Author: Abdulrahman Kadiri

CBN Governor,  Yemi Cardoso

Funding

By Kadiri Abdulrahman

Abuja, May 3, 2024 (NAN) The Governor of the Central Bank of Nigeria (CBN), Mr Yemi Cardoso, says strengthening national capacities for debt management is crucial for meeting government’s funding needs.

Cardoso said this on Monday in Abuja at the opening of the Regional Training on Annual Borrowing Plan (ABP) Development organised by the West African Institute for Financial and Economic Management (WAIFEM).

The News Agency of Nigeria (NAN) reports that the training was jointly organised by WAIFEM, the World Bank, and the International Monetary Fund (IMF).

Cardoso’s address was delivered by Mrs Ladi Bala-Keffi, the Acting Director, Monetary Policy Department of the CBN.

According to Cardoso, our countries must prioritise building a balanced and resilient debt portfolio.

He said that at the core of sound public debt management was the Debt Management Strategy (DMS) – a formal plan devised by the government to achieve its debt management objectives.

“These objectives typically include securing necessary financing at the lowest possible cost while prudently managing risk.

“Additionally, developing the domestic debt market may also be a key
objective in certain instances.

“A DMS operationalises these objectives by outlining the government’s preferences regarding the trade-offs between cost and risk associated with its chosen strategy.

“This strategy is typically established with a three-to five-year horizon and is assessed, reviewed, and updated on a rolling annual basis,’’ he said.

He said that publishing the DMS was essential as it demonstrates the government’s unwavering commitment to its fiscal strategy, promoting transparency and accountability in debt management practices.

According to him, this mitigates investor uncertainty and facilitates constructive dialogue with creditors, investors, and other key stakeholders, including credit rating agencies, regarding the
optimal financing strategy.

He said that the DMS was implemented annually through an ABP.

“This plan translates strategic objectives into concrete actions for raising funds and managing the government’s debt portfolio based on budget analysis and cash flow projections,’’ he said.

The Director-General of WAIFEM, Dr Baba Musa, said that the training was a significant milestone.

According to Musa, recognising the critical importance of ABP development, we proudly offer this course as a standalone for the first time.

He said that public debt had recently surged worldwide due to various factors like the COVID-19 pandemic, geo-political tensions, and other economic shocks.

“This trend is mirrored in our sub region, where debt managers grapple with unique challenges, including volatile commodity prices, elevated debt levels, limited fiscal space, fluctuating exchange rates, and rising borrowing costs.

“These challenges pose significant threats to debt sustainability, macroeconomic stability, growth prospects, and, ultimately, the well-being of the citizens.

“In this context, sound public debt management strategies and well-articulated
borrowing plans are more critical than ever,’’ he said.

He said that WAIFEM member-countries diligently formulate and update Medium-Term Debt Strategies (MTDS), but faced considerable implementation challenges.

According to him, the training on ABP Development is designed to address such challenges by providing a structured framework for operationalising the MTDS annually.

“This approach facilitates a more granular and actionable approach to debt management, ensuring the translation of strategic objectives into concrete borrowing activities and targets for the fiscal year.

“Aligning with the government’s budgetary and fiscal policy objectives, the ABP determines the sources of financing, instrument types, and maturities while remaining mindful of prevailing market conditions,’’ he said.

NAN reports that WAIFEM is a regional capacity-building institution founded in 1996 by the central banks of the five West African Anglophone countries; the Gambia, Ghana, Liberia, Nigeria and Sierra Leone.

Its mandate is to enhance the skills of policymakers and practitioners in financial and economic management. (NAN) (www.nannews.ng)

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Edited by Ese E. Eniola Williams

Licence

By Kadiri Abdulrahman

Abuja, June 3, 2024 (NAN) The Central Bank of Nigeria (CBN), has announced revocation of the licence of Heritage Bank Plc with immediate effect.

This is according to a statement issued by Hakama Sidi-Ali, the Acting Director, Corporate Communications Department on Monday in Abuja.

Sidi-Ali said that the action was in accordance with the apex bank’s mandate to promote a sound financial system in Nigeria and in exercise of its powers under Section 12 of the Banks and Other Financial Act.

This action became necessary due to the bank’s breach of Section 12 (1) of BOFIA.

“The Board and Management of the bank have not been able to improve the bank’s financial performance, a situation which constitutes a threat to financial stability.

“This follows a period during which the CBN engaged with the bank and prescribed various supervisory steps intended to stem the decline.

“Regrettably, the bank has continued to suffer and has no reasonable prospects of recovery, thereby, making the revocation of the licence the next necessary step,’’ she said.

According to her, the CBN took the action to strengthen public confidence in the banking system and ensure that the soundness of the financial system is not impaired.

“The Nigeria Deposit Insurance Corporation (NDIC) is hereby appointed as the Liquidator of the bank in accordance with Section 12 (2) of BOFIA, 2020.

“We wish to assure the public that the Nigerian financial system remains on a solid footing.

“The action we are taking today reflects our continued commitment to take all necessary steps to ensure the safety and soundness of our financial system,’’ she said. (NAN) (www.nannews.ng)

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Edited by Ese E. Eniola Williams