The Central Bank of Nigeria (CBN) has requested statutory powers to freeze accounts linked to criminals in the country.
The apex bank has also called for the creation of a Credit Tribunal to strengthen credit recovery processes and enforcement of collateral rights.
These positions were advanced, in Abuja, yesterday, at the Senate Committee Public Hearing on its Bill for an Act to Repeal the Banks and Other Financial Institutions Act (BOFIA) 2004 and re-enact the Banks and Other Financial Institutions Act 2020.
Mr Kofo Salam-Alada, CBN’s Director Legal Services, in his presentation told the lawmakers said that the 2004 BOFIA provided for the CBN Governor “to apply to the court for orders to freeze accounts which are deemed to be linked with criminal and other civil infractions.”
He noted, however, that in the new Bill, which has passed through the First and Second Readings, that provision was omitted, entirely.
“This omission he told the Senate “erodes the powers of the CBNand creates a huge gap in the regulatory and resolution framework. Therefore, we propose that the extant provisions should be reinstated,” Mr Salam-Alada pointed out.
On the Creation of Credit Tribunal, the director defended the position of the CBN, as according to him, such a tribunal would greatly enhance loan recovery in the nation’s banking industry.
“As part of measures to address the role of non-performing loans, we propose the creation of a Credit Tribunal. The overarching objective is to create an efficient regime for the recovery of eligible loans of banks and Other Financial Institutions (OFls) and enforcement of rights over collateral securities,” the director said.
On Dormant Accounts in banks, the CBN called for the inclusion of provisions to improve the administration of such accounts, adding, “such provisions should address such requirements as the criteria for determining dormancy, the processes for managing the funds in dormant accounts and procedure for reclaiming funds by beneficiaries.”
The apex bank called the inclusion in the Bill, statutory powers of the CBN to intervene in the process of managing a failing bank and bringing it back to sound financial health were possible.
The CBN urged a review of the framework for managing failing institutions in line with international standards to properly delineate roles for the agency tasked with managing failing banks and other financial institutions and those with responsibility for resolving banks and other financial institutions whose license has been revoked.
“In other words, the Central Bank of Nigeria does the former as provided in the BOFIA while NDIC is saddled with the latter under the NDIC Act. The global best practice is to have the banking legislation empower the Financial services industry regulator to regulate banks, promote their soundness and stability superintend issuance and revocation of operating licence without recourse to any other institution; while the Deposit insurer is in charge of bank resolution activities after the revocation of the operating licence,” the director said.
Mr Salam-Alada added: “There is a need to expand the options available to the CBN to resolve failing banks and manage the systemic crisis without recourse to the public treasury. In line with international best practices, we recommend the establishment of a resolution fund to pool resources for managing banking sector distress.
“We also recommend the adoption of additional resolution tools such as bail-in (ensuring that losses are absorbed by shareholders and creditors), sale of the business (allowing the resolution authority to sell all or part of the failing bank to a private acquirer) and asset separation (isolating the “bad” assets of the bank in an asset management vehicle for an orderly wind-down, if immediate liquidation is not justified in current market conditions).
“Several new types of licensed institutions have entered the Nigerian Financial Services sector since the enactment of the 1991 Act. These include the non-interest banks, credit bureaux, payment system service providers, among others. There is a compelling need to introduce new provisions in the Bill to address the unique peculiarities of these institutions.”
The Nigeria Deposit Insurance Corporation (NDIC) agreed with the position of the CBN on the need to delineate the responsibilities of the two organizations in banking failure resolution.
FCCPC: Electricity Topped Consumers’ Complaints In 2020
The Federal Competition and Consumer Protection Commission (FCCPC) says it received the highest consumer related complaints from the electricity sector in 2020.
Speaking in Abuja on Sunday, Babatunde Irukera (pictured), chief executive officer of FCCPC, said the banking and telecommunication sectors ranked second and third respectively on the complaints chart.
He added that the aviation sector was ranked fourth.
“Our complaints resolution team is still a very small team of people and they are dealing with thousands of complaints,” Irukera said.
“We are looking at expanding capacity to have more hands handling the complaints but the real game changer in handling complaints better and faster is for companies to start doing it.
“The person who has the least open complaint in our resolution team has about 800 complaints across sectors and that is one person. If you multiply it by 12 to 15 persons, you will imagine the number of complaints.
“Being able to expand to a point where we are able to operate more efficiently, we will keep training, leveraging technology, the more we leverage technology, the more efficiently we can do our work.”
The commission was established by the 2018 Federal Competition and Consumer Protection Act (FCCPA) to promote fair, efficient and competitive markets in the Nigerian economy, facilitate access by all citizens to safe products, and protect the rights of all consumers in Nigeria.
FEC Approves CBN’s Request To Renovate National Theatre For N21b
Lai Mohammed, minister of information and culture, said on Wednesday that the Federal Executive Council (FEC) has approved a memorandum of understanding (MoU) between the Central Bank of Nigeria (CBN), and the ministry of information and culture for the renovation of the National Theatre in Iganmu, Lagos.
He spoke at the end the weekly FEC meeting in Abuja.
The federal government, on July 12, 2020, handed over the national theatre to CBN and the bankers’ committee to signify the kick-start of the renovation process.
“This is a landmark approval because, it has paved the way for investment in the creative industry as part of the resolve of this government to create at least one million jobs in the next three years in the creative industry,” Mohammed said.
“The CBN and banker’s committee are willing to invest N21.894 billion to renovate, refurbish and commercialization (run it profitably) of the national theatre complex. The MoU has a life span of 21 years after which it will revert back to government.”
The minister assured that no job will be lost after the national theatre is renovated, adding that the “brand new national theatre, an event centre” will instead create more jobs.
Asides from this, FEC approved about N9.43 billion to complete the digital switch over (DSO) in broadcasting; N8.98 billion for a new national ICT park in the federal capital territory (FCT) to coordinate public and private ICT hubs in Nigeria.
The council also approved a new national policy on aging which would take care of the needs of the aged people across Nigeria; approved the ministry of water resources memo to construct Damaturu water supply project in Yobe state worth N8.43 billion.
Adesina identifies Debt Service As Greatest Risk To Nigeria
The President of African Development Bank (AfDB), Dr. Akinwunmi Adesina, has warned that debt service is Nigeria’s greatest risk, even as he urged the federal government to take steps to increase tax revenue in the face of dwindling oil income.
The Director of Communications and Liaison of the Federal Inland Revenue Service (FIRS), Mr. Abdullahi Ahmad, stated that he spoke virtually at the recently held First Annual National Tax Dialogue .
Dr. Adesina was quoted as saying that due to the impact of the COVID-19 pandemic, Nigeria’s economy shrank “by 3% in 2020 on account of falling oil prices and the effects of the lockdowns on economic activities,” adding, “with shrinkage in oil revenues, debt service payments pose the greatest risk to Nigeria.”
He stressed further that for Nigeria to overcome the pandemic, “taxes must form a significant percentage of government revenue. Digitalization of tax collection and tax administration is critical to ensure greater transparency of the tax system, widening of the tax base, while mitigating compliance risks and encouraging voluntary tax compliance.”
Tax experts and stakeholders at the event called for the automation of tax collection by the FIRS through data and intelligence in order to ease tax collection, as well as, improve revenue.
Executive Secretary, African Tax Administration Forum (ATAF), Mr. Logan Wort, harped on the place of technology in generating revenue for the country in a post-Covid economy.
Mr. Wort, who joined the dialogue virtually from South Africa, stated, “Domestic Resource Mobilisation (DRM) is expected to contribute at least 75% to 90% on average per country” in the post-Covid era, adding that Nigeria and other African countries should note, “improved tax revenue will have to take prime position” in the scheme of things.
He urged Nigeria to pay serious attention to e-commerce and the digital economy sector where big, trans-national digital conglomerates like Google, Netflix and Uber operate and make huge, tax-free profits as a possible way of increasing tax revenue generation.
He said Nigeria should borrow a leaf from Ghana in e-commerce taxation, projected to fetch Ghana $450 million in annual tax revenue.
Ekiti State Governor, Dr. Kayode Fayemi, who was chairman of the Dialogue, was quoted as lauding the FIRS “for its performance in the 2020 fiscal year, despite operating in the most challenging period. The Service not only collected N4.9 trillion in taxes, achieving 98% of its target; only 30.6% of this was attributed to Petroleum Profits Tax, from what used to be over 50%”.
He urged participants to, “interrogate how Nigeria can further deepen the use of technology to improve tax compliance nationally and across sub-nationals.”