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Bank of Industry seals landmark $1 billion syndicated term loan

The Bank of Industry has just successfully concluded a landmark US$1 billion loan syndication transaction.

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Bank of Industry seals landmark $1 billion syndicated term loan, Female entrepreneurs get N26 billion BOI loans , BOI donates N700 million to aid fight against coronavirus, BOI denies running a loan empowerment scheme

The Bank of Industry has announced the successful conclusion of a landmark $1 billion loan syndication transaction, in a bid to improve its capacity to support MSMEs.

This is according to a verified post on the website of the Bank of Industry, seen by Nairametrics.

READ: Federal Government obtains $20 billion investment in aviation

Nairametrics gathered that the transaction is the third major international debt syndication deal successfully concluded by BOI within the last 3 years. Prior to this deal, the bank had earlier in 2018 raised the sum of $750 million with the support of the African Export-Import Bank “Afreximbank”, this loan has been fully repaid.

In addition, in March 2020, the bank pulled off another €1 billion loan deal (Lead Arranged by Afreximbank, Credit Suisse, Rand Merchant Bank and Sumitomo Mitsui Banking Corporation Europe Limited (SMBC)).

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READ: Bank of Industry supports businesses with N3.9 billion loan 

Despite the challenges posed by the COVID-19 pandemic, Nairametrics learnt that the key factors which led to the success of the deal include; the impressive credit ratings of the bank, its ISO certifications in both Quality Management Systems and Information Security, as well as its strong strategic partnership with domestic commercial banks, evident by the continuous provisions of credit enhancements and de-risking tools to BOI customers.

READ: BoI’s MD complains that SMEs don’t repay loans, Nigerians react 

What you should know

  • According to Investopedia, Loan Syndication is the process of involving a group of lenders in funding various portions of a loan for a single borrower. Loan syndication most often occurs when a borrower requires an amount too large for a single lender to provide or when the loan is outside the scope of a lender’s risk exposure levels.
  • In lieu of the aforementioned point, Nairametrics gathered that 28 international financial institutions and funds participated in this transaction, which was initially pegged at $750 million, and later upgraded to $1 billion due to over-subscription.
  • African Export-Import Bank, Credit Suisse, African Finance Corporation, Rand Merchant Bank and Sumitomo Mitsui Banking Corporation Europe Limited (SMBC) are Mandated Lead Arrangers and Bookrunners of the deal, while the Export-Import Bank of China is the mandated lead arranger.
  • The Central Bank of Nigeria supported BOI by providing a full guarantee for the facility and a 100% currency swap to mitigate the foreign exchange rate risk.
  • Between 2015 and October 2020, the Bank of Industry with the support of its various stakeholders disbursed over ₦945 billion to 3,013,087 enterprises, thus creating over 6.87 million estimated direct and indirect jobs.

READ: BoI to extend grant to 110,000 MSMEs in Borno and others

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What they are saying

Commenting on the recent development, a part of the notice reads,

  • “With the successful conclusion of this deal, the Board and management of Bank of Industry is confident that the bank is now better positioned to catalyse domestic production and facilitate job creation on a transformational scale; enhance local industry competitiveness; attract domestic and foreign investments; integrate our local industries into domestic, regional and global value chains; grow our export earnings and positively impact the overall economic development of Nigeria in line with its mandate and especially in light of the planned commencement of the African Continental Free Trade Agreement (AfCFTA) in January 2021.”

READ: BOI denies running a loan empowerment scheme

Why it matters

The deal affords the Bank the opportunity to improve its lending capacity in support of MSMEs across key sectors in Nigeria, providing medium and long term loans with moratorium benefits.

This is in line with the present administration’s goal to resuscitate the Nigerian industrial sector, creating 10 million jobs through leveraging on the Nigeria Industrial Revolution Plan and the Economic Recovery and Growth Plan.

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Chidi Emenike is a graduate of economics, a Young African Leadership Initiative Fellow and an Investment Foundations certificate holder. He worked as a graduate Teaching Assistant in the Federal College of Education Kano and is also a trained National Peer Group Educator on Financial Inclusion

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Financial Services

CBN issues framework for QR payments

CBN has issued a framework that would guide Quick response (QR) code payments in Nigeria.

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The Central Bank of Nigeria has issued the framework that would guide Quick Response (QR) Code Payments in Nigeria.

This is a proactive move by the Apex bank towards ensuring the safety and stability of the Nigerian Financial System, as well as promoting the use and adoption of electronic payments and foster innovation in the payments system.

READ: Over 1 million people took loans from banks below 20% interest rate in 1 year- CBN

Quick Response (QR) Codes are matrix barcodes representing information presented as square grids, made up of black squares against a contrasting background that can be scanned by an imaging device, processed and transmitted by appropriate technology.

The codes are used to present, capture and transmit payments information across payments infrastructure and further enable the mobile channel to facilitate payments and present another avenue for promoting electronic payments for micro and small enterprises.

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READ: Binance offers DeFi coders $100,000; DeFi market value hits $8 billion

What you should know

  • Quick Response (QR) codes are two-dimensional bar codes. QR code payments allow merchants to receive payments from customers simply by scanning generated QR codes using a smartphone camera. The QR code payments carry the purchase transaction information to the mobile device of the buyer/customer.
  • Making payments via QR codes is very secure. It is because the QR code is nothing but just a tool that is used to exchange information. Any data which is transferred via QR codes is encrypted, thus making the payment secure.
  • The Participants in QR Code Payment in Nigeria include Merchants, Customers, Issuers (Banks, MMOs and Other Financial Institutions), Acquirers (Banks, MMOs and Other Financial Institutions) and Payments Service Providers.
  • QR payments are increasingly becoming a popular means of payments in Nigeria, and some industry players would see the framework as a perfect way of regulating the sector.
  • QR codes are capable of storing lots of data. But no matter how much they contain, when scanned, the QR code should allow the user to access information instantly. It can be used for payments, sharing contacts and Wi-Fi passwords and lots more.
  • The popular and common argument is that since POS machines are expensive, cheaper options such as QR scanners should be pushed forward to local traders.

READ: Telecoms, FSI to hugely boost Nigerian Economy in 2021 – CWG’s Business Director

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Financial Services

CBN unveils framework for regulatory sandbox operations

CBN has issued a regulatory Sandbox framework towards engaging with the operators in the Fintech space.

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The Central Bank of Nigeria has taken proactive steps towards ensuring more flexible ways of engaging with operators in the payment solutions/fintech space, in a bid to tacitly regulate how operators churn out their new products and services.

To this end, CBN has introduced Regulatory Sandbox which is a formal process for firms to carry out live tests of new, innovative products, services, delivery channels, or business models in a controlled environment, with regulatory oversight, subject to appropriate conditions and safeguards.

It is expected that the CBN would stay abreast of innovations while promoting a safe, reliable and efficient Payments System to foster innovation, without compromising the delivery of its mandate.

What you should know

  • A regulatory sandbox is a framework set up by a regulator that allows FinTech start-ups and other innovators to conduct live experiments in a controlled environment under a regulator’s supervision. It encourages innovation that can improve the design and delivery of payment services.
  • No doubt, regulations around Fintech are still emerging and developing, there is still a high entry barrier for new entrants and it is expected that Sandboxes would present them with a safe testing environment and ease regulatory onboarding.
  • Sandbox is quite suited for new products, services or solutions that are either not contemplated under the prevailing laws and regulations, or do not precisely align with existing regulations.
  • Sandbox is intended to promote effective competition, embrace new technology, encourage financial inclusion and improve customer experience, with a view to engendering public confidence in the financial system.
  • The framework provides guidance on the establishment, the applicable rules and operations of a Regulatory Sandbox for the Nigerian Payments System, as well as providing standards for the operations of a Regulatory Sandbox, prescribes the processes and procedures for analysing, collecting, updating, integrating, and storing consumer data and information.

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Financial Services

Standard Chartered Nigeria Plc crashes ‘personal loans’ interest rate to 1% monthly

The Bank crashed its interest rate to one of the lowest in Nigeria’s lending space.

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Standard Chartered: Easy Banking at no cost

Standard Chartered Nigeria Plc, has crashed its interest rate for ‘personal overdraft’ from 1.25% to 1% per month, according to information seen by Nairametrics.

Nairametrics understands that this review makes the rate, one of the lowest in Nigeria’s lending space, especially when compared to other players in the industry.

READ: Telecoms, FSI to hugely boost Nigerian Economy in 2021 – CWG’s Business Director

This is a strategic move by the bank as it makes major inroads into Nigeria’s competitive but lucrative retail end of lending. The retail end which includes divisions such as personal loans, payday loans is highly competitive with Fintechs, and other banks all jostling for the same market.

READ: InfraCredit guarantees TSL’s issuance of a N12 billion 10-year Series 1 Infrastructure Bonds

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Despite efforts by some of the banks to restructure their loan books due to the adverse effect of the pandemic, banking sector credit to the private sector improved to N19 trillion in the third quarter of 2020 representing a 15.6% increase from 2019.

READ: Nigeria’s GDP growth to rebound between 1.7% and 2.0% in 2021 – United Capital report

Notably, according to a CBN survey on credit conditions as reported by Nairametrics, supply of secured and unsecured credits to households is expected to increase in the first quarter of 2021, having recorded an increase in the previous quarter (Q4 2020).

Meanwhile, a cursory review of lending data on the websites of some sampled financial institutions, revealed that some financial institutions retained or downwardly reviewed their monthly interest rate on payday loans. For example, GT Bank Quick credit crashed its rate from 1.75% to 1.33%.

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READ: Over 1 million people took loans from banks below 20% interest rate in 1 year- CBN

Furthermore, UBA Click credit maintained its 1.58% charge, Zenith Bank term loan remained at 2.16%, Renmoney retained its 2.98% interest rate, and a host of others.

READ: Nigeria Fintech startup, CredPal raises $1.5million funding

What you should know:

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  • According to Standard Chartered, Personal Overdraft facility provided by Standard Chartered Plc is a revolving facility targeted at salaried customers with 12 months tenor and usually based on 50% of the net monthly salary of customers.
  • A minimum salary qualification of N50,000 is specified.

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