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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.

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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:

  • 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.

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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.

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

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Business News

IMF advises banks to suspend dividend payment

However, halting dividend payments may not go down well for many retail and institutional investors, who rely on bank dividends for regular income.

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IMF discloses immediate priority , Reduce funding oil subsidy - IMF to Nigeria , IMF: 40% of African countries can't pay back their debts , Nigeria among countries that pushed Global debt to $188 trillion - IMF , Coronavirus: World Bank, IMF to support Nigeria and other member countries affected, IMF, World Bank to hold meetings via conference call over Coronavirus epidemic, IMF advises banks to suspend dividend payment

In an article published on its website, International Monetary Fund (IMF) Managing Director, Kristalina Georgieva, advised banks to halt dividend payment for now. According to her, with the expectation of a deep recession in 2020 and partial recovery in 2021, banks’ resilience will be tested. Therefore, having in place strong capital and liquidity positions to support fresh credit will be essential.

According to the article, one of the steps needed to reinforce bank buffers is retaining earnings from ongoing operations which are not insignificant.

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IMF staff calculate that the 30 global systemically important banks distributed about US$250bn in dividends and share buybacks last year.

READ MORE: State Governments: Another cycle of non-payment of salaries to begin soon

In a circular dated January 31, 2018, the Central Bank of Nigeria (CBN) stipulated new conditions for eligibility of Nigerian banks to pay dividend and the quantum of dividend to be paid out by banks who are eligible. Prior to the release of the circular, dividend payout policy for Nigerian banks had been spelt out in Section 16(1) of BOFIA 2004 (as amended) and Prudential Guidelines for DMBs of 2010. The circular provided guidelines and restrictions around divdidend payout for banks based on NPL ratio, CRR levels, and Capital Adequacy Ratio (CAR).

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However, there were no regulatory restriction on dividend payout for banks that meet the minimum capital adequacy ratio, have a CRR of “low” or “moderate” and an NPL ratio of not more than 5%. However, it is expected that the Board of such institutions will recommend payouts based on effective risk assessment and economic realities. Indeed, current economic realities demand caution.

Current economic realities mean that banks face asset quality threats, further devaluation threat which may impact capital in some cases, and lower profits which in turn affects the quantum of capital retained. Ideally, these should reflect in NPL ratio and CAR ratio and should immediately restrict banks’ ability to pay dividend. However, there is usually a time lag before these ratios begin to reflect the new economic realities. Therefore, IMF’s advise may come in handy for many banks.

(READ MORE: Software security limitations cited as major reason for Covid-19 bank rush)

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That said, halting dividend payments may not go down well for many retail and institutional investors, who rely on bank dividends for regular income. Banks like Zenith and Guaranty Trust have a good history of consistent dividend payment with attractive yields which is a major attraction for many shareholders.

IMF advises banks to suspend dividend payment

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Economy & Politics

CBN reduces MPR to 12.50%, holds other metrics

Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) from 13.50% to 12.50% and retains CRR at 27.5%, Liquidity ratio at 30%.

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The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) from 13.50% to 12.50%.

Governor, CBN, Godwin Emefiele, disclosed this while reading the communique at the end of the MPC meeting on Thursday in Abuja.  Meanwhile, other parameters such as the Cash Reserve Ratio  (CRR) remained at 27.5%, Liquidity ratio at 30%.

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READ ALSO: Bankers decry rise in public debt, weak economy

Highlights of the Committee’s decision

  • MPC cuts MPR by 100 basis points to 12.50%
  • CRR stood at 27.5%
  • The Liquidity Ratio was also kept at 30%

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READ ALSO: Nigeria’s total debt to hit N33 trillion – Senate

According to Emefiele, the decision of the MPC to reduce the Monetary Policy Rate  was informed by the impact of the Covid-19 pandemic on the economy, increased inflationary pressure, restrictions in international trade and more.

He highlighted the decline in the nation’s GDP as well as the decline in the manufacturing and non-manufacturing purchasing index which were attributable to slower growth in production, rate of unemployment, amongst others.

READ MORE: AfDB’s Akinwumi Adesina hits back, denies allegations against him

 

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Economy & Politics

Buhari seeks approval from green chamber to borrow fresh $5.5billion

FG also seek approval for the revised 2020-2022 mid-term expenditure framework (MTEF) which became necessary as a result of the crash in crude oil prices and the cut in the production output.

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President Muhammadu Buhari is seeking the approval of the House of Representatives to borrow fund to finance capital projects at the federal and state (to support state governors) levels in the 2020 budget.

This request was disclosed via the official twitter handle of the House of Representatives.

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The president’s letter, which indicated that the fund would be sourced locally and internationally, was read on the floor of the House of Representatives by the Speaker, Femi Gbajabiamila, during plenary on Thursday, May 28, 2020.

READ ALSO: 4 key sectors CBN plans to pump money into

In the letter to the lower chamber, Buhari, is also seeking the approval for the revised 2020-2022 mid-term expenditure framework (MTEF) which became necessary as a result of the crash in crude oil prices and the cut in the production output.

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Although the tweet did not contain the total amount of loan that is being requested, reports suggests that the President is seeking approval to borrow the sum of $5.513 billion from external sources to finance 2020 budget deficit and support state governments to meet challenges caused by the coronavirus pandemic.

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READ MORE: Africa’s Post-Covid: Elumelu Moderates as Presidents of Senegal, Liberia, US Senator Coons, others Convene at UBA Africa Day Conversations 2020

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