CBN urged to enforce guidelines to push industry growth

The Central Bank of Nigeria (CBN), has been urged to enforce guidelines that would mandate commercial banks to stick to their core business of lending in line with international best practice.

This would enable licensed operators to expand their capacity, grow the financial sector, and enhance industry benefits for all stakeholders.

At a press briefing organised by Integrated Cash Management Services Limited (ICMS), a subsidiary of XL Africa Group, in Lagos, the Executive Chairman, Charles Nwodo Jnr, said a holistic approach to the entire cash supply chain in Nigeria’s financial system should rather be the function of the apex bank licensed operators not the commercial banks.

According to him, in other parts of the world, distribution, processing, securing and even packing of cash are done by private entities, while central banks typically concern themselves with the issuance of new notes and destruction of unfit notes as well as setting the standards for private operators in the value chain and monitoring compliance with standards.

He said: “These services are non-core operations to the bank and this means that the banks perform these services in an unregulated manner because the CBN did not license them for these services, and so they do not file any returns to the CBN on basis of standards and protocols associated with this”.

“The banks claim that the licensed operators do not have the capacity to service the industry, but then it becomes a troubling situation.

“So, there is a situation where banks render these services in an unregulated manner, which in turn exposes the financial system to the kinds of risks we see today such as mutilated notes issued to customers, counterfeits issued out of ATMs, and bank branches with little consequences to people. More importantly to us that are the licensed operators, we cannot compete with the banks, and so we are urging the CBN to do more to protect us from these banks.”

To further the step, Nwodo said the company has concluded plans to roll out about nine cash centres in the next 12 months to boost capacity.

“Presently, we want to solve the problem of capacity. We have some of the best and experienced personnel in this industry, and indeed we are the knowledge leaders. We have a technical partner called SBV Services”.

“SBV Services is owned by the four biggest banks in South Africa, and they have done the kind of service we want to provide for the past four years. They are officially classified as a social service provider in South Africa, and that is the kind of skill and expertise we want to leverage in order to execute our expansion programme in Nigeria.

“Our plan is to support the industry growth aspiration of the CBN by solving the problem of cash distribution and cash processing capacity constraint so that ICMS and other licenced operators in the sector can benefit from a more aggressive enforcement of extant policies and guidelines by the CBN.”

The Chartered Insurance Institute of Nigeria (CIIN) has described the Federal Government’s approval of the agreement for establishment of the African Trade Insurance Agency (ATI), as an economic driver that would enhance the industry’s contribution to the gross domestic product (GDP).

CIIN’s President, Muftau Oyegunle, who expressed this over the weekend, said the government’s action demonstrates first-hand commitment to growth of Nigeria’s insurance industry.

ATI is a Pan-African institution that provides political risk insurance to companies, investors, and lenders interested in doing business in Africa. Its deep African roots have positioned the organisation to understand and assess the risks synonymous with the region, and to help mitigate them.

Its reputation as well as its credibility, financial strength, underwriting capacity, robust risk solutions, and risk assessment have ensured that it is credibly rated by clients.

A memorandum from the Attorney General and Minister of Justice, Abubakar Malami, explained that the request for the President’s assent on the agreement was sequel to the directive of the Federal Executive Council that the instrument be prepared and forwarded for execution.

Oyegunle said the ATI’s growth would go a long way in creating an enabling platform for foreign trade, and engendering economic activities within the sector, which will ensure its improved contribution to the GDP.

He noted that the signing by the President will inspire confidence among foreign entities and investors interested in the Nigerian market, and this would result in more partnerships as well as exchange of ideas and technology.

Oyegunle urged the Presidency to retain its faith in the industry, and the goodwill it had extended in recent time, as the sector would repay these through significant contributions to the growth of the economy.

“It is heart-warming to see the government actively promoting the growth of the insurance industry. As one of the four pillars of financial inclusion, this Act signed by the President for the take-off of the ATI is a worthy enabler for the industry’s growth.