International Financial Centre will boost Nigeria’s economy —Suleyman

Suleyman 2

Mr Mohammed D. Suleyman is a thoroughbred lawyer and administrator with the passion, commitment and dedication to public service. As Director of the Financial System Strategy 2020 (FSS2020) Secretariat at the Central Bank of Nigeria (CBN), Suleyman has been working diligently with Alhaji Suleiman Barau, Deputy Governor, Corporate Services Directorate at the CBN, who is also Coordinator of the FSS2020 and representatives of other implementing institutions to actualise the goal of positioning Nigeria in the league of the world’s top 20 economies by the year 2020. In this exclusive interview with TheEconomy, Suleyman provides an insight into the prospects of FSS2020, the nation’s most ambitious financial sector project, the landmark achievements it has recorded so far and some of its challenges. Excerpts:

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What are the milestones so far achieved by FSS2020
In measuring the milestones of the FSS2020 programme, we have to look at the landmarks from different sectors’ perspectives. For Mortgage, the objective is to address deficit experienced by the sector on access to credit. The FSS2020 came up with a strategy to create a secondary mortgage market which led to the establishment of the Nigeria Mortgage Refinancing Company (NMRC) to provide lending to the Primary Mortgage Markets. And, the Uniform Underwriting Standards, hitherto non-existent, have now been codified and introduced in the mortgage industry to regulate the practice. In addition, the framework for the setting up of the Mortgage Asset Registry System (MARS) has been developed to capture mortgage transactions linked via a common IT platform. The Central Bank of Nigeria (CBN) has also categorized Primary Mortgage Banks into National, State and Local. In the pension sector, pension asset has grown from N2.9 trillion in 2012 to N6.02 trillion in 2016. What is more, to achieve the initiative on long-term infrastructure development, the Nigerian Sovereign Investment Authority (NSIA) was appointed advisers to manage the deployment of pension funds for long-term infrastructure development which will be governed by international best practice. Through sensitization and mass advocacy, PenCom has also evolved efficient mechanisms for prompt settlement of pension claims for retirees and is building capacity of its staff and operators using the IT platform for prompt service delivery and implementation of the on-going Micro Pension Scheme.

Any other high points?
Of course. In the insurance sector, the introduction of the Micro Insurance Scheme to drive financial inclusion, launching of Takaful insurance product to deepen the insurance industry and the enforcement of public interest/compulsory insurance to increase insurance penetration to four percent by 2020 are at different stages of implementation. In the Micro, Small and Medium Enterprises (MSMEs) sector, there is huge intervention to improve funding and access to finance for small businesses in Nigeria. The creation of the National Collateral Registry using moveable assets for lending to ensure access to finance by SMEs is a huge milestone. Thanks to the passage of the Secured Transactions In Movable Assets Bill by the National Assembly, the legal framework for the operations of the National Collateral Registry has now been perfected. The FSS2020 has also developed a Business Community-Based Credit Model to catalyze the growth of the MSME sector through value chain creation, increased productivity, employment generation and ease of access to credit to meet the required business needs.

What are the challenges facing the FSS2020 programme?
Notwithstanding some of the landmark achievements, there are some challenges facing the programme which include funding and logistics, human capital development, especially the inability to attract talent as clearly stated in the FSS2020 Transformational Programme. Delay in the passage of the identified Financial Sector Bills by the National Assembly is also a major drawback to the implementation of some of the FSS2020 initiatives coupled with policy inconsistency and lack of continuity in leadership of implementing institutions.

The FSS2020 is advocating for the setting up of the Nigeria International Financial Centre (NIFC). What are the benefits of the proposed Financial

Centre to the economy?
The FSS2020 has been working assiduously for the passage of the NIFC Bill, which is the draft legislation for the take-off of the Centre. It is noteworthy that as part of the process of designing the framework for the working of the Centre, the draft legislation has made provision for the NIFC to operate as a financially sovereign entity within a country with its own laws distinct from the municipal laws except on criminal matters. Indeed, not only investors who operate within the Centre would derive several benefits, but also Nigeria. The NIFC will help to accelerate Nigeria’s emergence as the de facto regional hub for financial services and facilitate the regional integration of West and Central African economies.

Does the NIFC have the capacity to push the development of Nigeria and the West/Central African regions?
Certainly. The Centre will drive Nigeria’s and West/Central African regions’ development as we have seen in other clime such as the Dubai IFC which supported the development of the UAE and the Middle East/North Africa region and the Malaysian IFC (supported by Singapore IFC) that sustained the Malaysian economy, and the five Asian “tigers” of the Association of South East Asian Nations (ASEAN 5) during and the post-global financial crisis. The NIFC is also expected to attract top-rated international financial services firms to participate in Africa’s development, as well as other leading companies. The proposed NIFC will facilitate the diversification of the economy to achieve rapid economic growth and development. It will also contribute to the development of human capital through close association, knowledge and skill transfer by foreign investors who will participate at the Centre. Above all, it will create jobs for Nigeria’s teeming young population.

How would you assess the contributions of the FSS2020 implementing institutions to the realization of the initiative?
The FSS2020 is a platform that brings together all the key implementing institutions to achieve a common goal in the financial system. Since actual implementation is being done by these agencies, our role is to identify where there are challenges or issues and proffer solutions, and avoid duplication of efforts. Our mediation efforts would involve calling the attention of the affected institution to address identified issues in the overall interest of the financial system. The FSS2020 objectives were carefully tailored to align with the mandate of the implementing institutions. For instance, the CBN has achieved a lot in the Payment System Vision 2020 which is an initiative of the FSS2020 with the adoption of i-Teller; introduction of Cheque Truncation with settlement cycle reduced from two days (T+2) to one day (T+1); Tokenization and encryption of electronic transactions; adoption of Bank Verification Number (BVN); NIBSS Instant Payment; and the Cashless policy.

And other implementing institutions?
The Securities and Exchange Commission (SEC) has been successful in the implementation of the e-dividend warrants, one of the initiatives of FSS2020. The SEC has also introduced market-making as a product, promoted establishment of capital market data bank, and developed Risk-based Capital Adequacy Framework. For PenCom, the agency has developed framework for the Micro Pension Scheme, while the Ministry of Finance in conjunction with the CBN established the Nigeria Mortgage Refinancing Company which is an initiative of the FSS2020 programme to deepen the mortgage sector and provide credit to primary mortgage institutions (PMIs). Furthermore, the funding of FSS2020, which hitherto had been solely borne by the CBN, until recently, is taking a turn for the better. Some of the implementing institutions such as PenCom and the Nigeria Deposit Insurance Corporation (NDIC) have started making contributions to the funding of the FSS2020 activities with others showing interest. Moreover, most of the implementing institutions have been providing technical assistance to the running of the programme.

What do you think the government can do to make the implementation of the FSS2020 initiatives successful?
The Nigerian government is expected to support the implementation of the FSS2020 initiatives by providing the required legal and regulatory framework to deepen the economy and pull the country out of recession. The ease of doing business initiative in Nigeria is a good start which would simplify and make establishing businesses less complex, thereby attracting foreign direct investments (FDIs) into the country. And the judicial process and Financial Ombudsman to deal with investors’ complaints need to be properly structured and strengthened. In addition, foreign investors must be encouraged to list on the Nigerian Stock Exchange to promote local partnership thereby reducing capital flight.

What are the other incentives to attract FDIs?
A business environment must be conducive for investors. Moreover, an enabling location must ensure that adequate tax incentives are put in place and the business registration processes are less cumbersome but without compromising the rules protecting local investors and markets. For instance, in some investment-friendly destinations such Dubai, there is low energy cost, tax-exemption for companies, absence of limitation on repatriation of profits and government openness towards a diversified economy. For example, Singapore, which is one of the most important gateways to Asia, has created tax incentives and exemptions; pro-business legislation; financial stability; and less stressful immigration policies.

What is your take on Nigeria’s push to ease doing business?
Commendable. The Nigerian government should be extolled, especially as it is gradually building the framework that would ensure the ease of doing business with the signing of the Executive Orders by the Acting President. These Executive Orders are expected to open up the country to investors. However, it is imperative that while government encourages foreign investors, it must protect the local markets against unfavourable practices and competition.

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