Business
CBN To Set Guidelines On Margin Lending
Central Bank of Nigeria on Thursday said it would soon issue guidelines on margin lending to prevent the kind of reckless lending that contributed significantly to the crisis in the Nigerian banking sector.
The CBN Governor, Mr Lamido Sanusi, said, during a news conference that the sector entered a crisis situation, partly because the CBN, as the regulator, lacked both the capacity and will to supervise the banks.
Banks lost about N1m after the stock market bubble, fuelled by a lending spree to stockbrokers, bank subsidiaries and individuals for stock purchases, burst in 2008.
Citing examples of regulatory lapses, Sanusi said there had been no guideline on margin trading, adding that “for instance, the Financial Sector Regulatory Committee did not meet for three years and no one talked.
He observed that the major issues in sector centred around corporate governance, saying banks were controlled by their chief executive officers rather than the boards.
He said, there was no risk management framework, and there was lack of investor/consumer sophistication. People were buying bank’ stocks without knowing the reasons for doing so.
He added, when you have someone responsible for financial system stability or surveillance, who has never worked in a bank, it is difficult to expect him to now what makes the banks run.
Sanusi noted that the reforms in the sector were based on four pillars enhancing that quality of banks ensuring financial stability, ensuring good financial sector evolution and putting in place a system to ensure that the financial sector continued to contribute to the economy.
He said the financial market division of the CBN had been strengthened,adding that the apex bank was also working closely with the Ministry of Finance to ensure stability.
The CBN governor said the Asset Management Company, expected to take toxic assets off banks balance sheets, would take off with N1m when the bill was passed.
In his speech, the Minister of State for Finance, Mr Remi Babalola, said to initiate the kind of reforms embarked upon by the CBN governor required an unusual boldness and the kind of political zeal you don’t find in environments like this.
He also disclosed that the Nigerian Deposit Insurance Corporation had alerted the Ministry of Finance of developments in the banking sector before the recent crisis.
The NDIC wrote to us to tell us that there were serious issues in the banking industry. They named specific banks and talked about the proportion of loan book in the capital market, he said, adding that in circumstances like this, discussions were stalled because the other regulator would not agree with the others position.
He, however, expressed the ministry’s full support for the banking reforms, saying that, we are committed to higher regulatory and supervisory standards in all segments of the financial services industry.
Our overall focus is economy. We will collaborate with the CBN to fast track the establishment of the AMC and ensure that we safeguard the banks.
We will give the CBN that governmental support it needs at any point in time without jeopardising confidence in the system. On his part, Acting Managing Director/Chief Executive Officer, NDIC, Alhaji Umaru Ibrahim said 89 NDIC examiners, in addition to those CBN, were currently in the 24 banks to re-ascertain the financials of the banks.
He also said the corporation had already set in motion, the process of reviewing its act to accommodate provisions that would enhance its effectiveness.
Some Commercial drivers in Port Harcourt have said that the Federal Government’s N1,350 fuel discount is yet to reduce their daily operating cost.
A cross session of commercial drivers who spoke to The Tide correspondents in Port Harcourt said they are yet to feel the impact of the government discount, adding that most filling stations in the city are even selling above the pump price
A driver Jude Ogbo who operates the mile 1 Rumuokoro axis of Port Harcourt said plies the discount has not reflected in his daily fuel expenses.
“Since the discount was announced, many filling stations still sell at the old price. When you go there, you discover they sell you two litres at the price of one. For now, we have not seen any reduction,”_ he said.
Another commercial driver, Comrade Ishmael Uzeho who operates within the Port Harcourt metropolis, said the discount is not being implemented across the country.
“How has the discount affected us? I will say it has not. Many stations are not working. Only NNPC is working and that is just one person in the whole country. If government really wants to help, let the fuel price go down properly,”_ he said.
Uzeho added that if the price of fuel goes down, transport fares will also go down. He noted that his route fare has remained at N500.
On his part, Mr. Moses Dapa, Supervisor at Sam Jaja Foundation Transport Company, said the company has not increased its fares despite the high cost of fuel.
“We are still running normal price. We charge N2,000 and N5,000 depending on the destination. We will not increase our price. I don’t know about other parks, but for Sam Jaja, we are maintaining normal price,”_ Dapa said.
He appealed to passengers to understand that drivers are not using high fuel price as an excuse to charge excessive fares.
Other drivers who spoke said the federal government should monitor the NNPCL retail stations to ensure that the directive is implemented.
Recalled that The Federal Government in abid to reduce transportation cost in the country had announced a 30-day margin discount at NNPC Retail stations across the country from October 1 to 31,
However investigation revealed that the policy is yet to affect transportation cost in the country.
By; Stephens Sopakriba and Saint Davies
In a press statement released to The Tide’s source on Friday in Abuja, the group said Nigeria had a significant resource advantage due to its vast natural gas reserves.
“At a time when global energy markets face unprecedented volatility and rising operational costs, Nigeria stands on a massive resource advantage with its vast natural gas reserves,” the group said.
Highlighting this potential, Alfa Designs urged the nation to move past complaints over energy costs and aggressively embrace Compressed Natural Gas (CNG) as a sustainable engine for economic growth.
While federal policy adjustments have sought to cushion the impact of global energy shocks, industry experts emphasised that long-term relief hinges on a rapid, nationwide transition to gas.
“Transitioning away from expensive traditional petroleum products promises to ease the financial burden on ordinary citizens.
“It will also reposition Nigeria as an attractive industrial hub capable of drawing foreign direct investment and driving job creation,” it said.
To demonstrate the practical feasibility of this transition, the group said it recently partnered with a global Original Equipment Manufacturer (OEM) to lower the entry barriers for commercial drivers.
“By negotiating directly with the manufacturer, we reduced the total cost of acquiring and installing a CNG conversion kit for commercial tricycles (commonly known as Keke NAPEP) from up to N700,000 down to under N450,000.”
The group said this shift offers dramatic immediate financial benefits for local operators, with petrol currently selling at roughly N1,390 per liter.
It said that, in comparison, at a CNG equivalent price of about N98 per liter, a daily commercial driver using 10 liters of fuel reduces its daily energy expenditure from N13,900 to N3,980.
“This represents a daily net savings of N9,920, or more than 71 per cent.
“Over a standard 26-day working month, drivers save over N257,000, allowing them to fully recover the cost of the CNG conversion in less than 46 operational days.”
The company further stated that when scaled nationally, the economic implications are monumental.
“Nigeria consumes approximately 50 million liters of gasoline daily, costing roughly N69.5 billion per day.
“A nationwide 71 per cent reduction in fuel expenditure would generate daily national energy savings of N49.6 billion.
“On an annualised basis, this shift equates to approximately N18.1 trillion, or $13.5 billion, kept within the domestic economy.”
The group added that those recurring national savings would offer a vital mechanism to help address Nigeria’s estimated $2.3 trillion infrastructure deficit.
It said reinvesting those funds into the economy helps eliminate the 30 to 40 per cent operational overhead currently consumed by imported fossil fuels.
“The resulting boost to corporate margins expands the national tax base, generates reliable user-fee revenues to make major transit projects bankable, and creates a self-sustaining financial cycle,” it said.
