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CBN ‘Counterproductive’ Policy Forced Nigerians to Pay Cash

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Naira Remains under pressure
  • CBN ‘Counterproductive’ Policy Forced Nigerians to Pay Cash

The Central Bank of Nigeria has introduced several policies and directives to stimulate growth, turn Nigeria into a cashless nation and increase the number of adults in the financial system through its financial inclusion programme.

The numerous policies and directives were to achieve government aim of creating jobs and improve revenue generation by ensuring working Nigerians pay taxes.

However, poor wage growth amid several charges in a nation with 23.1 percent unemployment rate has forced several consumers to shun convenience, created by the growing fintech space for cash payment, in an effort to beat extra charges imposed by the central bank on PoS usage.

In September, the CBN had directed all Point of Sale (PoS) owners to charge an additional N50 stamp duty per N1000 transaction despite advocating for a cashless society.

This was after the Federal Government closed Nigerian land borders in August, pushing prices of food items about 50 percent above their normal price.

The surged in consumer prices boosted inflation for a second consecutive month in October to 11.61 percent, further hurting consumer spending and savings.

Merchants have said customers, in a bid to manage their expenses better, have resorted to cash payment.

The President, Association of Mobile Money and Bank Agents in Nigeria, Mr Victor Olojo, said: “We have filling stations and big merchants who have actually dumped the PoS because customers have declined using it and in other cases, it is not profitable any more when they don’t charge customers; they have to bear the cost of the N50 stamp duty.

“To a large extent, the PoS is still a very important tool for agent banking and in most cases, the agents try to push the N50 stamp duty charge to the end users.”

Last week, the Federal Government asked Nigerians to demand PoS payment at the post office, saying it will help to curb leakages. The same government is imposing an additional charge on every single transaction charged via PoS.

The story is not different in the bank where customers are saddled with various financial burdens.

A recent report showed six Nigerian banks generated N675.9 billion non-interest income in the first 9 months of the year.

Non-interest income is income generated from monthly account service charges, deposit and transaction fees and annual fees.

Six Nigerian banks generated N675.9 billion or about 0.6 percent of Nigeria’s 2020 proposed budget by charging customers for service in a largely automated system.

Financial experts have said this will continue to impact CBN’s financial inclusion and cashless policy programmes as more Nigerians, especially its largest population – the uneducated, may dump card payment for cash payment and bank for virtual currencies.

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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Loans

FCMB Empowers Agribusiness, Healthcare and Others With AFDB’s $50 Million Credit

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Mrs Yemisi Edun - Investors King

Women empowered businesses and local enterprises involved in agribusiness, manufacturing, health care, and renewable energy will have access to long term funding from First City Monument Bank (FCMB), courtesy of a $50m credit facility from the African Development Bank (AfDB). 

The $50m credit line will narrow the lending gap to underserved segments and complement FCMB’s lending efforts and operations in the Nigerian market. AfDB will disburse the funds to FCMB before the end of this year.

Mrs Yemisi Edun, Managing Director, FCMB, thanked the African Development Bank for having confidence in the Bank, saying the credit line would help it increase lending to high impact sectors of the Nigerian economy.

She said, “The $50m credit line will increase access to finance for women empowered businesses and enterprises involved in agribusiness, manufacturing, renewable energy and healthcare, enabling them to build back better post-COVID.

“We are delighted that a minimum of 30 per cent of the funds will go specifically to women empowered businesses, which would, in turn, contribute to stimulating gender equality and empowerment. Remarkably, it aligns with FCMB’s transformative agenda of boosting household economic resilience by improving women’s access to credit and work opportunities.”

In addition to the $50m, the AfDB will provide a technical assistance grant of $200,000 to FCMB through its Affirmative Finance Action for Women in Africa (AFAWA). The Women Entrepreneurship Finance Initiative, an international partnership supporting women entrepreneurs in developing countries, supports AFAWA. The assistance grant complements the loan and will further strengthen training, monitoring and reporting by the Bank.

In a statement, AfDB’s Director of Financial Sector Development, Mr Stefan Nalletamby, said, “We are pleased to support FCMB’s strategy to become a dominant player in addressing the funding needs of women-empowered and local enterprises. This project will extend valuable resources to critical but underserved segments during the ongoing COVID-19 pandemic, with its adverse macroeconomic impact”.

AfDB added that the project also advances its ten-year strategy and is consistent with three of its high-five strategic priorities. These are industrialise Africa, Feed Africa, and improve the quality of life for the people of Africa. This also aligns with the Nigeria Country Strategy Paper 2020-2024.

Recently, FCMB secured a $10 million facility from Oikocredit, a major global social impact investor and co-operative institution based in The Netherlands, to upscale its impressive financial support to SMEs and the agribusiness sectors in Nigeria.

FCMB is a member of FCMB Group Plc, Nigeria’s leading and most diversified financial holding company with subsidiaries that are market leaders in their respective segments. The Bank has built a strong base in various sectors of the nation’s economy by consistently offering cutting-edge solutions to its customers across segments.

Having successfully transformed into a retail banking and wealth management-led group, FCMB expects to continue to distinguish itself through innovation and the delivery of exceptional services.

To find out more about FCMB, please visit www.fcmb.com.

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Banking Sector

Fidelity Bank Doles Out N39 Million to 15 Lucky Customers

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Fidelity Bank Promo - Investors King

In yet another show of its commitment to reward loyal customers for maintaining a savings habit, leading financial institution, Fidelity Bank PLC has presented cash gifts worth N39million to lucky customers at the closing ceremony of the Fidelity Bank’s Get Alert in Millions (GAIM) Promo.

Held at Fidelity Bank’s head office in Lagos on Thursday, 29 July 2021, the well-attended event was conducted in the presence of relevant regulatory bodies including the National Lottery Regulatory Commission (NLRC), Lagos State Lotteries Board (LSLB), and Federal Competition and Consumer Protection Commission (FCCPC).

Speaking at the event, the Managing Director/Chief Executive Officer of Fidelity Bank, Mrs. Nneka Onyeali-Ikpe, ably represented by the bank’s Executive Director -Lagos and SouthWest, Dr. Ken Opara, reiterated the bank’s devotion to supporting initiatives that enrich the lives of its loyal customers even in times of economic uncertainties. She said “Encouraging savings and financially empowering our loyal customers have been a long-standing heritage at Fidelity Bank. We are elated at yet another opportunity to dole out up to N39Million to 15 Nigerians even in this time of economic uncertainty”. She further stressed the bank’s intentional drive towards enhancing CBN’s financial inclusion goal. “As a bank, we continuously position ourselves as key drivers for financial inclusion. Beyond encouraging savings, we believe that our GAIM campaign is a suitable initiative to attract the unbanked to the banking side of life”, Nneka added.

At the event, the duo of Mr. Sunday Okechukwu and Mr. Justine Nwaozor, who won the star prize of N10 million each were credited with their winnings. 13 other winners were credited with N3 million, N2 million, and N1 million accordingly; while 18 lucky customers walked home with consolation prizes including TV sets, refrigerators and generators.

Expressing his delight, a star prize winner, Mr. Sunday Okechukwu said, “I am grateful for this reward and most especially, the initiative. It’s common knowledge that having a healthy savings culture is good for one’s financial wellbeing, however, staying true to savings is sometimes difficult given the times we are in. However, with initiatives like this, savings become easier as we stand a chance to win big. I am glad to have won big, so big enough to turn my life and business around. Truly, Fidelity Bank keeps their word”.

Launched in 2019, Fidelity Bank’s GAIM Season 4 promo is a savings initiative of the bank specifically aimed at promoting a savings culture among Nigerians. Through this campaign, a total of N120 million has been seeded to several Fidelity Bank customers.

As a bank, we are pleased with the outcome of this initiative so far. Having wound up the fourth season of this campaign, it is exciting to see the number of people whose fortunes have changed. Although GAIM Season 4 is over, we will continue to drive initiatives that will, directly and indirectly impact the lives of our customers and Nigerians at large”, disclosed the Head of Savings and Sales, Fidelity Bank Plc, Mr. Ukpai Ibe.

Over the years, the leading tier two Bank has continued to intensify its efforts and innovate ways towards ensuring customer and stakeholder satisfaction. Through this promo, Fidelity Bank has promoted financial inclusion through digital channels and enriched the lives of its customers.

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Banking Sector

FCMB Group Posts 22.1 Percent Decline in Profit in H1 2021

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FCMB - Investors King

FCMB Group Plc, a leading financial institution in Nigeria, recorded a 22.1 percent decline in profit after tax in the first half (H1) of 2021 despite zero COVID-19 restrictions.

The lender gross earnings dipped by 4.02 percent from N98.179 billion achieved in the first half of 2020 to N94.228 billion in the period under review, the bank disclosed in its unaudited financial statements seen by Investors King.

Net interest income also moderated by 5.25 percent from N45.379 billion reported in H1 2020 to N42.998 billion in H1 2021. While net fee and commission income increased to N12.934 billion in the period under review, representing an increase of 33.51 percent from N9.688 billion achieved in the same period of 2020.

Net trading income drop from N3.925 billion in H1 2020 to N2.639 billion in H1 2021, this represents a decline of 32.78 percent.

Other revenue sheds 39.7 percent from N7.555 billion in H1 2020 to N4.552 billion in H1 2021. Profit before minimum tax and income tax decreased by 24.2 percent to N8.911 billion in H1 2021, down from N11.071 billion recorded in H1 2020.

The bank paid N450 million as minimum tax and income tax of N903.797 million to push profit after tax down by 22.1 percent from N9.701 billion in H1 2020 to N7.557 billion in H1 2021.

The lender realised N974.744 million from foreign currency translation differences for foreign operations. This brings the total comprehensive income for the period N8.545 billion.

Earnings per share dipped from N0.49 H1 2020 to N0.38 in H1 2021.

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