President Bassirou Diomaye Faye was on Tuesday inaugurated as President of Senegal. He is the youngest to take the presidential seat in the West African nation. 

Here is a list of youngest leaders in Africa. 

1.     Ibrahim Traoré, Burkina Faso ( 36)

Ibrahim Traoré is the current youngest serving President in Africa after he displaced the former military leader, Paul-Henri Sandaogo Damiba through a coup d’etat when he was 34. Ibrahim Traoré has been in charge of the Affairs of Burkina Faso since September 30th, 2022.

2.     Mahamat Deby, Chad ( 39)

Four-star military general, Mahamat Idriss “Kaka” Déby Itno is serving as the transitional president of Chad. He gained power following the death of his father, late Chadian President Idriss Déby who died in action while commanding troops in the Northern Chad offensive.  Born April 4, 1984, he assumed power on 20 April 2021. He is the second youngest serving African leader.

3. Assimi Goïta, Mali (41)

Following the military take over in Mali against former president Ibrahim Boubacar Keïta in 2020, Assimi Goïta became president and the third youngest military leader in Africa. The 41-yeat-old has been in charge of Mali on interim basis since May 28th, 2021.

4.     Mamady Doumbouya, Guinea ( 44)

Mamady Doumbouya led a coup d’état on 5 September 2021 that ousted the former president, Alpha Condé.

Doumbouya is now the military officer serving as the interim president of Guinea since 1 October 2021. Born on March 4, 1980, makes him the fourth youngest leader on the African continent at age 44.

5.     Bassirou Diomaye Faye, Senegal (Age 44)

Bassirou Diomaye Diakhar Faye is the youngest democratically elected president in Africa, and the fifth youngest African leader sworn in in on April 2, 2024. He is a lawyer, tax inspector, and politician who ran for the office of the president in place of disqualified candidate Ousmane Sonko. He was born on March 25, 1980.

6.     Abiy Ahmed, Ethiopia (Age 47)

Abiy Ahmed was born on 15 August 1976 is the sixth youngest African leader. He is a politician serving as the third Prime Minister of Ethiopia since 2018. Ahmed is a computer engineer and military officer. He was awarded the 2019 Nobel Peace Prize “for his efforts to achieve peace and international cooperation, and in particular for his decisive initiative to resolve the border conflict with neighbouring Eritrea”..

7.     Andry Rajoelina, Madagascar ( 49)

Andry Nirina Rajoelina was born on 30 May 1974 and is the seventh youngest African leader. The Malagasy-French politician and businessman who has served as president of Madagascar since 2019 was president of a provisional government from 2009 to 2014 following a political crisis and military-backed coup. He once held the office of Mayor of Antananarivo for one year. Before venturing into politics, Rajoelina was a media and advertising entrepreneur.

The seven-man panel set up by the Chief Judge of Edo State, Justice Daniel Okungbowa, to investigate the allegation of misconduct levelled against the state deputy governor, Philip Shaibu, began sitting on Wednesday.

The panel headed by retired Justice S. A. Omonuwa, was set up by Justice Okungbowa following the resolution by the state House of Assembly, which initiated the impeachment process against Shaibu.

At the panel on Wednesday, the House of Assembly was represented by Mr Joe Ohiafi, Deputy Clerk, Legal, just as Shaibu was represented by Prof Oladoyin Awoyale (SAN).

The impeachment process is believed to be the latest development in the conflict between Shaibu and Governor Godwin Obaseki, his principal, which allegedly began when Shaibu announced his intention to run for Edo governor this year.

A statement signed by the administrative secretary of the panel, George Odidi, last Thursday read, “Take notice that consequent upon the inauguration of the above panel by His Lordship the Hon. Chief Judge of Edo State, Hon. Justice Daniel Okungbowa, in line with Section 188 Subsection 5 of the Constitution of the Federal Republic of Nigeria 1999, the said panel shall commence sitting at Judges Conference room, New High Court Complex, Benin City on Wednesday, April 3, 2024 at 10am prompt.

“Parties and/or their counsel are expected to be present on that day while the complainant is expected to be ready to present its case on that day.”

[Punch]

The Nigerian Electricity Regulatory Commission, NERC, has increased the electricity tariff paid by Band A customers from N68/KWh to N225/kWh.

Band A customers are those that receive an average daily electricity supply of 20 hours or more. With the new order issued by NERC, Band A customers would no longer enjoy Federal Government subsidy on Electricity.

NERC said in Abuja that Band A customers make up just 15 percent of total electricity customers in the country.

Details coming...

[Vanguard]

When the CBN governor, Mr Olayemi Cardoso indicated last year that they were in the process of setting a new minimum capital base for Nigerian banks to enhance their capacity to support a one trillion dollar economy, I welcomed the idea with open hands and assumed that this administration was finally going to get something right about the economy especially given the way that they had been bungling economic policies since the inception of their administration.

While setting the minimum capital base for banks with international operations at N500 billion seems rather high, when we do a comparative analysis with other African countries where banks have billions of dollars in capital base, we realize that we are just scratching the surface. We need to do a lot more if we are serious about supporting a one trillion-dollar economy.

Apart from the contradiction of Nigeria being the largest economy in Africa and yet not a single Nigerian bank is among the top ten banks in terms of capital base, we also have a situation in Nigeria where banks are very reluctant to support the economy and would rather just lend money to the government and a few large blue chip companies while millions of entrepreneurs all over the country have little or no access to credit to finance their operations from the banking industry.

It is instructive to note that less than 3% of Nigerians have access to credit from Nigerian banks. Yet, the banks keep making huge profits every year mostly from government securities and forex trading which add very little value to the economy.

To support a one trillion dollar economy, we need to create a banking system that will not only be willing to give credit to support economic growth through entrepreneurs, we must aggregate enough capital within the banking system to finance their activities.

We need to go from a situation whereby very few entrepreneurs have access to bank credit to one in which credit is available for all eligible businesses in the country. It is only then that businesses will be able to grow at an exponential rate for the country to realize the dream of a one trillion-dollar economy.

Ironically the CBN governor’s vision of wanting to support a one trillion dollar economy is contradicted by his monetary policy direction of increasing interest rates which in itself is a disincentive to businesses that will lead to economic growth.

While the CBN governor’s reason for increasing interest rates was allegedly to fight inflation, I have argued that interest rate hikes will only work to curb inflation in a society in which the majority of the people have access to bank credit which is not the case in Nigeria. I also observed that the current inflation that we have in Nigeria is a cost-push inflation and not a demand-pull so it doesn’t make sense to increase interest rates to curb demand when most Nigerians already have very weak purchasing power.

The real reason behind the high inflation rate in the country is the fiscal indiscipline of the government that is expressed by their huge budget deficits and “budget padding” which is then financed through loans from the banking system and through Ways and Means advances which both increase money supply in the system without any additional productivity and this is what leads to inflation.

If the CBN governor is serious about fighting inflation, he needs to prevail on the federal government to cut the deficit and stop releasing funds to them to fund the deficit while commercial banks are also restrained from lending money to the government. This is what should have been done instead of punishing the victims of their hapless economic policies with higher interest rates in the guise of fighting inflation.

In my previous article on this subject matter, I suggested that the CBN set the minimum capital base for tier-one banks in the country at $5 billion or its Naira equivalent if they are truly serious about supporting a one trillion dollar economy. This is because banks supporting the economies of much smaller African countries than ours have capital in excess of $5 billion while Standard Bank of South Africa has a capital base of $13.2 billion yet they are supporting economies that are much smaller than ours.

For Nigeria to grow into a one trillion dollar economy, we need to have a fundamental shift in the way banking is done in the country. We need to move from the current system where banks just need to invest in government bonds and treasury bills while trading in forex to make huge profits to a system where banks will focus on funding the real sector of the economy, housing development, and consumer credit.

To achieve this, there must be deliberate government policy to restrict the issuance of government debt instruments like bonds and treasury bills while banks are incentivized to lend more to the public while lowering interest rates.

More importantly, we will need to significantly enhance the capacity of our banking industry to adequately finance our population which is more than 200 million people, and to achieve this the banking industry will have to aggregate a lot more capital than the current N500 billion minimum capital base for tier-one banks can muster.

It was certainly a step in the right direction for the CBN to increase the minimum capital base for banks in the country. However, the new minimum capital announced doesn’t reflect the CBN governor’s goal of supporting a one trillion dollar economy nor will it stimulate the needed seismic change that the banking industry needs to play a more supportive role in the economy.

Oshobi, a development economist, management consultant, and author writes from Lagos.

Ali Chiroma, a former president of the Nigeria Labour Congress (NLC), is dead.

Ibrahim Chiroma, a relative to the deceased and secretary of the NUJ in Borno state, announced Chiroma’s death in a statement on Tuesday.

He said the ex-NLC president, who died at the University of Maiduguri Teaching Hospital, will be buried on Wednesday in Borno.

Chiroma served as NLC president from 1984 to 1988.

“It is with deep sorrow that I announce the death of Comrade Ali Chiroma, former President of the Nigeria Labour Congress,” the statement reads.

“The sad event occurred this evening (Tuesday, April 2) at the University of Maiduguri Teaching Hospital.

“The burial for the repose of the deceased will be held tomorrow Wednesday 4pm at the residence of the deceased, No.7A along Galadima Road, near Muhammadu Shuwa Memorial Hospital (Nursing Home), Maiduguri.”

Chiroma’s reign as NLC president came to an end in 1988 after the union was dissolved by Ibrahim Babangida, the former head of state.

In 1993, Sani Abacha, former military head of state, appointed Chiroma as head of the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG).

[TheCable]

Has Nigeria learnt any lessons from the Okuama massacre?  Will the incident repeat itself or offer profound lessons against future experience?  In the journey of life, no individual or nation or country is immune from occurrences thrown up by circumstance, which may be pleasant or painful.  Lessons learnt from such experiences are deployed to prevent possible future recurrence, failing which the same catastrophe repeats itself. In context, the gruesome murder of army officers at Okuama in Ughelli South Local Government Area, Delta State, which transcends ethnic emotions and accompanied by wide condemnations, is a confirmation that Nigeria has not, and does not learn from lessons, otherwise, the calamity would have been avoided. 

The incident was not the first. It happened at Odi, Bayelsa State; Zaki Biam, Benue State; and Gbaramatu, Delta State.

Yet, it appeared neither the federal government nor the Nigerian Army learnt any lessons therefrom.  This is evident from the Okuama saga, a proof of the country’s insensitivity to bloodshed and exposition of poverty in the policy making process.  

This notwithstanding, the Okuama calamity has again thrown up another opportunity for lessons to be learned.  If Nigeria fails again this time around to learn from these happenings, then the country risks further carnage, which may possibly take a more complex form with unmanageable and unpredictable consequences.  It may be too costly for the country’s fledgling socio-economic balance and stability. 

Therefore, the lessons are crucial, and should be identified by the government and harnessed as feedback for proactive purposes to forestall future recurrence.  It is a tragedy for any country with a relapsing experience not to have a codified strategy encapsulated in a template to resolve related matters. In specific terms, what then are the lessons and takeaways from the Okuama disaster?  

Lesson One: To have allowed a land dispute over fishing rights between Okuama and neighbouring Okoloba community in Bomadi Local Government Area, Delta State, to escalate means there were no proactive measures and concerted prompt intervention by the Nigeria Police Force and Delta State Government in response to petitions written by Okuama community. 

The community, through its lawyers, I. Ejedegba and Co., had written a petition to the Commissioner of Police in Asaba, Delta State which was acknowledged on January 31, 2O24, while the petition written by Okuama community leaders and addressed to the Delta State Governor was received on February 2, 2O24.  This was over one month before the gruesome murder of the military officers on March 14, 2O24. 

Since the Police is the first line of defence and statutorily responsible for civil matters, they should have wadded in upon receipt of the petitions to nip the crisis in the bud, aside previous joint meetings among the communities, the Police and the Delta State Government that yielded no solution.  Under this development, the Delta State Governor should have been advised to wield the big stick by acquiring the land in contention for public interest to end the crisis.  

Lesson Two: Inviting the Army for a mediatory and peace mission to Okuama for resolution of land dispute between two communities that were not at war, was an error in judgement. The dispute was civil in nature, and it was only when efforts by the Police and the Delta State Governor had failed, and there was evidence of likely escalation into a dangerous dimension beyond the capacity of the Police, that would have warranted intervention by the Nigerian Army.  It is not the responsibility of the Army to broker peace in a civil matter.

Lesson Three: Central to the killing of the military personnel in Okuama, is presumably oil.  Oil appeared to be the underpinning motive behind the horrendous and senseless killings.  Mere land dispute between two communities could not have led to such a mindless massacre. Soldiers are deployed to the Niger Delta region to protect oil facilities, and in the course of this duty, they might have been marked as “enemy” by those profiteering from illegal oil deals. 

Those involved in crude oil theft and other illegal activities, including processing of locally refined products might see the Army as an obstacle to their business interests.  The military high command should have known this, and prepare the soldiers for possible eventuality and collision with entrenched oil thieves.  The circumstances of their death showed that the military men were taken unawares.  It was likely that crude oil thieves and other vested interests might have planned and taken advantage of the soldiers’ peaceful disposition to unleash mayhem in such a horrific and despicable manner.  

Lesson Four: The mass destruction of Okuama by the Army in response to the death of the soldiers without singling out the culprits, was unhelpful, as innocent children, mothers, elderly, the sick and even pregnant women, were either killed, rendered homeless or died while trying to escape.  To bring pains on an entire community over the action of a few criminals, is indefensible.  Reprisal attack and collective punishment are incompatible with international laws.  

Recalled that after destruction of Odi by the Army, the community resorted to litigation and got a favourable judgement, leading to payment of N15 billion out of court settlement, as compensation.  Justice Lambi Akanbi of the Federal High Court had condemned the government for a “brazen violation of the fundamental human rights of the victims to movement, life and to own property and live peacefully in their ancestral home.”  Since the Okuama experience is reminiscent of the destruction at Odi, it is likely Okuama may seek redress in the law court for compensation over reprisal destruction of lives and properties.  

Lesson Five: As the President and Commander-in-Chief of the Armed Forces of Nigeria, Bola Tinubu’s order to the Army was too hasty and reactionary without taking into consideration innocent lives in Okuama that were caught up in the web.  Granting “full authority” to the military to bring anybody found to have been responsible for the attack to justice, was an obvious blanket licence for the military to invade Okuama. 

Instead, the President should have ordered the security agencies and the Police to specifically intervene, identify and arrest the criminal elements in the community, while instituting an independent high-powered panel of enquiry to unravel the causes of the mayhem.  A future restraint on the part of the President is imperative to douse tension and minimise further collateral damage.

Lesson Six: The Army’s decision to lock down and lay siege to Okuama without granting access to the Delta State Governor, the Police, humanitarian agencies, and even the press to assess the situation on ground, has given rise to speculations about the plight of the members of the community, particularly the innocent, helpless and indigent persons.  This is unhelpful to the image of the Army. 

By not allowing access, the Army has, unwittingly, opened its operations to speculations. For example, it was alleged that the Army killed over 50 persons in Okuama, with other survivors hiding in the bush, including old women, children, the elderly ones and even the sick, with no food to eat and water to drink.  This is a gross violation of their fundamental human rights.

To avoid being put on the spotlight, it is imperative for the military to grant access into the community to enable humanitarian agencies and volunteer groups to extend help and assistance to the innocent ones to prevent further fatalities. This will also serve the interest of the Army’s reputation.

Lesson Seven: After the destruction of Odi, initial public sympathy for the military waned.  Same is replicating itself at Okuama over the conduct of the Army.  The Army, like other federal government agencies, is not a supreme institution that is above the Constitution and the Nigerian State, neither is the civilian population subject to military laws.  Indeed, the Army is subject to civil authority under Democracy. Therefore, it must change its current tactics at Okuama where it has refused access to the community, assumed sole information provider on goings-on, and subjected civilians to investigation, arrest and detention.  

It is hoped that these lessons will serve as reference and guide for the state governments, the Police, the Army and the federal government in handling related crises to avert future disaster.  

. Dr. Owhoko, a Lagos State-based public policy analyst, author and journalist

Looking at Africa’s future through the lens of progress, evidence, foresight, and optimism – although it’s difficult to predict the future with certainty, several African countries have shown great potential for development. Countries like Ethiopia, Rwanda, Ghana and Botswana have made significant strides in economic growth, infrastructure development, and social progress. 

Egypt, South Africa and Nigeria are the top most powerful countries in Africa, according to US News and World Report’s 2019 power ranking. 

Several African countries, including Mauritius, Botswana, Cape Verde, Seychelles and Rwanda, are known for good governance. These countries have made significant progress in political stability, rule of law, and control of corruption. Speaking of issues of uniqueness, diversity, duration of existence, and variety, I would say, that Africa is sufficiently primed for greatness.

Let me continue with the profound words of Joshua J. Marine. Marine posited: “Challenges are what makes life interesting and overcoming them is what makes life meaningful” Yes! Leadership cum politics are phenomenal realities – as a continent, we sure need to get our art together. For example, each country faces unique challenges and opportunities, and their development paths will likely depend on different factors including governance, economic policies, education, and international partnerships. Suffice it to say that It is still rudderless as far as many of the countries in the continent of Africa is concerned.

Succinctly put, to view Africa solely as a hotbed of disease and hunger is to ignore the significant strides that countries and communities have made. There is still much work to be done. But looking to the past can provide some hope for the future: Rwanda, once known primarily for its tragic genocide, is now known as a model of stability and economic growth, while Eritrea and Ethiopia signed a peace agreement this year to end two decades of war and enmity. African countries must push for further peace initiatives while they continue to support refugees and populations affected by conflict to improve stability and growth on the continent further.

Before I proceed, I want to be clear, don’t get me wrong, Africa lacks selflessness in  leadership. Unarguably, Africa is the most resourceful continent and the naturally wealthiest in the world. Despite the amazing advantage of having nice weather, massive forests with fruit, vegetation and plantations, wildlife, gold, diamonds, Uranium, various metals, and manpower willing to work hard for low wages, Africa is the poorest economically in the world. Because leadership is everything and due to corruption, stupidity, and greed, nearly all African leaders are failing with some few exceptions.

Collectively, the continent has more to gain pulling together and harnessing its vast natural resources to finance the development agenda towards greater prosperity. It must also ensure that future growth and exploitation of natural resources is results-oriented, climate resilient, and sustainable. Nearly half the world’s gold and one-third of all minerals are in Africa. 

Here’s a look at the resources African countries have below:

Africa area = 30,37 million km2

China area = 9,6 million km2

US area = 9,8 million km2

Europa area = 10,18 million km.

– Africa has 60% arable land.

– Africa owns 90% of the raw material reserve.

-Africa owns 40% of the global gold reserve.

– Africa, 33% of the diamond reserve.

– Africa has 80% of Coltan’s global reserve (mineral for telephone and electronics production), mainly in the Democratic Republic of Congo.

– Africa has 60% of the global cobalt reserve (mineral for car battery manufacture).

– Africa is rich in oil and natural gas.

– Africa (Namibia) has the world’s richest fish coastline.

– Africa is rich in manganese, iron, and wood.

– Africa has thirty-half million km2 (30 875 415 km2).

-Africa has 1,3 billion inhabitants (China has 1,4 billion inhabitants in 9,6 million km2).

Which means Africa is SUB-POPULATED.

– The arable lands of the Democratic Republic of Congo can feed all of Africa. And Africa’s arable land is a cord to feed the whole world.

– The Democratic Republic of Congo has important rivers that can illuminate Africa.

The problem is that the CIA, western companies, and some African puppets have destabilised the DRC for decades.

– Africa is a culturally diverse continent with dance, music, architecture, sculpture, etc.

– Africa accommodates 30.000 medicinal recipes and herbs that the West modifies in its laboratories.

– Africa has a young global population that should reach 2,5 billion by the year 2050.

In the meantime, countries such as China are moving quickly to invest in Africa’s future, while the United States and other Western nations have taken more passive roles.

After weeks of anticipation, the Central Bank of Nigeria last Thursday released a circular reviewing the minimum capital requirements for all commercial, merchant, and non-interest banks operating in the country. The review came exactly two decades after a former Governor of the CBN Prof Chukwuma Soludo raised the minimum capital requirements for banks from N2 billion to N25 billion, and three months after the current governor Yemi Cardoso, gave banks a heads up that they would have to raise fresh capital to serve as buffers against risk assets on their balance sheets, prevailing economic headwinds, and bolster their ability to handle big ticket transactions.

Under the current review, commercial banks with international banking licences would have to raise their minimum capital to N500 billion, national banks to N200 billion, regional and merchant banks to N50 billion, non-interest national banks to N20 billion, while non-interest banks will have to meet a new minimum threshold of N10 billion. To meet the new capital requirements in two years, the CBN directed banks to consider the injection of fresh equity capital through private placements, rights issues and/or offer for subscriptions. They could also consider mergers and acquisitions and/or upgrades or downgrades of their licences.

However, the clincher in the circular was the central bank’s definition of what it meant by minimum capital. It said minimum capital shall comprise of paid-up capital and share premium only and shall not be based on shareholders’ funds. CBN further excluded Additional Tier 1 (AT1) Capital for the purpose of meeting the new minimum capital requirements by banks. Shareholders’ funds refer to the net worth of a company after all its liabilities have been deducted from its assets. It comprises the share capital and retained profits or earnings that have been reinjected into the business by its shareholders. AT1 Capital, on other hand, are debt securities or instruments that have no fixed maturity. They usually comprise preference shares or high contingent convertible securities.

By excluding shareholders’ funds and AT1 Capital, the CBN prioritised direct cash injections into the banks over accounting entries to satisfy recapitalisation requirements. Also, though not a member of the Bank for International Settlements (BIS) in Basel, Switzerland, whose mission is to support global central banks’ monetary policies and financial system stability, the CBN by its recapitalisation guidelines deviated from the Basel III criteria for regulatory capital.

Basel III reforms were introduced in December 2010 after the global financial crisis of 2007-2009, which revealed several weaknesses in the capital bases of existing banks, as definitions of capital varied widely between jurisdictions, regulatory adjustments were generally not applied to the appropriate level of capital, and disclosures were either deficient or non-comparable. These factors contributed to the lack of public confidence in capital ratios during the global financial crisis. To address these weaknesses, the Basel Committee on Banking Supervision (BCBS) published the Basel III reforms with the aim of strengthening the quality of banks’ capital bases and increasing the required level of regulatory capital. In addition, the BCBS instituted more stringent disclosure requirements.

Under Basel III, components of regulatory capital for banks comprise Common Equity Tier 1 (CET1) Capital made up of common shares and stock surpluses, retained earnings, other comprehensive earnings, qualifying minority interest and regulatory adjustments; as well as Additional Tier 1 (AT1) Capital, which is the sum of capital instruments meeting the criteria for AT1 and related surplus, additional qualifying minority interest and regulatory adjustments. CET1 and AT1 are classified as Tier 1 Capital for banks on a going concern basis. Then there is Tier 2 Capital which is gone-concern capital and applies to banks that have failed. Tier 2 instruments must absorb losses before depositors and general creditors do so.

While it must be acknowledged that Basel III is not legally binding in any jurisdiction, and as earlier indicated, the CBN is not a member of the BIS in Switzerland, Basel III was intended to form the general basis for national or regional rulemaking for regulatory capital. Nonetheless, as with Basel I and II, even BIS members have taken different approaches to implementing Basel III. Some regulators have even gone as far as arguing that the rules apply to banks with $100 billion in assets or more. This in effect addresses any concerns raised by some market analysts at the weekend that the CBN was not complying with Basel III reforms in its latest recapitalisation programme. Besides, no Nigerian bank can boast of a balance sheet size of $100 billion in assets. Despite all their sound and fury, not one of them comes close!

Basel III aside, no Nigerians banker worth his or her salt can say that they did not see the recapitalisation programme coming. They did not need a Cardoso (or Cardi-B as he is often called in social media circles) to tell them that their banks had to initiate measures to raise fresh capital. For instance, Access Holdings Plc, in its 2023 financial accounts that was released 24 hours before the CBN circular, announced its intention to raise N365 billion through a rights issue in 2024. There was also speculation among market analysts two weeks earlier, that Guaranty Trust Holdings Plc (GTCO), which is yet to release its 2023 accounts was toeing the same path with a capital raise of N350 billion to N500 billion.   

Effectively, bankers who did not have their heads buried in the sand already knew that the naira devaluation and spiralling inflation had wreaked havoc on their risk assets, notwithstanding the supernormal profits that they declared in the second half of 2023 due to FX revaluation gains. Buttressing this, Cardoso last December revealed that due to the impact of the forex unification policy and efforts to remove the subsidy on petrol by the federal government, banks had breached some of the key metrics such as single obligor limits, resulting in the erosion their capital. It also led to a deterioration of their asset quality that could easily clog up banks’ balance sheets with non-performing loans. And as any banking system regulator knows, low asset quality affects banks’ capital and therefore their soundness.

But what the banks did not anticipated was that the CBN would not allow them to use their shareholders’ funds, which has retained earnings as a key component, as the basis for computing revised capital requirements. Unsurprisingly, since the release of the circular, there’s been disquiet in the banking sector as Nigerian lenders and their shareholders absorb the enormity of the daunting task over the next two years. Add to this a seminal WhatsApp group dedicated to all things markets that I belong to, which almost blew a gasket at the weekend as members heatedly debated the merits and demerits of the non-inclusion of retained earnings in the new capitalisation requirements for banks.

Had the CBN allowed the banks to use shareholders’ funds as a basis for the new capital base, most, if not all banks, would have carried on with business as usual because the retained earnings on their balance sheets already exceeded their paid-up capital and share premium combined by several hundreds of billions of naira. As things stand, some Tier 1 bank holding companies and banks have retained earnings in excess of N500 billion – the new capital base threshold for international banks. These are Access Holdings – N715.13 billion, FBNH Plc – N608.73 billion, UBA Plc – N750.81 billion and Zenith Bank Plc – N894 billion, while GTCO at N424.50 billion is not far off. By implication, if banks’ retained earnings are added to their current paid-up capital and share premium, they would meet and exceed the new minimum capital requirements stipulated by the CBN.

Another concern that came up was that with the exclusion of retained earnings, the options given by the CBN for fresh capital injection through either private placement, the issuance of new shares (or public offers) and/or through mergers and acquisitions was dilutive for existing shareholders of the banks. One of the first persons to throw the first salvo over the new recapitalisation guidelines released by the CBN was Mustapha Chike-Obi, Chairman of Fidelity Bank Plc and Chairman of the Bank Directors Association of Nigeria ((BDAN), who was quoted on Arise News Channel on Friday morning as stating that the non-inclusion of retained earnings would not work and called on the CBN to provide additional clarification on the issue.

Similarly, Johnson Chukwu, CEO of Cowry Assets Management Limited, faulted the exclusion of retained earnings and advised the CBN to align the new capital requirements with industry dynamics to facilitate a seamless transition. According to him, the exclusion of retained earnings will result in banks incurring recapitalisation costs, adding that this would force banks to declare cash and bonus dividends for their shareholders and undertake rights issues.

Other market analysts further posited that the exclusion of retained earnings from new capital requirements for banks would put them under pressure, given the huge amounts lenders would have to raise in an environment where capital is already constrained. According to one such analyst, “You have a situation where the CBN has adopted a contractionary monetary policy stance with high interest rates and is issuing OMO bills at 27%. This was done to curb inflation, attract foreign portfolio investors into the market and thereby improve FX liquidity. As such, capital is constrained in the country due to the tight monetary stance of the CBN. So how are banks expected to raise an estimated N3 trillion to N4 trillion to meet the new capital thresholds? This is just contradictory.”

He also wondered what the of objective of the CBN was, asking if it is to improve capital buffers of banks and strengthen their ability to fund big ticket transactions to grow the economy, how will this be achieved with the high interest rates on treasury bills that have crowded out the private sector? “In addition, with the Cash Reserve Ratio (CRR) at 45% and Liquidity Ratio at 30%, how are the banks expected to lend money to their customers. So, if the banks raise fresh equity capital, are they going to continue lending to government?” he asked.

Though it is true that the CBN’s contractionary stance is at variance with its decision to compel banks to raise fresh equity capital, it will be short-sighted for anyone to think that the current monetary tightening will be remain in place for an eternity, as the policy measures are short-term in nature. Like any central bank, once the CBN determines, say12 months from now, that inflation is beginning to recede and FX stability has been achieved, it will begin to lower interest rates and loosen its stance on CRR and the liquidity ratio, by which time the banks will be recapitalised or nearing recapitalisation and ready to create new risk assets for economic growth. Yet, for the CBN’s monetary policy to succeed, a lot of action will still be required from the fiscal side which has continued to run an expansionary budget and has failed to implement measures to address structural bottlenecks that are adding to Nigeria’s economic woes.

But even as bankers and market analysts at the weekend were losing sleep over the exclusion of retained earnings, CBN officials countered that there was either an absence of sincerity on the true position of things in the banking sector or there was pervasive ignorance. A CBN official who spoke to this writer off the record, dismissed the retained earnings of several banks, calling them mere accounting entries that are not worth the paper on which they are written. According to him, a lot the banks had been granted forbearances over the years and if the forbearances are withdrawn by the CBN, their retained earnings will be wiped out. He said total forbearances in the industry were roughly the capital the central bank is asking the banks to raise.

Providing further insight, he said almost all banks in the country have massive exposures to defaulting debtors, particularly in the energy sector (power sector and oil and gas loans), that they have scant hope of recovering. “These are loans that were given out 10 years ago to power sector investors during the privatisation exercise that have not been recovered. Then there are loans that were given to local oil and gas companies to acquire the assets of oil multinationals. All these loans are impaired, and the banks have little or no hope of recovering them. Yet, the CBN kept rolling over the forbearances to give the semblance of financial system soundness and stability. This was what Cardoso inherited from his predecessor Godwin Emefiele who was very lax with the forbearances that he gave to the banks, and they were too many of them,” the official disclosed.

The official said that save for the foreign banks – Citi Bank, Standard Chartered Bank and Stanbic IBTC – and to a lesser extent a few local banks such as GTBank, Zenith Bank and perhaps Access Bank, all the other banks have significant exposures to bank debtors whose non-performing loans (NPLs), running into trillions of naira, have not been written off against their income. He added that withdrawing the forbearances in one fell swoop would be injurious to the system, so the best route is for banks to raise fresh capital and for the CBN to allow them to bite the bullet in a phased manner.       

However, a few market analysts who sensed that the CBN has no confidence in the retained earnings of several banks, are questioning why the regulator cannot simply isolate banks that are under forbearance and allow the few without forbearance to count their retained earnings against capital. They were of the view that the blanket decision to disregard a significant portion of the book value of the banking system would amount to discrediting the financial statements of banks that external auditors and CBN examiners had approved over the last couple of years. They also felt that the CBN should tighten and monitor the calculation of risk weighted assets (RWAs) of banks so that they are not fictional, and once this is done, the CBN should focus on capitalisation of ratios. (RWAs are bank loans and other assets, weighted according to risk.) Furthermore, they recommended the exclusion of some part of retained earnings such as unrealised gains on assets and FX revaluation gains.   

Responding, the central bank official said CBN examiners had been acutely aware of the problem of rising NPLs and made recommendations to several banks to raise fresh capital in their respective examination reports, but their recommendations were ignored by both the banks and CBN executives. “Instead of being a proper regulator, the CBN became an enabler by not enforcing its own prudential guidelines,” he said. The CBN official added that the hot air being blown by banks over retained earnings was misplaced because the bulk of it was not cash and the objective of the central bank is to inject fresh cash into the balance sheets of banks.

“If they have confidence in their retained earnings, the banks should pay them out as dividends to their shareholders. But realistically, they cannot do so because a lot of these retained earnings have gone into various aspects of their balance sheets and are probably part of their risk assets which are impaired, they are also probably part of their fixed assets which you cannot immediately liquidate. So, it is difficult to include such retained earnings as part of their capital because it’s not actually cash. And since it is the CBN’s objective is to create new risk assets by way of loans, this can only be achieved through fresh cash injections,” he explained.

In addition, CBN is not unaware that the supernormal profits arising from FX revaluation gains that a lot of banks will declare for the 2023 financial year are not cash backed, so for them to pay dividends, they would have to do so from depositors’ funds. Banks can get away with it, according to Ugochukwu Obi-Chukwu, Founder/CEO of Nairametrics, “Because banks’ cashflow statements include depositors’ funds, so it is fungible and often impossible to know what funds the banks are paying out.” This interchangeability of shareholders’ funds with depositors’ funds on the financial statements of banks, renders it difficult for the public to know when a bank is distressed just by looking at its financials. It is for this reason, Obi-Chukwu noted, that central banks can only detect looming bank failure when they conduct stress tests. This, he added, reinforces Emefiele’s position when he oversaw the CBN that banks are not owned by their shareholders but by depositors because they have a significantly higher stake in banks and must be protected at all cost. In essence, without depositors, shareholders have no banks.

Well, as the banking sector recapitalisation exercise slowly but surely kicks off from today, it is expected that so many issues will be thrown up for the CBN and banks to wade through. Although it is uncertain that the central bank will back off from the non-inclusion of retained earnings to the revised capital base for banks, it will be advisable for the regulator to revisit the 30-day deadline given to banks to submit their implementation plans for recapitalisation.

For one, the Companies and Allied Matters Act (CAMA) renders the 30-day target unrealistic, as the Act stipulates that any changes to a company’s equity structure must get the approval of its shareholders. Two, a company’s shareholders can only meet by way of an annual or extraordinary general meeting after its board of directors must have met and considered the alterations to the equity structure. Three, to convene an AGM or EGM, at least 21 days notice must be given, to enable shareholders attend and approve or reject the changes to the capital structure.

Spokesperson of the Nigeria Police Force, Olumuyiwa Adejobi on Tuesday revealed that the force would give post-humous awards to the families of six police officers killed in Delta State.

Announcing the development while speaking on Channels TV’s Politics Today, Adejobi detailed that  the police would be there for the families of the deceased soldiers during the difficult time.

Naija News reports that the police spokesman further disclosed that this would be the first time that the the IGP would be organising an event of this nature.

”The IGP has decided to give post-humous awards to the six and our fallen heroes will also be honoured. We are going to move with their families shoulder to shoulder and navigate these difficult moments,” he said.

Naija News had earlier reported that six officers killed while investigating the disappearance of three colleagues in Delta State.

Adejobi had while announcing the development disclosed that  six other officers are still missing and five suspects have been arrested in connection with the killings.

The statement released by Adejobi after the development read,  “The Nigeria Police Force is profoundly saddened by the devastating loss of six courageous officers in Delta State who exhibited exceptional valour in the face of adversity.

“These brave officers tragically fell victim to a cowardly ambush by armed assailants while undertaking a mission to investigate the disappearance and rescue of three of their colleagues in the Ohoro Forest, Delta State, while six others are currently missing-in-action.

“Our hearts extend to the families, friends, and colleagues of the fallen officers during this period of profound sorrow. We stand in solidarity with them, offering our deepest condolences and earnestly praying for the peaceful repose of the departed souls.”

[NaijaNews]