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Finance

FG Approves Three-year External Borrowing Plan

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Muhammadu-Buhari

FG Approves Three-year External Borrowing Plan

The federal government has approved a three-year rolling external borrowing plan.

Briefing State House Correspondents after the Federal Executive Council (FEC) meeting held in Abuja yesterday, the Minister for Finance, Mrs. Kemi Adeosun, said the approval would be transmitted to the National Assembly immediately.

She said the loans would come from agencies such as the World Bank, African Development Bank, China Exim Bank, and other development agencies like the Japanese International Cooperation Agency (JICA).

Also at the briefing were the Minister for Information and Culture, Lai Muhammed, Minister for Solid Minerals, Kayode Fayemi, Minister for Finance, Minister for Agriculture, Audu Ogbeh, and Minister for Education, Adamu Adamu, who also briefed journalists with respect to FEC’s approval for their respective ministry.

Other highlights of the meeting included the changing of the name of Ministry for Solid Minerals to Ministry of Mines and Steel Development, the approval of a new roadmap for the development of the solid minerals sector, approval of contracts to build a new structure called international house at the University of Ibadan and a library at the University of Lagos.

The finance minister said the plan to borrow externally was in line with government’s strategy to focus on concessional debts, low cost loans particularly from multi-lateral agencies.

She said: “So this plan we have put forward today which was approved by the FEC and will be transmitted to the National Assembly for the approval includes:

“Concessional loans average interest rates 1.25 per cent, four to seven year moratorium, 20 years to pay. From agencies such as the World Bank, African Development Bank, China Exim Bank, and other development agencies lke Japanese International Cooperation Agency (JICA).”

Adeosun said the loans would be applied to develop strategic sectors which government believed would help revive the economy.

She said the power sector would receive a significant amount of the loan to take care of projects militating against efficient power generation. She specifically cited transmission.

“This is long term money that will enable us solve some of the problems in that sector,” she added.

Adeosun said the health sector would also benefit from the loan.

She said: “There are projects around polio. There are some money that have been allocated to us to help us do some massive immunisation, in order to control this recent outbreak. This is being provided by the World Bank.

“There is provision for solid minerals and of course I’m very excited about the discovery of nickel. The World Bank is supporting the project by the Ministry of Mines and Steel with $150 million to enable them strengthen their capacity in that area.

“The largest beneficiary of our borrowing is agriculture because it is equally strategic and we have programmes by the minister some of which he inherited and is going to restructure and reform and some are new to the ministry.”

The minister said government would also seek funding through Eurobond.

She said: “The FEC sent a strong signal to everybody that we need to reach out to the National Assembly to get this borrowing plan approved as soon as possible. Because a lot of this money is for developmental projects. We need this money and it is available for us.

“Remember these are foreign exchange coming to our country that will help our economy.”

Answering questions after the briefing, the finance minister said the present administration was on course to lay a solid foundation for Nigeria’s development.

Adeosun dismissed claims that the administration was confused about how to manage the nation’s economy.

According to her, the government has a clear view of what to do to turn the economy around.

She said: “It is the worst possible time for us. Are we confused? Absolutely not. How are we going to get ourselves out of this recession. One, we must make sure that we diversify our economy. There are too many of us to keep on relying on oil. We can all see what happened at the output data of the oil and gas sector. What’s happening in the Niger Delta has dragged down the GDP of the entire economy. We’re too dependent on oil.
We have to invest in capital projects.

“No we are not confused, the time are confusing but we are not confused. We are extremely focused. We know that if we can just bear and get through this difficult period, Nigeria is going to be better for it. If we rely on oil and the price of oil remains low and the quantity of oil remains low, we can’t grow. We have to grow our non oil economy.

“I think that we have a long way to go. We’re not confused and we’re not deceiving ourselves that everything is rosy. It’s not. It’s a difficult time for Nigeria but I think Nigeria is in the right hands and if we can stick to our strategy. We still have some adjustments to make. I think we need to make some adjustments in monetary policy. It’s quite clear we do and we will do that. We’re working on that. We need to try and find a way to support the manufacturing sector better and we will do that.”

While answering question on the figure released by National Bureau of Statistics, Adeosun said the inflation was being pushed by cost and it would be curtailed.

“What we have is cost-push inflation and when you have cost-push inflation it is structural inflation. It is not going to respond to monetary policy tools such as increasing the rate of interest. We have to address the structural causes of the inflation

“The trend, the rate of inflation growth has slowed down and that’s a good sign.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Loans

Farmers Are Refusing To Pay Back Loans – CBN Cries Out

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agriculture

The Central Bank of Nigeria (CBN) has cried out over the refusal of the majority of farmers who benefited from the Anchor Borrowers’ Programme (ABP) to repay their loans.

CBN Development Finance Officer, Mr Sadeeq Ajayi revealed this at the Agribusiness Innovation Clinic.

He claimed that the majority of the beneficiaries regard the loan as their part of the national cake in his speech entitled Fostering Innovation and Collaboration Across the Agricultural Value Chain, which was organized by the Global Alliance for Improved Nutrition (GAIN).

He urged farmers who had delayed their agricultural loans to repay them, claiming that the CBN’s failure to retrieve the loans from defaulting farmers had jeopardized the plan and prohibited other farmers from using it.

“While the Anchor Borrowers’ Programme had recorded some level of success, the failure of farmers to repay the loans has, however, been a major setback.

“Many of the farmers refused to pay back their loans due to the misconception that since CBN is the lender, the loan is a ‘national cake’ and they do not have to pay back what they consider theirs as citizens.

“This attitude has made it difficult for other farmers, who also want to access the loan, to benefit from the scheme,” he said.

In 2021, about 2.85 million farmers benefitted from the Anchor Borrowers Programme. Investors King gathered that N554.63bn was disbursed, of which N61.02bn was allocated to 359,370 dry season farmers.

In its October monthly report, the CBN also revealed that the Anchor Borrowers Program disbursed N1.9 billion to 2,521 farmers to cultivate 8,963 hectares of land through three participating financial institutions.

Cassava, cotton, fish, groundnut, maize, poultry, rice, soya beans, wheat, cattle, sorghum, ginger, castor seed, sesame, tomato, cocoa, yellow pepper, oil palm, cowpea, and onion were among the crops cultivated on 3,097,834 hectares, according to the report.

ABP is an agricultural loan scheme launched by the federal government in 2015 through the Central Bank of Nigeria (CBN) to provide loans (in kind and cash) to smallholder farmers in order to increase agricultural production, create jobs, and reduce food import bills in order to conserve foreign reserves.

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Finance

MTN Nigeria’s MoMo Formally Commences Operation

MoMo has commenced a full commercial Payment Service Bank operations, today, 19th May, 2022

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MTN

MTN Nigeria’s subsidiary company, MoMo has commenced a full commercial Payment Service Bank (PSB) operations, today, 19th May, 2022.

This comes after a successful trial that began on May 16, 2022, to commemorate the start of MTN’s GSM operations on May 16, 2001, and MTN’s listing on the Nigerian Exchange Limited on May 16, 2019.

Investors King had reported the CBN’s approval of this process some months back stating; “This is the first step in the process towards a final approval, subject to the fulfillment of certain conditions as stipulated by the CBN. The decision to issue a final approval is firmly within the regulatory purview of the CBN and we respect their right and judgment in that regard.

“MTN Nigeria affirms its commitment towards the financial inclusion agenda of the CBN and the Federal Republic of Nigeria and continues to explore means whereby it can contribute to its fulfillment…”

MoMo PSB is determined to enable millions of Nigerians to access a broad range of financial service products. With an expansive agent network of over 166,000 active agents and digitized partnership infrastructure, MoMo PSB will continue to expand its agent network in order to serve Nigerians across the country and eliminate friction from routine transactions by digitizing cash payments.

Customers can open a MoMo wallet, send money to any phone number in the country, and pay their bills by dialing *671# from any network.

Furthermore, MoMo wallets will allow Nigerians in the Diaspora to send money to any phone number in the country in the future, a crucial feature considering Nigeria’s position as the top recipient of remittances in Sub-Saharan Africa.

“We are grateful to the Central Bank of Nigeria (CBN) for their support and guidance through the process,” said Karl Toriola, CEO of MTN Nigeria. “This is an important milestone for MTN Nigeria in our mission to support the government’s drive towards financial inclusion in Nigeria.

Not just for those in urban centers and markets, but also people in the rural and remote areas of the country who remain excluded from the financial system,” he added.

MoMo PSB CEO, Usoro Usoro said: “Providing easy to use, accessible and affordable financial services to all Nigerians is essential to executing the CBN’s financial inclusion strategy and the digital inclusion agenda of the Minister of Communications and Digital Economy. We look forward to playing our part and are excited about the opportunities to partner with relevant institutions across various sectors to co-create and expand access nationwide.”

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Banking Sector

CBN Issues Directive For Open Banking to Improve Financial Services

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Central Bank

In an effort to stimulate innovation and widen the range of financial products and services available to banks’ customers, the apex regulatory bank, the Central Bank of Nigeria (CBN), has established the legal framework for Open Banking in Nigeria.

This was revealed in a circular titled ‘Operational guidelines for open banking in Nigeria’ which was obtained by Investors King.

The Regulatory Framework for Open Banking in Nigeria, according to the CBN, establishes standards for data sharing across the banking and payments systems in order to stimulate innovation and expand the range of financial products and services available to bank customers.

According to the CBN, the financial sector data guideline would allow clients to access innovative financial products and services.

The Apex bank said: “Open banking recognises the ownership and control of data by customers of financial and non-financial services, and their right to grant authorisations to service providers to access innovative financial products and services. This is anticipated to drive competition and improve access to banking and payments services”.

The CBN also added that participants in open banking shall adhere strictly to security standards when accessing and storing data, and shall be subject to minimum privacy standards, operational standards, risk management standards and customer experience standards as prescribed by the Bank.

According to the CBN, any organization with customer data that may be transferred with other businesses in order to deliver innovative financial services within Nigeria is eligible to participate in the Open Banking ecosystem.

Open banking is a banking practice in which banks and non-bank financial organizations provide third-party financial service providers open access to customer banking, transaction, and other financial data via application programming interfaces (APIs).

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