Daily Independent (Lagos)
Kingsley Ighomwwenghian
8 July 2009
(Page 2 of 2)
According to the Guidelines for commercial Agriculture Scheme, "state governments and the Federal Capital Territory Authority could also borrow up to 20 per cent of the bond proceeds for on-lending to farmers. The ceiling to the States may be reviewed as the need arises by the Project Management Committee (PMC)."
A commercial agricultural enterprise is defined under the scheme as "a commercial enterprise is any farm or agro-based enterprise with agricultural asset (excluding land) of not less than N350 million for an integrated farm with prospects of growing the assets to N500 million within the next three years and N200 million for non-integrated farms/agro-enterprise. This however, does not apply to loans obtained by state government for on-lending."
Target agricultural commodities include cultivation of target like rice, cassava, cotton, oil palm, wheat, rubber, sugar cane, Jatropha carcus, fruits and vegetable; livestock- dairy, poultry, piggery; and fisheries. Credit support to the target commodities is to be administered along the entire value chain of; Production, Storage, Processing, Market and Enterprise development," according to the CBN
The objectives of the scheme, according to the guidelines include fast-tracking development of the country's agricultural sector by providing credit facilities to commercial agricultural enterprises at a single digit interest rate.
Price manipulation
AP had in a paid advertorial recently accused Nova Finance & Securities Limited, acting for Dangote of manipulating its share price between February 11 and March 20, 2009. The SEC investigating committee heard from representatives of the various parties including AP, Nova Finance, Dangote and Afribank Registrars, and found Nova Finance, a stock broking firm, guilty of flouting several sections of the Investments & Securities Act (ISA) 2007 and the industry code of conducts. The commission suspended Nova for a year from April 16, 2009, in line with Section 38(4) of the ISA. Eugene Anenih, Nova's CEO was "disqualified from being employed in any arm of the securities industry for a period of five years with effect from April 16, 2009." Anenih was also been referred to the Economic & Financial Crimes Commission (EFCC) for further investigation and possible prosecution under section 115, among others.
The commission did not find any evidence showing that Dangote instructed Nova Finance or its CEO to effect the transactions in AP, which were allegedly done on his behalf.
ATM In Public Places
Within the period under review, the CBN ordered banks to remove their automated teller machines from public places, especially airport and hotel lobbies across the country. In the April 7, 2009 circular to all banks, the CBN expressed anxiety over the crowding of public places as banks compete for space.
Signed by James Olekah, Director, Banking Operations Department, the circular entitled "deployment of Automated Teller Machines" recalled that at the onset, the ATM Consortium (ATMC) was the body mandated solely to deploy the electronic payment system in public places, while the banks will concentrate on installing same only within their premises. The CBN directed banks to "henceforth restrict the deployment of ATMs to their premises. Banks are further advised to redeploy all existing ATMs in public places to their premises on, or before June 30, 2009."
The apex bank also hinted of plans to license another ATM consortium in addition to the existing one, both of which shall be responsible for the deployment of ATM in public places in line with best practice. This, the statement added, is in line with the policy on joint payment infrastructure and to effectively meet growing public demand for the services the industry.
So far, there are about boast of 8,138 ATMs, a far cry from what is needed, out of which 55 per cent are located outside bank branches, many have queried the move, which they believe has not taken convenience of customers into consideration.
Femi Omoyele, in his opinion published by a newspaper a fortnight ago, regretted that this could have huge impact on the industry, as about 55 per cent of these machines are located outside of bank branches. This, it is believed, would lead to huge cost of pulling down to be erected again in designated areas. He regretted that that apex bank by saying only the consortium can install ATMs in public places has misplaced its priority at this time. He wondered why the CBN issued such a directive knowing the relief and convenience brought by the advent of the machines to bank customers. The directive, he believes, amounts to the CBN wanting to take Nigerians back to the past
Pegging Of Deposit, Lending Rates
Worried by the soaring rates in the country, the Bankers' Committee pegged the maximum deposit rate at 15 percent per annum from the former 21 percent, while prescribing 22 per cent maximum lending rate 22 percent per annum from over 30 percent hitherto. All other charges are also not to exceed 2.0 per cent per annum, decisions, which according to Soludo were taken at a breakfast meeting where it also noted the a need to moderate competition and lay greater emphasis on the safety and soundness of the banking system.
To dampen the inter-bank interest rates, he disclosed that the apex bank would lend to banks at no more than 500 basis points above its monetary policy rate at the discount window (that is maximum of 14.75 percent at the current MPR).
Forex Concerns
The CBN further streamlined purposes for which funds sourced from the official market can be used. In its circular titled: "Use of RDAS Funds for Investment in securities denominated in foreign currencies and establishment of offshore subsidiaries/branches," the CBN forbade the use of funds sourced from the Retail Dutch Auction System (RDAS) for opening branches by banks and companies. Instead, the apex bank directed that such endeavours must only be financed from other sources.
According to the apex bank, the RDAS "shall not be eligible for investment in securities denominated in foreign currencies abroad and setting up of offshore subsidiaries/branches of Nigerian companies."
The CBN earlier in the year returned to the RDAS, which was earlier abandoned in 2006 for the Wholesale Dutch Auction System (WDAS), under the new regime, banks can now only buy (foreign exchange from the CBN) and sell to end users, while such purchases must be supported with appropriate documentations. "Because funds are fungible, people can buy and use it to trade among themselves," the governor said, adding that it is now an offence to misreport to the apex bank.
The apex bank later pegged the price that banks can buy and sell foreign exchange at 1.0 per cent above the rate the CBN (benchmark) rate. This, he continued, is an indication that the CBN is committed to ensuring a stable exchange rate for the Naira against other major currencies of the world.
The CBN has since adopted a zero tolerance for erring banks, as defaulters risk such punishment ranging from blacklisting any bank official cut whether he is the bank treasurer or chief executive. Depending on the weight of the offence, the CBN governor warned that sanction could also be as severe as withdrawing the foreign exchange dealership license of the erring bank.
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