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Fitch Affirms 8 Nigerian Banks’ Ratings

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Fitch Ratings

Fitch Ratings Friday affirmed the national ratings of eight Nigerian banks. The banks are First Bank of Nigeria (FBN), United Bank for Africa (UBA), Fidelity Bank, Diamond Bank, First City Monument Bank (FCMB), Union Bank , Stanbic IBTC Bank, the Bank of Industry (BOI) as well as Stanbic IBTC Holdings (SIBTCH).

A statement from the international agency explained that the rating actions followed Fitch’s downgrade of Nigeria’s Long-Term Local Currency Issuer Default Rating (IDR) to ‘B+’ from ‘BB-‘, as a result of which it now equalised with the long-term foreign currency IDR.

It further explained that its latest action was driven by the change in Fitch’s sovereign rating criteria.

“Following the sovereign criteria change and rating action, Fitch has recalibrated the National Rating scale for Nigeria. As a result the national ratings for the aforementioned banks were affirmed as there is no change in their relative creditworthiness,” it stated.

According to the agency, the national rating of UBA was based its standalone creditworthiness and was also underpinned by potential sovereign support.

Also, the national ratings of FBN, Fidelity, Diamond, FCMB and UBN were based on potential sovereign support given their systemic importance, just as the national ratings of Stanbic and SIBTCH were based on the probability of support from their parent, Standard Bank Group Limited (SBG; BBB-/Stable).

SBG has a majority 53.2 per cent stake in SIBTCH, which in turn owns 100% of Stanbic IBTC.

“Fitch believes that SBG’s support would extend equally to both the bank and the holding company. The national ratings of BOI are driven by potential sovereign support reflecting its 99.9 per cent state ownership, its policy role and the bank’s strategic importance to Nigeria’s economic and industrial development.

“The banks’ (apart from UBA, SIBTC and SIBTCH) national ratings are sensitive to a weakening ability of the Nigerian sovereign to provide support. UBA’s National Ratings are sensitive to both a weakening in sovereign support as well as any change in its standalone credit worthiness”, it said.

“The national ratings of SIBTC and SIBTCH are sensitive to a change in potential support (relating to both ability and propensity) from their ultimate parent, SBG. The national ratings of SIBTCH and SIBTC could withstand a three-notch downgrade of SBG’s long-term IDR,” it added.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Finance

Tanzania: African Development Fund Approves $116 Million Loan to Upgrade Southern Road Corridor

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Afdb - Investors King

The Board of Directors of the African Development Fund on Wednesday approved a loan of around $116 million to the Tanzanian government to upgrade a 160-km Mnivata-Newala-Masasi road corridor in the southern part of the country.

The Bank’s loan represents 98.71% of the project cost; the government of Tanzania will provide the remaining 1.29% in funding.

The project will upgrade the roadway, including the 84-meter Mwiti bridge, to bituminous standard. The works also have social components, including the provision of potable water, education and medical infrastructure, the establishment of cashew nut processing units, and extension of entrepreneurial training to women and youth.

The upgrade is expected to open up rural areas in the region and enhance the Mtwara Development Corridor, which links Mtwara Port and Mbamba Bay port on Lake Nyasa. Exporters, importers, small-scale cross-border traders, farmers, transporters are all expected to benefit.

“The periodic isolation of such a significant population worsens vulnerability and undermines social inclusion. Improved road connectivity would therefore build the resilience of the people and widen livelihood opportunities within the Mtwara Development Corridor and the surrounding districts,” Bank Director General for East Africa Nnenna Nwabufo said.

Overall, the five-year project will improve mobility and accessibility for about 1.1 million people in Mtwara, Tandahimba, Newala and Masasi districts and facilitate integration with neighbouring Mozambique, Malawi and Zambia.

Currently, the districts of Tandahimba and Newala, with an estimated combined population of 509,000 people, are mostly cut off, while connection with the Mtwara port area for essential supplies is severely constrained during rainy seasons due to the state of the road.

The project will advance Tanzania’s current five-year Development Plan (2021-2026) and aligns with the Bank Group’s Country Strategy Paper (2021-2025) which emphasizes sustainable infrastructure for a competitive economy and an improved private sector business environment for job creation, as well as two High-5 strategic priorities: Integrate Africa and Improve the quality of life for the people of Africa.

At 30 June 2021, the Bank Group’s active portfolio in Tanzania comprised 22 operations (19 public and 3 private) with a total commitment of about $2.4 billion.

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Banking Sector

FirstBank Expands Its International Money Transfer Network, Reinforces its Commitment to Customer Service

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FirstBank Headquarter - Investors King

In furtherance of the need to expand diaspora remittance inflow into the country, First Bank of Nigeria Limited has increased its network of International Money Transfer Operators (IMTOs), targeted at easing the accessibility of its customers to receive money from close to 100 countries across the world in a safe and secured manner. With over 750 branches across the country, customers can receive money from the nearest FirstBank branch closest to them.

Over the years, FirstBank has been in partnership with Western UnionMoneyGram, Ria, Transfast, and WorldRemit. The bank is also in partnership with other IMTOs which include Wari, Smallworld, Sendwave, Flutherwave, Funtech, Thunes and Venture Garden Group to promote remittance inflow into the country, thereby putting Nigerians and residents at an advantage in receiving money from their families, friends and loved ones across the world.

Beneficiaries can receive remittance in US dollars in any of our over 750 branches spread across the country. Customers without an existing domiciliary account can have dollar account automatically created for their remittances. You can also receive inflow directly into your account through Western Union.

In addition, FirstBank has launched its wholly owned remittance platform named First Global Transfer product to promote the international transfer of funds across its subsidiaries in sub-Saharan Africa. These subsidiaries include FBNBank DRC, FBNBank Ghana, FBNBank Gambia, FBNBank Guinea, FBNBank Sierra-Leone, FBNBank Senegal.

Reiterating the Bank’s resolve in promoting diaspora remittances, regardless of where one is across the globe, the Deputy Managing Director, Mr Gbenga Shobo said “at FirstBank, expanding our network of International Money Transfer Operators is in recognition of the significant roles diaspora remittances play in driving economic growth such as helping recipients meet basic needs, fund cash and non-cash investments, finance education, foster new businesses and debt servicing.

We are excited about these partnerships, as it is essential to ensure our customers are at an advantage to receive money from their loved ones and business associates, anywhere they are, across the world.”

FirstBank pioneered international funds transfer and remittances over 25 years ago and has been at the forefront of promoting cross border payments in the country, having started the journey with Western Union Money Transfer. The Bank’s wealth of experience and operation in over 750 locations nationwide gives it the edge in the market.

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Finance

Private Sector Seeks FG’s Directive on VAT Payment

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Value added tax - Investors King

The Organised Private Sector of Nigeria (OPSN) on Sunday in Lagos called on the Federal Government to urgently make a pronouncement on the ongoing controversy over VAT payment so that businesses will know what to do.

OPSN chairman, Mr Taiwo Adeniyi, made the call at a news conference and said delays in addressing the issue could cause negative effects on businesses, most especially in the collection and remittances of VAT.

“We are aware that by Sept. 21 we get penalised if we do not pay or remit the VAT for the month of August.

“We are also aware that laws are not made in retrospect. It then means that even if those laws have been enacted, particularly the Lagos State law which came into effect in September, it will not affect the payment by businesses in the state.

“Due to our remittances, we have issues with the fact that the law for Rivers was made in August and the majority of the businesses in Lagos usually will have a relationship with the Rivers State Inland Revenue too.

“The confusion in the public space is the reason we are calling on the government to come to our aid as we want to pay.

“It is for the government at the center to make a pronouncement as to what becomes of us,’’ he said.

Adeniyi, who is also the President of, Nigeria’s Employers Consultative Association (NECA), said that the ongoing challenge had the potential to make businesses pay double VAT in view of demands by the FIRS and state governments.

He said that businesses, as the collecting agents, were practically unclear on the authority to remit to and without a clear path, this would further aggravate the pain on businesses.

“It is a popular saying that where two elephants fight, it is the grass that suffers.

“It is no longer news that Nigerian businesses have been battling with myriads of challenges, making the survival of enterprises and ease of doing business in the country among the worst in this part of the world,’’ he said.

There has been controversy over the collection of VAT after a Federal High Court ruled that it was not the duty of the Federal Government to collect the tax.

VAT is normally collected by the Federal Government since the military era and the money is shared by the three tiers of government.

Following the court ruling, however, Lagos and Rivers states passed laws that allowed them to collect VAT.

FIRS, which used to collect the VAT on behalf of the Federal Government, has challenged the court ruling at the appellate court.

OPSN comprises the Manufacturers Association of Nigeria, the Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture, NECA, Nigeria Association of Small Scale Industries and the Nigeria Association of Small and Medium Enterprises.

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