CBN Sells N4.1 Trillion Worth of Special Bills


•Unveils new capital requirement for payment service providers

•Emefiele lists ABP achievements

Obinna Chima in Lagos and James Emejo in Abuja

Following last week’s introduction of 90-day special bills by the Central Bank of Nigeria (CBN), the apex bank yesterday sold N4.1 trillion worth of the instrument in the money market.

The CBN has also announced new capital requirement and licence categorisation for payment service providers (PSP).

The sale of the 90-day special bills into the money market came just as CBN Governor, Mr. Godwin Emefiele, outlined the impact of the Anchor Borrowers’ Programme (ABP), set up to finance smallholder farmers.

He said the programme has revolutionised agricultural credit financing and remained the fulcrum of transformation initiatives in the sector.

Features of the special bills, introduced by the CBN, include zero-coupon, applicable yield at issuance to be determined by the CBN; the instrument will be tradable amongst banks, retail and institutional investors.

Also, the CBN stated that the instrument shall not be accepted for repurchase agreement transactions with the CBN and shall not be discountable at the CBN window.

In addition, the instrument will qualify as liquid assets in the computation of liquidity ratio for deposit money banks.

Speaking on Arise Television yesterday, the Head of Research at United Capital, Mr. Wale Olusi, who confirmed the development, said: “With this instrument, there is a new outlet for non-bank financial institutions who can go ahead and buy the bills from the banks.

“Technically, it is another form of Nigerian Treasury Bill or Open Market Operations (OMO). But regardless of what name they call it, as long as it is a zero-coupon instrument, it means that it is discounted at a particular rate, which is almost like treasury bills.”

In terms of pricing, the special bills are not different from OMO or treasury, Olusi said.

CBN Unveils New Requirements for PSP

The CBN has announced a new capital requirement and licence categorisation for payment service providers.

The CBN, in a circular posted on its website yesterday, which was signed by its Director, Payment System Management Department, CBN, Mr. Musa Jimoh, put the new capital requirement for mobile money operations as well as switching and processing companies at N2 billion respectively. The circular was dated December 9, 2020,

The minimum capital requirement Payment Solution Services (PSS) was pegged at N250 million while that of super-agents is now N50 million.

Also, Payment Terminal Service Providers (PTSP) and Payment Solutions Service Providers (PSSP) are required to have N100 million minimum capital requirement respectively.

The CBN said the move was in line with its commitment to promote a strong and credible payment system.

“The new licensing framework offers clarity for new and existing market participants given the significant evolution and innovation in the Nigerian payment system,” it added.

According to the CBN, payment system licensing has been streamlined into four broad categories. These it listed to include switching and processing; Mobile Money Operations (MMOs); PSS and Regulatory Sandbox.

It said: “Only MMOs are permitted to hold customer funds. Companies with licences within any of the other categories are not permitted to hold customers’ fund. Companies seeking to combine activities under switching and MMO categories are strongly permitted to operate under a holding company structure with the subsidiary entities delineated to prevent co-mingling.

“Payment system companies in the PSS category may hold any of PSSP, PTSP and super agent licence or a combination of the licences thereof. All licensed payment service providers in any of the categories covered by this framework holding or seeking any other CBN issued licences are required to obtain a no-objection from the Payment System Management Department.

“The object clauses in the Memorandum and Articles of Association of Payment Service Providers shall be limited to the permissible activities under their licensing authorisations. Collaboration between licensed payment companies, banks and other financial institutions in respect of products and services are subject to CBN’s prior approval.

“All new licensing requests including those with approval-in-principle are to comply with the new requirements immediately. Existing licensed payment companies are to comply with the new licensing requirements where applicable not later than the end of June 2021.”

Emefiele lists ABP Achievements

The CBN Governor, Mr. Godwin Emefiele, yesterday outlined the impact of the Anchor Borrowers’ Programme (ABP), set up to finance smallholder farmers.

He said the programme has revolutionised agricultural credit financing and remained the fulcrum of transformation initiatives in the sector.

He also said through the use of technology to boost productivity, the apex bank will work with farmers to achieve one million hectarage cultivation during the 2020 dry season; an improvement from the 500,000 hectarages in the preceding farming year.

Emefiele said in Minna, Niger State, during the national flag-off of the 2020/2021 dry season rice farming and loan recovery drive that beyond being a tool for economic empowerment, job creation and wealth redistribution, the ABP had also galvanised financial inclusion in rural communities. The programme was jointly organised by the CBN and Rice Farmers Association of Nigeria (RIFAN).

The event witnessed the display of four massive rice pyramids apparently to prove critics wrong that the country currently lacks sufficient rice to feed its growing population.

The rice farmers said the country has sufficient commodity to feed its citizens and export to earn foreign exchange.

Emefiele said with the deployment of technology which covered farmers enumeration, biometric capture and GPS mapping of farms, all embedded to enhance the operational efficiency of the ABP, the 2018 wet season witnessed a geometric rise in beneficiaries.

He added that about 275,000 farmers were empowered to cultivate 220,000 hectares across all the 36 States of the federation and the Federal Capital Territory (FCT).

Emefiele, represented by CBN Deputy Governor, Corporate Services, Mr. Edward Adamu, explained that since the launch of the ABP by President Muhammadu Buhari in 2015, rice has remained the focal crop under the programme given its crucial role in the diet of average Nigerians.

According to him, with the current population of about 200 million, importation of any major food item will continually drain the country’s external reserves, export jobs to countries where these food items are produced and distort the commodity value chains as Nigeria will not be able to guarantee the supply of raw materials for its agro-allied companies.

He described loan recovery as the hallmark of any credit process, adding that the combination of input distribution and loan recovery drive further demonstrated that the ABP remained a sustainable credit programme towards repositioning the sector.

He stated that the CBN has continued to enhance its risk mitigation strategies to guarantee the intended outcomes of the ABP.

He added that beyond rice, the commodity association window has been expanded to cover more commodities, including maize, cassava, sorghum, soybean and ginger.

He said: “We are hopeful that all these efforts will contribute to our national aggregates and galvanise our drive to economic diversification.

“Despite the devastation caused by numerous floods in the 2018 wet season, farmers have been submitting produce and cash as part of their loan repayment but we need the association to intensify efforts in this regard in the spirit of the partnership and sustainability of the programme for the transformation of the sector.”

He added that the partnership with RIFAN under the Commodity Association Window of the ABP was a flagship programme to explore the potential inherent in agricultural commodity associations and position them strategically as drivers of enhanced agricultural productivity in the country.

He said linking the divisions to the innovative financing model under the ABP delivered quality inputs and mechanisation services to farmers at a competitive price and the right time.

He stated that from a modest pilot of 75,000 farmers in 26 states, the RIFAN-CBN ABP has now been fully established in all states of the federation, including the FCT.

Emefiele, however, said the participation of other commodity associations posed a leadership challenge to RIFAN to remain the lead association and role model for others in terms of members’ engagement and loan recovery.

However, RIFAN President, Mr. Aminu Goronyo, told THISDAY at the occasion that contrary to speculations that there’s no sufficient rice in the country, Nigeria currently has enough for local consumption and for export to other African countries.

He said: “They say there is no rice in Nigeria but we that are farming knew there’s rice; enough rice in Nigeria and more than enough to export to other African countries.

“That is why we portray the Egyptian and Nigerian rice pyramids for all to see. The paddy that you see here is just a fraction of what we cultivated in Niger State.”

He added that the success story in rice production is currently replicated in different parts of the country.

CBN Director, Development Finance Department, Mr. Yusuf Yila, however, said about 500,000 hectares would be cultivated in Niger State alone under the new farming dispensation.