Nigeria plans ‘Jollof Bond’ to tackle infrastructure deficit, threatens MTN on fraudulent USSD charges

Date:

looks at proposal from Deutsche Bank and World Bank in 2020
As CBN Says Nigerian banks healthy

Thank you for reading this post, don't forget to subscribe!

Nigeria Minister of Finance has said that the bilateral meeting with the UK authorities was to explore areas of cooperation on the debt instrument on the proposed Jollof bond,

Naija247news recalled that the Lord Mayor of London, Alderman Charles Bowman, had in June 2018, disclosed plans to launch the Jollof Bond on the London Stock Exchange to support the financing of Nigeria’s wide infrastructure deficit. He had noted the need to finance Nigeria’s infrastructure using naira-denominated financial instruments.

But speaking on the outcome of the meeting, Ahmed said: “I am happy to announce the willingness of the UK authorities to support our infrastructure financing through the possible issuance of a Jollof Bond. “Already a working committee is being set up to interface with Nigeria on this possible naira-denominated bond. The CBN will be leading in these efforts. We will also explore all options in this regard at the next UK investment summit that will be holding in January 2020.”

Speaking further, she explained that essentially, the Jollof Bond is an instrument issued offshore but denominated in local currency.

She said the importance of such a debt instrument was that it protects the country and issuer from exchange rate exposure.

She said: “We are contemplating such a bond. There have been proposals made to us, not just by the UK government but also by Deutsche Bank and today also by the World Bank.

“We are looking at that as another instrument to raise financing for the national budget. In the past we have issued Eurobond which has done well, but we are considering this option because it could be cheap and even if it is not, it will be more cost-effective because we are protected from exchange rate differential risk.”

According to her, there were also discussions around areas of mutual cooperation as well as the possibility of signing an agreement on the avoidance of double taxation as well as asset repatriation.

In addition, Ahmed expressed belief that the recent closure of the borders would help address the issue of smuggling from both Niger and Benin Republic, when the matter is resolved.

She urged the affected neighbouring countries to abide by African Continental Free Trade Agreement (AfCFTA).

She said the Nigerian delegation had discussion around the power sector recovery programme.

Ahmed said the discussion between the federal government’s delegation and World Bank for a $3 billion power sector loan had gotten to advanced level, saying the first tranche of $750 million may be released next April.

She said there was room for the loan to be extended to $4 billion.

Nigeria’s Central Bank Warns Telcos on Fraudulent USSD charges
The Governor of Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, yesterday directed commercial banks and other financial institutions under its regulation to shun the move by telecommunication companies to impose charges on Unstructured Supplementary Service Data (USSD) services.

Precisely, he said banks have been directed to move their services to Telcos that are willing to offer such service at the lowest or even zero charges.

In addition, Emefiele insisted that the strategic health of the banking sector remains “very strong.”

This is just as the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, disclosed that the federal government and authorities from the United Kingdom have resumed talks about the possibility of the latter supporting Nigeria’s plan to float a ‘Jollof Bond’ to support infrastructure development in the country.

They said this while responding to questions during a joint media briefing by the leaders of the Nigerian delegation, at the end of the International Monetary Fund (IMF)/World Bank Annual Meetings in Washington DC.

Some telcos recently sent notices to their customers about the new charge.

For instance, MTN in a notice to its customers stated: “Please note that from October 21, we will charge N4 per 20 seconds for USSD access to banking services. Thank you.”

USSD is a Global System for Mobile (GSM) communication technology that is used to send text between a mobile phone and an application programme in the network.

However, reacting to the development, Emefiele said: “You are all aware that there is a drive for us to deepen financial inclusion in Nigeria. I had made my commitments to Bill Gates Foundation as well as Queen Maxima that we would deepen financial inclusion and that by 2020 the rate of financial inclusion would have accelerated to about 80 per cent.

“At this time, we are close to about 65 per cent. We moved from about 42 per cent to 65 per cent in about 18 months and we believe that we can achieve this 80 percent if everybody, that is the bank and telecoms company, cooperate with us.

“About five months ago, I held a meeting with some telecoms companies and leading banks in Nigeria, at the CBN in Lagos and the issue on cost of USSD came up. We came to a conclusion that the use of USSD is a sunk cost, meaning that it is not an additional cost on the infrastructure of the telecoms companies. But the telecoms companies disagreed with us and said it was an additional investment in infrastructure and that for that reason, they needed to impose the charge. I appealed to them to please review this downwards and they refused.

“I understand that about three to four weeks ago, rather than reduce it, they went ahead to increase by 300 per cent. I opposed it and I have told the banks that we would not allow this to happen. The banks are the people who give these businesses to the telecoms companies and I leave the banks and the telecoms companies to engage.

“And I have told the banks that they have to move their business and move their traffic to a telecoms company that is ready to provide it at the lowest possible and if not at zero cost and there is where we stand and we must achieve it.”

Meanwhile, the federal government, through the Ministry of Communications, has directed the Nigerian Communications Commission (NCC) to immediately call on MTN to suspend its plan to implement additional charges for every financial transaction carried out by bank customers, using the *737* code.

The Minister of Communications, Dr. Isa Pantami, yesterday, issued a press statement, directing the NCC to ensure that MTN suspends the implementation of such plan.

USSD is a communications service controlled by mobile network operators, which is a critical piece of infrastructure used to provide mobile financial services through the mobile phone and it is linked to the SIM card of the mobile phone.

Pantami, in the statement signed by his spokesperson, Mrs. Uwa Suleiman, said: “The office of the Honourable Minister of Communications, Dr. Isa Pantami, is unaware of this development and has hereby directed the sector regulator, the Nigerian Communications Commission (NCC), ensures the operator suspends such plans until the Honourable Minister is fully and properly briefed.”

Responding to a question on the health of the banks, especially in the light of the recently released CBN Financial Stability Report for December 2018, which showed that seven banks had funding gap, Emefiele said stress-testing is a routine at the central bank.

He said the exercise is done regularly to check the strategic health of all banks in the industry.

He explained: “So, from time to time, maybe one bank failed one ratio or the other and we would advise that the bank should improve on the ratio; whether it is capital adequacy ratio, liquidity ratio, or other forms of ratios that have been prescribed to the banking industry.

“So, the fact that you read that seven banks failed stress test does not mean that those banks are weak, what we are saying is that there are areas that they are weak, we try to make sure they address them.

“So, it is nothing that would lead to any panic or systemic crisis in the industry.”

He also disagreed with the IMF that foreign exchange restrictions placed on some items in the official forex market was impeding the flow of foreign direct investments (FDIs) in the country.

According to him, the IMF position that restriction of forex on items that could be produced locally, was affecting FDIs “is false.”

The CBN governor backed the decision by the federal government to temporarily shut Nigeria’s land borders with Benin Republic and Niger.

According to him, the federal government has a responsibility to put in place policies that would support growth in the Nigerian economy, saying that smuggling had negatively impacted infant industries in the country.

He said: “Two weeks to the closure of the border, I was called by rice millers and they were complaining that each of them had nothing less than 30,000 metric tonnes of milled rice in their warehouses that they couldn’t sell as a result of smuggling.

“I was also called by some of the poultry farmers that we were also financing through our intervention funds that they couldn’t sell their eggs and poultry items.”

Continuing, Emefiele, however, disclosed that a week after the border closure, the rice millers called back to reveal an improvement in sales.

Jollof Bond

Share post:

Subscribe

Popular

More like this
Related

“This entertainment industry is so dark cos people in it are so vile – Actress Uche Ogbodo

March 19, 2024. Azonuchechi Chukwu. Actress Uche Ogbodo has said the...

SSANU begins 7-day warning strike

March 19, 2024. Azonuchechi Chukwu. The Senior Staff Association of Nigerian...

Gunmen kill church general overseer and pastor in Akwa Ibom

March 19, 2024. Azonuchechi Chukwu. Gunmen have killed the founder of...

Police Arrest 16-year-old boy for defiling schoolmate in Port Harcourt

March 19, 2024. Azonuchechi Chukwu. The Rivers State Police Command has...

Discover more from Naija247news

Subscribe now to keep reading and get access to the full archive.

Continue reading