ISTANBUL — Ozcan Yuksel’s descent into debt began with a stroll down Istiklal Caddesi, a popular Istanbul promenade teeming with shops and restaurants.
Bank employees were passing out credit card applications and helping people fill them out. Mr. Yuksel made the equivalent of a few hundred dollars a month working for a lighting fixture shop. But it turned out that did not matter.
“They were asking people to sign, and I did,” he said. Within a week he had a card and a spending limit many times his paycheck.
That was in 2001. Today, Mr. Yuksel, a 32-year-old father of two, owes more than $8,000, much more than his annual income and an amount that will take him more than a decade to repay. He is among millions of Turks who are in over their heads in debt they incurred after local banks aggressively marketed credit cards to low-income people.
Mr. Yuksel’s tale of living on borrowed money illustrates one of the ills plaguing the country’s economy and threatening a new financial debacle in an unstable region. It echoes the subprime mortgage calamity in the United States in 2008, in that the Turkish banks often seemed oblivious to the risk that their new customers might not pay them back.
The credit ratings agency Standard & Poor’s warned in a report last week that the boom in consumer credit had become a serious risk for Turkish lenders. Slowing economic growth, political turmoil and increasing reluctance by foreign investors to provide financing “are prompting a deterioration in the operating environment for Turkish banks,” S.&P. said.
Even as turmoil in Ukraine lately has overshadowed Turkey’s political and economic crisis, the problems here on the other side of the Black Sea have not diminished. On Thursday, Turkey’s dangerously weakened currency, the lira, lapsed to a three-week low as political opponents of Prime Minister Recep Tayyip Erdogan continued to raise allegations in the graft scandal clouding his government less than a month before local elections.
When foreign capital was flowing freely into Turkey and other emerging markets, the nation used it to splurge on consumer goods and real estate, rather than on new businesses that would support lasting growth. Now the bill is coming due. A big issue facing Turkey is what financial and political havoc this pile of consumer debt could create as a plunge in the value of the Turkish lira and a pullback by foreign investors forces the country to live within its means.
Much of Turkey’s rapid growth in the last decade came from consumer spending based on credit. Debt from credit cards rose 31 percent nationwide in 2012. In 2013 it rose an additional 22 percent. From practically nothing a decade ago, consumer debt in Turkey now equals 55 percent of household disposable income, according to Oxford Economics, a research organization in Britain. Until the Turkish government recently curtailed the practice, stores habitually offered to sell almost anything on installment, even a pair of jeans.
The debt overhang adds to the stress on the Turkish economy, which is already intense. Debt by the Turkish private sector, including businesses other than banks, totals more than 60 percent of gross domestic product. That is one of the highest levels among developing countries, according to Oxford Economics.
An additional danger is that foreign investors are increasingly less willing to finance this debt, preferring to deploy their money in the United States and Europe as those regions grow faster and offer better returns. The danger is seen in Turkey’s current-account deficit, a measure of how much imports exceed exports. The deficit of 7.4 percent of gross domestic product in 2013 is really a representation of how much more Turks were spending than they were earning. Such a deficit is sustainable only as long as foreigners are willing to keep extending credit. Signs suggest they are not. That means the boom in consumer spending stops suddenly, forcing a sharp decline in living standards.
In response, the Turkish central bank has raised official interest rates sharply. The move seems to have stabilized the lira from further declines, but it has raised the cost of borrowing, which will slow the economy. Fewer people will shop if they can’t buy on credit.
Some analysts say the amount of consumer debt in Turkey, about $131 billion, is not big enough to threaten the country’s banks in the way that subprime mortgages, and securities tied to them, undermined the health of banks in the United States and other nations.
They say that because Turkish banks are considered well capitalized and the number of problem loans, at less than 5 percent of the total, is considered low. But S.&P. warned in its report that the official numbers may understate the scope of problem loans. Banks may be allowing debtors to take out new loans to repay old ones, rather than classifying the loans as being in arrears.
In a slower economy, it will be even more difficult for low-income people like Mr. Yuksel to get pay raises or better jobs that would help them escape indebtedness. Umit Kumcuoglu, chief executive of Kare Investment and Securities, an Istanbul fund manager, said Turkey needed to do more to improve the climate for business and increase exports. “The way to achieve that is through entrepreneurship,” Mr. Kumcuoglu said.
Instead, Mr. Yuksel earns the equivalent of about $420 a month working for a lighting shop. When a customer buys a fixture, he installs it in the customer’s home.
A slightly built man with a dark beard and sad eyes, Mr. Yuksel grew up in a village in eastern Turkey and is among the millions of people who have migrated from poor rural areas to Istanbul, looking for better opportunities and swelling the city’s population to more than 10 million.
After Mr. Yuksel received his first credit card, banks kept sending him more offers, he said. Within a year and a half he had eight credit cards, and was borrowing from new cards to make payments on old ones. The Turkish Central Bank has become concerned about outrageous interest payments. In December it imposed a cap on credit card interest payments of 27 percent per year. The permissible rate can still be as high as 35 percent for people who are behind in their payments.
That does not help Mr. Yuksel much. At first he used the cards only for necessities like food, he said, but later succumbed to temptation and bought items such as a plasma television and a refrigerator.
Mr. Yuksel consolidated his debt on two cards and canceled the rest. Still, by 2011, he said, the payments on the credit cards exceeded $1,000 a month, more than twice his salary.
Soon the banks started to call. One day in 2012 a collection agency came to Mr. Yuksel’s workplace during business hours, shaming him in front of co-workers, he said. Now the agency takes a quarter of his net income every month. About an additional quarter goes to support his 8-year-old daughter from a previous marriage.
Mr. Yuksel’s second wife and their newborn live on what is left. He said they sometimes go for two months without eating meat. It will take him six or seven years to repay just the debt to one bank, he said. Then it will be the other bank’s turn. Turkish law has no provision for personal bankruptcy, and, in any case, failing to repay a debt is considered a deep dishonor.
“I blame myself,” Mr. Yuksel said. “Why wasn’t I more careful?”
But he is also angry at the banks. “They saw how much I was paid,” he said. “You are given this card beyond your means. It sits in your pocket. No matter how hard you try, you spend it.”
Ecobank Nigeria has projected power sector funding of at least $5 billion p.a. over the next five years starting from 2014.
This according to the bank is in line with its policy to support the growth and development of the power sector in Nigeria, being its own contribution to the sector’s transformation initiated by the Federal Government through its privatization programme.
Ecobank has played a major role on the Buy-Side of the Power Sector Privatization Exercise by providing Financial Advisory Services, Lead Arranger Role, Acquisitioning Financing and Guarantees to Distribution Companies (DISCOS) , Generating Companies (GENCOS) and National Integrated Power Plants (NIPP).
Ecobank Country Head, Power & Energy, Olufunke Jones stated that the bank’s objective is focused on playing actively at all levels of the sector’s privatization which includes Distribution, Transmission and Generation. She said Nigeria has one of the largest gaps between demand and supply for electricity.
To bridge this gap the country requires a combination of favorable government policies, private sector participation and Foreign Direct Investment (FDI) as well as transparency and persistent monitoring that will guarantee an improved business environment.
According to Mrs. Jones, the current power reforms have created opportunities for Capital Expenditure (CAPEX) and Operating Expenditure (OPEX) funding which is a consequence of the handover to the new owners. In her words “there is the urgent need to rehabilitate the distribution networks in order to make them robust and flexible enough to accommodate the nation’s demand for power”.
Also commenting, Mrs. Funmilola Ogunmekan Local Account Manager, Corporate Banking Group said unlike the telecoms industry where new investors were able to take advantage of new technologies to redefine industry norms, the power sector is faced with the challenges of upgrading mostly obsolete equipment and processing under a traditional technology framework.
This, amongst others, is the immediate challenge before the potential of the industry is fully manifested. Mrs. Ogunmekan reiterated that in 2014 Ecobank will leverage its position as a bank with the 3rd largest branch network to provide effective Utility Collections and Cash Management services while providing the required additional CAPEX/OPEX funding requirement for at least five of the Distribution Companies across the country.
Ecobank has partnered with these companies to put in place an effective and seamless Utility Collection System devoid of leakages and supported by a robust IT infrastructure.
The President of the Federal Republic of Nigeria, Goodluck Jonathan has expressed his joy on the occasion of Nigeria’s centenarian celebration today.
Read his full speech below
1. I extend warm greetings and felicitations
to all Nigerians as we celebrate our nation’s
centenary; a significant milestone in our
journey to Nationhood.
2. One hundred years ago, on the 1 st of
January 1914, the British Colonial authorities
amalgamated the Southern and Northern
Protectorates, giving birth to the single geo-
political entity called Nigeria which has
become our home, our hope, and our
3. I have often expressed the conviction that
our amalgamation was not a mistake. While
our union may have been inspired by
considerations external to our people; I have
no doubt that we are destined by God
Almighty to live together as one big nation,
united in diversity. Continue…
4. I consider myself specially privileged…
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On February 27, 2014, over fifty representatives of U.S. and Mexican Governments, private sector, academia, and civil society met at Northern Virginia Community College to address workforce development needs through greater higher education collaboration. This meeting of the Working Group on Community Colleges and Workforce Development was part of the U.S.-Mexico Bilateral Forum on Higher Education, Innovation, and Research launched by President Obama and President Pena Nieto in May 2013. Mexico and the United States recognize that educational and academic exchange is a fundamental part of the ongoing High-Level Economic Dialogue (HLED), which focuses on strategic economic and commercial priorities to promote growth, job creation, and North America competitiveness.
The working group discussed ways to expand educational and economic opportunities and to develop a 21st century workforce to bring increased prosperity in the region.
U.S. Department of State Assistant Secretary for Educational and Cultural Affairs Evan Ryan, Mexican Ministry of Foreign Relations Under Secretary Sergio Alcocer, and Dr. Robert Templin, President of the Northern Virginia Community College (NOVA) opened the working group meeting. In her opening remarks, Assistant Secretary Ryan highlighted the importance of linking U.S. and Mexican higher education institutions to support job creation, innovation, and broad-based economic prosperity in both countries. Under Secretary Alcocer mentioned the commitment of the leaders of the United States, Canada, and Mexico in the recently held North American Leaders’ Summit in Toluca, Mexico to promote a workforce with the skills necessary for the region´s success in the 21st century global economy. Discussions focused on expanding institutional partnerships between U.S. community colleges, Mexican technical and polytechnic universities, and the private sector.
Co-sponsored by the American Association of Community Colleges (AACC) and Northern Virginia Community College, the meeting included U.S. representatives from the Departments of Commerce, Education, and State, USAID, the National Science Foundation, numerous community colleges from throughout the United States, and the private sector. Mexican participants represented the Ministries of Foreign Relations and Labor and Social Welfare, the National Council for Science and Technology, Mexican higher education institutions, and private sector. Binational representatives of the U.S.-Mexico Commission for Educational and Cultural Exchange (COMEXUS) and the U.S.-Mexico Foundation for Science (FUMEC) also attended.
This meeting follows the U.S.-Mexico Forum’s first working group meeting on promoting student exchange held in Mexico City on January 15. U.S. and Mexican stakeholders will convene for the next working group, focusing on the special potential of the border region, at the University of Texas at El Paso on March 5 and 6. Subsequent working groups will focus on research and innovation, English and Spanish language acquisition, and student and scholar exchange as both countries seek to expand economic opportunities for their citizens, develop a shared vision on educational cooperation, and share best practices in higher education and innovation.
Country’s largest two-wheeler maker Hero MotoCorp on Thursday launched its operations in Turkey by entering into a distribution agreement with Asya Makina.
Asya Makina, a subsidiary of Soysal Group, would distribute Hero MotoCorp two-wheelers through its network of 50 outlets spread across the Turkey, the company said in a statement.
The Turkish partner would further add several new outlets in the next one year.
The two-wheeler maker also introduced its 125cc motorcycle Glamour, 150cc bike Thriller and 100cc scooter Pleasure in Turkey, all compatible with Euro III emission norms.
Hero MotoCorp Managing Director & Chief Executive Officer Pawan Munjal inaugurated Hero?Asya dealership at Camlica in Istanbul in the presence of Chairman of the Board of Directors of Soysal Group Uysal Soysal.
Speaking at ceremony, Munjal said: “The commencement of our operations in Turkey is a significant milestone in our overall global expansion plans. We are aware that Turkey has a strong bikes market where customers value quality products, and our vision is to provide convenient, fuel-efficient mobility to every two-wheeler customer across Turkey.”
“We will be able to achieve our immediate target of having five per cent market share in Turkey and bring more bikes from portfolio,” he added.
Hero MotoCorp has an objective of reaching 50 global markets by 2020.
New economic activities have arisen between Nigeria and the United Arabs Emirates (UAE) as a result of the air connectivity occasioned by Emirates Airline. This has increased the bilateral trade volumes between both countries to $857 million in 2009 from $106 million in 2004, a 710 percent increase in a 5-year period.
A document in which Emirates recently examined the impact on bilateral trade to 15 countries following the launch of services between 2002 and 2007, showed that among all the fifteen countries Emirates started operating into since 2002, the positive trade and commerce impact on Nigeria is just a little lower than Mauritius whose trade volume increased by 951 percent in 5-year cumulative percentage growth.
Emirates started operations into Nigeria in 2004 and has witnessed tremendous increase in traffic figures and ticket sales as the route became one of the most attractive to traders who come from far and wide to do business in Nigeria.
For instance, many traders prefer to first go through Dubai to connect other European countries in order to buy goods to either take back to Nigeria or take to their destinations.
A list of foreign airlines operating into Nigeria released by the Nigerian Civil Aviation Authority in December 2010 showed that Emirates closely follows British Airways in terms of tickets sales between January 2009 and December 2009, grossing N21, 522,232,269.60.
As the bi-lateral trade increases with traffic, the airline has signed another agreement with Nigeria’s Ministry of Aviation to commence a daily linked service to Abuja and Kano from 1 August 2014.
The announcement follows Emirates’ recent milestone of ten years of successful operations to Lagos, to which the airline flies twice daily, making 14 frequencies in a week.
While witnessing the boom in traffic, just over a year after it started operations in 2004, Emirates increased its services from four to six flights a week, and following further demand, it became a daily operation in October 2005.
In 2006, Lagos was delinked from Accra and became a direct service to Dubai and in February 2009, a second daily service was introduced, and today each flight is served with a Boeing 777-300 ER.
“Nigeria is experiencing strong demographic and economic growth. The country is strategic to Emirates’ global expansion, as Africa is. With our decision to start a daily linked service to Abuja and Kano we will now offer from three major cities in the country a very convenient and comfortable access to Dubai, and to Emirates network via Dubai, particularly the Middle East and Asia Pacific, where Emirates is flying to more than 30 destinations, including the Airbus 380 to 12 cities such as Beijing, Shanghai, Hong Kong, Bangkok and Sydney. The new service will also help create new opportunities for business, industry and tourism,” said Thierry Antinori, Emirates Executive Vice President and Chief Commercial Officer.
Analysts say that apart from the fact that ‘Abuja is also the headquarters of the Economic Community of West African States and the regional headquarters of the Organisation of the Petroleum Exporting Countries,
Kano, the capital of Kano State in northern Nigeria, is the second most populous city in Nigeria after Lagos, therefore, Emirates knows where best to get its traffic.
“When airlines want to expand into new markets, countries often ask how it will benefit their national economies. The answer is clear: increased connectivity between markets spurs new economic activity such as trade, tourism and investment. Without connectivity, countries often instead struggle to keep pace,” Emirates said in the report.
Meanwhile, Emirates SkyCargo, the freight division of the airline, introduced a scheduled freighter service to Kano in October 2013, and with Abuja joining the network, Emirates will now fly to 26 destinations in Africa and 142 worldwide in 80 countries.