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Forex Ban: CBN Begins Refund of Licence Fees to BDC Operators

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 By Tony Obiechina, Abuja 
The Central Bank of Nigeria (CBN) said it will begin immediate refund of all outstanding pending minimum capital deposits and licence fees to Bureaux De Change promoters pending licence application.


The Bank stated this in a circular released on Thursday on its website. 
The action is coming on the heels of the apex bank’s stoppage of foreign exchange sales to Bureau De Change operators.
CBN Governor, Godwin Emefiele had announced the sales ban on Tuesday at the of the Monetary policy committee meeting.
“Further to the Monetary Policy Committee (MPC) briefing of July 27, 2021, the Central Bank of Nigeria (CBN) will commence the immediate refund of capital deposits and licencing fees (where applicable) to promoters who have pending Bureaux de Change (BDC) licence applications with the CBN,” the Bank said in the circular.

The apex bank had been faced with foreign exchange woes leading to the devaluation of the naira to N410 to the dollar at the official window from N379 previously held.
But at the parallel market, the naira has lost its value to over N503 to the dollar, despite issuing several warnings to speculators by Emefiele.
Promoters of BDC across the country have obligations to pay N35m to the bank and other fees.
The N35m is the minimum capital deposit for promoters to get licence.
With the new development, the apex bank said for a BDC promoter to access the refunds they must put forward their requests in writing to the “Director, Financial Policy and Regulatory Department” of the bank in Abuja.
The apex bank said the request must include a telex copy of the capital deposit of N35m.
Others include account details for the refund, “which should be the same as the account from which capital deposits originated, including the bank name; account name and account number.”
Also, the bank said it would require a copy of the bank draft/telex for payment of licensing fees of N1m.
 “All Deposit Money Banks are hereby directed to henceforth stop accepting instructions from customers to transfer capital deposit of N35 million to the designated CBN account for the purpose of applying for BDC licence”, the apex bank added.

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Economy

Ishaku Demands Urgent Review of Revenue Allocation Formula

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Taraba State Governor Darius Ishaku
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From Victor Gai, Jalingo


Taraba state governor, Darius Ishaku has  advocated immediate upward review of the current revenue allocation formula to cushion the pangs of financial burdens of the states and local government areas in the country.

 


He made the assertion during a two-day review meeting on revenue allocation formula with the Revenue Mobilization Allocation and Fiscal Commission (RMAFC) in Jalingo, the State capital.


In his keynote address, Governor Ishaku, represented by his deputy, Engr Haruna Manu, stated that the upward review of the revenue allocation formula has become imperative because it has been long overdue, since the last exercise was carried out during the military rule in 1992.


The governor further frowned at the current situation where the federal government has continued to enjoy the lion share of 52%, leaving the 36 states and the 774 local government areas with a paltry 48% to share.


He said, “in the past decades, the transformations witnessed in the country have increasingly shifted the burden of governance in the face of insufficient and dwindling revenue allocation from the Federation Account; this has over the years affected the effective performance of state and local government administrations in Nigeria.


“In the light of this uneven and inequitable revenue sharing formula, I wish to State that the revenue sharing formula is unfavourable to the second and third tiers of government, since it cannot keep up with our rising obligations, necessitating an immediate review of the formula.”

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Furthermore, the governor enjoined Tarabans, particularly the stakeholders, to participate fully in the review process by submitting position papers and engaging in meaningful dialogues to improve fiscal efficiency at the subnational level.


On his part, the Speaker of the State House of Assembly, Rt. Hon. Joseph Albasu Kunini,  strongly argued that revenue allocation formula has been one of the fundamental decision rules in allocating resources in the public sector worldwide, hence Nigeria should not be an exception.


According to him, the main reasons for revenue allocation in the country was to promote national unity and rapid economic growth, but he regretted that despite the continuous increase in revenue generation in the country, the expected impact on the citizenry has not been realized and felt, due to the revenue allocation problems.


He further faulted the current revenue allocation formula among the three tiers of government, just as he averred that the current clamour and advocacy going on within the public domain has to do with the dire need for upward review of the revenue allocation formula among the federal, state and local governments in the country.


Against this backdrop, he stressed that upward review of the revenue allocation formula in the country would chart a new order to match up with other developed countries of the world.

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“The current revenue allocation formula, adopted, maintained and used by the federal government of Nigeria be reviewed to enable each tier of government be funded based on the functions it performs.


“By doing so, each tier will perform the expenditure functions within its jurisdictions for exercising full autonomy as a federal component.


“That in the spirit of full autonomy for the principles of true federalism to be in operations, states and local governments in Nigeria should be given a higher percentage.


“This is because both the states and local governments are discovered to be the tiers of government that are closer to the citizens, in terms of the basic needs needed by the citizens, since majority of Nigerians live in rural areas where social amenities are in short supply,” the Speaker explained.


He then proposed a new revenue sharing formula in tandem with the current economic realties and burdens of governance  as follows: federal government – 40.20%, state governments – 34.20%, and local governments – 25.60% (totally 100%).


The Speaker also advocated that the current 13% derivation being enjoyed by the oil producing states be reduced to 10%, since the 3% has now been captured in the Petroleum Industry Act signed by President Muhammadu Buhari, recently.

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Earlier, in his opening speech, the Chairman of the Commission, Engr Elias N. Nbam, represented by a Federal Commissioner representing Taraba State, Engr Ahmed Yusuf, stated that the Commission was carrying out its constitutional functions as contained in Part I, Paragraph 32 of the 1999 Constitution of the Federal Republic of Nigeria (as Amended) which has empowered it, “to review from time to time the Revenue Allocation Formula and Principles in operation to ensure conformity with changing realities, provided that any Revenue Formula which had been accepted by an Act of the National Assembly shall remain in force for a period of not less than five (5) years from the date of commencement of the Act.”


He, therefore, stressed that the sensitization exercise was designed to enlist the interests of the stakeholders, through interactions at various levels in order to get informed and make useful inputs that could provide workable template to assist the Commission in its task of evolving and bequeathing to the Nation a fair, just and equitable new revenue sharing formula.

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Business News

Eurobond Offer: Nigeria Back at International Capital Market -DMO

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By Tony Obiechina, Abuja

The federal government has announced plans to return to the
International Capital Market (ICM) for the issuance of Eurobond Offer.
The last time Nigeria accessed the ICM was November 2018.


Consequently, the Debt Management Office (DMO) said in a statement on
Thursday that virtual meetings with investors have been scheduled for
September 17 and 20, 2021.
According to the statement, in order to avail local investors the
opportunity to invest in the Eurobonds, meetings will also be held
with local investors. This is the first time local investors will be
included in the Roadshows, and this is one of the reasons why a
Nigerian Bookrunner (Chapel Hill Denham Advisory Services Ltd) was
appointed as one of the Transaction Advisers.

Through the Eurobond issuance, Nigeria is expected to raise up to
USD$3 billion but no more than USD$6.2 billion. The issuance for which
all statutory approvals have been received, is for the purpose of
implementing the New External Borrowing in the 2021 Appropriation Act.
Proceeds are for the financing of various projects in the Act.
In addition to providing funding to part-finance the deficit in the
2021 Appropriation Act, the issuance of Eurobonds by Nigeria benefits
the country in many other strategic ways; amongst which are: it is an
inflow of foreign exchange, leading to an increase in External
Reserves. External Reserves help support the Naira Exchange Rate, and
Nigeria’s sovereign rating; When Nigeria raises funds externally,
through Eurobonds, it frees up space in the domestic market for
private sector and sub-national borrowers. In effect, it helps the
sovereign not to crowd out other borrowers in the domestic market; The
issuance of Eurobonds by Nigeria has opened up opportunities for
Nigeria’s corporate sector notably banks, to issue Eurobonds to raise
capital in the ICM. By so doing, their capital base has been
strengthened to provide banking services whilst also meeting
regulatory requirements. Nigeria has a sovereign yield curve in the
ICM, extending up to 30 years.
*The local listing of Nigeria’s Eurobonds on the Nigerian Exchange
Ltd. and the FMDQ Securities Exchange Ltd., have increased the range
of products on these two (2) exchanges and their respective market
capitalisation. Overall, Eurobond issuances by Nigeria and the
investor meetings that precede the pricing, have provided a strong
global platform for Nigeria to tell its own story and opportunities
available in Nigeria for investors.
The statement then named the Transaction Advisers appointed by Nigeria
for the issuance to include, International Bookrunners/ – JP Morgan,
Citigroup Global Markets Limited; Joint Lead Managers Standard
Chartered Bank and Goldman Sachs; Nigerian Bookrunner – Chapel Hill
Denham Advisory Services Ltd; Financial Adviser – FSDH Merchant Bank
Ltd; International Legal Adviser – White & Case LLP and Nigerian Legal
Adviser – Banwo & Ighodalo.

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Agriculture

Stakeholders Seek Intervention of Nollywood to Change Perception about Agriculture

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By Joseph Chibueze, Abuja

Stakeholders in the nation’s food system have called on the federal
government to engage the Nollywood industry to help change the
narratives around agriculture, especially for the youths.


That was one of the resolutions contained in the communique issued at
the end of the 2021 Feed Nigeria Summit held recently in Abuja.
The 17 point communique who dwell extensively on how Nigeria can
achieve food security by developing the agriculture value chain, also
stressed the need for effective collaboration between the federal
government and the private sector.

According to the communique, “The federal government must provide
institutional support to enable SMEs to build the organisational
structures and operational capacity necessary to attract investments.
“The government should also work with the private sector to design and
implement agricultural blueprints and deploy more improved technology
and mechanised agricultural equipment.”
A key point captured in the document is that modernising the
agricultural sector is one of the prerequisites for fixing Nigeria’s
food systems to meet present and future demands.
On that note, according to the Summit, the Federal Ministry of
Agriculture and Rural Development should consult with key stakeholders
including the various farming associations, development partners and
state ministries of agriculture for the effective implementation of
the National Agricultural Technology and Innovation Plan (NATIP).
The Summit also notes that the National Assembly should lock in
agricultural policies in order to prevent arbitrary reversal, and
appropriate financing for the sector.
Other areas the stakeholders want serious action include; that the
Ministry of Agriculture and Rural Development should dialogue with the
private sector on how to incorporate extension workers from large
businesses to smallholder farmers; develop agricultural internships
and skill acquisition institutions, particularly in collaboration with
the 52 Colleges of Agriculture; in partnership with interested
stakeholders educate food exporters and producers on the dynamics and
relevance of compliance to standards; enforce the compliance to
standards and the harmonisation of standards between African nations
in view of the African Continental Free Trade Area (AfCFTA); sensitize
farmers on the difference between loans, grants, development aid, and
all other finance benefits that they have access to and how to
interact with these services.
Others are: that organised private sector players should adopt
innovative strategies to find and take advantage of exciting funding
opportunities in the sector; federal government must partner with the
private sector to create facilities and incubating centers similar to
business incubation platforms to aid the exchange of ideas and that
federal government should provide equipment for the data collectors to
use for adequate collection of farmers data and ease of assignment.
The Feed Nigeria Summit (FNS) is Nigeria’s flagship agricultural
sector convocation that has over the years earned its reputation as
the country’s foremost sectoral assembly responsible for catalyzing
transformational progress in her agriculture sector.
The 2021 edition with the theme: “POST-COVID19: A Repaired Food
System, Pathway to a Revived Economy”, focused on the need to
capitalise on the positive energy of the Nigerian agriculture sector
to strengthen the nation’s overall – Post COVID – economy. Emphases
were, therefore, placed on an objective auditing of the entire
agricultural ecosystem to ascertain areas of strength, as well as
weaknesses.
Participants at the summit include the immediate past Minister of
Agriculture and Rural Development, Alhaji Sabo Nanono; the British
Acting High Commissioner, Gill Atkinson; Senior Special Adviser on
Industrialisation, Office of the President, AfDB Group, Prof Banji
Oyelaran – Oyeyinka; Representatives of sub-national Governments;
Chairman, House Committee on Agricultural Institutions and Colleges,
Hon Munir Babba Danagandi; Directors and Technical Advisors from the
Federal Ministry of Agriculture and Rural Development; Representative
of the International Fund for Agriculture De v e l o p m e n t (I
FAD); Chief Executive Officers of various agro-allied companies and
farmer organisations, among others.

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