Nigerian banks on Thursday announced that they will kick-start the implementation of the stamp duty charge of 0.375 per cent on loans backed by legal mortgages, shares, debentures or bonds.

This is coming after the Federal Inland Revenue Service (FIRS) had directed banks to implement stamp duty on certain transactions that requires duty payments such as contracts and legal mortgages.

According to the FIRS, as the manner of business transactions continue to evolve and change pattern, the law on stamp duties will also change. It noted that the stamp duties has therefore undergone several amendments over the years up to the Finance Act 2019.

Stamp duty is essentially a duty chargeable on both physical and electronic instruments. The stamp duties Act defines duty to mean “any stamp duty for the time being chargeable under any act and also includes any fee chargeable hereunder”.

In several email notifications sent to its customers, banks revealed that they will start implementing the FIRS directive while adding that the charge will be applied to the value of the assets and remitted back to the revenue office.

Access Bank in an email notification titled to its customers, “Stamp Duty Automation Update”, said, “We will like to inform you that the Federal Inland Revenue Service (FIRS) has directed all Nigerian banks to implement stamp duty on certain transactions that require duty payments such as contracts and legal mortgages”.

The bank noted that in compliance to this directive, it have taken measures to streamline the process to make transactions more convenient for its customers.

“To this end, a stamp duty charge of 0.375 per cent will be applied to loans backed by legal mortgages, shares, debentures or bonds. The charge will be applied on the value of legal mortgages, shares, debentures or bonds and remitted to the FIRS”, the bank said.

Access Bank added that all previously approved loans will remain unchanged and should be repaid in full as per the agreed terms and conditions.

“We are committed to providing you with exceptional service”, it said.

It will be recalled that the Federal Government stated it is looking to expand net on transactions covered by the stamp duty charges from regular bank transfers.

A report by African Export-Import Bank (Afreximbank) has stated that the current “high gold prices offer African countries an opportunity to strengthen their reserve portfolios with a safer asset like gold”.

The report also advised African countries that relied on gold to take advantage of the increasing prices of the commodity in the medium term by investing in their gold sector and improving their value chain in the long-term.

The report forecasted that gold prices could remain high for a long time due to reduction in interest rates by many central banks.

The report, titled, “The Ongoing Gold Price Rally: Macroeconomic Implications for African Producers,” said, “The gold sector is macro-critical in several African countries.”

It added that the African continent produced approximately one-quarter of the world’s gold and generated substantial foreign exchange earnings and fiscal receipts from it, while creating employment opportunities in producing countries.

The report stated that in the medium term, the gold rally was an opportunity for long-term infrastructure and social investments to diversify the production base. It urged governments to implement soft and hard measures to tame the activities of illegal miners.

The report added, “Recently, its value has surged and reached an all-time high. The rally began in mid-February of 2024.

“As of April 12, 2024, the spot price was $2,401.5 per ounce, a 21 per cent increase since mid-February 2024. Considering a longer timeframe, since October 2023, the value of the precious metal has risen by 32 per cent. Future prices are projected to be consistently upward, with 68 months of future pricing quoted at $ 2,776 per ounce.

“The current price rally is attributed to several factors, including the anticipation of monetary easing by major central banks, robust demand from central banks in emerging economies, and ongoing geopolitical instability in the Middle East and Ukraine.”

The report added, “African continent produces about one-quarter of the world’s gold production. According to data from the World Gold Council, African countries produced a total of 979.2 metric tons of gold in 2022.

“Ghana, South Africa, Sudan, Mali, Burkina Faso, the DRC, Tanzania, Zimbabwe, Togo, and Côte d’Ivoire are the top 10 producers, which collectively account for 90 per cent of the continent’s production. In 2022, the top 10 producers received $66 billion in gold export receipts.

“These top 10 producers also account for 14.6 per cent of the continental GDP. Any change in the price of gold can have significant macroeconomic implications and trade dynamics for these gold dependent countries and the African continent.”

The said as of December 2020, the World Gold Council reported that central banks held roughly 35,000 tons of gold, amounting to approximately 18 per cent of all the gold in the world.

According to the same source, African central banks held about three per cent of global central bank gold reserves. It said African central banks could exploit the high prices and shore up their reserve holdings by storing the produce reserves or buying on the markets.

It stated that as of 2023, North African countries held the most gold as a reserve asset, with approximately 446 tons, with Algeria holding 174 tons, Egypt holding 126 tons, Libya holding 117 tons, Morocco holding 22 tons, and Tunisia holding seven tons. Elsewhere on the continent, South Africa held 125 tons, Nigeria held 21.4 tons, Mauritius h12.4 tons, Ghana 8.7 tons, and Mozambique held four tons.

The report said, “It is important to note that gold plays a significant role in the exports and GDP of several African economies. Therefore, its price volatility has significant macroeconomic implications.

“In the near term, the recent rally in gold prices is expected to benefit countries whose economies are heavily dependent on the precious metal. However, caution should be exercised to avoid macroeconomic instability, which could arise from the fluctuation of gold prices with its attendant effects.

“While windfall export receipts resulting from increased gold revenue will improve fiscal accounts, it is key to manage them carefully to avoid any extra spending that could destabilise the macroeconomic environment. The growth effect has remained subdued, and more effort may be needed to boost economic growth.”

According to the report, gold is a precious metal that symbolises stability and acts as a secure investment during economic turmoil.

It is an asset that maintained its value over the long term and is frequently utilised as a store of wealth, the report stated.

The report said while inflation eroded the real value of wealth, gold had usually maintained or even increased its value over time. Gold had proven to be a stable or even an appreciating asset during high inflation, making it a valuable secure investment.

The Nigeria Deposit Insurance Corporation (NDIC) Thursday announced increase in the maximum deposit insurance coverage levels for all licensed deposit-taking financial institutions with immediate effect.

Mr. Bello Hassan, Managing Director/Chief Executive, NDIC, disclosed this at a media briefing in Abuja.

He said the maximum deposit insurance coverage for Deposit Money Banks (DMBs) had been increased from N500,000 to N5 million, to provide full coverage of 98.98 per cent of total depositors compared to the current 89.20 per cent.

In terms of the value of deposit covered, he said the revised coverage would increase the value of deposits covered by deposit insurance to 25.37 per cent compared to the current 6.31 per cent of total value of deposits.

Under the new regime, the maximum deposit coverage for Microfinance Banks (MFBs) was raised from N200,000 to N2 million to offer full coverage of 99.27 per cent of depositors compared to 98.76 per cent currently.

Hassan said this would increase the value of deposits covered by deposit insurance to 34.43 per cent compared to14.38 per cent of total value of deposit currently covered.

Furthermore, maximum deposit coverage for Primary Mortgage Banks (PMBs) was also increased from N500,000 to N2 million to provide full coverage of 99.34 per cent of depositors compared with the current 97.98 per cent.

He said this would increase the value of deposits covered by deposit insurance to 21.04 per cent compared to 10.77 per cent currently applicable.

The adjustments also involved an increase from N500,000 to N2 million for Payment Service Banks (PSBs) to offer full coverage of 99.99 per cent of depositors, to increase the value of deposits covered to 43.10 per cent from 40.60 per cent.

In addition, the maximum Pass-through deposit insurance coverage for Mobile Money Operators (MMOs) was increased from N500,000 to N5 million per subscriber per MMO as the applicable coverage level for depositors of DMBs.

The NDIC boss said the revised deposit coverage had balanced the corporation’s goals of deposit protection and financial system stability with incentives for depositors to practice market discipline and prevent banks from unnecessary risk-taking and moral hazard.

He said consideration was given to ensure that the coverage was limited but adequate enough to protect a large number of depositors and credible enough to prevent the destabilising effect of bank runs.

According to him, the adoption of the revised maximum coverage was supported by the corporation’s current funding, represented by the balances in the various Deposit Insurance Funds (DIFs), expected annual premium collection, enhanced supervision that would reduce the likelihood of bank failures, effective bank resolution frameworks and other funding arrangements provided by the NDIC Act No. 33 of 2023.

He said, “I will like to reaffirm the NDIC’s unwavering commitment to protecting depositors and contributing to the stability of the financial system.

“These adjustments to the maximum deposit insurance coverage reflect our dedication to adapt and evolve in response to the changing landscape of the financial industry, and we remain steadfast in our pursuit of a secure and resilient banking environment for all.”