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CBN Meets Bank CEOs, Considers All Options

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In bid to ensure financial system stability and integrity, while restoring calm, the Central Bank of Nigeria (CBN) will today meet with the Body of Bank CEOs, following which it will consider the plea by eight bank executives whose institutions were suspended from the foreign exchange (FX) market last Tuesday, to give them more time to return the Nigerian National Petroleum Corporation (NNPC)/Nigerian Liquefied Natural Gas (NLNG) Company dollar deposits held by the affected banks to the Treasury Single Account (TSA) domiciled with the CBN.

Nine banks were initially suspended from participating in the FX market by the CBN last Tuesday for failing to return $2.334 billion belonging to the NNPC/NLNG to the TSA, despite the federal government’s directive since August last year that all government deposits must be remitted to the account by September 15, 2015.

The eight banks – First Bank of Nigeria (FirstBank) Limited, Diamond Bank Plc, Sterling Bank Plc, Skye Bank Plc, Fidelity Bank Plc, Keystone Bank Limited, First City Monument Bank (FCMB) Limited, and Heritage Bank Limited – were yet to remit a total of $1.804 billion NNPC/NLNG funds to the TSA as of Friday.

United Bank for Africa (UBA) Plc, which complied last week by refunding $530 million to the TSA, has since been re-admitted into the FX market.

However, following the plea by the eight banks that remain barred from participating in the FX market, the central bank will be meeting with all bank CEOs today and will afterwards consider the plea to give the affected banks more time to refund the funds, a reliable industry source informed on Sunday.

A top CBN source also said that the central bank was considering the request by the CEOs of the affected banks after the meeting held with them last week following their suspension from the FX market.

He, however, blamed the banks for failing to comply with the deadlines and repeated reminders given to them to refund the NNPC/NLNG dollar deposits since last year.

According to him, “Following the federal government’s directive on the movement of all government funds to the TSA, the NNPC approached us last September to compel the banks to return its dollar deposits to the TSA.

“Based on this, we discovered $6 billion was held by all the banks and we agreed with them that 50 per cent of the amount should be paid by October last year, 25 per cent after 60 days and the outstanding 25 per cent after 30 days.

“However, after meeting the October deadline by paying $3 billion, the banks have since failed to meet the December and January deadlines and have only refunded an extra $900 million, leaving an outstanding balance of $2.1 billion. All entreaties that they should return the balance of about $2.1 billion have fallen on deaf ears, which was what led to the suspension of the nine banks last week.

“We even discovered that some of the banks had converted the dollar deposits to naira and lent them out for various projects, which was ill-advised, given that most government funds are current account or demand deposits and should not be lent out for long-term projects, so basically there was a major mismatch of assets and liabilities.

“It got to a point whereby the presidency felt that the CBN Governor, Mr. Godwin Emefiele, was treating the banks with levity because he was once one of them. So, the measure to suspend the nine banks was forced on the CBN by the banks who failed to comply with the directive.”

The official said since the suspension, the central bank has met with the bank executives twice.

He said the primary objective of the CBN is to ensure financial system stability and integrity, and to restore calm in the markets, adding that it is for this reason the CBN is considering their request for more time to refund the NNPC/NLNG dollar deposits.

“Another reason the CBN is considering their request is because most of them are already speaking to foreign investors and donor institutions to raise money in order to refund the NNPC/NLNG funds,” the official said.

Owing to the suspension of the eight banks from the FX market, the naira fell sharply on the parallel market to a record low of N412 to the dollar on Friday, as against the N397 to the dollar the week before.

On the interbank forex market, the naira also closed at N314.95 to the dollar on Friday, reflecting the huge gap between the interbank and parallel market.

The sharp depreciation of the naira on the parallel forex market was attributed to the strong demand for the greenback by customers of the eight banks that were banned from the official FX market.

It was gathered that a lot of them resorted to the parallel market for dollar purchases to meet pressing obligations, as they await the resolution of the matter between the banks and the CBN.

But a banking source expressed optimism that the plea by the eight banks for more time, if approved, would help to resolve the problem in FX market.

“One of the resolutions from the meeting of the Body of Bank CEOs which met in Lagos last Thursday, was that the affected banks should be given some time to repay the money.

“The meeting which was presided over by the CEO of Access Bank Plc, Mr. Herbert Wigwe, agreed to send a proposal to the CBN to accept a repayment plan and also appealed that the CBN should help them to convince the federal government and presidency to accept the proposal,” the source added.

Wigwe, in a statement last week, said that the body agreed to work closely with the CBN to address the issue that led to the ban in a manner that would protect the stability of the industry, and to ensure proper conduct in the optimisation of the FX market.

While clarifying that there was no concealment in any form, as the banks had always disclosed the funds in their returns, the statement from the Body of Bank CEOs noted that the situation arose out of the maturity mismatch of funds found in certain strategic sectors to ensure the growth of the economy.

Meanwhile, the federally collected revenue during the second quarter of 2016 fell to N1.159 trillion, which was 51.3 per cent and 8.6 per cent lower than the budgetary estimates for Q2 2016 and the receipts in the preceding quarter, respectively.

In its second quarter economic report for 2016, the CBN attributed the decline in federally collected revenue (gross) relative to budgetary estimates, was due to the shortfall in receipts from both oil and non-oil revenue during the second quarter of 2016.

At N537.19 billion or 46.3 per cent of total revenue received, gross oil receipts were lower than the provisional quarterly budget and the receipts in the preceding quarter by 39.2 per cent and 19.4 per cent, respectively.

The decline in oil revenue relative to the budget estimates was attributed to the persistent fall in receipts from crude oil/gas exports due to persistent low price of crude oil in the international market and the series of shut-ins and shutdowns at some NNPC terminals owing to pipeline vandalism.

Similarly, at N621.86 billion or 53.7 per cent of total revenue, gross non-oil receipts were above the receipts in the preceding quarter by 3.2 per cent. It was however below the provisional budget estimates by 58.4 per cent.

The decline in non-oil revenue relative to the provisional budget estimates was due largely to the shortfall in receipts from all of its components except Customs Special Levies (Non-Federation Account) during the review quarter.

Furthermore, the CBN report showed Nigeria’s crude oil production, including condensates and natural gas liquids, was estimated at an average of 1.54 million barrels per day (mbd) or 141.68 million barrels (mb) for the second quarter of 2016.

This represented a decline of 0.37mbd or 15.4 per cent, relative to 1.82mbd or 165.62 million barrels produced in the first quarter of 2016.

“Crude oil exports stood at 1.09mbd or 100.28mb. This represented a decline of 20.4 per cent, compared with 1.37mbd or 124.67mb recorded in the preceding quarter.

“Supply disruptions owing to continued attacks on oil installations by vandals accounted for the decline in crude oil production. Deliveries to the refineries for domestic consumption remained at 0.45mbd or 41.40 million barrels during the review quarter.

“At an estimated average of US$46.44 per barrel, the price of Nigeria’s reference crude, the Bonny Light (37º API), rose by 35.0 per cent, compared with the level in the preceding quarter.

“The average prices of other competing crudes, namely, the UK Brent at US$45.29/b, WTI at US$45.18/b and Forcados at US$46.05/b exhibited similar trends as Bonny Light.

“The average price of OPEC basket of eleven selected crude streams, at US$42.38 per barrel, indicated an increase of 40.5 per cent, compared with the average of US$30.16/b recorded in the preceding quarter,” it added.

Of the gross federally collected revenue, a net sum of N665.67 billion was transferred to the Federation Account for distribution among the three tiers of government and the 13 per cent Derivation Fund in the quarter under review.

On the back of the CBN’s Q2 report on the economy, the markets are expected to witness a flurry of data releases from the National Bureau of Statistics (NBS) this week.

This would definitely influence investment decisions in the coming days, said Lagos-based financial advisory firm, Afrinvest West Africa, last week.

Scheduled for release by the NBS on Wednesday include: the Q2, 2016 quarter unemployment and underemployment watch; Q2, 2016 foreign trade estimates; Q2, 2016 Gross Domestic Product estimates (Production Approach); July 2016 Consumer Price Index and Inflation; Q2, 2016 Capital Importation and FDI report and July 2016 PMS/Petrol Price Watch, amongst others.

Of these, focus would mostly be on the Q2, 2016 GDP report and July 2016 Inflation, Afrinvest said in a report.

“Analysts’ consensus forecasts on both data (including ours) is decidedly bearish and we do not expect any positive surprise from the rest.

“The downtrend in growth of the Nigerian economy which began in late 2014 majorly due to falling oil prices, has persisted into 2016, as forex market illiquidity, downtime in power supply and depressed real consumer income continue to weigh on productivity, investment and consumer spending.

“Developments in the forex market – which has seen the naira depreciate significantly against a host of foreign currencies – as well as increases in power and fuel tariffs have had pass-through on consumer prices with the inflation rate in June 2016 far above the CBN’s allowable band of 6-9 per cent and an eight-year high of 16.5 per cent from 9.6 per cent in January,” Afrinvest said.

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.

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PayPal Acquires Happy Returns Logistics Business

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PayPal announced that it’s acquiring Happy Returns, a returns solution provider that offers online shoppers access to easier ways to send back unwanted merchandise to retailers without having to box it up and ship it themselves.

The company today offers a network of over 2,600 drop-off returns locations in the U.S., including those in over 1,200 metros and in every U.S. state.

It also has relationships with hundreds of brands that have been using its returns software and reverse logistics services. The company says it will continue to offer its returns experience to online retailers and shoppers as a part of PayPal.

Founded in 2015, Santa Monica-based Happy Returns’ value proposition was to take some of the overhead and cost out of the returns process for online retailers. Because online shoppers can’t inspect items they buy directly, online retail tends to see higher return rates, especially in apparel. Happy Returns found that online items are 3 to 4 times as likely to be returned than those purchased in-store, for example.

Meanwhile, today’s retailers have to compete with giants like Amazon and Walmart, both of which enable returns more easily for their customers by way of their large brick-and-mortar footprints — Amazon with Whole Foods other locations, and Walmart with its own stores. In fact, the foot traffic that offering an Amazon returns desk or locker system in-store has led retailers like Kohl’s and Stein Mart to embrace the enemy by catering to shoppers with Amazon returns in their own stores.

Today, the Happy Returns solution offers a combination of software, services and logistics that allows retailers to manage their returns through their own retail stores, by the carrier, as well as through Happy Returns’ “Return Bar” locations. These are found in physical retail stores like Paper Source, Sur La Table, Cost Plus World Market, and others. The service has been used by several digitally native brands, including Everlane, Rothy’s, and Parachute Home, among others.

Happy Returns has also been closely working with PayPal throughout its history, it notes. And notably, PayPal made a strategic investment in the business in 2019, as part of an $11 million financing round.

Following the deal’s close, Happy Returns will continue to work with retailers and shoppers both on and off PayPal’s platform, it says. The company’s co-founders, David Sobie and Mark Geller, and its full 120+ team will join PayPal and will report to Frank Keller, VP Consumer In-Store and Digital Commerce at PayPal.

PayPal is not disclosing the deal terms. To date, Happy Returns had raised $25 million in funding.

“This is an incredibly exciting milestone for our company, and it would not have been possible without the hard work and dedication of our entire team,” an announcement on Happy Returns’ website reads. “We are so proud of what our team has accomplished and are grateful for the tenacity, creativity and empathy Happy Returns employees bring to work each day. We are confident that the best is yet to come, and are looking forward to our next chapter as part of the PayPal organization.”

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MoneyGram and Coinme Partner to Expand Access to Bitcoin

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MoneyGram International, a global leader in cross-border P2P payments and money transfers, and Coinme Inc., the largest licensed cryptocurrency cash exchange in the U.S., announced the launch of a new partnership to enable the cash funding and payout of digital currency purchases and sales.

The partnership, which utilizes MoneyGram’s modern, mobile and API-driven payments platform and Coinme’s proprietary cryptocurrency exchange and custody technology, will bring bitcoin to thousands of new point-of-sale locations in the U.S., with plans to expand to select international markets in the second half of 2021.

“This innovative partnership opens our business to an entirely new customer segment as we are the first to pioneer a crypto-to-cash model by building a bridge with Coinme to connect bitcoin to local fiat currency,” said Alex Holmes, MoneyGram Chairman and CEO. “Our unique, global network is an incredibly valuable asset, and we’re excited to open our platform to Coinme as we increasingly look to capture new growth by monetizing our network to new use-cases.”

Global cash on and off-ramps ensure access to bitcoin

The MoneyGram and Coinme integration will provide a fast and easy way for customers to purchase bitcoin with cash and withdraw bitcoin holdings in cash. It is specially designed for customers who may be interested in utilizing bitcoin for the first time. With less than 20,000 cryptocurrency kiosks in the world today, the MoneyGram and Coinme partnership will further expand access to bitcoin and potentially other digital currencies by creating thousands of new point-of-sale locations to buy and sell cryptocurrency.

“MoneyGram has spent more than 80 years building one of the world’s largest P2P payment networks,” said Neil Bergquist, Coinme CEO. “By integrating its global infrastructure with our licensed crypto exchange technology, we can enable the purchase and sale of cryptocurrencies across its system using cash. This is a major milestone for the bitcoin and cryptocurrency communities, and for the millions of people who will benefit from a trusted, easy and affordable onramp to digital currency.”

The service will be available at select MoneyGram locations starting in the U.S. in the coming weeks. Additional countries and cryptocurrencies will be made available shortly thereafter.

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International Breweries To Train 500 Young Entrepreneurs Through Kickstart Initiative

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As part of its commitment to bringing people together for a better world and its objective of delivering impactful, developmental and sustainable projects, International Breweries Plc through its social investment arm, International Breweries Foundation has launched the 6th edition of its Kickstart entrepreneurship programme recently.

The initiative is targeted at enterprise growth and development for young entrepreneurs between the ages of 18 and 35.

During a media briefing to update the public on the process of this year’s edition, Managing Director, International Breweries Plc, Hugo Rocha expressed delight that the Kickstart Initiative had evolved from the regional programme it used to be, to an inclusive national programme that reaches the six geopolitical zones and 36 states of Nigeria.

“Over the years, we have held the conviction that the energy, zeal, and brilliance of the youths of Nigeria who constitute about 70 percent of the total population should be tapped and channelled to productive use. This is the logic behind Kickstart – to promote a culture of entrepreneurship among young people through training, provision of capital and mentorship,” Rocha said.

Rocha concluded his remarks on a high note, stating that, “as International Breweries celebrates its 50th Anniversary this year, I am pleased that the results of a 3-year impact assessment study that we commissioned on Kickstart came out positive and gives us the confidence to continue to support young people to achieve their dream of entrepreneurship. We remain steadfast in our commitment towards the economic development of Nigeria”

Also speaking at the press conference, Chairman, Advisory Board, International Breweries Foundation, Peter Bamkole explained that International Breweries Plc and its foundation is dedicated to continuing to contribute its quota towards tackling the twin challenges of unemployment and poverty while promoting Decent Work and Economic Growth in line with Goad 8 of the United Nations Sustainable Development Goal (UNSDGs).

“By creating Kickstart, International Breweries Foundation set out to be the nursery of innovation in a business where budding enterprise managers are groomed—held by the hand and taken through the rigour of entrepreneurial work. We aim to produce well-rounded entrepreneurs who understand and are prepared to put in the work it takes to do business successfully in a unique climate like ours.” Bamkole said.

Over the past five years, the Kickstart initiative has provided training, mentoring, and seed capital of N325,136 million (in total) for 274 grantees; 708 direct beneficiaries and 2,832 indirect beneficiaries across a wide range of business sectors; with the result of the creation of about 571 jobs and 1,392 new jobs projected across the six geopolitical zones of Nigeria.

Speaking on the mechanics of the award, Legal and Corporate Affairs Director, International Breweries Plc, Temitope Oguntokun revealed that the award is in three phases: the application phase, the training phase and the pitch fest phase which is the final selection of grantees by judges.

She explained that the Kickstart Initiative will be incorporating an expansive training module that will train 500 young entrepreneurs online, with a number of them going into the bootcamp. This year’s edition also features a streamlined search for entrepreneurs into Agriculture, Modular Retailing, Circular Packaging (Recycling), Technology, and Renewable Energy sectors.

“After a transparent selection process on the Enterprise Development Centre (EDC) platform via the link, https://reg.smetoolkit.ng/program-apply/kickstart-nigeria-2021, which will open on the 20th of May, successful applicants will be equipped with critical skills and training on entrepreneurship by experienced entrepreneurs and corporate professionals during a 2-day boot camp. They will partake at the pitch fest where a panel of judges will appraise their proposals before final selection. Winners of the pitch fest will then be awarded grants at the awards ceremony in Lagos,” Oguntokun noted.

The press launch which held last week in Lagos had in attendance dignitaries such as the Director for Employment, Lagos State Ministry of Wealth Creation and Employment, Mrs Iyabo Seriki-Bello, Director of Partnerships and Coordination for Small and Medium Enterprises Development Agency of Nigeria; Dr Friday Okpara; Chairman, Advisory Board, International Breweries Foundation, Mr Peter Bamkole; members of the International Breweries team, past Kickstart Alumni, mentors and a host of others joining online.

Following its trajectory of success, impact over the years, and its extensive yet immersive plans for the 6th edition, Kickstart, under the auspices of International Breweries and its foundation is geared towards transforming Nigeria into an economic powerhouse through the impact of entrepreneurship.

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