FG slashes CBN’s budget by 50%

The Central Bank of Nigeria (CBN) has
disclosed that 50% of its budget has been
slashed by the federal government, lamenting
that this cut in budget has seriously affected
its capabilities to fund some financial system
initiatives.
This disclosure was made by the Director of
the Financial System Stability (FSS 2020) of
the CBN Mr Mohammed Suleiman when
members of the FSS 2020 visited the the
Nigeria Deposit Insurance Corporation (NDIC)
yesterday in Abuja.
According to Mohammed Suleiman, “funding
has been a major issue, the FSS 2020
programme since its inception has always
been bankrolled single handedly by the CBN.
The CBN is beginning to weary a little bit
because the current budget this year was
reduced by 50% and that is majorly affecting
some of our capabilities to implement some
of these strategic objectives.”
Suleiman lamented that “50% of our budget
cut is no small measure at all. We need to
agree on the funding approach, we need to
have a rethink and get the support of all
implementing institutions. The FSS2020 is
not a CBN project it is a financial system
project, all financial system players have to
take ownership of the project and be willing
to support it.”
During the exchange of views on the way to
move the FS2020 project forward an official
of the NDIC revealed that it costs around
N198 billion to fund the FSS2020 project.
The Director FSS2020 who is also a staff of
the CBN noted that “we will structure the
FSS2020 to include dedicated team for
monitoring, tracking and reporting and
ensure regular quarterly or biannual meeting
of stakeholders for the progress and
implementation of the strategy.”
Suleiman identified some of the challenges
the FSS2020 team have had to grapple with
to include: inadequate financial skills
development particularly in the capital
market; unavailability of investable funds for
long term financial products; non existence
of listing rules for special purpose vehicles;
increasing cost of transactions and
operations; weak risk management.
Other challenges include: low level of card
usage on POS and high ATM usage for cash
transactions; physical insecurities and
prevalence of financial fraud; low levels of
financial literacy and inclusion; low
acceptability of Mobil payment and merchant
locations; non existence of sound collateral
management; inadequate legal and
regulatory framework for commodities market
and unwillingness of private companies to go
public; inadequate foreign direct investment
and non existence of integrated credit
scoring system.
To ensure that the FSS2020 project does not
fail because of lack of funds, Suleiman
stated that “the intervention is to advocate
that agencies making budgetary provisions
provide funds for development because these
products need the support of budget to
implement them.”
He also expressed concern that Nigeria does
not “have the required skills for these
products, we need to build the capacity of
the industry, we have started capacity
building at Woodpecker for heads of strategy
of implementing institutions who were in
attendance at Golden Tulip in Lagos recently.
The FSS2020 director then revealed that that
capacity building programme “cost the CBN
£144,000 because facilitators were brought
in from UK. We will also build capacities in
the bonds markets and derivatives.”
Already, they have identified agencies that
will take ownership of these strategies, they
are CBN, SEC, NSE, NDIC PenCom, National
Assembly, Nigeria Commodities Exchange,
Budget and National Planning, Federal
Ministry of Trade and Investment, SMEDAN
and SON (they will be in charge of setting
standards for the commodities to make them
fit for purpose).
Mohammed Suleiman decried what he called
inadequate legal framework and to address
this inadequacy, the secretariat of the
FSS2020 has come up with some planned
interventions to address the inadequate legal
framework.
He said they have been able to come
together with other stakeholders to create
some legislative interventions through bill for
the consideration of the National Assembly.
“Some of the interventions behind the bills
that we have crafted about three weeks back
are the warehouse receipt bills, the
securitization bill, the mortgage and allied
matters bill, and the SMEDAN amendment
bill these are bills that we have so far
reviewed and are ready for transmission to
the Federal Executive Council (FEC).”
For now they have concluded work on “the
payment system management bill which has
been approved by the FEC, the one awaiting
the FEC approval is the collateral registry bill
which has been forwarded to the office of the
Attorney General of the Federation for
onward transmission to the FEC for
consideration, these are the bills that we
need to support the initiative in achieving
these objectives.”
He also stated that they “have started work
on the debt factoring bill because we need to
look elsewhere for alternative sources of
funding for long term financing of
infrastructural development and we are
looking at the capital market.”
Reacting to these claims and requests by the
FSS2020 team, the Managing Director of the
NDIC Alhaji Umaru Ibrahim assured the
FSS2020 team that the corporation would
donate technical staff as requested by the
team “as soon as there’s a formal request
but he was quick to remind the team that
there is an existing sharing formula for
funding the FSS2020 project.
Alhaji Umaru Ibrahim also noted that the
NDIC “has very visible presence in the
activities of the FSS2020”, he advocated for
a common wallet and appealed that “the
CBN should more than others because it is
in a position to do better.”

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