Finance

Interventions: Senate Moves to Check CBN’s ‘Reckless’ Spending

Published

7 years ago

June 8, 2017

Interventions: Senate Moves to Check CBN’s ‘Reckless’ Spending

The Senate has condemned the Central Bank of Nigeria for spending a total of N1.223tn in 2016 on interventions without appropriation by the National Assembly.

The upper chamber of the National Assembly is now considering subjecting the apex bank’s expenditure on interventions to legislative approval.

This is the focus of a bill seeking to amend the CBN Act, 2007 “to ensure transparency and accountability in the operations of the bank and subject intervention advances to the approval of the National Assembly,” which passed the second reading at the plenary on Wednesday.

Senator Rose Oko, who sponsored the bill, said the amendment was to bring the CBN Act in line with the provisions of Section 80 of the 1999 Constitution and Sections 22 and 23 of the Fiscal Responsibility Act.

Oko noted that the apex bank was empowered and mandated by Section 38 of the CBN Act to intervene in the nation’s budget to meet shortfalls to the tune of five per cent of the actual revenue of the previous year.

“However, the Central Bank of Nigeria has continually acted in contravention of the provisions of the Constitution and the Fiscal Responsibility Act through extra-budgetary interventions to selected bodies, institutions and agencies,” she added.

The lawmaker stated that while the interventions were expected to have economic benefits, notably to strengthen the economy through the stabilisation process, income distribution, resource allocation, sectorial performance and job creation, “its procedural problems and its lack of appropriation and oversight exposes it to abuse, ineffective implementation and imprudence in its implementation.”

She added, “The CBN neither seeks nor obtains the approval of the National Assembly on the intervention funds as they are not captured in the Appropriation Act. There are, therefore, no known mechanisms for monitoring and tracking of the funds.

“Consequently, effective legislative oversight of such funds is not in existence. This situation gives room for abuse, financial recklessness and financial imprudence, resulting in the lofty aims of the intervention remaining unrealised to a large extent.”

Oko cited some of such interventions by the CBN as the N620bn bailout to five banks, namely Afribank Plc, Intercontinental Bank Plc, Union Bank of Nigeria Plc, Oceanic Bank Plc and Finbank Plc.

She also mentioned the “various donations to tertiary institutions running into several billions,” the N300bn bailout to states, drawn from the $2.1bn NLNG taxes and dividends, to pay salaries, as well as the N2.02tn said to have been set aside by the apex bank to fund various sectors of the economy.

The sectors were listed as the Commercial Agricultural Credit Scheme (N200bn); Power and Aviation Intervention Funds (N300bn); the Micro, Small and Medium Enterprises Development Fund (N220bn); Real Sector Support Facility (N300bn); and the Nigeria Electricity Market Stabilisation Facility (N213bn), totalling N1.223tn.

Oko said, “The total capital budget for 2016 was N1.8tn. If N1.223tn was indeed disbursed or intended as intervention, then, an amount almost the size of the capital budget was disbursed without appropriation and tracking to know the effectiveness of the intervention in the economy.”

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Samed Olukoya

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

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Banking Sector

UBA, Access Holdings, and FBN Holdings Lead Nigerian Banks in Electronic Banking Revenue

Published

3 hours ago

April 24, 2024

Samed Olukoya

United Bank for Africa (UBA) Plc, Access Holdings Plc, and FBN Holdings Plc have emerged as frontrunners in electronic banking revenue among the country’s top financial institutions.

Data revealed that these banks led the pack in income from electronic banking services throughout the 2023 fiscal year.

UBA reported the highest electronic banking income of N125.5 billion in 2023, up from N78.9 billion recorded in the previous year.

Similarly, Access Holdings grew electronic banking revenue from N59.6 billion in the previous year to N101.6 billion in the year under review.

FBN Holdings also experienced an increase in electronic banking revenue from N55 billion in 2022 to N66 billion.

The rise in electronic banking revenue underscores the pivotal role played by these banks in facilitating digital financial transactions across Nigeria.

As the nation embraces digitalization and transitions towards cashless transactions, these banks have capitalized on the growing demand for electronic banking services.

Tesleemah Lateef, a bank analyst at Cordros Securities Limited, attributed the increase in electronic banking income to the surge in online transactions driven by the cashless policy implemented in the first quarter of 2023.

The policy incentivized individuals and businesses to conduct more transactions through digital channels, resulting in a substantial uptick in electronic banking revenue.

Furthermore, the combined revenue from electronic banking among the top 10 Nigerian banks surged to N427 billion from N309 billion, reflecting the industry’s robust growth trajectory in digital financial services.

The impressive performance of UBA, Access Holdings, and FBN Holdings underscores their strategic focus on leveraging technology to enhance customer experience and drive financial inclusion.

By investing in digital payment infrastructure and promoting digital payments among their customers, these banks have cemented their position as industry leaders in the rapidly evolving landscape of electronic banking in Nigeria.

As the Central Bank of Nigeria continues to promote digital payments and reduce the country’s dependence on cash, banks are poised to further capitalize on the opportunities presented by the digital economy.

Loans

Nigeria’s $2.25 Billion Loan Request to Receive Final Approval from World Bank in June

Published

1 day ago

April 23, 2024

Samed Olukoya

Nigeria’s $2.25 billion loan request is expected to receive final approval from the World Bank in June.

The loan, consisting of $1.5 billion in Development Policy Financing and $750 million in Programme-for-Results Financing, aims to bolster Nigeria’s developmental efforts.

Finance Minister Wale Edun hailed the loan as a “free lunch,” highlighting its favorable terms, including a 40-year term, 10 years of moratorium, and a 1% interest rate.

Edun highlighted the loan’s quasi-grant nature, providing substantial financial support to Nigeria’s economic endeavors.

While the loan request awaits formal approval in June, Edun revealed that the World Bank’s board of directors had already greenlit the credit, currently undergoing processing.

The loan signifies a vote of confidence in Nigeria’s economic resilience and strategic response to global challenges, as showcased during the recent Spring Meetings.

Nigeria’s delegation, led by Edun, underscored the nation’s commitment to addressing economic obstacles and leveraging international partnerships for sustainable development.

With the impending approval of the $2.25 billion loan, Nigeria looks poised to embark on transformative initiatives, buoyed by crucial financial backing from the World Bank.

Banking Sector

FMBN Set for Commercialization to Improve Affordable Mortgage Financing

Published

2 days ago

April 22, 2024

Samed Olukoya

In a bid to bolster housing delivery efficiency and enhance affordable mortgage financing for Nigerians, the Federal Mortgage Bank of Nigeria (FMBN) is gearing up for commercialization.

This move comes as part of the Nigerian government’s efforts to address the housing deficit and ensure adequate shelter for its citizens.

The Managing Director of FMBN, Shehu Osidi, made this announcement during a courtesy visit by the Federal Housing Delivery Reforms Task Team at the bank’s headquarters in Abuja.

Led by Mr. Adedeji Adesemoye and Brig. Gen. Tunde Reis, the task team discussed strategies to revitalize the housing sector, with a focus on FMBN’s pivotal role in providing affordable mortgage financing.

Osidi explained the bank’s commitment to supporting the government’s agenda of reforming and improving the housing sector, which is vital for sustainable development and enhancing citizens’ quality of life.

He underscored FMBN’s significant journey in the history of mortgage and housing finance in Nigeria and expressed optimism about the forthcoming commercialization process.

The commercialization plan involves repositioning and recapitalization efforts, following extensive engagements with the Bureau of Public Enterprise (BPE).

Osidi stressed the importance of aligning the bank’s operations with its mandate of affordable mortgage financing, ensuring that it remains a reliable partner in the quest for accessible housing solutions.

As part of its strategic blueprint, FMBN has prioritized various initiatives to enhance service delivery and operational efficiency.

Of note is the ICT project aimed at upgrading core banking applications that is almost complete and promised to revolutionize customers’ experience.

Also, amendments to the FMBN and NFH Acts are underway in the National Assembly, addressing key areas to facilitate the bank’s transformation.

Despite challenges, including performance issues with estate development loans, FMBN is determined to overcome obstacles and achieve its objectives.

The commercialization plan aligns with broader efforts to deepen reforms and foster a remarkable turnaround in the housing sector.

By focusing on process automation, cost efficiency, credit quality enhancement, and strategic partnerships, FMBN aims to catalyze sustainable growth and address the nation’s housing needs effectively.

Chairman of the Federal Housing Reforms Task Team, Adedeji Adesomoye, reiterated the committee’s mandate to review the operations and governance structures of key housing institutions.

With ambitious targets set by the government, including the construction of 20,000 housing units in 2024 and 50,000 units in subsequent years, the commercialization of FMBN marks a pivotal step towards realizing Nigeria’s housing aspirations.

As the commercialization process unfolds, FMBN stands poised to play a central role in facilitating access to affordable mortgage financing, thereby contributing to the realization of homeownership dreams for millions of Nigerians.