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How to access new CBN’s Non-oil Export Fund

Fund will diversify revenue base of the economy and development of the nation’s non-oil export sector.

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How to access new CBN's Non-oil Export Fund

The Central Bank of Nigeria (CBN) has issued a guideline to access its Non-Oil Export Stimulation Facility (NESF). The fund was introduced to diversify the revenue base of the economy and to expedite the growth and development of the nation’s non-oil export sector.

This was disclosed in a document published on the apex bank’s website. The facility, according to the document, will help redress the declining export financing and reposition the sector to increase its contribution to economic
development.

Objectives of the Facility

*  Improve access of exporters to concessionary finance to expand and diversify the non-oil export baskets;

* Attract new investments and encourage re-investments in value-added non-oil exports production and non traditional exports;

* Shore up non-oil export sector productivity and create more jobs;

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*Support export-oriented companies to upscale and expand their export operations as well as capabilities; and
* Broaden the scope of export financing instruments.

READ MORE: Infrastructural financing in Nigeria: Why bonds are better than loans

Who qualifies for the fund

* Firms that are duly incorporated in Nigeria under the Companies and Allied Matters Act (CAMA) and have verifiable export off-take contract(s).

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* Satisfactory credit reports from at least two Credit Bureaux in line with the provisions of CBN Circular BSD/DIR/GEN/CIR/04/014 dated April 30, 2010.

* All applications shall be in compliance with CBN circulars BSD/DIR/GEN/LAB/07/015 and
BSD/DIR/GENLAB/07/034 on “Prohibition of Loan Defaulters from Further Access to Credit Facilities in the Nigerian banking System” and “Guidelines for Processing Requests from DMBs to Extend New/Additional Credit Facilities to Loan Defaulters and AMCON Obligors” dated June 30, 2014 and October 10, 2014, respectively.

READ MORE: Nigeria’s cocoa exports to fall by $100m as prices rise in futures market.

Eligible Transactions

* Export of goods processed or manufactured in Nigeria;

* Export of commodities and services, which are allowed under the laws of Nigeria and do not violate the principles of non-interest banking and finance;

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* Imports of plant & machinery, spare parts and packaging materials, required for export-oriented production that cannot be sourced locally;

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* Resuscitation, expansion, modernization and technology upgrade of non-oil export industries;

* Export value chain support services such as transportation, warehousing and
quality assurance infrastructure;

* Working capital/stocking facility; and

READ ALSO: How Nigeria recorded its highest non-oil exports ever in 2019

Participating Financial Institutions (PFIs)

* Non-Interest Banks (NIBs).
* Non-Interest Development Finance Institutions (NI-DFIs).

Features of the NESF

* Financing Limit Term financings under the Facility shall not exceed 70% of verifiable total cost of the project subject to a maximum of ₦5,000,000,000.00.

Tenor

The NESF shall have a tenor of up to 10 years and shall not exceed the 31st December, 2027.

Working capital/stocking facility shall be for one year. Where applicable, the facility can be rolled-over twice on a reducing balance basis of 33.3% of the original amount.

READ MORE: FG targets $150 billion revenue from Zero-oil plan 

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Repayment

Repayments of principal and return shall be quarterly and in accordance with the agreed repayment schedule.

Moratorium

* Moratorium shall be project-specific and shall not exceed two (2) years.

* In case of construction, additional moratorium of up to one (1) year may be allowed, subject to approval by the CBN.

* Rates of Return: The Facility shall be granted at an all-inclusive rate of return of 9% per annum.

READ ALSO: CBN waives guarantor requirement for N50 billion COVID-19 loan applications

Application Procedures

A PFI shall submit application to CBN on behalf of its customer in the prescribed format.

In the case of financing syndication, the lead bank shall submit application on behalf of other banks. All correspondence with respect to the application shall be with the lead
bank.

Each request for a facility is to be accompanied by the following documents:
a) Written request from the project promoter to a PFI seeking financing under the NESF.

b) Completed application form.

c) Certified true copies of documents on business incorporation.

d) Three (3) years tax clearance certificate.

e) Audited statement of accounts for the last three (3) years (where applicable) or the most recent management account for companies less than three (3) years in
operations.

f) Feasibility study/ business plan of the project.

g) Relevant permits/ licenses/ approvals (where applicable).

h) Verifiable export orders/ contracts or other export agreement and arrangements/ commitments.

See details of the guidelines here

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]

1 Comment

1 Comment

  1. Tessy Uhegbu

    July 20, 2020 at 7:38 am

    What I need first is get small loan for my NAFDC number. Am into food Processing, like plantain flour, beans, soybeans, mellet, cassava, cocoyam, surghurm floor. #500,000 (five hundred thousand) will be helpful. Before going for big loan.

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Financial Services

Despite CRR debits, Nigerian Banks record higher net interest income

Banks are recording higher net interest income, despite the CBN’s frequent CRR debits chalking off significant amounts of their cash.

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net interest income, Nigerian Banks, Fitch, Nigerian banks tremble over Cyber attack, Most Nigerian banks are very likely to fail stress tests should the economic downturn persists and deepens

Some of the top banks in Nigeria posted a total net interest income of N403 billion in the third quarter of 2020 compared to N369.5 billion in the same period in 2019.

In the first 9 months to date, the banks have reported a combined net interest income of N1.2 trillion compared to N1.1 trillion same period last year.

READ: Aviation: Nigerian ground handling firms count revenue losses due to pandemic-induced plunge

Nairametrics collated these figures from the following banks, FBNH, UBA, GT Bank, Access Bank, Zenith Bank, Fidelity Bank, Stanbic IBTC, Sterling Bank, and Union Bank. The banks recently released their third-quarter interim results.

Deposit money banks have complained bitterly over the central bank’s frequent CRR debits chalking off significant amounts of cash that they could have earned on.

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READ: Union Bank releases Q1 2020 result, records 14% profit increase

A Nairametrics report indicates banks suffered CRR debits of over N1.9 trillion in the second quarter of 2020, taking the total amount of customer deposits held by the CBN at about N6.5 trillion.

The figure is likely higher now as more CRR debits have occurred in the third quarter of the year. Nairametrics reported banks were debited N226 billion CRR debit in a recent update provided by reliable sources.

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However, as the above report indicates, the banks still earned more this year compared to 2020. Where banks may have suffered dips is in net interest margin, a measure of the percentage of income banks earn after netting off the cost of funds.

READ: Nigerian Banks issue N3.3 trillion in new loans in June 2020

However, this has also been largely mitigated by low deposit rates even as banks maintain most of their lending rates.

Despite the rise in net interest income for the collection of banks under our review, some banks individually faired worse in 2020 compared to 2019. FBNH, Stanbic IBTC, and Access Bank all recorded lower net interest income in the first 9 months of 2020 compared to the same period in 2019. Significant gains over the prior year were however recorded with the other banks.

READ: Access Bank Plc posts N102.3 billion profit in 9M 2020, up by 15.7% YoY

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What is driving Margins

Banks are recording higher net interest income largely because interest rates on deposits are at near-record lows.

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This drive down in the cost of funds helps boost the income of banks because they are also yet to significantly drop their lending rates.

In the first 9 months of the year, the banks reported total loans and advances of N1.6 trillion, 14% higher than the N1.4 trillion reported at the end of 2019.

READ: FBN Holdings Plc posts Profit of N21.9 billion in Q3 2020

Banks have also reported generally improved pre-tax earnings, posting a combined N737 billion in the first 9 months of 20120 compared to N723 billion in the same period last year.

The better than expected results has triggered a boost to their share price. Banks have also seen their share price rally in recent weeks as investors finally recognize their low valuations amidst strong earnings.

The Banking sector index is up 14.72% year to date and only fell last week after investors embarked on cashing out their profits.

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Financial Services

AXA Mansard Insurance Plc set to raise company’s share capital to N18 billion

AXA Mansard Insurance Plc. has announced its plans to embark on a share consolidation and issuance of bonus shares exercise.

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AXA Mansard Insurance Plc

AXA Mansard Insurance Plc. has announced its plans to embark on a share consolidation and issuance of bonus shares exercise required to take the company’s share capital to N18 billion.

This announcement is contained in a notice, signed by the firm’s Secretary, Mrs. Omowunmi Mabel Adewusi and sent to the Nigerian Stock Exchange market, as seen by Nairametrics.

What you should know

The corporate decision is part of the resolutions of the Board of Directors of AXA Mansard Insurance Plc. subject to shareholders’ approval and other regulatory requirements.

Some key highlights of the notice are:

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  • That the Management of the Company is set to carry out the share consolidation and issuance of bonus shares exercise required to take the Company’s share capital to N18billion.
  • That the bonus issue exercise may be done at once or in phases, provided the Company meets the September 30, 2021 deadline set by the Commission.
  • That subject to regulatory approvals, the Company would hold an Extra Ordinary General Meeting to obtain shareholders’ approval of the Share consolidation and Bonus Share
  • That the Board and Management be and are hereby authorized to appoint such advisers, professionals, and parties that they deem necessary, upon such terms and conditions that the Directors may deem appropriate with regard to the aforementioned Share Consolidation and Bonus Issue Exercise.
  • That the Board of Directors be and are hereby authorized to take all steps and do all acts that they deem necessary for the successful implementation of the above stated resolutions.

Why it matters

The corporate action is a deliberate and strategic way of meeting up with the new and revised minimum paid up share capital requirements for composite firms, which is currently pegged at N18 billion.

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Financial Services

CRR Compliance: Banks suffer another N226 billion in CRR debits

Nigeria banks have had their vaults debited of N226 billion by the Central Bank of Nigeria in the apex bank’s latest CRR sequesters.

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Deposit Money Banks (DMBs) have collectively suffered a debit of N226 billion in compliance with the Cash Reserve Requirements (CRR) fixed by the CBN.

According to a reliable source, the debit occurred in the week ended November 20, 2020. This follows a whopping N917.5 billion debit recorded a month ago as reported by Nairametrics. The central bank imposed CRR sequesters on banks that fail to meet its minimum lending targets as a percentage of deposits.

READ: Nigerian economy slips into recession as GDP contracts by 3.62% in Q3 2020

In its September monetary policy communique, the bank claimed its policy measures have led to increased lending in the economy emphasizing the need to double down on it.

“The Differentiated Cash Reserves Requirement (DCRR) and the minimum Loan-to-Deposit Ratio (LDR), have ensured a significant stream of credit to the real economy. As at end-August 2020, aggregate bank credit had risen by about N3.7 trillion relative to its level in May 2019, when the LDR policy was introduced. The outlook for credit to the economy remains positive given that these policies are still in place and, importantly, that the banking industry continues to be resilient.”

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READ: Africa’s internet economy has the potential to reach 5.2% of the continent’s GDP by 2025 – Goggle/IFC

READ: Crypto: Alpha Finance gains 400% in 10 days, supported by a big bank

                                            Source: Nairalytics Research

READ: Banks guaranteed N3.6 billion loans to farmers under the ACGSF – CBN

What you should know

  • Out of the N226 billion debited for November 2020; top five (5) banks in Nigeria – FUGAZ, bore the biggest brunt, with a combined debit of N137.5 billion, implying that the top 5 banks accounted for 60.8% of the total debit for this month.
  • The break down of the debit for the top five banks are; GT Bank (N59.5 billion), Zenith Bank (N30 billion), FBN (N20 billion), Access (N18 billion), and UBA (N10 billion).
  • Nairametrics had earlier reported that CBN increased the CRR in January by 5% to 27.5% to address monetary-induced inflation, whilst retaining the benefits from the CBN’s LDR policy.
  • Cash Reserve Ratio (CRR) is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank. CRR is set according to the guidelines of the central bank of a country.

READ: FUGAZ Banks suffer N1.9 trillion in CRR Debits in Q2

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