Connect with us

Investment

CBN Sets 10% Limit on Banks’ Investment in Islamic Bonds

Published

on

CBN
  • CBN Sets 10% Limit on Banks’ Investment in Islamic Bonds

The Central Bank of Nigeria (CBN) has set commercial banks’ investment in Islamic bonds issued by state governments to 10 per cent of the total amount on offer.

CBN’s Director, Financial Markets Department, Angela Sere-Ejembi, said the apex bank also fixed a maximum tenor of 10 years for the bonds.

“In view of the need to foster financial system and economic growth and development, as well as complement the efforts of government at various levels, the CBN has approved “Guidelines for Granting Liquid Asset Status to Sukuk Instruments Issued by State Governments”, to enhance the diversification of sources of funding for development at the sub-national levels,” she said.

She said financial deepening is gradually gaining ground in the Nigerian financial landscape with the introduction of new financial products, including non-interest financial instruments, to cater for the diverse financial needs of the populace and government at various levels.

The adoption of Sukuk issuance by state governments in Nigeria, as an alternative means of financing public expenditure, will contribute to the deepening of the financial system. In the same light, it is expected that other levels of government as well as interested supra-national financial organisations may get involved in Sukuk structuring at some time in the future.

She said to ensure the sustainability of this development, the CBN has considered the need to enhance the quality of Sukuk instruments, by issuing these guidelines to provide for eligibility for the grant of liquidity status to Sukuk issued by state governments at its discount window as well as for the purpose of liquidity ratio computation. This will further deepen the market and promote investment and secondary market activities.

The Sukuk issuance, she said, shall be backed by a law enacted by the relevant House of Assembly, specifying that a sinking fund to be fully funded from the consolidated revenue fund account of the state be established.

“The state government shall have in place a fiscal responsibility law, with provisions for public debt management, in order to enhance investor confidence. The state government shall establish a debt management department in order to ensure transparency and professional management of debt issues,” she said.

She continued: “The Sukuk shall, at inception and throughout its tenor, be of investment grade as determined by a rating agency accredited by the Securities and Exchange Commission (SEC). A SEC confirmation that the proceeds have been disbursed in line with the provisions of the prospectus shall be submitted to the Director, Financial Policy and Regulation Department (FPRD) of the CBN at the anniversary of the Sukuk issuance. Subsequently, SEC confirmation shall be required on amounts that have not been disbursed by the first anniversary.”

She added: “Repayment structure shall be from a funded sinking fund account (supported by a legislated irrevocable standing payment order (ISPO) and/or other legislated sources of repayments disclosed in the offer documents). The Trustee(s) to the Sukuk shall submit to Director, FPRD, CBN every six months: (a) a statement of accounts of the sinking funds’ investments and (b) a statement of declaration on the sufficiency of the sinking funds’ investments and investment income in meeting maturing and redemption obligations.”

 

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.

Investment

Afreximbank, AAAM to Drive Automotive Investment

Published

on

Afreximbank

Afreximbank, AAAM to Drive Automotive Investment

The African Export-Import Bank (Afreximbank) and the African Association of Automotive Manufacturers (AAAM) have entered into a Memorandum of Understanding (MoU) for the financing and promotion of the automotive industry in Africa.

President of Afreximbank, Prof. Benedict Oramah and President of AAAM/Managing Director of Nissan Africa, Mike Whitfield, signed the MoU in early February, according to a statement yesterday.

The deal formalised the basis for a partnership aimed at boosting regional automotive value chains and financing for the automotive industry while supporting the development of enabling policies, technical assistance, and capacity building initiatives.

Oramah, said, “the strategic partnership with AAAM will facilitate the implementation of the Bank’s Automotive programme which aims to catalyze the development of the automotive industry in Africa as the continent commences trade under the African Continental Free Trade Area (AfCFTA).”

Under the terms of the MoU, Afreximbank and AAAM will work together to foster the emergence of regional value chains with a focus on value-added manufacturing created through partnerships between global Original Equipment Manufacturers (OEM), suppliers, and local partners.

The two organisations plan to undertake comprehensive studies to map potential regional automotive value chains on the continent in regional economic clusters, in order to enable the manufacture of automotive components for supply to hub assemblers.

“To support the emergence of the African automotive industry, they will collaborate to provide financing to industry players along the whole automotive value chain. The potential interventions include lines of credit, direct financing, project financing, supply chain financing, guarantees, and equity financing, amongst others.

“The MoU also provides for them to support, in conjunction with the African Union Commission and the AfCFTA Secretariat, the development of coherent national, regional and continental automotive policies, and strategies.

“With an integrated market under the AfCFTA, abundant and cheap labour, natural resource wealth, and a growing middle class, African countries are increasingly turning their attention to support the emergence of their automotive industries.

“Therefore, the collaboration between Afreximbank and AAAM will be an opportunity to empower the aspirations of African countries towards re-focusing their economies on industrialisation and export manufacturing and fostering the emergence of regional value chains,” the statement added.

“The signing of the MoU with Afreximbank is an exciting milestone for the development of the automotive industry in Africa. At the 2020 digital Africa Auto Forum, the lack of affordable financing available for the automotive sector was identified as one of the key inhibiters for the growth and development of the automotive industry in Africa and having Afreximbank on board is a game changer and a hugely positive development,” CEO of AAAM, David Coffey said.

“It is wonderful to have a partner that is as committed as the AAAM to driving the development and growth of our sector on the continent; this collaboration will ensure genuine progress for our industry in Africa,” Coffey added.

Other areas covered by the MoU include working with the African Union and the African Organisation for Standardisation to harmonise automotive standards across the continent and developing an automotive focused training program for both the public and private sector.

Continue Reading

Investment

FG Warns Foreign Investors Against Enslaving Nigerians

Published

on

Immigration

FG Warns Foreign Investors Against Enslaving Nigerians

The Federal Government on Monday warned foreign investors against subjecting Nigerians working in their companies to industrial slavery.

The government said the warning became necessary following several complaints against foreign companies maltreating some of their staff.

The Chief Commissioner, Public Complaints Commission, Chile Igbawua, issued the warning during a courtesy call on him by a delegation of Pan Africa United Youth Developments Network who came to lay complaint against some foreign companies allegedly maltreating Nigerians working under them.

The PCC said that it would not allow only its state commissioners to handle the issues due to their magnitude as there had been so many complaints about the ways some of the foreign companies were treating their staff.

At the event, the leader of the delegation, Habib Muhammed, expressed concern over alleged injustice and irregularities perpetrated by some company on Nigeria youths whom they engaged as factory workers.

He called on the Federal Government to look into the alleged slavery and injustice meted on Nigerian youths.

While calling on the foreigners to obey the labour laws of Nigeria, Igbawua said, “Our resources cannot be used to enslave us again.”

He said, “We have labour laws in Nigeria for goodness sake and we also have industrial standards; people working in various industries are entitled to good working conditions and minimum conditions of service.”

He added that the law was clear on the issue of casualisation and should be implemented.

Continue Reading

Investment

Foreign Direct Investments into China Shot Up by 9% in 2020 to $163 Billion Against 49% US Decline

Published

on

growth

Foreign Direct Investments into China Shot Up by 9% in 2020 to $163 Billion Against 49% US Decline

China had the highest inflow of Foreign Direct Investments (FDI) globally in 2020, surpassing the US which took the lead in 2019.

According to the research data analyzed and published by Comprar Acciones, China’s inflow shot up by 9% to $163 billion up from $140 billion the previous year. Meanwhile, the US had a 49% drop from $251 billion in 2019 to $134 billion.

Based on data from the National Bureau of Statistics, China reported a 2.3% growth in GDP in 2020. It was the only major economy to record a positive growth rate during the year.

Chinese Stock Market Saw 18 Million New Investors in 2020

Global FDI took a hit in 2020, falling by 42% year-over-year (YoY) from $1.49 trillion in 2019 to $859 billion. The figure was 30% lower than the one reported during the 2009 financial crisis.

Developed countries saw the worst performance, sinking by a cumulative 69% YoY to $229 billion. For developing economies, there was a 12% decline of $616 billion. By the end of 2020, developing countries accounted for a 72% share of global FDI, the highest on record. India had the highest growth among top-rated economies, shooting up by 13%.

China bore the brunt of the pandemic much better than its peers, posting a 6.5% GDP growth in Q4 2020. During the year, there were 18.02 million new investors in its mainland stock market, raising the total to 177.77 million. Driving the surge in interest was the stellar performance of Chinese stocks in 2020.

The Shenzen Component grew by 38.7% in 2020, and the CSI 300 increased by 27.2%, compared to the S&P 500’s 16.26% growth. IPO activity also soared, with China and Hong Kong accounting for 40% of global IPO volume in 2020 according to Ernst & Young.

Continue Reading

Trending