BUSINESSDAY, 23 APRIL, 2012

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Business Review

The Economist A third industrial revolution

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Banks seek safety in Treasury Bills instead of lending GODfREY 0810MA

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Inkl relUCllnce 10 IIl.e risk. especllny In Icndlns locustom en, Is now evide nt In their huse Inveltmenl In sovemmenl ieCuritie.

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such IS TrUluT)' 8i1ls which have uro credit risk.

Beside. governmen t IUlranly and low rbk. anO lher a'· traction II uld 10 be Ihe relurns which are usually higher Ihan Inn Ilion.

II Is also believed Iha' Ihe larll! of another round of doubl

ful and non· ~rforminglo.ns II contl",'nlns high risk exposure Ii Buslneullay 'lUdy hoWl thl' while banks Ihal h .. ve ~ rar relellied their 2011 reJull.

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Brew lendln8 marginally. number of Ihem are plllinS up Inveslmenll in Tre3lur) Bllhi For InStance, GTSlnlt Invested

N256.81 billion In Treasury Sills for Ihe flnandal year ended De· cember31.20 11 .63.27 perunl up from NIS7.Z9 billion In2010 The blnk's lOin boo .. In creued only by 20.49 percem, up (rom NS93.4 billion 10 N715 ColJlfrwl'S 01'1 Po~.

Agric experts brainstorm as Edo agribusiness investment sum mit holds today JOHN OSAOOWR & IOAtS UMARWOWlti, BeninCny

cnhllr . and allted products Dp! rts ",m today IiISmbl! 11 Benin City, the l;do tile Cll'llill 10 braln510rm Ind unfold" .. egiNlo Improve IBrlcuhuralllntductlvuy In the 5111e The expenl'l'1J1 be dlscuulns II Lhe 1IIIe'I f·flt IKubu5men Inves-tmenl .ummlt, which 15 comina thrH dip Ihud of the South- South £, onomkSummil billed 10 lab mAslba, DelII siite (rom 'rrU !6 to April 28.

Edo~.le w th .bout I 6 mUlion heccares 01 lind ls noted for CUAVlI. pain produce. rubber and CGa)I prOllucdon. and this Is done currently by subsistence rarmlUl whotie nooucuvhy 15 on Ihe decline ow OJ to outmoded practica and ",..mill Interettln rannlnalmo" the polpulace..

Abdul Oroh. 5tate commlss1oner'orasrlaJlure and flIILurai re5OUtt:n lold Euslneuo.y In an exclusive Intt! r..te\¥ on the summil: • Our mulLr economic base Is agriculture Iltd thlt i.Jwhat we Ilt! worldn, ~,n now ·Our ultimate 1)I.n Is 10 pUL "sricuhure on Ihe ITonl bumer, to make It Ihe hiltHI employer of laboul~ pro\ ide quality em ploymeru and roC beet bruJeing tilhna orthe.-.o I: Groh added.

Oroh uld: Right. DOW £do "ale I. the le.dlng producer or ClUlva In I,e Soulh- 50mh

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CD"mwson Pagrof ~ 1n'er"k"'I" ,~44&45

FAAN circumvents presidency in N228m generator repair sleaze _Amount (ould have bought 4 new ones JOSHUA BASSEY

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IBeria Iruly Ippean 10 be I cellpll of corruption where p u b.

IIc funds .re fraudu-

lenlly carted IWlY, and with Impunity by those placed In positiOns of aUlhorlty In whlilt .eems I conllnu.· tion of this trend. Ihe Federal

Alrpof.. Authority of Nisula (PAAN) squlndered I whoppins N228 million to re pllr three (3) lenen llng sell' II the Nnlmdl AdkJwe In ternl ·

tional AIrport (NAlA), Abuja. In amount which Illhelimeoflhe repair. could hive bouShl four brand Dew leDerltor. of equal capacity (l2S0KVA) .. Ihose

repaired The mone.·. It was learnt was hurriedly olpprovt.od by the mllnaBemenf I nd paid upfrolll to Ihe contractor; Julius BerBel Nllertl Pic lISlln51 ·111 lenown

4 Monday 23 AprU 201

FAAN eire mvents presidency in N228m ...

Ctmli ..u«ifrom Page I

financial rul~ ' ftS observed by O.K. Bello, the c hief Internal 8udilot of FAlIN, In hi, memo 10 the aclina fenual manaset (audit). dated May 28, 2009 obledlna to the deDI. Whereas a ktter seeldnSmlnIlierial applovu (Qr lhe contnct to repair Ihe reller.ton . NOI 2,3 and .. al fhe airport. was forwarded to ,'Ie then minister of aviation, F d.-II. Nleu. on May 14. 2009, and approved by the minister In alener s.igned on her beh.n by • t. A)'O Aklndeko.

10 the Ihen m lUaglng director of FMN - Richard Alsuegbeogun, on May 18, 2009, the chid Inlernalaudllor urlhe aulhority was made jJrh y 10 the deal on

May 18. 2009, .fler peymenl had

been approved and the accounts department raised voucher and payment certlncate Issued In favour of Julius Berser. on the recommendatioD of director of aJrpou safety and engineerln, lervicel on May 22. 2009.

Oocumentl leen by Busl oenOay showed that the chid audhor, In a leiter dated May 28. 2009 and forwarded to the acting general manager (audit) observed as rollows: That·N228 million cost of repair of the generators Is above mlnluerlal approval level, and will need President In Council approvaL ·Oue process certlncate Is not atlached to payment voucher prepared by the Account OepanmenL

-Leller of award II allo not anac hed to the file.

Paying N228 million before lob 1.1 done implies that 'we are paying I DOS advance payment ; this II against all known finan dal rules: That quotallon obtained fmm John 1I0it Englnurin8 Ihowed that Ihleror Pertlngl of nme capaelly brand new will cost N55.6 mUlion per generator set: Going by the documents obtained by BuslnenOay, the N228 million. as at the lime of the transacdon. could have been uled to purchale four brand new Uster or Perlcinga generat· Ing sets or lame capacity at the COlt orN55.6 million per unlL Bello also left a note of warn· Ing: "WIth all these observations If you stUl want us to treat the file, please direct further: And

from all documents seen by BuslnessOay on the transaction, the chid Internal auditor was by· pasaed.

M has become the case In the nallon', public lector. FAAN opted for repaln at a higher cost totaUng N206 mOOon, less VaJue Adiled Tu(VAT) and Withhold· IngTu: {WAT}.

The deaJ was executed when the current managing director of PAAN, George Urlesl was director of airport operations and Azuka Onyla wu director of nnance and accounts.

The huge sum of money Iquandered on generators which alao gunle diesel at prices which remain top secret.

Is done al the expense of the comfort of p.ssengen whom the alrpom are meant to serve.

l-R lertnart Nlbon, head 01 gas turb6ne business or SIEMENS; OtusegunAganga, mlni&Wroi trade and investment; Presidefll GoodIUCk Jonalhan; Peter ObI, gO\'flmor, Anambta State, DezianI Alcson--Madueke, petroteum rilislof, and Steve Oduah 8 Nigerian engineer wor1dng with SIEMENS, during the preskknt'. visit to SIEMENS ILriJine faclory in Bertin, recentty

Agric experts brainstorm as Edo ...

Cont n wfrom Page 1 ,tates.. Our viSIon Is 10 be num· beronein tbe p,untry. We don't only wanl to 'proc1uce c....va but want to dqvtlop It, that Is to produce It for dlips. high qual .

Ity cassava flOUr ethanol, basic food consumption ,uch a. garrl.

Indusuial ntwm nerlals Uke gtu· COM and starch. amon! otlle" -n.ese aro tle Ideas, so we are aJready workns on them. We al50 _ntto bllng In those bus inesses thai ai" nlready thrtvtng In tlle asr1cul~n:1 st:cIO" IUch as food processing like Oansa Food of Oangole~ hr added.

Orah told lIuslnessO.y that

speakers Invhed £rom other pam of the world Indude Patrick 1(0rma_, UNIOO repret:entatlve and director, rqlonaJ office. who wUl speak on the topic. 'Agr1bUJi· nes.s options for Edostate" at the summit wltll the theme, 'Trans· forming Agriculture In Edostatehn Audu Ogbeh, Ihe second repubUc agriculture mlnisler as chalnnan. ·Graham Herer, managing director, Okomu 011 Palm Pic, • South· African, wUl speak on • over· coming challenges of AgricultUre- and Tony Bello, Senior Technical Adviser to the AgrIculture mlnlsteron Agribusiness. will speak on • Enhandng vaJue chaJn of malor production

in Edo st.te~ Adell Aklnyoju, managing director, Food Concepts, lude Uwnwanne. head, Project Im plementation Office or the NI · gerlan Incentive· Based Rlak Sharing S)'IJtem for AgTlcultural LendJng (NIRSAI.), Peler Akpok. podlon, the team leader, Cocoa VaJue ChaJn Development and CBN represeLlt.tlve, amODg others will be Ipeakl.ng at the SWDmlL Governor Adami Osblomhole will slve the opening remarks. wbUe the lIale commissioner for agriculture and natural resources, Abdul Oroh will present the welcome address al the one d.y ~ummiL

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Banks lock huge ...

ContinuMfrom Page I billion the previous year.

First Bank Invested N187.45 billion. a 688.93 percent In· crease compared to N23 .76 bUlion In 2010. The bank srew lend Ins by 9.32 percent, from NI.I2 trillion to NJ.23 trillion.

Diamond Bank bought Treasury Bills worth N94 ,58 billion, as against N57.3 blllion the pre · vlous year, Indicating a 65.06 percent increase.. It Increased Its loan book by 10.48 pernnt from N307 billion to N339.2 bllUon. Sterling Bank'slnvestmenl In TreuuryOUllwaswonh N12.93 billion, up from N6.02 billion In 2010. The bank'iloan portfolio Increased from N99.24 billion to NI59.73bWlon. UnlonBankln · Vf:Sted N9.82 billion for the lhird qUllJ1er ended September 2011, I shon faJ! tllough from N22.48 billion and extended N220.52 billion to customers, as againsl N202.38 billion during the same period In 2010.

A red nag of banks' cau · tlon In lending II the Interest income (whlcb Is Interest that aecruel 10 banks by lending) compared to non Interest income (Income from oth · er servlcelJ like Automated Teller MachlnelJ- ATM , COlt of Transactlonl · COT and other transacllon charSel) .

Investment managen believe the trend may conlinue with the CBN warning that banks should not play deeper Into rlak .. sets. Reporu thlt the apex bank Is likely to conduct further IIrell tesll before the end of the year, may also heighten the Icare. nnanclal experts bave warned Analysts attribute the larSe Investment Into Treasury 8ms to the safety of these InstnlmenlS, given government sovereignty and Su.ranlee, as well as the re o turns from the asset. Following the CBN 's restrictive monetary policy which loa ked liquidity from tlle nnanclal system, inter· bank rates rose from an average on percent 10 I~ percent, high . er than March Innatlon rate of 11.9 percent. As a result, banks were mlgratlns from other asset classes to Treasury Ollis.

Ike Chloke , manaslng dl · rector, AfrlDve51 Well Africi Umlted attributes banks large Investment In TOs to the CBN warning and tlle experie nces of the last few years. Chloke Hid these nnanclallnstituuons are leared of creallng risk .nets and aURcllnS the apel! bank's sanction .

Their experience with cus' tomers providing InlJumeient infonnation on loan demand and provision of coUall!n.l.s wtUch eventually became worthless. he said Informed their latest decl · lions. According to QUolte. many banks which kist money as a result of this. do not wanl to get tllelr

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said. was tlle decision to lnvest in fingen burnt again.riskassctwhen 1he rewlt. he TBsl 'Whycreate. a bank can invest in TBs and get 15 percent ~umr he asked