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(Investigation) CBN Intervention Funds: Controversy as Keystone Bank Asks Participants to Pay Full Commercial Loan Rate on Performing Intervention Facilities

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1 year ago

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CBN Issues update on Naira scarcity

*(Investigation) CBN Intervention Funds: Controversy as Keystone Bank Asks Participants to Pay Full Commercial Loan Rate on Performing Intervention Facilities*

*… Banks Indict CBN*

*.. Apex Bank Fail to Respond*

 

Recall that in 2020 immediately after Covid-19, the apex bank of Nigeria (CBN) swung into action by introducing a special pricing offer on the existing CIFI (Creative Industry Financing Initiative) loans. In addition to this, they injected N100bn into the economy that was disbursed through the Intervention Fund Scheme for Health Sector businesses among others.

 

 

 

 

 

 

The choice of health sector for the intervention was deliberate in 2020 following the realities and the need to strengthen the health sector after the covid-19 incident and the over dependence on imported drugs. The intervention was meant for those that play in the creative space and health sector including other manufacturing sectors and designed by CBN to cushion the impacts of Covid-19 and specifically focused on domestic manufacturing support.

 

 

 

 

 

 

 

Based on investigation carried out by team of well trained investigative journalists under the Nigeria Guild Of Investigative Journalists (NGIJ), we learnt that businesses in these sectors are meant to enjoy interest rate of 5% at the initial period (one year subject to extension by CBN) and there after which it reverts to 9% for the duration of the facility not exceeding 10yrs in total. Other beneficiaries in the scheme are Fashion/textile, Software Developers, Healthcare Manufacturers, Healthcare Service Providers, Healthcare Value Chain Players, etc.

 

 

 

 

 

 

However, it became a serious matter when a commercial bank, specifically KEYSTONE decided to unilaterally increase the intervention facility rate from 9% to 24% on performing customers without the knowledge or consent of CBN or without regards to the attendant effect on the businesses at this time. , The guild obtained initial information (Keystone letter to several customers dated September 20th and titled “ *NOTICE OF INTEREST RATE REVIEW* ”, which led to the full investigation.

 

 

 

 

 

 

The letter referenced ‘CBN review of ‘Cash Reserve Ratio Policy and other monetary policies’ as a basis for rate change but did not reference any directive or published circular rescinding the policy rate.

 

 

 

 

 

During the course of our investigation, we realized that Keystone has already started charging the increased rate by directly deducting interest at its new rate from the customers without consent.

 

 

 

 

 

During our investigation, we spoke to the managing director of Keystone bank, Olaniran Olayinka. who confirmed the rate change by the bank but could not provide any support of a CBN directive to that effect. The core of his argument is that the funds belong to the bank.

 

 

*(Investigation) CBN Intervention Funds: Controversy as Keystone Bank Asks Participants to Pay Full Commercial Loan Rate on Performing Intervention Facilities* *... Banks Indict CBN* *.. Apex Bank Fail to Respond* Recall that in 2020 immediately after Covid-19, the apex bank of Nigeria (CBN) swung into action by introducing a special pricing offer on the existing CIFI (Creative Industry Financing Initiative) loans. In addition to this, they injected N100bn into the economy that was disbursed through the Intervention Fund Scheme for Health Sector businesses among others. The choice of health sector for the intervention was deliberate in 2020 following the realities and the need to strengthen the health sector after the covid-19 incident and the over dependence on imported drugs. The intervention was meant for those that play in the creative space and health sector including other manufacturing sectors and designed by CBN to cushion the impacts of Covid-19 and specifically focused on domestic manufacturing support. Based on investigation carried out by team of well trained investigative journalists under the Nigeria Guild Of Investigative Journalists (NGIJ), we learnt that businesses in these sectors are meant to enjoy interest rate of 5% at the initial period (one year subject to extension by CBN) and there after which it reverts to 9% for the duration of the facility not exceeding 10yrs in total. Other beneficiaries in the scheme are Fashion/textile, Software Developers, Healthcare Manufacturers, Healthcare Service Providers, Healthcare Value Chain Players, etc. However, it became a serious matter when a commercial bank, specifically KEYSTONE decided to unilaterally increase the intervention facility rate from 9% to 24% on performing customers without the knowledge or consent of CBN or without regards to the attendant effect on the businesses at this time. , The guild obtained initial information (Keystone letter to several customers dated September 20th and titled “ *NOTICE OF INTEREST RATE REVIEW* ”, which led to the full investigation. The letter referenced ‘CBN review of ‘Cash Reserve Ratio Policy and other monetary policies’ as a basis for rate change but did not reference any directive or published circular rescinding the policy rate. During the course of our investigation, we realized that Keystone has already started charging the increased rate by directly deducting interest at its new rate from the customers without consent. During our investigation, we spoke to the managing director of Keystone bank, Olaniran Olayinka. who confirmed the rate change by the bank but could not provide any support of a CBN directive to that effect. The core of his argument is that the funds belong to the bank. He noted that CBN never came to their aid when they needed support but instead has increased the cash reserve requirement from 27.5% to 32%. He further noted that tier one banks did not participate in the intervention, but the small banks did. A quick investigation showed that the big banks, UBA, FBN, Zenith, Access, Fidelity etc were big participants in the sector specific DCRR intervention program and all currently are adhering to the policy guidelines for such. Not satisfied with the response, we went further to speak with another bank official who revealed to us that the newly appointed CBN Governor Mr Olayemi Cardoso has announced that the Apex will no longer get involved in any intervention funds, he said . He however did not confirm that CBN is reversing existing intervention rates while they are still performing without default. According to the new governor of the apex bank, the bank needs to move into a limited advisory role that supports economic growth rather than actively play a prominent role in the financing of these projects. There is nothing in this statement or others we are aware of that indicates that CBN will change, or cancel its existing interventions. If that is the case, then a circular should be issued to that effect but it has not done so. The CBN statement is generally understood to mean more focus on monetary policy and less or away from fiscal policies or interventions that should be left for the relevant agencies and ministries such as Bank of Industry, Bank of Agriculture etc. He emphasized the need to restore the apex bank’s independence and credibility by refocusing on its core mandate and ensuring a culture of compliance. The core question which is for CBN to answer is whether a bank can unilaterally change intervention policy rates on existing facilities on non-defaulting customers without recourse to the regulator. The challenge is a policy consistency challenge that does nothing but erode public and investor confidence. The silence from CBN has done nothing but exacerbate the challenge or at minimum embolden unscrupulous bankers to the detriment of customers and public confidence. Our journalist attempted to speak with the central bank director in charge when the Intervention was initiated Mr Yila Yusuf but Yila referred us to another director (Dr Musa) noting that he is no longer in charge and he can't speak on it . When we spoke with Dr Musa, he turned us down and referred us to the CBN, Head of Corporate Communications who is incommunicado since about two weeks till now. From the feelers around the CBN confirmed that the Mr Olayemi Cardoso is not interested in running an interventionist economic policy which has manifested in President Bola Ahmed Tinubu-led administration and removal of fuel subsidy. It is on this note that we are calling on the CBN governor Mr Olayemi Cardoso to come out and clarify to the public and beneficiaries the real situation of things because the companies involved are seriously concerned due to the sudden change in the policy rate. Some of these participants invested in these entities along with foreign partners that relied on the intervention facilties and employ thousands of Nigeria across all regions. The biggest challenge to investing in Nigeria is policy inconsistencies. It is hard to reconcile why a bank will reverse a CBN policy rate without recourse to CBN directive which is generally always published. The challenge with not addressing this is that other banks will take this cue that CBN has approved or authorized the rate change and will follow suit. Such arbitrariness ultimately leads to lack of investor and public confidence, potential defaults and ultimately lay off of those that were employed when these entities invested. The Apex bank needs to do something as a matter of urgency to clarify what the policy is on existing intervention facilities for the entire banks and borrowers – it cannot be a cowboy country where there are no rules. The country, not only investors suffers where there is an appearance of lack of policy consistency.

 

 

 

He noted that CBN never came to their aid when they needed support but instead has increased the cash reserve requirement from 27.5% to 32%.

 

 

 

 

 

He further noted that tier one banks did not participate in the intervention, but the small banks did.

A quick investigation showed that the big banks, UBA, FBN, Zenith, Access, Fidelity etc were big participants in the sector specific DCRR intervention program and all currently are adhering to the policy guidelines for such.

Not satisfied with the response, we went further to speak with another bank official who revealed to us that the newly appointed CBN Governor Mr Olayemi Cardoso has announced that the Apex will no longer get involved in any intervention funds, he said . He however did not confirm that CBN is reversing existing intervention rates while they are still performing without default.

According to the new governor of the apex bank, the bank needs to move into a limited advisory role that supports economic growth rather than actively play a prominent role in the financing of these projects. There is nothing in this statement or others we are aware of that indicates that CBN will change, or cancel its existing interventions. If that is the case, then a circular should be issued to that effect but it has not done so. The CBN statement is generally understood to mean more focus on monetary policy and less or away from fiscal policies or interventions that should be left for the relevant agencies and ministries such as Bank of Industry, Bank of Agriculture etc.

He emphasized the need to restore the apex bank’s independence and credibility by refocusing on its core mandate and ensuring a culture of compliance.

The core question which is for CBN to answer is whether a bank can unilaterally change intervention policy rates on existing facilities on non-defaulting customers without recourse to the regulator.

The challenge is a policy consistency challenge that does nothing but erode public and investor confidence.

The silence from CBN has done nothing but exacerbate the challenge or at minimum embolden unscrupulous bankers to the detriment of customers and public confidence.

Our journalist attempted to speak with the central bank director in charge when the Intervention was initiated Mr Yila Yusuf but Yila referred us to another director (Dr Musa) noting that he is no longer in charge and he can’t speak on it .

When we spoke with Dr Musa, he turned us down and referred us to the CBN, Head of Corporate Communications who is incommunicado since about two weeks till now. From the feelers around the CBN confirmed that the Mr Olayemi Cardoso is not interested in running an interventionist economic policy which has manifested in President Bola Ahmed Tinubu-led administration and removal of fuel subsidy.

It is on this note that we are calling on the CBN governor Mr Olayemi Cardoso to come out and clarify to the public and beneficiaries the real situation of things because the companies involved are seriously concerned due to the sudden change in the policy rate.

Some of these participants invested in these entities along with foreign partners that relied on the intervention facilties and employ thousands of Nigeria across all regions.

The biggest challenge to investing in Nigeria is policy inconsistencies. It is hard to reconcile why a bank will reverse a CBN policy rate without recourse to CBN directive which is generally always published.

The challenge with not addressing this is that other banks will take this cue that CBN has approved or authorized the rate change and will follow suit.

Such arbitrariness ultimately leads to lack of investor and public confidence, potential defaults and ultimately lay off of those that were employed when these entities invested.

The Apex bank needs to do something as a matter of urgency to clarify what the policy is on existing intervention facilities for the entire banks and borrowers – it cannot be a cowboy country where there are no rules.

The country, not only investors suffers where there is an appearance of lack of policy consistency.

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Sahara weekly online is published by First Sahara weekly international. contact [email protected]

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UBA GMD Calls for Public-Private Collaboration, Joins Aviation Minister to Commission New MMIA Departure Section

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9 hours ago

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December 22, 2024

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UBA GMD Calls for Public-Private Collaboration, Joins Aviation Minister to Commission New MMIA Departure Section

The newly renovated departure section of the Murtala Muhammed International Airport, Lagos, refurbished by United Bank for Africa (UBA) Plc, was officially commissioned on Friday, December 20th, 2024.

The laudable project, which marks a transformative moment in Nigeria’s aviation sector, underscores UBA’s unwavering commitment to national development and highlights the immense value of strategic public-private partnerships (PPPs).

The ceremony was graced by distinguished stakeholders, including the Honourable Minister of Aviation and Aerospace Development, Festus Keyamo, SAN; the Managing Director of the Federal Airports Authority of Nigeria (FAAN), Mrs. Olubunmi Kuku; other Directors, and Heads of Agencies operating at the Airport.

Speaking at the event, UBA’s Group Managing Director/CEO, Oliver Alawuba,lauded the collaboration that brought the project to fruition as he emphasised the need for public and private institutions to come together to build and revamp the nation’s assets.

“This renovation is a testament of UBA’s belief in the transformative power of investing in national assets. By modernising our airports, we not only enhance infrastructure but also position Nigeria as a global hub for tourism, trade, and investment,” he stated.

Alawuba took time to highlight the broader economic impact of such initiatives, urging increased private-sector participation in national development. “Public-private partnerships like this demonstrate what can be achieved when we unite for a shared vision of progress and investing in infrastructure catalyses economic growth, improves travel experiences, and creates opportunities across various sectors of the economy,” he added.

Alawuba reflected on the power of unity and collaboration, quoting Helen Keller: “Alone we can do so little; together we can do so much.” The commissioning of the renovated departure section serves as a reminder of what strategic partnerships can achieve in driving national development and elevating Nigeria’s global standing.”

While commissioning the project, Keyamo commended UBA for executing the project, a feat he termed a landmark achievement in Nigeria’s aviation sector. “This renovated departure section exemplifies the bank’s commitment to elevating aviation infrastructure, improving passenger experiences, and fostering international partnerships. It is a proud moment for the ministry and all stakeholders involved, and I thank the management of UBA for pioneering this initiative,” he remarked.

The minister highlighted other key achievements of his ministry, including compliance with the Cape Town Convention, the launch of a consumer protection portal, and advancements in major infrastructure projects such as the second runway at Abuja Airport and solar energy integration in airport operations.

The Managing Director/Chief Executive of FAAN, Mrs. Olubunmi Kuku, commended UBA and other stakeholders for their contributions, adding, “This project reflects FAAN’s dedication to delivering world-class aviation infrastructure. The enhanced departure section not only elevates passenger experiences but also strengthens Nigeria’s competitive position in global aviation,” she said.

She called for more private-sector participation, emphasising that “partnerships like these are essential to transforming the aviation sector into a beacon of excellence.”

The newly renovated departure section boasts cutting-edge facilities designed to enhance efficiency and passenger comfort. This upgrade reaffirms the Murtala Muhammed International Airport’s status as a critical gateway to Nigeria and a major hub for international travel in Africa.

United Bank for Africa is Africa’s Global Bank. Operating across twenty African countries and the United Kingdom, the United States of America, France and the United Arab Emirates, UBA provides retail, commercial and institutional banking services, leading financial inclusion and implementing cutting edge technology. UBA is one of the largest employers in the financial sector on the African continent, with 25,000 employees group wide and serving over 45 million customers globally.

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Dangote Hails Tinubu on Impact of Crude for Naira Swap Deal

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1 day ago

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December 21, 2024

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Dangote Hails Tinubu on Impact of Crude for Naira Swap Deal

 

 

…As Dangote Refinery partners MRS to sell PMS at N935 per litre nationwide at its retail outlets

 

 

Sahara Weekly Unveils That The Foremost entrepreneur and President of the Dangote Industries Limited, Aliko Dangote has commended President Bola Ahmed Tinubu for the positive impact of the naira for crude swap deal on the Nigerian economy, which has led to reduction in prices of petroleum products in the country.

 

Dangote Hails Tinubu on Impact of Crude for Naira Swap Deal

 

To provide succour to Nigerians, Dangote recently reduced the price of Premium Motor Spirit (PMS) from N970 to N899.50 at its Refinery loading gantry and provided generous credit terms to marketers.

 

 

“To ensure that this price reduction gets to the end consumer, we have signed a partnership with MRS to sell petrol from its retail outlets nationwide at N935 per litre” he added. This price has already commenced in Lagos, and it will be offered nationwide from Monday.

 

 

In his statement, he called on other oil marketers such as the NNPC Retail and all other marketers, “to work with us to ensure that Nigerians enjoy high-quality petrol at discounted prices.”

 

 

According to him, “The Dangote Refinery is for the benefit of Nigeria and Nigerians. We will therefore continue to work with various value chain players to deliver high quality petrol at cheaper prices. Our aim is for all Nigerians to have ready access to high quality petroleum products that are good for their vehicles, good for their health, and good for their pockets.

 

 

Recall that in September, the Federal Executive Council (FEC) under the leadership of Mr. President approved the sale of crude to local refineries in Naira and corresponding purchase of petroleum products in Naira. The move, which commenced on October 1, led to reduced pressure on the dollar and ensured the stability of the local currency.

 

 

Dangote thanked Nigerians for their unwavering support and the government for creating an enabling environment for the domestic refining industry.

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Port Harcourt Refinery Stays Active: NNPC Denounces Sabotage Rumors

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2 days ago

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December 21, 2024

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Port Harcourt Refinery Stays Active: NNPC Denounces Sabotage Rumors

NNPC Debunks Shutdown Rumors, Confirms Port Harcourt Refinery Fully Operational

 

The Nigerian National Petroleum Company Limited (NNPC Ltd) has dismissed reports circulating in certain media outlets claiming that the Old Port Harcourt Refinery, which was re-streamed two months ago, has been shut down.

In a statement released by Olufemi O. Soneye, the Chief Corporate Communications Officer of NNPC Ltd, the company clarified that the refinery is fully operational. The statement noted that the facility’s operational status was recently verified by former Group Managing Directors of NNPC during a site inspection.

“Preparation for the day’s loading operation is currently ongoing,” the statement confirmed, emphasizing that allegations of the refinery’s shutdown are baseless and intended to create panic or artificial scarcity in the fuel market.

NNPC Ltd urged members of the public to disregard such misleading reports, labeling them as the work of those seeking to exploit Nigerians.

The Old Port Harcourt Refinery has been in operation since its re-streaming, and the company remains committed to ensuring stability in the supply of petroleum products across the country.

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