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June 2022: Microfinance banks’ loan to private sector hits N1.12trn

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Loans by Microfinance banks surged to N1.12 trillion as of the end of June 2022, representing a 115.7% increase compared to N521.25 billion recorded as of the end of 2021. This means that microfinance banks issued an aggregate of N602.8 billion new loans.

This is according to data culled from the Central Bank of Nigeria (CBN). Notably, most of the loans were to the private sector of the economy at N1.11 trillion, while N7.26 billion of the loans are to other financial corporations.

Microfinance is a category of financial services targeting individuals and small businesses who lack access to conventional banking and related service. The increase in the loans by microfinance banks is in line with the CBN’s mandate to increase access to credit in the real sector.

Although the Central Bank has increased the benchmark interest twice this year to 14 per cent, in a bid to curb the rising rate of inflation in the country, which could discourage businesses from taking more loans from banks.

However, banking sector credit to the private sector hit a record high in June 2022, increasing by 1.5 per cent to stand at N39.27 trillion, from N38.68 trillion recorded in the previous month and an 11.6 per cent increase when compared to N35.19 trillion recorded as of December 2021.

On the flip side, credit to government by commercial banks, declined marginally on a month-on-month basis to N17.99 trillion, although significant increase when compared to N13.33 trillion recorded as of the beginning of the year.

Meanwhile, microfinance banks’ claims on the Central Bank fell sharply to N7.74 billion, a 67.9 per cent decrease compared to N24.09 billion recorded as of December 2021.

Net foreign assets stood at a negative of N22.96 billion as of June 2022, a marginal movement from the deficit of N22.78 billion recorded as of the reference period.

Deposits to microfinance banks excluded from broad money stood at N625.87 billion in June 2022 from N72.92 billion recorded as of December 2021.

Also, other deposits included in broad money increased from N300.06 billion recorded as of December 2021 to N353.97 billion in June of this year.

Additionally, transferable deposits and securities other than shares both of which are included in broad money as of June 2022 stood at N106.62 billion, and N988.85 million respectively.

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FG urges NIPSS members on creative solutions to national challenge

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The Minister of Budget and Economic Planning, Atiku Bagudu, has urged members of the National Institute for Policy and Strategic Studies (NIPSS), to devise creative solutions to Nigeria’s social and economic challenges.

Bagudu received  participants of the Senior Executive Course 46 of the institute in his office on Monday in Abuja.

According to him, some of the issues confronting Nigeria  as a nation might require out of the box solutions.

“The NIPSS was created in the wisdom of our forefathers, to train senior management personnel that can bring unusual solutions to problems confronting us,” he said.

He urged the participants to eschew self-interest and make decisions that can assist the nation to make better choices.

Bagudu  said that the national planning function of the ministry comes from the National Planning Commission.

He said that the digital economy is one area that the ministry was looking at for mass youth engagement and economic prosperity.

“Digital economy is an evolving process.which the country will have to leverage digital for overall growth and development.

“It is a new reality. Today trading platforms are closing shop and increasingly going digital.

“Nigeria needs to respond positively and reap benefits from the digital economy. But we have to make the space safe through effective regulation.

“Some countries have data protection laws which enable them to check and regulate excesses in the digital space,” he said.

The Minister commended the law enforcement agencies for promptly going after digital platforms like Binance, which was used to disrupt the foreign exchange market and to weaken the Naira.

He also commended the Governor of the Central Bank of Nigeria (CBN), Yemi Cardoso, for his various monetary policy decisions that restored confidence in the Nigerian economy.

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Cardoso to speaks at IMF meeting on FX reforms

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The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso will speak on foreign exchange (FX) market reforms at the ongoing International Monetary Fund (IMF) Spring Meetings on Wednesday in Washington D.C.

The meetings of the Boards of Governors of the IMF and the World Bank Group (WBG) bring together central bankers, ministers of finance and development, parliamentarians, private sector executives, representatives from civil society organisations and academics to discuss issues of global concern, including the world economic outlook, poverty eradication, economic development, and aid effectiveness.

Also featured are seminars, regional briefings, press conferences, and many other events focused on the global economy, international development, and the world’s financial system

Cardoso assumed office as the Governor of the CBN in September 2023. Since then he has introduced some new FX policies and adjusted some existing ones to ensure the stability of the naira.

According to Cardoso, the exchange rate in Nigeria has increased/depreciated due to the simultaneous occurrence of two factors: a decline in the supply of US Dollars coinciding with a surge in the demand for US dollars.

He said in February 2023 that the foreign exchange market is currently facing increased demand pressures, causing a continuous decline in the value of the naira. Factors contributing to this situation include speculative forex demand, inadequate forex supply due to non-remittance of crude oil earnings to the CBN, increased capital outflows, and excess liquidity from fiscal activities.

To address exchange rate volatility, he said a comprehensive strategy has been initiated to enhance liquidity in the FX markets.

This includes unifying FX market segments, clearing outstanding FX obligations, introducing new operational mechanisms for BDCs, enforcing the Net Open Position limit, and adjusting the remunerable Standing Deposit Facility cap.

As part of measures to control inflation and stabilise the naira, the CBN last month raised its benchmark interest rate, known as the Monetary Policy Rate (MPR) by 200 basis points to 24.75 percent from 22.75 percent in February 2024.

In her second term message, Kristalina Georgieva, IMF managing director, who was recently reappointed by the executive board of the IMF, said, “I am deeply grateful for the trust and support of the Fund’s Executive Board, representing our 190 members, and honoured to continue to lead the IMF as managing director for a second five-year term.”

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PenCom recovers N12.45bn from erring employers

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The National Pension Commission (PenCom) said it has recovered N12.45 billion from employers that failed to contribute towards their employees retirement.

The recovery would indeed help in wealth creation for the workers, thereby securing them against old age poverty in retirement.

PenCom in its 4th quarter 2024 report, said it has maintained the services of Recovery Agents (RAs) for the recovery of unremitted pension contributions and penalties from defaulting employers.

It submitted that during the quarter, the sum of N319,468,587.45 comprising principal contributions N128,176,029.95 and penalties N191,292,557.50 was recovered from 32 defaulting employers.

It noted that meanwhile, the Commission Secretariat/Legal Advisory Services Department had been requested to take legal action against 4 defaulting employers.

The pension industry regulator maintained that from the commencement of the recovery exercise in June 2012 to 31 December 2023, a total sum of N25,447,085,186.71 comprising of principal contributions N12,929,415,445.52 and penalties N12,517,669,741.19 was recovered from defaulting employers.

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