CBN lending policy will normalise credit market, economic growth – LCCI
By Oluwafunke Ishola
Mr Muda Yusuf, Director-General of LCCI, said this in an interview with the News Agency of Nigeria on Sunday in Lagos.
Yusuf said this while reacting to CBN’s letter dated July 3, to all Deposit Money Banks (DMB) mandating them to maintain a 60 per cent Loan to Deposit Ratio (LDR); in effect, the banks are required to give minimum of 60 per cent of their deposits as loans, with effect from Sept. 30.
The CBN said the policy was to encourage SMEs, Retail, Mortgage and Consumer lending, adding that it would soon provide a detailed framework for classification of enterprises or businesses.
Yusuf said the new lending policy was a timely corrective measure to improve credits to the private sector, which had for years grappled with issues of credit access, cost of credit and tenure of funds.
“These challenges are more severe for Micro, Small and Medium Enterprises in the economy.
“The economy was characterised by profound crowding effect of the private sector in the financial markets owing to the diversion of credit to government through the instrumentalities of treasury bills and Federal Government bonds,” he said.
He said it would improve economic inclusion of more SMEs and promote economic diversification in line with the Economic Recovery and Growth Plan (ERGP).
Yusuf noted that the policy had the probability of reducing interest rate as supply of credit would increase and improve lending creativity and innovation by banks.
toward addressing some possible risks in the lending policy.
He proposed the strengthening of the Collateral Registry to enhance the profiling of borrowers in the banking system, adding that the character of borrower had been identified as a major risk factor to lending in the economy.
Yusuf called for scaling up corporate governance practices in the banking system to prevent insider abuse and compromise of credit assessment processes.
He submitted that credit guarantee framework should be strengthened to give comfort to the banks and also promotion of the use of credit insurance.
Yusuf urged the fiscal authorities to effectively address enabling business environment issues, particularly infrastructure deficit and quality, in order to reduce credit risk.
The LCCI boss tasked the CBN to ensure alignment of the new policy with extant monetary policy actions, especially with regards to Cash Reserve Ratio and the Liquidity Ratio which are currently at 22.5 per cent and 30 per cent respectively.
Yusuf stressed that the detailed guidelines of the policy should take the recommendations into account while imploring the CBN to collaborate with stakeholders to ensure impactful outcomes of the policy on the economy.
NIRSAL, Coy unveil insurance product for crop indemnity
The Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL Plc), has developed a Hybrid Multi-Peril Crop Indemnity-Index Insurance (HM-II).
NAN reports that the HM-ll , is designed to protect farmers from losses during a planting season caused by bad weather (low & high rainfall, early & late season dry spells.
It also covers lightning, hailstorms and thunderstorms), pest outbreak, disease outbreak, fire outbreak and permanent disability or death of the farmer.
He said that the new product was another step towards the development of the NIRSAL Comprehensive Index Insurance (NCII) conceptualised in 2018 with the ultimate goal of Agric insurance product development by factoring in commodity pricing parameter in the cover to be issued.
” Towards achieving the NCII, the launch of the HM-II marks an improvement to the NIRSAL Area Yield Index Insurance (AYII) which the corporation developed in 2017 and piloted in the wet season farming of the same year to significant effect, covering17,000 farmers and 10,000 hectares with a harvest value of N3Billion.
“This latest development is a testament to the progress NIRSAL Plc is making in the Agricultural insurance space, prior to NIRSAL Plc’s intervention, private underwriters were not insuring agriculture.
” We have brought about the inclusion of underwriters other than NAIC in underwriting Agricultural transactions and stimulated the development of new and innovative agricultural insurance products.”
Abdulhameed reiterated NIRSAL Plc’s commitment to not only protect farmers but to also help Nigeria diversify its economy, attain self-sufficiency in food production and entrench inclusive economic growth in alignment with the Federal Government’s Economic Recovery and Growth Plan (ERGP).
Also speaking, Yusuf Yila, Director of CBN’s Development Finance Department revealed that the CBN has already adopted NIRSAL Plc’s Area Yield insurance (AYII) products and looks forward to deploying the HM-II.
He commended NIRSAL Plc for always being at the forefront of agribusiness innovation and encouraged the company to continue on its upward trajectory.
Also, Mr Benjamin Agili, Managing Director REGIC, described the product HM-ll as a that product seeks to protect the small-holder farmers from farming loss during a particular farming season.
This, he said, guarantees sustainability and continuity, “ensuring the farmer is able to remain in business, no matter the loss or situation.”
On his part, Mr Sunday Thomas, NAICOM’s Commissioner for Insurance who was represented by Mr Leonard Akah, NAICOM’s Director of Policy & Regulation, said that in line with the Federal Government’s Financial Inclusion Strategy, NAICOM was eager to lend its support to the development of a product such as HM-II.
NAN reports that a key advantage of the HM-II is that in cases where such risks happen, benefits paid out to the farmer would be up to the maximum loan or the insured amount after confirmation by advanced satellite technology, an assessment by an agriculture expert, or both.
Edited By: Sadiya Hamza
MPC: Financial experts seek monetary, fiscal policies alignment
The experts spoke with the News Agency of Nigeria on Friday in Lagos against the backdrop of the 275th MPC meeting slated for Sept. 21 and 22 in Abuja.
They said that monetary and fiscal policies must align to grow businesses and attract investments into the country.
He noted that VAT increment was affecting both small and big businesses in the country.
“Increasing tax is not the best way to help this economy, because when the tax rate is high, employers will sack people from their jobs.
“When the tax is reduced, you will see increase in productivity, more tax returns and more employment.
“Central Bank of Nigeria should work with the fiscal section for their own policies to work because when CBN makes a policy that is contrary to the fiscal policy, it will not make any headway,” he said.
Unegbu said that challenges in the monetary system were huge and should be addressed beyond provision of palliatives for banks by CBN.
He said that the recent increase in electricity tariff when there was no stable power, should be addressed.
Adebayo Adeleke, former General-Secretary, Independent Shareholders Association of Nigeria said that the committee should find ways to ensure that the country did not plunder into recession.
“The committee should be looking at ensuring the continuity of policies that will not drive the country into recession.
“What CBN has done so far is to try as much as they can to discourage savings by lowering interest rate.
“There are two legs to it, if you lower interest rate so that people do not bring their money and dump in the bank, is because you want more money in circulation in the economy.
“The next leg is that we lower interest so that we can inflate the economy. The economy has taken a downturn because of COVID-19; a lot of businesses have been affected.
“So if you are closing the gate to deposit or by discouraging people with the lower interest rate, then we should lower the interest on borrowing.
“Interest on loan should be lowered. That will also encourage people to take more money to restart their businesses because we need to bring the economy back on stream,” he said.
Adeleke said he would be expecting to see more deliberations on how businesses could access more funds, which he believed was a major expectation of the general investing public.
Kurfi said that the committee should consider maintaining the rate on treasury bill, which will attract banks to lend out money to businesses.
“If you want to push the economy upward, you need to have lower interest rate in terms of borrowing.
“Treasury bill should be low to attract banks to lend out their money because if you remember in 2016 when the treasury bill was 15 to 16 per cent, banks took all their money to buy treasury bill and could not lend which affected the economy.
Kurfi said that devaluation of naira was another challenge to be tackled but envisaged that CBN would continue to intervene at least with the bureau de change to bring down the price of dollar.
He said that before CBN intervention, dollar was trading in the parallel market at N470 but now less at N450 or N445.
He expressed optimism that the upward price change of petrol would encourage establishment of new refineries and attract investors once the price is right.
Edited By: Grace Yussuf
Nigerians laud CBN’s new family homes financing initiative
Some Nigerians have commended the Central Bank of Nigeria (CBN)’s new initiative to build affordable homes and create thousands of jobs for Nigerians.
The News Agency of Nigeria reports that the apex bank recently unveiled a framework for the implementation of Family Homes Financing Initiative to fast track the deployment of 300,000 homes across the country.
The financing initiative will support the Federal Government’s Economic Sustainability programme to fast track the deployment of 300,000 homes in the 36 states of the federation and the Federal Capital Territory.
Mr Abbas Ibrahim, a Pharmacist said that the initiative, if effectively implemented would go a long way to bridge housing deficit, especially in urban areas.
He urged the CBN to ensure that the initiative was not hijacked by a section of the elites, who might not allow the masses benefit from it
“I am particularly happy about this initiative.
“The way I understand it is making decent home ownership affordable to ordinary Nigerians as well as create jobs in the housing sector.
“I urge the CBN to ensure the laudable initiative is implemented without compromise,’’ he said.
Mr Raji Adebayo, an economist and a civil servant, commended the initiative as a sure path to poverty reduction and employment generation.
“I saw the report about CBN’s framework for family home financing initiative and I was particularly impressed.
“Apart from generating affordable homes and thousands of employment, it will equally support local content development in the housing sector.
“The fact that 90 per cent of the materials for the construction component of the initiative will be sourced locally is cheering,’’ he said.
Mrs Mojisola Olaniyi, a business woman also commended the idea of home ownership financing by the Federal Government.
She, however, urged the CBN to ensure that its collaboration with a private developer did not make the houses unaffordable to the masses.
“I learnt that the initiative is to support the Federal Government’s Economic Sustainability programme to fast track the deployment of 300,000 homes across the country.
“It is a good initiative but the CBN and other government agencies involved should drive the process to the end and not allow the private developer set prohibitive cost to the homes when completed.’’
It said the introduction of mass housing was key economic activities with potential to create significant number of jobs rapidly.
Edited By: Dorcas Jonah/Grace Yussuf
Edo election: INEC distributes sensitive materials to LGAs
The Independent National Electoral Commission (INEC), on Thursday began the distribution of sensitive election materials to the 18 Local Government Areas of Edo, ahead of the Saturday’s governorship election.
The News Agency of Nigeria (NAN, reports that the materials were distributed amidst tight security.
The exercise which took place at the Central Bank of Nigeria (CBN), Benin branch, was witnessed by political parties’ agents, accredited observers and newsmen.
Speaking to newsmen, Mr Timidi Wariowei, INEC’s Head of Voter Education and Publicity in Edo, said that the distribution of the materials began with the farthest LGAs.
Wariowei said, “So far we have loaded about 11 LGAs. We started from Akoko-Edo, Etsako Central, Owan East and Owan West among others.
“Some have gone and others are completely loaded and are sorting out their security escort and very soon materials will move to all the local governments.
“From the local governments, the materials will move to Registration Areas Centres (RACs) and from the RACs they will move to the polling units and voting points on Saturday morning.
Edited By: Johnson Eyiangho/Donald Ugwu