₦airaland Forum

Managing Director, Nigeria Incentive Based Risk Sharing System for Agricultural Lending (NIRSAL), Mr. Aliyu Hameed has said that the firm has guaranteed loans totaling N61.16billion to agriculture and disbursed N753.35million as rebate to borrowers who paid back loans on time between 2013 and 2015.

This was the period when the agency was still a project implementation office under incubation within the Development Finance Department of the Central Bank of Nigeria (CBN).
He added that NIRSAL had also guaranteed up to 207 agricultural value chain projects valued at N39.49billion under the Growth Enhancement Scheme (GES) programme of the Federal Ministry of Agriculture & Rural Development (FMARD) and paid $2.2million (N439.09million) as interest draw back to beneficiaries on 91 agriculture related projects.

Hameed said NIRSAL had between 2013 and mid-2016 trained 157,000 farmers/primary producers in 6 value chains including rice, cocoa, cotton, tomatoes, sesame, and soybeans.

Speaking during a presentation at the Design Workshop on Establishing an African Agriculture Risk Sharing and Financing Mechanism which was organised by the African Development Bank (AfDB) in Nairobi, Kenya, the NIRSAL boss argued that the growth of agriculture in Nigeria will lead not only to prosperity but also improve income equality in the country.

He, maintained that the positive impact of agriculture on income inequality was one of the several reasons for the focus of the Buhari administration on the sector which is believed to have the potential to boost the economy and improve the lives of Nigerians.

Hammed further described the progress made so far by NIRSAL as a product of the farsighted pro-people vision of the Buhari administration and the continued commitment of the CBN under Mr. Godwin Emefiele to achieving the vision.

His comments also came as the AfDB identified the NIRSAL financial model as of the current successes of African agriculture during its post event assessment of the workshop.

Describing NIRSAL as a “Game Changer” in Nigeria’s agricultural space, the MD added that it planned to further facilitate lending to 3.8 million agricultural producers out of the estimated 14 million agricultural producers in the country within the next 10 years by providing guarantees through intermediaries including Microfinance institutions and cooperatives.

In a statement by NIRSAL’s Coordinator Research & Strategy, Bello Abdullahi Abba! Hameed said part of the key objective of NIRSAL was to increase total value of agricultural lending- from the current 1.4 percent to 10 percent of total bank lending by 2026 and generating by $3 billion of additional agricultural lending in order to boost food production levels, stimulate inclusive growth, create jobs and increase the standard of living of farmers who constitute the greater majority of our population.

Essentially, NIRSAL was set up in 2013 as an initiative of the CBN, the Bankers’ Committee and the FMARD as a primary platform for managing agribusiness risk so banks can lend with confidence to the sector which had largely been neglected.

NIRSAL use credit guarantees to address the risk of default and provide technical assistance and incentives to both financial institutions and borrowers to bridge understanding and increase capacity to payback.

The Lagos State Government says it will partner the private sector, specifically Japan International Cooperation Agency, to construct a $1bn urban rail line.

The state Commissioner for Transportation, Dr. Dayo Mobereola, said this during a seminar by the Lagos Metropolitan Area Transport Authority in conjunction with the Japanese firm in Lagos.

According to LAMATA, a survey titled ‘Lagos Urban Railway Development Project in the Federal Republic of Nigeria’ was conducted by both partnering firms, which was aimed at introducing the Automated Guide Transit, a type of monorail conceived as a new transportation system in the state.

The agency added that based on the study, the monorail project, to link Marina, Victoria Island and Ikoyi, would curb traffic congestion and improve the environment in Lagos.
Mobereola, who estimated the cost of the project to be executed as $1bn, said a huge percentage of the sum “would come from the private sector.”

According to the commissioner, the Gross Domestic Product in Lagos comes mainly from the Marina-Victoria Island-Ikoyi axis and that the area constitutes major attraction for business in the state.

He added that during the project, the existing structures would not be affected, “since the middle of the roads would be used for its implementation.”

However, Mobereola said the state would pay compensation where existing structures were affected.

The Acting Managing Director, LAMATA, Mr. Iyiola Adeboye, explained that the project was aimed at ensuring smooth transportation and reducing gridlock in Lagos State.

The Public Transport Director, LAMATA, Mr. Gbenga Dairo, while addressing the current condition of transportation in Lagos Island, attributed the problem to inappropriate road layout, poor traffic management, inadequate public transport and institutional obstacles.

According to the Team Leader, Urban Railway and Transport Planning, JICA, Mr. Akiyama Yoshihiro, the preparatory survey was based on terms of reference between JICA and LAMATA carried out in August 2015.

Aircraft manufacturing giant, Boeing, has predicted that Africa will need about 22,000 new pilots and 24,000 new technicians by 2035.

In a statement on their website, Boeing added that a total of 1.5 million new pilots and 24,000 technicians would be in demand worldwide at the same period.

According to Boeing, the outlook represents a global requirement for about 31,000 new pilots, 35,000 new technicians and 40,000 cabin crew annually.

A breakdown of the figure region by region shows that Asia Pacific has the highest forecast with 248,000 pilots and 268,000 new technicians; Europe, 104,000 pilots and 118,000 new technicians; and North America, 112,000 pilots and 127,000 new technicians.
In addition, 51,000 pilots and 50,000 new technicians would be in demand in Latin America; 58,000 pilots and 66,000 technicians in the Middle East; and Russia, 22,000 pilots and 26,000 technicians by 2035.

The forecast was made at Boeing’s 2016 Pilot and Technician Outlook at EAA Air Venture Oshkosh.

The outlook is a respected industry study, which forecasts the 20 year demand for crews to support the world’s growing commercial airplane fleet. This year’s outlook focuses on cabin crew demand.

It shows a growth of 10.5 per cent for pilots over the 2015 outlook and 11.3 per cent for maintenance technicians.

The Vice-President, Boeing Flight Services, Sherry Carbary, said, “The pilot and technician outlook has become a resource for the industry to determine demand for successful airline operations. Cabin crew are an integral part of operating an airline.

“While Boeing does not train cabin crew like pilots and technicians, we believe the industry can use these numbers for planning purposes.”

Boeing forecast that between 2016 and 2035, the world’s commercial aviation industry would require approximately 617,000 new commercial airline pilots, 679,000 commercial airline maintenance technicians and 814,000 cabin crew

Boeing said that new pilot demand had been primarily driven by new airplane deliveries and fleet mix, while new technician demand was driven by fleet growth.

According to Boeing, the Asia-Pacific region comprises 40 per cent of the global need due to the growth in the single-aisle market, which is driven by low-cost carriers, while North America is the result of new markets opening in Cuba and Mexico and demand in Europe has increased as a response to a strong intra-European Union market.

The Federal Government’s Economic Management Team on Tuesday held what it called a consultative forum with a team of economic and financial experts across the country.

The meeting was meant to enable the team, which consists of government officials only, to engage the experts on how to address the challenges facing the country’s economy, which is currently in recession.

At the meeting presided over by Vice President Yemi Osinbajo, suggestions on how best to reflate the economy, bring it out of recession and promptly restore growth featured prominently on the agenda.

According to a statement by his spokesperson, Mr. Laolu Akande, the vice president was said to have expressed President Muhammadu Buhari’s determination to continuously consider and adopt policies that would boost business, increase employment and provide succour to the poor and the disadvantaged.
Osinbajo was quoted as saying, “We will continue to engage with experts and other stakeholders so that we can measure the progress of the economic policies that have been put in place. The challenges are many but the opportunities are much greater.

“We are clearly on the path to building an economy that will create jobs and ensure inclusive growth.”

Experts who attended the four-hour special meeting included Mr. Bismarck Rewane, Mr. Bode Augusto, Prof. Akpan Ekpo, Dr. Ayo Teriba and Prof. Badayi Sani.

Issues discussed at the meeting included the review of the new foreign exchange regime and its effect on the economy as well as the draft Medium Term Economic Framework for 2017-2019.

Akande said the EMT members and the experts made suggestions on how to reflate the economy, especially through massive infrastructural spending, with active private sector participation, ensure pro-people economic policies, and increase the supply of dollars to the forex market, among others.

Speaking with reporters at the end of the meeting, the Minister for Budget and National Planning, Senator Udo Udoma, said, “We have just finished a special meeting of the economic management team; as you know, we are in the middle of consultations to develop the new mid-term economic framework.

“The meeting is part of a comprehensive consultation process that we are embarking on to make sure that we reach out to a wide spectrum of Nigerians to get a feedback in terms of how best to make sure that we come out of this recession.”

27naira:
I trade currencies and commodities ☺

27naira:
Last quarter, the US economy showed impressive growth especially in the Labour sector, which spurred investors to speculate at least 25 Bps increase in Base rate. This speculation drove up the demand for dollar denominated assets. However, Yellen took a dovish stance, given that brexit has deepened the uncertainty in the global economy, it appears less likely that any tightening will be happening anytime soon. Since a lot of investors have priced in 25Bps in US assets, analysts assumed that dollar assets appears to be overpriced and as usual investors moved liquidity to Yen, Aussie and NZ assets. Fluctuating commodity prices have had their fair share of impact on the Aussie but as it stands and given that US GDP as at yesterday performed below expectation, possibility of the fed to increase rate this year is unlikely. Yen is a safe heaven but increasing Yen value does no good to the Japanese economy. Only if our Government takes into consideration global economic outlook before making decisions, things won't get better

dotun365:
well I disagree with you. Inflation is caused by too much money chasing too few goods in the economy . How do you tackle inflation?? A) Increase the number of goods(that takes time) b) reduce the amount of money by hiking the rates (takes a shorter time lag). FDI's flow to countries with low inflation that's why inflation needs to be taken care of as soon as possible. As inflation begins to drop as a result of less money, FDI's will flow in and the exchange rate gets better for the Naira. Putting it another way, we are spending at a rate far greater than the growth rate of the economy so the CBN is trying to reduce/slow down the spending till when the economy is growing at a faster rate

Quakertellicus1:
My problem with your analysis is that you are comparing Japan (developed country, already investor friendly)...with Nigeria (developing country, not investor friendly).

Investment is not too good in Nigeria not because of what we do with our interest rates, but because of corruption, tribalism, poor education systems, and poor power supply (that is going to take ages and millions to fix).

Adesiji77:
@Truth234

It always does...

I am not an economist but it is apparent that the rate hike by MPC was just a gamble in the face of stagflation.

The inflationary trend can only go one way, which is north.

27naira:
I was impressed when I read your analysis.. just yesterday, Bank of Japan unfolded certain economic stimulus package which includes ETF buyback programmes and increased USD swaps but guess what, analysts say that wasn't enough! They expected more rate cuts into the negative territory and an increase in the Monetary Base. BOJ wanted to curtail the rising value of the Yen which is hurting export. They wanted their money to depreciate! We need to drive foreign capital and ordinarily increasing Base rate should have worked but not any more. Investors want to see stability, they want to know their money is safe! That's why after Brexit, German bonds yield moved into negative territory because people were looking for security and not yield. We want Governments to come up with a policy frame work that works and peddling rates. As a matter of fact, government need to cut rates! And probably increase provision for USD swaps and borrow from IMF

CBN didn't fail to lure local and foreign investors, uncertain global economic outlook after the U.K exit the European Union and unfavorable business environment in Nigeria forced both foreign and local investors to hold back.

So, it will be totally wrong to hike rates in order to attract investors when our consumer spending is weak and consumer price index (Inflation) is at 11 year high. If we need to create jobs to boast spending by stimulating the economy domestically. It will be wrong to raise rate today, because even if they do it won't be effective. And I think MPC are smarter than that.

How does this make sense to you? You are giving investors money without considering real economic growth, what about 25 year high unemployment rate? So is better not to create jobs and give money to oyinbo wey no send you.

Even US that is the most appreciated economy this year, held rate unchanged immediately Britain exit the EU. Global risks and current uncertainty will continue to weigh on growth, especially emerging economies. Why is Japan, third largest economy, UK, New Zealand etc cutting rates to aid growth and Nigeria increasing rates.

The same way they refuse to float naira until last minute.

Skye Bank Plc has received over N100bn in liquidity from the Central Bank of Nigeria since July 4 to shore up its operations, its new Managing Director, Mr. Tokunmbo Abiru, has said.

He told reporters on Friday that the CBN staff had been working at the bank for two weeks to support the lender, Reuters reported.

The CBN had said it provided a loan to the lender to boost its liquidity after Skye Bank breached requirements on capital and lending, a development that made the central bank to replace its Board of Directors and management.

The short-term lending facility will allow new management to “ensure that some withdrawals it suffered in the wake of the undue panic of last week do not adversely affect its operations,’’ the Acting Director, Corporate Communications, CBN, Mr. Isaac Okorafor, had said in an emailed response to questions.

He said the CBN had also issued guarantees to the bank’s depositors and creditors as a demonstration of its health.

The CBN had replaced the top managers of the bank earlier.

But while the regulator has moved to calm markets, saying Skye and the industry remained healthy, the bank’s stocks have been plunging to record lows.

The CBN has said it has no plan to sell Skye Bank.

The CBN guarantee will not only enhance Skye Bank’s interbank trading and activities; but will also provide assurance to the other banks to continue to deal with and trade with the bank’s instruments in the interbank market.

Meanwhile, Abiru disclosed that the bank posted pre-tax loss in 2015. Similarly, Learn Africa Plc, Caverton Offshore Support Group Plc and ABC Transport Plc recorded losses of various degrees in their 2016 half-year financial results

Skye Bank recorded a loss of N40.7bn for 2015 financial, which is a drop from N18.7bn profit recorded the previous year.

Learn Africa posted a loss before tax of N352.1m for 2016 H2 versus loss of N167.1m a year ago, according to the figures presented by the firm to the Nigerian Stock Exchange on Friday.

Its half-year ended June 2016 revenue was N135.7m compared to N444.3m a year ago.

Caverton Offshore Support though reported a group half-year revenue of N9.14bn compared to N11.91m a year ago, recorded a group loss before tax of N2.36bn versus profit of N1.76bn a year ago.

ABC Transport also reported a half-year loss before tax of N333.8m for 2016. It had reported a profit of N64.5m a year ago. Its half-year ended June 2016 group revenue was N3.71bn compared to N3.31bn a year ago.

Nigerian banks are likely to face more challenges as the nation’s benchmark interest rate continues to rise, global credit rating agency, Fitch Ratings, has said.

The Central bank of Nigeria’s Monetary Policy Committee had on Tuesday increased the interest rate from 12 per cent to 14 per cent in a move to curb inflation and strengthen the naira. The move has been widely criticised by economists.

The CBN’s Monetary Policy Rate (benchmark interest rate), which hovered around six per cent from 2001 to 2011, has risen steeply.

In a statement on Friday, Fitch said, “Rising rates are likely to put additional pressure on banks’ asset quality. Almost all lending is extended at floating rates and banks should be able to reprice their loans quite quickly but borrowers will face more difficulties in servicing their debts.

“Impaired loans are already high in the Nigerian banking sector, where average non-performing loan ratios reached 6.2 per cent at end-March 2016, partly reflecting the impact of currency depreciation on businesses as well as higher oil-related problem loans at some banks.”

Fitch expects loan growth (excluding foreign-exchange translation effects) to slow during the second half of 2016 and into 2017.

Banks have already tightened underwriting standards as economic conditions in the country worsen.

The nation’s Gross Domestic Product contracted by 0.4 per cent year-on-year in the first quarter of 2016 and Fitch forecasts the GDP growth to fall to 1.5 per cent in 2016.

Adesiji77:
This is expected. Tough times for borrowers...

Cc: lalasticlala, dominique, Mynd44

Bank customers with existing loan obligations must brace for higher levels of indebtedness as the Deposit Money Banks have begun an upward review of the interest rates on all outstanding loans.

The development followed Tuesday’s increase of the Monetary Policy Rate from 12 per cent to 14 per cent by the Central Bank of Nigeria’s Monetary Policy Committee.

Multiple banking sources told one of our correspondents on Thursday that the lenders would as early as next week begin to dispatch letters to their customers, informing them of the upward review of the interest rates on their loans.

“Banks don’t waste time on matters like this. The increase in the MPR means interest rates on loans have to go up. We have started writing letters to our customers. A few may go this week, while more will go next week. Customers will get the letters in emails and hard copy,” a top executive of a tier-1 bank told one of our correspondents under condition of anonymity on Thursday.
Other top bank officials, who confirmed the development, did not state the rate of increase in the interest rates on the outstanding loans.

They said the upward reviews of the rates were being done with keen consideration for certain conditions relating to each bank customer.

“What applies to customer A may not apply to customer B. We take keen look at each customer and their peculiar situation, including their loan history with us, before making the review. But the fact is that an increase is inevitable with the hike in the CBN’s MPR,” another top bank official said.

Banking experts say the MPR, often called the benchmark interest rate, is the yardstick for other interest rates bank charges on loans advanced to their customers.

The MPC had after its bi-monthly meeting on Tuesday increased the MPR from 12 per cent to 14 per cent. The measure was meant to reduce the amount of cash in circulation and thus fight inflation, which hit 16.5 per cent in June.

A financial analyst at BGL Plc, a research and investment advisory firm, Mr. Femi Ademola, said banks usually reviewed interest rates on loans whenever the CBN raised or lowered the MPR.

This, he said, was why banks usually included the clause: ‘Subject to prevailing interest rate’ on their offer letters for loans.

Officials said the latest review by the banks might move the interest rate on some loans from between 25 per cent and 27 per cent to around 30 per cent.

Ademola said while the banks would enjoy more interest income from the upward review, a small part of this amount would be paid to savings account customers as interest on their deposits.

In line with the CBN regulations, savings account customers are paid 30 per cent of the MPR as interest on their deposits. With the increase in the MPR, about 0.6 per cent of each customer’s savings account deposit will be credited to their account as accrued interest on their savings.

Analysts described this as negligible compared to what the banks would earn from the additional interest rate imposed on loans.

Meanwhile, manufacturers said the decision of the CBN to raise the MPR was a deadly blow to an already comatose manufacturing sector, adding that more sector operators were bound to close shops.

A local manufacturer of envelopes and Managing Director, FAE Limited, Princess Layo Okeowo, said, “I just pray that we do not all close our doors. The foreign exchange situation is already becoming unbearable with manufacturers having to wait for ages after bidding to get dollars. The increase in interest rate is a bitter pill to swallow and it has made an already bad situation worse.

“It is certain that the banks will readjust their interest rates even for people who have outstanding loans. It is certain that within the next one week, the banks will start writing letters to their debtors notifying them of increased interest rates on loans.

“Manufacturers will have to increase prices and already, the purchasing power is very low and the number of our customers has reduced drastically.”

An executive director in one of the leading aerosol firms in the country, Mr. Kingsley Oni, said because of the scarcity of dollars, his company had to lay off workers for the first time in its more than 20 years’ of existence.

Oni said, “We have over 2,000 workers; because we are not getting dollars, for the first time, we are retrenching. The point is, when they keep raising these interest rates, the impact on the manufacturing sector is very negative.

“The CBN cannot control inflation, but a situation where a country is in this situation and you still find a lot of private jets all over Abuja is what baffles me. One of those jets can be sold and the money ploughed back into the real sector to create jobs if the government is really serious.”

The Chairman, Qualitek Industries, Chief Olayinka Kufile, said although the CBN was trying to control inflation, the reality was that many industries in the country had become comatose.

He said, “Most activities in the manufacturing ector have been grounded. In the basic metal industry where I operate, everything is flat, because while we were trying to get out of the problem of the dollar increasing from N158 to a dollar to N200 to a dollar, we lost a lot of money. Before we could even get out of that, the dollar kept increasing and now it is more than N300 and the people who took loans at the exchange rate of N197 to a dollar are in heavy debts.

“If the government is hoping to earn money in taxes from the non-oil sector, they cannot get those taxes where companies are not producing and making money. Most industries today are not producing and they have reduced their staff strength to near zero.”

For the Director-General, Manufacturers Association of Nigeria, Mr. Remi Ogunmefun, within the concept of economics, the CBN was right to increase the benchmark rate in order to spur savings and investment as well as control inflation.

He said, “The implication of the increase for manufacturers is that the cost of borrowing will rise higher than it is already. It is quite unfortunate because over the years, we have been clamouring for a single digit interest rate.”

JAkpayen:
Do you know that the US FOMC had planned to increase its rate? Reason was to return core inflation to 2% and they watch improvement in labor market as a criteria. Does this mean they want to attract FDI? NO.

It is the FG that can attract FDI into the economy and create the conducive environment to improve employment but because we have non-existent or weak macroeconomic policy in place, hence the situation of the economy. In its decision, the MPC stated that they want to stabilise price and the financial system thus inflation needs to be controlled. Let's wait until the end of this quarter to see if things improve. I'm sure if the economy improves by their next meeting in September, the tone might change.

Seun:
Ok, there is no longer any doubt about the fact that these guys are bleeps. What the Bleep is wrong with them? How can you drastically raise the MPR after acknowledging that the country is in a recession? These ppl will wreck the economy completely if something drastic is not done.

Chukzyfcb:
You are still viewing the subject matter from the negative side. Also saying foreign Investors will not come is largely a speculation. Like I said from the start, its a gamble! Unemployement rose because manufacturers are finding it hard to cope. The naira exchange rate is rising daily, just yesterday it was 370naira to $1 @ the parallel market despite the MPR @ 12% what then would you have the cbn do? Should they deplete the little in our reserves trying to defend the naira? You still haven't procurred a solution, you are harping on the negatives. The basis remains that we need FOREX & we need it Soon to counter our negative GDP growth. If you can't still suggest how we go about that , then you are doing nothing new than just criticising.

Chukzyfcb:
Can't you see the big picture bro? That lack of bulk forex in our account is why we are suffering this much? Manufacturers are pulling out because of lack of forex to purchase raw materials, same goes for the aviation sector & so on & so forth. Why do you think inflation is steady rising? If we can attract forex, enough forex to counter the demand. Naira will strengthen, inflation rate will fall & then we can then re-adjust the MPR rate overtime as inflation slows. That's the possibilty of the move.
You can criticise the move but I'll advice you be constructive about it. Devaluation is not a 1 year or a 4year thing, Okonjo iweala has pointed out how it took 30yrs for dubai to be fully diversified. We need the loans now both for capex & to satisfy our growing appetite for forex. If you can procure a better solution, pls I'm all ears

JAkpayen:
This is the best decision to fight the stagflation being experienced in Nigeria's economy. It may help stabilise the naira but surely the country will head into recession. This is a bad time to go for loan

Chukzyfcb:
Uhmm too late, the rate has been increased bro! Now 14% from 12%, yes it may be a deadly move but MPC guys had to take the gamble. I mean look at what we'v done toattract Foreign Investors yet they are still reluctant to enter the market.
- The stock market increased in its capitalization this year
- The naira was devalued allowed to float
Yet we don't see FPI's coming through
This may be just be the trick to push their buttons. With inflatinn standing @ 16%, most Investors will be reluctant to put thier money in any Instrument that will yield below 16%, hence the Rates had to be pushed up. Its a gamble we must take.

Analysts expect the MPC to raise interest rates, which should make the currency more attractive to foreign investors. Foreign exchange dealers said the local currency fell after the Central Bank of Nigeria failed to lure in local investors or foreign players to the interbank market.

Jetspeed:
I have a UK proffessional qualifications in procurement. Will my qualification be exempted?

ramdris:
Op if only u know what fraudulent pple do to make money, u will b more careful I this new is a fact or not....

Adesiji77:
You can't really blame people who panic. There is usually no smoke without fire.

A client of mine once shared a story of how he was able to get his funds out of a bank some years ago before it "packed up". Just before the bank went under, an insider asked him to withdraw ALL his funds. He is forever grateful to this individual.

It may interest you to know that way back November 2015, some sources warned of the current situation. See below;

https://www.nairaland.com/2764507/skye-bank-tops-9-nigerian#40429006

https://www.nairaland.com/2766842/skye-bank-tops-nine-nigerian#40461869

Extract....


OlujobaSamuel, july66, mikeapollo, dearie, davide470,Truth234

midasbliss:
BH was there for him...

nnachukz:
Ok. Militants are bombing, prospective customers are shunning our oil. Which way Nigeria? Buhari brought bad luck to our nation.