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Trouble in Nation’s Mortgage Banks Over Liquidity Squeeze



Nigeria Mortgage Refinance Company NMRC
  • Trouble in Nation’s Mortgage Banks Over Liquidity Squeeze

A Crisis looms in the nation’s financial system as lack of funds hits the Primary Mortgage Banking (PMB) segment.

It was learnt that the situation which has become critical for one of the mortgage banks, as it no longer honours depositors’ claims, may soon result in its collapse and affect the sub-sector. As each depositor is only insured to the tune of N500,000, the collapse of PMBs would spell disaster for their customers.

The development could undermine confidence in the operations of the banks, set the national housing policy backward and lead to the collapse of some of the mortgage institutions.

The critically ill mortgagee found itself in the situation because it ignored the liquidity ratios, as it invested all depositors’ funds in assets that are now not easily convertible.

The inability of about 15 mortgage companies to pay premium contributions in 2016 is an indication of operational challenges in the sub-sector.

The Nigeria Deposit Insurance Corporation (NDIC) affirmed that about 15 of the 35 PMBs did not pay the insurance premium as at December 2016, a situation that put the customers at higher risk.

The Managing Director of NDIC, Umaru Ibrahim said the commission’s capacity to sustain its efforts in ensuring that insured institutions are put on the part of sustainable growth and development depends largely on the premium contribution, which is an amount paid periodically to the insurer (NDIC) by the insured (mortgage banks) for covering their risk.

Frontline economist and Chief Executive Officer of Financial Derivatives Limited, Bismarck Rewane, said the challenge could be a corporate governance issue in one or two institutions, but not in the entire industry. According to him, the possibility of having one or two issues would be there, but as a quoted company, the regulators would handle matters right.

But Rewane said there might be crisis if more than 40 per cent of the operators could not pay their premium contributions to the deposit insurer. “It means they are not in business and the situation is no longer a challenge, but a crisis. It means some are just being there until the whole crisis manifests,” he said.

The Managing Director of Cowry Asset Management Limited, Johnson Chukwu, described the failure of any deposit-taking institution, particularly a mortgage bank, to honour its obligations as partly a case of liquidity management, which boils down to corporate governance.

“Although the sub-sector is the weakest in the financial system, with total deposit liability that can easily be written off by the regulator, any shakeout will lead to losses in cash and perception.

“Every financial institution will become suspect if there is a distressed bank now. First, the sub-sector will be deserted. Second, even conventional banks will experience a cold response from customers. This is because not many know the differences. The mortgage refinancing company must be made to work more now,” he said.

He said that government’s policy of high interest rate on its risk-free securities at between 16 per cent and 18 per cent would not allow investments into the mortgage sub-sector, just as conventional banks would soon face the same effect.

NDIC spokesman, Hadi Birchi, reiterated that the commission’s mandate is to settle every depositor of failed financial institutions, first with the insured amount and second with as much as the assets of the company can provide.

While acknowledging that the commission is aware of the challenges in the mortgage banks and is currently looking for solutions, he said customers and other stakeholders should not panic.

Efforts to reach the spokesman of the Central Bank of Nigeria, Isaac Okorafor, through text message and calls were not successful.

At the weekend, an industry source told The Guardian that the number of defaulters on the premium contributions had decreased to 13, but affirmed that most of their investments (understandably housing projects) did not bring about the estimated returns.

“The economy is harder now and some who are expected to buy the houses are not forthcoming. The houses are there, but we cannot get money since they are not taken up,” the source said.

The chief executive officer of the mortgagee told The Guardian that the situation was tough, but that the company was doing its best to turn things around.

“The condition of the economy is also compounding the matter. There is no money and people are not meeting up to their obligations to the bank. The assets are there but you cannot easily convert them now because of the recession.

“I must admit that the projections of the bank did not turn up well. Yes, the liquidity ratios were well overshot, but I think the calculation was that the investments will turn up,” the bank boss said.

Also, the situation, which started about three years ago, has become so serious that the company failed to honour some customers’ demand in the last one year.

As at third quarter of 2016, the Nigerian Bureau of Statistics (NBS) could only report the sub-sector’s first quarter (Q1) activities on deposits, loans and interest rates, an indication of failing corporate governance structure.

Even with incomplete disclosures, the NBS said the sub-sector, made up of 35 institutions, had N78.1 billion in loans and leases; domestic debts of N65.6 billion; and National Housing Fund contribution of N9.7 billion in its books as at Q1.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.


The Highest Corporation Taxes Around the World and the Main Drivers Behind them



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Taxes Pay by Corporation Around the World and the Main Drivers Behind them

While corporation tax rates are influenced by the country’s definition, there’s clearly a pattern with developing countries and emerging economies paying higher rates to sustain the country.

The top five richest countries in the world’s corporation tax are relatively varied, with Luxemburg standing at 27.08%, Norway at 22%, Iceland at 20%, Switzerland at 18% and Ireland at 12.5%. It would appear that some countries’ cultures factor into how much tax they pay. For example, Scandinavian countries are proud to pay higher taxes to contribute to social welfare.

On average, Africa has the highest corporation tax rate throughout the world’s continents at 28.45% and South America, the second highest with an average rate of 27.63%. However, Europe stands at the lowest rate of 20.27%. Does this contradict the claim that developed countries pay higher tax?

OECD explained that corporation tax plays a key part in government revenue. This is particularly true in developing countries, despite the global trend of falling rates since the 1980s. Let’s take a closer look at two continents, South America and Africa, paying the highest corporation tax rates in the world.

South America has most countries in highest corporation tax top 10

According to data analysed, Brazil and Venezuela have the highest corporation tax at 34%, followed closely by Colombia at 33%, and Argentina at 30%, making South America the continent with the most countries in the top 10 who pay the highest corporation tax.

It is unclear whether South America, as an emerging continent, is charging higher taxes in order to raise government revenue or to benefit from businesses that are looking to expand internationally and enter new markets. According to research, South America is becoming a popular choice for business to enter, with strong trade links and an advantageous geographic location. Indeed, South America is a large continent where some countries are business friendly and others are harder to penetrate.

Africa: the continent with the highest average corporation tax

Being the poorest continent in the world, Africa unsurprisingly has the highest average corporation tax at 28.45%. With the highest in this data being Zambia at 35% and the lowest being Libya and Madagascar at 20%, South Africa stands roughly in the middle at 28%, slightly above average for Africa overall. Does this mean that South Africa is the safest bet for business?

South Africa is one of Africa’s largest economies, with 54 diverse countries in terms of political stability, development, growth, and population. As South Africa has been a relatively slow growth area over the years, corporation tax dropped from 34.55% in 2012 to the current rate — but was this effective? GDP in South Africa has fluctuated quite dramatically since the 1960s. Business favours countries with political stability, which is something South Africa doesn’t currently have. Furthermore, South Africa’s government debt to GDP sits roughly in the middle of the continent’s countries — is this influencing their corporate tax rate?

Country Continent Tax (%)
Puerto Rico North America 37.5
Zambia Africa 35
Brazil South America 34
Venezuela South America 34
France Europe 33.3
Columbia South America 33
Morocco Africa 31
Japan Asia Pacific 30.62
Mexico North America 30
Argentina South America 30
Germany Europe 30
Australia Asia Pacific 30
Philippines Asia Pacific 30
Kenya Africa 30
Nigeria Africa 30
Congo Africa 30
Belgium Europe 29
Pakistan Asia Pacific 29
Sri Lanka Asia Pacific 28
New Zealand Asia Pacific 28
South Africa Africa 28
Luxembourg Europe 27.08
Chile South America 27
Canada North America 26.5
Algeria Africa 26
India Asia Pacific 25.17
Jamaica North America 25
Chile South America 25
Ecuador South America 25
Netherlands Europe 25
Spain Europe 25
Austria Europe 25
South Korea Asia Pacific 25
Bangladesh Asia Pacific 25
China Asia Pacific 25
Indonesia Asia Pacific 25
Zimbabwe Africa 25
Tunisia Africa 25
Greece Europe 24
Italy Europe 24
Malaysia Asia Pacific 24
Israel Middle East 23
Egypt Africa 22.5
Norway Europe 22
Denmark Europe 22
Turkey Europe 22
Sweden Europe 21.4
United States North America 21
Portugal Europe 21
Russia Europe 20
Finland Europe 20
Iceland Europe 20
Afghanistan Asia Pacific 20
Azerbaijan Asia Pacific 20
Kazakhstan Asia Pacific 20
Thailand Asia Pacific 20
Vietnam Asia Pacific 20
Cambodia Asia Pacific 20
Taiwan Asia Pacific 20
Saudi Arabia Middle East 20
Jordan Middle East 20
Yemen Middle East 20
Madagascar Africa 20
Libya Africa 20
Slovenia Europe 19
Czech Republic Europe 19
Poland Europe 19
United Kingdom Europe 19
Belarus Europe 18
Croatia Europe 18
Switzerland Europe 18
Ukraine Europe 18
Singapore Asia Pacific 17
Hong Kong Asia Pacific 16.5
Lithuania Europe 15
Georgia Asia Pacific 15
Maldives Asia Pacific 15
Kuwait Middle East 15
Iraq Middle East 15
Ireland Europe 12.5
Cyprus Europe 12.5
Bulgaria Europe 10
Qatar Middle East 10
Hungary Europe 9
Barbados North America 5.5


Lucy Desai is a content writer at QuickBooks, a global company offering the world’s leading accountancy software.

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African Development Bank Appoints Ms. Yacine Fal as Director General, Cabinet Office of the President




Adesina Appoints Ms. Yacine Fal as Director General, Cabinet Office of the President

African Development Bank has appointed Ms. Yacine Fal as the Director General, Cabinet Office of the President, effective from November 1st 2020.

According to a statement put out by the multilateral financial institution, Ms. FaI will oversee the administrative and operational work and activities of the Cabinet Office of the President as the new Director General.

Mainly, “she will provide oversight of all units and departments directly reporting to the President. She will also ensure enhanced delivery efficiency and effectiveness for all Presidential initiatives and Bank operations, as per agreements with respective Vice Presidency Complexes. She will oversee the work of senior staff to improve overall coordination and engagement of the President and Chairman of the Board of Directors with the Board.”

Yacine Fal is a Senegalese citizen with Masters of Law degree from the University of Dakar and obtained her postgraduate degree in international law from the University of Paris X.

Commenting on her appointment, Yacine said “I am greatly honored by the confidence reposed in me by President Adesina to support him in ensuring the successful implementation of his bold vision for the Bank and the continent. I look forward to leading teams in the President’s Cabinet Office to provide managerial, administrative and operational bandwidth and to assure the success of the President’s vision and mandate following his historic re-election with 100% vote of the Bank’s shareholders.”

Speaking on her appointment, Dr. Adesina, the President, AfDB, said “Yacine is a highly capable manager. She brings vast knowledge and experience of the Bank’s legal, procurement, human resources, processes, systems, and operations to her new position. I am delighted to have Yacine lead a restructured Cabinet Office of the President that will comprehensively support the delivery of my vision and mandate to strengthen the Bank and accel erate Africa’s devel opment.

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Global Life & Health Insurance Top Industry by Revenue in 2020 at $4.4 Trillion




Global Life & Health Insurance Industry Leads in Terms of Revenue Generation in 2020 at $4.4 Trillion

According to the research data analyzed and published by ComprarAcciones, life and health insurance will be the biggest industry globally in 2020. The sector has been growing at an average rate of 2.4% from 2015 to 2020 and will surpass $4.384 trillion.

According to Global Data, the insurance sector as a whole raked in $2.611 trillion in 2019 and was the sixth largest. Notably though, an Allianz Global insurance report projects a decline of 3.8% for the industry worldwide in 2020.

Top 12 Publicly Listed Oil Companies Post $80 Billion Loss in H1 2020

2019 was a great year for insurance as premiums grew at a rate of 4.4%. However, the 2020 decline will be over three times worse than after the 2008 financial crisis. At the time, the sector only shrank 1%. An Allianz study projects that in 2021, the growth rate of insurance premiums will return to pre-pandemic levels.

Oil and gas, which was the top industry in 2019, is ranked third in 2020. It is expected to rake in $3.325 trillion in revenue in 2020. In 2019, it made over $4.797 trillion, growing 16.2% in revenue and 36.3% in profits year-on-year (YoY).

The situation in 2020 is vastly different as the top 12 publicly traded oil companies reported a collective loss of $80 billion. According to Anadolu Agency, during H1 2019, they had posted a collective net income of $46.5 million.

On the other hand, banking was the third largest industry by revenue in 2019, raking in $4.424 trillion. However, in 2020, it sits in the eight spot and is estimated to generate $2.341 trillion. Putting this in perspective, the top 5 Chinese banks reported a drop of $9.9 billion in H1 2020 profit. In the US, the top 6 banks increased loan loss provisions from $25 billion in Q1 2020 to $35 billion in Q2 2020.

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