arrange a mortgage straight away.’

Gifted money could be subject to inheritance tax. For gifts above your annual allowance of £3,000, you must live longer than seven years from the date you gave the money away to avoid the risk of an inheritance tax liability on your donation.

A gifted deposit can also prompt questions over who gets the money back if a couple of splits and their house is sold.

A solicitor can draw up a legal document such as a Declaration of Trust to note which buyer the gift was given , and the share of the property to which they are entitled.


If you cannot afford to give a deposit away, then you can lend it — on your own terms.

A loan lets you keep some control by specifying when you need the cash back. It may be exempt from inheritance tax but the rules are complex, so check with a tax expert first.

A solicitor is needed to draw up the terms and, just like with a mortgage, the parents would register a charge on the property deeds to ensure the loan is paid back.

The charge on the deeds would specify that on the sale of the property, or when it is remortgaged, the money lent is repaid.

A drawback for the parents, however, is that they are also required to stick to the terms and cannot readily access their cash.

Only a handful of lenders accept a parental loan as a deposit, and those that do take monthly repayments into account — which could restrict the amount your child can borrow.


First-time buyers can now add their parents to the mortgage application while keeping Mum and Dad’s names off the deeds.

A ‘joint borrower, sole proprietor’ deal allows the buyer to apply for a home loan using their parents’ income. Adding family members to the mortgage, but not the property, has grown in popularity.

Lenders prefer this over a traditional guarantor deal, where parents are vetted separately to make sure they can make payments in case the children default on the loan.

After Virgin Money withdrew its guarantor mortgage last year due to a lack of demand, only a handful of lenders, including Hinckley & Rugby, Cambridge and Market Harborough building societies, will still consider this type of deal.

Instead, around 20 lenders offer the new joint borrower arrangement — double that available ten years ago.

High Street banks such as Barclays, Metro, and Clydesdale offer a mortgage on these terms, along with building societies such as Newcastle, Hinckley & Rugby and Buckinghamshire. Interest rates are typically the same as with a regular mortgage.

The cheapest five-year fix available is 2.34 percent with Barclays for borrowers with a 10 percent deposit. On a mortgage of £150,000, the monthly repayments would be £661. Over five years, the total cost of the mortgage, including a £999 fee, would be £40,659.

The length of the mortgage offered will depend on the age of the oldest borrower.

Mark Harris, chief executive of mortgage broker SPF Private Clients, says: ‘This type of deal helps with the affordability of the mortgage but not the deposit.

It also ensures the child qualifies for first-time buyer stamp duty exemptions, while the parents sidestep the additional 3 percent stamp duty surcharge for purchasing a second home.’

And by not owning a share of the first-time buyer’s home, parents can also avoid paying capital gains tax on any increase in the value of the house when it is sold.

But Mr Harris warns: ‘Anyone named on the mortgage is jointly responsible for making payments. It could also damage their credit rating if repayments are not maintained, and affect the parents’ ability to take out further debt in the future.’



Among specialist offers aimed at families is a 100 percent mortgage tied to a savings account.

This allows first-time buyers to buy a house without a deposit on the condition that a family member deposits money in attached savings account for a fixed period.

The Barclays Family Springboard and Lloyds Lend A Hand mortgages require 10 percent of the value of the house to be locked away in a fixed-interest savings account for three years.

Although your money is tucked away and you cannot access it in an emergency, you will get it back, along with interest, when the term ends.

Lloyds pays 2.5 percent on savings, and Barclays currently pays 2.25 percent — its rate is set 1.5 percent above the Bank of England base rate.

David Hollingworth, of mortgage broker L&C, says: ‘This could help parents or grandparents who are not in a position to give money away, or have a large family and need to share their wealth around.’

But for the first-time buyer, it may mean they have to stay in the property until its value increases enough to give them a substantial deposit in order to take the next step on the housing ladder.

If the house price falls, they could find themselves in negative equity. If mortgage payments are missed, banks may hold on to the money for longer until they are cleared or, depending on the lender, use some of the money to clear any debts.

Former garage owner Carl Bojen, 65, used the Family Springboard mortgage to help his granddaughter Toni Thornton, 28, buy her first home nearby in Grimsby, Lincolnshire, with partner Kane Ramsey and their son Ronny, three.

‘I want to help all my grandchildren buy their own homes, but it would break me to give all six of them a deposit,’ Carl says.

Carl and his wife Linda, 65, put £13,200 of their savings — 10 percent of the £132,000 purchase price — into a Barclays savings account attached to the mortgage. After three years Carl and Linda will get their money back with interest, ready to help their next grandchild.

Without help, Toni, who works in telephone sales, and electrician Kane would have had to save for another three years.


Another option for families is, instead of offering cash as a deposit, parents can allow the bank to put a charge — like a mortgage — on their home for the equivalent amount.

The value of that charge could be, for example, 20 to 25 percent of the value of the first-time buyer’s house. It remains on the property for around 10 years.

It can be reviewed before then, and if there is enough equity built up in the home, it can be removed early.

Aldermore Bank and Family Building Society are two lenders that offer these types of mortgages. Family BS requires the first-time buyer to contribute 5 percent of the deposit.

It could suit parents who have lots of property wealth and do not plan to move house.

If parents want to move, particularly in the short term, there must be enough equity in their new home to still provide the same guarantee.

There is also the risk that they could lose their home if their child or grandchild’s house is repossessed and there is not enough money to repay the loan.


Families can also use a savings account to slash the interest a first-time buyer pays on their mortgage.

A family offset mortgage is similar to the savings and mortgage account option, but instead of getting interested on the money in the account, it is used to reduce the mortgage cost.

When the mortgage lender checks whether the first-time buyer can afford the mortgage, they will base the assessment on the lower monthly payments, after the parents’ savings have been taken into account.

For example, if a mortgage of £150,000 was taken out, and £50,000 savings were deposited in the account, the borrower would only pay interest on £100,000 of the mortgage.

Family Building Society and Yorkshire Building Society are among those which offer the deal.

Parents will get their money back after a fixed period. This is usually ten years, but it can be reviewed earlier — for example, when the borrower’s fixed rate comes to an end.

The drawback is that the money is locked away for a period and will not earn interest for the parents. It could also be eroded by inflation.

If the house is repossessed or sold for less than the loan amount due, savings in the offset account can also be used to foot the shortfall.

But in a low-interest rate environment, savers may prefer to forego earning a small amount of interest in favor of helping their children pay less towards their monthly mortgage payments.

Kim and Alison Wilkinson, both 60, from Surrey, used a Family Building Society offset mortgage to help their daughter Sarah, 26, buy a £260,000 three-bedroom terraced home in Portsmouth, Hampshire.

The couple had built up savings but did not need to use them in the short term. Earning next to no interest in a savings account, they decided to put the money to better use.

Secondary school teacher Sarah’s mortgage with Family BS was fixed for five years at 2.89 percent.

‘Mum and Dad wanted their money to work as hard as possible,’ says Sarah. ‘By putting it in the offset account, it effectively earned 2.89 percent.’

While she could afford the monthly repayments without her parents’ help, she says: ‘This reduced my mortgage payment from around £750 to £550, which gave me the more disposable income to furnish the house and enjoy treats such as holidays, which I may not have been able to do as a first-time buyer.’


Income-poor older homeowners with plenty of property wealth could unlock their home’s equity to help.

Equity release is available to borrowers aged 55 or over. It allows homeowners to gift their property wealth now, instead of waiting until they die and their house is sold.

In the first half of 2018, close to 20 percent of borrowers taking out equity release used the money to help the family, according to Canada Life.4

The only has to be repaid only when the homeowner dies or moves into long-term care. There are also options that allow borrowers to pay the monthly interest if they want to reduce the cost of the overall loan.

This can also reduce your inheritance tax liability, as the value of the equity release loan will be deducted from the overall estate when the inheritance tax bill is calculated.

Rates on equity release mortgages are higher than traditional mortgages. The average interest rate is 5.24 percent, compared to the average two-year fixed rate of 2.49 percent on a traditional mortgage.

Interest is also rolled up and added to the loan monthly, which can double the debt every 14 years.

Parents or grandparents should seek legal advice before entering into a family mortgage arrangement.

Source: DailyMail

Real Estate – Sector’s Growth Yet to Recover from Recession

A breakdown of the recently released GDP report by the National Bureau of Statistics showed a further contraction in the real estate sector. The sector’s real growth stood at -3.85% from -2.68% recorded in the preceding quarter.

The sector has now been in the negative territory for at least 12 consecutive quarters. However, the sector’s contribution increased from 6.5% in Q3’18 to 6.6% in Q4’18.

The global real estate agency, Knight Frank, recently released its ‘The London Report 2019’. In this report, the agency observed:

1. Commercial offices in central London attracted a total of £16.2 billion of global capital ahead of other cities like Paris, Manhattan and Hong Kong. China was the largest investor in the city.

2. London’s real estate market remains the most liquid and transparent in the global market. This will remain an attractive feature for global and domestic investors.

What does this mean for developing countries like Nigeria?

Renewed hope in London’s real estate market coupled with the negative growth recorded in Nigeria’s real estate market reduces the possibility of increased investment in the domestic real estate sector.

Performance of real estate companies in Nigeria

Currently, four companies – UPDC, UAC Property, Union Homes and Skye Shelter Fund – are listed on the Nigerian Stock Exchange.

In the period between December 31, 2018 and January 31, 2019 there was mixed movement in share prices across the board. UPDC and UAC shares declined by 9.9% and 9.95% respectively to N5.95 and N1.72. Union Homes and Skye Shelter Fund’s share prices remained flat at N45.20 and N95.00 respectively.

Proshare Nigeria Pvt. Ltd.

Outlook for real estate in February

Minimal activities are expected within the real estate sector in February. The election season will slow down activities across various sectors including real estate. However, we expect activities within the sector to improve by H2’19, driven by increased government spending.

Source: Proshareng

Sovereign fund to boost power generation with N50 billion

A subsidiary of the Nigeria Sovereign Investment Authority (NSIA), InfraCredit, has opened a N50 billion 600MW Shiroro Hydro Electric Infrastructure Green Bond to boost the plant and power generation nationwide.

Launched in partnership with GuarantCo, KfW Development Bank and Africa Finance Corporation, the deal is covered by the North South Power Company Limited’s (NSP) N8.5 billion 15-year 15.60 per cent Series 1 Guaranteed Fixed Rate Senior Green Infrastructure Bonds Due 2034, operator of the 30-year concession programme.

In a statement, the Executive Vice Chairman/CEO, NSP, Dr. Olubunmi Peters, relished the milestone move.


The Chief Executive Officer, InfraCredit, Chinua Azubuike, noted: “With the completion of the Series 1 Guaranteed Green Infrastructure Bond issuance, the company has established a long envisioned link with a more sustainable long-term, local currency financing required to implement its ambitious strategic power generation expansion plan through the capital markets.

“Infrastructure assets like Shiroro Hydroelectric Power Plant generate social, environmental and economic impact such as contributing to greenhouse gas emission reduction, revitalising disenfranchised areas, improving access to services and creating employment.

“Shiroro Hydro is an extremely essential and resilient asset with a 30-year consistent production history. North South Power, with the acquisition of a 30-year concession in 2013, has demonstrated the competence and ability to deliver on its business targets from restoring capacity target to 600MW and a 45 per cent increase in power generation.”

He added: “We believe that a sustainable and inclusive implementation of the eligible customer framework in a manner that generates economic benefits for all stakeholders will accelerate the industry’s strategic growth. With the success of this first-in-kind transaction, InfraCredit has further demonstrated its pioneering commitment to promoting financial inclusion.

Fund Manager, African Local Currency Bond Fund, James Doree remarked: “The first corporate green bond in Nigeria, issued by North South Power and supported by InfraCredit, sets a benchmark for the domestic and regional capital market.

Register to be part of the conference at the 13th Abuja Housing Show click here

North South Power’s ongoing investments in the Shiroro power station since 2013 have restored nameplate capacity with minimal environmental impact and NSP is now able to generate more than 2,000 GWh on a yearly basis.”

Source: Mathia Okwe


Foreign Trade volume hits N32.26Trn in 2018

The National Bureau of Statistics, NBS, said Nigeria recorded a total trade value of N32.26 trillion year-on-year in 2018, representing 39.3 per cent increase over the corresponding period in 2017.

The trade value for 2017 stood at N23.16 trillion.

The NBS said this in Foreign Trade in Goods Statistics for Fourth Quarter of 2018 posted on its website.

The bureau said the volume of total merchandise trade in 2018 was the highest recorded since 2014, nearly double pre-recession levels.

The Bureau said during the fourth quarter of 2018, total merchandise trade stood at N8.60 trillion compared to its value of N9.06 trillion recorded in third quarter of the year.

It said the total export component of the trade recorded at N5.02 trillion, represented an increase of 3.5 per cent over third quarter 2018 and 28.5 percent over fourth quarter 2017.

African cities become the new home to over 40,000 people every day, many of whom find themselves without a roof over their heads. With that in mind, IFC has committed to do more to develop the property sector, both to provide new and affordable housing and to encourage an industry that requires significant building materials and has the potential to be a major employer. In May, IFC and Chinese multinational construction and engineering company, CITIC Construction launched a $300 million investment platform, CITICC (Africa) Holding Limited, to develop affordable housing in multiple African countries. The platform will partner with local housing developers and provide long-term capital to develop 30,000 homes over next five years. IFC estimates that each housing unit will create five full-time jobs – resulting in nearly 150,000 new jobs on the continent. Kenya and Nigeria are high on the priority list for the new effort. Kenya’s housing shortage is estimated at 2 million units, while Nigeria is in want of 17 million units. The soaring demand is being met by scant new supply. Africa’s housing market has few local developers with the technical and financial strength to construct large-scale projects. The IFC-CITIC Construction platform will work with local housing companies to develop affordable housing projects across Sub-Saharan Africa, each ranging in size from 2,000 to 8,000 units. CITIC Construction has a proven track record in constructing and delivering large scale housing projects. The platform will start by developing homes in Kenya, Rwanda and Nigeria, expanding to other countries as operations ramp up. “In Angola, through planning, financing, construction and post-construction operation, CITIC Construction has successfully completed the 200,000 units housing program, new city of Kilamba Kiaxi, with relative infrastructure and utilities in four years. CITIC Construction has also founded the CITIC BN Vocational School in Angola which helps youth acquire the skills they need to become professionals”, said Hong Bo, Assistant President of CITIC Group and Chairwoman of CITIC Construction, “CITIC Construction will take advantage of our engineering experience and delivery capability to develop more affordable houses for Africa through the platform with IFC.” “As Sub-Saharan Africa become more urbanized, the private sector can help governments meet the critical need for housing”, said Oumar Seydi, IFC Director for Eastern and Southern Africa. “The platform will help transform Africa’s housing markets by providing high quality, affordable homes, creating jobs, and demonstrating the viability of the sector to local developers. IFC will work with financial institutions to support mortgages and housing finance that will allow people to purchase the units.” The new housing units will be constructed in accordance to IFC’s green building standards, delivering homes that are environmentally friendly and sustainable. The World Bank Group estimates that by 2030, three billion people, or 40 percent of the world’s population will need new housing units. To date, IFC has invested more than $3 billion in housing finance in over 46 countries world-wide. IFC focuses on regions where large portions of the population live in sub-standard housing and have limited access to credit to build, expand, or renovate their homes.

Meanwhile, the bureau said the import component stood at N3.58 trillion in fourth quarters 2018.

The figure showed a drop of N631.6 billion or 15.0 per cent compared to third quarter, 2018 but an increase of 69.6 percent when compared with the corresponding quarter in 2017.

However, it said the increase in export value and decrease in import value (relative to third quarter 2018) resulted in a favourable trade balance of N1441 billion, or 125.5 per cent over the preceding quarter.

According to the report, crude oil export has been the main stay of the economy, accounting for the largest share of total exports (84.2 per cent) in the fourth quarter of 2018 at N4.228 billion.

Non-oil products accounted for 4.6 per cent of total exports while other oil products accounted for 11.2 per cent of total exports in the quarter under review.


Source: DailyTrust


MFBs contemplate on the N10bn national licence ahead of CBN’s new capital requirement

Ahead of the full implementation of the new capital requirement for Microfinance Banks (MFBs) next year, the National Association of Microfinance Banks (NAMB) is planning to float a National MFB licence with N10 billion capital base.

The move is to absorb those MFBs who may not meet the new capital requirement announced by the Central Bank of Nigeria (CBN).

“As soon as we set up the National MFB, we will list it on the Nigerian Stock Exchange (NSE) before the end of the year,” Rogers Nwoke, president of NAMB, told BusinessDay exclusively.

Nwoke said his team was at the NSE last week for a closing bell ceremony where he discussed with the Exchange on how the members of NAMB could come to the market.

But the move by NAMB may also have been informed by the plan by the CBN and the Bankers Committee to establish a National MFB across the 774 local government areas of the country using Nigerian Postal Service (NIPOST) facilities.

According to the National MFB establishment plan by the CBN and the Bankers Committee, the two bodies will utilise the sum of N5 billion as equity from N60 billion Agri-Business Small and Medium Enterprises Investment Scheme (AGSMEIS) Fund, while NIPOST will contribute its offices across the country.

The CBN in October 2018 increased the minimum capital requirements for Unit microfinance banks from N20 million to N200 million, State MFBs from N100 million to N1 billion, and National MFBs from N2 billion to N5 billion.

The new minimum capital requirement was to take immediate effect for new applications while existing microfinance banks were required to fully comply with effect from April 1, 2020, according to CBN’s directive.

But MFB operators have been raising concern over the new capital requirement, saying it would be difficult if not impossible for many MFBs to meet.

Nwoke told BusinessDay that the existing 886 microfinance banks operating in the country have a capital base of N93 billion.

When contacted, Tokunbo Martins, director, Other Financial Institutions (OFIs) department, CBN, described the move by NAMB as “fantastic”.

Microfinance bank operators had protested the increase in their capital requirement and had written to the CBN for review of the new capital base and extension of deadline.

“We have taken all their requests on board and we are going to look at it,” Martins said.
The CBN had directed that to meet the new capital requirements, existing microfinance banks are expected to explore the possibility of mergers and acquisitions and/or direct injection of funds.

Also, the regulators said the Revised Regulatory and Supervisory Guidelines for Microfinance Banks, Code of Corporate Governance for Microfinance Banks and sector-specific Prudential Guidelines for Microfinance Banks would be issued in due course.

Institutions that meet the capital requirements as well as demonstrate the existence of strong corporate governance in their operations, the apex bank said, would be allowed to open account at the CBN office within their state of operation. Such institutions would also be channels for micro funding activities of the CBN and the Development Bank of Nigeria.


Source: Business Day


Financial Inclusion: CBN Unveils Policy To Expand Access To Banking

The Central Bank of Nigeria (CBN), has unveiled the National Financial Inclusion Strategy designed to ensure that at least 80 per cent of Nigerians have access to banking and other financial services.

The Governor of CBN, Mr. Godwin Emefiele, represented by the Deputy Governor in charge of Financial System Stability, Mrs. Aisha Ahmad, made the presentation at the National Financial Literacy Stakeholders’ Conference in Abuja.

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Emefiele said about 36.8 per cent of eligible Nigerian adults currently do not have access to financial services, adding that the figure indicated a significant improvement over the 41.6 per cent exclusion rate recorded in 2016.

He noted that although the improvement was encouraging, “there is still considerable work to be done to achieve the overall 20 per cent target exclusion rate by 2020.”

Emefiele said the apex bank had also released new policy frameworks on consumer protection, financial literacy and financial education.

He said, “Adequate consumer protection is critical to sustaining the long term viability of the financial sector because consumer protection is a necessary precursor to building and maintaining trust in the formal financial sector.

“An essential pillar of any consumer protection regime is consumer education, which is founded on financial literacy.

“The benefits of a financially literate population are immense. Consumers are better equipped to make optimal choices in the use of financial products, pose lower credit and default risk.

“In addition, it constitutes a market for sustainable financial services and promote Financial System Stability by increasing market demand and responsible use of financial services.”

Emefiele said the apex bank recently introduced regulations and guidelines for the licensing and operations of Payment Service Banks in furtherance of its efforts to leverage technology to enhance access to financial services for the unbanked.

According to him, the move was expected to drive down exclusion rates by leveraging wider variety of multiple channels to enhance access to deposit products, payments and remittance services to small businesses and low income households.

The governor, however, stressed that consumer protection and its constituent pillar of consumer education remained critical to the attainment of its objectives for inclusion.

The CBN boss said building inclusive financial systems had become an important objective for policymakers around the world given the positive effects it has on poverty reduction and enhancing economic prosperity.

He said the conference, themed: ‘Implementing Financial Literacy and Consumer Protection to Advance Financial Inclusion in Nigeria,’ could not be more unambiguous in its focus and urgency to move from the conceptual to practical in the drive for financial inclusion.

Emefiele said low financial awareness and literacy levels as well as consumer confidence remained critical issues which must be examined more closely if financial inclusion strategy must succeed.

He stressed that the financial system remained probably the most affected by technological advancement with new digital products and services which had emerged and the internet greatly influences consumers’ purchasing decisions as they continue to adopt e-commerce.

The CBN governor further noted that 1.4 billion electronic transactions valued at N97.4 trillion were processed in the banking industry in 2017, compared to 869 million transactions valued at N69.1 trillion recorded in 2016.

“While these developments are no doubt good for the financial system and are expected to aid our financial inclusion efforts, they are accompanied by a myriad of challenges,” he explained.

Among other things, he said privacy and security concerns, requiring enhanced privacy and data protection for consumers continued to pose a challenge to achieving financial inclusion.

He also said consumers are exposed to new and more inventive fraudulent practices which required stakeholders to double their combat efforts.

“The industry is also faced with an increasing complexity of financial products and services accompanied by consumers’ lack of information or capacity to understand such products and/ or their associated risks. Thus enhanced disclosure has therefore become very essential,” he said.

He added that as the markets develop with the introduction of new innovative players, products, and channels, the challenge for regulatory agencies will be to continually balance supervisory objectives aimed at identifying, managing and mitigating risk with those that support market development and help promote financial inclusion.

He, however, expressed hope that there will not only be renewed vigour but more alliances, partnerships and collaborative programmes at the end of the conference towards achieving its objectives.

“I sincerely believe that through our collaborative efforts, we will not only surpass our target of 80 per cent financial inclusion target by the year 2020, but also have financially capable and more confident consumers that would support the stability of our financial system and contribute to the economic growth of our great country,” he said.

Affa Dickson Acho

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