Business
How to deal with failed banks—IMF
International Monetary Fund IMF, has said that bail out of failing banks with public funds should be the last resort. It said it is advocating a resolution framework that carefully balances the moral hazard and spillover effects and improves the trade-off. Such a framework would make bail-outs the exception rather than the rule”. According to the IMF using public funds to rescue failing banks bail-outs, could weaken market discipline and lead to excessive risk taking—the moral hazard effect while letting private investors absorb the losses, bail-ins could destabilise the financial sector and the economy as a whole—the spillover effect. In most cases, banks were bailed out. This it said in the past put policy makers in a dilemma.
“This created public resentment and prompted policymakers to introduce measures to shift the burden of bank resolution away from taxpayers to private investors. Our recent study, also featured in an analytical in the 2018 Spring Meetings, looks at the question of what to do when a bank fails. Not all crises are alike. Some are isolated, with little or no spillover effect. In those cases, bail-outs would merely create moral hazard. Resolving a failing bank should rely on bail-ins: private stakeholders should bear the losses. Other crises are systemic, and affect all corners of an economy or many countries at the same time.
The destabilising spillovers associated with bank failures in such a situation would justify the use of public resources: moral hazard still exists but is bearable compared to the alternative of a severe crisis that hurts all, including those without a stake in the troubled bank. So, the framework should commit to using bail-ins in most cases and allow use of public funds only when the risks to macro-financial stability from bail-ins are exceptionally severe. The best way to avoid such dilemmas is to reduce spillovers and the need for bail-outs in the first place. This can be achieved through two mutually re-enforcing mechanisms. The first mechanism is reducing the likelihood of crises and minimising costs should a crisis occur. This translates into having a more resilient banking system: less leverage and risk taking, and more capital and liquidity. Then the odds that a bank runs into trouble are smaller. And, if there is trouble, banks can absorb the losses without help from the government.
The second mechanism is making the bail-in option viable. The problem is that policymakers may make the promise to bail in a troubled bank but, in a crisis, they will be tempted to bail them out. So people will not believe that bail-ins will happen and continue to expect bail-outs. This is the worst of both worlds, because it has spillover and moral hazard effects. How do policymakers make a credible commitment that there really will be bail-ins? First, ensure that banks have enough buffers to absorb losses and clarify upfront which investor claims (such as bonds and deposits) will in the event of failure be written down and in what order. Second, only allow sophisticated investors who can understand and absorb the losses to hold these bail-in-able claims.
Third, improve systemic banks’ resolvability by periodic assessments, living wills that spell out how the bank will be resolved, and domestic and cross-border drills to assess the impact of a threat. Turning to the other side of the trade-off, how do we limit moral hazard? First, credibly commit to using bail-outs only in exceptional cases and on a temporary basis with a clear exit plan. Second, use public funds only after those that can absorb the losses have been bailed in. Third, recover these bail-out funds after the storm has passed and ensure that all is executed in a transparent, accountable manner.
“Reforms since the crisis have improved the trade-off by seeking to make bail-ins a credible option and to make bail-outs less likely. New frameworks—such as those in the United States and the European Union—introduce comprehensive powers to resolve banks, including through bail-ins. These measures also seek to contain spillovers from bail-ins by ensuring that banks have adequate buffers to absorb losses, and aim to make them more resolvable via effective resolution planning. We support the ongoing reform agenda and stress that resolution frameworks should minimise moral hazard. That said, we also emphasise the need to allow for sufficient, albeit constrained, flexibility to be able to use public resources in systemic crises—when spillovers are deemed likely to severely jeopardise macro-financial stability.
National Bureau of Statistics has said that Nigeria’s Company Income Tax rose sharply in the second quarter of 2025, hitting N2.78 trillion.
The figure represents a significant 40.27 per cent increase compared to the N1.98 trillion recorded in the first quarter of the year, reflecting both improved tax compliance and stronger corporate performance across key economic sectors.
The NBS report said that domestic company income tax payments accounted for the bulk of the revenue, contributing N2.31 trillion, while offshore collections stood at N469.36 billion during the period under review.
According to the NBS, the financial and insurance sector recorded the highest quarter-on-quarter growth, rising by an astonishing 772.29 per cent, driven by improved profitability among banks, fintechs, and insurance firms following robust half-year earnings.
This, according to NBS, was followed by wholesale and retail trade, as well as motor vehicle repair activities, which grew by 538.38%.
Activities of households as employers also surged by 526.79%, although their overall contribution to total company income tax remained negligible.
On the flip side, some sectors experienced sharp declines in company income tax remittances.
Activities of extraterritorial organizations and bodies dropped by –45.01%, while education, public administration, defence, and compulsory social security recorded declines of –26.61% and –18.17% respectively.
The contraction in these sectors, particularly education and public administration, highlights persistent structural and fiscal challenges confronting government-funded institutions.
In terms of contribution to total tax revenue, financial and insurance activities led with a dominant 44.13%, reflecting the sector’s continuing expansion and strong capital flows.
Manufacturing followed with 15.57%, bolstered by increased production output and improved supply chain activity.
Mining and quarrying ranked third, contributing 9.18%, supported by higher commodity prices and renewed interest in solid mineral development.
At the bottom of the contribution chart were activities of households as employers, which accounted for just 0.01%, as well as activities of extraterritorial organizations and bodies, and water supply, sewerage, waste management, and remediation services, each contributing 0.04%. Despite economic headwinds, year-on-year company income tax collection still rose by 12.66% when compared to Q2 2024, underscoring moderate but steady improvement in government revenue mobilisation.
Company income tax collection in the same period of 2024 rose by 150.83 per cent N2.47 trillion. In the first three months of the year, company income tax collection stood at N984.61 billion. According to the report, local payments in the period under review amounted to N1.35 trillion, while foreign CIT payments contributed N1.12 trillion. On a quarter-on-quarter basis, the agriculture, forestry, and fishing sectors exhibited the highest growth rate at 474.50%, followed by financial and insurance activities at 429.76%, and manufacturing at 414.15%.
Lagos State government has reaffirmed its unwavering commitment to supporting micro, small, and medium enterprises (MSMEs) across the state through visibility, capacity building, and market access. Commissioner for Commerce, Cooperatives, Trade, and Investment, Folashade Ambrose-Medebem, made the pledge on Sunday at the closing ceremony of the 2025 Lagos International Trade Fair (LITF). The 38th edition of the event, organised by the Lagos Chamber of Commerce and Industry (LCCI), had its theme as “Connecting Business, Creating Value.”
Ms Ambrose-Medebem said every entrepreneur, regardless of scale, deserves an enabling environment to thrive and contribute meaningfully to the state’s economic prosperity. She said the state, through strategic investments in infrastructure, institutional reforms, and continuous engagement with the private sector, was building a Lagos that worked for business. The commissioner added that the state would continue to foster innovation, competitiveness, and sustainability.
“As a government, we remain steadfast in our commitment to making Lagos the preferred destination for commerce and enterprise. This fair has once again demonstrated the power of connection: connection between producers and consumers, investors and innovators, the government and the private sector, and local entrepreneurs and global brands. Every handshake, every conversation, every business card exchanged here is a building block toward the future we are creating, a future of prosperity that leaves no one behind,” she said.
The commissioner urged businesses to continue to connect, collaborate, and create value, saying, “In Lagos, we do not just trade goods; we trade ideas, build futures, and transform lives. “Together, let us continue to make Lagos not just a place of commerce, but a symbol of progress, innovation, and endless opportunity.” Gabriel Idahosa, president of LCCI, urged governments at all levels to continue addressing the issues of creating an enabling environment in the country.Mr Idahosa said focus should be on infrastructure, security, and implementing the right policies to address the key drivers of high inflation.
This, he said, was needed to fully harness the vast enterprising resources of domestic and foreign investors for the diversification of our economy and the welfare of our people. He pledged the commitment of the organised private sector to stand solidly behind the state in its quest to actualise its innovative initiatives on all fronts. NAN
Jumia Technologies AG posts a $17.7 million loss before income tax in the third quarter of 2025, down 1% year-on-year from $17.8 million in the third quarter of 2024. The road to profitability has remained long as ecommerce continues to face uncertainties, including widening competition with rivals in the same industry. The e-commerce company revenue came in at $45.6 million compared to $36.4 million in the third quarter of 2024, representing a 25% year-over-year surge in the period. The company reported gross merchandise value of $197.2 million compared to $162.9 million in the third quarter of 2024, up 21% year-over-year. Excluding South Africa and Tunisia, physical goods GMV grew 26% year-over-year, Jumia revealed in the unaudited financials.
Jumia said in its report that the GMV growth was driven by supply and strong marketing execution, partially offset by lower corporate sales in Egypt. Excluding corporate sales, GMV in reported currency grew 37% year-over-year. Nigeria’s momentum accelerated, with order growth up 30% and GMV up 43% year-over-year, Jumia said. The e-commerce giant’s operating loss reduced by 13% year-over-year to $17.4 million compared to $20.1 million in the third quarter of 2024. The company’s adjusted earnings before interest tax depreciation and amortisation loss dropped by 17% to $14.0 million compared to $17.0 million in the third quarter of 2024.
Jumia reported a loss before income tax of $17.7 million, a slight reduction of 1% compared to $17.8 million in the third quarter of 2024. Liquidity printed at $82.5 million, a decrease of $15.8 million in the third quarter of 2025, compared to an increase of $71.8 million in the third quarter of 2024, which included the net proceeds from the August 2024 At-the-Market (ATM) offering, and a decrease of $12.4 million in the second quarter of 2025.
Its net cash flow used in operating activities settled at $12.4 million compared to net cash flow used in operating activities of $26.8 million in the third quarter of 2024 and $12.7 million used in the second quarter of 2025. The result includes a positive working capital contribution of $0.4 million.
Jumia reported that customers’ orders grew 34% year-over-year, driven by strong execution, enhanced product assortment, and healthy consumer demand across key categories. It said quarterly active customers ordering physical goods grew by 23% year-over-year, highlighting continued engagement and customer loyalty. As of September 30, 2025, the Company’s liquidity position was $82.5 million, comprised of $81.5 million in cash and cash equivalents and $1.0 million in term deposits and other financial assets, it said in the report Jumia’s liquidity position decreased by $15.8 million in the third quarter of 2025, compared to an increase of $71.8 million in the third quarter of 2024, which included net proceeds from the August 2024 At-the-Market (ATM) offering, and a decrease of $12.4 million in the second quarter of 2025.
Net cash used in operating activities was $12.4 million in the third quarter of 2025, compared to a net cash used of $26.8 million in the third quarter of 2024 and $12.7 million used in the second quarter of 2025. The result includes a positive working capital contribution of $0.4 million in the third quarter of 2025, compared to a negative working capital contribution of $9.1 million in the third quarter of 2024, primarily reflecting improvements in operating performance.
In addition, the Company reported $1.4 million in capital expenditures in the third quarter of 2025, compared to $0.9 million in the third quarter of 2024, primarily reflecting investments in infrastructure and facility enhancements to support business growth. “This quarter marks a significant acceleration in customer demand and order growth, driven by strong execution across our markets and growing consumer trust in the Jumia brand. We believe Jumia has reached an inflection point as our compelling value proposition, and improved operational discipline position us for sustainable, profitable growth.
“We continue to strengthen our cost structure and sharpen operational discipline, reinforcing our path toward profitability. Our focus remains on execution and customer engagement as we build a more efficient business.
“We believe that we are on track to reach breakeven on a Loss before Income tax basis in Q4 2026 and achieve full-year profitability in 2027, positioning Jumia for long-term growth and value creation.”
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