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Central Bank of Kenya Bars Banks from Dealing with Flutterwave, Chipper Cash

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Central Bank of Kenya (CBK), Kenya’s apex bank, has instructed commercial banks in the country to stop dealing with Nigerian fintechs, Flutterwave Payment Technology and Chipper Technologies.

Central Bank of Kenya Bars Banks from Dealing with Flutterwave, Chipper Cash

The CBK gave the instruction in a circular signed by Matu Mugo, deputy director, bank supervision.

The bank accused the fintechs of operating in the country illegally.

The CBK had last month frozen the accounts of Futterwave over allegations of fraud, which the Nigerian fintech denied.

Specifically, the CBK accused both entities of engaging in Money Remittance and Payment Services without licensing and authorisation.

The circular reads, “It has come to the attention of the Central Bank of Kenya (CBK) that Flutterwave Payments Technology Limited (Flutterwave) and Chipper Technologies Kenya Limited (Chipper) have been engaging in Money Remittance and Payment Services without licensing and authorisation by CBK. Money Remittance Services in Kenya are regulated pursuant to the Central Bank of Kenya Act and the Money Remittance Regulations, 2013. Further, Payment Services in Kenya are regulated pursuant to the National Payment System Act and the National Payment System Regulations, 2014.

“You are therefore directed to immediately cease and desist from dealing with Flutterwave and Chipper.

“You are thereafter required, within seven (7) days of the date of the letter to confirm to CBK your compliance with the directive.”

 


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E-Financial

All Banks Safe and Sound —NDIC

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Bello Hassan, managing director, Nigeria Deposit Insurance Corporation (NDIC) has said that all Deposit Money Banks (DMBs) in Nigeria, including Polaris Bank are safe and sound.

All Banks Safe and Sound —NDIC

Hassan made the clarification on the sideline of a three-day Capacity Building Workshop organised by the Legal Department of NDIC, for law enforcement agencies at BWC Hotel, Victoria Island, Lagos.

He also said that Polaris Bank was not sold as reported by some media recently. According to the News Agency of Nigeria (NAN) the event had, “Effective Investigation and Prosecution of Banking Malpractices that Led to Failure of Banks’’, as its theme.

“All banks that are operating within the country are sound in as much as their licences have not been revoked.

“If there is a problem, the regulator that issues the licence will be the one to revoke the licence. “In as much as the licence is not revoked, you’re free to continue to bank with the institution; it means it is safe,’’ Hassan said.

The NDIC boss also explained that the corporation usually carried out stress tests on banks on a monthly basis, to ascertain their financial soundness. He said: “The Central Bank also does stress testing, and so do we in NDIC. In fact we do it on a monthly basis to ascertain the financial soundness of those banks and we see no red line.

“When we talk of key financial soundness indicators, we are talking about the capital adequacy and liquidity and the quality of the assets.

“Those two solid financial soundness indicators that you use to gauge the safety and soundness of these institutions are robust.

“So, based on that, the banks are safe and sound; continue to bank with them.’’

Recall that the management of Polaris Bank recently discredited the report on the purported sale of the bank by the Central Bank of Nigeria (CBN) to private individual for N40 billion.


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FG Borrows N2.45Trillion from CBN by Ways and Means Advances

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Federal government’s total borrowing from the Central Bank of Nigeria (CBN) through Ways and Means Advances rose from N17.46tn in December 2021 to N19.91tn in June 2022.

FG Borrows N2.45Trillion from CBN by Ways and Means Advances

The Punch quoted data from the CBN, which showed that the Federal Government borrowed N2.45tn from the apex bank within six months.

The N19.91tn owed the apex bank by the Federal Government is not part of the country’s total public debt stock, which stood at N41.60tn as of March 2022, according to the Debt Management Office.

The public debt stock only includes the debts of the Federal Government of Nigeria, the 36 state governments, and the Federal Capital Territory.

According to the Punch “Ways and Means Advances is a loan facility through which the CBN finances the shortfalls in the government’s budget”.

According to Section 38 of the CBN Act, 2007, the apex bank may grant temporary advances to the Federal Government with regard to temporary deficiency of budget revenue at such rate of interest as the bank may determine.

The Act read in part, “The total amount of such advances outstanding shall not at any time exceed five per cent of the previous year’s actual revenue of the Federal Government.

“All advances shall be repaid as soon as possible and shall, in any event, be repayable by the end of the Federal Government financial year in which they are granted and if such advances remain unpaid at the end of the year, the power of the bank to grant such further advances in any subsequent year shall not be exercisable, unless the outstanding advances have been repaid.

However, the CBN has said on its website that the Federal Government’s borrowing from it through the Ways and Means Advances could have adverse effects on the bank’s monetary policy to the detriment of domestic prices and exchange rates.

“The direct consequence of central banks’ financing of deficits are distortions or surges in monetary base leading to adverse effect on domestic prices and exchange rates i.e macroeconomic instability because of excess liquidity that has been injected into the economy,” it said.

The World Bank had, in November last year, warned the Nigerian government against financing deficits by borrowing from the CBN through the Ways and Means Advances, saying this put fiscal pressures on the country’s expenditures.

Despite warnings from experts and organisations, the Federal Government has kept borrowing from the CBN to fund budget deficits.

The PUNCH had reported that the Federal Government paid an interest of N2.03tn from January 2020 to November 2021 on the loans it got from the CBN through the Ways and Means Advances.

It was also reported that Federal Government paid an interest of N405.93bn from January 2022 to April 2022 on the loans it got from the CBN.

Mr Johnson Chukwu, managing director/chief executive officer, Cowry Asset Management Limited, said the central bank lending put pressure on the exchange rate and the inflation rate, with “liquidity that has no productivity attached to it coming into the system.”

Aliyu Ilias, development economist, said the refusal of the government to remove petrol subsidy had significantly increased expenditure, forcing the government to resort to borrowing to close its widening fiscal deficit.

He advised the government to seek better ways of generating revenue, such as widening its tax net and privatising its assets.


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Polaris Bank Not Sold – NDIC MD

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The Nigeria Deposit Insurance Corporation (NDIC) has stated that Polaris Bank remains unsold, days after a report that Auwal Lawan Abdullahi, an investor in farm business, is planning to acquire the lender.

Abdullahi, a son-in-law of former military dictator, Ibrahim Babangida, was reportedly planning to acquire Polaris Bank at a price of N40 billion, which is below the N1.2 trillion that the Central Bank of Nigeria (CBN) and Asset Management Company of Nigeria (AMCON) invested in Polaris Bank.

However, while reacting to the safety of Nigerian banks, Bello Hassan, Managing Director, NDIC, said Polaris Bank has not been sold, and banks in the country are sound, NAN reported on Wednesday.

He further stated that, “All banks that are operating within the country are sound in as much as their licences have not been revoked. If there is a problem, the regulator that issues the licence will be the one to revoke the licence.

“In as much as the licence is not revoked, you’re free to continue to bank with the institution; it means it is safe.”

Hassan also said, “The Central Bank also does stress testing, and so do we in NDIC. In fact we do it on a monthly basis to ascertain the financial soundness of the banks and we see no red line.

“When we talk of key financial soundness indicators, we are talking about the capital adequacy and liquidity and the quality of the assets.

“Those two solid financial soundness indicators that you use to gauge the safety and soundness of these institutions are robust. So, based on that, the banks are safe and sound; continue to bank with them.”


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