FIDELITY BANK UNVEILS BUSINESS FLEX ACCOUNT, TRADERS SUPPORT FACILITY
FIDELITY Bank has launched two new products; Business Flex account and Traders Support Facility, to support Small Medium Enterprises (SMEs) in the country.
The products were unveiled at the bank’s SME Funding Connect Series held in Lagos. Outlining benefits of the products, Regional Head, Yaba/Surulere branch, Fidelity Bank, Mrs Chetachi Ezenagu said: “Fidelity Bank has supported a lot of SMEs over the years. We have understudied the terrain and we come up with products that will suit the entrepreneurs within the Nigerian business climate.
“The Fidelity Business Flex Account is a low cost business account. You know when you are starting a business initially and you want to keep your cost at the barest minimum. So it is a low cost business account for the Micro Small and Medium Enterprises (MSMEs) and it is also embedded with a fee sage accounting software. This is powerful online accounting software that will enable them to update and optimize their business processes, balance their books and control their business processes on the go.”
MFB’S BAD LOANS DROP BY 5.3% TO N25 BILLION – NDIC
THE microfinance bank industry recorded 5.2 percent decline in nonperforming loans (bad loans) to N25 billion in 2018 from N26.18 billion in 2017.
The industry, however, struggled in terms of profitability as profit before tax stagnated at N16.2 billion during the year.
The Nigerian Deposit Insurance Corporation, NDIC, disclosed this in its 2018 annual report, which also revealed 14.7 percent increase in total deposits of the industry to N191.41 billion in 2018 from N166.88 billion in 2017.
The report stated: “The MFBs’ sub-sector reported a gross income of N105 billion as at December 31, 2018 against N89.63 billion in 2017. Interest income also recorded an increase of 3.06 percent from N78.98 billion in 2017 to N81.40 billion in 2018.
Non-interest income slightly improved by 2.25 percent from N23.08 billion as at December 31, 2017 to N23.60 billion as at December 31, 2018. Profit before tax recorded a marginal increase of 0.06 percent from N16.21 billion in 2017 to N16.22 billion in 2018. But Return on Asset (ROA) and Return on Equity (ROE) decreased from 4.50 percent and 18.90 percent in 2017 to 4.22 percent and 18.19 percent in 2018, respectively. “The total assets of MFBs stood at N384.50 billion as at December 31, 2018 against N360.59 billion as at December 31, 2017. Likewise total loans and advances stood at N221.51 billion in December 2018 against N201.37 billion in December 2017. The NPLs decreased by 5.27 percent from N26.18 billion in December 2017 to N24.8 billion in December 2018.
Similarly, the NPLs (portfolio-at-risk) ratio improved from 13 percent in 2017 to 11.20 percent in 2018 but still above the regulatory threshold of five percent. “The MFBs’ total deposits increased, by 14.7 percent from N166.88 billion in 2017 to N191.41 billion in 2018. The average liquidity ratio also increased from 72.54 percent in 2017 to 73.95 percent in 2018, and above the minimum regulatory threshold of 20 percent. “MFBs’ loan to deposits ratio stood at 115.73 percent as at December 31, 2018 against 120.66 percent as at December 31, 2017.
NDIC stated: “During the year, the CBN granted one year extension to April 2021 for the recapitalization of MFBs. Furthermore, two tiers of Unit MFBs were created, namely: Tier 1 (Unit Rural) and Tier 2 (Unit Urban). The capital requirement for Tier 1 Unit Rural MFBs was fixed at N50 million, while Tier 2 Unit Urban MFBs remained at N200 million. The compliance timeline was reviewed to allow MFBs sufficient time to recapitalize. The Tier 1, Unit-Rural MFBs are expected to raise their capital to N25 million by April 2020 and to N50 million by April 2021. In the same vein, Tier 2 Unit Urban MFBs should meet capital base of N100 million by April 2020 and N200 million by April 2021. The state and national MFBs were given up to April 2021 to meet the new capital requirements. “In 2018, the number of licensed MFBs stood at 888. The South-West Zone had the highest number of operational MFBs of 309, against 361 in 2017. The number of MFBs in the South-South region also dropped to 90 in 2018 from 112 in 2017. In the South-East, it dropped to 156 in 2018 from 177 in 2017. For the Northwest, it dropped from 132 MFBs in 2017 to 117 in 2018. “The North Central recorded a drop from 184 in 2017 to 147 in 2018. However, the number of MFBs in the North-East remained unchanged at 42. “The NDIC examined 294 MFBs, focusing on their operations, board and management oversight, risk management practices, internal control systems, and the level of compliance with applicable laws, rules and regulations. “In 2018, the NDIC paid N89.24 million insured deposits to 1,804 depositors of MFBs in-liquidation compared to 173 depositors of closed MFBs and N13.24 million paid in 2017. The significant increase was due to the 138 MFBs that were closed during the year. “The cumulative payment of N2.97 billion was made to 83,415 depositors of closed MFBs as at December 31, 2018, compared to N2.88 billion paid to 81,611 depositors of closed MFBs as at December 31, 2017. “In the discharge of its obligation as Liquidator, the NDIC had made cumulative payments amounting to N116.258 billion to depositors, creditors and shareholders as at December 31, 2018. The breakdown includes payments of insured and uninsured deposits of N108.641 billion, N2.973 billion and N70.53 million to depositors of defunct DMBs, MFBs and PMBs, respectively”.
SECURITIES DEALERS BLAME MARKET DOWNTURN ON PANIC SELLINGS
THE Association of Securities Dealing Houses of Nigeria (ASHON) has attributed the downward trend in the stock market in recent times to panic sale of shares. Besides, ASHON has re-opened the call on investors to take advantage of sound professional advice from their stockbrokers before taking investment decision.
Reacting to the on-going bearish trend in the market in recent times, ASHON’s Chairman , Chief Patrick Ezeagu, said : “Many investors adopt herd instinct whereby they sell off just because others are selling.” Ezeagu noted that two investors may not necessarily have the same motive for sale or buy order, saying this is where the need for professional investment advice from stockbrokers become compelling.
He stated that a trend analysis of corporate earnings in recent times indicate that many companies across sectors have posted higher earnings with good returns but this has not significantly reflected in the movement of their share prices. Ezeagu explained that there was nothing unusual about this as the market generally reflects the trend in the economy; hence, investors buy into the future of these companies on the expectation of higher shareholder value.
“Those who are selling off their shares right now are speculators and not real investors. Every stock market needs speculators for liquidity but they can change investment decision in one second. Our Stock market is forward looking. ‘‘Investors need not be nervous. They should consult professional stockbrokers for sound investment decision. There is no basis for panic sale of shares.
Many companies have announced strong financial performance with prospects of increased future earnings. Why should a shareholder of such a company embark on panic sale of shares? “Globally, stock market gauges the mood of the economy like a barometer. Our market is not a local one. Foreign investors have significant stakes because their analysis has always convinced them that our market has potential for strong Return on Investment (ROI). At the moment, core investors are awaiting a couple of things, including announcement of ministers of the Federal Republic and the Economic Team to show the clear direction of the government. “ These are issues that are beyond the Board and Management of the Nigerian Stock Exchange, NSE but have dire consequences on investment decisions. The bearish trend has to do with the fact that the government is yet to settle down after the elections.”
EXPANDING FINANCIAL INCLUSION
The linkage between financial inclusion and economic development of developing countries has provided the impetus for countries to develop and implement improved strategies to financially include their unbanked citizens, according to the latest financial inclusion report of the Central Bank of Nigeria (CBN).
Also, a study by the World Bank in 2017, revealed that there is a strong positive correlation between account penetration of various countries and their Gross Domestic Product (GDP) per capita.
For instance, high income countries with approximately 100 per cent of account penetration posted GDP per capital ranging from $25,000 above, while Sub-saharan African countries with less than 65 per cent account penetration in most cases recorded GDP per capita less than $10,000.
As part of commitment to further enhance the level of financial inclusion in Nigeria and by implication sustain inclusive economic growth, the Governor, Central Bank of Nigeria and Chairman of the National Financial Inclusion Steering Committee, Mr. Godwin Emefiele, had in his 5-year strategy (2019—2024) has defined a target of 95 per cent financial inclusion rate by 2024.
The new target according to the Governor, calls for institutions to re-strategise and refocus initiatives, policies and schemes that would accelerate the pace of delivery of their respective financial inclusion efforts.
Clearly, enhancing financial inclusion was one of the reasons why industry stakeholders established the Shared Agents Network Expansion Facility (SANEF).
SANEF, among other targets, intends to establish 500,000 agents across the country by 2020.
SANEF is a project powered by the CBN, banks, NIBSS, licenced mobile money operators and shared agents with the primary objective of accelerating financial inclusion in Nigeria.
The initiative also involves on-boarding 40 million low income and unserved Nigerians into the financial system and deepening access to mobile and digital financial products and services such as savings accounts, micro loans, insurance, pensions by Nigerians.
The project seeks to deepen financial inclusion in Nigeria through an integrated ecosystem with strong regulatory oversight, consumer protection and interoperable payment systems with limited concentration risk.
The Chief Executive Officer, SANEF, Ronke Kuye, recently reiterated the commitment of the body towards meeting the target.
Kuye, who said this during a financial inclusion stakeholders’ forum in Lagos recently, pointed out that the organisation was on track to achieving the target that was given to it by the Central Bank of Nigeria, as it currently has 156,000 agents.
According to her, the company would be working together with the super agents as well as the agents to drive and ensure financial inclusion in the country.
Kuye explained, “Banks are not usually sited in rural areas so it is important for us to have financial representatives in form of agents in all the areas banks cannot have their branches in order to achieve the financial inclusion rate of 80 percent by 2020.
“In addition to all of these efforts towards driving financial inclusion, we ensure there are training programmes for the agents, financial literacy and campaign awareness, technology platform that would enable everyone that wants to open an account with any agent bank outlet.
“Where ever the SANEF sign is, it is safe for customers to go there to open an account, do BVN enrolment, transfers, cash in and cash out transactions. We are collaborating with the Bank of Industry and other stakeholders to ensure that there are products for the agents to offer to the public; such as micro pension, micro insurance and micro credit.”
Furthermore, Kuye said SANEF was working on improving the standard of technology in the industry.
“For example, the new account we are launching soon would have the same standard as any other account.
“Also the applications can be used to use various products such as, cash in cash out. We are going to make arrangements for basic products,” he added.
Also Speaking at the event, the Head, Financial Inclusion Secretariat, CBN, Joseph Attah, who was represented by the Assistant Director Finance Development, Central Bank of Nigeria, Dr Paul Oluikpe, said, “To spur all stakeholders to action and engineer a measurable path towards achievement, the financial inclusion Secretariat has outlined a number of workable assumptions around SANEF’s target of 500,000 agents by 2020.
“Considering the fact that SANEF currently has over 100,000 agents in 2019; if each of these agents signs on 6.9 accounts per month, that would translate to 83 accounts per year and then cumulating to 8.3 million accounts by the end of 2019, thus precisely fulfilling our 2019 target of including 8.3 million people for this year.
Agent banking has been identified as one of the key influencers to drive mass markets to formal financial services as they enable customers to cash in, cash out, make payments or conduct other financial transactions without necessarily having to go through the traditional brick and mortar channels.
The success of agent banking, according to a report by EFInA, is dependent on many factors, but significant among them is agent management.
A well-managed agent network can help providers build brand awareness, educate customers, and meet system-wide liquidity demands, all of which build confidence among users in a service that has low awareness.
On the other hand, a poorly managed agent network, by contrast, is characterised by widespread low quality customer experiences, which in turn erodes trust and drives away business.
Even before the National Financial Inclusion Strategy (NFIS) was launched in 2012, where agent banking was identified as one of its drivers, the Central Bank of Nigeria led in promoting an effective system for the settlement of transactions, a key driver for financial inclusion in Nigeria. In addition, after the NFIS launch, there have been other activities that have continued to shape the Nigerian Agent banking space.
To the Chief Executive Officer, EFInA, Esaie Dier, while speaking at the stakeholders’ forum, noted that, “As an agent in this sector, in order for you to generate revenue you need to understand the customers, the business and how best to communicate with them. “Thus we are providing data for the agents to build their strategy around the number of people that are financially excluded, also their locations. In addition, we provide technical assistance.
“For instance, if someone has a good idea that can generate about ten million into the banking system, we would come up with a strategy to support such idea as we provide financial support.
“This year, we gave out $2 million to six Nigerians to develop business ideas. Basically we help create awareness, data and grants that help develop businesses.
“We have been working with regulators to address some of the challenges out there and come up with efficient policies and regulations that help drive businesses and ideas.”
Speaking on measures put in place by the CBN to protect the agents against harassment, an official of the Consumer Protection Department, CBN, Damola Ayanda, said: “The financial institution that the agent works with has the responsibility to ensure that all the right tools are in place for the products and services that you render.”
Ayanda, while speaking on point of sale dispensing errors which had been identified as a challenge in the industry, said the central bank was working on a solution whereby when a customer comes to the agents with such complaints, it would be resolved effectively.
Some agents at the forum noted that technology has been used to save cost, drive capacity and enhance services with the aggressive drive for financial inclusion.
Ayanda stressed the need for capacity building for agents, to enable them understand the regulatory framework that guides the channels used to deliver services and products.
“For every financial instrument or channel that is used in Nigeria there is a regulatory framework. The agents need to understand the framework guiding that channel in order to resolve issues quickly and effectively using the framework.
“If you know the guidelines of the POS transactions you will not have issues concerning POS dispensing errors. Another thing is that before financial institutions register an individual as an agent they need to look into it that the person is licenced and capable of doing the work.
“There are currently a lot of people becoming agents which has led to a lot of cash in cash out agent banking boots,” he added.
On his part, the Head of Agent Banking, Access Bank, Michael Ogba, pointed out that there are about 99 million adult Nigerians, and less than 20,000 ATMs and less than 500,000 PoS in the country.
“Also banks are no longer building bank branches; neither are they buying more ATM machines. Our research shows that the highest numbers of PoS terminals that are being bought in the last one year are going to mobile money operators, which tells us that, the agent banking business is a good one, it is not going to reduce, rather it would increase. “Nigeria is still under banked which means there is still a large amount of customer base to be tapped into,” he explained.
SENATE FAVOURS DIVESTMENT OF FG’S 40% STAKE IN DISCOS
Members of the Nigerian Senate have declared their support for the proposal to recapitalise the 11 electricity distribution companies (Discos).
They also advised that the 40 per cent shares held by the federal government in the Discos be divested from and sold to investors with technical competence.
A statement from the Ministry of Power quoted the parliamentarians to have disclosed this, stating that it would be more beneficial to Nigeria and the power sector.
It disclosed that the Senate President, Ahmad Lawan, made this known when he received a management team of the Transmission Company of Nigeria (TCN) which was led to his office by its Managing Director, Mr. Usman Mohammed.
Lawan, during the visit, also stated that it was not in the interest of the government to continually disburse bailout funds to the power Discos without commensurate improvement in electricity supply.
He said experts in the field should be given an opportunity to invest in the sector and assured that the Senate would continue to support the TCN in its execution of the Transmission Rehabilitation and Expansion Programme (TREP) which is planned to rehabilitate, stabilise and provide the necessary flexibility in the country’s transmission grid.
Despite his assurance of support for TCN’s TREP, Lawan, however expressed displeasure with the report on its contracting for a Supervisory Control and Data Acquisition (SCADA) which had reportedly happened three times unsuccessfully in the past.
He thus called for a more stringent process of awarding contracts that would allow only competent firms qualified to execute the project.
Similarly, the Deputy Senate President, Ovie Omo-Agege, said he was impressed with the presentation of the TCN team, and expressed confidence in their capacity to solve the country’s power supply challenges.
In the same vein, the Senate Majority Leader, Yahaya Abdullahi, said reducing government’s bureaucracy in the power sector operations was key to getting past its challenges. He cited the difficulty in securing the supply of gas to thermal power generation companies (Gencos) as a major setback to power generation in the country.
Abdulahi, agreed with the position of Lawan, on the sale of the 40 per cent holding of the government in the Discos to experts, and suggested that the Senate could re-open the power privatisation exercise carried out in 2013 and involve big foreign investors to allow for proper restructuring of the sector.
Mohammed, had earlier presented a report on the operations of the TCN in the last two and half years to the leadership of the Senate, and explained that stabilising the country’s transmission system frequency, executing the TREP, securing $1.57 billion from multi-lateral financing agencies for execution of specific transmission projects nationwide, and evacuation of 755 containers containing power equipment from the ports as well as initiated the procurement of a functional SCADA and spinning reserve, were parts of the successes of his team within the period.
The immediate past Minister of Power, Works and Housing, Mr. Babatunde Fashola, recently said the Nigerian Electricity Regulatory Commission (NERC) has enormous regulatory powers to make the country’s electricity reforms work.
Fashola had said this while answering questions at the recent ministerial screening exercise. He had stated that the NERC needed to be supported by stakeholders to exercise its powers to sanction erring operators who refuse to serve consumers efficiently in the sector.
He had noted that issues of consumer complaints and regulations should be directed to the regulatory agency for effective administration and compliance, stating that sections of the country’s Electric Power Sector Reform Act (EPSRA) 2005, vested enormous power on NERC.
“Let me speak to two powers that the regulator has in Sections 73, 74 and 75 of the electric power sector (EPSRA). One of the powers that was vested in that law by the regulator is to undertake an investigation and do several things.
“It could mean demanding the license of the licensee or even cancelling the license as we have seen in cases like the Central Bank of Nigeria, and as we have seen in some cases in Economic and Financial Crime Commission (EFCC) and Nigeria Broadcasting Commission.
“So, the powers of the regulator for making the reform work must be targeted towards ensuring minimum service levels, licensing conditions are met and until we fully exhaust those powers, it will be premature to say that the reform is not working,” Fashola had said.