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Despite COVID-19 Negative Impacts, CBN Continues to Charge Stamp Duty

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  • Despite COVID-19 Negative Impacts, CBN Continues to Charge Stamp Duty

The Central Bank of Nigeria has continued to compound the burden of  the Nigerian people despite the negative impacts of COVID-19 on earnings.

It should be recalled that in an effort to enhance internal revenue generation and boost revenue to GDP from 6 percent to 15 percent, the apex bank had imposed N50 stamp duty on N10,000 and above transactions.

This was prior to COVID-19 outbreak that eroded earnings and business activities across all sectors. However, despite calls to support families, individuals and businesses affected by the deadly virus, the apex continues to impose and debt stamp duty on bank accounts of Nigerians.

In a recent email forwarded to customers by the United Bank for Africa, the lender said it has commenced deduction of stamp duty since  1st of February in line with central bank directive.

In the email, the deposit money bank stated that “On February 1st 2020, the Federal Government of Nigeria (FGN) released a policy directing all banks to apply a stamp duty charge of N50 to all inflows of N10,000 and above.”

“You may have noticed this charge on a few of your transactions from April 1st 2020. The charges for February and March 2020 would be deducted from your account on May 9th.”

In spite of the current hardship, reduction in salaries and in some cases nothing at all, the apex bank has refused to revise several revenue generating policies in line with current economic realities like it did with the Naira devaluation.

This may not be unconnected with the $3.4 billion loan secured from the International Momentary Fund. Investors King had reported that part of the agreements reached with Federal Government was to increase revenue generation by increasing electricity tariffs and VAT.

It is sad that the same government that announced it would stimulate the economy and support families and businesses with more than N3.4 trillion, is the same government imposing demurrage on goods abandoned in warehouse due lockdown, charging stamp duty and planning to raise tariffs.

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.

Finance

CBN Maintains 11.5 Percent Monetary Policy Rate, Leaves Other Ratios Unchanged

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The Central Bank of Nigeria led Monetary Policy Committee (MPC) has left the interest rate unchanged at 11.5 percent to further stimulate activities in the real sector of the economy.

Godwin Emefiele, the Governor of Central Bank of Nigeria disclosed this at the end of the MPC meeting on Tuesday in Abuja.

He said other parameters, the Cash Reserve Ratio (CRR), Liquidity ratio, and asymmetric corridor, were left unchanged.

According to the Governor, the committee voted unanimously to maintain the current monetary policy and attributed the surge in inflation to structural policies, the increase in pump price and the recent #EndSARS protest.

Highlights of CBN-MPC’s  Decision

  • MPR was kept at 11.50%
  • The asymmetric corridor of +100/-700 basis points around the MPR
  • CRR was retained at 27.5%
  • Liquid Ratio was also kept at 30%

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Finance

Unity Bank Grew Gross Earnings by 8 Percent to N34 Billion in Nine Months

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Unity Bank Plc grew gross earnings by 8 percent despite COVID-19 and other headwinds that hurt the profitability of most businesses in the first nine months of the year.

A break down of the bank’s unaudited financial results for the period showed gross earnings rose by 8 percent to N33.91 billion for the nine months ended September 30, 2020, up from N31.26 billion posted in the same period of last year.

The lender’s total assets rose by 44 percent from N293.05 billion in the corresponding period of 2019 to N420.87 billion in the period under review.

Unity Bank grew profit before tax from N1.61 billion in 2019 to N1.71 billion in the period under review, while profit after tax expanded from N1.48 billion in the corresponding period to N1.57 billion in 2020.

Customers’ deposits stood at N332.36 billion during the period under review, up from N257.69 billion posted in 2019.

Commenting on the performance, Mrs. Tomi Somefun, the Managing Director/Chief Executive Officer, Unity Bank Plc, expressed delight at the strong growth recorded across the bank’s balance sheet, especially from both the liability and assets side of the business and across key indices.

She said, “even as the bank continues to innovate in its e-business product bouquet to target and support value chain business with robust technology and thus diversify its earnings base.”

Somefun said, “One of the areas that will define our strategic direction going forward is investment in alternative channels, leveraging further deployment of resources in technology.

“COVID-19 gave us a chance to test the integrity and scalability of our technology, the IT infrastructure, and the electronic banking channels, and provided us an opportunity to see where we needed to improve and strengthen, knowing that the future of sustainable banking business is in alternative channels.”

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Finance

Financial Sector Grew by 6.8 Percent in the Third Quarter

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The finance and insurance sector that comprises of both the financial institutions and insurance subsectors grew by 5.91 percent year-on-year in nominal terms in the third quarter (Q3).

According to the National Bureau of Statistics (NBS) latest report, the financial institutions’ subsector accounted for 88.89 percent of the sector in real terms in the quarter under review while the insurance subsector contributed the remaining 11.11 percent.

During the third quarter of 2020, the financial institutions’ subsector grew by 6.8 percent in Q3 2020 from 28.41 percent in Q2 2020 and 0.61 percent in Q3 2019 despite COVID-19 and a tough operating environment. The insurance subsector, however, contracted by -18.67 percent in Q3 2020 from -29.53 percent in Q2 2020 and 3.96 percent in Q3 2019.

On a quarterly basis, the sector declined by 24.76 percent.

In terms of contribution to GDP, the finance and insurance sector contributed 2.46 percent in Q3 2020, higher than the 2.40 percent it represented a year ago and lower than the contribution of 3.76 percent achieved in the previous quarter.

The economy contracted by 3.62 percent in the third quarter following a 6.10 percent decline posted in the second quarter. Nigeria is officially in the second economic recession in four years.

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