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Home Blog Page 4153

Nigeria’s Most Profitable Public Companies

By
Ndubuisi Ekekwe
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1
Hamlet answered Lord Polonius, “Words, Words, Words”. And in “The Rime of the Ancient Mariner” , Coleridge muttered “Water, water everywhere, / Nor any drop to drink”. And the peerless Achebe wrote, “an adult does not sit and watch while the she-goat suffers the pain of childbirth tied to a post”.
 
Good People, as I read this chart, I can shout “money, money, money” and also remind myself that even though this money is everywhere in Nigeria, many cannot just find it. And then the big one: we need better policy to unlock shared prosperity for ALL in this nation of abundance.
 
You need to salute MTN Nigeria, it is dancing where it matters most: value capture. Indeed, MTN Nigeria is more profitable than the whole of Airtel operations in Africa. Can you hear me now?
Data from Nairametrics

New CBN Directions on FX Purchase, Prohibition of Form “M” for Fertilizer, Indirect Participants in Payment Systems

By
Emmanuel Ifeanyi Ogbuka
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0

New Directives in the Acquisition of Foreign Exchange from Authorized Dealers in Nigeria.

It was recently announced by the Central Bank of Nigeria through its Authorized Dealers (Banks) that the following regulations will henceforth apply in foreign exchange purchases :-

– In compliance with Ss.85(2),(4) & (5) of the Personal Income Tax Act(as amended), customers applying for the purchases of Forex Forms A(invisible), Form Q(SMEs), & Form M(for letters of credit & bills for collection) are now required to submit their Tax Clearance Certificates (TCCs) evidencing tax payments for 3 preceding the current year of assessment OR a Tax Exemption Certificate.

– Tax Certificates would also be required for sourcing FX-based Personal Travel Allowance and Business Travel Allowance (PTA/BTA) transactions which have been generally reduced to $2,000 from $4,000 by most authorized dealers. 

– This is in addition to all existing documentary requirements to be uploaded on the regulatory platform of the CBN.

– These new directives are regulatory compliance requirements aimed at efficiently processing foreign exchange transactions in Nigeria.

 Details of the Central Bank of Nigeria Prohibition of Form “M” For Fertilizer Importation in Nigeria.

On the 30th of January,2020, the Central Bank of Nigeria (CBN), pursuant to its earlier circular dated the 10th of December,2018, gave in a subsequent circular the following directions :-

– That an existing ban on the importation of all NPK Fertilizers into Nigeria remains in force.

– That no authorized dealer shall henceforth establish Forms M for the Importation of NPK Fertilizers into Nigeria.

– In view of the foregoing, any authorized dealer that establishes Forms M for the importation of all NPK Fertilizers & any other variant shall be severely sanctioned including the management and staff responsible for the transaction.

– Strict compliance with this circular is required.

Details of the CBN Regulation for the Operation of Indirect Participants in the Nigerian Payments System.

The Central Bank of Nigeria (CBN) on the 11th of November,2019, released a set of regulations pursuant to its jurisdiction to promote sound financial systems in the country for the development of an efficient and effective payments system in Nigeria.

This article will be looking at the provisions of these regulations.

What are the objectives of these CBN regulations?

1). To set out the procedures for effective integration of indirect participants in the payments system in Nigeria.

2). To standardize the operation of indirect participants in the payments system, taking into cognizance their operational risks.

3). To provide a framework for the clearing and settlement of indirect participants payment instruments through the direct participating banks.

4). To strengthen indirect participants for effective contribution to digital financial services in Nigeria. 

What are the minimum criteria for indirect participants?

To qualify as an indirect participant, an institution shall :-

  1. a) have a satisfactory risk-based rating from the CBN & secure a letter of recommendation from its direct participating bank, signed by the Chief Risk Officer and an Executive Director of the direct participating bank;

b). comply with Nigerian Uniform Bank Account Number (NUBAN) standards.

What are the general principles guiding indirect participants as outlined in the regulations?

The general principles outlined in the regulations are as follows:-

– Only direct participating banks are permitted to settle payment obligations of indirect participants.

– An indirect participant shall settle all its payment obligations through only one (1) direct participating bank per payment scheme at any given time.

– The relationship between a direct participating bank and an indirect participant shall be governed by a settlement agreement.

– Where the account of an indirect participant with a direct participating bank is not adequately funded, the direct participating bank may decline further settlement services to the indirect participant and inform the payment processor accordingly.

What are the components of the payments system?

The payments system as governed by these CBN regulations is made up of :-

– Cheque clearing

– EFT & Bulk payments

– Instant payments

– Card Issuance

– Card transaction & acquiring (ATM, POS, Web, etc)

– Portals (e-reference, anti-fraud, e-passport, etc)

– The Bank Verification Number (BVN) system

– Any other component approved by the CBN

What are the obligations of indirect participants under the CBN regulations?

– To comply with applicable provisions of the Nigerian Bankers Clearing System(NBCS) rules.

-To maintain a settlement account/accounts with the direct participating bank wherein the net settlement position of the indirect participants shall be credited or debited as may be appropriate after each settlement session.

– Pledging collateral in an amount as agreed with the directly participating bank which shall serve as security for settlement obligations.

– To pay settlement fees to the directly participating bank annually or as may be agreed by the parties.

How are settlement agreement/indirect participant disputes to be settled?

Indirect participant disputes are to be settled according to the dispute resolution clauses of settlement agreements or if that fails, by recourse to the CBN Dispute Resolution mechanism.

Welcome To Tekedia Mini-MBA and Upcoming “Venture Investing and Portfolio Management” program

By
Ndubuisi Ekekwe
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0

Greetings! We’re very excited to note that Tekedia Mini-MBA edition 11 has started. It began on Monday. If you registered but for any reason did not get your login instructions yet, please the instructions are here.

On Saturday, the first Zoom session will begin with Prof Ndubuisi Ekekwe’s “Mission, Innovation and Growth of Firms”. Zoom links are in the Board.  The following have been scheduled for Zoom live sessions. 

  • – June 13 – Design Thinking and Innovation –  Aderinola Oloruntoye, SAP Africa
  • – June 15 – Lean Supply Chain Applications in Business – Chibueze Noshiri, NATO Luxembourg
  • – June 17- Ndubuisi Ekekwe

 

  • – June 20 – Business Strategy and Execution-  Eromosele Omomhenle. Microsoft USA
  • – June 22 – Developing Effective People Management System in Companies, Ibironke Tolu-Ogunpolu, Afterschool Careers Hub
  • – June 24- Ndubuisi Ekekwe

 

  •  -June  27 – Human-Centered Product Design, Dr. Obinna Anya, Google USA
  • -ETC ETC

Dozens of faculty members from some of the leading companies in the world will teach in this edition. It is going to be the best edition yet.

Some of our members here will join the upcoming  “Venture Investing and Portfolio Management” program scheduled for July 3 – 29 , 2023. We want to welcome everyone as you get ready for that also.

As a team, we want to thank you for choosing Tekedia Institute. We’re here to serve.

Tekedia Institute Team

World Bank Marks Nigeria’s Economic Growth Projection Down to 2.8%

By
Samuel Nwite
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0

The World Bank has marked Nigeria’s output growth for the year 2023 down to 2.8 percent, due to the slow performance of the country’s economy in the first quarter of the year.

In its June Global Economic Prospects, the World Bank said that Nigeria’s economy is expected to see faster growth of three percent and 3.1 percent in 2024 and 2025 respectively.

The Washington-based financial institution had projected a 2.9 percentage point output growth. June’s 2.8 percent estimate is 0.3 percent lower than the 3.1 percent real growth expansion recorded last year.

The Bank has expressed concerns over the sluggish growth of the country from 2023 to 2024, emphasizing that it falls short of the necessary progress required to effectively address extreme poverty.

During the first quarter, the gross domestic product (GDP) experienced a slowdown due to a shortage of cash, resulting in a modest growth rate of 2.3 percent.

Sub-Saharan Africa (SSA) is projected to achieve an average growth rate of 3.2 percent this year, surpassing the global average of 2.1 percent by over one percentage point.

The report highlights that financing requirements are expected to remain high due to increased borrowing costs, reduced oil production and prices, and ongoing fiscal and external pressures, compounded by weak domestic revenue generation.

The report states, “Nigeria, the largest economy in the region, experienced further easing of growth in early 2023 as challenges in oil production persisted, constraining its recovery.”

“The non-oil sector, which drove economic activity last year, lost momentum at the beginning of this year due to persistently high inflation, foreign exchange shortages, and a shortage of banknotes resulting from currency redesign,” the report adds.

More than half of the downward revision for SSA growth in 2023 can be attributed to a significant slowdown in South Africa. Downgrades are widespread across energy and metal producers, as well as countries with limited natural resources.

“Excluding South Africa, growth in SSA is expected to decelerate from 4.2 percent in 2022 to 3.9 percent this year. While this represents a slight revision from January, this rate of expansion is still one percentage point below the average observed between 2000 and 2019,” the report explains.

Regarding the global forecast, the report states, “Stronger-than-expected activity in early 2023 is anticipated to push average annual growth 0.2 percentage point higher than the January forecast, despite an expected slowdown in the second half.”

However, the report cautions that the projected growth for 2024 is weaker than previously anticipated, primarily due to the delayed impact of increased monetary policy rates and additional challenges stemming from tighter credit conditions.

Implication of SEC Suit on Crypto Industry

By
Paul Ugbede Godwin
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0

The crypto industry is facing a major regulatory challenge as the U.S. Securities and Exchange Commission (SEC) has sued two of the largest crypto platforms, Coinbase and Binance, for allegedly violating securities laws. The SEC claims that both platforms operated as unregistered exchanges and allowed users to trade unregistered securities, among other charges. The lawsuits have sent shockwaves across the crypto market, as investors fear that the SEC’s actions could stifle innovation and growth in the sector.

The lawsuit follows a similar action by the Commodity Futures Trading Commission (CFTC) in March, which accused Binance and CZ of violating U.S. derivatives trading laws. The CFTC also alleged that Binance secretly coached U.S. customers on how to bypass compliance controls.

The SEC and CFTC actions are part of a broader crackdown on the crypto industry by U.S. regulators, who have expressed concerns about the lack of transparency, accountability, and consumer protection in the sector. SEC Chair Gary Gensler has compared the crypto market to “the Wild West” and called for more regulation and enforcement.

The lawsuit could have significant implications for the crypto industry, as Binance is the dominant player in the global market, with over $1 trillion in trading volume in May 2023. Binance offers a wide range of services, including spot trading, futures trading, margin trading, lending, staking, and decentralized finance (DeFi).

If the SEC succeeds in its lawsuit, Binance could face hefty fines, penalties, injunctions, and disgorgement of ill-gotten gains. Binance could also be forced to stop serving U.S. customers or comply with stricter rules and regulations. This could affect the liquidity, innovation, and growth of the crypto market, as well as the confidence and trust of investors..

However, some industry observers have questioned Binance’s claims and said that the company has been operating in a gray area for too long. They have also pointed out that Binance has faced regulatory scrutiny and pressure from several other countries, including the UK, Japan, Germany, Canada, Singapore, and Thailand.

The outcome of the SEC lawsuit is uncertain and could take months or years to resolve. However, it is clear that the crypto industry is entering a new phase of regulatory challenges and uncertainties that could reshape its future.

Coinbase, which went public in April 2021, is the largest crypto platform in the U.S., with over 70 million verified users and $223 billion in assets on its platform. Binance is the world’s largest crypto platform by trading volume, with over 100 million users and $1.4 trillion in monthly volume. Both platforms offer a wide range of crypto products and services, including spot trading, futures and options contracts, lending and borrowing, staking, decentralized finance (DeFi), and non-fungible tokens (NFTs).

The SEC’s lawsuits allege that both platforms failed to register as brokers or dealers with the agency, as required by the Securities Exchange Act of 1934. The SEC also alleges that both platforms facilitated the trading of unregistered securities, such as tokens that may be deemed as investment contracts under the Howey test. The Howey test is a legal framework that determines whether an asset is a security based on whether it involves an investment of money in a common enterprise with an expectation of profit from the efforts of others.

The SEC’s lawsuits seek injunctive relief, disgorgement of ill-gotten gains, civil penalties, and permanent bans on both platforms from operating in the U.S. The lawsuits also name the CEOs of both platforms, Brian Armstrong of Coinbase and Changpeng Zhao of Binance, as defendants, holding them personally liable for the alleged violations.

The lawsuits have sparked a fierce debate in the crypto industry over the role and scope of regulation. Some industry players argue that the SEC’s actions are necessary to protect investors from fraud and manipulation, and to ensure a level playing field for all market participants. Others contend that the SEC’s actions are overreaching and arbitrary, and that they stifle innovation and growth in the sector.

Coinbase and Binance have both denied the SEC’s allegations and vowed to fight them in court. Coinbase has also filed a suit against the SEC for failing to respond to its July 2022 petition that asked the agency to provide guidance for the crypto industry using its formal rulemaking process. Binance has also said that it has been trying to cooperate with regulators and comply with local laws in every jurisdiction it operates in.

The lawsuits could affect the adoption and innovation of crypto technologies, such as DeFi and NFTs, which rely on decentralized platforms and protocols that may not fit neatly into existing regulatory frameworks. The SEC also cites specific features or statements of some cryptocurrencies that support its claim that they are securities. For example:

BNB: The SEC alleges that BNB is a security because it represents an investment contract with Binance, which controls its supply and demand through various mechanisms, such as burning tokens to reduce circulation and increase scarcity.

BUSD: The SEC alleges that BUSD is a security because it represents an investment contract with Paxos, which issues and redeems BUSD tokens in exchange for U.S. dollars at a 1:1 ratio.

Solana: The SEC alleges that Solana is a security because it has a deflationary model powered by a burning mechanism that creates profit expectations for investors. The SEC also cites promotional statements made by Solana’s parent company to increase demand for its token.

Polygon: The SEC alleges that Polygon is a security because it represents an investment contract with its developers, who control its governance and development through a foundation and a DAO (decentralized autonomous organization).

Cardano: The SEC alleges that Cardano is a security because it represents an investment contract with its developers, who control its governance and development through a foundation and a treasury system.

Filecoin: The SEC alleges that Filecoin is a security because it represents an investment contract with its developers.

The outcome of these lawsuits could have significant implications for the future of the crypto industry, as they could set precedents for how crypto platforms are regulated and what kinds of products and services they can offer. 

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