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ERGP to Lift Nigeria’s Economy, Says RMBN Boss

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  • ERGP to Lift Nigeria’s Economy, Says RMBN Boss

The Managing Director of Rand Merchant Bank (RMBN), Mr. Michael Larbie has expressed optimism that the implementation of the federal government’s Economic Recovery and Growth Plan (ERGP) will help stimulate economic activities in the country.

The ERGP, a medium-term plan for 2017 – 2020, was developed to restore economic growth while leveraging the ingenuity and resilience of the Nigerian people – the nation’s most priceless assets.

Larbie, who spoke in an interview, highlighted the contribution of his bank towards ensuring that the ERGP realises its objectives.

He stressed the need to drive sustained and inclusive growth in the economy.

“There is an urgent need to drive a structural economic transformation with an emphasis on improving both public and private sector efficiency,” he added.

The ERGP aims at increasing national productivity and achieving sustainable diversification of production, significantly grow the economy and achieve maximum welfare for the citizens beginning with food and energy security.

The ERGP focuses on three strategic objectives: restoring growth, investing in our people, and building a competitive economy.

Commenting on the contribution of his bank toward Nigeria’s economic growth, he said: “RMBN provided trade and working capital facility to Olam Nigeria (Flour Business) and Wacot Limited (Cotton Ginning). Also, RMBN assisted in the creation of a local Agric giant through advising BUA on the sale of it wheat milling, pasta and flour manufacturing assets which supports the ERGP aimed at reducing food imports and becoming a net exporter of major agricultural products.

“Also, in addition, RMBN supported Nigeria’s ERGP by providing Indorama Eleme Petrochemicals Limited with $50 million and N6 billion facilities to grow the fertilizer business to increase agriculture output, reduce reliance on fertiliser import, and become an exporter of agriculture products.

“We acted as a financial adviser to GB Foods in the acquisition of a local fast-moving consumer goods (FMCG) business which plans to backward integrate creating employment and reducing importation of tomato paste thereby conserving foreign exchange.

“RMBN also provided GZI with N17 billion loan as part of a syndicate to fund the first of its kind production of aluminium beverage cans thereby supporting the Economic Recovery and Growth Plan aimed at increasing the Research and Development, technology and innovation to generate the competitive edge needed to penetrate the global economy,” he added.

Furthermore, Larbie pointed out that his bank supported BUA with N5 billion for manufacturing and backward integration.

According to him, the BUA facility was for the funding of raw materials for the company’s cement factory and thereby assisting in increasing their production capacity in Nigeria.

“We also supported the TGI (Chi), the trade and working capital facility to the CHI group. This assisted the company in stocking up enough raw materials to produce their beverages and snacks business in Nigeria.

“In addition, our funding also assisted TGI in the Agricultural space where WACOT has been able to import fertilisers which is a major agric value chain input.

“RMB Nigeria provided AIG with N6 billion funding to support local steel production to build local technical, managerial skills and capacity encouraging development of value addition industries.

“AIG has been able to channel exports of over $40 million through RMBN and they have capacity to do more over a period of time,” he added.

In addition, he disclosed that his bank structured a term loan facility for Interswitch to deepen financial payments infrastructure with the aim of increasing the volume of transactions processed and encouraging rapid ICT penetration.

RMBN also facilitated N3.5 billion funding to Axxela to extend the gas supply network for industrial clients in line with the ERGP to expand domestic gas production, he said.

Moody’s: Technology Shaping Future of Banking

Digital innovation in financial services is placing a premium on efficiency and opening up competition that will continue to drive disruption across banking business segments, including payments, lending, capital markets and wealth management, Moody’s Investors Service stated in a new report.

According to the report obtained Monday, banks that consistently assert digital leadership, would thrive and prosper, while laggard banks that lack the vision or resources to develop competitive digital strategies would be disrupted.

It noted that aging legacy financial platforms had created opportunities for new nimble entrants to capture a portion of banks’ profits by offering more customer-focused, responsive and efficient channels.

Furthermore, Moody’s noted that bank of the future would cater to high and rapidly evolving customer expectations by harnessing key enabling technologies, leveraging increasingly mature and dependable digital distribution channels, and applying these tools across multiple businesses and product segments. “Customers will gravitate to providers that best meet their demands for convenience, personalisation and affordability, with privacy and data security a growing competitive differentiator.

“Amid the shifts in technology and consumer demand, competition will stiffen among banks, big technology companies and small fintechs.

“In the face of these threats, successful incumbent banks will be those that, either on their own or in collaboration with others, pursue aggressive digital transformation to become more efficient and responsive to evolving customer demands,” Moody’s analyst and co-author of the report, Fadi Abdel Massih said. Continuing, he added: “Disintermediation of the customer relationship would be a threat to this business model if it ends up reducing banks’ pricing power by transforming them into providers of a ‘back-office’ balance sheet for customer-facing apps/businesses.”

Also, the report noted that digitisation would offer efficiency enhancement opportunities for incumbent banks through the optimisation of branch networks, data collection, analysis and reporting process but not without high initial investment.

“To date, regulatory requirements have been a moat protecting incumbents. The traditional, more regulated banking model — reliant on cheap, sticky deposits — retains a significant advantage for incumbents over nonbank platforms. “However, recent regulatory initiatives signal increasing openness to fintech. “Regulatory sandboxes and open banking initiatives indicate a shift in authorities’ willingness to encourage innovation and competition,” Moody’s assistant vice president-analyst and co-author of the report, Megan Fox explained.

According to the report, competitors may opt to avoid regulatory barriers by relying on a bank partnership to satisfy regulation.

In this disruptive scenario, banks would remain subject to all regulatory requirements, while “white labelling” their products, and big tech partners will hold the key customer relationships and avoid regulatory barriers, it added.

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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Finance

Nigeria’s Public Debt Hits ₦121.67 Trillion as Borrowings Surge – DMO

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The Debt Management Office (DMO) of Nigeria has announced that the country’s total public debt has risen to ₦121.67 trillion ($91.46 billion) as of March 31, 2024.

This represents an increase of ₦24.33 trillion from the ₦97.34 trillion ($108.23 billion) recorded at the end of December 2023.

The surge in debt is attributed to both domestic and external borrowings by the Federal Government, the 36 state governments, and the Federal Capital Territory (FCT).

The DMO’s report reveals that Nigeria’s domestic debt now stands at ₦65.65 trillion ($46.29 billion), while the external debt is ₦56.02 trillion ($42.12 billion).

The DMO noted that the rapid increase in public debt is largely due to new borrowing to partially finance the 2024 Budget deficit and the securitization of a portion of the ₦7.3 trillion Ways and Means Advances at the Central Bank of Nigeria (CBN).

“The increase was from new borrowing to part-finance the 2024 Budget deficit and securitization of a portion of the ₦7.3 trillion Ways and Means Advances at the Central Bank of Nigeria,” the DMO stated.

Despite the rising debt, the DMO remains optimistic about future debt sustainability, contingent on improvements in government revenue.

“Whilst borrowing, as provided in the 2024 Appropriation Act, will continue, we expect improvements in the Government’s Revenue to enhance debt sustainability,” the DMO added.

The increase in debt comes at a time when President Bola Tinubu is preparing to present the 2024 Supplementary Budget to the National Assembly.

This follows the President’s approval of the ₦28.7 trillion 2024 Appropriation Bill on January 1, 2024, which was ₦1.2 trillion higher than the budget originally proposed in November 2023.

The 2024 budget, dubbed the “Budget of Renewed Hope,” set ambitious targets, including pegging the oil price at $77.96 per barrel and estimating daily oil production at 1.78 million barrels.

However, the naira has faced severe depreciation, plunging to nearly ₦2,000/$1 in February, before stabilizing around ₦1,500/$1.

Economic analysts warn that the escalating debt and currency depreciation could pose significant challenges to Nigeria’s economic stability.

The government’s ability to manage its borrowing and stimulate revenue generation will be critical in navigating these fiscal pressures.

As Nigeria grapples with these economic realities, the focus remains on finding sustainable solutions to manage the growing debt burden while fostering economic growth and stability.

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Banking Sector

Federal High Court Sets Date for Contempt Hearing in GTB vs. AFEX Loan Case

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The Federal High Court in Lagos has scheduled June 27, 2024, for the next hearing in the ongoing contempt suit filed by Guaranty Trust Bank Plc (GTB) against directors of AFEX Exchange Commodities Limited.

The case revolves around a disputed N17.81 billion loan obtained under the Central Bank of Nigeria’s Anchor Borrowers’ Programme.

Presiding over the court, Justice Chukwujekwu Aneke set the date following a session where arguments were presented by the plaintiff’s lead counsel, Mr. Ade Adedeji (SAN), and the respondent’s counsel, Prof. Olawoyin (SAN).

The core issue pertains to the alleged disobedience of a court order by the directors of AFEX Exchange Commodities Limited.

GTB, through its counsel Ajibola Aribisala (SAN), has accused AFEX and its directors—Ayodele Balogun, Jendayi Fraaser, Justin Topilow, Mobolaji Adeoye, and Koonal Ghandi—of contempt for failing to comply with a court directive.

The bank alleges that these directors did not appear in court as mandated, which led to the initiation of contempt proceedings.

During the latest session, Adedeji emphasized the necessity for the directors to appear in person, stating, “My lord, the parties in contempt are not in court. The contemnors cannot sit in the comfort of their homes and send a lawyer to court in contempt proceedings. The law is trite that they must appear before the court.”

In response, Olawoyin argued that he had only recently been briefed on the matter and was not fully aware of the prior developments.

He noted that some of the individuals listed as directors were no longer with the company, adding that one current director, Mr. Akinyinka, was present in court, while another was on pilgrimage.

The contempt case traces back to a suit marked FHC/L/CS/911/2024, where GTB sought to recover the loan amount through legal measures.

On May 27, Justice Aneke granted an interim Global Standing Instruction (GSI) injunction, which directs over 20 banks to transfer funds credited to AFEX into its account with GTB until the debt is settled.

Also, the court authorized GTB to take possession of AFEX’s 16 warehouses across seven states and sell the commodities stored within, as these were procured using the CBN’s loan facility.

The N17.81 billion loan comprises N15.77 billion in principal and interest outstanding as of April 17, 2024, and an additional N2.04 billion covering recovery costs and incidental expenses.

As the court prepares for the next hearing, the financial and legal communities are closely watching the proceedings.

The outcome will significantly impact not only the involved parties but also set a precedent for handling similar cases in the future.

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Banking Sector

CRC Credit Bureau Celebrates 15 Years with Record 14% Credit Penetration in Nigeria

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CRC Credit Bureau Limited celebrated its 15th anniversary with a record 14% credit penetration rate.

The occasion was marked with the CRC Finance and Credit Conference 2024 held in Lagos, where key industry stakeholders gathered to reflect on the bureau’s journey and discuss future trends in credit risk management.

Founded in January 2010 and licensed by the Central Bank of Nigeria (CBN), CRC Credit Bureau has played a pivotal role in enhancing access to credit across Nigeria.

Dr. Tunde Popoola, the Group Managing Director/CEO of CRC Credit Bureau Limited, highlighted the bureau’s journey, noting that from its inception with a single product, CRC has expanded its offerings to 18 products covering all aspects of the lending value chain.

Speaking at the conference, Dr. Popoola underscored the bureau’s contribution to Nigeria’s financial sector, stating, “CRC Credit Bureau has been instrumental in transforming access to credit in Nigeria over the past 15 years. We started with a vision to simplify credit access through reliable data and have since grown to serve millions of Nigerians.”

The event focused on the theme “Sustainable Financing Options: Innovations in Credit Risk Management,” emphasizing the importance of sustainable finance amid economic challenges.

The conference provided a platform for stakeholders to discuss strategies for mitigating risks and enhancing the efficiency of credit operations in Nigeria.

Reflecting on the current state of credit penetration, Dr. Popoola noted that while Nigeria has made significant progress, the 14% penetration rate still falls below global benchmarks.

He highlighted that CRC Credit Bureau currently holds credit scores for 33 million Nigerians, facilitating over 29.4 million searches in 2023 alone, with an additional 10 million searches conducted in the first quarter of 2024.

Joel Owoade, Chairman of CRC’s Board of Directors, acknowledged the economic headwinds impacting businesses in Nigeria but stressed the importance of sustainable financing to mitigate risks associated with lending.

“As we navigate economic fluctuations, sustainable financing remains crucial to fostering economic stability and growth,” Owoade remarked.

The conference also featured insights from industry experts on leveraging artificial intelligence (AI) in credit risk management and regulatory frameworks to support AI-driven innovations.

Olaniyi Yusuf, Managing Partner of Verraki, highlighted the potential of AI to create jobs and enhance economic productivity, calling for supportive regulatory environments that balance innovation with risk management.

Representatives from the Central Bank of Nigeria (CBN) emphasized the regulator’s efforts to promote sustainable credit practices.

Dr. Adetona Adedeji, Acting Director of the Banking Supervision Department at CBN, outlined initiatives such as the National Collateral Registry and Global Standing Instruction aimed at enhancing credit access while minimizing risks.

As CRC Credit Bureau looks ahead, Dr. Popoola expressed optimism about the future, stating, “We remain committed to driving greater financial inclusion and expanding credit access in Nigeria. Our focus is on leveraging technology and strategic partnerships to deliver innovative solutions that meet the evolving needs of consumers and lenders.”

The celebration of CRC Credit Bureau’s 15th anniversary underscored its pivotal role in Nigeria’s financial sector, marking a milestone in the nation’s journey towards broader financial inclusion and sustainable economic growth.

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