A Week in Nigeria: 5 October

Highlights from Reuters coverage of Nigeria over the last seven days

The central bank has been seeking to boost credit to businesses and consumers following recession in Nigeria

In this week’s round-up: central bank levies $1.3bn charge on banks for loan target failure, South Africa and Nigeria agree trade deals, lawmakers increase 2020 budget outline, and 19 freed from baby factory.

  • Nigeria’s central bank has levied a charge on 12 banks for a total of more than 400 billion naira ($1.3 billion) for failing to increase loans to meet a regulatory target, three banking sources and one of the lenders told Reuters. The central bank asked lenders in July to maintain a ratio of lending out at least 60% of deposits by September or face a higher cash reserve levy, part of measures aimed at getting credit flowing in Africa’s biggest economy. The cash reserve requirement in Nigeria is 22.5%. However, the regulator has said that banks which fail to meet its new minimum loan target will face a higher cash reserve requirement equal to 50% of the lending shortfall. The funds will go into the cash reserve requirement and will not be available to the banks, the spokesman said. Lenders have asked the central bank to review the charge because the regulator did not stick with the cut off date it published when the policy was announced, one banking source told Reuters. The central bank has been seeking to boost credit to businesses and consumers following recession in Nigeria, but lending has yet to pick up. With growth slow, banks prefer to park cash in risk-free government securities rather than lend to companies and consumers. Since the 2016 recession, lenders have done little to expand credit in Nigeria, blaming a weak economy after a 2014 oil price crash and a currency crisis that made loans go sour. Analysts fear growing credit quickly could weaken asset quality and capital buffers.
  • South Africa and Nigeria signed 30 trade and cooperation agreements, weeks after a wave of violence against Nigerian nationals in Johannesburg and Pretoria had strained relations between Africa’s top two economies. Presidents Cyril Ramaphosa and Muhammadu Buhari, at the conclusion of a two-day visit by the Nigerian leader, said they regretted the violence and subsequent retaliation in Nigeria against South African businesses, pledging instead to deepen trade ties. Ramaphosa said the two countries had sealed 32 bilateral agreements and memoranda of understanding covering trade and industry, science and technology, defence, agriculture and energy. Nigeria accounts for 64 percent of South Africa’s total trade with the West African Region and is one of its largest trading partners on the continent. In September, mobs armed with makeshift weapons attacked businesses and homes owned by foreigners, leading to at least 10 deaths, dozens of injuries and up to 400 arrests. “The recent acts of xenophobic attacks on our compatriots and other Africans in South Africa are shocking to me, Nigerians and indeed Africa. It was an embarrassment to the continent,” Buhari told a town hall meeting with Nigerians living in South Africa during his visit.

Nigeria bureau chief for Reuters. Ghanaian family, British accent. Ex-BBC, before that newspapers.