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Over N190bn disbursed through Anchor Borrowers Programme – CBN

The @cenbank disclosed that over N190 billion has been disbursed to more than 1.1 million smallholder farmers through the Anchor Borrowers Programme. This was disclosed, yesterday, by the CBN Governor, Godwin Emefiele

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The Central Bank of Nigeria (CBN) disclosed that over N190 billion has been disbursed to more than 1.1 million smallholder farmers through the Anchor Borrowers Programme.

This was revealed by the CBN Governor, Godwin Emefiele, yesterday, when he appeared before the Senate Committee on Banking, Insurance and other Financial Institutions to be screened for reappointment as Governor.

Defending his accomplishments during his first term in office, Emefiele stated the following;

“The results are there to see that as a result of our Anchor Borrowers Programme where we have disbursed over N190 billion to over 1.1 million smallholder farmers, cultivating over 1.3 million hectares of land, that we need to do more of this.”

The CBN Chief also stated that the Government’s Anchor Borrowers Programme has made it possible for the masses to access credit, generate employment and boost economic activity amongst our rural population.

“SO, WE FROM THE CENTRAL BANK OF NIGERIA FROM THE MONETARY POLICY SIDE, HAVE COME TO THE REALISATION THAT USING THE INSTRUMENTALITY OF THE ANCHOR BORROWERS PROGRAMME WHERE ACCESS TO CREDIT IS BEING PROVIDED TO OUR MASSES ALL OVER THE COUNTRY, THAT IT WILL BE A WAY TO GENERATE EMPLOYMENT AND BOOST ECONOMIC ACTIVITY AMONGST OUR RURAL POPULATION.”

Furthermore, he said that as part of the CBN‘s statutory responsibilities, it will continue to ensure that funds are available at a low interest rate, in order to guarantee easy accessibility to credit facilities by Nigerians.

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An economy in distress – The CBN Governor further stated that the economy is not measuring up when compared to the other countries of the world, especially those in Asia. According to him, the level of development recorded in Nigeria over the last 50 years has been unimpressive.

“I went to one Asian country, I entered the country happy but I came out of the country sadly. Sad because I could see the level of development that this country has achieved over the last 50 years.

“And I cast my mind back and look at my country, Nigeria that what have we achieved? This is what gives me the push that at my age of 57, I saw this country when it was good.”

However, the CBN boss is optimistic that the monetary authority will do everything possible to accomplish its policy mandate.

“I am looking at the country today and I am saying I don’t want to say it is bad but I want to say that we have a lot of work to do; because the country has no doubt receded somewhat.

So from our side in the monetary policy, we will do everything possible to ensure that with the mandate that is bestowed on us, we will pull this country forward.”

Quick Take on ABP:  The Anchor Borrowers Programme (ABP) was launched by President Muhammadu Buhari in November 2015, and was intended to create a linkage between anchor companies involved in the processing and smallholder farmers (SHFs) of the required key agricultural commodities. Other objectives include:

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  • Increase banks’ financing to the agricultural sector
  • Reduce agricultural commodity importation and conserve external reserves
  • Increase capacity utilization of agricultural firms Create a new generation of farmers/entrepreneurs and employment
  • Deepen the cashless policy and financial inclusion
  • Reduce the level of poverty among smallholder farmers
  • Assist rural smallholder farmers to grow from subsistence to commercial production levels.

Upshots – Although many Nigerians are yet to be considered for loans under the ABP, the CBN’s Anchor Borrowers’ Programme appears to be one of the most successful programmes under the current administration. For instance, the state’s Chairman, Rice Farmers Association of Nigeria (RIFAN), Alh. Abubakar Aliyu, reportedly disclosed last week in Kano that the registered farmers were selected from the 44 Local Government Areas of the state.

“We have no fewer than 27, 000 registered farmers under in our association, who will benefit from the federal government’s anchor borrower programme this planting season. We are lucky to have been considered for the loan because many of our members have yet to repay the loans given to them in the 2017 and 2018 farming season.

“The total package of the facility is n219, 000 per farmer. Each farmer will receive fertiliser, seeds, chemicals, water pump, and cash backing for the payment of labourers”

Nairametrics had earlier reported that ABP has created not less than 2.5 million jobs across the country. Earlier in the year, the CBN reiterated its commitment to increase the funding of the ABP due to the success of the programme in the North-east. The CBN Deputy Director of Development and Finance, Mr. Edwin Ezelu, disclosed at a formal ceremony marking the repayment of the ABP loan given to the North East Commodity Association (NECAS) in Yola State.

At the event, Ezelu, reiterated the commitment of the CBN in ensuring the timely release of funds to farmers, adding that the bank’s resolve was aimed at facilitating the achievement of the federal government’s plans to boost the country’s food security and agricultural value chain.

Samuel is an Analyst with over 5 years experience. Connect with him via his twitter handle

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Financial Services

How foreign exchange risks and others affect the Nigerian pension industry 

A report has analysed risks militating against the Pension industry in Nigeria.

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This is why you should make voluntary contributions to your pension fund

Despite being one of the fastest-growing sectors in the Nigerian financial services industry, the Nigerian pension industry has been affected by various riskssuch as the volatility in the foreign exchange and other factors.

However, these risks have harsh consequences on the retirement income of contributors. For example, in Nigeria, whilst the pension assets in the last decade have grown by 21% annually, the growth in the value of assets when converted to USDhas been about 11% over the same period. 

READ: PenCom recovers N17.51billion from defaulting employers, imposes penalties

This is according to a recent report released on Pension Sector Forum by ARM Pension, with the theme “Pension Assets Risk Management in the Face of Uncertainties 

All other things being equal, the findings revealed that the Defined Contribution Pension scheme assets on a 10- year time frame, grew faster than Defined Benefits (CAGR 8.4% pa vs 4.8% pa). Increased member coverage and higher contributions were probable factors responsible for the growth In addition, most retirees might not have enough funds to maintain a decent standard of living, as retirement risk has been transferred to them. 

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Other risks outlined in the summit includeinterest rate risk, political risk, operation risk, and key macroeconomic risks such as unemployment, GDP, inflation, currency among others. 

READ: Is Zenith Bank thriving on the strength of sound financial indices?

With regards to who bears the retirement risk, 68% of the risk is borne from one’s sources, while 38% is from outside sources. 

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The report also stated that the total pension contributions received in the industry from 2017- 2019, was almost equally split between the private and public sectors at the end of Q3 2019 

Explore Economic and Financial Data on the Nairametrics Research Website

Way Forward 

In mitigating the risks inherent in the Nigerian pension industry, experts at the summit called for increased collaboration among stakeholders, engagement with all regulators, increased advocacy for corporate governance, increased awareness, and sensitization of contributors by stakeholders among others as viable options going forward. 

Key Highlights  

  • As of June 2020, only 11.3% of the Nigerian labour force had opened retirement savings accounts (RSAs), while pension assets stand at less than 10% of GDP. 
  • The total number of funds under management currently stands at N11.1 trillion. 
  • There are currently over 9.04 million subscribers and 32 operators. 

READ: Why May was bad for your Pension funds

To view the report, click to download HERE

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Financial Services

Nigerian fintech companies raised $600 million in five years – McKinsey Report 

McKinsey report has revealed that Nigeria’s fintech companies have raised over $600 million in funding in the last six years.

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fintechs, commercial banks, Events in FinTech industry in 2019, Nigeria's fintech industry 2020: The growth frontier of the new decade

In a space of five years, Nigeria’s fintech companies have raised over $600 million in funding, attracting 25($122 million) of the $491.6 million raised by African tech startups in 2019 alone – second only to Kenya, which attracted $149 million.  The period under review is 2014- 2019. 

This information is contained in a recently published report by McKinsey titled Harnessing Nigeria’s Fintech Potential.” The report highlighted the combination of youthful demographic, increasing smartphone penetration, and concerted efforts to driving financial inclusion as factors that interplay to produce conducive and thriving enabler or platform for the fintech firms in Nigeria. 

READ: BOOM: CBN issues new circular that could force banks to lend to nearly everyone.

The report outlined some of the feedback against fintech companies ranging from poor user experience, underwhelming value-added from using some of the financial products, low returns on savings, and limited access to investment opportunities. 

The report also showed that Nigerian fintech companies are primarily focused on payments and consumer lendinghaving allotted an aggregate of 39% on payments to consumers, SMEs, and corporate FSP, and an additional 25% to consumer lending. The breakdown is depicted below. 

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READ: This is where PSB, CBN got it all wrong

Source: McKinsey report, 2020. 

READ: Banks Vs Fintechs – Who should be Afraid? (Part Two)

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On the driving factors behind the increasing choice of payment and consumer lending as an area of concentration by fintech companies, a part of the report read thus; 

The factors driving growth in each of these segments vary. Payment-focused solutions have surged over the past two years, spurred in part, by the central bank’s financial inclusion drive and favorable regulatory policies, including revised Know Your Customer (KYC) requirements for lower-tier accounts and incentives, to accelerate development of agent networks across the country. PagaOPayCellulant, and Interswitch’s QuickTeller compete with mobile banking applications and bank unstructured supplementary service data (USSD) channels to send and receive transactions and bill payments. 

READ: PenCom recovers N17.51billion from defaulting employers, imposes penalties

Fintech activity in lending is picking up, thanks to the fact that fintechs are able to leverage payment data to determine lending risk more easily, and utilize smartphones as a distribution channel. For example, fintech startups such as Carbon and Renmoney have successfully leveraged alternative credit-scoring algorithms, to provide instant, unsecured, short-term loans to individuals. A few fintechs, such as Migo, have also stepped up to offer unsecured working-capital loans to SMEs with minimal documentation. Banking fintech solutions have been fast followers here, with leading banks launching digital lending platforms like Quick Credit by GTBank and Quickbucks by Access Bank. 

In general, access, convenience, and trust have all played key roles in the increasing use of fintech products. For example, in the last six months, 54% of consumers have reported increased usage of their fintech products 

READ: Key ‘side-hustles’ Nigerian Bankers supplement their income with

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Why this matters 

In line with the National Financial Inclusion goals of 2020, and owing to the fact that despite the remarkable progress recorded by traditional banking institutions, the vast majority of consumers are underserved.  Hence, the issue of accessibility especially in remote areas, affordability, and user experience have been a front-burner issue. 

The aforementioned issues have created an opening that fintechs have been quick to take advantage of, providing enhanced propositions across the value chain, to address major points in affordable payments, quick loans, and flexible savings and investments among others. 

READ: CBN grants licenses to 3 Payment Service Banks

Conclusion 

Fintech accounted for only 1.25of retail banking revenues in 2019, signaling a room for development. Despite recording a growth of fintech investments in Nigeria to the tune of approximately $460 million in 2019, majority of these investments were from external investors. This was only a small fraction (1.27%) of the $36 billion invested in fintech globally. 

READNew report details how Nigerian fintech companies are expanding their business scopes

The report opined that full optimization of fintech companies in Nigeria can stimulate economic activity, by creating a multiplier effect, and can drive progress towards development goals. Economic impact will primarily come from expanding revenue pools and attracting foreign direct investment to the country. The sector can unlock a plethora of economic benefits by driving increased fintech productivity, capital, and labour hours through digitization of financial services.  

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Business

PenCom recovers N17.51billion from defaulting employers, imposes penalties

N17.51 billion was recovered by PenCom from employers who refused to remit pensions from workers’salaries

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Nigeria’s Pension Asset increased by N228 billion in October, PFAs increase investment in infrastructure to N40.52 billion   

The National Pension Commission has recovered N17.51 billion from employers that refused to remit deducted monthly pensions from their workers’ salaries to their Retirement Savings Accounts with the respective Pension Fund Administrators.

This was disclosed by the Commission in its 2020 second quarter report which was released on Friday.

Out of the N17.51 billion, the principal contribution was N8.89 billion, while the penalty imposed on the employers was N8.63 billion.

READ: CBN says 22 banks to restructure over 35,000 loans due to COVID-19

The report read, “Following the issuance of demand notices to some defaulting employers whose outstanding pension contribution liabilities had been established by the recovery agents, 16 of the affected employers remitted the sum of N261.33 million representing principal contribution of N152.79million and penalty of N108.54million during the quarter. This brought the total recoveries made from inception as at June 30, 2020 to N17.51billion.”

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According to the report, one batch of NSITF lump sum payment application totalling N225,442.72 was however received on behalf of five NSITF members during the quarter.

READ: Ngige accuses NSITF management of embezzling N48 billion and awarding fake contracts

It said the application was processed and five members’ contributions were transferred to their bank accounts.

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Consequently, it added, the cumulative sum of N2.94billion had been paid into the bank accounts of 36,551 NSITF contributors as lump sum/one off payment from inception to June 30.

For the quarter ended June 30, the commission said it processed monthly pension payments totalling N62.25million in respect of 3,629 NSITF pensioners.

READ: Private Sector drives industry growth, as PenCom remits N7.4bn into RSA

As of June 30, it said the total pension payment to NSITF pensioners amounted to N4.73billion.

The commission added that it reviewed the request for the payment of attributable income to eligible NSITF members and granted a “no objection” for payment of N2.92billion to 165,954 eligible NSITF members whose NSITF contributions were refunded to their RSAs or bank accounts as of December 2018.

READ: Leaked memo: CBN instructs banks to block bank account of 38 companies for “forex abuse”

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