The technical suspension on Fortis’ shares for inability to submit financial statement as at when due impacted negatively on the earnings of the lender. Chris Ugwu writes
Microfinance Policy Regulatory and Supervisory Framework (MPRSF) were launched in 2005 and the objectives were to address the prolonged non-performance of many existing community banks.
This has been attributed to incompetent management, weak internal controls and high cost of transactions. Other objectives to be addressed by MPRSF are poor corporate governance, lack of well-defined operations, restrictive regulatory/supervisory requirements, and weak capital base of existing institutions.
Indeed, a huge gap exists in the provision of financial services to a large number of active but poor and low income groups, especially in the rural areas as a result of rigidity in operations of formal financial institutions in Nigeria.
However, despite the efforts, the problem of funding has remained a major militating factor against the effectiveness of micro finance banks in Nigeria.
This is because the Nigerian economy has continued to face major headwinds, from substantial decline in international crude oil prices to significant constraints to business activities in the north eastern part of the country owing to the activities of insurgents.
The fall in crude prices had heightened pressure on the Nigeria’s foreign reserves and the domestic currency, leading to the volatility in exchange rate and a dip in foreign reserves.
These microeconomic pressures and unrelenting regulatory adjustments have to a large extent constrained the margins of financial institutions in the country.
Fortis Microfinance Bank Plc, which had sustained considerable growth in bottom line, has also been affected by not only harsh operating milieu but investors’ negative perception following the suspension NSE placed on its shares for default in filing 2016 financial results as and when due.
The MFB, which began to show positive outlook earnings during the second quarter of 2016, dropped sharply in the third quarter of third quarter of 2017.
The share price, which closed at N2.58 per share in March 31, 2017 has remained at the same price even as at Friday due to the technical suspension placed on the shares of the company.
Fortis Microfinance Plc began the first quarter ended March 31 2016 with 55.31 per cent drop in profit after tax to N71.910 million from N160.933 million recorded a year earlier.
Its pre-tax profit equally dropped by 55.31per cent from N102.728 million the previous year to N229.904 million during the period under review.
Fortis’s interest income grew by 17.89 per cent from N566.429 million in 2015 to N667.774 million during the financial year 2016.
However, the lender’s second quarter ended June 30, 2016 profit after tax grew by 14.42 per cent to N267.996 million from N234.225 million recorded a year earlier.
The institution’s pre-tax profit equally grew by 14.42 per cent from N334.608 million the previous year to N382.851 million during the period under review.
Fortis’s interest income grew by 37.73 per cent from N1.304 billion in 2015 to N1.796 billion during the financial year 2016.
Also, the lender’s third quarter ended September 30, 2016 profit after tax grew by 15.27 per cent to N421.729 million from N365.845 million recorded a year earlier.
In a filing from the Nigerian Stock Exchange (NSE), the microfinance institution’s pre-tax profit equally grew by 15.27 per cent from N522.636 million the previous year to N602.471 million during the period under review.
Its interest income rose by 44.38 per cent from N1.836 billion in 2015 to N2.651 billion during the financial year 2016.
Fortis’ full year ended December 31, 2016 profit after tax inched up marginally by 0.44 per cent to N586.255 million from N583.703 million recorded a year earlier.
The microfinance institution’s pre-tax profit however, dropped by 5.65 per cent from N882.521 million the previous year to N832.605 million during the period under review.
Its interest income increased by 19.26 per cent from N3.649 billion in 2015 to N4.352 billion during the financial year 2016.
Fortis Microfinance sustained positive bottom line in the half year ended June 30, 2017 with profit after tax growing by 152.82 per cent to N677.549 million from N267.996 million recorded a year earlier.
A report obtained from the NSE, showed that the microfinance institution’s pre-tax profit equally rose by 152.82 per cent from N382.851 million the previous year to N967.927 million during the period under review.
Fortis’s interest income rose by 40.53 per cent from N1.796 billion in 2016 to N2.324 billion during the financial year 2017.
However, the MFB’s third quarter ended September 30, 2017 profit after tax dropped by 82.52 per cent to N73.713 million from N421.729 million recorded a year earlier as challenges of operational environment tool toll on the company.
Its pre-tax profit equally fell by 82.52 per cent from N602.471 million the previous year to N105.305 million during the period under review.
Fortis’s interest income grew marginally by 3.36 per cent from N2.651 billion in 2016 to N2.740 billion during the financial year 2017.
Default in filing results
Consequent upon the inability of Fortis to submit its year end 31 December 2016 audited financial statements to the NSE when due, as required by the applicable provisions, the shares of the Bank were suspended from being traded on the floor of The Exchange.
According to the management, the non-rendition of statements to the Exchange within the material period was chiefly attributable to the fact that, as a banking institution, the statements of Fortis had to be submitted to the apex bank prior to being released for any purpose.
“The technical suspension of Fortis’ shares from the trading floor of the Exchange set off a chain reaction that culminated in several unintended outcomes, the most significant being the panic withdrawals of deposits it triggered. This was because the announcement was largely misconceived, misinterpreted and misunderstood as a revocation of the Bank’s operating license.
“Although the Exchange lifted the suspension on 15th September 2017, after the Bank submitted the financial statements and met other conditions for the lifting as required by the Exchange, it was impossible to change the mindset of majority of depositors within such a very short time, “the management noted.
It noted that the Bank is addressing these challenges, adding that in the third quarter of 2017, just as Fortis was on the cusp of migrating to a more versatile and robust Core Banking Application, several accounting anomalies were unearthed that had to be immediately brought to the attention of the Bank’s primary Regulator, the Central Bank of Nigeria.
“Due to the observed accounting irregularities, previous financials filed with regulatory authorities and released to the public may have been impacted and may have to be restated where necessary. With the approval and guidance of the CBN, Fortis is currently engaged in a far-reaching house cleaning exercise, which at the end will culminate in the emergence of a leaner, healthier bank set apart by a renewed emphasis on professionalism and adherence to international best ethical standards,” the Bank said.
In furtherance of the process of enshrining good corporate governance, the lender said it recently identified three qualified individuals with considerable experience to join the Board as independent directors who have no previous existing relationship with Fortis in any way, shape or form.
These individuals according to the bank, would be presented to the shareholders for their approval at the next Annual General Meeting (AGM) of the Bank, which is expected to hold during the first quarter of 2018.
“If approved, the addition of these individuals to the Board will enhance the Board’s capacity to perform its oversight functions and enhance the workings of various critical board committees.
Furthermore, negotiations are on-going with the bank’s group of foreign lenders to grant it the much needed respite through the restructuring of existing facilities,” it said.
The bank added that discussions are also at an advanced stage to engage a reputable firm of turnaround experts working in concert with a revitalized management team to quickly restore the FMFB on the path of sustainability and profitability, through the adoption of a revised business model and rejigging of the existing Five-Year Strategic Plan.
For micro finance sector to experience positive times, the industry should embrace changes in business environment, which presents uncommon opportunities to deepen penetration of the market through creativity and ingenuity.
We’ll use dialogue to resolve myriads of problems in maritime industry–Nwabunike
Hon. Iju Tony Nwabunike last week emerged the new National President of the Association of Nigerian Licensed Customs Agents (ANLCA) in the election held in Enugu. Nwabunike, who is the Managing Director of Mac- Tonnel Nigeria Limited, and pioneer chairman of the Council for the Regulation of Freight Forwarding in Nigeria (CRFFN), in this interview with PAUL OGBUOKIRI, he speaks on the programmes of his administration. He insists that there are more civilized ways of addressing issues not lockouts.
ANLCA’s national elections have come and gone; what does your victory entail for members?
My victory is not only for members of ANLCA but is also a victory for all because it will bring about total emancipation from foreigners, who have taken over our businesses and jobs for our people. It is total emancipation from the unwholesome activities of some government agencies that do not want to play the game by the rules.
It is victory for all the operational challenges faced by our people in the course of doing their legitimate businesses. We will ensure that freight forwarders and customs brokerage agents are seen as professionals and not dropouts.
We will embark on an aggressive training and re-training of our members to make them globally competitive in their operational activities. We will enthrone a regime of international best practice for our members and also network with international bodies and agencies in terms of training and re-training our members on international best practice. You will see a total re-organisation of the customs brokerage and freight forwarding profession in Nigeria.
There is this clamour for ceding certain percentage of import duties collected by the customs brokerage agents. What is your take on this?
We will interface with the National Assembly in many areas. One of them is making input into the import guidelines of the country since we are directly involved. Secondly, since we generate the revenue for the Nigeria Customs Service in terms of import duties and other fees and levies collection, it will not be out of place if our welfare is taken care of in the process of doing this.
There may be challenges and difficulties at the beginning, but we will triumph in the end. We will seek adequate reward from government agencies for our members, in doing all these; we will apply dialogue and consultations not confrontation. This is why we will partner the National Assembly with a view to creating the needed legal framework.
A lot of freight forwarders and customs brokerage agencies are not computerised. What do you intend to do about this, especially in terms of helping them acquire modern Information and Communication Technology (ICT)?
First and foremost, we will put in place a wonderful and ICT compliant secretariat for the association. Like I told you earlier, the new executive will train and retrain members on international best practice, in international trade business. ICT would form part of this training and capacity building programme.
We are considering exploring the possibility of guaranteeing loans from Micro Finance Banks to enable them acquire modern ICT equipment that would ease their jobs and by so doing enhance professional efficiency. How would you relate with the Federal Government in terms of international trade policies that affect freight forwarders and customs brokerage agents? Like I told you earlier, caution will be our watchword and so we will employ dialogue not confrontation and lockouts. We will employ every legitimate and modern means of addressing issues.
For instance, we would want to make inputs into fiscal policies that affect us, especially fixing tariffs and charges, we will dialogue with relevant government agencies in this direction. For instance, we believe that the government should revisit the issue of the 41 items blacklisted from accessing foreign exchange through the official market.
We also think that the government should at this time review its vehicle import policy, especially the ban on the importation of vehicles through the land borders. Everyone knows that this policy has not achieved its desired objectives for obvious reasons.
So it is high time the government allowed the importation of vehicles through the land borders, especially Seme and Idiroko but efforts must be made to ensure that appropriate duty is paid on any vehicle so imported.
We will also seek a review of import tariff and charges for some staple foods consumed mostly by the poor masses such as rice, tomato puree. It is commendable that the government is trying to encourage local production of such products, but we propose that in situations where locally produced ones cannot meet the needs of the over 180 million Nigerians, the shortfall should be imported, at least until the country is self -sufficient in the production of such items.
What would be the association’s relationship with the Nigerian Shippers Council?
As a regulatory agency of the government, ANLCA under my watch will liaise with the Nigerian Shippers Council to check some of the excesses of shipping companies and terminal operators.
The current rampant cases of imposition of arbitrary levies and charges by terminal operators and shipping companies would no longer be tolerated. We will not allow a situation whereby you wake-up in the morning and find out that the entire charges have been reviewed upwards without any form of negotiation or all the notice to that effect.
It is also a well- known fact that our jobs are being taken away by foreign customs brokerage agents, Customs officers and even members of the Nigerian Plant Quarantine Service today do clearing jobs at the ports.
We will not sit and allow all these to continue and so we will device mechanisms to ensure that all these anomalies are corrected. Cargo clearing business must be done in Nigeria the same way it is done elsewhere including neighbouring African countries and indeed all over the world. So we will take a critical look at these issues, activities of shipping companies, terminal operators and even bonded terminals and other service providers at the ports
There is a disagreement between the Council for the Regulation of Freight Forwarding in Nigeria (CRFFN) and ANLCA over Practitioners Operating Fee (POF). What is your take on it?
You know ANLCA is currently in court with the CRFFN, but we will resolve all that through dialogue. The new Executive Council of the association would take urgent steps to resolve the debacle. We will seek legal advice from the legal department of the association as well as from independent sources with a view to urgently resolving the crisis. There must be a way forward.
How would you relate with other members of the various associations in the industry?
You will recall that the immediate past president of the National Association of Government Approved Freight Forwarders (NAGAFF) was at the venue of the election that saw my emergence. So I have a good rapport with all of them. We need to speak with one voice. We will synergise with the Council of Managing Directors of Licensed Customs Agents (NCMDLCA) and even the association of Registered Freight Forwarders (AREFF), among others.
‘Radio can be used to check herdsmen/farmers’ clashes’
Mrs. Alison Data Phido is the Executive Director, African Radio Drama Association (ARDA). ARDA was launched in Nigeria in 1996 and has more than 30 radio stations across the country. She speaks with FLORA ONWUDIWE on some of their executed projects in form of drama and jingles which have been syndicated to other countries in Africa and broadcast on the BBC in Hausa. Mrs. Phido also suggested the methodology to put an end to Fulani herdsmen and farmers’ clashes
What informed establishing the African Radio Drama Association (ARDA)?
The ARDA was established in faraway Harare, Zimbabwe. It was during a development communication symposium of people who are interested in using radio to the development of communications. It has scholars; radio producers, actors, presenters, even some development people, people who are working in health, agriculture and so on.
So, it was a symposium that was looking at ways we can communicate better with our populations on several development areas and problems that we have in Africa. It wasn’t just Africans; we had people from Asia, Philippines and the Caribbean. There were people who are passionate about what the most accessible medium is and how we can use it so that people will really benefit from it. Those of us who went from Nigeria were amazed at the sheer possibilities of how one can use a simple medium like radio to achieve so much in terms of development. We were amazed because at that time, radio was no longer an attractive medium.
If you were born in the 50s, or grew up in the 60s and 70s, you saw the impact of radio. In the 90s, television had taken over and videos were the in thing. And the reasons were not far-fetched. But even in the developed countries, radio is still very important to them; so why is it not that way in Nigeria. We knew at that time the radio had become deregulated so even the private radio stations had programming that was nothing to write home about.
Mostly, they were playing a lot of music and advertisements. Nobody was spending money producing programmes anymore. But in other countries, you hear about people using radio dramas to promote agriculture, make people think about family planning, better reproductive health; they are using radio drama to promote girl child education. We saw what people were doing with radio and we said, why can’t we do the same in Nigeria, Africa. So the association was born.
What are those contents that affect Nigeria that you are using radio to promote?
Think about all the indexes of under- development; education, good governance, democracy, democratic principles, accountability, corruption. We talk about reproductive health matters, children’s health, nutrition in families, female genital mutilation, widows’ dispossession, and child’s rights. Under gender inequality, we talk about sexual responsibility issues, HIV/AIDs and Malaria.
The issue raised was that people in the rural areas are mostly affected. When you take some of these executed projects to them, the barrier is language; how do you communicate for them to have an impact of ARDA’s project?
We speak in the language that they understand. We do this simply because our methodology starts from who we think the beneficiaries are. For example, in a particular location, they have an issue that they feel that we can help them address; we start by researching, talking and engaging them in trying to find solutions to whatever issues they have. We normally package our programmes in the languages of those people and that is the beauty of radio to be honest. Because if you are low literate or illiterate and you don’t have access to print medium, you cannot understand or read or write. But then people are speaking your language on radio, you will understand them. That is why radio is accessible because even for low literate people, at least it is oral, so we try as much possible to speak to people in the language that they understand and that is why we define our audience first of all.
The issue of reproductive or maternal health is predominantly in the rural areas for lack of facilities and lack of education. The Lagos State Government seems to be more involved, does ARDA work with states?
In every state where we worked, we tried to get the states to key in. If you want things to be sustainable, you have to look at what you have on ground; what is the structure. Maternal health for instance is an issue that they want to address. Many states have family planning units or maternity unit; they have all kinds of programmes that look at addressing maternal health. Nigeria is one of the countries that has very high maternal mortality rate. We are one of those countries that have more women dying just because they are pregnant or delivering a baby. Many countries have reduced incidences of maternal mortality. We are still on the high side.
Do you syndicate some of these projects you execute in Nigeria to other countries in Africa?
Yes we do. We have worked on several Hausa and Fulani projects before. I mention those in particular because if you look at West Africa, Hausa is spoken by populations in several of these countries. For instance, Hausa is spoken in Niger, Cameroun, Mali, Ghana and across the coast, you have pockets of Hausa populations; so you have a lot of international radio stations having Hausa service. We broadcast in the past on BBC Hausa service, Deutchvelle in Fatuwan; a radio drama series that we had in Hausa called ‘Asuga Ategiri’ for several years. That is to show you the reach as we were getting comments and letters from Libya, Sudan, Cote d’ Ivoire, Ghana, Niger among others. We also belong to a network that was set up by an organisation called the Panos West Africa. They support the community radio stations and many countries have hundreds of them. Nigeria is still a new thing here. In Ghana, Mali and Niger, they all have community radio stations and they want contents and they beg for contents. What Panos does is try and get people who are building content to try and contribute to its bank. Once these programmes are in the bank, any radio station can use them.
When the initiative was launched in 1996, did you know that you would go this far?
I knew that we would go even further than where we are now because it was a huge and very big vision. I saw the number one development communication entity, development communication agency on the continent. That was what I thought this organisation is going to be because there has never been anything like it; we have advertising agencies and other media agencies but there are no development communication organisations.
ARDA is made up of experts with cross cultural perspective. What does this mean?
We have the expertise in ARDA that is always a little bit more than what other people have to offer. For example, we have staff or associates from advertising background, which means they are experts in how to package communication to motivate people to buy something; either idea or products. We have people who are producers of media materials, film producers or radio producers, scriptwriters, trainers who can facilitate any workshop or people who can come up with a curriculum or any kind of training.
The edge we have above other people is every single person here has a developmental background. A developmental background gives a different perspective, knowledge and awareness.
Most Non Governmental Organisations (NGOs) usually fold up after a while for lack of fund, but ARDA waxes stronger; the bride of long list of foreign donors, grants and support from within. What is the secret that has kept the organisation afloat for other founders of NGOs to take a cue from?
Some NGOs have come and gone, most of them could be lack of funds, and some may have completed whatever they mandated for themselves to do. But for ARDA, we had a vision for an enduring organisation. So when you had that kind of a vision, you set it up from the beginning to have those characteristics that will make an enduring organisation. What are the things that make an organization stay? When you study organisations that are there for decades there are certain significant characteristics. I think the main thing is that, there is a niche for the kind of services we are offering, because even in the developed countries, communicating development is something that is ongoing. There are things that you are always going to communicate to your community population, so the niche we have carved for ourselves is something that we needed that will always be an important service. So for developing countries, the issues are numerous, there are some long standing matters that still need to be communicated. The other things that made us to survive till now and for us to be attractive to donors as well as partner organizations are two folds; we do quality work that they can see the value, success and impact of some of the things we had done in the past. We have structures in place to manage funds that we do receive, which means that a donor is confident that they gave us money. There is nothing that donors love more than having structures, checks and balances, like having a supervisory board, are they meeting, do you have audited accounts, those are the things that make people part with their money. Also, another source of our income is we do consultancies.
You said you had a project where you had to educate the Fulani herdsmen, what kind of project was that?
It was a project on Climate Change; an adaptation to Climate Change. Why we worked with the herdsmen is because of the constant conflict between the herdsmen and farmers in the country over resources. Because it is about the distribution of resources, scarce resources and the natural habitat of the herdsmen, the Sahel region of the country is very dry now. Many people can tell you how far the desert has encroached into our country. So you can imagine the Sahel being the driest. We also have the Guinea Sudan areas, which is coming down almost to Benue, Guinea Savannah regions, so you find during the dry season, that there is hardly adequate water and greenery or food for the cattle and most of the breeders that raise cows are nomadic. If there is no food they move South west, until the rains begin and they go back. It is the way that they have always traditionally done their work.
Glo-sponsored African Voices dedicates this week’s edition to photography
This week’s edition of Globacom-sponsored African Voices on CNN International is all about photographers that are influencing the continent behind the scenes from the camera.
With the theme “Through the Lens”, the 30-minute magazine programme will feature Gerald Rambert of Mauritius, Omar Victor Diop of Senegal and Adnen Chaouchi of Tunisia.
Globacom in a press statement urged viewers to watch African Voices on CNN at 7 a.m. and 4.30 p.m. on Saturday and at 12.30 a.m., 4.30 a.m. and 8 p.m. on Sunday. Further repeats will also run at 5 a.m. on Monday and at 10.30 a.m. on Tuesday.
According to the company, the CCN crew will take a dive with the Mauritian photographer, Rambert, as he introduces viewers to the world of deep sea photography.
He discloses how his big passion for the fish and the sea led him to spending hours in the water and finally to underwater photography. He is today the photographer for many magazines.
The Senegalese photographer, Omar Diop, is a graduate of the Paris Business School who worked in several multinationals before abandoning his corporate job to devote himself to photography. Viewers will find out how he is blurring the lines between photography and painting.
The final guest on the programme is a journalist and radio host who CNN said is changing the way news is consumed through mobile journalism. He is expected to talk about how he combines his job as a journalist with television production.
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