Money market
CBN issues guidelines for operation of Credit Guarantee Companies
The Central Bank of Nigeria (CBN), having reviewed and incorporated comments from various stakeholders, has issued guidelines for the regulation and supervision of Credit Guarantee Companies (CGC) in Nigeria.
This, it says, would provide guidance on regulatory expectations from credit guarantee companies in Nigeria.
A CGC is an institution licensed by the CBN with the primary objective of providing guarantees to banks and other lending financial institutions licensed by the CBN, hereinafter referred to as Participating Financial Institutions (PFIs), against the risk of default by borrowers.
These guidelines, according to the apex bank, stipulate the minimum standards for the operations of CGCs in Nigeria.
“The provisions of these guidelines shall apply to CGCs licensed by the CBN, PFIs shall comply with the provisions of these guidelines as it relates to their activities. PFIs may apply for and obtain a guarantee from only CGCs licensed by the CBN, for any loan granted to MSMEs.
“A CGC may guarantee only loans originated by PFIs excluding impaired assets that had been acquired,” the banking sector regulator stated in the guideline obtained from its website.
The application for CGC licence shall be processed in two stages, namely:
Approval-in-Principle (AIP) and final licence.
It clarified that any promoter(s) seeking a licence to operate a CGC in Nigeria shall apply in writing to the governor of the CBN and submit the following documents with the application: “A non-refundable application fee of N100,000 only, or such other amount as the CBN may specify, in bank draft payable to the CBN or CGC application and licensing account;
“Evidence of deposit of the specified minimum paid-up capital requirement of N10 billion or any other amount that may be prescribed by the CBN into FPRD CGC Share Capital Account. Promoters should note that in compliance with the BOFIA 2020, the investment of share capital deposit shall be subject to availability of investment instruments. Upon the grant of licence or otherwise, the CBN shall refund the sum deposited to the promoters, together with the investment income, if any, after deducting administrative expenses and tax on the income.
“Evidence of capital contribution made by each shareholder, evidence of name reservation with the Corporate Affairs Commission (CAC), detailed business plan or feasibility report,” it stated.
The CBN said this is part of its efforts to stimulate lending to Micro, Small and Medium Enterprises (MSMEs).
The guidelines stipulate minimum licensing governance and prudential requirements for prospective Credit Guarantee Companies.
Fees, charges and commission by a CGC shall follow the applicable guide to charges by banks and other financial institutions, or any other directive as may be specified by the CBN from time-to-time, the bank further stated, adding that it reserves the right to revoke a CGC licence where there is evidence of insolvency, misuse of the licence, unauthorised cessation of business for any continuous period of six months or any period aggregating six months during a continuous period of 12 months, or breach of the CGC guidelines.
The Securities and Exchange Commission (SEC) says the regulation of crypto-currencies and other digital assets are under its full control and regulation.
The Director-General of SEC, Dr Emomotimi Agama, said this at the first Annual Conference of the Association of Capital Market Academics of Nigeria (ACMAN) on Thursday in Abuja.
Agama described crypto assets as digital or virtual assets utilised by cryptography for security.
He said there were over 15,000 crypto currencies created which had Bitcoin as the most popular.
The director-general said that the regulatory landscape for cryptocurrency was not yet firm even in the United States.
According to him, Nigeria’s crypto transaction volume had reached $56.7 billion between July 2022 and June 2023, hence the efforts by SEC.
Agama quoted a survey which said that 33.4 per cent of Nigerians were using or owned crypto currencies.
”Secrecy of crypto usage is what is driving its adoption by the youth.
”Some people don’t have bank accounts but they have crypto wallet.
”Crypto is like an air, can you cage it, No. What you can do is to build a risk management around it, ”he said.
Agama said the commission would continue to educate investors on the risks associated with digital assets to be able to make wise investment decisions.
Chief Osita Izunaso, the Chairman, Senate Committee on Capital Market, said the country required effective crypto regulation to benefit from the gains of the market.
Izunaso said the absence of effective regulation on crypto currencies had exposed so many investors to fraud.
He called for synergy from all stakeholders to harness opportunities in the crypto space.
The Director-General of the Debt Management Office, Ms Patience Oniha, called for awareness creation to educate investors to make informed decisions.
Mr Bello Hassan, the Managing Director of the Nigeria Deposit Insurance Corporation, said that crypto currencies had come to stay as younger people were patronising the market.
Hassan called on SEC to constantly update investors with unbiased information of the associated risks of trading in the crypto market.
Prof. Uche Uwaleke, the President, ACMAN, said the conference was aimed at considering the possibilities of expanding the financial sector regulations.
Uwaleke said the conference would also explore ways to accommodate crypto assets within the regulatory space.
ACMAN conferred awards on many stakeholders in the financial and capital markets for their various contributions in moving the markets forward.
The conference was organised by ACMAN in collaboration with SEC.
By Opeyemi Abdulsalam
The Nigerian currency, Naira, maintained its stability against the United States dollar at the official foreign exchange market on Wednesday, trading at N1,507.83 per dollar.
According to data from FMDQ, this represents a marginal change of N0.04 from the previous day’s rate of N1,507.79 per dollar.
At the parallel market, the naira also maintained its exchange rate of N1,505 per dollar, unchanged from the previous day.
Bureau de Change operators in the Wuse Zone 4 area of Abuja confirmed the rates, with one operator, Dayyabu Ashiru, stating that they sell at N1,505 per dollar and buy at N1,495.
“We sell at N1,505 per dollar and buy at N1,495,” Dayyabu Ashiru, a Bureau de Change operator in Wuse Zone 4 told a source on Wednesday.
The stability of the naira comes on the heels of recent reforms implemented by the Central Bank of Nigeria (CBN), which have attracted a significant inflow of $24 billion into the country in the first quarter of 2024, according to the CBN Governor’s recent interview with Bloomberg Television.
In a related development, the CBN on Tuesday issued a fresh directive permitting International Money Transfer Operators and all banks to pay diaspora remittances in naira.
O3 Capital, a leading Nigerian fintech and the country’s first non-bank credit card issuer, has disclosed that the launch of its four American Express (‘Amex’) cards have been met with huge demand both in and out of Nigeria.
Chief Executive Officer of O3 Capital, Abimbola Pinheiro, in a statement said, “We are delighted with the amazing response to our launch of American Express cards in Nigeria.
“The success of the Green and Platinum cards, in particular, shows the market’s enthusiasm for modern financial solutions. We are proud to support both individual and corporate customers in their financial journeys.
“Our cards launch has also struck a major chord with established banks and fintechs – many of whom have approached us to partner with them. The future for O3 is exciting.
“We are also pleased to have received a positive acknowledgment from the Government of Nigeria, to our exciting developments – and which is aligned with the Financial System Strategy 2020 of the Central Bank of Nigeria (CBN), and the main thrust of a ‘cashless Nigeria’,” he stated.
Abimbola further said the acknowledgment underscores the importance of O3 Capital’s contribution to the country’s financial ecosystem.
In May 2024, O3 Capital announced an agreement with American Express to issue four new American Express credit cards: the O3 American Express® Green Card for consumers, the O3 American Express Gold Card for consumers, and the O3 American Express Platinum® Card for consumers; and the O3 American Express Gold Business Card for small- and medium-sized enterprises (SMEs).
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