Financial experts and shareholders last Saturday expressed mixed reactions over the decision of the Central Bank of Nigeria (CBN) to revoke the licence of Skye Bank.
The stakeholders expressed their views in separate interviews with newsmen in Lagos, while reacting to the revocation of the licence of Skye Bank by the apex bank.
Prof. Sheriffdeen Tella of the Economics department, Olabisi Onabanjo University Ago-Iwoye, Ogun commended the decision of the apex bank.
Tella said the CBN had helped Skye Bank shareholders by making the announcement at the close of banking hour for the week.
He said the announcement at the close of the week prevented an immediate run on the bank.
According to him, announcement of a buyer was also helpful and would prevent a run on the bank in the coming week.
“There is no time that can be regarded as good for this kind of action but action must be taken whenever it becomes inevitable.
“Such actions are capable of dousing tension that normally follows sudden closure of banks,” Tella said.
He said the shareholders had not really benefited from the bank because they had not received dividend on their investment for a long time.
The economist said in other climes where shareholders were active investors, they would have sold their shares to minimise losses.
“But in Nigeria, majority hold on to their shares even when it is apparent the business is sliding down,” Tella added.
He, however, said the impact on the economy and the banking sector in particular may not be serious, unless another bank ran into trouble within three to six months.
The Managing Director, APT Securities and Funds Ltd., Malam Garba Kurfi, the decision of the apex bank as a regulator could not be faulted.
Kurfi said the development should serve as a lesson to both the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) to put their house in order.
He noted that SEC and NSE should be more active going forward by ensuring suspension of trading on the shares of any bank taken over by CBN to avoid making mockery of the capital market.
He said Skye Bank shares traded on the exchange on Sept. 21 and made some gains only for the licence to be revoked the same day.
“CBN has been demonstrating several times that it has no regards for shareholders but only depositors and as at today the only loser in the bank are the shareholders,” Kurfi said.
He said the shareholders should learn from past experience by exiting any bank taken over by the CBN to avoid regrets.
The General Manager, Anambra Broadcasting Service, Awka, Mr Uche Nworah, said the mandate of the apex bank and the Nigeria Deposit Insurance Corporation (NDIC) was to safeguard depositors.
Nworah said the CBN must have seen a lot of things in the bank before deciding to revoke the licence to protect investors and depositors.
He, however, faulted the apex bank’s approach in terms of information management.
Nworah said the bank’s customers and depositors were the ones that alerted the workers of what was going on in Awka, Anambra State.
Publicity Secretary, Independent Shareholders Association of Nigeria, Mr Moses Igbrude, said the takeover of Skye Bank was a very sad and avoidable story.
Igbrude described the takeover as a total loss for all the bank’s minority shareholders.
He linked the bank’s failure to the acquisition of the former Afribank against the shareholders advice.
“The story started some few years ago when the former management decided to expand by acquiring former Afribank and later Mainstream Bank against the advice of some of us shareholders not to do so.
“They refused to listen to us when we told them that Mainstream Bank was cancerous and political exposed, that the intrigue that would follow the acquisition would consume the bank.
“While shareholders of Skye Bank have lost their investments, what happened to the management who took the decision and those professional consultants who did the due diligence reports that the management rely on to take decision?
“It is high time regulators address the issue fake consultants who parade themselves as professionals or else this will continue to happen,” Igbrude said.
National Coordinator, Progressive Shareholders Association of Nigeria, Mr Boniface Okezie, said the CBN needed to explain its actions to Nigerians for better understanding.
Okezie said the apex bank needed to find a lasting solution to the banking sector crisis which was becoming an embarrassment not only to government but to the investing public.
He said the CBN should be held responsible for the development in Skye Bank because it granted the bank the approval to acquire Afribank.
Okezie said the investors should not be allowed to suffer again for the misdeeds and mistakes of the regulations.
Recall that CBN revoked the licence of Skye Bank and renamed it ‘Bridge Bank’ before settling for the current name Polaris Bank.
Nigeria’s Revenue-To-GDP Ratio Lowest, Private Sector Choking – World Bank
Nigeria’s revenue-to-Gross Domestic Product ratio, which fell to between five and six per cent last year, is the lowest in the world, the World Bank said on Monday.
The Country Director for Nigeria, World Bank, Dr Shubham Chaudhuri, said this during a panel session at a virtual public sector seminar with the theme ‘Nigeria in challenging times: imperatives for a cohesive national development agenda’ organised by the Lagos Business School.
Chaudhuri, who stressed the need for private investment for the country to realise its potential, said the private sector in the country ‘is struggling to breathe’.
“In Nigeria, I think the basic economic agenda is about diversification away from oil because oil has really been like resource curse for Nigeria on multiple dimensions,” he said.
He noted the aspiration of the President, Major General Muhammadu Buhari (retd.), to lift 100 million Nigerians out of poverty by the end of the decade.
He said, “Nigeria is a country with tremendous potential. If you look at the synopsis for this panel, it suggests that Nigeria is at a critical juncture – almost at the moment of crisis.
“Despite all of that, Nigeria is still the largest economy in Africa. So, just think about the potential that Nigeria has because of its natural resources, but more than that, because of its dynamism and all of its population. Nigerians are more entrepreneurial by nature.
“No country has become prosperous and realised its potential, eliminated poverty without doing two simple things: investing in its people, and unleashing the power of the private sector in creating jobs by investing and growing business. And then, of course, the basic function of the state is to provide security and law and order.”
According to Chaudhuri, to invest in people entails basic services, basic education, primary healthcare and nutrition, among others.
He said, “On this, Nigeria at the moment ranks sixth from the bottom in terms of the human capital index that we produce every year.
“So, obviously, there is a huge agenda in terms of investing in human capital. Nigeria spends more on PMS (premium motor spirit) subsidy than it does on primary healthcare in a year, and we know who the PMS subsidy is benefitting.”
He indicated that despite the country’s huge potential to attract private capital, the non-oil part of the economy ‘is not growing that robustly and certainly not generating revenues that the government needs’.
Chaudhuri said, “So, we see as priorities investments in human capital. But for that, one needs revenues. And there again, Nigeria unfortunately has the distinction of having about the lowest revenue-to-GDP ratio in the world.
”The standard rule of thumb is that for government to provide the basic services and law and order, it needs between 15 to 20 per cent of GDP as being revenue, and this will be both at the federal and state levels combined.
“In Nigeria, it was eight per cent in 2019. In 2020, in the middle of the Covid-19 crisis and with the fall in oil prices, that went down to about between five and six per cent.
“So, domestic revenue mobilisation is huge. And then the third is enabling the space for private investment. You have to fix the power problem. Power is like the oxygen of an economy. In Nigeria, the private sector is struggling to breathe.”
CBN Stops Sale Of Forex To BDCs
The Central Bank of Nigeria (CBN) as announced immediate discontinuation of sale of Foreign Exchange (forex) to Bureau de Change (BDC) operators in the country.
Mr Godwin Emefiele, the CBN Governor , made this announcement yesterday, while presenting a communique from the apex bank’s Monetary Policy Committee (MPC) meeting in Abuja.
Emefiele said that the decision was informed by the unwholesome business practices of the BDCs, which he said had continued to put enormous pressure on the Naira.
He said , henceforth, the apex bank would sell forex to deserving Nigerians through the commercial banks.
“ The BDCs were regulated to sell a maximum of 5000 dollars per day, but CBN observed that they have since been flouting that regulation and selling millions of dollars per day.
“The CBN also observed that the BDCs aid illicit financial flows and other financial crimes. The bank has thus, decided to discontinue the sale of forex to the BDCs with immediate effect.
“We shall, henceforth, channel all forex allocation through the commercial banks,” he said.
He urged the commercial banks to ensure that every deserving customer got their forex demand, adding that any bank found circumventing the new system would be sanctioned.
“Once a customer presents all required documentation to purchase forex, the commercial banks should ensure they get the forex.
“Any customer that is denied should contact the CBN on 0700385526 or through the email- firstname.lastname@example.org “ he said.
The Tide source reports that stakeholders have been calling on the CBN and its MPC to take urgent steps to halt unending depreciation of the Naira.
Recently, a past President of the Chartered Institute of Bankers of Nigeria (CIBN), Mr Okechukwu Unegbu, urged the MPC to focus on policy decisions that would curb rising inflation and stabilise the Naira.
RSG To Privatise Songhai, Fish Farms
There are strong indications that the Rivers State Government has concluded plans to privatise the moribund Songhai Farm in Tai and Fish Farm in Buguma.
The State Chairman of the Peoples Democratic Party (PDP), Amb. Desmond Akawor, gave this indication while appearing in a phone-in radio programme organised by Silverbird Communications in Port Harcourt at the weekend.
He explained that the previous administration in the state failed to put in place a sustainability programme for these farms, hence they went moribund.
In order to reverse the situation, he said that the present administration was now contemplating a rehabilitation scheme to be driven by a privatisation policy to enable those investments come on stream.
He said the scheme had reached an advanced stage and is to executed by the State Ministry of Agriculture.
On the issue of job creation, Akawor said the administration of Chief Nyesom Wike was using the various construction projects around the state to empower the youths.
He explained that the government had floated a special scholarship scheme in Law and Medical Sciences to create opportunities for young people in various professions.
He called on the opposition to desist from de-marketing the state through propaganda as it’s capable of scaring investors away from the state.
Akawor insisted that the Wike led administration has provided an enabling environment for businesses to thrive through infrastructure and improved security.
By: Kevin Nengia
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