NIGERIAN FINANCE NEWS 3/08/20
Introduction
The finance news this day will focus on the disbursement to Wet season farmers of N432 billion by the CBN. However, following the story of the Wet season farmers disbursement revealed the CBN exceeded their initial plans to disburse N432bn.
Reports from the Apex bank indicate it disbursed a total of N539.8billion within the three months of 2020. The report is included in this day's economic news below with other important economic news as compiled by Abiahu, Mary-Fidelis.
The economic news includes the following:
1. Banks implement new CBN guidelines on debt recovery
2. Review courier regulation by NIPOST, LCCI tells govt
3. Corporate earnings lift stock market index by 1.09%
4. Checking rising incidence of unclaimed dividend in capital market
5. Deloitte Launches Initiative to Support SMEs, Others
6. FIRS Grants One Week Extension for Companies to File Returns
7. FG Urged to Adhere to Transparency in Public Finance Mgt.
The Central Bank of Nigeria on Thursday said it plans to fund the value chains of nine agricultural commodities to the tune of N432bn in the 2020 wet planting season. It outlined the commodities to include rice, cotton, oil palm, tomato, cassava, poultry, fish, maize, cocoa and livestock/diary.
Senior officials of the bank disclosed this at a stakeholders’ meeting to review the successes recorded under the CBN Anchor Borrowers Programme and the strategies for the 2020 agricultural wet season.
This came as the bank said it would release a framework for the integration of non-interest window in all its intervention programmes. It named the ABP and the Targeted Credit Facility that would support households and micro, small and medium enterprises affected by the COVID-19 pandemic, as the main programmes being considered by the framework.
The Director, Development Finance Department, CBN, Yila Yusuf, explained that the bank’s target for the 2020 planting season was to advance about N432bn to farmers in the value chains of nine commodities. He said the money would be sent through the designated participating banks, adding that over 1.1 million farmers, cultivating over one million hectares of farmland were expected to benefit from the loans.
Yusuf said the loans would help to produce a collective output of 8.3 million metric tonnes of commodities. “The bank’s funding of the Anchor Borrowers’ Programme for the 2020 season is the highest since the inception of the programme in 2015,” he said.
The Director, Corporate Communications, CBN, Isaac Okorafor, said the creation of a non-interest window followed appeals by concerned stakeholders for farmers to be considered for funding under the programme. He said work had been concluded on the funding document and that the policy would be issued shortly to enable farmers access and benefit from it.
On the Targeted Credit Facility of the bank, Okorafor said the aim of the initiative was to alleviate the impact of the coronavirus on individuals and small businesses. He said the CBN Governor, Godwin Emefiele, had directed the Development Finance Department of the bank as well as the NIRSAL Micro-Finance Bank to fast-track the approval process of loans to help restore businesses and livelihoods.
Various associations of farmers commended the CBN for its support to the agricultural sector. They noted that the ABP had particularly impacted positively on rice production across the country.
ACTUAL DISBURSEMENT: CBN disburses N539.8m loans to farmers in three months
The Central Bank of Nigeria disbursed N539.8m loans to farmers between January and March 2020. It disclosed this in its third quarter economic report on titled ‘Agricultural credit guarantee scheme’, obtained on Monday. Part of the report reads, “A total of N539.8m loans was guaranteed to 3,161 farmers under the Agricultural Credit Guarantee Scheme in the first quarter of 2020..
“This represented a decrease of 53.9 per cent and 34.8 per cent below the levels in the preceding quarter and the corresponding period of 2019 respectively.” Sub-sectorial analysis showed that food crops obtained the largest share of the total, with N291.6m (54.0 per cent) guaranteed to 1,958 beneficiaries; followed by the livestock, N115.2m (21.3 per cent) guaranteed to 430 beneficiaries. Cash crops had N64.9m (12 per cent) guaranteed to 335 beneficiaries; fisheries, mixed crops and ‘others’ received N36.1m (6.7 per cent), N16.8m (3.1 per cent) and N15.3m (2.9 per cent), respectively, guaranteed to 121, 233, and 84 beneficiaries.
Analysis by state showed that 30 states and the Federal Capital Territory benefited from the scheme in the review quarter, with the highest and lowest sums of N54.8m (10.2 per cent) and N1.8m (0.3 per cent) guaranteed to Ogun and Nasarawa states respectively. The bank stated that agricultural activities in the first quarter of 2020 were predominantly preparation of land for early wet season planting, harvesting of tree crops and irrigation-fed vegetables. In the livestock sub-sector, it stated, farmers continued to intensify efforts towards raising of poultry birds and cattle in preparation for the 2020 Easter festivity.
The CBN said during the quarter, the African Development Bank, in collaboration with the Federal Government, signed a $500m memorandum initiative to develop four special agro-industrial processing zones in the country. The special agro-industrial processing zones were designed to concentrate agro-processing activities within areas of high agricultural potential to boost productivity, integrate production, processing and marketing of selected commodities, it stated.
It said the initiative was capable of boosting the structural transformation of the economy by providing opportunities for public and private sector investments. The report said, “Following the outbreak of COVID-19, which led to lockdown in major cities around the globe, the Nigerian agricultural sector in Q1 2020, witnessed a huge demand uptick arising from panic buying, mostly for essential commodities. “The panic buying was fueled by the speculations of economic slow-down.” It stated that the development also led to increase in commodity prices in the market.
FINANCE NEWS – MONDAY, AUGUST 3, 2020
1. Banks implement new CBN guidelines on debt recovery
2. Review courier regulation by NIPOST, LCCI tells govt
3. Corporate earnings lift stock market index by 1.09%
4. Checking rising incidence of unclaimed dividend in capital market
5. Deloitte Launches Initiative to Support SMEs, Others
6. FIRS Grants One Week Extension for Companies to File Returns
7. FG Urged to Adhere to Transparency in Public Finance Mgt.
Banks implement new CBN guidelines on debt recovery
Deposit Money Banks on August 1 commenced the implementation of the Central Bank of Nigeria’s Global Standing Instruction which allows them to recover outstanding debts of debtors from other banks. Experts who spoke to our correspondent said the implementation would help to differentiate real wealthy businessmen from debtor businessmen.
A former President, Trade Union Congress, Peter Esele, said the guideline was long overdue but added that it was better late than never. He said, “The financial system has been abused and it is baffling that one man would be owing six banks in the same country; it can’t happen anywhere else. “What the CBN is doing now is that it is sanitising the industry and we now actually know who are the real businessmen and the real big men.
“Some men are wealthy from running banks down because a lot of the big men are running banks down.” He said the CBN and the banks should start giving credit score. The President, United Labour Congress, Joseph Ajaero, said, “Banks that are lending money to people should make sure that they have adequate collateral.
“Ordinarily, banks cannot on their own go to another bank and take the money that was kept in another bank; they are independent and should operate independently.” He said it was because the banks were lending without collateral that they were running into problem.
Review courier regulation by NIPOST, LCCI tells govt
The Chamber of Commerce and Industry has described the dual role of the Nigerian Postal Service as a regulator and operator of the courier business as unfair, inequitable, and repressive. The chamber, through its Director General, Dr Muda Yusuf, said the power vested on NIPOST to regulate its competitors was not consistent with the best practice principles of business regulations globally. In a statement issued on Sunday entitled ‘Comments on the 2020 NIPOST regulatory provisions for courier industry’, Yusuf said the dual role negated the ease of doing business policy of the Federal Government.
He called on the Federal Government and the National Assembly to urgently remedy the situation, saying it was inconsistent with the extant competition law of Nigeria. The LCCI boss highlighted the challenges facing courier companies in the country and commended the Minister of Communications and Digital Economy, Dr Isa Pantami, for promptly reversing the new licence and renewal fee introduced by the postal service.
Yusuf, however, asked for further intervention in other provisions in the courier regulation guidelines. He asked that an aspect of the provision, which stated that an operator should contribute two per cent of its total annual revenue to the Postal Fund, for postal development in rural and underserved areas, should be expunged. “We submit that this provision will put too much burden on courier and logistics businesses and make them unsustainable. These businesses are already grappling with a multitude of taxes and levies in the course of their daily operations,” he said.
He added, “The provision in the courier regulation, which vests the minister with powers to compel any licensed courier and/or logistics services operator to undertake free delivery service for the purpose of Universal Postal Service Obligations/or any social service delivery in national interest needs to be reviewed. “This provision will undermine the confidence of investors in the courier and logistics business and should immediately be repealed. It is a negation of the efforts of the Federal Government to attract investment, create jobs and grow the economy.”
He expressed concern over the insistence that all courier items/articles such as right issues, shares certificates, statement of accounts, cheques, letters or offer documents, weighing below 0.5kg brought to a courier/logistics service operator should be referred to the nearest post office for processing and delivery. Yusuf described this provision as unfair, saying citizens should not be compelled to patronise NIPOST against their will, irrespective of the size or weight of the items.
He urged the Pantami to take urgent steps to clean up the regulations in the interest of the Nigerian economy, business continuity, private sector development and job creation. According to him, there is need to save the courier industry from a stifling and suffocating regulatory regime.
Corporate earnings lift stock market index by 1.09%
Despite the two public holidays declared by the Federal Government to mark the Eid-El-Kabir celebrations, the influx of corporate earnings last week propelled activities on the equities sector of the Nigerian Stock Exchange (NSE), last week, as the All-share index and market capitalisation both gained 1.09 per cent to close the week at 24,693.73, and N12.882 trillion, respectively. Similarly, all other indices finished higher with the exception of NSE ASeM, NSE Consumer Goods, and NSE Oil/Gas Indices, which depreciated by 0.06 per cent, 0.44 per cent, and 6.51 per cent, respectively. Despite the upturn in last week’s trading, analysts predicted pullbacks this week, due to unimpressive earnings reports released by some sectors especially from companies in the oil and gas sector.
According to them, most of the companies’ scorecards that were released so far reflected the effects of the lockdowns occasioned the coronavirus pandemic, as most of the companies posted negative and mixed numbers. The Chief Research Officer, Investdata Consulting, Ambrose Omodion, said the few outstanding numbers so far are from United Capital, Jaiz Bank, Okomu Oil, Lafarge Africa, and Prestige Assurance. “The sectors that posted the worst earnings performance are consumer goods and petroleum products marketing, considering the numbers that emanated from Unilever, Cadbury, International Breweries, Total Nigeria, Seplat, and Eterna and CAP. “This is likely to influence dividends pay-outs for this current financial year negatively across some sectors and companies, while those benefiting from the pandemic and economic shutdown are likely to grow their dividends for the year.
However, he explained that investors are buying presently to increase their positions in undervalued stocks ahead of Q2 numbers. He also added that sectors that have suffered oversold, offer attractive risk-reward buy-opportunities and outlook for considerable short, medium and long term investment. Furthermore, he advised investors to trade low priced stocks with serious caution to avoid being trapped.
“Again, the current undervalued state of the market offers opportunities to position for the short, medium and long-term. “This is why investors should target fundamentally sound, and dividend-paying stocks for possible capital appreciation going forward.” Analysts at Codros Capital said: “Our view continues to favour cautious trading as risks remain on the horizon due to a combination of the increasing number of COVID-19 cases in Nigeria and weak economic conditions. “Thus, we continue to advise investors to seek trading opportunities in only fundamentally justified stocks.”
Last week, a turnover of 421.984 million shares worth N5.337 billion was recorded in 11,801 deals by investors on the floor of the exchange, in contrast to a total of 1.350 billion shares valued at N14.433 billion that was exchanged hands in 16,723 deals during the preceding week. The financial services industry (measured by volume) led the activity chart with 249.588 million shares valued at N1.563 billion traded in 5,899 deals; thus contributing 59..15 per cent to the total equity turnover volume and value respectively. The consumer goods industry followed with 51.760 million shares worth N1.072 billion in 1,877 deals. The third place was the Industrial goods industry, with a turnover of 46.197 million shares worth N833.473 million in 1,489 deals.
Trading in top three equities namely, WAPCO Plc, FBN Holdings Plc and Mutual Benefit Assurance Plc. (measured by volume) accounted for 110.114 million shares worth N685.942 million in 1,587 deals, contributing 26.09 per cent and 12.85 per cent to the total equity turnover volume and value, respectively. ETF’s 34,880 units valued at N44.775 million were traded this week in 22 deals, compared with a total of 53,420 units at N444.544 million transacted last week in 14 deals.
A total of 11,909 units of bonds worth N15.732 million were traded this week in eight deals compared with 1,747 units valued at N1.985 million transacted last week in eight deals. About 24 equities appreciated in price during the week, lower than 28 in the previous week, while 28 fell, higher than the 25 equities in the previous week. Also, 111 equities remained unchanged, higher than 110 recorded in the previous week.
Checking rising incidence of unclaimed dividend in capital market
Dividends are the distributable earnings of a company, which are determined by its board of directors. However, when declared, it becomes a liability on the company, CAMA (1990). When a dividend is not claimed by the shareholder for any reason, it contributes to the incidence of unclaimed dividends. According to CAMA (1990), dividends are considered unclaimed after 15 months from the date of declaration. Regrettably, the incidence of unclaimed dividends remains one of the perennial issues that have continued to remain a challenge in Nigeria’s capital market. This issue has remained on the front burner of public discourse in the past few years, especially amongst stakeholders.
From as little as over N2 billion in 1999, the figure has since risen sharply to N158.4 billion at the end of 2019, representing an increase of 32 per cent from N120 billion recorded in 2018. To contain the rise, the market regulators introduced the process of dematerialisation, which is the conversion of a share certificate from physical to electronic form that is credited to an investor’s Central Securities Clearing System Limited (CSCS) account. The move, rather than boosting transaction processes, instead heightened the delay; accompanied by irregularities that also encouraged fraud, with attendant loss of share certificates, delay in receipt of dividend warrants, notice of meetings, and companies’ annual report.
As a result, many shareholders are not aware of the true status of their shareholding in many of the companies listed on the Nigerian Stock Exchange (NSE), NASD Plc, or Over-the-counter (OTC), also called the off-exchange trading market. Shareholders often say they have lost their investment or that their company has shut down because they have not heard from them for a long time, just as many have shares in companies that closed shop due to failure, merger or acquisition.
To reduce unclaimed dividends to the barest minimum, a Professor of Economics, Babcock University, Segun Ajibola, who noted that the main cause is traceable to identity management, insisted that registrars must evolve a seamless process of updating the details of shareholders from time to time to be current with the contact details of shareholders.
Aside updating their details, the University Don also suggested that shareholders should also be made to provide details of beneficiaries of the dividends to the registrars in the case of death. “The Problem of unclaimed dividends has been with us in Nigeria for a while. There are occasions when shareholders would have changed postal addresses unknown to the registrars of the companies paying the dividends; hence dividend warrants cannot get to the shareholders. “It is worse when the shareholders are dead and no beneficiaries are named or traceable, or the process of change from the dead old shareholders to the new ones is cumbersome.”
Despite the measures put in place by the Securities and Exchange Commission (SEC), to stem the rising figure and contain the cankerworm, investors’ returns on investment have continued to accumulate on a yearly basis without being claimed. The Commission, saddled with the primary responsibility of investor protection has repeatedly introduced initiatives to ensure that investors are not denied their right of investing in the capital market. The e-registration platform was launched in efforts by the market regulators to eradicate the difficulties encountered by retail investors in claiming their dividends through their savings accounts.
The initiative was undertaken by SEC in collaboration with the Central Bank of Nigeria (CBN), and the Nigeria Inter-Bank Settlement System (NIBSS).. The former Acting DG of the SEC, Mary Uduk, at a meeting in Abuja last year, had also linked the incidence of unclaimed dividends to poor identity management.
She said: “Right now, you will not get unclaimed dividends from new issues. Part of the problem of unclaimed dividends has to do with identity management, and we are doing all we can to educate the public, and engaging the various stakeholders to be able to get a lot of the information that we require.” “Since then, items like the Bank Verification Number (BVN) have been added to help in identity management; the capital market is also taking advantage of it. The Central Securities Clearing System, and the registrars are working together to ensure that more information from the legacy shareholders are being collected to be able to update their information and get them to claim their dividends.”
Deloitte Launches Initiative to Support SMEs, Others
Deloitte Africa Leadership has launched the Deloitte Private in West Africa, a practice established to focus on serving SMEs), high net worth individuals, family-owned businesses and Private Equity houses. The launch was held in partnership with the Nigerian Stock Exchange (NSE) under its Growth Board programme. The Growth Board, launched in January 2020, is a specialised board for emerging businesses with high growth potentials, to encourage SMEs to get listed on the exchange.
A statement explained that Deloitte Private would provide value-added services to SMEs listed on NSE’s Growth Board and private companies facing challenges affecting the future of their businesses. Speaking on Deloitte Private Services and offerings, Chief Executive and West Africa Leader, Deloitte, Fatai Folarin, said: “small companies have the potential to become tomorrow’s multi-nationals and entrepreneurs have the passion to become future business leaders.” He stressed the importance of SMEs to the economy and explained Deloitte’s commitment to partnering with SMEs in Nigeria and across Africa to drive growth.
Folarin, also stated that the collaboration with the NSE on the initiative was essential to boosting investors’ confidence and would ultimately accelerate growth in Nigeria. In setting the context for the two-day event, Deloitte Private West Africa Leader, Linda Quaynor, indicated that the initiative was to demonstrate the commitment to SMEs by offering unique solutions through cost-effective delivery models that will enable them scale operations and future proof their businesses.
Also speaking at the event, Head, Primary Markets, Listing Business Division, NSE, Tony Ibeziako, provided insights into the operation of the Growth Board, including the importance of listing on the Growth Board and the benefits for SMEs. The firm stressed that launch of the initiative would accelerate growth in the private market segment, support and build capacity for small businesses and help SMEs navigate the complexities in the operating environment to scale exponentially.
FIRS Grants One Week Extension for Companies to File Returns
The Executive Chairman,Federal Inland Revenue Service (FIRS), Mr. Muhammad Nami, has announced a further one-week extension to the July 31 deadline for companies with December accounting year end to file their 2020 annual income tax returns. He said the extension was in the spirit of the Eid-el-Kabir festivities and further to earlier palliative measures rolled out by the service in support of the Nigerian taxpayers against the backdrop of the COVID-19 pandemic. Nami said the affected companies would not be penalised for late submission, if they file their tax returns within the grace period, between August 1st to 7th, 2020.
In a statement by Director, Communications and Liaison Department, FIRS, Dr. Abdullahi Ahmad, the EC also granted a one-week grace period to regular monthly obligations that become due at the end of July 2020, particularly the petroleum profits tax instalmental payment, withholding tax and Value Added Tax (VAT) returns.
He, however, stressed that nonetheless, the service would continue to identify with the challenges of the times, which the taxpayers are going through. “FIRS will continue to respond proactively to the realities of these times, towards easing the burden of our esteemed taxpayers.” FIRS had earlier in the month announced a further extension for the closing date of its waiver of penalty and interest window on tax debts owed by individuals and businesses from June 30 to August 31.
This came after an earlier extension of deadline set to waive interests accruable to debts as well as the related penalties for defaulting taxpayers if they fully settle their indebtedness on or before May 31 to June 30. Nami said the latest extension was a follow-up to a number of palliative measures devised by the FIRS to cushion the effects of the COVID-19 pandemic on the Nigerian economy in order to support tax-paying individuals and business entities in the country.
FG Urged to Adhere to Transparency in Public Finance Mgt.
The federal government has been tasked to ensure transparency and fiscal equity in its drive to utilise public finance. This is in line with the recently signed Finance Act 2020 and the aggressive tax policy drive of the government. The charge was given by the Civil Society Legislative Advocacy Centre (CISLAC) during a recent stakeholders’ dialogue held in Lagos.
Speaking, the Executive Director, CISLAC, Auwal Musa, said Nigeria’s fiscal regime has been in a near mess with the different news on financial misappropriation on a daily basis, adding that ministries, department, agencies are having field day with issues of financial malpractices. He said the call was necessary because tax inequalities and massive leakages in the public procurement process and budget implementation creates loophole for misappropriation of public funds. “The Nigerian economy as at the present is majorly dependent on borrowed resources no thanks to the pandemic excuse and multinational companies are free to practice all available evasive practices with their local collaborators due to lack of oversight.
“Allegation of abuse of public offices and misappropriation of public funds by public office holders is becoming a form of our daily offices in Nigeria. Government must ensure that money generated from tax is adequately used for developmental projects in the country.” Achieving this, according to a CISLAC’s recent report on ‘Policy Brief on Effective Public Finance Management Roadmap in Nigeria,’ according to him, noted that development and growth experienced by any nation are primarily determined by the efficiency of the nation’s public finance management system.
The report highlighted that government should implement progressive taxation and ensuring that rich persons and companies pay taxes, expand tax base by bringing more taxable Nigerians into tax net through effective reforms, increase tax compliance by rich individuals and companies and including payment of tax on offshore hidden properties, strengthen anti-virus evasion avoidance policies, transfer pricing legislation and measures against tax havens.
However, another report titled: ‘Nigeria Public Finance Management Roadmap,’ looked at budget process, strengthening institutions, laws revenue and tax matters, public procurement, support systems, recommended among others that public sector budgetary system should migrate out of the traditional system to an on-line, real time-based system.
CONCLUSION
Friends, Jesus is coming soon. If you are still living in sin, its time to repent, don't hide them. If you are ready to do so now, say this simple prayer:
Heavenly Father, I come to You in the name of Jesus Christ.
I believe that Jesus died for my sins and rose again for my justification. I repent of my sins and ask for forgiveness. I ask Jesus to come into my heart and reign as my Lord and Saviour. I receive Him by faith, I am born again!
FIRE...
Post a Comment