Finance
Banks’ borrowings from CBN to hit N23tr by year end
Three are indications that banks borrowing from the Central Bank of Nigeria, CBN, may hit N23.7 trillion this year, with interest payment of N15 billion going by the current thrust and impacts of the CBN monetary measures. This represents 109 percent and 86 percent increases against the N11.33 trillion and N8.4 billion recorded in 2018.
The development would be fuelled by the apex bank’s contractionary monetary policy stance in the face of the increasing pressure on the Naira in the Investors and Exporters (I&E) window.
The pressure in the I&E is being triggered by sharp decline in foreign portfolio inflows and increased dollar demand by foreign portfolio investors, FPIs, exiting the nation’s money market.
Furthermore, banks’ deposit placements with the CBN is expected to drop by 31 percent to N14.3 trillion from N20.7 trillion in 2018 with interest earned by the banks rising moderately by 2.69 percent to N7.23 billion from N7.5 billion in 2018.
Indications to this emerged from the CBN monthly economic reports covering January to May 2019, which showed that banks’ borrowing from the CBN through the Standing Lending Facility (SLF) shot up by 109 percent to N10.99 trillion for the five months period, from N5.27 trillion during the corresponding period (January to May) of 2018.
Interest paid by the banks also shot up by 86 percent to N7.32 billion during the five months period ending May 2019, from N3.94 trillion in the corresponding period of 2018.
The CBN monthly economic reports also showed that banks’ deposit placement with the CBN through its Standing Deposit Facility (SDF) dropped by 31 percent to N5.59 trillion during the period under review from N8.1 trillion in the corresponding period of 2018, while the interest earned by banks rose slightly by N2.85 billion from N2.69 billion in the corresponding period of 2018.
The above trend is expected to persist till the end of the year driven by two factors, namely, the recent reduction in the remunerable limit on banks’ deposit placement through the SDF, and scarcity of funds in the interbank money market, due to increased liquidity mop up by the CBN.
The mop up, Financial Vanguard learnt, became compelling to address increasing pressure on the Naira due to sharp decline in foreign portfolio investment (FPI) inflows and increased dollar demand on the CBN.
Pressure on the Naira
Financial Vanguard analysis showed that the Naira lost 0.7 percent or N2.87 against the dollar between July 1 and August 9 in the I&E window, where the indicative exchange rate rose to N363.57 per dollar on August 9 from N360.57 per dollar on July 1.
This is in sharp contrast to the relative stability of the currency in the first half of the year (H1’19) when the indicative exchange rate for the I&E hovered between N360 per dollar and N361 per dollar.
Financial Vanguard analysis shows that FPI inflow in the I&E dropped by 28 percent to $780 million in July, the lowest since December 2018.
The figure was $1.09 billion in June 2019. The $780 million FPI inflow for July represented 60 percent decline when compared with average monthly inflow of $1.94 billion in H1’19.
This development forced the CBN to intervene in the I&E window for the first time since April this year, injecting $540 million.
Furthermore, the apex bank increased liquidity mop up in the interbank money market by 36 percent, as it sold N739 billion worth of secondary market Treasury Bills, TBs, (Open Market Operations, OMO) in July, up from N476 billion sold in June. This action resulted to net outflow of N438 billion through OMO bills from the interbank money market in July, up from net outflow of N4 billion in June.
Analysts’ comments
Financial analysts have been busy tracking these developments recently. According to Nnamdi Olisaeloka, a Fixed Income Analysts with Lagos based investment firm, Zedcrest Capital Limited, the development will be repeated in the remaining period of 2019, especially in the face of N9.6 trillion worth of TBs which will mature between August and December this year, hence increased borrowing by banks from the apex bank. He said:
“We expect the trend of higher SLF figures to persist in the remaining months of 2019, as the CBN is expected to increase its spate of Open Market Operations (OMO) issuance and foreign exchange interventions in the interbank market, to combat the higher OMO maturity profile in September to December 2019 and to sustain the stability of the naira, given the recent pressures from capital flow reversals by offshore investors.
Banking system liquidity Also the CBN policy on sterilizing excess funds of banks operating below its 60 percent Loan to Deposit (LDR) benchmark ratio, would also impact on banking system liquidity and could pressure the SLF volumes higher.”
However, Ayo Akinwunmi, Head of Research, FSDH Merchant Bank, though attributed the sharp increase in SLF to increase in banks’ lending to the economy, argued that the trend might not persist in the remaining part of the year.
He said: “I am aware that banks are expanding lending to the real sector of the economy and they are mobilising fund from various sources, including borrowing money from the Central Bank of Nigeria, to meet the increasing lending requirements.
“The trend of higher SDF may not continue because of the huge liquidity in excess of N9.6 trillion that is coming to the inter-bank market from August to December 2019 in form of maturities of government securities.” Both analysts, however, agree that the sharp decline in SDF will persist for the remaining part of the year due to the decision of the CBN to reduced the remunerable limit on banks’ deposit placement through the SDF to N2 billion per day from N7 billion per day.
According to Olisaeloka, “The SDF figure is expected to sustain a decline as banks would prefer to invest their surplus funds in short term treasury bills, given the decline in the remunerable SDF amount to N2 billion per institution.” Akinwunmi on his part said:
“Since the amount that will qualify for interest rate at the Standing Deposit Facility has dropped from N7. 5 billion to N2 billion in the face of an increase in minimum loan to deposit ratio, less fund will be available for SDF. This is because banks are now required to channel more fund to lending than before, to stimulate economic growth in Nigeria.”
Vanguard
Improved efforts at collaboration among financial service providers, telecommunication operators, and tech Startups, with conscious effort geared at consumer awareness, have been proffered as key remedies to the challenge of financial inclusion in the country.
This is the viewpoint of stakeholders that gathered for the second edition of Payment Forum Nigeria (PAFON 2.0) held recently in Lagos.
Delivering a keynote address on the theme, “Bridging the Customer Experience Gap for Financial Inclusion Using AI”, Ebehijie Momoh (Mrs.), the managing director and chief executive officer of AfriGoPay Financial Services Limited, said that with 64% of Nigerian adults being financial included the country has made immense progress in that regards.
She said that between 2012 till date, the country has recorded robust regulatory reforms, especially the launch of the Bank Verification Number (BVN) in 2014 making it easier to identify and track customers across different banks.
“This initiative enhanced the credibility of the financial sector and increased confidence in formal banking systems.
The growth in adoption of smartphones has also helped the financial sector to leapfrog financial inclusion. Nigeria has 142.16 mobile internet subscriptions with an average consumption of ~7.04GB / month as of January 2025. If you juxtapose it to the 15.9% decline in shipments of feature phones to 18.8 million units in Africa as at Q1 2024, you will understand that the uptake in smartphones has helped us a great deal.
Mrs. Momoh who spoke through Mr. Munachi Duru, the head of Innovation and Strategic Partnership at AfriGoPay, said the adoption of artificial intelligence banking gave birth to solutions like smile identity, a leading KYC verification provider launches facial recognition capabilities in Nigeria as neobanks and commercial banks are deploying AI-based KYC verification tools, enabling cheaper and efficient customer acquisition and servicing.
In her goodwill message, Mrs. Uche Uzoebo, MD/CEO, Shared Agent Network Expansion Facilities Limited (SANEF) Limited said that with progress made in accelerating financial inclusion to unbanked and underbanked communities in Nigeria, SANEF has leveraged Artificial Intelligence (AI) as the next step to advancement in financial services in the country.
She noted that as technology evolves rapidly within the financial ecosystem, Financial Inclusion must continue to be at the center of the nation’s progress.
According to her, agent banking has been a game-changer in expanding financial inclusion across Nigeria. “By deploying agents in underserved areas, we have brought financial services and banking products such as account opening, cash in, cash out, bill payment, transfers and other services closer to the unbanked and underserved.”
Speaking during a panel session, Mr. Ibirogba Oluwagunwa, chairman, Lagos State Chapter of the Association of Mobile Money & Bank Agents in Nigeria (AMMBAN), spoke of lack of collaboration and slow institutional drive towards AI as key barriers hindering digital inclusion.
He harped on the need for information sharing among fintech operators, and improved free flow of information to consumers. “The human barrier angle needs to be addressed. Fintechs need to be pushed to move forward, AI cannot operate itself.”
In his contribution, Mr. Chika Nwosu, managing director of PalmPay, reiterated the need to reach the consumers with simple format communication and education style.
He said operators should create awareness and design consumer-centric approach in developing any products. This will not only draw the consumers towards the product, but also generate trust and ease the use of such products.
Focusing on the use of AI to ensure reach, inclusion and security, Azure Application and AI Specialist at Microsoft UK, Olusoji Solomon Adeyemo, spoke on the need for AI and Blockchain in the bid to extend services to rural communities and the unbanked.
According to him, “AI, Blockchain and CBDs are shaping the future of payment, and there is a serious need for education. We need to align with global trends in new tech adoption.”
While noting that AI can ensure reach, Adeyomo said blockchain will also create digital identity that is exclusive and will promote digital financial inclusion.
In her position, Oluwabunmi Ogunyemi, the customer support lead at Moniepoint MFB, proffered physical and digital meet with customers, even in rural areas, as a viable means of inclusivity.
Also speaking, Olusegun Afolabi, the co-founder of Face Technologies UK Ltd., called for improved collaborations among stakeholders in the financial sector.
According to him, the fintech companies must also embrace effective identification solutions, focusing on biometrics and card technologies to ensure topnotch security for users.
Earlier in his opening remarks, Mr. Peter Oluka, co-Convener of the Forum, noted that the financial inclusion journey in the country has come to a crucial juncture where over 30 million adults are still financially excluded, many of whom reside in rural areas or belong to vulnerable demographics.
He noted that despite 12% growth in access to formal financial services between 2020 and 2023, as recorded by the EFInA Access to Financial Services Survey 2023, challenges still exist that hinders the unlocking of the potentials of digital payments to drive inclusive growth in Nigeria.
He further posited: “As digital infrastructure grows and fintech innovation accelerates, we must channel these advancements toward building a more inclusive, secure, and trusted financial ecosystem. This is not just about transactions — it’s about empowerment, opportunity, and economic participation for all.
Nodding in agreement, Mr. Chike Onwuegbuchi, co-Convener, PAFON, reiterated the need for all stakeholders in the financial payment industry, including regulators, to participate in forums as PAFON, to map out, growth strategies with consumers and other strata of the ecosystem.
He promised to invite security stakeholders, such as the EFCC and others in subsequent editions of the event. This will help give insight into security concerns in deployment of products and services in rural and unbanked communities.
Payments Forum Nigeria (PAFON) is a platform dedicated to shaping the future of digital payments and financial services in our country.
Finance
Flutterwave Powers Local Businesses in Ghana Through Pay With Bank Transfer
Reporter: Ikenna Ugwu
Flutterwave, a leading payments technology company in Africa, has broadened its reach in Ghana through the integration of Pay With Bank Transfer, done in partnership with Affinity Bank.
With over 115 million bank transfer payments recorded in Ghana in 2023, this move will ensure that Flutterwave businesses in Ghana can now receive payments seamlessly and securely through a rapidly growing payment method. While Mobile Money leads as the preferred payment type for everyday transactions in Ghana, the recent growth in transactions for Pay With Bank Transfer symbolizes the expanding payment options available for Ghanaian businesses.
Flutterwave has a track record of driving innovation in the African finance ecosystem, and this new development promises versatility, thereby expanding the pool of customers available to businesses. As a preferred payment method, it also promises faster payments while providing access to a more secure process of transacting which benefits both the sender and the receiver (business).
“We are excited to extend our services to the Ghanaian market” says Olugbenga Agboola, Flutterwave Founder & CEO“At Flutterwave, we are driven by the vision of building Africa’s economy. By making payment options like Pay With Bank Transfer available for everyday use, we are expanding access to payments and enabling local businesses to thrive in the economy”
By establishing this strategic partnership, Flutterwave aims to drive the adoption of the Pay With Bank Transfer option in Ghana, using virtual accounts to allow for secure and transparent payments. This will provide enterprises and small businesses with a simpler way to receive payments and give their customers a seamless process of making payments.
Geoffrey Fiador, Manager, Country Operations and Partnerships, at Flutterwave stated: “By delivering essential payment options like Pay With Bank Transfer for businesses in Ghana, we’re providing an easy way for them to increase their revenue opportunities to grow their businesses. ”
This announcement comes at the heels of Flutterwave’s recent approval by the Bank of Ghana to provide inward remittance services. With a track record of success across Africa, Flutterwave continues to be a trusted partner for businesses in over 34 countries, providing the tools and expertise necessary for success in the dynamic African market.
Finance
Stanbic IBTC Capital leads Presco PLC’s ₦82.9 Billion Bond Issuance to drive West African market growth
Reporter: SANDRA ANI
Presco PLC (Presco or the “Company”), has achieved a significant milestone with the successful issuance of its ₦82,896,000,000 7-year 23.75% senior unsecured fixed rate Series I Bonds under its ₦150 billion bond issuance programme (the “Transaction”) with the Securities and Exchange Commission (“SEC”). Stanbic IBTC Capital Limited (“Stanbic IBTC Capital”) acted as the Lead Issuing House on the Programme.
The proceeds from the Transaction will enable the Company fund its acquisition of a 100% equity stake in Ghana Oil Palm Development Company (GOPDC), further supporting its strategic expansion objectives.
Speaking on the transaction registration, Mr Reji George, Managing Director / CEO, Presco PLC commented:
“The successful completion of our Series 1 Bond issuance solidifies Presco’s foundation for continued growth and expansion. Aligned with our strategic objectives of increasing our planted area of palm oil and, to lead Africa in the fully integrated edible oil and fats business in the nearest future, the proceeds from this issuance will be primarily directed towards the acquisition of a majority equity stake in the Ghana Oil Palm Development Company (GOPDC).
This not only enhances our operational efficiencies, It also solidifies our market presence and competitive advantage in the palm oil sector beyond Nigeria. Most importantly, this will enable us to better serve our valued customers and deliver sustainable value to our shareholders. We extend our sincere gratitude to Stanbic IBTC Capital and all our advisors for their support throughout this process.”
Also speaking on the transaction registration, Oladele Sotubo, Chief Executive, Stanbic IBTC Capital, said:
“Stanbic IBTC Capital is proud to have advised Presco PLC on the successful issuance of its ₦82.9 billion Series 1 bond. As the largest local currency corporate bond issuance in the Nigerian market in recent years, this milestone underscores our deep expertise in capital markets and our commitment to delivering innovative, high-impact financial solutions.
Beyond reinforcing Presco’s strategic growth, this transaction enhances funding diversification within the agricultural sector, driving sustainable industry expansion. We appreciate Presco PLC’s trust in Stanbic IBTC Capital and the consortium of advisors who contributed to the successful execution of this landmark deal.
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