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Reps Amends Finance Act, Includes Levies on Non-Alcoholic Drinks

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The House of Representatives Committee on Finance has resolved that it will amend the Finance Act to include levies on all carbonated and non-carbonated drinks.

The Committee made the resolution on Monday at the interactive session on the 2022-2024 Medium-Term Expenditure Framework (MTEF), holding at the National Assembly, Abuja.

This followed the plea by the Comptroller-General of Nigerian Customs Services, Hameed Ali, that all beverages companies should be made to pay levies.

Mr. Ali, while responding to a question of levy on non-alcoholic drinks, said he had been advocating that non-alcoholic drinks be re-excised.

According to him, non-alcoholic drinks are as harmful as alcoholic beverages, noting that there is a 30 percent excise levy on alcoholic drinks.

“On several cases, I have made submissions. My chairman (Leke Abejide, the Chairman House Committee on Customs & Excise Duties) is aware that I have been on this battle that we should re-excise the companies that were de-excised in 2019.

“What we have been fighting for is that if alcohol beverages and tobacco are injurious to our health and that is why the government decided to tax them, the carbonated drinks are equally injurious to our health and they should be taxed.

“I have sung this song for many years now, Coca-Cola is producing in this country and it is not being taxed. There is nowhere you go in the world that Coca-Cola is not paying tax to its host country, but Coca-Cola in this country is not paying anything because of the government’s unwillingness to re-excise those companies. For us, we have been battling for it, and I hope that one day, we will start collecting,” Mr. Ali said.

Responding to the demand of Mr. Ali, the Chairman of the House Committee on Finance, James Faleke, said the committee will consider amending the Finance Act along the line of argument of the Customs CG.

“We will be considering……..I am sure that the federal government will be coming up with the 2022 Finance Bill. There is a need for us to look at the possibility of charging excise duty on all drinks manufactured in this country, this is on all drinks, carbonated and non-carbonated.

“Carbonated is already part of the Finance Act, but companies cannot be operating and making huge profits. We are talking about excise….I am sure they are paying their income tax, but in terms of production tax…..even non-alcoholic are injurious, if you drink too much it is a wahala (problem). You will just be consuming sugar,” he said.

Also making a case for the levy on beverages, Mr. Abejide said the government needs to commence the implementation of the carbonated drinks levy.

He said the full implementation of the law would increase the revenue generation of Customs.

“Customs is doing well, and I am happy. This Finance Act that we passed in 2020, we should try and start making it work for carbonated drinks. It is already there as a law. Customs should partner with the ministry of finance so that they will get the approval in order for them to start collecting so that they can act and start collecting, If we implement that Act, it will be very easy to collect. Even if it is not up to N2.5 trillion, at least they can cross it,” Mr. Abejide said.

The Customs CG also blamed the lack of scanners at major ports for the smuggling of goods. According to him, agents connive with importers to devalue goods to reduce the percentage of duties.

“To be frank, apart from vehicle smuggling, most of the smuggling —evasion of duties — happens at the port because we do not have scanners and which means we cannot inspect every container and know the content,” Mr. Ali said.

“With due respect to stakeholders, most of our traders in conjunction with clearing agents always try to devalue the goods that are imported and therefore reducing the percentage. But if we have scanners…. I thank God very soon we will be deploying three major scanners at the major ports. That will help us tremendously to be able to reduce to the barest minimum the extent of smuggling. Because you have a company bringing 50 containers, you hardly can inspect all those and also we are mindful of the ease of doing business.

“Mr chairman, I assure you that now that the scanners are almost at our shores, once we deploy them I believe that we will realise the increment in terms of revenue.”

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Banking Sector

Global Banking Sector Grows 40% Reviving Pandemic Losses in Just 12 Months

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European Investment Bank - Investors King

In 2020, the global banking sector took a hit following the economic impact of the coronavirus pandemic, which was reflected in the overall market capitalization. However, with the ongoing global recovery, the banking industry has regained most of the losses incurred during the health crisis. 

According to data acquired by Finbold, in just 12 months between Q2 2020 and Q2 2021, the global banking sector’s market cap has surged 39.62%, adding €2.1 trillion from €5.3 trillion to €7.4 trillion. On the path to recovery, the market cap slightly plunged in 2020 Q3 to €5.2 trillion before gaining 17.3% the next quarter.

Among the Western European banks, Spain’s BBVA bank recorded the highest total shareholder return rate at 19.7% between April 2021 – July 2021, followed by Société Générale from France at 13.8%, while Banco Santander, also from Spain, ranks third at 12.1%. United Kingdom’s Barclays is the worst performer with a TSR of -8%. Data on the global banking sector’s market cap is provided by Banking Hub.

How banking sector sustained growth

The registered market capitalization is supported by the large-scale reopening of economies due to the vaccine rollout. Additionally, the banks, especially from major economies like the United States and Europe, have reaped from policies meant to cushion the economy from the adverse effects of the pandemic. Notably, the decisions by most banks to retain a low-interest-rate environment has been beneficial to banks.

Worth noting is that during the pandemic, banks found themselves in a tight spot. Historically, the banking sector has been considered the custodian of the economy but the pandemic also plunged the banks into a crisis. The banking sector’s profits were adversely affected considering they are bound to the business cycle and interest rates.

At the same time, banks also put in place measures like approaching loans with caution due to uncertainty in repaying which directly impacted profits. However, banks were tapped to facilitate the distribution of stimulus packages boosting their capital reserves in return.

Worth pointing out is that institutions like the European Central Banks allowed banks to continue using their capital buffers flexibly with a planned extension until 2022. With such moves helping banks sustain growth, it eliminates the worry of straining capital buffers while the health crisis is still impacting the banks’ balance sheets.

Furthermore, the crisis highlighted the need for banks to keep huge reserves of capital that can be activated in the wake of economic turmoil. Although most banks have historically relied on assets for future cushion, a crisis like the coronavirus calls for more capital because selling assets in such an environment is challenging.

Besides the policies, the banking sector recovery was partly aided by existing operational risk management arrangements. The pandemic tested all financial market participants and most leading banks successfully invoked business continuity plans. The plans ensured that the financial markets continued to run smoothly and orderly.

The sector’s recovery has also been accelerated by other factors like the increased adoption of pre-pandemic trends like digitalization and sustainability. Digitization of operations has been backed by consumers who are willing to conduct transactions online. At the same time, the digital shift has presented a competitive factor in the sector, with institutions that had established online presence benefiting the most.

Notably, the recovery was at some point under threat during the third quarter of 2020 amid concerns of the pandemic’s second wave. However, the sector sustained the gains with the rollout of the vaccine. Furthermore, moving into 2021, the industry appears not to be bothered by the Delta variant.

The future of the banking sector

By sustaining the market capitalization for two consecutive quarters, it can be assumed that the banking sector response to the health crisis is bearing fruits. However, it is still early to determine if the recovery is sustainable.

The rally will be tested, especially when central banks eliminate all the policies meant to cushion the economy. However, in the long run, banks will have to tailor their operations towards changing consumer behaviour.

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Banking Sector

How Stanbic IBTC is Transforming Nigeria’s Trade Landscape

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Stanbic IBTC Bank PLC, a subsidiary of Stanbic IBTC Holdings PLC, has reiterated its commitment to fostering international trade and help the nation actualise its economic growth and development goals.

The Bank said it will continue to fine-tune its three-pronged approach to facilitating trade activities for clients. These are the development of bespoke financial solutions to help boost trade for clients; sponsorship of relevant trade shows that bring together stakeholders in global trade, including exporters and importers; and organisation of seminars and workshops to provide clients and other stakeholders with industry insights and enlighten them on global trade opportunities.

“Our goal is to become the ‘go-to’ Bank as far as global trade is concerned, with emphasis on Africa-China trade. This approach is of immense value to our clients and will help us achieve our fundamental purpose, which is to drive Nigeria’s growth,” Chief Executive Stanbic IBTC Bank PLC, Wole Adeniyi, said.

In line with this resolve, Stanbic IBTC organised a webinar on the African Continental Free Trade Area (AfCFTA). The webinar themed: ‘AfCFTA State of Play: Understanding Potential and Maximising Opportunities for the Customer’, emphasised Stanbic IBTC’s readiness to leverage the trade opportunities of the AfCFTA agreement to unlock business opportunities for its clients in the small and medium-sized enterprises (SMEs) sector as well as its corporate clients.

In 2019, Stanbic IBTC launched its Africa China Agent Proposition (now called Africa China Trade Solutions – ACTS) to boost trade transactions between Africa (Nigeria) and Asia, especially China, and help customers consummate the best business deals without having to travel to China.

According to Stanbic IBTC, ACTS will give customers exclusive access to an array of exporters in China through an accredited agent, Zhejiang International Trading Supply Chain Co Ltd, also known as Guamao.

Stanbic IBTC has held various fora as part of its sensitisation drive on ACTS and the currency swap agreement between Nigeria and China. These fora provided insight on how best to help clients and businesses leverage the opportunity and assess the impact of the Chinese economy on trade in Nigeria and Africa as a whole.

According to Wole, these workshops were geared towards deepening trade connections with the Chinese business community, thereby stimulating strong trade and business ties between Africa, with a special focus on Nigeria and China.

Stanbic IBTC Bank was a platinum sponsor of the 2021 Global Trade Review (GTR) West Africa Conference themed ‘Connecting the Region’s Trade Experts. The GTR West Africa Conference is an annual regional event for trade discussions and networking among leading practitioners in trade, export, and commodity finance to strategically explore the latest developments, strategies, and solutions needed to drive growth.

Experts have continued to commend Stanbic IBTC on this bold approach to educate its clients and investors about the benefits of AfCFTA, the Nigeria China currency swap deal, and the ACTS proposition, all geared towards helping clients unlock business opportunities.

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Banking Sector

Arise B.V., Equity Investor, Invests US$75 Million in Ecobank

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A leading investor in financial institutions in Sub-Saharan Africa, Arise B.V. has made US$75 million perpetual non-cumulative AT1 capital investment in Ecobank Transnational Incorporated.

In a statement signed by Adenike Laoye, the Group Head of Corporate Communications, Ecobank, the fund will help optimise and improve ETI’s Tier 1 capital.

“This Basel III compliant instrument is the first AT1 instrument issued by ETI and a landmark transaction in the sub-Saharan Africa region. The investment will optimize and improve ETI’s Tier 1 capital by US$75 million,” the bank stated.

The latest investment showed Arise, an existing shareholder of Ecobank, has confidence in the bank’s future given the series of support and commitment the leading equity investor has provided to Ecobank in recent years.

Speaking on the new investment, Ade Ayeyemi, Group Chief Executive Officer of ETI, stated: “This investment by Arise is a testament to continued support and confidence from our shareholders; their commitment to, and belief in our strategy which we remain focused on executing to deliver value to our shareholders and excellence to our customers. Indeed, in addition to improving our double leverage ratio, it is also a good boost for the firm and its staff”.

Deepak Malik, Chief Executive Officer of Arise stated: “ETI is our primary banking investment in Francophone West Africa and Anglophone West Africa. We are very supportive of ETI’s growth ambitions and its ability to increase financial services to Agri, SMEs & retail customers. Our investment will also strengthen the balance sheet of ETI and provide additional risk capital”.

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