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Govts, Oil Firms, Manufacturers Borrow N8.24tn From Banks

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bank loans
  • Govts, Oil Firms, Manufacturers Borrow N8.24tn From Banks

The oil and gas sector, governments and manufacturers account for the large chunk of loans from Nigerian banks as of the end of March this year.

The total loans given to the oil and gas, manufacturing sectors and governments by banks in the country stood at N8.24tn at the end of March.

Latest data obtained from the National Bureau of Statistics revealed that loans given to the oil and gas sector stood at N4.686tn, while the governments got N1.368tn.

The manufacturing sector got a loan of N2.241tn, while general commerce received N1.035tn.

Loans to the general, finance and insurance, and power and energy sectors stood at N1.019tn, N954.68bn and N683.93bn, respectively while agriculture, forestry and fishing sector and construction sector got N648.89bn and N642.87bn, respectively.

Information and communication sector and the real estate sector secured N607.95bn and N599.39bn loans respectively.

Loans to transportation and storage sector stood at N213.94bn, while capital market got N227.28bn.

The professional, scientific and technical services industry secured a loan of N170.92bn, while public utilities and the education sector got N78.91bn and N58.4bn, respectively.

Loans to the human health and social work sector stood at N23.09bn; water supply, sewerage, waste management and remediation activities sector got N22.68bn; and arts, entertainment and recreation sector received N11.34bn.

The mining and quarrying sector and extraterritorial organisations and bodies got N8.97bn and N0.03bn, respectively.

The banking sector’s non-performing loans stood at N1.676tn as of the end of March 2019, according to the NBS.

The gross loans recorded in the banking sector stood at N15.480tn, while the loans after specific provisions stood at N13.739tn in the period under review.

The ratio of the NPLs to total loans was 10.83 per cent, while the ratio of NPLs to total loans after specific provisions was 12.2 per cent

The total amount of NPLs at the end of 2018 was N1.792tn, while the gross loans and loans after specific provisions were N15.353tn and N13.562tn, respectively.

Banks’ NPLs fell by six per cent from 15 per cent in June 2017 to nine per cent in May 2019, the Central Bank of Nigeria said.

The apex bank said capital adequacy ratio for the banking industry improved from 11 per cent in June 2017 to over 16 per cent in May 2019 and liquidity level also increased by over 20 per cent within the same period.

The CBN, Godwin Emefiele said, “In addition, the ratio of non-performing loans in the banking system has reduced from 15 per cent in June 2017 to nine per cent in May 2019, due to concerted efforts by the CBN and the Deposit Money Banks, although more work is being done to moderate NPL levels to the maximum prescribed level of five per cent.

“Our financial institutions are well-positioned to perform their intermediation role, which will ultimately help in supporting the growth of our economy.”

He said the drop in commodity prices affected a good number of banks given their exposure to the oil and gas sector, and this resulted in an increase in banks’ NPLs.

According to the CBN, as a result of risk management measures embarked upon by it, capital adequacy and liquidity ratios of commercial banks are now above the prudential levels.

The Managing Director/Chief Executive Officer, Asset Management Corporation of Nigeria, Mr Ahmed Kuru, recently expressed concerns over the resurgence of huge toxic loans in the banking sector.

He called on the authorities to revisit the Failed Bank Act so that operatives in the banking sector would be made to account for their actions.

He also urged banks to immediately strengthen their risk management frameworks to stem the negative growth.

Kuru explained that given the huge resources that were available to financial institutions and the pivotal role they played in the development of the economy, it became mandatory for financial institutions to take the issues of risk management seriously to prevent what happened during the global financial crisis.

He suggested that in line with the fight against corruption, there was a need to address impaired and arranged credits so that operators would be held responsible for booking credits contrary to their credit policy that went bad under their supervision.

He noted that one of the reasons for the failure of the banking system during the global financial crisis of 2008/2009, which eventually led to the creation of AMCON, was the prevalence of weak risk management framework by financial institutions.

The Chairman, Independent Corrupt Practices and Other Related Offences Commission, Prof. Bolaji Owasanoye, said recently that the commission would collaborate with AMCON to recover debts.

He said the huge debts had become existential challenge for the country since the few people who were the debtors were still walking free and waxing strong in the society.

Considering the positive impact the funds would have in the economy if recovered, Owasanoye said the time had come for the ICPC and other relevant sister agencies to partner AMCON and support the debt recovery drive.

He said, “We have to be practical in our approach. Something needs to be done and very fast too given the approaching AMCON sunset because this is public funds we are talking about here. We need AMCON and ICPC to work closer and develop a strategy that would work.

“We need the public to know the opportunity cost of the huge debt to the Nigerian economy, we need to share information as sister agencies locally and internationally and treat this matter as a last lap race by setting up a joint taskforce to deal with this sobering issue.”

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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Livestock Feeds Appoints Adegboyega Adedeji as Substantive Managing Director

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Adegboyega Adedeji is the Substantive Managing Director

Livestock Feeds Plc on Monday announced it has appointed Mr. Adegboyega Adedeji as the company’s substantive Managing Director, effective from 2nd October 2020.

In a statement released on the Nigerian Stock Exchange (NSE), the company said Mr. Adedeji was the Acting Managing Director of the Company before he was appointed as the Managing Director.

It added that Mr. Adedeji was “formerly the General Manager, Sales and Operations responsible for all sales activities and the strategic development of the Company’s markets, along with new products portfolio generation and development.”

He graduated from the famous Obafemi Awolowo University, Ile-Ife in 1996 and had his MBA from the University of Roehampton, UK in 2018.

He worked with Grand Cereals Limited as Regional Sales Manager before becoming their procurement manager. He moved to UACN Plc in 2007 as the Training Services Manager, a position held till September 2009 before he was transferred to UAC Restaurant.

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COVID-19 to Plunge Global Consumer Spending by 8.6 % in 2020

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Global Consumer Spending to Drop by 8.6 Percent in 2020

The coronavirus pandemic has changed almost every aspect of people’s daily lives, and consumer spending is no exception. The uncertainty of the COVID-19 crisis caused considerable changes in consumer habits, forcing them to cut down their budgets and prioritize spending.

According to data presented by Stock Apps, the coronavirus outbreak is expected to cut global consumer spending to $44.3trn in 2020, an 8.6% plunge year-over-year.

$4.2trn Drop in Spending Amid COVID-19 Crisis

Falling consumer spending has significant effects on overall Gross domestic product (GDP) growth, considering it accounts for almost 70% of GDP.

Before the COVID-19 crisis, global consumer spending has witnessed steady growth for five years in a row, revealed Statista, IMF, United Nations, World Bank, and Eurostat data. In 2015, it amounted to over $41.5trn. Over the next twelve months, this figure rose to $42.5trn and continued growing. Statistics show that in 2019, consumers worldwide spent a total of $48.5trn, the highest amount in a decade.

However, the coronavirus crisis triggered a sharp fall in 2020, with global consumer spending expected to plunge by $4.2trn year-over-year. Nevertheless, statistics show the following years are set to witness a recovery, with consumer spending growing by 20% to $53.5bn in 2022.

Statista data also revealed that Switzerland represents the leading country globally, with over $40,000 in consumer spending per capita in 2020. Luxembourg ranked second with around $5,000 less than that. Iceland, Denmark, and Norway follow, with $34,300, $25,800, and $25,600, respectively.

60% of Consumers Changed their Shopping Behaviour

The McKinsey&Company survey showed consumers became increasingly cautious with their spending in 2020. Even after countries lifted lockdowns, many consumers still see their incomes fall, forcing them to reduce budgets and change shopping habits.

Statistics show that increased time spent indoors led to significant growth in consumer spending on groceries, household, and home entertainment. Brazil, South Africa, and India lead in this category, with up to 30% consumer spending growth. Major consumer markets like the United States, United Kingdom, Germany, and China witnessed around 15% grocery shopping growth in the first half of the year.

However, with consumers being mindful of their spending and turning to less expensive products, 2020 has witnessed a plunge in clothes and accessories, outside entertainment, services, travel, and transportation spending. Respondents in all countries said they cut down spending in these categories between 20% and 50%.

The McKinsey survey also revealed the COVID-19 outbreak triggered a significant change in the shopping mindset. More than 60% of consumers globally have tried a different brand or shopped at another retailer during the crisis, mostly for convenience, value, and quality.

In China and the United States, over 75% of consumers reported trying a new shopping method, and 60% plan to stick with it post-crisis. The United Kingdom and Germany follow with 71% and 54% of consumers who practiced new shopping behavior. In Japan, where lockdowns weren’t imposed, only 33% of consumers changed their shopping mindset.

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Survival Fund: Buhari Commences Disbursement of N75 Billion Support Fund

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President Muhammadu Buhari

FG to Commence Disbursement of N75 Billion Survival Fund to MSMEs

The Federal Government to commence the disbursement of N75 billion COVID-19 support fund to successful Micro, Small and Medium Enterprises (MSMEs) that applied for financial support under the National MSME Survival Fund this week.

On September 10, 2020, the Federal Government announced the introduction of two financial support schemes to support around 1.7 million small businesses with N75 billion.

According to Tola Adekunle, the Special Assistant to the President on MSMEs, Office of the Vice President, who doubles as Project Coordinator, Survival Funds Scheme, payment disbursement to some of the beneficiaries of the schemes would commence this week.

He said, “Presently we are doing it in batches of 12 states to be able to monitor the scheme and as we speak now 12 states are ready. We are hoping that by the end of this week, we will be able to pay 12 states.

“We are starting with the artisans and it is 4,500 persons per state, plus 4,500 for transporters, bringing it to about 9,000 for each state. Right now, we have about 54,000 from 12 states.”

Asked by journalists when those on payroll support would start receiving payments, he said “By the end of this month.

“We want to ensure that the staff start getting their salaries and same for the second and third month.

Adekunle explained that payroll support which was introduced under the survival fund to help businesses that employed between 10 to 50 people, will ensure 10 of the 50 employees are paid between N30,000 to N50,000 depending on their salaries. Payment, he said would commence by the ending of this month.

He said, “We now pay 10 of those people from among the 50 employees and we pay them between N30,000 and N50,000.

“But the minimum we pay is three staffs for three months to support their businesses and to ensure that we are helping businesses to augment their salaries.”

He, however, said the program ended on October 15 but states that were yet to meet their quotas were demanding extension. A demand he said was valid given that only less than 20 states have met their quotas.

In my own opinion, it is valid but the decision lies in the hands of the committee and the project coordinator so I have to convince them based on data analysis,” he said.

Speaking on the total number of applicants for the payroll support, Adekunle said, “As at the day it closed, we had about 432,000 businesses that had applied. However, we have shortlisted less than 70,000 businesses that qualify and meet the requirements.”

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