- Monetary Policy Offers Limited Tools for Economic Recovery
Mr Godwin Emefiele, the Governor of Central Bank of Nigeria (CBN), says monetary policy offers limited tools for dealing with the current economic challenges in the country.
Emefiele said this while delivering a keynote lecture at the 2017 Annual Conference of Nigerian Bar Association (NBA) in Lagos.
The lecture was titled “The Dilemma of Monetary Policy During a Recession: Potential Options for Nigeria”.
Emefiele identified the current challenges facing Nigeria as falling Gross Domestic Products (GDP) growth rate, rising inflation, persistently high interest rates, falling foreign exchange reserves and depreciating exchange rate.
He said the CBN could not tackle these challenges with the tool available to it with the objective of changing the outcomes for the better.
The governor pointed that CBN had always used monetary policy implementation at its disposal in controlling interest rates and money supply to moderate inflation and achieve economic growth.
Emefiele said these problems occurred simultaneously and needed to be dealt with over a short period of time.
According to him, the real dilemma the country is faced with is that there are significant trade-offs in outcomes of economic variables regardless of what specific monetary policy the nation implemented.
“For example, one would expect that given the bank’s core mandate to pursue low inflation, the central bank would implement policies geared towards that.
“In order to tackle high inflation, the correct monetary policy would be to tighten money supply either by increasing the Cash Reserve Requirement (CRR) of banks, mopping up money through increased Open Market Operations or raising the Liquidity Ratio of banks.
“While doing any or a combination of these would help moderate inflationary pressure, it could ensure that interest rates remain high and may even be inimical to restoring economic growth in the short term.
He, therefore, said that bank would need the support and cooperation of the NBA to build synergy towards the achievement of the various policy options enumerated.
According to him, the CBN is leading other stakeholders through the Financial System Strategy 2020 (FSS2020) in order to achieve stability in the financial system.
He said this would help to develop a robust, globally competitive and market friendly legal framework for Nigeria’s financial sector by the year 2020.
“FSS 2020 intends to apply the instrumentality of the law as a vehicle to fast-track the development of Nigeria’s financial system.
“As such, this is one area where the CBN would need the support of the NBA.”
Emefiele said that one of the major lessons learnt from the recent global financial crises was the need to develop adequate frameworks and appropriate tools for managing financial stability.
“In this regard, the Financial Services Regulation Coordinating Committee led by the CBN, is putting together a robust framework that will adequately promote stability of the Nigeria’s financial system.
The governor also said that it was imperative that the NBA should be ready and willing to partner with the CBN in areas like legislative advocacy.
He said this would ensure quick promulgation of robust legislations in support of chosen policy options and vigorous support for establishment of commercial courts to facilitate speedy resolution of commercial disputes.
Others, he said, were provision of constructive inputs for the development of robust financial sector legislative bills and other regulations and checkmating unbridled recourse to the use of interlocutory applications to frustrate legitimate expectations in commercial and financial disputes to contribute.
He urged every Nigerian to contribute his or her quota to national development.
“I am not unaware of the short-term pains we are all going through right now. But gold glitters after it has gone through enormous heat.
“Let us, therefore, use this opportunity to look inwards, diversify our economy, produce locally, and create jobs
for our unemployed youths.
“Even when we disagree about the way forward, we should do so in good faith and never lose sight of what is important.
“We should remain resolutely committed to the course and be motivated by the achievability of our desire to strengthen our economic fundamentals.”
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.
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