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Nigerian Banks Must Reform to Survive Fintech Revolution – Osinbajo

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  • Nigerian Banks Must Reform to Survive Fintech Revolution – Osinbajo

The Vice-President, Prof. Yemi Osinbajo, has stressed the need for banks in the country to carry out urgent reforms so as not to be caught off-guard by rising innovations in financial technology, saying the effect of new innovations in fintech was inevitable.

He stated that fintech, which is the new technology and innovation that aims to compete with traditional financial methods in the delivery of financial services, would disrupt the financial space but that apart from reforms, banks could avoid being affected negatively if they also invested in fintech companies.

In his address at the ongoing Africa Investment Forum, which was organised by the African Development Bank, in Johannesburg, South Africa, the Vice-President, however, gave the assurance that there would be effective regulation to protect consumers and the space.

An online newspaper, The Cable, quoted him as saying, “Fintech companies, as you know, are challenging some of the old laws on banking and all of that. The major issue is that technology is clearly going to disrupt the financial space, and is doing so already, so banks have to reform.

“They have to invest in some of the fintech companies themselves, and they have to see this revolution as inevitable. I think what we are seeing today is the reform around that space, and many of the banks are looking up and understanding that this is going to happen, and it’s already happening.”

“I think the first thing is to allay the fears of the banks that their lunch isn’t being taken away. Banks, of course, are jittery about some of what is happening in the fintech space, but they need to be assured that this isn’t about taking away their lunch but that we cannot avoid what is coming to us now.”

While allaying the fears of the banks over the future of their services, he pointed out that even though the quick convergence between technology and financial products was happening faster than many of the banks could cope with, the government would work with them to ensure the development of the sector.

The Vice-President, who spoke alongside the President of host South Africa, Cyril Ramaphosa, and his counterparts from Ghana, Nana Akufo-Addo, and Guinea, Alpha Condé, on the presidential panel, added, “What we are saying is that payment system, lending, all sort of financial systems, even insurance are happening much faster.

“So, we have to change regulation and we must ensure that we give space to these tech companies because what is happening is that there is a quick convergence between technology and financial products, so much faster than many of the banks are able to cope with.

“What we are trying to do is work with the banking system, like the Central Bank of Nigeria. For example, we are sitting with the fintech companies, banks, and the telcos. The telcos are in this space now and many of them are challenging some of what used to be traditional banking businesses.”

Meanwhile, in a unanimous decision, the Presidents in attendance and Nigeria’s Vice-President agreed on the need to remove every impediment to the slow rate of development on the continent.

The President of AfDB Group, Dr Akinwumi Adesina, had in his opening address said the goal of the forum was to allow investments land smoothly on investment runways in Africa, adding that the forum was a 100 per cent transactional platform to develop projects, derisk deals, fast-track the closure of deals and improve the business environment for investments to thrive on the continent.

He said, “Africa has massive infrastructure deficits, from ports to railways, roads, energy and Information Technology infrastructure needed to spur its competitiveness in global markets. The African Development Bank estimates the continent has a financing gap of $68bn to $108bn per year for infrastructure.

“But it’s all about how you see it; a glass half empty or a glass half full. Let’s see it as a glass half full. That means Africa has an investment opportunity of $68bn to 108bn a year for infrastructure alone.”

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.

Banking Sector

COVID-19: CBN Extends Loan Repayment by Another One Year

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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.

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Finance

MTN Nigeria Generates N1.35 Trillion in Revenue in 2020

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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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Finance

Nestle Nigeria Approves Final Dividend of N35.50k per 50 Kobo Ordinary Share for 2020

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Nestle Nigeria Approves Final Dividend of N35.50k per 50 Kobo Ordinary Share for 2020

Nestle Nigeria, a leading food and beverage company, has declared a final dividend of N35.50k per 50 kobo ordinary share for the year ended December 31, 2020.

The beverage company said N24.50k of the amount declared was from the after-tax profit of 2020 and N5 and N6 were from the after-tax retained earnings of the years ended December 2019 and 2018, respectively.

Nestle Nigeria stated that the amount declared is subject to appropriate withholding tax and approval at the Annual General Meeting of shareholders.

It also noted that payment will be made only to shareholders whose names appear in the Register of Members as at the close of business on 21 May 2021.

Dividends will be paid electronically to shareholders whose names appear on the Register of Members as at 21 May 2021, and who have completed the e-dividend registration and mandated the Registrar to pay their dividends directly into their Bank accounts.

Shareholders who are yet to complete the e-dividend registration are advised to download the Registrar’s E-Dividend Mandate Activation Form, which is also available on their website: www.gtlregistrars.com, complete and submit to the Registrar or their respective Banks.

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