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Overview

Across the year, the Central Bank of Nigeria and its presiding governor – Mr. Godwin Emefiele – have conducted a handful of changes to the nation’s monetary policy in attempts to stimulate economic activity through measures to increase access to lending facilities

Following years of maintaining the status quo on the monetary policy tools, policy changes made to reduce the cost of government borrowing late last year have had a domino effect thus forcing the Monetary Policy Committee’s hand in adjusting its parameters. The restriction of Nigerian corporations and individuals from the Open Market Operations securities market consequently drove down the discount rates on the Nigerian Treasury Bills. This reduction in borrowing cost to the government in turn caused banks and other non-banking financial institutions to revise their deposit rates downward as most use the Treasury Bills as a benchmark for their deposit rates.

From last year, carrying on into this year we, have seen steady reductions in Treasury Bills rates and deposit rates. This has resulted in the CBN revising its Monetary Policy Rate twice – from 14.5% to 13.5% last year, and from 13.5% to 12.5% in May.
What does this mean to the average individual or institution investor? It means that investors who fall into these two categories have seen a severe decline in their returns from money invested in fixed deposits, treasury bills, commercial papers, mutual funds, and any other investment avenues that use these instruments as their underlying components. Meanwhile, year-on-year Consumer Price Index inflation has been on the rise for 11 consecutive months culminating at 12.82% for the month of July.

CBN Letter to all Banks RE: Interest Rates on Savings Deposits

On the 1st of September 2020, CBN released a circular instructing all banks to review the minimum interest rate payable on savings deposits to 10% per annum of the Monetary Policy Rate in response to the trend of declining lending rates to the real sector. For context, this is a downward revision from the previous minimum interest payable on savings deposits which was 30% of the Monetary Policy Rate as outlined in the Guide to Charges by Banks, Other Financial and Non-Financial Institutions published on the 20th of December 2019. At that time the MPR was 13.5%.

What does this mean for Investors?

Effectively, this revision means that your savings deposit which would have previously earned a minimum of 3.75% (or 4.05% prior to the 28th of May 2020) will now earn a minimum of 1.25% per annum. That accounts for a 66.67% reduction in the interest you could have potentially earned on your savings deposit going forward.

What is the Solution?

Investors now have to be more clever and more intentional in their investment activities to either match or surpass what had been previously attainable. The opportunities for investors are not as evident as they once were, because returns from the larger and more ubiquitously known institutions are going to be much leaner and will likely tend more towards the minimum current requirement of 1.25% than away from it. Fortunately, UK-Dion presents the opportunities for investors of all classes to earn significantly more than is currently being offered at most financial institutions.

  • Our UK-Dion Prime Capital product provides investment options with tenors ranging from 3 months to 5 years. Earn a minimum of 9% for 3 months and from 16%-18.5% between 1 year and 5 years, with the only requirement being a minimum investment amount of N250,000.00.
  • For those looking to save periodically, we offer them the UK-Dion Smart Savers. Invest a minimum of N10,000.00 and lock it in for a year to earn 8% per annum.
  • For our more affluent clientele, we have the UK-Dion Investment Club which pays out interest of 20% per annum. To earn this premium, investors must commit a minimum of N5 million for 2 years.

Interest is payable on a monthly basis for investments one year and above, if the investor wishes. For a 6-month investment, interest is payable every 3 months.
We also offer more investment methods and solutions. Chat with us via compliance@ukdioninvestment.com for more information and enquiries.
At UK-Dion Investment Limited we pride ourselves with satisfying the financial goals of our clients while ensuring that we put the security and wellbeing of our clients’ funds first.
We simply add value.