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Development Bank Of Nigeria Disbursed N400B to SMEs in Four Years

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Development Bank of Nigeria (DBN)- Investors King

The Development Bank of Nigeria (DBN) Plc has disbursed a total of N400 billion to Small and Medium Enterprises (SMEs) in the country in the past four years, its Chief Executive Officer (CEO), Mr. Tony Okpanachi, disclosed on Tuesday.

His revelation came as the African Export-Import Bank (Afreximbank) stated that 62 percent of women-led SMEs have been adversely impacted by the COVID-19 pandemic, while between 27 percent and 30 percent of SMEs owned by men were affected.

Okpanachi, who spoke at a virtual second annual lecture series of the DBN, themed, ‘Resilient Innovation: MSMEs’ adaptability in Uncertain Times,’ said the DBN had fulfilled its mandate by championing the provision of funds for the SMEs.

He stated: “As a bank, we have championed this cause through all our three mandates of providing long-term financing, capacity building and partial credit guarantees over the years.

“Since commencing operations in 2017, we have disbursed over N400 billion in loans to over 150,000 Nigerian SMEs out of which 27 percent are women-owned and 26 percent new owned businesses respectively. This has led to the creation of over 130,000 jobs.”

He stressed that in 2020 alone, the sum of N190 billion was disbursed through 19 participating financial institutions (PFIs) out of which N9.8 billion was to 6,935 first-time borrowers, N5.7 billion to 9,066 youths, and N11.8 billion to 25,171 women-owned businesses.

Cumulatively, he said, 83 percent reported an increase in their sales after obtaining the loan, while 48 percent were able to increase their staff strength after receiving the facility.

Additionally, 125 MSMEs were also trained as part of the bank’s capacity-building initiative through the DBN Entrepreneurship Training Programme, which was held in Abuja and Lagos, he added.

Okpanachi disclosed that the 2021 DBN training programme has commenced and is financed by the bank under the platform of Enterprise Development Centre, Pan-Atlantic University, Google and Wider Perspectives Ltd.

On why the bank shows interest in SMEs, he explained that this was because “big things have small beginnings”.

The DBN boss said: “It is at times like this that our mandate at the Development Bank of Nigeria Plc has captured in our vision which is to facilitate sustainable socio-economic development through the provision of finance to Nigerians on sound SMEs through eligible financial intermediaries.”

In his remarks, the Chairman of the Board of the DBN, Shehu Yahaya, said over the years, the bank has focused on avenues to make SMEs thrive.

He alluded to DBN’s five-year strategic plan, which includes expanding its reach, advocating for MSMEs and expanding its capacity among others, adding that this has become more crucial in the face of difficulties in the country.

Also speaking, the President and Chairman, Board of Directors, African Export-Import Bank, Prof. Benedict Oramah, said the impact of the COVID-19 pandemic on SMEs called for more concentration on SME fundings.

Oramah, who was represented by Afreximbank’s Executive Vice-President, Finance, Administration and Banking Services, Denys Denya, said 62 percent of women-led small businesses have been strongly impacted by the pandemic, while between 27 percent and 30 percent of SMEs owned by men were impacted.

He regretted that African SMEs are largely suffering the digital gap, adding that this led to huge obstruction in the continent’s supply chain during the lockdown.

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Finance

Private Sector Seeks FG’s Directive on VAT Payment

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Value added tax - Investors King

The Organised Private Sector of Nigeria (OPSN) on Sunday in Lagos called on the Federal Government to urgently make a pronouncement on the ongoing controversy over VAT payment so that businesses will know what to do.

OPSN chairman, Mr Taiwo Adeniyi, made the call at a news conference and said delays in addressing the issue could cause negative effects on businesses, most especially in the collection and remittances of VAT.

“We are aware that by Sept. 21 we get penalised if we do not pay or remit the VAT for the month of August.

“We are also aware that laws are not made in retrospect. It then means that even if those laws have been enacted, particularly the Lagos State law which came into effect in September, it will not affect the payment by businesses in the state.

“Due to our remittances, we have issues with the fact that the law for Rivers was made in August and the majority of the businesses in Lagos usually will have a relationship with the Rivers State Inland Revenue too.

“The confusion in the public space is the reason we are calling on the government to come to our aid as we want to pay.

“It is for the government at the center to make a pronouncement as to what becomes of us,’’ he said.

Adeniyi, who is also the President of, Nigeria’s Employers Consultative Association (NECA), said that the ongoing challenge had the potential to make businesses pay double VAT in view of demands by the FIRS and state governments.

He said that businesses, as the collecting agents, were practically unclear on the authority to remit to and without a clear path, this would further aggravate the pain on businesses.

“It is a popular saying that where two elephants fight, it is the grass that suffers.

“It is no longer news that Nigerian businesses have been battling with myriads of challenges, making the survival of enterprises and ease of doing business in the country among the worst in this part of the world,’’ he said.

There has been controversy over the collection of VAT after a Federal High Court ruled that it was not the duty of the Federal Government to collect the tax.

VAT is normally collected by the Federal Government since the military era and the money is shared by the three tiers of government.

Following the court ruling, however, Lagos and Rivers states passed laws that allowed them to collect VAT.

FIRS, which used to collect the VAT on behalf of the Federal Government, has challenged the court ruling at the appellate court.

OPSN comprises the Manufacturers Association of Nigeria, the Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture, NECA, Nigeria Association of Small Scale Industries and the Nigeria Association of Small and Medium Enterprises.

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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 - investorsking.com

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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