A minimum capital base of N100bn has been proposed for commercial banks in Nigeria by the Central Bank of Nigeria (CBN).
TRhe Apex Bank revealed this while presenting his five-year term agenda.
According to the CBN Governor, Godwin Emefiele, the current capital base of the banks are no longer realistic, principally because of the massive devaluation of the Naira since the benchmark was set about 10 years ago.
It could be recalled that the apex bank under Lamido Sanusi as governor had pegged minimum capital base of banks at N15 billion (US$113 million at the exchange rate of USD/132.85 then) for Regional Licence, N25 billion (US$188m) for National Licence and N100 billion (US$753m) for International Licence.
But at the current exchange rate of 360 naira to a dollar, the value of the Regional Licence has gone down to US$49 million from US$113 million, while National Licence is now down to US$82million from US$188 million with the International Licence down to US327.9 million from US$753 million.
Emefiele had although stated that the apex bank was looking at benchmarking with the Investors and Exporters, Import and export forex window rate of USD/360, he said the apex bank may use the official rate of USD/305 to minimise the immediate impact on the banks.
Consequently, barring other considerations, at current official exchange rate of USD/ 305 the value of Regional Licence would be N35 billion, up 133 percent from N15 billion, while that of National Licence would be N57.3 billion, up 128 percent from N25 billion and International Licence at N230 billion, up 130 percent from N100 billion.
The percentage point increase, during Chukwuma Soludo’s tenure, has a capital base adjustment of 1,150 percent to N25 billion from N1billion, while Joseph Sanusi, the CBN Governor before Soludo, had effected a 1,900 percent increase.
“In the next five years, we intend to pursue a programme of recapitalising the banking industry so as to position Nigerian banks among the top 500 in the world. Banks will, therefore, be required to maintain a higher level of capital, as well as, liquid assets in order to reduce the impact of an economic crisis on the financial system.
“It was Governor (Chukwuma) Soludo, in 2004 who did the last recapitalisation we had, moving the capitalisation from N2 billion to N25 billion.
“I must commend that effort because it resulted in positioning Nigerian banks, not only in Africa but to become among top banks in the world, in terms of capitalisation,” he stated.
He added that the decision has also helped strengthen the banks to take on large transactions which they badly needed.
“Today, when you relate N25 billion in 2001 exchange rate, which was about N100/$1, N25 billion was about $200 million. Today if you relate N25 billion at N360/$1, you can see that it is substantially lower than $75 million.
“What we are trying to say is that the capitalisation has weakened quite substantially and there is a need for us to say it is time for us to recapitalise Nigerian banks again.
“It is a policy thrust which will be discussed at the Committee of Governors’ Meeting and of course, the framework for the recapitalization of Nigerian banks would be unfolded for the whole world to know.”
The governor further stated that in the next five years, his team would work closely with the fiscal authorities to ensure macro-economic stability, double-digit growth, single-digit inflation and greater access to finance for businesses.
DMO Reveals Nigeria’s Debt Under Buhari’s Administration
As of March 31, 2019, the Debt Management Office, DMO, released the Public Debt Data which included the Federal Government of Nigeria’s (FGN) internal and additional debts, the 36 Federal States and the Federal Capital Territory (FCT).
The numbers have been published on Wednesday in a declaration on DMO’s Official webpage.
Read DMO’s statement below:
“At ₦24.947 Trillion (US$ 81.274 Billion) as at March 31, 2019, the Total Public Debt grew marginally by 2.30% when compared to the figure of ₦24.387 Trillion (US$ 79.437 Billion) as at December 31, 2018.
“The increase of ₦560.009 Billion in the Total Public Debt in Q1 2019, was accounted for largely by Domestic Debt which grew by ₦458.363 Billion.
“Increases were recorded in the Domestic Debt Stock of the FGN, States and the FCT. External Debt also increased by ₦101.646 Billion during the same period.
“In relation to the Debt Management Strategy, the Ratio of Domestic to External Debt stood at 68.49% to 31.51% at the end of March 2019.
“The Total Public Debt to GDP Ratio was 19.03% which is within the 25% Debt Limit imposed by the Government,”
The Debt Management office has initially published one of this articles in 2018 saying the Buhari administration is in N26 Trillion debt.
Here is a complete break down of the debt:
% of Total
|A.||Total External Debt||25,609.63||7,860,875.93||31.51%|
|FGN + States & FCT only||25,609.63||7,860,875.93||31.51%|
|B.||Total Domestic Debt||55,664.46||17,086,204.66||68.49%|
|States & FCT||12,942.77||3,972,784.37||15.92%|
|c.||Total Public Debt(A+B)||81,274.09||24,947,080.59||100%|
AFCFTA: Sahara Group Lauds Buhari For The Signing The Deal
Kola Adesina, the MD of the Sahara Group, stated that the African Continental Free Trade Agreement (AfCFTA) can change the energy industry of Africa. The black continent can profit from this by aligning regulations, taxation, cross-border workforce cooperation and new capital development.
Lately, AfCFTA got a major surge when the Nigerian President, Muhammad Buhari signed Nigeria to AfCFTA. The world’s biggest free trade area with a total gross domestic product of $3.4 trillion encompassing a market of more than 1.2 billion individuals.
Mr. Adesina said that the new deal will:
“propel governments and the private sector to take strategic steps towards repositioning the power industry across the continent.
“The energy sector has several components along the value chain that require interconnectivity of all stakeholders to make uninterrupted power available. With AfCFTA, Africa now has a platform to critically reconsider harmonized major infrastructure developments as well as the aggregate contribution and enabling legislation, policies and tariffs required to shore up power supply across the continent
“Nigeria has an abundance of gas deposits. With a power plant located in Nigeria we can develop transmission infrastructure that covers West Africa and achieve electrification of the entire region with the gas fired plants from Nigeria. These are some of the conversations and partnerships that I believe AfCFTA will trigger across the continent,”
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