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Govts, Oil Firms, Manufacturers Borrow N8.24tn From Banks

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  • Govts, Oil Firms, Manufacturers Borrow N8.24tn From Banks

The oil and gas sector, governments and manufacturers account for the large chunk of loans from Nigerian banks as of the end of March this year.

The total loans given to the oil and gas, manufacturing sectors and governments by banks in the country stood at N8.24tn at the end of March.

Latest data obtained from the National Bureau of Statistics revealed that loans given to the oil and gas sector stood at N4.686tn, while the governments got N1.368tn.

The manufacturing sector got a loan of N2.241tn, while general commerce received N1.035tn.

Loans to the general, finance and insurance, and power and energy sectors stood at N1.019tn, N954.68bn and N683.93bn, respectively while agriculture, forestry and fishing sector and construction sector got N648.89bn and N642.87bn, respectively.

Information and communication sector and the real estate sector secured N607.95bn and N599.39bn loans respectively.

Loans to transportation and storage sector stood at N213.94bn, while capital market got N227.28bn.

The professional, scientific and technical services industry secured a loan of N170.92bn, while public utilities and the education sector got N78.91bn and N58.4bn, respectively.

Loans to the human health and social work sector stood at N23.09bn; water supply, sewerage, waste management and remediation activities sector got N22.68bn; and arts, entertainment and recreation sector received N11.34bn.

The mining and quarrying sector and extraterritorial organisations and bodies got N8.97bn and N0.03bn, respectively.

The banking sector’s non-performing loans stood at N1.676tn as of the end of March 2019, according to the NBS.

The gross loans recorded in the banking sector stood at N15.480tn, while the loans after specific provisions stood at N13.739tn in the period under review.

The ratio of the NPLs to total loans was 10.83 per cent, while the ratio of NPLs to total loans after specific provisions was 12.2 per cent

The total amount of NPLs at the end of 2018 was N1.792tn, while the gross loans and loans after specific provisions were N15.353tn and N13.562tn, respectively.

Banks’ NPLs fell by six per cent from 15 per cent in June 2017 to nine per cent in May 2019, the Central Bank of Nigeria said.

The apex bank said capital adequacy ratio for the banking industry improved from 11 per cent in June 2017 to over 16 per cent in May 2019 and liquidity level also increased by over 20 per cent within the same period.

The CBN, Godwin Emefiele said, “In addition, the ratio of non-performing loans in the banking system has reduced from 15 per cent in June 2017 to nine per cent in May 2019, due to concerted efforts by the CBN and the Deposit Money Banks, although more work is being done to moderate NPL levels to the maximum prescribed level of five per cent.

“Our financial institutions are well-positioned to perform their intermediation role, which will ultimately help in supporting the growth of our economy.”

He said the drop in commodity prices affected a good number of banks given their exposure to the oil and gas sector, and this resulted in an increase in banks’ NPLs.

According to the CBN, as a result of risk management measures embarked upon by it, capital adequacy and liquidity ratios of commercial banks are now above the prudential levels.

The Managing Director/Chief Executive Officer, Asset Management Corporation of Nigeria, Mr Ahmed Kuru, recently expressed concerns over the resurgence of huge toxic loans in the banking sector.

He called on the authorities to revisit the Failed Bank Act so that operatives in the banking sector would be made to account for their actions.

He also urged banks to immediately strengthen their risk management frameworks to stem the negative growth.

Kuru explained that given the huge resources that were available to financial institutions and the pivotal role they played in the development of the economy, it became mandatory for financial institutions to take the issues of risk management seriously to prevent what happened during the global financial crisis.

He suggested that in line with the fight against corruption, there was a need to address impaired and arranged credits so that operators would be held responsible for booking credits contrary to their credit policy that went bad under their supervision.

He noted that one of the reasons for the failure of the banking system during the global financial crisis of 2008/2009, which eventually led to the creation of AMCON, was the prevalence of weak risk management framework by financial institutions.

The Chairman, Independent Corrupt Practices and Other Related Offences Commission, Prof. Bolaji Owasanoye, said recently that the commission would collaborate with AMCON to recover debts.

He said the huge debts had become existential challenge for the country since the few people who were the debtors were still walking free and waxing strong in the society.

Considering the positive impact the funds would have in the economy if recovered, Owasanoye said the time had come for the ICPC and other relevant sister agencies to partner AMCON and support the debt recovery drive.

He said, “We have to be practical in our approach. Something needs to be done and very fast too given the approaching AMCON sunset because this is public funds we are talking about here. We need AMCON and ICPC to work closer and develop a strategy that would work.

“We need the public to know the opportunity cost of the huge debt to the Nigerian economy, we need to share information as sister agencies locally and internationally and treat this matter as a last lap race by setting up a joint taskforce to deal with this sobering issue.”

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.

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Dangote Cement Refutes Claim it Sells Cement High in Nigeria

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Dangote Cement Plc has refuted the widely propagated story that the company sells cement at a significantly higher price in Nigeria compared to other African nations like Zambia and Ghana.

The management of the leading manufacturing company said it sells a bag at N2,450 in Obajana and Gboko, and N2,510 in Ibese, the amounts stated include VAT.

Devakumar Edwin, Dangote’s Group Executive Director, Strategy, Portfolio Development & Capital Projects, who spoke with journalists in Lagos, said the company sells for an equivalent of $5.1, including VAT in Nigeria, it sells for $7.2 in Ghana and $5.95 in Zambia ex-factory, inclusive of all taxes.

Devakumar, therefore, described the allegation as false, misleading, and unfounded, and challenged the media to conduct independent investigation into the price of cement in some other African countries, including Cameroun, Ghana, Sierra Leone, Zambia.

To ensure that we meet local demand, we had to suspend exports from our recently commissioned export terminals, thereby foregoing dollar earnings.

“We also had to reactivate our 4.5m ton capacity Gboko Plant which was closed 4 years ago and run it at a higher cost all in a bid to guarantee that we meet demand and keep the price of Cement within control in the country.”

“Over the past 15 months, our production costs have gone up significantly. About 50% of our costs are linked to USD so the cost of critical components like: gas, gypsum, bags, and spare parts; has increased significantly due to devaluation of the Naira and VAT increase.

“Despite this, DCP has not increased ex-factory prices since December 2019 till date while prices of most other building materials have gone up significantly.

“We have only adjusted our transport rates to account for higher costs of diesel, spare parts, tyres, and truck replacement. Still, we charge our customers only N300 – 350 per bag for deliveries within a 1,200km radius.

“We have been responsible enough not to even attempt to cash in on the recent rise in demand to increase prices so far,” Devakumar said.

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Samsung, Vision Care Begin Fresh CSR Activities, Earmark 12,000 Masks for Nigeria

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Samsung Heavy Industries Nigeria Limited (SHIN) and Vision Care, an international relief organization dedicated to the prevention of blindness, have launched fresh Corporate Social Responsibility (CSR) initiative to help Nigeria mitigate the impact of COVID-19 pandemic.

Vision Care is a member of the International Agency for the Prevention of Blindness (IAPB), and participant of ‘VISION 2020’, a global initiative of the IAPB and the World Health Organisation (WHO).

Vision Care has since conducted more than 25 Vision Eye Camps yearly and has grown into an international non-profit organisation serving 38 countries throughout Asia, Africa and Central-South America.

Since 2015, SHIN has worked with Vision Care in the yearly Eye Camp as part of its Corporate Social Responsibility (CSR) to provide free cataract surgeries to Nigerians who cannot afford the payment. SHIN has been sponsoring the eye surgeries of Nigerians on a yearly basis.

In 2019, SHIN sponsored the eye surgeries of at least 115 Nigerian patients and 224 outward patients as part of its CSR in Nigeria.

Since it started the programme, SHIN has sponsored the eye surgeries of 572 Nigerian patients, 1,593 outward patients and has also donated glasses to 99 patients.

Due to outbreak of the COVID-19 Pandemic, the yearly Eye Camp for 2021 had been called off to adhere to Federal Government’s measures in response to the virus.

Consequently, SHIN and Vision Care came up with a fresh CSR initiative this year to donate 496 bags of rice (25kg) and 12,000 reusable face masks to three states in the country to fulfill their commitment of contributing to the society.

The items will be delivered later this month.

The three states that will benefit from the donation are Lagos, Kano and Bayelsa states.

Out of the 496 bags of rice, and 12,000 facemasks, Lagos will receive 96 bags of rice and 200 masks.

SHIN also stated that Kano State will receive 200 bags of rice and 5,000 masks, while Bayelsa State will get 200 bags and 5,000 masks.

“This is an additional CSR activity from SHI in addition to SHIN’s donation of 5,000 COVID-19 test kits from Korea. The washable masks that the head office has purchased from Korea are certified to retain its effectiveness against COVID-19 transmission for up to 50 washes,” SHIN said in a statement.

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Senate Summons NICON, AIICO, Others Over N17.4bn Pension Remittances

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The Senate Public Accounts Committee has summoned the management of the NICON Insurance Plc, AIICO Insurance and other insurance companies over their alleged failure to remit N17.4bn pension fund to the Pension Transitional Arrangement Directorate.

The Senate hinged the summon on the 2016 report of the Auditor-General for the Federation which unraveled the alleged non-remittance of N17.4bn pension fund to PTAD.

Appearing before the panel on Monday, the Executive Secretary of PTAD, Dr Chioma Ejikeme, informed the lawmakers that PTAD took over the assets and liabilities of the defunct pension offices without a formal handing over.

She said, “On taking over, the directorate wrote all underwriters to make returns and remit whatever amount that was in their custody into a CBN dedicated account.

“Some of the underwriters responded to the request while some did not.

“The bank certificate of balances, accounting statements, three years financial statements and policy files requested by the federal auditor were not handed over to PTAD at the time of consolidation.

“It is worthy to note that we discovered that N17.4bn which comprised of cash, securities and properties from the nine insurance underwriters was unremitted as a result of the letter PTAD sent to them.

“These figures represent the claims by the underwriters with regards to their indebtedness.

“In order to ascertain the true position of legacy funds in custody of underwriters, the directorate appointed a consultant in 2018 who carried out forensic audit of nine out the 12 insurance underwriters and produced a final report on the recovery of the legacy funds and assets for PTAD.”

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