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Virus, Oil Collapse Shake Foundations of Banks

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Nigerian banks have more to worry about than the coronavirus: Cratering oil prices and the threat of another naira devaluation are emerging as the biggest risks to how many lenders will emerge unscathed.

Virus, Oil Collapse Shake Foundations of Banks

According to Bloomberg, the e industry has already agreed to forgo profit to support the economy as measures to contain the Covid-19 outbreak bring most businesses to a halt.

Now, oil prices near $15 a barrel are drying up the largest source of foreign exchange. That’s weighing on the currency in a triple whammy for a sector the central bank is relying on to restructure loans showing signs of stress.

Most banks have their crude risks hedged at $40-$50 a barrel, according to ARM Investment Managers in Lagos, which means provisions would need to be raised if prices remain at current low levels.

A naira devaluation following the one in March could cause dollar loans to sour, which would have to be covered by naira earnings, while also adding to the cost of capital.

“The risk to earnings is higher if oil prices are less than $30 per barrel over a prolonged period of time — up to six months in our opinion,” said Aderonke Akinsola, an analyst at Chapel Hill Dunham in Lagos. “We cannot rule out the possibility that some banks may not survive that.”

The scale of the fallout could surpass that of tumbling oil prices in 2014, which triggered a naira devaluation and five quarters of economic contraction from the start of 2016.

That led to a surge in non-performing loans that eventually contributed to the collapse of Skye Bank Plc and Diamond Bank Plc, which was bought by Access Bank Plc in 2019.

The industry is still trying to recover from restructuring loans related to the oil and gas sector.

The nation’s banks “remain susceptible to deteriorating credit quality due to their exposure to ailing sectors, particularly oil and gas producers,” which account for about 26% of total loans, according to the International Monetary Fund.

“The CBN’s imposed caps on bank fees and pressure on net interest income would also limit profitability.”

Nigerian banks are also under pressure from their regulator, which expects lenders to extend 65% of their deposits as credit.

The central bank last week took 1.47 trillion naira ($3.8 billion) from the cash reserves of lenders for failing to meet that goal and a requirement to park 27.5% of their capital with it, people familiar with the matter said.

“The combined effect of low business activities, higher impairments and possible operational and fair-value losses may result in reduced profit levels and capital depletion,” KPMG Nigeria unit said in an emailed report. Banks will also see a “sharp increase in non-performing loans.”

In order to cushion the impact of the crisis, the Abuja-based central bank is providing about 3.5 trillion naira of intervention loans for manufacturers and health-care providers at 5% interest. It also allowed banks to restructure the terms on loans.

Besides dollar loans to the oil industry, banks also face significant foreign-currency exposure to power companies, which increases their risks in the event of a naira devaluation, according to Renaissance Capital.

United Bank for Africa Plc had 10% exposure to the power sector as of 2019, Fidelity Bank Plc 10% and FCMB Group Plc 7%.

Some winners can emerge from a naira depreciation, like Guaranty Trust Bank Plc, the nation’s largest by market value, because a significant proportion of its capital is denominated in foreign currency, according to EFG-Hermes.

Guaranty Trust Bank reported flat earnings for the first quarter through March after loan charges doubled and fees and commission income declined.

An index of 10 of the country’s biggest banks fell 0.4% on Thursday, snapping six days of gains. The gauge is down 24% this year, compared with a decline of 14% for the 153-member all-share index.

“At the start of the year, banks only had to face CBN’s tight regulations, which threatened margins,” said Emmanuel Adeleke, a bank analyst at ARM Securities. “Now, it is a double whammy.”

 


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FG Asks MDAs to Halt New Policies Until Full Compliance with RIA

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Federal government has directed all Ministries, Departments and Agencies (MDAs) to suspend the introduction and rollout of new policies, regulations, or major regulatory changes until full compliance with the Regulatory Impact Analysis (RIA) Framework is achieved.

FG Asks MDAs to Halt New Policies Until Full Compliance with RIA

The directive, issued by Princess Zahrah Mustapha Audu, director general of the Presidential Enabling Business Environment Council (PEBEC), is part of efforts to strengthen regulatory quality, ensure policy coherence, and improve the ease of doing business in Nigeria

According to the statement, the RIA Framework, which was formally implemented in January 2025, requires that all new policies or amendments introduced after the date must undergo review and approval in line with its provisions.

She noted the framework has already been circulated to MDAs by the Office of the Secretary to the Government of the Federation and is also accessible on the PEBEC website.

MDAs are therefore expected to familiarise themselves with the framework and align their policy development processes accordingly.

Audu emphasised that while the government remains committed to working collaboratively with regulatory institutions, no new reform or policy would be allowed to proceed without being backed by clear and verifiable evidence.

She explained the directive aims to prevent policy shocks that could negatively affect businesses, investors and citizens, eliminate inconsistencies and frequent policy reversals, and institutionalise evidence-based policymaking across government.

The directive also seeks to enhance transparency, improve predictability, and boost stakeholder confidence in public policies, while ensuring adequate engagement to minimise resistance prior to implementation.

Consequently, all MDAs have been instructed to suspend any planned policy rollouts that have not yet been implemented, ensure that new policy proposals are supported by comprehensive RIA and necessary approvals, and integrate the RIA process into their internal policy formulation procedures.

They are also required to undertake structured and inclusive stakeholder engagement as part of policy development to improve acceptance and implementation outcomes.

The PEBEC boss added that MDAs can access the RIA Framework through its website or seek technical support from the council’s secretariat.

She, however, noted that exceptions would only be granted in cases of urgent national interest, subject to appropriate approval.

Audu stressed that cooperation from all MDAs is crucial to building a stable, consistent and business-friendly regulatory environment capable of driving sustainable economic growth and boosting investor confidence.

 

 

 


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FG Unveils Digital Platform to Showcase Nigeria’s Culture, Tourism Destinations

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The Federal Government has unveiled a new digital platform, NITOUREY, aimed at showcasing Nigeria’s rich cultural heritage and tourism destinations to global audiences.

The initiative, introduced at a press conference organised by the Nigerian Tourism Development Authority, was described as a public-private partnership designed to project Nigeria’s diverse cultural assets.

Speaking at the event on Tuesday, the Minister of Arts, Culture, Tourism and the Creative Economy, Hannatu Musawa, said the platform marked another step in repositioning Nigeria as a leading global destination for tourism, culture and creative excellence.

She explained that the digital project would harness the power of the creative economy and technology to amplify Nigeria’s cultural narratives while creating opportunities for young Nigerians, filmmakers, content creators and tourism operators.

Musawa said, “Today marks yet another significant step in our collective journey to reposition Nigeria as a leading global destination for tourism, culture and creative excellence.

“The initiative aligned with the administration’s economic diversification drive, noting that tourism had the potential to contribute significantly to national growth.

“President Bola Tinubu has a vision to use tourism as part of economic diversification and expansion, and NTDA can play a vital role in achieving that goal”.

She emphasised that NITOUREY would not only showcase destinations across the country but also create economic opportunities within the creative industry.

“Through this initiative, we are not only showcasing destinations across Nigeria but also creating opportunities for the creative industries, including filmmakers, content creators, tourism operators and young Nigerians within the creative economy,” she added.

The minister also stressed the importance of collaboration between government agencies, state governments and the private sector, noting that the platform was a PPP initiative designed to unlock the full potential of Nigeria’s tourism and creative sectors.

“This is a commendable PPP initiative that demonstrates the collaboration required to unlock the full potential of Nigeria’s tourism and creative industry,” she said.

She further assured stakeholders that the Ministry of Art, Culture, Tourism and the Creative Economy would continue to support initiatives that enhance Nigeria’s visibility, attract investment and create jobs.

In his remarks, the Director General of NTDA, Ola Awakan, described NITOUREY as a transformative platform that will redefine how Nigeria is presented to the world.

He emphasised that tourism thrives on perception, visibility, and storytelling, noting that the platform will collaborate with key institutions, including the Nigerian Film Corporation, National Film and Video Censors Board, and the National Information Technology Development Agency, to deliver high-quality content.

Awakan added that the initiative is powered by a strong public-private partnership involving TOURCLIQ Creatives Limited and JM MiSA International Limited, underscoring the importance of collaboration in unlocking the full potential of Nigeria’s tourism and creative industries.

He further revealed that NITOUREY will spotlight iconic destinations across Nigeria’s six geopolitical zones, including Zuma Rock, Yankari Resort and Safari, the Argungu Fishing Festival, Ngwo Pine Forest and Cave, Obudu Mountain Resort, and Olumo Rock, projecting them to a global audience.

The platform is expected to serve as Nigeria’s premier tourism streaming platform, projecting the country’s culture, creativity and destinations to both domestic and international audiences.

 


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Telecoms subscribers’ compensation for poor service starts this month – NCC

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Nigerian Communications Commission has announced that its directive requiring telecom operators to compensate subscribers for poor service quality will take effect from this month.

Telecoms subscribers’ compensation for poor service starts this month – NCC

NCC

In an FAQ released on Tuesday, April 7, the Commission clarified that the directive applies specifically to Mobile Network Operators (MNOs) that fail to meet their Quality of Service (QoS) Key Performance Indicators (KPIs).

These include major operators such as MTN, Airtel, Globacom, and 9mobile, although the NCC did not specify which of them fell short of the required standards.

The Commission explained that the compensation framework covers service failures affecting voice calls, data services, and SMS. It also applies to both individual and corporate subscribers.

According to the NCC, subscribers will qualify for compensation if they experienced poor network service in an affected Local Government Area and carried out at least one revenue-generating activity, such as a billed call, SMS, or data session, during the relevant period.

The regulator emphasised that subscribers do not need to apply for compensation, as operators are mandated to automatically identify affected users and provide compensation directly. It added that only service failures falling below defined thresholds under the QoS Regulations will qualify, while brief or quickly resolved disruptions may not be eligible.

The NCC also noted that a separate compensation framework already exists for Internet Service Providers (ISPs). The directive was earlier announced in a statement by the Commission’s Head of Public Affairs, Nnenna Ukoha, as part of efforts to prioritise consumer protection within Nigeria’s telecommunications sector.

The Commission highlighted the critical role of telecom services in economic activity, communication, and access to digital opportunities, noting that poor service quality can negatively impact productivity, business operations, and public confidence.

It added that the compensation policy complements existing regulatory measures aimed at monitoring service delivery and enforcing performance standards across the industry.


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