- FG’s Huge Debts Crippling Financial System
The Monetary Policy Committee of the Central Bank of Nigeria on Tuesday called on the Federal Government to urgently evaluate the level of its domestic indebtedness and develop a framework for settling these debts.
The committee, in a communique issued at the end of its two-day meeting held at the headquarters of the CBN in Abuja, warned that the huge government indebtedness to economic agents had slowed down business activities.
In the communique, which was read by the CBN Governor, Mr. Godwin Emefiele, the committee noted that the development was not good for the economy as it was compromising the integrity of the financial system.
While reiterating that monetary policy alone could not address the current economic crisis, the CBN governor noted that the committee called for an enrichment of fiscal and other sector initiatives and interventions towards resolving the growth challenges in the economy.
He said these interventions were vital in order to promptly revive confidence in the economy.
Emefiele said, “Members stressed the need for a robust and more keenly coordinated macroeconomic policy framework that would restart output growth, stimulate aggregate demand and rein in inflation expectations.
“The MPC urged the Federal Government to urgently assess the extent of its indebtedness to domestic economic agents and develop a framework for securitising the debts in order to settle its outstanding domestic contractual obligations, which cut across all sectors of the economy.
“These accumulated debts have slowed the business activities of economic agents, most of who are indebted to the banking system, thus compromising the integrity of the financial system. It also advised the bank (CBN) to commit to greater surveillance and deployment of early warning systems in managing the banking system.”
The CBN governor said the committee called on security agencies to sustain their checks on the activities of illegal foreign exchange operators in order to bring sanity to that segment of the market.
He said, “The extant foreign exchange regulation outlaws the trafficking of currency on the streets as some unlicensed operators currently do.
“Thus, to evolve an appropriate naira exchange rate that stabilises the foreign exchange market, Bureau De Change operators must strictly observe the terms and conditions of their licences.”
On whether the CBN was supporting jail terms for people hoarding dollars, Emefiele said the apex bank would not support any such move.
He said while the current foreign exchange regulations of the CBN did not in any way support jail term for people who hoard dollars, he was aware that the Nigerian Law Reform Commission was working towards reviewing the regulations.
The apex bank boss, however, added that the CBN would not support any move to prescribe jail terms for people who hoard dollars.
He said, “Let me use this opportunity to reiterate that it is not in our foreign exchange regulations that people should be jailed or their dollars confiscated. But I am aware because just today (Tuesday), I was told that the Nigerian Law Reform Commission is looking at reviewing the exchange regulations, just like it normally will from time to time depending on the exigency of the time.
“We have not been contacted regarding whether or not some of the clauses that are involved are included in the review to be conducted by the Law Reform Commission.
“But I am saying here categorically that if we are contacted, or whenever it becomes an issue for discussion, we will advise against a clause that forbids people from keeping their dollars if they chose to, or a law that says people should be jailed for keeping foreign currencies.”
When asked if the apex bank was concerned about some of the risks facing the banking system owing to the current economic crisis, the CBN governor admitted that while all players in the financial system were facing “tremendous risks,” the central bank would ensure that they would not crystalise to a point where depositors’ funds would be lost.
He said, “As a result of the current challenges being faced by the global economy, all agents in the financial system, such as banks and other players, are facing tremendous risks.
“When there is a slowdown or recession, naturally banks will face certain risks such as non-performing loans rising and different other risks, and this imposes on the regulator a greater challenge to ensure that it strengthens its prudential guidelines to ensure that the banks and particularly depositors are protected.
“Nigerian banks, like other banks in other climes, are facing risks. But those risks are surmountable, and the central bank is doing all its best to ensure those risks don’t crystalise to a point where we will begin to talk about depositors losing their deposits. So for that reason, the rumour about banking sector risks is overtly elevated.”
On whether the apex bank was considering reducing the number of BDC operators so as to better regulate their activities, the governor said the CBN might consider that option at the appropriate time.
He said, “We believe that everybody (BDC) is entitled (to have a licence) once the regulations are set; there is no need to preclude you if you meet the conditions. But of course, naturally, the regulator, which is the CBN, has a right to put in place policies that limit entry. If we want to limit entry, we know what to do.
“I can assure you we will do it anytime we decide to limit entry or even exacerbate exit from the market, and that is something we will look into at the appropriate time.”
On the foreign exchange inflow through the CBN, the governor said the country recorded a decline of $447.5m or 31.85 per cent from $1.4bn in September to $957.37m in October.
He attributed the decrease to lower crude oil and other government revenues in the period under review, lamenting that despite the resumed Joint Venture payments in October, the total outflows also continued to decrease.
Foreign exchange outflows, according to him, dropped significantly by 58.68 per cent from $2.25bn to $1.01bn during the period.
Emefiele said the committee implored the CBN to continue to direct more focus at making foreign exchange available to the agriculture and manufacturing sectors of the economy.
This, according to him, can be achieved by enforcing its policy directing Deposit Money Banks to allocate 60 per cent of the available foreign exchange to these sectors.
On the Monetary Policy Rate, the CBN governor said the committee decided to leave it unchanged at 14 per cent.
He explained that all the 10 members who attended the MPC meeting agreed to maintain the current monetary policy stance.
Apart from the MPR that was retained at 14 per cent, the governor said the committee also voted to retain the Cash Reserves Ratio at 22.5 per cent.
Also retained were the liquidity ratio, which was left at 30 per cent; and the asymmetric window, which was left at +200 and -500 basis points around the MPR.
Peter Obaseki Retires as Chief Operating Officer of FCMB Group Plc
The Board of Directors of FCMB Group Plc has announced the retirement of Mr. Peter Obaseki, the Chief Operating Officer of the financial institution, with effect from March 1, 2021. He was also an Executive Director of the Group.
His retirement was approved at a meeting of the Board of the Group on February 26, 2021. This has also been announced in a statement to the Nigerian Stock Exchange (NSE) by the financial institution.
The Chairman of FCMB Group Plc’s Board of Directors, Mr Oladipupo Jadesimi, thanked Mr. Obaseki for his valuable service and excellent support to the Board for many years.
FCMB Group Plc is a holding company divided along three business Groups; Commercial and Retail Banking (First City Monument Bank Limited, Credit Direct Limited, FCMB (UK) Limited and FCMB Microfinance Bank Limited); Investment Banking (FCMB Capital Markets Limited and CSL Stockbrokers Limited); as well as Asset & Wealth Management (FCMB Pensions Limited, FCMB Asset Management Limited and FCMB Trustees Limited).
The Group and its subsidiaries are leaders in their respective segments with strong fundamentals.
For more information about FCMB Group Plc, please visit www.fcmbgroup.com.
COVID-19: CBN Extends Loan Repayment by Another One Year
Central Bank Extends One-Year Moratorium by 12 Months
The Central Bank of Nigeria (CBN) has extended the repayment of its discounted interest rate on intervention facility by another one-year following the expiration of the first 12 months moratorium approved on March 1, 2020.
The apex bank stated in a circular titled ‘Re: Regulatory forbearance for the restructuring of credit facilities of other financial institutions impacted by COVID-19’ and released on Wednesday to all financial institutions.
In the circular signed by Kelvin Amugo, the Director, Financial Policy and Regulation Department, CBN, the apex bank said the role-over of the moratorium on the facilities would be considered on a case by case basis.
The circular read, “The Central Bank of Nigeria reduced the interest rates on the CBN intervention facilities from nine per cent to five per cent per annum for one year effective March 1, 2020, as part of measures to mitigate the negative impact of COVID-19 pandemic on the Nigerian economy.
“Credit facilities, availed through participating banks and OFIs, were also granted a one-year moratorium on all principal payments with effect from March 1, 2020.
“Following the expiration of the above timelines, the CBN hereby approves as follows:
“The extension by another 12 months to February 28, 2022 of the discounted interest rate for the CBN intervention facilities.
“The role-over of the moratorium on the above facilities shall be considered on a case by case basis.”
It would be recalled that the apex bank reduced the interest rate on its intervention facility from nine percent to five percent and approved a 12-month moratorium in March 2020 to ease the negative impact of COVID-19 on businesses.
To further deepen economic recovery and stimulate growth, the apex bank has extended the one year-moratorium until February 28, 2022.
MTN Nigeria Generates N1.35 Trillion in Revenue in 2020
MTN Nigeria Grows Revenue by 15.1 Percent from N1.169 Trillion in 2019 to N1.35 Trillion in 2020
Despite the COVID-19 pandemic and challenging business environment, MTN Nigeria realised N1.346 trillion in revenue in the financial year ended December 31, 2020.
The leading telecommunications giant grew revenue by 15.1 percent from N1.169 trillion posted in the same period of 2019.
Operating profit surprisingly jumped by 8.5 percent from N393.225 billion in 2019 to N426.713 billion in 2020.
This, the telecom giant attributed to the surge in finance costs due to increased borrowings from N413 billion in 2019 to N521 billion in 2020.
MTN Nigeria further stated that the increase in finance costs was the reason for the decline in growth of profit before tax to 2.6 percent.
MTN Nigeria grew profit before tax by 2.6 percent to N298.874 billion, up from N291.277 billion filed in the corresponding period of 2019.
The company posted N205.214 billion profit for the year, a 0.9 percent increase from N203.283 billion recorded in the 2019 financial year.
Share capital remained unchanged at N407 million. While Total equity increased by 22.3 percent from N145.857 billion in 2019 to N178.386 billion in 2020.
MTN Nigeria’s market price per share increased by 61.8 percent from N105 to N169.90.
While market capitalisation as at year-end also expanded by 61.8 percent to N3.458 trillion, up from N2.137 trillion.
The number of shares issued and fully paid as at year-end stood at 20.354 million.
MTN Nigeria margins were affected by Naira devaluations and capital expenditure due to the new 4G network coverage roll-out.
“Margins were adversely affected by the effect of naira devaluation and expenses associated with new sites’ roll-out to boost 4G network coverage in FY’20.
“On the former, we note that MTNN expanded the scope of its service agreement with IHS Holding Limited and changed the reference rate for converting USD tower expenses to NAFEX (vs CBN’s official rate previously). Thus, over the full-year period, the company’s operating margin contracted by 1.9 ppts YoY to 31.7%,” CardinalStone stated in its latest report.
News3 weeks ago
Doctors Warn Covid Will Become Endemic and People Need to Learn to Live With it
Bitcoin2 weeks ago
Bitcoin Rebounds To $50,881 Per Coin on Wednesday
Bitcoin3 weeks ago
Bitcoin Surges Above $50,000 Per Coin on Tuesday, Sets a New All-Time High
News2 weeks ago
U.S. COVID-19 Deaths Hit 500,000
Economy3 weeks ago
Petrol Subsidy May Hit N11.2bn Per Week
Economy4 weeks ago
Petrol Landing Cost Rises to N180, Oil Crosses $60
Cryptocurrency4 weeks ago
Why CBN Bans Banks from Facilitating Cryptocurrency Exchanges
News3 weeks ago
WAEC Releases 2020 Result, Just 39.8 Percent Passed