Following the controversy over the alleged padding and errors in the 2016 Budget, some corporate economics have raised concern on the implication for national economy recovery and foreign capital inflow.
Sunday Vanguard learnt that some Nigerian companies that have been in talks with their foreign partners over counterpart funding of joint ventures have been forced to hold action since mid last year over policy uncertainties following the election of new government.
While many of them expressed satisfaction with the process and outcome of the election, they were non-committal over prospects of funding their Nigerian investments preferring to wait for a clear policy direction from the new government. The first shock was the long delay in rolling out the cabinet which elongated policy positions while also elongating the waiting time for foreign investors’ commitments.
Economy observers were of the view that while there is massive decline in government revenue following the oil price crash, 2016 Budget, which provided for massive economic stimulus, gave hopes of economic recovery amidst the dwindling revenue.
However, a top executive of a Nigerian company whose foreign partners have adopted the waiting position, told Sunday Vanguard, at the weekend, that the companies had thought they would wait for about three months after the take-off of the new government but lamented that ‘’we are now in the tenth month and our partners are still saying they will wait for some more time”.
According to him, the on-going controversy over the 2016 Budget has further complicated the relationship with their partners and the fate of the joint venture as they had hoped that the budget, which they saw as a good one with clear policy positions, appears to have run into a glitch.
Analysing the situation further, chief economist at FSDH Merchant Bank, Mr. Ayodele Akinwunmi, said the controversy over the budget creates more uncertainty for investors who had delayed their decision up till now.
‘’It may also delay the implementation of the projects in the budget which will not make an average Nigerian to feel the impact of the current government,”Akinwunmi said.
However, another notable economist, Mr. Bismarck Rewane who is the Managing Director/Chief Executive, Financial Derivatives Company, is more concerned with the assumptions of the budget which he sees some problems than the issue of errors which he believed would easily be resolved.
‘’The errors in the budget are not an issue, they can be corrected. The real issues are the assumptions of the budget. The crude oil price, the production target, exchange rate and inflation rate, these are the real issues, that determine the effectiveness of the budget,”Rewane stated.
In the same line of argument, the Deputy President of Nigerian Labour Congress, Mr. Issa Aremu, pointed out: ‘’The President has said they (errors) would be corrected, and those responsible would be punished. What we should be concerned about is if the budget would be used to boost the economy and then strengthen the Naira. Will the budget be used to boost local production through patronage of locally produced goods, or it would be spent on imported goods and hence weaken local production? These should be our concerns’’.
Union Bank Announces the Appointment of Aisha Abubakar as Independent Non-Executive Director
Union Bank of Nigeria Plc (“Union Bank”) has announced a change to the membership of its Board of Directors with the appointment of Ms. Aisha Abubakar as an Independent Non-Executive Director effective 9th September 2021, following the approval of the Central Bank of Nigeria (CBN).
Ms. Abubakar joins the Board of Union Bank following her tenure as Nigeria’s Honourable Minister for Women Affairs and Social Development from 2018 to 2019. Prior to this, she also served as the Honourable Minister of State for Industry, Trade and Investment between 2015 and 2018. At the start of her career, Ms. Abubakar worked at Continental Merchant Bank Ltd., African Development Bank and African International Bank.
She is an accomplished public sector administrator with over three decades of professional experience in Public Service and Pension Administration, Investment Banking, SME Finance/Rural Enterprise Development and Micro-Credit Administration.
Ms. Abubakar is a Fellow of the International Professional Managers Association (IPMA-UK), and the President of the International Experts Consultants (IEC-UK).
Commenting on the addition to the Board, Mrs. Beatrice Hamza Bassey, Union Bank’s Board Chair said: “On behalf of the Board of Directors, I welcome Ms. Aisha Abubakar to the Board. She brings many years of robust experience which will be invaluable in supporting our efforts to steer the Bank forward and deliver on our strategic objectives.”
Also commenting, Chief Executive Officer, Mr. Emeka Okonkwo said: “I am pleased to welcome our new Independent Non-Executive Director, Ms. Aisha Abubakar to the Board. We look forward to drawing from her wealth of experience and fresh perspectives as we continue to execute our vision to be Nigeria’s most reliable and trusted partner.”
AfDB Approves $50M Trade Finance Deal with Standard Chartered Bank
The African Development Bank Group has approved a $50m Trade Finance Unfunded Risk Participation Agreement (RPA) for StandardChartered Bank.
This was contained in a statement titled ‘African Development Bank approves a $50m Multinational Trade Finance Risk Participation Agreement facility for Standard Chartered Bank’ published on the bank’s website on Wednesday.
The statement said, “The board of directors of the African Development Bank Group has approved a $50m Trade Finance Unfunded Risk Participation Agreement facility between the African Development Bank and Standard Chartered Bank.”
The essence of this agreement is to promote intra-Africa trade, ensure regional integration and lessen the trade finance gap in Africa.
“The agreement is expected to boost intra-Africa trade, promote regional integration, and contribute to the reduction of the trade finance gap in Africa, in line with implementation aspirations of the African Continental Free Trade Area,”
The bank’s Director for Financial Sector Development, Stefan Nalletamby, stated that “We are excited about finalising this facility with Standard Chartered Bank as it offers us the flexibility to use our strong AAA-rated risk-bearing capacity to increase access to trade finance and boost intra/extra-African trade on the continent, in support of the AfCFTA.
“This partnership is expected to catalyze more than $600m in value of trade finance transactions across multi-sectors such as agriculture, manufacturing and energy over the next three years.”
Director-General of the bank’s Southern Africa region, Leila Mokadem, was quoted to have said, “The advent of COVID-19, coupled with stringent regulatory/capital requirements and Know Your Customer compliance enforcement, has seen many global banks reduce their correspondent banking relationships in Africa, while some are exiting the market altogether.
“There is, therefore, an urgent need for financing to reenergise Africa’s trade, which requires more participation of institutions like the African Development Bank.”
The parties in the agreement are expected to share the default risk on a portfolio of eligible trade transactions originated by African Issuing Banks and indemnified by Standard Chartered Bank.
Beneficiaries of this facility are issuing banks in Africa with the ability to grow their trade finance business has been constrained by inadequate trade confirmation lines from international banks.
Other beneficiaries are small and medium enterprises (SMEs) and domestic firms which rely on these issuing banks to fulfill their trade finance commitments.
The RPA facility is aligned with the AfDB’s High 5 priority goals which are: light up and power Africa, feed Africa, industrialize Africa, integrate Africa, and improve the quality of life for the people of Africa.
Standard Chartered Launches Flexible ‘Smart Business Loan’ Product To Support SMEs
Standard Chartered on Wednesday launched its Smart Business Loan (SBL) product to support Small and Medium Scale Enterprise (SMEs) in Nigeria.
David Idoru, Head of Consumer, Private and Business Banking, of the bank in Nigeria, said in a statement in Lagos that SBL was an unsecured installment/term loan available to SME clients within key target sectors.
“Qualified SMEs would be able to access up to N20million loan, without providing tangible security/collateral to purchase asset, finance business expansion and other capital expenditure needs.
“This loan was designed to help SMEs meet their short to medium-term needs.
“As a Bank, our purpose is to drive commerce and prosperity in the locations we operate in. This is done through offering cash, lending, trade and wealth management solutions that specifically drive economic growth,” he said.
Idoru said that the bank was constantly looking for ways to ensure SMEs get access to the needed support to enable their businesses to thrive, adding that prior to the product launch, clients were required to provide full collateral cover to access loans from the bank, but SBL had been designed to provide the necessary flexibility to the clients.
“It is accessible to new and existing clients of the Bank with no waiting period, including small and medium scale organisations, who can access up to N20million in loans without collateral for a maximum tenure of two years,” he said.
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