E-Financial
CBN Mulls New Credit Mechanism for Real Sector @ Single Digit
To encourage banks to give credit to the real sector of the economy, at single digit rates, the Central Bank of Nigeria (CBN), has offered to complement the effort of Deposit Money Banks (DMBs) through a mechanism to support banks that lend to corporate entities at single digit rate.
Addressing journalists at the end of the Monetary Policy Committee (MPC) Meeting in Abuja, which saw the retention of all monetary rates, the CBN Governor Mr Godwin Emefiele disclosed that the mechanism “is not meant to bring competition among Deposit Money Banks, but it is meant to complement their efforts.”
According to Emefiele, “the most important thing is that we want to see to it that we achieve a single digit rate. We believe this will work because rather than the banks keeping the money in the reserves they can key into this and promote these transactions as long as they meet the terms and conditions.”
Specifically, Emefiele said “a differentiated dynamic cash reserve requirement regime will be implemented to direct cheap long term bank credit at nine per cent and a minimum tenor of seven years and two years moratorium to the employment elastic sectors of the economy.”
Details of this framework he said are being worked out by the banking supervision and the monetary policy departments and will be released very soon stressing that more details on this new mechanism “will be provided soon for the banks and everybody to know.
MPC was concerned that credit to the economy was sliding and we looked at means to incentivize the Deposit Money Banks to increase credit to the real sector.”
The MPC was of the opinion that while it is difficult to encourage job creation in an environment within deficit infrastructure, the committee believes that the bank should continue to encourage Money Deposit Banks to increase the flow of credit to the real economy to consolidate economic recovery.
To achieve this, Emefiele noted that two approaches were considered: the first approach, in order to achieve the objective of lowering interest rate particularly to those priority sectors- manufacturing sectors, agric sector, the CBN “will encourage large corporates to issue commercial papers/note to the market and there will be a memorandum that will detail explanations of what they are going to do with that money.”
In order to complement the effort of the banks, the CBN he said “will expect that this commercial papers will come at low rate of single digit of 9 per cent or below that and for long tenor at least a period of 7 years with a specific purpose for that loan.”
If central bank sees that kind of notes in the market, Emefiele noted that the “CBN will complement the effort of the banks through a mechanism to support that bank that lends to that corporate at single digit rate.
It is not meant to bring competition in the money deposit banks, it is meant to complement their efforts. The most important thing is that we want to see to it that we achieve a single digit rate.”
The second approach he said is “if a bank lends money for new projects and planned expansions, verifiable not refinancing, to a project for seven years inclusive of two years moratorium at 9 percent interest rate, that the bank providing this evidence and verified by the central bank, we will go into that bank’s CRR and release equivalent of that cash from our CRR at zero kobo spread.”
Emefiele explained further that “in this case, that bank earns its 9 percent of that money. We feel this is novel; it is something that we should give a chance.
In the past we have reduced CRR and release liquidity into the market but the liquidity was not channeled properly to the high impact corporations – we mean employment generating sectors or output improving sector of the economy.”
Updating journalists on the Chinese Currency swap deal, the CBN Governor revealed that they “opened the first auction last week Friday and the result from that auction will be released on Friday, but from the preliminary information I heard is that it was a successful auction. The details will be unfolded by Friday.”
About the declining foreign reserves from $47.7 billion in May to $47.2 billion in June, Emefiele said “this has nothing to do with politics. What is happening is as a result of US Fed normalisation.
Since the interest rate has gone up in the US, and other advanced economies, in an attempt to stimulate their economies, these money that moved into the emerging economies have now being taken back and this means there will be so much outflow of cash than inflow of cashflow, and of course we have our own share of it.”
He noted that “Nigeria has performed better than other emerging market around the world, with a stabilized exchange rate that has remain stable because we have been able to build enough buffer to support our currency and that is why the exchange rate has remain stable.
Countries like South Africa and others have had their currencies depreciated but the Naira remains stable at N360/$ at this time.”
Speaking on the outcome of the MPC meeting in general, Emefiele said “MPC commended the approval of the Federal Government’s 2018 budget and called for the accelerated implementation to further support the fragile growth recovery.”
The committee also called for sustained implementation of the Economic Recovery and Growth Plan (ERGP) to further stimulate output growth.
However, the MPC was “concerned about the liquidity impact of the 2018 expansionary fiscal budget and increasing FAAC distributions due to rising prices of crude oil as well as the buildup in election related activities.”
Exactly two years after the MPC decided to hold rates at 14%, at the end of Tuesday’s meeting, MPC again voted to retain the: Monetary Policy Rate (MPR) at 14.0%; Cash Reserve Ratio (CRR) at 22.5%; Liquidity Ratio at 30.0%; and Asymmetric corridor at +200 and -500 basis points around the MPR.
Defending the MOC’s decision, Emefiele stated that “in the discussion for a hold, it was noted that risk to the macroeconomic and financial environment appears fairly balanced with improvement in output growth and inflation.”
Holding policy at the current stand he said “will support growth and further moderate inflation. However, committee noted the appetite of the public for loosening and concern that hold MPR at 14 per cent since July 2016 and considering the dynamic nature of the market, the rates might have lost its signal effect on the market, hence dampen market expectations.”
“The argument in favor of maintaining the current policy stand, is to monitor the magnitude of the liquidity impact of the fiscal injections and elections related expenditures ahead of the 2019 elections” he explained.
E-Financial
Cybersecurity Expert Raises Alarm, Warns against Use ATM Card PIN for Online Transactions
Dr. Kingsley Chibuzor Aguoru, a Nigerian-British Chartered Engineer and Doctor of Information Security, has petitioned the Economic and Financial Crimes Commission (EFCC) and the Central Bank of Nigeria (CBN) to immediately put a halt to card PIN usage for online payments to protect Nigerians from being fleeced of their hard earned money.
He said he was making the passionate appeal in order to secure financial practices in the country.
According to the UK based chartered Engineer, with his over 20 years of experience in financial technologies and security, who pioneered the concept of OTPs for card-not-payments, he was compelled to bring attention to the critical flaws in the Nigeria’s current online card payment practices, which exposes customers to unnecessary risks and significant danger.
Specifically, according to Aguoru, the continued use of PIN in online transactions put Nigerians at a grave risk of being defrauded.
Aguoru noted that card PINs were designed for face-to-face transactions at ATMs and POS terminals where secure encryption methods protect users rather than online usage.
In the petition cited by this paper, titled: “Urgent Call to Ban Card PIN Usage for Online Payments in Nigeria”, Dr. Aguoru explained: “In 2005, I developed a solution to tackle prevalent fraud in card-not-present transactions in the United Kingdom using both online and offline OTP models, drawing on Cartesian geometry. Although major networks like Visa and Mastercard declined the innovation at the time, my OTP model has since become a standard worldwide for authorization.
”Nigerian payment providers, such as Paystack and Flutterwave, and Interswitch still require card PINs for online card transactions, a practice virtually obsolete elsewhere or not ever used. Card PINs are designed for face-to-face transactions at ATMs and POS terminals, where secure encryption methods protect users. Using them online exposes consumers to serious cyber risks, including phishing, keylogger, man-in-the-middle attacks, even some dubious staff at the payment provider company can misuse customer’s PIN captured on the internet.”
He continued: “Nigerians are already familiar with OTPs for securing online transactions. However, it is critical to understand that OTPs should never be combined with Card PINs in an online setting. Instead, global best practices require using OTPs or Multi-Factor Authentication alone for online payments, which adds a secure layer of protection, an alternative to using card PINs online is to issue hardware card readers. With these devices, customers would simply insert their card, enter their PIN directly on the reader, and receive a generated OTP, keeping the entire process offline and secure.”
Enumerating the role of CBN in financial matters in the present digital age, Dr. Aguoru called on the apex financial regulator to protect consumers from cyber vulnerabilities. “I respectfully call on the CBN to address these issues head-on by prohibiting web PIN entry for card payments and enforcing OTP or MFA requirements across all payment providers.”
He advised the CBN to urgently steps forward for the safety of Nigerian cardholders by banning the use of card pins for online transactions and mandate the use of OTPs or other dynamic authentication methods, such as authorization through mobile banking apps.
He noted that there was need for consumers to be educated on safe online payments practice to minimize exposure to phishing and other cyber threats.
He said it was also necessary for the apex bank to enforce industry wide compliance with modern security standards to protect Nigerian customers, especially on the web, through policies, such as security, payments compliance policies.
Aguoru emphasized that by adopting these measures, the CBN will greatly reduce the risks Nigerian consumers face and bring the nation’s payment systems in with international best practice.
Customers of foremost payment service bank, MoneyMaster Payment Service Bank (MMPSB), will henceforth, enjoy a 10 percent data bonus offer on every recharge above N1,000 on their Glo lines.
The data bundle offers one of the highest volumes in the country and the data purchases come with 30-day validity, with an automatic rollover of unused data upon subscription for a new plan.
The offer, which is meant to reward loyal customers and new ones, also underscores the bank’s dedication to empowering Nigerians to master their money via efficient offers that make every naira count.
The 10 percent bonus offer is available for Glo customers on banking channels including the MoneyMaster PSB app, USSD banking code *995# and MoneyMaster PSB Web banking.
MoneyMaster is a provider of innovative digital financial products and services that transform lives. It has the mission to deepen financial inclusion and has been pivotal in providing financial technology services to bridge the gaps between the banked, underbanked and unbanked population.
Mr. Julius Arhebun, head of Agency Banking at MoneyMaster, said, the offer shows the bank’s commitment to offering its customers products that enhance their lifestyle and help them master their money.
“With this offer, our existing and new customers can enjoy extended access to quality internet services whether it is streaming their favourite content, browsing top sites, or catching up on trends on their favourite social media apps”, he noted.
He further explained that existing customers can buy a data bundle of N1000 or above from their mobile wallets, savings account or individual current account via our USSD banking code *995#, mobile app or web banking. For new customers, the offer comes via opening accounts via the USSD banking platform or downloading the mobile application.
United Bank for Africa (UBA) Plc, Africa’s Global Bank, has set the wheels in motion to expand its operations in the Middle East with plan ongoing to open a subsidiary in Saudi Arabia, its largest economy.
This move which is expected to happen within the next year will mark the bank’s second subsidiary in the Gulf Region, following the expansion of its business to the United Arab Emirates in 2022.
Muyiwa Akinyemi, group deputy managing director, UBA, who disclosed this during a panel session during the 8th Edition of the Future Investment Initiative (FII) in Riyadh, Saudi Arabia and in an interview with Arise TV, underscored the bank’s strategic commitment towards fostering Africa’s growth through infrastructure development, youth empowerment, and sustainable partnerships across key global markets.
He said, “Opening a presence in Saudi Arabia represents the next step for us in connecting the Africa-Gulf region. We are excited to bring UBA’s expertise in financial services to Saudi Arabia, where we aim to facilitate knowledge transfer and create strong economic linkages.
“This venture will further enable us to access Saudi expertise in food security, energy transition, and sustainable practices, which are all critical for Africa’s continued development.”
While emphasising the importance of Africa as a strategic investment destination for long-term capital, he said, “Africa’s infrastructure deficit is an opportunity for investors worldwide. Our pitch to the Gulf and Southeast Asia emphasizes that Africa must be part of their investment horizon. Today, food security is paramount as our population expands.
Akinyemi also highlighted the bank’s dedication to nurturing Africa’s youth talent through entrepreneurship.
“Guided by our Group Chairman’s efforts with the Tony Elumelu Foundation, UBA is committed to supporting young entrepreneurs in tech, agriculture, and entertainment, which are all burgeoning sectors in Africa. With such a young and dynamic population, we see enormous potential for innovation and growth.”
He also reiterated the bank’s continuous support for Small and Medium Enterprises (SMEs) in Africa and beyond as he outlined the bank’s commitment to these businesses, which he referred to as key players in the African economy and vehicles for employment and economic growth.
“SMEs are the backbone of economic development in Africa. They contribute significantly to job creation and value chains, particularly within Nigeria. Over the last year, UBA has committed billions to support SMEs across Africa, and our network of over 20 countries enables us to make a substantial impact.”
During the panel discussions, Akinyemi took time to emphasize UBA’s longstanding experience on the continent as it navigates an ever-evolving investment landscape, adding that “As investors, we focus on infrastructure and sustainable projects that encourage economic prosperity while addressing pressing issues such as talent migration.
“Our goal is to ensure that people can thrive in Africa without needing to relocate. By investing in local talent and fostering growth sectors, we contribute to building the next generation of global innovators right here in Africa,” he noted.
The DMD further articulated UBA’s approach to risk management on the continent, emphasizing that the bank’s 75-year history has uniquely equipped it with insights and strategies to navigate diverse markets.
“With over seven decades of experience, Africa is what we know, and that knowledge allows us to manage risks effectively. We see tremendous opportunities in various sectors across the continent, and our continued investments are driven by a commitment to bring economic empowerment to communities, increase GDP, and improve socioeconomic quality. Our anniversary is a celebration of UBA’s legacy of contributing to Africa’s progress. We look forward to leveraging this milestone to drive even greater impact across sectors and empower future generations,” he said.
United Bank for Africa Plc is a leading Pan-African financial institution, offering banking services to more than forty-five million customers, across 1,000 business offices and customer touch points in 20 African countries. With presence in New York, London, Paris and Dubai, UBA is connecting people and businesses across Africa through retail, commercial and corporate banking, innovative cross-border payments and remittances, trade finance and ancillary banking services.
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