CBN blames NERFUND for declining assets, loan advances of DFIs

The Central Bank of Nigeria (CBN) has blamed the deteriorating performance of the National Economic Reconstruction Fund (NERFUND) for the declining assets and loan advances of the six Development Finance Institutions (DFIs) in its latest half year economic report ending June 2014. The six DFIs, Bank of Agriculture (BOA); Bank of Industry (BOI); Federal Mortgage Bank of Nigeria (FMBN); Nigerian Export- Import Bank (NEXIM); The Infrastructure Bank (TIB); and the National Economic Reconstruction Fund (NERFUND) are expected to offer, among others, specialised and micro financial services, relatively cheap and accessible financing options, provide long-term finance for infrastructure development, industrial growth, agriculture, small and medium enterprises (SME) development.

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This is coming on the heels of the Bureau for Public Enterprise (BPE) finalising the process of privatising BoI and BoA, which were billed for the exercise mid-last year and this year respectively. “We (BPE) are in the pro- cess of procuring transaction advisers,” said Benjamin Dikki, in an SMS response to BusinessDay on Tuesday. The report stated that all the DFIs are in weak financial states with total assets declining by 2 percent to N575.10billion as at end -June 2014, from N586.7 billion at end -December 2013. Similarly, the apex bank’s half year report released last week, also said that the banks’ aggregate net loans and advances declined by 3.5 per cent to N345.60billion, from N358.20billion at end- December 2013. The report also revealed that deposit money banks expressed their strong preference for the CBN deposit window; Standing Deposit Facility (SDF) as N376.1 billion excess funds was kept with CBN as against N142.3billion in the corresponding period, thereby depriving the real sector of credit for growth. According to the CBN, “Provisional data indicated that total assets of the six (6) Development Finance Institutions (DFIs) namely: Bank of Agriculture (BOA); Bank of Industry (BOI); Federal Mortgage Bank of Nigeria (FMBN); Nigerian Export -Import Bank (NEXIM); The Infrastructure Bank (TIB); and the National Economic Reconstruction Fund (NERFUND) declined by 2.0 per cent to N575.10billion at end -June 2014, from N586.7 billion at end -December 2013. “Similarly, the aggregate net loans and advances declined by 3.5 per cent to N345.60billion, from N358.20billion at end-December 2013. The decline relative to the preceding half year was attributed to the deterioration in the financial performance of NERFUND. A disaggregation of the asset base of the institutions indicated that BOI, FMBN, BOA, NEXIM.TIB and NERFUND accounted for 51.5, 24.5, 9.1, 9.0, 5.3 and 0.6 per cent, respectively, of the total.”