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Update: CBN to bar individuals, start-ups from trading treasury bills 

The CBN has ordered all commercial banks and other financial institutions to ensure treasury bills are not sold to individuals and small firms.

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CBN releases new guidelines for OFIs, orders inclusion of NUBAN code or face sanctions

… as apex bank denies, says directive only affects OMO

Following an earlier report that the Central Bank of Nigeria (CBN) has ordered commercial banks and other financial institutions not to sell treasury bills to individuals and small firms from November 29, 2019, the apex bank has said its directive only affect the Open Market Operations.

What it means: The development means that the treasury bills is still open to individuals and small firms.

CBN directed that all banks to exclude individuals and local corporates from investing in Open Market Operations (OMO) auctions with effect from October 23, 2019.

In a circular signed by Director, Financial Markets Department, CBN, Angela Sere-Ejembi, and cited by Nairametrics, the banker insisted that participation of the financial institutions at the auction should be on proprietary and non-proprietary basis, without the participation of the investors mentioned above.

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Good side of the directive: The development is expected to drive foreign inflows by restricting individuals and local corporate, leaving only the banks and foreign investors to participate at the auction.

On the flip side: There are concerns by some experts that the direction of the apex regulator is still unclear.

For instance, Comercio Partners Limited explained that its concerns remain the seeming unclear direction of the CBN with regards to monetary policy.

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It stated, “This is a follow up to the circular released last week warning banks that all demand at auctions must be effective and fully backed by appropriate funding after observing high levels of unfunded bids at the OMO auction.  

“Whether this is a move aimed at protecting the Naira, checking the excesses of banks or managing its OMO issuance cost, the move would certainly engender some level of uncertainty, which markets do not like.”  

However, the report indicated that it is only big corporate organisations that would be allowed to do treasury bills investments and that the banks were already notifying their customers of the new directive. But the existing treasury bills investments would be allowed to continue till the end of their maturity dates.

Treasury, bills, calendar, Central Bank

If the apex regulator reverse it’s move to restrict individuals from trading treasury bills, it could also lead to an increase in savings deposits of the banks, attracting interest rates below what the treasury bills offered.

A source from the CBN, who pleaded anonymity as the bank would soon issue an official statement, said the move was to stop the mop-up of funds from the system through the treasury bills.

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[READ MORE: CBN sets up committee to recover N36 billion credit facility]

Why CBN gave the directive: He said, “Many people with huge cash prefer to keep their funds idle in treasury bills instead of investing the funds. Some people collect huge severance package, have huge funds but they have refused to invest the money. 

“We want these funds to be useful in the economy so that they will be available in the banks and can be invested to create more jobs in the country.” 

Abiola has spent about 14 years in journalism. His career has covered some top local print media like TELL Magazine, Broad Street Journal, The Point Newspaper. The Bloomberg MEI alumni has interviewed some of the most influential figures of the IMF, G-20 Summit, Pre-G20 Central Bank Governors and Finance Ministers, Critical Communication World Conference. The multiple award winner is variously trained in business and markets journalism at Lagos Business School, and Pan-Atlantic University. You may contact him via email - [email protected]

7 Comments

7 Comments

  1. Okechukwu

    November 7, 2019 at 9:01 pm

    CBN has said that it is not excluding individuals from treasury bills only from the OMO space. Is this something you want to clarify for your readers? Thanks in advance.

  2. Margaret Giwa

    November 14, 2019 at 4:49 am

    Excluding individual from treasury bill,there must be another avenue provided by which individual can grow. The young must grow. There should not be any restriction.

    • Mark Zulu

      November 16, 2019 at 8:59 am

      Is an open market, why excluding individual investors, something is wrong , the upper class, owners of strong cooperations want to keep it to themselves via the CBN. That mean it is only for the big wigs.
      Those at the other side of the divide should to invest in other terrains. Remember there is no more box to think out of it, just think and start-up.

  3. Aaron

    November 15, 2019 at 4:59 am

    Does this mean individuals can no longer buy treasury bills through their banks? Why deny individuals of their rights to invest their funds in a relatively safe investment avenue?

  4. Madonna

    November 16, 2019 at 5:37 am

    CBN rejected my treasury bills deposit 2 times now,am not happy about that because it helps me a lot

  5. Omoragbon Sunday

    November 27, 2019 at 12:58 pm

    I think, when policies are rolled out, the issuing institution, need to look at both sides of the coin. It was 50M, & above, now individual, monetary policy makes think twices.

  6. Adewale Oyewo

    February 23, 2020 at 4:10 pm

    I think this CBN policy is not well thought out and as such would be counter productive. Denying individuals the purchase of Treasury bill on the excuse that such huge funds should remain in the system. Why not allow them trade in TB and lend such monies to the bank also on a short term on a reasonable margin and the same given out as loan to businesses who are ready to do business but cash trapped. As such there would be more money to do business and spending would increase and more jobs would be created. This policy is gagging the economy.

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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. 

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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Source: McKinsey report, 2020. 

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. 

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. 

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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 

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. 

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. 

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.

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.”

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.

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

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.

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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.

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Coronavirus

COVID-19 Update in Nigeria

On the 26th of September 2020, 136 new confirmed cases and 3 deaths were recorded in Nigeria

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The spread of novel Corona Virus Disease (COVID-19) in Nigeria continues to record increases as the latest statistics provided by the Nigeria Centre for Disease Control reveal Nigeria now has 58,198 confirmed cases.

On the 26th of September 2020, 136 new confirmed cases and 3 deaths were recorded in Nigeria, having carried out a total daily test of 7,968 samples across the country.

To date, 58,198 cases have been confirmed, 49,722 cases have been discharged and 1,106 deaths have been recorded in 36 states and the Federal Capital Territory. A total of 502,545  tests have been carried out as of September 26th, 2020 compared to 494,577 tests a day earlier.

COVID-19 Case Updates- 26th September 2020,

  • Total Number of Cases – 58,198
  • Total Number Discharged – 49,722
  • Total Deaths – 1,106
  • Total Tests Carried out – 502,545

According to the NCDC, the 136 new cases were reported from 16 states- Lagos (41), Ogun (27), Rivers (19), Abia (10), Oyo (6), Plateau (6), Bauchi (5), Ondo (5), Ekiti (4), Kaduna (4), Edo (3), Ebonyi (2), Bayelsa (1), Delta (1), Osun (1), Yobe (1).

Meanwhile, the latest numbers bring Lagos state total confirmed cases to 19,215, followed by Abuja (5,644), Plateau (3,379), Oyo (3,254), Edo (2,623), Kaduna (2,393), Rivers (2,324), Delta (1,802), Ogun (1,823), Kano (1,737), Ondo (1,625), Enugu (1,289), Ebonyi (1,040), Kwara (1,028), Abia (891), Gombe (864). Katsina (848), Osun (827),  Borno (741), and Bauchi (697).

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Imo State has recorded 566 cases, Benue (481), Nasarawa (449), Bayelsa (398),  Jigawa (325), Ekiti (321), Akwa Ibom (288), Niger (259), Adamawa (237), Anambra (234), Sokoto (162), Taraba (95), Kebbi (93), Cross River (87), Zamfara (78), Yobe (76), while Kogi state has recorded 5 cases only.

READ ALSO: COVID-19: Western diplomats warn of disease explosion, poor handling by government

Lock Down and Curfew

In a move to combat the spread of the pandemic disease, President Muhammadu Buhari directed the cessation of all movements in Lagos and the FCT for an initial period of 14 days, which took effect from 11 pm on Monday, 30th March 2020.

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The movement restriction, which was extended by another two-weeks period, has been partially put on hold with some businesses commencing operations from May 4. On April 27th, 2020, Nigeria’s President, Muhammadu Buhari declared an overnight curfew from 8 pm to 6 am across the country, as part of new measures to contain the spread of the COVID-19. This comes along with the phased and gradual easing of lockdown measures in FCT, Lagos, and Ogun States, which took effect from Saturday, 2nd May 2020, at 9 am.

On Monday, 29th June 2020 the federal government extended the second phase of the eased lockdown by 4 weeks and approved interstate movement outside curfew hours with effect from July 1, 2020. Also, on Monday 27th July 2020, the federal government extended the second phase of eased lockdown by an additional one week.

On Thursday, 6th August 2020 the federal government through the secretary to the Government of the Federation (SGF) and Chairman of the Presidential Task Force (PTF) on COVID-19 announced the extension of the second phase of eased lockdown by another four (4) weeks.

READ ALSO: Bill Gates says Trump’s WHO funding suspension is dangerous

 

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