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FG’s Debt to Expand with N1.021tn Treasury Bills

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FG Borrows
  • FG’s Debt to Expand with N1.021tn Treasury Bills

In line with the federal government’s domestic borrowing plan, the Central Bank of Nigeria (CBN) plans to issue treasury bills worth N1.021 trillion between June and August this year.

According to the CBN’s Nigerian Treasury Bills issue programme, a total of N214 billion would be raised by issuing 91-day, 182-day and 364-day treasury bills on June 15.

Also, on June 22, the Bank would also sell treasury bills worth N133 billion, while on July 6, the fixed income instrument valued at N177 billion would be issued by the CBN.

In the same vein, the central bank’s treasury bills issuing programme showed that on July 20, the Bank would issue another treasury bills of various tenor worth N205 billion; N229 billion on August 3rd and N62.436 billion on August 17.

Nigeria, grappling with its first recession in 25 years which was largely brought on by low oil prices and the impact of attacks on energy facilities in the Niger Delta, plans to spend about N7.44 trillion this year.

The West African country expects a budget deficit of about N2.21 trillion this year as it tries to spend its way out of a recession, with more than half the deficit to be funded through local borrowing.

The Debt Management Office (DMO) recently put Nigeria’s total debt stock at N19.15 trillion as at the end of first quarter 2017; up from the N17.36 trillion it was at the end of last year.

According to the DMO, the external component of the country’s debt stood at $13.80 billion at the end of March 2017, as against $11.40 billion at the end of December. But the domestic component of the debt fell to N11.97 trillion, as against N13.88 trillion last year.

A breakdown of the domestic debt component showed that while FGN Bonds was N8.178 trillion, Nigerian Treasury Bills N3.6 trillion, Nigerian Treasury Bond was N191 billion and the FGN Savings Bond N2.068 billion.

The federal government raised a total of $1.5 billion through Eurobond sales in two tranches in the first quarter of this year.

Acting President Yemi Osinbajo while signing the budget on Monday pointed out that the economy was already signalling a gradual recovery as growth is headed towards positive territory.

“We are also gradually instilling confidence in our exchange rate regime. This improvement in GDP growth and other macro-economic indicators is largely attributable to our strategic implementation of the 2016 Budget as well as stronger macroeconomic management and policy coordination.

“I am confident that the 2017 Budget will deliver positive economic growth and prosperity – one that is self-sustaining and inclusive. In this regard, the 2017 budget will be implemented in line with our Economic Recovery and Growth Plan,” he added.

Over the 2017-2020 plan period, the government is focussing on five key execution priorities, namely: stabilising the macroeconomic environment; agriculture and food security; energy sufficiency in power and petroleum products; improved transportation infrastructure; and industrialisation through support for micro, small and medium-scale enterprises (MSMEs).

Minister of Finance, Kemi Adeosun recently said Nigeria’s debt is not too high. However, she pointed out that the country’s revenue was too low.

She had said that the country’s debt to Gross Domestic Product ratio remained low.

She said: “The problem is not that our debt is too high, but that our revenue is too low. It is revenue you use to pay debt and our revenue in Nigeria right now is very low.”

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.

Finance

NAIC Pays N1.7bn Claims to Farmers

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The Nigerian Agricultural Insurance Corporation (NAIC) said it paid a total of N1.7 billion claims to over 5,000 farmers in the past two years.

NAIC, which is the only federal government owned insurance company authorised to offer agric insurance services to farmers at subsidised rate, said a breakdown of the paid claims showed that it paid N856 million to insured farmers in 2019 and N848 million in 2020.

Commenting on the development, NAIC Managing Director, Mrs. Folashade Joseph, said the claims were paid to the farmers to cover losses incurred in the course of doing business.

Joseph, enjoined agricultural investors and lending institutions to continue to partner NAIC by taking agricultural insurance cover that will enable them remain firm in business despite unforeseen circumstances from weather conditions and other risks in order to realise the food security agenda of President Muhammadu Buhari.

She said the above-mentioned amount was shared among five million farmers who suffered various setbacks in their farms as a result of natural course.

According to her, the NAIC Agric Insurance Scheme was launched in 1987 by federal government to restore the confidence and productivity of Nigerian farmers who suffered losses as a result of natural disaster such as flood, drought, pest and diseases.

The NAIC boss explained that the essence of the sensitisation campaign embarked by the corporation was to let the farmers know and understand exactly what NAIC does, the importance of insurance, and make them understand how insurance works, how they can access NAIC products and services, how to process their claims, as well as what insurance stands to do for them.

“Agribusiness is evolving fast and so many risks are being thrown up, many new participants are coming into the business of agriculture, and the risks are on the increase if you look at them across the value chain, there is no so many participants so we need to keep sensitising the farmers and let them know we are serving them, and we need to know from them how to serve them,” she explained.

Speaking further, she said, “our assurance to farmers is that when they are insured and they suffer losses covered by any of the policies they purchased, including natural disasters and whatever, they will get paid for their losses, and that is the purpose of insurance and setting up NAIC.

“Our motor is ‘Plowing the Farmer Back to Business, Plowing the Farmers into Prosperity’, and we settle claims.”

She said NAIC currently deals with thousands of farmers (Small, Medium, and Large scale farmers) across the country, adding that the corporation serves farmers with investment as little as N100, 000, and at the same time serves multinational farmers.

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Banking Sector

UBA Organises Capacity Building Forum

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UBA Insider dealings

As part of its commitment to support the growth and sustainability of micro, small and medium-scale enterprises (MSME) in the continent, the United Bank for Africa (UBA) Plc, is set to organise the next edition of its UBA Business Series.

The UBA Business Series which is a monthly event, is an MSME Workshop as well as a capacity building initiative of the bank where business leaders and professionals share well-researched insights on best practices for running successful businesses, especially in the face of the difficult operating environment that dominates the African business landscape.

Through this initiative, UBA has been assisting with essential tips to help businesses re-examine their models and strategies and ensure that they stay afloat and remain thriving, a statement from the bank explained.

The topic for the next edition of the series is, “Managing Performance for Business Growth,” and it will be held today, via Microsoft Teams.

At this session, the Managing Director, Secure ID Limited, Mrs Kofo Akinkugbe, will be sharing useful tips and insights on the key strategies of performance management to boost business growth.

Akinkugbe is the founder of SecureID Nigeria, a MasterCard, VISA and Verve certified Smartcard Personalization Bureau and Digital Technology company. She currently serves as the Managing Director/CEO, Secure Card Manufacturing, – a Smartcard manufacturing plant producing high security identity cards and documents for the Banking, Telecoms and Public sectors across Africa and beyond.

UBA’s Head, SME Banking, Sampson Aneke said of Akinkugbe, “with her vast experience garnered over the years from various sectors, she will help business owners understand how performance management strategies can be effectively implemented to ensure business growth.”

He emphasised UBA’s commitment and deep passion for small businesses, which according to him, remains the engine of any developing economy adding, “We know small businesses are the backbone of the economy in every country. In many climes, businesses with fewer than 100 employees account for 98.2 per cent of all businesses. This no doubt captures the importance of SMEs to a thriving economy which is why UBA is committed to seeing them flourish.”

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Banking Sector

CBN to Extend Credit Risk Management System to OFIs

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In an effort to curb growing bad debt, the Central Bank of Nigeria has said it will extend its Credit Risk Management System to Other Financial Institutions (OFIs) operating in Nigeria to protect them from bad debtors.

According to the apex bank, this is important following the successful implementation of the credit risk system in other lending institutions operating in Nigeria.

The bank disclosed this in a circular titled ‘Credit Risk Management System: Commencement of enrolment of all Development Finance Institutions, Microfinance Banks, Primary Mortgage Banks and Finance Companies’ and signed by Kelvin Amugo, the Director, Financial Policy and Regulation Department, on Monday.

In part, the circular read, “As part of efforts to promote a safe and sound financial system in Nigeria, the CBN introduced the CRMS to improve credit risk management in commercial, merchant and non-interest banks as well as to prevent predatory borrowers from undermining the banking system.

“With the successful implementation of the CRMS in deposit money banks, it has become expedient to commence the enrolment of Other Financial Institutions on the CTMS platform.

“Accordingly, all DFIs, MfBs, PMBs and FCs are required to report all credit facilities (principal and interest) to the CRMs and to update same on monthly basis.

“OFIs shall note the Bank Verification Numbers and Tax Identification Numbers are the only basis for regulatory renditions”.

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