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CBN Seeks to Slash Importation by 35%

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Godwin Emefiele - Investors King

The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, yesterday said efforts are ongoing to reduce the country’s import bill by about 35 per cent.

He said President Muhammadu Buhari’s insistence about five years ago on the diversification of the country’s economic base had already started to yield positive results.

The CBN governor, while receiving a delegation from the Central Bank of The Gambia (CBG), led by its governor, Mr. Buah Saidy, on a two-day working visit to the country, stated that the country currently has the potential to export and earn foreign currency from the production of urea for local production of fertiliser as well as petroleum product as soon as the Dangote refineries goes into operation by the first quarter of next year.

This, he said would help to reduce importation by about 35 per cent.

He said a country with a population of over 200 million should have food security, pointing out that this was why the CBN was aggressively looking into the area of food and, “where we can use our own available raw materials to produce what we need in our country”.

He said: “And we believe with time Nigeria will really be a greater country than it is today. We don’t think we are great yet because we have a high import dependence in the country and we are doing everything possible to reduce imports.

“But like you know, when we are able to reduce imports, encourage exports and encourage consumption spending and investment, those are some of the parameters that will ultimately boost our economy so that we can continue to see rapid growth in our GDP and see prosperity for our people.”

He also told the visiting team that the apex bank has vast experiences in IT and cybersecurity, adding that its infrastructure had been proven to be impregnable to hackers.

He said: “There were some protests sometime last year and when the protest was going on we saw that people were trying to hack into systems and they tried to hack into the CBN systems.

“I got a message that the CBN system had been hacked into and I said the CBN system cannot be hacked into. I called our director in charge of IT and she responded that we have enough firewall that prevented the hack into our system. So those are the kinds of experiences we can share with you though expensive but will share then with you and think of how to work together to collaborate with yours.”

However, Saidy, who also said the CBG was having a difficult time regulating the banks in the Gambia especially in the areas of meting out sanctions to erring financial institutions had further sought to know the magic which the CBN had adopted to sanction banks’ executives without repercussions.

Responding, however, Emefiele attributed the successes to the support which the apex bank had enjoyed from the National Assembly.

He said: “On the issue of the CBN independence, I thank you for the kind words. But I think the point is that we thank our own parliament. Our parliament has been extremely supportive of the CBN.

“They put in place a central bank Act that grants independence to the CBN and we have our Banks and Other Financial Institutions Act that also grants a lot of power and authority for the CBN to bite when we find people who want to take advantage of the system for their own personal benefit and we don’t breed any nonsense about people who try to take advantage of our system for their personal benefits.

“Everything must be done keeping in mind the overall national goals and objectives and that is why the CBN will act very fast on any economic agent that tries to undermine our policies and that’s why we are very firm on them.”

He said: “Working with your parliamentary I believe you can have laws that can give you the kind of independence that you need in any, practically most of the central banks in the world today have independence that gives them the power to be able to manage monetary policy in a way that is beneficial to their countries and economy.”

Emefiele also said the apex bank was doing everything possible, apart from looking at currency adjustment when necessary, to confront issues of supply management and ensure that economy grows.

He said the CBN had adopted demand management strategies that will help to curtail imports and ensure that some of those goods that can be produced locally are not imported.

Meanwhile, there are strong indications that CBN may seal an agreement with the Central Bank of the Gambia (CBG) to undertake the printing of legal tender for the latter.

This followed a request by the CBG for a possible collaboration as it seeks to address acute currency shortages in the country.

Already, Emefiele, while receiving a delegation, assured that the CBN has extremely competitive advantage to manage the currency printing job for The Gambia.

He said the Nigerian Security Printing and Minting Plc which was established in the early 1960s had been printing currency for the country, adding that the facility has a lot of idle capacity to satisfy the demand of the CBG.

Among other considerations, Saidy had informed the CBN governor that it is currently costly and unsustainable for the Gambia to continue to rely on its printer – De La Rue of London – for its currency needs.

He added that the distance coupled with some logistics and resource constraints had partly led to a current situation whereby the country had witnessed acute shortage of currency with the attendant implications for the economy.

Emefiele, nevertheless, said: “I note your point on currency management. The Nigerian mint was set up in the early 1960s and we’ve been producing our currency since the early 60s and we have a lot of idle capacity to ensure that instead of you going to Europe or other countries, you will be able to benefit from our ideas.”

He said: “Our colleagues will take you to the security printing facility. Our colleagues that came in from Liberia two months ago were fascinated by the kind of facilities, we have at our Nigerian security printing and minting facility and I am sure that you will also enjoy them.

“And I am sure they will follow you back to the Gambia to see how they can help you to structure your economic order quantities so we can also be of assistance in printing your currency.

“And I can assure you that we can be extremely competitive if only from the stand point of logistics and freight from Europe but it’s just going to be a few hours from here to the Gambia and the rest of them.”

The CBG governor had further explained that it costs the bank about £70,000 to lift printed currencies from Sri Lanka to the Gambia.

He said: “We also need assistance in currency management. Right now we have a situation where we are running very low on currency and at some point I get scared because we cannot at the central bank run out of currency completely as that will be a disaster.

“So we want to learn from your estimate. We have a model but we have not looked at it yet – given to us by our printers – De La Rue. How they estimate the currency need of the country on yearly basis.

“But I think it has some defects otherwise, the acute shortage we have currently would not have happened.”

Saidy said: “We placed an order for three years of currency to be printed but again, the contract with De La Rue since independence they have been printing our currency.

“Yesterday in my interaction with the Deputy Governor, Mr. Kingsley Obiora, we realise that you print your own currency and I asked about security and he assured me that you have top of the line security features.

“So this is another area I would want us to exchange ideas and have discussions on how possibly if we decide to go with you we can collaborate with your assistance to be printing our currency.”

He said: “Again, it is closer, De La Rue is in London but they do the printing in Malta and also Sri Lanka. The last one was done in Sri Lanka.

“Lifting those things all the way to the Gambia is costly because we had to do some emergency order and that cost was going to be on CBG but with negotiations and assuming then that we will give them this contract of three years of printing our currency, they now paid for the flight – about £70,000 to lift those currencies to the Gambia.”

He also said the CBG was in the country to benefit from the CBN’s vast experiences on how it had successfully regulated the financial system and sought assistance in the areas of information technology, modernisation, cybersecurity, forex shipping and management, among others.

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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Banking Sector

MIPAD Announces Onyeali-Ikpe Among Global Top 100 Trade Champions of African Descent Worldwide

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In acknowledgment of her outstanding impact on global trade, Dr. Nneka Onyeali-Ikpe, the Group Managing Director and Chief Executive Officer of Fidelity Bank Plc, has been recognized as one of the honorees in the 2024 Most Influential Global Top 100 Export and International Trade Edition.

Themed, “Championing the Vision of Global Africa as a Unified Economic Block and Single Market,” the initiative which was announced on May 25, 2024 in celebration of Global Africa Day, lists several leaders in the global trade space of African descent, including the President, African Export–Import Bank (Afreximbank), Prof. Benedict Okey Oramah,); Minister of Trade and Export Promotion, Algeria, H.E. Kamel Rezig; Chairman, World Trade Centre Accra, Ghana, H.R.H Togbe Afede; the Nigerian Minister of Industry, Trade and Investment, Dr. Doris Nkiruka Uzoka-Anite; Executive Director and CEO, Nigerian Export Promotion Council (Nigeria), Nonye Ayeni; Executive Vice President, Intra-African Trade Bank (IATB), Kanayo Awani; Director, Trade Development (Africa & Caribbean), World Trade Centre Miami, US, Kemi Arosanyin; Secretary of State for Business and Trade and President of the Board of Trade (United Kingdom/Nigeria), Kemi Badenoch; President, US-Africa Business Centre at US Chamber of Commerce, Kendra Gaither; and President of the Buenaventura Chamber of Commerce (Colombia), Milady Garces Arboleda.

According to a statement by Most Influential People of African Descent (MIPAD), the organisers of the initiative, “These honorees are recognized for their groundbreaking achievements in Trade & Export and are called upon to champion the vision of a unified Global Africa as an economic block. This recognition aligns with the ethos of the International Decade for People of African Descent, highlighting MIPAD’s ongoing commitment to celebrating individuals, organizations, and governments demonstrating outstanding leadership in advancing people of African descent globally.”

Commenting on the initiative, Dr Onyeali-Ikpe said, “This recognition demonstrates our market leadership in the international trade space at Fidelity Bank and our devotion to helping Nigerian businesses play a more active role in the global trade space.

Since 2022, we have hosted the largest private-sector driven trade expo tagged the Fidelity International Trade and Creative Connect (FITCC) with hundreds of export businesses from Nigeria, off-takers in the UK and USA, investors, regulators, media and other key stakeholder in the trade sector. Through FITCC, we have closed deals totaling $450million. Our commitment as a bank is to do more in this space and we thank MIPAD for the recognition.”

The Most Influential People of African Descent (MIPAD), is a global civil society initiative in support of the International Decade for People of African Descent, proclaimed by United Nation’s General Assembly resolution 68/237, to be observed from 2015 to 2024. MIPAD identifies high achievers of African descent in public and private sectors from all around the world as a progressive network of relevant actors to join together in the spirit of recognition, justice and development.

Ranked as one of the best banks in Nigeria, Fidelity Bank is a full-fledged commercial bank with over 8.3 million customers serviced across its 251 business offices in Nigeria and the United Kingdom as well as on digital banking channels.

The bank has won multiple local and international awards including the Export Finance Bank of the Year at the 2023 BusinessDay Banks and Other Financial Institutions (BAFI) Awards, the Best Payment Solution Provider Nigeria 2023 and Best SME Bank Nigeria 2022 by the Global Banking and Finance Awards; Best Bank for SMEs in Nigeria by the Euromoney Awards for Excellence 2023; and Best Domestic Private Bank in Nigeria by the Euromoney Global Private Banking Awards 2023.

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Banking Sector

Heritage Bank Liquidation: NDIC Opens Bidding for Assets and Branches

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The Nigeria Deposit Insurance Corporation (NDIC) has commenced the process of liquidating the bank’s assets across Nigeria.

This move comes as part of NDIC’s role as the liquidator of the failed bank, aimed at recouping funds and resolving outstanding liabilities.

The NDIC, through an advertorial published in major newspapers, has announced the sale of 48 properties belonging to Heritage Bank.

These properties include the bank’s head office located at 143 Ahmadu Bello Way and its annex at 130 Ahmadu Bello Way, Victoria Island, Lagos.

Also, the liquidation covers chattels such as vehicles, office equipment, plant, and machinery spread across 62 locations nationwide.

Interested parties are invited to participate in a public competitive bidding process. They have been given the opportunity to inspect the assets and submit bids to acquire them.

The bidding process requires potential buyers to submit bids accompanied by a Certified Bank Draft amounting to 10% of their bid.

Successful bidders will be required to settle the balance within two weeks of notification of their successful bid.

The liquidation process marks a significant step in NDIC’s efforts to manage the fallout from Heritage Bank’s closure effectively.

The corporation has also commenced the verification and payment of depositors with balances of N5 million or less, a category that constitutes about 99% of the bank’s customer base. According to Bello Hassan, the Managing Director of NDIC, Heritage Bank had approximately 2.3 million depositors with total deposits amounting to N650 billion, while its loan portfolio stood at about N700 billion.

The decision to revoke Heritage Bank’s license was made by the CBN due to the bank’s persistent breach of regulatory requirements and its inability to improve its financial position despite intervention measures.

This action underscores the CBN’s commitment to maintaining financial stability within the banking sector and protecting depositors’ funds.

Stakeholders within the banking industry, including the Bank Directors Association of Nigeria (BDAN) and the House of Representatives, have expressed support for the regulatory actions taken.

BDAN’s Chairman, Mustapha Chike-Obi, emphasized the necessity of such decisions in safeguarding the overall health of the banking sector.

Meanwhile, the House of Representatives has passed a resolution urging the CBN to investigate the management and leadership of Heritage Bank to ascertain if any mismanagement or wrongdoing contributed to its failure.

The resolution also called for a comprehensive review of NDIC’s operations to ensure it is adequately equipped to fulfill its mandate as a deposit insurer and investor in failed banks.

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Finance

Economic Woes Slash Nigerian Manufacturing Tax Revenue by 70%

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In a striking indication of the challenges facing Nigeria’s manufacturing sector, tax payments from manufacturers have plummeted to their lowest level in three years.

According to the latest Company Income Tax (CIT) report by the National Bureau of Statistics (NBS), the tax revenue from both local and foreign manufacturing firms fell by a staggering 70.4 percent in the first quarter of 2024.

The revenue dropped to N43.2 billion from N145.1 billion in the same period last year, indicating the severe impact of the country’s tough operating environment on manufacturers’ financial performance.

This decline also reflects a year-on-year decrease of 31.4 percent from N62.9 billion, highlighting the ongoing difficulties manufacturers face.

The report points to increased borrowing costs, driven by rising interest rates and the devaluation of the naira, as key factors squeezing the sector.

“Manufacturers are not finding it easy with the high cost of production,” said Abiodun Kayode-Alli, a senior tax manager at PwC.

He explained that the harsh economic climate has significantly reduced the amount companies contribute to the government in taxes.

“Apart from the tough business environment, collection in Q1 is usually not much because most companies have until June 30 to complete filing and payments.”

Company Income Tax, a levy imposed on the income of corporations, varies based on company size.

Small firms with gross turnovers of N25 million or less are exempt, medium-sized firms (turnover between N25 million and N100 million) pay 20 percent, and large companies (turnover above N100 million) are taxed at 30 percent.

Despite these gradations, the manufacturing sector, which used to be a major contributor, recorded the lowest growth rate among 21 sectors.

The aggregate CIT collection fell by 12.9 percent to N984.61 billion in Q1 from N1.13 trillion in the previous quarter.

This downturn is particularly concerning given that the Federal Inland Revenue Service recently disclosed a shortfall in tax revenue, generating N3.94 trillion against a target of N4.8 trillion.

Muda Yusuf, Chief Officer of the Centre for the Promotion of Private Enterprise (CPPE), highlighted the severe losses incurred by major players due to the foreign exchange reforms.

“The economy has not been favorable to most manufacturers, who are significant contributors to tax revenue,” Yusuf said.

BusinessDay’s research reveals that seven out of 13 listed consumer goods firms reported combined losses of N388.6 billion in Q1.

These firms include industry giants like International Breweries Plc, Cadbury Nigeria Plc, Nigerian Breweries Plc, and Nestlé Nigeria Plc.

Also, companies such as BUA Cement, Lafarge Africa Plc, and Nascon Allied Industries Plc saw their earnings decline significantly.

“A lot of consumer firms had higher finance costs because of FX losses and higher interest rates,” noted Ayorinde Akinloye, a Lagos-based investor relations analyst. “Despite some having good operating performance, their profits declined, while others recorded huge losses.”

The Central Bank of Nigeria’s aggressive monetary policy, raising the rate to 26.25 percent in May to combat inflation and support the naira, has exacerbated these financial pressures.

The liberalization of the foreign exchange regime also resulted in a near 30 percent devaluation of the naira this year, further complicating the economic landscape for manufacturers.

This challenging environment has prompted several multinationals to exit the Nigerian market. In the past ten months, companies like Kimberly-Clark, Procter & Gamble, GlaxoSmithKline Consumer Nigeria, Equinor, Sanofi, and Bolt Food have ceased operations in the country.

“Many companies that seem to be alive today are sick and most are not making profits. Many will still shut down because they cannot plan. About 10 million businesses have closed shop,” said Femi Egbesola, national president of the Association of Small Business Owners of Nigeria.

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